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LAUNCH Lab 13

{ "title": [ "Background", "Polar Satellite Data and Products", "Overview of Initial NOAA and DOD Plans for Replacement Satellite Programs", "Agencies Transferred Responsibilities to Their Respective Programs, but NOAA’s Is Being Downsized, and DOD’s Has Been Terminated", "NOAA Established the JPSS Program and Contracts for Most Components, but Plans to Modify Requirements to Limit Costs", "DOD Established and Subsequently Terminated Its DWSS Program", "NPP Is in Orbit and Transmitting Data; Development of the First JPSS Satellite Has Begun, but Critical Steps Remain", "NPP Is in Orbit; Sensor Data Are Being Calibrated for Use", "Development of JPSS Is Under Way; Critical Decisions and Milestones Are Pending", "JPSS Risk Management Process in Place; Key Risks Remain", "NOAA Is Working to Mitigate Delays in Establishing Cost and Schedule Baselines", "NOAA Is Working to Mitigate Risks in Program Staffing", "NOAA Has Not Established Plans to Mitigate an Expected Gap in Satellite Data Continuity", "NOAA Has Not Established Plans to Mitigate the Risk That the Polar Satellite Constellation Is Becoming Increasingly Unreliable", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments by the Department of Commerce", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "Since the 1960s, the United States has operated two separate operational polar-orbiting meteorological satellite systems: the Polar- orbiting Operational Environmental Satellite (POES) series, which is managed by NOAA, and the Defense Meteorological Satellite Program (DMSP), which is managed by the Air Force. These satellites obtain environmental data that are processed to provide graphical weather images and specialized weather products. These satellite data are also the predominant input to numerical weather prediction models, which are a primary tool for forecasting weather days in advance—including forecasting the path and intensity of hurricanes. The weather products and models are used to predict the potential impact of severe weather so that communities and emergency managers can help prevent and mitigate its effects. Polar satellites also provide data used to monitor environmental phenomena, such as ozone depletion and drought conditions, as well as data sets that are used by researchers for a variety of studies such as climate monitoring.\nUnlike geostationary satellites, which maintain a fixed position relative to the earth, polar-orbiting satellites constantly circle the earth in an almost north-south orbit, providing global coverage of conditions that affect the weather and climate. Each satellite makes about 14 orbits a day. As the earth rotates beneath it, each satellite views the entire earth’s surface twice a day. Currently, there is one operational POES satellite and two operational DMSP satellites that are positioned so that they cross the equator in the early morning, midmorning, and early afternoon. In addition, the government relies on a European satellite, called the Meteorological Operational (MetOp) satellite, for satellite observations in Together, the satellites ensure that, for any region the midmorning orbit.of the earth, the data provided to users are generally no more than 6 hours old. Besides the operational satellites, six older satellites are in orbit that still collect some data and are available to provide limited backup to the operational satellites should they degrade or fail. The last POES satellite was launched in February 2009. The Air Force plans to launch its two remaining DMSP satellites as needed. Figure 1 illustrates the current operational polar satellite constellation.", "Polar satellites gather a broad range of data that are transformed into a variety of products. Satellite sensors observe different bands of radiation wavelengths, called channels, which are used for remotely determining information about the earth’s atmosphere, land surface, oceans, and the space environment. When first received, satellite data are considered raw data. To make them usable, processing centers format the data so that they are time-sequenced and include earth-location and calibration information. After formatting, these data are called raw data records. The centers further process these raw data records into channel-specific data sets, called sensor data records and temperature data records. These data records are then used to derive weather and climate products called environmental data records. These environmental data records include a wide range of atmospheric products detailing cloud coverage, temperature, humidity, and ozone distribution; land surface products showing snow cover, vegetation, and land use; ocean products depicting sea surface temperatures, sea ice, and wave height; and characterizations of the space environment. Combinations of these data records (raw, sensor, temperature, and environmental data records) are also used to derive more sophisticated products, including outputs from numerical weather models and assessments of climate trends. Figure 2 is a simplified depiction of the various stages of satellite data processing, and figure 3 depicts examples of two different weather products.\nWith the expectation that combining 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—NPOESS—capable of satisfying both civilian and military requirements. The converged program, NPOESS, was considered critical to the nation’s ability to maintain the continuity of data required for weather forecasting and global climate monitoring. NPOESS satellites were expected to replace the POES and DMSP satellites in the morning, midmorning, and afternoon orbits when they neared the end of their expected life spans.\nTo manage this program, DOD, NOAA, and NASA formed a tri-agency Integrated Program Office, with NOAA responsible for overall program management for the converged system and for satellite operations, the Air Force responsible for acquisition, and NASA responsible for facilitating the development and incorporation of new technologies into the converged system.\nWhen the primary NPOESS contract was awarded in August 2002, the program was estimated to cost about $7 billion through 2018. The program was to include the procurement and launch of 6 satellites over the life of the program, with each satellite hosting a subset of 13 instruments. The planned instruments included 11 environmental sensors, and two systems supporting specific user services (see table 1). To reduce the risk involved in developing new technologies and to maintain climate data continuity, the program planned to launch the NPP NPP was to demonstrate selected demonstration satellite in May 2006.instruments that would later be included on the NPOESS satellites. The first NPOESS satellite was to be available for launch in March 2008.\nIn the years after the program was initiated, NPOESS encountered significant technical challenges in sensor development, program cost growth, and schedule delays. By November 2005, we estimated that the program’s cost had grown to $10 billion, and the schedule for the first launch was delayed by almost 2 years. These issues led to a 2006 decision to restructure the program, which reduced the program’s functionality by decreasing the number of planned satellites from 6 to 4, and the number of instruments from 13 to 9. As part of the decision, officials decided to reduce the number of orbits from three (early morning, midmorning, and afternoon) to two (early morning and afternoon) and to rely solely on the European satellites for midmorning orbit data.\nEven after the restructuring, however, the program continued to encounter technical issues in developing two sensors, significant tri- agency management challenges, schedule delays, and further cost increases. Because the schedule delays could lead to satellite data gaps, in March 2009, agency executives decided to use NPP as an operational satellite. reach about $15 billion and launch schedules that were delayed by over 5 years, the Executive Office of the President formed a task force, led by the Office of Science and Technology Policy, to investigate the management and acquisition options that would improve the NPOESS program. As a result of this review, in February 2010, the Director of the Office of Science and Technology Policy announced that NOAA and DOD would no longer jointly procure the NPOESS satellite system; instead, each agency would plan and acquire its own satellite system. Specifically, NOAA would be responsible for the afternoon orbit and the observations planned for the first and third satellites. DOD would be responsible for the early morning orbit and the observations planned for the second and fourth satellites. The partnership with the European satellite agencies for the midmorning orbit was to continue as planned. When this decision was announced, NOAA immediately began planning for a new satellite program in the afternoon orbit—called JPSS—and DOD began planning for a new satellite program in the morning orbit— called DWSS.\nUsing NPP as an operational satellite means that the satellite’s data will be used to provide climate and weather products.", "After the decision was made to disband the NPOESS program in 2010, NOAA and DOD began planning for their respective satellite programs. For NOAA, these plans included: relying on NASA for system acquisition, engineering, and integration; completing, launching, and supporting NPP; acquiring and launching two satellites for the afternoon orbit, called developing and integrating five sensors on the two satellites; finding alternate host satellites for selected instruments that would not be accommodated on the JPSS satellites; and providing ground system support for NPP, JPSS, and DWSS; data communications for MetOp and DMSP; and data processing for NOAA’s use of microwave data from an international satellite.\nIn 2010, NOAA estimated that the life cycle costs of the JPSS program would be approximately $11.9 billion for a program lasting through fiscal year 2024, which included $2.9 billion in NOAA funds spent on NPOESS through fiscal year 2010.\nAlternatively, DOD planned that its DWSS program would be comprised of two satellites, the first to be launched no earlier than 2018. Each satellite was to have three sensors: a Visible/Infrared Imager/Radiometer Suite, a Space Environment Monitor, and a microwave imager/sounder. As of September 2011, DOD planned to conduct a thorough system requirements review before finalizing DWSS functionality, cost, and schedule. Table 2 compares the planned cost, schedule, and scope of the three satellite programs at different points in time.\nWe have issued a series of reports on the NPOESS program highlighting technical issues, cost growth, and key management challenges affecting the tri-agency program structure. For example, in June 2009, we added to our previous concerns about the tri-agency oversight of the NPOESS program. We reported that the Executive Committee responsible for providing direction to the program was ineffective because the DOD acquisition executive did not attend committee meetings; the committee did not track action items to closure; and many of the committee’s decisions did not achieve the desired outcomes. We also reported that the program’s cost estimates were expected to rise and that the launch schedules were expected to be delayed. To help address these issues, we made recommendations to, among other things, improve executive- level oversight and develop realistic time frames for revising cost and schedule baselines. Agency officials agreed with our recommendations and took steps to improve executive oversight.\nGAO, Polar-Orbiting Environmental Satellites: Agencies Must Act Quickly to Address Risks That Jeopardize the Continuity of Weather and Climate Data, GAO-10-558 (Washington, D.C.: May 27, 2010). identified. For example, NOAA transferred key staff from the NPOESS program to the JPSS program and coordinated with the Air Force to negotiate contract changes.", "Following the decision to disband NPOESS, both NOAA and DOD were responsible for transferring key management responsibilities to their respective programs. This entailed (1) establishing separate program offices for their respective follow-on programs, (2) establishing requirements for their respective programs, and (3) transferring contracts from NPOESS to the new programs.\nBoth agencies made progress on these activities, but recent events have resulted in major program changes. Specifically, NOAA established its JPSS program office, established program requirements, and transferred most sensor contracts. However, the agency now plans to remove key requirements, including selected sensors and ground systems, to keep the program within budget. DOD established its DWSS program office and modified its contracts accordingly before deciding in early 2012 to terminate the program and reassess its requirements (as directed by Congress).", "After the February 2010 decision to disband NPOESS, NOAA transferred management responsibilities to its new satellite program, defined its requirements, and transferred contracts to the new program. Specifically, NOAA established a program office to guide the development of the NPP and JPSS satellites. NOAA also worked with NASA to establish its program office to oversee the acquisition, system engineering, and integration of the satellite program. By 2011, the two agencies had established separate—but colocated—JPSS program offices, each with different roles and responsibilities. NOAA’s program office is responsible for programmatic activities related to the satellites’ development, including managing requirements, budgets, and interactions with satellite data users. Alternatively, NASA’s program office is responsible for the development and integration of the sensors, satellites, and ground systems. In January 2012, both agencies approved a management control plan that delineates the two agencies’ roles, responsibilities, and executive oversight structure.\nIn September 2011, NOAA established its official requirements document for the JPSS program. This document defines the components of the program as well as the expected performance of the satellites and ground systems. Key components include NPP, the two JPSS satellites, the five sensors, a distributed ground-based network of satellite data receptor sites, and four ground-based data processing systems. This system is to deliver 31 satellite data products within 80 minutes of observation on the first satellite and within 30 minutes on the second satellite.\nOver the 2 years since the decision to disband NPOESS, NOAA has also been working to transfer and refine the contracts for four of the sensors that are to be launched on the first JPSS satellite from the Air Force to NASA. The program completed the transfer of all of the contracts by September 2011 and then began the process of updating the contracts to match JPSS’ requirements. This process has been completed for three sensors (CrIS, OMPS, and ATMS). Program officials expect to finalize changes to the contract for the last sensor (VIIRS) in June 2012.\nWhile NOAA and NASA have made progress in transferring management and contract responsibilities from NPOESS to the JPSS program, NOAA recently decided to modify its requirements in order to limit program costs. From January to December 2011, the agency went through a cost estimating exercise for the JPSS program. This exercise included identifying key program elements, documenting assumptions, performing historical and parametric analysis to determine reasonable estimates for the elements, seeking an independent cost estimate, and reconciling the two estimates. At the end of this exercise, NOAA validated that the cost of the full set of JPSS functions from fiscal year 2012 through fiscal year 2028 would be $11.3 billion. After adding the agency’s sunk costs of $3.3 billion, the program’s life cycle cost estimate totaled $14.6 billion. amount is $2.7 billion higher than the $11.9 billion estimate for JPSS when NPOESS was disbanded in 2010. According to NOAA officials, this increase is primarily due to a 4-year extension of the program from 2024 to 2028, the addition of previously unbudgeted items such as the free flyers, cost growth associated with transitioning contracts from DOD to NOAA, and the program’s decision to slow down work on lower-priority elements because of budget constraints in 2011.\nNOAA’s $3.3 billion sunk costs included $2.9 billion through fiscal year 2010 and about $400 million in fiscal year 2011.\nIn working with the Office of Management and Budget to establish the president’s fiscal year 2013 budget request, NOAA officials stated that they agreed to fund JPSS at roughly $900 million per year through 2017, to merge funding for two climate sensors into the JPSS budget, and to cap the JPSS life cycle cost at $12.9 billion through 2028. Because this cap is $1.7 billion below the expected $14.6 billion life cycle cost of the full program, NOAA decided to remove selected elements from the satellite program. While final decisions on what will be removed are expected by the end of June 2012, NOAA may discontinue: support for OMPS operations on JPSS-1; development of two of the three planned Total and Spectral Solar Irradiance Sensors, the spacecraft for all three of these sensors, and the launch vehicle for the three sensors; development of the OMPS and CERES sensors on JPSS-2; plans for a network of ground-based receptor stations; planned improvements in the time it takes to obtain satellite data from JPSS-2 (the requirement was to provide data in 30 minutes; instead, the requirement will remain at the JPSS-1 level of 80 minutes); plans to install an Interface Data Processing Segment (IDPS) at two plans to support ground operations for DOD’s future polar satellite program.\nNOAA anticipates modifying its official requirements documents to reflect these changes by the end of 2012. The removal of these elements will affect both civilian and military satellite data users. The loss of OMPS and CERES satellite data could cause a break in the over 30-year history of satellite data and would hinder the efforts of climatologists and meteorologists focusing on understanding changes in the earth’s ozone coverage and radiation budget. The loss of ground-based receptor stations means that NOAA may not be able to improve the timeliness of JPSS-2 satellite data from 80 minutes to the current 30 minute requirement, and as a result, weather forecasters will not be able to update their weather models using the most recent satellite observations. Further, the loss of the data processing systems at the two Navy locations means that NOAA and the Navy will need to establish an alternative way to provide data to the Navy.", "After the February 2010 decision to disband NPOESS, DOD transferred management responsibilities to its new satellite program, started defining its requirements, and modified contracts to reflect the new program. Specifically, in 2010, DOD established a DWSS program office and started developing plans for what the satellite program would entail. The DWSS program office, located at the Space and Missile Systems Center in Los Angeles, California, was given responsibility for the acquisition, development, integration, and launch of the DWSS satellites. Because this is considered a major acquisition, it is overseen by the Defense Acquisition Board and the Under Secretary of Defense for Acquisition, Technology, and Logistics.\nIn August 2010, the agency determined that the DWSS program would include two satellites and that each satellite would host three sensors. Over the following year, the program office developed a program plan and a technical description, and planned to define requirements in early 2012. Further, the agency started modifying its existing contracts with the NPOESS contractor to reflect the new program. By May 2011, the program office had contracted for DWSS activities through the end of 2012.\nThese efforts, however, have been halted. In early 2012, with congressional direction, DOD decided to terminate the DWSS program because it still has two DMSP satellites to launch and it did not yet need the DWSS satellites. In January 2012, the Air Force halted work on the program. DOD is currently identifying alternative means to fulfill its future environmental satellite requirements.", "In September 2010, shortly after NPOESS was disbanded, NOAA and NASA established plans for both NPP and JPSS. These plans included launching NPP by the end of October 2011 and completing an early on-orbit check out of the NPP spacecraft and sensors (called commissioning) by the end of January 2012; completing all NPP calibration and validation activities2013; and developing, testing, and launching JPSS-1 by the end of 2014 and JPSS-2 by the end of 2017.\nProgram officials currently estimate that JPSS-1 will launch by March 2017 and JPSS-2 will launch by December 2022. NOAA officials explained that part of the reason for the change in launch dates is that the program’s budget under the 2011 continuing resolution was only one third of what NOAA had anticipated. Thus, program officials decided to defer development of the first JPSS satellite in order to keep NPP on track.\nNOAA officials noted that the JPSS launch dates could change as the agency finalized its program planning activities.", "NPP was successfully launched on October 28, 2011. After launch, NASA began the process of activating the satellite and commissioning the instruments. This process ended at the beginning of March 2012, which was a little over a month after the planned completion date at the end of January 2012. The delay was caused by an issue on the VIIRS instrument that caused the program to halt commissioning activities in order to diagnose the problem. Specifically, the quality of VIIRS data in certain bands was degrading much more quickly than expected. NASA and the JPSS program office subsequently identified the problem as contamination on VIIRS mirrors. NOAA and NASA program officials, including the JPSS director and project manager, reported that this issue is not expected to cause the instrument to fall below its performance specifications. Figure 4 depicts an image of Earth using VIIRS data from NPP.\nProgram officials are working to complete NPP calibration and validation activities by October 2013, but they acknowledge that they may encounter delays in developing satellite products. NOAA is receiving data from the five sensors on the NPP satellite, and has begun calibration and validation. According to NOAA and NASA officials, during this time, the products go through various levels of validation, including a beta stage (products have been minimally validated, but are available to users so that they can begin working with the data); a provisional stage (products are not optimal, but are ready for operational evaluation by users); and a validated stage (products are ready for operational use). The amount of time it takes for a product to be fully validated depends on the sensor and the type of product. For example, NOAA provided a provisional ozone environmental data record from the OMPS sensor in April 2012 and expects to provide three beta environmental data records from the CrIS sensor by October 2012. NOAA’s users began to use validated ATMS products in May 2012, and NOAA expects that they will increase the amount and types of data they use in the following months.", "The major components of the JPSS program are at different stages of development, and important decisions and program milestones lie ahead. NASA’s JPSS program office organized its responsibilities into three separate projects: (1) the flight project, which includes sensors, spacecraft, and launch vehicles; (2) the ground project, which includes ground-based data processing and command and control systems, and (3) the free-flyer project, which involves developing and launching the instruments that are not going to be included on the JPSS satellites. Table 3 shows the three JPSS projects and their key components.\nWithin the flight project, development of the sensors for the first JPSS satellite is well under way; however, selected sensors are experiencing technical issues and the impact of these issues had not yet been determined. The ground project is currently in operation supporting NPP, and NOAA is planning to upgrade selected parts of the ground systems to increase security and reliability. The free-flyer project is still in a planning stage because NOAA has not yet decided which satellites will host the instruments or when these satellites will launch. One of these projects has recently completed a major milestone and one project has its next milestone approaching. Specifically, the flight project completed a separate system requirements review in April 2012, while the ground project’s system requirements review is scheduled for August 2012.\nBecause development of the sensors for JPSS-1 began during the NPOESS era, NASA estimates that as of March 2012, all of the sensors have been at least 60 percent completed. However, selected sensors are encountering technical issues and the full impact of these issues on cost and schedule has not been determined. Further, the program has not yet made a decision on which launch vehicle will be used. NASA and NOAA officials reported that the technical issues thus far are routine in nature, and that they plan to select a launch vehicle by the end of 2012. Table 4 describes the current status of the components of the JPSS-1 flight project.\nWhile NOAA ground systems for satellite command, control, and communications and for data processing are currently supporting NPP operations, the agency plans to upgrade the ground systems to improve their availability and reliability. In 2010, we reported that NPP’s ground systems had weaknesses because they were developed using outdated security requirements approved in 1998. These weaknesses were highlighted soon after NPP was launched, when the communications links providing satellite data from the satellite receiver in Svalbard, Norway, to the United States were severed. NOAA immediately established a temporary backup capability, and plans to upgrade its communications systems to establish permanent backup capabilities by the end of 2012. In addition, NOAA plans to enhance the backup capabilities of its data processing system infrastructure by November 2015.\nThe instruments in the free flyer project, including the Total and Spectral Solar Irradiance Sensor and two user services systems (the Search and Rescue Satellite-Aided Tracking system and an Advanced Data Collection system), are currently under development. However, in early 2012, NOAA decided to consider not launching the Total and Spectral Solar Irradiance Sensor as an option for staying within its budget cap. Moreover, the agency is still considering its options for the spacecraft that will carry the other two instruments to space. For example, it is considering contracting for a spacecraft or having the instruments hosted on some other organization’s satellite. Table 5 depicts the status of the components of the free-flyer project.", "The JPSS program has a structured risk management process in place and is working to mitigate key program risks; however, NOAA faces key risks involving the potential for satellite gaps and does not yet have mitigation plans. According to best practices advocated by leading system engineering and program management organizations, effective risk management addresses four key areas: preparing for risk management, identifying and analyzing risks, mitigating risks, and providing executive oversight.effective risk management process. Specifically, the program documented its risk management strategy; identified relevant stakeholders and designated responsibilities for risk management activities; established and implemented standards for categorizing and prioritizing risks; instituted a program to identify, track, and mitigate risks; and established a process for regularly communicating risks to senior NASA and NOAA management.\nThe JPSS program office has implemented elements of an The JPSS program is working to mitigate the risks of a lack of a cost and schedule baseline and program office staffing shortfalls, but NOAA has not established mitigation plans to address the risk of a gap in the afternoon orbit or potential satellite data gaps in the DOD and European polar satellite programs, which provide supplementary information to NOAA forecasts. Because it could take time to adapt grounds systems to receive alternative satellites’ data, delays in establishing mitigation plans could leave the agency little time to leverage its alternatives. Until NOAA identifies its mitigation options, it may miss opportunities to leverage alternative satellite data sources. Moreover, until NOAA establishes mitigation plans for a satellite data gap, it runs the risk of not being able to fulfill its mission of providing weather forecasts to protect lives, property, and commerce.", "NOAA oversaw the establishment of contracts for the JPSS-1 sensors and spacecraft and NASA is managing the cost, schedule, and deliverables on these contracts using discrete task orders, but the agencies have not established a contractual cost and schedule baseline that would allow them to monitor contractor deliverables within an earned value management system.established an overall program baseline that delineates the cost, schedule, and content of the entire program. Under NASA’s acquisition life cycle, a program baseline is due at the key decision milestone In addition, program officials have not yet scheduled to be completed by July 2013. Managing a program without a baseline makes it more difficult for program officials to make informed decisions and for program overseers to understand if the program is on track to successfully deliver expected functionality on cost and schedule.\nProgram officials acknowledge that the lack of a baseline is a risk, and they are tracking it through their risk management program. Program officials explained that after transferring the contracts from the Air Force to NASA, they needed to definitize the contracts to reflect JPSS program requirements instead of NPOESS program requirements. The JPSS program office has completed this process for three sensors (CrIS, OMPS, and ATMS) and is working to complete the process for one other sensor (VIIRS) by June 2012. After definitizing each contract to JPSS requirements and schedules, NASA and the contractors will perform an integrated baseline review before implementing an earned value management system. NOAA officials reported that they are working to establish contractual baselines as rapidly as practical for each of the contracts.\nProgram officials also plan to establish an overall program baseline. Actions planned to mitigate this risk include establishing a stable and realistic 5-year budget profile, which was completed in December 2011; refining the program requirements to match the expected budget by October 2012; definitizing contracts to address any changes in requirements in establishing the overall program baseline by the end of November 2012.", "NOAA and NASA have not yet fully staffed their respective JPSS program offices. While having a knowledgeable and capable program management staff is essential to any acquisition program, it is especially critical given the history of management challenges on the NPOESS program. However, NOAA has not yet filled 18 of the 64 positions it plans for the program office, including those for a program scientist and system engineers for the JPSS satellite, ground systems, and overall mission. In addition, NASA has not yet filled 6 positions it plans for its ground project.\nUntil these positions are filled, other staff members are supporting the workload and this could delay the schedule for implementing improvements in the ground systems.\nBoth agencies are actively tracking their respective program offices’ staffing and plans for filling vacancies. According to NOAA officials, the agency is mitigating this risk by filling three of the vacant positions with long-term detailees. Further, NOAA plans to fill most of the positions, including that of the technical director, by July 2012. NASA has started the process to fill its vacancies, and plans to fill these by the end of September 2012.", "In September 2011, we reported that NOAA was facing a gap in satellite data continuity; the risk of that gap is higher today. When NPOESS was first disbanded, program officials anticipated launching the JPSS satellites in 2015 and 2018 (while acknowledging that these dates could change as the program’s plans were firmed up). Over the past year, as program officials made critical decisions to defer work on JPSS in order to keep NPP on track, the launch dates for JPSS-1 and JPSS-2 have changed. Program officials currently estimate that JPSS-1 will be launched by March 2017 and JPSS-2 will be launched by December 2022.\nNOAA officials acknowledge that there is a substantial risk of a gap in satellite data in the afternoon orbit, between the time when the NPP satellite is expected to reach the end of its life and the time when the JPSS-1 satellite is to be in orbit and operational. This gap could span from 17 months to 3 years or more. In one scenario, NPP would last its full expected 5-year life (to October 2016), and JPSS-1 would launch as soon as possible (in March 2017) and undergo on-orbit checkout for a year (until March 2018). In that case, the data gap would extend 17 months. In another scenario, NPP would last only 3 years as noted by NASA managers concerned with the workmanship of selected NPP sensors. Assuming that the JPSS-1 launch occurred in March 2017 and the satellite data was certified for official use by March 2018, this gap would extend for 41 months. Of course, any problems with JPSS-1 development could delay the launch date and extend the gap period. Given the history of technical issues and delays in the development of the NPP sensors and the current technical issues on the sensors, it is likely that the launch of JPSS-1 will be delayed. Figure 5 depicts four possible gap scenarios.\nAccording to NOAA, a data gap would lead to less accurate and timely weather prediction models used to support weather forecasting, and advanced warning of extreme events—such as hurricanes, storm surges, and floods—would be diminished. To illustrate this, the National Weather Service performed several case studies to demonstrate how its weather forecasts would have been affected if there were no polar satellite data in the afternoon orbit. For example, when the polar satellite data were not used to predict the “Snowmaggedon” winter storm that hit the Mid-Atlantic coast in February 2010, weather forecasts predicted a less intense storm, slightly further east, and producing half of the precipitation at 3, 4, and 5 days before the event. Specifically, weather prediction models under- forecasted the amount of snow by at least 10 inches. The agency noted that this level of degradation in weather forecasts could place lives, property, and critical infrastructure in danger.\nNOAA officials have communicated publicly and often about the risk of a satellite data gap; however, the agency has not established plans to mitigate the gap. NOAA officials stated that the agency will continue to use existing POES satellites, as well as NPP, as long as they provide data and that there are no viable alternatives to the JPSS program. However, it is possible that other governmental, commercial, or international satellites could supplement the data. If there are viable options for obtaining data from external sources, it would take time to adapt NOAA systems to receive, process, and disseminate the data. Until NOAA identifies these options, it may miss opportunities to leverage these satellite data sources.", "Since its inception, NPOESS was seen as a constellation of satellites providing observations in the early morning, midmorning, and afternoon orbits. Having satellites in each of these orbits ensures that satellite observations covering the entire globe are no more than 6 hours old, thereby allowing for more accurate weather predictions. Even after the program was restructured in 2006 and eventually terminated in 2010, program officials and the administration planned to ensure coverage in the early morning, midmorning, and afternoon orbits by relying on DOD satellites for the early morning orbit, the European satellite program for the midmorning, and NOAA’s JPSS program for the afternoon orbit. However, recent events have made the future of this constellation uncertain:\nEarly morning orbit—As discussed earlier in this report, in early fiscal year 2012, DOD terminated its DWSS program. While the agency has two more satellites to launch and is working to develop alternative plans for a follow-on satellite program, there are considerable challenges in ensuring that a new program is in place and integrated with existing ground systems and data networks in time to avoid a gap in this orbit.\nDOD officials stated that they plan to launch DMSP-19 in 2014 and DMSP-20 when it is needed. If DMSP-19 lasts 6 years, there is a chance that DMSP will not be launched until 2020. Thus, in a best- case scenario, the follow-on satellites will not need to be launched until roughly 2026. However, civilian and military satellite experts have expressed concern that the DMSP satellites are quite old and may not work as intended. If they do not perform well, DOD could be facing a satellite data gap in the early morning orbit as early as 2014.\nMidmorning orbit—The European satellite organization plans to continue to launch MetOp satellites that will provide observations in the midmorning orbit through October 2021. The organization is also working to define and gain support for the follow-on program, called the Eumetsat Polar System-2nd Generation program. However, in 2011, NOAA alerted European officials that, because of the constrained budgetary environment, they will no longer be able to provide sensors for the follow-on program. Due to the uncertainty surrounding the program, there is a chance that the first European follow-on satellite will not be ready in time to replace MetOp at the end of its expected life. In that case, this orbit, too, would be in jeopardy.\nAfternoon orbit—As discussed previously, there is likely to be a gap in satellite observations in the afternoon orbit that could last well over one year. While our scenarios demonstrated gaps lasting between 17 and 53 months, NOAA program officials believe that the most likely scenario involves a gap lasting 18 to 24 months.\nFigure 6 depicts the polar satellite constellation and the uncertain future coverage in selected orbits.\nThe NOAA Administrator and other senior executives acknowledge the risk of a data gap in each of the orbits of the polar satellite constellation and are working with European and DOD counterparts to coordinate their respective requirements and plans; however, they have not established plans for mitigating risks to the polar satellite constellation. As in the case of the anticipated gap in the afternoon orbit, NOAA plans to use older polar satellites to provide some of the necessary data for the other orbits. However, it is also possible that other governmental, commercial, or international satellites could supplement the data. For example, foreign nations continue to launch polar-orbiting weather satellites to acquire data such as sea surface temperatures, sea surface winds, and water vapor. Also, over the next few years, NASA plans to launch satellites that will collect information on precipitation and soil moisture. If there are viable options from external sources, it could take time to adapt NOAA systems to receive, process, and disseminate the data to its satellite data users. Until NOAA identifies these options and establishes mitigation plans, it may miss opportunities to leverage alternative satellite data sources.", "After spending about $3.3 billion on the now-defunct NPOESS program, NOAA officials have established a $12.9-billion JPSS program and made progress in launching NPP, establishing contracts for the first JPSS satellite, and enhancing the ground systems controlling the satellites and processing the satellite data. JPSS program officials are currently working to calibrate NPP data so that they are useable by civilian and military meteorologists and to manage the development of sensors for the first JPSS satellite. In coming months, program officials face changing requirements, technical issues on individual sensors, key milestones in developing the JPSS satellite, and important decisions on how to accommodate instruments that are not included on the JPSS satellite.\nWhile the JPSS program office is working to mitigate risks associated with not having a program baseline or a fully staffed program management office, NOAA has not established plans to mitigate the almost certain satellite data gaps in the afternoon orbit or the potential gaps in the early and mid-morning orbits. These gaps will likely affect the accuracy and timeliness of weather predictions and forecasts and could affect lives, property, military operations, and commerce. Because it could take time to adapt ground systems to receive an alternative satellite’s data, delays in establishing mitigation plans could leave the agency little time to leverage alternatives. Until NOAA identifies its mitigation options, it may miss opportunities to leverage alternative satellite data sources.", "Given the importance of polar-orbiting satellite data to weather forecasts, we recommend that the Secretary of Commerce direct the Administrator of NOAA to establish mitigation plans for risks associated with pending satellite data gaps in the afternoon orbit as well as potential gaps in the early morning and midmorning orbits.", "We sought comments on a draft of our report from the Department of Commerce, DOD, and NASA. We received written comments from the Secretary of Commerce, who transmitted NOAA’s comments. In its comments, NOAA agreed with the report’s recommendation and noted that the National Environmental Satellite, Data, and Information Service— a NOAA component agency—has performed analyses on how to mitigate potential gaps in satellite data, but has not yet compiled this information into a report. The agency plans to provide a report to NOAA by August 2012. The department’s comments are provided in appendix II. The department also provided technical comments, which we incorporated as appropriate.\nWhile neither DOD nor NASA provided comments on the report’s findings or recommendations, they offered technical comments, which we incorporated as appropriate. Specifically, the Staff Action Officer for the Space and Intelligence Office within the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics provided technical comments both orally and via e-mail, and a commander within the Navy’s Oceanographer staff provided oral technical comments. In addition, the Project Manager of the JPSS flight project—a NASA employee—provided technical comments via e-mail.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution of it until 30 days from the date of this letter. We are sending copies of this report to interested congressional committees, the Secretary of Commerce, the Secretary of Defense, the Administrator of NASA, the Director of the Office of Management and Budget, and other interested parties. In addition, this report will be available on the GAO Web site at http://www.gao.gov.\nIf you have any questions about this report, please contact me at (202) 512-9286 or at [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.", "Our objectives were to (1) evaluate efforts to transfer management and contract responsibilities from the National Polar-orbiting Operational Environmental Satellite System (NPOESS) program to the separate satellite programs being established at the National Oceanic and Atmospheric Administration (NOAA) and Department of Defense (DOD), (2) assess NOAA’s progress in developing the NPOESS Preparatory Project (NPP) satellite and the Joint Polar Satellite System (JPSS), and (3) evaluate NOAA’s efforts to mitigate key project risks.\nTo evaluate efforts to transfer responsibilities from NPOESS to the separate NOAA and DOD programs, we compared the agencies’ plans for establishing program management offices, developing program requirements, and transferring contracts to each agency’s actual accomplishments. We analyzed key program documents, including acquisition decision memorandums, requirements documents, and the management control plan. We observed NOAA’s monthly program management briefings and obtained detailed briefings on efforts to establish a program cost estimate, NOAA’s fiscal year 2013 budget for JPSS, and decisions to remove selected program elements. To assess the reliability of the program’s cost estimate, we compared agency documentation of the program office estimate and the independent cost estimate, and interviewed program officials and cost estimators to understand key aspects of and differences between the estimates. We determined that the estimates were sufficient for our purposes of providing summary data. We interviewed program officials from NOAA, DOD, and the National Aeronautics and Space Administration (NASA), to obtain information on transition schedules, progress, program requirements, and challenges.\nTo assess NOAA’s progress in developing the NPP and JPSS satellite systems, we compared NOAA’s plans for key milestones to its actual accomplishments. We reviewed monthly progress reports, draft program schedules, and the NPP operational readiness review package. We observed NOAA’s monthly program management briefings to determine the status of key components. We interviewed both agency and contractor officials, including officials at Ball Aerospace, Inc. and Raytheon Space and Airborne Systems, Inc. We also interviewed key NOAA satellite data users, including officials involved in weather forecasting and numerical weather prediction, to identify their experiences in working with NPP data as well as their plans for working with JPSS data.\nTo evaluate NOAA’s efforts to mitigate key project risks, we compared the agency’s risk management process to best practices in risk management as identified by the Software Engineering Institute. We reviewed NOAA’s program risk lists on a monthly basis to obtain insights into management issues and actions. We interviewed agency and contractor officials to evaluate actions to address each transition risk. In addition, we interviewed NOAA satellite data users to determine the impact of any changes in requirements.\nWe performed our work at NASA, NOAA, and DOD offices in the Washington, D.C., area and at contractor facilities in Los Angeles, California; Aurora, Colorado; and Boulder, Colorado. We conducted this performance audit from May 2011 to June 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, Colleen Phillips (Assistant Director), Kathleen Lovett Epperson, Kate Feild, Nancy Glover, Franklin Jackson, and Fatima Jahan made key contributions to this report.", "NASA: Assessments of Selected Large-Scale Projects. GAO-12-207SP. (Washington, D.C.: Mar. 1, 2012).\nPolar Satellites: Agencies Need to Address Potential Gaps in Weather and Climate Data Coverage. GAO-11-945T. (Washington, D.C.: Sept. 23, 2011).\nPolar-Orbiting Environmental Satellites: Agencies Must Act Quickly to Address Risks That Jeopardize the Continuity of Weather and Climate Data. GAO-10-558. (Washington, D.C.: May 27, 2010).\nPolar-Orbiting Environmental Satellites: With Costs Increasing and Data Continuity at Risk, Improvements Needed in Tri-agency Decision Making. GAO-09-772T. (Washington, D.C.: June 17, 2009).\nPolar-orbiting Environmental Satellites: With Costs Increasing and Data Continuity at Risk, Improvements Needed in Tri-agency Decision Making. GAO-09-564 (Washington, D.C.: June 17, 2009).\nEnvironmental Satellites: Polar-orbiting Satellite Acquisition Faces Delays; Decisions Needed on Whether and How to Ensure Climate Data Continuity. GAO-08-899T. (Washington, D.C.: June 19, 2008).\nEnvironmental Satellites: Polar-orbiting Satellite Acquisition Faces Delays; Decisions Needed on Whether and How to Ensure Climate Data Continuity. GAO-08-518. (Washington, D.C.: May 16, 2008).\nEnvironmental Satellite Acquisitions: Progress and Challenges. GAO-07-1099T. (Washington, D.C.: July 11, 2007).\nPolar-orbiting Operational Environmental Satellites: Restructuring Is Under Way, but Challenges and Risks Remain. GAO-07-910T. (Washington, D.C.: June 7, 2007).\nPolar-orbiting Operational Environmental Satellites: Restructuring Is Under Way, but Technical Challenges and Risks Remain. GAO-07-498. (Washington, D.C.: Apr. 27, 2007).\nPolar-orbiting Operational Environmental Satellites: Cost Increases Trigger Review and Place Program’s Direction on Hold. GAO-06-573T. (Washington, D.C.: Mar. 30, 2006).\nPolar-orbiting Operational Environmental Satellites: Technical Problems, Cost Increases, and Schedule Delays Trigger Need for Difficult Trade-off Decisions. GAO-06-249T. (Washington, D.C.: Nov. 16, 2005).\nPolar-orbiting Environmental Satellites: Information on Program Cost and Schedule Changes. GAO-04-1054. (Washington, D.C.: Sept. 30, 2004).\nPolar-orbiting Environmental Satellites: Project Risks Could Affect Weather Data Needed by Civilian and Military Users. GAO-03-987T. (Washington, D.C.: July 15, 2003).\nPolar-orbiting Environmental Satellites: Status, Plans, and Future Data Management Challenges. GAO-02-684T. (Washington, D.C.: July 24, 2002)." ], "depth": [ 1, 1, 2, 1, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "", "h3_full", "", "h0_full h3_full", "h0_full", "h0_full", "h1_full", "", "h1_full", "h2_full h1_title", "", "", "h2_full h1_full", "", "h2_full", "", "", "h0_full h1_full", "", "", "", "", "h3_full h2_full" ] }

{ "question": [ "What did NOAA and DOD do following the disbanding of the NPOESS program in 2010?", "What specific actions did NOAA take to transfer responsibilities?", "What specific actions did DOD take to transfer responsibilities?", "How have recent events impacted DOD and NOAA's programs?", "How has NOAA developed its satellite system in the past year?", "What progress was made in October 2011?", "What are the three major components of the JPSS program?", "How is the flight project progressing?", "How is the ground project progressing?", "How is the free-flyer program progressing?", "What risks does the JPSS program face?", "What characterizes the response to these risks?", "What problems might these risks cause?", "Why are environmental satellites important?", "What is the NPOESS?", "What issues did the NPOESS program face?", "How did the government respond to these issues?" ], "summary": [ "Following the decision to disband the National Polar-orbiting Operational Environmental Satellite System (NPOESS) program in 2010, both the National Oceanic and Atmospheric Administration (NOAA) and the Department of Defense (DOD) made initial progress in transferring key management responsibilities to their separate program offices.", "Specifically, NOAA established a Joint Polar Satellite System (JPSS) program office, documented its requirements, and transferred existing contracts for earth-observing sensors to the new program.", "DOD established its Defense Weather Satellite System program office and modified contracts accordingly. However, recent events have resulted in major program changes at both agencies.", "However, recent events have resulted in major program changes at both agencies. NOAA plans to revise its program requirements to remove key elements, including sensors and ground-based data processing systems, to keep the program within budget. Further, in early 2012, DOD decided to terminate its program and reassess its requirements.", "Over the past year, NOAA has made progress in developing its satellite system, but critical decisions and milestones lie ahead.", "In October 2011, the JPSS program office successfully launched a satellite originally called the NPOESS Preparatory Project (NPP). Data from the satellite are currently being calibrated and validated, and NOAA meteorologists started using selected satellite data products in their weather forecasts in May 2012.", "Further, the three major components of the JPSS program (the flight, ground, and free-flyer projects) are at different stages of development.", "Within the flight project, development of the sensors for the first JPSS satellite is well under way; however, selected sensors are experiencing technical issues.", "The ground project is currently in operation supporting NPP and NOAA is planning to upgrade parts of the ground system infrastructure to increase its security and reliability.", "The free-flyer project, intended to integrate and launch key instruments that could not be accommodated on the JPSS satellites, is still in a planning stage because NOAA has not yet decided which satellites will host the instruments or when these satellites will launch.", "The JPSS program office has implemented elements of an effective risk management process; however, the program still faces significant risks. It does not yet have a cost and schedule baseline in place, the program office is not yet fully staffed, and there will likely be a gap in satellite data lasting 17 to 53 months from the time NPP is projected to cease operations and the first JPSS satellite begins to operate. There are also potential satellite data gaps in the DOD and European polar satellite programs, which provide supplementary information to NOAA forecasts.", "The JPSS program office is managing the first two risks, but NOAA has not established plans to mitigate potential satellite gaps.", "Until these risks are mitigated and resolved, civilian and military satellite data users may not have the information they need for timely weather forecasting, thereby risking lives, property, and commerce.", "Environmental satellites provide critical data used in forecasting weather and measuring variations in climate over time.", "NPOESS—a program managed by NOAA, DOD, and the National Aeronautics and Space Administration—was planned to replace two existing polar-orbiting environmental satellite systems.", "However, 8 years after a development contract for the NPOESS program was awarded in 2002, the cost estimate had more than doubled—to about $15 billion, launch dates had been delayed by over 5 years, significant functionality had been removed from the program, and the program’s tri-agency management structure had proven to be ineffective.", "In February 2010, a presidential task force decided to disband NPOESS and, instead, to have NOAA and DOD undertake separate acquisitions." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, -1, 2, 2, 2, -1, 0, 0, -1, -1, 1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 4, 4, 4, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Agencies Have Made Progress Implementing Key Requirements for Priority Goals, but Some Information Is Incomplete", "Agencies Have Implemented Several Requirements Related to Priority Goals", "Most Agencies Did Not State Whether Their Priority Goals Support Any CAP Goals", "Agencies Generally Identified Performance Measures for Their Priority Goals, but Many Measures Did Not Have Related Targets for Measuring Interim Progress", "Agencies Did Not Provide Milestones with Scheduled Completion Dates for Many Priority Goals", "Most Agencies Did Not Describe How Their Priority Goals Reflect Congressional Input", "Past Audit Work Provides Perspective on Selected Agencies’ Capacities to Achieve Their Priority Goals", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope & Methodology", "Appendix II: Comments on the Department of Homeland Security’s Priority Goals", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Appendix III: Comments on the Department of Housing and Urban Development’s Priority Goals", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contacts", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contacts", "Goal Statement", "GAO Comments:", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Appendix IV: Comments on the Department of Transportation’s Priority Goals", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contacts", "Appendix V: Comments on the Department of Veterans Affairs’ Priority Goals", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Appendix VI: Comments on the Office of Personnel Management’s Priority Goals", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contacts", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contacts", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Goal Statement", "GAO Comments", "Status of Key Open Recommendations and Matters for Congressional Consideration", "Selected GAO Reports", "GAO Contact", "Appendix VII: Comments from the Department of Veterans Affairs", "GAO Comments", "Appendix VIII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "GPRAMA specifies that APGs are to have ambitious targets that can be achieved within a 2-year period; a clearly identified agency official, known as a goal leader, who is responsible for achieving the goal; clearly defined quarterly milestones; and interim quarterly targets for performance measures, if more frequent updates of actual performance provide data of significant value.\nOther GPRAMA requirements provide additional information and context for the priority goals. For example, agencies are to describe how their APGs contribute to the agency’s long-term strategic goals, as well as any of the CAP goals developed by OMB, as applicable. This information can help illustrate how an agency’s efforts to achieve its priority goals fit within a broader, crosscutting context—both within the agency and across the federal government. In addition, agencies are to describe how they incorporated any input on their priority goals received during consultations with relevant congressional committees.\nGPRAMA also lays out a schedule for gradual implementation of its provisions, with a 3-year period of interim implementation following enactment in January 2011. It required agencies to identify their APGs and related information in their strategic plans and performance plans, published concurrently with the President’s Budget in February 2012. Agencies also were to provide information about their APGs for OMB to publish on Performance.gov by October 1, 2012, and agencies are to OMB provided update this information on at least a quarterly basis. guidance to agencies on implementing the act’s provisions, including those related to APGs, in several memorandums and its annual Circular No. A-11 in both 2011 and 2012.\nIn addition to OMB’s guidance, the Performance Improvement Council (PIC) shared practices related to developing and implementing APGs with agencies in 2011 and 2012. The PIC established the Goal Setting Working Group in May 2011 to assist agencies in setting their 2012 to 2013 APGs. The group produced a draft guide to goal setting, which included criteria for selecting priority goals as well as elements and examples of effective goal statements. In September 2012, the PIC also produced a draft best practices guide for developing milestones; the guide described the characteristics of milestones and provided several examples.", "", "For each APG, agencies were required, by GPRAMA or OMB guidance, to make available to OMB for publication on Performance.gov and in their strategic plans or performance plans (1) a performance goal with a target level of performance to be achieved in a 2-year time frame; (2) an explanation of how the goal contributes to agency strategic goals; and (3) the identification of an agency official as the goal leader responsible for achieving the goal. Agencies provided information about each of these requirements for all of the 102 APGs on Performance.gov included in our assessment—which represents an important accomplishment in the development of priority goals.\nFigure 1 illustrates how information on Performance.gov for one of OPM’s priority goals meets the three requirements. The full goal statement for the APG provides a targeted level of performance to achieve (“participation of at least 2 multi-state health plans in State Affordable Insurance Exchanges”) within a 2-year timeframe (“by October 1, 2013”). The layout of information on Performance.gov shows that this APG supports OPM’s strategic goal to “Improve Access to Health Insurance,” as part of its strategic objective to “contract with multi-state health plans to be offered on affordable insurance exchanges.” Finally, information on the site identifies OPM’s Director of Healthcare and Insurance as the goal leader for this APG.\nAs an additional example, the Social Security Administration (SSA) included information about each of its APGs in an appendix of its fiscal year 2013 performance plan. As shown in figure 2, for SSA’s priority goal to ensure faster hearing decisions, the plan provides the targeted level of performance (“reduce the average time…to 270 days”) and the timeframe (“by the end of fiscal year 2013”) in the “Priority Goals” column. In the same column, SSA indicated that the goal is linked to performance measure 1.1c, which supports the agency’s strategic goal “Deliver Quality Disability Decisions and Services.” In the “Goal Leaders(s)” column, SSA identifies the Executive Coordinator for Backlog Initiatives in the Office of Disability Adjudication and Review.\nSSA’s strategic plan for fiscal years 2013 to 2016 also identifies its APGs and how each supports an agency strategic goal. Figure 3 provides a table from the strategic plan that presents a list of goals that support each of its strategic goals and denotes those that are APGs with an asterisk.\nOur past work has shown that although the federal government faces a series of challenges that in many instances are not possible for any single agency to address alone, agencies often face a range of challenges and barriers when they attempt to work collaboratively. Our annual reports on duplication, overlap, and fragmentation highlight a number of areas where a more crosscutting approach is needed—both across agencies and within a specific agency.\nWe found that duplication and overlap occur because programs have been added incrementally over time to respond to new needs and challenges, without a strategy to minimize duplication, overlap, and fragmentation among them. Also, there are not always interagency mechanisms or strategies in place to coordinate programs that address crosscutting issues, which can lead to potentially duplicative, overlapping, and fragmented efforts. GPRAMA establishes a new framework for taking a crosscutting and integrated approach to improving government performance, and effective implementation of that framework could play an important role in clarifying desired outcomes, addressing performance that spans multiple organizations, and facilitating actions to reduce unnecessary overlap, duplication, and fragmentation.\nTwo provisions in GPRAMA, in particular, direct agencies to link their APGs with crosscutting federal efforts. First, the act requires agencies to identify federal organizations, program activities, regulations, policies, and other activities—both internal and external to the agency—that contribute to each of their APGs and include this information in their performance plans and provide it to OMB for publication on Performance.gov. In addition, OMB’s 2012 guidance directs agencies to include tax expenditures in their identification of organizations and programs that contribute to their APGs, as part of their updates to Performance.gov. Since 1994, we have recommended greater scrutiny of tax expenditures, as periodic reviews could help determine how well specific tax expenditures work to achieve their goals and how their benefits and costs compare to those of programs with similar goals. Second, APGs are to be informed by the CAP goals. The act also requires agencies to demonstrate in their performance plans any alignment between their performance goals—including their APGs—and the CAP goals. Both of these provisions are important because they show how agencies are coordinating efforts toward a common crosscutting issue. As we have previously reported, uncoordinated program efforts can waste scarce funds, confuse and frustrate program customers, and limit the overall effectiveness of the federal effort.\nAgencies identified at least one internal contributor for each of their APGs, though agencies differed in the amount of detail they provided. For example, the National Science Foundation (NSF), as shown in figure 4, identified its Directorate of Engineering as a lead organization and its Innovation Corps activities and programs as contributing programs to its APG to increase the number of entrepreneurs emerging from university laboratories.\nDOT, in its fiscal year 2013 performance plan, organized the descriptions of its planned performance—including its APGs—into broad themes under its strategic goals. As shown in figure 5, DOT identified the operating administrations, activities, enabling legislation, regulations, and other resources that contribute to each theme.\nSimilarly, DOT identified on Performance.gov a range of contributing programs to its APG to reduce the risk of aviation accidents (see figure 6).\nAgencies identified external contributors for 73 of the 102 APGs. When they did identify external contributors, agencies differed in the amount of detail they provided. The Department of State (State), for instance, identified in its fiscal year 2013 congressional budget justification external contributors for six of the eight APGs it jointly developed with the U.S. Agency for International Development (USAID). These external contributors are generally at the department/agency, component, or program level, such as the Department of Defense (DOD), the Department of Justice’s Office of Overseas Prosecutorial Development Assistance and Training, and the Department of Justice’s International Criminal Investigative Training Assistance Program, respectively (see figure 7).\nSimilarly, State and USAID identified on Performance.gov external contributors to their APG to advance low emissions, climate-resilient development, such as the Department of Agriculture (USDA), the Forest Service (a USDA component), the Environmental Protection Agency, and international governmental and nongovernmental organizations (see figure 8).\nWe did not verify that agencies included all relevant internal and external federal contributors to their APGs. However, it was not always clear why external contributors were not identified for 29 of the 102 APGs. In some instances this could be explained by the goal being internally focused. For example, the Department of the Interior listed no external contributors to its internally-focused APG to “build the next generation of conservation and community leaders by supporting youth employment” at the department. However, our analysis indicates that 8 of the 29 APGs that lack external contributors are related to crosscutting areas that we have identified as at risk of potential fragmentation, overlap, or duplication. For example, NSF did not list any external contributors to its APG to develop a diverse and highly qualified science and technology workforce by having 80 percent of institutions funded through NSF’s undergraduate programs document the extent of use of proven instructional practices by September 30, 2013. Our past work has identified 209 programs across 13 federal agencies that are focused on science, technology, engineering, and mathematics education, some which may have efforts related to those NSF is undertaking for this goal.\nIn addition, our in-depth examination of a sample of 21 APGs indentified several APGs related to our work on fragmentation, overlap, and duplication, including one where not all relevant contributors were identified. As we have previously reported, HUD, USDA, and the Department of the Treasury (Treasury) operate rental housing programs with overlapping purposes, although the products, areas served, and delivery methods differed, and recommended that further collaboration be undertaken and documented in strategic plans and performance plans by these agencies. HUD and USDA generally agreed with the recommendations; Treasury did not provide comments. As illustrated in figure 9, HUD identified two tax expenditures (Treasury) as contributors to its APG targeted at preserving affordable rental housing—the only APG out of all 102 to have tax expenditures identified as external contributors. However, HUD did not identify USDA or its rental housing programs.", "The Department of Commerce (Commerce) and State both have export- related APGs, and noted on Performance.gov that their APGs contribute to the broader CAP goal to double U.S. exports by the end of 2014. However, our analysis indicates that 27 additional APGs appear to support at least one of the 14 interim CAP goals, but agencies did not describe this connection. In part, this could be a result of OMB’s guidance, which does not state the requirement for agencies to show the alignment between their performance goals—including their APGs—and the CAP goals. Instead the guidance directs agencies to refer to Performance.gov, where the quarterly updates for the CAP goals will describe how the agency’s goals contribute to the CAP goal. While in a few instances CAP goals identified contributing APGs, this alignment was not also provided in the corresponding APG information on the site. For example, in the quarterly update published in December 2012, the export CAP goal identified the export-related APGs of Commerce and State—as well as that of USDA—as supporting the CAP goal’s strategies. Unlike Commerce and State, USDA did not describe how its export-related APG supports the broader export CAP goal. According to OMB staff, as the information presented on Performance.gov and its functionality is expanded and enhanced, they expect to cross-reference related pieces of information, which they stated would include the connections between APGs and any related CAP goals.\nWe have reported that communicating the relationship between individual agency goals and outcomes that cut across federal agencies provides an opportunity to clearly relate and address the contributions of alternative federal strategies. In addition, as mentioned above, it is important for agencies to identify areas in which they should be coordinating efforts to meet crosscutting goals, and we have reported that strategic plans and performance plans can be tools for doing so.\nWithout OMB guidance directing agencies to describe how their performance goals—including APGs—support any relevant CAP goals, agencies may not understand the importance of examining how their efforts contribute to broader federal outcomes and planning for those contributions. Similarly, although we did not analyze whether agencies included all relevant internal and external contributors for their APGs, our work on potential areas of fragmentation, overlap, and duplication helped identify several examples where agencies did not list relevant external contributors. In addition, OMB’s review process does not systematically check whether agencies have identified all relevant contributors. This raises questions as to whether larger issues exist with the completeness of agencies’ listings of APG contributors. More importantly, without complete information related to both of these requirements, it is unclear whether agencies have properly planned to coordinate their efforts. As we noted earlier, uncoordinated program efforts can waste scarce funds, confuse and frustrate program customers, and limit the overall effectiveness of the federal effort.", "As noted earlier, agencies are to define a target level of performance to be achieved within a 2-year timeframe for each APG. GPRAMA requires agencies to establish a set of performance measures (called performance indicators in the act), which are used to assess progress toward each goal, at least annually. The act also requires agencies to review and report on progress toward their APGs on at least a quarterly basis. One way agencies can gauge progress this frequently is through the development of interim quarterly performance targets—that is, targets for each quarter that falls within the 2-year period.interim targets for performance measures when more frequent updates of actual performance would provide data of significant value to the federal government, Congress, or program partners at a reasonable level of administrative burden.\nThe Senate committee report that accompanied the bill that ultimately was enacted states that the quarterly performance review requirement for APGs is intended to increase the use of performance information to improve performance and results. Our past work has shown that although agencies collect a significant amount of performance information, they have not consistently used that information to improve management and results. We have previously identified practices for enhancing agency use of performance information, one of which is to communicate performance information, including performance against targets, frequently and effectively. Frequent, regular communication can help managers to inform staff and other stakeholders of their commitment to achieve the agency’s goals and to keep these goals in mind as they pursue their day-to-day activities. Frequently reporting progress toward achieving performance targets also allows managers to review the information in time to make improvements. Without related targets, agencies may be unable to demonstrate to key stakeholders, including Congress, program partners, and the public, that they are tracking progress frequently enough to address any performance issues related to their APGs as they arise.\nIn the December 2012 update to Performance.gov, agencies identified 241 performance measures for gauging progress toward 91 of the 102 APGs. For the 11 APGs without performance measures, the agencies stated that the goals are more appropriately measured by milestones. Although OMB’s guidance strongly encourages agencies to use quantitative measures, it allows agencies the flexibility to develop qualitative goal statements that are supported by milestones to assess progress. All 24 agencies have at least one APG with an accompanying performance measure.\nThe frequency with which agencies collect performance information for the measures varies, as illustrated in table 1. Agencies collect and report results on a majority of the measures (166 out of 241, or 69 percent) on at least a quarterly basis. Measuring and reporting results this frequently represents substantial progress in agencies’ ability to use performance information in a timelier manner to pinpoint and act on improvement opportunities. Previously, GPRA required agencies to report their performance on an annual basis.\nFigure 10 illustrates one of the two measures the Department of Health and Human Services (HHS) identified for its APG to increase the number of health centers certified as Patient Centered Medical Homes. The measure is the percent of health centers with at least one site recognized as a Patient Centered Medical Home. HHS provided interim performance targets for each quarter of the goal period, beginning with an interim target of 4 percent in the first quarter of fiscal year 2012, with subsequent targets increasing toward the final target of 25 percent by the fourth quarter of fiscal year 2013. In addition, HHS reported its progress toward those interim targets on a quarterly basis.\nIn other cases, agencies did not provide interim targets to show the level of performance expected for each underlying measure. For a majority of their measures (136 or 56 percent), agencies provided interim targets that align with their measures (e.g. quarterly targets for quarterly measures for each quarter during the 2-year period of the goal). For example, similar to the HHS example above, for 90 measures agencies provided quarterly targets to be achieved through the end of the goal period (fourth quarter of fiscal year 2013) for each measure. But for 77 measures (32 percent), agencies provided interim targets that align with their measures for only a portion of the 2-year timeframe. Finally, for 28 measures (12 percent), agencies did not provide interim targets that align with their measures for any portion of the 2-year timeframe.\nAs previously stated, GPRAMA requires agencies to develop interim quarterly performance targets for their measures if more frequent updates of actual performance would provide data of significant value to the federal government, Congress, or program partners at a reasonable level of administrative burden. While OMB’s 2012 A-11 guidance provides a definition of “reasonable administrative burden,” it does not define what constitutes “data of significant value.” Therefore it may be unclear to agencies when it would be appropriate to develop these targets. Furthermore, the guidance does not mention the interim quarterly performance target requirement. OMB staff told us that they expect agencies to provide such targets, and that they have communicated this expectation to agencies. OMB staff shared with us the user guide they developed for agencies to input data for publication on Performance.gov. According to the guide, indicators should include a target for each reporting period.", "The act requires each APG to have clearly defined quarterly milestones— scheduled events signifying the completion of a major deliverable or a set of related deliverables or a phase of work. Similar to performance measures, OMB’s guidance states that milestones will follow fiscal year quarters and notes that agencies may choose monthly milestones if preferred. In addition, a draft guide developed by the PIC describes characteristics of a good milestone, such as articulating concrete actions to be taken and being time-bound.\nMilestones can help agencies demonstrate that they have clear and fully developed strategies and are tracking progress to accomplish their goals. Such strategies, as identified in our past work, should (1) identify specific actions agencies are taking or plan to take to carry out their missions, (2) outline planned accomplishments, and (3) provide a schedule for their completion. Milestones can help show the connection between agencies’ day-to-day activities and their goals. In addition, by describing the strategies to be used to achieve results, including clearly defined milestones, and the resources to be applied to those strategies, agencies can provide information that would help key stakeholders, including Congress, better understand the relationship between resources and results. Without clearly defined milestones, agencies may have difficulty demonstrating that they have properly planned the actions needed, and are tracking progress, to accomplish their APGs.\nFor 63 of the 102 APGs, agencies identified on Performance.gov clearly- defined milestones for both the near term (presented as “Next Steps,” with a scheduled completion date in the next fiscal quarter) and longer term (presented as “Future Actions,” covering the remainder of the goal period). Figure 11 provides an illustrative example of an APG with both near-term and longer-term milestones. For its goal to improve awareness of VA services and benefits by increasing the timeliness and relevance of online information available to veterans, service members, and eligible beneficiaries, VA provided milestones scheduled for completion in the second quarter of fiscal year 2013 (near term) and the fourth quarter of fiscal year 2013 (the end of the goal period).\nAgencies did not always identify the quarterly milestones they planned to accomplish in order to achieve their APGs during the 2-year goal period. Furthermore, the presentation of information about milestones on Performance.gov does not always convey the time frames for expected action. For the remaining 39 goals, agencies did not provide specific completion dates in discussions of near-term or longer-term plans (or in some cases both) for accomplishing the goal. As figure 12 illustrates, the Small Business Administration (SBA) provided planned actions it intends to take in the near term and longer term to help accomplish its APG to process disaster applications efficiently. However, it is unclear when SBA intends to complete these actions.\nOMB’s 2012 A-11 guidance does not adequately reflect that clearly- defined milestones should have scheduled completion dates and be publicly reported. The guidance states that APGs must have quarterly milestones to track progress, and it outlines the time frames that near- term and longer-term milestones should cover. However, the guidance does not state that agencies should provide specific completion dates for their milestones. In addition, contrary to GPRAMA, the guidance also states that agencies’ presentations of near-term milestones in the quarterly updates on Performance.gov are optional. When we asked OMB staff about this, they agreed that the designation of near-term milestones as optional for the quarterly updates was an error in A-11 guidance; it should have been required. They told us they intend to correct this error in the 2013 A-11 guidance. OMB staff further stated that OMB has communicated to agencies that near-term milestones are to be included in quarterly updates to Performance.gov in other ways. For example, the Performance.gov user guide states that “agencies will summarize how they plan to improve progress…and will include key milestones planned” for the near term, as part of the “Next Steps” portion of the APG information. Without clear and consistent guidance about developing and publishing milestones with clear completion dates, agencies may continue to omit key information about the actions they plan to undertake to accomplish their goals.", "Only 1 of the 24 agencies that developed APGs described how those goals reflect input from congressional consultations. GPRAMA states that APGs are to reflect the highest priorities of the agency as determined by the head of the agency and informed by consultations with Congress. Agencies are to consult with their relevant appropriations, authorization, and oversight committees when developing or making adjustments to their strategic plans, including their APGs, at least once every 2 years. Regarding this requirement, OMB’s guidance highlights that agencies should specifically consult with Congress on priority goal issue areas, and suggests agencies could start discussions of their next set of priority goals in the context of providing Congress an update on progress on the current APGs.\nThe act also requires agencies to describe how input provided during congressional consultations was incorporated for each agency priority goal on Performance.gov. In addition, agencies are to similarly describe in their strategic plans how input from congressional consultations was incorporated into their goals. Without this information, it will be difficult to know whether an agency’s goals reflect congressional input, and therefore if the goals will provide useful information for congressional decision making.\nIn the December 2012 update to Performance.gov, agencies provided information about how they engaged stakeholders during their goal development processes. Although 19 agencies stated that they included Congress as part of their stakeholder engagement, only SBA provided information about the input it received on its APGs from those consultations, as shown in figure 13.\nTwo agencies, DOD and DOT, broadly mentioned that congressional input on agency goals was incorporated as appropriate. Education took a different approach and provided information about how it engaged stakeholders, including Congress in several instances, for each of its APGs. However, none of these agencies provided specific information on the input that was received or how it was incorporated.\nSeveral agencies also provided broad descriptions of their consultations in their strategic plans. For example, VA states in its plan that in November 2011 it initiated the process for consulting with Congress regarding the development of its agency priority goals and the VA strategic plan. Additionally, in the SSA strategic plan, the agency mentioned developing its plan in consultation with employees, stakeholders, advisory groups, and Congress. However, in none of these instances did agencies provide any further details about how these consultations influenced their strategic plans, including their APGs.\nOMB’s 2011 guidance, which covered the development of APGs for 2012 to 2013, stated that agencies should consult with Congress on priority OMB staff told goal issue areas, prior to submitting draft goals to OMB.us that agencies formed a working group on consultations and OMB staff worked with agencies on how to do the consultations well. However, OMB staff also told us that agencies were generally not comfortable publishing the input they received from Congress during their consultation for a variety of reasons, such as a reluctance to characterize competing or conflicting congressional interests.\nHowever, without such information, it is unclear that agencies have adequately engaged Congress and appropriately incorporated congressional feedback into their APGs. The consultation process was established by GPRA in 1993 so that agencies could take congressional views into account as appropriate. But as noted in the Senate committee report that accompanied the bill that ultimately became GPRAMA, little evidence existed that agencies had formally or significantly considered the input of key stakeholders when developing goals. The requirement for agencies to describe how congressional input was incorporated into their goals was intended to strengthen the consultation process.\nOur past work has noted the importance of considering Congress a partner in shaping agency goals. Successful consultations can create a basic understanding among stakeholders of the competing demands that confront most agencies, the limited resources available to them, and how those demands and resources require careful and continuous balancing. We have also reported that agency consultations with Congress on the identification of priority goals presents an opportunity to develop such an understanding, especially given Congress’s role in setting national Although priorities and allocating the resources to achieve them.constructive communication across the branches of government can prove difficult, it is essential for sustaining federal performance improvement efforts. Consultations provide an important opportunity for Congress and the executive branch to work together to ensure that agency missions are focused; goals are specific, results-oriented, and address congressional concerns about performance; and strategies and funding expectations are appropriate and reasonable.", "Our prior audit work and in some instances that of relevant agency inspectors general provide additional perspective on the capacity of DHS, DOT, HUD, OPM, and VA to achieve their APGs. Our comments on each of these goals can be found in Appendixes II (DHS), III (HUD), IV (DOT), V (VA), and VI (OPM). Given the breadth of issues dealt with by these goals, our comments for each goal cover a range of topics.\nDespite this variation, several goals suggested that agencies continue to grapple with a common challenge from our past work related to measuring progress toward their goals and ensuring that the related performance data are accurate. For example, related to both HUD’s and VA’s APGs to assist in housing and reducing the number of homeless veterans, we have previously reported that HUD and VA lack key data on the population of homeless women veterans, including their characteristics and needs. This hampers VA’s ability to plan services effectively. In December 2011, we recommended that HUD and VA should collaborate to ensure appropriate data are collected and use these data to strategically plan for services. VA concurred with this recommendation and, in April 2013, stated that it had taken additional actions to inform policy and operational decisions about homeless and at- risk women veterans. For example, VA stated that it worked with HUD to ensure that gender specific data were collected during the 2013 Point in Time count of homeless persons. In another example related to DOT’s APG to reduce roadway fatalities, our past work has indicated that the quality of state traffic safety data systems varied across the six data systems maintained by states. In April 2010, we recommended that the National Highway Traffic Safety Administration (NHTSA) take steps to ensure that traffic records assessments provide an in-depth evaluation that is complete and consistent in addressing quality across all state traffic safety data systems. In response, NHTSA has taken a number of steps intended to improve the quality of the assessments and the data systems, and as of spring 2013, these efforts continue.", "Many of the meaningful results that the federal government seeks to achieve cannot be realized without effective coordination and collaboration both within and across agencies. Recognizing this, Congress and the executive branch established a new crosscutting and integrated approach for focusing on results and improving government performance with the passage and enactment of GPRAMA. The act’s requirements related to the development of APGs, along with more frequent reviewing and reporting of progress towards them, have the potential to address crosscutting and other federal performance management challenges our past work has identified.\nOMB and the PIC provided significant support to agencies during their development of APGs. For example, in 2011 and 2012, OMB developed and provided to agencies detailed guidance and memorandums to explain GPRAMA’s requirements and OMB’s expectations for APGs. In addition, the PIC formed the Goal Setting Working Group to assist agencies in setting their 2012 to 2013 APGs, and developed draft guides related to selecting APGs and developing milestones. Given these past efforts, both OMB and the PIC will have an important role moving forward to help ensure that agencies fully develop their APGs.\nAgencies have implemented key provisions related to their APGs. However, they have not always provided information about coordination and collaboration for crosscutting efforts. Agencies also did not always identify external contributors to their APGs. OMB’s review process for publishing APG information on Performance.gov checks to make sure agencies have identified at least one contributor, but it does not verify that agencies have identified all appropriate contributors. In addition, most agencies did not describe how their APGs contribute to CAP goals. OMB’s guidance does not adequately reflect that agencies should describe this linkage. Revised guidance could help ensure that agencies are aware of this requirement and provide information accordingly. Further, without providing information about external contributors or how APGs contribute to CAP goals, it is unclear whether agencies have adequately planned to address performance that spans multiple organizations, thereby putting these efforts at risk for duplication, overlap, and fragmentation and potentially wasting scarce funds and limiting the effectiveness of federal efforts.\nThe requirement for agencies to review progress made toward their APGs on a quarterly basis is intended to increase agencies’ use of the significant amount of performance information they collect. This, in turn, can help agencies to improve their performance and results in a more timely manner—a challenge our work has previously highlighted. Agencies generally developed performance measures, and collect information more frequently than in the past. This shows promise for their ability to use this information to support more timely decision making, especially when improvements are needed. However, agencies did not always identify related interim performance targets. This could be because OMB’s A-11 guidance does not mention the interim quarterly performance target requirement or define when it would provide data of significant value and therefore be required, although other OMB guidance directs agencies to develop these targets. By revising its guidance documents to consistently include this information, OMB could help ensure that agencies are meeting its expectation (and the requirement) that agencies identify interim performance targets for their APGs when doing so would provide data of significant value. Without clear targets, which enable a comparison of results against planned performance, it is unclear if agency managers have the information they need to determine if they are making sufficient progress toward each APG—a practice our past work has shown can actually lead to increased use of information and improved results. In addition, by not providing targets, key stakeholders have little assurance that an agency is actively managing its performance to make progress towards its APGs on a quarterly basis, thereby limiting oversight and accountability opportunities.\nGPRAMA requires agencies to develop clearly defined quarterly milestones for their APGs, which can help demonstrate that agencies have identified concrete actions needed to accomplish their goals and when those actions should be taken. However, agencies did not consistently publish milestones with scheduled completion dates, thereby missing an opportunity to assure the public and key stakeholders that they have appropriate strategies in place to achieve their APGs. Although OMB’s 2012 A-11 guidance directs agencies to develop quarterly milestones for their APGs and outlines near-term and longer-term timeframes those milestones should cover, the guidance does not state that agencies should provide specific completion dates for their milestones. In addition, the guidance does not adequately reflect that GPRAMA requires these milestones to be published on Performance.gov due to an error. Although OMB has provided additional direction to agencies about publishing milestones, revising its A-11 guidance to correct the error would ensure that its direction to agencies is consistent and clear.\nAgencies should consult with Congress as a partner in developing their goals, in part to ensure that the resulting performance information is useful for congressional and executive branch decision making. Agencies’ consultations with Congress on their APGs provide opportunities for both parties to gain a better understanding of the competing demands that both confront and how those demands and limited resources require careful and continuous balancing. However, most agencies did not provide information about how they incorporated any views or suggestions obtained through congressional consultations when developing their goals. This lack of information leaves it unclear as to whether agencies made serious attempts to engage with Congress on identifying the agencies’ highest priorities for improved performance.", "To ensure that agencies fully develop their APGs, we make the following seven recommendations to the Director of OMB.\nTo ensure that agencies can (1) compare actual results to planned performance on a more frequent basis, as appropriate, and (2) demonstrate how they plan to accomplish their goals as well as contribute to the accomplishment of broader federal efforts, we recommend the Director of OMB revise relevant guidance documents to provide a definition of what constitutes “data of significant value;” direct agencies to develop and publish on Performance.gov interim quarterly performance targets for their APG performance measures when the above definition applies; direct agencies to provide and publish on Performance.gov completion dates, both in the near term and longer term, for their milestones; and direct agencies to describe in their performance plans how the agency’s performance goals—including APGs—contribute to any of the CAP goals.\nWhen such revisions are made, we recommend the Director of OMB work with the PIC to test and implement these provisions.\nIn addition, as OMB works with agencies to enhance Performance.gov to include additional information about APGs, we recommend that the Director of OMB ensure that agencies adhere to OMB’s guidance for website updates by providing complete information about the organizations, program activities, regulations, tax expenditures, policies, and other activities—both within and external to the agency—that contribute to each APG; and a description of how input from congressional consultations was incorporated into each APG.", "We provided a draft of this report for review and comment to the Director of OMB and the five agencies covered by our in-depth review of APGs (DHS, DOT, HUD, VA, and OPM). All six agencies provided technical comments, which we incorporated as appropriate.\nIn oral comments, staff from OMB’s Office of Performance and Personnel Management agreed with the recommendations in our report.\nIn its written comments, reproduced in appendix VII, VA concurred with the conclusions of our report and provided additional information about its strategic plan, and related performance measurement efforts, to reduce its backlog of compensation claims. However, as VA acknowledges in its comments, the plan does not provide individual performance goals and metrics for all initiatives, which we believe are necessary for VA to ensure it is spending its limited resources on proven methods to speed up disability claims and appeals processes.\nWe also sought comments from relevant agencies covered by the illustrative examples used in this report. We received such comments from Commerce, NSF, SBA, State, and USAID, and incorporated them as appropriate.\nWe are sending copies of this report to the Acting Director of OMB and the heads of the 24 agencies that developed APGs as well as interested congressional committees and other interested parties. This report will also be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-6806, or [email protected]. Specific questions about our comments on the sample of APGs contained in appendixes II through VI may be directed to the contact listed for each goal. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of our report. Key contributors to this report are listed in appendix VIII.", "The GPRA Modernization Act of 2010 (GPRAMA) requires us to review the act’s implementation at several critical junctures, and this report is part of a series of reviews planned around the requirement. Our specific objectives for this report were to (1) examine the extent to which agencies have implemented selected planning and reporting requirements and leading practices related to agency priority goals (APG); and (2) comment on the priority goals of several selected agencies based on our prior work and that of relevant agency inspectors general (IGs) and identify our relevant open recommendations and matters for congressional consideration.\nTo address both objectives, we reviewed information about the APGs published on Performance.gov in February 2012 and updated in December 2012, as well as the updated strategic plans and performance plans agencies published in 2012 to reflect GPRAMA requirements. To assess the reliability of information presented on Performance.gov we reviewed relevant documentation and interviewed Office of Management and Budget (OMB) staff about data quality control procedures. We determined that the data were sufficiently reliable for the purposes of this report.\nIn addition, for the first objective, we reviewed and assessed the implementation of selected planning and reporting requirements for 102 of the 103 APGs developed by the 24 agencies selected by OMB and that were released concurrently with the President’s fiscal year 2013 budget on Performance.gov.requirements we used to assess implementation included whether the goal: (1) supports a federal government priority goal (also known as cross-agency priority or CAP goals); (2) contributes to agency strategic goals; (3) reflects input from congressional consultations; (4) identifies the federal organizations, program activities, regulations, policies, and other activities—both within and external to the agency—that contribute to the APG; (5) has a clearly identified agency official as the goal leader; (6) has targets for a 2-year timeframe; (7) has interim quarterly targets; and (8)\nThe key GPRAMA planning and reporting has clearly defined quarterly milestones. In addition to the requirements of GPRAMA, our assessment of the extent of implementation was also informed by the Senate committee report accompanying GPRAMA, relevant OMB guidance, and our past work on how to effectively implement GPRA.\nTo address the second objective, we selected 5 of the 24 agencies that developed APGs—the Departments of Homeland Security (DHS), Housing and Urban Development (HUD), Transportation (DOT), and Veterans Affairs (VA), and the Office of Personnel Management (OPM)— based on several factors, including the number and variety of types of federal programs involved in achieving the goals, such as direct service, grant, and regulatory programs, and whether the APGs were related to any of the CAP goals. We then reviewed the work that we and relevant IGs have conducted over a number of years related to each of the 21 APGs developed by the 5 agencies. Because the 21 APGs are a non- generalizable sample of all APGs, our views on those APGs cannot be generalized to the entire universe but provided insights about each of the 21 APGs, as well as a theme common to several APGs. We also updated the status of related key open recommendations and matters for congressional consideration We conducted our performance audit from July 2012 to April 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Based on our past work, as well as that of the DHS IG, we commented on each of DHS’s three priority goals for 2012 to 2013: 1. Ensure resilience to disasters by strengthening disaster preparedness and response capabilities. By September 30, 2013, every state will have a current, DHS-certified threat, hazard, identification and risk assessment (THIRA). 2. Improve the efficiency of the process to detain and remove criminal aliens from the United States. By September 30, 2013, reduce the average length of stay in immigration detention of all convicted criminal aliens prior to their removal from the country by 5 percent. 3. Strengthen aviation security counterterrorism capabilities by using intelligence driven information and risk-based decisions. By September 30, 2013, the Transportation Security Administration will expand the use of risk-based security initiatives to double the number of passengers going through expedited screening at airports, thereby enhancing the passenger experience.\nFor each goal, we also identify our related past reports and provide an update on the status of any open recommendations and matters for congressional consideration that we previously made related to the goal. We also identify a GAO contact for our work related to each goal.", "Ensure resilience to disasters by strengthening disaster preparedness and response capabilities. By September 30, 2013, every state will have a current, DHS-certified threat, hazard, identification, and risk assessment.", "Our past work has identified a number of challenges DHS faces in achieving its goal of strengthening disaster preparedness and response capabilities including challenges associated with efforts to measure national preparedness capabilities and assess the impact of preparedness grant funding. These efforts involve the Federal Emergency Management Agency’s (FEMA) preparedness grants.\nFEMA provides state and local governments with funding in the form of grants to enhance the capacity of state and local emergency responders to prevent where possible, respond to, and recover from natural disasters and terrorism incidents involving chemical, biological, radiological, nuclear, or explosive devices, or cyber attacks. States and urban areas are required to conduct a THIRA as a condition of receiving preparedness grant funding under programs including the State Homeland Security Program, Emergency Management Performance Grant Program and Urban Area Security Initiative grant program.\nDepartment of Homeland Security, Federal Emergency Management Agency, Threat and Hazard Identification and Risk Assessment Guide Comprehensive Preparedness Guide (CPG) 201 First Edition, (Washington, D.C., April 2012.) completed their THIRAs. FEMA granted 6-month extensions to the December 31, 2012, deadline for five states and three local urban areas affected by Hurricane Sandy in late October 2012.", "In March 2011, we suggested that Congress may wish to consider limiting preparedness grant funding to maintaining existing capabilities (as determined by FEMA) until FEMA completes a national preparedness assessment of capability gaps at each level of government based on tiered, capability-specific performance objectives to enable prioritization of grant funding. In April 2011, Congress passed the Continuing Appropriations Act that reduced funding for FEMA preparedness grants by $875 million from the amount requested in the President’s fiscal year 2011 budget. In December 2011, Congress passed the Consolidated Appropriations Act for fiscal year 2012 that reduced funding for FEMA preparedness grants by $1.28 billion from the amount requested in the President’s fiscal year 2012 budget.\nIn March 2011, we also suggested that FEMA should complete a national preparedness assessment of capability gaps at each level based on tiered, capability-specific performance objectives to enable prioritization of grant funding, and FEMA could identify the potential costs for establishing and maintaining those capabilities at each level and determine what capabilities federal agencies should provide. In June 2012, the DHS OIG reported that FEMA did not have a system in place to determine the extent that Homeland Security Grant Program funds enhanced the states’ capabilities to prevent, deter, respond to, and recover from terrorist attacks, major disasters, and other emergencies before awarding more funds to the states. As of March 2013, FEMA has not yet completed a national preparedness assessment of capability gaps at each level. According to FEMA officials, the urban area, state, territorial, and tribal nation THIRAs that were due December 31, 2012 will serve as the basis for assessing national preparedness capabilities and gaps. FEMA will coordinate the review and analysis by a THIRA Analysis and Review Team. The team has begun meetings to discuss the common themes and findings and develop an initial proposed list of priorities for building and sustaining the core capabilities and update the proposed list of priorities as needed. These actions are part of the overall process for THIRA analysis and review, which FEMA officials said will help them develop guidance for developing capabilities to meet national priorities.\nIn July 2009, we recommended that the FEMA Administrator should develop and implement measures to assess how regional collaboration efforts funded by Urban Area Security Initiative grants build preparedness capabilities. FEMA contracted the National Academy of Public Administration to provide recommendations for quantifiable performance measures to assess the effectiveness of the State Homeland Security Program and Urban Area Security Initiative grants. The National Academy of Public Administration issued its report in October 2011 and FEMA released the report in April 2012. The report recommends that FEMA conduct an assessment of collaborative approaches, in coordination with local jurisdictions, states, regions, and urban areas, and use the results to develop a scoring system for future quantitative or qualitative performance measures on collaboration. As of March 2013, FEMA has not yet taken action in response to this recommendation. However, according to FEMA officials, the THIRA process, along with planned coordination meetings with urban area, state, tribal, and territorial officials will likely result in data that they can use to develop collaboration- related performance metrics.\nFEMA indentified the “percent of high priority core planning capabilities rated as proficient by states and territories” as a measure of the agency’s progress in achieving its priority goal. This measure reports the percent of high priority core capabilities related to planning that states and territories rate as proficient. According to FEMA, this information is gathered from the SPRs (annual self-assessments by states and territories of their levels of preparedness.) However, as we reported in October 2010, FEMA officials stated, while the SPRs had enabled FEMA to gather data on the progress, capabilities, and accomplishments of a state’s, the District of Columbia’s, or a territory’s preparedness program, these reports include self-reported data that may be subject to interpretation by the reporting organizations in each state and not be readily comparable to other states’ data. The officials also stated that they had taken steps to address these limitations, for example by creating a web-based survey tool to provide a more standardized way of collecting state preparedness information that will help them validate the information by comparing it across states. However, since April 2009, FEMA has made limited progress in assessing preparedness and capabilities and has not yet developed national preparedness capability requirements based on established metrics to provide a framework for these assessments, as we reported in March 2012.", "National Preparedness: FEMA Has Made Progress in Improving Grant Management and Assessing Capabilities, but Challenges Remain. GAO- 13-456T. Washington, D.C.: March 19, 2013.\nManaging Preparedness Grants and Assessing National Capabilities: Continuing Challenges Impede FEMA’s Progress. GAO-12-526T. Washington, D.C.: March 20, 2012.\nFollow-up on 2011 Report: Status of Actions Taken to Reduce Duplication, Overlap, and Fragmentation, Save Tax Dollars, and Enhance Revenue. GAO-12-453SP. Washington, D.C.: February 28, 2012.\nGovernment Operations: Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue. GAO-11-318SP. Washington, D.C.: March 1, 2011.\nFEMA Has Made Limited Progress in Efforts to Develop and Implement a System to Assess National Preparedness Capabilities. GAO-11-51R. Washington, D.C.: October 29, 2010.\nUrban Area Security Initiative: FEMA Lacks Measures to Assess How Regional Collaboration Efforts Build Preparedness Capabilities. GAO-09-651. Washington, D.C.: July 2, 2009.\nNational Preparedness: FEMA Has Made Progress, but Needs to Complete and Integrate Planning, Exercise, and Assessment Efforts. GAO-09-369. Washington, D.C.: April 30, 2009.", "Stephen L. Caldwell, Director, Homeland Security and Justice Issues, [email protected], (202) 512-8777.", "Improve the efficiency of the process to detain and remove criminal aliens from the United States. By September 30, 2013, reduce the average length of stay in immigration detention of all convicted criminal aliens prior to their removal from the country by 5 percent.", "Our past work does not provide a basis to assess DHS’s ability to improve the efficiency of the process to detain and remove criminal aliens from the United States. DHS has reported progress toward achieving this priority goal since fiscal year 2010. The DHS annual performance report for fiscal years 2011 to 2013—which also serves as the agency’s annual performance plan—showed that the agency reduced the length of stay in detention of all convicted criminal aliens prior to removal from the United States from 37 days in fiscal year 2010 to 34.7 days in fiscal year 2011. This represents a decline of over 6 percent compared to the priority goal target to reduce the length of stay by 5 percent. DHS attributed this decrease in part to expanded detention capacity in locations where detainee transfers occur most often, as the need to transfer a detainee from a facility in one location to another location increased the average length of stay by approximately 14 days. The DHS strategic plan for fiscal years 2012 to 2016 shows planned targets to maintain the same number of days (35) in fiscal years 2012, 2013, and 2016. Similarly, the DHS annual performance report for fiscal years 2011 to 2013 shows the same planned target of less than or equal to 35 days for both fiscal year 2012 and fiscal year 2013. DHS reported that it continues to focus on the development of a detention system that has the right number and type of facilities in the right locations to align with enforcement and removal activities. DHS reported making improvements in prior years, but noted that various challenges, such as case backlogs, could inhibit success in achieving further improvements in length of stay requirements. For example, maintaining the average length of stay for criminal aliens at, or slightly below, 35 days in the long term may require the hiring of additional immigration judges, according to DHS.", "We currently have no open recommendations or matters for congressional consideration related to this priority goal.", "We currently have no reports related to this priority goal.", "Rebecca Gambler, Director, Homeland Security and Justice Issues, [email protected], (202) 512-6912.", "Strengthen aviation security counterterrorism capabilities by using intelligence driven information and risk-based decisions. By September 30, 2013, the Transportation Security Administration (TSA) will expand the use of risk-based security initiatives to double the number of passengers going through expedited screening at airports, thereby enhancing the passenger experience.", "TSA’s goal is stated in broad terms; consequently, quantitatively measuring progress toward meeting the goal of strengthening aviation security counterterrorism capabilities will be a challenge. Further, the stated performance measure, with its focus on expedited passenger screening, will not allow TSA to assess its progress in using intelligence driven information and risk-based decisions to meet this goal in other related areas, such as in screening checked baggage or air cargo. TSA, as a component of DHS, relies upon multiple layers of security to deter, detect, and disrupt persons posing a potential risk to aviation security. These layers focus on screening millions of passengers and pieces of carry-on and checked baggage, as well as tons of air cargo, on a daily basis. Our past work has analyzed TSA’s progress in implementing these security measures and identified challenges it has encountered in implementing cost-effective aviation security programs and measuring performance.\nTo help achieve its priority goal of strengthening aviation security counterterrorism capabilities by using intelligence driven information and risk-based decisions, TSA officials stated that the agency will, among other steps, expand the use of its new “TSA Pre✓™” program to double the number of passengers going through expedited screening at airports by September 30, 2013. TSA introduced TSA Pre✓™ in October 2011, and plans on expanding it to 40 airports by March 2013. Based on current participation, frequent flyers of five airlines as well as individuals enrolled in other departmental trusted traveler programs—where passengers are pre-vetted and deemed a trusted traveler—are eligible to be screened on an expedited basis. This program is intended to allow TSA to focus its resources on higher risk travelers. Agency officials have reported that with the deployment of this program and other risk-based security initiatives, such as modifying screening procedures for passengers 75 and over and active duty service members, TSA has achieved its stated goal of doubling the number of passengers going through expedited screening. According to TSA, by the end of calendar year 2013, TSA will provide expedited screening to 25 percent of the individuals currently processed through security screening. Achieving this target will mean that approximately 450,000 of the 1.8 million passengers who travel on average each day from the nation’s airports will undergo some form of expedited screening. However, since this goal is focused on passenger screening, it will not allow TSA to assess its progress in using intelligence driven information and risk-based decisions in other areas to achieve the broader outcome of strengthening aviation security counterterrorism capabilities, such as in screening checked baggage or air cargo. We plan to initiate a review of TSA’s progress in implementing TSA Pre✓™ in 2013.\nIn our past work, we found that TSA has taken steps to implement aviation security mechanisms that are more intelligence-driven and risk- based. For example, TSA implemented the Secure Flight program to allow it to focus resources on high risk passengers by vetting passengers’ names, dates of birth, and other information against terrorist watch lists. In May 2009, we reported that TSA had made significant progress in developing the Secure Flight program but also noted that it faced challenges in identifying passengers who might use false identifying information. We also assessed TSA’s efforts to implement a behavior detection program that seeks to selectively identify potentially high-risk passengers for additional screening. Our May 2010 report found that while TSA has taken actions to validate the science underlying the program and improve performance measurement, among other actions, more work remains to ensure the program’s effectiveness, such as developing comprehensive program performance measures. In March 2012, we reported that questions related to the program will remain until TSA demonstrates that using behavior detection techniques can help secure the aviation system against terrorist threats. TSA plans to or is currently implementing a number of other behavior based programs that we plan to report on in 2013.", "In November 2012, we recommended that TSA take steps to improve its oversight of air passenger screening complaint processes, by establishing (1) consistent policies for receiving complaints and informing passengers about complaint processes, (2) a process to systematically analyze information on complaints, and (3) a focal point to coordinate these efforts. In its comments on this report, DHS concurred with the recommendations and stated that TSA is taking steps to implement them.\nIn May 2012, we recommended that to help DHS address challenges in meeting the air cargo screening mandate as it applies to air cargo carried on passenger flights inbound to the United States, mitigate potential air cargo security vulnerabilities, and enhance overall efforts to screen and secure inbound air cargo, the Secretary of Homeland Security should direct the Administrator of TSA to assess the costs and benefits of requiring all-cargo carriers to report data on the amount of inbound air cargo screening being conducted. In comments on the May 2012 report, DHS concurred with the recommendation and stated that TSA was working on developing a system that will provide the capability for all- cargo carriers to report data on screened high-risk inbound air cargo shipments. In April 2013, TSA reported that once this system becomes fully operational, these data will be available for each all-cargo carrier.\nIn July 2011, we recommended that TSA develop a plan to deploy explosives detection systems (EDS) that meet the most recent explosives-detection requirements and ensure that new machines, as well as machines deployed in airports, will be operated at the levels established in those requirements. This plan should include the estimated costs for new machines and upgrading deployed machines, and the time frames for procuring and deploying new machines. In commenting on this report, DHS concurred with the recommendation. As of March 2013, TSA has a plan in place to evaluate and implement the most recent certified algorithms on the existing fleet of deployed EDSs. However, our recommendation calls for a plan to deploy new EDSs as well as to upgrade existing EDSs in airports to meet the 2010 EDS explosives detection requirements. Our recommendation was intended to ensure that all EDSs operating in airports meet the most recent requirements, which are currently the 2010 requirements. Consequently, we continue to believe that a plan is needed that describes the approach that TSA will use to deploy EDSs that meet the most recent explosives detection requirements and ensure that all deployed machines will be operated at the levels established in the latest requirements.\nIn May 2010, we recommended that TSA perform a cost benefit analysis of TSA’s behavior detection program known as the Screening of Passengers by Observation Techniques (SPOT), including a comparison of the program with other security screening programs, such as random screening, or other already existing security measures. In commenting on this report, DHS concurred with the recommendation and TSA completed the analysis in December 2012. We are evaluating the cost-benefit analysis as part of ongoing work that we will report on in 2013.\nIn May 2010, we recommended that TSA take steps to better measure the effectiveness of the SPOT program and evaluate the performance of TSA’s behavior detection officers, who implement the program at TSA- regulated airports. We also recommended that TSA establish a plan that includes objectives, milestones, and time frames to develop outcome- oriented performance measures to help refine the current methods used by behavior detection officers for identifying individuals who may pose a risk to the aviation system. In commenting on this report, DHS concurred with the recommendation and completed its plan in November 2012. We are evaluating the plan as part of ongoing work that we will report on in 2013.", "Air Passenger Screening: Transportation Security Administration Could Improve Complaint Processes. GAO-13-43. Washington, D.C.: November 15, 2012.\nAviation Security: Actions Needed to Address Challenges and Potential Vulnerabilities Related to Securing Inbound Air Cargo. GAO-12-632. Washington, D.C.: May 10, 2012.\nAviation Security: TSA Has Enhanced Its Explosives Detection Requirements for Checked Baggage, but Additional Screening Actions Are Needed. GAO-11-740. Washington, D.C.: July 11, 2011.\nAviation Security: Efforts to Validate TSA’s Passenger Screening Behavior Detection Program Underway, but Opportunities Exist to Strengthen Validation and Address Operational Challenges. GAO-10-763. Washington, D.C.: May 20, 2010.\nAviation Security: TSA Has Completed Key Activities Associated with Implementing Secure Flight, but Additional Actions Are Needed to Mitigate Risks. GAO-09-292. Washington, D.C.: May 13, 2009.", "Stephen M. Lord, Director, Homeland Security and Justice Issues, [email protected], (202) 512-4379.", "Based on our past work, as well as that of the HUD IG, we commented on each of HUD’s six priority goals for 2012 to 2013: 1. Improve program effectiveness by awarding funds fairly and quickly.\nBy September 30, 2013, HUD will improve internal processes to ensure that HUD can obligate 90 percent of Notice of Funding Availability (NOFA) programs within 180 calendar days from budget passage, ensuring that America’s neediest families have the shelter and services they need, when they need them. The timely obligation and subsequent disbursement of funds will positively impact the agency’s ability to achieve all of its priority goals. 2. Increase the energy efficiency and health of the nation’s housing stock. By September 30, 2013, HUD will enable a total of 159,000 cost effective energy efficient or healthy housing units, as part of a joint HUD-Department of Energy (DOE) goal of 520,000 in 2012 to 2013 and a total goal of 1.2 million units from 2010 through 2013. 3. Preserve affordable rental housing. By September 30, 2013, preserve affordable rental housing by continuing to serve 5.4 million families and serve an additional 61,000 families through HUD’s affordable rental housing programs. 4. Prevent foreclosures. By September 30, 2013, assist 700,000 homeowners who are at risk of losing their homes due to foreclosure. 5. Reduce vacancy rates. By September 30, 2013 reduce the average residential vacancy rate in 70 percent of the neighborhoods hardest hit by the foreclosure crisis relative to comparable areas. Hardest hit neighborhoods are defined as Neighborhood Stabilization Program (NSP) 2 Neighborhood Investment Clusters (NIC). 6. Reducing homelessness. By September 30 2013, in partnership with the VA, reduce the number of homeless veterans to 35,000 by serving 35,500 additional homeless veterans. HUD is also committed to making progress towards reducing family and chronic homelessness and is working towards milestones to allow for tracking of these populations.\nFor each goal, we also identify our related past reports and provide an update on the status of any open recommendations and matters for congressional consideration that we previously made related to the goal. We also identify a GAO contact for our work related to each goal.", "Improve program effectiveness by awarding funds fairly and quickly. By September 30, 2013, HUD will improve internal processes to ensure that HUD can obligate 90 percent of NOFA programs within 180 calendar days from budget passage, ensuring that America’s neediest families have the shelter and services they need, when they need them. The timely obligation and subsequent disbursement of funds will positively impact the agency’s ability to achieve all of its priority goals.", "Although we have not conducted an in-depth analysis of HUD’s NOFA processes, our recent work and a recent bid protest decision highlight some of the challenges HUD has faced when trying to award funds quickly and the importance of using appropriate processes to award funds. In our bimonthly reviews of selected states’ and localities’ use of funds made available under the American Recovery and Reinvestment Act of 2009 (Recovery Act), we commented on the NOFA process HUD used to award nearly $1 billion in public housing capital funds to public housing agencies based on competition for priority investments, including investments that leveraged private sector funding or financing for renovations and energy conservation retrofit investments. In September 2009, we reported that HUD had received almost 1,800 applications for the funds and that its review process had been slower than expected. According to HUD officials, this was due to the number of applications with lengthy narratives needing review. Further, HUD officials stated that their staff were reviewing these applications while carrying out their ongoing responsibilities related to managing the public housing capital fund program. Despite these challenges, we reported in December 2009 that HUD had met the Recovery Act requirement to obligate all of the funds to public housing agencies by September 30, 2009. Specifically, HUD accepted applications from June 22 to August 18, 2009, and according to a HUD official, 746 housing agencies submitted 1,817 applications for these competitive grants. In September 2009, HUD awarded 396 competitive grants to housing agencies that successfully addressed the NOFA requirements.\nIn addition, a recent bid protest decision highlights the importance of using appropriate processes to award funds regardless of the time involved. On August 15, 2012, we concluded that HUD’s use of a NOFA that resulted in the issuance of a cooperative agreement to obtain services for the administration of Project-Based Section 8 Housing Assistance Payment contracts was improper because the “principal purpose” of the NOFA was to obtain contract administration services for HUD’s direct benefit and use, which should be acquired under a procurement instrument that results in the award of a contract.", "In our August 15, 2012, bid protest decision, we recommended that HUD cancel the NOFA and solicit the contract administration services for the Project-Based Section 8 rental assistance program through a procurement instrument that would result in the award of contracts. In its response, HUD informed us of its intention to proceed with the NOFA and of its plan to make awards. However, as a result of litigation filed in the Court of Federal Claims that sought to enjoin it from proceeding with the NOFA, HUD announced its agreement not to make the awards until the court rules on the matter. As of March 2013, the court had not yet issued its decision.", "Assisted Housing Services Corporation; North Tampa Housing Development Corporation; The Jefferson County Assisted Housing Corporation; National Housing Compliance; Southwest Housing Compliance Corporation; CMS Contract Management Services and the Housing Authority of the City of Bremerton; Massachusetts Housing Finance Agency. B-406738 et al. August 15, 2012.\nRecovery Act: Status of States’ and Localities’ Use of Funds and Efforts to Ensure Accountability. GAO-10-231. Washington, D.C.: December 10, 2009.\nRecovery Act: Funds Continue to Provide Fiscal Relief to States and Localities, While Accountability and Reporting Challenges Need to Be Fully Addressed. GAO-09-1016. Washington, D.C.: September 23, 2009.", "Mathew J. Scirè, Director, Financial Markets and Community Investment, [email protected], (202) 512-8678.", "Increase the energy efficiency and health of the nation’s housing stock. By September 30, 2013, HUD will enable a total of 159,000 cost effective energy efficient or healthy housing units, as part of a joint HUD-DOE goal of 520,000 in 2012 to 2013 and a total goal of 1.2 million units from 2010 through 2013.", "Energy-efficient green building practices can increase up-front costs but also may provide long-term financial, environmental, and health benefits. In prior work, we credit HUD for using accepted energy-efficient green building standards developed by others, such as the Environmental Protection Agency’s (EPA) Energy Star program and the Enterprise Green Communities, as criteria for measuring progress toward its goal. These standards are generally recognized as effective measures of increased energy efficiency. However, our prior work also found that HUD could do more to promote energy efficiency.\nFor example, in October 2008, we found that while HUD’s public housing office had shown leadership and initiative in partnering to develop a benchmarking tool that could be used to identify properties with high levels of utility consumption, HUD’s multifamily assisted housing had no such tool. In the absence of such a tool, HUD cannot target certain multifamily properties for green building improvements, which could result in benefits that include reduced resource consumption. In April 2013, HUD officials told us that they were collaborating with other federal agencies and industry partners to develop such a tool for its multifamily portfolio.\nOur October 2008 report also identifies ways that HUD could better meet its priority goal for cost-effective energy-efficient measures, particularly for water conservation. HUD officials we interviewed identified water conservation savings as significant and among the biggest potential opportunities for financial savings, but HUD had provided few incentive points for water conservation or indoor air quality measures in its competitive grant programs. Since our report, a number of HUD programs have added water savings devices to requirements for new construction and rehabilitation projects. In addition, the Interagency Rental Policy Working Group, which includes HUD, USDA, and Treasury, has adopted requirements for water saving products and energy star appliances for rehabilitation projects.\nAs stated above, HUD’s priority goal is a portion of a larger HUD-DOE joint goal. DOE’s weatherization assistance program is one of the largest residential energy-efficiency programs in the nation and some DOE weatherization grantees also received HUD assistance. HUD officials told us that DOE grantees do not report which weatherization recipients received HUD assistance and HUD grantees are not required to report to HUD whether they received weatherization assistance. Consequently, double counting could occur, although HUD indicated that the likelihood of such double-counting is small. In October 2012, HUD officials told us that they were planning to use the results of a DOE evaluation of its weatherization program to identify any double counting and, if necessary, revise the overall HUD-DOE totals reported previously for 2009 and 2010. In April 2013, HUD officials told us that the data collection portion of DOE’s evaluation was complete and they were awaiting the results from DOE.", "We recommended in October 2008 that HUD ensure the completion of the regulation that would require the use of energy-efficient products and appliances for public housing as directed by the Energy Policy Act of 2005. HUD included the statutory requirement in a proposed rule published in February 2011, but as of March 2013, HUD had not published the final rule.\nWe also recommended in October 2008 that HUD work with DOE to expeditiously implement energy-efficiency updates to the HUD manufactured housing code. Although manufactured housing is not part of HUD’s agency priority goal, we believe that energy-efficiency efforts in this area are directly related to the goal. Manufactured housing is an area in which HUD has significant influence because it has been responsible for establishing manufactured building code requirements since 1974. We found that HUD had not made significant energy efficiency updates to code for this program since 1994. HUD officials told us that pursuant to the requirements of the Energy Independence and Security Act of 2007 which moved responsibility for promulgating manufactured energy efficiency standards to DOE, they intended to wait to make energy- efficiency updates to the code because they were concerned about overlapping agency responsibilities between DOE and HUD. We concluded in October 2008 that waiting to take action could result in years more of some manufactured homes being built without improved energy standards. HUD has worked with DOE in developing more stringent energy standards for manufactured homes. For example, in February 2010, DOE published an advance notice of proposed rulemaking on energy efficient standards for manufactured homes pursuant to the 2007 Act and HUD officials told us that they met with DOE on the proposal. Until the rule is finalized, HUD and DOE will continue to miss an opportunity to improve the energy efficiency of manufactured housing units.\nAdditionally, in October 2008 we recommended that HUD work with DOE’s Oak Ridge National Laboratory and EPA to develop a utility benchmarking tool for multifamily properties. We pointed out that HUD’s public housing office had shown leadership and initiative in partnering to develop a utility benchmarking tool that could be used to identify multifamily properties with high levels of utility consumption, and that HUD’s multifamily assisted housing could benefit from a similar tool that would allow properties to be targeted for green building improvements. In October 2012, HUD officials told us that Oak Ridge’s data tool is now out of date. They added that HUD was actively working with DOE, EPA, Fannie Mae, and industry representatives on a strategy to develop common data inputs and reporting standards for multifamily properties that could lead to a multifamily benchmarking tool. In April 2013, HUD officials told us that they are working to develop a multifamily energy star benchmark that will provide information on building performance on a portfolio basis. However, it is not clear when HUD intends to complete its energy start benchmark. Until such a tool is in place and HUD is able to benchmark utility costs in its multifamily portfolio, HUD will continue to miss opportunities to target less-efficient multifamily properties for green building improvements, and reduce resource consumption and utility expenses for itself and its funding recipients.\nIn November 2011 we recommended that DOE, HUD, and EPA lead an effort to collaborate with other agencies to identify performance information, such as shared goals and common performance measures, for green building initiatives for the nonfederal sector. About one-third of the 94 initiatives we identified have goals and performance measures specific to green building and about two-thirds do not; therefore the results of most initiatives and their related investments in green building are unknown. DOE, HUD, and EPA generally agreed with the recommendation. In November 2012, HUD officials stated that they had met with EPA and DOE representatives to review our recommendation. The agencies generally agreed that initiatives that show potential for collaboration would be best served through existing interagency partnerships. HUD stated that the agencies might explore a higher level of centralized collaboration for the long term, but such efforts would require additional legislative or executive authority to implement.\nIn October 2012, we found that key standards for manufactured homes provide a lower margin of safety against a carbon monoxide exposure incident than those for site built homes. We found that HUD’s ventilation standards establish standards for airflow, not air quality, and recommended that HUD test the performance of its installed ventilation systems and reassess its ventilation standards. Measuring the actual airflow achieved by installed ventilation systems would not only permit HUD to know whether its standards are being met, but also permit HUD to better understand the potential impact ventilation systems may have on indoor air quality and the overall health of the homes. HUD generally agreed with both recommendations and stated that it would bring them before the Manufactured Housing Consensus Committee, which is responsible for recommending proposed rules to HUD, for consideration.", "Manufactured Housing Standards: Testing and Performance Evaluation Could Better Ensure Safe Indoor Air Quality. GAO-13-52. Washington, D.C.: October 24, 2012. 2012 Annual Report: Opportunities to Reduce Duplication, Overlap and Fragmentation, Achieve Savings, and Enhance Revenue. GAO-12-342SP. Washington, D.C.: February 28, 2012.\nGreen Building: Federal Initiatives for the Nonfederal Sector Could Benefit from More Interagency Collaboration. GAO-12-79. Washington, D.C.: November 2, 2011.\nGreen Affordable Housing: HUD Has Made Progress in Promoting Green Building, but Expanding Efforts Could Help Reduce Energy Costs and Benefit Tenants. GAO-09-46. Washington D.C.: October 7, 2008.", "William B. Shear, Director, Financial Markets and Community Investment, [email protected], (202) 512-8678.\nFrank Rusco, Director, Natural Resources and Environment, [email protected], (202) 512-3841.", "Preserve affordable rental housing. By September 30, 2013, preserve affordable rental housing by continuing to serve 5.4 million families and serve an additional 61,000 families through HUD’s affordable rental housing programs.", "HUD’s efforts to achieve this goal involve several HUD programs including the housing choice voucher, public housing, and project-based programs, which are HUD’s key programs for delivering rental assistance.factors that could impact HUD’s ability to meet this goal including the department’s ability to keep property owners in the project-based program and serve additional households.\nOur past work on these programs has identified a number of HUD has implemented recommendations we made in April 2007 to help enhance HUD’s ability to keep project-based property owners in the program. Specifically, we found that although HUD offered several incentives to keep property owners in the program, some property owners, managers, and industry representatives cited concerns with certain HUD policies and practices, especially the one-to-one replacement policy (which prohibited reductions in the total number of program units in a property when a contract was renewed), and the reimbursement process for operating costs in high cost areas. In 2011, HUD modified this policy and revised the way it calculates reimbursement for operating costs. We also found that between 2001 and 2005 owners renewed 92 percent of contracts and 95 percent of units covered by these contracts. Property owners, managers, and industry representatives with whom we spoke as part of our April 2007 report indicated that market conditions were the primary factors in owners’ decisions to leave or remain in the program. Similarly, HUD has implemented a recommendation we made in November 2005 to address late housing assistance payments to landlords, which may encourage owners to participate in HUD’s project-based program. Specifically, in 2007 HUD made improvements to its data, including verifying information on contract renewal dates and project costs, which should help the department more reliably determine the timing and amount of funding needed by the landlords, thereby improving the timeliness of its payments.\nOur work has also identified certain factors that could enhance HUD’s ability to meet its goal to preserve affordable rental housing. For instance, our March 2012 report on the housing choice voucher program identified potential areas that, if implemented, could help HUD reach more renter households. Specifically, excess reserves in the voucher program could be used to serve additional families, if authorized by Congress. In addition, certain rent reform options (that is, changes to the calculation of households’ payment toward rent) may allow HUD to serve more people. For example, if implemented, rent reform could reduce the federal cost burden—in some cases, quite considerably—or if Congress chose to reinvest cost savings in the program, allow the program to serve between 1,400 to 287,000 additional households, depending on which rent reform option was implemented.\nWe also noted that HUD could do more to ensure that certain housing agencies continue to serve households. Specifically, our April 2012 report found that HUD may not be able to systematically ensure that agencies participating in the Moving to Work (MTW) demonstration program are meeting the requirement to serve substantially the same number of households through their rental assistance programs that they would As a result, the program have been able to serve prior to participation.may affect HUD’s ability to meet its goal of preserving affordable rental housing. We found that, contrary to internal control guidance, HUD did not have a process in place to systematically review compliance with several program requirements, including the requirement to serve substantially the same number of households. We concluded that because Congress is considering expanding the program to many more housing agencies, the absence of information needed to conduct compliance reviews is significant. We further stated that without more complete knowledge of the extent to which agencies are adhering to program requirements, it is difficult for Congress to know whether an expanded MTW will benefit additional agencies and the residents they serve.\nMore broadly, as part of our work on overlap, fragmentation, and duplication in federal programs, we reported in August 2012, that although selected HUD, USDA, and the Department of the Treasury (Treasury) rental housing programs had overlapping purposes, the agencies’ products, areas served, and delivery methods differed. Specifically, we found that although HUD is the only agency that has a specific priority goal to preserve affordable rental housing, seven of the nine selected HUD, USDA, and Treasury programs we reviewed have the shared purpose of financing the development of new rental units or preserving existing units through refinancing or rehabilitation. However, we found that five of these programs differ in terms of tenant and geographic eligibility. Additionally, we found that HUD and USDA administer project-based rental assistance programs, which provide rental subsidies to property owners that provide housing to low-income households. We reported that although HUD serves more households in rural areas, a large share of units with USDA’s rental assistance were in rural ZIP codes, while a smaller share of units with HUD rental assistance were in these areas. In addition, we also found that all three agencies have been working to consolidate and align requirements in rental We housing programs through the Rental Policy Working Group.concluded that although its efforts have been consistent with many key collaborative practices, the group has not taken full advantage of opportunities to reinforce agency accountability for collaborative efforts through the agencies’ annual and strategic plans, or expanded its guiding principles to evaluate areas requiring statutory action to generate savings and efficiencies.", "In August 2012, we recommended that to further improve HUD, USDA, and Treasury’s efforts through the Rental Policy Working Group to consolidate and align certain requirements in multifamily housing programs, the Rental Working Group should take steps to document collaborative efforts in strategic and annual plans to help reinforce agency accountability for these efforts. HUD and USDA agreed with the recommendation.\nIn April 2012, we recommended that the Secretary of the Department of Housing and Urban Development develop and implement a systematic process for assessing compliance with statutory requirements. In response to this recommendation, HUD stated that the agency had conducted an extensive effort that allowed it to monitor compliance with the requirement for agencies to continue assisting substantially the same total number of households that they would have been able to serve prior to participating in the MTW program. HUD further stated that it was testing implementation of the process and planned to formalize the process through the publication of a notice. On January 10, 2013, HUD issued a notice that describes a compliance effort that, according to HUD, will ensure that MTW agencies continue to meet the statutory obligation to serve substantially the same number of families as if they had not participated in the MTW demonstration.use a numerical indicator to make annual determinations of compliance.\nAccording to the notice, HUD will In March 2012, we recommended that the HUD Secretary provide information to Congress on (1) housing agencies’ estimated amount of excess subsidy reserves and (2) HUD’s criteria for how it will redistribute excess reserves among housing agencies so that they can serve more households. In taking these steps, the Secretary should determine a level of subsidy reserves housing agencies should retain on an ongoing basis to effectively manage their voucher programs. HUD neither agreed nor disagreed with our recommendation. HUD noted that it currently provides quarterly reports to the Congressional Budget Office on subsidy reserve levels. However, these quarterly reports do not include information on the estimated amount of agencies’ subsidy reserves that exceed prudent levels. HUD did not comment on its efforts to provide information to Congress on the criteria for how it will redistribute excess reserves among agencies so it can serve more households. In March 2013, HUD officials told us that, upon request, they provide information to HUD’s Appropriations Committee on subsidy reserves levels, including those balances above certain minimum reserve levels. We will continue monitoring the agency’s progress in implementing our recommendations.", "Housing Assistance: Opportunities Exist to Increase Collaboration and Consider Consolidation. GAO-12-554. Washington D.C.: August 16, 2012.\nMoving to Work Demonstration: Opportunities Exist to Improve Information and Monitoring. GAO-12-490. Washington D.C.: April 19, 2012.\nHousing Choice Vouchers: Options Exist to Increase Program Efficiencies. GAO-12-300. Washington D.C.: March 19, 2012.\nProject-Based Rental Assistance: HUD Should Update Its Policies and Procedures to Keep Pace with the Changing Housing Market. GAO-07-290. Washington D.C.: April 11, 2007.\nProject-Based Rental Assistance: HUD Should Streamline Its Processes to Ensure Timely Housing Assistance Payments. GAO-06-57. Washington D.C.: November 15, 2005.", "Daniel Garcia-Diaz, Director, Financial Markets and Community Investment, [email protected], (202) 512-8678.", "Prevent foreclosures. By September 30, 2013, assist 700,000 homeowners who are at risk of losing their homes due to foreclosure.", "HUD’s efforts to achieve this goal involve the Federal Housing Administration’s (FHA) early delinquency interventions and loss mitigation programs. However, our past work raised questions about whether FHA has collected and analyzed data to assess the effectiveness of these efforts in preventing redefaults. Further, the HUD IG raised questions about the extent to which certain efforts were conducted in accordance with program requirements.\nIn June 2012, we reported that millions of borrowers faced an elevated risk of foreclosure and that various indicators showed that the housing market remained weak. In particular, we noted that the serious delinquency rate for FHA loans increased in the second half of 2011, counter to trends in the broader market. We reported that FHA had been working with loan servicers to identify best practices for reaching borrowers and had reporting requirements for servicers throughout the delinquency process. However, we found that although FHA had begun to calculate redefault rates for specific home retention actions, it had not used this information to assess the effectiveness of its foreclosure mitigation efforts. Doing so is particularly important because FHA loan modifications typically do not reduce borrower’s monthly payments to the levels that our analysis indicated result in more sustainable modifications. We also found that FHA had not assessed the impact of loan and borrower characteristics on the performance of its foreclosure mitigation efforts. In some cases, FHA did not have the data needed to conduct these analyses.\nIn a September 2012 report, the HUD IG estimated that 11,693 preforeclosure sales completed during the 12-month period it reviewed did not meet HUD’s requirements for participation and recommended that HUD strengthen controls over the preforeclosure sale program. Preforeclosure sales are one type of FHA loss mitigation action included in HUD’s calculation of borrowers assisted. Including ineligible preforeclosure sales in the calculation of borrowers assisted could overstate foreclosure prevention efforts.\nHUD has previously reported performance that exceeds its target for preventing foreclosures for fiscal years 2012 and 2013. During the period covering fiscal years 2010 and 2011, HUD reported assisting 902,431 homeowners that were in danger of losing their homes to foreclosure— 496,197 through FHA early delinquency interventions and 406,234 through FHA loss mitigation programs. For fiscal years 2012 and 2013, HUD anticipates meeting its foreclosure prevention goal by reaching 500,000 homeowners with early delinquency interventions and an additional 200,000 through loss mitigation programs. Through the end of fiscal year 2012, HUD reported that it was more than halfway to meeting its goal, having reached 290,216 homeowners with early delinquency interventions and 154,933 homeowners through loss mitigation programs.", "In June 2012, we recommended that FHA conduct periodic analyses of the effectiveness and the long-term costs and benefits of its loss mitigation strategies and actions. These analyses should consider (1) the redefault rates associated with each type of home retention action and (2) the impact that loan and borrower characteristics have on the performance of different home retention actions. FHA should use the results from these analyses to reevaluate its loss mitigation approach and provide additional guidance to servicers to effectively target foreclosure mitigation actions. If FHA does not maintain data needed to consider this information, it should require servicers to provide the data. In an August 2012 response to our recommendations, HUD noted that it was performing a complete review of the structure of its home-retention assistance. HUD is also undertaking an analysis of borrower and loan data with the goal of proactively directing servicers as to which assistance actions should be targeted to particular borrowers. In November 2012, FHA issued Mortgagee Letter 2012-22, which contained changes to the requirements for servicers to follow when assessing borrowers for FHA loss mitigation home-retention options. We requested and plan to assess the analysis HUD completed as the basis for this change in FHA’s loss mitigation strategies to determine whether it fully responds to our recommendation.", "Foreclosure Mitigation: Agencies Could Improve Effectiveness of Federal Efforts with Additional Data Collection and Analysis, GAO-12-296. Washington, D.C.: June 28, 2012.", "Mathew J. Scirè, Director, Financial Markets and Community Investment, [email protected], (202) 512-8678.", "Reduce vacancy rates. By September 30, 2013 reduce the average residential vacancy rate in 70 percent of the neighborhoods hardest hit by the foreclosure crisis relative to comparable areas. Hardest hit neighborhoods are defined as Neighborhood Stabilization Program (NSP) 2 Neighborhood Investment Clusters (NIC).", "HUD will apply the results of the second phase of its Neighborhood Stabilization Program (NSP 2), funded under the American Recovery and Reinvestment Act, towards achieving this agency priority goal. The agency considers NSP, which provides grants to government and other entities to try to reduce the number of foreclosed and abandoned properties, its primary tool for mitigating the effects of foreclosures on As we reported in November 2011, high foreclosure neighborhoods.rates have contributed to increased vacancies, which can impose additional costs and challenges on communities, including increased public safety costs and lower tax revenues. While we have not directly assessed HUD’s capacity to achieve this agency priority goal, our prior work evaluating NSP indicates that through this program, HUD has the potential to reduce vacancies in areas receiving NSP funding. In December 2010, we examined HUD’s implementation of the first phase of NSP and grantees’ compliance with program requirements in using their funds to mitigate the impacts of foreclosures, which can include increased vacancies. We found that HUD and grantees had taken actions to try to ensure program compliance. While three phases of NSP were authorized by different pieces of legislation, all three rounds of NSP generally follow the same requirements. Therefore our previous findings are applicable to NSP 2, the contributing program to this agency priority goal.\nThrough its NSP technical assistance program, HUD has hired The Reinvestment Fund (TRF) to conduct analyses of NSP investments across the United States. HUD is using aspects of this analysis to measure progress toward meeting this agency priority goal. As part of its quarterly studies, TRF is conducting analysis of trends in vacancy rates within NICs versus comparable areas (or neighborhoods). NICs are geographic areas with a concentration of properties to which NSP funds have been applied. On the Performance.gov website, HUD uses “NIC” to refer to those areas to which NSP 2 funds have been applied. For both the first and second quarter of 2012, HUD reported that about 78 percent of NICs had lower vacancy rates than at least one comparable area— outperforming the agency priority goal’s target of 70 percent.\nWe have not assessed the reliability of TRF’s studies. However, in its analysis, TRF uses data from HUD’s Disaster Recovery Grant Reporting (DRGR) system, the information system used by all NSP grantees to report on their activities and results. In December 2010, we reported that inconsistencies in the manner in which grantees entered data into DRGR could complicate the analysis of program outputs and result in over counting and under counting of program outputs. We recommended that HUD take several actions to improve the consistency of the data collected from NSP grantees. In October 2012, HUD addressed these recommendations by issuing detailed guidance. For the purposes of measuring progress towards this goal, TRF uses property address information from DRGR for units that received NSP 2 funding. Quarterly, HUD standardizes and removes duplicate address information from DRGR to try to prevent any double counting of properties in TRF’s analyses.", "We currently have no open recommendations or matters for congressional consideration related to this priority goal.", "Vacant Properties: Growing Number Increases Communities’ Costs and Challenges. GAO-12-34. Washington, D.C.: November 4, 2011.\nNeighborhood Stabilization Program: HUD and Grantees Are Taking Actions to Ensure Program Compliance but Data on Program Outputs Could be Improved. GAO-11-48. Washington, D.C.: December 17, 2010.", "Mathew J. Scirè, Director, Financial Markets and Community Investment, [email protected], (202) 512-8678.", "Reducing homelessness. By September 30 2013, in partnership with the VA, reduce the number of homeless veterans to 35,000 by serving 35,500 additional homeless veterans. HUD is also committed to making progress towards reducing family and chronic homelessness and is working towards milestones to allow for tracking of these populations.", "HUD notes that several programs are expected to contribute to the achievement of its priority goal to reduce homelessness, including the HUD Veterans Affairs Supportive Housing (HUD-VASH) program, HUD homeless assistance programs, and the Homelessness Prevention and Our past work has identified a number of Rapid Re-Housing Program.issues related to these programs. For example, our June 2012 report on the HUD-VASH program—a collaborative initiative between HUD and VA that targets the most vulnerable, most needy, and chronically homeless veterans—states that the program has moved veterans out of homelessness. Specifically, according to VA, as of March 2012, nearly 31,200 veterans lived in HUD-VASH supported housing, which represents about 83 percent of the vouchers authorized under the program. In addition, our December 2011 report on homeless women veterans notes that although HUD collects data on homeless women and on homeless veterans, the department does not collect detailed information on homeless women veterans and neither HUD nor VA captures data on the overall population of homeless women veterans. Further, our report states that HUD and VA lack data on the characteristics and needs of these women on a national, state, and local level. Finally, our report notes that absent more complete data on homeless women veterans, VA does not have the information needed to plan services effectively, allocate grants to providers, and track progress toward its overall goal of ending veteran homelessness.\nOur May 2012 report on the fragmentation, overlap, and duplication among federal homelessness programs also identified issues related to the programs that are expected to contribute to the achievement of this priority goal. For example, our report noted HUD was one of eight federal agencies that administered 26 targeted homelessness programs in fiscal year 2011, suggesting fragmentation and some overlap among these programs.fund housing assistance, but also provides funding for mental health care, substance abuse treatment, and employment services. Similarly, HHS and VA administer programs that provide housing and employment assistance. Fragmentation and overlap can lead to inefficient use of resources. Some local service providers told us that managing multiple applications and reporting requirements was burdensome, difficult, and costly. Moreover, according to providers, persons experiencing More specifically, HUD not only administers programs that homelessness have difficulties navigating services that are fragmented across agencies. Further, our report states that limited information exists about the efficiency or effectiveness of targeted homelessness programs because evaluations have not been conducted recently—including for the six programs HUD administers. Finally, our report states that the U.S. Interagency Council on Homelessness (Interagency Council) strategic plan to prevent and end homelessness has served as a useful and necessary first step in increasing agency coordination and focusing attention on ending homelessness; however, the plan lacks key characteristics desirable in a national strategy. For example, the plan does not list priorities or milestones and does not discuss resource needs or assign clear roles and responsibilities to federal partners.", "In May 2012, we recommended that the Interagency Council and the Office of Management and Budget, in conjunction with the Secretaries of HHS, HUD, Labor, and VA, should consider examining inefficiencies that may result from overlap and fragmentation in their programs for persons experiencing homelessness. VA agreed with this recommendation. HHS, HUD, Labor, and the Interagency Council did not explicitly agree or disagree. We also recommended that to help prioritize, clarify, and refine efforts to improve coordination across agencies, and improve the efficiency and effectiveness of federal homelessness programs, the Interagency Council, in consultation with its member agencies, should incorporate additional elements into updates to the national strategic plan or other planning and implementation documents to help set priorities, measure results, and ensure accountability. According to the Interagency Council, its fiscal year 2013 report will focus on updates and progress made on the national strategic plan’s objectives. The Interagency Council’s national strategic plan broadly describes the federal approach to preventing and ending homelessness; however, until the key member agencies fully implement their plans, including setting priorities, measuring progress and results, and holding federal and nonfederal partners accountable, they are at risk of not reaching their goal of ending veteran and chronic homelessness by 2015, and ending homelessness among children, youth, and families by 2020.\nIn December 2011, we recommended that in order to help achieve the goal of ending homelessness among veterans, the Secretaries of HUD and VA should collaborate to ensure appropriate data are collected on homeless women veterans, including those with children and those with disabilities, and use these data to strategically plan for services. In concurring with this recommendation, VA stated it had several initiatives already planned or under way to gather information on those homeless women veterans who are in contact with VA, including the development of a more streamlined and comprehensive data collection system. In April 2013, VA stated that it had taken additional actions to inform policy and operational decisions about homeless and at-risk women veterans. For example, VA stated that in 2013 it worked with HUD to ensure that gender specific data were collected during the 2013 Point in Time count of homeless persons. VA added that the results of the 2013 Point in Time count will be included in the Annual Homeless Assessment Report to Congress which will be published later in 2013 and will be used by the department to strategically plan and implement services for all homeless and at-risk veterans, including women veterans. In addition, VA stated that in 2012 it revised the Community Homelessness Assessment, Local Education and Networking Groups survey to capture gender specific data for homeless veterans to better identify the needs of women veterans and influence service provision.", "Veteran Homelessness: VA and HUD Are Working to Improve Data on Supportive Housing Program. GAO-12-726. Washington, D.C.: June 26, 2012.\nHomelessness: Fragmentation and Overlap in Programs Highlight the Need to Identify, Assess, and Reduce Inefficiencies. GAO-12-491. Washington, D.C.: May 10, 2012.\nHomeless Women Veterans: Actions Needed to Ensure Safe and Appropriate Housing. GAO-12-182. Washington, D.C.: December 23, 2011.\nHomelessness: A Common Vocabulary Could Help Agencies Collaborate and Collect More Consistent Data. GAO-10-702. Washington, D.C.: June 30, 2010.", "Alicia Puente Cackley, Director, Financial Markets and Community Investment, [email protected], (202)512-8678.", "Based on our past work, as well as that of the DOT IG, we commented on each of DOT’s four priority goals for 2012 to 2013: 1. Air traffic control systems can improve the efficiency of airspace. By September 30, 2013, replace a 40-year-old computer system serving 20 air traffic control centers with a modern, automated system that tracks and displays information on high altitude planes. 2. Advance the development of passenger rail in the United States. By September 30, 2013, initiate construction on all 7 high speed rail corridors and 36 individual high speed rail projects. 3. Reduce risk of aviation accidents. By September 30, 2013, reduce aviation fatalities by addressing risk factors both on the ground and in the air. Commercial aviation (i.e. airlines): Reduce fatalities to no more than 7.4 per 100 million people on board. General aviation (i.e. private planes): Reduce fatal accident rate per 100,000 flight hours to no more than 1.06. 4. Reduce the rate of roadway fatalities. Reduce the rate of roadway fatalities from 1.26 in 2008 to 1.03 per 100 million vehicle miles traveled by December 31, 2013.\nFor each goal, we also identify our related past reports and provide an update on the status of any open recommendations and matters for congressional consideration that we previously made related to the goal. We also identify a GAO contact for our work related to each goal.", "Air traffic control systems can improve the efficiency of airspace. By September 30, 2013, replace a 40-year-old computer system serving 20 air traffic control centers with a modern, automated system that tracks and displays information on high altitude planes.", "The priority goal refers to the Federal Aviation Administration’s (FAA) replacement of the existing en route air traffic control automation system used in its en route air traffic control centers (centers) with a new system architecture, the En Route Automation Modernization system (ERAM). While our previous work has shown that FAA has experienced delays in deploying ERAM, FAA has since made progress toward achieving this goal. As we reported in September 2012, FAA has experienced delays in deploying ERAM, which affected overall acquisition and maintenance costs as well as time frames for other programs. Specifically, the ERAM program is almost 4 years behind its original schedule and about $330 million, or about 15 percent, over its original budget because of the following factors: unanticipated risks associated with operational complexities at the field sites, insufficient testing to identify software issues before deployment at the field sites, insufficient communication between the program office and field sites, and insufficient stakeholder (e.g., air traffic controller) involvement during system development and deployment.\nThe delays added an estimated $18 million per year to the costs of maintaining the system that ERAM was meant to replace.\nSince new budget and schedule baselines for the ERAM program were established in June 2011, according to FAA reports, the program has made progress toward its goal of initial operating capability of ERAM by September 30, 2013. As of March 2013, FAA had achieved initial operating capability at 16 out of 20 centers and expects to achieve this goal. In September 2012, the DOT IG reported that FAA’s use of initial operating capability for tracking progress with ERAM gave FAA decision makers a false sense of confidence in the maturity of the system when in reality, much work and time still remained in implementing the system. For example, after FAA declared its first two sites as achieving initial operating capability, these sites experienced multiple failures after the milestone was achieved and went through a measured transition from limited operations to eventual continuous operations. In response to the DOT IG’s recommendation to better define key milestones to reflect progress, FAA is planning to establish criteria for entrance and exit at the various key milestones, including initial operating capability. FAA also plans to have all 20 centers operationally ready by August 2014.\nAs we reported in September 2012, looking more broadly, ERAM is considered to be the backbone that will support the Next Generation Air Transportation System (NextGen)—a new air traffic management system that will replace the current radar-based system and is expected to enhance the safety and capacity of the air transport system—and delays with ERAM’s deployment illustrate challenges FAA faces in implementing NextGen. For example, delays in ERAM affected the implementation of two other key NextGen acquisitions—Data Communications and System Wide Information Management. In part because of ERAM’s delay, FAA pushed the Data Communications program’s start date from September 2011 to May 2012, revised the original plan for the first System Wide Information Management segment, and delayed the start date for another segment from 2010 to July 2012. The implementation of NextGen—both in the midterm (through 2020) and in the long term (beyond 2020)—will be affected by how well FAA manages these and other program interdependencies.", "To address past issues with cost estimate and schedule accuracy, such as those with ERAM, in February 2012, we recommended that when appropriate for major acquisition programs based on a program’s cost, schedule, complexity, and risk, FAA conduct an assessment of major acquisition programs to ensure they meet all of the established best practices for cost estimates and schedules contained in our guidance; require a fully integrated master schedule for each major acquisition program, including those that are NextGen components; and conduct independent cost estimates and schedule risk analysis.\nAs of March 2013, FAA has taken steps to implement these recommendations. For example, according to FAA officials, FAA’s Acquisition Executive Board now considers whether an independent cost estimate or schedules risk analysis is advisable as parts of its program review. FAA is also developing an Integrated Master Schedule for the entire NextGen initiative that is, in part, intended to show how changes in program schedules affect other programs and the timelines for the NextGen initiative as a whole. To further strengthen schedule integration, FAA plans to continue populating the integrated master schedule and then begin integrating this tool with other FAA planning tools, including the National Airspace System Enterprise Architecture and NextGen Implementation Plan, in December 2013.", "Next Generation Air Transportation System: FAA Faces Implementation Challenges. GAO-12-1011T. September 12, 2012.\nAir Traffic Control Modernization: Management Challenges Associated with Program Costs and Schedules Could Hinder NextGen Implementation. GAO-12-223. February 16, 2012.\nNextGen Air Transportation System: FAA’s Metrics Can Be Used to Report on Status of Individual Programs, but Not of Overall NextGen Implementation or Outcomes. GAO-10-629. July 27, 2010.", "Gerald L. Dillingham, Ph.D., Director, Physical Infrastructure Issues, [email protected], (202) 512-2834.", "Advance the development of passenger rail in the United States. By September 30, 2013, initiate construction on 7 high speed rail corridors and 36 individual high speed rail projects.", "While our past work does not cover activities related to construction of high speed rail projects, we and the DOT IG have reported on planning and other weaknesses with the Federal Railroad Administration’s (FRA) High Speed Intercity Passenger Rail (HSIPR) program related to FRA’s capacity to achieve this APG. The federal government had not historically had a strong leadership role in intercity passenger rail but this changed in 2009 when the HSIPR program was authorized. The program provides grants to states and other entities to develop high speed intercity passenger rail corridors and projects. As of January 2013, FRA had awarded grants for 150 high speed intercity passenger rail projects. Of these projects, FRA had obligated about $9.2 billion for 9 corridor programs and 57 individual high speed rail projects as of December 2012. According to FRA, by this same date, states and other project sponsors had begun construction on 5 of the high speed rail corridors and 33 of the individual high speed rail projects. By the end of fiscal year 2013, FRA’s goal is to begin construction on a total of 7 corridor and 36 individual high speed rail projects.\nThe fundamental weaknesses of the HSIPR program include not having well-defined goals, a clear strategic vision, and performance measures to track program progress. In March 2009, before the HSIPR program was established, we reported that several principles could help guide the potential federal role in high speed rail. These principles included, among other things, creating well-defined goals based on identified areas of national interest, incorporating performance and accountability for results into funding decisions, and employing the best analytical tools and approaches to emphasize return on investment. Similarly, in June 2010, we reported that FRA’s strategic vision for high speed rail, as outlined in the agency’s April 2009 Vision for High-Speed Rail in America, did not define the goals, stakeholder roles, or objectives for federal involvement in high speed intercity passenger rail and that the agency’s preliminary national rail plan did not include recommendations for future action. Further, although states would be among primary HSIPR grant recipients, many did not have rail plans that would establish strategies and priorities for rail investments or identify the public benefits of such investments. Many of these weaknesses continue. For example, in September 2012 the DOT IG reported that FRA’s HSIPR goals lacked the thoroughness needed to ensure that grant managers and decision makers, including Congress, could understand them, and that FRA generally lacked performance measures needed to assess the program’s progress in achieving its goals as well as complete monitoring mechanisms. According to DOT, FRA has taken action to address some of the issues reported by the DOT IG, including developing a standardized mechanism for collecting and tracking HSIPR grantee performance and compliance metrics, and developing a comprehensive grants management training curriculum.\nThere are also weaknesses in how the HSIPR program is administered starting with how HSIPR grants are awarded. In March 2011 we reported that, although FRA had applied its established criteria during the eligibility and technical reviews of the HSIPR grant applications, we could not verify whether it applied its final selection criteria because the documented rationales for selecting projects were typically vague. We concluded that without a record that provided insight into why decisions were made, FRA invited skepticism about the overall fairness of its decision making. Other program weaknesses include the lack of guidance issued to HSIPR applicants and FRA’s grants administration framework. In March 2009 we recommended the Secretary of Transportation develop guidance and methods for ensuring reliability of ridership and other forecasts used to determine the viability of high speed rail projects. In March 2012, the DOT IG also reported that FRA had established only minimal requirements and guidance on the information HSIPR grant applicants must provide to FRA on project viability which did not provide enough detail to minimize bias and ensure accuracy in project viability assessments. In addition, in September 2012, the DOT IG reported that FRA had issued the policies and procedures for HSIPR grants management several years after the program had been established and that insufficient staffing and training undermined FRA’s efforts to effectively administer and ensure the accountability of HSIPR grant funds once they are awarded. FRA’s Grants Management Manual was not issued until April 2012, almost 3 years after the HSIPR program was authorized. FRA’s monitoring plan, which will, among other things, guide performance and compliance monitoring for the HSIPR program, was not finalized until March 2012.\nAside from program weaknesses, we have found that implementing high speed rail projects is difficult. This difficulty could affect achievement of program goals. Our March 2009 report identified some of the challenges in developing and financing high speed rail projects, including securing the up-front investments for such projects and sustaining public and political support and stakeholder consensus. We concluded that whether any high speed rail proposals are eventually built hinges on addressing the funding, public support, and other challenges facing these projects.", "In March 2011, we recommended that FRA create additional records to document the substantive reasons behind award decisions in future HSIPR funding rounds to better ensure accountability for its use of federal funds. As of November 2012, FRA had enhanced its grant management manual with more explicit requirements for documenting the rationale behind its funding selections.\nIn March 2009, we recommended, among other things, that the Secretary of Transportation develop guidance and methods to improve the reliability and accuracy of ridership, cost, and other forecasts for these systems. As of November 2012, FRA said it is implementing this recommendation in conjunction with stakeholders, partners, and researchers, through an iterative process of developing methods and guidance, using them, and then refining them. FRA is also working with a research panel of the Transportation Research Board to develop a handbook that will provide tools to decision makers in such areas as ridership forecasting and service characteristics (e.g., frequency of service). FRA said it expects implementing this recommendation will require from 5 to 10 years.\nIn September 2012, DOT’s IG recommended that before awarding, obligating, and disbursing additional grant funds, FRA should take several actions to establish a comprehensive grants management program with clear program goals and mechanisms to track grantee performance toward those goals. In response to the IG’s recommendations, FRA officials concurred with each recommendation and said they would implement reports, tools and training programs to meet the IG’s recommendations starting in late 2012.", "Intercity Passenger Rail: Recording Clearer Reasons for Awards Decisions Would Improve Otherwise Good Grantmaking Practices. GAO-11-283. Washington, D.C.: March 10, 2011.\nHigh Speed Rail: Learning from Service Start-Ups, Prospects for Increased Industry Investment, and Federal Oversight. GAO-10-625. Washington, D.C.: June 17, 2010.\nHigh Speed Passenger Rail: Future Development Will Depend on Addressing Financial and Other Challenges and Establishing a Clear Federal Role. GAO-09-317. Washington, D.C.: March 19, 2009.", "Susan Fleming, Director, Physical Infrastructure Issues, 202-512-2834, [email protected].", "Reduce risk of aviation accidents. By September 30, 2013, reduce aviation fatalities by addressing risk factors both on the ground and in the air. Commercial aviation (i.e. airlines): Reduce fatalities to no more than 7.4 per 100 million people on board. General aviation (i.e. private planes): Reduce fatal accident rate per 100,000 flight hours to no more than 1.06.", "DOT’s FAA has worked toward these goals by partnering with the airline industry and other stakeholders through the Commercial Aviation Safety Team (CAST), improving runway safety, shifting toward a risk-based analysis of airborne aviation system information, establishing safety management systems (SMS), renewing the General Aviation Joint Steering Committee (GAJSC), and developing a 5-year strategy for reducing general aviation fatalities. DOT reported that from 2009 through 2011 FAA exceeded its targets for reducing commercial air carrier fatalities, well below its 2013 goal. For general aviation fatality rates, however, FAA has not yet achieved its goal, in part due to challenges we have recently discussed.\nAs we reported in April 2012, CAST has contributed to reducing commercial aviation accidents by analyzing past accidents and incidents to identify precursors and contributing factors, and ensuring that efforts to improve safety focus on the most prevalent accident categories. CAST has reduced commercial aviation risks by focusing on areas including controlled flight into terrain, loss of control, and runway incursions. CAST analyzes accident and incident data to identify precipitating conditions and causes, and then formulates an intervention strategy designed to reduce the likelihood of a recurrence. According to CAST, its work—along with new aircraft, regulations, and other activities—reduced the commercial aviation fatal accident rate by 83 percent from 1998 to 2008 and is an important aspect of FAA’s efforts to improve aviation safety by sharing and analyzing data. However, as we reported in October 2011, for safety at and around airports, including runways, the overall rate of runway incursions (the unauthorized presence of an airplane, vehicle, or person on the runway) at towered airports has trended steadily upward, as has the rate and number of airborne operational errors (errors made by air traffic controllers), though it is not clear whether these recent increases in operational errors can be attributed to several changes in reporting policies and procedures at FAA, or increases in actual incidents.\nWe reported in September 2012 that FAA is seeking to further enhance commercial aviation safety by shifting to a data-driven, risk-based safety oversight approach—referred to as SMS. SMS represents a proactive approach to safety and is intended to continually monitor all aspects of aviation operations and collect appropriate data to identify emerging safety problems before they result in death, injury, or significant property damage. SMS implementation is required for FAA and several of its business lines and the agency is taking steps to require industry implementation. Several challenges remain that may affect FAA’s ability to effectively implement SMS. FAA is taking steps to address some of these, but challenges related to data concerns, its capacity to conduct analysis and oversight, and standardization of policies and procedures could negatively affect FAA’s efforts to implement SMS in a timely and efficient manner and require some skills that agency employees do not have. Addressing these challenges is ever more important with air travel projected to increase over the next 20 years.\nFAA has embarked on several initiatives to meet its goal of reducing the fatal general aviation accident rate; however it reported not meeting its target fatality rates in any year from 2009 through 2011. As we reported in October 2012, FAA reported the general aviation fatality rate exceeded the target rate by 7.4 percent for 2011. FAA initiatives to improve aviation safety include renewing the GAJSC and implementing the Flight Standards Service’s 5-year strategy for reducing general aviation fatalities. The GAJSC, a government-industry partnership similar to the CAST approach for commercial aviation, focuses on analyzing general aviation accident data to develop effective intervention strategies. We believe that the GAJSC has the potential to contribute to a reduction in general aviation accidents and fatalities over the long term. However, the 5-year strategy has shortcomings that jeopardize its potential for success because, among other things, the strategy lacks performance measures for significant activities. Without a strong performance management structure, FAA will not be able to determine the success or failure of the significant activities that underlie the strategy. Furthermore, there are some limitations in flight activity data and other data that preclude a confident assessment of general aviation safety. For example, FAA’s survey of general aviation operators, on which the agency bases its annual flight-hour estimates, continues to suffer from methodological and conceptual limitations, even with FAA’s efforts to improve it.", "In October 2012, we recommended that FAA (1) improve measures of general aviation activity by requiring the collection of the number of hours that general aviation aircraft fly, (2) set specific general aviation safety improvement goals—such as targets for fatal accident reductions—for individual industry segments (e.g. personal or corporate operations) using a data-driven, risk management approach and (3) determine whether the programs and activities underlying the 5-year strategy are successful and if additional actions are needed, develop performance measures for each significant program and activity underlying the 5-year strategy. In its comments to our report, FAA reported that it is working toward implementing these recommendations.\nIn September 2012, we recommended that FAA develop a system to assess whether SMS meets its goals and objectives by identifying and collecting related data on performance measures. In comments to our report, FAA stated that it is currently involved in activities directed towards the development of safety performance measurement capabilities, including a process and measures for measuring safety performance. This activity is expected to be completed by April 2015.\nIn October 2011, we recommended that FAA develop separate risk-based assessment processes, measures, and performance goals for runway safety incidents involving commercial and general aviation aircraft, and to expand the existing risk-based process for assessing airborne losses of separation. In comments to our report, FAA reported that it is working toward implementing these recommendations.", "General Aviation Safety: Additional FAA Efforts Could Help Identify and Mitigate Safety Risks. GAO-13-36. Washington D.C.: October 4, 2012.\nAviation Safety: Additional FAA Efforts Could Enhance Safety Risk Management. GAO-12-898. Washington D.C.: September 12, 2012.\nAviation Safety: FAA Is Taking Steps to Improve Data, but Challenges for Managing Safety Risks Remain. GAO-12-660T. Washington D.C.: April 25, 2012.\nAviation Safety: Enhanced Oversight and Improved Availability of Risk- Based Data Could Further Improve Safety. GAO-12-24. Washington D.C.: October 5, 2011.\nAviation Safety: Improved Data Quality and Analysis Capabilities Are Needed as FAA Plans a Risk-Based Approach to Safety Oversight. GAO-10-414. Washington D.C.: May 6, 2010.", "Gerald L. Dillingham, Ph.D., Director, Physical Infrastructure Issues, [email protected], (202) 512-2834.", "Reduce the rate of roadway fatalities. Reduce the rate of roadway fatalities from 1.26 in 2008 to 1.03 per 100 million vehicle miles traveled by December 31, 2013.", "We have issued a number of reports related to DOT’s efforts to reduce highway fatalities that highlight the need for improved performance accountability and data. The number of traffic fatalities decreased from 41,000 in 2000 to fewer than 33,000 in 2010; the fatality rate per 100 million miles traveled also decreased from 1.53 in 2000 to 1.11 in 2010.To help states reduce traffic fatalities, the National Highway Traffic Safety Administration (NHTSA) within DOT provides traffic safety grants to states to, among other things, promote and enforce safety belt use and impaired driving laws and improve traffic safety data systems. While NHTSA has made progress in developing performance measures to help NHTSA and states evaluate the effectiveness of traffic safety programs, we reported in March 2008 that state performance has generally not been tied to receipt of the grants and improvements in state traffic safety data are needed to support a more performance-based approach to improving traffic safety programs.\nOn July 6, 2012, President Obama signed into law the Moving Ahead for Progress in the 21st Century Act.transportation program framework more performance-based by: (1) establishing national performance goals for the federal-aid highway program in several areas, including goals for the safety of the nation’s highways; and (2) requiring the Secretary of Transportation, in consultation with state departments of transportation and others, to establish performance measures linked to national goals, including measures for serious injuries and fatalities on public roads. Finally, the act required states to establish performance targets for those measures and report their progress in achieving planned outcomes through the statewide transportation plans. These provisions are consistent with a performance-based planning framework we recommended to Congress in December 2010 and, as they are implemented over the next several years, should help NHTSA and states focus their efforts on key actions needed to improve traffic safety and reduce highway fatalities.\nThe act made the surface While states have implemented projects to improve traffic safety data systems, such as switching to electronic data reporting and adopting data collection forms consistent with national guidelines, enhancements in these systems are still needed to support a performance-based approach to improving traffic safety. In April 2010, we reported that our analysis of traffic records assessments—conducted for states by NHTSA technical teams or contractors at least every 5 years—indicated that the quality of state traffic safety data systems varied across the six data systems maintained by states. Assessments include an evaluation of system quality based on six performance measures. Across all states, we found that vehicle and driver data systems met performance measures 71 percent and 60 percent of the time, respectively, while roadway, crash, citation and adjudication, and injury surveillance data systems met performance measures less than 50 percent of the time. States face resource and coordination challenges in improving traffic safety data systems. For example, custodians of data systems are often located in different state agencies, which may make coordination difficult. In addition, rural and urban areas may face different challenges in improving data systems, such as limited technology options for rural areas or timely processing of large volumes of data in urban areas. States we visited have used strategies to overcome these challenges, including establishing an executive-level traffic records coordinating committee (TRCC), in addition to the technical-level committee that states are required to establish to qualify for federal traffic safety grant funding. An executive-level committee could help states address challenges by targeting limited resources and facilitating data sharing.", "In April 2010, we recommended that the Secretary of Transportation should direct the NHTSA Administrator to (1) ensure that traffic records assessments provide an in-depth evaluation that is complete and consistent in addressing all performance measures across all state traffic safety data systems and (2) study and communicate to Congress the value of requiring states to establish an executive-level TRCC in order to qualify for traffic safety data system grant funding.\nIn response to the first recommendation, NHTSA developed a comprehensive approach for assessing the systems and processes that govern the collection, management, and analysis of traffic records data. Core to this approach is the set of questions for conducting assessments published in September 2012 in the Traffic Records Program Assessment Advisory. The Advisory includes standards of evidence to guide state officials in providing the information necessary to answer each assessment question. The assessment now asks a comprehensive, uniform set of questions about data quality performance measures across all state traffic safety data systems. NHTSA kicked off a pilot program to test the new process in Indiana in November 2012. This pilot was successfully completed in February 2013. As part of the new assessment process, NHTSA will create a database to house data from the new traffic records systems, conduct research and identify national trends. NHTSA can then inform states about how the ratings for each of their assessment questions compares with a national average.\nIn response to the second recommendation, NHTSA’s study examining how executive level and technical level TRCCs coordinate traffic records systems management was initiated with the 2012 pilot test of the new traffic records assessment process in Indiana. Data collection will continue through the fiscal year 2015 assessment cycle at which point 10 states will have been assessed and the data set will be large enough to enable a quality analysis. The data for this study will include the information submitted by the states as well as the ratings received on the comprehensive, uniform set of assessment questions. Specifically, NHTSA plans to examine states’ responses to questions about their TRCC management, strategic planning, data integration, and the capabilities of the six core traffic records components. Notable practices demonstrated by effective TRCC organizations—particularly at the executive level—will be highlighted.", "Statewide Transportation Planning: Opportunities Exist to Transition to Performance-Based Planning and Federal Oversight. GAO-11-77. Washington, D.C.: December 15, 2010.\nTraffic Safety Data: State Data System Quality Varies and Limited Resources and Coordination Can Inhibit Further Progress. GAO-10-454. Washington, D.C.: April 15, 2010.\nTraffic Safety Programs: Progress, States’ Challenges, and Issues for Reauthorization. GAO-08-990T. Washington, D.C.: July 16, 2008.\nTraffic Safety: NHTSA’s Improved Oversight Could Identify Opportunities to Strengthen Management and Safety in Some States. GAO-08-788. Washington, D.C.: July 14, 2008.\nTraffic Safety: Improved Reporting and Performance Measures Would Enhance Evaluation of High-Visibility Campaigns. GAO-08-477. Washington, D.C.: April 25, 2008.\nTraffic Safety: Grants Generally Address Key Safety Issues, Despite State Eligibility and Management Difficulties. GAO-08-398. Washington, D.C.: March 14, 2008.\nSurface Transportation: Restructured Federal Approach Needed for More Focused, Performance-Based, and Sustainable Programs. GAO-08-400. Washington, D.C.: March 6, 2008.", "Phillip R. Herr, Managing Director, Physical Infrastructure Issues, [email protected], (202) 512-2834.\nSusan Fleming, Director, Physical Infrastructure Issues, [email protected], (202) 512-2834.", "Based on our past work, as well as that of the VA IG, we commented on each of VA’s three priority goals for 2012 to 2013: 1. Assist in housing 24,400 additional homeless veterans (12,200 per year) and reduce the number of homeless veterans to 35,000 in 2013, to be measured in the January 2014 Point-In-Time homelessness count. By September 2013, working in conjunction with the U.S. Interagency Council on Homelessness (Interagency Council) and HUD, VA will also assist homeless Veterans in obtaining employment, accessing VA services, and securing permanent supportive housing, with a long-range goal of eliminating homelessness among Veterans by 2015. 2. Improve accuracy and reduce the amount of time it takes to process veterans’ disability benefit claims. By September 30, 2013, reduce the veterans’ disability compensation and pension claims backlog to 40 percent from 60.2 percent while achieving 90 percent rating accuracy, up from 83.8 percent, in pursuit of eliminating the Veterans’ claims backlog (defined as claims pending more than 125 days) by 2015. 3. Improve awareness of VA services and benefits by increasing the timeliness and relevance of on-line information available to veterans, service members and eligible beneficiaries. By September 30, 2013, increase the number of registered eBenefits users from 1.0 million to 2.5 million.\nFor each goal, we also identify our related past reports and provide an update on the status of any open recommendations and matters for congressional consideration that we previously made related to the goal. We also identify a GAO contact for our work related to each goal.", "Assist in housing 24,400 additional homeless veterans (12,200 per year) and reduce the number of homeless veterans to 35,000 in 2013, to be measured in the January 2014 Point-In-Time homelessness count. By September 2013, working in conjunction with the U.S. Interagency Council on Homelessness (Interagency Council) and HUD, VA will also assist homeless Veterans in obtaining employment, accessing VA services, and securing permanent supportive housing, with a long-range goal of eliminating homelessness among veterans by 2015.", "VA notes that several programs are expected to contribute to the achievement of its priority goal to reduce homelessness among veterans, including the HUD Veterans Affairs Supportive Housing (HUD-VASH) program, Grant and Per Diem program, Domiciliary Care for Homeless Veterans program, and Health Care for Homeless Veterans program. Our past work has identified a number of issues related to these programs. For example, our June 2012 report on the HUD-VASH program—a collaborative initiative between HUD and VA that targets the most vulnerable, most needy, and chronically homeless veterans—states that the program has moved veterans out of homelessness. Specifically, according to VA, as of March 2012, nearly 31,200 veterans lived in HUD- VASH supported housing, which represents about 83 percent of the rental assistance vouchers authorized under the program. In addition, our December 2011 report on homeless women veterans notes that although HUD collects data on homeless women and on homeless veterans, the department does not collect detailed data information on homeless women veterans and neither HUD nor VA captures data on the overall population of homeless women veterans. Further, our report states that HUD and VA lack data on the characteristics and needs of these women on a national, state, and local level. Finally, our report notes that absent more complete data on homeless women veterans, VA does not have the information needed to plan services effectively, allocate grants to providers, and track progress toward its overall goal of ending veteran homelessness.\nOur May 2012 report on the fragmentation, overlap, and duplication among federal homelessness programs also identified issues related to the programs that are expected to contribute to the achievement of this priority goal. For example, our report noted VA was one of eight federal agencies that administered 26 targeted homelessness programs in fiscal year 2011, suggesting fragmentation and some overlap among these programs.funding for supportive services such as health care, substance abuse treatment, and employment assistance, but also administers programs that provide housing and employment assistance. Similarly, HUD not only administers housing assistance, but also provides funding for mental More specifically, VA typically operates programs or provides health care, substance abuse treatment, and employment services. Fragmentation and overlap can lead to inefficient use of resources. Some local service providers told us that managing multiple applications and reporting requirements was burdensome, difficult, and costly. Moreover, according to providers, persons experiencing homelessness have difficulties navigating services that are fragmented across agencies. Further, our report states that limited information exists about the efficiency or effectiveness of targeted homelessness programs because evaluations have not been conducted recently—including for the 13 programs VA administers or co-administers. Finally, our report states that the Interagency Council strategic plan to prevent and end homelessness has served as a useful and necessary first step in increasing agency coordination and focusing attention on ending homelessness; however, the plan lacks key characteristics desirable in a national strategy. For example, the plan does not list priorities or milestones and does not discuss resource needs or assign clear roles and responsibilities to federal partners.", "In May 2012, we recommended that the Interagency Council and the Office of Management and Budget––in conjunction with the Secretaries of HHS, HUD, Labor, and VA––should consider examining inefficiencies that may result from overlap and fragmentation in their programs for persons experiencing homelessness. VA agreed with this recommendation. HHS, HUD, Labor, and the Interagency Council did not explicitly agree or disagree. We also recommended that to help prioritize, clarify, and refine efforts to improve coordination across agencies, and improve the efficiency and effectiveness of federal homelessness programs, the Interagency Council, in consultation with its member agencies, should incorporate additional elements into updates to the national strategic plan or other planning and implementation documents to help set priorities, measure results, and ensure accountability. According to the Interagency Council, its fiscal year 2013 report will focus on updates and progress made on the national strategic plan’s objectives. The Interagency Council’s national strategic plan broadly describes the federal approach to preventing and ending homelessness; however, until the key member agencies fully implement their plans, including setting priorities, measuring progress and results, and holding federal and nonfederal partners accountable, they are at risk of not reaching their goal of ending veteran and chronic homelessness by 2015, and ending homelessness among children, youth, and families by 2020.\nIn December 2011, we recommended that in order to help achieve the goal of ending homelessness among veterans, the Secretaries of HUD and VA should collaborate to ensure appropriate data are collected on homeless women veterans, including those with children and those with disabilities, and use these data to strategically plan for services. In concurring with this recommendation, VA stated it had several initiatives already planned or under way to gather information on those homeless women veterans who are in contact with VA, including the development of a more streamlined and comprehensive data collection system. In April 2013, VA stated that it had taken additional actions to inform policy and operational decisions about homeless and at-risk women veterans. For example, VA stated that in 2013 it worked with HUD to ensure that gender specific data were collected during the 2013 Point in Time count of homeless persons. VA added that the results of the 2013 Point in Time count will be included in the Annual Homeless Assessment Report to Congress which will be published later in 2013 and will be used by the department to strategically plan and implement services for all homeless and at-risk veterans, including women veterans. In addition, VA stated that in 2012 it revised the Community Homelessness Assessment, Local Education and Networking Groups survey to capture gender specific data for homeless veterans to better identify the needs of women veterans and influence service provision.", "Veteran Homelessness: VA and HUD Are Working to Improve Data on Supportive Housing Program. GAO-12-726. Washington, D.C.: June 26, 2012.\nHomelessness: Fragmentation and Overlap in Programs Highlight the Need to Identify, Assess, and Reduce Inefficiencies. GAO-12-491. Washington, D.C.: May 10, 2012.\nHomeless Women Veterans: Actions Needed to Ensure Safe and Appropriate Housing. GAO-12-182. Washington, D.C.: December 23, 2011.\nHomelessness: A Common Vocabulary Could Help Agencies Collaborate and Collect More Consistent Data. GAO-10-702. Washington, D.C.: June 30, 2010.", "Alicia Puente Cackley, Director, Financial Markets and Community Investment, [email protected], (202) 512-8678.", "Improve accuracy and reduce the amount of time it takes to process veterans’ disability benefit claims. By September 30, 2013, reduce the veterans’ disability compensation and pension claims backlog to 40 percent from 60.2 percent while achieving 90 percent rating accuracy, up from 83.8 percent, in pursuit of eliminating the veterans’ claims backlog (defined as claims pending more than 125 days) by 2015.", "As we and other organizations have reported over the last decade, VA has faced challenges improving the accuracy and timeliness of its disability claims process. VA’s disability compensation benefits program has been included in our High Risk List, under “Improving and Modernizing Federal Disability Programs,” since 2003. Our December 2012 report on VA claims processing found that VA’s disability claims backlog—defined as claims awaiting a decision over 125 days—had more than tripled since September 2009. In fact, two-thirds of all disability claims awaiting a decision in August 2012 met VA’s backlog definition. Moreover, the timeliness of disability claims processing over the last several years has worsened: the average length of time to complete a claim increased from 161 days in 2009 to 260 days in 2012. The number of disability claims received is likely to remain high as VA projects that 1 million service members will become veterans over the next 5 years, portending ongoing challenges for VA to meet its goal of processing claims within 125 days by 2015.\nWhile our December 2012 report did not look at claims processing accuracy, the VA IG established a benefits inspection program in March 2009 which examines claims processing accuracy at VA regional offices. Based on a review of the VA IG’s benefits inspection findings across 21 VA regional offices in fiscal year 2012, accuracy rates ranged from 40 to 87 percent per office for a sample of selected types of claims.\nIn December 2012, we reported that the Veterans Benefits Administration (VBA) has a number of ongoing initiatives designed to improve claims processing and help VA meet its timeliness goals, but the impact of some initiatives is uncertain:\nThe Fully Developed Claims program, implemented nationally in June 2010, provides priority processing to veterans who submit claims with all relevant private medical evidence. The average processing time for claims involved in the program is 98 days, but veteran participation in the program has been low—only 4 percent of all compensation claims submitted in 2012—minimizing the impact on VA’s claims backlog.\nThe Claims Organizational Model, which reorganizes claim staff into cross-functional teams, processes claims by complexity, and redesigns mailroom functions, was piloted in 3 regional offices in March 2012 and implemented in all regional offices as of March 2013.\nVBA developed standard medical forms—called Disability Benefits Questionnaires—designed to speed up the claims process by more accurately capturing medical evidence needed from medical providers. Although VBA tracks the number and completeness of questionnaires submitted, VBA is not measuring their impact on processing time. In 2010, VBA began to develop the Veterans Benefit Management System (VBMS), an initiative to help streamline the claims process and reduce processing times. According to VA officials, VBMS is intended to convert existing paper-based claims folders into electronic claims folders that will allow VBA employees electronic access to claims and their support evidence. Once completed, VBMS will allow veterans, physicians, and other external parties to submit claims and supporting evidence electronically. In August 2012, VBA officials told us that VBMS was not ready for national deployment, citing delays in scanning claims folders into VBMS as well as other software performance issues. A recent VA IG report also concluded that VBMS has experienced some performance issues and the scanning and digitization of claims lacked a detailed plan. However, according to VA, as of December 2012, 18 regional offices had implemented VBMS and all regional offices will implement VBMS by the end of calendar year 2013.\nIn our December 2012 report, we stated that without a comprehensive plan to strategically manage resources and evaluate the effectiveness of each initiative, VBA risks spending limited resources on initiatives that may not speed up disability claims processes. In response to our December 2012 report, on January 25, 2013, VA published the Strategic Plan to Eliminate the Compensation Claims Backlog.", "In a December 2012 report, we reviewed the timeliness of VA claims processing and recommended that the Secretary of Veterans Affairs direct the Veterans Benefits Administration to: 1. Develop improvements for partnering with relevant federal and state military officials to reduce the time it takes to gather military service records for National Guard and Reserve sources. 2. Develop improvements for partnering with Social Security Administration (SSA) officials to reduce the time it takes to gather SSA medical records. 3. Ensure the development of a robust backlog reduction plan for VBA’s initiatives that, among other best practice elements, identifies implementation risks and strategies to address them and performance goals that incorporate the impact of individual initiatives on processing timeliness.\nVA generally concurred with our recommendations, and has taken steps to address the recommendations. For example, VA stated it has recently initiated several interagency efforts to improve receipt of military service records. According to VA, on December 3, 2012, the joint VBA and DOD Disability Claims Reduction Task Force met to begin to evaluate the process to request records, among other issues, with the aim of improving the timeliness of record exchanges between the two agencies. In addition, the National Guard Bureau and the VA recently agreed to create a collaboration group that will examine ways to improve the timeliness and completeness of the records submitted in support of VA benefit claims. Furthermore, VA officials stated that VBA staff are currently meeting with SSA on a weekly basis to develop strategies to improve the records acquisition process and piloting a tool with four VA regional offices to provide VA staff with direct electronic access to SSA medical records. We believe these initiatives are heading in the right direction in order to improve the timeliness of meeting VA requests for SSA medical records and National Guard and Reservists records.\nVA agreed with our recommendation to develop a robust backlog plan for VBA’s initiatives, and subsequent to our report, published the Strategic Plan to Eliminate the Compensation Claims Backlog, which identifies implementation risks as well as tracks overall performance based on a number of metrics, including processing timeliness. However, this plan does not provide individual performance goals and metrics for all initiatives, which are needed to ensure VA is spending its limited resources on initiatives that are proven to speed up disability claims and appeals processes.", "High-Risk Series: An Update. GAO-13-283. Washington, D.C.: February 14, 2013.\nVeterans’ Disability Benefits: Timely Processing Remains a Daunting Challenge. GAO-13-89. Washington, D.C.: December 21, 2012.\nVA Disability Compensation: Actions Needed to Address Hurdles Facing Program Modernization. GAO-12-846. Washington, D.C.: September 10, 2012.\nVeterans Disability Benefits: Clearer Information for Veterans and Additional Performance Measures Could Improve Appeal Process. GAO-11-812. Washington, D.C.: September 29, 2011.\nVeterans’ Disability Benefits: Further Evaluation of Ongoing Initiatives Could Help Identify Effective Approaches for Improving Claims Processing. GAO-10-213. Washington, D.C.: January 29, 2010.", "Daniel Bertoni, Director, Education, Workforce, and Income Security Issues, [email protected], 202-512-7215.", "Improve awareness of VA services and benefits by increasing the timeliness and relevance of on-line information available to veterans, service members and eligible beneficiaries. By September 30, 2013, increase the number of registered eBenefits users from 1.0 million to 2.5 million.", "While we have not specifically looked at VA’s eBenefits efforts, our past work has identified challenges VA has faced in its efforts to increase awareness of its services and benefits which could be applicable to its ability to achieve this goal.\nIn February 2011, we reported that VA has a variety of activities to reach out to and support veterans and service members who may be eligible for VA education benefits, including the posting of information on its Web site to support those individuals in the process of applying for education benefits. We found that veterans service organizations, school officials, and students receiving VA education benefits had positive feedback for a recent redesign of the GI Bill web site that highlighted the three main steps in applying for Post-9/11 GI Bill benefits. However, we also found that VA did not provide links on the GI Bill Web site to consumer-focused information generated by other entities. In contrast, the Department of Education’s College Navigator site aggregated, for example, information on graduation rates, loan default rates, costs of attendance and available scholarships. Moreover, we found that little was known about the effectiveness of VA’s education outreach and support because VA did not have outcome-oriented performance measures for these activities. For example, while VA’s education program estimates the number of people who view or listen to a particular Post-9/11 GI Bill online, radio, or print advertisement, VA had not determined the extent to which its outreach campaign has been effective in informing or changing the behavior of target audiences.\nIn December 2011, we reported that VA and the Department of Defense had recently developed the eBenefits web portal to provide veterans with customized information on VA benefits and assistance, and how to apply for them, but the portal did not include a direct link to information on enhanced monthly benefits (which increase recipients’ monthly disability compensation or pension payments). A few of our focus group participants—conducted with veterans and their family representatives— commented that they had difficulty finding information about enhanced monthly benefits on VA’s website. Federal website guidelines recommend that navigation procedures to access online information should be simple and that links should be properly labeled to help users obtain desired results.\nIn December 2012, we reported on the status of VBA’s recent efforts to improve disability claims and appeals processing timeliness. In that report, we noted that veterans can learn about the status of their claims in several ways, including the use of eBenefits. However, we did not review veterans’ actual use of eBenefits.", "In our February 2011 report, to improve VA’s outreach and support for eligible service members and veterans, communication with school officials, and oversight of its education benefit programs, we recommended that the Secretary of Veterans Affairs, among other actions, (1) develop outcome-oriented performance measures for outreach to service members and veterans who are seeking VA education benefits and (2) establish performance measures for the quality of information provided by VA’s toll-free hotline and for the timeliness and quality of its Right Now Web service. VA concurred with these recommendations in commenting upon a draft of the report. With respect to the first recommendation, VA reported that it had deployed an early communication tool to inform service members and veterans about their eligibility for education benefits and, as of April 2013, reported that it was in the first phase of capturing data on the frequency of visits to dedicated website Uniform Resource Locators. VA anticipated it will be able to establish baseline performance measures by the end of July 2013. With respect to measuring the quality of VA’s customer service on its toll-free hotline and its online Right Now Web service, VA has established applicable national performance standards and, in April 2013, VA reported that the standards have been issued to its field. We have requested to review the performance standards prior to considering this recommendation fully implemented, and are awaiting further status updates with regard to the implementation of the first recommendation.", "Veterans’ Disability Benefits: Timely Processing Remains a Daunting Challenge. GAO-13-89. Washington, D.C.: December 21, 2012.\nVA Enhanced Monthly Benefits: Recipient Population Is Changing, and Awareness Could Be Improved. GAO-12-153. Washington, D.C.: December 14, 2011.\nVA Education Benefits: Actions Taken, but Outreach and Oversight Could Be Improved. GAO-11-256. Washington, D.C.: February 28, 2011.", "Daniel Bertoni, Director, Education, Workforce, and Income Security Issues, [email protected], 202-512-7215.", "Based on our past work, we commented on each of OPM’s five priority goals for 2012 to 2013: 1. Ensure high quality federal employees. By September 30, 2013, increase federal manager satisfaction with applicant quality (as an indicator of hiring quality) from 7.7 to 8.3 on a scale of 1 to 10, while continually improving timeliness, applicant satisfaction, and other hiring process efficiency and quality measures. 2. Improve performance culture in the Goals-Engagement- Accountability-Results (GEAR) pilot agencies to inform the development of government-wide policies. By September 30, 2013, employee responses to the annual Employee Viewpoint Survey in each of the five agencies participating in a performance culture pilot project will increase by 5 percent or greater on the results-oriented culture index and the conditions for employee engagement index, using 2011 survey results as the baseline. 3. Increase health insurance choices for Americans. By October 1, 2013, expand competition within health insurance markets by ensuring participation of at least two multi-state health plans in the State Affordable Insurance Exchanges. 4. Maintain speed of national security background investigations.\nThrough September 30, 2013, maintain a 40 day or less average completion time for the fastest 90 percent of initial national security investigations. 5. Reduce federal retirement processing time. By July 31, 2013, Retirement Services will have reduced its case inventory so that 90 percent of all claims will be adjudicated within 60 days.\nFor each goal, we also identify our related past reports and provide an update on the status of any open recommendations and matters for congressional consideration that we previously made related to the goal. We also identify a GAO contact for our work related to each goal.", "Ensure high quality federal employees. By September 30, 2013, increase federal manager satisfaction with applicant quality (as an indicator of hiring quality) from 7.7 to 8.3 on a scale of 1 to 10, while continually improving timeliness, applicant satisfaction, and other hiring process efficiency and quality measures.", "We have not specifically reported on OPM’s ability to ensure high-quality federal employees by increasing satisfaction with applicant quality. However, our past work has highlighted efforts OPM has undertaken to recruit and maintain a high-quality workforce.\nOur past work on OPM’s efforts to improve the federal government’s competitiveness in recruiting and maintaining a high-quality workforce has shown that in 2005, and again in 2008, OPM issued guidance on the use of hiring authorities and flexibilities. As we reported in September 2012, in 2006 OPM developed the Hiring Toolkit to assist agency officials in determining the appropriate hiring flexibilities to use given their specific situations, and in 2008 OPM launched an 80-day hiring model to help speed up the hiring process. Also in 2008, OPM established standardized vacancy announcement templates for common occupations, such as contract specialist and accounting technician positions, in which agencies can insert summary information concerning their specific jobs prior to posting for public announcement. In 2012, OPM issued regulations launching the Pathways program in order to make it easier to recruit and hire students and recent graduates and allow for noncompetitive conversion to permanent positions after meeting certain requirements. If successfully implemented, initiatives such as Pathways could help agencies further close critical skills gaps. We narrowed the scope of the human capital high-risk area in February 2011 to focus on this challenge of closing mission critical skills gaps and although progress has been made, the area remains on our recently issued High Risk List in February 2013.\nIn January 2010, we reported on the use of recruitment, relocation, and retention (3R) incentives at the Food and Drug Administration and the oversight provided by Health and Human Services, and how OPM provides oversight to agency 3R programs. We found that these flexibilities were widely used by agencies, and that retention incentives accounted for the majority of these incentive costs. Federal 3R incentives are among the human capital flexibilities intended to help federal agencies address human capital challenges and to build and maintain a high-performing workforce with essential skills and competencies. According to OPM, the 3R incentives are intended to provide agencies with discretionary authority to use compensation other than base pay to help recruit, relocate, and retain employees in difficult staffing situations. Our review of the steps OPM has taken to help ensure that agencies have effective oversight of their incentive programs found that while OPM provided oversight of such incentives through various mechanisms, including guidance and periodic evaluations and accountability reviews, there are opportunities for improvement.", "In January 2010, we recommended that the Director of OPM require agencies to incorporate succession planning efforts into the decision process for awarding retention incentives and document this requirement for succession planning in their 3R incentive plans. In January 2011, OPM issued proposed regulations to add succession planning to the list of factors an agency may consider before approving a retention incentive for an employee who would be likely to leave the federal service in the absence of the incentive. OPM stated that specifically listing this factor in the regulations will strengthen the relationship between succession planning and retention incentives. OPM anticipates publishing the final regulations this year.", "High Risk Series: An Update. GAO-13-283. Washington, D.C.: February, 14, 2013.\nHuman Capital Management: Effectively Implementing Reforms and Closing Critical Skills Gaps are Key to Addressing Federal Workforce Challenges. GAO-12-1023T. Washington, D.C.: September 19, 2012.\nHuman Capital: Continued Opportunities Exist for FDA and OPM to Improve Oversight of Recruitment, Relocation, and Retention Incentives. GAO-10-226. Washington, D.C.: January 22, 2010.", "Robert Goldenkoff, Director, Strategic Issues, [email protected], 202- 512-2757.\nYvonne Jones, Director, Strategic Issues, [email protected], 202-512- 2717.", "Improve performance culture in the GEAR pilot agencies to inform the development of government-wide policies. By September 30, 2013, employee responses to the annual Employee Viewpoint Survey in each of the five agencies participating in a performance culture pilot project will increase by 5 percent or greater on the results-oriented culture index and the conditions for employee engagement index, using 2011 survey results as the baseline.", "We have not specifically reported on improving the performance culture of the five GEAR pilot agencies—OPM, the Departments of Energy, Housing and Urban Development, and Veterans Affairs, and the U.S. GEAR is an effort to create high-performing organizations Coast Guard.that are aligned, accountable, and focused on results. Our past work has highlighted steps that OPM and agencies should take to improve their performance cultures.\nIn March 2003, we reported that effective performance management systems are not merely used for once or twice-yearly individual expectation setting and rating processes, but are tools to help the organization manage on a day-to-day basis. We identified key practices that create a clear linkage—”line of sight”—between individual performance and organizational success and, thus, transform agency cultures to be more results-oriented, customer-focused, and collaborative in nature. These key practices are: (1) align individual performance expectations with organizational goals; (2) connect performance expectations to crosscutting goals; (3) provide and routinely use performance information to track organizational priorities; (4) require follow-up actions to address organizational priorities; (5) use competencies to provide a fuller assessment of performance; (6) link pay to individual and organizational performance; (7) make meaningful distinctions in performance; (8) involve employees and stakeholders to gain ownership of performance management systems; and (9) maintain continuity during transitions.\nAs the federal government’s human capital leader, OPM must have the capacity to effectively assist agencies and to successfully lead and implement these important human capital management transformations. In January 2007, we reported that to enhance its capacity to do so, OPM is working to transform its own organization from less of a rulemaker, enforcer, and independent agent to more of a consultant, toolmaker, and strategic partner. We recommended that OPM reexamine its agency-wide skills and competencies in light of its updated strategic management document. OPM implemented this recommendation in 2008 by completing an agencywide competency assessment of all mission critical occupations. As reform initiatives move forward, it is increasingly important for OPM to complete this transformation and clearly demonstrate its capacity to lead and implement such reforms.", "We currently have no open recommendations or matters for congressional consideration related to this priority goal.", "Results-Oriented Management: Opportunities Exist for Refining the Oversight and Implementation of the Senior Executive Performance- Based Pay System. GAO-09-82. Washington, D.C.: November 21, 2008.\nOffice of Personnel Management: Key Lessons Learned to Date for Strengthening Capacity to Lead and Implement Human Capital Reforms. GAO-07-90. Washington, D.C.: January 19, 2007.\nResults-Oriented Cultures: Creating a Clear Linkage between Individual Performance and Organizational Success. GAO-03-488. Washington, D.C: March 14, 2003.", "Robert Goldenkoff, Director, Strategic Issues, [email protected], (202) 512-2757.\nYvonne Jones, Director, Strategic Issues, [email protected], (202) 512- 2717.", "Increase health insurance choices for Americans. By October 1, 2013, expand competition within health insurance markets by ensuring participation of at least two multi-state health plans in the State Affordable Insurance Exchanges.", "Our past work has not specifically focused on the priority goal of ensuring the participation of at least two multi-state health plans in each insurance exchange. However, we know from prior work that OPM had awarded a contract by early 2011 to provide policy and analytical support for this effort, and in March of 2012 it had issued a notice of proposed rulemaking.\nThe achievement of this goal will require OPM to contract with multiple private health insurance issuers and to coordinate closely with HHS, which is partnering with states to assure an operating Affordable Insurance Exchange in each state by January 1, 2014. Our work on OPM’s role overseeing the Federal Employees Health Benefits Program and its role in implementing the high risk pool program under the Patient Protection and Affordable Care Act are illustrative of OPM’s experience in two activities central to the achievement of this goal.\nNegotiate and contract with health insurance issuers. Through its oversight of the Federal Employees Health Benefits Program, OPM has long been responsible for selecting, contracting with, and regulating hundreds of health insurance issuers that offer health plans to millions of federal employees, dependents and retirees, as well as negotiating benefits and premium rates, as we reported in December 2002. OPM will likely leverage this experience and these relationships to contract with issuers to offer plans through state exchanges.\nCoordinate and collaborate with other agencies. In July 2011, we reported on OPM’s recent collaboration with HHS in implementing the new Pre-Existing Condition Insurance Plan (high risk pool) program required under the Patient Protection and Affordable Care Act. Under an interagency agreement, OPM assists with the administration of the program, including reviewing the performance of the health insurance issuer chosen to offer health plans within the federal program, and overseeing its operations on an ongoing basis.", "We currently have no open recommendations or matters for congressional consideration related to this priority goal.", "Patient Protection and Affordable Care Act: Contracts Awarded and Consultants Retained by Federal Departments and Agencies to Assist in Implementing the Act. GAO-11-797R. Washington, D.C.: July 14, 2011.\nPre-existing Condition Insurance Plans: Program Features, Early Enrollment and Spending Trends, and Federal Oversight Activities. GAO-11-662. Washington, D.C.: July 27, 2011.\nFederal Employees’ Health Plans: Premium Growth and OPM’s Role in Negotiating Benefits. GAO-03-236. Washington, D.C.: December 31, 2002.", "John E. Dicken, Director, Health Care, [email protected], 202-512-7043.\nStanley J. Czerwinski, Director, Strategic Issues, [email protected], 202-512-6520.", "Maintain speed of national security background investigations. Through September 30, 2013, maintain a 40 day or less average completion time for the fastest 90 percent of initial national security investigations.", "OPM’s priority goal of maintaining a 40 day or less average completion time for the fastest 90 percent of initial national security investigations is related to an area we previously designated as high risk. Specifically, in January 2005 we first placed DOD’s security clearance program—which comprises the vast majority of government-wide clearances—on our High Risk List because we identified significant delays in completing security clearances, which sometimes took up to a year to complete. OPM is currently the investigative service provider for the majority of the executive branch, including DOD. We removed the high-risk designation from DOD’s program in February 2011 due to both high-level attention from various executive branch agencies, including DOD, OMB, and the Director of National Intelligence and improvement in the timeliness of DOD clearances, among other things. For example, we found in January 2011 that DOD met the congressionally directed Intelligence Reform and Terrorism Prevention Act of 2004 goal of 40 days for initial investigations throughout fiscal year 2010. This timeliness measure does not include data on periodic reinvestigations. Timeliness data for investigations is OPM’s responsibility as the investigative service provider for DOD. For example, the fastest 90 percent of DOD initial clearance investigations were processed by OPM in an average of 35 days in fiscal year 2010. In addition, in 2010 the Performance Accountability Council (PAC) reported that OPM was meeting investigation timeliness goals for many of the agencies for which it conducts national security background investigations. However, we have not comprehensively reported on the timeliness statistics for all of the national security background investigations conducted by OPM. Instead, our previous work has focused on the timeliness of DOD clearances because DOD’s program was on our High Risk List.\nWhile OPM conducts background investigations for most of the federal government, executive branch agencies conduct other phases in the federal government’s personnel security clearance process. For example, the requesting agency determines which positions—military, civilian, or private-industry contracts—require access to classified information and, therefore, which people must apply for and undergo a security clearance investigation. OPM, in turn, conducts these investigations using federal investigative standards and OPM internal guidance as criteria for collecting background information on applicants. Adjudicators from the requesting agencies use the information contained in the resulting OPM investigative reports and consider federal guidelines to determine whether an applicant is eligible for a personnel security clearance.\nDuring the time while DOD’s security clearance program was on our High Risk List, the executive branch initiated actions to reform the government- wide security clearance process, in which OPM had a role as the investigative service provider. As part of this government-wide reform effort, Executive Order 13467 established a leadership structure by creating the PAC. The order appointed the Deputy Director for Management at OMB as the chair of the council and designated the Director of National Intelligence as the Security Executive Agent and the Director of OPM as the Suitability Executive Agent. The PAC is responsible for holding agencies accountable for the implementation of suitability, security, and, as appropriate, contractor employee fitness processes and procedures. In turn, the PAC issued a Strategic Framework in February 2010, which set forth a mission and strategic goals, performance measures, a communications strategy, roles and responsibilities, and metrics to measure the quality of security clearance investigations and adjudications. Some of the goals and performance measures developed by the PAC were aimed at addressing the timeliness of initial security clearance investigations. In addition to the timeliness of initial investigations and as the result of our work, members of Congress and federal agencies have expressed concerns about the quality of the background investigations. The leaders of the PAC also committed to measuring the quality of investigations by further developing quality metrics in a memorandum to Congress on May 31, 2010. While OPM’s agency priority goal to measure timeliness is important; it does not capture the competing priority of measuring the quality of the investigations. Finally, the Intelligence Reform and Terrorism Prevention Act required the executive branch to annually report on timeliness of background investigations; however, this requirement expired in 2011, so there is no mechanism to report the timeliness of the end-to-end clearance process—including timeliness of initiation and adjudication phases of the process, the timeliness of investigations that took OPM longer than 40 days to complete, or other security clearance reform- related goals—to Congressional oversight committees.", "In our May 2009 report, we recommended that the Director of OPM direct the Associate Director of OPM’s Federal Investigative Services Division to measure the frequency with which its investigative reports meet federal investigative standards in order to improve the completeness of future investigation documentation. As of March 2013, OPM has not implemented the recommendation to measure how frequently investigative reports meet federal investigative standards. Instead, OPM assesses the quality of investigations based on voluntary reporting from customer agencies. Specifically, OPM tracks investigations that are (1) returned for rework from the requesting agency; (2) identified as deficient using a web-based survey; and (3) identified as deficient through adjudicator calls to OPM’s quality hotline. In our past work, we noted that the number of investigations returned for rework is not by itself a valid indicator of the quality of investigative work because adjudication officials said they were reluctant to return incomplete investigations in anticipation of delays that would impact timeliness. Further, relying on agencies to voluntarily provide information on investigation quality may not reflect the quality of OPM’s total investigation workload. One of OPM’s customer agencies, DOD developed and implemented a tool known as RAISE to monitor the quality of investigations completed by OPM, However, OPM does not use DOD’s tool. According to an OPM official, OPM is working through the PAC to decide how the executive branch will measure quality government-wide. While the PAC considered using DOD’s RAISE tool, among others, according to the OPM official, they opted to develop another tool that better captures quality. Further, the OPM official stated OPM’s intent to implement that tool once it is developed by the PAC, but did not provide an estimated timeframe for development and implementation. Our prior work noted that in May 2010, leaders of the reform effort provided congressional members with metrics assessing According to officials quality and other aspects of the clearance process.from one of the PAC’s working groups, these metrics were communicated to executive branch agencies in June 2010. RAISE was one tool the reform team members planned to use for measuring quality.", "Personnel Security Clearances: Continuing Leadership and Attention Can Enhance Momentum Gained from Reform Effort. GAO-12-815T. Washington, D.C.: June 21, 2012.\nBackground Investigations: Office of Personnel Management Needs to Improve Transparency of Its Pricing and Seek Cost Savings. GAO-12-197. Washington, D.C.: February 28, 2012.\nHigh-Risk Series: An Update. GAO-11-278. Washington, D.C.: February 2011.\nPersonnel Security Clearances: Progress Has Been Made to Improve Timeliness but Continued Oversight Is Needed to Sustain Momentum. GAO-11-65. Washington, D.C.: November 19, 2010.\nPersonnel Security Clearances: An Outcome-Focused Strategy Is Needed to Guide Implementation of the Reformed Clearance Process. GAO-09-488. Washington, D.C.: May 19, 2009.\nDOD Personnel Clearances: Comprehensive Timeliness Reporting, Complete Clearance Documentation, and Quality Measures Are Needed to Further Improve the Clearance Process. GAO-09-400. Washington, D.C.: May 19, 2009.", "Brenda S. Farrell, Director, Defense Capabilities and Management, [email protected], 202-512-3604.", "Reduce federal retirement processing time. By July 31, 2013, Retirement Services will have reduced its case inventory so that 90 percent of all claims will be adjudicated within 60 days.", "OPM’s efforts to reduce federal retirement processing time have included attempts over 2 decades to modernize its retirement processing system by automating paper-based processes and replacing antiquated information systems. However, these efforts have been unsuccessful due to weaknesses in key management practices. Our previous reviews have identified weaknesses in project management, risk management, organizational change management, system testing, cost estimating, and progress reporting. Specifically, in February 2005, we made recommendations to address weaknesses in the following areas:\nProject management: OPM had defined major components of its retirement modernization effort, such as data conversion of paper files and development of electronic processes for capture and storage of data. However, it had not identified the dependencies among these efforts, increasing the risk that delays in one activity could have unforeseen impacts on the progress of others.\nRisk management: OPM did not have a process for identifying and tracking project risks and mitigation strategies on a regular basis. Thus, OPM lacked a mechanism to address potential problems that could adversely impact the cost, schedule, and quality of the modernization effort.\nOrganizational change management: OPM had not adequately prepared its staff for changes to job responsibilities resulting from the modernization by developing a detailed transition plan. The absence of such a plan could lead to confusion about roles and responsibilities and hinder effective system implementation.\nIn January 2008, as OPM was on the verge of deploying an automated retirement processing system, we reported deficiencies in management capabilities, and made recommendations to address them:\nTesting: The results of tests 1 month prior to the deployment of a major system component revealed that it had not performed as intended. These defects, along with a compressed testing schedule, increased the risk that the retirement processing system would not work as intended upon deployment.\nCost estimating: The cost estimate OPM developed for the modernization effort was not fully reliable. This meant that the agency did not have a sound basis for formulating budgets or developing a program baseline.\nProgress reporting: The baseline against which OPM was measuring the progress of the program did not reflect the full scope of the program; this increased the risk that variances from planned performance would not be detected.\nIn April 2009, we reported that OPM continued to have deficiencies in its cost estimating, progress reporting, and testing practices and we made recommendations to address these deficiencies, as well as additional weaknesses in the planning and oversight of the modernization effort. OPM agreed with these recommendations and began to address them, but the agency cancelled its most recent large-scale retirement modernization effort in February 2011.\nIn November 2011, agency officials, including the Chief Information Officer, Chief Operating Officer, and Associate Director for Retirement Services, told us that OPM does not plan to initiate another large-scale effort to modernize the retirement process. Rather, the officials said the agency intends to take targeted steps to improve retirement processing. More recently, in January 2012, OPM released a new plan to improve retirement processing that aims at targeted, incremental improvements rather than a large-scale modernization. Under this plan, the agency expects to eliminate its retirement processing backlog by July 2013 and accurately process 90 percent of its cases within 60 days. To meet this goal, OPM reported that it plans to hire and train 76 new staff to address retirement claims; establish higher production standards and identify potential retirement process improvements; and work with other agencies to improve the accuracy and completeness of the data they provide to OPM for use in retirement processing. However, as we have previously noted in February 2012, the plan does not address improving or eliminating the legacy information systems that currently support retirement processing. Although we have not assessed OPM’s actions or progress toward fulfilling its January 2012 plan, Performance.gov was updated to include information about the agency’s progress in December 2012. For example, the agency reported that it had met its targets for hiring new staff, as well as improving the accuracy and completeness of retirement data other agencies provide to OPM.", "We currently have no open recommendations or matters for congressional consideration related to this priority goal.", "OPM Retirement Modernization: Progress Has Been Hindered by Longstanding Information Technology Weaknesses. GAO-12-430T. Washington, D.C.: February 1, 2012.\nOPM Retirement Modernization: Longstanding Information Technology Management Weaknesses Need to Be Addressed. GAO-12-226T. Washington, D.C.: November 15, 2011.\nOffice of Personnel Management: Retirement Modernization Planning and Management Shortcomings Need to Be Addressed. GAO-09-529. Washington, D.C.: April 21, 2009.\nOffice of Personnel Management: Improvements Needed to Ensure Successful Retirement Systems Modernization. GAO-08-345. Washington, D.C.: January 31, 2008.\nOffice of Personnel Management: Retirement Systems Modernization Program Faces Numerous Challenges. GAO-05-237. Washington, D.C.: February 28, 2005.", "Valerie C. Melvin, Director, Information Management and Technology Resources Issues, [email protected], (202) 512-6304.", "", "1. Although our report included information about VA’s Strategic Plan to Eliminate the Compensation Claims Backlog in a subsequent paragraph, we revised the cited paragraph to note that VA, in response to our December 2012 report, published the plan on January 25, 2013. 2. We revised the cited paragraph to focus on VA’s Strategic Plan to Eliminate the Compensation Claims Backlog. However, as VA acknowledges in its comments, the plan does not provide individual performance goals and metrics for all initiatives. We continue to believe that without performance goals and measures clearly aligned with each of its initiatives, VA lacks assurance that it is spending its limited resources on proven methods to speed up disability claims and appeals processes.", "", "", "In addition to the above contact, Elizabeth Curda (Assistant Director) and Benjamin T. Licht supervised this review and the development of the resulting report. Virginia Chanley, Karin Fangman, Patricia Norris, Daniel Ramsey, and Dan Webb made significant contributions to this report. Robert Gebhart, Donna Miller, Jessica Nierenberg, and Ulyana Panchishin also made key contributions." ], "depth": [ 1, 1, 2, 3, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 1, 2, 1, 2, 3 ], "alignment": [ "", "h0_title h2_title h4_title h3_title h1_title", "h0_full h4_full h2_title h1_full", "h0_full h2_full", "h2_full", "h3_full", "", "", "h2_full h1_full", "h4_full", "", "h0_full h4_full", "h4_full", "h4_title", "", "", "h4_full", "", "h4_title", "", "", "h4_full", "", "h4_title", "", "", "h4_full", "", "h4_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What did GAO's review of APGs for 2012 to 2013 reveal?", "What requirements did agencies implement?", "What did agencies fail to fully explain?", "What does the act direct agencies to identify?", "How did agencies fail to meet this requirement?", "What does the act require regarding CAP goals?", "How did agencies fail to meet this requirement?", "What issues might this lack of documentation raise?", "What characterized the performance measures of APGs?", "What issues might the lack of interim targets raise?", "What requirement did OMB's guidance fail to meet?", "What did agencies fail to identify?", "How does this differ from the act's requirements?", "How do the act's requirements differ from OMB guidance?", "How was this demonstrated by GAO's investigation?", "What issues might the lack of milestones cause?", "What has GAO's work repeatedly shown regarding federal agencies?", "What requirements did the act establish?", "What does this report examine?", "What data did GAO collect to address these objectives?" ], "summary": [ "For 102 agency priority goals (APGs) for 2012 to 2013 that GAO reviewed, agencies implemented three GPRA Modernization Act of 2010 (the act) requirements.", "Agencies identified (1) a target level of performance within a 2-year time frame; (2) how their APGs contribute to their strategic goals; and (3) an agency official responsible for achieving each APG.", "Agencies did not fully explain the relationship between APGs and crosscutting efforts.", "The act directs agencies to identify federal organizations, programs, and activities that contribute to each APG.", "Agencies identified internal contributors to their APGs, but did not identify external contributors for 34 of 102 APGs. In some cases the APGs appeared to be internally focused; however, in others GAO's work has shown there are external contributors, but none were listed.", "In addition, the act requires agencies to identify how, if at all, an APG contributes to any cross-agency priority (CAP) goals set by the Office of Management and Budget (OMB).", "Although 29 of 102 APGs appeared to support a CAP goal, only two described the link.", "When agencies do not identify external contributors or links to crosscutting efforts, it is unclear whether agencies are coordinating to limit overlap and duplication.", "Most APGs had performance measures, but many lacked interim targets.", "Without interim targets when appropriate, agencies cannot demonstrate that they are comparing actual results against planned performance on a sufficiently frequent basis to address performance issues as they arise.", "The act requires agencies to develop quarterly targets for APGs if they provide data of significant value at a reasonable level of burden. However, OMB's guidance does not fully address this.", "Agencies did not identify milestones with completion dates for many APGs.", "The act requires agencies to develop and publish milestones--scheduled events for completing planned actions--for their APGs.", "However, OMB's guidance does not direct agencies to provide specific completion dates for their milestones.", "For 39 of 102 APGs, agencies did not provide milestones with clear completion dates for the next quarter or the remainder of the goal period.", "Without milestones, agencies are unable to demonstrate that they have properly planned for the actions needed to accomplish their goals and are tracking progress.", "GAO’s work has repeatedly shown that federal agencies must coordinate better to achieve common outcomes.", "The act established a more crosscutting and integrated approach to achieving results and improving performance, including a requirement that agencies identified by OMB establish APGs. The act directs GAO to review its implementation at several junctures; this report is part of a series doing so.", "This report (1) examines the extent to which 24 agencies identified by OMB implemented selected requirements related to 102 APGs, and (2) comments on the 21 APGs of five selected agencies, based on prior GAO and IG work, including the status of relevant open recommendations.", "To address these objectives, GAO reviewed the act’s requirements for APGs, OMB guidance, APG information from Performance.gov and related agency documents; and interviewed OMB officials. GAO selected DHS, HUD, DOT, VA, and OPM for their variety of APG program types and linkage to CAP goals. For each agency, GAO reviewed its past work, as well as that of IGs, related to the APGs and updated the status of open recommendations." ], "parent_pair_index": [ -1, 0, -1, -1, 1, -1, 3, 4, -1, 0, 0, -1, 0, 1, 0, 0, -1, -1, -1, 2 ], "summary_paragraph_index": [ 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 4, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Six Agencies Supported Sixty-Five Solar-Related Initiatives with a Variety of Key Characteristics", "Over Half of the Agencies’ Initiatives Exclusively Supported Solar Energy Technology", "Initiatives Are Fragmented across Agencies and Sometimes Overlap, but Agency Officials Reported Coordination to Avoid Duplication", "Fragmented Initiatives Overlapped in Their Technology Advancement Activities, Types of Technologies, Funding Recipients, and Goals", "To Avoid Duplication, Agencies Coordinate and Verify That Recipients Did Not Receive Duplicative Funding", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Solar-Related Initiatives at Six Federal Agencies, Descriptions and Fiscal Years 2010 and 2011 Obligations", "Appendix III: GAO’s Questionnaire for Federal Agencies with Initiatives Supporting Solar Energy Technologies", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Solar energy can be used to heat, cool, and power homes and businesses with a variety of technologies that convert sunlight into usable energy. Examples of solar energy technologies include photovoltaics, concentrated solar power, and solar hot water. Solar cells, also known as photovoltaic cells, convert sunlight directly into electricity. Photovoltaic technologies are used in a variety of applications. They can be found on residential and commercial rooftops to power homes and businesses; utility companies use them for large power stations, and they power space satellites, calculators, and watches. Concentrated solar power uses mirrors or lenses to concentrate sunlight and produce intense heat, which is used to generate electricity via a thermal energy conversion process; for example, by using concentrated sunlight to heat a fluid, boil water with the heated fluid, and channel the resulting steam through a turbine to produce electricity. Most concentrated solar power technologies are designed for utility-scale operations and are connected to the electricity-transmission system. Solar hot water technologies use a collector to absorb and transfer heat from the sun to water, which is stored in a tank until needed. Solar hot water systems can be found in residential and industrial buildings.\nInnovation in solar energy technology takes place across a spectrum of activities, which we refer to as technology advancement activities, and which include basic research, applied research, demonstration, and commercialization. For purposes of this report, we defined basic research to include efforts to explore and define scientific or engineering concepts or is conducted to investigate the nature of a subject without targeting any specific technology; applied research includes efforts to develop new scientific or engineering knowledge to create new and improved technologies; demonstration activities include efforts to operate new or improved technologies to collect information on their performance and assess readiness for widespread use; and commercialization efforts transition technologies to commercial applications by bridging the gap between research and demonstration activities and venture capital funding and marketing activities.\nCongressional Budget Office, Federal Financial Support for the Development and Production of Fuels and Energy Technologies (Washington, D.C.: March 2012). as a whole but not necessarily for the firms that invested in the activities. For example, basic research can create general scientific knowledge that is not itself subject to commercialization but that can lead to multiple applications that private companies can produce and sell. As activities get closer to the commercialization stage, the private sector may increase its support because its return on investment increases.", "We identified 65 solar-related initiatives with a variety of key characteristics at six federal agencies. Over half of the 65 initiatives supported solar projects exclusively; the remaining initiatives supported solar energy technologies in addition to other renewable energy technologies. The initiatives demonstrated a variety of key characteristics, including focusing on different types of solar technologies and supporting a range of technology advancement activities from basic research to commercialization, with an emphasis on applied research and demonstration activities. Additionally, the initiatives supported several types of funding recipients including universities, industry, nonprofit organizations, and federal labs and researchers, primarily through grants and contracts. Agency officials reported that they obligated around $2.6 billion for the solar projects in these initiatives in fiscal years 2010 and 2011.", "In fiscal years 2010 and 2011, six federal agencies—DOD, DOE, EPA, NASA, NSF, and USDA—undertook 65 initiatives that supported solar energy technology, at least in part. (See app. II for a full list of the initiatives). Of these initiatives, 35 of 65 (54 percent) supported solar projects exclusively and 30 (46 percent) also supported projects that were not solar. For example, in fiscal years 2010 and 2011, DOE’s Solar Energy Technologies Program—Photovoltaic Research and Development initiative, had 263 projects, all of which focused on solar energy. In contrast, in fiscal years 2010 and 2011, DOE’s Hydrogen and Fuel Research and Development initiative—which supports wind and other renewable sources that could be used to produce hydrogen—had 209 projects, 26 of which were solar projects. Although initiatives support solar energy technologies, in a given year, they might not support any solar projects. For example, NSF officials noted that the agency funds research across all fields and disciplines of science and engineering and that individual initiatives invite proposals for projects across a broad field of research, which includes solar-related research in addition to other renewable energy research. However, in any given year, NSF may not fund proposals that address solar energy because either no solar proposals were submitted or the submitted solar-related proposals were not deemed meritorious for funding based upon competitive, merit-based reviews.\nAlthough more than half of the agencies’ initiatives supported solar energy projects exclusively, the majority of projects supported by all 65 initiatives were not focused on solar. As shown in table 1, of the 4,996 total projects active in fiscal years 2010 and 2011 under the 65 initiatives, 1,506 (30 percent) were solar projects, and 3,490 (70 percent) were not solar projects.\nAgencies’ solar-related initiatives supported different types of solar energy technologies. According to agency officials responding to our questionnaire, 47 of the 65 initiatives supported photovoltaic technologies, and 18 supported concentrated solar power; some initiatives supported both of these technologies or other solar technologies. For example, NSF’s CHE-DMR-DMS Solar Energy Initiative (SOLAR) supports both photovoltaic and concentrated solar power technologies, including a project that is developing hybrid organic/inorganic materials to create ultra-low-cost photovoltaic devices and to advance solar concentrating technologies.\nThese initiatives supported solar energy technologies through multiple technology advancement activities, ranging from basic research to commercialization. As shown in figure 1, five of the six agencies supported at least three of the four technology advancement activities we examined, and four of the six supported all four.\nOur analysis showed that of the 65 initiatives, 20 initiatives (31 percent) supported a single type of technology advancement activity; 45 of the initiatives (69 percent) supported more than one type of technology advancement activity; and 4 of those 45 initiatives (6 percent) supported all four. For example, NASA’s Solar Probe Plus Technology Development initiative—which tests the performance of solar cells in elevated temperature and radiation environments such as near the sun— supported applied research exclusively. In contrast, NASA’s Small Business Innovations Research/Small Business Technology Transfer Research initiative—which seeks high-technology companies to participate in government-sponsored research and development efforts critical to NASA’s mission—supported all four technology advancement activities. The technology advancement activities supported by the initiatives were applied research (47 initiatives), demonstration (41 initiatives), basic research (27 initiatives), and commercialization (17 initiatives).\nThe initiatives supported these technology advancement activities by providing funding to four types of recipients: universities, industry, nonprofit organizations, and federal laboratories and researchers. The initiatives most often supported universities and industry. In many cases, initiatives provided funding to more than one type of recipient. Specifically, our analysis showed that of the 65 initiatives, 23 of the initiatives (35 percent) supported one type of recipient; 21 of the initiatives (32 percent) provided funding to at least two types of recipients; 17 initiatives (26 percent) supported three types; and 4 initiatives (6 percent) supported all four. In two cases, agency officials reported that their initiatives supported “other” types of recipients, which included college students and military installations.\nInitiatives often supported a variety of recipient types, but individual agencies more often supported one or two types. As shown in figure 2, DOE’s initiatives most often supported federal laboratories and researchers; DOD’s most often supported industry recipients; NASA’s supported federal laboratories and industry equally; NSF’s supported universities exclusively. For example, NASA’s Small Business Innovations Research/Small Business Technology Transfer Research initiative provided contracts to industry to participate in government- sponsored research and development for advanced photovoltaic technologies to improve efficiency and reliability of solar power for space exploration missions. NSF’s Emerging Frontiers in Research and Innovation initiative provided grants to universities for, among other purposes, promoting breakthroughs in computational tools and intelligent systems for large-scale energy storage suitable for renewable energy sources such as solar energy.\nFederal solar-related initiatives provided funding to these recipients through multiple mechanisms, often using more than one mechanism per initiative. As shown in figure 3, the initiatives primarily used grants and contracts. Of the 65 initiatives, 27 awarded grants, and 36 awarded contracts; many awarded both. Agency officials also reported funding solar projects via cooperative agreements, loans, and other mechanisms.\nAgency officials reported that the 65 initiatives as a group used multiple funding mechanisms, but we found that individual agencies tended to use primarily one or two funding mechanisms. For example, USDA exclusively used grants, while DOD tended to use contracts. DOE reported using grants and cooperative agreements almost equally. For example, DOE’s Solar ADEPT initiative, an acronym for “Solar Agile Delivery of Electrical Power Technology,” awards cooperative agreements to universities, industry, nonprofit organizations, and federal laboratories and researchers. Through a cooperative agreement, the initiative supported a project at the University of Colorado at Boulder that is developing advanced power conversion components that can be integrated into individual solar panels to improve energy yields. According to the project description, the power conversion devices will be designed for use on any type of solar panel. The University of Colorado at Boulder is partnering with industry and DOE’s National Renewable Energy Laboratory on this project.\nIn responding to our questionnaire, officials from the six agencies reported that they obligated around $2.6 billion for the 1,506 solar projects in fiscal years 2010 and 2011. These obligations data represented a mix of actual obligations and estimates. Actual obligations were provided for both years for 51 of 65 initiatives. Officials provided estimated obligations for 12 initiatives for at least 1 of the 2 years, and officials from another 2 initiatives were unable to provide any obligations data. Those officials who provided estimates or were unable to provide obligations data noted that the accuracy or the availability of the obligations data was limited because isolating the solar activities from the overall initiative obligations can be difficult. (See app. II for a full list of the initiatives and their related obligations.) As shown in table 2, over 90 percent of the funds (about $2.3 billion of $2.6 billion) were obligated by DOE. The majority of DOE’s obligations (approximately $1.7 billion) were obligated as credit subsidy costs—the government’s estimated net long-term cost, in present value terms, of the loans—as part of Title XVII Section 1705 Loan Guarantee Program from funds appropriated by Congress under the American Recovery and Reinvestment Act (Recovery Act). Even excluding the Loan Guarantee Program funds, DOE obligated $661 million, which is more than was obligated by the other five agencies combined.", "The 65 solar-related initiatives are fragmented across six agencies and many overlap to some degree, but agency officials reported a number of coordination activities to avoid duplication. We found that many initiatives overlapped in the key characteristics of technology advancement activities, types of technologies, types of funding recipients, or broad goals; however, these areas of overlap do not necessarily lead to duplication of efforts because the initiatives sometimes differ in meaningful ways or leverage the efforts of other initiatives, and we did not find clear evidence of duplication among initiatives. Officials from most initiatives reported that they engage in a variety of coordination activities with other solar-related initiatives, at times specifically to avoid duplication.", "The 65 solar-related initiatives are fragmented in that they are implemented by various offices across six agencies and address the same broad area of national need. In March 2011, we reported that fragmentation has the potential to result in duplication of resources. However, such fragmentation is, by itself, not an indication that unnecessary duplication of efforts or activities exists. For example, in our March 2011 report, we stated that there can be advantages to having multiple federal agencies involved in a broad area of national need— agencies can tailor initiatives to suit their specific missions and needs, among other things. In particular, DOD is able to focus its efforts on solar energy technologies that serve its energy security mission, among other things, and NASA is able to focus its efforts on solar energy technologies that aid in aeronautics and space exploration, among other things.\nAs table 3 illustrates, we found that many initiatives overlap because they support similar technology advancement activities and types of funding recipients. For example, initiatives that support basic and applied research most often fund universities, and those initiatives that support demonstration and commercialization activities most often fund industry.\nAlmost all of the initiatives overlapped to some degree with at least one other initiative in that they support broadly similar technology advancement activities, types of technologies, and eligible funding recipients.\nTwenty-seven initiatives support applied research for photovoltaic technologies by universities. For example, NSF’s Engineering Research Center for Quantum Energy and Sustainable Solar Technologies at Arizona State University pursues cost-competitive photovoltaic technologies with sustained market growth. The Air Force’s Space Propulsion and Power Generation Research initiative partners with various universities to develop improved methods for powering spacecraft, including solar cell technologies.\nSixteen initiatives support demonstration activities focused on photovoltaic technologies by federal laboratories and researchers. For example, NASA’s High-Efficiency Space Power Systems initiative conducts activities at NASA’s Glenn Research Center to develop technologies to provide low cost and abundant power for deep space missions, such as highly reliable solar arrays, to enable a crewed mission to explore a near Earth asteroid. DOE’s Solar Energy Technologies Program (SETP), which includes the Photovoltaic Research and Development initiative, works with national laboratories such as the National Renewable Energy Laboratory, Sandia National Laboratories, Brookhaven National Laboratory, and Oak Ridge Laboratory to advance a variety of photovoltaic technologies to enable solar energy to be as cost competitive as traditional energy sources by 2015.\nSeven initiatives supported applied research on concentrated solar power technologies by industry. For example, DOE’s SETP Concentrated Solar Power subprogram, which focuses on reducing the cost of and increasing the use of solar power in the United States, funded a company to develop the hard coat on reflective mirrors that is now being used in concentrated solar power applications. In addition, DOD’s Fast Access Spacecraft Testbed Program, which concluded in March 2011, funded industry to demonstrate a suite of critical technologies including high-efficiency solar cells, sunlight concentrating arrays, large deployable structures, and ultra- lightweight solar arrays.\nAdditionally, 40 of the 65 initiatives overlap with at least one other initiative in that they supported similar broad goals, types of technologies, and technology advancement activities.\nProviding lightweight, portable energy sources. Officials from several initiatives within DOD reported that their initiatives supported demonstration activities with the broad goal of providing lightweight, portable energy sources for military applications. For example, the goal of the Department of the Army’s Basic Solar Power Generation Research initiative is to determine the feasibility and applicability of lightweight flexible, foldable solar panels for remote site power generation in tactical battlefield applications. Similarly, the goal of the Office of the Secretary of Defense’s Engineered Bio-Molecular Nano- Devices and Systems initiative is to provide a low-cost, lightweight, portable photovoltaic device to reduce the footprint and logistical burden on the warfighter.\nArtificial photosynthesis. Several initiatives at DOE and NSF reported having the broad goal of supporting artificial photosynthesis, which converts sunlight, carbon dioxide, and water into a fuel, such as hydrogen. For example, one of DOE’s Energy Innovation Hubs, the Fuels from Sunlight Hub, supports basic research to develop an artificial photosynthesis system with the specific goals of (1) understanding and designing catalytic complexes or solids that generate chemical fuel from carbon dioxide and/or water; (2) integrating all essential elements, from light capture to fuel formation components, into an effective system; and (3) providing a pragmatic evaluation of the system under development. NSF’s Catalysis and Biocatalysis initiative has a specific goal of developing new materials that will be catalysts for converting sunlight into usable energy for direct use, or for conversion into electricity, or into fuel for use in fuel cell applications.\nIntegrating solar energy into the grid. Officials from several initiatives reported focusing on demonstration activities for technologies with the broad goal of integrating solar or renewable energies into the grid or onto military bases. For example, DOE’s Smart Grid Research and Development initiative has a goal of developing smart grid technologies, particularly those that help match supply and demand in real time, to enable the integration of renewable energies, including solar energy, into the grid by helping stabilize variability and facilitate the safe and cost-effective operation by utilities and consumers. The goal of this initiative is to achieve a 20 percent improvement in the ratio of the average power supplied to the maximum demand for power during a specified period by 2020. DOD’s Installation Energy Research initiative has a goal of developing better ways to integrate solar energy into a grid system, thereby optimizing the benefit of renewable energy sources.\nSome initiatives may overlap on key characteristics such as technology advancement activities, types of technologies, types of recipients, or broad goals, but they also differ in meaningful ways that could result in specific and complementary research efforts, which may not be apparent when analyzing the characteristics. For example, an Army official told us that both the Army and Marine Corps were interested in developing a flexible solar substrate, which is a photovoltaic panel laminated onto fabric that can be rolled up and carried in a backpack. The Army developed technology that included a battery through its initiative, while the Marine Corps, through a separate initiative, altered the Army’s technology to create a flexible solar substrate without a battery. Other initiatives may also overlap on key characteristics, but the efforts undertaken by their respective projects may complement each other rather than result in duplication. For example, DOE officials told us that one solar company may receive funding from multiple federal initiatives for different components of a larger project, thus simultaneously supporting a common goal without providing duplicative support.\nWhile we did not find clear instances of duplicative initiatives, it is possible that there are duplicative activities among the initiatives that could be consolidated or resolved through enhanced coordination across agencies and at the initiative level. Also, it is possible that there are instances in which recipients receive funding from more than one federal source or that initiatives may fund some activities that would have otherwise sought and received private funding. Because it was beyond the scope of this work to look at the vast number of activities and individual awards that are encompassed in the initiatives we evaluated, we were unable to rule out the existence of any such duplication of activities or funding.", "Officials from 57 of the 65 initiatives (88 percent) reported coordinating with other solar-related initiatives. Coordination is important because, as we have previously reported, a lack of coordination can waste scarce funds and limit the overall effectiveness of the federal effort. We have also previously reported that coordination across programs may help address fragmentation, overlap, and duplication. Officials from nearly all initiatives that we identified as overlapping in their broad goals, types of technologies, and technology advancement activities, reported coordinating with other solar-related initiatives. In October 2005, we identified key practices that can help enhance and sustain federal agency coordination, such as (1) establishing joint strategies, which help align activities, core processes, and resources to accomplish a common outcome; (2) developing mechanisms to evaluate and report on the progress of achieving results, which allow agencies to identify areas for improvement; (3) leveraging resources, which helps obtain additional benefits that would not be available if agencies or offices were working separately; and (4) defining a common outcome, which helps overcome differences in missions, cultures, and established ways of doing business. Agency officials at solar-related initiatives reported coordination activities that are consistent with these key practices, as described below.\nSome agency officials reported undertaking formal activities within their own agency to coordinate the efforts of multiple initiatives. For example:\nEstablishing a joint strategy. NSF initiatives reported participating in an Energy Working Group, which includes initiatives in the agency’s Directorates for Mathematical and Physical Sciences and for Engineering. Officials from initiatives we identified as overlapping reported participating in the Energy Working Group. NSF formed this group to initiate coordination of energy-related efforts between the two directorates, including solar efforts, and tasked it with establishing a uniform clean, sustainable energy strategy and implementation plan for the agency.\nDeveloping mechanisms to monitor, evaluate, and report results. DOD officials from initiatives in the Army, Marine Corps, and Navy that we identified as overlapping reported they participated in the agency’s Energy and Power Community of Interest. The goal of this group is to coordinate the R&D activities within DOD. The group is scheduled to meet every quarter, but an Army official told us the group has been meeting every 3 to 4 weeks recently to produce R&D road maps and to identify any gaps in energy and power R&D efforts that need to be addressed. Because of the information sharing that occurs during these meetings, the official said the risk of such duplication of efforts across initiatives within DOD is minimized.\nIn responding to our questionnaire, agency officials also reported engaging in formal activities across agencies to coordinate the efforts of multiple initiatives. For example:\nLeveraging resources. The Interagency Advanced Power Group (IAPG), which includes the Central Intelligence Agency, DOD, DOE, NASA, and the National Institute of Standards and Technology, is a federal membership organization that was established in the 1950s to streamline energy efforts across the government and to avoid duplicating research efforts. A number of smaller working groups were formed as part of this effort, including the Renewable Energy Conversion Working Group, which includes the coordination of solar efforts. The working groups are to meet at least once each year, but according to a DOD official, working group members often meet more often than that in conjunction with outside conferences and workshops. The purpose of the meetings is to present each agency’s portfolio of research efforts and to inform and ultimately leverage resources across the participating agencies. According to IAPG documents, group activities allow agencies to identify and avoid duplication of efforts. Several of the initiatives that we identified as overlapping also reported participating in the IAPG.\nLeveraging resources and defining a common outcome. DOE’s SETP in the Office of Energy Efficiency and Renewable Energy (EERE) coordinates with DOE’s Office of Science and the Advanced Research Projects Agency-Energy (ARPA-E) through the SunShot Initiative, which according to SunShot officials, was established expressly to prevent duplication of efforts while maximizing agencywide impact on solar energy technologies. The goal of the SunShot Initiative is to reduce the total installed cost of solar energy systems by 75 percent. SunShot officials said program managers from all three offices participate on the SunShot management team, which holds “brain-storming” meetings to discuss ideas for upcoming funding announcements and subsequently vote on proposed funding announcements. Officials from other DOE offices and other federal agencies are invited to participate, with coordination occurring as funding opportunities arise in order to leverage resources. Officials said meetings may include as few as 25 or as many as 85 attendees, depending on the type of project and the expertise required of the attending officials. Additionally, DOE and NSF coordinate through the SunShot Initiative on the Foundational Program to Advance Cell Efficiency (F-PACE), which identifies and funds solar device physics and photovoltaic technology research and development that will improve photovoltaic cell performance and reduce module cost for grid-scale commercial applications. The initiatives that reported participating in SunShot activities also included many that we found to be overlapping.\nDeveloping joint strategies; developing mechanisms to monitor, evaluate, and report results; and defining a common outcome. The National Nanotechnology Initiative (NNI) an interagency program, which includes DOD, DOE, NASA, NSF, and USDA, among others, was established to coordinate the nanotechnology-related activities across federal agencies that fund nanoscale research or have a stake in the outcome of this research. The NNI is directed to (1) establish goals, priorities, and metrics for evaluation for federal nanotechnology research, development, and other activities; (2) invest in federal R&D programs in nanotechnology and related sciences to achieve these goals; and (3) provide for interagency coordination of federal nanotechnology research, development, and other activities. The NNI implementation plan states that the NNI will maximize the federal investment in nanotechnology and avoid unnecessary duplication of efforts. NNI includes a subgroup that focuses on nanotechnology for solar energy collection and conversion. Specifically, this subgroup is to (1) improve photovoltaic solar electricity generation with nanotechnology, (2) improve solar thermal energy generation and conversion with nanotechnology, and (3) improve solar-to-fuel conversions with nanotechnology.\nIn addition to the coordination efforts above, officials reported through our questionnaire that their agencies coordinate through discussions with other agency officials or as part of the program and project management and review processes. Some officials said such discussions and reviews among officials occur explicitly to determine whether there is duplication of funding occurring. For example, SETP projects include technical merit reviews, which include peer reviewers from outside of the federal government, as well as a federal review panel composed of officials from several agencies. Officials from SETP also participate in the technical merit reviews of other DOE offices’ projects. ARPA-E initiatives also go through a review process that includes federal officials and independent experts. DOE officials told us that an ARPA-E High Energy Advanced Thermal Storage review meeting, an instance of potential duplicative funding was found with an SETP project. Funding of the project through SETP was subsequently removed because of the ARPA-E review process, and no duplicative funds were expended.\nIn addition to coordinating to avoid duplication, officials from 59 of the 65 initiatives (91 percent) reported that they determine whether applicants have received other sources of federal funding for the project for which they are applying. Twenty-one of the 65 initiatives (32 percent) further reported that they have policies that either prohibit or permit recipients from receiving other sources of federal funding for projects. Some respondents to our questionnaire said it is part of their project management process to follow up with funding recipients on a regular basis to determine whether they have subsequently received other sources of funding. For example, DOE’s ARPA-E prohibits recipients from receiving duplicative funding from either public or private sources, and requires disclosure of other sources of funding both at the time of application, as well as on a quarterly basis throughout the performance of the award. Even if an agency requires that such funding information be disclosed on applications, applicants may choose not to disclose it. In fact, it was recently discovered that a university researcher did not identify other sources of funding on his federal applications as was required and accepted funding for the same research on solar conversion of carbon dioxide into hydrocarbons from both NSF and DOE. Ultimately, the professor was charged with and pleaded guilty to wire fraud, false statements, and money laundering in connection with the federal research grant.", "We provided DOD, DOE, EPA, NASA, NSF, and USDA with a draft of this report for review and comment. USDA generally agreed with the overall findings of the report. NASA and NSF provided technical or clarifying comments, which we incorporated as appropriate. DOD, DOE, and EPA indicated that they had no comments on the report.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretaries of Agriculture, Defense, and Energy; the Administrators of EPA and NASA; the Director of NSF; the appropriate congressional committees; and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "The objectives of our report were to identify (1) solar-related initiatives supported by federal agencies in fiscal years 2010 and 2011 and key characteristics of those initiatives and (2) the extent of fragmentation, overlap, and duplication, if any, among federal solar-related initiatives, as well as the extent of coordination among these initiatives.\nTo inform our objectives, we reviewed a February 2012 GAO report that was conducted to identify federal agencies’ renewable energy initiatives, which included solar-related initiatives, and examine the federal roles the agencies’ initiatives support. The GAO report on renewable energy- related initiatives identified nearly 700 initiatives that were implemented in fiscal year 2010 across the federal government, of which 345 initiatives supported solar energy. For purposes of this report, we only included those solar-related initiatives that we determined were focused on research and development (R&D), and commercialization, which we defined as follows:\nResearch and development. Efforts ranging from defining scientific concepts to those applying and demonstrating new and improved technologies.\nCommercialization. Efforts to bridge the gap between research and development activities and the marketplace by transitioning technologies to commercial applications.\nWe did not include those initiatives that focused solely on deployment activities, which include efforts to facilitate or achieve widespread use of existing technologies either in the commercial market or for nonmarket uses such as defense, through their construction, operation, or use. Initiatives that focus on deployment activities include a variety of tax incentives. We also narrowed our list to only those initiatives that focused research on advancing or developing new and innovative solar technologies.\nNext, we shared our list with agency officials and provided our definitions of R&D and commercialization. We asked officials to determine whether the list was complete and accurate for fiscal year 2010 initiatives that met our criteria, whether those initiatives were still active in fiscal year 2011, and whether there were any new initiatives in fiscal year 2011. If officials wanted to remove an initiative from our list, we asked for additional information to support the removal. In total, we determined that there were 65 initiatives that met our criteria.\nTo identify and describe the key characteristics of solar-related initiatives implemented by federal agencies, we developed a questionnaire to collect information from officials of those 65 federal solar energy-related initiatives. The questionnaire was prepopulated with information that was obtained from the agencies for GAO’s renewable energy report including program descriptions, type of solar technology supported, funding mechanisms, and type of funding recipients. Questions included the type of technology advancement activities, obligations for solar activities in fiscal years 2010 and 2011, initiative-wide and solar-specific goals, and coordination efforts with other solar-related initiatives. We conducted pretests with officials of three different initiatives at three different agencies to check that (1) the questions were clear and unambiguous, (2) terminology was used correctly, (3) the questionnaire did not place an undue burden on agency officials, (4) the information could feasibly be obtained, and (5) the questionnaire was comprehensive and unbiased. An independent GAO reviewer also reviewed a draft of the questionnaire prior to its administration. On the basis of feedback from these pretests and independent review, we revised the survey in order to improve its clarity.\nAfter completing the pretests, we administered the questionnaire. We sent questionnaires to the appropriate agency liaisons in an attached Microsoft Word form, who in turn sent the questionnaires to the appropriate officials. We received questionnaire responses for each initiative and, thus, had a response rate of 100 percent. After reviewing the responses, we conducted follow-up e-mail exchanges or telephone discussions with agency officials when responses were unclear or conflicting. When necessary, we used the clarifying information provided by agency officials to update answers to questions to improve the accuracy and completeness of the data.\nBecause this effort was not a sample survey, it has no sampling errors. However, the practical difficulties of conducting any survey may introduce errors, commonly referred to as nonsampling errors. For example, difficulties in interpreting a particular question, sources of information available to respondents, or entering data into a database or analyzing them can introduce unwanted variability into the survey results. However, we took steps to minimize such nonsampling errors in developing the questionnaire—including using a social science survey specialist for design and pretesting the questionnaire. We also minimized the nonsampling errors when collecting and analyzing the data, including using a computer program for analysis, and using an independent analyst to review the computer program. Finally, we verified the accuracy of a small sample of keypunched records by comparing them with their corresponding questionnaires, and we corrected the errors we found. Less than 0.5 percent of the data items we checked had random keypunch errors that would not have been corrected during data processing. To conduct our analysis, a technologist compared all of the initiatives and identified overlapping initiatives as those sharing at least one common technology advancement activity, one common technology, and having similar goals. A second technologist then completed the same analysis, and the two then compared their findings and, where they differed, came to a joint decision as to which initiatives broadly overlapped on their technology advancement activities, technologies, and broad goals. If the two technologists could not come to an agreement, a third technologist determined whether there was overlap. To assess the reliability of obligations data, we asked officials of initiatives that comprised over 90 percent of the total obligations follow-up questions on the data systems used to generate that data. While we did not verify all responses, on the basis of our application of recognized survey design practices and follow-up procedures, we determined that the data used in this report were of sufficient quality for our purposes.\nWe conducted this performance audit from September 2011 to August 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Tables 4, 5, 6, 7, 8, and 9 provide descriptions, by agency, of the 65 initiatives that support solar energy technologies and the obligations for those initiatives’ solar activities in fiscal years 2010 and 2011.", "", "", "", "In addition to the individual named above, key contributors to this report included Karla Springer (Assistant Director), Tanya Doriss, Cindy Gilbert, Jessica Lemke, Cynthia Norris, Jerome Sandau, Holly Sasso, Maria Stattel, and Barbara Timmerman." ], "depth": [ 1, 1, 2, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_full", "h0_full", "h2_full h1_full", "h2_full h1_full", "h1_full", "", "h3_full h2_full", "", "", "", "", "" ] }

{ "question": [ "What solar initiatives did federal agencies support?", "What characteristics did the initiatives exhibit?", "What did agency officials report regarding appropriations?", "What characteristics do the initiatives share?", "How do the initiatives differ?", "What did GAO discover regarding the duplication of initiatives?", "What actions did agencies take to avoid duplication of initiatives?", "What is the US's most abundant energy resource?", "What did GAO report in February 2012?", "What questions did the existence of such initiatives raise?", "What was GAO asked to identify?", "What actions did GAO take in order to collect data for this report?" ], "summary": [ "Sixty-five solar-related initiatives with a variety of key characteristics were supported by six federal agencies. Over half of these 65 initiatives supported solar projects exclusively; the remaining initiatives supported solar and other renewable energy technologies.", "The 65 initiatives exhibited a variety of key characteristics, including multiple technology advancement activities ranging from basic research to commercialization by providing funding to various types of recipients including universities, industry, and federal laboratories and researchers, primarily through grants and contracts.", "Agency officials reported that they obligated about $2.6 billion for the solar projects in these initiatives in fiscal years 2010 and 2011, an amount higher than in previous years, in part, because of additional funding from the 2009 American Recovery and Reinvestment Act.", "The 65 solar-related initiatives are fragmented across six agencies and overlap to some degree in their key characteristics, but most agency officials reported coordination efforts to avoid duplication. The initiatives are fragmented in that they are implemented by various offices across the six agencies and address the same broad areas of national need.", "However, the agencies tailor their initiatives to meet their specific missions, such as DOD's energy security mission and NASA's space exploration mission.", "Many of the initiatives overlapped with at least one other initiative in the technology advancement activity, technology type, funding recipient, or goal. However, GAO found no clear instances of duplicative initiatives.", "Furthermore, officials at 57 of the 65 initiatives (88 percent) indicated that they coordinated in some way with other solar-related initiatives, including both within their own agencies and with other agencies. Such coordination may reduce the risk of duplication. Moreover, 59 of the 65 initiatives (91 percent) require applicants to disclose other federal sources of funding on their applications to help ensure that they do not receive duplicative funding.", "The United States has abundant solar energy resources and solar, along with wind, offers the greatest energy and power potential among all currently available domestic renewable resources.", "In February 2012, GAO reported that 23 federal agencies had implemented nearly 700 renewable energy initiatives in fiscal year 2010-- including initiatives that supported solar energy technologies (GAO-12-260).", "The existence of such initiatives at multiple agencies raised questions about the potential for duplication, which can occur when multiple initiatives support the same technology advancement activities and technologies, direct funding to the same recipients, and have the same goals.", "GAO was asked to identify (1) solar- related initiatives supported by federal agencies in fiscal years 2010 and 2011 and key characteristics of those initiatives and (2) the extent of fragmentation, overlap, and duplication, if any, of federal solar- related initiatives, as well as the extent of any coordination among these initiatives.", "GAO reviewed its previous work and interviewed officials at each of the agencies identified as having federal solar initiatives active in fiscal years 2010 and 2011. GAO developed a questionnaire and administered it to officials involved in each initiative to collect information on: initiative goals, technology advancement activities, funding obligations, number of projects, and coordination activities." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 0, 2, -1, -1, 1, -1, 0 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 1, 1 ] }

{ "title": [ "", "Background", "Rationale for the Change in Law", "Policies for Access to Data from Federally Funded Research Other Than Provisions in Circular A-110", "The Freedom of Information Act and Its Exemptions", "Relevant State Laws", "OMB's Revision of Circular A-110", "Reaction to the Draft Revisions", "Implementation of and Response to the Revisions", "Issues", "Has the Revision Made the Desired Information Available to the Public?", "Did the Proposed Changes to Circular A-110 Meet the Legislative Intent of the Amendment?", "What Data Are Made Available to the Public?", "To What Activities Does the Provision Apply?", "What Is Meant by \"Published\"?", "How Quickly Should Access to the Data Be Provided?", "How Long Should the Data Be Kept, and Who Should Keep Them?", "How Will Public Access to Research Data Serve the Public Interest?", "Do the Procedures Established Adequately Protect Proprietary Information and the Privacy of Human Subjects?", "Protection of Proprietary Information and Trade Secrets.", "Protection of Personal Information About Volunteer Human Subjects", "What Are the Financial Benefits and Costs of Implementation?", "How Might the Changes Affect Needed Research?", "Conclusion" ], "paragraphs": [ "The results of scientific studies are used in making many governmental policy decisions. While the studies are often published, the data on which they are based may not be, even for federally funded research. Before 1999, academic and nonprofit performers of such research were permitted but not required to make their data available to the public through provisions of the Freedom of Information Act (FOIA, 5 U.S.C. 552; see also CRS Report R41933, Freedom of Information Act (FOIA): Background and Policy Options for the 112th Congress , by [author name scrubbed]). In October 1998, a provision in P.L. 105-277 changed that, requiring that such data be made publicly available (112 Stat. 2681-495).\nTo implement the new requirement in 1999, the Office of Management and Budget (OMB) had to reconcile potentially competing public interests. On the one hand, the public has an interest in verifying the soundness of the science underlying policy decisions. That may require open access to data from government-funded research, especially if those data are used in developing federal regulations.\nOn the other hand, the public has an interest in ensuring that government-funded research is performed efficiently and effectively and that the rights of individuals involved in that research are protected. Requiring FOIA access to federally funded research could impose additional costs and other burdens on researchers and risk making information about individual research subjects public.\nThis report provides background on the 1999 revisions to federal policy, a discussion of the impacts of those changes, and an analysis of the issues raised by them. The first section describes the basis for the legislative provision and how the resulting changes affected access to federally funded research data. Following that is a discussion of agency policies and examples of access, although information available on the impacts of implementation was limited. The final section discusses issues raised by the changes and their current status.", "The disposition of records from federally funded research by academic and nonprofit institutions is governed by OMB Circular A-110, which applies to federal \"grants to and agreements with institutions of higher education, hospitals, and other nonprofit organizations.\" It does not apply to grants and agreements with state and local governments, but does apply to subawards to covered organizations, and \"[f]ederal agencies may apply [it] to [grants awarded to] commercial organizations, foreign governments, organizations under the jurisdiction of foreign governments, and international organizations.\"\nOMB circulars are \"[i]nstructions or information issued by OMB to Federal agencies [with an]… expected … continuing effect of two years or more.\" OMB requires all agencies to observe the provisions of relevant circulars.\nBoth before and after the 1999 revision, Circular A-110 had provisions on retention of and access to records, including data, pertinent to an award:\nRecords must be kept for a minimum of three years from the date an awardee submits the final expenditure report, and agencies must request transfer of records with long-term retention value to their custody. Unless required by statute, awarding agencies are prohibited from limiting public access to recipient records unless the agency can demonstrate that such records must be kept confidential and would have been exempted from disclosure by FOIA if they belonged to the agency. Agencies can also \"obtain, reproduce, publish or otherwise use the data first produced under an award,\" and authorize \"others to receive, reproduce, publish, or otherwise use such data for Federal purposes.\"\nThe P.L. 105-277 provision, commonly referred to as the Shelby amendment, mandated OMB to modify Circular A-110 \"to require Federal agencies to ensure that all data produced under an award will be made available to the public through the procedures established under the Freedom of Information Act.\" Pursuant to the changes made to Circular A-110, if a request is made under FOIA, agencies will be required to obtain certain types of research data from grantees and provide the requester access to the data, if FOIA exemptions do not apply. Also, to the extent permitted by FOIA, the agencies may collect research data in anticipation of public requests for data. FOIA and the circular also provide for cost reimbursement via fees charged to persons who request data under FOIA.", "Passage of the Shelby amendment is rooted in a two-year effort, begun in 1997 in House committee discussions, to make federally funded research data accessible to the public. A key element contributing to the effort was debate over the scientific basis of Environmental Protection Agency regulations to strengthen national ambient air quality standards for ozone and particulate matter. In particular, dispute focused on the unavailability of data underlying Harvard's \"Six Cities\" study, funded by the National Institutes of Health, that found a link between particulate air pollution and health. Industry groups requested to review the data, but the researchers refused, citing confidentiality agreements with the subjects. Subsequently, a procedure by which an independent group of scientists could review the data was developed, but the law's supporters believed that better access was needed.\nThe amendment's supporters said that two issues were raised by the EPA dispute. One was the need for transparency—that the public should have access to data that they paid for and that affects policy. The second related to accountability—that the public, not only peer reviewers or scientists, should have a right to examine the data on which agency regulations are based, since the data or interpretations of it might be incorrect, and regulations can be very expensive to implement and to comply with. Proponents argued that data access is important to ensure that regulations are well-supported scientifically and do not carry an undue burden.\nThose issues were not new, but they had been relatively quiet since the U.S. Supreme Court ruled in 1980 that a grantee's data were not agency records within the meaning of FOIA because the data had not been created or obtained by a federal agency. The case was Forsham v. Harris . The legal issue presented was whether records that were created and retained by nonagencies, but which are in some way affiliated with an agency, may be classified as agency records.\nIn Forsham, the Court established the minimum requirements for determining agency record status in the context of records created by nonagencies. The plaintiffs were a private organization of physicians who had sought to obtain the data underlying the report of a Department of Health, Education, and Welfare (HEW) grantee funded to conduct a study of diabetes treatment regimens. They alleged that the data they sought were agency records because (1) they were records of the grantee, which received its funds from a federal agency and was subject to some supervision in the use of those funds; (2) the federal agency had authority under its grant agreement to have obtained the data had it chosen to do so; and (3) the data formed the basis of the grantee's reports which were relied upon by the agency.\nThe court found that Congress had purposely excluded federal grantees from FOIA, and held that the private grantee was not an agency subject to FOIA. The court also concluded that the required data were not agency records within the meaning of FOIA because the data had not been created or obtained by a federal agency; and \"FOIA applies to records which have in fact been obtained and not to records which merely could have been obtained.\" The Court suggested that the grantee's data could become agency records if it could be shown that the agency directly controlled the grantee's day-to-day activities.\nThe legislative history of the Shelby amendment is sparse because no hearings were held on it before passage. The major indication of legislative intent, other than the language in the provision itself and the report language, is from Senate floor statements made at the time the Senate adopted the amendment. However, in the 106 th Congress, on July 15, 1999, the Subcommittee on Government Management, Information, and Technology of the House Committee on Government Reform held a hearing on H.R. 88 , a bill that would have repealed the amendment. That hearing provided additional background. Proponents of the amendment cited the costs of compliance with federal regulations coupled with the lack of public review of the data used by agencies in developing regulations. They also cited concerns about the adequacy of peer and agency review mechanisms to validate scientific data for setting regulations. Opponents cited concerns about possible violation of the privacy of human subjects, risks to confidential proprietary information, misinterpretation of data, inhibitory effects on the research enterprise, and costs of compliance.", "Research performers funded by federal grants have long been required to provide the agency with grant completion reports and copies of publications resulting from the research. Agencies have also developed policies to encourage researchers to share their data with other researchers. However, agencies did not traditionally require researchers to provide the data used or collected to the federal agency that sponsored the research. Therefore, those data were not generally available to the public.\nThose practices are based on principles and policies about governmental support of science. Many of the principles about federal support for science were discussed first in Science, the Endless Frontier, by Vannevar Bush, a science adviser to Presidents Franklin Roosevelt and Harry Truman. That document is considered by many observers to have established the basis of policy for governmental support of, and accountability for, extramural, especially academic, research by grants. After World War II, Congress initiated large programs to fund scientific research because of its perceived immediate or future value to the nation. Post-World War II enactments (creating the National Science Foundation, the National Institutes of Health, and so forth) led to the development of programs of governmental grants for research and for education and training of scientists in U.S. colleges and universities. Scientists were largely given responsibility through the research funding agencies to select research grantees by means of peer and merit review procedures; many of the responsibilities for administrative and financial accountability for grants research were shifted to universities.\nAlso in the postwar period, additional federal intramural laboratories were established to enable the conduct of applied or mission-relevant research, and private companies began research and development (R&D) for the federal government. In FY2009 about half of the $133 billion in federal funding for R&D was for research. More than three-quarters of the R&D funds were extramural—provided to nonfederal researchers. Universities were the single largest performer of federally funded research, receiving half of research funds, and industry was the largest performer of development, receiving more than two-thirds of those funds. In short, Congress, \"in some instances, made a conscious decision to finance this research in the private sector [that is, in academic institutions, other nonprofit institutions, and industry], rather than to create an alternative state system of research. In so doing it has attempted to preserve value peculiar to private systems ... ,\" including grantee autonomy, while incorporating federal interests. A legal interpretation of these private interests relevant to grant research was discussed in Forsham, including \"the values of competitive priority and peer recognition ...\" and the preservation of \"grantee autonomy.\"\nThe system of federal grants to support scientific research reflects principles that scientists consider important to the conduct of research. Those include scientific peer review of data and findings, replication of research results, use of publications to award credit for discovery and interpretation of data, and protection of the process of scientific inquiry. Especially important to scientists is public discussion of preliminary findings and research data without the potential for interference by political interests that might act to oppose research in progress.\nEven before passage of the Shelby amendment, Circular A-110 allowed agencies to obtain and use the data produced under an award and authorized others to use \"such data for federal purposes\" (OMB Circular A-110, 36(c)). However, neither Circular A-110 nor other instruments set overall federal policy about ownership of data produced under grant awards. In general researchers acted as owners, and agencies permitted them to act as owners, of data in that they retain them and control access to them.\nOver time, federal agencies developed their own separate policies that generally endorse sharing by the researchers of recorded information following publication of research results, with access limited to other researchers and with adequate safeguards for protection of confidential information relating to human subjects or confidential commercial information. Some agencies allow public access to research data via databases. Several major research funding agencies—such as the National Science Foundation (NSF), the National Institutes of Health (NIH), and the National Aeronautics and Space Administration (NASA)—encourage or require researchers to share raw data, slides, or physical samples with other researchers, usually, but not in all cases, after publication of research results. Agencies stipulate a variety of time periods for researchers to retain data, ranging from three to seven years; some require researchers to provide data automatically to other researchers; others do not.\nFor instance, the 1994 policy governing the National Institutes of Health, the federal agency that provides the largest amount of federal research funds (predominately in the life sciences) to universities and colleges, required supported researchers \"to make results and accomplishments of their activities available to the public,\" although there was no specific requirement with respect to data per se. However, NIH grantees and contractors were required to make \"unique research resources,\" including physical samples such as specific cell lines and cloned DNA, available to other researchers following publication or fulfillment of a contract. In certain cases researchers are expected to deposit data in data banks to permit efficient access to the scientific community.\nIn 2003, NIH released a policy on sharing research data, requiring grant applications for amounts over $500,000 to address data sharing. The final notice states that \"NIH expects and supports the timely release and sharing of final research data from NIH-supported studies for use by other researchers.\" The plan must take into account relevant privacy requirements and other laws and regulations, which require, for example, removal of personally identifiable information. NIH does not require that data be released while the research is in progress, but it must be made available by the time of publication of the main results from the data.\nNSF is the second largest federal funder of research at universities and colleges. It supports research in all areas of science. From its inception in 1950 until 1989, NSF had no written policy on data sharing (except relating to Automated Data Processing (ADP), software and large databases, which were written beginning in 1969). Its early policies allowed nongovernmental scientist/grantees to use their own professional procedures and incentives to promote sharing of information. It expected grantees to share data consonant with the principles of scientific exchange and replication in scientific research. In 1984, the NSF National Science Board adopted a data sharing policy. In 1989, the findings of an NSF committee were incorporated into a written data sharing policy that appeared in NSF's grant and management documents. Since the 1990s, NSF grantees have been expected to promptly submit findings for publication, and to \"share with other researchers, at no more than incremental cost and within a reasonable time, the primary data, samples, physical collections and other supporting materials created or gathered in the course of [the] work.\" Grantees are also \"encouraged to share software and inventions.\"\nOne prominent move toward increased public access was a statement of principles from an international group of genomics researchers in 1996. It called for freely available public access to all information on the human genome that was produced at research centers performing genome sequencing at large scales.\nSome nongovernmental science policy groups have also long advocated the disclosure of research data to other researchers after publication if disclosure is balanced by protections for privacy and intellectual property rights. In 1985, a report from the National Research Council states, \"Data relevant to public policy should be shared as quickly and widely as possible, in time with public release and following appropriate review.\" A 1998 statement of the three Academy presidents urged professional societies, academic leaders, and industry to develop clear and workable standards of open communication in scientific research.\nPresaging the public pressures that would come with the enactment of the Shelby Amendment, the Council on Governmental Relations (COGR), an association of research universities, issued a paper in 1996 urging senior university officials to develop policies to respond to increasing pressures for public access to data from federally sponsored research. Noting that the tradition of FOIA exemptions might weaken, it stated, \"Scientists may not be able to defend their 'rights' in the public's view, unless they can argue convincingly that reasonable limitations of release are actually in the public's interest.\"\nThe American Association for the Advancement of Science (AAAS) Council, in early 1999, adopted a resolution stating that \"it supports the public disclosure of scientific findings and regulatory decisions, at the appropriate time and with appropriate safeguards.... \" AAAS requires that authors submitting articles for publication in Science make \"all data necessary to understand, assess, and extend the conclusions of the manuscript … available to any reader of Science, \" as well as all computer codes \"involved in the creation or analysis of data.\" It also requires that large data sets be deposited in and made available through a repository. Various other professional groups, such as the American Sociological Association, the American Economic Association, and other scientific associations, developed policies encouraging or requiring sharing of data cited in articles published in their journals. In 2009, the publishers of Nature adopted, as a condition of publication, a requirement of authors \" to make materials, data and associated protocols promptly available to readers without preconditions.\"\nA 2009 Academy report presented a broad \"Data Access and Sharing Principle: Research data, methods, and other information integral to publicly reported results should be publicly accessible.\" The report goes on to recommend,\nAll researchers should make research data, methods, and other information integral to their publicly reported results publicly accessible in a timely manner to allow verification of published findings and to enable other researchers to build on published results, except in unusual cases in which there are compelling reasons for not releasing data. In these cases, researchers should explain in a publicly accessible manner why the data are being withheld from release.\nIt also recommended that each research field have a set of standards for sharing data, developed through a process involving not only researchers and their institutions but other stakeholders, such as sponsors, journals, and public interest organizations.\nAlso in 2009, a report for the National Science and Technology Council by an interagency working group referred to digital scientific data as \"national and global assets\" and recommended the development of a structured approach to preservation of and access to such data throughout the life cycle of the data. It stated that \"preservation and access capabilities are critical to the progress of individuals, nations, science, and society.\" The report recommended that agencies develop data policies \"to maximize appropriate information access and utility and to provide for rational, cost-efficient data life cycle management.\"\nThe America Competes Reauthorization Act of 2010 ( P.L. 111-358 ) required the Director of the Office of Science and Technology Policy (OSTP), via a working group, to coordinate agency policies \"related to the dissemination and long-term stewardship of the results of unclassified research, including digital data and peer-reviewed scholarly publications, supported wholly, or in part, by funding from the Federal science agencies\" (Sec. 103(a)). The act required a report to Congress, which was submitted in March 2012. The report summarized results of a Request for Information soliciting public input on public access to digital data. Responses showed broad support for increasing public access and requiring funding proposals to include data management plans. The report also stated that most federal agencies did not have policies on public accessibility for \"data generated through Federal grants, cooperative agreements, and some other types of funding mechanism.\"\nIn a February 2013 memorandum to federal agency heads, the OSTP Director affirmed the Obama Administration's commitment \"to ensuring that … the direct results of federally funded scientific research are made available to and useful for the public, industry, and the scientific community. Such results include peer-reviewed publications and digital data.\" It requires federal agencies funding more than $100 million in R&D annually to develop and implement plans for increasing public access to data generated after the effective date of the memorandum from unclassified research funded at least in part by federal funds.", "FOIA provides a procedure for any individual to obtain access to information in records held by federal executive agencies. FOIA does not require the requester of information to give a reason for the request. It presumes that the public has a right to information held by government agencies and allows access for any purpose, with the following exemptions (5 U.S.C. 552b):\n1. information that is properly classified to be kept secret in the interests of national defense or foreign policy, 2. information on internal personnel issues, 3. information that is exempted from disclosure by other statutes, 4. trade secrets and commercial or financial information that is privileged or confidential, 5. internal agency memos available only by litigation, 6. personnel, medical, or similar files, whose release would constitute an unwarranted invasion of privacy, 7. records or information compiled for law enforcement and whose release would compromise impartial adjudication or disclose information about law enforcement processes and related issues, 8. information related to the supervision of financial institutions, and 9. geological and geophysical information and data, including maps, concerning wells.\nThe law allows, but does not require, the agencies to withhold or redact agency records pursuant to these exemptions. In many cases, agencies may make discretionary disclosures of exempt information \"as a matter of good public policy.\"\nThe exemptions do not include any specific \"public interest\" provision, and the act \"does not authorize withholding of information or limit the availability of records to the public, except as specifically stated.\" Also, some observers say that the courts have interpreted the exemptions narrowly, promoting disclosure.\nFOIA also permits agencies to charge requesters for the cost of complying, although agencies do not retain the reimbursements, which go to the Treasury. Only direct costs can be reimbursed, and they are limited at most to search, duplication, and review. Lower charges apply to certain classes of requesters, such as educational institutions and the media.\nBefore passage of the Shelby amendment, private performers of federally funded research were not required to provide federal agencies with raw data and related information in response to FOIA requests. However, if the funding agency obtained the data for \"federal purposes,\" such as to investigate possible scientific misconduct, the data became agency records subject to FOIA. In addition, intramural research, performed directly by federal agencies, is accessible to the public, provided that none of the FOIA exemptions apply.", "All states have laws on public access to government information. Some laws provide broader access to information from nongovernmental researchers than the changes to Circular A-110 would allow, but others are more restrictive. Some observers have cited experience with those laws in commenting on the changes. For instance, Georgia's open records law allowed R.J. Reynolds Tobacco Company to try to obtain the data records of a Georgia researcher's study showing that children between the ages of 3 and 8 identified the company's cartoon camel and linked it to cigarettes. The researcher refused to allow the children to be identified and interviewed as the company wanted. The case involved litigation and a conflict between the university administration and the researcher regarding the applicability of the state law. Subsequently the State passed a law to prohibit invasion of the children's privacy, but the researcher resigned his position and abandoned the line of research he had been pursuing.\nSome state laws allow the release of specific kinds of scientific research data. California, Massachusetts, and Michigan have laws permitting the release of epidemiological data. The laws vary and some are more restrictive than the changes permitted by the language of Shelby amendment. For example, the California Public Records Act, unlike FOIA, permits an agency to withhold a record if \"on the facts of the particular case the public interest served by not making the record public clearly outweighs the public interest served by disclosure of the record.\" The law also apparently allows researchers to negotiate directly with the requesting party to protect sensitive data.", "The Shelby amendment required OMB to revise Circular A-110 by September 30, 1999. OMB published a proposed revision on February 4, 1999, and provided a 60-day comment period. After reviewing more than 9,000 comments, the agency published a second proposed revision on August 11, 1999, and provided an additional 30-day comment period. Language in both the draft and final revisions arguably restrict the application of the term data more narrowly than in the Shelby amendment, which included \"all data produced under an award\" ( Table 1 ). The first version would have applied only to data from research that had been both published and used in the development of policies or rules. The second was somewhat more restrictive; it would have applied only to research that is used in the development of regulations, for which notice and comment is required under the Administrative Procedure Act (5 U.S.C. 553, et. seq.).\nThe final revision was released on September 30, 1999, and published in the Federal Register on October 8, 1999. It was effective on November 8, 1999. It broadened the applicability of the provision from \"regulations\" to research that has been published and used in \"developing an agency action that has the force and effect of law.... \" The second proposed revision sought comments on whether the revision should apply only to regulations with impacts of $100 million or more. The final revision defined the term published as in the second proposed revision, but defined research data slightly more restrictively, replacing the term files with information , to prevent the release of video or audio tapes of research subjects. The implications of these differences in language are discussed below in the section on issues.\nThe Shelby amendment provides specifically for cost reimbursement via \"a reasonable user fee equaling the incremental cost of obtaining the data\" \"if the agency obtaining the data does so solely at the request of a private party.\" The OMB language pertaining to this issue, which did not change through the three versions of the revisions, allows an agency to obtain reimbursement of the \"full incremental cost of obtaining the research data,\" including the costs incurred by \"the agency, the recipient [of the research funding], and applicable subrecipients,\" provided that the agency obtains the data \"solely in response to a FOIA request.\" The supplementary information attached to the second proposed revision said agencies would be allowed to retain that fee \"to reimburse themselves, recipients, and applicable subrecipients, for the costs they incur.\" OMB also requested comments on estimates of such incremental costs and on the ways that grant recipients might charge such costs to their awards. The supplemental information attached to the final revision explained a procedure agencies could use to obtain reimbursements for grantees but contained the same cost-reimbursement provisions as in the first and second proposed revisions.\nThe final revised circular became effective in November 1999 . Federal agencies that subsequently issued conforming agency regulations allowed the public and interested parties to provide additional comment, as governed by the Administrative Procedure Act.", "OMB received over 9,000 public comments on the first draft revision, 55% supporting it, 45% opposing it. Over 3,000 comments on the second revision proposal were received.\nSupporters of broad public access included the United States Chamber of Commerce, the National Rifle Association, the Association of Equipment Distributors, a group of Former Administrators of the Office of Information and Regulatory Affairs in the Office of Management and Budget during the Bush and Reagan Administrations, and the Eagle Forum. Those groups argued for what the Senate sponsors discussed relating to transparency and accountability—a broad, wide- ranging provision that would provide the greatest degree of access to all types of research data and allow citizens and interest groups to examine the data supporting new government rules. Among other supporters, the Wall Street Journal stated in an editorial that \"if scientists want to take taxpayer money to conduct research, they should know that one of their main obligations is to make certain the public has full confidence in the ways those results are used. The Shelby law is a reasonable compromise that will help ensure just that.\"\nObjections to widening access to research data via FOIA—focusing especially on the potential burdens to the scientific research community or costs to a federal agency—were raised by the directors of the NSF and NIH, the President of the National Academy of Sciences, and such groups as the American Association of Universities, and AAAS. Opposition was reported also from the Pharmaceutical Research and Manufacturers of American (PhRMA), the Semiconductor Industry Association and the Boston Chamber of Commerce.\nOMB responded to such concerns in the supplementary explanatory information attached to the second proposed and final revisions of Circular A-110. For instance, the supplementary information attached to the second proposed revision said,\n[In preparing the proposed revision,] OMB has used its discretion to balance the need for public access to research data with protections of the research process. Specifically, OMB seeks to (1) further the interest of the public in obtaining the information needed to validate Federally-funded research findings, (2) ensure that research can continue to be conducted in accordance with the traditional scientific process, and (3) implement a public access process that will be workable in practice.\nSimilar language appeared in the supplementary information attached to the final revision.\nOMB also said that it \"does not construe the statute as requiring scientists to make research data publicly available while the research is still ongoing, because that would force scientists to 'operate in fishbowl' and to release information prematurely.\" The desire for scientists to do research using the traditional scientific process also led OMB to allow grantees to withhold from agencies confidential business information and private personal information (see Table 1 ).\nTwo attempts to repeal the Shelby Amendment failed. A proposed amendment to the Treasury, Postal Service, and General Government Appropriations Bill, FY2000, to withhold funding for implementation was rejected by the House Appropriations Committee ( H.Rept. 106-231 ) during markup. H.R. 88 , introduced January 6, 1999, would have repealed the amendment. Subcommittee hearings were held in July, 1999, but the bill died in committee.\nWithin a few months after promulgation of the revision, 16 agencies had incorporated the revision either via a rule or other means. Research institutions have also established procedures for responding to FOIA requests relating to the revision.", "In general, as discussed in the section on \" Policies for Access to Data from Federally Funded Research Other Than Provisions in Circular A-110 ,\" the trend in data sharing since the enactment of the revisions to Circular A-110 has been toward increased access. A commonly expressed concern about the Shelby Amendment was that resulting FOIA requests would create a substantial burden on researchers and even inhibit needed research. That concern did not appear to materialize in the years immediately following the change to the circular. The Government Accountability Office (GAO) reported in 2003 that during the first three years after the revision, only two agencies, NIH and EPA, had received FOIA requests under the provision, but none of them met the criteria of the revision. Of the 42 requests, 11 were for data from projects funded before the effective date of the revision. Data for seven were not available because the FOIA file had been destroyed under record-retention rules, and the remainder were either for information other than data or were withdrawn. Unfortunately, CRS could not locate any more recent such assessments. One study found only two requests to EPA under the Shelby Amendment between 2002 and 2012, one for studies relating to the use of the chemical perchlorate and the other for an analysis of data on lead toxicity. Both were granted. One, relating to data on the health effects of lead, involved some litigation, but information on costs or other impacts were not presented.\nWhile CRS could find no evidence of widespread FOIA requests under the Shelby Amendment or significant impacts, either benefits or costs, associated with its implementation, it is possible that such impacts exist but are not available in the public sources CRS had access to for this report. Indeed, some observers claim that serious negative impacts have occurred on research relating to regulatory issues. Therefore, any conclusions about use or impact of the amendment should be regarded as tentative.", "The use of the Freedom of Information Act to provide access to data from federally funded research has produced arguments for both potential benefits and potential disadvantages. A frequently cited benefit is that the mechanisms, federal infrastructure, and case law for FOIA are well-established. Opposition has focused on such issues as timing of access, need for access, the cost of administration, possible inadequacy of the protections provided by FOIA's exemptions, and potential for abuse. Some have suggested that requests should meet a public interest test before data are released. While a number of the early concerns expressed about the revision to Circular A-110 do not appear to have materialized, some discussion of the issues raised may be useful, especially in the event that the provision becomes more widely used.\nThe issues raised by the amendment and the OMB revisions to Circular A-110 can be divided into four categories:\nwhether the revision of Circular A-110 has made the desired information available to the public, whether the procedures established adequately protect proprietary information and the privacy of human subjects, what the benefits and costs of fulfilling the provisions are, and how the changes affect the research process.", "Several factors affect the degree to which the intended goals of the Shelby amendment were achieved. They include\nthe degree to which the proposed revisions to Circular A-110 fulfill the legislative intent of the amendment, what data have actually been made available, and how public access to data serve the public interest.", "The language in the final revision to Circular A-110 clearly was narrower than that in the legislative provision ( Table 1 ). While the amendment called for access to all data produced under a federal award, the final revision to Circular A-110 limits access to selected kinds of federally funded \"research data relating to published research findings produced under an award that were used by the Federal Government in developing an agency action that has the force and effect of law.\" This version is more restrictive than the proposed language of the first revision, which would have limited release to federally funded research data relating to published research findings that were used in developing federal policy or rules, but less restrictive than the proposed language of the second revision, which would have limited applicability to published research findings that were cited in or used by the government in developing a regulation. OMB said that it based its first proposed revision on its interpretation of floor statements in support of the provision made by Senators Shelby, Trent Lott, and Ben Nighthorse Campbell. However, those Senators cosigned a letter of April 5, 1999, to OMB Director Lew criticizing the narrow approach of OMB:\nWe believe that the clear intent of the statutory language, the accompanying report language and floor debate was to make \"all\" federally funded research data subject to FOIA, not just ... data which are used to support a federal rule or policy.\nAdditionally, OMB cited parts of a comment letter to the second revision submitted by Senators Shelby, Lott, Campbell, and Gramm \"that the revision should not be limited to regulations, but should apply generally to 'federal actions that can dramatically impact the public.'\"\nIn response to comments that application only to data directly related to regulations narrowed access contrary to congressional intent, OMB in the final revision to Circular A-110 broadened applicability to when \"a Federal agency publicly and officially cites the research findings in support of an agency action that has the force and effect of law.\" OMB said that would include actions in the form of administrative orders, but added \"we think that agencies rarely rely on Federally funded research in the context of their administrative orders.\" OMB said it \"decided not to extend the scope of the revision to agency guidance documents and other issuances that do not have the 'force and effect of law'\" because that would be difficult to implement.", "The amendment said that FOIA would apply to \"all data produced under an award,\" but did not define the word data . The first and second proposed OMB revisions were more restrictive than the language of the amendment (see Table 1 ). The first version used, but did not define, data. The second and final revisions did so.\nMany in the scientific community expressed concern about how the term should be interpreted—it might include not only final data, but also preliminary results, as well as e-mails, physical specimens, notes of researchers, and so forth. As discussed above, many federal agencies encourage or require researchers to share physical specimens, as well as data, with other researchers after the completion of a research project. Federal agency definitions such as those used by the NSF, NIH, and NASA defined data as recorded information, regardless of form or medium. That can include computer software and copyrightable materials. The definitions of data, however, do not include physical specimens.\nIn their April 5, 1999, letter to then-OMB Director Jacob Lew, Senators Shelby, Lott, and Campbell stated,\nAt a minimum, data should include all information necessary to replicate and verify the original results and assure that the results are consistent with the data collected and evaluated under the award. This would include all tangible information or materials, including but not limited to measurements, surveys and experimental details, and subsequent data treatments, including statistical analyses, obtained, performed and compiled by researchers under an award and used as the basis for reasoning, calculations, or conclusions (p. 3).\nThe second and the final revisions of Circular A-110 used the term research data defining it as stated in Table 1 . The definition focused on recorded factual material needed to validate research findings, and specifically excluded several other kinds of information and materials, including physical samples about which commenters on the February proposed revision had expressed concern. However, arguably the second version would have permitted access to a film or video of interviews with subjects, which are both recorded data and samples. The final version seems to permit researchers to withhold access to such records.\nThe second proposed and the final revisions also excluded from the definition of research data, materials similar to two FOIA exemptions. Despite the objections of many, including sponsoring Senators, that exclusions \"at the outset ... [are] ... inconsistent with the plain meaning of the law, and that these kinds of data could be exempted by an agency via the FOIA exemption process,\" OMB retained them in the final revision. One exclusion, related to Exemption 4, is for \"trade secrets, commercial information, materials necessary to be held confidential…until they are published, or similar information which is protected under law.\" The second revision had excluded \"information which may be copyrighted or patented\" (which commenters thought was too broad). The other exclusion is for \"information\" that \"would constitute a clearly unwarranted invasion of personal privacy.\" The second revision had excluded \"files\" rather than \"information,\" but OMB explained in the supplementary information attached to the final revision notice that many commenters said they feared that video or audio tapes of research subjects might not be considered to be in the form of a file and could be subject to disclosure, but that the word \"information\" covers such materials.\nThus, a grantee would not be required to submit excluded records to the funding agency. In addition, the agency would presumably subject the submitted records to further screening under the exemptions. OMB also noted that the courts have allowed agencies to withhold an \"entire record ... if necessary to ensure privacy (e.g., in a case where, notwithstanding the redaction of names or other personal identifiers, an individual's identity could still be inferred from other information ...).\"\nSome observers have argued that limiting public access to data from federally funded research may create imbalances in public debate about federal actions that fall under the Shelby Amendment in those cases where research funded by industries and other private-sector entities is also used. Data from such privately funded research would not be available under the revisions to Circular A-110. One suggested means of addressing an imbalance would be to expand the reach of the Shelby Amendment to cover all research used in such actions, whether federally or privately funded. However, such a proposal would likely raise issues about the limits of federal authority and the applicability of the various FOIA exemptions that could be difficult to resolve.", "The final OMB revision limits public access to research data consisting of \"recorded\" factual materials necessary to validate research findings, excluding preliminary analyses, drafts of scientific papers, plans for future research, peer reviews, and communications. It also excludes physical objects such as laboratory samples; trade secrets and information required to be held confidential until publishing or similar information protected under law; and personnel and medical information that would constitute an unwarranted invasion of personal privacy. Furthermore, the materials must have been published in a peer-reviewed journal or cited by an agency in support of an action that has the force and effect of law.\nExamination of funding sources indicates that only a small proportion of federally funded R&D is potentially covered by the revisions to Circular A-110. Much of the scientific activity that Circular A-110 covers is basic research. Most basic research data is not accessible to the public under FOIA because of exemptions, the way data is defined, and the fact that most academic basic research is unlikely to produce results used in developing \"an agency action that has the force and effect of law.\" However, much basic research is aimed at developing scientific principles that can lay the groundwork for applied research that is targeted at specific policies, actions, or regulatory issues. In addition, the continuing broad movement toward increasing public access to research data may eventually make the circular revision largely obsolete.\nOMB also said in the supplementary information attached to the second revision that it might narrow data access only to regulations that meet a $100 million threshold level of impact, and it sought public comments on this suggestion. The supplementary material attached to the final revision said OMB would not limit the applicability only to agency actions that have an impact over $100 million, because it received comments of both strong support for and opposition to the $100 million threshold.\nSome believed at the time that much research used in developing \"agency actions that have the force and effect of law\" would still not be accessible to the public. That is because Circular A-110 does not cover contracts, which agencies must use if procuring services, such as data which an agency knew from the outset would be used in developing specific agency actions, including regulations. Federal agencies would not be required under the amendment to obtain data from contracted research. Thus, such data would not be available to the public under FOIA unless the contract required that the data be provided to the agency. The circular also does not cover grants to state and local governments, so data from such awards would not be available under the amendment. In light of such considerations, some observers proposed that OMB extend the revisions of Circular A-110 to both the Federal Acquisition Regulations (48 C.F.R. 1ff), which cover contracts, and Circular A-102, which covers grants and cooperative agreements with state and local governments.", "The first OMB revision limited applicability of the amendment to \"data relating to published research findings.... \" It did not define the word published , which could be interpreted narrowly or broadly, as commenters noted. For example, it could apply only to papers published in scientific journals or to discussions of preliminary findings at meetings, data cited in papers sent out for peer review, e-mails, and so forth.\nIn their April 5, 1999, letter, Senators Shelby, Campbell, and Lott said that, while data from published research (defined \"to include publication in a journal or the presentation of those findings to the media\") should be released, \"[i]f federally funded prepublished data or findings are used by a federal agency to support a federal rule or policy, then ... such data would also be made publically available under FOIA.\"\nIn response, the second and final OMB revisions defined published research findings as those appearing in a \"peer-reviewed scientific or technical journal\" or publicly and officially cited in support of an agency action that has the force of law (or in the case of the second revision, cited in a regulation). Some critics said that language would not resolve several problems. For instance, OMB Watch said \"... the trigger should not be based solely on whether the agency simply cites the research in its support of the regulation. Rather, the trigger should be based on whether data from the cited research was part of the underlying assumptions or assessments used in developing the regulation.\" NIH proposed narrowing access to \"significant scientific findings\":\nWhen a regulatory agency cites research in the regulatory process, that research may be critically or marginally applicable to that regulation. A brief review of regulations revealed that some cite hundreds of research studies, all of which would be subject to FOIA under this amendment. It would greatly reduce the burden of this legislation if access were afforded to data from only those studies that were critical in the formulation of the regulation.\nAnother question still troubling to some, despite the language of the final revision, was what impacts public access would have on the ability of the researchers who develop a data set to benefit appropriately from the effort they have invested. Researchers often publish more than one paper from a set of data. Data cannot be copyrighted and scientists have traditionally been reluctant to make data public until they have had an opportunity to analyze them fully and publish the results. After data become publicly available, others might use them to publish analyses before the original researchers have the opportunity to do so. Once again, however, the broad move toward increasing public access appears to be reducing such concerns.", "Senators Shelby, Lott, and Campbell recommended to OMB that the public should have access in sufficient time to review underlying data before a rule or policy is issued:\nOMB should encourage agencies to: (1) notify the public of which studies will be used as early as is feasible in the rulemaking or policy development process; and (2) process all timely and relevant data requests before the public comment period on a proposed rule or policy closes. In addition, ... clarification that risk assessments and other federal reports or surveys are covered independently under the proposed revision will also help by providing the public with a chance to review the underlying data supporting these government findings before they are used in a rulemaking process.\nThe first, second, and final versions of the revisions to the circular proposed a \"reasonable time\" standard for the response to a request for research data. Some say that those who use FOIA to obtain data to comment on a proposed regulation may not obtain the data quickly enough to do so. Typical comment periods for regulations are 30, 60, or 90 working days, although longer periods may be provided for complex rules. In most cases, an agency would be required under FOIA to notify the requester within 30 working days (six weeks) whether it would comply with a request. If it grants the request, it must comply \"promptly\" or it may be subject to legal action. Once the data are obtained, requesters must examine and possibly reanalyze them to develop comments. In defense of the \"reasonable time\" standard, OMB explained, in the supplementary information attached to the final revision, \"Since OMB and the agencies do not yet have experience with implementing the public access process, we believe the 'reasonable time' standard, which allows consideration of the circumstances of a particular case, is appropriate. As OMB and the agencies gain experience with the public access process, we may be able to develop further clarification on this point.\"", "Section 53 of Circular A-110 requires that papers or records pertinent to an award (there is no specific requirement about data, but it is implied) must be retained for three years from the date of submission of the final expenditure report, and that if the grantee holds it longer the federal government can still access it. Thus, if the researcher kept records subject to the new circular for more than three years, the funding agency would be able to seek that information to respond to a FOIA request. If eligible research were officially cited or used in support of an agency action that has the force and effect of law, but more than three years after an award had ended, the data might no longer be available.\nQuestions arose about who—whether the university or the researcher—should be the custodian of the data. Some funding agencies have responded by requiring that applicants for research funding submit data management plans that include custodianship.", "The debate before and after passage of the Shelby amendment and the hearings held on H.R. 88 produced numerous reasons for widening public access to data from federally funded research. One is the \"transparency\" argument—that the public should have access to the data, since it was funded with taxpayer dollars. Other reasons are more directly related to accountability and the processes and politics of U.S. policymaking that rely on scientific and technical information or judgments. As more, and more costly, public policy decisions are based on scientific and technical information, there will likely be more public scrutiny of the rationale for those decisions. That is especially true in controversial issues where different scientists might interpret research data and their policy implications differently or when opposing interest groups might bring conflicting scientific data to bear on decision-making. Some contend that public understanding of science and public financial support for science might be enhanced with more access to research data. Others say that more access would ensure confidence in the legitimacy of governmental actions.\nSome say that peer review by other scientists may not be adequate to validate research, especially when findings affect important public policy decisions. That is crucial when research findings are based on \"metaanalysis\" or \"research synthesis\"—when a researcher develops a new policy-relevant research finding based on synthesizing the findings of many different research studies relating to the same topic. Those research methods are increasingly used in policy analysis. Others question not only the techniques used in metaanalysis, but also the validity of the original research and findings. In addition, some segments of the public are skeptical of the government's ability to correctly represent, interpret, or present all relevant scientific findings, especially given disclosures about federal agency misrepresentation of medical experimentation, such as the Tuskegee experiments, relating to treatment of syphilis, and of radiation exposure levels around some nuclear research laboratories. There has also been skepticism about federal agency findings and policies relating to research or research evaluations of subsidy or intervention programs in such diverse areas as science education and genetic engineering of crop seeds and other farm products. Advocates of public access say that, in cases like those, they should be given access to research data to replicate the analyses, to verify or refute the findings, or to evaluate methods used in conducting the research and interpreting the data. Interested members of the public seek the same kinds of access as other researchers often have to data, physical samples, specimens, and other records from federally funded research.\nFor most research, however, scientists find that independent evaluation of the raw data from a study is not necessary to evaluate the validity of the research. Federal agencies and the scientific community use several methods during the research process, with public involvement usually limited to later stages. Those evaluations usually do not involve examination by others of the raw data produced by the researchers. Before a grant for a scientific study is awarded, the granting agency generally performs a merit review of the proposed study, including an evaluation of the proposed methods of research and analysis. That review often involves evaluation of the proposal by independent scientists. As a study progresses, scientists usually report on progress, including preliminary findings, to their colleagues. Those findings may become public at that time if reported at scientific conferences attended by members of the press. Researchers may adjust methodologies or perform additional research based on the feedback they receive from colleagues. Once a study, or a particular stage, is completed, researchers usually prepare the results for publication. As part of that process, drafts of articles reporting the findings are usually evaluated by other scientists, who examine the methodology, analysis, and other elements. Once a paper is published, other segments of the scientific community and the public may respond to it, and they might challenge the premises, methodology, analyses, or conclusions. Such challenges might include other research aimed at testing the validity of the findings. The potential for such testing is one of the fundamental checks on validity provided by the scientific method. If independent researchers obtain the same results, that greatly strengthens the conclusions. If the results cannot be replicated, then the original conclusions were probably not correct.\nHowever, replication can be difficult or even impossible for large-scale studies or those using unique sets of information, such as the Harvard Six Cities study cited earlier. Also, in some instances, regulatory or other decisions might need to be made before confirming experiments could be performed. It is for such cases that evaluation of the data by others can be especially important in judging the validity of the research.\nPublic access to such data may lead to several alternative evaluations being produced by interested parties. That should help validate conclusions and increase the likelihood that errors will be detected. According to some, it could lead to a \"higher standard of review ... [and] the end result of this approach will be a body of scientific work more rigorously tested and reliable.\" However, evaluation of data is itself an area of expertise requiring skill and training. For example, statistical analysis can be done in many ways, and use of an inappropriate procedure can easily lead to spurious conclusions. Therefore, public assessment of the original and alternative evaluations may be difficult.", "Some opponents of the amendment said that FOIA is an inappropriate vehicle because its exemptions would not provide adequate protections for research data that should not be made public. As is specified in the final revision to OMB Circular A-110, in responding to a FOIA request, a researcher or research institution may withhold from an agency data that consists of trade secrets, confidential information, or information that is protected by law, or personnel and medical information whose disclosure would be an unwarranted invasion of personal privacy. Those definitions are similar to FOIA Exemptions 4 and 6, but these data will not be sent to the agency for consideration for redaction.", "The final revision to the circular, like the second proposed revision, included language that excluded proprietary information and trade secrets from the research data that would have to be sent to an agency to comply with a FOIA request. Specifically excluded are \"trade secrets, commercial information, materials necessary to be held confidential by a researcher until they are published, or similar information which is protected under law.\" All of the language after the word \"until\" was modified in the final revision in response to comments that too much information might be excluded by the second revision, which read \"until results are published in a peer-reviewed journal, or information which may be copyrighted or patented.\" OMB explained in the supplementary information published with the revision that \"to avoid unintended consequences, and to avoid having to sort out the complexities of copyright law (and how it might apply in various areas of Federally funded research),\" the substitute language \"is intended to ensure that the public access process will not upset intellectual property rights that are elsewhere recognized and protected under the law.\"\nIn addition, the exemptions and other precedents associated with FOIA would seem to prevent public access under the Shelby amendment to trade secrets and confidential business information. Exemption 3 exempts from mandatory disclosure matters exempted from disclosure by other statutes. Exemption 4 specifically protects trade secrets and privileged or confidential business information. Commercially sensitive data in pending patents are also protected from disclosure by other statutes. Also, the submitter of information may challenge its release through a reverse FOIA lawsuit.\nSome have complained that opportunities to compromise commercially relevant information could arise in the context of joint university/government/industry partnerships (even if the federal share of support is only 10%), since public access will not depend on \"the level of funding or whether the award recipient is also using non-Federal funds.\" There is also the view that some partnerships that include federally funded researchers \"make strict requirements on the researcher not to share data further. Without such agreements, private researchers would not participate in these partnerships.\" NAS President Alberts testified on this subject at hearings on July 15, 1999:\nFor example, commercial interests that have a strong competitive interest in particular areas of research will now be able to use FOIA requests to obtain university-based research data for their own use and competitive advantage in an effort to dominate or control that area of research, ultimately discouraging independent university research in these areas. Where universities have industry partners for jointly sponsored research projects, commercial concerns can use FOIA requests to obtain research data from these projects to the detriment of the actual project sponsors, who are their competitors.\nHe also said foreign governments would obtain data from federally funded basic research for use in their own R&D. There was also concern about timing: \"Under U.S. law, scientists have a year from the date of publication to file a patent application. Will allowing data to be publicly available through FOIA threaten a scientist's foreign patent rights?\"\nAccording to the Council on Governmental Relations (COGR), considerable case law has grown around use and challenges under FOIA and indicates that \"Exemption 4 has been effective in protecting university data.\" \"[T]here are well-understood exemptions that serve to protect data that are important to universities for scientific or commercial reasons,\" according to COGR. In fact, according to testimony of James T. O'Reilly, Visiting Professor of Law, University of Cincinnati College of Law, and author of Federal Information Disclosure, the protections afforded by the exemptions to FOIA and court and case law, together with agency rules and policies, have been viable in protecting privacy and commercial interests. In addition, he said, there are about 100 special exempting statutes: \"The conflicts over specific research interests in medical device testing data, for example, have been addressed in specific substantive laws.\"\nNevertheless, others recommended that OMB \"require agencies to allow private sector participants in federally funded projects, who either contributed parts of the database to the project or participated in developing the database, an opportunity to make recommendations to the federal agency regarding which data should be withheld from disclosure pursuant to the FOIA exemptions.\" As with a number of the other concerns originally raised, there appears to be no evidence that the anticipated problems have in fact occurred to any significant extent.", "Many scientific studies involve volunteer human subjects. Concerns about protecting the privacy of those subjects has continued to increase in conjunction with the increasing capabilities of information technology to integrate separate pieces of related information and the rapid pace of discoveries about human genetics. Many observers continue to believe that protections for personal medical and health information (collected during medical treatment as well as during scientific research) are inadequate generally, and Congress has enacted legislation to address such concerns.\nThe exclusion of certain personal information in the circular's definition of research data is intended to protect against unwarranted invasions of privacy. FOIA Exemption 6 provides additional protection. However, FOIA permits, but does not require, agencies to withhold information covered by the exemptions, and courts have ruled that public interest in disclosure may outweigh privacy interests (see section on \" The Freedom of Information Act and Its Exemptions \" above). Therefore, some observers fear that information that a human research subject was told was confidential might become public.\nSome have also expressed concern that the sorting and analytical capabilities of information technology might permit human subjects to be identified even if personal identifiers were removed. According to then-NIH Director Varmus,\nFOIA would allow the government agency to remove obvious identifiers such as name, Social Security number, telephone number, but in a given data set it is quite feasible to identify subjects using other information. If the requestor knew a few items about an individual's history, such as place of birth, education occupation, marital history, or other general information, an individual could be identified. Such identification would then open up the whole research record, including personal medical information, to the requestor.\nA related concern of researchers was that potential volunteer human subjects, fearing that personal private information will not be protected, will be reluctant to participate in research projects. However, no evidence of such changes in participation were identified.", "The potential financial benefits of the amendment would be reflected in any net savings to the public and the private sector that could occur if implementation pursuant to Circular A-110 prevented agency actions having the force and effect of law if the benefits of the actions were determined incorrectly, or if the benefits did not justify the expense. This might include the net savings accruing from postponing or not imposing regulations or other standard setting requirements. These kinds of actions could result, according to some observers, in savings of billions of dollars annually. It is also possible that wider public access to research data used in federal actions having the force and effect of law could facilitate public scrutiny and identification of errors, which, if corrected, might lead to improved federal actions and regulations. However, the use of the access provided by the revision to the circular does not appear to have been frequent enough to determine what savings might have accrued.\nFOIA allows the federal government to recover reasonable costs of fulfilling requests, although reimbursements go to the Treasury, not to the agency that incurred the costs. The Shelby amendment and revision to Circular A-110 provided specifically for cost recovery, in addition to the normal reimbursement fees imposed upon the requestor for a FOIA request.\nThe February 1999 proposed revision to Circular A-110 did not indicate whether researchers and their universities or the federal agency would be reimbursed, or whether fees collected would go to the U.S. Treasury, as with reimbursements covered directly by FOIA. The second and final revisions said that agencies \"may charge the requester a reasonable fee equaling the full incremental cost of obtaining the research data. This fee should reflect costs incurred by the agency, the recipient, and applicable subrecipients. This fee is an addition to any fees the agency may assess under the FOIA (5 U.S.C. 552(a)(4)(5)).\" The Shelby Amendment itself was silent on whether the agency can retain the fee or whether it should go to the Treasury. However, the supplementary information attached to the second revision and the final revision of the circular explained that agencies may seek reimbursement from data requesters to reimburse the recipient and the agency for the costs of providing the data.\nSeveral objections were raised to the reimbursement provisions. OMB Watch said the proposed revision did not explain how reimbursement would occur if the agency fulfilling the FOIA request were not the grant-making agency or how to deal with reimbursement for the costs of providing data after a grant period was finished and all funds had been expended.\nEven though researchers may be reimbursed for maintaining and preparing data to satisfy FOIA requests, some scientists complained that FOIA access would substantially encumber researchers and universities with new responsibilities. Some also said that the provision would result in expansion of the federal bureaucracy and overhead at research universities to deal with FOIA requests forwarded by an agency. Another issue of concern focused on the potential costs of litigation about implementation.\nSome commented that much administrative work and researcher time would be needed to prepare data and any accompanying explanations for disclosure. Some observers said that the expenses to universities would likely exceed the cap on administrative costs as part of the indirect cost rate universities may charge as defined in OMB Circular A-21, \"Cost Principles for Educational Institutions.\" Therefore, universities would have to absorb the costs unless Circular A-21 were revised. In its second revision, OMB stated that it would consider such a revision and invited comments on costs. Supplementary information in the final revision said comments received on this issue focused on the need for a separate agreement between the awarding agency and the recipient to ensure reimbursement for the full incremental cost of responding. It explained a process that agencies might use and said that OMB would consider revising Circular A-21 if the process did not work. As with other claims and concerns near the time of the revision, there appears to be little evidence of such impacts to date.", "In a September 10, 1999, letter to OMB, Senators Shelby, Campbell, Phil Gramm, and Lott said that although OMB's exclusion of business and personal information from its definition of research data that is maintained in the final revision\nmay seem an innocent restatement of the FOIA exemptions, it creates a troubling outcome by allowing researchers and agency officials broad discretion to interpret these new exceptions outside of FOIA and the case law that has evolved under FOIA. Given that terms such as privacy and confidential business information are highly subjective, the results could be disastrous for the public's ability to access important information. For instance, the main reason provided by research institutions for not releasing the raw data supporting the particulate matter epidemiology studies is the need to protect the privacy of the research subjects despite the fact that personal identifiers could be redacted. The OMB proposed revision should rely on the FOIA exemptions and the case law which have evolved over time in applying these exemptions rather than allowing ad-hoc and inconsistent decisionmaking....\nIf there were only a few significant public requests for such data, as appears to be the case, neither researchers nor their institutions might experience any major changes resulting from the amendment. However, proponents thought that the amendment might stimulate more independent reanalysis of data, or methods used to evaluate data, from covered research, and that it may also inspire more efforts by researchers to explain the bases of their findings to the public. Or it may generate more public scrutiny of the content and quality of scientific and technical data used in making federal policies.", "The Shelby Amendment was controversial at the time of enactment, but both claims of benefits and concerns about negative impacts do not appear to have materialized. The broader movement by federal funders, researchers, and other stakeholders toward increased public access to data from federally funded scientific research may have contributed to the apparently low impact of the amendment. The extent to which the amendment's enactment influenced that trend could not be determined. While many of the issues raised, although of historical interest, may seem moot or otherwise resolved at present, a significant increase in FOIA requests under this provision might revive them in the future." ], "depth": [ 0, 1, 1, 1, 1, 1, 1, 2, 2, 1, 2, 3, 3, 3, 3, 3, 3, 3, 2, 3, 3, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h1_full", "h0_full", "", "", "h0_full h2_title h1_title", "h1_full", "h2_full", "h0_title h1_title", "h0_title h1_title", "", "", "h1_full", "", "", "", "h0_full", "", "", "", "h1_full", "", "h2_full" ] }

{ "question": [ "For what are scientific studies often used in government?", "What are the standards regarding the public availability of data?", "What did the Shelby Amendment mandate?", "What was OMB required to do in response to this?", "What changes have been made since the final revision was published?", "For what did proponents of the amendment argue?", "What did proponents argue regarding the amendment's financial implications?", "What was their argument regarding the OMB revision?", "What did Senator Shelby say of the revision?", "What actions have dissenters taken?", "What does the data in this report suggest?", "Under what conditions might this change?" ], "summary": [ "The results of scientific studies are often used in making government policy decisions.", "While the studies are often published, traditional federal research funding policies did not require the data on which they are based to be made available publicly. Such policies did, however, generally require researchers to share data and physical samples with other scientists after publication of the research.", "A rider, often called the Shelby Amendment or Data Access Act, that was attached to the Omnibus Appropriations Act for FY1999, P.L. 105-277, mandated the Office of Management and Budget (OMB) to amend Circular A-110 to require federal agencies to ensure that \"all data produced under a [federally funded] award will be made available to the public through the procedures established under the Freedom of Information Act [FOIA].\" The amendment authorizes user fees.", "OMB was required to make changes and release a revised circular; subsequently, agencies that chose to do so issued their own conforming rules.", "The final revision was published in the Federal Register on October 8, 1999, and has not been changed in subsequent updates to the circular.", "Proponents of the amendment said that accountability and transparency are paramount: The public should have a right to review scientific data underlying research funded by government taxpayers.", "Some proponents argued that the amendment would result in significant savings.", "Some also believed that the OMB revision narrowed the scope of public access to research data contrary to congressional intent.", "Senator Shelby said the final revision, \"while still narrow in scope, is a good first step.... \"", "Legislative efforts both to repeal the provision and withhold funding for its implementation failed.", "The data available for this report suggest that the provision has not been commonly invoked in FOIA requests. To the extent that is the case, it supports the assessment that neither the benefits nor the concerns raised have materialized to a significant degree.", "That might change if usage increased, but the continuing movement toward increased public access to the results of federally funded research that has occurred independently of the 1999 revision to Circular A-110 may make its use in FOIA requests increasingly unnecessary." ], "parent_pair_index": [ -1, 0, -1, 2, 2, -1, 0, 0, 0, 0, -1, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 3, 3, 3, 3, 3, 4, 4 ] }

{ "title": [ "Background", "FHWA Has Established Some Federal Vehicle Size and Weight Requirements, Oversees State Enforcement, and Provides Some Assistance to States", "FHWA Has Established Some Federal Size and Weight Requirements for Vehicles", "FHWA Oversees State Enforcement and Provides Some Assistance", "States Set Varying Vehicle Size and Weight Laws, and Issue Permits with Different Permit Requirements", "States Set Varying Vehicle Size and Weight Requirements", "States Issue and Enforce Permits, and Practices Differ By State", "Conclusion", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of Transportation", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Commercial vehicles and loads are generally of a size and weight that allows them to freely travel on our nation’s highways; however, some are too large or too heavy (or both) to operate on a highway without posing a safety risk or potentially damaging highway infrastructure. A vehicle and load is considered oversized when the vehicle and the cargo it carries exceed the legal dimensions of length or width, as defined by federal requirements or length, height, or width as defined by state requirements for the state in which the vehicle will be traveling (see fig. 1). A vehicle and load is considered overweight when the vehicle and the cargo it carries exceed the legal weight limit as defined by federal and state requirements.\nWhen vehicles and loads exceed federal or state size and weight limits, carriers are generally required to reduce the size of the load to within the limits, if possible. Specifically, carriers must divide oversize or overweight loads of bulk goods such as corn, gravel, or mail into smaller loads unless they have special exceptions.overweight loads, such as sections of wind turbine towers, may receive permits to travel on a highway, if they can be safely transported without damaging pavements or bridges as determined by state requirements (see fig. 2).", "FHWA has established some federal vehicle size and weight requirements, collects some information on state enforcement practices, and provides some technical assistance to states related to truck size and weight issues.", "Federal laws and FHWA regulations establish standards for vehicle width, weight, and length on some of the nation’s highways.\nWidth and weight standards are set at maximums. The width standards generally require states to allow vehicles to be up to, but not exceed, 8 feet 6 inches wide (see fig. 4). Similarly, the weight standards generally require states to allow vehicles to be up to, but not exceed, 80,000 pounds in total vehicle weight. States cannot set lower width or weight maximums when these federal standards apply. Vehicles exceeding these width and weight standards are considered overwide or overweight.\nThe federal length standards differ from the above width and weight standards in that they do not establish a maximum overall length for a vehicle. The length standard is a minimum standard set to ensure interstate commerce is not impeded by a state’s requirements. The regulation provides only that states may not require permits for vehicles with trailers that are less than a specific length, which depends on the type of vehicle. For example, states cannot require trucks with a single trailer to obtain a permit for a trailer that is less than 48 feet. However, states may allow longer vehicles or trailers to travel without requiring a permit.\nAccording to FHWA officials, federal length and width standards are set to enhance interstate commerce by ensuring carriers can travel from state to state without undue restrictions on vehicle size. Maximum width standards are set to minimize infrastructure damage and assure safe traffic operations, and maximum weight standards are primarily to protect highways and bridges from damage from excessive weight and to assure safe traffic operations.\nFHWA’s federal vehicle width, length, and weight regulations apply to a small percentage of the nation’s highways. There are approximately 4,093,000 total miles of public highways and roads in the United States, and federal size and weight standards apply to designated highways of national importance, as shown in figure 5. The National Network connects cities on highways capable of safely handling larger commercial vehicles for interstate commerce. FHWA’s vehicle size (width and length) regulations apply to the entire 200,000 miles in the National Network, which includes the Interstate System, while the weight regulations apply to the 47,000-mile Interstate System, and not the larger National Network. Also, the National Highway System (NHS)—those highways important to the nation’s economy, defense, and mobility—is supported with improvement projects funded by almost $22 billion in federal-aid highway funds in fiscal year 2014. The federal size and weight regulations do not apply to about 50,000 miles of the 223,000 miles of the NHS. Therefore, size and weight regulations are applied differently and not on all types of federal highways. The federal size regulations apply to less than 5 percent, and the federal weight regulations apply to a little over 1 percent, of the over 4 million miles of public highways and roads.\nStates can set their own size and weight standards where a federal standard does not apply to a certain highway, which can be either more or less restrictive than the federal standards, depending on the type of standard. For example, while the State of Michigan follows the federal width standard (8 feet 6 inches) for vehicles on the highways covered by federal regulations or on special state-designated highways, on all other highways, a truck’s width cannot exceed a more restrictive state standard of 8 feet 0 inches. Conversely, New York is less restrictive on trailer lengths and allows 53 feet 0 inch long trailers—five feet longer than the minimum length states must allow on highways covered by federal regulations.\nFurther, federal standards have not been established for all aspects of vehicle size allowed on certain highways of national importance. Specifically, Congress has not set a vehicle height requirement, nor given FHWA the authority to do so, for any federal highway. FHWA officials said that the decision to not have a federal height standard goes back to a decision made in the 1950’s when the Interstate System was being constructed and the height clearances already varied from state to state. All states have set a maximum height at, or above, the standard semi- trailer height of 13 feet- 6 inches. In addition, while there are weight standards for the almost 47,000 mile Interstate System, there are no federal weight standards for the approximately 176,000 miles of highways on the federally important NHS and 153,000 miles of the National Network that are not on the Interstate System, as mentioned earlier. As a result, states determine the maximum truck height, length, and weight allowed and when a permit is required for these highways. Given these limits in federal standards for vehicle size and weight, states have the flexibility to set their own standards; however, as shown in the following sections, this flexibility results in a variance from state to state.", "In addition to establishing size and weight standards, FHWA oversees some state activities related to oversize and overweight vehicles and loads. FHWA’s Office of Freight Management and Operations in Washington, D.C., and staff in each of FHWA’s 52 Division Offices are responsible for communicating with states on federal standards regarding vehicle size and weight. FHWA requires states to prepare and submit an annual Truck Size and Weight Certification (Certification) and State Enforcement Plan. FHWA Division Offices are to review these documents to verify that each state is enforcing vehicle size and weight laws, and that state laws do not conflict with federal laws. Further, based on these documents and review of the states’ size and weight enforcement operations, the division offices are to prepare an evaluation report for each state. If states do not provide their annual certification, or the Secretary of Transportation (Secretary) determines that a state is not adequately enforcing all state laws on the Interstate System and other federal-aid routes, then the Secretary can withhold 7 percent of that state’s federal-aid highway funding while the state is given an opportunity to come into conformity with federal regulations or appeal the Secretary’s decision. If the state fails to certify, or the certification is rejected and the state’s appeal process is exhausted, the Secretary is required by law to redirect the 7 percent of the state’s federal funding previously withheld to other states. FHWA officials stated that they and state officials work together to correct problems with the certifications to avoid withholding funding from states and, as a result, have not withheld or redirected funding from any state since fiscal year 1992.\nPub. L No. 112-141, § 32801, 126 Stat. 405, 816 (2012). MAP-21 is the current authorization act for surface transportation programs and expired at the end of fiscal year 2014. Programs and budget authority authorized by MAP-21 were extended to May 31, 2015. Pub. L. No. 113-159, § 1001(a),128 Stat. 1839, 1840 (2014). Among other things, section 32801 of MAP-21 required DOT to conduct a comprehensive truck size and weight limits study addressing differences in safety risks, infrastructure impacts, and the effect on levels of enforcement between trucks operating at or within federal truck size and weight limits and trucks legally operating in excess of federal limits. emergencies as set out in on MAP-21. Additionally, FHWA in cooperation with the trucking industry and the Commercial Vehicle Safety Alliance funded the development of pilot car escort and law enforcement escort best practices guides in 2004. FHWA officials told us that they are planning to provide staff support to update the pilot car escort best practices guide including providing research on stakeholder-identified priority areas, such as vehicle operations.funds administered by FHWA can be used by states in constructing some infrastructure, such as weigh stations, to enforce weight standards.\nFHWA’s policy is to provide a safe and efficient highway network that can accommodate large vehicles, but FHWA plays a limited role in permitting oversize and overweight vehicles for several reasons. While FHWA’s regulations establish standards for vehicle size and weight, according to FHWA officials, FHWA lacks the statutory authority to establish any requirements for state permitting. According to these officials, permitting practices are largely a state matter, and thus they do not keep records of states’ permitting requirements or provide technical assistance on permitting to states. Officials from the 10 states we interviewed told us that the federal government provides them with little or no guidance on permitting. However, state transportation agencies—through their membership in AASHTO—have efforts under way to harmonize size and weight requirements and conditions under which they issue oversize and overweight vehicle permits. FHWA assists in an advisory role in this effort. FHWA officials told us that states are now working on changes to state administrative rules in order to harmonize requirements.", "States have varying laws and requirements that carriers must follow when operating vehicles on highways and bridges. Specifically, we found that states vary on vehicle size and weight laws, on state practices to issue and enforce permits for oversize and overweight vehicles, and on other state permitting requirements, as described below.", "All 50 states and the District of Columbia (D.C.) have state laws or regulations, based on applicable federal regulations, that set size and weight limits for vehicles operating in that state. Maximum vehicle width and weight requirements are generally set at the federal standard (8 feet 6 inches wide and 80,000 pounds for gross vehicle weight). However, states have varying size requirements for vehicle length and height. For example, 37 states set 53 feet 0 inches as the maximum legal length for a semitrailer, and length limits for the remaining 13 states and D.C. vary from 48 feet 0 inches to 65 feet 0 inches. Further, 29 states and D.C. set maximum vehicle height at 13 feet 6 inches, while the other 21 states allow vehicles to be from 14 feet 0 inches to 15 feet 0 inches. (Table 1 below summarizes vehicle size and weight requirements in the 50 states and D.C.)\nAccording to an AASHTO representative and state officials, such differences across states occur due to several factors, including age of infrastructure and changes to bridge clearance requirements over time. For example, Tennessee officials stated new bridges in Tennessee on the NHS are designed for a minimum vertical clearance of 16 feet 6 inches, while bridges on other routes have a minimum clearance of 14 feet 6 inches. Additionally, some standards were established in states a number of years ago and current state DOT staff may not know why they were established. For example, New York officials stated that a number of their requirements have been in place for decades and that officials do not know how they were determined, although carriers may have provided some input.", "States also administer differing processes to issue and enforce permits for vehicles that exceed their size and weight limits, and determine varying requirements that permitted vehicles must follow, as described below. Table 2 below summarizes these processes in the 50 states and D.C.\nPermit Issuing Agency: State governments issue most oversize and overweight permits; however, some local governments may also issue permits when carriers travel through local jurisdictions. State Departments of Transportation are often responsible for issuing permits. For example, states reported that state DOTs issue permits in 31 states and D.C. Permits can also be issued by state law enforcement, as in South Dakota, where South Dakota Highway Patrol Officers, trained in oversize and overweight enforcement, issue all state permits. In other states, the Department of Revenue or Department of Motor Vehicles may be the agency to issue permits. The number of permits issued annually varies greatly among states. For example, Texas issued the highest number of oversize permits in fiscal year 2013, around 400,000, while D.C. issued the fewest oversize permits, around 2,000. Trends in the number of permits issued vary from state to state, according to state officials we interviewed. Officials from one state described large increases in the number of permits issued, citing wind towers and oil industry activities as contributing factors, while another state described fluctuation in the number of permits issued, but no general increase.\nOversize and Overweight Permit Types: States reported offering differing permit types that can allow oversize or overweight vehicles to operate within a state or between states. For example, Maine has 2 types of permits, whereas Pennsylvania offers 96. Some states differentiate between vehicle sizes to determine permit type and fees, while others create specialty permits based on industry. For example, Washington has a special permit type for vehicles transporting empty apple containers, and Texas has a special permit type for water well drilling machinery and equipment. States may also allow carriers to apply for a regional permit that allows carriers to apply one time and obtain permits for a trip on designated highways across multiple states. However, the size and weight requirements for a regional permit differ between regions, and 22 states reported that they do not participate in any regional agreement.\nPermit System: Permits may be issued by online- or manual- permitting systems, and the type of review can differ for each system. For example, online systems allow carriers to apply online, and some may issue permits without review from a permitting official for certain oversize or overweight vehicles traveling on established routes. For manual systems, state officials process permit requests, which can require face-to-face or phone contact. Overall, 44 states and D.C. reported offering online applications for permits, yet not all of these states automatically issue permits, and many such issued permits are for specific sizes and weights or specific routes. In some cases, states may need to work with carriers to find alternative routes in cases when permit applications are denied. State officials and others have varying opinions on the advantages of online permitting systems. For example, Tennessee officials said that some form of manual permitting was the safest option, while South Dakota officials said that online systems improved safety by removing human clerical error. Texas officials said that either way, they could not manually review all permit applications, because there are too many requests. Further, in its Accident Report on the Collapse of the Interstate 5 Skagit River Bridge, NTSB noted that a permitting process that enables a carrier to self-issue a permit online, without engaging the state in a technical review, does not motivate carriers to conduct surveys of the route to be traveled before transporting oversize loads even if a survey is required.\nAutomated Routing System: Automated routing systems use clearance databases updated by state officials to provide a route to carriers. Twenty-three states reported they currently have automated vehicle routing capabilities. Officials in 8 out of the 10 states interviewed told us that automated routing systems could improve safety by removing human error or increasing compliance; however, 4 of the 10 states we interviewed currently offer automated routing. For example, South Dakota officials stated that their automated routing system was a benefit because it reduces the error rate while improving efficiency, safety, and carrier compliance. Additionally, Maine officials told us that while they do not have the capability, automated routing could make permit processing faster and more error-free. Not all of the states we interviewed agreed that automated routing would improve safety. For example, while Washington State officials are considering the development of automated routing, they do not see automated routing as a tool to increase safety. Additionally, Pennsylvania officials stated a primary benefit of automated routing systems would be ease of use for carriers.\nPermit Enforcement: States enforce compliance with permitting rules and regulations differently. For example, state officials we interviewed said they use roadside enforcement, administrative enforcement, or both to issue civil penalties or fines. Roadside enforcement generally involves law enforcement officers stopping an oversize or overweight vehicle and load to check for permits and compliance with state and local requirements. States may focus enforcement operations at fixed locations, such as at major border crossings or operate with mobile enforcement units, or both. According to state officials interviewed, the technology used in roadside enforcement can vary from yardsticks to sophisticated laser-measuring tools. For example, Texas officials told us that they use laser measuring systems with weigh-in-motion detection while Nebraska state officials said they physically measure vehicles with tape measures and traditional weight scales. Administrative enforcement can involve a review of permit documentation, a review of citations, or a review of carrier records collected by the state. State officials may review their records to identify carriers with numerous safety or permit violations. For example, Wisconsin permit officials told us they could enforce restrictions on repeat violators, shutting down their operation in the state by refusing to issue permits or by suspending licenses.\nEscort vehicles: Escort vehicles travel with an oversize or overweight vehicle and load to help protect the traveling public and infrastructure. The use of escort vehicles is widespread among states, though at different height and width thresholds. For example, 43 states and D.C. reported that they require escort vehicles for overheight vehicles and loads, although what is considered an overheight vehicle and load varies among states. All 50 states and D.C. reported that they require escort vehicles for overwidth vehicles and loads, although the threshold varies. Officials in 7 out of 10 states interviewed told us that requiring escort vehicles improves safety. For example, officials from Washington State and South Dakota said that escort vehicles improve safety because they improve visibility of the oversize or overweight load for other drivers. In 2004, SC&RA issued a best practices guide for escort vehicles, with participation from FHWA, although there is not a legal requirement that supports such a guide, according to FHWA officials.\nEscort vehicle driver certification: While the use of escort vehicles is widespread, many states currently do not require escort vehicle drivers to be certified. FHWA officials told us that there is no research that shows escort vehicle driver certification is a benefit to safety. Conversely, NTSB has previously concluded that the lack of standardization in certification of escort vehicle drivers leaves some drivers poorly prepared to carry out their duties and has recommended standardized training and certification for drivers. Thirteen states currently require such certification, which may involve training or passing a test. Of the 10 states we reviewed, two have such a requirement. For example, Washington State officials said that certification is a good practice that is required in their state, but cautioned that even with training and certification there is still the possibility of human error. Officials from 5 states of the 10 interviewed told us they have considered or are seeking to implement this requirement to improve safety or ease the burden of law enforcement officials, who may be required to escort. For example, Wisconsin officials said they would like to implement a certification process so that escort vehicle drivers can direct traffic. The remaining three states are not pursuing certification. For example, South Dakota officials said that they do not require escort vehicle drivers to be certified, because the lack of driver certification has not been identified as a problem.\nStates have established processes and determined requirements for permitting of oversize and overweight vehicles over time. In some areas, states follow similar practices and requirements: for example, most states make use of online permitting systems and escort vehicles. However, other processes and requirements differ and state officials we interviewed did not always agree on the benefits of various practices, such as automated routing systems and escort vehicle driver certification.\nNearly all state officials whom we spoke with told us that federal regulations standardizing permitting were unnecessary; however, some state officials we interviewed told us that more information on different permitting practices and their resulting benefits would be helpful to them to determine ways their state practices could be improved. For example, Texas officials stated that Texas’s current permitting rules are sufficient, but they are always looking for ways to do things better. Maine officials told us that FHWA could help identify best practices in permitting, as states typically have constrained resources and do not have the capacity to conduct this type of research. We have identified key steps agencies can take to improve agency performance; one of them includes identifying best practices to help identify changes that might be needed to improve performance. However, according to all the state officials we interviewed, the federal government did not provide any or very little guidance used in oversize and overweight permitting. FHWA officials told us that although they collect limited information on state permitting practices, they do not have research or data that compare state permitting information or identify best practices due to lack of authority over state permitting. However, FHWA has authority to conduct transportation research, including research on issues with national implications that could lead to improvements in highway safety, and in the past has worked with the trucking industry and others to identify best practices for related issues such as escort vehicles.\nOur review uncovered examples of how research of state permitting to identify best practices could better position FHWA to provide technical assistance to states that could help inform state policy and legislative changes needed to improve their permitting of oversize and overweight vehicles. For example, some state officials we interviewed described the large upfront investment of money and resources to acquire an automated routing system as a limiting factor to their state having such a system. Officials in South Dakota, which currently uses an automated routing system, agreed that while their system was expensive to implement and difficult to obtain support for, the investment has led to benefits of improved efficiency, that the state has benefitted more than the cost of the system, and that its use can be considered a best practice. Also as previously mentioned, state officials we interviewed described the varying state requirements on certification of escort vehicle drivers. Some state officials we interviewed described how state decisions on certification of escort vehicle drivers could increase costs to carriers, as they have to cover the cost of certification, as well as affect the availability of state law enforcement officers to perform other commercial vehicle enforcement functions. By conducting this type of research, FHWA would be better positioned to help states make sound decisions to improve safety and protect infrastructure in a cost-effective manner.", "FHWA’s policy is to provide a safe and efficient highway system that accommodates large vehicles, in part by regulating some aspects of vehicle size and weight and ensuring state enforcement of federal standards. However, FHWA has an opportunity to do more. Our review shows that state practices in regulating and enforcing oversize and overweight loads—in particular permitting practices—vary; further, states lack information on how well the range of practices being used actually work. In fact, FHWA has previously recognized the benefit in developing and distributing best practices in this area, as shown through its prior work with the trucking industry on an escort vehicle best practices guide. A similar study related to state permitting practices and requirements could help identify best practices to assist states in making decisions on their permitting practices. However, because FHWA does not collect information on state permitting, it is not in the best position to advise states on practices and requirements that could improve their performance.", "To improve stewardship over the nation’s highways and bridges, we recommend that the Secretary of Transportation direct the FHWA Administrator to take the following action:\nConduct a study on state oversize- and overweight-permitting practices, including automated vehicle routing and escort driver certification, to identify areas of best practice and share the results with states.", "We provided a draft of this report and the e-supplement to DOT for review and comment. DOT concurred with our recommendation and provided written comments, which are reprinted in appendix II. DOT also provided technical comments, which we incorporated as appropriate. DOT did not have any comments on the e-supplement.\nWe are sending copies of this report to the appropriate congressional committees and the Secretary of Transportation. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report please contact me at (202) 512-2834 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.", "This report examines (1) how DOT regulates and provides oversight of oversize vehicles and loads on highways and bridges and (2) how state agencies regulate oversize vehicles and loads on highways and bridges. For the purposes of our review, we defined an oversize vehicle and load to include when the vehicle and the cargo it is carrying exceeds the legal dimensions of length, height, or width as defined by federal and state requirements for the state in which the vehicle will be traveling. We defined an overweight vehicle and load as any vehicle or vehicle and load in which the vehicle and the cargo it is carrying exceed the legal dimensions for weight as defined by federal and state requirements for the state in which the vehicle will be traveling. The federal and state requirements that set size and weight standards could be in legislation or regulations. FHWA is the federal agency that oversees transportation of oversize and overweight vehicles and loads on highways and bridges.\nTo determine how DOT regulates and provides oversight of oversize vehicles and loads on highways and bridges, we reviewed relevant legislation, obtained program documents from and conducted interviews with FHWA and FMCSA officials to obtain information on current policies, procedures, and practices for monitoring the transportation of oversize and overweight vehicles and loads. Specifically, we obtained information about what data FMCSA currently collects on oversize and overweight loads; how FHWA coordinates with state agencies; actions FHWA has taken in its oversight process; and challenges, if any, that FHWA faces in improving highway safety, infrastructure preservation, and interstate commerce in relation to oversize and overweight loads. In addition, we conducted a literature search to identify and review relevant studies, reports, and available data on oversize loads to gain a better understanding of the issue.\nTo determine how state agencies regulate oversize vehicles and loads on highways and bridges, we conducted a literature review of and legal research on state laws, requirements, and restrictions on oversize and overweight loads. In addition, we conducted an online search of federal and state information about oversize and overweight vehicles and loads to identify data topics to collect and compare between the states. We reviewed commercially available information on states’ vehicle size requirements, and then developed and administered a data-collection instrument to officials from the 50 states and the District of Columbia in order to verify various state permitting practices. We created an e- supplement GAO-15-235SP from this data that allows the user to compare different combinations of selected states. The data were verified by state officials in permitting and law enforcement. We developed the data collection instrument to send requests via email to state officials for verification of the data and additional information, including any data points unavailable online. We received completed responses from the 51 respondents for a response rate of 100 percent. We reviewed responses for inaccuracies or omissions, analyzed the data, and have presented the key findings in this report and the full findings in the e-supplement, which can be viewed at GAO-15-235SP.\nWe also conducted interviews with state officials in 10 states to collect non-generalizable information on state permitting and enforcement practices related to oversize and overweight loads. We selected states that were (1) geographically diverse, (2) varied in the involvement of different regional permitting consortiums, (3) varied in the types of permitting requirements, (4) varied in the use of online electronic permitting, and (5) varied in crash and enforcement data availability. Using these criteria, we interviewed state officials from Iowa, Maine, Nebraska, New York, Pennsylvania, South Dakota, Tennessee, Texas, Washington, and Wisconsin. We used GAO’s prior work on improving agency performance as criteria to identify key steps agencies could take to improve state practices.\nIn addition, we also conducted interviews with representatives from national transportation organizations to obtain additional information on issues related to permitting and efforts by states to deal with these issues. Interviewees included the American Association of State Highway and Transportation Officials, the Commercial Vehicle Safety Alliance, the Specialized Carrier and Rigging Association, the American Trucking Association, and the National Pilot Car Safety Institute. Additionally, to understand the circumstances of the Interstate 5 bridge collapse in Washington State, we reviewed the National Transportation Safety Board (NTSB) documents, attended an NTSB Board meeting on the Interstate 5 bridge collapse, and interviewed relevant NTSB officials and investigators.\nWe conducted this performance audit from April 2014 to February 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the individual named above, Heather MacLeod (Assistant Director), Natalie Block, Brian Chung, Dave Hooper, Les Locke, Josh Ormond, Amy Rosewarne, Kelly Rubin, and Lorelei St. James made key contributions to this report. Also, Alice Feldesman and John Mingus made key contributions to the accompanying e-supplement (GAO-15-235SP)." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_full h1_title", "h0_full", "h0_full h1_full", "h2_full h1_full", "h1_full", "h1_full", "", "", "", "h2_full h1_full", "", "", "", "" ] }

{ "question": [ "What regulations has the FHWA established?", "What regulation does FHWA lack the authority to establish?", "What other activities does FHWA oversee?", "What are FHWA's limitations regarding state activities?", "What did GAO find when investigating size and weight requirements for oversize vehicles?", "What is an example of variation in requirements?", "What did GAO find when investigating permitting practices for oversize vehicles?", "Why might the variety of permitting practices pose an issue?", "What steps is FHWA taking to respond to this issue?", "According to GAO, what might improve FHWA's performance?", "What occurred in May 2013?", "What issues did this crash raise?", "What regulations exist to avoid such issues?" ], "summary": [ "The Department of Transportation's (DOT) Federal Highway Administration (FHWA) has established some federal vehicle size and weight requirements and oversees some state activities. Based on current legislation, FHWA has established rules and regulations for vehicle width, truck trailer length, and vehicle weight standards for certain federal-aid highways aimed at protecting highways and bridges from damage while providing a safe and efficient highway network.", "FHWA does not, however, have the authority to establish a height requirement, a decision that goes back to the Interstate System's construction in the 1950's, when height clearances already varied from state to state.", "FHWA also oversees states' processes for enforcing these standards by reviewing states' documentation of enforcement operations.", "However, FHWA has more limited involvement in individual states' permitting processes and requirements, which the agency considers largely a state matter. For example, it does not provide technical assistance on permitting to states.", "State laws and regulations set varying size and weight limits and permitting requirements for vehicles that exceed these limits and that operate on highways and bridges. Specifically, GAO found that the vehicle size and weight limits set by state laws and regulations vary by state, although they are within the parameters of federal requirements.", "For example, states' length standards vary between the minimum federal standard of 48 feet and 65 feet for a semitrailer.", "GAO also found that permitting practices for oversize vehicles often vary by state. In some cases, states follow similar practices; for example, most states make use of online permitting systems and escort vehicles that travel with an oversize or overweight vehicle. However, other permitting practices vary by state—such as states' use of automated routing systems to provide a route for oversize vehicles.", "A National Transportation Safety Board investigation reported that differences among states on the various aspects of truck permitting could be a safety concern. State officials GAO interviewed did not always agree on the benefits of the various permitting practices, and some spoke of the need for more information on this topic.", "While FHWA is (1) conducting some research on the potential effect of changes to truck size and weight limits and (2) working with the trucking industry to update a best practices guide on escort vehicle operations, it has not studied permitting best practices across states due to lack of authority over state permitting.", "In GAO's prior work on improving agency performance, GAO found that identifying best practices can help identify changes that might be needed to improve performance. By conducting this type of research, FHWA would be better positioned to help states make sound decisions to improve safety and protect infrastructure.", "In May 2013, a truck carrying an oversize load crashed into an interstate bridge in Washington state causing it to collapse.", "This crash raised issues about oversize vehicles and public safety.", "DOT develops regulations on vehicle size and weight, and states enforce these standards with some oversight from DOT. States also issue their own regulations on vehicle size and weight and issue permits for oversize and overweight vehicles." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, 2, 3, -1, -1, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Brief History of the Public Housing Program", "The Housing Act of 1937: The Beginning of Public Housing", "The Housing Act of 1949: Expansion and Ties to Urban Renewal", "1960s: New Forms of Assistance and the End of Legal Discrimination", "The 1970s and the Rise of Section 8", "The 1980s: Withdrawing Further from Public Housing", "1990s to Present: The End of Public Housing Development and Decline in Units", "Overview of the Program", "Administration", "PHAs", "PHA Plans", "Resident Involvement", "Public Housing Assessment System", "Demolition, Disposition, and Conversion", "Eligibility, Rent, Terms of Occupancy", "Eligibility", "Application, Waiting List, and Preferences", "Targeting and Deconcentration", "Screening", "Rent", "Flat Rents", "Utilities", "Reexamination", "Community Service Requirement", "Termination of Tenancy", "Tenant Grievance Procedure", "Additional Programs and Services", "Resident Supports", "Section 3", "Public Housing Homeownership", "Moving to Work", "Trends in Units and Characteristics of Properties", "Characteristics of Tenants", "Funding", "Operating Funding", "Public Housing Drug Elimination Grants", "Capital Funding", "Leveraging and Mixed Finance Development", "HOPE VI/Choice Neighborhoods Initiative", "Recent Trends in Funding", "Policy Issues", "Funding Levels", "The Role of Public Housing" ], "paragraphs": [ "", "Housing is primarily a private market enterprise in the United States. Most housing in this country is privately built and owned and most regulation of that process is done at the state and local level. However, the federal government has played a role for many years in assisting in the provision of safe, decent, and affordable housing for families of modest means. The low-rent public housing program was the original effort through which the federal government supported this policy goal. While public housing is a federally created and funded program, administered at the federal level by the Department of Housing and Urban Development (HUD), the properties are owned and managed at the local level by quasi-governmental public housing authorities (PHAs) under contract with the federal government. Given this unique federal-local relationship, the program is governed in part by federal rules and regulations and in part by policies set at the local level.\nThe program was controversial from the start, with opponents contending that it subverted local control and interfered with private enterprise. Later, criticism grew about the conditions of the housing the program provided. Concern was expressed about the quality of life public housing provided to the families it served, as well as the character of the tenants the program served and the effect public housing was having on the communities in which it was located. Over time, in response to these critiques and others, the public housing model—publicly owned and subsidized apartment buildings for poor families—was replaced with other models of assistance. While no new public housing is authorized to be funded and built, much of the existing stock of public housing built under the original program remains.\nToday's roughly 1.2 million units of public housing are home to some of the poorest families in the nation, including persons who are elderly, persons living with disabilities, and other families with and without children. In some cases, these families live in high-quality housing in neighborhoods of opportunity; in other cases, these families live in housing that is physically decrepit, socially isolated, and plagued by social ills. The federal government currently pays roughly $6 billion to $7 billion per year to support the remaining stock of public housing and there are differences of opinion about whether this program is a worthwhile federal investment or whether recent funding levels reflect an inadequate federal investment.\nThis report is meant to serve as an introduction to the federal public housing program. It provides information on the history of the program, how it is administered and funded, and the characteristics of public housing properties and the households they serve. While it introduces current policy issues, a full analysis of those issues and discussion of current legislation is not included in this report.", "In order to understand today's public housing program, and the issues surrounding the program, it is useful to know the background of how it evolved. The following section of this report provides a short history of the public housing program. It should not be considered a comprehensive or exhaustive treatment of the topic.", "The idea of a federal public housing program began taking shape in the 1930s during the Great Depression. Its purpose was intended to be twofold: the housing created would respond to a lack of sanitary housing available at a low cost to families who had fallen on hard times, and the construction of the housing would lead to the creation of jobs and economic growth. However, the idea of the federal government providing housing proved to be controversial. Opponents saw government involvement in housing as a step towards socialism, the building industries thought that they could handle the nation's housing problems without government intervention, and some local governments were concerned that federal housing would encroach on their sovereignty.\nThe Housing Act of 1937 (P.L. 75-412) attempted to balance some of these concerns in the way that it designed the low-rent public housing program. Under the terms of the act, public housing properties would be built and owned only by state-chartered and locally governed public housing authorities (PHAs). This gave states and localities the right to choose whether or not to participate in the program by deciding whether or not to create PHAs. The federal government would provide capital financing under long-term Annual Contributions Contracts (ACCs). These contracts would spell out the federal requirements of the program; however, many of the decisions about how the housing was designed, where it was located, and who could live in it would be left to the PHAs. Public housing's operations would be sustained primarily on tenant rents, which meant that families would be required to have incomes high enough to pay the rents charged for public housing units. However, in part to prevent competition with the private market, the authorizing statute dictated that families who wanted to live in public housing could not have incomes that exceeded five times the rents (six times in the case of large families). Further, the law required that for each new unit of housing built, an unsafe or unsanitary unit had to be eliminated (a concept often referred to as \"slum clearance\").\nNot long after the program was created, World War II shifted the focus of federal involvement in housing. The Lanham Act of 1940 halted new development under the low-rent public housing program in favor of government construction of housing for war workers. The act also gave war workers priority for existing public housing units. By the end of the 1940s, around 200,000 public housing units had been built and were under contract.\nThe earliest residents of public housing were primarily working class families who were \"temporarily poor\" because of the Depression. Later, many war workers moved into public housing. As the nation began to prosper again, many families in public housing had income above what was considered to be low income.", "After being diverted to support the war effort, the low-rent public housing program was restarted at the end of the decade by the Housing Act of 1949 (P.L. 81-171). That act created a federal policy goal of \"a decent home and suitable living environment for every American family.\" It authorized the Urban Renewal program—formalizing the policy of slum clearance evident in the 1937 act—and required communities to give preference for public housing units to families displaced by Urban Renewal. The act expanded the authorization for new public housing units, calling for the creation of 810,000 units by 1954 (or 135,000 units per year). At the same time, the act added new requirements. Out of concern about crowding out private market housing, the act instituted construction cost limits and added a requirement that public housing rents be at least 20% below prevailing market rents for safe and decent housing. Given that upper income eligibility limits were tied to rents (i.e., incomes could not exceed five times the rents), this meant that income eligibility limits would be lowered. Additionally, the act required that the Annual Contributions Contracts be amended to require the eviction of tenants whose income exceeded the limits.\nWhile the 1949 act restarted the public housing program, its goal of 810,000 units in six years was not met. The year after the enactment of the 1949 act, President Truman lowered the rate of construction to roughly half the authorized level in response to concerns about materials shortages resulting from the outbreak of hostilities in Korea. Congress followed suit by further lowering the authorized annual level of public housing construction starts each year in the appropriations acts. Also, opposition from local communities made it difficult for some PHAs to get approval to build public housing. As a result, fewer units were built in the 1950s than were envisioned by the 1949 act. By the end of 1957, only about 210,000 of the 810,000 units authorized by the 1949 act were under management.\nThe characteristics of the tenants served in public housing also began changing during this period. The policy changes included in the 1949 act, taken together, would mean that public housing would serve families with income lower than what was originally required under the 1937 act. This change in the income character of tenants is evident in the fact that from 1952 to 1962, the number of families in public housing receiving income from private or public assistance programs rose from 29% to 46%. Further, given that public housing development was explicitly tied to Urban Renewal after 1949, the program began to house more families of color, particularly black families, who had been uprooted and displaced by Urban Renewal. From the beginning of the 1950s to the end, the percentage of nonwhite families living in public housing increased from 36% to 46%. In an era of legal segregation and discrimination, the increasing proportion of black families living in public housing led to great opposition to new public housing development in some predominantly white communities and to the perpetuation of segregation in public housing properties themselves.", "The 1960s brought a new vision with regard to federal housing assistance. Several new programs were developed to subsidize privately owned rental properties, as opposed to publicly owned properties, including the Section 236 rent supplement program serving low-income families and seniors; the Section 202 program serving the elderly; and the Section 221d(3) program serving families with incomes too high for public housing but too low to afford housing in the private market. Another program, the Section 23 leased housing program, was a new public housing program designed to utilize private market units. It permitted PHAs to lease private market units on behalf of public housing-eligible families. Also, by the late 1960s the Turnkey model of public housing began growing in popularity; under the Turnkey approach, a private developer builds housing on land he owns and then sells the property to a PHA to use as public housing. These new models of assistance, because they utilized private market participants, were thought to be more efficient and timely. Despite the introduction of new programs, the number of public housing units increased significantly during the 1960s to over 800,000 units, an increase from about half a million units at the beginning of the decade.\nThe 1960s brought other important changes for public housing related to the social aspects of the program. A presidential order, Supreme Court cases, and civil rights legislation worked to make it illegal to deny public housing assistance to families based on their race and to systematically segregate public housing residents by race, which had been common since the inception of the program. While such discriminatory actions were officially outlawed during this period, desegregation and changes in community attitudes towards integrated public housing were not immediate and courts had to intervene. Out of concern about the ramifications of concentrations of poverty, the Housing and Urban Development Act of 1968 prohibited the construction of new high-rise public housing projects for families.\nThe Housing and Urban Development Act of 1969 made a fundamental change to the rent structure in public housing; the Brooke Amendment capped tenant contributions toward rent at 25% of family income. This change was made out of concern that rents charged for public housing were becoming too high for poor families to afford. To help meet the operating needs of public housing, the 1969 act also authorized HUD to begin providing operating assistance to PHAs, in addition to capital funding to cover the costs of the bonds they had issued to build public housing.\nOver this period, the income character of the tenants in public housing had also continued to change. Policy changes (such as the limit on the number of over-income families who could live in public housing, reductions in income eligibility standards, and preferences for families displaced by urban renewal) partnered with market changes (such as the post-war housing boom, increasing rates of homeownership, and suburbanization) resulted in public housing serving the poorest tenants, many of whom were receiving other public assistance. Until passage of the Brooke Amendment, the rents these very poor families paid were, in many cases, higher than what might be considered \"affordable\" to them, but not high enough to provide sufficient income to allow PHAs to properly maintain public housing properties. Although Congress eventually began providing additional operating subsidies to public housing after passage of the Brooke Amendment, some public housing developments, facing inadequate rental income and insufficient federal subsidies to maintain their properties, fell into severe disrepair. These realities—poorer tenants paying lower rents, insufficient operating income, and deteriorating units—shaped the public housing debates of the decade to follow.", "By the early 1970s, construction programs were subject to growing criticism for taking too long to develop and being too expensive. The Housing and Urban Development Act of 1970 required that at least 30% of new public housing units be created through the Section 23 leased housing program, which utilized the existing housing stock rather than new construction. The act also authorized a demonstration, called the Experimental Housing Allowance Program, to test the feasibility and effectiveness of giving families housing allowances in lieu of subsidized units. In 1973, President Nixon imposed a moratorium on all new housing construction commitments, including those under public housing. He argued that the existing programs needed revisiting because they did not provide decent housing to families and cost the federal government too much to build and maintain.\nThe Nixon Moratorium was ended as Congress authorized funding for new units of public housing and created new housing assistance programs. The Housing and Community Development Act of 1974 created the Section 8 program, which continued the shift to subsidizing privately owned housing by pairing rental subsidies with private market housing units. The Section 8 program was designed to respond to the criticisms of the earlier programs by including subsidies for private units and relying less heavily on new construction.\nAfter the moratorium, the focus of federal housing assistance policy had shifted away from constructing new public housing units to new models using the existing and private housing market through the Section 8 program. Public housing averaged fewer than 37,000 reservations for new units of public housing per year between 1975 and 1979, compared to an average of more than 275,000 reservations for new Section 8 assisted units per year over the same period.", "The Omnibus Budget Reconciliation Act of 1981 made several significant changes to public housing. It raised tenant rent contributions toward rent (as established by the Brooke Amendment at 25% of family income) to 30% of family income. Estimating that increased rents would decrease the need for federal operating subsidies, the act limited increases in funding for operating subsidies. At the same time, the act more deeply targeted assistance to the poorest families. Eligibility was largely restricted to families with incomes below 50% of the local area median income and federal preferences were set to target assistance to the households assumed to have the greatest need, including those who were homeless, those who were severely cost burdened, and those living in substandard housing.\nThe trend away from public housing continued with the Urban-Rural Recovery Act of 1983, which limited new construction of public housing to instances in which it would be less than the cost of acquiring existing housing. At the same time, the act limited the ability of PHAs to demolish or dispose of public housing to cases where the unit could not be reasonably rehabilitated or the demolition/disposition would result in the acquisition of new housing. The 1983 act also authorized a demonstration testing a new form of Section 8 assistance, a portable voucher with more flexible standards. The voucher program was made permanent in 1988 and fully replaced the original Section 8 program. The Housing and Community Development Act of 1987 further limited new public housing construction to only those cases where the PHA could certify that family housing demand could not be met through Section 8. New public housing starts dropped off significantly during the 1980s in favor of the new Section 8 program.\nDuring the 1980s, concern continued to grow about the state of the existing public housing stock—both the physical soundness as well as the social health of public housing communities. In 1989, Congress established a National Commission on Severely Distressed Public Housing. The commission was mandated to identify those public housing projects that were in a severe state of distress; assess the most promising strategies for improvement; and develop a national action plan. In 1992, the commission issued its findings and recommendations on the state of the nation's public housing. It reported finding residents living in fear of crime, high unemployment and limited opportunities for employment, insufficient resources to address the needs of residents, disincentives to self-sufficiency, and housing that had deteriorated to the point that it was physically dangerous. The commission issued a wide range of recommendations, including increased social services for residents, increased funding for public housing capital needs, better performance assessment for PHAs, and experimentation with new forms of public-private partnerships. The commission labeled 6% of the public housing stock as severely distressed; at the time, this equaled 86,000 units.", "The National Affordable Housing Act of 1990 reacted to some of the concerns about public housing echoed by the National Commission. It authorized the Family Self Sufficiency program, designed to provide incentives for assisted families to increase their employment. It also required HUD to establish a formal PHA management assessment system, including mechanisms for intervening in cases of troubled housing authorities, and it established a new source of safety and security funding, the Drug Elimination Grant program. Shortly thereafter, the Housing and Community Development Act of 1992 created the Revitalization of Severely Distressed Public Housing program—commonly referred to as HOPE VI—which authorized HUD to make competitive grants to PHAs to undertake major redevelopment of distressed public housing.\nIn 1995, the Clinton Administration proposed the \"Reinvention Blueprint,\" which called for most public housing developments to be converted to vouchers. At the same time, some Members of Congress were calling for the abolition of HUD. While the Blueprint was not fully undertaken and HUD was not abolished, reform proposals, many of which were included in the Blueprint, were considered throughout the 1990s.\nThese efforts culminated with the passage of a major reform bill in 1998, the Quality Housing and Work Opportunity Reconciliation Act of 1998 (QHWRA; P.L. 105-276 ). QHWRA included provisions designed to promote local control, including the elimination of federal preferences. It established a requirement that PHAs develop annual and five-year plans detailing how they were using their local discretion. It gave PHAs the authority to convert their public housing properties to vouchers, and in some cases, required that conversion if it proved cost effective. Influenced by the welfare reform debates of the mid-1990s that were focused on promoting work, QHWRA established a requirement that non-elderly, non-disabled residents be working or participating in community service or self-sufficiency activities for eight hours per month and created a disregard of newly earned income for some families. The act included authority for PHAs to leverage their public housing properties and funding in order to secure private resources (loans) for redevelopment. It also required HUD to develop a new formula for distributing operating funding to PHAs. Importantly, the act prohibited PHAs from using any federal capital or operating funding to develop net new public housing units. While Congress had not provided funding for the development of new public housing units since FY1994, this provision of QHWRA effectively prohibited any net new development, even if funds were available.\nMore than a decade after enactment of QHWRA, the number of public housing units nationally has declined steadily, as more units are torn down than are rebuilt (see Figure 1 ). The HOPE VI program, which had become at least partly responsible for declines in the number of units, has had its funding reduced substantially, in part in reaction to concerns about slow spending, and in part in reaction to concerns about displaced residents. With the exception of an infusion of funding from the economic stimulus legislation in 2009, capital funding has remained relatively level, despite a backlog in unmet capital needs. While PHAs have begun leveraging their public funds to raise private capital, the potential for leveraging sufficient funds to meet the full backlog of needs is limited. Given the reality of declining units, questions remain about the future of the public housing stock and the program's role in the future of federal housing assistance.", "The following section of this report provides basic information about today's public housing program. It begins with a discussion of the unique administrative structure of the program, followed by a discussion of the program's policies and rules as they apply to public housing residents. For a more detailed description of program policies, see the program regulations at 24 C.F.R. Parts 901-972 and in the Public Housing Occupancy Guidebook.", "Public housing has a unique administrative structure that pairs local administration and local discretion with federal funding and federal regulations. Public housing properties are owned and managed by quasi-governmental local public housing authorities (PHAs). PHAs have contracts, called Annual Contributions Contracts (ACCs), with the federal government. Under the terms of their contracts, PHAs agree to administer their properties according to federal rules and regulations, and in exchange they receive federal funding in the form of operating and capital grants (discussed later in this report under \" Funding \"). These federal rules and regulations provide PHAs with more discretion in developing some policies (such as the admissions process), but less discretion in developing other policies (such as the income determination process). In areas where PHAs do have discretion to set local policies, they are required to develop those policies through a public process that allows for—and responds to—community feedback.", "PHAs were, for the most part, created by states in response to the federal government's creation of the low-rent public housing program. Their authorities and structures are dictated by the state laws under which they were chartered. PHAs typically have an executive director as well as a governing board. The board generally has members appointed by local government officials, but it may also have elected members. The board's role is generally to approve policy, clarify goals, and delegate responsibility and authority to the executive director, who acts on its behalf. While PHAs' governing structures are dictated primarily by their state charters, federal law mandates that, unless otherwise exempted, PHA boards must include at least one resident.\nWhile PHAs were created for the purpose of administering the federal low-rent public housing program, their missions have expanded over the years. Some PHAs administer state and local housing programs and act as affordable housing developers in their communities. PHAs are also responsible for administering the federal Section 8 Housing Choice Voucher program; in fact, some PHAs no longer administer public housing and only administer the voucher program.\nThere are over 3,000 PHAs, and they vary in size from the very small to the very large. Table 1 provides a breakdown of PHAs that administer public housing by size. The vast majority of PHAs—75% of all PHAs—are small (administering fewer than 250 units), but small PHAs only administer about 18% of all public housing units nationally. Over half of all units are administered by large PHAs (1,250+ units). One PHA, the New York City Housing Authority (NYCHA) is noticeably larger than most other PHAs and accounts for over 17% of all public housing units nationwide.\nPart of the reason there are so many small PHAs is the way they were created by states; they were typically tied to a specific locality, such as a county or unit of local government. In recent years, there has been an increase in the number of smaller PHAs that have merged or formed consortia. In some cases, these mergers or consortia are designed to allow the agencies' programs—particularly the Section 8 voucher program—to be administered across a metropolitan region that crosses jurisdictional boundaries. In other cases, these mergers and consortia are meant to reduce administrative costs—for example, by requiring only one executive director for the consortia instead of one for each PHA—and to achieve efficiencies of scale. Academic researchers, as well as the Bush and Obama Administrations, have encouraged further PHA consolidation. However, PHA consolidation can lead to a loss of local control for municipalities, and may therefore be unpopular with local leaders.", "As a condition of receiving federal funds, PHAs agree to administer their low-rent public housing properties according to federal rules and regulations. However, those rules and regulations give PHAs the discretion to develop their own local policies and procedures in many aspects of the program. Those local policies and procedures must be included in the PHAs' plans.\nPHA plans are meant to provide information about how PHAs administer both their public housing and voucher programs as well as their intentions for the future. For anyone interested in a particular PHA's intentions, goals, and policies, the PHA plans can be a valuable resource. According to HUD's regulations:\nThe purpose of the plans is to provide a framework for local accountability and an easily identifiable source by which public housing residents, participants in the tenant-based assistance program, and other members of the public may locate basic PHA policies, rules and requirements concerning the PHA's operations, programs and services. (24 C.F.R. 903.3)\nPHAs are required to establish two plans: the five-year plan and the annual plan. Both plans must be developed with resident input and public participation, and the plans are subject to HUD approval. The five-year plan describes the PHA's mission, goals, and objectives and the PHA's progress towards meeting those goals and objectives. The goals and objectives are generally related to both the agency's physical housing stock as well as the agency's role in meeting the housing needs of lower-income families in their communities. The annual plan describes the PHA's day-to-day operations and policies. The policies and procedures spelled-out in the annual plan are expected to be consistent with the goals and objectives outlined in the five-year plan. Specifically, the annual plan must include information regarding, among other things,\nhousing needs in the PHA's community; the PHA's policies that govern eligibility, selection, and admissions (as described in the agency's Admissions and Continued Occupancy Plan); the PHA's financial resources, as well as its most recent audit; the PHA's rent determination policies; the PHA's operation and management, including rules, standards, and policies that govern maintenance and management of housing owned, assisted, or operated by the PHA; the extent of capital improvement needs at the PHA's properties; any public housing developments designated as housing for the elderly or disabled; any plans to demolish or dispose of public housing, or convert any public housing to vouchers; the PHA's community service and self-sufficiency programs; and the PHA's safety and crime prevention measures. (24 C.F.R. 903.7)\nPHAs are also required to establish Resident Advisory Boards to provide input in the planning process. Members of the Resident Advisory Boards are elected and are public housing residents and, if applicable, voucher holders. PHAs are required to consider Resident Advisory Board recommendations while they are developing their annual and five-year plans.\nIn addition to soliciting input from residents, PHAs are required to solicit broader community input on their PHA plans. Specifically, PHAs are required to make their draft plans publicly available and hold public hearings on their content. The PHA plan cannot be formally adopted until the public hearing has been completed, the recommendations have been considered, and any changes have been made.\nPHAs submit their plans to HUD and they are subject to HUD's approval. HUD reviews the plans to ensure that they are complete, consistent with any other local HUD plans, and consistent with federal law.\nSome PHAs are exempted from the annual and/or five-year planning process, and some are eligible for a streamlined annual plan process. Specifically, high performing PHAs, small PHAs (250 or fewer units), and Section 8 voucher-only PHAs are eligible to submit streamlined annual plans. Streamlined plans are not required to contain as much information as full plans, although PHAs must still give notice of how interested parties can obtain the information not contained in the streamlined annual plan. The Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ) included a title that exempted PHAs that administer 550 or fewer combined public housing units and Section 8 vouchers from filing an annual plan. PHAs that are considered troubled are not eligible for this exemption.\nPHAs participating in the Moving to Work Demonstration (MTW) may also be exempted from the standard annual and five-year plan requirements, although they are required to submit alternate annual MTW plans. (For an expanded discussion, see \" Moving to Work \" later in this report.)", "According to HUD regulations, \"residents shall be involved and participate in the overall policy development and direction of public housing operations.\" There are several ways in which resident participation in the government and management of public housing is promoted or required. As noted already, most PHAs are required to have at least one resident on their governing boards and PHAs must establish Resident Advisory Boards to provide input in the PHA planning process.\nAdditionally, public housing residents have the right to organize and elect a resident council to represent their interests. Most PHAs are required to set aside funding for resident participation activities, at least some of which is to be provided specifically for resident councils. PHAs are required to recognize resident councils, and resident councils may provide input in all areas of PHA operations, including but not limited to occupancy, general management, maintenance, security, resident training, resident employment, social services, and modernization priorities.\nTaking resident participation one step further, public housing residents may form resident management corporations, which are resident-sponsored entities that may enter into contracts with PHAs to undertake some or all of the management activities at a property (or properties). HUD's regulations state that HUD\nencourages [P]HAs, resident councils and resident management corporations to explore the various functions involved in management to identify appropriate opportunities for contracting with a resident management corporation. Potential benefits of resident-managed entities include improved quality of life, experiencing the dignity of meaningful work, enabling residents to choose where they want to live, and meaningful participation in the management of the housing development. (24 C.F.R. 964.15)", "HUD annually assesses the performance of the local PHAs that are administering the public housing and Section 8 Housing Choice Voucher programs. The current assessment of public housing program administration is called the Public Housing Assessment System (PHAS). PHAS includes reviews of indicators pertaining to the physical condition of an agency's housing stock, the financial condition of the agency, the agency's management performance, and their spending of capital funding.\nPHAs that score 90% or better overall, and at least 60% on all individual indicators (50% on the capital fund indicator) are considered high performers. High performers are eligible for reduced federal oversight (including a stream-lined annual plan, less frequent physical inspections) and may be eligible for bonus funding. PHAs that do not meet the requirements to be considered high performers are considered standard performers if their overall score is at least 60% and they score at least 60% on all of the sub-indicators (50% on the capital fund indicator).\nPHAs that score less than 60% overall, or on two or more of the PHAS indicators, are considered \"troubled.\" Once a PHA is designated as troubled, the Secretary must notify the PHA of its status. At the outset of a PHA's designation as troubled, it must develop a plan for its improvement with HUD. In addition to helping agencies develop these plans, HUD has a number of options for aiding troubled agencies. HUD can appoint a recovery team to help develop remedies, provide technical assistance and training, impose financial sanctions, or develop flexible arrangements with agencies tailored to their specific conditions.\nIf a troubled PHA fails to make adequate progress, it may be found to be in substantial default of its Annual Contributions Contract (ACC) with HUD. A PHA can be found to be in substantial default for violations of the Fair Housing Act (including maintaining segregated public housing), physical deterioration of the public housing stock, management difficulties (ranging from unwillingness or inability to follow HUD's program rules to fraud), or any combination of these factors.\nOne of the options available to HUD is to place a troubled PHA that is found to be in substantial default in a receivership. Under a receivership, a PHA is stripped of all or part of its authority and that authority is granted to another party, referred to as a receiver. Under an administrative receivership, HUD can either serve as the receiver itself and take temporary possession of all or part of the PHA, or the HUD can select another PHA or private housing management corporation to serve as the receiver and manage all or part of the PHA.\nAccording to HUD data from May 2012, 48% of PHAs administering public housing were considered high performers, 26% were considered standard performers, and 23% were considered substandard, most frequently for management reasons. About 2% of PHAs were considered troubled (with an overall score below a certain threshold and substandard scores on at least two indicators).", "As noted earlier, PHAs have contracts with the federal government governing their public housing properties. Under the terms of those contracts, PHAs must receive HUD's permission to make changes to their public housing stock. Specifically, PHAs must receive HUD's permission to either demolish or dispose of (sell) public housing units that are under contract. Demolition and disposition of public housing is governed by Section 18 of the U.S. Housing Act.\nIn order for a demolition to be approved, the property must be found to be \"obsolete as to physical condition, location, or other factors, making it unsuitable for housing purposes, and no reasonable program of modifications is cost-effective to return the public housing project or portion of the project to useful life.\"\nThe criteria for approving a disposition are broader, but PHAs face restrictions on how they can use the proceeds from a disposition. In order for a disposition to be approved, the property must meet the following criteria:\n(a) Conditions in the area surrounding the project (density, or industrial or commercial development) adversely affect the health or safety of the tenants or the feasible operation of the project by the PHA; (b) Disposition allows the acquisition, development, or rehabilitation of other properties that will be more efficiently or effectively operated as low-income housing developments; (c) The PHA has otherwise determined the disposition to be appropriate for reasons that are consistent with the goals of the PHA and the PHA Plan and that are otherwise consistent with the Act. (24 C.F.R. 970.17)\nHowever, the use of the proceeds from a disposition are limited. Unless waived by HUD, the proceeds must be used for the retirement of outstanding obligations. Any remaining proceeds must be used to provide low-income housing, or used for the benefit of the PHA's residents or to secure on-site commercial enterprises that are appropriate to serve the needs of the residents.\nIf a public housing unit is demolished or disposed of, any displaced tenants must be provided with relocation assistance, including comparable replacement housing. Replacement housing is generally provided in the form of either a residence in another public housing unit or a replacement voucher, referred to as a tenant protection voucher, which tenants can use to find housing in the private market.\nIn addition to demolition and disposition, another way in which properties can leave the public housing stock is through conversion to vouchers. In 1996, Congress enacted a requirement that any property with more than 300 units and a vacancy rate of over 10% be assessed to determine its viability. This was referred to as the Section 202 mandatory conversion requirement. If the assessment determined that it would cost more to rehabilitate the property than to provide residents with vouchers, then the property was to be removed from the public housing inventory in five years. The Quality Housing and Work Opportunity Act of 1998 (QHWRA; P.L. 105-276 ) rewrote and reinforced the mandatory conversion requirement (renaming it \"required conversion\") and added a voluntary conversion policy. Specifically, under QHWRA PHAs are required to assess for conversion all of their developments with 250 or more units and low occupancy. Covered developments must be converted to vouchers if the cost of modernizing them and operating them as public housing exceeds the cost of providing tenant-based vouchers. PHAs may choose to voluntarily convert developments in cases where it would (1) be beneficial to the residents, (2) be beneficial to the surrounding area, and (3) not have an adverse effect on the availability of affordable housing in the area. Voluntary conversions must also be cost-effective.\nSince 2006, PHAs have been required to review their inventory annually to determine whether any of their public housing units must be removed from the public housing inventory per the required conversion policy. This same assessment may be used by PHAs to determine whether or not to pursue voluntary conversion, although additional factors (the impact on residents, the surrounding community, and affordable housing) must be taken into account.\nAs of 2009, over 180,000 units of public housing had been removed through demolition or disposition and over 16,000 units had been removed through conversion. (For more information on inventory removals, see Figure 2 later in this report.)", "As noted earlier, the low-rent public housing program is governed by federal statute, regulation, and guidance, as well as local discretion and policy making. The following section of this report describes the federal rules and regulations that govern the basic aspects of the public housing program. However, given the amount of local discretion in the program, for any particular community the best place to learn a PHA's specific policies is the PHA's plans.", "Today's public housing program is meant to provide assistance to low-income families, so families must meet certain income standards in order to be eligible to live in public housing. In general, families must be low-income—having gross income at or below 80% of Area Median Income (AMI) —at the time they apply to live in public housing. \"Income\" is defined in federal statute as income from all sources from all members of the household, including imputed income from assets, with some exceptions.\nFurther, in order to be eligible the family must be comprised of citizens and/or eligible non-citizens. If a family has \"mixed status\" (including members who are not citizens and not eligible non-citizens), then the family may live in public housing but the ineligible member is not permitted to receive assistance. This is accomplished by providing the family with a prorated benefit, which means the family must pay higher rent.", "Families who wish to live in public housing must apply to their local PHA. Depending on the policies of the PHA, the household can apply to live in a specific property or any property within the PHA's inventory. Some PHAs have designated properties as being available only to persons who are elderly or have a disability. Families who wish to live in such properties must be either elderly or have a disability.\nThe demand for public housing is greater than the supply in most communities; as a result, a family is typically assigned to a waiting list once it applies for public housing. Waiting lists can be several months long, several years long, or even closed to new applicants. PHAs must establish policies related to how they will administer their waiting lists and include those policies in their annual plan. As a part of their waitlist management, PHAs may set local preferences, as long as those preferences are not in violation of federal civil rights law. Examples of allowable preferences include preferences for working families, families who are elderly or disabled, or veterans. Once a PHA has established preferences, it can then choose whether to apply, among families of the same preference category, a first-come, first-served selection policy or a random selection process.", "PHAs are charged with balancing two competing priorities in their public housing programs: serving the neediest families and deconcentrating poverty. Federal law requires that PHAs ensure that at least 40% of families admitted to public housing in a year are extremely low-income (defined as income at or below 30% of area median income). At the same time, federal law also prohibits PHAs from concentrating very low-income families in public housing dwelling units in certain projects or buildings within projects. PHAs are required to submit to HUD plans that explain how their admissions policies promote deconcentration of poverty and income mixing by bringing higher-income tenants into lower-income properties and lower-income tenants into higher-income properties.", "In addition to ensuring that families meet income eligibility standards, PHAs are also required to screen families to ensure that they are \"suitable for tenancy.\" Federal law prohibits PHAs from admitting household members who (1) have been convicted of producing methamphetamines on federally assisted housing property or (2) are subject to lifetime registration on a state sex offender registry. Federal law also requires PHAs to prohibit admission for household members who (1) were evicted from federally assisted housing for participating in drug-related criminal activity in the prior three years and have not undergone rehabilitation, (2) are actively engaging in illegal drug use, or (3) have exhibited a pattern of illegal drug use. These last three categories are subject to PHA interpretation, in that they leave discretion to the PHA to determine whether a family member has completed rehabilitation, is currently engaging in illegal drug use, or has exhibited a pattern of illegal drug use.\nIn addition to the federal prohibitions, PHAs may adopt additional discretionary screening criteria. PHAs may establish policies that prohibit admission of households who have other criminal convictions, have poor credit histories, have poor rental histories, or who fail to meet other criteria set by the PHA. PHAs that choose to adopt elective screening criteria must ensure that the criteria are not discriminatory or in violation of the Fair Housing Act.", "Federal housing law has generally defined housing as \"affordable\" to lower-income families if it costs no more than 30% of family income. To ensure that the low-income families in public housing are paying affordable rents, federal law bases tenant rent on family income. In the public housing program, a family's rent is calculated as the highest of the following:\n30% of the family's monthly adjusted income; \"Adjusted income\" is total family income, less any deductions. Examples of deductions include $480 for each dependent; $480 for elderly or disabled households; any unreimbursed medical expenses that exceed 3% of household income for elderly and disabled households; certain child care expenses for working families with children; in some cases, 100% of new earnings in the first year of new work and 50% of new earnings in the second year of new work, referred to as the earned income disregard; and additional deductions, at the discretion of the PHA. 10% of the family's gross monthly income; welfare rent, if applicable; or a minimum rent (up to $50) set by the PHA.", "Each year, PHAs must provide each family living in public housing the option to pay a flat rent in lieu of an income-based rent. Flat rents are market comparable rents established by each PHA. The idea behind flat rents is to encourage families to increase their earnings; if a family's income increases, the family's rent does not increase under a flat-rent model. Any time that a family faces a decrease in income and paying flat rents becomes a financial hardship, the family may request to switch back to income-based rents.", "Federal housing policy considers utilities to be a part of the housing costs of a family. Therefore, their costs are generally included when subsidizing tenants' housing costs. If a public housing development has individually metered units and the utilities are not included in the rent, then the PHA has the option to either pay a utility reimbursement directly to the family or pay the utility provider on behalf of the family. Each PHA is required to develop a schedule of utility allowances. Those utility allowance schedules—which can be based on past patterns of consumption or other estimates of reasonable utility costs—are used to determine how much a PHA will pay toward a household's utility bills and to determine if households living in properties with PHA-paid utilities should pay an additional charge if they have excess consumption.", "Families' household composition and income are reexamined annually for rent determination purposes. Families are required to provide any necessary information and PHAs are required to obtain third party verification of family income, asset values, expenses related to deductions, and other factors. Families may request interim reexaminations if they have a change in income or family composition. PHAs must adopt policies governing interim reexaminations—such as whether families are required to report an increase in income or change in family size between annual reexaminations—and include those policies in their admissions and continued occupancy plans as well as in the lease.", "At reexamination, families' compliance with the public housing community service and self-sufficiency requirement is also assessed. Under the requirement, non-elderly, non-disabled residents of public housing who are not otherwise exempted are required to participate in eight hours per month of either community service or economic self-sufficiency activities in order to retain their public housing. (For more information, see CRS Report RS21591, Community Service Requirement for Residents of Public Housing , by [author name scrubbed].)", "There are no federal time limits governing how long a family can live in public housing. As long as a family wishes to remain in public housing, and as long as they continue to pay their rent and comply with program rules, they can continue the residency. PHAs are authorized to evict families whose incomes increase above the low-income limit, but they are not required to evict these \"over-income\" families.\nAs is the case with screening, there are some federally determined, mandatory grounds for terminating tenancy or evicting families and PHAs are also permitted to determine their own grounds for eviction. Federal law requires that PHAs terminate the assisted tenancy of any member of the household who is convicted of producing methamphetamine on federally assisted housing property. PHAs are encouraged by HUD, but not required by law, to evict persons subject to lifetime registration on a state sex offender registry.\nFederal law also requires that PHAs adopt policies establishing that drug-related criminal activity, illegal drug use, or other criminal activity that threatens the health, safety, or right to peaceful enjoyment of other residents is grounds for termination of tenancy or assistance. In addition, PHAs are required to establish standards that allow termination of tenancy for alcohol abuse or provision of false information related to drug or alcohol abuse. PHAs may also establish additional grounds for termination of tenancy, such as other criminal conduct.\nOne important aspect of PHA discretion in termination cases relates to how it is applied. First, in most cases PHAs can determine when a household has met the threshold for termination of tenancy. Second, PHAs are permitted to determine whether the tenancy of the entire household should be terminated because of the actions of one member of the household, or even a guest of the household. PHAs have the discretion to request that an offending member be removed from the household, that an offending guest be barred from the property, or that the entire household's tenancy be terminated.", "Tenants living in public housing are permitted to challenge decisions made by the PHA regarding tenants' individual circumstances as well as PHA policies that may adversely affect the tenants' rights, duties, welfare, or status. Each PHA is required to develop a written grievance procedure that includes both an informal process for resolving grievances as well as an informal hearing process.", "", "The families served by the public housing program are low-income and some may have personal difficulties or other barriers that mean they could benefit from supportive services. While there is no dedicated source of funding for providing services for public housing residents, there are several programs through which PHAs can receive funding to hire staff to connect residents with services. The Resident Opportunity for Self Sufficiency (ROSS) program provides funding that PHAs can apply for to hire service coordinators to promote economic self-sufficiency among families and/or independent living for persons who are elderly or are living with disabilities. PHAs that wish to receive ROSS service coordinator funding apply to the Notice of Funding Availability (NOFA) published by HUD each year in the Federal Register . The Public Housing Family Self Sufficiency (FSS) program is similar to the ROSS program in that it funds the hiring of service coordinators and uses the NOFA process. The main difference is that the FSS program is specifically designed to link participating families to supportive services aimed at improving self-sufficiency. Families who agree to participate establish goals to be met within a five-year period and may be eligible to have any increased rent attributable to increased income deposited in an escrow account that they can access after five years. Some PHAs have service coordinator funding built into their operating funding.", "Section 3 of the Housing and Urban Development Act of 1968, as amended, establishes a requirement that certain recipients of HUD funding, to the greatest extent feasible, provide job training, employment, and contracting opportunities for low- and very low-income individuals, including residents of public housing, in connection with HUD-funded projects and activities in their communities. The requirement specifically applies to all public housing funding, as well as other housing and community development funds spent on housing construction or rehabilitation. Under Section 3, PHAs and their contractors and subcontractors are required to make their best efforts, consistent with federal, state, and local laws and regulations, to give to low- and very low-income persons employment and training opportunities generated by funds from development assistance, operating assistance, and modernization assistance. These three categories encompass virtually all federal public housing funding received by PHAs. The act establishes priority categories for low- and very low-income families to whom such opportunities should be provided, with the first being residents of those developments for which the assistance is expended, the second being residents of other developments managed by the PHA, the third being participants in the Youthbuild program, and the fourth being low- and very low-income persons residing within the metropolitan area or non-metropolitan county.", "PHAs are permitted to promote public housing resident homeownership in three ways: (1) by selling portions of public housing properties to residents, (2) by using some of their public housing capital funds to provide assistance to public housing residents wishing to become homeowners, or (3) by using some of their public housing capital funds to purchase homes to resell to public housing residents. PHAs that wish to pursue public housing homeownership must establish a plan that is then submitted to HUD for approval. This option has not been widely used; as of May 2009, about 6,000 units of public housing had been sold to residents.", "The Moving to Work Demonstration (MTW) was authorized by Section 204 of the Omnibus Consolidated Rescissions and Appropriations Act of 1996 ( P.L. 104-134 ). The purpose of MTW was to provide HUD and PHAs the flexibility to design and test policies to\nreduce cost and achieve greater cost effectiveness in federal expenditures; give incentives to families with children where the head of household is working, seeking work, or is preparing for work by participating in job training, educational programs, or programs that assist people in obtaining employment and becoming economically self-sufficient; and increase housing choices for low-income families.\nUnder Moving To Work, up to 30 agencies could apply to HUD for waivers of most rules under the U.S. Housing Act of 1937 (P.L. 75-412). With HUD approval, MTW agencies can merge their Section 8 voucher, public housing capital, and public housing operating funds; alter eligibility and rent policies, modify their funding agreements and reporting requirements with HUD, and make other changes.\nRules outside of the 1937 act, as amended—such as labor requirements and fair housing rules—cannot be waived under MTW, nor can rules governing the demolition and disposition of public housing. Agencies must also agree to serve substantially the same number of people they were serving before the demonstration and they must agree to continue to serve low-income families.\nAgencies participating in MTW have used the flexibility it provides differently. Some have made minor changes to their existing Section 8 voucher and public housing programs, such as limiting reporting requirements; others have implemented full funding fungibility and significantly altered their eligibility and rent policies.", "Determining the exact number of public housing units is complicated. The number of units under contract between HUD and a PHA at any given point in time is not necessarily the same as the number of physical units currently occupied by eligible families or available for occupancy. PHAs may be receiving funding for units that are temporarily vacant awaiting occupancy of a new tenant, temporarily vacant due to litigation, temporarily vacant awaiting rehabilitation, or permanently vacant awaiting demolition or disposition. There may also be units that are currently occupied that are slated for demolition or disposition and units that are in the process of being rehabilitated or built to replace units that were demolished or disposed of (sold or otherwise removed from the public housing inventory).\nGenerally, estimates of the current number of public housing units range from over 1.1 million units to just fewer than 1.2 million units.\nFigure 1 displays the trend over time in the number of public housing units eligible to receive payment. The public housing program peaked at just over 1.4 million units in the mid-1990s, and the number of units has declined fairly steadily since. The public housing program today has about as many units as it did in the mid-1970s.\nThe stock has been declining for two reasons: (1) PHAs have been demolishing and disposing of public housing units without fully replacing them; and (2) Congress has not authorized the addition of new units of public housing except to replace those being demolished and disposed of since the late 1990s.\nBetween 1973 and May 2009, nearly 250,000 units of public housing were approved for removal from the public housing inventory and more than 200,000 were actually removed. As shown in Figure 2 , the rate of removal has increased markedly since the mid-1990s, and the most common way a unit has been removed has been through demolition or disposition, although some units have been converted to vouchers. The rates of demolition and disposition increased markedly in the mid-1990s, which coincided with the creation of the HOPE VI program and the removal of the long-standing requirement that each unit of public housing that is removed from the inventory must be replaced (referred to as one-for-one replacement). According to HUD:\nAlthough demolition/disposition activity has always been permitted, HUD and its business partners have begun to actively pursue it as a management strategy option in the last ten years. This is due to the realization that some developments have difficulties associated not only with physical deterioration, but also with the overall deterioration of the surrounding community. It is also true that a large portion of the housing now being proposed for demolition/disposition was built in the late 1940s and early 1950s, and was built to a standard that is no longer acceptable for the general public. Developments meeting that description have very often become the housing of last resort within their communities.\nThe data presented in Table 2 provide descriptive information about public housing properties. Despite public housing's reputation as \"the projects,\" epitomized by the largest developments in major cities, the most common form for today's public housing projects is notably smaller in scale; high-rise and mixed developments account for less than one-quarter of all public housing properties, while three-quarters of developments are row houses; townhomes; walk-up, garden style, detached, or semi-detached homes; and scattered site housing. Further, less than half of all public housing properties are in central city locations and nearly half are located in low-poverty census tracts.\nIt is important to note, however, that these data are at the property rather than the unit level. Given that high-rise developments have greater density than other forms of housing and are more often located in central-city and high-poverty areas, the distribution of units is likely to be higher in these areas than that shown by the property data.\nFigure 3 displays the geographic distribution of public housing across the country. States are shaded relative to the number of public housing units within their borders. Superimposed dots indicate the location of individual properties, with the relative size of the property reflected in the diameter of the dot. As shown in the map, New York has the greatest number of public housing units. New York is home to over 18% of the nation's public housing stock and has more than three times the number of units as the state with the next highest number of units (Pennsylvania, which has about 5.5% of the nation's public housing units). New York is also home to the largest public housing projects, with several having well over 2,000 units. While New York has the greatest number of units and the largest projects, both Texas and Pennsylvania have more public housing projects than New York. Overall, public housing is predominately located in the eastern half of the United States.", "Unlike other social assistance programs that target specific subpopulations of low-income individuals and families (such as persons who are elderly, persons who are living with disabilities, or families with children), public housing is available to all types of low-income families and individuals. As shown in Figure 4 , today's public housing program serves families headed by persons who are elderly, persons who have a disability, and persons who are not elderly and not living with a disability, with and without children. While no one household type accounts for the majority of public housing families, the most common household type in public housing is families headed by persons who are not elderly, not living with a disability, and have children. These families account for over one-third of all households in public housing. Looking at the breakout of these families, the vast majority are single parent, female-headed households.\nElderly households without children are the second largest category, accounting for over a quarter of all households. Households where the head of household is living with a disability (including both those with and without children) account for about one-fifth of total households. Overall, there are more families without children (59% of all households) than with children (41%) in public housing.\nThe over 1.26 million families living in public housing are made up of over 2.7 million people. The overall average household size in 2010 was 2.2 people; families with children tended to be larger (an average of 3.5 people per family) and families without children tended to be smaller (an average of 1.3 people per family). Of the over 2.7 million people living in public housing in 2010, about 40% were children under the age of 18 and about 15% were adults over the age of 62.\nIn terms of race and ethnicity, just under half of all households living in public housing in 2010 were headed by a person who identified his or her race as white, and just under half of all households were headed by a person who identified his or her race as black. Twenty-one percent of households were headed by a person who identified his or her ethnicity as Hispanic.\nWith income restrictions on eligibility for public housing, households living in public housing are low-income. As shown in Table 4 , the median family income of households living in public housing in 2010 was $9,644 per year. To give this number context, it can be compared to the national poverty guidelines, which are used to define who is \"poor\" and therefore may be eligible for a number of other social assistance programs. Comparing the median income of all households living in public housing to the two-person poverty guidelines for 2010 ($14,570), the median income of families living in public housing was only about two-thirds of the poverty guideline. Comparing the median income of non-elderly, non-disabled families with children to the three-person poverty guidelines ($18,310), median family income for these households was less than half of the poverty guideline in 2010.\nDifferent types of families living in public housing receive their income from different sources. As shown in Table 5 , in 2010, over 80% of all elderly households reported receiving income from Social Security or pensions. Most households headed by persons with disabilities reported receiving Supplemental Security Income (SSI) and/or other Social Security or pension income. Non-elderly, non-disabled (NEND) families with children reported receiving income from a variety of sources. Over half reported income from work, 45% reported some income from welfare (defined as payments from the Temporary Assistance for Needy Families (TANF) program or state General Assistance (GA) programs), and over one-fifth reported some income from child support payments. About 5% of all households reported receiving no income from any source.\nOver the past several decades, social assistance programs have increasingly focused on promoting work and work activities among recipients of benefits, particularly non-elderly and non-disabled families. The community service and economic self-sufficiency requirement in public housing is an example of such a policy. Given the policy interest in increasing work effort among non-elderly, non-disabled families, Table 6 is provided to offer a closer look at the sources of income for these families. Among non-elderly, non-disabled families, just over half received income from work. The majority of working families were not receiving welfare income (defined as TANF or GA) in 2010. Dividing this population into those with and without children, in both cases the plurality of families received income from work and not welfare, although families without children were receiving income from work at a higher rate than families with children. Twenty-six percent of not-elderly, not-disabled households received income from welfare but not from work; among those families, those with children were more likely to receive income from welfare and not work. Given the work requirements in the federal TANF program, it is likely that most of those families receiving income from welfare are or will be subject to work requirements as a condition of receiving assistance. Just over a quarter of NEND families with children, and just under a fifth of NEND families without children, report receiving no income or receiving income only from non-work and non-welfare sources. These families are the most likely to be subject to the community service requirement in public housing, assuming they are not otherwise exempt.\nAs noted earlier in this report, families living in public housing pay income-based rents. Because the incomes of families living in public housing are quite low, the rents paid by those families are also quite low. As shown in Table 7 , looking at all households, the median rent paid by tenants in 2010 was $224 per month. Non-elderly, non-disabled families with children paid the lowest rent (under $200), which is not surprising, given that they tend to have the lowest incomes.\nIn order to provide a sense of the financial benefits to families of living in public housing, Table 7 also compares the difference between what tenants pay in rent each month and the fair market rent (FMR) in their local communities. In 2010, the median difference was $563 per month for all households. Not-elderly, not-disabled families with children had the greatest difference between the rents they pay to live in public housing and the local FMR, a benefit of nearly $700 per month, or over $8,300 per year.\nThe public housing program does not impose limits on the length of time a family can live in public housing. Once a family is leasing a public housing unit, the family can continue to renew that lease until it is no longer eligible, either because the family's income increases too much to maintain eligibility or because the family violates program rules in some way. The data presented in Figure 5 provide a snapshot of the length of tenure of families living in public housing in December 2010. The bars provide a distribution of households by the number of years they have lived in public housing and household type, and the box in the center of the graph presents median and mean length of stay by household type. More than half of all families living in public housing in 2010 had lived there for five years or less. The greatest share of households living in public housing had been in public housing for between one and two years; the next greatest share had been living in public housing for less than one year, although almost the same number had been living in public housing for more than 20 years. While families with children make up the greatest share of those families that have been living in public housing for less than one year, elderly-headed families make up the greatest share of those families that have been living in public housing for more than 20 years. Presumably, many of these elderly-headed families entered the program as a different household type, perhaps families with children, and their category changed as they aged.", "PHAs sustain public housing through a combination of federal funding, tenant rents, and other investment income. Congress typically appropriates several streams of funding to PHAs to help make up the difference between what PHAs receive in rent from tenants and what it costs to operate and maintain public housing. Operating funds are meant to fund the day-to-day operations of public housing (administration and staffing, utilities, routine maintenance, etc.). Capital funds are meant to help pay for modernization needs, such as replacing a roof or a heating and cooling system, or remodeling units. Both operating funds and capital funds are allocated to PHAs based on a formula. PHAs can also apply for competitive HOPE VI revitalization grants. HOPE VI grants are used to demolish and rebuild, or substantially rehabilitate, severely distressed public housing.", "Operating funds are meant to help pay for day-to-day operations, including utilities, safety and security measures, resident services, and administration. The operating fund provides subsidies to PHAs to make up the difference between what it costs to run public housing and what low-income tenants pay in rent. Under the formula, the calculation for determining a PHA's operating subsidy eligibility uses two components: expenses (meant to represent the cost of running public housing) and income (meant to represent the amount collected in tenant rents). HUD subtracts a PHA's income from its expenses, and the amount by which the income is short of the expenses is the PHA's operating subsidy eligibility.\nFor a number of years, the amount of appropriations provided by Congress was not sufficient to fund 100% of PHAs' formula eligibility; therefore, amounts provided to PHAs had to be prorated to fit within the amount of appropriations available. From 2005 to 2009, proration levels ranged from about 83% to about 89%. In 2010, the operating fund proration level was over 100%. Due to funding reductions in subsequent years, the proration level was 95% in 2011, 95% in 2012, and 82% in FY2013.\nAs previously noted, operating funds are meant to supplement the funds that PHAs receive from tenant rents, their own investments, and other sources. As a result, the percentage of a PHA's public housing operating budget that is made up of federal funds will vary across PHAs and from year to year. According to data from HUD, in 2009, an estimated 61% of PHAs' revenues nationally came from federal operating funds, 34% came from tenant rents, and 5% came from other sources (e.g., investment income, fee income). HUD also provided estimates of how PHAs used their funds: 22% of PHA operating expenditures nationally covered the cost of utilities, 30% went toward administrative expenses, 31% went toward maintenance costs, 11% went toward general expenses, and 3% each went toward tenant services and protective services.", "The Public Housing Drug Elimination Grant program (PHDEP) was funded between FY1991-FY2001. The program initially provided competitive grant funding to PHAs, and later provided formula grants to PHAs, to be used for a variety of safety and security activities. Examples include funding for security guards or patrols, developing after-school program activities and other activities designed to reduce the use of drugs, and making physical changes to public housing to promote security (such as installing security cameras). When the program was ended, it was argued that all of the activities funded under PHDEP could also be funded using operating funding.", "Capital funds are provided via formula to PHAs to help meet the modernization needs of public housing that cannot be met through the income collected via tenant rents. The formula for allocating capital funds uses various measures of relative need (e.g., size and age of stock) and relative construction costs. A portion of capital fund dollars is also generally set aside to provide Replacement Housing Factor (RHF) funding, which is funding set aside to replace units that are demolished or disposed of.\nPHAs may use their capital fund dollars for the modernization and development of public housing and for management improvements. Additionally, PHAs may use up to 20% of their capital funds to supplement their operating funding.\nUntil mid-2011, the most recent assessment of the modernization needs of the nation's stock of public housing was more than a decade old. The 1998 study found that, nationally, public housing properties were accumulating roughly $2 billion in capital needs each year, and that there was a backlog of $18 billion-$20 billion in unmet needs. Since that study was done, many public housing units have been demolished or redeveloped; at the same time, capital fund appropriation levels have only hovered around the annual accrual needs level (see Table 8 for recent funding levels). In the FY2008 appropriations act, Congress directed HUD to conduct a new Capital Needs Assessment in order to obtain a more current estimate of the capital needs of public housing. HUD released the results of the new study in mid-2011. It found that the backlog of capital needs in public housing now stands at about $20.7 billion and that annual needs are accruing at a rate of over $3.4 billion per year. Adjusting for inflation, this would be a decrease in the backlog, but an increase in the annual accrual rate.", "An increasing number of PHAs are leveraging their capital funds to secure outside resources to address their capital needs. According to data available from HUD, as of June 2012 nearly $3.8 billion had been approved to be leveraged by 240 PHAs. Under these transactions, PHAs pledge a portion of their future year annual capital funds toward the debt service payments on a loan or a bond. The pledge of future capital funds is made subject to the availability of appropriations, and the loans and bonds secured by the pledge are not backed by the federal government. PHAs wishing to participate in the Capital Fund Financing program (CFFP), the pilot program through which HUD has permitted these transactions, must apply for prior HUD approval. HUD generally restricts PHAs to pledging no more than one-third of their capital funding toward meeting the debt service needs of a bond or loan. PHAs are not currently permitted to pledge their operating funding or mortgage their public housing properties.", "HOPE VI is a public housing redevelopment grant program. Through HOPE VI, HUD provides competitive grants to PHAs to rehabilitate or demolish public housing and replace it generally with mixed-income housing.\nHOPE VI began as a demonstration program, created in reaction to the findings of the National Commission on Severely Distressed Public Housing. The commission's 1992 report labeled 6% of the public housing stock as severely distressed; at the time, this equaled 86,000 units. These severely distressed properties were characterized by high crime, low employment and few opportunities for residents, and poor physical conditions.\nThe purpose of the HOPE VI program is to revitalize severely distressed public housing developments and transform them into safe, livable environments. As described by HUD, this includes changing the physical characteristics of public housing from high-rise tenements to attractive, marketable units that blend in with the surrounding neighborhoods; lessening concentrations of poverty by reducing density and promoting mixed-income communities; encouraging partnerships with other agencies and local governments for support and resources; achieving high-quality management in public housing and enforcing strict eviction rules; and helping residents to attain self-sufficiency by providing services and educational opportunities, and by encouraging economic development in the area surrounding public housing.\nThe program was initially funded in FY1993 and has been funded each year since, although the overall funding level has declined in recent years (see Table 8 for recent funding levels). HOPE VI revitalization grants are awarded on a competitive basis to PHAs that apply for such grants. Through FY2010, HUD had awarded 268 revitalization grants.\nWhile the program has been credited with demolishing some of the most troubled public housing and replacing it with higher quality, mixed-income housing, it has also been criticized for the ways in which it has displaced existing residents. The Obama Administration has proposed replacing the HOPE VI program with a new initiative, referred to as the Choice Neighborhoods Initiative (CNI), which would expand the concept of HOPE VI beyond public housing to other distressed neighborhoods and increase requirements related to tenant relocation. Although CNI has not been authorized, Congress began funding the initiative in FY2010, and in FY2012 and FY2013, Congress funded only CNI and not HOPE VI.", "As can be seen in Table 8 , total funding for public housing has fluctuated up and down over the last decade. Total funding was increasing until FY2002. From FY2002 through FY2006, total public housing funding steadily declined, most rapidly following large reductions in funding for HOPE VI, which was slated for elimination by the George W. Bush Administration (and later, by the Obama Administration). Beginning with FY2007, funding began to rise again; apart from the $4 billion in stimulus capital funding provided in FY2009 by the American Recovery and Reinvestment Act (ARRA; P.L. 111-5 ), FY2010 total funding for public housing was at the highest level since the modern funding system for the program was adopted. The FY2011 year-long continuing resolution reduced total funding for public housing by about 9% compared to FY2010, and funding continued to decline in FY2012 and FY2013.\nLooking at appropriations relative to the number of public housing units eligible for payment in Figure 6 , it appears that per unit funding remained relatively flat from FY1999 through FY2008, with some increases in early years (commensurate with increases in appropriations) and some decreases (commensurate with periods of appropriations decreases). The sharp rise in funding per unit in FY2009 is primarily attributable to the $4 billion in capital funding provided in the economic stimulus legislation.", "While the purpose of this report is to provide an overview of and background information about the public housing program, it is important to also note that a number of policy issues about the program have been raised in recent years and have been and may be considered by Congress. While not fully addressed in this report, several of these issues are summarized below.", "There is an acknowledged backlog of unmet capital needs in the nation's public housing stock. The majority of the public housing stock is several decades old and much of the stock has not had the level of ongoing maintenance and major rehabilitation needed to keep it viable and habitable. Complicating matters, in some cases, is that properties were not built in such a way as to promote long-term viability (in some cases due to the use of poor quality materials or poor design, perhaps resulting from low per unit cost caps). The declining physical state of the public housing stock may be due in part to federal funding levels that, paired with federal rent collection rules, left PHAs with inadequate budgets to meet their properties' capital needs. In some cases, it may also be due to poor management decisions at the local level. Regardless of the cause, there is an acknowledged backlog of unmet capital needs in public housing that current federal funding levels, unless they increase substantially, are unlikely to address (notwithstanding the one-time increase in funding provided in the economic stimulus legislation in FY2009). As properties fall into disrepair, they are more likely to be candidates for removal from the public housing stock through demolition, disposition, or conversion.\nThe HOPE VI program was designed, in part, to address the unmet capital needs of those properties that are in the worst condition. As HOPE VI grants became smaller, leveraging expectations increased and PHAs began using their HOPE VI grant funding to secure additional private financing. Today, many PHAs have become adept at leveraging private resources, even without HOPE VI grants, by pledging other federal funding, primarily their capital funding. However, there are limits to the extent that PHAs can access these private mixed-finance markets. In order to prevent PHAs from becoming over-leveraged, HUD limits the share of future capital funding PHAs can pledge toward repaying debt. PHAs are further limited in that they are not currently permitted to pledge their future operating fund dollars to repay debt, nor are they permitted to pledge the underlying property itself as security to leverage private funding. Additionally, PHAs seeking funding in the private market are dependent on the willingness of lenders to provide them with capital on terms that are agreeable.\nIf there is a policy desire to preserve the existing public housing stock, additional funding would likely be needed. This could come in the form of increased federal appropriations. The economic stimulus legislation in the 111 th Congress provided one of the largest infusions of capital funding for public housing in recent years. At nearly $4 billion dollars, it should have been sufficient to address around 20% of the estimated backlog in capital needs ($18 billion-$20 billion). These funds were designated as emergency supplemental funding, meant to stimulate the economy during the recession, and were therefore provided outside of the budget constraints of the regular annual appropriations process; it is unclear if similar future infusions will be forthcoming. In light of tight budget constraints and political questions about the popularity of the public housing program, future large infusions of federal funding are uncertain.\nFederal rent policies could be changed to allow PHAs to collect higher payments from tenants. However, such a change would violate current standards of affordability and it is unclear, given the extremely low incomes of residents, if they could pay additional rent sufficient to meet unmet capital needs. Other options include making changes to existing policies to allow PHAs to better access private capital markets. These options could include permitting PHAs to leverage their operating fund dollars, permitting PHAs to mortgage the underlying value of their public housing properties, and/or creating instruments, such as mortgage insurance programs through the Federal Housing Administration (FHA), to encourage or provide incentives to lenders to make loans to PHAs on favorable terms.\nSome steps have been taken to increase the ability of PHAs to leverage private capital. The Rental Assistance Demonstration (RAD) is an Obama Administration initiative designed to test changes to the way that public housing is funded to permit PHAs to access private capital, in part by removing the limitations on mortgaging public housing properties. In the FY2012 HUD appropriations law ( P.L. 112-55 ), Congress authorized a version of RAD, which makes up to 60,000 units of public housing eligible to convert to project-based Section 8 contracts. The law provided no additional funding for this initiative. The FY2013 appropriations law continued the authorization for the initiative, again, with no additional funding.", "In light of the decline in the number of public housing units over time and the lack of authority to construct new units, the future role of the public housing program in federal housing policy is uncertain. The public housing program began as a construction program designed to help stimulate the economy coming out of the Great Depression. Its role evolved over time: first, to meet housing shortages during and after World War II; later, to address shortages of decent housing in conjunction with Urban Renewal efforts; and finally, to address shortages of decent housing that was affordable to the poorest families. In this last role, as a provider of affordable housing to poor families, the program has declined in prominence as other models of providing direct housing assistance to the poor have been developed. First, there were programs promoting the construction of properties owned by private market participants (through FHA insurance programs and later Section 8 rental assistance contracts), and later there were programs subsidizing families' housing costs in the existing housing stock (through the Section 8 voucher program). This last model, the Section 8 voucher program, is the only direct rental assistance program serving poor families that has grown to serve more families in the last several decades. At least part of that growth is attributable to declines in the number of public housing units, as families being displaced from public housing have received vouchers. These other models were developed in direct response to perceived shortcomings—lack of mobility, cost effectiveness, and efficiency—in the public housing program.\nWith policies like mandatory and voluntary conversion of public housing to vouchers, the question may be raised as to whether the \"vouchering-out\" of public housing is an inevitability, or if public housing itself is valuable enough to warrant taking steps to preserve it. Critics of public housing point to its often poor locations and conditions and argue that it traps the most vulnerable families in the worst housing conditions. They point to high rates of crime at some developments and low levels of social capital development and work effort, contending that public housing denies poor families choice and the option to live in communities of opportunity. Moreover, it is argued that the rent structure does little to promote self-sufficiency and may even discourage it. Advocates for public housing argue that the most vulnerable families are the least likely to have their needs met by the private market, even with a Section 8 rental voucher. Landlords are not required to accept vouchers and are permitted to screen families for suitability. PHAs, on the other hand, have a social mission to serve the poorest families. Further, advocates contend that high-quality public housing, particularly when it is enriched with services, can itself provide opportunities for families. They point to successful HOPE VI mixed-income communities and research on how place-based interventions can promote family success, particularly for persons who are elderly, but also for families with children.\nIn addition to the policy arguments for and against preserving public housing, the issue of cost is relevant. In recent years, the average annual \"cost\" to the federal government of providing a voucher to a family has been greater than the per unit funding provided to public housing. This could serve to bolster arguments in favor of retaining public housing as a more cost-effective way of providing rental assistance to low-income families. However, the low cost of public housing reflects what most agree is an underfunding of public housing. If public housing was funded at its full funding needs—particularly in light of the backlog of capital needs—the cost to the federal government of public housing would likely be much higher, and potentially higher than the cost of vouchers. However, in order to fully evaluate the costs and benefits of public housing one may wish to consider the underlying value of the public housing properties themselves, which were built with federal assistance and maintained with federal funds. Questions about to whom that value belongs may also be considered when evaluating the costs and benefits of the program in light of potential changes. These questions about underlying value, which are beyond the scope of this report, may be difficult to answer and different observers may come to different conclusions." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 2, 1, 2, 3, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 4, 3, 3, 4, 3, 4, 2, 3, 3, 3, 3, 1, 1, 1, 2, 3, 2, 3, 3, 2, 1, 2, 2 ], "alignment": [ "h0_title h1_title", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_full", "", "h0_full h1_title", "", "", "h1_title", "h1_full", "", "", "h0_title h1_title", "h0_full h1_full", "h1_full" ] }

{ "question": [ "How can public housing properties vary in layout?", "How has the number of public housing units changed since the 1990s?", "Where does funding for public housing properties come from?", "What appropriations have been given for public housing in recent years?", "What actions have been taken to increase federal funding for public housing?", "What actions have PHAs taken to obtain more funding?", "How has the use of private financing been criticized?", "What questions are arising about the program's future?" ], "summary": [ "Public housing properties themselves can be high-rise buildings, low-rise buildings, scattered site properties, and even part of mixed-income housing developments.", "Construction and acquisition of new public housing units effectively ended after the federal government stopped funding new development in the mid-1990s, although they began significantly decreasing much earlier as other models of providing housing assistance grew in popularity. As public housing properties have fallen into disrepair and been demolished, the number of public housing units has begun to decrease. Today, there are roughly 1.2 million units under contract and receiving federal funding, down from over 1.4 million units at the program's peak.", "Federal funding comes from two main formula grants—the Public Housing Capital Fund and the Public Housing Operating Fund—which are meant to supplement the rents collected by PHAs to meet the operation, maintenance, and capital needs of public housing. There have also been several competitive grant programs that provide additional funding to PHAs, including the HOPE VI program.", "In recent years, regular annual appropriations for public housing have generally been in the range of $6 billion to $7 billion per year, with an additional $4 billion provided by the 2009 economic stimulus legislation.", "In response to concerns about the adequacy of federal funding levels—paired with federal restrictions on tenant rents—to meet the capital needs of public housing, proposals have been introduced to promote private investment in public housing in order to preserve the existing stock.", "An increasing number of PHAs have pursued private financing to meet their capital needs in recent years.", "However, recent proposals calling for an expansion in the role of private finance in public housing have been met with concerns about the potential for the \"privatization\" of public housing and a loss of affordability.", "As the program continues to decline in terms of the number of families it serves, questions are arising about the role the program plays, and should play in the future, in terms of federal housing policy." ], "parent_pair_index": [ -1, -1, 1, 2, -1, -1, 1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Routine Monitoring", "Site Visits", "Single Audits", "Restrictive Drawdown", "National Monitoring Standards for Grantee Monitoring of Service Providers", "Grantee Files", "HRSA Does Not Consistently Follow Guidance on Oversight of Grantees and Faces Other Challenges", "HRSA Does Not Consistently Follow Applicable Guidance for Grantee Oversight", "HRSA’s Lack of Records and Changes in PO Assignments Further Challenge Its Oversight of CARE Act Grantees", "HRSA Recently Issued National Standards for Grantee Monitoring of Service Providers, but HRSA’s Implementation Created Challenges for Grantees", "Grantees Monitor Service Providers and HRSA Recently Issued National Standards", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Reporting Requirements for Part A and Part B Grantees", "Appendix II: HRSA Site Visits of Part A and Part B Grantees", "Appendix III: Comments from the Department of Health and Human Services", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Acknowledgments" ], "paragraphs": [ "Under the CARE Act, Part A and Part B grantees are awarded grants to provide a range of services—both medical and support—to uninsured and underinsured clients with HIV/AIDS. In fiscal year 2011, most CARE Act funding was distributed to grantees either as base or supplemental grants. Base grants are distributed by formula, which includes a grantee’s share of living HIV/AIDS cases. Supplemental grants are generally awarded through a competitive process based on the demonstration of severe need and other criteria. Part A provides for grants to EMAs and TGAs. EMA and TGA funding is primarily provided through three categories of grants: (1) formula grants, (2) supplemental grants, and (3) Minority AIDS Initiative (MAI) grants. Part B provides for grants to states, the District of Columbia, and U.S. territories and associated jurisdictions. These grants include (1) formula grants, (2) supplemental grants, (3) ADAP formula grants, (4) ADAP supplemental grants, (5) MAI grants, and (6) supplemental grants for states with “emerging communities”. Part A and Part B grantees apply for funding annually.\nThe PO is the HRSA official responsible for working with grantees in overseeing the programmatic and technical aspects of the Part A and Part B grants. Within HRSA, POs in the HIV/AIDS Bureau’s (HAB) Division of Service Systems are responsible for the oversight of Part A and Part B grantees. POs are supervised by HAB Division of Service Systems branch chiefs, who are responsible for ensuring that POs are meeting their oversight responsibilities. The PO works with the HRSA Office of Financial Assistance Management’s grants management specialists (GMS). GMSs are responsible for providing nonprogrammatic administrative assistance to grantees, including assistance in interpreting provisions of grants administration, law, regulation and policy. These provisions include how grantees can draw down grant funds and how grantees are to administer and close out grants. GMSs are supervised by Grants Management Officers. Additionally, within the Office of Federal Assistance Management, staff in the Division of Financial Integrity (DFI) provide TA and advice to the POs and GMSs.\nHRSA POs conduct their oversight of Part A and Part B grantees in accordance with regulations and guidance. HHS grants management regulations and guidance govern all HHS grants, including CARE Act grants. The regulations and guidance provide for the creation of agency and program-specific guidance. Where HRSA has not created specific guidance, POs and GMS follow the overarching HHS regulation and guidance. Therefore, POs follow HHS regulations and guidance and any additional HRSA-specific grants management guidance when it is available. HRSA officials told us POs are to follow the Division of Service System Operations Manual (HRSA Operations Manual), which provides guidance and protocols specifically for PO oversight of CARE Act Part A and Part B grantees. The HRSA Operations Manual was first provided to Because the us in August 2011 and updated in December 2011.updated HRSA Operations Manual was not in existence during the majority of the period covered by our review, we primarily refer to HHS grants management regulations and guidance in our evaluation of HRSA’s oversight. HRSA’s grantee oversight includes several elements, described below.", "HRSA POs are responsible for overseeing the Part A and Part B programs by conducting routine monitoring of grantees’ performance and compliance with statutory requirements, regulations, and guidance. Routine monitoring includes regularly scheduled monitoring calls, reviews of grantee reports, and the provision of TA to grantees. HHS guidance indicates that monitoring activities are to be documented. This guidance also indicates that the documentation is to include information about the type of follow-up actions recommended or taken. We found that POs were assigned an average of six Part A and Part B grantees to oversee at a time. If during the course of routine monitoring a PO finds that a grantee has not met its program or financial requirements, the PO is responsible for determining, in consultation with his or her branch chief, whether a grantee requires more intensive monitoring including a special condition of award, such as restrictive drawdown. The PO is responsible for monitoring any of these special conditions put in place. POs are HRSA’s primary contact with Part A and Part B grantees, and they are to communicate with their assigned grantees at least monthly. In addition to a scheduled routine monitoring conference call with grantee management, POs are to respond to interim grantee e-mails and calls and to provide guidance and TA as needed.\nAs part of routine monitoring, POs are also responsible for reviewing reports filed by grantees to fulfill HRSA’s annual reporting requirements. These reports are intended to help HRSA identify grantee problems with program implementation and ensure grantees’ compliance with federal statutes, regulations, and guidelines. In fiscal year 2012, Part A grantees are required to submit 11 different reports while Part B grantees are required to submit 16 reports. The reports contain important programmatic and financial information such as descriptions of funded services, annual expenditures, and grantee accomplishments and challenges in meeting program goals. POs are to provide feedback to grantees based on their review of these reports and provide written requests for changes to reports which are submitted through EHB. The PO and GMS are also responsible for reviewing grantee reports to ensure that grantees are spending funds in accordance with the grant terms and conditions and POs and GMSs are to coordinate in their review of grantees’ reports. Grantee reporting requirements are listed in appendix I.\nWhen a PO identifies a problem during routine monitoring the PO is to provide TA to help the grantee understand the changes needed to address the problem. TA is a targeted means of addressing a particular issue or problem and is provided to ensure that program implementation reflects the most recent requirements. The overall intent of TA is to assist the grantee in improving its capacity, effectiveness, and efficiency. A PO may provide the TA by phone, email, on-site or at grantee conferences. POs may provide the TA or assist grantees in obtaining TA from HRSA consultants.", "In addition to their overall routine monitoring responsibilities, POs are to participate in site visits for Part A and Part B grantees. Site visits are intended to provide the PO with an opportunity to review the program, and may act as a TA session for the grantee. HRSA guidance states that site visits should be viewed as an opportunity to expand on information grantees have provided in their CARE Act grant application, responses to reporting requirements, and conference calls. During a site visit, the PO may meet with grantee and service provider staff to obtain feedback on how the program is functioning, visit various locations at which service providers deliver services, and review grantee and service provider program documentation. For the Part A and Part B programs, HRSA does not have written guidance describing its policy for the selection of grantees to visit; however, agency officials told us that they prioritize site visits based on two elements—grantees without a recent site visit and grantees with problems. In addition, a federal course which HRSA has offered to all of its employees for several years and requires all new POs to take indicates that agencies should determine which grantees to visit based on an analysis of risk, which includes a consideration of grant funding level as an indicator of potential risk, among other things.\nWhen planning a site visit, POs are to provide advance notice in writing to the grantee of the intended site visit along with a copy of the site visit agenda and the tool the PO will be using to evaluate the grantee. The tool addresses the priorities listed below during the site visit. If the site visit will involve the review of a priority item in which the PO does not have specialized training, such as clinical quality management, the PO can consider bringing one or more HRSA consultants for the visit.\nAccording to HRSA guidance, POs are to focus on the following priorities during the grantee site visit (listed below in order of highest to lowest priority): assure grantee compliance with CARE Act provisions and HRSA guidance by reviewing compliance with the basic funding requirements, such as the presence of an adequate plan for the use of grant funds and administrative, program, and financial requirements; assure basic functioning of the Part A and Part B programs by reviewing, for example, the grantee’s ability to disburse funds to service providers in a timely fashion and the grantee’s ability to conduct program and financial monitoring of service providers; assure access to care by reviewing the grantee’s clinical quality management processes and the grantee’s assessment of unmet need for HIV/AIDS services in their jurisdiction; assure coordinated systems of care by reviewing the grantee’s efforts to coordinate with other CARE Act programs, HIV counseling, testing and prevention programs in their area, and other programs that provide access to HIV/AIDS treatment including Medicaid and Medicare; and document and report the impact of the grantees’ use of CARE Act funds including any program innovations and/or program successes.\nUpon arrival at the site visit location, the PO is to meet with the grantee leadership and the Part A or Part B program staff. During the initial meeting, the PO is to review the intent of the visit and the site visit agenda. This meeting is also an opportunity for the grantee to provide an update on the status of the program and the delivery of services. During the site visit, the PO is to take notes on the priorities listed above, and be prepared to conduct an exit conference with the grantee leadership and program staff to explain both preliminary positive and problem findings. The PO is to prepare a site visit report to document his findings and recommended corrective actions. Additionally, recommendations are to be provided for follow-up TA if appropriate and any special action steps that the PO will take to help the grantee address the site visit findings. HRSA guidance updated during our review states that the site visit report is to be provided to the grantee within 30 days of the visit.", "Part A and Part B grantees are subject to the requirements of the Single Audit Act, as amended, and the act’s implementing OMB guidance. These provisions require grantees that expend $500,000 or more in federal awards in a fiscal year to have a single audit for that year conducted by an independent auditor. HRSA’s Division of Financial Integrity (DFI) reviews grantees’ single audit reports with findings related to CARE Act programs along with corrective action plans provided by the grantee in response to any audit findings.HRSA to use single audits as a tool to monitor Part A and Part B grantee compliance with program and financial requirements.", "In accordance with federal regulations, HRSA may impose special restrictive conditions on a grantee’s award if HRSA determines that the grantee violated program or financial requirements, or has insufficient management systems or practices to ensure stewardship of grant funds or achievement of award objectives. These issues may be identified through routine monitoring activities, site visits, or single audits. One such condition is called restrictive drawdown. Restrictive drawdown requires that prior to spending any grant funds, grantees must submit a request for funds for HRSA review by the 20th of each month, for the upcoming month, or no less than 10 days before the grantee intends to expend the funds. With each request, the grantee must submit supporting documentation including all grantee invoices, and other financial documents related to the request. Upon PO review and approval of the request and related documentation, HRSA is to make CARE Act funds available to the grantee. In December 2011, during the course of our review, HRSA created agency-specific guidance that specified the reasons Part A and Part B grantees might be placed on restrictive drawdown, how a grantee is to be notified of this special condition, and under what conditions a grantee can be removed from restrictive drawdown. However, this guidance was not in place during the period covered by our review.", "Federal regulations require grantees to oversee their service providers. In April 2011 HRSA compiled existing requirements into a comprehensive document called the National Monitoring Standards.designed to help Part A and Part B grantees meet federal requirements for program and financial management, and to improve program efficiency. Prior to HRSA’s issuance of the standards, guidance on how to ensure grantee compliance with program requirements and how to monitor service providers was found in multiple sources. HRSA expects the standards to provide direction to grantees for monitoring their own compliance with CARE Act program and financial requirements and the performance of their service providers.\nHRSA officials told us that the national monitoring standards were developed in response to two HHS Office of Inspector General reports that identified the need for a specific standard regarding the frequency and nature of grantee monitoring of service providers and a clear PO role in monitoring grantee oversight of service providers.were compiled by HRSA with assistance from a national team of financial and program experts and a working group of Part A and Part B grantees. According to HRSA, the working group provided feedback on drafts of the standards. Additionally, according to HRSA, the standards were presented to all Part A and Part B grantees in a 2010 Grantee Meeting. Grantees were notified of their obligation to comply with these standards in fiscal year 2011.", "HRSA maintains three different grantee files to assist in its provision of oversight, monitoring, and TA to Part A and Part B grantees and there is a different record retention period for each of these three files. Single audit reports and related financial documentation are maintained in hard copy audit files by HRSA’s DFI. HRSA’s record management program requires these files to be kept onsite at HRSA for at least 2 years after the final close of the audit or upon resolution of any adverse audit findings. The files are then to be sent to the Federal Records Centers to be maintained for an additional 4 years.official grantee reports in response to CARE Act grantee reporting requirements listed in appendix I. It is maintained electronically by the HRSA Division of Grants Management Operations and the Division of Service Systems and documents in EHB are accessed by POs and other grants management staff as part of their routine monitoring responsibilities. Currently, HRSA maintains the EHB for 6 years, but is The EHB includes the NOA and working to finalize a record retention period. Additionally, PO files, which include the only documentation of routine monitoring, site visits, and TA, and duplicate copies of the required grantee reports that are also found in EHB, are maintained in hard copy by the PO. During the course of our review, HRSA officials told us that HRSA’s record management program requires these files to be maintained for the current and previous grant year, after which they were to be destroyed. The December 2011 update to HRSA’s Operations Manual now suggests that POs should maintain copies of site visit reports for at least 5 years, and that any documents related to issues under investigation not be discarded. However, this change does not apply to other key documentation in PO files, such as regularly scheduled conference calls and copies of relevant e-mails.", "HRSA does not consistently follow HHS or its own guidance for grantee oversight when monitoring CARE Act grantees. A lack of records and frequent changes in PO assignments further challenge HRSA’s ability to oversee grantees and to assist them with program implementation.", "HRSA did not consistently follow guidance for documenting routine monitoring, prioritizing grantee site visits, reviewing annual single audit findings, or clearly communicating with grantees about the restrictive drawdown process.\nPOs do not consistently document routine monitoring or follow up on that monitoring to help grantees address problems. HHS guidance indicates that monitoring activities performed in order to evaluate grantees’ programmatic performance, including any discussions with grantees, should be documented. This guidance also indicates that documentation of monitoring actions is to include information about the type of follow-up actions recommended or taken. However, we found that most of the PO files that we reviewed did not contain documentation of routine monitoring calls—of the 25 PO files for grantees in our sample, only 4 PO files contained documentation of monitoring calls at least quarterly in the 2010 grant files we reviewed, and only 8 contained documentation of quarterly calls in the 2011 grant files. Though most of the files we reviewed contained documentation of e-mails between POs and grantees indicating that communication was taking place, HRSA POs are to conduct and document regularly scheduled calls. Despite the lack of documentation in PO files, most grantees we interviewed reported having regular communication, via phone or e-mail, with their POs. Seventeen of the 25 grantees confirmed that their PO conducted regularly scheduled conference calls, and 7 noted that these calls included a set agenda.\nMost grantees said they had received feedback at least once from a PO on a required report, but eight noted that such feedback was uncommon. Grantees submit numerous reports throughout the year containing important programmatic and financial information. HHS guidance states that monitoring is to include a review of reports, and that review of reports may help officials identify performance or financial issues that require follow-up. Further, HRSA POs are to review and provide feedback and guidance to grantees on program and fiscal reports. However, seven grantees said that feedback on reports was not specific or timely. Only four grantees told us that they received PO comments on their reports during monthly monitoring calls, though HRSA states that reporting requirements are to be discussed during routine calls, which are intended to provide POs with an opportunity to provide such feedback. While a lack of feedback might indicate that a PO had no concerns about a grantee’s reports, POs may be missing opportunities to use the information provided in reports to better communicate with grantees about their compliance with program requirements and help grantees make improvements. Seven grantees stated that they would appreciate receiving more feedback on the reports they submit to ensure they were meeting HRSA’s standards.\nSome grantees told us that TA was not helpful because POs sometimes provide conflicting or delayed guidance. TA is a key step toward addressing grantee challenges with program implementation identified during routine monitoring. Though eight grantees described occasions when they received helpful TA from HRSA staff or contractors, eight noted that PO responses to their questions were sometimes delayed or inconsistent with past verbal guidance provided by their current or a past PO, making it difficult for them to understand what changes were needed. For example, one grantee told us it takes an excessive amount of time for their PO to answer their questions, and another said that PO responsiveness varied.\nFurther, four of the 25 grantees said they were told that HRSA could not provide needed TA due to budget constraints, forcing the grantees to seek TA from other sources or using their own administrative funds. Three of those grantees told us that they hired TA providers using their administrative funds, but one added that the TA cost $30,000 out of their limited administrative budget, which they noted might not be an option for many grantees. The CARE Act requires that grantees spend no more than 10 percent of their grant on administrative activities, which include TA and service provider monitoring activities. Three other grantees told us they turned to NASTAD for TA when HRSA could not provide it or when PO responses to their questions were delayed. Some grantees noted that HRSA had provided assistance through national TA calls and webinars, and one added that calls and webinars were a useful substitute for on-site TA when travel funds are limited. One grantee explained that they received helpful TA from their PO by phone after a planned TA visit by the PO was cancelled by HRSA due to constrained travel funds.\nWe found that 6 of the 25 grantee files we reviewed from 2010 and just 2 of the 25 files from 2011 contained documentation of TA reports and that few files contained documentation of PO discussions of corrective actions with grantees. HHS guidance states that monitoring activities and any resulting follow-up on identified performance issues must be documented, and issues are to be addressed as soon as possible by providing TA and ensuring grantees take needed corrective actions. Three grantees told us that PO follow-up on TA was vague or delayed, though two grantees told us that their POs did conduct follow-up on TA in monthly conference calls. Two grantees told us that though they informed HRSA in writing of their proposed action steps in response to TA recommendations, HRSA did not provide feedback on their proposed corrective actions. Another grantee said that they were unable to address site visit findings due to a lack of timely TA related to the findings.\nSome grantees said that their need for TA was exacerbated by the lack of a current program manual. For example, one grantee explained that a manual would help them with matters such as grantee reports. HRSA officials confirmed that the most recent Part A and Part B manuals were issued in 2006, and stated that these printed manuals were not updated to reflect the 2009 CARE Act reauthorization. While HRSA officials stated that policies and procedures had been made available on the CARE Act website, they acknowledged that information for grantees is not available in the form of a comprehensive program manual similar to the printed manual that was last provided in 2006. Seven grantees noted that more written guidance, including an up-to-date electronic program manual, would help them with many of their routine questions or TA needs, which often revolve around questions about CARE Act program requirements. Two grantees added that such written guidance would be especially beneficial for new grantee staff or newer grantees. Further, one of the service providers we spoke with stated that it did not find the HRSA website to be helpful because links were not always kept up to date. The Comptroller General of the United States’ Domestic Working Group found that establishing departmentwide policies and procedures on an internet site is beneficial to grantees because it allows grantees to find detailed HRSA officials said that they recently information in a single location.issued a survey to obtain feedback from grantees about HRSA’s program operations and processes, including the frequency and timeliness of PO communication with grantees and their satisfaction with TA provided by HRSA through conference calls, the HRSA website, and HRSA contractors. They said that they plan to use the results of this survey to improve their interactions with grantees.\nHRSA did not follow its own policies for selecting the grantees it visited from 2008 through 2011, and varied in its timeliness for providing site visit follow-up. According to HRSA officials, the agency cannot visit all of its 111 Part A and Part B grantees each year due to staff and budget constraints. Therefore, it is necessary for HRSA to be strategic in selecting which grantees to visit in any given year. HRSA does not have written guidance describing its policy for the selection of grantees to visit; however, agency officials told us that they prioritize site visits based on two elements—grantees without a recent site visit and grantees with problems. In addition, the Monitoring Grants and Cooperative Agreements for Federal Personnel manual, which accompanies a federal course which HRSA has offered to its employees for several years and requires all new POs to take suggests that agencies should determine which grantees to visit based on an analysis of risk, which may include the two elements HRSA told us it uses, as well as a consideration of grant funding level, among other things. However, our review of HRSA site visit data suggests that HRSA did not consistently select the grantees it visited based on these three elements.\nFirst, HRSA did not prioritize site visits based on the amount of time that had passed since a grantee’s last visit. Specifically, although many HRSA POs we spoke with said that site visits were a valuable and effective form of oversight, we found that 44 percent of all Part A and Part B grantees did not receive a site visit from 2008 through 2011. In addition, 6 of the 25 grantees we interviewed told us that there had been a significant amount of time between HRSA site visits they had received or since their most recent site visit, ranging from 5 to 12 years. One of these grantees said that its first HRSA site visit after 12 years led to the grantee being placed on restrictive drawdown. Grantee officials said that they believed that if HRSA had not waited 12 years to conduct a site visit there would have been far fewer findings because they would have been making necessary adjustments with each periodic site visit. An additional indication that HRSA does not consider time since last visit when scheduling site visits is the fact that HRSA does not maintain a centralized list of site visits that have been conducted. In order to provide data on their site visits for the purpose of our review, HRSA extracted data from travel records. Without centralized site visit data, HRSA would not be able to readily track this element when determining which grantees to visit Second, HRSA did not always appear to prioritize site visits based on a grantee’s history of problems. Based on HRSA data, we found that 30 percent of all Part A and Part B grantees with a history of problems did not receive a single HRSA site visit from 2008 through 2011. In addition, only three of the nine Part A and Part B grantees with the most HRSA site visits from 2008 through 2011 had been placed on restrictive drawdown. While HRSA visited these grantees three or more times, other grantees that were placed on restrictive drawdown received two or fewer HRSA site visits during these 4 years. Although HRSA officials told us that restrictive drawdown is not the only indication of grantee problems, they said they impose it when the grantee has a history of serious problems. We found that some grantees with numerous site visits had not been placed on restrictive drawdown, while other grantees with fewer site visits had. In fact, two grantees that were placed on restrictive drawdown in 2011 did not have a HRSA site visit at any time from 2008 through 2011.\nThird, some of the grantees that HRSA visited most during these 4 years had relatively small grant awards, indicating fewer people being served by that grantee, which suggests that the agency did not prioritize site visits based on grant funding level. For instance, the Virgin Islands received approximately $1 million in 2011 CARE Act Part B funding, based on an estimated 568 living HIV/AIDS cases at the end of 2009, but HRSA conducted six site visits there over 4 years. In contrast, California received the second largest 2011 grant award, approximately $150 million, based on an estimated 117,869 living HIV/AIDS cases at the end of 2009, but HRSA did not conduct any site visits there over the 4 years. See table 1 for the Part A and Part B grantees with the most HRSA site visits and their 2011 grant award and estimated HIV/AIDS cases, and see appendix II for a complete listing of this information for all Part A and Part B grantees. HRSA officials explained that the Virgin Islands had been placed on restrictive drawdown and had a history of severe problems that included both fiscal and administrative issues and problems with service delivery. However, other Part B grantees, with significantly larger grant awards, and a history of problems during the period covered by our review did not receive a HRSA site visit. Furthermore, the District of Columbia, which received approximately $21 million in 2011 CARE Act Part B funding based on an estimated 17,250 living HIV/AIDS cases at the end of 2009, had a history of problems and would require HRSA to spend little in travel funds to conduct site visits, but received only one visit over the 4 years. HRSA officials stated that there is no direct correlation between the amount of grant funding and the size of a grantee’s problems. However, because the Part A and Part B grant awards are based on the number of reported living HIV/AIDS cases in each metropolitan area or state, the grantees with larger awards serve more affected people.\nFurthermore, HRSA often was not timely in providing site visit follow-up to grantees. HHS guidance states that agencies are to document in writing site visit reports to grantees as soon as possible after completion of the visit. At the time of our file review, HRSA did not have guidance for POs specifying time frames with which to provide site visit reports. Our file review for grant years 2010 and 2011 found that 12 of the PO files for the 13 grantees that received site visits that occurred during that time period contained a copy of the site visit report. However, many of the grantees we interviewed that had a HRSA site visit during the period of our review said that it took HRSA a long time to provide the site visit report. Specifically, 15 of the 25 grantees we interviewed told us they had a HRSA site visit from 2008 through 2011. Eight of those 15 grantees said that it took over 30 days to receive the site visit report; it took HRSA 4 months or longer to provide 6 of those grantees with the site visit report. In a December 2011 update to its Operations Manual, which was not in place during the majority of the period covered by our review, HRSA specified that POs are to provide site visit reports to grantees within 30 days of the visit.\nSome POs we interviewed said that they were not always aware of grantees’ single audit findings or corrective actions developed in response to audit findings. According to HHS guidance, HRSA is to review annual single audit reports as part of its grantee oversight, and may use annual single audit information in decisions about implementing special award conditions such as restrictive drawdowns. Though DFI is the HRSA division primarily responsible for helping to ensure that grantees take appropriate corrective actions in response to single audit findings, POs, within HAB, are responsible for providing overall monitoring of grantees’ compliance with program requirements. We have found in past work that audits may provide important information on grantee performance and can serve as an accountability mechanism to help determine whether grantees used funds in accordance with program rules and regulations.enhanced by the timely review of single audit findings.\nFor this reason, PO monitoring could be However, some POs told us that DFI does not consistently share information about single audit findings and corrective actions. Though POs are able to access a summary of a grantee’s HRSA-related single audit findings in EHB, the EHB summary does not specify whether the findings are related to CARE Act programs in particular, which might make it difficult for POs to determine whether the audit contains information pertinent to their monitoring efforts without explanation from DFI. DFI officials told us they may contact POs or other HRSA staff to help review and ensure the adequacy of grantee corrective actions, but according to POs they do not always do so. Given their knowledge of grantees through routine monitoring activities, POs could provide DFI with valuable input regarding grantees’ corrective actions. However, one PO told us that DFI did not notify her when the grantees in her portfolio had audit findings, and another told us that DFI did not consistently share grantee corrective action plans in response to audit findings with her, though DFI might on occasion alert her if there was an issue with a grantee audit. One PO reported that she was recently consulted by DFI to provide input into a grantee’s audit findings, but added that this was the first time such consultation had occurred. HRSA officials said that they have enhanced the ways in which DFI communicates audit information to POs through EHB by including citations about audit findings specific to CARE Act programs along with grantee corrective actions designed to address the findings. HRSA officials said that they began doing this as of April 30, 2012.\nThe lack of consistent communication about single audit findings across HRSA divisions limits opportunities for POs to incorporate single audit information into their monitoring and help HRSA ensure that grantees take timely and effective corrective actions, as required. This is especially important given that HRSA may on occasion use single audit findings as a basis for implementing restrictive drawdowns, which require POs to work with grantees in reviewing financial information as part of grantees’ drawdown requests, even if the restrictive drawdown was recommended by DFI. In addition, opportunities for POs to help grantees implement timely corrective actions may also be affected by the lengthy time frames of the single audit process. For example, DFI officials told us that a grantee may be cited for a repeat finding in an audit before they have had time to correct the finding from the prior year’s audit. We previously reported that in the Single Audit process it could take 15 months or more from the end of the fiscal year in which an audit finding is initially identified before a grantee’s corrective action plan is approved by the responsible federal agency.opportunity to correct audit findings and POs may not have the Thus, in some cases, grantees may not have the opportunity to help ensure that the grantee corrects audit findings before the following year’s audit is conducted.\nThough single audits may contain information important to PO monitoring of grantees such as an assessment of how grantees are monitoring their service providers or whether the grantee is properly documenting client eligibility, some grantees told us that neither POs nor other HRSA staff generally communicate with them about single audits. Six grantees said that they did not recollect having any communication with HRSA about audit findings, though five others noted they had discussed audit findings with HRSA staff on at least one occasion, including one who said they discussed their annual single audit with HRSA staff during a site visit. Three POs told us that grantees sometimes initiate communication about their single audits. For example, one PO said that although she generally does not get involved with the audits or receive information from DFI, she had been contacted by one of her grantees regarding an audit finding, and therefore reviewed the proposed corrective actions as part of her routine monitoring.\nHRSA often did not communicate or document the reasons for implementing a restrictive drawdown. Only 2 of the 11 grantees from our sample of 25 that were on restrictive drawdown said that HRSA communicated the reasons they were placed on restrictive drawdown. In five cases, the grantee said they only learned about the restrictive drawdown upon receiving a new NOA, without prior warning or explanation from their PO or other HRSA staff. Though the issuance of a new NOA is the official means of notifying the grantee of the new condition on their grant award, NOAs do not enumerate the reasons for the restrictive drawdown. Though HRSA officials stated that grantees were notified verbally or in some cases by e-mail about their restrictive drawdown status, we found that the PO files for many of the 11 grantees in our sample that were on restrictive drawdown did not contain documentation of the reasons the restrictive drawdown was imposed. Federal regulations state that when an agency implements a condition on a grantee award such as a restrictive drawdown, it is to notify the grantee of the nature of the condition and the reason it is being imposed, and HHS guidance states that the agency is to document the reasons for use of the condition in the grant file. According to HRSA, 6 of the 52 Part A grantees and 13 of the 59 Part B grantees were on restrictive drawdown from 2008 through 2011.\nHRSA also has not consistently provided grantees placed on restrictive drawdown with instructions about how to meet the conditions for drawing down funds. HHS guidance states that the agency is to explain the nature of, and requirements for meeting, the conditions of the restrictive drawdown. However, 5 of the 11 sampled grantees that were on restrictive drawdown told us that HRSA did not provide clear instructions at the time the restriction was imposed for submitting drawdown requests or the supporting documentation they were required to submit with each request. Four grantees said that when they were first put on restrictive drawdown, they had to repeatedly submit their drawdown requests to their PO before clear expectations were established. One grantee said that they believed that HRSA was “making up the rules about restrictive drawdown as they went along,” and another stated that they received no guidance or written instruction specifying the documentation required as part of a drawdown request, which caused delays in the processing of their requests.\nFurther, HRSA has not consistently provided grantees with guidance on the types of corrective actions needed, including time frames for making the required changes, in order to have the restrictive drawdown removed. Federal regulations state that needed corrective actions and timelines are to be explained to the grantee at the time a restrictive drawdown is implemented. Most of the grantees in our sample said that they were not given a written set of action steps or specific corrective actions needed in order to have the restrictive drawdown removed. For example, one grantee told us that although they are willing to do what is needed to have the restriction removed, HRSA has not provided them with a set of requirements and timelines either verbally or in writing. Another grantee said that HRSA did not offer training to the grantee on the requirements for its restrictive drawdown until over a year after the condition was imposed. A third grantee stated that though after the restrictive drawdown process they made a change that will help them hold their service providers more accountable, the process would have been more beneficial had they been given a clear picture of the end goals at the outset.\nHRSA officials said that when a restrictive drawdown is lifted, the grantee is to be notified through a new NOA which is signed by the GMO. HRSA’s recently issued guidance states that the agency will revisit a grantee’s restrictive drawdown status once the grantee completes steps such as submitting documentation of compliance with corrective actions, completing recommended TA, and implementing a corrective action plan developed as part of a site visit. However, HRSA has lifted the restrictive drawdown condition for only two of the grantees in our sample since this guidance was in place, and it is unclear whether HRSA provided grantees with a clear plan for the removal of the condition even upon completion of recommended TA or corrective actions. One grantee explained that each time they made the changes requested by HRSA, they were given a new set of requirements to meet. For example, according to a TA report by HRSA consultants about 1 month after the restrictive drawdown was implemented, the grantee had taken important steps to address its financial challenges. Further, documents provided by the grantee indicate that following the consultant TA report, the PO indicated he would recommend that the grantee be removed from restrictive drawdown. However, despite documenting its ongoing work to address its financial challenges, the grantee was told more than a month later that further steps would be required before the condition would be removed, and the grantee remained on restrictive drawdown for approximately 4 more months. The grantee stated that they were not clearly told what they could do to have the condition removed despite repeated requests for that information, and that the costs to the program of remaining on restrictive drawdown interfered with the possible benefits.\nHRSA officials said that HRSA is revising the restrictive drawdown language to be included in the NOA to include the reasons for the restriction, needed corrective actions, and the type of documentation required for the drawdown requests to be processed, and would begin using this updated language on NOAs for grantees placed on restrictive drawdown after May 1, 2012. HRSA officials said that grantees are to be informed in writing of all conditions on their awards and how to proceed in order to have the conditions removed. They said that, where that is not occurring, they will work to ensure that it does.\nWe found that HRSA did not always provide grantees with additional TA or time to correct deficiencies before placing them on restrictive drawdown. HHS guidance states that an agency will generally afford the grantee an opportunity to correct any deficiencies before imposing conditions such as restrictive drawdown. Two grantees told us they were placed on restrictive drawdown after a site visit, but one noted that they were not given an opportunity to address the site visit findings before being placed on restrictive drawdown. The grantee stated that they submitted a corrective action plan in response to site visit findings approximately 2 months after receiving the site visit report, but according to HRSA the grantee was placed on restrictive drawdown right after the plan was submitted, suggesting the grantee did not have an opportunity to implement the corrective action plan before the condition was put in place.\nHRSA has stated that the restrictive drawdown process is a means of doing more intensive monitoring of grantees experiencing problems with program implementation, financial management, or other administrative issues. Two of the grantees in our sample told us that they had more frequent communication with their PO during monitoring calls or through e-mails after restrictive drawdown was implemented. In some cases, however, the restrictive drawdown process may have exacerbated a grantee’s existing challenges. For example, one grantee said they were told that they were put on restrictive drawdown because they had an unobligated balance that resulted from not spending funds at a quick enough pace. However, the grantee told us that, in part due to a lack of clear instructions from HRSA, the restrictive drawdown process caused further delays in their ability to spend grant funds and therefore aggravated the unobligated balance problem. In another case, a HRSA financial TA consultant reported that the restrictive drawdown itself was causing delays in a grantee’s ability to spend its grant funds, which the consultant feared might lead to a finding in the grantee’s next single audit.", "HRSA’s lack of records and frequent staff changes in PO assignments further challenge the agency’s oversight of grantees. HRSA officials told us that records of grantee oversight are located across three types of the agency’s files— HRSA’s EHB, which includes official NOAs and required reports, annual single audit reports, and PO files, which include monitoring documentation, such as notes from routine calls and TA, and site visit reports—not just those documents available electronically in HRSA’s EHB. Therefore, we consider all three of these files together to be a complete record of grantee oversight. While conducting our file review, we found that this complete oversight record was only maintained for the current and previous grant years because, prior to that, consistent with its records management program, HRSA destroyed documentation of grantee monitoring only available in the paper PO files. At the time of our file review midway through the 2011 grant year, all three grantee files were only available for the first half of grant year 2011 and grant year 2010, which was only approximately a year and a half of documentation. Therefore, HRSA’s ability to correct previously noted problems with grantee performance could be limited because easily accessible documentation of such problems was not maintained. In fact, a HRSA official told us that he believed that one grantee with a history of problems should be placed on restrictive drawdown. However, HRSA did not take this step because they had destroyed the site visit reports containing findings that would have supported placement on restrictive drawdown. In a December 2011 update to HRSA’s Operations Manual, which was not in place during the majority of our review, HRSA specified that POs are to maintain copies of site visit reports for at least 5 years, and any documents related to issues under investigation for as long as necessary. However, this change does not apply to other key documentation in PO files, such as regularly scheduled conference calls and copies of relevant emails.\nFurthermore, frequent PO changes in monitoring assignments could compound the challenges created by HRSA’s lack of long-standing documentation and possibly limit HRSA’s institutional memory for a given grantee. Specifically, according to HRSA data, from 2008 through 2011, 93 of the 111 Part A and Part B grantees had at least two or three different POs and 2 grantees had four different POs during this time.\nHRSA’s frequent changes in PO assignments could leave a recently transitioned PO and his new grantee at a disadvantage. For example, during our file review, we found that one of the grantees in our sample, a grantee with a history of problems that had been placed on restrictive drawdown, was missing documentation of monitoring calls for the 2010 grant year. That grantee’s current PO began monitoring the grantee near the beginning of the 2011 grant year and she explained that she did not receive documentation of any monitoring calls that had occurred under the previous PO.\nSome of the grantees we interviewed said that frequent PO changes resulted in variation in HRSA oversight. Eight of the 25 grantees we spoke with expressed concern about changes in their POs and 13 described the variation in PO monitoring styles that grantees had to adjust to when a new PO was assigned. For example, 1 grantee that had three POs from 2008 through 2011 told us that the PO changes resulted in delayed responses from HRSA and contradictory information being provided by different POs, which created confusion for the grantee and delays in funding distribution to service providers. Conversely, a grantee that had one PO during this time period told us that having a knowledgeable PO who serves for a long period of time creates better management of the grant because the PO develops important institutional memory about the grantee and its program.", "Federal regulations require grantees to oversee service providers and, in April 2011, HRSA issued the National Monitoring Standards, a compilation of requirements for grantee monitoring of service providers. Some grantees said that their implementation of the standards was hindered by insufficient HRSA assistance and the annual site visit requirement.", "Federal regulations require grantees to oversee service providers. HRSA told us that grantees are required to report to HRSA on their approach to service provider monitoring activities in annual grant applications. HRSA also verifies this information through grantee site visits and a review of a list of service providers, which grantees are required to submit annually. The number of service providers for Part A and Part B grantees ranges greatly. For example, Nebraska had only 3 service providers in 2011, whereas New York had 83 providers. Grantees we interviewed said they use a variety of tools to monitor their service providers, including frequent phone and e-mail communication, monthly service provider meetings, site visits, training, or reviews of financial and program reports. Specifically, most of the 25 grantees we interviewed told us that they are in at least monthly, if not daily, communication with their service providers. In addition, all but four grantees conduct service provider site visits at least annually. Of the four grantees that were not conducting site visits annually, two large states conducted site visits every 2 years, with one of those states visiting service providers with performance issues more frequently; one midsize state conducted site visits every 3 years; and one small state had not conducted site visits in many years. However, all but one of these grantees were in the process of beginning annual site visits at the time of our interview.\nIn April 2011, HRSA issued the National Monitoring Standards, which it describes as a compilation of existing requirements for grantee monitoring of Part A and Part B service providers. The standards include 133 requirements for Part A grantees and 154 requirements for Part B grantees. These standards describe program and financial requirements, program-only requirements, and financial-only requirements. (See table 2.)\nAccording to HRSA, these standards consist of preexisting requirements for program and financial management, monitoring, and reporting that are based on federal statutes, regulations, and program guidance and consolidates these requirements into one location to assist grantees. Table 3 provides examples of the standards.\nMore than half of the 25 grantees from our sample said that they found the training and/or TA HRSA has provided on the National Monitoring Standards to be insufficient because it has not answered all of their questions about HRSA’s expectations for how they should implement the standards. According to HRSA officials, HRSA has offered two webinars, a national TA call, and workshops at an all-grantees meeting to assist grantees. Some grantees told us HRSA also discussed the standards during a recent administrative meeting. Further, 5 of the 10 POs we interviewed told us they had discussed implementation of the standards with grantees during routine monitoring. Five grantees told us they had asked for more in-depth TA on the standards but had not received it. One grantee, however, did receive additional TA by phone from a HRSA branch chief targeted to all Part A and Part B providers in the grantee’s state. Although HRSA stated that it would provide sample tools to demonstrate how grantees could best meet certain standards, several grantees indicated that HRSA had not done so. According to most grantees, inadequate training, TA, or both makes it more difficult to understand HRSA’s expectations and be assured that they are adequately implementing the standards, which they were required to put into practice immediately upon their release in April 2011. HRSA officials said that they believe that the webinars, conference call, and presentations they have made at grantee meetings have provided grantees with useful assistance in implementing the standards. They further noted that the standards do not represent new requirements and therefore should have been familiar to grantees. However, in its survey of grantees, discussed earlier in this report, HRSA asked grantees about their training needs and any additional information needs they might have regarding a variety of issues, including the standards.\nSeven grantees expressed particular concern about the annual site visit requirement outlined in the standards, which two of them noted is especially challenging for grantees with a large number of providers across a large geographic area or in states with limited staff resources. Two of those grantees said that the new standard would require them to change site visit processes that had proven effective over time. They told us that they conduct routine site visits based on an assessment of risk; if they determine through regular monitoring that a provider has more performance issues than other providers, they will prioritize a site visit to that provider or visit that provider more frequently. They said that the requirement to visit every service provider annually, regardless of their performance, will not allow them to continue with this approach. One grantee with approximately 140 service providers told us that meeting the annual site visit requirement would be impossible given the grantee’s large number of providers and limited staff and administrative resources. One grantee told us the administrative burden of this requirement is exacerbated by the chart review requirements which will require grantees to spend more time reviewing provider documents on site, while sacrificing other monitoring activities focused on the quality of provider services. Two grantees noted that the annual site visit standard is more stringent than HRSA’s own standard for site visits to grantees, and that HRSA therefore may not have a good sense of the time and resources required to conduct annual site visits of all service providers. Despite these concerns, several grantees told us they are taking steps to comply with the requirement.\nNASTAD has written that the standards will require some grantees to largely restructure current monitoring systems and force them to focus on administrative reviews rather than an assessment of the quality of services being delivered by service providers, and that the standards are inconsistent with the National HIV/AIDS Strategy’s goal of streamlining grant administration and reporting requirements. NASTAD has further noted that the annual site visit requirement will be especially difficult for grantees during a time when grantees are experiencing reductions in funding and staff, and that the requirement will force grantees to dedicate limited staff resources toward monitoring activities rather than service delivery. According to NASTAD, grantees may also find it difficult to conduct all required provider monitoring activities using only the 10 percent of their CARE Act grant allowed for administrative costs. Many grantees also told us that the standards increase the administrative burden on their programs. HRSA responded to NASTAD that grantees should review their current use of administrative resources to ensure they are efficiently using resources to meet all of the monitoring standards, which are simply meant to provide clarity about existing requirements. In light of grantees’ ongoing concerns, however, NASTAD has recommended that HRSA explore alternatives to the annual site visit requirement, including requiring a site visit every 2 years instead of annually. In response to NASTAD’s recommendations, HRSA has stated that annual provider site visits are a programmatic requirement developed based on federal regulations permitting HRSA to set the frequency of monitoring activities, including site visits. HRSA also stated that the site visit requirement, which is consistent for all Part A and Part B grantees, is based on HHS OIG recommendations that HRSA set standards for grantee monitoring of service providers that include some consideration of regular site visits. NASTAD has written that because HRSA has authority to set the frequency of monitoring activities, it should consider alternatives to the annual site visit requirement.\nIn response to grantee concerns about the standards, HRSA officials have stated that TA may be requested through individual POs, and that it will provide future webinars focused on common grantee concerns, including the annual site visit requirement and eligibility documentation. HRSA officials further told us that they are encouraging collaboration between Part A and Part B grantees to jointly conduct site visits of providers that are funded by both Parts A and B to ease the burden of the site visit requirement. At least one larger grantee told us they will take advantage of that opportunity for collaboration. Some grantees stated that the standards are a helpful tool, and a few noted that the standards will help them better communicate with their service providers.", "Effective oversight of CARE Act grantees and service providers is critical to the CARE Act’s mission of providing help for uninsured or underinsured individuals and families affected by HIV/AIDS. However, our findings show that deficiencies in HRSA’s oversight may compromise its ability to ensure that this program is meeting its objectives or that CARE Act funds are being spent properly. Even though HHS and HRSA guidance exists regarding the documentation and follow-up of the key elements of grantee oversight including routine monitoring, the provision of TA, site visits, and restrictive drawdown, HRSA project officers are not always following these guidelines. If a grantee is struggling, the lack of systematic provision and documentation of assistance to improve the grantee’s performance, and not retaining such documentation over time, present a great challenge to ensuring that such problems do not recur. Many HRSA POs we spoke with said that site visits are a valuable and effective oversight tool. However, in visiting some grantees multiple times while not visiting others, seemingly without regard to the size of the grantee or presence of problems, HRSA demonstrated a lack of a strategic, risk- based approach for selecting grantees for site visits. Another challenge is the lack of an updated and electronically available comprehensive program manual for grantees. Grantees said that such a manual would likely decrease their need to consult with POs over relatively routine issues. Currently, grantees must frequently seek assistance from POs because there is not a current and complete source of written information that is readily available to guide their efforts. While HRSA’s compilation of 133 Part A and 154 Part B monitoring standards does provide grantees with an exhaustive set of guidelines for ensuring that their service providers are meeting program requirements, our findings on HRSA’s own oversight of grantees provide evidence of how important training and follow-up are to ensure that these requirements are consistently followed. HRSA has provided training to assist grantees in carrying out the standards, but grantees said that they wanted more guidance and training. Among the issues about which HRSA surveyed its grantees, was the additional information its grantees needed regarding the standards.", "In order to improve HRSA’s oversight of Part A and Part B grantees, we recommend that the Administrator of HRSA:\nEnsure that the agency is implementing the key elements of grantee oversight consistent with HHS and HRSA guidance, including routine monitoring, the provision of technical assistance, site visits, and restrictive drawdown.\nAssess and revise its record retention management program so that complete grantee files are available for a period of time that HRSA determines will satisfy all of the agency’s grantee oversight needs.\nDevelop a strategic, risk-based approach for selecting grantees for site visits that better targets the use of available resources to ensure that HRSA visits grantees at regular and timely intervals.\nUpdate and maintain a program manual for grantees.\nUse the results of HRSA’s survey of grantees to identify grantees’ training needs to allow them to comply with the National Monitoring Standards.", "We provided a draft of this report to HHS for its review, and HHS provided written comments (see app III). HHS concurred with all five of our recommendations and indicated that HRSA will work to fully implement the recommendations to improve oversight of Parts A and B of the CARE Act program. HHS also offered some specific comments in response to the report conclusions. HHS acknowledged that PO led site visits, monitoring calls, single audit reports, and the imposition of restrictive drawdown are central to HRSA’s routine monitoring, but added that the agency’s overall oversight strategy is a multilayered approach that involves review of items such as required grantee reports used for postaward monitoring, site visits, monitoring calls, review of audit reports, and the provision of technical assistance on all of these issues. Our analysis included these elements, as well as a discussion of ways in which these elements intersect. We interviewed HRSA and grantee staff on these tools and describe in this report grantees’ observations on HRSA’s provision of technical assistance and feedback on the large number of reports that they must routinely provide to HRSA. Findings in this report include a detailed discussion of issues in Ryan White program oversight including both the execution and documentation of the elements listed above.\nHHS also acknowledged that HRSA’s documentation of grantee monitoring should be strengthened, noting that during the period of GAO’s review, HRSA did not maintain all documentation of oversight in one centralized file. HHS stated that HRSA has instituted a new quality improvement process, which strengthens both documentation standards and communication with grantees. HHS said that this would be done through an expansion of the use of the EHB as the primary centralized location for documentation of oversight and monitoring, including site visit reports. HHS said that this process will also include regular PO meetings to provide training, and improvements in HRSA’s records management practices. These steps appear to be consistent with the goals of our recommendations. In follow-up to its comments, HRSA provided additional information on the agency’s planned information technology development efforts to improve and expand the functionality of EHB between September 2012 and mid-2013.\nHHS commented on statements by grantees we interviewed that indicated that HRSA could not provide needed TA due to budget constraints, forcing the four grantees to seek TA from other sources, using their own administrative funds. HHS described a wide array of TA and training services that HRSA provides to grantees. HHS also provided information on the extent of grantees’ use of some of these services and HRSA’s financial resources devoted to providing these services. HHS acknowledged in this discussion that, due to competing demands for HRSA’s TA, HRSA does, at times, recommend grantees utilize their CARE Act funding for TA. In its comments relevant to TA, HHS also noted our mention of the fact that three grantees had to turn to NASTAD for TA when HRSA could not provide it or when PO responses to their questions were delayed. HHS noted that HRSA has had a partnership with NASTAD in place since 1998 to provide TA to grantees. However, as we note in our report, the TA to be provided by NASTAD under this partnership is for the purpose of assisting Part B grantees with their ADAP. While several Part B grantees told us that they receive important assistance from NASTAD, there is no similar cooperative agreement in place or HRSA-recognized organization to provide TA to Part A grantees.\nHHS also commented on our finding that HRSA did not prioritize site visits strategically. HHS stated that there can be indications of grantee problems beyond those that we included in our site visit analysis, which we acknowledged in the report. Many of the additional indicators of grantee problems HHS listed in its comments, such as fiscal and administrative challenges, are also issues that can cause grantees to receive annual single audit findings or to be placed on restrictive drawdown, the two indicators we used in our analysis. HHS then provided extensive detail on the issues in Puerto Rico and the Virgin Islands that led to grantees in those jurisdictions receiving significantly more site visits than other grantees that had received substantially more funding. In our discussion of HRSA’s site visits, we make the point that the size of the grant did not appear to play a major role in HRSA’s decisions about which grantees to visit, including among grantees experiencing problems. Many POs we spoke with said that site visits were a valuable and effective form of oversight. Because HRSA cannot visit all of its grantees each year, it must work to ensure that it uses this valuable tool in such a way as to gain as much benefit as possible. The Monitoring Grants and Cooperative Agreements for Federal Personnel manual that we refer to in the report and HHS cites in its comments lists several grant characteristics that should be considered in selecting projects for on-site monitoring. “Cost and Total Support” is the first issue listed in the manual. In our discussion, we did not question the presence of serious issues in Puerto Rico and the Virgin Islands. Our point is that even among grantees experiencing problems, jurisdictions with much larger grants, such as the District of Columbia, were not similarly prioritized for site visits, even though a site visit to the District of Columbia would be of low cost to the agency.\nHHS commented on the prevalence of HIV/AIDS in the Caribbean as a justification for its numerous site visits, but we note that the size of Part A and B CARE Act grants is based upon the number of HIV cases that exist in the jurisdiction being served by the CARE Act grantee, thereby serving as a proxy for the prevalence of the disease in that area. Data on HRSA’s website indicate that CARE Act programs served 146 clients in the Virgin Islands in 2008, while serving 16,203 in the District of Columbia during the same period. HRSA’s pattern of site visits indicates that the agency visited some grantees with smaller grants far more often than other grantees with much larger grants, and thus a much higher prevalence of disease, that also experienced challenges in administering their grants. In its comments, HHS describes numerous elements of HRSA’s routine monitoring and several instances of TA directed to the District of Columbia. Nonetheless, it received one HRSA site visit during the period covered by our review as compared to the Virgin Islands, which received six HRSA site visits, as well as routine monitoring and TA. The District of Columbia’s grant was approximately $21 million while the Virgin Islands’ grant was $1.2 million. This suggests that HRSA did not consider the size of the grant in deciding which grantees to visit. While the size of the grant would not be the only consideration in a strategic approach to scheduling site visits, it should be a major consideration.\nHHS’s comments also addressed the issue of PO’s awareness of single audit findings. HHS described how, under HRSA’s process during the time covered by our review, POs were to be informed about single audit findings. HHS described an enhancement to HRSA’s process for ensuring that POs are provided with a more detailed description of single audit findings and corrective actions taken to address the findings. HHS said that this improved process was put in place as of April 30, 2012, which was after the period covered by our review.\nIn its comments, HHS also describes improvements to HRSA’s documentation of and communication with grantees about the restrictive drawdown process, issues which we already discuss in our report. If fully implemented, these improvements have the potential to remedy many of the issues we identified in our report.\nIn acknowledging our findings on HRSA’s records retention practices, HHS said that HRSA was required to retain records according to schedules approved by the National Archives and Records Administration (NARA). However, it further noted that HRSA has engaged in a review of its records management practices. HHS said that, in December 2011, during the course of our review, HRSA formed a workgroup on records management with program and grant staff across the agency to streamline various retention schedules for program and grant record retention practices. HHS said that HRSA will be providing additional training and updated policies for the HAB POs and grants management specialists on the contents of the official grant file. HHS said that HRSA would seek approval for any changes to HRSA’s record retention policies.\nIn commenting on our discussion of the difficulty some grantees expressed about meeting the requirement for an annual visit of their service providers, HHS noted that HRSA is working with a small number of grantees to provide flexibility in meeting the requirement, but did not describe what that flexibility would entail. In discussions near the end of our review, HRSA officials said that this would not include excusing grantees from the requirement that they visit all of their service providers annually, but could involve leveraging the efforts of other CARE Act grantees.\nHHS concluded its general comments on the report by again noting that the department concurred with all five of our recommendations. HHS further commented that HHS is already in the process of planning or implementing many of our recommendations. In its comments, HHS provided considerable detail on actions HRSA plans to take or has already taken to implement our recommendations. The actions HHS describes are generally responsive to our recommendations. However, because these actions follow the conclusion of our review or are to be implemented in the future, and sometimes without a designated time frame, we are unable to evaluate them specifically.\nHHS also provided technical comments, which we incorporated as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the Administrator of HRSA and the appropriate congressional committees. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IV.", "Appendix I: Reporting Requirements for Part A and Part B Grantees The Minority AIDS Initiative Annual Report for Part A grantees is due on January 31, 2012, which is in federal fiscal year 2013.", "Caguas, P.R., Dutchess County, NY, Santa Rosa, CA, and Vineland-Millville-Bridgeton, NJ lost their classification as TGAs before the 2011 grant year, which began March 1, 2011, so the award amount is from grant year 2010 and the estimated living HIV/AIDS cases are as of December 31, 2008.\nHRSA officials explained that when HRSA staff made trips to Puerto Rico that included stops at one or multiple Part A grantees and/or the Part B grantee. For example, a March 2009 trip to Puerto Rico included a site visit to the Part B grantee, to the San Juan Part A grantee, and to the Caguas Part A grantee. From 2008 through 2011, HRSA made 12 separate trips to Puerto Rico.", "", "", "", "In addition to the contact named above, key contributors to this report were Tom Conahan, Assistant Director; Romonda Bumpus; Cathleen Hamann; Kathryn Richter; Sara Rudow; and Jennifer Whitworth." ], "depth": [ 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 1, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h2_full", "h2_full", "", "", "h0_full", "", "", "h0_full", "h0_full", "", "h2_title h1_full", "h2_full h1_full", "h2_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "In what ways does the HRSA fail to meet HHS regulations?", "In what ways did HRSA fail to provide consistent documentation?", "What is the purpose of routine monitoring?", "In what ways did HRSA fail to follow HHS guidelines when implementing restrictive drawdowns?", "What do restrictive drawdowns require?", "What is the effect of HRSA's failure to follow HHS guidelines when implementing restrictive drawdowns?", "In what ways did HRSA fail to effectively select grantees for visitation?", "What are grantees required to oversee?", "What requirements do the standards describe?", "What issues hindered the program's implementation?", "How did HRSA officials respond to this report?", "What support do HIV and AIDS patients receive through CARE Act grants?", "How do grantees and service providers interact during this process?", "What was GAO Asked to report on?", "How did GAO collect data for this report?" ], "summary": [ "The Department of Health and Human Services’ (HHS) Health Resources and Services Administration (HRSA) does not consistently follow HHS regulations and guidance in its oversight of Ryan White Comprehensive AIDS Resources Emergency Act of 1990 (CARE Act) grantees when conducting key elements of grantee oversight, including routine monitoring and implementing restrictive drawdowns. Additionally, HRSA did not demonstrate a risk-based strategy for selecting grantees for site visits.", "Project officers (POs) do not consistently document routine monitoring or follow up on that monitoring to help grantees address problems, as required by HHS and HRSA guidance. However, GAO found that most POs did not document routine monitoring calls with grantees—only 4 of the 25 PO files GAO reviewed from 2010 and 8 of the 25 files GAO reviewed from 2011 contained documentation of monitoring calls at least quarterly.", "The purpose of routine monitoring is to enable POs to answer grantee questions about program requirements, provide technical assistance (TA), and follow up on grantee corrective actions in response to previously provided TA.", "HRSA often did not follow HHS regulations and guidance in implementing restrictive drawdowns, a special award condition HRSA can place on grantees with serious problems. Six of the 52 Part A grantees and 13 of the 59 Part B grantees were placed on restrictive drawdown from 2008 through 2011. GAO found that HRSA did not consistently provide grantees in GAO’s sample that were on restrictive drawdown with the reasons the restrictive drawdown was implemented, instructions for meeting the conditions of the restrictive drawdown, or guidance on the types of corrective actions needed.", "Restrictive drawdown requires that prior to spending any grant funds, grantees must submit a request, along with documentation of the need, for funds for HRSA review.", "This has limited the effectiveness of restrictive drawdown as a tool for improving grantee performance.", "Regarding the oversight of grantees through site visits, HRSA did not demonstrate a clear strategy for selecting the grantees it visited from 2008 through 2011. For example, HRSA did not appear to prioritize site visits to grantees based on the amount of time that had passed since a grantee’s last site visit. Although many HRSA POs GAO spoke with said that site visits were a valuable and effective form of oversight, GAO found that 44 percent of all grantees did not receive a site visit from 2008 through 2011 while others received multiple visits.", "Grantees are required to oversee the service providers with whom they contract and in April 2011, HRSA issued the National Monitoring Standards for grantee monitoring of service providers.", "The standards describe program and financial requirements and include 133 requirements for Part A grantees and 154 requirements for Part B grantees.", "Though the standards were intended to improve grantee monitoring of service providers, some grantees said that a lack of training and TA has hindered its implementation. Additionally, some grantees have found the requirement for annual site visits of service providers to be challenging.", "HRSA officials said that they believe they provided adequate training to grantees in implementing the standards, which did not represent new requirements.", "Each year, half a million people affected by human immunodeficiency virus (HIV) and acquired immunodeficiency syndrome (AIDS) receive services funded by CARE Act grants. HRSA, an agency within HHS, awards CARE Act Part A grants to localities and Part B grants to states and territories.", "These grantees may provide services themselves or may contract with service providers. HRSA POs monitor grantees, but grantees are to monitor their service providers. PO oversight includes routine monitoring, site visits, and monitoring of special award conditions, such as restrictive drawdown.", "GAO was asked to 1) evaluate HRSA’s oversight of CARE Act grantees and 2) examine steps HRSA has taken to assist CARE Act grantees in monitoring their service providers.", "GAO conducted a review of grantee files from 2010 and 2011 for 25 selected Part A and B grantees, reviewed HHS and HRSA policies, interviewed HRSA officials, analyzed HRSA data on site visits and interviewed grant officials from GAO’s 25 selected grantees and 6 selected service providers." ], "parent_pair_index": [ -1, 0, 1, 0, 3, 3, 0, -1, 0, 0, 2, -1, 0, -1, 2 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 0, 0, 0, 0 ] }

{ "title": [ "Background", "AOC Jurisdictions, Offices, and Major Contracts Subject to OIG Oversight", "Statutory Requirements, Policies, and Resources Related to the AOC OIG’s Work", "Significant Statutory Requirements of the OIG", "AOC OIG Policies and Procedures", "Audit Policies and Procedures", "Investigative Policies and Procedures", "OIG Budgetary and Staffing Resources", "OIG’s Insufficient Audit Planning and Changes to Investigative Operations Limited OIG Oversight", "Insufficient Planning Limited Audit Oversight", "OIG Planning Was Not Consistent with Policies and Did Not Apply CIGIE Standards", "OIG Provided No Audit Reports of AOC’s Mega Projects and Most Jurisdictions and Offices during Fiscal Years 2012 through 2015", "Insufficient OIG Planning Contributed to a Decline in OIG Audits and Monetary Accomplishments", "IG Changes to Investigative Operations Resulted in Limited Oversight", "IG’s Rescinding of Law Enforcement Authority Led to Removal of Criminal Investigators", "OIG Relied on Investigations by Entities That Were Not Subject to Professional OIG Standards", "Investigative Changes Contributed to a Decline of Reports and Accomplishments", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Architect of the Capitol Jurisdictions Subject to Office of Inspector General Oversight", "Appendix III: Architect of the Capitol Offices Subject to Office of Inspector General Oversight", "Appendix IV: Architect of the Capitol Mega Projects Subject to Office of Inspector General Oversight", "Appendix V: Comments from the Architect of the Capitol Office of Inspector General", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The Capitol Visitor Center (CVC) was the largest construction project on the Capitol Grounds in over 140 years. It was built to provide greater security for all persons working in or visiting the U.S. Capitol and an enhanced educational experience for visitors to learn about the Congress and the Capitol Building. The construction contract for structural and excavation work was awarded in June 2002. Subsequently, we reported on delays in the construction of the CVC and uncertainties in the estimated cost of the project until it opened in December 2008, at a total cost of $600 million, well above the original project budget of $265 million.\nThe House report accompanying the fiscal year 2008 Legislative Branch Appropriations bill noted the long-standing and continuing lapses in AOC management practices, including the delays and escalating costs of the CVC; cost overruns and time delays on other projects; and with regard to the Capitol Power Plant utility tunnels, complete management breakdown, failure of appropriate oversight responsibilities, and total disregard for the human element. That Legislative Branch Appropriations bill included language that would have created an OIG for AOC to provide an independent office within AOC, and the AOC IG Act establishing the OIG was enacted on December 26, 2007, as part of the Consolidated Appropriations Act for fiscal year 2008. The Senate report that accompanied this legislation called for a statutory inspector general for AOC to promote integrity and efficiency in AOC programs and to detect and prevent fraud, waste, and abuse. The related House report directed that the new IG ensure that AOC is utilizing appropriate management practices and budgetary and accounting standards within the limitations of all laws applicable to AOC operations and auditing and reporting semiannually on management, operational issues, and other issues as outlined in an annual audit plan.\nThe first statutory AOC IG was the former Assistant IG for Audit at the Corporation for National and Community Service and was appointed by the Architect in August 2008. After the first IG’s retirement in August 2013, the Architect appointed AOC’s Deputy General Counsel to become the current IG in September 2013. In addition to the IG, at the end of fiscal year 2015, the AOC OIG consisted of a Deputy IG (who also serves as the OIG’s legal counsel), Assistant IG for Audit, Assistant IG for Investigations, two auditors, two investigators, a management analyst, and an administrative officer. (See fig. 1.)", "AOC is responsible for the maintenance, renovation, and construction of the Capitol Hill buildings and grounds covering 17.4 million square feet of facilities and more than 587 acres, and the AOC OIG is responsible for the audit and investigative oversight of AOC. AOC carries out its mission through 10 jurisdictions with specific program responsibilities and Capitol Construction and Operations, which is made up of nine central offices, including the independent OIG. (See fig. 2.)\nAOC’s 10 jurisdictions manage AOC’s programs for the maintenance, operations, and preservation of the grounds and structures across Capitol Hill. (See app. II.) AOC’s Capitol Construction and Operations offices have responsibilities that range from overall planning and project management to financial and human capital in support of AOC’s mission and programs. (See app. III.)\nAOC’s responsibilities include the construction and restoration of key facilities. AOC classifies its largest projects for construction and restoration—those with an expected cost of over $50 million—as mega projects. Mega projects are designed by external architecture and engineering firms and constructed by external construction firms under major contracts managed by AOC. AOC’s performance and accountability reports highlight mega projects, including the Capitol Dome restoration and the Cannon House Office Building renewal. According to AOC officials, at the end of fiscal year 2015 AOC had four ongoing mega projects estimated to cost in total approximately $1.1 billion. (See app. IV.) According to AOC officials, the Cannon House Office Building renewal project is estimated to cost approximately $752.7 million, and the Capitol Dome restoration project is estimated to cost approximately $96.7 million. In addition, AOC estimated that the Refrigeration Plant Revitalization and the Capitol Power Plant Cogeneration projects will cost approximately $183.2 million and $116.6 million, respectively.", "", "As established by statute in 2007, the stated purposes of the AOC OIG are to (1) conduct and supervise audits and investigations relating to AOC; (2) provide leadership and coordination and recommend policies to promote economy, efficiency, and effectiveness; and (3) provide a means of keeping the Architect and the Congress fully and currently informed about problems and deficiencies related to the administration of programs and operations of AOC. The AOC IG is appointed by the Architect, in consultation with the Inspectors General of the Library of Congress, the Government Publishing Office, the U.S. Capitol Police, and GAO, and is to be selected without regard to political affiliation and solely based on integrity and demonstrated ability in accounting, auditing, financial analysis, law, management analysis, public administration, or investigations. The IG reports to and is under the general supervision of the Architect, who has no authority to prevent or prohibit the IG from initiating or completing any audit or investigation, issuing any subpoena during the course of an audit or investigation, issuing any report, or carrying out any other statutory duty or responsibility of the IG. In addition, the IG may be removed from office by the Architect, who must promptly communicate in writing the reasons for such removal to each house of the Congress. Subject to the laws governing selection, appointment, and employment by AOC, generally, the IG is authorized to select, appoint, and employ such officers and employees, including consultants, necessary to carry out the functions, powers, and duties of the OIG.\nThe AOC IG Act also incorporates numerous provisions of the Inspector General Act of 1978 (IG Act), as amended, imposing responsibilities and providing authorities common among federal OIGs. Among those responsibilities, the IG must comply with Government Auditing Standards, which requires, among other things, that in all matters relating to audit work, the audit organization and the individual auditor must be free from personal, external, and organizational impairments to independence and must avoid the appearance of such impairments. The IG must also take appropriate steps to ensure that any work performed by nonfederal auditors complies with these standards. In addition, whenever the IG has reasonable grounds to believe there has been a violation of federal criminal law, it is to be reported expeditiously to the Attorney General. The IG is also required to prepare semiannual reports to inform the Architect and the Congress of any significant problems found and recommendations for corrective action made by the OIG during the reporting period. The IG’s semiannual reports are to contain updates on significant recommendations from previous reports that have not been completed; a summary of matters referred to prosecutors and any prosecutions that occurred; and monetary accomplishments for the reporting period, including the dollar value of questioned costs and the dollar value of recommendations that funds be put to better use.", "AOC Order 40-1, Order on the Office of Inspector General Authority and Responsibilities and Architect of the Capitol Employee Responsibilities, effective October 12, 2010, sets out the authority and responsibilities of the AOC OIG in carrying out independent audits and investigations and promoting the economy, efficiency, and effectiveness of AOC. The requirements are mostly derived from the statutory requirements and authorities of the AOC IG. These include the IG’s direct access to the Architect, as well as access to all records, reports, audits, reviews, documents, papers, or other material available to the AOC. The order also specifies the IG’s authority to undertake such investigations and reports that are, in the judgment of the IG, necessary or desirable; request information and assistance from any federal, state, or local governmental agency; and administer or take from any person an oath, affirmation, or affidavit, when necessary in performing OIG functions. In addition, CIGIE’s Quality Standards for Federal Offices of Inspector General provides requirements for OIGs when developing an appropriate planning process and for managing, operating, and conducting oversight, including audits and investigations.", "AOC Order 40-1 includes the requirement for OIG audits to comply with Government Auditing Standards and the responsibility to follow an audit process, starting with an audit plan at the beginning of each fiscal year. According to the order, the plans are to include audits based on risk and materiality (significance or importance), legislatively mandated audits, requests from the Congress and AOC, or other work selected for audit or evaluation. The audit process is to include written notification to AOC followed by an entrance conference with pertinent AOC representatives before the audit begins. After the audit work is complete, an exit conference is to be held with the AOC point of contact and AOC management to discuss the results of the audit. The audit team is to issue a draft audit report to AOC management for comment and then issue a final audit report to present the results of the audit with the comments of AOC management. The AOC OIG has also developed written policies in its Audit Policies Manual and its Audit Standard Operating Procedures Manual. Together, these two manuals provide general auditing policies as well as specific audit procedures for planning and conducting audits and reporting the results of audits to AOC and the Congress. They also provide guidelines for using nonfederal auditors to audit AOC’s annual financial statements.", "AOC Order 40-1 includes the requirement for OIG investigations to be conducted in accordance with CIGIE Quality Standards for Investigations. The order states generally that the OIG is responsible for conducting and supervising investigations to find, remedy, or prevent fraud, waste, and abuse. It also lists examples of subjects that the OIG investigates, including fraud, waste, or abuse; bribes, kickbacks, and bid rigging; conflicts of interest; credit or purchase card fraud; forgery or thefts; improper use of AOC resources or property; violations of laws, rules, or regulations; and reprisal for reporting allegations of fraud, waste, or abuse to the OIG. The order also specifies that individual discrimination or retaliation complaints, individual employee benefits and compensation issues, individual grievances, individual workplace conflicts or matters covered in the collective bargaining agreement, or complaints regarding workplace safety and health or environmental issues are to be referred to AOC offices rather than to the OIG.\nPolicies and procedures for OIG investigations are contained in the Investigative Program Manual, which outlines the investigative conduct policy, coordination procedures, and other policies on the administration of investigations. These OIG policies also require that investigators adhere to all applicable CIGIE Quality Standards for Investigations. The CIGIE investigative standards include requirements for the qualifications of investigative personnel and the independence of investigative organizations and investigators from personal, external, and organizational impairments. In addition, the standards require the use of due professional care in the thoroughness of investigations, the application of legal requirements, and the use of appropriate investigative techniques. Due professional care also requires investigators to be impartial and objective and to provide accurate and complete documentation to support investigative reports. The CIGIE investigative standards also provide guidance on conducting investigations; using investigative plans with organizational and case-specific priorities; accurately, completely, and objectively reporting all relevant aspects of investigations; and managing investigative information.", "Funding for the AOC OIG is included in the appropriation available for AOC’s general administration. The OIG submits its budget requests for review to the AOC budget office, which then includes it as part of AOC’s overall budget request submitted to the Congress. The OIG’s budgets grew from approximately $2.0 million in fiscal year 2012 to approximately $2.7 million in fiscal year 2015, while the OIG’s staffing remained relatively constant, as shown in table 1.\nThe OIG’s budget increase occurred primarily in fiscal year 2015 when the OIG was provided additional funding for support services. According to the OIG, the additional funds were intended to hire individuals with engineering expertise to assist in the audit oversight of the Capitol Dome restoration and Cannon House Office renewal projects, but instead the OIG returned $343,501 of the funds to AOC when the engineering expertise was not obtained. The OIG ultimately hired a civil engineer in fiscal year 2016.", "The OIG’s strategic and annual audit plans for the 4-year period we reviewed did not include an assessment of AOC’s risks and did not establish priorities for providing audit reports. In addition, the current IG eliminated all criminal investigator positions, leaving the OIG investigators with no responsibility to complete investigations of allegations of criminal wrongdoing, which the OIG now refers to the U.S. Capitol Police (USCP) for investigation. Also, although the OIG is responsible for addressing fraud, waste, and abuse under AOC policy, we found instances where other AOC offices investigated such allegations of wrongdoing within their own offices, despite the potential for conflicts of interest. The OIG’s lack of adequate audit planning, lack of criminal investigators, and reliance on AOC program offices to conduct investigations of alleged wrongdoing have contributed to a significant decline in its audit and investigative reports and reported monetary accomplishments. As a result, AOC management and the Congress may not be fully and currently informed about potential problems and deficiencies relating to the administration of programs and operations of AOC.", "", "The AOC IG Act states that the OIG’s primary purposes are to conduct and supervise audits and investigations; promote economy, efficiency, and effectiveness; and keep AOC and the Congress fully and currently informed about problems and deficiencies through semiannual reports and other means. In addition, the act requires that OIG audits comply with Government Auditing Standards, which requires audit reports to communicate the results of audits. CIGIE’s Quality Standards for Federal Offices of Inspector General provides requirements for OIGs when developing an appropriate planning process and for managing, operating, and conducting oversight, including audits. The CIGIE standards direct OIGs to develop a methodology and process for identifying and prioritizing agency programs and operations as potential subjects for audits. In addition, the standards state that because resources are rarely sufficient to meet all requirements, audit planning should include an assessment of risk and an assignment of priorities to help ensure the optimum use of OIG resources. The CIGIE standards also provide guidance for OIGs on maintaining a planning system that assesses the nature, scope, and inherent risks of agency programs and operations. According to these standards, the annual performance planning process is to identify the activities to audit and investigate, inspect, or evaluate and translate these priorities into outcome-related goals, objectives, and performance measures.\nThe OIG’s Audit Standard Operating Procedures Manual requires a risk analysis—using input received from AOC management and the Congress, as well as audit leads developed during the past year—to identify the most viable audits based on risk and potential payback. The OIG’s annual audit plans for fiscal years 2012 through 2015 included the annual financial statement audits performed by an outside accounting firm; audits from prior years that were not completed, such as those of the Capitol Dome restoration and Cannon House Office Building reconstruction mega projects; and new planned audits, such as the audit of the Capitol Power Plant Cogeneration. However, the OIG’s strategic and annual audit plans for the 4-year period we reviewed did not include an assessment of risk. In addition, neither the OIG’s plans nor its policies included the assignment of priorities to help ensure the effective use of OIG resources in providing audit reports. While the OIG’s policies included CIGIE’s standards for investigations, the OIG has not adopted CIGIE’s Quality Standards for Federal Offices of Inspector General or developed comparable policies and procedures on planning that include both risk assessment and assigned priorities. In interviews with the IG, he explained that instead of formal plans with an assessment of risk and an assignment of priorities, the OIG relied on a process of “continuous review” defined by the IG as an effort to alert AOC and the Congress to cost overruns, delays, and other contract management issues as they occurred.", "In large part because of the OIG’s insufficient audit planning, the OIG provided no audit reports of AOC’s mega projects with an estimated combined cost of over $1.1 billion, and the OIG provided limited audit oversight of AOC’s jurisdictions and offices during the 4-year period we reviewed. According to OIG officials, the OIG staff performed continuous review by attending AOC’s weekly progress meetings for both the Capitol Dome restoration and Cannon House Office Building renewal mega projects. However, without audit reports developed from plans based on an independent assessment of AOC’s risks and with assigned priorities, the OIG provided little assurance that AOC’s most critical programs and contracts received adequate oversight, that audit resources were being applied to the most critical areas, and that the OIG’s efforts would fully inform AOC management and the Congress of any problems or deficiencies.\nIn addition, the lack of sufficient planning contributed to the minimal audit coverage of the jurisdictions and offices responsible for providing AOC’s programs and support services during fiscal years 2012 through 2015. To illustrate, the fiscal year 2015 audit report of CVC’s restaurant operations was the only OIG audit of a program provided by an AOC jurisdiction during the 4-year period we reviewed. However, this audit report was not a result of the OIG’s annual audit plan for fiscal year 2015, but rather was provided in response to a request from CVC management. Additional audit reports issued by the OIG focused on procurement, human capital, and other support services provided by three of AOC’s central offices in Capitol Construction and Operations during the 4-year period. (See table 2.)", "Because of the current IG’s emphasis on performing continuous reviews rather than planned audit reports, the audit accomplishments reported by the AOC OIG have declined significantly in recent years. To illustrate, under the prior IG, the OIG completed a total of nine audit reports and two evaluations in fiscal years 2012 and 2013, with reported monetary accomplishments of approximately $324,000. In fiscal years 2014 and 2015, the OIG, under the current IG, completed five audit reports and three other reviews, with reported monetary accomplishments of approximately $54,000, or approximately 14 percent of the 4-year total. (See table 3.)", "As a result of changes by the current IG to eliminate criminal investigator positions, the OIG no longer has staff with the explicit responsibility to complete investigations of potential criminal wrongdoing and refers such cases to USCP for investigation. Also, we found instances where the OIG referred certain allegations of wrongdoing involving potential fraud, waste, and abuse to the AOC program offices for investigation. Neither USCP nor AOC program offices are subject to CIGIE’s Quality Standards for Investigations when performing investigations or AOC IG Act requirements for protecting complainants’ identities. These changes of investigative operations by the IG have contributed in part to a significant decline in the investigative reports and monetary accomplishments reported by the OIG. In addition, these changes have increased the risk that (1) criminal and other improper activities may not be detected and (2) potential cases of fraud, waste, and abuse may not be fully and independently investigated and may not be reported to AOC management and the Congress.", "The OIG’s policies and procedures provide that the OIG receives allegations of fraud, waste, or abuse and determines whether to initiate investigations, which are to be conducted in accordance with CIGIE’s Quality Standards for Investigations. In addition, the AOC IG Act states that in carrying out the duties and responsibilities established under the act, the IG shall report expeditiously to the Attorney General whenever the IG has reasonable grounds to believe there has been a violation of federal criminal law. The act also provides that the Attorney General may provide the AOC IG with the necessary authority for law enforcement. The prior AOC IG obtained law enforcement authority for the OIG investigators through special deputation as authorized by the Attorney General, which allowed investigators to seek and exercise warrants, make arrests, and carry firearms when performing their investigative duties.\nAfter the current IG rescinded the OIG investigators’ law enforcement authority in January 2014, the IG stated, in the OIG’s semiannual report for the first half of fiscal year 2014, that the carrying of firearms created AOC employee anxiety and was unnecessary to fulfill statutory OIG obligations. Nevertheless, the OIG investigators had passed their most recent peer review, which included a review by another OIG on the proper use of firearms. In addition, the IG was unable to provide any specific incident where the OIG investigators had exercised the inappropriate use of their law enforcement authorities. The IG informed us that in his prior position as the AOC’s Deputy General Counsel, he had become aware of AOC management’s concerns with the OIG investigators’ authority to carry firearms, and for this reason, he rescinded the OIG’s law enforcement authority.\nThe OIG completed a job hazard analysis under the prior IG that was provided to the AOC Director of Safety, Fire, and Environmental Programs in June 2011. The OIG analysis concluded that OIG criminal investigators experienced safety hazards when conducting investigations of AOC personnel, programs, contracts, or funds when off the Capitol complex. The hazards included the surveillance of suspects, serving subpoenas, collecting physical evidence, and working with other law enforcement officials. The carrying of firearms was included among the personal protective equipment necessary to respond to these hazards.\nHaving removed their authority to carry firearms, rather than place the OIG investigators into potentially unsafe conditions without the protection of firearms, the current IG removed the staff’s responsibility to complete criminal investigations altogether by revising the position descriptions of the investigators. The IG stated in the second fiscal year 2014 semiannual report that carrying out law enforcement duties is unnecessary to the OIG’s missions to serve AOC and the Congress. As a result, the OIG’s criminal investigators were reclassified from Office of Personnel Management (OPM) Criminal Investigating Series 1811, with responsibilities for criminal investigations, to OPM General Investigating Series 1810, which has no specified responsibilities for criminal investigations.", "Because it has no criminal investigators to complete investigations of potential criminal allegations, the OIG refers such allegations to USCP for investigation. According to USCP officials, USCP is the only law enforcement agency with primary law enforcement authority for the U.S. Capitol buildings and grounds. In addition, USCP statutory authority extends to the protection of congressional members, officers, visitors, and facilities, which includes performing criminal investigations relating to AOC and other Capitol Hill entities. USCP officials confirmed that USCP does not have access to AOC’s internal systems and therefore cannot develop leads for proactive criminal investigations of fraud in AOC’s program management and contracting areas without being granted such access. Instead, USCP investigations are focused on criminal allegations referred to it by the OIG. USCP officials stated that USCP personnel have extensive training in performing criminal investigations. OIGs are required to follow CIGIE’s Quality Standards for Investigations when they conduct investigations, which contain, among other things, explicit requirements for investigator independence, objectivity, and due professional care. As mentioned previously, AOC OIG has incorporated these investigative standards into its policies and procedures. Although USCP is not subject to CIGIE’s investigative standards, USCP officials stated that the requirements in CIGIE’s investigative standards are required for all of its criminal investigations and are integral to USCP directives, processes, policies, and procedures.\nIn addition to the IG’s elimination of the OIG investigators’ responsibility to complete criminal investigations, the AOC OIG also changed its investigative operations with respect to noncriminal investigations. According to OIG investigators, shortly after the current IG took office, they were told in a meeting with the IG that senior AOC leadership would need to build its own investigative capabilities because the OIG would no longer handle many issues it previously investigated. Also, in the semiannual report for the period ending fiscal year 2014, the IG emphasized that the OIG would defer to AOC supporting offices in the absence of reasonable cause to believe complaints of alleged fraud, waste, and abuse of government resources. Consequently, the OIG may refer allegations of noncriminal wrongdoing to AOC’s program offices for investigation and rely on the investigative capabilities developed by AOC’s program offices. The review of allegations by other AOC offices is often appropriate when administrative actions can address the issues without OIG assistance. For example, AOC’s policies specify that individual complaints of discrimination or retaliation, individual employee benefits and compensation issues, individual grievances, individual workplace conflicts, matters covered in the collective bargaining agreement, or complaints regarding workplace safety and health or environmental issues are addressed by AOC offices in association with the Office of Compliance. The AOC IG Act allows the IG to exercise judgment when determining whether to conduct an OIG investigation. However, according to OIG investigators, the IG has also encouraged AOC program offices to conduct their own investigations, which can result in these offices addressing wrongdoing in areas outlined in the OIG’s policies and procedures as OIG responsibilities regarding fraud, waste, and abuse. The program offices are not subject to explicit policies requiring independence, objectivity, and due professional care, which are requirements under CIGIE’s investigative standards for OIGs.\nTo illustrate, the OIG under the prior IG conducted investigations of alleged abuses of worker’s compensation benefits by employees who filed potentially fraudulent claims. The OIG investigations conducted under the prior IG found that these employees were not always potentially eligible for worker’s compensation benefits. However, the AOC Human Capital Management Division is responsible for investigations of worker’s compensation issues. The Human Capital Management Division awarded a 1-year contract for $150,000 in August 2015 to a private investigative firm to perform the surveillance work once done by OIG investigators and to determine whether AOC employees have filed false claims in order to collect worker’s compensation or disability benefits. Since these investigations are not being performed by the OIG, they are not subject to CIGIE standards requiring independence, objectivity, or due professional care, which are among the requirements for investigations performed by the OIG. Human Capital Management Division officials stated that any suspected criminal violations would be referred to the OIG; however, under the IG’s current investigative operations, even if such criminal referrals were made they would not be investigated by the OIG but rather referred to USCP.\nIn another example, the OIG referred allegations of potential ethics violations to the AOC Office of General Counsel for investigation, even though such cases are consistent with the OIG’s responsibilities to investigate fraud, waste, and abuse. By referring these allegations to the Office of General Counsel for investigation, the resulting investigations are subject to neither CIGIE investigative standards for independence, objectivity, and due professional care nor the AOC IG Act, which requires the OIG to safeguard the identity of complainants. The lack of a statutory protection may hinder complainants from coming forward with information about potential wrongdoing within AOC. To illustrate, we reviewed an investigative case file provided by OIG investigators indicating that the OIG had received an allegation about a potential violation of AOC orders that prohibit using public office for private gain by the complainant’s supervisor. Such violations of abuse are specified by OIG policies and procedures as matters the OIG investigates. However, the IG determined this allegation was an ethical matter to be investigated by the AOC Office of General Counsel. Upon learning that the AOC Office of General Counsel rather than the OIG would be performing the investigation, according to the case file, the complainant withdrew the allegation because of fear of possible repercussions for moving forward with the case.", "Although the OIG continues to perform investigations, the IG’s changes in investigative operations have contributed in part to a significant decline in the number of investigative reports and monetary accomplishments reported by the OIG. To illustrate, under the prior IG, the OIG issued 53 investigative reports in fiscal years 2012 and 2013, compared to 23 reports in fiscal years 2014 and 2015 under the current IG, an almost 60 percent reduction. Also, as illustrated in table 4, since fiscal year 2013 the reported monetary accomplishments from investigations have declined from approximately $444,930 to approximately $7,260 in fiscal year 2015, as the current IG’s changes to investigative operations gradually became effective.\nIn fiscal year 2015, the OIG reported monetary accomplishments that accounted for less than 1 percent of the 4-year total reported by both IGs. In addition, the OIG had previously provided management advisories, which reported internal control weaknesses identified by investigations; however, it did not issue any management advisory reports in fiscal year 2015.\nThe AOC OIG has voluntarily agreed to be a part of the CIGIE peer review process, which includes a review of its investigative operations by another OIG. The primary purpose of CIGIE peer reviews is to determine whether OIGs have consistently applied CIGIE’s Quality Standards for Investigations. However, the OIG’s reliance on investigations by other entities will not necessarily be included in CIGIE’s peer review process. For example, the investigative operations of USCP when addressing criminal allegations and the investigations performed by AOC’s program offices, such as the Human Capital Management Division, would not be included in a peer review of the AOC OIG’s investigations. We discussed the objectives and scope of CIGIE’s investigative peer reviews with the outside OIG scheduled to perform the AOC OIG’s next review. We concluded that the issues raised in our report could be included within the scope of a peer review if expanded to include consideration of the OIG’s reliance on investigations provided by USCP, AOC’s Human Capital Management Division, the Office of General Counsel, and any additional AOC program offices that perform investigations of potential fraud, waste, and abuse.", "The Congress passed legislation establishing the AOC OIG, in part, to address the cost overruns and time delays of AOC projects, such as those found during the construction of the CVC, and the failure of appropriate oversight responsibilities. In addition, the stated purposes of the AOC OIG as established by the AOC IG Act include OIG audits and investigations and for the OIG to keep the Architect and the Congress fully and currently informed through semiannual reports and otherwise concerning fraud and other serious problems, abuses, and deficiencies. The Congress also intended the AOC OIG to promote economy and efficiency in AOC programs and to detect and prevent fraud, waste, and abuse.\nDuring fiscal years 2012 through 2015, the AOC OIG issued no audit reports of AOC’s mega projects, which have an estimated combined cost of over $1 billion. In addition, the current IG’s emphasis on the continuous review of specific mega projects since fiscal year 2014 contributed to this outcome. During the same 4-year period, the OIG provided only one audit report that addressed a single program among all the programs provided by AOC’s 10 jurisdictions, and reported a declining number of other audit reports accompanied by a corresponding decline in the reported amount of monetary accomplishments. As a result of the OIG’s minimal audit report coverage, the Architect and the Congress may not be fully and currently informed about the operations of AOC’s jurisdictions, offices, and major contracts. The OIG’s efforts during the 4-year period, including its continuous review of mega projects, did not have audit plans that were based on an assessment of risk or assignment of priorities. This is in part because the OIG has not adopted CIGIE’s Quality Standards for Federal Offices of Inspector General that includes these requirements for planning audits, investigations, and evaluations based on an assessment of agency risk and priority of efforts. Without policies and procedures for complete OIG plans with an assessment of AOC’s risks and established priorities to help direct its resources, the OIG can provide little assurance that it will provide future audit reports that address AOC’s most critical areas.\nIn addition, the current IG rescinded the OIG’s law enforcement authority and removed its investigators’ responsibility to complete investigations of potential criminal allegations, resulting in these allegations being referred to USCP for investigation. Furthermore, under the IG’s changes, AOC program offices can perform their own investigations of alleged wrongdoing in areas that can include the OIG’s responsibilities under its current policies regarding fraud, waste, and abuse. USCP and AOC program offices are not subject to CIGIE’s Quality Standards for Investigations. The OIG is subject to CIGIE’s standards that require investigations to be objective, independent, and consistent with due professional care, and to AOC IG Act requirements that complainants’ identities be protected. The current IG’s changes have contributed, at least in part, to fewer investigative reports and monetary accomplishments and may hinder potential complainants from coming forward with allegations of wrongdoing. As a result, the OIG’s practices raise questions about whether the OIG is carrying out its work in a way that fulfills the Congress’s original intent regarding the oversight of AOC.", "We are making two recommendations to the AOC OIG regarding its (1) audit planning and (2) investigative operations.\nTo provide increased oversight of AOC and to keep the Architect and the Congress fully and currently informed, we recommend that the AOC OIG revise and implement policies and procedures to provide audit reports that are based on planning that includes an assessment of risk and the assignment of priorities, consistent with requirements in CIGIE’s Quality Standards for Federal Offices of Inspector General.\nTo reduce the risk that fraud, waste, and abuse and criminal activities are not detected or fully addressed, we recommend that (1) the AOC OIG work with CIGIE to obtain a peer review from another federal OIG of the AOC OIG’s overall investigative operations, including consideration of the OIG’s reliance on investigations performed by other entities, and (2) make any needed changes in its operating procedures based on the results of the review to help ensure that investigations of AOC are conducted in accordance with CIGIE standards for investigations and AOC IG Act requirements.", "We provided a draft of this report to the AOC OIG for review and comment. In written comments reprinted in appendix V, the AOC OIG agreed with the two recommendations and stated that it would implement them. The AOC OIG also provided information on changes made in late 2015 and 2016, which was after our review period. Although these changes were outside the scope of our work, our report acknowledges the hiring of a civil engineer in fiscal year 2016 and the issuance of two reports on AOC mega projects, also in fiscal year 2016. The OIG acknowledged our findings on audit planning and the number of audit reports on AOC’s major construction projects and jurisdictions and stated that the OIG has now moved away from an approach that appeared to simply monitor projects and will incorporate a more formal risk assessment and prioritization process into its audit planning. We also received technical comments from the AOC OIG, which were addressed as appropriate. However, the OIG disagreed with a number of the statements and findings in the report related to its investigative operations, as discussed below. The USCP General Counsel also provided technical comments on behalf of USCP, which were addressed as appropriate.\nIn its written response, the AOC OIG stated that a CIGIE investigative program review had been scheduled to be completed in fiscal year 2016, and that without advance notice to the AOC OIG, the GAO review team requested that the designated CIGIE OIG peer review team suspend its activities pending the completion of this GAO audit. As we state in our report, our purpose in contacting the OIG peer reviewer was to determine the extent to which the AOC OIG’s investigative operations would be included in a peer review. The peer review had not yet begun when we met with the OIG peer reviewer, who provided information on CIGIE’s peer review process. We did not request that the peer review be suspended or postponed. We also discussed the ability of the peer review to include the OIG’s overall investigative operations, including consideration of the OIG’s reliance on investigations performed by other entities.\nIn its written comments, the AOC OIG also stated that the GAO draft confuses program responsibilities with investigative responsibilities and that the OIG does not rely on agency program offices to perform OIG investigations. The OIG commented that AOC program offices do not investigate any allegations of fraud, waste, or abuse for the OIG and that the AOC OIG is the only office responsible for performing such investigations pursuant to the IG Act. The OIG added that it is the only AOC office that can guarantee confidentiality to employees and other witnesses. The OIG concluded that GAO’s factual findings in this area are mistaken and not supported. Our report discusses AOC’s policies applicable to the OIG that specify the issues that program offices can and should address, and the issues of fraud, waste, and abuse that are specifically OIG responsibilities. Our report provides examples of AOC program offices that have addressed wrongdoing in areas of OIG responsibilities regarding fraud, waste, or abuse. These examples are based on our review of documentation in the OIG’s case files. Specifically, as noted in our report, we reviewed an investigative case file provided by OIG investigators indicating that the OIG had received an allegation about a supervisor’s potential violation of AOC orders that prohibit using public office for private gain. Such violations of abuse are specified by OIG policies and procedures as matters the OIG investigates. However, the OIG determined that this allegation would be investigated by the AOC Office of General Counsel. In another example, we obtained documentation from the Human Capital Management Division of its contract for $150,000 in August 2015 for a private investigative firm to perform the surveillance work once done by OIG investigators, to determine whether AOC employees have filed false claims in order to collect worker’s compensation or disability benefits. Based on these examples, AOC program offices may have investigated matters of fraud, waste, and abuse, which are specifically OIG responsibilities. The OIG agreed with our recommendation to work with CIGIE to obtain a peer review of the AOC OIG’s investigative operations, including consideration of the OIG’s reliance on investigations performed by other entities.\nThe AOC OIG stated that our draft report rejects the OIG’s reliance on the law enforcement authority of USCP and that this is contrary to law. Our report does not assess and therefore provides no opinion on the law enforcement authority of USCP and how these investigations were handled or resolved. Contrary to the OIG’s assertion, our report specifically addresses the OIG’s investigative process, including the referral of matters for investigation, relative to CIGIE’s quality standards. In addition, our report does not address whether the policies and procedures of USCP align with CIGIE standards on how referrals are to be handled. Also, as stated in our report, the AOC OIG had law enforcement authority, which includes the authority to carry firearms, already in place when the current IG entered office in September 2013, which he rescinded based on reasons outlined in our report. In addition, the Attorney General had previously determined under the criteria laid out in Section 6 of the IG Act that law enforcement authority was appropriate for the AOC OIG. We did not assess this determination.\nThe AOC OIG also provided several comments about the qualifications of USCP, citing its accreditation by the Commission on Accreditation for Law Enforcement Agencies, Inc. The OIG includes the attributes for accreditation, which included among others, professionalism, independence, and objectivity. As stated in our report, our focus was on OIG investigations and specifically how OIG investigations follow quality standards provided by CIGIE, which were established, in part, to help ensure the independence of OIG investigative efforts. Based on technical comments provided by the USCP General Counsel on behalf of USCP officials, we added certain information regarding requirements of USCP’s criminal investigations. However, we did not audit USCP or the policies and procedures that apply to its investigations. AOC OIG has responsibility for ensuring that its investigations comply with applicable standards. It is for these reasons that we have recommended that the AOC OIG work with CIGIE to obtain a peer review from another federal OIG of the AOC OIG’s overall investigative operations, including consideration of the OIG’s reliance on investigations performed by other entities, and make any needed changes in its operating procedures based on the results of the review to help ensure that investigations of AOC are conducted in accordance with CIGIE standards for investigations and AOC IG Act requirements. The AOC OIG agreed to implement this recommendation.\nWe are sending copies of this report to the Architect, the Architect of the Capitol Inspector General, and interested congressional committees. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-2623 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI.", "Our audit objectives were to (1) identify the Architect of the Capitol’s (AOC) jurisdictions, offices, and major contracts subject to AOC Office of Inspector General (OIG) oversight during fiscal years 2012 through 2015; (2) determine the statutory requirements, policies, and budgetary and staffing resources of the AOC OIG during fiscal years 2012 through 2015; and (3) examine the extent to which the AOC OIG developed plans and policies for oversight of AOC’s jurisdictions, offices, and major contracts during fiscal years 2012 through fiscal year 2015, and the extent to which oversight was provided.\nTo identify the AOC jurisdictions, offices, and major contracts subject to AOC OIG oversight during fiscal years 2012 through 2015, we obtained the AOC’s performance and accountability reports for each fiscal year. From these reports, we determined AOC’s priorities and the focus of AOC’s efforts for matters that could be considered for OIG oversight. We also obtained descriptions of AOC’s organizational units, including the administrative offices that provide operational support and the 10 jurisdictions that provide the AOC’s programs for the maintenance, renovation, and construction of the Capitol Hill buildings and grounds. We identified the largest construction and renovation contracts as reported by AOC that are classified as mega projects, with over $50 million each in estimated cost.\nTo determine the statutory requirements of the AOC OIG, we reviewed the AOC Inspector General Act of 2007 (AOC IG Act) and obtained the associated legislative history of that law, including committee reports and accompanying statements regarding the proposed bills leading to enactment. We summarized the views of the congressional committees as stated in reports and bills that led to the creation of the OIG to obtain an understanding of where the OIG could focus its efforts and resources. We also analyzed the statutory requirements from the Inspector General Act of 1978, as amended, that apply to the AOC OIG to determine the full range of requirements applicable to the office. We obtained the OIG’s written policies and procedures that applied to the 4-year period we reviewed. We summarized the guidance provided by the OIG’s policies and procedures to help determine whether they included requirements for audits and investigations and addressed the requirements of the AOC IG Act.\nWe obtained AOC OIG budget information for fiscal years 2012 through 2015 from the OIG that had been verified by AOC budget officials for data reliability. We obtained AOC OIG staffing information for fiscal years 2012 through 2015 from the OIG; AOC budget staff verified data reliability. We determined that the data were reliable for the purposes of this report.\nTo examine the OIG’s oversight plans and policies, we obtained the strategic plans and annual audit plans for the 4-year period we reviewed from the OIG and discussed the focus and definition of continuous review efforts with the Inspector General (IG). We also obtained the OIG policies and procedures specific to OIG planning and compared these requirements with the OIG’s plans. We also reviewed the OIG’s plans for consistency with CIGIE’s Quality Standards for Federal Offices of Inspector General regarding planning. In addition, we obtained and summarized the requirements in the OIG’s policies and procedures for audits and investigations. We obtained all OIG reports issued during the 4-year period we reviewed, which included audits, investigations, evaluations, management advisories, and memorandums, and identified the AOC programs addressed by the reports. We compared the subjects addressed by OIG’s audit reports with AOC’s jurisdictions, offices, and major contracts and noted any lack of audit coverage during the 4-year period. We also obtained the monetary accomplishments from OIG audits reported in the OIG’s semiannual reports to determine any trends and changes over the period. We also summarized the content and results of all investigative reports for the 4-year period to determine any changes in the reported results and any trends and changes in reported monetary accomplishments.\nWe interviewed all OIG investigative staff and the IG to obtain an understanding of changes made to the OIG’s investigative operations. We also interviewed an officer in the U.S. Capitol Police (USCP) Investigations Division identified by the AOC OIG to obtain an understanding of USCP’s mission and investigative procedures related to allegations of criminal violations referred to it by the AOC OIG. In addition, we obtained the assistance of AOC OIG investigators who provided examples of OIG investigations for our review. We determined the reliability of information in the OIG’s semiannual reports and other reported information by comparing it with the source information in individual reports issued by the OIG. The data we obtained were appropriate and reliable for meeting the report’s objectives.\nWe conducted this performance audit from December 2014 to November 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "The Architect of the Capitol (AOC) Office of Inspector General (OIG) was established, in part, to conduct and supervise audits and investigations relating to AOC. This includes AOC’s jurisdictions, which are responsible for AOC’s programs and are subject to OIG oversight (see table 5).", "The Architect of the Capitol (AOC) Office of Inspector General (OIG) was established, in part, to conduct and supervise audits and investigations relating to AOC. This includes AOC’s Capitol Construction and Operations offices, which provide program support and are subject to OIG oversight (see table 6).", "The Architect of the Capitol (AOC) Office of Inspector General (OIG) was established, in part, to conduct and supervise audits and investigations relating to AOC. This includes AOC’s mega projects, which are each estimated to cost over $50 million and are subject to OIG oversight (see table 7).", "", "", "", "In addition to the contact named above, Jackson Hufnagle (Assistant Director), Lisa Boren, Jason Kirwan, Lisa Motley, Taya Tasse, and Kenneth Thiry made key contributions to this report." ], "depth": [ 1, 1, 1, 2, 2, 3, 3, 2, 1, 2, 3, 3, 2, 2, 3, 3, 3, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "h2_title h1_title h3_title", "h3_full h2_full", "h1_title", "", "h1_full", "", "h0_full h1_full", "h0_title", "h0_full", "h0_full", "h0_full", "h1_title", "h1_full", "", "h1_full", "h0_full h2_full h1_full", "h3_full", "h0_full h3_full", "h2_full", "", "", "", "", "", "", "" ] }

{ "question": [ "How was the AOC OIG's audit planning limited?", "To what extent did the OIG use these CIGIE standards?", "What approach was taken in the place of the CIGIE standards?", "What results have come from this auditing system?", "How did shortcomings in the audit process affect the results?", "What changes did the IG make concerning OIG in FY2014?", "How has this affected OIG's responsibilities?", "What standards do USCP and AOC offices adhere to?", "How have these changes affected OIG investigative reports?", "How has the OIG responded to these changes?", "Why was the AOC OIG established?", "What was GAO'S role in this process?", "What does this report discuss?", "How did GAO collect data for this report?", "What recommendations did GAO make?", "How did the AOC OIG respond to GAO's recommendations?", "How has this affected GAO's findings?" ], "summary": [ "The AOC OIG's audit planning during this period did not include either risk assessments or assigned priorities for conducting audits consistent with standards of the Council of the Inspectors General on Integrity and Efficiency (CIGIE).", "In addition, the OIG did not adopt these CIGIE standards in its policies and procedures.", "Instead, the current IG emphasized “continuous review” of mega projects, which he defined as an effort to alert AOC and the Congress of contract management issues as they occurred.", "This approach and the prior IG's efforts did not result in any audit reports of AOC's mega projects during fiscal years 2012 through 2015. The OIG also reported a decline in total audit reports and monetary accomplishments of potential dollar savings during fiscal years 2014 and 2015 (see table). Further, the OIG provided only one audit report of an AOC jurisdiction program during the 4-year period.", "Because of incomplete plans, a limited number of audit reports, and the lack of audit reports of AOC's mega projects, AOC and the Congress did not have the full benefit of OIG findings and recommendations and were not kept fully and currently informed of possible AOC problems and deficiencies during the 4-year period.", "In fiscal year 2014, the IG rescinded the OIG's law enforcement authority and removed the OIG investigators' responsibility to complete criminal investigations.", "Instead, the OIG's investigators have responsibility for administrative investigations and rely primarily on the U.S. Capitol Police (USCP) to perform criminal investigations, and on occasion other AOC program offices perform their own investigations.", "USCP and AOC program offices are not subject to CIGIE standards. The OIG is required to follow CIGIE standards for investigations.", "These OIG changes contributed in part to a decline in investigative reports and monetary accomplishments.", "The OIG has volunteered to receive a peer review of its investigations that could be expanded to include consideration of investigations by these other entities.", "The AOC OIG was established by statute in 2007, in part because of congressional concerns about time delays and cost overruns during construction of the Capitol Visitor Center.", "GAO was asked to assess the AOC OIG's oversight of AOC.", "This report describes AOC areas subject to OIG oversight and examines the extent to which the OIG developed plans and policies for AOC oversight for fiscal years 2012 through 2015 and the extent to which oversight was provided.", "GAO reviewed AOC's annual performance and accountability reports, the OIG's statutory requirements, the OIG's policies and procedures, and applicable CIGIE standards. GAO also interviewed AOC OIG officials, analyzed the OIG's plans and reports for the 4-year period, and compared these efforts with the AOC areas subject to oversight.", "GAO is making two recommendations to the AOC OIG to (1) revise and implement policies and procedures to provide audit reports based on planning that includes risk assessment and assignment of priorities consistent with CIGIE standards and (2) obtain a peer review from another federal OIG of overall investigative operations, including consideration of the OIG's reliance on investigations performed by other entities, and to make any needed changes based on the results of such review.", "In comments on a draft of this report, the AOC OIG agreed with the two recommendations but raised concerns with some of GAO's findings.", "GAO continues to believe that its findings are valid, as discussed in the report." ], "parent_pair_index": [ -1, 0, 1, 2, 3, -1, 0, 1, 2, 3, -1, 0, -1, 2, -1, 0, 1 ], "summary_paragraph_index": [ 5, 5, 5, 5, 5, 6, 6, 6, 6, 6, 0, 0, 0, 0, 7, 7, 7 ] }

{ "title": [ "", "Introduction", "DFS Basics", "DFS Companies", "DFS and the Broader Gambling Industry", "Industry Positions on DFS Gaming", "Legal Status and Regulatory Environment", "Federal Laws Potentially Applicable to DFS", "Unlawful Internet Gambling Enforcement Act", "Professional and Amateur Sports Protection Act", "Wire Act", "Illegal Gambling Business Act", "Considerations for Financial Institutions Regarding DFS Transactions", "State Action", "State Legislatures", "State Attorneys General", "DFS-Related Consumer Protection Concerns", "Player Funds", "Age Limits", "Inside Information", "Problem Gambling", "Proof of Location", "Congressional Efforts and Policy Considerations", "Federal Regulation", "State Regulation", "Industry Self-Regulation" ], "paragraphs": [ "", "Daily fantasy sports (DFS), a form of online gaming in which players assemble imaginary teams that amass points based on how well individual players perform in real-life sporting events, operates in a gray area of the law. The DFS industry has not been regulated by the federal government, but the attorneys general of several states have claimed that DFS either violates state laws or is subject to state regulation.\nCongressional action directly affecting the DFS industry dates back to a 2006 law, the Unlawful Internet Gambling Enforcement Act (UIGEA; P.L. 109-347 ), which outlaws illegal gambling using the Internet and bars banks, credit card firms, and other financial service providers from processing payments to companies offering \"unlawful Internet gambling.\" UIGEA defines \"unlawful Internet gambling\" as placing or receiving a bet or wager via the Internet where such bet or wager is unlawful under either federal or state law. UIGEA provides an exemption to this prohibition for online participation in fantasy sports if the games have certain attributes including set prize pools, skill-based contests, and outcomes that do not depend solely on the performance of a single real-world team or player. However, DFS contests did not exist at the time of UIGEA's enactment in 2006, and there is debate about whether DFS, as presently offered to consumers, falls within the law's fantasy sports \"exemption.\" It is also possible that courts could determine that DFS is subject to a 1992 law, the Professional and Amateur Sports Protection Act (PASPA; P.L. 102-559 ), which bans sports betting in most states, and to various other federal and state gambling laws. This uncertainty has drawn the attention of Congress, with some Members proposing to reexamine the legal status of the industry.", "Fantasy sports began as a type of informal gambling among friends, in which participants composed imaginary teams of active professional baseball players and won or lost depending on their players' statistical performance over the course of a full baseball season. Fantasy baseball developed into more formal \"rotisserie leagues\" in the 1980s, with elaborate rules and scoring systems. Daily fantasy sports essentially extends the fantasy concept to other sports, compresses season-long games into daily and weekly formats, and allows them to be played online among participants with no personal connection.\nDFS online gaming offers players a variety of sport options (e.g., baseball, basketball, football, and hockey), performance metrics, and types of contests ranging from one-on-one competitions to games with large numbers of participants. The idea is for a player to assemble an imaginary team that amasses points based on how well each individual on a team performs in real-life games, as measured by statistics such as the number of passing yards gained in football, the number of hits in baseball, or the percentage of three-point field goal attempts that are successful in basketball. To add to the challenge, every DFS player is given a salary cap, requiring that the sum of the real-life salaries of the players on each team fall below a specified level.\nDepending on the game the participant chooses to enter, the rewards for winning could range from a few dollars to a large amount in a guaranteed prize pool (GPP). DFS companies assert that these rewards are earned as the result of a fantasy sports player's skill rather than being the result of luck or chance. The companies' websites describe their offerings as \"contests\" and \"games\" and avoid such words as \"gambling\" and \"bet.\" As discussed further below, the determination of whether players' rewards are earned as a result of skill or of chance may be significant in establishing the legal status of DFS.\nAccording to a study published in Sports Business Journal , \"DFS affords a huge advantage to skilled players. In the first half of the 2015 MLB season, 91% of DFS player profits were won by just 1.3% of players.\" A separate survey of DFS participants conducted by Eilers Research in summer 2015 found that 70% of contestants lost money. These studies seem to suggest that the best players dominate everybody else because a certain amount of skill goes into putting together a winning daily fantasy lineup.\nOne of the attractions of DFS is that it can be played on a variety of communication devices at a time and place of the participant's choosing. A typical fantasy sports player is younger, better educated, and wealthier than the usual visitor to a casino. A typical player is a male around 30 years of age who is extremely interested in sports and has played in fantasy leagues for several years. Many DFS participants formerly played online poker, which in the United States is now legal in only three states. According to the Fantasy Sports Trade Association (FSTA), the industry's national trade group, DFS players spent an average of $257 on entry fees and league-related materials in 2015.", "The two main DFS companies, FanDuel, founded in 2009, and DraftKings, launched in 2012, accounted for about 95% of the market's revenue in 2014, according to various estimates. Both companies are privately held. Roughly two dozen other companies also offer daily fantasy sports.\nThe industry has a fairly simple revenue model. Players pay entry fees, which range from 25 cents to several thousand dollars, to compete in a single contest, whether against a small group of friends or against a huge pool of players seeking to win a prize pool in the millions of dollars. Operators in the industry typically keep a \"rake\" (the house's commission) of 5% to 15% of the total betting pool to cover operating costs and profit. DFS companies claim to distribute the rest as winnings.\nAccording to Eilers Research, which studies the gaming industry, the DFS industry's net revenue (entry fees minus prizes) in the United States totaled $86 million in 2014. The research firm said in late 2014 that \"none of the major DFS providers are generating a profit, and it's unlikely that anyone will be cash flow positive in the next two years.\" Although DFS companies have not released detailed financial statements, it is generally believed that their aggressive advertising and marketing efforts are taking a large share of their net revenue. As shown in Figure 1 , FanDuel and DraftKings claim to have attracted 1.4 million paid active users in 2014, a huge uptick from fewer than 20,000 paid users as recently as 2011. FSTA, however, claims that the number of DFS players is small compared to the nearly 60 million people it estimates to have played season-long fantasy sports in 2015.\nThe major DFS operators are backed financially by investors with other sports-related interests. Investors in FanDuel include Turner Sports (a subsidiary of Turner Broadcasting System), and cable television distributors Time Warner Cable and Comcast, while investors and marketing partnerships in DraftKings include the Kraft Group (which owns the New England Patriots football team), the Fox Sports cable television network, and Major League Baseball. In some cases, these investors may be less interested in the profitability of DFS than in its potential to enlarge the customer base for sports events and broadcasts. Sports leagues and associations have strongly opposed legalized sports betting, but some have supported the growth of fantasy sports partly because of the increased viewership that results from DFS contests. Cable television companies that carry sports programming, in some cases on high-cost tiers of service or on a pay-per-view basis, may see a similar benefit. According to DFS operator FanDuel, fans consume 40% more sports content once they start playing daily fantasy sports.\nOther companies have entered the market. Yahoo!, a recent entrant into the DFS market, offers daily and weekly fantasy sports games played for cash prizes on the Yahoo Sports daily fantasy website. CBS, the parent of the CBS television network, launched its own DFS product in August 2015. The ESPN cable sports network has arranged for DraftKings to promote its programs during its programming, and vice versa, instead of launching its own DFS platform. Television network executives may be especially interested in the prospect that DFS may keep players tuned in to a game with a lopsided score because they are more interested in individuals' performance than the final outcome. Such ventures have the potential to change the structure of the DFS market considerably.", "DFS is tiny relative to the gambling industry, whose casinos, Indian gaming operations, racinos, and state lotteries generated nearly $70 billion in net revenue in 2014. Despite the DFS industry's modest size, its rapid growth has raised questions about its potential effect on the more established gambling industry. Casinos and casino hotels employed about 400,000 people nationwide in 2014, and they are a major source of government revenue. Lotteries and taxes on commercial casinos and other types of gambling generated $27.3 billion for state governments in 2014, according to the Rockefeller Institute of Government of the State University of New York. In Nevada, gaming taxes made up about 24% of the state's general fund revenue in FY2014, and Nevada counties collected additional fees and levies from casinos. Pennsylvania collects a tax of 55 cents on every dollar bet on slot machines in the state. DFS companies historically have not been regulated as gambling in most states; however, the question of whether they should be is currently being litigated in a number of jurisdictions, as discussed in the \" Legal Status and Regulatory Environment \" section of this report.", "The traditional gambling industry itself is split on how to respond to DFS. Some land-based casino operators fear losing customers to DFS operators, as DFS players can now participate in contests from any spot outside a casino using their computers and mobile devices, and worry that DFS, especially if left unregulated, could become as disruptive to gambling as other Internet-based companies, such as Airbnb and Uber, have been to the hotel and taxi industries, respectively. Other gambling companies, however, see DFS as a possible way to tap into and introduce a younger generation generally unenthusiastic about bricks-and-mortar gambling to traditional gaming options such as slot machines and horse races. They see DFS as a possible new source of revenue, and a promising way to cross-market to individuals who might not otherwise enter a casino.\nThis split is repeated within individual segments of the industry. For example, in Indiana, some racinos, which are gambling venues located at racetracks, want to offer DFS sports contests at licensed racetrack casinos in hopes of stimulating interest in horse racing, even as other racino operators worry that DFS could negatively affect racino revenue. Some state-run lotteries are considering whether to offer online DFS games, while others are more concerned about losing customers to DFS.\nThe American Gaming Association (AGA), which represents commercial and tribal casino operators, has taken the position that it seeks \"legal clarity and adequate consumer protections\" for DFS activities. The Indian tribes that operate casinos generally have not weighed in on DFS, but some are concerned that it could affect gaming facilities that generated $28.5 billion in gross revenue in 2015. In Arizona, the failure of a 2014 bill designed to legalize DFS was reportedly due in part to tribal objections.", "Gambling is primarily a matter of state law, reinforced by federal law in situations where the presence of an interstate or foreign element might otherwise frustrate enforcement of state law. Few states have enacted laws that expressly address fantasy sports. However, state gambling laws often define \"gambling\" in such a way that they could potentially apply to fantasy sports, depending on the rules and format of the particular contest at issue. The legal status of fantasy sports under most state laws often turns on whether success in the activity depends primarily on the skill of individual contestants (which would likely make it legal) or mostly chance (which would probably make it unlawful gambling). In addition, some state laws that would appear to permit \"traditional\" fantasy sports may not be as favorable toward DFS.\nMore than 80 civil lawsuits have been filed across the country against FanDuel and DraftKings; these cases allege improper or illegal conduct by the companies and advance three different theories of liability: (1) the use of \"inside information\" to gain an unfair advantage; (2) violations of state gambling laws; and (3) fraud relating to misleading promotional schemes. In early February 2016, the U.S. Judicial Panel on Multidistrict Litigation consolidated these actions in a Massachusetts federal district court, noting that \"these actions involve common questions of fact\" and that \"centralization … will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation.\" Until these and other lawsuits involving DFS operators are settled, prosecutions become final, or states and the federal government definitively respond legislatively or administratively, questions will remain as to exactly what state and federal laws apply to these companies, their customers, and their service providers.", "DFS may implicate at least four federal laws that are directly related to gambling: (1) the Unlawful Internet Gambling Enforcement Act; (2) the Professional and Amateur Sports Protection Act; (3) the Wire Act; and (4) the Illegal Gambling Business Act. In addition, financial institutions that offer services to DFS operators could face legal liability under federal money laundering statutes if they do not implement adequate internal controls (policies and procedures) to manage and monitor risks.", "The Unlawful Internet Gambling Enforcement Act (UIGEA) was enacted in 2006 as a response, in part, to the perceived problem of foreign Internet gambling operations that made their services available to U.S. customers. The law attempts to address this issue by regulating the flow of financial payments to companies that are involved in offering unlawful Internet gambling. Specifically, UIGEA prohibits anyone \"engaged in the business of betting or wagering\" from knowingly accepting checks, credit card charges, electronic transfers, and similar payments in connection with unlawful Internet gambling. UIGEA expressly excludes from the definition of the term \"business of betting or wagering\" the services of financial institutions as well as communications and Internet service providers that may be used in connection with the unlawful bet; however, such entities may nonetheless incur liability under UIGEA if they are directly engaged in the operation of an Internet gambling site. A violation of UIGEA is subject to a criminal fine of up to $250,000 (or $500,000 if the defendant is an organization), imprisonment of up to five years, or both. In addition, upon conviction the court may enter a permanent injunction enjoining a defendant from making bets or wagers \"or sending, receiving, or inviting information assisting in the placing of bets or wagers.\" Any person or entity that violates UIGEA and its implementing regulations may also be subject to civil and regulatory enforcement actions.\nUIGEA requires certain financial payment providers \"to identify and block or otherwise prevent or prohibit restricted transactions\" that are used for unlawful Internet gambling. UIGEA does not, however, alter existing federal or state laws. Indeed, UIGEA contains a rule of construction provision that expressly pronounces its lack of preemption or other effect on other federal and state laws relating to gambling: \"No provision of this subchapter shall be construed as altering, limiting, or extending any Federal or State law or Tribal-State compact prohibiting, permitting, or regulating gambling within the United States.\"\nIn addition, UIGEA's definition of \"unlawful Internet gambling\" does not specify what gambling activity is illegal. As a federal appeals court emphasized in 2009, \"[i]t bears repeating that the Act itself does not make any gambling activity illegal.\" Rather, the statute relies on underlying federal or state gambling laws to make that determination—that is, UIGEA applies to an Internet bet or wager that is illegal in the place where it is placed, received, or transmitted:\nThe term \"unlawful Internet gambling\" means to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made.\nUIGEA further defines the term \"bet or wager\" to mean \"the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome.\" However, under UIGEA an illegal \"bet\" or \"wager\" specifically does not include \"participation in any fantasy or simulation sports game … in which … no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization\" and that satisfies the following criteria:\n1. All prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest, and their value is not determined by the number of participants or the amount of any fees paid by those participants. 2. All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominately by accumulated statistical results of the performance of individuals (athletes, in the case of sports events) in multiple real-world sporting or other events. 3. No winning outcome is based (a) on the score, point spread, or any performance or performances of any single real-world team or a combination of such teams; or (b) solely on any single performance of an individual athlete in any single real-word sporting or other event.\nOne argument underlying the fantasy sports exemption is that a player's command of statistics, knowledge of the game, and observation of factors affecting an individual athlete's performance are all matters of skill, not luck.\nThis fantasy sports exemption was enacted before the creation of DFS. In addition, the statutory exemption does not specify the extent to which chance may play a role in determining the winning outcome of the contest. The UIGEA fantasy sports exemption also sets no limit on entry costs, prizes, or the duration of contests. These three considerations form, in part, the basis for the legal uncertainty under which DFS providers may be able to assert their eligibility for the UIGEA exemption.", "The federal Professional and Amateur Sports Protection Act (PASPA), enacted in 1992, generally prohibits state governments from sponsoring, operating, advertising, promoting, licensing, or authorizing gambling on competitive games in which amateur or professional athletes participate, \"or on one or more performances of such athletes in such games.\" It also prohibits any person from sponsoring, operating, advertising, or promoting such gambling \"pursuant to the law or compact of a governmental entity.\" (PASPA contained a \"grandfather\" clause to allow sports gambling operations in Nevada, Oregon, Delaware, and Montana, each of which permitted certain types of sports betting at the time of PASPA's passage.)\nIt is uncertain whether DFS or other types of fantasy sports leagues violate PASPA, particularly in light of the fantasy sports exemption that Congress included in UIGEA 14 years later. In addition, an argument has been made that PASPA may even preempt state laws that expressly legalize fantasy sports. The Massachusetts Gaming Commission released a \"white paper\" on daily fantasy sports in January 2016 that explored in detail the possible \"constraint to state action\" toward DFS that PASPA may pose:\nThe fact that PASPA prohibits a government entity \"to sponsor, operate, advertise, promote, license or authorize by law or compact \" suggests that conflict would only arise when a state passes legislation or joins a compact that involves one of the six PASPA verbs.… There is presently a dearth of case law discussing the limits of what would constitute affirmative state action sufficient to trigger a PASPA violation …\nAny approach to state action outside of the six PASPA verbs should be a cautious one … While some states have promulgated legislation to specifically exempt DFS from their definitions of gambling/bet/wager, such action could be challenged as \"authorizing\" or \"promoting\" a sports betting scheme particularly where a state would be required to take affirmative action to achieve the goal. Arguably, a state could defend its actions as merely clarifying the absence or ambiguity of existing law rather than an outright \"authorization\" that would run afoul of PASPA.\nRegulation that does not involve authorization by law is a significantly more conservative approach that appears far less likely to directly conflict with PASPA and has already been initiated by our attorney general. Further \"regulate\" is not one of the PASPA verbs and thus is arguably permitted on the face of the statute, particularly where the regulations themselves do not establish a licensing or other heavy state oversight scheme.\nAnother method of avoiding the PASPA limitations may be to promulgate legislation that addresses the larger subject of internet-based electronic gambling. While DFS would likely fall under the umbrella of such legislation, if the legislation does not specifically target DFS, it runs less chance of any outright PASPA challenge.\nTo date, no federal or state court has considered whether DFS operators, or state laws that regulate DFS, are in conflict with PASPA. However, PASPA provides that any legal challenge regarding this issue may be brought only by the U.S. Attorney General, the major professional sports leagues, or the National Collegiate Athletic Association (NCAA). It is unclear whether any of these entities may be inclined to file a PASPA action. Several U.S. professional sports leagues have entered into partnerships with DFS operators, and thus might not desire to have a court determination of the impact of PASPA on DFS that is unfavorable to their economic interests. On the other hand, the NCAA has long been an opponent of sports wagering involving its student athletes, and has reportedly refused to allow DFS advertisements during college basketball tournaments; unless it changes its position, it could be a potential opponent of state actions legalizing DFS. The U.S. Attorney General could also seek an injunction, but she may be reluctant to do so, argues one legal practitioner, who cites \"the deference that the federal government has historically provided to states related to the enforcement of gambling laws.\"", "The federal Wire Act of 1961 (also referred to as the Interstate Wire Act or the Wire Wager Act) prohibits the use of interstate wire communication facilities by those in the gambling business to transmit bets or gambling-related information. Violators of the Wire Act are subject to imprisonment for not more than two years and/or a fine of the greater of not more than twice the gain or loss associated with the offense or $250,000 (not more than $500,000 for organizations). Note that the Wire Act is directed at anyone \"engaged in the business of betting or wagering,\" and some courts have suggested it may not be used to prosecute simple bettors. Note also that the Wire Act applies without regard to whether the gambling is permitted under state law. The federal courts have interpreted the term \"wire communications\" to include Internet communications.\nPrior to 2011, the U.S. Department of Justice's Criminal Division consistently maintained that the Wire Act applies not only to sports wagering, but also to other forms of interstate gambling, including non-sports Internet gambling. Such an expansive view of the Wire Act by the Justice Department apparently dissuaded state governments from expressly authorizing and implementing Internet gambling within their jurisdictions. However, in late 2011, the Justice Department's Office of Legal Counsel reversed its interpretation of the Wire Act, opining that \"interstate transmissions of wire communications that do not relate to a 'sporting event or contest,' 18 U.S.C. §1084(a), fall outside the reach of the Wire Act.\" This decision expresses the Justice Department's intent to confine its use of the Wire Act to prosecutions of those involved in gambling businesses that use interstate wire communication facilities to transmit sports bets or sports gambling-related information.\nIt is unclear, however, whether operation of DFS or other types of fantasy or simulation sports games (as defined by the UIGEA exemption) constitutes \"the placing of bets or wagers on any sporting event or contest\" within the meaning of the Wire Act.", "DFS operators may face criminal liability under the Illegal Gambling Business Act of 1970 (IGBA) if they are in violation of state gambling laws and meet other elements of the criminal offense. IGBA punishes anyone who conducts, finances, manages, supervises, directs, or owns all or part of an illegal gambling business. IGBA defines an \"illegal gambling business\" to mean a gambling business that\n1. is a violation of the law of a state or political subdivision in which it is conducted; 2. involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and 3. has been or remains in substantially continuous operation for a period in excess of 30 days or has a gross revenue of $2,000 in any single day.\nViolations of IGBA are punishable by imprisonment for not more than five years and/or fines of the greater of (1) not more than twice the gain or loss associated with the offense or (2) $250,000 ($500,000 for an organization). Note that IGBA is broader than the Wire Act in one respect, as it applies to gambling activities that do not depend on the use of a \"wire communication.\" However, IGBA is narrower than the Wire Act in that the type of illegal gambling business must first exceed the statutory thresholds described above in order for IGBA to apply. Reportedly, a federal grand jury in Florida has been investigating DFS companies for possible IGBA violations.", "The Bank Secrecy Act (BSA) of 1970 and its major component, the Currency and Foreign Transactions Reporting Act, require U.S. financial institutions to help the federal government detect and prevent money laundering by filing reports and maintaining records of certain transactions involving cash, negotiable instruments, or foreign currency. Under the BSA, financial institutions must file with the Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) suspicious activity reports (SARs) relating to any transaction involving $5,000 or more that they have reason to suspect are derived from illegal activity (including illegal sports betting). Banks must also establish and maintain anti-money laundering programs designed to ensure that bank officers and employees will have sufficient knowledge of the banks' customers and of the business of those customers to identify the circumstances under which filing SARs is appropriate. Suspicion aside, banks must file currency transaction reports with FinCEN relating to transactions involving $10,000 or more in cash.\nBanks, their officers, employees, and customers may also face criminal liability under the money laundering statutes for illegal gambling-related financial transactions. Section 1957 of Title 18, U.S. Code , makes it a federal crime to deposit or withdraw $10,000 or more in proceeds derived from illegal gambling activities. Section 1956 makes it a federal crime to engage in a financial transaction involving such proceeds conducted with an eye to promoting further offenses—for example, by withdrawing illegal gambling-generated funds in order to pay the salaries of the gambling operator's employees.\nFederally insured state- and federally chartered depository institutions that engage in illegal or unsafe banking practices also run the risk of being assessed civil money penalties and even losing deposit insurance coverage, which would result in the termination of their status as insured depository institutions.\nFinally, banks, credit card companies, and other payment system participants could be at risk of violating UIGEA if they process transactions for DFS companies that are operating in states where DFS has been deemed unlawful. In apparent concern about its legal liability under UIGEA due to the growing number of state attorneys general who have determined DFS to be illegal gambling (see detailed description of these actions in the following section), a payment processing company, Vantiv Entertainment Solutions, informed its DFS clients that it would \"suspend all processing for payment transactions\" related to DFS in the United States effective February 29, 2016. Because this company \"handles a significant number of transactions\" for FanDuel and DraftKings in the form of players' deposits and withdrawals, one report called its decision to stop working with them \"perhaps the biggest blow yet\" to the DFS industry. A week after Vantiv's action, the world's largest credit card lender, Citigroup, announced that it would \"block transactions at DraftKings and FanDuel by New York residents pending a final decision by the courts.\" These combined actions arguably \"threaten the financial lifeblood of the [DFS] industry\" because \"Citigroup provides money through its cards, while the other financial institution, Vantiv, processes the bets.\"", "Any entity that provides gaming for real money must comply with state gambling laws to be offered in a state. Each state has its own independent definition of gambling, which may include everything from state-conducted lotteries, bricks-and-mortar casinos, horse racing, and tribal casinos to intrastate Internet gambling. The issue of whether DFS is considered a game of luck or skill is central to the debate over the legal status of DFS under the states' gambling laws.", "The number of states taking a legislative interest in DFS is growing rapidly. In 2015, DFS was an active topic for lawmakers in least a dozen states, up from just two in 2014. Some states are considering requiring DFS operators to obtain licenses and comply with certain consumer protection safeguards (such as employee background checks and ensuring that players are not underage or employed by a DFS company); others are interested in regulating the industry as they regulate gambling; still others are seeking to clarify its status under their existing gambling laws. For example, Maryland in 2012 enacted a law explicitly legalizing fantasy sports contests by exempting \"fantasy competition\" from state law prohibitions against betting, wagering, and gambling. In 2015, Kansas also enacted a law declaring fantasy sports a game of skill—thus removing fantasy sports from state laws that ban illegal lotteries. In October 2015, Nevada became the first state to require gambling licenses for DFS operators, via a notice issued by the Nevada Gaming Control Board.\nSome DFS operators do not offer fantasy sports competitions in states where their legal status is unclear. For example, FanDuel and DraftKings do not offer DFS games in Arizona, Hawaii, Iowa, Louisiana, Mississippi, Montana, Nevada, and Washington. Arizona law limits fantasy sports contests by defining prohibited gambling as an \"act of risking or giving something of value for the opportunity to obtain a benefit from a game or contest of chance or skill or a future contingent event.\" An Iowa criminal statute prohibits the playing of a \"game for any sum of money or other property of any value,\" which was interpreted by a 1931 Iowa Supreme Court decision as not depending on \"whether the game is one of skill or chance.\" Louisiana passed a law in 1997 that established the crime of \"gambling by computer,\" which prohibits the operation of \"any game or contest whereby a person risks the loss of anything of value in order to realize a profit when accessing the Internet.\" Montana law expressly prohibits any form of commercial gambling, which would include fantasy sports in which entrance fees are paid and prizes are awarded. The Washington State Constitution prohibits all forms of gambling unless the activity is specifically allowed by state law, and Washington law also expressly prohibits Internet gambling. The Washington State Gambling Commission has stated that fantasy sports wagering falls under both the statutory definition of gambling as well as the state statute prohibiting Internet gambling (to the extent the particular fantasy sports wagering takes place online). Finally, as described in greater detail in the next section, FanDuel and DraftKings have suspended their operations in Hawaii, Mississippi, and Nevada in the aftermath of opinions issued by those states' attorneys general that called into question the legality of DFS.\nIllinois is considering a bill that has garnered support from DFS operators, who see it as an industry-friendly measure that could be used as a model for regulation in other states. Included in Illinois's Fantasy Contests Act are provisions that would define fantasy sports without equating it to gambling, ban players under age 18, and require annual audits to make certain that state rules are being followed.\nIn late January 2016, the California Assembly overwhelmingly approved a bill, the Internet Fantasy Sports Games Consumer Protection Act, which would establish a regulatory and licensing regime for DFS operators. If enacted, the bill would require any person or entity to obtain a license from the California Department of Justice prior to offering any Internet fantasy sports within the state. The licensed operator would be required to pay an annual regulatory fee and also provide player-winnings information to California tax authorities.\nFive states account for roughly 40% of all DFS usage (see Figure 2 ) and about 40% of industry revenues. This suggests that if these states pass legislation that negatively affects DFS businesses, the growth of the industry could be adversely affected.", "Parallel to the DFS activity in state legislatures, several state attorneys general have weighed in on the legal status of daily fantasy sports under their existing laws. To date, the majority have determined DFS to constitute illegal gambling, although a few have approved of the contests. For example, Nevada's attorney general in October 2015 found that \"daily fantasy sports constitute sports pools and gambling games.… As a result, pay-to-play daily fantasy sports cannot be offered in Nevada without licensure.\" In November 2015, the New York attorney general ruled that DFS is illegal gambling and ordered the two largest DFS websites to immediately stop accepting wagers in the state. In his cease-and-desist letter to FanDuel, he distinguished season-long fantasy sports from DFS:\nWe believe there is a critical distinction between DFS and traditional fantasy sports, which, since their rise to popularity in the 1980s, have been enjoyed and legally played by millions of New York residents. Typically, participants in traditional fantasy sports conduct a competitive draft, compete over the course of a long season, and repeatedly adjust their teams. They play for bragging rights or side wagers, and the Internet sites that host traditional fantasy sports receive most of their revenue from administrative fees and advertising, rather than profiting principally from gambling. For those reasons among others, the legality of traditional fantasy sports has never been seriously questioned in New York.\nUnlike traditional fantasy sports, the sites hosting DFS are in active and full control of the wagering: FanDuel and similar sites set the prizes, control relevant variables (such as athlete \"salaries\"), and profit directly from the wagering. FanDuel has clear knowledge and ongoing active supervision of the DFS wagering it offers. Moreover, unlike traditional fantasy sports, DFS is designed for instant gratification, stressing easy game play and no long-term strategy. For these and other reasons, DFS functions in significantly different ways from sites that host traditional fantasy sports.\nOn December 11, 2015, a New York State court judge granted the New York attorney general's request for preliminary injunctions against DraftKings and FanDuel (to stop them from doing business in New York and accepting bets entry fees, wagers, or bets from New York consumers). Later that same day, the DFS companies obtained a temporary stay of the preliminary injunctions from a New York appellate court. In early January 2016, the New York Supreme Court Appellate Division's First Department granted the DFS companies' requests for permanent stays of the injunctions pending their appeal of the judge's order. According to one news report, the appeal has been scheduled for May 2016.\nAlthough Maryland enacted a law in 2012 that permits fantasy sports, the Maryland attorney general in January 2016 issued an advisory opinion questioning whether DFS is authorized by that law and recommended that the Maryland state legislature consider the issue. Attorneys general in other states have also determined that DFS constitutes illegal gambling under their state laws, including in Illinois, Texas, Vermont, Hawaii, and Mississippi.\nReaching an opposite conclusion, the Massachusetts attorney general announced in October 2015 that she believes DFS is not prohibited by either federal or Massachusetts state law. She later issued the proposal mentioned above, laying out extensive regulations under which she would like to see DFS companies operate, including a ban on players under 21 and restrictions on where such sites can advertise. In early February 2016, Rhode Island's attorney general found that DFS leagues do not violate state laws pertaining to \"games of chance\" and lotteries; nevertheless, he recommended that the Rhode Island legislature act expeditiously to enact a statute that regulates the operation of DFS \"to ensure criminal elements do not infiltrate the game, youth participation is barred, [and] addiction issues [are] addressed.\"", "The popularity of DFS and its unregulated status have generated a number of concerns related to protection of consumers who enter daily fantasy sports contests.", "It is not clear what legal protections DFS customers have over their account balances upon the default or insolvency of a DFS company. DFS companies currently are not subject to comprehensive regulatory regimes at the federal level or in most states. Instead, many DFS companies are FSTA members, through which they voluntarily agree to comply with industry standards.\nOne FSTA standard calls for companies to segregate customer deposits from their general operating funds. FanDuel and DraftKings have stated publicly that they adhere to the policy of ring-fencing customer deposits in segregated customer accounts. However, it is unclear whether the consumer protections outlined in these public statements and voluntary industry standards are legally binding and enforceable.\nEach DFS company requires individuals to agree to a \"terms of service agreement\" before they can enter contests. These terms of service agreements contractually establish the general legal relationship between the DFS company and its customers. At least some terms of service agreements, which vary from company to company, arguably are ambiguous as to a customer's legal recourse when the company fails, for example, by entering bankruptcy. These agreements might, for instance,\ninadequately or imprecisely define what constitutes \"customer funds\" or \"customer deposits\"; fail to require that customer deposits be held at financial institutions that are insured by federal or state governments; fail to require that customer accounts be held and administered by independent third parties; expressly state that the agreement does not create a fiduciary or similar legal relationship between the customer and the DFS company; allow the DFS company to unilaterally amend the terms of agreement at any time and for any reason; allow the DFS company to deny prizes or \"points\" for amorphous reasons, such as if a customer has engaged in an activity that the company considers to be \"adverse to [its] operation\"; fail to establish what rights a customer might have to recover funds if the customer's account is canceled by the DFS operator for a violation of the terms of service agreement; and include liability waiver provisions.\nAdditionally, players may have difficulty verifying that companies are complying with industry standards and stated policies to the extent that DFS companies are not subject to comprehensive regulatory regimes. Furthermore, even if customer funds are fully protected, there may be a significant delay in customers' ability to recover their funds if a DFS company enters a bankruptcy or some other legal proceeding.", "States typically set a minimum age for persons engaging in casino gambling and racetrack betting, but age limits are more difficult to enforce for games offered online. Massachusetts has proposed prohibiting anyone under age 21 from participating in daily fantasy sports games. Some DFS operators request potential players to supply copies of identification documents if there is reason to suspect a minor is creating an account, and DraftKings requires new players to state their dates of birth.", "In fall 2015, it was reported that employees of FanDuel and DraftKings had won large prizes playing at other DFS sites, possibly by using nonpublic information as to how many people selected specific National Football League players for their teams. Two Members of Congress called upon the Federal Trade Commission (FTC) to investigate whether these incidents involving possible misuse of private information constitute an \"unfair or deceptive practice\" under the Federal Trade Commission Act. In response to these allegations, FanDuel and DraftKings prohibited their employees from playing DFS games on any DFS website. The Massachusetts attorney general has also proposed regulations that would forbid any DFS employee or contractor from playing on any DFS contest platform, \"[n]or may such person play through another person as a proxy.\"", "Because players may participate in DFS from homes, offices, dormitory rooms, or any number of other locations at any time of day or night, some individuals may find their desire to play difficult to control. The National Council on Problem Gambling (NCPG) adopted a resolution on October 8, 2015, stating it believes participants in fantasy sports are at high risk to, and do, develop gambling problems. Among other things, it urges companies offering fantasy sports contests to develop gambling-related consumer protections using NCPG guidelines as a foundation, and to avoid running advertisements that \"misrepresent the frequency or extent of winning or target people with game-play problems or minors ...\" The Massachusetts attorney general's proposed DFS regulations would require DFS operators to comply with the state's \"truthful advertising\" regulations and to not use in any advertisements the depictions of minors, students, or school or college settings. Furthermore, the proposed regulations mandate that \"advertisements in published media (e.g., print, television, Internet and smartphone applications) will include information concerning assistance available to problem gamblers or will direct consumers to a reputable source for such information.\"", "If state governments regulate DFS, operators will need to be able to ensure players are where they say they are. The same is true if DFS is found to be gambling, as UIGEA specifically prohibits \"gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.\"\nSome gambling businesses, such as poker websites, currently use geolocation technology to assure that players are physically located in jurisdictions in which the games are legal. The same technology could probably be applied to DFS. DraftKings recently announced an agreement with GeoComply, a company that tracks user location by analyzing Internet protocol (IP) addresses and Global Positioning System data, triangulating wi-fi and cell tower connections, and employing software to detect a customer's use of concealing technologies such as virtual private networks. FanDuel has declined to say what geolocation technology and procedures it uses.", "No bills have been introduced in the 114 th Congress that would either legalize or regulate DFS nationwide. However, some Members have called for formal inquiries into the daily fantasy sports industry.\nIn October 2015, Representative Hakeem Jeffries asked the House Judiciary Committee to examine whether \"permitting a multibillion-dollar industry to police itself serves the best interests of the American people.\" Senator Robert Menendez and Representative Frank Pallone have called on the Federal Trade Commission (FTC) to implement safeguards and ensure a fair playing field in daily fantasy sports. And Senator Richard Blumenthal has called for a federal investigation into deceptive or fraudulent practices at DFS leagues by the FTC and the Department of Justice. In addition, questions about the roles of skill and luck in fantasy sports prompted Representative Frank Pallone in September 2015 to request the House Energy and Commerce Committee to hold a hearing to consider whether fantasy sports is currently allowed by UIGEA. According to press reports, Representative Dina Titus, too, has asked the House Energy and Commerce Committee to hold a hearing on the legalities of daily fantasy sports.\nPolicy options that could shape the future of the DFS industry generally center on whether regulation should come from Congress, individual states, or the DFS industry itself.", "Congress could pass legislation specifically governing DFS games, such as laws to oversee state and tribal agencies that regulate DFS contests. Congress could also amend the existing federal gambling laws to expressly prohibit or authorize DFS gaming. Arguably, if Congress imposes regulations on DFS providers, it would likely affect the industry's costs, as new laws may include new costs such as significant consumer protections and licensing fees .", "Currently, a state-by-state approach is being used to regulate the industry. For example, Nevada now requires a DFS operator to obtain a license. Some states, such as Massachusetts, may regulate the DFS industry within their borders, and others, like Texas, may declare it unlawful gambling. A few states, specifically Kansas, may allow DFS companies to continue as an unregulated industry. Some states, for instance New York, might attempt to halt DFS operators until regulations are put in place. Litigation over some of these state actions is currently ongoing, and additional lawsuits are possible in the future.", "The DFS industry has responded to greater national and state scrutiny with its own self-regulatory system. In October 2015, FSTA, which claims more than 300 member companies, including DraftKings, FanDuel, Yahoo Fantasy Sports, ESPN, and CBS Sports Digital, announced a Fantasy Sports Control Agency (FSCA). FSCA, led by Seth Harris, former acting U.S. Secretary of Labor, aims to develop cross-company standards, internal controls, auditing policies, and enforcement mechanisms to govern the industry. Both DraftKings and FanDuel have endorsed FSCA's formation." ], "depth": [ 0, 1, 1, 2, 1, 2, 1, 2, 3, 3, 3, 3, 2, 2, 3, 3, 1, 2, 2, 2, 2, 2, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h0_full h1_full", "h3_title", "h3_full", "h4_title", "h4_full", "h0_title h2_title h1_title h3_title", "h0_title h1_title", "", "h0_full h1_full", "", "", "", "h2_full h3_title", "h3_full h2_full", "", "h2_title", "h2_full", "", "", "", "", "h0_full h3_full h2_title h1_title", "h1_full", "h2_full", "" ] }

{ "question": [ "What is the legal standing of DFS companies?", "To what extent are they regulated federally?", "How do state governments regulate them?", "What confusion exists around the UIGEA?", "How has the legality of the DFS industry been challenged?", "How does the legal status of DFS affect stakeholders?", "How could the PASPA affect DFS regulation?", "What decision regarding DFS operators was considered in 2015?", "What did Nevada decide?", "What other approaches have been considered?", "How could a gambling designation affect DFS operators?", "What would be the problem with removing state regulation?", "How large is the DFS sector?", "How does DFS revenue compare to that of the regulated gambling industry?", "What is the projected future for the DFS industry?", "What is the opinion of the traditional gambling industry on DFS?", "What is the stance of many casino operators?", "How have Indian tribes operating casinos reacted to the DFS industry?", "How are opinions on DHS divided among racinos?", "How have state lotteries reacted to online DFS games?" ], "summary": [ "Daily fantasy sports (DFS) companies, which operate online gaming platforms that allow players to assemble imaginary sports teams and compete in daily or weekly contests, function in a gray area of the law.", "The federal government does not license or regulate them.", "State governments have the main responsibility for regulating gaming activities that offer the prospect of monetary rewards, but a series of federal laws, most recently the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA; P.L. 109-347), may limit states' ability to oversee DFS.", "The 2006 law, however, was enacted at a time when only season-long fantasy sports existed. Whether Congress intended it to exempt DFS from state regulation is unclear.", "Congress, multiple states, and law enforcement agencies have questioned the legality of the fledgling DFS industry, with a central focus on whether DFS contests are indeed games of skill (which would most likely make DFS legal) or chance (which would probably make DFS unlawful gambling).", "The legal status of DFS under state law directly affects whether DFS operators may be federally prosecuted under the Illegal Gambling Business Act (P.L. 91-452) and whether banks and payment processors could be held liable for violating UIGEA if they process monetary transactions related to daily fantasy sports.", "It is also possible that courts could determine that the Professional and Amateur Sports Protection Act (PASPA; P.L. 102-559) prohibits most state legislatures from authorizing or regulating DFS.", "In 2015, more than a dozen states considered whether or not to allow DFS operators to offer their gaming activities to individuals located within their borders.", "Nevada has decided to require DFS operators to obtain a license from its state gaming commission.", "Other states are considering a similar approach, which could include wagering taxes akin to the ones casinos pay.", "If state lawmakers decide to treat DFS as gambling, and if the courts determine that status is consistent with federal law, DFS would be subject to regulations, licensing, consumer protection safeguards, and other mandates where states choose to impose and enforce them.", "In the absence of state regulation, there is no means of assuring customers' access to funds on deposit with DFS operators and of enforcing prohibitions on participation by underage gamers.", "Despite the controversy that surrounds it, the DFS sector is relatively small.", "FanDuel and DraftKings, the two largest operators, and the roughly two dozen smaller DFS companies are estimated to have booked around $86 million in net revenue (receipts minus prizes) from DFS in 2014, a small fraction of the regulated gambling industry's net revenue.", "Nonetheless, a variety of sports teams and organizations and media companies have invested in the DFS industry, suggesting a potential for rapid expansion if the industry's legal status is clarified.", "There are strong differences of opinion within the traditional gambling industry on DFS.", "Some land-based casino operators fear losing customers to DFS games, while other casino owners see it as a potential new revenue source allowing them to attract younger players.", "Some Indian tribes that operate casinos have expressed concern about the prospect that DFS could reduce their revenues, but many tribes have not weighed in.", "In some states, racinos (gambling venues located at racetracks) may lobby to offer DFS sports to help increase interest in horse racing; in other states, racino operators worry that DFS will divert potential bettors from their facilities.", "A few state lotteries are considering whether to offer online DFS games." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 0, -1, 0, 0, 0, 3, -1, 0, 0, -1, 0, 0, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 4 ] }

{ "title": [ "Background", "Bi-State Tolling Authorities Have Broad Authority to Set and Use Tolls, and Tolling Decisions Are Primarily Influenced by Debt Rather Than Federal Toll Provisions", "Bi-State Tolling Authorities Have Broad Authority to Set Toll Rates and Use Toll Revenues", "Tolling Decisions Are Primarily Driven by Debt Obligations and Other Factors", "A Federal Law That Tolls Be “Just and Reasonable” Has Less Influence on Toll- Setting Decisions Than Other Factors", "Bi-State Authorities Are Generally Not Subject to Federal or State Requirements for Public Involvement and Provided the Public Limited Opportunities to Participate in Recent Toll-Setting Decisions", "The Bi-State Authorities Are Not Subject to Federal or Generally Applicable State Requirements for Public Involvement", "The Bi-State Authorities Provided the Public Limited Opportunities to Participate in Recent Toll- Setting Decisions", "External Oversight of Bi-State Tolling Authorities Has Been Limited, but Bi-State Authorities Have Established Some Internal Oversight", "States Have Conducted Few Audits of Bi-State Tolling Authorities, and States’ Audit Authorities Are Unclear", "Bi-State Tolling Authorities Have Established Internal Oversight Mechanisms, but One Internal Audit Entity Lacks Assurance of Independence", "Concluding Observations", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Discussion of the Federal “Just and Reasonable” Standard and Significant Federal Administrative and Court Decisions Addressing Toll Increase Challenges", "The Three Federal Bridge Statutes", "Significant Federal Administrative and Court Decisions During DOT Oversight of Toll Increases from 1970-1987", "The 1987 Act and Significant Federal Court Decisions since Enactment", "Appendix III: Public Involvement in Toll Increases by Bi-State Tolling Authorities", "Appendix IV: Summary of States’ Reported Audit Authority over the Four Bi-state Tolling Authorities", "Delaware River and Bay Authority (DRBA), New Jersey and Delaware", "Delaware River Joint Toll Bridge Commission (DRJTBC), New Jersey and Pennsylvania", "Delaware River Port Authority (DRPA), Pennsylvania and New Jersey", "Port Authority of New York and New Jersey (PANYNJ), New York and New Jersey", "Appendix V: GAO Contact and Staff Acknowledgments", "Contact", "Acknowledgments" ], "paragraphs": [ "Interstate compacts are legal agreements between states designed to address issues that transcend state lines. Compacts enable states to act jointly on matters that are beyond the authority of an individual state but are not within the specific purview of the federal government. States have entered into interstate compacts to act jointly to address a variety of concerns including resolving border disputes, allocating interstate waters, enhancing law enforcement, disposing of radioactive waste, and developing regional transportation systems, among other issues. According to the Council of State Governments, more than 200 interstate compacts exist today, and most of those are for purposes other than managing interstate crossings. To form an interstate compact, two or more states typically negotiate an agreement, and each state legislature enacts a law that is identical to the agreement reached. Once all states specified in the compact have enacted such laws, the compact is formed.\nIn cases where the compact affects the balance of power between the federal government and the states, the states must obtain the consent of Congress for the compact to be valid. Congress can give its consent by passing legislation that specifically recognizes the compact as enacted by the states, at which time the compact becomes federal law. Congress may impose conditions as part of granting its consent, and it typically reserves the right to alter, amend, or repeal its consent in the compact itself. Congress included such a provision in each of the public laws consenting to the four interstate compacts in this review.\nIn establishing an interstate compact, states usually delegate authority to an independent entity, such as a bi-state tolling authority, that is created to administer and implement the compact’s provisions. Decision-making for each bi-state tolling authority is the responsibility of a board of commissioners composed of representatives of the member states, who are appointed by a state’s governor, such as local government officials, or serve by virtue of their elected position, such as a state treasurer. In addition to appointing commissioners, state governors may have authority to veto decisions made by commissioners from their state if such authority is specified in the compact or provided through reciprocal legislation passed by the states. The interstate compact includes the terms to which both states have agreed, and to which Congress has provided its consent. Some compacts include language that enables states to modify a compact through reciprocal legislation. Unless the bi- state authorities engage in programs that receive federal funds, such as operating transit systems or airports, they are generally not subject to federal oversight.\nThe four bi-state tolling authorities manage a wide range of facilities, but the PANYNJ is significantly larger than the other three in terms of assets owned. At the end of fiscal year 2011, the PANYNJ reported that the total value of its assets was approximately $33.9 billion, which includes its five airports, six tolled crossings between New York and New Jersey, the World Trade Center properties, and other assets. By comparison, the DRPA’s $1.8 billion in total assets in 2011 was the next-largest asset value. New Jersey has a unique stake in these bi-state tolling authorities as it is the only state that is a party to each of the four interstate compacts in our review. See table 1 for a summary of the assets maintained by the four bi-state tolling authorities in our review.\nThe bi-state tolling authorities primarily fund the operation and maintenance of these facilities through tolls and other user fees collected from assets they manage. Many of these bridges and tunnels require significant renovations due to their age, and the costs of maintaining these facilities are substantial. For example, the PANYNJ began construction on the George Washington Bridge in 1927 and the bridge opened to traffic in 1931. Approximately 270,000 vehicles cross it every day, and the PANYNJ plans to spend $544 million to replace the suspender ropes on the bridge from 2011 through 2020. Each of the bi- state tolling authorities has instituted a toll increase in the past 5 years to help fund such renovations, and the toll rates may vary based on the type of vehicle crossing the facility (e.g., passenger vehicles or commercial trucks), whether cash or electronic payment (EZPass) is used, and the time of day. For example, the PANYNJ, which collects tolls from eastbound drivers entering New York City on its facilities, raised the toll rates for automobiles paying cash from $8 to $12 in September 2011, with an additional increase of $1 for cash tolls in December 2012 and additional $1 increases effective in December 2014 and December 2015. Passenger vehicles using EZPass pay less—$8.25 during off-peak hours and $10.25 during peak hours. See table 2 for an overview of the passenger vehicle toll rate ranges and bi-state tolling authorities’ operating revenues and expenses in fiscal year 2011.\nTo secure financing for capital improvements to their facilities, bi-state tolling authorities issue bonds to creditors and pledge tolls and other revenues for the repayment of the bond principal and interest. The four bi- state tolling authorities are required through either their bond agreements with creditors or bylaws to have an annual audit of their consolidated financial statements by an independent audit firm, which provides assurance that financial information reported to the public is accurate and fairly presented. These audits are generally not designed to evaluate the effectiveness of an entity’s internal controls or management’s overall performance in achieving its objectives, but are meant to provide assurance that the financial information provided to creditors and the public—including assets, liabilities, revenues, and expenditures—are free from material misstatement.\nIn recent years, the operations of two bi-state tolling authorities, the DRPA and the PANYNJ, have been the subject of public scrutiny and media attention. In response, the governors of New York, New Jersey, and Pennsylvania directed the authorities to allow reviews that identified concerns about the management and operations of the two authorities. Specifically, as a condition of the governors’ approval of the PANYNJ’s 2011 toll increase, the PANYNJ contracted with two consulting firms to undertake a comprehensive review and audit of the PANYNJ’s finances and operations. Generally, this audit (1) found, among other things, concerns with the PANYNJ capital-planning process, cost controls, and oversight of the World Trade Center program, and (2) summarized reform initiatives undertaken by PANYNJ to address concerns. In July 2010, the governors of New Jersey and Pennsylvania directed the DRPA to agree to an independent investigation of its operations by the New Jersey Office of the State Comptroller. The State Comptroller found issues with the transparency of DRPA’s practice of sharing insurance commissions, providing unlimited free bridge passes to DRPA employees, and the conduct of its economic development program. DRPA has passed several board resolutions to address concerns. During the course of our review, DRPA reported that its economic development program was under review by a federal grand jury led by the U.S. Attorney’s Office in Philadelphia.", "Interstate compacts provide the bi-state tolling authorities with broad authority to set toll rates and use revenues for a range of purposes, including capital improvements for their transportation infrastructure and, in certain cases, economic development projects. In setting tolls, bi-state tolling authorities are primarily influenced by bond agreements, as well as operations and maintenance costs and other factors. To obtain financing for capital projects, bi-state authorities pledge through bond agreements to maintain specific revenue required to repay their debt. The bi-state authorities set toll rates to meet these revenue requirements, while also accounting for the costs of maintaining the infrastructure given economic conditions, traffic levels, and other factors. Federal law has less influence on tolling decisions because currently no federal agency has the authority to enforce the federal requirement that bridge tolls be “just and reasonable.” In addition, some federal courts have questioned whether a private party has the right to challenge toll increases in court under this requirement. However, private parties also have been able to challenge toll increases in federal court under the Commerce Clause of the U.S. Constitution.", "The interstate compacts generally provide the bi-state tolling authorities with broad authority to set rates and use toll revenues to maintain, repair, and improve their transportation infrastructure and cover other expenses. Although the specific language in the interstate compacts varies, the bi- state authorities are permitted to set tolls and use tolls and other revenues for bridges, tunnels, and other infrastructure. The bi-state authorities are also generally permitted to use tolls and other revenues to cover operations and maintenance costs, make capital improvements, repay debt obligations, maintain reserve funds to address contingencies, or to make other investments. The bi-state tolling authorities prepare capital plans that prioritize their large-scale projects to improve and maintain their facilities, such as bridge resurfacing, painting and de- leading, and replacing and repairing bridge cables and transit cars over a period of several years. For example, PANYNJ officials reported that over the past 5 years, the PANYNJ has spent approximately $2.5 billion on capital projects for its “interstate transportation network,” which includes its bridge, tunnel, PATH train system, and bus and ferry facilities. Similarly, DRPA’s approved 2013 capital plan identifies more than $746 million in capital improvement projects for its four bridges, transit line, and other facilities over the next 5 years. The DRPA reported that in 2010, its board approved two contracts totaling nearly $140 million to replace the deck of the Walt Whitman Bridge and monitor construction of the project. Bi-state authorities are also permitted to use toll revenues to subsidize other operations, such as transit services. For example, the DRPA reported that in its 2012 capital plan, it provided about $33 million to its PATCO train line for capital projects, such as rehabilitating tracks and other improvements, representing about 26 percent of its total capital program for that year.\nIn addition to using tolls and other revenues for transportation purposes, the PANYNJ, the DRPA, and the DRBA are permitted by either their compact, subsequent compact amendments or bi-state legislation to use revenues for projects to promote their local economies, such as airports, industrial parks, business centers, and waterfront development projects. In certain cases the compacts impose conditions on using revenue for economic development. For example, the DRPA is permitted to use revenues for economic development only after allocating revenues to fund operations and maintenance costs for bridge and other capital facilities. According to DRJTBC officials, its compact does not authorize the DRJTBC to use its toll revenues for economic development projects.", "The bi-state authorities set tolls and other charges primarily to generate revenues to maintain their operations and infrastructure and meet their debt obligations. On a year-to-year basis, the bi-state tolling authorities’ annual revenues may not be sufficient to fund the infrastructure projects in their long-term capital programs. The authorities enter into bond agreements with creditors in which they pledge the collection of tolls, among other revenues, to secure financing for capital improvements. Such bond agreements provide the authorities with the funding they need to maintain their infrastructure in a state of good repair, but this also can result in the bi-state tolling authorities incurring substantial debt obligations, which must be repaid over time. For example, the four bi- state authorities’ total debt service costs, including the principal and cost of interest, range from $453 million to $30.2 billion over the life of their bonds, which may extend several decades depending on the bond terms. See table 3 for a summary of the principal owed by the four authorities on their bond debt and the total debt service cost over the life of their bonds.\nBi-state tolling authorities maintain specific operating revenue levels to pay the annual principal and interest on their debt. One measure of an entity’s ability to repay its debt is the “debt service coverage ratio,” which compares an entity’s annual operating revenues after operating expenses (net revenues) to its annual debt service costs. For example, the DRJTBC is required through a bond agreement to maintain a debt service coverage ratio of 1.3—meaning that it must generate net revenues that are at least 130 percent of its annual debt service costs or risk a default on its debt. Officials from each of the four bi-state tolling authorities reported that they monitor revenues on an ongoing basis and adjust their toll rates, in part, to ensure that future revenues will be adequate to meet their debt coverage requirements. Officials from Moody’s Investors Service, a credit-rating agency, stated that they use the debt service coverage ratio as a metric to assess the credit-worthiness of entities seeking financing through capital markets. Credit-rating agency officials reported that the ability to set toll rates independently to cover debt obligations is the most important factor considered in assigning a credit rating.\nBi-state tolling authorities also consider in their toll-setting decisions forecasts of traffic and associated toll revenues. These forecasts are based upon projections of economic factors that underlie traffic demand, such as employment, population, value of goods and services, fuel prices, and other factors that can affect traffic volume and associated toll revenues. For example, officials from the PANYNJ reported that more than 127 million cars, buses, and trucks crossed its bridges and tunnels in 2007. The PANYNJ reported that as a result of the economic recession, elevated gas prices, and its toll increase, traffic declined by about 6 percent to approximately 119 million vehicle crossings in 2011. Additionally, unforeseen weather events that can cause damage to infrastructure can affect revenues and expenses; the bi-state tolling authorities maintain a reserve fund and insure their assets for such events.", "Although there is a federal statute requiring that bridge tolls be “just and reasonable,” in practice this requirement has less influence on bi-state authorities’ toll-setting decisions than other factors, in that no federal agency currently has the authority to enforce the standard. Since 1906, federal law has required that toll rates for bridges over navigable waters be “just and reasonable,” and until 1987 this provision was enforced by various federal agencies. Originally, the Department of War performed this role, and later the Department of Transportation’s (DOT) Federal Highway Administration (FHWA) performed an administrative review of toll rates if complaints were made by third parties or at the FHWA Administrator’s discretion. From 1970 to 1987, the FHWA Administrator adjudicated several significant toll increase challenges, finding on at least two occasions that proposed toll rates were unjust and unreasonable, and on at least one occasion that proposed toll rates met the “just and reasonable” standard. In 1987, Congress repealed DOT’s authority to determine if toll rates were just and reasonable, but the standard itself remains in statute. While several parties have sought to challenge toll increases under this federal “just and reasonable” standard in court, certain federal courts have questioned whether private parties have the right to raise such court challenges. However, private parties also have been able to challenge toll increases in federal court under the Commerce Clause.\nAlthough no federal agency currently enforces the just and reasonable standard, prior administrative decisions and federal court opinions have interpreted how the standard is to be applied. Since 1973, federal administrative and court decisions have generally found that just and reasonable tolls are those sufficient to pay not only the reasonable cost of maintaining, repairing and operating facilities, but also to establish funds to amortize bridge indebtedness, provide a reasonable return on invested capital, and other purposes. These decisions have also found other uses of toll revenues—such as operating public transportation facilities—to be appropriate. In 1987, Congress in effect codified these decisions and repealed provisions that had expressly limited the use of toll revenues to specific purposes, such as maintaining, repairing, and operating a bridge. Key federal administrative and court decisions applying the “just and reasonable” standard are discussed in greater detail in Appendix II.", "In general, bi-state authorities are not required to follow federal or generally applicable state requirements for involving and informing the public, such as open meeting and open records laws. Instead, they set their own policies, which may be less stringent than those that apply to federal agencies, states, and other organizations. In addition, none of the four interstate compacts we reviewed contains language establishing specific public involvement requirements for toll setting. We found four areas in their most recent toll increases in which the bi-state authorities provided the public limited opportunities to learn about and provide comment on toll proposals, in contrast to federal and state requirements for involving the public, as well as practices used by other tolling authorities. See appendix III for a detailed timeline of public involvement in the four bi-state authorities’ most recent toll increases.", "The bi-state authorities told us that they are not subject to federal or generally applicable state requirements for informing the public. For example, federal regulations for public participation in transportation decisions require regional planning bodies, known as metropolitan planning organizations (MPOs), to provide adequate notice and time for public review and comment, hold public meetings at convenient and accessible locations and times, and demonstrate explicit consideration and response to public input received in making planning decisions. In addition, each of the four states has established laws governing open meetings and records for public agencies that include requirements such as giving notice before holding public meetings, as well as submitting information to the state on the rationale for a toll increase, the financial position of the agency, and the purposes for which revenues will be used. According to bi-state authority officials, none of these generally applicable laws applies to the four bi-state authorities. However, New York and New Jersey have enacted reciprocal state statutes that require the PANYNJ to hold open meetings.\nIn the absence of federal or state requirements, the bi-state authority officials reported that they have established their own general policies for public involvement, including making records publicly available and holding open board meetings. These internal policies, however, have been criticized for being less open or accessible than federal or state requirements. For example, in September 2011, the New York State Committee on Open Government found that the PANYNJ’s freedom of information policy—which allows the public to request PANYNJ documents—and open meeting policy were more restrictive and provided less access than freedom of information and open meetings laws that apply to state agencies in New York.\nIn addition to federal and state laws for public participation, federal agencies and the Transportation Research Board, a non-government research organization for transportation practice and policy, have identified leading practices that transportation agencies could use to involve the public in decision-making. In reviewing state and federal law and leading practices, we identified several practices used by transportation agencies that are subject to federal and state requirements that provide a useful way to assess whether the bi-state authorities are meeting expectations the public may have for accountability and transparency from public agencies. These practices include: establishing a documented process for public involvement in toll- requiring sufficient opportunities for public comment before approving toll proposals; providing key information to the public to support toll proposals; and summarizing public input for decision makers and the public before toll proposals are put to a vote for approval.", "We found that the bi-state authorities’ efforts to involve the public during their most recent toll increases were limited in comparison with requirements for state and local transportation agencies and leading practices to involve the public in decision-making. The bi-state authorities did not in all cases (1) have documented public involvement processes for toll-setting; (2) provide the public with key information on their toll proposals in advance of public hearings; (3) offer the public sufficient opportunities to comment on toll proposals; and (4) provide a public summary of comments received before toll increases were approved.\nAccording to the Transportation Research Board, establishing a defined, structured, and transparent process for involving the public in key decisions, such as those related to setting tolls, allows the public to understand the process and be aware of critical decision points where they can have influence if a toll increase is announced. At the time of their most recent toll increases, the four bi-state authorities had general policies for holding open board meetings, but these policies did not outline specific steps for involving the public in toll increases. We have previously reported that having a transparent process for reviewing and updating user fees, such as tolls, helps assure payers and other stakeholders that user fees are set fairly and accurately and are spent on intended purposes. Furthermore, soliciting stakeholder input is particularly important in cases where there is a monopoly supplier, where alternatives are limited and fees are not fully voluntary. Because the public may have few alternatives to using the tolled crossings, having a transparent, documented process specific to toll setting could improve the public’s understanding of how the tolls work and what activities they may fund.\nThe four bi-state authorities’ general policies do not provide the public with information specific to the toll-setting process, including: (1) the number of toll hearings the authority will hold, along with locations; (2) the amount of time that will be available to the public to comment on the proposal before it is voted on; and (3) how the authority will use public comments in its decision-making process. In addition, three of the four bi- state authorities did not have policies that specified the amount of advance notice to the public before holding public toll hearings. Only the PANYNJ’s policies specify the length of advance notice (10 days). In contrast, bridge authorities in Michigan are required under state law to hold three public hearings and provide advance notice with dates, times, and locations prior to any proposed toll increase to allow the public an opportunity to comment. A documented process for public involvement also demonstrates to the public and to credit-rating agencies that toll- setting is taking place within a predictable framework and could create institutional memory within the authorities for toll setting in the future. Without a documented process for public involvement, the public lacks a clear view of the bi-state authorities’ decision-making process, which could undermine the authorities’ ability to win the public’s support and secure necessary toll revenues.\nIn commenting on a draft of this report, the PANYNJ stated that its policy is to provide the public with the amount, purpose, and estimated revenues of the proposed toll increase 10 days before convening toll hearings, and that this policy constitutes a documented public involvement process. According to the PANYNJ, this policy was established in 1977 through a resolution passed by its board of commissioners. However, PANYNJ board resolutions and other PANYNJ rules and regulations are generally not available to the public through its web site. Consequently, at the time of the September 2011 toll increase, the public lacked the information needed to understand whether the PANYNJ was following its public involvement policies and making its toll-setting decisions in a predictable framework. In June 2012, the PANYNJ incorporated its 1977 public involvement policy into its publicly available bylaws. While this policy will be in effect for future toll increases, we do not believe that the PANYNJ’s policy can be considered a defined and structured process for involving the public in key decisions because the policy still does not specify the number of toll hearings, the amount of time to be made available for the public to comment, and how the authority will utilize public comments.\nFederal regulations pertaining to public participation require MPOs to provide adequate public notice and time for public review and comment at key decision points, and to hold any public meetings at convenient and accessible locations and times. As we have previously reported, the public is a key stakeholder in any tolling decision, and providing for stakeholder input may affect support for and acceptance of a fee and contribute to improved understanding about how the fees work and what activities they fund. The four bi-state authorities provided the public limited opportunities to comment before toll proposals were put to a vote for approval. For example, the DRJTBC did not hold any public hearings to receive public comment before approving its 2011 toll increase during an open board meeting. The DRPA and the DRBA each held one hearing per state to receive comment before approving their respective toll increases in open board meetings. Prior to convening toll hearings, the DRBA discussed the need for its toll increase in several board meetings that were open to the public. The PANYNJ held ten hearings on a toll proposal in various locations, including an online forum; however, those hearings were held in a single day. In contrast, officials from the Blue Water Bridge Authority and Mackinac Bridge Authority in Michigan reported that they typically provide 30 days after public notice is given for comment on toll proposals before approving an increase. Further, officials from the Golden Gate Bridge, Highway and Transportation District stated that they engaged the public through meetings, hearings, open houses, and other outreach for about 8 months prior to its last increase. The Bay Area Toll Authority in California began the public involvement process for its toll increase more than 6 months before the proposal was implemented with three public meetings held in locations around the region.\nAccording to state and federal requirements and leading practices, agencies should provide key information to the public in advance of a toll proposal to give the public the opportunity to understand the agency’s rationale for a toll increase and provide meaningful input to the decision- making process. However, the three bi-state authorities that held public toll hearings provided only limited information such as short descriptions of the capital projects they intended to implement using revenue from their proposed toll increases. The PANYNJ reported that at the time of its most recent toll proposal, it had not made a long-term capital plan available to the public detailing the full uses of the proposed toll and fare increases for the public to review. In prior work, we found that leading organizations prepare long-term capital plans that usually cover a 5- to 10-year period to document specific planned projects, plan for resource use, and establish priorities for implementation, and those plans are updated on an annual or biennial basis.\nThe PANYNJ reported that the June 2012 policy changes to its bylaws give the public information on the purposes for which tolls and fares are being adjusted and an estimate of the overall increase in revenues resulting from the change at least 10 days prior to holding public toll hearings. However, this policy is less stringent than a requirement applicable to state tolling authorities in New York, which must provide the governor, state comptroller, and legislators a special report supporting the proposed toll increase at least 120 days in advance. This report must include the authority’s operation, debt service, and capital construction costs for the next 5 years, as well as estimates of the impact that revenues from the toll increase will have on the authority. Similarly, the public notice for the Golden Gate Bridge, Highway and Transportation District’s 2010 toll increase proposal included information on its budget shortfall and need for new revenue, the proposed toll schedule and dates of implementation, revenues anticipated from the increase, and a comparison of the District’s toll rates with similar bridge authorities around the country. Additionally, the Transportation Research Board has reported that those who are proactive in providing information are better able to guide public dialogue about the authority and its activities.\nAccording to the Transportation Research Board, one goal of a good public involvement process in transportation decisions is the incorporation of citizen input into decision making. Providing the public the opportunity to voice its opinion on toll increases is important, and the ideas, preferences, and recommendations contributed by the public should be documented and seriously considered by decision makers. Additionally, federal regulations require that MPOs demonstrate explicit consideration and response to public input received during the transportation planning process. Final toll-setting decisions should be communicated to the public with a description of how public input was considered and used. According to the Transportation Research Board, a decision-making process that has public involvement inputs but no clear effect on the outputs is not a successful program.\nOnly one of the four bi-state authorities created a summary of public input received during toll hearings and made it available to decision makers and the public. The PANYNJ provided a report to its commissioners summarizing the oral comments received at each of its ten public hearings, as well as written comments submitted, and made a transcript of each hearing publicly available on its website. After receiving public comment, the PANYNJ received a letter from the governors of New York and New Jersey voicing their disapproval of the initial increase, and modified its toll proposal to provide for more gradual toll increases over several years. The Mackinac Bridge Authority in Michigan also prepares a summary of public comments it receives at each hearing that categorizes responses according to those in favor of and opposed to the toll increase. This analysis distills the viewpoints of the public into a format that is readily useful to decision makers. Without evidence that decision-makers are considering the public’s input before voting, the public lacks an assurance that its participation affects the tolling decision.\nThe Transportation Research Board has found that ongoing two-way communication is essential to a good public involvement program and that successful strategies provide continuous opportunities for the public to learn about and engage in the process. Organizations that maintain an ongoing conversation with the public through the media, open houses, and outreach efforts may improve the public’s buy-in and understanding of toll increases and how revenues will be used. Officials from the Golden Gate Bridge, Highway and Transportation District reported that regardless of whether a toll increase is being considered, engaging with the media regularly to discuss maintenance and capital projects is important so that the public is continually aware of the needs of the Golden Gate Bridge and how toll revenue is being used. By engaging the public in an ongoing conversation on how toll revenues are put to use, bi-state authorities have an opportunity to make a more convincing and transparent case for their toll proposals to secure necessary revenues.", "", "The external oversight of the bi-state authorities has been limited as only one of the four bi-state authorities has been regularly audited by a state audit entity. Specifically, the Office of the New York State Comptroller has conducted three audits of the PANYNJ in the past 5 years. The New Jersey Office of the State Comptroller conducted an investigation of the DRPA at the request of the governors of New Jersey and Pennsylvania in 2010, and with the approval of the DRPA board. Neither the DRJTBC nor the DRBA has been subject to an audit by state audit entities in their respective states. New Jersey State Comptroller and New Jersey State Auditor officials stated that they have authority to audit the four state bi- state authorities, but have not prioritized further audits of the authorities due to limited staffing resources and competing demands, such as auditing state agencies that receive state funds.\nThe few audits conducted have identified areas of concern in two bi-state tolling authorities. For example, in its July 2011 report on the PANYNJ’s use of consulting, construction management, and other contracted services, the New York State Comptroller found that the PANYNJ lacked supporting documentation for 57 of the 75 contracts it reviewed, with a total value of $1.18 billion in contracts lacking justification that the services were needed. Although the New York State Comptroller made several recommendations to improve the transparency of PANYNJ contracting, the PANYNJ does not have the same requirements as New York state agencies to report its progress in implementing recommendations, and it has not done so for this audit. As a result, the status of any actions taken by the PANYNJ to address the New York State Comptroller’s recommendations is not publicly available. New York State Comptroller officials stated that in May 2013 it initiated a follow-up audit of the PANYNJ’s contracting procedures in which it will report on the status of any reforms taken by the PANYNJ.\nThe New Jersey State Comptroller’s investigation found that the DRPA did not follow its own policies for approving and monitoring economic development projects and raised questions as to whether selected projects were properly vetted. The report also found that insurance brokers in New Jersey and Pennsylvania shared more than $1.5 million in commissions from the purchase of DRPA insurance policies, regardless of whether the brokers actually placed the policies “or performed any service at all.” Although the sharing of insurance commissions is legal in New Jersey, the report noted that the practice was potentially wasteful of toll-payer funds. In response, the DRPA has adopted new competitive procurement policies to select insurance brokers to reduce the potential waste of toll-payer revenues. DRPA officials also reported that the board passed a resolution in August 2010 that prohibited the use of DRPA revenues for projects that are not directly connected to the assets under the board’s direct control; however, another resolution in December 2011 permitted the allocation of DRPA’s remaining economic development funds to complete seven economic development projects.\nThe authority of state audit agencies to oversee the bi-state authorities is in many cases unclear. Prior work by GAO and others has found that audit authorities should be clearly established to ensure that those authorities are widely understood by the agencies responsible for oversight and among the communities they oversee. However, differences in states’ laws and disagreements between the bi-state authorities and the state audit agencies have prompted questions about the authority of several states to provide oversight. Some of the states with bi-state tolling authorities have similar, but not identical legislation pertaining to their audit authorities, and some could not point to any concurring language in their state laws. For example, New Jersey State Comptroller officials stated that the office has standing authority to provide oversight of each of the bi-state tolling authorities under the New Jersey state law that enables it to audit New Jersey public agencies and independent state authorities. The New Jersey State Auditor—a separate office from the New Jersey State Comptroller—also reported that its office has standing authority to audit the four bi-state authorities under a separate New Jersey state law. Nonetheless, officials in both offices could not point to reciprocal legislation in Delaware and Pennsylvania establishing their authorities in those states.\nIn some cases, state audit agencies and bi-state authorities expressed disagreements over the extent of the state’s audit authority, or stated that audit authority was not established. Specifically, New Jersey State Auditor officials reported that the office attempted to initiate an audit of the DRJTBC in July 2013, but the DRJTBC rejected the request stating in a letter that the audit was not authorized by the DRJTBC interstate compact or by state laws in New Jersey and Pennsylvania. DRJTBC officials also stated that the New Jersey State Comptroller does not have standing audit authority. In addition, the Delaware Office of Auditor of Accounts reported that it does not have the authority to audit the DRBA, and the Pennsylvania Auditor General reported that it does not have the authority to audit the DRPA and the DRJTBC. The DRBA and the DRPA took no position as to whether New Jersey or the other states have standing audit authority. Appendix IV provides additional information about oversight authorities for the four bi-state authorities in the four states.\nIn addition to state audit agencies, other state agencies may also have limited authority to review the activities of bi-state authorities. In one case we found that these limits posed risks to the accountability of federal transportation programs because the federal government lacked assurance that credits claimed by New Jersey to waive federal-aid matching fund requirements were in fact eligible and accurate. Under the federal-aid highway program, which provides about $40 billion annually to states to build and improve highways and bridges, states are typically required to provide a 20-percent funding match. However, a state may receive “toll credits” to reduce its matching requirement if it can demonstrate that toll revenues were spent on facility improvements and met other requirements. According to FHWA officials, from fiscal year 2008 through 2011, FHWA approved over $334 million in federal toll credits from the four bi-state tolling authorities. New Jersey applied these toll credits and others earned from other tolling authorities in the state to eliminate the state’s entire required match for highway and transit projects from fiscal year 2008 through 2011. FHWA officials in New Jersey stated that they rely on the state to self-certify the accuracy and eligibility of its own toll credits. However, New Jersey Department of Transportation (NJDOT) officials stated that NJDOT does not request or review underlying project documentation, such as contract awards or project schedules, from the bi-state authorities to support their eligibility certifications. NJDOT officials stated that they would have authority to conduct audits and spot checks of the bi-state authorities but they could not provide any documentation to that effect. The officials also stated that NJDOT has never conducted an audit or spot-check of any of the bi-state authorities’ expenditures to confirm their eligibility for toll credits. As a result of states’ limited oversight of bi-state tolling authorities, FHWA lacks assurance that the states are able to fully verify the information collected from the bi-state authorities before it is provided to FHWA for approval.\nOfficials from certain bi-state tolling authorities told us that the states exercise oversight through the governor’s veto of the voting decisions of the commissioners from that state. This veto authority may provide an important check and balance on the boards’ decisions with regard to the governors’ priorities. However, such a veto power is limited to the voting decisions of the board and does not provide the public insight into the internal activities of the bi-state authorities that would otherwise be provided by an independent auditor. Moreover, this veto power is not always available to both governors. Specifically, according to DRJTBC and DRPA officials, the governor of Pennsylvania does not have veto authority over the DRJTBC or the DRPA because its state legislature has not provided that authority in state law. According to the New Jersey Governor’s office, New Jersey state law provides that the New Jersey Governor may veto actions of DRJTBC commissioners representing that state; however, that authority has not been exercised because substantially similar legislation has not been passed in Pennsylvania. DRJTBC reported that the New Jersey Governor may not unilaterally enforce its veto authority without reciprocal legislation enacted in Pennsylvania, as well as an act of Congress to amend the compact. In contrast, New Jersey and New York governors both have veto authority over the PANYNJ, and New Jersey and Delaware governors have veto authority over the DRBA.", "Each of the four interstate bi-state tolling authorities has established internal oversight mechanisms with responsibilities that vary based on the size and complexity of the organization. The four bi-state tolling authorities each have an audit committee comprised of board commissioners that is charged with activities such as overseeing the auditing and financial reporting processes of the authority, coordinating external financial or management audits, and directing the activities of internal audit departments, if applicable. For example, every 2 years DRPA’s audit committee selects an independent firm to conduct a management performance audit of DRPA business activities, which is intended to enhance transparency and enable the DRPA to more quickly identify issues that require the attention of the board and management. DRJTBC officials reported that the audit committee coordinates the annual audit of its financial statements and directs the auditors to perform stress tests of various functional areas, including management controls.\nIn addition to the activities of the audit committees, the two largest authorities, the PANYNJ and the DRPA, have also established separate inspectors general and internal audit departments that conduct their own performance and financial audits and respond to public or internal allegations of waste, fraud, and abuse. In general, internal audit entities are organizations that are accountable to senior management and those charged with governance of the audited entity. Internal audit entities typically follow audit procedures and practices based on the standards established by the Institute of Internal Auditors, and they are generally not subject to the standards that guide federal or state external auditors or inspectors general. For example, they do not generally report the results of their work to the public, Congress, or to their state’s legislature. However, like external audit agencies, internal audit entities are expected to be free from impairments to their independence and must avoid the appearance of any impairment to independence to meet professional auditing standards.\nAlthough auditor independence is required by professional internal auditing standards, the DRPA has yet to establish clear access authorities for its inspector general. As a result, the DRPA office of inspector general lacks an assurance of independence. DRPA officials reported that the DRPA inspector general’s office was established in 2012 in response to a 2010 bill introduced in the House of Representatives that called for Congress to withdraw its consent from DRPA’s interstate compact if certain reforms, including creating the position, were not made. However, the DRPA resolution establishing the inspector general did not establish authorities for it to access DRPA records and personnel, and according to DRPA officials, such written authorities did not exist at the time of our review. The DRPA inspector general reported that he had drafted standard operating procedures for his office based on standards for state or local inspectors general, which included audit authorities and oversight responsibilities, and submitted those procedures to DRPA’s audit committee for its review. Although the DRPA inspector general maintains that he does not need the board’s approval for these standard operating procedures, the inspector general reported that members of the DRPA board attempted to weaken the authorities, including inserting a provision to require that the inspector general report any potential criminal activity to DRPA management rather than directly to legal authorities. The DRPA inspector general reported that he would not abide by this provision if enacted by the DRPA board. We requested from DRPA a copy of the standard operating procedures prepared by the inspector general; however, DRPA officials stated that these procedures have not been approved by the board and did not make them available for our review. As a result, we were unable to verify whether the authorities pursued by the DRPA inspector general were sufficient to enable the office to independently conduct its oversight responsibilities. In addition, the DRPA and PANYNJ declined our request to meet independently with officials from their respective inspectors general and internal audit departments without DRPA and PANYNJ management officials present.\nBy design, internal audit entities do not generally publically report their findings, and thus the public is usually not aware of the accountability efforts taken by these entities. For example, in 2011 the PANYNJ’s internal audit department office completed 271 audits of PANYNJ activities and reported $12.9 million in estimated savings as a result of its audits. However, the PANYNJ audit department does not publically report findings. While the PANYNJ provided us with summaries of several audit reports, it declined our request to provide selected full audit reports for our review. DRPA’s inspector general reported that it has conducted several audits and investigations and has released one report to the public. Although the Institute of Internal Auditors standards do not require internal audit departments to report audit results to the public, by not doing so, the public may be unaware of the efforts taken by bi-state authorities to safeguard toll payer revenues and improve management performance and operations.", "Congress has given wide latitude to four states to address infrastructure needs in the Northeast by consenting to the creation of bi-state tolling authorities that operate some of the most highly traveled interstate crossings in the United States. These public authorities have broad authority to manage their operations without the same constraints, requirements, and oversight to which state and federal agencies are subject. Because these authorities are neither federal nor state entities, and because GAO does not make recommendations to non-federal entities, we are not making any recommendations in this report. The bi- state tolling authorities have recognized that the traveling public pays for these facilities, and that they must be accountable to the public. However, issues of transparency and accountability could undermine the authorities’ ability to win the public’s support and secure necessary toll revenues. As such, states have both the incentive and the opportunity to enhance the transparency and accountability of the bi-state tolling authorities.\nSpecifically, the bi-state tolling authorities would benefit from clear and consistent requirements for public involvement in decision-making to ensure a documented process for public involvement and meaningful and sufficient opportunities for the public to comment, among other measures. In addition, the states have the incentive to work together to clarify the lines of external oversight over the bi-state tolling authorities, so that each state’s audit entity has sufficient standing authority and access to conduct audits and investigations of the operations of the bi-state tolling authorities. Furthermore, the internal audit entities of the bi-state tolling authorities are uniquely positioned to provide ongoing oversight and accountability. The DRPA established its inspector general in response to congressional concerns, and has the opportunity to more fully address those concerns by assuring the independence of its inspector general by establishing clear authorities for it to perform its work.", "We submitted a draft of this report to the DOT and the four bi-state tolling authorities for review and comment. The DOT and the DRPA had no comments on the draft. We received technical comments from the DRBA, the DRJTBC, and the PANYNJ, and we incorporated those comments as appropriate. We also provided sections of the draft report relating to the external oversight of the bi-state tolling authorities to state audit agencies in Delaware, New Jersey, New York, and Pennsylvania and received technical comments, which we incorporated as appropriate.\nIn addition to providing technical comments, the PANYNJ disagreed with our finding that it did not have a documented and structured public involvement process for setting tolls. The PANYNJ stated that its policy of providing 10-days advance notice before convening toll hearings and providing the public with the amount and purpose of proposed toll rates constituted a documented public involvement process. According to the PANYNJ, this policy was established in 1977 through a resolution passed by its board of commissioners. However, PANYNJ board resolutions and its other rules and regulations are generally not available to the public. Consequently, at the time of the September 2011 toll increase, the public lacked the information needed to understand the PANYNJ’s public involvement policy, and whether the PANYNJ was following that policy and making its toll-setting decisions in a predictable framework. In June 2012, the PANYNJ incorporated its 1977 policy into its publicly available by-laws. While this policy will be in effect for future toll increases, we do not believe that it can be considered a defined and structured process for involving the public in key decisions because, as stated in our report, the policy does not specify the number of toll hearings, the amount of time to be made available for the public to comment, and how the authority will utilize public comments. The PANYNJ also disagreed with our finding that it did not offer the public sufficient opportunities to comment during its most recent toll increase, and stated that as a matter of practice, it has held multiple toll hearings in both states prior to toll increases. Our draft report recognized that the PANYNJ held 10 hearings in various locations for its proposed 2011 toll increase, including an online forum. However, because those hearings were held in a single day—and only 3 days prior to the board of commissioners’ vote to approve toll increases—we believe that the accelerated schedule did not provide sufficient, convenient and accessible opportunities for the public to comment on the proposal.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to congressional committees with responsibilities for surface transportation issues and the Secretary of Transportation. In addition, this report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-2834 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff that made significant contributions to this report are listed in appendix V.", "Our three objectives were to assess: (1) the authority of bi-state tolling authorities to set and use tolls and the factors that influence toll setting, (2) the extent to which bi-state tolling authorities involve and inform the public in their toll-setting decisions, and (3) the extent to which bi-state tolling authorities are subject to external and internal oversight.\nTo assess the authority of bi-state tolling authorities to set and use tolls and the factors that influence toll setting, we reviewed the interstate compacts of the four bi-state tolling authorities: the Port Authority of New York and New Jersey (PANYNJ), the Delaware River Port Authority (DRPA), the Delaware River and Bay Authority (DRBA), and the Delaware River Joint Toll Bridge Commission (DRJTBC). We also interviewed bi-state tolling authority officials for their perspectives of the key drivers that influence their tolling decisions. We corroborated testimonial evidence by (1) reviewing of the bi-state tolling authorities’ most recent financial statements and annual reports, as well as recent official statements and related documentation provided by the bi-state tolling authorities; and (2) by interviewing credit rating agency officials and reviewing information that evaluates the financial standing of the bi-state tolling authorities. To assess the purposes for which toll revenues can be used, we reviewed the interstate compact agreements, including any amendments, and interviewed authority officials on their permitted use of toll revenues. We reviewed the allowable uses for toll revenues, but due to ongoing litigation between the PANYNJ and the American Automobile Association regarding recent toll increases by the PANYNJ, we did not assess the specific purposes and projects for which the PANYNJ uses its toll revenues. For consistency, we did not assess the specific purposes and projects for which the other bi-state authorities use their toll revenues. To determine the extent to which bi-state tolling authorities are influenced by the federal requirement that tolls be just and reasonable, we interviewed bi-state tolling authority officials and reviewed the federal “just and reasonable” standard for evaluating toll increases, in section 508 of title 33, U.S. Code and conducted a legal review of how this standard has been interpreted and enforced by federal courts and federal agencies. The results of our legal review are provided in appendix II.\nTo assess the extent to which the bi-state tolling authorities involve and inform the public in their toll-setting decisions, we interviewed officials from each of the bi-state authorities regarding their efforts to involve the public in recent toll increases. We also reviewed documentation on each authority’s most recent toll increase—such as public notices, newspaper articles, meeting minutes, board resolutions, and official statements—as provided by the authorities and collected from their public websites. We also examined the bi-state authorities’ interstate compacts and bylaws to determine whether their policies for public involvement met several practices that incorporate federal and state requirements for involving the public, as well as practices used by other tolling authorities. These practices include: (1) establishing a documented process for public involvement, (2) requiring sufficient opportunities for public comment, (3) providing key information to the public, and (4) summarizing public comments. We selected these practices through analysis of federal requirements for public participation by metropolitan planning organizations, state laws for public involvement in tolling decisions, guidance on involving the public in transportation decisions from the Transportation Research Board, and our previous work on designing user fees. We also interviewed officials from five bridge toll authorities in California and Michigan that were not created by interstate compacts regarding their efforts to involve and inform the public in recent toll-setting decisions. We selected these authorities because they manage and operate tolled bridges that are similar in scale to the bi-state authorities, have similar governance structures, and recently implemented a toll increase.\nTo assess the extent to which bi-state tolling authorities are subject to external and internal oversight, we reviewed available audit reports and interviewed and collected information from the state audit agencies of each of the four charter states in our review (New Jersey, New York, Pennsylvania, and Delaware) and from the audit organizations within the bi-state tolling authorities. To assess external oversight, we reviewed the results of recent audits and investigations of the bi-state tolling authorities, including an investigation of DRPA completed by the New Jersey Office of the State Comptroller in 2012, and several audits of the PANYNJ conducted by the Office of the New York State Comptroller. We also reviewed relevant state laws in New Jersey, New York, and Pennsylvania regarding the oversight of the bi-state tolling authorities in those states and we interviewed officials with the New Jersey Office of the State Comptroller, the New Jersey State Auditor, the Office of the New York State Comptroller, the Pennsylvania Department of the Auditor General, and the Delaware Office of Auditor of Accounts in order to describe statutory audit authorities pertaining to the bi-state tolling authorities. Because this is a discussion of state law, we are not providing an independent analysis as to whether these laws establish audit authority over the bi-state authorities. To assess the internal oversight of the bi-state authorities, we collected information on the internal audit mechanisms in place in each of the bi-state tolling authorities and we interviewed the officials from the offices of the inspector general within the PANYNJ and DRPA. We compared the external oversight structure with GAO’s Government Auditing Standards and other relevant GAO work on oversight of non-federal entities, and we compared the activities of the internal audit entities with the International Standards for the Professional Practice of Internal Auditing published by the Institute of Internal Auditors and related GAO work on internal auditing.\nWe conducted this performance audit from July 2012 through August 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "In order to describe the current federal oversight environment, we provide this summary of the development of the just and reasonable standard for setting tolls on bridges, of significant federal administrative and court decisions interpreting it, and of whether courts have found there is a private right of action to enforce it. In addition, we discuss several cases challenging toll increases brought under the Commerce Clause of the U.S. Constitution. As detailed below, the federal standard for the setting of bridge tolls by states—that tolls be “just and reasonable”—was established in federal law in 1906. While the standard has remained unchanged to the present day, the federal government no longer has an oversight role in its implementation. The Secretary of War initially had responsibility for enforcing the standard, and this responsibility was transferred to the Secretary of Transportation in 1968, where it remained until the Department of Transportation’s (DOT) oversight authority was repealed in 1987. Since that time, a handful of lawsuits have been filed in the federal courts in effect seeking to enforce the just and reasonable standard. Rather than addressing what that standard means, however, most of these cases have grappled with who has the right to enforce it, that is, whether the statute creates a “private right of action” for private individuals or entities to bring suit to enforce the standard. The U.S. Court of Appeals for the Third Circuit has ruled that the statute does not provide a private right of action. The U.S. Court of Appeals for the Second Circuit has issued a ruling applying the “just and reasonable” standard, but did not address whether a private right of action to enforce the standard exists. Lower federal courts have not formally decided the issue but have discussed it generally. A few of these courts also analyzed a challenge to a toll increase using a Constitutional “dormant commerce clause analysis,” which focuses on whether state taxation discriminates against or unduly burdens interstate commerce and thereby impedes free private trade in the national marketplace. These cases are discussed in more detail below.", "“f tolls shall be charged for the transit over any bridge constructed under the provisions of said sections,…such tolls shall be reasonable and just and the Secretary of War may, at any time, and from time to time prescribe the reasonable rates of tolls for such transit over such bridge…”\nIt was not until 1926 that informal congressional guidance specified what was entailed in the “reasonable and just” standard. As articulated by key House and Senate members, the standard meant that tolls for bridges should be limited to those necessary to provide a fund sufficient to pay for the cost of maintaining, repairing and operating the bridge, and to provide a sinking fund to amortize the cost of the bridge, including reasonable interest and financing costs, as soon as possible under reasonable charges. After the sinking fund had been provided, the bridge was to be operated toll-free or with tolls adjusted so as not to exceed its operating and maintenance costs. It would take another 20 years before these principles were put into legislation under the General Bridge Act of 1946 (1946 Act).\nThe Secretary of War issued very few decisions during the period he was responsible for overseeing and enforcing the 1906 and 1946 Acts. However, one of the more significant cases involved a complainant who argued that it was unjust and unreasonable to divert automobile users’ tolls for the purpose of paying the costs of port development and improvements. The Secretary ruled against the complainant saying that because Congress had approved the bi-state compact establishing the Delaware River Port Authority, which authorized the Authority to pool revenues from all of its income-producing activities, and authorized the expenditure of revenues so pooled for port development and port promotion purposes, the Authority’s decision to use toll revenues for those purposes was within its sound managerial discretion. Hence, the Secretary determined, the higher tolls could not be said to be unjust or unreasonable simply because they contributed to financing operations that did not directly benefit highway users.\nThe duties for administering the 1906 and 1946 Acts were transferred to the Secretary of Transportation by the Department of Transportation Act of 1966. In addition, the Secretary was given jurisdiction over international bridges in the International Bridge Act of 1972 (1972 Act). The 1972 Act also included a “just and reasonable” clause where tolls could be collected for amortization of the construction or acquisition costs of the bridge, including interest and financing costs, and for earning a reasonable return on invested capital.", "From 1970 until 1987, the Federal Highway Administration (FHWA) Administrator, to whom the Secretary of Transportation delegated his toll- oversight authority, determined whether bridge toll increases were “just and reasonable” under the 1906, 1946, and 1972 Acts. The first significant case in which a court reviewed FHWA’s determinations occurred in 1973. The U.S. Court of Appeals for the Eighth Circuit, in the Burlington v. Turner case, reviewed a decision of the Federal Highway Administrator that the toll structure set by the City of Burlington, Iowa for its toll bridge over the Mississippi River was unjust and unreasonable under the 1906 Act. The court found that toll rates for the Macarthur Bridge between Iowa and Illinois should be limited to an amount sufficient to pay the reasonable cost of maintaining, repairing and operating the bridge and its approaches under economical management; to provide a sinking fund for amortization of the bridge indebtedness; and to provide a reasonable return on invested capital. In 1974, the year after the Burlington decision, the FHWA administrator, in the Keokuk Bridge Tolls case, applied the principles of the Burlington case and found that an 8 percent rate of return with added operating and maintenance expenses was reasonable. However, because half of the toll revenues went to municipal programs and projects unrelated to the bridge, the Administrator determined that the rates were not reasonable and just. Then in 1979, the U.S. Court of Appeals for the Second Circuit, in Automobile Club of New York v. FHWA, 592 F. 2d 658 (2d Cir. 1979), upheld the decision of the FHWA Administrator and a lower court allowing inclusion of complementary capital improvements to highways or transit systems in the rate base for setting tolls for bridges for the Port Authority of New York and New Jersey (PANYNJ).", "The Surface Transportation and Uniform Relocation Act Assistance Act of 1987 (1987 Act) repealed DOT’s authority to review bridge toll increases, but maintained the requirement that tolls on bridges constructed under the authority of the 1906, 1946 and 1972 Acts must be “just and reasonable.” The 1987 Act also repealed the 1946 Act’s express limitation of the use of toll revenues to specific bridge-related purposes such as maintaining, repairing, and operating a bridge. Since DOT’s authority for reviewing bridge toll increases was repealed in 1987, the federal courts have become the sole forum for challenges to tolls both under the statutory “just and reasonable” standard of the 1987 Act as well as under the Commerce Clause of the U.S. Constitution. A handful of federal court cases have applied the “just and reasonable” standard and addressed whether private parties can bring suit to enforce it. As summarized below, courts in different circuits have reached different conclusions or expressed different views regarding whether private parties have the right to raise such challenges in court under the “just and reasonable” standard. This has not been an issue for those cases brought under the Commerce Clause. (1) Automobile Club of New York, Inc. v. Port Authority of New York and New Jersey, 887 F. 2d 417 (2d Cir. 1989) – The central issue of this case was whether it was “just and reasonable” for the PANYNJ to include losses from the Port Authority Trans-Hudson (PATH) Railroad in the Port Authority’s rate base for determining the tolls to be charged for passage over the bridges owned by the PANYNJ between New York and New Jersey. The plaintiffs contended that that the bridge toll increases violated both the statutory “just and reasonable” standard in the 1987 Act and the Constitution’s Commerce Clause. The federal district court dismissed the “unjust and unreasonable” argument, finding that the statutory standard had sufficient “flexibility” to allow inclusion of functionally-related but non- bridge (PATH) costs in the PANYNJ’s rate base. The court also rejected the argument that including non-bridge costs in setting bridge tolls imposed an excessive and unconstitutional burden on interstate commerce, Applying a three-part test previously established by the Supreme Court, the lower court found that (1) the challenged state action regulated evenhandedly, with only “incidental” effects on interstate commerce; (2) the state action served a legitimate local purpose; and (3) there were no alternative means to promote this local purpose that would not also affect interstate commerce. On appeal, the Second Circuit, in a 2-1 decision, upheld the lower court’s ruling that PATH was sufficiently related to the PANYNJ’s bridges and tunnels to warrant its inclusion in the rate base on which “just and reasonable” bridge tolls were based. The Commerce Clause challenge was not raised on appeal. Neither the district court nor the Court of Appeals, however, explicitly addressed the issue of whether the 1987 Act creates a private right of action. (2) Wallach v. Brezenoff, 930 F. 2d 1070 (3d Cir. 1991) – In this case, New Jersey citizens brought suit against the PANYNJ challenging toll increases both under the “just and reasonable” standard found in the 1987 Act and the Commerce Clause. At the district court level, the court granted the PANYNJ’s motion for summary judgment and the plaintiffs appealed solely based on the Commerce Clause issues. The Third Circuit court rejected the appeal by pointing to the reasons given by the district court in Automobile Club of New York, Inc. v. Port. Auth. of New York and New Jersey, 706 F. Supp. 264 (S.D.N.Y. 1989), i.e., that (1) the challenged state action regulated evenhandedly, with only “incidental” effects on interstate commerce; (2) the state action served a legitimate local purpose; and (3) there were no alternative means to promote this local purpose that would not also affect interstate commerce. (3) Molinari v. New York Triborough Bridge and Tunnel Authority, 838 F.Supp. 718 (E.D.N.Y. 1993) – The plaintiffs in Molinari brought suit against the New York Triborough Bridge and Tunnel Authority, challenging the 1989 and 1993 toll increases on the Verrazano-Narrows Bridge. They maintained that the tolls were “unjust and unreasonable” within the meaning of the 1987 Act solely because they were used to subsidize the mass transportation components of the Metropolitan Transportation Authority. The district court granted the Authority’s motion for summary judgment, finding that “plaintiffs have failed to create even a triable issue of fact on their claim that the challenged toll increases on the Verrazano-Narrows Bridge are unjust and unreasonable.” “f a bridge toll generates more revenue than necessary to provide a fair profit or rate of return,” the court continued, “the toll may not be challenged successfully if it is used to support a single integrated transportation system in which the successful operation of the bridge is dependent in whole or in part on the operation of the other related facilities.” The court also raised serious questions regarding whether a private right of action exists under the 1987 Act, finding that not only does the statute not explicitly create such a right, it also lacks the kind of “right- or duty- creating language” that has generally been the most accurate indicator of the propriety of implication of a cause of action.” Finally, the court noted that the “Supreme Court has . . . been ‘especially reluctant to imply causes of action under statutes that create duties on the part of persons for the benefit of the public at large” and that there was a compelling case to be made that a private right of action should not be implied. (4) American Trucking Association v. Delaware River Joint Toll Bridge Commission, 458 F.3d 291 (3d Cir. 2006) – In this case, the U.S. Court of Appeals for the Third Circuit found that the 1987 Act’s “just and reasonable” provision did not create a private right of action for truck drivers to challenge the reasonableness of tolls on bi-state bridges operated by the Delaware River Joint Toll Bridge Commission. The court ruled that the statute contained no language that might suggest a congressional desire to allow a private suit to enforce the “just and reasonable” provision. In the absence of explicit language conferring a private right of action, the court addressed whether a private right of action could be implied under the Supreme Court’s four-factor test in Cort v. Ash: (1) does the statute create a federal right in favor of the particular plaintiff?; (2) is there any indication of legislative intent either to create such a remedy or to deny one?; (3) is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the particular plaintiff?; and (4) is the cause of action one traditionally relegated to state law so that it would be inappropriate to infer a cause of action based solely on federal law? Under the Supreme Court’s first factor, the Third Circuit found that the 1987 Act was designed to benefit the public at large, not truckers specifically. Under the second factor, the Third Circuit found legislative history on both sides of the issue and thus no clear expression of legislative intent that a private right of action was supported. This was sufficient for the court to find that there was no private right of action under the 1987 Act. The Court noted, as an aside, that the truckers had not raised any constitutional challenge in this case. (5) Auto Club of New York, Inc. v. Port Authority of New York and New Jersey, 842 F. Supp. 2d 672 (S.D.N.Y. 2012) – In this case, the Auto Clubs of New York and New Jersey (together AAA) sought to halt toll increases proposed by the PANYNJ for its bridges and tunnels, arguing that they violated the Constitution’s Commerce Clause and the just and reasonable standard of the 1987 Act. In particular, AAA argued that 2011 toll increases on PANYNJ bridges and tunnels which were earmarked to fund cost overruns in the PANYNJ’s real estate development at the World Trade Center violated the statutory “just and reasonable” standard because the increases were not functionally related to the PANYNJ’s integrated, interdependent transportation network and so should not have been included in the rate base. AAA also claimed the toll increases were unreasonable under the Constitution’s so-called dormant Commerce Clause because the tolls were not “based on a fair approximation of…use” of the bridges and tunnels and are “excessive in relation to the benefits conferred” on the users. AAA sought to stop the toll increases both temporarily—on an emergency basis—and permanently.\nThe district court rejected AAA’s request for immediate relief to stop the toll increases, finding that AAA did not show, as required, that it would likely win the case when all the facts are heard (the case is still ongoing). The court stated that it did not need to reach the question of whether AAA had a private right of action under the 1987 Act. It did, however, raise questions about the Third Circuit’s reasoning in the American Trucking case (discussed above) saying that it “leaves no means of enforcement , making the words ‘just and reasonable’ mere surplusage and conflicting with the text and structure of the rest of the act.” The district court also questioned American Trucking’s suggestion that “the state political process could be the venue that Congress had in mind for the airing of toll grievances” since one state’s legislature cannot unilaterally modify tolls on a bi-state bridge without impinging on the rights of the other state’s citizens in violation of the Commerce Clause. Further, the district court questioned the American Trucking court’s use of legislative history to justify its decision, since it “waived away Committee reports from two earlier (but unpassed) versions of the Highway Act containing similar ‘just and reasonable’ language, reports which stated that ‘the Committee has created a basis for which a user may commence a suit in Federal Court’ upon belief ‘that actions of a toll authority are not just and reasonable.’”\nThe parties agreed that a 3-prong test applied by the Supreme Court in 1994 was applicable to determine the reasonableness of fees for the use of state-provided facilities by those engaged in interstate commerce. Under this test, a fee is reasonable, and thus constitutionally permissible, “if it (1) is based on some fair approximation of the use of the facilities, (2) is not excessive in relation to the benefits conferred, and (3) does not discriminate against interstate commerce.” Applying this test, the district court found that AAA failed to show it likely will succeed on either on its Commerce Clause claim or its claim under the Highway Act, even assuming a private right of action exists under the 1987 Act.", "", "", "Officials from the New Jersey Office of the State Comptroller stated that, the office, established in 2007, has standing oversight authority over DRBA—and the three other bi-state authorities—under the New Jersey state law that enables it to audit and investigate New Jersey “public agencies” and “independent state authorities.” However, it has not been firmly established in state law or state judicial cases that these bi-state authorities are considered “public agencies” or “independent state authorities” for the purposes of this law. The New Jersey State Auditor—a separate agency from the New Jersey Office of the State Comptroller— also reported that it has authority to audit the four bi-state tolling authorities under a New Jersey state law that provides for a performance audit of “any independent authority, or any public entity or grantee that receives state funds.” However, the New Jersey State Auditor also stated that receiving state funds is not necessarily a precondition for its audit authority over DRBA or any of the bi-state tolling authorities. Nonetheless, officials with the New Jersey Office of the State Comptroller and the New Jersey State Auditor were unaware of reciprocal legislation in Delaware recognizing their offices’ audit authority over DRBA. The Delaware Office of the Auditor of Accounts stated that it does not have audit authority over DRBA because it is not a state agency and does not receive state funds. Neither New Jersey nor Delaware has audited DRBA. DRBA officials took no position as to whether either state had standing audit authority, but stated that DRBA would entertain a request for audit if contacted by either state auditor. Although the New Jersey Office of the State Comptroller has not been refused access by any of these entities there remains an open question as to the applicability of these provisions to these bi-state authorities.", "As with the other three bi-state authorities, New Jersey Office of the State Comptroller officials reported that they have standing oversight of DRJTBC under New Jersey state law. However, DRJTBC officials reported that the New Jersey Office of the State Comptroller does not have authority to audit or investigate DRJTBC because its audit authority is limited to entities within its state and does not extend to bi-state authorities. The New Jersey Office of the State Comptroller has not audited the DRJTBC, and it could not point to reciprocal legislation in Pennsylvania recognizing the New Jersey State Comptroller’s audit authority. The Pennsylvania Department of the Auditor General reported that under Pennsylvania state law, the DRJTBC must submit biennially to a performance audit jointly conducted by the Auditor General of Pennsylvania and the State Auditor of New Jersey with a report to be issued every odd-numbered year. The first report was to be completed by December 31, 1997. Similar legislation was passed in New Jersey that would require the Pennsylvania Auditor General and the New Jersey State Auditor to jointly conduct annual financial and management audits. However, an official of Pennsylvania’s Department of the Auditor General reported there is a conflict between the two states’ laws with regard to the joint authority and audit schedule, and that this conflict needs to be resolved in order for the audit authority to be clear. DRJTBC officials stated that neither state’s laws amended DRJTBC’s interstate compact because the laws were not identical and the two separate requirements for annual and biennial audits and different work products cannot be reconciled, and any amendments to the compact would require an act of Congress. As such, DRJTBC reported that neither New Jersey nor Pennsylvania state audit entities have authority to audit or investigate DRJTBC. The Pennsylvania Department of the Auditor General and the New Jersey State Auditor officials stated that none of the annual or biennial audits of DRJTBC cited in the state laws have been conducted by their offices either separately or jointly. During the course of our review, New Jersey State Auditor officials reported that its office sent the DRJTBC a letter to initiate an audit in July 2013, but DRJTBC rejected the request stating in a letter that the audit was not authorized by the DRJTBC interstate compact or by state laws in New Jersey and Pennsylvania. This disagreement between the DRJTBC and the State Auditor of New Jersey was yet to be resolved at the time of our report.", "According to officials from Pennsylvania’s Department of the Auditor General, it does not have the authority to audit or investigate DRPA because DRPA is an independent authority and not a state agency. A Pennsylvania Department of the Auditor General official also stated that because the Auditor General holds a standing, ex officio position as a voting member of the DRPA’s Board of Commissioners, he or she cannot use his office to audit or investigate the DRPA, and has not conducted any audits of DRPA. According to New Jersey Office of the State Comptroller officials, the comptroller has standing oversight authority over DRPA, and exercised that authority in its 2012 investigative report. However, this investigation was conducted in response to the request of the governors of both states and with the approval of the DRPA board. Furthermore, New Jersey State Comptroller officials could not point to any reciprocal legislation in Pennsylvania recognizing standing authority to conduct future audits of DRPA. DRPA officials took no position as to whether New Jersey or Pennsylvania have standing audit authority and that any decision as to whether to adhere to any state audit requests would be a matter for its board to decide.", "Officials with the Office of the New York State Comptroller and the New Jersey Office of the State Comptroller officials stated that their offices have audit authority over the PANYNJ. The PANYNJ confirmed this audit authority; and while the Office of the New York State Comptroller has conducted several audits, the New Jersey Office of the State Comptroller has yet to do so. However, because the access authorities claimed by the New Jersey Office of the State Comptroller over PANYNJ in its enabling legislation differ from the access authorities recognized by the PANYNJ, it is unclear what specific authorities would be available to the New Jersey Office of the State Comptroller if it attempted to conduct an audit of PANYNJ. Furthermore, according to officials with the Office of the New York State Comptroller, the PANYNJ does not have the same requirements as New York state agencies to report its progress in implementing recommendations to the Office of the New York State Comptroller.", "", "", "In addition to the contact named above, Steve Cohen, Assistant Director; Matt Barranca; Melissa Bodeau; Mya Dinh; Dave Hooper; Joah Iannotta; Hannah Laufe; Josh Ormond; and Justin Reed made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2, 2, 1, 1, 2, 2, 2, 2, 1, 2, 2 ], "alignment": [ "", "h0_full h2_title", "h2_full", "h0_full", "h0_full", "h1_full", "", "h1_full", "", "", "", "h2_full", "h2_full", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What authority do bi-state tolling authorities possess?", "What factors affect how tolls are set?", "To what extent does the statute requiring tolls to be \"just and reasonable\" affect tolling decisions?", "What policies must bi-state tolling authorities follow regarding transparency?", "To what extent are bi-state tolling authorities transparent about toll increases?", "How do the actions of the bi-state polling authorities compare to federal and state requirements?", "How was the creation of bi-state tolling authorities authorized?", "Why have bi-state tolling authorities come under scrutiny in recent years?", "What did GAO examine in this review?", "How did GAO collect data for this review?", "Why didn't GAO provide recommendations?", "How did stakeholders respond to the review?", "What is GAO's stance on these responses?" ], "summary": [ "Bi-state tolling authorities have broad authority to set toll rates and use revenues for a range of purposes, including maintaining, repairing, and improving their infrastructure.", "In setting tolls, bi-state tolling authorities are primarily influenced by debt obligations and maintain specific operating revenues to repay their debt.", "A federal statute requiring bridge tolls to be \"just and reasonable\" has less influence on tolling decisions, in part, because no federal agency has authority to enforce the standard.", "Bi-state tolling authorities are not required to follow federal or general state requirements for involving and informing the public; they set their own policies that can be less stringent than practices of transportation agencies that follow federal or state requirements.", "In their most recent toll increases, the bi-state authorities generally provided the public limited opportunities to learn about and comment on proposed toll rates before they were approved. For example, one bistate authority did not hold any public toll hearings, while another provided one day for hearings.", "In contrast to federal and general state requirements and leading practices, the bi-state authorities did not in all cases (1) have documented public involvement procedures for toll setting; (2) provide the public with key information on the toll proposals in advance of public hearings; (3) offer the public sufficient opportunities to comment on toll proposals; and (4) provide a public summary of comments received before toll increases were approved.", "The Northeast is home to some of the most highly traveled interstate crossings in the United States, funded by toll revenues collected from the traveling public. Since 1921, Congress has provided its consent to New York, New Jersey, Pennsylvania, and Delaware to enter into legal agreements known as interstate compacts, establishing four bi-state tolling authorities to build and maintain toll bridges and tunnels.", "In recent years, bi-state tolling authorities have come under scrutiny for toll increases and other concerns, and GAO was asked to review their toll-setting decisions and oversight framework.", "GAO examined: (1) the authority of bistate tolling authorities to set and use tolls and the factors that influence toll setting; (2) the extent to which the authorities involve and inform the public in toll-setting decisions; and (3) the extent to which the authorities are subject to external and internal oversight.", "GAO reviewed federal and state laws, bi-state tolling authority documents, and interviewed officials from the authorities and state audit offices.", "GAO does not make recommendations to non-federal entities; nonetheless the authorities could benefit from greater transparency in public involvement and clearer lines of external oversight.", "DOT had no comments on a draft of this report and three authorities provided technical comments, which GAO incorporated as appropriate. In addition, the Port Authority of New York and New Jersey disagreed, stating its policies constituted a documented public involvement process.", "GAO maintains that these policies were not publicly available, or a defined and structured process." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 1, -1, 0, -1, 2, 2, 2, 5 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 0, 0, 0, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Participants in MAP and FMD Have Remained Relatively Consistent in Recent Years", "Program Participants Have Conducted a Variety of Activities to Promote Their Products Overseas", "MAP and FMD Program Participants and Expenditures Remained Generally Consistent in Program Years 2007 through 2011", "Matching Contributions for MAP and FMD Met or Exceeded Minimum Contribution Requirements in 2011", "FAS Uses Management Processes to Reduce Duplication Risks, but Some Participants’ Annual Progress Reports Have Not Identified Assessment Methodologies", "FAS Established Integrated Management Processes to Reduce Risks of Duplication among Market Development Programs", "FAS Monitors Participants’ Expenses for All Programs through Its Compliance Review Process", "Selected MAP and FMD Progress Reports Generally Reflected FAS Requirements and Key Attributes of Successful Performance Measurement, but Some Reports Did Not Identify Assessment Methodology as Required", "FAS Requires MAP and FMD Participants to Conduct Comprehensive Evaluations When Appropriate", "FAS Cost-Benefit Analysis Asserts That MAP and FMD Benefit U.S. Economy, but Methodological Limitations May Affect the Magnitude of Estimated Benefits", "FAS-Commissioned Cost- Benefit Analysis Asserted Benefits of Market Development Programs", "Economic Models Used to Estimate MAP’s and FMD’s Benefits Have Limitations That May Affect Estimates’ Accuracy", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: USDA Market Development Program Recipients and Award Amounts in Fiscal Year 2012", "Appendix III: Expenditures in 2011 for the Emerging Markets Program, Quality Samples Program, and Technical Assistance for Specialty Crops Program", "Appendix IV: Cost-Benefit Analyses Assert That Several Market Failures Justify FAS Programs", "Appendix V: Computable General Equilibrium Model", "Appendix VI: Comments from the U.S. Department of Agriculture", "Appendix VII: GAO Contacts and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "FAS administers USDA’s five market development programs on behalf of the Commodity Credit Corporation, which is owned and operated by the U.S. government. The programs provide matching funds to support U.S. industry efforts to build, maintain, and expand commercial overseas markets for U.S. agricultural products, with the overarching goal of increasing agricultural exports. Congress authorizes a maximum level of the corporation’s funds to be used for USDA’s market development programs, with the exception of QSP, through 5-year farm bills. (Table 1 shows authorizations for the five programs for fiscal years 2002 through 2012.) Many other countries also provide government funding to promote agricultural exports that compete with U.S exports in the world market. The World Trade Organization does not consider such expenditures to be trade distorting and therefore does not restrict these expenditures, according to USDA officials.\nParticipants in these programs include nonprofit agricultural trade associations; agricultural cooperatives that promote their own brand name; and state regional trade groups. The majority of market development funds are used for promotion of generic U.S. commodities, with no emphasis on a particular brand; however a portion of MAP funds may be used for promotion of branded products. When considering applications for funding, FAS gives priority to applicants with the broadest producer representation and affiliated industry participation of the commodity being promoted. Appendix II shows participants in the five market development programs in fiscal year 2012 and their award amounts. These organizations may participate in more than one of the five market development programs.\nAfter approving an application for participation in a market development program, FAS sets the participant’s funding level and signs a program agreement with the participant. FAS provides a program approval letter, which outlines approved activities and their budget levels, and program funds are expended through reimbursement of the participant’s expense claims for approved activities. The five programs have different requirements related to participants’ matching contributions, which FAS refers to as “cost-sharing”; these requirements ensure that program funds are supplemental. MAP requires participants that receive funding for promotion of generic products to make contributions to the program that are worth at least 10 percent of the funding they receive, although FAS encourages participants to commit in their program applications to contributing more than the minimum required. Eligible contributions include cash; the cost of acquiring materials; and in-kind contributions, such as professional staff time spent on design and execution of activities. The MAP branded products program and FMD require participants to make a minimum contribution of 50 percent. EMP, TASC, and QSP do not require minimum or maximum contributions, but applicants are expected to propose the amount they will contribute. For all five programs, the contribution levels that participants commit to is an important factor FAS considers in approving applications for funding, according to FAS officials. In addition, MAP and FMD participants must certify that program funds supplement, and do not supplant, any private funds, while applications for the other three programs must state why the applicants could not achieve their objectives without government funds.\nIn addition to having different contribution requirements, the five market development programs have different funding levels, objectives, and criteria for approving applications for funding.\nMarket Access Program. MAP is the largest of the five programs, with a current annual authorization of $200 million—about 80 percent of USDA’s total annual market development funding. In fiscal year 2012, 66 program participants received MAP awards, which ranged from about $17,000 to almost $20 million (see app. II). MAP was established in 1985 to aid in the development, expansion, and maintenance of foreign markets for U.S. agricultural commodities and products by sharing the costs of overseas marketing and promotional activities. A portion of MAP funds is used for promotion of brand- name products by cooperatives or by small, for-profit businesses that apply through state regional trade groups or other MAP participants. In addition, unlike participants in the MAP generic products program, small businesses promoting branded products are subject to a “graduation requirement,” which limits them to no more than 5 years of promotions in a given country. The MAP regulations for market development for generic and branded products identify eligible expenditures and criteria that FAS is to consider in approving applications and determining funding levels. Eligible expenditures include, among others, advertising, point-of-sale materials, in-store and food service promotions and product demonstrations, seminars and educational training, participation in trade shows, market research, and independent evaluations and audits. The process for approving applications for MAP funding involves applying a variety of qualitative criteria, including the adequacy of the applicant’s plan for addressing market constraints and opportunities, prior export promotion experience, past program results, and the suitability of the applicant’s plan for performance measurement. The MAP regulations also list quantitative criteria for determining award amounts for qualified applicants, including the size of the budget request relative to the projected value of exports of the commodity being promoted, the size of the budget request relative to the actual value of exports of the commodity in prior years, and the applicant’s proposed contribution level.\nForeign Market Development Program. FMD, which was established in 1954, provides $34.5 million per year to nonprofit agricultural associations representing U.S. agricultural producers and processors, to create, expand, and maintain long-term export markets primarily for generic bulk commodities. In fiscal year 2012, 24 FMD participants received award amounts ranging from about $16,000 to more than $5 million (see app. II). FMD allows many of the same expenditures as MAP, such as market research and product demonstrations; however, unlike MAP, FMD funds may not be used for activities targeted directly at consumers. The qualitative criteria for approving applications for participation in FMD and the quantitative factors for determining award amounts are also similar to those for MAP. Examples of these quantitative factors include the applicant’s contribution level and the value of exports being promoted.\nEmerging Markets Program. EMP, which was established in 1990, provides up to $10 million annually to U.S private-sector, university, or government entities for technical assistance activities intended to promote exports of U.S. agricultural commodities and products in emerging markets by improving their food and business systems and reducing potential trade barriers. In 2012, FAS awarded EMP funds to 35 entities, some of which received funding for more than one EMP project, with total awards per participant ranging from $14,000 to about $500,000 (see app. II). Types of projects funded may include feasibility studies, market research, sector assessments, orientation visits, specialized training, business workshops, and similar undertakings. EMP is not intended for projects targeted at end-user consumers. Ineligible expenses include branded product promotions (e.g., in-store promotions, restaurant advertising, labeling); advertising, administrative, and operational expenses for trade shows; website development; equipment purchases; and the preparation and printing of brochures, flyers, and posters. The EMP regulations list the criteria FAS is to consider in reviewing applications for funding. Among these criteria are the applicant’s willingness to contribute resources; the degree to which the proposed project is likely to contribute to the development, maintenance, or expansion of U.S. agricultural exports to emerging markets; and a demonstration of how the proposed project will benefit a particular industry as a whole. Individual projects are unlikely to be approved at levels above $500,000, and funding for continuing and substantially similar projects is generally limited to 3 years.\nQuality Samples Program. QSP, which was established in 1999, currently provides $2 million annually to assist U.S. organizations in supplying commodity samples to potential foreign importers. Projects focus on industry and manufacturing, rather than on end-use consumers, and are intended to promote U.S. food and fiber products. In fiscal year 2012, 12 program participants received QSP funding, in most cases for multiple projects, with total awards per participant ranging from $5,000 to $460,000 (see app. II). QSP funding for individual projects is limited to $75,000, and the projects should be completed within a year of approval by FAS. Eligible expenditures include the sample purchase price and the cost of transporting the samples domestically to the port of export and from there to the foreign port or point-of-entry. Samples provided in a QSP project may not be directly used as part of a retail promotion or supplied directly to consumers. The annual QSP Notice of Funds Availability spells out the criteria that FAS is to use for approving applications for QSP funding. These criteria include, among others, the potential for expanding commercial sales in the proposed market; the importer’s contribution in terms of handling and processing the sample; the amount of funding requested and the applicant’s willingness to contribute resources; and how well the proposal’s technical assistance will demonstrate the intended end-use benefit.\nTechnical Assistance for Specialty Crops Program. TASC, which was established in 2002, is currently authorized under the 2008 farm bill, as extended by the American Tax Payer Relief Act of 2012, to provide a maximum of $9 million to U.S. entities, for projects that address sanitary, phytosanitary, and technical barriers that prohibit or limit U.S. specialty crop exports. Any U.S. organization may receive TASC funding, including, but not limited to, U.S. government and state government agencies, nonprofit trade associations, universities, agricultural cooperatives, and private businesses. In 2012, FAS awarded funds to 24 participants, some of whom received funding for multiple projects, and total funding awarded to each participant ranged from about $1.3 million to $14,000 (see app. II). FAS will not consider proposals for TASC funding that exceed $500,000 in a given year. Examples of eligible expenditures include seminars and workshops, study tours, field surveys, development of pest lists, and pest and disease research. Certain types of expenses are not eligible for reimbursement, such as the costs of market research, advertising, and other promotional expenses. The TASC regulations list a variety of criteria that FAS is to consider in evaluating applications for funding, including, among others, the viability and completeness of the proposal, the potential trade impact of the project on issues such as market retention, and the cost and level of contributions from the applicant.", "Participants in USDA’s market development programs use program funds to support a variety of activities intended to raise awareness or acceptance of U.S. agricultural products in overseas markets. MAP and FMD participants, their share of program expenditures, and the countries where they spent the majority of program funds remained relatively consistent from 2007 through 2011. Unlike funds for the other programs, a portion of MAP funds is used for promotion of branded products. In 2011, MAP participants spent about 85 percent of program funding on overseas promotion of generic commodities; more than 600 small companies and seven agricultural cooperatives spent the remaining 15 percent of MAP funding to promote branded products. MAP and FMD participants met or exceeded those programs’ requirements for minimum matching contributions. Appendix III shows EMP, QSP, and TASC participant expenditures in 2011.", "Market development program participants have used program funds to conduct a variety of activities intended to raise awareness or acceptance of U.S. agricultural products in overseas markets. Participants have also used program funds to address technical barriers that prohibit or limit specialty crop exports. Many program participants receive funding from more than one of the five market development programs. For instance, in fiscal year 2012, 22 of the 66 MAP participants received funds from FMD, and 22 of the 24 FMD participants received funds from MAP. In addition, all 12 QSP participants, 6 of the 24 TASC participants, and 18 of the 35 EMP participants received funds from at least one other program (see app. II for additional details). The following paragraphs present examples of five participants’ use of 2011 program funds for market development efforts in Japan and Mexico. Common activities undertaken included, among others, market research, consumer and retail promotion, participation in international trade shows, and reverse trade missions, in which foreign buyers visit U.S. agricultural producers.\nThe American Hardwood Export Council used more than $1.7 million in 2011 MAP and FMD funds for multiple generic product promotional efforts in Japan. According to a council representative, consumers in Japan value wood products from trees that are harvested legally and sustainably, which provides a marketing advantage for American hardwood compared with woods from tropical competitors. We visited furniture stores in Japan displaying the American Hardwood Export Council’s informational handouts, which highlight the sustainability and legality of American hardwoods used in the furniture. The council’s efforts in Japan also include educating designers and architects about the environmental advantage—that is, the smaller carbon “footprint”—of sustainable wood products compared with synthetic material. The council also conducts educational efforts aimed at explaining to Japanese furniture and flooring manufacturers, designers, and architects that discoloration and curving grains are wood characteristics rather than imperfections, because, according to a council representative, straight wood grain has traditionally been favored in Japan.\nCalifornia Table Grape Commission used about $271,000 in 2011 MAP funds for generic product promotional activities in Mexico. Commission representatives informed us that in-store promotional activities are the most effective means of reaching the customer. Promotional activities include in-store grape display competitions as well as promotions with other U.S. fruit groups, such as apples and pears. The commission also used MAP funding to conduct in-store grape sampling demonstrations at major retail chains throughout Mexico to demonstrate the quality of California grapes. In 2010 and 2011, FAS authorized the commission to use TASC funds for activities to remove, resolve, or mitigate sanitary, phytosanitary, and related barriers that prohibit or threaten the export of U.S. specialty crops in multiple countries. In 2011, the commission received an allocation of more than $363,000 for a multiyear TASC project to conduct research and provide the ancillary staffing and supplies needed to identify postharvest treatment protocols to eliminate invasive pests in U.S. grape exports.\nCotton Council International used more than $2.7 million in MAP and FMD funds in 2011 for generic product promotion activities in Japan. These activities—such as educating Japanese consumers about the benefits and unique characteristics of cotton versus other fibers and conducting advertising, public relations, and promotions—were intended to increase consumer preference for cotton and retailer demand for fabrics made from U.S. cotton. According to representatives from Cotton Council International, increasing demand for clothing made with U.S. cotton in a large consumer market, such as Japan, also increases exports of cotton fiber to other countries that manufacture cotton garments for sale to retail buyers in Japan.\nThe Western United States Agricultural Trade Association (WUSATA) provided a total of about $926,000 in MAP funds for market development activities in Japan and Mexico in 2011. WUSATA, which is one of four state regional trade groups with responsibility for supporting MAP branded product promotion for small businesses, directed more than half of this funding to 34 small businesses to support their branded product promotions in Japan and Mexico. WUSATA allocates the majority of its annual MAP funds to more than 200 small businesses and cooperatives based in 13 western states, according to WUSATA officials. WUSATA also uses some of its MAP funds for generic product promotion, primarily for participation in numerous international trade shows and for inbound and outbound trade missions. In addition, WUSATA devotes some MAP funding for generic product promotion and outreach efforts to small businesses to encourage them to consider exporting their products and use assistance from the MAP program. WUSATA officials noted that many businesses are unaware of their products’ overseas market potential.\nThe Wine Institute used more than $106,000 in 2011 MAP funds for generic product promotional activities in Mexico. In Mexico, we observed a Wine Institute-sponsored promotional event in Mexico City to facilitate trade contacts between California wine label representatives and Mexican wine importers. The event was intended to generate publicity for California wines and increase consumer awareness. In Japan, where consumers are most familiar with European wines, the Wine Institute worked with restaurants to promote California wines, according to a Wine Institute representative. The Wine Institute uses some of its MAP funding to support branded product promotion by small businesses. In 2011, the Wine Institute also received a $500,000 TASC allocation for a 5-year project to prepare and file petitions to the Japanese government to allow the sale of U.S. wines containing certain additives that are commonly used by U.S. producers.", "MAP and FMD participants and their share of market development program expenditures remained relatively consistent from 2007 through 2011, with many of the same participants receiving the majority of funding each year. Expenditures by the 10 participants that spent the largest amounts of funding from the two programs in 2011 represented 54 to 57 percent of those programs’ total expenditures in 2007 through 2011 (see table 2). According to FAS officials, these 10 participants also reflect the top 10 U.S. exports of agricultural products in 2011, although not in the same rank order. An FAS official noted that MAP and FMD typically provide ongoing support for program participants that seek not only to open new overseas markets but also to maintain export market share. These participants typically receive funding every year. According to FAS officials, although a variety of both qualitative and quantitative factors affect the level of funding provided to participants each year, FAS seeks to provide a stable level of funding to support participants’ multiyear market development strategies.\nOur analysis of expenditure data from 2002 through 2011 shows that MAP and FMD participants spent market development funds throughout the world, consistently spending more than half of the funds in the same 10 countries. (Table 3 shows MAP and FMD expenditures in these countries in 2011.) The expenditures in these 10 countries accounted for 66 percent, on average, of total MAP and FMD expenditures from 2002 through 2011. According to an FAS official, participants are encouraged to direct program funds to markets where they will have the greatest impact on increasing exports. This official noted that, although participants use MAP and FMD funds in a variety of export markets, the majority of their funds are expended in countries with the largest export markets for U.S. agricultural products.\nIn 2011, about 15 percent of total MAP expenditures were used to promote branded products. The four state regional trade groups and five of the agricultural trade associations in the MAP program allocated a portion of their MAP funding to small businesses to promote branded products in foreign markets. Specifically, these groups allocated a total of more than $22.8 million in MAP funds for branded product promotions in 2011 to 644 small businesses. These small businesses’ average expenditure in 2011 was about $25,000 and their median expenditure was $33,000. Small businesses use MAP funding for a variety of activities, including participation in trade shows, buying missions, advertising, and in-store demonstrations and promotions. In addition, seven agricultural cooperatives—Sunkist Growers, Inc.; Blue Diamond Growers; Sunsweet Growers, Inc.; Sun-Maid Growers of California; Welch Foods, Inc.; Ocean Spray Cranberries, Inc.; and Cal-Pure Pistachios, Inc.—spent about $6.4 million in 2011 to promote their own brands. According to FAS officials, cooperatives’ activities to promote their products using a brand name are often similar to the activities of trade associations promoting generic commodities. Table 4 shows the 16 organizations that participated in the MAP branded products program in 2011, the portions of their total MAP expenditures that were used for promotions of branded products, and the numbers of small businesses that the participants’ MAP branded products program expenditures supported.\nFrom 2002 through 2011, a total of 2,131 unique small businesses received funding for promotional activities through the MAP branded products program. Many of the small businesses participated in the MAP branded products program for multiple years. Of the 2,131 businesses, 41 percent were involved in the branded products program for 1 year, and 59 percent were involved for more than a year. In 2011, 153 small businesses expended MAP branded program funds for the first time. The MAP branded products program had, on average, about 638 unique small businesses per year and supported activities throughout the world. The largest expenditures of program funding for MAP branded products were directed to 8 of the 10 countries with the largest expenditures of total MAP and FMD funding, shown in table 3.\nFrom 2002 through 2011, small businesses in the MAP branded products program reached the 5-year limit for promoting a product in a given country—known as the program’s “graduation requirement”—in 1,121 instances. These instances involved 569 businesses in about 80 countries. During this period, 64 businesses used MAP branded products program funding for more than 5 years in a given country in 82 instances. According to FAS, participation in certain international trade shows is exempt from the graduation requirement for the MAP branded products program.", "In 2011, all MAP and FMD participants met or exceeded the programs’ required minimum matching contribution levels. The average contribution level for MAP participants was about 191 percent of MAP expenditures in 2011, and the median contribution level was about 134 percent.The majority of these participants contributed more than 100 percent of their total expenditures. The average contribution level for all FMD participants in 2011 was 316 percent, and the median was 232 percent. Nearly all FMD participants provided matching cash and in-kind contributions of more than 100 percent of total expenditures.\nSince 2002, MAP participants’ total contributions have ranged from 138 percent to 198 percent of their total MAP expenditures, and FMD participants’ total contributions have ranged from 123 percent to 192 percent of their total FMD expenditures. Table 5 compares MAP and FMD participants’ contributions and expenditures in 2002 through 2011.", "FAS has established processes to reduce risks of duplication among the five market development programs, to monitor participant expenditures, and to assess program results. FAS’s integrated approach includes a unified database and application process to help mitigate risks of duplication. In addition, FAS works with participants in the MAP branded products program to ensure that the small businesses they support are not receiving funds for similar activities from more than one source; our review of 2011 data found no small businesses receiving funds from multiple sources. FAS also conducts regular compliance reviews to verify participants’ program expenditures and contributions. FAS guidelines require program participants to submit annual progress reports assessing results for each country where they conduct market development activities. In the progress reports that we reviewed, program participants’ performance measures generally reflected requirements in FAS guidelines as well as key attributes of successful performance measurement that we identified in previous GAO reports. However, 149 of the 373 performance measures in the reports that we reviewed did not clearly identify, as the FAS guidelines require, the methodologies used to assess results for each performance measure, making it difficult to verify the reported results. FAS guidelines also require MAP and FMD participants to conduct comprehensive evaluations of their program- funded market development activities when appropriate.", "FAS integrates its management processes to reduce the risk of duplication among the market development programs, given that many participants receive funding from more than one program. Because MAP and FMD support many of the same goals and allowable expenses and most FMD participants also participate in MAP, the greatest risk of duplication is between these two programs. To reduce this risk, FAS uses an integrated online system, known as the Unified Export Strategy (UES) system, which participants typically use to apply for funding for any of the five market development programs. For example, a participant seeking funding for both FMD and MAP submits a single application through the UES system, explaining how it intends to use both programs to support its foreign market development objectives. FAS’s review of these funding applications allows it to prevent duplicative programming, according to FAS officials. FAS officials also noted that only expenses for pre- approved activities may be reimbursed and that the UES system associates each approved activity with the particular program for which it was approved. In addition, FAS agricultural attachés based in overseas posts review and comment on the portions of participants’ applications that apply to their countries and regions. This provides an additional layer of review that helps prevent duplicative programming, according to FAS officials.\nFAS also takes steps to ensure that small businesses participating in the MAP branded program do not obtain funding from more than one source—such as two state regional trade groups—for promotion in the same country. To prevent such duplicative funding, FAS requires that the four state regional trade groups provide the names of all businesses and products participating in their branded promotion programs each year. According to an FAS official, FAS also participates in regular conference calls with the four state regional trade groups, during which they compare lists of small businesses applying for branded products program funding. In addition, FAS circulates a memo annually to the four groups, stating that businesses that promote certain product types should seek funding from specific commodity groups before applying for funds from the state regional trade groups. For example, FAS’s memo in 2012 stated that small businesses promoting dairy, livestock, meat, poultry, seafood, and egg products should be referred first to the applicable commodity groups before applying for funding from a state regional trade group. In reviewing expenditure data for MAP branded product promotions for the 2011 program year, we found no instances in which small businesses obtained funding from multiple sources to promote the same products in the same countries.", "FAS performs financial and compliance reviews to verify that participants claimed reimbursement for expenses appropriately, and it holds participants accountable for maintaining proper documentation of all of their reimbursement claims. According to an FAS official, FAS’s independent Compliance Review Branch has a staff of eight officers, including the branch chief, who periodically visit participant sites to verify that all expenses submitted for reimbursement are authorized, reasonable, and documented. These compliance reviews cover all market development programs in which the participant was involved, enabling the compliance officers to verify that all reimbursement claims were paid for pre-approved expenses for each program. The reviews also verify that participants’ reported contributions are properly documented, are based on allowable expenses, and match the amounts that the participants committed to in their market development program applications. In addition, the compliance officers verify that participants that spent $500,000 or more of federal funds from one or more sources in a single year have been audited in accordance with Office of Management and Budget Circular A-133. Our review of FAS documentation for five program participants showed that FAS conducted compliance reviews of these participants between May 2011 and March 2012.\nAccording to the Compliance Review Branch Chief, compliance officers typically conduct these reviews every 3 years for the smaller participants and verify 100 percent of those participants’ expenses. Compliance officers conduct reviews more frequently for the larger participants because of the volume of reimbursement claims involved, and they may review only a sample of those participants’ expenses. Participants must return to FAS any reimbursements for claims found not to be allowable. The Compliance Review Branch Chief stated that, although participants have the right to a hearing to contest compliance review results, they generally repay the rejected claims under an agreed timeframe. The Chief also noted that, because participants typically apply for future funding from the programs, they have an incentive to comply with FAS requirements.", "The performance measures in the progress reports that we reviewed generally met criteria based on FAS guidance for progress reports and key attributes of successful performance measures that we previously identified. However, some participants’ annual progress reports did not identify the approaches and information sources used to assess activity results for each performance measure, as FAS guidelines require. FAS guidelines require MAP and FMD participants to submit, within 6 months after the program year ends, annual country progress reports identifying market challenges, describing activities over the past year, and stating measureable goals and results of their performance. These reports enable the participants and FAS to assess the participants’ progress in achieving their stated goals each year. In addition, FAS considers participants’ progress reports when reviewing their MAP and FMD funding applications for subsequent years.\nFAS guidelines require, among other things, that MAP and FMD participants’ annual progress reports contain the following elements to demonstrate how their market development activities are relevant and their impact is measured. The reports should identify “constraints”—that is, obstacles to achieving stated objectives—and “opportunities,” which participants can utilize to achieve their objectives in the markets where they operate. The reports should also provide the performance measures that will be used to assess each activity’s impact on these constraints and opportunities. (See the text box for an example, from FAS guidelines, of a constraint and its related performance measures.) Further, the reports should show, for each performance measure, an associated baseline measure, a stated goal for the given year, and a result. Finally, the reports should identify the methodology that will be used to assess progress toward the goal associated with each performance measure.\nFAS Example of a Constraint and Associated Performance Measures for a Hypothetical Seafood Group Constraint: new products for , and their availability and characteristics…are not known by the three major retailers. Also, are not aware of their potential consumer interest in these species and how they can increase their profits by introducing them.\nPerformance measures associated with the constraint:\nNumber of retailers carrying targeted regional U.S. products on a\nNumber of new products sampled by targeted retailers\nNumber of products carried on a regular basis by targeted retailers FAS staff in Washington, D.C., and at applicable overseas posts review participants’ annual progress reports as part of the annual application review, according to FAS officials and participant representatives. FAS staff provide feedback to participants about their reports both informally, through e-mail and telephone, and formally, through feedback letters. For example, one feedback letter from FAS that we reviewed instructed the participant to express its objectives more concisely and to develop performance measures that track the desired outcome rather than the participant’s activities. FAS officials noted that their reviews of funding applications consider whether participants adjusted their market development strategies on the basis of results they reported for the previous year. Two Agricultural Trade Officers told us that, in addition to reviewing the reports, they have provided participants support and feedback regarding the identification of constraints and opportunities and development of performance measures.\nFAS also provides training to help participants identify constraints and opportunities and develop performance measures that meet FAS’s requirements. According to FAS officials, biannual conferences of program participants generally include workshops on program evaluation, which in the past have emphasized developing meaningful performance measures. One of the Agricultural Trade Officers whom we interviewed reported having conducted a workshop that reviewed the UES process and discussed key definitions and criteria for identifying constraints and opportunities and for developing performance measures.\nThe country progress reports that we reviewed generally complied with criteria based on selected FAS guidelines for preparing progress reports and key attributes of successful performance measurement that we had previously identified. In general, the 56 reports by MAP and FMD participants that we reviewed met five of six criteria we used for our analysis. However, 149 of the 373 performance measures in the sampled reports (40 percent) did not identify the methodologies used to assess results, as FAS guidelines require. Following are details of our analysis of the performance measures in the progress reports we reviewed, using these six criteria. 1. Constraint or opportunity has at least one outcome measure. For each constraint or opportunity shown in a progress report, FAS guidelines require that at least one performance measure be outcome oriented rather than output oriented. FAS describes an outcome as showing changed behavior, with an emphasis on what was achieved and how participant activities have affected attitudes and consumer habits in the targeted market. In contrast, FAS defines an output as showing what was done at the activity level (e.g., two seminars conducted, newsletter sent to 1,000 addressees). The progress reports that we reviewed used both outcome and output measures to determine the impact of activities and to address the identified constraints and opportunities. At least one outcome measure was associated with 105 of the 115 constraints and opportunities in the sample (91 percent), and outcome measures constituted 260 of the 378 performance measures (69 percent). 2. Performance measure is clear. We assessed the clarity of the performance measures. Specifically, we assessed whether the measure’s name and definition were clearly stated and consistent with the numerical goal used to calculate it—a key attribute for successful performance measures that we previously identified. We found that 356 of the 378 performance measures (94 percent) in the progress reports that we reviewed met this criterion. 3. Performance measure is aligned with related constraint or opportunity. To ensure alignment of performance measures with the constraints or opportunities they address, FAS guidelines state that each measure must directly affect the related constraint or opportunity, must reflect the scope of activity and progress in the market, and must be within the ability of the participants to influence. In the progress reports that we reviewed, 330 of the 378 performance measures (87 percent) were aligned with the related constraint or opportunity, and 110 of the 118 constraints and opportunities had at least one aligned performance measure associated with it. However, 58 (13 percent) of the performance measures were not aligned with a constraint or opportunity, indicating a risk that those participants might measure incorrectly, or fail to measure, the impact of their activities. 4. Performance measure is quantifiable. FAS guidelines require that each performance measure be quantifiable. All 378 (100 percent) of the measures in the sample of progress reports we reviewed were quantifiable, with numerical values. When a goal is measurable, FAS is better able to assess whether the participant’s performance is meeting expectations. 5. Performance measure has associated baselines. FAS guidelines state that each performance measure should have an associated baseline. We found that 359 of the 375 measures in our sample (96 percent) had associated baselines, indicating that they were based on an initial market review and that the performance measures were consistent from year to year. However, we also found that the baselines did not appear to inform the goals for subsequent years. For example, one participant had a baseline of 105 buyer/seller introductions but set a goal of 35 for the following year. The result for that year—164—not only exceeded the baseline but also exceeded the goal by more than 468 percent, calling into question whether the baseline was appropriate for the performance measure. 6. Performance measure has an identified methodology. FAS guidelines for reviewing country progress reports state that the reports must identify the methodologies used to assess results for each performance measure. The reports that we reviewed identified a methodology—that is, an information source, an approach for assessing results, or both—for 224 of the 373 performance measures (60 percent). For example, one progress report identified “esults gathered from consumer surveys during in-store promotions” as the information source and the approach used to assess results of activities intended to increase consumer awareness. Another report identified the information source and the approach as “2009 results based on 334 informal customer surveys conducted throughout the year” and explained how certain results were averaged to provide aggregated numbers. For the 149 performance measures with no identified methodology (40 percent), it would be difficult for FAS to determine the reliability of the reported results.\nTable 6 summarizes the results of our analysis of the sample of country progress reports that we reviewed.\nIn addition, a comparison of participants’ measurable goals and reported results in the progress reports that we reviewed showed that those participants met or exceeded a combined total of 222 of 357 (62 percent) of their goals. However, the extent to which participants met the goals varied widely; some participants exceeded a goal by more than 1,000 percent, while others attained less than 10 percent of the goal. FAS guidance requires that participants monitor their progress relative to their stated goals but has not established requirements for whether, when, or how participants should meet their goals. According to FAS officials, narratives in the progress reports should address whether and why actual results did or did not meet goals and what changes are needed to address any disparities. FAS officials noted that if an FAS marketing specialist reviewing a funding application notices wide discrepancies between the participant’s goals and results for the previous year, the specialist will collaborate with the participant to identify lessons that can be learned and will look for corresponding changes in the participant’s strategy for the coming year.", "FAS requires that program participants conduct evaluations of their program activities when appropriate or required by FAS. Current MAP regulation defines a program evaluation as a review of the participant’s entire program or an appropriate portion of the program as agreed to by the participant and FAS. These reviews can range from external, third- party evaluations, such as cost-benefit analyses, to participants’ internal reevaluations of their approaches to market development activities. FAS officials reported that they received a combined total of 71 third-party program evaluations from 43 participants in 2010 and 2011. Additionally, eight of 10 U.S. agricultural export promotion groups surveyed by an industry contractor reported that they conducted country, regional, or global evaluations during the last 3 years.\nBecause the program evaluations are conducted on a case-by-case basis and may cover only a portion of a participant’s market development activities (e.g., market development efforts in 1 of 20 countries where a participant conducts its activities), it is difficult to determine what portion of all market development efforts are assessed through these evaluations. One FAS contractor who had previously conducted third- party evaluations for MAP and FMD participants told us that factors such as the size of the participants and the value the participant places on monitoring and evaluation affected the frequency, depth, and usefulness of evaluations that his firm had conducted.", "A 2007 cost-benefit analysis of MAP and FMD, commissioned by FAS, found that the programs increased U.S. agricultural exports and benefitted the U.S. economy. Overall, the study asserted that the government’s expenditures for the two programs had resulted in greater increases in U.S. agricultural exports and greater benefit to the U.S. economy than would have occurred without the expenditures. However, the study’s two econometric models estimating the programs’ benefits have methodological limitations that may affect the accuracy of the estimates. First, the model used to estimate changes in market share omitted important variables, and, second, a sensitivity analysis of key assumptions was not conducted for that and another model that the study used. FAS officials reported that they plan to commission a new cost- benefit analysis in 2014 but indicated that they have not yet identified the methodologies that the new analysis will use.", "The 2007 cost-benefit analysis, conducted by Global Insight, Inc., found that MAP and FMD had positive effects on agricultural export activities. The study also asserted that without public-sector funding, the private sector would under invest in agricultural market development, negatively affecting the U.S. economy—an outcome known as market failure. The study used data from fiscal years 2002 through 2006 to estimate the economic effects of FAS’s program expenditures under the 2002 farm bill and of FAS’s possible expenditures under a hypothetical 2007 farm bill. Following are key estimates from the 2007 study.\nThe study estimated that the increased market promotion and development funding authorized for MAP and FMD in the 2002 farm bill—almost doubling from roughly $125 million in fiscal year 2001, before the bill’s enactment, to approximately $234 million in fiscal year 2006—raised the U.S. share of global agricultural exports from 18 percent to 19 percent, equivalent to a $3.8 billion increase in trade. The study estimated that as a result, economic welfare increased by $828 million.\nThe study estimated that if annual MAP and FMD spending under the hypothetical 2007 farm bill in fiscal years 2007 through 2015 were equivalent to spending under the 2002 farm bill in fiscal year 2006, the U.S. share of global agricultural exports would rise from 19 percent in 2007 to 20.9 percent in 2015—equal to $84 billion in U.S. exports in 2015. If spending under the hypothetical 2007 farm bill increased by 50 percent over the 2006 level, U.S. exports would increase to $86.4 billion in 2015 and economic welfare would increase by $740 million. On the other hand, the study suggested that if the hypothetical bill did not authorize funding for the two programs, U.S. exports would grow to $75.5 billion by 2015 and economic welfare would decrease by $1.1 billion.\nThe study found that market development promotions for certain U.S. high-value commodities have a positive effect—known as a spillover effect—on exports of other U.S. high-value commodities.\nThe study estimated that every dollar spent for agricultural market development under the 2002 farm bill increased economic welfare by $5.20; under the hypothetical 2007 bill, every dollar would increase economic welfare by $4.10. In contrast, eliminating the funding would reduce economic welfare by $4.30 per eliminated dollar, resulting in a $1.1 billion loss to the U.S. economy.", "Two models that Global Insight used to estimate the effects of MAP and FMD on the U.S. economy have methodological limitations that may affect the models’ ability to accurately estimate the programs’ benefits to the U.S. economy. As with any study using economic models, the lack of data forces researchers to make certain assumptions, and the resulting estimates are affected by the methodologies chosen and the assumptions used. In general, the 2007 study assumes that FAS program expenditures lead to an increase in private-sector expenditures. To estimate the economic effects of the program assistance, the 2007 study employed two economic models commonly used in cost-benefit analysis: (1) A market share model to estimate the effect of expenditures under the 2002 farm bill and the hypothetical 2007 farm bill on the U.S. agricultural market share of global markets and (2) a spillover effect model to estimate increases in U.S. agricultural exports due to promotions of other U.S. exported commodities. However, these models have limitations that may affect their ability to accurately estimate the economic benefits of MAP and FMD. FAS officials reported that they plan to commission a new cost-benefit analysis in fiscal year 2014, but they indicated that they have not yet identified the methodologies that the new study will use.\nTo examine the effect of the 2002 farm bill and the potential effect of the hypothetical 2007 farm bill, the 2007 study used a U.S. market share model to simulate the market share for U.S. high-value and bulk commodities in global markets from 1975 through 2004. However, the model has limitations related to its exclusion of important variables and its lack of a sensitivity analysis of key assumptions.\nThe 2007 study’s use of the market share model controlled for four variables across each year: (1) the U.S. market share in the previous year, (2) the currency exchange rate, (3) combined FAS program expenditures and participants’ contributions over time, and (4) a time trend to account for any omitted variables. However, the model excludes some variables that could be important for determining the U.S. market share—in particular, industry-specific variables such as commodity prices, production volumes, and number of export competitors. Although the study states that a linear trend variable is included as a proxy for missing variables in the model, this variable cannot be expected to capture the full effects of such industry-specific variables. By limiting the model to the four variables, the study may bias the effect of these variables by incorrectly identifying the magnitude of these variables and the statistical significance of their effect on U.S. market shares.\nThe 2007 study used the market share model to examine the possible effects of the hypothetical 2007 farm bill under three scenarios. 1. The first scenario assumed that FAS program expenditures and participant contributions would remain constant. On the basis of these assumptions, the study predicted that U.S. exports would increase from $65 billion in 2006 to $84 billion in 2015. 2. The second scenario assumed that FAS would increase program expenditures and that participants would increase their contributions gradually, spending 50 percent more by 2012 than in 2007. On the basis of these assumptions, the study predicted that U.S. exports would increase from $65 billion in 2006 to about $86 billion in 2015. 3. The third scenario assumed that FAS would immediately eliminate program expenditures in 2008 and that, as a result, participants would spend less of their own resources on market development, gradually decreasing their spending by 50 percent by 2012 compared with 2007. On the basis of these assumptions, the study predicted that U.S. exports would increase from $65 billion in 2006 to $75.5 billion in 2015.\nFollowing Office of Management and Budget guidelines for conducting a cost-benefit analysis, the study included a sensitivity analysis of the market share model’s predictions, assessing the level of confidence in the predictions with a 95 percent confidence interval. However, the study did not include a sensitivity analysis of the third scenario’s assumption regarding participants’ response to the elimination of FAS funding. In particular, the study did not examine the effects that a range of participants’ responses to the elimination of FAS funding would have on the U.S. market share. That is, the study did not consider whether participants’ market development spending would remain constant, would decrease at lower rates than the 50 percent that the study assumed, or would increase to the level of the eliminated FAS expenditures. Best practices for cost estimation dictate the inclusion of a sensitivity analysis to ascertain the effect of the assumption on the results. For a sensitivity analysis to reveal the effect of a changed assumption on a cost estimate, the analysis must examine the effect of changing one assumption while holding all other assumptions and variables constant. In addition, the study did not provide any insight or data to support the assumption that participants would reduce their spending if FAS program funding were eliminated.\nThe 2007 study used a spillover effect model to test the assumption that increasing the market promotion of one U.S. commodity has a positive effect on exports of other U.S. commodities. The study found that the effects of the relationships between commodity promotions and exports ranged from positive to negative and varied in magnitude but that, overall, the positive effects outweighed the negative effects. The model examined the relationship between U.S. market promotions and exports for four high-value products—almonds, apples, grapes, and wine—for the period 1985 through 2004. For example, increased U.S. promotion of almonds led to increased U.S. exports of grapes but to decreased exports of wine and had no effect on apple exports. Conversely, increased U.S. promotion of grapes led to decreased U.S. exports of almonds but to increased exports of apples and wine.\nAlthough the study estimated the size of the spillover effect, it did not include a sensitivity analysis of a key assumption used for this estimate. The study assumed that some type of market development as a result of U.S. market promotions occurs in 64 percent of all markets for U.S. exports. To estimate the spillover effect of FAS market promotions, the model used this assumption, unsupported by data or industry evidence, as well as the estimated effects of promotions of one commodity on the exported quantities of other commodities. According to the study, the spillover effect of FAS market promotions ranges from 24 percent to 54 percent of the total growth in overall market development. However, the study did not include a sensitivity analysis of the effect of changing the assumption that development occurs in 64 percent of markets as a result of U.S. market promotions. That is, the study did not examine the extent to which assuming a higher or lower percentage of market development would change the magnitude of the estimated spillover effect.", "For many years, MAP and FMD—the two programs that receive most of USDA’s market development funding—have provided continuing assistance to an established pool of agricultural trade associations, primarily to promote generic commodities overseas. FAS has developed a performance monitoring framework in which FMD and MAP participants are expected to develop measurable objectives—that is, constraints and opportunities—linked to performance measures that allow them to annually compare their results with established baselines and goals. Participants generally followed this framework successfully; however, many of the participants’ annual country progress reports that we reviewed did not identify, as FAS guidelines require, the methodologies used to assess results for each performance measure. These gaps limit FAS’s ability to determine the reliability of program results reported by participants and to accurately assess participants’ progress and success in achieving program objectives.\nThe 2007 cost-benefit analysis that FAS commissioned asserted that MAP and FMD have increased U.S. exports and benefited the U.S. economy. However, one econometric model that the study used to estimate the programs’ effects excluded variables that have significant impact on U.S. market shares. As a result, the model may bias the estimates of the variables that it included. In addition, because another model that the study used did not include a sensitivity analysis of certain assumptions, it is not possible to determine the degree to which those assumptions would affect the model’s results. For example, one scenario assumed that if FAS suddenly eliminated all MAP and FMD expenditures, participants would reduce their own spending on market development by 50 percent. However, the study does not examine the effects of participants’ other possible responses to the elimination of FAS expenditures, such as maintaining their spending or increasing it to compensate for the eliminated FAS funds. Accurate cost benefit analyses help decision makers determine how best to allocate program funding and provide a better picture of the potential effect on U.S. exports and the economy if funding is increased or decreased.", "We recommend that the Secretary of Agriculture direct FAS to take the following three actions: To improve MAP and FMD participants’ annual reporting of the results of their market development activities, use appropriate means to emphasize the importance of participants’ identifying the methodologies used to assess results for each performance measure in their annual country progress reports.\nTo improve the accuracy of future cost-benefit analyses of FAS’s market development programs, ensure that any econometric model used for the cost-benefit analysis, such as the market share model, includes industry- specific variables that could have a significant role in determining the U.S. market share—for example, commodity prices, production volumes, and number of export competitors; and conduct a sensitivity analysis, in accordance with best practices for cost estimates, of the key assumptions that are applied in any economic models used in the cost-benefit analysis, such as the market share model and spillover effect model.", "USDA provided written comments about a draft version of this report, concurring with our findings and recommendations (see app. VI for a copy of these comments). USDA also provided technical comments, which we incorporated as appropriate.\nAs agreed with your office, we plan no further distribution until 30 days from the report date. At that time, we will send a copy to USDA. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-4802 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made significant contributions to this report are listed in appendix VII.", "We were asked to review several aspects of the U.S. Department of Agriculture’s (USDA) five market development programs, which USDA’s Foreign Agriculture Service (FAS) administers. This report (1) describes participation and expenditures in these market development programs, particularly the Market Access Program (MAP) and Foreign Market Development Program (FMD); (2) examines FAS’s management and monitoring of its market development programs; and (3) assesses FAS’s cost-benefit analysis of MAP’s and FMD’s impact on the U.S. economy. Because MAP and FMD receive most of USDA’s market development funding, we focused our review primarily on program participation in those two programs.\nFor our first and second objectives, we selected five program participants as case studies: the American Hardwood Export Council, the California Table Grape Commission, the Wine Institute, Cotton Council International, and the Western United States Agricultural Trade Association. To select the four commodity group participants, we examined market development program expenditure data for 2002 through 2011. We chose participants that used more than one market development program and had spent a significant amount of their market development funds in the two countries—Japan and Mexico—that we selected for our review. The four groups consisted of at least one bulk commodity group, one nonfood commodity group, and one high-value commodity group, and one horticultural group. All four were MAP participants, and two were also FMD participants. In addition, we included one of four state regional trade groups in our sample, because these groups allocate the majority of MAP funds to small businesses for branded product promotion. We reviewed additional documents, including agreement letters, strategic plans, country progress reports, program evaluations, and other information provided by FAS and the participants. We also interviewed U.S.-based headquarters staff from each of the five organizations. Additionally, we conducted fieldwork in Japan and Mexico, interviewing FAS staff in the Agricultural Trade Offices in Tokyo, Osaka, and Mexico City, as well as representatives of program participants in each country. We also observed several trade promotion activities and visited retailers where U.S. products were sold. We selected Japan and Mexico because they are in different geographic regions and are among the countries where program participants have spent the largest shares of USDA market development funds. In addition, for all of three of our objectives, we interviewed FAS staff in headquarters, contractors that FAS uses for aspects of its market promotion programs, and subject matter experts in the field of trade economics. We also reviewed relevant laws, regulations, and FAS guidelines.\nTo describe agricultural groups’ participation in FAS’s five market development programs and the programs’ expenditures from 2002 through 2011—our first objective—we reviewed program participants’ applications, country progress reports, and program evaluations to identify examples of the activities that participants undertook with market development funding. We also analyzed expenditure data for the five programs from 2002 through 2011 to understand the nature of program participation and to identify program participants with the largest expenditures as well as changes in participants’ expenditures. We reviewed MAP and FMD expenditure data by country to determine where participants spent the largest amounts of program funding. Further, we compared participants’ matching contributions with their expenditure levels to determine whether participants were meeting program cost- sharing requirements. In addition, we reviewed expenditure data for the MAP branded products program for 2002 through 2011 to determine the scope of the branded products program, including the number of small businesses participating and the number affected by the 5-year graduation requirement. To assess the reliability of market development program expenditure and contribution data that FAS provided, we conducted electronic and manual data testing and held interviews with knowledgeable USDA staff members. On the basis of our assessment of the data and our interviews with the staff members, the data appear to be reliable for the purposes of this report.\nTo examine FAS’s management and monitoring of the market development programs—part of our second objective—we discussed management practices and the use of the Unified Export Strategy (UES) system, which participants use to apply for multiple programs to reduce risks of overlap and duplication among the five programs with FAS officials. We also met with FAS’s Compliance Review Branch to review FAS’s process for verifying participants’ expenditures and contributions for all programs in which they participated. In addition, to verify that small businesses participating in the MAP branded products program did not receive MAP funds from more than one MAP participant for promotion in the same country, we reviewed expenditure data for the MAP branded products program for 2011. We examined all businesses that had spent MAP funds, the countries where they spent the funds, and the MAP participants that allocated these funds to the businesses through the branded products program. We identified, and reviewed with FAS, any instances in which a business may have spent in a single country funds received from two MAP participants.\nTo determine whether MAP and FMD participants were assessing results in accordance with FAS performance monitoring guidelines—also part of our second objective—we developed an assessment tool to analyze a sample of participants’ annual country progress reports. We selected a random but nongeneralizable sample of 20 participants in MAP and FMD, and we identified countries where these participants spent more than $5,000 in 3 consecutive fiscal years, 2008 through 2010. We requested the country progress reports for all 20 participants for each of the 3 years—a total of 60 progress reports. After requesting the 60 reports, we removed four groups on being informed that those groups use other forms of reporting; we also removed two state regional trade groups. After we requested additional randomly selected progress reports, our final sample totaled 56 reports. Where progress reports covered a region rather than a specific country, we used regional data and country-specific data as available. We selected criteria, based on FAS guidelines for developing the progress reports and key attributes of successful performance measurement that we previously identified, to assess constraints and performance measures in the reports that we reviewed. These criteria are as follows: (1) each constraint has at least one outcome measure; (2) the performance measure is clear; (3) the performance measure is aligned with the related constraint or opportunity; (4) the performance measure is quantifiable; (5) the performance measure has an associated baseline; and (6) the performance measure has an identified methodology. We also compared the goals and results reported for each performance measure to determine the extent to which the goals were met and the results were reported. We recorded each constraint and performance measure from the country progress reports we reviewed, and two reviewers coded separate analyses for each criterion. The two analyses were then reconciled to produce a final result. In addition, we requested from FAS all third-party program evaluations associated with our random sample of participants and countries in the 3- year timeframe. FAS informed us that the evaluations were too difficult to identify using these parameters and provided a list of 71 evaluations that 43 participants, including 13 of those in our sample, submitted in 2010 and 2011. We did not assess the quality of the evaluations, because such an assessment was beyond the scope of this engagement.\nTo assess FAS’s cost-benefit analysis of MAP’s and FMD’s impact on the U.S. economy—our third objective—we analyzed studies of MAP and FMD commissioned by FAS and published in 2007 and 2010, respectively, by Global Insight, Inc. We conducted structured interviews with the studies’ authors, agency officials, and academics involved in the studies. We also reviewed relevant research on market development programs. In addition, we reviewed Office of Management and Budget guidelines for conducting cost-benefit analyses and interviewed office officials. We evaluated the studies on the basis of GAO’s cost estimation guide, prior related GAO work, and internal expertise.\nWe conducted this performance audit from August 2012 to July 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Many organizations participate in more than one of the five U.S. Department of Agriculture (USDA) market development programs. FAS allocates the majority of USDA’s market development funding for the Market Access Program (MAP), which has the largest number of participants. Table 7 shows the 103 program participants and their award amounts in fiscal year 2012, in descending order of total award amounts. The table does not show small businesses that received a share of MAP funding indirectly for branded product promotion.", "Tables 8 through 10 show USDA market development program participants that spent the largest amounts of funds provided by the Emerging Markets Program (EMP), Quality Samples Program (QSP), and Technical Assistance for Specialty Crops Program (TASC) funds in 2011. Table 11 shows the countries where the largest amounts of funding for the three programs were spent in 2011.", "The 2007 study and 2010 update contended that three market failures lead private firms to underinvest in export promotion compared with the socially optimal level. According to the study, these failures therefore justify U.S. government intervention through the U.S. Department of Agriculture market development programs.\nUncertain funding. Because of uncertainty about annual U.S. government allocations of market development funding, private-sector participants tend to develop short-term (i.e., 1 year) plans that do not take into account the long-term effects of market development. For example, market development expenditures for high-value and bulk commodities have a lagged impact of 7 and 3 years, respectively, so that expenditures in a single year accrue benefits over several years. As a result, private-sector participants tend to underfund market development activities relative to the socially optimal level.\nSpillover effect. Market development for one commodity may also increase demand for other commodities—a result known as a spillover effect. For example, almond promotions increase grape exports (but not vice versa). Unless such commodities are “co- branded” and marketed together, exporters do not see the spillover effect as a promotion incentive and thus tend to underpromote their own products compared with socially optimal levels.\nIndirect effect. Related to the first two sources of market failure, less than optimal amounts of promotion, and therefore of exports, will lead—in what is known as the indirect effect—to less than socially optimal operating levels in other segments of the farm economy and the general economy. To the extent that exports benefit other sectors of the general economy, such as by increasing growers’ prices and government tax revenues, there is a compelling public interest in helping firms to develop new export markets for U.S. agricultural commodities.", "The 2007 cost-benefit analysis that the Foreign Agricultural Service (FAS) commissioned used a computable general equilibrium model, in addition to a market share model and a spillover effect model, to examine the economic impacts of FAS’s Market Access Program and the Foreign Market Development Program. A computable general equilibrium model is a mathematical expression where all economic relationships are modeled simultaneously. For example, the price of a good depends on the price of all other input goods, profits, and wages, and vice versa, assuming full employment in the economy. Compared with the market share or spillover effect model, the computable general equilibrium model includes a more comprehensive list of relevant variables while allowing more parameters to vary.\nUsing this model, the 2007 study found the following key results:\nThe FAS program and participant promotion expenditures under the 2002 farm bill present an economic-welfare-to-government- expense ratio of 10.3:1 and an economic-welfare-to-total-expense ratio of 5.2:1. This result translates into an increase in farm cash receipts of $2.2 billion.\nThe FAS program and participant promotion expenditures under a hypothetical 2007 farm bill presented a potential economic- welfare-to-government-expense ratio of 8.2:1 and an economic- welfare-to-total-expense ratio of 4.1:1, with a total economic benefit of $740 million. In addition, for the period 2008-2012, farm revenues would equal $256 billion under the hypothetical 2007 farm bill and would change by $2.4 billion and -$4.2 billion under the increasing and eliminating scenarios, respectively.", "", "", "", "In addition to the individual named above, Christine Broderick (Assistant Director), Pedro Almoguera, Mason Thorpe Calhoun, Howard Cott, Kathryn Crosby, Martin De Alteriis, Justin Fisher, Reid Lowe, Grace Lui, and Vanessa Taylor made significant contributions to this report." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full", "h0_full", "h0_full", "h0_full", "h0_full", "h1_full", "h1_full", "h1_full", "h1_full", "h1_full", "h2_full", "", "h2_full", "h2_full", "", "", "h4_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How do market development program participants attempt to raise awareness of U.S. agricultural products?", "What sort of activities are funded?", "How did market development program participants perform between 2007 and 2011?", "To what extent did MAP and FMD participants meet FAS contribution requirements?", "How are branded products affected under MAP funding?", "How does the USDA FAS reduce the risk of duplication among programs?", "How does FAS process funding applications and expenditures?", "How does FAS monitor expenses?", "In what way does FAS assess program progress?", "What did the GAO report find?", "To what extent did the sampled reports outline the assessment process?", "How would this gap affect FAS?", "How did the MAP and FMD programs affect U.S. agricultural exports?", "How may the economic models used for the estimates be limited?", "To what extent did the study consider the validity of key assumptions?", "How will FAS address the shortcomings of the cost-benefit analysis?", "How does USDA assist efforts to expand U.S. agriculture in overseas markets?", "In what ways is the program under scrutiny?", "What funding does USDA provide for these efforts?", "How did MAP and FMD funding compare to total USDA funding?", "What was GAO asked to review?", "What did the GAO report discuss?", "What USDA data did GAO assess?" ], "summary": [ "Market development program participants use program funds to support a variety of activities intended to raise awareness or acceptance of U.S. agricultural products in overseas markets.", "Common activities include, among others, market research, consumer and retail promotion, and participation in international trade shows.", "GAO's analysis of expenditure data from 2007 through 2011 shows that participants in the Market Access Program (MAP) and the Foreign Market Development Program (FMD)--the largest of the five market development programs--remained generally consistent during that period. The program participants with the largest shares of funding and the countries where the largest shares of funds were spent also remained relatively consistent.", "Expenditure data for 2011 show that MAP and FMD participants met or exceeded FAS contribution requirements that they match minimum percentages of the program funding they receive.", "Unlike funding for the other programs, a portion of MAP funds is used for promotion of branded products. In 2011, MAP participants spent about 85 percent of program funding on overseas promotion of generic commodities. More than 600 small companies and seven agricultural cooperatives spent the remaining 15 percent of MAP funding to promote branded products.", "The U.S. Department of Agriculture's (USDA) Foreign Agricultural Service (FAS) uses several management and monitoring processes to reduce the risk of duplication among the five programs.", "FAS uses an integrated system to process funding applications for multiple programs and to monitor expenditures, which reduces the risk of duplication.", "According to FAS officials, FAS also monitors participants' expenses for all programs through its compliance review process.", "In addition, FAS guidance requires program participants to submit annual progress reports on the results of their market development activities.", "GAO found that performance measures in a sample of progress reports generally reflected selected FAS guidance and key attributes of successful performance measures that GAO had identified.", "However, the sampled reports did not always outline the methodologies used to assess activity results as required by FAS guidelines.", "In these cases, it would be difficult for FAS to determine the reliability of the reported results and the impact of market development activities.", "A 2007 cost-benefit analysis of MAP and FMD, commissioned by FAS, found that the programs increased U.S. agricultural exports and benefited the U.S. economy, but methodological limitations may affect the magnitude of the estimated benefits. Overall, the analysis asserted that the government's expenditures for the two programs resulted in greater increases in U.S. agricultural exports and greater benefit to the U.S. economy than would have occurred without the expenditures.", "However, an economic model used to estimate the programs' impact on U.S. market share omitted important variables, such as commodity prices.", "Also, the study did not include sensitivity analyses of certain key assumptions underlying its estimates of impacts on U.S. exports. For example, analyses of the possible effects of varying levels of program funding would provide a clearer picture of the potential impact of increased or decreased funding on U.S. exports and the economy.", "FAS officials reported that they plan to commission a new cost-benefit analysis in 2014 but have not yet identified the methodologies that the new analysis will use.", "USDA administers five programs to assist U.S. agricultural industry efforts to build, maintain, and expand overseas markets.", "However, members of Congress continue to debate the level of funding for this assistance and its impact on agricultural exports.", "USDA provides about $250 million annually for the five market development programs.", "MAP and FMD received about 90 percent of this funding in fiscal year 2012, with allocations of $200 million and $34.5 million, respectively.", "GAO was asked to review USDA's market development programs.", "This report (1) describes participation and expenditures in these market development programs, particularly MAP and FMD; (2) examines FAS's management and monitoring of its market development programs; and (3) assesses FAS's cost-benefit analysis of MAP's and FMD's impact on the U.S. economy.", "GAO analyzed USDA expenditure data from 2002 through 2011 and reviewed key agency and program participant documents. GAO also assessed a sample of participants' annual progress reports and assessed economic cost-benefit analyses of MAP and FMD commissioned by USDA." ], "parent_pair_index": [ -1, 0, 0, 2, 0, -1, 0, 0, 0, -1, 4, 5, -1, 0, 0, 0, -1, 0, 0, 2, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "CBP’s Law Enforcement Positions", "CBP Staffing Levels for Law Enforcement Officer Positions", "CBP’s Hiring Process for Law Enforcement Officer Positions", "Financial Incentives and Other Human Capital Flexibilities Available to CBP", "CBP Has Enhanced Its Recruitment Efforts and Applications for Law Enforcement Officer Positions Have Increased", "CBP Established a Centralized Recruitment Office to Manage Recruitment Efforts across Components", "CBP Has Increased Its Participation in Recruitment Events and Standardized Its Recruiter Training", "CBP Increased Its Use of Recruitment Incentives, Although Use by Components Varied", "Applications for Law Enforcement Positions Have Tripled since Fiscal Year 2013", "CBP’s Accenture Contract Is Intended to Further Enhance CBP’s Recruitment Efforts", "CBP Has Taken Steps to Improve Its Hiring Process, but the Process Remains Lengthy", "CBP Has Improved Its Performance in Two Key Hiring Metrics", "CBP Has Taken Steps to Improve Its Hiring Process for Law Enforcement Officers", "Certain Factors Affect CBP’s Hiring Process for Law Enforcement Positions", "CBP Has Enhanced Its Retention Efforts, but Does Not Systematically Collect and Analyze Data on Departing Law Enforcement Personnel", "CBP’s Retention of Law Enforcement Officers Varies by Position", "Retaining Law Enforcement Officers in Hard-to-Fill Locations Has Been Challenging for CBP", "CBP Has Taken Steps to Address Retention Challenges", "CBP Does Not Have a Systematic Process to Capture and Analyze Data on Departing Law Enforcement Officers", "Conclusions", "Recommendation for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Department of Homeland Security", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgements" ], "paragraphs": [ "", "Within CBP’s three operational components—OFO, Border Patrol, and AMO—there are five categories of law enforcement officer positions, each with different job requirements and responsibilities. First, OFO’s CBP officers conduct immigration and customs inspections at ports of entry to prevent the illicit entry of travelers, cargo, merchandise, and other items. Second, Border Patrol agents are responsible for securing the U.S. border between ports of entry and responding to cross-border threats. Third, AMO has three categories of law enforcement officers—Air Interdiction Agents, Aviation Enforcement Agents, and Marine Interdiction Agents—who interdict and disrupt threats to the United States in the air and maritime environments at and beyond the border. For more information on CBP’s law enforcement officer positions, see figure 1.", "In recent years, CBP has not been able to attain statutorily-established minimum staffing levels for its Border Patrol agent positions or meet its staffing targets for other law enforcement officer positions. Figure 2 shows the difference between CBP’s onboard staffing levels and its authorized staffing levels from fiscal years 2013 through 2017.", "CBP’s law enforcement applicants undergo a lengthy and rigorous hiring process that includes nearly a dozen steps, including a background investigation, medical examination, physical fitness test, and polygraph examination. Several of these steps can be done concurrently—for example, CBP can begin the background investigation while the candidate completes the physical fitness test and medical examination process steps. Figure 3 depicts the hiring process for Border Patrol agent and CBP officer positions.", "CBP is able to use financial incentives and other compensation-based human capital flexibilities to help recruit and retain qualified law enforcement personnel. According to OPM, federal agencies have broad discretionary authority to provide additional compensation in certain circumstances to support workforce needs and address human capital challenges, including through the use of financial incentives such as recruitment, relocation, and retention incentives. Table 1 below provides an overview of these incentives.\nIn addition to these incentives, CBP can also offer other compensation- based human capital flexibilities to employees. For example, with OPM approval, CBP may establish a special salary rate, or a higher rate of pay for employees, either nationwide or in a specific geographic area where CBP’s recruitment or retention efforts are, or would likely become, significantly handicapped without those higher rates.", "", "CBP officials stated they established the National Frontline Recruitment Command (NFRC)—a formal task force housed within CBP’s Office of Human Resources Management (HRM)—in February 2016. The NFRC is charged with, among other things, developing recruitment strategies, providing strategic guidance, and managing recruitment efforts across all three operational components. CBP officials stated that, prior to the creation of the NFRC, the recruitment and hiring of law enforcement officers was done at the component level and there was no integrated CBP-wide approach to coordinate efforts and address challenges. Based on our literature search, we identified leading practices that may be applicable to federal law enforcement agencies in recruiting, hiring, and retaining law enforcement personnel. Having a centralized entity or office in charge of developing recruitment strategies and overseeing recruitment activities is consistent with leading practices we identified for recruiting for law enforcement positions specifically. All three other selected law enforcement agencies we reviewed also had recruitment strategies that outlined their respective agencies’ recruitment roles and responsibilities, while two had a centralized entity in charge of recruitment. In particular, officials from both ICE and the Secret Service stated they have a central office in charge of recruitment efforts while BOP officials told us that recruitment for Correctional Officers is mainly handled at the local prison level.\nThe NFRC is responsible for setting CBP’s strategic recruitment goals and overseeing agency-wide recruitment initiatives. For example, CBP officials are finalizing the Frontline Hiring and Recruiting FY 18 to FY 24 Strategy & Implementation Plan, which outlines specific initiatives designed to increase the number and quality of applicants applying for law enforcement officer positions. The strategy describes ways CBP can target its recruitment efforts more effectively and develop brand identities for each component to provide the foundation for a comprehensive marketing strategy.\nIn addition to setting strategic initiatives, the NFRC manages the recruitment budget and allocates recruitment funding for CBP and the operational components. For example, NFRC officials stated that the NFRC funds CBP-wide recruitment initiatives such as Special Emphasis Recruitment Teams—teams of specially trained recruiters from each component who attend events specific to different demographic groups such as females or veterans. The NFRC also funds other initiatives such as strategic partnerships with major businesses, which allow CBP to advertise and recruit at their events. For example, CBP previously participated in strategic partnerships with the Big 10 and Big XII athletic conferences, and in 2016 and 2017, the NFRC spent $500,000 for a strategic partnership with the Spartan Race program, which allowed CBP and its components to advertise, set up recruitment booths, and sign up applicants at events. NFRC officials told us they ended their partnership with the Spartan Race in December 2017 and are evaluating options for future strategic partnerships.\nThe NFRC also allocates funding for both joint recruitment events—those attended by two or three components—and single-component events attended by one operational component. For example, NFRC officials stated that career and job fairs provide opportunities for CBP to leverage its resources and attract potential applicants to all three components. At these events, applicants can talk to uniformed recruiters to learn more about their respective career paths. NFRC officials stated that in addition to CBP-wide efforts, the NFRC manages and allocates recruitment funding for each operational component to cover the cost of recruitment events or other initiatives that meet the specific needs of that component. For example, AMO officials stated that they use NFRC funding to attend events such as helicopter shows where there is a higher potential to attract qualified pilots.\nAs shown in table 2, CBP’s recruitment budget allocated by the NFRC almost doubled from approximately $6.4 million in fiscal year 2015 to more than $12.7 million in fiscal year 2017. The budget allocated by the NFRC specific to the operational components—while a small percentage of CBP’s overall recruitment budget—increased during this time frame as well. For example, Border Patrol’s recruitment budget increased from approximately $433,000 in fiscal year 2015 to more than $1 million in fiscal year 2017, while OFO’s budget increased from approximately $116,000 to nearly $525,000.\nIn addition to recruitment funding managed by the NFRC, components may use additional funding from their own budgets that is not allocated or managed by the NFRC to fund recruitment initiatives. For example, two of the three components funded their own strategic partnerships. Border Patrol officials stated they spent $1.5 million on a strategic partnership with the Professional Bull Riders Association which allowed them to target specific applicants who fit Border Patrol’s applicant profile. This partnership provided Border Patrol with the opportunity to advertise and recruit at more than 70 events over the course of 18 months. Likewise, OFO officials told us they spent $15,000 to be the sole sponsor of the 2018 National Police Week race in Washington, D.C., which includes a recruitment booth, a logo on the official T-shirt, and a prominent speaker at the start of the race. AMO officials stated that while they generally do not use their own funding to pay for strategic partnerships, they do partner with the University of North Dakota, which has a large flight school, where they give presentations in classrooms and recruit on campus.", "CBP has increased its emphasis on recruitment and increased the number of recruitment events it has participated in since fiscal year 2015. Specifically, CBP more than tripled the total number of recruitment events it participated in, from 905 events in fiscal year 2015 to roughly 3,000 in both fiscal years 2016 and 2017 (see fig. 4).\nCBP components generally attend two different types of recruitment events—outreach events designed to promote CBP’s brand and events such as job and career fairs designed to actively cultivate potential applicants. For example, AMO officials stated their attendance at the 2018 Border Security Expo technology trade fair was an outreach event designed to promote the component at a high-visibility event despite the low likelihood of directly reaching qualified applicants, such as pilots. AMO officials also stated they participate in the HELISUCCESS career fair at the annual Heli-Expo trade show where individuals from across the helicopter industry gather to attend seminars and interact with recruiters. They noted that this event provides a great opportunity to recruit qualified applicants who have a license to fly helicopters.\nWhile CBP increased its participation in recruitment events from fiscal years 2015 through 2017, officials across all three components told us the NFRC canceled a number of events during the first half of fiscal year 2018 because of a lack of certainty regarding the agency’s budget while functioning under continuing resolutions, which extended fiscal year 2017 funding until the enactment of the Consolidated Appropriations Act, 2018, in March 2018. Additionally, CBP officials stated that the agency was responsible for providing humanitarian support for multiple hurricanes during this time frame which put a strain on CBP’s resources. Overall, these officials explained that the NFRC canceled 36 percent of all recruitment events during the first half of fiscal year 2018 until the enactment of the Consolidated Appropriations Act, 2018. They stated that during this period, they focused on attending free local events and online events such as webinars, but noted that the lack of consistent year-to- year funding for recruitment activities directly affected their ability to attend recruitment events and thus to recruit qualified personnel.\nTo attend recruitment events and promote their brand, CBP components utilize their own law enforcement personnel to act as recruiters. As shown in table 3, as of March 2018, CBP had 1,663 recruiters across the three components, which included 57 full-time and 1,606 part-time recruiters. CBP officials stated that most recruiters do not conduct recruitment activities on a full-time basis and recruitment is considered a collateral responsibility in addition to regular duties. In addition, officials stated these recruiters must be approved by their component leadership and funding for their positions comes from the components’ budgets.\nIn July 2017, CBP implemented a 5-day standardized training program for all component recruiters focused on effective public speaking and engagement tactics as well as specific, in-depth information on each operational component and the CBP hiring process. CBP officials stated that a goal of this training, among other things, is to ensure that recruiters provide standardized, accurate information to all potential applicants. As of April 2018, 636 recruiters had completed the training, according to CBP officials, and the agency plans to train 1,300 recruiters by the end of fiscal year 2018.", "In addition to establishing the NFRC and increasing participation in recruitment events, CBP has increased its use of recruitment incentives from fiscal years 2015 through 2017 to help staff hard-to-fill locations. A recruitment incentive may be paid to a newly-appointed employee if an agency determines that a position is likely to be difficult to fill in the absence of such an incentive. From fiscal years 2015 through 2017, OFO increased the number of recruitment incentives it paid to CBP officers from 9 incentives in 2 locations at a total cost of about $77,600 to 446 incentives across 18 locations at a cost of approximately $4.3 million. AMO and Border Patrol did not use recruitment incentives from fiscal years 2015 through 2017 (see fig. 5).\nOFO officials told us that recruitment incentives have been effective in filling staffing shortages at hard-to-fill locations. For example, they noted that since they began offering recruitment incentives in fiscal year 2015, 14 of the 18 locations where these incentives are used have not experienced a decrease in staffing levels as of February 2018. Additionally, OFO officials told us that in larger ports-of-entry—such as San Ysidro, California, where staffing levels have consistently remained below authorized targets—staffing levels have increased by up to 15 percent. AMO officials stated while they did not use recruitment incentives from fiscal years 2015 through 2017, as of April 2018 they are using them to fill remote locations in the Caribbean. Specifically, AMO paid two recruitment incentives for Air Interdiction Agents and two for Marine Interdiction Agents at locations in Puerto Rico and the U.S. Virgin Islands. AMO officials stated that they began using these incentives to staff hard- to-fill locations because of a nationwide shortage of pilots as well as increased competition with commercial airlines. However, as AMO has only recently started using these incentives, it is too early to gauge whether it will be effective in increasing staffing levels at these hard-to-fill locations. Border Patrol officials stated the main reason they do not use recruitment incentives is that in the past these incentives created resentment among current employees that did not receive extra pay to do the same job in the same location. Additionally, these officials told us that job announcements for Border Patrol agent positions do not specify particular duty locations, but represent a general announcement that can be used to fill numerous duty locations, as necessary.", "As a result of its efforts, CBP has experienced an increase in the number of applications it received for law enforcement officer positions across all three operational components from fiscal years 2013 through 2017. For example, with the exception of fiscal year 2014, applications for Border Patrol agent positions increased every year from roughly 27,000 applications in fiscal year 2013 to more than 91,000 applications in fiscal year 2017. Further, during the same period, applications for CBP officer positions increased from approximately 22,500 to more than 85,000, and applications for AMO’s law enforcement officer positions increased from roughly 2,000 to more than 5,800 (see fig. 6).", "In November 2017, CBP signed a contract with a total potential period of 5 years at a not-to-exceed value of $297 million with Accenture Federal Services, LLC, to help the agency recruit and hire the 5,000 Border Patrol agents called for in Executive Order 13767 as well as an additional 2,000 CBP officers and 500 AMO personnel. Under this performance-based contract, Accenture will be responsible for enhancing CBP’s recruitment efforts and managing the hiring process for those applicants it recruits. The contract includes a base year and four 1-year option periods which CBP may exercise at its discretion for a total potential period of 5 years. The $297 million represents the maximum amount CBP may obligate on the contract during the potential 5-year period. CBP obligated $43 million on the Accenture contract in November 2017 for startup costs, security- related services, and for the hiring of 440 CBP officers, 150 Border Patrol agents, and 23 AMO law enforcement officers. Under the terms of the contract, CBP will pay the contractor a set dollar amount for each law enforcement officer hired. For example, in the first year of the contract, CBP has agreed to pay Accenture approximately $40,000 for each Border Patrol agent hired with 80 percent paid when a candidate receives an official job offer and the remaining 20 percent paid upon the candidate’s entry-on-duty date.\nThe Accenture contract is intended to enhance CBP’s recruitment efforts by improving its marketing strategy and utilizing new ways to capture and analyze data to better inform recruitment efforts, according to CBP officials. For example, HRM officials stated that, in February 2018, Accenture began its digital marketing campaign and started posting electronic ads to target potential applicants for CBP’s law enforcement positions. In addition, Accenture is using advertisements, e-mail blasts, and other strategic marketing tools to specifically target various categories of potential applicants, such as women, veterans, minorities, and current law enforcement officers. CBP officials told us that they are not concerned about Accenture’s recruiting efforts encroaching on the agency’s current applicant pool as Accenture’s activities will largely target populations that CBP has not historically pursued. They also stated that for populations that CBP does target (e.g., veterans and women), the agency expects to benefit from Accenture’s recruitment efforts by increasing the number of applicants from these populations to all job announcements for CBP positions. Further, they noted that if Accenture’s tactics are successful, there is nothing prohibiting the agency from replicating such tactics to garner more applicants.\nCBP officials also stated that Accenture plans to provide opportunities to better enhance the agency’s data analytics on its recruitment efforts. For example, Accenture is using recruitment data and software to identify potential candidates and increase traffic to websites where these individuals can submit applications. CBP officials told us they would benefit from these and other insights that Accenture’s data analytics will provide as CBP can evaluate the contractor’s recruitment efforts and initiatives and, based upon Accenture’s success, incorporate them into CBP’s own efforts. While these efforts seem promising, it is too early to determine whether these initiatives will help increase the number and quality of applicants for CBP’s law enforcement officer positions.", "", "Since fiscal year 2015, CBP’s performance in two key metrics that it uses to assess the efficiency and effectiveness of its hiring process for law enforcement officer positions has generally improved. Specifically, CBP reduced its time-to-hire and increased its overall applicant pass rates for all three components.\nTime-to-Hire. CBP’s average time-to-hire metric calculates the average number of calendar days that elapsed between the closing date of a job announcement and an applicant’s entry-on-duty date. CBP’s time-to-hire for all law enforcement officer positions decreased from fiscal years 2015 through 2017. Specifically, during this period, the time-to-hire for CBP officers decreased by 78 days (20 percent) to an average of 318 days for fiscal year 2017. For AMO Air and Marine Interdiction Agents, CBP’s time-to-hire decreased by 103 days (28 percent) to an average of 262 days for fiscal year 2017. The agency’s time-to-hire for Border Patrol agents was the longest at 628 days in fiscal year 2015. As discussed earlier, Border Patrol officials stated that there were no job announcements for Border Patrol agent positions in fiscal year 2014; therefore, many of the agents hired in fiscal year 2015 had applied in fiscal year 2013, accounting for this protracted time-to-hire. Even so, from fiscal year 2016 to 2017, CBP’s time-to-hire for Border Patrol agents decreased by 32 days (11 percent) to an average of 274 days for fiscal year 2017 (see table 4).\nWe also compared CBP’s time-to-hire with that of the Secret Service because its hiring process for law enforcement officers is the most similar to CBP’s. Specifically, the Secret Service’s hiring process comprises roughly the same number of hiring steps and also includes a polygraph examination—one of the more challenging and time-consuming steps in the process—as well as a written assessment, background investigation, medical examination, and interview. We found that CBP’s time-to-hire for its law enforcement positions was shorter than the Secret Service’s in fiscal years 2016 and 2017. For example, in fiscal year 2017, CBP’s time-to-hire for CBP officers and Border Patrol agents was 73 days and 117 days shorter, respectively, than the Secret Service’s. Further, CBP’s time-to-hire for AMO’s law enforcement positions was shorter than the Secret Service’s in every fiscal year from 2015 through 2017.\nOverall Applicant Pass Rates. CBP’s overall applicant pass rate metric calculates the estimated percentage of applicants who successfully complete the hiring process and enter on duty. CBP data indicate that overall applicant pass rates more than doubled for CBP officer and Border Patrol agent positions from fiscal years 2016 to 2017 (see table 5).\nCBP officials told us that higher overall applicant pass rates paired with recent increases in the number of applications received by the agency are starting to result in an increase in the number of law enforcement officers hired as applicants complete CBP’s hiring process and officially enter on duty. As shown in table 6, CBP data indicate that more law enforcement officers entered on duty in the first half of fiscal year 2018 than entered on duty in the first half of fiscal year 2017. Specifically, the total number of CBP officers and Border Patrol agents that entered on duty in the first half of fiscal year 2018 increased by roughly 50 percent and 83 percent, respectively, when compared to the same period of the prior fiscal year. Further, the total number of AMO law enforcement officers that entered on duty in the first half of fiscal year 2018 more than doubled from the same period of fiscal year 2017.\nCBP officials noted that they hope to consistently maintain this trend of increased hires to offset attrition and attain target staffing levels. For example, although 328 Border Patrol agents entered on duty in the first half of fiscal year 2018, 404 agents departed Border Patrol during this same period, resulting in a net loss of 76 agents. Likewise, in the first half of fiscal year 2018, a total of 449 CBP officers entered on duty while 488 officers departed OFO, resulting in a net loss of 39 officers. These data indicate that CBP continues to face challenges in retaining qualified law enforcement personnel and attaining target staffing levels for these positions. We discuss this issue later in this report.", "CBP has made efforts to improve its hiring process by revising certain aspects of the process and piloting two key hiring initiatives—Hiring Hub events and the Applicant Care program. According to agency officials, these efforts to streamline and improve CBP’s overall hiring process have collectively resulted in the decreased time-to-hire and increased overall applicant pass rates discussed above. In addition to these efforts, CBP’s contract with Accenture is designed to provide surge hiring capacity to help supplement the agency’s efforts to meet its staffing goals, according to agency officials.\nHiring Process Revisions. CBP has implemented changes aimed at streamlining its hiring process for law enforcement officers and made adjustments to specific hiring steps. For example, among other changes, CBP took the following steps: In fiscal year 2015, CBP replaced its paper-based fingerprinting process with an electronic format, reducing the costs and effort required to physically process and mail paper fingerprinting cards.\nIn fiscal year 2016, CBP increased the frequency of its job announcements on USAJOBS.gov to solicit applications on a continuous basis instead of only posting announcements for set periods of time. In addition, DHS was directed by statute to enhance its efforts to recruit members of the Armed Forces to serve as CBP officers through identifying shared activities and opportunities for reciprocity related to steps in hiring so as to minimize the time required to hire qualified applicants.\nIn March 2017, CBP was granted the authority to waive the polygraph examination for veterans who meet certain criteria, including those who hold a current, active top-secret/sensitive-compartmented- information clearance.\nIn April 2017, CBP received OPM approval to use direct-hire authority for law enforcement positions, which allows CBP to expedite the typical hiring process by eliminating competitive rating and ranking procedures and veterans’ preference. As of March 31, 2018, 77 CBP officers and 107 Border Patrol agents had entered on duty through this authority, but HRM officials told us that more applicants continue to progress through CBP’s hiring pipeline.\nCBP has also made revisions to specific steps in its hiring process, including the application, entrance examination, physical fitness test, and polygraph examination, among others. For example, in May 2014, CBP incorporated questions into its electronic application that are designed to automatically disqualify applicants who, based on their responses, could not pass CBP’s background investigation. Specifically, applicants that provide a disqualifying response to any of these questions would not be able to submit an application, thereby saving CBP the effort and resources associated with processing nonviable applicants. Further, in fiscal year 2016, CBP reordered its hiring process to place the entrance examination as the first step directly after an applicant submitted an application. Prior to this change, CBP conducted qualification reviews on applicants to ensure they met position requirements before inviting them to take the entrance exam. According to CBP officials, this updated process provided applicants with the opportunity to obtain a realistic preview of the job they were applying for earlier in the hiring process. These officials explained that this helps to ensure that only those applicants who are committed to completing the hiring process and entering on duty at CBP continue through the hiring pipeline, which may help to address high applicant discontinue rates (e.g., roughly half of all eligible applicants in fiscal year 2015 did not take the exam). According to CBP documentation, this revision also created efficiencies as the agency no longer has to spend time and resources on completing qualification reviews for applicants who either did not show up to take the exam or failed the exam itself.\nCBP data show recent improvements in both the pass rates for the entrance examination process step as well as its average duration—the average amount of time it took applicants to complete this step. Specifically, from fiscal years 2016 to 2017, pass rates increased by about 40 percent for both CBP officer and Border Patrol agent candidates, and the average duration shortened from 17 days to 13 days for CBP officer candidates and from 19 days to 12 days for Border Patrol agent applicants. CBP officials told us they are also exploring options to allow applicants to complete the entrance examination remotely— eliminating the need for candidates to travel to physical testing sites and potentially further reducing the amount of time spent completing this step.\nIn fiscal year 2016, the physical fitness test process step was amended for all law enforcement officer applicants to provide those who fail another chance to complete this requirement, according to CBP officials. Further, in fiscal year 2017, CBP eliminated the second physical fitness test— which had been the last process step in CBP’s hiring process—for CBP officer, Border Patrol agent, and AMO applicants. In addition to shortening the overall process, officials told us this change provided the small percentage of applicants that passed every other hiring process step with an opportunity to demonstrate they meet CBP’s physical ability standards during basic training.\nCBP has also made several changes to its polygraph examination process step, which has consistently had the lowest pass rate of any step in its hiring process. For example, among other things, CBP has increased the number of polygraph examiners available to administer the test, according to agency officials, and is piloting a new type of polygraph exam—the Test for Espionage, Sabotage, and Corruption. According to CBP officials, the new examination focuses on identifying serious crimes and is sufficiently rigorous to ensure that only qualified applicants are able to pass. Preliminary data from CBP’s pilot show that this new exam has demonstrated higher pass rates when compared with CBP’s traditional polygraph exam while also taking less time, on average, per test to complete. In addition, in response to recommendations made by the DHS OIG in August 2017, CBP implemented a policy requiring polygraph examiners to take steps to terminate an ongoing examination if disqualifying information is obtained from an applicant during the exam. Further, CBP officials told us they are continuing to work on developing and deploying a presecurity interview to identify unsuitable applicants prior to spending resources on conducting the polygraph examination. While it remains too early to tell if these efforts will result in improvements to the polygraph examination step, available CBP data indicate mixed results. Specifically, while the average duration to complete this step decreased for all law enforcement officer positions from fiscal years 2015 through 2017, pass rates also declined slightly over this same period (see table 7).\nHiring Hub Events. In August 2015, CBP piloted its first Hiring Hub event where applicants could complete the structured interview and polygraph examination in one location over the course of several days. In fiscal year 2016, CBP expanded its use of these events, holding additional Hiring Hubs in New York, New York; San Diego, California; and Laredo, Texas; among other locations. The use of consolidated hiring events is consistent with a leading practice we identified in hiring for law enforcement officer positions, and officials at both ICE and the Secret Service stated their agencies are using similar events to process applicants. Although CBP could not provide specific data on its Hiring Hub events, CBP officials stated that the use of these events reduced the agency’s time-to-hire by consolidating hiring process steps that traditionally took applicants weeks to complete into just a few days— effectively enhancing the applicant experience and helping to reduce the number of individuals that drop out of the hiring process.\nDespite attributing a reduction in the agency’s time-to-hire to the Hiring Hubs, CBP discontinued their use in fiscal year 2017 because of their high costs, according to CBP officials. Specifically, CBP officials told us the agency spent $878,000 and $426,000 in fiscal years 2016 and 2017, respectively, which included renting physical space for the Hiring Hub events and funding the travel expenses of CBP employees sent to staff them. However, CBP officials told us that the best practices and process improvements CBP learned from these events have been incorporated into the agency’s new expedited hiring model, which has been used to process all CBP law enforcement applicants since April 2017. According to CBP officials, this model utilizes existing CBP facilities where applicants can complete the structured interview and polygraph examination near where they live while also providing CBP with cost savings by avoiding the need to rent physical office space.\nApplicant Care. In fiscal year 2017, CBP supplemented its traditional applicant outreach efforts by piloting the Applicant Care program across all three components. This program is intended to pair viable applicants with a trained recruiter who can answer questions and provide individuals with guidance and support throughout the lengthy hiring process. Formally pairing trained recruiters with applicants is a leading practice we identified in hiring for law enforcement positions, and of the three other selected agencies we reviewed, the Secret Service also had a similar program, according to Secret Service officials. According to CBP data, 806 applicants across all three operational components have participated in the Applicant Care pilot program and, as of May 2018, 28 of these have entered on duty at CBP. CBP officials in OFO, AMO, and HRM told us that the Applicant Care program had been useful in providing an effective way to communicate with applicants. According to a senior AMO official, AMO has fully incorporated the program into its hiring efforts and has paired every applicant since June 2017 with an AMO recruiter. Specifically, this official told us the program has been beneficial by keeping candidates engaged and steadily progressing through the process. HRM officials concurred, stating that the Applicant Care program has been successful in reducing the number of individuals that fail to complete CBP’s lengthy hiring process. According to CBP officials, the Applicant Care program also helps to reduce CBP’s time-to-hire since recruiters can actively encourage candidates to promptly progress through aspects of the hiring process that applicants are responsible for completing, such as the submission of OPM’s Standard Form 86 (SF- 86).\nCBP officials told us that the agency is collecting data to evaluate the effectiveness of the Applicant Care pilot, including the average time-to- hire and overall pass rates of participating applicants. However, since the pilot is ongoing and some applicants continue to progress through CBP’s hiring pipeline, information on the program’s effectiveness remains preliminary. CBP officials also told us that scaling the Applicant Care initiative to include all applicants may present a challenge, especially given the recent increase in the number of law enforcement applications CBP has received. For example, a senior AMO official noted that, as of January 2018, 10 AMO recruiters were managing a total of about 200 applicants as part of the program, and that more recruiters would be needed to reduce employee workload to a more manageable level. Further, Border Patrol officials said that scaling the initiative to include the tens of thousands of individuals that annually apply for Border Patrol agent positions will be challenging as recruiters do not have the capacity to directly communicate with each one.\nAccenture Contract. According to CBP officials, the Accenture contract is intended to enhance the agency’s ability to achieve its primary goal— hiring law enforcement officers to meet target staffing levels—by augmenting CBP’s current hiring infrastructure and pursuing new and innovative hiring initiatives.\nHRM officials told us that Accenture will establish its own hiring infrastructure where Accenture personnel will administer most of the hiring process steps to those applicants it recruits. Specifically, the contractor is responsible for implementing the same hiring process steps and maintaining CBP’s standards to ensure that all applicants recruited by Accenture meet those standards. According to HRM officials, Accenture’s efforts are expected to provide CBP with surge hiring capacity without affecting CBP’s current hiring infrastructure, which will continue to function throughout the contract’s duration. According to CBP officials, Accenture began processing an initial trial group of random applicants in May 2018 to ensure that the contractor is able to process candidates through its hiring pipeline as required by the contract.\nCBP officials also told us that Accenture has the flexibility to pursue novel hiring tactics and pilot initiatives that CBP may not have considered or been able to undertake. For example, Accenture plans to pilot innovative ways to reduce the time-to-hire, including by streamlining steps in the hiring process, which could help to improve CBP’s overall process and generate increased hires for law enforcement positions. Further, because the contractor will only be paid for individuals that receive final job offers and enter on duty—and not for implementing these new methods and initiatives—CBP does not bear the financial risk if such initiatives prove not to be cost-effective. On the other hand, if hiring methods piloted by Accenture are successful in reducing CBP’s time-to-hire and generating increased law enforcement officer hires, CBP can incorporate these methods into its own process.\nAs of March 2018, some key issues were still being negotiated between CBP and the contractor. For example, while HRM officials told us that the main metric used to assess Accenture’s effectiveness will be the total number of hires the contractor produces, they were still working to finalize other key metrics for evaluating the contractor’s effectiveness as well as an oversight plan to ensure the contractor operates according to agency requirements. In addition, a senior HRM official told us that the costs associated with hiring a law enforcement officer are generally the same regardless of whether an applicant is processed by Accenture or CBP. Specifically, CBP officials explained that the requirements to hire a law enforcement officer are rigorous and include administering entrance examinations, background investigations, physical fitness and medical tests, and polygraph examinations, among other process steps. CBP officials stated that the costs associated with conducting these process steps for all applicants—and not just the small percentage who successfully complete the hiring process and enter on duty at CBP—are incurred whether the process is administered by Accenture or CBP. As a result, these officials explained that CBP is most focused on processing as many qualified candidates as possible to increase law enforcement officer staffing levels. As Accenture’s hiring infrastructure will not become fully operational until June 2018, it is too early to evaluate whether the contractor will be able to efficiently and effectively provide the surge hiring capacity CBP needs to achieve its staffing goals.", "While CBP has reduced its time-to-hire and made efforts to improve its hiring process for law enforcement officers, CBP officials have noted that the hiring process remains lengthy, which they said directly affected the agency’s ability to recruit and hire for law enforcement positions. CBP officials also stated that their ability to further improve CBP’s time-to-hire and increase law enforcement hires is affected by hiring process steps that can be challenging and time-consuming for applicants to complete as well as CBP’s reliance on applicants to promptly complete certain aspects of the process.\nAs noted above, in fiscal year 2017, it took an average of 274 days for Border Patrol agent applicants and more than 300 days for CBP officer applicants to complete all hiring steps and enter on duty. According to a leading practice we identified in hiring for such positions, agencies should ensure that the hiring process is not protracted or onerous for applicants. While OPM’s time-to-hire target for federal agencies is 80 days, officials at CBP, ICE, and the Secret Service told us that such a target is not feasible for law enforcement positions given the rigor and complexity of the hiring process. Further, according to CBP officials, the agency’s multistep hiring process for its law enforcement officer positions is intentionally rigorous and involves extensive applicant screening to ensure that only qualified candidates meet the technical, physical, and suitability requirements for employment at CBP. Even so, CBP officials across several components told us that the agency’s time-to-hire was too long and directly affected the component’s ability to recruit and hire for law enforcement positions. For example, OFO officials told us that the longer the hiring process takes to complete, the more likely it is that an applicant will drop out. Further, qualified applicants may also decide to apply for employment at a competing law enforcement agency such as ICE that may have a less rigorous process than CBP’s, according to CBP officials.\nOne factor that affects CBP’s ability to efficiently process and onboard law enforcement officers are specific hiring process steps that are time- consuming and challenging for candidates to complete. For example, CBP officials across all three operational components and HRM cited the polygraph examination as a significant bottleneck within CBP’s hiring process. In addition to having the lowest pass rate of any step in CBP’s process, as noted above, the polygraph examination also took CBP officer and Border Patrol agent applicants, on average, the longest amount of time to complete in fiscal year 2017—74 days and 94 days, respectively. Further, Border Patrol and HRM officials both told us that these already lengthy time frames may increase further because of the growing number of applicants for CBP’s law enforcement positions. In addition, CBP’s background investigation and medical examination process steps as well as the SF-86 submission and preemployment complete hiring phases had the five longest average durations for law enforcement applicants in fiscal year 2017. For example, on average, it took CBP law enforcement officer applicants across all three components 55 days or more to complete the medical examination and more than 60 days to complete the background investigation. For more information on the average durations of these selected aspects of CBP’s hiring process, see table 8.\nAnother factor that affects CBP’s ability to reduce its time-to-hire is CBP’s reliance on applicants to complete certain aspects of the hiring process in a timely manner. While the agency has taken steps to mitigate this issue—most notably through its Applicant Care program and the Accenture contract—its ability to ensure that applicants quickly complete those aspects of the hiring process they are responsible for remains limited. For example, as discussed above, applicants are responsible for completing their own SF-86, and CBP officials noted that applicants often take weeks to accurately complete and submit this form. Further, one senior HRM official told us that each time a mistake is identified in this paperwork, applicants receive an additional 5 days to fix the error, which adds up over time. CBP data indicate that while the average duration for this process step has decreased since fiscal year 2015, it continues to take more than 45 days for the average applicant to complete, as noted in table 8 above. As this completed paperwork is required to begin the background investigation and, according to CBP officials, schedule a structured interview, this inherently affects CBP’s ability to reduce its time-to-hire. Further, for the medical examination process step, applicants are responsible for, among other things, scheduling the examination itself and providing pertinent documentation, such as any medical waivers required to pass the exam. According to a senior HRM official, as of February 2018, CBP had to conduct follow-up outreach to roughly 65 percent of applicants during this process step to obtain the information required to complete this step.", "", "From fiscal years 2013 through 2017, CBP’s annual rates of attrition varied across its five law enforcement officer positions. Specifically, OFO’s annual attrition rates for the CBP officer position were consistent at roughly 3 percent, while rates for Border Patrol agent and AMO’s Marine Interdiction Agent positions were below 5 percent in 4 out of the 5 fiscal years we reviewed. When we compared CBP’s annual attrition rates for these positions to those of the other selected law enforcement agencies, we found that CBP’s attrition rates were similar to ICE’s annual attrition rates for its law enforcement positions and generally lower than those of the Secret Service and BOP. Annual attrition rates for AMO’s aviation positions were higher, ranging from 5.0 percent to 9.2 percent for the Air Interdiction Agent position and 7.8 percent to 11.1 percent for the Aviation Enforcement Agent position. Even so, in the last 3 fiscal years, attrition rates for these positions have generally remained lower than those of the Secret Service and BOP (see table 9).\nIn addition, from fiscal years 2013 through 2017, CBP’s ability to hire more law enforcement officers than it lost varied across positions. Specifically, CBP consistently hired more CBP officers and Aviation Enforcement Agents than it lost. Further, while CBP generally maintained its staffing levels for Marine Interdiction Agents, the agency consistently lost more Border Patrol agents and Air Interdiction Agents than it hired. Even so, onboard staffing levels for all five of CBP’s law enforcement officer positions have consistently remained below authorized staffing levels.\nOFO. With the exception of fiscal year 2016, CBP hired more CBP officers than it lost each fiscal year. Specifically, from fiscal years 2013 through 2017, CBP hired an average of 978 CBP officers and lost an average of 719 officers each year, resulting in an average annual gain of 258 CBP officers and an increase in its overall staffing level of nearly 1,300 officers over this 5-year period. However, as OFO’s staffing targets for CBP officers also increased each year during this period, OFO remained below its authorized levels from fiscal years 2014 through 2017. In fact, OFO ended fiscal year 2017 more than 1,100 CBP officers below its annual staffing target (see fig. 7).\nBorder Patrol. From fiscal years 2013 through 2017, CBP hired an average of 522 Border Patrol agents and lost an average of 890 agents each year, resulting in an average annual loss of 368 Border Patrol agents over this 5-year period. Therefore, despite having an annual attrition rate that mostly remained below 5 percent, Border Patrol was not able to replace departing Border Patrol agents with new hires from fiscal years 2014 through 2017. As a result, staffing levels for Border Patrol agents decreased by 1,838 total agents over our review period and the gap between Border Patrol’s onboard staffing levels and its congressionally-mandated minimum staffing floor has expanded each year from fiscal years 2014 through 2017. Border Patrol ended fiscal year 2017 with 19,437 agents—nearly 2,000 agents below its fiscal year 2016 statutorily-established minimum and 7,000 below the staffing target established in response to Executive Order 13767 (see fig. 8).\nAMO. From fiscal years 2013 through 2017, CBP (1) gained Aviation Enforcement Agent staff, (2) generally maintained staffing levels for its Marine Interdiction Agent position, and (3) consistently lost Air Interdiction Agent staff. First, despite the Aviation Enforcement Agent position generally having CBP’s highest annual attrition rates, CBP hired more Aviation Enforcement Agents than it lost each fiscal year and increased its overall staffing level by 79 positions during our review period. Even so, AMO staffing levels for these positions remained below its authorized targets in 4 out of the 5 fiscal years we reviewed. Second, AMO staffing levels for the Marine Interdiction Agent position remained level as AMO lost a net total of 3 Marine Interdiction Agents from fiscal years 2013 through 2017. Nevertheless, onboard staffing levels for these positions remained below the annual authorized levels in 4 of the 5 fiscal years we reviewed. Third, on average, CBP hired 25 Air Interdiction Agents and lost 52 agents each fiscal year, resulting in an average annual loss of 27 agents and a net decrease of 136 positions between fiscal years 2013 and 2017. Further, even though the authorized staffing targets for these positions decreased every year since fiscal year 2013, AMO’s onboard Air Interdiction Agent staffing levels remained below authorized levels in 4 of the 5 fiscal years we reviewed (see fig. 9).", "CBP has acknowledged that improving its retention of qualified law enforcement personnel is critical in addressing staffing shortfalls, but officials identified difficulties in retaining key law enforcement staff as a result of geographically remote and hard-to-fill duty locations. CBP officials across all three operational components and HRM cited location—and specifically employees’ inability to relocate to posts in more desirable locations—as a primary challenge facing the agency in retaining qualified personnel.\nBorder Patrol officials explained that duty stations in certain remote locations present retention challenges due to quality-of-life factors—for example, agents may not want to live with their families in an area without a hospital, with low-performing schools, or with relatively long commutes from their homes to their duty station. Border Patrol’s difficulty in retaining law enforcement staff in such locations is exacerbated by competition with other federal, state, and local law enforcement organizations for qualified personnel. According to Border Patrol officials, other agencies are often able to offer more desirable duty locations—such as major cities—and, in some cases, higher compensation. CBP data indicate that Border Patrol agents consistently leave the component for employment with other law enforcement agencies, including OFO as well as other DHS components such as ICE. For example, while retirements accounted for more than half of annual CBP officer losses from fiscal years 2013 through 2017, they accounted for less than a quarter of annual Border Patrol agent losses, indicating that the majority of these agents are not retiring but are generally leaving to pursue other employment. Further, according to CBP data, the number of Border Patrol agents departing for employment at other federal agencies increased steadily from 75 agents in fiscal year 2013 to 348 agents in fiscal year 2017—or nearly 40 percent of all Border Patrol agent losses in that fiscal year (see fig. 10).\nFurther, of the 113 Border Patrol agents who departed CBP for other federal agencies during the first half of fiscal year 2018, 72 agents (64 percent) went to ICE. Border Patrol officials told us that working a standard day shift at ICE in a controlled indoor environment located in a major metropolitan area for similar or even lower salaries presents an attractive career alternative for Border Patrol agents who often work night shifts in extreme weather in geographically remote locations. The President of the National Border Patrol Council also cited this challenge, stating that unless Border Patrol agents have a strong incentive to remain in remote, undesirable locations—such as higher compensation when compared with other law enforcement agencies—they are likely to leave the agency for similar positions located in more desirable locations.\nWhile OFO officials told us the component did not face an across-the- board challenge in retaining CBP officers, they have had difficulty retaining officers in certain hard-to-fill locations that may be geographically remote or unattractive for families, such as Nogales, Arizona, and San Ysidro, California. As a result, CBP officer staffing levels in these locations have consistently remained below authorized targets. For example, OFO ended fiscal year 2017 approximately 300 positions below its authorized staffing level in both its Tucson, Arizona, field office, which includes the port of Nogales, and its San Diego, California, field office, which includes the port of San Ysidro. See figure 11 for more information on the OFO field offices with the four largest gaps between onboard and authorized staffing levels for CBP officer positions from fiscal years 2015 through 2017.\nOFO officials stated that CBP officers regularly leave posts in remote or hard-to-fill locations to transfer to similar positions in more desirable locations, both internally within OFO as well as at other law enforcement agencies. In addition, officials from the National Treasury Employees Union, which represents CBP officers, told us that excessive overtime and stressful employment conditions—including forced temporary duty travel—also contributed to CBP officers leaving the agency for positions at other law enforcement entities. CBP data indicate that the number of CBP officers who left CBP for employment at other federal agencies increased from 33 in fiscal year 2013 to 108 in fiscal year 2017—or 15 percent of all CBP officer losses in that fiscal year. Likewise, of the 66 CBP officers who departed CBP for other federal agencies during the first half of fiscal year 2018, 34 officers (52 percent) went to ICE.\nAMO has also had difficulty retaining its law enforcement personnel—and particularly its Air Interdiction Agent staff—in hard-to-fill locations, such as Aguadilla, Puerto Rico, and Laredo, Texas. However, given the unique qualifications and competencies required for the Air Interdiction Agent position, AMO does not compete with other law enforcement organizations. Instead, AMO officials told us they compete with the commercial airline industry for qualified pilots. Specifically, they stated that this competition is exacerbated by a nationwide shortage of pilots. In addition, AMO officials explained that there is a perception among applicants that commercial airlines are able to offer pilots more desirable locations and higher compensation. However, they told us that AMO generally provided pilots with higher starting salaries than many regional airlines as well as most career options available to helicopter pilots.", "All three CBP operational components have taken steps to retain qualified law enforcement personnel by offering opportunities for employees to relocate to more desirable locations and pursuing the use of financial incentives, special salary rates, and other payments and allowances.\nRelocation Opportunities. Border Patrol, OFO, and AMO have formal programs providing law enforcement officers with opportunities to relocate. For example, in fiscal year 2017, Border Patrol implemented its Operational Mobility Program and received initial funding to relocate about 500 Border Patrol agents to new locations based on the component’s staffing needs. According to Border Patrol officials, retaining current employees is a top focus for leadership at the component and this program provides Border Patrol agents with opportunities for a paid relocation to a more desirable location at a lower cost to CBP than an official permanent change of station transfer. As of April 2018, Border Patrol officials told us that 322 Border Patrol agents had accepted reassignment opportunities through the program so far and the component hopes to continue receiving funding to provide these opportunities.\nLikewise, OFO’s National Reassignment Opportunity Bulletin provides CBP officers with opportunities to voluntarily relocate to new ports of entry at their own expense. CBP officers are able to submit reassignment requests multiple times throughout the year and selections are made based on OFO’s staffing needs as well as employees’ seniority and other eligibility requirements. According to OFO officials, the program has been in place since February 2012, and OFO data indicate a recent increase in reassignments from 122 participating CBP officers in calendar year 2016 to 202 officers in 2017. Further, these officials noted that CBP officers are also able to relocate to new duty stations through partner swaps—when two employees assigned to different duty locations agree to switch—and hardship reassignments—for example, when a CBP officer must relocate because a spouse has been transferred to a new location for work.\nAlso, AMO personnel who are non-bargaining unit employees and have served for at least 3 years in their current location are eligible for noncompetitive paid relocations. AMO officials told us that opportunities for relocations are posted every few months in which eligible personnel can apply for transfers to specific duty locations based on the needs of the operational component.\nFinancial Incentives and Other Payments and Allowances. CBP’s three operational components have also recently taken steps to supplement employees’ salaries through the use of human capital flexibilities—such as retention and relocation incentives and special salary rates—as well as other payments and allowances. CBP’s goal in pursuing these human capital flexibilities is to retain current employees— especially in remote or hard-to-fill locations—who are likely to internally relocate within CBP to more desirable duty locations or depart the agency for similar positions at other law enforcement organizations or commercial airlines. Supplementing the salaries of its employees is consistent with a leading practice we identified in retaining qualified law enforcement personnel—specifically, agencies should ensure they are offering pay and compensation comparable with other law enforcement agencies. Further, two of the three other selected law enforcement agencies we reviewed regularly used retention incentives and other human capital flexibilities to help retain qualified law enforcement personnel in cases where filling the position would be difficult or recruitment costs would be high. However, we found that from fiscal years 2013 through 2017, CBP’s use of such financial incentives and other payments was limited as the agency paid a total of 4 retention incentives and 13 relocation incentives, and implemented 1 special salary rate for all positions during this 5-year period.\nFrom fiscal year 2013 through 2017, Border Patrol did not offer retention incentives to agents and paid 2 relocation incentives to transfer Border Patrol agents to Artesia, New Mexico, and Washington, D.C., at a cost of roughly $78,000. However, in fiscal year 2018, Border Patrol increased its use of relocation incentives to facilitate the transfer of agents to duty stations along the southwest border that are less desirable due to the remoteness of the location and lack of basic amenities and infrastructure. Specifically, as of April 2018, 67 Border Patrol agents had received such incentives to relocate to duty stations in Ajo, Arizona; Calexico, California; and the Big Bend region in Texas; among others.\nWhile Border Patrol did not offer retention incentives during our review period, it submitted a formal request to CBP leadership in February 2018 for a 10 percent across-the-board retention incentive for all Border Patrol agents at the GS-13 level and below, which represents the majority of the component’s frontline workforce. According to Border Patrol documentation, these incentives, if implemented, could help reduce Border Patrol’s attrition rate—which has consistently outpaced its hiring rate—by helping retain agents who may have otherwise left Border Patrol for similar positions in OFO, ICE, or other law enforcement agencies. According to HRM officials, as of April 2018, CBP leadership was evaluating Border Patrol’s group retention incentive request, including the costs associated with implementing this 10 percent across-the-board incentive. In addition, as the incentive would benefit Border Patrol agents in all of the component’s duty locations, the extent to which this effort would be effective in targeting agent attrition in the remote locations that represent CBP’s largest staffing challenges remains to be seen.\nIn addition, as of May 2018, CBP was planning to submit a request to OPM for a $10 per day remote duty location allowance for Border Patrol agents staffed to 17 geographically remote stations. These stations meet OPM’s definition of “remote worksites” and have quality-of-life conditions that are substantially below the standard at most other CBP duty locations. According to the agency, this allowance could help to address the attrition of Border Patrol agents at these duty stations. However, like its group retention incentive request, it is not yet known whether this proposal will be approved.\nFrom fiscal years 2013 through 2017, OFO paid a total of 4 retention incentives at a cost of $149,000 to retain CBP officers in Tucson, Arizona; Detroit, Michigan; Carbury, North Dakota; and Laredo, Texas. Further, OFO paid 7 relocation incentives at a cost of approximately $160,000 to relocate personnel to the hard-to-fill ports of Alcan and Nome, Alaska; Coburn Gore, Maine; and Detroit, Michigan. One OFO official told us OFO did not regularly use retention incentives because its relatively low annual attrition rates make it difficult to propose a persuasive business case to CBP leadership that such incentives are necessary. Further, another OFO official explained that OFO’s strategy is focused on using recruitment incentives to staff hard-to-fill locations with new employees. As discussed above, OFO officials told us this strategy has been effective in retaining CBP officers in most of the hard-to-fill locations where recruitment incentives have been used since fiscal year 2015.\nIn addition to relocation and retention incentives, OFO received OPM approval in fiscal year 2017 to implement a special salary rate for CBP officers staffed to the hard-to-fill location of Portal, North Dakota—a port that consistently experienced CBP officer losses of more than 10 percent each year. Specifically, this special salary rate supplements CBP officers’ base salaries up to 40 percent and, according to OFO officials as of February 2018, there had not been any CBP officer departures from the port since this rate was implemented in June 2017. OFO officials stated that while recruitment incentives can bring applicants to hard-to-fill locations, special salary rates may be able to retain them for longer periods. However, while OFO officials have cited the effectiveness of this special salary rate in retaining personnel, this rate only applies to one hard-to-fill location and does not address OFO’s ongoing staffing challenges in other chronically understaffed locations. According to OFO officials, the component is considering requesting additional special salary rates for such locations where attaining authorized staffing levels has proved difficult, but these officials noted that such discussions are in the preliminary stage due to the extensive effort and amount of time required to pursue this option. Specifically, these officials told us that requesting OPM approval for a special salary rate in Portal, North Dakota, was an onerous and extensive process that took CBP and OPM more than 2 years to complete from start to finish.\nFrom fiscal years 2013 through 2017, AMO did not offer retention incentives to law enforcement personnel and paid a total of 4 relocation incentives to transfer three Air Interdiction Agents and one Marine Interdiction Agent to Puerto Rico at a cost of approximately $84,000. However, AMO has taken steps to pursue additional human capital flexibilities to address its difficulty in retaining Air Interdiction Agents, including a group retention incentive and a special salary rate. Specifically, in September 2017, AMO submitted an official request to HRM for a 10 percent group retention incentive for Air Interdiction Agents staffed to duty locations in Yuma and Sierra Vista, Arizona; Grand Forks, North Dakota; Laredo, Alpine, and McAllen, Texas; and Aguadilla, Puerto Rico. According to the request, the incentive is intended to help AMO retain qualified pilots in these hard-to-fill locations by raising their salaries to be more competitive with commercial airlines. HRM officials told us in March 2018 they were working with AMO and CBP’s Office of Finance to assess the proposal’s cost.\nIn addition, as of April 2018, AMO was in the process of drafting a special salary rate request for all Air Interdiction Agents from GS-11 through GS- 13 at all AMO locations. HRM officials confirmed they were working with AMO officials on this request, including evaluating whether AMO meets OPM’s criteria. HRM officials told us that OPM’s criteria for approving the use of special salary rates represent a high bar and AMO will have to present a strong business case that demonstrates a regular pattern of component-wide Air Interdiction Agent losses.", "CBP does not have a systematic process for capturing and analyzing information on law enforcement officers who are leaving, such as an exit interview or survey. As a result, the agency does not have important information it could use to help inform future retention efforts. CBP officials across all three components confirmed that they do not systematically conduct formal exit interviews to collect data on departing employees. Officials from OFO and AMO told us that departing law enforcement officers receive the DHS exit survey and therefore have the option to provide these data. However, while CBP officials explained that DHS provides the survey response data to CBP on a quarterly basis, AMO officials told us that this information was of limited value due to low response rates. Further, when we requested these data, CBP was unable to provide the survey response data—or the percentage of departing employees who had completed the survey—citing a technical reporting error in DHS’s system. In addition, according to CBP officials, in August 2017, DHS communicated that it no longer required CBP (or DHS’s other components) to use the DHS exit survey.\nIn the third quarter of fiscal year 2017, Border Patrol implemented its own exit survey, which includes questions gauging departing employees’ reasons for leaving, length of service, and, if applicable, what organization they are departing for, among other questions. While such questions should provide CBP with useful data on the factors affecting Border Patrol agent departures, Border Patrol officials told us that the response rate was 9 percent as of January 2018. When we asked these officials about the steps they were taking to improve this response rate, they replied that individual Border Patrol sectors were responsible for disseminating these surveys and the headquarters officials were unsure of the extent to which sector-level officials were sending the surveys to departing employees. To ensure the surveys were being sent, a senior Border Patrol headquarters official explained that sector-level officials have been told to copy him on all e-mails disseminating the survey.\nAccording to CBP officials, in April 2018, the agency launched an initiative to develop a CBP-wide exit survey. The agency plans to develop customized questions for the survey, conduct a pilot of the survey in July 2018, and integrate the survey into CBP’s off-boarding process by the beginning of fiscal year 2019. While CBP provided us with these project milestone dates, the agency did not provide any documentation describing key aspects of the initiative, such as whether CBP will develop a strategy focused on encouraging departing employees to complete the survey to foster higher response rates. Further, CBP did not provide any information on how the agency planned to analyze and use data collected by the exit survey to inform its efforts to retain qualified law enforcement personnel.\nTwo of the other selected law enforcement agencies we reviewed—BOP and the Secret Service—use exit surveys to collect a wide range of information on departing employees, while ICE is currently developing its own survey. For example, similar to Border Patrol’s exit survey, BOP’s uses a mix of multiple-choice and open-ended questions to assess reasons for departures as well as employee attitudes toward compensation, work-life balance and other working conditions, and supervisors. Further, both BOP’s and the Secret Service’s surveys inquire about actions the agencies could have taken that would have prevented the employee’s departure.\nCBP officials said that management is generally aware of the factors that influence law enforcement officer departures, including the main reason— they want to relocate to more desirable locations. Specifically, Border Patrol officials stated that managers have anecdotal knowledge through informal conversations or meetings at the local level with departing Border Patrol agents, and OFO officials stated that when a CBP officer leaves, there is a general understanding among their colleagues as to the reasons for their departure. In contrast to OFO and Border Patrol officials, AMO officials stated that because of the low participation rates on the DHS survey, the component does not have enough data to understand and address the factors that influence employees’ decisions to leave. Standards for Internal Control in the Federal Government state that management should obtain relevant data from reliable sources and process these data into quality information to make informed decisions in achieving key objectives. Taking steps to ensure that the agency’s operational components are systematically collecting and analyzing complete and accurate information on all departing law enforcement officers—including the factors that influenced their decision to separate— would better position CBP to understand its retention challenges and take appropriate action to address them.", "CBP has made progress in improving its recruitment, hiring, and retention of law enforcement officers, including increasing the total number of applications it receives for these positions and reducing the amount of time it takes to hire applicants. Further, CBP has taken steps to address its primary challenge in retaining qualified law enforcement officers by offering opportunities for these personnel to relocate and pursuing the use of financial incentives and other payments to supplement employee salaries. Even so, retaining law enforcement officers in hard-to-fill locations continues to be challenging for CBP.\nAlthough CBP management may be aware of the primary reason law enforcement personnel leave the agency, CBP does not have a systematic process in place across its three operational components to capture and analyze information on these departures, such as an exit interview or survey. Taking steps to ensure that the agency’s operational components are systematically capturing and analyzing a wide range of information on all departing law enforcement officers and the factors that influenced their decisions to leave would better position CBP to understand its retention challenges and take appropriate action to address them.", "The Commissioner of CBP should ensure that its operational components systematically collect and analyze data on departing law enforcement officers and use this information to inform retention efforts. (Recommendation 1)", "We provided a draft of this product to DHS for review and comment. DHS provided written comments, which are noted below and reproduced in full in appendix I, and technical comments, which we incorporated as appropriate. We also provided the draft report to the Federal Bureau of Prisons for review and comment, which indicated via e-mail that it did not have any comments on the draft report.\nDHS concurred with our recommendation and described the actions it plans to take in response. Specifically, DHS stated that CBP is taking steps to develop an agency-wide exit survey to collect information on departing law enforcement officers for implementation in fiscal year 2019. DHS also stated that CBP is working to develop a mass communications plan to facilitate the completion of the survey by exiting employees to ensure an effective response rate. Systematically capturing and analyzing quality information on departing law enforcement officers will help CBP to understand its retention challenges. To fully address the intent of our recommendation, CBP will also need to use this information to address its retention challenges and inform its overall retention efforts.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Homeland Security, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8777 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact named above, Adam Hoffman (Assistant Director), Bryan Bourgault, Eric Hauswirth, Tyler Kent, Amanda Miller, Sasan J. “Jon” Najmi, Leslie Sarapu, Michael Steinberg, and Adam Vogt made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title h1_title", "h2_full", "h2_full h1_full", "", "", "h0_title", "", "h0_full", "", "h0_full", "", "", "", "", "", "h2_title h1_title h3_title", "h3_full h1_full", "h2_full h1_full", "h3_full h1_full", "h1_full", "h0_full h3_full h1_full", "", "", "", "", "", "" ] }

{ "question": [ "How has CBP increased emphasis on recruitment?", "How did these efforts affect the number of applications it received?", "How has CBP attempted to better target potential applicants?", "To what extent have these efforts been successful?", "What is the current state of CBP's effort to address retention issues?", "What is the key retention challenge?", "How has CBP addressed this challenge?", "How could CBP better understand its retention challenges?", "What is CBP responsible for?", "Why has CBP been unable to meet its target staffing levels?", "What was GAO asked to review?", "What does this report review?", "How did GAO collect data for this report?", "How did GAO assess CBP strategies?" ], "summary": [ "U.S. Customs and Border Protection (CBP) increased its emphasis on recruitment by establishing a central recruitment office and increasing its participation in recruitment events, among other things.", "As a result, the number of applications it received for law enforcement positions across its operational components—the Office of Field Operations, U.S. Border Patrol, and Air and Marine Operations—from fiscal years (FY) 2013 through 2017 more than tripled.", "Also, in November 2017, CBP hired a contractor to more effectively target potential applicants and better utilize data to enhance CBP's recruitment efforts.", "However, it is too early to gauge whether the contractor will be effective in helping CBP to achieve its goal to recruit and hire more law enforcement officers.", "CBP enhanced its efforts to address retention challenges. However, staffing levels for law enforcement positions consistently remained below target levels. For example, CBP ended FY 2017 more than 1,100 CBP officers below its target staffing level.", "Officials cited employees' inability to relocate to more desirable locations as a key retention challenge.", "CBP has offered some relocation opportunities to law enforcement personnel and has recently pursued the use of financial incentives and other payments to supplement salaries, especially for those staffed to remote or hard-to-fill locations.", "However, CBP does not have a formal process for capturing information on all departing employees, such as an exit survey. Ensuring that operational components are systematically collecting and analyzing such information would better position CBP to understand its retention challenges and take appropriate action to address them.", "CBP is responsible for securing U.S. borders and employs nearly 45,000 law enforcement officers across its three operational components at and between U.S. ports of entry, in the air and maritime environment, and at certain overseas locations.", "In recent years, CBP has not attained target staffing levels for its law enforcement positions, citing high attrition rates in some locations, a protracted hiring process, and competition from other law enforcement agencies.", "GAO was asked to review CBP's efforts to recruit, hire, and retain law enforcement personnel.", "This report examines CBP's efforts to (1) recruit qualified law enforcement officers, (2) more efficiently hire law enforcement applicants, and (3) retain law enforcement officers.", "GAO analyzed CBP data on recruitment, hiring, and retention from FY 2013 through 2017, as well as selected data for the first two quarters of FY 2018.", "GAO also reviewed CBP strategies and the recent contract it awarded to augment its recruiting and hiring activities and interviewed officials from CBP and three other selected law enforcement agencies." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 1, 0, -1, -1, -1, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "Background", "Contempt of Court", "Civil Contempt of Court", "Criminal Contempt of Court", "Supreme Court Case—Representation in Civil Cases", "Criminal Nonsupport", "State Actions", "Federal Criminal Penalties", "Implications", "Placing the Imprisonment Option in Policy Context", "Appendix. State Laws" ], "paragraphs": [ "", "Child support is the cash payment that noncustodial parents are obligated to pay for the financial support of their children. Child support payments enable parents who do not live with their children to fulfill their financial responsibility to their children by contributing to the payment of childrearing costs.\nThe Child Support Enforcement (CSE) program was signed into law in 1975 ( P.L. 93-647 , Title IV-D of the Social Security Act) as a federal-state program to help strengthen families by securing financial support for children from their noncustodial parent on a consistent and continuing basis and by helping some families to remain self-sufficient and off public assistance. The CSE program is based on the premise that both parents are financially responsible for their children. Basic responsibility for administering the CSE program is left to the states, but the federal government has a major role in dictating the major design features of state programs; funding, monitoring, and evaluating state programs; providing technical assistance; and giving states help in locating noncustodial parents and obtaining child support payments. Congress, through legislative changes, has broadened the mission of the CSE program. The CSE program has evolved over time from a \"welfare cost-recovery\" program into a \"family-first\" service delivery program that seeks to enhance the well-being of families by making child support a reliable source of income.\nIncluded in their available methods to collect child support obligations, states use the threat of jail and actual incarceration in jail. Many states bring charges of civil or criminal contempt of court or criminal nonsupport against noncustodial parents who fail to pay child support.\nAll states have criminal statutes that relate to the failure to pay child support. Thus, in all states, failure to pay child support is technically a crime under the state's criminal nonsupport statutes. However, many states choose to treat failure to pay child support less harshly by treating it as a violation of a court order. A violation of a court order is usually referred to as contempt of court and, depending on the state, it may be considered a civil offense, a criminal offense, or both.\nIn the CSE program, although a general protocol is usually followed, the individual caseworker has discretion over how to manage a case. For example, the caseworker determines which child support collection methods to use. After the CSE caseworker determines that he or she has spent an appropriate amount of time trying to get a noncustodial parent to meet his or her child support obligation, the worker often has the authority to have a warrant issued to bring the noncompliant noncustodial parent before a judge. Some noncustodial parents contend that they appeared in court in compliance to a subpoena and then were immediately arrested and put in jail after the court hearing.\nThe task of trying to persuade noncustodial parents to pay their child support obligation is an ongoing and, at times, futile duty for many judges. The threat of jail—or actual incarceration—for failure to pay child support is widely acknowledged to be just a temporary fix, but many judges contend that it is their most productive leverage in child support cases. Given that about 70% of child support arrearages (i.e., past due child support) are owed by noncustodial parents with no reported income or income of $10,000 or less per year, the inability of low-income noncustodial parents to pay child support will likely be a constant and ongoing problem.\nNational data do not exist with respect to how often the incarceration option is used. So, if incarceration of noncustodial parents for nonpayment of child support is viewed as an issue, there are no data to reflect the magnitude of the problem.", "The CSE program is operated in all 50 states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands, and by several Indian tribes or tribal organizations. The CSE program provides seven major services on behalf of children: (1) parent location, (2) paternity establishment, (3) establishment of child support orders, (4) review and modification of child support orders, (5) collection of child support payments, (6) distribution of child support payments, and (7) establishment and enforcement of medical support.\nThe CSE program has at its disposal a wide variety of methods by which to obtain child support obligations. Collection methods used by state CSE agencies include\nincome withholding, intercept of federal and state income tax refunds, intercept of unemployment compensation, liens against property, reporting child support obligations to credit bureaus, intercept of lottery winnings, sending insurance settlement information to CSE agencies, authority to withhold or suspend driver's licenses, professional licenses, and recreational and sporting licenses of persons who owe past-due support, authority to seize assets of debtor parents held by public or private retirement funds and financial institutions, and authority for the Secretary of State to deny, revoke, or restrict passports of debtor parents.\nIn addition, federal CSE law requires states to enact and implement the Uniform Interstate Family Support Act (UIFSA) and expand full faith and credit procedures (so as to effectively enforce interstate child support cases). Federal law also provides for international enforcement of child support. In addition, federal criminal penalties may be imposed in certain cases. Moreover, all jurisdictions also have civil or criminal contempt-of-court procedures and criminal nonsupport laws (see the Appendix ). This option means that it is possible for all states and jurisdictions to incarcerate certain noncustodial parents who owe past-due child support.\nThe most effective child support enforcement tool is income withholding, a procedure by which automatic deductions are made from wages or other income. Once initiated, income withholding can keep child support flowing to the family on a regular basis. In FY2010, about 67% of the $32 billion collected by the states for child support payments was obtained through income withholding, 6% from the unemployment intercept offset, 6% by way of the federal income tax refund offset, 4% from other states, less than 1% from the state income tax refund offset, and 16% ($5 billion) from other sources. Sporadic data from the federal Office of Child Support Enforcement (OCSE) indicate that roughly $3.5 billion of the $5 billion amount from other sources is from child support collected through banks, credit unions, and other financial institutions pursuant to the financial institution data match program; and perhaps about $1 billion (per year) is from collections obtained due to the driver's license suspension program. Based on these rough estimates, probably less than 2% of child support collections can be associated with the threat of incarceration. If a noncustodial parent is actually incarcerated because of nonpayment of child support, the likelihood of receipt of child support payments from that parent during the period of incarceration is very small.\nIt should be noted that even before the enactment of the CSE program in 1975, states individually and collectively tried to address the problem of nonpayment of child support. For example, in 1910 the National Conference of Commissioners on Uniform State Laws approved the Uniform Desertion and Non-Support Act, which imposed criminal penalties on fathers who failed to support their children. The 1910 act sought to improve the enforcement of the duties of support, but it did not take into account husbands and fathers who fled the jurisdiction. As the U.S. population became more mobile and noncustodial parents and their children increasingly lived in different states, welfare agencies had to support some destitute families because the extradition process was inefficient and often unsuccessful. In 1950, The National Conference of Commissions on Uniform State Laws published the Uniform Reciprocal Enforcement of Support Act (URESA). The commission stated that, \"The purposes of this act are to improve and extend by reciprocal legislation the enforcement of duties of support and to make uniform the law with respect thereto.\" URESA sought to enforce the provisions in two ways: criminal enforcement and civil enforcement.\nAlthough jail has been a method to enforce child support obligations for a long time, from the outset many acknowledged that it was counterproductive to put the noncustodial parent in jail. Commentary on the 1950 version of URESA indicated the following:\nEveryone was agreed that the return of the obligor to face criminal charges in the state from which he had fled was of limited value. If convicted, he would be put in jail and the state would still have the burden of support of the destitute family. Even when free again, he would be under the heavy handicap of \"a man with a criminal record\" in finding a job and supporting his family. However, the commissioners finally decided to leave criminal enforcement in the Act because it was the traditional method of solving the problem and it was not certain that civil enforcement would take care of all cases; and it was felt that, while actual extradition would be of little use, the threat of extradition might be a powerful weapon in the case of shiftless and slippery obligors.\nState and federal laws and procedures that penalize noncustodial parents for not paying child support by \"locking them up\" have gained sympathy in recent years from a wide range of interested parties. Child support experts and state policymakers now generally categorize noncustodial parents who do not consistently pay their child support obligation on a timely basis as \"can't pay\" and \"won't pay\" parents. While policymakers and the public are somewhat sympathetic to those who cannot pay, they are angry with those that will not pay. In response, states and the federal government have developed and implemented aggressive child enforcement tools to pursue \"won't pay\" parents who refuse to meet their child support obligation despite having the financial resources to do so. The increasingly common use of criminal statutes and contempt of court orders in child support cases reflects society's growing frustration with \"won't pay\" parents. (It should be noted that although this either-or delineation may at first seem straightforward, in practice it can be very complicated and many low-income noncustodial parents claim that they are mistakenly lumped into the \"won't pay\" group when in reality they do not have the income or resources to pay.)\nOther countries also use the jail option. For example, in England and Wales if a nonresident parent refuses to pay the child maintenance he or she owes, the Child Support Agency can apply to the courts for a warrant of commitment. This warrant can legally send a nonresident parent to prison for up to six weeks. Moreover, as in the United States, even if the nonresident parent is sent to prison, he or she is still obligated to pay all of the child support owed. Among the 14 countries studied in a 2009 report, 3 did not imprison persons for failure to pay child support arrears. Two of the three countries that did not imprison were Australia and Finland. In addition, the report noted that although Denmark specifies criminal prosecution and imprisonment in various documents, it has never in practice prosecuted or incarcerated anyone because of nonpayment of child support.\nAs mentioned above, one of the services provided by the CSE program is review and modification of child support orders. A prevalent viewpoint holds that an effective modification process can help assure that child support orders remain appropriate and prevent the accumulation of inappropriate child support debt.\nThe section below discusses ways in which the nonpayment of child support can result in a noncustodial parent being incarcerated. Laws concerning most child support enforcement activities are civil, but nonpayment of child support may subject a noncustodial parent to criminal sanctions in three situations: (1) a finding of contempt of court for failure to obey a court's child support order—contempt of court is classified as either criminal or civil; (2) prosecution under a state criminal nonsupport statute; or (3) prosecution under the Child Support Recovery Act of 1992, as amended in 1998 ( P.L. 102-521 and P.L. 105-187 ). Anecdotally, it appears that it is not uncommon for low-income noncustodial parents to be incarcerated for nonpayment of child support or contempt of court charges that relate to nonpayment of child support. Unfortunately, national data do not exist with respect to how often the incarceration option is used. CSE agencies generally do not track arrests for nonpayment of child support and the record-keeping of sheriffs' offices or prosecuting attorneys' offices on this topic is sporadic, nonexistent, and/or inconsistent across jurisdictions.", "Contempt of court is a legal term that means that the individual in question is not following a court order. State courts have the authority to punish individuals for violating their valid judgments or decrees. Certain acts or omissions that embarrass the court, lessen its authority or dignity, or obstruct the administration of justice constitute contempt. A judge who feels someone is improperly challenging or ignoring the court's authority has the power to declare the defiant person in contempt of court. Contempt is classified as either civil or criminal.\nIf the purpose of the penalty imposed is for the benefit of a private party to the action, the contempt is generally classified as civil. Civil contempt occurs when an individual willfully disobeys a court order or rule. This is sometimes referred to as indirect contempt because it occurs outside the judge's immediate realm and evidence must be presented to the judge to prove the contempt. An individual who is found to be in civil contempt of court may be fined, jailed, or both as a consequence of his or her actions. The fine or jailing is meant to coerce the individual into obeying the court, not to punish the person, and the person is to be released from jail just as soon as he or she complies with the court order. In family or domestic relations law, civil contempt is one way a court enforces child support orders that have been violated. In fact, parties seeking payment of child support often ask courts, through motions for civil contempt, to send the defendant (i.e., the noncustodial parent) to jail unless he or she comes up with the money owed. In a civil contempt of court case, the individual is no longer in contempt (and thereby free) once he or she complies with the court's requirements (e.g., fully pay all child support arrearages, make timely child support payments in accordance with a court-sanctioned agreement, or participate in a work and/or training program so as to be able to make child support payments at a later date).\nHowever, if the purpose of the penalty is to vindicate the authority of the court, the contempt is classified as criminal. Criminal contempt occurs when an individual interferes with the ability of the court to function properly. For example, if an individual yells at the judge or jury, it could be considered criminal contempt of court. An individual who is found to be in criminal contempt of court may be fined, jailed, or both as punishment for his or her actions. Criminal contempt of court charges are punitive, in that their intent is to deter future acts of contempt by punishing the offender no matter what happens in the underlying proceeding. In other words, criminal contempt of court charges become separate charges from the underlying case. Unlike civil contempt sanctions, criminal contempt charges may live on after resolution of the underlying case.\nAlthough contempt of court proceedings are generally classified as either civil or criminal, it is generally agreed that it is often hard to determine how a particular act or infraction should be properly classified. Interested parties also agree that judges should more carefully determine whether to impose civil or criminal contempt of court rulings. This is because \"an incorrect decision (wrongly classifying the contempt proceeding as civil) can increase the risk of wrongful incarceration by depriving the defendant of the procedural protections (including counsel) that the Constitution would demand in a criminal proceeding.\"", "According to CSE documents, civil contempt actions are generally brought against noncustodial parents who have very poor child support payment histories, are unemployed or self-employed, or have no regular income that can be withheld through income withholding. The basic purpose of a civil contempt action is to encourage compliance with the child support order. In fact, in general, a finding of current ability to pay is a prerequisite to a civil contempt ruling. In a civil contempt action, the purpose is to force compliance by the noncustodial parent. The sanction usually falls into three categories: (1) coercive/punitive fines (paid to the court), (2) compensatory/remedial fines (paid to the custodial parent), and (3) incarceration. However, any fine or imprisonment is generally considered improper unless it benefits the custodial parent and the children and allows the noncustodial parent to purge himself or herself (i.e., avoid punishment) by complying with clearly stated and attainable requirements.\nAccording to arguments made during the Turner v. R ogers Supreme Court case, \"A court may not impose punishment in a civil contempt proceeding when it is clearly established that the alleged contemnor is unable to comply with the terms of the order. And once a noncustodial parent who is delinquent in paying his or her child support obligation complies with the underlying order, he is purged of the contempt and is free.\" Some commentators characterize this situation by saying that \"He carries the keys of his prison in his own pockets.\" The Court has made clear (in a case not involving the right to counsel) that, where civil contempt is at issue, the Fourteenth Amendment's Due Process Clause allows a state to provide fewer procedural protections than in a criminal case. Further, a state may place the burden of proving inability to pay on the defendant.\nSome commentators assert that although the intent may be that persons who are unable to comply with court requirements because they do not have the money to pay child support obligations should not be charged with contempt of court, in practice this may occur because some noncustodial parents are mistakenly thought to be able to pay and many noncustodial parents cannot prove that they are not able to pay.", "A strictly penal sanction is supposed to be imposed only in cases wherein the defendant is provided essential due process protections. These due process protections include the right to notice of the offense, the right to present a defense, the right to call witnesses, an impartial judge, and, in some jurisdictions, the right to counsel and a trial by jury.\nA criminal contempt proceeding is considerably more complicated than a civil contempt proceeding. Initiation of the proceeding may require a more formal notice than is provided the civil defendant in the motion and order to show cause, although a formal indictment is not necessary. The possibility of an indigency hearing, a jury trial, and a change of judge potentially makes the process a very long one.\nNonetheless, there are occasions when criminal contempt may be effective. In cases where a noncustodial parent has been charged with civil contempt on several occasions but never voluntarily makes child support payments until the jail term is imminent, a criminal contempt action may change his or her attitude about compliance. In addition, a court may set consecutive jail terms for multiple contempt of court rulings. Moreover, criminal contempt might be the only available remedy to punish a noncustodial parent who willingly limited his or her ability to pay child support (out of spite) by quitting a job or taking one at a much lower salary.", "Parents can be jailed without a trial because failure to pay child support is usually handled as a civil matter—contempt of court. This means that if the noncustodial parent is found guilty of contempt of court and ordered to appear at a hearing, he or she can be sent to jail unless willing and able to satisfy the child support obligation. As mentioned, these civil defendants generally are not entitled to the constitutional protections that criminal defendants receive, including the presumption of innocence or the right to an attorney.\nIn contrast, indigent criminal defendants have a right to court-appointed attorneys, who typically are paid with tax dollars. Recently, the U.S. Supreme Court was asked to determine whether the Fourteenth Amendment's Due Process Clause requires a state to provide legal representation to an indigent noncustodial parent who is subject to a child support order and faces imprisonment due to noncompliance with that order.\nIn Turner v. Rogers , the Court declined to rule that due process requires legal representation in such instances where other procedural safeguards exist. These safeguards center around a defendant's ability to pay and include\n(1) notice to the defendant that his ability to pay is a critical issue in the contempt proceeding; (2) the use of a form (or the equivalent) to elicit relevant financial information; (3) an opportunity at the hearing for the defendant to respond to statements and questions about his financial status; and (4) an express finding by the court that the defendant has the ability to pay.\nThe case at issue was a South Carolina child support case wherein the defendant, Michael Turner, spent a year in jail for failure to pay back child support after a hearing conducted without legal representation. He presented some evidence of his inability to work, but the court made no finding as to the defendant's indigent status or ability to pay. He was not convicted of a crime; the year in jail was not a punishment, per se. Turner was being held in contempt of court, and the jail time was a means to induce the payment of nearly $6,000 in past-due child support.\nIn reaching its decision, the Court relied on factors set forth in Mathews v. Eldridge , to determine what safeguards are required to make a civil proceeding fundamentally fair. Specially, the Court stated\nA requirement that the State provide counsel to the noncustodial parent in these cases could create an asymmetry of representation that would \"alter significantly the nature of the proceeding.... Doing so could mean a degree of formality or delay that would unduly slow payment to those immediately in need. And, perhaps more important for present purposes, doing so could make the proceedings less fair overall, increasing the risk of a decision that would erroneously deprive a family of the support it is entitled to receive. The needs of such families play an important role in our analysis.\"\nThe Court determined that the straightforward nature of child support proceedings, the lack of representation by the custodial parent, and the existence of other procedural safeguards outside of legal representation all suggested that the Due Process Clause did not mandate appointment of an attorney under the circumstances presented. However, the Court found that the lower court violated Turner's rights by not ensuring that he had counsel or other procedural safeguards to provide notice that his ability to pay was a critical issue or a form to elicit financial information to make such a determination. It is important to note that this decision did not address instances where the child support is owed to the state (i.e., reimbursement of welfare funds) or where complex matters are presented.\nDuring discussion, debate, and arguments concerning the Turner v. Rogers case, the concept of whether nonpaying noncustodial parents should be viewed as deadbeats versus turnips was a recurring point of contention. Those who likened noncustodial parents with high child support arrearages to deadbeats argued that some defendants, most often fathers, somehow develop a belief that their financial and emotional obligations to their children ended when their relationship with the children's mother did. These observers also claimed that other noncustodial parents withhold child support in order to punish or control their ex-spouses. They asserted that for these two groups of defendants, sometimes the threat of jail, followed up by actual jail time (so as not to make the threat an empty one), is the only way to get such noncustodial parents to comply with their child support obligations.\nThose who likened certain noncustodial parents to turnips claimed that many low-income child support defendants were turnips from whom no one—not the custodial parent, not the CSE caseworkers, not the judge—could squeeze one penny. They asserted that the majority of low-income noncustodial parents who end up in jail are turnips, low-income defendants who cannot afford to purge themselves of contempt. According to several analysts and Turner's legal team, the turnips of the world are those who most often end up in jail, which both needlessly deprives them of freedom (and the ability to find a job) and fails to achieve the state's goal of inspiring compliance with child support.\nBecause the defendant \"holds the keys to his own jail cell\" in a civil contempt case, with the ability to end the jail time by complying with the order, it has historically been considered differently than a jail sentence of a specified term for criminal contempt.\nAccording to Turner, the problem was that he just did not have the money to pay. Further, because he did not have a lawyer at his contempt hearing, he was unable to prove it. Because he was sent to jail to force him to comply with a debt he could not pay, he likened his situation to debtors' prison. The mother of his children and her supporters, including the two U.S. Senators from South Carolina, argued that granting civil contempt defendants the right to counsel would actually lead to inequality in the justice system for custodial parents, who do not have such a right.\nUnder prior U.S. Supreme Court rulings, indigent criminal defendants have a right to court-appointed attorneys, who typically are paid with tax dollars. But the Supreme Court has declined to grant similar rights in civil proceedings that could result in jail time and declined to do so again in Turner . However, the U.S. Supreme Court did find that the state court violated the defendant's constitutional rights by sentencing him to imprisonment without first determining whether he had the ability to pay. Thus, the Court set aside a unanimous ruling by the South Carolina Supreme Court and sent the case back to the lower court for \"further proceedings not inconsistent with this opinion.\"", "In many instances, CSE actions are not successful in collecting past-due child support. In those cases, the CSE caseworker via an attorney may pursue criminal charges against the delinquent obligor. There are criminal offenses for nonsupport of children at both the state and federal level.", "All 50 states and the District of Columbia have state-specific or jurisdiction-specific criminal statutes that relate to the failure to pay support in purely intrastate or intra-jurisdiction cases. In some of these states (including DC), the attorneys who establish and enforce child support obligations in civil court have the discretion to file criminal charges against a noncustodial parent. Other states have a referral process where the child support attorney refers the case to the district attorney or prosecutor to review for criminal prosecution. Also, some states appoint child support attorneys as special prosecutors solely for the purpose of bringing an action under the state criminal nonsupport statute.\nAlthough CSE program remedies such as income withholding and income tax refund intercept are still the most often used enforcement tools, criminal nonsupport proceedings can be a useful deterrent to noncompliance. In most states, the usual procedure is for all available civil remedies to be exhausted before resorting to the use of criminal nonsupport. It can be argued that where CSE remedies have proven unsuccessful or where the noncustodial parent has been evading civil remedies, a criminal charge can be effective in bringing about payment.\nIn most states, the normal rules of evidence apply to a criminal nonsupport action. Depending on local practice, the action is initiated by filing a criminal complaint or indictment. Based on the initial finding, a judge may issue a warrant or summons. Like other state criminal actions, the initial pleading must allege all elements of the crime in such a manner that allows the defendant to understand the charge and prepare a defense. State law defines the elements of the crime. The standard of proof in these cases is proof beyond a reasonable doubt. See Table A-1 in the Appendix for a state-by-state listing of criminal nonpayment of child support statutes.", "During the early 1990s, research revealed that a significant number of noncustodial parents were able to meet their child support obligations but intentionally chose not to do so. The chances of successfully escaping one's child support duties increased substantially when the noncustodial parent crossed state lines so as not to pay child support. The Child Support Recovery Act of 1992 ( P.L. 102-521 ) addressed the problem of interstate enforcement of child support by taking the incentive out of moving to another state to avoid paying child support. According to the congressional report on the legislation, \"The bill is designed to target interstate cases only. These are the cases which state officials report to be clearly the most difficult to enforce, especially the 'hard core' group of parents who flagrantly refuse to pay and whom traditional extradition procedures have utterly failed to bring to justice.\"\nP.L. 102-521 imposed a federal criminal penalty for the willful failure to pay a past due child support obligation to a child who resides in another state that has remained unpaid for longer than a year or is greater than $5,000. For the first conviction, the penalty is a fine of up to $5,000, imprisonment for not more than six months, or both; for a second conviction, the penalty is a fine of not more than $250,000, imprisonment for up to two years, or both. This federal criminal penalty was seen as an additional child support enforcement tool or remedy to be used for especially difficult cases in which state-level options had been exhausted and the noncustodial parent with the ability to pay seemed to be intent on evading his or her child support obligations.\nAfter the 1992 law was implemented, there was concern that by providing for a maximum punishment of just six months in prison for a first offense, even very egregious cases of nonsupport were only considered misdemeanors. In response to assertions that the 1992 law did not adequately address more serious instances of nonpayment of child support obligations, Congress passed the Deadbeat Parents Punishment Act of 1998 ( P.L. 105-187 ). The law establishes two new categories of felony offenses, subject to a two-year maximum prison term. The offenses are (1) traveling in interstate or foreign commerce with the intent to evade a support obligation if the obligation has remained unpaid for more than one year or is greater than $5,000; and (2) willfully failing to pay a child support obligation regarding a child residing in another state if the obligation has remained unpaid for more than two years or is greater than $10,000.\n\"Project Save Our Children\" is the mechanism through which the federal criminal penalties for nonsupport law is carried out. The Project Save Our Children initiative is conducted by officials from the HHS Office of Inspector General, the OCSE, the Department of Justice, state CSE agencies, and local law enforcement organizations working together to pursue chronic delinquent parents who owe large sums of child support. Its goal is to increase child support collections through the identification, investigation, and, when warranted, prosecutions of flagrant, delinquent child support offenders.\nAccording to HHS, in FY2006 Project Save Our Children, received over 10,000 cases from the states. As a result of the work of the task forces, in FY2006 986 arrests were made nationwide and 872 individuals were sentenced. Federal investigations resulted in a total of $39.6 million in restitution being ordered with $35.8 million actually collected in FY2006. In FY2007, the Project Save Our Children program resulted in about $8.1 million in child support collections from 1,139 child support cases.", "Many policymakers argue that the threat of jail usually brings noncustodial parents who are employed or have access to income or assets into compliance with child support orders. In contrast, low-income noncustodial parents who do not have the money to pay their child support obligation go directly to jail (because they are unable to comply before the threat is actualized due to their lack of funds).\nThe threat of jailing noncustodial parents who are delinquent in meeting their child support obligations is intended to coerce them to pay, but if they have no money, they cannot pay. Moreover, in many instances these noncustodial parents have used up their goodwill with relatives and friends and thus can no longer borrow from others to meet their obligations. Thus, in the case of some low-income noncustodial parents, jail becomes their reality because they do not have the income or assets to eliminate the threat.\nAccording to many analysts, the threat of jail may be a good public policy tool, but actually making good on the threat generally is not productive. In other words, putting low-income noncustodial parents in jail, especially when it is known that they are unemployed and without the means to pay their child support obligations, does not seem to be effective in gaining financial or emotional help for children. But, observers ask, how can use of a threat be effective if everyone knows that there are no teeth behind it?\nMany noncustodial fathers maintain that the CSE system is dismissive of their financial condition and continues to pursue child support payments (current as well as arrearages) even when it knows that many of them can barely support themselves. They argue that for welfare families, the CSE program generally does not improve their child's well-being because their child support payments are used to benefit the state and federal government (i.e., welfare reimbursement) rather than their child. They contend that the CSE program causes conflicts between them and their child's mother because the women often use it as leverage by threatening to report them to CSE authorities, take them back to court, have more of their wages garnished, or have them arrested.\nSome commentators assert that jails are expensive, dangerous places in which people become aggressive in order to manage their fears or survive the sentence. Therefore, they contend that although most of these people may have been nonviolent before they were incarcerated, they often are no longer so after being in jail or prison.\nNoncustodial parents who are incarcerated for violations related to nonpayment of child support are usually put in jail rather than prison. One widely held myth is that jails only hold nonviolent offenders. To the contrary, jails receive individuals pending arraignment and hold those awaiting trial, conviction, or sentencing. They also hold probation, parole, and bail-bond violators. Some of these individuals are violent persons.\nIt is generally agreed that violence is a part of prison life. It has been noted that the lack of outrage over prison violence is testament to the fact that it is considered a normal and acceptable part of behavior inside prison. According to one report: \"The rates of physical assault for male inmates is over 18 times higher than assault victimization rates for males in the general population, and rates for female inmates are over 27 times higher than their nonincarcerated counterparts.\" Thus, many observers both inside and outside the criminal justice system concede that jails and prisons should primarily be used for violent offenders and that less harsh alternatives should be used for non-violent offenders such as those whose only offense is nonpayment of child support.\nAccording to a report by the American Civil Liberties Union (ACLU), \"Incarceration has a devastating effect on men and women whose only remaining crime is that they are poor.\" Although the report pertains to legal financial obligations (i.e., fines and/or costs imposed on the defendant by a court), the following commentary could also apply to low-income noncustodial parents who are unable to handle their child support obligations.\nUpon release, they face the daunting prospect of having to rebuild their lives yet again. Even for those men and women with unpaid LFOs [Legal Financial Obligations] who do not end up back behind bars, their substantial legal debts pose a significant, and at times insurmountable, barrier as they attempt to re-enter society. They see their incomes reduced, their credit ratings worsen, their prospects for housing and employment dim, and their chances of ending up back in jail or prison increase. Many must make hard choices each month as they attempt to balance their needs and those of their families with their LFOs. They also remain tethered to the criminal justice system—sometimes decades after they complete their sentences—and live under constant threat of being sent back to jail or prison, solely because they cannot pay what has become an unmanageable legal debt.\nSome commentators note that jail generally increases a person's stress and negatively impacts his or her emotional/mental and physical health. They claim that some inmates adopt an aggressive persona out of self-preservation (because the inmate believes that it's a matter of intimidate or be intimidated). They also contend that many persons self-medicate (i.e., use legal or illegal drugs) both inside and outside of jail/prison to counteract the negative impacts, which often results in further repercussions that usually negatively affect the building of positive, strong parent-child relationships and sometimes result in recidivism. Many observers maintain that putting nonviolent persons in jail is often counterproductive especially in times of tight state and local budgets and/or when jail/prison overcrowding is an issue.\nThe United States incarcerates more individuals than any other nation. In 2008, the Pew Center on the States reported that 1 in every 100 adults in the United States now lives behind bars. According to MDRC, a nonpartisan research organization, \"Corrections costs exceed $65 billion per year, with most of the total borne by state and local governments.\" To save costs and to increase the effectiveness and efficiency of the criminal justice system, many states and localities are making use of community service (i.e., unpaid community work), halfway houses, electronic monitoring, court supervision, and community sentencing as alternatives to incarcerating people in jail or prison.\nMany policy analysts contend that the incarceration of persons for nonviolent offenses, such as nonpayment of child support, is both wrong and counterproductive. They say that criminalizing nonpayment of child support by making it a misdemeanor or a felony disproportionately affects low-income noncustodial parents who, more likely than not, are just as poor or poorer than the mother and child (or children) owed child support payments. They also contend that criminalizing nonpayment of child support disproportionately affects noncustodial parents who are African American.\nMany CSE officials counter that noncustodial parents are not penalized for being poor but rather because they are \"deadbeats.\" They contend that it is about demonstrating intent. They assert that most judges give noncustodial parents chance after chance to avoid jail as long as he or she demonstrates a sincere effort to pay their child support obligation. They maintain that persons who show that they are truly looking for a job—by providing proof that they are filling out applications and talking to prospective employers—and persons who can prove that they have little income by showing documentation of bills and/or income receipts usually succeed in convincing the court that they should not be put in jail, especially if they acknowledge their child support responsibilities and a willingness to meet those obligations.\nSome observers argue that although it is not a crime to be poor, if a noncustodial parent is not able to pay his or her child support obligation because he or she has no income, that noncustodial parent could land in jail. They say that although some people assert that jail is the place for deadbeat dads, the truth is that you do not have to be a deadbeat to end up in jail. They claim that if a noncustodial parent is unemployed and unable to meet his or her child support obligation, he or she may be lumped into the deadbeat category. Thus, they contend that many law-abiding citizens face loss of freedom for failing to pay child support because they are poor.\nSome noncustodial parents claim that the deck is stacked against them. Many assert that their freedom is in the hands of CSE caseworkers. They contend that when a caseworker feels that enough time has been spent on trying to obtain payment, the caseworker has the authority to have a warrant issued to bring the noncustodial parent before a judge. They note that some noncustodial parents have the misfortune of being arrested and placed in jail immediately following the court proceeding. Many of these noncustodial parents say that it does not seem to them that all other options are used before CSE caseworkers send their cases to the courts for adjudication.\nUnlike other felons, noncustodial parents who are put in jail because of nonpayment of child support cannot get credit for child support owed for the time they serve in jail. In other words, a noncustodial parent cannot substitute time in jail in place of making child support payments. Also, as discussed earlier, unlike other felons, most noncustodial parents who face jail time because of noncompliance with child support orders do not get a chance to speak to an attorney or to have an attorney speak on their behalf.\nSome observers maintain that incarceration isolates parents from their children and weakens parent-child bonds. They point to the social science literature that maintains that children who have a healthy relationship with both biological parents generally do better on a variety of social indicators than those who only interact with one parent. They note that the costs of incarceration are high and include much more than food, clothing, and shelter expenses. These observers argue that the social, psychological, and emotional impacts on children and families and the negative, disruptive impacts on communities should also be considered. They further maintain that persons with a criminal record have a hard time finding employment and thus a vicious cycle is started and continues. In recent years, the concept of mandating work and/or training programs for low-income noncustodial parents who cannot afford to pay their child support obligations has been viewed by some as an alternative to incarceration.\nOther observers say that noncustodial parents are given numerous chances to pay their child support obligation or meet the court's requirements before they are finally remanded to jail or prison. They point out that noncustodial parents who are unable to meet their child support obligation can request a downward modification of their child support order. They contend that in many instances, the CSE agency will negotiate a payment plan with the noncustodial parent and in some instances forgive some of the child support arrearages. They assert that there are many ill-effects that result from failure to pay child support, namely the reduced income/economic status of children. They contend that not meeting child support obligations is a crime and should be treated as such.\nOthers point out that operating safe, secure, humane, and well-programmed prisons cannot be done inexpensively. They contend that people are incarcerated for legitimate reasons and assert that nonpayment of child support is a legitimate reason for incarceration. They maintain that the cost of incarceration should not be an overriding factor if there is agreement that a crime has been committed.", "As mentioned earlier, imprisonment of noncustodial parents who are delinquent in making their child support payments is one of the older remedies that state CSE agencies are authorized to use for enforcing child support. Now, especially pursuant to the 1996 welfare reform law ( P.L. 104-193 ), there are many more child support enforcement tools. Nonetheless, incarceration still remains among the tools used by the CSE program to enforce child support obligations.\nDiscussions that occurred during the early years of the CSE program indicate that policymakers and administrators maintained that the threat of jail would be more than enough to persuade noncustodial parents to pay their outstanding child support debts—that noncustodial parents would pay rather than go to jail. The historical view was that the CSE program needed \"sticks\" for noncustodial parents who failed to meet their child support obligations. Many observers viewed imprisonment as the last resort and encouraged CSE administrators to give noncustodial parents several opportunities to comply with child support orders before punishing noncompliant offenders by sending their cases to court, which could result in their incarceration. In practice, this viewpoint is still held. As shown in Table A-1 in the Appendix , all states have criminal sanctions for failure to pay child support.\nIt used to be that most noncustodial parents who were penalized with jail were there because they were trying to avoid their financial and moral obligations to pay child support for their children. They tried to hide themselves by moving from place to place or earn money \"under the table\" (i.e., in the underground economy). Some noncustodial parents have indicated that they did these things out of anger or spite because of animosity toward the children's mother and/or because they believed that the CSE agency was unfairly taking too much out of their meager income.\nThe CSE program has become more effective and efficient over the years. The program's ability to locate noncustodial parents and their income and assets is well known. Thus, for many noncustodial parents who currently end up in jail because of nonpayment of child support violations, it is because they do not have the income or means to pay. As one analyst put it, they are dead poor, not deadbeats. Other commentators have noted that large CSE caseloads lead to an increased likelihood that noncustodial parents will be viewed as \"all the same,\" as making excuses, and as not trustworthy in their stated reasons for being unable to pay child support. This increases the probability that many low-income noncustodial parents will end up in jail for nonpayment of child support.\nMany observers argue that incarcerating people—knowing (1) the high costs associated with imprisoning people and (2) that it may significantly diminish their future ability to get jobs, pay taxes, and lift themselves and their families out of poverty—does not make sense.\nAlthough many custodial parents agree, to a certain extent, that some noncustodial parents are \"dead broke\" rather than \"deadbeats,\" they contend that the states and the federal government need to proceed with caution in lowering child support orders for low-income noncustodial parents and refusing to use the incarceration option. They argue that child support is a source of income that could mean the difference between poverty and self-sufficiency for some families. They emphasize that lowering the child support order is likely to result in lower income for the child. They argue that even if a noncustodial parent is in dire financial straits, he or she should not be totally released from financial responsibility for the children. They assert that it is imperative that the children not be short-changed, and that children not be made to suffer because of recalcitrant noncustodial parents who fail to meet child support obligations.\nAccording to the National Child Support Enforcement Strategic Plan: \"Preventing the build-up of unpaid support (arrearages) through early intervention rather than traditional debt threshold-based enforcement\" has been a recent objective and strategy of the CSE program. \"That is, we built a system that intervened only after debt ... accumulated and often too late for collection to be successful, let alone of real value to the child. Severe enforcement remedies applied when necessary have their place. But this Strategic Plan signals our intent to build a culture of compliance, in which parents support their children voluntarily and reliably.\" The CSE Strategic Plan lists the following as ways to strengthen the CSE system and thereby avoid the jail option:\n1. modify orders to ensure that obligations stay consistent with ability to pay; 2. contact noncustodial parents soon after a scheduled payment is missed; 3. update child support guidelines to recognize modern family dynamics and realities (e.g., shared custody, incomes of custodial parents, etc.); 4. use automation to detect noncompliance as early as possible; and 5. aim primarily at consistent, reliable payment of current support, even if it means compromising uncollectible arrears to bring the noncustodial parent back into the fold.\nMany observers maintain that an effective modification process can help assure that child support orders remain appropriate and prevent the accumulation of inappropriate child support debt. Under the CSE program, states are given significant latitude regarding modifications and reviews of child support orders. Federal law requires that states give both parents the opportunity to request a review of their child support order at least once every three years, and states are required to notify the parents of this right. In order to prevent child support arrearages, especially for noncustodial parents who are unemployed or in prison, some analysts argue that child support modification laws should be changed so that they are more sensitive to periods of incarceration, unemployment, or injury/illness during which the noncustodial parent's ability to pay child support decreases. They contend that it is virtually impossible for most low-income noncustodial parents with those types of barriers to stay current in meeting their monthly child support payments.\nIn addition, it has periodically been suggested that in some cases in which the child support obligation cannot be met, in-kind assistance (such as providing child care) may be one way in which society can steadfastly adhere to the tenet that both parents are responsible for the well-being of their children while recognizing the reality of the dire financial situation in which many low-income noncustodial parents find themselves.\nA wide body of research indicates that father absence has negative ramifications for children. Given that incarceration separates parents from children, many analysts contend that severe enforcement remedies such as incarceration no longer serve a useful purpose. They assert that more innovative approaches to confinement such as probation, participation in drug abuse prevention programs, participation in work and training programs, house arrest, or placement in a halfway house are effective counter measures to the negative effects incarceration has on familial relationships and one's ability to obtain employment.\nAccording to one former inmate: \"When you come out of prison, you are facing a lot of issues like housing and transportation. Plus, you're a felon, and it's hard to find work. And you've got to pay child support and the court fees you owe.\" Many observers contend that non-incarceration remedies are a better option for noncustodial parents, children, families, and ultimately the communities in which they live.\nThe costs of using the criminal justice system for nonviolent offenders are high. The money from revamping/restructuring the criminal justice system might fund many alternatives. According to the Pew Center on the States, \"With states facing the worst fiscal crisis in a generation and corrections costs consuming one in every 15 state discretionary dollars, the need to find cost-effective ways to protect public safety is more critical than ever.\" Research from the Public Safety Performance Project and its partners details strategies—such as strengthening community supervision and reinvesting money currently spent on imprisoning the lowest risk inmates—to cut corrections costs and give taxpayers a better return on public safety dollars.\nThere are now many state and federal initiatives with the purpose of trying to ameliorate some of the harmful impacts of father absence. Such initiatives include responsible fatherhood programs and CSE access and visitation programs. These initiatives are intended to provide low-income noncustodial parents with jobs, job training, and/or job skills so that they can earn a living and be able to meet their child support obligations—based on the premise that these noncustodial parents need extra help because people with a prison record are less desirable workers than people who have not been in jail from the standpoint of employers.\nPolicymakers, CSE analysts and administrators, and most commentators agree that imposing jail time on low-income noncustodial parents who cannot afford to meet their child support obligations can be counterproductive, since imposing jail time means the person is not working and earning money. Moreover, having a criminal record usually lowers a person's job prospects. Ex-offenders re-entering communities face a host of problems, a major one being barriers to employment because of their criminal records. Most employers now conduct background checks, with the result that people are often denied employment or even fired from jobs because of their criminal records. Moreover, the inability of many people released from jails and prisons to meet their financial obligations can contribute to their being incarcerated again.\nAccording to a 2005 report:\nFor most of these parents, their support orders will not be reduced while they are incarcerated and (unless they find some other means of continuing to pay during their incarceration), they will accumulate arrears and interest on these arrears. Moreover, in most states, if the custodial parent and child receive public assistance, the child support arrears are not owed to the child and custodial parents but to the state, and thus are of no direct benefit to the child, and cannot be forgiven by the custodial parent.\nThe long-term consequences of these practices on individuals can be enormous. Whether they have been incarcerated for nonpayment of child support or on other grounds, the fact of having been incarcerated and having a criminal record, coupled with a large debt that can quickly reach an unpayable amount can make it virtually impossible for noncustodial parents to secure and maintain employment or to establish stability upon release. The lack of employment and continuing escalation of debt in turn greatly increase the likelihood that the noncustodial parents will be re-incarcerated for nonpayment of child support.\nSome commentators maintain that if required work and/or job training programs are used instead of the jail option, noncustodial parents and their children are better off. One CSE enforcement tool that can be used for noncustodial parents who have a child who receives Temporary Assistance for Needy Families (TANF) benefits allows judges to remand nonpaying noncustodial parents (of a child receiving TANF benefits) to a TANF work program, with the mandate to participate in the program, pay the child support owed, or be confined in jail. This obligation can be monitored to ensure compliance by the noncustodial parent. If the parent is in fact working surreptitiously, it is likely that the work program will conflict with his or her other job, forcing the parent to admit to having earnings and thereby to pay child support. If the noncustodial parent really is jobless, the program can help him or her get a job. One example of a child support-driven employment project is the Texas Noncustodial Parent Choices Program. Another example is the Fathering Court, which was first implemented in Missouri in 1998 and later launched in Alabama, Iowa, Louisiana, Texas, and Washington, DC. It is an alternative to the prosecution and incarceration of noncustodial fathers with significant child support arrearages.\nIn addition, some noncustodial parents are participating in Transitional Jobs programs. Transitional Jobs programs provide time-limited wage-paying jobs that combine work, skill development, and supportive services to help participants, who have struggled to find or keep a job, quickly and successfully enter the labor force.\nMoreover, a number of state CSE programs have established employment programs in partnership with state and local workforce development boards and local courts for low-income noncustodial parents trying to meet their child support obligations. According to data from the federal Office of Child Support Enforcement (OCSE), as of September 2011, at least 29 states and the District of Columbia were operating work-oriented programs for noncustodial parents with active CSE agency involvement. Most of the programs were not statewide.\nHowever, other observers pose the \"what if\" question. They wonder what would happen if mandatory work and training program were imposed on low-income noncustodial parents who are unable to pay their child support obligations and for whatever reason these parents are not contributing to their child's support after participating in such a program. Would not incarceration be an appropriate option for low-income noncustodial parents who flunked out of an imposed work/training program, dropped out of the program, or could not keep the provided job? They contend that incarceration as a penalty of last resort for nonpayment of child support is a logical and long-standing option given that noncustodial parents (like custodial parents) have a moral and financial obligation to support their children and not meeting that obligation is criminal and may have long-term negative consequences for their children. They note the fact that all 50 states and the District of Columbia have criminal sanctions for nonpayment of child support is not happenstance.", "The failure to pay child support has been a crime in most states for many years. In the beginning, most of the laws were on the books but in practice rarely used. In the 1990s, nonpayment of child support was viewed as a serious crime. Many states even had a \"most wanted\" list for child support debtors. Moreover, a 1992 law also made nonpayment of child support a federal crime. By the late 1990s, most states had begun using jail as a last resort option after other CSE enforcement tools proved ineffective.\nTable A-1 shows state statutes related to criminal sanctions for failure to pay child support. As seen in the table, the classifications of these statutes include such titles as nonsupport, abandonment of dependent child, desertion and nonsupport of children, flagrant nonsupport, and criminal nonsupport. The maximum penalty ranges from up to six months in jail in Rhode Island and the District of Columbia to a fine of up to $150,000 in Arizona and imprisonment between five and 20 years in Arkansas.\nTable A-1 is an update of a table published in 1993 by the HHS Office of Child Support Enforcement in a now defunct publication titled the Child Support Prosecutor's Bulletin , which was published quarterly in coordination with the American Bar Association's Child Support Project. This update was compiled by Meredith Peterson and [author name scrubbed] of the Knowledge Services Group of the Congressional Research Service (CRS)." ], "depth": [ 0, 1, 1, 2, 3, 3, 3, 2, 3, 3, 1, 1, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h0_full h1_full", "h1_full", "", "", "", "", "", "", "h3_full h2_full", "h3_full h2_full", "" ] }

{ "question": [ "Why was CSE created?", "What is the premise of the CSE program?", "Where is the CSE program operated?", "What authority do state CSE programs have available?", "How may non-payment of support lead to criminal sanctions?", "How is contempt of court classified?", "How does civil contempt occur?", "How does criminal contempt occur?", "What are the implications of a finding of contempt?", "What is the main argument of opponents of incarceration for nonpayment of child support?", "How is criminalizing nonpayment of child support discriminatory, according to these opponents?", "How may incarceration affect the individual's future development?", "Why do some belive in harsher penalties for nonpayment of child support?", "Why do the proponents argue in favor of incarceration?", "In their eyes, what is the importance of child support?", "How do they believe nonpayment of child support should be classified?" ], "summary": [ "The Child Support Enforcement (CSE) program was signed into law in 1975 (P.L. 93-647) as a federal-state program to enhance the well-being of families by making child support a reliable source of income.", "The CSE program is based on the premise that both parents are financially responsible for their children.", "The CSE program is operated in all 50 states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands, and by several Indian tribes or tribal organizations.", "State CSE programs have at their disposal a wide variety of methods by which to obtain child support obligations. In addition, states under their own authority and the authority of their courts can use the threat of incarceration and/or actual incarceration.", "Nonpayment of support may subject a noncustodial parent to criminal sanctions in three situations: (1) a finding of contempt of court for failure to obey a court's child support order, (2) prosecution under a state criminal nonsupport statute, or (3) prosecution under federal criminal penalties for nonpayment of child support.", "Contempt of court is classified as either \"civil\" or \"criminal.\"", "Civil contempt occurs when an individual willfully disobeys a court order or rule.", "Criminal contempt occurs when an individual interferes with the ability of the court to function properly.", "Judges can sentence individuals to imprisonment upon a finding of contempt.", "Many contend that the incarceration of persons for nonpayment of child support is both wrong and counterproductive.", "They say that criminalizing nonpayment of child support by making it a misdemeanor and/or felony disproportionately affects low-income noncustodial parents who more likely than not are just as poor or poorer than the mother and children owed child support payments.", "They also contend that the negative ramifications of being in jail include a weakened bond between the noncustodial parent and his or her children and family and a high probability that the individual will ultimately be re-incarcerated for nonpayment of child support or other infractions or crimes.", "Others say that for some noncustodial parents, the threat of being incarcerated for nonpayment of support is not enough.", "They contend that some noncustodial parents would rather quit their jobs, go from job to job, work in the underground economy (where earnings are not reported to anyone), or engage in illegal activity rather than meet their child support obligations.", "They argue that child support is a source of income that could mean the difference between poverty and self-sufficiency for some families.", "They say that children ought not to be short-changed because of recalcitrant noncustodial parents, and maintain that nonpayment of child support is a real crime and should be treated as such." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 1, 1, 1, -1, 0, 0, -1, 0, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Background on SSDI", "Eligibility", "Benefits", "Determination and Adjudication Process", "Trends in the SSDI Program Since 1980", "Enrollment", "Termination", "Program Size", "Prevalence Rates", "Causes of the Growth in the SSDI Rolls", "Changes in the Demographic Characteristics of Insured Workers", "Growth in the Working-Age Population", "The Influx of Women into the Labor Force", "The Aging of the Workforce", "Changes in Opportunities for Work and Compensation", "High Unemployment", "The Value of Cash Benefits", "The Value of Health Coverage", "Changes in Federal Policy", "The Social Security Amendments of 1983", "The Social Security Disability Benefits Reform Act of 1984", "Other Potential Factors", "Changes in the Health of the Working-Age Population", "Variation in the Disability Determination and Appeals Process", "Reform Proposals", "Tighten Eligibility Criteria", "Eliminate Eligibility for SSDI Benefits at Age 62 or Later", "Increase the Recency-of-Work Requirement", "Adjust the Age Categories for Vocational Factors", "Improved Administration of the Program", "Permit SSA to Be Represented at the Hearing Level of the Appeals Process", "Difficulties with Switching to an Adversarial Process", "Update SSA's Listing of Impairments", "Update SSA's Occupational Information System", "Increase the Number of Full Medical CDRs Conducted by SSA", "Limitations of Full Medical CDRs", "Return-to-Work Incentives249", "Increase Awareness of Return-to-Work Services", "Benefit Offset", "Promote Supported-Work Policies", "Experience Rate the Employer's Portion of the Payroll Tax Rate", "Employer-Sponsored Private Disability Insurance", "Acronyms" ], "paragraphs": [ "", "Concern among some Members of Congress and the public over the financial sustainability of the Social Security Disability Insurance (SSDI) program has grown. Under current law, the Federal Disability Insurance (DI) Trust Fund—which finances the benefits and administrative costs of the SSDI program—is projected to be exhausted by the fourth quarter of calendar year 2016. If depleted, the DI trust fund would be able to pay about 80% of scheduled SSDI benefits.\nThe declining solvency of the DI trust fund is the result of an increasing imbalance between SSDI's income and outlays. Between 1980 and 2013, non-interest income to the DI trust fund (adjusted for inflation) increased 181%, while spending on benefits grew 219%. The increase in spending is due largely to the growth in the number of beneficiaries on SSDI. Over the same period, the number of disabled workers and their dependents more than doubled, rising from 4.7 million in 1980 to 11 million in 2013. Because benefit payments account for nearly all program spending, the growth in the SSDI rolls has contributed heavily to the financial difficulties of the DI trust fund.\nTo assist lawmakers in addressing the sustainability of the program, this report provides an overview of reform proposals to manage the long-term growth in the SSDI rolls. The report is divided into four sections. The first section provides a brief background on SSDI, including program eligibility criteria, benefits, and the initial determination and adjudication process. The second section discusses the growth in the SSDI rolls since 1980 by examining historical entry and exit trends in the program. The third section investigates some of the causes of growth in SSDI, including changes in the demographic characteristics of the working-age population, changes in opportunities for work and compensation, and changes in federal policy. The fourth section examines various options to manage the growth in the SSDI rolls, namely, (1) stricter eligibility criteria, (2) improved administration of the program, (3) stronger return-to-work incentives, and (4) policies to encourage employers to help disabled workers continue to work.\nMany of the options discussed in this report could reduce spending by slowing or even reducing the growth of SSDI over the long term; however, such options are unlikely to produce savings in time to prevent the projected exhaustion of the DI trust fund in 2016. For information on financing options to extend the solvency of the DI trust fund in the short term, see CRS Report R43318, Social Security Disability Insurance (DI) Trust Fund: Background and Solvency Issues , by [author name scrubbed].", "Enacted in 1956 under Title II of the Social Security Act, SSDI is part of the Old-Age, Survivors, and Disability Insurance (OASDI) program administered by the Social Security Administration (SSA). OASDI is commonly called Social Security. Like Old-Age and Survivors Insurance (OASI), SSDI is a form of social insurance that replaces a portion of a worker's earnings based on the individual's career-average earnings in jobs covered by Social Security. Specifically, SSDI provides benefits to insured workers under the full retirement age (FRA) who meet the statutory test of disability and to their eligible dependents. FRA is the age at which unreduced Social Security retirement benefits are first payable (currently 66). In November 2014, 10.9 million individuals received SSDI benefits, including 9 million disabled workers, 150,000 spouses of disabled workers, and 1.8 million children of disabled workers.", "To qualify for SSDI, workers must be (1) insured in the event of disability, and (2) statutorily disabled. To achieve insured status, individuals must have worked in covered employment (i.e., jobs covered by Social Security) for about a quarter of their adult lives before they became disabled and for at least five of the past 10 years immediately before the onset of disability. However, younger workers may qualify with less work experience based on their age. In 2014, SSDI provided disability insurance to an estimated 151 million workers.\nTo meet the statutory test of disability, insured workers must be unable to engage in any substantial gainful activity (SGA) because of a medically determinable physical or mental impairment that can be expected to result in death or has lasted or can be expected to last for at least one year. In 2015, the monthly SGA earnings limit is $1,090 for most workers and $1,820 for statutorily blind individuals. In general, workers must have a severe condition that prevents them from doing any kind of substantial work that exists in the national economy, taking into account age, education, and work experience.", "Cash benefits begin five full months after a beneficiary's disability onset date. Initial benefits are based on a worker's career-average earnings, indexed to reflect changes in national wage levels (up to five years of the worker's low earnings are excluded). Benefits are subsequently adjusted to account for inflation through cost-of-living adjustments (COLA), as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). However, benefits may be offset if a disabled worker also receives workers' compensation or other public disability benefits. In November 2014, the average monthly benefit was $1,146 for disabled workers, $309 for spouses of disabled workers, and $343 for children of disabled workers.\nIn addition to cash benefits, disabled workers and certain dependents are eligible for health coverage under Medicare after 24 months of entitlement to cash benefits (29 months after the onset of disability). In 2012, Medicare spending per disabled beneficiary averaged about $9,900.\nSome SSDI beneficiaries may also qualify for Supplemental Security Income (SSI). SSI provides cash payments to aged, blind, or disabled individuals with limited income and assets. Both programs are administered by SSA and use the same definition of disability; however, unlike SSDI, SSI has no work or contribution requirements. In most states, SSI recipients are automatically eligible for Medicaid. Over 1 million disabled workers ages 18-64 received both SSDI and SSI benefits in December 2013.", "To apply for SSDI, an individual must first file an application with a local SSA field office. Applications that meet the work history and earnings requirements are then forwarded to a state Disability Determination Services (DDS) office for a medical determination. DDSs—state agencies that are fully funded by the federal government—decide whether applicants meet national disability standards established by SSA. State DDS examiners and medical and psychological consultants typically use medical evidence collected from the claimant's treating sources (physicians, psychologists, or other acceptable medical sources) to determine the severity of the claimant's impairment(s). If a claimant's condition is determined to be severe and meets (or is of equal severity to) the medical criteria in SSA's Listing of Impairments , the claimant is considered disabled and therefore eligible for SSDI. Claimants who do not meet the medical criteria in the listings proceed to a more individualized assessment that examines their residual functional capacity to perform any past relevant work or other work that exists in the national economy. If a claimant cannot perform such work, the claimant is awarded benefits.\nClaimants whose initial applications are denied may appeal. During the appeals process, claimants may present additional evidence or arguments to support their case as well as appoint a representative to act on their behalf. The appeals process is composed of four stages: (1) reconsideration by a different examiner from the state DDS office, (2) a hearing before an administrative law judge (ALJ), (3) a review before the Appeals Council, and (4) filing suit against SSA in U.S. district court. Almost all appeals reach the ALJ stage; few proceed to the Appeals Council or federal court.", "", "Between 1980 and 2013, the number of SSDI applications submitted to SSA's field offices doubled, from 1.3 million to 2.6 million. As Figure 1 illustrates, most of that growth began around 2000. The number of awards for SSDI increased 111% over this same period, from 420,000 in 1980 to 888,000 in 2013. At the same time, the overall incidence (enrollment) rate rose from 4.4 awards per 1,000 disability-exposed to 6.3. The incidence rate is the ratio of the number of new beneficiaries awarded benefits each year to the number of workers who are insured in the event of disability but not currently receiving benefits (i.e., the disability-exposed population ).", "Entitlement to benefits ends when a disabled worker no longer meets the eligibility criteria for SSDI. Although the overall number of disabled-worker terminations increased 77% between 1980 and 2013, from 435,000 to 769,000, the ratio of annual disabled-worker terminations to the average number of disabled-worker beneficiaries (the termination rate ) actually decreased 41%, from 145 disabled-worker terminations per 1,000 disabled-worker beneficiaries to 86.\nAs depicted in Figure 2 , three main factors drive the termination rate: death, recovery, and conversion. The beneficiary death rate decreased 42% between 1980 and 2013, from 48 disabled-worker terminations per 1,000 disabled-worker beneficiaries to 28, reflecting the trend in the U.S. population of declining mortality rates across all age groups.\nRecovery refers to individuals whose benefits were terminated because of medical improvement or earnings above SGA. From 1980 to 2013, the recovery rate declined 77%, from 29 disabled-worker terminations per 1,000 disabled-worker beneficiaries to 6.7. A conversion termination occurs when SSA automatically converts a disabled-worker benefit to a retired-worker benefit due to a disabled worker reaching the FRA. Over this same period, the conversion rate fell 25%, from 68 disabled-worker terminations per 1,000 disabled-worker beneficiaries to 51.\nThe rise in the recovery rate during the early 1980s stemmed mainly from the enactment of the Social Security Disability Amendments of 1980 ( P.L. 96-265 ), which expanded the use of continuing disability reviews (CDR) for all non-permanently disabled beneficiaries. CDRs are periodic medical reevaluations conducted to determine if beneficiaries continue to meet SSA's definition of disability. The frequency of CDRs is linked to a beneficiary's probability of recovery. A major review of the SSDI program after the passage of the 1980 amendments resulted in a marked increase in the recovery rate between 1980 and 1982. However, the political backlash over the implementation of the reviews led to a temporary moratorium on CDRs for most mental impairment cases as well as an increase in the percentage of beneficiaries designated as \"permanently disabled\" and therefore subject to less frequent reviews. These actions, coupled with changes to the disability determination and review process stemming from the Social Security Disability Benefits Reform Act of 1984 ( P.L. 98-460 ), contributed to the subsequent decrease in the recovery rate.\nThe 1997 increase in the recovery rate largely resulted from the passage of the Contract with America Advancement Act of 1996 ( P.L. 104-121 ), which terminated the benefits of SSDI and SSI recipients whose drug addiction and alcoholism (DA&A) significantly contributed to their disability. However, because DA&A beneficiaries represented less than 3% of all disabled adults on SSDI and SSI in 1996 and new applicants could no longer claim disability based on DA&A, P.L. 104-121 's impact on the overall trend in the SSDI recovery rate was minimal.\nStarting in 2002, the recovery rate contracted again, in part, because of a reduction in the number of medical CDRs conducted by SSA. The Contract with America Advancement Act of 1996 authorized additional funds for CDRs but only for FY1996 through FY2002. In FY2003, the additional funding for CDRs lapsed and SSA shifted its focus away from CDRs toward processing the growing number of initial disability claims. As a result, the number of medical CDRs performed by SSA dropped from an all-time high of 877,000 in FY2000 to 208,000 in FY2007, before climbing back up to 526,000 in FY2014 ( Figure 3 ).", "Between 1980 and 2013, the overall number of SSDI beneficiaries increased 134%, from 4.7 million to 11 million. Most of the growth in the program stemmed from disabled workers, whose ranks tripled, from 2.9 million in 1980 to 9 million in 2013 ( Figure 4 ). In contrast, the number of spouses of disabled workers on SSDI decreased 66% during this period, from 462,000 in 1980 to 157,000 in 2013. The number of children receiving benefits grew rather modestly compared with the number of disabled workers on SSDI, from 1.4 million children in 1980 to 1.9 million in 2013.", "The size of the SSDI rolls is largely the function of two factors: the incidence (enrollment) rate of beneficiaries into the program and the termination rate of beneficiaries from the program. From 1980 to 2013, a marked rise in the incidence rate, coupled with a steady decline in the termination rate, resulted in an appreciable increase in the number of beneficiaries on SSDI. The prevalence rate measures the total number of disabled workers relative to the overall insured-worker population at the end of the year. The insured-worker population is the sum of the disability-exposed population and the number of individuals who are already receiving SSDI benefits. Between 1980 and 2013, the gross (unadjusted) prevalence rate grew from 2.8% to 5.9% ( Figure 5 ).\nWhen one adjusts the prevalence rate to control for the effects of changes in the age-sex distribution of the insured-worker population, the upward trend is less pronounced. Age-sex adjusting permits a more meaningful comparison over extended periods, insofar as it \"isolates the changing trend in the true likelihood of receiving benefits for the insured population, without reflecting changes in the age distribution of the population.\" From 1980 to 2013, the age-sex-adjusted prevalence rate grew from 3.1% to 4.6%.\nBecause the baby-boom generation is aging and older workers are more likely to qualify for SSDI, the gross rate would have increased even if the rate for each age group remained constant. The growth in the gross rate is due to both population aging (discussed below) and growth in the age-sex adjusted rate. The gap between the age-sex-adjusted rate and the gross rate is the growth that is attributable to changes in the age and sex distribution of the insured population.", "Ascribing shares of the growth in the SSDI program to specific factors has engendered disagreement among researchers, advocates, and some Members of Congress. In general, people who support higher spending on SSDI focus on changes in the demographic characteristics of insured workers. In contrast, individuals who want to limit program spending typically focus on the effect of changes in the economic incentives to apply for SSDI and legislative changes to the program's eligibility criteria.\nAs Figure 5 highlights, some of increase can be explained by demographic factors such as the aging of the workforce; however, the increase in the age-sex-adjusted rate means the growth in the SSDI rolls is also attributable to non-demographic factors, some of which are not well understood. This section examines some of the more salient explanations for the growth in the program and discusses other potential factors.", "", "One factor behind the increase in the total number of beneficiaries on SSDI is the overall growth in the working-age population ( Figure 6 ).\nFrom 1980 to 2013, the population ages 20-64 rose from 134 million to 192 million, while the insured-worker population ages 20-64 grew from 94 million to 146 million. The growth in the working-age population accounts for largest the share of the increase in the total number of beneficiaries on SSDI.", "The latter half of the 20 th century witnessed a marked expansion of women in the workforce, which has contributed to the growth in SSDI. Between 1950 and 1999, the annual labor force participation rate for women age 16 and older nearly doubled, from 34% to an all-time high of 60%. As a result, the share of women ages 15-64 who were insured for disability increased from 51% in 1980 to 67% in 2014. The portion of men who were insured declined slightly over this period, from 77% to 71% ( Figure 7 ).\nThe growth in the share of women insured for disability coincided with an increase in the rate at which insured women were awarded benefits. As Figure 8 shows, both male and female age-adjusted incidence rates increased markedly between the late 1980s and early 1990s. However, male age-adjusted incidence rates declined following the 1990-1991 recession while female rates held steady. Researchers refer to this trend as women's \"catch-up.\" Since the late 1990s, age-adjusted incidence rates for women have been more or less at parity with men's rates. Although the reason for the gap between incidence rates during the 1980s is not entirely clear, researchers have speculated that past generations of women may have been less likely to know about SSDI and more likely to turn to family members or means-tested programs, such as Aid to Families with Dependent Children (AFDC), when affected by work-limiting impairments.", "The aging of the large baby-boom generation—individuals born between 1946 and 1964—played a marked roll in increasing the number of individuals on SSDI. Beginning in 1996, working-age baby boomers increasingly aged and became more prone to disability, resulting in a shift in the age distribution of the insured-worker population from younger workers to older workers. This shift helped to increase the gross incidence and prevalence rates, inasmuch as older workers have a higher likelihood of benefit receipt relative to younger workers. Between 1996 and 2013, the portion of SSDI awards to disabled workers ages 50 to FRA increased from 54% to 66% ( Figure 9 ). One reason for this is that older workers report suffering from work-limiting disabilities at higher rates relative to younger workers.\nAnother factor is that the definition of disability is effectively less strict at higher ages. In making a disability determination, DDS examiners take into account the claimant's medical condition as well as vocational factors such as age, education, residual functional capacity, and work experience. Under its regulations, SSA considers advancing age to be a limiting factor in a claimant's ability to adjust to other work. Therefore, older workers are more likely to receive benefits than are younger workers, even if they have the same disability. The trustees expect the gross prevalence rates to grow at a slower pace in the future as baby boomers increasingly become eligible for full Social Security retirement benefits.", "Changes in financial incentives also contributed to the growth in the program. In deciding whether to apply, workers compare the value of SSDI benefits (cash payments and health coverage) with their opportunities for work and compensation. When the economy is strong, more individuals who could qualify for SSDI might decide to seek or continue employment. On the other hand, when labor market conditions are adverse, more individuals may find SSDI benefits preferable to the jobs and compensation available to them in the economy. Although the initial determination process screens out most non-meritorious claimants, SSA may grant awards to some claimants on the margin of program entry who could potentially work but choose not to due to economic circumstances. This subsection outlines how changes in the financial incentives to apply for SSDI likely increased the incidence of benefit receipt.", "During periods of economic weakness, individuals who might otherwise choose to work may be more likely to apply for SSDI benefits as a form of unemployment assistance. There is a positive relationship between the unemployment rate and the SSDI application rate. With the exception of the period between 1980 and 1984, instances of high unemployment are associated with an increase in SSDI applications. As shown in Figure 10 , the recent recession (December 2007 to June 2009) contributed to a conspicuous spike in the number of SSDI applications submitted to SSA; between 2007 and 2010, applications for SSDI increased 32%, from 2.2 million to 2.9 million.\nThe relationship between the unemployment rate and the approval rate is somewhat more ambiguous, inasmuch as the award year may not coincide with the application year due to a prolonged determination and appeals process. Several studies have found an inverse relationship between the approval rate and the unemployment rate. In other words, a claimant's likelihood of receiving an award at the initial determination level decreases as the unemployment rate rises. This is thought to occur because adverse labor market conditions induce more marginally disabled individuals to apply for benefits. Nevertheless, the overall number of SSDI awards issued by SSA appears to increase during economic downturns. One possible reason for this is that some individuals who could qualify for SSDI but choose instead to work when the economy is strong are often less likely to find reemployment opportunities following a job loss when the unemployment rate is high. Between 2007 and 2010, the number of SSDI awards granted by SSA increased 22%, from 819,000 to 1 million.", "Over the past few decades, SSDI appears to have become more attractive to lower-skilled workers because their potential SSDI benefits replace a larger portion of their earnings than before. The share of a worker's pre-disability earnings replaced by cash benefits is known as the replacement rate . Although the replacement rate depends on a worker's past earnings, the Social Security benefit formula also reflects changes in the average earnings of all workers in the national economy, as measured by the Average Wage Index (AWI). Due to the progressive nature of the benefit formula, replacement rates are greater for workers with low lifetime wages than for high-wage workers ( Table 1 ).\nSome part of the growth in SSDI is driven by rising replacements rates for low-skilled workers, which have made SSDI benefits more desirable than work for an increasing share of workers. The increase in the relative attractiveness of SSDI benefits was likely strongest for low-wage workers, because they experienced slower real earnings growth over the last three decades than medium and high-wage workers. This increase in wage inequality has interacted with the structure of the benefits formula to increase replacement rates for lower-skilled workers. That means that SSDI is more attractive to those workers than it had been in the past.\nWhile researchers generally agree that replacement rates \"are rising due to the widening distribution of income,\" there is some disagreement over the extent to which this increase induced low-wage workers to apply for SSDI benefits.", "Access to affordable health coverage also affects an individual's decision to apply for SSDI, but the net effect of changes in health policies on SSDI is unclear. As noted earlier, disabled workers and certain dependents are eligible for coverage under Medicare after 24 months of entitlement to cash benefits (29 months after disability onset). Congress extended Medicare to SSDI beneficiaries under the Social Security Amendments of 1972 (P.L.92-603) because the \"use of health services by people who are severely disabled is substantially higher than that by the nondisabled ... yet the disabled have limited incomes in comparison to those who are not disabled, and most disabled persons are unable financially to purchase adequate private health insurance protection.\"\nHealth care is generally more expensive for individuals with disabilities. One study found that health care expenditures per capita were over four times greater for workers with disabilities than those without disabilities. Persons with disabilities have higher health care expenditures because they typically use more health services and have secondary conditions that further impair overall health. These higher costs can make health care coverage prohibitively expensive for some individuals with disabilities. In 2013, 39% of individuals with disabilities had private health insurance coverage, compared with 71% of individuals without disabilities. The lower coverage rate for individuals with disabilities under private health insurance is due, in part, to the availability of government-sponsored health care coverage under Medicare and Medicaid.\nSome research suggests that the desire to gain access to Medicare induced some individuals with disabilities to apply for SSDI. However, it is difficult to know exactly how many individuals awarded SSDI were motivated to apply in order to gain access to Medicare. One study found that 22% of SSDI beneficiaries ages 18-64 lacked health insurance coverage prior to their entitlement to SSDI.\nThe Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) is likely to influence SSDI application rates in the future, though the law's net effect on the SSDI prevalence rate is difficult to determine. On the one hand, the ACA may reduce SSDI applications by increasing access to affordable health coverage, making access to Medicare less valuable. On the other hand, the ACA may increase SSDI applications by making it easier for individuals who get health coverage through their work to apply, because they could obtain Medicaid coverage or subsidized coverage in the exchange during the 24-month waiting period for Medicare. Recent research indicates that the health care law's effect on SSDI application rates is likely to vary by locality due to factors such as (1) the availability of Medicaid in a state, (2) local health insurance coverage rates, and (3) the availability and type of state Medicaid buy-in programs.", "In addition to demographic and economic changes, various amendments to the Social Security program played a role in increasing the number of people on SSDI. While some of the changes to Social Security were designed to address specific issues with SSDI, modifications to other parts of the program indirectly affected the incentives for individuals to apply for disability benefits. The following subsection examines how changes in the full retirement age for Social Security retired-worker benefits and in the evaluative criteria used to determine disability contributed to the growth in the SSDI rolls.", "The Social Security retirement program faced serious financial challenges in the early 1980s. High inflation and low wage growth starting in the 1970s had eroded the balance of the OASI trust fund, which finances the benefits and administrative costs of the OASI program. In 1982, the Social Security trustees projected that the OASI trust fund would exhaust by the middle of 1983.\nTo improve the financial condition of the OASI trust fund, Congress enacted the comprehensive Social Security Amendments of 1983 ( P.L. 98-21 ). Among the 1983 amendments' many substantial changes was an increase in the FRA from 65 to 67. Between 2002 and 2009, the FRA gradually increased until it reached 66 for workers born between 1943 and 1954. The FRA is scheduled to rise again, reaching 67 for workers born in 1960 and later.\nRaising the FRA reduced OASI spending but increased DI spending in several ways. First, it increased the number of workers who are eligible for SSDI. From 2003 to 2014, the number of insured workers ages 65-FRA rose from over 200,000 to more than 2.4 million. Because workers aged 65-FRA are more likely to have a qualifying disability, the increase in the number of insured workers led to an increase in the number of workers awarded benefits. In 2013, over 7,400 workers aged 65-FRA were awarded benefits.\nSecond, the increase in the FRA lengthened the duration of benefit receipt for SSDI recipients near retirement age. Disabled workers move from SSDI to OASI when they reach the FRA. As the FRA increased above 65, beneficiaries remained on SSDI longer. In December 2013, over 455,000 disabled workers ages 65-FRA received benefits.\nThird, the rise in the FRA increased the value of SSDI cash benefits relative to early retirement benefits. Insured workers who choose to retire between the ages of 62 and FRA are subject to a permanent reduction in their monthly cash benefits. Prior to the 1983 amendments, the reduction for claiming retirement benefits at age 62 was 20%; with the increase in the FRA to 66, the reduction at age 62 rose to 25%. That reduction will rise to 30% for workers whose FRA is 67. Because SSDI benefits are approximately the same as full retirement benefits, the increase in the FRA likely impelled some additional workers to apply for SSDI benefits in order to maximize their total cash benefits. Although recent studies suggest that an increase in the value of disability benefits relative to early retirement benefits induces individuals to apply for SSDI benefits, researchers are divided over whether such individuals are actually awarded benefits.", "As noted earlier, the Social Security Disability Amendments of 1980 ( P.L. 96-265 ) markedly expanded the use of continuing disability reviews (CDRs) as a means of reducing the growth in program costs. CDRs are periodic medical reevaluations conducted to determine if beneficiaries are still disabled. Between January 1982 and fall 1984, SSA issued benefit termination notices to 490,000 of the 1.2 million SSDI beneficiaries subjected to a CDR. However, the rise in beneficiary terminations due to CDRs sparked a degree of public outcry and had \"a very damaging effect on the public perception of SSA's administration of the disability program.\" News stories at the time often depicted the financial and emotional difficulties faced by recently terminated beneficiaries and their dependents. Ultimately, of the 490,000 beneficiaries who received termination notices, approximately 200,000 had their benefits reinstated on appeal.\nIn response to the contention over the increased use of CDRs, Congress unanimously enacted the Social Security Disability Benefits Reform Act of 1984 (DBRA; P.L. 98-460 ). DBRA changed the statutory standards for evaluating disability in a variety of ways. First, it revised the medical eligibility criteria for CDRs so that SSA could terminate the benefits of a recipient due to medical improvement only if the agency found substantial evidence of medical improvement related to the recipient's ability to work since the most recent favorable determination. Under the 1980 amendments, SSA had treated medical CDRs as a new determination and could revoke benefits even if a beneficiary's health had not changed.\nSecond, it required the Secretary of Health and Human Services to revise the criteria under the \"mental disorders\" category in the Listing of Impairments . Before the reforms, disability determinations relied primarily on medical factors, which tended to disadvantage claimants with mental impairments from benefit receipt. The revised listings for mental impairments—first published in 1985 —\"reduced the weight given to medical factors and put a greater weight on functional capacities, such as the applicant's ability to perform activities of daily living. \"\nThird, it required SSA to consider the combined effect of multiple non-severe impairments on the claimant's ability to engage in SGA. Prior to DBRA, a disability determination could not proceed unless the claimant had one or more independently severe impairments. Lastly, DBRA provided a temporary statutory standard (through the end of 1986) for evaluating pain. Before the reforms, there was no \"specific statement in the law\" as to how pain should be evaluated. SSA issued new pain regulations in 1991.\nIn enacting DBRA, Congress sought to protect the rights of \"those correctly and properly allowed on the rolls\" while continuing to remove non-meritorious beneficiaries from the program. To accomplish this, Congress established a national, uniform process for determining disability, which complemented objective medical criteria with more subjective criteria such as pain and functional capacity. Congress, though, explicitly stated that the intent of DBRA was not to change the basic standard of eligibility for SSDI.\nNevertheless, a number of researchers argue that despite Congress's intention, the establishment of new evaluative criteria contributed to the growth in the disability rolls by making it easier for claimants with \"difficult-to-verify\" impairments to qualify for SSDI, such as mental and musculoskeletal disorders. For example, the revision to the \"mental disorders\" category in the Listing of Impairments , which gave greater weight to functional capacities, may have permitted more claimants with mental impairments to qualify for SSDI. Similarly, the allowance of the combined effect of multiple non-severe impairments and the evaluation of pain may have made it easier for claimants suffering from musculoskeletal disorders (impairments involving bones, muscles, tendons, or ligaments) to enroll in the program.\nAs Figure 11 illustrates, the percentage of awards due to mental and musculoskeletal impairments increased markedly following the passage of DBRA. Between 1985 and 2001, the share of newly awarded beneficiaries with mental impairments increased from 18% to 26% before declining to 17% in 2013. According to one researcher at SSA, the increase in awards resulting from mental disorders in 1986 \"is directly attributable to changes in the decision making process due to the 1984 Social Security Disability Benefits Reform Act.\" From 1986 to 2012, the share of all beneficiaries with mental impairments increased from 24% to 31%.\nThe change in musculoskeletal impairments was even more pronounced. Between 1985 and 1994, awards based on musculoskeletal disorders remained roughly constant, rising from 13% to 13.4%. However, due to a change in the reporting method for awards, the percentage of awardees with musculoskeletal impairments jumped to 22% in 1995, later increasing to 36% in 2013. From 1986 to 2013, the share of all beneficiaries with musculoskeletal impairments grew from 18% to 31%.\nFor an alternative perspective, Figure 12 shows the change in the incidence of various diagnostic groups over time. Although the incidence of other diagnostic groups, such as circulatory-related disabilities, stayed roughly constant over the past 30 years, the growth in musculoskeletal and mental awards was such that the share of awards based on other disabilities declined ( Figure 11 ). In other words, as mental and musculoskeletal awards increased in absolute terms, other impairments remained generally steady. However, because the overall rate of mental and musculoskeletal awards increased, the share of other impairments decreased.\nThe growth in the share of beneficiaries with mental and musculoskeletal impairments may have also increased the disability rolls by increasing the average length of time that beneficiaries stay on SSDI. Mortality rates for beneficiaries with mental or musculoskeletal impairments are lower than average, while their conversion rates are higher than average. As a result, they experience a longer-than-average duration of benefit receipt. Furthermore, because beneficiaries with mental impairments enter the program at younger-than-average ages, their time on SSDI could last decades.", "", "It is unclear whether overall changes in population health have affected the size of the SSDI program. Although mortality rates at all ages have fallen markedly over the last half-century, indicating generally improved health, the rise in conditions such as obesity and diabetes—which may increase the risk for certain diseases and other health problems—might have increased the share of the population with severe disabilities.\nThus far, researchers have failed to reach a consensus on whether working-age adults are healthier or unhealthier. Some research indicates that reported rates of disability have grown, especially among the younger working-age population. On the other hand, some researchers have found that the likelihood of near-elderly individuals (ages 50-64) to report a work-limiting disability has declined, while the health of younger workers has stayed roughly the same.\nPart of the problem in determining trends in the prevalence of disability in the working-age population stems from the fact that there is no single, universally accepted definition or measure of disability. Although many of the large surveys used by researchers specifically ask questions pertaining to disability, the wording and complexity of the questions often differs. Because many surveys are self-reporting, the definition of what constitutes a work-limiting disability often rests entirely on the subjectivity of the respondent. As a result, trends in the prevalence of disability vary by survey and by the definition of disability.\nGiven the inconclusive literature, it seems unlikely that changes in the prevalence of disability in the working-age population can adequately explain the growth in the SSDI rolls.", "Some researchers have suggested that inconsistency in the disability determination and appeals process contributed to the growth in the program, but the evidence on the issue is inconclusive. Depending on the case, variation can both increase and decrease the overall allowance rate. Disability examiners and ALJs with high allowance rates may be offset by examiners and judges with low allowance rates.\nAs earlier noted, DDS examiners use a combination of medical and functional evidence to determine whether an impairment precludes a claimant from engaging in SGA. Although DDS examiners base their initial determinations on uniform guidelines established by the SSA, regional differences in demographic, health, and employment characteristics may produce variation in initial allowance rates among DDS offices. However, one study found an appreciable degree of variation in determination outcomes across examiners within the same DDS office. The study estimated that up to 60% of applicants \"could have received a different initial determination from at least one other examiner in the DDS office.\" Even though the appeals process mitigated some of this variation, the study concluded that up to 23% of claimants could have ultimately received different outcomes had other examiners in the DDS office performed the determination.\nSome have speculated that the uncertainty of an outcome at the initial determination level due to variation across DDS examiners likely encouraged denied claimants to pursue the appeals process, increasing their likelihood of SSDI receipt. The aforementioned study found that claimants denied by stricter examiners were more likely to appeal their determinations. Although most of the awards granted by SSA are made at the initial determination level, the hearing level has the highest allowance rate of any step in the determination and appeals process. In FY2013, the allowance rate at the hearing level was 48%, compared with 33% at the initial level, 11% at the reconsideration level, 1% at the Appeals Council level, and 2% at the federal court level. The study found that 75% of denied claimants who contested their initial determinations had their denials overturned eventually on appeal.\nOthers contend that variation in the allowance rates at the hearing level of the appeals process contributed to the number of workers on SSDI. A 2013 report by SSA's Office of the Inspector General (OIG) discovered wide variances in the allowance rates among some ALJs within the same hearing office. Additionally, an earlier OIG report found a direct relationship between the number of cases adjudicated by outlier ALJs (i.e., judges at the extreme ends of the distribution scale) and allowance rates. ALJs with the highest allowance rates adjudicated more dispositions relative to the office average, while ALJs with the lowest allowance rates adjudicated fewer dispositions compared with the office average. A 2014 OIG report estimated that judges with 700 or more dispositions and allowance rates of 85% or higher improperly allowed benefits in approximately 24,900 cases over a seven-year period, resulting in \"questionable costs\" of more than $2 billion.\nEven in the absence of such variation, those claimants improperly granted awards by outlier examiners and judges might have eventually been found disabled in the future. One study found that over 60% of claimants denied at the hearing level of the appeals process were later awarded benefits within 10 years. One possible explanation is that the health of some initially rejected claimants with marginal disabilities may deteriorate to the point that they meet SSA's definition of disability several years later. Therefore, inconsistency in the disability determination and appeals process may simply accelerate receipt of benefits for some workers.", "This section examines options to manage the long-term growth in the SSDI program. These options have been proposed by numerous sources, including researchers, advocacy organizations, federal agencies, and the Social Security Advisory Board (SSAB). For an overview of options to reduce benefit levels or to increase program revenues, see CBO's 2012 report, Policy Options for the Social Security Disability Insurance Program , available at https://www.cbo.gov/publication/43421 .\nAs noted previously, while many of the proposals discussed in this report have the potential to slow or even reverse the prevalence of SSDI receipt and thus generate savings to the program over the longer term, such proposals are unlikely to produce savings in time to forestall the projected exhaustion of the DI trust fund. To avoid a 20% cut in benefits in 2016, lawmakers would likely need to enact some kind of short-term financing, such as a reallocation of the Social Security payroll tax rate or interfund borrowing.", "One policy option to reduce the growth in the SSDI rolls is to tighten the program's eligibility requirements. In general, the aim of tightening eligibility criteria is to mitigate the number of marginally disabled individuals on the program while continuing to grant awards to the most severely disabled individuals. Because marginally disabled individuals have some remaining capacity to work, rejecting their applications would generally cause less harm to them than to more severely disabled individuals. That said, there is no guarantee that all marginally disabled individuals can work. Although it is difficult to discern which type of claimants would be affected by more stringent eligibility requirements, a recent study found that marginal program entrants are more likely to be younger, suffer from mental impairments, and have low earnings histories. Henry Aaron, chair of the Social Security Advisory Board, summarized that \"the challenge for society is to choose a definition that best balances its willingness to award benefits to some people who do not 'deserve' them and to deny benefits to some who do.\"\nEnacting stricter eligibility criteria would also affect other federal spending and tax programs. On the one hand, tightening standards would not only directly reduce spending through a higher rejection rate; it would also likely discourage some individuals from applying for SSDI in the first place. Additionally, stricter standards would likely encourage some prospective applicants to continue to work, which would increase tax receipts. On the other hand, some people who could no longer qualify for SSDI would seek other federal support. For example, individuals with sufficiently low income and assets could potentially qualify for SSI, increasing federal spending.", "As noted earlier, workers between the ages of 62 and FRA who apply for early Social Security retirement benefits are subject to a reduction in their monthly benefits. In contrast, workers between the ages of 62 and FRA who apply for SSDI benefits receive about the same benefit that they would have received had they applied for retirement benefits at their FRA. Some Members of Congress have expressed concern that the differential between disability and early retirement may induce workers between the ages of 62 and FRA to apply for SSDI as a means of increasing their total benefits. In 2013, 9% of the nearly 869,000 awards issued by SSA went to individuals between the ages of 62 and FRA.\nTo reduce the growth in the SSDI rolls, policymakers could eliminate eligibility for SSDI benefits starting at age 62. Instead, workers between the ages of 62 and FRA would be eligible only for early retirement benefits. Under current law, the penalty for taking early retirement at age 62 is a 25% to 30% monthly reduction in cash benefits, depending on year of birth. CBO recently estimated that preventing workers from applying for SSDI benefits after their 62 nd birthday or receiving SSDI benefits if they became eligible after that date starting in 2016 would reduce federal outlays by $10.6 billion between 2015 and 2024, or 0.6% of scheduled outlays for SSDI.\nOne reason to eliminate eligibility starting at age 62 is that it could \"encourage individuals that seek disability benefits as an early retirement program to remain in the work force.\" However, opponents point out that this option would adversely affect older workers with little or no capacity to work in the national economy, especially those workers near or below the poverty line.", "To become insured under the Social Security program, workers must accrue work credits—known as quarters of coverage —based on their earnings in covered employment. In 2015, workers are credited with one quarter of coverage for each $1,220 in earnings, up to the maximum of four quarters of coverage per year. To qualify for SSDI, workers must have earned a minimum number of quarters of coverage based on their age and generally must have earned at least 20 quarters of coverage during a 40-calendar quarter period ending with the quarter in which their disabilities began. In other words, disability claimants must have worked for five of the past 10 years to be eligible for SSDI. That \"recency-of-work\" requirement—sometimes known as the 20/40 rule—restricts the program to individuals who have worked of late and for a reasonable length of time in covered employment.\nCBO recently estimated the impact of increasing the recency-of-work requirement on beneficiary enrollment. According to the agency, requiring non-blind disability claimants to have worked four of the past six years (instead of five of the past 10) starting in 2016 would reduce federal outlays by $32.4 billion between 2015 and 2024, or 1.8% of scheduled outlays for SSDI.\nThe stricter recency-of-work requirement would likely affect individuals with intermittent work histories, specifically workers with prolonged and sustained bouts of absence from covered employment due to unemployment or withdrawal from the labor force. One study found that while working-age men (ages 25-54) report leaving the labor force primarily because of disability, working-age women typically report leaving the labor force to care for someone in their household. Consequently, the more stringent recency-of-work requirement may disproportionately affect women who drop out of the labor force to act as caregivers.", "Another option is to raise the age categories for \"vocational factors.\" In addition to assessing an applicant's medical condition, DDS examiners take into account the individual's ability to perform any past relevant work or other work that exists in the national economy. Vocational factors such as age, education, and work experience—in combination with the individual's residual functional capacity—help an examiner to determine whether an applicant's impairment precludes him or her from engaging in SGA. Since vocational factors such as education and work experience typically become less stringent with age, SSA is more likely to award benefits to older insured workers.\nCurrently, SSA categorizes older workers across four age ranges: 45-49, 50-54, 55-59, and 60 and older. CBO examined the effects of increasing the 45-49 and 50-54 age ranges by two years to 47-51 and 52-56 and making 57 to FRA the new maximum range, thereby eliminating the 45, 46, and 60 and older categories. According to CBO, if this option had been implemented in 2013, it would have decreased the number of SSDI beneficiaries by 50,000 or 0.5% in 2022, as well as reduced program expenditures by $1.0 billion in that year.\nSSA explored raising the age categories in the past but ultimately decided against it. In 2005, SSA issued a Notice of Proposed Rulemaking (NPRM) to increase the age categories for older insured workers by two years. However, after collecting feedback from the public, SSA withdrew the NPRM in 2009.", "One option is to improve the way in which SSA administers the program so that fewer non-meritorious people receive benefits. Variation in the application of program rules can distort the disability determination and adjudication process, resulting in SSA granting awards to non-meritorious claimants or denying benefits to claimants with little or no capacity to work. Similarly, diminished program integrity—whether through waste, fraud, or abuse—may permit some beneficiaries to remain on SSDI even after their health improves. This subsection outlines reforms to the administration of the program that could conceivably reduce the growth in the SSDI rolls.", "In general, a claimant displeased with the decision at the reconsideration level of the appeals process may request a hearing before an ALJ, in writing, within 60 days upon receipt of the previous determination. At the hearing level, a claimants may present additional evidence or arguments to support the case and appoint a representative to act on his or her behalf. Most claimants are represented by attorneys at ALJ hearings. Since SSA is not represented at the hearing, the proceeding is considered inquisitorial or non-adversarial. Under the inquisitorial process, an ALJ investigates the merit of an appeal by informally questioning the claimant and any scheduled witnesses (e.g., medical or vocational experts).\nProponents of this process argue that the informal nature of the proceedings and lack of cross-examination by an opposing attorney encourages claimants to share more information with the ALJ. Moreover, supporters note that in Richardson v. Perales , the Supreme Court found that SSA hearings should be \"understandable to the layman claimant, should not necessarily be stiff and comfortable only for the trained attorney, and should be liberal and not strict in tone and operation. This is the obvious intent of Congress so long as the procedures are fundamentally fair.\"\nOpponents contend that inquisitorial process makes it harder for ALJs to make informed decisions on a consistent basis, because they must remain impartial while simultaneously representing the interests of both claimants and SSA. According to the Association of Administrative Law Judges (AALJ), having to wear all three \"hats\" during a hearing sometimes places an ALJ in an untenable situation, in which the judge must represent clients whose interests are at odds with one another. The difficulty of maintaining impartiality while simultaneously representing the interests of both parties may cause an ALJ to overlook a key piece of evidence or argument, thereby affecting the outcome of the decision.\nTo improve the accuracy of ALJs' decisions, the AALJ, the SSAB, and some Members of Congress have advocated switching from an inquisitorial to an adversarial process in which claimants and SSA are each afforded representation. The AALJ and SSAB argue that the vigorous cross-examination of claimants by SSA representatives would provide ALJs with additional information, resulting in better decisions. According to SSAB, under the inquisitorial process, some ALJs may be reluctant to question claimants aggressively for fear of appearing to be biased. SSAB contends that switching to an adversarial process would allow ALJs to investigate the history and extent of claimants' medical impairments more thoroughly, resulting in better-reasoned decisions and greater judicial consistency.\nAnother potential advantage of the adversarial process is that government representation may reduce the number of cases that an ALJ would need to hear, which could further improve the quality of their decisions. In 2013, SSA Deputy Commissioner Glenn Sklar testified that the agency expects ALJs to issue 500-700 decisions annually. Some researchers speculate that the pressure to adjudicate a high number of disability claims quickly has led to poorer ALJ decisions and consequently a higher allowance rate. According to a 2013 Senate report, this pressure stems from a 2007 plan by SSA to reduce its backlog of disability hearings. One reason why the pressure to hear a large volume of cases may have increased the overall allowance rate is that issuing an award is generally not appealed by a claimant and is therefore subject to less scrutiny than a denial would be. A 2014 story on SSA's disability backlog in the Washington Post noted that \"judges complain that saying 'yes' is a lot easier—and faster—than saying 'no.' A negative decision often requires a lengthier write-up, which goes through all the different ailments that might have rendered this person disabled. That means 10 pages of text to prepare for a future appeal. A 'yes' decision is rarely appealed. So, they say, it takes less writing.\" The AALJ contends that switching to an adversarial process would allow government attorneys to settle cases with a high probability of reversal before the hearing level, giving ALJs more time to adjudicate complicated cases or ones with a lower likelihood of being reversed. By allowing government representatives to decide which cases to defend, the adversarial process could reduce the pressure for ALJs to decide a high number of claims, which, in turn, could improve the quality of their decisions.\nAt a hearing in November 2013, SSA refuted the characterization that it is sacrificing quality by granting claims \"too readily\" and insisted that it is \"making quicker, higher quality disability decisions.\" The agency also noted that between FY2007 and FY2013, the share of ALJs with allowance rates of 85% or greater fell from 20% to 3%.", "Successfully implementing an adversarial process at the hearing level poses several challenges for SSA. First, it would require additional expenditures to hire attorneys and appropriate staff. Disability hearings are already quite costly for SSA. In FY2011, the unit cost of adjudicating a disability hearing was about $2,750, compared with about $1,060 to process an initial disability claim. Those extra costs would offset any savings from reduced benefit outlays.\nSecond, a federal judge issued an injunction against SSA's previous adversarial pilot program in 1986, so an adversarial process might require new legislative authority. In 1982, SSA initiated the Social Security Administration Representation Project (SSARP) in five hearing offices across the country to test \"whether the participation of SSA representatives in disability cases at the administrative hearing level can contribute toward improving the quality and timeliness of hearing dispositions.\" Under the SSARP, government representatives reviewed hearing requests, initiated case development, and represented the agency whenever a claimant had an appointed representative at a hearing.\nThe SSARP sparked concern among some Members of Congress and the public over the \"fairness of SSA's disability adjudication process.\" One month into the pilot program, seven disability claimants challenged the SSARP in the Western District of Virginia seeking injunctive and declaratory relief. In Salling v. Bowen , a district judge issued an injunction against the SSARP, finding that its procedures did not meet the standard for due process and were not \"fundamentally fair.\" The judge also held that the pilot program violated the Social Security Act and intruded on the independence of ALJs. Although SSA appealed the court's decision, the agency ultimately discontinued the SSARP and revoked its regulations in 1987. According to the General Accounting Office (GAO; now the Government Accountability Office), the preliminary results of the pilot were never verified and a final report was never issued.\nThird, the effects of switching to an adversarial process are difficult to predict. To determine the effectiveness of government representation, SSA would need to know:\nwhether representation can improve the quality of ALJ decisions, and if so, whether higher-quality decisions reduce the overall allowance rate, and if so, whether the adversarial process can be done in a cost-effective manner.", "During the disability determination process, DDS examiners and medical and psychological consultants typically use medical evidence collected from the claimant's treating sources to determine the severity of the claimant's impairment. To assess whether the impairment precludes the claimant from working, state disability examiners evaluate it against SSA's Listing of Impairments (hereinafter \"listings\"). The listings describe medical impairments that are considered severe enough to prevent an individual from performing any gainful activity for each of the 14 major adult body systems. Most of the impairments described in the listings are permanent or expected to result in death. All other listings must show that the impairment has lasted or is expected to last for at least one year. If the claimant's impairment meets (or is of equal severity to) the criteria in the listings, SSA considers the claimant disabled and therefore eligible for benefits. Claimants who do not meet the medical criteria in the listings proceed to a more individualized assessment that examines their remaining ability to work, taking into account certain vocational factors.\nAlthough the listings serve as a useful guide for DDS examiners, the percentage of awards determined at the listings stage has decreased substantially over the years. Between FY1980 and FY2010, the share of initial allowances based on claimants meeting the medical listings declined from 58% to 38%, while the portion based on claimants having an impairment equal in severity fell from 16% to 8% over the same period ( Figure 13 ). SSAB, GAO, and SSA's OIG all attribute this decline to the increasingly outdated nature of the listings. In 2000, the OIG found that SSA had not updated certain listings in over 10 years; moreover, SSA had not updated the listings for mental disorders in 15 years. In 2003, GAO identified SSDI as a high-risk program because it relied on listings that did not reflect the impact of medical and technological advances on work-limiting impairments.\nTo improve the quality and accuracy of disability determinations, SSA initiated a two-tiered process for updating its medical listings beginning in 2003. Under the new process, the agency is to first complete a comprehensive revision of each listing category, taking into account any medical disorder or disease that may inhibit an individual's ability to work. Once the comprehensive update is complete, SSA is to conduct periodic reviews of each listing category to ensure that the listings are current. SSA has completed comprehensive revisions to nine of the 14 major adult body systems.\nSSA has experienced delays in completing comprehensive updates to the remaining five major adult body systems. For example, SSA has still not completed a final revision of the listing for mental disorders—SSDI's second most diagnosed impairment—which last received a comprehensive update in 1985. SSA officials attribute the delay to a shortage of qualified staff and to the enormous complexity of implementing and revising new medical listings.\nUpdating the listings to take into account medical and technological advances, as well as changes in the labor market, could allow DDS examiners to better identify individuals with severe work-limiting disabilities, while screening out non-meritorious claimants who could potentially engage in SGA. The impact of updated medical listings on the prevalence of benefit receipt remains unclear, because claimants denied at the medical listings stage of the determination process may still be awarded benefits based on vocational factors.", "If a claimant fails to meet the eligibility criteria described in the medical listings, SSA is to proceed with a more individualized assessment that examines the claimant's ability to engage in SGA. To \"minimize subjectivity and promote national consistency,\" SSA employs a system of medical and vocational rules designed to assist examiners in discerning whether a claimant can perform any past relevant work or other work that exists in the national economy. SSA considers claimants who cannot perform such work to be disabled and therefore eligible for SSDI.\nCurrently, SSA uses the Department of Labor's (DOL) Dictionary of Occupational Titles (DOT) to determine the physical and mental demands of available work in the national economy. Because DOT last received a major update in 1977, its occupational information is considered largely outdated. Although DOL replaced DOT with the Occupational Information Network (O*NET) in 1998, SSA concluded that O*NET's occupational information was insufficient to meet its requirements. A 2012 Senate report expressed concern that DOT's increasingly outdated information may result in awards to claimants who could work in unlisted occupations.\nTo improve program integrity, SSA in December 2008 established the Occupational Information Development Advisory Panel to develop a new occupational information system (OIS) for use in the vocational stages of the disability determination process. In July 2012, SSA signed an interagency agreement with the Bureau of Labor Statistics (BLS) to test the viability of using BLS's National Compensation Survey (NCS) to collect occupational data for the new OIS. In FY2013, SSA and BLS conducted a three-phase test to assess the NCS's accuracy and reliability in capturing occupational data that are relevant for disability determinations. SSA expects to start developing the new OIS in FY2015 and implement it by FY2016.\nIn the future, SSA's updated OIS may help to mitigate the growth in the SSDI rolls. According to SSA, the occupational information in DOT reflects an industrial economy, whereas today's economy has become more service oriented. Therefore, modern occupations that require less physical exertion may allow individuals with certain disabilities to remain in the labor force. On the other hand, some individuals may be more likely to qualify for SSDI when evaluated using the updated OIS. For example, older individuals with disabilities may have difficulty adjusting to the intensity and pressure of many of today's employment opportunities, while individuals with less extensive education may be less suited to \"cognitively demanding\" work.\nAnother complicating issue is that individuals with disabilities still tend to work in occupations that require physical labor. For instance, one study found that individuals with cognitive or multiple disabilities are more likely to work in physically demanding, low-skilled jobs. Consequently, an updated OIS may not reduce the number of individuals with certain chronic conditions from applying for benefits.", "As noted earlier, medical CDRs are periodic reevaluations conducted to determine if beneficiaries are still disabled. If SSA finds substantial evidence of medical improvement related to a beneficiary's ability to work, the agency typically considers the beneficiary no longer disabled. By increasing the number of full medical CDRs conducted each year, SSA could increase the recovery rate of beneficiaries with work-related medical improvements, which would help to reduce the disability rolls.\nAccording to SSA, periodic medical evaluations are one of the most cost-effective tools for improving program integrity. Of the more than 443,000 full medical CDRs conducted in FY2012, SSA estimates that it will cease paying benefits to over 76,000 individuals and their eligible dependents after all appeals (a cessation rate of 17%). For every dollar spent on CDRs in FY2012, the agency estimates approximately $14.60 in future savings to the federal government. Prior to that, the CDR process yielded an estimated savings-to-cost ratio of $10 to $1. (Note that benefit savings from CDRs are not counted for congressional scorekeeping purposes. )\nHowever, a loss of dedicated funding for program integrity activities between FY2003 and FY2008 left SSA with fewer resources with which to conduct disability reviews, resulting in a CDR backlog ( Figure 14 ). In 2010, the OIG estimated that if SSA had conducted all full medical CDRs when they were originally scheduled between 2005 and 2010, the agency would have removed an additional 90,000 to 180,000 SSDI and SSI beneficiaries from the rolls, thereby avoiding between $1.3 billion and $2.6 billion in benefit payments from 2005 to 2010. Despite recent efforts to reduce the backlog, SSA estimated that there were 1.3 million pending medical CDRs at the end of FY2013.\nReducing the CDR backlog has posed a challenge for SSA, in part because of a reduction in DDS staffing levels over the years. In response to budget deficits following the last recession, some states instituted furloughs or hiring freezes of state employees, including DDS examiners. The reduced staffing at DDSs limited SSA's ability to conduct periodic medical reviews and contributed to the backlog of CDRs. To address the lower staffing levels, SSA transferred a portion of disability cases from furloughed DDS offices in some states to non-furloughed DDS offices in other states. Additionally, the agency received funding in FY2009 and FY2010 to increase the number of DDS staff by more than 2,900 employees. However, due to an agency-wide hiring freeze that began in FY2011, SSA did only limited critical hiring between FY2011 and FY2013. The combination of attrition and hiring freezes during this period resulted in a net decline in DDS staffing levels ( Table 2 ).\nTo address the mounting backlog of CDRs and enhance program integrity, advocacy organizations, researchers, and the Obama Administration have all expressed their support for increasing CDR funding. The Budget Control Act of 2011 (BCA; P.L. 112-25 ), which places caps on discretionary spending, includes a provision to adjust the caps to permit additional appropriations to SSA for program integrity activities such as CDRs and SSI redeterminations. SSI redeterminations are periodic reviews to ensure that beneficiaries meet SSI's financial eligibility requirements.\nThe Consolidated Appropriations Act, 2014 ( P.L. 113-76 ) appropriated a total of $1.197 billion for CDRs and SSI redeterminations, which was the maximum amount allowed under the BCA for FY2014. With this level of funding, SSA completed nearly 526,000 full medical CDRs and 2.6 million SSI redeterminations (see Figure 3 ). The FY2014 appropriation also allowed the agency to hire about 2,600 DDS employees, including both replacement staff and additional hires.\nFor FY2015, the Administration requested the full amount authorized for program integrity activities under the BCA: $273 million in base funding and $1.123 billion in cap adjustment funding. The Administration estimates that the $1.396 billion in total program integrity funding would allow SSA to perform at least 888,000 full medical CDRs and 2.6 million SSI redeterminations in FY2015. Congress appropriated the maximum amount for FY2015 in the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ).\nAccording to SSA, the agency would need $11.8 billion in program integrity funding during FY2014-2023 to eliminate the CDR backlog by FY2018 and prevent it from growing back again through FY2023. This level of funding would allow SSA to conduct an estimated 8.8 million full medical CDRs. However, at the funding levels prescribed in the BCA, SSA projects that it would be able to conduct only 7.8 million full medical CDRs at a cost of $10.3 billion.\nFor FY2016, the Administration proposes replacing the discretionary spending caps established under the BCA with a dedicated source of mandatory funding to enable SSA to conduct more CDRs and SSI redeterminations on a consistent basis. Under this option, SSA estimates that it would conduct more than 8 million full medical CDRs at a cost of $10.7 billion during FY2014-FY2023.", "While additional funding and new hires would allow the agency to perform more full medical CDRs, the shortage of veteran examiners complicates the issue. Part of the problem stems from the fact that DDS examiners experience high rates of turnover. According to GAO, over 20% of DDS examiners hired between September 1998 and January 2006 left or were terminated within their first year. Of the examiners who remain, it takes about two years of experience before SSA considers them to be fully trained. Thus, even with additional hiring, it may take the agency years to reestablish a robust pool of highly experienced disability examiners.\nAdditionally, because of diminishing returns, future marginal savings from additional CDRs would be less than the past average. When SSA performs CDRs, it prioritizes the beneficiaries who are most likely to have substantial medical improvement related to their ability to work. However, as the number of completed CDRs increases, the chance of benefit cessation declines for subsequent reviews.\nThe savings-to-cost ratio would also decrease if former SSDI beneficiaries who were terminated due to medical improvement reapply and return to the program. According to one study, of those whose eligibility ceased after CDRs from 2003 to 2008, an estimated 20% of former SSDI-only beneficiaries will come back onto the rolls within eight years.\nIt is important to note that program integrity activities alone would be unable to substantially improve the financial outlook of the SSDI program, because potential savings from CDRs take time to accumulate and apply to multiple programs. For example, SSA projects that the full medical CDRs conducted in FY2012 will result in a present value of nearly $7 billion in lifetime savings to the federal government; however, these savings are spread out over decades and are attributable not only to SSDI but also to OASI, SSI, Medicare, and Medicaid.", "Another policy option to combat the growth in the SSDI rolls is to provide stronger incentives for beneficiaries to return to work. Currently, SSA allows beneficiaries to test their ability to work by participating in a trial work period (TWP), during which participants may earn any amount for nine months within a rolling 60-month period without having their benefits reduced or their entitlement to SSDI terminated. In addition, SSA provides employment and support services. Still, few beneficiaries leave the program. In 2013, SSA terminated the benefits of 0.4% of all disabled-worker recipients due to earnings above SGA.", "To address some of the barriers to employment faced by disabled workers, Congress enacted the Ticket to Work and Work Incentives Improvement Act of 1999 ( P.L. 106-170 ), which established the Ticket to Work and Self-Sufficiency program (hereinafter \"Ticket to Work\"). Ticket to Work assists beneficiaries between the ages of 18 and 64 in returning to the labor force by providing a voucher or ticket for employment, vocational rehabilitation (VR), or other support services through public or private contractors known as Employment Networks (EN), as well as through traditional state VR agencies. Participation in the Ticket to Work program is voluntary, and ticket holders (beneficiaries) decide when and whether to assign a ticket to a particular state VR agency or EN. Under the program, state VR agencies and ENs receive payments from SSA for services provided to ticket holders based on specific work-related performances measures.\nThus far, the Ticket to Work program has met with little success. Although program participants are more likely to be employed than other beneficiaries, only about 2.3% of all active tickets issued by SSA are in use (i.e., assigned to an EN or state VR agency). According to GAO, EN representatives partially attribute Ticket to Work's low beneficiary participation rate to \"a lack of understanding and awareness of the program.\" Meanwhile, some disability-advocacy organizations contend that the fear of losing benefits may deter beneficiaries from participating.\nTo improve the return-to-work rate of SSDI recipients, researchers Bonnie O'Day and David Stapleton have proposed testing early intervention policies that provide beneficiaries with employment and other support services shortly after receipt of benefits. The researchers argue that current programs have failed to increase the return-to-work rate, because many beneficiaries \"have been separated from the labor force, often for years, before they are offered assistance.\" The researchers posit that beneficiaries may have a greater chance of returning to work if they receive services earlier during their stay on SSDI.\nOne early intervention option is to require all future beneficiaries to participate in work preparation counseling to educate them about available services. Beneficiaries may be more likely to participate in programs they understand. Although mandatory work preparation counseling would require new funding, the counseling might be cost-effective if it improves the return-to-work rate of SSDI recipients, especially if it targeted those with the best chance of success.\nSSA oversees two voluntary grant programs aimed at increasing beneficiary awareness of return-to-work services. In addition to the Ticket to Work program, P.L. 106-170 also established the Work Incentives Planning and Assistance (WIPA) program and the Protection and Advocacy for Beneficiaries of Social Security (PABSS). WIPA awards grants to community organizations that provide education and assistance for beneficiaries interested in returning to work, and PABSS provides grants for legal assistance and advice on how to obtain VR, employment, or other services.\nEstimating the overall impact of mandatory counseling on the SSDI beneficiary return-to-work rate is difficult because the results of SSA's current employment-counseling initiatives are inconclusive. According to one study, the use of WIPA services possibly has a positive effect on the employment outcomes of SSDI and SSI beneficiaries. However, it is difficult to discern whether beneficiaries who received WIPA services would have enjoyed the same employment outcome in the absence of such services.", "One reason why few workers leave the rolls due to substantial earnings is that some beneficiaries deliberately \"park\" their earnings from work below the SGA threshold. After completing the TWP and a 36-month extended period of eligibility (EPE), beneficiaries who earn more than the SGA limit have their benefits terminated. One study found that between 0.2% and 0.4% of all SSDI beneficiaries parked their earnings below SGA in a typical month from 2002 to 2006 in order to retain their benefits.\nBeneficiaries may park their earnings below SGA (sometimes called the \"cash cliff\") in part because their impairment prevents them from working consistently. Another study found that 59% of Ticket to Work participants reported working at a job for at least one month during 2003-2005; however, of those participants who later left work, the most cited reason was due to poor health. Parking one's earnings below SGA may weaken a work-oriented beneficiary's attachment to the labor force, possibly resulting in an erosion of skills and thus a reduced likelihood of returning to work following a health-related withdrawal from the labor force.\nTo remedy the phenomenon of parked earnings, several disability-rights organizations have advocated eliminating the fixed cash cliff (SGA threshold) and replacing it with a gradual benefit-offset model that allows beneficiaries to increase their earnings while remaining on SSDI. The SSI program operates under a benefit-offset system, deducting $1 in benefits for every $2 in earnings over $65. Advocates argue that a benefit-offset model would make SSDI beneficiaries \"financially better off\" by allowing them to maximize their total income and work potential. A benefit-offset model could also improve the finances of the SSDI program by reducing the amount of cash benefits paid out to recipients. Additionally, adopting a benefit-offset model could increase beneficiaries' attachment to the labor force by making work more attractive.\nOn the other hand, benefit offset may induce only a small number of beneficiaries to increase their earnings (i.e., those beneficiaries who park their earnings). Although benefit outlays from the DI trust fund would decrease under this scenario, such savings would have little impact on the solvency of the DI trust fund. Additionally, by making it easier for recipients to maintain their eligibility for benefits, benefit offset could decrease the SSDI termination rate further, which, in turn, could increase the total number of beneficiaries on the rolls. Furthermore, benefit offset may increase the attractiveness of SSDI benefits, impelling more workers to apply to the program.\nSSA is currently in the process of conducting a Benefit Offset National Demonstration (BOND) project, in which treatment participants lose $1 in benefits for every $2 in earnings exceeding a BOND Yearly Amount (BYA) equal to 12 times the monthly SGA limit. Some BOND participants are also eligible for Enhanced Work Incentives Counseling (EWIC), which is designed to address a range of issues related to returning to work, including access to medical treatment, employment services, and job training. In implementing BOND, SSA seeks to test whether benefit offset can increase earnings and reduce dependence on SSDI for work-oriented beneficiaries.\nIn preparation for BOND, SSA implemented a four-state pilot program known as the Benefit Offset Pilot Demonstration (BOPD) from 2005 to 2008. According to SSA, participation in the BOPD had a positive effect on the earnings of individuals in the treatment group; however, the pilot also increased average benefit payments because of partial payments made to beneficiaries whose benefits would have been suspended under normal program rules for earning above SGA.\nIn August 2013, SSAB called for the early termination of BOND. The board cited the implementation problems associated with the pilot program and BOND's low participation rate as evidence that BOND would likely fail to increase beneficiary return-to-work rates in a cost effective manner. SSAB estimated that terminating BOND would save approximately $17 million in FY2015.", "Some researchers have suggested shifting the focus of SSDI reform away from terminating beneficiaries already on the rolls toward attenuating the inflow of new beneficiaries into the program. Advocates of this approach—sometimes referred to as supported work —argue that offering employment supports shortly after the onset of disability would allow more workers who experience disability to keep working. Most supported-work policies use financial incentives to encourage employers to provide preventive, accommodative, rehabilitative, and other return-to-work services. Although Title I of the Americans with Disabilities Act (ADA; P.L. 101-336 , as amended) requires employers to provide some level of reasonable accommodation for employees with disabilities in the workplace, some employers fail to comply with the provisions of the ADA. Faced with few employment opportunities, individuals with disabilities who could conceivably work given appropriate accommodation may turn to SSDI as a last resort. This subsection provides an overview of two supported-work policies that have the potential to reduce the incidence of benefit receipt.", "Experience rating is a process for determining insurance premiums based on the cost of an insurance pool's past claims. In essence, an insurer calculates a firm's insurance premium based on the likelihood, or risk, of the firm submitting a future claim given its previous behavior. Many types of employer-sponsored insurance use experience rating to determine premiums, including state workers' compensation (WC), unemployment insurance (UI), and private disability insurance (PDI). Because premiums are a function of past claims, firms' costs reflect their use of the insurance program, creating incentives for them to reduce the number of claims.\nTo reduce the incidence of SSDI receipt, several researchers have suggested that the federal government should experience rate the employer's portion of the payroll tax used to fund SSDI. Currently, employers pay the same payroll tax rate, regardless of the rate at which their employees enroll in the program. However, an experience rated system would link payroll tax rates to the claim rate, which would give employers an additional incentive to support disabled workers.\nProponents of experience rating often point to its use in the Netherlands' disability insurance (DI) system as evidence of its potential impact in the United States. Between 1998 and 2003, the Netherlands gradually incorporated experience rating into its DI system. According to one study, instituting experience-rated DI premiums resulted in a 15% reduction in the Dutch DI incidence rate. Since the early 2000s, the Netherlands has witnessed a marked decline in its DI prevalence rate.\nExperience rating could be implemented relatively simply. Employers already report payroll tax data to the Internal Revenue Service (IRS), which the agency shares with SSA. Moreover, most employers are accustomed to the concept of experience rating because of their experience paying state WC and UI premiums. By compiling both payroll tax and beneficiary award data, SSA could experience rate the SSDI payroll tax \"without imposing substantial new reporting requirements or administrative burdens on employers.\"\nOpponents of experience rating argue that the policy would adversely affect some workers. For example, experience rating could make employers hesitant to hire or retain workers \"perceived to be a high risk for disability.\" Employers may discriminate against older workers, people with chronic conditions such as diabetes, or individuals prone to risky behaviors. To address this possibility, supporters of experience rating suggest implementing risk adjustments specific to factors such as age, occupation, and health status, as well as enforcing existing anti-discrimination laws.\nCritics also point out that experience rating could reduce the compensation of low-wage workers. For instance, some employers subject to higher payroll tax rates could shift the additional cost onto workers in the form of reduced take-home pay or benefits. Employers unable to shift additional labor costs onto their employees may instead offset the higher payroll tax rate by hiring fewer workers in the future. Since low-wage individuals tend to work in professions with high rates of disability, they may be disproportionately affected by employer cost avoidance and therefore more likely to suffer financially. Opponents argue that workers harmed by employer cost avoidance could end up on SSDI, increasing the size of the program.\nFurthermore, some critics say that while the system changes employers' incentives, it fails to address the incentives for workers to apply for SSDI. For example, some workers may apply in response to factors beyond the employers' control, such as low market wages.", "Another option to reduce the number of SSDI beneficiaries is for the federal government to promote employer-sponsored private disability insurance (PDI). PDI provides beneficiaries with a partial wage replacement and return-to-work services. As of March 2014, 40% of all workers in private industry had access to short-term disability (STD) insurance, and 34% had access to long-term disability (LTD) insurance. STD insurance typically lasts a fixed number of weeks or months, while LTD insurance can last anywhere from a year to several decades. PDI is less expensive than other forms of employer-sponsored insurance, such as health care. In addition, employers can partially offset the cost of PDI by requiring employees to contribute to the insurance plans.\nSome researchers have advocated that the federal government should promote employer-sponsored PDI to reduce the growth in the SSDI rolls. Employer-sponsored PDI plans could reduce the incidence of SSDI benefit receipt, because they provide employment-support services soon after the onset of disability when the likelihood of recovery is highest. By intervening with robust supported-work services early in the disability process, PDI may keep workers with disabilities attached to the labor force and therefore reduce the number who apply for SSDI.\nOffering employers financial incentives is one way to promote employer-sponsored PDI. For example, SSA could lower the tax rate of employers who purchase PDI and whose insurance agents coordinate with SSA to manage disability cases in a cost-effective manner. Alternatively, the federal government could award subsidies or tax credits to firms that provide PDI.\nA second way to promote PDI would be to require all employers to provide it. Companies that refuse to provide PDI would be subject to possible legal action, financial penalties, or both. Currently, New Jersey, New York, Hawaii, and Puerto Rico require employers to contribute toward some form of STD insurance, generally known as temporary disability insurance (TDI). Employer-mandated PDI has become increasingly popular in many European countries. The Netherlands, for example, requires employers to cover the cost of sick pay for two years following the onset of a disabling condition, while the U.K. requires employers to pay up to six months of statutory sick pay.\nResearchers David Autor and Mark Duggan have proposed requiring all employers to provide short-term PDI, which would provide workers with rehabilitation services, workplace accommodation, and a partial wage replacement for two years. Under this proposal, plans would be purchased on the existing PDI market, and employers would be permitted to require employees to contribute up to 40% of the cost of their coverage. Following the exhaustion of employer-sponsored PDI, beneficiaries who are found to be disabled would qualify for SSDI. Workers with extremely severe or terminal disabilities would be exempt from the two-year PDI requirement and would qualify for SSDI immediately.\nUsing the financial incentives approach would be relatively simple, because the federal government already encourages employers to hire workers with disabilities by offering tax credits to offset the cost of providing workplace accommodation. Having SSA work with employers and insurers under an experience-rating system would likely require significantly more resources than the tax credit proposal, but the system could be structured to limit federal costs. In spite of these advantages, financial incentives might be ineffective. As noted above, the federal government currently offers employers tax incentives to hire workers with disabilities; however, the evidence that such incentives actually drive employers to hire such workers has been \"limited and inconclusive.\" Similarly, the lure of a lower payroll tax rate under an experience-rating model may not cause employers to purchase PDI, especially if the cost of providing PDI outweighs any savings from the reduced payroll tax rate.\nA mandate, on the other hand, would likely have a larger effect. The prospect of having to pay financial penalties due to noncompliance is typically a more powerful incentive for employers than tax credits. Although a government mandate does not guarantee universal compliance because some employers could simply pay the appropriate penalty, requiring employers to provide PDI might still have a marked effect on the inflow of beneficiaries into the SSDI program.\nOne of the biggest unknown factors of the mandate approach outlined by Autor and Duggan is whether the private insurance market can offer an economically feasible two-year PDI plan. Most insurers sell PDI plans as either short-term (around 26 weeks) or long-term (anywhere from a year to several decades). Although both types of PDI cost employers about the same amount per hour worked, LTD insurance plans typically have stricter eligibility standards. For instance, LTD plans may have more stringent definitions of disability or have a larger list of pre-existing medical conditions that make employees ineligible. LTD plans are generally stricter because beneficiaries could receive benefits for years or even decades. To offset some of the risk associated with LTD plans, insurers often require beneficiaries to apply for SSDI after the onset of disability and deduct any SSDI income from a beneficiary's LTD benefit. However, because the Autor and Duggan proposal does not permit insurers to offset part of their costs by requiring beneficiaries to apply for SSDI, such two-year PDI plans may not be financially viable in the current insurance market.\nAutor and Duggan contend that their proposal would be economically feasible for insurers because their PDI plan would be less generous that current LTD policies. Based on their conversations with private insurers, they believe that two-year policies would not substantially increase the costs associated with PDI.\nAdditionally, private insurers could simply raise premiums to a level sufficient to make two-year PDI policies profitable. The extent to which insurers could raise rates would depend on the structure of the federal mandate as well as on state insurance laws. However, if insurers raised premiums too high and compliance penalties for employers were too low or not adequately enforced, then employers could choose not to provide PDI.", "" ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 2, 2, 3, 1, 2, 3, 3, 3, 2, 3, 3, 3, 2, 3, 3, 2, 3, 3, 1, 2, 3, 3, 3, 2, 3, 4, 3, 3, 3, 4, 2, 3, 3, 2, 3, 3, 4 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full", "h0_full", "h0_full", "", "", "", "", "", "", "", "h1_full", "h1_title", "h1_full", "", "", "h1_title", "", "h1_full", "", "", "", "", "", "", "", "h3_full h2_full", "", "", "", "", "", "", "", "", "", "", "", "h2_full", "", "", "", "", "", "" ] }

{ "question": [ "What is SSDI?", "What are SSDI benefits based on?", "How can individuals qualify?", "What disability eligibility restrictions exist?", "What accounts for the growth in individuals on SSDI?", "What do these demographic changes consist of?", "To what extent did non-demographic changes contribute to this growth?", "What is non-demographic growth?", "What is the purpose of this report?", "What is the goal of most proposals?", "What do these proposals consist of?", "What factors does this report leave unexamined?", "How will these proposals affect the DI trust fund?", "How can a cut in benefits be avoided?", "How could Congress bolster the trust fund?", "What would these short-term options accomplish?" ], "summary": [ "Social Security Disability Insurance (SSDI) provides benefits to nonelderly workers with certain disabilities and their eligible dependents.", "As in Old-Age and Survivors Insurance (OASI)—Social Security's retirement program—SSDI benefits are based on a worker's past earnings.", "To qualify, individuals must have worked and paid Social Security taxes for a certain number of years and be unable to engage in substantial gainful activity (SGA) due to a severe mental or physical impairment that is expected to last for at least one year or result in death.", "In general, disabled workers must be unable to do any kind of substantial work that exists in the national economy, taking into account age, education, and work experience.", "Most researchers agree that changes in the demographic characteristics of the working-age population account for a large share of the growth in the number of individuals on SSDI.", "Demographic changes consist of (1) the aging of the baby boomers, (2) the influx of women into the labor force, and (3) the overall growth in the working-age population.", "However, there is considerable disagreement among researchers over how much non-demographic factors contributed to the growth.", "Non-demographic factors include (1) changes in opportunities for work and compensation (e.g., slow wage growth for low-skilled workers and high unemployment), (2) changes in federal policy that made it easier for some people to qualify as disabled, and (3) the rise in the full retirement age for unreduced Social Security retirement benefits.", "To assist lawmakers in addressing the sustainability of the program, this report provides an overview of proposals to manage the long-term growth in the SSDI rolls.", "Most of the proposals focus on reducing the inflow (enrollment) of new beneficiaries into the program.", "These proposals involve (1) tightening eligibility criteria, (2) improving the administration of the program, and (3) providing incentives for employers to help keep employees working when they become disabled. On the other hand, some of the proposals seek to increase the outflow (termination) of beneficiaries from the program. These proposals entail (1) providing stronger incentives for beneficiaries who can work to return to the labor force, and (2) increasing the number of periodic continuing disability reviews, which stop benefits for people found to be no longer disabled.", "This report does not examine options to reduce benefit levels or increase program revenues.", "Although many of the options discussed in this report have the potential to slow or even reverse the growth of SSDI receipt and thus generate savings to the program over the longer term, such proposals are highly unlikely to significantly forestall the projected exhaustion of the DI trust fund.", "To avoid a 20% cut in benefits in late 2016, lawmakers would almost certainly have to use cash infusions to bolster the assets of the DI trust fund.", "For example, Congress could reallocate the Social Security payroll tax rate to give the DI trust fund a larger share (as was done in 1994), or it could authorize interfund borrowing from the OASI trust fund or Medicare's Hospital Insurance (HI) trust fund.", "These short-term financing options would give lawmakers more time to develop and implement some of the longer-term proposals mentioned in the report if they wished to slow the growth in the disability rolls." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 0, 2, -1, -1, 1, -1, -1, 0, 0, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "Background", "Making Home Affordable Programs", "Hardest Hit Fund Program", "FHA Short Refinance", "Treasury Continues Its Efforts to Reach More Borrowers and Address Interest Rate Increases", "Treasury Has Disbursed More Than 40 Percent of Allocated TARP Housing Funds", "Treasury Has Expanded Incentives under HAMP to Reach More Borrowers and Further Assist Existing Program Participants", "Treasury Has Not Fully Assessed the Benefits and Costs of Recent MHA Program Changes", "HAFA Relocation Assistance", "Year Six Pay-for-Performance Incentive and Recast", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of the Treasury", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Treasury’s Office of Homeownership Preservation within the Office of Financial Stability, which administers Treasury’s TARP-related efforts, is tasked with finding ways to help struggling homeowners avoid foreclosure and assist in stabilizing the housing market. Treasury has established three initiatives funded under TARP to address these issues: MHA, the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (Hardest Hit Fund), and support for loans insured by FHA through the FHA Refinance of Borrowers in Negative Equity Positions program (FHA Short Refinance).", "Treasury allocated $29.8 billion of the $37.5 billion in TARP housing funds to MHA to encourage the modification of eligible mortgages and provide other relief to distressed borrowers. Only loans originated on or before January 1, 2009, that meet certain requirements are eligible for assistance under MHA. Several programs have been designed under MHA to help struggling homeowners and prevent avoidable foreclosures.\nHAMP first-lien modifications. The largest component of MHA is the first-lien modification program. The program was intended to help eligible borrowers stay in their homes and avoid potential foreclosures by reducing monthly mortgage payments to affordable levels. Modifications are available for single-family properties (one to four units) with mortgages no greater than $729,750 for a one-unit property. Borrowers are eligible only if the companies servicing their mortgages have agreed to participate in the program. To determine whether a participating loan servicer is required to modify a loan, HAMP uses a standardized net present value (NPV) model to compare expected cash flows from a modified loan to the same loan with no modifications, using certain assumptions. If the expected cash flow with a modification is positive (i.e., more than the estimated cash flow of the unmodified loan), the participating loan servicer is required to make the loan modification. Treasury uses TARP funds to provide both one-time and ongoing incentives to mortgage investors, loan servicers, and borrowers for up to 6 years after a loan is modified. These incentives are designed to increase the likelihood that the program will produce successful modifications over the long term and take into consideration the servicers’ and investors’ costs for making the modifications.\nOnly financial institutions that signed a Commitment to Purchase Financial Instrument and Servicer Participation Agreement on or before October 3, 2010, are eligible to receive TARP financial incentives under the MHA program. Treasury pays the incentives for HAMP modifications for loans not owned or guaranteed by the housing enterprises Fannie Mae or Freddie Mac. Fannie Mae and Freddie Mac bear the cost of HAMP modifications for loans they own or guarantee. primary residence and whose first-lien mortgage payments are more than 31 percent of their monthly gross income, as calculated using the debt-to- income (DTI) ratio. HAMP Tier 2, which was announced in January 2012, is available for both owner-occupied and rental properties, and borrowers’ monthly mortgage payments prior to modification may be less than 31 percent DTI.\nAs part of the HAMP Tier 1 modification, servicers reduce a borrower’s interest rate until the DTI is 31 percent or the interest rate falls to 2 percent. modification. It then gradually increases by increments of no more than 1 percent per year (interest rate step-ups) until it reaches the cap, which is the Freddie Mac Primary Mortgage Market Survey rate at the time of the evaluation for the modification. The interest rate is then fixed at that rate for the remaining loan term. In contrast, under HAMP Tier 2 the interest rate is based on the weekly Freddie Mac Primary Mortgage Market Survey Rate at the time of the modification and remains fixed for the life of the loan.\nServicers are not required to reduce interest rates below 2 percent. Interest rate reduction is one step in the HAMP Tier 1 standard modification waterfall. Under the waterfall, servicers must first capitalize accrued interest and certain expenses paid to third parties and add this amount to the loan balance (principal) amount. Next, servicers must reduce the interest rate until the 31 percent DTI target is reached or the interest rate is reduced to 2 percent. If the interest rate reduction does not result in a DTI ratio of 31 percent, servicers must then extend the maturity and/or amortization period of the loan up to 40 years. Finally, if the target DTI ratio is still not reached, the servicer must forbear, or defer, principal until the payment is reduced to the 31 percent target, subject to an excessive forbearance cap. The mortgage holder/investor absorbs the reduced payment until 38 percent DTI is reached, and Treasury and the lender then share payment reductions until 31 percent DTI is reached. period of least 3 months before a loan is permanently modified and any government payments made. Borrowers who redefault on a permanent HAMP loan modification—that is, who miss three consecutive mortgage payments—no longer qualify for borrower incentives under the program. In addition, the servicer and investor do not continue to receive incentives for that loan. Borrowers who experience a subsequent hardship after receiving a HAMP Tier 1 modification or who redefault on a HAMP Tier 1 modification may be eligible for a HAMP Tier 2 modification under certain conditions. These include having undergone a change in circumstances that show a clear need for the program (such as default or imminent default).\nThe Second Lien Modification Program (2MP). According to Treasury, 2MP is designed to work in tandem with HAMP modifications to provide a comprehensive solution to help borrowers afford their mortgage payments. When a borrower’s first lien is modified under HAMP and the servicer of the second lien is a 2MP participant, that servicer must offer modification and/or full or partial extinguishment of the second lien. Treasury provides incentive payments to second- lien mortgage holders, including in the form of a percentage of each dollar in principal reduction on the second lien. Treasury has doubled the incentive payments offered to second-lien mortgage holders for 2MP permanent modifications that include principal reduction and have an effective date on or after June 1, 2012.\nPrincipal Reduction Alternative (PRA). In October 2010, PRA took effect as a component of HAMP to give servicers more flexibility in offering relief to borrowers whose homes were worth significantly less than their mortgage balance. Under PRA, Treasury provides mortgage holders/investors with incentive payments in the form of a percentage of each dollar in principal reduction. Treasury has tripled the PRA incentive amounts offered to mortgage holders/investors for permanent modifications with trial periods effective on or after March 1, 2012. Participating servicers of loans not owned by the housing enterprises Fannie Mae or Freddie Mac must evaluate the benefit of principal reduction for mortgages with a loan-to-value (LTV) ratio that is greater than 115 percent when evaluating a homeowner for a HAMP first-lien modification.principal under HAMP, even when the NPV calculations show that the expected value of the loan’s cash flows would be higher with a principal reduction than without it. However, servicers must adopt and follow PRA policies that treat all similarly situated loans in a consistent manner. When servicers include principal reduction in modifications under PRA, the principal reduction amount is initially treated as non- interest-bearing principal forbearance. If the borrower is in good standing on the first, second, and third anniversaries of the effective date of the modification’s trial period, one-third of the principal reduction amount is forgiven on each anniversary.\nThere is no requirement to forgive\nHome Affordable Foreclosure Alternatives (HAFA) Program. Under this program, servicers offer foreclosure alternatives (short sales and deeds-in-lieu of foreclosure) to borrowers who meet the basic eligibility requirements for HAMP and who do not qualify for a HAMP trial modification, do not successfully complete a HAMP trial modification, default on a modification (miss three or more consecutive payments), or request a short sale or deed-in-lieu. The program provides incentive payments to investors, servicers, and borrowers for completing these foreclosure alternatives.\nHome Affordable Unemployment Program. This program offers assistance to borrowers who are suffering financial hardship due to unemployment. Borrowers are eligible for a 12-month forbearance period during which monthly mortgage payments are reduced or suspended. Servicers can extend the forbearance period at their discretion if the borrowers are still unemployed after the 12-month period. Servicers are required to consider borrowers who later find employment or whose forbearance period expires for a HAMP loan modification or a foreclosure alternative, such as the HAFA program. No TARP funds are provided to servicers under this program.\nFHA and the Department of Agriculture’s Rural Housing Service (RHS) modification programs. These programs are similar to HAMP Tier 1 and cover FHA-insured and RHS-guaranteed mortgage loans. If a modified FHA-insured or RHS-guaranteed mortgage loan meets Treasury’s eligibility criteria, the borrower and servicer can receive TARP-funded incentive payments from Treasury.\nIn 2009, Treasury entered into agreements with Fannie Mae and Freddie Mac to act as financial agents for MHA. Fannie Mae serves as the MHA program administrator and is responsible for developing and administering program operations, including registering, executing participation agreements with, and collecting data from servicers and providing ongoing servicer training and support. Freddie Mac serves as Treasury’s compliance agent and has a designated independent division, Making Home Affordable Compliance, that is responsible for assessing servicers’ compliance with program guidelines, including conducting on- site and remote servicer loan file reviews and audits.", "Treasury established the Hardest Hit Fund program in February 2010, 1 year after announcing MHA. The goal of the program is to fund innovative measures developed by state housing finance agencies and approved by Treasury to help borrowers in states hit hardest by the aftermath of the housing bubble. By September 2010, Treasury had completed the full allocation of $7.6 billion in funds across 18 states and the District of Columbia. States were selected for funding either because their unemployment rates were at or above the national average or they had experienced housing price declines of 20 percent or more that left some borrowers owing more on their mortgages than the value of their homes. Although the type of assistance provided varies by state, all states use some portion of their funds to help unemployed homeowners make mortgage payments. Other states have programs of principal reduction to help make mortgage payments more affordable, reduce or eliminate borrowers’ second liens, and provide transition assistance to borrowers leaving their homes.", "Under TARP, Treasury and FHA established the FHA Short Refinance program. The program took effect in September 2010 and provides underwater borrowers—those with properties that are worth less than the principal remaining on their mortgage—whose loans are current and are not insured by FHA with the opportunity to refinance into an FHA-insured mortgage. The investor must agree to forgive a certain level of principal in order to reach a specified LTV ratio. In the event of a default on the refinanced loan, Treasury pays up to a certain percentage of the claim after FHA has paid its part. In 2013, Treasury reduced the amount obligated to the FHA Short Refinance program from $8.1 billion to $1.0 billion, in part because participation levels were lower than originally projected. According to Treasury officials, the reduction was also intended to minimize the administrative costs associated with the program. In March 2015, Treasury subsequently reduced the amount obligated to the program from $1.0 billion to $125 million.", "", "Between February 2009 and May 2015, Treasury disbursed approximately $16.3 billion (43 percent) of the $37.5 billion in TARP funds allocated to support housing programs. The amounts disbursed to each of the three TARP-funded housing programs varied (see fig. 1). Of the $29.8 billion allocated to MHA, the largest TARP-funded program, Treasury had disbursed $11 billion (37 percent) as of May 2015. Of the $7.6 billion allocated to the Hardest Hit Fund program, $5.1 billion (67 percent) had been disbursed as of that date, and of the $125 million allocated to the FHA Short Refinance program, $20 million (15 percent) had been disbursed. The original deadline for borrowers to be accepted into MHA programs was December 31, 2012. Treasury has since extended the program three times, most recently through at least December 2016. Treasury officials said that they anticipated using all of the remaining funds allocated to MHA.\nIn March 2015, the Congressional Budget Office (CBO) increased its estimate of likely outlays of TARP-funded housing programs by $2 billion, primarily because of Treasury’s announcement of an additional $5,000 in principal reduction for participants in the sixth year of a mortgage modification in November 2014.dollar surplus in the amount that Treasury has estimated, because CBO anticipates that fewer households will participate in housing programs.\nNonetheless, CBO projects a $9 billion When HAMP, the largest MHA program, was announced in February 2009, Treasury projected that up to 3 million to 4 million borrowers who were at risk of default and foreclosure would be helped. As we noted in our July 2009 report, reaching the projected number of borrowers would be difficult for several reasons. In addition, as we found in our February 2014 report, the pool of mortgages eligible for MHA programs was declining.\nAs shown in figure 2, HAMP participation, as measured by trial and permanent modifications started each month, peaked at 145,000 in January 2010, generally declined in 2011, and then held relatively steady until the end of 2013. Since March 2015, the total amount of new modifications has ranged from 9,000 to 15,000 per month through April 2015 (the most recent month for which data were available).\nWith the introduction of HAMP Tier 2 in 2012, the decline in HAMP Tier 1 modifications has been compensated by an increasing number of HAMP Tier 2 modifications (see fig. 3). As of March 2015, HAMP Tier 2 accounted for more than half of all new trial and permanent modifications.\nAs shown in table 1, from April 2010 through April 2015 the HAFA program has assisted the second-largest number of borrowers after HAMP, with approximately 363,000 transactions. In addition, about 182,000 borrowers had principal forgiven through the PRA program through March 2015.\nSome states have made more progress than others in disbursing allocated funds and meeting state-level targets for household participation for the Hardest Hit Fund. Through May 2015, the Hardest Hit Fund program had disbursed approximately 68 percent of allocated funds ($5.2 billion of $7.6 billion). The District of Columbia, Oregon, Rhode Island, Tennessee, New Jersey, Illinois, North Carolina, and Ohio had each disbursed more than 75 percent of their allocated funds, and one state— Alabama—had disbursed less than 30 percent (see fig. 4). State housing finance agencies for the 18 states and the District of Columbia participating in the program originally estimated that the total number of Hardest Hit Fund participants would reach approximately 335,000 households by the end of the program in December 2017. As of December 2014, the states, along with the District of Columbia, had assisted approximately 219,000 households, or 65 percent of their goal.", "Treasury has taken steps to increase participation in its housing programs and further assist existing program participants. Since October 2014 (the date of our last report on HAMP), Treasury has on three occasions made substantive policy changes to its TARP-funded housing programs, including HAMP and HAFA:\nHAMP Tier 2 Interest Rate Adjustment: In October 2014 Treasury announced that it would adjust the HAMP Tier 2 loan modification interest rate from 0 basis points above the primary mortgage market survey rate to 50 basis points below the primary mortgage market survey rate. According to Treasury, this action was taken primarily to assist borrowers who cannot sustain or do not qualify for a HAMP Tier 1 modification and otherwise expand the population of homeowners eligible for HAMP Tier 2. Treasury had previously expanded the eligibility for the HAMP Tier 2 program to borrowers who had lost their good standing on their Tier 1 loan modification or were experiencing financial duress, such as that associated with a higher monthly mortgage payment due to an interest rate increase. Treasury estimated that the reduction would provide a median savings of $258 on the median monthly HAMP Tier 1 payment after the first interest rate step-up.\nHAFA Relocation Assistance Payment Increase: At the same time, Treasury increased HAFA’s relocation assistance payment to borrowers from $3,000 to $10,000.\nTreasury noted that the costs of relocating—such as rental deposits and moving expenses—could be especially burdensome for recently delinquent homeowners who were often struggling with unemployment and/or may have exhausted their cash reserves. According to Treasury, increasing the relocation assistance payment could also provide an alternative to foreclosure for HAMP Tier 1 borrowers unable to make their monthly mortgage payments due to interest rate step-ups. Further, Treasury also increased the incentive payments an investor can receive for extinguishing a subordinated second lien from $8,500 to a minimum of $12,000, noting that participation by subordinate lien holders, who were in a first-loss position, was critical to the success of a short sale or deed-in-lieu under HAFA. According to Treasury, without the incentive, investors might resort to foreclosure, leaving a struggling borrower with no other alternative.\nYear Six Pay-for-Performance Incentive and Recast: In November 2014, Treasury extended the HAMP Tier 1 pay-for-performance principal balance reduction payment for a sixth year and increased the payment from $1,000 to $5,000 in year six as of November 2014. According to Treasury officials, increasing financial incentives for homeowners who remain in good standing after receiving a HAMP modification can help lower the risk of redefault by (a) providing a stronger incentive for borrowers to remain current on their modified loans, (b) lessening the impact of the interest rate step-up, and (c) helping homeowners build equity in their homes, something that is particularly beneficial for those struggling with negative equity. Treasury also extended the Year Six Pay-for-Performance Incentive to borrowers with HAMP Tier 2 loan modifications. Before the directive, HAMP Tier 2 borrowers, whose mortgage interest rate is fixed, did not receive performance incentives.\nThe $5,000 principal balance reduction payment becomes payable one month after the sixth anniversary of the month the HAMP trial period plan became effective. The loan must be in good standing and not paid in full. This Supplemental Directive also requires servicers to offer to recast an eligible HAMP Tier 1 borrower’s loan after the 6-year anniversary of the trial period plan.borrowers’ monthly mortgage payment by a median of $56 per month. In addition, servicers may, but are not required to, offer to recast the unpaid principal balance for HAMP Tier 2 borrowers who are in good standing after the application of borrower incentives in year 6.\nTreasury estimates that a recast could lower HAMP Tier 1 Subsequently, in January 2015, Treasury extended the $5,000 Year Six Pay-for-Performance Incentive and Recast to HAMP loans owned or guaranteed by the enterprises. This change represented the first use of TARP dollars to assist borrowers with enterprise-backed loans. The requirements are similar to those that are already in place for non-enterprise loans. If the servicer has not signed an amended MHA servicer participation agreement with respect to enterprise loans on or before March 15, 2015, the enterprise pays the cost of the incentive, according to internal guidance.", "Treasury had taken steps to assess the benefits and costs of the three recent MHA program changes we reviewed but did not fully meet all of the key elements of effective benefit-cost analyses. Among the stated purposes of the legislation that created the TARP program are protecting home values and preserving homeownership, while key considerations include minimizing the impact on the national debt, among other things. OMB has issued guidance on using benefit-cost analyses to help federal agencies efficiently allocate resources through well-informed decision making. While Treasury is not required to follow the OMB guidance because MHA program changes are not issued under a rulemaking framework, the guidance does contain practices that are still relevant and may be useful for Treasury to consider. Additionally, since the formal rulemaking process does not apply in this instance and no public comment period is required, it is therefore even more important that a framework is used to maintain accountability and efficiency in the use of public funds. In our 2010 report on Treasury’s decision to extend TARP we found that Treasury could improve its decision making by establishing a robust analytic framework that included clear objectives and meaningful measures. A benefit-cost analysis provides such a framework by linking potential agency actions to program goals, delineating the benefits and costs of potential actions, comparing potential actions to alternative actions, and developing mechanisms to track the performance of the proposed actions. We also have noted in prior work that the systematic process of analyzing benefits and costs can help decision makers organize and evaluate information about alternatives and determine trade-offs among them.\nOMB’s guidance outlines four key elements of a benefit-cost analysis—a policy rationale, explicit assumptions, evaluation of alternatives, and verification (see table 2).\nTreasury officials told us they do consider the benefits and costs of their program changes. However, Treasury officials also explained that they must balance a number of additional factors, such as operational and time constraints. Treasury officials described how Treasury is trying to be proactive and quickly implement changes, especially those intended to assist homeowners facing interest rate step-ups in the near future. As a result, Treasury officials explained they are required to make programmatic decisions based on limited information. Also, Treasury officials indicated that program benefits and costs are dependent upon a number of unknown factors, such as national mortgage delinquency rates and other macroeconomic trends, borrower application rates and the performance of modified loans over time. Further, program benefits extend beyond individual borrowers to the larger community and are difficult to quantify.\nBased on our review of available documentation and discussions with Treasury officials for this review, we determined that Treasury substantially or partially met some but not all four of the OMB elements in considering benefits and costs of the three recent program changes we reviewed—the HAMP Tier 2 Interest Rate Reduction, HAFA Relocation Assistance, and the Year Six Pay-for-Performance Incentive and Recast (see fig. 5). Treasury used action memorandums to summarize the need for and basis of these program changes. However, the action memorandums and the additional supporting documentation provided by Treasury varied in terms of the content of the material discussed and the degree to which they addressed the key elements of benefit-cost analysis.\nPolicy rationale: Treasury substantially met this element. Treasury considered lowering the interest rate as a way of making HAMP Tier 2 modifications a more effective alternative for homeowners that cannot sustain, or do not qualify, for a HAMP Tier 1 modification. These borrowers include, in particular, HAMP Tier 1 borrowers who may struggle with interest rate increases in years 6 and beyond of their loan modification. According to Treasury, after all of the HAMP Tier 1 interest rate increases, the median monthly HAMP Tier 1 payment will increase about $212. Increasing a borrower’s monthly payment by increasing the interest rate, something that will happen to many HAMP Tier 1 borrowers in 2015, increases the borrower’s risk of defaulting. Treasury has reported that 83 percent of HAMP Tier 1 borrowers (approximately 752,000) will experience at least one interest rate increase and that the majority of them will experience two or three increases.\nTreasury determined that reducing a borrower’s monthly mortgage payments continues to be the primary driver of the long-term effectiveness of HAMP modifications. Likewise, in our June 2012 HAMP report, our econometric analysis showed that reducing a borrower’s monthly payment by reducing either their mortgage interest rate or principal balance reduced the borrower’s risk of defaulting on the loan, but only up to a certain point. HAMP Tier 2 loan modifications offer borrowers a below-market interest rate that is fixed for the life of the loan and that may be lower than the scheduled interest rate increases under HAMP Tier 1. For example, the average interest rate cap would be 5.04 percent for borrowers who received a HAMP Tier 1 loan modification in 2009. When Treasury made the program change, it assumed a Freddie Mac Primary Mortgage Market Survey rate of approximately 4 percent resulting in an expected fixed rate under Tier 2 of about 3.5 percent (after 50 basis point discount).\nExplicit assumptions: Treasury partially met this element. Treasury assumed that reducing HAMP Tier 1 borrowers’ monthly payments through a HAMP Tier 2 loan modification would offset the increased risk of redefault caused by the HAMP Tier 1 interest rate reset. Treasury determined that the median HAMP Tier 1 monthly payment would rise by $95 after the first interest rate increase and would have risen by $212 after the last increase. Assuming a Freddie Mac Primary Mortgage Market Survey rate of approximately 4 percent and 50 basis points discount, Treasury estimated that the HAMP Tier 2 interest rate reduction would provide a median savings of $258 from the median payment under HAMP Tier 1 after the first interest rate increase.\nTreasury conducted significant analysis to arrive at its decision to lower the HAMP Tier 2 interest rate. Before Treasury’s most recent change, the HAMP Tier 2 interest rate was the same as the Freddie Mac Primary Mortgage Market Survey rate. Treasury officials provided analysis showing that, assuming a 4-percent primary mortgage market survey rate, reducing the HAMP Tier 2 interest rate 50 basis points below the market rate could help a number of HAMP Tier 1 borrowers experiencing an interest rate increase by increasing the number of HAMP Tier 1 borrowers passing the HAMP Tier 2 NPV eligibility test. However, Treasury’s analysis also found that a more deeply discounted HAMP Tier 2 interest rate decreased the number of HAMP Tier 1 borrowers who might benefit. That is, with a deeper discounting of the HAMP Tier 2 interest rate, fewer HAMP Tier 1 borrowers would pass the HAMP Tier 2 NPV eligibility test. Treasury’s analysis showed that setting the HAMP Tier 2 interest rate at 50 basis points below the market rate allowed the largest number of HAMP Tier 1 borrowers (approximately 192,000) to be NPV positive while giving them some payment reduction. Treasury’s analysis also showed setting the rate at 100 basis points (instead of 50 basis points) below the market rate would increase the amount of Tier 1 borrowers’ payment reduction (an additional $22 or from $258 to $280) but would decrease the number of Tier 1 borrowers eligible for a Tier 2 loan modification (approximately 12,000 fewer loans).\nHowever, Treasury does not appear to have estimated the percentage of the 192,000 HAMP Tier 1 borrowers who would likely redefault or be in imminent default (i.e., future HAMP Tier 1 beneficiaries of this program change). According to Treasury officials, Treasury data shows that approximately 25 percent of HAMP Tier 2 modifications relate to borrowers who previously received HAMP Tier 1 trial or permanent modifications that they could not thereafter sustain. Treasury officials stated that given the unique criteria and circumstances of HAMP Tier 1 borrowers, it would be difficult to predict how many additional borrowers will redefault as a result of an interest rate increase. However, an Urban Institute study on interest rate resets, which Treasury officials told us they reviewed and considered, using Treasury published loan file information assumed a 10 percent increase in redefaults.\nIn addition to not estimating redefaults, Treasury did not estimate future costs to the HAMP program as a result of this program change. Treasury officials told us that because their goal was to help as many homeowners as possible avoid foreclosure, they settled on the rate that would benefit the larger number of HAMP Tier 1 borrowers. As a result of the reduction in the HAMP Tier 2 interest rate, Treasury’s share of the costs of the monthly reductions will increase a maximum of 25 basis points for the first five years of all new HAMP Tier 2 loan modifications.HAMP Tier 2 transactions represented more than half of all new HAMP transactions. According to Treasury, because the $29.8 billion in obligated funds remains unchanged, the interest rate change will have no impact on the MHA budget and will fit into Treasury’s existing budgetary authority. However, this assessment does not take into account the fact that unused MHA program funds could be returned to the federal government general fund if deobligated by Treasury, ultimately reducing federal government expenditures and minimizing the impact on the national debt.\nEvaluation of alternatives: Treasury partially met this element, primarily due to the lack of documentation of some alternatives considered. Treasury provided documentation showing that it considered lowering the interest rate in increments of 50 basis points, 100 basis points, 150 basis points, 200 basis points and not lowering the interest rate at all. Treasury also evaluated the effect of the interest rate reduction at various Primary Mortgage Market Survey rates, (e.g., 4 percent, 5 percent, etc.) given that such rates may change over time. Although Treasury did not provide any supporting documentation, officials told us that they had considered a number of other alternatives as well. For example, Treasury officials said they considered limiting the reduction to HAMP Tier 1 borrowers only. However, Treasury officials told us that limiting the change to redefaulting HAMP Tier 1 borrowers only would have limited the overall assistance provided and would not have increased the overall number of potentially eligible borrowers.\nTreasury officials said they also considered further targeting the rate reduction only at the Tier 1 borrowers most in risk of default. Treasury officials told us that HAMP Tier 2 already does that by virtue of its eligibility criteria. In order to quality for HAMP Tier 2, a HAMP Tier 1 borrower must meet basic eligibility criteria, which includes being either delinquent or at risk of imminent default. Treasury officials added that creating a bifurcated rate would add considerable operational complexity that would have reduced effectiveness by delaying implementation and putting borrowers at risk until the changes could be implemented.\nTreasury officials also told us that they had considered a stakeholder’s suggestion of freezing HAMP Tier 1 borrowers’ interest rate (i.e., eliminate interest rate increases). However, Treasury officials told us they rejected the suggestion as unfeasible because stakeholders advised them that it would have required the remodification of all Tier 1 loans, including executing new loan documents. Officials also added that freezing rates would likely cost significantly more than the selected approach.\nVerification: Treasury partially met this element. Treasury identified the maximum number of HAMP Tier 1 borrowers who could possibly benefit from its decision to reduce the HAMP Tier 2 interest rate. However, Treasury did not estimate the number of these HAMP Tier 1 borrowers that it expected to use HAMP Tier 2 or the total number of borrowers (both existing Tier 1 and new borrowers) expected to benefit from HAMP Tier 2. According to Treasury officials, they do not attempt to estimate the number of borrowers it expects to serve under HAMP Tier 2 or other programs because Treasury found servicer estimates of future participation to not be reliable predictors of future participation. Treasury officials said that their objective is to serve the greatest number of borrowers possible. However, as we found in July 2009 and June 2010, Treasury will be unable to effectively evaluate the success of program changes if it does not establish specific outcomes-based performance measures (expected benefits) at the outset to compare actual results versus the additional program outlays.\nFurther, according to Treasury officials it is difficult to estimate the number of borrowers that will ultimately receive assistance under HAMP Tier 2 or other programs, given borrowers’ unique situations, the dynamic nature of the housing market, and broader economic forces including changes in unemployment rates and rates of new mortgage defaults. OMB’s guidance recognizes that uncertainty is basic to many analyses and therefore its effects should be analyzed and reported. For example, OMB’s guidance states that the analysis should include information surrounding the key sources of uncertainty, expected value estimates of outcomes, sensitivity of results to sources of uncertainty, and where possible, probability distributions of benefits, costs, and net benefits.\nTreasury officials told us that they would closely track the number of homeowners who entered HAMP Tier 2 before and after the discounted rate went into effect to identify the impact of the change and the percent of HAMP Tier 2 borrowers who come from HAMP Tier 1. According to officials, this information will help Treasury fully assess the effectiveness of the program change. While following trends is a necessary component of a verification plan, it remains unclear how Treasury will be able to assess the effectiveness of this program change (i.e. whether anticipated benefits and costs have been realized, and whether it is minimizing the impact on the national debt) without a specific estimate or benchmark to track.", "Policy rationale: Treasury substantially met this element. Treasury noted that negative equity continued to be a persistent problem for many communities in the United States, with nearly 1 in 10 homeowners still underwater. Treasury also concluded that HAFA would be an important alternative for underwater homeowners facing interest rate increases and at risk of default. Treasury officials said they increased the HAFA relocation assistance after reviewing relocation costs, including moving expenses and rental deposits. Additionally, Treasury officials told us that HAFA can provide a safety net for borrowers who cannot sustain, or do not quality for, HAMP Tier 1 including those struggling with interest rate increases. While not a home retention option, HAFA can provide an alternative to foreclosure for those borrowers through the use of short sales and deeds-in-lieu. Treasury officials provided us with academic research they used when making changes to HAFA supporting these conclusions. According to Treasury, this research indicated that such mobility helped resolve regional unemployment differences through the movement of individuals to areas with greater employment opportunity. Treasury also demonstrated that some of the states with the most HAFA transactions also had above-average unemployment rates.\nExplicit assumptions: Treasury partially met this element. As noted above, Treasury noted that nearly 1 in 10 homeowners were still underwater. Being underwater effectively prevents many borrowers from selling their homes to pay off their mortgages. Treasury also concluded that the costs of relocating, such as rental deposits and moving expenses, could be especially burdensome for recently delinquent homeowners, who were often struggling with unemployment, may have exhausted their cash reserves, or both. However, Treasury did not fully meet this element because while it provided arguments for a higher assistance amount, the assumptions that went into its decision to more than triple the amount of assistance provided from $3,000 to $10,000 per borrower remain unclear. Treasury’s action memorandum noted rental rates in California, Florida, and Arizona (the states with the highest number of HAFA transactions) were steadily increasing. For example, Treasury focused on California when calculating rental deposits, because California accounted for more HAFA transactions than any other state. Treasury estimated rental deposits for a two-bedroom apartment to be approximately $4,500 in California. Officials also explained that the increase would help ensure that interstate moves remained a viable option for borrowers seeking employment opportunities. Treasury officials told us that the average cost of moving a two-bedroom household out of state was estimated at more than $5,600, almost five times more than an intrastate move, which was estimated at $1,170 based on data from the American Moving and Storage Association.\nIn its action memorandum, Treasury noted that the funds obligated to MHA remain unchanged at $29.8 billion and that the changes would have no impact on the MHA budget or TARP overall. However, this assessment does not take into account the fact that unused MHA program funds could be returned to the federal government general fund if deobligated by Treasury.\nEvaluation of alternatives: Treasury partially met this element. Treasury did not provide evidence that it conducted research or analysis that would allow it to evaluate a potential alternative of adjusting the benefits provided on a needs-based approach to assistance. Treasury officials told us that they had considered basing the relocation assistance on borrower location, but because HAFA is a national program Treasury wanted to treat borrowers in all states equally. Also, Treasury officials said they had concerns about servicers communicating the details of a needs-based or tiered approach to borrowers. Using a tiered approach might have led to borrower confusion about how much assistance they would receive and would require borrowers to provide additional documentation evidencing their relocation costs. Treasury officials also stated that using a needs- based or tiered approach would have required significant adjustments to both Treasury’s and servicers’ systems and processes, and that ease of implementation was an important consideration. Treasury officials noted that if Treasury had chosen a different approach it would not have had the assistance in place by February 2015. A more complicated alternative could not have been implemented until summer 2015 at the earliest. It remains unclear what impact such a delay might have had, particularly if it had permitted a more tiered approach that recognized borrowers’ unique circumstances and needs. Providing equal amounts of relocation assistance regardless of borrowers’ location and circumstances can result in inequitable treatment and potentially unintended results. For example, borrowers with underwater mortgages residing in low-cost areas might be more likely to seek the HAFA incentive, even if they were likely to remain current on their modified mortgage without it.\nVerification: Treasury partially met this element. Treasury did not provide specific estimates on the number of homeowners, including HAMP Tier 1 borrowers, whom it expected to receive HAFA assistance. Treasury noted that the amount that would be ultimately disbursed in connection with the HAFA relocation assistance payment increase would depend on a number of factors that it could not predict at the time (e.g., national mortgage delinquency rates and other economic conditions, borrower application rates, and the performance of modified loans over time).\nTreasury officials said they will continue to track the number of HAFA transactions before and after the relocation assistance increase. However, without specific estimates, Treasury will be unable to assess the expected effectiveness of this program change, particularly for HAMP Tier 1 borrowers. Treasury officials told us they would be unable to determine whether the increased incentive influenced borrowers’ decisions to seek a HAFA transaction.", "Policy rationale: Treasury partially met this element, but did not fully justify key aspects of the program change. Treasury provided three main justifications for making this change. First, Treasury officials noted that increasing financial incentives for homeowners in good standing after a HAMP modification could help lower the risk of redefault by providing a strong incentive for remaining current on modified loans. Previously, Treasury conducted a survey of active HAMP Tier 1 borrowers. The survey showed that nearly two-thirds of borrowers were aware of the incentives, and 73 percent of those respondents said they were motivated by them. Treasury officials said that the survey’s results confirmed that borrowers responded to performance incentives. Second, Treasury officials told us that having more equity in their homes—something this incentive provided—was important to lower the risk of redefault, particularly for those struggling with negative equity. Research by Treasury found higher redefault risks associated with underwater borrowers, who have no or negative equity in their homes. Third, officials said that they decided to offer the $5,000 incentive at the end of year 6 to lessen the financial impact of HAMP Tier 1 interest rate increases. Specifically, they said that the combination of a recast of the HAMP Tier 1 loan (which servicers are required to offer in conjunction with this program change) and all of the pay-for-performance incentives would lower monthly payments for a large population of homeowners facing increasing interest rates. Treasury officials also noted that this incentive was among options that they believed both Treasury and MHA servicers could implement relatively quickly because it did not require complex infrastructure changes.\nHowever, it is less clear why Treasury extended the $5,000 Year Six Pay- for-Performance Incentive to borrowers with HAMP Tier 2, RD-HAMP, and Treasury FHA-HAMP loan modifications. Borrowers in these programs do not face interest rate increases, because the modified interest rate of their loans is fixed for the life of the loan. Also, prior to Supplemental Directive 14-05, HAMP Tier 2 borrowers did not receive any pay-for-performance incentives. According to Treasury officials, borrowers in HAMP Tier 2, RD-HAMP and FHA-HAMP can still benefit from the increased equity that performance incentives provide. Officials stated that HAMP data showed that redefault rates fell as a loan’s post- modification LTV ratio decreases, and lowering the LTV ratio is especially important for those homeowners who remain underwater. In addition, officials said that increasing borrower incentives for these three programs could also incentivize more borrowers to apply for assistance with HAMP in the future.\nIn addition to the survey results showing that borrowers are motivated by existing incentives, Treasury officials pointed to their own analysis to support the year 6 incentive’s expansion to those programs. Treasury’s research showed that holding all other factors constant, borrowers with HAMP modifications performed better than similarly situated borrowers Officials stated that HAMP’s borrower with proprietary modifications.incentives were a probable explanation for these results. However, the borrower incentives were not included in the study’s analytical model. As a result, we believe the research cannot be used as evidence to support Treasury’s conclusions. Lastly, Treasury was unable to provide documentation to explain how it determined that $5,000 was the appropriate dollar amount for the incentive, given its stated goal of reducing loan modification redefaults.\nExplicit assumptions: Treasury partially met this element. Treasury assumed that providing these changes would incentivize HAMP borrowers to remain current in their monthly payments. While Treasury officials pointed to surveys of HAMP Tier 1 borrowers to demonstrate the effect of performance incentives, Treasury did not provide data supporting a greater willingness of borrowers already current on their modified mortgages—including HAMP Tier 2, RD-HAMP, FHA-HAMP and enterprise HAMP borrowers—to continue paying because of an increase in incentives.\nTreasury also assumed that the incentive would encourage HAMP Tier 1 borrowers in good standing and facing interest rate increases to remain current. Treasury estimated that the median HAMP Tier 1 monthly payment would increase by $95 after the first interest rate increase and by $212 after all interest rate increases. Treasury further estimated that the proposed recast would result in a median monthly payment reduction of $56 for HAMP Tier 1 borrowers. Treasury estimated that the reduction would offset 27 percent of the $211 cumulative payment increase for the median borrower. Treasury has reported that payment reduction strongly correlates with decreased defaults on HAMP loan modifications. However, our June 2012 report found that certain levels of payment reductions have a greater effect on reducing redefaults and that beyond these levels greater payment reductions have a diminishing impact on reducing redefault. It is unclear whether Treasury determined the extent to which this offset would help HAMP Tier 1 borrowers experiencing interest rate increases avoid redefault because of the increase in their monthly mortgage payments.\nHAMP Tier 1 borrowers will see their first rate increase at the beginning of year 6, and these borrowers will not receive the benefit until the beginning of year 7. Treasury officials told us that they expected many borrowers to be able to absorb the first interest rate increase. However, according to an Urban Institute study on interest rate resets, all HAMP borrowers with resetting loans in 2017 and 2018 will have an average increase of 33 percent, or about $254 in monthly payment increases. Moreover, according to a study by the Urban Institute large numbers of 2010 HAMP Tier 1 borrowers (nearly 235,000) in 2017 and 2011 HAMP Tier 1 borrowers (nearly 160,000) in 2018 are expected to encounter much higher monthly payment increases of $318 (a 43 percent increase) and $313 (a 41 percent increase), respectively.\nAccording to Treasury, approximately one million total borrowers already in HAMP are potentially eligible for the incentive, of which 752,000 in HAMP Tier 1 will see at least one interest rate increase. The balance of the one million represents homeowners in HAMP Tier 1, HAMP Tier 2, RD HAMP and Treasury FHA-HAMP who will not experience an interest rate change on their loan modifications. Treasury officials told us that they had not estimated how many of these potentially eligible borrowers will benefit from the additional incentive. Further, Treasury has not indicated the number of redefaults it expects the new incentive to prevent.\nTreasury estimated the total cost of the additional incentives at between $4 billion and $6 billion in additional TARP fund outlays, depending on how many potentially eligible homeowners participate and remain current. According to Treasury, this number includes the cost of extending the incentives to all HAMP programs and the maximum cost of Treasury’s agreement to fund the extension of the additional incentive to enterprise HAMP loans meeting the requirements of Supplemental Directive 15-01. Treasury did not report the expected costs for each specific program, making a cost comparison across programs difficult.\nOfficials told us that Treasury’s goal was more than to prevent HAMP Tier 1 borrowers from defaulting and that Treasury wanted to increase the performance and sustainability of all HAMP modifications. However, while Treasury’s action memorandum did discuss the general benefits of incentive payments, Treasury’s analysis did not address its decision to extend the incentive to HAMP Tier 2, RD-HAMP, and FHA-HAMP borrowers.\nEvaluation of alternatives: Treasury partially met this element. Treasury officials noted that they had explored options to enhance MHA programs to provide continued assistance to homeowners at risk of default, including those facing interest rate increases under HAMP. For example, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) recommended that Treasury increase the amount of the annual borrower incentives and require servicers to apply the annual incentive against the borrowers’ monthly mortgage payment rather than using it as a principal curtailment. Treasury did increase borrower incentives (e.g., by adding the sixth year $5,000 incentive), but officials said that they found multiple complications with SIGTARP’s suggestion to apply the annual incentive against the borrower’s monthly mortgage payment. For instance, borrowers on an automatic payment plan might have trouble making payments as the monthly payment amount changed, depending on whether it included the month’s incentive. According to Treasury officials, the mechanics of a monthly incentive would be difficult to explain to borrowers.\nTreasury officials told us that they had discussed SIGTARP’s suggestion with servicers, one of which suggested utilizing a recast option as an alternative means of lowering the borrower’s monthly payment. Treasury officials also told us that they had discussed SIGTARP’s recommendation with housing advocates that had expressed some concerns regarding logistics and changing monthly payments.\nTreasury officials told us that because servicers already had infrastructure in place to apply incentives to borrowers’ principal balance, they could quickly implement the additional incentive after the sixth year. Officials also told us that given Treasury’s experience implementing HAMP, Treasury had to consider implementation difficulties, feasibility for servicers, time constraints, and costs associated with any potential solution. Because interest rate increases had already begun and officials wanted to get assistance to borrowers as quickly as possible, Treasury had to consider the limitations of its administrative system and servicers’ systems when making its decision.\nTreasury internal documents said that they had considered variations of the pay-for-performance incentive, such as limiting it to borrowers with the most demonstrated need, reducing the amount of the incentive, or limiting the number of eligible HAMP programs. Treasury officials told us that they had made the judgment that a $5,000 amount in the sixth year with a recast option appropriately balanced the effect of a significant incentive, the desire for a timely and substantial payment relief option, and the time required to implement program changes. With regard to the selected amount of the incentive—$5,000—Treasury documents discussed how it considered providing smaller or larger amounts but reached the current amount after taking into account a number of possible factors. However, Treasury officials could not point to analysis of this and alternative amounts, and their relative impact on reducing redefault (i.e., HAMP Tier 1 program redefaults or the other included programs redefault rates), or other expected outcomes.\nVerification: Treasury partially met this element. Treasury identified the universe of potentially eligible HAMP borrowers for the additional incentive but did not estimate how many borrowers would likely qualify (e.g., remain in good standing for six years and, as to enterprise borrowers, be serviced by a participating SPA servicer. Further, Treasury does not have a plan for evaluating the effectiveness of the pay-for- performance incentive on HAMP Tier 2, RD-HAMP, FHA-HAMP, and enterprise borrowers. Treasury did identify the universe of potentially eligible HAMP Tier 1 borrowers but did not provide specific numbers on the number of HAMP Tier 1 borrowers most likely to receive the benefit.\nTreasury officials told us that they would continue to collect performance data on all of the HAMP programs. According to officials, the data will allow them to monitor the incentive’s impact on default curves after borrowers are notified of the increased incentive by comparing borrowers’ performance over time. However, such an approach would not permit isolating the impact of this incentive, because it is unable to control for other factors that could affect the number of HAMP Tier 1 borrowers that redefaulted. As a result, Treasury will be limited in its ability to adequately determine whether the incentive has helped prevent redefaults after the interest rate increases.", "Approximately 1.5 million borrowers have received permanent HAMP first-lien modifications, and $18.8 billion (63 percent) of TARP funds allocated to MHA remain to be disbursed (as of May 2015). Treasury has recently made a series of program changes that are intended to increase participation in MHA programs and mitigate the impact of HAMP Tier 1 interest rate increases. Treasury’s analysis showed that these changes could result in additional outlays of TARP funds in the billions of dollars. However, inconsistencies we saw with regards to Treasury’s analysis suggest the lack of a standard process in place to ensure that program changes were subject to a comprehensive benefit-cost analysis. Treasury did not fully meet all of the key elements of benefit-cost analysis for the three program changes that we reviewed. As noted in OMB guidance and our past work, benefit-cost analysis improves decision-making by providing a framework for systematic analysis of objectives, influencing factors, and their effects. Each of the four elements of a benefit-cost analysis—policy rationale, explicit assumptions, evaluation of alternatives, and verification—are important in promoting efficient resource allocation through well-informed decision-making. Since such program changes do not require Treasury to engage in a formal rulemaking process that includes a public comment period, standardizing the process might allow for increased accountability of Treasury’s program changes. Because Treasury did not comprehensively address each of the four key elements of an effective benefit-cost analysis, when it has made recent program changes, it has limited assurance that the changes will effectively mitigate expected rate increases in a manner that minimizes the impact on the national debt. It is important that MHA program changes that will result in additional TARP outlays be based on key elements of benefit-cost analysis since any unused MHA funds could be returned to the federal government general fund and available for other purposes, thereby reducing the national debt.", "To bring greater rigor and efficiency to decisions about the use of federal funds allocated for TARP housing programs, we recommend that the Secretary of the Treasury develop and implement policies and procedures that establish a standard process to better ensure that TARP- funded housing program changes are based on analyses that comprehensively and consistently meet the key elements of benefit-cost analysis.", "We provided a draft of this report to Treasury for review and comment. Treasury provided written comments, which are presented in appendix II. We also received technical comments from Treasury that are incorporated as appropriate in the report. In its written comments, Treasury agreed that it is important to assess the costs and benefits of proposed program modifications. Treasury highlighted some of its efforts to evaluate alternatives along with costs and benefits of the recent changes made to the MHA program. Treasury stated that it would seriously consider the extent to which it can apply our recommendation going forward.\nIn its comment letter, Treasury noted that the recent enhancements to the MHA program can be implemented with existing allocated financial resources since any costs associated with these program changes will draw from funds already allocated. However, any unused allocated funds can be deobligated and returned to the general fund, allowing the funds to be used for other purposes. For this reason, we believe it is important that Treasury consider carefully whether the additional costs associated with these program changes are consistent with the expected benefits provided. In fact, Treasury has previously deobligated significant funds when it determined that a program was unnecessary. For example, Treasury recently deobligated almost $8 billion in allocated TARP funds based on lower than expected participation in the FHA Short Refinance Program. Moving forward, it will be important that Treasury follow the best practices discussed in OMB’s Circular A-94 to ensure taxpayer funds are spent efficiently and effectively and to minimize the impact on the national debt.\nIn its technical comments, Treasury also raised concern about how we evaluated its plans to meet the verification element of benefit-cost analysis for the three program changes we reviewed. Specifically, Treasury expressed concern that we did not fully credit Treasury for its plans to monitor the effects of the program changes. Based on our review of the additional information provided by Treasury during the agency comment period, we made modifications to our draft report ratings for the verification element for all three program changes and the evaluation of alternatives element for the HAFA relocation assistance program change. However, even with the consideration of this additional information, our analysis found that Treasury has not fully addressed critical components of OMB’s guidance for the verification element. As we discussed in the report, without estimating the number of potential beneficiaries, Treasury will be limited in its ability to conduct results-oriented evaluations of the effectiveness of the changes. Further, we maintain that it is important that Treasury estimate the number of borrowers who are likely to receive an additional benefit in order to effectively evaluate the outcomes of providing those additional benefits.\nWe are sending copies of this report to the appropriate congressional committees. This report will be available at no charge on our website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact me at (202) 512-8678 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.", "In response to a provision in the Emergency Economic Stabilization Act of 2008 (EESA), this report examines (1) the status of TARP-funded housing programs and (2) the extent to which Treasury’s analytic framework for considering recent program changes was consistent with federal guidance and best practices.\nTo assess the status of TARP housing programs, we collected and analyzed data on participation levels and spending for the Making Home Affordable (MHA), the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (Hardest Hit Fund), and the Federal Housing Administration (FHA) Refinance of Borrowers in Negative Equity Positions (FHA Short Refinance) programs. For MHA and FHA Short Refinance programs, we collected data on the number of borrowers participating in the program and program-specific information on the help they received from Treasury’s MHA monthly performance reports through May 2014 and its quarterly reports through March 2015. For the Hardest Hit Fund, we collected data from participating states’ program agreements with Treasury on the total amount of funds allocated and the projected number of households to be assisted, as well as from Treasury’s quarterly data and performance summary reports. We used these data to calculate the percentage of households assisted and percent of funds disbursed. Further, we analyzed the Congressional Budget Office’s analysis of projected TARP spending and interviewed Treasury officials about the status of the programs, including any future program changes, and their projections for completing disbursement of TARP-housing funds. To assess the reliability of the Treasury data, we reviewed related documentation and interviewed knowledgeable agency officials. From this, we determined that the data were sufficiently reliable for the purposes of this report.\nTo assess Treasury’s efforts to consider the costs and benefits of a range of policy options when making program changes, we interviewed Treasury officials about their process for making program changes; we reviewed MHA Monthly Performance Reports, quarterly Special Inspector General for TARP reports to Congress, the MHA program handbook, Treasury’s supplemental directives communicating program changes, internal Treasury documents, prior GAO work, and reviewed Treasury’s website. We also interviewed one organization that acts as the sole contractor for Treasury’s borrower hotline and a think tank that recently issued a relevant study. We compared Treasury’s process to key elements of effective cost-benefit analysis contained in guidance from the Office of Management and Budget (OMB).\nWe conducted this performance audit from November 2014 to July 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on the audit objectives.", "", "", "", "In addition to the contact named above, Harry Medina (Assistant Director), Jon D. Menaster, (Analyst-in-Charge), Bethany M. Benitez, Christina S. Cantor, Emily R. Chalmers, William R. Chatlos, Lynda E. Downing, Cheryl L. Jones, John A. Karikari, Susan E. Offutt, Jena Y. Sinkfield, Estelle M. Tsay-Huang, James D. Vitarello, and William T. Woods made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h2_title", "h0_full h2_full", "", "", "h0_title h1_title", "h0_full", "h0_full h1_full", "h1_full", "", "h1_full", "", "", "", "h2_full h1_full", "", "", "", "" ] }

{ "question": [ "What was Treasury's role in TARP?", "How did the number of new borrowers in HAMP change?", "How has HAMP Tier 1 activity changed?", "How has HAMP Tier 2 activity changed?", "How does Treasury plan on expanding the program participant base?", "To what extent did Treasury assess the effectiveness of the program changes?", "What ambiguities persist regarding redefault reduction?", "What did the results of Treasury surveys show?", "What factors do program costs and benefits rely on?", "How will the lack of through analysis be detrimental to Treasury?", "How does Treasury help struggling homeowners?", "Why does GAO report on TARP activities?", "What does this report address?", "How did GAO collect data for this report?" ], "summary": [ "Between February 2009 and May 2015, the U.S. Department of the Treasury (Treasury) disbursed approximately $16.3 billion of the $37.5 billion in Troubled Asset Relief Program (TARP) funds allocated to support housing programs.", "The number of new borrowers with permanent modifications added to the Home Affordable Modification Program (HAMP), the key component of these programs, began to decline in late 2013 but has stabilized at between 9,000 and 15,000 additions per month.", "Activity under HAMP Tier 1, the original modification for qualified borrowers seeking to reduce their mortgage payments to affordable levels (rates periodically reset), has gradually declined.", "HAMP Tier 2, a broader fixed rate modification announced in 2012, has gradually grown to account for the majority of new entrants.", "Since October 2014, Treasury has expanded incentives in order to draw new entrants into the programs and further assist existing participants.", "In making program changes, Treasury took steps to assess their benefits and costs but did not fully meet all of the key elements of federal benefit-cost analysis guidance, and thus has limited assurance that the additional expenditures are an effective and efficient use of taxpayer dollars (see figure below).", "For example, it is unclear whether the recent changes, such as extending performance incentives to borrowers in the sixth year of their HAMP modification (estimated to cost $4-6 billion), will reduce redefaults.", "Treasury officials told GAO that borrower surveys confirmed that borrowers responded to performance incentives.", "Treasury officials said that program benefits and costs depended on unknown factors and macroeconomic trends and that program benefits were difficult to quantify.", "Without full and comprehensive analyses, Treasury will be challenged to determine whether program changes are actually achieving desired goals and are an efficient use of taxpayer dollars.", "Treasury has allocated $37.5 billion in TARP funds to help struggling homeowners avoid potential foreclosure since 2009.", "The Emergency Economic Stabilization Act of 2008 includes a provision for GAO to report every 60 days on TARP activities.", "This 60-day report examines (1) the status of TARP-funded housing programs and (2) the extent to which Treasury's analytic framework for considering recent program changes was consistent with federal guidance and best practices.", "To do this work, GAO analyzed borrower participation levels, reviewed program documentation, and interviewed Treasury officials." ], "parent_pair_index": [ -1, 0, 0, 0, -1, -1, 0, 0, -1, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Role and Evolution of State’s Office of the Coordinator for Counterterrorism", "Role and Evolution of State’s Bureau of Counterterrorism", "CT Bureau Programs and Activities", "CT Bureau Organizational Structure", "CT Bureau Funding Allocations", "CT Bureau’s Authorized Staffing Has Increased since Fiscal Year 2011, and Recent Efforts Have Been Made to Reduce Long- standing Staffing Gaps", "While CT Bureau Has Assessed Its Performance, It Has Not Evaluated Its Priority Countering Violent Extremism Program or Established Time Frames for Addressing Evaluation Recommendations", "CT Bureau Assessed Progress toward Achieving Its Foreign Assistance– Related Goals", "CT Bureau Has Completed Four Program Evaluations since Fiscal Year 2012 but Has Not Evaluated Its Priority CVE Program", "CT Bureau Has Not Established Time Frames for Addressing Recommendations from Program Evaluations", "CT Bureau’s Collaboration on Countering Violent Extremism and Counterterrorism Finance Programs Was Generally in Line with Key Collaboration Practices", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Ancillary Efforts Managed by the Department of State Bureau of Counterterrorism", "Appendix III: Department of State Bureau of Counterterrorism Description of Its Directorates and Offices", "Directorates", "Principal Deputy Coordinator for Counterterrorism", "Regional and Multilateral Affairs", "Homeland Security", "Operations", "Offices and Units", "Office of the Executive Director", "Office of Strategy, Plans, and Initiatives", "Office of Programs", "Public Affairs Unit", "Foreign Terrorist Fighters Unit", "Countering Violent Extremism Unit", "Appendix IV: Allocations of Funds to the Department of State Bureau of Counterterrorism for Six Counterterrorism- Related Programs, Fiscal Years 2011 to 2015", "Appendix V: Funds Obligated for the Department of State Bureau of Counterterrorism Operations Budget, Fiscal Years 2012 to 2014", "Appendix VI: Department of State Bureau of Counterterrorism Workforce Planning Efforts", "Appendix VII: Comments from the Department of State", "Appendix VIII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "As shown in figure 1, the CT Office has evolved over the last two decades. In December 2010, the QDDR recommended the creation of the CT Bureau to supersede the CT Office.numerous other offices, was attached to State’s Office of the Secretary, which provided management and administrative support to the CT Office. The CT Office relied on the Secretary of State’s Office of the Executive Secretariat for functions such as budgeting and human resources. According to a report by State’s Office of Inspector General in 2012, the The CT Office, along with CT Office’s needs for management support services, such as human resources, could not be met in a timely and efficient fashion because the Office of the Executive Secretariat had other responsibilities in addition to providing administrative support to the CT Office.\nAccording to State, one reason for elevating the CT Office to a bureau was that the office’s responsibilities for counterterrorism strategy, policy, operations, and programs had grown far beyond the original coordinating mission. The QDDR stated that the new CT Bureau, when established, would build on and expand the CT Office’s activities in three areas; it would (1) play a key role in State’s efforts to counter violent extremism, (2) strengthen State’s ability to assist foreign partners as they build their own counterterrorism capabilities, and (3) engage in multilateral and bilateral diplomacy to advance U.S. counterterrorism goals. In addition, the QDDR mentioned that the bureau status would allow for more effective coordination with other agencies, including the Departments of Defense, Homeland Security, and Justice, and with the Intelligence Community. Figure 2 shows the organizational structure of the CT Office in 2011.\nAs the new CT Bureau began organizing itself, State’s Office of Inspector General (OIG) conducted an inspection of the CT Bureau in early 2012. The OIG recognized that the inspection took place as the bureau was implementing internal reorganization and reported that this process entailed creating an executive office, adding new staff to develop capabilities, and shifting staff around, among other things. In its report, the OIG stated that the CT Bureau’s intended goals included improving communications and coordination through measures such as integrating policy and program staff and creating more efficient and transparent flows of information, including through a new tasking and tracking system. The OIG made 13 formal recommendations addressing issues such as staffing, training, and reorganization; 10 of the recommendations had been closed as implemented as of June 2015, according to an OIG official.", "Since transitioning to a bureau in January 2012, the CT Bureau updated its mission statement to focus on partnerships and building the capacity of partner nations to counter terrorism. The current mission of the CT Bureau is to promote U.S. national security by taking a leading role in developing coordinated strategies and approaches to defeat terrorism abroad and securing the counterterrorism cooperation of international partners.\nThe CT Bureau identified five principal areas of responsibility: (1) U.S. counterterrorism strategy and operations, (2) countering violent extremism, (3) homeland security coordination, (4) capacity building, and (5) counterterrorism diplomacy. According to CT Bureau officials, these responsibilities are reflected in the types of programming that the bureau carries out.", "Like its predecessor office, the CT Bureau manages a range of programs, initiatives, and activities to combat terrorism around the world. According to the CT Bureau, it manages and oversees six key programs:\nAntiterrorism Assistance: implemented by the Department of State’s Bureau of Diplomatic Security, helps partner nations build capacity across a wide spectrum of counterterrorism law enforcement skills, offering training, equipment, mentoring, and technical assistance.\nCountering Violent Extremism (CVE): seeks to deny terrorism new recruits by reducing sympathy and support for violent extremism. The program supports targeted counter-recruitment interventions for at- risk communities in priority countries and aims to build resilience against violent extremist narratives. It also builds the capacity of partner nations and civil society organizations to counter violent extremism.\nCounterterrorism Engagement: builds the capacity of multilateral organizations and regional bodies, including the Global Counterterrorism Forum, to promote counterterrorism cooperation and best practices.\nCounterterrorism Finance (CTF): assists partner nations to build and strengthen effective legal frameworks and regulatory regimes, establish active and capable Financial Intelligence Units, strengthen the investigative skills of law enforcement entities, and bolster prosecutorial and judicial development.\nRegional Strategic Initiative: fosters regional cooperation and deepens partnerships to address top-priority terrorism challenges.\nTerrorist Interdiction Program: provides partner nations with biometrics technology and training to identify, disrupt, and deter terrorist travel at airports and other major ports of entry.\nIn addition, the CT Bureau manages or is responsible for other counterterrorism-related efforts, which are described in appendix II.", "In the transition from CT Office to CT Bureau in 2012, some organizational changes occurred, such as a reduction from five to four Deputy Coordinators. The creation of the bureau elevated the role of strategic planning and metrics, and established a new policy and guidance unit to ensure that all CT programs and activities, to include counterterrorism programs implemented with foreign partners, conform to law and policy and reflect the counterterrorism priorities of the Secretary of State and the Coordinator for Counterterrorism.\nAdditional changes to the CT Bureau’s organizational structure occurred starting in 2014, following the confirmation of an ambassador as the Coordinator of the bureau.Coordinator initiated a strategic review of the CT Bureau’s programs and what they were accomplishing to help form a clear picture of priorities, threats, and where the bureau’s efforts and funding should be directed. The strategic review led to several key changes in the bureau’s structure, and the CT Bureau’s overall programmatic focus shifted to a regional or geographic approach. The function of program monitoring, oversight, and evaluation was elevated, and a separate Office of Programs was created to monitor the day-to-day activities of counterterrorism programming at the program management level. Figure 3 depicts the new organizational chart of the CT Bureau as of June 2015.", "The CT Bureau is allocated funding for (1) foreign assistance programming that the bureau oversees as well as (2) the operations of the bureau. The foreign assistance allocations to the CT Bureau fund counterterrorism-related programs that the bureau oversees. As shown in figure 4, from fiscal years 2011 through 2014, the CT Bureau was allocated a cumulative total of $539.1 million for six counterterrorism- related programs: (1) Antiterrorism Assistance, (2) Countering Violent Extremism, (3) Counterterrorism Engagement, (4) Counterterrorism Finance, (5) Regional Strategic Initiative, and (6) Terrorist Interdiction Program. The CT Bureau requested $104.4 million in allocations for fiscal year 2015 for these programs. State officials were unable to provide actual allocations for fiscal year 2015 because they were working to finalize them, as of June 2015. For funding allocations by program, fiscal year, and funding account, see appendix IV.\nWhen the CT Bureau became operational, in early 2012, its operations were no longer part of the executive management of the Office of the Secretary of State. The CT Bureau and the Office of the Secretary of State worked with State’s Bureau of Budgeting and Planning to determine the size of the budget that was needed to support the new CT Bureau, according to CT Bureau officials. The bureau’s allocated resources include funding for the operations of the bureau. The CT Bureau receives funds from two sources to fund its core operations: the Diplomatic and Consular Programs and the Worldwide Security Programs accounts. Figure 5 shows the bureau’s total allocations for its overall management and operations since fiscal year 2012. These allocations increased from $11.7 million in fiscal year 2012 to $14.7 million in fiscal year 2013, as the bureau was being established. The allocations then decreased to $13.1 million in fiscal year 2014. Appendix V provides information on the CT Bureau’s total obligations for its overall operations since fiscal year 2012.", "The CT Bureau’s number of authorized full-time equivalent (FTE) staff positions has grown annually since fiscal year 2011, and the bureau has recently undertaken efforts to reduce a persistent staffing gap. The bureau’s number of authorized FTEs grew from 66 in fiscal year 2011 to 96 in fiscal year 2015, which is an increase of more than 45 percent. Figure 6 shows the number of authorized FTEs within the bureau for fiscal years 2011 to 2015, along with the number of FTE positions that were filled. While the bureau’s current authorized level of FTEs for fiscal year 2015 is 96 positions, it had 22 vacancies as of October 31, 2014. The percentage of vacancies in the bureau has ranged from 17 percent to 23 percent in fiscal years 2011 to 2015. According to the CT Bureau, these vacancies have included both staff-level and management positions. For example, recent vacancies have included a management position in the Office of Homeland Security and program analyst positions in the Office of Programs. Since the staffing snapshot reflected in figure 6, the bureau has reported it has made efforts to fill vacancies. The Principal Deputy Coordinator for Counterterrorism testified before Congress on June 2, 2015 that the CT Bureau had reduced its FTE vacancies to 11 positions. However, we have been unable to verify that 4 of the reportedly filled positions have been filled because State has not provided sufficient documentation.\nIn addition to the authorized FTEs, the CT Bureau also has non-FTE positions, which include contractors; interns; fellows; detailees; and “When Actually Employed,” the designation applied to retired State employees rehired under temporary part-time appointments. For fiscal years 2013, 2014, and 2015, respectively, the CT Bureau had 92, 78, and 69 such positions, in addition to its authorized FTEs, according to the CT Bureau.\nAccording to State, to meet the personnel requirements associated with standing up the CT Bureau, the bureau received an authorized increase According of 31 positions covering fiscal year 2012 to fiscal year 2014. to the CT Bureau, about 7 of these positions were initially filled within the first 6 months after the bureau was established. Filling many of the remaining positions was postponed until the current Coordinator for Counterterrorism had time to assess the bureau’s needs and priorities, according to the CT Bureau. CT Bureau officials stated that since fiscal year 2012, the authorized positions have been reallocated each year and moved around within the CT Bureau based on the bureau’s needs. When the Coordinator for Counterterrorism, following the strategic review, deemed that more staff might be needed in newly created units, some of the authorized positions were used for that purpose. For example, 1 position was used to fill a management-level position in the CT Bureau’s Office of Strategy, Plans, and Initiatives and another to fill a senior-level position in the Foreign Terrorist Fighters Unit, according to CT Bureau officials. For additional information regarding the CT Bureau’s workforce planning efforts, see appendix VI.", "The CT Bureau utilized various means to assess its performance, including performance assessments and program evaluations. Specifically, in fiscal years 2012 and 2013, the CT Bureau established indicators and targets for its foreign assistance–related goals identified in the bureau’s first multiyear strategic plan. The bureau also reported results achieved toward each established indicator. In addition, since being elevated to a bureau in fiscal year 2012, the CT Bureau has completed four evaluations of counterterrorism-related programs it oversees, but none have focused on CVE programming—a priority for the bureau. The completed evaluations resulted in 60 recommendations, and the CT Bureau reported having implemented about half of the recommendations as of June 2015. A standard practice in program management is to complete actions in response to recommendations from evaluations within established time frames. However, the CT Bureau has not established time frames for addressing the remaining recommendations. Without specific time frames for completing actions in response to recommendations from evaluations, it will be difficult for the bureau to ensure that needed programmatic improvements are made in a timely manner or to hold its implementing partners accountable for doing so.", "The CT Bureau assessed its progress toward achieving its foreign assistance–related goals in fiscal years 2012 and 2013, as required by State policy. That policy requires bureaus to respond to an annual department-wide data call for foreign assistance–related performance information. Specifically, bureaus must identify indicators and targets for their foreign assistance–related goals, as defined in their multiyear strategic plans, and report results achieved toward each indicator for the prior fiscal year.foreign assistance–related goals in its first multiyear strategic plan and As shown in figure 7, the CT Bureau identified four established quantitative indicators and corresponding targets for each of those goals. It also reported results achieved for each indicator. According to these results, the CT Bureau generally met or exceeded its targets or the baseline when no target existed.", "Since being elevated to a bureau in fiscal year 2012, the CT Bureau has completed four evaluations of counterterrorism-related programs it funds and oversees. The number of completed program evaluations meets the number of evaluations required by State’s February 2012 evaluation policy.during fiscal years 2013 and 2014 and focused primarily on evaluating programs providing training courses to law enforcement officials of partner nations, such as the Antiterrorism Assistance program in Morocco and Bangladesh.", "Standard practices in program management include, among other things, establishing specific time frames for addressing recommendations from program evaluations. For example, internal control standards for the federal government state that management should (1) promptly assess the findings and recommendations from evaluations, (2) determine and complete actions in response to the findings and recommendations from evaluations within established time frames, and (3) record actions taken on recommendations in a timely and accurate manner. State’s January 2015 evaluation guidance, which provides specific criteria and guidelines for evaluating State programs, also recognizes the need for bureaus to track and address recommendations from evaluations.\nThe four program evaluations the CT Bureau completed during fiscal years 2013 and 2014 resulted in 60 recommendations. In response to questions during the course of our review, CT Bureau officials developed action plans to describe the status of efforts to address the 60 recommendations. On the basis of our review of these action plans, the CT Bureau reported having implemented about half of the recommendations (28 of 60) as of June 2015. The bureau had put on hold or decided not to implement 4 recommendations. The remaining 28 recommendations were still being considered or were in the process of being implemented, or the bureau had made a commitment to implement them. CT Bureau officials said that program officers are assigned responsibility for following up on recommendations that affect their portfolio but that the bureau does not have any policy or other guidance outlining the timing for addressing recommendations from evaluations. Further, according to bureau officials, the bureau does not have a system for assigning time frames for the implementation of recommendations. While the action plans are a positive first step to help the bureau monitor and track its progress in implementing recommendations, they do not address the need for the bureau to establish time frames for addressing recommendations from evaluations. Without specific time frames for completing actions in response to recommendations from evaluations, it will be difficult for the bureau to ensure that needed programmatic improvements are made in a timely manner or to hold its implementing partners accountable for doing so.", "We found that activities between the CT Bureau and other bureaus within State as well as with other U.S. government agencies on counterterrorism programs, specifically the CVE and CTF programs, were generally in line with six of the seven key practices that GAO has identified for interagency collaboration in the areas of (1) outcomes and accountability, (2) bridging organizational cultures, (3) leadership, (4) clarity of roles and responsibilities, (5) resources, and (6) written guidance and We did not review one additional key collaboration agreements.practice, which covers participants, because doing so would have required taking a comprehensive look across all the State bureaus and other U.S. government agencies to ensure that all the relevant participants in counterterrorism efforts were included and would have required an evaluation of their relevant resources, skills, and abilities to contribute, which was outside the scope of this review.\nOutcomes and accountability.\nGAO-12-1022. Having defined outcomes and mechanisms to track progress can help shape a collaborative vision and goals. defined intended outcomes generally as collaborating on policy and programming decisions, sharing information, and ensuring that there is no duplication of existing or planned initiatives. When working with other U.S. government agencies, the CT Bureau generally has laid out the intended outcomes of coordination efforts in interagency agreements. We found that within State, the goals of coordination may be articulated by the CT Bureau through specific requests across regional or functional bureaus or messages defining and assigning specific tasks. For example, some State officials in regional bureaus mentioned that the CT Bureau has asked for input on CVE programming, specifically on reviewing CVE grant proposals from posts and nongovernmental organizations for respective regions to ensure that the programming was feasible and did not conflict with other initiatives. Further, some State officials said that the CT Bureau reached out to them to request their expertise on identifying regional stakeholders that could provide input for the State portion of the February 2015 White House Summit on Countering Violent Extremism.\nWith regard to coordination on CTF, we found that the interagency Terrorist Financing Working Group previously had provided a mechanism for the CT Bureau and other U.S. government agencies to hold regular meetings to discuss and reach consensus on CTF programming outcomes and goals. According to agency officials, interagency coordination on CTF programs occurred in the past mostly through the Terrorist Financing Working Group, which developed an annual list of priority countries based on an analysis by participating agencies, including various intelligence agencies. The working group was co-chaired by the former CTF unit within the CT Bureau and provided a mechanism for agency stakeholders to share information on CTF activities and find ways to avoid potential conflict between any initiatives. According to officials at other agencies, the Terrorist Financing Working Group has not met recently, and the CT Bureau is in the process of developing new interagency collaboration mechanisms for CTF programming, after the CTF unit within the bureau was disbanded during the recent reorganization of the bureau. Department of the Treasury officials stated that in the interim there is sufficient coordination between the bureau and stakeholders on CTF programming; however, they stated that if the Terrorist Financing Working Group remains on hiatus for some time, and no replacement mechanism for regular formal collaboration is initiated, stakeholders’ awareness of what other agencies are doing to counter terrorism financing could be hindered.\nWe identified accountability mechanisms to monitor, evaluate, and report on results or outcomes of counterterrorism programming, especially when there is an interagency agreement between the CT Bureau and other U.S. government agencies on programming such as CVE. For example, an interagency agreement between the CT Bureau and United States Institute of Peace stipulates that reporting on the outcome of the programming is to include quarterly performance reports, interim reports, and final reports no later than 60 days after the termination of the agreement. In addition, some agency officials said that there are monitoring and evaluation mechanisms in place when implementing CT Bureau–funded programming. For example, Department of the Treasury officials stated that they are responsible for providing after-action reports to the CT Bureau on their program efforts related to activities with foreign governments aimed at strengthening anti-money laundering and combating the financing of terrorism regimes for CT Bureau-funded programming.\nBridging organizational cultures.\nWe found that while terminology may differ when discussing CVE, within State, some regional and functional bureau officials we spoke with stated that they use a common definition for CVE and apply the CVE strategy and policy that the CT Bureau has developed for CVE programming. Similarly, some officials in other U.S. government agencies we spoke with said they agree on common terms and outcomes of counterterrorism programming as ideas are discussed between the CT Bureau and the implementing agency, if the bureau funds a program or grant. For example, USAID officials said that while their agency’s definition of CVE differs from the CT Bureau’s, they have implemented programs on the ground in the Maghreb and the Sahel region on CVE capacity building using an agreed-upon common CVE definition.\nWe also found that collaborating agencies reported frequent communication related to CVE programs. Specifically, we found that frequency of communication between the CT Bureau and other State bureaus as well as other U.S. government agencies varied depending on the project or activity and ranged from daily to monthly interactions. For example, on one of the CT Bureau–funded CVE projects implemented by the United States Institute of Peace, the implementing program specialist estimated that he has been in touch with his counterpart at State once every 2 days on average over the life of the program, which focuses on developing training for an international institution for CVE-related training in the United Arab Emirates.\nLeadership.\nFor CVE and to some extent CTF, we found that officials at State and at other U.S. government agencies were generally aware of the agency or individual with leadership responsibility for the particular counterterrorism program. In addition, at the time of our review, officials said that they receive relevant and timely information on CVE-related programming from the bureau. Officials in State’s regional bureaus stated that they are generally aware of when the CT Bureau would have the lead on counterterrorism issues versus the regional bureaus. For example, some of these officials said that if a given issue involved policy and cross-cutting counterterrorism areas, the CT Bureau would take the lead on meetings and assigning tasks, whereas if the issue was more regional in nature, the regional bureaus would take the lead with support from the CT Bureau.\nWe found that while the leadership for the CTF program was generally clear in the past, at the time of our review there was some uncertainty among officials as to whom they should be working with on CTF programming, because of the recent reorganization of the CT Bureau. For example, some U.S. government officials said that there had been a dedicated CTF unit within the bureau that dealt with CTF programming and also coordinated the interagency Terrorist Financing Working Group. However, with the elimination of the stand- alone CTF unit within the CT Bureau, it was not as clear to these officials who was the point of contact for CTF issues. At the time of our review, a few U.S. government agency officials said that it would be beneficial if the CT Bureau shared new contact information resulting from the recent reorganization; however, in the interim, the officials would still reach out to the point of contact that had been previously established for CTF issues.\nClarity of roles and responsibilities.\nWe found that there was general clarity on the roles and responsibilities of the participants collaborating on CVE and CTF counterterrorism programs with the CT Bureau. For example, several State officials said that for questions related to programs, such as CVE, they knew who their point of contact in the CT Bureau was and also what that person’s portfolio encompassed. We also found that the roles and responsibilities of participants are generally clarified in writing in cases where there is an interagency agreement between the bureau and implementing U.S. government agency partners on a particular program. For example, such agreements outline the roles and responsibilities of the requesting agency and the servicing agency.\nWhen referring to assessing the performance of counterterrorism programming, officials from both within State and other U.S. government agencies said that they were clear on whose responsibility it was to monitor and evaluate CVE and CTF programming activities. State and other agency officials understood that the CT Bureau would be responsible for ensuring evaluations of counterterrorism programs are conducted; however, the monitoring and reporting of the outcomes of CT Bureau–funded programs would be the responsibility of the implementing U.S. government agency partner of that program, or the recipient of the funding.\nResources.\nAccording to information provided by the CT Bureau, it had provided funding for CVE or CTF programming activities to most of the agencies with which we spoke. The program funding for these activities came from the Nonproliferation, Antiterrorism, Demining, and Related Programs and Economic Support Fund funding accounts. According to information from the CT Bureau, from fiscal year 2011 to fiscal year 2014, it obligated over $11 million to agencies we spoke with for CVE programming and over $43 million to agencies we spoke with for CTF programming using interagency agreements or transfers.\nWe found that, in cases where the CT Bureau funded U.S. government agencies on CVE or CTF programming, the funding mechanism was clear and laid out in the interagency agreements.\nSome agency officials told us that these agreements provide the vehicle whereby funding can be obligated from the CT Bureau to their agencies using a standard process. For example, Department of Homeland Security officials said that they have worked with the CT Bureau when receiving funding for cross-border financial training to be carried out in various countries and that the funding mechanism was clear. USAID officials stated that while USAID does not have interagency agreements with the CT Bureau, funding from the bureau for the CVE programs and activities that USAID administers comes through standard interagency transfers.\nWritten guidance and agreements.\nWe found that many of the U.S. government agencies we spoke with had formal interagency agreements with the CT Bureau on CVE- and CTF-related programming or activities. The interagency agreements described, among other things, the service to be provided, roles and responsibilities of each party, method and frequency of performance reporting, and accounting information for funding of the service provided. The interagency agreements we reviewed covered a multiyear agreement period. For example, the CT Bureau has an agreement with the Department of Justice Office of Overseas Prosecutorial Development, Assistance and Training on funding a Resident Legal Advisor in Panama who works with the host country government to enhance the capacity of criminal justice actors and institutions to handle financial crimes involving money laundering and terrorist finance. The interagency agreement in place covers funding for the period of 2014 through 2019. According to CT Bureau officials, as the scope or activities of the CT Bureau–funded programming changes, the interagency agreements can be modified. In addition, the CT Bureau and the Department of Justice have an interagency agreement on development of community police training in Bangladesh.\nWe found that many of the State bureaus we spoke with that coordinate with the CT Bureau on CVE and CTF programs did not have any written agreements, such as memorandums of understanding or written guidance laying out the terms of the collaboration. However, several State officials indicated that formalized agreements were not necessary, as the collaboration between bureaus within State is routine and the CT Bureau has been effective in sharing information pertaining to the CVE programs.", "Given the critical importance of preventing terrorist attacks on the United States and its interests around the world, State elevated the Office of the Coordinator for Counterterrorism to the Bureau of Counterterrorism in fiscal year 2012 to lead the department’s effort to counter terrorism abroad and to secure the United States against terrorist threats and violent extremism. The CT Bureau recently has undertaken steps to address long-standing staffing gaps and it has placed a priority on efforts to counter violent extremism, among other things, since being elevated to a bureau in fiscal year 2012. Although the bureau has completed some program evaluations, it has yet to evaluate its past or current CVE efforts, an action that could help it make more informed decisions about programmatic efforts to counter violent extremism abroad. Also, while the CT Bureau has completed four program evaluations, resulting in 60 recommendations to improve its programs, it has implemented only about half of those recommendations and has not established time frames for addressing the remaining recommendations. Without specific time frames for completing actions in response to evaluation recommendations, it will be difficult for the bureau to ensure the timely implementation of programmatic improvements that would benefit both the country-specific efforts evaluated as well as the broader global program.", "Given that countering violent extremism is a priority for the U.S. government in general and State’s CT Bureau, we recommend that the Secretary of State take steps to ensure that CVE program efforts abroad are evaluated.\nTo improve State’s CT Bureau’s program management efforts, we recommend that the Secretary of State take steps to ensure the CT Bureau establishes specific time frames for addressing recommendations from program evaluations.", "We provided a draft of this report to the Departments of State, Defense, Justice, Homeland Security, and the Treasury, and to USAID, the United States Institute of Peace, and the Office of the Director of National Intelligence for their review and comment. We received written comments from State, which are reprinted in appendix VII. State and Treasury provided technical comments, which we incorporated as appropriate. State concurred with our recommendation to conduct an evaluation of its overseas Countering Violent Extremism program efforts. Specifically, State indicated that it was currently assessing which programs would most benefit from third-party evaluation during the upcoming fiscal year and expected CVE to be included in its final determination. State also concurred with our recommendation to establish specific time frames for addressing recommendations from its program evaluations. State indicated that it will commit to setting a timetable for reviewing each recommendation by a third-party evaluator and implementing those actions that are deemed both implementable and worthwhile.\nWe are sending copies of this report to the appropriate congressional committees, the Secretaries of State, Defense, Homeland Security, and the Treasury, the Attorney General of the United States, the USAID Administrator, the Director of National Intelligence, and the President, United States Institute of Peace. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7331 or [email protected]. Contact points for our Office of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VIII.", "In addition to presenting information on the evolution of the Department of State’s (State) Bureau of Counterterrorism (CT Bureau) and changes in funding, the objectives of this review were to examine (1) how the CT Bureau’s staffing resources have changed since 2011, (2) the extent to which the bureau has assessed its performance since 2011, and (3) the extent to which the bureau’s coordination with U.S. government entities on selected programs is in line with key collaboration practices.\nTo determine the extent to which the CT Bureau’s staffing resources have changed since 2011, we reviewed staffing allocation data from fiscal years 2011 to 2015. We received data on the total authorized full-time equivalent (FTE) positions, total established positions, and the total on- board positions for those fiscal years. State’s Office of the Executive Secretariat provided the FTE staffing data for fiscal years 2011 and 2012, and the CT Bureau, specifically the Executive Office, provided the FTE and other staffing data for fiscal years 2013 to 2015. To assess the reliability of the staffing data, we compared and corroborated information provided by State with staffing information in the Congressional Budget Justifications for the fiscal years as well as spoke to State officials regarding the processes they use to collect and verify the staffing data. On the basis of the checks we performed, we determined these data to be sufficiently reliable for the purposes of this report. To determine how the CT Bureau’s mission, organizational structure, and funding resources may have changed since 2011, we reviewed and analyzed State and CT Bureau documents pertaining to the mission, organization of the bureau, staffing, funding, and foreign assistance program allocations. We also interviewed State officials from the CT Bureau; Office of Inspector General; Office of U.S. Foreign Assistance Resources; and the Bureaus of Human Resources, Comptroller and Global Financial Services, Budgeting and Planning, and Administration. Specifically, for the mission statement, we reviewed the CT Bureau’s mission statement from 2011 and also from 2015, both reflected in bureau documents and on the bureau’s website, to ascertain what changes, if any, there have been to the bureau’s mission. We discussed with CT Bureau officials any changes to the bureau’s mission over time. To determine changes in the CT Bureau’s organizational structure, we reviewed the organizational chart of the Office of the Coordinator for Counterterrorism (CT Office) from 2011 as well as organizational charts of the CT Bureau covering 2012 through 2015. We also spoke to officials representing every directorate and most offices that had been established within the CT Bureau to understand their roles and responsibilities and any impact that the bureau’s strategic review and reorganization has had on their portfolios. To depict changes in resources, we reviewed data on the CT Bureau’s operations allocations and obligations from 2011 to 2015 as well as foreign assistance allocations that the bureau has received over the same time period. The allocations and obligations for the bureau’s operations were provided by the CT Bureau, while the allocations for the foreign assistance programs were provided by State’s Office of U.S. Foreign Assistance Resources. We depicted the allocated funding information based on the funding accounts as well as the foreign assistance programs they cover. To assess the reliability of the funding and allocations data, we spoke to State officials regarding the processes they use to collect and verify the data. On the basis of the checks we performed, we determined these data to be sufficiently reliable for the purposes of this report.\nTo examine the extent to which the CT Bureau has assessed its performance since 2011, we reviewed bureau strategic plans, performance reports, program evaluation reports, and action plans for evaluation recommendations, as well as State policy and guidance documents outlining performance reporting and evaluation requirements for bureaus. Specifically, to examine the CT Bureau’s performance reporting efforts, we reviewed the bureau’s multiyear strategic plans and performance reports to determine whether the bureau had established performance measures for its foreign assistance–related goals and used established performance measures to assess the bureau’s progress toward achieving its goals, as required by State policy. While we reviewed documentation on the CT Bureau’s performance measures, and discussed the CT Bureau’s performance reporting efforts with cognizant State officials, we did not fully assess the reliability of these measures because our goal was to determine whether the bureau had established performance measures rather than describe the bureau’s actual performance. We are publishing the performance results the CT Bureau reported to provide context and additional support for our finding that the bureau has assessed its performance. To examine the CT Bureau’s program evaluation efforts, we reviewed evaluation reports and compared the number of evaluations the bureau completed against the number of evaluations required by State’s February 2012 evaluation policy. We also compared the bureau’s efforts to track and address recommendations from evaluations against internal control standards for the federal government and State’s January 2015 evaluation guidance, which provides specific criteria and guidelines for evaluating State programs. In addition, we interviewed or obtained written responses from officials from State’s Office of U.S. Foreign Assistance Resources and Bureau of Budget and Planning to clarify State’s performance reporting and evaluation requirements for bureaus and whether the CT Bureau had met the requirements. We also interviewed CT Bureau officials responsible for strategic planning and program monitoring and evaluation to obtain additional or clarifying information related to past or currently planned bureau efforts on performance reporting and evaluations.\nTo examine the extent to which the CT Bureau’s coordination within State and other U.S. government entities on selected programs is in line with key collaboration practices and collaboration features, we reviewed agency documents and interviewed officials from various State regional and functional bureaus and other U.S. government agencies. Specifically, we spoke with officials representing regional bureaus—African Affairs, East Asian and Pacific Affairs, European and Eurasian Affairs, Near Eastern Affairs, South and Central Asian Affairs, and Western Hemisphere Affairs—and officials representing functional bureaus or offices—Center for Strategic Communications; Conflict and Stabilization Operations; Democracy, Human Rights, and Labor; Economic and Business Affairs; Educational and Cultural Affairs; International Narcotics and Law Enforcement Affairs; and International Organization Affairs. We also spoke with officials from the Departments of Defense, Homeland Security, Justice, and the Treasury; United States Agency for International Development; the National Counterterrorism Center; and the United States Institute of Peace in Washington, D.C. We focused on coordination on the Countering Violent Extremism (CVE) and Counterterrorism Finance (CTF) programs because these programs involve coordination with large numbers of agencies and State entities and also represent strategic priorities for the CT Bureau. We used GAO’s leading practices for implementing interagency collaborative mechanisms to better understand the extent and nature of collaboration between the CT Bureau and other bureaus within State and other U.S. government agencies on CT Bureau programs and compared CT Bureau’s coordination efforts against these key collaboration practices. We devised a standard set of questions that incorporated questions provided in GAO’s collaboration practices to ask State regional and functional bureaus and U.S. government agencies. We focused on six of the key collaboration practices: outcomes and accountability, bridging organizational cultures, leadership, clarity of roles and responsibilities, resources, and written guidance and agreements. We analyzed the information provided by State and agency officials against these practices to determine whether the collaboration between these entities and the CT Bureau on CVE and CTF were generally consistent with these practices.\nWe conducted this performance audit from July 2014 to July 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "In addition to its key programs and activities, the Bureau of Counterterrorism manages or is responsible for a number of other counterterrorism-related efforts, including the following: Issuing Country Reports on Terrorism, which are annual, mandated reports to Congress that provide, among other things, an assessment of each country in which acts of international terror of major significance occurred and an assessment of each country whose territory is being used as a sanctuary for terrorist or terrorist organizations.\nCo-chairing the Technical Support Working Group (TSWG), which enhances the counterterrorism technology and equipment capabilities of U.S. government agencies and elements involved in counterterrorism and antiterrorism activities. The TSWG implements five bilateral research and development agreements with international partners. The cooperative programs with Israel, Canada, the United Kingdom, Australia, and Singapore allow the United States to leverage foreign experience, expertise, resources, and infrastructure to address commonly-held technical priorities for combating terrorism.\nLeading the Counterterrorism Preparedness Program, a series of international exercises designed to strengthen the U.S. and partner nations’ capacity to prevent, protect against, respond to, and recover from terrorist attacks, especially those involving weapons of mass destruction.\nLeading the Foreign Emergency Support Team, which is the U.S. government’s only interagency, on-call team poised to support embassies in responding to terrorist incidents worldwide.\nPreparing public designations of foreign terrorist organizations, designations that have legal consequences.", "The Department of State’s (State) Bureau of Counterterrorism (CT Bureau) is led by a Coordinator for Counterterrorism and is currently organized with four directorates and numerous offices and units that cover counterterrorism policy, strategy, planning, programming, and operations. According to the CT Bureau, the bureau’s final structure is pending until it has been approved by State’s management and incorporated into the department’s Foreign Affairs Manual. Pending incorporation into the Foreign Affairs Manual, the CT Bureau provided the following description of its directorates and offices.", "", "The Principal Deputy Coordinator for Counterterrorism serves as the senior deputy and advisor to the Coordinator for Counterterrorism and has the authority to act on the Coordinator’s behalf in his or her absence. The Principal Deputy Coordinator is responsible for overall management of the bureau and, in consultation with the Coordinator, plans and supervises the substantive work of the bureau, including public affairs outreach strategies. The Principal Deputy Coordinator represents the bureau in department and interagency groups as well as supervises subordinate offices, as directed by the Coordinator.", "The directorate is led by a Deputy Coordinator and is made up of two offices with a regional focus and one focused on multilateral affairs, according to the CT Bureau. The two regional offices—Office of Africa, Europe, and the Americas, and Office of South and Central Asia and the Near East—are engaged in day-to-day policy tasks and interactions that are managed by interagency working groups. This includes writing policy papers, providing policy guidance, and participating in interagency and within-State meetings to work on counterterrorism-related issues. The offices work very closely with State regional bureaus, focusing on terrorism-related issues, such as designation of terrorist groups or updates on terrorist threats or activities in a region or country.\nThe Office of Multilateral Affairs handles multilateral engagements of the CT Bureau and works with multiple partners including the United Nations. The office tracks the work of the multilateral organizations, sets the agenda on U.S. counterterrorism issues at multilateral meetings, and develops multilateral counterterrorism programs to cover capacity- building goals as well as other counterterrorism strategic priorities of the CT Bureau and the rest of the U.S. government. One example of multilateral engagement is through the Global Counterterrorism Forum, which is an informal, multilateral counterterrorism platform that focuses on identifying critical civilian counterterrorism needs, mobilizing the necessary expertise and resources to address such needs, and generally enhancing global cooperation.", "The directorate is led by a Deputy Coordinator and covers three offices— Office of Homeland Security, Office of Terrorist Screening and Interdiction, and Office of Terrorist Designations and Sanctions, according to the CT Bureau. The Office of Homeland Security leads State’s efforts to deliver and implement core cross-cutting homeland security policies and programs that intersect with U.S. foreign policy development on counterterrorism issues and coordinates with other State bureaus and U.S. government agencies on homeland security issues such as border security, transportation security, and critical infrastructure protection. The Office of Terrorist Screening and Interdiction leads State’s policy development, interagency coordination, international engagement, and negotiations for the exchange of biographic terrorism screening information. It also coordinates programs to constrain terrorist mobility globally by helping countries at risk of terrorist activity or transit to enhance their border security capabilities. The Office of Terrorist Designations and Sanctions identifies and designates targets for listing as Foreign Terrorist Organizations and leads the mandated review of State’s designations under Foreign Terrorist Organization authorities. It also leads State’s coordination of policy on countering terrorism finance worldwide.", "The directorate is led by a Deputy Coordinator and covers one office, the Office of Operations, and three units—the Technical Programs Unit, the Policy Unit, and the Coordination Unit, according to the CT Bureau. The directorate coordinates State’s interagency efforts to plan and conduct sensitive counterterrorism operations worldwide. It also coordinates interagency and military counterterrorism activities and leads the Foreign Emergency Support Team, which is the U.S. government’s interagency team poised to respond quickly to terrorist incidents worldwide.", "", "The Office of the Executive Director provides executive management and direction for the CT Bureau in areas related to budget and finance, human resources, information technology, and communications. The office keeps track of CT Bureau reporting requirements such as quarterly reports and congressional notifications in order to execute the foreign assistance budget. The office also liaises with other government agencies on counterterrorism programmatic and management issues such as budget and financial management, training, and continuity of operations.", "The Office of Strategy, Plans, and Initiatives identifies, sets, coordinates, monitors, and adjusts CT Bureau counterterrorism priorities at the strategic level. The priorities are based on the current threat environment, partnership priorities, and monitoring priorities. The office also manages the bureau’s congressional affairs portfolio and provides broad guidance on counterterrorism policy and strategy to program implementers in State and other government agencies.", "The Office of Programs covers counterterrorism programming and implementation from a regional perspective focused on Countering Violent Extremism, Counterterrorism Finance, Antiterrorism Assistance, and Regional Strategic Initiative–funded programs and other counterterrorism-related programs. The office monitors the day-to-day activities at the program management level and makes sure that program implementers follow implementation agreements. The office also leads the monitoring and evaluation of programs to ensure that the programs follow statements of work with indicators.", "The Public Affairs Unit covers several functions, among other things, that involve writing press guidance, speeches, public remarks, and congressional testimony for senior CT Bureau personnel. The unit reviews and clears reports from other offices within the CT Bureau and also clears press releases and guidance related to counterterrorism issues. The unit also promotes the CT Bureau’s mission and events via social media. The unit is also involved in the tasking, coordinating, and drafting of State’s annual Country Reports on Terrorism.", "The Foreign Terrorist Fighters Unit, led by an ambassador-level Senior Advisor, leads State’s and interagency efforts in engaging with foreign partners to prevent and interdict foreign extremist travel to Syria and Iraq. The unit coordinates bureau and interagency strategy and initiatives on the foreign fighter issue to advise principals on the latest developments surrounding this problem set. The unit screens cables, intelligence reports, and academic research, and briefs the Senior Advisor and other principals as necessary. The unit also meets with foreign partners to exchange information, coordinate actions, and assist in the development of press guidance on these issues.", "The Countering Violent Extremism (CVE) Unit was created to elevate and advance the CT Bureau’s policy work on countering and preventing violent extremism. To accomplish this goal, the CVE policy unit helps formulate and develops department, interagency, diplomatic, and multilateral efforts and initiatives to identify and address the drivers of violent extremism. The unit also engages with and supports other CVE- specific and relevant elements within State and with other agencies.", "Foreign assistance allocations to the Department of State’s Bureau of Counterterrorism (CT Bureau) fund counterterrorism-related programs that the bureau oversees. These allocations increased from fiscal years 2011 to 2012 as the CT Bureau transitioned from an office to a bureau. These allocations decreased thereafter from $154 million in fiscal year 2012 to $110 million in fiscal year 2014, as shown in figure 8. The majority of these allocations are from the Nonproliferation, Antiterrorism, Demining, and Related Programs account, which funds all six counterterrorism-related programs listed in the figure. These programs support a variety of activities including antiterrorism training and equipment, building foreign partner capacity to counter violent extremism, counterterrorism engagement with foreign partners, and anti-money laundering and counterterrorism finance training. Allocations from the Economic Support Fund support those Countering Violent Extremism and Counterterrorism Engagement program activities that do not involve law enforcement entities. For fiscal year 2015, the CT Bureau requested $104.4 million in allocations to fund the six programs.", "The Bureau of Counterterrorism receives funds from two sources to support its core operations: the Diplomatic and Consular Programs and the Worldwide Security Programs accounts. The base operations of the bureau cover all travel, the majority of contracts, supplies, staffing costs, telephone, information technology, and printing and equipment. Figure 9 shows the bureau’s total obligations for its overall operations since fiscal year 2012. These obligations increased from fiscal year 2012 to 2013 as the bureau was being established. The base operations obligations then decreased from about $7.7 million in fiscal year 2013 to about $4.8 million in fiscal year 2014.\nThe Bureau of Counterterrorism’s overall budget is made up of the following components: (1) Base Operations covers all travel, the majority of contracts, supplies, staffing costs, telephone, information technology, and printing and equipment for the bureau; (2) Regional Security Initiative covers the travel for the bureau’s six field coordinators based at U.S. embassies as well as two to four regional conferences per year that bring together personnel from the embassies from various regions to discuss counterterrorism policy and strategy for that region; (3) Foreign Emergency Support Team supports the Operations Directorate’s activities, including its travel, equipment, and post support costs; (4) Technical Support Working Group supports the Operations Directorate’s activities, including its travel and contribution to the Department of Defense; and (5) the Worldwide Security Program account covers the costs of the contracts related to staff and other direct costs supporting the Counterterrorism Preparedness Program.", "According to the Department of State’s (State) Bureau of Counterterrorism (CT Bureau), it has used a number of ways to assess its resource and workforce planning needs. CT Bureau officials reported that it uses State’s Domestic Staffing Model to establish human resource demand for its workforce and to also make staffing decisions across the bureau. According to the Office of Resource Management and Analysis in State’s Bureau of Human Resources, bureau managers can use the data in the model to make various decisions on current levels of work and the personnel resources performing the work. For example, the baseline could provide insight into the level of effort being expended on each function and managers could assess whether their practices are consistent with bureau priorities. The Domestic Staffing Model contains grade and skill level information for personnel performing functions in each bureau, which allows the model to predict what type of personnel resources would be required to support the expected workload increases. Moreover, this in turn could provide valuable information for recruitment, succession planning, and training purposes. However, the most recent data collection for the Domestic Staffing Model was conducted in spring 2011, when the CT Bureau was the Office of the Coordinator for Counterterrorism and thus the model does not reflect the current CT Bureau’s organizational structure. According to State officials, the information for the CT Bureau will be updated in the Domestic Staffing Model by the end of 2015.\nCT Bureau officials also reported that the bureau looks at its resource needs during the annual planning and budgeting process that entails CT Bureau directors analyzing or assessing the workload of the staff in their respective areas and providing detailed justification for each full-time equivalent staff position requested. All requests and justifications for additional full-time equivalent staff positions are vetted with the Principal Deputy Coordinator for Counterterrorism and if approved, presented to the Coordinator for Counterterrorism for approval as part of the overall bureau budget request, according to the CT Bureau. Once updated, the Domestic Staffing Model, along with the annual planning and budgeting process, would be a reasonable approach at looking at workforce planning and consistent with best practices.\nBest practices for effective strategic workforce planning should, among other things, address the following key principles: determine the critical skills and competencies that will be needed to achieve current and future programmatic results; develop strategies that are tailored to address gaps in number, deployment, and alignment of human capital approaches for enabling and sustaining the contributions of all critical skills and competencies; and monitor and evaluate the progress toward its human capital goals.", "", "", "", "In addition to the contact named above, Jason Bair (Assistant Director), Andrea Riba Miller (Analyst-in-Charge), Esther Toledo, Ashley Alley, David Dayton, Martin de Alteriis, and Laurani Singh made key contributions to this report. Tina Cheng, Steven Lozano, and Sarah Veale provided technical assistance." ], "depth": [ 1, 2, 2, 3, 3, 2, 1, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "h0_full", "h1_full", "h1_full", "", "h1_full", "h3_full", "h2_full h1_full", "h3_full h2_full h1_full", "h3_full h2_full", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How has the number of FTE positions at the Bureau of Counterterrorism changed since FY2011?", "How did the number of authorized FTEs change between FY2011 and FY2015?", "How were these vacancies distributed?", "Why were some vacancies left unaddressed?", "What progress has been made in addressing vacancies?", "What gaps exist in the bureau's self-assessment efforts?", "What evaluations has the bureau completed?", "Why is the lack of time frames a negative factor for the bureau?", "What flaws exist in the bureau's evaluation selection?", "How important are counterterrorism efforts for the U.S. government?", "What agency leads counterterrorism efforts?", "How has State's Office of the Coordinator for Counterterrorism changed to better counter terrorism?", "What was GAO asked to review?", "What did GAO recommend?", "To what extent did State concur with these recommendations?", "What actions does State plan to take?" ], "summary": [ "The Department of State's (State) Bureau of Counterterrorism has had an annual increase in authorized full-time equivalent (FTE) positions since fiscal year 2011 and has recently undertaken efforts to reduce a persistent staffing gap.", "The bureau's authorized FTEs increased from 66 in fiscal year 2011 to 96 in fiscal year 2015, and over the same period, FTE vacancies ranged from 17 to 23 percent.", "The vacancies included both staff and management positions.", "Bureau officials said they postponed filling some positions until the Coordinator for Counterterrorism had sufficient time to assess the bureau's needs and priorities.", "A senior Bureau of Counterterrorism official testified before Congress in June 2015 that the bureau was making progress and that it had 11 vacancies. However, we have not been able to verify that 4 of the reportedly filled positions have been filled because State did not provide sufficient documentation.", "While the bureau has undertaken efforts to assess its progress, it has not yet evaluated its priority Countering Violent Extremism (CVE) program and has not established time frames for addressing recommendations from program evaluations. Specifically, the bureau established indicators and targets for its foreign assistance–related goals and reported results achieved toward each indicator.", "Specifically, the bureau established indicators and targets for its foreign assistance–related goals and reported results achieved toward each indicator. The bureau has also completed four evaluations covering three of its six programs that resulted in 60 recommendations. The bureau reported having implemented about half of the recommendations (28 of 60) as of June 2015 but has not established time frames for addressing the remaining recommendations.", "Without specific time frames, it will be difficult for the bureau to ensure timely implementation of programmatic improvements.", "In addition, despite identifying its CVE program as a priority and acknowledging the benefit of evaluating it, the bureau has postponed evaluating it each fiscal year since 2012.", "Terrorism and violent extremism continue to pose a global threat, and combating them remains a top priority for the U.S. government.", "State leads and coordinates U.S. efforts to counter terrorism abroad.", "State's Office of the Coordinator for Counterterrorism was elevated to bureau status in 2012 with the aim of enhancing State's ability to counter violent extremism, build partner counterterrorism capacity, and improve coordination.", "GAO was asked to review the effects of this change and the new bureau's efforts.", "GAO recommends that the Secretary of State take steps to (1) ensure that CVE program efforts abroad are evaluated and (2) establish time frames for addressing recommendations from program evaluations.", "State concurred with both of GAO's recommendations.", "State indicated that it was currently assessing which programs would benefit from a third-party evaluation and that it would commit to setting a timetable for reviewing each recommendation by a third-party evaluator." ], "parent_pair_index": [ -1, 0, 1, 0, 0, -1, 0, 1, 1, -1, 0, 1, -1, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 0, 5, 5, 5 ] }

{ "title": [ "Background", "CBP and ICE Roles and Responsibilities", "Overview of Land Mobile Radio Networks and Infrastructure", "Land Mobile Radio System Requirements and Mandates", "Overview of DHS Border Security and Immigration TACCOM Programs", "DHS Components Have Taken Steps to Upgrade Tactical Communications Equipment and Infrastructure, but Could Benefit by Developing Performance and Program Plans", "CBP Has Completed Most TACCOM Modernization Projects in Southwest Border Locations, but Could Benefit from Developing a Performance Monitoring Plan", "ICE Has Taken Some Actions to Modernize Technology on the Southwest Border but Does Not Have Complete Information to Effectively Manage Its Program", "Additional Efforts Are Needed to Ensure That CBP and ICE Agents and Officers Receive Necessary Training", "CBP Training", "ICE Training", "DHS Is Taking Actions Aimed at Improving Tactical Communications Interoperability, but It Is Too Soon to Determine Whether These Actions Will Address Persistent Challenges", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Department of Homeland Security", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "DHS is responsible for securing U.S. borders, in collaboration with other federal, state, local, and tribal entities. CBP, a component within DHS that is the lead agency for border security, is responsible for, among other things, preventing terrorists and their weapons from entering the United States and for interdicting persons and contraband crossing the border illegally. Within CBP, OFO is responsible for securing the border at ports of entry. Border Patrol is the CBP component charged with ensuring security along border areas between the ports of entry. Additionally, CBP’s OAM provides air and maritime support to secure the national border between the ports of entry, within maritime operating areas, and within the nation’s borders. ICE, a component within DHS, is responsible for the investigation and enforcement of border control, customs, and immigration laws. Within ICE, Homeland Security Investigations is responsible for disrupting and dismantling transnational criminal organizations engaged in smuggling and other cross-border criminal activities that seek to exploit the United States’ legitimate travel, trade, financial, and immigration systems for illicit purposes. DHS, CBP, and ICE components also coordinate their border security efforts with various other federal, state, local, and tribal entities. Figure 1 shows the Border Patrol sectors and ICE regions that represent geographic focus areas for tactical communications modernization upgrade projects, within the southwestern United States.\nThere are 20 Border Patrol sectors across the United States. The 9 Border Patrol sectors that constitute the southwest border are San Diego, El Centro, Yuma, Tucson, El Paso, Big Bend, Laredo, Del Rio, and Rio Grande Valley. There are 26 ICE regions across the United States. The 5 ICE regions that constitute the southwest border are San Diego, Phoenix, El Paso, San Antonio, and Houston.", "Along the southwest border, CBP and ICE primarily operate on CBP’s radio network, which is controlled from and by NLECC, located in Orlando, Florida. A land mobile radio system is the primary voice communications tool for agents and officers to communicate with one another and with dispatchers and typically consists of the following: subscriber units: portable radios used for handheld operation and mobile radios used for vehicular operation; repeaters: can be portable or fixed and are used for retransmitting radio user transmissions to extend the range for radio communications; fixed site equipment: used to provide single-site and wide-area coverage for radio operation and includes routers, antennas, and towers, among other things; and key management facilities: used to provide Over-the-Air Rekeying (OTAR) to allow for encrypted communications. CBP’s OTAR system is located at the NLECC and generates, distributes, and manages national voice and data encryption keys for DHS agencies as well as other federal, state, and local law enforcement agencies.\nFigure 2 illustrates the basic components of a radio system.", "DHS radio systems must meet three key requirements, as described below.\nNarrowband mandate. In 1992, Congress passed the Telecommunications Authorization Act, title I of which established, within the Department of Commerce, the National Telecommunications and Information Administration (NTIA).Secretary of Commerce for Communications and Information and, as relevant here, is tasked with advancing policies to foster effective use of NTIA is led by the Assistant the radio spectrum by the federal government. NTIA serves as the President’s principal advisor on telecommunications and information policy and manages federally assigned spectrum. NTIA has authority to issue rules and regulations as may be necessary to ensure the effective, efficient, and equitable use of spectrum both nationally and internationally. As part of its authority under 47 U.S.C. § 902(b)(2)(A), NTIA developed the Manual of Regulations and Procedures for Federal Radio Frequency Management (NTIA Manual), which is the compilation of policies and procedures that govern the use of the radio frequency spectrum by the U.S. government. Federal agencies must comply with the requirements set forth in the NTIA Manual. With respect to land mobile systems, pursuant to the NTIA Manual, narrowband frequency modulation (FM) is conventional FM with channel spacing of 12.5 kilohertz (kHz) or less, instead of 25 kHz. In accordance with the NTIA Manual, the federal government is required to foster the development of, and standards for narrowband land mobile systems, and institute plans to narrowband land mobile systems operating in certain bands according to a specific schedule. With certain exceptions, the channel bandwidth in certain frequency bands used by federal agencies for radio systems was to be reduced from 25 to 12.5 kHz, effective January 1, 2008.reduction in channel bandwidth is referred to as narrowbanding.\nProject 25. Since 1989, federal agencies have collaborated with public safety associations to establish common technical standards, called Project 25 (P25), for radio systems and devices. The purpose of these technical standards is to support interoperability among different radio systems, and to enable seamless communication across federal, state, and local agencies and jurisdictions. The P25 suite of standards is intended to promote interoperability by making radio systems and devices compatible regardless of the manufacturer. DHS Sensitive Systems Policy Directive 4300A, implementing DHS Management Directive 140- 01, Information Technology System Security, requires compliance with P25 standards for all DHS tactical wireless communication systems procurements.\nAdvanced Encryption Standard (AES). DHS mandates the protection of all law-enforcement sensitive voice communications through the use of encryption. Encryption requires the use of an algorithm and a cryptographic key to encode messages at the origin and decode messages at the receiver. Federal departments and agencies are required to use encryption algorithms approved by the National Institute of Standards and Technology (NIST), such as the Advanced Encryption Standard used by DHS, for federal land mobile systems to protect sensitive information from being compromised.", "CBP and ICE have separate modernization efforts under each component’s respective TACCOM program. These modernization efforts are focused on upgrading existing radio systems equipment and infrastructure to comply with DHS requirements and expand coverage and capacity.\nCBP TACCOM. The CBP TACCOM modernization program, initiated in 2008, oversees the upgrade and modernization of existing outdated radio systems, to support more than 44,000 CBP law enforcement personnel in their daily operations across the nation. Through this program, CBP plans to modernize existing radio systems with digital technologies that provide AES while also meeting the federal narrowbanding mandate and P25 standards. For fiscal year 2009, CBP was appropriated $160 million in American Recovery and Reinvestment Act of 2009 (Recovery Act) funds for salaries and expenses, of which $100 million was for the procurement and deployment of new or replacement nonintrusive inspection systems, and $60 million was for procurement and deployment of TACCOM equipment and radios. Under the Recovery Act, CBP also received an additional $100 million for Border Security Fencing, Infrastructure, and Technology (BSFIT), for expedited development and deployment of border security technology on the southwest border.\nICE TACCOM. The ICE TACCOM modernization program aims to replace aging legacy tactical communications networks with digital P25 compliant upgrades that provide AES encryption capabilities and meet the federal narrowband mandate to improve communications, interoperability, and coordination for ICE personnel during field operations. Pursuant to the Recovery Act, for fiscal year 2009, ICE received $20 million for automation modernization, for the procurement and deployment of tactical communications equipment and radios. In addition to Recovery Act funds, the TACCOM program is funded out of the Automation Modernization account for new investments and ICE base budget for operations and maintenance. The ICE TACCOM program received $10 million in fiscal year 2009 and $8 million in fiscal year 2011 from the Automation Modernization account and has not received any funding for its modernization efforts since 2011.\nDHS TACNET. In 2009, DHS estimated that it would cost $3 billion and take two decades to modernize the individual radio systems of all DHS components, including CBP and ICE. Accordingly, the DHS Acquisition Review Board mandated DHS components to work with the DHS Office of the Chief Information Officer to find alternatives to this approach. Conceived in 2011, the Tactical Communications Network (TACNET) is a separate program focused on developing next-generation communications technologies to meet DHS-wide interoperability needs, such as tactical broadband. However, as we have previously reported, while such a network would likely enhance interoperability, it would not support mission-critical voice capabilities for 10 or more years. TACNET is currently unfunded, but the DHS Acquisition Review Board granted approval to pursue the technical demonstration project on March 31, DHS intends for TACNET to eventually leverage this capability to 2011.consolidate individual DHS component TACCOM programs, including the components’ separate modernization projects.\nSAFECOM is a communications program that provides support, including research and development, to address interoperable communications issues. Led by an executive committee, SAFECOM has members from state and local emergency responders as well as intergovernmental and national public safety communications associations. DHS draws on this expertise to help develop guidance and policy. Among other activities, SAFECOM developed the Interoperability Continuum to assist emergency response agencies and policymakers to plan and implement interoperability solutions for data and voice communications. This tool identifies five critical success elements that must be addressed to achieve a sophisticated interoperability solution: governance, standard operating procedures, technology, training and exercises, and usage of interoperable communications.", "", "From 2009 through 2013, CBP completed full modernization projects in 4 of the 9 sectors that constitute the southwest border. In these 4 sectors, Yuma, Tucson, Rio Grande Valley, and El Paso, CBP has upgraded outdated analog tactical communications equipment and infrastructure to digital systems that meet the narrowband mandate and are compliant with both P25 interoperability standards and AES encryption capabilities, and expanded coverage and provided capacity enhancements by procuring additional equipment and building out new tower sites in areas where CBP agents operate that were not previously covered with existing infrastructure.\nIn 2009, CBP determined that the TACCOM modernization program was not cost-effective and would take too long to complete. Accordingly, CBP revised its modernization approach for all remaining sectors, halting the addition of any new tower sites, and in conjunction with the approval of TACNET in 2011, adding a project known as Digital in Place (DIP) as a capstone to this program with the expectation that DIP would provide a digital baseline for TACNET. The scope of the DIP project entails upgrading the remaining analog radio sites to the P25 digital systems with AES encryption capabilities and does not provide additional coverage or capacity enhancements. This project provides one-for-one replacements of analog systems with digital systems. CBP plans to implement DIP in the remaining five sectors along the southwest border that did not receive full modernization upgrades. As of September 2014, DIP projects have been completed in three of the five remaining sectors along the southwest border—Big Bend, Laredo, and Del Rio—and are currently under way in other locations across the nation. According to CBP, because DIP does not include new site build-outs or the need to obtain additional frequency licenses, this approach will greatly reduce the costs associated with the full modernization approach and will be completed in a relatively shorter time period. For example, in 2009, CBP estimated that full modernization of all CBP sites in the nation would cost $1.3 billion for development and implementation, not including life cycle costs, and would take 20 years to complete. In comparison, CBP estimated that the total cost, including life cycle costs, to implement DIP in the remaining sectors would be about $410 million in addition to the cost of the five original modernization projects—for a total life cycle cost of approximately $945 million, and would be completed by 2016. However, according to CBP officials, the agency currently anticipates that some of the infrastructure upgrades for these projects will be completed in 2018, because of resource constraints.\nCBP developed a Test and Evaluation Master Plan, dated June 2013, for the Rio Grande Valley, El Paso, and DIP projects. The plan stated that the conceptual design for all projects under the TACCOM modernization program is based on commercial-off-the-shelf proven technology. According to DHS’s Acquisition Directive 102-01 and its associated guidebook, operational testing results should be used to evaluate the degree to which the system meets its requirements and can operate in the real world with real users like CBP and ICE radio users. Moreover, this guidance states that even for commercial-off-the-shelf systems, operational test and evaluation should occur in the environmental conditions in which a system will be used before a full production decision for the system is made and the system is subsequently deployed. This guidance also states that for commercial-off-the-shelf systems, operational tests should be conducted to ensure that the systems satisfy user-defined requirements.\nCBP initially had plans to conduct operational tests in multiple sectors; however, it conducted the operational test in one sector, Rio Grande Valley, and such testing was limited. CBP did not conduct operational testing in Yuma, Tucson, or El Paso, although the agency did perform some tests with users in real operational environments for each of these sectors. According to DHS and CBP officials, formal test plans were not executed in Tucson or Yuma because of resource constraints and changing agency priorities. In Rio Grande Valley, CBP conducted a limited user test, which served as the operational test and evaluation event to determine whether TACCOM was operationally effective and suitable for deployment and met user needs. According to the Rio Grande Valley limited user test report, the radio system tested in Rio Grande Valley was found to be operationally effective and met the coverage and availability key performance requirements. However, the limited user test report also noted that operational suitability—which included assessments of interoperability, reliability, availability, and maintainability—was undetermined because insufficient data were collected to make a definitive determination. The Rio Grande Valley limited user test report also noted that since testing was conducted only at a singular focus area, system impacts and CBP agent and officer input from untested sites remain unknown. CBP officials stated that a separate operational test and evaluation event was not conducted for the El Paso focus area because the Rio Grande Valley results were used to evaluate both sectors, given that the same radio systems were deployed to El Paso and Rio Grande Valley. Despite these limitations, an official from the DHS Science and Technology Directorate who oversaw CBP’s operational testing stated that the operational testing conducted by CBP in Rio Grande Valley provided reasonable assurance that CBP’s radio system met key performance requirements in accordance with DHS acquisition guidance because the agency determined that Rio Grande Valley best represented the weather and terrain features across all four southwest border TACCOM project locations, which are the key variables that could affect test results based on location.\nCBP has completed deployment of radio systems to four southwest border sectors—Rio Grande Valley, El Paso, Tucson, and Yuma—and has upgraded existing systems in three southwest border sectors—Big Bend, Laredo, and Del Rio—and both CBP and DHS officials stated that the agency does not plan to conduct additional testing on the deployed systems or conduct any operational testing for the DIP projects because the agency is replacing outdated equipment with commercial-off-the-shelf technology on a one-for-one basis. Moreover, CBP has taken other actions to assess the implementation of the systems deployed in those sectors. For example, in 2012, CBP completed an operational analysis of upgrades in Tucson and Yuma under the TACCOM modernization program to determine if the investment in those sectors was meeting its performance goals. According to the operational analysis report, the modernization upgrades completed in Tucson and Yuma delivered quantifiable benefits with the addition of 17 new radio sites, which provided additional coverage, and the replacement of outdated equipment with new digital equipment resulted in increased availability of radio systems. The report also included the results of an end user survey that was conducted as part of the operational readiness review process in fiscal year 2011 to assess user satisfaction with the deployed system. While the user satisfaction survey indicated an acceptable level of satisfaction with the availability and usability of the system, the report also noted several operational issues experienced by users during the transition from the analog system to the digital system, including poor radio coverage in specific locations, the perception that the old analog system provided better coverage than the digital system because of signals fading in a different manner, and users experiencing communications bleed over between some sites, which occurs when radio transmissions are overheard by radio users who are not the intended recipients. However, CBP continued to move forward with the current modernization approach given the need for immediate improvements in communications capability and the lack of a viable alternative technology that could be deployed. Moreover, since the TACCOM investment would have a life cycle of at least 10 years, the report concluded that this investment would support CBP radio users through the transition period needed to establish a next-generation broadband network. In addition, CBP officials stated that the agency collects information on radio system availability and maintenance. For example, CBP NLECC officials track daily system outages for sites that have been upgraded and provide weekly reports to management on this information, including how long outages lasted and how issues were resolved. CBP also tracks and resolves radio hardware issues reported by users in the field.\nWhile these are positive steps, CBP has not developed an agency-wide plan to monitor the performance of its radio systems. In particular, CBP has not yet collected sufficient data to determine how well the systems are functioning within and across sectors, and has not obtained perspectives from radio users since the systems were deployed in each location. Such information could help CBP better identify any challenges with use of the system and assess system performance. For example, although CBP collects information on radio system availability and maintenance, CBP officials stated that they have not used this information to assess overall system performance to determine the extent to which upgraded radio systems are meeting user needs or to identify areas in need of corrective action. According to CBP officials, the agency has not yet analyzed available data to determine the extent to which upgraded radio systems are meeting user needs or to identify areas in need of corrective action because complete operational data have not been collected for all sites to which radio systems were deployed and because these data are maintained across different repositories that are not currently linked together. According to CBP officials, the agency recognizes the need to collect sufficient data to monitor radio system performance and is taking steps to address this need by collecting data in recently modernized sites, including El Paso. Once the data have been collected, the agency plans to consolidate these data in a central repository. While this may be a useful practice, a performance monitoring plan, including information on how data will be collected across all sites and how these data will be used to monitor the performance of deployed radio systems, could better position CBP to assess whether its radio systems are functioning as intended in each location or whether they are meeting user needs.\nMoreover, most of the groups of CBP radio users we met with reported experiencing challenges relating to operational performance. For example, 7 of the 10 groups of CBP radio users we met with in the Tucson, Rio Grande Valley, and El Paso sectors stated that coverage gaps continued to affect their ability to communicate, even after the upgrades were completed. Specifically, 2 groups stated that coverage in some areas seemed to be worse after the upgrades were completed, 4 groups stated that coverage gaps had been reduced but continued to exist after the upgrades, and 1 group stated that while coverage had improved in some areas, the group did not receive the coverage enhancements it expected to receive, especially in critical areas. As another example, 10 of 14 CBP radio users we met with reported experiencing challenges related to frequency saturation—whereby too many users are operating simultaneously on one channel, blocking other users from being able to access that channel. CBP agents and officers we met with also reported instances in which operability challenges delayed or prevented their ability to communicate with agents or officers from other agencies, which resulted in missed apprehensions of suspects or inefficient use of resources. Specifically, 1 group of Border Patrol radio users we met with stated that a common practice is to assign a Border Patrol agent to work alongside agents or officers from other agencies, such as ICE, to facilitate interoperability by relaying interagency communications, which they cited as an inefficient use of agency resources. According to CBP officials, these challenges may also be attributed to lack of training or understanding of standard operating procedures, which we discuss later in this report.\nStandards for Internal Control in the Federal Government calls for agencies to identify, capture, and distribute operational data to determine whether an agency is meeting its goals and effectively using resources.\nThis guidance also calls for agencies to ensure that ongoing monitoring occurs during the course of normal operations to help evaluate program effectiveness. According to CBP officials, the agency has not yet developed a performance monitoring plan because the system is not yet mature, but it is working to establish reliable system performance measures in the interim, and would initiate a formal performance plan once the system and support cultures mature. Officials were unable to provide specific details about what the performance plan would contain or a time frame for when they would establish the plan. However, as CBP agents and officers are currently using radio systems on a daily basis and given the operational testing limitations previously discussed, without a performance monitoring plan, CBP is not well positioned to identify issues experienced by current CBP users in a timely manner and actions that could address those identified issues.", "ICE has 58 completed, ongoing, or planned projects under its TACCOM modernization program and has taken some actions to modernize its TACCOM radio systems, including along the southwest border. Specifically, according to ICE officials, the agency has replaced individual analog TACCOM radios and equipment with digital systems that comply with P25 standards and the narrowband mandate, and provide AES encryption capabilities across all 26 ICE regions, including the southwest border regions. In addition, while ICE has completed full modernization projects—which entail expanding coverage and capacity by building new sites—in other regions across the United States, it has not developed plans to modernize any southwest border regions. Instead, to meet the needs of ICE radio users in the southwest border regions, ICE officials stated that the agency’s strategy has focused on leveraging other agency infrastructure in areas where ICE does not have infrastructure until funding is approved to initiate modernization projects in these regions. For example, in Yuma and Tucson, ICE officials stated that the agency primarily uses CBP’s radio system. Moreover, ICE is a stakeholder on CBP’s full modernization and DIP projects since ICE’s primary means of tactical communication in these locations is on the CBP network.\nSpecifically, ICE officials stated that the agency provided 76 repeaters for installation at over 65 CBP sites located in Arizona, New Mexico, and Texas. Additionally, ICE is converting ICE radio users over to the CBP digital networks and implementing radio programming changes to enable ICE radio users to communicate on these networks. ICE officials also stated that the agency has entered into agreements with certain state and local agencies to use their channels in areas where ICE lacks radio coverage and also has a need to communicate daily with these mission partners.\nICE has developed some documentation for the individual projects, such as individual project plans, and provided us with an integrated master schedule for the 58 ongoing, planned, and completed projects. While these documents have helped ICE manage its individual projects in specific locations, ICE has not documented an overall plan to manage its TACCOM modernization program and provide oversight across all projects. For example, ICE officials were unable to provide documentation that all TACCOM equipment had been upgraded to digital systems. A program plan could provide ICE with more information on how TACCOM resources have been expended and how projects are prioritized in a manner that meets ICE mission and user needs. CBP’s TACCOM program developed program plan documentation, such as an acquisition plan, operational requirements document, and life cycle cost estimate, among others, to meet the requirements of DHS Acquisition Directive 102-01. However, according to ICE TACCOM officials, the agency has not developed such documentation because the ICE program was not required to develop acquisition documentation in accordance with the DHS acquisition directive because the program was already in sustainment—e.g., project implementation phase complete—prior to 2008, when the directive was issued.\nBest practices in program management call for agencies to document fundamental program information. According to the Project Management Institute’s The Standard for Program Management, programs should, among other things, be defined in terms of expected outcomes, resources needed, and the complexity of delivering the changes needed to implement new capabilities across the organization.contains many elements, includes many documents, and formally expresses the organization’s concept, vision, mission, and expected benefits produced by the program; it also defines program-specific goals and objectives. The program plan is the overall documented reference by which the program will measure its success throughout its duration, including all phases, customer contracts, new business offers, and long- term goals and objectives. It should include the metrics for success, a method for measurement, and a clear definition of success.\nAn overarching TACCOM modernization program plan could better position ICE to manage its portfolio of projects, including proposed projects, under the TACCOM modernization program and provide documentation explaining TACCOM modernization program goals, critical mission needs, and how specific modernization projects are prioritized based on these needs. ICE has requested funding for TACCOM modernization projects along the southwest border in recent fiscal years. For example, ICE requested funding to modernize two southwest border regions in its fiscal year 2014 budget request. For fiscal year 2014, ICE TACCOM requested $21 million for upgrades in San Antonio and Houston, but did not receive any funding for this year. In its fiscal year 2015 budget request, ICE added two more southwest border regions, requesting $42 million to fully upgrade four of the five ICE regions along the southwest border—San Antonio, Houston, El Paso, and Phoenix. program plan could help ICE better oversee its prioritization of individual projects for resources and funding.\nAccording to officials, while there is a critical need to upgrade San Diego, ICE has not made any plans to do so until DHS takes over the management and control of the Integrated Wireless Network. ICE officials stated that they plan to work with CBP to determine how to upgrade the San Diego Integrated Wireless Network. assigned to the El Paso region in 2009, which increased to 274 agents in 2014; and 292 agents assigned to the Phoenix region in 2009, which increased to 347 agents in 2014. Additionally, our interviews with groups of ICE radio users showed that agency efforts to upgrade its TACCOM technology may not be supporting ICE radio user needs along the southwest border. For example, two of the three groups of ICE radio users we met with in Tucson, Rio Grande Valley, and El Paso that operate on CBP land mobile radio networks stated that coverage was worse after the upgrades or did not meet ICE radio user needs because the new system did not provide the capabilities the agency promised to deliver. The third group stated that CBP’s modernization project upgrades enhanced coverage in a limited capacity but created new challenges for ICE because of the increase in communication traffic. Specifically, ICE radio users in this location stated that since they are using CBP channels, Border Patrol has priority of use, so when there is too much traffic on a channel, ICE radio users are unable to access the channel or get kicked off the system and hear a busy signal when attempting to use their radios. All four groups of ICE radio users we met with stated that operability and interoperability challenges frequently compromised their investigations and resulted in unacceptable risks to officer safety.\nAccording to ICE officials, the agency recognizes that ICE radio user coverage needs have not been met in the southwest border areas and is currently taking steps to assess radio user needs in these locations. Specifically, ICE officials stated that they are soliciting information from radio users on their operational needs and briefing ICE management to inform future decisions about ICE coverage and funding needs. However, ICE officials stated that there are no plans for creating a program plan to guide and document these efforts. By developing a program plan to guide ICE’s overall TACCOM modernization program, ICE could more clearly articulate radio user needs, resource needs, and the goals of the program, as well as allow officials to identify any corrective actions needed to ensure that ICE radio systems are meeting ICE user needs.", "", "CBP provided training to Border Patrol, OAM, and OFO agents and officers on its upgraded digital systems in each southwest border location that received modernization upgrades, but could do more to ensure it is meeting the training needs of all CBP radio users. According to the DHS SAFECOM Interoperability Continuum, effective training and exercise programs to practice communications interoperability are essential for ensuring that the technology works and responders are able to effectively communicate during emergencies. The DHS SAFECOM Operational Guide for the Interoperability Continuum specifically highlights the importance of training when new technology is procured, stating “when a region procures new equipment, that region should plan training and conduct exercises to learn how to make the best use of that equipment.”CBP’s TACCOM Modernization Operational Requirements Document states that agents will receive training at the time that equipment is deployed and that refresher training will be provided as required because of either system reconfigurations or personnel turnover. This document further states that user training will be provided in a classroom setting to agents and officers in the field locations as close to deployment as possible.\nTo help ensure radio users understood the functions and capabilities of the newly upgraded digital systems in each of the four areas along the southwest border where modernization projects were completed, CBP provided training to Border Patrol agents and OFO officers on the functions of radio equipment and systems, encryption policies and processes for conducting secure communications, unique coverage maps depicting specific location information where radio users can expect their radios to operate, how to troubleshoot common technical challenges, and information about practices and protocols for conducting interoperable communications with other agencies. However, CBP radio users we met with reported experiencing communication challenges that they identified could be addressed with additional training to enhance their skills and help them overcome these communication challenges. Specifically, 8 of 14 CBP radio user groups we met with suggested that radio users be provided with additional radio training to enhance their proficiency in using radio systems. Two groups also noted that CBP agents receive intensive firearm training and must demonstrate proficiency with their firearms on a quarterly basis, yet they use their radios far more frequently than they do their firearms and are not required to demonstrate proficiency in using their radios. Moreover, although CBP provided training in each location, 3 groups stated that they did not receive any formal training and learned how to use their radios on the job. Further, according to CBP’s limited user test report for Rio Grande Valley, analysis of user surveys and test team observations indicated that training on the new TACCOM system can be improved and that full use of TACCOM capabilities will require better training. Specifically, the test report indicated that CBP agents and officers received varying degrees of TACCOM system training, a fact that may affect the ability of the operational test agent to conduct a thorough evaluation of TACCOM system training.\nAccording to a CBP official responsible for training, Border Patrol agents may transfer or be deployed to different sectors, which makes it difficult to estimate training needs because the agency does not determine whether agents had received training in a previous duty station or are in need of training. Further, CBP officials stated that the amount of training provided to CBP radio users can vary because of availability of funding or locally based CBP field support personnel, and support from local management for prioritizing and addressing user training needs. For example, CBP headquarters officials stated that some local managers may determine that training is not a priority, or that CBP offices responsible for providing training do not have sufficient resources to provide training to radio users. Federal regulations require that agencies establish priorities for training employees and allocate resources according to those priorities, as well as develop and maintain plans and programs that, among other things, identify mission-critical occupations and competencies, identify workforce competency gaps, and include strategies for closing competency gaps.\nBy developing and implementing a plan to address any identified skills gaps related to understanding the new digital radio systems and interagency radio use protocols, CBP could help ensure that more of its radio users have the skills needed to overcome challenges that hinder interoperable communications.\nTo calculate these percentages, we divided the number of agents trained in each year by the number of Border Patrol agents (radio users) onboard at the end of the year, for each sector. they were assigned. For example, they explained that Border Patrol agents assigned to the El Paso sector may have been deployed to the Tucson sector for training. Given challenges related to Border Patrol agents deploying across sectors and since CBP does not specifically track whether agents in each sector have been trained, CBP was not able to provide information on the number of Border Patrol agents who had not received training. However, as shown in figure 3, CBP was able to provide information on the number of Border Patrol agents who were trained in each year, by sector. We then compared these numbers with the number of Border Patrol agents onboard at the end of each year, for each sector. However, these percentages do not reflect the cumulative total number of Border Patrol agents that have not received any training, since agents that were trained in previous years may not need to receive training in subsequent years.\nThe amount of training that CBP provided for each OFO field office also varied by office and year. For example, in 2011, CBP trained 33 percent of OFO officers assigned to the Tucson field office that year, and 1 percent of OFO officers assigned to the El Paso field office, while in 2013, CBP trained 46 percent of officers assigned to the El Paso field office that year and 0 percent of officers assigned to the Tucson field office, as However, a CBP official responsible for training noted shown in figure 4.that Border Patrol and OFO training may have been combined for smaller offices. Further, as noted above, because CBP was unable to provide information on the number of OFO officers who did not receive training and officers may not need to receive training each year, these percentages do not reflect the cumulative total number of OFO officers who have not received any training.\nWhile CBP mostly provided training in the sectors that completed modernization upgrades, CBP also provided some training in other sectors where modernization projects were still under way. For example, in 2014, CBP trained 76 percent of Border Patrol agents assigned to the Del Rio sector that year, 39 percent of agents assigned to the Big Bend sector, and 45 percent of agents assigned to the Laredo sector—sectors that received DIP upgrades during 2014. CBP also provided some training in sectors that have not yet received modernization upgrades. For example, CBP trained about 3 percent of Border Patrol agents assigned to the San Diego sector in 2011. Developing a mechanism to verify that all Border Patrol and OFO radio users receive radio training could help CBP improve its ability to monitor and address radio user training needs.", "ICE provided training on the upgraded digital system in one location, but has not assessed radio user training needs to identify radio user skills gaps, developed a plan to ensure training needs are met, or tracked the training that it provided. As stated above, effective training and exercise programs to practice communications interoperability are essential for ensuring that the technology works and responders are able to effectively communicate during emergencies, according to the DHS SAFECOM Interoperability Continuum. Also, the DHS OEC Operational Guide for the Interoperability Continuum specifically highlights the importance of training when new technology is procured, stating “when a region procures new equipment, that region should plan training and conduct exercises to learn how to make the best use of that equipment,” as stated above. Moreover, ICE’s fiscal year 2013 congressional budget justification states that the ICE TACCOM modernization project will provide infrastructure and subscriber unit training for ICE agents and officers, ensuring users understand how to use the modernized communications systems to support their mission-critical operations. According to ICE officials, training was provided to radio users in only one location along the southwest border—Rio Grande Valley—because of a lack of resources. However, as stated above, federal regulations require that agencies establish priorities for training employees and allocate resources according to those priorities. Moreover, three of the four groups of ICE radio user groups we met with in field locations stated that additional training would help address challenges experienced by radio users. One of these four groups also stated that formal training would improve their ability to overcome challenges affecting their ability to communicate, such as not being able to locate proper channels used by other components. In addition, agents in that user group stated that they were not aware of all the capabilities of the new digital radio systems. Without a plan to address radio user skills gaps, ICE is not well positioned to ensure that it is meeting the training needs of its agents.\nFurther, Standards for Internal Control in the Federal Government states that control activities—such as policies, procedures, and management supervision—help to ensure that all transactions are completely and accurately recorded. However, while ICE officials provided training to radio users in Rio Grande Valley, they stated that they did not track or record which ICE radio users received this training.it would be beneficial for agents to demonstrate radio proficiency before entering the field and explained that they plan to improve ICE training efforts by increasing hands-on radio training during basic training and developing training for radio users in the field using ICE’s online training system, which tracks individual employee training records. However, officials noted that it will be a challenge to develop an online course for radio training because it would need to be tailored to each location, given differing channel frequencies in each region. While officials stated that they are considering these efforts, they did not provide any documentation for these plans or time frames for when these actions would be implemented, or any plans for tracking training that is provided in its current format. Developing a mechanism to verify that all ICE radio users receive radio training could help ICE improve its ability to monitor and address ICE radio user training needs.", "DHS is taking actions to improve tactical communications interoperability among DHS components and with other federal, state, and local agencies, but it is too soon to assess whether these actions will address the various challenges CBP and ICE face in achieving interoperability. Achieving tactical communications interoperability is a documented agency goal. CBP’s TACCOM Operational Requirements Document states that having interoperable communications among CBP components and with other federal agencies is a required mission need. Additionally, according to the DHS Tactical Communications Mission Needs Statement, DHS must provide users with connectivity and interoperability that allow all users and mission partners to securely share the information they need, when they need it, and in a form they can understand and act on with confidence. To help meet this goal, DHS established the Joint Wireless Program Management Office (JWPMO) in 2011, which is a coordinating body for the programmatic and technical functions of eight DHS components that collaborate voluntarily through this body.future projects, including CBP and ICE’s TACCOM modernization projects and TACNET.\nJWPMO establishes governance procedures for current and According to the 2012 DHS Operational Analysis Report for the TACCOM modernization program, DHS’s current approach of modernizing its radio systems to the P25 standard provides limited interoperability improvements and most DHS end users do not have interoperable communications capabilities. In an effort to more fully understand and address the department’s underlying interoperability challenges, DHS has developed a draft DHS Communications Interoperability Plan. Specifically, this draft plan outlines goals and initiatives aimed at addressing various types of interoperability challenges faced by DHS components. This draft plan further states that some DHS-internal standard operating procedures are insufficient and additional DHS- external standard operating procedures are needed to support current requirements. It also states that key barriers to effective standard operating procedure development and improvement include procedural (e.g., unclear authority), proficiency (e.g., limited knowledge), and awareness issues (e.g., understanding need). This plan calls for DHS components to improve awareness of standard operating procedures and to formalize training on TACCOM equipment and standard operating procedures, among other things.\nThe draft DHS Communications Interoperability Plan is based on the DHS SAFECOM Interoperability Continuum, which DHS developed as a guide for jurisdictions across the nation to track progress in strengthening interoperable communications. The SAFECOM Interoperability Continuum identifies five critical success elements that must be addressed to achieve a sophisticated interoperability solution: governance, standard operating procedures, technology, training and exercises, and usage of interoperable communications. The Interoperability Continuum states that usage refers to how often interoperable communications technologies are used and identifies four basic types of interoperability: planned events—such as athletic events that involve multiple responding agencies; localized emergency incidents—such as a vehicle collision on an interstate highway; regional incident management—such as routine coordination of responders across a region that includes disaster response; and daily use throughout region—whereby interoperability systems are used every day for managing routine as well as emergency incidents and users are familiar with the operation of the system and routinely work in concert with one another. Similarly, the draft DHS Communications Interoperability Plan states that during mission operations, DHS components require interoperability for a variety of scenarios, including planned events, day- to-day operations, and mutual aid operations.\nThree of 18 CBP and ICE radio user groups we met with in southwest border locations stated that interoperability solutions generally work well during planned events but are not available or do not work well during unplanned responses to incidents. Moreover, the draft DHS Communications Interoperability Plan states that for planned events, the standard operating procedures to achieve interoperability are generally well documented in advance of the event and then distributed to the components. However, it further states that standard operating procedures for interoperability during unplanned events, including day-to- day operations and mutual aid operations, are not well documented and that an operation is at risk of failure without a vetted, documented, and standardized procedure. For unplanned events, we found that CBP and ICE radio users in southwest border locations faced various challenges relating primarily to a lack of standard operating procedures resulting in radio users adopting inconsistent practices that hinder the department’s goal to achieve interoperability, as illustrated by the following examples:\nAccording to CBP and ICE headquarters officials, both components encourage and allow frequencies and encryption keys to be shared across DHS components. However, sharing of frequencies and encryption keys between CBP and ICE radio users, as well as awareness of policies governing the use of frequencies and encryption keys, was inconsistent in the locations we visited along the U.S. southwest border.\nAccording to encryption key subscription data across all southwestern border areas of responsibility (Arizona, California, New Mexico, and Texas) through September 2014, we found that 45 Border Patrol radios across all southwest border locations were programmed with ICE encryption keys, representing less than 1 percent of all Border Patrol agents assigned to southwest Border Patrol sectors. In addition, we found that 248 ICE radios across all southwest border locations were programmed with CBP’s common channel encryption key, representing about 14 percent of all ICE agents assigned to southwest border regions, while 5 ICE radios were programmed with the Border Patrol tactical encryption key, representing less than 1 percent of all ICE agents assigned to southwest border regions.\nAccording to CBP officials, the DHS common encryption key, which is intended for interoperability, is programmed into all CBP radios and should be programmed into all other DHS component radios for interoperable communications. However, of the 18 groups of CBP and ICE radio users that we met with, 7 groups stated that CBP and ICE do not share frequencies and encryption keys, a fact that they said hinders interoperable communications between these two components. Moreover, of the 7 groups that stated that CBP and ICE do not share frequencies and encryption keys, 4 groups suggested that sharing frequencies and encryptions keys between CBP and ICE would enhance interoperability between the components. Further, some radio users we met with either were unaware of the DHS common key or specifically did not use it for mission operations. For example, 4 of the 18 groups of CBP and ICE radio users we met with suggested that having a dedicated frequency for interoperability would improve interoperable communications. Additionally, 3 of the 18 groups said that they do not use the DHS common key for mission operations, with 1 group noting that Border Patrol specifically requires the use of the Border Patrol tactical key for all mission operations.\nCBP officials stated that if ICE radio users do not have CBP frequencies or encryption keys, it is because they did not request access or were not aware of frequency-sharing protocols. ICE officials stated that while sharing is encouraged, local management is responsible for deciding whether to request access to specific radio keys. Because these decisions are made at the local level, local relationships between CBP and ICE management may affect decisions to request or provide access to local radios keys. Additionally, ICE officials stated that while the majority of ICE encryption keys can be shared with CBP, a small number of these keys are reserved for ICE internal affairs investigations and could not be shared with other agencies.\nCBP and ICE components have multiple names for multiple channels and encryption keys, adding to the complexity of radio communications, and hindering communications interoperability across components. Each CBP component—Border Patrol, OAM, and OFO—uses different names for the same channels and encryption keys used in each location, even for national channels. ICE also uses different names for channels and encryption keys used to communicate with CBP components. Nine of the 18 groups of radio users we met with stated that the lack of a standardized channel and encryption key naming convention across DHS components hinders communications interoperability and suggested that DHS develop a standardized naming convention across the department to reduce confusion among DHS radio users. Specifically, 4 of 4 OAM radio user groups stated that inconsistent use of channel names often compromises their ability to provide air support to other CBP components because of time delays associated with trying to locate channels being used by other components. Further, 3 of 4 ICE radio user groups we met with stated that the lack of standardization particularly affects their ability to complete missions that cross different areas of responsibility. ICE headquarters officials stated that it would be difficult to coordinate among independent components to standardize channel and encryption key names. Accordingly, DHS would need to require the components to take this action.\nAchieving interoperability among DHS components and state and local agencies presents unique challenges because many state and local agency radio systems operate on different frequency bands that are incompatible with federal radio systems. Various solutions are available for CBP and ICE to communicate with these agencies, including using portable equipment to connect incompatible radio systems, calling dispatchers to connect users operating on incompatible radio systems, using designated interoperability channels, and loaning federal handheld radios to state or local agency mission partners. CBP and ICE have each established memorandums of understanding (MOU) to govern radio communications with state and local partners that identify specific frequencies that may be used, provide authority to use those frequencies, and establish basic radio protocols to facilitate communication. However, radio user groups we met with stated that understanding and use of these interoperability solutions varies by location and component, and having consistent guidance for interagency communications would help ensure radio users are aware of proper protocols and available mechanisms for communicating with state and local agencies.\nCBP and ICE agents and officers we met with along the U.S. southwest border reported instances in which the interoperability challenges discussed above delayed or prevented their ability to communicate, causing these agents and officers to miss opportunities to apprehend suspects or risk their safety by continuing to pursue a suspect without being able to call for backup assistance in the event of an altercation. For example:\nTwelve of the 18 groups of CBP and ICE radios users we met with stated that communications challenges caused them to miss apprehending a suspect.\nFourteen of the 18 groups of CBP and ICE radios users we met stated that they were involved in an incident in which a communications challenge jeopardized their safety.\nAccording to CBP officials, these challenges may also be attributed to lack of training or understanding of standard operating procedures. Given the challenge of coordinating across independent agencies to establish consistent policies and protocols on sharing and using encryption keys, labeling channel names, and communicating with state and local agencies, implementing the draft DHS Communications Interoperability Plan may help improve interoperability by providing leadership support and reducing local jurisdictional disagreements. However, since the DHS Communications Interoperability Plan has not yet been finalized, it is too soon to assess the extent to which this guidance will effectively address the interoperability challenges discussed above. According to DHS officials, the department intends to finalize the plan and aims to accomplish the goals outlined in the DHS Communications Interoperability Plan within 3 to 5 years.", "Interoperable communications have presented long-standing challenges for DHS. Thirteen years after the terrorist attacks of September 11, 2001, and more than 10 years after the bipartisan 9/11 Commission reported that interoperable communications need to be improved at all levels of government, DHS continues to face challenges achieving interoperable communications. Achieving interoperability depends on having radio systems that function as intended in each operating environment. Given that the limited operational testing conducted by CBP to ensure that its upgraded radio systems are operating as intended could not make a definitive determination on operational suitability, and since CBP agents and officers are currently using radio systems on a daily basis, a performance monitoring plan would help CBP identify issues experienced by current CBP users and actions that could address those identified issues. Moreover, CBP can do more to meet the training needs of all CBP radio users. Developing and implementing a plan to address any skills gaps for Border Patrol agents and OFO officers related to understanding the new digital radio systems and interagency radio use protocols could help CBP ensure that all its agents and officers operating along the southwest border have the skills needed to overcome challenges that affect their ability to communicate with agents and officers from other components. Further, since CBP does not have a mechanism to verify that all Border Patrol and OFO radio users receive radio training, the agency is unable to fully monitor and address radio user training needs.\nICE officials stated that the agency has upgraded its TACCOM radio equipment but were unable to verify this with documentation. Although ICE TACCOM officials were able to provide detailed planning documentation for modernization projects that were completed in other locations, the agency does not have complete information on how the program is being managed, including for locations on the southwest border. Without a program plan to guide ICE’s TACCOM modernization program efforts, ICE does not have the ability to determine whether its technology investments are meeting user needs and contributing to achieving the agency’s mission. Further, ICE has not provided sufficient training to agents operating along the southwest border to ensure these agents have the skills needed to overcome the interoperability challenges they face. Developing and implementing a plan to address radio user skills gaps, and developing a mechanism to verify that all ICE radio users receive radio training, would help ensure that the agency can better monitor and address ICE radio user training needs.", "To ensure that CBP’s land mobile radio systems are functioning as intended in each location and are meeting user needs, we recommend that the CBP Commissioner develop a plan to monitor the performance of its deployed radio systems.\nTo ensure the ICE TACCOM program is effectively managed, we recommend that the Assistant Secretary of ICE develop a program plan to ensure that the agency establishes the appropriate documentation of resource needs, program goals, and measures to monitor the performance of its deployed radio systems.\nTo improve CBP training efforts, we recommend that the CBP Commissioner take the following two actions: develop and implement a plan to address any skills gaps for CBP agents and officers related to understanding the new digital radio systems and interagency radio use protocols, and develop a mechanism to verify that all Border Patrol and OFO radio users receive radio training.\nTo improve ICE training efforts, we recommend that the Assistant Secretary of ICE take the following two actions: develop and implement a plan to address any skills gaps for ICE agents related to understanding the new digital radio systems and interagency radio use protocols, and develop a mechanism to verify that all ICE radio users receive radio training.", "We provided a draft of this report to DHS for review and comment. On March 11, 2015, DHS provided written comments, which are reprinted in appendix I and provided technical comments, which we incorporated as appropriate. DHS concurred with our six recommendations and described actions taken, under way, or planned to address them. Specifically, In response to our recommendation that CBP develop a plan to monitor the performance of its deployed radio systems, DHS stated that CBP will work to complete a CBP Land Mobile Radio System Performance Monitoring Plan by December 31, 2015.\nIn response to our recommendation that ICE develop a program plan to ensure appropriate documentation of resource needs, program goals, and measures to monitor the performance of its deployed radio systems, DHS stated that ICE’s Office of the Chief Information Officer (OCIO) will develop a program to facilitate, coordinate, and maintain ICE’s deployed radio systems. DHS further stated that in developing this program, ICE OCIO will ensure that the agency establishes the proper documentation of resource needs, defines program goals, and establishes measures to monitor performance. DHS estimated a completion date of January 31, 2016.\nIn response to our recommendation that CBP develop and implement a plan to address any skills gaps for CBP agents and officers related to understanding the new digital radio systems and interagency radio use protocols, DHS stated that CBP will work to develop and implement an action plan to address skills gaps for CBP agents and officers related to understanding the new digital radio systems and interagency radio use protocols. DHS further stated that CBP will explore options such as remote training using virtual learning and other distributive learning tools to best implement the training. DHS estimated a completion date of March 31, 2016.\nIn response to our recommendation that CBP develop a mechanism to verify that all Border Patrol and OFO radio users receive radio training, DHS stated that CBP will explore options to verify that all Border Patrol and OFO radio users receive radio training as part of its effort to develop and implement an action plan in response to our third recommendation. DHS estimated a completion date of March 31, 2016.\nIn response to our recommendation that ICE develop and implement a plan to address any skills gaps for ICE agents related to understanding the new digital radio systems and interagency radio use protocols, DHS stated that ICE Homeland Security Investigations (HSI) will propose an increase in training for new HSI special agents at the HSI training academy and plans to provide radios to new agents to be used during this training. DHS further stated that the ICE Office of Training will develop online training for ICE personnel. DHS estimated a completion date of March 31, 2016.\nIn response to our recommendation that ICE develop a mechanism to verify that all ICE radio users receive radio training, DHS stated that ICE will establish a new training plan for all special agents to ensure they receive proper radio training. DHS further stated that the training plan will include new users who will receive radios at the academy, as well as existing users in the field. In addition, DHS stated that in January 2015, HSI TACCOM personnel met with representatives of the HSI Academy to discuss these efforts. DHS estimated a completion date of March 31, 2016.\nThese planned actions, if implemented effectively, should address the intent of our recommendations.\nWe are sending copies of this report to the Secretary of Homeland Security, the CBP Commissioner, the Assistant Secretary of ICE, the House Homeland Security Committee, the House Subcommittee on Oversight and Management Efficiency, the House Subcommittee on Emergency Preparedness, Response, and Communications, and other interested parties. In addition, the report is available at no charge on the GAO web-site at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8777 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix II.", "", "", "Rebecca Gambler at (202) 512-8777 or at [email protected].", "In addition to the contact named above, Stephen L. Caldwell, Director; Kirk Kiester, Assistant Director; Carissa Bryant; Michele Fejfar; Christine Hanson; Rich Hung; Jon Najmi; Jessica Orr; and Carl Potenzieri made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "h0_title h1_title", "h0_full h1_full", "h0_full", "h1_title", "h1_full", "h1_full", "h0_full h3_full h2_full", "h3_full h1_full", "h0_full h1_full", "h3_full", "", "", "", "" ] }

{ "question": [ "How DHS, CBP, and ICE addressed radio interoperability?", "What modernization efforts has CBP completed?", "To what extent will CBP assess the effectiveness of the new systems?", "How will the lack of a plan affect CBP?", "What is the status of ICE's modernization efforts?", "In what ways has CBP provided agents with necessary radio training?", "How could CBP improve its radio training system?", "What characterized ICE's radio training?", "To what extent does ICE track its training?", "How could ICE's training system be improved?", "What actions has DHS taken to improve communications interoperability?", "What is the goal of the DHS Communications Interoperability Plan?", "What does this draft plan address?", "How does the lack of communications interoperability affect agency operations?", "What is the status of DHS regarding communications interoperability?", "What was GAO asked to review?", "What does this report address?", "How did GAO collect data for this report?" ], "summary": [ "The Department of Homeland Security (DHS), U.S. Customs and Border Protection (CBP), and U.S. Immigration and Customs Enforcement (ICE) have taken steps to upgrade tactical communications equipment and infrastructure, but could benefit by developing performance and program plans.", "Specifically, CBP has completed modernization projects in four of the nine sectors that compose the southwest border.", "Since rolling out upgrades—which include replacing and updating equipment and expanding infrastructure—CBP has not established an ongoing performance monitoring plan to determine whether the systems are working as intended.", "Without such a plan, CBP is not well positioned to assess whether its radio systems are functioning as intended in each location and are meeting user needs.", "In addition, ICE has taken some actions to modernize its tactical communications radio systems. However, ICE does not have a program plan to manage its portfolio of projects. By developing a program plan to guide ICE's overall tactical communications modernization program, ICE could better manage its program and achieve its program goals.", "CBP provided training to its agents and officers on upgraded radio systems in each southwest border location that received upgrades; however, 8 of 14 CBP radio user groups GAO met with suggested that radio users be provided with additional radio training to enhance their proficiency in using radio systems. Further, CBP does not know how many radio users are in need of training.", "Developing and implementing a plan to address any skills gaps related to the upgraded radio systems would help ensure more CBP radio users are able to effectively use their radios to accomplish the agency's mission. Further, developing a mechanism to identify CBP radio users in need of training would help CBP improve its ability to monitor radio user training needs.", "ICE provided training on the upgraded radio systems in one location, but 3 of the 4 ICE radio user groups GAO met with in field locations stated that additional training would help address challenges experienced by radio users.", "Further, ICE officials stated that they did not track the training that the agency provided.", "Additional efforts are needed to ensure that CBP and ICE agents and officers receive necessary training. Developing and implementing a plan to address any skills gaps for ICE radio users related to understanding the upgraded radio systems would help ensure more ICE radio users are able to effectively use their radios to accomplish the agency's mission. Further, developing a mechanism to track training provided to ICE radio users would help ensure that the agency can address ICE radio user training needs.", "DHS is taking actions to improve tactical communications interoperability among DHS components and with other federal, state, and local agencies, but it is too soon to assess whether these actions will address the various challenges CBP and ICE face in achieving interoperability.", "Specifically, among other actions, DHS developed a draft DHS Communications Interoperability Plan to more fully understand and address the department's underlying interoperability challenges.", "This draft plan outlines goals and initiatives aimed at addressing various types of interoperability challenges faced by DHS components, but since the plan has not been implemented, it is too soon to assess the extent to which this guidance will effectively address the interoperability challenges faced by DHS components.", "The lack of communications interoperability—the capability of different electronic communications systems (e.g., radios) to readily connect with one another to enable timely communications—can affect mission operations and the overall effectiveness of agencies responsible for securing the border.", "DHS continues to face challenges in achieving interoperable radio communications within and among federal, state, and local agencies despite investment by these agencies to improve their radio systems.", "GAO was asked to evaluate DHS border security and immigration tactical communications (TACCOM) programs and operational impacts resulting from interoperability challenges.", "This report addresses the extent to which (1) CBP and ICE have upgraded tactical communications equipment and infrastructure along the U.S. southwest border, (2) CBP and ICE have provided tactical communications training to radio users, and (3) DHS has taken actions to improve the interoperability of tactical communications along the U.S. southwest border and what challenges, if any, remain.", "GAO analyzed DHS documentation; visited four locations, selected for DHS prioritization of technology upgrade projects; and interviewed DHS officials." ], "parent_pair_index": [ -1, 0, 1, 2, 0, -1, 0, -1, 2, 2, -1, 0, 1, -1, 0, -1, -1, 3 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "Background", "Current Number of General and Flag Officers", "Responsibilities of General and Flag Officer Positions", "Historical Changes in General and Flag Officer Levels", "Criticisms of the Increasing Proportion of GFOs", "Justifications for Increasing Proportion of GFOs", "Regular Military Compensation for General and Flag Officers", "An Overview of Regular Military Compensation", "Regular Military Compensation for General and Flag Officers", "Statutory Controls on GFOs", "Current Grade Limits", "Grade Limits after December 31, 2022", "Presidential Determination for Three-Star and Four-Star positions", "Statutorily Defined Positions", "Statutory Grades", "Statutory Duties", "Considerations for Congress", "Appendix. Elements of Regular Military Compensation" ], "paragraphs": [ "", "The Constitution provides Congress with broad powers over the Armed Forces, including the power \"to raise and support Armies,\" \"to provide and maintain a Navy,\" and \"to make Rules for the Government and Regulation of the land and naval Forces.\" It also provides the Senate with the authority to provide \"Advice and Consent\" on presidential nominations of \"all other Officers of the United States,\" which includes military officers. On the basis of its constitutional authority, Congress has passed a number of laws which govern important aspects of military officer personnel management, including appointments, assignments, grade structure, promotions, and separations.\nThe most senior officers in the Army, Air Force, and Marine Corps are known as general officers. The most senior officers in the Navy are known as flag officers. The phrase \"general and flag officers\" or \"GFO\" refers to all officers in paygrades O-7 through O-10, thereby including one-star, two-star, three-star, and four-star officers. At the highest level, O-10, GFOs hold the most visible and important military positions in the Department of Defense, including the Chairman of the Joint Chiefs of Staff, the chiefs of the four military services, and the combatant commanders. At the lowest level, O-7, they hold positions that span an array of roles, including commanders, deputy commanders, and key staff roles in large organizations.\nThis report provides an overview of active duty GFOs in the United States Armed Forces—including authorizations, duties, and compensation—historical trends in the proportion of GFOs relative to the total force, criticisms and justifications of GFO to total force proportions, and statutory controls. National Guard and Reserve GFOs are not addressed in this report, unless they are serving on active duty in a manner that counts against the active duty caps on GFOs.\nGiven the authority granted to general and flag officers, Congress has developed a statutory framework applicable to this elite group, and considers changes to these laws as it deems appropriate. Congress also periodically reviews the number, duties, and compensation of GFOs. A frequent tension during these reviews has been DOD requests for additional GFOs versus congressional concerns that there are too many GFOs. As one senior DOD official noted during a 1997 congressional hearing:\nthroughout our history there has been a dialogue, just as is going on now, that has ebbed and flowed between the Congress and the military on the number of general and flag officers we need.... I think it is fair to say that over the years, the Congress has consistently taken the view that we have needed fewer general and flag officers, and that we have taken the opposite view, that we needed more than the Congress would allow. These debates tended to intensify during periods of major downsizing and restructuring of our forces, such as after World War II, the Korean War, the Vietnam War, and now after the cold war.\nReferences in this report to specific grades (ranks) within the general and flag officer corps will use the appropriate capitalized title, insignia, or paygrade as indicated in Table 1 .", "As of November 1, 2018, there were 920 active duty GFOs, of which 891 were subject to the statutory caps and 29 were exempt from the statutory caps. Distribution by grade and service is summarized in Table 2 . The 891 GFOS subject to the statutory caps is lower than the maximum of 963 authorized in statute (see \" Current Grade Limits \" later in this report). This is in accord with an intentional decision made by DOD in 2011 as part of an efficiency initiative directed by then-Secretary of Defense Robert Gates. By keeping GFO numbers substantially below the maximum authorized, this policy provides DOD flexibility to respond to new requirements for GFOs without the delays caused by the need to find an \"offset\" by downgrading or eliminating another GFO position.", "While Congress has specified functions or duties for some key positions—such as members of the Joint Chiefs of Staff, the Combatant Commanders, the top two officers of each service, the Commander of U.S. Special Operations Command, and the Chief of the National Guard Bureau —the great majority of GFO positions are not defined in statute. In these instances DOD uses the following criteria for determining whether a position should be filled by a general or flag officer:\nNature, characteristics, and function of the position; Grade and position of superior, principal subordinates, and lateral points of coordination; Degree of independence of operation; Official relations with other U.S. and foreign governmental positions; Magnitude of responsibilities; Mission and special requirements; Number, type, and value of resources managed and employed; Forces, personnel, value of equipment, total obligation authority; Geographic area of responsibility; Authority to make decisions and commit resources; Development of policy; National commitment to international agreements; Impact on national security and other national interests; and Effect on the prestige of the nation or the armed force", "A summary of the number of active duty GFOs and the proportion of GFOs relative to the total force over the past five decades is provided in Table 3 . A review of GFO levels indicates an 11% increase in the number of four-star officers (36 on September 30, 1965 vs. 40 on September 30, 2018) and a 24% increase in the number of three-star officers (119 vs. 147). At the same time, the number of one-star and two-star officers has decreased by about 35% (1,129 vs. 734).\nHowever, during this time period, the size of the total force was cut roughly in half, dropping from 2.66 million on September 30, 1965, to 1.32 million on September 30, 2018. Thus, a more salient measure may be the proportion of GFOs to the total force. Looking at the data from this perspective, it is clear that while GFOs have always made up a very small percentage of the total force, the general and flag officer corps has increased as a percentage of the total force over the past five decades. GFOs made up about one-twentieth of one percent (0.048%) of the total force in 1965, while they made up about one-fifteenth of one percent (0.070%) of the total force in 2018, indicating that the share of the total force made up of GFOs increased by 46%. This historical trend is more pronounced with respect to four-star officers (which grew from 0.0014% of the total force to 0.0030%, a 114% increase) and three-star officers (which grew from 0.0045% of the total force to 0.0112%, a 149% increase). One- and two-star officers as a percentage of the total force increased less rapidly (from 0.0425% of the total force to 0.0557%, a 31% increase).\nThese increases occurred at the same time that the size of the officer corps in general was increasing as a percentage of the total force. As indicated in the last column of Table 3 , between 1965 and 2018, the officer corps increased from 12.76% of the total force in 1965 to 17.51% in 2018, indicating that the share of the total force made up of officers increased by 37%.", "There have been two principal criticisms raised against the increasing proportion of GFOs relative the total force. The first criticism revolves around the increased cost of employing a GFO in comparison to a lower ranking officer. The second relates to the belief that too many GFOs slow down decisionmaking processes. Each point is explained in more detail below.\nCost . GFOs cost more to employ than officers of a lower rank. In part, this is due to the higher compensation they receive. For example, the average GFO in paygrade O-7 receives $204,405 in regular military compensation 14 in 2019, while the average officer in paygrade O-6 receives $180,709. Additionally, there can be other costs associated with GFOs, particularly at higher grades, such as the costs of larger staffs, official travel, security details, and aides. An example of this perspective was provided by a witness at a 2011 congressional hearing, who stated \"The progression towards a more top-heavy force is not without its consequences.... The cost of officers increases markedly with their rank, so taxpayers are overpaying whenever a G/FO is in a position that could be filled by a lower ranking officer.\" Decision making . Another criticism is that an increasing proportion of GFOs slows down decisionmaking by adding additional layers of management between the highest echelons of command and the lowest. In a 2010 speech, former Secretary of Defense Robert Gates criticized the impact of an increase in GFOs and senior civilians in making the Department of Defense a top-heavy and overly bureaucratic organization:\nDuring the 1990s, the military saw deep cuts in overall force structure—the Army by nearly 40 percent. But the reduction in flag officers—generals and admirals—was about half that. The Department's management layers—civilian and military—and numbers of senior executives outside the services grew during that same period. Almost a decade ago, Secretary Rumsfeld lamented that there were 17 levels of staff between him and a line officer. The Defense Business Board recently estimated that in some cases the gap between me and an action officer may be as high as 30 layers.... Consider that a request for a dog-handling team in Afghanistan—or for any other unit—has to go through no fewer than five four-star headquarters in order to be processed, validated, and eventually dealt with. This during an era when more and more responsibility—including decisions with strategic consequences—is being exercised by young captains and colonels on the battlefield.", "The increasing proportion of GFOs in comparison to the total force has been a topic of particular interest during past congressional hearings. During these hearings, and particularly during a 1997 congressional review of GFO authorizations, witnesses from the Department of Defense put forth a number of rationales for this growth, including the following:\nJoint requirements . One frequently cited cause of the increasing ratio of GFOs during past congressional hearings has been the increase in \"joint\" requirements that followed enactment of the Goldwater-Nichols Act (GNA) in 1986. While removing the Chairman of the Joint Chiefs of Staff from the chain of command, GNA enhanced the authority of the Chairman in other ways; significantly increased the roles and authorities of commanders of the joint Combatant Commands; and emphasized joint duty assignments for officers. These new institutional arrangements led to the creation of more joint GFO positions and powerful career incentives to serve in those positions. Testifying before Congress in 1997, the Vice Director of the Joint Staff emphasized how the growth of joint organizations affected the proportion of GFOs to the total force: \"There is really no law of proportionality here when you talk about joint growth. If you think about it, sir, where we have been since 1980, we stood up CENTCOM, SOCOM, Space Command; we have reorganized to form ACOM, TRANSCOM, [and] STRATCOM.\" Since then, additional joint headquarters have been established, to include U.S. Northern Command (established in 2002), Joint Task Force Guantanamo (established 2002), Combined Joint Task Force Horn of Africa (established 2002), U.S. Africa Command (2007), and U.S. Cyber Command (2009). Coalition Operations . Another rationale used to explain the increased proportion of GFOs has been an increased emphasis by the United States on forging coalitions with other nations to achieve common security objectives. This has, in turn, generated a demand for senior military leaders to conduct coordinated planning, training, and operations with their peers from foreign nations. The argument is also linked to the number of contingency operations the U.S. military has conducted since the end of the Cold War, which have often involved forces from dozens of countries, including the forces of the nation in which the operations take place. Examples of these coalition operations include Iraq and Afghanistan as well as smaller-scale contingencies such as Bosnia, Haiti, and Kosovo (ongoing). Contingency operations such as these are commanded by a GFO, who usually has additional GFOs as subordinate commanders and senior staff officers. Both their experience and the authority inherent in their grade can be considered important elements to the success of complex operations. Political and diplomatic considerations can also be a factor, as the officers leading these operations are normally expected to interact with the senior military and civilian leadership of the foreign nation where the operations are occurring. Organizational structure . As noted previously, the increase in the proportion of GFOs over the past 50 years has not been due to an increase in the number of GFOs, which has gone down in this time period, but to the much larger decrease in the size of the Armed Forces in general. In part, this slower reduction is due to the organizational structure of the Armed Forces, which includes certain GFO positions whether the Armed Forces are comparatively large or small. For example, there was a Chief of Staff of the Air Force at the peak of the Vietnam War, when the Air Force had about 900,000 airmen, and there is one today, when the Air Force has approximately 325,000 airmen. A similar case can be made for many of the GFOs who serve on the Joint Staff, the Service Staffs, the Combatant Commands, and certain defense agencies. Given the organizational structure of the Armed Forces—some of which is required by law—the amount of management \"overhead\" does not necessarily change in direct proportion to the size of the force. Another way of illustrating this is to consider what would happen if an Army division were disestablished: doing so would eliminate about 15,000 soldiers, but only three of them would be general officers. Technological changes . A fourth justification for increased GFO ratios is that technological advances have changed the way the United States fights its wars. Modern weapons systems, much more powerful and accurate than their predecessors, require fewer personnel to deliver greater firepower. Thus, while the number of personnel a GFO commands may decline as more sophisticated equipment is substituted for manpower, the lethality of those forces may increase. From this perspective, the lethality of the weapons systems, rather than the number of people, provides the justification for an organization to be led by a very senior military officer. Additionally, the advent and development of new domains of warfare—such as space and cyber—has led to the creation of new organizations to exploit advantages and defend against vulnerabilities in those environments.", "There are three main ways in which military personnel, including general and flag officers, are compensated: cash compensation (pay and allowances), non-cash compensation (benefits), and deferred compensation (retired pay and benefits). In this report, only the compensation elements which make up r egular m ilitary c ompensation will be discussed.", "Regular Military Compensation (RMC) is a statutorily defined measure of the major compensation elements which every servicemember receives. It is widely used as a basic measure of military cash compensation levels and for comparisons with civilian salary levels. RMC, as defined in law, is \"the total of the following elements that a member of the uniformed services accrues or receives, directly or indirectly, in cash or in kind every payday: basic pay, basic allowance for housing, basic allowance for subsistence, and Federal tax advantage accruing to the aforementioned allowances because they are not subject to Federal income tax.\" These elements are described in more detail in the Appendix . Certain GFOs receive a \"personal money allowance\" as well. This is not part of RMC, but is described in a footnote below. Congress included provisions in recent National Defense Authorization Acts to deny GFOs any increase in basic pay during calendar years 2015 and 2016.", "Table 4 provides the average RMC that general and flag officers received in 2019. It assumes that all GFOs receive BAH, rather than living in government provided housing.", "Congress has established a statutory framework for GFOs which limits their numbers by grade, requires presidential determination of many three-star and four-star positions, and specifies the grade and/or duties of certain key positions. This framework provides for greater congressional control over the most senior GFO positions, while providing substantial latitude to the executive branch in the management of the remaining GFOs.", "Sections 525 and 526 of Title 10 establish the number of general and flag officers that may be on active duty in the Army, Navy, Air Force, and Marine Corps. The two provisions establish separate caps for each service and for the joint community. There are certain circumstances under which a general or flag officer does not \"count\" against these caps. Additionally, the President has authority under 10 U.S.C. §527 to suspend the operation of the caps in time of war or national emergency declared by the Congress or the President.\nTable 5 summarizes the statutory limitations by grade for GFOs for service-specific positions. Table 6 summarizes the statutory limitations for GFOs service in Joint positions. Combining the maximum number of service and joint GFO authorizations, the maximum number of GFO positions authorized is currently 963. The current number of active duty GFOs subject to the statutory caps is 891. There are another 29 active duty GFOs who are not subject to the statutory caps. (See \" Current Number of General and Flag Officers \" earlier in the report.)", "The FY2017 National Defense Authorization Act included a provision, codified at 10 U.S.C. §526a, to reduce the number of GFOs authorized to be on active duty. The conference report that accompanied the bill highlighted congressional concerns that the military departments had not demonstrated a willingness to implement GFO reductions directed by then-Secretary of Defense Robert Gates in 2011 and, furthermore, noted the context of significant reductions in personnel strength that occurred in the 2011-2016 time frame. Starting in 2023, §526a will lower the number of GFOs that may be on active duty to a maximum of 620 for Service positions and 232 for Joint positions, a reduction of 111 from the current number of GFO positions authorized by 10 U.S.C. §526.", "Section 601 of Title 10 provides that \"[t]he President may designate positions of importance and responsibility to carry the grade of general or admiral or lieutenant general or vice admiral.... An officer assigned to any such position has the grade specified for that position if he is appointed to that grade by the President with the advice and consent of the Senate.\" Thus, with the exception of those so designated in statute, all three-star and four-star positions must be designated as such by the President. Congress can review the rationale for this designation as part of its oversight function, and the Senate retains the power to confirm or reject the nomination of an individual to fill such a position. The authority of the President to designate such positions is also limited by the strength caps on general and flag officers found in 10 U.S.C. §§525 and 526.", "Congress has established a number of GFO positions in law which carry designated grades, designated duties, or both.", "Congress has specified the grade for a number of key positions. For example, 10 U.S.C. §152 specifies that the Chairman of the Joint Chiefs of Staff holds the rank of General or Admiral. Similar language also exists for the Vice Chairman of the Joint Chiefs of Staff, the top two officers of each service, the Commander of U.S. Special Operations Command, and the Chief of the National Guard Bureau. Table 7 highlights some positions with statutorily required grades. Congress sometimes changes these statutory grades. For example, in 2008, Congress increased the grade of the Chief of the National Guard Bureau from Lieutenant General to General. Additionally, Section 502 of the FY2017 National Defense Authorization Act amended various statutory provisions to eliminate the statutory grade for 54 positions. As explained in the report that accompanied the Senate version of the FY2017 National Defense Authorization Act, where the provision originated:\nThe Committee determined that in order to effectively manage the reduction in the number of general and flag officers prescribed elsewhere in this Act, that the Secretary of Defense must be given the flexibility to assign appropriate officer grades to positions. The provision would not prohibit the position from being filled by an officer with the same, or a higher, or lower grade than the law currently requires.", "Positions with statutorily required grades typically have statutorily required duties as well. Table 7 provides excerpts of the statutorily required responsibilities, duties, or functions of certain GFO positions. Congress sometimes changes these duties. For example, in 2011, Congress changed the law to specify that the Chief of the National Guard Bureau was a member of the Joint Chiefs of Staff whose duties included \"the specific responsibility of addressing matters involving non-Federalized National Guard forces in support of homeland defense and civil support missions.\"", "Congress has a long-standing interest in the military officer corps in general, and has periodically focused additional attention on its most senior officers. Should Congress elect to address GFO authorizations, duties, compensation, or other related topics in more detail, it may wish to consider the following:\nWhat is the most appropriate way to determine how many GFOs the Department of Defense should have? How closely should this be linked to total force size? What other factors would be useful in determining what the right number of GFOs is? How do advances in information technology and decisionmaking tools impact the need for GFOs? Could use of these technologies result in flattened management structures and decrease the need for GFOs? Should Congress modify the current statutory framework that governs GFOs? Should it modify the caps set out in 10 U.S.C. §§525, 526, and 526a? To what extent do other statutory requirements, such as the Goldwater-Nichols Act (GNA), drive GFO requirements? Should GNA be revised to alter this effect? Could organizational restructuring of the Joint Staff and Service Staffs decrease the need for GFOs, or allow positions to be held by lower graded GFOs? Could certain organizations be merged to reduce the requirements for GFOs? Could military relations with international partners be restructured so as to lessen the need for GFO representation? How important is rank equivalence when senior U.S. military personnel work with their allied peers? Could National Guard and Reserve GFOs be used to reduce the need for active duty GFOs? Are there GFO positions that could be eliminated or \"downgraded\" to a lower rank? Are there GFO positions that could be replaced by civilian employees? What are the costs and benefits associated with these actions? How might this impact military effectiveness? Can the direct and indirect costs associated with GFOs be reduced? For example, could compensation or staff costs be reduced without significantly affecting the ability of GFOs to carry out their duties?", "Regular Military Compensation (RMC), as defined in law, is \"the total of the following elements that a member of the uniformed services accrues or receives, directly or indirectly, in cash or in kind every payday: basic pay, basic allowance for housing, basic allowance for subsistence, and Federal tax advantage accruing to the aforementioned allowances because they are not subject to Federal income tax.\" Each of these elements is described below.\nBasic Pay\nAll members of the Armed Forces receive basic pay, although the amount varies by pay grade (rank) and years of service (also called longevity). For most servicemembers, basic pay is the largest element of the compensation they receive in their paycheck and typically accounts for about two-thirds of an individual's RMC. It is roughly analogous to civilian salary.\nBasic Allowance for Housing\nAll servicemembers living in the United States are entitled to either government-provided housing or a housing allowance, known as basic allowance for housing (BAH). About 17% of GFOs living in the United States receive government-provided housing with the remainder receiving BAH to offset the costs of the housing they rent or purchase in the civilian economy. The amount of BAH a servicemember receives is based on three factors: paygrade (rank), geographic location, and whether or not the servicemember has dependents. However, there is no increase in BAH after paygrade O-7. Therefore, the amount of BAH for GFOs does not vary by rank, but only by locality and dependency status.\nPaygrade and dependency status are used to determine the type of accommodation—or \"housing profile\"—that would be appropriate for the servicemember (for example, one-bedroom apartment, two-bedroom townhouse, or three-bedroom single family home). Geographic location is used to determine the average costs associated with each of these housing profiles. The average costs of these housing profiles are the basis for BAH rates. As a result of this methodology, BAH rates are much higher in some areas than others, but servicemembers of similar paygrade and dependent status should be able to pay for roughly comparable housing regardless of their duty location.\nBasic Allowance for Subsistence\nNearly all servicemembers receive a monthly payment to defray their personal food costs. This is known as basic allowance for subsistence (BAS). BAS is provided at a flat rate, with separate rates for officers and enlisted personnel. In 2019, all officers, including GFOs, received $254.39 a month.\nFederal Tax Advantage\nMilitary allowances are generally not considered part of gross income and are not subject to federal income tax, thus generating a tax benefit for servicemembers. RMC considers only the federal income tax advantage provided by the exemption of housing and subsistence allowances from gross income. The precise value of the federal tax advantage for an individual servicemember will vary depending on his or her unique tax situation." ], "depth": [ 0, 1, 2, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 3, 3, 1, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_title h1_full", "", "", "", "h1_full", "h0_full h2_full", "", "", "", "h2_full", "", "", "", "h2_full", "h2_full", "h2_full", "h1_title", "h1_full" ] }

{ "question": [ "What laws has Congress enacted regarding the Armed Forces?", "How do these laws address general and flag officers?", "How does Congress maintain these laws?", "What areas of congressional interest exist regarding GFOs?", "What is RMC?", "How widely do GFO compensations vary?", "How has Congress used its authority to specify the grades of GFO positions?", "What general changes has Congress made?" ], "summary": [ "In the exercise of its constitutional authority over the Armed Forces, Congress has enacted an array of laws which govern important aspects of military officer personnel management, including appointments, assignments, grade structure, promotions, and separations.", "Some of these laws are directed specifically at the most senior military officers, known as general and flag officers (GFOs).", "Congress periodically reviews these laws and considers changes as it deems appropriate.", "Areas of congressional interest have included the number of GFOs authorized, the proportion of GFOs to the total force, compensation levels of GFOs, and duties and grades of certain GFOs.", "One commonly used measure of compensation, known as regular military compensation (RMC), includes basic pay, basic allowance for housing, basic allowance for subsistence, and the federal tax advantage associated with allowances, which are exempt from federal income tax.", "In 2019, the lowest-ranking GFOs make about $204,000 per year in RMC, while the highest-ranking GFOs make about $238,000 per year.", "For example, Congress increased the grade of the Chief of the National Guard Bureau (CNGB) from Lieutenant General to General in 2008. Three years later, Congress again changed the law to specify that the CNGB was a member of the Joint Chiefs of Staff whose duties included \"the specific responsibility of addressing matters involving non-Federalized National Guard forces in support of homeland defense and civil support missions.\"", "In 2016, Congress removed the statutory grade requirement from 54 GFO positions." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, -1, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 2, 2, 3, 3 ] }

{ "title": [ "Background", "TSA Acquires Security- Related Technologies to Screen Passengers and Baggage for Threats", "DHS Acquisition Process", "TSA Test and Evaluation Process", "DHS and TSA Partner with Industry to Develop and Deploy Screening Technologies in a Dynamic Threat Environment", "TSA Has Identified Technologies to Meet Mission Needs, but Failures during Testing Have Contributed to Acquisition Inefficiencies", "Test and Evaluation Process Is Consistent with Guidance and Best Practices and Identifies Technologies That Meet Mission Needs", "Only Half of Screening Systems Tested in the Last 5 Years Passed Testing and TSA Procured Almost All of the Successful Systems", "Immature Technologies Have Contributed to Acquisition Inefficiencies", "Too Soon to Tell Whether TSA’s Actions to Ensure Technology Maturity Will Address All Factors Contributing to Acquisition Inefficiencies", "TSA Is Taking Actions to Better Ensure Technology Maturity at the Start of Testing", "TSA Is Implementing a Third Party Testing Strategy but Has Not Finalized Its Approach or Conducted a Comprehensive Assessment of Testing Data", "TSA Has Yet to Finalize Key Aspects of the Third Party Testing Strategy", "TSA Has Not Conducted a Comprehensive Assessment of Testing Data", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Comments from the Department of Homeland Security", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "TSA uses security-related technologies to help secure approximately 1.8 million passengers, 1.2 million checked bags, and 3 million carry-on bags on 25,000 flights at roughly 440 federally regulated airports every day. As of August 2015, TSA had deployed about 15,000 units of security-related technology to airports nationwide and anticipates spending a significant portion of its $3.6 billion security capability budget on technologies such as these over the next 5 years. Within TSA, the Office of Security Capabilities (OSC) provides security-related technology solutions through two major DHS acquisition programs, the Passenger Screening Program (PSP) and the Electronic Baggage Screening Program (EBSP):\nPSP technologies, such as advanced imaging technology and bottled liquid scanners, work in combination at airport checkpoints to screen passengers and their carry-on baggage for threats.\nEBSP technologies, such as explosives trace detectors and explosives detection systems, help ensure that TSA screens 100 percent of checked baggage for explosives, as mandated by law.\nFor each technology type, vendors develop their own specific version or system. See table 1 for an overview of key PSP and EBSP technology types.\nAccording to TSA, EBSP and PSP are transitioning into a sustainment mode, meaning they are largely not procuring new types of screening technologies and are instead focused on the recapitalization of over 2,400 systems that are reaching their end-of-life over the next 5 years.\nIn our past work, we found key challenges related to TSA’s efforts to acquire technologies. For example, in March 2014, we found that TSA’s performance assessments of advanced imaging technology systems with automatic target recognition capability did not account for all factors affecting the effectiveness of the system, such as how well the system would perform with human operators, because the assessments were conducted in a laboratory. We recommended that TSA establish protocols to facilitate capturing operational data on secondary passenger screening at the checkpoint to determine the extent to which rates of false alarms for various advanced imaging technology systems affect operational costs once the systems with automatic target recognition capability are networked. TSA concurred with this recommendation. In its comments to our report, TSA stated that it will monitor, update, and report the results of its efforts to capture operational data and evaluate its associated impacts to operational costs. In January 2012, we found that TSA did not fully follow DHS acquisition policies when acquiring a different version of advanced imaging technology, which resulted in DHS approving nationwide deployment without full knowledge of TSA’s revised specifications. Among other things, we found that TSA had changed key performance parameters during the acquisition process without formally informing DHS acquisition officials, in violation of DHS policy. We recommended that TSA develop a road map describing when vendors will meet milestones for further developing advanced imaging technology and that TSA brief Congress as part of the budget process. Findings from this report resulted in a reduction in planned advanced imaging technology purchases amounting to approximately $1.4 billion.", "DHS policies and processes for managing its major acquisition programs, such as TSA’s PSP and EBSP, are primarily set forth in DHS Acquisition Management Directive 102-01 and DHS Instruction Manual 102-01-001, Acquisition Management Instruction/Guidebook. Within TSA, the PSP and EBSP program management offices are responsible for planning and executing the acquisition programs within the cost, schedule, and performance parameters in their program baselines, which are approved by DHS. DHS’s Deputy Secretary or Under Secretary for Management serve as the decision authority for PSP and EBSP acquisitions since both are large acquisition programs with life cycle cost estimates of over $1 billion. The decision authority reviews programs at five predetermined acquisition decision events to assess whether the programs are ready to proceed through each of the four acquisition life cycle phases.\nDuring the first phase of the acquisition life cycle—the “need” phase— TSA develops a mission need statement for a potential solution to an identified problem, such as threats concealed on passengers and in their carry-on items. If the acquisition decision authority concludes that the need is of sufficiently high priority to DHS, the program moves to the second phase known as the “analyze/select” phase. The TSA program management offices—such as PSP and EBSP—communicate this need to potential vendors through requests for information, requests for proposals, and broad agency announcements in search of potential solutions, such as innovative screening technologies. Program managers select the best technology option and, if the acquisition decision authority approves the proposed technology, the program moves to phase three. The third phase is the “obtain” phase in which TSA develops, tests, and evaluates systems—vendors’ versions of the selected technology. With acquisition decision authority approval, programs enter the final phase, the “produce/deploy/support” phase, and TSA can proceed with procurement and full deployment of tested and qualified systems.", "The goal of test and evaluation is to make sure that a product works as intended before it is provided to end-users, such as TSA’s transportation security officers. According to DHS policy, the primary purpose of test and evaluation is to provide timely, accurate information to managers, decision makers, and other stakeholders to reduce programmatic, financial, schedule, and performance risk. TSA’s test and evaluation process is guided by DHS and TSA policies. DHS issued its test and evaluation policy in May 2009 and TSA issued its policy in July 2010.\nWithin OSC, the Operations Support Division is responsible for testing and evaluating screening technologies in coordination with DHS’s Transportation Security Laboratory. Table 2 provides an overview of DHS and TSA test and evaluation roles and responsibilities.\nAs noted in the table, DHS and TSA both have responsibilities for evaluating vendors’ qualification data packages and determining whether to accept systems for testing. Once accepted, the systems undergo TSA’s three phase pre-acquisition test and evaluation process to verify requirements. Responsibility for verifying requirements is assigned to testers for each of the three phases: (1) qualification and certification testing at the Transportation Security Laboratory, (2) qualification testing at the TSA Systems Integration Facility, and (3) operational testing at selected airports. 1. Qualification and certification testing at the Transportation Security Laboratory. Qualification testing is the formal verification and validation of a system’s performance and must provide confidence that the system will satisfy desired capabilities in an operational environment. Qualification testing is typically conducted at two facilities, each serving distinct functions. Testing conducted at the DHS Science and Technology Directorate’s Transportation Security Laboratory in Atlantic City, New Jersey is focused on qualifying or certifying that a system meets the probability of detection of all categories of explosives while meeting TSA’s designated false alarm requirement. Typically, systems complete detection testing at the Transportation Security Laboratory prior to undergoing the balance of qualification testing at the TSA Systems Integration Facility. 2. Qualification testing at the TSA Systems Integration Facility. TSA conducts additional qualification testing at the TSA Systems Integration Facility in Arlington, Virginia to verify system performance against defined functional requirements, such as system capacities, human factors, physical characteristics, user safety, and system reliability, availability, and maintainability. This testing may include transportation security officers who exercise standard operating procedures to provide feedback regarding the system’s functions in a controlled environment. Systems must pass qualification testing and undergo an operational test readiness review before they can proceed to operational testing. 3. Operational testing at select airports. TSA conducts operational testing at select airports to evaluate a system’s operational effectiveness and suitability in a realistic environment and to ensure that the airport infrastructure is ready to accept the system. According to TSA, it selects test sites, in coordination with various stakeholders, using criteria intended to facilitate an unbiased evaluation of the systems. TSA injects mock threats during operational testing to assess performance of the entire system, including users and standard operating procedures. Operational tests focus on demonstrating that operational requirements have been met and that all critical operational issues have been resolved.\nFollowing operational testing, TSA prepares a system evaluation report, which provides effectiveness and suitability determinations along with potential system improvement recommendations. The DHS Director of Operational Test and Evaluation reviews the report and prepares a letter of assessment. The letter assesses the system evaluation report and the adequacy of TSA’s operational test and concludes whether the system is operationally suitable and effective for procurement. TSA’s program management offices place approved systems on qualified products lists, which contain systems that have successfully completed the test and evaluation process and have been approved by DHS. Once a system is on a qualified products list, which TSA maintains for most technology types, such as explosives detection systems, the vendor can participate in TSA’s procurement process. However, placement on a qualified products list does not guarantee that the vendor will receive a procurement contract.\nTSA conducts acceptance testing on systems at vendors’ factories following production and again once installed at airports to ensure consistency of the manufacturing process, system configuration, and functionality. Post deployment, TSA’s Office of Inspection and the DHS Office of Inspector General conduct covert tests in airports to identify vulnerabilities in screening processes. TSA and DHS test and evaluate systems prior to procurement, but covert testing has demonstrated that systems, when integrated into TSA’s screening process, do not always work as intended once deployed. TSA’s test and evaluation activities are funded by the program offices, and TSA’s life cycle cost estimate for EBSP reflects average annual testing costs of approximately $24 million. PSP officials estimate that the program averages $10 million in annual testing costs.", "TSA’s security screening must adapt to meet evolving threats since potential terrorists use their knowledge of aviation security measures when planning aviation-related attacks. New explosives threats can result in heightened detection standards, which may require software upgrades to existing systems or the development of new technologies. DHS and TSA partner with industry to build, test, field, and sustain security-related technologies. For example, DHS makes available testing facilities and expertise at the Transportation Security Laboratory that vendors can use, by their choice, to further the development and evaluation of their systems. TSA’s August 2015 Strategic Five-Year Technology Investment Plan for Aviation Security noted the market for security-related technologies is quite limited, with only a handful of vendors, which creates a significant challenge for small businesses. According to TSA, substantial funding and time are required by industry to develop, qualify, and produce TSA’s screening technologies, which represents a significant barrier to entry. For example, the procurement cost of an explosives detection system can exceed over half a million dollars. TSA’s approximately 15,000 systems were manufactured by 13 different vendors, with 5 vendors accounting for approximately 81 percent of deployed systems.", "Consistent with departmental guidance and acquisition best practices, TSA’s test and evaluation process supports its acquisition decisions by providing information regarding the ability of passenger and baggage screening technologies to meet mission needs prior to full production decisions. From June 2010 to July 2015, only half of the 22 systems that TSA and DHS tested successfully passed qualification and operational testing and were therefore deemed effective and suitable for deployment. TSA procured all but one of the successful systems. Technology failures during testing, as a result of vendors’ immature technologies entering the test and evaluation process, often required significant fixes and have contributed to inefficiencies in TSA acquiring the technologies for use in airports.", "TSA’s test and evaluation process is a critical means of providing DHS and TSA officials with accurate information about security-related technologies to support acquisition decisions. We found that the process is consistent with DHS and TSA policies and guidance and helps TSA ensure that the technologies it acquires fulfill mission needs upon deployment. For example, TSA has integrated end users, such as transportation security officers into its test and evaluation process, consistent with TSA test and evaluation policy. Also, TSA officials said they have designated program office liaisons to improve communication between testing officials and the TSA program offices responsible for procuring the screening technologies to help ensure program offices have the testing information they need to inform the procurement decision, in line with DHS test and evaluation policy. In addition, TSA establishes system evaluation teams for each system undergoing test and evaluation; the teams consist of the TSA and DHS officials that plan for and evaluate system effectiveness and suitability throughout the testing process. Further, TSA’s test and evaluation process is designed to identify and evaluate existing technologies that can be adjusted or repurposed to meet the agency’s needs. This goal is in line with department guidance underlining the importance of pursuing technologies, specifically commercial off-the-shelf technologies that do not require a substantial investment of time and money to ensure they are effective once procured.\nWe previously found that the validation of product knowledge early in the acquisition process and before key investments are made is consistent with best practices by commercial firms. Specifically, leading commercial firms strive to detect as many problems as possible during testing, which in turn leads to easier and less expensive improvements to products down the road. Leading commercial firms highlighted the importance of perceiving problems during testing, not as failures, but as knowledge which can be used to improve a product. Consistent with this practice, while vendors’ proposed systems may fail TSA’s test and evaluation process, these failures can help the government identify needed fixes to better ensure that they will be effective and suitable prior to being deployed to airports nationwide. Further, we previously found that cost overruns and underperformance of technologies are exacerbated when problems discovered during testing are not resolved. For example, costly redesigns and retrofits could be required to achieve satisfactory performance of units already deployed in the field. By conducting operational testing on systems prior to procurement, TSA is working to prevent such issues.", "Of the 22 PSP and EBSP systems TSA and DHS tested from June 2010 to July 2015, 11 successfully completed qualification and operational testing, and TSA procured all but one of the 11. An additional 8 systems were tested during this period and testing remains ongoing. In addition, during this period one vendor withdrew its system from the testing process. These 9 systems are not depicted in figure 1 below, which shows the number of systems that made it through each stage of TSA’s test and evaluation process during this period.\nAdditional detail on the outcomes of vendors’ proposed systems follows.\nFour additional systems were proposed by vendors during the 5-year period, but did not proceed to qualification testing because TSA did not accept the vendors’ qualification data packages. TSA officials told us they return nearly all qualification data packages to vendors at least once for additional clarification and documentation.\nFour systems did not pass qualification testing and therefore did not proceed to operational testing. For example, one proposed passenger screening system did not meet 15 of TSA’s 165 functional requirements. In this case, TSA identified 6 of the 15 failures as issues that could adversely affect an operational or mission essential capability and for which there is no known work-around solution. Deficiencies for this system included issues with safety, information security, maintenance, and system dimensions, among others.\nSeven systems either did not pass operational testing or had operational testing halted by TSA during this 5-year period. Operational testing is the first time a system is subject to realistic operational demands and used by a variety of transportation security officers; thus, problems with some systems are generally not detected until this phase of testing.\nEleven systems successfully passed qualification and operational testing; TSA procured 10 of them. Of these, TSA placed 9 on its qualified products lists, meaning that they were eligible for procurement. TSA procured the 10th system, second generation advanced imaging technology, independent of a qualified products list.\nTSA officials stated that test and evaluation results are a primary input into their acquisition decisions, but that they also consider factors such as mission, threats, and cost. A senior TSA acquisition official explained that TSA could decide to procure systems that have minor issues during testing and perform additional testing after the system is in airports to ensure that the problems are resolved. Similarly, TSA may choose not to procure systems that successfully complete TSA’s test and evaluation process. Placement on TSA’s qualified products list allows a vendor to participate in TSA’s procurement process, but it does not guarantee a procurement contract. However, TSA has awarded a contract to buy all 9 systems it tested and placed on its qualified products list since June 2010.\nIndustry officials noted that there is an expectation among vendors that if they meet the requirements as outlined by TSA they will at least be able to compete for procurement. We found that, from June 2010 to July 2015, one system—a portable explosives trace detector system—passed operational testing but was not procured. This system was intended to enhance the ability of transportation security officers to randomly screen passengers’ hands and their accessible property for traces of explosives residue. In July 2012, following approximately three and a half months of testing, TSA found that this vendor’s system met requirements, including probability of detection of required detection threats, and it was found to be operationally effective and operationally suitable with limitations. However, according to senior TSA officials, a new threat subsequently emerged. The TSA Acquisition Review Board, which reviewed the potential acquisition in advance of the DHS acquisition decision authority, decided to wait for a system that met TSA’s new detection requirements; thus, TSA issued an acquisition decision memorandum in November 2012 deferring the procurement. A senior TSA acquisition official stated that this decision was a positive action because the system did not meet TSA’s mission needs and therefore should not have been procured at that time.", "TSA officials emphasized that immature technologies submitted by vendors are a key driver of testing failures and therefore delays in TSA’s ability to buy screening systems for use in airports. Because immature technologies often experience multiple failures during testing and require multiple retests, testing costs more and takes longer than originally anticipated. After a testing related failure, vendors will usually modify their systems to address deficiencies and then re-submit their systems for additional TSA testing. According to TSA leadership, the security-related technologies industry is still maturing, since it primarily developed after the terrorist attacks of September 11, 2001. As a result, TSA has worked extensively with industry to help develop systems that will meet TSA’s mission needs. However, TSA’s extensive work with vendors has contributed to inefficiencies in purchasing screening systems. TSA’s Assistant Administrator for OSC, who serves as the TSA Chief Technology Officer, stated that TSA wants to reduce its role in system development in order to increase efficiency and certainty in the test and evaluation process so that it can be a true purchaser of these systems.\nWe found that 4 of the 11 systems that successfully passed TSA’s testing process since June 2010 required at least two formal rounds of qualification or operational testing. Testing officials noted that most of the systems tested during this period required even further testing in addition to these formal rounds. For example, TSA or DHS also conducted regression testing to verify that corrections made to the previously failed systems did not adversely affect system performance, according to these officials. TSA testing officials stated that nearly all systems need some modification by the vendor during testing. Industry representatives involved in testing these systems also told us that systems are not always mature when they enter TSA’s test and evaluation process, and that they can require significant modifications and retesting before they are ready to be bought and deployed to airports.\nTSA officials provided us with examples of three explosives detection systems that required multiple retests, which resulted in acquisition delays of several years. TSA also ended up spending over $3 million in additional costs incurred in retesting to ensure the systems were effective and suitable. All three systems had met explosives detection certification and false alarm rate criteria during qualification testing at the Transportation Security Laboratory, but failed to meet additional requirements during qualification testing at the TSA Systems Integration Facility and operational testing at selected airports. Some details of these delays and additional costs are below.\nOne explosives detection system experienced failures during testing that led to a 19 month delay to the scheduled full rate production decision and an additional $1.2 million in testing costs. During operational testing in summer 2011, TSA found that the system was effective with minor limitations, but not suitable because it failed to meet TSA’s reliability requirements and negatively impacted the ability of transportation security officers to detect threats at a certain level. The vendor made significant modifications to the system in fall 2012, and following additional testing DHS approved full rate production of the system in August 2014.\nThe second system experienced a 39 month delay to its scheduled full rate production decision and incurred an additional $1.1 million in testing costs as a result of multiple rounds of retests. The system began testing in fall 2010 and after follow-on operational testing in fall of 2012, TSA found the system to be effective with limitations and not suitable due to, among other things, issues with resetting or restarting the system after bag jam failures and reliability. The system underwent testing by a third party entity in late 2014 to verify that modifications made to the system improved its performance, and DHS approved full rate production in May 2015.\nAt the time of our engagement, the third explosives detection system’s scheduled full rate production decision had not yet occurred, but it had already been delayed by more than 60 months, resulting in an additional $1.2 million in testing costs. TSA began qualification testing of the system in fall 2010, and, after operational testing in fall 2011, TSA found the system to be effective with major limitations and suitable with minor limitations. TSA encountered issues with bag tracking and reliability, among other things. As of summer 2015, after five rounds of retests, the vendor was pursuing a third party test of the system.\nAccording to TSA and DHS testing officials, the actual single rounds of qualification and operational testing timeframes are not long, but it takes vendors a significant amount of time to correct issues identified during testing, which results in a delay to the start of TSA’s next round of testing. We found in June 2014 that the difficulties in getting vendors systems to meet the higher level detection for advanced imaging technology required the vendors to go back and conduct remedial developmental testing activities. We also found that the qualification testing environment is not conducive to remediating deficiencies that require extensive additional development work because feedback to vendors during this phase is limited. TSA testing officials stated they believe that vendors submit immature technologies and use the testing process to inform further system development, but TSA expects systems to be fully mature at the start of testing.", "TSA has acknowledged the need to better ensure technology maturity at the start of testing to improve the efficiency of its test and evaluation process. In addition to other efforts, a key action TSA is taking to achieve this goal is developing a third party testing strategy—through which a third party tester will help ensure systems are mature prior to entering TSA’s test and evaluation process. TSA plans to implement this strategy in 2016, but it is too soon to tell whether the strategy will address all of the factors that contribute to acquisition inefficiencies because TSA has yet to finalize its key aspects. For example, TSA has not identified whether there are a sufficient number of eligible third party testers or established a mechanism to oversee the testing they will perform. Further, TSA did not conduct a comprehensive assessment of testing data prior to developing its third party testing strategy and may be missing opportunities to identify additional areas for improvement in its acquisition process.", "As discussed earlier in the report, TSA’s test and evaluation process is consistent with policies and guidance outlined by DHS and TSA as well as acquisition best practices; however, TSA has acknowledged the need to improve the efficiency of the process by better ensuring technology maturity at the start of testing. For example, the Office of Security Capabilities’ most recent strategic plan as well as TSA’s overall 2015 Strategic Technology Investment Plan both note that the test and evaluation process needs to be more efficient and agile in responding to emerging threats.\nTSA has recently initiated two specific reforms to improve the efficiency of the test and evaluation process: increased transparency with vendors and a third party testing strategy. First, to increase transparency, TSA officials told us that they are sharing test plans with vendors to better prepare them for testing. While industry officials agreed that TSA has become more transparent, they said that the number of test plans that TSA has shared thus far have been limited. TSA also created a Test and Evaluation Process Guide to inform stakeholders—particularly industry— of the test and evaluation process, including the test and evaluation phases and roles/responsibilities of TSA, DHS, and industry. TSA also holds periodic industry days to update vendors on planned procurements and changes to acquisition processes, among other things. However, TSA test and evaluation guidance necessarily limits the extent to which testing officials can share information with industry throughout the testing process. TSA’s Director of Test and Evaluation stressed that, to maintain the integrity of the test process, they do not intend to provide vendors with detailed information that could be used to “game” the tests. For example, according to officials from the Transportation Security Laboratory’s Independent Test and Evaluation division, the certification and qualification testing it conducts—unlike developmental testing assistance made available by the laboratory to vendors—provides, by design, limited feedback between testers and the vendors, to ensure the integrity of the test and evaluation process.\nSecond, TSA is developing a third party testing strategy, which it has partially implemented for technologies that have already entered the test and evaluation process. According to interim guidance effective in July 2014, a vendor experiencing a significant failure during testing is required to fund and undergo third party testing and provide results to TSA, demonstrating that the system has met the previously failed requirements before the system is allowed to resume TSA’s testing process. Officials told us that the guidance exempts detection-related testing. At this time, according to TSA and DHS officials, third party testing cannot replace the explosives detection testing conducted by the Transportation Security Laboratory because no other testing facility has the same capabilities. Since TSA issued the guidance, one vendor has utilized a third party tester to verify that an operational availability problem discovered during follow-on operational testing was resolved. TSA is in the process of implementing the primary piece of the strategy, which establishes additional third party testing requirements that vendors must meet before entering the test and evaluation process. Figure 2 provides an overview of TSA’s use of third party testing following a technology failure during testing.", "", "TSA is developing a third party testing strategy and plans to implement it for select technologies in 2016. The strategy is a key TSA effort to improve technological maturity and ensure readiness for testing in order to reduce the number of technology failures during testing. A key aspect of this strategy is to strengthen requirements for vendors’ qualification data packages, which are required to enter the test and evaluation process. Currently, TSA requires some third party testing to confirm certain requirements in these data packages, such as compliance with emissions and radiation standards. But for other requirements, at present vendors simply can attest that they have been met rather than provide independent verification. The strategy could increase the number of requirements that must be independently verified in qualification data packages for some technologies, though TSA has not yet worked out the details.\nTSA has taken some steps to develop the strategy. For example, TSA is working in coordination with the National Institute of Standards and Technology to develop requirements for third party testers in accordance with international standards for test laboratories. TSA has communicated the developing strategy to key stakeholders, including DHS and industry, through meetings with DHS officials, industry days, and a request for information for potential third party testers. Also, TSA is taking steps to prioritize the requirements that should be independently verified in vendor qualification data packages.\nHowever, TSA has yet to finalize key aspects of the strategy to ensure that it will be successful before it is formally required next year.\nTSA officials are unsure of how many third party testers may be able to provide the necessary services to vendors. Without knowledge of the number of third party testers that can provide the necessary services, it is unclear whether there will be enough testers to satisfy the demand for this service. Further, if the number of testers is limited, it may increase the cost of testing services.\nTSA has not yet established a process for approving or monitoring third party testers, or established how often they will need to be recertified. TSA officials stated they may choose to have an independent party approve third party testers after initial implementation of the strategy. At the time of our review, TSA was finalizing the third party test application process for potential third party testers to apply for TSA approval. TSA officials estimated that this process would be completed by the end of March 2016.\nTSA has not established a mechanism to oversee third party testing.\nDHS and TSA officials stated that the extent of DHS’s role is dependent on how the third party testing strategy is implemented.\nTSA officials believe that the strategy will reduce the number of rounds of retests and decrease the time it takes for TSA to test systems. However, officials stated that there is no guarantee that third party testing will shorten acquisition timelines.\nTSA officials are unsure whether the third party testing strategy will save overall acquisition costs, which they have highlighted as a potential benefit. Specifically, while third party testing will shift the costs of retesting from TSA to the vendors, industry officials told us it is probable that vendors will reflect these additional costs in their pricing. TSA officials responsible for planning and implementing the third party testing strategy told us they had not assessed the potential impacts of vendors paying for testing on a system’s costs, or the possibility that third party testing costs could be a barrier to entering the market for new vendors.\nAs we established in prior work, components of sound planning include, among other items, identifying: problems and causes; resources, investments, and risks; roles, responsibilities, and coordination; and integration among and with other entities. If TSA does not finalize key aspects of its strategy prior to implementing further third party testing requirements for vendors to enter testing, it may cause unintended consequences, such as increasing acquisition costs or creating a barrier to market entry for new vendors, such as small businesses.", "At the time of our review, TSA had not conducted a comprehensive assessment of testing data, such as timeframes for completing testing and costs incurred, because it lacked a mechanism to track and consolidate testing data across all technologies, such as testing delays, costs, timeframes, and results. Thus, TSA does not have any documented assessment supporting the decision to implement the third party testing strategy and was unable to provide us with testing timeframes for each of the 22 systems tested in the past five years. TSA tracks testing delays and costs in separate systems and provides actual testing timeframes in the test reports for each system. However, after we raised this point during the course of our review, TSA officials developed a master testing tracker to more comprehensively track testing data. The master tracker consolidates testing data to generate a holistic view of specific technologies by summarizing testing timeframes, delays, costs, and progression through testing, among other things. TSA testing officials stated that the master tracker will help them to support TSA leadership by consolidating data for each system in one place, thereby eliminating the need to go through individual test reports to gather specific testing information, such as testing timeframes.\nAs noted above, in OSC’s Strategic Plan for 2013 to 2016, it expressed a commitment to risk-informed, data driven analysis and decision-making. While the master testing tracker TSA plans to develop is a positive first step towards more informed decision-making, officials have not established a plan for assessing the information collected from the tracker. Conducting a comprehensive assessment of these testing data is the critical next step. TSA has previously failed to assess information it collected with respect to third party testing. Specifically, while developing its third party testing strategy TSA issued a request for information in December 2012 about potential third party testers and their capabilities. However, senior TSA testing officials stated that TSA did not evaluate any of the responses that it received from potential third party testers because TSA intended the request to be a mechanism to provide vendors with information. According to Standards for Internal Control in the Federal Government, ongoing monitoring should occur in the course of normal operations. In addition, we previously found that agencies can use performance information to identify problems in existing programs, to try to identify the causes of problems, and/or to develop corrective actions. The benefit of collecting performance information is only fully realized when this information is actually used by agencies to make decisions oriented toward improving results.\nTSA’s actions to address the repeated technology failures during testing which have led to acquisition inefficiencies—in large part through its third party testing strategy—focus on improving technological maturity. However, TSA and industry officials we spoke with identified additional issues that may be contributing to the inefficiencies, which third party testing may not address. Specifically, TSA and industry officials highlighted issues pertaining to the program management offices’ development of acquisition schedules. Some industry officials we met with stated that the testing timeframes in acquisition schedules, specifically for explosives detection systems, are unrealistic. For example, TSA has communicated to vendors that testing for explosives detection systems will take around three years; however, according to an industry official this testing typically takes four or more years. Testing officials stated that they provide the program offices with time estimates for how long a single round of testing should take, but that it is ultimately the program office’s decision regarding how many rounds of testing to include in the schedule. TSA program officials acknowledged that they typically set optimistic schedules, assuming that technologies will not require multiple rounds of retesting. However, testing officials have stated it is rare for technologies to pass testing the first time.\nIn addition, industry officials identified issues with how requirements have been defined and interpreted in the past. For example, one industry official stated that there is a disconnect among TSA, DHS, and vendors about how operational and functional requirements will be interpreted and evaluated during the testing process. This official stated that when TSA tested a system submitted by the company that the official represents, the vendor and TSA interpreted a requirement about operational availability differently, specifically with regards to whether the requirement applied to the system on its own or to the system as integrated into the airport infrastructure. The vendor failed testing and was required to make system modifications prior to TSA’s qualification of the system.\nTSA testing officials also noted problems with how TSA has defined, interpreted, and shared requirements. For example, TSA developed two sets of requirements for its 2010 competitive procurement for explosives detection systems—requirements that systems must meet and requirements that TSA would like the systems to meet, which are referred to as minimum “shall” and non-minimum “shall” requirements, respectively. However, key stakeholders have disagreed on how these requirements should be interpreted as systems go through the testing process. In the case of one explosives detection system, the program office disagreed with how testing officials evaluated the test results, noting that the non-minimum “shall” requirements should not have been considered in the evaluation of effectiveness or suitability. Testing officials stated that systems needed to meet some of the non-minimum “shall” requirements in order to fulfill minimum “shall” requirements and therefore those should have been identified as minimum “shalls.” In addition, TSA did not release the operational requirements document for explosives detection systems to vendors prior to testing, and, as a result, vendors did not know what to expect during operational testing, according to testing officials.\nTSA is taking steps to address some of these issues. For example, testing officials stated that TSA plans to have one set of requirements for the next competitive procurement of explosives detection systems. In addition, TSA’s Mission Analysis Division is focused on improving the requirements development process through a more rigorous and structured method that involves the participation of relevant stakeholders, such as industry, DHS, and end-users, who TSA officials stated have not historically been involved in the process. In March 2015, industry officials identified additional actions that TSA could take to improve the transparency of requirements. Specifically, industry officials provided formal recommendations to TSA regarding how to further improve the transparency of requirements, such as developing a limited set of key requirements, which are critical to executing TSA’s mission, sharing requirements documents in draft form prior to final release, and defining and prioritizing requirements for each phase of the testing process, among other things.\nWithout conducting and documenting an assessment of testing data available to date, such as testing timeframes, costs incurred, and testing delays across all technologies and sharing it with key stakeholders, it is too soon to tell to what extent TSA’s reforms will address factors contributing to any acquisition inefficiencies. Specifically, TSA may be missing opportunities to identify other factors, in addition to technology immaturity, that are outside the purview of testing officials. An overall assessment of testing data could inform potential areas for improvement in the acquisition process, such as incomplete or unclear requirements and unrealistic acquisition schedules.", "For over a decade, TSA has secured the nation’s civil aviation system amid continued threats. Due to the significant challenge the agency faces in balancing security concerns with efficient passenger movement, it is important that TSA procure and deploy effective passenger and baggage screening technologies. As the security-related technology industry evolves to meet new and changing threats, TSA’s test and evaluation processes are also evolving. Since 2010, though, only half the systems tested have successfully passed testing and been qualified by TSA for procurement. Technology failures during testing have resulted in multiple retests and inefficiencies in acquiring systems that could potentially help TSA execute its mission.\nTSA has taken steps that could improve the maturity of technologies put forth by industry and reduce the burden on TSA’s own testing resources. TSA plans to implement its third party testing strategy for selected technologies in 2016. However, because TSA has not finalized certain aspects of this strategy—for example, determining how many potential third party testers are qualified to assist TSA, and how TSA will oversee this component of testing—there is a risk that the strategy will not be as effective as envisioned. Unintended consequences, such as increased acquisition costs, could result. While the third party testing strategy is likely to help improve system readiness for entering the test process, TSA has not conducted a comprehensive assessment of testing data for baggage and passenger screening systems, and therefore cannot be certain whether the steps currently planned will address other factors contributing to acquisition inefficiencies. Given TSA’s emphasis on improving its acquisition and test and evaluation processes, an assessment of TSA’s testing data would help guide future TSA reforms.", "We recommend that the Administrator of TSA take the following two actions: 1. To help ensure that actions taken to improve the test and evaluation process address identified challenges, finalize all aspects of the third party testing strategy before implementing further third party testing requirements for vendors to enter testing. 2. To help ensure that the reforms TSA has underway are informed by existing information, conduct and document a comprehensive assessment of testing data available to date, such as timeframes for completing testing, costs incurred, and testing delays across all technology areas to identify key factors contributing to any acquisition inefficiencies and potential areas for reform.", "We provided a draft of this product to DHS for comment. In its written comments, reproduced in appendix II, DHS concurred with both of our recommendations and provided plans of action and estimated completion dates for them. In response to our first recommendation—that TSA finalize all aspects of the third party testing strategy before implementing further third party testing requirements for vendors to enter testing—DHS stated that TSA plans to begin implementing the third party test program in a phased approach by December 31, 2016. TSA’s planned actions include, among other things, finalizing the third party tester application process, communicating the new approach to industry, and developing third party testing requirements. We believe that these are positive steps to finalize the strategy, but that TSA should also consider the potential consequences of implementing the strategy, such as the cost impacts to TSA and vendors, which will help to ensure the effectiveness of the strategy.\nDHS also provided technical comments that we incorporated into the report as appropriate.\nWe are sending copies of this report to the Secretary of Homeland Security, the TSA Administrator, and the appropriate congressional committees. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-4841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made significant contributions to this report are listed in appendix III.", "The Transportation Security Acquisition Reform Act included a provision for GAO to examine the Transportation Security Administration’s (TSA) test and evaluation process for security-related technologies. Specifically, this report examines the extent to which (1) TSA’s test and evaluation process helps TSA meet mission needs through the acquisition of passenger and baggage screening technologies, and (2) TSA’s planned actions to improve the test and evaluation process address factors contributing to inefficiencies, if any, in acquiring those technologies.\nFor our first objective, we reviewed Department of Homeland Security (DHS) and TSA acquisition and testing policies and guidance to determine the role of test and evaluation in TSA’s acquisition process and compared them to acquisition best practices. We also analyzed testing documentation provided to us by TSA for the 22 Passenger Screening Program (PSP) and Electronic Baggage Screening Program (EBSP) systems TSA has tested since June 2010, such as test and evaluation plans, test reports, system evaluation reports, data packages for entry into testing, and information regarding the number of retests during testing to determine the number of systems that passed each stage of TSA’s testing process. In addition, we reviewed TSA and DHS acquisition documentation for passenger and baggage screening technologies, including requirements documents, schedules, letters of assessment, acquisition decision memorandums, contract award notices, and information regarding the number of each technology deployed in airports nationwide to determine the number of systems that TSA has tested, qualified for use, and procured since June 2010. Additionally, we conducted interviews with TSA officials from the Office of Security Capabilities (OSC), the Office of Acquisitions, PSP, EBSP, and the Mission Analysis Division, regarding the acquisition and test and evaluation processes, the influence of test and evaluation results on TSA’s decisions about which technologies to procure, and reasons for any acquisition inefficiencies. We also met with DHS officials from the Science and Technology Directorate and the Office of Program Accountability and Risk Management regarding their roles and responsibilities related to TSA’s test and evaluation process. Further, we attended a joint industry and TSA workshop hosted by the Airport Consultants Council focused on TSA’s acquisition process for security- related technologies, including its test and evaluation process. Finally, we visited the two primary testing facilities for TSA’s security-related technologies—the TSA Systems Integration Facility, in Arlington, Virginia and DHS’s testing facility, the Transportation Security Laboratory, in Atlantic City, New Jersey to interview testing officials and observe the testing process. We chose these locations because they are TSA’s two primary testing facilities for security-related technologies.\nFor our second objective, we reviewed TSA strategic planning documents, including TSA’s August 2015 Strategic Five-Year Technology Investment Plan for Aviation Security, OSC’s Strategic Plan for 2013 to 2016, and OSC’s May 2014 Transportation Security Strategic Capability Investment Plan, to identify TSA’s stated challenges with the test and evaluation process and its plans for improvement. We also reviewed TSA’s interim third party testing guidance, implementation timeline, and briefings to industry as well as testing examples, which served as TSA’s rationale for implementing the third party testing strategy. In addition, we conducted interviews with TSA and DHS testing officials, including testers and evaluators, regarding challenges of TSA’s acquisition and test and evaluation processes as well as ongoing and planned efforts to improve testing efficiency and transparency. We also met with representatives from two industry groups with experience related to TSA’s test and evaluation process to obtain industry views on any challenges in the test and evaluation process for screening technologies, areas for potential improvement, and their perspectives on TSA’s third party testing strategy. We met with representatives from the Airport Consultants Council’s Security Manufacturers Coalition, who represented three of TSA’s largest vendors receiving 8 of PSP and EBSP’s 10 largest contracts to date. We also met with officials from the Homeland Security and Defense Business Council, who represented companies providing test and evaluation support services to DHS and TSA. Additionally, we conducted an interview with the DHS Director of Operational Test and Evaluation regarding planned efforts to expand DHS oversight of component-level testing, including TSA, from operational to developmental testing and its involvement in the development of TSA’s third party testing strategy. Further, we met with officials from the National Institute of Standards and Technology involved in the development of TSA’s third party testing strategy to determine TSA’s coordination with stakeholders in the development and implementation of the strategy. Finally, we conducted interviews with TSA testing officials regarding TSA’s existing and planned mechanisms for tracking systems throughout the test and evaluation process and any efforts to assess testing data, such as timeframes for completing testing and costs incurred and compared them to Standards for Internal Control in the Federal Government.\nWe conducted this performance audit from April 2015 to December 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, Katherine Trimble (Assistant Director), Charlie Shivers III (Analyst-in-Charge), Peter Anderson, Molly Callaghan, William Carrigg, Kristine Hassinger, Mark Hoover, Michael Kaeser, Jean McSween, Lindsay Taylor, and Ozzy Trevino made significant contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 3, 3, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "h2_full", "", "", "", "h0_full", "", "h0_full", "h0_full", "h1_full", "", "h1_title", "h1_full", "h1_full", "h2_full", "", "", "h2_full", "", "", "", "" ] }

{ "question": [ "To what extent has the TSA evaluated potential screening technologies?", "What is the purpose of the testing process?", "What resulted from the testing process between 2010 and 2015?", "What happened to programs that failed the testing process?", "How has the testing process been improved?", "What is the role of third party testing TSA's strategy?", "Why is a finalized strategy critical?", "To what extent has TSA assessed the testing data?", "How could such an assessment be beneficial?", "What are the responsibilities of TSA?", "How does TSA uphold this mission?", "What did GAO reviews of TSA reveal?", "What does this report assess?", "What accounts for GAO's involvement with TSA?" ], "summary": [ "The Transportation Security Administration's (TSA) test and evaluation process has enabled TSA and Department of Homeland Security (DHS) officials to identify passenger and baggage screening technologies that will meet mission needs, but technology failures during testing have contributed to inefficiencies in the acquisition process.", "Consistent with departmental guidance and acquisition best practices, TSA's test and evaluation process provides information regarding the ability of technologies to meet mission needs before agency officials decide whether to begin full production, saving the agency from investing in potentially expensive yet ineffective equipment.", "From June 2010 to July 2015, half of the 22 systems that TSA tested successfully completed qualification and operational testing. TSA procured all but 1 of the 11 successful systems.", "Technologies that entered the test and evaluation process and were immature required significant modifications and retesting.", "TSA has taken steps to improve its test and evaluation process by helping ensure technologies are mature before entering testing, but it is too soon to tell whether these actions will address all of the factors that contribute to acquisition inefficiencies.", "A key action TSA is taking involves developing a third party testing strategy, through which a third party will help ensure systems are mature prior to entering TSA's test and evaluation process. TSA plans to implement its approach in 2016, but it has yet to finalize key aspects of the strategy. For example, TSA has not identified whether there are a sufficient number of eligible third party testers or established a mechanism to oversee that testing.", "Without a finalized strategy, TSA risks unintended consequences, such as increasing acquisition costs.", "Further, TSA has not conducted or documented a comprehensive assessment of testing data and thus may be missing opportunities to identify additional areas for improvements to its acquisition process.", "An assessment of this data, such as costs incurred, could help TSA guide future reforms to the test and evaluation process to help ensure they address factors contributing to any acquisition inefficiencies.", "TSA, within the Department of Homeland Security, is responsible for securing the nation's civil aviation system while facilitating the movement of passengers and commerce at approximately 440 airports nationwide.", "TSA tests passenger and baggage screening technologies developed by industry to ensure they support TSA missions.", "In reviews from 2010 to 2014, GAO found that TSA encountered challenges in acquiring and deploying technologies.", "This report assesses the extent to which (1) TSA's test and evaluation process helps it meet mission needs through the acquisition of passenger and baggage screening technologies, and (2) TSA has taken steps to improve the test and evaluation process.", "The Transportation Security Acquisition Reform Act contained a provision for GAO to assess TSA's test and evaluation activities for security-related technologies." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 1, 0, 3, -1, 0, -1, 2, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction1", "AI Terminology and Background5", "Issues for Congress", "AI Applications for Defense", "Intelligence, Surveillance, and Reconnaissance", "Logistics", "Cyberspace Operations", "Information Operations and \"Deep Fakes\"66", "Command and Control", "Semiautonomous and Autonomous Vehicles", "Lethal Autonomous Weapon Systems (LAWS)", "Military AI Integration Challenges", "Technology", "Process", "Personnel", "Culture", "International Competitors", "China", "Russia", "International Institutions", "AI Opportunities and Challenges", "Autonomy", "Speed and Endurance", "Scaling", "Information Superiority", "Predictability", "Explainability", "Exploitation", "AI's Impact on Combat", "Minimal Impact on Combat", "Evolutionary Impact on Combat", "Revolutionary Impact on Combat" ], "paragraphs": [ "", "Artificial intelligence (AI) is a rapidly growing field of technology that is capturing the attention of commercial investors, defense intellectuals, policymakers, and international competitors alike, as evidenced by a number of recent initiatives. On July 20, 2017, the Chinese government released a strategy detailing its plan to take the lead in AI by 2030. Less than two months later Vladimir Putin publicly announced Russia's intent to pursue AI technologies, stating, \"[W]hoever becomes the leader in this field will rule the world.\" Similarly, the U.S. National Defense Strategy, released in January 2018, identified artificial intelligence as one of the key technologies that will \"ensure [the United States] will be able to fight and win the wars of the future.\"\nThe U.S. military is already integrating AI systems into combat via a spearhead initiative called Project Maven, which uses AI algorithms to identify insurgent targets in Iraq and Syria. These dynamics raise several questions that Congress addressed in hearings during 2017 and 2018: What types of military AI applications are possible, and what limits, if any, should be imposed? What unique advantages and vulnerabilities come with employing AI for defense? How will AI change warfare, and what influence will it have on the military balance with U.S. competitors? Congress has a number of oversight, budgetary, and legislative tools available that it may use to influence the answers to these questions and shape the future development of AI technology.", "Almost all academic studies in artificial intelligence acknowledge that no commonly accepted definition of AI exists, in part because of the diverse approaches to research in the field. Likewise, although Section 238 of the FY2019 National Defense Authorization Act (NDAA) directs the Secretary of Defense to produce a definition of artificial intelligence by August 13, 2019, no official U.S. government definition of AI currently exists. The FY2019 NDAA does, however, provide a definition of AI for the purposes of Section 238:\nAny artificial system that performs tasks under varying and unpredictable circumstances without significant human oversight, or that can learn from experience and improve performance when exposed to data sets.\nAn artificial system developed in computer software, physical hardware, or other context that solves tasks requiring human-like perception, cognition, planning, learning, communication, or physical action.\nAn artificial system designed to think or act like a human, including cognitive architectures and neural networks.\nA set of techniques, including machine learning that is designed to approximate a cognitive task.\nAn artificial system designed to act rationally, including an intelligent software agent or embodied robot that achieves goals using perception, planning, reasoning, learning, communicating, decision-making, and acting.\nThis definition encompasses many of the descriptions in Table 1 below, which summarizes various AI definitions in academic literature.\nThe field of AI research began in 1956, but an explosion of interest in AI began around 2010 due to the convergence of three enabling developments: (1) the availability of \"big data\" sources, (2) improvements to machine learning approaches, and (3) increases in computer processing power. This growth has advanced the state of Narrow AI, which refers to algorithms that address specific problem sets like game playing, image recognition, and navigation. All current AI systems fall into the Narrow AI category. The most prevalent approach to Narrow AI is machine learning, which involves statistical algorithms that replicate human cognitive tasks by deriving their own procedures through analysis of large training data sets. During the training process, the computer system creates its own statistical model to accomplish the specified task in situations it has not previously encountered.\nExperts generally agree that it will be many decades before the field advances to develop General AI, which refers to systems capable of human-level intelligence across a broad range of tasks. Nevertheless, the growing power of Narrow AI algorithms has sparked a wave of commercial interest, with U.S. technology companies investing an estimated $20-$30 billion in 2016. Some studies estimate this amount will grow to as high as $126 billion by 2025. DOD's unclassified expenditures in AI contracts for FY2016 totaled just over $600 million, increasing to over $800 million in FY2017.\nAI has a number of unique characteristics that may be important to consider as these technologies enter the national security arena. First, AI has the potential to be integrated across a variety of applications, improving the so-called \"Internet of Things\" in which disparate devices are networked together to optimize performance. As Kevin Kelley, the founder of Wired magazine, states, \"[AI] will enliven inert objects, much as electricity did more than a century ago. Everything that we formerly electrified we will now cognitize.\" Second, many AI applications are dual-use, meaning they have both military and civil applications. For example, image recognition algorithms can be trained to recognize cats in YouTube videos as well as terrorist activity in full motion video captured by uninhabited aerial vehicles over Syria or Afghanistan. Third, AI is relatively transparent, meaning that its integration into a product is not immediately recognizable. By and large, AI procurement will not result in countable objects. Rather, the algorithm will be purchased separately and incorporated into an existing system, or it will be part of a tangible system from inception, which may not be considered predominantly AI. An expert in the field points out, \"We will not buy AI. It will be used to solve problems, and there will be an expectation that AI will be infused in most things we do.\"", "A number of Members of Congress have called for action on military AI. During the opening comments to a January 2018 hearing before the House Armed Services Subcommittee on Emerging Threats, the subcommittee chair called for a \"national level effort\" to preserve a technological edge in the field of AI. Former Deputy Secretary of Defense Robert Work argued in a November 2017 interview that the federal government needs to address AI issues at the highest levels, further stating that \"this is not something the Pentagon can fix by itself.\" Other analysts have called for a national AI strategy to articulate AI objectives and drive whole-of-government initiatives and cross-cutting investments.\nIn the meantime, DOD has published a classified AI strategy and is carrying out multiple tasks directed by DOD guidance and the FY2019 NDAA, including\nestablishing a Joint Artificial Intelligence Center (JAIC), which will \"coordinate the efforts of the Department to develop, mature, and transition artificial intelligence technologies into operational use\"; publishing a strategic roadmap for AI development and fielding, as well as guidance on \"appropriate ethical, legal, and other policies for the Department governing the development and use of artificial intelligence enabled systems and technologies in operational situations\"; establishing a National Security Commission on Artificial Intelligence; and conducting a comprehensive assessment of militarily relevant AI technologies and providing recommendations for strengthening U.S. competitiveness.\nThese initiatives will present a number of oversight opportunities for Congress.\nIn addition, Congress may consider the adequacy of current DOD funding levels for AI. Lieutenant General John Shanahan, the lead for the Pentagon's most prominent AI program, identified funding as a barrier to future progress, and a 2017 report by the Army Science Board states that funding is insufficient for the service to pursue disruptive technology like AI. Although DOD funding for AI has increased in 2018—to include the JAIC's $1.75 billion six-year budget and the Defense Advanced Research Projects Agency's (DARPA's) $2 billion multiyear investment in over 20 AI programs—some experts have argued that additional DOD funding will be required to keep pace with U.S. competitors and avoid an \"innovation deficit\" in military technology.\nCritics of increased federal funding contend that significant increases to appropriations may not be required, as the military should be leveraging research and development (R&D) conducted in the commercial sector. The 2017 National Security Strategy identifies a need to \"establish strategic partnerships to align private sector R&D resources to priority national security applications\" and to reward government agencies that \"take risks and rapidly field emerging commercial technologies.\" In addition, the Office of Management and Budget directed DOD in preparing its FY2020 budget to \"seek to rapidly field innovative technologies from the private sector, where possible, that are easily adaptable to Federal needs, rather than reinventing solutions in parallel.\" Some experts in the national security community also argue that it would not be a responsible use of taxpayer money to duplicate efforts devoted to AI R&D in the commercial sector when companies take products 90% of the way to a useable military application. Others contend that a number of barriers stand in the way of transitioning AI commercial technology to DOD, and that reforming aspects of the defense acquisition process may be necessary. These issues are discussed in more detail later in this report.\nOne impediment to accurately evaluating funding levels for AI is the lack of a stand-alone AI Program Element (PE) in DOD funding tables. As a result, AI R&D appropriations are spread throughout generally titled PEs and incorporated into funding for larger systems with AI components. For example, in the FY2019 National Defense Authorization Act, AI funding is spread throughout the PEs for the High Performance Computing Modernization Program and Dominant Information Sciences and Methods, among others. On the other hand, a dedicated PE for AI may lead to a false precision, as it may be challenging to identify exact investments in enabling technologies like AI. The lack of an official U.S. government definition of AI could further complicate such an assessment.\nCongress may also consider specific policies for the development and use of military AI applications. Many experts fear that the pace of AI technology development is moving faster than the speed of policy implementation. Former Chairman of the House Armed Services Committee Representative Mac Thornberry has echoed this sentiment, stating, \"It seems to me that we're always a lot better at developing technologies than we are the policies on how to use them.\" Congress may assess the need for new policies or modifications to existing laws to account for AI developments and ensure that AI applications are free from bias. Perhaps the most immediate policy concern among AI analysts is the absence of an independent entity to develop and enforce AI safety standards and to oversee government-wide AI research. Former Secretary of Defense Ashton B. Carter, for example, has suggested the need for an \"AI czar\" to coordinate such efforts.\nRelatedly, Congress may consider debating policy options on the development and fielding of Lethal Autonomous Weapons Systems (LAWS), which may use AI to select and engage targets. Since 2014, the United States has participated in international discussions of LAWS at the United Nations (U.N.) Convention on Certain Conventional Weapons (CCW). Approximately 25 state parties have called for a treaty banning \"fully autonomous weapon systems\" due to ethical considerations, while others have called for formal regulations or political declarations. Some analysts are concerned that efforts to ban or regulate LAWS could impose strict controls on AI applications that could be adapted for lethal use, thereby stifling development of other useful military—or even commercial—technology. During recent testimony to the U.N., one expert stated, \"If we agree to foreswear some technology, we could end up giving up some uses of automation that could make war more humane. On the other hand a headlong rush into a future of increasing autonomy with no discussion of where it is taking us, is not in humanity's interest either.\" He suggested the leading question for considering military AI applications ought to be, \"What role do we want humans to play in wartime decision making?\"\nCongress may consider the growth of international competition in the AI market and the danger of foreign exploitation of U.S. AI technology for military purposes. In particular, the Chinese government is reported to be aggressively pursuing AI investments in the United States. Amid growing scrutiny of transactions involving Chinese firms in the semiconductor industry, in September 2017 President Trump, following the recommendation of the Committee on Foreign Investment in the United States (CFIUS), blocked a Chinese firm from acquiring Lattice Semiconductor, a U.S. company that manufactures chips that are a critical design element for AI technology. In this way, some experts believe that CFIUS may provide a means of protecting strategically significant technologies like AI. Indeed, the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) expands CFIUS's ability to review certain foreign investments, including those involving \"emerging and foundational technologies.\" It also authorized CFIUS to consider \"whether a covered transaction involves a country of special concern that has a demonstrated or declared strategic goal of acquiring a type of critical technology or critical infrastructure that would affect United States leadership in areas related to national security.\" Congress may monitor the implementation of FIRRMA and assess whether additional reforms might be necessary to maintain effective congressional oversight of sensitive transactions.\nIn addition, many analysts believe that it may be necessary to reform federal data policies associated with AI. Large data pools serve as the training sets needed for building many AI systems, and government data may be particularly important in developing military AI applications. However, some analysts have observed that much of this data is either classified, access-controlled, or otherwise protected on privacy grounds. These analysts contend that Congress should implement a new data policy that balances data protection and privacy with the need to fuel AI development.\nClosely related, AI development may increase the imperative for strict security standards. As discussed later in this report, AI algorithms are vulnerable to bias, theft, and manipulation, particularly if the training data set is not adequately curated or protected. During a February 2018 conference with defense industry CEOs, Deputy Defense Secretary Patrick Shanahan advocated for higher cybersecurity standards in the commercial sector, stating, \"[W]e want the bar to be so high that it becomes a condition of doing business.\" Some leading commercial technology companies have issued similar calls for increased scrutiny, with Microsoft's president Brad Smith arguing that a lack of regulation in this area could lead to \"a commercial race to the bottom, with tech companies forced to choose between social responsibility and market success.\"\nFinally, commercial companies have long cited the potential loss of intellectual property rights as a key impediment to partnering with DOD. In recognition of this issue, Section 813 of the FY2016 NDAA established a \"government-industry advisory panel\" to provide recommendations on technical data rights and intellectual property reform. The panel's report, released in November 2018, offers a number of recommendations, including increased training in intellectual property rights for acquisitions professionals and a pilot program for intellectual property valuation in the procurement process.", "DOD is considering a number of diverse applications for AI. Currently, AI R&D is being left to the discretion of research organizations in the individual services, as well as to DARPA and the Intelligence Advanced Research Projects Agency (IARPA). However, DOD components are currently required to coordinate with the JAIC regarding any planned AI initiatives costing more than $15 million annually. In addition, the JAIC has been tasked with overseeing the National Mission Initiatives, projects that will leverage AI to address pressing operational challenges. The Office of the Under Secretary of Defense for Research and Engineering, which oversaw the development of DOD's AI Strategy, will continue to support AI development and delivery.\nThe Algorithmic Warfare Cross-Functional Team, also known as Project Maven, has previously been a focal point for DOD AI integration and will transition from the Under Secretary of Defense for Intelligence to the JAIC, where it will become the first of the JAIC's National Mission Initiatives. Project Maven was launched in April 2017 and charged with rapidly incorporating AI into existing DOD systems to demonstrate the technology's potential. Project Maven's inaugural director stated, \"Maven is designed to be that pilot project, that pathfinder, that spark that kindles the flame for artificial intelligence across the department.\" AI is also being incorporated into a number of other intelligence, surveillance, and reconnaissance applications, as well as in logistics, cyberspace operations, information operations, command and control, semiautonomous and autonomous vehicles, and lethal autonomous weapon systems.", "AI is expected to be particularly useful in intelligence due to the large data sets available for analysis. For example, Project Maven's first phase involves automating intelligence processing in support of the counter-ISIL campaign. Specifically, the Project Maven team is incorporating computer vision and machine learning algorithms into intelligence collection cells that would comb through footage from uninhabited aerial vehicles and automatically identify hostile activity for targeting. In this capacity, AI is intended to automate the work of human analysts who currently spend hours sifting through videos for actionable information, potentially freeing analysts to make more efficient and timely decisions based on the data.\nThe intelligence community also has a number of publicly acknowledged AI research projects in progress. The Central Intelligence Agency alone has around 140 projects in development that leverage AI in some capacity to accomplish tasks such as image recognition and predictive analytics. IARPA is sponsoring several AI research projects intended to produce other analytic tools within the next four to five years. Some examples include developing algorithms for multilingual speech recognition and translation in noisy environments, geo-locating images without the associated metadata, fusing 2-D images to create 3-D models, and building tools to infer a building's function based on pattern-of-life analysis.", "AI may have a promising future in the field of military logistics. The Air Force, for example, is beginning to use AI for predictive aircraft maintenance. Instead of making repairs when an aircraft breaks or in accordance with monolithic fleet-wide maintenance schedules, the Air Force is testing an AI-enabled approach that tailors maintenance schedules to the needs of individual aircraft. This approach, currently used by the F-35's Automated Logistics Information System, extracts real-time sensor data embedded in the aircraft's engines and other onboard systems and feeds the data into a predictive algorithm to determine when technicians need to inspect the aircraft or replace parts.\nSimilarly, the Army's Logistics Support Activity (LOGSA) has contracted IBM's Watson (the same AI software that defeated two Jeopardy champions) to develop tailored maintenance schedules for the Stryker fleet based on information pulled from the 17 sensors installed on each vehicle. In September 2017, LOGSA began a second project that will use Watson to analyze shipping flows for repair parts distribution, attempting to determine the most time- and cost-efficient means to deliver supplies. This task is currently done by human analysts, who have saved the Army around $100 million a year by analyzing just 10% of shipping requests; with Watson, the Army will have the ability to analyze 100% of shipping requests, potentially generating even greater cost savings in a shorter period of time.", "AI is likely to be a key technology in advancing military cyber operations. In his 2016 testimony before the Senate Armed Services Committee, Commander of U.S. Cyber Command Admiral Michael Rogers stated that relying on human intelligence alone in cyberspace is \"a losing strategy.\" He later clarified this point, stating, \"If you can't get some level of AI or machine learning with the volume of activity you're trying to understand when you're defending networks ... you are always behind the power curve.\" Conventional cybersecurity tools look for historical matches to known malicious code, so hackers only have to modify small portions of that code to circumvent the defense. AI-enabled tools, on the other hand, can be trained to detect anomalies in broader patterns of network activity, thus presenting a more comprehensive and dynamic barrier to attack.\nDARPA's 2016 Cyber Grand Challenge demonstrated the potential power of AI-enabled cyber tools. The competition challenged participants to develop AI algorithms that could autonomously \"detect, evaluate, and patch software vulnerabilities before [competing teams] have a chance to exploit them\"—all within a matter of seconds, rather than the usual months. The challenge demonstrated not only the potential speed of AI-enabled cyber tools but also the potential ability of a singular algorithm to play offense and defense simultaneously. These capabilities could provide a distinct advantage in future cyber operations.", "AI is enabling increasingly realistic photo, audio, and video forgeries, or \"deep fakes,\" that adversaries could deploy as part of their information operations. Indeed, deep fake technology could be used against the United States and U.S. allies to generate false news reports, influence public discourse, erode public trust, and attempt to blackmail diplomats. Although most previous deep fakes have been detectable by experts, the sophistication of the technology is progressing to the point that it may soon be capable of fooling forensic analysis tools.\nIn order to combat deep fake technologies, DARPA has launched the Media Forensics (MediFor) project, which seeks to \"automatically detect manipulations, provide detailed information about how these manipulations were performed, and reason about the overall integrity of visual media.\" MediFor has developed some initial tools for identifying AI-produced forgeries, but as one analyst has noted, \"a key problem … is that machine-learning systems can be trained to outmaneuver forensics tools.\" For this reason, DARPA plans to host follow-on contests to ensure that forensic tools keep pace with deep fake technologies.\nArtificial intelligence could also be used to create full \"digital patterns-of-life,\" in which an individual's digital \"footprint\" is \"merged and matched with purchase histories, credit reports, professional resumes, and subscriptions\" to create a comprehensive behavioral profile of servicemembers, suspected intelligence officers, government officials, or private citizens. As in the case of deep fakes, this information could, in turn, be used for targeted influence operations or blackmail.", "The U.S. military is seeking to exploit AI's analytic potential in the area of command and control. The Air Force is developing a system for Multi-Domain Command and Control (MDC2), which aims to centralize planning and execution of air-, space-, cyberspace-, sea-, and land-based operations. In the immediate future, AI may be used to fuse data from sensors in all of these domains to create a single source of information, also known as a \"common operating picture,\" for decisionmakers. Currently, information available to decisionmakers comes in diverse formats from multiple platforms, often with redundancies or unresolved discrepancies. An AI-enabled common operating picture would theoretically combine this information into one display, providing a comprehensive picture of friendly and enemy forces, and automatically resolving variances from input data. Although MDC2 is still in a concept development phase, the Air Force is working with Lockheed Martin, Harris, and several AI start-ups to develop such a data fusion capability. A series of war-games in 2018 sought to refine requirements for this project. Similarly, DARPA's Mosaic Warfare program seeks to leverage AI to coordinate autonomous forces and dynamically generate multidomain command and control nodes.\nFuture AI systems may be used to identify communications links cut by an adversary and find alternative means of distributing information. As the complexity of AI systems matures, AI algorithms may also be capable of providing commanders with a menu of viable courses of action based on real-time analysis of the battle-space, in turn enabling faster adaptation to complex events. In the long run, many analysts believe this area of AI development could be particularly consequential, with the potential to improve the quality of and accelerate wartime decisionmaking.", "All U.S. military services are working to incorporate AI into semiautonomous and autonomous vehicles, including fighter aircraft, drones, ground vehicles, and naval vessels. AI applications in this field are similar to commercial semiautonomous vehicles, which use AI technologies to perceive the environment, recognize obstacles, fuse sensor data, plan navigation, and even communicate with other vehicles.\nThe Air Force Research Lab completed phase-two tests of its Loyal Wingman program, which pairs an older-generation, uninhabited fighter jet (in this case, an F-16) with an inhabited F-35 or F-22. During this event, the uninhabited F-16 test platform autonomously reacted to events that were not preprogrammed, such as weather and unforeseen obstacles. As the program progresses, AI may enable the \"loyal wingman\" to accomplish tasks for its inhabited flight lead, such as jamming electronic threats or carrying extra weapons.\nThe Army and the Marine Corps tested prototypes of similar vehicles that follow soldiers or vehicles around the battlefield to accomplish independent tasks. For example, the Marine Corps' Multi-Utility Tactical Transport (MUTT) is a remote-controlled, ATV-sized vehicle capable of carrying hundreds of pounds of extra equipment. Although the system is not autonomous in its current configuration, the Marine Corps intends for follow-on systems to have greater independence. Likewise, the Army plans to field a number of Robotic Combat Vehicles (RCVs) with different types of autonomous functionality, including navigation, surveillance, and IED removal. These systems will be deployed as \"wingmen\" for the optionally inhabited Next Generation Ground Vehicle, tentatively scheduled for initial soldier evaluations in FY2020.\nDARPA completed testing of the Anti-Submarine Warfare Continuous Trail Unmanned Vessel prototype, or \"Sea Hunter,\" in early 2018 before transitioning program development to the Office of Naval Research. If Sea Hunter enters into service, it would provide the Navy with the ability to autonomously navigate the open seas, swap out modular payloads, and coordinate missions with other unmanned vessels—all while providing continuous submarine-hunting coverage for months at a time. Some analysts estimate that Sea Hunter would cost around $20,000 a day to operate, in contrast to around $700,000 for a traditionally inhabited destroyer.\nDOD is testing other AI-fueled capabilities to enable cooperative behavior, or swarming . Swarming is a unique subset of autonomous vehicle development, with concepts ranging from large formations of low-cost vehicles designed to overwhelm defensive systems to small squadrons of vehicles that collaborate to provide electronic attack, fire support, and localized navigation and communication nets for ground-troop formations. A number of different swarm capabilities are currently under development. For example, in November 2016, the Navy completed a test of an AI-enabled swarm of five unmanned boats that cooperative ly patrolled a 4-by-4-mile section of the Chesapeake Bay and intercepted an \"intruder\" vessel. The results of this experiment may lead to AI technology adapted for defending harbors, hunting submarines, or scouting in front of a formation of larger ships. The Navy also plans to test swarms of underwater drones, and the Strategic Capabilities Office has successfully tested a swarm of 103 air-dropped micro-drones.", "Lethal Autonomous Weapon Systems (LAWS) are a special class of weapon systems capable of independently identifying a target and employing an onboard weapon system to engage and destroy it with no human interaction. LAWS require a computer vision system and advanced machine learning algorithms to classify an object as hostile, make an engagement decision, and guide a weapon to the target. This capability enables the system to operate in communications-degraded or -denied environments where traditional systems may not be able to operate. The U.S. military does not currently have LAWS in its inventory, although there are no legal prohibitions on the development of LAWS.\nDOD Directive 3000.09, \"Autonomy in Weapon Systems,\" outlines department policies for semiautonomous and autonomous weapon systems. The directive requires that all systems, regardless of classification, be designed to \"allow commanders and operators to exercise appropriate levels of human judgment over the use of force\" and to successfully complete the department's weapons review process. Any changes to the system's operating state require that the system go through the weapons review process again to ensure that it has retained the ability to operate as intended. Autonomous weapons and a limited type of semiautonomous weapons must additionally be approved before both development and fielding by the Under Secretary of Defense for Policy; the Under Secretary of Defense for Acquisition, Technology, and Logistics; and the Chairman of the Joint Chiefs of Staff. Human-supervised autonomous weapons used for point defense of manned installations or platforms—but that do not target humans—and autonomous weapons that \"apply non-lethal, non-kinetic force, such as some forms of electronic attack, against materiel targets\" are exempted from this senior-level review.\nDespite this policy, some senior military and defense leaders have expressed concerns about the prospect of fielding LAWS. For example, in 2017 testimony before the Senate Armed Services Committee, Vice Chairman of the Joint Chiefs of Staff General Paul Selva stated, \"I do not think it is reasonable for us to put robots in charge of whether or not we take a human life.\" Regardless, Selva explained that the military will be compelled to address the development of this class of technology in order to find its vulnerabilities, given the fact that potential U.S. adversaries are pursuing LAWS.", "From the Cold War era until recently, most major defense-related technologies, including nuclear technology, the Global Positioning System (GPS), and the internet, were first developed by government-directed programs before later spreading to the commercial sector. Indeed, DARPA's Strategic Computing Initiative invested over $1 billion between 1983 and 1993 to develop the field of artificial intelligence for military applications, but the initiative was ultimately cancelled due to slower-than-anticipated progress. Today, commercial companies—sometimes building on past government-funded research—are leading AI development, with DOD later adapting their tools for military applications. Noting this dynamic, one AI expert commented, \"It is unusual to have a technology that is so strategically important being developed commercially by a relatively small number of companies.\" In addition to the shift in funding sources, a number of challenges related to technology, process, personnel, and culture continue to impede the adoption of AI for military purposes.", "A wide variance exists in the ease of adaptability of commercial AI technology for military purposes. In some cases, the transition is relatively seamless. For example, the aforementioned aircraft maintenance algorithms, many of which were initially developed by the commercial sector, will likely require only minor data adjustments to account for differences between aircraft types. In other circumstances, significant adjustments are required due to the differences between the structured civilian environments for which the technology was initially developed and more complex combat environments. For example, commercial semiautonomous vehicles have largely been developed in and for data-rich environments with reliable GPS positions, comprehensive terrain mapping, and up-to-date information on traffic and weather conditions obtained from other networked vehicles. In contrast, the military variant of such a vehicle would need to be able to operate in locations where map data are comparatively poor and in which GPS positioning may be inoperable due to adversary jamming. Moreover, semiautonomous or autonomous military ground vehicles would likely need the ability to navigate off-road in rough terrain—a capability not inherent in most commercial vehicles.", "Standing DOD processes—including those related to standards of safety and performance, acquisitions, and intellectual property and data rights—present another challenge to the integration of military AI. Often, civilian and military standards of safety and performance are either not aligned or are not easily transferable. A failure rate deemed acceptable for a civilian AI application may be well outside of tolerances in a combat environment—or vice versa. In addition, a recent research study concluded that unpredictable AI failure modes will be exacerbated in complex environments, such as those found in combat. Collectively, these factors may create another barrier for the smooth transfer of commercially developed AI technology to DOD.\nDOD may need to adjust its acquisitions process to account for rapidly evolving technologies such as AI. A 2017 internal study of the process found that it takes an average of 91 months to move from the initial Analysis of Alternatives, defining the requirements for a system, to an Initial Operational Capability. In contrast, commercial companies typically execute an iterative development process for software systems like AI, delivering a product in six to nine months. A Government Accountability Office (GAO) study of this issue surveyed 12 U.S. commercial companies who choose not to do business with DOD, and all 12 cited the complexity of the defense acquisition process as a rationale for their decision.\nAs a first step in addressing this, DOD has created a number of avenues for \"rapid-acquisitions,\" including the Strategic Capabilities Office, the Defense Innovation Unit, and Project Maven, in order to accelerate the acquisitions timeline and streamline cumbersome processes. Project Maven, for example, was established in April 2017; by December, the team was fielding a commercially acquired prototype AI system in combat. Although some analysts argue that these are promising developments, critics point out that the department must replicate the results achieved by Project Maven at scale and implement more comprehensive acquisitions reform.\nCommercial technology companies are also often reluctant to partner with DOD due to concerns about intellectual property and data rights. As an official interviewed for a 2017 GAO report on broader challenges in military acquisitions noted, intellectual property is the \"life blood\" of commercial technology companies, yet \"DOD is putting increased pressure on companies to grant unlimited technical data and software rights or government purpose rights rather than limited or restricted rights.\"", "Some reports indicate that DOD and the defense industry also face challenges when it comes to recruiting and retaining personnel with expertise in AI due to research funding and salaries that significantly lag behind those of commercial companies. Other reports suggest that such challenges stem from quality-of-life factors, as well as from a belief among many technology workers that \"they can achieve large-scale change faster and better outside the government than within it.\" Regardless, observers note that if DOD and defense industry are unable to recruit and retain the appropriate experts, military AI applications could be delayed, \"deficient, or lacking in appropriate safeguards and testing.\"\nTo address these challenges, the Obama Administration launched the Defense Digital Service in 2015 as a means of recruiting private sector technology workers to serve in DOD for one to two year assignments—a \"tour of duty for nerds,\" according to director Chris Lynch. Similarly, former Deputy Secretary of Defense Bob Work has proposed an \"AI Training Corps,\" in which DOD \"would pay for advanced technical education in exchange for two days a month of training with government systems and two weeks a year for major exercises.\" Participants in the program could additionally be called to government service in the event of a national emergency. Other analysts have recommended the establishment of new military training and occupational specialties to cultivate AI talent, as well as the creation of government fellowships and accelerated promotion tracks to reward the most talented technology workers.", "An apparent cultural divide between DOD and commercial technology companies may also present challenges for AI adoption. A recent survey of leadership in several top Silicon Valley companies found that nearly 80% of participants rated the commercial technology community's relationship with DOD as poor or very poor. This was due to a number of factors, including process challenges, perceptions of mutual distrust, and differences between DOD and commercial incentive structures.\nMoreover, some companies are refusing to work with DOD due to ethical concerns over the government's use of AI in surveillance or weapon systems. Notably, Google canceled existing government contracts for two robotics companies it acquired—Boston Dynamics and Schaft—and prohibited future government work for DeepMind, a Google-acquired AI software startup. In May 2018, Google employees successfully lobbied the company to withdraw from Project Maven and refrain from further collaboration with DOD. Other companies, however, have pledged to continue supporting DOD contracts, with Amazon CEO Jeff Bezos noting that \"if big tech companies are going to turn their back on the U.S. Department of Defense, this country is going to be in trouble.\"\nCultural factors within the defense establishment itself may also impede AI integration. The integration of AI into existing systems alters standardized procedures and upends well-defined personnel roles. Members of Project Maven have reported a resistance to AI integration because integration can be disruptive without always providing an immediately recognizable benefit. Deputy Director for CIA technology development Dawn Meyerriecks has also expressed concern about the willingness of senior leaders to accept AI-generated analysis, arguing that the defense establishment's risk-averse culture may pose greater challenges to future competitiveness than the pace of adversary technology development.\nFinally, some analysts are concerned that DOD will not capitalize on AI's potential to produce game-changing warfighting benefits and will instead simply use AI to incrementally improve existing processes or reinforce current operational concepts. Furthermore, the services may reject certain AI applications altogether if the technology threatens service-favored hardware or missions. Members of Congress may explore the complex interaction of these factors as DOD moves beyond the initial stages of AI adoption.", "As military applications for AI grow in scale and complexity, many in Congress and the defense community are becoming increasingly concerned about international competition. In his opening comments at \"The Dawn of AI\" hearing before the Senate Subcommittee on Space, Science, and Competitiveness, Senator Ted Cruz stated, \"Ceding leadership in developing artificial intelligence to China, Russia, and other foreign governments will not only place the United States at a technological disadvantage, but it could have grave implications for national security.\"\nSince at least 2016, AI has been consistently identified as an \"emerging and disruptive technology\" at the Senate Select Intelligence Committee's annual hearing on the \"Worldwide Threat Assessment.\" In his written testimony for the 2017 hearing, Director of National Intelligence Daniel Coates asserted, \"The implications of our adversaries' abilities to use AI are potentially profound and broad. They include an increased vulnerability to cyberattack, difficulty in ascertaining attribution, facilitation of advances in foreign weapon and intelligence systems, the risk of accidents and related liability issues, and unemployment.\" Consequently, it may be important for Congress to understand the state of rival AI development—particularly because U.S. competitors may have fewer moral, legal, or ethical qualms about developing military AI applications.", "China is by far the United States' most ambitious competitor in the international AI market. China's 2017 \"Next Generation AI Development Plan\" describes AI as a \"strategic technology\" that has become a \"focus of international competition.\" According to the document, China will seek to develop a core AI industry worth over 150 billion RMB —or approximately $21.7 billion—by 2020 and will \"firmly seize the strategic initiative\" and reach \"world leading levels\" of AI investment by 2030.\nRecent Chinese achievements in the field demonstrate China's potential to realize its goals for AI development. In 2015, China's leading AI company, Baidu, created AI software capable of surpassing human levels of language recognition, almost a year in advance of Microsoft, the nearest U.S. competitor. In 2016 and 2017, Chinese teams won the top prize at the Large Scale Visual Recognition Challenge, an international competition for computer vision systems. Many of these systems are now being integrated into China's domestic surveillance network and social credit system, which aims to monitor and, based on social behavior, \"grade\" every Chinese citizen by 2021.\nChina is researching various types of air, land, sea, and undersea autonomous vehicles. In the spring of 2017, a civilian Chinese university with ties to the military demonstrated an AI-enabled swarm of 1,000 uninhabited aerial vehicles at an airshow. A media report released after the fact showed a computer simulation of a similar swarm formation finding and destroying a missile launcher. Open-source publications indicate that the Chinese are developing a suite of AI tools for cyber operations.\nChinese development of military AI is influenced in large part by China's observation of U.S. plans for defense innovation and fears of a widening \"generational gap\" in comparison to the U.S. military. Similar to U.S. military concepts, the Chinese aim to use AI for exploiting large troves of intelligence, generating a common operating picture, and accelerating battlefield decisionmaking. The close parallels between U.S. and Chinese AI development have some DOD leaders concerned about the prospects for retaining conventional U.S. military superiority as envisioned in current defense innovation guidance.\nAnalysts do, however, point to a number of differences that may influence the success of military AI adoption in China. Significantly, unlike the United States, China has not been involved in active combat for several decades. While on the surface this may seem like a weakness, some argue that it may be an advantage, enabling the Chinese to develop more innovative concepts of operation. On the other hand, Chinese military culture, which is dominated by centralized command authority and mistrust of subordinates, may prove resistant to the adoption of autonomous systems or the integration of AI-generated decisionmaking tools.\nChina's management of its AI ecosystem stands in stark contrast to that of the United States. In general, few boundaries exist between Chinese commercial companies, university research laboratories, the military, and the central government. As a result, the Chinese government has a direct means of guiding AI development priorities and accessing technology that was ostensibly developed for civilian purposes. To further strengthen these ties, the Chinese government created a Military-Civil Fusion Development Commission in 2017, which is intended to speed the transfer of AI technology from commercial companies and research institutions to the military. In addition, the Chinese government is leveraging both lower barriers to data collection and lower costs to data labeling to create the large databases on which AI systems train. According to one estimate, China is on track to possess 20% of the world's share of data by 2020, with the potential to have over 30% by 2030.\nChina's centrally directed effort is fueling speculation in the U.S. AI market, where China is investing in companies working on militarily relevant AI applications—potentially granting it lawful access to U.S. technology and intellectual property. Figure 2 depicts Chinese venture capital investment in U.S. AI companies between 2010 and 2017, totaling an estimated $1.3 billion. The CFIUS reforms introduced in FIRRMA are intended to provide increased oversight of such investments to ensure that they do not threaten national security or grant U.S. competitors undue access to critical technologies.\nEven with these reforms, however, China may likely gain access to U.S. commercial developments in AI given its extensive history of industrial espionage and cyber theft. Indeed, China has reportedly stolen design plans in the past for a number of advanced military technologies and continues to do so despite the 2015 U.S.-China Cyber Agreement, in which both sides agreed that \"neither country's government will conduct or knowingly support cyber-enabled theft of intellectual property.\"\nWhile most analysts view China's unified, whole-of-government effort to develop AI as having a distinct advantage over the United States' AI efforts, many contend that it does have shortcomings. For example, some analysts characterize the Chinese government's funding management as inefficient. They point out that the system is often corrupt, with favored research institutions receiving a disproportionate share of government funding, and that the government has a potential to overinvest in projects that produce surpluses that exceed market demand.\nIn addition, China faces challenges in recruiting and retaining AI engineers and researchers. Over half of the data scientists in the United States have been working in the field for over 10 years, while roughly the same proportion of data scientists in China have less than 5 years of experience. Furthermore, fewer than 30 Chinese universities produce AI-focused experts and research products. Although China surpassed the United States in the quantity of research papers produced from 2011 to 2015, the quality of its published papers, as judged by peer citations, ranked 34 th globally. China is, however, making efforts to address these deficiencies, with a particular focus on the development of military AI applications. Indeed, the Beijing Institute of Technology—one of China's premier institutes for weapons research—recently established the first educational program in military AI in the world.\nSome experts believe that China's intent to be the first to develop military AI applications may result in comparatively less safe applications, as China will likely be more risk-acceptant throughout the development process. These experts stated that it would be unethical for the U.S. military to sacrifice safety standards for the sake of external time pressures, but that the United States' more conservative approach to AI development may result in more capable systems in the long run.", "Like China, Russia is actively pursuing military AI applications. At present, Russian AI development lags significantly behind that of the United States and China. In 2017, the Russian AI market had an estimated value of $12 million and, in 2018, the country ranked 20 th in the world by number of AI startups. However, Russia is initiating plans to close the gap. As part of this effort, Russia will continue to pursue its 2008 defense modernization agenda, with the aim of robotizing 30% of its military equipment by 2025.\nRussia is establishing a number of organizations devoted to the development of military AI. In March 2018, the Russian government released a 10-point AI agenda, which calls for the establishment of an AI and Big Data consortium, a Fund for Analytical Algorithms and Programs, a state-backed AI training and education program, a dedicated AI lab, and a National Center for Artificial Intelligence, among other initiatives. In addition, Russia recently created a defense research organization, roughly equivalent to DARPA, dedicated to autonomy and robotics called the Foundation for Advanced Studies, and initiated an annual conference on \"Robotization of the Armed Forces of the Russian Federation.\" Some analysts have noted that this recent proliferation of research institutions devoted to AI may, however, result in overlapping responsibilities and bureaucratic inertia, hindering AI development rather than accelerating it.\nThe Russian military has been researching a number of AI applications, with a heavy emphasis on semiautonomous and autonomous vehicles. In an official statement on November 1, 2017, Viktor Bondarev, chairman of the Federation Council's Defense and Security Committee, stated that \"artificial intelligence will be able to replace a soldier on the battlefield and a pilot in an aircraft cockpit\" and later noted that \"the day is nearing when vehicles will get artificial intelligence.\" Bondarev made these remarks in close proximity to the successful test of Nerehta, an uninhabited Russian ground vehicle that reportedly \"outperformed existing [inhabited] combat vehicles.\" Russia plans to use Nerehta as a research and development platform for AI and may one day deploy the system in combat, intelligence gathering, or logistics roles. Russia has also reportedly built a combat module for uninhabited ground vehicles that is capable of autonomous target identification—and, potentially, target engagement—and plans to develop a suite of AI-enabled autonomous systems.\nIn addition, the Russian military plans to incorporate AI into uninhabited aerial, naval, and undersea vehicles and is currently developing swarming capabilities. It is also exploring innovative uses of AI for electronic warfare, including adaptive frequency hopping, waveforms, and countermeasures. Finally, Russia has made extensive use of AI technologies for domestic propaganda and surveillance, as well as for information operations directed against the United States and U.S. allies, and can be expected to continue to do so in the future.\nDespite Russia's aspirations, analysts argue that it may be difficult for Russia to make significant progress in AI development. In 2017, Russian military spending dropped by 20% in constant dollars, with subsequent cuts forecast in both 2018 and 2019. In addition, many analysts note that Russian academics have produced few research papers on AI and that the Russian technology industry has yet to produce AI applications that are on par with those produced by the United States and China. Others analysts counter that such factors may be irrelevant, arguing that while Russia has never been a leader in internet technology, it has still managed to become a notably disruptive force in cyberspace.", "A number of international institutions have examined issues surrounding AI, including the Group of Seven (G7), the Organisation for Economic Co-operation and Development (OECD), and the Asia-Pacific Economic Cooperation (APEC). The U.N. CCW, however, has made the most concerted effort to consider certain military applications of AI, with a particular focus on LAWS. In general, the CCW is charged with \"banning or restricting the use of specific types of weapons that are considered to cause unnecessary or unjustifiable suffering to combatants or to affect civilian populations\" and has previously debated weapons such as mines, cluster munitions, and blinding lasers. The CCW began discussions on LAWS in 2014 with informal annual \"Meetings of Experts.\" In parallel, the International Committee of the Red Cross (ICRC) held similar gatherings of interdisciplinary experts on LAWS that produced reports for the CCW on technical, legal, moral, and humanitarian issues. During the CCW's April 2016 meeting, state parties agreed to establish a formal Group of Governmental Experts (GGE), with an official mandate to \"assess questions related to emerging technologies in the area of LAWS.\" Although the GGE has now convened three times, it has not produced an official definition of LAWS or issued official guidance for their development or use. As a result, one U.S. participant cautioned that the international community is in danger of \"the pace of diplomacy falling behind the speed of technological advancement.\"", "AI poses a number of unique opportunities and challenges within a national security context. However, its ultimate impact will likely be determined by the extent to which developers, with the assistance of policymakers, are able to maximize its strengths while identifying options to limit its vulnerabilities.", "Many autonomous systems incorporate AI in some form. Such systems were a central focus of the Obama Administration's \"Third Offset Strategy,\" a framework for preserving the U.S. military's technological edge against global competitors. Depending on the task, autonomous systems are capable of augmenting or replacing humans, freeing them up for more complex and cognitively demanding work. In general, experts assert that the military stands to gain significant benefits from autonomous systems by replacing humans in tasks that are \"dull, dangerous, or dirty.\" Specific examples of autonomy in military systems include systems that conduct long-duration intelligence collection and analysis, clean up environments contaminated by chemical weapons, or sweep routes for improvised explosive devices. In these roles, autonomous systems may reduce risk to warfighters and cut costs, providing a range of value to DOD missions, as illustrated in Figure 3 . Some analysts argue these advantages create a \"tactical and strategic necessity\" as well as a \"moral obligation\" to develop autonomous systems.", "AI introduces a unique means of operating in combat at the extremes of the time scale. It provides systems with an ability to react at gigahertz speed, which in turn holds the potential to dramatically accelerate the overall pace of combat. As discussed below, some analysts contend that a drastic increase in the pace of combat could be destabilizing—particularly if it exceeds human ability to understand and control events—and could increase a system's destructive potential in the event of a loss of system control. Despite this risk, some argue that speed will confer a definitive warfighting advantage, in turn creating pressures for widespread adoption of military AI applications. In addition, AI systems may provide benefits in long-duration tasks that exceed human endurance. For example, AI systems may enable intelligence gathering across large areas over long periods of time, as well as the ability to autonomously detect anomalies and categorize behavior.", "AI has the potential to provide a force-multiplying effect by enhancing human capabilities and infusing less expensive military systems with increased capability. For example, although an individual low-cost drone may be powerless against a high-tech system like the F-35 stealth fighter, a swarm of such drones could potentially overwhelm high-tech systems, generating significant cost-savings and potentially rendering some current platforms obsolete. AI systems could also increase the productivity of individual servicemembers as the systems take over routine tasks or enable tactics like swarming that require minimal human involvement.\nFinally, some analysts caution that the proliferation of AI systems may decouple military power from population size and economic strength. This decoupling may enable smaller countries and nonstate actors to have a disproportionately large impact on the battlefield if they are able to capitalize on the scaling effects of AI.", "AI may offer a means to cope with an exponential increase in the amount of data available for analysis. According to one DOD source, the military operates over 11,000 drones, with each one recording \"more than three NFL seasons worth\" of high-definition footage each day. However, the department does not have sufficient people or an adequate system to comb through the data in order to derive actionable intelligence analysis.\nThis issue will likely be exacerbated in the future as data continue to accumulate. According to one study, by 2020 every human on the planet will generate 1.7 megabytes of information every second, growing the global pool of data from 4.4 zettabytes today to almost 44.0 zettabytes. AI-powered intelligence systems may provide the ability to integrate and sort through large troves of data from different sources and geographic locations to identify patterns and highlight useful information, significantly improving intelligence analysis. In addition, AI algorithms may generate their own data to feed further analysis, accomplishing tasks like converting unstructured information from polls, financial data, and election results into written reports. AI tools of this type thus hold the potential to bestow a warfighting advantage by improving the quality of information available to decisionmakers.", "AI algorithms often produce unpredictable and unconventional results. In March 2016, the AI company DeepMind created a game-playing algorithm called AlphaGo, which defeated a world-champion Go player, Lee Sedol, four games to one. After the match, Sedol commented that AlphaGo made surprising and innovative moves, and other expert Go players subsequently stated that AlphaGo overturned accumulated wisdom on game play. AI's capacity to produce similarly unconventional results in a military context may provide an advantage in combat, particularly if those results surprise an adversary.\nHowever, AI systems can fail in unexpected ways, with some analysts characterizing their behavior as \"brittle and inflexible.\" Dr. Arati Prabhakar, the former DARPA Director, commented, \"When we look at what's happening with AI, we see something that is very powerful, but we also see a technology that is still quite fundamentally limited ... the problem is that when it's wrong, it's wrong in ways that no human would ever be wrong.\"\nAI-based image recognition algorithms surpassed human performance in 2010, most recently achieving an error rate of 2.5% in contrast to the average human error rate of 5%; however, some commonly cited experiments with these systems demonstrate their capacity for failure. As illustrated in Figure 4 , researchers combined a picture that an AI system correctly identified as a panda with random distortion that the computer labeled \"nematode.\" The difference in the combined image is imperceptible to human eyes, but the AI system labeled the image as a gibbon with 99.3% confidence.\nIn another experiment, an AI system described the picture in Figure 5 as \"a young boy is holding a baseball bat,\" demonstrating the algorithm's inability to understand context. Some experts warn that AI may be operating with different assumptions about the environment than human operators, who would have little awareness of when the system is outside the boundaries of its original design.\nSimilarly, AI systems may be subject to algorithmic bias as a result of their training data. For example, researchers have repeatedly discovered instances of racial bias in AI facial recognition programs due to the lack of diversity in the images on which the systems were trained, while some natural language processing programs have developed gender bias. This could hold significant implications for AI applications in a military context, particularly if such biases remain undetected and are incorporated into systems with lethal effects.\n\"Domain adaptability,\" or the ability of AI systems to adjust between two disparate environments, may also present challenges for militaries. For example, one AI system developed to recognize and understand online text was trained primarily on formal language documents like Wikipedia articles. The system was later unable to interpret more informal language in Twitter posts. Domain adaptability failures could occur when systems developed in a civilian environment are transferred to a combat environment.\nAI system failures may create a significant risk if the systems are deployed at scale. One analyst noted that although humans are not immune from errors, their mistakes are typically made on an individual basis, and they tend to be different every time. However, AI systems have the potential to fail simultaneously and in the same way, potentially producing large-scale or destructive effects. Other unanticipated results may arise when U.S. AI systems interact with adversary AI systems trained on different data sets with different design parameters and cultural biases.\nAnalysts warn that if militaries rush to field the technology prior to gaining a comprehensive understanding of potential hazards, they may incur a \"technical debt,\" a term that refers to the effect of fielding AI systems that have minimal risk individually but compounding collective risk due to interactions between systems. This risk could be further exacerbated in the event of an AI arms race.", "Further complicating issues of predictability, the types of AI algorithms that have the highest performance are currently unable to explain their processes. For example, Google created a cat-identification system, which achieved impressive results in identifying cats on YouTube; however, none of the system's developers were able to determine which traits of a cat the system was using in its identification process. This lack of so-called \"explainability\" is common across all such AI algorithms. To address this issue, DARPA is conducting a five-year research effort to produce explainable AI tools.\nOther research organizations are also attempting to do a backwards analysis of these types of algorithms to gain a better understanding of their internal processes. In one such study, researchers analyzed a program designed to identify curtains and discovered that the AI algorithm first looked for a bed rather than a window, at which point it stopped searching the image. Researchers later learned that this was because most of the images in the training data set that featured curtains were bedrooms. The project demonstrated the possibility that training sets could inadvertently introduce errors into a system that might not be immediately recognized or understood by users.\nExplainability can create additional issues in a military context, because the opacity of AI reasoning may cause operators to have either too much or too little confidence in the system. Some analysts are particularly concerned that humans may be averse to making a decision based entirely on AI analysis if they do not understand how the machine derived the solution. Dawn Meyerriecks, Deputy Director for Science and Technology at the CIA, expressed this concern, arguing, \"Until AI can show me its homework, it's not a decision quality product.\" Increasing explainability will thus be key to humans building appropriate levels of trust in AI systems. As a U.S Army study of this issue concludes, only \"prudent trust\" will confer a competitive advantage for military organizations.\nAdditional human-machine interaction issues that may be challenged by insufficient explainability in a military context include the following:\nGoal Alignment . The human and the machine must have a common understanding of the objective. As military systems encounter a dynamic environment, the goals will change, and the human and the machine must adjust simultaneously based on a shared picture of the current environment. Task A lignment. Humans and machines must understand the boundaries of one another's decision space, especially as goals change. In this process, humans must be consummately aware of the machine's design limitations to guard against inappropriate trust in the system. Human Machine Interface. Due to the requirement for timely decisions in many military AI applications, traditional machine interfaces may slow down performance, but there must be a way for the human and machine to coordinate in real time in order to build trust.\nFinally, explainability could challenge the military's ability to \"verify and validate\" AI system performance prior to fielding. Due to their current lack of an explainable output, AI systems do not have an audit trail for the military test community to certify that a system is meeting performance standards. DOD is currently developing a framework to test AI system lifecycles and building methods for testing AI systems in diverse environments with complex human-machine interactions.", "AI systems present unique pathways for adversary exploitation. First, the proliferation of AI systems will increase the number of \"hackable things,\" including systems that carry kinetic energy (e.g., moving vehicles), which may in turn allow exploitive actions to induce lethal effects. These effects could be particularly harmful if an entire class of AI systems all have the same exploitable vulnerability.\nIn addition, AI systems are particularly vulnerable to theft by virtue of being almost entirely software-based. As one analyst points out, the Chinese may be able to steal the plans for an F-35, but it will take them years to find the materials and develop the manufacturing processes to build one. In contrast, stolen software code can be used immediately and reproduced at will. This risk is amplified by the dual-use nature of the technology and the fact that the AI research community has been relatively open to collaboration up to this point. Indeed, numerous AI tools developed for civilian use—but that could be adapted for use in weapon systems—have been shared widely on unclassified internet sites, making them accessible to major military powers and nonstate actors alike.\nFinally, adversaries may be capable of deliberately introducing the kinds of image classification and other errors discussed in the \" Predictability \" section above. In one such case, researchers who had access to the training data set and algorithm for an image classifier on a semiautonomous vehicle used several pieces of strategically placed tape (as illustrated in Figure 6 ) to cause the system to identify a stop sign as a speed limit sign. In a later research effort, a team at MIT successfully tricked an image classifier into thinking that a picture of machine guns was a helicopter—without access to the system's training data or algorithm. These vulnerabilities highlight the need for robust data security, cybersecurity, and testing and evaluation processes as military AI applications are developed.", "Although AI has not yet entered the combat arena in a serious way, experts are predicting the potential impact that AI will have on the future of warfare. This influence will be a function of many factors, including the rate of commercial investment, the drive to compete with international rivals, the research community's ability to advance the state of AI capability, the military's general attitude toward AI applications, and the development of AI-specific warfighting concepts.\nMany experts assert that there is a \"sense of inevitability\" with AI, arguing that it is bound to be substantially influential. Nevertheless, in January 2016, the Vice Chairman of the Joint Chiefs of Staff, General Paul Selva, intimated that it may be too early to tell, pointing out that DOD is still evaluating AI's potential. He stated, \"The question we're trying to pose now is, 'Do the technologies that are being developed in the commercial sector principally provide the kind of force multipliers that we got when we combined tactical nuclear weapons or precision and stealth?' If the answer is yes, then we can change the way that we fight.... If not, the military will seek to improve its current capabilities slightly to gain an edge over its adversaries.\" There are a range of opinions on AI's trajectory, and Congress may consider these future scenarios as it seeks to influence and conduct oversight of military AI applications.", "While many analysts admit that military AI technology is in a stage of infancy, it is difficult to find an expert who believes that AI will be inconsequential in the long run. However, AI critics point to a number of trends that may minimize the technology's impact. From a technical standpoint, there is a potential that the current safety problems with AI will be insurmountable and will make AI unsuitable for military applications. In addition, there is a chance the perceived current inflection point in AI development will instead lead to a plateau. Some experts believe that the present family of algorithms will reach its full potential in another 10 years, and AI development will not be able to proceed without significant leaps in enabling technologies, such as chips with higher power efficiency or advances in quantum computing. The technology has encountered similar roadblocks in the past, resulting in periods called \"AI Winters,\" during which the progress of AI research slowed significantly.\nAs discussed earlier, the military's willingness to fully embrace AI technology may pose another constraint. Many academic studies on technological innovation argue that military organizations are capable of innovation during wartime, but they characterize the services in peacetime as large, inflexible bureaucracies that are prone to stagnation unless there is a crisis that spurs action. Members of the Defense Innovation Board, composed of CEOs from leading U.S. commercial companies, remarked in their most recent report, \"DOD does not have an innovation problem, it has an innovation adoption problem\" with a \"preference for small cosmetic steps over actual change.\"\nAnother analysis asserts that AI adoption may be halted by poor expectation management. The report asserts that overhyped AI capabilities may cause frustration that will \"diminish people's trust and reduce their willingness to use the system in the future.\" This effect could have a significant chilling effect on AI adoption.", "Most analysts believe that AI will at a minimum have significant impact on the conduct of warfare. One study describes AI as a \"potentially disruptive technology that may create sharp discontinuities in the conduct of warfare,\" further asserting that the technology may \"produce dramatic improvements in military effectiveness and combat potential.\" These analysts point to research projects to make existing weapon systems and processes faster and more efficient, as well as providing a means to cope with the proliferation of data that complicate intelligence assessments and decisionmaking. However, these analysts caution that in the near future AI is unlikely to advance beyond narrow, task-specific applications that require human oversight.\nSome AI proponents contend that although humans will be present, their role will be less significant, and the technology will make combat \"less uncertain and more controllable,\" as machines are not subject to the emotions that cloud human judgment. However, critics point to the enduring necessity for human presence on the battlefield in some capacity as the principle restraining factor that will keep the technology from upending warfare. An academic study of this trend argues,\nAt present, even an AI of tremendous power will not be able to determine outcomes in a complex social system, the outcomes are too complex – even without allowing for free will by sentient agents.... Strategy that involves humans, no matter that they are assisted by modular AI and fight using legions of autonomous robots, will retain its inevitable human flavor.\nPointing to another constraining factor, analysts warn of the psychological impact that autonomous systems will have on an adversary, especially in conflict with cultures that place a premium on courage and physical presence. One study on this topic quotes a security expert from Qatar who stated, \"How you conduct war is important. It gives you dignity or not.\"\nIn addition, experts highlight that the balance of international AI development will affect the magnitude of AI's influence. As one analyst states, \"[T]he most cherished attribute of military technology is asymmetry.\" In other words, military organizations seek to develop technological applications or warfighting concepts that confer an advantage for which their opponent possesses no immediate countermeasure. Indeed, that is the U.S. military's intent with the current wave of technological development as it seeks \"an enduring competitive edge that lasts a generation or more.\" For this reason, DOD is concerned that if the United States does not increase the pace of AI development and adoption, it will end up with either a symmetrical capability or a capability that bestows only a fleeting advantage, as U.S. competitors like China and Russia accelerate their own respective military AI programs.\nThe democratization of AI technology will further complicate the U.S. military's pursuit of an AI advantage. As the 2018 National Defense Strategy warns, \"The fact that many technological developments will come from the commercial sector means that state competitors and nonstate actors will also have access to them, a fact that risks eroding the conventional overmatch to which our Nation has grown accustomed.\" In these circumstances, AI could still influence warfighting methods, but the technology's overall impact may be limited if adversaries possess comparable capabilities.", "A sizeable contingent of experts believe that AI will have a revolutionary impact on warfare. One analysis asserts that AI will induce a \"seismic shift on the field of battle\" and \"fundamentally transform the way war is waged.\" The 2018 National Defense Strategy counts AI among a group of emerging technologies that will change the character of war, and Frank Hoffman, a professor at the National Defense University, takes this a step further, arguing that AI may \"alter the immutable nature of war.\"\nStatements like this imply that AI's transformative potential is so great that it will challenge long-standing, foundational warfighting principles. In addition, members of the Chinese military establishment assert that AI \"will lead to a profound military revolution.\" Proponents of this position point to several common factors when making their case. They argue that the world has passed from the Industrial Era of warfare into the Information Era, in which gathering, exploiting, and disseminating information will be the most consequential aspect of combat operations.\nIn light of this transition, AI's potential ability to facilitate information superiority and \"purge combat of uncertainty\" will be a decisive wartime advantage, enabling faster and higher-quality decisions. As one study of information era warfare states, \"[W]inning in the decision space is winning in the battlespace.\" Members of this camp argue that AI and autonomous systems will gradually distance humans from a direct combat role, and some even forecast a time in which humans will make strategic-level decisions while AI systems exclusively plan and act at the tactical level. In addition, analysts contend that AI may contest the current preference for quality over quantity, challenging industrial era militaries built around a limited number of expensive platforms with exquisite capabilities, instead creating a preference for large numbers of adequate, less expensive systems.\nA range of potential consequences flow from the assumptions surrounding AI's impact on warfighting. Some studies point to overwhelmingly positive results, like \"near instantaneous responses\" to adversary operations, \"perfectly coordinated action,\" and \"domination at a time and place of our choosing\" that will \"consistently overmatch the enemy's capacity to respond.\" However, AI may create an \"environment where weapons are too fast, small, numerous, and complex for humans to digest ... taking us to a place we may not want to go but are probably unable to avoid.\" In other words, AI systems could accelerate the pace of combat to a point in which machine actions surpass the rate of human decisionmaking, potentially resulting in a loss of human control in warfare.\nThere is also a possibility that AI systems could induce a state of strategic instability. The speed of AI systems may put the defender at an inherent disadvantage, creating an incentive to strike first against an adversary with like capability. In addition, placing AI systems capable of inherently unpredictable actions in close proximity to an adversary's systems may result in inadvertent escalation or miscalculation.\nAlthough these forecasts project dramatic change, analysts point out that correctly assessing future impacts may be challenging. Historians of technology and warfare emphasize that previous technological revolutions are apparent only in hindsight, and the true utility of a new application like AI may not be apparent until it has been used in combat.\nNevertheless, given AI's disruptive potential, for better or for worse, it may be incumbent on military leaders and Congress to evaluate the implications of military AI developments and exercise oversight of emerging AI trends. Congressional actions that affect AI funding, acquisitions, norms and standards, and international competition have the potential to significantly shape the trajectory of AI development and may be critical to ensuring that advanced technologies are in place to support U.S. national security objectives and the continued efficacy of the U.S. military." ], "depth": [ 0, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 1, 1, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h3_full", "", "h0_title h3_title", "", "", "", "", "h3_full", "h0_full", "", "h0_title h1_title", "h1_full", "h1_full", "", "h0_full h1_full", "h2_full", "h2_full", "h2_full", "", "h3_title", "", "", "", "", "h3_full", "", "", "h3_full h1_title h0_title", "h3_full", "h1_full", "h0_full" ] }

{ "question": [ "How does the DOD hope to utilize AI applications?", "In what fields is the bulk of AI research being done?", "Where is AI already in use for military purposes?", "How can Congress's involvement shape AI's future?", "Why does AI present a challenge for military intergration?", "How does this effect the acquisition process?", "If acquired, what often needs to happen for AI applications before military use?", "How do cultural issues play a factor in AI's incorporation into the DOD?", "Why is there pressure for the U.S. to compete for military AI applications?", "How is China competing within the developmental AI market?", "What other country has been active in military AI development?", "What are some benefits to AI implementation in a military context?", "With such advantages due to AI, why are some people in the field concerned about AI?", "What do analysts think as a result of this complicated reality for AI?" ], "summary": [ "Artificial intelligence (AI) is a rapidly growing field of technology with potentially significant implications for national security. As such, the U.S. Department of Defense (DOD) and other nations are developing AI applications for a range of military functions.", "AI research is underway in the fields of intelligence collection and analysis, logistics, cyber operations, information operations, command and control, and in a variety of semiautonomous and autonomous vehicles.", "Already, AI has been incorporated into military operations in Iraq and Syria.", "Congressional action has the potential to shape the technology's development further, with budgetary and legislative decisions influencing the growth of military applications as well as the pace of their adoption.", "AI technologies present unique challenges for military integration, particularly because the bulk of AI development is happening in the commercial sector.", "Although AI is not unique in this regard, the defense acquisition process may need to be adapted for acquiring emerging technologies like AI.", "In addition, many commercial AI applications must undergo significant modification prior to being functional for the military.", "A number of cultural issues also challenge AI acquisition, as some commercial AI companies are averse to partnering with DOD due to ethical concerns, and even within the department, there can be resistance to incorporating AI technology into existing weapons systems and processes.", "Potential international rivals in the AI market are creating pressure for the United States to compete for innovative military AI applications.", "China is a leading competitor in this regard, releasing a plan in 2017 to capture the global lead in AI development by 2030. Currently, China is primarily focused on using AI to make faster and more well-informed decisions, as well as on developing a variety of autonomous military vehicles.", "Russia is also active in military AI development, with a primary focus on robotics.", "AI technology could, for example, facilitate autonomous operations, lead to more informed military decisionmaking, and increase the speed and scale of military action. While a small number of analysts believe that the technology will have minimal impact, most believe that AI will have at least an evolutionary—if not revolutionary—effect.", "Although AI has the potential to impart a number of advantages in the military context, it may also introduce distinct challenges. However, it may also be unpredictable or vulnerable to unique forms of manipulation.", "As a result of these factors, analysts hold a broad range of opinions on how influential AI will be in future combat operations." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, 0, 0, -1, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Executive Compensation", "USPS Executive Pay and the 112th Congress", "Comparisons to the Public and Private Sector", "The Private Sector", "The Public Sector", "Concluding Observations" ], "paragraphs": [ "", "The U.S. Postal Service (USPS) maintains a cadre of employees known as the Postal Career Executive Service (PCES). PCES employees are intended to fill \"key management positions\" within USPS, which employed 645,950 people as of the end of FY2011. As of May 18, 2012, USPS employed 640 employees in the PCES in addition to the PMG. Of those employees, 36, known as \"officials,\" serve at the pleasure of the Postmaster General (PMG) and include senior-level positions like area vice presidents and the Deputy Postmaster General. The remaining 604, known as \"executives,\" perform duties such as district manager or bulk-mail center manager. The PMG is not a member of the PCES.\nPay for PCES employees and the PMG is capped at $276,840 in FY2012. A PCES employee or the PMG may earn more than that statutory cap if he or she qualifies for a performance-based pay bonus. Any merit-based pay earned in excess of the pay cap can be retained as \"deferred pay\" and collected upon retirement. Former Postmaster General John E. Potter, for example, had an $815,788 aggregate balance in deferred pay as of September 30, 2011. The deferred pay currently is and will continue to be paid out in annual installments—as opposed to a lump sum.\nIn addition to pay, PCES employees receive benefits that are not provided to other federal employees, including free life insurance provided at a value equal to salary; periodic physical examinations; financial counseling; parking; and membership in up to two airline clubs. Additionally, PCES employees have no cap on the number of annual leave days they can accrue. Federal employees in the Senior Executive Service (outside of the Postal Service) cannot accrue more than 90 days of annual leave.\nSince 1971, USPS has been a self-supporting, wholly governmental entity. Although the USPS does receive an annual appropriation, the agency does not rely on appropriations to operate. Its annual appropriation is about $100 million per year, approximately 0.1% of USPS's $75 billion operating budget.\nAfter running modest profits from FY2004 through FY2006, USPS lost $25.4 billion between FY2007 and FY2011. Were it not for congressional action to reduce certain statutorily required health benefits payments, USPS would have lost an additional $9.5 billion.\nAs USPS's finances have deteriorated, its ability to absorb operating losses has been diminished. Between FY2005 and FY2011, USPS's debt rose from $0 to $13 billion. (The statutory debt limit is $15 billion (39 U.S.C. §2005(a)(2)(C)).) In July 2009, the Government Accountability Office (GAO) added the USPS's financial condition \"to the list of high-risk areas needing attention by the Congress and the executive branch. \"\nMedia reports and some Members of Congress have expressed concerns that the pay of USPS executives is too high and should be reduced—especially considering USPS's current financial condition. USPS and others, however, have argued that compensation rates are needed at their current levels to attract talented employees to maintain a Postal Service that delivers mail and packages to homes and businesses throughout the United States with limited appropriations. The total estimated cost to pay for PCES employees' compensation and benefits in FY2012 is $126.2 million, or less than 0.5% of the Postal Service's annual budget. Postal Officers within the PCES are estimated to cost the Service $11.0 million in FY2012, or less than 0.02% of the annual USPS budget.\nThe 112 th Congress has introduced two bills that would limit USPS executive pay in some way. S. 1789 , for example, would remove certain \"fringe benefits\" and cap pay at Level I of the Executive Schedule ($199,700 in 2012). H.R. 2309 would prohibit PCES employees from receiving bonuses in years when USPS expenses eclipsed revenues and would cap pay at Executive Schedule Level I in certain years. On April 25, 2012, S. 1789 was passed by the Senate. On January 17, 2012, H.R. 2309 was reported by the House Committee on Oversight and Government Reform. On March 29, H.R. 2309 was reported by the House Committee on Rules and placed on the Union Calendar. No further action has been taken on either bill.\nThis report examines the authorities governing executive compensation at USPS. It examines pay rates for other public-sector employees as well as certain private-sector employees to analyze how the pay of the Postmaster General and other Postal Service executives might compare. This report does not address the pay and benefits of bargaining USPS employees. It also does not examine the trends in workforce size and delineation within USPS.", "Federal authorities that govern USPS employee pay rates do not use the term PCES. Instead, the laws use the terms \"officers,\" \"employees,\" \"executives,\" and \"critical senior executives or equivalent positions.\"\nPursuant to 39 U.S.C. §1003(a), USPS has the authority to \"maintain compensation and benefits for all officers and employees on a standard of comparability to the compensation and benefits paid for comparable levels of work in the private sector of the economy\" (emphasis in original). Concurrently, 39 U.S.C. §1003(a) caps USPS pay at the rate for level I of the Executive Schedule, a pay level that dictates pay for high-ranking federal employees, including most Cabinet secretaries. Level I of the Executive Schedule is $199,700 in 2012.\nPostal executives, however, are eligible for annual one-time bonuses that can push their total compensation levels above the Executive Schedule cap. Pursuant to 39 U.S.C. §3686(a)-(b), executives may receive bonuses provided the employee's total compensation for the year does not \"exceed the total annual compensation payable to the Vice President … as of the end of the calendar year in which bonus or award is paid.\" The Vice President's pay is $230,700 in 2012. The USPS Board of Governors, however, must verify that the performance appraisal system used to determine if the award is warranted \"makes meaningful distinctions based on relative performance.\"\nMoreover, 39 U.S.C. §3686(c) gives the USPS Board of Governors authority to select up to 12 USPS officers \"in critical senior executive or equivalent positions to receive total compensation … not to exceed 120 percent of the total annual compensation payable to the Vice President.\" As noted above, the pay rate of the Vice President is $230,700 in 2012, and the Vice President does not qualify for performance-based pay bonuses. The cap on critical senior executive positions in USPS selected to receive this level of compensation, therefore, is $276,840 in 2012. Within 30 days of selecting those who should receive this salary level, the USPS Board of Governors is required to provide written notification to Congress and the Director of the Office of Personnel Management of whom they selected. According to USPS, as of May 1, 2012, there are eight employees currently serving in critical executive positions who are eligible for this level of compensation.\nAccording to USPS, its Board of Governors has annually contracted a private consulting firm to assist in setting compensation levels for postal executives. This firm attempts to compare USPS executive pay levels to \"market pay and compensation design practices for executive officers in other companies.\" According to USPS, finding private-sector executives with identical duties that could be used to compare pay rates \"was challenging because no other organization shares the same mission, scope of operations, and legislative oversight as the Postal Service.\" Despite these concerns, the private consulting firm found that in 2010, \"USPS executive base salaries are significantly below market when compared against published survey data or comparable jobs in the private sector.\"\nIn addition to salary, USPS executives and officials can earn bonuses for meeting annual performance goals. According to USPS, the \"goals and metrics … vary among executive officers and are weighted to reflect appropriately the degree to which an executive is able to influence the overall performance of the Postal Service.\" Generally, the Board of Governors determines the bonus metrics for the PMG and the Deputy PMG. The PMG then determines the metrics for performance bonuses for the other USPS executives and officials. Because of the Postal Service's current financial condition, no performance incentives were awarded for FY2011.\nTable 1 shows the FY2010 pay levels for selected federal executive officers within USPS. All of the employees in this table are among those selected by the USPS Board of Governors to receive compensation capped at 120% of the Vice President's total annual compensation.", "In the 112 th Congress, two bills that seek to reduce the pay and benefits provided to USPS executives have been introduced: S. 1789 and H.R. 2309 .\nS. 1789 , the 21 st Century Postal Service Act of 2012, includes a section that seeks to reduce USPS executive pay. Pursuant to Section 108 of S. 1789 , USPS executive pay would be capped at level II of the Executive Schedule, which is $179,700 in 2012. S. 1789 would authorize the Board of Governors to select up to six USPS employees in \"very senior executive positions\" to receive pay equivalent to Executive Level I ($199,700 in 2012). The bill limits \"fringe benefits\" of senior executives to that of other supervisors or managers who are not PCES, and prohibits USPS from providing an award or bonus to senior executives during years when USPS \"has not implemented the measures needed to achieve long-term solvency.\"\nH.R. 2309 would cap pay for what it calls \"Level Two Postal Service Executives\" (Level Twos) at Level I of the Executive Schedule ($199,700) in years when USPS is in control of a Commission on Postal Reorganization that would be established by the bill. H.R. 2309 states that this cap on compensation includes \"basic pay, bonuses, awards, and all other monetary compensation.\" H.R. 2309 links pay increases for the Level Twos to the Consumer Price Index. Additionally, no Level Two would be permitted to receive a \"bonus, award, or other monetary compensation\" when USPS expenditures exceed revenues. Pursuant to H.R. 2309 , Level Twos could not accrue deferred compensation in years when USPS expenditures exceed revenues.", "USPS noted in its financial statements that it may be difficult to compare the pay of USPS executives to that of private sector employees because of USPS's unique mission, size, and scope. The PMG headed a service with 645,950 full and part-time employees as of September 30, 2011 and revenues of $65.7 billion in FY2011. Although there are no government agencies or private sector companies that perform duties identical to that of USPS, it may be helpful to examine the pay rates of public and private-sector managers at entities that perform some identical services, provide some identical products, require a similar managerial skills, or are of a similar size. Examining the pay rates of these individuals may provide Congress with a broader context of USPS managerial pay.", "As noted above, federal law provides USPS the authority to set officer and employee pay rates \"on a standard of comparability to the compensation and benefits paid for comparable levels of work in the private sector of the economy\" (emphasis in original). To determine whether officer and employee pay rates are comparable, therefore, it is necessary to determine which private-sector positions would be considered comparable to certain positions within USPS. CRS selected three private-sector corporations that might be considered comparable to USPS for a variety of reasons: FedEx, the United Parcel Service (UPS), and Amtrak.\nFedEx provides a variety of transportation, e-commerce, and delivery services around the world and competes with USPS on some products and services. In FY2011, FedEx paid its Chairman, President, and CEO Frederick W. Smith $1.23 million in salary. When Mr. Smith's awards, non-equity incentives, and other compensation are added to that salary, his total compensation was $7.26 million in FY2011. FedEx does not list all the benefits and perquisites provided to Mr. Smith and other executives, but it does list life insurance premiums, 401(k) matching contributions, and other tax reimbursements among the benefits Mr. Smith received. In FY2011, FedEx reported it had 255,573 average full-time employees worldwide and had revenues of $39.3 billion.\nUPS is a global delivery company that provides specialized transportation and logistics services. Like FedEx, UPS competes with USPS on some products and services. FY2011 compensation data for UPS was unavailable. In FY2010, however, D. Scott Davis, Chairman and CEO of UPS, reported receipt of a $1 million salary and $10.73 million in total compensation. Benefits provided to Mr. Davis appear to be similar to those offered to the PMG, and include life insurance, financial planning, and health benefits. Nearly $7.8 million of Mr. Davis's total compensation for FY2010 was earned in stock options. UPS's website says it has 398,300 employees worldwide and earned $53.1 billion in revenue in 2011.\nAmtrak, also known as the National Rail Passenger Corporation, is a private organization that has received a federal subsidy every year since its inception in 1971. Like USPS, Amtrak has struggled financially. Amtrak's president's salary is currently $350,000. 49 USC §24303(b) of the U.S. Code covers the pay of Amtrak officers. It reads:\nThe board [of directors] may fix the pay of the officers of Amtrak. An officer may not be paid more than the general level of pay for officers of rail carriers with comparable responsibility. The preceding sentence shall not apply for any fiscal year for which no Federal assistance is provided to Amtrak.\nIn the original legislation creating Amtrak, the provision was \"[t]he rates of compensation of all officers shall be fixed by the board.\"\nIn FY2011, Amtrak reported $2.7 billion in revenues and 20,156 employees.", "While federal law permits USPS to set pay rates for certain employees at levels comparable to the private sector, USPS is a federal agency. It may be helpful, therefore, to examine the pay rates of other federal officials who serve in senior federal positions.\nAs noted earlier, the Vice President's pay is capped at $230,700 in 2012. The President's pay is $400,000. The President is provided an additional expense allowance, at present $50,000, which is not taxable and is to be used for official purposes only. All cabinet department secretaries are paid at Level I of the Executive Schedule ($199,700 in 2012). When calculating total compensation for federal employees, the Congressional Budget Office generally adds 30% of the employee's pay. Total compensation of the cabinet secretaries, therefore, would be about $259,610 in FY2012.\nThere are few federal employees whose pay is higher than that of the President. Tom Kilgore, the President and Chief Executive Officer (CEO) of the Tennessee Valley Authority—a corporation owned by the U.S. Government, reported earning $850,000 in 2011. Although TVA was appropriated government funds upon its inception, the Tennessee Valley Authority now operates entirely on power revenues.", "The 112 th Congress has introduced legislation that would reduce or otherwise limit the compensation of postal executives and officers. Both the House and Senate proposals are components of bills that, in their entirety, seek to improve the Postal Service's condition.\nBroadly speaking, USPS's present financial troubles are caused by falling revenues and rising operating costs. In recent years, both the economic downturn and the widespread adoption of electronic communication have eroded postage sales. The USPS's operating costs have increased, in part, to the Postal Accountability and Enhancement Act (PAEA), which requires USPS to prefund its future retirees' health benefits at a cost of approximately $5.6 billion per year. Federal law also obligates USPS to provide a wide range of services over a large geographic area six days per week at affordable and uniform prices. This \"universal service obligation,\" as the PRC has noted, costs the USPS approximately $4.4 billion per year. Meanwhile, the value of the USPS's monopoly (as the sole postal service provider), has fallen (because of the decline in mail volume) and generates perhaps $3.5 billion in annual revenues.\nUSPS executives are in an unusual position. They operate an entity with substantial legally conferred advantages (e.g., USPS does not pay tax), but they have limited control over many of the factors that drive USPS's revenues and costs. This makes it complex to assess the performance of USPS executives and align their pay accordingly. Whether the USPS runs a profit or deficit in any one year is not entirely dependent upon the actions of the USPS's top executives.\nCongress may decide that current USPS executive pay rates are at the optimum level to attract appropriate candidates to USPS's executive roles—those who can balance USPS's autonomy, legal obligations, and oversight requirements. In that case, USPS would be authorized to pay up to 12 of its critical senior executives compensation greater than that of the Vice President—and in some cases the President—ranking the PMG and other senior executives at USPS among the highest paid federal employees. Maintaining these levels of pay would arguably more closely align the compensation of the PMG and other high-ranking USPS employees with the basic salary of private sector employees at comparable organizations.\nAlternatively, Congress has the authority to modify USPS's executive pay structure and total compensation in a variety of ways. Reducing pay for critical USPS positions, for example, may bring USPS executives' salaries more closely in line with that of other top federal officials. Currently, postal executives may be paid as much as the secretaries of Cabinet departments, and up to 12 executives can receive pay at a rate higher than that of the Vice President. Postal executives' total compensation, therefore, may prompt questions about whether their jobs are worth more to the federal government than those of other senior federal officials.\nIt is unclear whether reducing executive compensation would encourage current USPS leadership to seek employment elsewhere in government or in the private sector. Pay reductions could also lead to lower levels of interest from qualified candidates for these positions. However, the same disincentive for federal service would apply to other senior executive positions across the government.\nThe nation's economic challenges and the USPS's persistent deficits are viewed by some as reasons for reducing USPS executive pay and eliminating bonuses. Yet, tying postal executive pay to the USPS's financial performance raises the question—is appropriate to increase executive compensation in better economic times or when the USPS runs profits?\nFinally, USPS's use of deferred compensation has drawn considerable attention. On the one hand, deferred compensation (and executive perquisites) enable the USPS to offer more appealing compensation packages to individuals it wishes to hire or retain. On the other hand, deferred compensation and perquisites do not neatly comport with federal statutory pay caps, and might be viewed by some as a way to evade pay limits. Furthermore, deferred compensation also can lead to situations where individuals no longer employed by the USPS continue to draw significant compensation. Former PMG Potter, for example, will continue to receive deferred pay benefits until 2020 although he retired from USPS in FY2010. Such a prohibition, however, could make postal executive positions less attractive to candidates who are qualified for the jobs or prompt current USPS executives to seek employment outside of the service." ], "depth": [ 0, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "", "h0_full", "", "", "", "h1_full" ] }

{ "question": [ "What is the size of USPS's workforce?", "What contingency do PCES make up within that workforce?", "How are the PCES employees divided?", "How do executives' duties differ from officers' duties?", "How are PCES employees paid?", "What is the pay cap?", "How can a Postal Executive exceed this pay cap?", "When can employees collect pay earned beyond the pay cap?", "To what extent do officers receive deferred pay?" ], "summary": [ "At the end of FY2011, USPS employed 645,950 people.", "Within that total is a cadre of Postal Career Executive Service (PCES) employees. As of May 18, 2012, USPS had 640 PCES employees.", "The cadre is divided into two categories: executives and officers.", "Executives, of which there were 604, perform duties such as district manager or bulk-mail center manager. Officers, of which there were 36, serve at the pleasure of the Postmaster General (PMG) and include senior-level positions like area vice presidents and the Deputy Postmaster General.", "PCES employees and the Postmaster General are paid pursuant to specific statutory authorities.", "Pay for PCES employees is capped at $276,840 in FY2012.", "A Postal Executive may earn more than that statutory cap if he or she qualifies for a performance-based pay bonus.", "Pay earned in excess of the pay cap may be deferred and collected upon retirement.", "Three USPS officers currently receive deferred pay." ], "parent_pair_index": [ -1, 0, 1, 2, -1, 0, 1, 1, 3 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Background", "Legislative History", "The HSUF Proposal", "Trading Partner Objections", "Overview of Dredging Operations", "Container Ships, the Panama Canal, and Dredging Needs", "HMTF Revenues", "HMT Revenue Generated by Port", "HMT Revenue Generated by Shipper Group", "HMTF Expenditures11", "Expenditures by Activity", "Shallow vs. Deep Draft Channels", "Expenditures by State", "Expenditures per Channel", "High Expense, Low Use Shipping Channels", "Great Lakes Harbor Maintenance Costs", "High Use, Low Expense Shipping Channels", "Port Cross-Subsidization: Advantages, Disadvantages", "Legislative Activity in the 111th Congress" ], "paragraphs": [ "", "In 1986, the Harbor Maintenance Tax (HMT) was enacted to fund U.S. Army Corps of Engineers' (USACE or the Corps) activities related to the routine operation and maintenance (O&M) of harbors, namely the dredging of harbor channels to their authorized depths and widths. This tax is assessed on the value of imported and domestic cargo handled at ports at the current rate of 0.125% ($1.25 per $1,000 in cargo value), which in recent years has raised over $1 billion annually. U.S. waterborne exporters no longer pay the tax because a 1998 U.S. Supreme Court ruling found it unconstitutional. Importers generate about 95% of the tax revenue. The tax revenues are deposited into the Harbor Maintenance Trust Fund (HMTF) from which Congress annually appropriates funds for harbor maintenance.\nIn recent years, HMTF annual expenditures have remained relatively flat while HMT collections have increased due to rising import volume (except in 2009 when collections declined along with import volume). Consequently, a large \"surplus\" in the HMTF has developed. Despite the surplus, the busiest U.S. harbors are not being fully maintained, according to the Corps. Full channel dimensions are, on average, available less than about a third of the time at the 59 highest use U.S. harbors. Under-maintained channels in busy U.S. ports could increase the risks of ship groundings or collisions, resulting in spilled cargo or fuel oil. They also could raise the cost of shipping, requiring ships to carry less cargo to reduce their draft or wait for high tide before transiting a harbor. To rectify this situation, some industry stakeholders seek to enact a \"spending guarantee\" to spend down the surplus in the HMTF. However, examining where trust fund monies have been spent indicates that little or no shipping is taking place at many of the harbors and waterways that shippers are paying to maintain. Some of these harbors or waterways are among the most expensive to maintain in the country and collectively they represent a significant portion of total HMTF expenditures. Thus, in addition to possibly increasing HMTF expenditures, policymakers may consider whether current expenditures are being efficiently and equitably utilized. Given the amount of HMT collections not spent on harbors and the amount spent on harbors with little or no cargo, a rough estimate is that less than half and perhaps as little as a third of every HMT dollar collected is being spent to maintain harbors that shippers frequently use.\nEconomic and equity issues related to HMT expenditures and collections are the main focus of this report. Before analyzing these issues, the report reviews the legislative history of the tax and legal challenges to it, discusses the advantages and disadvantages of alternative funding mechanisms, and describes the commercial context of current dredging activity. The last section identifies legislation related to harbor maintenance funding.", "", "The HMTF was established by Title XIV of the Water Resources Development Act of 1986 (WRDA, P.L. 99-662 , enacted November 17, 1986). Prior to 1986, U.S. Treasury general funds were used to pay the federal share for operation and maintenance (O&M) of harbors and for the deepening of channels. The HMT was originally assessed at 0.04% of the cargo value. This revenue was intended to pay for 40% of O&M costs incurred by the Army Corps of Engineers and 100% of O&M costs of the St. Lawrence Seaway. Section 11214 of the Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 ) increased the HMT from 0.04% to 0.125% in order to recover 100% of the Corps' port O&M expenditures.\nIn addition to imported and domestic waterborne cargo handled at ports, the tax is assessed on the value of the ticket in the case of cruise ship passengers. As mentioned earlier, export waterborne cargo is not taxed as per a 1998 Supreme Court decision that found that it violates the export clause of the Constitution, which states that, \"No tax or duty shall be laid on articles exported from any state.\" At the time, exports generated about a third of the fund's revenues. Other court decisions (including decisions by the U.S. Court of International Trade (CIT), the U.S. Court of Appeals, and the U.S. Supreme Court) have established that HMT is constitutional as applied to domestic shipments and the embarkation of cruise line passengers.\nGenerally, coastal and Great Lakes ports are subject to the tax. A list of ports subject to the tax is codified at 19 CFR 24.24. The list does not include ports on inland rivers that are subject to the inland waterways fuel tax collected for the Inland Waterways Trust Fund. Passengers aboard ferries and cargo moving to and from Alaska (except for crude oil), Hawaii, and other U.S. possessions are also not subject to the tax. Since 1998, nearly all of the tax revenue is generated by importers of waterborne cargo —domestic cargo shippers generate only about 5% of the revenue and cruise ship passengers less than 1%. A significant amount of HMT revenue is not collected from domestic shippers. The Corps' preliminary estimate is that approximately $500 million per year remains uncollected. The Corps is working with U.S. Customs and Border Protection (CBP) to improve tax collection from these shippers. Five hundred million dollars represents 44% of the total amount collected in FY2009 and is about eight times more than the amount currently collected from domestic shippers.", "In its 1998 decision the U.S. Supreme Court stated that a user fee based on the value of service provided to a marine carrier would not violate the Constitution. In August 1998, the Clinton Administration proposed a new revenue generating system using a Harbor Services User Fee (106 th Congress, H.R. 1947 ). The payment of the Harbor Services User Fee (HSUF) would be placed on the carrier, rather than the shipper (who pays the current HMT). The HSUF was based on a vessel's capacity, as measured by vessel capacity units, which are a volumetric measurement of ship size based on net tonnage or gross tonnage as appropriate, and its frequency of port use per voyage. Revenues from the fee would be deposited into a proposed Harbor Services Fund, which would fund both routine maintenance and harbor-deepening projects (new work). The proposal was aimed at satisfying the Supreme Court ruling by establishing a closer link between the revenue collection and the service provided, while being consistent with trade obligations. The 106 th Congress did not pursue the Clinton Administration's proposal or other proposals, such as a return to funding maintenance and dredging from general revenues ( H.R. 1260 ).\nThe stated advantage of the HSUF proposal was that it required ship owners to internalize the cost of deploying larger ships. Although larger ships save money on the ocean leg, they increase costs at port because, among other things, they require deeper channels and berths. Ship operators do not fully calculate these costs in their decision to build larger ships because dredging costs are borne by others, namely their customers (for harbor maintenance) and federal taxpayers (for harbor deepening). To the extent that dredging costs are external to a ship operator's cost-benefit calculation, its decisions regarding fleet investment will be biased in favor of larger ships. If these costs were internalized by the ship operators through payment of a dredging fee based on ship size, some say, ship investment decisions would more accurately reflect the true cost of bigger ships.", "The federal government is statutorily required to continue collecting the HMT from non-export cargo and passenger ships. The European Union sees the application of the HMT to imports as a discriminatory import tariff that violates U.S. obligations under the World Trade Organization (WTO). In February 1998, the European Union requested WTO consultations on the issue. A first round of consultations took place in March 1998. Second round negotiations, which included Japan, Norway, and Canada, took place in June 1998. The European Union indicated that if satisfactory legislation was not passed by January 1, 2000, it would ask for a WTO dispute resolution panel. As of 2009, however, the European Union has not requested a panel.", "The HMTF is used to fund maintenance dredging, not new construction. Maintenance dredging is work performed to maintain a channel's depth and width to the dimensions authorized by Congress. To increase a channel's authorized depth or width requires an act of Congress, which is referred to as construction or \"new work\" by the Corps and is funded from the General Treasury, not the HMTF. There are also different federal/local cost sharing requirements between construction and maintenance dredging as indicated in the following table.\nOver the last decade, maintenance dredging has accounted for about seven out of every ten federal dredging dollars and about 84% of the total material dredged (construction dredging has accounted for the remaining three dollars and 16% of total material dredged). About 80% of maintenance dredging is performed by private contractors under the USACE's direction. On a per cubic yard basis, construction dredging is over twice as expensive as maintenance dredging. In constant dollars (2000), the USACE calculates that maintenance dredging costs per cubic yard have increased from $1.53 in 1963 to $3.19 in 2008.\nThe Corps dredges only the federally designated channels in harbors. Port authorities are responsible for dredging berths, which is the area next to the pier where a ship docks.", "In the early 1980s, deep draft colliers (coal ships) fueled debate over U.S. port dredging needs. Today, seemingly ever-larger containerships are the primary driving force behind current dredging activity. Dry bulk vessels (ships that carry grain, soybean, ore, or coal) also have grown in size since World War II, but at present there does not appear to be a trend towards larger vessels in this category. Although oil tankers are among the largest vessels in the world fleet, typically, a supertanker stays at sea for extended periods, loading or unloading at offshore platforms or single-point moorings or discharging at designated \"lightering\" zones offshore where a supertanker transfers cargo to a smaller shuttle tanker.\nDifferences in service patterns between container and bulk ships account for the greater need of container ships for deeper access channels. Bulk tankers are usually chartered per voyage between a single origin and destination port and therefore have more flexibility in waiting for tidal action to ease their passage in port. Container ships pick up and drop off cargo at multiple ports as per an advertized schedule. Waiting for high tide would severely disrupt their service performance. Container ships typically call at three or four ports within a coastal region. They would likely be fully loaded at only the first and last calls, and partially loaded (and therefore needing less draft) at ports in between.\nShips calling at U.S. ports have been limited in size somewhat by the dimensions of the Panama Canal. The development of double-stack container rail service in the 1980s reduced the cost of shipping containers over land across the United States, thereby reducing reliance on the Canal for transcontinental shipments, and allowing trans-Pacific carriers to deploy larger, \"post-Panamax\" ships. This development increased the competitiveness of U.S. West Coast ports as gateways for trans-Pacific containerized trade, which is by far much larger than trans-Atlantic trade. Recently, the Panama Canal has embarked on a widening and deepening project, expected to be completed around 2015. U.S. Gulf and East Coast ports anticipate that the Canal's expansion will enhance their competitiveness vis-à-vis West Coast ports in capturing Asian cargo and, thus, their interest in dredging to accommodate larger ships has intensified. Due to geological differences, U.S. Gulf and East Coast ports, as a group, require far more dredging than do West Coast ports, some of which are particularly large generators of HMT revenue.\nIf U.S. ports subject to the HMT shipped more cargo between them, they would have more of an economic interest in the maintenance of each other's navigation channels. However, domestic shipping on the Great Lakes and along the coasts is only one-fifth the tonnage of U.S. foreign waterborne trade and domestic vessels account for less than one in every ten ship calls at U.S. ports. Besides Alaskan and Hawaiian ports which ship goods to and from California and Washington State ports, the only other U.S. ports with significant domestic volume are Duluth, Minnesota, which ships iron ore to Indiana and Ohio Great Lakes ports, and certain Gulf Coast ports, which ship significant amounts of petroleum or chemical products between them. Thus, for most U.S. ports, the relationship with one another is more competitive than complementary. This is in contrast to the harbor maintenance funding mechanism, which creates a national pool of funds and redistributes the tax revenues from busy U.S. ports with low maintenance costs to less busy ports with higher maintenance costs.", "The revenues collected from the HMT are deposited into the HMTF. The HMTF balance is expected to be over $5 billion at the end of FY2010, as shown in Figure 1 . Currently, revenue deposited into the HMTF exceeds transfers out of the fund, which are approved by Congress annually. Interest on collections has been over $100 million in recent fiscal years. HMTF expenditures fall under the discretionary spending budget ceilings. Congress appropriates funds for the USACE to perform navigation operation and maintenance at individual harbors. The amounts expended in a given year at harbors that qualify for recovery from the HMTF are reimbursed to the General Fund. The HMTF balance increased in FY1999 as a result of the Energy and Water Development Appropriations Act of FY1999 ( P.L. 105-245 ), which did not require the recovery of Corps of Engineers O&M expenditures from the fund for that year. Although a decrease in international trade reduced HMT collections by about $375 million in FY2009, the current HMTF balance, in conjunction with the revenue stream from the remaining HMT collections and interest payments, is considered sufficient to recover expenditures for the foreseeable future. Because the HMTF is not a separate, or \"off-budget,\" account within the federal budget, the \"surplus\" in the HMTF has in effect already been spent on general government activities.", "In the administration of the tax, there is no attempt to identify particular port usage and allocate funds accordingly. In other words, the HMT generates a national pool of funds, which is distributed without regard to which ports used triggered collection of the tax. However, the tax is meant to be a port user charge and comparing where the tax is assessed and where the revenues are spent raises a number of policy issues. As indicated above, almost all the tax revenues are generated by importers. This means that ports which handle a large amount of imported containerized cargo are likely to be exceptional in the amount of HMT revenues they generate since containerized cargo is generally higher in value than other cargo types. Data on cargo value is collected by the federal government only for international cargo, not domestic, so it is not possible to calculate the total amount of HMT revenue that could be collected at each port. To provide a rough indication of which ports likely generate the most HMT revenues, the top 25 ports by imported cargo value in 2005 are listed in Table 2 (2005 is the latest year available; the ranking is fairly stable from year to year). HMT revenue generation is quite concentrated. The top 15 ports account for 75% of the total value of imported cargo and the top 25 ports account for over 85% of the total value.\nAmong the ports listed in Table 2 , Los Angeles, Long Beach, Tacoma, and Seattle stand out as ports whose customers generate a substantial amount of HMT revenue that is mostly spent on the maintenance of other harbors. Based on the HMTF expenditures these ports have received and the HMT revenues generated on imported cargo alone (not counting domestic cargo or cruise ship traffic), Los Angeles and Long Beach likely receive less than a penny on the dollar, and Seattle and Tacoma just over a penny for every dollar that import shippers who use their port pay in HMT. New York, Boston, and Houston likely receive less than a quarter of tax revenues collected.", "To provide an indication of which importers generate the most revenues for the HMTF, Table 3 lists fifteen of the top commodities by value of cargo imported by vessel into the United States in 2008. These fifteen commodities account for about 82% of total cargo value imported by vessel. Imported oil accounts for about a third of total value and generates more funds for harbor maintenance than any other commodity (as classified by the harmonized system at the 2-digit level). Consumer goods also appear to generate significant HMT revenues because motor vehicles, clothing, toys and sporting equipment, furniture, footwear, beverages, and at least a portion of appliances and electrical machinery, if aggregated, account for over a third of import value.\nOne advantage of a harbor maintenance tax based on cargo value is that those who can most afford to pay, pay more. Transport costs generally decrease as a percentage of cargo value as cargo value increases. Thus, even though the HMT rate increases for higher value shipments, the overall cost of transportation in relation to shipment value decreases for higher value shipments. But cargo value does not have much correlation with dredging needs, so it works less well as a user fee in this regard. One can say that shippers of high-value, low volume commodities (such as manufactured and finished goods) are likely to prefer a tax based on cargo tonnage rather than cargo value. Conversely, high-volume, low-value shippers (shippers of raw materials in bulk) are likely to prefer a tax based on cargo value rather than cargo tonnage.", "", "Maintenance dredging accounts for about four-fifths of the Corps' total harbor and channel O&M costs, ranging from about $525 million to close to $700 million per year in recent years. Since establishment of the fund in 1986, the St. Lawrence Seaway Development Corporation's (SLSDC) operations and maintenance expenditures related to the seaway also are funded from the HMTF. Since 1996, the administrative cost of collecting the tax by U.S. Customs and Border Protection (CBP) is also funded from the HMTF. SLSDC and CBP expenditures from the HMTF have been relatively minor compared to the USACE's expenditures related to harbor operation and maintenance. Annually, about $15 million to $20 million has been appropriated from the HMTF to the SLSDC and $3 million to CBP.\nAncillary activities directly related to maintenance dredging or some other activity related to keeping a waterway unobstructed are also recoverable from the HMTF. For instance, since 1996, HMTF funds can be used to recover the federal share of construction costs for dredged material disposal facilities and about $10 million to $15 million annually has been spent on construction of these facilities. Some HMTF funds also go towards channel surveying and waterway management studies related to navigation. The USACE keeps one of its own dredges on standby for emergency dredging purposes, at a cost to the HMTF of about $5 million per year. In some harbors, drift material or aquatic weeds can be a navigation hindrance and HMTF funds are used for their removal. Maintenance of harbor breakwaters and jetties is also recoverable from the HMTF. HMTF monies have been used for the maintenance of certain bridges over waterways which are the responsibility of the Corps.\nIn addition to the locks operated and maintained by the SLSDC, the HMTF is used to fund the operation and maintenance of a few other locks not subject to the inland waterway fuel tax and not funded by the Inland Waterway Trust Fund. These include the Soo Locks on the St. Marys River in Michigan, the Chittenden Locks on the Lake Washington Ship Canal in Seattle, the Bonneville Lock and Dam on the Columbia River in Oregon (navigation portion only, not hydropower), the Black Rock Lock at Buffalo, the Troy Lock on the Hudson River in New York, multiple locks on the Okeechobee Waterway in Florida, and a few other locks along the Louisiana coast.", "The USACE distinguishes HMTF expenditures for deep draft versus shallow draft harbors and channels. Deep draft is greater than 14 feet, and shallow draft is 14 feet or less. On a yearly basis, since 1987, between 81% and 90% of HMTF expenditures have been spent on deep draft harbors and channels (thus, between 10% and 19% have been spent on shallow draft waterways). Over the last decade, about 16% of total HMTF expenditures have been spent on maintenance of shallow draft channels. Most shallow draft facilities are primarily recreational in nature and therefore contribute little (if any) revenue to the HMTF.", "As Table 4 indicates, nearly one-fifth of HMTF funds over the last decade have been spent in Louisiana. HMTF expenditures for Louisiana amount to over 2.5 times the expenditures for the second-ranking state, Texas, which accounts for about 8% of the expenditures. Michigan ranks fifth and is the only state without a salt water port in the top 15 (Ohio is the next state with only freshwater ports and ranks 17 th ). Although North Carolina is relatively expensive in terms of HMTF withdrawals, ranking 10 th and accounting for 3% of expenditures, relatively little commercial cargo is shipped on North Carolina waterways. North Carolina ranks 28 th in waterborne tonnage among the 30 coastal and Great Lakes states where the HMT is collected. In 2007, North Carolina ports handled about 8% more cargo than Rhode Island ports, but its harbor maintenance costs for the same fiscal year were nearly 20 times greater than Rhode Island's. The top 20 states in Table 4 account for 92% of HMTF expenditures from FY1999-FY2008.", "A list of the most expensive channels in terms of HMTF expenditures explains the state ranking. Significant factors in determining O&M costs are the amount of sand and silt moved either by a river or by coastal wave action, the total length of a channel, and number of locks. As Table 5 indicates, the most expensive channel is the Mississippi River from Baton Rouge to the river's end at the Gulf of Mexico. This shipping channel is about 250 miles long. It accounts for 43% of Louisiana's total HMTF expenditures and about 8% of the nation's total. Hurricane Katrina may have increased the need for maintenance dredging on the waterway, but even prior to its landfall in August 2005, over twice as much HMTF expenditures were directed to Louisiana than the other leading states. Mobile Harbor in Alabama is the second most expensive, followed by the St. Marys River channel in Michigan. The St. Marys River separates Michigan from Canada, and locks on this river allow navigation between Lake Superior and Lake Huron. Other channels with locks funded from the HMTF, as identified above, are also relatively expensive and some are included among the top 25. The top 25 projects account for nearly half (49%) of total HMTF expenditures.", "Some of the project names listed in Table 5 may not be recognizable to harbor maintenance taxpayers because they are not harbors or channels commonly used by shippers. One example is the Oregon Inlet on the Outer Banks of North Carolina (which the USACE refers to as the Manteo-Shallowbag Bay). Over the last decade, over $60 million ($6 million per year) has been spent to dredge the inlet in an attempt to maintain the channel to its authorized depth of 14 feet and width of 400 feet. Maintaining the channel to these dimensions, let alone keeping it open, is a challenge because of the notorious amount of sand that naturally moves along North Carolina's barrier islands. Essentially, the navigation channel acts as a trap for the moving sand and must be constantly removed, if the channel is to be kept passable. Although no cargo is moved through this channel, commercial fisherman, charter boat operators, and recreational craft use the inlet. The nearby fishing ports of Wanchese and Stumpy Point, North Carolina ranked 33 rd in commercial fish landings in 2007 (22.4 million pounds).\nOregon Inlet is exceptional in its dredging requirements but there are many more harbors, while individually costing less to maintain, collectively cost shippers hundreds of millions to maintain, even though no goods are shipped through them. Yaquina Bay and Harbor in Oregon is one example. This harbor has received over $25 million in HMT revenues over the last decade. No cargo has been shipped through this harbor in years, but it does rank 20 th in commercial fish landings and is a major recreational harbor.\nGrays Harbor (Westport) in Washington State is the 15 th most expensive harbor channel to maintain, yet, in 2007, it ranked 133 among U.S. ports in terms of the amount of cargo it handled. Over the last decade, $115 million ($11.5 million per year) has been spent keeping the channel to its authorized depth of 48 feet. About one ocean going ship and two or three coastal barges call at this port per week. For comparison, the nearby ports of Seattle and Tacoma (Sea/Tac) have withdrawn a combined total of $16.8 million over the last decade from the HMTF ($1.7 million per year), yet these ports handle about 75 ocean going ships and thousands of barges per week and handle 44 times more cargo than does Grays Harbor. Per ship call, maintenance dredging costs at Sea/Tac amount to less than $500, while at Grays Harbor they amount to over $250,000. Although little cargo moves through Grays Harbor, it is much more significant to commercial fishermen and recreational boaters. In 2007, it ranked 13 th in commercial landings of fish (98.3 million pounds).\nA similar situation occurs further down the coast at Humboldt Harbor (Eureka), California, which, like Grays Harbor, is highly dependent on trade in wood products. This harbor handles even less cargo than Grays Harbor, 722,000 short tons in 2007, which is not enough cargo even to make the list of the top 150 U.S. ports. Even so, about $4.5 million per year is spent from the HMTF for maintenance dredging, making it the 33 rd most expensive harbor to maintain. In 1998, the port embarked on a deepening project from 40 to 48 feet but ship traffic has declined since then. About one ocean going ship calls at this port per month. Barge traffic is a little more frequent. Barges do not have the same draft requirements as oceangoing ships.\nOther high cost waterways are canals that see little or no use by cargo shippers, at least not the big ships that would require the depths to which the canals are maintained. One example is the Cape Cod Canal, built in 1914 by a private financier who figured vessels would prefer the shorter route through the canal than the more circuitous and precarious route around the Cape. It was sold to the federal government in 1928 because not enough vessel operators preferred the canal route to make it commercially viable. Today, shippers are paying $7.7 million per year for the USACE to maintain it. The only cargo shipped through the canal on a regular basis is fuel oil in barges. The Cape Cod Canal costs nearly twice what it costs to maintain the Port of Boston's channels but handles less than half the cargo.\nAnother example of an expensive canal of little use to shippers is the Lake Washington Ship Canal (LWSC) that connects the Puget Sound with Lake Washington. Although located in Seattle, no shippers use the canal because all of the Port of Seattle's cargo terminals are located on the Sound, thus ships have no reason to transit the canal. The canal's cargo traffic is limited to intraport barge movement of sand and gravel, but it has cost HMT taxpayers $63 million to maintain over the last ten years which, like Grays Harbor, is tens of millions more than the costs to maintain the Ports of Seattle and Tacoma shipping channels combined. On a daily basis, an average of 100 pleasure boats (see Figure 2 below), transit the canal, accounting for about 82% of the canal's traffic. (Boaters prefer to dock in freshwater as there are no tides to contend with). Based on the number of vessels of all types that have transited the canal over the last decade (538,135 vessel transits), each vessel would have to pay $117 per transit if the maintenance costs were to be recovered from the canal's users. This indicates the nominal value that shippers are providing recreational boaters each time they pass through the canal. If recreational boaters were charged a fee based on the size of their boat, some say, it could correlate well with their lock usage and likely their ability to pay.\nNeither of these canals is as expensive to shippers as the Chesapeake and Delaware Canal (a.k.a. the C&D Canal) which has cost HMT taxpayers over $128 million in the last decade to maintain, almost three-fourths of what it has cost to dredge the entire Delaware Bay from the Port of Philadelphia to the Atlantic Ocean. As its name implies, the canal connects the Delaware Bay with the Chesapeake Bay, cutting across the State of Delaware. The canal was built because it was thought ships would take this short cut between the ports of Baltimore and Philadelphia. While the C&D Canal carries about 15 million short tons of cargo per year, ports along the Delaware Bay handle over 125 million short tons. The C&D Canal costs almost six times more, on a per ton basis, than the cost to maintain the entire Delaware Bay.", "Great Lakes carriers and ports refer to a lack of adequate dredging as a crisis in their waterway system, noting that many ships are \"light loading\" (carrying less cargo than the ship's capacity to reduce draft). Lower than normal precipitation has affected lake levels in some years. The Great Lakes Maritime Task Force, a coalition promoting Great Lakes shipping, asserts $200 million per year in maintenance funding is needed to restore the system to its authorized dimensions, but have only been appropriated about $90 million per year. While Great Lakes harbors and channels have accounted for 14% of total HMTF withdrawals over the last decade, shipping on the Great Lakes represents less than 10% of the total foreign and domestic tonnage shipped through ports subject to the HMT. Maintenance costs amount to about 60 cents per ton of cargo carried (based on 1998-2007 data) which, as Figure 3 indicates, makes the Great Lakes system one of the less efficient waterways. Because Great Lakes shipping consists mostly of relatively low dollar value raw materials (iron ore, coal, and limestone), it does not generate much HMT revenue (in 2005, Great Lakes ports accounted for only 0.3% of the nation's total value of waterborne imports). Thus, under the present financing scheme, the Great Lakes region relies heavily on coastal port use by importers to maintain its harbors.\nWide disparities exist among harbors when maintenance costs are compared on a per ton basis, as there is little need for channel maintenance at some of the busiest ports in the country while some rarely used ports or channels require extensive maintenance. Figure 3 illustrates this disparity among selected U.S. harbors. Harbors that handle little or no cargo may generate economic benefits for nearby communities through recreational boating or commercial fishing activity. However, recreational and fishing vessels do not require the same channel depths and widths as ships, and paying for their maintenance by increasing shipping costs can be seen as a shift of finite resources from those who pay the tax as a user fee to those who do not.", "While significant amounts of HMT funds are spent at harbors and channels that see little or no ship traffic, says the Corps, the busiest shipping channels in the country are not being maintained to their authorized depths and widths. As mentioned above, according to the Corps analysis, full channel dimensions are available less than an average of 35% of the time at the 59 highest use U.S. harbors. Most, if not all, of the busiest ports in the country generate more than sufficient HMT revenue to cover Corps O&M expenditures at their port, even at exceptionally dredging-intensive ports like those on the Mississippi River in Louisiana. While the top ten ports account for nearly 70% of the total value of foreign goods shipped through U.S. ports, these ports have received about 16% of total HMTF expenditures over the last decade. In terms of ship traffic, 80% of oceangoing ships arriving in the United States call at one of the nation's twenty busiest ports, but these twenty ports, based on a rough calculation, account for less than 40% of total HMTF expenditures. As indicated above, a good portion of the HMT revenues that shippers generate are used to dredge channels used mostly by either recreational boaters or commercial fishermen, which do not pay the HMT. Given the amount of HMT collections unspent on harbor maintenance and the amount spent on shallow draft or little used deep draft harbors, a rough estimate is that only 30 to 45 cents of every HMT tax dollar paid is being spent on harbors that shippers readily use.\nSome might argue that to target one group of harbor users for assessing a fee and then to distribute revenues mostly, or entirely, in the case of some harbors, for the benefit of other users, undermines the \"trust fund\" and \"user fee\" concept. Moreover, since fishing and marinas are commercial enterprises and private recreational boaters (and especially yacht owners) are not indigent harbor users, it might be asked why these users could not also contribute to the cost of maintaining the harbors they use. As originally introduced, the HMT would have been assessed on commercial fishermen. An amendment exempting commercial fishing from paying the tax was agreed to during Senate committee consideration. Recreational boaters currently pay federal fuel taxes and import duties, which are used, among other things, to fund boat safety programs and recreational boat docking and sewage disposal facilities, but are not used to fund dredging activity. This fund, the Sport Fish Restoration and Boating Safety Trust Fund, generates an equivalent amount of revenue on an annual basis as the HMT.", "Because the HMTF provides a national pool of funds for channel dredging rather than a port specific one, naturally deep harbors subsidize shallower ports. Thus, the present funding system levels the playing field among ports with different dredging requirements. Some might contend that it draws traffic away from more efficient ports to less efficient ports, in terms of dredging costs, thereby raising the Nation's overall cost of moving goods through the marine transportation system. Cross-subsidies among ports would be eliminated if funds generated at a particular port were reserved solely for that port's local dredging needs rather than becoming part of a nation-wide fund. However, a port-specific funding system would favor busy ports over ports that are underutilized. With more ship traffic, larger ports would not have to charge as much per ship or shipment to recover dredging costs as smaller ports (for example, the tremendous difference in dredging costs per ship call between Grays Harbor and SeaTac cited earlier). Some small ports would either have to close or service only small ships. Thus, a national pool of funds provides maintenance funds to smaller ports that otherwise would be economically unviable. However, smaller ports could reduce the overland transport costs for nearby importers or exporters, thereby promoting economic development in the region. There are also river systems that have significant levels of industry along them and the inability to move bulk cargoes out of smaller ports could diminish U.S. exports. Smaller ports can also provide shippers the option of moving cargo through less congested ports. For instance, Chrysler recently announced that it would begin exporting cars to Asia through Grays Harbor in Washington, in part, for this reason. If not handling cargo, smaller ports can still service the maritime industry in other ways. Smaller ports can be strategically located in terms of providing a \"harbor of refuge\" for vessels in distress, as a base for Coast Guard search and rescue operations, or as a homeport for government research vessels. For example, the National Oceanic and Atmospheric Administration (NOAA) recently announced that it would be moving its West Coast vessels from Seattle to Yaquina Bay and Harbor in Oregon.", "In the 111 th Congress, several bills were introduced to either change the tax rate or how revenues from the tax are spent. H.R. 3486 , H.R. 638 , S. 551 , and S. 1509 would repeal the tax on domestic waterborne non-bulk cargo and cargo imported from Canada through the Great Lakes for the purported purpose of mitigating highway congestion by diverting shipments from truck to water modes. Groups supporting this legislation contend that in addition to the HMT rate, the administrative burden of filing the tax discourages potential waterborne shippers, because they do not pay a separate tax when shipping by truck or rail. Others question to what extent this is true, however. Most truck shippers are not located on waterways and therefore would require a truck move to and from the loading and discharge ports to utilize waterborne transportation. These truck and cargo transferring costs could be a significant cost impediment for truck shippers to utilize waterborne transportation, regardless of the HMT.\nH.R. 3447 would do away with the requirement that HMTF spending be appropriated by Congress giving the USACE more autonomy over the amount spent yearly on harbor maintenance. H.R. 4844 / S. 3213 would provide a \"spending guarantee\" modeled after the Airport and Airway Trust Fund. The intent is to match annual spending levels with annual HMT collections. Opponents of these proposals argue that they would inhibit Congress' ability to adjust funding priorities from year to year.\nH.R. 2355 would increase the tax rate to 0.4375% ($4.38 per $1,000 in cargo value) and expand use of the fund for landside port improvements in addition to the waterside maintenance performed by the Corps. Increasing the capacity of highways and railroads leading to seaports has been an issue as Congress debates reauthorization of surface transportation funding programs, but minus a federal fuels tax increase, a major stumbling block has been how to increase federal funds for surface transportation improvements.\nThe Obama Administration, in its FY2010 budget submission, requested that a pilot project be created to examine the feasibility of having local users finance the maintenance dredging of channels with little or no commercial traffic. Congress reduced the amount of funding for this program from $1.5 million to $1.4 million. The Administration requested an additional $1.5 million for FY2011 and indicated that a report documenting the pilot's program findings would be prepared.\nThe American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) provided $4.6 billion for the USACE Civil Works Program, of which $2.3 billion was appropriated for operation and maintenance. A Corps Recovery Act spending plan indicates that $670 million in O&M work will be derived from the HMTF." ], "depth": [ 0, 1, 1, 2, 3, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 2, 3, 2, 3, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "h0_title h2_title h1_title", "h0_full h1_title", "h1_full", "", "", "h2_full", "h2_title", "h2_full", "", "h2_title h1_title", "", "", "h2_full", "h2_full", "h1_full", "", "h2_full h1_full", "", "h3_full h1_full" ] }

{ "question": [ "Why did the Congress enact the HMT?", "O&M costs come mostly from what?", "Where is the tax directed?", "At what rate is the tax assessed?", "Where do the tax revenues go?", "What changed in 1998 regarding the HMT?", "How well are the busiest harbors maintained?", "What risks become present due to this lack of maintenance?", "What are some proposing in response to these risks?", "What funding decisions may have caused this problem?", "What criticisms have been made of the HMT?", "What pilot program started in response to this concern?", "What other issues plague HMT revenue distribution?", "How are dredging costs distributed across the U.S?", "How are HMT revenues redistributed?", "What ports represent the largest new generators of HMT revenue?", "Why does international cargo increase competition?", "How did the111th Congress take up HMT?", "What objectives were included in this legislation?", "What was the fate of these bills?" ], "summary": [ "In 1986, Congress enacted the Harbor Maintenance Tax (HMT) to recover operation and maintenance (O&M) costs at U.S. coastal and Great Lakes harbors from maritime shippers.", "O&M is mostly the dredging of harbor channels to their authorized depths and widths.", "The tax is levied on importers and domestic shippers using coastal or Great Lakes ports.", "The tax is assessed at a rate of 0.125% of cargo value ($1.25 per $1,000 in cargo value).", "The tax revenues are deposited into the Harbor Maintenance Trust Fund (HMTF) from which Congress appropriates funds for harbor dredging.", "Due to a Supreme Court decision in 1998, exporters no longer pay the tax because it was found unconstitutional.", "Despite a large surplus in the trust fund, the busiest U.S. harbors are presently under-maintained. The U.S. Army Corps of Engineers (Corps) estimates that full channel dimensions at the nation's busiest 59 ports are available less than 35% of the time.", "This situation can increase the cost of shipping as vessels carry less cargo in order to reduce their draft or wait for high tide before transiting a harbor. It could also increase the risk of a ship grounding or collision, possibly resulting in an oil spill.", "To rectify this situation, some are calling for increasing disbursements from the trust fund.", "However, Corps data indicate that a significant portion of annual HMTF disbursements are directed towards harbors which handle little or no cargo. The Oregon Inlet in North Carolina, Grays Harbor in Washington, Humboldt Harbor in California, and the Lake Washington Ship Canal in Seattle are some of the harbors or waterways that fit this description. Commercial fishermen and recreational boat (or yacht) owners account for most, if not all, of the vessel traffic in these harbors. Fishermen and recreational boaters do not pay the HMT.", "Some might argue that to target one group of harbor users for assessing a fee and then to distribute revenues mostly, or entirely, in some cases, for the benefit of other users, undermines the \"trust fund\" and \"user fee\" concept.", "The Administration requested and Congress provided funding for a pilot program that began in FY2010 to investigate the feasibility of having non-cargo harbor users finance the dredging requirements of harbors with little or no commerce.", "In addition to the distribution of HMT revenues for the benefit of non-cargo harbor users, there are also equity issues associated with HMT revenue distribution among the nation's top commercial ports. The amount of HMT revenue ports generate also varies significantly due to differences in the amount and characteristics of the cargoes they handle.", "Due to geological differences, ports vary greatly in the amount of dredging they require. About one-fifth of HMTF expenditures are spent in Louisiana. The ports of Mobile, AL, and Portland, OR also are relatively expensive to maintain.", "Consequently, HMT revenues are redistributed from ports that are large import gateways with naturally deep channels to lower volume ports that require frequent dredging to maintain adequate channel depths and widths.", "The ports of Los Angeles, Long Beach, Seattle, and Tacoma, and to a lesser degree, Boston, New York, and Houston are large net generators of HMT revenue.", "International cargo predominates at most ports. Ports compete for this cargo, and the growth of containerized cargo and the prospective expansion of the Panama Canal have intensified competition among U.S. ports.", "Legislation was introduced in the 111th Congress that had varying objectives regarding the HMT.", "H.R. 3447 and H.R. 4844/S. 3213 would spend down the surplus in the HMTF. H.R. 2355 would increase the tax rate and expand use of the HMTF for landside port infrastructure improvements. H.R. 3486, H.R. 638, S. 551, and S. 1509 would repeal the tax on non-bulk cargo shipped on the Great Lakes and along the coasts in an effort to divert truck cargo from congested highways to waterways.", "None of these bills were enacted." ], "parent_pair_index": [ -1, 0, 0, 0, 0, 0, -1, 0, 1, 0, 0, 4, -1, 0, 1, 0, 0, -1, 0, 1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "Recent Developments", "Introduction", "Post-9/11 Reforms and Modified NICS Procedures", "NICS Procedures", "HSPD-6 and Terrorist Watchlists", "DOJ-FBI Modified NICS Procedures (February 2004)", "GAO Report Recommendations (January 2005)", "Possible Issues Raised by the Modified NICS Procedures", "DOJ Draft Proposal (April 2007)", "GAO Follow-Up Report (May 2009)", "Terror Gap Legislation", "HSGAC Hearing on the Fort Hood Shooting", "Denying Firearms and Explosives to Dangerous Terrorists Acts of 2011 and 2013 (S. 34 and H.R. 1506/S. 34 and H.R. 720)", "Firearms Eligibility and Dangerous Terrorist Determination", "Notification of a Dangerous Terrorist Determination", "Tenth Class of Prohibited Persons Under 18 U.S.C. §922(g)", "Remedies for Erroneous Firearms Denials", "Denial and Revocation of Firearms and Explosives Licenses", "Attorney General Implementing Guidelines", "Possible Policy Issues Raised by the Terror Gap Proposal", "Would the Proposed Non-notification Authority Be Feasible?", "Would Adequate Opportunity for Redress and Remedy Be Provided?", "Would a Precedent Be Set for Other Screening Processes?", "Appendix. Acronyms and Abbreviations" ], "paragraphs": [ "", "The April 15, 2013, Boston Marathon bombing that killed 3 people and wounded 264 could generate renewed interest in terrorist watchlist screening and background checks for firearms, because at least one of the alleged perpetrators was reportedly watch-listed as a suspected terrorist. And, on April 18, 2013, the alleged bombers—brothers Tamerlan and Dzhokhar Tsarnaev—are also alleged to have shot a police officer to death, high-jacked an automobile and taken its driver hostage at gunpoint, and engaged in a subsequent shootout with police.\nAccording to press accounts, in March and September 2011, the Russian Federal Security Service (FSB, or Federal'naya Sluzhba Bezopasnosti) contacted the Federal Bureau of Investigation (FBI) and Central Intelligence Agency (CIA), respectively, with information that suggested that Tamerlan Tsarnaev (the older brother) had become an Islamic extremist in the past year and intended to travel to Russia to meet with like-minded extremists. While neither the FBI nor CIA reportedly found that Tsarnaev was \"radicalized,\" based on a reasonable suspicion, records on him were possibly included in several border and aviation screening systems. These systems reportedly included an FBI record in a file on \"persons of interest,\" who might engage in \"suspicious travel,\" in the Department of Homeland Security's (DHS's) TECS; and a file based upon a CIA nomination to the National Counter Terrorism Center's Terrorist Identities Datamart Environment (TIDE), which was subsequently the basis of a terrorist watchlist record placed in the FBI-administered Terrorist Screening Center's Terrorist Screening Database (TSDB). Both the TIDE and TSDB are described in greater detail below.\nHowever, Tamerlan Tsarnaev's name was possibly spelled or transliterated differently from the Cyrillic alphabet, or even misspelt, on the watchlists in TECS and the TSDB, or on the passenger flight manifests submitted to DHS for pre-flight screening; as a possible consequence, potential watchlist matches were not made and authorities were not fully alerted about his travels to Russia from January through July 2012. Critics claim that had those officials been more fully alerted to his travels, they might have been prompted to more carefully scrutinize his behavior prior to the bombing.\nIn addition, on April 18, 2013, the Tsarnaev brothers allegedly shot and killed a Massachusetts Institute of Technology campus police officer, in an attempt possibly to seize that police officer's firearms. The brothers were reportedly armed with a 9mm Ruger semiautomatic pistol, when they attacked this police officer. This pistol was reportedly recovered at the scene of the subsequent shootout with police, and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is tracing this pistol. Prior to the shooting, attempts had been made to obliterate the pistol's serial number, but authorities managed to raise all nine digits of its number. This tracing process may provide information about how the brother(s) acquired the firearm. If the older brother, Tamerlan, had acquired the firearm from a federally licensed gun dealer, then the federally required background check may have triggered a terrorist watchlist hit that, in turn, would have possibly prompted authorities—particularly the FBI-led Boston Joint Terrorism Task Force—to reopen a preliminary assessment that it had previously conducted on him based upon the March 2011 Russian FSB tip and apparently closed in June 2011. The Boston JTTF, moreover, may have found cause to deny the firearms transfer to him. The Administration is reportedly conducting a top-to-bottom review to make sure that intelligence on the bombing was not missed, and Members of Congress have called for hearings.\nIn the 113 th Congress, even before the Boston bombing, Senator Frank Lautenberg and Representative Peter King had reintroduced their similar, but not identical, bills, the Denying Firearms and Explosives to Dangerous Terrorist Act of 2013 ( S. 34 and H.R. 720 ), known to supporters as the \"Terror Gap\" proposal. Also, in April 2013 when the Senate considered the Safe Communities, Safe Schools Act of 2013 ( S. 649 ), Senator Lautenberg filed an amendment ( S.Amdt. 734 ) to this bill that is similar, but not identical, to his Terror Gap proposal ( S. 34 ). While the Senate leadership has set S. 649 aside, if the Senate reconsiders this bill, it might also consider S.Amdt. 734 . In the wake of Boston, Senator Lautenberg has called for Congress to consider his bill to close the \"Terror Gap.\" In addition, Representative James Moran has included similar provisions in the NRA Members' Gun Safety Act of 2013 ( H.R. 21 ).", "Following the September 11, 2001, terrorist attacks (9/11 attacks), the George W. Bush Administration took measures to consolidate and expand the use of terrorist watchlists maintained by the federal government. As part of this process, the Department of Justice (DOJ) directed the FBI to modify their firearms- and explosives-related background check procedures to screen prospective firearms buyers and state-issued permit applicants (Brady background checks), as well as explosives license and permit applicants, against terrorist watchlist records. Those modified procedures became effective in February 2004. In addition, under the modified procedures FBI counterterrorism agents found it useful and arguably prudent to maintain and share information about terrorist watchlist-related matches for approved firearms transfer records. However, a provision of federal firearms law requires that all approved firearms transfer records held by the National Instant Criminal Background Checks System (NICS), including those related to terrorist watchlist matches, be destroyed within 24 hours.\nWhile the Attorney General has no specific statutory authority to screen those buyers and applicants against the terrorist watchlist records nor maintain records on approved firearms transfers for longer than 24 hours, the modified background check procedures initially generated little public outcry from opponents of greater federal gun control. At the same time, several Members of Congress raised public safety concerns about the possibility that terrorists might exploit the general availability of firearms in the United States. They tasked the Government Accountability Office (GAO) with evaluating the modified Brady background check procedures for firearms and, later, background check procedures for explosives. Since then, GAO has reported on several occasions that subjects of positive terrorist watchlist hits were transferred firearms and, less frequently, explosives. Over nearly 7 years (2004-2010), 1,453 federal firearms-related background checks resulted in terrorist watchlist matches; 1,321 (90.9%) were allowed to proceed. Those transfers were allowed to proceed because being on a terrorist watchlist is not, in and of itself, a disqualifying factor under either federal firearms or explosives law.\nGAO's confirmation that firearms have been transferred from federally licensed gun dealers to individuals watch-listed as known or suspected terrorists has lent impetus to a legislative proposal that was originally developed by DOJ, under Attorney General Alberto Gonzales, and submitted to Congress in April 2007. This proposal would give the Attorney General discretionary authority to deny firearms or explosives transfers to any watch-listed individuals if he deemed them to be \"dangerous terrorists.\" In the 110 th Congress, Senator Lautenberg and Representative King introduced this proposal as the Denying Firearms and Explosives to Dangerous Terrorists Act of 2007 ( S. 1237 / H.R. 2074 ). Supporters later dubbed this bill the \"Terror Gap\" proposal.\nIn the 111 th Congress, the November 2009 Fort Hood shooting renewed interest in this proposal, which Senator Lautenberg and Representative King had previously reintroduced ( S. 1317 / H.R. 2159 ). In May 2010, the Senate Homeland Security and Governmental Affairs Committee (HSGAC) held a hearing on \"terrorists and guns\" and debated the need to pass legislation like the Terror Gap proposal. While no further action was taken on the bill, Senator Lautenberg and Representative King reintroduced the Terror Gap proposal ( S. 34 and H.R. 1506 ) in the 112 th Congress.\nThis report examines potential policy issues that could arise under the Terror Gap proposal. For context, a basic overview of the U.S. government's post-9/11 terrorist watchlist procedures is provided, as well as an analysis of the Terror Gap proposal, which has been reintroduced in the 113 th Congress ( S. 34 and H.R. 720 ). Possible issues could include the following:\nShould U.S. persons—citizens and legal permanent residents—be notified when the Attorney General makes a \"dangerous terrorist\" determination about them for the purposes of gun control following a terrorist watchlist match? What form of redress and remedy would be provided for misidentifications, improper watch-listing, and wrongful denial? If enacted, moreover, would these redress and remedy provisions serve as a precedent for other terrorist screening procedures for which Congress has not provided similar avenues of relief? Would the Terror Gap proposal draw unwanted public attention to terrorist watchlists and related screening procedures, possibly undermining the effectiveness of those measures by making terrorists and other adversaries aware of them, and possibly setting a judicial review precedent for other terrorist watchlist screening processes?\nAs noted above, the Terror Gap proposal would grant the Attorney General the authority to deny firearms transfers and state-issued firearms permits, as well as federal licenses to deal in firearms, to watchlisted persons if he deemed them to be \"dangerous terrorists.\" The proposal would also grant the Attorney General similar authority to deny federal licenses to deal in explosives or federal permits to handle explosives. However, the gravity of a denial of a federal license to deal in either firearms or explosives, or a federal permit to handle explosives—which is arguably the denial of a privilege as opposed to a constitutionally enumerated right—would not be as compelling as the denial of a firearms transfer or state-issued permit to an individual. Hence, the principal focus of this report is on the potential policy issues that could be generated by the denial of a firearms transfer or a state-issued permit to an individual under the Terror Gap proposal. Although the due process issues raised by the Terror Gap proposal are not addressed in this report, the arguably parallel policy issues are examined in detail. To further this examination, this report provides (1) an overview of the post-9/11 reforms that led to the incorporation of terrorist watchlist checks into the Brady background check process, (2) an analysis of key provisions of the Terror Gap proposal, and (3) a summation of possible issues for Congress.", "Under the Brady Handgun Violence Prevention Act (Brady Act), Congress required the Attorney General to establish a computerized system to facilitate background checks on individuals seeking to acquire a firearm from federally licensed gun dealers. Under the permanent provisions of the Brady Act, the FBI activated the NICS on November 30, 1998. Initially, the FBI did not conduct terrorist watchlist queries through NICS as part of Brady background checks for firearms because being a known or suspected terrorist was not, and is not, a legally disqualifying factor for firearms possession eligibility under federal law. Conducting terrorist watchlist checks as part of Brady background checks for firearms raises three possible issues for Congress:\nShould terrorist watchlist checks be incorporated statutorily into the Brady background check processes? Given certain statutory restrictions prohibiting a permanent or temporary registry of firearms or firearms owners, should approved firearm transfer records be maintained on a temporary basis to determine whether persons of interest in counterterrorism investigations had or have obtained firearms? Should the Attorney General be granted authority to deny a firearms transfer based solely on a terrorist watchlist match?\nTo explore these issues in greater depth, the modified background check procedures, which were adopted in February 2004, are discussed below.", "Prior to the 1993 Brady Act, five states had established computerized, name-based criminal history record background check systems for firearms. However, the federal system under the Gun Control Act was largely paper-based. The Brady Act built upon this paper-based system, which essentially entailed the following procedures. When a private person (non-licensee) seeks to acquire a firearm (long gun or handgun) from a federally licensed gun dealer, he and the gun dealer are required to fill out ATF Form 4473. The gun dealer is also required to verify the purchaser's name, address, date of birth, and other information by examining a state-issued piece of identification, most often a driver's license. As the prospective transferee, the private person attests on ATF Form 4473, under penalty of perjury, that he is not a prohibited person.\nUnder current law, there are 10 classes of prohibited persons. Nine of those classes are prohibited from shipping, transporting, receiving, or possessing firearms or ammunition. They include\npersons convicted in any court of a crime punishable by imprisonment for a term exceeding one year; fugitives from justice; unlawful users or addicts of any controlled substance as defined in Section 102 of the Controlled Substances Act (21 U.S.C. §802); persons adjudicated as \"mental defectives\" or committed to mental institutions; illegal/unauthorized immigrants and most nonimmigrant aliens (with some exceptions in the latter case); persons dishonorably discharged from the U.S. Armed Forces; persons who have renounced their U.S. citizenship; persons under court-order restraints related to harassing, stalking, or threatening an intimate partner or child of such intimate partner; and persons convicted of misdemeanor domestic violence.\nIn addition, a 10 th class of persons is prohibited from shipping, transporting, or receiving firearms or ammunition. It includes\npersons under indictment in any court of a crime punishable by imprisonment for a term exceeding one year.\nAs part of a background check, a federally licensed gun dealer is required to submit a prospective firearms transferee's name, sex, race, date of birth, and state of residence to the FBI through NICS. Social security numbers and other numeric identifiers are optional, but the submission of these data is likely to increase the timeliness of the background check (and reduce misidentifications). The transferee's information is crosschecked against three computerized databases/systems to determine firearms transfer/possession eligibility. Those systems include the Interstate Identification Index (III), National Crime Information Center (NCIC), and NICS index. If the transferee indicates that he is a non-U.S. citizen, his information is also checked against the immigration and naturalization databases maintained by the Department of Homeland Security (DHS), Immigration and Customs Enforcement (ICE).\nThe FBI handles background checks entirely for most states, while other states serve as full or partial points of contact (POCs) for firearms background check purposes. In POC states, federally licensed gun dealers contact a state agency, and the state agency contacts the FBI for background checks. Under no circumstances is a federally licensed gun dealer informed about the prohibiting factor upon which a denial is based. A denied person is also not informed initially about the reason for his denial. However, a denied person may challenge the accuracy of the underlying record(s) upon which his denial is based. He would initiate this process by requesting (usually in writing) the reason for the denial from the agency that conducted the NICS check (the FBI or POC). The denying agency has five business days to respond to the request. Upon receipt of the reason and underlying record for the denial, the denied person may challenge the accuracy of that record. If the record is found to be inaccurate, the denying agency is legally obligated to correct that record.\nAs with other screening systems, particularly those that are name-based, false positives occur as a result of background checks. Although the frequency of these misidentifications has not been reported, the FBI has taken steps to mitigate false positives. In July 2004, DOJ issued a regulation that established the NICS Voluntary Appeal File (VAF), which is part of the NICS Index (described above). DOJ was prompted to establish the VAF to minimize the inconvenience incurred by some prospective firearms transferees (purchasers) who have names or birth dates similar to those of prohibited persons. These persons agree to authorize the FBI to maintain personally identifying information about them in the VAF as a means to avoid future misidentifications and delayed transfers. Current law requires that NICS records on approved firearms transfers, particularly information personally identifying the transferee, be destroyed within 24 hours.\nThere is also a provision of federal law that allows the Attorney General to consider petitions from a prohibited person for \"relief from disabilities\" and have his firearms transfer and possession eligibility restored. Since FY1993, however, a rider on the ATF annual appropriations for salaries and expenses has prohibited the expenditure of any funding provided under that account on processing such petitions. While a prohibited person could petition the Attorney General, bypassing ATF, such an alternative has never been successfully tested. As a result, the only way a person can reacquire his lost firearms eligibility is to have his civil rights restored or disqualifying criminal record(s) expunged or set aside, or to be pardoned for his crime.", "In September 2003, the U.S. government moved to consolidate and expand its use of watchlists to better screen for known or suspected terrorists at consular offices and international ports of entry, and to better track them if they manage to enter the United States. This effort came under Homeland Security Presidential Directive 6 (HSPD-6), which is discussed below. Prior to the 9/11 attacks, terrorist watchlists were maintained by several agencies primarily to prevent international (foreign) terrorists from entering the United States.\nUnder HSPD-6, the Attorney General established the Terrorist Screening Center (TSC) to consolidate the U.S. government's approach to screening both international and domestic terrorists. The National Counterterrorism Center (NCTC) also plays a pivotal role, because it serves as the U.S. government's central and shared knowledge bank on known or suspected international terrorists and international terrorist groups. The NCTC maintains the Terrorist Identities Datamart Environment (TIDE), the U.S. government's central repository on international terrorist identities and principal source of international terrorist screening records. Federal agencies within the U.S. Intelligence community (IC) forward nominations to the NCTC to place persons known or suspected to be international terrorists into TIDE based on evaluations of intelligence and law enforcement information. According to NCTC, if a person engages in certain types of conduct, it could warrant their entry into TIDE, and possibly a terrorist screening nomination as well. Examples of that conduct could include\ncommits international terrorist activity; prepares or plans international terrorist activity; gathers information on potential targets for international terrorist activity; solicits funds or other things of value for international terrorist activity or a terrorist organization; solicits membership in an international terrorist organization; provides material support (e.g., safe house, transportation, communications, funds, transfer of funds or other material financial benefit, false documentation or identification, weapons, explosives, or training); or is a member of or represents a foreign terrorist organization.\nAs of December 2011, TIDE contained over 740,000 persons, most with multiple minor spelling variations of their names. U.S. persons (including both citizens and legal permanent residents) made up less than 2% of TIDE listings. The NCTC supports the U.S. government's various terrorist screening operations by providing unclassified, \"For Official Use Only,\" international terrorist screening records to the FBI-administered TSC for inclusion in the Terrorist Screening Database (TSDB). As of May 2010, the TSDB contained information on 423,000 individuals. According to the TSC, U.S. persons make up about 5% of TSDB listings.\nAlthough there is little information about the terrorist nomination processes for other IC entities, according to a May 2009 DOJ Inspector General's audit, FBI Special Agents investigating international counterterrorism cases forward watchlist nominations on international terrorists to the NCTC for inclusion in TIDE and, subsequently, that information is forwarded to the TSC for inclusion in the TSDB. In addition, FBI Special Agents investigating domestic counterterrorism cases forward domestic terrorist watchlist nominations directly to the TSC for inclusion in the TSDB. Hence, the TSDB is the U.S. government's consolidated watchlist of all known or suspected terrorists, whether they are of the international or domestic type.\nIt is noteworthy that, in the Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 ), Congress required the Director of National Intelligence (DNI), in consultation with the Secretary of Homeland Security, the Secretary of State, and the Attorney General, to report to Congress on the criteria for placing individuals in the TSDB, including minimum standards for reliability and accuracy of identifying information, the threat levels posed by listed persons, and the appropriate responses to be taken if those persons were encountered. While it is unknown whether the DNI reported to Congress on this matter, in another report, the DHS Privacy Office underscored that those criteria could not be made public without (1) compromising intelligence and security or (2) allowing persons wishing to avoid detection to subvert those lists. In October 2007, the GAO reported that the FBI and Intelligence Community were using reasonable standards for watch-listing persons who are suspected of having possible links to terrorism.\nThe TSC shares TSDB-generated terrorist screening records with frontline screening agencies for inclusion in their computer systems. The TSC, moreover, tailors those records and shares them in accordance with the missions and legal authorities under which the screening agencies operate. Hence, those shared terrorist screening records are subsets of the TSDB, and are often viewed by observers to be distinct terrorist watchlists despite the intent of HSPD-6. Periodically, usually coinciding with a perceived U.S. government failure to watch-list a known or suspected terrorist properly, critics of the status quo have argued that visa and passport applicants, as well as air passengers, ought to be screened against the full set of available government data on potential terrorist threats.\nThe TSC director, in coordination with other federal agencies and national security staff, develops policies and procedures related to the criteria for including terrorist identities data in the form of terrorist screening records (or watchlist records) in the TSDB. All the data entered into the TSDB are collected by other agencies in accordance with applicable, pre-existing authorities. Although the TSC is not limited in its ability to address certain issues related to misidentifications because it has access to classified or law enforcement-sensitive information, it is restricted from divulging that information to the public. In a similar fashion, frontline screening agencies, such as the Transportation Security Administration (TSA) and U.S. Customs and Border Protection (CBP), have access to both unclassified traveler identifying information and sensitive intelligence or law enforcement information collected by other agencies. Such records would be considered security-sensitive information. Hence, it is generally the policy of the federal government neither to confirm nor deny whether any individual is on a terrorist watchlist.\nWhile the post-9/11 terrorist screening policies have resulted in positive terrorist watchlist matches and encounters, misidentifications and erroneous watchlist entries have also been a recurring concern for Congress. Initially, these problems were most frequently associated with TSA, but they also emerged as a problem for CBP. DHS addressed misidentifications and erroneous watchlist entries through its Traveler Redress and Inquiry Program (TRIP) and earlier efforts, such as, TSA's Office for Transportation Security Redress (OTSR). In addition, individuals who believe they have been denied boarding or unduly scrutinized in secondary screening/inspections, because they believe they have been misidentified as a terrorist while being screened by TSA or CBP, have another avenue for relief. If they feel that the relief and/or remedy provided under TRIP was unsatisfactory, they may pursue administrative review of TRIP determinations in federal court. To date, Congress and the Administration have shown little inclination toward providing any further judicial review to persons adversely affected by terrorist watchlist screening.", "In November 2003, DOJ directed the FBI to reassess its NICS procedures to include measures to screen prospective firearms transferees and permittees against terrorist watchlist records. This reassessment was arguably taken in tandem with the terrorist watchlist reforms initiated under HSPD-6, as well as a February 2002 NICS transaction audit in which it was determined that prohibited aliens (noncitizens) had been improperly transferred firearms.\nEffective February 2004, the FBI began routinely running background checks for firearms and explosives against a terrorist watchlist that resides in NCIC because inclusion on such a list suggests that there may be an underlying factor that would bar the prospective transferee, licensee, or permittee from possessing firearms or explosives. Following the 9/11 attacks, a subset of terrorist watchlist records that was included in an NCIC file designated by the FBI as the Violent Gang and Terrorist Organization File (VGTOF) was substantially expanded with TSDB-generated terrorist screening records. Later, the FBI segregated the gang- and terrorist-related records in NCIC-VGTOF, and terrorist screening records are currently downloaded into an NCIC file designated by the FBI to be the \"Known or Suspected Terrorist File (KST File).\"\nAs part of the background check process, NICS typically responds to a federally licensed gun dealer, otherwise known as a federal firearms licensee (FFL), with a NICS Transaction Number (NTN) and one of three outcomes: (1) \"proceed\" with transfer or permit/license issuance because no prohibiting record was found; (2) \"denied,\" indicating that a prohibiting record was found; or (3) \"delayed,\" indicating that the system produced information suggesting that there could be a prohibiting record. In the case of a possible watchlist match, NICS sends a delayed transfer (for up to three business days) response to the querying federally licensed gun dealer or state POC. During a delay, NICS staff contacts immediately the FBI Headquarters' Counterterrorism Division and FBI Special Agents in the field, and a coordinated effort is made to research possibly unknown prohibiting factors. If no prohibiting factors are uncovered within this three-day period, firearms dealers may proceed with the transaction at their discretion. However, FBI counterterrorism officials continue to work the case for up to 90 days in case disposition information is returned that permits a final determination.\nTo assist in verifying whether a KST hit is a positive encounter (a match), NICS staff often contact the federally licensed gun dealer to gain additional information on the applicant, such as his address, driver's license number, social security number, or alien registration number (if applicable). It is noteworthy, however, that GAO reported that federally licensed gun dealers are not legally obligated to provide NICS staff with this additional identifying information. If NICS and TSC staff believes the KST hit is a verified, positive encounter, the TSC staff will forward this information to the FBI's Terrorist Screening Operations Unit (TSOU). Next, NICS staff and the TSOU agent handling the encounter take further steps to make a final determination that the KST hit is a positive encounter.\nAt this juncture, the FBI Counterterrorism Division and the TSOU agent determine whether the applicant is the subject of an FBI investigation. If so, efforts will be made to coordinate with the appropriate Joint Terrorism Task Force (JTTF) and verify whether FBI Special Agents in the field have any disqualifying information on the applicant with which to block the transaction. If the applicant is not under investigation, then the FBI will generally initiate an investigation based upon the positive encounter and the fact that the watch-listed applicant had attempted to acquire either a firearm or a permit, or an explosives license/permit, if allowable under pertinent Attorney General investigative guidelines. In either case, the TSOU case agent is obligated to respond back to the NICS Command Center within 72 hours so NICS staff will know how to handle the NICS transaction.\nAfter a federally licensed gun dealer receives notice that the transaction may proceed, all identifying information submitted by or on behalf of the transferee is to be destroyed within 24 hours. In the case of a delayed response, all identifying information except for the NTN (NICS Transaction Number) and date of the transaction is to be destroyed in 90 days, unless a prohibiting factor is reported to the NICS Center. Generally, if an FFL proceeds with a transaction at his discretion following three business days, and the applicant is subsequently found to be disqualified, the ATF is notified and a firearms retrieval action is initiated in coordination with a JTTF.", "Senators Joseph Biden and Frank Lautenberg requested that GAO report on the modified NICS terrorist watchlist procedures. In January 2005, GAO reported that in a five-month period—February 3, 2004, through June 30, 2004—NICS checks resulted in an estimated 650 terrorist-related record hits. Of these potential hits, 44 were found to be positive matches. Yet, 35 of these transactions were allowed to proceed because, as noted above, being identified as a known or suspected terrorist is not grounds to prohibit a person from being transferred a firearm. Another six were denied, one was unresolved, and two were of an unknown status. GAO recommended that the Attorney General (1) clarify what information generated by the NICS background check process could be shared with counterterrorism officials; and (2) either more frequently monitor background checks conducted by full and partial POC states that result in terrorism-related NICS hits or allow the FBI to handle these cases entirely. Following this GAO recommendation, NICS procedures were altered and the NICS and TSC staff currently handle all KST hits for both full and partial POC states. However, with regard to the former recommendation, it is unknown whether the Attorney General clarified what NICS-generated information could be shared with counterterrorism officials.", "When Congress passed the Brady Act in November 1993, the use of terrorist watchlists during firearms-related background checks was not considered. Correspondingly, the Attorney General has no specific statutory authority to screen prospective gun buyers against terrorist watchlist records. Nevertheless, the DOJ and FBI have adopted procedures to do this because being on such a list suggests that there may be an underlying factor that would bar a prospective background check applicant from possessing a firearm. Hence, a possible issue for Congress could be whether terrorist watchlist checks should be incorporated statutorily into the background checks for firearms.\nIn addition, a proviso attached to the FY2004 DOJ annual appropriation and every year thereafter requires that NICS-generated approved firearms transaction records be destroyed within 24 hours. As described above, the FBI does not maintain those records for more than 24 hours after a federally licensed gun dealer has been notified by NICS that a firearms transaction has been approved. However, when background checks result in either partial or incomplete criminal history records, or a terrorist watchlist (NCIC-KST) hit, the firearms transactions is delayed for up to three business days. If a final determination cannot be made within three business days, NICS staff maintains the transaction record in an \"open\" status for up to 90 days. Upon a final determination, the FBI destroys the NICS firearms transaction records if the transferee is not found to be a prohibited person. However, to reach this final determination, information on the subjects of those background checks is passed on to FBI Special Agents and Intelligence Analysts in the field. While the NICS records are eventually destroyed for approved firearms transfers, it is unknown what happens to the information generated by NICS-related terrorist watchlist hits that are passed on to the FBI Counterterrorism Division and investigative personnel in the field, who are usually assigned to Joint Terrorism Task Forces. Information about those firearms transactions is possibly recorded and stored electronically in the FBI's investigative case files.\nIn the Brady Act, moreover, there is a provision that prohibits the (1) transfer of any NICS record to any other federal or state agency, or (2) the use of the NICS system as a national registry of firearms, firearms owners, or firearms transactions or dispositions. In light of the former prohibition, a second issue for Congress could be whether to grant the FBI greater authority to maintain and access NICS records for the purposes of counterterrorism, or whether existing statutory limitations that were arguably designed to prevent the maintenance of and access to such records should be strengthened.\nIn light of the first two issues, it follows that a third issue for Congress could be whether the Attorney General should be given explicit authority to deny firearms transfers to watch-listed persons on a case-by-case basis, or whether all known or suspected terrorists should be statutorily prohibited from possessing firearms and explosives.\nIn the 109 th Congress, several pieces of legislation were introduced that were related to NICS background checks and terrorist watchlists. For example, Senator Lautenberg and Representative John Conyers introduced the Terrorist Apprehension and Record Retention Act of 2005 ( S. 578 / H.R. 1225 ), a bill that would have (1) required that the FBI, along with appropriate federal and state counterterrorism officials, be notified immediately when NICS background checks indicated that a person seeking to obtain a firearm was a known or suspected terrorist; (2) required that the FBI coordinate the response to these occurrences; and (3) authorized the retention of all related records for at least 10 years. In both the 110 th and 111 th Congresses, Senator Lautenberg introduced a similar proposal, the Preserving Records of Terrorists & Criminals Transactions Act ( S. 2935 and S. 2820 ).\nAlso, in the 109 th Congress Representative Peter King introduced H.R. 1168 , a bill that would have required the Attorney General to promulgate regulations to preserve records of terrorist- and gang-related matches during these background checks until they had been provided to the FBI. Although these proposals would have addressed the issue of record retention, they would not have provided the Attorney General with a specific statutory authority to conduct terrorist watchlist checks, nor would they have authorized the Attorney General to deny a firearms transfer based solely on a terrorist watchlist match. However, Representative Carolyn McCarthy introduced a proposal in the 109 th Congress ( H.R. 1195 ) that would have barred anyone on the \"No Fly\" list from possessing a firearm. Prompted by some Members of Congress, DOJ developed a proposal to authorize the Attorney General to deny a firearms transfer to any watch-listed person he deemed to be a \"dangerous terrorist,\" as discussed below.", "Although watch-listed persons may be subjects of ongoing foreign intelligence, national security, and criminal investigations, they may not be persons prohibited from possessing firearms or explosives under current federal law. As subsequent events would indicate, DOJ concluded that it was limited under current law in its authority to use terrorist watchlists as part of the background check processes to deny firearms and explosives transfers to known or suspected terrorists. In hearings before the House Committee on the Judiciary, then-Attorney General Alberto Gonzales was questioned several times by Members of Congress about NICS procedures and terrorist watchlist hits.\nRepresentative Chris Van Hollen: \"Does it make sense to you that we stop a person from boarding the airline in order to protect the public safety, [but] that an individual can turn around, get in their car, go to the local gun shop and buy 20 semiautomatic assault weapons?\"\nAttorney General Gonzales: \"I think we should be doing everything we can to ensure that people [who] are in fact terrorists shouldn't have weapons in this country, the truth of the matter is. But unless they are disabled [disqualified] from having a weapon under the statute there's not much that we can do other than maybe try and get them out of the country or, by the way, to see if there's any disability under the statute that would allow us to deny them a firearm.\"\nIn 2005, Attorney General Gonzales directed the DOJ to form a working group to review federal gun laws—particularly in regard to NICS background checks—to examine whether additional authority should be sought to prevent firearms transfers to known or suspected terrorists. Nearly two years later, in April 2007, DOJ proposed legislation that would give the Attorney General the authority to deny a firearms transfer, state-issued firearms permit, or explosive license to any person found \"to be or have been engaged in conduct constituting, in preparation for, in aid of, or related to terrorism.\" In the 110 th Congress, Senator Lautenberg and Representative King introduced this proposal ( S. 1237 / H.R. 2074 ), but no further action was taken on either bill. In addition, Representative McCarthy reintroduced her proposal, newly titled the No Fly, No Buy Act ( H.R. 1167 ).", "In May 2009, nearly four years after its first report on NICS-related terrorist watchlist hits, GAO issued a follow-up report. According to that report, from February 2004 through February 2009 there were\n963 NICS background checks that resulted in positive terrorist watchlist matches, and of those checks, about 90% (865) were allowed to proceed and a firearms or explosives transfer may have occurred; of those checks described above that resulted in positive terrorist watchlist matches and a proceed with transfer, only one involved a potential explosives transfer; and of the 10% that resulted in denials (98), the denials were based on felony convictions, illegal immigration status, fugitive from justice status, or the unlawful use of, or addiction to, a controlled substance. All of these denials involved firearms, as opposed to explosives.\nGAO also recommended that if Congress were to move forward with legislation providing the Attorney General with the discretionary authority to deny a firearms transfer or permit or an explosives license/permit based on a terrorist watchlist hit, then it should consider including a provision in that legislation that would require the Attorney General to promulgate guidelines that would delineate under what circumstances that authority could be exercised. Following this report, Representative King and Senator Lautenberg reintroduced the DOJ draft proposal as nearly identical bills ( H.R. 2159 and S. 1317 ), which supporters dubbed the \"Terror Gap\" proposal.", "During the 111 th Congress, the November 5, 2009, Fort Hood shooting, in which 13 persons were shot to death and 32 wounded, served to heighten congressional interest in the use of terrorist screening records and firearms-related background checks. Leading up to the shooting, the alleged shooter, U.S. Army Major Nidal Malik Hasan, had corresponded by email with a radical Muslim imam, Anwar al-Aulaqi, who U.S. authorities had long suspected of having substantial ties to al-Qaeda in the Arabian Peninsula. Although FBI counterterrorism agents had been aware of Hasan's communications with al-Aulaqi, it was unclear at what level Hasan was scrutinized by the FBI. If he had been the subject of a full counterterrorism investigation, FBI policy would have required that he be watch-listed as a known or suspected terrorist. Had Hasan been watch-listed, there is a possibility, depending on the sequence of events, that his purchase of a pistol and the required background check could have alerted FBI counterterrorism agents to that transfer, and they might have been able to take steps that would have prevented the shooting. This event and several other terrorist attacks or disrupted plots involving firearms prompted Members of Congress to reexamine the Terror Gap proposal.", "In May 2010, the Senate Homeland Security and Governmental Affairs Committee (HSGAC) held a hearing on \"terrorists and guns,\" during which issues related to the Fort Hood shooting and a proposal to give the Attorney General additional authority to deny firearms transactions to persons watch-listed as terrorists were explored. Senator Joseph Lieberman, chairman of HSGAC, noted that firearms had been used in at least two deadly terrorist plots perpetrated by \"radicalized jihadists\": the Fort Hood shooting and the June 2009 Little Rock, AR, recruiting center shooting in which two U.S. servicemen were shot—one killed and one wounded. In other thwarted plots, conspirators were arrested for planning to use firearms to attack servicemen at Fort Dix, NJ, in 2006 and the Quantico, VA, Marine base in 2009. As part of his opening statement, Senator Lieberman voiced his strong support for the Terror Gap legislation and urged its prompt passage. He observed that\nTerrorists armed with semi-automatic and high-powered weapons can inflict heavy casualties in seconds. While it is true that homegrown terrorists are generally less sophisticated than those sponsored and trained overseas by Al Qaeda, they may also – particularly if acting alone – be harder to detect and stop. And the easy availability of lethal weapons ensures that these homegrown terrorists can legally obtain sufficient firepower to cause terrible damage.\nThese concerns were reinforced in June 2011 when Al Qaeda's U.S.-born spokesperson, Adam Gadahn, exhorted Muslim extremists in the United States to acquire firearms and carry out terrorist attacks in the United States in an internet posting.\nFor the hearing, GAO released updated statistics on firearms and explosives background checks and subsequent transactions that involved individuals watch-listed as terrorists. GAO also reported on measures taken by the FBI to improve firearms and explosives background checks for counterterrorism purposes. In this update, GAO reiterated that if Congress were to move forward with legislation providing the Attorney General with the discretionary authority to deny firearms or explosives transfers to individuals watch-listed as terrorists, then it should consider including a provision in that legislation to require the Attorney General to promulgate guidelines that would delineate under what circumstances such authority could be exercised.\nDaniel Roberts, FBI Assistant Director for the Criminal Justice Information Services Division, also testified about the modified background procedures that were adopted in February 2004 to include terrorist watchlist screening as part of firearms and explosives background checks. In addition, GAO reported that in October 2008, the FBI Counterterrorism Division initiated an analysis of firearms and explosives background checks that resulted in terrorist watchlist hits as a precaution prior to the presidential inauguration. Based on this analysis, the Counterterrorism Division began issuing analytical reports on this data on a monthly and quarterly basis. These classified reports are circulated to FBI field offices and Joint Terrorism Task Forces (JTTFs), and they have reportedly been instrumental in several FBI investigations. FBI officials indicated to GAO that they are generally allowed to collect, retain, and share information on watch-listed individuals who have engaged in a firearms or explosives transaction, regardless of whether the transaction was denied or allowed to proceed. Hence, background checks for firearms and explosives have arguably become a valuable source of criminal intelligence for the FBI.\nSenator Lautenberg and Representative King testified in support of their bills ( S. 1317 and H.R. 2159 ). Both New York City Mayor Michael R. Bloomberg and NYC Police Chief Raymond W. Kelly also testified in favor of these bills. Los Angeles Assistant Police Chief Sandy Jo MacArthur testified about the Los Angeles Police Department's ability to respond to events involving multiple attacks with firearms and/or explosives. Underscoring that many criminal assailants and terrorists often choose long guns and explosives, MacArthur opined that the \"tools\" (statutes) used to prevent firearms from falling into the hands of felons and domestic violence misdemeanants ought to be applied to known or suspected terrorists.\nConversely, Liberty Coalition Privacy Director Aaron Titus avowed that the Terror Gap legislation would \"strip citizens of their enumerated constitutional right to bear arms without any meaningful due process.\" Senator Lindsey Graham concurred, arguing that denying a firearms transfer based on a felony conviction in a lawful court was fundamentally different from doing so based on a terrorist watchlist record. He emphasized that watchlist records are created by an investigator or intelligence analyst based upon his reasonable suspicion that the subject is a terrorist or terrorist supporter. Given that firearms possession for self-defense is protected as an individual right under the Second Amendment of the Constitution, he surmised that such a denial would be improper. Similarly, Senator Susan Collins observed that denying a firearms transfer raises issues, possibly constitutional in nature, that denying an explosives license or permit would not. In a February 2011 special report, the HSGAC categorized the November 2009 Fort Hood shooting as the worst terrorist attack on U.S. soil since the 9/11 attacks.", "In the 112 th Congress, Senator Lautenberg and Representative King reintroduced their Terror Gap proposal as the Denying Firearms and Explosives to Dangerous Terrorists Act of 2011 ( S. 34 and H.R. 1506 ). Supporters included 550 mayors of U.S. cities, who are represented by Mayors Against Illegal Guns. They asserted that if the federal government can stop an individual on a terrorist watchlist from boarding a commercial aircraft, then the federal government ought to be empowered to stop an individual on a terrorist watchlist from acquiring a firearm. Opponents of the bill, including the National Rifle Association (NRA), argued that the Terror Gap proposal, if enacted, would be unconstitutional because it would allow the Attorney General to deny a person his \"individual right to keep and bear arms,\" and do so \"without due process of law.\" Supporters of the Terror Gap bill countered that it would provide a level of redress and remedy that are currently unavailable to others who face a denial of some other benefit or activity because they are identified as known or suspected terrorists through other federal terrorist screening activities.\nAs noted above, in the 113 th Congress, even before the Boston bombing, Senator Frank Lautenberg and Representative Peter King had reintroduced this proposal ( S. 34 and H.R. 720 ). In the wake of the Boston bombing, Senator Lautenberg has called for Congress to consider his bill to close the \"Terror Gap.\"", "The Terror Gap bill would grant the Attorney General discretionary authority to make a determination and designate an individual as a \"dangerous terrorist.\" This determination would be the basis for a denial of a firearms transfer, state-issued firearms permit, or an explosives or firearms-related federal firearms license. Background checks would likely trigger this determination because the bill would amend provisions of current law related to firearms and explosives eligibility and to background checks conducted through NICS. The Attorney General could make the determination if the individual in question\nis known (or appropriately suspected) to be or have been engaged in conduct constituting, preparation for, in aid of, or related to terrorism, or providing material support or resources for terrorism, and [there is] a reasonable belief that the [individual] may use a firearm in connection with terrorism.\nThis provision could have been designed to be discretionary for several possible reasons. First, not all individuals who are watch-listed as known or suspected terrorists present the same potential level or type of threat to public safety and/or national security. Second, there are likely individuals whom federal intelligence officers and counterterrorism agents would want to monitor more closely if given the option, but they would not want to alert those individuals to the possibility that they had been identified and watch-listed as a known or suspected terrorist. Indeed, there may be occasions when FBI counterterrorism agents would want to allow a firearms transfer to proceed so that they could surveil the known or suspected terrorist to see what he might do with that firearm or see to whom he might subsequently transfer those firearms. Third, the Attorney General may not want to call undue public attention to terrorist screening sources and methods that a denied, high-profile firearm(s) transfer might generate if and when a \"dangerous terrorist\" determination were made public.\nOn the other hand, the bill could be viewed as making the Attorney General responsible for making risk assessments about all potential firearms transfers that involved terrorist watchlist hits, despite the discretionary nature of the provision. While these risk assessments are already being performed at some level under the modified firearms background check procedures, this new authority, once granted, could create a public expectation that the Attorney General and his subordinates would always be correct in making the risk assessments. Consequently, if a watch-listed person were allowed to acquire a firearm from a federally licensed gun dealer, perhaps mistakenly, and he went on to commit a terrorist act, particularly one involving a mass shooting and loss of life, many in the public may perceive the Attorney General as being responsible for that outcome.", "Under the bill, the Attorney General would also be granted discretion about whether to inform a watch-listed and denied individual of the underlying \"dangerous terrorist\" determination that had been made about him. Hence, the Attorney General could potentially follow several paths with regard to any watch-listed person:\ndecline to make the determination and allow the transfer to go forward; make the determination, notify the individual, and deny the transfer; or make the determination, decline to notify the individual, but deny the transfer.\nUnder current law, however, an individual who is prohibited from being transferred a firearm has a right to learn the reason(s) for his firearms transfer denial. Whether notified or not, a person denied a firearms transfer under the bill would presumably be able to follow the same procedures in an attempt to learn the reason(s) for his denial. Under the bill, if the FBI continued the policy of neither confirming nor denying whether a person was watch-listed and was therefore unable to inform the individual about the reason for his denial, the individual might deduce that he had been watch-listed, because he would have been informed for any other reason(s).", "The bill would add persons whom the Attorney General had given \"actual notice\" of a \"dangerous terrorist\" determination to the nine classes of persons who are already prohibited from shipping, transporting, possessing, or receiving a firearm or ammunition under the GCA. As a result, any firearms previously possessed by the individual would become illegal upon notification of a \"dangerous terrorist\" determination. He would be obliged to give up control over any firearms he possessed until he successfully challenged the Attorney General's determination in federal court (as described below). On the other hand, if the Attorney General should choose not to notify the individual about the \"dangerous terrorist\" determination, the denied individual would continue to be legally eligible to possess any firearms that he previously possessed, as long as his previous possession were legal. It would also be legal for him to acquire firearms from private persons if those transfers were intrastate and in compliance with state laws. The bill would also prohibit any person from knowingly transferring a firearm to any person determined to be a \"dangerous terrorist\" by the Attorney General, although it is unclear how anyone in the general public (i.e., private persons) would be aware of that determination.", "With regard to NICS denials and \"dangerous terrorist\" determinations, the bill would amend the Brady Act to allow a denied individual to request from the Attorney General notification of the reason(s) for the denial, but it would also give the Attorney General the authority to withhold those reasons if he determines that the disclosure would compromise national security. The bill would make a similar amendment to the Brady Act in regard to correcting erroneous information. Any denied person would also be able to challenge that determination in U.S. federal court within 60 days of notice. The court would be required to sustain the Attorney General's determination upon a showing by the U.S. government by a preponderance of the evidence standard that the determination satisfied the proposed provisions described above (18 U.S.C. §§922A and B).\nPursuing remedy under the bill could prove very difficult because it would give the Attorney General considerable latitude to withhold from the court any information that would compromise national security. The court would be allowed access to summaries or redacted versions of documents underlying those determinations, as long as those documents did not contain information that might compromise national security. The bill does not address, however, whether the petitioner (denied person) or his attorney would be allowed access to those documents. In addition, at the court's option or on the motion of the petitioner, the court would be allowed to review the full, undisclosed documents ex parte and in camera . The court would also be allowed to determine whether the summaries or redacted versions of those documents were fair and accurate representations of the underlying documents. However, the court would not be allowed to overturn the Attorney General's determination based solely on the full, undisclosed documents.\nFurthermore, the bill does not address any of the implications of a determination being overturned. For example, if the petitioner were erroneously placed on the list, would there be any obligation on the part of the Attorney General to remove him from the watchlist? Or, if the petitioner were misidentified as a known or suspected terrorist, would some other form of redress be appropriate? One possible remedy under the bill could be a court order directing the firearms transfer, although this is unclear. Notwithstanding these ambiguities, the \"remedies\" provisions of the bill could possibly serve as a precedent under which other individuals adversely affected by the use of terrorist watchlists could challenge the outcomes of other terrorist screening activities conducted by frontline screening agencies in federal court. As described above, individuals who believe they have been misidentified as a terrorist while being screened by TSA or CBP, or other frontline screening agencies, arguably have narrower avenues for relief than that which would be provided under the bill.", "The bill would also make similar amendments to firearms and explosives licensing statutes. Accordingly, as it does for firearms, the bill would prohibit any individual who had received notice of a determination by the Attorney General that he was a \"dangerous terrorist\" from shipping, transporting, possessing, or receiving any explosive. In addition, the Attorney General would have the authority under the bill to deny or revoke any federal firearms license or explosives license or permit if he determines that the prospective or current holder of a firearms license or an explosives license or permit is a known or suspected terrorist, and there is a reasonable belief that he might use firearms or explosives in a terrorist act. Interestingly, the bill does not address the renewal of such licenses or permits. Hence, the bill could be interpreted as authorizing the Attorney General to screen licensees and permit holders on a continuous basis to determine whether they have been watch-listed as known or suspected terrorists and then consider whether these persons should be determined to be \"dangerous terrorists.\" Although the bill would allow an individual to challenge the denial or revocation of either a firearms license or explosives license/permit in federal court, it would similarly authorize the Attorney General to withhold certain information in those lawsuits if its disclosure could compromise national security.", "Although Senator Lautenberg's and Representative King's Terror Gap proposals are nearly identical, the Senate bill includes an additional provision. As recommended by GAO in 2009, it would require the Attorney General to issue guidelines outlining the circumstances under which the authority to make \"dangerous terrorist\" determinations would be exercised. The guidelines would be intended to provide accountability and a basis for monitoring how the authority is exercised so that the intended goals and expected results of the bill are achieved. This would arguably be done in a manner that safeguards privacy and civil liberties in accordance with Homeland Security Presidential Directives, under which the George W. Bush Administration sought to strengthen terrorist screening policies and procedures.", "Arguments for the Terror Gap bill and similar proposals often coalesce around the need for greater public safety in light of the fact that terrorists have used, or plotted to use, firearms and explosives in attacks in the United States. Conversely, arguments against the Terror Gap bill could coalesce around several issues, including the feasibility of non-notification, adequate opportunity for redress, and possible precedents for judicial review.", "Under the Terror Gap bill, the Attorney General would have the discretionary authority to deny a firearms transfer to any person that he determined to be a \"dangerous terrorist,\" but he would also have the authority to choose whether to notify the subject of that determination. As previously discussed, under the Brady Act, however, the agency holding the prohibiting record(s) on an individual is obligated to inform a denied person of the reason(s) for his NICS denial. On the other hand, it is generally the policy of the federal government to neither confirm nor deny whether an individual has been placed on a terrorist watchlist. If not notified of the \"dangerous terrorist\" determination, the denied person could inquire about the reason for the denial. If no reason were given for the denial upon inquiry, the denied person might deduce that he had been placed on a terrorist watchlist; otherwise, he would have been informed of the reason for denial. Some observers might question whether the policy of neither confirming nor denying whether an individual is watch-listed following a firearms denial based on a \"dangerous terrorist\" determination would be sustainable in the long run. In other words, if the only possible deduction that a denied person could make is that he was on a terrorist watchlist, why not tell him so?", "Denied individuals who believe they have been misidentified or mistakenly placed on a terrorist watchlist could face formidable obstacles to seeking redress. Proponents of the Terror Gap bill could argue that the FBI would most likely respond to the denied person within five business days, leaving him 60 days to conclude that he had been placed on a terrorist watchlist in the case of non-notification, and then hire an attorney and present his case in a federal court. Opponents of the proposal could counter that a person mistakenly determined to be a \"dangerous terrorist\" would have little opportunity to make an effective legal challenge to clear his name, particularly if he were not explicitly notified by the Attorney General of the determination. Furthermore, opponents could argue that, due to the extraordinary nature of a \"dangerous terrorist\" determination, a petitioner should be afforded more time to mount a legal challenge. A possible issue for Congress could be whether a petitioner would have sufficient time under the bill to appeal a denial in federal court, especially in a case where the Attorney General chose not to inform him of a \"dangerous terrorist\" determination.", "Supporters of the Terror Gap proposal have argued that it would provide a denied person an opportunity to appeal a \"dangerous terrorist\" determination that is currently unavailable to individuals identified as known or suspected terrorists in other federal government screening operations, such as passenger screening at an airport. At the same time, opponents of the proposal could argue that such redress and remedy provisions, if implemented, would likely draw unwanted attention to the U.S. government's use of terrorist watchlists and set a precedent for providing judicial review to persons who are adversely affected by the federal government's use of terrorist watchlists and screening operations.", "ATF: Alcohol, Tobacco, Firearms and Explosives\nCA: Bureau of Consular Affairs\nCTD: Counterterrorism Division\nCBP: Customs and Border Protection\nDHS: Department of Homeland Security\nDOJ: Department of Justice\nDOS: Department of State\nFBI: Federal Bureau of Investigation\nFFL: Federal Firearms Licensee\nGAO: Government Accountability Office\nGCA: Gun Control Act\nHSPD-6: Homeland Security Presidential Directive Six\nIC: Intelligence Community\nJTTF: Joint Terrorism Task Force\nKST File: Known or Suspected Terrorists File\nNCIC: National Crime Information Center\nNCTC: National Counterterrorism Center\nNICS: National Instant Criminal Background Check System\nNTN: NICS Transaction Number\nPOC: Point-of-contact\nTIDE: Terrorist Identities Datamart Environment\nTRIP: Traveler Redress and Inquiry Program\nTSA: Transportation Security Administration\nTSC: Terrorist Screening Center\nTSDB: Terrorist Screening Database\nTSOU: Terrorist Screening Operations Unit\nVAF: NICS Voluntary Appeals File\nVGTOF: Violent Gang and Terrorist Organization File" ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 3, 3, 3, 1, 2, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h2_full h1_full", "h0_title h1_title", "", "h0_full", "h1_full", "", "", "h0_full", "", "h2_title h1_title", "h1_full", "h2_full", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What could account for renewed interest in terrorist watchlist screening?", "What was a consequence of this?", "What took place in the aftermath of the bombing?", "What is ATF doing regarding the weapon used in this crime?", "Why is the acquisition of the gun significant?", "What, according to critics, should have happened through the watchlist?", "What happened to terrorist screening procedures after the 9/11 terrorist attacks?", "What changes took place?", "What happens to information related to the subjects of watchlist matches?", "What tasks do these FBI agents complete once receiving this information?", "What impact would Latuenberg and King's bill have had on firearm policy?", "How was the proposal reintroduced?", "How has the bill been continually reintroduced?", "What did Lautenberg do as the Senate considered the Safe Communities, Safe Schools Act of 2013?", "What might the Senate due if it reconsiders S. 649?", "How does the NRA Members' Gun Safety Act of 2013 relate to Lautenberg's amendment?" ], "summary": [ "Similarly, the April 15, 2013, Boston Marathon bombing could generate renewed interest in terrorist watchlist screening, because at least one of the alleged perpetrators was possibly entered into the National Counterterrorism Center's (NCTC's) Terrorist Identities Datamart Environment (TIDE).", "As a consequence, he was possibly watch-listed in the FBI-led Terrorist Screening Center's Terrorist Screening Database—the U.S. government's master watchlist of known and suspected terrorists.", "In addition, on April 18, 2013, both alleged perpetrators—Tamerlan and Dzhokhar Tsarnaev—are further alleged to have shot and killed a police officer, high-jacked an automobile and taken its owner hostage at gunpoint, and engaged in a subsequent shootout with police.", "The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is tracing a pistol recovered at the scene of the shootout.", "If the watch-listed brother, Tamerlan, had acquired the pistol from a federally licensed gun dealer, it might have generated a terrorist watchlist hit through NICS.", "Critics could argue that watchlist hits through NICS, or border and aviation security screening systems, might have prompted federal investigators to scrutinize Tamerlan Tsarnaev's travels and activities more closely prior to the bombing. As described in this report, moreover, a NICS-generated watchlist match might have prevented him from acquiring the pistol.", "Following the September 11, 2001, terrorist attacks, the U.S. government reevaluated its terrorist screening procedures.", "As part of this process, the Department of Justice (DOJ) and FBI modified the Brady background check procedures and recalibrated NICS to query an additional file in the National Crime Information Center (NCIC) that included terrorist watchlist records.", "Since February 2004, information related to the subjects of NICS-generated terrorist watchlist matches have been passed on to the FBI Counterterrorism Division and special agents in the field, who are usually members of Joint Terrorism Task Forces (JTTFs).", "These FBI agents, in turn, verify the match between the individual and the watchlist record, and they check for information that would prohibit that individual, the prospective transferee, licensee, or permittee, from possessing firearms or explosives (e.g., illegal immigration or fugitive status).", "In the 110th Congress, Senator Frank Lautenberg and Representative Peter King introduced a bill based on a legislative proposal developed by DOJ that would have authorized the Attorney General to deny the transfer of firearms or the issuance of firearms (and explosives) licenses/permits to \"dangerous terrorists\" (S. 1237/H.R. 2074).", "In the 111th Congress, they reintroduced this bill (S. 1317/H.R. 2159), which supporters dubbed the \"Terror Gap\" proposal.", "In the 112th Congress, they introduced similar bills (S. 34 and H.R. 1506). And, in the 113th Congress they reintroduced their bills (S. 34 and H.R. 720) once more.", "When the Senate considered the Safe Communities, Safe Schools Act of 2013 (S. 649) in April 2013, Senator Lautenberg also filed an amendment (S.Amdt. 734) to that bill, which is nearly identical to S. 34.", "While the Senate leadership set S. 649 aside, if the Senate reconsiders this bill, it might also consider S.Amdt. 734.", "In addition, Representative James Moran has included similar provisions in the NRA Members' Gun Safety Act of 2013 (H.R. 21)." ], "parent_pair_index": [ -1, 0, -1, 2, 2, 4, -1, 0, -1, 2, -1, 0, 0, -1, 3, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 4, 4, 4, 4, 4, 4 ] }

{ "title": [ "", "Background", "State Redistricting and the Best Available Data", "Adjustments to Census Data", "Departures from Use of Total Population Figures", "Use of Official Census Data", "Sampling and Estimation Adjustment", "Counting of Overseas Citizens", "Additional Reading" ], "paragraphs": [ "This report provides an overview of selected issues regarding census data that have arisen during recent decennial censuses, including use of sampling or other estimation techniques and counting U.S. citizens residing abroad.", "The Constitution requires that members of the House of Representatives \"shall be apportioned among the several States according to their respective numbers, counting the whole numbers of persons in each State, excluding Indians not taxed,\" and to this end an \"actual Enumeration shall be made ... within every subsequent Term of ten Years, in such manner as [Congress] shall by Law direct.\" The framers of the Constitution provided for a simple population headcount and made no provision for counts by sex, age, or address. The census was to provide figures to adjust periodically apportionment of representatives among the states. It was also originally intended to provide figures for determining proportionate shares of direct taxes for states. Congress has established and authorized the U.S. Census Bureau, an agency within the Department of Commerce, to administer the decennial population census and other surveys.\nIn addition to determining the apportionment of Representatives among the states, decennial population census data fulfills several purposes:\nprovides state and local governments a basis for establishing district boundaries for congressional, state legislative, and local representative bodies, because the data is generally considered to be the best available, although its use is not expressly mandated; determines allocation of electoral votes among states for presidential elections; determines allocations and/or triggers federal and state funding for a variety of public benefits and assistance programs; and triggers certain voting rights, such as identifying when the 10,000 single-language-minority citizens of voting age threshold is reached for the bilingual balloting provisions of the Voting Rights Act of 1965.\nWith regard to intrastate redistricting, all 50 states, the District of Columbia, and Puerto Rico currently receive census data for reapportionment and redistricting via the P.L. 94-171 census program. Under this program, the Census Bureau provides states decennial census figures for state-identified geographic areas and election precincts to use for intrastate redistricting activities prior to April 1 of the year following the decennial census. In addition, the President transmits figures for House of Representatives apportionment to Congress and each state by the end of the first week of the regular congressional session following the decennial census.", "The Constitution requires Congress to use census data to apportion Representatives among the states but does not expressly require states to use census data for intrastate congressional and state legislative redistricting. Courts, however, have held that states must use the best data available, regardless of whether it is census apportionment data.", "Federal court findings that states are not required to use federal census data for redistricting but must use the best data available has raised questions over whether the Census Bureau must provide states with adjusted census data in addition to census apportionment data. Courts have generally found that the Census Bureau is not required to provide such adjusted data\nThe best available data principle was set forth in the 1969 Supreme Court decision Kirkpatrick v. Preisler . In this case, the Supreme Court invalidated Missouri's congressional redistricting plan but indicated that Missouri's use of projected population figures was not per se invalid if such data would have a higher degree of accuracy than other available data. However, the Kirkpatrick Court stated that, in the instant case, the federal decennial census data were the best data available.\nIn Senate of the State of California v. Mosbacher , the Ninth Circuit addressed whether the Census Bureau was required to provide states adjusted census data for state intrastate redistricting activities. In California, the California state senate sued the Secretary of Commerce to release adjusted data after the Census Bureau decided not to adjust the official 1990 census data. In reaching its decision, the Ninth Circuit noted that if a state knows that census data is underrepresentative of the population, it can and should utilize non-census data, in addition to the official count, for redistricting. The Ninth Circuit found, however, that the Secretary of Commerce had no affirmative duty under the Census Clause of the Federal Constitution (Art. 1, §2, cl. 3) or federal law to provide states adjusted census data. Similarly, in City of Los A ngeles v. U.S. Dep't. of Commerce , the Ninth Circuit held that the Secretary of Commerce had no obligation under 13 U.S.C. §195 to adjust the official 2000 decennial census figures for intrastate redistricting purposes.\nThe circuits are divided on whether adjusted census data must be released under the Freedom of Information Act. In Assembly of the State of California v. U.S. Department of Commerce , the same court affirmed a lower court's decision requiring the Department of Commerce to release computer tapes containing statistically adjusted data from the 1990 census to the Assembly under the Freedom of Information Act, noting that \"states are not obliged to use official census data when drawing their state legislative or congressional districts.\" However, Florida House of Representatives v. U.S. Department of Commerce , the U.S. Court of Appeals for the Eleventh Circuit held that the statistically adjusted data was exempt from disclosure under the Freedom of Information Act.\nWhile states may use non-apportionment census data for redistricting purposes, such adjusted data must be able to withstand scrutiny. For example, in Young v. Klutznick , the city of Detroit sued the Department of Commerce regarding an adjustment to an alleged undercount in the 1980 census data. In dicta, the Sixth Circuit stated that the state legislature is not required by the federal Constitution to use Census Bureau data for congressional redistricting, but could use adjusted population figures when redistricting between decennial censuses, as long as any adjustment is thoroughly documented and applied systematically.\nSimilarly, in City of Detroit v. Franklin , the city sought to adjust an alleged undercount in the 1990 census data, arguing that Young had been overruled by Karcher v. Daggett . The city argued that in Karcher the U.S. Supreme Court had held that the apportionment clause imposes an obligation on states to use only the official population count as determined by the Census Bureau in redistricting. This argument was probably based on the sentence in Karcher that \"[a]dopting any standard other than population equality, using the best census data available ... would subtly erode the Constitution's ideal of equal representation\" and the fact that the Karcher Court considered the census data the only reliable indication of the districts' relative population levels. In City of Detroit , the District Court held, however, that the plaintiffs misconstrued Karcher and that it did not require states to use census figures in redistricting or overrule Young . Rather, the Supreme Court had \"merely reiterated a well-established rule of constitutional law: states are required to use the 'best census data available' or 'the best population data available' in their attempts to effect proportionate political representation.\"", "Federal courts have also examined whether state legislatures are required to use total population data for redistricting activities. In these cases, courts have found that the best available data standard does not necessarily require use of total population figures.\nFor example, in Burns v. Richardson , the Supreme Court held that in state legislative redistricting cases the Constitution \"does not require the states to use total population figures derived from the federal census as the standard\" of measurement. The Court noted that in earlier cases it had been careful to leave open the question of the appropriate population basis for redistricting activities, even though total population figures were, in fact, the basis for determining whether the Equal Protection Clause of the Constitution had been violated in several cases.\nIn Burns , Hawaii had used the number of registered voters as the basis for redistricting the state senate. The Court found that the redistricting plan \"satisfies the Equal Protection Clause only because on this record it was found to have produced a distribution of legislators not substantially different from that which would have resulted from the use of a permissible population basis.\" Hawaii was found to have a unique situation, wherein significant numbers of tourists, military personnel, and other transient population segments distorted the distribution of actual state citizens. The redistricting plan that would have resulted from using the total population would not have reflected the true state population distribution as accurately as one based on state citizenship. Since a registered voter population basis was the closest approximation of the state citizen population, use of the registered voter population was deemed consistent with the Equal Protection Clause. However, the Court was careful to note that Burns did not establish the validity of its unique redistricting population basis for all time or circumstances. Although federal decennial census figures need not be used as the basis for redistricting, any alternate data must be shown to be the best available or justified by particular circumstances that will result in a more accurate redistricting plan than one based on total population figures from the federal decennial census.\nThe Supreme Court has not addressed the constitutionality or propriety of using total population as opposed to voting population for intrastate redistricting when use of total population would produce a disparity in voter strength between districts with equal total populations. In Garza v. County of Los Angeles , the County of Los Angeles disputed a court-ordered redistricting plan that used total population. The U.S. Court of Appeals for the Ninth Circuit rejected the County's arguments to hold that redistricting based on voting populations instead of the total population would be unconstitutional. Justice Thomas, however, in his dissent from a denial of a writ of certiorari in Chen v. City of Houston , contrasted the Ninth Circuit decision in Garza with Fourth and Fifth Circuit decisions holding that whether to use total population as opposed to voting population for redistricting within a state should be determined through the legislative and political process.\nAlthough most states prescribe state legislative redistricting procedures through statute, many do not have a statutory procedure for congressional redistricting. In such states, state legislatures conduct congressional redistricting on an ad hoc basis after a federal decennial census. This means that often in such states there is no explicit statutory requirement to use official federal decennial census data for congressional redistricting, although there may be such an explicit requirement for state legislative redistricting. To the extent that a state's own laws do not explicitly require use of official federal decennial census data for intrastate redistricting, the state is free to use any other data.", "Even if a State's laws require use of official federal decennial census data, it is unclear what this means if the Federal Government releases two official sets of data. This issue was considered during oral arguments in the census sampling cases. If the Secretary of Commerce transmits an official adjusted data set, that data arguably could be considered official federal decennial census data even if it is not the data used to apportion the House of Representatives. One should note, however, that the Court's holding on standing for the plaintiffs in Department of Commerce v. U.S. House of Representatives indicates that a majority of the Court considers references to official federal decennial census data to refer to apportionment data. At the time Department of Commerce v. U.S. House of Representatives was decided, there had been a flurry of state legislative activity concerning the type of federal decennial census data to be used in intrastate redistricting because of the absence of sufficiently clear and explicit statutory guidelines on the appropriate data under such circumstances.\nAlthough Congress has not explicitly required states to use federal decennial census data in congressional redistricting, it could arguably do so under the same constitutional powers which give Congress the authority to establish other redistricting guidelines if it chooses. Art. I, §2, cl. 1, provides that the Members of the House of Representatives shall be chosen by the People and Art. I, §4, cl. 1, gives Congress authority to determine the times, places and manner of holding elections for Members of Congress. While it is not clear that one data set is more accurate than the other and the constitutional goal of equal representation is not implicated, Congress arguably could require that a particular type of data (e.g., limited to citizens or including citizens and aliens) be used in congressional redistricting. However, it could not do so with regard to redrawing state legislative or municipal districts, which remain state prerogatives as long as no constitutional voting rights are violated.", "Historically sampling and estimation techniques have been controversial, particularly, as discussed above, with regard to data released to or used by states in intrastate redistricting efforts. Therefore, a brief overview of the most recent U.S. Supreme Court cases may be useful.\nIn 1999, the U.S. Supreme Court held in Department of Commerce v. U.S. House of Representatives that the Census Act prohibits sampling in the census for apportionment of the House of Representatives. The Court, however, declined to decide whether sampling would also violate the census clause of the U.S. Constitution. The Court's decision was the culmination of two lawsuits challenging the Census Bureau's plans to use sampling in the 2000 census and two decades of litigation arising from attempts to use sampling and adjustment techniques for decennial census apportionment and redistricting data. Opponents of sampling claimed victory and promised to focus on improving the traditional headcount through methods such as expanded outreach to undercounted groups and use of administrative records. But proponents of sampling, including the Clinton Administration, noted that the decision did not determine sampling's constitutionality and did not prohibit sampling for purposes other than apportionment of the House of Representatives. Because the Court stated that Section 195 of the Census Act \"requires [the use of] statistical sampling in assembling the myriad demographic data that are collected in connection with the decennial census,\" supporters of adjustment argued that sampling techniques were not only permissible, but were required, in taking the census for purposes of intrastate redistricting and federal funding allocations.\nIn 2002, the U.S. Supreme Court upheld in Utah v. Evans the use of hot-deck imputation, an estimation technique used in the 2000 census, against a challenge by Utah after Utah lost a congressional seat to North Carolina. The Court held that hot-deck imputation does not violate the Census Clause or the 13 U.S.C. §195 prohibition on census data sampling for apportionment of the House of Representatives on the grounds that imputation was an estimation technique distinct from sampling. The Census Bureau had interpreted the Census Act to permit hot-deck imputation and had used it for many decennial censuses with no intervention from Congress. In fact, Congress had amended the Census Act after the Census Bureau had started using the technique and could have clarified the sampling prohibition to prohibit other estimation techniques. Significantly, the Court held that the term \"actual enumeration\" in the Census Clause distinguished subsequent apportionments of the House of Representatives from the one for the first Congress, which was based on conjecture and estimation before the first census could be conducted. It further found that the Census Clause and the Census Act broadly authorized Congress and the Census Bureau, respectively, to determine the methods and manner for conducting the census.\nWhile Congress could revise or clarify the statutory guidelines as to the permissible types of estimation and sampling techniques, no such legislation is currently pending in Congress. Federal case law is based on statutory interpretation rather than an interpretation of the Census Clause of the U.S. Constitution. Congress could legislatively require that the Census Bureau make adjusted data available, whether or not it is the official data transmitted through the P.L. 94-171 program.", "In November 2001, the U.S. Supreme Court affirmed a federal district court opinion upholding the Secretary of Commerce's decision to not include expatriate U.S. citizens, other than U.S. military and civilian federal government personnel, in the 2000 census data for reapportionment of the House of Representatives. U.S. military and federal civilian employees abroad have been included in census data used for apportionment of the House of Representatives in 1970, 1990, 2000, and 2010. The Census Bureau did not include such persons in the apportionment data for the 1980 census and was apparently not intending to include them in the 1990 apportionment data, but did so in response to pending legislative activity in the late 1980s.\nIn 1992, in Franklin v. Massachusetts , the United States Supreme Court upheld the Secretary of Commerce's decision to include and allocate overseas federal employees in the 1990 census data for the apportionment of the House of Representatives, which resulted in a loss of one congressional seat for Massachusetts. The Court held that there was no final agency action reviewable under the Administrative Procedure Act (APA) and that the allocation of overseas federal employees to their home states was consistent with the \"usual residence standard\" of other censuses and furthered the constitutional goal of equal representation. However, the issue of distinguishing between overseas federal employees and other expatriate U.S. citizens by including the former in the census and excluding the latter was not before the Court and was not decided.\nThis issue was raised in January 2001, when the state of Utah filed suit against the Secretary and Department of Commerce alleging that the defendants had unlawfully excluded overseas missionaries of the Church of Jesus Christ of the Latter-Day Saints (LDS) in violation of the Census Clause, the Free Exercise Clause of the First Amendment; of the Administrative Procedure Act (APA, 5 U.S.C. §§701 et seq. ); of the Religious Freedom Restoration Act (RIFRA, 42 U.S.C. §§2000bb et seq. ); of 2 U.S.C. §2a; and of the Census Act (13 U.S.C. §§1 et seq. ). The inclusion of such overseas missionaries would have meant that Utah would have gained a congressional seat which went to North Carolina instead.\nA three-judge panel upheld the Secretary of Commerce's decision, citing Franklin v. Massachusetts in finding that the President's report of apportionment data and calculations was the final act in apportionment rather than the Secretary's conduct of the census, and that, therefore, the APA did not apply. It further concluded that RIFRA and the Free Exercise Clause were not violated because there was no evidence that the exclusion of religious missionaries from the apportionment count burdened or in any way affected their right to exercise their religion. Finally, the court, citing Franklin v. Massachusetts with regard to the Census Clause and Census Act assertions, concluded that the Secretary's decision to include federal employees and military personnel overseas in the census apportionment data, while excluding other expatriates, was \"a rational exercise of the Secretary's discretion, delegated to the Census Bureau, to conduct its obligation to enumerate the population for apportionment purposes.\" The court noted, among other things, that there was no clear remedy for including LDS missionaries while excluding other private citizens or for including all U.S. expatriates. Inclusion of U.S. military and federal civilian personnel was based on factors such as the federal government's possession of reliable records maintained according to its guidelines, guidelines for determining home state residence, and the involuntary nature of such expatriates residence abroad.\nIn 2004, the Government Accountability Office (GAO) conducted a couple of studies and presented testimony in congressional hearings regarding the feasibility and cost of counting all expatriate U.S. citizens, not just U.S. military and federal civilian employees, and evaluated a 2004 test expatriate census conducted by the Census Bureau in Kuwait, France, and Mexico. The GAO concluded that including other expatriate groups would not be feasible or cost-effective, and would require clearer congressional guidance regarding the methodology to be used for data collection. Several bills ( S. 677 and H.R. 868 ) have been introduced in the 112 th Congress to mandate the inclusion of all expatriate U.S. citizens in the decennial census in accordance with specific guidelines but none have been enacted legislation yet.", "CRS Report R41048, Constitutionality of Excluding Aliens from the Census for Apportionment and Redistricting Purposes , by [author name scrubbed] and [author name scrubbed].\nCRS Report R40551, The 2010 Decennial Census: Background and Issues , by [author name scrubbed].\nCRS Report R41584, House Apportionment 2010: States Gaining, Losing, and on the Margin , by [author name scrubbed].\nCRS Report R41382, The House of Representatives Apportionment Formula: An Analysis of Proposals for Change and Their Impact on States , by [author name scrubbed].\nCRS Report R41357, The U.S. House of Representatives Apportionment Formula in Theory and Practice , by [author name scrubbed]." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h0_full h1_title", "h1_full", "", "h1_full", "h0_full h1_full", "h2_full", "" ] }

{ "question": [ "What does this report concern?", "How is state representation in federal government impacted by the census?", "How can census data be involved in intrastate redistricting?", "What states receive census data?", "What entity is responsible for the census?", "What kinds of adjustments can census data be subject to?", "Who has authority over releasing adjusted census data for redistricting purposes?", "What significant authority does the Secretary of Commerce make regarding census counts?", "How has Congress taken up the question of expatriates in census data?" ], "summary": [ "This report provides an overview of selected issues regarding census data that have arisen during recent decennial censuses, including use of sampling or other estimation techniques and counting U.S. citizens residing abroad.", "The Constitution requires that state representation in the House of Representatives be based on a population census conducted at least once every 10 years.", "The Constitution does not expressly require use of official federal decennial census data for intrastate redistricting, but courts have found that states must use the best data available, which may or may not be official census data.", "Currently, all 50 states, the District of Columbia, and Puerto Rico receive census data for reapportionment and redistricting via the census program conducted pursuant to P.L. 94-171.", "Under the Constitution and census statutes, the federal government has broad authority over how the census is conducted.", "The Supreme Court has found that federal law bars using sampling data to adjust the decennial census for House of Representatives reapportionment but that hot-deck imputation, an estimation technique, is permissible. Adjusting census data for other purposes, such as intrastate redistricting, is also not prohibited.", "In addition, the Secretary of Commerce has authority over whether it is feasible to release adjusted data for intrastate redistricting purposes.", "The Supreme Court has held that the Secretary of Commerce has discretion whether to include overseas federal personnel in the apportionment census. It has also found that the Secretary of Commerce can include U.S. military and civilian federal government overseas employees in the apportionment census while excluding other expatriate U.S. citizens.", "Because Congress has authority to legislate census methodology with regard to treatment of expatriates, several bills have been introduced in the 112th Congress addressing the inclusion of expatriates and categories of expatriates." ], "parent_pair_index": [ -1, -1, 1, 1, -1, 0, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 2, 2 ] }

{ "title": [ "Background", "TSA Roles and Responsibilities", "TSA Surface Security Budget and Regulations", "TSA Organizational Structure for Managing Its Surface Inspectors", "TSA Risk-Based Security for Surface Transportation", "Surface Inspectors Conduct Regulatory Inspections and Voluntary Security Assessments but TSA Has Incomplete Information on Their Activities", "Surface Inspectors Enforce Regulations through Inspections and Assist Surface Transportation Entities on a Voluntary Basis", "Regulatory Rail Inspections", "Regulatory Maritime Inspections", "Non-regulatory Security Activities", "TSA Has Taken Steps to Expand the BASE Review Program and Address Implementation Challenges", "TSA Has Incomplete Data on Surface Inspector Activities because It Cannot Account for All Aviation-related Activities", "TSA Used a Risk- Informed Process to Allocate Surface Inspector Staff, But Inspector Activities Did Not Align With Risk", "TSA Used a Risk-Informed Model to Allocate Surface Inspectors to Field Offices", "Between Fiscal Years 2013 and 2017 Surface Inspector Activities Did Not Align With Identified Risks for Surface Transportation Modes", "Monitoring Activity Implementation", "TSA Cannot Ensure That New Risk Mitigation Efforts Address High-Risk Entities and Locations", "Defining Measurable and Clear Objectives", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Surface Inspector Activities", "Start Date (fiscal year)", "Appendix III: Surface Inspector Time Spent on Activities Reported in the Surface Module of PARIS for Fiscal Years 2013 to 2017", "Appendix IV: Comments from the U.S Department of Homeland Security", "Appendix V: GAO Contact and Staff Acknowledgements", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "The Aviation and Transportation Security Act designated TSA as the primary federal agency responsible for securing all modes of transportation. In fiscal year 2005, Congress appropriated funds for surface transportation security, and the accompanying conference report directed that some of those funds go to rail compliance inspectors, the predecessors to today’s surface transportation security inspectors— referred to as surface inspectors.\nPublic and private transportation entities have the principal responsibility to carry out safety and security measures for their services. As such, TSA coordinates with public and private transportation entities to identify vulnerabilities, share intelligence information, and work to mitigate security risks to the system. See table 1 for examples of the entities TSA works with to secure the various surface transportation modes.", "In fiscal year 2005, $10 million of TSA’s surface transportation security appropriation was to hire and deploy up to 100 rail compliance inspectors. TSA assigned inspectors to oversee security and provide oversight and assistance to railroads, and subsequently, other surface transportation modes, including mass transit and passenger rail, freight rail, highway, and pipeline sectors. TSA has since increased the number of surface inspectors, and since 2013 has maintained more than 200 Full Time Equivalent (FTE) positions. See table 2 for additional details on the number of TSA surface inspector FTEs from fiscal years 2013 through 2017.\nIn August 2007, the 9/11 Commission Act was signed into law and required TSA to issue security regulations for freight and passenger rail, among other requirements. TSA also issued regulations governing surface transportation security on its own initiative. As of July 2017, TSA has issued the following regulations related to surface transportation:\nRail Inspections: Issued in November 2008, 49 C.F.R. part 1580 requires certain freight railroad carriers and passenger rail operations (passenger railroad carriers and rail transit systems) to designate a rail security coordinator, notify the Transportation Security Operations Center regarding any significant security concerns, and, if applicable, ensure a secure chain of custody of rail cars containing certain hazardous materials, and be able to provide location and shipping information for certain rail cars, among other things. The hazardous materials subject to this regulation include certain explosives, toxic inhalation hazardous materials (TIH), and radioactive materials. See appendix II for additional details.\nMaritime Inspections: TSA also partners with the U.S. Coast Guard (USCG) in securing maritime ports, facilities and vessels. TSA’s responsibilities include enrolling Transportation Worker Identification Credential (TWIC) applicants, conducting background checks to assess the individual’s security threat, and issuing TWICs. In addition, TSA is authorized to conduct inspections of persons using TWIC to access the secured area of a regulated maritime facility.", "Surface inspectors work under the direct command authority of the Federal Security Director (FSD) in the field. As of fiscal year 2017, TSA used a staffing model to allocate surface inspector staff to 49 different field offices, separated into seven geographic regions around the country. According to TSA, all but one surface field office locations are at or near major airports. Figure 1 depicts surface field office locations by region.\nSurface inspector policies and procedures, and operational oversight are managed separately.\nProgram Guidance: Within TSA’s Office of Security Operations, the Surface Compliance Branch plans surface transportation security activities and programs, and develops an annual work plan that lays out the minimum required activities to be completed for surface inspectors in the field. The Office of Security Policy and Industry Engagement (OSPIE) collects and analyzes data on certain surface inspector activities such as the Baseline Assessment for Security Enhancement (BASE) program, TIH attendance rates, and freight rail compliance rates; coordinates with industry stakeholders, and; develops strategic plans, among other things.\nOperational oversight: The Assistant Federal Security Director for Inspections (ASFD-I) in each field office manages surface inspectors on a day-to-day basis, oversees the scheduling of surface inspector work plan activities, and reviews inspectors’ documentation of activities in PARIS, TSA’s system of record. FSDs are ultimately responsible for ensuring that surface inspectors complete their annual work plan requirements.\nIn 2010, TSA created the Regional Security Inspector (RSI) position in an effort to improve oversight of surface inspectors in the field and standardize inspections across field offices. One RSI is assigned to each of the seven geographic regions and serves as a liaison between TSA headquarters staff and surface inspectors in the field. Each RSI is also assigned to be the lead liaison between TSA and the Class I railroads within their assigned geographic region. See figure 2 for surface inspectors’ command structure as of 2017.", "TSA documents state that it employs a risk-based approach for securing transportation modes and identifies managing risk as one of its strategic goals to help identify and plan security priorities and activities. According to TSA officials, TSA uses the National Infrastructure Protection Plan (NIPP) risk management framework and the DHS Risk Management Fundamentals as its primary risk guidance. In June 2006, DHS issued the NIPP which established a six-step risk management framework to establish national priorities, goals and requirements. Most recently updated in 2013, the NIPP defines risk as a function of three elements: threat, vulnerability and consequence. Threat is an indication of the likelihood that a specific type of attack will be initiated against a specific target or class of targets. Vulnerability is the probability that a particular attempted attack will succeed against a particular target or class of targets. Consequence is the effect of a successful attack. TSA uses the TSSRA, a bi-annual risk assessment that considers the three elements of risk to measure the risk of various terrorist attack scenarios, evaluate transportation modes, and identify surface security priorities.", "", "Surface inspectors conduct a variety of activities to implement TSA’s surface transportation security mission, including (1) regulatory inspections for freight and passenger rail systems, (2) regulatory TWIC inspections, and (3) non-regulatory security assessments and training which surface transportation entities participate in on a voluntary basis. Surface inspector activities are, in part, determined by an annual surface work plan that lays out the minimum required number of surface inspector activities to be completed by each field office. Specifically, the work plan requirements are designed to take up about one-third of inspectors’ available working hours, with the expectation that the other two-thirds of inspectors’ time will be used for related activities, such as documentation and follow-up, or other tasks as determined by local AFSD-Is and FSDs in the field.\nTo develop the annual surface work plan, officials from Office of Security Operation’s Surface Compliance Branch and OSPIE meet with each of the RSIs once a year to determine the requirements for each office. According to TSA officials, they rely on the previous year’s requirements as well as data on surface inspectors’ past activities as logged in PARIS as a starting point to develop the requirements, and adjust the work plan based on their professional judgment of the unique environment in each field office’s area of responsibility. TSA officials stated that they consider variables such as the compliance rates for inspections, the amount of TIH materials being shipped through an area, and any other relevant risk- related information when they develop the work plan.", "Surface inspectors conduct inspections to enforce several freight and passenger rail security requirements. Table 3 provides descriptions of these inspections and appendix II provides a complete listing of TSA’s regulatory activities.\nTSA also tracks the rate at which the inspected entities comply with the regulations discussed in table 3. According to TSA data, on average, overall compliance rates for inspections have remained relatively high, and the compliance rates have generally improved over the years as entities have become more familiar with the processes and expectations of each type of inspection.", "Surface inspectors work with the USCG to conduct inspections of TWIC card holders attempting to access the secured area of maritime facilities regulated by the Maritime Transportation Security Act of 2002 (MTSA). TSA first issued the TWIC regulation in 2007 in cooperation with the USCG, and according to TSA officials, began nationwide implementation of TSA inspection of TWICs at maritime facilities in fiscal year 2017. Surface inspectors scan cards using a TWIC card reader to verify that the card presented is valid and belongs to the card holder. TSA may pursue civil enforcement and can refer violators for criminal proceedings through the USCG. TSA officials stated they set the total minimum required TWIC inspections at 1,315 combined across all surface inspector field offices for fiscal year 2017 as a starting point, and would modify the requirements in subsequent years, as discussed below. According to TSA, it is too soon to determine compliance rates for TWIC inspections.", "Surface inspectors perform a variety of non-regulatory surface-related activities, such as various types of assessments, which require surface entities’ voluntary participation. Table 4 provides a list of key non- regulatory activities surface inspectors perform. For a full list of activities surface inspectors perform see appendix II.", "Since 2006, TSA has made adjustments to the BASE program to expand its use to more surface modes and address implementation challenges. To conduct a BASE review, surface inspectors use a standardized checklist to evaluate and score an entity’s security policies and procedures for areas such as employee security training, cybersecurity, and facility access control, among other items. According to TSA officials, the results of the BASE reviews are intended to help track the entity’s progress in implementing specific security measures over time and improve overall security posture among surface transportation entities, as well as inform transportation security grant funding. Surface inspectors also use entities’ BASE review scores to help inform Exercise Information System (EXIS) training programs inspectors facilitate for transportation entities.\nInitially, the BASE program was designed to assess large mass transit entities in major metropolitan areas that transported 60,000 riders or more daily. TSA officials stated in 2017 that TSA has completed initial and follow up BASE reviews for the top 100 mass transit agencies in the country which comprise approximately 80 percent of the ridership in the United States. In 2012, TSA expanded the BASE reviews to the highway mode to include trucking, motor coach, and school bus operators.\nAdditionally, TSA has taken steps to address challenges related to the implementation of the BASE reviews, including an initial lack of training and guidance for surface inspectors in conducting and evaluating the BASE reviews and difficulty applying the BASE template for smaller mass transit entities and highway entities. For example, surface inspectors we interviewed at six field offices indicated that they received limited to no training to conduct the initial BASE reviews. Office of Security Operations officials acknowledged that the BASE program initially lacked scoring guidance to allow surface inspectors to make objective evaluations. Additionally, two industry entities we spoke with stated that some BASE questions, as initially developed, seemed inappropriate or irrelevant given the scope of their operation, and that their scores reflected areas that they were not able to modify based on their limited size and resources. Further, in 2010, the DHS Office of Inspector General reported that TSA needed to provide increased training and guidance for inspectors to ensure that BASE assessments gather effective, objective data.\nIn response, officials from TSA’s Surface Compliance Branch stated that they established a BASE Advisory Panel and held a series of training workshops throughout the country on how to conduct BASE assessments. Specifically, in fiscal year 2014, TSA established a panel comprised of mass transit experts to adjust the BASE tool by modifying topics and removing outdated questions in an effort to improve the quality and applicability of the assessments for the industry stakeholders. TSA has also modified the BASE template over time to include areas such as cybersecurity and active shooter training, among others. TSA reported that it held a series of 16 workshops in 2015 around the country where headquarters officials met with inspectors to train them on how to conduct BASE assessments and correctly apply scoring guidance to help ensure inspectors applied the BASE criteria consistently. Moreover, in fiscal year 2016, TSA developed a targeted BASE that focuses only on an entity’s areas of concern as identified by surface inspectors in a previous BASE review. Further, TSA is piloting a modified BASE template in fiscal year 2017 that eliminates questions that may not apply for smaller mass transit and highway entities. According to Surface Compliance Branch and OSPIE officials, these changes have led to more consistent and more reliable results in the BASE scores. We believe that TSA efforts to improve training and guidance as well as establishing the BASE Advisory Panel will help address the agency’s previous concerns related to the implementation of the BASE review.", "According to TSA headquarters and field officials, in addition to surface inspection activities, surface inspectors are tasked, to varying degrees, with aviation activities. However, TSA officials told us that they are unable to identify the total time surface inspectors spend on aviation activities because of data limitations. For example, surface inspectors may perform aviation activities on a regular basis as a “duty agent,” or on an as- needed basis as determined by their local manager—their AFSD-I. TSA guidance directs surface inspectors to report the time they spend on all activities into TSA’s PARIS database. TSA officials responsible for managing PARIS told us that it has two independent modules – aviation and surface – and that surface inspectors enter aviation-related activities in both the aviation and surface modules. Specifically, TSA guidance directs surface inspectors to document their time serving as “duty agent” in the surface module of PARIS, but to document time spent on aviation inspections, incidents, or investigations – including those that take place during an inspector’s time serving as the duty agent – into the aviation module of PARIS. See table 5 for examples of the types of aviation activities surface inspectors record in each separate PARIS module.\nTSA officials told us that it is not possible to identify the time surface inspectors document in the aviation module of PARIS because there is no efficient, reliable way to distinguish surface inspectors from aviation or cargo inspectors in the data.\nSince TSA cannot reliably identify activities surface inspectors have entered into the aviation module of PARIS, TSA is only aware of the portion of time surface inspectors spent on aviation activities that was logged in the surface module. As a result, TSA does not have complete information on how surface inspector resources are being used or the extent to which surface inspectors are being used to perform aviation activities. According to some surface inspectors we spoke to, these resources can be substantial. Surface inspectors we interviewed at 16 of the 17 TSA field offices contacted stated that they perform aviation duties. One inspector stated she had received calls to respond to 12 different aviation incidents in one shift as duty inspector, and other inspectors stated that each incident report could subsequently take between 2 and 12 hours to complete. Surface inspectors from another office located near a major airport told us they have to work overtime to complete aviation incident reports and still meet their required surface activities. Further, we met with surface inspectors stationed at four different major airports who each estimated spending 20 percent, 25 percent, 30 percent, and 50 percent of their total working hours on aviation tasks, respectively.\nStandards for Internal Control in the Federal Government states that agencies should use complete information to make informed decisions and evaluate the agency’s performance in achieving key objectives. As stated previously, one of TSA’s key objectives is to employ a risk-based approach to all operations to identify, manage, and mitigate risk. Standards for Internal Control in the Federal Government also states that agencies should clearly document all activities in a manner that allows the documentation to be readily available for examination. Without having access to complete information on all inspector activities, including aviation activities, TSA cannot monitor how frequently surface inspectors are being used to support aviation. In addition, by not using complete information on how much time surface inspectors spend working in support of aviation, TSA is limited in its ability to make informed future decisions on annual resource needs for surface inspectors, which will be especially important as TSA takes steps to expand its inspection activities with the promulgation of new surface security regulations. By addressing the limitations in the aviation module of PARIS, TSA would be able to more reliably access complete information on all inspector activities. Also, it would have the information it needs to make fully informed decisions about surface inspector resources and activities, and to evaluate surface inspectors’ performance in achieving key surface security objectives.\nSince there is no way to identify surface inspectors in the aviation module of PARIS at the aggregate level, we were unable to conduct our own analysis of all surface inspector activities. However, we were able to analyze data on how surface inspectors reported spending their time in the surface module of PARIS, including time spent on aviation activities as documented in this particular module. Our analysis showed that from fiscal years 2013 to 2017, surface inspectors reported spending approximately 80 percent of their time on non-regulatory activities, while spending approximately 20 percent on regulatory inspections. Figure 3 shows a breakdown of the time surface inspectors recorded spending in the surface module of PARIS for fiscal year 2016, the most recent complete year of data available. See appendix III for similar breakdowns for each fiscal year from 2013 to 2017.", "", "In fiscal year 2017, TSA’s Surface Compliance Branch implemented an updated staffing model to redistribute 222 surface-funded positions across its 49 surface field offices based on the factors described in table 6 below.\nTSA considered four of these factors – HTUA/Urban Area Security Initiative (UASI), Mass Transit, TWIC, and TIH – to be related to risk. For example, TSA derived its list of HTUAs based on risk assessments conducted under the UASI program. We have previously reported that the UASI methodology for determining risk scores and distributing grant funds is reasonable, and that UASI grant allocations are strongly associated with a city’s current relative risk score. Additionally, according to TSA, inspectors focus on entities within surface transportation modes or shipments of certain hazardous materials the agency determines could pose the greatest security vulnerability and which could potentially be more likely to be targeted by terrorists.\nThe DHS Risk Lexicon 2010 and the 2013 NIPP risk management framework, which are TSA’s primary risk guidance, define risk-informed decision-making as the determination of a course of action predicated on the assessment of risk, the expected impact of that course of action on that risk, as well as other relevant factors. The DHS Risk Lexicon 2010 further states that risk-informed decision-making may also take into account multiple sources of information not included specifically in the assessment of risk. Because TSA considered multiple risk factors in addition to other information, such as the number of regulated entities in an area and the number of required activities, in its staffing model, we determined that TSA used a risk-informed model to allocate surface inspector staff to its 49 offices.", "TSA surface inspectors perform a wide range of regulatory and non- regulatory activities to fulfill the agency’s objective of employing risk- based security, but we found that between fiscal years 2013 and 2017 surface inspector activities did not align with the risks TSA identified for surface transportation. To inform its security strategy, TSA assesses risk within and across the aviation, freight rail, passenger rail/mass transit, highway, and pipeline modes approximately every 2 years using the TSSRA. According to the TSSRA’s cross-modal risk assessments between fiscal years 2013 and 2017, one particular surface mode consistently posed the highest risk, and another consistently posed the lowest risk out of all surface transportation modes. For example, in fiscal year 2016, TSA found that the lowest risk mode posed approximately 6 percent of domestic total risk while the highest risk mode posed 27 percent of domestic total risk. However, our analysis of data from the surface module of PARIS showed that inspectors reported spending between 35 and 45 percent of their time on the lowest risk mode between fiscal year 2013 and fiscal year 2016 – the most time spent on any surface mode. Of the time reported in the surface module of PARIS in fiscal year 2016, surface inspectors reported spending 38 percent of their time on the lowest risk transportation mode while they reported spending approximately 16 percent of their time on the highest risk surface mode according to the TSSRA. See figure 4 for a comparison between the percent of time inspectors recorded spending on each mode and the percent of risk identified in the TSSRA.\nWe found that TSA did not use the results of risk assessments that measure threat, vulnerability, and consequence, like the TSSRA, when it developed surface inspector work plans, or when it monitored activities inspectors conducted, including those in addition to the minimum work plan requirements. While TSA officials told us that they considered the results of the TSSRA, TSA officials could not provide evidence that they incorporated the results of the TSSRA or other risk assessments when developing the work plan and monitoring inspector activities, as required by DHS risk management guidance. For example, TSA officials could not provide documentation of how and why they selected certain work plan activities to address lower risk modes, or how they monitored the extent to which implemented activities aligned with or addressed risks.", "We found that TSA did not incorporate the results of the TSSRA or other risk assessments when it monitored how surface inspector activities were implemented beyond the minimum requirements laid out in the work plan. Specifically, we found that between fiscal years 2013 and 2017, inspectors spent about half their working hours fulfilling work plan requirements. Surface Compliance Branch officials told us that they reviewed PARIS data on all surface inspector activities, as reported in the surface module of PARIS, annually to inform staffing decisions and conducted detailed analysis of surface inspector time starting in fiscal year 2015. However, this analysis did not evaluate the extent to which surface inspector time beyond the work plan requirements corresponded to surface transportation risks as identified by the TSSRA or other risk assessments. Further, TSA officials told us that they did not think surface inspector time should be compared to risks identified in cross-modal risk assessments like the TSSRA because required regulatory inspections are unpredictable and can take a significant amount of time. However, as previously discussed, we found that, of the time reported in the surface module of PARIS, inspectors reported spending approximately 20 percent of their time on regulatory inspections, with the remaining 80 percent spent on non-regulatory activities.\nMore than half of the industry representatives we spoke to (9 of 15) identified benefits from inspectors’ activities in surface transportation modes other than freight rail. For example, two of the three representatives of MTSA-regulated companies we spoke to said that TSA’s TWIC inspections had significant benefits for the security of their facilities, and stated that they wanted more TWIC inspections and civil enforcement activities from inspectors because these activities discourage misuse of TWICs at their facilities. Representatives from two maritime companies, one highway company, and three public transportation systems told us that they wanted TSA surface inspectors to do more. Additionally, a representative for one national industry organization stated that his organization was concerned that TSA is mainly focused on freight rail when the principal threat resides in the passenger and mass transit modes, and suggested that TSA deploy inspection resources from the freight rail mode to support more non- regulatory initiatives in the passenger rail/mass transit mode.\nAccording to TSA, the agency employs a risk-based approach – which the DHS Risk Lexicon defines as using the assessment of risk as the primary decision driver – to all operations to identify, manage, and mitigate risk in all TSA lines of business. One TSA risk strategy document specifically emphasizes the importance of linking the TSSRA, among other risk assessments, to the identification of risk-reduction activities as part of a risk-based approach to security. Moreover, the NIPP risk management framework and the DHS Risk Management Fundamentals Doctrine, which TSA officials told us are TSA’s primary risk management guidance documents, also state that entities should systematically prioritize and implement activities and resources to mitigate and manage risks identified in risk assessments. These documents also state that monitoring implemented decisions and comparing observed and expected effects to influence subsequent risk management decisions are key steps in the homeland security risk management process. The DHS Risk Management Fundamentals Doctrine further states that agencies should document the development and selection of alternative risk management actions, including assumptions and risk strategies such as the decision to not take action and accept risk, in order to provide decision-makers with a clear picture of the benefits of each action. It also explains that the risk management process allows organizations to clearly explain the rationale behind resource decisions.\nTSA did not use the results of risk assessments – such as the TSSRA – or other risk information when it developed its surface inspector work plan requirements. Instead, TSA prioritized the lowest-risk surface transportation mode, reducing the amount of surface security resources available to address identified risks in other, higher-risk surface transportation modes. As a result, TSA’s limited surface transportation security resources were not used in a risk-based way. By incorporating the results of its risk assessments when it plans and monitors surface inspector activities, including those not required by the work plan, TSA would be better able to ensure that its limited surface transportation security resources are being used to effectively and efficiently address the highest risks to surface transportation, especially as risks evolve. Incorporating risk assessment results in planning and monitoring surface inspector activities will also allow TSA to ensure that its surface inspectors are making progress toward achieving TSA’s objective of risk- based security. Additionally, by documenting its risk mitigation decisions and strategies, TSA would be able to more clearly explain the rationale for its resource decisions, including when TSA decides to accept risk or prioritize lower-risk activities for any reason.", "In fiscal year 2012, TSA began developing the Risk Mitigation Activities for Surface Transportation (RMAST) program in support of TSA’s risk- based security initiative. According to TSA’s fiscal year 2017 work plan, the RMAST program incorporates specific risk reduction measures and focuses time and resources on high-risk locations through (1) public observation, (2) site security observations, and (3) stakeholder engagement activities. Though TSA field officials told us that inspectors have been conducting these activities in some format in the past, TSA began piloting this particular program in fiscal year 2014 and made RMAST a work plan requirement for each office starting in fiscal year 2017.\nIn addition to TSA demonstrating its commitment to the RMAST program by adding it as a required work plan activity, we found that inspectors reported spending an increasing amount of time conducting RMASTs since fiscal year 2014, and that RMASTs now comprise a larger percentage of inspector time (see table 7).\nAlthough surface inspectors reported spending an increasing amount of time on RMAST activities, we found that TSA has not identified or prioritized the high-risk entities and locations on which the RMAST program is intended to focus time and resources. For example, the fiscal year 2017 surface inspector work plan states that the required number of RMASTs each office should conduct was developed based on the presence of applicable stakeholders in each office’s area, but we found that TSA did not identify any such stakeholders in its work plan. Specifically, while the work plan guidance directed surface inspectors to conduct RMASTs with entities that fit “listed” criteria, this list consisted of all surface modes of transportation for which TSA has authority and did not include any criteria surface inspectors could use to identify the highest-risk and most critical locations, such as by type, characteristics, or location of high-risk entities. TSA officials told us that they have not identified high-risk entities for RMAST because there are too many potential entities and stated that there is no way to provide a full list of all entities in each office’s area. However, the intent of the RMAST program is to focus time and resources on high-risk entities and locations, which precludes the need to provide a complete list of all surface transportation entities in each area. Further, TSA officials told us that TSA has not provided any guidance to the field beyond the work plan on how to identify appropriate entities for RMASTs, but that they rely on surface field offices to identify the highest-risk entities in their own areas. Officials from three field offices told us that inspectors try to conduct RMASTs based on threat information or previous BASE scores, but inspectors in one of those offices said that the intelligence information they receive from TSA is insufficient to help them identify threats and conduct outreach for RMASTs. As previously discussed, the NIPP risk management framework and the DHS Risk Management Fundamentals Doctrine both state that entities should identify and assess risks and prioritize resources to mitigate those risks. If TSA identified and prioritized the types of high-risk entities and locations it intends the RMAST program to reach, surface inspectors would have information that would enable them to implement these activities in a more risk-based manner.", "While TSA has identified broad objectives for the RMAST program, it has not defined these objectives – and associated program activities – in a measurable and clear way. Specifically, in its description of RMAST in the fiscal year 2017 work plan implementation guidance, TSA stated that the RMAST program will be risk-based, intelligence-driven, and mitigate current threats and vulnerabilities, but did not provide further information that would allow TSA to measure progress toward achieving these objectives. Similarly, in its budget justifications for fiscal years 2014, 2015, and 2016 TSA stated that RMAST is intended to improve security and reduce the need for stakeholders to stretch limited resources to harden security at their most critical and high-risk locations, but TSA did not describe how it would measure whether security had improved, or if stakeholders’ resource needs were reduced. While our review of the fiscal year 2017 work plan guidance showed that TSA identified general categories of activities – public observation, site security observation, and stakeholder engagement – TSA did not identify what specific activities within each of these categories constitute an RMAST, or describe how those activities would help TSA achieve its objectives for the RMAST program. Some inspectors told us that the purpose of RMAST was unclear, that they had not been given the tools to perform RMAST in an effective and efficient way, or that the observation component of RMAST was not a valuable activity. TSA has not defined the RMAST program’s objectives and associated activities in a measurable and clear way because, according to TSA officials, TSA has not identified an approach for determining the effectiveness of activities conducted under the program.\nStandards for Internal Control in the Federal Government states that management should establish proper controls – including the establishment and review of clearly defined objectives and performance measures – so that program objectives and processes are understood at all levels and progress toward achieving objectives can be assessed. By defining the program’s objectives and associated activities in a measurable and clear way, TSA would be better positioned to measure progress toward achieving the program’s goal of mitigating current threats and vulnerabilities, and surface inspectors may better understand how to effectively carry out the program.", "TSA has employed surface inspectors for a variety of regulatory and non- regulatory activities intended to mitigate risks to surface transportation and enhance the security of the United States’ surface transportation systems and networks. Working with surface transportation entities, who have the primary responsibility for securing their respective entities, TSA surface inspectors enforce security regulations for the freight and passenger rail modes, but spend the majority of their time conducting non-regulatory activities such as security assessments, exercises, and observations. While TSA uses information on some surface inspector activities to monitor and make decisions on these activities, limitations in the PARIS data system prevent TSA from readily accessing complete information on how much time inspectors spend working in support of aviation. Without addressing these limitations TSA is limited in its ability to make informed future decisions on annual resource needs for surface inspectors, which will be especially important as TSA take steps to expand its inspection activities with the promulgation of new surface security regulations. Given that TSA spends only about 3 percent of its budget on surface activities, it is crucial that the agency have complete information on how resources are being used in order to best allocate these limited federal surface transportation security resources.\nAccording to TSA, the agency implements risk-based security – security activities that are driven primarily by the assessment of risk – to deliver the most effective security in the most efficient manner. While TSA has implemented a risk-informed process to allocate surface inspectors to its field offices, it has not taken steps to ensure that surface inspector activities align more closely to the risks TSA has identified in its risk assessments. As a result TSA could continue to prioritize its limited resources to lower risk surface modes, leaving fewer resources available for higher risk modes. By using the results of risk assessments like the TSSRA when it plans and monitors surface inspector activities, TSA would be better able to ensure that limited surface transportation security resources are used to effectively and efficiently address the highest surface transportation security risks. Additionally, by documenting its risk mitigation decisions and strategies, TSA would be able to more clearly explain the rationale for its resource decisions, including when TSA decides to accept risk or prioritize lower-risk activities for any reason.\nFurthermore, by identifying and prioritizing highest risk entities and locations for its new RMAST program, surface inspectors would have information that would enable them to implement risk mitigation activities in more of a risk-based way. In addition, by clearly defining the program’s goals and activities, TSA would be better able to measure whether RMAST activities are achieving the program’s goal of increasing surface transportation security.", "We are making the following four recommendations to TSA: The Administrator of TSA should address limitations in TSA’s data system, such as by adding a data element that identifies individuals as surface inspectors, to facilitate ready access to information on all surface inspector activities. (Recommendation 1)\nThe Administrator of TSA should ensure that surface inspector activities align more closely with higher-risk modes by incorporating the results of surface transportation risk assessments, such as the TSSRA, when it plans and monitors surface inspector activities, and that TSA documents its rationale for decisions to prioritize activities in lower-risk modes over higher-risk ones, as applicable. (Recommendation 2)\nThe Administrator of TSA should identify and prioritize high-risk entities and locations for TSA’s Risk Mitigation Activities for Surface Transportation (RMASTs). (Recommendation 3)\nThe Administrator of TSA should define clear and measurable objectives for the RMAST program. (Recommendation 4)", "We provided a draft of this report to DHS for their review and comment. DHS provided written comments, which are noted below and reproduced in full in appendix IV, and technical comments, which we incorporated as appropriate.\nDHS concurred with all four recommendations in the report and described actions underway or planned to address them. With regard to the first recommendation that TSA address limitations in its data system to facilitate ready access to information on all surface inspector activities, DHS concurred and stated TSA’s Compliance Division will maintain a staffing tool that identifies the modal assignments of transportation security inspectors that can be used to more effectively analyze all surface inspector activities. If fully implemented, such that data on all activities surface inspectors perform are readily accessible, this system should address the intent of the recommendation.\nWith regard to the second recommendation that TSA align surface inspector activities more closely with higher-risk modes by incorporating the results of surface transportation risk assessments, such as the TSSRA, when it plans inspector activities, and document its rationale for decisions to prioritize activities in lower-risk modes, TSA concurred and stated relevant risk information would be more clearly incorporated into the Surface Work Plan development process. Further, TSA plans to explain decisions and rationale for deviating surface inspector planned activities from mirroring the TSSRA in its program guidance documentation. TSA estimates it will complete this process by January 31, 2018. If TSA is able to fully incorporate risk assessment results, such as the TSSRA, into its decisions for assigning surface inspector tasks across surface transportation modes, and document its rationale if planned inspector activities do not align with risk assessment results, TSA’s planned actions would address the intent of the recommendation.\nWith regard to the third recommendation to identify and prioritize high-risk entities and locations for TSA’s Risk Mitigation Activities for Surface Transportation (RMAST), TSA concurred and stated the Surface Compliance Branch will prioritize entities for RMAST activities within the Surface Work Plan or other applicable program guidance documents using results from the TSSRA and using high threat urban area designations. TSA estimates this process will be completed by January 31, 2018 and if fully implemented, this process should address the intent of the recommendation.\nWith regard to the fourth recommendation that TSA define clear and measurable objectives for the RMAST program, TSA concurred and stated the Surface Compliance Branch has clarified in program guidance documents how to apply and measure certain security outcomes resulting from RMAST activities to security vulnerabilities identified from a previous BASE assessment or other security assessment program. Documentation corroborating these actions was not provided to GAO before the issuance of this report. However, if TSA is able to clearly state the purpose and objectives of RMAST activities, and track the extent to which these objectives have been met, this additional program guidance should address the intent of the recommendation.\nWe are sending copies of this report to interested congressional committees, the Secretary of Homeland Security, and the Administrator of the Transportation Security Administration. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7141 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix V.", "Our objectives were to examine (1) how Transportation Security Administration (TSA) surface inspectors implement the agency’s surface transportation security mission, and (2) the extent to which TSA has used a risk-based approach to prioritize and implement surface inspector activities.\nThis report is a public version of a prior sensitive report that we issued in October 2017. TSA deemed some of the information in the prior report sensitive security information, which must be protected from public disclosure. Therefore, this report omits sensitive information regarding the specific risks facing particular surface transportation modes as determined by TSA. However, the report addresses the same questions as the sensitive report and the overall methodology used for both reports is the same.\nTo obtain background information and answer both questions we (1) reviewed background documents, including TSA strategic documents and previous GAO and Department of Homeland Security (DHS) Inspector General reports, (2) analyzed TSA data on surface inspector activities, and (3) conducted non-generalizable interviews of surface inspectors, their supervisors, and industry stakeholders.\nTo understand TSA’s roles and responsibilities for surface security, as well as its mission, we examined statutes and regulations, including the Aviation and Transportation Security Act, the Implementing Recommendations of the 9/11 Commission Act of 2007, and TSA surface security and related regulations. We also reviewed DHS and TSA strategic documents including TSA’s National Strategy for Transportation Security 2016, the DHS National Infrastructure Protection Plan (NIPP) 2013, and the fiscal years 2016 to 2018 strategic plans for TSA’s Office of Security Operations and the Office of Security Policy and Industry Engagement. Additionally, we reviewed previous GAO and DHS Office of Inspector General reports on TSA’s surface security efforts and surface inspector programs.\nTo evaluate how surface inspectors implemented TSA’s surface security mission and the extent to which this implementation was based on risk, we analyzed data from the surface module of the Performance and Results Information System (PARIS) on the activities of surface inspectors from fiscal year 2013 through March 24, 2017, the most recent data available. Based on TSA documents, regulations, and interviews with TSA data and program officials, we categorized surface inspector activities according to regulatory and non-regulatory activities and by mode, and calculated the total time surface inspectors reported spending for each category. We analyzed data from fiscal years 2013 through 2017 to ensure that we could compare several years of data and analyze data obtained after reorganizations of the surface inspector command structure in fiscal year 2010 and offices in mid-fiscal year 2013. We did not review data from the aviation module of PARIS because, as discussed below, it was not feasible to identify the data surface inspectors entered into this module, and, based on our interviews with TSA data officials and our review of related documentation, we determined that all other surface inspector activities were documented in the surface module of PARIS.\nTo determine the reliability of data from the surface module of PARIS we (1) reviewed related documentation such as data dictionaries, schema, PARIS reliability assessments from previous GAO audits, TSA analyses of PARIS data, and data entry guidance, (2) interviewed TSA officials responsible for entering, reviewing, or using PARIS data, including headquarters officials, field office supervisors, and surface inspectors, (3) electronically and manually tested the data for completeness and obvious errors, such as duplicates and consistency with secondary sources, and (4) conducted internal logic tests on certain time-related fields in the data. Through these steps, we identified some inconsistencies in the data including incomplete data on surface inspectors’ aviation activities and non-specific data elements for inspection activities in fiscal year 2013, among others. However, we determined that for our purposes – to describe how surface inspectors reported spending their time at the summary-level – these inconsistencies did not affect the reliability of the PARIS surface module data and these data were reliable with some limitations.\nSpecifically, based on interviews with TSA data officials and our review of TSA data entry guidance, we determined that the data in the surface module of PARIS did not represent the complete activities conducted by surface inspectors because they enter some aviation activities separately in the aviation module of PARIS. Further, we determined that it was not feasible to distinguish aviation activities documented by surface inspectors in the aviation module from aviation activities documented by cargo or aviation inspectors in this module at the aggregate level. However, based on our testing, review of related documentation, and interviews with TSA data officials, we determined that the data surface inspectors entered into the surface module of PARIS, including data on some aviation activities, were reliable for our purposes. As a result, we reported data on surface inspectors’ aviation activities as documented in the surface module of PARIS, with the limitation that these data represent the minimum aviation activities surface inspectors actually conducted.\nAdditionally, through our analysis of PARIS data on regulatory inspections surface inspectors conducted in fiscal year 2013 and interviews with TSA data officials, we found that 25 percent of the total inspections in fiscal year 2013 (1,990 of 8,083) were documented under data elements that did not specify the type of inspection conducted. According to TSA officials, there are no additional data elements that would allow us to identify the specific type of inspection surface inspectors conducted for these 1,990 inspections. As a result, we determined that this portion of the fiscal year 2013 data was not reliable for our purposes of identifying the number of specific inspection types surface inspectors conducted. However, we found that the remaining 78 percent of inspection data for fiscal year 2013 was reliable for our purposes. As a result, the inspection counts and compliance rates we reported for fiscal year 2013 represent partial year data.\nTo obtain the perspectives of a wide sample of TSA officials on both surface inspector activities and TSA’s use of risk, we conducted semi- structured interviews with surface inspectors and/or their supervisors in 17 of 49 field offices. We also interviewed the 6 Regional Security Inspectors (RSIs), who cover all seven TSA regions. We interviewed inspectors and supervisors from at least 2 offices in each region and selected the offices based on a variety of factors including geographic dispersion, staff level, surface transportation environment, and whether the office was co-located with a major airport. We physically visited 6 offices and conducted the remainder of our interviews remotely. We selected the offices we traveled to based on the location of GAO staff, the availability of industry representatives in the area, and the opportunity to observe surface inspector assessments, tabletop exercises, and other activities. The results of our interviews are not generalizable, but provide insight into how surface inspectors and their supervisors implement TSA surface programs and the challenges they may face, if any.\nTo gain insight into the experience surface transportation industry stakeholders have had with TSA surface inspectors, we interviewed 15 industry stakeholders in four surface modes including 3 freight rail stakeholders, 3 maritime stakeholders, 3 highway stakeholders, and 6 passenger rail/mass transit stakeholders. We selected industry stakeholders based on their involvement and familiarity with TSA surface inspectors, the surface mode in which they operate, their ridership, and TSA recommendation. Three of these stakeholders consisted of national trade associations representing the highway, freight rail, and mass transit modes of transportation. As with our interviews with TSA surface inspectors and supervisors, our interviews with industry stakeholders are not generalizable but provided us with valuable information on the transportation industry’s interaction with TSA surface inspectors.\nTo further address our first objective and describe how TSA surface inspectors implemented the agency’s surface transportation security mission, we examined TSA strategic and program documents including surface inspector work plans and implementation guidance from fiscal years 2013 to 2017, the TSA Inspector Compliance Manual, and TSA surface security regulations, and reviewed public testimony by TSA leadership. To understand how TSA has implemented the Baseline Assessment for Security Enhancement (BASE) program in particular, we reviewed TSA program documents and guidance for the BASE program, including the BASE workbook, and observed a BASE review on a mass transit entity. We also observed a regional Intermodal – Security Training Exercise Program (I-STEP) exercise and an Exercise Information System (EXIS) exercise, and interviewed TSA officials in headquarters, and inspectors and supervisors in the field.\nWe used the results of our analysis of PARIS surface module data, specifically the number of each type of regulatory inspection TSA inspectors conducted from fiscal years 2013 to 2017, and PARIS data on the violations found during those inspections, to calculate regulatory compliance rates. We also used the results of our analysis of PARIS surface module data to describe how surface inspectors reported spending their time. As previously stated, we found the PARIS surface module data to be reliable for this purpose, with the limitation that TSA data on the time surface inspectors reported spending on aviation activities was incomplete because we could not identify surface inspector activities entered into the aviation module of PARIS. To evaluate the effects of this limitation, we compared the results of our data analysis, our reviews of PARIS documentation, and our interviews with TSA officials to Standards for Internal Control in the Federal Government.\nTo further address our second objective, the extent to which TSA has used a risk-based approach to prioritize and implement surface inspector activities, we analyzed TSA’s risk guidance as contained in the NIPP risk management guidance, the DHS 2010 Risk Lexicon, and the DHS Risk Management Fundamentals to understand how TSA should assess and use risk information. To understand the risks TSA has identified for surface transportation modes during the time period we examined, we analyzed TSA’s cross-modal risk assessments in three Transportation Security Sector Risk Assessments (TSSRA) published between May 2013 and July 2016.\nWe reviewed TSA’s fiscal year 2017 surface inspector staffing model and supporting documents and data and interviewed TSA officials responsible for developing and executing staffing. We compared that process to TSA risk guidance to evaluate the extent to which TSA considered risk when it staffed TSA surface inspectors for fiscal year 2017. We assessed only the fiscal year 2017 staffing model because TSA’s previous staffing model was last used in fiscal year 2011, which is outside our scope.\nTo determine the extent to which TSA prioritized surface inspector activities based on risk when it planned these activities, we identified, compiled and analyzed activity requirements from surface inspector work plans and associated implementation guidance from fiscal years 2013 to fiscal year 2017. We (1) compared them to each other to identify changes in planned surface inspector activities over time and (2) compared them to results from the TSSRA, as well as other risk information including unattended rates for Toxic Inhalation Hazard (TIH) rail cars and the presence of Maritime Transportation Security Act of 2002-regulated facilities in each office’s area. We also interviewed TSA officials in headquarters and the field who were responsible for developing the surface inspector work plan about the process and information they considered during work plan development, and compared this information to TSA risk guidance.\nTo determine the extent to which TSA’s implementation of surface inspector activities aligned with risk, we compared the results of our analysis of PARIS surface module data on the time surface inspectors spent in each surface mode to the results of the TSSRA cross-modal risk assessments from fiscal years 2013 to 2017. As previously discussed, we determined the data to be reliable for our purposes. We also compared the results of our analysis of PARIS surface module data to our analysis of work plan requirements to identify the amount of time surface inspectors reported spending on work plan activities. In addition, we identified the types of information TSA used in its fiscal year 2015 analysis of surface inspector time and activities to determine what TSA considered when it monitored how surface inspector activities were implemented.\nAdditionally, we used the results of our analysis of PARIS surface module data to determine the percent of total time surface inspectors reported spending on Risk Mitigation Activities for Surface Transportation (RMAST) between fiscal years 2013 and 2017. To understand TSA’s objectives for the RMAST program, we analyzed program descriptions in TSA congressional budget justifications and TSA’s fiscal year 2017 work plan and work plan implementation guidance. We also conducted interviews with TSA officials in headquarters, and inspectors and supervisors in the field, and observed an RMAST activity to understand how TSA has implemented the program. We compared the results of our analysis and interviews to TSA’s risk guidance and Standards for Internal Control in the Federal Government to evaluate the extent to which the program was risk-based and to which TSA had established measurable goals for the program.\nThe performance audit upon which this report is based was conducted from April 2016 to October 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We subsequently worked with TSA from September 2017 to December 2017 to prepare this nonsensitive version of the original report for public release. This public version was also prepared in accordance with these standards.", "Appendix II: Surface Inspector Activities 2005 High-visibility activities, such as patrols, passenger and baggage screening, and canine activities to introduce unpredictability, increase security, and deter potential terrorist actions on multiple modes of transportation. Managed by the U.S. Federal Air Marshal Service and conducted by TSA personnel, which may include surface inspectors. 2006 A voluntary review in which surface inspectors evaluate the security programs of transportation entities, offer technical assistance, and share best practices. TSA uses BASE to, among other things, determine priorities for allocating mass transit and passenger rail security grants, such as those provided through the Transportation Security Grant Program. 2006 Local field assessments of critical infrastructure, station and other facilities for mass transit, passenger rail, and commuter rail and bus systems. Station profiles provide detailed information of specific station-related intelligence, such as the locations of exits, telephones, CCTV, electrical power, station mangers etc. 2007 Inspectors verify that Toxic Inhalation Hazard (TIH) rail cars at rail yards within high- threat urban areas that transport TIH on a regular and reoccurring basis are being attended by railroad personnel. Inspectors also conduct “wildcard” RRS, during which they observe locations which do not normally handle TIH on a regular and recurring basis to determine if TIH cars are present, and if they are being attended by railroad personnel. 2008 Detailed assessments that focus on the vulnerabilities of high-population areas where TIH materials are moved by rail in significant quantities, and that provide site- specific mitigation strategies and lessons learned. 2008 I-STEP, which is managed through the Office of Security Policy and Industry Engagement, consists of contractor-facilitated exercises designed to help multimodal surface transportation entities closely examine their security programs and operational efforts. TSA facilitates I-STEP exercises across all surface transportation modes to help operators, law enforcement, first responders, and related entities test and evaluate their security plans, including prevention and preparedness capabilities, ability to respond to threats, and interagency coordination. TSA updates I-STEP scenarios as new threats emerge, helping industry partners prepare to implement the most appropriate countermeasures. 2014 Quality assurance assessments of Transportation Worker Identification Credential (TWIC) enrollment centers to, according to TSA officials, review contractor performance. 2015 EXIS consists of exercises facilitated by surface inspectors that utilize software developed by TSA for stakeholder use, generally focus on one entity, and are intended to build on the findings of a previously completed BASE assessment.", "2017 A program intended to focus time and resources on high-risk and critical assets, facilities and other infrastructure through the following activities: (1) public observation to identify suspicious activities, security vulnerabilities and/or suspicious behaviors that could be indicative of pre-operational planning related to terrorism; (2) site security observation to determine if the physical security measures and operational deterrence components are in place to effectively mitigate risk, and (3) stakeholder engagement including TSA’s public security awareness programs and improvised explosive device (IED) and intelligence briefings.\nIn this table, passenger rail and rail transit systems consist of: each passenger railroad carrier, including each carrier operating light rail or heavy rail transit service on track that is part of the general railroad system of transportation, each carrier operating or providing intercity passenger train service or commuter or other short-haul railroad passenger service in a metropolitan or suburban area (as described by 49 U.S.C. § 20102), and each public authority operating passenger train service; (b) each passenger railroad carrier hosting an operation described in paragraph (a) of this section; (c) each tourist, scenic, historic, and excursion rail operator, whether operating on or off the general railroad system of transportation; (d) each operator of private cars, including business/office cars and circus trains, on or connected to the general railroad system of transportation, and (e) each operator of a rail transit system that is not operating on track that is part of the general railroad system of transportation, including heavy rail transit, light rail transit, automated guideway, cable car, inclined plane, funicular, and monorail systems. 49 C.F.R. § 1580.200.", "", "", "", "Jennifer Grover (202) 512-7141 or [email protected].", "In addition to the contact named above, Christopher E. Ferencik, Assistant Director; Brendan Kretzschmar, Analyst in Charge; Nanette Barton, and Katherine Blair made key contributions to this report. Also contributing to the report were, Charles Bausell, Katherine Davis, Eric Erdman, Anthony Fernandez, Eric D. Hauswirth, Paul Hobart, Tracey King, Christopher Lee, Mara McMillen, Amanda Miller, Claudia Rodriguez, Christine San, McKenna Storey, Natalie Swabb, Michelle Vaughn, Adam Vogt, Johanna Wong." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 3, 3, 3, 2, 2, 1, 2, 2, 3, 2, 3, 1, 1, 1, 1, 1, 2, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "", "", "", "", "", "", "h0_title h1_title", "", "h0_full", "h0_full", "h1_full", "", "h1_full", "h1_full", "", "h2_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What did GAO find about TSA inspector activities?", "What anecdote backs up this finding?", "Why should TSA incorporate the results of risk assessments when prioritizing activities?", "What is the focus of RMAST?", "At present, what makes it difficult to enact RMAST?", "Why have TSA officials failed to prioritize these high-risk entities?", "Why would it be beneficial for TSA to identify and prioritize high-risk entities for RMAST?", "What was asked of GAO regarding TSA surface inspector activities?", "What does GAO's report address?", "What data was included in GAO's analysis?", "How else did GAO collect information in preparing this report?" ], "summary": [ "GAO also found that TSA prioritized inspector activities in the surface transportation mode with the lowest risk because TSA did not incorporate risk assessment results when planning and monitoring activities.", "Specifically, in fiscal year 2016, the last full year for which data on inspectors' activities in the surface modes was available, surface inspectors reported spending more than twice as much time on the lowest risk surface transportation mode according to TSA risk assessments than on the highest risk surface transportation mode.", "Incorporating risk assessment results when prioritizing inspector activities would help TSA ensure that its surface security resources address the highest risks.", "In fiscal year 2017, TSA fully implemented a new risk mitigation program—Risk Mitigation Activities for Surface Transportation (RMAST)—intended to focus time and resources on high-risk surface transportation entities and locations.", "However, GAO found that TSA has not identified or prioritized these high-risk entities and locations, or defined the RMAST program's objectives and associated activities in a measurable and clear way.", "According to TSA officials, they have not done so because there are too many potential entities to list them all for prioritization and TSA has not identified an approach for determining the effectiveness of activities under the program. However, prioritizing high-risk entities, such as by type, characteristics, or location does not require a complete list of entities.", "By identifying and prioritizing high-risk entities and locations for RMAST, and clearly defining the program's activities and objectives, TSA would be better able to implement RMAST activities in a risk-based manner and measure their effectiveness.", "GAO was asked to review TSA surface inspector activities.", "This report addresses (1) how TSA surface inspectors implement the agency's surface transportation security mission, and (2) the extent to which TSA has used a risk-based approach to prioritize and implement surface inspector activities.", "GAO analyzed TSA data on surface inspector activities from fiscal year 2013 through March 24, 2017, reviewed TSA program and risk documents and guidance, and observed surface inspectors conducting multiple activities.", "GAO also interviewed TSA officials in 17 of 49 surface field offices and 15 industry stakeholders." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 1, 1, -1, 0, 0, 0 ], "summary_paragraph_index": [ 6, 6, 6, 7, 7, 7, 7, 1, 1, 1, 1 ] }

{ "title": [ "Background", "Distribution Network for Natural Gas Pipelines", "Federal Environmental Laws That May Be Involved in the Pipeline Permitting Process", "Stakeholders That May Be Involved in the Pipeline Permitting Process", "The Interstate and Intrastate Pipeline Permitting Processes Can be Complex, with Multiple Stakeholders and Steps", "The Interstate Permitting Process Involves Three Phases, and Stakeholders Report It Is Consistent because It Has a Lead Agency", "The Intrastate Permitting Process Varies by State, and Most States We Reviewed Do Not Use a Lead Agency", "Time Frames for Interstate and Intrastate Pipeline Permitting Processes Vary Because of Multiple Factors", "Natural Gas Pipeline Stakeholders Identified Management Practices to Improve the Permitting Process", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of Agriculture", "Appendix III: GAO Contacts and Staff Acknowledgements", "GAO Contact", "Acknowledgments" ], "paragraphs": [ "This background discusses (1) the distribution network for natural gas pipelines, (2) the key federal environmental laws that may be involved in the permitting process for these pipelines, and (3) the key stakeholders that may be involved in the permitting process.", "A compressor station is a facility that helps the transportation process of natural gas from one location to another. Natural gas, while being transported through a gas pipeline, needs to be constantly pressurized in certain distance intervals. The compressor station compresses the natural gas, thereby providing energy to move the gas through the pipeline. The gas in compressor stations is normally pressurized by special turbines, motors, and engines. Pipeline companies install compressor stations along a pipeline route, typically every 40 to 100 miles. transmission pipelines. PHMSA estimates that there are roughly 2 million miles of distribution pipelines, most of which are intrastate pipelines, in the United States. These pipelines are considered outside of FERC’s jurisdictional responsibilities.", "Several federal environmental laws and agencies may come into play in the permitting process for natural gas pipelines, depending on the proposed route for the pipeline. The principal laws involved include the National Environmental Policy Act, the Clean Water Act, the Endangered Species Act, and the National Historic Preservation Act.\nPub. L. No. 91-190, 83 Stat. 852 (1970), codified as amended at 42 U.S.C. §§ 4321-4347 (2011).\nIntent in the Federal Register. The Notice of Intent acts as the formal announcement of the project to the public and interested federal, state, tribal, and local agencies. The lead agency is then required to determine the scope of the project. During this scoping process, the lead agency consults with resource agencies—such as the Corps or the Department of the Interior’s Fish and Wildlife Service (FWS)—to identify issues and alternatives to be analyzed in the EIS and allocate assignments for assistance in preparing the EIS. The lead agency will also identify other environmental review and consultation requirements under state, tribal, or local laws. Next, the lead agency prepares a draft EIS and solicits comments from the public; incorporates these comments into a final EIS; and issues a Record of Decision. Among other things, the Record of Decision—which is the final step for agencies in the EIS process—identifies (1) the decision made; (2) the alternatives considered during the development of the EIS, including the environmentally preferred alternative; and (3) plans to mitigate environmental impacts.\nEnvironmental assessment (EA). The lead agency prepares an EA when it is not clear whether a proposed project will have significant environmental impacts. An EA is intended to be a concise analysis that, among other things, briefly provides sufficient evidence and analysis for determining whether to prepare an EIS. If during the development of an EA, the lead agency determines that the proposed project will cause significant environmental impacts, the lead agency will stop producing the EA and, instead, produce an EIS. However, an EA typically results in a finding of no significant impact, and this finding is reported in a document that presents the reasons for the agency’s conclusion that no significant environmental impacts will occur when the proposed project is implemented. This finding is typically based on the use of mitigation measures.\nCategorical exclusion. The proposed pipeline project is classified as a categorical exclusion if a federal agency determines that the project falls within a category of activities that has already been determined to have no significant environmental impact. Under a categorical exclusion, the agency generally does not need to prepare an EIS or EA.\nNEPA regulations require federal agencies to make diligent efforts to involve the public in the preparation and implementation of NEPA documents. Under these regulations, agencies must provide a public comment period for a draft EIS; there is no corresponding requirement for an EA, but agencies may provide a public comment period.\nClean Water Act.requirements of the Clean Water Act, one goal of which is to eliminate the addition of pollutants to waters of the United States. Section 404 of the Clean Water Act requires, among other things, that projects involving the discharge of dredged or fill material into waters of the United States must obtain a permit; this permit is typically issued by the Corps. Gas pipelines may involve such discharges when, for example, they are constructed within a riverbed, stream, or wetland. Additionally, pipeline construction may be subject to Section 402 of the Clean Water Act, which prohibits the discharge of pollutants into waters of the United States without a National Pollutant Discharge Elimination System (NPDES) permit. Pipeline construction is also subject to Section 401 of the Clean Water Act, which requires anyone seeking a permit for a project that may affect water quality to seek approval from the relevant state water quality agency.\nPipeline projects may also be subject to many Endangered Species Act. agencies to ensure that any action they authorize, fund, or carry out is not likely to jeopardize the continued existence of a species listed as threatened or endangered under the act, or destroy or adversely modify its critical habitat. To fulfill this responsibility, the agencies must, under some circumstances, formally consult with FWS or the Department of Commerce’s National Marine Fisheries Service (NMFS) when the actions they authorize may affect listed species or designated critical habitat. Formal consultations generally result in the issuance of biological opinions by FWS or NMFS. The biological opinions contain a detailed discussion of the effects of the action on listed species or critical habitat and FWS’s and NMFS’s opinions on whether the pipeline company has ensured that its action is not likely to jeopardize the continued existence of the species or adversely modify critical habitat. In cases where a pipeline project as proposed is likely to either jeopardize the species or cause the destruction or adverse modification of its critical habitat, the opinions are to provide a “reasonable and prudent alternative” to avoid jeopardy or adverse modification that FWS or NMFS believes the pipeline company could take in implementing the action.\nPub. L. 93-205, 87 Stat. 884 (1973), codified at 16 U.S.C. §§ 1531-1544 (2011).\nNational Historic Preservation Act.Preservation Act (NHPA) requires federal agencies to take into account the project’s effect on any historic site, building, structure, or other object that is listed on the National Register of Historic Places. The Advisory Council on Historic Preservation oversees implementation of the Section 106 NHPA authority. In general, the advisory council delegates much of its authority under NHPA to state historic preservation offices. These offices identify historic properties and assess and resolve adverse effects on them under NHPA.\nSection 106 of the National Historic Rivers and Harbors Act of 1899. Harbors Act of 1899, projects such as pipelines that could affect navigable waters of the United States must receive authorization from the Corps. Specifically, the Corps regulates any work or structures in, over, or under navigable waters or any work that may affect the course, location, or condition of those waters.", "Pub. L. No. 69-560, 44 Stat. 1010; Pub. L. No. 71-520, 46 Stat. 918.\nFERC facilitate the timely development of pipeline projects.approves the construction of interstate pipelines by issuing a certificate of public convenience and necessity, which includes conditions that the pipeline company receive all required federal authorizations before beginning construction, if it has not already done so. FERC does not become involved in the permitting process for intrastate pipelines.\nFederal resource agencies. Federal resource agencies are responsible for managing and protecting natural and cultural resources such as wetlands, forests, wildlife, and historic properties. Virtually all applications for pipeline projects require some level of coordination with one or more of the following federal agencies, as well as others, to satisfy requirements for environmental review:\nThe Advisory Council on Historic Preservation seeks to promote the preservation, enhancement, and sustainable use of the nation’s historic resources. For proposed natural gas pipeline projects, the Advisory Council on Historic Preservation reviews and provides comments on those pipeline projects that may affect properties listed or eligible to be listed on the National Register of Historic Places pursuant to the NHPA.\nThe Bureau of Indian Affairs is responsible for, among other things, approving rights of way across lands held in trust for an Indian or Indian tribe. In addition, the Bureau of Indian Affairs must consult and coordinate with any affected tribe.\nThe Bureau of Land Management (BLM) is principally responsible for issuing right-of-way permits authorizing natural gas pipelines to cross federal lands.federal agency, such as National Forest System lands, as well as BLM lands, BLM is responsible for issuing an authorization.\nWhen pipelines cross the lands of another\nThe Corps has the authority to issue permits for the discharge of dredged or fill material into waters of the United States under Section 404 of the Clean Water Act. The Corps also has jurisdiction over structures or work in navigable waters of the United States under Section 10 of the Rivers and Harbors Act. If any activity could affect a federal project, such as a levee, dam, or navigation channel, permission from the Corps is required in accordance with Section 14 of the Rivers and Harbors Act of 1899.\nEPA is responsible for administering a wide variety of environmental laws. EPA’s responsibilities for the pipeline permitting process include commenting on EISs under the Clean Air Act; it also has the authority to participate in the Section 404 permit process.\nFWS is generally responsible for implementing the Endangered Species Act, among other laws, for freshwater and terrestrial species that may be affected by a pipeline construction project.\nThe Forest Service is responsible for managing 193 million acres of National Forest System lands, through which many thousands of miles of natural gas pipelines cross. If a proposed pipeline crosses more than one federal agency’s lands, BLM issues a right-of-way permit. In cases where the pipeline only crosses National Forest System lands, the Forest Service issues a special- use authorization.\nNMFS implements, among other things, the Marine Mammal Protection Act and the Endangered Species Act for most marine species and anadromous fish (i.e., fish that spend portions of their life cycle in both fresh and salt water).\nState resource agencies. State-level agencies are generally responsible for managing and protecting a state’s natural and cultural resources. State resource agencies, such as state environmental or water quality agencies, as is the case with their federal counterparts, participate in and review assessments of environmental impacts in accordance with their responsibilities under federal or state laws. In some cases, federal agencies have delegated authority to state resource agencies for carrying out federal laws. Additionally, state historic preservation offices advise and consult with federal and other state agencies to identify historic properties and assess and resolve adverse effects to those properties under the NHPA.\nTribal governments. As part of the planning and review process for pipeline projects, federal agencies engage in government-to- government consultation between American Indian Tribes and Alaska Native Corporations. Consultation is a deliberative process that aims to create effective collaboration and informed federal decision making. Tribal consultations can be a factor in the overall pipeline project schedule.\nLocal governments. Local governments involved in natural gas pipeline projects may include counties or municipalities that are empowered by state law or constitution to carry out provisions to protect the environment or safety of local citizens. This may include requiring soil and erosion plans or zoning laws.\nPublic interest groups. Public interest groups, such as Earthjustice, Delaware Riverkeeper, and the Pipeline Safety Trust, advocate for a number of issues, including the environment and public safety. They may comment on a proposed pipeline project during, for example, the NEPA process or any state processes that include public comment periods.\nPrivate citizens. Private citizens can provide comments and opinions in venues like public hearings. Like public interest groups, private citizens may comment on a proposed pipeline project during, for example, the NEPA process or any state processes that include public comment periods.", "Both the interstate and intrastate pipeline permitting processes are complex in that they can involve multiple federal, state, and local agencies, as well as public interest groups and citizens, and include multiple steps. The interstate permitting process involves three key phases: a voluntary pre-filing phase, an application phase, and a post- authorization phase with multiple steps. According to stakeholders we spoke with, the interstate process is consistent because FERC acts as a lead agency in coordinating multiple stakeholders. The intrastate process can also include multiple stakeholders and steps. However, those stakeholders and steps vary from state to state, and most states do not have a lead agency coordinating the process.", "We identified three key phases in the interstate permitting process for natural gas pipelines: pre-filing, application, and post-authorization. During these phases, federal, state, and local agencies, as well as public interest groups and citizens, may play a role in approving or commenting on the application for a permit to construct interstate pipelines. According to some industry representatives we spoke with, the interstate permitting process can be time-consuming, depending on the size and complexity of a proposed project, but it is consistent because FERC, as the lead agency, assists in coordinating with other stakeholders on the NEPA environmental analysis.\nIn 2002, FERC established a pre-filing phase to facilitate and expedite the review of natural gas pipeline projects through early coordination with FERC and cooperating agencies (see fig. 1). The intent of this phase is to involve stakeholders sooner so that potential issues can be identified and resolved earlier, thereby taking less time overall. Use of this phase is voluntary, and FERC must approve a company’s request for pre-filing. For those projects that are less complex, such as those that do not involve federal lands, endangered species, or crossings of waters of the United States, applicants may choose not to use the pre-filing phase. According to FERC officials, in 2012, 67 percent of applicants for major interstate pipeline construction projects chose to use this phase. In the pre-filing phase, FERC and the applicant focus on gathering the necessary information for the environmental analysis, which may involve numerous federal, state, and local agencies and is typically the most complex and time-consuming step of the permitting process.\nOnce FERC approves a company’s request to use the pre-filing phase for a project, agency staff notify other potential cooperating agencies that FERC has approved the use of the pre-filing phase and hold a planning or information meeting with the applicant and the agencies to discuss land and resource issues and concerns. FERC and the agencies also discuss the agencies’ ability to commit to an environmental review schedule. FERC will then work with the applicant and those agencies that are to have a role in the permitting process to initiate the NEPA scoping process—that is, the process of defining and refining the scope of an EIS or EA and the alternatives to be investigated—and begin the environmental analysis.\nApplicants are to hold “open house” meetings in the vicinity of the proposed project to share information about the project with the public. FERC staff often attends these meetings to answer any questions about the FERC permitting process and to invite the public to participate in the process at future dates. According to FERC’s website, applicants may incorporate proposed mitigation measures into the project design from comments received during these meetings. After these meetings, FERC will issue a Notice of Intent in the Federal Register for the preparation of an EA or EIS and seek additional public comments. FERC staff may also hold public scoping meetings for major projects that require an EIS or EA. Information given by the public during scoping meetings can help the company prepare environmental mitigation measures.\nAccording to industry representatives we spoke with, FERC’s pre-filing process was helpful at resolving potential problems earlier in the process, but other stakeholders said the pre-filing process is confusing and may limit public input. For example, one natural gas industry representative noted that the pre-filing phase has made the overall process less complicated. Another stated that it has resolved potential project “derailers,” such as issues with routing the pipeline through areas with endangered species, and has saved time for obtaining a permit. In addition, another industry representative said that early identification of stakeholders also increases coverage of potential resource impact issues so that appropriate surveys, mitigation practices, coordination with local and state requirements, and planning for habitat management or conservation can be coordinated with proposed project construction timelines. On the other hand, some state officials and representatives of public interest groups were more skeptical of the pre-filing phase. One representative of an environmental group said the public is unaware of the pre-filing phase and suggested that FERC and other stakeholders specifically reach out to environmental groups during the pre-filing phase if they want to resolve potential issues early in the process. However, another representative from an environmental group commended FERC for establishing an e-mail notification system that enables the public to sign up for e-mails on the progress of a specific project.\nOnce pre-filing activities are completed or, if the applicant chooses to forgo the pre-filing phase, the applicant submits an application for a certificate of public convenience and necessity to FERC (see fig. 2 for steps in the application phase). FERC issues a Notice of Application, which includes the following: the unique number assigned to the project; the ways in which stakeholders, including the public, can become involved in the proceedings; and the methods for filing comments with FERC. There are several factors taken into account when FERC establishes a schedule for the environmental review, including the scope and complexity of the project, the requirements of any cooperating agencies, and the requested time frame of the applicant. Schedules may be adjusted if new concerns are identified, new information is introduced, or the number of comments received is greater than anticipated. However, FERC has no authority to enforce that schedule with cooperating agencies.\nFERC then analyzes the information in the application and begins the scoping process for those proposed projects that did not use the pre-filing phase or continues the scoping process for those proposed projects that did use the pre-filing phase. If a company did not use the pre-filing phase, FERC will begin the scoping process and consult with cooperating agencies to gather information. Next, FERC will issue a Notice of Intent to prepare either an EA or EIS. FERC, along with any cooperating agencies, will prepare either an EA or a draft EIS, depending on the potential environmental effects of the project. Cooperating agencies are responsible for assisting FERC in the preparation of the EA or EIS for those issues that fall within their jurisdiction. For example, if a project impacts waters of the United States, the Corps is likely to participate in the development of the EA or EIS because it is responsible for the regulation of activities in jurisdictional waters of the United States and would need to evaluate proposed impacts to those waters to inform a permit decision pursuant to its authorities under Section 404 of the Clean Water Act and/or Section 10 of the Rivers and Harbors Act of 1899. The environmental analysis incorporates the necessary information from all federal agencies in one document.\nWhile FERC may issue the certificate of public convenience and necessity before all federal permits, certificates, or authorizations are complete, it will not grant the authority to construct a pipeline without these federal authorizations. Pipeline companies must coordinate with the relevant agencies to ensure that these permits, certifications, and authorizations are completed. This may happen during the application phase or after FERC issues its certificate.\nSome states have developed written agreements with federal agencies that establish a process for carrying out their roles in consultation, review, and compliance with one or more federal laws. In some cases, state agencies have received the authority from federal agencies to implement federal laws and regulations. For example, the Clean Air Act gives EPA the authority to limit emissions of air pollutants, such as nitrogen oxides and methane, that result from constructing and operating natural gas compressor stations and pipelines. Such emission limits are established through a preconstruction permit issued by EPA, or, in some cases, by a state or local agency that has received authority from EPA to issue Clean Air Act permits in its jurisdiction. According to EPA, at least 75 percent of preconstruction permits are issued by state and local agencies, and EPA’s regional offices issue the remaining preconstruction permits. In areas where the state agency issues the clean air permits under the rules of their state implementation plan, EPA provides minimal oversight because the state is the permitting authority and therefore has primacy over decision making. In addition, state agencies may have delegated authority to process and issue federal Water Quality Certifications, required under Section 401 of the Clean Water Act, and Consistency Concurrences, under the Coastal Zone Management Act.\nEnvironmental permits issued by federal agencies can also vary by state or by region. For example, the Corps issues two types of permits to authorize activities under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act of 1899: (1) individual permits, and (2) general permits. The type of permit used depends on the type and extent of proposed impacts on aquatic resources and whether a general permit is available to authorize such impacts. The Corps issues individual permits for specific projects that may have more than minimal impacts on aquatic resources, either individually or cumulatively, or are not otherwise authorized by general permits. The Corps issues general permits for activities resulting in no more than minimal adverse effects on the aquatic environment. The following three types of general permits are used for natural gas pipeline construction projects that require the discharge of dredged or fill material into waters of the United States and/or work or structures affecting the course, location, or condition of navigable waters:\nNationwide permit. This type of general permit is intended to streamline and expedite the evaluation and approval process throughout the nation for certain types of activities that have only minimal impacts, both individually and cumulatively, on the aquatic environment. Activities that meet the terms and conditions of this type of permit, such as natural gas pipeline construction projects, are already authorized by the Corps. The Corps district verifies that the project meets the conditions outlined in the applicable nationwide permit. Corps headquarters, rather than one of the 38 district offices, issues these permits. However, one of the Corps’ eight division offices may add regional conditions to these permits in order to protect local aquatic ecosystems or to minimize adverse effects on ecologically critical areas or other valuable resources.\nRegional general permits. This type of permit authorizes activities that commonly occur in a particular region and that are expected to have a minimal impact on waters of the United States, but that do not warrant national authorization. Corps district offices issue this type of permit.\nProgrammatic general permits. This type of general permit is established in those states or localities where there is a similar existing state, local, or other federal agency regulatory program. It is designed to avoid regulatory duplication. These types of permits may allow activities, including work in waters of the United States associated with pipeline projects, to have greater impact on waters than the nationwide general permits, provided there is still no more than minimal adverse effect on the environment. The programmatic general permit will identify those impacts that may be verified by the state or other entity with no review by the Corps, as well as any activities that may require notification to the Corps before verification is provided. Once the programmatic general permit is issued, the state or local agencies review proposed projects to verify that the proposed activities meet the terms and conditions of the permit, coordinating with the Corps’ district offices as necessary. Corps district offices receive annual reports from state and local agencies regarding the use of the programmatic general permits. Districts also retain the right to review any proposed project they determine may not meet the terms and conditions of the programmatic general permit.\nMost Corps districts primarily use nationwide permits to authorize work in waters of the United States in association with pipeline construction activities. Eight districts have developed regional general permits for certain activities, that may include pipeline construction, and six districts have developed state programmatic general permits. According to a Corps headquarters official, Corps districts may use different permitting mechanisms in different states to evaluate work in waters of the United States in association with pipeline projects. The regulations allow for this flexibility to account for regional differences in the aquatic environment, endangered species, historic sites, state regulations, or other factors. For example: In Pennsylvania, Corps district offices will generally rely on the Pennsylvania State Programmatic General Permit-4, under which the Pennsylvania Department of Environmental Protection verifies certain impacts that may occur in waters of the United States from the construction of some pipelines if the project meets certain criteria.According to Corps district officials, the Corps does not use a nationwide permit for these types of impacts because doing so would duplicate a similar state permit.\nOfficials in the Corps’ Fort Worth district office said they typically use a nationwide permit to authorize work in waters of the United States in association with pipeline construction. Officials said they have not considered the use of a programmatic general permit because there are no similar permitting programs or authorizations required by the state of Texas.\nIn Florida, Corps district officials issue both nationwide permits and regional general permits for work in waters of the United States in association with pipeline construction. Headquarters officials said the use of a programmatic general permit has not been considered because state regulatory processes are not similar enough to develop such a permit.\nIn addition to coordinating with federal agencies on the environmental analysis, FERC may work with state resource agencies and local governments during the permitting of a natural gas pipeline. For example, an interstate natural gas pipeline project that runs through Pennsylvania would require several federal, state, and local permits, licenses, approvals, and certifications, as shown in table 1. However, some state and local actions are preempted—that is, they are superseded or overridden by federal law—because the actions conflict with federal law. For example, state certificates of necessity and convenience, which otherwise may be issued by state public utility commissions or other state agencies, are preempted because FERC’s certificate of public convenience and necessity supersedes the state’s.\nThe process differs slightly depending on whether an EA or EIS is prepared, but in either case, FERC, acting as the lead agency, issues either a draft EIS or EA, and obtains public comments on the environmental analysis that was completed. FERC will respond to those comments, and issue its order either approving or denying the certificate of public convenience and necessity. According to representatives of one environmental group we spoke with, the public is not given sufficient time to intervene in the pipeline permitting process and often must hire attorneys to help them raise a motion with the agency because the process is complicated. According to representatives from several interest groups we spoke with, citizens are often unable to take these additional steps. However, FERC officials said that, while the agency establishes a deadline for timely motions to intervene, a motion to intervene can still be considered once the deadline has passed. Officials also said that an entity would be well-advised to file a motion to intervene as soon as possible. State officials we spoke with said that citizens are not well informed of the complicated interstate pipeline permitting process.\nOnce FERC has issued a certificate of public convenience and necessity or denied an application, the applicant or the party to the proceeding can request that FERC rehear the case or take FERC to court over the outcome of the case. Otherwise, in order to proceed, the pipeline company must file an implementation plan with FERC including, but not limited to, how the company will implement any environmental mitigation actions identified in the environmental analysis, the number of environmental inspectors the company will assign to the project to ensure that mitigation measures are implemented, and procedures the company will follow if noncompliance occurs. FERC must give written authorization before construction can begin. Following that authorization, the pipeline company must file weekly status reports with FERC documenting inspection and compliance until all construction activities are completed. In addition, FERC is to regularly inspect the construction. Section 7 of the Natural Gas Act grants the right of eminent domain when FERC issues a certificate of public convenience and necessity; the pipeline company therefore has the right to acquire the property for that project by eminent domain if it cannot acquire the necessary land by agreement or if it cannot agree with the landowner on the compensation to be paid for the land.", "If a new intrastate natural gas pipeline construction project does not cross a state border, then the responsibility for approval of pipeline routes falls to the individual states, and FERC does not play a role in siting the pipeline. The permitting process for these pipelines varies from state to state and may involve many federal, state, and local stakeholders. Unlike the interstate process, the intrastate process in most of the states we reviewed does not use a lead agency to authorize and coordinate siting and environmental reviews.\nAs is the case with the interstate permitting process, pipeline companies must consider two issues when planning an intrastate natural gas pipeline: land acquisition and the need to identify the siting authority that oversees the location and route for that pipeline. To acquire rights to the land necessary to build the pipeline, pipeline companies will generally attempt to negotiate right-of-way agreements with individual landowners along the intended route. If negotiations fail, the companies may seek to acquire the land through eminent domain proceedings. There is no uniform standard for right-of-way agreements and eminent domain authority, and procedures vary by state. However, BLM will process permits for intrastate natural gas pipelines located on federal lands administered by the Bureau.\nOf the 11 states we reviewed, 5 have agencies charged with siting intrastate natural gas pipelines. These 5 states require advance approval of the location and the route of the pipeline. The remaining 6 do not have siting agencies that require advance approval of location and route. Table 2 shows these differences among the states we examined.\nAs the table shows, the requirements of the application process differ from Florida—which generally requires state certification before constructing certain intrastate natural gas pipelines—to Texas, which does not require pipeline companies to obtain a permit to construct an intrastate pipeline and which gives natural gas utility pipeline companies statutory right of eminent domain without any prior state approval.\nAccording to public interest and industry group representatives we spoke with, the intrastate process for permitting and siting pipelines needs to be more transparent. In many states, it is difficult to determine the process for pipeline siting and whether the state has an agency with siting authority. They also told us that the intrastate process is challenging to navigate without an agency that takes the lead on siting and coordinating the environmental review, as FERC does at the interstate level. Additionally, representatives from two public interest groups we spoke with explained that it is more difficult for the public to comment on proposals for intrastate pipelines because the state processes are not transparent, and the public may not learn about pipelines until after they have been approved. The availability of eminent domain authority can also change how companies deal with land owners and, as a result, can change land owners’ perspective on the process as a whole, according to the public interest group representatives.\nFederal agencies become involved in the intrastate natural gas pipeline permitting process if federally protected resources have the potential to be affected by a project. For example, the Corps becomes involved when a proposed pipeline will be constructed in aquatic resources over which it has jurisdiction and FWS becomes involved if the route crosses an area with a plant or habitat on the federal list of threatened or endangered species.\nState environmental laws and regulations are applicable to intrastate pipelines. However, in 10 of the 11 states we reviewed, no single entity is responsible for coordinating all of the environmental reviews, including federal and state authorizations, during the intrastate permitting process. For example, in Rhode Island, the Energy Facility Siting Board is the authority for approving the siting and construction of natural gas pipelines; the pipeline company is responsible for obtaining all necessary permits, including all permitting and licensing under the jurisdiction of the state’s Department of Environmental Management. Conversely, the New York State Public Service Commission is the lead agency for the siting of intrastate natural gas pipelines. This department coordinates with other affected state agencies and local governments on the permitting process—one stop licensing.", "For interstate pipelines, FERC’s public record information system contains documents that provide dates associated with the phases of the permitting process; however, FERC does not track the time it takes to complete the process. FERC officials said data on processing time frames is of limited use when planning a project because the variability among projects can make them incomparable. Using the information available on interstate natural gas pipeline projects certified from January 1, 2010, to October 24, 2012, we determined that the average processing time from pre-filing to certification for interstate natural gas pipeline projects was 558 days, and the processing times ranged from 370 to 886 days. These projects varied in size and function and included pipelines, pipeline expansions, compressor stations, and other pipeline facilities. For projects that begin in the application phase, the average processing time from formal filing to certification was 225 days for this period. The processing times for these projects, which tended to be for compressor stations and smaller pipeline expansions, ranged from 63 to 455 days.\nFor intrastate pipelines, because the permitting process varies by state, the time frames for those processes may also vary. As is the case with interstate pipelines, time frames associated with permitting of intrastate pipelines may also vary because of differences in stakeholders, siting, and environmental factors and range in the amount of time to complete the permitting process. Some state agencies gave us estimates of time frames for specific parts of the process, but we found little comprehensive data on the intrastate permitting process in the states we reviewed. Comprehensive data are probably not available because most states do not have a lead agency that coordinates all the reviews necessary to complete the permitting process. For example, North Dakota state officials estimated that the siting part of the permitting process for intrastate pipelines takes just over 3 months; however, these 3 months do not include the time associated with any federal or state environmental reviews that may be necessary for pipeline projects. A New York state official estimated that the entire intrastate permitting process, including siting and all environmental reviews, takes 60 to 90 days for small pipelines, 3 to 6 months for medium pipelines, and 12 to 18 months for large pipelines. However, according to the official, these time frames vary depending on the complexity of the project and public opposition.\nThe following factors can further affect the time frame for an interstate or intrastate pipeline project’s permitting process, as our stakeholders explained:\nCorps Section 404 Clean Water Act and Section 10 Rivers and Harbors Act permitting. The Corps does not have statutory deadlines or time frames for evaluating applications for natural gas pipelines or other types of regulated activities. However, the Corps has two performance measures specific to the timing of permit decisions. For standard individual permits, the Corps has a goal of completing its reviews and making permit decisions for 50 percent of permit applications within 120 days from receiving complete applications. In fiscal year 2011, the Corps reported that it had issued a decision on 71 percent of these applications within 120 days. The Corps has a goal of processing 75 percent of general permits within 60 days from receiving a complete request. In fiscal year 2011, the Corps reported that it had acted on 90 percent of these requests within 60 days. However, a headquarters official explained that the Corps collects information on time frames for reviewing applications and issuing decisions for all utility projects under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act and does not separate data specific to natural gas pipelines from its reviews of other utility projects.\nAccording to Corps officials, application review can take longer for a number of reasons, such as the time it takes to receive all necessary information from the applicant and the time it takes for other agencies to complete decisions necessary for the Corps to finalize its review. For example, according to a Corps district official and Pennsylvania state officials, the Pennsylvania Department of Environmental Protection had, in recent years, a backlog of applications that delayed the transfer of applications to the Corps, but that backlog has been cleared. Pennsylvania officials said this backlog had probably occurred because the number of pipeline applications doubled since hydraulic fracturing of Marcellus Shale began in Pennsylvania.\nFWS and NMFS review under the Endangered Species Act. Federal reviews required under the Endangered Species Act can also affect time frames for the evaluation of natural gas pipeline projects. These projects can be permitted under the act in two ways. First, under section 7 of the act, federal agencies must ensure that any action they carry out (or actions of a nonfederal party that require a federal agency’s approval, permit, or funding) is unlikely to jeopardize the continued existence of a listed species or destroy or adversely modify its critical habitat. To fulfill this responsibility, federal agencies must consult with either FWS or NMFS (whichever agency has jurisdiction) when their actions may affect listed species or critical habitat. Formal consultations generally result in the issuance by FWS or NMFS of reports known as “biological opinions,” which discuss in detail the effects of proposed actions on listed species and their critical habitat, as well as that agency’s opinion on whether a proposed action is likely to jeopardize a species’ continued existence or destroy or adversely modify its critical habitat. The opinion also determines the quantity or extent of anticipated “incidental take”—that is, take that is not intentional but occurs nonetheless as a result of carrying out an agency action. FERC consults with FWS or NMFS under section 7 of the Endangered Species Act for the construction of interstate natural gas pipelines.\nFor actions without a federal nexus (i.e., no federal funding, permit, or license), section 10 of the Endangered Species Act provides an avenue for entities to obtain permits for activities—such as the construction of a natural gas pipeline or a highway—that may result in the take of a listed species. An applicant for a permit is to submit a habitat conservation plan that shows the likely impact of the planned action; steps taken to minimize and mitigate the impact; funding for the mitigation; alternatives considered and rejected; and any other measures FWS or NMFS may require. According to representatives of an industry association we spoke with, their members report successful coordination of consultations under section 7 of the act because a federal agency, such as FERC for interstate pipelines and BLM for some intrastate pipelines, can assist the pipeline company in establishing long-term mitigation plans and other requirements for section 7 approval. The section 10 review process is less preferable, according to representatives, because the pipeline company is responsible for coordinating the relevant federal and state agency reviews and permits before the section 10 review is completed, which takes more time than a section 7 consultation.\nDelays in state and local government reviews. State and local permitting and review processes can take time and affect federal decision-making time frames because some federal agencies cannot issue their permits until state and local governments have completed their own permitting processes. For example, permits for federal programs delegated to states, such as section 401 of the Clean Water Act, can take time for state agencies to review and are needed for the Corps to issue an individual permit or verify a general permit. According to a Corps official and state officials, some states experience delays in completing these reviews.\nOverlap of federal, state, and local environmental processes.\nAccording to representatives of an industry association we spoke with, jurisdictional overlaps between federal, state, and local agencies force pipeline companies to obtain environmental permits or approvals from more than one level of government for the same activity. In some cases, the pipeline company must coordinate the pipeline route with the requirements for permits and reviews required by up to four different authorities at the federal, state, county, and municipal level. For example, these representatives stated, EPA’s regional office serving Alabama requires that ordinances be adopted to create a local construction storm water permitting program to regulate the same construction sites that the Alabama Department of Environmental Management already regulates under its statewide program. According to these representatives, natural gas pipeline projects throughout the state of Alabama are required to comply with the state issued general permit as well as overlapping permits for the same activities in any of the 67 counties and hundreds of small towns that their projects may pass through. These industry representatives reported project delays and resource allocation constraints because several layers of reviews and permits involving various federal, state, and local stakeholders often take place to address the same environmental issues for the same natural gas project. However, according to representatives of public interest groups we spoke with, efforts to combine federal, state, and local processes can undermine the opportunity for public comment.\nIncomplete applications. Officials in all of the Corps district offices that we spoke with reported that incomplete applications may delay their review because applicants need time to revise their information. Applications are considered incomplete for a variety of reasons. For example, the application may be missing jurisdictional information (i.e., where the waters of the United States are located relative to the project) or the applicant may miscalculate impacts. Officials from a state resource agency told us that environmental consultants, hired and given processing deadlines by pipeline companies, may submit incomplete applications in order to meet those deadlines. According to a Corps headquarters official, if applicants do not submit all of the appropriate documentation, the permit process may be delayed.\nProject opposition. Public opposition and litigation can lengthen the time needed to review a pipeline project or even lead to the cancellation of a project. For example, public interest groups can work with the public to request extended comment periods and public hearings for proposed natural gas pipeline projects that may adversely affect the environmental resources in the area.", "According to officials from federal and state agencies and representatives from industry and public interest groups we interviewed, several management practices could be implemented to help overcome some of the challenges of a complex permitting process identified by these stakeholders. These practices would help overcome the challenges involved in implementing an efficient permitting process and obtaining public comments on pipeline projects. In this regard, in March 2012, the president signed Executive Order 13604, which aims to institutionalize best practices and reduce the amount of time required to make permitting and review decisions for infrastructure projects, including pipelines. Stakeholders we spoke with and the administration, in its plan for implementing the executive order, identified the following management practices as effective, among others:\nEnsuring a lead agency is coordinating the efforts of federal, state, and local permitting processes for intrastate pipelines. Representatives from industry and public interest groups we interviewed noted that the interstate process is better coordinated than intrastate processes because FERC is designated as the lead agency for the environmental review of a pipeline project, but there is no similar lead agency in the intrastate permitting process. Representatives of a public interest group noted that the absence of a lead agency also makes it difficult for the public to become involved in the permitting process because citizens often do not know which agency to contact about a pipeline project.\nIn that regard, in July 2001, the Interstate Oil and Gas Compact Commission and the National Association of Regulatory Utility Commissioners’ pipeline siting working group recommended that each state establish a coordinating effort within the governor’s office to monitor and assist in expediting the permitting process, while eliminating duplication of activities among state and local permitting entities. They further recommended that states identify all participants in the permitting process, consider naming a lead agency to monitor processing schedules within existing regulatory requirements, and determine information that needs to be communicated to the public.\nEnsure effective collaboration of the numerous stakeholders.\nStakeholders we interviewed emphasized the importance of collaboration among the numerous stakeholders involved in the permitting process. Some federal officials noted delays occur in the permitting process when stakeholders do not collaborate effectively. For example, a federal agency’s permitting process may be delayed if it receives insufficient information from a cooperating agency. The federal plan for implementation of Executive Order 13604 identified several examples of best practices to enhance interagency coordination. Some federal agencies have memorandums of understanding or agreements with other agencies to establish collaborative relationships that relate to the permitting process. For example, as described earlier, FERC and nine other agencies signed an interagency agreement for early coordination of required environmental and historic preservation reviews to encourage the timely development of pipeline projects. FERC and FWS also have a memorandum of understanding that focuses on avoiding or minimizing adverse impacts on migratory birds and strengthening migratory bird conservation through enhanced collaboration.\nProviding planning tools to help companies plan routes for pipelines and avoid sensitive environmental resources. Industry representatives we spoke with noted that there is a need for technology tools that can aid in the proper routing of pipelines when companies are planning a project. Such tools should involve mapping software and best practices for specific areas of the country so that agencies do not need to reassess environmental impacts each time a company plans a project. These tools would also allow the project to be routed with the fewest environmental impacts at an early stage in the pipeline company’s design process. Without such tools, it is difficult for pipeline companies to route a project given the various federal, state, and local requirements that are not available in a single location. For example, FWS is currently developing such a tool—the Information, Planning and Conservation (IPaC) System—that is expected to let companies determine whether there are any endangered and threatened species in a potential project area and obtain information about the measures the companies can take to help protect and conserve those species when designing and constructing a project. This system is expected to help companies make better routing decisions early on, eliminating the need to modify project plans later in the permitting process. The federal plan to implement Executive Order 13604 selected IPaC as an example of a best practice to “reduce surprises and help project proponents make better informed design decisions early, when there is more flexibility to make minor modification with minimum disruption of the project goals.”\nAnother planning tool that was mentioned as making the process more efficient by industry representatives was the Pennsylvania Natural Diversity Inventory Environmental Review Tool, which screens proposed projects to identify, avoid, or mitigate impacts on federal or state-identified threatened or endangered species. Industry representatives said this tool has been helpful to determine potential adverse impacts and plan mitigation.\nIn addition, BLM designates pipeline corridors as part of its land use planning process. According to BLM officials, corridors reduce environmental impacts by allowing projects to share access roads and use previously disturbed areas. They also reduce the need for new data collection and land use plan amendments.\nOffering industry the option to fund contractors or agency staff to expedite the permitting process. Industry representatives said that many pipeline companies are willing to fund contractors or agency staff to speed up their application review process, which has slowed because of increasing numbers of energy projects and fewer agency resources. For example, stakeholders cited FERC’s practice of allowing applicants to fund a third-party contractor to review applications and assist the agency in preparing NEPA environmental documents. The third-party contractor is selected by and works under the supervision of FERC officials but is paid by the pipeline company. Other federal agencies have similar practices that allow applicants to offer funding assistance during the permitting process. A FWS official said this outside support is essential for agencies given the heavy workload and short time frames associated with pipeline projects. However, not all agencies have Congressional authority to accept funds. For instance, according to Corps officials, the agency cannot accept funds from private entities and can only accept funds from non-Federal public entities under specific circumstances.\nIncrease the opportunities for public comments. According to representatives of some public interest groups and some state officials we interviewed, the public needs to have more opportunities to comment on a proposed pipeline project during the permitting process. A representative from one group observed that, while the typical NEPA process for public input allows the public to comment throughout the environmental review, FERC only offers a brief period for formal public comments. Representatives of other groups mentioned that, because the pipeline permitting process is complicated, it is difficult for the public to know when and how to comment and that additional information from the applicant, FERC, and states would be helpful. The implementation plan for Executive Order 13604 includes multiple best practice examples to improve outreach and education of the public. For example, the Department of the Interior is developing a web-based clearinghouse for environmental information on energy resource development. This clearinghouse is to provide environmental best practices, methods for conducting environmental assessments to aid in decision making, links to applicable federal and state laws related to energy development, and information on the various impacts of energy development projects.", "We provided a draft of this report for review and comment to the Departments of Agriculture, Defense, and the Interior; EPA; and FERC. The Department of Agriculture provided written comments in which they generally agreed with the overall findings of the report. The written comments are presented in appendix II of this report. The Department of Defense generally agreed with the overall findings of the report and provided technical or clarifying comments, which we incorporated as appropriate. The Department of the Interior and FERC provided technical or clarifying comments, which we incorporated as appropriate. EPA indicated that they had no comments on the report.\nWe are sending copies of this report to the appropriate congressional committees; the Secretaries of Agriculture, Defense, and of the Interior; the Administrator of EPA; the Chairman of FERC; and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.", "Our objectives for this review were to determine (1) the processes necessary for pipeline companies to acquire permits to construct interstate and intrastate natural gas pipelines; (2) information available on the time frames associated with the natural gas pipeline permitting process; and (3) stakeholder-identified management practices, if any, that may improve the permitting process. For purposes of this report, we consider the permitting process to involve steps companies need to take to obtain a permit, authorization, certificate, or approval from a federal, state, or local entity in order to construct a natural gas pipeline.\nTo understand processes and permits required to construct natural gas pipelines at the federal level, we reviewed relevant federal laws and regulations, as well as agency documentation, such as the interagency agreement between the Federal Energy Regulatory Commission (FERC) and nine other federal agencies regarding their coordination during the review process for the National Environmental Policy Act and efforts to facilitate the development of natural gas pipeline projects. In addition, we reviewed literature on natural gas pipeline permitting issues and previous relevant GAO reports. We interviewed officials with regulatory responsibilities at FERC, the Army Corps of Engineers (Corps), the departments of Agriculture and of the Interior, and the Environmental Protection Agency. We also interviewed a range of other knowledgeable individuals—including representatives of public interest groups, such as the Pipeline Safety Trust and Delaware Riverkeeper Network; and representatives of industry groups, such as the American Gas Association and the American Petroleum Institute—whom we identified as having expertise related to the permitting of natural gas pipelines.\nTo determine the processes for obtaining permits to construct natural gas pipelines at the state level, we selected a nonprobability sample of states for further review. We developed the following list of criteria to use as a tool for determining which states to include in our review: size of pipeline network (miles of pipe); amount of natural gas production (trillion British thermal units); amount of natural gas consumption (trillion British thermal units); natural gas inflow capacity (Million Cubic Feet per Day); natural gas outflow capacity (Million Cubic Feet per Day); recommendations from federal agency officials and other knowledgeable individuals.\nBecause we anticipated that states differ in their pipeline permitting processes, it was important to include states that ranked both high and large on the selection criteria, as well as states that ranked are low and small. We selected states by identifying the top five and the bottom five of each selection factor. For example, in considering the size of the pipeline network, we identified the five states with the most miles of pipeline and the five states with the fewest miles of pipeline. We also identified the states that were of congressional interest, recommended by a federal agency, and/or other knowledgeable individuals we spoke with. The states selected in our review are those that were most frequently recommended and/or identified in our ranking process. We selected states that were recommended and/or identified in our ranking process at least four times to be included in our review. Twelve states were above this threshold—California, Colorado, Delaware, Florida, Louisiana, New York, North Dakota, Oklahoma, Pennsylvania, Rhode Island, Texas, and Vermont. Louisiana was later omitted from our review because of limited response from the state. For our selected states, we reviewed relevant documentation and conducted interviews with state agency officials and officials at Corps district offices in California, Florida, Pennsylvania, and Texas. Because our sample was a nonprobability sample, the information we obtained is not generalizable to all states but provides illustrative information.\nTo identify the information available on the time frames associated with the natural gas pipeline permitting process, we conducted interviews with federal officials, industry associations, and public interest groups. In addition, we reviewed documents contained in FERC’s eLibrary, which is a record information system of electronic versions of documents issued and received by FERC on natural gas pipeline projects. FERC provided us with information on projects certified from January 1, 2009, to October 24, 2012. Owing to time and resource constraints, we limited our review to projects certified since January 1, 2010, and used eLibrary to access documents that contained information on the pre-filling date, traditional filling date, and certification date of these projects. In addition, we conducted interviews with FERC officials to determine the completeness of the documents contained in the system.\nWe conducted this performance audit from May 2012 to February 2013, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the individual named above, key contributors to this report included Karla Springer, Assistant Director; Pedro Almoguera; Cheryl Arvidson; Cindy Gilbert; Griffin Glatt-Dowd; Holly Sasso; Carol Herrnstadt Shulman; Barbara Timmerman; and Jeremy Williams." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "", "h2_full", "h2_full", "h0_full h2_title", "h0_full", "h0_full h2_full", "h0_full h2_full h1_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What groups can be involved with interstate and intrastate natural gas pipeline processes?", "How do the phases within the interstate process work?", "How is FERC involved in this process?", "How does the intrastate process differ from the interstate process?", "How do states vary within their processes?", "Why is coordination between pipeline companies and environmental laws and regulations difficult to implement within certain states?", "Why is it difficult to know the time frames associated with the permitting processes?", "Why is it a challenge to know time frames for interstate process?", "What did GAO find about this process?", "Why do time frames vary for the intrastate process?", "How has an increase in domestic natural gas production changed the pipeline landscape?", "What are some environmental concerns with natural gas pipelines?", "What protections are in place for these historical and cultural resources?", "What entities have a say in where the pipeline is constructed?", "With what pipelines is FERC involved?" ], "summary": [ "Both the interstate and intrastate natural gas pipeline permitting processes are complex and can involve multiple federal, state, and local agencies, as well as public interest groups and citizens, and include multiple steps.", "The interstate process involves a voluntary pre-filing phase, an application phase, and a post-authorization phase with multiple steps that stakeholders reported to be consistent among projects because the process is led by the Federal Energy Regulatory Commission (FERC).", "FERC coordinates with federal, state, and local agencies that have statutory and regulatory authority over various environmental laws and regulations. For example, if a proposed pipeline may affect endangered species, FERC coordinates with the U.S. Fish and Wildlife Service, which reviews the impacts on such species.", "The intrastate process can also involve multiple stakeholders and steps, but, unlike in the interstate process, GAO found that the stakeholders and steps vary by state.", "For example, of the 11 states GAO reviewed, 5 have agencies charged with approving the route of natural gas pipelines and require advance approval of the location and route, and the remaining 6 do not.", "Pipeline companies must also comply with various federal and state environmental laws and regulations; however, in most of the 11 states, no one agency is charged with coordinating the implementation of these laws and regulations as FERC is for the interstate process.", "Time frames associated with the interstate and intrastate permitting processes vary because of multiple factors, according to stakeholders.", "For the interstate process, FERC does not track time frames, citing the limited usefulness of such data.", "GAO analyzed public records and found that, for those projects that were approved from January 2010 to October 2012, the average time from pre-filing to certification was 558 days; the average time for those projects that began at the application phase was 225 days.", "For the intrastate process, because processes vary by state, the time frames of those processes may also vary. For example, state and local permitting and review processes can affect federal decision-making time frames because some federal agencies will not issue their permits until state and local governments have completed their own permitting processes, according to some stakeholders.", "Recent growth in domestic natural gas production, particularly due to increased production from shale, is resulting in an increase in the pipelines needed to transport that gas.", "Constructing natural gas pipelines requires clearing and maintaining rights-of-way, which may disturb habitat and historical and cultural resources.", "These resources are protected under a variety of federal, state, and local regulations implemented by multiple agencies.", "The laws, regulations and stakeholders involved in the permitting process depend on where the pipeline is constructed.", "FERC is the lead federal agency in approving interstate pipelines, coordinating with federal, state, and local agencies, but FERC is not involved in the approval of intrastate pipelines." ], "parent_pair_index": [ -1, 0, 1, -1, 3, 3, -1, 0, 1, 0, -1, 0, 1, 0, 3 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Uses of the NCIPP List", "DHS Has Made Changes to NCIPP List Criteria, but Has Not Identified the Impact of These Changes or Validated Its Approach", "DHS Made Several Changes to the List Criteria and Format", "DHS Has Not Identified the Impact of Changes in Criteria on List Users or Validated Its Approach for Developing the List", "DHS Has Taken Actions to Improve Its Consultation with States and SSAs to Address Challenges Developing the NCIPP List", "DHS Has Taken Various Actions to Work with States and SSAs on Developing the List", "Officials Representing Selected SSAs and States Have Mixed Views on the NCIPP Nomination Process", "DHS Is Working to Address Challenges Facing States", "DHS Could Not Verify That It Met Requirements to Report to Congress on the NCIPP", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Critical Infrastructure Sectors", "Appendix II: Objectives, Scope, and Methodology", "Appendix III: Comments from the Department of Homeland Security", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "Pursuant to the Homeland Security Act of 2002, as amended, DHS has responsibility for the protection of the nation’s critical infrastructure. Within DHS, the Office of Infrastructure Protection is responsible for critical infrastructure protection and resilience and leads the coordinated national effort to mitigate risk to the nation’s critical infrastructure, which includes working with public and private sector infrastructure partners.The Office of Infrastructure Protection also has the overall responsibility for coordinating implementation of the NIPP across the 18 critical infrastructure sectors; overseeing the development of Sector-Specific Plans; providing training and planning guidance to SSAs and asset owners and operators on protective measures to assist in enhancing the security of infrastructure within their control; and helping state, local, tribal, territorial, and private sector partners develop the capabilities to mitigate vulnerabilities and identifiable risks to their assets.\nWithin the Office of Infrastructure Protection, IASD manages the NCIPP. According to DHS, the main goals of the NCIPP are to (1) identify the infrastructure that if disrupted or destroyed could significantly affect the nation’s public health and safety, economic, or national security; (2) increase the accuracy of infrastructure prioritization efforts used to inform DHS resource allocation decisions; and (3) focus planning, foster coordination, and support preparedness efforts for incident management, response, and restoration activities among federal, state, and private sector partners. Critical infrastructure identified through the program includes several thousand level 1 or level 2 assets and systems. The levels are used to enhance decision making related to infrastructure protection and can include a range of businesses or assets in a local geographic area, such as refineries, water treatment plants, or commercial facilities, as well as the information and data systems that ensure their continued operation.\nConsistent with the generally voluntary critical infrastructure protection approach identified in the NIPP, according to DHS, the success of the NCIPP relies upon the voluntary contributions and cooperation of public and private sector partners from the infrastructure protection community. To compile the NCIPP list, consistent with statutory requirements, IASD conducts a voluntary annual data call to solicit nominations to the list from state homeland security and federal partners. To submit nominations, partners are to develop realistic scenarios for infrastructure that meet specific criteria developed by IASD. Consistent with the consequence categories identified in the NIPP risk management framework, NCIPP nominations are to meet minimum specified consequence thresholds outlined in the annual data call for at least two of the following four categories: fatalities, economic loss, mass evacuation length, and degradation of national security. After nominations are submitted, according to DHS guidance, IASD conducts a multiphase adjudication process intended to give state and federal partners the opportunity to review IASD’s preliminary decisions and submit additional information to support nominations that were not initially accepted, before IASD finalizes the NCIPP list.", "The NCIPP list is used to establish risk management priorities. According to the NIPP, prioritizing risk management efforts provides the basis for understanding potential risk mitigation benefits that are used to inform The NCIPP list, which identifies planning and resource decisions.nationally significant critical infrastructure based on consequences, informs the NIPP risk management prioritization process. The NIPP risk management prioritization process involves analyzing risk assessment results to determine which critical infrastructure faces the highest risk so that management priorities can be established. The NCIPP list is also used to, among other things:\nAllocate Homeland Security Grants. Within DHS, FEMA uses the number of assets included on the NCIPP list, among other data, in its risk formula for allocating State Homeland Security Program (SHSP) and UASI grant funds. The SHSP and UASI provide funding to states and cities, respectively, to support a range of preparedness activities to prevent, protect against, respond to, and recover from acts of terrorism and other catastrophic events. While the number of critical infrastructure a state or city has on the NCIPP list is used to determine the allocation of SHSP and UASI grant funds, there is no requirement that states or cities use these grant funds to enhance protection of these assets. For fiscal year 2012, FEMA allocated $294 million in SHSP funding to all 50 states, the District of Columbia, Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands. Additionally, in fiscal year 2012, FEMA allocated approximately $490 million in UASI funding to the nation’s 31 highest-risk cities.\nPrioritize Voluntary Critical Infrastructure Protection Programs. The Office of Infrastructure Protection’s Protective Security Coordination Division (PSCD) uses the NCIPP list and other inputs to prioritize its efforts to work with critical infrastructure owners and operators and state and local responders to (1) assess vulnerabilities, interdependencies, capabilities, and incident consequences, and (2) develop, implement, and provide national coordination for protective programs. Related to these efforts, PSCD has deployed the aforementioned PSAs in 50 states and Puerto Rico to locations based on population density and major concentrations of critical infrastructure. PSAs use the NCIPP list to prioritize outreach to level 1 and level 2 assets in their area of jurisdiction for participation in DHS’s voluntary security survey and vulnerability assessment programs, such as the Enhanced Critical Infrastructure Protection and Site PSAs are also often called upon by state Assistance Visit programs.homeland security advisers to assist them in nominating assets to the NCIPP list.\nInform Incident Management Planning and Response Efforts. DHS uses information collected during the NCIPP process and the NCIPP list to inform and prioritize incident management planning and response efforts. When an incident occurs, DHS officials pull information from a variety of sources, including the database of assets nominated to and accepted on the NCIPP list, to identify critical infrastructure in the affected area. IASD then prioritizes this information in an infrastructure of concern list to guide incident response efforts. The infrastructure of concern list includes any critical infrastructure affected by the event, which may include level 1 or level 2 assets.DHS components, including FEMA and PSAs, who use it on the ground to guide local incident response efforts.", "DHS has made several changes to its criteria for including assets on the NCIPP list. These changes initially focused on introducing criteria to make the lists entirely consequence based, with subsequent changes intended to introduce specialized criteria for some sectors and assets. DHS’s changes to the NCIPP criteria have changed the composition of the NCIPP list, which has had an impact on users of the list. However, DHS does not have a process to identify the impact of these changes on users nor has it validated its approach for developing the list.", "DHS’s initial approach for developing the NCIPP list differed by asset level. According to the Homeland Security Act, as amended, DHS is required to establish and maintain a prioritized list of systems and assets that the Secretary determines would, if destroyed or disrupted, cause national or regional catastrophic effects. The criteria for level 1 assets focused on consequences—the effects of an adverse event. The criteria for level 2 assets focused generally on capacity—the number of people that use an asset or output generated by an asset, such as the number of people that occupy a commercial office building, the daily ridership of a mass transit system, or the number of people served by a water utility. DHS officials told us that the level 1 consequence-based criteria and thresholds were initially established at the beginning of the program at the discretion of the Assistant Secretary for Infrastructure Protection, who sought to identify infrastructure that the destruction of which could be expected to cause impacts similar to those caused by the attacks of In contrast, the initial level 2 September 11 and Hurricane Katrina.criteria were generally capacity based in order to identify the most critical assets within each of the 18 sectors. However, the capacity-based criteria often differed by sector, making it difficult to compare criticality across sectors and therefore identify the highest-priority critical infrastructure on a national level.\nIn 2009, DHS changed the level 2 criteria to make the NCIPP list entirely consequence based, a change that brought its approach more into line with statutory requirements and, consistent with the NIPP risk management framework, allowed for comparison across sectors. The new level 2 criteria match the level 1 consequence-based criteria— fatalities, economic loss, mass evacuation length, or national security impacts—but with lower threshold levels than those used to identify level To be included on the NCIPP list, an asset must meet at least 1 assets.two of the four consequence thresholds, and is included on the list as either level 1 or level 2 depending on which consequence thresholds it meets. As figure 1 shows, the level 1 thresholds are higher than level 2 thresholds and therefore represent the most nationally critical assets.\nAccording to officials and agency documents, DHS changed the level 2 criteria to be consequence based for several reasons. First, NCIPP program officials stated that they changed the criteria to align the list with statutory requirements. Specifically, DHS interpreted the statute’s requirement that it identify assets that “would, if destroyed or disrupted, cause national or regional catastrophic effects,” as a call for consequence-based criteria.of assets prioritized using capacity-based criteria demonstrated that the initial level 2 criteria were not sufficient to fully identify assets capable of causing catastrophic events. Second, program officials stated that they changed the criteria to allow for comparisons across sectors, which is consistent with the NIPP. The NIPP states that using a common approach with consistent assumptions and metrics increases the ability to make comparisons across sectors, different geographic regions, or different types of events. Third, DHS also changed the criteria to improve the utility of the list. According to the NCIPP guidance, prior to 2009, assets designated as level 2 on the list experienced instability—assets being added and removed from year to year—which frustrated efforts to use the list for risk management planning and engagement, while assets designated as level 1 on the list—which had always been consequence based—remained relatively stable year to year.\nFoot-and-mouth disease (FMD) is a highly contagious viral disease of cloven-hoofed animals such as cattle, swine, and sheep. Infected animals develop a fever and blisters on their tongue and lips, and between their hooves. Many animals recover from a FMD infection, but the disease leaves them debilitated and causes losses in meat and milk production. FMD does not have human health implications. According to the U.S. Department of Agriculture, a 2001 outbreak of FMD in the United Kingdom resulted in the slaughter of millions of animals and economic losses conservatively estimated at $14.7 billion. See GAO, Homeland Security: Actions Needed to Improve Response to Potential Terrorist Attacks and Natural Disasters Affecting Food and Agriculture, GAO-11-652 (Washington D.C.: Aug. 19, 2011).\nDHS is currently reevaluating the agriculture and food sector-specific criteria because, according to officials, the specialized criteria created a great deal of inconsistency in the agriculture and food assets and systems included on the NCIPP list year to year.\nIn 2010, DHS also made adjustments to the NCIPP criteria to account for high-risk assets that may not always meet the consequence criteria by introducing the Catastrophic Economic Impacts Project and the Threats to Infrastructure Initiative. Under the Catastrophic Economic Impacts Project, infrastructure that meets only the level 1 consequence threshold for economic impact, but no other criteria, is added to the list as a level 2 asset. DHS officials explained that the project was added to account for instances when economic impact may be the primary impact. For example, the officials noted that a collapse of the U.S. financial system would likely not cause a large number of prompt fatalities or evacuations, but would cause catastrophic national impacts nonetheless. Meanwhile, the Threats to Infrastructure Initiative allows infrastructure that has received a specific, credible threat from a malicious actor, but otherwise would not meet NCIPP list criteria, to be added to the list as a level 2 asset. Unlike the other NCIPP criteria, the Threats to Infrastructure Initiative focuses on the threat to infrastructure rather than the consequences that may result from a specific event, which could complicate comparisons across assets and sectors. DHS officials told us that infrastructure with specific and credible threats were always included on the NCIPP list, but were historically added based on information from the intelligence community. The addition of the initiative allowed states to nominate critical infrastructure under the same scenario based on state and local intelligence information, such as that collected by fusion centers. According to DHS officials, they adjudicate Threats to Infrastructure Initiative nominations by determining whether the threat to an asset is specific and credible. As of fiscal year 2012, approximately 60 assets and systems have been added to the NCIPP list as a result of these new criteria.\nIn 2009, DHS also changed the format of the NCIPP list by expanding the type of infrastructure that could be nominated to the list to include clusters and systems of critical infrastructure in an effort to characterize the relationship among some infrastructure, such as dependencies and interdependencies, which was consistent with the statute and NIPP. According to the NCIPP guidance, clusters or systems of critical infrastructure are made up of two or more associated or interconnected assets or nodes that can be disrupted through a single event, resulting in regional or national consequences that meet the NCIPP criteria thresholds. An asset is a single facility with a fixed location that functions as a single entity (although it can contain multiple buildings or structures) and meets the NCIPP criteria by itself. A node is a single facility, similar to an asset, that does not meet the NCIPP criteria individually but does meet the criteria when grouped with other nodes or assets in a cluster or system. Figure 2 provides an illustration of an asset, a node, a cluster, and a system.\nBecause nodes do not meet the NCIPP criteria on their own, they are not included on the NCIPP list, but are identified on a separate list that is associated with the NCIPP list. For example, a group of nodes or assets making up a cluster would be listed on the NCIPP list under the name of the cluster, such as the ABC Cluster, but one would have to consult the associated list of nodes to identify the specific facilities that make up the listed cluster. The concept of clusters and systems is consistent with the statute and NIPP risk management framework. The law states that the prioritized list of critical infrastructure shall contain both systems and assets included in the national asset database, and the NIPP states that to the extent possible, risk assessments should assess the dependencies and interdependencies associated with each identified asset, system, or network. According to DHS, they recognized a need to identify clusters of critical infrastructure in 2008 after Hurricanes Gustav and Ike damaged a group of refineries that resulted in a nationally significant supply disruption of certain petrochemicals used across a wide range of industries.", "The changes DHS made to the NCIPP criteria in 2009 and 2010 changed the number of assets on and the composition of the NCIPP list. The total number of assets, clusters, and systems on the NCIPP list decreased from more than 3,000 in fiscal year 2009 to fewer than 2,000 in fiscal year 2011. The introduction of clusters and systems resulted in a separate list of thousands of nodes associated with the NCIPP list. Specifically, more than 2,500 additional facilities were included on the first nodes list in fiscal year 2011, and almost 4,000 facilities were included on the nodes list for fiscal year 2012. Figure 3 shows the relative changes in the number of assets, clusters, and systems on the NCIPP list and associated nodes list for fiscal years 2007 through 2012.\nAdditionally, the criteria changes also resulted in a change in the distribution of assets, clusters, or systems included on the NCIPP list by sector. Figure 4 shows that, among other sectors, the distribution of assets in the agriculture and food and defense industrial base sectors experienced large increases as a percentage distribution of the list from fiscal years 2009 to 2011, while for the same period, the energy and transportation sectors experienced large decreases. It also shows that the distribution of assets in the agriculture and food sector continued to increase as a percentage distribution of the list from fiscal years 2011 to 2012, while for the same period, the chemical sector experienced a large decrease.\nOur analysis shows that changes to the NCIPP list can have an impact on users of the list, specifically, FEMA’s allocation of UASI grant funds and PSAs’ ability to prioritize outreach and conduct site visits for its protection programs. Our analysis of the FEMA risk formula shows that a change in the number of NCIPP-listed assets located in a city has an impact on a city’s relative risk score. Our analysis also shows that current UASI grant allocations are strongly associated with a city’s current relative risk Therefore, a change in the number of NCIPP-listed assets score.located in a city can have an impact on the level of grant funding it receives.approximately $490 million in UASI grant funds to the 31 cities with the highest relative risk scores out of 102 eligible cities nationwide. Our analysis of FEMA’s risk formula showed that, at the minimum, if the number of level 2 assets is increased or decreased by as few as two for each city, it would change the relative risk score for 5 of the 31 cities that received fiscal year 2012 UASI grant funding. Such a change could result in increased or decreased grant funding allocations for the affected cities. The changes in the relative risk scores tend to affect cities in the middle to the bottom of the top 31 list because there is generally a larger gap between the relative risk scores of those cities at the top of the list than those in the middle to bottom of the list. However, even a small change in grant funding could have an impact on a city, especially if that city does not traditionally receive other federal assistance as compared with cities with higher risk scores.\nFor example, in fiscal year 2012, FEMA allocated We previously reported that changes to the NCIPP list have presented challenges to managing DHS programs, particularly the voluntary security survey and assessment programs managed by PSCD. In May 2012, we reported that PSCD was unable to track the extent to which it conducted security surveys and vulnerability assessments on NCIPP level 1 and level 2 assets because of (1) inconsistencies between the databases used to identify the high-priority assets and to identify surveys and assessments completed, and (2) the change in the format and organization of the NCIPP list that converted some assets previously listed as level 1 or level 2 into a cluster or system.fiscal year 2012 NCIPP list, DHS has begun to assign unique numerical identifiers to each NCIPP asset, cluster, and system, which officials told us has helped DHS track how many security surveys and vulnerability assessments it conducts on high-priority assets. The officials also told us that they anticipate fewer challenges associated with the list since the Beginning with the number of assets, clusters, and systems on the NCIPP list has remained relatively stable from fiscal years 2011 to 2012. However, as discussed earlier, the number of nodes associated with the NCIPP list has increased substantially, growing from more than 2,500 in fiscal year 2011 to almost 4,000 in fiscal year 2012, which could further challenge PSA’s ability to conduct outreach and prioritize site visits to critical infrastructure for its protection programs.\nPSCD officials in Washington, D.C. further told us that they do not have criteria establishing how PSAs should assess an NCIPP cluster or system that may contain many different nodes. The number of nodes in an NCIPP cluster or system can vary from two to several dozen and may be geographically dispersed. For example, one PSA told us that nodes in the same cluster may not have the same owner and could be part of a multistate system. Another PSA said that because several nodes in a system may not be the same (i.e., different types of facilities, different facility owners, or located in different areas), he generally conducts an assessment of each node in order to consider an assessment of a system complete. He explained that the facilities would have to be identical in order to conduct a single assessment for separate nodes, which he noted is rarely the case. Because it is difficult to prioritize which nodes within clusters or systems may be the most important for conducting assessments, the increase in the number of nodes associated with the NCIPP list could have the effect of complicating PSA efforts to conduct outreach to and assessments on the nation’s highest-priority infrastructure. PSCD officials told us they view this as a challenge, but they do not characterize it as a significant challenge. Further, they stated that while the treatment of nodes within NCIPP clusters or systems has not been specifically addressed in current program policies or guidance, they do not believe that this challenge has affected their ability to effectively prioritize facilities to receive security surveys and assessments. In January 2013, a PSCD official told us that PSCD is considering new guidance that would clarify how PSAs should approach nodes when conducting outreach or prioritizing visits for voluntary protection programs.\nDHS does not have a process for identifying the impact of changes to the list on its users and has not reviewed the impact of these changes on users. However, program officials told us that they work closely with the primary users of the list to understand how the data are used. According to officials, they recognize that changes to the NCIPP list may have an impact on users of the list, but they consider these impacts to be minor. For example, one program official told us that the changes in the number of level 1 and level 2 assets rarely have a significant effect on the amount of grant funding allocated to states or cities, because of the additional inputs considered in the FEMA risk formula that determine the grant allocations. However, as previously demonstrated through our analysis, even small changes to the NCIPP list counts can have an impact on UASI grant allocations when accounting for all of the additional inputs considered in FEMA’s risk formula. The officials also recognized that changes from the fiscal year 2009 to fiscal year 2011 NCIPP lists, which significantly reduced the number of assets on the list, required PSCD to reset its performance metrics for conducting its voluntary security survey and assessment programs. However, officials told us that the assets on the NCIPP list have remained relatively stable since fiscal year 2011; therefore, the officials believe that changes to the list would have a minor impact on PSAs’ outreach activities. While our analysis shows that the number of assets on the NCIPP list remained fairly constant from fiscal year 2011 to 2012, it also shows that the number of nodes on the associated nodes list continued to grow and almost doubled during this time. As discussed, the increase in nodes may complicate PSA efforts to conduct outreach to and assessments on the nation’s highest-priority infrastructure. Additionally, the officials told us that, internally, changes to the NCIPP list do not have an impact on DHS’s ability to identify and prioritize critical infrastructure during an incident because the list is just one of many information sources they consult when developing an event- specific infrastructure of concern list to guide incident response efforts.\nWhile the change to an entirely consequence-based list created a common approach to identify infrastructure and align the program with the statute and NIPP, recent and planned criteria changes to accommodate certain sectors and assets represent a departure from this common approach, which could hinder DHS’s ability to compare infrastructure across sectors. For example, the agriculture and food sector has criteria that are different from those of all other sectors. Furthermore, DHS has not validated its approach to developing the list to ensure that it accurately reflects the nation’s highest-priority critical infrastructure.\nThe NIPP calls for risk assessments—such as NCIPP efforts—to be complete, reproducible, documented, and defensible to produce results that can contribute to cross-sector risk comparisons for supporting investment, planning, and resource prioritization decisions. Table 1 provides a description of these core criteria for risk assessments.\nDHS could not provide documentation explaining how the threshold levels were established, such as the methodology for developing the NCIPP criteria or the analysis used to support the criteria, because, according to agency officials, the agency undertook an information technology change in the spring of 2012 that resulted in the loss of agency e-mails and program documentation. Nevertheless, as previously noted, officials told us the criteria and thresholds were established at the discretion of the Assistant Secretary for Infrastructure Protection. Program officials noted that they review the list on an annual basis but that the list has not been independently verified and validated by an external peer review. These officials believe a peer review would enable DHS to determine whether its efforts to develop the NCIPP list are based on analytically sound methodology and whether it has appropriate procedures in place to ensure that the NCIPP list is defensible and reproducible.\nWe have previously reported that peer reviews are a best practice in risk management and that independent expert review panels can provide objective reviews of complex issues. An independent peer review to validate the NCIPP criteria and list development process would better position DHS to reasonably assure that, consistent with the NIPP risk management framework, federal and state partners that use the NCIPP list have sound information when making risk management and resource allocation decisions. According to the NIPP, having sound information for making those decisions is critical for focusing attention on those protection and resiliency activities that bring the greatest return on investment.\nIn August 2012, NCIPP program officials told us they would like to establish a peer review to validate the program because officials believe the list has stabilized and now consider the program to be in a “maintenance phase.” In December 2012, the program director told us that IASD drafted and submitted a proposal to the Assistant Secretary for Infrastructure Protection in November 2012 that proposed different approaches for reviewing the NCIPP, including a peer review of the criteria used to decide which assets and systems should be placed on the list and the process for doing so. At that time, DHS officials said that they could not provide a copy of the draft proposal because it had not been approved by management. As of January 2013, IASD told us that the proposal had not been submitted to the Assistant Secretary for Infrastructure Protection as originally discussed, that it was unclear when the proposal would be submitted, and that it remained uncertain whether a peer review would be approved.\nThe National Research Council of the National Academies has also recommended that DHS improve its risk analyses for infrastructure protection by validating the models and submitting them to external peer review. According to the council, periodic reviews and evaluations of risk model outputs are important for transparency with respect to decision makers. These reviews should involve specialists in modeling and in the problems that are being addressed and should address the structure of the model, the types and certainty of the data, and how the model is intended to be used. Peer reviews can also identify areas for improvement. As we have previously reported, independent peer reviews cannot ensure the success of a model, but they can increase the probability of success by improving the technical quality of projects and the credibility of the decision-making process. Thus, an independent peer review would better position DHS to provide reasonable assurance that the NCIPP criteria and list development process is reproducible and defensible given the recent and planned changes, and that critical infrastructure protection efforts are being prioritized on the nation’s highest-priority infrastructure as intended by the NIPP risk management framework.", "DHS has taken various actions to work with states and SSAs, consistent with statutory requirements and the NIPP, to identify and prioritize critical infrastructure. However, officials representing selected states and SSAs have mixed views about their experiences adjusting to DHS’s changes to the NCIPP. DHS recognizes that states, in particular, face challenges— such as resource and budgetary constraints—associated with nominating assets to the NCIPP list, and has taken actions to address these challenges and reduce the burden on states.", "In recent years, DHS has taken actions to improve its outreach to states and SSAs to obtain their input on changes to the NCIPP. In 2009, DHS’s outreach to states and SSAs consisted of issuing a memorandum to obtain input on the proposed change to consequence-based criteria. Since 2009, DHS has taken various actions to address state nomination challenges and to reduce the burden on states. For example, in 2009, DHS revised its list development process to be more transparent and provided states with additional resources and tools for developing their NCIPP nominations. Specifically, once states submit their NCIPP nominations, DHS is to make preliminary adjudication determinations based upon the NCIPP criteria, then provide its preliminary adjudication results (whether a nomination was accepted or not) and why the decision was made. Next, DHS is to allow states an opportunity to request reconsideration of the nomination for which they could provide additional documentation clarifying the eligibility of the infrastructure. Figure 5 shows the revised NCIPP list development process, including the nomination, adjudication, and reconsideration phases.\nIn addition to revising the adjudication process, DHS took several actions intended to improve the nomination process in recent years. First, according to DHS’s 2011 data call guidance, DHS provided on-site assistance from subject matter experts to assist states with identifying infrastructure and disseminated a lessons learned document providing examples of successful nominations to help states improve justifications for nominations. Second, DHS has taken action to be more proactive in engaging states and SSAs in ongoing dialogue on proposed criteria changes and improving the NCIPP process and resulting list. For example, in 2010, DHS hosted the Food and Agriculture Criticality Working Group established through the Food and Agriculture Sector Government Coordinating Council—consisting of over 100 participants (including DHS, states, and SSAs)—to discuss the aforementioned modification of the criteria to make it more applicable to the agriculture and food sector. As discussed earlier, DHS and its state and SSA partners are currently reevaluating the agriculture and food sector-specific criteria, and the SSAs held a meeting in December 2012 to discuss updating and adding additional criteria. In addition, in July 2011, DHS established a working group composed of state and SSA officials to solicit feedback on the nomination process and recommend actions to improve the quality of the NCIPP list in preparation for the 2013 data call. DHS officials told us that much of the feedback received from states and SSAs centered on DHS improving communication and guidance throughout the data call—for example, updating the guidance with additional information on criteria. DHS also planned long-term studies, such as requesting input from partners on modifying criteria thresholds. DHS officials told us that they conducted extensive outreach to states and SSAs to encourage participation in the NCIPP working group including extending the submission deadlines multiple times, funding an on-site meeting with the partners, and hosting webinars and conference calls. However, according to DHS officials, DHS has since disbanded the working group because of lack of state and SSA participation and DHS budget constraints.", "Despite DHS’s outreach efforts, homeland security officials representing selected states and SSAs have mixed views on the NCIPP nomination process because of program changes, such as the aforementioned change to consequence-based criteria. Overall, the SSA officials we interviewed had more positive views of the NCIPP nomination process than the state officials we interviewed.\nSSA officials representing five of the eight sectors we interviewed told us that they believe it is very easy or moderately easy to nominate assets to the NCIPP list. However, officials representing three sectors said that they believe it is moderately difficult or very difficult to nominate assets to the list because of various factors. For example, one SSA official told us that the diversity and complexity of the sector’s assets makes it difficult to determine which assets meet the NCIPP criteria. Also, one SSA official stated that the online tool that the SSA uses to nominate assets to the NCIPP list requires detailed information, such as latitude and longitude coordinates, that may not be available for assets with unique characteristics.\nBy contrast, most state officials we contacted reported that it is difficult to nominate assets to the NCIPP list using the consequence-based criteria, and two officials said that they are considering whether to continue to participate in the NCIPP process. Homeland security officials representing 13 of the 15 states told us that they believe that the nomination process is moderately difficult or very difficult, while officials representing 2 states told us that they believe the nomination process is neither easy nor difficult. For the 13 states where officials told us that they believe the nomination process is moderately difficult or very difficult, officials representing 5 states told us that not having the capability and resources to develop scenarios to support consequence-based criteria (such as conducting economic analysis) are the major factors contributing to the time-consuming and difficult process of submitting nominations when the criteria changed. Officials from 2 states told us that their states no longer plan to nominate infrastructure to the NCIPP list because of the time and effort required to make nominations.", "DHS officials told us that they recognize that some states are facing challenges participating in the NCIPP program (as we previously identified in our discussions with state officials) and, according to officials, they are working to help them address some of these challenges. For example, DHS officials said that they recognized that the change to consequence-based criteria was difficult because it required states to invest considerable resources to make nominations. However, they also believe that other factors may influence states’ willingness to participate, such as (1) some state officials may believe that all critical infrastructure has been captured for the state and sector, (2) some state officials may believe that the benefits of participating—such as access to grant funding—have diminished and there is no longer an incentive to participate, and (3) the NCIPP data call process is voluntary and state partners do not have to participate if they do not wish.\nDHS has taken several steps to minimize the burden on state partners. First, DHS is conducting a more limited annual data call wherein all assets identified on the previous list are generally carried forward onto the subsequent list and states are asked to provide nominations of (1) critical infrastructure not accepted during the previous data call or (2) critical infrastructure not previously nominated but that partners believe merits consideration. In fiscal year 2013, 13 state or territorial partners participated in the data call. DHS officials question whether, given current budget constraints facing state and federal partners, there is a need to conduct an annual data call. In our past work, we have reported that, with our nation facing serious, long-term fiscal challenges, a reevaluation of federal agencies’ operations has never been more important than it is Consistent with our past work, DHS officials told us that they today.considered whether the costs of conducting an annual data call outweigh the benefits, since only minor updates are being made to the NCIPP list. In addition, one state official observed that, in a resource-constrained environment, states can no longer afford to conduct the NCIPP data call because it diverts resources from critical infrastructure protection partnership and coordination activities that could increase state and regional resilience, such as states maintaining their own list of high- priority critical infrastructure. In response, according to DHS officials, DHS is working to minimize major changes to the consequence-based NCIPP criteria, and thus, does not anticipate making any major changes to the NCIPP criteria that would cause a burden on state resources. Finally, DHS officials also told us that they have begun to take additional actions to enhance state participation, including developing and organizing a webinar with PSAs and state officials as they execute the data call. DHS is also working collaboratively with the State, Local, Tribal and Territorial Government Coordinating Council to develop a guide to assist states with their efforts to identify and prioritize their critical infrastructure.", "DHS has prepared documents describing the national asset database and the prioritized critical infrastructure list; however, DHS could not verify that it has delivered these documents for purposes of meeting its statutory requirement to report this information to the congressional committees specified in the law. Pursuant to the 9/11 Commission Act, which amended title II of the Homeland Security Act, DHS is required to report annually to the Committee on Homeland Security and Governmental Affairs of the Senate and the Committee on Homeland Security of the House of Representatives on, among other things, any significant challenges in compiling the database or list and, if appropriate, the extent to which the database or list has been used to allocate federal funds to prevent, reduce, mitigate, or respond to acts of terrorism.Although DHS was able to compile documents on the database and list for fiscal years 2008 through 2011 that generally contain the information on which DHS is to report, officials from DHS and the Office of Infrastructure Protection told us they were uncertain whether the documents were delivered to the requisite congressional committees because they do not have records to indicate that the documents were delivered. According to a DHS official, the DHS document tracking system includes notes on the intended delivery of the fiscal year 2008 and 2010 documents and a note regarding delivery of the fiscal year 2009 document, but the system does not contain a record to verify that the documents were delivered, i.e., that the transactions actually occurred. Staff from both committees could not find evidence of the documents. One staff member also conducted a search of congressional archives for the 109th, 110th, and 111th Congresses and found no records of receiving the statutorily required reports from DHS.\nWe reviewed the DHS documents intended to fulfill the statutory reporting requirements for fiscal years 2008 through 2011 and found that they generally contain information consistent with the statutory requirements. For example, the documents generally included an overview of the NCIPP list development process and changes, if any, from the previous year; challenges compiling the list; and how the list is used. Table 2 shows key elements of each document and how they match up with the statutory requirements.\nNevertheless, absent an approach to verify the delivery of the statutorily required reports on the database and list to the requisite committees of Congress, DHS cannot ensure that it has provided the committees with necessary information in a timely manner. The Standards for Internal Control in the Federal Government calls for compliance with applicable laws and regulations and for the accurate, timely, and appropriate documentation of the transactions. An approach to verify the timely delivery of required reports to the requisite committees of Congress, such as documenting or recording the transactions, would better position DHS to ensure that it is in compliance with its statutory reporting requirements, thereby providing the committees information needed to perform oversight.", "DHS efforts to identify and prioritize infrastructure continue to evolve, and the department has taken important actions to focus its prioritization approach on consequences, consistent with statutory requirements and the NIPP risk management framework. However, in recent years, DHS introduced new criteria for select sectors and non-consequence-based criteria to account for some assets, which could hinder DHS’s ability to compare assets across sectors in order to identify the nation’s highest- priority critical infrastructure. Given the magnitude of the changes DHS has made to the criteria for including infrastructure on the list, validation of the NCIPP list development approach could provide DHS managers and infrastructure protection partners more reasonable assurance that the list captures the highest-priority infrastructure that, if destroyed or disrupted, could cause national or regional catastrophic effects. NCIPP program officials told us they would like to have the NCIPP reviewed to validate the criteria used to decide which assets and systems should be placed on the list, but they have not yet submitted a proposal for this review to the Assistant Secretary for Infrastructure Protection. An independent, external peer review would better position DHS to provide reasonable assurance that its approach is reproducible and defensible, and that infrastructure protection efforts are being prioritized on the nation’s highest-priority critical infrastructure as intended by the NIPP risk management framework. Finally, it is unclear if DHS has met statutory annual reporting requirements regarding the NCIPP lists because DHS is unable to verify the delivery of these required reports. As a result, DHS cannot ensure that it is fulfilling its statutory reporting obligations and may not be providing the requisite congressional committees with the information needed to effectively oversee the program, particularly with regard to the allocation of scarce federal resources.", "To better ensure that DHS’s approach to identify and prioritize critical infrastructure is consistent with the NIPP risk management framework and that DHS is positioned to provide reasonable assurance that protection and resiliency efforts and investments are focused on the nation’s highest-priority critical infrastructure, we recommend that the Assistant Secretary for Infrastructure Protection, Department of Homeland Security, take the following action: commission an independent, external peer review of the program with clear project objectives for completing this effort.\nTo ensure that DHS is in compliance with its statutory reporting requirements and provides decision makers with the information necessary to perform program oversight, we recommend that the Secretary of Homeland Security, take the following action: develop an approach, such as documenting or recording the transaction, to verify the delivery of the statutorily required annual reports on the database and list to the requisite congressional committees.", "We provided a draft of this report to the Secretary of Homeland Security for review and comment. In its written comments reproduced in Appendix III, DHS agreed with both of our recommendations.\nWith regard to our first recommendation that DHS commission an independent, external peer review of the program with clear project objectives for completing this effort, DHS stated that a peer review would enable DHS to determine whether the NCIPP list is based on analytically sound methodology and whether appropriate procedures are in place to ensure that the list is defensible and reproducible. Specifically, DHS stated that it plans to commission and complete an independent peer review of the NCIPP process by the end of the fourth quarter of fiscal year 2014. If fully implemented, to include a review by independent experts to validate the criteria and process DHS uses to decide which assets and systems should be placed on the NCIPP list as we described in this report, DHS’s planned efforts will address the intent of this recommendation.\nWith regard to our second recommendation that DHS develop an approach, such as documenting or recording the transaction, to verify the delivery of the statutorily required annual reports on the database and list to the requisite congressional committees, DHS stated that it has a system in place to track the development and approval of congressional reports, but DHS confirmed that it does not currently have a standard procedure for verifying that the congressional reports are delivered. DHS stated that its Office of Legislative Affairs will develop and implement a standard operating procedure for tracking the delivery of annual reports on the database and the list. DHS did not provide an estimated completion date for this effort. If fully implemented, DHS’s planned efforts will address the intent of this recommendation.\nDHS also provided technical comments which we incorporated, as appropriate.\nWe are sending copies of this report to the Secretary of Homeland Security, the Under Secretary of the National Programs Protection Directorate, selected congressional committees, and other interested parties. In addition, the report is available at no charge on GAO’s website at http://www.gao.gov. If you or your staff have any questions about this report, please contact Stephen L. Caldwell at (202) 512-8777 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix IV.", "This appendix provides information on the 18 critical infrastructure sectors and the federal agencies responsible for sector security. The National Infrastructure Protection Plan (NIPP) outlines the roles and responsibilities of the Department of Homeland Security (DHS) and its partners—including other federal agencies. Within the NIPP framework, DHS is responsible for leading and coordinating the overall national effort to enhance protection via 18 critical infrastructure sectors. Homeland Security Presidential Directive/HSPD-7 and the NIPP assign responsibility for critical infrastructure sectors to sector-specific agencies (SSA). On February 12, 2013, the President issued Presidential Policy Directive/PPD-21 that, among other things, reduced the number of critical infrastructure sectors from 18 to 16. As an SSA, DHS has direct responsibility for leading, integrating, and coordinating efforts of sector partners to protect 11 of the 18 critical infrastructure sectors. The remaining sectors are coordinated by eight other federal agencies. Table 3 lists the SSAs and their sectors as they existed before any reorganization of the critical infrastructure sectors affected by the issuance of PPD-21.", "To address our first objective—determine the extent to which DHS changed its criteria for developing the National Critical Infrastructure Prioritization Program (NCIPP) list, identified the impact, if any, of these changes, and validated its approach—we reviewed the Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Commission Act), which, by amending title II of the Homeland Security Act of 2002, required the Secretary of DHS to establish and maintain a national database of systems and assets determined to be vital and the loss, interruption, incapacity, or destruction of which would have a negative or debilitating effect on the economic security, public health, or safety of the United States, any state, or any local government, or as otherwise determined appropriate for inclusion by the Secretary. In addition, the 9/11 Commission Act required the Secretary of DHS to establish and maintain a single prioritized list of systems and assets included in the national database that the Secretary determines would, if destroyed or disrupted, cause national or regional catastrophic effects.\nWe also reviewed DHS guidelines issued to states and SSAs from 2007 through 2012 that included details on the NCIPP list development process, to determine how DHS’s criteria and process for developing the list changed year to year. We then obtained and analyzed the NCIPP lists finalized for fiscal years 2007 through 2012 to determine the total number of high-priority assets by state and the change in distribution of high- priority assets by sector year to year. We used our analysis to select 8 of the 18 sectors—the banking and finance, defense industrial base, chemical, energy, transportation systems, agriculture and food, government facilities, and dams sectors. We chose these sectors to obtain a mix of sectors that (1) experienced the largest and smallest percentage change in the distribution of assets on the NCIPP list between fiscal years 2009 and 2011 because of program changes DHS made during this period, and (2) have an SSA located within or outside DHS. The information from our analysis of these sectors is not generalizable to the universe of all sectors. However, it provides valuable insights into yearly changes in the distribution of assets on the NCIPP list among a diverse group of sectors. On February 12, 2013, the President issued Presidential Policy Directive/PPD-21 that, among other things, reduced the number of critical infrastructure sectors from 18 to 16. To assess the reliability of the data, we reviewed existing documentation about DHS’s data system, which houses the data application used to create the NCIPP list, and spoke with knowledgeable agency officials responsible for maintaining the system and data application. While we determined that the data were sufficiently reliable to provide a general overview of the program, we included data limitations from our previous work in this report, where appropriate. We also interviewed officials in the Infrastructure Analysis and Strategy Division (IASD), which is part of the Office of Infrastructure Protection in DHS’s National Protection and Program Directorate, who are responsible for managing the NCIPP to identify DHS’s rationale for changing the criteria.\nIn addition, to address the first objective, we reviewed our prior reports as well as DHS Inspector General reports on protection and resiliency prioritization efforts and spoke with program officials who use the list from DHS’s Protective Security Coordination Division (PSCD), the Federal Emergency Management Agency (FEMA), and the Federal Bureau of Investigation to determine how they use the NCIPP list and the impact changes to the NCIPP list have had, if any, on their ability to use the list during fiscal years 2007 through 2012. In addition to interviewing program officials from PSCD headquarters, we also conducted interviews with nine of DHS’s protective security advisors (PSA)—one from each of the nine PSA regions—to discuss their contributions to the NCIPP list, how they use the list to prioritize their activities, and actions NCIPP management has taken to solicit their feedback regarding the program.The results from our interviews are not generalizable to the universe of PSAs but provide specific examples of how PSAs use the list and insights on the effect changes have had on their activities.\nAlthough the FEMA UASI grant formula is the same as the FEMA State Homeland Security Program (SHSP), we focused our sensitivity analysis on the UASI grant because this grant is allocated to only a subset of the nation’s 100 most populous urban areas— referred to as metropolitan statistical areas (MSA)—each year, whereas by law, each state and territory are required to receive a minimum allocation of the SHSP funds each year. For ease of reporting, we will refer to UASI grant recipients as cities rather than MSAs. for these 31 cities. We then re-ran the risk formula using these revised NCIPP level 2 infrastructure counts, while holding all other data inputs constant, which resulted in a change to the relative risk score rankings for 5 of the top 31 cities. We also performed additional statistical analysis of the FEMA risk formula and data that showed UASI grant allocations are strongly associated with a city’s current risk score, even when accounting for the influence of the previous year’s grant allocations. Based on our prior work with the FEMA UASI grant risk formula and interviews with FEMA officials about its data sources and quality assurance procedures, we determined that the data were sufficiently reliable for the purposes of this report. Last, we met with IASD officials to discuss actions they have taken to identify the impact of changes, if any, on users of the list, and compared these actions with applicable criteria in the NIPP and Standards for Internal Control in the Federal Government to determine if they were consistent.\nRegarding our second objective—to determine the extent to which DHS worked with states and SSAs to develop the NCIPP list—we reviewed relevant provisions of the 9/11 Commission Act and the guidelines DHS issued to state homeland security advisers and SSAs to solicit nominations of high-priority infrastructure for inclusion on the NCIPP list.\nWe also conducted interviews with officials from 10 SSAs and 15 state homeland security offices to obtain federal and state perspectives on DHS’s change to consequence-based criteria and coordination of the NCIPP program, as well as their views on nominating to and using the list. The SSA officials we interviewed represented the 8 sectors selected during our analysis for the first objective. Specifically, DHS was the SSA for 4 of the sectors—the chemical, dams, government facilities, and transportation systems sectors. The Departments of Energy, Defense, and the Treasury were the SSAs for 3 sectors—the energy, defense industrial base, and banking and finance sectors, respectively. Two SSAs, the Department of Agriculture and the Food and Drug Administration, share responsibility for the agriculture and food sector. The state homeland security officials we interviewed represented 15 states—California, Georgia, Illinois, Hawaii, Oklahoma, Maine, Mississippi, Nevada, New Jersey, New York, Texas, Virginia, Washington, West Virginia, and Wisconsin. We selected these states because they contained a range in the number of assets on the NCIPP The list and represented at least 1 state from each of 9 PSA regions.sector and state interviews are not generalizable to the universe of infrastructure sectors and states contributing to the NCIPP list. However, our selection combined with DHS policy guidance, further informed us about DHS efforts to manage the NCIPP program across a spectrum of states and partners nationwide. Finally, we interviewed IASD officials to discuss actions DHS had taken to consult with state and federal partners (as identified in program guidelines and based on our interviews with states and SSAs), and compared their responses with applicable criteria in the NIPP, Standards for Internal Control in the Federal Government, and relevant statutory provisions.\nWith regard to our third objective—determine the extent to which DHS reported to the requisite committees of Congress on the NCIPP—we reviewed the statutory requirement that DHS report annually to the Senate Committee on Homeland Security and Governmental Affairs and the House Committee on Homeland Security on the national asset database and prioritized critical infrastructure list. We also spoke to staff members representing both committees to determine if the committees received the statutorily required reports. Last, we interviewed DHS officials to discuss efforts to provide these reports to the committees and obtained and reviewed documents on the national asset database and prioritized critical infrastructure list that were intended to meet statutory reporting requirements to determine if these efforts were consistent with relevant statutory provisions and Standards for Internal Control in the Federal Government.\nWe conducted this performance audit from May 2012 to March 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, John F. Mortin, Assistant Director, and Andrew M. Curry, Analyst-in-Charge, managed this assignment. Chuck Bausell, Mona Nichols-Blake, Aryn Ehlow, Katherine M. Davis, Michele C. Fejfar, Eric D. Hauswirth, Mitchell B. Karpman, Thomas F. Lombardi, and Janay Sam made significant contributions to the work.", "Critical Infrastructure Protection: Preliminary Observations on DHS Efforts to Assess Chemical Security Risk and Gather Feedback on Facility Outreach. GAO-13-421T. Washington, D.C.: March 14, 2013.\nCritical Infrastructure Protection: An Implementation Strategy Could Advance DHS’s Coordination of Resilience Efforts across Ports and Other Infrastructure. GAO-13-11. Washington, D.C.: October 25, 2012.\nCritical Infrastructure Protection: Summary of DHS Actions to Better Manage Its Chemical Security Program. GAO-12-1044T. Washington, D.C.: September 20, 2012.\nCritical Infrastructure Protection: DHS Is Taking Action to Better Manage Its Chemical Security Program, but It Is Too Early to Assess Results. GAO-12-567T. Washington, D.C.: September 11, 2012.\nCritical Infrastructure: DHS Needs to Refocus Its Efforts to Lead the Government Facilities Sector. GAO-12-852. Washington, D.C.: August 13, 2012.\nCritical Infrastructure Protection: DHS Is Taking Action to Better Manage Its Chemical Security Program, but It Is Too Early to Assess Results. GAO-12-515T. Washington, D.C.: July 26, 2012.\nCritical Infrastructure Protection: DHS Could Better Manage Security Surveys and Vulnerability Assessments. GAO-12-378. Washington, D.C.: May 31, 2012.\nCritical Infrastructure Protection: DHS Has Taken Action Designed to Identify and Address Overlaps and Gaps in Critical Infrastructure Security Activities. GAO-11-537R. Washington, D.C.: May 19, 2011.\nCritical Infrastructure Protection: DHS Efforts to Assess and Promote Resiliency Are Evolving but Program Management Could Be Strengthened. GAO-10-772. Washington, D.C.: September 23, 2010.\nCritical Infrastructure Protection: Update to National Infrastructure Protection Plan Includes Increased Emphasis on Risk Management and Resilience. GAO-10-296. Washington, D.C.: March 5, 2010.\nThe Department of Homeland Security’s (DHS) Critical Infrastructure Protection Cost-Benefit Report. GAO-09-654R. Washington, D.C.: June 26, 2009.\nInformation Technology: Federal Laws, Regulations, and Mandatory Standards to Securing Private Sector Information Technology Systems and Data in Critical Infrastructure Sectors. GAO-08-1075R. Washington, D.C.: September 16, 2008.\nRisk Management: Strengthening the Use of Risk Management Principles in Homeland Security. GAO-08-904T. Washington, D.C.: June 25, 2008.\nCritical Infrastructure: Sector Plans Complete and Sector Councils Evolving. GAO-07-1075T. Washington, D.C.: July 12, 2007.\nCritical Infrastructure Protection: Sector Plans and Sector Councils Continue to Evolve. GAO-07-706R. Washington, D.C.: July 10, 2007.\nCritical Infrastructure: Challenges Remain in Protecting Key Sectors. GAO-07-626T. Washington, D.C.: March 20, 2007.\nHomeland Security: Progress Has Been Made to Address the Vulnerabilities Exposed by 9/11, but Continued Federal Action Is Needed to Further Mitigate Security Risks. GAO-07-375. Washington, D.C.: January 24, 2007.\nCritical Infrastructure Protection: Progress Coordinating Government and Private Sector Efforts Varies by Sectors’ Characteristics. GAO-07-39. Washington, D.C.: October 16, 2006.\nInformation Sharing: DHS Should Take Steps to Encourage More Widespread Use of Its Program to Protect and Share Critical Infrastructure Information. GAO-06-383. Washington, D.C.: April 17, 2006.\nRisk Management: Further Refinements Needed to Assess Risks and Prioritize Protective Measures at Ports and Other Critical Infrastructure. GAO-06-91. Washington, D.C.: December 15, 2005." ], "depth": [ 1, 2, 1, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "", "", "h0_full h3_title", "h0_full h3_full", "h0_full", "h1_full", "h1_full", "", "", "h2_full", "", "", "h3_full", "h1_full", "h0_full h3_full h4_full", "", "", "", "", "h3_full h4_full" ] }

{ "question": [ "What is the current status of DHS's attempt to change its criteria for including assets on NCIPP?", "How were the criteria altered?", "How has the changing of criteria altered the NCIPP list?", "To what extent has DHS reviewed these changes?", "What are the possible implications of these changes?", "What would be the advantage of an independent review?", "What other agencies did DHS enlist to help develop the list?", "How has the DHS been working to include states in this process?", "How has DHS attempted to address state challenges?", "To what extent did GAO verify that DHS is meeting statutory requirements?", "Why is the DHS's lack of a verification system problematic?", "How would implementing an approach to verify deliveries benefit DHS?", "What are ways in which critical infrastructure has been damaged in the 21st century?", "What does the NCIPP do?", "What concerns do members of Congress have regarding NCIPP?", "What was GAO asked to review?", "What three main aspects of the program did GAO assess?", "What data did GAO review?", "What is the scope of the interviews?" ], "summary": [ "The Department of Homeland Security (DHS) has made several changes to its criteria for including assets on the National Critical Infrastructure Prioritization Program (NCIPP) list of the nation's highest-priority infrastructure, but has not identified the impact of these changes or validated its approach. Program officials noted they would like to validate the NCIPP, but they have not yet submitted a proposal to DHS management.", "In 2009, DHS changed the criteria to make the list entirely consequence based--that is, based on the effect of an event on public health and safety, and economic, psychological, and government mission impacts. Subsequent changes introduced specialized criteria for some sectors and assets.", "For example, infrastructure that has received a specific, credible threat, but otherwise does not meet NCIPP criteria, may be included on the list. DHS's changes to the NCIPP criteria have changed the composition of the NCIPP list, which has had an impact on users of the list, such as the Federal Emergency Management Agency.", "However, DHS has not reviewed the impact of changes on users nor validated its approach to developing the list.", "While the change to an entirely consequence-based list created a common approach to identify infrastructure and align the program with applicable laws and the National Infrastructure Protection Plan, recent criteria changes to accommodate certain sectors and assets represent a departure from this common approach, which could hinder DHS's ability to compare infrastructure across sectors.", "An independent peer review--a best practice in risk management--would better position DHS to reasonably assure that the NCIPP list identifies the nation's highest-priority infrastructure.", "To develop the list, DHS has consulted with both states and sector specific agencies (SSA)--federal agencies responsible for protection and resiliency efforts among individual critical infrastructure sectors, such as energy, transportation, and dams.", "Since changing the NCIPP criteria in 2009, DHS has taken proactive steps to help states nominate assets to the list. These steps include providing on-site assistance, minimizing changes to the criteria, conducting outreach to encourage participation in an NCIPP working group (which includes SSAs), and providing explanations of why nominated assets do not make the list.", "DHS recognizes that states, in particular, face challenges--such as resource and budgetary constraints--associated with nominating assets, and has taken actions to address these challenges and reduce the burden on states.", "GAO could not verify that DHS is meeting statutory requirements to report annually to the Committee on Homeland Security and Governmental Affairs of the Senate and the Committee on Homeland Security of the House of Representatives on the NCIPP list.", "DHS officials prepared documents that generally contained information consistent with statutory reporting requirements, but they were uncertain whether they had been delivered to the committees because they do not have records to verify they were delivered.", "An approach to verify the delivery of the required reports, such as documenting or recording the transactions, would better position DHS to ensure that it is in compliance with its statutory reporting requirements and that it provides the committees with the information needed to perform oversight of the program.", "In October 2012, Hurricane Sandy caused widespread damage across multiple states and affected millions of people. Threats to critical infrastructure are not limited to natural disasters, as demonstrated by the terrorist attacks of September 11, 2001.", "Originally developed by DHS in 2006, and consistent with the Implementing Recommendations of the 9/11 Commission Act of 2007, the NCIPP identifies and prioritizes nationally significant critical infrastructure each year.", "However, Members of Congress and some state officials have raised questions about changes DHS has made to its approach for creating the list and the impact of these changes.", "GAO was asked to review DHS management of the program.", "GAO assessed the extent to which DHS has (1) changed its criteria for developing the list, identified the impact, if any, of these changes, and validated its approach, (2) worked with states and SSAs to develop the list, and (3) reported to Congress on the NCIPP.", "GAO, among other things, reviewed laws, DHS policies and procedures; analyzed the lists from 2007 through 2012; and interviewed DHS, SSA, and state homeland security officials selected based on their involvement with the program and geographic diversity.", "The interviews are not generalizable but provide insights." ], "parent_pair_index": [ -1, 0, 1, 1, 0, 0, -1, 0, 1, -1, 0, 0, -1, -1, 1, -1, 0, 0, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "Background", "CHIP-IN Act", "Omaha Project", "Pilot Program", "VA Has Not Yet Established a Framework for Effective Pilot Design for the CHIP-IN Pilot Program", "VA Has Not Established Clear Objectives", "VA Has Not Developed and Documented an Assessment Methodology or Evaluation Plan", "VA Has Not Documented Plans to Assess Scalability", "VA Is Making Efforts to Improve Communication with Relevant Stakeholders", "CHIP-IN Pilot Suggests That Donation Partnerships Can Improve Project Implementation, but Challenges Include Identifying Donors and Establishing Responsibilities", "VA and Omaha Donor Group Agree That the CHIP-IN Donation Approach and Private Sector Practices Have Improved the Omaha Project’s Implementation", "Stakeholders Agreed That Relying on Philanthropic Donations and Identifying Donors Is a Challenge to Establishing Pilot Partnerships", "CHIP-IN Team Lacks Documented Roles and Responsibilities and Has Limited Available Staffing", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Comments from the Department of Vetera ns Affairs", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "According to VA officials and Omaha donor group representatives, two main factors coalesced to become the impetus for the CHIP-IN Act.\nOne factor was an Omaha donor group’s interest in constructing an ambulatory care center that could help address the needs of veterans in the area, given uncertainty about when or whether VA would be able to build a planned replacement medical center. In 2011, VA allocated $56 million for the design of the replacement medical center in Omaha, which had a total estimated cost of $560 million. However, VA officials told us that given the agency’s backlog of construction projects, the replacement medical center was not among its near-term projects. In the meantime, according to VA officials and the Omaha donor group, they discussed a change in the scope of the project— from the original plan of a replacement medical center to a smaller- scope project for a new ambulatory care center—that could potentially be constructed using the existing appropriation of $56 million plus a donation from the Omaha donor group.\nAnother factor was the Congress’s and VA’s broader interest in testing innovative approaches to meeting VA’s infrastructure needs. According to VA officials, the agency was interested in constructing medical facilities in a more expeditious manner and developing legislation that allowed private money to help address VA’s needs.\nThe CHIP-IN Act authorized a total of five pilot projects but did not name any specific project locations. Subsequently, the Omaha donor group applied to participate in the pilot program—with the construction of an ambulatory care center—and VA executed a donation agreement in April 2017. VA may accept up to four more real property donations under the pilot program, which is authorized through 2021.\nThe CHIP-IN Act places certain requirements on donations under the pilot program. VA may accept CHIP-IN donations only if the property: (1) has already received appropriations for a VA facility project, or (2) has been identified as a need as part of VA’s long-range capital planning process and the location is included on the Strategic Capital Investment Planning process priority list provided in VA’s most recent budget submission to Congress. The CHIP-IN Act also requires that a formal agreement between VA and the non-federal entity provide that the entity conduct necessary environmental and historic preservation due diligence, obtain permits, and use construction standards required of VA, though the VA Secretary may permit exceptions.", "VA entered into an agreement with the Omaha donor group for the design and construction of an ambulatory care center in April 2017—4 months after enactment of the CHIP-IN Act. According to this agreement, which establishes the terms of the donation, the Omaha donor group will complete the design and construction of the facility and consult with VA. The facility will provide approximately 158,000 gross square feet of outpatient clinical functions, including primary care, an eye clinic, general purpose radiology and ambulatory surgery, specialty care, and mental health care.\nAccording to VA officials, planning for the facility began in April 2017, after the donation agreement was executed, and the project broke ground in April 2018. This donation agreement includes the mutually agreed- upon design and construction standards, which incorporate both VA’s standards and private sector building standards. The donation agreement also sets the terms of VA’s review of the design and construction documents and establishes escrow operations for the holding and disbursement of federal funds. Upon the Omaha donor group’s completion of the facility (scheduled for summer 2020) and VA’s acceptance, the Omaha donor group will turn the facility over to VA. The total estimated project cost is approximately $86 million. VA is contributing the $56 million that had already been appropriated for the design of the replacement medical facility. The Omaha donor group will donate the remaining approximately $30 million in private sector donations needed to build the facility.", "As shown in figure 2 and described below, VA officials told us that several offices are involved in various aspects of the CHIP-IN pilot—such as executing the Omaha project, seeking additional partnerships, and establishing the overall pilot program effort. The VA Office of Construction and Facilities Management (CFM) includes its Office of Real Property (ORP) and Office of Operations. ORP has taken a lead role in establishing the pilot program, while CFM Operations has led the execution of the Omaha project. Other VA offices that have been involved at different stages include the Office of General Counsel and the Secretary’s Center for Strategic Partnerships. Within the Veterans Health Administration (VHA), the local medical-center leadership was involved with developing the Omaha project, and the Office of Capital Asset Management, Engineering, and Support (Capital Asset Management Office) has contributed to efforts to identify additional projects. Some of these offices are involved with a steering committee created to implement the CHIP-IN Act (CHIP-IN steering committee). This steering committee met for the first time in September 2018.", "In 2016, we identified five leading practices for designing a well- developed and documented pilot program: articulating an assessment methodology, developing an evaluation plan, assessing scalability, and ensuring stakeholder communication. (See fig. 3.)\nThese practices enhance the quality, credibility, and usefulness of pilot program evaluations and help ensure that time and resources are used effectively. While each of the five practices serves a purpose on its own, taken together, they form a framework for effective pilot design.\nVA officials have worked to communicate with relevant stakeholders, but have not yet established objectives, developed an assessment methodology and evaluation plan, or documented how they will make decisions about scalability of the pilot program.", "In 2016, we reported that clear, measurable objectives can help ensure that appropriate evaluation data are collected from the outset of a pilot program. Measurable objectives should be defined in qualitative or quantitative terms, so that performance toward achieving the objectives can be assessed, according to federal standards for internal control. For example, broad pilot objectives should be translated into specific researchable questions that articulate what will be assessed. Establishing well-defined objectives is critical to effectively implementing the other leading practices for a pilot program’s design. Objectives are needed to develop an assessment methodology to help determine the data and information that will be collected. Objectives also inform the evaluation plan because performance of the pilot should be evaluated against these objectives. In addition, objectives are needed to assess the scalability of the pilot, to help inform decisions on whether and how to implement a new approach in a broader context (i.e., whether the approach could be replicable in other settings).\nRelevant VA stakeholders have not yet collectively agreed upon and documented overall objectives for the CHIP-IN pilot program, but the stakeholders said they are planning to do so. However, at the time of our review, each of the VA offices we interviewed presented various ideas of what the objectives for the pilot should be, reflecting their varied missions and roles in the CHIP-IN pilot. For example,\nA senior VHA official said the objectives should include (1) determining whether the CHIP-IN donation partnership approach is an effective use of VA resources and (2) defining general principles for the pilot, including a repeatable process for future CHIP-IN projects.\nA senior VA official who has been closely involved with the pilot said one objective should be determining how VA can partner with the private sector for future construction projects, whether through donation partnerships or other means.\nOfficials from ORP, who have taken a lead role in establishing the pilot, told us their objectives include identifying the four additional projects authorized by the CHIP-IN Act, developing a process to undertake potential projects, and determining whether a recommendation should be made that Congress extend VA’s CHIP-IN authority beyond the 5-year pilot. ORP officials said they have written some of these objectives in an early draft of plans for the CHIP-IN steering committee, but they have also discussed other objectives that are not yet documented.\nWhile the various VA offices involved may have somewhat different interests in the pilot program, developing a set of clear, measureable objectives is an important part of a good pilot design. For example, several VA officials who are involved in the pilot told us that it would be useful for relevant internal stakeholders to collectively agree upon and document overall objectives. ORP officials told us that the newly formed CHIP-IN steering committee will discuss and formalize objectives for the pilot. However, at the time of our review, a draft of these objectives had not been developed and a timeline for developing objectives was not yet established. A discussion of objectives was planned for the steering committee’s first meeting in September but had been rescheduled for the next meeting in October 2018.\nVA officials told us that they did not immediately move to establish a framework for the pilot program—which would include objectives for the pilot—for various reasons. Some officials said that VA and the Omaha donor group entered into formal discussions shortly after the CHIP-IN Act was enacted, and that their focus at the time was on negotiating and then executing a donation agreement for that particular project. As such, formal efforts to establish the framework for the overall pilot effort were in initial stages at the time of our review. ORP officials also said that the enactment of the CHIP-IN Act was not anticipated at the time CFM was planning and budgeting its resources for fiscal years 2017 and 2018, so work on the pilot had to be managed within available resources, largely as an additional duty for staff. In addition, a senior VHA official said a meeting to agree upon the pilot program’s objectives was needed but had not been held yet, noting that VA has competing priorities and vacancies at the senior executive level. ORP officials said they are now following project management principles in implementing the pilot. As part of this effort, they said that they intend to develop foundational documents for review by the CHIP-IN steering committee—such as a program plan containing objectives—but they have not done so yet.\nWithout clearly defined and agreed-upon objectives, stakeholders within VA may have different understandings of the pilot’s purpose and intended outcomes. As a result, the agency risks pursuing projects that may not contribute to what VA hopes to learn or gain from the pilot. While VA officials are planning to establish objectives as they formalize the CHIP-IN steering committee, at the time of our review these objectives had not been documented and no timeline has been established for when they would be. Without clear, measurable objectives, VA will be unable to implement other leading practices for pilot design, such as determining how to make decisions about scalability. Further, not defining objectives in the near future would ultimately affect VA’s ability to evaluate the pilot and provide information to Congress about its results.", "We have reported that developing a clearly articulated assessment methodology and a detailed evaluation plan are leading practices for pilot design. The assessment methodology and evaluation plan should be linked to the pilot’s objectives so that evaluation results will show successes and challenges of the pilot, to help the agency draw conclusions about whether the pilot met its objectives. The assessment methodology and evaluation plan are also needed to determine scalability, because evaluation results will show whether and how the pilot can be expanded or incorporated into broader efforts. Given that several VA offices are involved in the pilot’s implementation, it is important for relevant stakeholders to be involved with defining and agreeing upon the assessment methodology and evaluation plan.\nVA has not yet fully developed and documented either an assessment methodology or evaluation plan for the pilot, but VA officials told us they plan to do so. For example, ORP officials said they intend to collect lessons learned and then evaluate the pilot at its end in 2021 by reviewing this information with relevant stakeholders. However, more specific details for this assessment methodology have not been defined in accordance with this leading practice. For example, we found that ORP has not yet determined which offices will contribute lessons learned, how frequently that information will be collected, or who will collect it. Similarly, details for an evaluation plan have not been defined, including who will participate in the evaluation and how information will be analyzed to evaluate the pilot’s implementation and performance. Now that the CHIP- IN steering committee has met for the first time, this group intends to discuss assessment of the pilot at a future meeting, but it is not clear when that discussion will occur, what leading practices will be considered, and when plans will be defined and documented.\nAccording to VA officials, an assessment methodology and evaluation plan have not been developed because, as discussed above, after the CHIP-IN Act was enacted, efforts were focused on negotiating the Omaha donation agreement and then executing that project. As such, formal efforts to establish the pilot through the CHIP-IN steering committee were in initial stages at the time of our review. Further, until VA has agreed- upon and documented objectives for the pilot program, it may be difficult to determine what information is needed for an assessment methodology and how the pilot will be evaluated.\nUnless VA establishes a clear assessment methodology that articulates responsibilities for contributing and documenting lessons learned, VA may miss opportunities to gather this information from the pilot. For example, while some stakeholders are documenting lessons learned relevant to their roles in the pilot, others are not. Specifically, ORP and CFM Operations are documenting lessons learned, but other VA offices and the Omaha donor group have not, though some told us they would be willing to share lessons learned if asked. Without an assessment methodology, there may also be confusion about who is responsible for documenting lessons learned. For example, a senior CFM official said that the Omaha donor group was compiling lessons learned from the pilot overall and would subsequently share those with VA. However, representatives from the donor group told us they have not been asked to share lessons learned with VA, but they would be willing to do so. When key individuals leave their positions—a situation that has occurred a number of times during implementation of the CHIP-IN pilot—their lessons learned may not be captured. For example, VA officials and donor group representatives told us that two VA officials who were involved in developing the pilot have since left the agency. In addition, stakeholders’ memories of lessons learned may fade unless they record them. Waiting to develop an evaluation plan—which should include details about how lessons learned will be used to measure the pilot’s performance—may ultimately affect VA’s preparedness to evaluate the pilot and provide information to Congress about its results.", "The purpose of a pilot is to generally inform a decision on whether and how to implement a new approach in a broader context—or in other words, whether the pilot can be scaled up or increased in size to a larger number of projects over the long term. Our prior work has found that it is important to determine how scalability will be assessed and the information needed to inform decisions about scalability. Scalability is connected to other leading practices for pilot design, as discussed above. For example, criteria to measure scalability should provide evidence that the pilot objectives have been met, and the evaluation’s results should inform scalability by showing whether and how the pilot could be expanded or how well lessons learned from the pilot can be incorporated into broader efforts.\nVA officials have begun to implement this leading practice by considering the pilot as a means of testing the viability of the donation partnership approach; however, plans for assessing scalability have not been fully defined and documented. A senior VA official said scalability is seen as a way to determine if the donation approach or other types of private sector partnerships are a viable way to address VA’s infrastructure needs. Similarly, ORP officials told us they are first considering scalability in terms of whether the CHIP-IN donation approach is an effective or feasible way of delivering VA projects. These officials said scalability will be largely determined by whether all five authorized projects can be executed before authorization for the CHIP-IN pilot program sunsets. For example, if VA can find four additional projects and execute donation agreements before the pilot’s authority expires, then potentially VA could seek congressional reauthorization to extend the program beyond the 5- year pilot. ORP officials are also considering scalability in terms of any changes to the program, such as incentives for donors, that could potentially increase its effectiveness. However, ORP officials explained that scalability may be limited because the types of projects that can be accomplished with the CHIP-IN donation approach may not be the projects that are most needed by VA. Along with other pilot design topics, the CHIP-IN steering committee intends to discuss scalability at a future meeting, but it is not clear when that discussion will occur. Thus, while VA officials have considered what scalability might look like, they have not fully determined and documented how to make decisions about whether the pilot is scalable.\nSince VA has not defined and documented the pilot’s objectives and its evaluation plans, it may be more difficult to determine how to make decisions about scalability. Considering how the pilot’s objectives and evaluation plans will inform decisions about scalability is critical to providing information about the pilot’s results. For example, at the end of the pilot, VA and Congress will need clear information to make decisions about whether the CHIP-IN donation approach could be extended beyond a pilot program, if any changes could enhance the program’s effectiveness, or if particular lessons learned could be applied to VA construction projects more broadly. Without clear information about scalability, VA may be limited in its ability to communicate quality information about the achievement of its objectives. Such communication is part of the federal standards for internal control.", "We have reported that appropriate two-way stakeholder communication and input should occur at all stages of the pilot, including design, implementation, data gathering, and assessment. To that end, it is critical that agencies identify who or what entities the relevant stakeholders are and communicate with them early and often. This process may include communication with external stakeholders and among internal stakeholders. Communicating quality information both externally and internally is also consistent with federal standards for internal control.\nVA has begun to implement this practice, with generally successful communication with the Omaha donor group. While VA has experienced some external and internal communication challenges about the pilot, officials have taken steps to help resolve some of these challenges.\nExternal communication. VA officials and representatives from the Omaha donor group generally described excellent communication between their two parties. For example, donor group representatives told us that in-person meetings helped to establish a strong relationship that has been useful in negotiating the donation agreement and executing the project to date. Further, VA officials and donor group representatives said that all relevant stakeholders—such as the donor group’s construction manager, general contractor, and architect, as well VA’s engineer, project manager, and medical center director—were included in key meetings once the Omaha project began, and said that this practice has continued during the construction phase.\nAlthough the Omaha donor group reported overall effective relations and communications with VA, donor group representatives noted that additional public relations support from VA would have been helpful. For example, after the CHIP-IN project was initiated in Omaha, the donor group encountered a public relations challenge when news reports about unauthorized waiting lists at the Omaha medical center jeopardized some donors’ willingness to contribute to the project. While donor group representatives said this challenge was addressed when the donor group hired a public relations firm, they also explained that it would be helpful for VA headquarters to provide more proactive public relations support to the local areas where future CHIP-IN projects are located.\nVA officials stated that they experienced some initial challenges communicating pilot requirements to external entities that are interested in CHIP-IN donation partnerships, but officials said that in response the agency has changed its outreach approach. As discussed below, the donation commitment aspect of the pilot can be a challenge. When interested entities contact VA to request information on the CHIP-IN pilot, VA officials told us they find the entities are often surprised by the donation commitment. For example, two entities that responded to VA’s RFI told us they were not clear about the donation requirement or the expected level of donation, or both. One respondent did not understand the pilot required a donation and would not provide an opportunity for a financial return on investment. Another respondent indicated that when they asked VA for clarification about the expected project’s scope, personnel from a headquarters office and the local VA medical center could not fully answer their questions. VA officials acknowledged these challenges and said they have changed their outreach efforts to focus on certain potential CHIP-IN locations, rather than RFIs aimed at a broader audience. Further, VA officials said that when speaking with potential donors going forward, they plan to involve a small group of officials who are knowledgeable about the pilot and its donation approach.\nInternal communication. While VA initially experienced some challenges in ensuring that all relevant internal stakeholders have been included in the pilot’s implementation, according to officials, the agency has taken recent steps to address this concern and involve appropriate internal offices. For example, officials from the Capital Asset Management Office said they could have assisted ORP in narrowing the list of potential projects in the RFIs but were not consulted. Later, after revising the marketing approach, ORP reached out to the Capital Asset Management Office and other relevant offices for help in determining priority locations for additional CHIP-IN projects, according to an ORP official. Officials from the Capital Asset Management Office told us that with improved engagement they were able to participate more actively in discussions about the pilot. In addition, initial plans for the CHIP-IN steering committee did not include VHA representation. However, in summer 2018 ORP expanded the planned steering committee to include VHA representatives, a plan that some other VA offices told us is needed to ensure that the pilot addresses the agency’s healthcare needs and that VHA offices are informed about pilot efforts.", "", "Based on the experience with the Omaha project, the CHIP-IN donation approach can result in potential cost and time savings—through the leveraging of private-sector funding, contracting, and construction practices—according to VA officials and the Omaha donor group. Regarding cost savings, one VA official stated that using donations makes VA’s appropriated funds available to cover other costs. In addition, based on the experience with the Omaha project, other VA officials told us that a CHIP-IN project can potentially be completed for a lower cost because of practices resulting from private sector leadership. Specifically, VA estimated that the Omaha ambulatory care center would cost about $120 million for VA to build outside of a donation partnership—as a standard federal construction project. Under the CHIP-IN pilot, however, the total estimated cost of the Omaha facility is $86 million—achieving a potential $34 million cost savings. Regarding time savings, CHIP-IN projects can potentially be completed at a faster pace because of the use of certain private sector practices and because projects can be addressed earlier than they otherwise would be, according to VA officials.\nThe use of private-sector building practices can result in cost and time savings in a number of ways, according to VA officials and the Omaha donor group, as follows:\nThe use of private-sector building standards contributed to cost savings for the Omaha project, according to VA officials and donor group representatives. VA and the donor group negotiated a combination of industry and VA building standards. A CFM official told us that using this approach and working with the private sector donor group encouraged the design team to think creatively about the risk assessment process and about how to meet the intent of VA’s physical security standards, but at a lower cost than if they were required to build a facility using all of VA’s building standards as written. For example, when assessing the safety and physical-security risk, the donor group and VA identified a location where two sides of the facility will not have direct exposure to the public or roadway traffic. Prohibiting exposure to roadways on two sides of the facility will mean spending less money to harden (i.e., protect) the facility against threats such as vehicular ramming. According to VA officials, using the combined standards did not compromise security on the Omaha project.\nInvolving the general contractor early on in the design for the Omaha project, an approach VA does not typically take, contributed to both time and cost savings. VA officials told us that engaging the general contractor during the project’s design stage allowed the project to begin more quickly and was also helpful in obtaining information about costs and keeping the project within budget. However, VA officials said that depending on the project and contracting method used, it might not be possible to apply this contracting practice to VA construction projects outside of the pilot program.\nA private-sector design review method helped to save time. The Omaha donor group used a software package that allowed all design- document reviewers to simultaneously review design documents and then store their comments in a single place. VA officials said this approach was more efficient than VA’s typical review method and cut about 18 weeks from the project’s timeline. VA officials also said use of this software was a best practice that could be applied to VA construction projects more broadly. In addition, the donor group and VA employed fewer rounds of design reviews than VA typically uses; this streamlining also helped to save time during the design process, according to VA officials.\nFurther, VA officials said that the CHIP-IN donation approach can allow VA to address projects more quickly because they are addressed outside of VA’s typical selection and funding process. For example, VA officials told us that because of the agency’s current major construction backlog, using the CHIP-IN donation approach allowed work on the Omaha project to begin at least 5 years sooner than if the CHIP-IN approach had not been used. The Omaha project’s priority was low relative to other potential projects, so that it was unlikely to receive additional funding for construction for several years. For example, one agency official noted that even if the project was at the top of VA’s priorities, there is a backlog of 20 major construction projects worth $5 billion ahead of it—meaning the Omaha project would probably not be addressed for at least 5 years. VA officials also told us that as they consider future CHIP-IN projects, they are looking for other projects that, like the one in Omaha, are needed, but may not be a top priority given available funding and could be moved forward with a private sector donation. In addition, use of the CHIP-IN donation approach and decision to pursue an ambulatory care center contributed to an earlier start on a project to address veterans’ needs. However, as mentioned earlier, VA officials said that future construction projects will be necessary to address some needs that were part of the original replacement medical center plan.", "A main challenge to establishing pilot partnerships is the reliance on large philanthropic donations, according to VA officials, the Omaha donor group, and RFI respondents. In general, the potential donor pool may not be extensive given the size of the expected donations—in some cases tens or hundreds of millions of dollars—and the conditions under which the donations must be made. For example, as discussed earlier, VA officials said that when interested entities contact them about the pilot, they are often surprised by the donation commitment. When we spoke with two entities that responded to VA’s RFI, one told us that they “could not afford to work for free” under the pilot while another told us that developers are more likely to participate in the pilot if they see an incentive, or a return on their financial contribution. Also, VA officials told us that some potential project locations have not received any appropriations—making the projects’ implementation less appealing to potential donors. The Omaha donor group noted that a VA financial contribution at or above 50 percent of a project’s estimated cost is essential for demonstrating the agency’s commitment and for leveraging private-sector donations.\nTo address challenges involving the philanthropic nature of the pilot, ORP officials told us that VA has tried to identify strategies or incentives that could encourage donor involvement. For example, the CHIP-IN steering committee is considering what incentives might be effective to encourage greater participation. One ORP official told us that such incentives could include potential naming opportunities (that is, authority to name items such as facility floors, wings, or the actual facility), although offering such incentives may require changes in VA’s authority. Further, because it may be difficult to secure donations for larger, more costly projects, some VA officials, donor group representatives, and one RFI respondent we spoke to suggested that VA consider developing less costly CHIP-IN projects—giving VA a better chance of serving veterans by filling gaps in service needs. Other VA officials, however, said they wanted to focus on larger projects because the pilot allows only five projects.\nAnother challenge is that VA generally does not possess marketing and philanthropic development experience. VA officials told us that this makes the inherent challenge of finding donors more difficult. While VA officials have used the assistance of a nonprofit entity that has marketing expertise, they also said that going forward it would be helpful to have staff with relevant marketing and philanthropic development experience to assist with identifying donors. VA officials said this expertise could possibly be acquired through hiring a contractor, but funding such a hire may be difficult within their existing resources.", "As discussed above, the CHIP-IN pilot presents an uncharted approach to VA’s implementation of projects, and using CHIP-IN has aspects of an organizational transformation in property acquisition for the agency because it leverages donation partnerships and streamlines VA’s typical funding process. We have found that a key practice of organizational transformation includes a dedicated implementation team to manage the transformation process and that leading practices for cross-functional teams include clear roles and responsibilities, and committed members with relevant expertise. VA officials and Omaha donor group representatives acknowledged that a dedicated CHIP-IN team could help focus pilot implementation—and that no such team existed within the agency. ORP officials told us that the newly formed CHIP-IN steering committee would provide the necessary leadership for pilot implementation. They anticipate that a working group will be part of the committee and serve as a dedicated team for the pilot. However, as discussed below, roles and responsibilities have not been defined and staff resource decisions have not been made.\nClear and documented roles and responsibilities. Several VA officials told us that responsibility for managing the overall pilot effort had not been assigned, and that they had different interpretations of which office had responsibility for leading the pilot. Some officials identified ORP as the leader, while others thought it was CFM or the Center for Strategic Partnerships. One CFM official told us that a clear definition of responsibilities is needed under the pilot along with a dedicated office or person with the ability to make decisions when an impasse across offices exists. Similarly, a senior VHA official told us that leadership roles and responsibilities for the pilot are not fully understood within the agency, which has made establishing partnerships under the pilot a challenge. For example, both VA officials and Omaha donor group representatives identified the lack of a senior-level leader for the pilot as a challenge and emphasized the need for strong pilot leadership going forward. Now that a CHIP-IN steering committee is being formed to provide pilot leadership, ORP officials intend to discuss committee members’ roles and responsibilities. This discussion was planned for the first committee meeting but was rescheduled for the next meeting in October 2018. ORP officials, however, told us that they do not expect to assign individual members’ roles and responsibilities until a future date. VA officials did not have a timeline for when committee or individual members’ roles and responsibilities would be formally documented.\nORP officials said that roles and responsibilities for the pilot have not been defined because after enactment of the CHIP-IN Act, their first priority was to engage the Omaha donor group and negotiate an agreement. Later, after the Omaha project was progressing, ORP officials said they turned their attention to formalizing the pilot program and identifying additional donation partnerships. While it is important to concentrate on completion of individual projects, it is also important to plan for the overall pilot’s implementation—to help ensure that the pilot’s purpose and goals are met and in a timely manner. We have found that clarifying roles and responsibilities is an important activity in facilitating strong collaboration and building effective cross-functional teams. In addition, we have found that articulating roles and responsibilities is a powerful tool in collaboration and that it is beneficial to detail such collaborations in a formal, written document.\nCommitted team members. Various VA offices and staff members have worked on the CHIP-IN pilot in addition to their other responsibilities, but several VA officials told us the resources currently dedicated to the pilot are insufficient. During our review, an ORP official told us that two ORP staff each spent about 4 to 6 hours per week on the pilot, as collateral duties. However, since that time, one of these two staff members has left the agency. A senior VA official told us that ORP and the Center for Strategic Partnerships could each use two to three more dedicated staff members to work solely on the pilot. While one ORP official said that additional staff would likely be assigned after other CHIP-IN projects are identified, a Center for Strategic Partnerships official said a specified percentage of staff time should be dedicated now to identifying potential donors. As mentioned above, VA officials told us they anticipate a working group will be part of the CHIP-IN steering committee and will serve as the dedicated team to implement the pilot. However, VA has not yet documented how it will staff the working group, including how it will obtain the needed expertise within its existing resources.\nAccording to one VA official, staff had not been initially dedicated to the pilot because the CHIP-IN Act did not provide resources to fund a dedicated team for the pilot, so VA has needed to implement the pilot within its existing resources. This VA official also told us that they were not certain VA could support a dedicated team with existing resources. Another official indicated that VA would need to consider how to incorporate CHIP-IN into the agency’s operations if the pilot program were expanded beyond the initial pilot and then dedicate needed resources. Dedicating a strong and stable implementation team is important to ensuring that the effort receives the focused, full-time attention needed.\nTeam members with relevant knowledge and expertise. As previously discussed, VA officials told us that it would be helpful for a CHIP-IN team to include stakeholders with certain expertise, such as marketing and philanthropic development experience. In addition, representatives from the Omaha donor group said going forward, proactive public relations expertise is needed from VA headquarters (in particular, for external communications outside of the partnership) to quickly and positively address any incidents that could negatively impact VA’s ability to encourage donor participation in the pilot at the local level. For example, in the event of critical news reports about a local VA facility, such as what occurred in Omaha, donor group representatives said that additional public relations support would be helpful. VA officials also told us that a CHIP-IN team should be a collaborative effort across several offices. Specifically, one senior VA official said a cross-functional team with representation from ORP, CFM Operations, the Center for Strategic Partnerships, VHA, and the Office of Asset Enterprise Management (which has budget and finance expertise) would be useful in focusing and implementing the pilot. Leading practices for cross-functional teams include having members with a wide diversity of knowledge and expertise.\nHaving a dedicated team or working group that consists of committed members with clear roles and responsibilities could assist VA in implementing the CHIP-IN pilot. For example, the working group could focus time and attention on strengthening design of the pilot program as a whole, instead of implementing projects on a piecemeal basis. Further, clearly identifying and documenting roles and responsibilities could help relevant stakeholders define and agree upon pilot objectives as well as an assessment methodology and evaluation plan. In addition, including stakeholders with relevant expertise on the dedicated team may assist VA in identifying viable projects and negotiating partnership agreements more readily.", "The CHIP-IN pilot is a unique, time-limited opportunity for VA to test a new way of building needed medical facilities by using non-federal funding sources—donors—to leverage federal funds. Though the first project is still under way, stakeholders have already noted benefits of the donation partnership approach, including potential cost and time savings as well as learning about private sector practices that could be applied more broadly to VA construction. However, VA is not yet collecting the information it needs to support decisions by VA or Congress about the pilot. Without a strengthened pilot design—including measurable objectives, an assessment methodology, and an evaluation plan—that can help inform decisions about the scalability of the pilot, it may not be clear to VA and Congress whether the CHIP-IN approach could be part of a longer-term strategy or how lessons learned could enhance other VA construction efforts. While leadership for the pilot had not been previously assigned, a newly formed CHIP-IN steering committee is meant to focus on the pilot’s implementation. Defining and documenting roles and responsibilities for this committee—and identifying the resources needed to effectively implement the pilot—could assist VA in partnering with additional donors and creating new opportunities to meet the urgent needs of veterans.", "We are making the following three recommendations to VA.\nThe Secretary of VA should ensure that internal stakeholders—such as the CHIP-IN steering committee’s members—agree to and document clear, measurable objectives for the CHIP-IN pilot that will help inform decisions about whether and how to scale the program. (Recommendation 1)\nThe Secretary of VA should ensure that internal stakeholders—such as the CHIP-IN steering committee’s members—develop an assessment methodology and an evaluation plan that are linked to objectives for the CHIP-IN pilot and that help inform decisions about whether and how to scale the program. (Recommendation 2)\nThe Secretary of VA should ensure that the CHIP-IN steering committee documents the roles and responsibilities of its members and identifies available staff resources, including any additional expertise and skills that are needed to implement the CHIP-IN pilot program. (Recommendation 3)", "We provided a draft of this report to VA for comment. In its written comments, reproduced in appendix I, VA concurred with our recommendations and stated that it has begun or is planning to take actions to address them. VA also provided a general comment on the role of VHA in the CHIP-IN pilot, which we incorporated in our report.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Veterans Affairs, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions regarding this report, please contact me at (213) 830-1011 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact named above, Cathy Colwell (Assistant Director), Kate Perl (Analyst in Charge), Melissa Bodeau, Jennifer Clayborne, Peter Del Toro, Shirley Hwang, Terence Lam, Malika Rice, Crystal Wesco, and Elizabeth Wood made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h2_title h3_title", "h0_full h3_full h2_full", "", "", "h0_full h3_title", "", "h0_full h3_full", "h0_full", "h0_full h3_full", "h1_title", "h1_full", "h1_full", "h1_full", "h1_full", "", "", "", "", "", "" ] }

{ "question": [ "How will CHIP-IN help the VA?", "What obstacles remain for successfully implementing this pilot program?", "Which leading practice has VA begun to implement?", "What particular measures are lackign for CHIP-IN?", "Why would an assessment methodology help this project?", "How does the VA hope the steering committee helps with the implementation of CHIP-IN?", "What is the possible result of VA's failure to implement clear objectives and assessment?", "How could donation partnerships be important for the CHIP-IN program?", "What is the status of the first pilot project?", "What challenges exist for this project?", "How do VA and the donor group hope to address these difficulties?", "What are steps the VA could take in moving forward with this project?", "How does the CHIP-IN Act hope to answer the VA's pressing needs?", "What capacity does the VA have in relation to accepting donations?", "What is the first pilot project?", "How is GAO involved with the CHIP-IN Act?", "What is this report's purpose?", "How did GAO collect its data?", "To what did the GAO compare the implementation of the VA's pilot?" ], "summary": [ "The Department of Veterans Affairs (VA) is conducting a pilot program, called CHIP-IN, that allows VA to partner with non-federal entities and accept real property donations from them as a way to help address VA's infrastructure needs.", "Although VA signed its first project agreement under the program in April 2017, VA has not yet established a framework for effective design of the pilot program. Specifically, VA's pilot program design is not aligned with four of five leading practices for designing a well-developed and documented pilot program.", "VA has begun to implement one leading practice by improving its efforts to communicate with relevant stakeholders, such as including external stakeholders in key meetings.", "However, the VA offices involved have not agreed upon and documented clear, measurable objectives for the pilot program, which is a leading practice.", "Further, VA has not developed an assessment methodology or an evaluation plan that would help inform decisions about whether or how the pilot approach could be expanded.", "While VA officials said they intend to develop these items as tasks for the newly formed CHIP-IN steering committee, they have no timeline for doing so.", "Without clear objectives and assessment and evaluation plans, VA and Congress may have difficulty determining whether the pilot approach is an effective way to help address VA's infrastructure needs.", "To date, the CHIP-IN pilot suggests that donation partnerships could improve construction projects, but identifying donors and establishing a team for the pilot program have presented challenges.", "Officials from VA and the donor group for the first pilot project—an ambulatory care center in Omaha, Nebraska—said they are completing the project faster than if it had been a standard federal construction project, while achieving potential cost savings by using private sector practices.", "However, VA officials said it is challenging to find partners to make large donations with no financial return, and VA's lack of marketing and philanthropic development experience exacerbates that challenge.", "VA and the donor group agreed that a dedicated team of individuals with relevant expertise could facilitate the pilot's implementation. The new CHIP-IN steering committee could serve this purpose, but it lacks documented roles and responsibilities.", "Establishing a team with clear roles and responsibilities and identifying both available and needed staff resources could assist VA in partnering with additional donors and creating new opportunities to meet veterans' needs.", "VA has pressing infrastructure needs. The Communities Helping Invest through Property and Improvements Needed for Veterans Act of 2016 (CHIP-IN Act) authorized VA to accept donated real property—such as buildings or facility construction or improvements—through a pilot program.", "VA can accept up to five donations through the pilot program, which is authorized through 2021.", "VA has initiated one project in Omaha, Nebraska, through a partnership with a donor group.", "The CHIP-IN Act includes a provision for GAO to report on donation agreements.", "This report (1) examines the extent to which the VA's pilot design aligns with leading practices and (2) discusses what VA has learned from the pilot to date.", "GAO reviewed VA documents, including plans for the pilot program, and visited the Omaha pilot project. GAO interviewed VA officials, the Omaha donor group, and three non-federal entities that responded to VA's request seeking donors.", "GAO compared implementation of VA's pilot to leading practices for pilot design, organizational transformation, and cross-functional teams." ], "parent_pair_index": [ -1, 0, 1, 1, 1, 1, 1, -1, -1, 1, 2, 2, -1, 0, 0, -1, 0, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "Background", "Types of Renewable Energy and Technologies Used for Development", "Agency Permitting Processes for Renewable Energy Development", "BLM Has Received Hundreds of Permit Applications since EPAct 2005 and Authorized 25 Projects", "Since 2005, BLM Received 416 Wind and Solar Permit Applications and Authorized 17 Projects, and Permitting Time Frames Have Decreased", "Wind, Solar, and Geothermal Projects Applied for and Authorized since EPAct 2005 Total 5,450 Megawatts of Generating Capacity", "Agencies Have Taken Several Steps to Foster Renewable Energy Development on Federal Lands since EPAct 2005", "Agencies Have Created Policies Aimed at Improving Renewable Energy Development", "Agencies Have Taken Steps Intended to Improve Coordination Within and Across Agencies", "Agencies Have Devoted Additional Resources to Renewable Energy Development", "BLM Plans to Review Its Renewable Energy Activities", "Factors Related to Permitting, as Well as Market and Other Forces, Affect the Pace of Renewable Energy Development on Federal Lands", "Agency Officials and Others Identified a Number of Factors Related to Permitting That Can Facilitate or Hinder the Process", "Hindering Factors", "Market and Other Forces Outside the Permitting Process Also Play a Role", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Authorized Renewable Energy Projects for Which Applications Were Submitted after the Energy Policy Act of 2005", "Appendix III: Comments from the Department of Agriculture", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Renewable energy technologies generate electricity, fuels, or heat through the use of resources that are continually replenished, such as wind, sunlight, and naturally occurring underground steam and heat. Development of utility-scale renewable energy projects on federal land occurs primarily on lands managed by BLM and, to a lesser extent, on those managed by the Forest Service. Nearly all of the approximately 248 million surface acres of federal land managed by BLM are located in 11 western states and Alaska. BLM is also responsible for managing resources (e.g., geothermal, oil, and gas resources) lying on or beneath federal lands and beneath private lands for which the federal government retains mineral rights—amounting to approximately 700 million subsurface acres altogether. The Forest Service is responsible for managing 193 million acres of forests and grasslands, primarily in the western states but also throughout the country. The Fish and Wildlife Service and National Park Service manage about 90 million and 80 million acres, respectively, but under legislation that generally precludes the development of large-scale renewable energy projects. Another Interior agency, the Bureau of Indian Affairs, works with Indian tribes to develop renewable energy on tribal lands.\nRenewable energy projects on federal lands date back decades; for example, utility-scale geothermal projects have operated on both BLM- and Forest Service-managed lands since the 1970s, and several utility- scale wind projects have been operating on BLM-managed lands, primarily in California, since the early 1980s. In May 2012, the first utility- scale solar power plant began operating on federal lands, specifically on BLM-managed land. No utility-scale wind or solar development is operating at present on Forest Service-managed lands. In general, over half the nation’s electricity generated from geothermal resources comes from resources on federal lands, and about 1 percent of the nation’s electricity generated from wind and solar energy comes from resources on federal lands.", "Electricity generation using wind, solar, and geothermal energy can range from small-scale production—for example, rooftop solar panels on a home or geothermal resources heating a greenhouse—to utility-scale production of hundreds of megawatts of electricity. Figure 1 shows examples of utility-scale facilities representing each of these three energy types.\nThe most common technologies for utility-scale wind, solar, and geothermal development include the following:\nWind energy. Wind farms comprise a number of turbines built close together to produce utility-scale wind power. Horizontal-axis turbines, the most common, constitute nearly all utility-scale turbines in the United States. To generate electricity, horizontal-axis turbines capture the wind’s energy with two or three propellerlike blades mounted on a rotor sitting atop a tower. A smaller utility-scale wind farm may have 6 turbines on 100 acres and generate about 3 megawatts, and a larger wind farm may have over 100 turbines on about 10,000 acres and generate over 300 megawatts. Siting wind farms in appropriate locations is important because they can fragment wildlife habitat and plant communities, and the turbines and blades themselves may kill birds and bats, make noise, and mar views.\nSolar energy. Multiple technologies exist for utility-scale solar power. Solar photovoltaic technologies convert energy from sunlight directly into electricity, using arrays of solar panels. Concentrating solar power technologies use mirrors to focus the sun’s energy to heat water or other fluids; these fluids in turn create steam that powers a conventional turbine generator to produce electricity. An average solar plant, whether photovoltaic or concentrating, requires about 3 to 8 acres for every megawatt of generating capacity. For example, a small utility-scale solar plant occupying about 400 acres may generate 45 megawatts, and a large facility occupying over 7,000 acres may generate 1,000 megawatts. Selecting appropriate areas for the development of solar projects is essential given that such development generally precludes other uses of the same land because the surface area is graded before installation, and components are installed relatively close to one another. In the southwestern United States, where the potential for solar energy development is greatest, solar installations can affect habitat needed by various species, including those listed as threatened or endangered under the Endangered Species Act, such as the desert tortoise. In addition, some solar technologies use large amounts of water, which can be problematic in desert environments.\nGeothermal energy. Geothermal power plants extract geothermal fluids—hot water, brines, and steam—from the earth by drilling wells to depths of up to 10,000 feet. These fluids are then used to create a vapor that can power a turbine generator to produce electricity, with only the highest-temperature geothermal resources—generally above 200 degrees Fahrenheit—suitable for electricity generation. Geothermal power plants typically generate from 30 to 120 megawatts, and an individual power plant often uses resources brought to the surface through multiple wells. Mitigating for harmful effects is important in geothermal planning because geothermal operations can emit dangerous gases, and geothermal drilling operations may contaminate groundwater.\nHowever it is generated, electricity from utility-scale renewable energy development is sold to utilities and—like electricity generated by more conventional sources such as coal- or gas-fired power plants—is conveyed to consumers through transmission lines. Some of the best locations for wind and solar development, however, are in remote areas far from consumers, and transmission lines to carry the power are not always readily available in these remote areas. In addition, electricity generated from wind and solar development differs from geothermal and conventional sources because it is available intermittently, rather than continuously.", "In managing their lands, BLM and the Forest Service are required by the Federal Land Policy and Management Act of 1976 and the National Forest Management Act, respectively, to develop or revise land use plans for the areas they manage, providing for multiple uses, such as recreation, timber, and fish and wildlife, and natural scenic, scientific, and historical values. All land management actions, including renewable energy development, must conform to the approved land use plan governing the land management unit—such as a national forest—where the action is to take place. Consequently, renewable energy development can occur only where it is consistent with the applicable land use plan, which in some cases may require changing the plan. Plan revisions undergo extensive environmental analysis before being finalized.\nWind and solar energy projects on federal land require permits from the relevant land management agency through the issuance of rights-of- way. A right-of-way is an authorization to a qualified individual, business, or government entity to use a specific area of federal land for a specific amount of time for a certain purpose and with certain restrictions. Geothermal activities are administered by BLM for all federal lands (regardless of whether the surface land is managed by BLM or another agency) through the issuance first of leases and then of subsequent permits for drilling operations and other activities—similar to the process used for oil and natural gas.\nThe Federal Land Policy and Management Act of 1976 authorizes BLM and the Forest Service to issue rights-of-way over federal lands for a variety of purposes, including systems for generating, transmitting, and distributing electric energy. For new projects that may have a significant impact on the environment, the act requires applicants to submit a plan of construction, operation, and rehabilitation for the right-of-way that complies with applicable laws and regulations. An agency may issue a right-of-way only after the applicant has demonstrated that it has the technical and financial capability to construct the project for which the right-of-way is requested. Each right-of-way must include terms and conditions that, among others, protect the environment, federal property and economic interests, and the public interest. The holder of a right-of- way must generally pay its fair market value annually in advance and must provide a bond ensuring that the holder can perform the obligations—such as reclamation—required by the terms of the right-of- way.\nBLM’s permitting process for wind or solar energy projects comprises several steps prior to right-of-way issuance, as follows:\nA potential project developer contacts the BLM office responsible for land where a right-of-way is sought and obtains a standard application form.\nPreapplication meetings take place between the potential applicant and appropriate BLM field office staff to discuss the application form and its requirements, the general project proposal, land use planning in the area, and potential land use constraints.\nOnce an application has been submitted, BLM reviews it to determine whether it is complete. A complete application must include a statement of technical and financial capability to construct, operate, maintain, and terminate the system for which the right-of-way is being requested, along with a project description—called a plan of development—sufficiently detailed for BLM to evaluate the proposed project’s appropriateness and feasibility.\nBLM checks to ensure that the proposed use conforms with BLM land use plans and that no apparent conflicts exist, such as other valid rights for the same lands requested in the application.\nBLM establishes a cost-recovery fee based on the amount of time BLM estimates it will take to process the application and issue a decision and collects this fee from the applicant.\nBLM begins processing and evaluating the application, including associated environmental reviews under the National Environmental Policy Act (NEPA), Endangered Species Act, and others.\nAn approved application generally results in an authorized right-of-way, although BLM generally issues a notice to proceed before the holder of the right-of-way can begin construction. On the other hand, BLM is authorized to deny applications for various reasons—for example, if the project is not consistent with the relevant land use plan or if applicants do not provide BLM with sufficient information. At any point in the process, an applicant may choose to withdraw the application.\nThe Forest Service issues permits for wind and solar energy development under its “special use” permit process. A potential project developer files a project proposal, which must contain information such as a project description and evidence of the applicant’s technical and financial capability to carry out the project. Proposals are initially screened to ensure in part that the proposed project is consistent with applicable laws, regulations, and relevant land use plans. A second screening then examines whether the applicant has demonstrated sufficient technological and financial capability. If these conditions are met, the potential project developer may submit the proposal as a formal application, which is then analyzed under NEPA. If the project is approved, a special use permit is awarded to the applicant. Special use permits must include terms and conditions that protect the environment and require compliance with federal and state air and water quality laws, as well as with any state environmental and facility siting standards that are more stringent than federal standards. Like BLM, the Forest Service can deny applications for various reasons, including if the proposed project is inconsistent with the relevant land use plan or if the applicant fails to demonstrate sufficient technical or financial capability.\nGeothermal activities are authorized through the issuance of leases and several subsequent permits and approvals to drill fluid minerals under the Geothermal Steam Act of 1970, as amended. To explore and develop geothermal resources on federal lands, developers generally must first obtain a federal lease from BLM. Once a lease is obtained, a potential developer undergoes three primary phases seeking approval of plans and permits to explore and then develop geothermal resources and, ultimately, to construct a geothermal power plant. These plans and permits include the following: (1) an exploration plan, which describes the overall process for drilling and testing for geothermal resources; (2) one or more geothermal drilling permits, which allow an applicant to drill wells to confirm and produce geothermal resources at a given location; and (3) a utilization plan, which describes the proposed power plant and infrastructure needed to generate electricity from geothermal resources and provides much of the information needed to permit the power plant itself. A construction permit and site license must also be obtained before geothermal plant construction may begin. These three phases of geothermal permitting can be set in motion concurrently, but generally the environmental approval for the exploration phase is completed before applicants apply for geothermal drilling permits and subsequent construction permits. Applications for geothermal drilling permits can also be submitted after construction of a plant is completed if the developer determines that a geothermal field may benefit from additional wells.\nAs with many other land management activities, the agencies must comply with key environmental laws—including, among others, NEPA, the Endangered Species Act, and the National Historic Preservation Act—when amending land use plans and approving permits for renewable energy development. Compliance with these laws can involve considerable time spent by agencies and project developers on environmental analysis and consultation with multiple agencies.\nNational Environmental Policy Act of 1969. Enacted in 1970, NEPA has as its purpose, among others, to promote efforts to prevent or eliminate damage to the environment. NEPA requires an agency to prepare a detailed statement on the environmental impacts of any “major federal action” significantly affecting the environment. Regulations promulgated by the Council on Environmental Quality implementing NEPA generally require an agency to prepare either an environmental assessment or an environmental impact statement. Agencies may prepare an environmental assessment to determine whether there is a significant potential impact on the environment, which would necessitate the preparation of an environmental impact statement. If the agency determines in its environmental assessment that no significant environmental impacts will occur from the proposed action, then it prepares a finding of no significant impact. If the agency issues an environmental impact statement, it must also issue a record of decision describing the agency’s decision; identifying all alternatives the agency considered; and stating whether all practicable means to avoid or minimize environmental harm from the alternative selected have been adopted and, if not, why not. Environmental impact statements can be developed at either a programmatic level—where larger-scale, combined and cumulative effects can be evaluated and where overall management objectives, such as road access and use, are defined—or a project level, where the effects are evaluated of a particular project in a specific place at a particular time. Programmatic environmental impact statements can reduce the environmental analysis needed for individual projects proposed in the area covered by a programmatic statement. In addition, land use plan revisions typically involve the preparation of an environmental impact statement, and programmatic statements have also enabled agencies to amend multiple land use plans at the same time (e.g., land use plans for areas served by multiple BLM field offices), thereby reducing the NEPA review typically required when unit-specific land use plans are amended.\nEndangered Species Act of 1973. The purpose of the Endangered Species Act is to conserve threatened and endangered species and the ecosystems upon which they depend. Under section 7 of the act, federal agencies must ensure that any action they authorize, fund, or carry out is not likely to jeopardize the continued existence of a species protected under the act. To fulfill this responsibility, the agencies must, under some circumstances, formally consult with the Fish and Wildlife Service when their actions may affect listed species or habitat identified as critical to the species’ survival. The consultation usually ends with the issuance of a biological opinion by the Fish and Wildlife Service; this opinion may specify protective measures intended to minimize the project’s impact on the species. For example, on the basis of a biological opinion, BLM may require a wind project to incorporate techniques reducing the turbines’ potential to harm species protected under the act.\nNational Historic Preservation Act of 1966. The National Historic Preservation Act provides for the protection of historic properties. For all projects receiving federal funds or a federal permit, section 106 of the act requires federal agencies to take into account a project’s effect on any historic property, including, for example, areas of traditional religious and cultural importance to an Indian tribe. In accordance with regulations implementing the act, agencies must consult with relevant federal, state, and tribal officials to determine whether a project or activity has the potential to affect historic properties.\nOther key federal laws affecting the permitting of renewable energy projects in particular include the Migratory Bird Treaty Act and the Bald and Golden Eagle Protection Act. Each act generally makes it unlawful to “take” (defined to include, among other actions, hunting, trapping, or killing) a bird, its nest, or eggs covered by the act unless a permit has been issued under specific circumstances.\nIn addition to federal land management agency requirements, project applications are also subject to relevant state and local requirements, which vary from state to state. For example, in California, utility-scale solar projects are also subject to the California Environmental Quality Act. The California act requires a state agency to prepare an environmental impact report on any project it proposes to carry out or approve that may have a significant effect on the environment. The act generally prohibits the agency from approving a project unless it is modified to mitigate or avoid significant effects on the environment.", "Since 2005, BLM has received hundreds of permit applications for utility- scale renewable energy projects. For wind and solar projects, 17 projects have been authorized, with permit-processing time frames decreasing over time—from about 4 years to about 1.5 years. 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.", "According to agency officials and responses to our questionnaire, from passage of EPAct 2005 through May 2012, BLM received 416 permit applications for utility-scale wind and solar projects. Over 350 of the applications were for solar energy projects, almost all of which were submitted for development on BLM-managed lands in Arizona, California, and Nevada. Sixty-five applications were submitted to BLM for wind energy projects. One application was submitted for a wind energy project on Forest Service-managed land. 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. Table 1 depicts the status of all 416 wind and solar applications. (See also app. I for more information about our methodology for determining how many applications each agency received.)\nOf the 17 wind and solar projects that had been granted a right-of-way, 7 were in operation and 3 were under construction as of the time of this report. The remainder were delayed for various reasons—such as bankruptcy or changes in the type of technology applicants plan to install—or had been terminated. (See app. II for the status and details of authorized projects for all types of renewable energy.)\nOf the 109 wind and solar energy applications that were identified as pending, 2 had been approved through a signed decision at completion of environmental analysis but were not considered authorized because a right-of-way had not been issued, and 20 applications had entered the environmental analysis process as of the time of our review. The remaining applications were in earlier stages of the review process. According to BLM officials, some of these applications are not likely to be considered or approved because of where they stand in the queue of applications for that parcel of land. For example, for some especially desirable parcels, two or more applications may be in the queue for a right-of-way. Applications are processed in the order received, and applications that are further down the queue for the same parcel of land will be considered only if the first application for that parcel is withdrawn or denied. In other cases, BLM officials told us, applicants were no longer actively pursuing their applications but had not yet formally withdrawn them.\nApplications were withdrawn or denied for various reasons. According to BLM officials, some applicants withdrew because of concerns regarding the financial market and concerns over the presence of cultural and natural resources located in the project area. Regarding applications that were denied by the agency, BLM officials told us that a majority were denied because applicants did not provide sufficient information—such as technical details associated with their projects—for BLM to process the applications. The next most frequently identified reason for denial was that developers could not demonstrate the technical or financial capability to carry out their projects.\nPermitting for the 17 authorized wind and solar projects with applications submitted after EPAct 2005 took from less than half a year to almost 5 years from initial application submission to right-of-way authorization, according to our questionnaire results. 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. Some of this difference stems from the fact that most wind applications were processed using environmental assessments rather than environmental impact statements, whereas all authorized solar applications were processed using environmental impact statements—and processing applications using environmental assessments took roughly two-thirds as long, on average, as processing applications using environmental impact statements.\nIn addition, for those wind and solar applications processed using environmental impact statements, the time necessary to complete the application represented about one-third of total processing time. For wind applications processed using environmental assessments, the time to complete the application represented a smaller portion of the total processing time—about 9 percent. Most of the remainder was spent preparing for or conducting the environmental analysis (see fig. 2).\nBLM officials also reported substantially shorter processing times for wind and solar applications received in more recent years. Specifically, authorized wind and solar project applications submitted in 2006 took an average of about 4 years to process, whereas those applications submitted in 2009 averaged about 1.5 years (see fig. 3). According to BLM officials, these time frames may have decreased because BLM field office staff have gained experience in processing renewable energy applications.\nFrom EPAct 2005 through May 2012, BLM received applications for 29 new utility-scale geothermal projects, most of which were submitted from 2007 through 2009 for development in Nevada. Each component of the application process for developing utility-scale geothermal projects— exploration plans, geothermal drilling permits for individual wells, and utilization plans for constructing and maintaining the geothermal power plant—requires environmental analysis and agency approval. As of the time of this report, of these 29 proposed projects:\nBLM approved 25 exploration plans, with the remaining 4 projects suspended by the applicants.\nAssociated with the 25 projects approved for exploration, BLM approved 168 geothermal drilling permits to drill individual wells for developing these projects.\nBLM subsequently approved 8 of the 25 projects for construction and maintenance; 3 of these projects were operational, and another was under construction.\nSome of the 25 applications for which geothermal exploration plans had been approved did not progress to approval of construction because, during the exploration phase, applicants did not find sufficient geothermal resources to justify constructing a plant. In other cases, according to agency officials, financial difficulties constrained applicants’ ability to drill wells and construct power plants. A few other projects were early in the exploration process and had not yet moved to the construction phase, according to BLM officials.\nTime frames for obtaining the multiple approvals and permits necessary for utility-scale geothermal power plants ranged from 1 to 4 years, in part because of the time needed to explore and find adequate geothermal resources and also because of the time needed to process applications at each approval stage. On average, it took about 1.3 years for approval of exploration plans, about 124 days for approval of drilling permits, and about 1.3 years for approval of construction plans.", "BLM-authorized renewable energy projects sited on federal lands and applied for since EPAct 2005 have a total electricity-generating capacity of about 5,450 megawatts—a substantial increase over the capacity for renewable energy generation approved before EPAct 2005, which was about 1,360 megawatts. Of this 5,450-megawatt capacity, authorized wind projects contributed about 800 megawatts, solar projects about 4,200 megawatts, and geothermal projects about 450 megawatts.\nAs previously noted, EPAct 2005 established a goal that the Secretary of the Interior “seek to have approved non-hydropower renewable energy projects located on public lands with a generation capacity of at least 10,000 megawatts of electricity” by 2015. The 5,450 megawatts for authorized projects discussed above contribute to this goal, as do megawatts for projects that have been approved but for which an authorization has not been issued. Other megawatts that contribute to this goal include those from renewable energy projects on non-Interior lands that rely on BLM rights-of-way for “connected actions” essential to the project, such as transmission corridors. BLM officials also told us that the megawatts associated with projects approved before EPAct 2005 contribute toward meeting the goal. In October 2012, with the approval of a large wind energy project, Interior officials announced that the department had surpassed the 10,000-megawatt goal.", "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. In addition, BLM—partly in response to our review—has drafted a policy to help guide and assess these efforts to help ensure they are achieving their intended purposes.", "Since 2005, BLM has developed and revised policies aimed at improving renewable energy permitting and development on its lands through various means. Other agencies—including the Fish and Wildlife Service and the Forest Service—have also developed renewable energy policies. Although some of these steps began before EPAct 2005, BLM officials said they saw the need for continual improvements and changes, given the sharp increase in applications for renewable energy permits since EPAct 2005.\nBLM has developed and revised policies intended for improving renewable energy development on its lands by means of programmatic environmental impact statements, designation of priority projects, instruction memorandums, and rulemaking.\nOne 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). These statements enabled BLM to amend multiple land use plans simultaneously to provide for renewable energy development on BLM- managed lands; in some cases, the statements also established new policies and identified best management practices for energy development. According to BLM officials, the statements were intended to streamline the permitting process for renewable energy development by shortening the amount of time needed for project-by-project environmental impact analyses. The solar statement differed from those for wind and geothermal energy in that it identified specific areas of federal lands most suitable for development—known as solar energy zones—and created incentives, including economic incentives and more streamlined permitting, for development to occur in those locations.\nProgrammatic environmental impact statements can be particularly useful with regard to renewable energy development because many of BLM’s land use plans did not address such development at the utility scale and amending them through a programmatic review was more efficient than doing so one by one. For example, relying on the analysis in the wind statement, BLM amended 52 land use plans, in some cases incorporating wind energy development into land use plans where that energy type had not previously been addressed but where proponents had shown an interest and in other cases restricting wind energy development from wildlife habitat where the agency believed adverse effects could not be mitigated. Without the programmatic statement on wind energy, these land use plans would have had to be amended individually, each with its own associated environmental review.\nMoreover, in using such programmatic statements, BLM helped address concerns that NEPA’s requirements for environmental analysis can be overly time-consuming. According to BLM officials, the geothermal programmatic environmental impact statement approach has shortened the time it has taken BLM staff to ensure the accuracy of NEPA documentation for site-specific activities such as drilling, in part because it supplied a template for environmental assessments. Additionally, BLM officials anticipate that environmental analysis for applications in the new solar energy zones will be streamlined because BLM can tier these analyses to the relevant programmatic analysis.\nIn 2009, according to Interior officials, BLM began selecting projects to be given higher priority in application processing so as to focus agency efforts and limited resources on those projects it believed had a greater likelihood of being approved. Recognizing the need for explicit criteria, BLM in 2011 established criteria for prioritizing wind and solar energy projects. These criteria took into consideration natural and cultural resource values—seeking to direct development away from sensitive areas. According to officials, BLM expected that projects on less sensitive lands would take less time to process because these projects would require less consultation, environmental analysis, and mitigation. In addition, BLM also considered those projects for which the application process had progressed far enough to start formal environmental review. Initially, BLM selected priority projects on its own but—recognizing that other agencies are integral to the permitting process or may be affected by project development on BLM-managed lands—it has since coordinated on project selection with other agencies, including the Fish and Wildlife Service, National Park Service, Bureau of Indian Affairs, and Department of Defense.\nSome BLM officials told us that additional agency attention paid to priority projects has facilitated processing and streamlined the approval process. For example, the record of decision for all priority projects is now signed by the Secretary of the Interior, which means that the decisions, if challenged, cannot be appealed to the Interior Board of Land Appeals. This board’s review can lengthen approval time frames, according to BLM officials.\nSince 2005, BLM has issued multiple instruction memorandums to its field offices containing new policies aimed primarily at development of wind and solar energy. A significant increase in wind and solar permit applications beginning in 2007—many of which BLM officials said were speculative in nature or not detailed enough for consideration—coupled with BLM’s relative inexperience in processing such applications made managing the applications a challenge. Several of the memorandums stemmed from a lessons-learned workshop on renewable energy held in January 2011, where officials from several Interior agencies, as well as industry groups, identified challenges and developed suggestions for improvement. The following month, on February 7, 2011, BLM issued three instruction memorandums specifically targeted at clarifying NEPA documentation, facilitating the application review and approval process, and improving the quality of project applications. The instruction memorandums are as follows:\nA memorandum aimed at clarifying BLM’s policy under NEPA as it relates to analyzing applications for utility-scale renewable energy projects. This memorandum provided guidance to BLM staff on developing and presenting certain information required for environmental impact statements related to renewable energy projects. For example, as part of the NEPA process, BLM is to analyze reasonable alternatives for development. Given the various technologies available for renewable energy development, some alternatives may be proposed that are not technically or economically feasible. This memorandum states that reasonable alternatives include “those that are practical or feasible from the technical and economic standpoint and using common sense, rather than simply desirable from the standpoint of the applicant.” It also notes that information about the applicant’s interest and objectives, including any constraints or flexibility in a proposal, is needed to help BLM determine which alternatives to analyze in detail under NEPA and, conversely, which alternatives to eliminate from detailed analysis.\nA memorandum providing updated guidance to facilitate the application review and approval process by directing early coordination between BLM and other stakeholders. This memorandum requires that all prospective applicants participate in at least two preapplication meetings with BLM before the agency can accept an application for solar or wind projects. The first such meeting, between an applicant and BLM, helps ensure that the applicant is familiar with BLM’s right-of-way process and allows discussion of issues such as the applicant’s proposal for the project, any land use and siting constraints, potential environmental issues, and potential alternative site locations. The second meeting is to initiate coordination with other federal agencies, such as the Fish and Wildlife Service, as well as with tribal, state, and local government agencies; to provide an additional opportunity to discuss potential environmental and siting constraints; and to modify the proposed project, if necessary, before an application is submitted.\nA memorandum aimed at improving the quality of project applications, thereby enabling BLM officials to better identify applicants with a serious interest in project development. This memorandum sought to enable BLM to distinguish between applicants that are serious about developing a renewable energy project and those considered to be land speculators. To enable these distinctions, BLM clarified the expectation that wind and solar project applications are to include detailed project descriptions before BLM can begin further processing and that the agency will not accept plans that are still in the conceptual phase. Because right-of-way permit applications are processed in the order in which they are received, identifying serious applicants early in the process can help ensure that BLM’s time is spent reviewing and processing projects likely to come to fruition.\nBLM in 2011 undertook two rulemaking actions to facilitate the development of utility-scale wind and solar power on federal lands. First, in April 2011, BLM issued a temporary rule to immediately prevent the filing of mining claims in areas contemplated for wind or solar energy development, plus a related rule that would make permanent the temporary ban on mining claims. According to agency statements in the temporary rule, over the previous 2 years, hundreds of new mining claims were filed for areas where wind and solar right-of-way energy applications had been submitted. Also, according to these agency statements, many of these claims were likely to be speculative. Specifically, the temporary rule stated that these claims were filed not for true mining purposes but rather for the mining claimant to try to compel some kind of payment from the renewable energy applicant before relinquishing the mining claim. BLM officials told us that the agency expected to publish the final rule in January 2013. Second, in December 2011, BLM solicited public comments to be used in preparing a proposed rule to establish a competitive process for leasing federal lands for solar and wind energy development. According to agency statements in the proposed rule, a competitive process—rather than the first-come, first-served process currently in use—would enhance the agency’s ability to capture fair market value and ensure fair access to leasing opportunities. The rulemaking would establish competitive bidding procedures for lands within designated solar and wind leasing areas, define qualifications for potential bidders, and structure the financial arrangements necessary for the process. The agency expects to issue a proposed rule in January 2013.\nIn 2007, BLM issued a rule revising the agency’s geothermal resources leasing regulations to implement EPAct 2005. This rule established, among other things, a new process for competitive leasing, under which BLM is generally to issue a lease to the highest bidder.\nIn addition to new policies created by BLM, the Fish and Wildlife Service in March 2012 issued wind energy guidelines aimed at improving utility- scale wind energy development to reduce potential impacts to species of concern—including migratory birds, bats, bald and golden eagles, and sage grouse—regardless of whether projects are proposed for federal or private lands. Among other aims, these guidelines are intended to promote compliance with wildlife laws and regulations, encourage scientifically rigorous assessments proportionate to risks facing species of concern, and mitigate potential adverse effects on species of concern and their habitats. The guidelines assist developers in identifying species of concern that their proposed projects may affect and also discuss risks to those species. Adherence to these guidelines is voluntary. Regarding Forest Service-managed lands, in August 2011, the Forest Service amended its special use directives to add provisions specific to wind energy projects. Previously, agencywide policy was to deny wind energy development proposals if the proposed development could reasonably be accommodated on lands not managed by the Forest Service. Now, however, this policy is to be considered in conjunction with the agency’s encouragement of wind energy facilities on Forest Service-managed lands to help meet the nation’s energy needs. No such directives exist for solar projects, although agency officials told us they are drafting such provisions and expect to complete them in 2013. In general, officials with the Forest Service told us that interest in utility-scale wind and solar development on their lands is considerably less than for BLM-managed lands and that, as a result, the Forest Service has relied primarily on BLM guidance when considering proposals for development.", "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. Specifically, coordination has been formalized through regularly established meetings and memorandums of understanding across Interior agencies, as well as with other federal agencies and state and local governments.\nTo facilitate coordination on renewable energy activities among its component agencies, Interior instituted weekly meetings among its component agency officials at the national level to discuss issues concerning individual renewable energy applications and projects, particularly those identified as priority projects. These “strike team” meetings were intended to formalize coordination to ensure that officials across component agencies are aware of concerns that could affect the development of projects—including critical habitat, cultural or tribal issues, conflicts with national park boundaries or interests, and other environmental issues—and have a recurring forum where such concerns may be aired and resolved. BLM’s national and state renewable energy coordination offices also hold weekly meetings to discuss the status of projects and other issues as they come up.\nIn several cases, coordination between Interior agencies within certain regions has been formalized through a memorandum of understanding. In January 2008, for example, in recognition of the increase in renewable energy permit applications for projects in Southern California, BLM’s California Desert District and the Fish and Wildlife Service’s Ventura and Carlsbad offices signed a memorandum of understanding to help ensure efficient completion of required consultation under the Endangered Species Act. This memorandum defines the process, products, actions, time frames, and expectations needed to complete the process. In addition, in June 2011, a memorandum of understanding was signed between BLM’s California state office and the National Park Service’s Pacific West Region. The memorandum generally documents coordination procedures the two agencies are to follow in instances where proposed renewable energy projects in the region may affect lands under the jurisdiction of the National Park Service. According to Park Service officials, a similar memorandum is being explored between the National Park Service’s Pacific West Region and BLM’s Nevada state office. Interior officials told us that, given the success of the California effort, the agency is discussing potential amendments to agency manuals to ensure that closer coordination occurs between each BLM state office and relevant National Park Service regional offices. Before putting such amendments in place, however, the agency wants to evaluate different tools to encourage and reward staff for engaging in coordination.\nBLM has also formalized its coordination on renewable energy with other federal agencies, as well as with state and local entities. For example, in 2006 BLM and the Forest Service signed a memorandum of understanding to implement certain geothermal leasing and permitting provisions of EPAct 2005, in part to reduce the backlog of geothermal leasing applications. In addition, over the past decade, BLM and the Department of Energy’s National Renewable Energy Laboratory have maintained a relationship whereby the laboratory has provided expertise to BLM in support of BLM’s management of renewable energy development. According to laboratory officials, the relationship has evolved so that the laboratory provides BLM with assistance on a systematic rather than task-by-task basis. For example, in 2011 BLM and the laboratory signed an interagency agreement for the laboratory to provide technical assistance and training for fiscal years 2011 through 2013. Given the laboratory’s expertise, laboratory officials have in some cases assisted BLM offices with individual renewable energy applications by evaluating the technical feasibility of certain proposals. In addition, BLM state offices are working in partnership with state and local agencies. In California, multiple federal land management agencies are working with the California Energy Commission and the California Department of Fish and Game in a collaborative effort to develop the Desert Renewable Energy Conservation Plan for 22.5 million acres of public and private land in Southern California. This effort, initiated under a 2008 memorandum of understanding, is intended to develop a conservation strategy to provide for protection and conservation of the natural resources within the Mojave and Colorado Desert Regions while allowing solar and other renewable energy development in a manner that avoids or minimizes environmental impacts. According to Interior officials, other BLM efforts to coordinate with states have occurred in Wyoming and, to a lesser degree, in Arizona, Nevada, and New Mexico. Officials told us that success in developing renewable energy projects depends on collaboration with states, making such partnerships important.", "From fiscal year 2010 to fiscal year 2012, BLM reported more than doubling the program funding devoted to wind and solar energy activities, from about $8 million to about $16.5 million. During that time, BLM added 64 full-time-equivalent staff—tripling its staff from 32 in fiscal year 2010 to 96 in fiscal year 2012. 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. From fiscal year 2009 to fiscal year 2012, BLM reported collecting about $16 million through these fees; BLM officials estimated that cost- recovery fees represent about half of the total funds received by BLM field offices.\nIn contrast, funding and staffing for geothermal energy leasing and permitting declined in recent years after the expiration of temporary funding authority created by EPAct 2005. Specifically, the act established the Geothermal Steam Act Implementation Fund to be used to expedite the development of geothermal energy. The act required that certain rents and royalties paid as part of geothermal leases go into the fund until the end of fiscal year 2010. BLM used these funds for coordinating and processing geothermal, permits, among other uses. Authorization for this fund has expired, and after expiration, BLM’s geothermal-related obligations declined from about $7.9 million to about $2.7 million from fiscal year 2010 to fiscal year 2012, and the number of full-time- equivalent staff was reduced from 45 to 35 during that time.\nThe funding and staffing increases for wind and solar energy development were in large part used by BLM to establish renewable energy coordination offices at the national and state levels to, among other duties, help process wind and solar right-of-way permit applications in the four western states with significant renewable energy activity: Arizona, California, Nevada, and Wyoming. BLM also established similar but less well-developed entities, known as renewable energy teams, in several of the other western states with less-significant renewable energy activity.\nInterior agencies besides BLM have also recently devoted additional resources toward renewable energy efforts. To accommodate the workload associated with increased interest in renewable energy development, the National Park Service in 2010 hired a permanent, full- time national external renewable energy coordinator and six full-time- equivalent staff focused on coordination for renewable energy permitting. According to agency officials, these positions are supported by using funds from the agency’s existing programs. Other National Park Service staff also contribute time to renewable energy efforts on BLM-managed lands as a collateral duty. For example, agency officials told us that several agency staff representing national parks in Southern California have spent time working with BLM and project applicants on renewable energy proposals near national parks in the region; these officials told us they work with BLM and applicants to minimize potential negative effects on park resources, such as impaired views, increased noise and light pollution, and disruption to area wildlife.\nThe Fish and Wildlife Service also reported receiving more appropriated funds for engagement in renewable energy permitting. Specifically, in fiscal year 2010, the agency’s Conservation Planning Assistance Program received a $1.5 million increase for technical assistance on renewable energy projects. In fiscal year 2011, this program received an additional $2 million for these activities, for a total increase of $3.5 million. This $3.5 million increase continued for fiscal year 2012. The program’s funding covered not only time spent contributing assistance to projects proposed on federal lands but also to those proposed on private lands. Some of this funding helped address region-specific increases in workloads. For example, according to agency officials, in fiscal years 2011 and 2012, the Fish and Wildlife Service’s Pacific Southwest Regional Office was able to add two to three full-time-equivalent staff positions at the state level and to conduct consultation and project planning at five offices working on renewable energy in the region. Nonetheless, several Fish and Wildlife Service officials told us that they completed their increased federal lands renewable energy-related work as a collateral duty done in conjunction with other work responsibilities.\nInterior has taken steps to address its component agencies’ concerns over the amount of time and funding they commit to the renewable energy permitting process, according to agency officials. For example, Interior has prepared a draft secretarial order delegating authority for cost recovery to the Bureau of Indian Affairs, Fish and Wildlife Service, National Park Service, and others to allow these agencies to collect cost- recovery fees to help pay for their activities as part of the permitting process. A final order is expected to be issued in 2013.\nAccording to Forest Service officials, interest and activity in developing wind and solar energy projects on Forest Service-managed lands have been at a relatively low level, and no specific Forest Service increases in funding or staff comparable to BLM’s have been dedicated to renewable energy development. Forest Service officials told us that funding is received through recovery of costs from applicants when needed for specific renewable energy activities. The agency maintains two expert advisors on technical and legal issues related to geothermal leasing, as well as other personnel who work on renewable energy projects and policy as collateral duties. Nevertheless, the Forest Service does not dedicate specific funding to wind, solar, or geothermal energy development; rather, funding for such development is included in agency budget line items covering broader activities. According to Forest Service officials, they do not track the amount the agency spends on renewable energy permitting 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. The memorandum—developed partly in response to our review—directs the national renewable energy coordination office to establish an Oversight and Implementation Plan. This plan is to establish an internal review to be performed annually by the national renewable energy coordination office, beginning in fiscal year 2013. The review is intended to ensure BLM compliance with renewable energy regulations and policies and to ensure that guidance is applied appropriately and consistently throughout BLM. In addition, the plan is to call for collaboration among the various offices in the development of future renewable energy policies.\nDuring our review, some agency officials and stakeholders acknowledged the importance of greater resources and coordination in facilitating the permitting process but also informed us of areas for improvement— thereby indicating the importance of assessing the permitting process. For example, one agency official and some stakeholders told us that BLM field offices were not always consistent in their approach to renewable energy permitting or in their willingness to coordinate on renewable energy projects; they said that BLM could do more to help ensure consistency in coordination. An ongoing oversight and improvement plan can assist BLM in identifying needed improvements to its renewable energy permitting process.", "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. Other factors identified as important include some related to broader market forces, which operate outside of the permitting process and therefore beyond the agencies’ direct control.", "Agency officials, industry representatives, and other stakeholders we spoke with identified several key factors affecting the processing of renewable energy applications. 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.\nFactors identified as facilitating the permitting process are generally related to coordination among the parties involved in permitting and the availability of BLM resources.\nBLM respondents identified the quality of coordination between parties involved in permitting individual projects as among the top factors that facilitated the permitting process for each of the three energy types we reviewed. Such coordination occurs throughout the application process, including the initial request for an application; when key portions of the application, such as the plan of development, are made final; when environmental analyses are conducted and NEPA documentation is prepared; and the issuance of the right-of-way. It also happens among several parties—between the applicant and BLM staff, among staff within BLM, and between BLM staff and staff from other federal and nonfederal agencies.\nBLM respondents identified one forum for coordination as particularly helpful in facilitating the permitting process: participation in preapplication meetings, where coordination occurs among multiple parties. These meetings, which take place before an applicant submits an initial application to BLM, are meant to provide opportunities for applicants, BLM officials, and other stakeholders to discuss the permitting process, early concerns about project proposals, and other issues. According to some respondents to our questionnaire, applicants who spent time coordinating with stakeholders early could generally move through the permitting process more easily than those who had not. Several respondents acknowledged that preapplication meetings could be time- consuming, but these respondents also said that such meetings could help ensure that applicants understand BLM’s permitting process and required documentation, select appropriate locations to site projects (e.g., to avoid areas with environmental or other constraints), and submit an adequate application. Concerning one application, a respondent explained that frequent and early coordination between BLM and the applicant clarified expectations for both parties as to what information the applicant needed to provide to BLM, thus preventing delays associated with unanticipated surveys or studies that might otherwise have been required.\nSuch coordination often involved other federal agencies, which BLM respondents and others identified as important. Some Fish and Wildlife Service officials told us that meeting with applicants at the preapplication stage can help ensure that potential harm to species and ways to mitigate that harm are identified and addressed in the application. For example, particularly with wind energy projects, officials said they work with applicants to mitigate not only harm to threatened and endangered species and their habitats under the Endangered Species Act but also harm to other species protected under laws such as the Migratory Bird Treaty Act and Bald and Golden Eagle Protection Act. Fish and Wildlife Service officials also said that they work with applicants at the preapplication stage to prepare species conservation plans and issue species-specific Fish and Wildlife Service permits. These officials said that these early meetings and documentation from applicants provide both the applicant and the agencies greater certainty that the applicant can comply with relevant species protection laws. Similarly, a respondent told us that for one approved project, early coordination between the applicant and officials from a nearby Air Force base helped the applicant select a site that was less likely to interfere with the base’s training needs, thereby limiting the potential for conflict as the application progressed through the permitting process. BLM respondents also identified coordination with state, local, and tribal governments as facilitative, although to a lesser degree than coordination with federal agencies.\nMost representatives of industry and environmental groups we spoke with commended BLM’s efforts to enhance coordination, but they suggested that improvements could still be made. For example, one industry representative suggested that preapplication meetings could be more beneficial if BLM designated one staff member as coordination leader for a particular project. This individual could then be responsible for setting deadlines and holding the various other participants accountable for completing their respective tasks in a timely manner.\nBLM respondents frequently cited the availability of resources as an important factor in the permitting process. They identified the importance of (1) cost-recovery funds provided by applicants to cover agency permitting costs for wind and solar energy projects and (2) internal BLM resources used to support activities such as administration and policy development.\nThe cost-recovery funds that BLM requires applicants to submit before it processes wind or solar applications pay for agency permitting expenses, such as reviewing applicant-provided information and studies, preparing environmental analyses, and recording information in agencywide databases. According to BLM officials, BLM’s expenses are generally substantial given the scale of most renewable energy projects and required reviews, ranging from $50,000 to almost $400,000. Without receiving at least a portion of its expenses in the form of cost-recovery funds, BLM does not begin processing an application; any delay in receipt of these funds can cause additional delays throughout the permitting process. Several respondents noted that in certain cases the applicants never provided cost-recovery funds, even after multiple BLM requests.\nIn addition to cost-recovery funds, BLM provides internal resources to support administrative activities not specific to individual applications, as well as to maintain adequate staffing with sufficient expertise to process renewable energy applications. BLM officials and industry representatives told us that when BLM first began receiving applications for utility-scale solar development, it did not have expertise in either solar energy development or in processing permits for this type of right-of-way. Over the last few years, however, BLM has increased the number of its staff and the amount of funding dedicated to renewable energy development and has provided training opportunities to its staff who process applications; agency officials and industry representatives also told us that staff have become more knowledgeable through experience.\nRepresentatives from industry and environmental groups and officials from agencies other than BLM concurred that BLM staff have in more recent years become more knowledgeable about renewable energy in general and the permitting process specifically. Several commented that the pace at which an application was processed depended on the abilities of the assigned project manager and the emphasis placed on renewable energy by the field office processing the application.\nBLM respondents to our questionnaire commonly identified two other factors as facilitating the permitting process, although these factors were cited less frequently than those related to coordination or resources. One of these other factors was agency policy and guidance related to energy development. Specific policies identified by respondents as particularly helpful for wind and solar applications included programmatic environmental impact statements; instruction memorandums from BLM, including the memorandum addressing NEPA compliance for utility-scale renewable energy development; and a 2003 memorandum containing interim guidance from the Fish and Wildlife Service on avoiding and minimizing wildlife impacts from wind turbines. In addition, one industry representative told us that BLM’s solar programmatic environmental impact statement is effective in screening lands for the presence of cultural and biological resources. Another industry representative called the Fish and Wildlife Service’s 2012 wind energy guidelines an effective tool that clearly describes agency expectations.\nAnother facilitating factor identified was the selection of applications as priority projects. Several respondents and industry representatives told us that a priority designation helped because the various stakeholders involved in the permitting process dedicated their attention to reviewing priority projects. Others, however, were less certain of benefits. A few industry representatives told us they did not observe a reduction in application processing times. Also, one BLM respondent told us that, although the designation of a solar application as a priority project facilitated the permitting process for this project, it also encouraged officials to process the application faster than was appropriate, given that the necessary biological and cultural surveys had not been completed.", "BLM respondents to our questionnaire and other agency and industry representatives we spoke with identified several key factors that could delay the processing of renewable energy applications, such as application quality and other applicant-related factors, as well as factors related to managing for natural and cultural resources.\nRespondents identified the quality of a renewable energy application, including key components such as the plan of development for wind or solar projects, as among the top factors hindering the permitting process. The plan of development for wind and solar projects is to include information on structures and facilities associated with the proposed project, engineering specifications, maps, and other items. Similarly, applications for geothermal power plants are to include a detailed utilization plan, completed and signed facility construction permit, and completed and signed site license. According to BLM officials, this information allows them to determine the scale and scope of the proposed development and begin analyses to determine project feasibility. The agency does not begin processing applications until the information is complete. Since many applications require more information than is initially submitted, this step may delay processing, depending on how much additional information is requested by BLM and the applicant’s ability to respond. For example, one respondent to our questionnaire said that in addition to poorly defining the project, an applicant continually altered key application components—including project scope, design, and technology—which made it difficult for BLM officials to analyze impacts on natural and cultural resources and process the application in a timely fashion. BLM officials also told us that some applicants did not include detailed information necessary to begin review, such as technical plans for engineering and hydrological design or stormwater management, which delayed processing of the applications. When critical components like these are missing from an application, delays result. BLM questionnaire respondents reported that in some instances applicants did not respond to the agency’s requests for additional information or responded with incomplete information, leading to denial of their applications. As noted, our analysis showed that the most prevalent reason for denial was that an applicant did not provide information BLM requested that was needed to process the application.\nOn the other hand, several industry representatives told us that the amount of documentation necessary to develop a project on federal land is, in their view, at times excessive. Some representatives told us that additional information and studies requested by the agency can be time- consuming and expensive to provide, thereby delaying projects, and, in their opinion, are not always necessary. For example, one applicant for a wind energy project wanted to incorporate into the application studies on golden eagles, a protected species, that had recently been completed for areas close to the proposed project site. The Fish and Wildlife Service, however, requested site-specific studies, which could take 3 to 5 years.\nSimilarly, several questionnaire respondents identified applicants’ requests for BLM to delay the processing of their applications as hindering the permitting process. The respondents noted several reasons that applicants might make such requests, including the need for more time to respond to BLM’s requests for additional information and changes to agency policies or fees. For example, applicants might have requested a delay because they wanted to wait until the effects of BLM’s recently issued programmatic environmental impact statement for solar energy development could be determined. In other cases, costs associated with development—such as BLM rental fees paid by the applicant for siting a project on federal land or the costs required for mitigation efforts necessary at the project site—can cause an applicant to request a processing delay. One questionnaire respondent reported that an applicant for a solar energy project requested a BLM delay when BLM quoted rental rates higher than the applicant expected.\nBLM questionnaire respondents identified several other factors that, to a lesser degree, hindered the processing of applications, including managing for the presence of threatened or endangered species, or other species of concern, and managing for the presence of tribal, cultural, or historic resources. For example, for one pending solar application in Nevada, BLM officials noted that the applicant is performing additional wildlife and environmental analyses and consultation with the Fish and Wildlife Service to avoid impacts to the desert tortoise. For other projects, managing for the presence of tribal, cultural, or historical resources can contribute to the time it takes to process an application. In some areas, a burial site or a place of sacred significance may require extensive tribal consultation. For one project, an industry representative told us that extensive tribal consultations led to the applicant’s changing the project’s design about 15 times. Ultimately, according to this representative, the applicant spent thousands of hours on archaeological reviews and moved the project to prevent any degradation of culturally sensitive areas. This representative told us that the lack of specificity in the regulation guiding tribal consultation makes it difficult to ascertain whether an applicant’s proposed mitigations for sensitive resources are likely to be adequate. As a result, according to this representative, lawsuits may still ensue, further delaying development even after a project has been approved.\nBLM questionnaire respondents also identified requirements for state or local laws as factors that can hinder the permitting process. Specifically, several respondents told us that compliance with the California Environmental Quality Act can add procedural layers to processing applications in California.", "BLM questionnaire respondents, other BLM and federal agency officials, and industry representatives we spoke with also identified as important some factors outside of the permitting process and beyond agency control. Specifically, market forces and other factors influence whether renewable energy projects on federal lands are proposed, funded, and completed. Some of these factors relate to demand for renewable energy, including competition from electricity generated through other sources, and others relate to supply, including the availability of electrical transmission lines. Such forces can play a key role for any utility-scale renewable energy project by setting the financial backdrop for the project, according to industry representatives. For an applicant to secure financing for renewable energy projects on federal lands, investors generally require some assurance that the costs to construct the project and produce the energy will not exceed revenues from selling that energy. For example, BLM officials we spoke with told us that one reason that some renewable energy projects were withdrawn was that financing was not available because of concerns about whether the project could repay its investment costs. These officials said that financing for permitting, construction, and other aspects of development is more likely to be available to applicants who demonstrate that demand is sufficient and that the cost of supplying power allows for profitability.\nAccording to agency officials and industry representatives, demand for electricity from renewable sources can be influenced by such factors as competition from other sources of energy and the presence of renewable portfolio standards. As natural gas prices have decreased in recent years, renewable energy sources may have become less attractive to electricity purchasers and investors. Because wind and solar energy development provides an intermittent supply of electricity, purchasers and investors may find other, more steady supplies of electricity more attractive. In addition, demand for renewable energy may be affected by the presence of renewable energy portfolio standards; at least 29 states have such standards in place, under which utilities are required to derive a minimum percentage of total electricity they sell from renewable energy sources. Such standards may increase demand for renewable energy overall, but because an increasing number of these state standards have been or are nearly met, the utilities required to comply with these standards may no longer be interested in purchasing additional renewable energy within the next several years, according to industry representatives. BLM respondents noted that applicants sometimes struggled to find buyers for their electricity and, consequently, had difficulty pursuing their projects. Industry representatives told us that establishing power purchase agreements—contracts between energy producers and energy purchasers—was a key part of the success of their renewable projects, and several questionnaire respondents noted that some wind and solar projects could not move forward because the applicants were unable to secure such agreements. In one case, a BLM official noted that the inability of a solar project to secure a power purchase agreement contributed to the cancellation of a 700-megawatt project after BLM had authorized the project’s right-of-way permit.\nOfficials we spoke with also identified factors influencing the cost of supplying renewable energy—most notably the accessibility of transmission lines and the availability of government incentives—as having a role in the pace of energy development on federal land. According to agency officials and industry representatives, the availability of nearby power transmission and distribution lines and access to these lines are critical to the economic viability of a renewable energy project, regardless of whether the project is located on federal or nonfederal lands. Often, however, renewable energy sources are abundant in areas where transmission lines are scarce—increasing the overall difficulty and cost of supplying renewable energy. Moreover, the construction of new transmission lines can be costly and can face its own regulatory and environmental challenges, including separate environmental analyses. For example, several BLM officials in Wyoming told us that not having a sufficient transmission infrastructure has been a deciding factor in some companies’ decision to suspend or halt their renewable energy projects. In addition, we were told that the availability of government incentives can affect the cost of producing electricity from renewable resources. For example, the federal tax code includes special tax incentives for solar energy development, which can help increase the potential profitability of planned solar projects. Such tax credits can be useful, although less so if available financing is limited, because without financing for an initial investment, projects that might benefit from tax credits would not be built in the first place. As part of a federal response to the 2008 recession, the American Recovery and Reinvestment Act of 2009 expanded a number of existing tax incentives, including ones for renewable energy development. Several industry and government officials we spoke with cited the Energy Production Credit (also known as the Production Tax Credit) for wind facilities in particular as an important incentive for encouraging the development of several new wind projects. However, this tax credit was scheduled to expire at the end of calendar year 2012, which, according to some industry representatives, likely contributed to a reduction in the number of proposed wind projects. According to a respondent to our questionnaire, this uncertainty hampered one applicant’s ability to attract investors, and the applicant ultimately found the project no longer economically viable.", "We provided a draft of this report for review and comment to the Departments of Agriculture, Energy, and the Interior. In written comments (reproduced in app. III), the Department of Agriculture concurred with our findings, while the Departments of Energy and the Interior had no comments.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretaries of Agriculture, Energy, and the Interior; appropriate congressional committees; and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions regarding this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to the report are listed in appendix IV.", "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.\nTo address our first objective, we identified applications for utility-scale onshore wind and solar projects submitted to the Bureau of Land Management (BLM) after enactment of EPAct on August 8, 2005, through May 31, 2012, by asking the BLM renewable energy coordination office to query the BLM database designed to track such applications. We also identified geothermal drilling permit applications and associated utility- scale geothermal project applications submitted to BLM during the same time period by asking BLM to query the agency database designed to track geothermal permits. We contacted BLM because it is the agency responsible for permitting almost all applications submitted for renewable energy development on federal lands. We used the results of this query to group the permits according to the utility-scale projects of which they were a part. After reviewing the lists of applications and correcting for any obvious duplication and other errors, we sent each BLM state office a list of applications for projects located in that state and asked officials to verify our lists’ accuracy. In some instances, we deleted some applications because BLM officials informed us that certain applications were submitted to BLM before enactment of EPAct or were submitted for resource exploration or testing without being part of utility-scale development. BLM officials also identified applications that met our criteria but did not appear in their database; we added those applications to our analysis. We identified a total of 65 permit applications for wind projects, 351 for solar projects, and 29 for geothermal power plants, as well as 405 applications submitted for geothermal drilling permits from August 8, 2005 through May 31, 2012.\nWe distributed an electronic questionnaire to BLM officials for all projects meeting our criteria. We developed questionnaires for each energy type. For each application, we asked respondents to identify the dates of certain milestones (e.g., the date the application was received or the date it was considered complete) and the factors that facilitated or hindered processing of that particular application. Although the databases contained some of the milestone information we collected through our questionnaires, they did not include information for each of the dates needed for purposes of our analysis. To encourage questionnaire recipients to respond, we held meetings with national and state BLM officials to explain the questionnaire’s purpose, followed up by telephone and e-mail, and obtained a 100 percent response rate for projects meeting our criteria.\nWe sent the completed questionnaires to a third-party contractor to compile the results, checked the compiled results to ensure their accuracy and reliability, and followed up as needed to clarify incomplete or ambiguous responses. In some cases, we eliminated certain responses from our analysis because we could not obtain sufficiently complete information from the respondent. Because our questionnaire did not sample from a population, no sampling errors occurred. Nevertheless, the results of any questionnaire may be subject to errors, commonly referred to as nonsampling errors. For example, differences in how a particular question is interpreted, in the sources of information available to different respondents, or in how data are entered into a database or analyzed can introduce unwanted variability into questionnaire results. We took steps in questionnaire development, data collection, and data analysis to minimize these nonsampling errors. For example, before developing the questionnaires, we met with BLM officials at headquarters, state, and field offices to discuss the permitting process. We also reviewed current policies and legislation relevant to our questions and the analysis of the responses. The questionnaire was designed by GAO questionnaire specialists in conjunction with staff having subject-matter expertise. We pretested a draft of the questionnaire with officials from five BLM state offices—Arizona, California, Nevada, Utah, and Wyoming, the states that received the greatest number of applications—to ensure that the questions were relevant, clearly stated, and easy to understand.\nWe also conducted semistructured interviews with the special-use coordinators in each of the nine regional offices of the Forest Service. During these interviews, we requested information on the number of applications received and time frames for processing applications, as well as on factors facilitating and hindering the permitting process.\nTo address our second objective, we reviewed relevant laws, regulations, and agency policies and guidance. We also interviewed officials from the Department of the Interior and its four land management agencies—BLM, the Bureau of Indian Affairs, the Fish and Wildlife Service, and the National Park Service—as well as from the Department of Agriculture’s Forest Service. In addition to officials in these agencies’ headquarters, we interviewed BLM officials from California, Colorado, Nevada, and Wyoming. We selected California, Nevada, and Wyoming primarily because they represent areas where substantial renewable energy development on federal lands is taking place, and substantial agency resources are devoted to processing renewable energy applications. We selected Colorado primarily to obtain the perspective about the program from a state with less activity and fewer resources. We interviewed Fish and Wildlife Service officials from the agency’s Mountain-Prairie and Pacific Southwest Regions, both selected because of substantial renewable energy development occurring in the regions, and from one state office within each of these regions. We interviewed a National Park Service official from a national park in California because of his experience with renewable energy development near the park. In addition, we interviewed Forest Service officials from all nine Forest Service regions and officials in the wind, solar, and geothermal research programs at the Department of Energy’s National Renewable Energy Laboratory in Golden, Colorado. We reviewed strategic plans, agency reports, and reviews of renewable energy development on federal lands; memorandums of understanding between agencies; and programmatic environmental impact statements for wind, solar, and geothermal energy. We also obtained funding and staffing data for BLM from the Department of the Interior’s Financial and Business Management System. We assessed the reliability of the data we used in our report by reviewing the methods of data collection and data entry into this system, as well as various agency planning documents, and determined that the data were sufficiently reliable to use in this report.\nTo address our third objective, we reviewed the results of our questionnaire and semistructured interviews regarding both factors that facilitate and hinder renewable energy development. We also interviewed BLM and other agency officials, as well as representatives from seven industry and two environmental groups, to obtain their perspectives on the permitting process, the time frames and factors associated with processing permit applications, and renewable energy development in general.\nWe conducted this performance audit from January 2012 to January 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Of the 445 applications BLM received for utility-scale wind, solar, and geothermal projects since enactment of EPAct 2005 through May 2012, BLM authorized 25 projects—7 wind, 10 solar, and 8 geothermal (see table 2). These projects were authorized with the potential to generate about 5,450 megawatts: 800 megawatts from wind, about 4,200 megawatts from solar, and about 450 megawatts from geothermal energy.", "", "", "", "In addition to the individual named above, Steve Gaty (Assistant Director), Ulana Bihun, Catherine Bombico, Lee Carroll, Ellen W. Chu, Richard P. Johnson, and Kelly Rubin made key contributions to this report. Important contributions were also made by Catherine M. Hurley, Armetha Liles, Dan Royer, and Kiki Theodoropoulos." ], "depth": [ 1, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "h0_full", "h0_full", "", "h1_full", "h1_full", "h1_full", "h1_full", "h1_full", "h2_full", "h2_full", "h2_full", "h2_full", "", "", "h0_full", "", "", "", "" ] }

{ "question": [ "How has BLM responded to the Energy Policy Act of 2005?", "What was the fate of these authorized projects?", "What is the average time frame from submitting an application to approval of the project?", "What is the energy implication of the authorized projects?", "What have federal land management agencies done in light of the EPAct 2005?", "What action did BLM take?", "What other actions did the agencies take?", "What did stakeholders reveal about renewable energy development?", "How are permitting processes especially relevant to the pace of renewable energy development?", "What other factors influence the pace of energy development?", "What factors beyond the agencies' control may affect the process?" ], "summary": [ "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. 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.", "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.", "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." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 0, -1, 0, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "Background", "Authorizations to Use NCIC and NamUs Differ so the Data in Each Remains Separated", "Opportunities Exist to More Efficiently Share Missing and Unidentified Persons Information in NCIC and NamUs", "Conclusions", "Recommendation for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comparison of Fragmentation and Overlap in Key Characteristics of the National Crime Information Center (NCIC) and National Missing and Unidentified Persons System (NamUs)", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "NCIC is a law enforcement database maintained by the FBI’s Criminal Justice Information Services (CJIS) Division and was first established in 1967 to assist LEAs in apprehending fugitives and locating stolen property. In 1975, NCIC expanded to include the missing persons file to include law enforcement records associated with missing children and certain at-risk adults. The missing persons file contains records for individuals reported missing who: (1) have a proven physical or mental disability; (2) are missing under circumstances indicating that they may be in physical danger; (3) are missing after a catastrophe; (4) are missing under circumstances indicating their disappearance may not have been voluntary; (5) are under the age of 21 and do not meet the above criteria; or (6) are 21 and older and do not meet any of the above criteria but for whom there is a reasonable concern for their safety.\nThe unidentified persons file was implemented in 1983 to include law enforcement records associated with unidentified remains and living individuals who cannot be identified, such as those individuals who cannot identify themselves, including infants or individuals with amnesia. When a missing persons record is entered or modified, NCIC automatically compares the data in that record against all unidentified persons records in NCIC. These comparisons are performed daily on the records that were entered or modified on the previous day. If a potential match is identified through this process, the agency responsible for entering the record is notified.\nManagement of NCIC is shared between CJIS and the authorized federal, state, and local agencies that access the system. CJIS Systems Agencies (CSA)—criminal justice agencies with overall responsibility for the administration and usage of NCIC within a district, state, territory, or federal agency—provide local governance of NCIC use. A CSA generally operates its own computer systems, determines what agencies within its jurisdiction may access and enter information into NCIC, and is responsible for assuring LEA compliance with operating procedures within its jurisdiction. An Advisory Policy Board, with representatives from criminal justice and national security agencies throughout the United States, and working groups are responsible for establishing policy for NCIC use by federal, state, and local agencies and providing advice and guidance on all CJIS Division programs, including NCIC.\nNamUs became operational in 2009, and was designed to improve access to database information by people who can help solve long-term missing and unidentified persons cases—those cases that have been open for 30 days or more. NamUs is comprised of three internet-based data repositories that can be used by law enforcement, medical examiners, coroners, victim advocates or family members, and the general public to enter and search for information on missing and unidentified persons cases. These repositories include the missing person database (NamUs-MP), the unidentified person database (NamUs-UP), and the unclaimed persons database. NamUs-MP and NamUs-UP allow automated and manual comparison of the case records contained in each.\nThe University of North Texas Health Science Center, Center for Human Identification (UNTCHI) has managed and administered the NamUs program under a cooperative agreement with NIJ since October 2011. Two Directors within UNTCHI’s Forensic and Investigative Services Unit are responsible for daily management, oversight, and planning associated with NamUs. Additionally, eight regional system administrators (RSAs) and eight forensic specialists provide individualized case support.", "To gain access to NCIC, an agency must have authorization under federal law and obtain an Originating Agency Identifier (ORI). In general, to be authorized under federal law for full access to NCIC, an agency must be a governmental agency that meets the definition of a CJA. Specifically, data stored in NCIC is “criminal justice agency information and access to that data is restricted to duly authorized users,” namely CJAs as defined in regulation. The CJIS Security Policy allows data associated with the missing and unidentified persons files to be disclosed to and used by government agencies for official purposes or private entities granted access by law. For example, there is a specific provision that allows these files to be disclosed to the National Center for Missing and Exploited Children, a nongovernmental organization, to assist in its efforts to operate a nationwide missing children hotline, among other things. As of February 2016, there were almost 118,000 active ORI numbers that granted authorized agencies at least limited access to NCIC. Table 1 shows the different types of users granted ORI numbers to access NCIC and their associated access levels.\nUnlike NCIC, any member of the public may register to use NamUs and access published case information. When cases are entered, the RSA carries out a validation process by reviewing each case entered within his or her region to ensure the validity and accuracy of the information provided and determine whether the case may be published to the public website. Before any case may be publicly published to the NamUs site, the RSA must confirm the validity of that case with the LEA or other responsible official with jurisdiction by obtaining an LEA case number or an NCIC number. The RSA also vets registration applications for non- public users—professionals affiliated with agencies responsible for missing or unidentified persons cases. In addition to the published case information, these non-public registered users may also access unpublished case information. Table 2 shows the types of individuals that may register as NamUs users for the missing persons and unidentified persons files, and their access levels.\nNCIC data include criminal justice agency information and access to such data is restricted by law to only authorized users. Because many users of NamUs are not authorized to access NCIC, there are no direct links or data transfers between the systems. In addition, NCIC and NamUs only contain information manually entered by their respective authorized users. As a result, while both NCIC and NamUs contain information on long-term missing and unidentified persons, they remain separate systems.", "DOJ could facilitate more efficient sharing of information on missing and unidentified persons cases contained in NCIC and NamUs. The two systems have overlapping purposes specifically with regard to data associated with long-term missing and unidentified persons cases—both systems collect and manage data that officials can use to solve these cases. Further, three key characteristics of NCIC and NamUs—the systems’ records, registered users, and data validation efforts—are fragmented or overlapping, creating the risk of duplication. We found that, as CJIS and NIJ proceed with planned upgrades to both databases, opportunities may exist to more efficiently use data related to missing and unidentified persons cases, in part because no mechanism currently exists to share information between NCIC and NamUs.\nFigure 3 below describes the purpose of each system and explains how certain characteristics contribute to fragmentation, overlap, or both. See appendix II for a non-interactive version of figure 3.\nInteractive graphic Figure 3: Comparison of Fragmentation and Overlap in Key Characteristics of the National Crime Information Center (NCIC) and National Missing and Unidentified Persons System (NamUs)\nMove mouse over headers for description. For a noninteractive version, please see appendix II.\nDatabase Records: NCIC and NamUs contain fragmented information associated with long-term missing and unidentified persons. Specifically, information about long-term missing or unidentified persons may be captured in one system, but not the other. As a result, if users do not have access to or consult the missing and unidentified persons files in both data systems, they may miss vital evidence that could help to solve a given case. For example, in fiscal year 2015, 3,170 missing persons cases were reported to NamUs. During the same time period, 84,401 of the missing persons records reported to NCIC remained open after 30 days and became long-term cases. Conversely, in fiscal year 2015, 1,205 unidentified persons cases were reported to NamUs, while 830 records were reported to NCIC.\nNamUs also accepts and maintains records of missing and unidentified persons cases that are not published on its public website, in part because they may not meet criteria for entry into NCIC. According to NamUs officials, cases may remain unpublished for several reasons, including (1) they are undergoing the validation process, (2) they lack information required to complete the entry, (3) the responsible agency has requested the report go unpublished for investigative reasons, (4) a report has not been filed with law enforcement, or (5) law enforcement does not consider the person missing. For example, according to NamUs officials, a non-profit agency entered approximately 800 missing migrant cases that have remained unpublished on the NamUs public website because they do not have active law enforcement investigations associated with the cases. Because they do not have active law enforcement investigations on file and NCIC only accepts documented criminal justice information, it is highly unlikely that these approximately 800 cases are present in NCIC. Since access to unpublished cases is limited to authorized LEA and medicolegal investigators that have registered as NamUs users, investigators using only NCIC cannot use information from these NamUs cases to assist in solving unidentified persons cases.\nIn addition, the number of NCIC cases that are also recorded in NamUs varies greatly among states, further contributing to fragmentation. For example, of the long-term missing persons cases officials in each state reported to NCIC in fiscal year 2015, the proportion of these NCIC cases that were also recorded in NamUs ranged from less than 1 to almost 40 percent. However, in our nongeneralizeable review of laws in Arizona, California, and New York, the state laws specifically associated with reporting missing persons cases to NCIC or NamUs did not contribute to variation in reporting rates. Specifically, in fiscal year 2015, approximately 2 to 3.5 percent of the long-term cases reported by officials in each state to NCIC were ultimately reported to NamUs. These reporting rates are very similar despite the fact that, as discussed previously, we chose these three states because they had different reporting requirements associated with reporting missing and unidentified persons.\nRegistered Users: Fragmentation between the records reported to NCIC and NamUs also exists because different user groups with different responsibilities enter data on missing and unidentified persons. The fact that different user bases report information to each system means that certain types of cases may be found in one system but not the other. This creates inefficiencies for officials seeking to solve long-term missing and unidentified persons cases who have to enter information and search both systems to get all the available information.\nFurther, the NCIC user base is significantly larger than the NamUs user base, which likely contributes to the discrepancies in the number of long-term missing persons cases reported to each system. As of February 2016, almost 118,000 agencies had at least limited access to NCIC, with approximately 113,000 granted full access to all 21 NCIC files, including the missing and unidentified persons files. As of November 2015, just over 3,000 individuals were registered as non- public users of NamUs-MP and approximately 2,000 individuals were registered as non-public users of NamUs-UP. These registered users represent at least 1,990 agencies, less than 2 percent of the number of agencies registered to use NCIC.\nIn 1996, a person was reported missing and the case was entered into National Crime Information Center (NCIC). Three days later, a decomposed body was found a few miles away; however, no police report was ever generated for the person’s death nor was an entry made into NCIC. In 2013, the detective following up on the missing person case searched National Missing and Unidentified Persons System (NamUs) and found that a medical examiner had entered the unidentified remains case into NamUs. As a result, 16 years after the missing persons case was originally reported, DNA testing verified a match between the unidentified remains reported by a medical examiner to NamUs and the missing person case reported by law enforcement to NCIC in 1996.\nIn addition to the difference in the number of agencies registered to use NCIC or NamUs, there is variation in the types of agencies that are registered with each system, possibly contributing to differences in the type of case information reported. For instance, NamUs has a larger number of registered users in the medicolegal field (either as medical examiners, coroners, forensic odontologists, or other forensic personnel), which may explain why a greater number of unidentified persons cases are reported to NamUs. Specifically, while medical examiners and coroners represent less than 0.1 percent of NCIC’s total active ORIs, approximately 18 percent of agencies registered with NamUs have at least one user registered in the medicolegal field. Similarly, virtually all LEAs use NCIC, with only a small fraction registered to use NamUs, likely contributing to the low proportion of long term missing persons cases reported to both NCIC and NamUs by LEAs. Additionally, members of the public who do not have access to NCIC and are not affiliated with any type of agency can report missing persons cases to NamUs. The variation in the types of users registered with NCIC or NamUs ultimately limits the usefulness of either system, as important case information may be missed by individuals who do not access both systems. According to one LEA official we spoke with, his unit has had more than a dozen resolutions of cold cases as a result of information contained in NamUs since NamUs was established in 2009.\nData Validation Efforts: NamUs uses a validation process to ensure that all missing and unidentified persons cases include either the local LEA case number or an NCIC number before they are published to the public website. NamUs also has some ad hoc processes in place, beyond routine RSA responsibilities, designed to help ensure that data in selected states on missing and unidentified persons contained in NCIC are captured by NamUs. However, while intended in part to minimize fragmentation, these processes introduce additional inefficiencies caused by overlapping and potentially duplicative activities. Specifically, as part of the NamUs validation process, at least once a year, the RSA requests records from NCIC and manually reviews the data in both systems to ensure consistency. For example, from January 2015 through September 2015, RSAs requested and manually reviewed statewide NCIC records for at least 22,000 missing persons and 4,532 unidentified persons cases to ensure that if cases entered into NamUs were present in NCIC, the two systems contained comparable information. According to NIJ officials, if RSAs identify errors or missing information in an NCIC record during the course of their work, they will alert the agency responsible for the case. It is then the responsibility of that agency to enter or update the NCIC record.\nThe potential for duplication also exists when agencies want to utilize both NCIC and NamUs. For example, if agencies with access wanted their case data to exist in both systems, the system limitations would require them to enter the information in one system and then enter the same data in the second system, resulting in duplicative data entry. Officials from one state agency we interviewed noted that they have a full time employee who is solely responsible for entering case data into NamUs after it has been entered into NCIC. Further, when attempting to use information from either NCIC or NamUs, users are required to access and search each system separately, and then manually compare results.\nFragmentation and overlap between NCIC and NamUs result in inefficiencies primarily because there is no systematic mechanism for sharing information between the systems. According to CJIS officials, in lieu of a systematic sharing of information mechanism, they created a standard search that state and local agencies can use to request an extract of all of their missing and unidentified persons data contained in NCIC. Upon receipt of the resulting data extract, the requesting agency would then be responsible for entering the provided data into NamUs. However, this solution to share information does not address the inefficiencies created by the lack of an automated mechanism, as it requires additional work on the part of responsible officials and results in the potential for duplication.\nWe have previously reported that when fragmentation or overlap exists, there may be opportunities to increase efficiency. In particular, our prior work identified management approaches that may improve efficiency, including implementing process improvement methods and technology improvements while documenting such efforts to help ensure operations are carried out as intended. Additionally, we have reported that federal agencies have hundreds of incompatible information-technology networks and systems that hinder governmentwide sharing of information and, as a result, information technology solutions can be identified to help increase the efficiency and effectiveness of these systems.\nAccording to CJIS officials, the most significant limiting factors to a systematic sharing of information mechanism between NCIC and NamUs are that (1) access to NCIC is restricted to authorized users, (2) NamUs has not been granted specific access to NCIC by law, and (3) NamUs has a public interface. Because NamUs lacks specific statutory authority to access NCIC and the public is prohibited from accessing NCIC data, CJIS officials stated that fully exchanging data with NamUs would constitute an unauthorized dissemination of NCIC information. As a result, these officials stated that the CJIS Advisory Policy Board determined that NCIC could not be fully connected to NamUs. While there are statutory limitations regarding direct access to NCIC, there may be options to better share information that are technically and legally feasible. Thus, opportunities may exist within the current statutory framework to address fragmentation and overlap between the two systems.\nOur review of the data elements required by each system indicates a high degree of commonality between the data that can be collected by NCIC and NamUs, which could help facilitate the sharing of information. Specifically, 12 of the 15 data fields required by NamUs for a missing persons case and 12 of the 14 data fields required by NamUs for an unidentified persons case are also present in NCIC. Further, stakeholders we interviewed from three states offered a variety of solutions to address the fragmentation and overlap between NCIC and NamUs. For example,\nA law enforcement official in one state noted that a notification alert could be added to NCIC to inform users when related case data was also present in NamUs.\nAnother official stated that a query process that allowed authorized users to search information from both systems simultaneously would be helpful in minimizing the need to regularly check both systems. According to CJIS officials, a joint search function would likely require the systems to be fully integrated; however, CJIS officials noted that they had not formally evaluated the option because they believe it is currently precluded by federal law. While full integration of the two systems may be precluded, a joint search function may not equate to full integration. Authorized users with access to both systems could benefit from the efficiencies of such a search function. However, DOJ will not know whether this type of function could be technically or legally feasible until it evaluates the option. Implementing mechanisms to share information without fully integrating the systems could help improve the efficiency of efforts to solve long-term missing and unidentified persons cases using NCIC and NamUs.\nOfficials in another state suggested that a single data entry point could be used to populate both NCIC and NamUs to minimize duplicate data entry. This solution to share information has also been put forward as a requirement in several bills that have been introduced in Congress since 2009. In 2010, DOJ undertook an effort in response to the requirement in proposed legislation to determine whether it would be technically possible for a check box to be added to NCIC that would allow users to indicate that they would like the case information to be automatically entered into NamUs as well. According to CJIS officials, this type of check box is already in use for other NCIC files, which means it could be technically feasible for the missing and unidentified persons files. However, according to CJIS officials, this system change was not pursued for the missing and unidentified persons files because the proposed legislation did not pass, and consequently there was no legal requirement that CJIS implement this mechanism to share information. Nevertheless, without evaluating this mechanism, DOJ will not know whether it is technically and legally feasible. As a result, DOJ may be missing an opportunity to share information between NCIC and NamUs that would better help users close their missing or unidentified persons cases.\nBoth NCIC and NamUs are in the early stages of upgrading their systems; however, neither effort includes plans to improve sharing information between these systems. These ongoing upgrade processes provide DOJ with an opportunity to evaluate and document the technical and legal feasibility of options to improve sharing NCIC and NamUs missing and unidentified persons information, and to integrate appropriate changes, if any, into the next versions of the systems.\nAccording to NIJ officials, the discovery phase of the NamUs upgrade to NamUs 2.0 has been completed, and officials have developed a prioritized list of 793 items that they would like to include in the upgrade. The feasibility of each item and timelines for implementation will be determined in an iterative process based on time and funding considerations. According to the officials, the highest priority items are related to enhancing the existing capabilities of NamUs to make them more efficient and user-friendly. Our review of the prioritization document does not indicate that efforts to improve sharing of information with NCIC are included in the ongoing upgrade. NIJ officials stated that their goal for the upgrade is to share data more easily with a variety of state and local systems.\nAccording to CJIS officials, the upgrade process for NCIC began in 2014, with a canvas of 500 state, local, tribal, and federal NCIC users to identify the type of functionality users would like to see included in an updated system. The officials said that this process yielded more than 5,500 recommendations related to all 21 files contained in NCIC. CJIS officials did not specify how many recommendations were related to the missing and unidentified persons files, but did note that they received some feedback related to improving the ability to share data with NamUs. Based on the user canvas, CJIS developed a high-level concept paper that will be discussed at the Advisory Policy Board’s June 2016 meeting. Following Advisory Policy Board approval, CJIS will begin the development process, including identifying specific tasks. CJIS officials explained that because of the uncertainty regarding approval, and the way in which the upgrade development process will be structured, there are no specific timeframes available related to the update. The officials stated it will likely be several years before there are any deliverables associated with the effort.\nWhile we understand there are statutory restrictions regarding access to NCIC that must be adhered to, and we recognize that stakeholders may use NCIC and NamUs in distinct ways, DOJ has opportunities to explore available options that could potentially allow for more efficient use of information on missing and unidentified persons by reducing fragmentation and overlap. Without evaluating the technical and legal feasibility of options for sharing information, documenting the results of the evaluation, and, as appropriate, implementing one or more of these options, potential inefficiencies will persist. As a result, users who do not have access to information from both systems may continue to miss vital case information.", "Every year, more than 600,000 people are reported missing, and hundreds of sets of human remains go unidentified. Solving thousands of long-term missing and unidentified persons cases requires the coordinated use of case data contained in national databases, such as NCIC and NamUs. However, because no mechanism exists to share information between these systems, the fragmented and overlapping nature of the systems leads to inefficiencies in solving cases. Although there are statutory differences between the systems, there are potential options for sharing information—such as a notification to inform NCIC users if related case data were present in NamUs —that could reduce inefficiencies between NCIC and NamUs within the existing legal framework. The ongoing upgrade processes for both systems provide DOJ with the opportunity to evaluate the technical and legal feasibility of various options, document the results, and incorporate feasible options, as appropriate. Without doing so, and without subsequently implementing options determined to be appropriate during the next cycle of system upgrades, potential inefficiencies will persist and users who do not have access to information from both systems may be missing vital information that could be used to solve cases.", "To allow for more efficient use of data on missing and unidentified persons contained in the NCIC’s Missing Persons and Unidentified Persons files and NamUs, the Directors of the FBI and NIJ should evaluate the feasibility of sharing certain information among authorized users, document the results of this evaluation, and incorporate, as appropriate, legally and technically feasible options for sharing the information.", "We provided a draft of this product to DOJ for review and comment. On May 13, 2016, an official with DOJ’s Justice Management Division sent us an email stating that DOJ disagreed with our recommendation, because DOJ believes it does not have the legal authority to fulfill the corrective action as described in the proposed recommendation. Specifically, DOJ stated that NamUs does not qualify, under federal law, for access to NCIC and is not an authorized user to receive NCIC data. Therefore, DOJ does not believe there is value in evaluating the technical feasibility of integrating NamUs and NCIC.\nAs stated throughout this report, we understand the legal framework placed on NCIC and that it may be restricted from fully integrating with a public database. However, this statutory restriction does not preclude DOJ from exploring options to more efficiently share information within the confines of the current legal framework. Moreover, our recommendation is not about the technical feasibility of integrating NCIC and NamUs but about studying whether there are both technically and legally feasible options for better sharing long-term missing and unidentified persons information. We continue to believe that there may be mechanisms for better sharing this information—such as a notification alert in NCIC to inform users when related case data is also present in NamUs—that would comply with the legal restrictions. However, until DOJ studies whether such feasible mechanisms exist, it will be unable to make this determination. Without evaluating the technical and legal feasibility of options for sharing information, DOJ risks continued inefficiencies through fragmentation and overlap. Moreover, authorized users who do not have automated or timesaving access to information from both systems may continue to miss critical information that would help solve these cases.\nDOJ also provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Attorney General of the United States, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-9627 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.", "In response to Senate Report 113-181 (accompanying the Consolidated and Further Continuing Appropriations Act of 2015) this report addresses the following objectives: 1. Describe access to and use of missing and unidentified persons information contained in the National Crime Information Center (NCIC) and the National Missing and Unidentified Persons System (NamUs). 2. To what extent do opportunities exist to improve the use of missing and unidentified persons information contained in NCIC and NamUs?\nTo describe the access to and use of missing and unidentified persons information contained in NCIC and NamUs, we reviewed and compared NCIC and NamUs operating and policy manuals and data entry guides. In addition, we observed access to and use of missing and unidentified persons information in NamUs. To corroborate information above, we conducted interviews with officials who access and use NCIC and NamUs, including state criminal justice agencies, state and local law enforcement agencies (LEA), medical examiners, and coroners.\nTo determine the extent to which opportunities exist to improve the use of missing and unidentified persons information using NCIC and NamUs, we analyzed summary level case data by state for each system for fiscal year 2015. Because of statutory limitations on access to criminal justice information contained in NCIC we did not assess record level case data from either NCIC or NamUs. However, we compared NCIC summary level data to NamUs summary level data, and found it sufficient for demonstrating the extent to which information contained in the two systems is similar or different. We assessed the reliability of the data contained in NCIC and NamUs by, among other things, reviewing database operating manuals and quality assurance protocols, and by interviewing officials responsible for managing the systems. We found the data to be reliable for our purposes.\nWe also reviewed and compared NCIC and NamUs operating manuals and data entry guides to determine the comparability of minimum data requirements for record entry, individual data elements in each system, and their definitions. Our review of these documents allowed us to identify details about the purpose and design of each system that may support or preclude data sharing. In addition, we reviewed past and current CJIS and NIJ plans related to sharing information between NCIC and NamUs. We reviewed laws, policies, and information associated with reporting and sharing information on missing and unidentified persons, to include information about the types of users that can access or enter information into each system within three categories: (1) LEA, (2) non-LEA criminal justice agency (CJA)—such as a court; and (3) medicolegal investigator— such as a coroner. We assessed this information against Standards for Internal Control in the Federal Government and GAO’s evaluation and management guide for fragmentation, overlap, and duplication.\nNCIC and NamUs assign user access differently, with NCIC assigning access at the agency level, while NamUs provides access directly to individuals. Because of this, for the purposes of comparing NCIC and NamUs users, we consolidated information from NamUs for non-public users into their relevant agencies so as not to overstate the number of NamUs users as compared to NCIC. However, there are some limitations associated with this effort. For example, for a city-wide LEA such as the New York City Police Department, NCIC assigns Originating Agency Identifiers (ORI) numbers to each office within that particular agency, as the ORI number is used to indicate the LEA office directly responsible for a given NCIC record entry. When individuals register for NamUs, they may or may not provide the same level of detail regarding their specific office within a greater LEA, which means we may count an agency once for NamUs, even though that agency likely has multiple ORIs associated with it for NCIC. Further, because of the way user permissions are determined in NamUs, some LEAs with DNA or forensic specialists may also be included in the medicolegal investigator category, whereas they are likely to use only a single LEA ORI in NCIC. To address these limitations, this report presents information about both the number and type of individual users registered with NamUs, as well as the number and type of agencies that these users represent.\nTo corroborate information above, and to obtain more in-depth perspectives about the extent to which opportunities exist to improve the collection and use of missing and unidentified persons information, we conducted interviews. Specifically, we interviewed Department of Justice (DOJ) officials, relevant stakeholders from selected states, and officials from nongovernmental agencies, in part to learn about past and current efforts to share information between NCIC and NamUs. In addition, we selected Arizona, California, and New York to include in this review, based in part on their respective state laws and policies associated with missing and unidentified persons, as well as the number of cases reported to each database for fiscal year 2015. Specifically, after identifying the 10 states that reported the highest number of cases to both NCIC and NamUs, we then compared four characteristics of state laws and policies related to reporting missing and unidentified persons. These included whether the state law specified (1) required reporting to NCIC, NamUs, or other federal databases; (2) reporting requirements for specific populations; (3) a timeframe for reporting missing persons cases; and (4) a timeframe for reporting unidentified remains. We chose Arizona, California, and New York to provide illustrative examples of different types of state laws. Table 1 provides a high-level comparison of the reporting laws for each state we reviewed.\nWe then selected a nongeneralizeable sample of relevant stakeholders from each state to interview. Specifically, we interviewed relevant stakeholders in 3 state criminal justice agencies, 4 state and local LEAs, 2 medical examiner offices, and 1 coroner office. Although the views expressed from these interviews cannot be generalized to each state, they provide valuable insights about the types of experiences different stakeholder groups experience in states with varied reporting requirements. We also reviewed state documents associated with the data systems used by each state to report missing and unidentified persons information to NCIC.\nWe conducted this performance audit from September 2015 to April 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Appendix II: Comparison of Fragmentation and Overlap in Key Characteristics of the National Crime Information Center (NCIC) and National Missing and Unidentified Persons System (NamUs)\nPurpose Both systems contain data designed to be used to solve long- term missing and unidentified persons cases.\nRegistered Users Registered users of both systems must populate one system with missing and unidentified persons cases and then go through the process again to enter the same data in the second system. To utilize information from either system, registered users must go through an inefficient process of accessing and searching each system separately, and then manually comparing results.\nData Validation Efforts NamUs Regional System Administrators (RSA) check NCIC as part of the NamUs validation process. In fiscal year 2015, RSAs requested and manually reviewed NCIC records for at least 22,000 missing persons and 4,532 unidentified persons cases.\nNCIC contains significantly more missing persons cases than NamUs, while NamUs contains more unidentified persons cases, limiting the usefulness of either system. Specifically, in fiscal year 2015, 3,170 missing persons cases were reported to NamUs, while 84,401 long-term cases were reported to NCIC during the same time period. In contrast, 1,205 unidentified persons cases were reported to NamUs in fiscal year 2015, while 830 cases were reported to NCIC.\nLess than 0.1 percent of registered NCIC users are medical examiner or coroner offices, while approximately 18 percent of the agencies with at least one registered NamUs user are considered part of the medicolegal field. Additionally, many missing persons cases are initially reported in NamUs by members of the public who do not have access to NCIC. Consequently, potentially valuable information on missing persons cases may not be getting to all those who need it.", "", "Diana C. Maurer, (202) 512-9627 or [email protected].", "In addition to the contact named above, Dawn Locke (Assistant Director), Elizabeth Kowalewski, Susanna Kuebler, Amanda Miller, Jan Montgomery, Heidi Nielson, Janay Sam, Monica Savoy, and Michelle Serfass made key contributions to this report." ], "depth": [ 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h4_full", "h0_full h4_full", "h4_full h1_full h2_full h0_full h3_full", "h3_full h4_full", "", "h3_full", "h5_full", "h2_full", "", "", "" ] }

{ "question": [ "What is the difference between the NamUs database and the NCIC database?", "What is the implication of this difference?", "What do the NCIC and NamUs databases concern?", "How do case numbers differ across the two databases?", "How else do the two databases differ?", "What are the implications of this difference?", "How does the NCIC user base compare to NamUs's?", "What system do law enforcement agencies use?", "What system does the general public use?", "To what extent can NCIC and NamUs integrate?", "Although full integration is an impossibility, what options remain for the systems to complement each other?", "What is the effect of this lack of information sharing?", "Why are NCIC and NamUs necessary?", "What information does NCIC contain?", "What groups generally use NamUs?", "What does Senate Report 113-181 allow GAO to do?", "What does the GAO's report describe?", "How did GAO collect relevant information in the making of the report?" ], "summary": [ "The Federal Bureau of Investigation's (FBI) National Crime Information Center (NCIC) database includes criminal justice agency information and access to such data is restricted to authorized users. In contrast, the Department of Justice's (DOJ) National Institute of Justice (NIJ) funds and oversees the National Missing and Unidentified Persons System (NamUs), a database for which the public may register to access published case information.", "Because many users of NamUs are not authorized to access NCIC, there are no direct links between the systems. As a result, while both NCIC and NamUs contain information on long-term missing and unidentified persons, they remain separate systems.", "Database Records: NCIC and NamUs contain fragmented information associated with long-term missing and unidentified persons (cases open for more than 30 days).", "For example, in fiscal year 2015, 3,170 long-term missing persons cases were reported to NamUs while 84,401 missing persons records reported to NCIC became long-term cases.", "NamUs also accepts and maintains records of missing and unidentified persons cases that may not be found in NCIC because, for example, they have not yet been filed with law enforcement.", "As a result, users relying on only one system may miss information that could be instrumental in solving these types of cases.", "Registered Users: The NCIC user base is significantly larger than the NamUs user base, and the types of users vary, which may contribute to the discrepancies in each system's data.", "For instance, almost all law enforcement agencies use NCIC, with only a small fraction registered to use NamUs.", "Additionally, members of the public do not have access to NCIC, but can report missing persons cases to NamUs.", "According to FBI officials, federal law precludes full integration of NCIC and NamUs; however, opportunities to share information may exist within the legal framework to address fragmentation and overlap without full system integration.", "By evaluating the technical and legal feasibility of options to share information, documenting the results, and implementing feasible options, DOJ could better inform those who are helping solve missing and unidentified persons cases and increase the efficiency of solving such cases.", "Inefficiencies exist in the use of information on missing and unidentified persons primarily because there is no mechanism to share information between the systems, such as a notifier to inform NCIC users if related case data were present in NamUs.", "Every year, more than 600,000 people are reported missing, and hundreds of human remains go unidentified. Two primary federal databases supported by DOJ—NCIC and NamUs—contain data related to missing and unidentified persons to help solve these cases.", "NCIC contains criminal justice information accessed by authorized agencies to assist with daily investigations.", "NamUs information can be used by law enforcement, medical examiners, coroners, and the general public to help with long-term missing and unidentified persons cases.", "Senate Report 113-181 (accompanying the Consolidated and Further Continuing Appropriations Act of 2015) includes a provision for GAO to review NCIC and NamUs.", "This report describes the access to and use of missing and unidentified persons information contained in NCIC and NamUs, and the extent to which there are opportunities to improve the use of this information.", "GAO reviewed NCIC and NamUs data, and relevant state and federal statutes. GAO also conducted nongeneralizeable interviews with stakeholders in three states, selected in part on state laws." ], "parent_pair_index": [ -1, 0, -1, 0, 0, 2, -1, 0, 0, -1, 0, 0, -1, 0, 0, -1, 0, 1 ], "summary_paragraph_index": [ 2, 2, 4, 4, 4, 4, 5, 5, 5, 7, 7, 7, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "Ammonium Nitrate", "Regulation by Bureau of Alcohol, Tobacco, Firearms and Explosives", "Regulation by Department of Homeland Security", "Maritime Transportation Security Act", "Chemical Facility Anti-Terrorism Standards", "Ammonium Nitrate Proposed Rule", "Regulation by Occupational Safety and Health Administration", "Standard 1910.109: \"Explosives and Blasting Agents\"40", "Standard 1910.1200: \"Hazard Communication\"45", "Standard 1910.119: \"Process Safety Management of Highly Hazardous Chemicals\"", "Regulation by U.S. Environmental Protection Agency", "Emergency Planning and Community Right-to-Know Act", "Clean Air Act, Section 112(r)", "Anhydrous Ammonia", "Regulation by Department of Homeland Security", "Maritime Transportation Security Act", "Chemical Facility Anti-Terrorism Standards", "Regulation by Occupational Safety and Health Administration", "Standard 1910.111: \"Storage and Handling of Anhydrous Ammonia\"62", "Standard 1910.119: \"Process Safety Management of Highly Hazardous Chemicals\"64", "Standard 1910.1000: \"Air Contaminants\"72", "Regulation by Environmental Protection Agency", "Emergency Planning and Community Right-to-Know Act", "Clean Air Act, Section 112(r)", "Policy Issues", "Challenges from Reporting by Facilities", "Lack of Harmonized Reporting", "Inspection Rate", "Ability of Government Agencies to Share Information Effectively", "Public Access to Information" ], "paragraphs": [ "", "The explosion on April 17, 2013, at the West Fertilizer Company fertilizer distribution facility in West, TX, has led to questions about the oversight and regulation of agricultural fertilizer. Congressional policymakers have expressed concern and requested information about coordination among federal regulatory agencies and the efficacy of agency regulations. Different federal agencies apply a variety of regulatory structures to these chemicals. These regulations meet different policy rationales, goals, and purposes. Some attempt to ensure occupational safety, others environmental protection, and still others security. As a consequence, various federal, state, and local agencies collect mission-relevant information about chemical holdings, with some entities gaining a narrower, or broader, understanding of a facility's chemical inventories.\nThe West Fertilizer Company possessed a variety of agricultural chemicals at its retail facility, but policy interest has focused on two chemicals: ammonium nitrate and anhydrous ammonia. In 2012, the West Fertilizer Company had reported to the U.S. Environmental Protection Agency (EPA) and the state of Texas the presence of 110,000 pounds of anhydrous ammonia and 270 tons of ammonium nitrate , and had complied with certain provisions of the Clean Air Act, but the West facility may not have complied with all reporting requirements. For example, the facility had not contacted the Department of Homeland Security (DHS), which should have received information about ammonium nitrate or anhydrous ammonia stored at the facility. The DHS notes that the West Fertilizer Company facility might not have qualified as a regulated high-risk facility even if it had reported its chemical holdings.\nIn addition to federal regulation requiring reporting and planning for ammonium nitrate and anhydrous ammonia, most state and some local governments have laws and regulations regarding the handling of either or both of these chemicals. States regulate worker and environmental protection, product efficacy and safety, chemical sales and storage, and security. In addition, states may enforce standards such building, plumbing, mechanical, electrical, and fire codes. Local zoning laws may dictate placement of a facility within a community. Many states require registration to track the sellers and sales of fertilizer.\nThis report will focus on some of the federal regulatory programs overseeing storage of ammonium nitrate and anhydrous ammonia by retailers. The report will not address federal regulation of material in transport. It will discuss federal occupational safety, environmental, and security statutes and regulations applicable to each chemical. Select policy issues regarding these federal regulatory programs will be highlighted. It does not address various law enforcement activities related to tracking of anhydrous ammonia used for illegal drug synthesis (e.g., methamphetamine).", "Domestic production capacity of ammonium nitrate is approximately 7 million tons, and it is produced worldwide. The vast majority of ammonium nitrate use occurs without incident. Most experts consider ammonium nitrate itself as a stable chemical with few handling restrictions, but, in combination with a fuel source, it can pose an explosion hazard. Ammonium nitrate requires certain conditions, such as added heat or shock, confinement, or contamination to explode. Ammonium nitrate in combination with certain additives is widely used as a type of explosive known as a blasting agent. Ammonium nitrate is also used as a fertilizer.\nAmmonium nitrate is suspected as the source of the explosion at the West Fertilizer Company. Accidental explosions of ammonium nitrate have resulted in loss of lives and destruction of property. These accidents have rarely occurred, but have had high impacts. For example, the ammonium nitrate explosion in 1947 in Texas City, TX, where two ships carrying ammonium nitrate coated in wax and stored in paper bags caught fire and exploded, destroyed the entire dock area, including numerous oil tanks, dwellings, and business buildings. Because of this history, and its inherent characteristics, a variety of federal agencies have authority to regulate ammonium nitrate, some of which has been delegated to state agencies.", "The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) of the Department of Justice (DOJ) regulates ammonium-nitrate-based blasting agents, but it does not regulate ammonium nitrate as fertilizer. The ATF has issued regulations regarding the necessary distance to be maintained between ammonium nitrate and other explosive materials. The ATF and the fertilizer industry have undertaken joint voluntary efforts to secure ammonium nitrate fertilizer, predominantly through \"know your customer\" programs.", "While often used for legitimate purposes, malicious actors might also use ammonium nitrate fertilizer as part of an improvised explosive device. For example, the bombing of the Murrah Federal Building in Oklahoma City, OK, used ammonium nitrate, along with other chemicals, as the primary explosive material. The ease with which ammonium nitrate fertilizer can be transformed into ammonium-nitrate-based blasting agent has led to increased scrutiny of its storage and transfer in order to prevent misappropriation and misuse.\nFor this reason, the Department of Homeland Security (DHS) has multiple statutory authorities under which it regulates ammonium nitrate for security purposes. In general, DHS authorities fall into two categories: securing facilities containing ammonium nitrate and tracking the transfer of ammonium nitrate.\nSince 2002, the U.S. Coast Guard (USCG) has regulated security at certain stationary facilities adjacent to waterways under the authority of the Maritime Transportation Security Act (MTSA, P.L. 107-295 ). In 2006, when Congress authorized DHS to regulate high-risk chemical facilities for security purposes in P.L. 109-295 (Department of Homeland Security Appropriations Act, 2007), it exempted those facilities already regulated under MTSA. Congress also authorized DHS to oversee the sale and transfer of ammonium nitrate in P.L. 110-161 (Consolidated Appropriations Act, 2008).", "The DHS, through the USCG, regulates security at facilities located adjacent to any waters subject to U.S. jurisdiction. Note that this regulatory requirement is irrespective of the presence of chemicals at the facility, but would capture any facility storing ammonium nitrate adjacent to waterways. The USCG implemented MTSA through a series of regulations issued in October 2003. The MTSA requires the creation of an area security plan, assessment of security vulnerabilities at the facility, and the creation of a facility security plan. The USCG creates the area security plan. Either the USCG or the regulated facility performs a vulnerability assessment of the regulated facility. Based on this vulnerability assessment, the facility must develop and implement a security plan consistent with the broader USCG area maritime transportation security plan. The facility must update this plan every five years, and the USCG inspects the facility's implementation of the plan.", "In 2007, DHS issued an interim final rule establishing the Chemical Facility Anti-Terrorism Standards (CFATS), the regulatory program by which it implements its chemical facility security authority. Under the CFATS interim final rule, the Secretary of Homeland Security determines which chemical facilities must meet regulatory security requirements, based on the degree of risk posed by each facility. The DHS lists 322 \"chemicals of interest\" and screening threshold quantities for each chemical to determine the need to comply with CFATS. The DHS considers each chemical in the context of three threats: release; theft or diversion; and sabotage and contamination. The regulation includes as chemicals of interest both pure ammonium nitrate and ammonium nitrate with more than 0.2% combustible substances, including any organic substance calculated as carbon, to the exclusion of any other added substance. It identifies them as theft or diversion and release threats respectively.\nThe screening threshold quantity differs depending on the ammonium nitrate. Facilities possessing at least 5,000 pounds (400 pounds if packaged for transportation) of ammonium nitrate with more than 0.2% combustible substances are potentially high-risk facilities and must participate in the CFATS regulations. Facilities possessing at least 2,000 pounds of transportable fertilizer mixture containing at least 33% ammonium nitrate are potentially high-risk facilities and must participate in the CFATS regulations. According to DHS, \"This [screening threshold quantity] is geared toward ensuring that DHS secures [ammonium nitrate] inventories at major manufacturing and distribution facilities, as opposed to individual farmers involved mainly in the application of [ammonium nitrate].\"\nChemical facilities with greater than specified quantities of chemicals of interest must submit information to DHS. This information-gathering process is called the \"Top-Screen.\" It enables DHS to determine each facility's risk status based on the information received. If a facility comes into possession of any of the chemicals of interest at the corresponding quantities, it must complete and submit a Top-Screen within 60 calendar days. Also, the CFATS rule states that DHS may contact and instruct specific facilities to complete and submit Top-Screen information. Facilities that DHS deems high risk must meet CFATS requirements, which include performing a security vulnerability assessment, developing a site security plan, implementing the security plan, and then being inspected by DHS for compliance. See Figure 1 .\nSeveral types of facilities are exempt from the CFATS regulation. The statute exempts any facility that is: defined as a water system or wastewater treatment works; owned or operated by the Department of Defense or Department of Energy; regulated by the Nuclear Regulatory Commission (NRC); or regulated under MTSA. Many of these types of facilities comply with other security requirements. The DHS has implemented a regulatory extension for agricultural chemical users, though not distributors or retailers. Indeed, DHS stated in the CFATS interim final rule that \"if a retail establishment does exceed any of these [screening threshold quantities], the retail establishment will have to complete the Top-Screen.\" The CFATS rule does not, however, impose any limitations on the sale or transfer of ammonium nitrate.", "In 2007, Congress enacted Section 563 of P.L. 110-161 (Secure Handling of Ammonium Nitrate), authorizing DHS to \"regulate the sale and transfer of ammonium nitrate by an ammonium nitrate facility ... to prevent the misappropriation or use of ammonium nitrate in an act of terrorism.\" The statute further required that DHS develop regulations wherein, among other responsibilities:\nsellers and purchasers of ammonium nitrate register with DHS and are screened by DHS against the Terrorist Screening Database (TSDB); sellers of ammonium nitrate verify purchaser's identify and registration, keep records of sales or transfers, and report theft or loss; and DHS audits, inspects, and monitors compliance; develops guidance materials; establishes an appeals process; and defines the threshold percentage of ammonium nitrate in a mixture for that mixture to be regulated.\nThe DHS began its ammonium nitrate rulemaking process with an advanced notice of proposed rulemaking in October 2008 and, in August 2011, issued a proposed rule regulating ammonium nitrate possession, sale, and transfer.\nThe proposed rule would impose certain conditions on the sale or transfer of ammonium nitrate, for example, requiring that ammonium nitrate may only be transferred between registered ammonium nitrate sellers and registered ammonium nitrate purchasers. Each purchaser and seller would be required to apply to be registered with DHS, which would screen each applicant against the TSDB. Following the screening process, approved individuals would be allowed to engage in the sale, purchase, or transfer of ammonium nitrate.\nTransactions involving the sale or transfer of ammonium nitrate would be regulated at the point of sale and procedures for reporting a theft or loss of ammonium nitrate would be established. Ammonium nitrate sellers would be required to sell or transfer ammonium nitrate only to individuals who had successfully registered with DHS or those individuals' agents. The proposed rule would also require those selling ammonium nitrate to retain records for two years and report theft or loss of ammonium nitrate to federal authorities within 24 hours of discovery. The DHS would be responsible for ensuring compliance with these proposed standards to ensure public safety and support legitimate commerce.\nThis proposed rule received 132 comments, and DHS has not yet issued a final rule. According to DHS, it continues to adjudicate comments received on the proposed rule issued in August 2011. Consequently, no regulation implements DHS's statutory authority to regulate ammonium nitrate sale and transfer.", "The Occupational Safety and Health Administration (OSHA) regulates employers within the agency's jurisdiction that use or possess certain quantities of ammonium nitrate at their worksites. Under the \"General Duty Clause\" of the Occupational Safety and Health Act (P.L. 91-596, as amended), each employer must provide its employees with a workplace that is free from \"recognized hazards that are causing or are likely to cause death or serious physical harm\" to its employees. Thus, employers who use or possess ammonium nitrate must, regardless of any other regulations, ensure that the hazards known to be associated with ammonium nitrate do not put their employees in danger.\nNearly every workplace covered by OSHA is required to have an emergency action plan (EAP) that complies with OSHA Standard 1910.38. An EAP must have, at minimum, the following elements:\nprocedures for reporting a fire or other emergency; procedures for evacuation; procedures to be followed by employees who remain to operate parts of the facilities before evacuating; procedures to account for all employees after evacuation; procedures for employees performing rescue or medical duties; and names and job titles of persons who may be contacted by employees to provide information to employees about the EAP.\nAccording to information provided on its EPA Risk Management Plan (RMP), West Fertilizer Company reportedly had an EAP in place.\nIn addition to their general duty and EAP requirements, employers regulated by OSHA must meet the following occupational safety and health standards that specifically apply to the use and possession of ammonium nitrate.", "This standard regulates the storage, use, and transportation of explosives and blasting agents, including those that may contain ammonium nitrate. The general hazard provision of this standard states:\nNo person shall store, handle, or transport explosives or blasting agents when such storage, handling, and transportation of explosives or blasting agents constitutes an undue hazard to life.\nIn addition, this standard contains specific rules regarding the storage of ammonium nitrate. These specific rules include height and spacing requirements for stored ammonium nitrate, required separation from other materials, and identification of certain building parameters. This standard applies to all persons storing 1,000 pounds or more of ammonium nitrate, as well as the owner or lessee of the structure containing the stored ammonium nitrate.\nFinally, the standard also specifies the minimum distances by which blasting agents and ammonium nitrate must be separated during storage.", "This standard requires that chemicals used in the workplace be properly classified, labeled, and identified so that their potential safety and health hazards may be communicated to employees. For example, employers who use substances with recognized safety or health hazards are generally required to keep material safety data sheets on site and accessible to employees. In 2012, OSHA changed this standard to bring it more in line with the United Nations Globally Harmonized System of Classification and Labeling of Chemicals (GHS). This standard generally applies to \"any chemical which is known to be present in the workplace in such a manner that employees may be exposed under normal conditions of use or in a foreseeable emergency.\"", "Section 304 of the Clean Air Act Amendments of 1990 (CAAA) mandated promulgation of the Process Safety Management (PSM) standard. The PSM standard \"contains requirements for preventing or minimizing the consequences of catastrophic releases of toxic, reactive, flammable, or explosive chemicals.\" Processes involving ammonium nitrate are not subject to regulation under OSHA's process safety management of highly hazardous chemicals (PSM) standard, as ammonium nitrate is not listed as a highly hazardous chemical in Appendix A of the standard.", "The U.S. Environmental Protection Agency (EPA) is authorized to regulate production, distribution, storage, and release of most chemicals in commerce. Among the many environmental authorities the EPA relies upon, the Emergency Planning and Community Right-to-Know Act (EPCRA) and Section 112(r) of the Clean Air Act directly address the potential risks from facilities holding chemical hazards.", "The accidental and sudden release of methyl isocyanate in an industrial accident at the Union Carbide Plant in December 1984 in Bhopal, India, and the attendant loss of life and injuries spurred legislative proposals to reduce the risk of chemical accidents in the United States. Enacted in 1986 as Title III of the Superfund Amendments and Reauthorization Act (SARA; P.L. 99-499 ), the Emergency Planning and Community Right-to-Know Act (EPCRA) established requirements and a framework to ensure that the EPA, state and local governments, and the private sector would work together to control and, if necessary, respond to releases of hazardous chemicals to the environment. Section 301 of EPCRA established state emergency response commissions (SERCs) and local emergency planning committees (LEPCs) to develop and implement local plans for coping with potential releases of hazardous chemicals.\nAmmonium nitrate is regulated under two sections of EPCRA, Sections 311 and 312. EPCRA, Section 311, requires owners or operators of local facilities covered by the Occupational Safety and Health Act (P.L. 91-596, as amended) to submit a material safety data sheet (MSDS) for each \"hazardous chemical,\" or a list of such chemicals, to the SERC, the LEPC, and the local fire department. An MSDS need only be submitted once, unless there is a significant change in the information it contains. An MSDS must be provided in response to a request by an LEPC or a member of the public. The definition of \"hazardous chemicals\" includes hundreds of chemicals. EPCRA Section 311(e)(5) excludes certain substances from this definition, including \"fertilizer held for sale by a retailer to the ultimate customer.\"\nEPCRA, Section 312, requires the same employers to submit annually an emergency and hazardous chemical inventory form to the SERC, LEPC, and local fire department. These forms must provide estimates of the maximum amount of the chemicals present at the facility at any time during the preceding year; estimates of the average daily amount of chemicals present; and the general location of the chemicals in the facility. Information must be provided to the public in response to a written request. EPA is authorized to establish threshold quantities for chemicals below which facilities are not required to report.", "In 1990, accumulated data on chemical accidents in the United States prompted Congress to amend Section 112 of the Clean Air Act (CAA) to further address the threat of catastrophic releases into the ambient air of chemicals that might cause immediate deaths or injuries in communities. Section 112(r)(7) requires owners and operators of covered facilities that produce, process, handle, or store certain extremely hazardous substances to submit to the EPA a risk management plan (RMP) for each process that might have an accidental chemical release. RMPs summarize the potential threat of unanticipated emissions into the ambient air of certain dangerous chemicals and facilities' plans to prevent such releases and mitigate any damage.\nAmmonium nitrate is not a chemical regulated under Section 112(r) of the Clean Air Act. The implementing regulation applies to facilities that possess more than threshold levels of any of 77 acutely toxic substances or 63 flammable gases which the Administrator determined \"pose the greatest risk of causing death, injury, or serious adverse effects to human health or the environment from accidental releases.\" In listing substances, the statute directed the EPA Administrator to consider \"the severity of any acute adverse health effects associated with accidental releases of the substance,\" \"the likelihood of accidental releases of the substance,\" and \"the potential magnitude of human exposure to accidental releases of the substance.\" The law explicitly excludes fuels held for retail sale from regulation, as it does substances regulated under other sections of the Clean Air Act. In addition, the EPA Administrator was \"authorized to establish a greater threshold quantity for, or to exempt entirely, any substance that is a nutrient used in agriculture when held by a farmer.\" The EPA Administrator did not include ammonium nitrate on the RMP chemical list.", "Ammonia has a variety of uses, for example, as an agricultural fertilizer and an industrial refrigerant. It also is used in industrial chemistry to manufacture other nitrogen-containing chemicals, such as ammonium nitrate, which is made from the reaction of ammonia with nitric acid. The term \"anhydrous ammonia\" refers to essentially pure ammonia that exists as a gas. This contrasts with \"aqueous ammonia,\" where the ammonia is dissolved in water as a liquid solution. Many agricultural retailers and facilities with ammonia refrigeration systems store and use anhydrous ammonia. Domestic production of ammonia is approximately 12 million tons, and it is produced worldwide.\nIn contrast to ammonium nitrate, where the concern is one of potential explosion or theft to illegally manufacture explosives, anhydrous ammonia is a toxic inhalational hazard. Generally, anhydrous ammonia is stored as a liquid under pressure; it becomes a toxic gas when released to the environment. Anhydrous ammonia can harm individuals who inhale or contact it. Thus, it is regulated to prevent release of the chemical into the atmosphere where it might travel as a cloud and impact workers and the surrounding environment. It is also encountered routinely in relatively small quantities by local law enforcement officials and hazardous material response teams as part of illegal drug synthesis operations (e.g., methamphetamine).", "The DHS uses the same authorities to regulate security of facilities possessing anhydrous ammonia that it uses to regulate those possessing ammonium nitrate: MTSA and CFATS. As mentioned above, in 2002, Congress enacted MTSA, which authorized the USCG to regulate security at facilities adjacent to waterways. In 2006, Congress authorized DHS to regulate high-risk chemical facilities for security purposes, exempting those facilities already regulated under MTSA.", "The MTSA required DHS, through the USCG, to regulate security at facilities located adjacent to any waters subject to U.S. jurisdiction. Note that this regulatory requirement is irrespective of the presence of chemicals at the facility, but would capture any facility storing anhydrous ammonia adjacent to waterways. The USCG implemented MTSA through a series of regulations issued in October 2003. The MTSA requires the creation of an area security plan, assessment of security vulnerabilities at the facility, and the creation of a facility security plan. The USCG creates the area security plan. Either the USCG or the regulated facility performs a vulnerability assessment of the regulated facility. Based on this vulnerability assessment, the facility must develop and implement a security plan consistent with the broader USCG area maritime transportation security plan. The facility must update this plan every five years, and the USCG inspects the facility's implementation of the plan.", "In 2007, DHS issued an interim final rule establishing the Chemical Facility Anti-Terrorism Standards (CFATS), the regulatory program by which it implements its chemical facility security authority. The DHS regulates ammonia through the CFATS program. Under the CFATS interim final rule, the Secretary of Homeland Security determines which chemical facilities must meet regulatory security requirements, based on the degree of risk posed by each facility. The DHS lists 322 \"chemicals of interest\" and screening threshold quantities for each chemical to determine the need to comply with CFATS. The regulation lists two formulations of ammonia (anhydrous ammonia and aqueous ammonia with a concentration of at least 20%) as chemicals of interest and identifies release threats for them.\nFacilities holding 10,000 pounds or more of anhydrous ammonia or 20,000 pounds or more of aqueous ammonia with a concentration of at least 20% must submit information to DHS as part of the \"Top-Screen\" process. Facilities that DHS deems high risk based on the \"Top-Screen\" submission must meet CFATS requirements, which include performing a security vulnerability assessment, developing a site security plan, implementing the security plan, and then being inspected by DHS for compliance.\nAs noted above, the statute exempts several types of facilities from CFATS regulation. The DHS has implemented a regulatory extension for agricultural chemical users, though not distributors or retailers. As DHS stated in the CFATS interim final rule, \"if a retail establishment does exceed any of these [screening threshold quantities], the retail establishment will have to complete the Top-Screen.\"", "OSHA regulates employers within its jurisdiction that use or possess certain quantities of anhydrous ammonia at their worksites. In addition to being subject to the General Duty Clause, employers regulated by OSHA must meet the following occupational safety and health standards that specifically apply to the use and possession of anhydrous ammonia.", "This standard provides comprehensive requirements for the \"design, construction, location, installation, and operation of anhydrous ammonia systems including refrigerated ammonia storage systems.\" In addition to basic rules for the storage and handling of anhydrous ammonia and the operation of anhydrous ammonia systems, this standard provides additional requirements for different types of refrigerated and non-refrigerated storage systems and containers, transportation and transfer of anhydrous ammonia, and use of anhydrous ammonia in connection with farm vehicles such as spraying systems.", "Section 304 of the Clean Air Act Amendments of 1990 (CAAA) mandated promulgation of the PSM standard. The PSM standard \"contains requirements for preventing or minimizing the consequences of catastrophic releases of toxic, reactive, flammable, or explosive chemicals.\" The PSM standard covers processes involving anhydrous ammonia. As provided in Appendix A of the standard, OSHA considers anhydrous ammonia a highly hazardous chemical subject to standard when it is present in quantities exceeding 10,000 pounds. Facilities with sufficient quantities of anhydrous ammonia must comply with the 14 elements of the process safety management regulation.\nFor the purposes of this standard, a process is defined as:\nany activity involving a highly hazardous chemical including any use, storage, manufacturing, handling, or the on-site movement of such chemicals, or combination of these activities. For purposes of this definition, any group of vessels which are interconnected and separate vessels which are located such that a highly hazardous chemical could be involved in a potential release shall be considered a single process.\nAny employer engaging in a process subject to the PSM standard must adhere to requirements designed to prevent an accidental release of a highly hazardous chemical or mitigate the consequences of such a release to prevent a catastrophic outcome. The CAAA requires 14 elements to be components of the PSM standard, and these elements generally have been grouped into the following requirements for employers:\n1. develop and maintain written safety information identifying workplace chemical and process hazards, equipment used in the processes, and technology used in the processes;\n2. perform a workplace hazard assessment, including, as appropriate, identification of potential sources of accidental releases, an identification of any previous release within the facility which had a likely potential for catastrophic consequences in the workplace, estimation of workplace effects of a range of releases, estimation of the health and safety effects of such range on employees;\n3. consult with employees and their representatives on the development and conduct of hazard assessments and the development of chemical accident prevention plans and provide access to these and other records required under the standard;\n4. establish a system to respond to the workplace hazard assessment findings, which shall address prevention, mitigation, and emergency responses;\n5. periodically review the workplace hazard assessment and response system;\n6. develop and implement written operating procedures for the chemical process including procedures for each operating phase, operating limitations, and safety and health considerations;\n7. provide written safety and operating information to employees and train employees in operating procedures, emphasizing hazards and safe practices;\n8. ensure contractors and contract employees are provided appropriate information and training;\n9. train and educate employees and contractors in emergency response in a manner as comprehensive and effective as that required by the regulation promulgated pursuant to Section 126(d) of the Superfund Amendments and Reauthorization Act;\n10. establish a quality assurance program to ensure that initial process related equipment, maintenance materials, and spare parts are fabricated and installed consistent with design specifications;\n11. establish maintenance systems for critical process related equipment including written procedures, employee training, appropriate inspections, and testing of such equipment to ensure ongoing mechanical integrity;\n12. conduct pre-start-up safety reviews of all newly installed or modified equipment;\n13. establish and implement written procedures to manage change to process chemicals, technology, equipment and facilities; and\n14. investigate every incident which results in or could have resulted in a major accident in the workplace, with any findings to be reviewed by operating personnel and modifications made if appropriate.\nThe PSM standard does not apply to retail facilities. While the standard does not provide a definition of \"retail facility,\" OSHA's interpretation is that the retail facility exemption applies to any establishment in which more than half of the income it obtains from the sale of highly hazardous chemicals covered by the PSM standard comes from direct sales to end users. According to information provided on its EPA RMP, West Fertilizer Company reportedly was not covered by this standard.", "This standard provides limits to employee exposure to certain substances. As provided in Table Z-1 of this standard, the permissible exposure limit (PEL) of an employee to anhydrous ammonia is:\n50 parts of vapor or gas per million parts of contaminated air by volume at 25 degrees C and 760 Torr (50 ppm) as measured as an eight-hour time weighted average (TWA); or 35 milligrams of substance per cubic meter of air (35 mg/m 3 , approximate) as measured as an eight-hour time TWA.", "The EPA is authorized to regulate production, distribution, storage, and release of most chemicals in commerce. Among the many environmental authorities the EPA relies upon, the Emergency Planning and Community Right-to-Know Act (EPCRA) and Section 112(r) of the Clean Air Act directly address the potential risks from facilities holding chemical hazards.", "EPCRA Section 302 directs EPA to list \"extremely hazardous substances\" (EHS) that are to be the subject of emergency planning and to establish threshold planning quantities for each substance. Generally, EPA has included chemicals in this list if they can harm people exposed to them for only a short period of time. The implementing regulation requires owners or operators of facilities where an EHS is present at an amount above its threshold planning quantity to notify their SERC, which then is required to notify the EPA Administrator. Anhydrous ammonia is an EHS with a threshold planning quantity of 500 pounds.\nEPCRA Section 303 requires LEPCs to work with facilities handling EHS to develop response procedures, evacuation plans, and training programs for people who will be the first to respond in the event of an accident. Upon request, facility owners and operators are required to provide an LEPC with any additional information that it finds necessary to develop or implement an emergency plan.\nEPCRA Section 304 requires that facilities immediately report a release of any EHS or any \"hazardous substance\" (a much broader category of chemicals defined under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Section 102(a)) that exceeds the reportable quantity to appropriate state, local, and federal officials. Releases of a reportable quantity of a \"hazardous substance\" also must be reported to the National Response Center under CERCLA Section 103(a). (For more on CERCLA, see CRS Report RL30798, Environmental Laws: Summaries of Major Statutes Administered by the Environmental Protection Agency , which includes a summary of CERCLA.) EPCRA Section 304 also would require reporting of any release above the reporting threshold for anhydrous ammonia.\nAs noted in the section above for ammonium nitrate, EPCRA Section 311 requires owners or operators of local facilities regulated by OSHA to submit an MSDS for each \"hazardous chemical,\" or a list of such chemicals, to the LEPC, the SERC, and the local fire department. The OSHA defines \"hazardous chemicals,\" but EPCRA Section 311(e)(5) excludes \"fertilizer held for sale by a retailer to the ultimate customer\" from this definition.\nAlso as described previously, EPCRA Section 312 requires the same employers to submit annually an emergency and hazardous chemical inventory form to the LEPC, SERC, and local fire department. West Fertilizer Company reported their chemical inventory to the state of Texas.", "As described above, the CAA Section 112(r)(7) requires owners and operators of covered facilities that produce, process, handle, or store certain extremely hazardous substances, including, but not necessarily limited to extremely hazardous substances under EPCRA, to submit Risk Management Plans (RMPs) to the EPA. RMPs summarize the potential threat of unanticipated emissions into the ambient air of certain dangerous chemicals and facilities' plans to prevent such releases and mitigate any damage. Congress explicitly required planning for possible releases of anhydrous ammonia.", "As congressional policymakers consider the ramifications of the explosion in West, TX, they may face several policy issues. These policy issues include the challenges arising from relying on reporting of chemical inventories by regulated facilities; the potential for omission and duplication in existing regulatory reporting; the long intervals between inspection at many such facilities; the ability of federal, state, and local government agencies to share information effectively among themselves; and public and first-responder access to regulatory information.", "Congressional policymakers might consider mechanisms to address the data quality issues arising from reporting by facilities. Regulatory programs often require facilities to report their chemical holdings, but such reporting creates the potential for the regulatory agency to be unaware if the facility does not report. This may be especially true for federal agencies that rely on state or local implementation of federal requirements. In addition, the quality of such information may be questioned due to its self-reported nature. For example, the Government Accountability Office has found that DHS does not use self-reported vulnerability assessment information in determining the security risk at chemical facilities.", "Because different chemicals often have different reporting requirements, regulated entities often report different information to different regulating agencies. For example, as noted above, DHS, EPA, and state regulatory agencies receive different information; each chemical may fall under some, all, or no regulatory requirements due to particular exclusions or exemptions. Consequently, no central overview of facility chemical holdings exists, and may create the potential for inefficient regulation.", "Interested Members of Congress might focus upon the rate of inspection under the various regulatory programs. Under some federal programs, inspection has not occurred at a pace expected by policymakers. For example, the DHS stated that it had inspected and approved site security plan implementation at 166 of 4,298 facilities regulated under CFATS as of July 2013. In 2009, the EPA Office of Inspector General reported that EPA had inspected less than half of the EPA-identified high-risk facilities and less than 35% of all facilities reporting under Section 112(r) of the Clean Air Act. Inspection of facilities reporting their chemical holdings may increase the trustworthiness of supplied information. Also, regular inspection may yield benefits in enhanced compliance with best practices and regulatory adherence. Of course, increased inspection relies upon a substantial inspector cadre, which would require additional appropriations for support. Similarly, delegation of inspection responsibilities for federal programs to state agencies might reduce the number of discrete inspections but increase the costs borne by those states. Conversely, additional efficiency might be achieved with a cross-trained inspectorate that might inspect a facility under all, or most, applicable regulatory regimes.", "Congressional policymakers have identified information sharing in the homeland security and intelligence context as a high priority following the events of September 11, 2001. The reported gap in information between EPA, which knew of the West Fertilizer Company's existence and its anhydrous ammonia holdings, and DHS, which did not, indicates a potential gap in information sharing among federal regulators. Similarly, information possessed by the state of Texas, which knew of the West Fertilizer Company's ammonium nitrate holdings, apparently did not reach DHS. The DHS has detailed some of its information sharing activities, including sharing CFATS-regulated facility information with federal, state, and local partners, and is reinvigorating its coordination with EPA and review of EPA RMP data to identify facilities that may have failed to submit information under CFATS. Increased information sharing may also raise concern among industry stakeholders regarding the potential for inadvertent release of proprietary information due to the effects of aggregation and the increased need to transmit such information between different entities. President Obama issued an executive order on improving chemical facility safety and security, which would aim to enhance federal agency coordination and information sharing, among other activities.", "Congressional policymakers have long been interested in the balance between providing public access to information regarding chemical hazards and limiting the potential for malicious use of such information. Reporting under EPA regulation is intended to improve accident planning through increasing community and first-responder awareness of the potential for release of hazardous materials. First responders receive some of this information directly and residents of the surrounding community may obtain access to it. In contrast, DHS restricts information dissemination regarding security efforts at chemical facilities, partly in order to limit the ability of malicious actors to use such information for targeting purposes. The extent to which the residents and first responders of West, TX, knew of the potential hazards may provide insights into this balance and the effectiveness of community outreach efforts." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 3, 2, 3, 3, 3, 2, 3, 3, 1, 2, 3, 3, 2, 3, 3, 3, 2, 3, 3, 1, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "h0_full", "", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_title", "", "h1_full", "", "", "" ] }

{ "question": [ "What is the policy interest regarding the West Fertilizer Company?", "How is ammonium nitrate used in agriculture?", "In what situation ammonium nitrate become hazardous?", "What is one example of such an event?", "How has ammonium nitrate been used as a weapon?", "How did the West facility fail in regards to federal compliance?", "What entities collect information about chemical holdings?", "To what extent do these agencies share relevant information?" ], "summary": [ "The West Fertilizer Company possessed a variety of agricultural chemicals at its retail facility, but policy interest has focused on two chemicals: ammonium nitrate and anhydrous ammonia.", "Ammonium nitrate is a solid that can be used as a fertilizer, a use that generally occurs without incident.", "In combination with a fuel source and certain conditions, such as added heat or shock, confinement, or contamination, ammonium nitrate can pose an explosion hazard. Such accidents have rarely occurred, but have historically had high impacts.", "For example, the ammonium nitrate explosion in 1947 in Texas City, TX, where two ships carrying ammonium nitrate coated in wax and stored in paper bags caught fire and exploded, destroyed the entire dock area, including numerous oil tanks, dwellings, and business buildings.", "The bomb used in 1995 to attack the Murrah Federal Building in Oklahoma City, OK, contained ammonium nitrate as a component of its explosives.", "The West facility reportedly had not complied with all relevant and applicable regulatory requirements. For example, the facility reportedly had not contacted the Department of Homeland Security (DHS), which should have received information about any ammonium nitrate or anhydrous ammonia stored at the facility.", "Various federal, state, and local agencies collect mission-relevant information about chemical holdings.", "The extent to which agencies shared relevant information about chemical holdings in order to enable effective regulatory oversight is still unresolved." ], "parent_pair_index": [ -1, 0, 1, 2, 2, -1, -1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 3, 3, 3 ] }

{ "title": [ "Background", "BOP’s Organization and Workforce", "Federal Laws and Regulations Related to Retention Incentives", "BOP’s Retention Incentive Program", "Other Compensation- Based Human Capital Flexibilities", "BOP Increased Its Use of Retention Incentives and Used Them Primarily to Retain Staff in California and for Medical Professionals Nationwide", "BOP’s Total Retention Incentive Expenditures and the Number of Employees Receiving Retention Incentives Generally Increased from Fiscal Year 2012 through Fiscal Year 2016", "BOP Used Retention Incentives Primarily at Four California Institutions and for Medical Professionals Nationwide", "BOP Has a Variety of Internal Controls in Place throughout the Retention Incentive Process", "BOP’s Internal Controls Are Intended to Ensure That Retention Incentive Applications and Approvals Meet Requirements", "BOP Institutions Use Internal Controls to Help Monitor the Expiration, Continuation, or Termination of Retention Incentives", "BOP and DOJ Conduct Periodic Reviews of Retention Incentive Controls", "BOP Conducts Limited Planning and Evaluation of the Effectiveness of Retention Incentives", "BOP’s Planning for the Use of Retention Incentives is Limited", "BOP Does Not Evaluate the Effectiveness of Retention Incentives", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Bureau of Prisons’ Use of Retention Incentives by Occupations in Fiscal Year 2016", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Justice Management Division (JMD) JMD provides the Federal Bureau of Prisons senior management with guidance as it relates to Department of Justice (DOJ) policy for all matters pertaining to organization, management, and administration, including the use of human capital flexibilities such as retention incentives.\nBOP is responsible for incarcerating all federal offenders sentenced to prison. To carry out its mission, BOP, under the oversight of DOJ’s JMD, manages the human resource operations of its institutions, including the use of retention incentives. BOP administers, monitors, and oversees retention incentives through its Central Office, regional offices, and institutions.\nCentral Office. The Central Office serves as BOP’s headquarters and provides oversight of BOP operations and program areas. Within the Central Office is BOP’s Human Resource Management Division (HRMD) which is responsible for developing, implementing and administering human resource policies and programs, including the use of retention incentives that meet OPM and DOJ requirements. In addition, the Central Office’s Program Review Division (PRD) is responsible for assessing BOP programs, including human resources, to ensure that they are managed and operated effectively.\nRegional offices. BOP has six regional offices that cover the Mid- Atlantic, North Central, Northeast, South Central, Southeast, and Western regions of the United States. These offices, each led by a regional director, oversee the operations of the 122 federal institutions within their respective geographic regions of the country. According to BOP officials, regional office staff also provide local level oversight of institutions’ human capital programs, such as retention incentives, among other things.\nInstitutions. BOP institutions are managed by a warden and other officials, including an executive assistant and associate warden who generally provide overall direction and, in part, administer the institution’s human capital policies, including policies on retention incentives. Correctional services staff represent the largest segment of each institution’s workforce and are responsible for the correctional treatment, custody, and supervision of inmates. Non-correctional services staff include, among others, those employees assigned to non-correctional services management, facility operations, and the health services unit. Workers in health services and psychology services are responsible for providing inmates with medical, dental, and mental health services and include, for example, dentists, pharmacists, physicians, nurses, psychologists, and drug treatment specialists.", "The Federal Employees Pay Comparability Act of 1990 first authorized OPM to allow federal agencies to give incentives, including retention incentives, to employees. The Federal Workforce Flexibility Act of 2004 provided federal agencies increased flexibilities regarding these incentives. For example, individual retention incentives that were capped at 25 percent of an employee’s basic pay rate could be increased up to 50 percent in cases of critical agency need with OPM’s approval. Generally, under OPM regulations, an agency is authorized to pay a retention incentive to employees. This happens when the agency determines that the unusually high or unique qualifications of the employee or a special need of the agency for the employee’s services makes it essential to retain the employee and that the employee would be likely to leave federal service in the absence of an incentive. In addition, OPM requires agencies to develop plans for using retention incentives outlining, in part, the required documentation for justifying the retention incentive and any criteria for determining the amount of incentive and the length of the service period. Generally, agencies must require that employees sign a written service agreement that outlines the terms of the service such as the employee’s agreement to remain a certain length of time with the agency. Additionally, according to OPM regulations, to qualify for a retention incentive, each employee must have a performance rating of at least “fully successful” or an agency’s equivalent performance rating.", "BOP funds the majority of its retention incentives through its Salaries and Expenses appropriation account which represented almost 93 percent of BOP’s budget in FY 2016. According to BOP officials, BOP’s Central Office allocates funding from the Salaries and Expenses account to the regional offices. These regional offices then determine how to allocate their budget among various salary and expense activities, including retention incentives. HRMD delegates retention incentive determinations to each institution. In accordance with OPM requirements and BOP’s October 2016 Program Statement on Compensation, the wardens make retention incentive requests based on documented evidence that the employee possesses unusually high or unique qualifications or meets a special need of the agency and has a performance rating of at least “successful or its equivalent.” These incentives are calculated as a percentage of the employee’s basic pay and are disbursed in installments to the employee each pay period.", "In addition to retention incentives, BOP has authority to provide other compensation-based human capital flexibilities to employees, in certain circumstances. The following summarizes some of the compensation- based human capital flexibilities that BOP uses in addition to retention incentives, to retain and recruit staff:\nRecruitment and relocation incentives. BOP pays recruitment incentives to new hires and relocation incentives to current employees who elect to move to a different geographic area, when a position is likely to be difficult to fill in the absence of an incentive.\nStudent loan repayments. Using this authority, BOP may repay federally-insured student loans to attract job candidates or retain current employees.\nSpecial salary rates. With OPM approval, BOP may establish higher rates of pay for an occupation or group of occupations nationwide or in a local area when it finds the government’s recruitment or retention efforts are, or would likely become, significantly handicapped without those higher rates.\nPhysicians and dental comparability allowances. Comparability allowances may be paid to certain eligible physicians or dental professionals who enter into service agreements. These allowances are paid only to categories of physicians and dentists for which the agency is experiencing recruitment and retention problems and are fixed at the minimum amounts necessary to deal with such problems.", "", "BOP retention incentive expenditures generally increased from $10.7 million in fiscal year 2012 to $14.0 million in fiscal year 2016. Additionally, as illustrated in table 1, the number of employees who received retention incentives increased each year from 2,024 employees in fiscal year 2012 to 2,460 employees in fiscal year 2016.\nIn general, BOP employees who received retention incentives received the incentive for more than one year. For example, from fiscal year 2012 through fiscal year 2016, a total of 3,382 BOP employees received retention incentive payments. Of those, 82 percent (2,766 of 3,382) received retention incentive payments for at least 2 years and 39 percent received retention incentives all 5 years, as shown in figure 1.", "From fiscal years 2012 through 2016, BOP spent more than 97 percent of its total retention incentive expenditures on employees at four California institutions and for medical professionals nationwide. BOP’s total retention incentive expenditures for the four California institutions and medical professionals nationwide in fiscal year 2016 are provided in figure 2.\nFour California Institutions. The California institutions—United States Penitentiary (USP) Atwater, Federal Correctional Institution (FCI) Herlong, FCI Mendota, and Federal Correctional Complex (FCC) Victorville—constituted the largest portion of BOP’s total retention incentive expenditures, and the level of their expenditures remained relatively steady from fiscal year 2012 through 2016. BOP provides group retention incentives for staff at the General Schedule (GS) grades level 12 and below and those in the Federal Wage System at three institutions—USP Atwater, FCI Herlong, and FCC Victorville. BOP also provides individual retention incentives to its employees at GS grades level 12 and below and in the Federal Wage System at FCI Mendota. As shown in figure 3, our analysis of BOP data found that from fiscal years 2012 through 2016, these four California institutions had the largest percentage of retention incentive expenditures across institutions as well as the largest percentage of employees who received retention incentives.\nAdditionally, the four California institutions’ retention incentive expenditures remained relatively steady—around $8.1 to $8.2 million during the 5-year period—even though the overall number of employees who received the incentives generally increased. BOP officials told us that these California institutions’ retention incentive expenditures remained relatively steady in spite of an overall increase in the number of employees receiving incentives, in part, because in fiscal year 2013 BOP reduced the retention incentive rate—the percentage of an employee’s basic pay that determines the employee’s retention incentive— by 3 percent at the four California institutions.\nBOP officials reported using retention incentives primarily at these four institutions to supplement correctional officers’ salaries and compensate for the gap between BOP’s and other institutions’ salaries. Specifically, officials told us that these four California institutions were consistently understaffed as a result of their lower salaries in comparison to salaries offered at California state and local prisons and at other BOP institutions in California metropolitan areas. The Department of Labor’s Bureau of Labor Statistics reports that the average salary for correctional officers in California in 2016 was $70,020. For the same year, the annual average salary for BOP correctional officers at these four institutions was $50,859. To bring these four California institutions’ salaries in line with those offered by state, local, and other BOP institutions in California metropolitan areas, BOP officials told us that they first use recruitment incentives to attract and hire staff and then provide retention incentives to employees with a performance rating of at least “successful.”\nMedical Professionals. From fiscal years 2012 through 2016, BOP retention incentive expenditures for medical professionals increased by an average of approximately 21 percent per year. Our analysis showed that most recently—for fiscal years 2015 and 2016—BOP retention incentive expenditures for medical professionals accounted for the largest portion of BOP’s total retention incentive expenditures across the various occupation groups and was primarily responsible for the overall increase in BOP’s total retention incentive expenditures from fiscal year 2012 through fiscal year 2016. For example, in fiscal year 2016, BOP spent approximately 42 percent of total retention incentives expenditures for medical professionals ($5.8 million), 27 percent on correctional officers ($3.8 million), and the remaining 31 percent on employees in other occupations. In total, BOP retention incentive expenditures for medical professionals increased from approximately $2.7 million in fiscal year 2012 to $5.8 million in fiscal year 2016, as shown in figure 4. The increase accounted for 92 percent of BOP’s total increase in retention incentive expenditures during the five-year period. In comparison, BOP’s retention incentive expenditures for correctional officers and all other occupations remained relatively steady from fiscal year 2012 through fiscal year 2016, increasing by an average of approximately 1 percent per year.\nAccording to our analysis, the increase in retention incentive expenditures for medical professionals during the five years is partially explained by the increase in the number of institutions providing retention incentives to medical professionals. Specifically, from fiscal years 2012 through 2016, the number of institutions providing retention incentives to medical professionals increased from 53 institutions with 341 employees in medical occupations receiving retention incentives to 84 institutions providing retention incentives to a total of 646 employees in medical occupations.\nAccording to BOP officials, BOP primarily uses retention incentives for medical professionals in an effort to retain these employees by supplementing BOP salaries which are generally lower than salaries offered to medical professionals in the private sector. Officials told us that BOP has designated medical professional positions as hard-to-fill and, therefore, BOP retaining these professionals in a correctional setting requires the use of a variety of incentives, including retention incentives, in order to increase pay.", "", "BOP has a number of internal controls in place to ensure that retention incentive applications meet BOP and other requirements. BOP officials told us that these controls are part of a multilayered application and review process that begins at the institution and culminates at BOP’s Central Office. Our review of a random sample of 40 application packet case files for retention incentives awarded from fiscal year 2014 through fiscal year 2016 found that they all generally incorporated the internal controls described by officials. The key controls in this process include: Application review at the institution and regional levels. According to BOP officials, the retention incentive application process begins with an institution’s human resources office, whose staff complete a retention incentive application on behalf of an employee. The institution’s human resources office verifies that the information in the application justifies a retention incentive and that funds are available to pay the incentive. Although it is not required, BOP officials said that they use a retention incentive application checklist to help institutions ensure that retention incentive applications are complete. The institution’s human resources office then submits the completed application packet, which includes supporting documentation, to the warden for review. Next, the application packet is forwarded to the respective BOP regional director who also reviews it for accuracy and completeness. The regional director then adds an approval statement and forwards the packet to the Central Office for final review and approval. Of the 40 randomly selected application packet case files that we reviewed, 36 included a retention incentive checklist used by the institutions and all contained information to justify the retention incentive as well as a statement of the regional director’s approval.\nCentral Office’s final application approval. BOP policy requires that all retention incentive applications undergo two levels of review in BOP’s Central Office: first by the Human Resource Management Division’s (HRMD) Staffing and Employee Relations Section (SERS) and next by HRMD’s Personnel Director, for final review and approval. According to BOP officials, during the review process there is ongoing communication between the various entities to ensure that applications are complete and accurate; for example, if SERS finds an error in the application or requests additional information, SERS returns the application to the regional or institutional level for correction and re-review. All of the 40 BOP application packet case files that we reviewed included approvals by HRMD’s Personnel Director or an authorized official, as required by BOP policy.\nAnnual review and re-certification to continue retention incentives. According to BOP policy, on an annual basis, institutions’ human resources offices are required to review employees’ retention incentives to determine whether the incentive is still warranted. Payment of a retention incentive may be recertified and continued as long as the conditions giving rise to the original determination to pay the incentive still exist and funds are available. For each retention incentive, an institution’s human resources office must determine whether to continue, adjust, or terminate the incentive within one year of the initial or most recent approval. If the human resources office decides to continue the retention incentive, the institution’s warden must again submit a retention incentive application. Applications to continue the retention incentive proceed through the same review and approval process as initial applications. Of the 40 application files that we reviewed, 29 were continuations and 8 were initial requests for a retention incentive.", "According to BOP officials, after the initial approval of a retention incentive, an institution’s human resources office has primary responsibility for the monitoring of retention incentive payments. According to officials, institutions use a variety of internal controls to monitor the expiration, continuation, or termination of retention incentives, for example: Monitoring expiration dates. BOP officials stated that institutions’ human resources offices monitor retention incentives in order to identify incentives that are approaching their expiration date and need to be terminated or renewed. For example, according to BOP officials from USP Atwater, FCC Butner and FCI Phoenix, staff from their institutions’ human resources offices may generate a retention incentive activity report and cross reference this report with their locally generated tracking sheets. This process helps identify retention incentives approaching their expiration dates so that the human resources offices can submit a request for continuation before the incentive expires.\nUsing automated reminders to prompt file review. BOP officials stated that institutions use automated reminders to alert human resources staff to check the records of retention incentive recipients for human resources-related events such as promotions or relocations that could affect the continuation of a retention incentive.\nFollowing a checklist of steps for relocation processes. BOP officials told us that in April 2016 they instituted a checklist that outlines steps that an institution’s human resources staff must take when employees relocate to a different institution. Based on our review of this checklist, one step on the sheet prompts human resources staff to review the employee’s retention incentive. According to BOP policy, when an employee receiving a retention incentive transfers to another location, the human resources office where the employee was receiving the retention incentive is responsible for submitting a request to terminate the incentive. The termination must be effective the last day of the pay period that the employee occupies the position.\nSubmitting forgiveness waivers. BOP officials told us that institutions submit forgiveness waivers if a request to continue a retention incentive is not submitted and approved prior to the retention incentive expiring. BOP officials said that a forgiveness waiver is considered an acknowledgement of an administrative error and is a late submission of a retention incentive renewal that was still warranted. The waiver is not a request to forgive an overpayment since the employee was still considered to be eligible for the retention incentive. Of the 40 retention incentive applications that we reviewed, 5 applications included forgiveness waivers to excuse the tardiness of the filing and request continuations of the retention incentive.", "According to BOP officials, BOP conducts periodic audits and reviews of its human capital activities and related internal controls, to ensure that retention incentives are being used appropriately. The following offices conduct various audits and reviews involving BOP’s retention incentives: BOP’s Program Review Division (PRD) audits regional and institutional human resources functions. PRD audits BOP’s regional and institutional human resources offices to ensure that they are in compliance with BOP policies and procedures. According to BOP officials, as part of the audit process, PRD audits retention incentives to ensure that they have the proper approvals and are justified. PRD audits each institution’s human resources office at least every three years. During these audits, PRD generates retention incentive activity reports (the same reports that institutions run when monitoring for expiration dates), to check the accuracy of retention incentive programs under review. Following each audit, PRD issues a final report with findings to the institution and to the staff operating the program area under audit. Institutions respond to the report with corrective actions that the institution will take to address the findings. When the institution has resolved all corrective actions from the audit, the audit is closed. Additionally, each quarter, PRD provides HRMD with a report that summarizes its quarterly audit findings. According to BOP officials, HRMD uses these reports to identify any agency-wide trends that need to be addressed.\nOur review of BOP data showed that between fiscal years 2012 and 2016, PRD conducted nearly 200 audits. For example, in the fourth quarter of fiscal year 2016, PRD audited five institutions’ and regional offices’ human resource management functions. During these audits, PRD identified nine deficiencies, one of which pertained to retention incentives. Specifically, it found that one audited institution did not terminate an employee’s retention incentive after the employee had relocated to another institution. To correct the deficiency, the institution cancelled the retention incentive which discontinued future disbursements. According to BOP officials, a bill was generated to recoup the overpayment from the employee.\nBOP institutions conduct annual operation reviews of internal functions, such as human resources. BOP officials told us that each institution conducts annual operational reviews of various internal functions, such as human resources. According to BOP’s Program Review Guidelines for Human Resource Servicing Offices, during these reviews, institutions are required to review supporting documentation for staff currently receiving an incentive to determine if the incentives are still warranted. If the initial request for the retention incentive was made over the preceding 12 months, institutions are also required to ensure that it was approved. According to BOP officials, the results of these reviews are reported to PRD through the Central Office.\nDOJ’s Justice Management Division (JMD) audits BOP’s human resources programs. According to BOP officials, JMD conducts audits of component-level human resources programs to determine whether BOP’s systems are compliant with DOJ policy and aligned with DOJ’s Human Capital Strategic Plan. JMD’s most recent audit of BOP’s human resources programs that included a review of BOP’s retention incentives occurred in September 2010 at BOP’s Human Resource Service Center in Grand Prairie, Texas. JMD found that in some cases BOP granted retention incentives prior to the signing of service agreements. JMD also found that BOP lacked documentation to authorize a group retention incentive for employees at its Victorville, California institution. BOP’s written response to the findings stated that JMD incorrectly applied the service agreement requirement, as service agreements were not warranted in the specific case that it identified. Additionally, BOP stated that the documents JMD identified as missing from the case files in question were kept in separate files and not required to be part of the retention incentive application. JMD agreed with BOP’s responses and in January 2013, JMD closed out the audit’s findings noting that these responses satisfied all required corrective actions.", "", "While BOP takes a number of steps to determine current workforce needs and how to fill those needs, BOP does not strategically plan for how retention incentives can be used to meet long-term human capital goals. BOP officials stated that planning for human capital needs is conducted at institutions during quarterly workforce utilization meetings or manpower salary meetings. During these meetings, executive staff at the institution discuss the current state of the institution’s workforce. According to the BOP officials, while considering attrition, hiring, and turnover rates, the executive staff decide strategies they will employ to attract and retain employees for their current needs.\nWhile officials we spoke with at four institutions have discussed retention incentives at their workforce utilization meetings, details about the content of these discussions ranged. According to these officials and our review of meeting minutes from the four institutions, discussions about retention incentives respond to each institution’s short-term staffing situation rather than address future staffing needs based on an overall strategic human capital plan. For example:\nUSP Atwater officials told us that they review the current turnover rate, budget, projected vacancies, and use of retention incentives at annual budget development meetings. Meeting minutes reflected the following on retention incentives: “retention … still necessary to retain staff and hard-to-fill positions.”\nFCC Butner is a medical facility that offers retention incentives to all medical officers (all types of doctors) and nurses (practitioners, registered, etc.) at the institution. According to Butner officials, during workforce utilization meetings, Butner officials discuss recruitment and staffing trends for the institution and plans for how to address any staffing challenges. Meeting minutes we reviewed did not indicate specific discussions about the use of retention incentives.\nFCC Pollock executive staff discuss current institutional salary expenditures and projections and the status of vacant positions at workforce utilization meetings. While meeting minutes we reviewed indicated discussions about projected expenditures for incentive awards, the minutes did not differentiate between retention incentive awards, and other incentive awards such as recruitment or relocation incentive awards.\nFCI Phoenix officials stated that in their workforce utilization meetings, executive staff discuss salary projections and vacancy statuses. Meeting minutes we reviewed did not indicate specific discussions about the use of retention incentives.\nBOP decisions about retention incentives are currently not tied to any strategic human capital plan for how to use human capital flexibilities— such as retention incentives—to address their ongoing challenge of retaining staff in hard-to-fill positions. According to officials, retention incentives are awarded on an as-needed basis, determined by an institution’s warden, if funds are available.\nAccording to key principles for effective strategic human capital planning, such planning is an important component of an agency’s effort to develop long-term strategies for acquiring, developing, and retaining staff needed for an agency to achieve its goals. Specifically, senior leaders should be involved in developing, communicating, and implementing strategic human capital plans. Within an agency’s strategic human capital plan, the human capital policies, practices, and programs—for example, an agency’s retention incentive program—should clearly link to the human capital and program goals of the organization. By not having a strategic human capital plan that clearly establishes strategies that will be used to achieve specific human capital goals, BOP cannot ensure that its institutions are strategically managing their workforces in a manner that meets the agency’s human capital needs.\nIn August 2017, BOP officials told us that they began drafting a strategic human capital operating plan that will include strategic objectives, action plans, performance objectives and measures, and evaluation/reporting requirements. Officials stated that the plan will also include planning regarding the use of human capital flexibilities, such as retention incentives. BOP officials told us that they anticipate that the strategic human capital operating plan will be a supplement to their workforce utilization meetings and that an agency-wide plan will provide a set of strategies for all institutions to consider. However, BOP could not provide documentation of the project beginning or whether it would include a strategic approach specific to retention incentives. Including retention incentives in BOP’s strategic human capital operating plan would create a roadmap for the agency and the institutions to use to move from being reactive in their current workforce needs—for example, awarding retention incentives on an ad hoc basis when funds are available—to being strategic in how retention incentives are used and to ensure that these and other flexibilities help the agency achieve its long-term workforce goals.", "From fiscal year 2012 through fiscal year 2016, BOP spent more than $59 million on retention incentives but has not established any measures to evaluate their effectiveness. According to officials, BOP has not evaluated the effectiveness of its use of retention incentives because BOP officials consider a retention incentive successful if an employee does not leave the agency. However, BOP also uses other human capital flexibilities along with retention incentives to help retain staff. For example, BOP uses physician and dental comparability allowances—additional pay to a physician or dentist who enters into an agreement for a specified period of service—to help retain these medical personnel. According to officials, it would otherwise be difficult to compete with private sector salaries without the use of all available incentives. However, BOP has not studied whether or how retention incentives have contributed to employees’ retention in relation to other incentives such as physician and dental comparability allowances.\nAccording to our work on strategic human capital management and OPM’s guidance, it is crucial for organizations to evaluate the success of their human capital strategies, such as the use of retention incentives. In measuring the performance of these strategies and their contribution to key programmatic results, agencies can make adjustments, if necessary. For example, agencies can use evaluation results to make targeted investments in certain human capital strategies—such as the use of retention incentives—creating a cycle of strategic workforce management, where evaluation informs planning, planning dictates strategies, and strategies are evaluated for effectiveness. While BOP uses retention incentives to address critical skills gaps—such as with medical professionals—evaluating the effectiveness of retention incentives would help BOP determine whether and how retention incentives, as well as other human capital flexibilities, contribute to an employee’s continued employment at BOP or if adjustments to BOP retention strategies must be made for improved results.\nBOP officials agreed that evaluating the effectiveness of retention incentives would help them be more strategic about their human capital needs and spending on incentives. By including and implementing such an evaluation in its upcoming strategic human capital operating plan, BOP could better determine if it is making maximum use of its funds to retain the necessary qualified personnel or if changes must be made to most effectively retain its staff.", "As the largest employer within DOJ with some staff working in remote locations and undesirable conditions, BOP relies on a number of available flexibilities, including retention incentives, to help retain its employees. However, BOP currently lacks a strategic approach for using and evaluating retention incentives to address human capital goals. Given BOP’s ongoing staffing challenges, for example, retaining staff in hard-to- fill medical positions, developing a plan that includes a thoughtful blueprint for using retention incentives could help BOP better anticipate and address staffing needs. Moreover, evaluating its use of retention incentives could help BOP determine whether these incentives are effective or whether adjustments are needed to better retain its employees. By using evaluation results to inform planning, and planning to inform how retention incentives are used, BOP would be better positioned to achieve its long-term human capital goals and address its critical staffing needs.", "We are making two recommendations to BOP: 1. The Director of BOP should include in the forthcoming strategic human capital operating plan, 1) human capital goals and 2) strategies on how human capital flexibilities—including retention incentives—will be used to meet these goals. (Recommendation 1) 2. The Director of BOP should evaluate the effectiveness of BOP’s use of retention incentives to help determine whether the incentives have helped BOP achieve its human capital goals or if adjustments in retention incentives are needed. (Recommendation 2)", "We requested comments on a draft of this report from DOJ. In an email received November 15, 2017, the DOJ liaison stated that DOJ concurred with our recommendations. The Department did not provide official written comments to include in our report, but did provide written technical comments, which we incorporated as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the Attorney General and the Director of BOP. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-9627 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in Appendix III.", "This report examines (1) how BOP has used its authority to pay retention incentives; (2) what internal controls are in place for the use of retention incentives; and (3) the extent to which BOP plans for and evaluates the use of retention incentives.\nTo determine how BOP has used its authority to pay retention incentives, we reviewed BOP’s July 2012 report on its use of recruitment, relocation, and retention (3R) incentives. We then obtained underlying retention incentive expenditure data from DOJ’s Justice Management Division because it serves as the focal point for performance and financial information for all Department of Justice components and employees, including BOP. In particular, we obtained employee-level retention incentive payroll data for fiscal years 2012 through 2016. We selected this time period because it includes the most recent five complete fiscal years for which data were available and because we believe five years is sufficient time to identify trends in BOP’s retention incentive expenditures. We analyzed and aggregated the employee-level data by institution, occupation, and employee grade level. To identify trends, we compared per fiscal year expenditures across the various categories of occupations and locations across the five years. Additionally, we categorized institutions by BOP region, institutions that use group retention incentives, and institutions that use individual retention incentives. We also categorized occupations as medical professionals, correctional officers, and all other occupations and compared aggregate retention incentive expenditures for the different groups. Using information from BOP’s website and testimonial evidence from BOP officials on its health care system, for the purposes of this report, we defined medical professionals as BOP employees in occupations that provide medical, dental, and mental health care services and who do not solely provide these services in an administrative function. For the purposes of our analyses, medical professionals are dentists, dental assistants and hygienists, diagnostic radiological technologists, health aid and technicians, medical doctors (including psychiatrists), medical technologists, nurses, pharmacists, pharmacy technicians, physician assistants, and practical nurses and psychologists. To assess the employee-level retention incentive payroll data’s reliability, we obtained and analyzed documentation on systems’ capabilities and data control, interviewed data users and managers responsible for maintaining data, conducted checks for completeness and logical consistency, and compared the employee-level data to aggregated institution-level retention incentive expenditure data from BOP’s Financial Management Information System. We found the employee-level data to be sufficiently reliable for the purpose of this report.\nAdditionally for this objective, we reviewed documents such as the DOJ’s Financial Management Information System Sub-Object Classification Code Guide and the Office of Personnel Management (OPM) Handbook of Occupational Groups and Families to respectively identify the system codes used to track retention incentives expenditures and to identify the names for each occupational series code in the datasets. We also interviewed BOP Human Resource Management headquarters officials to obtain information on the primary purposes for BOP’s use of retention incentives and their views on identified retention incentive expenditures trends. We also interviewed U.S. Department of Health and Human Services’ (HHS) Public Health Service (PHS) officials to better understand how BOP and PHS manage costs, including retention incentive expenditures, for PHS staff assigned to BOP. BOP partners with PHS to acquire medical staff to provide medical care for BOP’s inmate population. BOP reimburses PHS for the costs of compensation and benefits—including retention incentive payments, if applicable—for PHS staff assigned to BOP. PHS has final approval authority for retention incentives paid to PHS staff assigned to BOP facilities. Furthermore, we obtained aggregated retention incentive expenditure data from PHS on the total amount of funds BOP reimbursed PHS for fiscal years 2012 through 2016. For the reliability of PHS’s data, we reviewed the system’s data fields to check that the appropriate fields were used to provide data and interviewed data users and managers to discuss how expenditures are recorded and maintained. We found the PHS data to be sufficiently reliable for the purpose of this report.\nTo identify and describe the internal controls that BOP has in place related to retention incentives, we obtained and analyzed documentation regarding BOP requirements and guidance for the use of retention incentives. We also interviewed officials from BOP’s Central Office who are responsible for the administration, management, and oversight of BOP’s human capital management systems, including retention incentives. We focused on the management and administrative controls used by BOP to review, approve, re-certify, and monitor retention incentives. Additionally, we interviewed the warden and human capital officers at 4 of the 122 institutions to obtain illustrative examples regarding the internal controls in place at these institutions to ensure the proper disbursement of retention incentives. We interviewed BOP officials at Federal Correctional Complex Pollock in Pollock, LA; Federal Correctional Complex Butner in Butner, NC; United States Penitentiary, Atwater in Atwater, CA and Federal Correctional Institution Phoenix, in Phoenix, AZ. These institutions were selected to ensure variation in the number and types of employees receiving retention incentives, BOP region, and security-level. Although the information we obtained from the interviews with officials at these four institutions cannot be generalized to other BOP institutions, these interviews provided important insights and perspectives about the use of retention incentives at BOP institutions. We also reviewed a non-generalizable random sample of 40 retention incentive application packet case files to determine the extent to which these files contained documentation on the internal control activities in place to monitor the application, approval, and funds disbursement processes of BOP’s retention incentive program. To identify our sample, we used employee-level expenditure data to randomly select 40 application files from the universe of BOP employees who received retention incentives from fiscal years 2014 through 2016. Each application file was reviewed by two GAO analysts who each assessed the extent to which each application contained the appropriate justification, approval signatures, and other documentation such as an application checklist and whether the application was an initial or continuation application.\nTo determine the extent to which BOP plans for and evaluates the use of retention incentives, we interviewed BOP officials regarding their experiences with retention incentives, how they use retention incentives to strategically manage their workforce needs, how the agency evaluates the effectiveness of retention incentives, and how retention incentives contribute to BOP’s broader human capital goals. We then compared these efforts to our work on strategic human capital planning, specifically in terms of planning for and evaluating the use of human capital flexibilities. Additionally, we interviewed the warden and human capital officers at four BOP institutions mentioned above to obtain illustrative examples of how workforce planning occurs at these institutions. We also reviewed the DOJ’s Office of Inspector General Report 16-02 “Review of the Federal Bureau of Prisons’ Medical Staffing Challenges” (March 2016) and our past work to better understand the challenges that BOP faces in retaining medical professionals and other staff.", "Table 2 provides the Bureau of Prisons’ (BOP) fiscal year 2016 retention incentive expenditures by various occupations and groups of occupations, such as medical professionals, correctional officers, and other occupations. A range of occupations are reflected in the table primarily as a result of four California institutions—United States Penitentiary (USP) Atwater, Federal Correctional Institution (FCI) Herlong, FCI Mendota, and Federal Correctional Complex Victorville—providing retention incentives to all employees at General Schedule grades level 12 and below and those in the Federal Wage System.", "", "", "In addition to the contact named above, Dawn Locke (Assistant Director) and Meghan Squires (Analyst-in-Charge) managed the work. Also, David Alexander, Renee Caputo, Willie Commons III, Jamarla Edwards, Robert Goldenkoff, Chelsa Gurkin, Eric Hauswirth, Janice Latimer, Lerone Reid, Rachel Stoiko, and Adam Vogt made significant contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "h0_title", "h0_full", "h0_full", "", "", "", "", "h1_title", "h1_full", "h1_full", "h1_full", "", "", "h0_full h2_full", "", "", "", "" ] }

{ "question": [ "How did BOP's retention incentive expenditures change from 2012 to 2016?", "What groups were targeted in this expenditure increase?", "Why are retention efforts especially important for medical professionals?", "What is the current status of is BOP's plans regarding retention incentives?", "How does BOP currently implement its planning for human capital needs?", "Why would a better human capital plan help BOP?", "In what way would evaluating the use of retention initiatives be beneficial?", "What does this report address?", "In the production of this report, what quantitative data did GAO acquire?", "What other data did GAO gather and analyze?", "What interview data did GAO collect?" ], "summary": [ "From fiscal years 2012 to 2016, the Department of Justice's (DOJ) Federal Bureau of Prisons' (BOP) total retention incentive expenditures generally increased from $10.7 to $14.0 million and the number of employees receiving retention incentives increased from 2,024 to 2,460.", "During those five years, BOP spent more than 97 percent of its total retention incentive expenditures on employees at four BOP institutions in California and for medical professionals nationwide. Further, total retention incentive expenditures for medical professionals increased by an average of 21 percent per year (see figure).", "According to BOP officials, BOP uses retention incentives, for example, to supplement BOP's medical professionals' salaries which are generally lower than private sector salaries.", "BOP takes steps to determine workforce needs and how to fill those needs, but has not strategically planned for and evaluated its use of retention incentives. Additionally BOP has not evaluated the effectiveness of its use of retention incentives in retaining staff. As a result, BOP does not know whether retention incentives have contributed to employees' retention in relation to other incentives used by BOP.", "According to BOP, planning for human capital needs is conducted at institutions during quarterly meetings, but discussions about these incentives respond to short-term staffing situations rather than proactively addressing future staffing needs.", "Including human capital goals and strategies in BOP's human capital plan would create a roadmap so the agency could move from being reactive to its current workforce needs to being strategic in trying to achieve its long-term workforce goals.", "Consistent with key principles for strategic human capital planning, planning for and evaluating the use of retention incentives could help BOP better determine if these incentives are an efficient and effective means by which to retain staff.", "This report addresses: (1) how BOP used its authority to pay retention incentives; (2) internal controls BOP has in place for the use of retention incentives; and (3) the extent to which BOP plans for and evaluates the use of retention incentives.", "GAO obtained employee-level retention incentive expenditure data from DOJ's Justice Management Division for fiscal years 2012 through 2016.", "GAO also reviewed agency documentation, such as policy statements and 40 randomly selected retention incentive application packet case files from fiscal years 2014 through 2016.", "GAO also interviewed officials from BOP's Central Office and four correctional facilities that use retention incentives, selected to reflect variation in the number and types of employees receiving retention incentives, BOP regions, and BOP institution security levels." ], "parent_pair_index": [ -1, 0, 1, -1, 0, 0, 0, -1, 0, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 4, 4, 4, 4, 1, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "How the Social Security Program Is Financed", "The Social Security Trust Funds as Designated Accounts", "Social Security Trust Fund Revenues", "Social Security Trust Fund Costs", "Social Security Trust Fund Operations", "Investment of the Social Security Trust Funds", "Off-Budget Status of the Social Security Trust Funds", "The Social Security Trust Funds as Accumulated Holdings", "The Social Security Trust Funds and the Level of Federal Debt", "The Social Security Trust Funds and Benefit Payments", "Appendix. Projected Trust Fund Dates, 1983-2019" ], "paragraphs": [ "", "The Social Security program pays benefits to retired or disabled workers and their family members and to the family members of deceased workers. As of March 2019, there were 63.3 million Social Security beneficiaries. Approximately 70% of those beneficiaries were retired workers and 13% were disabled workers. The remaining beneficiaries were the survivors of deceased insured workers or the spouses and children of retired or disabled workers.\nSocial Security is financed primarily by payroll taxes paid by covered workers and their employers. The program is also credited with federal income taxes paid by some beneficiaries on a portion of their benefits, reimbursements from the General Fund of the Treasury for various purposes, and interest income from investments held by the Social Security trust funds. Social Security tax revenues are invested in U.S. government securities (special issues) held by the trust funds, and these securities earn interest. The tax revenues exchanged for the U.S. government securities are deposited into the General Fund of the Treasury and are indistinguishable from revenues in the General Fund that come from other sources. Because the assets held by the trust funds are U.S. government securities, the trust fund balance represents the amount of money owed to the Social Security trust funds by the General Fund of the Treasury. Funds needed to pay Social Security benefits and administrative expenses come from the redemption or sale of U.S. government securities held by the trust funds.\nThe Secretary of the Treasury (the Managing Trustee of the Social Security trust funds) is required by law to invest Social Security revenues in securities backed by the U.S. government. The purchase of U.S. government securities allows any surplus Social Security revenues to be used by the federal government for other (non-Social Security) spending needs at the time. This trust fund financing mechanism allows the General Fund of the Treasury to borrow from the Social Security trust funds. In turn, the General Fund pays back the trust funds (with interest) when the trust funds redeem the securities. The process of investing Social Security revenues in securities and redeeming the securities as needed to pay benefits is ongoing.\nThe Social Security trust funds are both designated accounts within the U.S. Tr easury and the accumulated holdings of special U.S. government obligations. Both represent the funds designated to pay current and future Social Security benefits.", "The Social Security program is financed primarily by revenues from Federal Insurance Contributions Act (FICA) taxes and Self-Employment Contributions Act (SECA) taxes. FICA taxes are paid by both employers and employees, but it is employers who remit the taxes to the U.S. Treasury. Employers remit FICA taxes on a regular basis throughout the year (e.g., weekly, monthly, quarterly or annually), depending on the employer's level of total employment taxes (including FICA and federal personal income tax withholding). The FICA tax rate of 7.65% each for employers and employees has two components: 6.2% for Social Security and 1.45% for Medicare Hospital Insurance. The SECA tax rate is 15.3% for self-employed individuals, with 12.4% for Social Security and 2.9% for Medicare Hospital Insurance. The respective Social Security contribution rates are levied on covered wages and net self-employment income up to $132,900 in 2019. Self-employed individuals may deduct one-half of the SECA taxes for federal income tax purposes. SECA taxes are normally paid once a year as part of filing an annual individual income tax return. In 2018, Social Security payroll taxes totaled $885.1 billion and accounted for 88.2% of the program's total income.\nIn addition to payroll taxes, the Social Security program receives income from other sources. First, certain Social Security beneficiaries must include a portion of their Social Security benefits in taxable income for the federal income tax, and the Social Security program receives a portion of those taxes. In 2018, revenue from the taxation of benefits totaled $35.0 billion, accounting for 3.5% of the program's total income. Second, the program receives reimbursements from the General Fund of the Treasury for a variety of purposes. General Fund reimbursements totaled $0.2 billion, accounting for less than 0.1% of the program's total income. Finally, the Social Security program receives interest income from the U.S. Treasury on its investments in special U.S. government obligations. Interest income totaled $83.3 billion, accounting for 8.3% of the program's total income.\nThe Internal Revenue Service (IRS) processes the tax returns and tax payments for federal employment taxes and federal individual income taxes. All of the tax payments are deposited in the U.S. Treasury along with all other receipts from the public for the federal government.", "Within the U.S. Treasury, there are numerous accounts established for internal accounting purposes. Although all of the monies within the U.S. Treasury are federal monies, the designation of an account as a trust fund allows the government to track revenues dedicated for specific purposes (as well as expenditures). In addition, the government can affect the level of revenues and expenditures associated with a trust fund through changes in the law.\nSocial Security program income and outgo are accounted for in two separate trust funds authorized under Title II of the Social Security Act: (1) the Federal Old-Age and Survivors Insurance (OASI) Trust Fund and (2) the Federal Disability Insurance (DI) Trust Fund. Under current law, the two trust funds are legally distinct and do not have authority to borrow from each other. This is important given projections showing that the asset reserves held by the OASI fund will be depleted in 2034, whereas the asset reserves held by the DI fund will be depleted in 2052. Following the depletion of trust fund reserves (2052 for DI and 2034 for OASI), continuing income is projected to cover 91% of DI scheduled benefits and 77% of OASI scheduled benefits. In the past, Congress has authorized temporary interfund borrowing and payroll tax reallocations between OASI and DI to address funding imbalances. This CRS report discusses the operations of the OASI and DI trust funds on a combined basis, referring to them collectively as the Social Security trust funds . On a combined basis, the trust funds are projected to remain solvent until 2035, at which point continuing income is projected to cover 80% of program costs. (For a discussion of the status of the DI trust fund, see CRS Report R43318, The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status .)", "The Social Security trust funds receive a credit equal to the Social Security payroll taxes deposited in the U.S. Treasury by the IRS. The payroll taxes are allocated between the OASI and DI trust funds based on a proportion specified by law. A provision included in the Bipartisan Budget Act of 2015 ( P.L. 114-74 ) temporarily directs a larger share of total payroll tax revenues to the DI fund. For 2016 to 2018, the 12.4% payroll tax rate is allocated as follows: 10.03% for the OASI fund and 2.37% for the DI fund. Beginning in 2019, the allocation reverts back to 10.6% for the OASI fund and 1.8% for the DI fund.", "The U.S. Treasury makes Social Security benefit payments to individuals on a monthly basis, as directed by the Social Security Administration (SSA) as to whom to pay and the amount of the payment. When benefit payments are made by the U.S. Treasury, the Social Security trust funds are debited for the payments. Periodically, the Social Security trust funds are also debited for the administrative costs of the Social Security program. These administrative costs are incurred by several government agencies, including SSA, the U.S. Treasury, and the IRS.", "The annual revenues to the Social Security trust funds are used to pay current Social Security benefits and administrative expenses. If, in any year, revenues are greater than costs, the surplus Social Security revenues in the U.S. Treasury are available for spending by the federal government on other (non-Social Security) spending needs at the time. If, in any year, costs are greater than revenues, the cash flow deficit is offset by selling some of the accumulated holdings of the trust funds (U.S. government securities) to help pay benefits and administrative expenses.\nThere are two measures of Social Security trust fund operations: the annual cash flow operations and the accumulated holdings (or trust fund balance). The annual cash flow operations of the Social Security trust funds are a measure of current revenues and current costs. The cash flow operations are positive when current revenues exceed costs (a cash flow surplus) and negative when current costs exceed revenues (a cash flow deficit). In years with cash flow deficits, the Social Security program (unlike other federal programs that operate without a trust fund) may use the accumulated holdings of the Social Security trust funds from prior years to help pay benefits and administrative expenses.\nAlthough Social Security is a pay-as-you-go system, meaning that current revenues are used to pay current costs, changes made to the Social Security program in 1983 began a sustained period of annual cash flow surpluses through 2009. Since 2010, however, Social Security has had annual cash flow deficits (program costs have exceeded tax revenues). The 2019 Annual Report of the Social Security Board of Trustees projects that, under their intermediate assumptions, annual cash flow deficits will continue throughout the 75-year projection period (2019-2093).\nAt the end of 2018, the Social Security trust funds had accumulated holdings (asset reserves) of more than $2.9 trillion. The 2019 Annual Report projects that the trust funds will have asset reserves (a positive balance) until 2035, meaning that Social Security benefits scheduled under current law can be paid in full and on time until then. This is the same year projected in last year's report.\nIn addition, the 2019 Annual Report shows the 75-year actuarial deficit for the Social Security trust funds. The actuarial deficit is the difference between the present discounted value of scheduled benefits and the present discounted value of future taxes plus asset reserves held by the trust funds. It can be viewed as the amount by which the payroll tax rate would have to be increased to support the level of benefits scheduled under current law throughout the 75-year projection period (or, roughly the amount by which the payroll tax rate would have to be increased for the trust funds to remain fully solvent throughout the 75-year period). The 2019 Annual Report projects that the 75-year actuarial deficit for the trust funds is equal to 2.78% of taxable payroll. With respect to the change in the projected 75-year actuarial deficit, the trustees state,\nA 0.05 percentage point increase in the OASDI actuarial deficit would have been expected if nothing had changed other than the one-year shift in the valuation period from 2018 through 2092 to 2019 through 2093. The effects of updated demographic, economic, and programmatic data, and improved methodologies, collectively reduced the actuarial deficit by 0.11 percent of taxable payroll, offsetting most of the effect of changing the valuation period.\nAs noted above, on a combined basis, the Social Security trust funds are projected to have asset reserves sufficient to pay full scheduled benefits until 2035 . Considered separately, the OASI Trust Fund is projected to have sufficient asset reserves until 2034 (last year's report also projected 2034 as the depletion year) and the DI Trust Fund is projected to have sufficient asset reserves until 2052 (20 years later than projected in last year's report). The trustees note,\nIn last year's report, the projected reserve depletion year was the same for OASI and 20 years earlier (2032) for DI. The change in the reserve depletion for DI is largely due to continuing favorable experience for DI applications and benefit awards. Disability applications have been declining steadily since 2010, and the total number of disabled-worker beneficiaries in current payment status has been falling since 2014. Relative to last year's Trustees Report, disability incidence rates are lower in 2018. They are also assumed to rise more gradually from current levels to reach ultimate levels at the end of 10 years that are slightly lower. Accordingly, the projected Trust Fund depletion date is 20 years later and the 75-year actuarial deficit (0.12 percent of taxable payroll) is 0.09 percentage points lower than was projected last year.\nTable 1 shows the annual cash flow operations of the Social Security trust funds (noninterest income, cost, and cash flow surplus/deficit) for the historical period 1957 to 2018. From 1957 to 1983, the last time Congress enacted major amendments to the program, the Social Security trust funds operated with cash flow deficits (cost exceeded noninterest income) in 20 of the 28 years. Since 1984, the trust funds have operated with cash flow deficits in nine of the past 35 years (2010 to 2018).\nTable 2 shows projected cash flow operations of the Social Security trust funds (noninterest income, cost, and cash flow deficits) for the 2019 to 2034 period, as projected by the trustees in the 2019 Annual Report (under the intermediate assumptions).\nOne way to measure the cash flow operations of the trust funds is to take the ratio of noninterest income to cost for each year. A ratio greater than 100% indicates positive cash flow (a cash flow surplus); a ratio less than 100% indicates negative cash flow (a cash flow deficit). Figure 1 shows the ratio of current noninterest income to current cost for the Social Security trust funds each year over the historical period 1957 to 2018 and over the 2019 to 2034 period, as projected by the trustees in the 2019 Annual Report (under the intermediate assumptions).\nAs shown in the figure, in 2009, noninterest income of $689.2 billion divided by a cost of $685.8 billion results in a ratio just over 100% (100.5%), indicating a cash flow surplus for the Social Security trust funds that year. By comparison, in 2018, noninterest income of $920.1 billion divided by a cost of $1,000.2 billion results in a ratio of 92.0%, indicating a cash flow deficit.\nIn the 2019 Annual Report, the Social Security trustees project that the ratio of current noninterest income to current cost will remain below 100% for the 75-year projection period (2019-2093), with the gap between noninterest income and cost increasing over time (under the intermediate assumptions).\nWhen the Social Security trust funds operate with annual cash flow deficits, the U.S. Treasury can continue to pay benefits scheduled under current law as long as the accumulated balance in the trust funds is sufficient to cover the costs. This is because the Social Security program has budget authority to pay benefits in full and on time as long as there is an adequate balance in the Social Security trust funds (the designated accounts). When current Social Security revenues are not sufficient to pay benefits, however, the U.S. government must raise the funds necessary to honor the redemption of U.S. government obligations held by the Social Security trust funds as they are needed to pay benefits. If there are no surplus governmental receipts, the U.S. government may raise the necessary funds by increasing taxes or other income, reducing non-Social Security spending, borrowing from the public (i.e., replacing bonds held by the trust funds with bonds held by the public), or a combination of these measures.", "The Secretary of the Treasury is required by law to invest Social Security revenues in securities backed by the U.S. government. In addition, the Social Security trust funds receive interest on its holdings of special U.S. government obligations. Each U.S. government security issued by the U.S. Treasury for purchase by the Social Security trust funds must be a paper instrument in the form of a bond, note, or certificate of indebtedness. Specifically, Section 201(d) of the Social Security Act states,\nEach obligation issued for purchase by the Trust Funds under this subsection shall be evidenced by a paper instrument in the form of a bond, note, or certificate of indebtedness issued by the Secretary of the Treasury setting forth the principal amount, date of maturity, and interest rate of the obligation, and stating on its face that the obligation shall be incontestable in the hands of the Trust Fund to which it is issued, that the obligation is supported by the full faith and credit of the United States, and that the United States is pledged to the payment of the obligation with respect to both principal and interest. The Managing Trustee may purchase other interest-bearing obligations of the United States or obligations guaranteed as to both principal and interest by the United States, on original issue or at the market price, only where he determines that the purchase of such other obligations is in the public interest.\nAny interest or proceeds from the sale of U.S. government securities held by the Social Security trust funds must be paid in the form of paper checks from the General Fund of the Treasury to the Social Security trust funds. The interest rates paid on the securities issued to the Social Security trust funds are tied to market rates.\nFor internal federal accounting purposes, when special U.S. government obligations are purchased by the Social Security trust funds, the U.S. Treasury is shifting surplus Social Security revenues from one government account (the Social Security trust funds) to another government account (the General Fund). The special U.S. government obligations are physical documents held by SSA, not the U.S. Treasury. The securities held by the Social Security trust funds are redeemed on a regular basis. These special U.S. government obligations, however, are not resources for the federal government because they represent both an asset and a liability for the government.", "For federal budget purposes, on-budget status generally refers to programs that are included in the annual congressional budget process, whereas off-budget status generally refers to programs that are not included in the annual congressional budget process.\nSocial Security is a federal government program that, like the Postal Service, has had its receipts and (most) outlays designated by law as off budget. The off-budget designation, however, has no practical effect on program funding, spending, or operations. The annual congressional budget resolution, in its legislative language, separates the off-budget totals (receipts and outlays) from the on-budget totals (receipts and outlays). The report language accompanying the congressional budget resolution usually shows the unified budget totals (which combine the on- and off-budget amounts) as well as the separate on- and off-budget totals. The President's budget tends to use the unified budget measures in discussing the budget totals. The President's budget documents also include the totals for the on- and off-budget components, as required by law. The Congressional Budget Office uses the unified budget numbers in its analyses of the budget; it generally does not include on- and off-budget data in its regular annual reports.\nThe unified budget framework is important because it includes all federal receipts and outlays, providing a more comprehensive picture of the size of the federal government and the federal budget's impact on the economy. In the unified budget, the Social Security program is a large source of both federal receipts (35.2% in FY2018) and federal outlays (25.1% in FY2018). For purposes of the unified budget, the annual Social Security cash flow surplus or deficit is counted in determining the overall federal budget surplus or deficit.", "The Social Security trust funds can be viewed as trust funds, similar to any private trust funds, that are to be used for paying current and future benefits (and administrative expenses). By law, the Social Security revenues credited to the trust funds (within the U.S. Treasury) are invested in non-marketable U.S. government obligations. These obligations are physical (paper) documents issued to the trust funds and held by SSA. When the obligations are redeemed, the U.S. Treasury must issue a check (a physical document) to the Social Security trust funds for the interest earned on the obligations.\nUnlike a private trust that may hold a variety of assets and obligations of different borrowers, the Social Security trust funds can hold only U.S. government obligations. The sale of these obligations by the U.S. government to the Social Security trust funds is federal government borrowing (from itself) and counts against the federal debt limit. The requirement that the Social Security trust funds purchase U.S. government obligations serves several purposes, such as\noffering a mechanism for the Social Security program to recoup the surplus revenues loaned to the rest of the government; paying interest so that the loan of the surplus revenues does not lose value over time; ensuring that the Social Security trust funds (and not other government accounts) receives credit for the interest earnings; ensuring a level of return (interest) to the Social Security trust funds; and providing a means outside of the securities market for the U.S. government to borrow funds.\nThe accumulated holdings of the Social Security trust funds represent the sum of annual surplus Social Security revenues (for all past years) that were invested in U.S. government obligations, plus the interest earned on those obligations. As a result of surplus Social Security revenues from 1984 to 2009 and the interest income credited to the Social Security trust funds, the accumulated holdings of the Social Security trust funds totaled about $2.9 trillion at the end of calendar year 2018. It is the accumulated holdings of the Social Security trust funds (or the trust fund balance) that many people refer to when discussing the Social Security trust funds. Table 3 shows the accumulated holdings of the Social Security trust funds for the historical period 1957 to 2018. Table 4 shows the projected accumulated holdings of the Social Security trust funds for the 2019 to 2034 period, as projected by the Social Security trustees in the 2019 Annual Report (under the intermediate assumptions). The Social Security trustees project that in 2020 the program's total cost will exceed its total income. Under intermediate assumptions, this relationship is projected to continue until the trust funds are depleted in 2034.\nThe Social Security trustees project that, on average over the next 75 years (2019 to 2093), program costs will exceed income by an amount equal to 2.78% of taxable payroll (on average, costs are projected to exceed income by at least 20%). The gap between income and costs, however, is projected to increase over the 75-year period. For example, in 2035, the cost of the program is projected to exceed income by an amount equal to 3.15% of taxable payroll (costs are projected to exceed income by about 19%). By 2093, the cost of the program is projected to exceed income by an amount equal to 4.11% of taxable payroll (costs are projected to exceed income by about 24%).\nFor illustration purposes, the trustees project that the Social Security trust funds would remain solvent throughout the 75-year projection period if, for example,\nrevenues were increased by an amount equivalent to an immediate and permanent payroll tax rate increase of 2.70 percentage points (from 12.40% to 15.10%; a relative increase of 21.8%); or benefits scheduled under current law were reduced by an amount equivalent to an immediate and permanent reduction of (1) about 17% if applied to all current and future beneficiaries, or (2) about 20% if applied only to those who become eligible for benefits in 2019 or later; or some combination of these approaches were adopted.", "As part of the annual congressional budget process, the level of federal debt (the federal debt limit) is established for the budget by Congress. The federal debt limit includes debt held by the public, as well as the internal debt of the U.S. government (i.e., debt held by government accounts). Borrowing from the public and the investment of the Social Security trust funds in special U.S. government obligations both fall under the restrictions of the federal debt limit. This means that the balance of the Social Security trust funds has implications for the federal debt limit.", "The accumulated holdings of the Social Security trust funds represent funds designated to pay current and future benefits. When current Social Security tax revenues fall below the level needed to pay benefits, however, these funds become available only as the federal government raises the resources needed to redeem the securities held by the trust funds. The securities are a promise by the federal government to raise the necessary funds. In past years, when Social Security was operating with annual cash flow surpluses, Social Security's surplus revenues were invested in U.S. government securities and used at the time to pay for other federal government activities. Social Security's past surplus revenues, therefore, are not available to finance benefits directly when Social Security is operating with annual cash flow deficits, as it does today. The securities held by the trust funds must be redeemed for Social Security benefits to be paid.\nStated another way, when Social Security is operating with a cash flow deficit, the program relies in part on the accumulated holdings of the trust funds to pay benefits and administrative expenses. Because the trust funds hold U.S. government securities that are redeemed with general revenues, there is increased reliance on the General Fund of the Treasury. With respect to reliance on the General Fund when Social Security is operating with a cash flow deficit, it is important to note that Social Security does not have authority to borrow from the General Fund. Social Security cannot draw upon general revenues to make up for any current funding shortfall. Rather, Social Security relies on revenues that were collected for the program in previous years and used by the federal government at the time for other (non-Social Security) spending needs, plus the interest earned on its trust fund investments. Social Security draws on its own previously collected tax revenues and interest income (accumulated trust fund holdings) when current Social Security tax revenues fall below current program expenditures.\nAs the trustees point out, over the program's history, Social Security has collected approximately $21.9 trillion and paid out $19.0 trillion, leaving asset reserves of $2.9 trillion at the end of 2018. The accumulated trust fund holdings of $2.9 trillion represent the amount of money that the General Fund of the Treasury owes to the Social Security trust funds. The General Fund could be said to have fully paid back the Social Security trust funds if the trust fund balance were to reach zero (i.e., if all of the trust funds' asset reserves were depleted).\nThe trustees project that the asset reserves held by the Social Security trust funds will be depleted in 2035. At that point, the program will continue to operate with incoming receipts to the trust funds. Incoming receipts are projected to be sufficient to pay about 80% of scheduled benefits through the end of the projection period in 2093 (under the intermediate assumptions of the 2019 Annual Report). Title II of the Social Security Act, which governs the program, does not specify what would happen to the payment of benefits in the event that the trust funds' asset reserves are depleted and incoming receipts to the trust funds are not sufficient to pay scheduled benefits in full and on time. Two possible scenarios are (1) the payment of full monthly benefits on a delayed basis or (2) the payment of partial monthly benefits on time.", "The following table shows the key dates projected for the Social Security trust funds by the Social Security Board of Trustees (based on their intermediate set of assumptions) in each of their annual reports from 1983 to 2019." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 2, 1, 2, 2, 3 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "", "h0_full", "", "", "h0_full", "", "", "h1_full", "", "h1_full", "" ] }

{ "question": [ "How does the Social Security program support the families of deceased and disabled workers?", "How are these cash benefits accounted for?", "How are these funds projected to behave in the future?", "How do the OASI and DI Trust Funds interact?", "Under which circumstances has Congress authorized the shifting of funds between OASI and DI?", "What will occur once the trust funds are no longer solvent?", "How must Social Security tax revenues be stored?", "What has this system been compared to?", "How does this system differ from those of private trusts?" ], "summary": [ "The Social Security program pays monthly cash benefits to retired or disabled workers and their family members and to the family members of deceased workers.", "Program income and outgo are accounted for in two separate trust funds authorized under Title II of the Social Security Act: the Federal Old-Age and Survivors Insurance (OASI) Trust Fund and the Federal Disability Insurance (DI) Trust Fund.", "Projections show that the OASI fund will remain solvent until 2034, whereas the DI fund will remain solvent until 2052, meaning that each trust fund is projected to be able to pay benefits scheduled under current law in full and on time up to that point. Following the depletion of trust fund reserves (2052 for DI and 2034 for OASI), continuing income to each fund is projected to cover 91% of DI scheduled benefits and 77% of OASI scheduled benefits.", "The two trust funds are legally distinct and do not have authority to borrow from each other.", "However, Congress has authorized the shifting of funds between OASI and DI in the past to address shortfalls in a particular fund. The two trust funds are legally distinct and do not have authority to borrow from each other. However, Congress has authorized the shifting of funds between OASI and DI in the past to address shortfalls in a particular fund. Therefore, this CRS report discusses the operations of the OASI and DI trust funds on a combined basis, referring to them collectively as the Social Security trust funds.", "On a combined basis, the trust funds are projected to remain solvent until 2035. Following depletion of combined trust fund reserves at that point, continuing income is projected to cover 80% of scheduled benefits.", "By law, Social Security tax revenues must be invested in U.S. government obligations (debt instruments of the U.S. government).", "The accumulated holdings of U.S. government obligations are often viewed as being similar to assets held by any other trust on behalf of the beneficiaries.", "However, the holdings of the Social Security trust funds differ from those of private trusts because (1) the types of investments the trust funds may hold are limited and (2) the U.S. government is both the buyer and seller of the investments." ], "parent_pair_index": [ -1, 0, 1, -1, 3, -1, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 3, 3, 3 ] }

{ "title": [ "Background", "The Federal Rule-making Process", "Reporting Lines for Field Staff Who Implement Government Contracting and Business Development Programs Vary", "SBA Has Made Improvements to Its Certification Processes, but Some Weaknesses Remain", "HUBZone Program", "8(a) Business Development Program", "Women-Owned Small Business Program", "Legal Requirements and Volume, among Other Factors, Affect the Timeliness of SBA’s Rule-Making Actions", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Summary and Status of Previous GAO Recommendations", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "SBA’s organizational structure comprises headquarters and regional, district, and area field offices. At the headquarters level, SBA is divided into several key functional areas that manage and set policy for the agency’s programs. Seventeen headquarters offices report to the Office of the Administrator. SBA provides its services to small businesses through a network of regional and district offices that are led by the Office of Field Operations (OFO) and area offices, led by OGCBD, as discussed in greater detail later in this report. Regional offices oversee the district offices and promote the President’s and SBA Administrator’s messages throughout the region. District offices serve as the point of delivery for most SBA programs and services. Four program offices at the headquarters level manage the agency’s programs that provide capital, contracting, counseling, and disaster assistance services to small businesses: the Office of Capital Access, the Office of Entrepreneurial Development, the Office of Disaster Assistance, and OGCBD.\nOGCBD promotes small business participation in federal contracting through a variety of programs, including programs that provide small businesses with contracting preferences based on socioeconomic designations—the 8(a) Business Development (8(a)), Historically Underutilized Business Zone (HUBZone), women-owned small business (WOSB), and service-disabled veteran-owned small business (SDVOSB) programs.\nThe 8(a) program provides business development assistance to small, disadvantaged businesses and helps them participate in the federal contracting market through sole-source and competitive 8(a) set-aside contracts.\nThe HUBZone program aims to stimulate economic development in economically distressed areas by helping urban and rural small businesses that are located in designated economically distressed areas to access federal procurement opportunities.\nThe SDVOSB program helps service-disabled veteran-owned small businesses acquire federal contracts.\nThe WOSB Federal Contracting program helps women-owned small businesses acquire federal contracts.\nIn addition, SBA administers a prime contracts program, subcontracting assistance program, certificate of competency program, and size determination program to increase federal contracting opportunities for small businesses. These programs, among other things, seek to maximize federal contracting opportunities for small businesses, HUBZone small businesses, women-owned small businesses, and any other firm participating in an OGCBD program.\nOGCBD has four main offices at the headquarters level: Office of Business Development (which includes the new All Small Mentor-Protégé program), Office of Government Contracting, Office of HUBZone Program, and Office of Policy, Planning and Liaison.\nThe Office of Business Development administers the 8(a) business development program and includes the new Office of All Small Mentor-Protégé which was established in summer 2016 to provide mentor-protégé services to all eligible small businesses.\nThe Office of Government Contracting administers SBA’s prime contracts, subcontracting assistance, WOSB Federal Contracting program, certificate of competency, and size determination programs.\nThe Office of HUBZone Program administers the HUBZone program.\nThe Office of Policy, Planning, and Liaison is responsible for implementing small business government contracting legislation and policy through SBA regulations.\nSBA’s field-office structure consists of 6 area offices, 68 district offices, and 10 regional offices. Area offices may sometimes be co-located with regional and district offices but differ in mission and function.\nArea offices report to OGCBD and while headquartered in six cities across the country, cover multiple SBA regional geographic areas encompassing a number of states where contracting activity is most prevalent. The primary function of these offices is to manage government buying activities throughout the country, which includes reviewing potential agency requirements and making recommendations to agency contracting officers on the portion of contracts to set aside for qualified small businesses. This also includes working with federal agencies and small businesses after contracts have been awarded to adjudicate size protests and conduct subcontracting compliance reviews, among other functions.\nDistrict offices report to OFO and are located in at least one city for each state. The primary functions of these offices are (1) to market all SBA programs and services such as the aforementioned contracting programs, entrepreneurial development programs, and programs that facilitate loans from lenders to small business or capital access; (2) to provide business development assistance to entrepreneurs and small business owners; and (3) to support compliance and oversight responsibilities across capital and economic development programs. They also have geographic-specific contracting compliance responsibilities for local businesses in their portfolio. Branch offices and Alternative Work Sites serve as an extension of district offices and are in areas where local business needs require an additional SBA presence.\nRegional offices report to OFO and are responsible for marketing SBA and its programs to businesses and local government. Regional offices provide oversight of all district offices in their region and are often located in the same physical location as a district office.\nOGCBD sets policy for SBA’s government contracting and 8(a) business development programs and coordinates with OFO to implement its programs in field offices. OGCBD creates policies for field staff implementing its programs that include defining district office staff responsibilities and identifying counseling procedures that govern how district staff are to service firms. OGCBD also coordinates with OFO through weekly management calls to exchange information and provide updates on changes to policies and procedures. OGCBD has also coordinated with OFO to evaluate and update position descriptions for staff in field offices implementing its programs, most recently in 2016.", "SBA’s Office of Policy, Planning and Liaison (OPPL) is responsible for implementing small business government contracting laws and policy through SBA regulations. Executive branch agencies involved in rule making, including SBA, have authority and responsibility for developing and issuing regulations to implement laws. Many laws, regulations, and executive actions govern the federal rule-making process, including the following:\nAdministrative Procedure Act (APA): The APA was enacted in 1946 and established the basic framework of administrative law governing federal agency action, including rule making. The APA governs “notice-and-comment” rule making, also referred to as “informal” or “APA rule making.” This act generally requires (1) publication of a notice of proposed rule making, (2) opportunity for public participation in the rule making by submission of written comments, and (3) publication of a final rule and accompanying statement of basis and purpose not less than 30 days before the rule’s effective date. Congresses and presidents have taken a number of actions to refine and reform this regulatory process since the APA was enacted.\nExecutive Order 12866. Under Executive Order 12866, the Office of Information and Regulatory Affairs (OIRA), within OMB, reviews agencies’ significant regulatory actions (including both proposed and final rules) and is generally required to complete its review within 90 days after an agency formally submits a draft regulation. Each agency is to provide OIRA a list of its planned regulatory actions, indicating those that the agency believes are significant. For each rule identified by the agency as, or determined by the Administrator of OIRA to be, a significant regulatory action, the agency submits the rule to OIRA for formal review—including the coordination of interagency review. After receipt of this list, the Administrator of OIRA may also notify the agency that OIRA has determined that a planned regulation is a significant regulatory action within the meaning of the executive order. The order defines significant regulatory actions as those that are likely to result in a rule that may: 1. have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or state, local, or tribal governments or communities; 2. create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; 3. materially alter the budgetary effect of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or 4. raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in Executive Order 12866.\nFederal Acquisition Regulation (FAR). Certain acquisition regulations must go through a separate OMB process after the final rule has been published before being added to the FAR. The FAR is a regulation that generally governs acquisitions of goods and services by executive branch agencies. It addresses various aspects of the acquisition process, from acquisition planning to contract formation to contract management. Part 19 of the FAR governs small business contracting programs. Federal Register notices proposing or announcing amendments to the FAR are generally issued jointly by the Department of Defense, General Services Administration, and National Aeronautics and Space Administration (NASA), though these items typically receive the concurrence of OMB’s FAR Council. After receiving a memorandum from an agency proposing to amend the FAR, the FAR Council refers potential changes to standing FAR teams for review. The process of amending the FAR can take anywhere from months to years.\nThere are three phases in the federal rule-making process: initiation of rule-making actions, development of proposed rules, and development of final rules.\nDuring the initiation phase agency officials identify sources of potential rule makings. Potential rule makings may result from statutory requirements or issues identified through external sources (for example, public hearings or petitions from the regulated community) or internal sources (for example, management agendas). During this phase, agencies gather information that would allow them to determine whether a rule making is needed and to identify potential regulatory options.\nThe second phase of the rule-making process starts when an agency begins developing the proposed rule. During this phase, the agency drafts the rule and begins to address analytical and procedural requirements. Also built into this phase are opportunities for internal and external deliberations and reviews, including official management approval. OIRA may be involved informally at any point during the process. After OIRA completes its review and the agency incorporates resulting changes, the agency publishes the proposed rule in the Federal Register for public comments.\nIn the third phase of the process, the development of the final rule, the agency receives and reviews public comments, finalizes the language, and sends the rule through internal and external agency reviews, among other things. Once the comment period closes, the agency responds to the comments either by modifying the rule to incorporate the comments or by otherwise addressing the comments in the final rule. This phase also includes opportunities for internal and external review. Again, if the agency determines that the rule is significant or at OIRA’s request, the agency submits the rule to OIRA for review before final publication. If OIRA’s review results in a change to the final rule, the agency revises the rule before publication. After all changes are made, the final rule as published in the Federal Register includes the date that the rule becomes effective.\nAn agency has certain options to expedite the rule-making process, and Congress has the ability to compel agencies to take action on a rule making if it believes there have been unreasonable delays. The APA includes exceptions to notice and comment procedures for certain categories of rules, such as those dealing with military or foreign affairs and agency management or personnel. Further, APA requirements to publish a proposed rule generally do not apply when an agency finds, for “good cause,” that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Agencies often invoke “good cause,” for example, when Congress prescribes the content of a rule by law, such that prior notice and public comment could not influence the agency’s action and would serve no useful function. If an agency finds that notice and comment would be “impracticable, unnecessary, or contrary to the public interest,” the agency may issue a rule without prior notice and comment and instead solicit public comments after the rule has been promulgated. The agency may then choose to revise the rule in light of these post-promulgation comments. An agency also has the option of issuing an “interim final rule” to expedite the rule-making process. Other sources of exceptions to notice-and-comment rule making exist, such as specific statutory provisions that may direct agencies to expedite issuance of final rules. While agencies could be compelled to take action if they have “unreasonably delayed” a regulation or FAR amendment, Congress has seldom, if ever, compelled an agency to do so.", "OGCBD headquarters sets policies for SBA’s business development and government contracting programs, and SBA staff in field offices and other locations help to implement these programs at the local level. These field staff perform a variety of activities, depending on the program they are supporting. The reporting relationships between field staff and SBA headquarters also vary depending on the program. For example, field staff who implement government contracting programs report to OGCBD, while staff who manage the local portfolio-driven 8(a) business development program report to OFO, which oversees the field offices.\nPrime contracts and subcontracting assistance programs. At the headquarters level, the Office of Government Contracting within OGCBD manages SBA’s prime contracts, subcontracting assistance, certificate of competency, and size determination programs, which are implemented by staff who report to six area offices across the country. The Office of Government Contracting oversees the implementation of these programs by area offices and monitors the performance of and develops training for the staff who implement these programs.\nIn the field, staff known as procurement center representatives (PCR) implement SBA’s prime contracts program, and these staff report through area offices to OGCBD. As noted in SBA’s standard operating procedure (SOP) for the prime contracts program, PCRs work to help ensure that small businesses have a fair and equitable opportunity to compete for federal procurement opportunities and that a fair proportion of the total sales of federal government property is made to small business concerns. PCRs recommend the set-aside of selected acquisitions, recommend new qualified small business sources, appeal contracting officer’s decisions which they deem adverse to small business, and provide advice to large business concerns to facilitate maximum practicable subcontracting opportunities for the small business community. Staff known as commercial market representatives (CMR) implement SBA’s subcontracting assistance program; CMRs also report through area offices to OGCBD. CMRs, among other things, work to facilitate the matching of large prime contractors with small business concerns, counsel large prime contractors on their responsibilities to maximize subcontracting opportunities for small business concerns, and counsel small business concerns on how to market themselves to large prime contractors. Staff known as Industrial Specialists are assigned to manage the Certificate of Competency and the Size Protest determination program cases. Certificate of Competency’s Industrial Specialists analyze the responsibility and capability of small businesses that have been tentatively selected for a contract, to help ensure that any of the contracting officer’s concerns about the firm’s ability to successfully perform can be overcome. Size Industrial Specialists analyze protests of awards when there is a question as to whether the recipient is in fact a small business. Both of these decisional responsibilities affect the awarding of contracts to individual small businesses. 8(a) Business Development program. At the headquarters level, the Office of Business Development within OGCBD is responsible for administering services available through the 8(a) Business Development program by issuing program policy and plans, evaluating program implementation, and rendering final decisions on program eligibility, among other responsibilities. The Office of Business Development is comprised of three departments, which collectively support the 8(a) program.\nThe Office of Certification and Eligibility (OCE) has staff at both headquarters and two field offices who perform similar activities. OCE staff process initial certifications of eligibility for the 8(a) program and conduct continuing eligibility reviews for firms deemed to be high risk or complex, among other duties. OCE staff in field offices report to OGCBD via OCE.\nThe Office of Management and Technical Assistance administers most services provided to 8(a) participants that are not provided by the district offices, such as administering the 8(a) Mentor-Protégé program, servicing sole-source, competitive, and multiple award contracts; analyzing and processing termination waivers; reaching out to prime contractors, federal agencies, and the 8(a) business development community; and overseeing the execution of national and local seminars and conferences, among other things.\nThe Office of Program Review supports headquarters and field office staff administering the program by evaluating and responding to external reviews, creating marketing products for the 8(a) program, and preparing the annual report to Congress on program participation and contracting, among other things.\nAt the local level, about 160 district office staff members known as Business Opportunity Specialists support the 8(a) program by interacting directly with small businesses. Business Opportunity Specialists are responsible for implementing the 8(a) program within the geographical area serviced by their district office, and each specialist has a portfolio of firms that they are responsible for supporting throughout the firms’ participation in the 8(a) program. Their activities include assisting firms as they prepare to apply to the program, hosting webinars about SBA’s government contracting and business development programs, and conducting training for firms on how to strengthen elements necessary for participation in these programs, such as a creating a strong business plan. Business Opportunity Specialists are also responsible for conducting annual reviews, which assess a firm’s progress in the 8(a) program. Further, they conduct continuing eligibility reviews, which help ensure that firms are still eligible to participate in the program after initial certification.\nIn contrast with the field staff in area offices who implement SBA’s government contracting programs and report to OGCBD headquarters, Business Opportunity Specialists in district offices report to OFO via the district director, and their caseloads are determined by OFO. District directors manage the district offices and prepare a comprehensive District Office Strategic Plan outlining the methodology to achieve or exceed district goals by fiscal year end. The plan is specific to the district’s economic climate and encompasses goals related to OGCBD programs. Business Opportunity Specialists are responsible for executing goals of their district office’s plan that are specific to their position. In addition to supporting OGCBD programs, Business Opportunity Specialists support other SBA programs and assist with district office administration and local market initiatives. According to agency officials, the time specialists spend working on their 8(a) portfolios ranges from 55 percent to 100 percent. As a result, specialists who do not support 8(a) full time may also support other OGCBD programs, as discussed in the following sections, and assist with other district office activities, such as developing a marketing and outreach plan specific to their district office.\nHUBZone program. At the headquarters level, the Office of HUBZone within OGCBD administers the HUBZone program by certifying businesses as eligible to receive HUBZone contracts, maintaining a list of qualified HUBZone small businesses that federal agencies can use to locate vendors, adjudicating protests of HUBZone eligibility, decertifying firms that no longer meet eligibility requirements, and conducting marketing outreach and training. In the field, each district office has a HUBZone liaison who serves as the program expert at the local level. Because Business Opportunity Specialists are responsible for marketing OGCBD’s other programs in addition to their 8(a) duties, some of them also work with or serve as the HUBZone liaison to help ensure that the HUBZone program is implemented according to internal operating procedures and statute and help ensure that relevant HUBZone program goals and objectives are accomplished. The HUBZone liaison is also responsible for completing site visits or program examinations for firms, and conducting program marketing outreach to and training for state and local acquisition, economic development, and small business communities.\nWOSB and SDVOSB programs. At the headquarters level, the Office of Government Contracting within OGCBD publishes regulations for the WOSB program, conducts eligibility examinations of businesses that have received contracts, decides protests related to eligibility for a WOSB contract, conducts studies to determine eligible industries, and works with other federal agencies in assisting participating firms. The Office of Government Contracting also conducts SDVOSB eligibility protest reviews to help ensure that only eligible SDVOSBs receive contracts set aside for this group. The Office of Policy, Planning and Liaison issues regulations for the SDVOSB program and reports progress on the program’s set-aside goals. Because both programs are currently functioning as self-certifying programs, in which firms attest to their own eligibility to participate or obtain third-party certification, OGCBD does not make any determinations regarding firms’ eligibility prior to firms’ receiving contract awards. In the field, Business Opportunity Specialist responsibilities for these programs are largely limited to marketing these programs to the community and working with local resource partners, such as women’s business centers and veteran’s business centers, to educate firms and contractors about the programs.\nFigure 1 illustrates the lines of reporting for field staff who implement SBA’s government contracting and business development programs.\nSBA officials we spoke to in OFO and OGCBD described benefits of the current field-office and reporting structure. For example, they told us that the current field-office structure provides a national presence that allows firms to engage with staff in district offices across the country. As previously mentioned, at least one district office is located in each state, with multiple offices in some states. In addition, OFO officials said the reporting structure, in which Business Opportunity Specialists who implement the 8(a) program report to OFO rather than to OGCBD, allows for staff to also support the goals of their district office, which may require them to support local market duties and other SBA programs, in addition to supporting the firms in their 8(a) portfolio. Finally, SBA officials stated that the current structure helps to ensure that staff know their local market and can be responsive to local market needs as determined by their district director.\nHowever, OGCBD officials told us that the current reporting structure can result in inconsistent program delivery for business development programs. They described efforts taken recently to improve program delivery by improving OGCBD’s communication with OFO and field staff, including the following:\nWeekly management calls now occur between headquarters-level staff from OGCBD and OFO. These calls mostly address policy changes or changes to OGCBD’s standard operating procedures.\nMonthly conference calls including Business Opportunity Specialists and OGCBD management have been instituted to address any updates to the program.\nMonthly training refresher calls sponsored by the Office of Business Development have been implemented to provide training refreshers in addition to an opportunity to discuss program concerns or suggestions.\nMonthly HUBZone calls occur to monitor site visits and discuss complex fact patterns that may arise in connection with eligibility compliance.\nBusiness Opportunity Specialists were invited to attend a Department of Defense government contracting training session alongside OGCBD staff.\nHowever, information from SBA’s 2015 and 2016 Field Accountability Reviews indicate that communication issues may be ongoing. For example, one deputy district director said that conference calls are confusing, lack consistency, and do not provide up-to-date process changes. This deputy district director also noted that the calls did not cover all OGCBD programs and said that district field office staff were unaware of changes to WOSB and SDVOSB programs. Another district director said that communication breakdowns can occur when program offices schedule webinars, conference calls, and training activities that conflict with one another. Because the communications changes were implemented recently, it may be too soon to tell if they are having the intended effect.\nIn September 2015, we issued a report that was based on a broad review of management challenges at SBA, including OGCBD. In this 2015 report, we found that working relationships between headquarters and field offices that differ from reporting relationships can potentially pose programmatic challenges. At that time, SBA told us it had committed to assessing its organizational structure but had not yet completed those efforts. We recommended that SBA document the assessment of the agency’s organizational structure, including any necessary changes to, for example, better ensure that areas of authority, responsibility, and lines of reporting are clear and defined. As of May 2017, SBA had not provided documentation of such an assessment or of its decision making about the need for changes to its organizational structure. We maintain that such an assessment is needed to help ensure that SBA’s structure supports its mission efficiently and effectively.", "Over the past decade, we and SBA’s OIG have identified a number of weaknesses in the processes SBA uses to certify and recertify businesses as being eligible to participate in its HUBZone, 8(a), and WOSB programs and have made recommendations to SBA to address them. SBA has addressed a number of these recommendations; however, some remain outstanding.", "SBA has made some improvements to address problems we identified with the HUBZone program’s certification and recertification processes. For example, in June 2008 we reported that, for its HUBZone certification process, SBA relied on data that firms entered in the online application system and performed limited verification of the self-reported information. Although agency staff had the discretion to request additional supporting documentation, SBA did not have specific guidance or criteria for such requests. Consequently, we recommended that SBA develop and implement guidance to more routinely and consistently obtain supporting documentation upon application. In response to that recommendation, SBA revised its certification process, and since 2009 has required firms to provide documentation, which SBA officials review to determine the firms’ eligibility for the HUBZone program. SBA then performs a full-document review on all applications as part of its initial certification process to determine firms’ eligibility for the program. We have closed this recommendation as implemented.\nWe have also identified a number of concerns with SBA’s HUBZone recertification process. For example, in February 2015 we reported that SBA relied on firms’ attestations of continued eligibility and generally did not request supporting documentation as part of the recertification process. SBA only required firms to submit a notarized recertification form stating that their eligibility information was accurate. SBA officials did not believe they needed to request supporting documentation from recertifying firms because all firms in the program had undergone a full document review, either at initial application or during SBA’s review of its legacy portfolio in fiscal years 2010–2012. However, as we found, the characteristics of firms and the status of HUBZone areas—the bases for program eligibility—often can change and need to be monitored. As a result, we concluded that SBA lacked reasonable assurance that only qualified firms were allowed to continue in the HUBZone program and receive preferential contracting treatment. We recommended that SBA reassess the recertification process and implement additional controls, such as developing criteria and guidance on using a risk-based approach to requesting and verifying firm information.\nIn following up on this recommendation for our March 2016 report on opportunities to improve HUBZone oversight, we found that SBA had not yet implemented guidance for when to request supporting documents) for the recertification process because SBA officials believed that any potential risk of fraud would be mitigated by site visits to firms. According to data that SBA provided, the agency visited a fraction of certified firms each year during fiscal years 2013 through 2015. SBA’s reliance on site visits alone did not mitigate the recertification weaknesses that were the basis for our recommendation. The officials also cited resource limitations. In recognition of SBA’s resource constraints, we reiterated in our March 2016 report that SBA could apply a risk-based approach to its recertification process to review and verify information from firms that appear to pose the most risk to the program. In addition, as of February 2017, SBA officials told us that the agency had begun implementing a technology-based solution to address some of the ongoing challenges with the recertification process. The officials expected that the new solution would help them better assess firms and implement risk-based controls by the end of calendar year 2017. As of May 2017, this recommendation remains open.\nWe also found in June 2008 and again in February 2015 that the recertification process was backlogged—that is, firms were not being recertified within the required 3-year time frame. In 2015, we reported that as of September 2014, SBA was recertifying firms that had been first certified 4 years previously. While SBA initially eliminated the backlog following our 2008 report, according to SBA officials the backlog recurred due to limitations with the program’s computer system and resource constraints. Consequently, in February 2015 we again recommended that SBA take steps to ensure that significant backlogs would not recur. In response to the recommendation, SBA made some changes to its recertification process. For example, instead of manually identifying firms for recertification twice a year, SBA automated the notification process, enabling notices to be sent daily to firms (to respond to and attest that they continued to meet the eligibility requirements for the program). According to SBA officials, as of February 2017 this change had not yet eliminated the backlog.", "SBA has made improvements to address problems we identified with the 8(a) program’s process to help ensure firms’ continuing eligibility. In a March 2010 report, we made six recommendations to improve SBA’s monitoring of and procedures used in assessing the continuing eligibility of firms to participate in and benefit from the 8(a) program. SBA has taken steps to address the six recommendations, and we have closed all six as implemented. For example, we recommended that SBA monitor and provide additional guidance and training to district offices on the procedures used to determine continuing eligibility. In response to this recommendation, SBA issued revised regulations that provided additional 8(a) program eligibility requirements and criteria related to size standards, indicators of economic disadvantage, and other thresholds businesses must meet to maintain eligibility. In addition, SBA indicated that under its Field Accountability Review program it conducts oversight of SBA district offices using audit-like steps to measure performance and compliance regarding federal statutory mandates, regulations, and SBA policy and procedures. According to SBA, one of the areas covered by the Field Accountability Review on-site visits is the 8(a) annual compliance reviews of participating firms.\nIn April 2016, SBA’s OIG reported that SBA failed to properly document that 8(a) firms admitted into the program met all eligibility criteria. SBA’s OIG evaluated SBA’s eligibility determination process for admitting 48 applicants in the 8(a) program between January 1, 2015, and May 31, 2015, and found that 30 of the participants did not meet all of the eligibility criteria. SBA’s OIG found that SBA managers had overturned lower-level reviewers’ recommendations for denial without fully documenting how all of the identified areas of eligibility concerns were resolved. SBA’s OIG recommended that SBA (1) clearly document its justification for approving or denying applicants into the 8(a) program, particularly when those decisions differed from lower-level recommendations, and (2) provide documentation showing how eligibility concerns raised by lower-level reviewers were resolved for the 30 firms not documented. In response to the first recommendation, SBA noted in a written response to us that it had established a practice of noting a statement of difference in cases where decisions differed; however, the SBA OIG had yet to close this recommendation as of May 2017. According to the SBA OIG, this recommendation will remain open until this practice is documented in an SOP or desk guide for the program. In response to the second recommendation, SBA’s OIG noted that SBA provided the SBA OIG with documentation showing how the eligibility concerns were resolved for the 30 firms not documented, and this recommendation was closed as implemented. SBA OIG officials told us that they plan to issue a report that summarizes their analysis of the documentation provided by SBA in June 2017.", "SBA considers WOSB a self-certification program because firms self- certify their eligibility to participate by uploading documentation into an online repository or seeking approval from a third-party certifier. In October 2014, we found that SBA performed minimal oversight of third- party certifiers for the WOSB program and had not developed procedures that provide reasonable assurance that only eligible businesses obtain WOSB set-aside contracts. As a result, we found that SBA cannot provide reasonable assurance that certifiers fulfill the requirements of their role and that firms that attest that they are eligible for the program are actually eligible. We made two recommendations in this report:\nSBA should establish and implement comprehensive procedures to monitor and assess performance of certifiers in accord with the requirements of the third-party certifier agreement and program regulations; and\nSBA should enhance examination of businesses that register to participate in the WOSB program, including actions such as developing and implementing procedures to conduct annual eligibility examinations, analyzing examination results and individual businesses found to be ineligible to better understand the cause of the high rate of ineligibility in annual reviews, and implementing ongoing reviews of a sample of all businesses that have represented their eligibility to participate in the program.\nIn response to our recommendations, SBA has taken some actions. For example, SBA created an SOP stating that third-party certifiers are subject to a compliance review by SBA at any time, and SBA has completed a review of the four authorized third-party certifiers. We continue to monitor SBA actions to address our recommendations.\nSBA’s OIG has also identified weaknesses in the WOSB program. In May 2015, SBA’s OIG reported that contract awards were made to potentially ineligible firms based on documentation in the WOSB online repository. SBA’s OIG reviewed 34 contract awards and found that 9 did not have documentation in the repository. In addition, SBA’s OIG found that of the 25 awards that did have some documentation in the repository, a number did not include all of the required documentation or sufficient documentation to prove that the firm was controlled by women. SBA’s OIG recommended that SBA perform eligibility examinations on the firms identified in the report as potentially ineligible. According to SBA OIG officials, SBA completed the eligibility examinations on the firms identified as potentially ineligible and determined that 40 percent of these firms were not eligible to receive contracts under the WOSB program at the time of award. According to the SBA OIG, all recommendations from this report were closed as implemented.\nThe National Defense Authorization Act for Fiscal Year 2015 eliminated the self-certification process for the WOSB program and required SBA to give more authority to contracting officers to award sole-source contracts—that is, contracts that do not require competition. SBA completed a rule-making process to allow the program to award sole- source contracts. Although SBA has provided an advanced notice of proposed rule making for the certification program, it has not implemented a process to eliminate self-certification as of May 2017. As a result of inadequate monitoring and controls, such as not implementing a full certification program, potentially ineligible businesses may continue to incorrectly certify themselves as WOSBs, increasing the risk that they may receive contracts for which they are not eligible. Even with this change in the NDAA, we maintain that recommendations related to strengthening oversight of third-party certifiers and enhancing examinations of WOSB firms are needed to help ensure that only eligible businesses participate in the WOSB program.", "The timeliness of SBA’s rule-making process can vary due to the legal requirements that govern this process, among other factors. While agencies must adhere to the federal laws and executive actions that govern the federal rule-making process, each agency also has its own guidance and process for rule making. SBA relies on two SOP documents that outline procedures and responsibilities for rule making at the agency. One SOP on Federal Register documents identifies the procedures and responsibilities for obtaining internal clearance (the agreement of various offices within SBA and ultimately the signature of the Administrator) before publishing documents to the Federal Register, and includes details on how to format Federal Register proposed and final rules and the offices involved in reviewing documents. This SOP does not include specific information on required timelines for this process. The other SOP on SBA’s Office of Executive Secretariat includes, in part, additional information on clearance procedures before documents can be published in the Federal Register. This SOP includes limited information on internal deadlines, including that documents must be cleared by this office within 15 days of being initiated in SBA’s internal tracking system, with any documents needing re-clearance requiring an additional 5 days.\nSBA’s Office of Policy, Planning and Liaison (OPPL) works with SBA’s Office of General Counsel (OGC) and other internal subject-matter experts to draft and promulgate rules. OPPL has one director and two other staff members dedicated to rule making, and one of the two staff members is solely responsible for working with OMB’s FAR Council. SBA officials described their rule-making process as follows:\nOPPL relies on staff from OGC to draft the rule and then prepares the rule for OGCBD clearance and ultimately for agency-wide clearance by the Administrator.\nAfter receiving comments from SBA’s Office of Advocacy, SBA’s OIG, and other offices, OPPL prepares a memorandum to the Administrator for the Administrator’s review and clearance.\nThen, if the rule is determined by OIRA to be a significant regulatory action as defined by Executive Order 12866, the rule must go to OMB for an interagency review process managed by OMB, in which other federal agencies can provide comments and questions on SBA’s rule. This interagency review period requires 90 days, but the actual amount of time for this review varies. Sometimes the rule may be sent back to SBA where the process starts over again. According to SBA officials, if other agencies have no comments, the interagency review period can take 4 to 5 months.\nAfter the proposed rule passes interagency review, it goes back through OGCBD clearance and agency-wide clearance by the Administrator before being added to the Federal Register for public comment. OGC summarizes the public comments and drafts the final rule, and the final rule goes back to OGCBD and then the SBA Administrator for review before it is again sent to OMB for an additional review process. After these reviews are completed, the rule is then published in the Federal Register.\nRules that only apply to SBA (and that do not need to go to OMB to amend the FAR) have an effective date 30 days after issuance. For rules that amend the FAR, a statement is drafted by OPPL and the FAR team drafts proposed and final rules. It takes the FAR Council at least a year between proposed and final rule to complete a FAR amendment, according to SBA staff.\nFor SBA and the federal government more broadly, certain stages of the rule-making process have mandated time periods, as shown in figure 2. For example, the public comment period recommended by Executive Order 12866 is 60 days. In addition, the interagency comment period managed by OMB requires 90 days, and this review can occur prior to the publishing of both the proposed rule and the final rule. Other stages have no time requirements but also add to the overall length of the process, such as the time required to research, analyze, and draft a proposed rule.\nTimelines for promulgating rules varied across four finalized SBA rules we reviewed. We selected four statutory provisions requiring SBA to promulgate rules from the NDAAs for fiscal years 2013, 2014, 2015, and 2016 (out of a possible 47 provisions requiring rule making) for review to better understand SBA’s rule-making process. All four of these rules have been finalized by SBA. Table 1 identifies the four rules we reviewed and some basic time frames for each rule.\nFor these four rules, the rule-making process resulted in longer time frames than the required minimums along several metrics.\nInteragency Review. Three of the four rules we reviewed were identified as requiring the OMB interagency review process, which lasted longer than 90 days in some cases. Of these three rules, one (the Lower Tier Subcontracting rule) was under review with OMB for less than the required 90 day review period (86 days); the other two required 107 and 156 days for this review process. Further, these three rules also underwent an additional interagency review process after SBA had obtained public comments, which required an additional 68 to 75 days each.\nPublic comment period. In addition, SBA officials noted that the public comment period varied in some cases, with extended comment periods being added as necessary. For example, for the All Small Mentor-Protégé rule, SBA initially provided a 60-day comment period, but extended it by an additional 30 days in response to public request. Likewise, for the Limitations on Subcontracting rule, SBA reopened the initial 60-day comment period for an additional 30 days starting about a week after the initial comment period ended.\nStatutory deadlines. Finally, three of the four rules arose from statutes that required the final rule to be issued within a set period of time. Both the All Small Mentor-Protégé rule and the Advisory Size Decisions rule were required to be issued as final within 270 days of the law’s enactment, while the Lower Tier Subcontracting rule required a final rule to be issued by 18 months after the date of enactment. The All Small Mentor-Protégé rule took 1,300 days from the date of the law’s enactment to the issuance of the final rule, which was 1,030 days past the statutory deadline. The Advisory Size Decisions rule took 770 days, which was 500 days past the statutory deadline. The Lower Tier Subcontracting rule took almost exactly 18 months longer than the statutory deadline.\nSBA officials noted some factors that may have contributed to certain rules taking longer than anticipated in recent years. They explained that the volume of rule making required of SBA has increased in recent years. Agency officials said they were used to receiving such legislation in stand-alone bills every couple of years until Congress began including rule-making requirements for SBA in NDAAs in fiscal year 2013. In written responses to our questions on the four selected rules, SBA officials noted that the three rules required by NDAA for Fiscal Year 2013 came at a time when they were busy completing rules required by the Small Business Jobs Act of 2010, thereby delaying the start of their work on the new set of rules. In a congressional testimony in February 2016, the Associate Administrator of OGCBD stated that SBA had implemented over 25 provisions from the Small Business Jobs Act of 2010 and was making progress on the remaining provisions. OMB officials stated that the timeliness of SBA’s rule makings is not unusual and has not raised any concerns.\nAdditionally, SBA officials noted that some of the rules contained other statutory requirements that required additional work. Specifically, the All Small Mentor-Protégé program and the Limitations on Subcontracting rules included changes that affected Indian tribes, Alaska Native corporations, and Native Hawaiian organizations, which required SBA to consult with these groups in accordance with Executive Order 13175. Also, the Lower Tier Subcontracting rule required SBA, the General Services Administration, and the Department of Defense to submit a plan for implementing the rule to both House and Senate committees; the agencies were required to complete planned actions within 1 year after enactment, and SBA was required to issue any regulations necessary, including the completion of a FAR amendment, within 18 months after enactment. However, SBA officials said that the FAR Council generally will not open a FAR case until SBA has issued a final rule, making the accomplishment of this statutory deadline impracticable. SBA officials also cited some delays in rule making as a result of the recent presidential administration transition.\nGeneralizing about time frames in the rule-making process is difficult because the process varies from rule to rule. In an April 2009 report on the effect of procedural and analytical requirements on federal agencies’ rule-making processes, we found variation in the length of time required for the development and issuance of final rules, both within and across agencies. We identified several factors, including the complexity of the issues addressed; priorities set by agency management that can change; and the amount of internal and external review required. Additionally, SBA officials noted that some rules receive many more comments than others, which can add significantly to the timeline.\nVarious approaches exist for measuring the length of time required to develop and issue final rules, but they have limitations.\nInitiation to final publication. The most complete measure of the length of time for a rule making is to measure the period from initiation of the rule to final publication, but this approach is limited by disagreement as to when a rule-making process begins. According to our prior work, while agency officials generally agreed that the publication of a final rule marked the end of the rule-making process, identifying when a rule making begins is less definite. Specifically, while each agency identifies milestones that mark the initiation of a rule making, they may not factor in the time spent researching the rule makings or developing policy for the rule, as well as time spent researching rule makings related to the rule in question.\nPublication in Federal Register to final publication. Another approach to measuring the time required for a rule making is to use two rule-making milestones common among federal agencies: (1) publication of a proposed rule in the Federal Register and (2) publication of a final rule. However, this measurement is incomplete, as it ignores the potentially substantial length of time necessary for regulatory development, according to our April 2009 report. In that report, our case study of 16 rules suggested that this time frame ranged from approximately 6 months to 5 years, while the total rule- making time for the two rules on either end of that range varied from slightly over 1 year to 13 years, respectively. For our current review of four selected SBA rules, the time between the publication of proposed and final rules ranged from 7.5 months to 17.5 months.\nMandated timeline. Finally, another approach is to evaluate each rule against its mandated timeline, although this requirement does not exist for all rules. However, the various factors that can affect rule- making timeliness can limit the meaningfulness of this analysis. For example, although our April 2009 report found that rules that are a management priority or that have a statutory or judicial deadline may move more quickly through the rule-making process while other rules are set aside, this analysis must factor in the overall volume of required rule makings and the relative priorities and rule-making caseload for the agency.", "We are not making new recommendations in this report and maintain that SBA should implement our prior reports’ recommendations. We provided a draft of this report to SBA for review and comment. The agency provided technical comments that we incorporated as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Administrator of the Small Business Administration, and the Director of the Office of Management and Budget. The report is also available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-8678 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Major contributors to this report are listed in appendix III.", "This report examined (1) the field-office and reporting structure the Small Business Administration (SBA) uses to implement government contracting and business development and the benefits and challenges posed by these structures; (2) progress SBA has made to strengthen its certification processes; and (3) the timeliness of SBA’s rule-making process.\nTo examine SBA’s field-office and reporting structure for implementing its government contracting and business development programs, we reviewed SBA documentation on its organizational structure. In addition, we obtained and reviewed a March 2015 study on SBA’s organizational structure conducted by a third-party consultant. We also reviewed academic literature on organizational theory to provide context for understanding SBA’s organizational structure and leading practices for implementing changes to organizational structure. We conducted this literature search on organizational structure and theory and reviewed these articles to determine the extent to which they were relevant to our engagement and appropriate as evidence for our purposes. We also observed two online webinars hosted by SBA on government contracting for small businesses to better understand SBA’s communications to firms about its government contracting services. Further, we reviewed prior GAO and SBA Office of Inspector General (OIG) reports from 2008 through 2016 for findings related to SBA’s organizational structure and the benefits and challenges posed by its current structure. In addition, we interviewed SBA staff from the following headquarters offices: Office of Government Contracting and Business Development, Office of Certification Eligibility, Office of Field Operations, Office of the Chief Human Capital Officer, and Office of Policy, Planning, and Liaison, as well as the Administrator’s Chief of Staff. We interviewed SBA staff to obtain their perspectives on SBA’s current organizational structure with respect to government contracting and business development programming.\nTo examine the progress SBA has made to strengthen its processes for certifying small businesses as eligible to participate in its programs, we reviewed relevant laws, regulations, and agency guidance. We specifically examined SBA’s certification processes for its 8(a) Business Development and Historically Underutilized Business Zone (HUBZone) programs, as well as its self-certification processes for the Women- Owned Small Business (WOSB) and Service-Disabled Veteran-Owned Small Business (SDVOSB) programs. We also interviewed SBA headquarters staff to understand these different certification processes and to obtain their perspective on the progress that has been made to strengthen these processes. In addition, we reviewed prior GAO and SBA OIG work related to SBA’s certification processes to identify progress that has been made as well as opportunities to further strengthen these processes. See appendix II for more information on the status of selected prior GAO recommendations to SBA.\nTo examine the timeliness of SBA’s rule making, we reviewed relevant laws, regulations, executive actions, and SBA guidance. We also reviewed four statutorily mandated SBA rules, selected from a possible 47 provisions in the National Defense Authorization Acts of fiscal years 2013, 2014, 2015, and 2016 that potentially required SBA to draft and implement rules. We selected these rules as examples of mandatory rule making. We reviewed the public documentation for each rule, including any proposed or final rules, as well as the timelines associated with each rule. We also interviewed SBA staff and staff from the Federal Acquisition Regulatory (FAR) Council within the Office of Management and Budget (OMB) to understand SBA’s regulatory drafting process, the Federal Acquisition Regulation (FAR) process, and the coordination between SBA and the FAR Council. Finally, we reviewed prior GAO reports on rule making to understand the federal rule-making process and factors affecting the timeliness of agency rule making.\nWe conducted this performance audit from August 2016 to June 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "The following table summarizes the status of our recommendations from HUBZone, 8(a), and WOSB performance audits and investigations as of May 2017. We classify each recommendation as either open (the agency has not taken steps to implement the closed, not implemented (the agency decided not to take action to implement the recommendation).\nThe recommendations are listed by report.", "", "", "In addition to the individual named above, Marshall Hamlett (Assistant Director), Nathan Gottfried (Analyst In Charge), JoAnna Berry, Tim Bober, Farrah Graham, Jennifer Kamara, Jessica Sandler, Jennifer Schwartz, and Jena Sinkfield made major contributions to this report." ], "depth": [ 1, 2, 1, 1, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "h0_full h1_full", "h1_title", "h1_full", "h1_full", "", "h2_full", "", "h3_full h2_full h1_full", "", "", "", "" ] }

{ "question": [ "What is the OGCBD responsible for?", "What is the relationship between field staff and SBA headquarters?", "How is this reporting structure beneficial?", "What issues does this reporting structure have?", "What steps have OGCBD staff taken to amend these issues?", "What steps has SBA taken to address weaknesses?", "What HUBZone-related issue still remains?", "What did GAO recommend SBA do to amend this issue?", "What issue regarding eligibility still remains?", "According to SBA's OIG, how could this be amended?", "How did SBA respond to this recommendation?", "What factors affect the timelines of SBA's rule-making process?", "Why is it difficult to measure these timelines?", "How does the data GAO collected demonstrate this?", "What has contributed to delays in the rule-making process?", "How did OMB officials respond to GAO's concerns about delays?", "What documents did GAO review?", "What officials did GAO interview?", "What rules did GAO analyze?" ], "summary": [ "The Office of Government Contracting and Business Development (OGCBD) at Small Business Administration (SBA) headquarters sets policies for SBA's business development and government contracting programs, and SBA field office staff help to implement these programs at the local level.", "The reporting relationships between field staff and SBA headquarters vary depending on the program. For example, field staff who implement government contracting programs report to OGCBD, while most staff who implement the 8(a) business development program report to the Office of Field Operations (OFO), which oversees SBA's field offices.", "SBA officials told GAO that this reporting structure, in which some field staff implement OGCBD programs but report to OFO, offers some benefits—for example, it allows these staff to support the goals of OGCBD programs as well as those of the individual field offices.", "However, officials also said the reporting structure can result in inconsistent program delivery.", "They described recent steps to improve communication between OGCBD and field staff, but it is too soon to tell if these steps will be effective.", "SBA has taken some steps to address weaknesses GAO and the SBA Office of Inspector General (OIG) have identified in its processes for certifying small businesses as eligible to participate in SBA programs, but some recommendations remain open.", "For example, GAO found in 2015 that SBA had not required firms seeking recertification for the Historically Underutilized Business Zone (HUBZone) program to submit any information to verify continued eligibility and instead relied on firms' attestations of continued eligibility.", "GAO recommended that SBA assess the HUBZone recertification process and add additional controls; SBA had not yet implemented this recommendation as of May 2017.", "SBA's OIG also found in 2016 that SBA managers overturned lower-level reviewers' decisions to deny firms admission to the 8(a) program without documenting in the information system how eligibility concerns were resolved.", "SBA's OIG recommended that SBA clearly document the justification for approving or denying firms.", "In response, SBA stated that managers are now required to document decisions in the system that differ from those of lower-level reviewers.", "A number of legal requirements and the volume of required rule makings, among other factors, affect the timeliness of SBA's rule-making process. Certain stages of the rule-making process have mandated time periods, such as the required 90-day interagency review process for certain rules.", "Various approaches exist for measuring the length of time required to develop and issue final rules, but they have limitations. For example, in measuring the period from rule initiation to final publication, agencies may differ on when they mark initiation.", "For four finalized SBA rules GAO reviewed, the time from publication of the proposed rule to publication of the final rule varied from 7.5 months to 17.5 months.", "SBA officials noted that an increase in the number of statutorily mandated rules in recent years has contributed to delays in the agency's ability to promulgate rules in a more timely fashion.", "Office of Management and Budget (OMB) officials GAO spoke with stated that the length of time for SBA's rule makings is not unusual and has not raised any concerns.", "GAO reviewed documentation related to SBA's organizational structure and certification processes; relevant laws and regulations; SBA program guidance; and previous GAO reports.", "GAO interviewed SBA and OMB officials.", "GAO reviewed four statutorily mandated SBA rules, which were selected from 47 provisions in the National Defense Authorization Acts for fiscal years 2013, 2014, 2015, and 2016 as examples of mandatory rule making." ], "parent_pair_index": [ -1, -1, 1, 1, 3, -1, 0, 1, 0, 3, 4, -1, 0, 1, 0, 0, -1, -1, -1 ], "summary_paragraph_index": [ 4, 4, 4, 4, 4, 5, 5, 5, 5, 5, 5, 6, 6, 6, 6, 6, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "Defining Spam", "Avoiding and Reporting Spam", "Foreign Spam", "The Federal CAN-SPAM Act: Summary of Major Provisions", "Opt-In, Opt-Out, and a \"Do Not Email\" Registry", "CAN-SPAM Act Provision", "FTC Implementation", "Labels", "CAN-SPAM Act Provision", "FTC Implementation", "Other Implementation Actions", "Wireless Spam", "\"Bounty Hunter\" Provision", "Definition of \"Primary Purpose\"", "Related Legislation", "Legal Actions Based on the CAN-SPAM Act", "Federal Trade Commission Activity", "May 2008 Rules on CAN-SPAM Compliance", "December 2007 Staff Report on Malicious Spam and Phishing", "July 2007 Spam Summit", "December 2005 Assessment of the CAN-SPAM Act", "State Laws Regulating Spam" ], "paragraphs": [ "", "One aspect of increased use of the Internet for electronic mail (e-mail) has been the advent of unsolicited advertising, also called \"unsolicited commercial e-mail\" (UCE), \"unsolicited bulk e-mail,\" \"junk e-mail, \"or \"spam.\" Complaints often focus on the fact that some spam contains, or has links to, pornography; that much of it is fraudulent; and the volume of spam is steadily increasing. However, recent research shows that Internet users' concerns about spam are actually decreasing, even while the volume of spam continues to increase. For example, in a survey conducted by the Pew Internet & American Life Project during February and March 2007, respondents stated that they were \"less bothered by [spam]\" now than they reported being in the previous survey, conducted in June 2003. Specifically, in the 2003 survey, 25% of respondents stated that spam was a \"big problem\"; in the 2007 survey, that figure had dropped to 18%. Even more striking is that the percentage of participants who responded that spam was \"not a problem at all\" rose from 16% to 28% between 2003 and 2007. The percentage of respondents stating that spam is \"an annoyance, but not a big problem\" has stayed roughly the same at 57% and 51% in 2003 and 2007, respectively.\nOne reason for this change in attitude towards spam is attributed to Internet users' growing savvy with identifying spam on their own as well as their increased use of spam filters (whether provided by their Internet service provider (ISP) or purchased on their own). In 2007, 71% of Internet users use filters, up from 65% in 2005.", "One challenge in debating the issue of spam is defining it. To some, it is any commercial e-mail to which the recipient did not \"opt-in\" by giving prior affirmative consent to receiving it. To others, it is commercial e-mail to which affirmative or implied consent was not given, where implied consent can be defined in various ways (such as whether there is a pre-existing business relationship). Still others view spam as \"unwanted\" commercial e-mail. Whether or not a particular e-mail is unwanted, of course, varies per recipient. Since senders of UCE do find buyers for some of their products, it can be argued that at least some UCE is reaching interested consumers, and therefore is wanted, and thus is not spam. Consequently, some argue that marketers should be able to send commercial e-mail messages as long as they allow each recipient an opportunity to indicate that future such e-mails are not desired (called \"opt-out\"). Another group considers spam to be only fraudulent commercial e-mail, and believe that commercial e-mail messages from \"legitimate\" senders should be permitted. The DMA, for example, considers spam to be only fraudulent UCE.\nThe differences in defining spam add to the complexity of devising legislative or regulatory remedies for it. Some of the bills introduced in the 108 th Congress took the approach of defining commercial e-mail, and permitting such e-mail to be sent to recipients as long as it conformed with certain requirements. Other bills defined unsolicited commercial e-mail and prohibited it from being sent unless it met certain requirements. The final law, the CAN-SPAM Act (see below), took the former approach, defining and allowing marketers to send such e-mail as long as they abide by the terms of the law, such as ensuring that the e-mail does not have fraudulent header information or deceptive subject headings, and includes an opt-out opportunity and other features that proponents argue will allow recipients to take control of their in-boxes. Proponents of the law argue that consumers will benefit because they should see a reduction in fraudulent e-mails. Opponents of the law counter that it legitimizes sending commercial e-mail, and to the extent that consumers do not want to receive such e-mails, the amount of unwanted e-mail actually may increase. If the legislation reduces the amount of fraudulent e-mail, but not the amount of unwanted e-mail, the extent to which it reduces \"spam\" would depend on what definition of that word is used.\nOn December 16, 2004, the FTC issued its final rule defining the term \"commercial electronic mail message,\" but explicitly declined to define \"spam.\"", "Tips on avoiding spam are available on the FTC website and from Consumers Union. Consumers may file a complaint about spam with the FTC by visiting the FTC website and choosing \"File a Complaint\" at the bottom of the page. The offending spam also may be forwarded to the FTC, at [email protected] , to assist the FTC in monitoring spam trends and developments. The September 2004 issue of Consumer Reports has a cover story about spam, including ratings of commercially available spam filters consumers can load onto their computers. Also, individual ISPs use spam filters (though the filters may not catch all spam) and have mechanisms available for subscribers to report spam.", "Controlling spam is complicated by the fact that some of it originates outside the United States and thus is not subject to U.S. laws or regulations. Spam is a global problem, and a 2001 study by the European Commission concluded that Internet subscribers globally pay 10 billion Euros a year in connection costs to download spam. Some European officials complain that the United States is the source of most spam, and the U.S. decision to adopt an opt-out approach in the CAN-SPAM Act (discussed below) was not helpful. In April 2005, a British anti-spam and anti-virus software developing company, Sophos, listed the United States as the largest spam producing country, exporting 35.7% of spam (down from 42.1% in December 2004); South Korea was second, at 25% (up from 13.4% in December 2004). Tracing the origin of any particular piece of spam can be difficult because some spammers route their messages through other computers (discussed below) that may be located anywhere on the globe.", "The 108 th Congress passed the CAN-SPAM Act, S. 877 , which merged provisions from several House and Senate bills. Signed into law by President Bush on December 16, 2003 ( P.L. 108-187 ), it went into effect on January 1, 2004. P.L. 108-187 includes the following major provisions.\nCommercial e-mail may be sent to recipients as long as the message conforms with the following requirements: —transmission information in the header is not false or misleading; —subject headings are not deceptive; —a functioning return e-mail address or comparable mechanism is included to enable recipients to indicate they do not wish to receive future commercial e-mail messages from that sender at the e-mail address where the message was received; —the e-mail is not sent to a recipient by the sender, or anyone acting on behalf of the sender, more than 10 days after the recipient has opted-out, unless the recipient later gives affirmative consent to receive the e-mail (i.e., opts back in); and —the e-mail must be clearly and conspicuously identified as an advertisement or solicitation (although the legislation does not state how or where that identification must be made). Commercial e-mail is defined as e-mail, the primary purpose of which is the commercial advertisement or promotion of a commercial product or service (including content on an Internet website operated for a commercial purpose). It does not include transactional or relationship messages (see next bullet). The act directs the FTC to issue regulations within 12 months of enactment to define the criteria to facilitate determination of an e-mail's primary purpose. The FTC did so on December 16, 2004. Some requirements (including the prohibition on deceptive subject headings, and the opt-out requirement) do not apply if the message is a \"transactional or relationship message,\" which include various types of notifications, such as periodic notifications of account balance or other information regarding a subscription, membership, account, loan or comparable ongoing commercial relationship involving the ongoing purchase or use by the recipient of products or services offered by the sender; providing information directly related to an employment relationship or related benefit plan in which the recipient is currently involved, participating, or enrolled; or delivering goods or services, including product updates or upgrades, that the recipient is entitled to receive under the terms of a transaction that the recipient has previously agreed to enter into with the sender. The act allows, but does not require, the FTC to modify that definition. Sexually-oriented commercial e-mail must include, in the subject heading, a \"warning label\" to be prescribed by the FTC (in consultation with the Attorney General), indicating its nature. The warning label does not have to be in the subject line, however, if the message that is initially viewable by the recipient does not contain the sexually oriented material, but only a link to it. In that case, the warning label, and the identifier, opt-out, and physical address required under section 5 (a)(5) of the act; must be contained in the initially viewable e-mail message as well. Sexually oriented material is defined as any material that depicts sexually explicit conduct, unless the depiction constitutes a small and insignificant part of the whole, the remainder of which is not primarily devoted to sexual matters. These provisions do not apply, however, if the recipient has given prior affirmative consent to receiving such e-mails. Businesses may not knowingly promote themselves with e-mail that has false or misleading transmission information. State laws specifically related to spam are preempted, but not other state laws that are not specific to electronic mail, such as trespass, contract, or tort law, or other state laws to the extent they relate to fraud or computer crime. Violators may be sued by FTC, state attorneys general, and ISPs (but not by individuals). Violators of many of the provisions of the act are subject to statutory damages of up to $250 per e-mail, to a maximum of up to $2 million, which may be tripled by the court (to $6 million) for \"aggravated violations.\" Violators may be fined, or sentenced to up to 3 or five years in prison (depending on the offense), or both, for accessing someone else's computer without authorization and using it to send multiple commercial e-mail messages; sending multiple commercial e-mail messages with the intent to deceive or mislead recipients or ISPs as to the origin of such messages; materially falsifying header information in multiple commercial e-mail messages; registering for five or more e-mail accounts or online user accounts, or two or more domain names, using information that materially falsifies the identity of the actual registrant, and sending multiple commercial e-mail messages from any combination of such accounts or domain names; or falsely representing oneself to be the registrant or legitimate successor in interest to the registrant of five of more Internet Protocol addresses, and sending multiple commercial e-mail messages from such addresses. \"Multiple\" means more than 100 e-mail messages during a 24-hour period, more than 1,000 during a 30-day period, or more than 10,000 during a one-year period. Sentencing enhancements are provided for certain acts. The Federal Communications Commission, in consultation with the FTC, must prescribe rules to protect users of wireless devices from unwanted commercial messages. (The rules were issued in August 2004. See CRS Report RL31636, Wireless Privacy and Spam: Issues for Congress , by [author name scrubbed], for more on this topic.)\nConversely, the act does not —\nCreate a \"Do Not Email registry\" where consumers can place their e-mail addresses in a centralized database to indicate they do not want commercial e-mail. The law required only that the FTC develop a plan and timetable for establishing such a registry and to inform Congress of any concerns it has with regard to establishing it. (The FTC released that report in June 2004; see next section.) Require that consumers \"opt-in\" before receiving commercial e-mail. Require commercial e-mail to include an identifier such as \"ADV\" in the subject line to indicate it is an advertisement. The law does require the FTC to report to Congress within 18 months of enactment on a plan for requiring commercial e-mail to be identifiable from its subject line through use of \"ADV\" or a comparable identifier, or compliance with Internet Engineering Task Force standards, or an explanation of any concerns FTC has about such a plan. Include a \"bounty hunter\" provision to financially reward persons who identify a violator and supply information leading to the collection of a civil penalty, although the FTC must submit a report to Congress within nine months of enactment setting forth a system for doing so. (The study was released in September 2004.)", "Much of the debate on how to stop spam focuses on whether consumers should be given the opportunity to \"opt-in\" (where prior consent is required) or \"opt-out\" (where consent is assumed unless the consumer notifies the sender that such e-mails are not desired) of receiving UCE or all commercial e-mail. The CAN-SPAM Act is an \"opt out\" law, requiring senders of all commercial e-mail to provide a legitimate opt-out opportunity to recipients.\nDuring debate on the CAN-SPAM Act, several anti-spam groups argued that the legislation should go further, and prohibit commercial e-mail from being sent to recipients unless they opt-in, similar to a policy adopted by the European Union (see below). Eight U.S. groups, including Junkbusters, the Coalition Against Unsolicited Commercial Email (CAUCE), and the Consumer Federation of America, wrote a letter to several Members of Congress expressing their view that the opt-out approach (as in P.L. 108-187 ) would \"undercut those businesses who respect consumer preferences and give legal protection to those who do not.\" Some of the state laws (see below) adopted the opt-in approach, including California's anti-spam law.\nThe European Union adopted an opt-in requirement for e-mail, which became effective October 31, 2003. Under the EU policy, prior affirmative consent of the recipient must be obtained before sending commercial e-mail unless there is an existing customer relationship. In that case, the sender must provide an opt-out opportunity. The EU directive sets the broad policy, but each member nation must pass its own law as to how to implement it.\nAs noted, Congress chose opt-out instead of opt-in, however. One method of implementing opt-out is to create a \"Do Not Email\" registry where consumers could place their names on a centralized list to opt-out of all commercial e-mail instead of being required to respond to individual e-mails. The concept is similar to the National Do Not Call registry where consumers can indicate they do not want to receive telemarketing calls. During consideration of the CAN-SPAM Act, then-FTC Chairman Timothy Muris and other FTC officials repeatedly expressed skepticism about the advisability of a Do Not Email registry despite widespread public support for it. One worry is that the database containing the e-mail addresses of all those who do not want spam would be vulnerable to hacking, or spammers otherwise might be able to use it to obtain the e-mail addresses of individuals who explicitly do not want to receive spam. In an August 19, 2003, speech to the Aspen Institute, Mr. Muris commented that the concept of a Do Not Email registry was interesting, \"but it is unclear how we can make it work\" because it would not be enforceable. \"If it were established, my advice to consumers would be: Don't waste the time and effort to sign up.\"\nFollowing initial Senate passage of S. 877 , an unnamed FTC official was quoted by the Washington Post as saying that the FTC's position on the registry is unchanged, and \"Congress would have to change the law\" to require the FTC to create it. After the House passed S. 877 , Mr. Muris released a statement complimenting Congress on taking a positive step in the fight against spam, but cautioned again that legislation alone will not solve the problem.", "The CAN-SPAM Act did not require the FTC to create a Do Not Email registry. Instead, it required the FTC to submit a plan and timetable for establishing a registry, authorized the FTC to create it, and instructed the FTC to explain to Congress any concerns about establishing it.", "The FTC issued its report to Congress on June 15, 2004. The report concluded that without a technical system to authenticate the origin of e-mail messages, a Do Not Email registry would not reduce the amount of spam, and, in fact, might increase it.\nThe FTC report stated that \"spammers would most likely use a Registry as a mechanism for verifying the validity of e-mail addresses and, without authentication, the Commission would be largely powerless to identify those responsible for misusing the Registry. Moreover, a Registry-type solution to spam would raise serious security, privacy, and enforcement difficulties.\" (p. I) The report added that protecting children from \"the Internet's most dangerous users, including pedophiles,\" would be difficult if the Registry identified accounts used by children in order to assist legitimate marketers from sending inappropriate messages to them. (p. I) The FTC described several registry models that had been suggested, and computer security techniques that some claimed would eliminate or alleviate security and privacy risks. The FTC stated that it carefully examined those techniques—a centralized scrubbing of marketers' distribution lists, converting addresses to one-way hashes (a cryptographic approach), and seeding the Registry with \"canary\" e-mail addresses—to determine if they could effectively control the risks \"and has concluded that none of them would be effective.\" (p. 16)\nThe FTC concluded that a necessary prerequisite for a Do Not Email registry is an authentication system that prevents the origin of e-mail messages from being falsified, and proposed a program to encourage the adoption by industry of an authentication standard. If a single standard does not emerge from the private sector after a sufficient period of time, the FTC report said the Commission would initiate a process to determine if a federally mandated standard is required. If the government mandates a standard, the FTC would then consider studying whether an authentication system, coupled with enforcement or other mechanisms, had substantially reduced the amount of spam. If not, the Commission would then reconsider whether or not a Do Not Email registry is needed.\nOn August 1, 2005, the FTC issued a press release summarizing the results of testing it had conducted to determine if online retailers were honoring opt-out requests. The FTC found that 89% of the merchants it tested did, in fact, stop sending e-mails when requested to do so.", "Another approach to restraining spam is requiring that senders of commercial e-mail use a label, such as \"ADV,\" in the subject line of the message, so the recipient will know before opening an e-mail message that it is an advertisement. That would also make it easier for spam filtering software to identify commercial e-mail and eliminate it. Some propose that adult-oriented spam have a special label, such as ADV-ADLT, to highlight that the e-mail may contain material or links that are inappropriate for children, such as pornography.", "The CAN-SPAM Act: (1) requires clear and conspicuous identification that a commercial e-mail is an advertisement, but is not specific about how or where that identification must be made; (2) requires the FTC to prescribe warning labels for sexually-oriented e-mails within 120 days of enactment; and (3) requires the FTC to submit a report within 18 months of enactment setting forth a plan for requiring commercial e-mail to be identifiable from its subject line using ADV or a comparable identifier, or by means of compliance with Internet Engineering Task Force standards. However, the clear and conspicuous identification that a commercial e-mail is an advertisement, and the warning label for sexually-oriented material, are not required if the recipient has given prior affirmative consent to receipt of such messages.", "On May 19, 2004, an FTC rule regarding labeling of sexually oriented commercial e-mail went into effect. The rule was adopted by the FTC (5-0) on April 13, 2004. A press release and the text of the ruling are available on the FTC's website. The rule requires that the mark \"SEXUALLY-EXPLICIT\" be included both in the subject line of any commercial e-mail containing sexually oriented material, and in the body of the message in what the FTC called the \"electronic equivalent of a 'brown paper wrapper.'\" The FTC explained that the \"brown paper wrapper\" is what a recipient initially sees when opening the e-mail, and it may not contain any other information or images except what the FTC prescribes. The rule also clarifies that the FTC interprets the CAN-SPAM Act provisions to include both visual images and written descriptions of sexually explicit conduct.\nOn July 20, 2005, the FTC announced that it had charged seven companies with violating federal laws requiring these labels. Four of the companies settled with the FTC, which imposed a total of $1.159 million in civil penalties. U.S. District Court suits were filed against the other three companies.\nThe act also required the FTC to submit a report to Congress on a plan for making commercial e-mail identifiable from its subject line, or to explain what concerns would lead the FTC to recommend against such a plan. That report was submitted in June 2005. It concluded that requiring UCE senders to use a prefix such as ADV probably would not result in less spam.\nExperience with subject line labeling requirements in the states and in other countries does not support the notion that such requirements are an effective means of reducing spam.... Indeed, spam filters widely available at little or no cost ... more effectively empower consumers to set individualized email preferences to reduce unwanted UCE from both spammers and legitimate marketers. Mandatory subject line labeling, by comparison, would be an imprecise tool ... that, at best, might make it easier to segregate labeled UCE from unlabeled UCE. ... [I]t is extremely unlikely that outlaw spammers would comply with a requirement to label the email messages they send. By contrast, legitimate marketers likely would comply.... As a result ... labeled UCE messages sent by law-abiding senders would be filtered out. Meanwhile, unlabeled UCE messages sent by outlaw spammers would still reach consumers' in-boxes. (Italics in original.)", "The act required the FTC or the Federal Communications Commission (FCC) to take a number of other actions with regard to implementing the CAN-SPAM Act. The FTC routinely issues Notices of Proposed Rulemaking or the results thereof regarding this act, which are too numerous to include in this report. Selected issues are addressed below. See the FTC's spam website http://www.ftc.gov/spam for more information.", "The act required the FCC to issue regulations concerning spam on wireless devices such as cell phones. The FCC issued those regulations in August 2004.", "The act required the FTC to conduct a study on whether rewarding persons who identify a spammer and supply information leading to the collection of a civil penalty could be an effective technique for controlling spam (the \"bounty hunter\" provision). The study was released on September 15, 2004. The FTC concluded that the benefits of such a system are unclear because, for example, without large rewards (in the $100,000 to $250,000 range) and a certain level of assurance that they would receive the reward, whistleblowers might not be willing to assume the risks of providing such information. The FTC offered five recommendations if Congress wants to pursue such an approach:\ntie eligibility for a reward to imposition of a final court order, instead of to collecting a civil penalty; fund the rewards through congressional appropriations, instead of through collected civil penalties; restrict reward eligibility to insiders with high-value information; exempt FTC decisions on eligibility for rewards from judicial or administrative review; and establish reward amounts high enough to attract insiders with high-value information.", "The act required the FTC to issue regulations, within one year of enactment, defining the relevant criteria to facilitate determination of an e-mail's \"primary purpose.\" The FTC issued its final rule on December 16, 2004, exactly one year after the law was enacted. According to the FTC's press release, the final rule clarifies that the Commission does not intend to regulate non-commercial speech. It differentiates between commercial content and \"transactional or relationship\" content in defining the primary purpose of an e-mail message.\nIf an e-mail contains only a commercial advertisement or promotion of a commercial product or service, its primary purpose is deemed to be commercial. If an e-mail contains both commercial content and transactional or relationship content, the primary purpose is deemed to be commercial if the recipient would likely conclude that it was commercial through reasonable interpretation of the subject line, or if the transactional and relationship content does not appear in whole or in substantial part at the beginning of the body of the message. If an e-mail contains both commercial content, and content that is neither commercial content nor transactional or relationship content, the primary purpose is deemed to be commercial if the recipient would likely conclude that it was commercial through reasonable interpretation of the subject line, or if the recipient would likely conclude the primary purpose was commercial through reasonable interpretation of the body of the message. If an e-mail contains only transactional or relationship content, it is not deemed to be a commercial e-mail message.\n\"Commercial\" content is defined in the final rule as \"the commercial advertisement or promotion of a commercial product or service,\" which includes \"content on an Internet website operated for a commercial purpose.\" That is the same as the definition in the CAN-SPAM Act.\nThe FTC specifically declined to define the term \"spam\" because the act sets forth a regulatory scheme built around the terms \"commercial electronic mail message\" and \"transactional or relationship message.\"", "On December 22, 2006, President Bush signed the Undertaking Spam, Spyware, And Fraud Enforcement With Enforcers beyond Borders Act of 2005 (U.S. SAFE WEB Act, ( P.L. 109-455 ). The law allows the FTC and parallel foreign law enforcement agencies to share information while investigating allegations of \"unfair and deceptive practices\" that involve foreign commerce, but raised some privacy concerns because the FTC would not be required to make public any of the information it obtained through foreign sources.", "Many lawsuits have been brought against spammers. The following discussion is illustrative, not comprehensive.\nOn October 10, 2007, the FTC announced that it had filed a civil lawsuit against an international enterprise, with defendants in the United States, Canada, and Australia, that used spam to drive traffic to websites selling pills that the FTC alleges do not work. The FTC's spam database received over 175,000 spam messages sent on behalf of the operation. The action, announced at an international meeting of government authorities and private industry about spam, spyware, and other online threats, is the first brought by the agency using the U.S. SAFE WEB Act to share information with foreign partners. In addition, the FTC alleges that the operation violated the CAN-SPAM Act by initiating commercial e-mails that contained false \"from\" addresses and deceptive subject lines, and failed to provide an opt-out link or physical postal address.\nOn April 29, 2004, the FTC announced that it had filed a civil lawsuit against a Detroit-based spam operation, Phoenix Avatar, and the Department of Justice (DOJ) announced that it had arrested two (and were seeking two more) Detroit-area men associated with the company who are charged with sending hundreds of thousands of spam messages using false and fraudulent headers. The FTC charged Phoenix Avatar with making deceptive claims about a diet patch sold via the spam in violation of the FTC Act, and with violations of the CAN-SPAM Act because the spam did not contain a valid opt-out opportunity and the \"reply to\" and \"from\" addresses were fraudulent. The DOJ filed criminal charges against the men under the CAN-SPAM Act for sending multiple commercial e-mails with materially false or fraudulent return addresses. According to the FTC, from January 1, 2004 until the lawsuit was filed, about 490,000 of the spam messages forwarded by consumers to the FTC were linked to Avatar Phoenix.\nThe FTC simultaneously announced that it had filed a legal action against an Australian spam enterprise operating out of Australia and New Zealand called Global Web Promotions. The FTC stated that it was assisted by the Australian Competition and Consumer Commission and the New Zealand Commerce Committee in bringing the case. According to the FTC, since January 1, 2004, among the spam forwarded by consumers to the FTC, about 399,000 are linked to Global Web Promotions. The FTC charges that a diet patch, and human growth hormone products, sold by Global Web Promotions are deceptive and in violation of the FTC Act. The products are shipped from within the United States. The FTC further charges that the spam violates the CAN-SPAM Act because of fraudulent headers.\nThe FTC also filed a complaint against six companies and five individuals who, the FTC alleges, acting as a single business enterprise, sent e-mails containing sexually-explicit content without the required warning label and violated other provisions of the Adult Labeling Rule, the CAN-SPAM Act, and the FTC Act. A federal district court issued a Temporary Restraining Order against the defendants.\nSeparately, four of the largest ISPs—AOL, Earthlink, Microsoft, and Yahoo!—working together as part of the Anti-Spam Alliance, filed civil suits under the CAN-SPAM Act against hundreds of alleged spammers in March 2004. The suits were filed in federal courts in California, Georgia, Virginia and Washington. A number of other suits since have been filed.\nThe Massachusetts Attorney General filed the first state CAN-SPAM case against a Florida business called DC Enterprises, and its proprietor William T. Carson in July 2004, which also was filed under the Massachusetts Consumer Protection Act. That case was settled by DC Enterprises and Mr. Carson, who agreed to pay $25,000, halt further violations of the CAN-SPAM Act, and comply with state regulations regarding mortgage brokers.\nIt should be noted, however, that some ISPs are having difficulty recovering monetary judgments from spam cases (though not necessarily cases brought under the CAN-SPAM Act). Microsoft, for example, reportedly has won $620 million in judgments, but has collected only $500,000.", "The FTC enforces the CAN-SPAM Act and conducts other consumer-education initiatives related to combating spam.", "On May 12, 2008, the FTC approved new four new provisions clarifying the requirements of the CAN-SPAM Act. The provisions are intended to clarify the Act's requirements.\nThe new rule provisions address four topics: (1) an e-mail recipient cannot be required to pay a fee, provide information other than his or her e-mail address and opt-out preferences, or take any steps other than sending a reply e-mail message or visiting a single Internet Web page to opt out of receiving future e-mail from a sender; (2) the definition of \"sender\" was modified to make it easier to determine which of multiple parties advertising in a single e-mail message is responsible for complying with the Act's opt-out requirements; (3) a \"sender\" of commercial e-mail can include an accurately-registered post office box or private mailbox established under United States Postal Service regulations to satisfy the Act's requirement that a commercial e-mail display a \"valid physical postal address\"; and (4) a definition of the term \"person\" was added to clarify that CAN-SPAM's obligations are not limited to natural persons.\nIn addition, the Commission's Statement of Basis and Purpose (SBP) accompanying the final rule addresses a number of topics that are not the subject of any new rule provisions. These include: CAN-SPAM's definition of \"transactional or relationship message\"; the Commission's decision not to alter the length of time a \"sender\" of commercial e-mail has to honor an opt-out request; the Commission's determination not to designate additional \"aggravated violations\" under the Act; and the Commission's views on how CAN-SPAM applies to forward-to-a-\"friend\" e-mail marketing campaigns, in which someone either receives a commercial e-mail message and forwards the e-mail to another person, or uses a Web-based mechanism to forward a link to or copy of a Web page to another person. The SBP explains that, as a general matter, if the seller offers something of value in exchange for forwarding a commercial message, the seller must comply with the Act's requirements, such as honoring opt-out requests.", "In this staff report, the FTC describes findings from its July 2007 workshop, \"Spam Summit: The Next Generation of Threats and Solutions\" and proposes follow-up action steps that stakeholders can adopt to mitigate the harmful effects of malicious spam and phishing. In addition to proposing action steps for stakeholders, the report provides an overview of the agency's role in protecting consumers from the threats of fraudulent spam and phishing. The report also announces results from the FTC's 2007 Harvesting and Filtering Study, which suggest that Internet service providers' spam filters continue to serve an integral role in reducing the amount of spam that reaches consumers' in-boxes.", "In July 2007, the FTC hosted \"Spam Summit: The Next Generation of Threats and Solutions.\" This event was a follow-on effort of the FTC's 2003 Spam Forum. Issues included defining the problem; new methods for sending spam; the \"covert economy\" (e.g., to what extent does stolen information, such as government-issued identity numbers, credit cards, bank cards and personal identification numbers, user accounts, and e-mail addresses, play a role in spam?); deterring malicious spammers and cybercriminals; emerging threats (e.g., what emerging threats are occurring in media other than e-mail including spam over instant messaging, etc.?); putting consumers back in control (how can we empower consumers and businesses in the fight against spam and malware?); and stakeholder best practices.", "Under the law, the FTC was required to provide Congress with an assessment of the act's effectiveness, and recommend any necessary changes. The FTC submitted its report in December 2005. The FTC concluded that the act has been effective in terms of adoption of commercial e-mail \"best practices\" that are followed by \"legitimate\" online marketers, and in terms of providing law enforcement agencies and ISPs with an additional tool to use against spammers. Additionally, the FTC concluded that the volume of spam has begun to stabilize, and the amount reaching individuals' inboxes has decreased because of improved anti-spam technologies. However, it also found that the international dimension of spam has not changed significantly, and that there has been a shift toward the inclusion of \"increasingly malicious\" content in spam messages, such as \"malware,\" which is intended to harm the recipient. Other negative changes noted by the FTC are that spammers are using increasingly complex multi-layered business arrangements to frustrate law enforcement, and are hiding their identities by providing false information to domain registrars (the \"Whois\" database).\nThe FTC did not recommend any changes to the CAN-SPAM Act, but encouraged Congress to pass the US SAFE WEB Act ( S. 1608 , see next paragraph), noted that continued consumer education efforts are needed, and called for improved anti-spam technologies, particularly domain-level authentication (discussed later in this report).", "Thirty-eight states have passed laws regulating spam: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.\nThe CAN-SPAM Act preempts state spam laws, but not other state laws that are not specific to electronic mail, such as trespass, contract, or tort law, or other state laws to the extent they relate to fraud or computer crime. California passed an anti-spam law that would have become effective January 1, 2004 and was considered relatively strict. It required opt-in for UCE unless there was a prior business relationship, in which case, opt-out is required. The anticipated implementation of that California law is often cited as one of the factors that stimulated Congress to complete action on a less restrictive, preemptive federal law before the end of 2003.\nA number of lawsuits have been filed under the state laws. Two notable cases involve the Maryland and Virginia laws. In December 2004, a Maryland judge ruled that Maryland's anti-spam law is unconstitutional, because it seeks to regulate commerce outside of the state. An individual, Eric Menhart, who was a resident of the District of Columbia, but had a business in Maryland whose domain name was \"maryland-state-resident.com,\" filed suit against a New York-based spammer. According to the spamlaws.com website, the Maryland law prohibits sending commercial e-mail that uses a third party's domain name without permission, or that contains false or missing routing information, or with a false or misleading subject line. The law applies, inter alia , to e-mail sent from within Maryland, or if the sender knows that the recipient is a Maryland resident. Mr. Menhart reportedly is appealing the ruling.\nA lawsuit brought under Virginia's anti-spam law, however, led to a conviction of two North Carolina residents: Jeremy Jaynes, and his sister, Jessica DeGroot. According to the spamlaws.com website, the Virginia law makes it illegal, inter alia , to send unsolicited bulk e-mails containing falsified routing information, and allows the court to exercise personal jurisdiction over a nonresident who uses a computer or computer network located in Virginia. The case reportedly is the first felony spam case in the country. According to press accounts, Mr. Jaynes and Ms. DeGroot were convicted of misrepresenting the origin of e-mails that sold software and other products (a third defendant was acquitted). The e-mails went through AOL servers located in Virginia. Ms. DeGroot's conviction was later overturned, and Mr. Jaynes, who was sentenced to nine years in prison, appealed his conviction; his conviction was upheld by a three-judge panel for the Virginia Court of Appeals on September 5, 2006. Jaynes plans to appeal this decision, as well, but Virginia Attorney General Robert McDonnell said in a statement that his office plans to ask the court to revoke bond and order Jaynes to begin serving his sentence." ], "depth": [ 0, 1, 1, 1, 2, 1, 2, 3, 3, 2, 3, 3, 2, 3, 3, 3, 2, 2, 1, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h2_full", "", "", "h0_title h2_title h1_full", "h0_full h2_full h1_full", "", "h1_full", "h0_full", "", "", "", "", "", "", "", "", "h2_title", "", "", "", "h2_full", "h1_full" ] }

{ "question": [ "What is spam?", "What issues might spam cause?", "How do proponents of UCE defend it?", "What actions did President Bush take against unsolicited commercial emails?", "How does this Act control the flow of spam?", "How does the Act avoid mandating a Do Not Email registry?", "Why does the Act avoid creating a Do Not Email registry?", "What have proponents of CAN-SPAM argued?", "Why do opponents disagree with this line of reasoning?", "What advancements are necessary to solve the spam problem?" ], "summary": [ "Spam, also called unsolicited commercial email (UCE) or \"junk email,\" aggravates many computer users.", "Not only can spam be a nuisance, but its cost may be passed on to consumers through higher charges from Internet service providers who must upgrade their systems to handle the traffic. Also, some spam involves fraud, or includes adult-oriented material that offends recipients or that parents want to protect their children from seeing.", "Proponents of UCE insist it is a legitimate marketing technique that is protected by the First Amendment, and that some consumers want to receive such solicitations.", "On December 16, 2003, President Bush signed into law the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act, P.L. 108-187. It went into effect on January 1, 2004.", "The CAN-SPAM Act does not ban UCE. Rather, it allows marketers to send commercial email as long as it conforms with the law, such as including a legitimate opportunity for consumers to \"opt-out\" of receiving future commercial emails from that sender. It preempts state laws that specifically address spam, but not state laws that are not specific to email, such as trespass, contract, or tort law, or other state laws to the extent they relate to fraud or computer crime.", "It does not require a centralized \"Do Not Email\" registry to be created by the Federal Trade Commission (FTC), similar to the National Do Not Call registry for telemarketing. The law requires only that the FTC develop a plan and timetable for establishing such a registry, and to inform Congress of any concerns it has with regard to establishing it.", "The FTC submitted a report to Congress on June 15, 2004, concluding that a Do Not Email registry could actually increase spam.", "Proponents of CAN-SPAM have argued that consumers are most irritated by fraudulent email, and that the law should reduce the volume of such email because of the civil and criminal penalties included therein.", "Opponents counter that consumers object to unsolicited commercial email, and since the law legitimizes commercial email (as long as it conforms with the law's provisions), consumers actually may receive more, not fewer, UCE messages. Thus, whether or not \"spam\" is reduced depends in part on whether it is defined as only fraudulent commercial email, or all unsolicited commercial email.", "Many observers caution that consumers should not expect any law to solve the spam problem—that consumer education and technological advancements also are needed." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 0, 2, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2 ] }

{ "title": [ "Background", "DHS Organization and Missions", "Financial Systems", "DHS Components Define M&A Activities Differently and Can Identify M&A Spending, but Limitations Exist in Obtaining Data from Fiscal Years 1999 through 2013", "DHS Components Define M&A Activities Differently and Can Identify M&A Spending", "DHS Identifies Some M&A Spending and Is Taking Steps to Define and Collect Data on M&A Activities, but Could Improve Reliability of Data for Estimating Future Resource Requests", "DHS Identifies Spending on Specific M&A Activities through Two Efforts to Achieve Efficiencies and Reduce Spending", "DHS Has Taken Steps to Enhance the Collection of Actual M&A Spending, but It Is Too Early to Assess These Efforts", "Conclusions", "Recommendation for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Limitations to Identifying and Analyzing Management and Administration Spending", "Appropriation Account and PPA Limitations", "Object Classification Limitations", "Appendix II: Objectives, Scope, and Methodology", "Appendix III: Comments from the Department of Homeland Security", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "", "DHS’s seven operational components, listed along the bottom of figure 1, lead the department’s frontline activities. As described in DHS’s Quadrennial Homeland Security Review Report, the department has five core missions: (1) preventing terrorism and enhancing security, (2) securing and managing our borders, (3) enforcing and administering our immigration laws, (4) safeguarding and securing cyberspace, and (5) ensuring resilience to disasters.focuses on two areas: (1) providing essential support to national and economic security, such as maximizing the collection of customs revenue, and (2) maturing and strengthening DHS, such as enhancing shared awareness of risks and threats. DHS’s eight support components provide resources, analysis, equipment, research, policy development, and In addition to the five missions, DHS support to help ensure the operational components have the tools and resources to accomplish DHS’s missions. Figure 1 shows DHS’s organizational structure.\nAppropriation account and PPA: Congress appropriates funds to DHS in appropriations accounts that authorize it to incur obligations and make payments (expenditures) from the Treasury for specified purposes.These appropriations accounts are further broken down by program, project, or activity (PPA). PPAs are identified in conference reports and in the President’s budget submission. In addition, each DHS component explains its funding request by PPA in DHS’s congressional budget justification. PPAs are intended to provide a meaningful representation of the operations financed by the account. PPAs are not standard among DHS components. For example, the Transportation Security Administration’s PPAs generally align with its programs (e.g., Screening Partnership Program and Secure Flight), whereas the Coast Guard’s PPAs align with expense type. For example, the Coast Guard’s Operating Expenses account consists of the following six PPAs: military pay and allowances, civilian pay and benefits, training and recruiting, operating funds and unit-level maintenance, centrally managed accounts, and depot-level maintenance. In addition, the number of appropriations accounts and PPAs each component has varies. For example, the President’s fiscal year 2013 budget submission requested funding for the Federal Law Enforcement Training Center in a total of two appropriations accounts and three PPAs. In contrast, the budget submission requested funding for FEMA in a total of nine appropriations accounts and 19 PPAs. We previously found that there are limitations to using account structures to identify and analyze M&A spending.appropriation account structure was not constructed to delineate program and administrative expenses. In particular, (1) the budget does not identify an administrative account for all agencies, (2) similar expenses are categorized differently across agencies and within the same agencies from year to year, and (3) administrative accounts do not include all administrative expenses of an agency. See appendix I for more details on the limitations of using appropriations accounts and PPAs to identify M&A spending.\nSpecifically, we found that the Object classification: Object classes are numbered categories used in budget preparation to classify obligations by the types of goods or services purchased by the federal government. Obligations are commitments that create a legal liability of the federal government for the payment of goods and services. For example, an agency incurs an obligation when it places an order, signs a contract, purchases a service, or awards a grant. Obligations may also include interagency transactions where funds are transferred from one appropriation account to another. Object class information is mandated by law, which requires the President’s budget to present obligations by object class for each account. In DHS’s annual congressional budget justification, components break down their funding requests for each PPA by object class. The Office of Management and Budget (OMB) established five major object classes; by number, they are as follows: 10, personnel compensation and benefits; 20, contractual services and supplies; 30, acquisition of assets; 40, grants and fixed charges; and 90, other. See appendix I (table 5) for a description of the major object classes. These major classes are divided into smaller classes. For example, object class 20 includes 21, travel and transportation of persons; 24, printing and reproduction; and 26, supplies and materials. See figure 2 for examples of the contractual services and supplies object classification for DHS.\nWe previously found that object class data have limitations when used to identify and analyze obligations of an M&A nature.not an object class exclusively for M&A activities, so obligations for M&A For example, there is activities cannot be separated from obligations for mission activities. See appendix I for more details on the limitations of using object class data to identify M&A spending.", "Components use financial systems to track obligations and expenditures by account and PPA, as well as object classification. The term “financial system” includes an information system, composed of one or more applications, that is used for collecting, processing, maintaining, transmitting, or reporting data about financial events; supporting financial planning or budgeting activities; accumulating and reporting costs information; or supporting the preparation of financial statements. Of the 15 DHS components, 6 own and operate financial systems. The remaining components, with the exception of the Office of Inspector General, which relies on the Department of the Treasury, are customers of those 6 components that own and operate their own financial systems For example, the Coast and serve as internal shared service providers.Guard owns and operates a financial system, and TSA and the Domestic Nuclear Detection Office are customers of the Coast Guard. Each of the 6 components that own financial systems use different software or versions of software. Table 1 depicts which DHS components own financial systems and which are customers that use those systems.\nIn addition to the financial systems components utilize to track budget execution, DHS utilizes the FYHSP System PDM to develop the FYHSP report to Congress and assist the department with budget formulation. In response to DHS’s Bottom-Up Review, which called for the capability to better align DHS’s budget with its missions, PA&E developed the FYHSP System PDM.submit their resource allocation plans to request funding for future years. Financial systems use the appropriation structure specified by Congress for budget execution, while the PDM captures DHS’s programmatic The PDM is a data collection tool for components to structure used for resource formulation, managerial decision making, performance management, and articulating outcome-oriented mission programs to the public.", "The eight DHS components we reviewed define M&A spending differently. According to component officials, the components can identify M&A spending, but they do not do so because they are not required to by the department. In addition, the methods for identifying M&A spending vary among components. Components also have varied ability to report consistent, reliable M&A data, limiting the data available from fiscal years 1999 through 2013. Because components define M&A differently, have different methods for identifying spending, and limitations exist in obtaining data, it is not possible to compare components’ M&A spending data from fiscal years 1999 through 2013.", "Officials from all eight DHS components we reviewed provided us different definitions of M&A activities and told us that they can identify spending on M&A activities. (See table 2.) Four of the eight components in our review—FEMA, FLETC, ICE, and TSA—define their M&A activities according to the activities funded through their appropriations accounts and PPAs that are M&A in nature (i.e., activities of a support nature such as planning and budgeting, legal support, and IT infrastructure), while the other four—Coast Guard, DMO, CBP, and USSS—each define M&A activities differently and their definitions are not tied to activities in specific appropriation accounts or PPAs. For example, TSA officials stated that TSA’s M&A activities are those found within its Transportation Security Support appropriations account, specifically the following three PPAs: Headquarters Administration, Human Capital Services, and Information Technology. These three PPAs fund TSA’s headquarters and support functions. Alternatively, the Coast Guard does not have an M&A PPA. According to Coast Guard officials, the Coast Guard’s M&A activities are those associated with headquarters and its service centers, such as personnel support and finance, which support the entire Coast Guard and cannot be attributed to a single unit or mission. Unlike officials in other components, DMO officials said that they consider all of DMO’s activities to be M&A in nature, and therefore all of its spending to be M&A.\nDHS components are not required by the department to identify M&A spending as they obligate or expend funds, and as a result, none of the eight components we reviewed currently do so. However, all the components said they can identify M&A spending. Seven of the components would use their financial systems to identify M&A spending, while one component would use its cost model. However, methods for identifying spending vary among components. For example, FEMA officials said they can obtain M&A data from object classes within FEMA’s financial system, while Coast Guard officials said that they can use expenditures by cost centers and ICE officials said that they can calculate obligations and expenditures by PPA. Alternatively, officials from one component, CBP, said that CBP can use its cost model, which aligns costs with activities—but is separate from its financial system—to identify M&A spending. Table 2 summarizes how DHS components we reviewed define and would identify M&A activities and spending.\nDHS components have varied ability to report consistent, reliable M&A data, limiting the data available from fiscal years 1999 through 2013. While FEMA officials stated that FEMA could provide data since fiscal year 1999, officials from seven of the eight DHS components we reviewed told us they would be able to provide M&A spending data for some, but not all, fiscal years since 1999 because of changes in their financial systems and data reliability issues, among other reasons. Examples of these limitations in obtaining data include the following: Financial system changes: Officials from two of eight components cited a change or upgrade to their financial systems as a reason for not having data readily available since fiscal year 1999. For example, according to USSS officials, they could most easily identify M&A data for fiscal years 2005 through 2012, since USSS changed its financial system in 2005. The officials added that obtaining M&A data before fiscal year 2005 would be time-consuming, and the data would be difficult to merge with data in USSS’s current system because the financial systems are not compatible or linked.\nData reliability: Officials from two of eight components cited data reliability as a reason for not having data readily available since fiscal year 1999. For example, officials representing DMO—which was established in fiscal year 2004 along with its financial system—told us that they do not consider fiscal year 2004 data to be reliable because the data are for a partial year and the officials were learning the system; however, they consider the next fiscal year’s data (2005) reliable, as the financial system was fully operational for an entire fiscal year and officials had become familiar with using the system.\nDate component established: Four of the eight components were not established, or not established in their current form, until after 1999, and therefore data are not available or could be difficult to obtain. For example, CBP officials told us that obtaining M&A data prior to fiscal year 2003—when CBP was part of other federal departments—would be nearly impossible because the offices and agencies in those departments were not wholly transferred into what is now CBP.\nTable 3 provides information on the range of M&A data available by fiscal year, and the reason for that range.\nBecause components define M&A differently, have different methods for identifying spending, and limitations exist in obtaining data, it is not possible to compare components’ M&A spending data from fiscal years 1999 through 2013. Furthermore, components’ missions and authorities have changed over time, making a meaningful analysis of a single component’s spending over time difficult. For example, the Coast Guard doubled in size shortly after the terrorist attacks of September 11, 2001, because its mission was broadened to include additional national security responsibilities such as increasing port security. Specifically, as reported in the President’s fiscal year 2003 budget, port security accounted for approximately 1 to 2 percent of daily operations before September 11, 2001, and accounted for between 50 and 60 percent of daily operations in fiscal year 2003. Additionally, FEMA’s authority changed with the Post- Katrina Emergency Management Reform Act of 2006. The act enhanced FEMA’s autonomy—FEMA became a distinct entity within DHS—and responsibilities. For example, the act tasked FEMA with leading and supporting the nation’s risk-based, comprehensive emergency management system of preparedness, protection, response, recovery, and mitigation. Appendix I provides additional information on limitations to identifying and analyzing DHS’s M&A data.", "DHS has not identified the department’s total spending on M&A activities, but through two efforts to achieve efficiencies and reduce spending, it identifies spending on some M&A activities. DHS implemented a system to estimate the percentage of the department’s budget request in future years that is identified as M&A using a common definition, but not all components are adhering to the definition when entering resource allocation requests into the system. DHS is taking steps to require components to apply the same common M&A definition to obligations and expenditures contained in their financial systems, but it is too early to tell whether the steps DHS is taking will allow it to successfully collect reliable M&A data in the future.", "According to DHS OCFO officials, DHS has not identified the department’s total spending on M&A activities since DHS’s inception in 2003 because (1) there has not been a common M&A definition and (2) obtaining data would require requesting data from the components, which would require a manual, labor-intensive effort on their part to identify the data in their financial systems. However, through two efforts to achieve efficiencies and reduce spending, DHS is identifying and collecting data on components’ spending on specific M&A activities.\nAs avoidance figures quarterly through the ER Quarterly Reporting System.The ER collects expenditure data for three initiatives to determine whether the cost avoidance figures are reasonable and to verify components’ compliance with the initiatives: 1. facilities: rental costs for nongovernmental facilities for meetings, conferences, and training events; 2. printing: total cost of printed products; and 3. travel: all expenditures assigned to object class 21 travel and transportation of persons.\nThe data provided reflect all spending on the initiatives, including M&A activities and operational activities, such as mission-critical travel. According to the ER data, travel expenditures far exceeded spending on facilities rental and printing from fiscal years 2010 through 2012. Furthermore, components’ travel and printing expenditures were similar in both fiscal years 2010 and 2011, but increased in fiscal year 2012. In contrast, expenditures on facilities rental steadily declined from fiscal years 2010 to 2012. According to the ER Director, variations in expenditures across years are a result of mission needs, which can be cyclical in nature. For example, according to USSS officials, USSS generally has increased travel costs in an election year because of its mission to protect presidential candidates. Figure 3 shows DHS spending by initiative for fiscal years 2010 through 2012.\nThe ER office requires components to report their cost avoidance figures for 5 of the 46 initiatives: (1) facilities, (2) IT inventory management, (3) printing, (4) travel, and (5) wireless assets and services. Cost avoidances are savings that are reallocated to mission-critical activities, and do not result in decreases to the budget. These initiatives include M&A activities as well as operational activities, such as mission-critical travel, so the cost avoidances reported are not limited to M&A activities. DHS has reported achieving cost avoidances through sharing excess IT equipment within the department rather than buying new equipment, and using government office space and online tools for conferences instead of renting private facilities, for example. Figure 4 shows the cost avoidances DHS has achieved by these five initiatives for fiscal year 2012 through the first quarter of fiscal year 2013.\nDHS has achieved the greatest cost avoidances through the wireless assets and services, IT inventory management, and facilities initiatives. According to the ER data, FEMA, for example, reported a collective cost avoidance of $8 million during the time period as a result of reducing by approximately half what it was paying for wireless service per employee. Cost avoidances have been limited for the printing and travel initiatives relative to the other initiatives. According to officials from six of the eight components we interviewed, there are limited opportunities to avoid these costs, since mission needs dictate spending. For example, USSS officials stated that while USSS looks for opportunities to reduce costs and has recently opted for travel by bus rather than by aircraft, it ultimately has limited control over travel spending because the agency must provide protection for its protectees when and where they travel.\nIn response to the Campaign to Cut Waste—a government-wide effort to reduce administrative spending—DHS sets spending targets and tracks components’ spending (obligations and expenditures) for seven M&A categories: (1) travel, (2) printing, (3) supplies, (4) advisory service contracts (e.g., contracts for IT services and program management), (5) promotional items, (6) IT devices, and (7) executive sedan services. DHS components’ spending targets generally reflect a 20 percent decrease from their fiscal year 2010 spending levels in accordance with Executive Order 13589, issued in November 2011, and a subsequent May 2012 memorandum from OMB providing implementation guidance. Unlike ER data, the figures reported for the Campaign to Cut Waste generally exclude spending on mission-essential activities (e.g., travel for national security purposes), as the goal of the Campaign to Cut Waste is to reduce spending on administrative activities. The Campaign to Cut Waste concluded at the end of fiscal year 2013 per OMB guidance, with the exception of continued collection of spending data for travel.\nOf the eight components we reviewed, officials from six reported having difficultly determining spending for some of the Campaign to Cut Waste categories, highlighting the challenges of both defining and identifying M&A activities and spending. More specifically, while officials from all eight components did not report any difficulties determining travel spending, six of the eight components reported difficultly determining spending on promotional items, supplies, and/or IT devices. Officials from these six components cited unclear definitions and lack of a straightforward method to identify spending, such as no corresponding object class, as reasons for the difficulty. For example, ICE, TSA, and USSS officials stated that what qualifies as a promotional item is not well defined in the guidance, and as a result, the activities and associated spending that should be reported for this category are subjective. According to DHS OCFO and FEMA officials, FEMA delayed reporting its spending on office supplies in April 2013 when it realized the figures previously reported may have been overstated, as the object class that contains office supplies also includes purchases made on credit cards, which could include items other than office supplies. Officials from four of the eight components we reviewed reported difficulties determining spending for IT devices as a result of the broad definition in the executive order and the ability to isolate spending on specific types of IT devices (e.g., laptops) in their financial system.\nDespite the data limitations described above, we determined that the data are sufficiently reliable to illustrate general levels of DHS’s spending against its spending targets on the Campaign to Cut Waste categories for six of the seven categories (all but IT devices). Overall, DHS spent 12 percent less than its spending target for fiscal year 2012 on these six categories. However, given that data for the IT device category are incomplete and the final spending and spending target figures are being determined, it is unknown at this time whether DHS met its overall spending goal for fiscal year 2012. According to DHS’s Budget Division, for fiscal year 2013, the department was on track to meet or exceed the reduction levels established in the executive order in the areas of supplies and advisory service contracts, which will allow DHS to meet its overall spending target. Table 4 shows the amount DHS spent compared with its spending target by Campaign to Cut Waste category during fiscal year 2012 and the first two quarters of fiscal year 2013.\nIn response to DHS’s 2010 Bottom-Up Review, which called for the capability to better align DHS’s budget with its missions, PA&E implemented the FYHSP System PDM in March 2010, as well as three activity types for categorizing the department’s activities: (1) Mission/Operational; (2) Mission Support; and (3) Business Support (also referred to as M&A), including a definition of M&A activities. The FYHSP System PDM User Manual directs components to submit resource allocation requests by activity type according to the definitions below: 1. mission/operational activities: activities that directly contribute to a mission outcome (e.g., screening and disaster operations).2. mission support: activities providing a product or service for, and tailored to, mission/operational activities (e.g., logistical support, research and development, and intelligence). 3. business support (also referred to as M&A): activities found on the master list of 92 activities included in the user manual (e.g., conduct strategic planning, manage public affairs, and ensure information security).\nAs a result, DHS has the ability to model the percentage of its future years’ budget requests allocated to each of the three activity categories, including M&A, using a consistent definition. However, on the basis of our analysis of the activities entered into the FYHSP System PDM for fiscal years 2012 and 2013, we determined that 1 component did not enter any business support/M&A activities, and 5 components did not correctly categorize their business support activities since they entered some business support activities as mission support activities. Further, according to an analysis conducted by PA&E of the activities entered in the PDM as business support/M&A for fiscal years 2014 through 2018, components did not correctly categorize their requests by activity type or enter all of their business support/M&A activities, among other errors. For example,\n9 out of 15 components did not correctly word a portion of their business support/M&A activities to correspond with the master list;\n4 of the 15 components entered the wrong corresponding business support/M&A activity number as found on the master list for a portion of their business support activities; and\n4 out of 15 components entered fewer business support/M&A activities than PA&E would have expected, and 1 component did not enter any business support activities.\nAccording to DHS PA&E officials, the errors are a result of manual data entry or components not adhering to the guidance in the PDM user manual. For example, 1 component believes every activity it undertakes is in support of its mission and therefore it has no business support/M&A activities. Standards for Internal Control in the Federal Government calls for relevant, reliable, and timely information to be available for external reporting purposes and management decision making. Additionally, these Standards state that management should put in place control mechanisms and activities to enable it to enforce its directives and achieve results, such as providing relevant, reliable, and timely information. Furthermore, the Statement of Federal Financial Accounting Concepts No. 1, Objectives of Federal Financial Reporting, states that the objectives of federal financial reporting are to provide useful information to assist internal and external users in assessing the budget integrity, operating performance, stewardship, and systems and control of the federal government. DHS does not have a mechanism in place to work with the components to correct data errors in the PDM. According to PA&E, as of August 2013, it was in the process of working with components to revise the master list from 92 activities to fewer than 50 in conjunction with DHS’s efforts to revise its Quadrennial Homeland Security Review Report. In addition, in September 2013, PA&E told us that it plans to develop drop-down menus for the FYHSP System PDM to systematically ensure consistency of nomenclature and spelling of business support activities. While the development of drop-down menus will likely address the errors as a result of incorrectly worded activities and wrong activity numbers, the steps to be taken will not address the errors related to components not entering business support activities into the PDM or entering business support activities as mission support activities. By implementing a mechanism to assess whether components have entered the appropriate business support activities into the PDM, and working with the components to correct the data, as needed, DHS would be better positioned to reliably estimate and report to external stakeholders, such as Congress, what percentage of the department’s resource allocations requests are identified as M&A.", "DHS has taken steps to enhance the collection of actual M&A spending for the department as a whole. However, DHS’s M&A definition only applies to future allocation requests entered into the FYHSP System PDM beginning with fiscal year 2012. Accordingly, it is not used by components to identify obligations or expenditures by activity type in their financial systems. According to DHS, there is no linkage between components’ financial systems and the FYHSP System PDM because the systems were built upon different structures. Components’ financial systems are designed to track how components are spending funds and track obligations and expenditures according to their appropriations accounts and PPAs, which are established by the Appropriations Committees and are different for each component. The PDM was designed to help estimate future resource needs and was created based on a common account structure that aligns activities with the department’s programmatic structure—missions and objectives, according to the FYHSP System PDM User Manual. Managerial cost accounting concepts and standards call for reliable and timely information on the full cost of federal programs, their activities, and outputs. The cost information can be used by Congress and federal executives in making decisions about allocating federal resources, authorizing and modifying programs, and evaluating program performance. The cost information can also be used by program managers in making managerial decisions to improve operating economy and efficiency.\nFinancial Systems Integration Office, 2007 Report on Federal Financial Management Standards: Common Government-wide Accounting Classification Structure, version 1.0. major upgrade to their system, or (3) move to a shared service provider. One element of the 73, defined by DHS is “mission activity,” which requires components to identify data by activity type using the same business support (or M&A) definition in the FYHSP System PDM. Furthermore, through an effort called CFO Horizon, DHS has developed a data repository in which to collect data from DHS and its components’ various financial systems, so when data such as M&A are collected by the components in the future, they can be readily accessible by the department for consolidation, according to the CFO Horizon Concept of Operations.\nDHS OCFO is implementing ACS in two phases: Phase I and Phase II. According to DHS OCFO officials, DHS anticipates publishing the ACS Policy and Standards in November 2013, thus completing Phase I in the first quarter of fiscal year 2014. Phase II, implementation of ACS by the components, is scheduled to begin in fiscal year 2014. If a component does not store and cannot derive the data element, the component will not be expected to report on the data element until it modernizes, upgrades or move to a shared service provider, according to a DHS official. The mission activity element is not an element components can provide or easily provide without financial system modernization. According to the preliminary results of an assessment conducted by OCFO on the ability of the components to meet the ACS requirements using their financial systems as of May 2013, none of the components capture or store data by “mission activity” in their financial systems. While 4 of 15 components responded they could derive the data from their existing systems, 3 reported the level of difficulty to be high. Therefore, most components will need to modernize their systems in order to obtain M&A data, as they are currently unable to obtain or derive the data with their current financial systems. DHS is in the early stages of the phased implementation of its financial system modernization, with completion projected for the second quarter of fiscal year 2018.\nOCFO officials told us that in response to their assessment of components’ readiness to implement ACS, some components reported that even after they have a financial system that provides the capability to categorize by mission activity, they may not be able to do so because funds are not obligated by activity type. For example, CBP officials told us that approximately 70 percent of CBP’s budget is for salaries and benefits, and defining an individual’s salary by mission activity is difficult given that individuals, especially those working in the field (e.g., border patrol agents), perform a wide variety of tasks, making it difficult to accurately break down their salary expenses by activity type (mission, mission support, and business support). Additionally, TSA reported that it would be an extensive burden to manually enter such data. According to DHS OCFO officials, while implementation of any new financial system and new accounting structure is inherently challenging, it is executing a process to address issues as they are identified. However, it is too early to tell whether the steps DHS is taking will allow it to successfully collect reliable M&A data in the future.", "DHS has developed a common definition of M&A activities for resource planning for the department, but on the basis of our analysis, and PA&E’s analysis, not all components are accurately identifying or entering business support/M&A activities in accordance with the definition in the FYHSP System PDM User Manual when entering their future resource allocation requests into the PDM. By implementing a mechanism to assess whether components have entered the appropriate M&A activities into the PDM, and working with the components to correct the data, as needed, DHS would be better positioned to reliably estimate and report to external stakeholders, such as Congress, what percentage of the department’s resource allocations requests are identified as M&A. DHS’s M&A definition applies only to future allocation requests entered into the FYHSP System PDM. Accordingly, it is not used by components to identify obligations or expenditures by activity type in their financial systems. While DHS has drafted the ACS Policy and Standards to require components to collect the same data elements, including mission activity, financial system modernization, which is scheduled for completion in fiscal year 2018, will need to take place before all components are in a position to implement the mission activity element. Further, some components have identified challenges to categorizing obligations and expenditures by activity type regardless of the capability of their financial systems. Consequently, it is too early to tell how successful the steps DHS is taking will be in allowing it to collect reliable M&A spending data in the future.", "To help ensure DHS is able to reliably estimate the department’s future resource allocation requests identified as M&A, we recommend that the Under Secretary for Management direct PA&E to implement a mechanism to assess whether components have entered the appropriate M&A activities into the PDM, and work with the components to correct the data, as needed.", "We provided a draft of this report to DHS for its review and comment. DHS provided written comments, which are reprinted in appendix III, and concurred with our recommendation. In its written comments, DHS stated that it will continue to periodically assess whether components have entered the appropriate M&A activities into the PDM and continue to work with components to correct the data, as needed. In addition, DHS stated it will develop and implement a mechanism to ensure component compliance with guidance in time for the fiscal years 2016-2020 programming and budget process with an estimated completion date of June 30, 2014. Such actions should address the intent of our recommendation. DHS also provided technical comments, which we incorporated as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report, we plan no further distribution for 30 days from the report date. At that time, we will send copies of this report to the Acting Secretary of Homeland Secretary, appropriate congressional committees, and other interested parties. In addition, this report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-9627 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "We sought to independently identify and analyze the Department of Homeland Security’s (DHS) management and administration (M&A) activities and related spending from fiscal years 1999 through 2013 but were unable to because of various limitations. In particular, sources of federal budget data, including appropriations accounts broken down into program, project, or activity (PPA) and object classes, do not clearly distinguish M&A spending from other types of spending. Moreover, in cases where appropriations accounts and PPAs are largely M&A, the activities contained in those groupings are not consistent from year to year or complete since M&A activities can be found in other accounts or PPAs.", "We previously found that there are limitations to using account structures to identify and analyze M&A spending because the appropriation account structure was not constructed to delineate program and administrative expenses. In particular, (1) the budget does not identify an administrative account for all agencies, (2) similar expenses are categorized differently across agencies and within the same agencies from year to year, and (3) administrative accounts do not include all administrative expenses of an agency. We identified the same limitations based on our review of DHS’s appropriations accounts and PPAs.\nOn the basis of our review, of DHS’s appropriation account and PPA structure, 5 of 15 DHS components did not have an M&A account or PPA for fiscal year 2013. Moreover, for those 10 components that did have M&A PPAs in 2013, they did not all exist as far back as fiscal year 1999 or did not exist in their current form, making an analysis over time nearly impossible. For example, the Federal Law Enforcement Training Center’s (FLETC) Management and Administration PPA was established beginning with fiscal year 2013 at the request of the Office of Management and Budget to obtain better insight on M&A costs. Additionally, the Federal Emergency Management Agency (FEMA) previously had a Management and Administration account with an Operating Activities PPA, but those activities were within the Salaries and Expenses account, including all seven of its PPAs, for fiscal year 2013. For the components, such as U.S. Customs and Border Protection (CBP), which existed as legacy agencies in different federal departments before DHS was established, it would be difficult to identify relevant expenditures by PPA before 2003 because agencies and offices were not transferred intact.\nFor those 10 components with M&A PPAs, they differed from one another in terms of the activities funded through those PPAs. For example, activities contained in the Management and Administration PPA for FLETC include providing budget, finance, accounting, financial systems, financial statements, relocation, travel, and strategic planning functions, as well as asset management and human capital services, among others. U.S. Immigration and Customs Enforcement’s (ICE) activities contained in its Personnel Compensation and Benefits, Service, and Other Costs PPA include overseeing the budget, procurement, and facilities; providing human resources services and training for all employees and special agents; and tracking the agency’s performance measurements, but do not include strategic planning functions and asset management like FLETC’s. Without a consistent definition, comparing M&A spending among DHS components would likely lead to inaccurate conclusions about which components are spending more or less on M&A activities.\nOn the basis of our review we also found that the activities included and funded in a component’s PPA can also change annually. As a result, an increase in an M&A PPA may not actually mean increased M&A spending. For example, the conference report accompanying the fiscal year 2012 DHS appropriations act provided that funding for the Office of the Assistant Secretary for Cybersecurity and Communications and the Office of the Assistant Secretary for Infrastructure Protection had been moved to the National Protection and Programs Directorate M&A account. As a result, the National Protection and Programs Directorate requested an additional $3.9 million for its Directorate Administration PPA within its M&A account in fiscal year 2013. Without understanding this organizational change or the activities included in a particular PPA, the National Protection and Programs Directorate appears to have increased spending on Directorate Administration activities by $3.9 million. Conducting a year-to-year comparison without understanding these types of organizational changes could lead to faulty conclusions. Finally, M&A PPAs may not capture all M&A-related expenses, as some M&A activities may be captured in other PPAs. For example, FEMA officials reported that its M&A PPAs are found within its Salaries and Expenses appropriation account, but noted that there may be other accounts containing M&A activities.", "We previously found that object class data have limitations when used to identify and analyze obligations of an M&A nature since (1) no object class contains purely M&A activities, so obligations for M&A activities cannot be separated from obligations for mission activities; (2) the same type of expenses can be assigned to different object classes; and (3) reimbursements made by federal agencies are reobligated, which can lead to double counting. We identified the same limitations on the basis of our review. For example, we found that object class 26, supplies and materials, which is seemingly an administrative object class, is appropriately used by DHS components to capture obligations for more than office supplies. Specifically, Coast Guard officials told us the Coast Guard’s obligations for fuel for marine and air assets, uniforms, and ammunition, among other operational expenses, are assigned to object class 26. Similarly, the U.S. Secret Service (USSS) uses this object class to report obligations for fuel for the presidential limousine as well as the rest of its vehicle fleet. See table 5 for the entire list of object classes.\nGiven the different missions of DHS components and different activities assigned to an object class from component to component, any cross- component comparison of object class data could lead to inaccurate conclusions. This problem is compounded given that when components do have the same types of expenses, they can be appropriately assigned to different object class categories. For example, on the basis of our review, we found that one component may decide that information technology (IT) support belongs to budget object class 26, supplies and materials, while another component may decide these same IT costs belong to object class 25.7, operation and maintenance of equipment, according to a DHS Budget Division Analyst.\nFinally, object class data can exaggerate spending because reimbursable authority can lead to double counting if direct obligations cannot be distinguished from reimbursable obligations. Object classes present gross obligations—that is, the separate obligations made by each appropriation account, including the “reobligation” of amounts received as reimbursements from other federal agencies—and not actual expenses. For example, according to a DHS Budget Division Analyst, in fiscal year 2010, DHS had approximately $2 billion in expenditures in the supplies object class, but $512 million of the $2 billion was reimbursable authority.", "This report addresses the following questions: 1. How have select DHS components defined and identified their M&A activities and spending, and to what extent are M&A data available from fiscal years 1999 through 2013? 2. How has DHS identified M&A spending department-wide, and to what extent has DHS defined M&A activities and taken steps to enhance efforts to collect M&A data?\nTo address the first objective, we analyzed DHS’s congressional budget justifications, budget execution reports, and budget-in-briefs, as well as presidential budgets and appropriations legislation from fiscal years 2004 through 2013 to understand how M&A activities are defined and accounted for within components’ appropriations accounts. We sought to independently identify components’ M&A activities and related spending, but were unable to because of various challenges. In particular, sources of federal budget data do not define and distinguish all M&A spending from other types of spending. Moreover, in cases where groupings of budget data, such as appropriation accounts, are largely M&A, the activities contained in those groupings do not include all M&A activities and are not consistent from year to year. To determine how selected DHS components define their M&A activities and how they would go about identifying spending associated with these activities, we interviewed officials representing two of DHS’s eight support components— Departmental Management and Operations (DMO) and FLETC—and six of DHS’s seven operational components—FEMA, CBP, the U.S. Coast Guard, the Transportation Security Administration, ICE, and USSS.selected these eight components based on the amount of their budget authority (totaling nearly 88 percent of DHS’s fiscal year 2013 budget authority); their mission, for components with both operational and support missions; and date established, for components established both before and after the inception of DHS. To determine the extent to which M&A data are available from fiscal years 1999 through 2013, we We interviewed officials from the eight selected components about their ability to provide M&A spending data during the timeframe. We did not obtain available data from the components because the data would not be comparable. While the results of our interviews cannot be generalized across all DHS components, these interviews allowed us to obtain perspectives on how selected components would define and identify M&A spending, as well as the availability of their M&A data since fiscal year 1999.\nTo address the second objective, we examined DHS’s two efforts to identify and manage its spending on specific M&A activities—DHS’s Efficiency Review (ER)—an effort to identify opportunities to improve efficiency and streamline decision making through a series of initiatives— and the Obama administration’s Campaign to Cut Waste—a government- wide effort to reduce administrative spending. Specifically, we analyzed all available expenditure and cost avoidance data collected through the ER. The ER collects expenditure data for three initiatives: (1) facilities, (2) printing, and (3) travel. The ER also collects cost avoidance data for five initiatives: (1) facilities, (2) IT inventory management, (3) printing, (4) travel, and (5) wireless assets and services. We analyzed all expenditure and cost avoidance data available from the third quarter of fiscal year 2009—when data collection began—through the first quarter of fiscal year 2013—the most recent data available at the time of our review. To assess the reliability of the data, we reviewed the data for obvious errors and traced one component’s recorded expenditure and cost avoidance data back to documentation showing its original data submission. We also interviewed component officials responsible for entering the data, and the ER Director to determine how the data are collected and maintained in the ER Quarterly Reporting Site. We determined that the expenditure data likely understate DHS’s total spending, since some components and offices did not submit their expenditures at all in certain quarters or did not report all expenditures, as they excluded certain types of travel. Specifically, one component and one office did not report their facilities expenditures, one component and two offices did not report their printing expenditures, and one office did not report its travel expenditures, and three components under-reported their travel expenditures. Despite these limitations, the data were sufficiently reliable to illustrate general levels of spending by DHS. We determined that the cost avoidance data prior to fiscal year 2012 were not reliable, since the formula used during that time frame for two of the initiatives—printing and travel—was not an accurate method to determine cost avoidances, a conclusion with which component officials concurred because figures could be overstated. However, we determined that cost avoidance data beginning with the first quarter of fiscal year 2012 were sufficiently reliable for reporting DHS’s cost avoidances as the ER Office began requiring an explanation of the specific actions that led to cost avoidance in order for the cost avoidance to be counted.\nWe analyzed data collected for the Campaign to Cut Waste for fiscal year 2012 through the second quarter of fiscal year 2013—all of the data available at the time of our review. Specifically, we analyzed DHS’s spending against its spending targets for all seven categories of the campaign—(1) travel, (2) printing, (3) supplies, (4) advisory service contracts, (5) promotional items, (6) IT devices, and (7) executive sedan services. To assess the reliability of the data, we discussed DHS’s implementation of and methodology for developing metrics for the campaign with a Budget Analyst from the Office of the Chief Financial Officer (OCFO) Budget Division. We also interviewed officials from the eight DHS components in our review about how they determine and report their spending figures for the campaign, and any challenges they experience in determining these figures. On the basis of these interviews, we identified data limitations in terms of the consistency, completeness, and accuracy of the data for three of the categories as a result of components defining categories differently, and experiencing difficulty identifying accurate figures or not reporting figures as a result of the difficulties. After considering the portion of spending these categories contributed to total spending tracked by the Campaign to Cut Waste, we determined the data were sufficiently reliable to illustrate general levels of DHS’s spending against its spending targets on the Campaign to Cut Waste categories for six of the seven categories—all but IT devices, for which data are not complete, and therefore excluded from our analysis.\nWe also analyzed fiscal year 2012 and 2013 data in the Future Years Homeland Security Program (FYHSP) System Program Data Module (PDM), which was developed by DHS, in part to model the percentage of DHS’s resource allocation requests that are for activities identified as M&A in future years. We compared components’ categorization of activities by type in the PDM with the definitions for the three activity type categories (mission/operational, mission support, and business support/M&A) as stated in the FYHSP System PDM User Manual, which provides guidance to components on entering data into the PDM. We discussed the development and implementation of the FYHSP System PDM with DHS OCFO Program Analysis & Evaluation (PA&E) officials who oversee the PDM. Moreover, we reviewed PA&E’s data quality analysis of fiscal year 2014 through 2018 resource requests identified as M&A to determine the accuracy of M&A data entered into the PDM consistent with instructions in the user manual. On the basis of our review of the analysis for any obvious data errors and outliers, we determined that the results of PA&E’s analysis are sufficiently reliable for identifying any limitations of the PDM data. On the basis of our analysis, PA&E’s analysis, and interviews with PA&E officials, we determined the data were not sufficiently reliable for reporting the percentage of DHS’s resource allocations requests that are categorized as M&A. We compared the ability to use the PDM data with criteria in Standards for Internal Control in the Federal Government and Statement of Federal Financial Accounting Concepts No. 1, Objectives of Federal Financial Reporting. We did not assess the reliability of data beyond the categorization by activity type (e.g., categorization of activities by investment type), since such data were outside of the scope of our review.\nAlso, to address the second objective, we interviewed DHS OCFO officials in the Resource Management Transformation Division to discuss the steps DHS has taken to enhance the collection of M&A data for the department as a whole. We analyzed documentation related to DHS’s efforts to implement its business intelligence initiative to standardize financial data, among other things. Specifically, we analyzed documentation describing DHS’s plans for standardizing its accounting structure across the department, including its draft Accounting Classification Structure (ACS) Policy and Standards and ACS Guidebook. We compared these efforts against criteria for cost accounting in the Statement of Federal Financial Accounting Standards No. 4, Managerial Cost Accounting Standards and Concepts. We also reviewed the Concept of Operations and program milestones for “CFO Horizon”—a means to consolidate components’ financial data. Finally, we interviewed OCFO Resource Management Transformation officials about their efforts to implement CFO Horizon and develop ACS.\nWe conducted this performance audit from February 2013 to December 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, Glenn Davis (Assistant Director), Lisa Canini, and Wendy Dye made significant contributions to this work. David Dornisch, Eric Hauswirth, Tracey King, Mike LaForge, Lara Miklozek, Leah Nash, Jack Warner, and Leonard Zapata also contributed to this report.", "DHS Financial Management: Additional Efforts Needed to Resolve Deficiencies in Internal Controls and Financial Management Systems. GAO-13-561. Washington, D.C.: September 30, 2013.\nHigh Risk Series: An Update. GAO-13-283. Washington, D.C.: February 2013.\nStreamlining Government: Key Practices from Select Efficiency Initiatives Should Be Shared Governmentwide. GAO-11-908. Washington, D.C.: September 30, 2011.\nFinancial Management: NOAA Needs to Better Document Its Policies and Procedures for Providing Management and Administration Services. GAO-11-226. Washington, D.C.: January 31, 2011.\nA Glossary of Terms Used in the Federal Budget Process. GAO-05-734SP. Washington, D.C.: September 2005.\nBudget Object Classification: Origins and Recent Trends. GAO/AIMD-94-147. Washington, D.C.: September 13, 1994.\nBudget Issues: Assessing Executive Order 12837 on Reducing Administrative Expenses. GAO/AIMD-94-15. Washington, D.C.: November 17, 1993.\nBudget Issues: Limitations on Analyzing the Cost of Administrative Operations. GAO/AFMD-86-54BR. Washington, D.C.: July 22, 1986." ], "depth": [ 1, 2, 2, 1, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h2_title", "", "h2_full", "h0_full h2_title h3_title", "h0_full h3_full h2_full", "h1_full", "h1_full", "", "h1_full", "", "", "h0_full", "", "", "h3_full h2_full h1_full", "", "", "", "", "h2_full" ] }

{ "question": [ "What challenges exist in analyzing the spending data of DHS?", "What do officials from the first four components define M&A activities as?", "How does this differ from the opinions of officials in the last four components?", "How accessible is M&A spending data to the eight components GAO interviewed?", "Why is it impossible to compare components' M&A spending data?", "What steps is DHS taking to identify its M&A spending?", "What difficulties has DHS encountered?", "Why is DHS unable to make reliable estimates?", "How would developing a mechanism to improve data reliability benefit DHS?", "What is DHS?", "What difficulties has DHS faced since its inception?", "What was GAO asked to provide information on?", "What questions does this report address?", "What steps did GAO take to collect data for this report?", "What did the interviews provide?" ], "summary": [ "Officials from all eight Department of Homeland Security (DHS) components in GAO's review define management and administration (M&A) activities--activities that help agencies achieve their mission and program goals--differently, and while component officials said they can identify M&A spending, limitations exist in obtaining spending data from fiscal years 1999 through 2013.", "Officials from four of the eight components define their M&A activities according to the activities funded through their appropriations accounts and programs, projects, or activities (PPA) that are M&A in nature. For example, officials from the Transportation Security Administration said its M&A activities are those found within three PPAs within its Transportation Security Support appropriations account.", "The remaining four components each define M&A activities differently, and those definitions are not tied to activities contained in specific appropriations accounts. For example, the Coast Guard's M&A activities are those associated with headquarters and its service centers (e.g., personnel support), according to officials.", "According to component officials, the eight components GAO reviewed can identify their M&A spending, but currently do not because they are not required to do so by the department. Officials from seven of the eight components said they could provide M&A spending data for some, but not all, fiscal years since 1999 because of changes in their financial systems, among other reasons. Federal Emergency Management Agency (FEMA) officials stated that FEMA could provide data since fiscal year 1999.", "Because components define M&A differently, have different methods for identifying spending, and limitations exist in obtaining data, it is not possible to compare components' M&A spending data from fiscal years 1999 through 2013.", "DHS has not identified the department's total spending on M&A activities, but has identified some M&A spending through DHS's Efficiency Review--an effort to identify opportunities to improve efficiency--and the Campaign to Cut Waste--a government-wide effort to reduce administrative spending. DHS is also taking steps to define and collect data on M&A activities, but has encountered difficulties in implementing these steps. Specifically, in 2010, DHS developed a common definition of M&A in conjunction with the Future Years Homeland Security Program (FYHSP) System Program Data Module (PDM) for components to submit resource allocation requests for future years by activity type: mission/operational, mission support, and business support/M&A.", "However, DHS is unable to reliably estimate what percentage of its requests are identified as M&A because 4 out of 15 components did not enter all appropriate business support/M&A activities and 1 component did not enter any business support/M&A activities, among other errors, which DHS officials said are a result of manual data entry and components not adhering to the guidance in the user manual.", "DHS does not have a mechanism in place to work with the components to correct data errors in the FYHSP System PDM.", "By implementing a mechanism to assess whether components have entered the appropriate M&A activities into the PDM, and working with the components to correct the data, as needed, DHS would be better positioned to reliably estimate and report to external stakeholders what percentage of DHS's resource allocations requests are identified as M&A.", "DHS is the third-largest federal department, with budget authority of approximately $60 billion.", "Since its inception in 2003, DHS has faced challenges strengthening its multiple management systems and processes. Some Members of Congress said that DHS's components' budget requests do not provide sufficient detail to allow them to distinguish between funding for mission and M&A activities.", "GAO was asked to provide information on what DHS spends on M&A activities, including spending by its components since fiscal year 1999.", "This report addresses the following questions: (1) How have select DHS components defined and identified their M&A activities and spending, and to what extent are M&A data available from fiscal years 1999 through 2013? (2) How has DHS identified M&A spending department-wide, and to what extent has DHS defined M&A activities and taken steps to enhance efforts to collect M&A data?", "GAO analyzed documents, such as DHS's budget execution reports, and efforts to identify spending on M&A activities since fiscal year 1999. GAO interviewed officials from eight DHS components, selected on the basis of their budget authority, which in total accounts for nearly 88 percent of DHS's fiscal year 2013 budget authority.", "Though not generalizable, the interviews provided insights." ], "parent_pair_index": [ -1, 0, 1, 0, 0, -1, 0, 1, 1, -1, 0, -1, -1, 0, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Trade Concepts1", "The Basics of Trade", "Trade and Jobs", "Economic Globalization", "U.S. Trade Performance16", "The U.S. Role in the World Economy", "The U.S. Trade Deficit", "Understanding Data on U.S. Trade and the Economy", "U.S. Manufacturing and Services", "Formulation of U.S. Trade Policy", "Role of Congress", "Role of the Executive Branch", "Role of the Private Sector", "Role of the Judiciary", "U.S. Trade and Investment Policy Issues", "Trade Negotiations and Agreements", "Import Issues66", "Federal Export Issues67", "Investment Issues74", "Additional Readings", "CRS Reports", "CRS Insights and In Focus Products", "Other Readings", "List of Questions", "Trade Concepts", "U.S. Trade Performance", "Understanding Data on U.S. Trade and the Economy", "U.S. Manufacturing and Services", "Formulation of U.S. Trade Policy", "Role of the Judiciary", "U.S. Trade and Investment Policy Issues", "Selected Import Issues", "Selected Export Issues", "Investment Issues", "Appendix" ], "paragraphs": [ "", "", "1. Why do countries trade?\nEconomic theory states that trade occurs because it is mutually enriching . It is asserted that it has a positive economic effect like that caused by technological change, whereby economic efficiency is increased, allowing greater output from the same amount of scarce productive resources. By allowing each participant to specialize in producing what it is relatively more efficient at and trading for what it is relatively less efficient at, trade (according to economic theory) can increase economic well-being above what would be possible without trade. The benefit of trade is attached to the product received (the import), not in the product given (the export). Hence, countries export in order to pay for imports. There is a broad consensus among economists that trade expansion has a favorable effect on overall economic well-being, but the gains will not necessarily be distributed equitably. Although most economists hold that the benefits to the overall economy exceed the costs incurred by workers who lose their jobs to increased trade, others argue that the benefits are often overestimated and the costs are often underestimated.\nSome goods that are imported into the United States, such as bananas, cannot be produced economically in sufficient quantities to satisfy domestic demand. Many other products (including intermediate goods) and services are imported because they can be produced less expensively or more efficiently by firms in other countries. Many imports into the United States contain U.S.-made components (such as semiconductors inside a computer) or U.S.-grown raw materials (such as cotton used to make t-shirts). Consumers can benefit through access to a wider variety of goods at lower costs. This raises consumer welfare (i.e., consumers have more money to spend on other goods and services) and helps control the rate of U.S. inflation. Producers can benefit through access to lower priced components or inputs that can be utilized in the production process. Longer term, import competition can also pressure companies to reduce costs through innovation, research, and development, leading to growth in economic output and productivity.\n2. What is comparative advantage?\nThe idea of comparative advantage was developed by David Ricardo early in the 19 th century and its insight remains relevant today. Ricardo argued that specialization and trade are mutually beneficial even if a country finds that it is more efficient at producing everything than its trading partners. If one country produces a given good at a lower resource cost than another country, it has an absolute advantage in its production. (The other country has an absolute disadvantage in its production.) If all productive resources were highly mobile between countries, absolute advantage would be the criterion governing what a country produces and the pattern of any trade between countries. But Ricardo demonstrated that because resources, particularly labor and the skills and knowledge it embodies, are highly immobile, a comparison of a good's absolute cost of production in each country is not relevant for determining whether specialization and trade should occur. Rather, the critical comparison within each country is the opportunity cost of producing any good— how much output of good Y must be forgone to produce one more unit of good X . If the opportunity costs of producing X and Y are different in each economy, then each country has a comparative advantage in the production of one of the goods. In this circumstance, Ricardo predicts that each country can realize gains from trade by specializing in producing what it does relatively well and in which it has a comparative advantage and trading for what it does relatively less well and in which it has a comparative disadvantage.\n3. What determines comparative advantage?\nMost often, differences in comparative advantage between countries occur because of differences in the relative abundance of the factors of production: land, labor, physical capital (plant and equipment), human capital (skills and knowledge including entrepreneurial talent), and technology. Standard economic theory predicts that comparative advantage will be in activities that make intensive use of the country's relatively abundant factor(s) of production. For example, the United States has a relative abundance of high-skilled labor and a relative scarcity of low-skilled labor. Therefore, the United States' comparative advantage will be in goods produced using high-skilled labor intensively, such as aircraft, and comparative disadvantage will be in goods produced using low-skilled labor intensively, such as apparel. In addition to differences in factor endowments, differences in productive technology among countries create differences in relative efficiency and may be a basis for comparative advantage. Nevertheless, some high-skilled services jobs, such as computer programming and graphic design, can today be easily done in a country such as India because of the revolution in telecommunications.\n4. Can governments shape or distort comparative advantage?\nGovernment actions to influence comparative advantage can be grouped in two broad categories: policies that indirectly nurture comparative advantage, most often by compensating for some form of market failure, but not targeted at any specific industry or activity; and policies that aim to directly create and nurture comparative advantage in particular industries. Indirect influence on comparative advantage can emanate from government policies that eliminate corruption, enforce property rights, remove unnecessary impediments to domestic market transactions, liberalize trade and foreign investment barriers, assure macroeconomic stability, build transport and communication infrastructure, support mass education, and assist technological advance. Policies that try to exert a direct influence on comparative advantage may include policies to promote and protect certain industries (such as through subsidies or trade protection) that are thought to have significant economic potential. In this view, realizing that potential requires initial government support to help a country obtain its economic targets. Some economists contend that direct government policies may often distort a country's trade and investment flows, reduce economic efficiency, undermine more economically competitive industries that do not receive government help, and diminish potential economic growth.\n5. What is the terms of trade ?\nA nation's terms of trade— the ratio of an index of export prices to an index of import prices—is a measure of the export cost of acquiring desired imports. Increases and decreases in its terms of trade indicate whether a nation's gains from trade are rising or falling. A sustained improvement in the terms of trade expands what a nation's income will buy on the world market and can make a significant contribution to the long-term growth of its economic welfare. When that occurs, a nation's economy as a whole is often said to have become more globally competitive. Similarly, a falling terms of trade raises the export cost of acquiring imports, which reduces real income and the domestic living standard. Although trade is considered a process of mutual benefit, each trading partner's share of those benefits can change over time, and movement of the terms of trade is an indicator of that changing share.", "6. What are the costs of trade expansion?\nLike technological change and other market forces, international trade creates wealth by inducing a reallocation of the economy's scarce resources (capital and labor) into relatively more efficient industries that have a comparative advantage and away from less efficient activities that have a comparative disadvantage. This reallocation of economic resources is often characterized as a process of \"creative destruction,\" generating a net economic gain to the overall economy, but also being disruptive and costly to workers in adversely affected industries that compete with imports. Many of these displaced workers bear significant adjustment costs and may find work only at a lower wage. Although economic analysis almost always indicates that the economy-wide gains from trade exceed the costs, the perennially tough policy issue is how or whether to secure those gains for the wider community while dealing equitably with those who are hurt by the process. Economists generally argue that facilitating the adjustment and compensating for the losses of those harmed by market forces, including trade, is economically less costly than policies to protect workers and industries from the negative impacts of trade. While it is debatable how well existing worker assistance policies have worked, funding is also a long-standing issue. A 2008 study by the Peterson Institute for International Economics, for example, estimated the lifetime costs of worker displacement that were triggered by expanded trade in 2003 to be as high as $54 billion, but calculated that the United States spent less than $2 billion that year to address the costs for workers connected to that displacement.\n7. Does trade \" destroy \" jobs?\nTrade \"creates\" and \"destroys\" jobs in the economy just as other market forces do. Economy-wide, trade creates jobs in industries that have a growing comparative advantage and destroys jobs in industries that have a growing comparative disadvantage. In the process, the economy's composition of employment changes, but there may not be a net loss of jobs due to trade. Consider that over the course of the rapid economic expansion that occurred from 1992 to 2000, U.S. imports increased nearly 240%, but total employment grew by 22 million jobs and the unemployment rate fell from 7.5% to 4.0% (the lowest unemployment rate in more than 30 years). From 2001 to 2007 (before the global financial crisis), U.S. employment grew by 7.1 million jobs and the unemployment rate dropped from 4.7% to 4.6%, while U.S. imports over the period increased by 70.8%. From 2007 to 2010, the U.S. unemployment rate rose to 9.6% and employment fell by 7 million, but U.S. imports declined by 2.0%. In times of economic hardship, when unemployment is high, governments will sometimes try to stimulate some domestic industries by protecting them from foreign competition. However, such measures are unlikely to increase total employment and could be costly. The near-term cost can be an exacerbation of weakness in the economy as foreign governments may retaliate with their own protective measures, causing a decline in exports. In the long run, trade protection may tend to reallocate employment from unprotected domestic industries toward protected domestic industries, but not increase total employment. However, more than just a transfer of well-being between sectors occurs, as there will be a permanent cost to the whole economy arising from the less efficient allocation of these resources.\n8. Does trade reduce the wages of U.S. workers?\nInternational trade can have strong effects, good and bad, on the wages of American workers. Concurrent with the large expansion of trade over the past 25 years, real wages (i.e., inflation adjusted wages) of American workers grew more slowly than in the earlier post-war period, and inequality of wages between the skilled and less skilled worker rose sharply. Trade based on comparative advantage tends to increase the return to the abundant factors of production—capital and high-skilled workers in the United States—and decrease the return to the less-abundant factor—low-skilled labor in the United States. Therefore, it is reasonable to expect that, other factors constant, a large increase in imports, particularly from economies with vast supplies of low-skilled labor (such as China), could negatively affect the wages of low-skilled U.S. workers in import-sensitive industries. U.S. low-skilled workers have increasingly faced competition from lower-cost producers, largely in developing countries. In many instances, economic globalization (discussed below) has led U.S. multinational firms to source a significant share of their labor-intensive production to lower-wage countries, which, to some extent, has put downward pressure on the wages of U.S. workers in some import-sensitive industries. On the other hand, U.S. workers in export-oriented industries on average are estimated to earn more than workers in non-exporting industries. Overall, the evidence on whether or not trade has contributed to growing income inequality in the United States is mixed and inconclusive. This is due in part because a number of other factors, such as advancing technology (where the jobs that are generated may require more advanced skills and higher education than was required in the past), may have had a significantly larger impact on relative wages than foreign trade. For this reason, many economists contend that the United States should implement policies that seek to enhance U.S. education and skill levels to better enable U.S. workers to respond more effectively to the rapidly changing nature of the global economy as well as technological advancements.", "9. What is intra-industry trade?\nA sizable portion of world trade sees countries exporting and importing goods from the same industry to each other. This phenomenon is called intra-industry trade. This type of trade is particularly characteristic of the large flows of products between advanced economies, which have very similar resource endowments. This suggests that there is another basis for trade than comparative advantage behind intra-industry trade: the use of economies of scale. Economies of scale exist when a production process is more efficient (i.e., has lower unit costs) the larger the scale at which it takes place. This scale economy becomes a basis for trade because while the United States and Germany, for example, could be equally proficient at producing any of a wide array of goods such as automobiles and pharmaceuticals that consumers want, neither has the productive capacity to produce the full range of goods at the optimal scale. Therefore, a pattern of specialization tends to occur with countries producing and trading some sub-set of these goods at the optimal scale.\n1 0 . What is economic globalization?\nGlobalization has come to represent many things. In general, economic globalization refers specifically to the increasing integration of national economies into a worldwide trading system. Economic globalization involves trade in goods and services, and trade in assets (i.e., currency, stocks, bonds, and real property), as well as the transfer of technology, and the international flows (migration) of labor. Since 1950, global trade has consistently grown faster than world production. For example, from 1980 to 2014, global exports of goods and services grew at an average annual rate of 5.4% compared to average annual global GDP growth of about 3.5%. In addition, global exports as a percent of world GDP over this period rose from 20.9% to 31.3%. These data indicate that trade has been a driving force in the global economy.\nGlobal integration in the United States (discussed in more detail in the next section) has advanced quickly, with imports of goods and services as a share of GDP rising from 4.3% in 1950 to about 16.5% in 2014. More recent but far more dramatic has been the growth of international trade in assets. From 1990 to 2007 (before the 2008 global financial crisis hit), gross capital flows to and from the United States leaped by 1,495% as compared to a 248% advance of U.S. trade in goods and services. The rising economic integration of the world economy has been facilitated by two types of events: the myriad of technical advances in transport and communication, which have reduced the natural barriers of time and space that separate national economies, and national and multi-national policy actions that have steadily lowered various man-made barriers (i.e., tariffs, quotas, subsidies, and capital controls) to international exchange.\n1 1 . What are global supply chain s and how do they relate to economic globalization?\nA supply chain is the interrelated organizations, resources, and processes that create and deliver a product to the final consumer. A global supply chain organized mostly by multinational corporations (MNCs) means that products that were once produced in one country may now be produced by assembling components fabricated in several countries. To illustrate, the WTO estimates that in 2011, intermediate manufactured products accounted for 55% of global non-fuel trade, and that on average about 26% of the value of national exports in 2008 included foreign content in the form of imported inputs used to produce these exports. Not only does such geographically fragmented production raise the level of trade associated with a particular final product, it also tends to raise the level of trade with both developing countries and developed countries. The expansion of global supply chains (in both value terms and as a percent of total global trade) has facilitated lower trade barriers and technological advances that have increased the speed and lowered the cost of international transport and, perhaps most importantly, accelerated the international flow of information that allows firms to coordinate geographically fragmented production with relative ease. (The effect of globalization on U.S. trade flows are discussed in the section on U.S. trade performance.)\nGlobal supply chains present both challenges and opportunities for U.S. small- and medium-sized enterprises (SMEs). On the one hand, SMEs face increased foreign competition because of globalization. At the same time, SMEs have gained business opportunities by the increase in outsourcing by U.S. and foreign MNCs. According to one study, U.S. SMEs accounted for 28% of U.S. direct exports in 2007. However, this figure rises to 41% when the value of U.S. SME sales to large U.S. exporting firms is included.\n1 2 . How does globalization affect job security?\nA greater degree of international economic integration and specialization can add to disruptive forces in the marketplace, including concerns that over time high-wage and high-skilled U.S. service sector jobs may now be vulnerable to \"outsourcing\" (i.e., shifting business functions from the United States to countries with lower labor costs). Although most economists maintain that globalization is unlikely to have a negative effect on overall U.S. employment rate or the average U.S. worker wage, greater volatility of U.S. worker incomes and employment in some sectors is a possible effect. For example, some U.S. MNCs have focused on performing high-end activities associated with innovating products such as research and development (R&D), while outsourcing component production and final product assembly to numerous overseas suppliers. Such activities may reduce the number of U.S. manufacturing jobs in some industries, but boost the number of service-related jobs in other industries. Some contend that globalization has increased volatility in employment and earnings for many U.S. workers and argue that trade adjustment assistance programs should be expanded to assist individuals negatively impacted by imports in order to help them more rapidly obtain employment in other sectors. Others contend that a broader challenge for the United States is to implement policies that promote a highly educated and skilled work force and boost domestic innovation in order to help the U.S. labor force to respond more quickly to the challenges and opportunities presents by the globalization process.", "", "1 3 . Wh ich are the largest global trading economies?\nThe largest trading economies for total trade in goods and services in 2014 were the United States, China, Germany, Japan, the United Kingdom, and France. China was the largest exporter of goods and services, while the United States was the largest importer (see Table 1 ). In terms of the largest merchandise trading economies in 2014, the top five were China, the United States, Germany, Japan, France, and the Netherlands. The United States was the largest merchandise importer and the second-largest merchandise exporter. While the United States is a major global trader, the size of that trade relative to the size of the U.S. economy is much smaller than that of other major trading economies. U.S. exports and imports of goods and services as a percent of GDP in 2015 were 28.1%. This compares with 37.2% for Japan, 39.3% for China, 56.39% for the United Kingdom, and 83.5% for Germany.\nThe U.S. share of global merchandise exports has changed significantly over the past five decades or so, due largely to the rapid increase of global trade, especially among developing countries. The U.S. share of global merchandise exports over this period was as follows: 15.1% in 1960, 13.6% in 1970, 11.1% in 1980, 11.3% in 1990, 12.1% in 2000, 8.4% in 2010, and 8.8% in 2014.\nVarious organizations have developed indexes to assess the \"openness\" or \"competitiveness\" of the U.S. economy relative to other global economies. For example, the Heritage Foundation publishes an \"Index of Economic Freedom.\" Its 2014 report ranked the United States as the 12 th \"freest\" economy out of 186 economies (Hong Kong, Singapore, New Zealand, Australia, and Switzerland ranked as the top 5). Similarly, the World Economic Forum (WEF) produces an annual \"Global Competitiveness Index.\" The WEF's 2014-2015 report ranked the United States third (up from fifth from the 2013-2014 report) after Switzerland and Singapore.", "14 . What is meant by the trade deficit?\nA trade deficit occurs when a country's imports are greater than its exports. There are various measurements of the U.S. trade deficit. In general, most media reports on the U.S. trade deficit refer to the balance of U.S. trade in goods (merchandise). In 2015, the U.S. merchandise trade deficit was $759.3 billion, down from a peak of $816 billion in 2006. However, a large and growing level of U.S. trade is in services, where the United States usually runs large annual surpluses. In 2015, that surplus was $219.6 billion. By adding net exports of services to the calculation, the U.S. trade deficit on goods and services was $464 billion in 2014. Further adding in net transfer payments (such as investment income and dividends) and net transfer payments (such as foreign aid) gives the broadest measure of a nation's trade balance—the current account balance. In 2015, the United States recorded a $484.1 billion current account deficit, down from its historic peak of $807 billion in 2006 (see Table 2 ). The decline in the U.S. trade deficit was largely caused by two major factors: the global economic crisis (which, for example, significantly reduced U.S. demand for imports) and a decline in U.S. oil imports.\n15 . Wh y does the United States run a trade deficit?\nThe most significant cause of the U.S. trade deficit is the low rate of U.S. domestic savings relative to its investment needs. In order to make up for that shortfall, Americans must borrow from countries abroad (such as China) with excess savings. Such borrowing enables Americans to enjoy a higher rate of economic growth than would be obtained if the United States had to rely solely on domestic savings. This in turn boosts U.S. consumption and the demand for imports, producing a trade deficit. The U.S. trade deficit is an indicator that Americans consume more than they produce. As long as foreigners (both governments and private entities) are willing to loan the United States the funds to finance the lack of savings in the U.S. economy (such as by buying U.S. Treasury securities), the trade deficit can continue. The United States, however, accumulates more debt. As of March 2014, the U.S. public debt was $18.2 trillion, up from $7.1 trillion in March 2004.\n16 . How significant is the size of the U.S. trade deficit and how does it compare with other major economies ?\nEconomists often look at the size of the U.S. trade deficit relative to the size of the U.S. economy (gross domestic product, or GDP). This measurement is particularly useful in examining trends over time or comparing U.S. data with those of other countries. As can be seen in Figure 1 , the U.S. balance on the current account relative to GDP deteriorated sharply from 1991 to 2006; it reached a record high 5.8% of GDP in 2006. Since that time, the U.S. current deficit as a percent of GDP has generally declined, due in large part to the effects of the global economic slowdown that began around 2008.\nTable 3 lists current account balances as a percent of GDP for the top 10 largest global economies in 2014 (based on GDP on a purchasing power parity basis), along with data on the ratio of domestic savings to total investment for each country. The countries with the largest current account surpluses as a percent of GDP included Germany (8.0%), Russia (5.4%), and China (2.7%). The largest economies with the biggest current account deficits as a percent of GDP included the United Kingdom (4.7%), Brazil (3.3%) and the United States (2.5%).\n17 . What role do foreign trade barriers play in causing bilateral trade deficits?\nSome policymakers view the size of the U.S. trade deficit with certain countries (such as China, where the U.S. merchandise trade deficit totaled $343 billion in 2014—by far the largest U.S. bilateral trade imbalance) as an indicator that the trade relationship is \"unfair\" and the result of distortive policies, such as subsidies, trade barriers, currency intervention, discriminatory regulations, investment restrictions, and failure to establish an effective mechanism for protecting intellectual property rights (IPR)—to name a few. Such policies tend to affect bilateral trade in specific products and with particular countries and can negatively affect the profitability of U.S. exporters and overseas investors. To some extent, such policies may also affect bilateral trade balances, but do not necessarily affect the size of the overall (global) U.S. trade deficit, which, as noted earlier, is largely a reflection of the level of U.S. savings. If distortive measures were reduced in certain countries, U.S. exporters would sell more of their products to them. But if U.S. consumption/savings behavior did not change, an increase in U.S. exports would likely result in an increased demand for imports, and the overall U.S. trade deficit would likely remain relatively unchanged (all things being equal). Similarly, the reduction of distortive trade policies in one country might raise manufacturing costs to such an extent as to cause firms to move production to another country. As a result, U.S. imports from the first country would fall, while imports from the second country would rise. This would lower the U.S. trade deficit with the first country and increase it with the other, and the overall U.S. trade deficit would be relatively unchanged.\n18 . How does the trade deficit affect the exchange value of the dollar?\nWithout sufficient inflows of capital, a trade deficit causes other parts of the economy to adjust, particularly the country's exchange rate—for the United States, this is the value of the dollar relative to that of the Japanese yen, Canadian dollar, British pound, or European euro. The way the adjustment mechanism works is that the excess of U.S. imports causes a surplus of U.S. dollars to flow abroad. If these dollars are then converted to other national currencies, the dollar's excess supply tends to lower the price of the dollar relative to other currencies (exchange rate), and the value of the dollar depreciates. This causes imports to be more expensive for American consumers and U.S. exports to be cheaper for foreign buyers. This process will gradually cause U.S. imports to decrease and exports to increase, thereby decreasing the trade deficit.\nForeign holders of U.S. dollars may not always exchange them for other currencies because the dollar holds a special status in global financial markets and because the U.S. economy is viewed both as a safe haven for storing wealth and as an attractive destination for investments. In some countries, the dollar is used as a medium of exchange, and in most countries it is used as a reserve currency by central banks. Foreign governments can intervene to keep the value of their currency from appreciating relative to the dollar by buying dollars and essentially sending them back to the United States through purchasing U.S. Treasury securities or other U.S. assets. China, for example, has been doing this since 1994, and, as a result, it has become the largest foreign holder of U.S. Treasury securities (at nearly $1.3 trillion as of March 2015) and the largest holder of foreign exchange reserves (at $37.3 trillion as of July 2014). Efforts by Japan in recent years to boost economic growth by expanding its money supply have led some critics to charge that such policies are largely aimed at depreciating the yen in order to boost Japanese exports.\nSome analysts contend that several countries have intervened in currency markets to hold down the value of their currencies and that this has hampered, to some extent, the realignment of global trade balances, which in turn has negatively affected the U.S. economy. For example, a July 2012 study by the Peterson Institute for International Economics contends that \"currency manipulation,\" based on \"excessive\" levels of foreign exchange reserves (FERs), is widespread, especially in developing and newly industrialized countries. The study identified 22 economies that \"manipulate their currency\" based on the size of their FERs as a percent of GDP and the cumulative increase in FERs as a percent of GDP in 2012, the most significant of which were China, Denmark, Hong Kong, South Korea, Malaysia, Singapore, Switzerland, and Taiwan. The Peterson Institute estimated that currency intervention by the 22 economies increased the U.S. current account trade deficit by $200 billion to $500 billion and caused the loss of 1 million to 5 million U.S. jobs.\n19 . How is the trade deficit financed?\nThe U.S. trade deficit is financed by borrowing from abroad. This takes the form of net financial inflows into the United States (which is reflected in the U.S. current account data). In 2013, U.S. net financial inflows amounted to $93 billion. Foreigners acquired $906 billion in assets in the United States (excluding financial derivatives), while Americans acquired $553 billion in assets abroad. Within these totals, foreigners purchased an additional $141.8 billion in Treasury securities and $44 billion in other government securities. Foreigners also invested $193 billion in their companies located in the United States.\n20 . Is the trade deficit a problem for the U.S. economy?\nMany economists view the U.S. trade deficit as a dual problem for the economy. In the long term, it generates debt that must be repaid by future generations. Meanwhile, the current generation must pay interest on that debt. Whether the current borrowing to finance imports is worthwhile for Americans depends on whether those funds are used for investment that raises future standards of living or whether they are used for current consumption. If American consumers, business, and government are borrowing to finance new technology, equipment, or other productivity-enhancing products, the borrowing results in a deficit and can be paid off because such investments will boost the level of economic growth in the long run. If the borrowing is to finance consumer purchases of clothes, household electronics, or luxury items, it pushes the repayment of funds for current consumption on to future generations without investments to raise their ability to finance those repayments, which implies that in the future, consumption levels will have to fall in order to pay for the debt, which lowers future economic growth. Some economists warn that, under certain circumstances, a continually rising U.S. trade deficit could spark a large and sudden fall in the value of the dollar and financial turmoil in both the United States and abroad.\nThe U.S. current account deficit as a percent of GDP reached a peak of 5.8% in 2006 and has fallen significantly since, declining to 2.4% in 2014, although much of that decline was the result of the effects of the global economic slowdown. Although the U.S. economy has not yet fully recovered to pre-crisis levels, foreign investors continue to look to the United States as a safe haven for their money. As a result, the U.S. Treasury has had no problem selling securities to fund the U.S. budget deficit. Eventually, however, if foreign investors stop offsetting the trade deficit by buying dollar-denominated assets, U.S. interest rates would have to rise to attract more foreign funds into U.S. investments. Rising interest rates could cause a crisis in financial markets and may also raise inflationary pressures. Since global financial markets are now so closely intertwined, turmoil in one market can quickly spread to other markets in the world.\n21 . How long can the United States keep running trade deficits?\nU.S. deficits in trade can continue for as long as foreign investors are willing to buy and hold U.S. assets, particularly government securities and other financial assets. Their willingness depends on a complicated array of factors, including the perception of the United States as a safe haven for capital, relative rates of return on investments, interest rates on U.S. financial assets, actions by foreign central banks, and the savings and investment decisions of businesses, governments, and households. The policy levers that influence these factors that affect the trade deficit are held by the Federal Reserve (interest rates) as well as both Congress and the Administration (government budget deficits and trade policy), and their counterpart institutions abroad.\n22 . How can the trade deficit be further reduced?\nIn reducing the U.S. trade deficit, the policy tool kit includes direct measures (trade policy) that are aimed at imports, exports, and the exchange rate, and indirect measures (monetary and fiscal policies) aimed at U.S. interest rates, saving rates, budget deficits, and capital flows. Monetary and fiscal policies, however, usually address conditions in the U.S. macro-economy and generally consider the trade deficit only as a secondary target.", "23 . How important is trade to the U.S. economy?\nAs indicated in Figure 2 , the level of U.S. trade in goods in services relative to GDP has risen markedly over the past three decades. U.S. exports of goods and services as a percent of GDP rose from 9.8% in 1980 to 12.6% in 2015, while imports of goods and services increased from 10.3% to 15.5%. According to the U.S. Department of Commerce, in 2014, U.S. exports \"supported\" 11.7 million jobs in the United States, which was 53.9% higher than 1993 levels.\n24 . Who are the leading U.S. trade partners?\nAs shown in Table 4 , in 2015, China was America's largest merchandise trading partner, followed by Canada, Mexico, and Japan. China was the largest source of U.S. imports, followed by Canada, Mexico, and Japan. Canada was the largest destination of U.S. exports, followed by Mexico, China, and Japan.\n25 . How does economic globalization \" complicate \" interpretation of U.S. trade data?\nTrade is becoming increasingly complex. In the past, companies tended to source most or all of their production in one country, using inputs that were largely made domestically. Today, MNCs produce worldwide, often using inputs that are sourced from the United States and worldwide. China is a good example of this phenomenon. Since initiating free market reforms in 1979 and opening up its economy to global trade and investment, China has emerged as a major center for global supply chains. Because of China's large pool of low-cost labor, many export-oriented multinational corporations have moved production from other countries (primarily in Asia) to China. In many cases, products that are \"made in China\" are actually products that are \"assembled in China,\" using imported inputs (such as components) that are designed and produced globally. The value added that occurs in China is often quite small relative to the total value of the finished product when it is imported into the United States and elsewhere, and a significant level of the profits from the sale of the product is estimated to accrue to the multinational company that owns the brand.\nThe rapidly changing nature of global supply chains has made it increasingly difficult to understand and interpret the implications of trade data for the U.S. economy. To illustrate, when the United States imports such products as iPhones and iPads, it attributes the full value of those imports as occurring in China, even though the value added that occurred there is quite small. Apple Inc., (the U.S. firm that developed these products) is the largest beneficiary in terms of the profits generated by the sale of its products, and most of its product design, software development, product management, marketing, and other high-wage functions and employment occur in the United States. In other words, U.S. trade data may show where products are being imported from, but they often fail to reflect who ultimately benefits from that trade. In many instances, U.S. imports from China are really imports from many countries. Yet, the full value of the final imported product is attributed to China, which results in what one might consider to be an inflated trade deficit figure. A joint study by the Organization for Economic Cooperation and Development (OECD) and the WTO estimated that the U.S trade deficit with China would be reduced by 25% in 2009 if bilateral trade flows were measured according to the value-added that occurred in each country before it was exported. Additionally, one study estimated that 24.7% of U.S. imports from Canada, and 39.8% of U.S. final merchandise imports from Mexico, consist of value added from the United States.", "26 . Is the U.S. manufacturing sector shrinking?\nMedia reports of factory closings and worker layoffs, and the plethora of labels indicating that merchandise was made in China, Mexico, or any of a number of foreign countries, often reinforce the perception that the U.S. manufacturing sector is shrinking. Two ways of examining this issue are to look at U.S. manufacturing output and manufacturing employment. Such data paint a mixed picture. To illustrate:\nFrom 1987 to 2015, the value of real output by U.S. manufacturing increased by 83.1% ( Figure 3 ). From 1980 to 2014, the value-added of U.S. manufacturing as a percent of GDP fell from 20.5% to 12.0%, while services grew from 56.0% to 68.5% of GDP ( Figure 4 ). From 1987 to 2014, U.S. manufacturing became more efficient as labor productivity (measured by output per hour) increased by 152.4% ( Figure 3 ). U.S. employment in manufacturing peaked at 19.4 million in 1979, but fell to 12.3 million by 2015, while jobs in private services during this time increased from 48.9 million to 100.3 million. In addition, U.S. employment in manufacturing as a percent of total non-agricultural employment fell from 21.6% in 1979 to 8.8% in 2014, while the level for private services grew from 54.3% to 70.5%. Business services employment within U.S. manufacturing has increased in recent years, growing from 29.8% in 2002 to 32.6% of total U.S. manufacturing jobs in 2012; computer and electronic products had the largest increase, with business services accounting for 67.2% of those manufacturing jobs in 2012.\nThese data indicate that, while U.S. manufacturing output has increased, its importance relative to the economy has declined. U.S. employment in manufacturing has declined in both the number of workers and as a percent of non-agricultural employment. The decline in U.S. manufacturing employment was likely partly caused by the increase in labor productivity (such as the introduction of new technologies) as fewer workers are now needed for a given level of production than were needed in the past. In addition, the jobs in the service sector increased sharply, both in numbers and as a percent of non-agricultural employment. As noted earlier, globalization may have impacted the U.S. manufacturing in some industries. Apple Inc. designs its products in the United States but outsources most of its production to firms in China. Apple's main source of its profits stems from its ability to innovate new products and intellectual property and engineering, not from the production of these products. In addition, many U.S. manufacturing firms use imported inputs (such as parts) from low-wage countries in their production to lower costs as part of global supply chain production. Also, from a statistical standpoint, some of the \"decline\" in manufacturing may have resulted from reclassification of jobs in U.S. employment data, that is, jobs that used to be classified under manufacturing are now classified under services. Manufacturing remains an important component of the U.S. economy. U.S. manufacturers are estimated to perform 70% of all private-sector R&D and account for 60% of U.S. exports. According to the United Nations, in 2012, the United States ranked second after China in terms of gross value added of manufacturing (i.e., the actual value of manufacturing that occurred in the country, excluding inputs and raw materials used in production). The value for manufacturing in China was $2.6 trillion versus $2.0 trillion for the United States.\n27. What is trade in services , and how is it different from goods trade?\nThe term \"services\" refers to an expanding range of economic activities, such as audiovisual, construction, computer and related services, energy, express delivery, e-commerce, financial, professional, retail and wholesaling, transportation, tourism, and telecommunications. Services account for a majority of U.S. economic activity—68% of U.S. gross domestic product (GDP) and 80% of U.S. civilian employment. Services are 30% of U.S. exports but, unlike trade in goods, every year the United States exports more services than it imports. Surpluses in services trade have partially offset U.S. trade deficits in goods trade.\nServices not only function as end-use products, but also act as the \"lifeblood\" of the rest of the economy. For example, transportation services move intermediate products along global supply chains and final products to consumers; telecommunications services open e-commerce channels; and financial services provide credits for the manufacture and consumption of goods. Intermediate services embedded within a global value chain can include services such as research and development, design and engineering, and business services, such as legal and accounting.\nAs with trade in goods, foreign government barriers may prevent U.S. trade in services from expanding to their full potential, but services barriers are often different from those faced by goods suppliers. Many impediments in goods trade—tariffs and quotas, for example—are at the border. By contrast, restrictions on services trade occur largely within the importing country and serve as \"behind the border\" barriers. Some of these restrictions are in the form of government regulations. One concern in international trade is ensuring that partner countries' regulations are applied in a nondiscriminatory and transparent manner that does not that favor domestic over foreign service providers. Because services transactions more often require direct contact between the consumer and provider than is the case with goods trade, many of the \"trade barriers\" that foreign companies face pertain to the ability to establish a commercial presence in the consumers' country in the form of direct investment or to the temporary movement of providers and consumers across borders.\n28. How is digital trade different from other trade in goods and services?\nNon-tariff barriers related to digital trade establish restrictions that may impact what a firm offers in a market or how it operates. Because digital trade is intangible and does not require direct interaction between individuals, the trade barriers confronted are often in the form of localization requirements that restrict the flow of commercial data. For example, data transfer regulations that restrict cross-border data flows (\"forced\" localization barriers to trade), or require use of locally based servers or infrastructure, may limit the type of financial transactions and services that a firm can sell in a given country. Restrictions on cross-border data flow may prohibit the ability of a provider that offers or relies on cloud-computing to enter a market. Similarly, country-specific data regulations may create a disincentive for U.S. firms to invest in certain markets if a firm is hindered in its ability to export its own data from a foreign affiliate to a U.S.-based headquarters in order to aggregate and analyze information from across its global operations or to transfer customer or human resources records.\nThe proponents of data localization seek to ensure privacy of citizens, security, and domestic control. However, others point out that maintaining data within a country does not necessarily guarantee security or protect a country from exposure to foreign attacks. Opponents of localization restrictions on digital trade also point to lost efficiencies and increased costs of not allowing a free flow of information across borders, and they support policies that protect privacy without creating trade barriers.\nOther non-tariff barriers to digital trade may come in the form of regulations that require the use of national standards or certification in order to operate.", "", "29 . What role does Congress play in the making of trade policy?\nThe role of Congress in formulating international economic policy and regulating international trade is based on express powers set out in Article 1, Section 8, of the U.S. Constitution, \"To lay and collect Taxes, Duties, Imposts and Excises\" and \"To regulate Commerce with foreign Nations, and among the several States,\" as well as the general provision \"To make all Laws which shall be necessary and proper\" to carry out these specific authorities. Congress exercises this power in many ways, such as through the enactment of tariff schedules and trade remedy laws, and the approval and implementation of reciprocal trade agreements.\n30 . What committees take the lead in exercising congressional authority over trade?\nBecause of the revenue implications inherent in most trade agreements and policy changes, the House Ways and Means Committee and Senate Finance Committee have primary responsibility for trade matters. Each committee has a subcommittee dedicated exclusively to trade issues. Other committees may have a role should trade agreements, policies, and other trade issues include matters under their jurisdiction.\n31 . In w hat explicit ways does Congress make trade policy?\nU.S. trade policy is founded on statutory authorities, as passed by Congress. These include laws authorizing trade programs and governing trade policy generally in areas such as tariffs, non-tariff barriers, trade remedies, import and export policies, political and economic security, and trade policy functions of the federal government. Congress also sets trade negotiating objectives in law; requires formal consultation from, and opportunity to provide advice on trade negotiations with the executive branch; and conducts oversight hearings on trade programs and agreements to assess their conformity to U.S. law and congressional intent.\n32 . How can individual Member s affect trade policy decisions?\nIndividual Members affect trade policy first as voting representatives who determine collectively the statutes governing trade matters. They may also exercise influence as sitting members on relevant committees, in testimony before those committees, whether as members of them or not, and in exercising informal influence over other Members through the exercise of the political authority and power invested in them by the electorate.\n33 . What is meant by fast track or Trade Promotion Authority (TPA)?\nTPA (formerly known as fast track) refers to a statutory mechanism under which Congress (1) defines trade negotiating objectives, (2) authorizes the President to enter into reciprocal trade agreements governing tariff and non-tariff barriers, and (3) allows implementing bills to be considered under expedited legislative procedures, provided the President observes certain statutory obligations in negotiating trade agreements, including notifying and consulting Congress. The purpose of TPA is to preserve the constitutional role of Congress with respect to consideration of implementing legislation for trade agreements that require changes in domestic law, while also bolstering the negotiating credibility of the executive branch by assuring that the trade implementing bill will receive expedited and unamended consideration.\nThe last TPA expired in 2007. Legislation to renew TPA—the \"Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA-2015)—was introduced by Senators Hatch and Wyden and Representative Ryan on April 16, 2015. The legislation, as reported by the Senate Finance Committee, was joined with legislation extending Trade Adjustment Assistance (TAA) into a substitute amendment to H.R. 1314 (an unrelated revenue measure), and the legislation passed on May 22 by a vote of 62-37. In the House, the measure was voted on under a procedure known as \"division of the question,\" which requires separate votes on each component, but approval of both for the bill to pass. Voting on June 12, TPA (Title I) passed by a vote of 219-211, but TAA (Title II) was defeated 126-302. On June 18, the House again voted on identical TPA language as an amendment attached to H.R. 2146 , an unrelated House bill. This amendment did not include TAA. This legislation passed the House 218-206, and by the Senate 60-38. The President signed the legislation ( P.L. 114-26 ) on June 29, 2015.\nCurrent negotiations on the proposed Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (T-TIP), the Trade in Services (TISA), and the World Trade Organization (WTO) Doha Round agreements may require TPA in order to pass implementing legislation.", "34 . Who is in charge of U.S. trade policy ?\nThe President directs overall trade policy in the executive branch and performs specific trade functions granted to him by statute. The chief adviser to the President on trade matters is the United States Trade Representative (USTR), a Cabinet-level appointment that has primary responsibility for developing, coordinating, and implementing U.S. trade policy, as well as negotiating trade agreements and enforcing U.S. trade laws (see 19 U.S.C. 2171).\n35 . Why was the USTR created?\nCongress created the USTR in 1962 (originally as the Office of the Special Representative for Trade Negotiations) to heighten the profile of trade and provide better balance between competing domestic and international interests in the formulation and implementation of U.S. trade policy and negotiations, which were previously managed by the U.S. Department of State.\n36 . How are trade decisions made?\nThe USTR has primary responsibility for trade negotiation and trade policy decisions within the executive branch. However, such decisions often involve areas of responsibility that fall under other Cabinet-level departments, at times requiring a multi-department interagency process. To implement this process, Congress established the Trade Policy Committee, chaired by the USTR and consisting of the Secretaries of the Treasury, Commerce, State, Agriculture, Labor, and other department heads as the USTR deems appropriate. The USTR subsequently established two sub-Cabinet groups—the Trade Policy Review Group (TPRG) and the Trade Policy Staff Committee (TPSC). The executive branch also solicits advice from a three-tiered congressionally established trade advisory committee system that consists of private sector and non-federal government representatives.\n37 . What are the functions of the executive branch in U.S. trade?\nThe executive branch executes trade policy in a variety of ways. It negotiates, implements, and monitors trade agreements, and has responsibility for customs enforcement, collection of duties, implementation of trading remedy laws, budget proposals for trade programs and agencies, export and import policies, and agricultural trade, among others.\n38 . When does the President get involved in trade decisions?\nThe President is responsible for influencing the direction of trade legislation, signing trade legislation into law, and making other specific decisions on U.S. trade policies and programs where he deems the national interest or political environment requires his direct participation. This can take place in many areas of trade policy, such as requesting TPA/fast track authority, initiating critical trade remedy cases, meeting or communicating with foreign heads of state or government, and other areas subject to or requiring high political visibility.", "39 . What is the formal role of the private sector?\nThe formal role of the private sector in the formulation of U.S. trade policy is embodied in a three-tiered committee system that Congress has provided in Section 135 of the Trade Act of 1974, as amended. Currently there are 28 committees (with about 700 citizen advisors), which are administered by the USTR's Office of Intergovernmental Affairs & Public Engagement (IAPE) in cooperation with a number of other federal agencies. The three-tier system consists of (1) the President's Advisory Committee for Trade Policy and Negotiations (ACTPN); (2) five general policy advisory committees dealing with environment, labor, agriculture, Africa, and intergovernmental issues; and (3) 22 technical advisory committees in the areas of industry and agriculture. These committees have been set up in order to ensure that private sector views are known and considered in the formulation and implementation of U.S. trade policies and programs.\n40 . What is the informal role that the private sector plays in the formulation of U.S. trade policy?\nThe private sector helps shape U.S. trade policy in a number of informal ways. For example, representatives from industry and non-government organizations may be invited to testify before congressional committees on trade matters. Private sector representatives are also invited or requested to testify before the United States International Trade Commission (USITC), the U.S. Department of Commerce, or other government bodies to provide assessments of the potential impact of pending trade actions, such as an antidumping or countervailing duty order, on their industries and sectors. Private sector organizations also lobby Congress and the executive branch to promote their interests in U.S. trade policy actions and agreements.\n41 . Why do groups attempt to lobby on trade decisions?\nTrade is becoming a larger and increasingly integral part of the U.S. economy. Virtually all kinds of agricultural and manufactured goods are tradeable—they can be exported and imported. In addition, a growing number of services—once considered non-tradeable because of their intangibility—can be bought and sold across borders because of technology advancements, such as the Internet. As a result, how U.S. trade policy is shaped and implemented can affect a broad spectrum of people in the United States. For some industries, firms, and workers, congressional decisions to support a particular trade agreement or Department of Commerce rulings on antidumping cases, subsidies, and other cases could affect both employment and growth. Those decisions could also influence product choices of U.S. consumers. Such groups are also concerned with obtaining greater market access in various countries. Consequently, groups representing businesses, farmers, workers, consumers, and other segments of the economy strive to make sure that their views on trade policy decisions are represented.", "42 . How do federal courts get involved in trade?\nLegal challenges may be brought in federal court by importers, exporters, domestic manufacturers, and other parties affected by governmental actions and decisions concerning trade. Cases may involve, for example, customs classification decisions, agency determinations in antidumping and countervailing duty (CVD) proceedings, presidential decisions to (or not to) restrict imports under trade remedy statutes, or the constitutionality of state economic sanctions. The federal government may also initiate legal proceedings against individuals and firms to enforce customs laws or statutory restrictions on particular imports and exports. Some trade statutes may preclude judicial review. For example, most preliminary determinations in antidumping and CVD proceedings and governmental actions involving the implementation of WTO and free trade agreements may not be challenged in federal court. While most federal cases involving trade laws are heard in the U.S. Court of International Trade (see below), cases may also be filed in other federal courts depending on the cause of action or proceeding involved. Court decisions may significantly affect U.S. trade policy when they examine whether an agency has properly interpreted its statutory mandate, determine whether an agency has acted outside the scope of its statutory authority, decide how much deference should be granted the executive branch under a particular statute, or rule on whether a trade statute violates the U.S. Constitution.\n43 . What is the U.S. Court of International Trade?\nThe U.S. Court of International Trade (USCIT) is an Article III federal court located in New York City with exclusive jurisdiction over a number of trade-related matters, including customs decisions, antidumping and countervailing duty determinations, import embargoes imposed for reasons other than health and safety, and the recovery of customs duties and penalties. Formerly known as the Customs Court, the USCIT was renamed in the Customs Court Act of 1980, which also significantly enlarged its jurisdiction. The court consists of nine judges, no more than five of whom may be from the same political party. Judges are appointed by the President with the consent of the Senate. USCIT decisions are appealable to the U.S. Court of Appeals for the Federal Circuit and to the U.S. Supreme Court. Statutory provisions related to the USCIT may be found at 28 U.S.C. Sections 251-258 (establishment) and 28 U.S.C. Sections 1581-1585 (jurisdiction).", "", "44 . Why does the United States negotiate trade liberalizing agreements?\nThe United States negotiates trade liberalizing agreements for economic and commercial reasons, including to\nencourage foreign trade partners to reduce or eliminate tariffs and non-tariff barriers and, in so doing, increase market access for U.S. exporters; gain an advantage for U.S. exporters over foreign competitors in a third-country market; increase access to lower cost imports that help to control inflation and offer domestic and industrial consumers a wider choice of products; and encourage trading partners, especially developing countries, to rationalize their trade regimes, and thereby improve the efficiency of their economies.\nThe United States also negotiates trade liberalizing agreements for foreign policy/national security reasons, including to\nstrengthen established alliances; forge new strategic relationships; and establish a presence in a geographic region.\n45 . What are the various types of trade liberalizing agreements?\nIn general, reciprocal trade agreements can be categorized by the number of countries involved: bilateral agreements , such as free trade agreements (FTAs), are between two countries; regional agreements , such as the North American Free Trade Agreement (NAFTA) and the proposed Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP), involve three or more countries in a geographic region; plurilateral agreements involve a number of countries (not always from the same region) that often negotiate to liberalize trade in a specific sector, such as the proposed Trade in Services Agreement (TISA); and multilateral agreements , such as those negotiated in the World Trade Organization (WTO), cover a significant share of global trade.\nAmong major trade agreements, the TPP is currently a major focus, in that it is a proposed comprehensive and high-standard free trade agreement (FTA) among 12 countries to liberalize trade and investment through enhanced rules and disciplines and greater market access. It may become a vehicle to advance a wider Asia-Pacific free trade area as well as a U.S. policy response to the rapidly increasing economic and strategic linkages among Asian-Pacific states. It is portrayed by the Administration as the key economic component of the \"rebalance\" to the Asia-Pacific.\nThe TPP has slowly evolved from a more limited agreement among four countries concluded in 2006 into the current 12-country FTA negotiations, with the United States joining the negotiations in 2008. Japan, the most recent country to participate, joined the negotiations in 2013. The United States has existing FTAs with 6 of the 11 countries participating—Australia, Canada, Chile, Mexico, Peru, and Singapore. The five TPP countries without existing FTAs with the United States are Brunei, Japan, Malaysia, New Zealand, and Vietnam. Views on the agreement vary widely. Proponents argue that the TPP has the opportunity to expand trade and investment opportunities with negotiating partners that make up 37% of total U.S. goods and services trade, and establish trade and investment disciplines on new issues such as supply chain management, state-owned enterprises (SOEs), regulatory coherence, and digital trade barriers, in a region of strategic economic and geopolitical importance.\nProponents argue that the TPP has the opportunity to expand trade and investment opportunities with negotiating partners that make up 37% of total U.S. goods and services trade, and establish trade and investment disciplines on new issues such as supply chain management, state-owned enterprises (SOEs), regulatory coherence, and digital trade barriers, in a region of strategic economic and geopolitical importance. Opponents voice concerns over greater competition in import sensitive industries, and how the potential TPP agreement might impact U.S. sovereignty in establishing future U.S. regulations in areas such as health, food safety, and environment.\nAmbassador Froman signed the concluded TPP on February 4, 2016, but Congress must pass implementing legislation for the agreement to enter into force in the United States. Recently signed Trade Promotion Authority (TPA) legislation guarantees certain legislative procedures for congressional consideration of TPP implementing legislation, including an up or down vote by Congress. Such procedures, however, are contingent on Congress's determination that the Administration has made sufficient progress in advancing congressional negotiating objectives established in TPA and has followed TPA notification and consultation requirements.\n46 . Who benefits from trade liberalizing agreements? Who loses?\nEconomic theory suggests and empirical studies have generally concluded that economies as a whole benefit when trade barriers are removed because economic resources (land, labor, and capital) are employed more efficiently. However, economic theory and studies also point out that the benefits of trade liberalization are not distributed evenly within an economy and not even among economies. Some industries, firms, and workers \"lose\" if they cannot adjust to the increased foreign competition resulting from the trade agreement or if particular provisions of the trade agreement disadvantage their interests. Other industries, firms, and workers \"win\" if they can take advantage of new market opening opportunities presented by the trade agreement or if particular provisions of the trade agreement favor or promote their interests.\n47 . What is the World Trade Organization ( WTO ) ?\nThe WTO is a 160-member body that establishes through negotiations and implements the multilateral system of rules on trade in goods, services, agriculture, IPR, trade remedies, and on other trade-related matters and adjudicates disputes under the rules. Fundamental principles of the WTO include non-discrimination and national treatment in trade among the members. The WTO was established in January 1995 as a part of the agreements reached by the signatories to the General Agreement on Tariffs and Trade (GATT). The WTO administers the roughly 60 agreements and separate commitments made by its members as part of the GATT (for trade in goods), the General Agreement on Trade in Services (GATS—for trade in services), and the agreement on trade-related aspects of intellectual property rights (TRIPS). It also oversees multilateral and plurilateral negotiations among its members.\n48 . How are disputes resolved under WTO agreements?\nIf a WTO member believes that another member has adopted a law, regulation, or practice that violates a WTO agreement, the member may initiate dispute settlement proceedings under the WTO Dispute Settlement Understanding. The process begins with consultations and, if these fail to resolve the dispute, the member may request that the WTO establish a dispute panel. A panel report may be appealed to the WTO Appellate Body by either disputing party. If the defending member is found to have violated a WTO obligation, the member will be expected to remove the challenged measure. If this is not done by the end of the established compliance period, the prevailing member may request authorization from the WTO to take temporary retaliatory action. In most cases, retaliation consists of tariff increases on selected products from the defending member. From January 1995 to June 2014, 496 dispute settlement complaints have been filed in the WTO, with the majority of disputes resolved through consultations and negotiations rather than through a ruling by a WTO dispute settlement panel (or the WTO's Appellate Body). WTO members have an obligation to comply with WTO dispute resolution rulings, and if such compliance is not forthcoming, the WTO member that filed the complaint can request authorization to impose trade sanctions against, or seek compensation from, the defending WTO member.\nWTO decisions do not have direct effect in U.S. law. Thus, in the event a U.S. statute is found to be inconsistent with U.S. obligations in the WTO, the dispute findings may not be implemented except through U.S. legislative action. Where an administrative action is successfully challenged, the USTR decides what, if any, compliance action will be taken. If sufficient statutory authority exists to amend or modify a regulation or practice or to issue a new determination in a challenged administrative proceeding, the USTR may direct the agency involved to make the change, provided that certain statutory procedures for such actions are followed. As a matter of policy, the United States generally seeks to comply with WTO dispute settlement rulings that go against it, as doing so helps ensure that other WTO members comply with rulings that have gone against them, including those brought by the United States.\n49 . What is the Doha Round?\nSince the GATT was signed in 1947, its signatories (member countries) have revised and expanded the trade rules in various rounds of negotiations to liberalize global trade. The Doha Development Agenda (DDA) is the ninth round and the first under the WTO. It is named after the city where it was launched in November 2001—Doha, Qatar. The WTO members included \"development\" in the title to reflect their intention to include issues of importance to developing countries. The negotiations have primarily focused on three areas—agriculture, non-agricultural goods, and services, although members have conducted negotiations in other areas as well, such as rules. As of this writing, negotiators have not been able to reach agreement and conclude the round. In December 2013, WTO members reached consensus on a Trade Facilitation Agreement (TFA) to remove customs obstacles at the border. However, beginning in July 2014, implementation of the agreement has been held up by India because of its concerns over food security issues. On November 13, 2014, the USTR announced that the United States and India had resolved their differences. As of March 2015, WTO members have reported on new efforts made to formally accept the new TFA, with delegations outlining target dates for securing approval seeing that the agreement enter the WTO's 10 th Ministerial Conference in Nairobi next December.\n50 . What are free trade agreements (FTAs)?\nAt a minimum, FTAs are agreements between/among two or more countries under which they agree to eliminate tariffs and non-tariff barriers on trade in goods and services among them, but each country maintains its own trade policies and regulations, including tariffs, on trade outside the FTA. FTA partner countries may also agree to reduce barriers or otherwise establish rules of behavior in other economic activities—investment, IPR, government procurement, worker rights, and environmental protection.\n51 . How do FTAs that the United States negotiate s generally differ from those negotiated among other countries?\nThe United States currently has 14 FTAs in force that include 20 countries. The FTAs that the United States negotiates are often more comprehensive and high standard than those that are negotiated among other countries, particularly developing countries. The standard U.S. FTA model includes not only the elimination of tariffs on trade in goods among the FTA partners, but also reduction of barriers on trade in services, rules on foreign investment, requirements for IPR protection, government procurement, and provisions on labor and environment, and several other issues. The United States is currently negotiating a number of FTAs, including the TPP, involving the United States and 11 other countries in the Asia-Pacific region; and the Transatlantic Trade and Investment Partnership (T-TIP) between the United States and the European Union. The United States has sought to make the TPP a comprehensive high standard free trade agreement that can serve as template for future FTA negotiations, especially through addressing issues that have not traditionally been address in other trade agreements, such as the development of new rules on state-owned enterprises (SOEs) and digital trade.\n52 . What are Trade and Investment Framework Agreements (TIFAs)?\nA TIFA is an agreement between the United States and another country (for example Egypt) or group of countries (for example, ASEAN) to consult on issues of mutual interest in order to promote trade and investment among the participants. Most U.S. TIFAs are with developing countries. The United States and its TIFA partner(s) agree to establish a joint ministerial-level council as the overall mechanism for consultation with the possibility of establishing issue-oriented working groups. A TIFA is a non-binding agreement and does not involve changes in U.S. law; therefore, TIFAs do not require congressional approval. In some cases, TIFAs have led to FTA negotiations.", "As noted earlier, countries export in order to obtain imports, which benefit various parts of the economy. Lower-priced imports generally benefit the U.S. economy as a whole. However, in some instances, imports may harm certain import-sensitive U.S. firms, in particular when foreign firms or governments seek to employ trade-distorting measures. The federal government seeks to use a number of trade tools to combat unfair foreign trade policies and assist those injured by foreign trade. In some cases, such policies are intended to help create a \"level playing field\" for U.S. producers and workers, induce foreign countries to eliminate trade-distortive policies, or to help import-sensitive firms adjust to the changing nature of global competitive through the use of Trade Adjustment Assistance (TAA).\n53 . What are other benefits of imports?\nConsumers can benefit through access to a wider variety of goods at lower costs. This raises consumer welfare (which means consumers have more money to spend on other goods and services) and helps control the rate of U.S. inflation. Producers can benefit through access to lower priced components or inputs that can be utilized in the production process. Longer term, import competition can also pressure companies to reduce costs through innovation, research, and development, leading to growth in economic output and productivity.\n54 . What are the costs of imports?\nBy affording increased competition to U.S. companies producing similar products, imports can contribute to U.S. job losses and business failures. In some cases, import competition can cause job losses and company failures that are concentrated in a region or sector, which can cause considerable economic distress in a community. The use of unfair trade policies (such as export subsidies) to boost sales in the United States can result in trade tensions.\n55 . What are the main U.S. trade remedy laws?\nTwo primary trade remedy laws aimed at unfair trade practices are the antidumping (AD) and countervailing duty (CVD) statutes. Other trade remedy laws include Section 201 (see below), Section 301 (focuses on violations of trade agreements or other foreign practices that are unjustifiable and restrict U.S. commerce), and Section 337 (focuses on unfair practices in import trade such as patent and copyright infringement).\n56 . What is the purpose of the countervailing duty law?\nThe purpose of the CVD law is to offset any unfair and injurious competitive advantage that foreign manufacturers or exporters might enjoy over U.S. producers as a result of receiving a government subsidy. As defined by the WTO, a subsidy is a financial contribution, such as a loan, grant, or tax credit, provided by a government or other public entity that confers a specific benefit to manufacturers or exporters of a product. Countervailing duties, if imposed, are designed to equal the net amount of the foreign subsidy and are levied upon importation of the subsidized goods into the United States.\n57 . What is the purpose of the antidumping law?\nDumping generally refers to an unfair trade practice in which an exporter sells goods in one export market at lower prices than comparable goods sold in the home market or in other export markets. Companies may dump products to gain market share or deter competition. U.S. law provides for the assessment and collection of antidumping duties when an administrative determination is made that foreign goods are being dumped or sold at less than fair value in the United States, and that such imports cause or threaten to cause material injury to a U.S. industry.\n58 . What is the import relief (safeguards) law?\nChapters 1 and 2 of the Trade Act of 1974, as amended, provide the President with the authority to apply safeguard measures temporarily (increased tariffs or quotas) to restrict imports if they threaten or cause serious injury to a domestic industry. Safeguard measures apply to products that are not necessarily traded unfairly. This provision recognizes that liberalization of trade barriers can change competitive conditions and that in certain cases domestic industries should be provided a temporary period of relief to allow time for adjustment. The U.S. International Trade Commission investigates and recommends on import relief cases, and the President takes final action. Safeguard measures are permitted under WTO rules.\n59 . What is the Trade Adjustment Assistance (TAA) Program?\nCongress passed the first trade adjustment assistance program as part of the Trade Expansion Act of 1962 (P.L. 87-794) and it has extended and changed the TAA provisions over time. TAA was developed to provide certain types of temporary assistance to workers, firms, farmers, and communities that may be negatively impacted by foreign trade. Funding for TAA was $797 million in FY2013, down from $1.8 billion in FY2010.\nRecent legislation in regards to TAA was introduced March 4, 2015, the Trade Preferences Extension Act of 2015 ( H.R. 1295 ) reauthorizes TAA through June 30, 2021, and restores some benefits under the program that had been allowed to expire by extending the termination provisions of the Trade Act of 1974; authorizing $450 million in funding; extending the reemployment trade adjustment assistance; and authorizing appropriations for trade adjustment assistance for workers, firms, and farmers. It was signed into law June 29, 2015 ( P.L. 114-27 ).\n60 . What is the rationale for TAA?\nIn proposing the program, supporters in Congress argued that those injured by increased trade competition as a result of public policy should not be required to bear the full cost of the impact. Justification rested on arguments for (1) economic efficiency, by speeding the adjustment process and returning idle resources to work more quickly, (2) equity, by compensating the losers of free trade while spreading the cost of freer trade to society as a whole, and (3) as a way to defuse domestic opposition to trade liberalizing agreements and measures. TAA skeptics argue that such assistance is costly and economically inefficient, reduces worker and firm incentives to relocate and adjust, and may not be equitable given that many economic groups hurt by changing economic circumstances caused by factors other than trade policies are not afforded special economic assistance. Despite disagreement, Congress has consistently found compromise positions to maintain the program over the past five decades.", "The federal government maintains a number of programs and policies to promote certain U.S. exports. Some programs provide direct assistance to U.S. exporters, such as financing or trade counselling. Other U.S. policies attempt to promote exports by negotiating trade liberalization measures, such as through FTAs, or agreements to enhance trade rules and disciplines. In some instances, the federal government seeks to restrict certain exports.\n61 . What are the benefits of exports?\nFrom the perspective of individual companies, export markets provide opportunities to expand production and increase efficiency by taking advantage of economies of scale and access to growing markets overseas. Companies may also be able to sell goods and services at higher prices than they can obtain at home. From the perspective of individual workers, jobs in export-oriented industries often provide higher than average wages.\n62 . What are some costs of exporting?\nFrom an economic perspective that views higher levels of consumption as being the goal of economic activity, countries export goods and services in order to earn the foreign currency with which they can buy imports. Exports, according to this view, are foregone production that could have been consumed domestically (and instead are used to acquire and consume imports).\n63 . What factors most determine U.S. export levels?\nEconomists maintain that the overall level of U.S. exports is determined primarily by the same macroeconomic conditions that generate the U.S. trade deficit. These include the level of savings and investment, the foreign exchange rate, and willingness of foreigners to invest in U.S. assets. U.S. exports also depend on economic growth rates in major markets. The higher the rate of economic growth in Asia (particularly Japan and China), Europe (particularly Germany, the UK, and France), Canada, and Latin America, the more people in those markets are likely to buy U.S. exports, other things being equal.\n64 . What factors determine the exporting success of specific sectors?\nThe level of American exports in specific sectors depends both on the overall level of exports and on an interplay of factors such as the relative competitiveness of the American industry, trade barriers abroad, and sometimes the degree of U.S. export promotion. The higher the overall level of exports, the more individual sectors are likely to sell abroad, but given the impact of macroeconomic factors, export surges by a particular sector often are offset by a decline in exports by other sectors. In a world of (mostly) floating exchange rates, a large export surge will cause foreigners to buy more dollars to pay for those exports. This raises the demand for dollars and increases its price relative to other currencies. Since the United States does not intervene in currency markets to fix its exchange rate, the higher value of the dollar makes U.S. exports more expensive and may reduce their sales.\n65 . How does the U.S. government promote exports?\nThere are at least 20 federal agencies involved in promoting U.S. exports and supporting U.S. investment. For example, the Export-Import Bank (Ex-Im Bank), the Department of Agriculture, and the Overseas Private Investment Corporation (OPIC) administer various finance programs aimed at helping U.S. firms export and invest in certain developing countries, including through fee-based services. These agencies have mandates that vary in their direct emphasis on U.S. commercial interests and U.S. foreign policy, but their activities can have both U.S. commercial and/or foreign policy implications. In some cases, U.S. trade financing is provided to help U.S. firms obtain a \"level playing field\" against certain foreign firms that may be receiving subsidized financing from their respective governments. In addition, the Department of Commerce, through the International Trade Administration (ITA), acts to promote U.S. exports of goods and services (particularly by small and medium-sized companies) by providing a number of support services, such as export counselling. Boosting U.S. exports was elevated as a priority issue with the Obama Administration's introduction of the National Export Initiative (NEI) in the 2010 State of the Union Address. The NEI set a strategy to double U.S. exports by 2015 in an effort to boost the economy and generate employment growth. The next phase of NEI is NEI/NEXT, which has five objectives: to connect more American businesses to more global customers; to make the exporting process easier and less expensive; to expand access for businesses to export financing and insurance; to promote exports and the attraction and retention of investment as a priority for American communities; and to create, foster, and ensure more exporting opportunities. NEI/NEXT, among other things, also has a cross-cutting objective to improve government data to support companies' exporting decisions across all five specific objectives.\nAs the official U.S. export credit agency (ECA), Ex-Im Bank finances and insures U.S. exports of goods and services with the goal of supporting U.S. jobs. On a demand-driven basis, it seeks to support exports that the private sector is unwilling or unable to finance alone at commercially viable terms for exporting; and/or to counter government-backed financing offered by foreign countries through their ECAs. The rationales behind Ex-Im Bank's activities remain subject to congressional debate.\nEx-Im Bank operates under a renewable general statutory charter (Export-Import Bank Act of 1945, as amended), extended through the end of FY2109 by the Export-Import Bank Reform and Reauthorization Act of 2015 (Division E, P.L. 114-94 ). This act lowered the Bank's statutory lending authority (\"exposure cap\" for outstanding portfolio) to $135 billion for each of FY2015-FY2019 subject to certain conditions, and made reforms including to its policies or operations in risk management, fraud controls, and ethics, as well as the U.S. approach to international negotiations on disciplines on government-backed export credit financing.\n6 6 . Are U.S. export promotion programs beneficial to the U.S. economy?\nThis is a hotly debated question. A number of economic justifications have been given for supporting or opposing government export promotion programs and policies. Economic theory generally holds that free markets should determine the most efficient allocation of scarce resources, based on supply and demand factors. However, market failures may prevent the market from operating at its \"optimal\" or most efficient level, causing the market to either over-allocate or under-allocate resources to various economic activities and leading to economic waste. Thus, in order to remove such market failures and promote economic efficiency, some form of government intervention may be warranted. The existence of imperfect information in the market, spillovers, and imperfect competition are examples of market failures that often are cited as justifying government export promotion programs, the presumption being that either the composition or level of U.S. exports is below that which would maximize U.S. living standards. From an economic perspective, much of the debate over export promotion involves whether some market failure actually has occurred, and whether government intervention can produce net benefits for the economy as a whole.\nSupporters of export promotion programs assume that market failures have occurred and have led to significant misallocation of resources in the economy. Some view export promotion as a corrective tool to ensure that resources are directed to their most efficient use. Proponents argue that these policies can boost exports substantially, improve national living standards, and (during periods of less than full employment) increase output and employment. An additional justification used involves instances when U.S. firms find themselves unable to compete in certain overseas markets because their foreign competitors have received significant levels of government support, including subsidized export financing. U.S. policies to counter or offset such subsidies, it is argued, will create a level playing field for U.S. firms and possibly induce other countries to discontinue providing export subsidies.\nOpponents of export promotion programs dispute that significant market failures have occurred, and warn that government intervention may interfere with the efficient operation of the market. Such critics argue that export promotion policies are little more than distortive subsidies that favor some firms over others, reduce efficiency within the economy, result in terms-of-trade losses, and diminish national living standards. In addition, while critics concede that trade promotion programs may help boost employment and production during periods of less than full employment, they question why exporting firms should be favored for assistance over other U.S. firms. Some argue that broad monetary and fiscal policies aimed at stimulating domestic demand may provide a more effective means of boosting the economy.\nMany economists would argue that addressing market failures could boost U.S. economic efficiency. However, various factors, such as global macroeconomic policies and the economic growth rates of the United States and its major U.S. trading partners, trends in global trade policies (such as expansion of trade liberalization policies or, conversely, increased trade protectionism), and international exchange rates will likely be among the most significant forces determining the level and composition of U.S. exports in the long run.\n67 . What does the U.S. government do to restrict exports and why ?\nCongress has authorized the President to control the export of various items for national security, foreign policy, and economic reasons. Separate programs and statutes for controlling different types of exports exist for nuclear materials and technology, defense articles and services, and dual-use goods and technology. Under each program, licenses of various types are required before an export can be undertaken. The U.S. Departments of Commerce, State, Energy, and the Treasury administer these programs.", "68 . What are the main kinds of capital flows?\nGenerally, the two main kinds of capital flows are foreign direct investment (FDI) and foreign portfolio investment (FPI). FDI involves the acquisition of real assets such as real estate, a manufacturing plant, or controlling interest in an ongoing enterprise by a person or entity from another country. Foreign portfolio investment involves the purchase of foreign equities or bonds, loans to foreign residents, or the opening of foreign bank accounts. FDI often involves a long-term commitment and can have direct employment stimulation advantages for the host country, while portfolio investments are extremely liquid and can be withdrawn oftentimes at the click of a computer mouse. In addition, there are official capital flows generated by governments for various purposes, such as humanitarian assistance and other foreign aid.\n69 . Which is larger—trade or capital flows?\nIt depends. Recent data indicate that from 1985 to 2012, global trade in goods and services, as measured by exports, tripled from $6 trillion a year to $19 trillion a year. During the same period, capital flows, as measured in the balance of payments accounts (direct, portfolio, and other official investments), more than quadrupled from $1.1 trillion a year to $7.0 trillion a year. But during this time period, there also has been an explosion in growth in other types of capital flows, known as foreign exchange and over-the-counter derivatives markets. These markets facilitate trade in foreign exchange and other types of assets. While the capital flows associated with these markets do not directly relate to transactions in the balance of payments, they do affect the international exchange value of the dollar, which in turn affects the prices of goods and services and the cost of securities. A survey of the world's leading central banks indicated that the total daily trading of foreign currencies was more than $5.3 trillion in April 2013.\n70 . Why do companies invest abroad?\nFor the most part, firms invest abroad to increase their profits. Economists and other experts generally conclude, however, that a broad range of factors influences a firm's decision to invest abroad. The major determinants of FDI are the presence of ownership-specific competitive advantages in a transnational corporation; the presence of locational advantages, such as resource endowments or low-cost labor in a host country; and the presence of superior commercial benefits in an intra-firm relationship as opposed to an arm's-length relationship between investor and host country. Multinational firms apparently are motivated by more than a single factor, and likely invest abroad not only to gain access to a low-cost resource, but also to improve their efficiency or their market share. In addition, many firms often find it advantageous to operate close to their customers in foreign countries, where tastes and preferences may differ from those in the home market. Foreign markets may also enable multinational firms to access various resources, such as a well-educated work force, which might contribute to the firm's R&D activities. Some FDI activities involve mergers and acquisitions that may help a firm become more globally competitive.\n71 . Why has foreign investment increased so dramatically in recent decades?\nFrom 1990 to 2012, the stock, or the cumulative amount, of foreign direct investment in the world grew by more than tenfold from $1.8 trillion to $23 trillion. This rapid growth arises from a number of factors. One of the most important factors has been a change in public policies toward foreign direct investment among most countries. Foreign direct investment (FDI) has come to be viewed favorably not only by the economically advanced countries, but also by developing economies, which now often compete to bring in much-needed capital, technology, and technical expertise. Currently, about three-fourths of all direct investment is placed among the highly developed economies where consumer tastes and workers' wages are comparable.\n72 . What are the levels of U.S. FDI outflows and inflows?\nFDI flows to and from the United States have increased rapidly over the past few decades. From 1990 to 2014, the stock of U.S. FDI abroad rose from $431 billion to nearly $4.9 trillion, while the stock of FDI in the United States increased from $395 billion to nearly $2.9 trillion (see Figure 5 ). The largest destination for total (or the stock of) U.S. FDI outflows through 2013 included the Netherlands, Luxembourg, Canada, Ireland, and the United Kingdom, while the largest sources of total FDI inflows included the United Kingdom, Japan, the Netherlands, Canada, and Luxembourg.\n73 . What are some of the benefits of FDI ?\nGenerally, economists argue in favor of unimpeded international flows of capital, such as direct investment, because they estimate that such flows positively affect both the domestic (home) and foreign (host) economies. For the home country, direct investment benefits the individual firms that invest abroad, because they are better able to exploit their existing competitive advantages and to acquire additional skills and advantages. Direct investment also seems to be associated with a strengthened competitive position, a higher level of skills of the employees, and higher incomes of firms that invest abroad. Host countries benefit from inward FDI because the investment adds permanently to the capital stock and often to the skill set of the nation. Direct investment also brings technological advances, since firms that invest abroad generally possess advanced technology, processes, and other advantages. Such investment also boosts capital formation and contributes to a growth in a competitive business environment and productivity. In addition, direct investment contributes to international trade and integration into the global trading community, since most firms that invest abroad are established multinational firms.\n74 . Are there costs associated with FDI ?\nConcerned observers argue that U.S. FDI in production facilities abroad supplants U.S. exports, thereby reducing employment and wages in the U.S. economy. While it appears unlikely that the overall U.S. employment level is affected by direct investment flows, jobs in particular companies and sectors can be adversely affected when a company decides to produce similar products abroad. For example, if a U.S. auto company closed an assembly line in the United States and opened one in Mexico assembling the same product line, U.S. auto assembly jobs are lost. Similarly, while inward flows of foreign direct investment tend to create new jobs, there sometimes is concern that the new foreign owners may not serve as stable and dependable community partners, as did the previous nationally based ownership.\n75 . What are Bilateral Investment Treaties ( BITs ) ?\nBITs are agreements between two countries for the reciprocal encouragement, promotion, and protection of investments in each other's territories. Most treaties contain basic provisions that cover the following areas: scope and definition of investment, admission and establishment, national (or non-discriminatory) treatment (often referred to as most-favored-nation treatment), compensation in the event of expropriation or damage to the investment, guarantees of free transfers of funds, and dispute settlement mechanisms, both state-state and investor-state. U.S. BITs have to be ratified by the Senate.\n76 . What is the Committee on Foreign Investment in the United States ( CFIUS ) and what does it do ?\nCFIUS is an interagency committee that serves the President in overseeing foreign investment transactions that could affect the national security of the country. CFIUS was established initially by an executive order of President Ford in 1975 with broad responsibilities and few powers. The authority to review foreign investments, known as the Exon-Florio provision, was formally established in 1988 with the passage of P.L. 100-418 . In 2007, the Foreign Investment and National Security Act ( P.L. 110-49 ) established CFIUS itself in statute and expanded the role of the committee in reviewing foreign investment transactions that could affect \"homeland security\" and \"critical industries.\" Some foreign investors and foreign governments have objected to the expanded role of CFIUS as being counter to the long-standing U.S. position of an open investment climate. The authority granted to the President to block foreign investment transactions, however, has been invoked only twice since 1988, although in a few instances, issues and concerns raised by CFIUS have led foreign investors to cancel a planned purchase or to divest itself of the purchase if the deal had had already been completed.", "", "CRS Report R43841, International Trade and Finance: Key Policy Issues for the 114th Congress, 2nd Session , coordinated by [author name scrubbed] and [author name scrubbed].\nCRS Report RL31032, The U.S. Trade Deficit: Causes, Consequences, and Policy Options , by [author name scrubbed].\nCRS Report RL33577, U.S. International Trade: Trends and Forecasts , by [author name scrubbed] and [author name scrubbed].\nCRS Report R43291, U.S. Trade in Services: Trends and Policy Issues , by [author name scrubbed].\nCRS Report RL33274, Financing the U.S. Trade Deficit , by [author name scrubbed].\nCRS Report RL32964, The United States as a Net Debtor Nation: Overview of the International Investment Position , by [author name scrubbed].\nCRS Report RS22331, Foreign Holdings of Federal Debt , by [author name scrubbed] and [author name scrubbed].\nCRS Report R43242, Current Debates over Exchange Rates: Overview and Issues for Congress , by [author name scrubbed].\nCRS Report R42965, The North American Free Trade Agreement (NAFTA) , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications , by [author name scrubbed].\nCRS Report R43748, The Pacific Alliance: A Trade Integration Initiative in Latin America , by [author name scrubbed].\nCRS Report RL33536, China-U.S. Trade Issues , by [author name scrubbed].\nCRS Report RL33534, China's Economic Rise: History, Trends, Challenges, and Implications for the United States , by [author name scrubbed].\nCRS Report R43741, India-U.S. Economic Relations: In Brief , coordinated by [author name scrubbed].\nCRS Report RL33743, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy , by [author name scrubbed].\nCRS Report RL31356, Free Trade Agreements: Impact on U.S. Trade and Implications for U.S. Trade Policy , by [author name scrubbed].\nCRS Report R43491, Trade Promotion Authority (TPA): Frequently Asked Questions , by [author name scrubbed] and [author name scrubbed].\nCRS Report R42694, The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress , coordinated by [author name scrubbed].\nCRS Report R42344, Trans-Pacific Partnership (TPP) Countries: Comparative Trade and Economic Analysis , by [author name scrubbed].\nCRS Report R43387, Transatlantic Trade and Investment Partnership (T-TIP) Negotiations , by [author name scrubbed], [author name scrubbed], and [author name scrubbed].\nCRS Report RL34292, Intellectual Property Rights and International Trade , by [author name scrubbed] and [author name scrubbed].\nCRS Report RS20088, Dispute Settlement in the World Trade Organization (WTO): An Overview , by [author name scrubbed], [author name scrubbed], and [author name scrubbed].\nCRS Report RS22154, World Trade Organization (WTO) Decisions and Their Effect in U.S. Law , by [author name scrubbed], [author name scrubbed], and [author name scrubbed].\nCRS Report R41550, U.S.-Vietnam Economic and Trade Relations: Issues for the 114th Congress , by [author name scrubbed].\nCRS Report RS22640, What's the Difference?—Comparing U.S. and Chinese Trade Data , by [author name scrubbed].\nCRS Report RS22823, Overview of Labor Enforcement Issues in Free Trade Agreements , by [author name scrubbed].\nCRS Report RL34470, The U.S.-Colombia Free Trade Agreement: Background and Issues , by [author name scrubbed].\nCRS Report R43882, Latin America and the Caribbean: Key Issues for the 114th Congress , coordinated by [author name scrubbed].\nCRS Report RL32371, Trade Remedies: A Primer , by [author name scrubbed].\nCRS Report R41916, The U.S. Export Control System and the President's Reform Initiative , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL32461, Outsourcing and Insourcing Jobs in the U.S. Economy: Evidence Based on Foreign Investment Data , by [author name scrubbed].\nCRS Report RL33388, The Committee on Foreign Investment in the United States (CFIUS) , by [author name scrubbed].\nCRS Report RL33436, Japan-U.S. Relations: Issues for Congress , coordinated by [author name scrubbed].\nCRS Report RS21857, Foreign Direct Investment in the United States: An Economic Analysis , by [author name scrubbed].\nCRS Report RS21118, U.S. Direct Investment Abroad: Trends and Current Issues , by [author name scrubbed].\nCRS Report R43052, U.S. International Investment Agreements: Issues for Congress , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL34524, International Trade: Rules of Origin , by [author name scrubbed].\nCRS Report R43014, U.S. Customs and Border Protection: Trade Facilitation, Enforcement, and Security , by [author name scrubbed] and [author name scrubbed].\nCRS Report R41495, U.S. Government Agencies Involved in Export Promotion: Overview and Issues for Congress , coordinated by [author name scrubbed].\nCRS Report R41929, Boosting U.S. Exports: Selected Issues for Congress , by [author name scrubbed] et al.\nCRS Report R43581, Export-Import Bank: Overview and Reauthorization Issues , by [author name scrubbed].\nCRS Report R42844, IMF Reforms: Issues for Congress , by [author name scrubbed] and [author name scrubbed].\nCRS Report R43671, Export-Import Bank Reauthorization: Frequently Asked Questions , coordinated by [author name scrubbed].\nCRS Report R43387, Transatlantic Trade and Investment Partnership (T-TIP) Negotiations , by [author name scrubbed], [author name scrubbed], and [author name scrubbed].\nCRS Report RL33867, Miscellaneous Tariff Bills: Overview and Issues for Congress , by [author name scrubbed].\nCRS Report RS22204, U.S. Trade Deficit and the Impact of Changing Oil Prices , by [author name scrubbed].\nCRS Report R44044, U.S. Trade with Free Trade Agreement (FTA) Partners , by [author name scrubbed].\nCRS Report R43988, Issues in International Trade: A Legal Overview of Investor-State Dispute Settlement , by [author name scrubbed] and [author name scrubbed].\nCRS Report R44015, International Investment Agreements (IIAs): Frequently Asked Questions , coordinated by [author name scrubbed].\nCRS Report RS20210, Trade Adjustment Assistance for Firms: Economic, Program, and Policy Issues , by [author name scrubbed].", "CRS In Focus IF10166, Environmental Provisions in Free Trade Agreements (FTAs) , by [author name scrubbed] and [author name scrubbed].\nCRS In Focus IF10033, Intellectual Property Rights (IPR) and International Trade , by [author name scrubbed] and [author name scrubbed].\nCRS In Focus IF10120, Transatlantic Trade and Investment Partnership (T-TIP) , by [author name scrubbed] and [author name scrubbed].\nCRS In Focus IF10017, Export-Import Bank of the United States (Ex-Im Bank) , by [author name scrubbed].\nCRS In Focus IF10161, International Trade Agreements and Job Estimates , by [author name scrubbed].\nCRS In Focus IF10112, Introduction to Financial Services: The International Foreign Exchange Market , by [author name scrubbed].\nCRS In Focus IF10156, U.S. Trade Policy: Background and Current Issues , by [author name scrubbed], [author name scrubbed], and [author name scrubbed].\nCRS In Focus IF10052, U.S. International Investment Agreements (IIAs) , by [author name scrubbed] and [author name scrubbed].\nCRS In Focus IF10149, African Growth and Opportunity Act (AGOA) , by [author name scrubbed].\nCRS In Focus IF10000, The Trans-Pacific Partnership (TPP): An Overview , by [author name scrubbed] and [author name scrubbed].\nCRS In Focus IF10038, Trade Promotion Authority (TPA) , by [author name scrubbed].\nCRS In Focus IF10041, Reductions to Mandatory Agricultural Conservation Programs in Appropriations Law , by [author name scrubbed].\nCRS In Focus IF10049, Debates over \"Currency Manipulation\" , by [author name scrubbed].\nCRS In Focus IF10046, Worker Rights Provisions in Free Trade Agreements (FTAs) , by [author name scrubbed] and [author name scrubbed].\nCRS In Focus IF10002, The World Trade Organization , by [author name scrubbed] and [author name scrubbed].\nCRS In Focus IF10030, U.S.-China Trade Issues , by [author name scrubbed].\nCRS In Focus IF10119, U.S.-China Relations , by [author name scrubbed] and [author name scrubbed].\nCRS In Focus IF10110, China as the World's \"Largest Economy\" , by [author name scrubbed].\nCRS In Focus IF10139, China's Currency Policy , by [author name scrubbed].\nCRS In Focus IF10045, Cuba: President Obama's New Policy Approach , by [author name scrubbed].\nCRS In Focus IF10047, North American Free Trade Agreement (NAFTA) , by [author name scrubbed].", "Office of the United States Trade Representative, 2014 Trade Policy Agenda and 2013 Annual Report, March 2014 , at http://www.ustr.gov .\nOffice of the United States Trade Representative, 2014 National Trade Estimate Report on Foreign Trade Barriers , March 2014, at http://www.ustr.gov .\nOffice of the United States Trade Representative, 2014 Special 301 Report , April 2014, at http://www.ustr.gov .\nU.S. Congress, House Ways and Means Committee, Overview and Compilation of U.S. Trade Statutes, 2013 Edition, January 2013, at http://waysandmeans.house.gov/uploadedfiles/2013_blue_book_.pdf .\nThe White House, Council of Economic Advisers, 2014 Economic Report of the President, at http://www.whitehouse.gov/administration/eop/cea/economic-report-of-the-President/2014 .", "", "1. Why do countries trade?\n2. What is comparative advantage?\n3. What determines comparative advantage?\n4. Can governments shape or distort comparative advantage?\n5. What is the terms of trade?\n6. What are the costs of trade expansion?\n7. Does trade destroy jobs?\n8. Does trade reduce the wages of U.S. workers?\n9. What is intra-industry trade?\n10. What is economic globalization?\n11. What are global supply chains and how do they relate to economic globalization?\n12. How does globalization affect job security?", "13. Which are the largest global trading economies?\n14. What is meant by the trade deficit?\n15. Why does the United States run a trade deficit?\n16. How significant is the size of the U.S. trade deficit and how does it compare with other major economies?\n17. What role do foreign trade barriers play in causing bilateral trade deficits?\n18. How does the trade deficit affect the exchange value of the dollar?\n19. How is the trade deficit financed?\n20. Is the trade deficit a problem for the U.S. economy?\n21. How long can the United States keep running trade deficits?\n22. How can the trade deficit be further reduced?", "23. How important is trade to the U.S. economy?\n24. Who are the leading U.S. trade partners?\n25. How does \"economic globalization\" complicate interpretation of U.S. trade data?", "26. Is the U.S. manufacturing sector shrinking?\n27. What is trade in services and how is it different from goods trade?\n28. How is digital trade different from other trade in goods and services?", "29. What role does Congress play in the making of trade policy?\n30. What committees take the lead in exercising congressional authority over trade?\n31. In what explicit ways does Congress make trade policy?\n32. How can individual Members affect trade policy decisions?\n33. What is meant by fast track or Trade Promotion Authority (TPA)?\n34. Who is in charge of U.S. trade policy?\n35. Why was the USTR created?\n36. How are trade decisions made?\n37. What are the functions of the executive branch in U.S. trade?\n38. When does the President get involved in trade decisions?\n39. What is the formal role of the private sector?\n40. What is the informal role that the private sector plays in the formulation of U.S. trade policy?\n41. Why do groups attempt to lobby on trade decisions?", "42. How do federal courts get involved in trade?\n43. What is the U.S. Court of International Trade?", "44. Why does the United States negotiate trade liberalizing agreements?\n45. What are the various types of trade liberalizing agreements?\n46. Who benefits from trade liberalizing agreements? Who loses?\n47. What is the World Trade Organization (WTO)?\n48. How are disputes resolved under WTO agreements?\n49. What is the Doha Round?\n50. What are free trade agreements (FTAs)?\n51. How do FTAs that the United States has negotiated generally differ from those negotiated among other countries?\n52. What are Trade and Investment Framework Agreements (TIFAs)?", "53. What are other benefits of imports?\n54. What are the costs of imports?\n55. What are the main U.S. trade remedy laws?\n56. What is the purpose of the countervailing duty law?\n57. What is the purpose of the antidumping law?\n58. What is the import relief (safeguards) law?\n59. What is the Trade Adjustment Assistance (TAA) Program?\n60. What is the rationale for TAA?", "61. What are the benefits of exports?\n62. What are some costs of exporting?\n63. What factors most determine U.S. levels?\n64. What factors determine the exporting success of specific sectors?\n65. How does the U.S. government promote exports?\n66. Are U.S. export promotion programs beneficial to the U.S. economy?\n67. What does the U.S. government do to restrict exports and why?", "68. What are the main kinds of capital flows?\n69. Which is larger—trade or capital flows?\n70. Why do companies invest abroad?\n71. Why has foreign investment increased so dramatically in recent decades?\n72. What are the levels of U.S. FDI outflows and inflows?\n73. What are some of the benefits of FDI?\n74. Are there costs associated with FDI?\n75. What are Bilateral Investment Treaties (BITs)?\n76. What is the Committee on Foreign Investment in the United States (CFIUS) and what does it do?", "This appendix provides a list of acronyms used throughout the report." ], "depth": [ 0, 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "", "", "", "", "", "", "", "", "", "h0_title h2_title h1_title", "h0_full h2_full", "", "h0_full h2_full h1_full", "", "h0_title h3_title", "h0_full h3_full", "h3_full", "h0_full", "h3_full", "h0_title", "h0_full", "", "", "h0_title h1_title h3_title", "", "h3_full", "h1_full", "", "", "", "", "", "h0_full", "", "h1_full" ] }

{ "question": [ "What role does Congress play in U.S. trade policy?", "What is an example of Congressional involvement in U.S. trade policy?", "What other global agreements has Congress shown an interest in?", "What topics are the subject of ongoing debates in Congress?", "What does this report provide?", "What is the intended use of this report?", "How is this report organized?", "What does the third section deal with?", "What government and organizational roles are discussed in this section?", "What questions does the first section list?", "What topics regarding trade does this section consider?", "What topics regarding investment policy does this section consider?" ], "summary": [ "Congress plays a major role in U.S. trade policy through its legislative and oversight authority. There are a number of major trade issues that are currently the focus of Congress.", "For example, bills were introduced in the 113th Congress to reauthorize Trade Promotion Authority (TPA), the U.S. Generalized System of Preferences (GSP), and the U.S. Export-Import Bank, and legislative action on these issues could be forthcoming in the 114th Congress. Additionally, Congress has been involved with proposed free trade agreements (FTAs), including the Trans-Pacific Partnership (TPP) involving the United States and 11 other countries and the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union (EU).", "Also of interest to Congress are current plurilateral negotiations for a Trade in Services Agreement (TISA) and an updated multilateral Information Technology Agreement (ITA) in the World Trade Organization (WTO). Trade and investment policies of major U.S. trading partners (such as China), especially when they are deemed harmful to U.S. economic interests, are also of continued concern to Congress. Recent improved U.S. relations with Cuba have resulted in the introduction of several bills to boost bilateral commercial ties.", "The costs and benefits of trade to the U.S. economy, firms, workers, and constituents, and the future direction of U.S. trade policy, are the subject of ongoing debates in Congress.", "This report provides information and context for these and many other trade topics.", "It is intended to assist Members and staff who may be new to trade issues.", "The report is divided into four sections in a question-and-answer format: trade concepts; U.S. trade performance; formulation of U.S. trade policy; and trade and investment issues. Additional suggested readings are provided in an appendix.", "The third section, \"Formulation of U.S. Trade Policy,\" deals with the roles played by the executive branch, Congress, the private sector, and the judiciary in the formulation of U.S. trade policy.", "Information on how trade policy functions are organized in Congress and the executive branch, as well as the respective roles of individual Members and the President, is provided. The roles of the private sector and the judiciary are also discussed.", "The fourth section, \"U.S. Trade and Investment Policy Issues,\" lists questions related to trade negotiations and agreements and to imports, exports, and investments.", "The justification, types, and consequences of trade liberalization agreements, along with the role of the WTO, are treated in this section. The costs and benefits of imports, exports, and investments are also discussed, including how the government deals with disruption and injury to workers and companies caused by imports and its efforts to both restrict and promote exports.", "The motivations and consequences of foreign direct investment flows are also discussed." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 0, -1, 0, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 4, 4, 5, 5, 5 ] }

{ "title": [ "Background", "SBA Disaster Loan Program", "Paperwork Reduction Act", "SBA Disaster Loan Application Forms", "SBA Generally Meets Paperwork Reduction Act Form Renewal Requirements through Its Clearance Process and Internal Controls", "SBA’s Form Renewal Process Generally Meets Paperwork Reduction Act Requirements", "SBA Has Internal Controls to Monitor Compliance with Form Renewal Process", "SBA Plans to Continue Streamlining the Process, but Could Do More to Integrate and Clarify Available Information Resources", "SBA Has Implemented Some Actions and Has Planned Others Intended to Reduce Burdens on Loan Applicants", "SBA Could Better Integrate Consistent Information about the Disaster Business Loan Process into Its Web Portal and More Fully Define Loan Terminology", "Disaster Loan-Related Information Is Not Easily Accessible", "Disaster-Related Resources Do Not Consistently Feature Key Information", "Some Business Loan Applicants Are Confused about Finance Terminology", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Small Business Administration Disaster Business Loan Application Forms", "Appendix III: SBA and ACSI Customer Satisfaction Surveys", "Appendix IV: Small Business Administration Disaster Business Loan Resources", "Appendix V: Small Business Administration Electronic Loan Application Notification Messages", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "According to SBA officials, when a disaster is declared in an area, a staff member from an SBA field operations center, located in Atlanta, Georgia, or Sacramento, California, contacts the area’s SBDC network to identify a site for setting up a business recovery center, which may be the local SBDC office. Officials added that SBDC staff members co-locate in a business recovery center, when possible, so business loan applicants can access SBDC services at the center. Additionally, SBA officials said that SBDCs help SBA by doing the following: conducting local outreach to disaster victims, assisting declined business loan applicants or applicants who have withdrawn their loan applications with applications for reconsideration or re-acceptance, assisting declined applicants in remedying issues that initially precluded loan approvals, and providing business loan applicants with technical assistance, including helping businesses reconstruct business records, helping applicants better understand what is required to complete a loan application, compiling financial statements, and collecting required documents.\nSBA offers two types of disaster loans for businesses: (1) Physical Disaster Loans, which help replace damaged property or restore property to pre-disaster condition, and (2) Economic Injury Disaster Loans, which provide working capital to help small businesses survive until normal operations resume after a disaster. See table 1 for additional details of both types of disaster business loans.\nSBA has divided the disaster loan process into three steps: application, verification and loan processing, and closing, as shown in figure 1. This report focuses on step 1, the loan application process. Physical Disaster Loan applicants have 60 days and Economic Injury Disaster Loan applicants have 9 months from the date of disaster declaration to apply for a loan. Disaster victims may apply for a disaster business loan through the Electronic Loan Application online portal or by paper submission. The information from online and paper applications is loaded into SBA’s Disaster Credit Management System, which is the system SBA uses to process loan applications and make determinations for its disaster loan program.", "The Paperwork Reduction Act seeks to “ensure the greatest possible public benefit from and maximize the utility of information created, collected, maintained, used, shared, and disseminated by or for the Federal Government.” A collection of information, such as forms, includes a request for information from 10 or more persons to be submitted to the federal government. The act requires agencies to establish a process for evaluating and approving collections of information. The act created the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB) to perform all Paperwork Reduction Act functions. As part of the review process for a collection of information, OMB’s director must determine whether or not an agency’s proposed collection of information should be approved for public use. The director may approve a collection of information for a maximum of 3 years. Agencies are required to renew information collection forms before expiration to maintain a valid OMB control number.\nIn addition to the process requirement, the act includes broader requirements, including that agencies reduce information collection burdens on the public, ensure that the public has timely and equitable access to public information, and improve information technology practices to reduce burden.", "SBA’s disaster business loan application forms are examples of a collection of information, so each form must be approved by OMB. SBA requires all disaster victims in need of a disaster business loan to submit the applicable loan application forms. To apply for a loan, a disaster victim must complete the required disaster business loan application forms (see app. II) and relevant additional forms:\nSBA Form 5 – Disaster Business Loan Application; OMB Control Number 3245-0017; expiring on January 31, 2018 (see app. II, fig. 5).\nSBA Form 413D – Personal Financial Statement; OMB Control Number 3245-0188; expiring on January 31, 2018 (see app. II, fig. 6).\nSBA Form 1368 – Additional Filing Requirements Economic Injury Disaster Loan and Military Reservist Economic Injury Disaster Loan; OMB Control Number 3245-0017; expiring on January 31, 2018 (see app. II, fig. 7).\nSBA Form 159D – Fee Disclosure Form and Compensation Agreement; OMB Control Number 3245-0201; expiring on October 31, 2017 (see app. II, fig. 8).\nInternal Revenue Service (IRS) Form 4506-T – Request for Transcript of Tax Return; OMB Control Number 1545-1872; expiring on December 31, 2016 (see app. II, fig. 9).\nFigure 2 shows that, according to SBA, in fiscal year 2014 it took a disaster business loan applicant approximately 4.5 hours to complete all the relevant forms, including gathering required documentation such as the most recent tax return.", "", "Consistent with the Paperwork Reduction Act’s requirement that agencies establish a review process, SBA’s Records Management Division oversees SBA’s Paperwork Reduction Act Clearance Process, which is documented in a standard operating procedure (SOP). The Paperwork Reduction Act requires an agency to establish a process to evaluate an information collection. SBA’s 2006 Forms Management Program, SOP 00 30 3, provides written operating procedures for the agency’s Paperwork Reduction Act clearance process. Figure 3 shows the overall process. First, Records Management Division officials identify which SBA forms will expire in 6 months, determine the program office responsible for each form, and issue an expiration memorandum to the program office with a timeline to complete the Paperwork Reduction Act clearance process. The Records Management Division uses the Regulatory Information Service Center and Office of Information and Regulatory Affairs Consolidated Information System, OMB’s electronic system, to identify which collections of information, such as loan application forms, will expire in 6 months. Next, Records Management Division officials said they solicit public comments and coordinate with the relevant program offices as well as Office of General Counsel (OGC) and Office of Inspector General (OIG) to evaluate the information collection. After the internal reviews are completed, the Records Management Division submits the Paperwork Reduction Act submission package to OMB electronically and concurrently posts a 30-day Federal Register notice seeking public comment on the proposed collection of information.\nFollowing this comment period, OMB notifies SBA whether it has approved SBA’s Paperwork Reduction Act submission package and, if approved, provides the OMB control number and expiration date for the approved forms.\nSBA’s requirement that program offices complete and sign routing forms aligns with Paperwork Reduction Act requirements that the head of an agency certify that the information collection is necessary for the proper performance of the agency’s functions. The Records Management Division coordinates the program office reviews. For example, ODA oversees the renewal of Forms 5 and 1368. Two forms, OMB Form 83-I and SBA’s Form 58, document that program offices involved in the collection of information have reviewed and approved the Paperwork Reduction Act submission package. The first form is OMB Form 83-I, which is OMB’s Paperwork Reduction Act submission form that an agency uses to certify that it is in compliance with the Paperwork Reduction Act requirements by identifying the type and purpose of the collection information being submitted to OMB. Form 83-I also includes a supporting statement, which justifies the necessity of a collection of information and use of statistical methods to reduce burden, if applicable. The second form is SBA’s Form 58, which is SBA’s Record of Clearance and Approval that tracks the completion of SBA’s Paperwork Reduction Act Clearance Process. SBA program offices responsible for the renewal of the collection of information, such as ODA, complete these forms and document approval by the necessary SBA stakeholders.\nSBA’s requirement that OGC review and provide feedback on each Paperwork Reduction Act submission package before it is sent to OMB conforms to the act’s requirements for independent review of the information collection. The Paperwork Reduction Act requires an agency to establish an independent process that evaluates whether or not the Paperwork Reduction Act submission package meets the act’s requirements. SBA Form 58 allows the involved program offices and OGC to review the Paperwork Reduction Act submission package and verify its compliance with the act’s requirements. OGC officials stated that they review OMB Form 83-I, supporting statements, and applicable information collection instruments to ensure compliance with Paperwork Reduction Act requirements. OGC also determines whether recent statutory, regulatory, or other changes are reflected in the collection of information and described in the supporting statement document.\nOIG also reviews and comments on each Paperwork Reduction Act submission package before it is sent to OMB. According to OIG officials, their comments are intended to make the program stronger and address difficulties encountered in criminal, civil, or administrative matters that changes to the form could help avoid in the future. OIG officials said they also review for clarity and check for issues and deficiencies that OIG has identified in prior audits. OIG officials stated that they do not sign the SBA Form 58 to preserve their independence and not create a perception that the OIG endorses a program office’s document. According to SBA, the agency’s policy to have both OGC and OIG review and have OGC sign- off on a Paperwork Reduction Act submission package helps the agency not only to achieve its goal of getting OMB to approve the package prior to the expiration of a disaster business loan form, but also to identify and address risks or areas of noncompliance.", "Consistent with applicable federal internal controls, SBA has a monitoring system to identify and remedy deficiencies in the Paperwork Reduction Act clearance process. Federal internal control standards state that management should establish and operate activities to monitor controls and that management should also remediate identified internal control deficiencies on a timely basis. According to SBA officials, as part of its monitoring system, if a program office is nonresponsive or fails to meet the timelines outlined in its expiration memorandum, then the Records Management Division may elevate the issue to the Chief Operating Officer, who would contact the program office’s Associate or Assistant Administrator to address the matter. Records Management Division officials also said that they may obtain from OMB an extension of an expiration date so that a collection of information is not out of compliance with the Paperwork Reduction Act.\nWe found that SBA’s disaster business loan application forms generally include the required elements, such as having an OMB control number, valid expiration date, an estimate of how long it will take to complete the form, and a statement notifying applicants that they are not required to respond to the request for information if the form does not display a valid OMB control number. We also observed from a demonstration that the Electronic Loan Application disaster business loan application forms include the OMB control number, expiration date, and a disclaimer that if the OMB control number is missing, an applicant is not required to complete the forms.\nAlthough SBA’s disaster business loan forms generally are in compliance with these Paperwork Reduction Act requirements, we identified three instances of noncompliance. Consistent with OMB’s finding in its 2014 Information Collection Budget Report, we found an instance of noncompliance when SBA’s Form 159D – Fee Disclosure and Compensation Agreement was not submitted for OMB’s review prior to its expiration date. SBA was aware of this violation, and to address it, Records Management Division officials said that the program office responsible for Form 159D instituted personnel and operational changes, including weekly reviews of pending expirations, progress reports for renewals in progress, and designation of individuals accountable for Paperwork Reduction Act compliance. In addition, we found that SBA Form 159D – Fee Disclosure and Compensation Agreement did not have an expiration date and SBA Form 413D – Personal Financial Statement did not include a statement informing applicants that they do not have to complete a form that does not display a valid OMB control number. SBA officials corrected these forms in October 2016.\nSBA’s Records Management Division officials told us that it documents any deficiencies in a memorandum to the appropriate program office and directs that office to remedy the issue in consultation with other program offices, if necessary. Records Management Division officials also said that the program office resubmits the collection of information to the division. Records Management Division officials added that no standard time frames have been set for remediation because timing depends on when the deficiency is identified and the nature and complexity of the issue.\nIn addition to the Paperwork Reduction Act clearance process and the related monitoring system, SBA has feedback mechanisms in place. The federal internal control standards state that management should use quality information to achieve its objectives. SBA uses two survey instruments to solicit customer feedback from a sample of business loan applicants and recipients (see app. III). According to SBA officials, SBA uses the surveys, both administered by phone, to solicit input and suggestions for improvements. First, SBA contracts with a third-party group to administer the American Customer Satisfaction Index (ACSI) survey. Second, SBA’s Customer Service Center conducts its own customer satisfaction survey to solicit feedback from selected business loan applicants and recipients, including suggestions for improving the disaster loan process. One question from the Customer Service Center questionnaire asks, “Based on your experience with the SBA, do you have any suggestions for making the process easier?” According to SBA officials, the collected suggestions undergo multiple levels of consideration within SBA’s Continuous Improvement Process Board and ODA’s Associate Administrator decides whether to implement a recommendation. In addition to receiving suggestions from loan applicants, the Continuous Improvement Process Board receives suggestions from SBA employees.", "", "Recent and planned actions for the disaster loan program, described in SBA’s Fiscal Year 2015 Annual Performance Report, have focused on promoting disaster preparedness, streamlining the loan process, and enhancing online application capabilities (see table 2). According to the report, SBA’s objectives with respect to disaster assistance are to deploy its resources quickly, effectively, and efficiently in a manner that preserves jobs and helps small businesses return to operation. The actions SBA has taken or plans to implement are intended to achieve these objectives.\nMany of SBA’s recent and planned changes to the disaster loan program described in its 2015 performance report incorporate various leading practices intended to reduce paperwork burdens. We reviewed and identified leading practices from the Hurricane Sandy Rebuilding Task Force Report (2013), an OMB memorandum to agency heads (June 2012), and the Small Business Paperwork Relief Task Force Reports (2003, 2004). These materials note the following leading practices, among others:\nSeparating application tracks for business and home disaster loans: As we previously reported, SBA implemented separate tracks in October 2013.\nExpediting approval of loan applications that meet minimum credit score and other requirements: SBA revised its disaster loan program regulations in April 2014 so that SBA now may consider an applicant’s credit rather than business cash flow in assessing the applicant’s repayment ability.\nUsing electronic communication and “fillable fileable” forms: SBA introduced the online application capability in August 2008, where loan applicants can complete and submit forms online, and SBA is currently updating the system with more features.\nUsing “smart” electronic forms to assure data submitted meets information system requirements: SBA’s online application portal includes system checks that ensure information entries meet formatting requirements. The portal also provides notices specifying formatting requirements.\nFurther, SBA has reported that increased use of electronic loan applications has reduced errors and loan-processing times. SBA has a dedicated web portal for disaster loan assistance (available at https://disasterloan.sba.gov/ela/, see app. IV, fig. 12) where disaster victims can apply for a loan online and check on the status of a loan application. According to SBA officials, recent enhancements to the web portal include a feature that allows a loan applicant to check the status of an application, including the application’s relative place in the queue for loan processing. The web portal also includes a frequently asked questions page, phone and email contacts to SBA customer service, and links to other SBA information resources. An SBA official we interviewed explained that information from electronic applications is imported directly into the Disaster Credit Management System, instead of SBA staff manually entering information from paper applications into the system. As a result, SBA officials said, the agency has reduced the likelihood of errors in loan applications, reduced follow-up contacts with loan applicants, and expedited loan processing.", "", "SBA has published several written and electronic resources about the disaster loan process, but much of this information is not easily accessible to loan applicants and SBA’s resource partners from the disaster loan assistance web portal. Available resources include the following:\nThe disaster business loan application form (Form 5, see app. II, fig. 1) lists documents required for a loan application along with additional information that may be necessary for a decision on the application.\nSBA’s Fact Sheet for Businesses of All Sizes (see app. IV, fig. 13) provides information about disaster business loans, including estimated time frames, in a question-and-answer format. For example, the fact sheet answers questions concerning collateral requirements of disaster loans, information that must be submitted for a loan, and the amount of time an applicant might expect to wait before the application is approved or denied.\nThe 2015 Reference Guide to the SBA Disaster Loan Program and three-step process flier (see app. IV, fig. 14 and 15) set out the three steps of the loan process, required documents, and estimated time frames.\nSBA’s online Partner Training Portal provides disaster-loan-related information and resources for SBDCs (available at https://www.sba.gov/ptp/disaster; see app. IV, fig. 16). The training portal includes two videos—one explaining the disaster loan process and the other explaining the disaster assistance program—and three documents that provide information on disaster preparedness, types of disaster loans, and loan procedures.\nHowever, SBA has not effectively integrated these resources into its disaster loan assistance web portal, as much of this information is not easily accessible from the web portal’s launch page. The federal Guidelines for Improving Digital Services state that an agency should (i) integrate its digital presence into its overall customer experience strategies, and (ii) publish information in ways that make it easy to find, access, share, distribute, and repurpose. Additionally, the Paperwork Reduction Act has a broad requirement that an agency disseminate information in a manner that is efficient, effective, and economical. SBA’s web portal appears to serve as a one-stop shop where disaster victims can apply for and access more information about loans, among other things. However, when a user clicks on the “General Loan Information” link in the web portal, it routes the user back to SBA’s main website, and the web page featuring loan-related information contains a menu of additional links. In particular, and as shown in figure 4, to access the fact sheet, the reference guide, and the three-step process flier, a site user may click on three successive links and then select from a menu of 15 additional links. Among the latter group of 15 links, the link for Disaster Loan Fact Sheets contains further links to five separate fact sheets for various types of loans. Similarly, to access the reference guide or the three-step flier, the user must click on the Disaster Policies and Procedures link, which is 1 of 15 available link selections.\nIn addition, key disaster loan information resources are not integrated into SBA’s Partner Training Portal and SBDCs were unaware of key resources. As mentioned earlier, SBA’s performance reporting indicates that the agency shared the reference guide with resource partners. Most SBDCs we interviewed were aware that SBA was promoting online applications through the web portal and had assisted disaster victims in completing online applications. However, at least half of the SBDCs we interviewed were not aware of additional information resources. Among the eight SBDCs we interviewed, four SBDCs were not aware of SBA’s three-step process flier and five SBDCs were not aware of the Partner Training Portal. Additionally, the Partner Training Portal does not include the fact sheet, the reference guide, or the loan process flier. SBA officials said that SBDCs that have not experienced a declared disaster in recent years may not be aware of more recently developed information resources because those SBDCs would not have encountered the need for them. However, two of the four SBDCs we interviewed that were not aware of the three-step process flier experienced a disaster during or after 2014—which, according to SBA, was when the flier was created.\nAlthough SBA has created and posted key disaster loan information online, these efforts are not effectively integrated in a way that helps users efficiently find needed information following a disaster. According to SBA officials, SBA plans to incorporate updated information from the three-step process flier on the Electronic Loan Application, but it does not have a time frame for specific improvements. SBA officials also said that disaster-loan information and resources are not prominently located on SBA’s website because of the website’s layout and space constraints arising from the agency’s other programs and priorities. However, officials said that the website’s launch page includes a banner section that prominently features recent news, including information related to major disasters. But, SBA officials added that any information displayed on the banner is temporary. Absent better integration of disaster business loan- related resources into SBA’s web portal and streamlined access to business loan-related resources on SBA’s website and its Partner Training Portal, loan applicants—and SBDCs assisting disaster victims— may not be aware of key information for completing disaster business loan applications.", "The contents of SBA’s disaster-loan-related resources do not consistently feature key information about (1) the three-step loan process, (2) documentation requirements and reasons for requiring such information, and (3) estimated time frames for the loan process. Each resource includes some of the information; however, none of the resources provide all of the information and none include reasons or explanations for documentation requirements (see table 3).\nWe found that business loan applicants reported confusion to SBDCs about the overall loan process, required documentation, and time frames, and inconsistent information from SBA may have contributed to these issues. For example, according to SBDCs we interviewed as well as responses to SBA and the ACSI surveys, some business loan applicants found the loan process and required documentation confusing for the following reasons: Inconsistent information about loan application process. According to the SBA 2015 Performance Report, SBA uses a “three- step process” communications strategy to provide a consistent message to the public in promoting the disaster loan application process. However, as previously mentioned, not all SBA disaster- related resources include information about the three-step process and the consistency of information varies among information resources (see table 3). Moreover, three SBDCs told us that business loan applicants felt SBA did not clearly communicate parts of the process involved in applying for disaster business loans. For example, according to two of the three SBDCs, there were instances when applicants who applied to SBA for a disaster business loan were told to first register with the Federal Emergency Management Agency to obtain a disaster number. The SBDCs stated that the applicants were confused by directions from SBA indicating that such registration was required. Based on our follow-up with SBA officials, SBA encourages business loan applicants to also register with the Federal Emergency Management Agency, but it is not required. However, the Partner Training Portal’s Disaster Assistance Video conveys an inconsistent message and seems to suggest that a disaster victim must first register with the Federal Emergency Management Agency before applying for a disaster loan.\nUnexpected requests for additional documentation. One of the three SBDCs told us of instances where applicants thought they had provided all the required documentation, but received subsequent requests from SBA for additional documentation. In a 2014 report on disaster assistance, we found in interviews with SBDCs and local business organizations that SBA’s follow-up requests for additional documentation prolonged the application process and loan decision. Furthermore, we observed that although the paper application form includes a list of additional information that may be requested, the Electronic Loan Application does not include a list of other information an applicant may have to provide SBA in addition to the required forms. Also, as of August 2016, the Electronic Loan Application did not contain two disaster business loan forms: (1) SBA Form 159D – Fee Disclosure and Compensation, and (2) SBA Form 1368 – Additional Filing Requirements Economic Injury Disaster Loan, and Military Reservist Economic Injury Disaster Loan. According to SBA officials, SBA includes links to these two forms in follow-up letters sent to disaster business loan applicants after they submit their loan applications.\nLack of information about the reasons for required documents.\nAccording to responses from SBA’s survey of loan applicants provided by SBA, one survey respondent said that the loan process required too much information from applicants when SBA could access the same information elsewhere. The applicant cited that she should not have to locate copies of her tax return when SBA can use her signed tax transcript form to obtain tax information from the IRS. Further, according to one SBDC we interviewed, applicants it assisted did not understand why SBA requires applicants to submit both a current tax return and complete an IRS tax transcript authorization form. SBA officials said that tax transcripts do not provide all the information contained in a tax return. Therefore, they need information from transcripts and returns to make loan decisions. However, the reasons why are unclear to applicants because none of the available resources provide this explanation.\nConsistent with comments provided by SBDCs, the loan application process received the lowest satisfaction scores on the ACSI survey. According to the ACSI survey results for 2012 through 2015, the loan application process received business loan applicants’ and recipients’ lowest satisfaction scores of any SBA disaster loan program processes. The SBA Disaster Loan Program processes surveyed in the ACSI are application process, decision process, Customer Service Center, loan closing, inspection process, SBA staff, and recovery center. In response to questions about the application process, survey respondents were least satisfied with the “amount of paperwork required to complete the loan application” and “ease of attaining the information required to fill out the application.” Moreover, based on the survey results, ACSI recommended from 2012 to 2015 that SBA focus on improving the application process as a means of increasing business loan applicants’ and recipients’ satisfaction with the process.\nIn addition, SBDCs reported and surveys found that applicants’ expectations about the time frames associated with the entire process were unmet and available resources do not consistently inform applicants about expected time frames.\nUnmet expectations about time frame to apply for and receive loans. Two SBDCs we interviewed told us that business applicants commonly complained about how long it took to go through the loan process and that it took too long to receive their loans. Two other SBDCs suggested that SBA could provide more information about the loan process to better manage applicants’ expectations. Specifically, one SBDC suggested SBA could provide more information about estimated time frames. Another SBDC said some of the applicants the SBDC assisted expected a faster loan process, and many business owners may start a loan application but never complete the application because they cannot spare time away from their business to collect all the required documents and to complete the loan application forms. In addition, according to responses from SBA’s survey of loan applicants provided by SBA, one survey respondent suggested that the business loan process should require fewer and shorter application forms. Another respondent said that the business loan process is too complicated and too time-consuming, and the respondent withdrew the loan application as a result.\nInformation about time frames not included in all resources. The three-step process flier and the resource guide for businesses provide estimates of expected time frames for the processing and closing steps of the loan process. However, the Electronic Loan Application and some other resources do not provide an applicant with any estimated time frame of when the disaster business loan application will be processed. The Electronic Loan Application does provide the applicant with application status messages, such as “processing application.” See appendix V for application status messages and descriptions. According to SBA officials, SBA has updated its disaster forecasting model and planning documents that enable SBA to better estimate loan processing time frames based on the severity of a disaster, the volume of expected loan applications, and other factors.\nAccording to the ACSI survey results for 2012 through 2015, loan applicants and recipients surveyed consistently rated the loan decision process with the second-lowest satisfaction scores. In response to questions about the decision process, survey respondents were least satisfied with the “timeliness of the decision.” Based on the survey results, ACSI recommended from 2012-2015 that SBA focus on improving the loan decision process as a means of increasing applicants’ and recipients’ satisfaction with the process.\nThe Paperwork Reduction Act and OMB state that agencies should explain the collection and use of personal information and promote transparency with the public. In particular, the Paperwork Reduction Act has a broad requirement that an agency explains to the person receiving an information collection the reasons for collecting the information and the agency’s use of the collected information. Furthermore, according to OMB’s directive on open government, transparency promotes accountability by providing the public with information about government activities. However, SBA’s paper and online resources do not provide consistent information about the three-step loan process, required documents and reasons for the requirements, and processing time frames, which could be contributing to applicants’ confusion. According to SBA officials, SBA’s customer service representatives working in disaster areas provide applicants information about the loan process, including explaining the three-step loan process and estimated time frames for completing the process. SBA officials also added that they refer business applicants to SBDCs for additional assistance in completing disaster loan applications. However, as previously mentioned, we found that SBDCs were not always well informed about information resources that explained the disaster loan process. Further, business applicants who apply without seeking assistance from SBA or SBDCs may see only SBA’s fact sheet, reference guide, loan-process flier, or application forms. Absent more consistent disaster loan-related information in each of the agency- produced paper and online resources, loan applicants and SBDCs may not understand the disaster loan process, documentation requirements, and time frames and may continue to find the loan process confusing.", "Our SBDC interviews indicate that some business loan applicants are confused about the finance terminology and financial forms required in the application, particularly the requirement that they submit a personal financial statement. According to three SBDCs we interviewed, they mentioned instances where business applicants had difficulty understanding the parts of the loan application dealing with financial statements and finance terminology; for example, there were applicants who were not familiar with financial statements, did not know how to access information contained in a financial statement, and did not know how to create a financial statement. Although the loan forms include instructions, the instructions do not define the financial terminology. According to SBA officials, when applicants do not know how to create a personal financial statement, the agency’s customer service representatives direct applicants to SBDCs for help. Two of the three SBDCs said these difficulties arise among business owners who do not have formal education or training in finance or related disciplines—and who are attempting applications during high-stress periods following disasters.\nFederal statute requires agencies to use clear and understandable terminology. Specifically, the Plain Writing Act of 2010 requires that federal agencies use plain writing in every document that they issue. Plain writing is defined as clear, well-organized writing that follows best practices appropriate for the intended audience. According to SBA officials, although the agency does not provide a glossary that defines finance terminology in loan application forms, the online application portal has a “contextual help” feature that incorporates information from application forms’ instructions to help applicants complete disaster loan forms. Additionally, as previously stated, SBA officials said that there are other resources, such as SBA customer service representatives and local SBDCs, available to assist business loan applicants and to explain the loan forms and key terms. As mentioned earlier, promoting disaster preparedness among businesses is one of the strategies in SBA’s 2015 performance report and actions SBA has taken include holding disaster preparedness webinars and conducting regional outreach. However, these efforts may not offer sufficient assistance or reach all applicants. Without explanations of finance terminology, loan applicants may not fully understand the disaster business loan application requirements, which may contribute to confusion in completing the financial forms.", "Generally, lack of integration of resources into the disaster loan assistance web portal, inconsistent information in written and online resources, and undefined finance terminology on the loan application have contributed to the burden of businesses applying for disaster loans.\nIn particular, disaster business loan applicants and resource partners may not be aware of key information for completing disaster business loan applications because key resource materials such as SBA’s fact sheet, reference guide, and three-step process flier are not easily accessible from the web portal. In addition, without consistent information about the loan process, explanation of documentation requirements, and expected time frames in SBA’s resource materials, loan applicants and resource partners may continue to find the loan process confusing. Further, without defining financial terminology in loan forms some applicants may not fully understand the requirements of the application. A more integrated, consistent, and clear dissemination of information by SBA would help business disaster victims better access information about the disaster loan process, better understand the loan document requirements and expected time frames, and better understand the definition of loan terminology, thus helping to reduce victims’ burdens in recovering from disasters.", "We are recommending the following three actions: To help business disaster victims and resource partners better access information about the disaster loan process, the Administrator of the Small Business Administration should integrate information resources such as the fact sheet, reference guide, and three-step process flier into its disaster loan assistance web portal and Partner Training Portal in a way that is more accessible to users.\nTo help reduce confusion about the disaster loan process and the time frames applicants may experience, the Administrator of the Small Business Administration should ensure the consistency of content across its disaster loan process resources by including in these written and online resources, as appropriate, the following: (1) the three-step process; (2) the types of documentation SBA may request and the general reasons why such information may be requested; and (3) estimates of loan processing time frames applicants might experience and external factors, such as the severity of a disaster, that may affect these time frames using, for example, estimates from its forecasting and related planning tools.\nTo further assist disaster business loan applicants, the Administrator of the Small Business Administration should define technical terminology related to financial statements and other finance terminology on the disaster business loan application forms, in both electronic and paper format. For example, in the online application portal, SBA could incorporate a glossary in the “help” feature. Additionally, SBA could include a glossary in the paper application, so that business applicants who apply by mail can access the definitions as well as the general reasons why such information may be requested.", "We provided a draft of this report to SBA for review and comment. The SBA liaison—Program Manager, Office of Congressional and Legislative Affairs—stated in an e-mail that SBA’s Office of Disaster Assistance agreed with our recommendations. The SBA liaison also provided technical comments in an e-mail, which we incorporated where appropriate.\nWe are sending copies of this report to appropriate committees and the Administrator of SBA. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8678 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI.", "The Recovery Improvements for Small Entities After Disaster Act of 2015 includes a provision for us to evaluate the steps that the Small Business Administration (SBA) has taken to comply with the Paperwork Reduction Act of 1995 in administering its Disaster Loan Program. Specifically, this report examines (1) controls in SBA’s process for complying with the form renewal requirements of the Paperwork Reduction Act in administering its Disaster Loan Program, and (2) SBA’s recent and planned actions to reduce the burden of business loan applicants for the Disaster Loan Program. Although the processes we are evaluating apply to disaster loans for homeowners and businesses, this report focuses on disaster business loans for businesses. Additionally, SBA has divided the disaster loan process into three steps: application, verification and loan processing, and closing (see fig. 1). This report focuses on step 1, the loan application process.\nTo examine the extent to which SBA has processes to implement and monitor compliance with the Paperwork Reduction Act’s requirements in administering its Disaster Loan Program and the effectiveness of the processes and controls in ensuring the requirements are met, we reviewed the act and Office of Management and Budget (OMB) regulations to identify relevant requirements. We also reviewed SBA’s policies and procedures, including the Forms Management Standard Operating Procedures, to identify its processes for meeting Paperwork Reduction Act requirements, and we assessed the processes against the act and applicable federal internal controls. We also interviewed SBA officials to understand SBA’s compliance with the act’s requirements and the effectiveness of SBA’s controls.\nAdditionally, we reviewed each disaster business loan form to determine if SBA’s disaster business loan application forms satisfied the Paperwork Reduction Act requirements of having an OMB control number; valid expiration date; an estimate of how long it will take to complete the form; and a statement notifying applicants that if a form does not display a valid OMB control number then applicants do not have to complete that form.\nSpecifically, we reviewed SBA Form 5 – Disaster Business Loan Application; SBA Form 159D – Fee Disclosure Form and Compensation Agreement; SBA Form 1368 – Additional Filing Requirements Economic Injury Disaster Loan, and Military Reservist Economic Injury Disaster Loan; and SBA Form 413D – Personal Financial Statement. For each form, we also reviewed the form renewal package—OMB Form 83-I; OMB Form 83-I supporting statement; and SBA Form 58—for SBA Form 5, Form 1368, and Form 413D, for years 2008, 2011, and 2014; and for SBA Form 159D, for years 2009, 2013, and 2014. For information on how an applicant would navigate the Electronic Loan Application portal to submit a disaster business loan application, we received an in-person demonstration of the Electronic Loan Application portal at SBA’s headquarters.\nTo examine the extent to which SBA has developed plans or implemented actions to further reduce the paperwork burden of disaster business loan applicants, we reviewed SBA’s 2015 Performance Report and other SBA documentation that set out recent and planned actions intended to reduce burden or enhance loan processes for disaster business loan applicants. Moreover, we reviewed and identified leading practices intended to reduce paperwork burdens from the Hurricane Sandy Rebuilding Task Force Report (2013), an OMB memorandum to agency heads (June 2012), and the Small Business Paperwork Relief Task Force Reports (2003, 2004). We also interviewed Office of Disaster Assistance officials responsible for administering the Disaster Loan Program to discuss recent and planned actions to reduce the paperwork burden on disaster business loan applicants.\nIn addition, we conducted semi-structured interviews with Small Business Development Centers (SBDC) to identify burdens faced by disaster loan applicants and suggestions to improve such issues. We selected a nongeneralizable sample of eight SBDCs to interview, based on which counties in each of the four Census regions had the highest number of approved disaster business loans for calendar years 2012 through April 1, 2016. Specifically, we associated each state within SBA’s 10 regions with one of the four Census regions—Northeast, Midwest, South, and West—which allowed us to have geographic diversity in the SBDCs we interviewed. Within each Census region, we identified two counties with the highest number of approved disaster business loans. In cases where more than one county tied for the highest number of approved disaster business loans, the county with the highest loan amount disbursed was selected. In instances where a county had the two highest number of loan approvals, the county with the third highest number of approved disaster business loans was selected. To select the eight SBDCs to interview, we used the city and zip code of the counties with the highest number of approved disaster business loans to identify the SBDCs located either within or nearby these counties. If a county with the highest number of approved disaster business loans did not have an SBDC located within it, we then selected the SBDC closest to the zip code receiving the highest number of disaster business loan approvals. If a county had multiple SBDCs located within it, we then looked at the zip code affected by the disaster in the county and selected the SBDC closest to the zip code receiving the highest number of disaster business loan approvals. Our selections do not represent the views of other SBDCs that were not included.\nWe also reviewed both SBA’s and the American Customer Satisfaction Index’s (ACSI) customer satisfaction survey results. For analysis of SBA’s customer satisfaction survey results, we obtained survey suggestions submitted by disaster business loan applicants from June 2012 to March 2015. We selected this time period to be consistent with the time period used in the selection of SBDCs. The results comprised a list of 19 survey suggestions submitted by disaster business loan applicants and referred to the Continuous Improvement Process Board for review. For analysis of ACSI’s customer satisfaction survey results, we looked at ACSI’s 2012 through 2015 reports and identified the loan process areas that negatively and positively affected survey respondent’s satisfaction with SBA’s disaster business loan program and ACSI’s identified recommendations for improvements. We determined that these data were sufficiently reliable for the purpose of describing applicants’ experiences with the disaster business loan application process.\nWe conducted this performance audit from February 2016 to November 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "", "", "", "In addition to the contact named above, Jill Naamane (Assistant Director), Kun-Fang Lee (Analyst-in-Charge), Bethany Benitez, Tim Bober, William R. Chatlos, Camille Henley, Lindsay Maple, Marc Molino, and Tovah Rom made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 3, 3, 3, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "", "h2_full", "h2_full", "h0_title", "h0_full", "h0_full", "h1_title", "h1_full", "h1_title", "h1_full", "h1_full", "h1_full", "h1_full", "h1_full", "", "h0_full h2_full", "", "", "", "", "", "", "" ] }

{ "question": [ "How does the SBA reinforce compliance with the PRA?", "What steps does this process include?", "What steps has the SBA taken to improve this process?", "What is the SBA's record regarding the disaster business loan process?", "How do loan recipients typically access this materials?", "How do SBA's materials fail to help loan applicants?", "What do PRA guidelines state in regards to promoting transparency?", "How does the SBA fail to meet these guidelines?", "How would meeting these guidelines likely benefit SBA and business disaster victims?", "What volume of disaster business loan applications does the SBA receive?", "How does PRA seek to ease disaster victims' burden?", "What does the Recovery Improvements for Small Entities After Disaster Act of 2015 ask of GAO?", "How does this report accomplish that goal?" ], "summary": [ "The Small Business Administration (SBA) process for complying with the Paperwork Reduction Act (PRA) includes a number of controls to help disaster business loan forms comply with the act and Office of Management and Budget (OMB) requirements (see figure).", "For example, SBA has a standard operating procedure that documents its clearance process; a requirement to solicit public comments; and a requirement that offices of Disaster Assistance, General Counsel, and Inspector General review submission packages for PRA clearance.", "SBA surveys business loan applicants to solicit suggestions for improving the loan process. The disaster business loan forms also include a valid OMB control number, as required by PRA.", "SBA has implemented and planned actions to streamline the disaster business loan process, but the agency has not made loan-related information and requirements easily accessible or consistent, or defined key terms, contributing to applicants' burden. SBA's 2015 Performance Report set out the agency's recent and planned actions, including streamlining the loan process and enhancing online loan application capabilities.", "SBA has published written and electronic materials about the disaster loan process, but applicants cannot easily access these materials from SBA's dedicated disaster loan web portal, contrary to federal guidelines for improving digital services.", "Also, SBA's materials provide inconsistent information on the process, required documents, and estimated processing time frames. Business loan applicants reported that they found the documentation requirements confusing and the application time frames unclear.", "PRA and an OMB directive on open government generally state that agencies should explain the collection and use of information and promote transparency by providing the public with information about government activities.", "Similarly, some Small Business Development Centers told GAO that loan applicants have expressed confusion over undefined financial terminology in SBA's loan application, particularly terminology in the required personal financial statement.", "Federal law requires agencies' forms be written using plain language that is appropriate for the intended audience. Improved integration of electronic resources and consistency of information in SBA's materials would help business disaster victims better access resources and understand the disaster loan process and expected time frames. Further, providing definitions of loan terminology can help reduce victims' confusion.", "According to SBA, the agency received more than 40,000 disaster business loan applications from fiscal years 2010 through 2014, and estimates that applicants spent on average a total of more than 25,000 hours per year filling out disaster loan application forms.", "PRA requires agencies to minimize paperwork burden on individuals and small businesses.", "The Recovery Improvements for Small Entities After Disaster Act of 2015 includes a provision for GAO to evaluate SBA's compliance with PRA.", "This report examines (1) controls in SBA's process for complying with PRA form renewal requirements in administering its disaster business loans, and (2) SBA's recent and planned actions to reduce burden for business loan applicants." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 0, -1, 3, 3, -1, 0, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 3, 3, 3, 3, 3, 3, 0, 0, 0, 0 ] }

{ "title": [ "", "Background", "Changes Undertaken in Response to 9/11", "The Information Sharing Environment", "Limitations and Risks of Information Sharing", "Detroit Bomb Attempt", "Fort Hood Shooting", "WikiLeaks", "Conclusion" ], "paragraphs": [ "", "At the heart of the intelligence effort lies a paradox. Intelligence is valuable only if it can be shared with consumers who need it, but, to the extent that it is more widely shared, risks of compromise are enhanced. The necessary goal is to find the best balance between adequate sharing and effective information security. The current Director of National Intelligence (DNI), James R. Clapper, has referred to the need to find the \"sweet spot\" between sharing and protecting information.\nOn a daily basis, professional intelligence officers attempt to find the \"sweet spot.\" Compromising secrecy can result in the loss of a source but restricting dissemination of information too narrowly may mean that it does not reach those who need it. The basic approach taken by the U.S. Government has been focused on establishing \"need-to-know.\" Sensitive information is made available only to those persons with appropriate clearances and a \"need-to-know\" that information for the performance of their duties. The complex systems for handling classified information, especially intelligence information, require careful background investigations of persons with access to classified information, approval by their agencies, and determinations that specific individuals or offices need to use specific classified information.\nThe contemporary U.S. Intelligence Community with its sixteen agencies is very large. The Defense Intelligence Agency (DIA) alone is said to have over 16,000 employees and the National Security Agency (NSA), the Central Intelligence Agency (CIA), the National Reconnaissance Office (NRO), and the National Geospatial-Intelligence Agency (NGA) also employ thousands of individuals and contractors. Thousands more work for the intelligence organizations of the four military services.\nIn many agencies an organizational culture has evolved over time that encourages a deep commitment to the agency's mission and emphasizes support to a limited number of clients. The CIA and the State Department's Bureau of Intelligence and Research (INR) focus on cabinet officials and the National Security Council (NSC) staff. Agencies in the Department of Defense (DOD) naturally focus on supporting the work of the Pentagon and the operating forces, especially those engaged in combat. In addition to the challenges involved in keeping information secure, organizational cultures and close ties to specific consumers have, however, the potential to discourage sharing information with other agencies. Some observers of bureaucratic practice have perceived a tendency for agencies to restrict dissemination of information that might provide leverage in the decisionmaking process.\nIn the aftermath of the 9/11 attacks in 2001, a consensus emerged that information sharing, especially between intelligence offices and law enforcement officials had been deficient and had contributed to the failure to detect the plot in advance. The U.S. Intelligence Community, now concentrating on the counterterrorism mission, moved to ensure that information with any potential relevance was shared with counterterrorism analysts throughout the Federal Government. (To a much greater extent than in other areas of intelligence concern, couterterrorism requires that bits of information from widely disparate sources be pieced together in a coherent pattern.)\nThe consensus in supporting intelligence information sharing persists. At the confirmation hearing for General Clapper as DNI in July 2010, Senator Dianne Feinstein, the Chairman of the Senate Select Committee on Intelligence (SSCI), advised the nominee that \"Every day of every week, month by month, the DNI must assure coordination between intelligence agencies to eliminate duplication and improve information sharing.\" In April 2011, President Barack Obama explained his nomination of General David Petraeus to serve as Director of the Central Intelligence Agency: \"he understands that staying a step ahead of nimble adversaries requires sharing and coordinating intelligence.\"\nBetter information sharing throughout the Federal Government and especially among the agencies of the Intelligence Community has become a priority for both the Executive Branch and Congress. In the aftermath of 9/11, major legislation included significant provisions to encourage and, in some cases, mandate greater sharing of information and these provisions have been implemented by both the Bush and Obama Administrations.", "Investigations of the September 11, 2001 attacks by the two congressional intelligence committees and the 9/11 Commission (the National Commission on Terrorist Attacks Upon the United States) concluded that a central obstacle to acquiring advance information on the plot was the inability to bring together all information that had been acquired about the plotters—there were many clues but they were retained in the files of different agencies. To some extent, information was not shared because of bureaucratic inertia, but in others efforts by determined analysts were quashed by officials determined to ensure that the \"wall\" between law enforcement and intelligence entities was not breached.\nHistorically, the Federal Government has taken two complementary approaches to this paradox—intelligence information is provided only to those who have appropriate clearances, i.e. , they have had background investigations and been judged to be loyal, trustworthy, and capable of safeguarding classified information. Having a clearance is not, of course, sufficient to gain access to sensitive information; there must also be a \"need-to-know,\" i.e. the individual must have a work-related requirement for access to the information not just generalized curiosity. In theory everyone obtaining access to a given piece of classified information has (a) a clearance indicating that he or she is loyal and trustworthy and (b) a need for the information to perform his or her professional responsibilities. In actuality, of course, as with any human system, there can be mistakes. The number of genuine \"secret agents,\" foreign agents who have been successfully deceptive during their background investigations are very few but not non-existent. Much more numerous are individuals who can be bribed or who become disenchanted with their supervisors, or with a current U.S. policy, and proceed to illegally provide classified information to foreign governments or organizations. Also very damaging are individuals (or whole organizations) that become careless in handling classified information.\nEven as information sharing was being made a statutory imperative, it was widely understood that any effort to share more information among intelligence agencies increased the risks of information being stolen or compromised. Various types of technical approaches were identified to maintain the security of shared information. Considerable attention to these approaches was reflected in the 2003 report of the Markle Foundation's Task Force on National Security in the Information Age which has had an important influence on approaches to information sharing issues. The Task Force maintained that\nThere are no smart cards or tokens that cannot be cracked, biometrics are not 100 percent reliable, and high-quality passwords are difficult to remember, manage, and enforce. With all of these technologies there are also people and process issues (such as enrollment procedures and audit trails) that can undermine their integrity. Therefore, a multifactored system is a preferable approach. Multifactor authentication typically combines a password with a token or smart cart and can include other forms of authentication including biometrics, challenge codes and questions, and profile access matching. Authentication is strongest when a part of the information resides with the user, a part with the token or smart card, and a part in the network. Credit card companies, good users of multifactor authentication, rely on tokens (credit cards), passwords (PIN), challenge questions (\"What's your mother's maiden name?), and profile matching (\"Is this a typical charge for this individual?\").\nCounterterrorism requires wide varieties of disparate types of information, e.g. visa applications, flight manifests, ties to hostile organizations, conversations with known terrorists, efforts to obtain restricted materials, etc. In counterterrorism and other intelligence missions the intelligence analyst may be involved in piecing together stray bits of information. This greatly complicates establishing need-to-know standards. The WMD Commission argued:\nIf rigidly applied, the 'need-to-know rule is incompatible with a networked environment. In a networked environment, providers of information cannot know for sure when a user 'needs' a particular piece of information. Instead . . . users of this service must be given access to all information broadly available on the network within the clearance levels of the individual user, and consistent with applicable privacy and civil liberties guidelines.\nAs the Bush Administration's 2007 National Strategy for Information Sharing stated:\nInformation acquired for one purpose, or under one set of authorities, might provide unique insights when combined, in accordance with applicable law, with seemingly unrelated information from other sources, and therefore we must foster a culture of awareness in which people at all levels of government remain cognizant of the functions and needs of others and use knowledge and information from all sources to support counterterrorism efforts.\nA particular complication of using information sharing to support counterterrorism efforts is the difficulty in maintaining separate procedures for handling information regarding U.S. persons. Many types of information including phone or email traffic may involve U.S. persons even if the particular target is a foreign national. Congress and the executive branch continue to address these and related issues in regard to provisions of the Foreign Intelligence Surveillance Act (FISA) and related legislation.\nInformation sharing has proven to be essential for the counterterrorism mission and it is likely to be vital in other areas such as cybersecurity and in counterintelligence efforts aimed at preventing foreign exploitation of sensitive U.S. defense technologies. Other missions, such as gathering intelligence on the military plans and capabilities of foreign countries, may require less information from law enforcement agencies.\nA major result of the 9/11 investigations was the USA Patriot Act ( P.L. 107-56 ) and other legislation that removed most of the \"wall.\" Subsequently, the Justice Department modified the Federal Rules of Criminal Procedure to permit release of information relating to counterintelligence or foreign intelligence from grand jury investigations to other government agencies with strict protections against misuse.\nIt was recognized, however, that removing restrictions on information sharing was by itself inadequate; there was a need to establish an organizational structure to ensure that information sharing was not just legally possibly but institutionalized in routine agency practice. The Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 ) established the position of the DNI with statutory authorities to foster information sharing. Specifically, the legislation provided that the DNI:\nShall have principal authority to ensure maximum availability of and access to intelligence information within the intelligence community consistent with national security requirements.\nFurther, the DNI shall:\n(A) establish uniform security standards and procedures;\n(B) establish common information technology standards; protocols, and interfaces;\n(C) ensure development of information technology systems that include multi-level security and intelligence integration capabilities;\n(D) establish policies and procedures to resolve conflicts between the need to share intelligence information and the need to protect intelligence sources and methods;\n(E) develop an enterprise architecture for the intelligence community and ensure that elements of the intelligence community comply with such architecture; and\n(F) have procurement approval authority over all enterprise architecture-related information technology items funded in the National Intelligence Program.\nThe National Counterterrorism Center (NCTC) was also established within the Office of the DNI with specific statutory authorities providing access to all information relevant to terrorist plots. NCTC analysts make use of data from all intelligence and law enforcement agencies as part of its counterterrorism responsibilities.\nIn addition, the Bush Administration published Executive Order 13388 on October 25, 2005 that mandated sharing of terrorist information and established an Information Sharing Council chaired by the Information Sharing Environment Program Manager and composed of representatives from major agencies with counterterrorism responsibilities. In October 2007 a National Strategy for Information Sharing described and provided guidance on information sharing at the Federal, state, local and tribal levels and with the private sector and foreign partners.", "The President was also directed by the Intelligence Reform and Terrorism Prevention Act to establish an Information Sharing Environment (ISE) to facilitate the sharing of information relating to terrorism among all Federal agencies and state, local and tribal entities. The ISE, with a very small staff, is not focused solely on intelligence agencies, but works to establish consistent policy guidelines and technologies across five major communities—defense, intelligence, homeland security, foreign affairs, and law enforcement. It also reaches out to other agencies in the Federal Government and to state, local and tribal entities that are concerned with security issues.\nThe Act established the position of ISE Program Manager who prepares plans to improve information sharing and monitor implementation. The ISE extends beyond the Intelligence Community; indeed, it was designed to include State, local, and tribal entities and the private sector by providing policy guidelines and technological standards. The current ISE Program Manager, Kshemendra Paul, explained the role of his office in March 2011 testimony by use of a highway construction analogy: \"[W]e are not pouring the concrete—rather, we are providing leadership and coordination of a complex set of factors that make the highway safe and navigable: governance and engagement, strategy and policy alignment, business process harmonization, guidelines, standards, and architecture. This leadership and coordination enables our mission partners—the general contractors building and managing the day-to-day operation of the highways—to build to common specifications.\" The goal has been to\nnormalize federal security practices and risk management methodologies to foster acceptance government-wide. That acceptance then leads to 'reciprocity' between agencies, i.e., recognition that each organization's protection processes and systems are trusted to perform securely and predictably.\nAs ISE Program Manager, Mr. Paul does not control information sharing among agencies but rather his office issues \"government-wide procedures, guidelines, instructions, and functional standards, as appropriate, for the management, development, and proper operation of the ISE.\"\nSeparate from the ISE is the Intelligence Community Information Sharing Executive (IC ISE) whose responsibilities extend only to intelligence agencies. Under the direction of the DNI, the IC ISE prepares plans for encouraging information sharing among intelligence agencies and monitors their implementation with periodic progress reports to the DNI. In March 2011 testimony the IC ISE, Corin R. Stone, described the three-pronged IC ISE strategy for maintaining the security of information within the context of information sharing:\nThe first is ACCESS: ensuring that the right people can discover and access the networks and information they need to perform their duties, but not to information that they do not need. This is a complex matter that is centered on the principle of determining \"Need to Know.\" The second element is TECHNICAL PROTECTION: technically limiting the ability to misappropriate, manipulate, or transfer data, especially in large quantities, such as by disabling or prohibiting the use of removable media on classified networks, including thumb drives and CDs. The third area is AUDITING and MONITORING: taking actions to give the IC day-to-day confidence that the information access granted to our personnel is being properly used. This involves monitoring and auditing use activity on classified computer systems to identify anomalous activity, and following up accordingly.\nThe IC ISE is working to provide end-to-end management technology; it is implementing user authentication by the first quarter of FY2012. During FY2012, there are plans to leverage an Enterprise Audit Framework to enhance the sharing of audit data across the Intelligence Community. From the testimony it was unclear, however, how much of this effort involves the ISE establishing technical standards and procedures and how much it involves the acquisition of new systems and their deployment.\nInformation sharing has become a central mission for intelligence agencies. In addition to statutory mandates in the Intelligence Reform Act of 2004 and other legislation, the DNI issued Intelligence Community Directive 501 , Discovery and Dissemination or Retrieval of Information within the Intelligence Community, on the last day of the G.W. Bush Administration. This Directive requires (section D.1) that \"IC elements shall treat information collected and analysis produced as national assets and, as such, shall act as stewards of information who have a predominant 'responsibility to provide.'\" The Directive adds, (in section D.2.(b.)): \"'Stewards' . . . shall fulfill their 'responsibility to provide' by making all information collected and analysis produced by an IC element available for discovery by automated means by authorized IC personnel, unless otherwise determined by the DNI.\" Those who are authorized, according to section D.3., \"have a 'responsibility to discover' information believed to have the potential to contribute to their assigned mission need.\" These policy documents and repeated statements by senior intelligence officials have made it quite clear that the formal framework of intelligence collection and analysis is now built around the imperative of sharing information.\nCongressional backing for information sharing within the Intelligence Community appears solid. In addition to the comments by Senator Feinstein noted above, Representative Mike Rogers, the Chairman of the House Permanent Select Committee on Intelligence (HPSCI), has been a strong proponent of integrating information across the Community. Support for sharing has not just been verbal; section 402 of the Intelligence Authorization Act for FY2010, P.L. 111-259 , enacted October 7, 2010 provided the DNI authority to transfer funds to non–intelligence agencies that maintain systems to store and disseminate intelligence information.\nAt the same time there are efforts to better protect the security of shared information. In March 2011, DNI James Clapper signed Intelligence Community Directive 502, Integrated Defense of the Intelligence Community Information Environment. This directive mandates the development and implementation of an Intelligence Community-wide approach to defending the intelligence information environment. A concept of operations is to be developed and issued later in 2011 and will establish standards for all intelligence agencies.\nThe FY2011 Intelligence Authorization bill, H.R. 754 , that has been passed by both chambers, includes a provision (section 402) that mandates an effective automated insider threat detection program to be established by October 2013. The report accompanying the Senate version of the bill ( S. 719 ) does not provide details of the program but the use of the term \"automated\" suggests capabilities to ensure that data is not downloaded or transmitted without authorization, and that a record of transmissions be maintained.", "Intelligence sharing has contributed to a number of significant successes. Often mentioned is the arrest of Najibullah Zazi before he could successfully detonate explosives in the New York City subway in 2009 along with a number of other plots planned to occur in the U.S. and against U.S. interests abroad. Most recently, the successful attack on Osama Bin Laden in May 2011 has been officially credited to cooperation among the CIA, NSA, and NGA in particular.\nHowever, despite the best efforts—and significant successes—of the Intelligence Community in recent years in identifying terrorist plots and providing solid intelligence to policymaking agencies and to military forces fighting in two wars, several important cases suggest that significant impediments to information sharing have persisted. On the other hand, sharing of information led to unauthorized disclosures on the Internet and in the media that have reportedly jeopardized intelligence sources and undermined U.S. diplomacy.", "One significant lapse was the so-called Christmas bombing of December 2009 in which a Nigerian man, Umar Farouk Abdulmutallab, attempted to detonate an explosive on a plane approaching Detroit. The attempt failed because of action by passengers and crew but many questioned why the individual had been allowed to board the aircraft. Concerns grew when it was revealed that the bomber's father had actually warned U.S. embassy officers in Nigeria that his son may have become radicalized. A report by the Senate intelligence committee concluded that there were various failures to sharing information. \"The inconsistencies in distributing key intelligence reports may have contributed to the failure of the Intelligence Community to identify Abdulmutallab as a potential threat. While there was no intent to limit access to the reports, processes failed to disseminate relevant intelligence to all offices and individuals with a need to know.\" In particular, reporting was not disseminated to all appropriate CIA elements, some reporting was not disseminated until after the attempted attack, some FBI counterterrorism analysts could not access all relevant reports, and analysts at the National Counterterrorism Center did not connect \"key intelligence reporting with the other relevant reporting.\" President Obama described it as \"a failure to connect the dots of intelligence that existed across our intelligence community and which, together, could have revealed that Abdulmutallab was planning an attack.\" In additional views to the Senate Report, Senators Saxby Chambliss and Richard Burr targeted technological issues:\n. . .technology across the Intelligence Community still is not adequate to provide search enhancing tools for analysts. Several of the intelligence analysts involved in the Abdulmutallab case said that they were unable to link together the various reports on Abdulmutallab due to the struggle to balance searching the large volume of terrorism-related intelligence available with their daily workloads. The large number of intelligence databases compounded this problem by forcing some analysts and collectors to search multiple databases. NCTC officials told Committee staff that NCTC does not have the technical ability to follow or process all leads. Rather, NCTC is dependent on its personnel to conduct complex searches in multiple intelligence databases and to rely on the memory and knowledge of those analysts to link intelligence. CIA has similar problems with its main all-source counterterrorism database. This remains a problem today.", "In another incident, Army Major Nidal Hasan, was accused of shooting some 45 servicemembers at Ft. Hood, Texas on November 5, 2009, of whom 12 died in addition to one civilian. An investigation by the Senate Homeland Security and Governmental Affairs Committee concluded. that information about his contacts with foreign terrorists had not been appropriately shared. The committee report found that:\nthe FBI and DOD failed to recognize and to link the information they possessed even though they had advantages with respect to Hasan as compared to other lone wolves: (1) Hasan was a military officer who lived under a regimented system with strict officership and security standards, and (2) the government had learned of communications from Hasan to the subject of an unrelated FBI terrorism investigation [REDACTED].\nSenators Lieberman and Collins further underscored the reason for information sharing: \"As has been proven time and again in the intelligence context, information that may not appear troubling to one analyst may complete the puzzle for another analyst who has a different perspective or access to other information.\"\nTheir report criticized in particular the role of the FBI's Joint Terrorism Task Forces (JTTFs) for failing to ensure that analysts could access all available information. It was unclear to the Committee if officials \"detailed\" to JTTFs from agencies outside of the FBI were serving as representatives of their home agencies or as part of the JTTF analytical team. The committee noted a tendency not to share FBI information with the detailees. \"As revealed in the Hasan case and reinforced by other evidence, detailees to JTTFs have often lacked adequate access to databases and training but paradoxically are relied upon to lead JTTF investigations.\" Further, the FBI itself had problems with finding relevant information.\nThe report points out that the FBI could not easily link Hasan's initial communications with the Suspected Terrorist to his later communications, and the failure to do so was a factor in the government not intervening against Hasan before the attack, and the FBI should have identified and remedied its inability to link his communications together prior to the attack.", "In addition to other factors, the Detroit bomb attempt and the Fort Hood shooting resulted from failures to share available information, to analyze disparate pieces of intelligence, and provide notice to responsible officials in a timely manner. On the other hand, the WikiLeaks disclosures that began in 2010, have drawn considerable attention to the risks that widespread information sharing entails. One U.S. soldier in Iraq was reportedly able to download many thousands of State Department cables and transfer them to unauthorized recipients who published them on the Internet and in a number of newspapers. Most of the messages disseminated to the media were not from intelligence agencies and damage to U.S. intelligence efforts has not been publicly addressed. According to congressional testimony by DOD officials in March 2011, forward deployed units had access to a network (the Secret internet Protocol Router Network (SIPRNet)) that has between 400,000 and 500,000 DOD users. As DOD officials testified, \"The expanded use of computer networks has also increased the opportunity for even a single authorized user to access, copy, manipulate, download, and intentionally publicize enormous amounts of information from the interconnected databases of interconnected agencies.\" State Department representatives at the hearing indicated that the practice of making diplomatic cables available on SIPRNet has ended.\nThe WikiLeaks incident reflects a number of concerns that affect intelligence information sharing. First, there are inevitably communications personnel and message handlers who are in a position to do serious damage. Secondly, widespread use of computer databases increases the number of individuals with access as well as the number of documents that are accessible. Furthermore, intelligence officials have to be aware that once information is made available to bloggers or journalists, with a number of exceptions, there are very few legal restraints on their ability to make it public on the Internet or in the media.\nIn the wake of WikiLeaks and other disclosures of classified information some observers may call into question the advisability of greater and more routine information sharing among intelligence agencies. Indeed, as Representative Rogers, the HPSCI Chairman, has commented: \"Need-to-know is an important provision when you are trying to do some operation to keep us safer. But need-to-share got us into trouble with WikiLeaks and with other leaks.\" Mass leaks of documents that reveal the names of U.S. contacts in foreign countries and foreign governments, including their intelligence services could result in severe repercussions and even death for individuals who have attempted to assist the U.S. Observers also believe that public revelations about U.S. successes in monitoring foreign communications channels would lead to their discontinuance. There is, some observers suggest, a reasonable likelihood that greater restrictions on dissemination of sensitive intelligence lowers the chances for leaks and compromises.", "There are a number of technical approaches to reducing opportunities for unauthorized sharing of information. Computers can be configured to prevent downloading of large document files. Computers can also be programmed to make any downloads identifiable by date, time and individual. According to media accounts some of these features have been available on government systems but were not activated. Congress may choose to determine if these reports are accurate and if changes currently being planned by the Intelligence Community have been instituted. In calling for legislation to address the dangers of unauthorized information sharing, HPSCI Chairman Rogers emphasized the need for \"smart access,\" which is \"an identity-based information security management system that improves our ability to detect and deter the few bad actors, and not unnecessarily punish responsible actors by denying them access to the sensitive information they need to get their work done.\"\nCongress may wish to review the Information Sharing Environment to ensure that there are proper boundaries to intelligence information sharing and that appropriate metrics are established to assist in determining what information must be limited to a very narrow set of consumers. As noted above, however, it may be very difficult, given the requirements of counterterrorism, to know in advance what information a counterterrorism analyst will \"need to know.\" Although these analysts will need to be able to draw on a multiplicity of databases, observers suggest that there are ways to categorize information according to especially sensitive programs and all agree that not every analyst needs to be able to see every piece of information. An oft-cited concern is the tendency to over-classify documents which adds to administrative burdens and undermines respect for the classification process.\nIt is possible to limit dissemination of especially sensitive information, whether it is sensitive because of the nature of its contents or because it was acquired from an especially sensitive source. It is also possible to prevent the downloading and reproduction of large masses of information. It is possible to trace the identities of those who had access to particular pieces of information. Ultimately, however, security depends on the loyalty of cleared officials at all levels. A clerk with the right access can unlawfully transfer highly sensitive information as readily or more readily than a senior official. Some highly sensitive information—the identity of an agent or the fact that a code has been broken—can be found in a short document or even memorized for verbal transmission.\nThose responsible for information security must of course be aware of the extent of the interest in acquiring classified U.S. information. Foreign countries (including friendly ones or even allies) may not turn down opportunities to gain insight into U.S. policymaking or military capabilities. Various anti-American organizations worldwide eagerly seek information that can damage or embarrass the U.S. Government. Major media outlets, not all of which are in foreign countries, consider themselves free to publish classified information regardless of possible damage to U.S. persons, interests, or foreign supporters. There is, in short, an active market for classified information held by U.S. intelligence agencies with thousands of officials having some access. Personnel security is a crucial part of the problem. Despite procedural and technical approaches taken to limit misuse of classified information, disloyal or careless officials can be the source of leaks.\nFor the U.S. Intelligence Community, the policy decision of whether the emphasis should be on \"need-to-know\" or the \"need-to-share\" can be viewed as a false choice. Information must always be shared with those with a genuine need to know even if this potential universe is a large one. At the same time, Congress may wish to ensure that clearance procedures are thorough as well as expeditious. More rigorous analyses of instances in which cleared personnel have transferred or sold classified information may lead to improved procedures for maintaining security. There may well be more technological approaches that will make it possible to establish greater accountability for the use of classified intelligence information\nIntelligence efforts are never risk-free. Acquiring information is often hazardous; analysis efforts can be wrong and result in mission failure and the loss of life. Good analysis can be delayed or not provided to the right consumer in a timely manner resulting in expensive wasted efforts. Congressional oversight of intelligence activities can improve executive branch performance and provide encouragement to intelligence officials to prevent compromises of sensitive materials. Ultimately, however, a degree of risk seems inevitable.\nGovernment officials must also accept the enduring reality of a media culture that is prepared to publish official secrets and considers such disclosure a patriotic contribution to democratic discourse. That individual civil servants or servicemembers can be very harshly punished for their role in releasing information while editors and reporters are honored and celebrated seems to some as paradoxical. Ultimately the security of information, as is the case with the security of the nation, depends on those who willingly uphold the oaths that they have taken." ], "depth": [ 0, 1, 1, 2, 1, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h1_full", "h3_title", "h3_full", "h2_full", "", "", "h2_full", "h0_full" ] }

{ "question": [ "How does classified information affect US security?", "What is considered a disclosure of classified intelligence?", "Why does classified information need to be accessible?", "How does this access relate to security?", "What kinds of changes were made for information sharing?", "As a result, how has the Intelligence Community changed?", "Why was the Information Sharing Environment created?", "To what extent have information sharing efforts been successful?", "What recent incidents illustrate obstacles to information sharing?", "What online consequences of information sharing have occurred?", "What is the current status of support for information sharing?", "How might information sharing improve?", "How has Congress acted to improve information sharing?", "What is the big challenge of information sharing?" ], "summary": [ "Unauthorized disclosures of classified intelligence are seen as doing significant damage to U.S. security.", "This is the case whether information is disclosed to a foreign government or published on the Internet.", "On the other hand, if intelligence is not made available to government officials who need it to do their jobs, enormous expenditures on collection, analysis, and dissemination are wasted.", "These conflicting concerns require careful and difficult balancing.", "Major statutory and regulatory changes were made to facilitate information sharing among agencies.", "In law and in Federal regulations a culture of sharing has been established in the Intelligence Community.", "An Information Sharing Environment was created within the new Office of the Director of National Intelligence in order to establish policies, procedures, and technologies to link people, systems, and information from government agencies.", "Although government officials maintain that policies designed in recent years to increase sharing have helped prevent a number of serious terrorist attacks and contributed significantly to the May 2, 2011 operation against Osama bin Laden, the results have been uneven and, in some cases, unfortunate.", "Reviews of the Fort Hood shooting in 2009 and the attempted bombing of a commercial airliner the following Christmas revealed that serious obstacles to information sharing had not been completely overcome.", "At the same time, wide availability of State Department cables provided the opportunity for massive leaks of classified documents (including some intelligence materials) through the WikiLeaks website and cooperating media.", "Despite these developments, support for information sharing among intelligence agencies remains strong within both the executive branch and Congress.", "Intelligence Community representatives have recently described new technologies and procedures to enhance information security including capabilities to determine who has had access to particular reports.", "Members of Congress included legislative initiatives to accomplish similar goals in FY2011 intelligence authorization legislation (H.R. 754) that has passed both the House and Senate.", "The challenge remains, how to manage inherent risks to find the \"sweet spot\" (the term used by Director of National Intelligence James Clapper) between information security and information sharing." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, -1, 0, 0, -1, -1, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "U.S.-Turkey Relations", "Turkey's Strategic Orientation in Question", "U.S./NATO Cooperation with Turkey", "Overview", "F-35 Aircraft Acquisition Endangered by Possible S-400 Acquisition from Russia", "S-400 Deal and Implications for NATO", "Possible Impact on F-35 Transaction", "U.S. Offer of Patriot System as Alternative to S-400", "Syria", "Background", "Implications of Announced U.S. Withdrawal", "Various Criminal Cases After 2016 Coup Attempt", "Congressional Proposals", "Domestic Turkish Developments", "Political Developments Under Erdogan's Rule", "Economic Concerns" ], "paragraphs": [ "", "This report provides background information and analysis on the following topics:\nVarious aspects of U.S.-Turkey relations, including (1) Turkey's strategic orientation; (2) U.S./NATO cooperation and how a Turkish purchase of an S-400 air defense system from Russia could endanger its acquisition of U.S.-origin F-35 aircraft; (3) the situation in northern Syria, including with Kurdish-led militias; (4) criminal cases of note since the failed 2016 coup attempt in Turkey; and (5) congressional proposals. Domestic Turkish developments, including politics under President Recep Tayyip Erdogan's largely authoritarian and polarizing rule (with local elections scheduled for March 2019), and significant economic concerns.\nFor additional information, see CRS Report R41368, Turkey: Background and U.S. Relations , by Jim Zanotti and Clayton Thomas.", "", "Numerous points of bilateral tension have raised questions within the United States and Turkey about the two countries' alliance. Turkish actions and statements on a number of foreign policy issues have contributed to problems with the United States and its other NATO allies, fueling concern about Turkey's commitment to NATO and Western orientation. For its part, Turkey may bristle because it feels like it is treated as a junior partner, and may seek greater foreign policy diversification through stronger relationships with more countries. In the months since the apparent October 2018 killing of Saudi journalist Jamal Khashoggi in Saudi Arabia's Istanbul consulate, some observers speculate that President Erdogan has sought to use information from the event to gain leverage in Turkey's dealings with the United States, and to boost Turkey's regional and global profile.\nA number of considerations drive the complicated dynamics behind Turkey's international relationships. Turkey's history as both a regional power and an object of great power aggression translates into wide popularity for nationalistic political actions and discourse. This nationalistic sentiment might make some Turks wary of Turkey's partial reliance on other key countries (for example, the United States for security, European Union countries for trade and investment, and Russia and Iran for energy). Moreover, Turkey's cooperative relationships with countries whose respective interests may conflict involves a balancing act. Turkey's vulnerability to threats from Syria and Iraq increases the pressure on it to manage this balance. Involvement in Syria and Iraq by the United States, Russia, and Iran further complicates Turkey's situation. Additionally, grievances that President Erdogan and his supporters espouse against seemingly marginalized domestic foes (the military and secular elite who previously dominated Turkey, the Fethullah Gulen movement, Kurdish nationalists, and liberal activists) extend to the United States and Europe due to apparent suspicions of Western sympathies for these foes.\nTurkey's Middle Eastern profile expanded in the 2000s as Erdogan (while serving as prime minister) sought to build economic and political linkages—often emphasizing shared Muslim identity—with Turkey's neighbors. However, efforts to increase Turkey's influence and offer it as a \"model\" for other regional states appear to have been set back by a number of developments since 2011: (1) conflict and instability that engulfed the region and Turkey's own southern border, (2) Turkey's failed effort to help Muslim Brotherhood-aligned groups gain lasting power in Syria and North Africa, and (3) domestic polarization accompanied by government repression. Although Turkey shares some interests with traditional Sunni Arab powers Saudi Arabia and Egypt in countering Iran, these countries' leaders regard Turkey suspiciously because of the Turkish government's Islamist sympathies and close relationship with Qatar. Turkey maintains relations with Israel, but these have become distant and—at times—contentious during Erdogan's rule.", "", "Turkey's location near several global hotspots makes the continuing availability of its territory for the stationing and transport of arms, cargo, and personnel valuable for the United States and NATO. From Turkey's perspective, NATO's traditional value has been to mitigate its concerns about encroachment by neighbors. Turkey initially turned to the West largely as a reaction to aggressive post-World War II posturing by the Soviet Union. In addition to Incirlik air base near the southern Turkish city of Adana, other key U.S./NATO sites include an early warning missile defense radar in eastern Turkey and a NATO ground forces command in Izmir. Turkey also controls access to and from the Black Sea through its straits pursuant to the Montreux Convention of 1936.\nCurrent tensions have fueled discussion from the U.S. perspective about the advisability of continued U.S./NATO use of Turkish bases. Reports in 2018 suggested that some Trump Administration officials were contemplating significant reductions in the U.S. presence in Turkey. There are historical precedents for such changes. On a number of occasions, the United States has withdrawn military assets from Turkey or Turkey has restricted U.S. use of its territory or airspace. These include the following:\n196 2— Cuban Missile Crisis . The United States withdrew its nuclear-tipped Jupiter missiles from Turkey as part of the secret deal to end this crisis with the Soviet Union. 1975— Cyprus. Turkey closed most U.S. defense and intelligence installations in Turkey during the U.S. arms embargo that Congress imposed in response to Turkey's military intervention in Cyprus. 2003— Iraq. A Turkish parliamentary vote did not allow the United States to open a second front from Turkey in the Iraq war.\nSome of the plotters of an unsuccessful coup attempt in Turkey in July 2016 apparently used Incirlik air base, causing temporary disruptions of some U.S. military operations. This may have eroded some trust between the two countries, while also raising U.S. questions about Turkey's stability and the safety and utility of Turkish territory for U.S. and NATO assets. As a result of these questions and U.S.-Turkey tensions, some observers have advocated exploring alternative basing arrangements in the region.\nThe cost to the United States of finding a replacement for Incirlik and other sites in Turkey would likely depend on a number of variables including the functionality and location of alternatives, where future U.S. military engagements may happen, and the political and economic difficulty involved in moving or expanding U.S. military operations elsewhere. While an August 2018 report cited a Department of Defense (DOD) spokesperson as saying that the United States is not leaving Incirlik, some reports suggest that expanded or potentially expanded U.S. military presences in Greece and Jordan might be connected with concerns about Turkey.\nCalculating the costs and benefits to the United States of a U.S./NATO presence in Turkey, and of potential changes in U.S./NATO posture, revolves to a significant extent around three questions:\nTo what extent does strengthening Turkey relative to other regional actors serve U.S. interests? To what extent does the United States rely on the use of Turkish territory or airspace to secure and protect U.S. interests? To what extent does Turkey rely on U.S./NATO support, both politically and functionally, for its security and regional influence?", "Turkey's plans to take delivery of an S-400 air defense system from Russia sometime in 2019 could hamper its acquisition of U.S.-origin F-35 Joint Strike Fighter aircraft. Turkey is a member of the international consortium that has developed the F-35, and plans to purchase 100 of the aircraft. Training on the F-35 for Turkish pilots is now underway on U.S. soil, and the first aircraft is reportedly scheduled to leave the United States for Turkey sometime in 2020.", "Turkey justified its preliminary decision to acquire S-400s instead of U.S. or European alternatives by claiming that it turned to Russia because NATO allies rebuffed its attempts to purchase an air defense system from them. Turkey has also cited various practical reasons, including cost, technology sharing, and territorial defense coverage. However, one analysis from December 2017 asserted that the S-400 deal would not involve technology transfer, would not defend Turkey from ballistic missiles (because the system would not have access to NATO early-warning systems), and could weaken rather than strengthen Turkey's geopolitical position by increasing Turkish dependence on Russia.\nFor some observers, the S-400 issue raises the possibility that Russia could take advantage of U.S.-Turkey friction to undermine the NATO alliance. Previously, in 2013, Turkey reached a preliminary agreement to purchase a Chinese air and missile defense system, but later (in 2015) withdrew from the deal, perhaps partly due to concerns voiced within NATO, as well as China's reported reluctance to share technology.", "While U.S. officials express desires to avoid disruptions to the F-35's manufacture and rollout, they also express concern that Turkey's potential operation of the S-400 alongside the F-35 could compromise sensitive technology. According to one analysis, \"the Pentagon fears that Turkey's operation of the S-400 would allow the Russian military to study how the F-35 stealth fighters [show up on] Russian-built air defense radars, and potentially facilitate the infiltration of [the F-35] computer system. This could compromise the F-35's effectiveness around the world.\" According to one Turkish press report, Turkey has taken a step intended to assuage U.S. concerns by insisting on an arrangement that allows Turkish technicians to operate the S-400 without Russian involvement, and Turkey may also allow U.S. officials to examine the S-400.\nCongress has enacted legislation that has subjected the F-35 transfer to greater scrutiny. Under Section 1282 of the FY2019 John S. McCain National Defense Authorization Act ( P.L. 115-232 ), DOD submitted a report to Congress in November 2018 on a number of issues affecting U.S.-Turkey defense cooperation, including the S-400 and F-35.\nMuch of the report was classified, but an unclassified summary said that the U.S. government has told Turkey that purchasing the S-400 would have \"unavoidable negative consequences for U.S.-Turkey bilateral relations, as well as Turkey's role in NATO,\" including\npotential sanctions against Turkey under Section 231 of the Countering America's Adversaries Through Sanctions Act (CAATSA, P.L. 115-44 ); risk to Turkish participation in the F-35 program (both aircraft acquisition and industrial workshare); risk to other potential U.S. arms transfers to Turkey, and to broader bilateral defense industrial cooperation; reduction in NATO interoperability; and introduction of \"new vulnerabilities from Turkey's increased dependence on Russia for sophisticated military equipment.\"", "In July 2018, a State Department official confirmed ongoing U.S. efforts to persuade Turkey to purchase a Patriot air defense system instead of an S-400. However, in October 2018, Turkish Defense Minister Hulusi Akar said that talks with U.S. and European air defense system suppliers had \"not yielded desired results,\" and announced plans for Turkey to begin deploying the S-400 in October 2019. Previously, Turkish officials had indicated some concern about whether Congress would approve a Patriot sale, perhaps because of some congressional opposition for other arms sales to Turkey.\nThe unclassified summary of the November 2018 DOD report to Congress indicated that U.S. officials were continuing to offer a Patriot system to Turkey:\nThe Administration has developed an alternative package to provide Turkey with a strong, capable, NATO-interoperable air and missile defense system that meets all of Turkey's defense requirements. Parts of the package require Congressional Notification. Congressional support for Foreign Military Sales and Direct Commercial Sales to Turkey is essential to provide a real alternative that would encourage Turkey to walk away from a damaging S-400 acquisition.\nIn December 2018, the Defense Security Cooperation Agency (DSCA) notified Congress that \"the State Department has made a determination approving a possible Foreign Military Sale [FMS] of eighty (80) Patriot MIM-104E Guidance Enhanced Missiles (GEM-T) missiles, sixty (60) PAC-3 Missile Segment Enhancement (MSE) missiles and related equipment for an estimated cost of $3.5 billion.\"\nReportedly, discussions between U.S. and Turkish officials over a Patriot sale are ongoing. Turkish officials have stated their intention to proceed with the S-400 purchase regardless of how negotiations over the Patriot sale proceed. In 2009, DSCA notified Congress of a possible FMS to Turkey of Patriot missiles and associated equipment, but the countries did not enter into a transaction for that equipment. Since 2007, Turkey has solicited a number of outside bids to sell it an air defense system, but has not finalized a transaction to date.", "", "Turkey's involvement in Syria's conflict since 2011 has been complicated and costly. During that time, Turkey's priorities in Syria appear to have evolved. While Turkey still officially calls for Syrian President Bashar al Asad to leave power, it has engaged in a mix of coordination and competition with Russia and Iran (Asad's supporters) on some matters since intervening militarily in Syria starting in August 2016. Turkey may be seeking to protect its borders, project influence, promote commerce, and counter other actors' regional ambitions.\nTurkey's chief objective has been to thwart the Syrian Kurdish People's Protection Units (YPG) from establishing an autonomous area along Syria's northern border with Turkey. The YPG has links with the PKK (Kurdistan Workers' Party), a U.S.-designated terrorist organization that for decades has waged an on-and-off insurgency against the Turkish government while using safe havens in both Syria and Iraq. Turkey appears to view the YPG and its political counterpart, the Democratic Union Party (PYD), as the top threat to its security, given the boost the YPG/PYD's military and political success could provide to the PKK's insurgency within Turkey. The YPG plays a leading role in the umbrella group known as the Syrian Democratic Forces (SDF), which also includes Arabs and other non-Kurdish elements.\nSince 2014, the SDF has been the main U.S. ground force partner against the Islamic State (IS, also known as ISIS/ISIL). Even though Turkey is also a part of the anti-IS coalition, U.S. operations in support of the SDF—largely based from Turkish territory—has fueled U.S.-Turkey tension because of Turkey's view of the YPG as a threat. As part of SDF operations to expel the Islamic State from the Syrian city of Raqqah in 2017, the U.S. government pursued a policy of arming the YPG directly while preventing the use of such arms against Turkey, and Secretary of Defense Jim Mattis announced an end to the direct arming of the YPG near the end of the year. Following the Raqqah operation, U.S. officials contrasted their long-standing alliance with Turkey with their current but temporary cooperation with the YPG.\nAfter Turkey moved against IS-held territory in northern Syria as a way to prevent the YPG from consolidating its rule across much of the border area between the two countries (Operation Euphrates Shield, August 2016-March 2017), Turkey launched an offensive directly against the YPG in the Afrin province in January 2018. In Afrin and the other areas Turkey has occupied since 2016 with the help of allied Syrian opposition militias (see Figure 2 below) , Turkey has organized local councils and invested in infrastructure . Q uestions persist about how deeply Turkey will influence future governance in these areas .", "President Trump's announcement in December 2018 that the United States would withdraw approximately 2,000 U.S. troops stationed in Syria has major implications for Turkey and the YPG. The announcement came shortly after a call between Presidents Trump and Erdogan, during which Trump reportedly accepted Erdogan's offer to take responsibility for countering the Islamic State in Syria. U.S. officials have been cited as saying that U.S. troops will redeploy from Syria by summer 2019.\nHow a U.S. withdrawal would happen remains unclear, as does how Turkey and the many other actors in Syria would respond. Turkey has refused to agree to a demand from National Security Advisor John Bolton to guarantee the YPG's safety, with Erdogan insisting that Turkey should have a free hand with the YPG and other groups it considers to be terrorists. In January, amid reports that the U.S. military had begun preparing for withdrawal, President Trump tweeted that he would \"devastate Turkey economically\" if it hit the Kurds, and at the same time proposed the creation of a 20-mile-deep \"safe zone\" on the Syria side of the border. Secretary of State Mike Pompeo later said that the U.S. \"twin aims\" are to make sure that those who helped take down the IS caliphate have security, and to prevent terrorists from attacking Turkey out of Syria. Some sources suggest that U.S. officials favor having a Western coalition patrol any kind of buffer zone inside the Syrian border, with some U.S. support, while Turkey wants its forces and Syrian rebel partners to take that role.\nUncertainty surrounding the announced U.S. withdrawal from northeast Syria also applies to how Turkish forces might operate there. One analyst calculates that additional Turkish military intervention might focus on areas, such as Tal Abyad (aka Tell Abiad), that are less historically Kurdish than others, in an effort to reduce the YPG's control over territorially contiguous regions. Some observers express doubts that Turkish-supported militias would be able to counter the Islamic State as effectively as the YPG-led SDF, and one journalist has stated concerns about what could happen to the IS foreign fighters held by the SDF if Turkey clashes with the YPG. Turkish officials have requested U.S. air and logistical support for their potential operations, despite the two countries' different stances on the YPG. In a New York Times column in January, President Erdogan envisioned that if Turkish-backed forces gain control of predominantly Kurdish areas in Syria currently under YPG rule, these regions would be run by popularly elected local councils advised by Turkish officials. Various analyses surmise that a U.S. troop withdrawal would lead the YPG toward an accommodation with Russia and the Syrian government. A reference by Russian President Vladimir Putin to the 1998 Adana Protocol between Turkey and Syria suggests that Russia may seek to limit direct Turkish involvement in Syria under the premise that Syria's government would take greater responsibility for constraining YPG actions.\nHow U.S.-Turkey coordination plays out in northeastern Syria could influence Turkey's presence in western Syria, particularly in key contested areas like the town of Manbij and Idlib province. Russia and the Syrian government have sent forces near Manbij, possibly as a check on Turkish personnel there who are intent on eradicating YPG influence from the town. In Idlib, Turkey-backed forces stationed at points around the province appear to have failed to prevent territorial gains by Al Qaeda-linked Hayat Tahrir al Sham (HTS) jihadists who also oppose the Syrian government. The HTS gains in Idlib may lead to a Russian-backed Syrian military operation there with the potential for new refugee flows to Turkey.", "A number of cases involving criminal allegations or detentions have generated controversy between the United States and Turkey since the July 2016 coup attempt in Turkey. Shortly after the attempt, Turkey's government called for the extradition of Fethullah Gulen (the U.S.-based former cleric whom Turkey's government has accused of involvement in the plot), and the matter remains pending before U.S. officials. Since the coup attempt, sharp criticism of U.S. actions related to Gulen's case has significantly increased in Turkish media. Additionally, Turkey's government has dismissed around 130,000 Turks from government posts, detained more than 60,000, and taken over or closed various businesses, schools, and media outlets. The government's measures appear to have targeted many who are not connected with Gulen.\nAs part of Turkish authorities' postcoup crackdown, they detained Pastor Andrew Brunson (who was released, after a two-year imprisonment, in October 2018) and a number of other U.S. citizens (most of them dual U.S.-Turkish citizens), along with Turkish employees of the U.S. government. Reports suggest that Congress and the State Department are trying to obtain the release of those currently detained, though the Administration lifted sanctions on senior Turkish officials following Pastor Brunson's release.\nSeparately, two prominent Turkish citizens with government ties were arrested by U.S. authorities in 2016 and 2017 for conspiring to evade sanctions on Iran. One, Reza Zarrab, received immunity for cooperating with prosecutors, while the other, Mehmet Hakan Atilla, was convicted and sentenced in May 2018 to 32 months in prison. The case was repeatedly denounced by Turkish leaders, who reportedly expressed concern about the potential implications for Turkey's economy if the case led U.S. officials to impose penalties on Turkish banks. This has not yet happened.", "Bilateral tensions contributed to various legislative proposals by Members of Congress during the 115 th Congress. The most significant congressional action against Turkey to date has been an arms embargo that Congress enacted in response to Turkish military intervention in Cyprus. That embargo lasted from 1975 to 1978.\nIn the 116 th Congress, the House-passed Consolidated Appropriations Act, 2019 ( H.R. 648 ) contains foreign aid provisions that also have been introduced in the Senate Appropriations Committee. Section 7046(d) of H.R. 648 includes the following proposals regarding Turkey:\nRequiring DOD to update its FY2019 NDAA report to Congress on Turkey's possible S-400 acquisition. The update, including a detailed description of plans to impose sanctions under CAATSA, is required by November 1, 2019. Until the report is submitted, funding cannot be used to transfer F-35 aircraft to Turkey. Restricting transfer of arms to Turkish P residential Protection Directorate (TPPD) . This restriction, which is subject to a few exceptions, would apply unless the State Department reports to Congress that members of the TPPD who were involved in a violent incident against protestors during a May 2017 Washington, DC, trip by President Erdogan have been \"brought to justice.\"\nH.R. 648 is less stringent than an earlier FY2019 appropriations bill ( S. 3108 ) from the 115 th Congress that would have prohibited transferring F-35s to Turkey if it purchased the S-400, and would have denied entry to senior Turkish officials involved in detaining U.S. citizens.", "", "President Erdogan has ruled Turkey since becoming prime minister in 2003. After Erdogan became president in August 2014 via Turkey's first-ever popular presidential election, he claimed a mandate for increasing his power and pursuing a \"presidential system\" of governance. Analyses of Erdogan sometimes characterize him as one or more of the following: a pragmatic populist, a protector of the vulnerable, a budding authoritarian, an indispensable figure, and an Islamic ideologue.\nErdogan's consolidation of power has continued amid domestic and international concerns about growing authoritarianism in Turkey. He outlasted the July 2016 coup attempt, and then scored victories in the April 2017 constitutional referendum and the June 2018 presidential and parliamentary elections—emerging with the expanded powers he had sought. Some allegations of voter fraud and manipulation surfaced in both elections. U.S. and European Union officials have expressed a number of concerns about rule of law and civil liberties in Turkey, including the government's influence on media and Turkey's reported status as the country with the most journalists in prison.\nWhile there may be some similarities between Turkey under Erdogan and countries like Russia, Iran, or China, some factors distinguish Turkey from them. For example, unlike Russia or Iran, Turkey's economy cannot rely on significant rents from natural resources if foreign sources of revenue or investment dry up. Unlike Russia and China, Turkey does not have nuclear weapons under its command and control. Additionally, unlike all three others, Turkey's economic, political, and national security institutions and traditions have been closely connected with those of the West for decades.\nErdogan is a polarizing figure, with about half the country supporting his rule, and half the country against it. To obtain a parliamentary majority in the June 2018 elections, Erdogan's Islamist-leaning Justice and Development Party ( Adalet ve Kalkinma Partisi , or AKP) relied on a coalition with the Nationalist Action Party ( Milliyet Halk Partisi , or MHP). The MHP is the country's traditional Turkish nationalist party, and is known for opposing political accommodation with the Kurds. Local elections scheduled for March 2019 could be a significant barometer of domestic support for Erdogan under the difficult economic circumstances described below.", "The Turkish economy appears to be slowing down, with negative consequences both for consumer demand and for companies seeking or repaying loans in global markets. Economic growth was down from over 7% in 2017 to around 3% in 2018, with forecasts for 2019 at or below 1%. By the end of 2018, inflation had essentially doubled year-on-year to more than 20%. During 2018, the Turkish lira depreciated close to 30% against the dollar in an environment featuring a globally stronger dollar, rule of law concerns and political uncertainty, and significant corporate debt. In August 2018, amid U.S.-Turkey tensions on the Pastor Brunson matter, President Trump announced a doubling of tariffs on Turkish steel and aluminum imports. This prompted retaliatory action from Turkey. The lira plunged in value, but recovered somewhat in the final months of 2018 after Turkey's central bank raised its key interest rate by 6.25% in September. In November 2018, the United States granted Turkey (along with seven other countries) a six-month exception from U.S. sanctions on Iranian oil.\nSome observers speculate that Turkey may need to turn to the International Monetary Fund (IMF) for a financial assistance package. This would be a sensitive challenge for President Erdogan because his political success story is closely connected with helping Turkey become independent from its most recent IMF intervention in the early 2000s. Before the central bank's rate hike in September 2018, some commentators voiced concerns about the bank's independence as Erdogan publicly opposed increasing rates. In January 2019, Turkey's parliament voted to grant Erdogan broader emergency powers in case of a financial crisis.\nThe government appears to be trying to stimulate growth via familiar measures to boost consumer demand. A former Turkish economic official has claimed that by offloading the \"debt crisis of the real sector\" onto the banking sector, the government has exacerbated the crisis. In his opinion, a \"harsh belt-tightening policy\" with or without the IMF is thus inevitable after the March 2018 local elections." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 4, 4, 4, 2, 3, 3, 2, 2, 1, 2, 2 ], "alignment": [ "h5_title h0_title h2_title h4_title h3_title h1_title", "h0_full h5_full h2_full", "h5_title h0_title h2_title h3_title h1_title", "h0_full h5_full", "h0_title h1_title h3_title", "h0_full", "h3_title h1_full", "h1_full", "h3_full", "h1_full", "h2_title", "h2_full", "h2_full", "", "h3_full", "h5_title h4_title", "h5_full h4_full", "h4_full" ] }

{ "question": [ "What characterizes Turkey's relationship to Western nations?", "Why does Turkey's need for domestic energy complicate this relationship?", "How do US interests in Turkey's actions complicate the two countries' relations?", "What other troubled relations does Turkey have?", "Why F-35 acquisition endangered?", "How does Turkey's purchase change their ability to purchase from the US?", "What are the possible implications of this transaction?", "How has the U.S. responded to this possible deal?", "How has Turkey's actions involving Syria affected US-Turkey relations?", "Under what circumstances did the US withdraw from Syria?", "Why have there been debates on Turkish intervention in Syria?", "What is the PKK?", "What action did Congress take regarding US-Turkey relations and the current administration?", "How did the DOD act on reporting US-Turkey relations?", "How will this report be updated?", "What kind of power does President Erdogan have?", "How has Turkish currency changed in value?", "How has this changed Turkey's financial position?", "How does this effect elections?", "What is the next step for US-Turkey relations?", "What questioning has Erdogan's consolidation of power caused?", "How can the US properly evaluate Turkey?" ], "summary": [ "Turkey's core security and economic relationships and institutional links remain with Western nations, as reflected by some key U.S. military assets based in Turkey and Turkey's strong trade ties with the European Union. However, various factors complicate U.S.-Turkey relations.", "For example, Turkey relies to some degree on nations such as Russia and Iran for domestic energy needs and coordination on regional security, and therefore balances diplomatically between various actors.", "Additionally, Turkey's president and longtime leader Recep Tayyip Erdogan appears to be concerned that the United States and some other Western countries harbor sympathies for some of the groups that have been marginalized domestically under Erdogan.", "Also, Turkey has played a larger role in the Middle East since the 2000s, but has faced a number of setbacks and has problematic relations with Israel and most Sunni Arab countries other than Qatar.", "F-35 aircraft acquisition endangered by possible S-400 acquisition from Russia.", "Turkey's planned purchase of an S-400 air defense system from Russia could trigger U.S. sanctions under existing law and decrease Turkey's chances of acquiring U.S.-origin F-35 aircraft.", "The possible S-400 transaction has sparked broader concern over Turkey's relationship with Russia and implications for NATO.", "U.S. officials seek to prevent the deal by offering Patriot air defense systems as an alternative to the S-400.", "Turkey's political stances and military operations in Syria have fed U.S.-Turkey tensions, particularly regarding Kurdish-led militias supported by the United States against the Islamic State over Turkey's strong objections.", "President Trump's announcement in December 2018 that U.S. troops would withdraw from Syria came after a call with President Erdogan in which Erdogan accepted responsibility for countering the Islamic State in Syria.", "Efforts to coordinate U.S. and Turkish actions related to a U.S. withdrawal have triggered debate about the possible consequences of Turkish intervention in northeast Syria, especially for those Kurdish-led militias, which have links with the PKK (Kurdistan Workers' Party).", "The PKK is a U.S.-designated terrorist organization that originated in Turkey and wages an on-and-off insurgency against the Turkish government while using safe havens in both Syria and Iraq.", "Within the tense bilateral context, the 115th Congress required the Trump Administration—in the FY2019 John S. McCain National Defense Authorization Act (NDAA, P.L. 115-232)—to report on the status of U.S.-Turkey relations, with particular emphasis on the possible S-400 deal and its implications.", "The Department of Defense (DOD) submitted a mostly classified report to Congress in November 2018.", "Appropriations legislation proposed for FY2019 in the 116th Congress (H.R. 648) would require an update to the DOD report.", "President Erdogan rules in an increasingly authoritarian manner, with his power further consolidated in June 2018 presidential and parliamentary elections.", "A number of developments (a globally stronger dollar, rule of law concerns and political uncertainty, significant corporate debt) led to a precipitous drop in the value of Turkey's currency during 2018.", "A major September 2018 interest rate hike by Turkey's central bank helped reverse some of the currency's downward slide, but concerns remain about Turkey's financial position and the possible consequences that higher interest rates might have for economic growth.", "Local elections are scheduled for March 2018 against the backdrop of these economic concerns.", "The next steps in relations between the United States and Turkey will take place with Turkey facing a number of political and economic challenges.", "Given Erdogan's consolidation of power, observers now question how he will govern a polarized electorate and deal with the foreign actors who can affect Turkey's financial solvency, regional security, and political influence.", "U.S. officials and lawmakers can refer to Turkey's complex history, geography, domestic dynamics, and international relationships in evaluating how to encourage Turkey to align its policies with U.S. interests." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, 1, 1, -1, -1, -1, 2, -1, -1, 1, -1, -1, 1, 1, -1, -1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 3, 3, 3, 3, 4, 4, 4, 4, 5, 5, 5, 6, 6, 6, 6, 7, 7, 7 ] }

{ "title": [ "", "Introduction", "The Highway Trust Fund Financing Dilemma", "What Congress Faces", "The Underlying Problem: Spending Exceeds Revenues", "The Resulting Funding Shortfalls", "Existing Highway Fuel Taxes16", "How the Rates Have Been Raised Since 1983", "The \"Great Compromise\" and the Highway \"User Fee\"", "50/50 Share: Deficit Reduction/Highway Trust Fund", "More for Deficit Reduction", "Alternatives for HTF Finance", "\"Fixing\" the Gas Tax", "Providing a Tax Rebate to Offset a Fuels Tax Increase", "Switching to Sales Taxes", "Mileage-Based Road User Charges", "Mileage-Based Road User Charges and Non-highway Programs", "Other Options to Preserve the Highway Trust Fund", "The Future of the Trust Fund", "Making a General Fund Share Permanent", "Toll Financing of Federal-Aid System Highways", "Options for Expanded Use of Tolling", "Value Capture", "Public-Private Partnerships", "Municipal Bonds", "Transportation Infrastructure Finance and Innovation Act (TIFIA) Financing", "National Infrastructure Bank", "State Infrastructure Banks" ], "paragraphs": [ "", "Almost every conversation about surface transportation finance begins with a two-part question: What are the \"needs\" of the national transportation system, and how does the nation pay for them? This report is aimed almost entirely at discussing the \"how to pay for them\" question. Since 1956, federal surface transportation programs have been funded largely by taxes on motor fuels that flow into the Highway Trust Fund (HTF). A steady increase in the revenues flowing into the HTF due to increased motor vehicle use and occasional increases in fuel tax rates accommodated growth in surface transportation spending over several decades. In 2001, though, trust fund revenues stopped growing faster than spending. In 2008 Congress began providing Treasury general fund transfers to keep the HTF solvent.\nEvery year since 2008, there has been a gap between the dedicated tax revenues flowing into the HTF and the cost of the surface transportation spending Congress has authorized. Congress has filled these shortfalls with a series of further transfers, largely from the Treasury's general fund. These transfers have shifted a total of $143.6 billion to the HTF. The last $70 billion of these transfers were authorized in the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ), which was signed by President Barack Obama on December 4, 2015. The FAST Act funds federal surface transportation programs from FY2016 through FY2020. When the act expires the de facto policy of relying on general fund transfers to sustain the HTF will be 12 years old.\nCongressional Budget Office (CBO) projections indicate that the imbalance between motor fuel tax receipts and HTF expenditures will reemerge and the HTF balance will approach zero in FY2021. In consequence, funding and financing surface transportation is expected to continue to be a major issue for Congress.", "The HTF has two separate accounts—highways and mass transit. The primary revenue sources for these accounts are an 18.3-cent-per-gallon federal tax on gasoline and a 24.3-cent-per-gallon federal tax on diesel fuel. Although the HTF has other sources of revenue, such as truck registration fees and a truck tire tax, and is also credited with interest paid on the fund balances held by the U.S. Treasury, fuel taxes in most years provides roughly 85%-90% of the amounts paid into the fund by highway users. The transit account receives 2.86 cents per gallon of fuel taxes, with the remainder of the tax revenue flowing into the highway account. An additional 0.1-cent-per-gallon fuel tax is reserved for the Leaking Underground Storage Tank (LUST) Fund, which is not part of the transportation program.\nSince the trust fund was created in 1956, motor fuel taxes have increased four times: in 1959, 1982, 1990, and 1993.\nSince the 1993 increase, additional changes to the taxation structure have modestly boosted trust fund revenues. The American Jobs Creation Act of 2004 ( P.L. 108-357 ), for example, provided the trust fund with increased future income by changing elements of federal \"gasohol\" taxation. In 2005, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users ( P.L. 109-59 ; SAFETEA) included a number of changes designed to bolster the trust fund, mainly by addressing tax fraud. SAFETEA also provided for the transfer of some general fund revenue associated with transportation-related activities to the trust fund. It was believed at the time of SAFETEA's passage that the tax changes, a $12.5 billion unexpended balance in the trust fund, and higher fuel tax revenue due to expected economic growth would be sufficient to finance the surface transportation program through FY2009. This prediction proved to be incorrect. The shortfalls resulting from the overly optimistic forecasts associated with SAFETEA were rectified by Treasury general fund contributions. In September 2008, Congress enacted a bill that transferred $8 billion of Treasury general funds to shore up the HTF. Other transfers followed (see Table 1 ).\nThe era of automatic trust fund growth may be over. Annual vehicle miles traveled (VMT) are no longer increasing at the 2% average rate experienced from the 1960s until 2008; although vehicle use is growing again after slumping between 2008 and 2012 due to the sluggish economy, total mileage is projected to grow at an average of roughly 1% per year over the next 20 years. Meanwhile, other policy changes are weakening the link between driving activity and motor fuel tax revenues. Under new rules issued in 2012, combined new passenger car and light truck Corporate Average Fuel Economy standards are expected to reach 41.0 miles per gallon in model year 2021 and 49.7 miles per gallon in model year 2025. This will eventually reduce the number of gallons of fuel used, although the impact in the near term will be modest. The expanding fleets of hybrid and electric vehicles, respectively, pay less or nothing by way of fuel taxes, raising equity issues that are likely to become more prominent as the electric vehicle fleet expands.\nAn increase in the existing fuel tax rates would provide immediate relief to the trust fund. As a rule of thumb, adding a penny to federal motor fuel taxes provides the trust fund with roughly $1.5 billion to $1.7 billion per year. The prospect of reduced motor fuel consumption, however, casts doubt on the ability of the motor fuel taxes to support increased surface transportation spending beyond the next decade, even with modest increases in tax rates.", "Since FY2008, the balance of federal highway user tax revenues in the HTF has been inadequate to fund the surface transportation program authorized by Congress. The 2015 surface transportation act addressed the HTF shortfall through FY2020 by authorizing the use of Treasury general funds for transportation purposes. CBO projects that from FY2021 to FY2026 the gap between dedicated surface transportation revenues and spending will average $20.1 billion annually ( Table 2 ). In 2020, as Congress considers surface transportation reauthorization, it could again face a choice between finding new sources of income for the surface transportation program and settling for a smaller program, which might look very different from the one currently in place. Figure 1 shows the impact of the general fund transfers within the context of the underlying imbalance between HTF revenues and projected spending for FY2016-FY2026.", "Table 2 provides projections of the gap between HTF receipts and outlays following the expiration of the FAST Act at the end of FY2020. In recent decades, Congress has typically sought to reauthorize surface transportation programs for periods of five or six years. As the table indicates, a five-year reauthorization beginning in FY2021 faces a projected gap between revenues and outlays of nearly $101 billion. A six-year reauthorization would face a gap of almost $125 billion. These projections assume that spending on federal highway and public transportation programs would remain as it is today, adjusted for anticipated inflation.", "When the FAST Act expires at the end of FY2020, the balance in the HTF resulting from previous years' income is expected to be $12.1 billion—an amount equal to approximately two and a half months of outlays. CBO projects that this balance, plus incoming revenue, will allow the Federal Highway Administration (FHWA) and the Federal Transit Administration (FTA) to pay their obligations to states and transit agencies until sometime in FY2021. However, without a reduction in the size of the surface transportation programs, an increase in revenues, or further general fund transfers, the balance in the HTF is projected to be close to zero near the end of FY2021 (see Table 3 ). At that point, both FHWA and FTA would likely have to delay payments for completed work.\nBased strictly on projected income and expenses, the HTF would move from a positive balance of $12.1 billion at the start of FY2021 to a negative balance of $88.5 billion at the end of FY2025. However, current law does not allow the HTF to incur negative balances. Unless this is changed, $88.5 billion represents the minimum amount the House Ways and Means Committee and the Senate Committee on Finance would need to find over the FY2021-FY2025 period in some combination of additional revenue and budget offsets for general fund transfers, should Congress choose to continue funding surface transportation at the current, or \"baseline,\" level, adjusted for inflation. Because the HTF currently provides all but about $2 billion of annual spending authorized for the highway and transit programs (the main exception being the FTA Capital Investment Grants Program), these numbers have implications for the size of the program Congress may approve to follow the FAST Act.\nHighway and transit spending based solely on the revenue projected to flow into the HTF under current law would be limited to roughly $41 billion in FY2021, significantly less than the \"baseline\" FY2021 outlays of roughly $58 billion. The projected year-to-year decline in HTF revenue implies that FHWA and FTA would have less contract authority each year to spend on projects through FY2026.\nReducing expenditures might not provide immediate relief from the demands on the HTF. Because transportation projects can take years to complete, both the highway and public transportation programs must make payments in future years pursuant to commitments that have already been incurred. As of FY2018, obligated but unspent contract authority for highway projects in progress is projected to be roughly $64 billion. This does not count another $24 billion in available but unobligated contract authority. For public transportation programs the equivalent figures for FY2018 are projected to be almost $16 billion in unpaid obligations and another $10 billion in unobligated contract authority. The obligated amounts represent legal obligations of the U.S. government and must be paid out of future years' HTF receipts.", "The first federal tax on gasoline (1 cent per gallon) was imposed in 1932, during the Hoover Administration, as a deficit-reduction measure following the depression-induced fall in general revenues. The rate was raised to help pay for World War II (to 1.5 cents per gallon) and raised again during the Korean War (to 2 cents per gallon). The Highway Revenue Act of 1956 (P.L. 84-627) established the HTF and raised the rate to 3 cents per gallon to pay for the construction of the Interstate Highway System. The Federal-Aid Highway Act of 1959 (P.L. 86-342) raised the rate to 4 cents per gallon. The gasoline tax remained at 4 cents from October 1, 1959, until March 31, 1983. During this period, revenues grew automatically from year to year as fuel consumption grew along with increases in vehicle miles traveled.\nSince 1983 lawmakers have passed legislation raising the tax rates on highway fuel use three times. Although infrequent, these rate increases were quite large in a proportional sense. The gasoline tax was raised on April 1, 1983, from 4 to 9 cents per gallon, a 125% increase; on September 1, 1990, from 9 to 14 cents (not counting the additional 0.1 cent for LUST), or 55%; and on October 1, 1993, from 14 to 18.3 cents, or 31%.", "Increasing the rate of the fuel taxes has never been popular. The last three increases were accomplished with difficulty and were influenced by the broader budgetary environment and the politics of the time.", "The increase in the fuel tax rate under the Surface Transportation Assistance Act of 1982 (STAA; P.L. 97-424 , Title V) occurred in the lame-duck session of the 97 th Congress. In the \"Great Compromise,\" supporters of increased highway spending had come to an agreement with transit supporters (mostly from the Northeast) that a penny of a proposed 5-cents-per-gallon increase would be dedicated to a new mass transit account within the HTF. This meant that support for the bill during the lame-duck session was widespread and bipartisan. During the congressional elections of 1982 the Democrats had picked up 26 seats in the House of Representatives. The economy was experiencing a major recession, and some argued that increased highway spending would stimulate the economy. President Reagan's opposition to an increase in the \"gas tax\" softened during the lame-duck session. On November 23, 1982, he announced that he would support passage of STAA, even though it would \"mean an increase in the highway user fee, or gas tax, of 5 cents a gallon.... Our country's outstanding highway system was built on the user fee principle—that those who benefit from a use should share in its cost.\" Nonetheless, the bill faced a series of filibusters in the Senate, which were eventually overcome by four cloture votes. The conference report was again filibustered, and President Reagan helped secure the votes needed for cloture. President Reagan signed STAA into law on January 6, 1983, more than doubling the highway fuel tax to 9 cents per gallon.", "The Omnibus Budget Reconciliation Act of 1990 (OBRA90; P.L. 101-508 ), enacted November 5, 1990, was passed under the pressure of impending final FY1991 sequestration orders issued by President George H. W. Bush under Title II of P.L. 99-177 , the Balanced Budget and Emergency Deficit Control Act of 1985, known as the Gramm-Rudman-Hollings Act (GRH). OBRA90 included budget cuts, tax changes, and the Budget Enforcement Act ( P.L. 101-508 ), which rescinded the FY1991 sequestration orders. OBRA90 also raised the tax on gasoline by 5 cents per gallon, to 14 cents. Half the increase went to the HTF (2 cents to the highway account and 0.5 cents to the mass transit account), with the other 2.5 cents per gallon to be deposited in the general fund for deficit reduction. This was the first time since 1957 the motor fuel tax had been used as a source of general revenue. Section 9001 expressed the sense of Congress that all motor fuel taxes should be directed to the HTF as soon as possible.", "The Omnibus Budget Reconciliation Act of 1993 (OBRA93; P.L. 103-66 ) Section 13241(a) made further changes in regard to fuel taxes:\nThe 2.5-cents-per-gallon fuel tax dedicated to deficit reduction in OBRA90 was redirected to the HTF beginning October 1, 1995, and its authorization was extended to September 30, 1999. The highway account received 2 cents per gallon and the mass transit account 0.5 cents per gallon of the rededicated amount. An additional permanent 4.3-cents-per-gallon fuel tax took effect in October 1993 and was dedicated to deficit reduction.\nThis brought the gasoline tax to 18.3 cents per gallon, although for two years (October 1, 1993, to October 1, 1995) 6.8 cents per gallon of this was deposited in the general fund, dedicated to deficit reduction. On October 1, 1995, the amount going to the general fund dropped to 4.3 cents per gallon, and the amount dedicated to the HTF increased to 14 cents per gallon. Subsequently, under the Taxpayer Relief Act of 1997 ( P.L. 105-34 ), all motor fuel tax revenue was redirected to the HTF (3.45 cents per gallon to the highway account and 0.85 cents to the mass transit account), effective October 1, 1997. (The LUST fund continues to receive the revenue from an additional 0.1 cents-per-gallon tax.)\nSince 2001, revenue flowing into the HTF has not met expectations in most years, and has generally lagged inflation since FY2007. In some years, HTF revenue has declined even in nominal terms (unadjusted for inflation) due to reduced vehicle travel. Because of the fixed nature of the cents-per-gallon gasoline and diesel taxes, the only way the taxes can generate additional revenue for the HTF is if motor-fuel consumption rises. In recent years, as gasoline prices have fallen, the vehicle miles traveled have increased, and gasoline sales have exceeded 2007 levels. An improving U.S. job market and wage growth may have contributed to record high VMT. The renewed popularity of vehicles with relatively low fuel economy suggests demand for motor fuel may remain stronger than anticipated a few years ago. However, to date CBO continues to forecast declines in gasoline tax revenues through FY2027.", "The political difficulty of increasing motor fuel taxes has led to interest in alternative approaches for supporting the HTF. These involve tying motor fuel tax rates to the price of fuel, changing the structure of the current fuel taxes, and charging drivers for the distance they drive rather than the fuel they consume, as well as freight-related charges and a variety of options unrelated to transportation.", "A differently designed gas tax might be indexed to both inflation (either inflation generally or highway construction cost inflation) and fuel-efficiency improvements. This new design would be imposed after raising the current gas tax rate to compensate for the loss in purchasing power since the last rate increase in 1993.\nIf the motor fuels taxes for gasoline and diesel had been adjusted in 2016 to keep pace with the change in the Bureau of Labor Statistics' consumer price index since 1993, the 18.3-cents-per-gallon gasoline tax would now be 31 cents per gallon, and the 24.3-cents-per-gallon diesel tax would be 41.1 cents per gallon. Consequently, the first step in implementing this method of \"fixing\" the gas tax would be to raise the base tax rate for gasoline by roughly 13 cents per gallon and to raise the rate for diesel by roughly 17 cents per gallon. Future adjustments would depend on the inflation rate in future years.\nTax-rate adjustments to make up for revenue lost due to greater fuel efficiency could be determined by dividing miles driven by vehicle category by the total amount of fuel consumed by that category and comparing the quotient to the previous year. Although fuel-economy standards for new vehicles are to rise sharply over the next few years, the average efficiency of the entire vehicle fleet will rise slowly because of the large number of older vehicles on the road. Consequently, an annual efficiency adjustment to the fuel tax rates would likely be small.", "One approach to reducing the political obstacles to higher fuel taxes is to couple a fuels-tax increase with income-tax rebates approximating the average cost of the fuels tax increase to the typical driver. The cost of the rebates would be less than the additional taxes collected because truckers, other commercial users, and individuals who do not file income-tax returns would not receive the rebates. The rebates could be phased out after several years while the higher tax rates would continue.\nThis solution raises a number of issues. The proposal could be seen, in effect, as a general fund transfer. Depending on the language of the House and Senate budget resolutions, the rebates might have to be offset by spending reductions elsewhere in the federal budget. Also, unless the higher tax rates were indexed for inflation, revenues would again be on a downward slope after the tax increase occurs.", "Under the sales tax concept, the federal motor fuel tax would be assessed as a percentage of the retail price of fuel rather than as a fixed amount per gallon. Some states already levy taxes on motor fuels in this way, either alongside or in place of fixed cents-per-gallon taxes on motor fuel purchases.\nIf fuel prices rise in the future, sales tax revenues could rise from year to year even if consumption does not increase. Conversely, however, a decline in motor fuel prices could lead to a drop in sales tax revenue. Many states that tied fuel taxes to prices after the price shocks of the 1970s encountered revenue shortfalls in the 1980s, when fuel prices fell dramatically. Over a 20-year period, most of these variable state fuel taxes disappeared. Recently, however, Virginia eliminated its cents-per-gallon fuel taxes in favor of a sales tax on fuel and a general sales tax increase that was dedicated to transportation purposes. The Virginia law mandates that the tax be imposed on the average wholesale price (calculated twice each year) but sets price floors; if prices of motor fuels fall beneath those floors, the amount of fuel tax charged per gallon is not reduced further.\nA federal sales tax on motor fuel would likely be at best an interim solution to the long-term problem of financing transportation infrastructure because, as with the current motor fuel tax, it relies on fuel consumption to fund transportation programs. To the extent that improved vehicle efficiency or adoption of hybrid or electric vehicles leads to long-term declines in fuel usage, a sales tax on fuel may not lead to increases in trust fund revenues. In addition, a sales tax calibrated to produce a desired amount of revenue in an environment of high motor fuel prices could significantly underperform if fuel prices were to be lower than anticipated.", "Economists have long favored mileage-based user charges as an alternative source of highway funding. Under the user charge concept, motorists would pay fees based on distance driven and, perhaps, on other costs of road use, such as wear and tear on roads, traffic congestion, and air pollution. The funds collected would be spent for surface transportation purposes.\nThe concept is not new: federal motor fuel taxes are a form of indirect road user charge insofar as road use is loosely related to fuel consumption. Some states have charged trucks by the mile for many years, and toll roads charge drivers based on miles traveled and the number of axles on a vehicle, which is used as a proxy for weight. Recent technological developments, as well as the evident shortcomings of motor fuel taxes, have led to renewed interest in the user charge concept, including establishment of a pilot program in legislation enacted in 2015.\nMileage-based road user charges (often referred to as vehicle miles traveled charges, or VMTs) could range from a flat cent-per-mile charge based on a simple odometer reading to a variable charge based on vehicle movements tracked by the Global Positioning System (GPS). Other proposals envision mileage-based road user charges that would mimic the way Americans now pay their fuel taxes by collecting the charge at the pump. Most road user charge proposals would require electric vehicle users to pay for their use of the roads.\nImplementation of a mileage-based road user charge would have to overcome a number of potential disadvantages relative to the motor fuels tax, including public concern about personal privacy; the higher costs to establish, collect, and enforce this charge (estimates range from 5% to 13% of collections); the administrative challenge of the billing process given the size of the vehicle fleet (estimated at roughly 263 million vehicles); and the setting and adjusting of the road user charge rates, which would likely be as controversial as increasing the motor fuels taxes. Another barrier to implementation is how to fairly charge the \"unbanked,\" those who have no bank accounts or credit/debit cards.\nA nationwide mileage-based road user charge would be analogous to a national toll. This raises the prospect that vehicles using toll roads might be charged twice, although this effectively happens now in that toll road users also pay tax on the motor fuel they consume while using the toll road. Technically, it would be possible for a road user charge to replace an existing toll, but this could cause complications with respect to the servicing of bonds funded by toll-road revenue.", "Since 1982, the HTF has financed most federal public transportation programs as well as highway programs. If a mileage-based road user charge were to be used strictly for highway purposes, it might reasonably be characterized as a user fee even if the amount paid by each individual driver does not correspond precisely to the social cost (such as pollution and traffic congestion costs) of that user's driving. A road user charge that funded both highways and public transportation might arguably be seen more as a tax than a user fee. This distinction raises a number of legal issues. Any legislation establishing a road user charge would have to clearly identify what the charge would be spent on. If the existing HTF were to be retained, legislation would have to specify what share of the revenue would be credited to the separate highway and mass transit accounts within the fund.", "In addition to options discussed above, a wide range of additional proposals has been suggested to generate revenue for the HTF. These proposals largely originated from the work of the two SAFETEA congressional commissions and of groups such as the American Association of State Highway and Transportation Officials (AASHTO) and Transportation Research Board (TRB). For example, AASHTO's Matrix of Illustrative Surface Transportation Revenue Options lists 33 potential HTF revenue options with yield estimates in tabular form. Many of these options involve taxes on freight movements or energy. It should be emphasized that the revenue estimates from these exercises are merely suggestive; the revenue obtained from any given measure would depend on changes in the price of motor fuels, growth in the number of annual auto registrations, and other factors.", "If Congress chooses not to impose new taxes and fees dedicated to the HTF, it could still maintain or expand the surface transportation program with general fund monies. Any of the financing options discussed above could be used to sustain the existing federal financing mechanism, the HTF, but could also be used to support the general fund if Congress considers alternatives to the trust fund financing model. This would weaken the historical link between the taxes and fees paid by highway users and spending on the nation's highways and bridges.\nThe Highway Trust Fund was set up as a temporary device that was supposed to disappear when the Interstate System was finished. It has endured, and its breadth of financing has expanded well beyond the Interstates, most significantly with the 1982 creation of the mass transit account within the fund to support public transportation spending. But the HTF is certainly not essential to a federal role in transportation funding. Congress routinely funds large infrastructure projects, such as those constructed by the Army Corps of Engineers, from general fund appropriations. Before 1956, it funded highway projects using annual appropriations. As recently as the 1990s, significant highway programs such as the Appalachian Development Highway System were funded from the general fund.\nOne alternative would be to eliminate the trust fund structure, thereby doing away with its complicated budget framework of contract authority, obligations, and apportionments. Eliminating the trust fund would force surface transportation to compete with other federal programs for funding each year, possibly leading to less spending on transportation.\nThere could be advantages to moving away from trust fund financing of surface transportation. Until recently, one of the most intractable arguments in reauthorization debates concerned which states were \"donors\" to transportation programs and which were \"donees.\" Donor states were states whose highway users were estimated to pay more to the highway account of the HTF than they received. Donee states received more than they paid. The donor-donee dispute was unique to the federal highway program, and occurred largely because of the ability to track federal fuel tax revenues by state. This issue has faded as injections of general fund revenues into the HTF have made all states donees, and would likely disappear if transportation-related taxes were deposited into the general fund instead of the trust fund. Treating fuel taxes as just another source of federal revenue would also dampen the long-standing link between road user charges and program spending. This would provide Congress with greater flexibility to allocate funding among various transportation modes and between transportation and nontransportation uses.\nMost trust-fund outlays take the form of formula grants over which states have a great deal of spending discretion. While there are numerous federal requirements attached to trust fund expenditures, there have been until recently relatively few performance-oriented goals that the states are required to meet in selecting projects to be undertaken with federal monies. Performance measures might be easier to implement without formula programs that automatically apportion funding to the states.\nEliminating the trust fund might also allow for creativity in thinking about the provision of transportation infrastructure across the modal boundaries that now define much of federal transportation spending. Historically, important parts of U.S. transportation infrastructure, such as the transcontinental railroads and the Panama Canal, were authorized by specific congressional enactments rather than grant programs. Reconsidering the trust fund structure might reopen discussion of this approach.\nAnother alternative would be to again devote all trust fund revenues exclusively to highway spending. This would leave transit and other surface transportation programs to be funded exclusively by annual appropriations of general funds. Such a change would have political implications. Since the early 1990s, public transportation and cycling advocates, environmentalists, and a wide range of other groups have become full-fledged supporters of the surface transportation program, as it has benefited their interests. The expanded coalition supporting the surface transportation program played an important role in the hard-fought political battles since the early 1990s to pass multiyear surface transportation bills.\nAs was made clear by passage of the FAST Act, Congress has chosen to support the current HTF funding model by transferring funds, mostly from the Treasury general fund. Whether such general fund support should continue is likely to become a major point of contention when Congress debates reauthorizing surface transportation programs beyond FY2020.", "By FY2020, the last year of the FAST Act, federal highway programs will have been funded for 12 years under a de facto policy of providing a Treasury general fund share. Congress could address the inadequacy of motor fuel taxes to meet surface transportation needs by making the general fund share permanent.\nThe public transportation titles of surface transportation bills already fund the New Starts program with general fund appropriated funds. The Federal Aviation Administration (FAA) budget is also supported by a combination of trust funds and general funds; the general fund amount is supposed to approximate the value of the airways system to military and other government users and to \"societal\" nonusers (people who do not fly but, for example, benefit from the delivery of freight via aircraft). A similar argument could be made regarding the public good benefits of a well-functioning highway system to justify an annual general fund appropriation to support spending on roads.\nShould Congress agree on a future policy of providing an annual general fund share for federal highway funding, the financing structure of the federal-aid highways program could change. Congress would have the choice of appropriating the general fund share to the HTF and maintaining the programmatic status quo, or it could fund some programs from the trust fund and fund others via appropriations. Congress could also consider a two-pronged approach to authorization. It could authorize the trust funded programs separately from the appropriated programs. This would give Congress the option of trust funding a very long (perhaps as much as 10-year) authorization bill for programs that fund projects that typically take many years to plan and complete. The long-term authorization could be paired with a series of short-term bills funded with appropriated general funds for programs whose projects are more likely to be completed quickly.", "Toll roads have a long history in the United States, going back to the early days of the republic. During the 18 th century, most were local roads or bridges that could not be built or improved with local government tax revenue alone. However, beginning with the Federal Aid Road Act of 1916 (39 Stat. 355), federal law has included a prohibition on the tolling of roads that benefited from federal funds. During the late 1940s and early 1950s, the prospect of toll revenues allowed states to build thousands of miles of limited-access highways without federal aid and much sooner than would have been the case with traditional funding. Despite this, the tolling prohibition was reiterated in the Federal-Aid Highway Act and Highway Revenue Act of 1956 (70 Stat. 374), which authorized funds for the Interstate System, created the HTF, and raised the fuel taxes to pay for their construction. Over the last three decades the prohibition has been moderated so that exceptions to the general ban on tolling now cover the vast majority of federal-aid roads and bridges. There remains a ban on the tolling of existing Interstate System highway surface lane capacity. While new toll facilities have opened in several states, some of those projects have struggled financially.\nGenerally, there are three levels of restrictions on tolling of federal-aid highways. Non-Interstate System highways and bridges may be converted to toll roads but only after reconstruction or replacement. Existing Interstate System surface lane capacity may not be converted to toll roads except under the auspices of two small pilot programs. However, Interstate System bridges and tunnels may be converted if they are reconstructed or replaced. New capacity on the federal-aid highway system generally may be tolled. There are no federal restrictions on tolling of roads off of the federal-aid system.", "Highway toll revenue nationwide came to $14.025 billion in FY2015, according to FHWA. While the amount of toll revenue has grown significantly in recent years, toll revenue as a share of total spending on highways has been relatively steady for more than half a century, in the range of roughly 5% to 6%. On average, facility owners collected $2.38 million per mile of toll road or bridge in FY2015, but revenue per mile varies greatly among toll facilities. All revenue from tolls flows to the state or local agencies or private entities that operate tolled facilities; the federal government does not collect any revenue from tolls. However, a major expansion of tolling might reduce the need for federal expenditures on roads. There are three possible means of increasing revenue from tolling:\nIncrease the E xtent of T oll R oads. FHWA statistics identify 5,882 tolled miles of roads, bridges, and tunnels as of January 1, 2016, a net increase of 1,161 miles, or 25%, over 1990. Toll-road mileage comprises only 0.6% of the 1,016,964 miles of public roads eligible for federal highway aid. While there may be many existing roads on which tolling would be financially feasible, the vast majority of mileage on the federal-aid system probably has too little traffic to make toll collection economically viable. Increase T oll- R oad U sage. The financing of many of the toll roads constructed in the 20 th century was based on the assumption that the new roads would lead to increased vehicle usage. Although vehicles miles traveled declined in the wake of the recession that began in 2007, vehicle use has been rising again since 2014. If this trend continues it bodes well for toll revenues, which would rise with increasing traffic. On the other hand, if demographic trends and social changes, such as the increased popularity of center-city living, eventually lead to slower growth in personal motor vehicle use, then toll revenues may be constrained in the longer term. If that proves to be the case, higher traffic volume may contribute little to increased toll revenues. Increase the A verage T oll per M ile. Raising tolls can be politically challenging, especially when revenue is used for purposes other than building and maintaining the toll facility. Trucking interests frequently raise opposition to rate changes that increase truck tolls relative to automobile tolls. Where roads are operated by private concessionaires, the operators' contracts with state governments typically specify the maximum rate at which tolls can rise. Additionally, large increases can encourage motorists to use competing nontolled routes.\nThese factors suggest that imposing tolls on individual transportation facilities is likely to be of only limited use in supporting the overall level of highway capital spending. Furthermore, some states, particularly those with low population densities, may have few or no facilities suitable for tolling. Toll collection itself can be costly; collection costs on many existing toll roads exceed 10% of revenues. For these reasons, while tolls may be an effective way of financing specific facilities—especially major roads, bridges, or tunnels that are likely to be used heavily and are located such that the tolls are difficult to evade—they would likely be less effective in providing broad financial support for surface transportation programs.", "Value capture represents an attempt to cover part or all of the cost of transportation improvements from landowners or developers who benefit from the resulting increase in the value of real property. Value capture revenue mechanisms include tax increment financing, special assessments, development impact fees, negotiated exactions, and joint development. The federal role in value capture strategies may be limited, as the Government Accountability Office (GAO) has noted, but it is worth describing these strategies to provide a fuller picture of the ways in which they might supplement or supplant more commonly used funding and financing mechanisms.\nValue capture is not a new idea. Land developers built and operated streetcar systems in the late 19 th century as a way to sell houses on the urban fringe, for example. Much of the recent experience with value capture has been associated with public transit. GAO found that the most widely used mechanism is joint development, in which a real estate project at or near a transit station is pursued cooperatively between the public and private sectors. An example might involve a transit agency leasing the unused space over a station, its \"air rights,\" to a developer in exchange for a regular payment.\nGAO found that joint development has generated relatively small amounts of money for transit agencies. For example, the Washington Metropolitan Area Transit Authority received about $10 million from joint development in FY2016, about 1% of its operating revenue. However, less widely used strategies, such as special assessment districts, are estimated to generate significant amounts of funding for specific projects. In a special assessment district, properties within a defined area are assessed a special tax for a specific purpose. A special assessment district in Seattle produced $25 million of the $53 million (47%) needed to fund the South Lake Union streetcar project.\nThere has been less use of value capture in highway projects, but this appears to be changing. Texas, for example, has authorized the use of tax increment financing through the creation of transportation reinvestment zones to help fund highway projects. Special assessment districts also have been set up in several states, including Florida and Virginia, to fund highway projects. In Virginia a special assessment district was used to help fund the expansion of Route 28 near Washington Dulles International Airport beginning in the late 1980s.", "Growing demands on the transportation system and constraints on public resources have led to calls for more private-sector involvement in the provision of highway and transit infrastructure through public-private partnerships (P3s), which can be designed to lessen demands on public-sector funding. Private involvement can take a variety of forms, including design-build and design-build-finance-operate agreements. Typically, the \"public\" in public-private partnerships refers to a state government, local government, or transit agency. The federal government, nevertheless, exerts influence over the prevalence and structure of P3s through its transportation programs, funding, and regulatory oversight.\nTo be viable, P3s involving private financing typically require an anticipated project-related revenue stream from a source such as vehicle tolls, freight container fees, or, in the case of transit station development, building rents. Private-sector resources may come from an initial payment to lease an existing asset in exchange for future revenue, as with the Indiana Toll Road and Chicago Skyway, or they may arise from a newly developed asset that creates a new revenue stream. Either way, a facility user fee, such as a toll, is often the key to unlocking private-sector participation and resources.\nIn some cases, private-sector financing is backed by \"availability payments,\" regular payments made by government to the private entity based on negotiated quality and performance standards of the facility. Aversion in the private sector to the risk that too few users will be willing to pay for use of a new facility has made availability payment P3s more common over the past few years. As a result, state and local governments are retaining this risk, known as demand risk, more often.\nIt is widely believed that hundreds of billions of dollars of private monies are available globally for infrastructure investment, such as surface transportation. To date, however, the number of transportation P3s in the United States is relatively small, as is the amount of long-term private financing provided. According to one source, from 1993 through September 2017 there were 30 surface transportation P3s involving long-term financing, with total project costs totaling $39 billion. This includes the 99-year lease of the Chicago Skyway; the I-595 managed lanes project in Florida; and the Purple Line light rail transit project in Maryland. P3s and private investment in surface transportation are relatively larger in many other countries, including Portugal, Spain, and Australia.\nIt is quite possible that private investment will grow in the future, but many impediments remain. Some of the major ones include the relative attractiveness of the tax-exempt financing available to state and local government, political opposition to tolling and privatization, and difficulties associated with project development. Private-sector financing generated through P3s might best be seen as a supplement to traditional public-sector funding rather than as a substitute.\nIn addition to attracting private capital, P3s may generate new resources for highway and transit infrastructure in at least two ways. First, P3s may improve efficiency through better management and innovation in construction, maintenance, and operation—in effect providing more infrastructure for the same price. Private companies may be more able to examine the full life-cycle cost of investments, whereas public agency decisions are often tied to short-term budget cycles. Such cost reductions may not materialize, however, if the public sector has to spend a substantial amount of time on procurement, oversight, dispute resolution, and litigation. GAO argues that most state governments lack the capacity to manage P3 contracts.\nSecond, P3s may reduce government agencies' costs by transferring the financial risks of building, maintaining, and operating infrastructure to private investors. These risks include construction delays, unexpectedly high maintenance costs, and the possibility that demand will be less than forecast. There is a danger, however, that this transfer of risk may prove illusory if major miscalculations force the public agency to renegotiate contracts or provide financial guarantees. Moreover, as GAO points out, not all the risks can or should be shifted to the private sector. For instance, private investors are unlikely to accept the risk of higher construction costs due to delays in the environmental review process.", "Municipal bonds, debt instruments used by states and all types of local government, are a major source of financing for transportation infrastructure. The interest on municipal bonds is generally exempt from federal income tax; consequently, an investor will usually accept a lower interest rate than on a non-tax-exempt bond, and the borrower can finance a project at a lower cost. The forgone tax revenue is the federal government's contribution to a project financed with municipal bonds.\nPrivate activity bonds (PABs) are a type of municipal bond in which a state or local government acts as a financial intermediary for a business or individual. PABs are not eligible for federal tax exemption unless Congress grants an exception for a certain purpose and other requirements are met. Congress has approved limited use of tax-exempt private activity bonds for airports, docks and wharves, mass commuting facilities, high-speed intercity rail facilities, and qualified highway or surface freight transfer facilities (26 U.S.C. §142). In the case of qualified highway or surface freight transfer facilities, the Secretary of Transportation must approve the issuance of PABs, and the aggregate amount allocated must not exceed $15 billion (26 U.S.C. §142(m)(2)). As of January 2017, $6.6 billion of the $15 billion had been issued to finance 17 projects, and another $4.3 billion had been allocated to eight other projects. There have been proposals to increase the bond issuance cap so that PABs, which are seen as an important support for P3 deals, can continue to be issued in the future.\nWhile municipal bonds are a popular financing method, there are a number of potential disadvantages to their use. Because they are issued by state and local government, the federal government has less control over the types of projects supported and the amount of the federal contribution than it does with grant and loan programs. Tax-exempt bonds, moreover, can be an inefficient way to subsidize state and local debt because borrowing costs are reduced by less than the forgone revenue. As the Congressional Budget Office notes, \"the remainder of that tax expenditure accrues to bond buyers in the highest income tax brackets.\" Also, tax-exempt bonds are unattractive to investors that do not have a federal tax liability, such as pension funds and foreign individuals and organizations, shrinking the potential funds available to state and local governments.\nTax credit bonds, an alternative type of tax-preferred municipal bond, might help to overcome some of these limitations. Tax credit bonds typically do not pay interest. Instead, the investor receives a tax credit, an amount that is the same for investors in different tax brackets. Tax credit bonds, therefore, are more efficient than tax-exempt bonds because the revenue forgone by the federal government equals the reduction in borrowing costs that state and local governments receive. Unused tax credits may be carried forward to another year or sold to another entity with tax liability. With some types of tax credit bonds known as issuer credit or direct pay bonds, the credit is paid to the issuer and the investor gets interest similar to taxable securities. Consequently, tax credit bonds can be attractive to investors with no federal tax liability.\nFederal authority exists for state and local governments to issue some types of tax credit bonds, but none can be used to finance transportation projects. Tax credit bonds authorized by the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ), known as Build America Bonds, were used to finance a wide range of projects including transportation. The authorization to issue these bonds expired December 31, 2010.", "An existing federal mechanism for providing credit assistance to relatively large transportation infrastructure projects is financing under the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, enacted in 1998. TIFIA provides federal credit assistance in the form of secured loans, loan guarantees, and lines of credit.\nFederal credit assistance reduces borrowers' costs and lowers project risk, thereby helping to secure other financing at rates lower than would otherwise be possible. Another purpose of TIFIA funding is to leverage nonfederal funding, including investment from the private sector. Loans must be repaid with a dedicated revenue stream, typically a project-related user fee, such as a toll, but sometimes dedicated tax revenue. As of January 2018, according to DOT, TIFIA had provided assistance of nearly $30 billion to more than 70 projects. The overall cost of the projects supported is estimated to be $107 billion.\nThe FAST Act reduced funding for the TIFIA program after it had been greatly increased under the previous authorization, the Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ), enacted in July 2012. Prior to MAP-21, the TIFIA authorization was $122 million annually. This was increased to $750 million in FY2013 and $1 billion in FY2014 and FY2015. Under the FAST Act, the direct authorization for TIFIA was $275 million in both FY2016 and FY2017, $285 million in FY2018, and $300 million in both FY2019 and FY2020. Because the government expects its loans to be repaid, an appropriation need cover only administrative costs and the subsidy cost of credit assistance. According to the Federal Credit Reform Act of 1990, the subsidy cost is \"the estimated long-term cost to the government of a direct loan or a loan guarantee, calculated on a net present value basis, excluding administrative costs.\" According to DOT, $1 in TIFIA funding historically has provided about $10 in credit assistance, a 10% subsidy cost, although in recent years each dollar has provided closer to $14.\nSeen in isolation, the cut in the TIFIA authorization reduced DOT's capacity to issue loans by approximately $7.25 billion in FY2016, assuming a 10% subsidy cost. However, the FAST Act also allowed states to use funds they receive from two other highway programs to pay for the subsidy and administrative costs of credit assistance. These two programs are the Nationally Significant Freight and Highway Projects Program (NSFHPP), authorized at $800 million in FY2016, and the National Highway Performance Program (NHPP), authorized at $22.3 billion in FY2016. If states decide to use their formula funding in this way, the potential amount of loans and other credit assistance may be much greater than would be possible using the $275 million direct authorization alone. The Transportation Investment Generating Economic Recovery (TIGER) Grant Program, funded by general fund appropriations, also can be used by grant recipients to pay the subsidy and administrative costs of a TIFIA loan.\nSeveral changes to the TIFIA program in the FAST Act were aimed at making it easier to finance smaller projects, particularly those in rural areas. These provisions included\nproviding authority for a TIFIA loan to a state infrastructure bank (SIB) to capitalize a \"rural project fund\"; adding transit-oriented development (TOD) infrastructure as an eligible project (TOD infrastructure is a \"project to improve or construct public infrastructure that is located within walking distance of, and accessible to, a fixed guideway transit facility, passenger rail station, intercity bus station, or intermodal facility\"); allowing up to $2 million of TIFIA budget authority each fiscal year to pay the application fees for projects costing $75 million or less instead of requiring payment by the project sponsor; modifying or setting the minimum project cost thresholds for credit assistance at $10 million for TOD projects, the capitalization of a rural project fund, and local government infrastructure projects; and providing for a streamlined application process for loans of $100 million or less.\nIn addition, the FAST Act authorized the creation of a new National Surface Transportation and Innovative Finance Bureau within DOT to administer federal transportation financing programs, specifically the TIFIA program, the SIB program, the Railroad Rehabilitation and Improvement Financing (RRIF) Program, and the allocation of authority to issue private activity bonds for qualified highway or surface freight transfer facilities. To fulfill this mandate, DOT established the Build America Bureau in July 2016. The bureau also will be responsible for establishing and promoting best practices for innovative financing and P3s, and for providing advice and technical expertise in these areas. The bureau will administer the new discretionary Nationally Significant Freight and Highway Projects grant program, known as INFRA grants, and will have responsibilities related to procurement and project environmental review and permitting.", "Congress has considered several proposals to create a national infrastructure bank to help finance infrastructure projects. One purported advantage of a national infrastructure bank over other loan programs, such as TIFIA, is that it would have more independence in its operation, such as in project selection, and have greater expertise at its disposal. Additionally, a national infrastructure bank would likely be set up to help a much wider range of infrastructure projects, including water, energy, and telecommunications infrastructure. Proponents claim that the best projects, or at least those that are the most financially viable, would be selected from across these sectors.\nIn many formulations, capitalization of a national infrastructure bank comes from an appropriation, but in others the bank is authorized to raise its own capital through bond issuance. By issuing securities that are not tax exempt, it could tap pools of private capital that do not invest in tax-exempt bonds, such as pension funds and foreign citizens, the traditional source of much project finance. Tax-exempt municipal securities are unattractive to some investors, either because individual issues are too small to interest them or because the investors do not benefit from the tax preference. Taxable bonds with long maturities might be attractive to some of these investors. An infrastructure bank also might reduce the federal government's share of project costs, putting greater reliance on nonfederal capital and user fees.\nMost infrastructure bank proposals assume the bank would improve the allocation of public resources by funding projects with the highest economic returns regardless of infrastructure system or type. Selection of the projects with the highest returns, however, might conflict with the traditional desire of Congress to assure funding for various purposes. In the extreme case, major transportation projects might not be funded if the bank were to exhaust its lending authority on water or energy projects offering higher returns.\nLimitations of a national infrastructure bank include its duplication of existing programs like TIFIA and the Wastewater and Drinking Water State Revolving Funds. An infrastructure bank may not be the lowest-cost means of increasing infrastructure spending. CBO has pointed out that a special entity that issues its own debt would not be able to match the lower interest and issuance costs of the U.S. Treasury. In some formulations, a national infrastructure bank exposes the federal government to the risk of default.", "SIBs already exist in many states. In 32 states and Puerto Rico, SIBs were created pursuant to a federal program originally established in surface transportation law in 1995 ( P.L. 104-59 ). Several other states, among them California, Florida, Georgia, Kansas, Ohio, and Virginia, have state investment banks that are unconnected to the federal program. Local governments have also begun to embrace the idea. The City of Chicago has established a nonprofit organization, the Chicago Infrastructure Trust, as a way to attract private investment for public works projects, and Dauphin County, PA, has established an infrastructure bank funded from a state tax on liquid fuels to make loans to the 40 municipalities and private project sponsors within its borders.\nOne of the biggest stumbling blocks to federally authorized SIBs has been capitalization. States can capitalize the banks using some of their apportioned and allocated highway and transit funds, and any amount of rail program funds. Under the FAST Act, capitalization of a rural project fund may now be made by a loan from the TIFIA program. Federal funds have to be matched with state funds, generally on an 80% federal, 20% state basis. Authority to use federal transportation funds for this purpose lapsed between the beginning of FY2010 and enactment of the FAST Act in December 2015, and few states took advantage of this authority prior to FY2010 because they preferred to use their federal grant funds for other purposes." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 3, 3, 3, 1, 2, 2, 2, 2, 3, 2, 1, 1, 1, 2, 1, 1, 1, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "h0_full h1_title", "h1_full", "h1_full", "", "h0_full", "", "", "", "", "h2_full", "", "", "h2_full", "h2_full", "", "", "h0_full h2_full", "", "h0_title h2_title", "h0_full h2_full", "", "h2_full", "h2_full", "", "", "" ] }

{ "question": [ "How were federal surface transportation programs funded, historically?", "How have taxes changed since 1993?", "How had driving rates supplemented the lack of change in taxes?", "How does this compare to the current situation?", "How are future changes in the fuel economy likely to change fuel tax revenue?", "To what extent has Congress addressed the recent fuel tax issues?", "How has Congress financed the federal surface transportation program?", "What did the most recent reauthorization act stipulate?", "How common is this funding policy?", "To what extent did the FAST Act consider long-term funding?", "How will the end of FAST affect the HTF?", "What are the possible effects of raising motor fuel taxes?", "What could be an alternative to raising motor fuel taxes?", "What is a solution so that HTF could continue their operations?", "How could these difficulties cause major changes?", "To what extent could private investment and federal loans be used?", "What opportunities does tolling offer?" ], "summary": [ "For many years, federal surface transportation programs were funded almost entirely from taxes on motor fuels deposited in the Highway Trust Fund (HTF).", "Although there has been some modification to the tax system, the tax rates, which are fixed in terms of cents per gallon, have not been increased at the federal level since 1993.", "Prior to the recession that began in 2007, annual increases in driving, with a concomitant increase in fuel use, were sufficient in most years to keep revenue rising steadily.", "This is no longer the case.", "Although vehicle miles traveled have recently surpassed prerecession levels, future increases in fuel economy standards are expected to reduce motor fuel consumption and therefore fuel tax revenue in the years ahead.", "Congress has yet to address the surface transportation program's fundamental revenue issues, and has given limited legislative consideration to raising fuel taxes in recent years.", "Instead, since 2008 Congress has financed the federal surface transportation program by supplementing fuel tax revenues with transfers from the U.S. Treasury general fund.", "The most recent reauthorization act, the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94), was enacted on December 4, 2015, and authorized spending on federal highway and public transportation programs through September 30, 2020. The act provided $70 billion in general fund transfers to the HTF to support the programs over the five-year life of the act.", "This use of general fund transfers to supplement the HTF will have been the de facto funding policy for 12 years when the FAST Act expires.", "The FAST Act did not address funding of surface transportation programs over the longer term.", "Congressional Budget Office (CBO) projections indicate that the HTF revenue shortfalls relative to spending will reemerge following expiration of the FAST Act.", "Raising motor fuel taxes could provide the HTF with sufficient revenue to fully fund the program in the near term, but may not be a viable long-term solution due to expected declines in fuel consumption. It would also not address the equity issue arising from the increasing number of personal and commercial vehicles that are powered electrically and therefore do not pay motor fuel taxes.", "Replacing the fuels tax with a mileage-based road user charge or vehicle miles traveled (VMT) charge would need to overcome a variety of financial, administrative, and privacy barriers, but could be a solution in the longer term.", "Treasury general fund transfers could continue to be used to make up for the HTF's projected shortfalls but could require budget offsets of an equal amount.", "The political difficulty of adequately funding the HTF could lead Congress to consider altering the trust fund system or eliminating it altogether. This might involve a reallocation of responsibilities and obligations among federal, state, and local governments.", "Private investment and federal loans can meet some surface transportation needs, but many projects are not well suited to alternative financing.", "Tolling may be an effective way to finance specific roads, bridges, or tunnels that are likely to have heavy use and are located such that the tolls are difficult to evade, but tolls are unlikely to provide broad financial support for surface transportation programs." ], "parent_pair_index": [ -1, -1, 1, 2, 2, -1, 0, 0, 2, 2, 0, -1, -1, -1, 2, 2, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 1, 3, 3, 3, 3, 3, 3 ] }

{ "title": [ "", "Latest Developments", "Policy Issues", "Brief History of the Chemical Weapons Program in Syria", "Current Chemical Weapons Program", "Syrian Statements on Chemical and Biological Weapons", "Chemical Weapons Security", "Chemical Weapons Use and Potential Responses", "Pre-August 2013 Uses", "August 21, 2013, Attack", "U.N. Investigation", "Possible Responses to CW Use", "Chemical Weapons Dismantlement", "OPCW Executive Council Decision", "Dismantlement Plan Elements", "Destruction88", "Timeline", "Access", "Resources", "Compliance", "U.N. Security Council Resolution 2118", "Biological Weapons", "Cooperative Threat Reduction Programs", "Legislation" ], "paragraphs": [ "", "In a sharp reversal of its policy of denying the existence of a chemical weapons program, the Syrian government agreed to destroy its chemical weapons stocks and joined the treaty banning the possession and use of these weapons, the Chemical Weapons Convention (CWC), on September 12. President Obama had been seeking congressional authorization to use military force in response to a large-scale chemical weapons attack by Syria, but on September 10 asked congressional leaders to postpone a vote in order to give the Administration time to pursue a U.S.-Russian diplomatic initiative to achieve chemical weapons disarmament in Syria.\nOn September 14, 2013, Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov announced a proposed Framework for Elimination of Syrian Chemical Weapons. The target dates for implementation are completion of initial on-site inspections of Syria's declared chemical weapons-related sites by November 2013; destruction of Syrian chemical weapons production, mixing, and filling equipment by November 2013; and complete elimination of all chemical weapons material and equipment in the first half of 2014. Details are discussed in the \" Chemical Weapons Dismantlement \" section below.\nAs a first step, the Syrian government is required to declare all its stocks, munitions, precursor chemicals, and production and storage facilities to the Organization for the Prohibition of Chemical Weapons (OPCW). The Syrian government submitted this document to the OPCW on September 20, 2013. Based on this declaration, the OPCW recommended a plan for CW destruction, which was approved by its Executive Council on September 27, 2013. International inspectors would first verify that the declaration was accurate and complete, and are to begin inspections by October 1. Then, inspectors would oversee that the amounts declared were then destroyed. They would also check that any related production facilities were shuttered or converted. The United Nations and the OPCW have had experience successfully monitoring the destruction of chemical weapons in several countries. Syria has requested technical assistance for the CW dismantlement process, which would likely include U.S. technical or financial assistance to the OPCW. In past cases of chemical weapons elimination, the country holding the stocks was responsible for securing the stockpile and related facilities while awaiting dismantlement. U.N. Security Council Resolution 2118 authorizes measures under Chapter VII of the U.N. Charter if Syria does not comply with its chemical weapons disarmament commitments. Under Chapter VII, a response could include sanctions or use of military force.\nThe U.N. Mission to Investigate Allegations of the Use of Chemical Weapons in the Syrian Arab Republic released its report on September 16. Based on its investigation on the ground in Syria, the inspection team concluded that surface-to-surface rockets containing the nerve agent sarin were used in the Ghouta area of Damascus against civilians on a \"relatively large scale.\"", "The Syrian case may be the first time the international community has faced a civil war in a state with a known stockpile of chemical weapons. This contingency has raised two major policy concerns: the use of chemical weapons by the regime of President Bashar al Asad; and whether the regime could lose control over these weapons. The first scenario has apparently come to pass; the British, French, and U.S. governments have issued reports assessing that the Syrian government has used chemical weapons against opposition forces in the country. The largest-scale use to date was on August 21, 2013.\nPresident Barack Obama and other world leaders had said that the use of chemical weapons against the civilian population would be met with consequences, which could include the use of military force. For example, President Obama suggested during an August 2012 press briefing that the United States might take military action against Syria if Damascus used or lost control of its chemical weapons, explaining that \"a red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized. That would change my calculus.\"\nOn August 31, 2013, President Obama stated that the United States should respond with \"military action against Syrian regime targets\" and added that he would ask Congress to grant authorization for the use of military force. The White House had previously announced on June 13, 2013, that the Syrian government had used chemical weapons \"on a small scale against the opposition multiple times in the last year.\" The statement added that, in response to the Asad regime's use of chemical weapons, the President had authorized the expansion of military assistance to the opposition forces in Syria.\nU.S. officials have expressed confidence that chemical weapons stocks in Syria are secured by the Asad regime, which dispatched elite Special Forces for that purpose. Due to the urgency of preventing access to these weapons by unauthorized groups, including terrorists, the United States government has been preparing for scenarios to secure the weapons in the event of the Asad regime's loss of control. However, this presents unique challenges. In testimony before the Senate Armed Services Committee on March 7, 2012, then-Secretary of Defense Leon Panetta said, \"It's 100 times worse than what we dealt with in Libya. And for that reason, that's why it's raised even greater concerns about our ability to address how we can secure those sites.\" The Pentagon has estimated that, in a non-permissive environment, it would take over 75,000 troops to neutralize the chemical weapons.\nPossible scenarios of highest concern include Syrian government use of chemical weapons—authorized or unauthorized by local commanders; or Syrian government loss of control through either defections by local commanders in charge of chemical weapons sites or a facility turnover in the course of battle. The United States and other governments have warned Syria that use of chemical weapons could prompt unspecified response, presumed to be military intervention. At the same time, the United States has been urging Russia, historically a patron of Syria, to encourage Asad to maintain control over chemical weapons. Some have suggested that the United States should communicate to Syrian government commanders at the sites that they will be rewarded for maintaining control of these weapons and protecting these facilities from extremist elements. Other possible options include training or assisting the Free Syrian Army in securing chemical weapons, should that army capture such facilities. Preventing chemical weapons from falling into the hands of extremist elements is the ultimate goal of such policies. There will continue to be limits, however, to the United States' ability to monitor the security of these stockpiles and limits to intelligence about where, how well, and by whom they are being secured.\nSpecific scenarios to secure chemical weapons have not been discussed in detail to date in open testimony. Even before the current proposal laying out plans for chemical weapons destruction in Syria, some analysts have proposed that advanced planning for international teams would be required. Press reports say that a joint exercise in Jordan in the spring of 2012 included scenarios for securing chemical weapons stocks. The United States and the Czech Republic, which leads NATO chemical defense preparation, are also cooperating to prepare for various scenarios. Israeli President Shimon Peres has appealed to Russian President Putin to urge Asad to ensure chemical weapons' security. The proposal being discussed by Secretary Kerry and Russian Foreign Minister Lavrov in Geneva most likely includes security of the chemical weapons stockpile awaiting eventual dismantlement. In past cases, the government possessing the chemical weapons has been responsible for guarding chemical weapons stocks and facilities awaiting dismantlement.", "Syria has had a chemical weapons program \"for many years,\" according to an Office of the Director of National Intelligence (ODNI) report to Congress covering 2011. However, U.S. official assessments regarding the origin of Syria's chemical weapons program have varied over the years. A 1995 intelligence assessment states that \"Syria has had a chemical warfare program since the mid-1980s.\" However, a 1997 Department of Defense report states that the program began in the 1970s.\nDamascus probably developed its chemical weapons program in response to a perceived threat from Israel, according to a 1988 U.S. intelligence assessment and the 1997 Defense Department report. Some analysts point out that Egypt provided Syria with a small number of chemical weapons and delivery systems in the lead-up to the Yom Kippur War in 1973. Syria began to expand its program in the late 1970s and early 1980s. Declassified U.S. documents indicate that the Soviet Union supplied Syria with chemical agents, delivery systems, and training related to chemical weapons use. Syria is likely to have procured equipment and precursor chemicals from private companies in Western Europe.\nU.S. government documents indicate that Damascus has sought a self-sufficient chemical weapons program since the mid-1980s. A 1983 Special National Intelligence Estimate indicated that Syria did not have an \"indigenous capability to produce [chemical weapon] agents or material,\" but a 1985 State Department telegram suggests that the country was attempting to develop its own chemical weapons. Stating that \"Damascus is enhancing its chemical weapon capability,\" the cable explains that the United States was imposing export controls on eight dual-use chemicals that \"can be used … in the manufacture of chemical weapons.\" Twelve years later, Syria was seeking an \"independent chemical warfare capability,\" according to the Defense Department. Damascus has apparently not yet achieved this goal.\nLike Egypt, Syria has never signed the Chemical Weapons Convention (CWC), which prohibits the development, production, stockpiling, transfer, and use of chemical weapons. However, in 1968, Syria acceded to the 1925 Geneva Protocol for the Prohibition of the Use in War of Asphyxiating, Poisonous or Other Gases, and of Bacteriological Methods of Warfare, which bans the use of chemical or biological agents in warfare. Therefore, \"Syria has formally renounced both first and retaliatory use of chemical or biological weapons against any State,\" according to the Organization for the Prohibition of Chemical Weapons, which implements the CWC. Syria has said that its ratification of the CWC (and BWC) is contingent on establishment of a zone free of weapons of mass destruction in the Middle East. Syrian Foreign Minister Walid Moallem stated during a July 29, 2012, press conference that Damascus supports the establishment of such a zone.", "\"There is no doubt amongst the UK intelligence community that the Syrian regime possesses vast stockpiles\" of chemical weapons, according to a British Parliamentary report published in July 2013. Israel Defense Forces Deputy Chief of Staff Major-General Ya'ir Nave described Syria's chemical weapons arsenal as \"the largest in the world\" during a June 2012 interview. Damascus possesses mustard blister agent, sarin nerve agent, and VX nerve agent, according to official U.S. assessments. According to a French intelligence report published on September 2, 2013, Syria has more than 1,000 metric tons of chemical warfare agents and precursor chemicals. This stockpile includes several hundred metric tons of sarin, which represents the bulk of Syria's chemical weapons stockpile. Syria also has several hundred metric tons of mustard agent in ready-to-use form and several tens of metric tons of VX. The sarin and VX are, in part, stored in binary form (see below for a description of binary chemical munitions). Syria is developing both another blister agent (nitrogen-based mustard) and a nerve agent more toxic than sarin.\nThe country's chemical weapons and related facilities appear to be distributed throughout the country. U.S. Defense Department Press Secretary George Little told reporters on July 24, 2012, that Syria has \"a really distributed network of [chemical weapons] stockpiles.\" Similarly, Director of National Intelligence James Clapper told the Senate Armed Services Committee on February 16, 2012, that Damascus has \"an extensive network\" of chemical weapons installations.\nAs noted, Syria has sought an independent chemical weapons production capability for some time. However, according to the ODNI report covering 2011, \"Syria remains dependent on foreign sources for key elements\" of its chemical weapons program, \"including precursor chemicals.\" Defense Intelligence Agency (DIA) Director Michael Flynn made a similar statement in April 2013 congressional testimony. Precursor chemicals are generally dual-use chemicals with legitimate industrial uses that can be combined as feedstock to produce blister or nerve agents. Syria appears to lack the capacity to independently produce key precursors. The potency and effectiveness of Syrian chemical agents are unknown since precursor chemicals may degrade over time, but, as noted, Syria has used chemical weapons with some apparent effectiveness.\nAccording to the ODNI report covering 2011, Syria's chemical weapons agents \"can be delivered by aerial bombs, ballistic missiles, and artillery rockets.\" It is worth noting that Syria has also been testing new methods of dispersing chemical agents, according to the September 2013 French intelligence report.\nAccording to an August 30, 2013, White House statement, the government \"has thousands of munitions that can be used to deliver chemical warfare agents\" and \"has the ability to strike simultaneously in multiple locations.\" The September 2013 French intelligence report concurs that Syria has several thousand delivery vehicles. Regarding these delivery vehicles, public official U.S. assessments apparently only provide detailed information about Syria's ballistic missiles. According to Flynn's testimony and a State Department report covering 2008, Syria possesses \"several hundred\" Scud B, Scud C, Scud D, and SS-21 short-range ballistic missiles (SRBMs), all of which are mobile. Past U.S. official reports have not been entirely clear regarding the composition of Syria's Scud missile inventory; a 2006 report from the National Air and Space Intelligence Center (NASIC) includes the Scud B, Scud C, Scud D, and SS-21 in Syria's SRBM inventory, but NASIC reports from 2009 and 2013 omit the Scud B and Scud C.\nAn ODNI report to Congress covering 2006 indicates that Syria's Scud B, Scud C, and Scud D missiles, as well as its SS-21 missiles, \"can employ\" chemical warheads. But exactly which of these missiles are tasked with delivering chemical weapons is unclear. A 1988 U.S. assessment identifies Syria's Scud B missiles as delivery vehicles for chemical weapons. However, more recent U.S. government statements have been somewhat less precise. In June 2003, then-Under Secretary of State for Arms Control and International Security John Bolton told a House Committee on International Relations hearing that Syria \"is believed to have chemical warheads available for a portion of its Scud missile force,\" but he did not specify which types of Scud missiles were assigned this mission. DIA Director Flynn made a similar statement in his April 2013 testimony. While missile warheads can deliver non-persistent chemical agents such as sarin, persistent agents such as VX and blister are viewed by many chemical weapons experts as being more effectively employed by missile warheads than non-persistent agents.\nThe September 2013 French intelligence assessment provides more detail regarding Syria's ballistic missiles, specifying that Syria's Scud C missiles are capable of delivering sarin, VX, and mustard agent; the Scud B missiles are capable of delivering sarin and VX. Syria's SS-21 missiles are capable of delivering sarin, mustard agent, and VX, according to the report, which also identifies Syria's M600 missiles as capable of delivering sarin, mustard agent, and VX. Press reports have identified the M600 missile as a Syrian version of Iran's Fateh-110 SRBM. Certain Syrian missiles can carry up to several hundred liters of chemical agents, the report says, though it does not identify which missiles have this capability.\nA 1991 national intelligence estimate states that Syria had 500-kilogram aerial bombs containing sarin. The September 2013 French intelligence report also states that Damascus has such weapons. Each bomb can deliver 100-300 liters of sarin, depending on the model, the report says.\nSyria could also use its batteries of BM-21 multiple rocket launchers, which can more reliably deliver ordnance to a targeted area. According to the September 2013 French intelligence report, Syria has 302 and 320 mm artillery rockets with maximum ranges of 50 kilometers which can deliver sarin, mustard agent, and VX. Rocket launchers, when massed, can be used to rapidly achieve lethal doses of non-persistent agents in a concentrated area. While Scud missiles might be used for targeting a neighboring country, it is more likely that artillery rockets would be used on the battlefield against rebel forces. Indeed, Damascus has used artillery rockets in such a fashion, according to U.S. and French public assessments (see section on \" Chemical Weapons Use and Potential Responses \"). Syria possesses other tactical munitions which can deliver sarin at ranges of less than 50 km, the report says, but it does not specify further.\nWell-known difficulties in the employment of chemical weapons include inability to control the gas cloud resulting from an attack, putting one's own troops at risk without proper protection; contaminating the area attacked for days and weeks, depending on the chemical agent and weather conditions; and uncertain delivery of a lethal dose of the agent (due to dissipation of agents into the atmosphere or volatility of the agent).\nStorage and munitions design could impact the length of time Syrian forces or other forces would have to deploy chemical weapons. Chemical munitions are either unitary or binary in design. Unitary munitions are filled with the chemical agent at a central facility, while binary munitions include two separate canisters of precursor chemicals that combine either manually or automatically inside the weapon when launched. The exact composition of Syria's chemical munitions stockpile is not known from open sources, but a 1991 National Intelligence Estimate states that Damascus had developed binary Scud missile warheads and aerial bombs. More recently, DIA Director Flynn testified in April 2013 that Syria's chemical weapons stockpile \"includes either complete or binary components of sarin, mustard, and VX.\" If unitary munitions are employed, it is not known whether chemical agent is stored in bulk, or warheads are filled in advance. This process could take weeks to months for battlefield quantities and is considered a hazardous undertaking for troops involved in filling unitary chemical munitions, as well as those troops handling, transporting, and delivering them. If Syria used binary munitions, then the warheads could potentially be deployed immediately. Press reports in early December 2012 quoted unnamed officials as saying that Syria had combined the precursor chemicals for sarin into warheads, but no officials have publicly confirmed that information.\nThe Asad regime \"views chemical weapons as one of many tools in its arsenal, including air power and ballistic missiles, which they indiscriminately use against the opposition,\" the August 30, 2013, White House statement said. According to a French intelligence assessment published on September 2, 2013, the Asad government has adapted its chemical weapons munitions and tactics in order to achieve its goal of terrorizing the Syrian population. Specifically, the regime has been using chemical weapons for localized and targeted purposes during the current civil conflict. The munitions contain lower amounts of chemical agents.\nPresident Asad is \"the ultimate decision maker for the chemical weapons program and members of the program are carefully vetted to ensure security and loyalty,\" according to the U.S. assessment, which adds that the Syrian Scientific Studies and Research Center \"manages Syria's chemical weapons program.\" The September 2013 French assessment concurs with this judgment. The center \"is subordinate to the Syrian Ministry of Defense,\" according to the statement. An element of the institute called Branch 450 is responsible for filling chemical weapons and for the security of chemical stocks. Press reports have identified Branch 450 (which is referred to as Unit 450 in English language news accounts) as the Syrian military organization which controls the country's chemical weapons.", "In July, a Syrian official indicated that the government possesses chemical and biological weapons and may use them if attacked. During a July 23, 2012, press conference, Syrian Foreign Ministry Spokesperson Jihad Maqdisi stated that \"[a]ny chemical or biological weapons will never be used … in the Syrian crisis, no matter what the internal developments in this crisis are.\" He explained that \"[a]ll varieties of these weapons are stored and secured by the Syrian armed forces and under its direct supervision, and will not be used unless Syria is subjected to external aggression.\"\nSubsequent statements from Syrian officials have tried to walk back this statement, indicating that the country does not have chemical or biological weapons. Information Minister Imran al-Zubi said in a July 23, 2012, interview that Maqdisi's statement described above did not constitute an admission of chemical weapons possession, arguing that the statement was a response to accusations that Syria possesses such weapons. Asked during a July 29, 2012, press conference whether Syria possesses chemical weapons, Syrian Foreign Minister al-Mu'allim observed that Israel possesses nuclear weapons, \"regardless of whether we have or do not have\" chemical weapons. He was similarly ambiguous during a television interview broadcast on October 1, 2012. Syria's Information Minister Umran Ahid al-Zabi denied in an April 26, 2013, interview that Syria had used chemical weapons and repeated the regime's claim that Damascus does not possesses such weapons. He also stated that Syria does not possess biological weapons. President Asad stated in a newspaper interview published June 17, 2013, by the state-run Syrian news agency that \"we have never confirmed or denied the possession\" of chemical weapons.\nOn December 3, 2012, the Syrian Foreign Ministry stated that \"Syria has stressed repeatedly that it will not use these types of weapons, if they were available, under any circumstances against its people.\" Information Minister al-Zabi stated in late April 2013 that Syria would not use chemical weapons against Israel, even in the case of armed conflict between the two countries. President Asad denied the allegations of Syrian chemical weapons use (discussed below) in the June 2013 interview. Syrian Deputy Foreign Minister Faisal Mekdad denied that the government had carried out the August 21, 2013, attacks (discussed below) in an interview with the Associated Press.\nOn September 10, Syrian Foreign Minister Walid Moallem admitted to the arsenal by saying, \"We are ready to reveal the locations of the chemical weapon sites and to stop producing chemical weapons and make these sites available for inspection by representatives of Russia, other countries and the United Nations.\" On September 12, 2013, the Syrian government acceded to the Chemical Weapons Convention, and on September 20, 2013, it submitted an initial declaration of all its chemical weapons stocks and production facilities.", "In the past, the United States has discussed chemical weapons security with Damascus; State Department spokesperson Victoria Nuland told reporters February 10, 2012, that \"for many years we've had a dialogue with Syria about the importance of security and safety of these weapons.\" Officials from the Obama Administration and other governments have expressed concern regarding the security of Syria's chemical weapons, but U.S. officials have unanimously stated that the weapons stockpiles are secure. For example, former White House spokesperson Tommy Vietor stated on July 21, 2012, that the Obama Administration is \"very concerned\" about Syria's chemical weapons, but also noted that \"[w]e believe Syria's chemical weapons stockpile remains under Syrian government control.\" The United States is monitoring Syrian chemical weapons stockpiles, Vietor added. Then-Secretary of Defense Leon Panetta stated during a September 28, 2012, press briefing that Damascus has moved some chemicals in order to secure them better, adding that the country's \"main sites … still remain secure.\" Press reports of the movement of chemical weapons again appeared in early December 2012. According to Director of National Intelligence James Clapper's March 12, 2013, testimony before the Senate Select Committee on Intelligence, \"groups or individuals in Syria could gain access to [chemical weapons]-related materials.\" The United States continues to assess that the \"Assad [sic] regime maintains control\" of the government's chemical weapons, according to a June 13, 2013, statement from Deputy National Security Advisor for Strategic Communications Ben Rhodes.\nOfficials from other governments have expressed concern about Syria's chemical weapons security while acknowledging that, for the time being, the weapons are secure. Israeli Vice Prime Minister and Strategic Affairs Minister Moshe Ya'alon stated in June 2012 that \"[at] this stage, the Syrian regime has firm control over the chemical weapons arsenal.\" Russian Deputy Foreign Minister Sergey Ryabkov stated in an interview published September 6, 2012, that \"[w]e are fully sure—and we have official confirmation from Damascus on this—that the government of this country is taking all necessary measures to ensure the security of its chemical stockpile.\" More recently, British Defense Secretary Philip Hammond told reporters on May 2, 2013, that the Syrian government \"is largely in control of its chemical weapons, principal chemical weapons sites ... there is no evidence that the regime has lost control of significant chemical weapon sites yet.\" According to a British intelligence assessment published August 29, 2013, a \"number\" of Syrian opposition groups \"continue to seek a [chemical weapons] capability.\"\nObama Administration officials have indicated that the United States has been working with other regional governments, including Israel, to ensure the security of Syria's chemical weapons. During a July 29, 2012, press briefing, then-Secretary of Defense Panetta identified Jordan, Turkey, and \"other allies in the region\" as partners in this effort.\nU.S. and British officials have claimed that their governments generally know the locations of Syria's chemical weapons. British Defense Secretary Hammond stated on May 2, 2013, that \"I think we have a great deal of knowledge of location of chemical weapons,\" although he added that \"[t]hat is not the same as saying that I can put my hand on my heart and say we know where every last item is.\" Deputy National Security Advisor Rhodes stated during a June 17, 2013, press briefing that\nwhile we can't say with certainty that we are aware of where every chemical weapons munitions [sic] is in the country, this is something we devote a lot of attention and resources to and we feel like we have a sense of both the fact of the regime controlling these chemical weapons stockpiles and some sense of where they are generally.", "", "According to officials from France, Israel, the United Kingdom, and the United States, there is evidence that the Syrian government has used sarin nerve agent against opposition forces in the country. Over time, official statements on this issue expressed increasing certainty that chemical weapons have been used. White House Press Secretary Jay Carney stated on December 3, 2012, that the Obama Administration has \"increased concern about the possibility of the [Asad] regime taking the desperate act of using its chemical weapons.\" Major General Aviv Kochavi, the head of Israeli military intelligence, has stated that Syria is preparing to use its chemical weapons, according to press reports. British intelligence indicated in January 2013 that Syria may have a low threshold for using chemical weapons. Director of National Intelligence James Clapper told the Senate Armed Services Committee on April 18, 2013, that the \"increasingly beleaguered regime, having found that its escalation of violence through conventional means is not working, appears quite willing to use chemical weapons against its own people.\"\nAllegations that chemical weapons have been used in the conflict again surfaced on March 19, 2013. Both sides of the conflict claim that chemical weapons were used by the other side against civilians in the village of Khan al-Assal (near Aleppo). Some press reports have said they were delivered with rockets and may have carried chlorine. The Syrian government officially requested that the United Nations Secretary General Ban Ki-moon investigate its allegations that opposition forces used chemical weapons at Khan al-Assal (Aleppo area) on March 19. The opposition claims that the Asad regime also used chemical weapons in other recent attacks (including near Damascus). The United Kingdom and France sent letters to the U.N. Secretary General in late March that reportedly provided evidence based on witness interviews and soil samples that chemical weapons were used on multiple occasions, but the letters have not been made public. Press reports said the letters claimed that chemical weapons had been used on three occasions: March 19 in Khal al-Assal and in Ataybah, as well as December 23 in Homs.\nAccording to letters sent April 25, 2013, to Senators John McCain and Carl Levin by Miguel Rodriguez, Assistant to the President and Director of the Office of Legislative Affairs, the U.S. intelligence community assessed \"with varying degrees of confidence that the Syrian regime has used chemical weapons on a small scale in Syria, specifically the chemical agent sarin.\" The Asad regime, rather than opposition forces, would \"very likely\" have initiated any chemical weapons use, Rodriguez wrote. A White House official explained during an April 25, 2013, background briefing that U.S. intelligence on Syrian chemical weapons use is \"based on a mosaic of information,\" which needs to be corroborated via further investigation. \"[W]e are continuing to do further work to establish a definitive judgment as to whether or not the red line has been crossed and to inform our decision-making about what to do next,\" the official added. The April 25 letters explained that physical evidence has contributed to the intelligence assessment described above. But uncertainty concerning the \"chain of custody\" of this evidence precluded the intelligence community from confirming \"how the exposure occurred and under what conditions,\" Rodriguez wrote. Secretary of State John Kerry stated May 28, 2013, that the United States has \"evidence\" of Syrian chemical weapons use,\" but added that \"it's an intelligence community assessment. Assessments are not evidence that you're prepared to take to the world.\"\nHowever, on June 13, 2013, the White House released a statement by Deputy National Security Advisor Rhodes saying that, after further investigation,\nour intelligence community assesses that the Assad regime has used chemical weapons, including the nerve agent sarin, on a small scale against the opposition multiple times in the last year. Our intelligence community has high confidence in that assessment given multiple, independent streams of information.\nThe statement said these sources of information included reporting about Syrian military attack planning and execution, descriptions of attacks, physiological symptoms consistent with exposure to chemical weapons agents, and analysis of physiological samples \"which revealed exposure to sarin.\" Positive results from such samples, however, do not indicate \"how or where the individuals were exposed or who was responsible for the dissemination,\" Rhodes added. Chemical weapons use had resulted in an estimated 100-150 deaths in Syria, the statement said.\nRhodes explained the evolution in the U.S. assessment during a June 17, 2013, press briefing:\nIn terms of the time from April, essentially what we had in April was an initial intelligence assessment, and the President's direction was to continue to investigate additional corroborating facts and information so that we could raise our confidence level. Because that was not a high-confidence assessment and we didn't feel like we had enough corroborated information to reach that high degree of confidence that this red line had been crossed.\nWhat's been done in the course of the last several weeks is we've been able to piece together a broader information picture—so you're able to take, for instance, an assessed incident of chemical weapons use, you're able to receive reporting from individuals who were there on the ground. We were able to review physiological samples that have been collected at the site. We were able to review open source reporting from social media and other things that speak to the use of chemical weapons in an area. And we were able to review our own intelligence reporting, which obviously covers a range of different means.\nIn piecing together that information picture, the intelligence community is able to increase its confidence level. And so that's what led to the announcement yesterday. It was driven by the firming up of this assessment over the course of the last several weeks, which the President had asked for after the announcement we made in April.\nNone of the U.S. statements concerning the June 13 assessment appear to address the chain of custody issue cited above.\nAccording to an August 30, 2013, White House statement, the United States assesses that Syria \"has used chemical weapons on a small scale against the opposition multiple times in the last year\"—an assessment \"based on multiple streams of information including reporting of Syrian officials planning and executing chemical weapons attacks and laboratory analysis of physiological samples obtained from a number of individuals, which revealed exposure to sarin.\" The Syrian government \"has used chemical weapons over the last year primarily to gain the upper hand or break a stalemate in areas where it has struggled to seize and hold strategically valuable territory,\" according to the statement.\nThe United Kingdom and France have also argued that Syria has used chemical weapons. A British Foreign Office spokesperson stated April 25, 2013, that the United Kingdom has \"limited but persuasive information from various sources showing chemical weapon use in Syria, including sarin.\" More recently, British Foreign Secretary William Hague stated on June 14, 2013, that the United Kingdom \"agree[s] with the US assessment that chemical weapons, including sarin, have been used in Syria by the Assad regime.\" Prior to the August 21, 2013, attack discussed below, the Syrian government used chemical weapons \"on at least 14 occasions,\" according to a British intelligence assessment published August 29, 2013.\nRegarding the possible use of chemical weapons by opposition groups in Syria, a British government spokesperson stated on June 5, 2013, that \"chemical weapons use in Syria is very likely to have been by the regime ... we have no evidence to date of opposition use.\"\nA French Ministry of Foreign Affairs spokesperson stated on April 26, 2013, that \"there were indications\" that the Syrian government has used chemical weapons, but added that the government lacks \"irrefutable evidence\" of such use. However, French Foreign Minister Laurent Fabius stated June 4, 2013, that \"France is now certain that sarin gas has been used in Syria several times and in a localized manner.\" Elaborating on this claim during a June 14, 2013, press briefing, a French Ministry of Foreign Affairs spokesperson told reporters that the Syrian government had \"sprayed sarin by helicopter.\" The spokesperson also commented on possible use of chemical weapons by opposition groups in Syria, explaining that \"[n]ot only is there nothing to indicate that the opposition might have used such weapons, everything leads us to think that that isn't the case.\" Regarding the chain of custody issue, a French Foreign Ministry spokesperson told reporters on June 7, 2013, that, for one set of blood and urine samples taken from Syria, the French government \"know[s] where and how it was taken; how it was transported; and how it was analyzed. In other words, we are certain about the soundness of the entire test chain: from when the sample was taken to the analysis.\" The other set of samples \"made it possible to conclude that sarin was used, however, not to attribute it to the Syrian regime and it was not transported in optimal conditions,\" the spokesperson explained. According to a French intelligence assessment published on September 2, 2013, the Syrian government may also have conducted attacks with chemicals normally used for non-chemical weapons purposes.\nMichael Oren, Israel's ambassador to the United States, stated during an April 28, 2013, television interview that an Israeli military \"assessment looks like there's a high probability of usage,\" but added that the assessment is not \"definitive proof.\"\nFor its part, Russia has expressed skepticism regarding the assessments described above. Russian Foreign Minister Sergey Lavrov explained during a June 20, 2013, television interview that \"we have found nothing which would hold water\" in the evidence of Syrian chemical weapons use presented to Moscow by representatives of France, the United Kingdom, and the United States. Lavrov had previously argued during a June 15 press conference that using chemical weapons \"in such small amounts ... is senseless from a military point of view.\"\nMoscow, however, has asserted that opposition fighters in Syria have used chemical weapons. Russian ambassador to the United Nations Vitaliy Churkin told reporters on July 9, 2013, that, according to Russian experts' analysis, only \"fighters of the armed opposition\" used chemical weapons at the Khal al-Assal site, explaining that the weapons used an explosive that is \"not usually used in the production of standard [chemical] munitions.\" Lavrov provided additional details of this assessment during a July 10, 2013, press briefing, explaining that \"characteristics of the missile and sarin gas\" used at the site \"do not meet standards used in industrial production\" and adding that \"the missile and the mentioned substance were made in February in the territory of Syria,\" which at the time was under control of a group affiliated with the Free Syrian Army. Lavrov also indicated that Russia has avoided the chain of custody issue because Russian experts took samples from the Syrian site and analyzed them. U.S. and British officials responded that there is no evidence that any opposition groups possess chemical weapons or have used such weapons. A Free Syrian Army spokesperson denied the Russian charges.\nRussian statements have reiterated this skepticism. For example, Lavrov stated on September 2 that British, French, and U.S. intelligence evidence regarding chemical weapons use by the Syrian government \"does not convince us at all.\" He also argued during an August 26, 2013, press conference that it would have been illogical for the Syrian government to use chemical weapons while U.N. inspectors were in the country.\nPast statements from other governments have also expressed uncertainty regarding claims of Syrian chemical weapons use. For example, the G8 did not confirm the use of chemical weapons, but instead condemned \"any use of chemical weapons in Syria\" in a June 18, 2013, statement. Moreover, a June 22, 2013, statement from the Friends of Syria Core Group referred to the \"reported use\" of chemical weapons by the regime.", "Public intelligence assessments issued by the United Kingdom and the United States on August 29 and August 30, 2013, respectively, stated that the Syrian government used chemical weapons on August 21 against opposition forces outside of Damascus. A U.S. team investigating chemical weapons use in Syria was in the country at the time. The regime used rockets to deliver nerve agent. An unclassified French intelligence report published on September 2, 2013, also concluded that the government launched such an attack. The attack killed 1,429 people, according to the U.S. assessment. The UK assessment put the number of fatalities at \"at least 350.\" French intelligence has concluded, on the basis of video evidence, that the attack killed at least 281 people. However, models used by French intelligence are consistent with other estimates of approximately 1,500 fatalities. The French report also suggests that the August 21 attack demonstrated that the Syrian government has deliberately crossed a threshold to large-scale chemical weapons use. Moreover, the French government has information suggesting that Damascus may undertake similar attacks in the future, the report says.\nThe United States has concluded that \"regime officials were witting of and directed the attack on August 21,\" according to the White House statement, which explained that \"Syrian chemical weapons personnel ... were preparing chemical munitions prior to the attack.\" Although the United States intercepted communications \"involving a senior official intimately familiar with the offensive\" which \"confirmed that chemical weapons were used by the regime,\" whether the Syrian leadership directed the attack is unclear. Noting the lack of an \"obvious political or military trigger for regime use of [chemical weapons] on an apparently larger scale now, particularly given the current presence in Syria of the U.N. investigation team,\" the British assessment states that permission to authorize the use of chemical weapons \"has probably been delegated by President Asad to senior regime commanders.\" Any \"deliberate change in the scale and nature of use would require his authorisation,\" according to the assessment. The French report does not identify any regime officials or institutions as initiators of the attack, but it does say that only Asad and certain influential members of this clan are empowered to order the use of chemical weapons. Such orders are transmitted to the relevant Syrian Scientific Studies and Research Center organizational elements, as well as the armed forces commands, which determine the targets and weapons to use.\nOpposition forces in Syria did not carry out the attack, according to the three assessments. \"[T]he scenario in which the opposition executed the attack on August 21 is highly unlikely,\" according to the August 30 White House statement, which explains that \"the Syrian opposition does not have the capability to fabricate all of the videos, physical symptoms verified by medical personnel and NGOs, and other information associated with this chemical attack.\" The opposition forces also do not have a history of using chemical weapons, the statement says. President Obama stated during an August 28, 2013, television interview that the United States does not believe that \"given the delivery systems, using rockets, that the opposition could have carried out these attacks.\" Similarly, the British assessment asserts that no opposition group \"currently has the capability to conduct a [chemical weapons] attack on this scale.\" The September 2013 French report says that no group within the Syrian opposition forces is currently able to stockpile and use chemical weapons on the scale and in the manner of the August 21 attack, which was conducted in a military fashion and included the use of \"conventional air and artillery bombardments,\" as well as a ground offensive. Syrian opposition forces probably could not have fabricated evidence of the August 21 attack, according to the same report. The evidence includes victim testimony, multiple videos, and affected children at eight different locations.", "As noted, the Syrian government initially called for a U.N. investigation of what Damascus said was chemical weapons use by opposition forces on March 19, 2013. The U.N. wanted the ability to investigate beyond the site where those attacks allegedly took place, but, according to press reports, the Syrian government wanted to limit the investigation to the March 19 incident and select the members of the inspection team. The U.N. and Syria ultimately agreed in late July 2013 on procedures for the inspections. The U.N. inspectors arrived in Syria on August 18 and left on August 31. The U.N. Secretary General appointed Ake Sellstrom to lead the inspection team, which will try to determine whether chemical weapons were used, but not who used them. The U.N. is also cooperating with the Organization for the Prohibition of Chemical Weapons in the investigation.\nDuring an April 26, 2013, press briefing, U.N. spokesperson Martin Nesirky explained that the U.N. investigators need \"swift access and unfettered access\" to the relevant Syrian sites, noting the \"risk that the evidence can deteriorate over time when you are talking about possible chemical weapons,\" but U.N. spokesperson John Ennis stated in June 2013 that, despite the possible deterioration of chemical agents, \"[t]here are a range of possible on-site activities extending beyond the collection of environmental samples, which still could provide information on whether or not chemical weapons were used.\" The British intelligence assessment published August 29, 2013, also addressed this subject, explaining that\n[t]here is no immediate time limit over which environmental or physiological samples would have degraded beyond usefulness. However, the longer it takes inspectors to gain access to the affected sites, the more difficult it will be to establish the chain of evidence beyond a reasonable doubt.\nFrance, the United Kingdom, and the United States all expressed support for the investigation and reiterated support for the investigation after the June 13, 2013, U.S. assessment. According to Rhodes's June 13 statement, the United States intended to send a letter to the U.N. Secretary General describing \"our updated intelligence assessment and specific incidents of alleged chemical weapons use.\" Secretary General Ban confirmed on June 14, 2013, that his office had received the letter. As noted, the United Kingdom and France have sent similar letters to the Secretary General. The Russian government has also submitted a \"technical analysis\" regarding the possible use of chemical weapons in Syria, Nesirky stated on July 12, 2013.\nThe June 18, 2013, G8 statement called on\nall parties to the conflict to allow access to the U.N. investigating team mandated by the U.N. Secretary-General, and drawing on the expertise of the Organisation for the Prohibition of Chemical Weapons (OPCW) and World Health Organisation (WHO), in order to conduct an objective investigation into reports of use of chemical weapons. The U.N. team should make their report and deliver it to the U.N. Security Council for their assessment.\nSellestrom and U.N. High Representative for Disarmament Affairs Angela Kane met with Syrian officials in Damascus at the government's invitation on July 24 and 25, 2013. According to a joint statement, the two sides had \"thorough and productive\" discussions regarding the U.N. investigation, which \"led to an agreement on the way forward.\" The statement provided no additional detail, but the inspectors arrived in Syria on August 18 and began working the next day.\nNesirky stated August that, in addition to Sellestrom, the team would \"consist of about 10 experts from the Organisation for the Prohibition of Chemical Weapons and the World Health Organization.\" The team planned to visit the Khal al-Assal site, as well as two other locations that the U.N. is keeping confidential \"as a safety and security precaution.\" A spokesperson for U.N. Secretary-General Moon stated August 14, 2013, that the inspection team would \"remain in the country to conduct its activities, including on-site visits, for a period of up to 14 days, extendable upon mutual consent.\" Ban stated August 19, 2013, that the inspectors \"must have ... access to the reported sites to undertake the necessary analyses and to collect samples.\" The team's work would also include \"interviews and examination of witnesses, victims, attending medical personnel as well as the conduct of post-mortem examinations,\" he added. Syrian Deputy Foreign Minister Mekdad stated that the government would \"fully cooperate\" with the inspection team and \"provide it with all information we have and all facilities to reach a rational conclusion,\" the Associated Press reported.\nOn August 22, the United Nations issued an oral request to the Syrian government for permission to investigate the August 21 chemical weapons attack near Damascus described above. U.N. High Representative for Disarmament Affairs Angela Kane delivered a letter with the request on August 24; Syria subsequently granted the inspectors permission to visit the site. U.N. Spokesperson Nesirky told reporters on August 30 that \"the team has completed its collection of samples and evidence relating to\" the attack. The inspectors left Syria on August 31; Secretary General Ban received a briefing about their work on the same day.\nU.N. spokesperson Farhan Haq told reporters August 29, 2013, that the inspectors had \"collected a considerable amount of evidence, evidence through samples, evidence through witness interviews.\" The spokesperson also explained that the inspection team would transfer the material that it had gathered to several laboratories in Europe for testing. Some inspectors \"will be on hand for all the various deliveries to the various laboratory sites to ensure the chain of custody of the evidence that they have collected,\" Haq added. The samples were shipped to the laboratories on September 2. The laboratory analysis will \"take longer than days, but it is the clear intention of the investigation team to finish its work as soon as it possibly can,\" Haq said. The final analyses are to be reported to Secretary General Ban, who will share the results with the Security Council and other U.N. member states, a U.N. spokesperson said September 2. His report is to contain all of the evidence that the U.N. has gathered, including witness statements.\nOn August 30, Secretary Kerry raised questions regarding the inspections' effectiveness, stating that the Syrian government had \"shelled the neighborhood\" where the August 21 attack occurred \"in order to destroy evidence.\" The inspectors' access \"was restricted and controlled,\" he added. Asked about this statement during a September 1 press briefing, Nesirky replied that \"while in the country, the mission was able to access all locations it had identified as priority sites. And it was able to conduct the fact-finding activities it deemed necessary.\"\nRegarding Khan al-Asal and the two other sites, Haq explained August 29 that \"the team was able to do some preliminary work,\" but was \"not able to conduct on-site visits.\" The team had turned its attention to the August 21 attack because Ban \"had asked them to look into that one as a matter of priority,\" Haq stated, adding that the inspectors \"intend still in due course to look into those other incidents.\"\nSecretary General Ban has received a written request from the Syrian government to investigate what Damascus described as additional chemical attacks by Syrian opposition forces, Haq said August 29, adding that any such reports \"will be given serious consideration.\" U.N. inspectors visited a Syrian military hospital on August 30 to collect information regarding the government's allegations.\nThe U.N. Mission to Investigate Allegations of the Use of Chemical Weapons in the Syrian Arab Republic released its report on September 16. Based on its investigation on the ground in Syria, the inspection team concluded that surface-to-surface rockets containing the nerve agent sarin were used in the Ghouta area of Damascus against civilians on a \"relatively large scale.\"", "The allegations of use raise the question of the U.S. \"red line.\" The White House has suggested that the United States might respond to the Syrian government's use or loss of control of chemical weapons with military force. Carney told reporters on July 22, 2012, that \"the international community will hold accountable any Syrian officials\" who fail to keep the country's chemical weapons under governmental control, but he would not specify possible actions to ensure accountability. President Barack Obama, after noting during an August 20, 2012, press briefing that he had not yet \"ordered military engagement\" in Syria, suggested that he may do so if Damascus used or lost control of its chemical weapons:\nWe cannot have a situation where chemical or biological weapons are falling into the hands of the wrong people. We have been very clear to the Asad regime, but also to other players on the ground, that a red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized. That would change my calculus.\nSecretary of Defense Chuck Hagel reiterated this policy to the Senate Armed Services Committee on April 18, 2013, that, \"President Obama has made clear that if Assad and those under his command use chemical weapons or fail to meet their obligations to secure them, there will be consequences and they will be held accountable.\" Secretary Hagel also said there were \"plans in place to respond to the full range of chemical weapon scenarios.\"\nReiterating previous statements on the matter, President Obama told reporters on April 26, 2013, that Syrian use of chemical weapons \"crosses a line that will change my calculus and how the United States approaches these issues.\" According to the April 25, 2013, letters to Congress,\nthe administration is prepared for all contingencies so that we can respond appropriately to any confirmed use of chemical weapons, consistent with our national interests. The United States and the international community have a number of potential responses available, and no option is off the table.\nAsked during the April 25, 2013, background briefing cited above about the range of potential U.S. responses to Syrian use of chemical weapons, the White House official stated that such a response \"could run a broad spectrum of activity across our various lines of effort in Syria,\" citing U.S. diplomatic initiatives, nonlethal assistance to opposition groups in Syria, and humanitarian assistance.\nThe June 13, 2013, White House statement said, \"[t]he President has said that the use of chemical weapons would change his calculus, and it has.\" The statement announced a qualitative change in assistance to the opposition:\nFollowing on the credible evidence that the regime has used chemical weapons against the Syrian people, the President has augmented the provision of non-lethal assistance to the civilian opposition, and also authorized the expansion of our assistance to the Supreme Military Council (SMC).\nThe Administration stated that the use of chemical weapons by Syria had led to an increase in \"the scope and scale of assistance\" that it will provide to the opposition.\nA July 19, 2013, letter from General Martin Dempsey, Chairman of the Joint Chiefs of Staff, to Senator Carl Levin described an option for using military force \"to prevent the use or proliferation\" of Syrian chemical weapons. Such an operation would include \"destroying portions of Syria's massive stockpile, interdicting its movement and delivery, or ... seizing and securing program components.\" This option \"would call for a no-fly zone as well as air and missile strikes involving hundreds of aircraft, ships, submarines, and other enablers,\" Dempsey wrote, adding that \"[t]housands of special operations forces and other ground forces would be needed to assault and secure critical sites.\" The operation would result in the \"control of some, but not all chemical weapons\" and \"would also help prevent their further proliferation into the hands of extremist groups,\" the letter said. Dempsey concluded his description of this option by noting that the \"inability\" of the United States \"to fully control Syria's storage and delivery systems could allow extremists to gain better access.\"\nPresident Obama stated during an August 28, 2013, television interview that \"the international norm against the use of chemical weapons needs to be kept in place ... we do have to make sure that when countries break international norms on weapons like chemical weapons that could threaten us, that they are held accountable.\" During that interview, the President said that he had not made a decision regarding military action against Syria. However, he stated August 31 that \"the United States should take military action against Syrian regime targets,\" adding that \"this would not be an open-ended intervention. We would not put boots on the ground. Instead, our action would be designed to be limited in duration and scope.\"\nOther governments have also said the use of military force would be justified if chemical weapons were used. For example, French President François Hollande stated in an August 27, 2012, speech that Syrian use of chemical weapons \"would be a legitimate reason for direct intervention\" by the \"international community.\" Apparently discussing potential military action, French Foreign Minister Fabius told the French Senate on September 5 that\n[t]he action we're proposing is considered and collective. President Hollande stated that it should be – I quote – \"firm and proportionate.\" A one-time response with meaningful but targeted objectives. There is no question of sending in ground troops. There is no question of launching military operations to overthrow the regime.\nWilliam Hague, the UK secretary of state for foreign and commonwealth affairs, told the House of Commons on September 3, 2012, that Syria's use of chemical weapons \"would be an extremely serious matter, and it might change some of the international calculations about this crisis.\" Hague did not specify any potential actions, but did say in an opening statement to the House that \"we have not ruled out any options as this crisis deepens.\" However, British Prime Minister ruled out UK participation in any prospective strikes on Syria after the House of Commons voted on August 29 against such an action.", "Syria submitted its instrument of accession to the Chemical Weapons Convention (CWC) on September 14, 2013. Damascus has also requested provisional application of the CWC to Syria prior to its entry into force for that country. On September 14, 2013, Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov presented a proposed Framework for Elimination of Syrian Chemical Weapons. The Executive Council of the Organization for the Prohibition of Chemical Weapons (OPCW) is developing a destruction plan for Syria. This plan was adopted by the Executive Council on September 27, 2013.\nPresident Obama said on September 10 that any CW elimination process would have to ensure \"verifiable and enforceable destruction.\" Key implementation issues will include verification, access, security of stocks and of international personnel, and timelines for action. Because Syria is in the midst of civil war, there are many risk factors that have not been present in past cases of chemical weapons destruction, such as in Libya or Iraq. A top priority would be ensuring the security of the chemical weapons stocks awaiting dismantlement. International inspectors would be at great physical risk and would require adequate protection, and the changing nature of the conflict could limit access of inspectors to sites. Also, the destruction of chemical weapons is a time-consuming, expensive process with great need for safety precautions. Therefore, the initial stage of the process may focus on securing the chemical weapons at existing locations, consolidating at centralized storage facilities if possible, or even shipping out of the country for storage for destruction, although the latter options pose risks during transport. In past cases, the government possessing the chemical weapons has been responsible for guarding chemical weapons stocks and facilities awaiting dismantlement.", "The OPCW Executive Council adopted a decision on September 27, 2013, which requires Syria to destroy its chemical weapons program. Syria's September 19 declaration included \"names, types, and quantities of its chemical weapons agents, types of munitions, and location and form of storage, production, and research and development facilities,\" according to the OPCW Executive Council decision. Specifically, it requires Damascus to submit additional information regarding its chemical weapons program within 7 days and submit the CWC-required declaration regarding the government's chemical weapons program within 30 days. The OPCW Secretariat will make available \"any information or declaration referred to in this decision\" to all CWC States Parties \"within five days of its receipt.\"\nMoreover, the decision requires Damascus to \"complete the elimination of all chemical weapons material and equipment in the first half of 2014.\" The Executive Council is to determine \"intermediate destruction milestones,\" by November 15, 2013, but the decision does require Syria to destroy \"chemical weapons production and mixing/filling equipment\" by November 1, 2013. The decision also requires Damascus to \"cooperate fully with all aspects of the implementation of this decision, including by providing the OPCW personnel with the immediate and unfettered right to inspect any and all sites\" in Syria.\nAccording to the decision, the OPCW is to begin inspections in Syria by October 1, 2013, and is to inspect the country's declared chemical weapons facilities within 30 days. The OPCW is also to inspect \"as soon as possible ... any other site identified by a State Party as having been involved in the Syrian chemical weapons programme, unless deemed unwarranted by the Director-General, or the matter resolved through the process of consultations and cooperation.\"\nThe OPCW Secretariat is to report \"on a monthly basis\" to the Executive Council about the decision's implementation. The council is to meet within 24 hours if the OPCW Director-General reports delay by Syria \"in meeting the requirements\" of the September 27 decision or the CWC. The council is to \"consider whether to bring the matter, including relevant information and conclusions, to the attention\" of the U.N. Security Council.\nThe decision provides the OPCW with authority to hire personnel \"in order to ensure efficient and effective implementation\" of the decision. The OPCW is also to \"consider, on an urgent basis, the funding mechanisms for activities carried out by the Secretariat with respect to\" Syria and \"call upon all States Parties in a position to do so to provide voluntary contributions for activities carried out in the implementation of this decision.\"", "", "Kerry stated that the United States and Russia \"have agreed ... on a basic assessment of the numbers and types and locations\" of Syria's chemical weapons. The proposal specifies the categories of chemical weapons-related items that are to be destroyed: production equipment; mixing and filling equipment; filled and unfilled weapons and delivery systems; unweaponized chemical agents and precursor chemicals; and material and equipment related to the research and development of chemical weapons.\nSyria is believed to have more than 1,000 metric tons of chemical warfare agents and precursor chemicals. This stockpile includes several hundred metric tons of sarin, which represents the bulk of Syria's chemical weapons stockpile. Syria also has several hundred metric tons of mustard agent in ready-to-use form and several tens of metric tons of VX. The proposal does not specify which delivery vehicles Syria must destroy. The regime has several thousand delivery vehicles, including several hundred Scud-type ballistic missiles. Damascus also has other types of ballistic missiles, aerial bombs, and artillery rockets.\nSome chemical agents and precursor chemicals could be destroyed outside of Syria, \"depending upon site-specific conditions,\" although locations for such destruction have not been publicly identified. These materials could also be consolidated and destroyed \"in the coastal area of Syria.\"", "Syria would start implementing its CWC commitments before the Convention enters into force for Damascus. The OPCW will adopt \"necessary measures ... to implement an accelerated programme to verify the complete destruction of Syria's chemical weapons stockpiles, production facilities and other relevant capabilities,\" according to a September 14, 2013, OPCW statement. The schedule should include the \"shortest possible final deadline, as well as intermediate deadlines, for the destruction of Syrian chemical weapons capabilities,\" the proposal says. The \"target dates\" for implementing the destruction plan are completion of initial on-site inspections of Syria's declared chemical weapons-related sites by November 2013; destruction of Syrian chemical weapons production, mixing, and filling equipment by November 2013; and complete elimination of all chemical weapons material and equipment in the first half of 2014. As noted above, the OPCW is to begin inspections by October 1.", "Russia and the United States will work with the OPCW, the U.N., and \"Syrian parties\" to arrange for the security of the monitoring and destruction mission, according to the proposal, which adds that the \"Syrian government has primary responsibility ... in this regard.\" Kerry argued that, if the Asad government cooperates, inspectors \"should not have a problem achieving access\" to chemical weapons sites because, he asserted, all of Syria's chemical weapons \"are in areas under regime control predominantly\" and should not be in \"contested\" areas. Damascus has continued to move its chemical weapons to locations where the regime has more control of the weapons, he explained. Kerry acknowledged that the possession of such weapons by opposition groups could \"present a larger challenge\"; Russia has argued that opposition forces have used chemical weapons. Kerry and Lavrov stated that both the regime and opposition fighters would bear responsibility for ensuring safe access to the sites.", "The international community, including the United States and Russia, will need to contribute both technical and financial assistance to this effort. The OPCW called for such contributions in its September 27 plan. Countries could give directly to the OPCW to support its efforts, or could provide Syria with assistance directly. The September 14 proposal acknowledges that the OPCW needs \"supplementary resources to implement\" it and explains that the United States and Russia \"are each prepared to devote high-level attention and resources to support the monitoring and destruction mission of the OPCW.\" Kerry and Lavrov indicated that they will solicit resources from other countries. The State Department is currently waiting for the OPCW to provide an estimate of the destruction costs. The Senate, in its version of the FY2014 National Defense Authorization Act, approved $13 million for chemical weapons destruction to cover expected costs in Libya or Syria. S.Rept. 113-44 says that \"$13.0 million is transferred to Chemical Weapons Eliminations—Libya/Middle East to prepare for potential requirements in Syria if the U.S. Government has a Syrian partner with whom to work to potentially secure and destroy Syria's chemical weapons stockpile.\" Funding for Syrian chemical weapons destruction may also be proposed in a continuing resolution or supplemental.\nG-8 Global Partnership countries may choose to contribute funds to the OPCW for Syrian chemical weapons destruction to fulfill their pledges under that program. European countries in particular have donated funds and expertise to chemical weapons destruction efforts in the Russian Federation and elsewhere.", "According to the proposal, the OPCW Executive Council decision should \"refer to\" the CWC provisions requiring the Council to bring issues of non-compliance \"directly to the attention of the UN General Assembly and the UN Security Council.\" The Framework commits Washington and Moscow to support Security Council adoption of a resolution that \"reinforces\" the Council decision, includes \"steps to ensure its verification and effective implementation,\" and includes a provision to \"impose measures under Chapter VII of the UN Charter\" if Syria fails to comply with the resolution. Such non-compliance would include \"unauthorized transfer, or any use of chemical weapons by anyone in Syria.\" Security Council Resolution 2118, which underpins compliance, is described below.", "On September 27, 2013, the U.N. Security Council unanimously adopted Resolution 2118, which endorses the OPCW Executive Council decision and requires Syria to comply with \"all aspects\" of that decision. In addition, all parties in Syria must give personnel designated by the U.N. and OPCW \"immediate and unfettered access to and the right to inspect ... any and all sites,\" as well as the right to interview \"individuals that the OPCW has grounds to believe to be of importance for the purpose of its mandate.\" The resolution also states that Syria \"shall not use, develop, produce, otherwise acquire, stockpile or retain chemical weapons\" or transfer such weapons. This prohibition applies to non-governmental entities in Syria.\nIn an apparent effort to address Article I of the CWC, which requires states-parties to refrain, \"under any circumstances,\" from acquiring chemical weapons, Resolution 2118 gives governments permission \"to acquire, control, transport, transfer and destroy chemical weapons identified\" by the OPCW Director-General \"consistent with the objective of the Chemical Weapons Convention, to ensure the elimination\" of Syria's chemical weapons program \"in the soonest and safest manner.\"\nResolution 2118 also requests the OPCW Director-General and the U.N. Secretary-General to report every month on the resolution's implementation and also to report on non-compliance with the resolution or OPCW decision. In the event of non-compliance, \"including unauthorized transfer of chemical weapons, or any use of chemical weapons by anyone\" in Syria, the Security Council will \"impose measures under Chapter VII\" of the U.N. Charter.\nResolution 2118 also contains provisions concerning governments other than Syria. It \"encourages\" states to \"provide support, including personnel, technical expertise, information, equipment, and financial and other resources and assistance ... to enable the OPCW\" and the U.N. to carry out the chemical weapons destruction mission. Similarly, the resolution \"urges\" governments and \"all Syrian parties\" to assist with relevant security arrangements. Moreover, Resolution 2118 requires states to \"prohibit the procurement of chemical weapons, related equipment, goods and technology or assistance\" from Syria.\nIn addition to the prohibition on the possession and use of chemical weapons, Resolution 2118 has other provisions that apply to non-state actors. For example, it calls on governments to report any efforts of governments to provide \"any form of support to non-State actors that attempt to develop, acquire, manufacture, possess, transport, transfer or use nuclear, chemical or biological weapons and their means of delivery.\" The resolution also calls on governments to report non-state actors' efforts to undertake such activities.", "The question of a Syrian biological weapons program has also been raised in discussions of loss of sensitive military sites. Syria's biological weapons activities appear to be considerably less advanced than the country's chemical weapons program. Past U.S. assessments have stated that Damascus was pursuing biological weapons. According to a 1988 intelligence estimate, Syria was \"conducting research and development\" on a biological weapons program. A 1991 intelligence estimate assessed that the government had \"a mature offensive [biological weapons] program\" and that some agents \"could be weaponized in the next three to five years.\" However, a 1997 Defense Department report was similar to the 1988 estimate and added that Damascus had not \"begun any major weaponization or testing related to biological warfare.\" Several years later, Syria was \"not believed to have progressed much beyond the research and development phase and may have produced only pilot quantities of usable agent,\" according to an October 2001 Defense Department report.\nSome U.S. assessments issued during the past decade have indicated that Damascus has continued to pursue biological weapons. For example, a report from the Director of Central Intelligence to Congress covering the second half of 2002 states that \"[i]t is highly probable that Syria also continued to develop an offensive [biological weapons] capability.\" More recently, Principal Deputy Assistant Secretary of State Vann Van Diepen stated in April 2012 that Syria \"has been researching biological weapons.\" Nevertheless, it appears that Syria is still not capable of producing biological weapons. An ODNI report to Congress covering 2009 states that Damascus is \"not believed to have achieved a capability to put [biological weapons] agents into effective weapons.\" The ODNI report covering 2011 states only that \"Syria's biotechnological infrastructure is capable of supporting BW agent development.\"\nAccording to the 2012 State Department report regarding compliance with arms control and disarmament agreements, \"the United States is concerned that Syria ... may be engaged in activities that would violate its obligations under the BWC,\" if Damascus were a party to the agreement. \"It remained unclear during the reporting period whether Syria would consider the use of biological weapons as a military option,\" the report adds. The 2013 version of the report reiterates this analysis.\nAccording to April 18, 2013, testimony from Director of National Intelligence Clapper before the Senate Armed Services Committee, Syria's biological weapons program may be somewhat more advanced than suggested by the assessments described above. Clapper stated that\n[b]ased on the duration of Syria's longstanding biological warfare (BW) program, we judge that some elements of the program may have advanced beyond the research and development stage and may be capable of limited agent production. Syria is not known to have successfully weaponized biological agents in an effective delivery system, but it possesses conventional and chemical weapon systems that could be modified for biological agent delivery.\nDIA Director Flynn testified during the same hearing that \"[w]e do not believe Syria has achieved a capability to use biological agents as effective mass-casualty weapons.\"", "As referenced above (\" Resources \"), U.S. government programs could be used to address or fund efforts to secure or dismantle Syrian weapons of mass destruction or advanced conventional weapons following a regime collapse scenario. There are two most likely sources of such funding. The State Department's Nonproliferation and Disarmament Fund (NDF) has authority to spend funds \"notwithstanding any other provision of law\" and is authorized to work in states outside the former Soviet Union. The Department of Defense's Cooperative Threat Reduction (CTR) has authorization to use funds in the Middle East region as a whole.\nSecretary of Defense Hagel told the Senate Armed Services Committee on April 18, 2013, that CTR funds are being used to assist Syria's neighbors to bolster border defenses and prevent WMD proliferation from Syria:\nThrough our cooperative threat reduction program, the Department of Defense personnel and our interagency partners are also working closely with Syria's neighbors, including Jordan, Turkey and Iraq to help them counter the threat from Syria's chemical weapons.\nAs part of this effort, the Department of Defense is funding over $70 million for activities in Jordan including providing training and equipment to detect and stop any chemical weapons transfers along its border with Syria and developing Jordanian capacity to identify and secure chemical weapons assets.\nThe program will continue to train and equip border security staff in Jordan, Iraq, and Turkey in FY2014 to prevent proliferation of WMD across borders shared with Syria. Prior to this, CTR programs were used most recently in the Middle East in Libya and Iraq. The estimated scope of the chemical (and potential biological) weapons stocks and facilities in Syria is far greater than those in those countries. In Libya, the dismantlement process was initially undertaken with the agreement of the government. In 2011, when unrest toppled the Qaddafi regime, the chemical stocks were secured by forces aligned with the United States. However, additional stocks were hidden by the Qaddafi regime and only identified after the conflict, showing the limits of U.S. and other intelligence. In the case of Iraq, the United States undertook similar work in 2003 after Operation Iraqi Freedom. However, United Nations inspectors had completed much of the dismantlement work after the 1991 Persian Gulf War, and stockpiles and capacity turned out to have been overestimated in 2003. A continued focus of nonproliferation programs in both Iraq and Libya has been engaging former WMD weapons scientists in civilian projects to prevent the exploitation of their expertise for weapons proliferation purposes. International partners under the G-8 Global Partnership have experience cooperating in dismantling former Soviet chemical weapons stockpiles. In general, CTR and NDF programs are not designed to work in a non-cooperative environment and require the agreement of the host country. Therefore, the focus to date for the Syria challenge has been to bolster capacity of neighboring states to interdict any transfers.\nCivil war and possible loss of control or regime collapse by a state in possession of weapons of mass destruction poses a distinct change from the way these nonproliferation programs have been implemented in the past. The Syrian case may be the first time the international community faces the possibility of a civil war in a state with a known stockpile of chemical weapons. Due to the urgency of preventing access to these weapons by unauthorized groups including terrorists, the United States government has been preparing to secure the weapons in the event of the Asad regime's loss of control. A successor regime may not agree to renounce and eventually dismantle Syrian chemical weapons. A new government in Syria may believe that chemical weapons continue to serve as a military deterrent to Israel or others. Some experts and policy makers have suggested that the United States and other countries make joining the Chemical Weapons Convention (and therefore chemical weapons dismantlement) a condition for recognition and support of a new government in Syria.\nThis situation may have changed after the Assad regime acceded to the Chemical Weapons Convention in mid-September. It is now obligated to destroy its stocks and production facilities, although implementation poses many challenges, and chemical weapons security will remain a concern. With the cooperation of the Syrian government (or a successor government), cooperative threat reduction programs could have a prominent role to play. The Organization for the Prohibition of Chemical Weapons will play a key role in dismantling the chemical weapons in Syria. Therefore, the United States and other countries may contribute funds or technical support for Syrian chemical weapons destruction through the OPCW.", "Syria's chemical weapons stocks have been addressed in recent legislation.\nThe Free Syria Act of 2013 ( H.R. 1327 ), Section 204 has a provision giving the President the authority to establish a program to facilitate Syrian chemical and biological weapons destruction in cooperation with a \"Syrian entity\" to \"secure, safeguard, disable, dismantle, transport out of Syria, or destroy chemical and biological weapons, their precursor and constituent parts and associated equipment.\" It includes congressional reporting requirements and funding authorities. The Syria Democratic Transition Act of 2013 ( S. 617 ), Section 10 proposes that the United States work with regional partners to develop a plan to secure conventional and unconventional weapons stockpiles in Syria; recover and dispose of all unconventional weapons stockpiled in Syria \"with particular attention to chemical weapons\"; and prevent the illicit transfer of these weapons. It gives the President notwithstanding authority to conduct these activities. It also includes the sense of Congress that the State Department's FY2014 budget request should include an increase in NADR funding for these goals. The House FY2013 Foreign Operations Appropriations Bill ( H.R. 5857 ) said NADR funds \"may also be used for such countries other than the Independent States of the former Soviet Union and international organizations when it is in the national security interest of the United States to do so.\" This could include Syria. The Syria Freedom Support Act ( H.R. 2106 ) as passed by the House Committee on Foreign Affairs in March 2012 included a provision that would authorize the President to assist a future democratic Syrian government with securing and dismantling its inherited weapons of mass destruction and related facilities. Section 106 of the bill provides $250 million in drawdown authority and transfer authority from any other appropriated funds \"notwithstanding any other provision of law.\" The Senate FY2012 Foreign Operations Appropriations Committee report ( S.Rept. 112-85 ) said in regard to the Nonproliferation, Demining, and Anti-terrorism funding, \"The Committee recognizes that dynamic change in the Near East and ongoing threats and humanitarian needs in other regions afford opportunities to conduct and expand nonproliferation, demining, and anti-terrorism programs, including in Syria should the current regime fall. The Committee recommends additional funding above the budget request to accelerate the U.S. response to such opportunities, which is in the security interests of the United States and regional allies.\" The National Defense Authorization Act ( H.R. 1960 ) as reported by the House includes Section 1205, which gives authority to the \"Secretary of Defense, with the concurrence of the Secretary of State, to provide assistance to the military and civilian response organizations of Jordan, Kuwait, Bahrain, the United Arab Emirates, Iraq, Turkey, and other countries in the region of Syria in order for such countries to respond effectively to incidents involving weapons of mass destruction in Syria and the region.\" It authorizes up to $4 million for this purpose. Section 1251(b) of this bill gives the sense of Congress that \"the President should fully consider all courses of action to reinforce his stated 'redline' regarding the use of weapons of mass destruction by the Assad regime in Syria.\" The Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 ( P.L. 102-182 ) requires that the President, following the receipt by the executive branch of \"persuasive information ... indicating the substantial possibility that, on or after October 28, 1991, the government of a foreign country has made substantial preparation to use or has used chemical or biological weapons,\" determine within 60 days \"whether that government, on or after October 28, 1991, has used chemical or biological weapons in violation of international law or has used lethal chemical or biological weapons against its own nationals.\" The law also requires the President to report such a determination to Congress \"promptly.\" The report is to specify sanctions to be imposed on the government pursuant to the law. The law also contains a provision that enables the chairs of the Senate Committee on Foreign Relations and the House Foreign Affairs Committee (in consultation with the ranking Members) to request at any time a report within 60 days \"on the information held by the executive branch which is pertinent to\" whether a specified foreign government \"on or after December 4, 1991, has used chemical or biological weapons in violation of international law or has used lethal chemical or biological weapons against its own nationals.\"\nThe use, change of hands, or loss of control of chemical weapons stocks in Syria could have unpredictable consequences for the Syrian population as well as for U.S. allies and forces in the region. Congress may wish to assess the Administration's plans to respond to possible scenarios involving the use, change of hands, or loss of control of Syrian chemical weapons. Congress may also wish to assess the Administration's plan for chemical weapons verification and destruction in Syria. Forces, funding, and authorization by Congress may be required to address potential contingencies." ], "depth": [ 0, 1, 1, 1, 1, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 3, 3, 2, 1, 1, 1 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h0_full h2_full h1_full", "h0_full h3_full h4_full h1_full", "", "h0_full h2_title h3_title", "h0_full h2_full", "h3_full", "h0_title h1_title", "h0_full", "h1_full", "h1_full", "", "h2_full", "", "h2_title", "", "", "", "", "h2_full", "", "", "h4_full", "h4_full h1_full" ] }

{ "question": [ "How is Syria involved in chemical agent and precursors?", "What chemical agents does Syria possess?", "What is known about the stockpile?", "How is Syria receiving chemical precursors?", "How did the Chemical Weapons Convention affect chemical weapons?", "What countries are US-confirmed to still have chemical weapons?", "What is Syra's involvement in the Chemical Weapons Convention?", "What is the US's major concern regarding Syria?", "What has the US ascertained regarding Syria's use of chemical weapons?", "What characterizes notable instances of chemical weapons use?", "How has the UN evaluated to Syria's use of chemical weapons?", "How did Obama view military intervention regarding Syria's chemical weapons?", "How did Syria and Russia create an agreement regarding Syria's chemical weapons?", "How does this link to UN goals?", "How is this draft being developed?", "What are the key points of this resolution?", "What has the international community determined regarding Syria's use of chemical weapons?", "Why is the security of the Asada's regime's chemical weapons important?", "How does this extend to the movement of these items?", "How has the US been monitoring Syria's chemical weapons?", "How would intelligence and Special Forces react in event of Syrian conflict?", "What suggests possible changes in Syrian military capacities?", "In what way has the US developed their interests in controlling Syrian chemical weapons?", "How else might these forces be utilized?", "What protocols might exist for reviewing these plans?" ], "summary": [ "Syria has produced, stored, and weaponized chemical agents, but it remains dependent on foreign suppliers for chemical precursors.", "The regime of President Bashar al Asad possesses stocks of nerve (sarin, VX) and blister (mustard gas) agents, possibly weaponized into bombs, shells, and missiles. The government also has associated production facilities.", "Chemical weapons and their agents can deteriorate depending on age and quality; little is known from open sources about the current condition of the stockpile.", "Syria continues to attempt to procure new supplies of chemical weapons precursors, which are dual-use, through front companies in third countries.", "Most countries that have had chemical weapons arsenals in the past have destroyed, or are in the process of destroying, these weapons under the Chemical Weapons Convention. This convention requires its member states to eliminate all of their chemical weapon stocks, munitions, precursor chemicals, and related production and storage facilities.", "The U.S. intelligence community cites Iran, North Korea, and Syria as having active chemical weapons programs.", "The Syrian government acceded to the Chemical Weapons Convention on September 14, 2013.", "A major policy concern of the United States has been the use or loss of control of chemical weapons stocks in Syria, which could have unpredictable consequences for the Syrian population and neighboring countries, as well as U.S. allies and forces in the region.", "The United States and other countries have assessed that the Syrian government has used chemical weapons against opposition forces in the country.", "The U.N. team's investigative report confirmed the large-scale use of sarin nerve agent against civilians in the Ghouta area of Damascus on August 21. The largest-scale use to date was on August 21, 2013.", "A U.N. inspection team began working in Syria on August 19, 2013, and completed their mission on August 31.", "However, President Obama subsequently explained in a September 10 speech that he had asked congressional leaders to postpone a vote to authorize the use of military force in order to give the Administration time to pursue a new diplomatic initiative.", "Syrian Foreign Minister Walid Moallem stated the previous day that Damascus had accepted a proposal presented by the Russian government, according to which Syria would turn over its chemical weapons for international control and supervised destruction.", "The United Nations Security Council is discussing a draft resolution designed to accomplish this goal.", "Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov presented a proposed Framework for Elimination of Syrian Chemical Weapons, which outlines deadlines and actions required.", "Key issues for implementation of chemical weapons destruction in Syria include verification, inspectors' access, destruction method and location, and the security of international personnel.", "The United States and other countries have assessed that the Syrian government has used chemical weapons against opposition forces in the country. The largest-scale use to date was on August 21, 2013. A U.N. inspection team began working in Syria on August 19, 2013, and completed their mission on August 31. The U.N. team's investigative report confirmed the large-scale use of sarin nerve agent against civilians in the Ghouta area of Damascus on August 21.", "While the United States and other governments have said they believe the Asad regime has kept its chemical weapons stocks secure, policy makers are also concerned about what could happen to these weapons in the course of the civil war, such as diversion to terrorist groups or loss of control during a regime collapse.", "There is also concern that Syria could transfer its chemical weapons to Hezbollah in Lebanon.", "Administration officials have stated that the United States has been working with regional allies to detect the movement of chemical weapons, prepare interdiction scenarios, and mitigate possible use against military or civilian populations.", "During conflict, the intelligence community and Special Forces units would likely play a major role in locating and securing such weapons in a combat environment.", "The nature and recent course of the conflict in Syria suggests that rapid changes in control over critical military facilities may occur.", "U.S. government programs established to secure or remove chemical or other weapons of mass destruction through threat reduction or nonproliferation programs have focused on destruction or scientist redirection in an atmosphere of cooperation. At present, such programs are providing border security assistance to neighboring states.", "These programs may also be used to contribute financial or in-kind technical assistance to the Organization for the Prohibition of Chemical Weapons (OPCW) mission to eliminate chemical weapons in Syria.", "U.S. policy makers and Congress may wish to review and discuss authorities, funding, forces, and scenarios." ], "parent_pair_index": [ -1, 0, 1, -1, -1, 4, 4, -1, -1, 1, -1, -1, -1, 1, 2, 2, -1, -1, 0, -1, -1, -1, -1, 2, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 0, 1, 1, 1, 1, 4, 4, 4, 4, 4, 4, 5, 5, 5, 6, 6, 6, 6, 6 ] }

{ "title": [ "", "Introduction", "Background", "Types of Transportation Public-Private Partnerships", "Prominent Examples of Public-Private Partnerships", "Chicago Skyway", "Indiana Toll Road", "Northern Virginia I-495 HOT Lanes", "Las Vegas Monorail", "Missouri DOT Safe and Sound Program", "Texas SH-130", "Florida I-595 Express Lanes", "The Growth of Public-Private Partnerships", "Federal Legislation", "Highway Tolling", "Innovative Highway Finance", "Innovative Highway Contracting", "Innovative Transit Financing", "Innovative Contracting in Transit", "Issues for Congress", "Can P3s Provide Additional Resources for Transportation?", "Will P3s Divert Resources from the Transportation Sector?", "Are There Other Resource Benefits?", "What Are the Effects of P3s on Operation of the Highway Network?", "What Are the Effects of P3s on Infrastructure Planning?", "Policy Options", "P3s and Interstate Highway Tolls", "Federal Financing Programs" ], "paragraphs": [ "", "Growing demands on the transportation system and constraints on public resources have led to calls for more private sector involvement in the provision of highway and transit infrastructure through what are known as \"public-private partnerships\" or \"P3s.\" As defined by the U.S. Department of Transportation (DOT), \"public-private partnerships (P3s) are contractual agreements formed between a public agency and a private sector entity that allow for greater private sector participation in the delivery and financing of transportation projects.\" Typically, the \"public\" in public-private partnerships refers to a state government, local government, or transit agency. The federal government exerts influence over the prevalence and structure of P3s through its transportation programs, funding, and regulatory oversight, but is usually not a party to a P3 agreement.\nP3s can offer a means of injecting additional resources into highway and public transportation systems while reducing costs, project delivery time, and public sector risk. However, many individual surface transportation projects are not well suited to P3s, because, for example, they are too small to bear the transaction costs of a P3 or they offer limited opportunity for profit. P3s have the potential to distort transportation planning by directing public funds to projects that offer opportunity for private return rather than to projects that might offer greater social benefits—to construction of a new toll bridge, for example, rather than to repairing an existing highway. Depending upon the specific arrangements, a P3 may also leave the public sector bearing risks if a project does not perform as anticipated.\nA wide variety of public-private partnerships in highways and transit exists, but this report focuses on the two types that are generating the most debate: (1) the leasing by the public sector to the private sector of existing infrastructure, sometimes referred to as \"brownfield\" facilities; and (2) the building, leasing, and owning of new infrastructure by private entities, sometimes known as \"greenfield\" facilities. A common, though not essential, element of greater private sector participation in highway infrastructure provision is the use of tolling. Vehicle tolls provide a revenue stream to retire bonds issued to finance a project and to provide a return on investment. Highway tolling can be implemented by public authorities, but it is widely believed that the privatization of transportation infrastructure will hasten the spread of tolling and may raise toll rates. Consequently, a discussion of P3s must include, as this report does, the issue of vehicle tolling and other direct pricing mechanisms.", "Interest in public-private partnerships stems principally from concerns that public-sector resources are inadequate to sustain the nation's highway and transit infrastructure. A number of reports over the past decade have concluded that substantially increased funding of surface transportation infrastructure is needed to deal with physical deterioration, congestion, and future growth in demand for passenger and freight movements. A 2014 report by DOT estimated that inflation-adjusted spending on highways needs to be between 23% and 46% above the 2010 level to improve conditions and performance, and that spending on transit systems would need to rise between 33% and 48% to expand and achieve a good state of repair. Similar problems were found by two congressionally mandated commissions.\nAt the same time, the main revenue mechanism at the federal level, the fuels tax, is in trouble. The federal contribution to highway and transit infrastructure is largely derived from the highway trust fund, which relies primarily on revenue from motor fuels taxes. The tax rates are set on a per-gallon basis and were last raised in 1993, while a reduction in auto travel and improved vehicle fuel efficiency mean that drivers are purchasing fewer gallons of fuel. As a result, the amount of revenue flowing into the highway trust fund has not increased in line with construction costs ( Figure 1 ). In its most recent estimates, the Congressional Budget Office (CBO) suggests that both the highway account and the mass transit account of the highway trust fund will approach a zero balance early in FY2015 absent congressional action.\nThe gap between fuel tax revenues and future infrastructure investment needs has stimulated interest in P3s. Yet the 2007 report of the National Surface Transportation Policy and Revenue Study Commission illustrated divergent views about the role P3s should play in U.S. transportation policy. The majority view, supported by 9 of the 12 commissioners, contended that severe underinvestment is the main problem facing transportation infrastructure; the majority urged greater use of P3s and other mechanisms to attract private capital as adjuncts to greater federal spending financed by major increases in fuels taxes. An opposing viewpoint, expressed by three commissioners including the then U.S. Secretary of Transportation Mary Peters, asserted that \"a failure to properly align supply and demand, not a failure to generate sufficient tax revenues, is the essential policy failure\" in transportation infrastructure provision. A key ingredient of change, in their view, should be market-based reforms allowing for much greater reliance on tolls and private sector participation, including P3s.", "In the traditional method of providing transportation infrastructure, known as \"design, bid, build,\" the public sector decides there is a need for a new facility, plans its development with a wide variety of community input, organizes the funding and financing, lets out contracts to design and construct the facility, and operates and maintains the facility after completion. In contrast, a public-private partnership may involve private-sector participation in any or all phases of development and operation. The private-sector involvement may be predicated on a revenue stream from the operation of a facility, such as vehicle tolls, or it may be attracted by the promise of future government payments.\nAccording to DOT, P3s in highway and transit infrastructure provision can be categorized into seven basic types. Of these, five have been used to construct new infrastructure. From least to most private responsibility, they are the following:\nPrivate Contract Fee Service. This type of partnership involves the public sector contracting for program management services involving major projects or even capital programs. Program management services include strategic planning, financial management, and coordination in the areas of environmental studies and approvals, design, and construction. An example of this type of P3 is the Louisiana TIMED program, which involved the widening of 536 miles of state highways, widening or new construction of three major bridges, and improvements to the Port of New Orleans and Louis Armstrong International Airport. A private partner, Louisiana TIMED Managers, was hired in 2002 to manage overall program delivery including the financing strategy, public outreach, scheduling, pre-construction activities, and construction administration. Design-Build (DB). This type of partnership arrangement combines two services that are traditionally separate, design and construction, into one fixed-fee contract. The public sector retains control of the facility as well as responsibility for planning, preliminary engineering, funding and financing, and post-construction operation and maintenance. An example of this type of P3 is the Tappan Zee Bridge in New York. The New York State Thruway Authority is paying Tappan Zee Constructors, LLC, $3.1 billion to design and build the new bridge, which will be turned over to the Thruway Authority upon completion. Design-Build-Operate-Maintain (DBOM). These partnerships go even further than design-build P3s by adding private-sector responsibility for operation and maintenance once a facility goes into service. The public sector is still responsible for funding and financing, and retains the risks if operation costs more than anticipated or revenue falls short. The 21-mile Hudson-Bergen light rail system in New Jersey is an example of DBOM. The original fixed-price contract awarded to the 21 st Century Rail Corporation in 1996 was for design and construction of the initial 10 miles by a specified date and then 15 years of operation and maintenance. The contract was subsequently renegotiated for extensions to the system and to lengthen the operation and maintenance agreement. Design-Build-Finance (DBF). This adds short-term financing to a design-build contract. Payment by the public partner is typically deferred during the construction phase, requiring the private partner to arrange financing until the work is complete. As with DB projects, the public sector retains responsibility for planning, preliminary engineering, and operation and maintenance. An example of a DBF project is the I-75 expansion in Florida, which began in 2007 and was completed in 2010. For this project, payments began during construction and final payment was received about one year after completion. Design-Build-Finance-Operate -Maintain (DBFO M ). In addition to the designing, building, and operation of an infrastructure project, these types of P3s transfer to the private sector much of the long-term financing responsibility. Debt financing leveraged with a revenue stream, such as tolls, is the most common financing mechanism in this type of P3. However, financing may be supplemented with public-sector grants and/or in-kind contributions such as right-of-way. The I-635 LBJ Managed Lanes project near Dallas, TX, is an example of a DBFOM. After completion, which is expected in 2016, the concessionaire, LBJ Infrastructure Group, will operate and maintain the facility, including the collection of tolls, until 2062.\nIn the case of existing infrastructure, DOT identified two basic types of P3s. These are the following:\nO&M Concession . The public agency turns over to the private sector responsibility for asset operation and maintenance, including service and management. The Anton Anderson Memorial Tunnel in Alaska, a road and rail tunnel, is an example of an O&M concession. VMS, the concessionaire, is responsible for toll collection, train and highway vehicle control, road and rail maintenance, and initial emergency response. Long - Term Lease Agreement. This type of partnership typically involves the leasing of an existing facility to a private company for a specified amount of time. The private partner usually pays an initial concession fee and must operate and maintain the facility to prescribed standards. The private company typically collects tolls on users and keeps the revenue to pay its bond holders and to generate a return on its equity investment. Examples of this type of P3 are the Chicago Skyway and the Indiana Toll Road.", "", "The Chicago Skyway is a 7.8-mile elevated toll road connecting the Dan Ryan Expressway (I-94) to the Indiana Toll Road (I-90). Built in 1958 without federal funds, the Skyway was operated and maintained by the City of Chicago Department of Streets and Sanitation until 2004, when it was leased for 99 years to the Skyway Concession Company (SCC), a consortium controlled by two well-known foreign companies involved in infrastructure investment, Cintra (Spain) and Macquarie Infrastructure Group (Australia). SCC won this concession with a bid of $1.83 billion in a competition that included four other detailed proposals. The city of Chicago and SCC signed a contract on October 27, 2004, and SCC began operating the Skyway on January 24, 2005.\nAccording to the lease agreement, SCC must operate and maintain the Skyway to certain standards, and, within limits, can collect and retain all toll revenue. For cars, tolls were limited to $2.50 through 2007, gradually rising to $5.00 in 2017. After that, tolls can be increased each year by the greater of 2%, the percentage change in the government's Consumer Price Index (CPI), or the percentage increase in per capita nominal Gross Domestic Product (GDP). As of February 2014, the toll for cars was $4. Of the single $1.83 billion upfront payment to the city of Chicago, $463 million was used to pay the outstanding debt on the road, $392 million was used to pay down the city's general obligation debt, and $875 million was placed into long-term and medium-term reserve funds.\nOne criticism of the Chicago Skyway P3 is that the lease diverts resources from transportation to other uses. The city of Chicago contests this view, noting that much of the lease revenue was placed in reserve funds that generate interest revenue roughly equal to what the city formerly received in toll revenue. In any case, the city notes, when the Skyway was under public control excess toll revenues were directed to the city's general fund and were not necessarily used for transportation. The U.S. Government Accountability Office (GAO) has stated that the city's credit rating improved when it reduced its general obligation debt, thereby reducing the future cost of borrowing for capital projects.", "The Indiana Toll Road (ITR) is a 157-mile segment carrying an Interstate designation that runs across northern Indiana linking with the Chicago Skyway in the west and the Ohio Turnpike in the east. Built largely without federal funds and opened in 1956, the toll road was operated by the Indiana DOT from 1981 to 2006. After a bidding process involving 11 proposals, a 75-year lease concession was awarded to the Indiana Toll Road Concession Company (ITRCC), a partnership between Cintra and Macquarie Infrastructure Group, for a single lump-sum payment of $3.8 billion. Cintra and Macquarie invested $374 million each and seven banks provided the remaining $3 billion.\nITRCC began operating the facility on June 29, 2006. Tolls are regulated by the concession agreement. For example, the toll for a two-axle vehicle traveling the length of the road, $4.65 when the ITRCC took control, was limited to a maximum of $8.00 through June 30, 2010. After an initial adjustment in 2010, toll increases in subsequent years will be limited to the greater of 2%, the percentage change in the CPI, or the percentage increase in per capita nominal GDP. In February 2014, the toll for a two-axle vehicle traveling the length of the Indiana Toll Road was $9.70.\nAs part of the contract, ITRCC agreed to upgrade the highway in specific ways, such as implementing electronic tolling and adding a third lane in congested areas. The proceeds from the lease were used by Indiana DOT to fund a large number of highway construction and preservation projects under the state's 10-year \"Major Moves\" initiative. In addition, the seven counties through which the toll road passes received payments of between $15 million and $40 million for local transportation projects.", "In December 2007, the Virginia Department of Transportation (VDOT) signed an agreement with a private consortium to build and operate four new high-occupancy toll (HOT) lanes, two in each direction, on a 14-mile stretch of the Capital Beltway (I-495) from the Springfield Interchange to north of the Dulles Toll Road. The partnership between VDOT and the private consortium is an example of a Design-Build-Finance-Operate-Maintain (DBFOM) P3. The contract is a fixed-price, fixed time, design-build contract, with an 80-year lease for operations, maintenance, and toll collection. The HOT lanes opened in November 2012 and are operated using congestion pricing technology that collects a variable toll based on traffic levels. High-occupancy vehicles with at least three passengers, motorcycles, buses, and emergency vehicles travel without charge.\nThe private consortium of Fluor Corporation and Transurban financed most of the $2 billion project with $348 million in equity and another $1.2 billion borrowed using federal credit assistance. This involved a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan of $589 million and $589 million in tax-exempt private-activity bonds. The state committed $400 million in grant funding to the project for a number of additional highway improvements, including the final phase of the Springfield Interchange, improvements to the I-66 interchange, reconstruction of some bridges on the Beltway, and participation in a regional congestion plan.", "The ability to impose tolls on heavily trafficked roads provides an obvious source of returns on private investment. Public transportation systems, on the other hand, almost always cost more to run than can be generated from fares and other operating revenues. This makes it difficult to develop transit systems without significant public sector support, as the Las Vegas Monorail project demonstrates. The monorail is a four-mile system that connects hotels and other attractions on the Las Vegas Strip. Unlike most transit P3s, which have direct government ownership and financial support, the Las Vegas Monorail has been a private venture, owned and operated by the Las Vegas Monorail Company, a non-profit corporation. The original segment of the system, operating between two major hotels, was opened in 1995. The system was expanded in 2004 with financial and in-kind contributions from hotels and resorts in addition to the sale of tax-exempt bonds that are being repaid with passenger fares and advertising revenues.\nA proposal to extend the system to McCarren International Airport was approved by Clarke County in November 2006. Despite this approval, the project does not appear to have attracted the approximately $500 million needed to finance construction. Financial problems with the existing system may be to blame. The monorail has had difficulty meeting its operating and debt expenses, a problem exacerbated by the 2007-2009 recession. Newspaper reports in 2008 stated that the system was failing to meet its operating and debt expenses by about $30 million annually and that the company was drawing down its reserve funds. In January 2010, while continuing to provide service, the Las Vegas Monorail Company filed for Chapter 11 bankruptcy protection. The company emerged from bankruptcy in 2012 with its debts of $757 million, mostly outstanding bonds, reduced to $13 million. The monorail carried 4.2 million passengers in 2013 and generated $18.4 million of revenue, as compared to 10.3 million passengers in the peak year of 2005, when revenue reached $30.2 million.", "An example of a design-build P3 is the replacement of 554 mostly small bridges carrying local roads by a single contractor as part of the Missouri Department of Transportation's (MoDOT's) Safe and Sound Program. MoDOT awarded KTU Constructors a $487 million contract to complete the work by December 2013. Work was completed in November 2012. MoDOT financed the project by selling Grant Anticipation Revenue Vehicle (GARVEE) bonds. The bonds are being repaid in 24 annual installments of $50 million using a portion of the state's annual highway apportionment. This Design-Build P3 was originally proposed as a Design-Build-Finance-Maintain P3. The original P3 was to include a long-term maintenance contract element and private activity bonds as a financing mechanism. Problems in the financial markets in 2008 made the original proposal unaffordable.", "Designed to relieve congestion on I-35, SH-130 is a 90-mile, four-lane toll road on the east side of Austin, TX, connecting I-35 in the north and I-10 in the south. In 2007, the Texas Department of Transportation entered into an agreement with a concessionaire, the SH 130 Concession Company, to design, build, finance, operate, and maintain a 40-mile extension to the existing 50 miles of SH 130 on the south-east side of Austin. The agreement specified a 50-year concession from the opening of the new segment, which occurred in 2012. The $1.3 billion project was primarily financed by the concessionaire with $686 million in senior bank loans, $210 million in private equity, and a $430 million TIFIA loan.\nSince its opening in 2012, and despite a speed limit of at least 80 miles per hour, the 40-mile toll road extension has had much lower traffic volumes than forecast and, therefore, is generating much less revenue than the concessionaire needs in order to repay its loans. In March 2013, in an effort to get more trucks to use the toll road, the state decided to subsidize the toll for trucks for one year. TxDOT is paying the concessionaire $6 million as compensation for revenue lost due to reduced truck tolls. In October 2013, the project's debt was substantially downgraded and a rating agency stated the concessionaire is at risk of defaulting in 2014. This may force the state to terminate the concession and take full responsibility for the road. These problems also imperil the TIFIA loan to the project.", "To relieve major highway congestion, the Florida Department of Transportation (FDOT) entered into a P3 agreement to make major improvements to I-595, a stretch of road near Fort Lauderdale linking I-75 and Florida's Turnpike to the west and I-95 to the east. The centerpiece of the project is the construction of three reversible toll lanes in the median of I-595. Started in 2010, construction is expected to be completed in 2014. The agreement requires the concessionaire, I-595 Express LLC, to design, build, finance, operate, and maintain the facility for 35 years. The $1.8 billion project was mostly financed by the concessionaire with $781 million in senior bank loans, a $603 TIFIA loan, and $208 million in equity. The concessionaire did not accept revenue risk associated with the payment of vehicle tolls. Instead, the private-sector financing is backed by \"availability payments,\" regular payments made by FDOT to the private entity based on quality and performance measured against negotiated standards. Toll rates on the new express lanes will be set by FDOT, and revenue collected will be retained by the state.", "Through most of the 20 th century, highway and transit construction were supported almost entirely by public funding, particularly from the federal government. The private sector's role was largely limited to bidding on and building what the public sector had planned, designed, and financed. The 1980s, however, saw federal spending on highways and transit projects grow at a slower rate than inflation, and the federal share of total capital spending on highways and transit declined. These trends spurred interest in the use of public-private partnerships, as states and localities, particularly those in fast-growing parts of the country, searched for new ways to fund and build transportation infrastructure.\nThis interest was demonstrated in two state-level policy initiatives. With developments in automated toll collection technology that reduced both the cost of collecting tolls and the associated delays for motorists, seven states approved legislation by the late 1980s to allow private investment in highway projects on which the private partners could collect tolls. Two of the earliest projects developed under these new rules were the Dulles Greenway in Virginia and SR-91 in California, which both opened in 1995. According to DOT, 33 states and Puerto Rico currently have general P3 enabling legislation. In transit, new revenue was sought from the development of private facilities on or over transit agency land, a process known as joint development. For example, joint development was used in the construction of offices, retail space, and a hotel surrounding the Washington Metropolitan Area Transit Authority's Bethesda, MD, station. The station opened in 1984 and the mixed-use development was completed in 1985. The air-rights lease for this development generates $1.6 million annually in rents for the transit agency.", "The growing state and local interest in seeking private investment in transportation prompted Congress to explore the inclusion of P3s in federal surface transportation programs starting in the late 1980s. This has resulted in legislative change in numerous areas.", "In the Surface Transportation and Uniform Relocation Assistance Act of 1987 ( P.L. 100-17 ), Congress established a pilot program allowing federal funds to be used in construction or reconstruction of toll facilities, with a maximum federal share of 35%. However, these new or reconstructed facilities had to be publicly owned and operated and Interstate Highways were specifically excluded. Four years later, the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA; P.L. 102-240 ) removed the pilot program status, allowed states to convert non-tolled roads, bridges, and tunnels to tolled facilities, raised the federal cost share to 50%, and allowed for private ownership and operation. ISTEA also established the Congestion Pricing Pilot Program, which allowed federal funds to be used in the implementation of congestion pricing (variable tolls) on up to five projects, of which a maximum of three could be Interstate Highways.\nThe Congestion Pricing Pilot Program was continued in the Transportation Equity Act for the 21 st Century (TEA-21; P.L. 105-178 ), enacted in 1998, but expanded to allow 15 projects and renamed the Value Pricing Pilot Project. Additionally, TEA-21 created another pilot program, the Interstate System Reconstruction and Rehabilitation Pilot Program, for up to three toll projects on the Interstate Highway system. The three slots were filled by I-70 in Missouri, I-81 in Virginia, and I-95 in North Carolina, but none of the proposed projects has been completed as a toll facility.\nIn 2005, the Safe, Accountable, Flexible, Efficient Transportation Equity Act (SAFETEA; P.L. 109-59 ) allowed conversion of High Occupancy Vehicle (HOV) lanes to High Occupancy Toll (HOT) lanes. SAFETEA also created two new programs. The Express Lane Demonstration program authorized up to 15 new tolled facilities from the conversion of existing HOV facilities or where new lanes are constructed. The program explicitly provided for private investment. Five tolling agreements were signed under the program and will continue in force, although the program expired on September 30, 2012. The Interstate System Construction Toll Pilot program authorized tolling of three new Interstate Highways. SAFETEA also extended and modified the Value Pricing Pilot Program by setting aside a portion of the authorized funding for congestion pricing projects that do not involve highway tolls, such as parking pricing strategies and pay-as-you drive pricing involving innovative forms of car ownership and insurance.\nThe most recent surface transportation authorization law, the Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ), allows states to impose tolls on new federally aided bridges, tunnels, and highways, including Interstate Highways. Tolls may also be imposed on new lanes of an existing free highway, bridge, or tunnel, including Interstates, as long as the number of free lanes is unchanged. Furthermore, tolls may be placed on a reconstructed highway, bridge, or tunnel except on the Interstate system. MAP-21 also did away with the requirement that public authorities execute a toll agreement with FHWA on a federal-aid highway. A tolling agreement was required prior to imposing tolls on a federal-aid highway or before using federal-aid funds on an existing toll facility.\nA substantial number of toll-based projects have been initiated since the passage of ISTEA, and this activity appears to have accelerated. A survey sponsored by the Federal Highway Administration (FHWA) found that from the passage of ISTEA through December 2008, a total of 235 toll-based improvement projects were initiated in 32 states and one U.S. territory. About 20% of the toll-based projects identified in the survey involved a public-private partnership.", "Another way in which changes in federal law have encouraged P3s is through developments in innovative financing, a term that covers a broad set of ways to finance infrastructure outside the usual methods involving tax-funded appropriations, intergovernmental grants, and government revenue bonds. Language in ISTEA led to the creation in 1994 of the Innovative Finance Test and Evaluation (TE-045) program, which sought to implement and evaluate new highway financing tools. Some of the ideas developed in this experimental program were subsequently enacted in the National Highway System Designation Act of 1995 ( P.L. 104-59 ), including the State Infrastructure Bank (SIB) pilot program, which permitted certain states to set up revolving funds with federal money in an attempt to leverage other public and private resources for infrastructure projects.\nCongress advanced private participation in surface transportation projects in the Transportation Infrastructure Finance and Innovation Act (TIFIA), adopted in 1998 as part of TEA-21. TIFIA provides federal credit assistance to leverage non-federal funding, including investment from the private sector. Over time, Congress has authorized TIFIA to assist projects smaller than originally intended and has expanded its coverage to include freight rail and intermodal facilities. MAP-21 greatly expanded the TIFIA program, authorizing $750 million for FY2013 and $1 billion in FY2014. This authorization provided DOT with the capacity to lend about $16 billion.\nSAFETEA also designated certain private transportation activities as eligible for federally tax-exempt state and local bond financing. Historically, federal law has provided investors a federal income tax exemption on state and local government bonds issued to finance public activities, such as building a school, enabling the borrowers to take advantage of low interest rates, whereas private activity bonds issued to finance activities that are less public in nature pay taxable interest and therefore offer higher interest rates. Over the years, some types of private activities have been designated \"qualified private activities,\" allowing their sponsors to access the tax-exempt bond market. Airports, docks and wharves, mass commuting facilities, and high-speed intercity rail facilities, highways, and surface freight transfer facilities all have been designated as qualified private activities.\nCongress has limited the amount of qualified private activity bonds that can be issued in each state and for certain activities. SAFETEA included a $15 billion limit on bond issuance for qualified highway or surface freight transfer facilities, although bonds issued under this section are exempt from the state volume caps that exist for the general issuance of private activity bonds. Under the law, the Secretary of Transportation is charged with deciding how to allocate the limited capacity among entities desiring to issue private activity bonds. It is possible that the $15 billion cap will be reached in the first quarter of FY2015, which could inhibit creation of transportation infrastructure public-private partnerships. The Obama Administration's FY2014 budget proposal included a provision to increase the limit for transportation PABs to $19 billion.", "Since 1990, FHWA has undertaken Special Experiment Projects involving innovative contracting methods designed to reduce costs. One of these, design-build contracting, was made a permissible method of contracting in the federal-aid highway program in TEA-21, albeit with certain conditions. These conditions included limiting design-build contracting to projects over $50 million (over $5 million for Intelligent Transportation System projects) and restricting the start of final design until a project has met the requirements of the National Environmental Policy Act (NEPA), including environmental reviews. In 2005, Congress eliminated the $50 million floor for design-build contracts and permitted agencies to enter into contracts with private firms before NEPA approval. It also set a 180-day limit on the time for challenging federal approvals, including environmental approvals. This limitation was aimed at reducing risk and may be particularly important for projects financed by private investors.\nMAP-21 included several other provisions to encourage the creation of P3s at the state and local level. These provisions require DOT to compile and make available best practices in the use of P3s and to develop model contracts, and allow DOT to provide technical assistance in analyzing and drafting P3 agreements.", "One of the earliest legislative initiatives in mass transit, the National Urban Mass Transportation Act of 1974 ( P.L. 93-503 ), explicitly encouraged private financial participation in transit by permitting federal assistance for joint development projects, which typically involved commercial or residential development of land near transit stations. These types of projects, however, were discouraged by an administrative decision by the Urban Mass Transportation Administration (now known as the Federal Transit Administration or FTA) in the 1980s that federal subsidies should take contributions from private partners into account, which effectively meant that private dollars committed to a project would replace federal dollars. Congress directed FTA to revise this policy to allow land acquired with federal funding to be used in joint development projects and income derived from such projects to be used for transit operation. TEA-21 then made joint development eligible for reimbursement in federal transit grant programs. The law pertaining to joint development was last modified by SAFETEA, with regulations promulgated in 2007. Among other things, SAFETEA added intercity bus and rail terminals as permitted uses for joint development authority.", "ISTEA furthered the use of P3s in transit by initiating a demonstration program to explore the use of DB/DBOM in the New Starts program. FTA picked five projects to be a part of the demonstration program: Los Angeles Union Station Intermodal Terminal, Baltimore Light Rail Transit System Extensions, San Juan Tren Urbano, Bay Area Rapid Transit (BART) Airport Extension, and the Northern New Jersey Hudson-Bergen light rail project. ISTEA also directed FTA to issue guidance on the use of DB/DBOM in the Federal New Starts program. More recently, SAFETEA authorized the Secretary of Transportation to establish a pilot program to explore the use of P3s in new transit rail or bus rapid transit projects. This program was known as the Public-Private Partnership Pilot Program, or \"Penta-P.\" The East Corridor and Gold Line Corridor Rail projects in Denver, CO, BART's Oakland Airport Connector, and two BRT projects in Houston, TX, were selected to participate in the program.", "The widespread interest in encouraging P3s in surface transportation raises a number of important issues for Congress. These fall into two main categories: (1) the extent to which P3s can help finance the surface transportation system; and (2) the effects of long-term concessions on the planning, operation, and use of the surface transportation system. P3s offer a number of benefits for states and localities, but they also present a number of trade-offs and potential problems. Consequently, there is not one easily identifiable \"public interest\" but multiple stakeholders with overlapping interests that must be weighed against each other. The public interest in P3s has been protected on a project-by-project basis through the terms of concession agreements. Some, including GAO, have suggested that a more systematic approach to identifying and evaluating the public interest in P3s needs be developed and employed, as has been done in other countries such as Australia. As part of such an effort, the federal government might need to identify and evaluate the national public interest in highway projects that employ a P3.", "P3s are often touted as a means of providing resources for the provision of transportation infrastructure beyond those provided by government. In many cases, a P3 is designed to offer a return to private-sector capital from a project-related revenue stream such as vehicle tolls, container fees, or, in the case of transit station development, building rents. Of course, the public sector could raise revenue from transportation facilities in the same ways. The putative advantages of P3s are their ability to attract additional capital for infrastructure and to build and operate transportation facilities more efficiently than the public sector.\nThe private share of a P3 can be financed with both debt (bond) and equity financing. Because equity investors have an opportunity to share in the profits, they may be less conservative than investors who would buy the municipal bonds used to finance a bridge or a transit system. In addition, the opportunity to invest in equity or taxable debt may lure pension funds and foreign investors, which generally are not subject to U.S. federal income tax and therefore do not benefit from the tax exclusion of interest on municipal bonds. Private concessions are often for terms longer than traditional municipal bond maturities of 25, 30, or 40 years, allowing the concessionaire to raise capital from very long-term investors. Based on these principles, one estimate suggests that the city of Chicago, which raised $1.83 billion for a 99-year concession of the Chicago Skyway, could have raised only $800 million by selling municipal bonds backed by Skyway revenues.\nP3 agreements involving toll facilities often include provisions regarding future toll increases. With such agreements, investors may be more confident in the ability of a private operator than a public operator to raise tolls in the future, given that toll increases at publicly controlled facilities are often politically contentious. Additionally, investors may believe a private operator will be more able to control operating costs and thereby increase its profit from any given level of tolls.\nEven if such advantages make P3s attractive to private capital, it is unclear how much private money could be attracted to investment in surface transportation infrastructure. In principle, hundreds of billions of dollars may be available for infrastructure development around the world. So far, however, the amount used to provide long-term financing through P3s appears to be small. According to one study, from 1989 through early 2011 there were 96 transportation P3s worth a total of $54.3 billion in the United States. Of these, 11 projects, built at a total cost of $12.4 billion, included a long-term private financing component. This suggests that the potential scale of private investment may be relatively modest when viewed in the context of total highway and transit infrastructure spending.\nTolling, both public and private, accounts for about 5% of highway revenues. The American Association of State Highway and Transportation Officials (AASHTO) has projected that highway tolling may eventually be able to generate between 7% and 9% of future national highway investment needs. The potential of P3s in transit financing is likely smaller. As most transit lines cannot cover operating costs from fares, they are less tempting targets for private investment; transit P3s either involve availability payments or development of stations at which private investors can benefit from control of nearby land, leaving the public sector to provide the bus or rail lines that serve the stations. This suggests that P3s are likely to generate less than this estimated level of 7% to 9% of total investment needs for roads and transit.\nA related point, and one not fully considered in these estimates, is that the institution of a toll tends to suppress or divert travel demand. Widespread tolling could lead travelers to switch to other modes, change the time of a trip to avoid a charge, or forgo travel altogether. An estimate by DOT suggests that immediate imposition of widespread congestion pricing could reduce highway investment needs by as much as 30% from baseline estimates because of lower vehicle miles traveled. Of course, there is little likelihood that such widespread highway pricing could be instituted anytime soon, but the DOT estimate suggests that the ability to finance highway needs through tolls may have limitations.", "State and local governments have significant demands for funding in many different areas. It is possible that asset leases of transportation facilities could be used to fund a wide range of government services other than transportation, a prospect that one expert has referred to as \"revenue extraction.\"\nDiversion of resources may also be of more general concern in that new private resources attracted to transportation infrastructure may substitute for public resources in the transportation sector rather than supplementing them, with no net gain in funding. In a study of the effect of federal highway funding increases on state highway funding between 1982 and 2002, GAO observed a substitution effect, particularly between 1998 and 2002, when a 40% increase in federal capital spending was accompanied by a 4% drop in state and local capital spending.", "P3s may generate new resources for transportation infrastructure in two other ways. First, they may improve resource efficiency through improved management and innovation in construction, maintenance, and operation, in effect providing more infrastructure for the same price. Private companies may be more able to examine the full life-cycle cost of investments, whereas public agency decisions are often tied to short-term budget cycles. On the other hand, some or all of these savings may not materialize if the public sector has to spend a substantial amount of time on procurement, oversight, and disputes that may result in litigation. GAO found in 2008 that most state governments did not have the necessary capacity to manage P3 contracts. To aid states, MAP-21 required DOT to \"develop standard public-private partnership transaction model contracts for the most popular types of public-private partnerships for the development, financing, construction, and operation of transportation facilities.\"\nSecond, through P3s the private sector may bear many of the financial risks of building, maintaining, and operating infrastructure. Such risks abound. One major risk is that construction will cost more and/or take longer than foreseen. Another is that a facility to be financed by tolls will have less demand than estimated, and will fail to generate the expected revenue. Transferring these and other risks to the private sector is not necessarily a money saver, as the private partner will require compensation for assuming them, but the risk transfer may provide greater certainty for the public sector. However, not all the risks can or should be shifted to the private sector. For instance, a major risk associated with transportation infrastructure projects that the private sector is unlikely to be able to accept is the delay and uncertainty associated with the environmental review process.\nDetractors argue that, at least in some cases, the transfer of risk in a P3 may prove illusory if miscalculations force the public sector to renegotiate the P3 contract or to assume project ownership. In the case of the extension of SH-130 near Austin, TX, discussed earlier, low traffic volumes prompted the state to provide an unanticipated subsidy of truck tolls for one year. If low traffic volumes cause the concessionaire to default on its financial commitments, repayment of a $430 million TIFIA loan to the federal government may be at risk. If a default occurs, the state may have to terminate the concession and take full responsibility for the road. In some P3s, the public sector retains revenue risk, thus putting itself on the line to repay creditors if the project fails to generate anticipated revenue.", "If P3 projects involve highway tolls, some road users may claim to be charged twice, as they may also be paying tax on the motor fuel used to drive on the facility. A proliferation of tolled roads, particularly those under private control, thus has the potential to raise travel costs. Trucking groups have been particularly wary of proposals to fund highway construction through tolls, as they worry that toll rates could shift some costs from passenger vehicles to trucks. Tolls are not regulated by the federal government, but P3 contracts provide a mechanism for states to exercise control over tolls on privately operated highways. This may be particularly important in a situation in which there is no viable alternative to a particular road, bridge, or tunnel, allowing the operator to exercise monopoly power—although a concessionaire's ability to raise tolls is limited by the possibility that higher tolls will reduce traffic and revenue.\nIf tolls imposed under P3s divert traffic, they could result in increased congestion and reduced safety on other routes. Diversion of truck traffic is seen as particularly problematic, as truckers facing high tolls may find it worthwhile to use toll-free roads less able to accommodate long or heavy vehicles. One study suggests that the safety impacts and infrastructure damage resulting from diversion may be substantial, although the scale of effects will vary by route and the size of the toll.\nTolling also involves equity issues. In some cases, states or local governments have attempted to structure tolls or locate toll-collection facilities so that users from other states or localities provide a disproportionate share of the revenue, potentially burdening interstate commerce. Tolls place a greater burden on lower-income than higher-income households, although surveys of users on toll roads tend to show a significant level of usage by people from low income households. Moreover, projects that add a tolled alternative to non-tolled lanes, such as the I-495 HOT lanes in Northern Virginia, are likely to benefit all road users if they reduce congestion in \"free\" lanes.", "P3s may have longer-term effects on the transportation system insofar as they influence decisions about what to build and where. Public-sector investment decisions inevitably involve a political process, and it is frequently argued that government funding of transportation infrastructure is spread too widely, or worse, goes to projects with low ratios of benefits to costs. A number of studies have shown, for example, that geographic equity is often a basis for distributing transportation funding and selecting projects. Private-sector investors, on the other hand, will be drawn to projects that have the greatest potential financial returns, and are unlikely to be interested in financing facilities that have little revenue-generating potential or would be easy for users to circumvent. P3s reliant on tolls, therefore, are unlikely to address transportation issues in rural areas. They may also not be suitable for roads that carry relatively little traffic but provide important connections between the more heavily traveled segments.\nConcerns about the effects of P3s on transportation planning have been particularly acute when states receive unsolicited proposals. It is generally assumed that projects for which proposals are solicited from the private sector will have come through a public planning process. Unsolicited project proposals, on the other hand, may or may not reflect the priorities of the state, region, or locality as incorporated in short- and long-range plans. Consequently, it has been suggested that P3 enabling legislation should not permit unsolicited proposals. Proponents of P3s argue that this would stifle innovative ideas, and that while a proposal may be unsolicited, to come to fruition it would have to pass through the public review process.\nSome P3 contracts contain non-compete clauses that restrict what types of improvements a government agency can make near a privately operated facility. Such restrictions may impede the ability of public agencies to increase capacity and to devise coordinated congestion management policies. On the other hand, investors might be less willing to undertake P3s if there were no protection from unlimited competition by \"free\" roads provided by the taxpayer, requiring a balance between attracting private investment and protecting the public interest in mobility and choice.\nThe exceedingly long terms of some concession agreements, 99 years in some cases, may further complicate transportation planning. While very long-term contracts may be required to provide investors with sufficient returns, contract provisions may tie the hands of planners and policy makers years into the future, when conditions may be very different. This may argue for limiting the term of a concession to the design life of a facility, although that may deter some investors. Another possible solution is for concession agreements to include provisions that allow for reasonable amendments and for third-party arbitration of disagreements.", "MAP-21 made several changes to federal law that are likely to encourage the creation of P3s at the state and local level. These include greatly increasing the amount of funding available for TIFIA loans and making tolling on federal-aid highways less restrictive. MAP-21 also required DOT to provide technical support to P3s. These changes were a move away from the policy of incremental changes and experimentation in program incentives and regulation that existed prior to MAP-21.\nThere are two broad policy options for expanding use of P3s. The first would be to actively encourage P3s with program incentives, as was done in MAP-21, but with relatively tight regulatory controls. The second would be to aggressively encourage the use of P3s through program incentives and deregulation, particularly in the areas of tolling and financing. It should be pointed out that at the level of detailed policy prescriptions these options are not necessarily mutually exclusive, as Congress could decide to deregulate in one area while enhancing regulation in another, and may add funding to one program and cut funding to another.\nProponents of the first option tend to be cautious about the benefits of P3s and favor regulations designed to protect the public interest from their perceived problems. They emphasize that many P3s involve little private money or are subsidized by the public sector, that risk transfer from the public to the private sector can be illusory, and that P3 contracts may constrain government decisions about the transportation system. In response to such concerns, MAP-21 required that best practices complied by DOT \"shall include policies and techniques to ensure that the interests of the traveling public and State and local governments are protected in any agreement entered into with the private sector for the development, financing, construction, and operation of transportation facilities.\"\nThe debate over public oversight is not new. The proposed Surface Transportation Authorization Act (STAA) of 2009 would have made P3s involving federal-aid highway funds subject to various federal requirements, including a weighing of the costs and benefits of the P3 against traditional public delivery methods. The proposal also contained requirements regarding public information and public involvement and a prohibition against non-compete clauses in P3 agreements. These requirements would have been enforced by a new Office of Public Benefit (OPB) within FHWA to \"provide for the protection of the public interest in relation to highway toll projects and public-private partnership agreements on Federal-aid highways.\" The requirement that the OPB review and approve a P3's compliance with new public transparency provisions raised particular concern among advocates of more widespread use of P3s, who asserted that the risk of OPB disapproval late in the process would discourage project partners from investing the substantial time and money required to develop projects.\nThe more aggressive approach to P3s would provide program funding to encourage innovation and generally deregulate the use of tolling and private sector involvement, thereby letting states decide when and how to enter into agreements. The federal role in such a scenario could be limited to providing guidance about instituting good practices and avoiding common pitfalls, although it might be possible to set up a federal P3 office which, in addition to providing technical advice, could also provide consulting services in a fee-for-service arrangement, and could possibly help to develop the P3 market. Such entities exist in several other countries, such as Partnerships BC in British Columbia, Infrastructure Partnerships Australia, and Partnerships UK. Other past proposals have linked deregulation of tolling and public-private partnerships with devolution of federal responsibilities in highways and transit to the states.", "Many parts of the Interstate Highway system have traffic levels that would make it financially viable to have toll-supported public-private partnerships. The need for reconstructing Interstates is likely to accelerate in the years ahead as many reach their approximately 50-year design life. Many of these projects are likely to be very expensive \"mega-projects,\" running into the hundreds of millions of dollars. Although imposing tolls on \"free\" roads is likely to be unpopular, Congress could allow states to impose tolls on an Interstate after its reconstruction as a way to facilitate financing of such projects.", "The TIFIA program has played an important role in the funding packages of several large P3s. MAP-21 greatly enlarged the program, authorizing $16 billion in loan capacity in FY2013 and FY2014, but there have already been enough applications to almost exhaust that budget authority. Further enlarging TIFIA could encourage creation of P3s. However, increased lending may also increase the likelihood that a project is unable to repay its loan. TIFIA loans can be subordinate to other debt financing for the project, except, as required by statute, in the event of bankruptcy, insolvency, or liquidation (although there are some exceptions). The possibility that the federal government will claim parity with other creditors, known as a \"springing lien,\" may discourage the completion of some P3 agreements. Abolishing the springing lien, however, may expose the federal government to greater risk of loss if a project sponsor is unable to service its debt.\nPrivate activity bonds have been another important way in which the federal government has encouraged the development of P3s in transportation. As noted earlier, the current cap of $15 billion may be reached in FY2015, threatening the development of new projects. The Administration's FY2014 budget proposal includes a provision to increase this amount to $19 billion. Raising the cap is not cost free, however. This provision, if enacted, would reduce revenue by $515 million over the 2014 to 2023 budget window.\nA national infrastructure bank could be designed to promote development of P3. The central idea of a national infrastructure bank, or \"I-bank,\" would be to provide low-cost, long-term loans on flexible terms, much like the TIFIA program. However, an I-bank might have more independence than TIFIA, which is controlled by the U.S. Department of Transportation, and as a separate organization might be able to build up a specialized staff, including expertise on the creation and oversight of P3s. Funding could come from an appropriation to pay for administrative costs and the subsidy cost of credit assistance, although in some formulations an I-bank would raise its own capital through bond issuance.\nMany different formulations of an I-bank have been proposed over the past few years. Three I-bank proposals that have been introduced in the 113 th Congress are the National Infrastructure Development Bank Act ( H.R. 2553 ) by Representative DeLauro, the Partnership to Build America Act ( H.R. 2084 ) by Representative Delaney, and the Building and Renewing Infrastructure for Development and Growth in Employment (BRIDGE) Act ( S. 1716 ) by Senator Warner.\nState infrastructure banks (SIBs) already exist in 32 states. Most were created in response to a federal program enacted in 1995 ( P.L. 104-59 ). Although they tend to provide credit assistance to small projects that do not involve a P3, an expansion of their role may make them more supportive of projects involving a private partner. MAP-21 did not extend authority for a state to use a portion of its federal surface transportation funds to capitalize a SIB. Several bills have sought to encourage SIBs by allowing states to fund them from federal funds, by creating a dedicated federal funding stream, or by authorizing SIBs to issue bonds that would benefit from tax credits." ], "depth": [ 0, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 1, 2, 3, 3, 3, 3, 3, 1, 2, 3, 3, 2, 2, 1, 2, 2 ], "alignment": [ "h0_title h1_title", "h0_full", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_full h1_full", "h0_title", "h0_full", "", "", "", "h1_full", "", "h1_full" ] }

{ "question": [ "What is the relationship between private funding and surface transportation infrastructure?", "Why might private funding be undesirable?", "Why do P3s remain an open question?", "What issues do P3s raise?", "What does this report discuss?", "What would be the effect of the first policy option?", "How would this affect the current state of transit?", "What is the nature of the second policy option?", "How would this option affect tolling and financing?" ], "summary": [ "Evidence suggests that there is significant private funding available for investment in surface transportation infrastructure, but that it is unlikely to amount to more than 10% of the ongoing needs of highways over the next 20 years or so, and probably a much smaller share of transit needs.", "With competing demands for public funds, there is also a concern that private funding will substitute for public resources with no net gain in transportation infrastructure.", "The effect of P3s on the planning and operation of the transportation system is a more open question because of the numerous forms they can take, and because they are dependent on the detailed agreements negotiated between the public and private partners.", "Many highway and bridge P3s involve tolling, raising questions about equity and traffic diversion and, more broadly, concerns about whether there is a national public interest justifying federal oversight of P3s.", "This report discusses two broad policy options for Congress as it considers reauthorizing federal surface transportation programs.", "The first would be to actively encourage P3s with program incentives as has been done in the Moving Ahead for Progress in the 21st Century Act (MAP-21; P.L. 112-141), but with relatively tight regulatory controls.", "This might include a requirement for an evaluation of the costs and benefits of the P3 against traditional public delivery methods, new requirements regarding public information and public involvement, and a prohibition against non-compete clauses in P3 agreements (which could prevent public authorities from providing new, competitive infrastructure near a privately controlled facility).", "The second broad option would be to aggressively encourage the use of P3s through program incentives and deregulation.", "This might include fewer restrictions on the tolling of Interstate Highways and the enhancement of existing financing programs that encourage P3s, such as the TIFIA (Transportation Infrastructure Finance and Innovation Act) program and private activity bonds, or new initiatives, such as the creation of a national infrastructure bank." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, 1, 0, 3 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Location of Oil and Gas Development in the United States", "Oil and Gas Production", "Transportation Modes", "Department of Transportation", "Increased Oil and Gas Production Presents Challenges for Transportation Infrastructure That Could Pose Environmental and Safety Risks and Have Economic Implications", "Increased Domestic Oil and Gas Production Presents Challenges for Transportation Infrastructure", "Transportation Infrastructure Limitations and Related Effects Could Pose Environmental and Safety Risks and Have Economic Implications", "DOT Has Not Fully Addressed Safety Risks from Expansion of Federally Unregulated Gathering Pipelines", "Increases in the Number, Size, and Operating Pressure of Gathering Pipelines Pose Additional Risk, Particularly Where They Are Not Federally Regulated", "DOT Has Not Proposed Regulatory Changes to Address Risks Posed by Gathering Pipelines", "Transmission Pipeline Infrastructure Has Not Increased Substantially as a Result of Shale Development", "DOT Is Working to Address Risks Related to the Increase in Transportation of Oil by Rail", "Crude Oil Is Transported Increasingly by Rail and Travels Long Distances in Large Volumes", "DOT Is Taking Action to Address Safety Risks Resulting from the Transport of Crude Oil by Rail", "Crude Oil Classification, Testing, and Packaging", "Crude Oil Tank Car Design", "Emergency Response", "Conclusions", "Recommendation", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Impacts of Shale Oil and Gas Development on Highways in Selected States", "Infrastructure Impacts", "Safety Concerns", "Actions to Address Impacts and Safety", "Appendix III: Comments from Department of Transportation", "Appendix IV: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments" ], "paragraphs": [ "", "Oil and natural gas are found in a variety of geologic formations distributed across the country, such as shale and tight sandstone. Shale plays—sets of discovered or undiscovered oil and natural gas accumulations or prospects that exhibit similar geological characteristics—are located within basins, which are large-scale geological depressions, often hundreds of miles across, that also may contain other oil and gas resources. Figure 1 shows the location of shale plays and basins in the contiguous 48 states.\nShale plays can contain oil, natural gas, or both. In addition, a shale gas play may contain “dry” or “wet” natural gas. Dry natural gas is a mixture of hydrocarbon compounds that exists as a gas both underground in the reservoir and during production under standard temperature and pressure conditions. Wet natural gas contains natural gas liquids, or the portion of the hydrocarbon resource that exists as a gas when in natural underground reservoir conditions but that is liquid at surface conditions. The natural gas liquids are typically propane, butane, and ethane and are separated from the produced natural gas at the surface. Operators may then sell the natural gas liquids, which may give wet shale gas plays an economic advantage over dry gas plays. According to a 2014 EIA publication, operators moved away from the development of shale plays that are primarily dry gas in favor of developing plays with higher concentrations of crude oil and natural gas liquids such as the Eagle Ford in Texas, because given natural gas prices at that time, crude oil and natural gas liquids were more valuable products. Another advantage of liquid petroleum and natural gas liquids is that they can be transported more easily through different modes of transportation than dry natural gas, which is transported almost entirely by pipelines to markets and consumers.", "In recent years, domestic onshore production of oil and gas has been steadily rising. For example, from 2007 through 2012, annual production from shale and tight sandstone formations increased more than sixfold for oil and approximately fivefold for gas (see fig. 2). Horizontal drilling and hydraulic fracturing have advanced significantly over the last decade and are largely credited with spurring the boom in oil and gas production in the United States.\nOil: Average domestic crude oil production from shale and tight sandstone formations in 2012 has increased more than sixfold compared with average production in 2007, from 0.34 million barrels per day in 2007 to 2.25 million barrels per day in 2012. To put this into context, according to EIA data, the United States consumed an average of more than 18 million barrels of petroleum products per day in 2012. According to EIA officials, oil from shale and tight sandstone formations accounts for 31 percent of total U.S. production. According to EIA, increased production in 2012 and 2013 was the largest annual increase since the beginning of U.S. commercial crude oil production in 1859. Much of the increase in crude oil production has been from shale formations, such as the Bakken in North Dakota, the Eagle Ford in Texas, and the Niobrara in Colorado. According to EIA officials, U.S. production of crude oil is expected to continue to increase—by 48 percent from 2012 to 2019—and will remain above the 2012 level through 2040.\nNatural Gas: Domestic natural gas production in 2012 has increased about fivefold compared with production in 2007, from less than 2 trillion cubic feet in 2007 to more than 10 trillion cubic feet in 2012. To put this into context, annual domestic consumption of natural gas was just over 25 trillion cubic feet in 2012, according to EIA data. In September 2012, we found that, assuming current consumption levels without consideration of a specific market price for future gas supplies, the amount of domestic technically recoverable shale gas could provide enough natural gas to supply the nation for the next 14 to 100 years. Much of the increase in natural gas has been from shale formations, such as the Barnett, Fayetteville, Haynesville, and Marcellus formations.", "Multiple modes of transportation, including pipeline, rail, highways, and waterways, connect oil and gas production infrastructure (such as wells and processing plants) in shale areas to customers, which include refineries, industrial users, and individual consumers. Additionally, when products switch modes of transportation, oil-loading terminals, sometimes referred to as “transload” terminals, transfer the product from one mode to another, such as when crude oil is transferred from a truck or gathering pipeline to a train. Responsibility for maintaining these modes vary: pipelines and rail are generally privately owned, while highways and waterways are generally public. Figure 3 illustrates how various transportation modes work together to bring oil and gas from production areas to users.\nApproximately 2.5 million miles of pipelines transport roughly two-thirds of domestic energy supplies throughout the United States. These pipelines carry natural gas and hazardous liquids, including crude oil and natural gas liquids from production areas to end users, such as residences and businesses. Gathering pipelines collect produced oil and gas from their source and transport these products to processing facilities and transmission pipelines. Transmission pipelines then transport these products longer distances to users such as residences and businesses. Distribution pipelines transport natural gas to consumers for use and are not within the scope of this report. Characteristics of gathering and transmission pipelines are described in table 1.\nThe U.S. rail network consists of about 200,000 miles of track, which runs mostly through rural areas. The railroad industry is dominated by the seven largest railroads, known as Class I railroads, which collectively accounted for more than 90 percent of annual railroad-freight revenues in 2012. Smaller regional and short-line railroads transport freight shorter distances and can help connect customers in areas not served by the larger railroads. The railroads’ national association, the Association of American Railroads (AAR), represents the interests of the industry and works with railroads and other stakeholders to develop industry standards. Crude oil travels by rail in tank cars, commonly DOT-111 tank cars, which are generally owned by shippers or third parties. The DOT- 111 is a DOT-specification tank car, meaning it must be built to conform to standards specified in DOT regulation. It is a non-pressurized car that is used to transport a variety of liquid products, including hazardous, flammable materials like crude oil. Terminals, referred to as transload facilities, transfer crude oil from other transportation modes (typically trucks or gathering pipelines) to tank cars for transport by train.\nIn addition to pipeline and rail, other modes, including barge and truck may transport oil and gas products. For example, barges may transport oil over longer distances on major waterways, such as the Mississippi River, while trucks typically transport oil over short distances to transload facilities. While this report provides a closer look at transportation infrastructure and safety impacts of shale oil and natural gas development on pipeline and rail nationwide, we also discuss highway infrastructure and safety impacts in the four selected states we examined (see app. II for a summary of highway-related impacts).", "DOT is responsible for ensuring the safe transportation of people and goods through regulations, oversight, inspections, and other efforts, sometimes in partnership with states. Within DOT, PHMSA’s Office of Pipeline Safety oversees the safety of pipelines through regulation and an inspection program, which includes over 100 PHMSA inspectors, and also collects information about the location of pipelines. PHMSA also has arrangements with states, which collectively have over 300 inspectors, to assist with overseeing interstate pipelines, intrastate pipelines, or both. PHMSA’s current pipeline regulations cover all hazardous liquid (including crude oil) and natural gas transmission pipelines. In addition to minimum safety standards that all transmission pipeline operators must meet, PHMSA employs a risk-based approach to transmission pipeline regulation and requires operators to systematically identify and mitigate risks in “high-consequence areas,” which include populated and environmentally sensitive areas. PHMSA also applies this risk-based approach to gathering pipelines and regulates gathering pipelines in non- rural areas, resulting in regulation of approximately 10 percent of the nation’s gathering pipelines. Generally, PHMSA retains full responsibility for inspecting interstate pipelines for compliance with its regulations and taking enforcement actions when needed. However, states may be authorized to conduct inspections of interstate pipelines, as well as inspections and associated enforcement for intrastate pipelines. States can also promulgate regulations for intrastate pipelines, including gathering pipelines, even if these pipelines are not covered by PHMSA’s federal safety requirements.\nPHMSA, through its Office of Hazardous Materials Safety, also regulates shippers and railroads transporting hazardous materials like crude oil by rail and other modes. A memorandum of agreement details how PHMSA works with the other DOT modal agencies to address hazardous- material transportation safety. DOT’s other modal administrations have responsibility for safety of their respective modes, such as the Federal Railroad Administration (FRA), which oversees rail safety. FRA enforces its own and PHMSA’s safety regulations through inspections by FRA officials and state partners in some states. PHMSA also has hazardous materials inspectors who enforce requirements for hazardous material packaging for transportation. Additionally, PHMSA’s regulations include emergency response planning requirements for pipelines and the transportation of crude oil by rail. Specifically, regulations require operators of transmission pipelines and urban gathering pipelines to prepare emergency response plans and coordinate them with emergency responders. Railroads that transport crude oil in tanks larger than 42,000 gallons are required to develop comprehensive oil-spill response plans with additional requirements for contingency planning, ensuring response resources by contract or other means, and training. Railroads are required to submit comprehensive plans to FRA for review. Otherwise, railroads are required to develop basic response plans, for which there are fewer requirements. Because PHMSA applies a risk- based approach to its transportation oversight, we believe it is appropriate to apply principles of risk-based management to assessing the agency’s efforts in this area. Risk-based management has several key characteristics that help to ensure safety, including (1) using information to identify and assess risks; (2) prioritizing risks so that resources may be allocated to address higher risks first; and (3) promoting the use of regulations, policies, and procedures to provide consistency in decision making.", "Increased oil and gas production presents challenges for transportation infrastructure because some of the growth in production has been in areas with limited transportation linkages to processing facilities. According to studies and publications we reviewed, infrastructure limitations and related effects could pose environmental and safety risks and have economic implications, including lost revenue and hindered oil and gas production.", "Though capital investments in U.S. infrastructure for oil and gas transportation, processing, and storage have increased significantly in recent years—by 60 percent from 2008 to 2012, according to a December 2013 industry report—expansions in infrastructure have not kept pace with increased domestic oil and gas production. In the United States, most oil and nearly all natural gas are transported by pipeline. According to EIA data, U.S. refinery receipts of domestic crude oil by pipeline increased almost 25 percent from 2008 to 2012, from 1.6 billion barrels to nearly 2 billion barrels. However, according to a number of studies and publications we reviewed, including a 2013 report from the Fraser Institute, oil and natural gas production in the United States is outpacing the capacity to transport the resources through existing pipeline infrastructure. In February 2013, EIA reported that pipeline capacity to deliver crude oil to a key hub increased by about 815,000 barrels per day from 2010 through 2013; however, the increase has been inadequate to transport crude oil from production sites to refineries. In March 2014, we found that most of the system of crude oil pipelines in the United States was constructed in the 1950s, 1960s, and 1970s to accommodate the needs of the refining sector and demand centers at that time. We also found that, according to Department of Energy officials, this infrastructure was designed primarily to move crude oil from the South to the North, but emerging crude oil production centers in Western Canada, Texas, and North Dakota have strained the existing pipeline infrastructure. For example, according to a 2013 industry publication, oil production exceeded pipeline capacity in North Dakota by about 300,000 barrels of oil per day in the state.\nThe limited pipeline capacity to transport crude oil has resulted in the increased use of other transportation options, in particular rail, truck, and barge (see fig. 4).\nRail: According to a 2014 EIA report, U.S. refinery receipts of domestic crude oil by rail increased more than sevenfold from 2008 to 2012, from 4 million barrels to 30 million barrels. The increased use of rail for transporting crude oil is due to the increases in crude oil production in North Dakota, Texas, and other states, which have exceeded the capacity of existing pipelines to move oil from production areas to refineries, according to a number of studies and publications we reviewed.\nTruck: According to a 2014 EIA report, U.S. refinery receipts of domestic crude oil by truck increased almost 90 percent from 2008 to 2012, from 69 million barrels to 131 million barrels. In addition, according to a North Dakota Pipeline Authority publication, some natural gas liquids are transported to market by truck.\nBarge: According to a 2014 EIA report, U.S. refinery receipts of domestic crude oil by barge increased more than 200 percent from 2008 to 2012, from 48 million barrels to 151 million barrels. According to the EIA report, the increase in barge shipments may be partially explained by crude oil being transferred to barges from rail cars for the final leg of some journeys to refineries, particularly on the East Coast and along the Mississippi River.\nAccording to a number of studies and publications that we reviewed, in addition to pipeline capacity limitations, rail, barges, and processing facilities and storage facilities also face limitations. For example, a 2013 industry publication identified a backlog for tank cars, needed to transport oil by rail, in the United States at nearly 60,000—representing over 20 percent of the existing U.S. tank car fleet. In addition, a 2014 Congressional Research Service report states that significant development of loading and unloading facilities could be required if rail is to continue substituting for pipeline capacity. Further, a number of studies and publications identified that oil and gas production in some areas can exceed the capacity to process and store the resources. For example, state officials in North Dakota reported in 2013 that maintaining sufficient natural gas processing capacity is a challenge of increased production.", "A number of studies and publications we reviewed identified environmental and safety risks or economic implications from transportation infrastructure limitations. For example: Risks to air quality: These risks can be the result of intentional flaring—a process of burning the gas developed along with oil—of associated natural gas that results from limited pipeline infrastructure and of engine exhaust from increased truck and rail traffic.\nOil and natural gas are often found together in the same reservoir. The natural gas produced from oil wells is generally classified as “associated- dissolved,” meaning that it is associated with or dissolved in crude oil. In areas where the primary purpose of drilling is to produce oil, operators may flare associated natural gas because no local market exists for the gas and transporting to a market may not be economically feasible. In September 2012, we found that flaring poses a risk to air quality because it emits carbon dioxide—a greenhouse gas linked to climate change—and other air pollutants that can increase ground-level ozone levels and contribute to regional haze. In January 2014, the North Dakota Industrial Commission reported that nearly 30 percent of all natural gas produced in the state is flared. According to a 2013 report from Ceres, flaring in North Dakota in 2012 resulted in greenhouse gas emissions equivalent to adding 1 million cars to the road.\nIncreased truck and rail traffic associated with the movement of oil from well sites also creates a risk to air quality as engine exhaust, containing air pollutants such as nitrogen oxides and particulate matter that affect public health and the environment is released into the atmosphere. Specifically, the Department of State reported in 2014 that increasing the number of unit trains transporting crude oil could increase greenhouse gases emitted directly from the combustion of diesel fuel in trains and in 2011 we found that trucking freight produces more air pollution than other transportation modes. Air quality may also be degraded as fleets of trucks traveling on newly graded or unpaved roads increase the amount of dust released into the air—which can contribute to the formation of regional haze.\nInherent safety risks: Transporting oil and gas by any means—through pipelines, rail, truck, or barge—poses inherent safety risks. However, in January 2013, we found that pipelines are relatively safe when compared with other modes, such as rail and truck, for transporting hazardous goods because pipelines are mostly underground. For example, we found that large trucks and rail cars transporting hazardous materials, including crude oil and natural gas liquids, resulted in far more fatalities and incidents than pipelines. Specifically, we found that from 2007 to 2011, fatalities averaged about 14 per year for all pipeline incidents reported to PHMSA, including an average of about 2 fatalities per year resulting from incidents on hazardous liquid and natural gas transmission pipelines. In comparison, in 2010, 3,675 fatalities resulted from incidents involving large trucks and 730 additional fatalities resulted from railroad incidents. Therefore, increased transport of oil and gas by rail, truck, or barge could increase safety risks.\nAccording to state officials and several publications we reviewed, increased truck traffic resulting from increased oil and gas production can present hazardous driving conditions—particularly on roads not designed to handle heavy truck traffic. Our analysis of data from PHMSA found that in recent years, the number of reported incidents involving the transport of crude oil by truck in both Texas and North Dakota has increased. Specifically, such incidents increased in Texas from 17 incidents in 2008 to 70 incidents in 2013, and in North Dakota they increased from 1 incident in 2008 to 16 incidents in 2013.\nBarge accidents also pose safety risks and can have associated environmental and economic effects. For example, according to the U.S. Coast Guard Polluting Incident Compendium, in 2011, a barge struck a bridge on the Lower Mississippi River causing damage to the barge and a discharge of just over 11,000 gallons of oil. In February 2014, a barge crash resulted in the spilling of about 31,500 gallons of crude oil into the Mississippi River, temporarily shutting down transportation along the river. According to a 2012 Congressional Research Service report, an oil spill from a barge can cause significant harm to marine ecosystems and individual aquatic organisms and negatively affect business activity near the spill, particularly businesses and individuals that count on the resources and reputation of the local environment. For instance, the local fishing and tourist industry may be affected, and in some cases, a well-publicized oil spill can weaken local or regional industries near the spill site, regardless of the actual threat to human health created by the spill.\nEconomic implications: According to a number of studies and publications we reviewed, infrastructure limitations and related effects could have economic implications, including lost revenue, higher energy prices, and hindered development.\nLost revenue: In addition to the risks to air quality from flaring, we found in October 2010 that flaring natural gas has economic implications, and in April 2014 the Environmental Protection Agency reported that flaring results in the destruction of a valuable resource. For example, in 2010 we found that on federal oil and gas leases, natural gas that is flared, instead of captured for sale, represents a loss of about $23 million annually in royalty revenue for the federal government. According to a 2013 report from the North Dakota Pipeline Authority, in August 2013, 2.7 percent of the total economic value and 7.2 percent of the total energy content being produced in North Dakota were lost due to flaring. In another example, a Ceres report found that in May 2013 roughly $3.6 million of revenue was lost per day, at market rates, as a result of flaring in North Dakota.\nHigher energy prices: Growing shale development and the resulting increased availability and lower prices of natural gas have contributed to an increasing reliance on natural gas as a source of producing electricity in some parts of the country. However, pipeline infrastructure limitations have at times contributed to price spikes. For example, according to a paper from ICF International, pipeline limitations were a contributing factor to higher natural gas prices in the northeast in January 2014. A cold weather pattern involving record low temperatures led to increased demand for natural gas for space heating and for generating electricity across parts of the country. With the surge in demand, several major pipeline systems became constrained and could not deliver sufficient natural gas to meet demand. According to a 2014 EIA publication, prices at the Algonquin, Massachusetts trading point, which normally are around $3 to $6 per million British thermal units (MMBtu) during unconstrained periods, reached up to $38/MMBtu in early January. These price increases for natural gas led electricity systems to use more oil-fueled generating resources during this period.\nHindered oil and gas production: A 2013 study sponsored in part by the Utah Department of Transportation found that oil and gas production from the Uinta Basin is likely to be constrained by limitations in the capacity of transportation infrastructure. Specifically, the study found that existing pipelines in the state are already at or near capacity, and by 2020, demand on the infrastructure network to transport oil and gas will exceed capacity—resulting in a loss of 12 percent of potential production over the next 30 years. Further, according to a 2013 industry report, infrastructure constraints such as pipeline limitations and bottlenecks from the Permian Basin in Texas to a key hub have contributed to discounted prices for some domestic crude oils. For example, we found in March 2014 that West Texas Intermediate crude oil—a domestic crude oil delivered to a key hub that is used as a benchmark for pricing for all crude oil—was priced just under $18 per barrel less in 2012 than Brent, an international benchmark crude oil from the European North Sea that has historically been about the same price as West Texas Intermediate. These discounted prices mean resource developers have received lower prices for their crude oil production. According to a 2013 Energy Policy Research Foundation report, discounted prices may eventually lead to production growth constraints.", "", "Gathering pipeline construction has increased significantly as a result of increased shale oil and gas development; however, the increase in pipeline mileage is unknown because data on gathering pipelines are not systematically collected by PHMSA nor by every state. The Interstate Natural Gas Association of America (INGAA), a trade organization representing interstate natural gas transmission pipeline companies, estimated in March 2014 that shale oil and gas development will result in approximately 14,000 miles of new gas gathering pipelines and 7,800 miles of new oil gathering pipelines added each year from 2011 through 2035. State officials in Pennsylvania, North Dakota, Texas, and West Virginia said that companies have invested significantly in gathering pipeline infrastructure. For example, according to data published by Texas state officials, 15,684 new miles of federally unregulated gathering pipelines were added in the state between 2010 and 2013. In response to the growth in gathering pipelines, Texas officials told us that their state enacted legislation to increase state regulatory authority over gathering pipelines. Similarly, North Dakota passed rule changes in 2013 to increase state regulatory authority over gathering pipelines. Texas officials told us that they plan to study and determine what parts of their rules should apply to gathering pipelines during 2014 and then issue guidance in 2015. In April 2014, North Dakota implemented regulations requiring companies to report the location and characteristics of gathering pipelines carrying any products including natural gas, crude oil, natural gas liquids, water, and others. The National Association of Pipeline Safety Representatives, an association representing state pipeline safety officials, produced a compendium of state pipeline regulations showing that most states with delegated authority from PHMSA to conduct intrastate inspections do not have expanded regulations that cover increased oversight of gathering pipelines. As a result, companies building gathering pipelines in rural areas are generally not subject to inspection and do not have to report the location and characteristics of much of the gathering pipelines being installed.\nAlthough the majority of the total gathering pipeline network that exists are the traditional small pipelines, state pipeline regulators, PHMSA officials, and pipeline operators we spoke with said that some newly built gathering pipelines have larger diameters and higher operating pressures that more closely resemble transmission pipelines than traditional gathering pipelines. For example, while gathering pipelines have traditionally been 2 to 12 inches in diameter, one company operating in the Texas Eagle Ford shale region showed us plans to build 30- and 36- inch natural gas gathering pipelines, which is near the high end of diameters for regulated transmission pipelines. Historically, federally unregulated gathering pipelines were low pressure, smaller-diameter pipelines and were generally in rural areas where there was less safety risk. Now, according to PHMSA, industry, and state pipeline safety officials we spoke to, gathering pipelines of larger diameter and higher pressure are being constructed, including in areas closer to populations. Such construction could increase safety risk, since an incident occurring on one of these larger, high-pressure unregulated gathering pipelines could affect a greater area and be as serious as an incident involving a regulated transmission pipeline of similar diameter and pressure.\nPipeline operators and industry organizations told us that new gathering pipelines are likely safer because new pipelines are less susceptible to issues like corrosion—a common reason for failure in older pipelines. Pipeline operators also told us that some large-diameter, high-pressure gathering pipelines are built to the same specifications as regulated transmission pipelines and that these pipelines are in very rural areas with little risk to people. They also expressed that safety is very important to the industry and that companies understand not only the potential harm to the network, people, and environment, but also the public perception following a high-profile incident and therefore manage their assets to avoid incidents. Nonetheless, state pipeline regulators, PHMSA officials, and safety organizations expressed concern with the potential safety threat of unregulated gathering pipelines of this size. For example, a citizens’ shale development awareness group in Pennsylvania has documented construction of several unregulated gathering pipelines in the state that are 24 inches in diameter. The group argues that while these gathering pipelines are in rural areas, they are being built unnecessarily close to homes. PHMSA officials told us that the large diameter and pressure of the pipelines increase the concern for the safety of the environment and people nearby.\nIn addition to potential increased safety risk as a result of the changing characteristics of the pipelines, some stakeholders shared concerns about the readiness of emergency responders to address potential incidents that could occur with unregulated gathering pipelines. PHMSA’s emergency response planning requirements that apply to other pipelines do not apply to rural unregulated gathering pipelines. Consequently, response planning in rural areas with unregulated gathering lines may be inadequate to address a major incident. Transmission pipeline operators with pipelines similar in size to the new gathering pipelines are required to develop comprehensive emergency response plans and coordinate with local emergency responders. Emergency response officials whom we spoke with stated that lacking information about the location of some gathering pipelines, responders—particularly in rural areas—may not be adequately prepared to respond to an incident. A representative from the National Association of State Fire Marshals told us that training and communication with pipeline companies are key for emergency responders’ knowledge and awareness. Additionally, emergency response officials also told us that rural areas in particular lack the level of hazardous-materials response resources found in metropolitan areas where more is known about the extent of local pipeline networks. The National Transportation Safety Board (NTSB) has also stated that emergency response planning is critical for pipeline safety and has recommended that pipeline operators help ensure adequate emergency response by providing local jurisdictions and residents with key information on the pipelines in their areas.", "As previously discussed, PHMSA applies a risk-based approach to regulating pipeline safety. A key principle of risk-based management is promoting the use of regulations, policies, and procedures to provide consistency in decision-making. PHMSA has acknowledged the growing potential risk of federally unregulated gathering pipelines as more are constructed and at larger diameters and higher pressures, but DOT has not proposed regulatory changes to address this risk. In August 2011, PHMSA published an Advance Notice of Proposed Rulemaking, stating that the existing regulatory framework for natural gas gathering pipelines may no longer be appropriate due to recent developments in gas production. In the notice, PHMSA asked for comment on whether it should consider establishing new, risk-based safety requirements for large-diameter, high-pressure gas gathering pipelines in rural locations, among other potential changes to gathering pipeline regulations. The proposal also states that enforcement of current requirements has been hampered by the conflicting and ambiguous language of the current regulation that can produce multiple classifications for the same pipeline system, which means that parts of a single pipeline system can be classified as rural gathering pipelines and therefore be unregulated, while other parts of the same pipeline with the same characteristics are regulated. PHMSA officials told us they have drafted proposed regulations for both gas and hazardous liquid gathering pipelines but as of June 2014, the agency had not issued the Notice of Proposed Rulemaking for comment. According to DOT officials, the proposed gas rule is being reviewed internally and the proposed hazardous liquid rule is with the Office of Management and Budget for review. PHMSA officials also told us they have studied existing federal and state gathering pipeline regulation to help identify where gathering pipelines are currently regulated and remaining gaps; however, this study has been in the final stages of review during the course of our work and has not yet been published.\nGiven the lack of PHMSA regulation of rural gathering pipelines, the extent, location, and construction practices for rural gathering pipelines is largely unknown by federal, state, and local officials, and oversight to verify the construction and monitor operators’ safety practices is lacking. In 2012, we concluded that unregulated gathering pipelines also pose risks due to construction quality, maintenance practices, and limited or unknown information on pipeline integrity. We recommended at that time that PHMSA collect data on unregulated gathering pipelines to facilitate quantitatively assessing the safety risks posed by these pipelines, which we said could assist in determining the sufficiency of safety regulations for gathering pipelines. According to DOT officials, as of July 2014, PHMSA has compiled data on existing gathering pipeline requirements, and the resulting report is under internal review. Furthermore, officials said that data collection is part of the proposed rules also under review. In 2010, the National Association of Pipeline Safety Representatives recommended that PHMSA modify federal pipeline regulations to establish requirements for gathering pipelines in rural areas that are presently not regulated. The association stated that with the advent of new production technologies, there has been rapid development of gas production from shale formations such as the Barnett, Marcellus, and Bakken resulting in a significant amount of new gathering pipeline construction. Further, in these newer gas gathering systems, it is not uncommon to find rural gathering pipelines up to 30 inches in diameter and operating at 1480 psi, which is the higher end of traditional transmission operating pressure. Enhanced pipeline safety for all types of pipeline was also on NTSB’s “Most Wanted List” in 2013 and 2014. NTSB has prioritized overall pipeline safety because of the increased demand in oil and gas and the aging pipeline infrastructure.\nResources are an important consideration in evaluating how to address the increased risk of gathering pipelines. According to PHMSA officials, inspection resources are limited and would be further stretched if rural gathering pipelines were regulated. If PHMSA were to receive increased staff funding in the near future, there could be a lag in ramping up the inspection workforce because inspectors would have to complete PHMSA’s 3-year pipeline-inspection training to become fully certified. However, if PHMSA were to set minimum federal regulations for gathering pipelines, this would enable the agency to include currently federally unregulated rural gathering lines in decisions for prioritizing resources for addressing safety risks. This is in line with the principles of risk-based management, while also enabling data-driven, evidence-based decisions about the risks of rural gathering pipelines, which our previous work has shown is especially important in a time of limited resources. State regulators in all four states we spoke with acknowledged their resources could also be strained; however, the officials supported regulating rural gathering pipelines. State officials said that without rural gathering pipeline regulation, such as provisions for inspections or industry reporting, they have limited knowledge of the construction and maintenance practices of rural gathering pipeline operators, do not always know where new rural gathering pipelines are being constructed, and may not even have communication with the operators.", "Gas flows from shale plays into transmission pipelines have increased, but construction of new transmission pipelines has not increased dramatically as a result of increased shale development. According to PHMSA data, approximately 4,500 miles of new oil and gas transmission pipelines were built between January 2010 and December 2012. This includes about 2,000 miles each of crude oil and natural gas pipelines and the remaining is pipeline for natural gas liquids.\nOil and gas pipeline industry representatives and transmission pipeline companies we spoke with stated that transmission pipeline companies have been able to accommodate increased demand in various ways. Transmission pipeline companies have repurposed existing pipelines, made operational changes—including increased compression and change in directional flow—and added additional capacity to the current network through smaller-scale construction projects. Companies have repurposed pipelines by changing them from one product to another, such as converting a natural gas pipeline to a natural gas liquid pipeline or a crude oil pipeline. Companies have also instituted operational changes such as adding additional compression to their line, which allows them to move more gas through the same lines, and changing directional flow of a pipeline. One pipeline operator we spoke with is reversing flow of its gas transmission pipeline. Prior to shale development, this pipeline moved natural gas from the Gulf Coast to the Northeast. By 2017, the volume of gas that once flowed north will flow south. The pipeline operator stated that changing the direction of the flow, while not as easy as flipping a switch, requires significantly less time and money than building a new pipeline. Smaller-scale construction projects, such as short pipeline extensions, help meet the demands of shale areas like the Marcellus because the natural gas being produced is in close proximity to its destination market. Therefore, it is primarily a matter of connecting new gas production into the existing transmission pipeline network.\nHowever, accommodating increased demand through new construction is a challenging proposition. To build a transmission pipeline requires a long-term commitment—often a contract that spans 30 to 50 years from producers. Major transmission pipeline projects may also face long timeframes. Pipeline companies we spoke with stated that once contracts are in place it usually takes 2 to 4 years to complete a pipeline. This is in part a result of the permitting process, which can include multiple federal and state agencies as well as obtaining rights to build on properties of individual land owners. Timelines can be longer if the pipeline construction project is contentious. The construction timeline is also dependent on terrain and weather. Pipeline industry representatives in West Virginia told us that constructing pipelines in mountainous terrains is much more difficult than in flat land. State officials in North Dakota said that long winters and short construction seasons cause construction projects to last over several construction seasons to complete. Other reasons provided by state officials and industry officials for a slower growth in pipeline infrastructure in North Dakota include the challenge of securing right-of-ways, as well as uncertainty in market demand. It is possible that continued shale exploration and development in other parts of the country could displace demand for Bakken shale products. Developers have proposed some future pipeline projects, and some have been approved in areas like North Dakota, but transmission pipeline mileage has not seen the same kind of rapid increase as gathering pipeline mileage. For example, Enbridge Energy Partners has proposed a transmission pipeline called Sandpiper that spans 612 miles from North Dakota through Minnesota to Wisconsin. The pipeline is proposed to be 24 inches and 30 inches in different places and will carry between 225,000 and 375,000 barrels of oil. WBI Energy announced planning for a 375-mile natural gas transmission line called the Dakota Pipeline in January 2014. The proposed route would start in North Dakota and continue into Minnesota.\nIn areas of shale development without access to an established pipeline network, such as the Bakken region, lengthy timelines and high costs associated with building transmission pipeline have led producers to seek alternative methods for transporting some of the production—primarily rail.", "", "The use of rail to transport crude oil from development areas to refineries has increased dramatically. STB data show that rail moved about 236,000 carloads of crude oil in 2012, which is 24 times more than the approximately 9,700 carloads moved in 2008 (see fig. 5). Carloads further increased in 2013, with AAR reporting that Class I freight railroads originated 407,761 carloads of crude oil that year.\nAccording to railroads, the majority of this increased movement of crude oil by rail is done using unit trains, which are trains that carry only one commodity to a single destination. Crude oil unit trains may consist of 80 to 120 tank cars, each carrying about 30,000 gallons of product, for a total of about 2.4 million to 3.6 million gallons of crude oil per train (see figure 6). This has resulted in an increase in demand for tank cars. According to AAR, nearly 50,000 tank cars were used to transport crude oil by rail as of April 2014.\nThere are different types of crude oil, which affects where crude is refined, as refineries are configured differently to handle the various types. This, in turn, affects where crude oil is transported for refining. Increasingly, crude oil produced in the United States is “light and sweet” (lower in density and sulfur content); in contrast, a portion of new Canadian production has been “heavy and sour” crude oil (higher in density and sulfur content). We have previously reported that not all U.S. refineries can take advantage of domestic crude oils to the same extent because of configuration constraints at some refineries. Therefore, oil may travel long distances to a refinery with the matching refining configuration even if there is refinery capacity nearer to the crude oil source. According to an oil industry association in North Dakota, much of the domestic refining capacity for Bakken crude oil, which is a lighter crude, is located along the Gulf, East, and West Coasts. According to STB data, about 69 percent of crude oil transported by rail in 2012 originated in North Dakota, followed by Texas and all other states (see fig. 7). STB data show that crude oil originating in North Dakota in 2012 traveled to 19 destination American states or Canadian provinces across North America. While most Bakken crude oil was shipped to destinations along the Gulf Coast, there was a large increase in oil shipped to East and West Coast destinations in 2012, signaling a shift in demand from the Gulf region to the other coasts.\nWhile pipelines generally deliver commodities to a fixed customer, rail offers the flexibility to serve different customers, allowing shippers to shift product quickly in response to market needs and price opportunities. Despite the great increase in crude oil transported by rail, the commodity remains a small percentage of railroads’ business, comprising about 1.4 percent of Class I railroads’ freight originations in 2013, according to AAR. As previously discussed, there are thousands of miles of track in the United States, providing various shipping opportunities for crude oil, as well as other commodities. Officials from Class I railroads said they have not extensively added new infrastructure to specifically accommodate the increased shipping of crude oil by rail, although officials from some railroads said they have added track infrastructure in specific areas of increased shale oil development to increase capacity.", "As the movement of crude oil by rail has increased, incidents, such as spills and fires involving crude oil trains have also increased. PHMSA’s hazardous materials incident data show that rail crude oil incidents in the United States increased from 8 incidents in 2008 to 119 incidents in 2013. These data show that the majority of the 2013 incidents were small; however, two incidents in 2013, in Aliceville, Alabama and Casselton, North Dakota resulted in large spills and greater damage. Significant incidents have continued to occur in 2014, including an April derailment and fire in Lynchburg, Virginia. During a presentation at an April 2014 forum on rail safety, NTSB noted that significant accidents involving crude oil have increased in recent years, with one incident occurring between 2008 and 2012 compared to eight incidents since 2012.\nDOT, primarily through PHMSA and FRA, sometimes jointly, has taken steps to engage the rail and oil and gas shipping industries and emergency responders to address the safety of transporting crude oil by rail, particularly in response to concerns stemming from the July 2013 Lac-Mégantic, Quebec accident: In August 2013, February 2014, and May 2014, DOT issued emergency orders to compel shippers and railroads to address safety risks by taking steps to secure unattended trains, ensure proper testing and packaging of crude oil, and notify emergency responders about crude oil shipments. DOT also issued safety advisories during this period recommending additional actions.\nIn August 2013, PHMSA, with FRA assistance, initiated an ongoing special inspection program to examine whether crude oil rail shipments are appropriately tested and packaged. The effort consists of spot inspections, data collection, and testing crude oil samples taken from tank cars. Initial information from the program has identified deficiencies; DOT issued fines against three companies in February 2014 for not following proper crude oil packaging procedures. According to PHMSA officials, this effort inspects about 2 percent of Bakken crude oil trains.\nIn September 2013, PHMSA issued an Advance Notice of Proposed Rulemaking seeking comments from industry and other stakeholders on improvements to standards for crude oil rail tank cars. This action was in response to the railroad industry’s 2011 petition for improved standards and recommendations from NTSB.\nIn January 2014, PHMSA issued a safety alert notifying the general public, emergency responders, shippers, and carriers that Bakken crude oil may be more flammable than traditional heavy crude oil based on tests associated with PHMSA and FRA’s special inspection program. PHMSA said it planned to issue final results of the tests at a later date.\nIn February 2014, DOT entered into a voluntary agreement with AAR to improve the safety of moving crude oil by rail including increased track inspections, improved emergency braking capabilities, use of a risk-based routing tool to identifying the safest routes, travel at lower speeds, and emergency response training and planning.\nAlso in February 2014, PHMSA officials met with emergency responders and industry groups to discuss training and awareness related to the transport of Bakken crude oil.\nIn July 2014, DOT issued an update on PHMSA and FRA’s joint special inspection program that includes results to date of their crude oil testing efforts and related discussion of the appropriate packaging of oil tested.\nAdditionally, in July 2014, PHMSA, in coordination with FRA, proposed new rules that align with key areas of concern cited by stakeholders: crude oil classification, testing, and packaging; crude oil tank car design; and emergency response. Specifically, PHMSA issued a Notice of Proposed Rulemaking seeking comment on proposals for new regulations to lessen the frequency and consequences of train accidents involving large volumes of flammable liquids, such as crude oil. The proposal includes new operational requirements for certain trains transporting a large volume of flammable liquids; revisions to requirements for crude oil classification, testing, and packaging; and improvements in tank car standards. Additionally, PHMSA, also in consultation with FRA, issued an Advance Notice of Proposed Rulemaking seeking comments in response to questions about potential revisions to current regulations for emergency response planning for crude oil transported by rail.", "PHMSA’s current regulations for transporting hazardous materials require that shippers classify and characterize the materials they ship to identify the materials’ characteristic properties and select an appropriate shipping package based on those properties. “Classification” refers to identifying a material’s hazard class, which could be one or more from the list of nine in PHMSA’s hazardous materials regulations, such as a flammable liquid or flammable gas. “Characterization” refers to ascertaining other characteristics of the product to determine its proper packing group, a designation based on risk that identifies acceptable packages. Specifically, PHMSA’s regulations classify crude oil as a flammable liquid and offer acceptable tank cars under three packing groups based on characteristics such as the oil’s flash point—lowest temperature at which a liquid can vaporize to form an ignitable mixture in air—and boiling point. PHMSA’s regulations provide options for the tests shippers may use to determine these characteristics. Crude oil with higher boiling and flash points is considered less risky, since it is less likely to form flammable vapor unless exposed to extreme temperatures, and more approved packaging choices exist for such oil than for oil with lower boiling and flash points that could form ignitable vapor at lower temperatures. Substances that are gases, rather than liquid, at ambient temperatures are even more flammable, and thus more stringent packaging requirements apply to flammable gases than to flammable liquids. In particular, flammable gases must be packaged in pressure tank cars, which provide additional safety in the event of an accident.\nAccording to PHMSA officials, because crude oil is a natural resource, it has greater characteristic variability than a hazardous material manufactured under strict specifications or quality guidelines. Thus, testing may need to be done more frequently to make sure the proper packaging rules are followed, since different rules may apply depending on the characteristics of a particular oil shipment. A review by Canadian transportation safety officials determined that the crude oil involved in the Lac-Mégantic accident was packaged under less stringent packing requirements than those which should have been followed, given the flammability characteristics of the oil involved. Although, as DOT officials pointed out, a different packing group would not have changed the package itself, since the type of tank car involved in the incident, the DOT-111 tank car, is allowed for crude oil transport under all three packing groups.\nStakeholders we spoke to have differing views on the volatility of crude oil from the Bakken region, the area where the most crude oil is being shipped by rail. Some industry stakeholders, including the operators of Bakken crude oil rail terminals, characterized Bakken crude oil as being like any other crude oil produced in the United States, while other stakeholders said it has differences that may make it more volatile. In particular, PHMSA and AAR officials said that Bakken oil has variable composition and may sometimes contain higher than usual levels of dissolved natural gases. According to AAR officials, this can lead to flammable gases building up in a tank car during transport. AAR officials also said that the presence of natural gas makes fires more likely when crude oil tank cars are involved in an accident. Additionally, a May 2014 industry study noted that Bakken crude oil may contain higher amounts of dissolved flammable gases; however, the report states that it is not enough to warrant new regulations for crude oil rail transportation.\nAccording to PHMSA officials, the current regulatory framework for classifying and packaging crude oil for transport by rail may need to be further examined to ascertain if it addresses all of the risks posed by some shale crude oils that have properties unlike other typical crudes. PHMSA’s July 2014 Notice of Proposed Rulemaking calls for shippers of mined gases and liquids to be transported by rail, including crude oil, to develop and implement a program for sampling and testing to ensure the shippers’ materials are properly classified and characterized. The procedures must outline a frequency of sampling and testing that accounts for the potential variability of the material being tested, sampling at various points to understand the variability of the material during transportation, sampling methods that ensure a representative sample of the entire packaged mixture is collected, and testing methods used, among other requirements. The sampling and testing program must be documented in writing and retained for as long as it remains in effect and be made available to DOT for review upon request.\nRepresentatives from railroads and crude oil terminals we spoke to, as well as from the oil and gas industry, have indicated that clarification about the requirements for testing and packaging crude oil is needed. Specifically, two of the railroads and two crude oil rail terminal operators told us that PHMSA needs to clarify its crude oil testing requirements, including to more clearly state which tests should be done and with what frequency. One of the terminal operators told us that without clearer guidance, they are unsure whether they are performing the right tests and testing with sufficient frequency. They are also concerned they may be incurring unnecessary expense from over-testing. PHMSA’s July 2014 Notice of Proposed Rulemaking does not state which tests should be performed or specifically how often, but does state that testing methods used should enable complete analysis, classification, and characterization of the material as required by PHMSA’s regulations and that the frequency of testing should account for the potential variability of the material. The notice also seeks comment on whether more or less specificity of these requirements would aid shippers and whether the proposed guidelines provide sufficient clarity for shippers to understand whether they are in compliance. PHMSA has also drafted more detailed guidance on classification and packaging crude oil, including testing procedures, but had not released it publicly as of June 2014.\nAdditionally, the American Petroleum Institute, an oil and gas industry association, formed a working group in 2014 to develop industry standards for testing and packaging of crude oil for transportation by rail, which the group hopes to implement by October 2014. PHMSA officials said that PHSMA scientists have been attending the group’s meetings and providing input. In its July 2014 Notice of Proposed Rulemaking, PHMSA noted that it is encouraged by the development of an industry standard and that once finalized, PHMSA may consider adoption of such a standard.", "Under PHMSA’s current packaging regulations, a number of types of tank cars are approved for transporting crude oil. However, DOT-111 tank cars are most commonly used, according to industry and railroad representatives, and PHMSA’s regulations allow its use for all types of crude oil, regardless of packing group.\nNTSB has documented a history of safety concerns with the DOT-111 tank car. Specifically, NTSB has raised concerns regarding the tank car’s puncture resistance, heat tolerance, and potential for overpressurization during a fire. In its report of a 2011 investigation of the derailment of a train hauling ethanol tank cars, NTSB noted that its 1991 safety study and four train-derailment investigations from 1992 to 2009 had identified problems with DOT-111 tank cars. The report further concluded that the car’s poor performance suggested that DOT-111 tank cars are inadequately designed to prevent punctures and breaches and that the catastrophic release of hazardous materials can be expected when derailments involve DOT-111 cars. In response to that and other rail incidents, in 2012, NTSB recommended that PHMSA upgrade its DOT- 111 tank car standards to improve tank shielding and puncture resistance, a move the industry had already begun to address.\nIn 2011, the railroad industry petitioned PHMSA to adopt improved standards for DOT-111 tank cars and worked with tank car manufacturers and other stakeholders to develop improved industry standards that were implemented later that year. These standards called for a thicker shell to improve puncture resistance, shielding at both ends of the tank car, and protection for the top fittings of the tank car. More recently in November 2013, following the Lac-Mégantic accident, the railroad industry called for further tank car upgrades, including a thicker shell, protection to prevent overheating, additional shielding, protection for outlet handles on the bottom of a tank, and high-capacity pressure relief valves. Figure 8 shows how these various proposed upgrades may be incorporated into a crude oil tank car.\nAlthough tank cars are generally owned by shippers or third parties, one railroad told us they intend to acquire their own fleet of tank cars built to the railroad industry’s 2013 proposed standards. The railroad hopes to incentivize the cars’ use by shippers; however, railroads are obligated to move materials as long as they are packaged according to federal standards, and told us they cannot force customers to use upgraded cars and have to accept cargo so long as it is in an allowable package, which includes older model DOT-111 cars.\nA wide range of stakeholders we interviewed—including those from PHMSA, NTSB, state transportation agencies, railroad industry, and rail suppliers—told us that crude oil tank car standards need to be improved. Most shippers, railroads, and rail suppliers providing comments in response to PHMSA’s September 2013 rail safety Advance Notice of Proposed Rulemaking also stated this opinion. However, there were some differences in their views on how improvements should be implemented. Those who commented in response to PHMSA’s notice supported enacting the industry’s upgraded tank car standard into regulation and were generally supportive of proposals to strengthen tank cars’ puncture resistance through design features such as thicker tank walls, jackets, and shielding. However, stakeholders disagreed on the extent to which existing tank cars should—or even could—be retrofitted to meet higher standards. For example, shippers and rail suppliers stated that existing tank cars built to the current industry standards that already exceed the regulatory standard should be exempt from retrofitting if PHMSA were to adopt an even higher standard. Shippers also expressed concerns that retrofitting would be costly, take tank cars out of service, and put a burden on the already busy shops that also build new tank cars. Local-government and rail-industry commenters supported retrofitting existing cars.\nIn its July 2014 Notice of Proposed Rulemaking, PHMSA sought comment on requirements for a new DOT-117 tank car standard to replace the current DOT-111 standard for newly manufactured tank cars transporting flammable liquids, which could be one of three options: 1) a design by PHMSA and FRA that would increase puncture resistance, provide thermal protection, protect top fittings and bottom outlets, and improve braking performance; 2) the design in the railroad industry’s proposal from November 2013 previously discussed; and 3) the 2011 industry-developed tank car design with some enhancements. PHMSA’s Notice of Proposed Rulemaking concluded that cars built to the option 3 standard would likely be built in the absence of a new rule, based on commitments from industry, but that options 1 and 2 would provide additional safety benefits, along with additional cost. Specifically, PHMSA estimated that the improved braking, roll-over protection and increased shell thickness under option 1 would cost $5,000 more per car than option 3. According to PHMSA, option 2 would have most of the same safety features as option 1 except rollover protection and the improved braking system, resulting in a cost of $2,000 more per car than option 3. In addition to the new DOT-117 standard, the proposal would create a performance standard for the design and construction of new tank cars equivalent to the DOT-117, subject to FRA approval. Under the proposal, existing tank cars would have to be retrofitted to comply with the performance standard. The proposal calls for phasing out use of all DOT-111 tank cars for transporting flammable liquids by October 1, 2020, although the cars could still be used to transport other materials.\nAlthough this proposed rule had previously been scheduled for release in November 2014, PHMSA accelerated its efforts to issue a proposal, resulting in the July 2014 release. According to PHMSA officials, the agency did not issue a proposal sooner because the industry, as well as the public, have had different opinions on tank car specifications. Since 2011, PHMSA has received multiple petitions seeking changes to tank car safety standards. In the interim, the railroad industry has moved to adopt higher standards, and in a May 2014 safety advisory, PHMSA and FRA asked companies to refrain from using older tank cars if possible.", "Transporting a large volume of flammable liquid in one train increases the risk of a large fire or explosion in the event of a derailment, such as in the Lac-Mégantic incident. DOT has noted that the transportation of crude oil in unit trains compounds the risk of ignition, and NTSB has reported that crude oil unit trains present the potential for disastrous consequences in the event of an accident. Associations representing emergency responders told us they are particularly concerned about the risk these trains pose to rural areas, which generally have fewer resources to respond to hazardous materials incidents. They also cited concerns with the general lack of awareness about risks and the need for industry to better communicate with local responders about them. Railroad officials told us that risks from unit trains can be managed. Further, railroad officials told us that transporting crude oil in trains that carry a mixture of freight commodities could be higher risk, due to the need to sort crude oil tank cars in rail yards, and that doing so would lead to reduced efficiency by increasing the turn-around times for crude oil trains. In August 2013, AAR revised its guidance on hazardous materials operating practices so that its restrictions would apply to crude oil unit trains; these restrictions include a 50 MPH speed limit, limitations on the use of track siding, and requirements for addressing defective bearings. However, associations representing emergency responders told us that industry should do more to prepare responders for potential incidents, such as by providing information, training, and resources. These organizations also shared concerns about rural responders lacking resources and information to respond as effectively as responders in urban areas. As previously mentioned, stakeholders told us that rural areas may lack sufficient resources to respond to a major event, like an accident involving a crude oil unit train.\nAs previously discussed, PHMSA has engaged emergency responders on crude oil transportation safety, and the voluntary commitment DOT secured from railroads included emergency response planning and training efforts. However, PHMSA’s requirements for comprehensive emergency response planning do not apply to unit trains used to transport crude oil, raising concerns about the abilities of responders and other stakeholders to effectively handle potential incidents. As currently worded, PHMSA’s regulations require comprehensive plans for trains that haul any liquid petroleum or non-petroleum oil in a quantity greater than 42,000 gallons per package—greater than the about 30,000 gallons of crude oil typically transported in a tank car—even though a unit train of 100 cars could carry about 3 million gallons of crude oil. Instead, PHMSA requires railroads to have a basic plan that includes information about the maximum potential discharge, response plans, and identification of (but not coordination with) private response personnel and the appropriate people and agencies to contact in the event of an incident. Federal regulations require that comprehensive emergency response plans include a written plan outlining contingency planning, an identified central coordinating official during an incident, private personnel secured by contract or other means to respond to a worst-case incident, training, equipment, and response actions and be subject to review by FRA. Without a comprehensive plan, PHMSA does not have assurance that railroads have taken steps to plan for response needs and identified and coordinated with the appropriate responders. PHMSA’s July 2014 Advance Notice of Proposed Rulemaking seeks comment on several possible ways of expanding the comprehensive planning requirement to include crude oil unit trains by changing the threshold under which such plans are required.\nAlthough this review focuses on the packaging and movement of crude oil in tank cars, our prior work has found that while DOT has taken actions in this area, there are other safety issues that are also relevant to the context of the safety of transporting crude oil by rail. Specifically, in a December 2013 report, we found that FRA has developed a risk-based approach to direct its inspection efforts, but the agency had been slow to implement broader risk reduction planning. As required by the Rail Safety Improvement Act of 2008, FRA was tasked with overseeing railroads’ development of risk reduction plans. Specifically, FRA was required to issue a final rule by October 2012 directing railroads to develop these plans, but our report found that FRA had not yet issued the final rule. Our report described safety challenges that railroads face, some of which can contribute to derailments. Other actions have been taken subsequently. FRA issued a final rule in January 2014 revising track inspection requirements to increase the standard for track used to transport hazardous materials. And, as discussed, railroads entered into a voluntary agreement with DOT in February 2014 to improve the safety of crude oil trains. In their comments in response to PHMSA’s September 2013 Advance Notice of Proposed Rulemaking on rail safety, several shippers noted that recent incidents have generally been caused by defective track, railroad equipment or operational issues, and supported improvements in these areas. NTSB’s accident report for the aforementioned 2011 derailment of ethanol tank cars noted that although problems with tank cars were a contributing factor, the probable cause of the accident was a broken rail. PHMSA has also noted that addressing the causes of derailments, not just upgrading tank cars, is important for improving the safety of transporting crude oil by rail. According to PHMSA officials, the severity of a derailment may present a wide range of forces for any particular tank car to withstand, and therefore, even an enhanced tank car may have variable performance and may not always perform better in a given derailment. PHMSA’s July 2014 Notice of Proposed Rulemaking to address safety of transporting crude oil by rail includes a number of other provisions in addition to those already discussed for trains carrying 20 or more tank carloads of flammable liquids, including a routing analysis, enhanced braking, and codifying the May 2014 emergency order requiring notification to emergency responders about crude oil shipments.", "The advent of new oil and gas production technologies has created a new energy boom for the United States. However, with this increase in production comes the responsibility to move those flammable, hazardous materials safely.\nWhile the Department of Transportation has worked to identify and address risks, its regulation has not kept pace with the changing oil and gas transportation environment. Gathering pipeline construction has increased, but some of these new pipelines in rural areas fall outside the current safety framework, despite operating at the size and pressure (and therefore similar risk) as federally regulated transmission lines. DOT began a rulemaking to address this issue in 2011 but did not issue proposed rules. Subsequently, new gathering pipeline infrastructure has continued to grow, with industry predicting such growth will continue for the foreseeable future, raising concerns where such pipelines are not subject to safety regulations.\nThe growth in the use of rail to move crude oil has likewise revealed risks not fully addressed by the current safety framework, particularly in ensuring that oil is properly tested and packaged for shipping. Emergency responders also need to be adequately prepared in the event that incidents occur, both for pipeline and for rail. Recent transportation incidents, such as the July 2013 train accident in Lac-Mégantic, Quebec, have highlighted the need for risk-based federal safety oversight. Since the Lac-Mégantic accident, much emphasis has been placed on the need to upgrade standards for tank cars that carry crude oil, but attention to tank cars alone is not sufficient to address safety, a sentiment shared by some railroads and shippers, as well as DOT. Oil and gas shippers, railroads and pipeline operators, emergency responders, and government all have a role to play. Shippers, in particular, play an important role in making sure that hazardous materials like crude oil are properly packaged for safe transport. This underscores the importance of DOT’s role in assessing the risk such oil poses and providing clear guidance for handling it safely. Without timely action to address safety risks posed by increased transport of oil and gas by pipeline and rail, additional accidents that could have been prevented or mitigated may endanger the public and call into question the readiness of transportation networks in the new oil and gas environment. DOT’s recent proposed rulemakings to address concerns about transporting crude oil by rail signal the department’s commitment to addressing these important safety issues. Because of the ongoing rail safety rulemakings, we are not making recommendations related to rail at this time.", "To address the increased risk posed by new gathering pipeline construction in shale development areas, we recommend that the Secretary of Transportation, in conjunction with the Administrator of PHMSA, move forward with a Notice of Proposed Rulemaking to address gathering pipeline safety that addresses the risks of larger-diameter, higher-pressure gathering pipelines, including subjecting such pipelines to emergency response planning requirements that currently do not apply.", "We provided a draft of this report to DOT for comment. We received written comments from DOT’s Assistant Secretary for Administration, which are reproduced in appendix III. These comments stated that PHMSA generally concurred with our recommendation to move forward with a rulemaking to address risks posed by gathering pipelines. Further, the letter stated that PHMSA is developing a rulemaking to revise its pipeline safety regulations and is examining the need to adopt safety requirements for gas gathering pipelines that are not currently subject to regulations. Additionally, the letter stated that proposed regulations are under development to ensure the safety of natural gas and hazardous liquid gathering pipelines that include collecting new information about gathering pipelines to better understand the risk they pose.\nIn the version of the draft report we sent to DOT for comment, we had also recommended that PHMSA develop and publish additional guidance on testing, classification and packaging of crude oil for transport by rail and that PHMSA address emergency response planning regulations for transporting oil by rail so that they include shipments of crude oil by unit trains. DOT’s written response stated that PHMSA generally concurred with these recommendations and was taking steps to address them. Subsequently, on July 23, 2014, PHMSA, in coordination with FRA, issued rulemaking proposals that, if implemented, would likely address these concerns. Therefore, we are no longer making those recommendations in this report and we have added language to the report describing the objectives of the proposals. We also received technical comments from DOT, which we incorporated as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the appropriate congressional committees and to the Secretary of Transportation. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact Susan Fleming at (202) 512-2834 or [email protected] or Frank Rusco at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Major contributors to this report are listed in appendix IV.", "This report addresses (1) challenges, if any, that increased domestic oil and gas production poses for U.S. transportation infrastructure and examples of associated risks and implications; (2) how pipeline infrastructure has changed as a result of increased oil and gas production, the key related safety risks, and to what extent the U.S. Department of Transportation (DOT) has addressed these risks; and (3) how rail infrastructure has changed as a result of increased oil production, the key related safety risks, and to what extent DOT has addressed these risks.\nTo identify challenges increased domestic oil and gas production poses for U.S. transportation infrastructure and examples of the associated risks and implications, we reviewed and synthesized information from 36 studies and other publications from federal, state, and tribal government agencies; industry; academics; and other organizations. We identified these studies and publications by conducting a search of web-based databases and resources—including Transport Research International Documentation, ProQuest, and FirstSearch—containing general academic articles, government resources, and “gray literature.” Studies and publications were limited to those focused on domestic onshore oil and gas production and published in the years 2008 through 2013. In addition, we reviewed prior work we have conducted. We included examples of known transportation infrastructure limitations and associated effects from these studies and publications in this report. We believe the studies and publications identified through our literature search and included in our review have identified key examples of known transportation infrastructure limitations and associated effects. In addition, we analyzed data from the U.S. Department of Energy’s Energy Information Administration (EIA) to identify oil and gas produced from 2007 to 2012. To assess the reliability of these data, we examined EIA’s published methodology for collecting this information and found the data sufficiently reliable for the purposes of this report.\nTo determine how pipeline infrastructure has changed as a result of increased oil and gas production, we analyzed data from DOT’s Pipeline and Hazardous Materials Safety Administration (PHMSA) on pipeline construction from January 1, 2010 through December 31, 2012 and interviewed PHMSA officials and representatives of pipeline industry associations and operators. We assessed the reliability of the data on pipeline construction by reviewing documentation about the database, interviewing agency officials about how the data are collected, comparing the data to similar information from EIA on completed pipeline projects, and reviewing the agency’s related internal controls. We determined that the data were sufficiently reliable for describing new pipeline construction projects. We identified key pipeline safety risks by reviewing documents provided by and interviewing officials from PHMSA, pipeline industry associations and operators, and safety organizations. To examine trends in pipeline incidents, we analyzed PHMSA’s pipeline incident data from January 1, 2008 through December 31, 2013. This analysis only examined transmission pipeline incidents, since many gathering pipelines are not regulated and therefore the data may not include potential gathering pipeline incidents. We assessed the reliability of these data by reviewing documentation on the collection of these data, interviewing agency officials about how the data are collected and whether there are potential limitations for using the data as we intended, and reviewing the agency’s related internal controls. We determined that these data were sufficiently reliable for identifying trends in pipeline incidents. We also examined transportation infrastructure changes and safety risks specific to key shale development areas in four states selected because they are located above shale plays in different parts of the country with generally the highest levels of oil and gas production from 2007 through 2011, according to EIA data. The states and corresponding shale plays were Pennsylvania and West Virginia (Marcellus shale play), North Dakota (Bakken shale play), and Texas (Eagle Ford shale play). In these states, we spoke with state oil and gas regulatory and transportation agencies, oil and gas industry associations, oil and gas companies, railroads, and crude oil rail terminal operators, as well as a community advocacy organization in Pennsylvania. We also reviewed documents provided by these organizations.\nTo determine how rail infrastructure has changed, we analyzed Surface Transportation Board (STB) data on crude oil shipments by rail for calendar years 2008 through 2012 and interviewed DOT officials from PHMSA and the Federal Railroad Administration and industry representatives, including railroads. We assessed the reliability of the STB data by reviewing documentation about the data, interviewing agency officials about how the data were collected and ways they could be analyzed, and reviewing the agency’s related internal controls. We determined that the data were sufficiently reliable for describing trends in the movement of crude oil. To identify the key safety risks related to changes in rail infrastructure, we analyzed PHMSA’s data on rail hazardous-materials incidents from January 1, 2008 through December 31, 2013, reviewed documents submitted to a DOT rulemaking proceeding on rail safety, and interviewed DOT officials and representatives from safety organizations and industry. We assessed the reliability of PHMSA’s incident data by reviewing documentation about the data, interviewing agencies officials about how the data were collected, testing the data for inconsistencies, and reviewing the agency’s related internal controls. We concluded that the data were sufficiently reliable for discussing trends in rail hazardous-materials incidents. Additionally, to examine infrastructure impacts and safety issues closely associated with shale areas, we Interviewed officials from state oil and gas regulatory and transportation agencies, industry associations and oil and gas transportation companies in the four states mentioned previously: North Dakota, Pennsylvania, Texas, and West Virginia. To evaluate to what extent DOT has addressed safety risks, we reviewed federal laws and regulations, DOT emergency orders and guidance, and interviewed DOT officials. National and state-level stakeholders we interviewed are listed in tables 2 and 3.\nWe conducted this performance audit from August 2013 to August 2014 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Pipeline and rail are used to transport shale oil and gas long distances; however, truck transportation via local roads and highways also plays an important role. Trucks transport these goods from production areas to pipeline and rail as well as haul most materials needed to develop oil and gas, such as water, sand, and equipment used during drilling and hydraulic fracturing. State agencies within the four states we examined (Pennsylvania, North Dakota, Pennsylvania, and Texas) have noted significant local road and highway impacts and safety concerns as a result of shale oil and gas development and have taken steps to address these impacts.", "States have reported a significant increase in truck traffic as a result of shale oil and gas development, the effects of which are particularly acute in rural areas unused to this level of road congestion. State officials provided estimates of the number of truck-loads required to drill and fracture a shale gas well ranging from about 1,200 to about 3,000. Although the number of trucks is greatest during the initial drilling and fracturing phases, significant truck volume may return if a well is re- fractured and, in the case of oil wells, trucks can be used to remove oil if the wells are not connected by pipeline. State officials told us that roads in many of these areas prior to development were built for light local and farm use and were not built for the additional thousands of heavy truck loads associated with oil and gas development, leading to deterioration. North Dakota officials told us that many of the roads the oil industry is using were built to handle approximately 600 loads a day and now these roads can see thousands of heavy truck loads per day. Officials also told us that state-wide, truck traffic accounts for approximately 18 percent of all traffic, but in development areas truck traffic can account for 35 to 50 percent. As a result, it has been much more difficult to predict where the biggest road deterioration is going to happen because it depends on the location and intensity of shale development. In Pennsylvania, officials told us the increased volume of trucks has shortened the roads’ normal life cycle, leading to accelerated deterioration and significant damage. The costs of shoring up and rebuilding roads to address these impacts are significant. The Texas Department of Transportation estimated an annual impact to farm-to-market roads, state highways, and local roads in the Eagle Ford area of about $4 billion.", "Road deterioration and increased truck volumes have created safety concerns in these states. Reported highway incidents involving crude oil have increased in recent years in North Dakota and Texas, the two states we examined with significant shale oil development. In Texas, for example, the Texas Department of Transportation reported an increase in highway crashes in the Eagle Ford shale and Permian Basin areas, with the Permian area seeing a 13 percent increase in roadway fatalities between 2012 and 2013.", "The following actions are examples of ways state officials said they have addressed highway infrastructure and safety concerns:\nExtraction taxes. Officials in North Dakota told us the state uses taxes on extracted mineral resources to pay for road improvements. In 2013, the Texas state legislature voted to transfer a portion of the state’s oil and gas severance tax to pay for road maintenance, a measure that will go before Texas voters for approval in November 2014.\nUse agreements. In Pennsylvania and West Virginia, states have entered into road-use agreements with energy companies making the companies responsible for their damage to the roads and maintaining them. Companies must also pay a bond as part of the agreement. Officials told us these agreements have helped make companies more responsible for their impact. For example, in Pennsylvania, officials told us industry had invested over $750 million in roadway infrastructure improvements.\nPublic awareness. Texas launched a public education campaign to alert drivers to the need to use caution when driving through energy- related work zones.\nAlthough much of the impact has been on rural, nonfederal roads, the Federal Highway Administration has been involved in helping states to coordinate information sharing. For example, in 2011, the Federal Highway Administration hosted an information-sharing meeting between officials in Pennsylvania and West Virginia, who told us the session was beneficial.", "", "", "", "In addition to the individuals named above, Karla Springer (Assistant Director), Sara Vermillion (Assistant Director), Melissa Bodeau, Lorraine Ettaro, Quindi Franco, David Hooper, Andrew Huddleston, John Mingus, Joshua Ormond, James Russell, Holly Sasso, Jay Spaan, Jack Wang, Amy Ward-Meier, and Jade Winfree made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 1, 2, 2, 3, 3, 3, 1, 1, 1, 1, 1, 2, 2, 2, 1, 1, 2, 2 ], "alignment": [ "h1_title h3_title", "", "h3_full", "h1_full", "h3_full", "h0_full", "h0_full", "h0_full", "h2_title h1_title", "h2_full h1_full", "", "", "h2_title", "h2_full", "h2_full", "h2_full", "", "h2_full", "h1_full", "", "", "h4_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "Why does increased oil and gas production present challenges for transportation infrastructure?", "How has pipeline capacity affected oil transportation?", "Why are these changes in transportation a cause for concern?", "What is flaring?", "Why is flaring a cause for concern?", "How has the nature of oil and gas pipelines changed?", "How are these pipelines regulated?", "Why are these pipelines not subject to these regulations?", "To what extent is this still true?", "How are new regulations for these pipelines being considered?", "How has rail transportation of crude changed between 2008 and 2012?", "Why is this increase concerning?", "What precautions do crude oil shippers take?", "What guidance has DOT provided regarding packaging?", "To what extent is this guidance adequate?", "Why are unit trains not covered under the DOT requirements?", "Why is this a cause for concern?", "How have oil and gas extraction techniques improved?", "How has this affected oil and gas production?", "How is the safety of the U.S. transportation system maintained?", "What was GAO asked to review?", "What does this report examine?", "How did GAO collect data for this report?" ], "summary": [ "Increased oil and gas production presents challenges for transportation infrastructure because some of this increase is in areas with limited transportation linkages.", "For example, insufficient pipeline capacity to transport crude oil has resulted in the increased use of rail, truck, and barge to move oil to refineries, according to government and industry studies and publications GAO reviewed.", "These transportation limitations and related effects could pose environmental risks and have economic implications. For instance, natural gas produced as a byproduct of oil is burned—a process called flaring—by operators due, in part, to insufficient pipelines in production areas.", "For instance, natural gas produced as a byproduct of oil is burned—a process called flaring—by operators due, in part, to insufficient pipelines in production areas.", "In a 2012 report, GAO found that flaring poses a risk to air quality as it emits carbon dioxide, a greenhouse gas linked to climate change, and other air pollutants. In addition, flaring results in the loss of a valuable resource and royalty revenue.", "Due to the increased oil and gas production, construction of larger, higher-pressure gathering pipelines (pipelines that transport products to processing facilities and other long-distance pipelines) has increased.", "However, these pipelines, if located in rural areas, are generally not subject to U.S. Department of Transportation (DOT) safety regulations that apply to other pipelines, including emergency response requirements.", "Historically, gathering pipelines were smaller and operated at lower pressure and thus posed less risk than long-distance pipelines.", "But the recent increase in their size and pressure raises safety concerns because they could affect a greater area in the event of an incident.", "In 2011, DOT began a regulatory proceeding to address the safety risks of gathering pipelines, but it has not proposed new regulations. Although states may regulate gathering pipelines, an association of state pipeline regulators' report on state pipeline oversight shows that most states do not currently regulate gathering pipelines in rural areas.", "Crude oil carloads moved by rail in 2012 increased by 24 times over that moved in 2008.", "Such an increase raises specific concerns about testing and packaging of crude oil, use of unit trains (trains of about 80 to 120 crude oil cars), and emergency response preparedness.", "Crude oil shippers are required to identify their product's hazardous properties, including flammability, before packaging the oil in an authorized tank car.", "DOT has issued safety alerts on the importance of proper testing and packaging of crude oil.", "However, industry stakeholders said that DOT's guidance on this issue is vague and that clarity about the type and frequency of testing is needed.", "Additionally, unit trains, which can carry 3 million or more gallons of crude oil and travel to various locations through the country, are not covered under DOT's comprehensive emergency response planning requirements for transporting crude oil by rail because the requirements currently only apply to individual tank cars and not unit trains.", "This raises concerns about the adequacy of emergency response preparedness, especially in rural areas where there may be fewer resources to respond to a serious incident.", "Technology advancements such as horizontal drilling and hydraulic fracturing (pumping water, sand, and chemicals into wells to fracture underground rock formations and allow oil or gas to flow) have allowed companies to extract oil and gas from shale and other tight geological formations.", "As a result, oil and gas production has increased more than fivefold from 2007 through 2012.", "DOT oversees the safety of the U.S. transportation system.", "GAO was asked to review oil and gas transportation infrastructure issues.", "This report examines (1) overall challenges that increased oil and gas production may pose for transportation infrastructure, (2) specific pipeline safety risks and how DOT is addressing them, and (3) specific rail safety risks and how DOT is addressing them.", "GAO analyzed federal transportation infrastructure and safety data generally from 2008 to 2012 or 2013 (as available), reviewed documents, and interviewed agency, industry, and safety stakeholders, as well as state and industry officials in states with large-scale shale oil and gas development." ], "parent_pair_index": [ -1, -1, 1, -1, 3, -1, 0, 1, 2, -1, -1, 0, 0, 0, 3, -1, 5, -1, 0, -1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "The CFATS Rule and Process", "ISCD Has Assigned Thousands of Facilities to Tiers, but ISCD’s Approach to Risk Assessment Does Not Reflect All Risk Elements", "ISCD Has Tiered Thousands of High-Risk Chemical Facilities and Resolved Some Problems Using Its Risk Assessment Approach to Assign Tiers", "ISCD’s Risk Assessment Approach Does Not Consider All Elements of Risk", "ISCD Has Begun to Take Actions to Examine How its Approach Could be Enhanced and Could Take Additional Steps to Help Ensure That it is Complete and Validated", "ISCD Revised Its Security Plan Review Process, but Plan Approvals Could Take Years", "ISCD Revised Its Security Plan Review Process because of ISCD Managers’ Concerns", "Security Plan Reviews Could Take Years to Complete, but ISCD is Examining How it Can Accelerate the Review Process", "ISCD Has Increased its Efforts to Communicate and Work with Facilities and May Have an Opportunity to Systematically Gather Feedback on Its Outreach Efforts", "ISCD’s External Communication Efforts with Facilities have Increased Since 2007", "Selected Trade Associations Had Mixed Views about ISCD Efforts to Communicate with Owners and Operators", "Trade Associations We Contacted Expressed Concern about the Burden of Responding to Data Collection Requirements which ISCD Has Plans to Address", "ISCD Does Not Seek Systematic Feedback on the Effectiveness of Its Outreach Efforts", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of Homeland Security", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "The CFATS program is intended to secure the nation’s chemical infrastructure by identifying and protecting high-risk chemical facilities. Section 550 of the DHS appropriations act for fiscal year 2007 requires DHS to issue regulations establishing risk-based performance standards for the security of facilities that the Secretary determines to present high levels of security risk. The CFATS rule was published in April 2007 and Appendix A to the rule, published in November 2007, listed 322 chemicals of interest and the screening threshold quantities amount for each.\nISCD has direct responsibility for implementing DHS’s CFATS rule, including assessing risks and identifying high-risk chemical facilities, promoting effective security planning, and ensuring that high-risk facilities meet the applicable risk-based performance standards through site security plans approved by DHS. ISCD is managed by a Director and operates five branches that are, among other things, responsible for (1) information technology operations; (2) policy and planning; (3) providing compliance and technical support; (4) inspecting facilities and enforcing CFATS regulatory standards; and (5) managing logistics, administration, and chemical security training. From fiscal years 2007 through 2012, DHS dedicated about $442 million to the CFATS program. In fiscal year 2012, DHS was authorized 242 full-time equivalent positions.", "DHS’s CFATS rule outlines a specific process for administering the program. Any chemical facility that possesses any of the 322 chemicals in the quantities that meet or exceed the threshold quantity outlined in Appendix A of the rule is required to use DHS’s Chemical Security Assessment Tool (CSAT)—a web-based application through which owners and operators of chemical facilities provide information about the facility. Once a facility is registered in CSAT, owners and operators are to complete the CSAT Top Screen—which is the initial screening tool or document whereby the facility is to provide DHS various data, including the name and location of the facility and the chemicals and their quantities at the site. DHS is to analyze this information using its risk assessment approach, which is discussed in more detail below, to initially determine whether the facility is high risk. If so, DHS is to notify the facility of its preliminary placement in one of four risk-based tiers—tier 1, 2, 3, or 4. Facilities preliminarily placed in any one of these tiers are considered to be high risk, with tier 1 facilities considered to be the highest risk. Facilities that DHS initially determines to be high risk are required to then complete the CSAT security vulnerability assessment, which includes the identification of potential critical assets at the facility and a related vulnerability analysis. DHS is to review the security vulnerability assessment and notify the facility of DHS’s final determination as to whether or not the facility is considered high risk, and if the facility is determined to be a high-risk facility, about its final placement in one of the four tiers.\nOnce assigned a final tier, the facility is required to use CSAT to submit a site security plan or participate in an alternative security program in lieu of a site security plan. The security plan is to describe the security measures to be taken to address the vulnerabilities identified in the vulnerability assessment, and identify and describe how security measures selected by the facility are to address the applicable risk-based performance standards. DHS then is to conduct a preliminary review of the security plan to determine whether it meets the regulatory requirements. If these requirements appear to be satisfied, DHS is to issue a letter of authorization for the facility’s plan. DHS then is to conduct an authorization inspection of the facility and subsequently determine whether to approve the security plan. If DHS determines that the plan does not satisfy CFATS requirements, DHS then notifies the facility of any deficiencies and the facility must submit a revised plan correcting them. If the facility fails to correct the deficiencies, DHS may disapprove the plan. Following approval, DHS may conduct further inspections to determine if the facility is in compliance with its approved security plan.Figure 1 illustrates the CFATS regulatory process.\nISCD uses a risk assessment approach during the early stages of the regulatory process to develop risk scores to assign chemical facilities to a final tier. According to an ISCD document that describes how ISCD develops its CFATS risk score, the risk score is intended to be derived from estimates of consequence (the adverse effects of a successful attack), threat (the likelihood of an attack), and vulnerability (the likelihood of a successful attack, given an attempt). The ISCD risk assessment approach is composed of three models, each based on a particular security issue: (1) release, (2) theft or diversion, and (3) sabotage, depending on the type of risk associated with the 322 chemicals of interest listed in Appendix A of the CFATS rule. For release, the model assumes that a terrorist will release the chemical of interest at the facility and then estimates the risk to the surrounding population. For theft or diversion, the model assumes that a terrorist will steal or have the chemical of interest diverted to him or herself and then estimates the risk of a terrorist attack using the chemical of interest in a way that causes the most harm at an unspecified off-site location. For sabotage, the model assumes that a terrorist will remove the chemical of interest from the facility and mix it with water, creating a toxic release at an unspecified off- site location, and then estimates the risk to a medium-sized U.S. city. Once ISCD estimates a risk score based on these models, it assigns the facility to a final tier.", "Since 2007, ISCD has assigned about 3,500 high-risk chemical facilities to final tiers and has taken action to identify and address problems with its risk-tiering approach. However, ISCD’s risk-tiering approach does not reflect all elements of risk. Specifically, ISCD is to assess risk using estimates of the consequences, threat, and vulnerability associated with a terrorist attack, but ISCD does not consider key elements of risk, such as economic consequences or facility vulnerability consistent with the NIPP and the CFATS rule. ISCD recognizes that its tiering approach is not complete and continues to mature and has begun to take actions to assess its approach, including commissioning an expert panel.", "In July 2007, ISCD began reviewing information submitted by the owners and operators of approximately 40,000 facilities. By January 2013, ISCD had designated about 4,400 of the 40,000 facilities as high risk and thereby covered by the CFATS rule. ISCD had assigned about 3,500 of those facilities to a final tier, of which about 90 percent were tiered because of the risk of theft or diversion. The remaining 10 percent were tiered because of the risk of release or the risk of sabotage. In addition, about 900 of the 4,400 facilities had been assigned to preliminary tiers and were to be assigned a final tier once ISCD processed data from the facility using ISCD’s risk assessment approach. ISCD officials noted that the number of tiered facilities and their individual tiers is likely to be fluid over time as changes in chemical holdings, production, processes, storage methods, or use occur. Table 1 shows the number and percentage of facilities assigned a final tier as of January 2013.\nOver the last 2 years, ISCD has identified problems with the way the release chemicals model assigns chemical facilities to tiers and has taken or begun to take action to address those problems. In February 2011, ISCD managers were notified by contracting officials responsible for running the model that some chemical facilities had been placed in an incorrect final tier because this model included incorrect data about the release of high-risk chemicals of interest. In June 2011, ISCD officials adjusted the model, lowering the tier for about 250 facilities, about 100 of which were subsequently removed from the CFATS program. In September 2012, ISCD officials stated that they were confident that the adjustment helped make this model more accurate.\nHowever, in October 2012, ISCD officials stated that they had discovered another anomaly that they were working to correct. Specifically, ISCD officials said that they had uncovered a defect that led the model to exclude population density calculations for about 150 facilities in states or U.S. territories outside the continental United States, including Alaska, Hawaii, Puerto Rico, and Guam. In December 2012, ISCD officials said that they had made adjustments to the model to resolve this issue. They added that they expected that once data from the approximately 150 facilities were assessed, no more than 11 of the approximately 150 facilities would be affected by a change to their tier. ISCD officials said that as of February 2013, upon further examination, they expect that about 2 facilities will be affected. However, those two facilities were already tiered for other chemicals covered by CFATS, and ISCD officials did not expect those facilities’ respective tiers to change.", "ISCD has tiered thousands of facilities using its current risk assessment approach, but ISCD’s risk assessment approach is not mature because it does not consider key elements of risk from the NIPP and the CFATS rule. According to the NIPP, which, among other things, establishes the framework for managing risk among the nation’s critical infrastructure, risk is a function of three components—consequence, threat, and vulnerability—and a risk assessment approach must assess each component for every defined risk scenario. Furthermore, the CFATS rule calls for ISCD to review consequence, threat, and vulnerability information in determining a facility’s final tier. However, ISCD’s risk assessment approach does not fully consider all of the core criteria or components of a risk assessment, as specified by the NIPP, nor does it comport with parts of the CFATS rule.\nISCD’s risk assessment approach does not currently conform to the NIPP and is not consistent with the CFATS rule because it does not yet fully consider consequence criteria when assessing risk associated with a terrorist attack. The NIPP states that at a minimum, consequences should focus on the two most fundamental components—human consequences and the most relevant direct economic consequences. Like the NIPP, the CFATS rule states that chemical facilities covered by the rule are those that present a high risk of significant adverse consequences for human life or health, or critical economic assets, among other things, if subjected to terrorist attack, compromise, infiltration, or exploitation.\nOur review of ISCD’s risk assessment approach and discussions with ISCD officials showed that the approach is currently limited to focusing on one component of consequences—human casualties associated with a terrorist attack involving a chemical of interest—and does not consider consequences associated with economic criticality. ISCD officials told us that, at the inception of the CFATS program, they did not have the capability to collect or process all of the economic data needed to calculate the associated risks and they were not positioned to gather all of the data needed. They said that they collect basic economic data as part of the initial screening process in the CSAT; however, they would need to modify the current tool to collect more sufficient data. This contrasts with other DHS components, like the U.S. Coast Guard and the Transportation Security Administration, which have gathered and assessed economic data as part of some critical infrastructure risk assessment efforts.\nISCD officials stated that they have begun to have discussions with other DHS components, like the U.S Coast Guard, about their approach to risk assessment. They also said that they recognize that the economic consequences part of their risk-tiering approach will require additional work before it is ready to be introduced. They noted that the preamble to the November 2007 CFATS rule stated that they would defer incorporating economic criticality until a later date. In September 2012, ISCD officials told us that they had engaged Sandia National Laboratories to examine how ISCD could gather needed information and determine the risk associated with economic impact, but this effort is in the initial stages, with an expected completion date of June 2014. ISCD officials added they are uncertain about how Sandia National Laboratories’ efforts will affect their risk assessment approach.\nISCD’s risk assessment approach is also not consistent with the NIPP because it does not consider threat for the majority of regulated facilities. According to the NIPP, risk assessments should estimate threat as the likelihood that the adversary would attempt a given attack method against the target. Like the NIPP, the CFATS rule requires that, as part of site vulnerability assessment process, facilities conduct a threat assessment, which is to include a description of the internal, external, and internally- assisted threats facing the facility and that ISCD review the site vulnerability assessment as part of the final determination of a facility’s tier. showed that (1) ISCD is inconsistent in how it assesses threat using the different models because while it considers threat for the 10 percent of facilities tiered because of the risk of release or sabotage, it does not consider threat for the approximately 90 percent of facilities that are tiered because of the risk of theft or diversion; and (2) ISCD does not use current threat data for the 10 percent of facilities tiered because of the risk of release or sabotage.\n6 C.F.R. §§ 27.215, .220.\nISCD did not have documentation to show why threat had not been factored into the formula for approximately 90 percent of facilities tiered because of the risk of theft or diversion. However, they pointed out that the cost of adding a threat analysis for these facilities might outweigh the benefits of doing so because it may not provide the increased specificity and level of details to justify the cost. Officials further explained that the model assumes that a terrorist would remove the chemical of interest and use it offsite and ISCD cannot predict where a chemical of interest would be used as a result of theft or diversion. Nonetheless, it is inconsistent for ISCD to not consider threat for the theft or diversion risk model, given that the assumptions about an attack are similar to those considered under the sabotage model—that is, both models assume that a terrorist would use a chemical of interest at an offsite, undisclosed location. This extra level of specificity would be useful for ISCD’s overall risk assessment efforts given that about 90 percent of facilities are regulated because of the theft or diversion security issue. ISCD officials said that given the complexity of assessing threat for theft or diversion, they are considering reexamining their approach.\nRegarding the other 10 percent—facilities tiered because of the risk of release or sabotage—ISCD documents showed that both models consider threat data based primarily on the location of the facility. Nonetheless, ISCD could use more current data to estimate threat among these facilities. Our review showed that ISCD is using 5-year-old threat data based on metropolitan statistical areas (MSA) to estimate threat for those facilities even though these data are updated annually by DHS for purposes of the Urban Areas Security Initiative program. ISCD officials said that they were unaware that threat data they were using were out of date and said they would explore the feasibility of using updated threat scores. Current threat data would provide a more complete and accurate threat profile for release or sabotage and might aid in ISCD’s overall risk assessment efforts.\nISCD’s risk assessment approach is also not consistent with the NIPP because it does not consider vulnerability when developing risk scores.\nAccording to the NIPP, risk assessments should identify vulnerabilities, describe all protective measures, and estimate the likelihood of an adversary’s success for each attack scenario. Similar to the NIPP, the CFATS rule calls for ISCD to review facilities security vulnerability assessments as part of its risk-based tiering process. This assessment is to include the identification of potential security vulnerabilities and the identification of existing countermeasures and their level of effectiveness in both reducing identified vulnerabilities and meeting the aforementioned risk-based performances standards.\nOur review of the risk assessment approach and discussions with ISCD officials showed that the security vulnerability assessment—the primary CSAT application ISCD uses to assess risk—contains numerous questions aimed at assessing vulnerability and security measures in place. These include questions about the accessibility of the facility to an attacker, the capability of the security force to respond to an attack, and security controls related to potential cyber attacks. However, although facilities are required to respond to these questions, ISCD officials told us that they have opted not to use the data facilities provide because it is “self-reported” data—data that are not validated by ISCD—and ISCD officials have observed that facility owners and operators tend to either overstate or understate some of the vulnerability information provided; thus making it not useful for tiering purposes. ISCD officials agreed that the risk assessment approach does not assess differences in vulnerability from facility to facility and location to location because it does not use any vulnerability data. Thus, ISCD’s risk assessment approach treats every facility as equally vulnerable to a terrorist attack regardless of location and on-site security.\nISCD officials told us that they consider facility vulnerability, but primarily at the latter stages of the CFATS regulatory process particularly with regard to the development and approval of the facility site security plan and the inspection process. With regard to site security plans, ISCD officials stated that even though facility data are not currently used to tier facilities based on their response in the security vulnerability assessment, they view the responses as valuable because they prompt facilities’ thinking about vulnerability before they prepare their site security plan or alternative security program. Regarding inspections, ISCD officials stated that they believe that once security plans are authorized and approved, the inspection process could enable ISCD to assess facilities’ vulnerabilities and gauge their progress mitigating those vulnerabilities. Because ISCD has completed a limited number of authorization inspections (56 as of December 2012), it is too early to tell how they plan to use this self-reported vulnerability information. However, ISCD officials indicated that it might be used to help make decisions about the use of inspection resources, especially since they do not anticipate retiering facilities based on their efforts to mitigate risk.", "ISCD has begun to take some actions to examine how its risk assessment approach can be enhanced. For example, in addition to engaging Sandia National Laboratories to develop the framework for assessing economic consequences discussed earlier, ISCD has commissioned a panel of subject matter experts to examine the strengths and weaknesses, if any, of its current risk assessment approach. ISCD officials stated that the panel’s work is intended to focus on whether ISCD is heading in the right direction and they view it as a preliminary assessment. According to ISCD’s task execution plan, the objectives of this assessment are to (1) convene a panel of subject matter experts involved in chemical safety and security, (2) hold one or more working group meetings focused on assessing and providing feedback on the current models and (3) provide a report on the strengths, weaknesses, and issues on the current models. The plan calls for the panel to provide actionable recommendations on potential improvements to the CFATS models, but the panel is not to develop alternative CFATS models nor formally validate or verify the current CFATS risk assessment approach— steps that would analyze the structure of the models and determine whether they calculate values correctly. ISCD officials stated that they believe that the review process would include some steps to assess whether the models are methodologically sound and reliable. In February 2013, after the panel was convened, ISCD officials also stated that they provided information to the panel about various issues that they might want to consider, among them (1) how to address vulnerability in the models given ISCD concerns about data quality and (2) what the appropriate variables to use, if any, are for threats associated with theft or diversion, as discussed earlier.\nISCD is moving in the right direction by commissioning the panel to identify the strengths and weaknesses of its risk assessment approach and the results of the panel’s work could help ISCD identify issues for further review and recommendations for improvement. The results of the panel’s efforts represent one piece of information ISCD will have to consider, moving forward, to ensure that the risk assessment approach is complete within the context of the NIPP risk management framework and the CFATS rule. For instance, in addition to any recommendations coming out of the panel’s work, the development of a mature risk assessment approach would require that ISCD consider and act upon the results of Sandia National Laboratories work on economic consequences. Likewise, ISCD would need to consider the issues we identified, such as not using up-to-date threat data, or how vulnerability could be used in the final tiering process.\nISCD will need to develop an overall plan designed to incorporate the results of these various efforts to revise and enhance its risk assessment approach to fully address each of the components of risk— consequences, threat, and vulnerability—to better align them with the NIPP and the CFATS rule. A plan, complete with milestones and time frames, is consistent with standard practices for project management, which state that managing a project involves, among other things, developing a timeline with milestone dates to identify points throughout the project to reassess efforts under way to determine whether project changes are necessary. ISCD would then be better situated to provide a more complete picture of its approach for developing and completing its review of steps needed to address each component of ISCD’s risk assessment approach and actions needed to make it fully conform to the NIPP and the CFATS rule. It also would provide ISCD managers and other decision makers with insights into (1) ISCD’s overall progress and (2) a basis for determining what, if any, additional actions need to be taken.\nIn addition, given the significant consequences of a terrorist attack on a chemical facility, after ISCD completes these actions, commissioning an independent peer review to assess its revised risk assessment approach, including a complete verification and validation of the models would help ensure that the revised model is sound and facilities are appropriately tiered. In our past work, we reported that peer reviews are a best practice in risk management and that independent expert review panels can provide objective reviews of complex issues. We reported that peer reviews should, among other things, address the structure of the model, the types and certainty of the data, and how the model is intended to be used. Furthermore, the National Research Council of the National Academies has recommended that DHS improve its risk analyses for infrastructure protection by validating the models and submitting them to external peer review. According to the National Research Council of the National Academies, peer reviews should include validation and verification to ensure that the structure of the models is both accurate and reliable.\nAs we have previously reported, independent peer reviews cannot ensure the success of a risk assessment approach, but they can increase the probability of success by improving the technical quality of projects and the credibility of the decision-making process. Thus, a peer review that is commissioned after ISCD revises its approach and incorporates all of the elements of risk would enable peer reviewers to consider a more complete risk assessment approach and provide the opportunity to fully verify and validate it. After ISCD has developed a more mature risk assessment approach, a subsequent peer review would provide better assurance that ISCD can appropriately identify and tier chemical facilities, better inform CFATS planning and resource decisions; and provide the greatest return on investment consistent with the NIPP.", "ISCD has revised its site security plan review process to address concerns expressed by ISCD managers that the original process was overly complicated and included bottlenecks that slowed the review time. ISCD officials said that they believe the current security plan review process, implemented in July 2012, is an improvement over the prior versions. However, they did not collect or track data on the prior review processes, so the improvement between the previous review processes and the current process cannot be measured. Going forward, ISCD has recently implemented a plan to measure various aspects of the process, but it will take time before ISCD can establish baseline measures. Nonetheless, given the rate at which ISCD intends to review and approve security plans, we estimate that it could take about 7 to 9 years to complete reviews of plans for approximately 3,120 facilities that, as of January 2013, had been assigned a final tier but had not yet had their security plans reviewed and approved.", "ISCD has made various revisions to its security plan review process. Under the CFATS rule, once a facility is assigned a final tier, it is to submit a site security plan to describe security measures to be taken and how they will address applicable risk-based performance standards. The November 2011 internal memorandum that discussed various challenges facing the program noted that ISCD had not approved any security plans and stated that the process was overly complicated, did not leverage ISCD’s resources, and created bottlenecks. In addition, the memorandum stated that revising the process was a top program priority because the initial security plan reviews were conducted in a manner inconsistent with the spirit and intent of the CFATS authorizing legislation—that is, plan reviewers used the risk-based standards as prescriptive criteria rather than as standards for developing an overall facility security strategy. According to ISCD, the initial reviews were conducted using the 18 risk-based standards as prescriptive criteria because ISCD had not developed guidance for reviewers of facility plans to use when considering the merits of those plans. ISCD officials told us that they had been working on a solution prior to the internal memorandum being finalized in November 2011. They also pointed out that the action plan that was intended to address the challenges outlined in the memorandum, developed in early 2012, included an action item devoted to improving the security plan review process.\nISCD has implemented two revisions to the security plan review process since October 2011. According the ISCD officials, the first revision was called the interim review process, which was intended to be a “holistic” review whereby individual reviewers were to consider how layers of security measures met the intent of each of the 18 standards. This was a departure from the original review process which generally used the performance standards as specific criteria. Under the interim process, ISCD assigned portions of each facility’s plan to security specialists (e.g., cyber, chemical, and physical, among others) who reviewed plans in a sequential, linear fashion. Using this approach, plans were reviewed by different specialists at different times culminating in a quality review. ISCD officials told us that the interim process was unsustainable, labor- intensive, and time-consuming, particularly when individual reviewers were looking at pieces of thousands of plans that funneled to one quality reviewer.\nIn July 2012, ISCD stopped using the interim process and began using the revised review process. The current process entails using contractors, teams of ISCD employees (physical, cyber, chemical, and policy specialists), and ISCD field office inspectors who are to review plans simultaneously using the holistic approach developed earlier. Figure 2 shows the revised security plan review process as of July 2012.\nISCD officials said that they believe the revised security plan review process is a “quantum leap” forward, but did not capture data that would enable them to measure how, if at all, the new process is more efficient (i.e., less time-consuming) than the former processes. ISCD officials explained that one of the more time-saving beneficial aspects of the new process involves field inspectors interacting with the facilities when the review of the security plan results in an unfavorable outcome. Now, when ISCD identifies a security plan that contains deficiencies, such as missing or unclear information about a security measure, the plan is to be immediately returned to the facility and ISCD is to schedule a compliance assistance visit whereby field inspectors work with the facility to resolve any issues identified. According to ISCD officials, this approach contrasts with the past practices whereby ISCD would continue to review the entire plan even when problems were identified early and not return the plan to the facility until the review was complete, resulting in longer reviews.\nOfficials also noted that by using the revised process, ISCD has realized the value of (1) moving from a single person reviewing every plan sequentially to a team approach, and (2) understanding that security plans do not have to be perfect in order to issue authorization letters and conduct authorization inspections. Regarding the latter, ISCD officials noted that ISCD has begun issuing authorization letters with conditions to inform facilities that their plans provide sufficient information to schedule an inspection. For example, one authorization letter noted that ISCD had not yet determined whether or not the plan satisfied the cyber security risk-based performance standard, and stated that additional information would be gathered during the authorization inspection.\nAlso, when the revised process was implemented in July 2012, all authorization letters include a condition noting that ISCD has not fully approved the personnel surety risk-based performance standard of plans because ISCD has not yet determined what the facilities are to do to meet all aspects of personnel surety. ISCD believes issuing authorization letters with conditions, rather than waiting until all conditions are met, enables inspectors to visit facilities sooner so that ISCD can approve plans more quickly.\nMoving forward, ISCD intends to measure the time it takes to complete parts of the new process and has recently implemented a plan to measure various aspects of the process. Specifically, ISCD’s Annual Operating Plan, published in December 2012, lists 63 performance measures designed to look at various aspects of the site security plan review process—from the point the plans are received by ISCD to the point where plans are reviewed and approved. For example, ISCD plans to collect data on (1) the percentage of facilities with authorization inspections completed within 90 days of security plan authorization for tier 1 and 2 facilities and within 120 days of security plan authorization for tier 3 and 4 facilities, and (2) the number of high-risk facilities in total and by tier that have approved security plans. Collecting data to measure performance about various aspects of the security plan review process is a step in the right direction, but it may take time before the process has matured to the point where ISCD is able to establish baselines and assess its progress. As of February 2013, ISCD is beginning to gather data at points in the process to establish baselines and measure performance and has a goal of reviewing some of the measures and data associated with them monthly, quarterly, or annually, depending on the measure.", "ISCD actions to revise its security plan reviews may result in improvements over the prior processes, but it could take years to review plans for thousands of facilities that have been assigned a final tier—a factor which ISCD hopes to address by examining how it can accelerate the review process. According to ISCD officials, between July 2012 and December 2012, ISCD had approved 18 security plans, with conditions such as the aforementioned personnel surety qualification. ISCD officials told us that, moving forward, they anticipate that the revised security plan review process could enable ISCD to approve security plans at a rate of about 30 to 40 a month. Furthermore, ISCD officials noted that the approval rate could reach 50 plans a month in the third quarter of fiscal year 2013 as the review process becomes more efficient. However, ISCD estimates that under a best case scenario the revised review process could take about 6 months to approve a plan—assuming the plan would not have to be sent back to the facility for revision. ISCD estimates further show that under a worst case scenario the revised process could take as long as 20 months to approve a plan—assuming the plan would have to be sent back to the facility for revisions. Regardless, ISCD officials told us that they would likely be able to increase production because staff are overcoming the learning curve associated with the revised process.\nUsing ISCD’s estimated approval rate of 30 to 40 plans a month, we calculated that it could take anywhere from 7 to 9 years to complete reviews and approvals for the approximately 3,120 plans submitted by facilities that have been final-tiered that ISCD has not yet begun to review. Figure 3 shows the estimated number of years it could take to approve all of the security plans for the approximately 3,120 facilities that, as of January 2013, had been final-tiered assuming an approval rate of 30 to 40 plans a month.\nIt is important to note that our 7 to 9 year estimate does not include other activities central to the CFATS mission, either related to or aside from the security plan review process. Specifically, our estimate does not include time required to: review security plans for about 900 facilities that have yet to be assigned a final tier; and review approved security plans to resolve issues relating to personnel surety, which cannot be fully accomplished until after ISCD decides how to conduct the terrorist ties portion of personnel surety.\nFinally, our estimate does not include developing and implementing the compliance inspection process, which is intended to ensure that facilities that are covered by the CFATS rule are compliant with the rule, within the context of the 18 performance standards. ISCD officials estimate that the first compliance inspections would commence in September 2013, which means that the CFATS regulatory regime would likely be fully implemented for currently tiered facilities (to include compliance inspections) in 8 to 10 years. According to ISCD officials, they are actively exploring ways to expedite the speed with which the backlog of security plans will be cleared such as potentially leveraging alternative security programs, re-prioritizing resources, and streamlining the inspection and review requirements. ISCD officials added that they plan to complete authorizations inspections and approve security plans for tier 1 facilities by the first quarter of fiscal year 2014 and for tier 2 facilities by the third quarter of fiscal year 2014.", "ISCD’s efforts to communicate and work with owners and operators to help them enhance security at their facilities have increased since the CFATS program’s inception in 2007, particularly in recent years. The various trade associations representing facility owners and operators who responded to our query on ISCD’s outreach had mixed views about the effectiveness of ISCD’s efforts to communicate with them over various aspects of the program. Most of the trade associations that responded stated that ISCD seeks and receives informal feedback on its communication efforts, but ISCD stated that it has not developed a systematic approach to solicit feedback to assess the effectiveness of its outreach activities. ISCD is currently developing a strategic communication plan which may create an opportunity for ISCD to explore how it can obtain systematic feedback on its outreach.", "Since 2007, ISCD has taken various actions to communicate with facility owners and operators and various stakeholders—including officials representing state and local governments, private industry, and trade associations—to increase awareness about CFATS and these efforts have increased as the program has matured. From fiscal years 2007 through 2009, most of ISCD’s communication efforts entailed outreach with owners and operators and stakeholders through presentations to familiarize them with CFATS; field visits with federal, state, and local government and private industry officials; and compliance assistance visits at facilities that are intended to assist them with compliance or technical issues. By 2010 and in subsequent years, ISCD revised its outreach efforts to focus on authorization inspections during which inspectors visited facilities to verify that the information in their security plans was accurate and complete and other outreach activities including stakeholder outreach. Table 2 shows the number of outreach activities performed by ISCD from fiscal year 2007 through the first quarter of fiscal year 2013.\nAccording to ISCD officials, the increase in outreach was intended to facilitate the development of site security plans and occurred for various reasons. First, according to ISCD officials, during the early years of the program, regulated facilities did not require as much assistance because they were generally engaged in the development of their Top Screens and security vulnerability assessments. Second, officials said that, as ISCD matured, its ability to track outreach activities improved when ISCD’s tracking system was automated in June 2010—during the early years of the program, outreach reporting was manual. Third, ISCD officials stated that ISCD staffing increases made it possible to perform more outreach to regulated stakeholders. They said that, prior to fiscal year 2009, field staff consisted of about 30 staff detailed from DHS’s Federal Protective Service and in subsequent years ISCD increased the size of its field staff to more than 100.", "Our analysis of industry trade associations’ responses to questions we sent them about the program showed mixed views about ISCD’s efforts to communicate with owners and operators through ISCD outreach efforts. Whereas 3 of the 11 trade associations that responded to our questions indicated that ISCD’s outreach program was effective in general, 3 reported that the effectiveness of ISCD’s outreach was mixed, 4 reported that ISCD’s outreach was not effective, and 1 respondent reported that he did not know. Our analysis also showed that trade associations that responded, in general, viewed specific types of ISCD outreach to be either effective or of mixed effectiveness (fig. 4 shows our analysis of trade association responses to questions about specific types of ISCD’s outreach activities).\nWe also analyzed trade association responses with regard to the usefulness of ISCD outreach activity in terms of their members’ understanding of performance standards, tiering approach, and data collection requirements, as shown in figure 5.\nOur analysis of trade association responses to our questions showed that opinions were mixed regarding the usefulness of outreach activities related to helping regulated facilities understand the Risk-Based Performance Standards. Specifically, trade association responses showed that 5 of the 11 associations that responded indicated that outreach was useful or had mixed usefulness and 4 associations reported that it was not useful. For example, among those trade associations that indicated that outreach on the performance standards was useful, one reported that outreach activities have helped members better understand the standards and another reported that performance standards guidance and early presentations were also helpful. Conversely, among those that indicated they did not believe outreach on the Risk-Based Performance Standards was useful, one cited a lack of ISCD training on the standards and another reported that ISCD needed to provide more assistance to explain what would or would not be compliant using the standards.\nNearly all (9 of 11) trade association respondents indicated that ISCD’s outreach to members was not useful in helping them understand the tiering approach used to determine the risk levels of regulated facilities, which they viewed as not being transparent. respondents reported that the lack of transparency can hinder facility owners and operators’ ability to properly make risk reduction decisions; and 6 respondents reported that there are instances where tiering results contradict the facility’s perception of what is “high risk” or conflict with results at similar facilities with similar chemical holdings and population densities in surrounding communities. One member company of 1 trade association reported that industry has repeatedly asked for information on the tiering process without success. ISCD officials told us that they do not currently provide regulated facilities with details about the CFATS risk- tiering approach but noted that one of the tasks of the aforementioned expert panel review is to make recommendations regarding what additional tiering-related information should be provided to facilities. DHS has designated some parts of the risk models as Chemical-terrorism Vulnerability Information—which warrants special treatment for handling and sharing, including assessing whether or not there is a need to know—and other parts of the models as Secret. ISCD officials also stated that they have not received a formal request by facilities asking ISCD to recheck assigned tiering levels or to re-evaluate the output of the risk models because facilities believe the methodology used is faulty.\nOne respondent said that he was not well positioned to comment on the usefulness of ISCD’s tiering-related outreach activities because of a lack of information from owners and operators the association represented. Another respondent indicated that that the association was not aware that ISCD had conducted outreach in this area.\nAccording to these officials, the primary request from facilities is to know how their facilities were tiered, and industry requests for information mainly come from facilities that either believe they should not be tiered or tiered facilities that are questioning why a neighboring facility has not been tiered.\nOur query of selected trade associations also showed that they generally had mixed views about ISCD’s outreach on data collection requirements. Specifically, 4 of the 11 association officials that provided responses to our query reported that ISCD’s outreach efforts had either been useful or had been of mixed usefulness in enabling them to better understand and comply with the ISCD’s data collection requirements; 3 reported that outreach on data collection requirements had not been useful; and 4 did not answer the question. Among the 4 respondents that found outreach on data collection requirements to be useful or of mixed usefulness, 1 noted that ISCD had done more outreach specifically on elements of the site security plan, which has broadened stakeholders understanding of the type of information DHS is looking for and options they may not have previously considered. Of the 3 that reported ISCD’s outreach on data collection requirements had not been useful, 1 trade association respondent reported that, in 2009, industry representatives had suggested that ISCD produce a document providing tips and suggestions for completing site security plans and reported that it took 3 years for ISCD to produce such a document; similarly, 2 member companies of another trade association reported that ISCD’s outreach had not been useful in increasing understanding of data collection requirements, and 1 cited the experience of an individual that seemed confused on much of the information being requested.", "Most of the trade associations that responded to our questions also expressed concern about CSAT data collection requirements specifically with regard to various applications such as the Top Screen, vulnerability assessment, and site security plan. Specifically, our analysis of responses by the 11 trade associations indicated that nearly all (9 of 11 respondents) believed that the CSAT data collection effort was burdensome for regulated owners and operators; the other 2 trade associations provided mixed responses. Nine industry trade associations reported that the CSAT data submission requirements take significant resources (such as time and personnel) to prepare, and 10 questioned the value of the tools in reducing risk or increasing security.association official reported that completing the Top Screen, vulnerability assessment, and security plan data collection effort required over 200 person hours. Another association official reported that the vulnerability assessment data collection requirements were very burdensome and noted that one member’s security plan covered 1,400 questions and was nearly 300 pages long.\nISCD officials acknowledged that CSAT can be burdensome and they intend to introduce improvements to CSAT to assist facilities in developing and submitting their Top Screens, security vulnerability assessments, and site security plans. In ISCD’s December 2012 Annual Operating Plan, one action item calls for the revision of the CSAT based on engagement with industry in order to create a more efficient and effective tool. ISCD officials stated that they estimate that revisions to CSAT will be in place sometime in 2014. According to these officials, improvements being considered for CSAT applications include a reduction in the number of text-based responses and narrative information required in the vulnerability assessment and the site security plan; the inclusion of more drop-down menu options, which is also expected to improve data analysis; and a reduction of the number of repetitive questions, for example, in the site security plan. ISCD officials noted that CSAT can be burdensome when facilities have to reenter data from one document to the next and stated that they are looking to revise CSAT so that information already entered on one document automatically populates data fields covering the same question in the next. ISCD officials also told us that one of the actions ISCD plans to take is to hold three meetings, or roundtable discussions, with industry officials at various locations beginning at the end of February 2013. They said that these discussions are intended to obtain input from industry officials on how CSAT can be improved. ISCD officials said that in making revisions to the CSAT they will consider eliminating unnecessary data requirements, but stated that they may decide to continue to request the data—even if they are not used for risk tiering—because doing so may be helpful to facilities as they prepare their security plans.", "ISCD seeks informal feedback on its outreach efforts but does not systematically solicit feedback to assess the effectiveness of outreach activities, and it does not have a mechanism to measure the effectiveness of ISCD’s outreach activities. Trade association officials reported that in general ISCD seeks informal feedback on its outreach efforts and that members provide feedback to ISCD. Association officials further reported that ISCD has encouraged association members to contact local ISCD inspectors and has hosted roundtable discussions and meetings where members of the regulated community provide feedback, suggest improvements, or make proposals regarding aspects of the CFATS program such as site security plans, alternative security programs, gasoline storage site risks, and the personnel surety program. Furthermore, according to ISCD officials, while feedback is solicited from the regulated community generally on an informal basis, inspectors and other staff involved in ISCD’s outreach activities are not required to solicit feedback during meetings, presentations and assistance visits, and inspectors are also not required to follow-up with the facilities after assistance visits to obtain their views on the effectiveness of the outreach.\nISCD, as part of its annual operating plan, has a priority for fiscal year 2013 to develop a strategic communications plan intended to address both internal and external communication needs including industry outreach. One goal in the plan is to maintain robust communication and outreach. In addition, the annual operating plan contains 27 monitoring and performance measures that address outreach program activities, but only one of these calls for ISCD to solicit feedback to assess and measure the effectiveness of the program. The NIPP states that when the government is provided with an understanding of private sector information needs, it can adjust its information collection, analysis, synthesis, and dissemination activities accordingly. We have previously reported on the benefits of soliciting systematic feedback. Specifically our prior work on customer service efforts in the government, systematic feedback from regulated facility owners and operators to among other things, determine the kind and quality of services they want and also determine their level of satisfaction with existing services including outreach may benefit to organizations like ISCD that service the public.\nAs ISCD develops its strategic communication plan, options for gathering feedback on outreach possibly could include using formal surveys reviewed and approved by the Office of Management and Budget (OMB) soliciting feedback from regulated under the Paperwork Reduction Act; owners and operators as a part of after-action reviews conducted at assistance visits, meeting and presentations; working with trade associations or other representatives of the regulated community to design and conduct member surveys; or working with members of various critical infrastructure sectors, such as the chemical or energy sectors, to develop and conduct surveys of sector owners and operators. Given the mixed perspectives of the trade associations we queried, systematic feedback about outreach activities might better position ISCD to identify problems and target changes to its outreach efforts, if necessary, or improve CFATS program outcomes in general. Doing so would also be consistent with Standards for Internal Control in the Federal Government, which call for top level reviews of actual performance and the establishment and review of performance measures and indicators.", "ISCD has taken action to assign facilities to risk based tiers, revise its process to review site security plans, and work with facilities to improve security. However, three factors could affect program operations as ISCD moves forward:\nThe first factor is a risk assessment approach that is not yet complete because it does not consider all of the elements of risk called for by the NIPP and the CFATS rule. ISCD has begun to take some actions to develop a more robust risk assessment approach, but ISCD would be better positioned to assess risk if it developed an overall plan, with milestones and time frames, incorporating the results of the various efforts to more fully address each of the three components of risk— consequence, threat, and vulnerability—and take actions to enhance the current risk assessment approach. ISCD has commissioned an expert panel to identify the strengths and weaknesses of the current risk assessment approach and the results of the panel’s work could help ISCD identify issues for further review and recommendations for improvements. This effort and the results from it represent one component of the various efforts ISCD will have to consider moving forward to ensure that the risk assessment approach is complete per the NIPP and the CFATS rule. After ISCD has developed and completed its efforts to enhance its risk assessment approach by using the results of the current expert panel’s efforts as well as incorporating the issues we identified along with the Sandia National Laboratories’ work on economic consequences, an independent peer review would provide better assurance that ISCD can appropriately identify and tier chemical facilities, better inform CFATS planning and resource decisions; and provide the greatest return on investment consistent with the NIPP and CFATS rule.\nThe second factor is ISCD’s ability to measure its progress reviewing site security plans under its revised review process. ISCD has developed measures to assess its progress reviewing site security plans and has recently implemented a plan to measure various aspects of the process. ISCD’s efforts appear to be a step in the right direction, but, it will take time for ISCD to collect enough data to develop baselines and begin measuring its performance. While it could take years before ISCD can review and approve the site security plans currently in its queue, ISCD intends to explore ways that it can accelerate the process. Thus, we are not making recommendations at this time.\nThe third factor is exploring opportunities to establish a mechanism to systematically gather feedback to measure the effectiveness of ISCD outreach efforts with facility owners and operators. This includes ISCD efforts to communicate with owners and operators on various aspects of the program, such as the development of site security plans, and work with them to better understand how and whether data collection requirements are burdensome and can be reduced. Doing so would be consistent with (1) the NIPP which states that once the government understands private sector information needs, it can adjust its information collection, analysis, synthesis, and dissemination activities accordingly, and (2) our past work on the benefits of soliciting feedback to determine customer level of satisfaction with existing services, including outreach. In addition, by obtaining systematic feedback on its outreach efforts, ISCD might be better positioned to (1) identify problems and target program changes, if necessary, and generally improve ISCD efforts to communicate and work with facility owners and operators, and (2) measure its performance consistent with our Standards for Internal Control in the Federal Government.", "To better assess risk associated with facilities that use, process, or store chemicals of interest consistent with the NIPP and the CFATS rule, we recommend the Secretary of Homeland Security direct the Under Secretary for NPPD, the Assistant Secretary for IP, and Director of ISCD to take the following two actions: develop a plan, with timeframes and milestones, that incorporates the results of the various efforts to fully address each of the components of risk and take associated actions where appropriate to enhance ISCD’s risk assessment approach consistent with the NIPP and the CFATS rule, and conduct an independent peer review, after ISCD completes enhancements to its risk assessment approach, that fully validates and verifies ISCD’s risk assessment approach consistent with the recommendations of the National Research Council of the National Academies.\nTo enhance ISCD efforts to communicate and work with facilities, we recommend that the Secretary of Homeland Security direct the Under Secretary for NPPD, the Assistant Secretary for IP, and the Director of ISCD to explore opportunities and take action to systematically solicit and document feedback on facility outreach consistent with ISCD efforts to develop a strategic communication plan.", "We provided a draft of this report to the Secretary of Homeland Security for review and comment, which are reprinted in appendix II. In its written comments, DHS agreed with our recommendations and stated that it has efforts underway that will address them. Regarding our first recommendation that ISCD develop a plan, with timeframes and milestones, to fully address each of the components of risk and take associated actions where appropriate to enhance ISCD’s risk assessment approach consistent with the NIPP and the CFATS rule, DHS plans to document all processes and procedures related to the risk assessment approach and conduct an internal DHS review of the complete risk assessment process, among others things, to ensure that all elements of risk are included in the risk assessment approach. Regarding our second recommendation that ISCD conduct an independent peer review, after it completes enhancements to its risk assessment approach, that fully validates and verifies ISCD’s risk assessment approach consistent with the recommendations of the National Research Council of the National Academies, DHS agreed that a peer review that includes validation and verification steps would be a worthwhile endeavor, once any changes that result from the aforementioned review of the risk assessment approach are implemented. Regarding our third recommendation that ISCD explore opportunities and take action to systematically solicit and document feedback on facility outreach consistent with ISCD efforts to develop a strategic communication plan, DHS plans to explore such opportunities to make CFATS-related outreach efforts more effective for all stakeholders. DHS also provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to interested congressional committees and to the Secretary of the Department of Homeland Security. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov. If you or your staff members have any questions about this report, please contact me at (202) 512-9610 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.", "This report is a follow-on engagement of work we completed in July 2012 about the actions the Department of Homeland Security’s (DHS) Infrastructure Security Compliance Division (ISCD) took related to an internal memorandum that cited an array of challenges—including human capital and administrative issues—that hindered the implementation of the Chemical Facility Anti-Terrorism Standards (CFATS) program. This report discusses the extent to which DHS has assigned chemical facilities to risk-based tiers and assessed its approach for doing so, revised the process to review security plans, and communicated and worked with facilities to help improve security.\nTo determine the extent to which DHS has assigned chemical facilities to risk-based tiers and assessed its approach for doing so, we reviewed ISCD applications and documents including web-based Chemical Security Assessment Tools (CSAT) applications—such as the Top- Screen and security vulnerability assessment—used to collect security information from facilities, the ISCD risk assessment approach used to determine a facility’s risk tier, policies and procedures on tiering, as well as a sample copy of a facility’s Top Screen and security vulnerability assessment. In addition, we outlined the risk tiering models associated with different security issues—release, theft or diversion, and sabotage. We also reviewed DHS memoranda detailing the challenges with the release security issue model and ISCD’s work to improve it. We compared our review to various criteria including the risk framework outlined in the CFATS statute and rule, the National Infrastructure Protection Plan (NIPP), and risk modeling best practices as outlined by the National Research Council of the National Academy of Sciences to determine if ISCD’s risk assessment approach comports with these criteria and if not, where gaps or deficiencies exist. We also obtained data from ISCD’s CSAT system that showed how many of the roughly 3,500 facilities, which ISCD has determined to be regulated by CFATS, were placed in each of the 4 risk-based tiers and what their related security issue(s) was. Because data in the system change regularly, these data represent a snapshot of finally tiered facilities as of January 24, 2013. To assess the reliability of the data we obtained from CSAT, we reviewed system documentation, compared similar datasets for consistency, and interviewed knowledgeable ISCD officials about system controls and determined that the CSAT data were sufficiently reliable for the purposes of this report. We also reviewed documents related to ISCD’s ongoing review of the risk assessment approach including the statement of objectives, task execution plan, and terms of reference and compared these documents with the criteria for peer review as laid out by the National Research Council of the National Academy of Sciences as well as past GAO work on peer review.understanding of the risk assessment approach, we interviewed DHS and contracting officials knowledgeable about the methodology behind the models and their strengths and weaknesses. We also interviewed DHS and contracting officials responsible for the review about the review’s scope and progress, and to corroborate and confirm our understanding of the review.\nTo corroborate and confirm our To determine the extent to which DHS has revised its process to review security plans, we reviewed and analyzed documents, where available, including the CFATS statute and rule, the November 2011 internal memorandum, DHS’s Risk-Based Performance Standards Guidance, ISCD security plan review policies and procedures, security plan review memoranda, and the instructions used by facilities to prepare and submit security plans. As a part of our review of security plan documents, we identified progress made and challenges encountered by ISCD as the security plan review process evolved. To confirm our understanding of the security plan review process and how it has evolved, we gathered and analyzed statistics pertinent to the process to determine how many site security plans had been reviewed, authorized, and approved as a percent of the total number of security plans submitted. We then used the number of plans approved, along with ISCD officials’ estimates of how many plans they intend to approve per month beginning in calendar year 2013 to estimate how long it might take ISCD to review and approve site security plans for the approximately 3,500 currently regulated facilities. We also interviewed ISCD officials about the security plan review process to corroborate the information obtained from ISCD documents and the results of our analyses.\nTo determine the extent to which DHS has communicated and worked with facilities to help improve security, we reviewed documents (e.g., ISCD’s standard operating procedures for conducting compliance assistance visits, inspections, and help desk support). We also reviewed ISCD data on outreach activities—such as the type and number of field visits to facilities and presentations to industry—for fiscal year 2007 through November 30, 2012 that we obtained from CHEMS. As noted above, we determined that data from the CHEMS system were sufficiently reliable for the purposes of this report. In addition, we contacted officials representing 15 trade associations whose members are facilities regulated by CFATS to obtain their perspectives on DHS’s efforts to communicate and work with facility owners and operators to help improve security. We selected these 15 trade associations because they are listed in an annex to the NIPP as those with which DHS works on a regular basis on chemical security matters. According to this annex, working with these industry associations is a more manageable number of contact points through which DHS can coordinate activities with a large number of the asset owners and operators in the chemical sector. According to the NIPP, a Sector Coordinating Council is the principal entity under which owners and operators of critical infrastructure can coordinate with the government on a wide range of protection activities and issues. The Chemical Sector Coordinating Council represents a significant majority of the owners and operators in the chemical sector. We sent a list of open- ended questions to representatives at each of the 15 trade associations and received responses from 11 trade association representatives. We analyzed, categorized, and summarized these responses by using a systematic content analysis of the open-ended responses to determine the trade association views. As a part of our analysis, two analysts reviewed the responses, developed categories to be used for the content analysis, and worked together to categorize each open-ended answer. A third analyst reviewed this categorization and verified that the answers were placed in the appropriate categories. Any disagreements regarding the categorization of the answers were subsequently reconciled. The information we obtained from the 11 trade associations that responded is not generalizable to the universe of chemical facilities covered by CFATS; however, it does provide insights into DHS efforts to perform outreach and seek feedback on the implementation of the CFATS rule. We compared the results of our analysis of the responses received from the trade associations and other audit work related to ISCD’s outreach efforts to various criteria, including CFATS statute and rule, the NIPP, past GAO work on industry outreach, and internal control standards to determine if DHS’s outreach efforts comport with these criteria, and if not, determined where gaps exist. We also interviewed knowledgeable ISCD officials regarding their outreach efforts.\nWe identified three limitations that should be considered when using our results. First, as noted in our previous work, documentary evidence about the development of the CFATS program is, for the most part, not available. Program officials did not maintain records of key decisions made in the early years of the program and the basis for these decisions. This applies particularly to the risk tiering methodology and the security plan review process. Furthermore, ISCD officials told us many of the individuals involved in these decisions are no longer at ISCD. During discussions, the current management team qualified that much of what they told us about these decisions is their best guess of what happened and why. This limits our ability to fully assess the risk model and compare the original site security plan review process with the process currently in place. Second, with regard to our work with facility owners and operators, we limited our review to industry associations primarily due to time constraints and the large number of owners and operators in the chemical sector. As a result, we could not generalize our findings to the universe of CFATS-regulated facility owners and operators. We mitigated this limitation by contacting 15 industry associations that represented a wide range of CFATS regulated chemical facilities. Third, given that ISCD had only recently begun to approve security plans, our scope did not include the facility compliance inspection process (which is based on the results of the approved security plans).\nWe conducted this performance audit from October 2012 through April 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, John F. Mortin, Assistant Director, and Ellen Wolfe, Analyst-in-Charge; Chuck Bausell; Jose Cardenas; Michele Fejfar; Jeff Jensen; Tracey King; Marvin McGill; made significant contributions to the work.", "Critical Infrastructure Protection: An Implementation Strategy Could Advance DHS’s Coordination of Resilience Efforts across Ports and Other Infrastructure. GAO-13-11. Washington, D.C.: October 25, 2012.\nCritical Infrastructure Protection: Summary of DHS Actions to Better Manage Its Chemical Security Program. GAO-12-1044T. Washington, D.C.: September 20, 2012.\nCritical Infrastructure Protection: DHS Is Taking Action to Better Manage Its Chemical Security Program, but It Is Too Early to Assess Results. GAO-12-567T. Washington, D.C.: September 11, 2012.\nCritical Infrastructure: DHS Needs to Refocus Its Efforts to Lead the Government Facilities Sector. GAO-12-852. Washington, D.C.: August 13, 2012.\nCritical Infrastructure Protection: DHS Is Taking Action to Better Manage Its Chemical Security Program, but It Is Too Early to Assess Results. GAO-12-515T. Washington, D.C.: July 26, 2012.\nCritical Infrastructure Protection: DHS Could Better Manage Security Surveys and Vulnerability Assessments. GAO-12-378. Washington, D.C.: May 31, 2012.\nCritical Infrastructure Protection: DHS Has Taken Action Designed to Identify and Address Overlaps and Gaps in Critical Infrastructure Security Activities. GAO-11-537R. Washington, D.C.: May 19, 2011.\nCritical Infrastructure Protection: DHS Efforts to Assess and Promote Resiliency Are Evolving but Program Management Could Be Strengthened. GAO-10-772. Washington, D.C.: September 23, 2010.\nCritical Infrastructure Protection: Update to National Infrastructure Protection Plan Includes Increased Emphasis on Risk Management and Resilience. GAO-10-296. Washington, D.C.: March 5, 2010.\nThe Department of Homeland Security’s (DHS) Critical Infrastructure Protection Cost-Benefit Report. GAO-09-654R. Washington, D.C.: June 26, 2009.\nInformation Technology: Federal Laws, Regulations, and Mandatory Standards to Securing Private Sector Information Technology Systems and Data in Critical Infrastructure Sectors. GAO-08-1075R. Washington, D.C.: September 16, 2008.\nRisk Management: Strengthening the Use of Risk Management Principles in Homeland Security. GAO-08-904T. Washington, D.C.: June 25, 2008.\nCritical Infrastructure: Sector Plans Complete and Sector Councils Evolving. GAO-07-1075T. Washington, D.C.: July 12, 2007.\nCritical Infrastructure Protection: Sector Plans and Sector Councils Continue to Evolve. GAO-07-706R. Washington, D.C.: July 10, 2007.\nCritical Infrastructure: Challenges Remain in Protecting Key Sectors. GAO-07-626T. Washington, D.C.: March 20, 2007.\nHomeland Security: Progress Has Been Made to Address the Vulnerabilities Exposed by 9/11, but Continued Federal Action Is Needed to Further Mitigate Security Risks. GAO-07-375. Washington, D.C.: January 24, 2007.\nCritical Infrastructure Protection: Progress Coordinating Government and Private Sector Efforts Varies by Sectors’ Characteristics. GAO-07-39. Washington, D.C.: October 16, 2006.\nInformation Sharing: DHS Should Take Steps to Encourage More Widespread Use of Its Program to Protect and Share Critical Infrastructure Information. GAO-06-383. Washington, D.C.: April 17, 2006.\nRisk Management: Further Refinements Needed to Assess Risks and Prioritize Protective Measures at Ports and Other Critical Infrastructure. GAO-06-91. Washington, D.C.: December 15, 2005." ], "depth": [ 1, 2, 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h3_full", "", "h0_full", "", "h0_full", "h0_full", "h3_title h1_full", "h3_full h1_full", "h1_full", "h2_full h4_title", "", "h4_full", "", "h2_full", "h3_full h2_full", "", "", "h0_full h4_full", "", "", "", "", "h3_full" ] }

{ "question": [ "How does DHS assign risk-based tiers?", "How is ISCD's assignment approach flawed?", "What factors does the risk assessment approach neglect?", "How will ISCD review its risk assessment approach?", "How could an independent peer complement the ISCD's assessment approach?", "How has ISCD revised its security review process?", "Why was the process revised?", "How does the revised process compare to the old process?", "What data will ISCD collect on its review process?", "How long will it take for ISCD to complete its reviews?", "What is ISCD's current stance on its review process?", "What actions has ISCD taken to work with the owners and operators?", "How does ISCD collect feedback on its outreach activities?", "What opportunities does ISCD have to implement a systemic feedback collection process?", "What is the benefit of a systematic feedback collection approach?", "Why is the security of chemical facilities critical?", "How does DHS regulate high-risk chemical facilities?", "Why did DHS establish the CFATS program?", "What is ISCD's role in the CFATS program?", "What did GAO review?", "How did GAO collect information from DHS sources?", "What data did GAO collect from chemical facilities?", "To what extent is this review generalizable?" ], "summary": [ "Since 2007, the Department of Homeland Security's (DHS) Infrastructure Security Compliance Division (ISCD) has assigned about 3,500 high-risk chemical facilities to risk-based tiers under its Chemical Facility Anti-Terrorism Standards (CFATS) program, but it has not fully assessed its approach for doing so.", "The approach ISCD used to assess risk and make decisions to place facilities in final tiers does not consider all of the elements of consequence, threat, and vulnerability associated with a terrorist attack involving certain chemicals.", "For example, the risk assessment approach is based primarily on consequences arising from human casualties, but does not consider economic consequences, as called for by the National Infrastructure Protection Plan (NIPP) and the CFATS regulation, nor does it consider vulnerability, consistent with the NIPP.", "ISCD has begun to take some actions to examine how its risk assessment approach can be enhanced, including commissioning a panel of experts to assess the current approach, identify strengths and weaknesses, and recommend improvements. ISCD will need to incorporate the various results of these efforts to help them ensure that the revised risk assessment approach includes all elements of risk.", "After ISCD has incorporated all elements of risk into its assessment approach, an independent peer review would provide better assurance that ISCD can appropriately identify and tier chemical facilities, better inform CFATS planning and resource decisions, and provide the greatest return on investment consistent with the NIPP.", "DHS's ISCD has revised its process for reviewing facilities' site security plans--which are to be approved by ISCD before it performs compliance inspections--but it did not track data on the prior process to measure differences.", "The past process was considered by ISCD to be difficult to implement and caused bottlenecks in approving plans.", "ISCD views its revised process to be a significant improvement because, among other things, teams of experts review parts of the plans simultaneously rather than sequentially, as occurred in the past.", "Moving forward ISCD intends to measure the time it takes to complete reviews, but will not be able to do so until the process matures.", "GAO estimated that it could take another 7 to 9 years before ISCD is able to complete reviews on the approximately 3,120 plans in its queue which means that the CFATS regulatory regime, including compliance inspections, would likely be implemented in 8 to 10 years.", "ISCD officials said that they are exploring ways to expedite the process such as reprioritizing resources and streamlining inspection requirements.", "DHS's ISCD has also taken various actions to work with owners and operators, including increasing the number of visits to facilities to discuss enhancing security plans, but trade associations that responded to GAO's query had mixed views on the effectiveness of ISCD's outreach.", "ISCD solicits informal feedback from facility owners and operators on its efforts to communicate and work with them, but it does not have an approach for obtaining systematic feedback on its outreach activities.", "ISCD's ongoing efforts to develop a strategic communication plan may provide opportunities to explore how ISCD can obtain systematic feedback on these activities.", "A systematic approach for gathering feedback and measuring the results of its outreach efforts could help ISCD focus greater attention on targeting potential problems and areas needing improvement.", "Facilities that produce, store, or use hazardous chemicals could be of interest to terrorists intent on using toxic chemicals to inflict mass casualties in the United States.", "As required by statute, DHS issued regulations that establish standards for the security of high-risk chemical facilities.", "DHS established the CFATS program to assess the risk posed by these facilities and inspect them to ensure compliance with DHS standards.", "ISCD, which manages the program, places high risk facilities in risk-based tiers and is to conduct inspections after it approves facility security plans.", "GAO assessed the extent to which DHS has (1) assigned chemical facilities to tiers and assessed its approach for doing so, (2) revised its process to review facility security plans, and (3) communicated and worked with owners and operators to improve security.", "GAO reviewed DHS reports and plans on risk assessments, security plan reviews, and facility outreach and interviewed DHS officials.", "GAO also received input from 11 trade associations representing chemical facilities, about ISCD outreach.", "The results of this input are not generalizable but provide insights." ], "parent_pair_index": [ -1, 0, 1, -1, 3, -1, 0, 1, -1, 3, -1, -1, -1, 1, -1, -1, 0, -1, 2, -1, 0, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "Background", "Agencies Have Adopted Policies and Procedures, but Annual Reports Lack Some Required Information", "Interagency PSI Policies and Procedures Established", "Agencies Submitted Reports, but They Lacked Some Required Information", "Extent to Which Activities Meet PSI Objective Is Unclear because Agencies Lack Measures of Results", "U.S. Agencies Participated in PSI Activities to Support PSI’s Objective", "U.S. Agencies Have Not Established a Framework to Measure PSI’s Results", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Full Text of the Statement of Interdiction Principles", "Interdiction Principles for the Proliferation Security Initiative", "Appendix III: Proliferation Security Initiative Activities from Fiscal Year 2009 to December 2011", "Month Fiscal year 2012 November", "Fiscal year 2011 September", "Fiscal year 2010 September", "Month Fiscal year 2009 September", "Appendix IV: Comments from the Department of State", "GAO Comments", "Appendix V: Comments from the Department of Defense", "GAO’s Comments", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "PSI is a multinational effort to prevent the trafficking of WMD, their delivery systems, and related materials to and from states and nonstate actors of proliferation concern. PSI has no formal organization or bureaucracy. In the United States, PSI is not a program housed in a single agency, but instead is a set of activities with participation by seven agencies and the intelligence community. PSI encourages partnership among states to work together to develop a broad range of legal, diplomatic, economic, military, law enforcement, and other capabilities to prevent WMD-related air, land, or sea transfers to states and nonstate actors of proliferation concern. International participation is voluntary, and there are no binding treaties on those who choose to participate. Countries supporting PSI are expected to endorse PSI principles, embodied in four broad goals in the Statement of Interdiction Principles of September 2003, by a voluntary, nonbinding “political” commitment to those principles. See appendix II for the full text of the Statement of Interdiction Principles. They also voluntarily participate in PSI activities according to their own capabilities. According to the principles, PSI participants use existing national and international authorities to put an end to WMD-related trafficking and take steps to strengthen those authorities, as necessary.\nThe U.S. government’s PSI efforts involve participation in three broad activities: multilateral PSI planning meetings called Operational Experts Group (OEG) meetings, PSI exercises, and other efforts to encourage support and capacity for interdictions, such as workshops and conferences.military, law enforcement, intelligence, legal, and diplomatic experts from the United States and other OEG countries meet to consider ways to enhance the WMD interdiction capabilities of PSI participants, build support for the initiative, develop operational concepts, organize PSI exercises, and share information about national legal authorities. The policy office in the Office of the Secretary of Defense heads the U.S. delegation to these multilateral meetings.\nAccording to State, at multilateral PSI planning meetings, PSI exercises vary in size and complexity, and some involve military personnel and assets from participating PSI countries. Other exercises examine the use of law enforcement or customs authorities to stop WMD proliferation. There are also “tabletop” exercises or simulations, which explore scenarios and determine solutions for hypothetical land, air, or sea interdictions. Among the most visible PSI exercises are those that combine a tabletop and a live interdiction exercise using military assets from multiple PSI countries, such as practicing the tracking and boarding of a target ship.\nOther activities include both outreach to countries that have not endorsed PSI principles and cooperation and collaboration with countries that have endorsed PSI and are seeking assistance to increase their capacity to act in accordance with the Statement of Interdiction Principles. These efforts include workshops, training, conferences, and bilateral discussions with foreign government officials. U.S. officials said they engage in bilateral discussions, for example, to conclude PSI shipboarding agreements or to seek ways to overcome obstacles to support for PSI principles. State takes the lead in diplomatic outreach efforts.", "U.S. agencies have adopted interagency guidance documents that establish policies and procedures for all agencies participating in PSI activities. In addition, agencies have submitted annual reports, though they lacked required estimated and actual expenditure information from most participating agencies.", "The 9/11 Act expresses Congress’ sense that DOD and State should establish, among other things, clear policies and procedures and roles and responsibilities for PSI. As we noted in our 2008 report, while DOD and Customs and Border Protection (CBP) had established some policies and procedures for their PSI activities, State and some law enforcement agencies had not. Since then, an interagency group, including representatives from all agencies participating in PSI, produced two companion guidance documents, Guidance for U.S. Government Activities in Support of the Proliferation Security Initiative and Insuring the Durability of PSI: An Action Plan, that the interagency group adopted in 2010 and 2011, respectively. According to National Security Staff officials, these documents are a primary source of policies and procedures for all relevant agencies—defining PSI activities, providing guidance on interagency communication, and addressing objectives and responsibilities. For example, they establish that State has primary responsibility for diplomatic outreach activities and that DOD leads the U.S. delegation at OEG meetings. According to officials, such interagency policies and procedures also allow all U.S. agencies involved in PSI to plan activities without duplicating efforts and to properly and coherently articulate the U.S. government’s vision and strategy on PSI.\nIn addition to interagency guidance, DOD and CBP also have their own PSI-specific policy documents. As we reported in our 2008 review of PSI, DOD had PSI-specific policies and procedures in place, specifically those encouraging combatant command participation in PSI exercises. DOD Joint Staff provided guidance directing combatant commands to leverage the staff, assets, and resources of the existing DOD exercise program in support of PSI exercises. This Joint Staff guidance provided procedures, including roles and responsibilities, for the planning and execution of U.S. military support to PSI. Among other things, the guidance encouraged combatant commands to change existing DOD exercises by adding a PSI component. Our 2008 review also reported that CBP, a component of DHS, produced a PSI-specific directive that provides roles and responsibilities, policies and procedures, and PSI-relevant definitions. Approved in 2006, CBP is currently revising this document to reflect updated roles and responsibilities.", "The 9/11 Act required DOD and State to submit to Congress in February an annual comprehensive joint report, beginning in 2008. The report is to consist of a 3-year plan describing PSI-related activities and identifying estimated expenditures for these activities, and a description of the PSI- related activities and associated expenditures carried out during the fiscal year preceding the year of the report.report, although responsibility for leading the annual effort alternates DOD and State co-author each between the two. The lead agency solicits input from all U.S. agencies participating in PSI and consolidates the information provided to produce the final report for submission to Congress. State and DOD have submitted annual PSI reports in 2009, 2010, and 2011 including descriptions of PSI activities, but these reports do not include all required estimated expenditures for PSI activities over the next 3 fiscal years and the amount expended in the prior year.\nDOD is the only agency performing PSI activities that has provided all required planned and prior year expenditure information for these reports. For example, the 2011 report includes information from DOD stating that it plans to conduct a regional PSI exercise called Leading Edge in Central Asia in fiscal year 2012 and in the Middle East in fiscal year 2014 and that each exercise is estimated to cost $600,000 for staff travel to support planning events and exercise execution. Table 1 shows annual planned expenditures from that report for PSI-related exercises in fiscal years 2012 to 2014 for DOD combatant commands and Joint Staff only, including many of the major PSI-related activities expected in that period. The report indicates that these expenditures include travel expenses, conference hosting fees, contracting support, training expenses, and other uniquely PSI-attributable expenses and lists all agencies consulted in the preparation of the report.\nIn addition, DOD has fully reported its prior year expenditures and, in many cases, includes expenditure amounts by activity. For example, the 2011 report states that DOD’s total PSI expenditures for that year were approximately $519,000. Further, the report includes activity-specific expenditure information, such as the $31,400 DOD spent for training aids and staff travel in support of the Phoenix Express PSI exercise.\nThe annual reports do not uniformly include expenditure data for any other agencies participating in PSI. For example, the 2010 report states that the United States hosted an OEG meeting in Miami, Florida, for which the United States had a delegation of 34 representatives from DOD, State, DHS, the Federal Bureau of Investigation (FBI), the Department of the Treasury (Treasury), and the Department of Energy (DOE), among others. The report states that DOD contributed about $145,000 but does not include expenditure data from other agencies for the event. Table 2 shows the extent to which PSI annual reports include expenditure information for U.S. agencies participating in PSI activities.\nAlthough reports contain some expenditure data from agencies other than DOD, none of the other agencies provide this data for all of the annual reports. For example, for fiscal years 2008 and 2009, DOE reported total PSI expenditures of $69,000 and $55,000 respectively. Also, FBI reported that it spent a total of about $750,000 to organize and sponsor PSI events in Hungary and Australia in fiscal year 2009. However, no expenditure data were provided for activities in which DOE participated for fiscal year 2010 and for FBI’s activities in fiscal years 2008 and 2010. From DHS, CBP officials could document submitting PSI-specific expenditures of about $35,000 for the 2010 report; however, the report did not include this information, stating that the only costs DHS incurred were associated with travel to PSI events. According to State officials, State does not identify and track its PSI-related expenditures because it made the decision that such a breakout is unnecessary. However, officials said they could calculate State’s total PSI-related expenditures because these are almost entirely for travel to OEG meetings or bilateral negotiations. FBI officials also reported that they do not separately track PSI expenditures.\nOf the four agencies we spoke with, only DOD makes a specific budget request for PSI-related activities. U.S. Strategic Command has a fiscal year 2011 budget of $800,000 to provide financial assistance for combatant commanders to plan, participate in, and execute WMD interdiction exercises. This fund is used routinely but not exclusively to support PSI activities such as hosting a PSI exercise, embedding PSI scenarios into broader military exercises, ensuring that appropriate subject matter experts can participate in PSI exercises, or purchasing interdiction-related training aids. According to State officials, they prefer funding PSI expenditures from their general operating accounts because this practice allows them greater flexibility and the ability to fund PSI- related travel when the need arises. FBI and CBP officials also reported that they provide PSI funding when necessary through more general operating accounts.\nAgencies that do not track and report their expenditures are not providing Congress sufficient information for Congress to assess U.S. participation in PSI. If agencies are unable to provide requested assistance, but are not tracking or reporting on expenditures, it is difficult for the agencies to determine and demonstrate to Congress whether they are effectively prioritizing their use of limited resources. For example, FBI officials stated they could not provide PSI-related training requested in 2011 by Colombian national police because they did not have sufficient funding.\nMoreover, the lack of required expenditure information limits Congress’ ability to oversee agencies’ commitment to the PSI objective.", "DOD, State, CBP, and FBI officials participated in a range of PSI activities since 2008 to meet their objective of expanding and enhancing counterproliferation efforts, but it is unclear to what extent these activities have achieved the objective because agencies lack measures of results. The agencies either led or participated in 22 PSI activities from fiscal year 2009 through fiscal year 2011, including multilateral meetings and exercises. In addition, they have extended access to PSI activities to more countries that are not part of the 21-country OEG. Despite recommendations in the 9/11 Act and by GAO that agencies develop PSI performance indicators, DOD, State, CBP, and FBI have not developed indicators that can be used to systematically measure progress toward Further, the agencies have not systematically the stated PSI objective.evaluated PSI activity results. Although some officials indicated plans to develop PSI performance indicators, officials from DOD and State also cited several challenges to developing indicators to measure PSI activities’ results, including difficulty quantifying how PSI activities improved capacity. However, GAO has previously reported that, despite challenges, evaluating results and developing measures are possible. One approach PSI agency officials could consider is developing a framework to link performance measures, such as number of participants trained, to outcomes, such as changes in national policies that strengthen their authority to perform interdictions.", "PSI’s objective is to enhance and expand our capacity to prevent the flow of WMD, their delivery systems, and related materials on the ground, in the air, and at sea, to and from states and nonstate actors of proliferation concern. Agency officials provided us with a range of PSI activities they have participated in since our 2008 report to support the PSI objective. U.S. agencies led or participated in 22 PSI activities from fiscal year 2009 through fiscal year 2011 and State officials reported numerous informal bilateral consultations designed to provide tools that increase countries’ capacity to interdict illicit shipments of WMDs and WMD-related materials. As table 3 shows, these activities fall under the three broad categories of the U.S. government’s PSI efforts: multilateral OEG meetings, PSI exercises, and other activities such as workshops and training sessions. See appendix III for a summary of each of the PSI activities with U.S. participation from fiscal year 2009 to December 2011. For example, the U.S. Naval Forces Africa hosted an exercise in May 2010 that included a PSI maritime interdiction scenario designed to improve regional cooperation and maritime security in the Mediterranean basin. Also, a U.S. delegation participated in an Australia-hosted exercise in September 2010 that focused on an aircraft counterproliferation scenario and associated customs and law enforcement authorities and challenges. A regional PSI planning meeting was held in conjunction with the exercise.\nOfficials from DOD, State, DHS, and FBI stated that their outreach efforts, including State’s diplomatic efforts, have contributed to an increased number of countries supporting PSI since our 2008 report. For example, the number of countries that became PSI countries by endorsing the Statement of Interdiction Principles has increased from 93 to 98 since 2008 and DOD officials said that they have ongoing efforts with several non-endorsing countries and believe that the number of endorsing countries will continue to rise. The most recent endorsees are Antigua and Barbuda, Colombia, the Republic of Korea (South Korea), St. Vincent and the Grenadines, and Vanuatu. Further, the number of signed bilateral shipboarding agreements between the United States and individual PSI countries increased between November 2008 and February 2012 from 9 to 11. Bilateral shipboarding agreements put procedures into place and identify points of contact to permit the timely inspection by either party of vessels flying their flags suspected of transporting proliferation-related cargo. State officials said these agreements are significant because they have been signed by countries with some of the largest ship registries.\nU.S. agencies, in cooperation with the 20 other OEG countries, also have extended access to PSI activities to additional countries since our last report. In 2008, we reported that U.S. agencies had not built relationships with PSI countries that are not OEG countries by involving them in PSI planning and activities. We recommended that U.S. agencies work in conjunction with other leading PSI countries to increase cooperation, coordination, and information exchange with PSI countries that were not In May 2009, the invited to multilateral OEG planning meetings. countries of the OEG committed to consider ways to involve more countries in future PSI planning meetings. According to U.S. officials, they also agreed to increase the number of PSI activities, including regional PSI planning meetings, that include PSI-endorsing countries beyond the OEG countries and, in some cases, non-endorsing countries. In addition, the 2011 U.S. interagency PSI report to Congress stated that activities planned for fiscal years 2012 through 2014 are designed to increase cooperation, coordination, and information exchange with the broad range of PSI-endorsing countries beyond the countries that normally participate in the OEG.\nGAO-09-43.\nEight of the 17 participating delegations at a PSI activity hosted in September 2010 by Australia represented countries not normally invited to multilateral PSI planning meetings. The activity included an aircraft counterproliferation scenario exercise and a regional PSI planning meeting.\nAccording to U.S. officials, the Republic of Korea endorsed PSI in May 2009 as a result of its participation in PSI activities and became one of the 21 leading PSI countries in November 2010. It organized a PSI exercise and hosted a regional PSI workshop in 2010.\nU.S. officials said they are also currently developing the Critical Capabilities and Practices effort, a clearinghouse for PSI-related information and tools, designed to make PSI lessons learned and best practices available both to PSI activity participants and to endorsing countries that were unable to participate in the activities. The OEG countries discussed and confirmed support for the development of the Critical Capabilities and Practices effort. Officials said they have not set a target date for the effort to begin making PSI-related information and tools available.", "While U.S. agencies have undertaken a range of PSI efforts since 2008, they have not established a framework to measure PSI activities’ results and, therefore, it is unclear to what extent these activities have enhanced and expanded capacity to prevent the flow of WMD, their delivery systems, and related materials on the ground, in the air, and at sea, to and from states and nonstate actors of proliferation concern. The 9/11 Act recommended that DOD and State establish indicators to measure results of their PSI activities. It is the responsibility of the implementing agencies to measure the results of PSI activities. Linking the activities to the initiative’s overall objective could help the agencies better organize and prioritize future activities. In 2008, we reported that agencies had not established PSI performance indicators. We also recommended that law enforcement agencies, such as DHS and FBI, which we found to have become increasingly involved in PSI activities, establish PSI performance indicators and they concurred.\nThe four agencies we reviewed have not established formal performance indicators that can be used to systematically measure progress toward the stated PSI objective. DOD officials said they have general counterproliferation goals but have not developed PSI indicators. FBI officials said that they have performance measures applying to activities of their Weapons of Mass Destruction Directorate, and that their PSI- specific goal is the commitment to participate in PSI activities as appropriate, including at least one PSI exercise per year. Although FBI officials consider this to be a performance indicator, participation alone does not provide information to measure the results of PSI activities. State has identified as its PSI indicator “An Effective Global Network Countering WMD Proliferation-Related Trafficking.” However, the measures used to track the indicator’s progress change from year to year, making it difficult for State to assess systematically the results of its PSI activities. For example, although State did not meet its fiscal year 2009 target to have 100 PSI-endorsing countries, it did not set targets for the number of PSI endorsees for fiscal years 2010 or 2011. We reported in 2008 that CBP developed a PSI Implementation Plan with expected goals and targets, but that it had not been updated since June 2006. As of February 2012, CBP officials stated that many of the goals are outdated and that the plan has not been updated because they wanted to wait and align their plan with the interagency PSI policy documents that were completed in 2010 and 2011. The officials acknowledged that performance measurement is important and said they are working to include indicators in their updated plan.\nIn addition, although some agencies have made efforts to assess individual PSI activities, the four agencies we reviewed have not performed a systematic evaluation of the results of PSI activities. Some officials draft summary reports following individual activities to identify issues to address in planning for future activities. For example, FBI officials said they conducted a formal evaluation of the two workshops they sponsored in 2009. The report from the September 2009 workshop in Australia included some reporting of feedback from a written survey conducted at the end of the activity. Similarly, a CBP official provided examples of post-activity reports that include recommendations for future PSI efforts. However, these reports do not represent a systematic evaluation that links the activity results to the PSI objective. The officials with whom we met said they consider past activities when planning for the future, but they have no systematic evaluation of the activity results or impact to aid their planning. Further, the annual PSI reports to Congress do not generally document results of U.S. agencies’ activities beyond the names of the participating countries.\nState and DOD officials cited a number of challenges to developing indicators to measure the impact or results of the U.S. government’s PSI activities. According to the officials, results that can be quantified can also be misleading. For example, the officials stated the following:\nTracking the overall number of new countries endorsing PSI ignores the fact that U.S. agencies have strategic reasons for focusing efforts on a certain country or subset of countries, even if a larger number of other countries might be persuaded more quickly to endorse.\nTracking the number of interdictions does not necessarily link PSI activities to the initiative’s objective. According to the officials, the initiative’s activities are focused on building capacity to perform interdiction, but actual interdictions are not performed as part of PSI. They emphasized that they cannot credit successful interdictions to PSI activities, in part because there are many efforts in addition to PSI that are focused on counterproliferation. Also, a change in the number of interdictions over the previous year could be attributed to a range of positive and negative factors, including better capacity to interdict, increased transfers of illicit material, or failure to deter transfers.\nTracking measures of U.S. efforts, such as the number of activities hosted by the United States, ignores the fact that PSI is a multinational effort.\nFurther, State officials said some of the results of PSI activities are difficult to quantify. For example, although the officials said tools and expertise provided to participants at activities are used by participants to enhance their ability to interdict illicit cargo, the extent of the improvement is often difficult to measure and track.\nDespite the challenges U.S. agencies face in developing performance indicators, it is possible for agencies to measure performance. One possible approach agencies could consider is to develop a framework that links PSI activities to the initiative’s objective. GAO has previously identified such frameworks, called logic models, that agencies could adopt even if they face performance measurement challenges similar to some of the ones identified by PSI implementing agencies.GAO reported that using a logic model could allow the agencies to consider indirect outcomes and unquantifiable benefits when linking activities and outputs to the overall objective. By specifying the program’s theory of what is expected, a logic model can help evaluators define measures of the program’s progress toward its ultimate goals. In particular, GAO found that logic models were used or could be used to measure results in programs with challenges similar to some of PSI’s, including, for example, difficulty in observing changes in behavior occurring after activity completion and difficulty in attributing outcomes to activities because of external factors’ influence on the outcomes. Figure 1 provides generic guidance on how a logic model framework could be used to link agencies’ program inputs and outputs to outcomes or impact. A logic model can help identify pertinent variables and how, when, and in whom they should be measured, as well as other factors that might affect program results.", "PSI has the potential to increase global capacity to recognize and interdict the flow of WMD, their delivery systems, and related materials on the ground, air, or sea, to and from states and nonstate actors of proliferation concern. The previous and current administrations have committed to implementing PSI and President Obama has called for it to be turned into a durable international institution. Given this commitment, it is important that agencies ensure that PSI is fully implemented according to legislative recommendations and requirements. Since our 2008 report, U.S. agencies have developed interagency PSI policies and procedures that satisfy a recommendation of the 9/11 Act. They have also submitted annual reports covering fiscal years 2008 through 2010 documenting their PSI activities, but these reports have not included the associated funding information for all PSI implementing agencies, as required by law. While all agencies we spoke with except DOD stated that they fund their PSI activities from their general funds, rather than request an annual PSI budget, it does not eliminate the requirement that they provide expenditure information for their PSI activities under the 9/11 Act. Without reports that include the required information for all agencies’ PSI activities, Congress will not know how much the U.S. government is spending on PSI and how such funds are being allocated. Also, while U.S. agencies have provided years of documentation of a range of activities they have performed or plan to perform under PSI, they have been unable to demonstrate if or how these activities are linked to the PSI objective. Without performance indicators that can be used to systematically measure progress toward the stated PSI objective and a framework for measuring the results of PSI activities, Congress and the public do not have a sufficient basis to judge whether PSI activities are successful.", "To ensure that Congress has information to assess U.S. participation in PSI, we recommend that the Secretaries of Defense and State take the following two actions: 1. Include in the annual PSI report to Congress the required expenditure information for all U.S. agencies participating in PSI activities; and 2. Develop a framework for measuring PSI activities’ results, including performance measures where possible that help link the results to PSI’s objective.", "We provided a draft of this report to DOD, State, FBI, and DHS. DOD and State provided written comments on a draft of this report, which are reprinted in appendixes IV and V along with our responses to specific points. FBI and DHS, along with DOD and State provided technical comments that we have incorporated into this report, as appropriate.\nIn commenting on the draft report, DOD partially concurred with both of our recommendations. Consistent with our recommendation, DOD agreed that the annual PSI report should include expenditure information for all U.S. agencies. DOD stated that the reports have included information on expenditures by DOD and other agencies that are unique to PSI, while excluding items that are accounted for in agency general operating budgets. However, we found that some expenditure amounts not reported in the annual reports were unique to PSI and, therefore, should have been included. In a 2009 e-mail to CBP, a DOD official stated that travel expenses could be included in its submission to the annual report, as long as they were specifically for a PSI event. However, after CBP submitted such expenditures to DOD, they were excluded from the 2010 annual report even though they were for PSI-specific travel. DOD also partially concurred with our recommendation to develop a results framework. The department cited challenges in establishing objective and quantifiable measures of success but committed to make an effort to implement the recommendation by using the Critical Capabilities and Practices (CCP) concept as a results framework and to identify meaningful performance measures, where appropriate.\nState partially concurred with the recommendation to provide expenditure information for all U.S. agencies participating in PSI activities. The department explained that it is difficult to define some expenditures as unique to PSI, for example, because travel in support of PSI events often coincides with travel in support of other department operational activities. However, the department said it would closely examine travel-related and other expenses unique to PSI in order to include them in future reports to Congress. State did not concur with our recommendation that it should develop a results framework. State said it had some indicators, such as the numbers of PSI-endorsing countries, for use in measuring PSI progress, but cautioned that PSI does not lend itself to collective data that would provide reasonable approximation of results. Nonetheless, State cited the CCP effort as one tool it intends to use, in coordination with other participating U.S. agencies, “which could contribute to an effective future analysis of the outcomes of coordinated PSI activity,” which is consistent with our recommendation. Although we made a written request for documentation of State’s PSI performance indicators in July 2011, State did not provide documentation of its PSI indicator and targets until March 2012, after it provided its response to our draft report. We have revised our report findings to include this documentation and our assessment. Upon reviewing the documentation provided, we found that the metrics State identified were not consistently listed as annual metrics in the strategic plan to which they refer. For example, neither the number of endorsing states nor the conclusion of shipboarding agreements were listed as metrics for fiscal years 2010 or 2011. In addition, State set no numeric targets for its participation in PSI activities for fiscal years 2010 or 2011. Without an overall results framework including, where possible, consistent indicators and targets that can be tracked over time, State cannot systematically evaluate its PSI activities.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, the Secretary of State, the Secretary of Homeland Security, the Attorney General, and other interested parties. In addition, this report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-9601 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors are listed in appendix VI.", "To assess the progress agencies have made since 2008 in establishing recommended Proliferation Security Initiative (PSI) policies and procedures, and issuing required annual reports, we reviewed the findings and recommendations in GAO’s 2006 and 2008 reports on PSI and the Implementing Recommendations of the 9/11 Commission Act of 2007 (the 9/11 Act). We requested and reviewed documentation of policies and procedures developed since 2008. Because the National Security Staff is the custodian of the interagency policy documents, we discussed the contents of those documents with National Security Staff officials and reviewed the documents to confirm that they contained PSI policies and procedures. We also reviewed PSI annual reports submitted to Congress by the Departments of State (State) and Defense (DOD) and analyzed them for compliance with the requirements in the 9/11 Act. We reported expenditure data as they appeared in the annual reports to Congress and discussed the reliability of the data with agency officials. We determined the data were sufficiently reliable for the purposes of our report. Further, we interviewed relevant agency officials to better understand the extent to which they implemented the requirements and recommendations in the 9/11 Act and any compliance challenges they faced.\nTo assess the extent to which PSI activities have enhanced and expanded U.S. efforts to prevent the flow of weapons of mass destruction (WMD) materials, we reviewed and analyzed documents from DOD, State, the Department of Homeland Security (DHS), and the Department of Justice (DOJ). We analyzed the information on each PSI activity in the annual reports covering fiscal years 2009 and 2010. We reported the number of PSI activities with U.S. participation based on agency documents. Because the agencies have not yet submitted the annual report for PSI activities in fiscal year 2011, we analyzed information on fiscal year 2011 activities provided by agency officials. We also interviewed relevant agency officials and solicited responses from seven DOD combatant commands to a list of questions about the PSI. In particular, we requested and analyzed documentation of actions relevant agencies have taken, if any, to develop indicators of PSI’s success. In addition, we compared our findings with those of the 2008 GAO PSI review and reviewed GAO reports assessing agencies’ evaluation frameworks and performance measurement.\nFor both objectives, we focused on DOD and State because the applicable recommendations and requirements in the mandate were addressed to them. In addition, we assessed DHS and DOJ progress because GAO made recommendations to those agencies in 2008 to develop policies, procedures, and performance indicators because of the increased involvement of law enforcement agencies in U.S. PSI efforts.", "The PSI is a response to the growing challenges posed by the proliferation of WMD, their delivery systems, and related materials worldwide. The PSI builds on efforts by the international community to prevent proliferation of such items, including existing treaties and regimes. It is consistent with, and a step in the implementation of the UN Security Council Presidential Statement of January 1992, which states that the proliferation of all WMD constitutes a threat to international peace and security, and underlines the need for member states of the UN to prevent proliferation. The PSI is also consistent with recent statements of the G8 and the European Union, establishing that more coherent and concerted efforts are needed to prevent the proliferation of WMD, their delivery systems, and related materials. PSI participants are deeply concerned about this threat and of the danger that these items could fall into the hands of terrorists and are committed to working together to stop the flow of these items to and from states and nonstate actors of proliferation concern.\nThe PSI seeks to involve, in some capacity, all states that have a stake in nonproliferation and the ability and willingness to take steps to stop the flow of such items at sea, in the air, or on land. The PSI also seeks cooperation from any state whose vessels, flags, ports, territorial waters, airspace, or land might be used for proliferation purposes by states and nonstate actors of proliferation concern. The increasingly aggressive efforts by proliferators to stand outside or to circumvent existing nonproliferation norms, and to profit from such trade, requires new and stronger actions by the international community. We look forward to working with all concerned states on measures they are able and willing to take in support of the PSI, as outlined in the following set of “Interdiction Principles.”", "PSI participants are committed to the following interdiction principles to establish a more coordinated and effective basis through which to impede and stop shipments of WMD, delivery systems, and related materials flowing to and from states and nonstate actors of proliferation concern, consistent with national legal authorities and relevant international law and frameworks, including the UN Security Council. They call on all states concerned with this threat to international peace and security to join in similarly committing to: 1. Undertake effective measures, either alone or in concert with other states, for interdicting the transfer or transport of WMD, their delivery systems, and related materials to and from states and nonstate actors of proliferation concern. “States or nonstate actors of proliferation concern” generally refers to those countries or entities that the PSI participants involved establish should be subject to interdiction activities because they are engaged in proliferation through: (1) efforts to develop or acquire chemical, biological, or nuclear weapons and associated delivery systems; or (2) transfers (either selling, receiving, or facilitating) of WMD, their delivery systems, or related materials. 2. Adopt streamlined procedures for rapid exchange of relevant information concerning suspected proliferation activity, protecting the confidential character of classified information provided by other states as part of this initiative, dedicate appropriate resources and efforts to interdiction operations and capabilities, and maximize coordination among participants in interdiction efforts. 3. Review and work to strengthen their relevant national legal authorities where necessary to accomplish these objectives, and work to strengthen when necessary relevant international law and frameworks in appropriate ways to support these commitments. 4. Take specific actions in support of interdiction efforts regarding cargoes of WMD, their delivery systems, or related materials, to the extent their national legal authorities permit and consistent with their obligations under international law and frameworks, to include: a. Not to transport or assist in the transport of any such cargoes to or from states or nonstate actors of proliferation concern and not to allow any persons subject to their jurisdiction to do so. b. At their own initiative, or at the request and good cause shown by another state, to take action to board and search any vessel flying their flag in their internal waters or territorial seas, or areas beyond the territorial seas of any other state, that is reasonably suspected of transporting such cargoes to or from states or nonstate actors of proliferation concern, and to seize such cargoes that are identified. c. To seriously consider providing consent under the appropriate circumstances to the boarding and searching of its own flag vessels by other states, and to the seizure of such WMD-related cargoes in such vessels that may be identified by such states. d. To take appropriate actions to (1) stop and/or search in their internal waters, territorial seas, or contiguous zones (when declared) vessels that are reasonably suspected of carrying such cargoes to or from states or nonstate actors of proliferation concern and to seize such cargoes that are identified and (2) to enforce conditions on vessels entering or leaving their ports, internal waters, or territorial seas that are reasonably suspected of carrying such cargoes, such as requiring that such vessels be subject to boarding, search, and seizure of such cargoes prior to entry. e. At their own initiative or upon the request and good cause shown by another state, to (a) require aircraft that are reasonably suspected of carrying such cargoes to or from states or nonstate actors of proliferation concern and that are transiting their airspace to land for inspection and seize any such cargoes that are identified and/or (b) deny aircraft reasonably suspected of carrying such cargoes transit rights through their airspace in advance of such flights. f.\nIf their ports, airfields, or other facilities are used as transshipment points for shipment of such cargoes to or from states or nonstate actors of proliferation concern, to inspect vessels, aircraft, or other modes of transport reasonably suspected of carrying such cargoes, and to seize such cargoes that are identified.", "", "", "", "", "Source- GAO analysis based on DOD and State data.", "", "1. Our recommendation focuses on developing a framework that links PSI activities to the initiative’s objective, and not just on indicators, which alone do not link the activities to the desired outcomes. Although we made a written request for documentation of State’s PSI performance indicators in July 2011, State did not provide documentation of its PSI indicator and targets until March 2012, after it provided its response to our draft report. We have revised our report findings to include this documentation and our assessment. Upon reviewing the documentation provided, we found that the metrics State identified were not consistently listed in its bureau strategic plan as annual metrics. For example, neither the number of endorsing states nor the conclusion of shipboarding agreements were listed as metrics for fiscal years 2010 and 2011. In addition, State set no numeric targets for its participation in PSI activities for fiscal years 2010 and 2011. Without an overall results framework including, where possible, consistent indicators and targets that can be tracked over time, State cannot systematically evaluate its PSI activities. 2. State’s decision to consider including PSI-specific expenditures in future reports to Congress is consistent with our recommendation. 3. If the Critical Capabilities and Practices (CCP) concept is developed as a framework that links PSI activities to outcomes and the objective of PSI, it will be consistent with our recommendation. (See also comment 1.) 4. Based on State’s response, we have revised the report to reflect State’s justification for not breaking out PSI expenditures. However, State’s decision not to track PSI expenditures is inconsistent with the requirement to report such information annually. 5. The description of OEG meetings as planning meetings is consistent with our 2008 report on PSI. State concurred with this decision. In addition, we believe that the activities currently listed by State are consistent with PSI planning. We have added a footnote in the background more fully explaining OEG meetings.", "", "1. The 9/11 Act requires that DOD, in conjunction with State, report to Congress annually on the amount expended for the prior year’s PSI activities. Because DOD is the only agency we spoke with that makes a specific budget request for PSI-related activities, its decision not to report expenditure amounts accounted for in agency general operating budgets limits Congress’ knowledge of the amount the U.S. government is spending on PSI and how those funds are being allocated. In addition, we found that some expenditure amounts not included in the annual reports were unique to PSI and, therefore, should have been included. In a 2009 email to CBP, a DOD official stated that travel expenses could be included in its submission to the annual report, as long as they were specifically for a PSI event. However, after CBP submitted such expenditures to DOD, they were excluded from the 2010 annual report even though they were for PSI- specific travel. 2. DOD’s willingness to work with interagency partners toward developing and using a framework to assess PSI activities and toward identifying meaningful performance measures is consistent with our recommendation. If the CCP is developed as a framework that links PSI activities to outcomes and the objective of PSI, it will be consistent with our recommendation.", "", "", "In addition to the contact named above, Godwin Agbara (Assistant Director), Jeffrey Baldwin-Bott, Lynn Cothern, and Mattias Fenton made key contributions to this report. Martin de Alteriis, Mark Dowling, and Mary Moutsos also provided technical assistance." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 2, 1, 2, 2, 2, 2, 1, 2, 1, 2, 1, 2, 2 ], "alignment": [ "h2_full", "h0_full", "h0_full", "h0_full", "h1_full", "h1_full", "h1_full", "h1_full", "", "", "h2_full", "", "", "", "", "", "", "", "", "", "h0_title", "h0_full", "", "", "" ] }

{ "question": [ "How have U.S. agencies established PSI policies and procedures?", "What documentation have the agencies produced?", "What PSI guidance have DOD and CBP developed?", "To what extent did the 2009-2011 reports met PSI requirments?", "To what extent have PSI activities achieved their objectives regarding counterproliferation?", "What were the results of the outreach efforts?", "How has the range of PSI activities been expanded?", "To what extent can the progress of the PSI program be measured?", "What efforts have been made to develop PSI performance indicators?", "What has GAO recommended regarding assessment?", "Why was the PSI program created?", "How is the PSI program organized?", "What has Congress recommended regarding PSI?", "What has GAO recommended regarding PSI?" ], "summary": [ "U.S. agencies have adopted interagency guidance documents that establish PSI policies and procedures and have submitted annual reports; however, these reports do not contain expenditure data for all agencies as required by law.", "The agencies produced documents that contain general PSI policies and procedures.", "In addition, DOD and the Department of Homeland Security’s Customs and Border Protection (CBP) developed policies and procedures specifically to guide their agencies’ PSI activities.", "The annual reports submitted in 2009, 2010, and 2011 met requirements to describe PSI-related activities planned for future years and those that took place in the preceding year. Although the reports included an account of DOD’s PSI expenditures, they did not contain all expenditures for other agencies for PSI activities as required by law.", "U.S. officials participated in a range of PSI activities since 2008 to meet their objective of expanding and enhancing counterproliferation efforts, but it is unclear to what extent these activities have achieved the objective because agencies lack measures of results. The agencies either led or participated in 22 PSI activities from fiscal year 2009 through fiscal year 2011 including multilateral meetings and exercises.", "Officials stated that their outreach efforts contributed to increased support for PSI since GAO’s 2008 report, such as the increase from 93 to 98 countries endorsing PSI.", "In addition, they have extended access to PSI activities to more countries that are not part of the group of 21 PSI Operational Experts Group countries, for example by holding regional planning meetings.", "Despite recommendations of Congress and GAO that agencies develop PSI performance indicators, DOD, State, CBP, and the Federal Bureau of Investigation have not developed indicators that can be used to systematically measure progress toward the stated PSI objective. Further, the agencies have not systematically evaluated PSI activity results.", "Although some officials indicated plans to develop PSI performance indicators, officials from DOD and State also cited several challenges to developing indicators to measure PSI activities’ results including difficulty quantifying how PSI activities improved capacity.", "However, GAO has previously reported that, despite such challenges, developing measures that help link activities to results is possible. PSI agencies could develop a framework that links performance measures to outcomes. For example, such a framework could link the number of participants trained to changes in national policies that strengthen participant countries’ authority to interdict the shipment of WMD, their delivery systems, and related materials.", "In 2003, the Bush Administration announced the Proliferation Security Initiative (PSI) to enhance U.S. efforts to prevent the spread of weapons of mass destruction (WMD).", "PSI is not a program housed in only one agency, but instead is a set of activities with participation by multiple U.S. agencies and other countries.", "Congress recommended that the Department of Defense (DOD) and Department of State (State) establish policies, procedures, and indicators to measure results and required that they submit annual reports.", "It also mandated that GAO report on PSI effectiveness. In 2008, GAO likewise recommended that law enforcement agencies also establish policies, procedures, and performance indicators." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 1, -1, 3, 3, -1, 0, -1, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Overview of Major Acquisition Systems", "Selected Topics", "Quality of Procurement Data", "System for Award Management (SAM)", "Access to and Comprehension of Procurement Information and Data", "Posting Contracts Online", "Digital Accountability and Transparency Act (DATA Act)73 and FPDS-NG", "Concluding Remarks" ], "paragraphs": [ "", "Increasingly, the federal government uses technology to facilitate and support the federal procurement (or acquisition) process. Primary beneficiaries of this shift to online procurement systems (i.e., websites and databases) are the government's acquisition workforce and prospective and incumbent government contractors. Web-based procurement systems are essential for completing certain processes and fulfilling various requirements including, for example, publicizing contracting opportunities, helping to ensure that the government only does business with responsible contractors, capturing subcontracting information, and collecting and maintaining contract award data. Possible benefits conferred by the suite of acquisition systems include enhanced efficiency, improved access to information, mitigation of the administrative burden shared by federal employees and contractors, and the timely collection of accurate data. The government's reliance on web-based systems is not surprising for yet another reason: the magnitude of government procurement. Beginning with FY2008, the federal government has spent over $500 billion and conducted at least 5.7 million contract actions each fiscal year through FY2012. During the same time period, federal agencies dealt with at least 154,000 contractors each fiscal year. This figure does not include entities that competed for, but were not awarded, any government contract.\nCongressional interest in the executive branch's procurement systems (and, more broadly, government procurement) is fueled by a combination of its responsibilities. As the keeper of the federal purse and the body responsible for oversight of the executive branch, Congress takes a keen interest in how federal agencies spend the funds appropriated to them and, generally, how well the acquisition process works. While congressional oversight of government procurement includes overseeing web-based acquisition systems, these systems also serve as resources for congressional oversight efforts as well as legislative activities. Additionally, some online procurement systems may be useful when crafting responses to constituents who have commented on, or requested assistance related to, government procurement. Relatedly, Congress has demonstrated an ongoing interest in promoting the transparency of government spending data, including contract award information, for citizens and other interested parties.\nThis report begins with an overview of major online procurement systems that support certain acquisition processes, or contain data about agencies' procurements. This section includes a table that provides basic information about each system and that may serve as a reference guide. The next section of the report then examines several issues and topics, including data quality, the System for Award Management (SAM), and the posting of contracts online.\nMajor web-based, executive branch procurement systems are the focus of this report. This report does not include any agency-specific websites or databases. Additionally, it does not include all of the governmentwide online systems associated with government procurement, such as the Small Business Administration's Subcontracting Opportunities Directory and SUB-Net, or the RFP-EZ pilot program. Generally, only executive branch agencies are subject to the applicable statutes, regulations, policies, or guidelines that govern the use of the procurement systems covered in this report. Although individual legislative branch or judicial branch agencies might be permitted to use these systems, they are not necessarily required to do so.", "The past two decades have seen the federal government take \"increasing advantage of technology to improve the efficiency and effectiveness of the acquisition lifecycle, from performing market research to recording contractor performance information.\" Initially, most online acquisition systems were established for the purpose of facilitating and improving the procurement process. Contracting officers, and other members of the government's acquisition workforce, post solicitations (and other documents, such as sources sought notices) on the Federal Business Opportunities (FedBizOpps) website. In turn, FedBizOpps is a resource for would-be government contractors seeking opportunities to sell their goods or services to the government. The System for Award Management streamlines the registration process for prospective and current contractors while providing a single repository of information for agency personnel to use, for example, to confirm business size, review contractors' certifications, and pay contractors. To aid in ensuring that the government does business only with responsible contractors, agency personnel also use SAM to determine whether a contractor is presently suspended or debarred, and query the Federal Awardee Performance Information and Integrity System (FAPIIS). Contracting officers submit performance information to the Past Performance Information Retrieval System (PPIRS) and, in turn, use information stored in the system when evaluating a contractor's past performance.\nSome web-based acquisition systems may primarily serve other purposes and other users. Congressional staff and agency personnel may find the contract award data available on the Federal Procurement Data System-Next Generation (FPDS-NG) website useful when developing, or implementing, policy. A push for transparency led to the passage of the Federal Funding Accountability and Transparency Act of 2006 (FFATA, P.L. 109-282 ). FFATA mandated the development of a user-friendly system comprising a variety of government spending data, including procurement data. Another effort aimed at enhancing transparency involves FAPIIS. Subsequent to the establishment of FAPIIS, legislation was enacted which made the contents of this system, except for past performance data, accessible to the public.\nTable 1 contains information regarding 11 web-based acquisition systems and a related Department of Labor system. The table reflects the current status of the General Services Administration's effort to consolidate eight procurement websites, plus the Catalog for Federal Domestic Assistance (CFDA), into one integrated system, SAM. Three websites—Central Contractor Registration (CCR, which includes Federal Agency Registration (FedReg)), Excluded Parties List System (EPLS), and Online Representations and Certifications Application (ORCA)—migrated to SAM in July 2012. None of the three is listed separately in Table 1 . Each of the five remaining procurement systems slated to migrate to SAM at later dates has its own entry in the table. These websites are the Electronic Subcontracting Reporting System (eSRS), FedBizOpps, FPDS-NG, PPIRS, and Wage Determinations Online (WDOL). Additional information about SAM is provided below.", "", "Over the years, questions have been raised regarding the accuracy, completeness, and timeliness of the contract award data available from FPDS and its successor, FPDS-NG. FPDS was established in February 1978, and by fall 1982 the Government Accountability Office (GAO) had published three reports that documented deficiencies in the completion and accuracy of data submitted by federal agencies. A decade later, during preparations for the transition from FPDS to FPDS-NG, GAO reported to the Director of OMB in late 2003 that FPDS data were \"inaccurate and incomplete.\" During the transition, agencies were asked to \"review their data and identify and correct any deficiencies\" before they transferred the data to FPDS-NG and certify \"the accuracy and completeness\" of their FY2004 data. Yet, in 2005, GAO shared its concerns with the OMB Director regarding the \"[t]imeliness and accuracy of data\" and \"[e]ase of use and access to data\" in FPDS-NG. In its 2007 report, the Acquisition Advisory Panel (AAP) catalogued several problems with FPDS-NG, including inaccurate data, unclear instructions, the system's failure to capture certain data, and validation rules that did not function as intended. An April 2008 review of \"complex service acquisitions\" by GAO revealed that \"the FPDS-NG field identifying major programs was typically blank.\" Other GAO studies revealed difficulties in identifying interagency contracts in FPDS-NG because of the way they were coded, and reported that \"some contracts were incorrectly coded as T&M [time and material] contracts while others were incorrectly coded as having acquired commercial services.\"\nReports of procurement data problems have been met by efforts to ensure the data are accurate and complete, and reported in a timely manner. Most recently, the Administrations of George W. Bush and Barack Obama have provided guidance to agencies regarding data submitted to FPDS-NG. The latest guidance, which was issued by the Office of Federal Procurement Policy (OFPP) in 2011, complements and expands upon FAR 4.604. Under FAR 4.604(a), an agency's senior procurement executive \"is responsible for developing and monitoring a process to ensure timely and accurate reporting of contractual actions to FPDS [FPDS-NG].\" Additionally, the chief acquisition officer of the agency \"must submit to the General Services Administration (GSA), in accordance with FPDS [FPDS-NG] guidance, within 120 days after the end of each fiscal year, an annual certification of whether, and to what degree, agency CAR [contract action report] data for the preceding fiscal year is complete and accurate.\"\nOFPP's 2011 memorandum provides instructions, sampling methodologies, and templates for agencies to use in calculating and reporting the accuracy and completeness of data submitted to FPDS-NG. Agencies are required to compute the accuracy of 25 \"key data elements,\" including date signed, extent competed, type of set aside, and place of manufacture. Governmentwide, the four-year average (FY2008-FY2011) for completeness was 98.3% and for sample accuracy 94.0%. Data were not provided for individual agencies, and these are the most recent data available.\nOFPP also stated in its memorandum that, in conjunction with GSA, it would carry out the following activities as part of its \"sustained efforts to improve procurement data quality throughout the year\":\n\"continue the interagency working group on data quality, focusing on emerging issues, challenges, solutions, guidance, and process improvements;\" \"revitalize the [online] community of practice ... to collect tools and agency best practices for improving data quality and host focused discussions on key issues; and\" \"collaborate with the Federal Acquisition Institute and the Defense Acquisition University to review and improve related workforce training and development and to develop a better understanding of how procurement data are used throughout the acquisition process.\"\nAdditionally, policies, system limitations, and regulations can be sources of seemingly inaccurate, or incomplete, data; lead to unusual, or anomalous, results; or hamper transparency. Examples include the following:\nFPDS-NG does not contain classified data, or information about purchases for \"petroleum or petroleum products ordered against a Defense Logistics Agency Indefinite Delivery Contract.\" DOD's procurement data are not available immediately through FPDS-NG; the data are \"subject to a 90-day delay.\" When registering in SAM, a business may choose to identify itself as, for example, a woman owned business or minority owned business. Independent verification of these designations is not required, which leaves open the question of the accuracy of this type of information. Data in FPDS-NG are identified, or organized, as data elements, and, over the years, data elements have been added, deleted, or revised. It is possible that the inclusion of a recently added data element, or one that is scheduled to be removed, in a user's search could affect the results. For example, conducting a search for FY2007 procurement data that includes a data element added to FPDS-NG in FY2010 might yield anomalous results. Regarding transparency, some might argue that it is hampered by regulations that permit the use of a generic Data Universal Numbering System (DUNS) number. Generally, an entity is required to have a unique DUNS when registering in SAM. Under certain circumstances, an entity may use an authorized generic DUNS number (e.g., 123456787, which is identified as \"Miscellaneous Foreign Awardees\"), which precludes identification of the contractor.", "As mentioned above, an initiative is underway to consolidate eight procurement websites, and the Catalog of Federal Domestic Assistance, into one system. The eight procurement websites are Central Contractor Registration, Electronic Subcontract Reporting System, Excluded Parties List System, Federal Business Opportunities, Federal Procurement Data System-Next Generation, Online Representations and Certifications Application, Past Performance Information Retrieval System, and Wage Determinations OnLine.gov. When discussing SAM, these websites are referred to as \"legacy systems.\"\nThe history of SAM begins with the Integrated Acquisition Environment (IAE). Established by OMB in 2001 and housed within GSA, IAE \"was initiated to integrate, standardize, and streamline some of the many different acquisition data systems used throughout the government.\" The development and implementation of web-based acquisition systems occurred independently and, accordingly, without an overarching, comprehensive plan, as the federal government shifted from paper-based systems to web-based systems for its procurement processes. The mix of government procurement systems also included \"unique data systems\" that had been developed by some agencies for their own use. IAE's initial strategy was to \"adopt, adapt, acquire,\" which involved adopting existing data systems that had been developed by federal agencies (e.g., DOD's CCR), adapting existing systems (e.g., transforming FPDS into FPDS-NG), and acquiring systems to fulfill unmet needs (e.g., ORCA).\nAlthough IAE improved the acquisition systems it inherited, questions remained regarding, among other things, the efficiency, responsiveness, and coherence of the existing systems. Testifying at a congressional hearing in fall 2009, the Federal Chief Information Officer (CIO) described the problems associated with the multiple procurement systems.\nEach of the eight IAE systems was originally developed independently, used different software, and operated on different hardware platforms run by different contractors. In this complex and stove-piped environment, it was difficult to respond to policy or technology changes in a timely manner.\nSpecific issues, or problems, included separate logins, which are \"inefficient and confusing\"; overlapping data, which is \"inefficient and creates opportunity for error\"; no single or uniform level of service, which could subject users to varying levels of service; and multiple vendors hosting the systems, which is \"more expensive than consolidated hosting.\"\nAt the same hearing where he described the problems with the existing acquisition systems, the Federal CIO stated that consolidating the eight systems into \"an integrated platform for procurement\" would improve data quality, simplify access to procurement data, and improve the usability of the procurement systems.\nThe effort to develop an integrated platform began in February 2010 when GSA awarded a contract to IBM US Federal to consolidate nine systems (eight procurement systems plus the CFDA) into SAM. Table 2 shows how SAM will be organized when completed.\nThe first phase, launched in July 2012 after a two-month delay, saw the entity management functions—CCR (including Federal Agency Registration), EPLS, and ORCA—migrate to SAM. However, several news articles reported that problems with SAM prompted GSA to shut down the system for several days, until August 6, 2012. GSA also contacted the contractor responsible for SAM, summarizing, in a notice of concern, the problems encountered by users.\nThe overall performance issues and functionality defects that materialized with the initial release of SAM Phase 1 on July 28, 2012, have prevented a majority of users from performing a variety of award management process with SAM Phase 1. The performance issues and defects continue to impact end to end award management processes within the system, forcing users to rely on emergency system workarounds.\nConcerns about the operability of SAM also prompted GSA to re-establish temporarily its Excluded Parties List System website in fall 2012. Contracting officers use EPLS to determine whether prospective contractors have been excluded from receiving government contracts.\nDOD responded to SAM performance issues by issuing a class deviation from registration requirements and annual representations and certifications requirements for contractors. The Defense Department's memorandum noted that \"SAM has experienced performance issues that have affected the timely processing of awards,\" and added that GSA had been working aggressively to resolve the issues promptly. Reportedly, the Administrator of OFPP stated, in September 2012, that \"'GSA has a lot of thinking to do before they implement future phases of SAM.... OFPP is working hand-in-hand with them and CIO [U.S. Chief Information Officer] Steve VanRoekel, and other users such as DOD, to make sure the system moves forward in the right direction.'\"\nSeveral months after Phase 1 was implemented, GSA shifted management responsibility for SAM from its Office of Government-wide Policy to the agency's Federal Acquisition Service (FAS) and the Office of the Chief Information Officer. Specifically, the Acting FAS Commissioner and the Deputy CIO have taken over management of SAM. The same announcement noted that the Acting Administrator of General Services has \"called for the development, reporting and monitoring of key metrics around the SAM implementation.\"\nWhile performance problems were not apparent publicly until implementation had begun, budget and schedule problems were identified earlier. In March 2012, GAO reported that the project has been plagued by cost increases, funding shortages, and schedule delays. Failure to \"adequately execute the SAM hosting strategy as initially planned\" and increased \"demand for help desk services\" contributed to higher development costs. GAO estimated that the cost of SAM-related contracts increased from $96.0 million (initial contract award amounts) to $181.1 million (GAO estimate). The increase in cost was due mostly to \"higher than expected hosting costs.\" While costs have been increasing, \"the program also did not receive funding increases it requested.\" GSA's response has been to modify and delay the schedule, and defer payments or revise contract requirements. GAO recommended that GSA \"[r]eassess the SAM business case to compare the costs and benefits of various alternatives,\" and, if it makes sense to continue the project, then \"reevaluate the hosting strategy\" and \"take steps to ensure that the SAM development contract payments are more closely aligned with the program schedule and delivery of capabilities.\"", "Public access to procurement information and data, which is often couched in terms of transparency, has grown over the years. Some procurement processes, such as the posting of solicitations, have moved online, and statutory requirements and policies have led to the creation of procurement data systems, such as USAspending.gov. Transparency can yield significant benefits, such as contributing to an informed citizenry, enhancing policy planning and decisionmaking, and fostering accountability.\nAccess to online systems and procurement information and data, however, does not necessarily equate to comprehension. Without sufficient knowledge of government procurement and expertise in using the government's online acquisition systems, users may face challenges identifying which system(s) can be used meet their needs; understanding the capabilities and limitations of the different systems; determining how to access, or find, the data or information they seek; and understanding how to analyze and interpret the data or information they obtain. The following examples demonstrate situations users might encounter.\nThe dollar amounts associated with some contract actions in FPDS-NG (and, relatedly, USAspending.gov) are either negative or zero. A negative dollar amount represents a deobligation and a dollar amount of zero represents an administrative action. The Federal Awardee Performance Information and Integrity System may contain information for a particular contractor that covers a five-year period. However, \"some of that information may not be relevant to a determination of present responsibility\" for the contractor, including \"a prior administrative action such as debarment or suspension that has expired or otherwise been resolved.\" Moreover, a contractor's Certification Regarding Responsibility Matters only covers three years, not five years. For certain types of businesses, such as minority-owned and woman-owned, a business owner self-certifies that the business belongs in a particular group. A business owner's interpretation of a particular designation might differ from a user's interpretation. Thus, a user who is unaware self-certification is permitted for certain types of businesses might obtain incorrect data. FPDS-NG is a dynamic system in that data elements (e.g., type of contract, date signed, and vendor name) may be added, merged, or eliminated. For that reason, some searches could yield potentially inaccurate results.", "Presently, the federal government does not have a database of contracts awarded by federal agencies. (FPDS-NG includes discrete information, in data fields (data elements), about contract awards.) Since June 2003, at least two separate executive branch initiatives have explored the possibility of posting contracts online, and at least one bill, if enacted, would have led to posting contracts online.\nThe General Services Administration led the initial executive branch effort, posting a notice in the Federal Register in 2003. The stated goal of the initiative was to increase transparency and \"further the [Bush] Administration's global vision of a citizen-centric E-Government\" while the notice sought comments that could aid in implementing a pilot. GSA noted that any proprietary information would be redacted from a contract before it would be posted. Whereas some respondents supported the proposal, suggesting that implementation would increase visibility of and transparency in federal procurement, others stated that existing information sources, policies, and regulations were sufficient.\nWorking through its Integrated Acquisition Environment, GSA established a working group, which consisted of representatives from several federal agencies, to examine the feasibility, challenges, and anticipated benefits of posting federal contracts online. The project was named Contract Award Documents Online (CADO). The CADO working group considered how the Freedom of Information Act (FOIA) process might integrate with, or affect, making contracts publicly available as a matter of course, because agencies use the FOIA process when responding to most requests for copies of contracts. The CADO working group identified the following challenges:\n\"CADO removes the FOIA staff from the process, exposing Agencies to legal challenges by minimizing active FOIA participation in the document release process.\" \"Proactive posting to the public increases the potential for inadvertently releasing sensitive information.\" \"Agency Staff limitations—CADO would require drastic increases in administrative and technical staff to maintain and operate proactive systems in both the vendor and government communities.\" \"Lack of current federal regulation or policy guiding agencies and contractors in the procedures and processes of obtaining contract award documents outside of the current FOIA process.\"\nAnticipated benefits of making contracts publicly available include \"[i]ncreased transparency of contract award documents … [p]otential reduction in the number of FOIA requests … [and] [r]educed cost of operations and maintenance of manual response systems in each agency.\" The CADO working group concluded, however, \"that there is insufficient data supporting a Business Case to recommend the design, development and implementation of a centralized federal system to present contract award data online.\"\nMore recently, DOD, GSA, and NASA issued an advance notice of proposed rulemaking regarding posting contracts online. Anticipating that, in the future, a requirement to post contracts, task orders, and delivery orders online might be established, in 2010 the Civilian Agency Acquisition Council (CAAC) and Defense Acquisition Regulations Council (DAR Council) solicited comments with the goal of learning how to post contracts \"without compromising contractors' proprietary and confidential commercial or financial information.\" Additionally, the councils sought suggestions that would \"facilitate uniform, consistent processing methods that are fair and equitable as well as cost effective and efficient, while at the same time simplifying access to acquisitions once posted.\"\nIn responding to a particular set of comments elicited by the advance notice of proposed rulemaking, the CAAC and DAR Council identified several issues they believed warranted consideration prior to implementing a scheme for the posting of contracts online.\nAny contract-posting initiative must give consideration to the cost involved (in technology and software as well as the time of contractor and Government employees) and the risks associated with posting this information (e.g., lawsuits against the Government for inadvertently releasing information that could be damaging to national security and/or the competitive positions of companies doing business with the Government). DOD, GSA, and NASA advocate a judicious approach to establishing contract-posting requirements, one that will appropriately conserve resources and identify information that should be protected from general release to the public. Our assessment is that any contract posting requirement, at a minimum, should involve … a high dollar threshold [regarding the value of a contract], a requirement for only the successful offeror to redact the contract and/or proposal that will be posted, and an incentive for the successful offeror to do so.\nNecessary protections for information and personnel involve, at a minimum, a FOIA analysis, which is time consuming and requires senior analysts and attorneys. DOD, GSA, and NASA are concerned, too, that the on-going efforts to identify protections essential for safeguarding unclassified information are not yet sufficiently mature that such efforts can be bypassed to establish a contract-posting requirement prior to guidance on unclassified information. To avoid inadvertent disclosures, the Government would be required to review contractor-redacted documents before such items are posted to a public Web site. The contract or contractor's proposal may contain information that requires protection beyond trade secrets or proprietary information.\nOffering the following rationale, DOD, GSA, and NASA withdrew the advance notice of proposed rulemaking.\n[A]t this time … [we] do not plan to amend the FAR because some of the existing acquisition systems … provide certain information on Government contracts that is readily available to the public, and most of the content of a contract solicitation or contract action not already available on one of the [government] acquisition systems … is either standard FAR terms and conditions … agency specific terms and conditions … or sensitive information that may be releasable under FOIA.\nCongress also has shown interest in making procurement documents, including contracts, available to the public. If enacted, S. 3077 (110 th Congress) would have required that \"the request for proposals, the announcement of the award, the contract, and the scope of work to be performed\" for all \"contracts, subcontracts, purchase orders, task orders, lease agreements and assignments, and delivery orders\" be posted on the website required by the Federal Funding Accountability and Transparency Act (FFATA) of 2006. Neither this bill, nor its companion bill, H.R. 6411 , was enacted.\nDuring the 113 th Congress, a bill was introduced that, if enacted, would require executive branch agencies to make public records available on the Internet at no charge.\" Whether S. 549 would apply to government contracts probably would depend, at a minimum, on the interpretations of public record and record , and any regulations that would be promulgated to implement this bill. The term public record , as defined in S. 549 , \"means any record, regardless of form or format, that an agency discloses, publishes, disseminates, or makes available to the public.\" The bill's definition of record \"includes contracts entered into by persons working as agents of the Federal Government, including records in the possession of Government contractors.\"", "The DATA Act—which is the title of two similar bills, H.R. 2061 and S. 994 , that were introduced during the 113 th Congress—would amend the Federal Funding Accountability and Transparency Act (FFATA; P.L. 109-282 ; 31 U.S.C. §5101 note).\nIf the DATA Act (i.e., either bill) is enacted, responsibility for the operation of the website established pursuant to FFATA, USAspending.gov, would shift from the Director of OMB to the Secretary of the Treasury. Generally, the DATA Act would require, among other things, the following:\nThe Treasury Secretary, in consultation with the heads of OMB, GSA, and other federal agencies, to establish governmentwide \"financial data standards for Federal funds\"; The Director of OMB to lead an effort to consolidate financial reporting requirements for recipients of federal awards; and The Recovery Accountability and Transparency Board, in consultation with the Secretary of the Treasury and the head of OMB, to establish a pilot program for recipients of federal funds that meet certain conditions. The pilot program would involve reporting financial data related to receipt of federal funds.\nNeither bill would establish a procurement database. A key distinction between the thrust of the DATA Act and the purpose of most procurement databases is that the former focuses on spending data and using it as a tool to detect fraud, waste, or abuse while the latter facilitate the acquisition process. Possible implications for FPDS-NG involve the connection between it and USAspending.gov. FPDS-NG is the source of the prime contracting procurement data available through USAspending.gov. The implications of a requirement to develop and implement financial data standards for FPDS-NG.", "Web-based systems increasingly have become embedded in the federal government's acquisition process, providing the means for collecting, storing, searching, or disseminating a variety of data and other information to the acquisition workforce and other interested parties. Many of the systems were designed to facilitate the acquisition process; some of them also promote transparency. Recognizing the potential benefits of integrating certain online procurement systems (and the Catalog for Federal Domestic Assistance), GSA has undertaken an effort to consolidate nine systems into the System for Award Management. It remains to be seen whether efforts to disclose additional procurement information (such as posting contracts online), or to present procurement data in a new portal, or format (such as proposed in the DATA Act), come to fruition. No matter the source of information or data, though, some would argue that access does not necessarily confer comprehension, which may require some knowledge of government procurement." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h0_full h2_full h1_full", "h2_title h1_title h3_title", "h3_full h1_full", "h2_full", "h3_full", "h3_full", "h3_full", "h0_full h2_full" ] }

{ "question": [ "How has the role of technology in the acquisition process changed?", "Who benefits from this shift to online systems?", "How important are these online systems to the acquisition process?", "How do the online systems affect contractors?", "What questions have been raised about the federal government's online acquisition systems?", "How has OFPP attempted to remedy these issues?", "To what extent is FPDS-NG data accurate?", "What programs became part of SAM in 2012?", "What other programs will SAM include?", "Why was there interest in an integrated system?", "In what ways does this report address transparency?", "What information exists regarding federal agencies' contracts?", "How did GSA examine this issue?", "What were the group's findings?", "How did DOD, GSA and NASA address this issue?", "How did the matter conclude?", "What is the relationship between transparency and comprehension?", "How has the 113th Congress addressed transparency of spending data?" ], "summary": [ "Increasingly, the federal government uses technology to facilitate and support the federal acquisition process.", "Primary beneficiaries of this shift to online systems (websites and databases) are the government's acquisition workforce and prospective and incumbent government contractors.", "The suite of web-based systems supports contracting officers' efforts to ensure the government contracts only with responsible parties, is essential to the dissemination of information regarding contracting opportunities, and facilitates interagency contracting.", "From the contractor perspective, the government's online systems streamline the processes involved in fulfilling various administrative requirements, provide access to possible contracting opportunities, and are potential resources for market research.", "Interest in the federal government's online acquisition systems is reflected in a variety of issues and topics. Over the years, questions have been raised regarding the accuracy, completeness, and timeliness of the contract award data available from FPDS and its successor, FPDS-NG.", "Recent efforts to remedy these problems include guidance issued by the Office of Federal Procurement Policy (OFPP) in 2011, which provides instructions for calculating and reporting the accuracy and completeness of data submitted to FPDS-NG.", "The most recent information available regarding FPDS-NG data shows that, governmentwide, the four-year average (FY2008-FY2011) for completeness was 98.3% and for sample accuracy 94.0%.", "The following three systems became part of SAM in July 2012: Central Contractor Registration (CCR, which includes Federal Agency Registration (FedReg)), Excluded Parties List System (EPLS), and Online Representations and Certifications Application (ORCA).", "When completed, SAM will also include five other online procurement systems, plus the Catalog of Federal Domestic Assistance (CFDA).", "A variety of issues and problems, including separate logins, overlapping data, the absence of a single, uniform level of service, and multiple vendors hosting the systems, prompted interest in developing an integrated system.", "Although this report does not focus on transparency, several issues discussed here are related to transparency.", "First, while the Federal Business Opportunities (FedBizOpps) website and FPDS-NG provide information about executive branch agencies' procurements, a database of federal agencies' contracts does not exist.", "In 2003, GSA established a working group to examine the feasibility, challenges, and anticipated benefits of posting federal contracts online.", "Ultimately, the working group concluded there were insufficient data to support recommending the establishment of a central system for posting contracts online.", "In 2010, the Department of Defense (DOD), GSA, and the National Aeronautics and Space Administration (NASA) issued an advance notice of proposed rulemaking (ANPR) regarding posting contracts online.", "Comments submitted in response to the notice identified several challenges, and the matter was concluded when the agencies withdrew the ANPR.", "Second, transparency does not necessarily equate to comprehension. Generally, variation exists among the users of government procurement systems regarding their knowledge of government procurement and procurement data.", "Third, during the 113th Congress, two similar bills (H.R. 2061 and S. 994) with the same name (Digital Accountability and Transparency Act, or DATA Act) were introduced, either of which would enhance transparency of spending data, including certain procurement data." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, -1, -1, 0, -1, -1, -1, 1, 2, 1, 4, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 3, 3, 3, 4, 4, 4, 5, 5, 5, 5, 5, 5, 5, 5 ] }

{ "title": [ "Background", "Major Steps in Corps Water Resources Development Projects", "Corps Feasibility Studies", "Statutory Provisions for Accelerating Feasibility Studies", "The Corps Has Taken Steps to Address Some Feasibility Study Acceleration Provisions but Not Others", "The Corps Has Performed Some Review of Its Feasibility Study Acceleration Reforms but Has Not Conducted a Comprehensive Evaluation of Impacts", "The Corps Has Not Maintained Complete Milestone Data for Selected Feasibility Studies in Its Central Data System", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: U.S. Army Corps of Engineers Project Acceleration Statutory Provisions and Corps Actions Related to Each Provision", "Appendix III: Comments from the Department of Defense", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The Corps is one of the world’s largest public engineering, design, and construction management agencies. Located within the Department of Defense, the Corps has both military and civilian responsibilities. Through the civilian Civil Works Program, the Corps plans, constructs, operates, and maintains a wide range of water resources development projects such as navigation and flood risk projects. The Assistant Secretary of the Army for Civil Works, appointed by the President, sets the strategic direction for the program and has principal responsibility for the overall supervision of functions relating to the Army’s Civil Works Program. The Chief of Engineers, a military officer, is responsible for execution of the civil works and military missions. At the Corps level, the Civil Works Program is organized into three tiers: headquarters in Washington, D.C.; eight regional divisions; and 38 local district offices (see fig. 1).\nCorps headquarters primarily develops policies and guidance to implement the agency’s responsibilities and plans the direction of the organization. The divisions, which were established generally according to watershed boundaries, primarily coordinate the districts’ civil works and military projects and are commanded by military officers. The districts, also commanded by military officers, are to, among other things, plan and implement feasibility studies and the resulting water resources development projects that are approved by the divisions and headquarters.", "There are several steps in conducting a Corps water resources development project. When a local community perceives a need or experiences a water resources problem that is beyond its ability to solve, it typically contacts the Corps for assistance. These communities and Congress, as well as other entities, play key roles in the process. Figure 2 illustrates the major steps in conducting a Corps water resources development project.", "As identified above, one of the major steps in initiating a water resources development project is conducting a feasibility study. Feasibility studies further investigate a water resources problem and make recommendations on whether a project is in the federal interest, and if so, how the problem should be addressed. Generally, the cost of a feasibility study is shared between the Corps and a nonfederal sponsor, such as a local port authority or a state agency.\nIn 2012, the Corps began using a new approach to conducting feasibility studies, referred to as SMART Planning. As part of this approach, Corps officials are to use and document a risk-informed approach to decision- making. Specifically, Corps officials are to consider risks at each point in the feasibility study process and balance the probability and consequences associated with those risks with the time and costs needed to avoid or mitigate risks through, for example, collecting additional data or conducting additional analysis. By doing so, they are to conduct only the additional analysis needed to make a decision at that point in the process. At each step, Corps officials are to use an approach that balances the level of detail, data collection, research, and associated risks with what is necessary to deliver the feasibility study, and they are to justify any additional work as the best course forward.\nThe Corps’ feasibility study process consists of four phases (scoping, alternative evaluation and analysis, feasibility-level analysis, and Chief’s report) and a number of key milestones, such as identifying project alternatives for further review (see fig. 3). The complete feasibility study process is to take place within the statutory target time frame of less than 3 years (36 months). The Corps uses SMART Planning to help feasibility studies meet the agency’s 3x3x3 rule. Corps policy allows the Corps to spend more money and take more time on an unusually complex feasibility study if the district leading the study requests and receives an exemption from headquarters or the Assistant Secretary of the Army for Civil Works. However, Corps policy indicates that such exemptions are not routine and are to be granted only after careful consideration and review by division and headquarters officials. In addition, WRRDA 2014, as amended, provides that the Secretary of the Army may make an exception by extending the timeline of a study if the Secretary determines that the study is too complex to comply with the 3x3x3 rule. The Secretary is not to extend the timeline for a feasibility study for a period of more than 10 years, and any feasibility study that is not completed before that date shall no longer be authorized. The act also requires the Secretary to provide written notice to the Senate Committee on Environment and Public Works and the House Committee on Transportation and Infrastructure each time the Corps grants such an exception.\nThe feasibility study process includes work the Corps undertakes to satisfy requirements under the National Environmental Policy Act (NEPA) and other environmental statutes. Under NEPA, federal agencies are to evaluate the potential effects of proposed projects on the environment. When the Corps determines that a water resources development project could have significant environmental effects, it must prepare an EIS. The Corps issues a draft EIS as part of the overall draft feasibility report for public and stakeholder review and issues a final EIS when it issues its final feasibility report. Feasibility studies that require an EIS typically represent larger and more complex studies than those that do not require an EIS. According to a 2013 Congressional Research Service report, Corps feasibility studies that are larger and more complex tend to require additional funding and time when compared to less complex, smaller studies. While the Corps does not publish information on the length of time it takes to complete feasibility studies, our analysis of publicly available data showed that the median time it took the Corps to complete a feasibility study with an EIS was more than 7 years for those studies completed from 2008 through 2018.", "WRRDA 2014 contains provisions related to, among other things, accelerating the completion of feasibility studies for which an EIS is prepared. These provisions broadly fall into different general categories, which we grouped as follows:\nCoordination and administration. These provisions are generally process oriented. Among other things, they relate to facilitating the process of coordinating and administering feasibility studies by, for example, encouraging the Corps and other agencies to coordinate early in the feasibility study process and resolve issues expeditiously.\nEnvironmental review. These provisions relate to implementing NEPA and other environmental statutes when conducting feasibility studies. For example, the Corps is to establish a program to measure and report on progress made to improve and expedite the planning and environmental review process.\nPublic transparency. These provisions generally require the Corps to, among other things, make information publicly available on how it is implementing the acceleration provisions.", "The Corps has taken steps to address broad WRRDA 2014 provisions related to facilitating the process of coordinating and administering feasibility studies. For example: Issuance of a joint coordination guide. In September 2015, as a result of the act and previous ongoing coordination efforts, the Corps, NMFS, and FWS worked together to jointly issue a coordination guide for conducting feasibility studies. The guide discusses the feasibility study process in depth and emphasizes the importance of substantive, early engagement among the three agencies to successfully deliver projects and avoid delays later in the process that may result from lingering disagreements among the agencies.\nIssuance of Corps guidance on WRRDA 2014 acceleration provisions. In March 2018, the Corps issued guidance on how officials should implement the WRRDA 2014 acceleration provisions when conducting feasibility studies. This includes guidance on implementing administrative changes such as deadlines for gathering agency or public comments. It also includes guidance on coordination within the agency as well as with other agencies and stakeholders, such as nonfederal sponsors. For example, WRRDA 2014 provides that the Corps is to make certain information available to other agencies as early as practicable in the environmental review process. The Corps’ March 2018 guidance indicates that Corps officials are to provide information on the (1) environmental and socioeconomic resources located within the physical area associated with a feasibility study, and (2) general locations of the different alternatives under consideration. While the guidance was not issued for almost 4 years after the enactment of WRRDA 2014, several Corps headquarters and district officials said the Corps disseminated information on how to implement the acceleration provisions to the districts in various ways, such as through webinars and working with teams that had initiated feasibility studies subject to the act’s acceleration provisions.\nMany Corps headquarters, division, and district officials said that many of the act’s coordination and administration provisions are similar to long- standing practices they followed, based on requirements in other laws such as NEPA. For example, according to many Corps headquarters, division, and district officials, the WRRDA 2014 provision to develop a coordinated environmental review process is generally consistent with NEPA and its implementing regulations. According to a Corps headquarters official, the WRRDA 2014 coordination provisions add specificity to the Corps’ existing practices by detailing which agencies to involve in coordination efforts and when to involve them.\nThe Corps also has taken steps to address one of the WRRDA 2014 provisions related to public transparency. Specifically, the Corps is to annually prepare, and make publicly available, a list of feasibility studies subject to the acceleration provisions that do not have adequate funding to make substantial progress toward completion of the study. Corps headquarters and district officials said that in the past the Corps funded several hundred active feasibility studies at any given time. While this allowed for many feasibility studies to remain active and make some progress, it also made less funding available for individual feasibility studies and slowed the progress of some studies, according to several Corps officials. According to a February 2012 Corps policy memo, agency leadership initiated a process to review all active feasibility studies to determine which were the most viable for congressional funding. The Corps re-scoped or deactivated the remainder of the feasibility studies. Many Corps district and headquarters officials told us this allowed for increased funding for and progress to be made on the feasibility studies that remained active. As a result of the Corps’ efforts, headquarters officials said the number of active Corps feasibility studies decreased from 653 in 2012 to 89 at the end of 2018. In addition, they said that because active feasibility studies now have greater levels of funding, the agency has not had to report any active feasibility studies that do not have adequate funding.\nHowever, as of May 2019, the Corps has not addressed other WRRDA 2014 provisions related to public transparency and environmental review. These include the following:\nStatus and progress database. By June 2015, the Corps was to establish and maintain an electronic database and, in coordination with other federal and state agencies, issue reporting requirements to make publicly available the status and progress regarding compliance with applicable requirements of NEPA and other required approval or action.\nPerformance measurement. The Corps is to establish a program to measure and report on progress made toward improving and expediting the planning and environmental review process.\nEnvironmental review guidance. The Corps is to (1) prepare, in consultation with the Council on Environmental Quality and other federal agencies with jurisdiction over actions or resources that may be impacted by a project, guidance documents that describe the coordinated environmental review processes the Corps intends to use to implement reforms for planning projects, and (2) issue guidance on the use of programmatic approaches for the environmental review process that carries out specified actions and meets specified requirements.\nIn other instances, the Corps has taken some initial steps but has not fully addressed certain WRRDA 2014 provisions. Specifically, not later than 180 days after the act’s enactment, the Corps was to survey the agency’s use of categorical exclusions in projects since 2005, publish a review of that survey, and solicit requests from other federal agencies and project sponsors for new categorical exclusions. By June 2015, the Corps was to propose a new categorical exclusion if it identified a category of activities that merited such action. As of May 2019, the Corps had conducted an internal survey and solicited input through the Federal Register on its procedures for implementing NEPA. However, Corps headquarters officials said they had not published a review of its survey, targeted requests for new categorical exclusions to other federal agencies and nonfederal sponsors, or proposed new exclusions as merited. Appendix II contains a more detailed summary of the WRRDA 2014 acceleration provisions, along with information on Corps actions to address each provision.\nCorps headquarters officials identified resource constraints as the primary reason for not addressing some public transparency and environmental review provisions. For example, to develop environmental review guidance, Corps headquarters officials told us that they would need to conduct various steps, including drafting guidance, conducting administrative review with other federal agencies, soliciting public comment, and revising the guidance. Headquarters officials also said they were involved in a similar effort with other federal agencies to develop environmental review guidance in a publication called the 2015 Red Book, an effort they characterized as labor intensive.\nIn addition, to establish a database to publicly report on the status of its feasibility studies, Corps headquarters officials said they would need to stand up and maintain a website similar to the Federal Infrastructure Permitting Dashboard for federal infrastructure projects. The Corps is one of many agencies involved in the effort to create and maintain this dashboard, and Corps headquarters officials said the effort was a resource-intensive process. Corps headquarters officials said that while they have not created the database required by WRRDA 2014, relevant information is available through the agency’s annual public reports on active and recently completed feasibility studies’ milestones and schedules. Corps headquarters officials also said the status of feasibility studies is often available on the Corps districts’ websites. However, this information is not easily accessible without knowing which district office is responsible for a given feasibility study.\nWhile Corps officials identified resource constraints as the primary reason for not addressing certain WRRDA 2014 provisions, they did not provide specific estimates on the resources that the Corps would need to address these provisions. In addition, the officials said they do not have a plan that addresses how and when they intend to implement the provisions they have yet to address. We have previously reported on leading practices for sound planning and have found that implementation plans that include resource estimates help ensure organizations achieve their goals and objectives. Such a plan would better position the Corps to address the remaining WRRDA 2014 provisions related to environmental review and public transparency.", "The Corps monitors feasibility studies and has done some review of its acceleration reforms but has not conducted a comprehensive evaluation of the impacts of these reforms. In terms of monitoring, Corps policy states that division and district leaders are responsible for monitoring feasibility studies within their areas of responsibility. According to Corps policy, districts are to prepare a quality control plan for each project to ensure compliance with all technical and policy requirements, and divisions are responsible for quality assurance by ensuring that districts plan, design, and deliver quality projects on schedule and within budget. Corps headquarters officials also said they monitor the progress of feasibility studies during management meetings, during which they discuss the cost and status of feasibility studies as well as the quality of those studies; such meetings are largely led by Corps management or by the Corps’ Planning Advisory Board, which oversees the quality of feasibility studies.\nIn addition to monitoring individual feasibility studies, Corps headquarters officials said they have conducted some broader reviews of how the acceleration reforms are progressing. For example, they conducted a trend analysis in October 2018 and again in April 2019 to identify the reasons why some feasibility studies have received exceptions from the timing and cost requirements of the 3x3x3 rule. These analyses, among other things, identified that some studies were too complex to be completed within 3 years or for less than $3 million, according to Corps officials. Furthermore, based on their experiences with various reform efforts, Corps officials said that they have been making real-time enhancements. For example, based on input from the Corps’ Planning Advisory Board, Corps leadership has called for the agency to clarify its updated approach to risk management, according to Corps officials. These officials said each component within the Corps that is involved in conducting feasibility studies is to issue internal guidance on its risk management approach.\nHowever, Corps headquarters officials said the Corps has not conducted a comprehensive evaluation of acceleration reforms to determine what impacts the reforms have had and whether any modifications to those reforms are needed. Corps and other agency officials and stakeholders we interviewed differed in their views of the acceleration reforms’ impacts on the cost, time frames, and quality of feasibility studies:\nCost and time frames for completing feasibility studies. Many Corps officials said they agreed with the overall goals of reducing costs and increasing the speed with which feasibility studies are carried out. Some Corps headquarters and district officials said SMART Planning and the 3x3x3 rule are changing the Corps’ culture around the amount of time and cost a feasibility study should take. However, several Corps district and headquarters officials said some Corps staff are experiencing difficulties with the cultural change represented by SMART Planning and the 3x3x3 rule. For example, a Corps district official said that in the past some Corps navigation economists had one year to complete some modeling analyses for feasibility studies, but they now are to complete such work in 90 days due to the constraints of SMART Planning and the 3x3x3 rule, which has been a difficult adjustment. In addition, many Corps headquarters, division, and district officials raised concerns that the cost limitation of $3 million may not be realistic given differences in cost across geographic locations or the loss of spending value over time caused by inflation.\nQuality of feasibility studies. Several Corps district officials we interviewed said they like the Corps’ new policy of involving other agencies earlier in the process and with more frequency. They said they believe this approach has improved coordination with other agencies—by, for example, inviting the other federal agencies to join the Corps in a formal initiation meeting—which can in turn improve the overall quality of a feasibility study. However, some FWS and NMFS officials said they would like to be more involved and have better communication with the Corps than they currently do, such as throughout the feasibility study process rather than just at the beginning of a study and at the end when their formal review is requested. Similarly, several Corps headquarters, district, and division officials have commended the agency’s new approach to risk management and stated that they aim to provide partner agencies with the information they need to conduct their work on the feasibility study. However, many Corps, FWS, and NMFS officials and nonfederal sponsors we interviewed said they were concerned that this new approach might result in insufficient information for making decisions, which could affect the quality of feasibility studies. For example, for six of the seven studies that we reviewed, officials from FWS and NMFS said it has become more difficult for them to provide meaningful input on the feasibility study alternatives considered because the Corps provides them with less detailed information than in the past.\nCorps officials and other stakeholders we interviewed also expressed concern about possible impacts of the 3x3x3 rule on the quality of feasibility studies. For example, many Corps headquarters, division, and district officials said that because the 3x3x3 rule puts constraints on costs and time frames, if the scope of a feasibility study is not similarly reduced, it can affect the study’s quality. In addition, nonfederal sponsors for four of the seven studies we examined expressed concerns with the 3x3x3 rule; three of these four nonfederal sponsors said they believe that the Corps is more focused on meeting the cost and schedule timelines than on the needs or quality of the study.\nSenior Corps headquarters officials said they are confident that the cost and duration of feasibility studies has decreased overall as a result of the acceleration reforms but could not provide us with documentation to support this observation. Specifically, officials said in March 2019 that based on analysis they had recently conducted, most feasibility studies are now being completed within 4 years and at a lower cost than feasibility studies undertaken prior to implementation of the 3x3x3 rule. While these results may not meet the 3x3x3 rule, officials said that these feasibility studies were the first subject to the acceleration reforms and may not depict the likelihood of future feasibility studies meeting the rule. This is, in part, because Corps officials who are working on new feasibility studies have the benefit of the past several years of experience working with the SMART Planning process. Further, Corps officials said that they do not have formal documentation summarizing how the acceleration reforms have affected the quality of their feasibility studies overall, but they monitor individual feasibility studies, as described earlier.\nAccording to Corps headquarters officials, the Corps has not conducted a more comprehensive evaluation of the broader impacts of the acceleration reforms because it has only completed a small number of feasibility studies since 2012 under the acceleration reforms, and officials are focused on monitoring their ongoing individual studies. These officials said they see the value in conducting such an evaluation as they complete more studies but that they have not developed formal plans to do so. Effective program evaluation includes an evaluation plan—that is, a plan that takes into account the questions guiding the evaluation, the constraints faced in studying the program, and the information needs of the intended users. Developing an evaluation plan would help position the Corps to conduct a timely and effective review of the impacts of the acceleration reforms overall.", "The Corps has not maintained complete data on the 10 key milestones in its central data system for more than half of the feasibility studies we reviewed. Specifically, for the 19 feasibility studies we reviewed, we found that: seven studies in the Corps’ central data system included complete data for all 10 key milestones, and twelve studies were missing one or more milestones in the data system.\nTable 1 provides information on the key milestone data included in the Corps’ central data system for the 19 feasibility studies we reviewed.\nMany Corps headquarters and division officials said that Corps officials vary in their knowledge of its central data system. Many headquarters, division, and district officials we interviewed also acknowledged that, in general, the milestone information entered into the Corps’ central data system can be inconsistent across different feasibility studies.\nCorps headquarters officials said agency policy requires district officials conducting feasibility studies to enter data on 10 key milestones for each study into the agency’s central data system. However, while the policy identified the 10 milestones, it only explicitly requires that two of the 10 milestones be entered into the agency’s central data system.\nSpecifically, the policy states that officials are to enter into the Corps’ data system the milestones for (1) feasibility study initiation and (2) posting of the plan for peer and stakeholder review. Corps officials said the intent of the policy is for all 10 key milestones to be entered into the central data system but acknowledged that the policy may not be clear. In part to assist district officials in conducting feasibility studies, Corps headquarters officials created a template, which includes information on nine of the 10 key milestones. In addition, a Corps district official said she was unclear on the agency’s expectations about which milestones to enter into the central data system. Corps headquarters officials said they contact district officials responsible for feasibility studies to obtain up-to- date information and ensure they understand the progress of each feasibility study. While this may help to ensure accuracy and completeness of milestone data on feasibility studies, several Corps district officials said the process of responding to such data calls can be time consuming and take them away from their core responsibilities. Without clarifying its policy to help ensure district officials enter data on all key milestones for feasibility studies into its central data system, the Corps will not have complete data to efficiently monitor the progress of feasibility studies.", "The Corps has taken steps to address the acceleration provisions in WRRDA 2014, such as those related to coordination. However, it has not fully addressed provisions related to environmental review or public transparency. Corps officials said they do not have a plan that addresses implementation of remaining provisions or the resources that will be required to implement them. An implementation plan that includes resource estimates would better position the Corps to address the remaining provisions in WRRDA 2014.\nFurther, the Corps monitors the progress of feasibility studies and has conducted some reviews of the individual acceleration reforms. However, the agency has not developed an evaluation plan for its acceleration reforms to better understand the reforms’ impacts overall and determine whether any modifications to those reforms are needed. Developing such a plan would enable the Corps to conduct a timely and effective evaluation.\nFurther, without clarifying its policy to ensure district officials enter all key milestone dates for feasibility studies into its central data system, the Corps will continue to lack complete data to efficiently monitor the progress of feasibility studies.", "We are making the following three recommendations to the Department of Defense: The Secretary of the Army should direct the Assistant Secretary of the Army for Civil Works to develop an implementation plan that includes resource estimates to address the remaining WRRDA 2014 acceleration provisions. (Recommendation 1)\nThe Secretary of the Army should direct the Assistant Secretary of the Army for Civil Works to develop a plan to conduct a comprehensive evaluation of the impacts of the agency’s feasibility study acceleration reforms. (Recommendation 2)\nThe Secretary of the Army should direct the Assistant Secretary of the Army for Civil Works to clarify its policy to help ensure district officials enter data on all key milestones for feasibility studies into its central data system. (Recommendation 3)", "We provided a draft of this report to the Department of Defense for review and comment. In its written comments, reprinted in appendix III, the Department concurred with our recommendations. The Department commented that we should redirect our recommendations to the Assistant Secretary of the Army for Civil Works rather than to the Chief of Engineers and the Commanding General of the U.S. Army Corps of Engineers, which we did. The Department also provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, the Secretary of the Department of the Interior, the Secretary of Commerce, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "This report examines the extent to which the U.S. Army Corps of Engineers has (1) addressed the feasibility study acceleration provisions under the Water Resources Reform and Development Act of 2014 (WRRDA 2014), (2) reviewed the impact of its feasibility study acceleration reforms, and (3) maintained complete milestone data for feasibility studies in its central data system.\nTo conduct our work, we reviewed the first 19 feasibility studies subject to the WRRDA 2014 feasibility study acceleration provisions, among other things. These feasibility studies included those that (1) were initiated after June 10, 2014, the date WRRDA 2014 was enacted, through August 15, 2018, and (2) for which an environmental impact statement (EIS) is prepared. We chose to review studies through August 15, 2018, because after that date the Corps initiated several feasibility studies using funding in a supplemental appropriation the Corps received in February 2018 to conduct work in response to recent large hurricanes, and Corps officials said they planned to use a somewhat different approach to conducting these studies. For each study, we reviewed Corps guidance on the agency’s process for planning feasibility studies and other related documentation. We examined information from the Corps on the progress and status of the19 feasibility studies. We also reviewed information for each feasibility study on the Corps’ business line or program, the district or division overseeing the study, and information on which studies had received exceptions from the 3x3x3 rule.\nWe also conducted a more in-depth review of seven of these 19 feasibility studies. We selected these seven studies because they represent different types of water resources development projects, were at varying stages of completion, and are geographically dispersed. The seven studies, and the Corps districts leading these studies, are:\nCoastal Texas Protection and Restoration (Galveston District);\nHouston Ship Channel Expansion Channel Improvement Project (Galveston District);\nMatagorda Ship Channel (Galveston District);\nGulf Intercoastal Waterway: Brazos River Floodgates and Colorado River Locks Systems (Galveston District);\nMississippi River Ship Channel, Gulf to Baton Rouge, Louisiana General Reevaluation Report (New Orleans District);\nSacramento River, General Reevaluation Report (Sacramento\nPort of Long Beach Deep Draft Navigation Improvements (Los Angeles District).\nFor each of these seven studies, we reviewed project management plans and other project documents, such as draft feasibility studies, if available. From August 2018 through November 2018, we visited the four district offices that led these seven studies, including the Corps’ Galveston, Los Angeles, New Orleans, and Sacramento district offices. During these visits, we discussed the status and progress of each of these feasibility studies and the Corps’ coordination with other federal agencies and nonfederal sponsors, among other things. For each study, we interviewed officials from nonfederal sponsors—such as the state or local government associated with individual studies—and from federal partners—including the Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS). We selected FWS and NMFS because of the important role they play in reviewing environmental aspects of Corps feasibility studies and their role in the 2015 joint publication on coordination. We also interviewed Corps officials at the three divisions overseeing the districts that conducted the feasibility studies we selected. This included officials from the Corps’ South Pacific, Mississippi Valley, and Southwestern divisions. While the seven studies provide illustrative examples, they are not generalizable to all of the Corps’ feasibility studies for which an EIS is prepared.\nWe developed and used four standard sets of semi-structured interview questions for the following groups: the (1) Corps district office officials conducting the seven selected feasibility studies, (2) FWS and NMFS officials working with the Corps on these studies, (3) Corps division officials overseeing each study, and (4) nonfederal sponsors who worked with the Corps on each study.\nTo characterize the views of those we interviewed throughout the report, we defined modifiers to quantify officials’ views as follows: “some” refers to responses from two to four Corps officials and/or stakeholders; “several” refers to responses from five to seven Corps officials and/or stakeholders; and “many” refers to responses from eight or more Corps officials and/or stakeholders.\nTo examine the extent to which the Corps addressed the WRRDA 2014 feasibility study acceleration provisions, we compiled a list of the provisions. We then reviewed the Corps’ documentation related to the implementation of these provisions, including agency guidance and policies. We compared this information with the WRRDA 2014 acceleration provisions. To do this, we created categories for the acceleration provisions and grouped the provisions by category.\nTo examine the extent to which the Corps has reviewed the impact of its acceleration reforms, we reviewed Corps policy, guidance, training, and other documentation on implementation of those reforms. We use the term acceleration reforms to refer to the requirements that new feasibility studies are to be completed in less than 3 years and at a cost of not more than $3 million, the Corps’ risk management of feasibility studies through its new SMART Planning process, and the WRRDA 2014 acceleration provisions. We reviewed documentation from the Corps on the feasibility studies that have received exceptions from the 3x3x3 rule. We interviewed Corps headquarters officials to learn what, if any, (1) new policies were in place to help division and district staff implement the reforms; and (2) review or analysis headquarters officials had completed of the impacts of the reforms on the cost, time frames, or quality of feasibility studies. We also interviewed Corps districts and division officials who were responsible for the seven studies about how the acceleration reforms were working, as well as FWS and NMFS officials and nonfederal sponsors about their views of the impacts of the new processes on their work on these feasibility studies. We compared this information with program evaluation guidance.\nTo examine the extent to which the Corps has maintained complete milestone data for feasibility studies in its central data system, we obtained milestone data from the system for the 19 Corps feasibility studies in our review. We analyzed the milestone data to determine which milestone dates were in the system and then worked with Corps headquarters officials to verify that information. We assessed the reliability of these data by reviewing related documentation and interviewing knowledgeable officials, among other things. We determined that the data were sufficiently reliable for the purpose of understanding which districts and divisions conducted feasibility studies and for understanding the types of milestones that were entered into the central data system. However, as discussed in this report, we determined that the milestone data were not sufficiently reliable for other purposes. We reviewed data for all feasibility studies in our review to determine whether they conformed to Corps expectations on what milestone data should be in the system.\nWe estimated the median time it took the Corps to complete a feasibility study for which an EIS was prepared. To do this, we obtained from the Corps website the names of all feasibility studies completed with a Chief’s Report from July 2008 through June 2018 and the dates they were completed. We verified with Corps headquarters officials that its list of studies with a Chief’s Report was current for that time frame. For each of these feasibility studies, we then found the associated notice of intent to complete an EIS as published in the Federal Register. While the date the Corps filed a notice of intent to complete an EIS is not the initiation date for the feasibility study, we used it as a proxy since Corps headquarters officials said that, in the past, the notice of intent was filed soon after a study was initiated. We calculated the time between the date the notice of intent was filed and the date of the Chief’s report to arrive at an estimate of the amount of time the each feasibility study took to complete. We then calculated the median time it took to complete these feasibility studies.\nWe conducted this performance audit from April 2018 to July 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform our audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Appendix II: U.S. Army Corps of Engineers Project Acceleration Statutory Provisions and Corps Actions Related to Each Provision provides guidance, independently evaluates, and approves the document before taking subsequent action; and ensures the project sponsor complies with all design and mitigation commitments.\nIn addition, any NEPA documents prepared in this way are to be adopted and used by any federal agency when making any determination to the same extent the agency could adopt or use a document prepared by another federal agency under NEPA.\nCategory name Coordination and Administration Designating Jurisdictional Agencies GAO summary of statutory provision For all federal, state, and local governments and Indian tribes that may have jurisdiction over a project or that may be required to review some aspect of the feasibility study or make a determination on issuing a permit or other decision, the Corps must: identify these agencies as early as practicable, and invite these agencies to participate or coordinate as early as practicable and set a deadline for response.\nCorps actions related to provision The Corps issued its WRRDA 2014 acceleration guidance in March 2018. as well as the Principles and Guidelines and Planning Guidance Notebook.\nAny federal agency invited by the Corps will be designated as a cooperating agency unless that agency follows certain specified steps.\nPlan for Coordinating Input and Completing Environmental Review The Corps, after consultation with and with the concurrence of relevant entities is to establish a plan for coordinating public and agency participation in, and comment on, the environmental review process for each feasibility study or category of studies. As soon as practicable but not later than 45 days after the close of the public comment period on a draft Environmental Impact Statement (EIS), the Corps, after consultation with and with the concurrence of relevant entities, also is to establish, as a part of the coordination plan, a schedule for completing the environmental review process. In doing so, the Corps is to consider certain factors, provide the schedule to relevant entities, and make it available to the public.\nThe Corps issued its WRRDA 2014 acceleration guidance in March 2018. In addition, a Corps official indicated that portions of this provision are implemented under the Corps’ NEPA procedures.\nThe Corps issued its WRRDA 2014 acceleration guidance in March 2018. not more than 60 days for agency or public comment on a draft EIS, and not more than 30 days for agency and public comment on other environmental review documents.\nGAO summary of statutory provision Issue Identification and Resolution The Corps, the cooperating agencies, and any participating agencies are required to work cooperatively to identify and resolve issues that could delay completion of the environmental review process or result in the denial of any approval required for the project study under applicable laws.\nCorps actions related to provision The Corps issued its WRRDA 2014 acceleration guidance in March 2018. In addition, a Corps official indicated that portions of this provision are implemented under the Corps’ NEPA procedures and Planning Guidance Notebook. Many Corps district officials said they have used various strategies, such as meetings, to resolve issues with other agencies.\nThe Corps is to make information available to the cooperating and participating agencies as soon as practicable in the environmental review process regarding the environmental and socioeconomic resources located within the project area and the general locations of the alternatives under consideration. Based on information from the Corps, cooperating and participating agencies are to identify as early as practicable any issues of concern regarding the potential environmental or socioeconomic impacts of the project, including any issues that could substantially delay or prevent an agency from granting a permit or other approval that is needed for the project study.\nOn the request of a participating or cooperating agency or project sponsor, the Corps is to convene an issue resolution meeting with the relevant entities to resolve issues that may (1) delay completion of the environmental review process, or (2) result in denial of any approval required for the project study under applicable laws. Such a meeting is to be held not later than 21 days after the Corps receives the request for the meeting unless the Corps determines there is good cause to extend that deadline. Additionally, the Corps may convene an issue resolution meeting at its discretion, regardless of whether such a meeting is requested. If resolution cannot be achieved within 30 days of an issue resolution meeting and the Corps determines that all information necessary to resolve the issue has been obtained, the Corps is to forward the dispute to the heads of the relevant agencies for resolution.\nCorps actions related to provision The Corps issued its WRRDA 2014 acceleration guidance in March 2018.\nThe Corps must notify the Senate Committee on Environment and Public Works and the House Committee on Transportation and Infrastructure as soon as practicable. The Corps must continue notifications every 60 days thereafter until all decisions have been made by the federal agency. The amount of funds made available to support the office of the head of that federal agency must be reduced by certain specified amounts, subject to certain limitations.\nThe Corps, NMFS, and FWS jointly issued a coordination guide for conducting feasibility studies in September 2015. The Corps also issued its WRRDA 2014 acceleration guidance in March 2018.b In addition, a Corps official indicated that portions of this provision are implemented under the agency’s NEPA procedures and Planning Guidance Notebook,f as well as the Principles and Guidelines.e\nUpon request by a state or project sponsor, and to the maximum extent practicable and appropriate, as determined by the agencies, the Corps and other federal agencies with relevant jurisdiction in the environmental review process are to provide technical assistance to the state or project sponsor in carrying out early coordination activities. If requested by a state or project sponsor, the Corps, in consultation with other federal agencies with relevant jurisdiction, may establish memoranda of agreement with certain entities to carry out early coordination activities, subject to certain limitations.\nNew Information The Corps is to consider information received after the close of a comment period if the information satisfies the requirements for a supplemental EIS under NEPA regulations.\nThe Corps issued its WRRDA 2014 acceleration guidance in March 2018.\nCorps actions related to provision The Corps issued its WRRDA 2014 acceleration guidance in March 2018.\nWith respect to the environmental review process for any project study, the Corps is to have the authority and responsibility to (1) take actions as are necessary and proper and within the Corps’ authority to facilitate the expeditious resolution of the environmental review process for the project study, and (2) prepare or ensure that any required EIS or other environmental review document required to be completed under NEPA is completed in accordance with applicable federal law.\nPublishing Information on Studies with Inadequate Funding to Make Substantial Progress The Corps is to annually prepare and make publicly available a list of feasibility studies that the agency does not have adequate funding to make substantial progress toward the completion of the study.\nThe Corps has undertaken a multi-year effort to focus funding on the feasibility studies the agency determined are the most viable options for Congressional funding and then re-scope or deactivate the remaining studies.\nThe Corps has not taken action as of May 2019. not later than June 10, 2015, establish and maintain an electronic database and, in coordination with other federal and state agencies, issue reporting requirements to make publicly available the status and progress with respect to compliance with applicable requirements of NEPA and other required approval or action; and publish the status and progress of any such required approval or action on a feasibility study.\nCategorical Exclusions Not later than 180 days after June 10, 2014, the Corps is to: conduct an internal survey on its use of categorical exclusions since 2005, publish a review of the survey that includes a description of certain specified information, and solicit requests from other federal agencies and project sponsors for new categorical exclusions.\nAs of May 2019, the Corps had conducted an internal survey and solicited public input through the Federal Register on its procedures for implementing NEPA. However, Corps headquarters officials said they had not published a review of its survey, targeted requests for new categorical exclusions to other federal agencies and nonfederal sponsors, or proposed new exclusions as merited.\nIf the Corps identifies a category of activities that merits establishing a new categorical exclusion, the agency is also to propose new categorical exclusions by June 10, 2015.\nPerformance Measurement The Corps is to establish a program to measure and report on progress made toward improving and expediting the planning and environmental review process.\nThe Corps has not taken action as of May 2019.\nGAO summary of statutory provision Guidance on Coordinated Environmental Review The Corps, in consultation with the Council on Environmental Quality and other federal agencies with jurisdiction over actions or resources that may be impacted by a project, is to prepare guidance documents that describe the coordinated environmental review processes that the Corps intends to use to implement the reforms for the planning of projects.\nCorps actions related to provision The Corps has not taken action as of May 2019. Corps officials said they have reached out to the Council on Environmental Quality several times and are waiting for feedback on preparing this guidance.\nGuidance on Programmatic Approaches to Environmental Review The Corps is to issue guidance on the use of programmatic approaches to carry out the environmental review process that carries out specified actions and meets specified requirements.\nThe Corps has not taken action as of May 2019.\nU.S. Army Corps of Engineers, Implementation Guidance for Section 1005 of the Water Resources Reform and Development Act of 2014 (WRRDA 2014), Project Acceleration (Washington, D.C.: March 2018). Pub. L. No. 91-190, 83 Stat 852 (1970) (codified as amended at 42 U.S.C. §§ 4321-4347).", "", "", "", "In addition to the contact named above, Vondalee R. Hunt (Assistant Director), Candace Carpenter (Analyst in Charge), Matthew Levie, and Rebecca Makar made key contributions to this report. In addition, Michael Armes, Justin Fisher, Gwen Kirby, Patricia Moye, and Kiki Theodoropoulos contributed to the report." ], "depth": [ 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_title", "", "", "h3_full", "h0_full", "h1_full", "h2_full", "h0_full h2_full", "", "", "h0_full h3_full", "h0_full", "", "", "", "" ] }

{ "question": [ "How is the U.S. Army Corps of Engineers addressing feasibility study acceleration provisions?", "How did the Corps implement a coordination provision?", "To what extent have the Corps implemented other provisions?", "How does the Corps plan on addressing these provisions?", "How would such a plan benefit Corps?", "To what extent does the Corps monitor its acceleration reforms?", "What consensus exists regarding the effects of the reforms?", "Why haven't the Corps conducted a comprehensive impact review?", "How could an evaluation plan benefit the Corps?", "To what extent does the Corps maintain complete milestone data for feasibility studies?", "According to Corps officials, how does this compare to agency policy?", "How does this compare to the explicit text of the policy?", "Why is the lack of policy clarity a cause for concern?", "What does WRRDA 2014 require of the Corps?", "What does WRRDA 2014 require of GAO?", "What does this report address?", "How did GAO collect data for this report?" ], "summary": [ "The U.S. Army Corps of Engineers has taken steps to address some feasibility study acceleration provisions under the Water Resources Reform and Development Act of 2014 (WRRDA 2014) but not others.", "For example, to implement a provision related to coordination, the Corps in September 2015 issued guidance emphasizing the importance of early coordination with other federal agencies to avoid delays later in the process.", "However, the Corps has not taken steps to address other provisions, such as one that calls for the Corps to establish a database to make publicly available information on the status of feasibility studies, citing resource constraints.", "The Corps does not have a plan to address these other provisions.", "A plan that includes resource estimates would better position the Corps to address the remaining acceleration provisions.", "The Corps regularly monitors feasibility studies and has conducted some reviews of its acceleration reforms, such as an analysis that found that some studies were too complex to complete within the agency's timing and cost requirements—i.e., within 3 years and for less than $3 million. However, the Corps has not comprehensively evaluated the reforms' impacts.", "Corps officials and stakeholders expressed differing views on the reforms' impacts on the costs, time frames, and quality of feasibility studies. For example, many Corps officials GAO interviewed said the reforms' overall goals to reduce studies' cost and time frames were positive, but others raised concerns, such as that the $3 million cost limitation may not be realistic for different geographic areas.", "Corps officials said they have not conducted a comprehensive impact review in part because they are focused on monitoring ongoing studies. These officials said they see the value in conducting such a review as they complete more studies, but they have not developed a plan to do so.", "Developing an evaluation plan would help the Corps conduct a timely and effective review.", "The Corps has not maintained complete milestone data in its central data system for the 19 feasibility studies GAO reviewed (see figure). For example, 12 studies did not include data for one or more milestones.", "Corps officials said agency policy requires the entry of information on 10 key milestones in the agency's central data system.", "However, GAO found that the policy only explicitly requires that two of the key 10 milestones be entered into the agency's central data system.", "Without clarifying its policy to help ensure officials enter data on all milestones in the central data system, the Corps will not have complete data to efficiently monitor the progress of feasibility studies.", "WRRDA 2014 requires the Corps to, among other things, conduct activities to accelerate the completion of feasibility studies.", "The act also includes a provision for GAO to assess acceleration reforms.", "This report examines the extent to which the Corps has (1) addressed the WRRDA 2014 feasibility study acceleration provisions, (2) reviewed the impact of its feasibility study acceleration reforms, and (3) maintained complete milestone data for its studies.", "GAO reviewed WRRDA 2014 and Corps documents; reviewed 19 feasibility studies subject to the act's acceleration provisions; analyzed data on key milestones; and interviewed Corps officials and stakeholders." ], "parent_pair_index": [ -1, 0, 0, 2, 3, -1, 0, 0, 2, -1, 0, 1, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 1, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "Federal Funding for Climate Change", "Climate Change Initiatives", "The Global Change Research Program (USGCRP)", "Clean Energy Technologies", "International Assistance", "Climate Adaptation, Preparedness, and Resilience", "Principal Observations and Legislative Issues" ], "paragraphs": [ "", "The federal government has funded work to address global climate change for more than four decades. An initial focus on science has expanded to encompass both mitigation and adaptation, involving at least 18 agencies plus the Executive Office of the President. The work supported is conducted by universities, national laboratories, private contractors, non-governmental organizations, and some federal agencies. Most of the funding has supported scientific and, since the 1990s, technological research and development (R&D).\nGiven uncertainties regarding the risks of future climate change, the federal climate strategy has aimed at improving the information available for decision-making and reducing the costs of technologies that could help abate the risks. A growing component has been federal planning and efforts to adapt to climate change. Complementing the science and technology initiatives have been regulatory actions; programs to build capacity in private, state, local, and international entities to address climate change; and tax incentives to stimulate deployment of low greenhouse gas-emitting technologies. Many of these initiatives are identified in the Obama Administration's recently announced Climate Action Plan, which stated three main prongs:\ncutting carbon pollution in America; preparing the United States for the impacts of climate change; and leading international efforts to address global climate change.\nFederal funding for these activities described in this report differs across these priorities and has shifted over time. Policy instruments and programs depend on funding to differing degrees to be effective; some rely on large amounts of direct federal investment (e.g., in federal R&D) while others primarily require support for administrative expenses.\nAs congressional and public debate continues with regard to whether and how to address climate change, the priorities for federal funding are likely to evolve further. Members of Congress have expressed a range of views about funding for climate change-related activities. Some question the relative priorities among initiatives or whether the risks of climate change merit the magnitude of federal expenditures and of federal policies on the economy in exchange for benefits that would mostly accrue to future generations, people in other countries, and stability of Earth systems. Other Members point to scientific and economic research to underpin their support for increasing funding to address climate change. Congressional debate on climate change funding takes place in the broader context of stark choices among competing fiscal demands.", "The Office of Management and Budget (OMB) and federal agencies have identified approximately $77 billion of budget authority available to federal agencies from Fiscal Years 2008 through 2013 for climate change activities. The large majority—more than 75%—funded technology development and deployment, mostly through the Department of Energy (DOE). More than one-third of the identified funding during this period was appropriated in the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ), enacted February 17, 2009.\nThis CRS report presents information available on federal budget authority in FY2008 through FY2013, and the President's FY2014 request, for climate change activities of federal departments and agencies. The amounts are reported by OMB, and occasionally by individual departments and agencies where noted. CRS relies on OMB and agency sources of data since most climate-related funding is appropriated at the subaccount level and therefore is not directly identifiable in legislation and committee reports. OMB has produced a \"budget cross-cut\" for climate change activities when it has been required by language in appropriations bills. Individual agencies often report funding for specific programs, but that information may not be comprehensive or comparable to information on funding for climate change activities in other programs or agencies. Further, when agencies cooperate on programs, double-counting of funding could occur if one were simply to add up what the agencies each report. Some of the OMB and agency sources may report inconsistent or incomplete data. It is CRS's judgment that the amounts in the following tables likely underestimate total federal funding relating to climate change for the period, perhaps on the order of tens of millions of dollars (i.e., not billions). Information is not available for all programs for all years, as explained below.", "Tables in this report detail funding by agency in terms of budget authority. Funding information is provided for several of the major federal initiatives which address climate change, including the following:\nthe Global Change Research Program; Clean Energy Technologies, largely corresponding to the former Climate Change Technology Program; International Assistance, sometimes called the Global Climate Change Initiative; and Climate Adaptation, Preparedness, and Resilience.\nThe President's request for FY2014 contains $11.6 billion for federal expenditures on programs. In the request, 23% would be for science (the U.S. Global Change Research Program or USGCRP), 68% for \"clean energy\" technology development and deployment, 8% for international assistance, and 1% for adapting to climate change. The Office of Management and Budget (OMB) also reports energy tax provisions that may reduce greenhouse gas (GHG) emissions would reduce tax revenues by $9.8 billion.\nThe Office of Management and Budget (OMB) also reports estimates of Energy Tax Provisions and Energy Grants in Lieu of Tax Provisions that may stimulate deployment of low GHG-emitting technologies. These fiscal incentives serve as exemptions to the baseline tax structure, and usually result in a reduction in the amount of tax owed. A review of these provisions is beyond the scope of this CRS report, though the OMB estimates are provided in Table 4 .\nMinor inconsistencies sometimes exist in alternative reports on funding, perhaps due to rescissions or reprogramming, or because a program may be cast as climate change-related in some contexts but not in others. The reported initiatives are cross-agency \"roll-ups\" of programs and funding in the agencies, and information on some programs is available only to the degree that the agency has reported funding to OMB or Congress. Some activities, particularly those that consider or address potential impacts of climate change on federal programs or assets, likely existed prior to their being identified as climate change-related, so that funding may have occurred prior or in addition to activities listed in these tables. Other caveats about comparing or examining possible trends in funding are described in more detail in CRS Report RL33817, Climate Change: Federal Program Funding and Tax Incentives , by [author name scrubbed].\nThis CRS report also provides a series of reported enacted budget authority and tax provisions for climate change programs since FY2001, in Table 4 . One may presume that past numbers are increasingly inconsistent with present accounting the farther back in time, for reasons explained above. Nonetheless, the general magnitude of overall spending and the shifts in categories of spending may be useful to some. Figure 2 shows those estimates of historical budget authority since FY2001 to the FY2014 request, adjusted for inflation (i.e., in constant 2012 dollars).\nThrough most of the 1990s, most federal funding identified to address climate change was directed at improving the science, under the U.S. GCRP. As Figure 2 shows, by FY2001, investment in climate-related energy technology research, development, and deployment (Clean Energy Technologies) surpassed science (the U.S. GCRP) as the largest component of federal activities and has continued to increase its share since then; the share in FY2013 enacted budget authority shrunk slightly from FY2012, however. The one-time investment in climate-related technologies contained in the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) was notably large and still constitutes more than one-fifth of all identified federal expenditures since FY2001 (including the FY2014 request). Adaptation to climate change has been added to the identified federal expenditures since FY2010, but remains too small to be seen as a share on the time series figure.", "The U.S. Global Change Research Program (USGCRP) was mandated by Congress in the Global Change Research Act of 1990 ( P.L. 101-606 ). The USGCRP is intended to improve understanding of climate science, including the cumulative effects of human activities and natural processes on the environment; develop science-based resources to support policymaking and resource management; and communicate findings broadly among scientific and stakeholder communities. Thirteen departments and agencies participate in the USGCRP. The White House Office of Science and Technology Policy (OSTP) and the Office of Management and Budget (OMB) work with the USGCRP to establish research priorities and funding plans to help ensure that the program is aligned with the Administration's priorities and reflects agency planning.\nTable 1 below presents estimates for direct federal funding for the USGCRP from FY2008 through the FY2014 request. During the George W. Bush Administration, a second set of scientific research programs was identified and named the Climate Change Science Program. The CCSP is now merged into the USGCRP in the cross-cut budget.", "The Clean Energy Technologies (CET) efforts are intended to research, develop, and deploy technologies that would reduce GHG emissions compared to technologies currently commonly used. Besides federal R&D, CET includes a variety of voluntary partnership and grant activities.\nFunding provided by the CET initiative is intended to stimulate the development and use of selected energy technologies, including renewable, low-carbon fossil, and nuclear technologies as well as energy efficient technologies, products, and process improvements. Consequently, the large majority of CET budget authority has been in the Department of Energy.\nThe CET initiative is a recent iteration of the Climate Change Technology Program (CCTP) that was formally established administratively under President George W. Bush, which itself included a number of existing programs. The FY2014 budget request calls for an investment of nearly $7.9 billion in support of CET, a 30% and 37% increase in comparison to the enacted FY2012 and current FY2013 budget authority, respectively. These funds reflect the current Administration's priority for new technologies as a means to facilitate future GHG reductions and meet the President's GHG emissions reduction targets, in the range of 17% below 2005 levels by 2020 and approximately 83% below 2005 levels by 2050. Meeting the 2050 target would likely require radical change from the currently prevalent energy system.\nThe Department of Energy coordinated the CCTP inter-agency effort through a central office. It is unclear to what degree the current programs are coordinated as an inter-agency strategy, or through what mechanism. However, as is apparent in the budget figures below, most of the activities are within the Department of Energy.\nTable 2 presents estimates, to the extent they are available, for direct federal funding for the CCTP from FY2008 through the FY2014 request.", "The United States supports international financial assistance for global climate change initiatives in developing countries. Under the Obama Administration, this assistance has been articulated primarily as the Global Climate Change Initiative (GCCI), a platform within the President's 2010 Policy Directive on Global Development. The GCCI aims to integrate climate change considerations into U.S. foreign assistance through a range of bilateral, multilateral, and private sector mechanisms to promote sustainable and climate-resilient societies, foster low-carbon growth, and reduce emissions from deforestation and land degradation. The GCCI is implemented primarily through programs at three \"core\" agencies: the Department of State, the Department of the Treasury, and the U.S. Agency for International Development (USAID). Most GCCI activities at USAID are implemented through the agency's bilateral development assistance programs. Many of the GCCI activities at the Department of State and the Department of the Treasury are implemented through international organizations, including the United Nations Framework Convention on Climate Change's Least Developed Country Fund and Special Climate Change Fund, as well as multilateral financial institutions such as the Global Environment Facility, the Clean Technology Fund, and the Strategic Climate Fund.\nTable 3 presents estimates for federal budget authority for the GCCI from FY2008 through the FY2014 request.", "Funding does not appear to be reported by most agencies in support of their plans to adapt to climate change, or \"Adaptation Plans,\" as stipulated under Executive Order 13514 and reported since 2012 in agencies' Strategic Sustainability Performance Plans (SSPPs). Many agencies are in early stages of planning or implementation, and the related funding would in almost all cases be in the details of appropriations accounts, and therefore not readily available.\nOne exception is the Department of the Interior (DOI). The Secretary of Interior issued Secretarial Order 3289 in 2009 (amended in 2010), \"addressing the Impacts of Climate Change on America's Water, Land, and Other Natural and Cultural Resources.\" DOI has identified vulnerabilities to its missions and assets, as well as to tribes and their resources, and has developed plans and associated budgets to address those vulnerabilities. According to OMB, enacted budget authority for this purpose increased from $88 million in FY2012 to $90 million in FY2013 (after sequestration). The request for FY2014 was $110 million. These amounts do not include resources in the U.S. Geological Survey, as their efforts to provide related science to support the bureaus and other agencies are reported in the USGCRP.", "Over the past two decades, federal funding for climate change-related activities has expanded from scientific research, almost exclusively, to a wide variety of programs to (1) develop and disseminate technologies; (2) build an informational and analytical foundation for future policy actions; (3) plan for adaptation to actual or expected climate change; (4) assist private sector decision-makers and lower-income countries; and (5) address additional needs. Federal strategy on climate change largely reflects the aggregation of a variety of existing programs, presidential initiatives, and congressionally directed activities. Presidential initiatives have been built largely from existing programs, and agencies have contributed to shared program goals using existing resources and expertise. Priorities tend to be based on departmental missions and the degree of support for the input activities. As the debate continues over appropriate strategies to address climate change, the needs and priorities for funding are likely to evolve further.\nFederal budget for climate change-related programs is primarily aimed at investment and tax provisions aimed at stimulating energy technologies that may reduce GHG emissions. The Clean Energy Technologies category represents 68% of the President's request for FY2014. Over the period since FY2001, including the FY2014 request, these technology programs constitute more than 70% of all funding for identified climate change-related programs (excluding tax provisions). By itself, the one-time injection of resources in the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 )—almost entirely for energy technology development—is nearly one-quarter the cumulative spending from FY2001 through FY2013.\nSince FY2001, funding for climate change science has remained roughly constant, varying up or down by as much as 15% in real dollars (i.e., adjusted for inflation). Funding for science was near its real-dollar low in FY2008, and would almost reach a high if the FY2014 request were enacted. (The peak was $2,577 million in FY2003 in 2012 constant dollars.)\nInternational assistance, to facilitate capacity-building and efforts by selected, low-income countries to mitigate their GHG emissions and adapt to expected climate change, has nearly tripled from FY2001 to the current FY2013 budget authority. The FY2014 request proposed an increase of the current FY2013 amount by 9.5%, to $856 million. This is 8% of the President's request.\nAdaptation to climate change has grown in attention across the federal agencies, as well as across segments of the public and private sector. Although activities in the federal agencies have expanded, especially since 2009, little of this activity is reported in OMB's budget cross-cut. This omission probably reflects the relatively low level of effort in most agencies, and that efforts are typically add-ins to wider programs rather than stand-alone activities. For example, grants for coastal zone planning may incorporate effects of potential sea level rise and storm surges as one consideration among many in those plans. Only the Department of the Interior, which has a department-wide effort to identify and address vulnerabilities to the assets it manages, explicitly reports adaptation funds. This is less than 1% of the FY2013 funding across agencies.\nInterpreting how funding relates to levels of effort to address climate change is challenged by several reporting issues. Identifying actual funding for climate change activities is clouded by several ongoing issues, including the following:\nthe levels of aggregation of the budget request; changes in scope of what is reported; changes in accounting methods used over time; inconsistencies across agencies in defining and interpreting methods for reporting activities; lack of description by agencies for subaccount level climate change-related activities in their budget documentation; and omissions of reporting of some arguably climate-related activities in the overall program.\nIn light of these issues, the Government Accountability Office (GAO) investigated the Administration's reporting practices in 2005, 2006, and 2011. GAO recommended that the Administration provide greater clarity and consistency of reporting on federal funding for climate change activities. While some improvements were made following the 2006 GAO report, many issues persist, confounding analysis of climate change funding. The 2011 GAO report concluded that there were two key factors that \"complicate efforts to align funding with priorities\": (1) \"... federal officials do not have a shared understanding of strategic priorities\" and (2) \"... since mechanisms for aligning funding with priorities are nonbinding, they are limited when in conflict with agencies' own priorities.\" In addition, congressional priorities may differ from the President's goals and requests, further complicating alignment of goals and priorities.\nThe funding data described in this report derive primarily from OMB's series of Reports to Congress on Federal Climate Change Expenditures published through the requirements in various appropriation laws passed from 2002 through 2008, 2010, and 2012. In response to language included in FY2012 appropriations, OMB released its latest report on August 28, 2013. It appears that OMB produces these budget cross-cuts only when required by legislation. If the 113 th Congress finds data on climate change funding and programs useful for oversight and other legislative purposes, it may consider renewing requirements for reporting of climate change-related activities, including directions that would continue to improve clarity and consistency compared to previous reports.\nSome Members of Congress have expressed interest in how federal funding may reflect and enable the Obama Administration's overall strategy, and priorities within it, to address climate change. Beyond the amounts of budget authority in this report, further legislative considerations regarding the federal funding of climate change activities may include the following:\nthe sufficiency and alignment of federal resources to support a strategy to achieve long-term climate change policy goals; the demands of climate change adaptation programming for federal agencies, their programs, and resources; whether additional and predictable foreign aid resources may be provided to support actions by low-income countries to mitigate greenhouse gases or adapt to climate change; possible legislative proposals to restructure or improve collaboration among agencies regarding climate change activities; and the incorporation of recommendations from evaluations (whether internal or external) to improve climate change programs." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h2_full h1_full", "h0_full h2_title", "h0_full h2_full", "", "", "", "", "h1_full" ] }

{ "question": [ "How were climate change programs funded?", "What role did the American Recovery and Reinvestment Act of 2009 play in climate change program funding?", "What climate change funding was requested for FY2014?", "How would energy tax provisions affect tax revenues?", "How are federal climate change-related activities administered?", "How was federal climate change policy constructed?", "What actions has the Obama Administration taken regarding climate change policy?", "What does this report address regarding climate change-related federal funding?", "How does this report review the effects of energy tax provisions?", "In what waysdoes the report address individual programs?", "How might this report be valuable for Members?" ], "summary": [ "Direct federal funding to address global climate change totaled approximately $77 billion from FY2008 through FY2013. The large majority—more than 75%—has funded technology development and deployment, primarily through the Department of Energy (DOE).", "More than one-third of the identified funding was included in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5).", "The President's request for FY2014 contains $11.6 billion for federal expenditures on programs. In the request, 23% would be for science, 68% for energy technology development and deployment, 8% for international assistance, and 1% for adapting to climate change.", "The Office of Management and Budget (OMB) also reports that energy tax provisions that may reduce greenhouse gas (GHG) emissions would reduce tax revenues by $9.8 billion.", "At least 18 federal agencies administer climate change-related activities, according to OMB.", "Federal policy on climate change has been built largely from the \"bottom up\" from a variety of existing programs and mandates, presidential initiatives, and congressionally directed activities; funding has largely reflected departmental missions and support for each activity.", "Recently, the Obama Administration, in the context of its Climate Action Plan announced in June 2013, outlined an overall strategy with programs, resources, and tax incentives in a cross-agency, inter-governmental initiative.", "This report summarizes direct federal funding identified as climate change-related from FY2008 enacted funding through FY2013 and the FY2014 request (as well as a less consistent series beginning with FY2001).", "It reports the Administration's estimates of tax revenues not received due to energy tax provisions that may reduce GHG emissions.", "The report briefly identifies the programs and funding levels, as well as some qualifications and observations on reporting of federal funding.", "It further offers some issues that Members may wish to consider in deliberating on U.S. climate change strategies." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 1, -1, 0, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 7, 7, 7, 7 ] }

{ "title": [ "Background", "IRS Budget", "IRS Customer Service", "Systemic Verification", "Tax Cuts and Jobs Act", "IRS Improved Customer Service, Managed Multiple Challenges Processing Returns, and Identified More Potential Fraud and Noncompliance Compared to Last Year", "Customer Service Generally Improved During the 2018 Filing Season", "Telephone Service", "Correspondence", "Customer Service Strategy", "IRS Managed Multiple Processing Challenges During the 2018 Filing Season Including Changes in Tax Law and Issues with Hiring and Redistributing Work Responsibilities", "Changes in Tax Law", "Issues Hiring and Redistributing Work Responsibilities", "IRS Identified More Potential Fraud and Noncompliance by Verifying Wage Information Than It Did at the Same Point in the 2017 Filing Season", "IRS Continued to Deactivate and Renew ITINs", "IRS Developed a Management Structure to Implement the Tax Cuts and Jobs Act and Address Associated Challenges and Took Steps to More Fully Involve Human Capital Decision Makers", "IRS Developed a Management Structure to Implement the Tax Cuts and Jobs Act and Took Steps to More Fully Involve Its Human Capital Decision Makers", "IRS Identified the Scope, Nature, and Time Frame of the Tax Cuts and Jobs Act as Implementation Challenges", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Internal Revenue Service", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "IRS’s budget declined by about $658 million (5.5 percent) between fiscal years 2013 and 2018 (see fig. 1). Furthermore, full-time equivalents funded with annual appropriations declined by 10,876 (12.7 percent) between fiscal years 2013 and 2018. The President’s fiscal year 2019 budget request was $11.135 billion. This amount is less than the fiscal year 2000 level for IRS, after adjusting for inflation. IRS requested an additional $397 million to cover implementation expenses for the Tax Cuts and Jobs Act over the next 2 years and received $320 million for implementation pending submission of a spend plan, which IRS provided in June 2018. IRS officials said the majority of the money would be directed toward technological updates.", "IRS uses multiple channels to provide customer service to taxpayers, as follows: Telephone service. Taxpayers can contact IRS assistors via telephone to obtain information about their accounts throughout the year or to ask basic tax law questions during the filing season. Taxpayers can also listen to recorded tax information or use automated services to obtain information on the status of refund processing as well as account information such as balances due. During fiscal years 2013 through 2017, IRS received an average of about 107 million calls from taxpayers each year, according to IRS data.\nCorrespondence. Taxpayers may also use paper correspondence to communicate with IRS, which includes responding to IRS requests for information or data, providing additional information, or disputing a notice. IRS assistors respond to taxpayer inquiries on a variety of tax law and procedural questions and handle complex account adjustments, such as amended returns and duplicate filings. IRS tries to respond to paper correspondence within 45 days of receipt; otherwise, such correspondence is considered overage. In fiscal year 2017, about 35 percent of the nearly 17.5 million pieces of correspondence IRS received was overage, down from approximately 47 percent of 20.8 million pieces of correspondence in fiscal year 2013. Minimizing overage correspondence is important because delayed responses may prompt taxpayers to write again, call, or visit IRS Taxpayer Assistance Centers (TAC); each of which lead to additional costs. Additionally, IRS is required to pay interest on refunds owed to taxpayers if it did not process amended returns within 45 days.\nOnline services. IRS’s website is a low-cost method for providing taxpayers with basic interactive tools to check their refund status or balance due, make payments, and apply for plans to pay taxes due in scheduled payments (installment agreements). Taxpayers can use the website to print forms, publications, and instructions and can use IRS’s interactive tools to get answers to tax law questions without calling or writing to IRS. IRS data show that total visits to IRS’s website in fiscal year 2017 were about 500 million.\nIn-person services. Face-to-face assistance remains an important part of IRS’s service efforts, particularly for low-income taxpayers. Taxpayers can receive face-to-face assistance at one of about 370 IRS TACs or at thousands of sites staffed by volunteer partners during the filing season. At TACs, IRS representatives provide services including answering basic tax law questions, reviewing and adjusting taxpayer accounts, taking payments, authenticating ITIN applicants, and assisting IDT victims. Based on IRS data, nearly 3.3 million taxpayers visited an IRS TAC in fiscal year 2017. At sites staffed by volunteers, taxpayers can receive free return preparation assistance as well as financial literacy information. In fiscal year 2017, nearly 3.6 million taxpayers had their returns prepared at volunteer sites, according to IRS data.", "Systemic verification is one element of IRS’s Return Review Program, its primary system to detect fraud and noncompliance. The Return Review Program is a platform that runs individual tax returns through a set of rules and models to detect potential taxpayer fraud and other noncompliance. During systemic verification, IRS checks information that taxpayers report on their returns against W-2 data in order to verify wage and withholding information and identify discrepancies.\nWe previously reported that the wage information that employers report on the W-2 had not been available to IRS until after it issued most refunds. In an effort to address issues such as refund fraud and improper EITC payments, Congress enacted the Protecting Americans from Tax Hikes Act of 2015, which included provisions that took effect in 2017. The act required employers to submit W-2s to the Social Security Administration (SSA) by January 31, which is about 1 to 2 months earlier than in prior years. SSA then provides W-2 data to IRS for verifying employee wage and withholding data on tax returns. The act also required IRS to hold refunds for all taxpayers claiming the EITC or ACTC until February 15. Now that IRS has earlier access to W-2 information, IRS is using it to conduct additional verification checks before issuing billions of dollars in potentially fraudulent refunds.\nIRS issues individual taxpayer identification numbers (ITIN) to certain non-U.S. citizens who have federal tax reporting or filing requirements and do not qualify for SSNs. The Protecting Americans from Tax Hikes Act required taxpayers that filed a U.S. federal tax return containing an ITIN to renew the number if the ITIN was not used on at least one tax return in the past 3 years or it was issued prior to 2013 and contained certain middle digits. IRS reported that it deactivated approximately 12.4 million ITINs in 2017 and notified affected taxpayers via mail and public notices. If affected taxpayers did not renew their ITINs either before filing or in conjunction with filing, their refunds may have been delayed.", "The Tax Cuts and Jobs Act made a number of significant changes to the tax law affecting both individuals and corporations. For example, for individual taxpayers, for tax years 2018 through 2025, tax rates were lowered for nearly all income levels, some deductions from taxable income were changed (personal exemptions were eliminated while the standard deduction was increased), and certain credits, such as the child tax credit, were expanded. For individuals with business income reported on their tax return (pass-through entities), effective tax rates can be reduced with a 20 percent deduction of qualified business income. For corporate filers, the tax rate was changed from a range between 15 and 35 percent to a flat rate of 21 percent, and the corporate alternative minimum tax was eliminated. IRS must take action to make the necessary changes to process tax returns in 2019 and to help taxpayers understand the new law and its effect on their tax obligations. For example, IRS has planned and begun conducting outreach to employees, employers, and industry associations encouraging employees to reassess their withholdings in light of changes the law made to deductions and credits that may affect tax liability and withholding for a large number of taxpayers.", "", "IRS’s telephone, online, and in-person services generally improved during the 2018 filing season compared to prior years. However, timeliness in responding to written correspondence declined from last year. Our prior recommendations could help IRS better manage its correspondence performance and develop a comprehensive customer service strategy to improve its efforts.", "During the 2018 filing season, IRS slightly improved its telephone level of service—the percentage of callers seeking and receiving live assistance—and reduced wait times (see fig. 2). From January 1 through April 21, 2018, IRS estimated that it answered 80 percent of calls seeking live assistance, which is a slight increase from about 79 percent for the same period last year, and reduced the average caller’s wait time to speak to an assistor from 6.5 to 5.1 minutes.\nThis marks the third year of measured improvements since IRS reached a low of 37.5 percent level of service in 2015 with a 23.1-minute average wait time. IRS officials attributed the improvements to decreased telephone call volume and sufficient staff levels to meet the demand for service. IRS expected its level of service for the entire fiscal year 2018 to be 75 percent, which is similar to fiscal year 2017 when IRS achieved a 77.1 percent level of service.\nTotal call volume to IRS taxpayer service lines has declined by about 43 percent since 2013 (see fig. 3). IRS officials attributed the decline in call volume to several factors, including targeted media campaigns to ensure taxpayers had the information they needed to prepare and file their tax returns prior to the filing season, fewer attempts by callers to re-dial multiple times after receiving busy signals or disconnects or abandoning the call after long wait times, and moving calls inquiring about balances due and installment payments to the compliance division, which, according to IRS data, accounted for approximately 2 million calls in the 2018 filing season.\nThe percentage of calls that IRS assistors have answered since 2013 has generally increased, while calls answered by automated services has generally decreased. IRS officials attributed the decrease in automated calls answered to discontinuation of the e-file personal identification number (PIN) automated retrieval service in June 2016, along with a decrease in callers using the Where’s My Refund automated service.\nIn December 2014, we recommended that IRS systematically and periodically compare its telephone service to the best in business to identify gaps between actual and desired telephone performance. In response, IRS benchmarked its telephone service, measures, and goals to comparable agencies and companies in an internal 2016 study. IRS projected that achieving an 83 percent level of service would optimize its balance between wait-time, disconnects, and assistor availability. However, officials told us in June 2018 that they are adjusting this projection based on new services and procedures introduced since the 2016 study.\nThe study also recommended exploring using new technology, including email, online chat, and telephone call-back features as well as establishing regularly scheduled follow-up benchmarking. In March 2018, IRS officials told us they are implementing some of the recommendations from the study, including requesting funding to implement a customer call- back feature. IRS is also developing new methods of monitoring and reporting service performance across telephone, online, and in-person channels to identify changes in taxpayer behavior and better adapt to their needs.\nIRS telephone performance data for 2018 were unavailable from November 2017 until March 2018. IRS officials explained that IRS was upgrading the Enterprise Telephone Data System—IRS’s official source for all data related to its toll-free telephone performance measures—to a more current version. Before IRS completed the upgrade, the system crashed. Due to the system outage, IRS was unable to publish its reports on telephone performance. IRS officials told us that while the system remained offline, they could still monitor daily call demand and staff resources, which they used to develop an estimated level of service to monitor telephone performance. Once the system was operational, IRS recovered and validated the data, confirming that the data they used while the system was offline were sufficiently accurate.\nIn addition, IRS replaced the approximately 15-year-old telephone equipment it uses for answering taxpayer calls because of ongoing failures that contributed to poor service. For example, at times the assistor could hear the customer speaking, but the customer could not hear the assistor. The new equipment will enable future service improvements such as a call-back feature so customers will not have to wait on the line for a response. IRS completed the upgrades as planned in June 2018.", "Because the same staff answer telephone calls and respond to correspondence, IRS has continued to struggle to balance competing demands for maintaining quality telephone level of service with timely responses to written correspondence. Between October 1, 2017 and April 21, 2018, IRS received over 9 million pieces of correspondence. IRS staff focus on answering the telephones during the filing season, so they have less time to respond to correspondence, resulting in inventory and processing time increases. As it had in prior years, IRS directed staff to focus on correspondence early in December 2017 and January 2018 to reduce the inventory before the filing season. However, through April 21, 2018, the overage rate of correspondence—the percentage of cases generally not processed within 45 days of receipt by IRS—was 36.8 percent compared to 26.4 percent at the same time last year.\nTo improve the management of taxpayer services, in 2015 we recommended that the Secretary of the Treasury update the Department of the Treasury’s (Treasury) performance plan to include overage rates for handling taxpayer correspondence as a part of Treasury’s performance goals. To implement this recommendation, we suggested that Treasury include this performance measure as part of a comprehensive customer service strategy. Treasury neither agreed nor disagreed with our recommendation, and as of June 2018, it had not included correspondence overage rates as a performance goal in its performance plan. We continue to believe that this recommendation is valid.\nIRS established its new online account service in November 2016 and taxpayer use of this service has increased since then. The online account service was unavailable to new users between mid-October and early December 2017 because of a security breach at Equifax, the service IRS used to verify users’ identities. In September 2017, Equifax announced that criminals had exploited a vulnerability in its systems and obtained personally identifiable information on 145.5 million individuals, including names, SSNs, birth dates, addresses, and in some cases, driver’s license information. IRS suspended its online account service, eventually re- activating it when it replaced Equifax’s identity verification service with another provider. IRS’s online account allows taxpayers to view their IRS account balance (including the amount they owe for tax, penalties, and interest), take advantage of various online payment options, and access the Get Transcript application where taxpayers can obtain copies of their prior tax returns.\nDespite these challenges, use of IRS’s online account has increased since its launch. Between January 1, 2018 and April 30, 2018, total unique users of the online account reached over 1 million compared to 327,000 for the same period in 2017 when the service was newly launched. In addition, taxpayers increasingly used the online account to access payment options, including payment agreements. For example, taxpayers made four times as many payments using the online account to access Direct Pay, IRS’s online payment option, between January 1 and April 30, 2018 compared to the same period last year.\nIRS experienced a separate online service disruption prior to the 2018 filing season. Tax professionals could not access e-services between September and October 2017 because of an IRS delay in a scheduled upgrade to the system and improvement to the security of the application. This service is used by tax professionals to conduct transactions, including applying for authorization as an e-file provider. As a result of this delay, tax professionals were unable to use this key service during a critical planning period prior to the filing season, shortening the amount of time available to complete the necessary actions before filing season. Despite this delay, IRS officials told us that more than 60,000 tax professionals were able to complete their transactions in preparation for the 2018 filing season.\nFinally, IRS launched a redesigned website in August 2017 to make it easier to use and find information. Website use during the 2018 filing season showed the greatest year-to-year increase over the past 5 years (see fig. 4). From January 1 through April 21, 2018, visits to irs.gov increased by about 24.2 percent compared to the same period last year (from 311.4 million to 386.9 million). During that same period, total page views increased by about 50.4 percent (from 1.27 billion to 1.91 billion).\nIn-person visits to IRS’s Taxpayer Assistance Centers (TAC) have declined since IRS began requiring appointments for in-person service in 2016. During the 2018 filing season (January 1 through April 21, 2018), IRS served 1 million taxpayers at the TAC locations compared to about 1.3 million during the same period in 2017. However, IRS officials reported that, between January 1 and April 30, 2018, over half of the approximately 1.6 million taxpayers requesting an appointment had their questions resolved on the telephone and did not need an appointment.\nIRS policy mandates that, under special circumstances, taxpayers who arrive at a TAC without an appointment receive service if staff members are available, even when the assistors do not have appointment openings. Officials acknowledged that not all taxpayers receive service if they walk in because there are not always assistors available. As of April 30, 2018, IRS served nearly 63,000 taxpayers during the 2018 filing season under an exception to the required appointment process. IRS officials noted that the lines at TACs have shortened in recent years, which they attribute to the appointment system and services available through the telephone. Nationwide, 5.8 percent of taxpayers waited over 30 minutes for assistance between January 1 and April 21, 2018, compared to 5.6 percent during the same period in 2017, according to IRS data. Service improved compared to the same period for 2013 to 2016 when between 27 and 33 percent of taxpayers waited over 30 minutes for assistance.\nTo improve the appointment process, in 2018 IRS developed the Field Assistance Scheduling Tool, which helps IRS manage appointments at the TACs and monitor availability and demand. IRS expects to add to this tool by developing reporting capabilities for managing staff availability and appointments, including the capability to measure the time lapse between when a taxpayer calls to schedule an appointment and the actual appointment. According to IRS officials, by using the tool’s current capabilities, they identified the need to recruit and train nearly 100 employees from other areas of IRS to support increased demand at 27 TAC locations near the end of the filing season.\nIRS also provided alternative options for in-person taxpayer services. In January 2017, IRS opened four co-locations with the Social Security Administration (SSA). During the 2018 filing season, 708 taxpayers received in-person service at these co-locations as of April 21, 2018. In May 2018, IRS officials said they were working to open an additional co- location with SSA. In addition, IRS added six virtual assistants—kiosks that provide video calling to an IRS assistor—to the 31 existing terminals across the United States.", "We have made several recommendations for IRS to improve its customer service. In December 2012, we recommended IRS develop a strategy to improve telephone and correspondence service. While IRS has taken steps toward implementing related recommendations, including the telephone benchmarking study mentioned earlier, IRS has not completed the actions we recommended, including (1) outlining a comprehensive strategy that defines appropriate levels of correspondence service and wait time and (2) listing specific steps to manage service based on an assessment of time frames, demand, capabilities, and resources. However, IRS officials told us in June 2018 that they had begun drafting a customer service strategy that they expected to complete by September 2018. We will assess this strategy once it is issued.\nAdditionally, in December 2011 and April 2013 we made recommendations that call for IRS to develop a long-term strategy for providing and improving web-based services to taxpayers. In June 2018, officials in the Office of Online Services stated that they do not have a specific strategy that outlines their long-term vision for increasing online services and web offerings. Rather, they rely on IRS’s fiscal year 2018–2022 Strategic Plan to provide that vision. The fiscal year 2018– 2022 Strategic Plan includes objectives related to expanding digital options for taxpayers and professionals to interact efficiently with IRS, and developing additional self-assistance and correction tools for enhanced online account capabilities. However, this plan is at a high level and does not include business cases for new online services that describe the potential benefits and costs of the projects, timelines and a prioritization of proposed projects. In July 2018, IRS officials provided additional documentation that we are reviewing to assess the steps being taken to develop a long-term strategy to improve web services for taxpayers.", "IRS started the filing season on January 29, 2018, approximately 1 week later than it has in recent years to ensure the security and readiness of processing systems and to assess the potential impact of recently passed tax laws on 2017 tax returns. IRS also extended the filing deadline by 1 day after a system outage occurred on tax day, April 17, 2018, that prevented IRS from processing electronically filed returns. Taxpayers were able to prepare and submit returns electronically during the day; but a flaw in the mainframe prevented data from being accepted and released for processing. IRS officials said the problem was caused by a hardware issue in a 1.5 year old mainframe subcomponent and was not related to IRS applications or any of the agency’s legacy computer systems. The system failure affected a number of electronic applications, including Direct Pay and the online account service, and delayed return processing until the end of the day. IRS officials said that the agency recovered the system without data loss and worked with software companies to coordinate their transmission of returns that were held earlier in the day. These officials said the agency was able to process all returns submitted electronically by the end of the day.\nNeither the system issue nor the later start had a significant effect on returns processing during the filing season. As of April 20, 2018, IRS had processed 130.48 million returns, compared to 128.85 million by the same time last year.\nIRS experienced several additional challenges during the 2018 filing season, including multiple pieces of legislation affecting individual tax returns that passed soon before the beginning of the filing season or after it had begun, as well as issues hiring and redistributing work responsibilities in some IRS processing facilities.", "Disaster relief. On September 29, 2017, Congress passed a law which provided tax relief related to retirement plan distributions and casualty losses for people affected by Hurricanes Harvey, Irma and Maria. The law allowed storm victims to deduct disaster losses on their 2017 returns or on amended 2016 returns. On February 9, 2018, Congress extended these benefits to certain taxpayers affected by wildfires in California. The President also issued major disaster declarations for many areas affected by the hurricanes and wildfires, allowing IRS to use its authority to postpone certain tax-related deadlines under the Robert T. Stafford Disaster Relief and Emergency Act. The laws also offered other forms of tax-relief—such as hardship distributions from employer-sponsored retirement plans. To address issues resulting from disaster-related legal changes, IRS issued press releases and public notices informing taxpayers of tax- relief options; postponed various filing and payment deadlines for individuals and businesses affected by disasters; ensured that sites offering in-person taxpayer assistance in Puerto Rico, Florida, and Texas were open and developed special products to support these sites in dealing with affected taxpayers; and adapted procedures to accommodate disaster-relief efforts.\nIRS officials also said they corresponded with taxpayers they thought were eligible for new disaster relief benefits as a result of legal changes put in place. The officials told us that as of May 26, 2018, the agency had assisted 37,000 taxpayers seeking live telephone assistance and worked or closed 6,196 amended returns and 8,847 correspondences related to Hurricanes Harvey, Irma, and Maria.\nTax Cuts and Jobs Act. While many of the provisions included in the Tax Cuts and Jobs Act will not affect filing until the 2019 filing season, a few changes affected filing in 2018. For example, the threshold to claim the medical expense deduction was temporarily lowered, allowing individuals to claim deductions for medical expenses totaling more than 7.5 percent of their adjusted gross income for tax years 2016 and 2017. Also, provisions similar to those described above were implemented for certain qualified federally declared disasters that occurred in 2016. The law passed shortly before the start of the filing season and IRS had to recall, revise, and re-issue more than 100 products that had already been published.\nIn addition, several provisions affecting business filers presented processing challenges during the 2018 filing season. For example, IRS made changes to its forms to address fiscal year filers whose earnings will be taxed at different rates for 2017 and 2018 (referred to as blended rate) and developed forms and instructions for filers whose returns involve the foreign earnings of foreign subsidiaries of U.S. companies. Officials told us they processed returns subject to the blended rate provision manually and held returns affected by the foreign earnings provision until they completed necessary programming changes for the systems to process them in accordance with the new law. As of May 18, 2018, the agency was holding 2,265 affected individual and business returns. IRS officials said they completed the programming required to process all of these returns automatically by July 2, 2018. However, depending on when IRS completes processing these returns, it may need to pay interest on some refunds. IRS officials said they do not expect many of the held returns affected by the foreign earnings provision to claim refunds.\nExtension of expired tax provisions. On February 9, 2018, after some taxpayers had already filed their 2017 taxes, Congress extended to 2017 a number of temporary tax provisions that expired at the end of 2016. These provisions include deductions for qualified tuition and related expenses and the ability to deduct premiums for mortgage insurance as interest. Testifying before Congress, the Acting Commissioner of IRS described the extensions as a major processing challenge and said this is the only time the agency has been required to implement retroactive tax extensions after the beginning of a filing season. To address the extensions, IRS officials told us they reprogrammed systems to accept taxpayer claims related to these retroactively extended provisions; recalled, revised, and re-released more than 50 already published products; and held 5,624 individual returns while necessary programming changes were made to ensure proper processing.", "IRS faced challenges in two of its five paper processing centers related to hiring and redistributing work responsibilities. The center in Ogden, UT experienced issues related to changes in work assigned to the site while the center in Austin, TX experienced ongoing hiring difficulties. Despite these challenges, IRS officials reported that the agency was able to meet all of its target dates for processing returns and issuing refunds.\nOgden. To realize cost savings from the decrease in paper filing as a result of increased electronic filing, IRS began to consolidate its paper processing centers in 2018. As part of this plan, IRS moved some individual paper return processing to its facility in Ogden. This facility had not processed individual returns since 2000 and IRS officials told us that the lack of recent experience with this kind of work caused processing to fall behind targets. For example, as of March 2, 2018, Ogden had missed IRS targets for return processing time by between 14 and 15 days, depending on the form type.\nOfficials told us the agency had reintroduced Ogden to the work gradually, by assigning fewer returns to the site in the first year; nevertheless, the site still experienced delays. For example, as of March 2, Ogden had processed 10.6 percent of the 202,000 returns expected, while the processing centers in Fresno, CA and Kansas City, MO had processed 98.5 percent (723,000 out of 734,000) and 98.2 percent (545,000 out of 555,000) of their expected returns respectively on the same date.\nIRS minimized the effects of these delays on overall processing by transferring returns initially sent to Ogden to the Kansas City location, which enabled IRS to meet its overall processing goals. Later in the filing season, processing at Ogden had improved, but still had not reached IRS’s goal for the site. For example, as of May 11, 2018, Ogden was at approximately 73 percent of schedule, having processed 716,000 out of 977,000 scheduled returns. IRS officials said that responding to changes in work flows is a normal aspect of processing across all locations, but noted that the agency continued to monitor the situation in Ogden and learn from the experience to guide future consolidation efforts.\nAustin. This processing facility, slated for closure in 2024, also experienced processing delays. As we reported in 2017, and as IRS officials told us again this year, IRS was unable to hire enough personnel to process paper tax returns at this site, which may be due to low unemployment rates in the area. IRS officials told us Austin planned to hire 567 employees by early March to transfer data from paper returns to an electronic format, but had only been able to hire 142 people, or 25 percent of that target. IRS officials told us the position was perceived as undesirable in a low-unemployment environment. The officials said they had addressed the issue by (1) moving resources as needed within the service center and (2) transferring returns to the Kansas City facility for processing.", "IRS identified more potential fraud and noncompliance through February 15, 2018, than it had by the same time last year. In its second year of receiving earlier W-2 data from SSA to match against returns, IRS identified a larger number of potentially fraudulent or noncompliant returns claiming the EITC or ACTC prior to issuing refunds—340,000 compared to 162,000 at the same point in 2017. IRS also reduced the percentage of returns for which it was unable to verify wage information to 13 percent, compared to 58 percent in 2017. IRS officials told us this was, in part, a result of receiving 224 million W-2s by February 15 compared to 214 million by the same time in 2017. Having more W-2 data available earlier also allowed IRS to better target its selection of returns for review, helping to reduce taxpayer burden and IRS workload. For example, IRS had excluded 10,000 returns from review as of February 15, 2018, compared to 3,000 during the same time in 2017.\nIn addition, IRS improved its ability to identify potentially false and fraudulent returns for returns with EITC or ACTC—including those for which it did not have W-2 data at the time of identification—by developing two new filters that automated some aspects of the manual review process used in 2017. IRS developed the new filters based on cases of confirmed fraud identified through systemic verification in 2017 and selected returns with characteristics that are more likely to be fraudulent or noncompliant. The filters select returns for review among those reporting information that does not match corresponding W-2 data and that IRS could not verify because it did not have W-2 data at the time of selection. Last year, IRS identified 12,000 cases of confirmed fraud from the 162,000 cases it selected for review. IRS officials told us that they do not have final data at this time, but that they anticipate they will confirm more cases of fraud and noncompliance in 2018 as a result of these filters.\nReturns with refunds not claiming EITC or ACTC benefits are also subject to systemic verification as well as additional fraud filters. However, for returns not claiming these benefits, IRS does not hold refunds when it is unable to verify wages reported by the taxpayer unless the returns are selected by other fraud filters for review. As we reported in January 2018, IRS cannot verify information reported for more than half of returns submitted early in the filing season prior to issuing refunds because it receives W-2 information throughout the filing season. In 2017 and 2018, IRS received and processed the majority of W-2s by mid- to late- February. In addition, IRS verified most wage information on returns submitted in mid-February as being accurate. IRS verified that accurate wage information was reported on 77 percent of returns not claiming the EITC or ACTC submitted between February 9 and 15, 2018, representing $10.91 billion in refunds.\nHowever, IRS does not have data available early in the filing season that would help it better identify which returns are potentially fraudulent or noncompliant. As a result, IRS issues refunds for a large percentage of returns without the EITC or ACTC that cannot be verified against W-2 data prior to February 15. For example, among 2017 returns without EITC or ACTC, IRS was unable to verify\n91 percent of returns submitted before January 25, 2018— representing $4.27 billion in refunds; and\n60 percent of returns submitted prior to February 15—representing $29.27 billion in refunds.\nIRS has the authority to hold refunds for these returns (as it does for returns that do claim the EITC or ACTC) until any date deemed necessary to make inquiries, determinations, and assessments in conjunction with those determinations. However, IRS officials told us that IRS has not held those refunds because of the volume of existing cases, challenges of processing large numbers of refunds on a single day, and other costs to the agency, such as inquiries from taxpayers about their refunds.\nIn January 2018, we recommended that IRS study the benefits and costs of the refund hold and consider modifying it based on the study results. For example, IRS could hold refunds for taxpayers not claiming EITC or ACTC and release the refunds once it has the W-2 data available and has verified the wage information. IRS officials reiterated that the potential of verification to detect more fraud and noncompliance is limited by delays caused by filing extensions and use of paper W-2s—which are transcribed at SSA before being transmitted to IRS. For example, IRS had not received any paper W-2 data for tax year 2017 by the February 15 refund hold date. IRS is continuing to study systemic verification’s potential, and is working to identify additional fraud and noncompliance by beginning to match non-wage income reported by taxpayers against data reported on Forms 1099-MISC by companies or individuals that paid the taxpayer miscellaneous income.", "The Protecting Americans from Tax Hikes Act also contained a number of provisions relating to individual taxpayer identification numbers (ITIN). The provisions required IRS to deactivate (1) all ITINs issued prior to 2013 and (2) all ITINs not used at least once during the 3 most recent consecutive tax years. As of February 26, 2018, IRS said it had deactivated 14.7 million ITINs, approximately 12.4 million of those in 2017 and an additional 2.3 million in 2018.\nFollowing this initial round of deactivations, ITIN renewal requests have been significantly lower than IRS anticipated. IRS expected it would receive 1.3 million renewal applications by the end of 2018 for ITINs that expired in 2017. However, by April 21, 2018, IRS had only received 23 percent (297,825 of 1.3 million) of the expected renewals.\nIRS officials said they based their renewal projections on a computation assuming that all ITINs with middle digits 78 and 79—which were issued 16 or more years prior to their deactivation and were the first set of older ITINs to be deactivated—would be renewed. However, the actual renewal rate in 2017 was only 60 percent for these ITINs. IRS officials said the agency used actual renewal data to revise its renewal estimate for the remaining ITINs issued prior to 2013 and containing certain middle digits that will be deactivated. Based on these new estimates, IRS will accelerate the completion date for deactivation of older ITINs.", "", "To address the changes included in the Tax Cuts and Jobs Act, in January 2018 IRS established the Tax Reform Implementation Office (TRIO), a central office that coordinates implementation efforts. IRS officials said that the 2017 tax law will affect all IRS divisions and responsibilities. Each of the 119 provisions in the Tax Cuts and Jobs Act that fall under IRS responsibility has been assigned to one of IRS’s four business divisions—Wage and Investment, Large Business and International, Small Business/Self-Employed, and Tax-Exempt and Government Entities—each of which will be responsible for planning and executing the assigned provisions. In addition to TRIO, IRS also established the Tax Reform Executive Steering Committee and the Tax Reform Implementation Council (TRIC), described below:\nTax Reform Implementation Office (TRIO). TRIO principally consists of executive-level IRS employees and coordinates efforts by each business operating division to revise and develop forms, instructions, tools, and guidance and to execute programming changes, communications, and training initiatives required to implement the individual provisions of the Tax Cuts and Jobs Act. The office is intended to monitor the implementation action plans of each business division and ensure risks associated with implementation efforts are captured and addressed. TRIO has developed an integrated project plan to track critical implementation activities identified by the business divisions and discussed by TRIC (described below). Personnel can access the project plan and update it with accomplishments and milestones.\nTax Reform Executive Steering Committee. TRIO reports to the Executive Steering Committee, which includes IRS’s Acting Commissioner, Deputy Commissioners, Treasury officials, and heads of offices. The steering committee serves as a forum to provide leadership guidance, direction, and advice on implementation activities for the Tax Cuts and Jobs Act.\nTax Reform Implementation Council (TRIC). TRIC consists of representatives from business divisions and functional units—such as Information Technology (IT) and Communication and Liaison—that are performing implementation activities. The group first met on February 8, 2018, and meets weekly to discuss activities, concerns, and needs that might involve other IRS divisions. The meetings are also a forum to discuss accomplishments and deadlines.\nFigure 5 illustrates TRIO’s role in coordinating the various changes IRS expects to make.\nTo implement the Tax Cuts and Jobs Act, IRS’s Human Capital Office (HCO) estimated that the agency will need to hire and train staff to fill approximately 1,100 positions requiring a variety of competencies and provide additional training on tax law changes for current employees. HCO will be responsible for recruiting and hiring these new employees and ensuring they have the needed skills and HCO will play a key role in training them. It is HCO’s mission to provide human capital strategies and tools for recruiting, hiring, developing, retaining, and transitioning a highly skilled and high-performing workforce to support IRS’s mission. TRIO and other senior IRS officials acknowledged that HCO’s role in implementing the new tax law is as valuable as other supporting stakeholders, such as IT. Nevertheless, HCO did not initially have representation in TRIC, as did IT and other essential operational support units. TRIC meetings provide a forum not only for the business operating divisions directly implementing the provisions of the Tax Cuts and Jobs Act to discuss and coordinate needs and activities, but for supporting stakeholders to understand the status of implementation efforts as well as future expectations and needs.\nHCO officials said that when the formation of TRIO was first announced, they contacted TRIO leadership to request that HCO have representation. However, they were told that the purpose of the group was to discuss the tax law itself, not hiring or other human resources matters affected by the law. In our discussions with IRS officials, they told us that HCO has an informal liaison to TRIO, participates in the executive steering committee, and has existing human resource partners in the business operating divisions, and that additional HCO representation in tax law implementation—including the weekly TRIC calls—was not necessary.\nHowever, a senior HCO official told us that it would be beneficial for HCO to participate in the weekly TRIC meetings to stay abreast of current developments and future plans and share relevant timelines and processes related to hiring and training. Participation will help HCO to manage its operations more strategically, for example, by planning for training required ahead of the 2019 filing season.\nBased on our discussions with IRS officials about HCO’s role in tax law implementation, in June 2018, HCO began participating in the weekly TRIC calls. HCO’s participation will likely help IRS make more informed decisions concerning implementation of major tax law changes. It will also position HCO to proactively understand human capital needs and timelines across the agency and to hire and train personnel at the appropriate times. At the same time, IRS will also be better positioned to improve its management and strategy for executing implementation plans while also fulfilling the agency’s mission.", "IRS officials identified a number of challenges associated with implementing the Tax Cuts and Jobs Act:\nScope of changes. To implement 119 provisions of the Tax Cuts and Jobs Act, IRS will need to (1) interpret the law; (2) create or revise nearly 500 tax forms, publications, and instructions; (3) publish guidance and additional materials; (4) reprogram 140 interrelated return processing systems; (5) hire additional staff and train its workforce to help taxpayers understand the law and how it applies to them; and (6) conduct extensive taxpayer outreach. IRS officials stated that these provisions will require extensive changes relevant to both individual and business filers and affect all areas of IRS.\nComplex and extensive nature of changes. According to IRS officials, many of the revisions are complex and interrelated and require central coordination and oversight. While IRS has to make changes to its products every year, many of the changes needed to implement the Tax Cuts and Jobs Act are more extensive than usual and affect some of the forms with which taxpayers are most familiar. For example, all Form 1040 products—the forms and instructions for individual tax return filing—will be changed in accordance with the law.\nOne-year time frame. IRS officials told us that implementing the Tax Cuts and Jobs Act in 1 year will be challenging. Officials said the agency is using implementation of the Patient Protection and Affordable Care Act as a general guide for its current efforts, but noted this earlier legislation was less expansive. IRS was responsible for 47 provisions of the Patient Protection and Affordable Care Act and had multiple years to implement some of its provisions, including those officials identified at the time as the most challenging. Implementing individual provisions of the Tax Cuts and Jobs Act involves multiple, dependent actions. For example, IRS cannot determine the changes it will need to make to various tax forms until it has interpreted the law and cannot reprogram its return processing systems until those forms are changed.\nTo complete necessary changes in time for the 2019 filing season, IRS has used overtime and compensatory hours. For example, according to IRS officials, as of May 26, 2018, IRS had used 1,749 overtime hours to make changes to forms and publications, between two and three times as many overtime hours as it did in the entirety of fiscal years 2016 or 2017. In addition, the agency delegated authority to approve requests for work to a larger group of managerial staff and temporarily reassigned existing staff to assist with time-sensitive changes to tax forms and publications. In March 2018, IRS also made a request for direct hiring authority, which would allow the agency to hire IT staff more quickly. While this authority could be helpful to fill specific positions more timely, IRS officials explained that these staff will require training on tax processing procedures. According to a senior IRS official, as of June 2018 the Office of Personnel Management had not yet authorized this request.\nIRS has taken a number of steps to implement time-sensitive provisions of the new law. IRS officials noted that while some provisions of the Tax Cuts and Jobs Act are retroactive or relevant to the 2018 filing season, most will not take effect until the 2019 filing season. As part of the planning process, IRS determined when various provisions of the law would become relevant and acted to release information on the provisions with the earliest relevance first. For example, IRS released new withholding tables and associated guidance; revised the form and online withholding calculator that taxpayers use to provide information to employers about the amount of tax that employers should withhold from their wages; and provided guidance on the transition tax on untaxed foreign earnings of foreign subsidiaries of U.S. companies, a new section of the Tax Cuts and Jobs Act that changes how business income is calculated and tax is paid for the 2018 filing season.\nIRS is continuing to revise its forms and issue guidance in advance of the 2019 filing season.", "We provided a draft of this report to the Internal Revenue Service for review and comment. IRS provided written comments, which are reproduced in appendix I. In its written comments, IRS generally concurred with our findings and noted a concern regarding interpretation of correspondence overage data. IRS said that the overage rate we report is based upon the open inventory at the end of the fiscal year. We clarified the basis of the overage rate in our report. However, we believe the total that IRS cites in its letter could also be misinterpreted in that it does not represent the total overage inventory; rather it is a total for the last week of the fiscal year. IRS tracks the overage correspondence rate on a weekly basis, which can vary somewhat during the year given fluctuations in correspondence receipts and staff availability to respond, but is relatively consistent throughout the year. Therefore, the overage rate at the end of the fiscal year provides a basis for assessing IRS’s annual performance in responding to written correspondence.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of the Treasury, the Acting Commissioner of Internal Revenue, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-9110 or [email protected]. Contact points for our offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff members who made major contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact named above, Tom Gilbert (Assistant Director); Erin Saunders Rath (Analyst-in-Charge); Shea Bader; Jacqueline Chapin; Jehan Chase; Kirsten B. Lauber; Regina Morrison; Robert Robinson; and Sarah Wilson made significant contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 3, 3, 3, 2, 3, 3, 2, 2, 1, 2, 2, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "h0_title h2_title", "h0_full h2_title", "h0_full", "h0_full h2_full", "", "h0_full", "", "", "", "", "h2_title h1_title", "h2_full h1_full", "h1_full", "h2_full", "", "", "", "" ] }

{ "question": [ "How did the IRS customer service change in 2018?", "How did IRS telephone and online services change?", "How does this compare to the 2015 filing season?", "What challenges still remain for IRS?", "What did GAO recommend regarding correspondence?", "How did tax law change in 2018?", "How did the IRS implement these changes?", "What challenges face the implementation?", "What steps has IRS taken to address these challenges?", "How will involving HCO in agency discussions benefit IRS?", "Why is GAO not making a related recommendation?", "To what extent is GAO's 2015 recommendation still valid?", "To what extent did IRS agree with GAO's findings?", "How did GAO clarify this point?" ], "summary": [ "The Internal Revenue Service (IRS) generally improved its customer service during the 2018 filing season compared to prior years and managed multiple return processing challenges. Overall, despite multiple challenges including mid-filing season changes to tax law and a computer system failure, IRS met its processing targets for individual tax returns.", "For the third year in a row, IRS improved its telephone service by answering 80 percent of calls seeking live assistance and reducing wait times to about 5 minutes, as of the end of the 2018 filing season. Taxpayer use of online services also increased, including irs.gov and its online account tool for taxpayers to view their balances due.", "This compares to 37.5 percent of calls answered with an average wait time of about 23 minutes during the 2015 filing season.", "However, answering taxpayer correspondence remains a challenge—IRS was late responding to about 37 percent of correspondence as of the end of the 2018 filing season compared to about 26 percent at the same time in 2017.", "In 2015, GAO recommended that the Department of the Treasury (Treasury) include timeliness in handling taxpayer correspondence as part of its performance goals, but as of June 2018 Treasury had not done so.", "In 2018, IRS began taking steps to implement significant tax law changes from Public Law 115-97—commonly referred to by the President and many administrative documents as the Tax Cuts and Jobs Act.", "To implement the changes, IRS established a centralized office to coordinate implementation across IRS offices and divisions.", "IRS officials cited the broad scope and complexity of the changes—which will require extensive changes to tax forms, publications, and computer systems—along with the 1 year time frame as key implementation challenges.", "Although IRS has taken steps to address these challenges, such as developing a project planning tool, GAO found that the new coordination office did not initially fully include the Human Capital Office (HCO), the division responsible for managing the agency's workforce. Based on GAO's discussions with IRS officials, representatives from HCO now attend weekly coordination meetings discussing and planning the tax law changes.", "Involving HCO in these discussions will better position IRS to hire new employees and train them and the existing workforce. It will also help HCO better understand training requirements and staffing needs ahead of the 2019 filing season.", "Because HCO is now attending the weekly meetings, GAO is not making a related recommendation.", "In addition, GAO believes that its 2015 recommendation to Treasury to include timeliness in handling correspondence as part of its performance goals, which Treasury neither agreed or disagreed with, is still valid.", "IRS generally concurred with GAO's findings but noted concerns with interpreting the percentage of correspondence considered “overage” (more than 45 days old).", "GAO clarified its report but notes that while the open inventory of overage correspondence at the end of the fiscal year is not representative of total overage items for the year, the overage rates are relatively consistent throughout the year." ], "parent_pair_index": [ -1, 0, 1, -1, 3, -1, 0, 0, 2, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 5, 5, 5, 5 ] }

{ "title": [ "Background", "Four Factors Frame the Challenge Posed by Requirements, and Detailed Systems Engineering Is Key to Knowing Whether and How the Challenge Can Be Met", "Case Studies Illustrate the Relationship between Requirements Challenge, the Timing of Systems Engineering, and Program Outcomes", "Three More Successful Programs Had Modest Requirements and Conducted Detailed Systems Engineering Analysis before Development Start", "KC-46 Tanker Modernization Program", "Small Diameter Bomb Increment I", "Joint Light Tactical Vehicle", "Three Programs Had Some Requirements Challenges but Conducted Systems Engineering to Support Risk Mitigation", "Global Positioning System III", "Paladin Integrated Management", "P-8A Poseidon Multi-Mission Maritime Aircraft Increment I", "Three Programs with Problematic Outcomes Had Challenging Requirements and Limited Systems Engineering before Development Start", "F-35 Lightning II", "CH-53K Heavy Lift Replacement Helicopter", "Integrated Air and Missile Defense", "Knowledge of Systems Engineering Can Enhance Oversight before a Program Starts Product Development", "Conclusions", "Matter for Congressional Consideration", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope and Methodology", "Appendix II: Comments from the Department of Defense", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Acknowledgments" ], "paragraphs": [ "In our past work examining weapon system acquisitions and best practices for product development, we have found that leading commercial firms and successful DOD programs pursue an acquisition approach that is anchored in knowledge, whereby high levels of product knowledge are demonstrated at critical points in the acquisition process. The first key point in this knowledge-based process occurs when a match is achieved between the customer’s needs or requirements and available resources—including technology, design, time, and funding. That match establishes a sound basis for a program business case and supports the decision to invest in product development. Achieving a match between requirements and resources prior to committing to a product development program reduces risk and uncertainty and sets the program up for success. We have previously found that key enablers of a good business case include:\nFirm, feasible requirements: Requirements should be clearly defined, affordable, and clearly informed—thus tempered—by systems engineering. Once programs begin, requirements should not change without assessing their potential disruption to the program.\nMature technology: Science and technology organizations should shoulder the technology development burden, proving technologies can work as intended before they are included in a weapon system program. The principle is not to avoid technical risk but rather take risk early and resolve it ahead of the start of product development.\nIncremental, knowledge-based acquisition strategy: Rigorous systems engineering coupled with more achievable requirements are essential to achieve faster delivery of needed capability to the warfighter. Building on mature technologies, such a strategy provides time, money, and other resources for a stable design, building and testing of prototypes, and demonstration of mature production processes.\nRealistic cost estimate: Sound cost estimates depend on a knowledge-based acquisition strategy, independent assessments, and sound methodologies.\nMajor defense acquisition programs go through a series of phases as they progress from the identification of the top-level requirements for new capability, through initial planning of a solution, to product development, and finally production and deployment of a fielded system. Within DOD, the process of identifying and understanding requirements typically begins when a sponsor, usually a military service, submits an Initial Capabilities Document that identifies the existence of a capability gap; the operational risks associated with the gap; and a recommended solution or preferred set of solutions for filling the gap. Potential solutions are then assessed in an Analysis of Alternatives, system capabilities are chosen, and top-level capability or operational requirements are then defined in a draft Capability Development Document that goes through several stages of service- and DOD-level review and validation. After the top-level capability requirements are defined, they are then decomposed into more specific capability requirements, known as the performance specification, and then into a series of more detailed design requirements. Progressively more detailed descriptions of the system design are established in what systems engineering literature refers to as configuration baselines. Within DOD, the configuration baselines are called the “functional baseline” that details the system-level performance requirements; the “allocated baseline” that establishes a preliminary design and defines the subsystems and how they are to work together; and the “product baseline” that describes the final design and provides component-level details (see figure 1).\nSystems engineering is a disciplined process to transform top-level capability requirements into detailed, lower-level design requirements that can be achieved with available resources. Programs are required to prepare a systems engineering plan as a management tool to guide systems engineering activities over the life of a program. According to DOD, the discipline of this process provides the control and traceability to develop solutions that meet customer needs. The systems engineering process can be depicted in a V-shape that starts when a capability gap is identified and a proposed solution for filling that gap is selected. Top-level capability requirements are then defined and decomposed into lower-level design requirements until a final design is established. As this process takes place, requirements become more specific and the number of requirements at each successive level grows. This growth can be exponential, with tens of thousands of detailed design requirements derived from a relatively small number of capability requirements. Figure 2 illustrates the relationship between requirements decomposition and systems engineering.\nAs more detailed design requirements are identified, decision makers can make informed trades between the requirements and available resources, potentially achieving a match and establishing a sound basis for a program business case. As the requirements decomposition process takes place, engineering and design knowledge grows and risk decreases, leading to more realistic cost and schedule estimates and more predictable program outcomes.", "Our analysis of nine selected DOD programs, supported by our previous work examining best practices for product development, identified four key factors that provide insight into the challenge posed by a system’s top-level capability requirements and the related risk. While they are not the only factors that could be considered, we found that they were prominent and observable early in our case study programs. Those four factors are:\nAcquisition approach - indicates whether a program intends to take an incremental, evolutionary approach or a single-step approach to meet all capability requirements. According to GAO best practices, an incremental approach reduces risk by developing and delivering a product in a series of enhanced interim capabilities until final capability is reached. In contrast, a single-step approach increases risk by attempting to deliver the final capability all at once without any interim capabilities.\nTechnology status - indicates the extent to which the critical technologies for a proposed system are mature at the start of product development. According to GAO best practices, technologies are ready for inclusion in a product development program when they have been demonstrated in a realistic, operational environment (i.e., Technology Readiness Level (TRL) 7), proving that they can work as intended. Demonstrating technologies in an operational environment provides a higher level of technology understanding and reduces risk prior to starting product development. Beginning system development with less mature technologies (i.e., TRL lower than 7) increases program risk because unexpected technology challenges could significantly affect product design.\nDesign maturity - indicates the extent to which a proposed system’s design is either derived from an existing commercial or DOD system—whether operational or prototype—or is new and unprecedented. According to GAO best practices, designs derived from existing systems, whether commercial or DOD, by nature have more knowledge available when product development begins, thus reducing risk. In contrast, unprecedented designs are by nature more complex and inherently higher risk.\nSystem interdependency - indicates the extent to which a system relies on another system or group of systems being developed and managed separately to provide its required capabilities. According to DOD acquisition guidance, although DOD programs should not be acquired in isolation, a program office developing a more independent system generally has more control over requirements, schedule, funding, and interfaces, among other factors. In contrast, a program office developing a system that is more dependent on other systems—like a system of systems—generally has less control, thus making its requirements more challenging to achieve and increasing risk. For example, systems of systems tend to be more complex and must manage (1) interfaces with other systems that have potentially unaligned performance requirements, (2) the need for collaborative governance with separately managed programs, and (3) differences in program phases of development.\nAs we discuss in the following pages, the case study programs with top- level capability requirements that posed a more modest challenge took an incremental acquisition approach, incorporated more mature technologies, used a design that was derived from an existing product or prototype, and limited dependence on systems being developed and managed separately, reducing the amount of risk being carried forward into product development. In contrast, the programs with top-level capability requirements that were more challenging generally assumed full capability would be delivered in a single-step, incorporated immature critical technologies, used a new and unprecedented system design, and had full capability that in some cases was critically dependent on separately developed and managed systems without sufficiently mitigating risk before starting product development.\nThe fact that some requirements can be more challenging than others does not necessarily mean that problems are unavoidable. Rather, the ensuing systems engineering effort, if timely and sufficiently vigorous, can provide the needed confidence that the requirements are achievable. Our previous work in best practices has found that conducting detailed systems engineering analysis before starting product development contributes to understanding the requirements challenge and identifying and mitigating associated risks. Systems engineering is the primary means for determining whether and how the challenge posed by a program’s requirements can be met with available resources. It is a disciplined learning process that translates capability requirements into specific design features and thus identifies key risks to be resolved. Our prior best practices work has indicated that if detailed systems engineering is done before the start of product development, the program can resolve these risks through trade-offs and additional investments, ensuring that risks have been sufficiently retired or that they are clearly understood and adequately resourced if they are being carried forward. Figure 3 depicts this relationship between the timing of systems engineering and the start of product development for successful and problematic programs.\nIn our case-study analysis, we found that systems engineering is a natural learning process that takes place at some point in all programs.\nOur work in commercial best practices has found that, at a minimum, programs need to conduct systems engineering to decompose capability requirements into an allocated baseline—that is, establish a preliminary design—before beginning a product development program. When the bulk of the detailed systems engineering is done after starting a product development program it often results in cost and schedule growth and creates inefficiency. Figure 4 compares the points in the requirements and systems engineering processes at which problematic and successful programs would begin product development.\nWithin the current defense acquisition framework, DOD decision makers should assess a program’s risk factors and systems engineering progress well in advance of the start of product development. For example, DOD’s acquisition policy states that program requirements must be firm and clearly stated and that the risk of committing to development is or will be adequately reduced prior to awarding a development contract. The policy also emphasizes the value in establishing an allocated baseline—i.e. preliminary design—prior to the start of product development, which is a best practice that contributed to good outcomes in our case study programs. This practice was also emphasized by Congress in the Weapon System Acquisition Reform Act of 2009, which required programs to hold a preliminary design review or obtain a waiver prior to starting a development program.\nWe have historically found that many of DOD’s major weapon system development programs tended to conduct the bulk of systems engineering after a development contract had been awarded and product development had begun. In many cases, the top-level capability requirements established by the government at that time still needed to be analyzed by the contractor and decomposed into a functional baseline (system-level design), an allocated baseline (preliminary design), and a product baseline (final design). As a result, those programs had started product development with a limited understanding of the challenge posed by requirements.", "Our case studies illustrate the relationship among program outcomes, the four key factors that frame the challenge posed by requirements, and timely systems engineering. Our analysis of development cost and schedule data for the nine case studies shows that, as of December 2015, about half of the programs had reported relatively good development cost and schedule outcomes, while the others had experienced significant cost and schedule growth (see table 2). Of the programs we studied, the three that began development with more modest requirements and had conducted detailed systems engineering generally had good outcomes. The three programs with some requirements challenges that conducted systems engineering analysis to mitigate associated risks experienced moderate cost and schedule outcomes. Finally, the three programs in our sample that began development with challenging requirements and had done little systems engineering generally reported poor outcomes.\nThese results are consistent with our recent analysis of DOD’s overall major defense acquisition portfolio. In March 2016, we reported that while program outcomes across the portfolio remained mixed, DOD’s newer programs were reporting better cost outcomes. We found that some of those programs had taken steps to retire risks through systems engineering before starting product development and thus began with a clearer understanding of the challenge posed by their requirements.", "The KC-46A Tanker Modernization (KC-46), Small Diameter Bomb Increment I (SDB I), and Joint Light Tactical Vehicle (JLTV) programs provide examples in which top-level requirements generally posed moderate challenges, steps were taken to identify and retire risks through detailed systems engineering, which enabled development of sound business cases before product development began. In these cases, the government and the prime contractor conducted systems engineering to decompose the requirements and identify an allocated baseline by the time they started product development. As a result, the programs established cost and schedule baselines that were well informed, contributing to relatively good outcomes.", "Our analysis of the KC-46 requirements challenge and the ensuing systems engineering effort is summarized in figure 5.\nOfficials from the Air Force and the KC-46 prime contractor told us that at the start of product development in 2011, they had conducted detailed systems engineering and the system’s critical technologies were nearing maturity. The KC-46 was designed to improve on the KC-135’s refueling capacity, efficiency, and capabilities for cargo and aeromedical evacuation, and to integrate defensive systems. The Air Force planned an incremental acquisition approach focused on integrating mature military technologies onto a commercial aircraft derivative design. Although the government did not hold a preliminary design review until after development began, prime contractor officials noted that they had identified the allocated baseline as part of their internal risk reduction efforts before the development contract was awarded. As a result the KC- 46 program took steps that enabled a sound business case. Because KC- 46 development was considered by the government to be a relatively low- risk effort, the prime contractor was awarded a fixed price incentive contract at the start of product development, which mitigated risk to the government. The prime contractor subsequently discovered problems with the aircraft wiring and aerial refueling systems and encountered a fuel contamination incident, all of which contributed to a 14-month delay in the delivery of initial operating capability. However, the government’s development costs have decreased by 12 percent largely because the contract is fixed price and the government’s initial cost estimate assumed a greater number of engineering changes than have actually occurred, indicating that the Air Force understood that development challenges remained and reflected that understanding in its initial cost estimates.", "Our analysis of the SDB I requirements challenge and the ensuing systems engineering effort is summarized in figure 6.\nAt the start of product development in 2003, the Air Force and the SDB I prime contractor had performed detailed systems engineering to understand the challenge posed by requirements and remaining risks. The SDB was designed to meet a pressing Air Force need for a low- collateral damage weapon small enough to maximize the number that can be carried aboard a single aircraft. The Air Force planned an incremental acquisition approach to the overall SDB program, with SDB I—the first increment—using mature technology and based on a design derived from competitive prototypes developed and tested by the prime contractor. According to program officials, all of the system’s critical technologies were mature and they had production representative hardware when product development started. The Air Force and competing contractors conducted systems engineering over the course of 2 years prior to development to refine requirements in light of available resources. During that time live fire testing was conducted and the Air Force held preliminary and critical design reviews—key systems engineering events—with each contractor. According to prime contractor officials, their interactions with the Air Force prior to the start of development allowed them to get a clear understanding of design requirements. As a result, they were able to achieve a stable design and provide a production representative system at the start of product development. With all of the detailed systems engineering done before development started, risks were understood. The Air Force had a sound business case that reflected a realistic understanding of the challenge facing the SDB I development program. The program’s total development cost decreased by almost 4 percent and the system was available for use 1 month earlier than initially estimated.", "Our analysis of the JLTV requirements challenge and the ensuing systems engineering effort is summarized in figure 7.\nAt the start of product development in 2012, the Army and Marine Corps and the JLTV prime contractor had performed detailed systems engineering to understand the challenge posed by requirements and remaining risks. The JLTV was expected to be a family of vehicles built on a common automotive vehicle platform to replace the High Mobility Multipurpose Wheeled Vehicle for some missions. In response to concerns raised by DOD’s acquisition executive regarding technical maturity, shifting requirements, and affordability, and in light of available resources, the Army and Marine Corps worked with three contractors prior to the start of product development to refine requirements. The Army and Marine Corps planned an incremental acquisition approach using mature technology and based on a design derived from prototypes developed and tested by the winning contractor prior to the start of product development. Basic capability would be provided initially, with enhanced force protection, increased fuel efficiency, greater payload, and other improvements to be added in later increments. As a result, the prime contractor was able to identify an allocated baseline and provide a mature product based on a demonstrated design at the start of development. With the bulk of the systems engineering done before development started, the JLTV program had taken steps to reduce risk and enable a sound business case that reflected a realistic understanding of the challenge it faced. The program has decreased development costs by 6 percent. Although acquisition cycle time has increased 19 months from initial estimates, program officials noted that the schedule growth was due to issues unrelated to systems engineering or program requirements, specifically production contract bid protests that delayed operational testing and the need to add time for Army users to complete critical training.", "The Global Positioning System III (GPS III), Paladin Integrated Management (PIM), and P-8A Poseidon Multi-Mission Maritime Aircraft (P-8A) programs provide examples in which top-level requirements generally posed moderate challenges with some risks that were identified and generally mitigated through systems engineering. In these cases, the government and the prime contractor conducted some detailed systems engineering to inform their program business cases before starting product development but not all requirements risks were mitigated, which contributed to problems and some cost and schedule growth.", "Our analysis of the GPS III requirements challenge and the ensuing systems engineering effort is summarized in figure 8.\nAlthough the Air Force and GPS III prime contractor conducted some detailed systems engineering to inform the program’s business case before the start of development in May 2008, additional risks to fielding the capability existed due to interdependencies associated with a critical ground control system and military user equipment that were being developed and managed as separate programs. The GPS III program is expected to develop and field a new generation of satellites to supplement and eventually replace currently operational GPS satellites. As the space segment of DOD’s effort to sustain and modernize the GPS system, the GPS III program is one part of a system of systems, which also includes the Next Generation Operational Control System (OCX), intended to replace the existing GPS ground system and to operate both current and future satellites, and the Military GPS User Equipment (MGUE), intended to provide the military services with new GPS receivers. In order to avoid problems associated with a previous GPS satellite program, the Air Force planned an incremental acquisition approach to GPS III, using technologies that were assessed as mature and performed some systems engineering to gain an early understanding of the challenge posed by requirements. According to contractor officials, this systems engineering, conducted during the competitive requirements development phase, helped them better understand design requirements. Regardless of these efforts, the program was negatively impacted by dependency on other systems.\nDesign and manufacturing problems with a key GPS III navigation subsystem delayed the program by almost 2 years; however, the satellites’ dependence on the much delayed OCX proved to be a greater challenge to sustaining and modernizing the GPS system. The delivery of the OCX Block 1, which is required to operate the GPS III satellites with both legacy and new capabilities, has been delayed by 6 years to July 2021 and may be delayed further because of ongoing developmental issues. As a result of the OCX program’s delays, the Air Force is pursuing a smaller scale program to modify the existing GPS operational control system to enable the operational use of GPS III satellites for all legacy GPS functions until delivery of the OCX Block 1, which will then permit the operational testing and use of the GPS III satellites’ new capabilities. Due to OCX delays and the likely timing of the contingency operations system the Air Force may need to delay the launch of multiple GPS III satellites or launch several without fully testing them. Moreover, although testing the satellites’ functionality is not dependent on new user equipment, timing of MGUE capability delivery will further postpone—by about a decade—the warfighter’s ability to take advantage of the upgraded system’s new military code, which offers greater resistance to jamming.", "Our analysis of the PIM requirements challenge and the ensuing systems engineering effort is summarized in figure 9.\nThe Army’s Paladin Integrated Management (PIM) program—officially the M109A7 Family of Vehicles—began formal product development as a major defense acquisition program in June 2011. The Army began early systems engineering and development work in 2007. At that time, PIM was a service life extension program for the existing Paladin M109A6 and according to program officials, was expected to be a relatively minor upgrade to update the fire control system and replace the power pack of the existing system. The Army expected these requirements to neither result in a significant or complicated design change, nor be costly. As part of the service life extension program, the Army had identified both functional and allocated baselines. By 2011, the Army had made several changes to the program, with significant implications for the design and cost of PIM. Specifically, the Army increased force protection and survivability requirements, as directed by DOD, and added a cannon that had been in development as part of the Army’s Future Combat Systems program before it was cancelled in 2009. These changes essentially resulted in a new design versus an upgrade, and the associated costs increased enough to make PIM a major defense acquisition program.\nThe program’s functional and allocated baselines were re-established in 2012, reflecting both the design changes and the systems engineering done since 2007, and ensured cost and schedule estimates were sufficiently informed for a sound business case. Since 2011, development cost has increased 5 percent and the program has experienced a schedule delay of 2 months. While not a textbook example of how to keep requirements stable during a program, PIM’s experience shows that changes can be accommodated when accompanied by a suitable systems engineering effort.", "Our analysis of the P-8A Increment I requirements challenge and the ensuing systems engineering effort is summarized in figure 10.\nAt the start of P-8A development in 2004, the Navy and the prime contractor had completed some detailed systems engineering but an allocated baseline was not yet established. The P-8A is expected to replace an existing system, the P-3C Orion, and meet aspects of the Navy’s anti-submarine warfare, anti-surface warfare, and intelligence, surveillance, and reconnaissance capability requirements. The Navy planned an incremental, evolutionary acquisition approach focused on providing a first increment of capability to users in the quickest and most cost efficient manner. The Navy also expected P-8A Increment I to be built on open systems architecture to allow subsequent increments to more easily deliver increased capabilities. In addition, the airframe was to be derived from an existing commercial aircraft. According to prime contractor officials, the P-8A airframe design was about 50 percent common with the commercial airframe from which it was derived. At the start of development, none of P-8A Increment I’s four critical technologies were mature, increasing risk associated with the program’s business case. However, as part of its systems engineering analysis, the Navy and the prime contractor identified mature backup technologies that could be used if the critical technologies did not mature as expected thus mitigating some of the technology risk. P-8A Increment I experienced some cost and schedule growth. That growth is largely due to delays in the completion of the final system design. As of February 2016, the program’s development cost estimate had increased 14 percent, and its acquisition cycle time had increased by 4 months.", "The F-35 Lightning II (F-35) and CH-53K Heavy Lift Replacement Helicopter (CH-53K) did not conduct adequate systems engineering prior to starting product development, and as result began development with significant risks and a limited understanding of the challenge posed by their requirements. Neither program had established a functional or allocated baseline before development began. In fact, their allocated baselines were not established until years into product development. The government and prime contractor for the Integrated Air and Missile Defense (IAMD) program did some systems engineering before the start of product development, but the Army made high-level changes during the first year of development to integrate additional systems, necessitating additional detailed systems engineering work after the start of development.", "Our analysis of the F-35 requirements challenge and the ensuing systems engineering effort is summarized in figure 11.\nAt the start of development in 2001, neither DOD nor the F-35 prime contractor had conducted detailed systems engineering to adequately retire risk, establish an allocated baseline, and truly understand the challenge posed by their requirements. As a result, the F-35 program did not have a sound, executable business case. The F-35 was a next generation, highly complex stealth fighter with integrated avionics and software intensive mission systems being developed in three variants to meet the needs of three U.S. military services and various international partners. When development began, DOD planned to achieve full capability using a single-step acquisition approach and the F-35’s critical technologies were immature. DOD’s initial program plans showed that key systems engineering analyses to support an allocated baseline would not be complete until the program was years into development.\nThe bulk of F-35 systems engineering was done after development began and the program experienced significant cost and schedule growth— development costs increased 60 percent over initial estimates and initial operational capability was delayed over 5 years—and was restructured three times. The first restructuring was driven by the discovery of significant weight issues with the F-35B variant as the program developed its preliminary design, resulting in costly design changes. DOD and prime contractor data indicate that the system’s functional baseline—detailing the system-level design—was not finalized until 4 years into development. As systems engineering continued and testing began, additional discoveries were made, requiring further design changes and contributing to the two additional restructurings. Ultimately, the program realized that some capabilities originally envisioned when development began would not work as expected and would have to be completed as part of follow- on development program.", "Our analysis of the CH-53K requirements challenge and the ensuing systems engineering effort is summarized in figure 12.\nAt the start of development in 2005, neither the Marine Corps nor the CH- 53K prime contractor had conducted detailed systems engineering to adequately retire risk, establish an allocated baseline, and fully understand the challenge posed by their requirements. They had established neither a performance specification nor a functional baseline. As a result, the CH-53K program did not have a sound, executable business case. The Marine Corps and the prime contractor disagreed on what specific systems engineering tasks were needed, and initial plans showed that key analyses would not be complete until the system was well into development. The Marine Corps expected the CH-53K to provide improvements relative to the CH-53E in range and payload, survivability and force protection, reliability and maintainability, coordination with other assets, and overall cost of ownership. As a result and in order to meet requirements, an entirely new aircraft design was needed. According to the prime contractor, none of the parts in the new design were common parts with the CH-53E. When development began, the Marine Corps planned to achieve full capability using a single-step acquisition approach. At that same time, the system’s critical technologies were not mature.\nNearly all CH-53K systems engineering was done after development began, and the program experienced significant cost and schedule growth. Because the program office and prime contractor disagreed on what systems engineering tasks needed to be accomplished, problems began immediately following the start of development. Once systems engineering began and problems were identified, the Marine Corps chose to defer some key performance capabilities to reduce development costs, and, in 2010, the program was restructured with a new baseline approved in 2013. Discoveries during ground testing and qualification drove additional unanticipated design changes and delays. As a result, the program’s initial production decision was delayed 8 months, and the program now plans to establish a new cost baseline. In total, the program’s development costs have increased 51 percent over initial estimates, and its initial operational capability has been delayed by over 4 years.", "Our analysis of the IAMD requirements challenge and the ensuing systems engineering effort is summarized in figure 13.\nAlthough the Army and IAMD prime contractor had conducted some detailed systems engineering and technologies were assessed as nearly mature at the start of product development, the IAMD program’s business case was critically dependent on sensors and weapons that had been developed and managed as separate programs. IAMD is expected to network sensors, weapons, and a common battle command system across an integrated fire control network to support the engagement of air and missile threats. The Army planned an incremental acquisition approach and held a competition for preliminary design to mitigate risk in May 2009. Prime contractor officials told us they conducted systems engineering prior to the start of development, which may have helped them better understand design requirements. While a functional baseline was established prior to the start of product development and the prime contractor built a basic design prototype to demonstrate for the government that the design architecture would work, the system’s allocated baseline was not fully established until after the start of development.\nSystem interdependency has posed challenges to the IAMD program in several ways. The Army made high-level changes in IAMD during the first year, which resulted in the program having to integrate additional systems and causing significant changes in how the systems were to interact. According to prime contractor officials, three of the four IAMD critical technologies rely on interfacing with other systems and many of these interfaces were not defined until after the development contract was awarded. IAMD has encountered challenges integrating new software from the contractor with other acquisition programs critical to its functionality. IAMD development cost has increased over 60 percent since the start of development, with about half of the increase occurring in the first year. The program has been rebaselined and initial operational capability has been deferred by 2 years. This experience is somewhat similar to that of the GPS III with an important distinction. While challenges with GPS III’s interdependence with other systems did not significantly affect the design of the satellites themselves, the interdependence of IAMD did have significant implications for its software design, which were not recognized until after the start of product development.", "Systems engineering, if done well, can be a key enabler for establishing a sound business case for a program before the start of product development. By the same token, it can provide indications to Congress and other organizations responsible for oversight as to the soundness of DOD’s approach to undertaking a new program. The decision to begin product development is the last opportunity in the acquisition process— prior to committing to a major financial investment—to level a product’s requirements to available resources, thereby establishing a good business case. A sound business case provides credible evidence that (1) the warfighter’s needs are valid and that they can best be met with the chosen concept; and (2) the chosen concept can be developed and produced within existing resources—that is, proven technologies, sufficient design knowledge, adequate funding, and adequate time exist to deliver the product when it is needed. A program should not go forward into product development, nor should this step be funded, unless a sound business case can be made. Therefore, Congress, which is responsible for making that funding decision, should also have insight into the soundness of the business case. However, given current budget processes and mechanics in DOD today, these congressional decisions must be made well in advance of the start of product development and establishment of the final business case.\nSystems engineering is essential to establishing a sound business case. We have previously found that key enablers of a good business case include firm, feasible requirements, mature technology, an incremental, knowledge-based acquisition strategy, and a realistic cost estimate. Our work examining commercial companies’ best practices has found that requirements should be clearly defined, affordable, and clearly informed—thus tempered—by systems engineering prior to the start of product development. Once programs begin, requirements should not change without assessing their potential disruption to the program. In addition, science and technology organizations should shoulder the technology development burden, proving technologies can work as intended before they are included in a weapon system program. The principle is not to avoid technical risk, but rather take risk early and resolve it ahead of the start of product development. Programs should use an incremental, knowledge-based acquisition strategy. We have found that rigorous systems engineering coupled with more achievable requirements are essential to achieve faster delivery of needed capability to the warfighter. Building on mature technologies, such a strategy provides time, money, and other resources for a stable design, building and testing of prototypes, and demonstration of mature production processes. Finally, a good business case will have a realistic cost estimate based on a knowledge-based acquisition strategy, independent assessments, and sound methodologies.\nOver the years, and as previously noted in this report, we have found that for a program to deliver a successful product with available resources, high levels of knowledge—informed by systems engineering—must be demonstrated before significant commitments are made. This requires the user and developer to negotiate whatever trade-offs are needed to achieve a match between the user’s requirements and the developer’s resources before product development begins. While it would seem that taking such an approach would be axiomatic, we have found that it is not. On the contrary, we have previously found that there are strong incentives within the culture of weapon system acquisition to overpromise a prospective weapon’s performance while understating its likely cost and schedule demands. Competition with other programs vying for defense dollars puts pressure on program sponsors to project unprecedented levels of performance (often by counting on unproven technologies) while promising low cost and short schedules. These incentives, coupled with a marketplace that is characterized by a single buyer (DOD), low volume, and limited number of major sources, create a culture in weapon system acquisition that encourages undue optimism about program risks and costs.\nA particular challenge for Congress is the fact that committees must often consider requests to authorize and fund a new program well ahead of the start of product development—the point at which key business case information would be presented. For example, if DOD has scheduled a decision to start a new development program in August 2017, the funding needed for the first year of development would have to be included in DOD’s fiscal year 2017 budget request. This budget request would be submitted to Congress in February 2016, or 18 months before the actual program decision. Given this time lag, Congress could be making critical funding decisions—which in effect authorize the start of development— with limited information about program risk factors, systems engineering progress, and the soundness of the program’s business case.\nThe nine case studies we examined for this report suggest that understanding the dynamic between program requirements, risks, and the requisite systems engineering analysis can facilitate early oversight. Specifically, when the top-level requirements for what could be a new major weapon system are initially identified in a draft Capability Development Document, the challenge those requirements pose and how it relates to the four factors we identified—acquisition approach, technology status, design maturity, and system interdependence—can be observed. Once the challenge is framed, the systems engineering plan can be refined to obtain the requisite knowledge to (1) identify expectation gaps and other risks, and (2) resolve them by the start of product development. Ultimately, the final Capability Development Document could then be informed by an allocated baseline (the preliminary design) and provide a sound basis for an executable business case. This sequence of events is notionally depicted in figure 14 along with when a budget to start a new program is submitted to Congress.\nWhile congressional insight at the time of the funding decision is limited, DOD policy directs program managers to provide certain documents to DOD decision makers that when taken together could provide a picture of a proposed program’s risk factors and systems engineering status. Programs are generally required to provide versions of these documents to DOD decision makers prior to each major milestone review, including the start of development. However, it is not clear whether Congress is given the same information DOD decision makers are given when DOD submits its budget request for funding to begin a new program. Those documents include an acquisition strategy, a test and evaluation master plan, a technology readiness assessment, and a systems engineering plan.\nThe systems engineering plan is of particular interest because it brings the risk factors that we have identified together with a proposed program’s systems engineering knowledge. According to DOD acquisition policy, the plan will be submitted for approval for each milestone review, beginning with the milestone review to approve the start of the technology maturation and risk reduction phase—the acquisition phase that precedes the start of product development. DOD views the plan as a “living document” that it expects to be updated as needed throughout the acquisition process. The plan is expected to support the acquisition strategy, including the program interdependencies, and communicate the overall technical approach to balance system performance, life-cycle cost, and risk in addressing warfighter needs. It should describe the program’s overall technical approach, including key technical risks, processes, resources, organization, metrics, and design considerations. It should also detail the timing and criteria for conducting systems engineering technical reviews, including those that will establish the functional, allocated, and product level baselines. In addition, the plan should address system integration risks, including risks related to external dependencies which are outside the program manager’s span of control in order to ensure timely design, development, deployment, and sustainment of the system. Key aspects of the plan are intended to support more detailed technical planning in order to provide effective management and control of the program’s technical progress and the execution of risk mitigation activities.\nIf the key factors that frame the requirements challenge are understood, a functional baseline is established, and a realistic plan exists to complete the allocated baseline, Congress will have more assurance that a program is on a path to a sound business case—informed by an allocated baseline—as it considers funding requests for development start, and a systems engineering plan could help to pull these elements together.", "Weapon system development programs involve unknowns that translate into cost and schedule risk. This is the nature of any product development program. The case studies in this report illustrate a strong relationship between requirements, systems engineering, and program outcomes. They show that one key to avoid poor outcomes in major weapon system development programs is not necessarily to eliminate all risks, but instead to invest in detailed systems engineering analysis to understand the design implications of requirements and reconcile them with the resources that can be reasonably expected. At a minimum, this reconciliation, or match, should be evidenced by an allocated baseline— that is, a preliminary design—before committing to a product development program. Our cases indicate that regardless of the challenge posed by initial requirements, systems engineering, if done well, can be a key enabler of a sound business case for starting a new development program. This helps to ensure that if a program takes risks, those risks are clearly identified, and any resource consequences are acknowledged and accounted for in cost and schedule estimates. In some cases—as seen with JLTV and PIM—this process could take time and result in requirements changes, but, if done before committing to a product development, it is more likely to result in a sound and executable business case.\nUnderstanding the dynamic between program requirements, risks, and systems engineering can facilitate early oversight—thus offering a potential curb to overpromising. When the top-level requirements for what could be a new major weapon system are initially identified in a draft Capability Development Document, DOD should clearly understand the challenge presented by those requirements as framed by the four factors we identified. Having a clear understanding of the challenge presented by the initial requirements, coupled with a systems engineering plan laid out against a schedule to achieve a sound, executable business case before the start of product development would provide Congress and other oversight organizations a means to assess the soundness of a proposed acquisition program. Importantly, it would be possible to assess progress made by the program against the plan, using the identification of key systems engineering baselines as waypoints. As progress is made, artifacts of knowledge—in terms of the systems engineering baselines as well as decisions made to trade off requirements, choose alternate design or technology solutions, and to add time and money to close gaps— should also be available. While Congress would still likely be in the position of considering a budget request to start a program well before DOD’s actual decision to start product development, the systems engineering plan and progress made against it would provide more robust input to Congress’s deliberations. This could also provide Congress with better insight into the risks facing a proposed development program— including the risks a program may be taking after the start of product development in the event that the desired level of systems engineering is not complete.", "To enhance program oversight and provide more robust input to budget deliberations, Congress should consider requiring DOD to report on each major acquisition program’s systems engineering status in the department’s annual budget request, beginning with the budget requesting funds to start development. The information could be presented on a simple timeline—as done for the case studies in this report—and at a minimum should reflect the status of a program’s functional and allocated baselines as contained in the most current version of the program’s systems engineering plan.", "We provided a draft of this report to DOD for review and comment. DOD’s written comments are reprinted in appendix II of this report. That draft report included a recommendation that DOD submit the systems engineering plans of each new proposed development program to Congress at the same time the budget requesting funds to begin development is sent to Congress. DOD did not agree with our recommendation. In its comments, DOD agreed that early systems engineering reduces risk and establishes a solid foundation for program success. However, DOD noted that the systems engineering plan is a management tool to guide a program’s system engineering activities and the timing of the plan and any updates are not aligned to inform a budget decision that could occur as much as 18 months prior to program initiation. DOD also noted that it believes that existing statutory certifications and reports submitted to Congress contain adequate information regarding program risk and technical maturity. We appreciate DOD’s thoughtful response and agree that existing statutory certifications and reports provide some level of insight into program risks and general assurance that plans are in place to address those risks. However, it is not clear whether they provide adequate detail about progress against those plans, such as whether a functional baseline has been established or when an allocated baseline will be established. In addition, those certifications and reports are linked to program milestone reviews and are not specifically aligned to inform program budget decisions. Documents such as the systems engineering plan are “living documents” that are updated as needed throughout the acquisition process and could be made available to inform the budget process. Therefore, we continue to believe that linking robust insight into systems engineering progress, like the information contained in the systems engineering plan, with the timing of congressional budget deliberations would be beneficial and as such are now including a matter for congressional consideration. Given that the systems engineering plan is updated during the acquisition process, linking systems engineering progress to budget requests need not be onerous. As noted above, this could be accomplished using a top-level timeline of less than a page, as done in the case studies in this report.\nWe are sending copies of this report to interested congressional committees and offices; the Secretary of Defense; the Secretaries of the Army, Navy, and Air Force. In addition, the report will be made available at no charge on the GAO Web site at http://www.gao.gov.\nIf you or your staff has any questions concerning this report, please contact me at (202) 512-4841. Contact points for our offices of Congressional Relations and Public Affairs may be found on the last page of this report. Staff members making key contributions to this report are listed in appendix III.", "This report (1) identifies a framework for assessing the challenges and risks associated with program requirements and the extent of systems engineering done before product development begins; (2) illustrates the relationship between systems engineering and program outcomes; and (3) assesses implications for program management and oversight.\nTo conduct our work, we selected a non-generalizable sample of 9 major defense acquisition programs, out of a total portfolio of 79 programs, to include at least 2 from each service and Department of Defense (DOD) wide programs. The specific case study programs we selected are identified in table 1.\nTo assess the challenges and risks associated with program requirements and the extent of systems engineering done by each of the 9 programs before development began, we analyzed top-level program requirements such as key performance parameters, key system attributes, and other system attributes, as well as lower-level derived requirements like system design specifications and design drawings. For each case study program, we requested and analyzed the number of requirements identified for each baseline (functional, allocated, and product level) at the time of system engineering reviews and program milestones and compared the results to DOD systems engineering guidance, DOD acquisition policy, and our previous GAO reports examining weapons systems acquisitions and best practices for product development. To ensure our understanding of commercial best practices remained current, we interviewed officials from leading companies including Caterpillar, Inc., Cummins, Inc., Proctor and Gamble, and Motorola Solutions. In addition, we assessed documents and data from system engineering reviews and program reported technology readiness levels; and we reviewed program acquisition strategies, capability development documents or operational requirements documents, acquisition baselines, and selected acquisition reports.\nTo assess the relationship between systems engineering and program outcomes, we analyzed requirements, cost, and schedule documentation for each of our case study programs, and then met with relevant program officials and prime contractors to obtain relevant program documents, data, and historical information. We reviewed selected acquisition and Defense Acquisition Executive Summary reports, budget data, DOD Systems Engineering assessments of preliminary and critical design reviews, and previous GAO reports such as our annual reviews of major defense acquisition programs and program specific reports.\nTo identify program oversight implications, we also reviewed relevant acquisition statutes, DOD acquisition policy, systems engineering guidance, and previous GAO reports examining weapons systems acquisitions and best practices for product development. To obtain additional insights into these implications, we spoke with knowledgeable DOD officials including program managers and prime contractors for our case study programs. We assessed the reliability of DOD and contractor data by reviewing existing information about the data and interviewing agency officials knowledgeable about the data. We spoke to both program and prime contractor officials for each of the case study programs and determined that the data were sufficiently reliable for the purposes of our reporting objectives.\nWe conducted this performance audit from June 2015 to November 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, Travis Masters (Assistant Director); Peter Anderson; Marvin Bonner; Robert Bullock; Kurt Gurka; Scott Hiromoto; Jean McSween; Robert Miller; LeAnna Parkey; and Roxanna T. Sun made key contributions to this report." ], "depth": [ 1, 1, 1, 2, 3, 3, 3, 2, 3, 3, 3, 2, 3, 3, 3, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_full h1_full", "h1_full", "h1_full", "", "", "", "", "", "", "", "h1_full", "", "", "", "h0_full h2_full", "", "h2_full", "h2_full", "h3_full", "", "", "", "" ] }

{ "question": [ "What challenges do a given weapon system's requirements pose?", "Why is systems engineering crucial to the success of a program?", "How does the timing of systems engineering negatively or positively impact a program?", "What is the advantage of utilizing preliminary designs?", "What kinds of programs had better outcomes?", "What specifically about such programs led to desired outcomes?", "Why did some programs fail to produce the desired outcome?", "What challenges must Congress overcome in overseeing product development?", "How does DOD policy address the need to take into account risk factors of a program?", "How could DOD better communicate its process to Congress?", "What was DOD's response to this report?", "What does Report 114-102 address?", "How did GAO assess the role of system engineering in product development?" ], "summary": [ "GAO's analysis of nine case studies identified four factors that frame the challenge posed by a given weapon system's requirements: acquisition approach, technology status, design maturity, and system interdependency.", "Systems engineering is the primary means for determining whether and how that challenge can be met. It is a disciplined learning process that translates requirements into specific design features and thus identifies key risks to be resolved.", "GAO's prior best practices work has found that if detailed systems engineering is done early, a program can resolve such risks through trade-offs and additional investments before a program starts.", "A key point in systems engineering where this match can be assessed is the preliminary design. As shown below, establishing a preliminary design through early detailed systems engineering portends better program outcomes than doing so after program start.", "Programs with modest requirements and early detailed systems engineering had better outcomes.", "For example, the Small Diameter Bomb Increment I program, which delivered within cost and schedule estimates, had an incremental approach, mature technologies, a derivative design, and detailed systems engineering before development began.", "Programs that began with more challenging requirements and insufficient systems engineering reported worse outcomes. For example, the F-35 Lightning II, which has encountered significant cost and schedule problems, began development with a single-step approach, a highly complex design, immature technologies, and little systems engineering.", "Understanding the dynamic between a program's requirements, risks, and the requisite systems engineering effort has important implications for oversight. A particular challenge is that Congress often must consider requests to authorize and fund a new program in advance of the start of product development, when the business case would be better established.", "DOD policy requires that DOD decision makers have information about a proposed program's risk factors and systems engineering status, in a systems engineering plan, at the start of a new program.", "However, it is not clear whether Congress also has this information at that time. A systems engineering plan could provide more robust information to Congress when considering a budget request to start a new program.", "In commenting on a draft of this report DOD disagreed.", "This report (1) identifies a framework for assessing the challenge posed by weapon system requirements and the extent of systems engineering done before product development begins; (2) illustrates the relationship between systems engineering and program outcomes; and (3) assesses implications for program oversight.", "GAO analyzed a non-generalizable sample of nine case studies. GAO assessed the extent to which systems engineering was conducted before development by reviewing program requirements and analyzing cost and schedule documentation for each case study." ], "parent_pair_index": [ -1, -1, 1, 1, -1, 0, 0, -1, -1, -1, -1, -1, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 1, 1 ] }

{ "title": [ "Background", "Band Types and Structure", "Roles and Responsibilities of Organizations and Personnel Related to Military Bands", "All Military Services Have Reduced the Number of Bands and Band Personnel since 2012, but Total Operating Cost Trends Varied across the Services", "The Number of Military Bands and Authorized Military Personnel Decreased across All Military Services from Fiscal Year 2012 through 2016", "Number of Bands", "Future Changes to the Number of Bands and Total Band Personnel", "Trends in Total Reported Operating Costs Varied across the Military Services, and Active-Duty Military Personnel Costs Have Decreased Consistent with Personnel Reductions Reported Operating Costs for Fiscal Years 2012 through 2016", "Active-Duty Military Personnel Pay and Allowance Costs for Calendar Years 2012 to 2016", "Military Services Consider Instrumentation and Regional or Command Needs to Determine the Size and Location of Bands, and Assess Ongoing Needs through Existing Force-Structure and Budget Reviews", "Military Services Consider Instrumentation Needed to Perform at Required Events to Organize Their Bands", "Regional and Field Band Locations Are Determined Based on Command Assignments or Regional Needs", "Military Services Consider the Number and Size of Bands and Ongoing Needs as Part of Their Existing Force-Structure and Budget Review Processes", "Military Services Have Tracked and Used Information on Band Events but They Have Not Developed Objectives and Measures to Assess How Bands Are Addressing Their Missions", "Military Services Have Tracked Information on Band Events, and Bands Reported Using This Information to Plan and Improve Future Events", "Military Services Have Not Developed Objectives and Performance Measures to Assess How Their Bands Are Addressing the Bands’ Missions", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Development and Analysis of GAO Military Bands Questionnaire", "Appendix II: Observations on Band Facility and Transportation Resources", "Band Facility Resources", "Band Transportation Resources", "Appendix III: Location of Active-Duty Bands in Fiscal Year 2016", "Appendix IV: Location of Reserve- Component Bands in Fiscal Year 2016", "Appendix V: Comments from the Department of Defense", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "The military services have two types of bands: (1) premier and specialty bands and (2) regional and field bands. The premier and specialty bands are predominately located in the National Capital Region and have a ceremonial mission, but they also engage in community-relations activities. For example, the bands’ performances include ceremonies at Arlington National Cemetery and events where high-level officials—such as the President and the military service Secretary and Chief of Staff— are in attendance. The regional and field bands are located throughout the United States and worldwide, and provide musical support to military units or commands by fulfilling ceremonial missions, participating in community-relations events, and performing for military service members.\nBands typically consist of multiple musical groups, such as a ceremonial band, brass quintet, and popular music group. Figure 1 describes examples of the different types of musical groups a band may have.", "The Office of the Assistant to the Secretary of Defense for Public Affairs establishes policies and implementation guidance for DOD’s public affairs programs, including community-relations activities. In this role, the Office of the Assistant to the Secretary of Defense for Public Affairs oversees the execution and movement of military bands to support community-relations activities.\nThe services vary in their structures for managing their bands. The Navy centrally manages its band program, while the Army, Marine Corps, and Air Force have decentralized management of their bands. All Navy regional and field bands and the U.S. Naval Academy Band are field activities of the U.S. Navy Band. The U.S. Navy Band also provides funding to the Navy’s regional and field bands through Fleet Band Activities, while the Superintendent of the U.S. Naval Academy provides funding to the U.S. Naval Academy Band. The Army, Marine Corps, and Air Force have service headquarters-level organizations that manage their band programs, but their service guidance provides that local commands maintain control over and provide funding for their bands. Table 1 identifies Army, Navy, Marine Corps, and Air Force offices that manage their military service’s bands, and summarizes the offices’ responsibilities.\nThe band members’ roles and responsibilities related to training and deployment vary across the services. Members of all bands except for the U.S. Marine Band—“The President’s Own” complete basic training and ongoing physical fitness requirements. Their responsibilities for deploying to a combat environment and whether they perform nonmusical duties in combat environments vary by service and the type of band. Except for the Marine Corps, the primary mission of band members who deploy is to perform music. Marine Corps band members, according to band program officials, provide perimeter security or support convoy operations when deployed to a combat environment. In addition, according to military- service band program officials, members of Army National Guard and Air National Guard bands can be called upon to assist other Air and Army National Guard units with civil-defense duties and disaster-relief efforts. Table 2 shows the basic training, ongoing physical fitness, and combat environment requirements for the military services’ bands.", "The military services reduced their number of bands by 9.3 percent, and also reduced military personnel authorizations dedicated to bands by 7.5 percent, from fiscal year 2012 through 2016. Over the same period, the Navy and Air Force reported increases in their total operating costs for bands, while the Marine Corps reported that its costs declined. The Army did not have complete data for the operating costs of its reserve bands from fiscal year 2012 through 2015, but reported declines in total operating costs for its active-duty and National Guard bands. Pay and allowance costs of active-duty military personnel dedicated to bands decreased from calendar year 2012 through 2016 for all of the military services, consistent with the reductions in military personnel authorizations dedicated to active-duty bands.", "", "The number of bands in the four military services decreased from 150 in fiscal year 2012 to 136 in fiscal year 2016, a decline of 9.3 percent (see table 3). The extent of reductions in the number of bands varied by service, with the Air Force reporting the largest decrease and the Army reporting the smallest decrease in the number of bands from fiscal year 2012 through 2016.\nFrom fiscal year 2012 through 2016, according to military-service data and officials, total military personnel authorizations dedicated to bands decreased by 7.5 percent—from 7,196 in fiscal year 2012 to 6,656 in fiscal year 2016 (see table 4). The extent of reductions in military personnel authorizations varied by service and component. For example, the total number of military personnel authorizations dedicated to Air National Guard bands declined from 320 to 200—or 37.5 percent—from fiscal year 2012 through fiscal year 2016, while the total for Army Reserve and National Guard bands stayed the same in that period. According to military-service officials, resource constraints have led to past reductions in the size of their bands.\nOur analysis shows that the total military personnel authorizations dedicated to bands account for a relatively small amount of the military services’ end-strength authorizations, and have decreased at a similar rate compared to total service end-strength authorizations from fiscal year 2012 through 2016. Specifically, in fiscal years 2012 through 2016, the number of military personnel authorizations dedicated to bands was less than half a percent of the military services’ end strength for all services. In addition, the total number of military personnel authorizations dedicated to bands declined by 7.5 percent compared to a 6.6 percent decline in personnel authorizations overall (from 2.3 million authorizations in fiscal year 2012 to 2.1 million authorizations in fiscal year 2016) across the four military services over this period.", "The Army plans to reduce the number of bands and military band personnel from fiscal year 2017 through 2019. The Army plans to close 12 bands—8 active-duty bands and 4 reserve bands—and reduce the number of personnel authorizations dedicated to 43 National Guard bands over this period. As a result of these reductions, the Army plans to reduce the total number of military personnel authorizations dedicated to Army bands from 4,497 in fiscal year 2016 to 3,865 in fiscal year 2019, or by about 14 percent (see table 5). The other three services do not have plans to change the number or size of their bands at this time, according to service officials.", "The Navy and Air Force reported that the total operating costs of their bands increased from fiscal year 2012 through 2016, and the Marine Corps reported decreased costs over this period. The Army did not have complete data for its reserve bands from fiscal year 2012 through 2015, but reported decreases in total operating costs for its active-duty and National Guard bands. Operating costs for the bands include expenses not related to military personnel, such as travel, transportation, instruments, uniforms, office supplies, and civilian salaries. According to military-service band program officials, the military services use operations and maintenance appropriations to fund their band programs. At the component level, the Army active-duty, Army National Guard, Marine Corps active-duty, and Air National Guard bands reported decreases in their total operating costs from fiscal year 2012 through 2016, and the Navy active-duty and Air Force active-duty bands reported increases in their costs in the same period (see table 6).\nNavy band program officials stated that their bands’ operating costs increased in part because the band program was not adequately funded to meet its mission in fiscal years 2012 through 2014 prior to the band program’s reorganization in fiscal year 2015. In addition, the officials stated that the U.S. Navy Band had onetime renovation costs of $749,000 in fiscal year 2016 for its office facilities and had to increase civilian and contractor staffing to meet its new command responsibilities as a result of the band program’s reorganization. An Air Force band program official stated that local commands are responsible for funding their bands, so bands may have had unique circumstances that led to increases in costs over time. For example, the official noted that after Bolling Air Force Base transitioned to Joint Base Anacostia-Bolling, the band at that location became responsible for funding such things as building maintenance for its facilities on the base. The official stated that the band was not previously responsible for these expenses, which, in part, led to increases in the band’s funding in fiscal years 2014 through 2016.\nTravel and equipment expenses are among the highest-operating cost areas for individual bands, according to military-service band program officials. Bands travel throughout their areas of operations or responsibility to perform at events. In addition, according to military- service guidance or band program officials, bands maintain professional- grade instruments for their band members. Band program officials or band commanders we met with noted that band members need to have professional-grade instruments for several reasons, including working at a high number of events in a range of weather conditions and a variety of venues, such as an indoor reception or an outdoor parade. One band commander we met with stated that the band’s travel costs were about $364,000 in fiscal year 2016, accounting for 43 percent of the band’s total costs of about $850,000. That same band commander stated that the band’s supply costs, such as instruments, instrument supplies, and uniforms, were at least about $142,000, or at least 17 percent of the band’s total costs in fiscal year 2016. For another band, the band commander we met with reported that travel costs were about $228,000, or 68 percent of the band’s total costs of about $338,000 in fiscal year 2016, while the band’s costs of purchasing instruments, instrument supplies, sheet music, and sound supplies were about $92,000, or 27 percent of the band’s total costs.", "According to data from the Defense Finance and Accounting Service, pay and allowance costs of active-duty military personnel dedicated to bands decreased from calendar year 2012 through 2016 for all of the military services (see table 7). Although a direct comparison with personnel authorizations is not possible because the personnel counts above are in fiscal years and pay and allowance costs were reported by DOD in calendar years, the Army, Navy, Marine Corps, and Air Force reduced pay and allowance costs over time consistent with the overall decrease of 10 percent in personnel authorizations dedicated to active-duty bands from fiscal year 2012 through 2016.\nWe were not able to obtain data that were sufficiently reliable for determining trends in the pay and allowance costs of military personnel dedicated to National Guard and reserve bands in the Army and Air National Guard bands in the Air Force in time for our review. For example, in calendar years 2012 through 2016, the Defense Finance and Accounting Service could not identify pay and allowance data for between about 6 and 24 percent of the military personnel that the Defense Manpower Data Center reported were dedicated to Army National Guard bands in those years.", "The military services consider the instrumentation needed to perform at required events, as well as needs of the region or command to which a band is assigned, to determine the size and location of their military bands. In addition, the military services assess the overall size of, and ongoing needs for, their bands through existing force-structure and budget review processes, typically in response to proposed resource reductions.", "The military services consider the instrumentation needed to perform at a variety of required events to organize their bands. According to military- service band program officials, the premier and specialty bands tend to be larger than regional and field bands because of the bands’ unique missions and the number and types of high-profile events these bands perform. In fiscal year 2016, the premier and specialty bands ranged in size from 35 to 252 military personnel authorizations. According to military-service guidance or band program officials, the military services organize their premier and specialty bands so that each band consists of multiple musical groups to meet a variety of musical requirements. These groups can range from a large concert band to smaller musical groups, such as a rock band, and can perform simultaneously at different venues. For example, Army force-structure and band program officials stated that the U.S. Army Band—“Pershing’s Own,” which had 252 military personnel authorizations dedicated to the band in fiscal year 2016, has seven musical groups that performed a total of about 6,000 events in fiscal year 2016, according to data from the Army. According to these officials, the musical groups include a 54-member ceremonial band that supports official government events and military funerals at Arlington National Cemetery, a 54-member concert band that performs at official and public engagements, and the 16-member Herald Trumpets ensemble, comprised of 14 trumpet players and 2 drummers, that performs at the White House to welcome foreign ambassadors and visiting heads of state.\nRegional and field bands are generally smaller than premier and specialty bands and, with the exception of one 15-member band in the Air Force, ranged in size from 35 to 75 military personnel authorizations in fiscal year 2016. Similar to the premier and specialty bands, the military services have organized these bands with multiple musical groups to perform at required events. For example, Air Force guidance states that regional and field bands must have a sufficient number of band members to support State Funeral Plans and deployments, and to ensure the bands have adequate personnel for assignment rotations both within and outside of the United States. In the case of the Marine Corps, officials stated that each regional and field band needed to be the size of a rifle platoon to meet its ceremonial requirements and because band members may deploy to support combat operations. Figure 2 shows the organization of a 35-member Navy band, illustrating how a military band is organized into multiple groups to meet its musical requirements.", "The military services have generally determined the location of their regional and field bands based on the command or region the bands support. Appendixes III and IV include a map showing the location of active-duty and reserve-component bands, respectively, in fiscal year 2016.\nArmy— Army guidance provides rules of allocation and stationing for regional and field bands. The guidance allows planners to determine required resources and personnel to execute music support operations and identify stationing and mission command relationships. Allocations and stationing are based on the type of organization being supported, such as division headquarters or training centers, as well as the number of brigades. According to the Army, the Army has assigned its active-duty regional and field bands to division commands and training centers, and its National Guard and reserve regional and field bands geographically based on factors such as (1) population centers to support recruitment and retention of Army musicians and (2) the location of troop and veteran populations in the states and territories. For example, an Army Reserve band is located in Los Angeles County, California, which had the highest estimated number of veterans in the United States as of the end of fiscal year 2015, and an Army National Guard band is located in Maricopa County, Arizona, which had the second-highest estimated number of veterans in the United States.\nNavy—According to Navy band program officials, the Navy’s regional and field bands are located in the largest fleet or headquarters locations. Each of the regional and field bands located within the contiguous United States has a geographic area of responsibility, while the operational commanders define the geographic areas of responsibility for the regional and field bands in Hawaii, Italy, and Japan.\nMarine Corps—A Marine Corps band program official stated that the Marine Corps has assigned its regional and field bands to major commands. Marine Corps guidance requires the commanding general of the commands to which bands are assigned to determine the size of each band’s area of responsibility for performing events, which the guidance defines as the geographic area in which an installation, its units, and personnel have an economic and social impact. For example, the commanding general of the 3rd Marine Aircraft Wing, located in San Diego, California, established its band’s area of responsibility for military and civilian events as within a 100-mile radius of the installation, to include other specific Marine Corps units outside of this radius, such as the Marine Corps Air Station in Yuma, Arizona. A band program official stated that the Marine Corps regional and field bands are located at major commands to provide ceremonial support to the largest number of Marines and subordinate commands.\nAir Force—According to Air Force band program officials, the Air Force has assigned its active-duty regional and field bands to major commands and generally located Air National Guard bands in states with higher numbers of Air National Guard wings. Air Force guidance assigns a geographic area of responsibility to the active-duty and Air National Guard regional and field bands located within the contiguous United States, while the commands for the two bands located in Germany and Japan assign their bands’ geographic areas of responsibility. Air Force band program officials noted that they have also kept the active-duty bands located with major commands, in part, because they are spread out evenly across the United States where the bands can reach large population centers.", "The military services consider the overall size of, and ongoing needs for, their military bands through existing force-structure and budget reviews. In the past, the services have generally assessed the size of their bands in response to proposed resource reductions; however, Army force- structure officials stated that the Army plans to make recommendations based on a review of its music structure by the end of fiscal year 2017.\nArmy—The Army reviews the number and size of its bands through its annual Total Army Analysis process, during which the Army determines how it allocates its end strength among its units. Army force-structure officials stated that they have considered several factors when making force-structure decisions regarding band numbers and size, including senior-leader priorities, critical mission needs for other organizations, and the location of other military bands. For example, Army force-structure officials stated that having an Air Force band in San Antonio, Texas, was a factor in the Army’s plans to close an Army band in San Antonio in fiscal year 2019. In February 2017, the Director of the Army Staff directed the Commander of the U.S. Army Training and Doctrine Command and the Chief of Army Music to conduct a comprehensive review of the Army’s music structure, including determining the proper organization, mission and goals, functions, priorities, and management oversight for Army bands. Army force-structure officials stated that the recommendations from that review will be made to the Vice Chief of Staff of the Army by the end of fiscal year 2017.\nNavy—Navy manpower officials stated that the Navy considers the number and size of Navy bands as part of the service’s annual budget- development process. During the fiscal year 2012 budget-development process, the Navy decided to reduce the size of its bands to offset resource needs for other programs because of reductions to the Navy’s overall end strength, according to Navy manpower officials. Subsequent to the decision to make these reductions, the Navy reorganized its band program effective in fiscal year 2015, in part because Navy band program officials wanted to ensure that all Navy bands had a sufficient number of band members to meet their primary mission of performing ceremonies.\nMarine Corps—Marine Corps officials stated that they consider their bands as part of reviews of total force structure. In fiscal year 2013, after a force-structure review, the Marine Corps closed two regional and field bands because of budget reductions. In addition, in March 2017, a Marine Corps force-structure official stated that in an ongoing review officials had considered reducing the size of bands to offset increases in end strength needed to support other new Marine Corps capabilities. However, the official stated that the Marine Corps decided not to reduce the size of bands because senior officials recognized how much the bands are used by commands; also, the leadership noted the value of the bands to troop welfare and to community relations, and noted band members’ secondary role of providing perimeter security in combat.\nAir Force—Air Force manpower officials stated that the Air Force reviews the number and size of its bands through its annual budget-development process. From fiscal year 2012 to 2014, the Air Force closed three active- duty and six Air National Guard regional and field bands to address budget reductions or to offset increases for other mission needs, according to band program officials. During the fiscal year 2015 budget- development process, the Air Force Bands Division submitted four options for reducing the number and size of bands that took into consideration, among other things, the reduced support to major commands and the number of outreach opportunities missed to connect with industry leaders and the public in the areas that would no longer have band support. However, the Air Force did not implement any of these options. Air Force manpower officials noted that, when the Air Force has proposed past reductions, the commanders and community leaders strongly advocated for maintaining bands assigned to their command and local areas because of the bands’ effect on troop morale and community relations.", "The military services have tracked and used information on band events; however, the services have not developed objectives and measures to assess how their bands are addressing the bands’ missions, such as inspiring patriotism, enhancing the morale of troops, and promoting U.S. interests abroad.", "All four military services have tracked information, such as the number and type of band events, and military bands reported using this information to aid their planning for any improvements at future events. The type of tracked information varies, but all services at a minimum track the number and types of events the bands have performed, as well as the number of audience members at these events and broadcast audience counts. In addition, the Navy, Marine Corps, and Air Force track the number of event requests their bands are not able to fulfill. Military bands generally enter this information into a database or regularly report the information to the services’ band program offices. We found that the number of audience members varies widely depending on the type of event. For example, according to Air Force data, one of the U.S. Air Force Band’s musical groups performed at the Super Bowl in 2016 in front of an estimated 71,000 ticketholders, while another musical group performed at a service member’s promotion ceremony that had an estimated 75 people in attendance. Table 8 shows the reported number of events performed by the military bands, the number of event requests that were declined, and the estimated number of audience members at events in fiscal year 2016, according to data collected by the military services.\nEach military service categorizes the types of events performed by its bands differently. The Army, Navy, and Air Force track several specific categories for the types of events their bands perform. For example, the Army tracks, among other categories, the number of funerals performed, which accounted for 35 percent of the events Army bands performed in fiscal year 2016 according to Army data. The Marine Corps categorizes the types of events its regional and field bands perform more broadly as either “Military” or “Civilian,” and reported that 79 percent and 21 percent of the events performed by these bands in fiscal year 2016 were “Military” and “Civilian,” respectively.\nMilitary bands perform at a variety of events, such as military ceremonies, community events or parades, and funerals for service members. According to band commanders we met with, their bands prioritize performing at military ceremonies or events where service members are in attendance. In addition, the Office of the Assistant to the Secretary of Defense for Public Affairs issues an annual outreach planning document that articulates, for the upcoming fiscal year, (1) the military services’ priorities for community-relations activities, (2) key resources available for use, (3) summary details about known and anticipated activities, and (4) certain cost information for the identified activities.\nThe responses to our questionnaire showed how individual bands track and use information to plan future events. According to their responses, 101 of 125 bands (or 81 percent) responded that they track social-media analytics, such as frequency of mentions on Facebook. In addition, we found that bands use their band websites, Facebook, Twitter, and YouTube to expand the reach of their events. For example, in November 2016, the U.S. Army Field Band posted a YouTube video of the band’s performance of the “Battle Hymn of the Republic” that had about 1.6 million views as of June 2017. The U.S. Air Force Band also posted a YouTube video in December 2015 of an event at Union Station in Washington, D.C., that had about 4 million views as of June 2017. The military bands that responded to our questionnaire identified the following examples of how they used tracked information to make changes to their performances:\nAn Army band reported changing the timing of summer concerts from Sundays to Saturdays to meet its audiences’ preference.\nAn Air Force band determined that audience members wanted an overall entertainment product with performances using lighting, staging, and other elements—rather than just music.\nAn Army band stationed in a foreign country determined that audiences wanted mostly small-group performances, local pop music, and other music that caters to both U.S. and local national audiences.", "While the military services have tracked information on the events their bands performed, they have not developed objectives and performance measures to assess how their bands are addressing the bands’ missions, such as inspiring patriotism, enhancing the morale of troops, and promoting U.S. interests abroad. Table 9 shows the missions for the military bands, according to military-service guidance. In May 2017, officials from the Office of the Assistant to the Secretary of Defense for Public Affairs stated that DOD is revising its guidance for community- relations policy implementation to incorporate an overarching mission for military bands.\nBand program officials cited several examples of how they can determine that their bands are addressing their missions.\nIndicators of demand—Band program officials noted that the audience counts and number of declined event requests as cited above indicate the demand for their events and that the demand exceeds supply. Air National Guard band program officials stated that in addition to the counts of performances cited above, Air National Guard bands survey audiences during summer tours to understand how their bands are received by the general public. For example, based on responses to these surveys in 2016, program officials reported that 1,135 (or 98 percent) of 1,154 survey respondents stated that they had a better understanding of the federal and state missions of the Air National Guard after attending the bands’ performances.\nExamples of effectiveness—Military service band program officials cited examples where bands were used to address specific challenges or objectives in their local area of operations. Air Force band program officials provided an example where recruiters at a base had difficulty recruiting diverse service members, so in March 2016 an Air Force band performed recruiting concerts at local schools; the result was the band reached 7,000 students, and recruiters reported an increase in queries after these events.\nSupport from senior leadership—Officials from all of the military- service band programs stated that senior leadership has supported the bands’ missions, citing how bands aid in outreach to troops, communities, or international audiences. For example, Navy and Air Force band program officials stated that senior leadership has noted how performances by bands can be an initial step towards improving relationships with foreign nations. The Commanding Officer of the U.S. Navy Band provided an example where the Chairman of the Joint Chiefs of Staff hosted a delegation from a foreign nation that had tense relations with the United States at the time. According to the Commanding Officer, the U.S. Navy Band’s chorus provided after- dinner entertainment, and as part of the performance, sang one of the foreign nation’s folk songs in the native language, which was videotaped, posted on YouTube, and had over 1.1 million views.\nWhile these examples provide important context about the bands’ reach and impact, the approaches do not include measurable objectives nor exhibit several of the important attributes performance measures should include. GAO’s Standards for Internal Control in the Federal Government states that management should define objectives in specific and measurable terms so they are understood at all levels of the entity and that performance towards achieving those objectives can be assessed. In addition, the standards state that management should establish activities to monitor performance measures. GAO has developed several important attributes that performance measures should include if they are to be effective in monitoring progress and determining how well programs are achieving their mission, such as performance measures being clear, objective, and measurable, and having baseline and trend data to identify, monitor, and report changes in performance and to help ensure that performance is viewed in context. Table 10 identifies each attribute and its corresponding definition.\nHowever, we found that the services have not developed objectives and performance measures that include several of the important attributes for successful performance measures to assess how their bands are addressing the bands’ missions. Specifically, the services’ approaches do not exhibit the linkage attribute in that there is not clear alignment between the information and how it affects the bands’ ability to achieve their missions. GAO’s key attributes state that linkages between an organization’s mission and measures are most effective when they are clearly communicated and create a line of sight so that everyone understands how their work contributes to the organization’s efforts. Also, the military services have not established a baseline for the information, so they are not able to assess the program’s performance and progress over time. Identifying and reporting deviations from the baseline as a program proceeds provides valuable information for oversight by identifying areas of program risk and their causes to decision makers. Lastly, the services’ approaches are not using the GAO attribute of measurable targets to facilitate future assessments of whether overall objectives were achieved.\nOfficials from all of the military-service band program offices stated that they have not quantified whether their bands are addressing their missions because the bands’ missions, such as inspiring patriotism, enhancing the morale of troops, and promoting U.S. interests abroad, are not quantitatively measurable. While we believe that inspiring patriotism and enhancing the morale of troops could be quantitatively measured through techniques such as surveys and focus groups, band program officials stated, and we recognize, that they have limited resources to conduct these types of activities. We also acknowledge that evaluating how the bands are addressing their missions is difficult. However, using the information the military services already track, such as the number of events performed or the number of audience members in attendance, the services could, for example, develop a baseline assessment for current performance, set measurable targets, and monitor trends over time to assess progress.\nDOD and the services are taking steps to improve how they track information on events to measure the effectiveness of military bands. In September 2016, the Chief of Army Music established an Army Music Analytics Team to define and gather data points to regularly collect information from Army bands to report quantifiable effects on event performance, audience engagement, and messaging. In June 2017, an Army band program official stated that the team has expanded its scope to collaborate with academia and industry to obtain insights and identify metrics that can be used to demonstrate the effectiveness of Army bands. Also, in response to our review, officials from the Office of the Assistant to the Secretary of Defense for Public Affairs stated that they met with service band program officials and band commanders to establish standard metrics to collect on events performed by bands. According to these officials, DOD plans to include these metrics in its guidance on community-relations policy implementation.\nDOD’s and the services’ actions represent key steps that can inform and guide efforts to establish measurable objectives and performance measures that include important attributes. Developing and implementing measurable objectives and performance measures for their band programs that demonstrate linkage to the bands’ missions, include an established baseline of data, and have measurable targets could provide DOD and congressional decision makers with the information they need to assess the value of the military bands relative to resource demands for other priorities.", "DOD uses military bands to inspire patriotism, enhance the morale of the troops, and promote public awareness by supporting a range of activities, including funerals for military service members, events where high-level officials such as the President are in attendance, and community-relations activities such as parades in local communities. However, the services have not developed measurable objectives and performance measures that include important attributes for successful performance measures, including linkage, a baseline, or measurable targets, to assess how their bands are addressing the bands’ missions. While we acknowledge that evaluating how bands are addressing their missions is difficult, the information the services already collect and the additional steps they have been taking to measure their bands’ effectiveness could inform and guide efforts to establish such measurable objectives and performance measures that are consistent with GAO’s Standards for Internal Control in the Federal Government and GAO’s past work on important attributes of performance measures. Doing so could provide information that would assist DOD and congressional decision makers as they assess the value of the military bands relative to resource demands for other priorities.", "To help ensure that each service can provide information to decision makers as they assess the value of the military bands relative to resource demands for other priorities, we recommend that the Secretaries of the Army, Navy, and Air Force, and the Commandant of the Marine Corps, direct the Chief of Army Music, Commanding Officer of the U.S. Navy Band, Chief of the Air Force Bands Division, and Director of Marine Corps Communications, respectively, each to develop and implement measurable objectives and performance measures for their respective services’ bands. At a minimum, these measures should include the important attributes for successful performance measures of demonstrating linkage to the program’s mission, establishing a baseline, and having measurable targets to demonstrate program performance.", "We provided a draft of this report to DOD for review and comment. In its written comments, reproduced in appendix V, DOD concurred with our recommendations. DOD also provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to the appropriate congressional committees; the Secretary of Defense; the Secretaries of the Army, the Navy, and the Air Force; and the Commandant of the Marine Corps. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact me at (213) 830-1011 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix VI.", "To gather information about military bands for this review, we sent a questionnaire to Army, Marine Corps, and Air Force bands actively performing in fiscal year 2017 and to the Executive Officer of the U.S. Navy Band and Director of Navy Fleet Band Activities. The Executive Officer of the U.S. Navy Band or the Director of Navy Fleet Band Activities completed a questionnaire on behalf of each Navy band actively performing in fiscal year 2017 because the Navy centrally manages the operations of Navy bands. For the other three services, the individual bands completed the questionnaire. The total number of bands or band operating locations surveyed was 134.\nAs part of the questionnaire’s development, a representative from each military service familiar with the service’s bands reviewed a draft questionnaire for substantive issues, and a GAO survey specialist reviewed the questionnaire for technical issues. To minimize errors that might occur from respondents interpreting our questions differently than we intended, we pretested our questionnaire with a Navy band program official with responsibilities for managing the Navy music program; and leadership from three active-duty bands from the Army, Marine Corps, and Air Force, one Army Reserve band, and two Army National Guard bands. During the pretests, conducted in person or by phone, we asked the officials to read the instructions and each question out loud and to tell us how they interpreted the question. We then discussed the instructions and questions with officials to determine whether (1) the instructions and questions were clear and unambiguous, (2) the terms we used were accurate, (3) the questionnaire was unbiased, and (4) the questionnaire did not place an undue burden on the officials completing it, and (5) to identify potential solutions to any problems identified. We noted any potential problems and modified the questionnaire based on the feedback received from the reviewers and pretests, as appropriate.\nTo administer the questionnaire, we sent e-mail notifications to each recipient beginning on February 6, 2017. On February 8, 2017, we sent the questionnaire as a Microsoft Word form and a cover e-mail and asked the recipients to fill in the questionnaire and e-mail it back to us. We closed the survey on March 20, 2017. Overall we received completed questionnaires for 129 bands or band operating locations, for a response rate of 96 percent.\nBecause we attempted to contact all bands rather than a sample and we are not generalizing results to any bands, there was no sampling error. However, the practical difficulties of conducting any survey may introduce errors, commonly referred to as nonsampling errors. For example, differences in how a particular question is interpreted, the sources of information available to respondents, how the responses were processed and analyzed, or the types of people who do not respond can influence the accuracy of the survey results. We took steps in the development of the questionnaire, the data collection, and the data analysis to minimize these nonsampling errors and help ensure the accuracy of the answers that were obtained. For example, a social-science survey specialist designed the questionnaire, in collaboration with analysts having subject- matter expertise. Then, as noted earlier, the draft questionnaire was pretested to ensure that questions were relevant, clearly stated, and easy to comprehend. The questionnaire was also reviewed by military-band subject-matter experts and a survey specialist, as mentioned above.\nData from the Word questionnaires were entered manually by a GAO contractor, data entry was checked, and any data-entry errors were corrected before analyses. We examined the results to identify inconsistencies and other indications of error, and addressed such issues as necessary. Quantitative data analyses were conducted by an analyst using Microsoft Excel, and another analyst verified the analyses.\nThe verbatim wording of a key survey question whose results are discussed in the body of this report is below. 23. In fiscal year 2016, which of the following types of metrics, if any, did your band track related to the engagements it performed? Please check one box in each row.\nBroadcast or streamed audience counts Social media analytics (e.g., Facebook Likes, Twitter retweets or favorites)\nType of engagement (e.g., civic engagement, base support, recruiting)\nOther positive or negative feedback not listed above (please specify below) a. If your band has made changes to how, when, what, or where it performs based on observations from the metrics above, please provide examples from fiscal year 2016. The box will expand as you type.", "We sent a questionnaire to Army, Marine Corps, and Air Force bands actively performing in fiscal year 2017 and to the Executive Officer of the U.S. Navy Band and Director of Navy Fleet Band Activities to gather information on the types of facilities and modes of transportation used by the bands. The Executive Officer of the U.S. Navy Band or the Director of Navy Fleet Band Activities completed questionnaires on behalf of each Navy band actively performing in fiscal year 2017 because the Navy centrally manages the operations of Navy bands. For the other three services, the individual bands completed the questionnaire. Based on the responses to our questionnaire, we made the following observations about the bands’ facilities and transportation resources.", "Based on the responses to our questionnaire, the types of facilities that bands used varied. When asked to describe the facilities used by their band in fiscal year 2016, bands responded that their facilities included band halls, chapels or church buildings, armories, and former base dining halls, among others. Bands provided additional details on the facilities they used in fiscal year 2016, including the following:\nBands reported using between one and six buildings. Premier and specialty bands typically reported using more buildings than the regional and field bands.\nOf the 128 bands that responded, 78 (or 61 percent) stated that they shared at least one building with another organization. In some cases, bands responded that they shared a building but not the band’s offices or rooms with another organization. In other cases, bands indicated that they shared specific areas with another organization. For example, one band reported that its rehearsal hall was occasionally used as a classroom, while another band stated that one of its larger musical groups rehearsed in the base dining facility.\nBands generally reported having rehearsal space, office space, and storage space. The overall size of these three types of spaces ranged from 260 to about 48,000 square feet. Premier and specialty bands reported that the overall size of their rehearsal, office, and storage space ranged from 5,000 to about 48,000 square feet, while regional and field bands reported the overall size of these spaces ranged from 260 to over 28,000 square feet.\nFour bands reported that the facilities the band used in fiscal year 2016 were built in fiscal years 2012 through 2016, which they reported had a total cost of $56 million. In addition, 10 bands identified single projects greater than $1 million to repair, renovate, or construct a facility for the bands’ use that were initiated in fiscal years 2012 through 2016, which they reported had a total cost of about $29 million. Bands also described the projects and why they were needed. For example, one band reported that the project provided space so that multiple music groups could train at the same time. In another case, a band reported that renovations were needed to correct aged facilities based on inspection results.", "Based on the responses to our questionnaire, the transportation used to travel to performances varied by band. When asked to identify the modes of transportation the bands used to travel to performances and whether bands had exclusive use of any vehicles in fiscal year 2016, bands provided us with the following information:\nWhen traveling to events, bands reported most often using (1) base motor-pool vehicles; (2) buses, cars, vans, or trucks leased or chartered from a private company; or (3) commercial air.\nOf the 128 that responded, 69 bands (or 54 percent) stated that they had exclusive use of certain vehicles, such as box trucks, pickup trucks, passenger and cargo vans, and buses, among others. The numbers of vehicles that bands had exclusive use of ranged from 1 to 24, with premier and specialty bands reporting that they had exclusive use of more vehicles than regional and field bands. Specifically, premier and specialty bands reported having exclusive use of 1 to 24 vehicles per band, while regional and field bands reported having exclusive use of 1 to 8 vehicles per band.", "Figure 3 shows the location of the 31 Army, 11 Navy, 12 Marine Corps, and 9 Air Force active-duty bands in fiscal year 2016. The active-duty bands have different areas of responsibility for performing events:\nArmy guidance states that a band’s geographic area of responsibility is the same as its installation commander’s geographic area of responsibility.\nNavy guidance establishes a geographic area of responsibility for bands located within the contiguous United States, while the operational commanders define the geographic areas of responsibility of the regional and field bands in Hawaii, Italy, and Japan.\nMarine Corps guidance states that the commanding general of the commands to which bands are assigned determines the size of each band’s area of responsibility.\nAir Force guidance assigns a geographic area of responsibility to its bands located within the contiguous United States, while the commands for the bands located in Germany and Japan assign their bands’ geographic areas of responsibility.", "Figure 4 shows the location of the 5 Air National Guard, 51 Army National Guard, and 17 Army Reserve bands in fiscal year 2016. According to military-service band program officials, members of the Air National Guard, Army National Guard, and Army Reserve bands are on duty for one weekend per month and 2 weeks during the summer. In addition, these bands have different areas of responsibility for performing events:\nAir Force guidance assigns a geographic area of responsibility for each Air National Guard band.\nThe Army National Guard bands generally perform events within their respective state or territory, according to Army band program officials.\nAccording to Army band program officials, the Army has assigned the Army Reserve bands to Army Reserve Regional Support Commands, and these bands perform events throughout the command’s area of responsibility.", "", "", "", "In addition to the contact named above, key contributors to this report were Margaret A. Best (Assistant Director), William J. Cordrey, Felicia M. Lopez, Vikki L. Porter, Richard S. Powelson, Michael D. Silver, Jared A. Sippel, Wayne J. Turowski, and Melissa A. Wohlgemuth." ], "depth": [ 1, 2, 2, 1, 2, 3, 3, 2, 3, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "", "", "", "h1_title", "", "", "h1_full", "h0_full h1_title", "h0_full h1_full", "h0_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "To what extent have military services evaluated the missions of military bands?", "What metrics are missing from this approach?", "How has the military decided to improve how they track the efficacy of military bands?", "Why does GAO believe improving upon current methods for tracking efficacy could benefit the military services?", "How do military bands help the troops and their image?", "What kinds of activities do military bands do?", "Why did DOD restrict the community-relations activities of bands in 2013?" ], "summary": [ "The military services have not developed objectives and measures to assess how their bands are addressing the bands' missions, such as inspiring patriotism and enhancing the morale of troops. All four military services have tracked information, such as the number and type of band events. Further, military-service officials cited the demand for band performances, anecdotal examples, and support from senior leadership, as ways to demonstrate the bands are addressing their missions.", "However, the military services' approaches do not include measurable objectives or performance measures that have several important attributes, such as linkage to mission, a baseline, and measurable targets, that GAO has found are key to successfully measuring a program's performance.", "Military band officials cited the difficulty and resources required to quantify how the bands are addressing their missions, but the military services are taking steps to improve how they track information on band events to measure the bands' effectiveness.", "GAO believes these key steps could inform and guide the services' efforts to develop and implement measurable objectives and performance measures. Doing so could provide decision makers with the information they need to assess the value of the military bands relative to resource demands for other priorities.", "The Department of Defense (DOD) uses military bands to enhance the morale of the troops, provide music for ceremonies, and promote public awareness.", "Bands across the military services support a range of activities, including funerals for military service members, events attended by high-level officials, and community-relations activities such as parades.", "In fiscal year 2013, DOD restricted its community-relations activities, including placing travel restrictions on bands, as a result of the sequestration ordered in March 2013." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, -1 ], "summary_paragraph_index": [ 4, 4, 4, 4, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "The U.S. Pipeline Network", "Safety in the Pipeline Industry", "Federal Agencies in Pipeline Safety", "Pipeline and Hazardous Materials Safety Administration", "PHMSA Organization and Funding", "PHMSA's Regulatory Activities", "PHMSA Reauthorization and Pipeline Safety Statutes", "Pipeline Safety Improvement Act of 2002", "Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006", "Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011", "Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016", "Federal Energy Regulatory Commission", "National Transportation Safety Board", "San Bruno Pipeline Incident Investigation", "Marshall, MI, Pipeline Incident Investigation", "Merrimack Valley Pipeline Incident Investigation", "Other Investigations", "PHMSA's Role in Pipeline Security", "PHMSA Cooperation with TSA", "Key Policy Issues", "Overdue PHMSA Statutory Mandates", "Safety of Gas Transmission Pipelines Rule", "Safety of Hazardous Liquids Pipelines Rule", "Amendments to Parts 192 and 195", "Underground Natural Gas Storage Facilities", "Emergency Order Authority", "PHMSA Rulemaking Oversight and Agency Response", "Staffing Resources for Pipeline Safety", "PHMSA Inspection and Enforcement Staff", "Direct-Hire Authority", "State Pipeline Safety Program Oversight", "Aging Pipeline Infrastructure", "PHMSA and Pipeline Security", "Conclusion" ], "paragraphs": [ "", "The U.S. energy pipeline network is integral to the nation's energy supply and provides vital links to other critical infrastructure, such as power plants, airports, and military bases. These pipelines are geographically widespread, running alternately through remote and densely populated regions—from Arctic Alaska to the Gulf of Mexico and nearly everywhere in between. Because these pipelines carry volatile, flammable, or toxic materials, they have the potential to injure the public, destroy pr operty, and damage the environment. Although they are generally an efficient and comparatively safe means of transport, pipeline systems are nonetheless vulnerable to accidents, operational failure, and malicious attacks. A series of accidents in California, Pennsylvania, and Massachusetts, among other places, have demonstrated this vulnerability and have heightened congressional concern about U.S. pipeline safety. The Department of Energy's first Quadrennial Energy Review (QER), released in 2015, also highlighted pipeline safety as a growing concern for the nation's energy infrastructure.\nThe federal pipeline safety program resides primarily within the Department of Transportation's (DOT's) Pipeline and Hazardous Materials Safety Administration (PHMSA), although its inspection and enforcement activities rely heavily upon partnerships with the states. Together, the federal and state pipeline safety agencies administer a comprehensive set of regulatory authorities which has changed significantly over the last decade and continues to do so. The federal pipeline safety program is authorized through the fiscal year ending September 30, 2019, under the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act; P.L. 114-183 ) signed by President Obama on June 22, 2016.\nThis report reviews the history of federal programs for pipeline safety, discusses significant safety concerns, and summarizes recent developments focusing on key policy issues. It discusses the roles of other federal agencies involved in pipeline safety and security, including their relationship with PHMSA. Although pipeline security is not mainly under PHMSA's jurisdiction, the report examines the agency's past role in pipeline security and its recent activities working on security-related issues with other agencies.", "The U.S. energy pipeline network is composed of approximately 3 million miles of pipeline transporting natural gas, oil, and hazardous liquids ( Table 1 ). Of the nation's approximately half million miles of long-distance transmission pipeline, roughly 215,000 miles carry hazardous liquids—over two thirds of the nation's crude oil and refined petroleum products, along with other products. The U.S. natural gas pipeline network consists of around 300,000 miles of inter state and intra state transmission. It also contains some 240,000 miles of field and gathering pipeline, which connect gas extraction wells to processing facilities. However, with 7% of gathering lines currently under federal regulation (discussed later in this report), the total mileage of U.S. gathering lines is not known more precisely. Few state agencies collect this information. The natural gas transmission pipelines feed around 2.2 million miles of regional pipelines in some 1,500 local distribution networks serving over 69 million customers. Natural gas pipelines also connect to 152 active liquefied natural gas (LNG) storage sites, as well as underground storage facilities, both of which can augment pipeline gas supplies during peak demand periods.", "Uncontrolled pipeline releases can result from a variety of causes, including third-party excavation, corrosion, mechanical failure, control system failure, operator error, and malicious acts. Natural forces, such as floods and earthquakes, can also damage pipelines. Taken as a whole, releases from pipelines cause few annual injuries or fatalities compared to other product transportation modes. According to PHMSA statistics, there were, on average, 12 deaths and 66 injuries annually caused by 32 pipeline incidents in all U.S. pipeline systems from 2009 through 2018. After steady decline between 2009 and 2013, the average incident count increased and recently shows no clear trend ( Figure 1 ). A total of 40 serious pipeline incidents was reported for 2018.\nApart from injury to people, some accidents may cause environmental damage or other physical impacts, which may be significant, particularly in the case of oil spills or fires. PHMSA requires the reporting of such incidents involving\n$50,000 or more in total costs, measured in 1984 dollars, highly volatile liquid releases of 5 barrels or more or other liquid releases of 50 barrels or more, or liquid releases resulting in an unintentional fire or explosion.\nOn average there were 260 such \"significant\" incidents (not involving injury or fatality) per year from 2009 through 2018. As with serious incidents, there is no clear trend for pipeline incidents affecting only the environment or property over the last five years ( Figure 2 ). It should be noted that federally regulated pipeline mileage overall rose approximately 7% over this period; neither the annual statistics for injury nor environmental incidents are adjusted on a per-mile basis.\nAlthough pipeline releases have caused relatively few fatalities in absolute numbers, a single pipeline accident can be catastrophic in terms of public safety and environmental damage. Notable pipeline and pipeline-related incidents over the last decade include the following:\n2010 ―A pipeline spill in Marshall, MI, released 19,500 barrels of crude oil into a tributary of the Kalamazoo River. 2010 —An explosion caused by a natural gas pipeline in San Bruno, CA, killed 8 people, injured 60 others, and destroyed 37 homes. 2011― An explosion caused by a natural gas pipeline in Allentown, PA, killed 5 people, damaged 50 buildings, and caused 500 people to be evacuated. 2011 ―A pipeline spill near Laurel, MT, released an estimated 1,000 barrels of crude oil into the Yellowstone River. 2012 —An explosion caused by a natural gas pipeline in Springfield, MA, injured 21 people and damaged over a dozen buildings. 2013 —An oil pipeline spill in Mayflower, AK, spilled 5,000 barrels of crude oil in a residential community causing 22 homes to be evacuated. 2014 —An explosion caused by a natural gas distribution pipeline in New York City killed 8 people, injured 50 others, and destroyed two 5-story buildings. 2015 —A pipeline in Santa Barbara County, CA, spilled 3,400 barrels of crude oil, including 500 barrels reaching Refugio State Beach on the Pacific Ocean. 2015 — The Aliso Canyon underground natural gas storage facility in Los Angeles County, CA, released 5.4 billion cubic feet of gas, causing the temporary relocation of over 2,000 households and two schools in Porter Ranch. 2016 —An explosion caused by a natural gas distribution pipeline in Canton, OH, killed one person, injured 11 others, and damaged over 50 buildings. 201 8 —Explosions and fires caused by natural gas distribution pipelines in the Merrimack Valley, MA, killed one person, injured 21 others, damaged 131 structures, and required 30,000 residents to evacuate.\nSuch incidents have generated persistent scrutiny of pipeline regulation and have increased state and community activity related to pipeline safety.", "Three federal agencies play the most significant roles in the formulation, administration, and oversight of pipeline safety regulations in the United States. As stated above, PHMSA has the primary responsibility for the promulgation and enforcement of federal pipeline safety standards. The Federal Energy Regulatory Commission (FERC) is not operationally involved in pipeline safety but examines safety issues under its siting authority for interstate natural gas pipelines. The National Transportation Safety Board (NTSB) investigates transportation accidents—including pipeline accidents—and issues associated safety recommendations. These agency roles are discussed in the following sections.", "The Natural Gas Pipeline Safety Act of 1968 (P.L. 90-481) and the Hazardous Liquid Pipeline Act of 1979 ( P.L. 96-129 ) are two of the principal early acts establishing the federal role in pipeline safety. Under both statutes, the Transportation Secretary is given primary authority to regulate key aspects of interstate pipeline safety: design, construction, operation and maintenance, and spill response planning. Pipeline safety regulations are covered in Title 49 of the Code of Federal Regulations .", "As of March 8, 2019, PHMSA employed 290 full-time equivalent (FTE) staff in its Office of Pipeline Safety (OPS)—including 145 regional inspectors—and in DOT offices outside of OPS that also support pipeline safety functions. Those staff include attorneys, data analysts, information technology specialists, and regulatory specialists required for certain enforcement actions, promulgating regulations, issuing pipeline safety grants, and issuing agreements for pipeline safety research and development.\nIn addition to federal staff, PHMSA's enabling legislation allows the agency to delegate authority to intra state pipeline safety offices, and allows state offices to act as \"agents\" administering inter state pipeline safety programs (excluding enforcement) for those sections of inter state pipelines within their boundaries. According to the DOT, \"PHMSA leans heavily on state inspectors for the vast network of intrastate lines.\" A few states serve as agents for inspection of interstate pipelines as well. There were approximately 380 state pipeline safety inspectors in 2018.\nPHMSA's pipeline safety program is funded primarily by user fees assessed on a per-mile basis on each regulated pipeline operator. The agency's total annual budget authority has grown fairly steadily since 2001, with the largest increase in FY2015 ( Figure 3 ). For FY2019, PHMSA's estimated budget authority is approximately $164 million—more than double the agency's budget authority in FY2008 (not adjusted for inflation). The Trump Administration's requested budget authority for PHMSA is approximately $151 million for FY2020, roughly 8% less than the FY2019 budget authority, with proposed reductions primarily in contract programs, research and development, and grants to states.", "PHMSA uses a variety of strategies to promote compliance with its safety standards. The agency conducts programmatic inspections of management systems, procedures, and processes; conducts physical inspections of facilities and construction projects; investigates safety incidents; and maintains a dialogue with pipeline operators. The agency clarifies its regulatory expectations through published protocols and regulatory orders, guidance manuals, and public meetings. PHMSA relies upon a range of enforcement actions, including administrative actions such as corrective action orders (CAOs) and civil penalties, to ensure that operators correct safety violations and take measures to preclude future safety problems.\nFrom 2014 through 2018, PHMSA initiated 943 enforcement actions against pipeline operators. Of these cases, 348 resulted in safety orders to operators. Civil penalties proposed by PHMSA for safety violations during this period totaled approximately $24.2 million. PHMSA also conducts accident investigations and system-wide reviews focusing on high-risk operational or procedural problems and areas of the pipeline near sensitive environmental areas, high-density populations, or navigable waters.\nSince 1997, PHMSA has increasingly required industry's implementation of \"integrity management\" programs on pipeline segments near \"high consequence areas.\" Integrity management provides for continual evaluation of pipeline condition; assessment of risks to the pipeline; inspection or testing; data analysis; and follow-up repair; as well as preventive or mitigative actions. High consequence areas (HCAs) include population centers, commercially navigable waters, and environmentally sensitive areas, such as drinking water supplies or ecological reserves. The integrity management approach prioritizes resources to locations of highest consequence rather than applying uniform treatment to the entire pipeline network. PHMSA made integrity management programs mandatory for most oil pipeline operators with 500 or more miles of regulated pipeline as of March 31, 2001 (49 C.F.R. §195). Congress subsequently mandated the expansion of integrity management to natural gas pipelines, along with other significant changes to federal pipeline safety requirements, through a series of agency budget reauthorizations as discussed below.", "The PIPES Act of 2016 was preceded by a series of periodic pipeline safety statutes, each of which reauthorized funding for PHMSA's pipeline safety program and included other provisions related to PHMSA's authorities, administration, or regulatory activities.", "On December 12, 2002, President George W. Bush signed into law the Pipeline Safety Improvement Act of 2002 ( P.L. 107-355 ). The act strengthened federal pipeline safety programs, state oversight of pipeline operators, and public education regarding pipeline safety. Among other provisions, P.L. 107-355 required operators of regulated natural gas pipelines in high-consequence areas to conduct risk analysis and implement integrity management programs similar to those required for oil pipelines. The act authorized DOT to order safety actions for pipelines with potential safety problems and increased violation penalties. The act streamlined the permitting process for emergency pipeline restoration by establishing an interagency committee, including the DOT, the Environmental Protection Agency, the Bureau of Land Management, the Federal Energy Regulatory Commission, and other agencies, to ensure coordinated review and permitting of pipeline repairs. The act required DOT to study ways to limit pipeline safety risks from population encroachment and ways to preserve environmental resources in pipeline rights-of-way. P.L. 107-355 also included provisions for public education, grants for community pipeline safety studies, \"whistle blower\" and other employee protection, employee qualification programs, and mapping data submission.", "On December 29, 2006, President Bush signed into law the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006 ( P.L. 109-468 ). The main provisions of the act address pipeline damage prevention, integrity management, corrosion control, and enforcement transparency. The act created a national focus on pipeline damage prevention through grants to states for improving damage prevention programs, establishing 811 as the national \"call before you dig\" one-call telephone number, and giving PHMSA limited \"backstop\" authority to conduct civil enforcement against one-call violators in states that have failed to conduct such enforcement. The act mandated the promulgation by PHMSA of minimum standards for integrity management programs for natural gas distribution pipelines. It also mandated a review of the adequacy of federal pipeline safety regulations related to internal corrosion control, and required PHMSA to increase the transparency of enforcement actions by issuing monthly summaries, including violation and penalty information, and a mechanism for pipeline operators to make response information available to the public.", "On January 3, 2012, President Obama signed the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (Pipeline Safety Act, P.L. 112-90 ). The act contains a broad range of provisions addressing pipeline safety. Among the most significant are provisions to increase the number of federal pipeline safety inspectors, require automatic shutoff valves for transmission pipelines, mandate verification of maximum allowable operating pressure for gas transmission pipelines, increase civil penalties for pipeline safety violations, and mandate reviews of diluted bitumen pipeline regulation. Altogether, the act imposed 42 mandates on PHMSA regarding studies, rules, maps, and other elements of the federal pipeline safety program. P.L. 112-90 authorized the federal pipeline safety program through the fiscal year ending September 30, 2015.", "On June 22, 2016, President Obama signed the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act, P.L. 114-183 ). As noted earlier, the act authorizes the federal pipeline safety program through FY2019. Among its other provisions, the act requires PHMSA to promulgate federal safety standards for underground natural gas storage facilities and grants PHMSA emergency order authority to address urgent \"industry-wide safety conditions\" without prior notice. The act also requires PHMSA to report regularly on the progress of outstanding statutory mandates, which are discussed later in this report.", "One area related to pipeline safety not under PHMSA's primary jurisdiction is the siting approval of interstate natural gas pipelines, which is the responsibility of the Federal Energy Regulatory Commission (FERC). Companies building interstate natural gas pipelines must first obtain from FERC certificates of public convenience and necessity. (FERC does not oversee oil pipeline construction.) FERC must also approve the abandonment of gas facility use and services. These approvals may include safety provisions with respect to pipeline routing, safety standards, and other factors. In particular, pipeline and aboveground facilities associated with a proposed pipeline project must be designed in accordance with PHMSA's safety standards regarding material selection and qualification, design requirements, and protection from corrosion.\nFERC and PHMSA cooperate on pipeline safety-related matters according to a Memorandum of Understanding (MOU) signed in 1993. According to the MOU, PHMSA agrees to\npromptly alert FERC when safety activities may impact commission responsibilities, notify FERC of major accidents or significant enforcement actions involving pipelines under FERC's jurisdiction, refer to FERC complaints and inquiries by state and local governments and the public about environmental or certificate matters related to FERC-jurisdictional pipelines, and when requested by FERC, review draft mitigation conditions considered by the commission for potential conflicts with PHMSA's regulations.\nUnder the MOU, FERC agrees to\npromptly alert PHMSA when the commission learns of an existing or potential safety problem involving natural gas transmission facilities, notify PHMSA of future pipeline construction, periodically provide PHMSA with updates to the environmental compliance inspection schedule, and coordinate site inspections, upon request, with PHMSA officials, notify PHMSA when significant safety issues have been raised during the preparation of environmental assessments or environmental impact statements for pipeline projects, and refer to PHMSA complaints and inquiries made by state and local governments and the public involving safety matters related to FERC-jurisdictional pipelines.\nFERC may also serve as a member of PHMSA's Technical Pipeline Safety Standards Committee which determines whether proposed safety regulations are technically feasible, reasonable, cost-effective, and practicable.\nIn April 2015, FERC issued a policy statement to provide \"greater certainty regarding the ability of interstate natural gas pipelines to recover the costs of modernizing their facilities and infrastructure to enhance the efficient and safe operation of their systems.\" FERC's policy statement was motivated by the commission's expectation that governmental safety and environmental initiatives could soon cause greater safety and reliability costs for interstate gas pipeline systems.", "The National Transportation Safety Board (NTSB) is an independent federal agency charged with determining the probable cause of transportation incidents—including pipeline releases—and promoting transportation safety. The board's experts investigate significant incidents, develop factual records, and issue safety recommendations to prevent similar events from reoccurring. The NTSB has no statutory authority to regulate transportation, however, and it does not perform cost-benefit analyses of regulatory changes; its safety recommendations to industry or government agencies are not mandatory. Nonetheless, because of the board's strong reputation for thoroughness and objectivity, over 82% of the NTSB's safety recommendations have been implemented across all transportation modes. In the pipeline sector, specifically, the NTSB's safety recommendations have led to changes in pipeline safety regulation regarding one-call systems before excavation (\"Call Before You Dig\"), use of pipeline internal inspection devices, facility response plan effectiveness, hydrostatic pressure testing of older pipelines, and other pipeline safety improvements.", "In August 2011, the NTSB issued preliminary findings and recommendations from its investigation of the San Bruno Pipeline incident. The investigation included testimony from pipeline company officials, government agency officials (PHMSA, state, and local), as well as testimony from other pipeline experts and stakeholders. The investigation determined that the pipeline ruptured due to a faulty weld in a pipeline section constructed in 1956. In addition to specifics about the San Bruno incident, the hearing addressed more general pipeline issues, including public awareness initiatives, pipeline technology, and oversight of pipeline safety by federal and state regulators. The NTSB's findings were highly critical of the pipeline operator (Pacific Gas and Electric, PG&E) as well as both the state and federal pipeline safety regulators. The board concluded that \"the multiple and recurring deficiencies in PG&E operational practices indicate a systemic problem\" with respect to its pipeline safety program. The board further concluded that\nthe pipeline safety regulator within the state of California, failed to detect the inadequacies in PG&E's integrity management program and that the Pipeline and Hazardous Materials Safety Administration integrity management inspection protocols need improvement. Because the Pipeline and Hazardous Materials Safety Administration has not incorporated the use of effective and meaningful metrics as part of its guidance for performance-based management pipeline safety programs, its oversight of state public utility commissions regulating gas transmission and hazardous liquid pipelines could be improved.\nIn an opening statement about the San Bruno incident report, the NTSB chairman summarized the board's findings as \"troubling revelations … about a company that exploited weaknesses in a lax system of oversight and government agencies that placed a blind trust in operators to the detriment of public safety.\" The NTSB's final incident report concluded \"that PHMSA's enforcement program and its monitoring of state oversight programs have been weak and have resulted in the lack of effective Federal oversight and state oversight.\"\nThe NTSB issued 39 recommendations stemming from its San Bruno incident investigation, including 20 recommendations to the Secretary of Transportation and PHMSA. These recommendations included the following:\nconducting audits to assess the effectiveness of PHMSA's oversight of performance-based pipeline safety programs and state pipeline safety program certification, requiring pipeline operators to provide system-specific information to the emergency response agencies of the communities in which pipelines are located, requiring that automatic shutoff valves or remote control valves be installed in high consequence areas and in class 3 and 4 locations, requiring that all natural gas transmission pipelines constructed before 1970 be subjected to a hydrostatic pressure test that incorporates a pressure spike test, requiring that all natural gas transmission pipelines be configured so as to accommodate internal inspection tools, with priority given to older pipelines, and revising PHMSA's integrity management protocol to incorporate meaningful metrics, set performance goals for pipeline operators, and require operators to regularly assess the effectiveness of their programs using meaningful metrics.", "In July 2012, the NTSB issued the final report of its investigation of the Marshall, MI, oil pipeline spill. In addition to finding management and operation failures by the pipeline operator, the report was critical of PHMSA for inadequate regulatory requirements and oversight of crack defects in pipelines, inadequate regulatory requirements for emergency response plans, generally, and inadequate review and approval of the response plan for this particular pipeline. The NTSB issued eight recommendations to the Secretary of Transportation and PHMSA, including\nauditing the business practices of PHMSA's onshore pipeline facility response plan programs, including reviews of response plans and drill programs, to correct deficiencies, allocating sufficient resources to ensure that PHMSA's facility response plan program meets all of the requirements of the Oil Pollution Act of 1990, clarifying and strengthening federal regulation related to the identification and repair of pipeline crack defects, issuing advisory bulletins to all hazardous liquid and natural gas pipeline operators describing the circumstances of the accident in Marshall, asking them to take appropriate action to eliminate similar deficiencies, to identify deficiencies in facility response plans, and to update these plans as necessary, developing requirements for team training of control center staff involved in pipeline operations similar to those used in other transportation modes, strengthening operator qualification requirements, and harmonizing onshore oil pipeline response planning requirements with those of the U.S. Coast Guard and the U.S. Environmental Protection Agency for oil and petroleum products facilities to ensure that operators have adequate resources for worst-case discharges.", "In October 2018, the NTSB issued a preliminary report of its investigation into the Merrimack Valley natural gas fires and explosions, which affected the communities of Lawrence, Andover, and North Andover, MA. The report concluded, based on an initial investigation, that the natural gas releases were caused by excessive pressure in a local distribution main during a cast iron pipeline replacement project. Due to an erroneous work order, pipeline workers improperly bypassed critical pipeline pressure-sensing lines. Without an accurate sensor signal from the bypassed pipeline segment, the pipeline pressure regulators allowed high-pressure gas into the distribution lines supplying homes and businesses—many of which failed and released natural gas as a result. The NTSB's formal incident investigation continues, so the agency has not yet released a final accident report. However, in response to its initial findings, the NTSB made a preliminary recommendation to the Commonwealth of Massachusetts to eliminate its professional engineer license exemption for public utility work and to require a professional engineer's seal on public utility engineering drawings. The NTSB also made recommendations to the natural gas distribution utility regarding its design and operating practices. It made no recommendations to PHMSA.", "The NTSB has made recommendations to PHMSA as a result of other pipeline incident investigations. Detailed discussion of NTSB findings and recommendations, including those described above, are publicly available in the NTSB's docket management system. In addition, in January 2015, the NTSB released a safety study examining integrity management of natural gas transmission pipelines in high consequence areas. The study identified several areas of potential safety improvement among such facilities\nexpanding and improving PHMSA guidance to both operators and inspectors for the development, implementation, and inspection of operators' integrity management programs, expanding the use of in-line inspection, especially for intrastate pipelines, eliminating the use of direct assessment as the sole integrity assessment method, evaluating the effectiveness of the approved risk assessment approaches, strengthening aspects of inspector training, developing minimum professional qualification criteria for all personnel involved in integrity management programs, and improving data collection and reporting, including geospatial data.\nPHMSA maintains a list of NTSB's pipeline safety recommendations directed at the agency which are currently open. As of September 11, 2018, there were 25 open recommendations dating back to 2011. In many cases, NTSB has classified these recommendations as \"Open—Acceptable Response\" because they are being incorporated satisfactorily in ongoing PHMSA rulemakings, further discussed below. However, a few recommendations are classified as \"Open—Unacceptable response,\" because NTSB is not satisfied with PHMSA's actions to implement them.", "Pipeline safety and security are distinct issues involving different threats, statutory authorities, and regulatory frameworks. Nonetheless, pipeline safety and security are intertwined in some respects—and PHMSA is involved in both.\nThe Department of Transportation played the leading role in pipeline security through the late 1990s. Presidential Decision Directive 63 (PDD-63), issued during the Clinton Administration, assigned lead responsibility for pipeline security to DOT. These responsibilities fell to the Office of Pipeline Safety, at that time a part of DOT's Research and Special Programs Administration, because the agency was already addressing some elements of pipeline security in its role as safety regulator. The DOT's pipeline (and LNG) safety regulations already included provisions related to physical security, such as requirements to protect surface facilities (e.g., pumping stations) from vandalism and unauthorized entry. Other regulations required continuing surveillance, patrolling pipeline rights-of-way, damage prevention, and emergency procedures.\nIn the early 2000s, OPS conducted a vulnerability assessment to identify critical pipeline facilities and worked with industry groups and state pipeline safety organizations \"to assess the industry's readiness to prepare for, withstand and respond to a terrorist attack.... \" Together with DOE and state pipeline agencies, OPS promoted the development of consensus standards for security measures tiered to correspond with the five levels of threat warnings issued by the Office of Homeland Security. OPS also developed protocols for inspections of critical facilities to ensure that operators implemented appropriate security practices. To convey emergency information and warnings, OPS established a variety of communication links to key staff at the most critical pipeline facilities throughout the country. OPS also began identifying near-term technology to enhance deterrence, detection, response, and recovery, and began seeking to advance public and private sector planning for response and recovery.\nOn September 5, 2002, OPS circulated formal guidance developed in cooperation with the pipeline industry associations defining the agency's security program recommendations and implementation expectations. This guidance recommended that operators identify critical facilities, develop security plans consistent with prior trade association security guidance, implement these plans, and review them annually. While the guidance was voluntary, OPS expected compliance and informed operators of its intent to begin reviewing security programs and to test their effectiveness.", "In November 2001, President Bush signed the Aviation and Transportation Security Act ( P.L. 107-71 ) establishing the Transportation Security Administration (TSA) within DOT. According to TSA, the act placed DOT's pipeline security authority (under PDD-63) within TSA. The act specified for TSA a range of duties and powers related to general transportation security, such as intelligence management, threat assessment, mitigation, security measure oversight, and enforcement. On November 25, 2002, President Bush signed the Homeland Security Act of 2002 ( P.L. 107-296 ) creating the Department of Homeland Security (DHS). Among other provisions, the act transferred the Transportation Security Administration from DOT to DHS (§403). On December 17, 2003, President Bush issued Homeland Security Presidential Directive 7 (HSPD-7), clarifying executive agency responsibilities for identifying, prioritizing, and protecting critical infrastructure. HSPD-7 maintained DHS as the lead agency for pipeline security (paragraph 15), and instructed DOT to \"collaborate in regulating the transportation of hazardous materials by all modes (including pipelines)\" (paragraph 22h).\nIn 2004, the DOT and DHS entered into a memorandum of understanding concerning their respective security roles in all modes of transportation. The MOU notes that DHS has the primary responsibility for transportation security with support from the DOT, and establishes a general framework for cooperation and coordination. The MOU states that \"specific tasks and areas of responsibility that are appropriate for cooperation will be documented in annexes ... individually approved and signed by appropriate representatives of DHS and DOT.\" On August 9, 2006, the departments signed an annex \"to delineate clear lines of authority and responsibility and promote communications, efficiency, and nonduplication of effort through cooperation and collaboration between the parties in the area of transportation security.\"\nIn January 2007, the PHMSA Administrator testified before Congress that the agency had established a joint working group with TSA \"to improve interagency coordination on transportation security and safety matters, and to develop and advance plans for improving transportation security,\" presumably including pipeline security. According to TSA, the working group developed a multiyear action plan specifically delineating roles, responsibilities, resources and actions to execute 11 program elements: identification of critical infrastructure/key resources, and risk assessments; strategic planning; developing regulations and guidelines; conducting inspections and enforcement; providing technical support; sharing information during emergencies; communications; stakeholder relations; research and development; legislative matters; and budgeting.\nP.L. 109-468 required the DOT Inspector General (IG) to assess the pipeline security actions taken by the DOT in implementing its 2004 MOU with the DHS (§23). The Inspector General published this assessment in May 2008. The IG report stated,\nPHMSA and TSA have taken initial steps toward formulating an action plan to implement the provisions of the pipeline security annex.... However, further actions need to be taken with a sense of urgency because the current situation is far from an \"end state\" for enhancing the security of the Nation's pipelines.\nThe report recommended that PHMSA and TSA finalize and execute their security annex action plan, clarify their respective roles, and jointly develop a pipeline security strategy that maximizes the effectiveness of their respective capabilities and efforts. According to TSA, working with PHMSA \"improved drastically\" after the release of the IG report; the two agencies began to maintain daily contact, share information in a timely manner, and collaborate on security guidelines and incident response planning. Consistent with this assertion, in March 2010, TSA published a Pipeline Security and Incident Recovery Protocol Plan which lays out in detail the separate and cooperative responsibilities of the two agencies with respect to a pipeline security incident. Among other notes, the plan states,\nDOT has statutory tools that may be useful during a security incident, such as special permits, safety orders, and corrective action orders. DOT/PHMSA also has access to the Regional Emergency Transportation Coordinator (RETCO) Program…. Each RETCO manages regional DOT emergency preparedness and response activities in the assigned region on behalf of the Secretary of Transportation.\nThe plan also refers to the establishment of an Interagency Threat Coordination Committee established by TSA and PHMSA to organize and communicate developing threat information among federal agencies that may have responsibility for pipeline incident response.\nDOT has continued to cooperate with TSA on pipeline security in recent years. For example, TSA coordinated with DOT and other agencies to address ongoing vandalism and sabotage against critical pipelines by environmental activists in 2016. In April 2016, the Director of TSA's Surface Division testified about her agency's relationship with DOT:\nTSA and DOT co-chair the Pipeline Government Coordinating Council to facilitate information sharing and coordinate on activities including security assessments, training, and exercises. TSA and DOT's Pipeline and Hazardous Materials Safety Administration (PHMSA) work together to integrate pipeline safety and security priorities, as measures installed by pipeline owners and operators often benefit both safety and security.\nIn December 2016, PHMSA issued an Advisory Bulletin \"in coordination with\" TSA regarding cybersecurity threats to pipeline Supervisory Control and Data Acquisition (SCADA) systems. In July 2017, the two agencies collaborated on a web-based portal to facilitate sharing sensitive but unclassified incident information among federal agencies with pipeline responsibilities. In February 2018, the Director of TSA's Surface Division again testified about cooperation with PHMSA, stating \"TSA works closely with [PHMSA] for incident response and monitoring of pipeline systems,\" although she did not provide specific examples.", "The 116 th Congress may focus on several key issues in its continuing oversight of federal pipeline safety and as it considers PHMSA's reauthorization, including incomplete statutory mandates, adequacy of PHMSA staffing, state program oversight, aging pipeline infrastructure, and PHMSA's role in pipeline security. These issues are discussed in the following sections.", "Congress has used reauthorizations to impose on PHMSA various mandates regarding standards, studies, and other elements of pipeline safety regulation—usually in response to major pipeline accidents. The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 ( P.L. 112-90 ) and the PIPES Act of 2016 ( P.L. 114-183 ) together included 61 such mandates. As of March 5, 2019, according to PHMSA, the agency had completed 34 of 42 mandates under P.L. 112-90 and 16 of 19 mandates under P.L. 114-183 . Some Members of Congress are concerned that major mandates remain unfulfilled years beyond the deadlines specified in statute. They have expressed frustration with PHMSA's failure to fulfill its statutory obligations, arguing that it delays important new regulations, undermines public confidence in pipeline safety, and does not allow Congress to evaluate the effectiveness of prior mandates as it considers PHMSA's next reauthorization. Among the overdue mandates, Congress has focused on several key regulations (rules) with potentially significant impacts on pipeline operations nationwide.", "This rulemaking would require operators to (1) reconfirm pipeline maximum allowable operating pressure and (2) test the material strength of previously untested gas transmission pipelines in high-consequence areas ( P.L. 112-90 §23(c-d)). The statutory deadline for PHMSA to finalize these two rules was July 3, 2013. The rulemaking also would address the expansion of \"integrity management\" programs for gas transmission pipelines beyond high-consequence areas ( P.L. 112-90 §5(f)). Integrity management provides for continual evaluation of pipeline condition; assessment of risks; inspection or testing; data analysis; and follow-up repair; as well as preventive or mitigative actions. The deadline for PHMSA to finalize the integrity management provisions was January 3, 2015. The rulemaking also would address the application of existing regulations to currently unregulated gathering lines ( P.L. 112-90 §21(c)).\nPHMSA issued a Notice of Proposed R ule making incorporating the above provisions, and other requirements, on June 7, 2016. However, PHMSA subsequently decided to split its efforts into three separate rulemakings to facilitate completion. PHMSA anticipates publication of a final rule for the maximum allowable operating pressure and material testing provisions in July 2019. PHMSA anticipates publication of separate final rules for the integrity management provisions and for the gathering line provisions in December 2019.", "Among other requirements, this rulemaking would require leak detection systems, where practicable, for hazardous liquids (i.e., oil and refined fuel) pipelines and would set standards for leak detection capability ( P.L. 112-90 §8(b)). It also would address the expansion of integrity management for liquids pipelines beyond high-consequence areas ( P.L. 112-90 §5(f)). The deadlines for PHMSA to finalize these rules were, respectively, January 3, 2014, and January 3, 2015. The rulemaking also would require additional integrity assessment measures for certain underwater onshore liquids pipelines ( P.L. 114-183 §25). PHMSA issued a prepublication final rule on January 13, 2017, but withdrew it on January 24, 2017, for further review in compliance with the \"Memorandum for the Heads of Executive Departments and Agencies\" issued by the White House. PHMSA anticipates publication of a final rule in May 2019 .", "This rulemaking, which refers to Title 49 of the Code of Federal Regulations, involves requirements for pipeline valve installation and minimum rupture detection standards. These measures are intended to enhance the ability of pipeline operators to quickly stop the flow of a commodity (e.g., oil) in case of an unintended release by installing automatic or remote-controlled valves ( P.L. 112-90 §4). The rulemaking also would outline performance standards for pipeline rupture detection ( P.L. 112-90 §8(b)). The deadline for PHMSA to finalize these rules was January 3, 2014. PHMSA anticipates issuing a proposed rule in August 2019.", "This rulemaking would set minimum federal safety standards for underground natural gas storage facilities ( P.L. 114-183 §12). The deadline for PHMSA to finalize this rule was June 22, 2018. PHMSA issued an interim final rule on December 19, 2016. However, the agency temporarily suspended certain enforcement actions on June 20, 2017, and re opened the rule to public comment until November 20, 2017. DOT anticipates publishing the final rule in August 2019 .", "This rulemaking would implement PHMSA's new authority to issue emergency orders, which would apply to all operators and/or pipeline systems to abate an imminent hazard ( P.L. 114-183 §16). The deadline for PHMSA to finalize this rule was March 22, 2017. The agency issued an interim final rule on October 14, 2016. PHMSA anticipates publication of a final rule in March 2019.", "In response to questions during a 2015 hearing about overdue statutory mandates, a PHMSA official testified that rulemaking delays at that time did not reflect a lack of commitment but rather their complexity, the agency's rulemaking process, and limited staff resources. A 2016 audit report by the DOT Inspector General concluded that PHMSA lacked \"sufficient processes, guidance, and oversight for implementing mandates\" in a timely manner. On June 21, 2018, the current PHMSA administrator testified that the agency had adequate staffing and funding for its rulemaking activities and was working to streamline the agency's rulemaking process to accelerate finalization of the overdue rules. He stated that PHMSA would prioritize rulemaking in three areas: the safety of hazardous liquid pipelines, the safety of gas transmission and gathering pipelines, and pipeline rupture detection and automatic shutoff valves.", "The U.S. pipeline safety program employs a combination of federal and state staff to implement and enforce federal pipeline safety regulations. To date, PHMSA has relied heavily on state agencies for pipeline inspections, with over 70% of inspectors being state employees. As the PHMSA administrator remarked in 2018,\nPHMSA faces a manpower issue. It is obvious that an agency that employs about 536 people cannot oversee 2.7 million miles of pipeline all by itself. In fact, PHMSA makes no attempt to do so. Most actual safety inspections are performed by our state partners.\nNonetheless, some in Congress have criticized inspector staffing at PHMSA for being insufficient to cover pipelines under the agency's jurisdiction. In considering PHMSA staff levels, issues of interest have been the number of federal inspectors and the agency's historical use of staff funding.", "In FY2019, PHMSA is funded for 308 full-time equivalent (FTE) employees in pipeline safety. As noted earlier, PHMSA employed 290 full-time equivalent staff in pipeline safety, including 145 inspectors, as of March 8, 2019. According to PHMSA officials, the agency continues hiring and anticipates employing additional staff in the second half of the fiscal year. While t he President's request ed budget authority for PHMSA's pipeline safety program in FY2020 is less than the FY2019 budget authority , it projects only a small reduction in funded staff . The budget includes an estimate of 306 FTEs for FY2020 , two fewer FTEs than the prior year . According to PHMSA, these two positions , which support pipeline safety data anal ysis and information technology, are to be transferred to DOT's Office of the Chief Information Officer as part of a centralization of all systems and technology within that office.\nIf PHMSA's pipeline safety staffing were to be funded at the level of the President's FY2020 budget request, it would maintain the significant increase in PHMSA staff funding (mostly for inspectors) appropriated since FY2014 ( Figure 4 ). However, to the extent it reduces funding for grants available to the states, it potentially could reduce the number of staff in state pipeline safety agencies. It would also be a step back, in terms of funding, from the long-term expansion of PHMSA's pipeline safety program begun over 20 years ago in response to a series of pipeline accidents, the terrorist attacks of 9/11, implementation of PHMSA's integrity management regulations, and the boom in U.S. shale gas and oil production.\nPHMSA officials have offered a number of reasons for the persistent shortfall in inspector staffing. These reasons include a scarcity of qualified inspector job applicants, delays in the federal hiring process during which applicants accept other job offers, and PHMSA inspector turnover—especially to pipeline companies, which often hire away PHMSA inspectors for their corporate safety programs. Because PHMSA pipeline inspectors are extensively trained by the agency (typically for two years before being allowed to operate independently), they are highly valued by pipeline operators seeking to comply with federal safety regulations. The agency has stated that it is challenged by industry recruitment of the same candidates it is recruiting, especially with the rapid development of unconventional oil and gas shales, for which the skill sets PHMSA seeks (primarily engineers) have been in high demand. A 2017 DOT Inspector General (IG) report supported PHMSA's assertions about industry-specific hiring challenges and confirmed \"a significant gap between private industry and Federal salaries for the types of engineers PHMSA hires.\"\nTo overcome its pipeline inspector hiring challenges, PHMSA has implemented a \"robust recruitment and outreach strategy\" that includes certain noncompetitive hiring authorities (e.g., Veterans Employment Opportunities Act) and a fellows program. The agency also has offered recruitment, relocation and retention incentives, and a student loan repayment program. In addition to posting vacancy announcements on USAJOBS, PHMSA has posted job announcements using social media (Twitter and LinkedIn), has conducted outreach to professional organizations and veterans groups, and has attended career fairs and on-campus hiring events. PHMSA states that it has been \"working hard to hire and retain inspector staff\" but continues to experience staff losses due to an aging workforce and continued difficulty hiring and retaining engineers and technical staff because of competition from the oil and natural gas industry.\nAlthough PHMSA has taken concrete actions in recent years to shore up its workforce, there may still be room for improvement. Notably, the IG report concluded in 2017 that PHMSA did \"not have a current workforce management plan or fully use retention tools,\" although the agency had improved how it integrates new employees in the agency. According to the IG, PHMSA concurred with the report's workforce management recommendations and proposed appropriate action plans. On a related issue, a 2018 study by the Government Accountability Office (GAO) reports that \"PHMSA has not planned for future workforce needs for interstate pipeline inspections,\" and, in particular, has not assessed the resources and benefits available from its state partners. The GAO concluded that without this type of forward-looking analysis, \"PHMSA cannot proactively plan for future inspection needs to ensure that federal and state resources are in place to provide effective oversight of interstate pipelines.\" According to GAO, PHMSA has concurred with its recommendation to develop a workforce plan for interstate pipeline inspections. What impact PHMSA's subsequent actions may have on its staff recruitment, retention, and deployment is an open question.", "One specific remedy PHMSA has pursued in its efforts to recruit pipeline inspectors is to seek direct-hire authority (DHA) from the Office of Personnel Management (OPM). This authority can expedite hiring, for example, by eliminating competitive rating and ranking, or not requiring veterans' preference. OPM can grant DHA to federal agencies in cases of critical hiring need or a severe shortage of candidates.\nIn its 2013 appropriations report, the House Appropriations Committee stated\nThe Committee is aware of several challenges PHMSA faces in hiring pipeline safety inspectors. One such challenge is the delay caused by the federal hiring process, which is compounded by other market dynamics. The Committee encourages the Office of Personnel Management to give strong consideration to PHMSA's request for direct-hire authority for its pipeline safety inspection and enforcement personnel. Such authority may enable PHMSA to increase its personnel to authorized levels and thereby demonstrate the need for additional resources.\nThe same language appears in the committee's 2014 appropriations report. Consistent with the committee's recommendations, PHMSA applied to the OPM for direct-hire authority in April 2015 but was denied. According to PHMSA, the OPM informed agency officials of the denial verbally, but did not provide a formal, written explanation for the denial at the time.\nIn 2016, the PHMSA administrator reiterated the agency's desire for DHA, stating that it \"would complement our recruitment efforts by reducing the agency's time to hire from more than 100 days to less than 30 days.\" P.L. 114-183 did not grant PHMSA direct-hire authority, but did allow the agency to apply to the OPM for it upon identification of a period of macroeconomic and pipeline industry conditions creating difficulty in filling pipeline safety job vacancies (§9b). However, the aforementioned IG report concluded that direct hire authority might not provide PHMSA with the needed tools to recruit staff more effectively. According to the IG, while this authority might speed hiring of new employees, \"it is not clear how it alone would resolve long-standing staffing challenges such as competing with a well-paying industry over a limited talent pool.\"", "In the wake of several major safety incidents involving facilities under the jurisdiction of state pipeline safety regulators, some state programs have come under scrutiny regarding their overall effectiveness. After the San Bruno pipeline incident, the California state pipeline safety program—which had regulatory responsibility for the pipeline that ruptured—was criticized by the NTSB for its failure to detect the pipeline's problems. The NTSB was also critical of PHMSA's oversight of the state because the agency had not \"incorporated the use of effective and meaningful metrics as part of its guidance for performance-based management\" of state pipeline safety programs. A 2014 investigation by the DOT Office of Inspector General assessed the effectiveness of PHMSA's state program oversight as recommended by the NTSB. The IG report stated\nPHMSA's oversight of State pipeline safety programs is not sufficient to ensure States comply with program evaluation requirements and properly use suspension grant funds. Lapses in oversight have resulted in undisclosed safety weaknesses in State programs.\nThe IG report recommended that PHMSA \"take actions to further refine its policies and procedures for managing the program, including its guidelines to the States and improve its oversight to ensure States fulfill their role in pipeline safety.\" The report made seven specific programmatic recommendations to achieve these goals. In its response to a draft version of the IG report, PHMSA officials concurred or partially concurred with all of the IG reports' recommendations, describing actions it had taken to address the IG's concerns. The IG report therefore considered all but two of its recommendations resolved, but urged PHMSA to reconsider and clarify its response to the remaining two recommendations. These recommendations pertained to PHMSA's staffing formula and its annual evaluations of inspection procedures among the states.\nThe Aliso Canyon and Merrimack Valley incidents again focused attention on the oversight and effectiveness of state pipeline safety programs. For example, during the Aliso Canyon incident, PHMSA expressed concern to state regulators about aspects of the state's safety oversight, including its review of historical well records showing facility anomalies and requirements for safety contingency plans to protect workers, the public, and property. A subsequent federal interagency task force concluded that \"the practices for monitoring and assessing leaks and leak potential at the Aliso Canyon facility were inadequate to maintain safe operations.\" In the Merrimack Valley case, state legislators reportedly criticized Massachusetts' pipeline safety regulators for insufficient staffing and inadequate oversight of pipeline facilities. However, PHMSA's annual evaluation of the state's pipeline safety program—conducted the month before the natural gas releases—gave the state program a rating of 97.4 out of 100 maximum points. PHMSA's evaluation did note a shortfall in inspector staffing, which could impact the agency's inspection schedule, and that the state agency was working to hire additional inspectors. In light of these incidents, and the IG's prior recommendations, Congress may reexamine the adequacy of PHMSA's oversight of its state pipeline safety partners.", "The NTSB listed the safe shipment of hazardous materials by pipeline among its 2019-2020 Most Wanted List of Transportation Safety Improvements , stating \"as infrastructure ages, the risk to the public from pipeline ruptures also grows.\" Likewise, Congress has ongoing concern about the safety of older transmission pipelines—a key factor in San Bruno—and in the replacement of leaky and deteriorating cast iron pipe in natural gas distribution systems—a key factor in Merrimack Valley. The construction work in Merrimack Valley, which led to the natural gas release, was part of a cast iron pipe replacement project. (Age was also a factor in the failure of the well casing which led to the uncontrolled natural gas release at the Aliso Canyon facility.) According to the American Gas Association and other stakeholders, antiquated cast iron pipes in natural gas distribution systems, many over 50 years old, \"have long been recognized as warranting attention in terms of management, replacement and/or reconditioning.\" Old distribution pipes have also been identified as a significant source of methane leakage, which poses safety risks and contributes to U.S. greenhouse gas emissions. In April 2015, then-Secretary of Energy Ernest Moniz reportedly stated that safety and environmental risks from old, leaky distribution lines were \"a big issue.\"\nNatural gas distribution system operators all have ongoing programs for the replacement of antiquated pipes in their systems, although some are constrained by state regulators who face challenges considering significant rate increases to pay for these upgrades. According to the Department of Energy, the total cost of replacing cast iron and bare steel distribution pipes is approximately $270 billion. Practical barriers, such as urban excavation and disruption of gas supplies, also limit annual replacement. Although the federal role in natural gas distribution systems is limited, because they are under state jurisdiction, there have been prior proposals in Congress and in the QER to provide federal support for the management and replacement of old cast iron pipe.\nThe Pipeline Safety Act mandated a survey (with follow-up every two years thereafter) of pipeline operator progress in adopting and implementing plans for the management and replacement of cast iron pipes (§7(a)). The Merrimack Valley incident may refocus attention on PHMSA's regulation of pipe replacement (currently voluntary), pipeline modernization projects and work packages, older pipeline records, safety management systems, and other issues related to aging pipelines. Congress also may examine the industry's overall progress in addressing the safety of antiquated distribution lines and opportunities for federal support of those efforts.", "Ongoing physical and cyber threats against the nation's pipelines since passage of the PIPES Act have heightened concerns about the security risks to these pipelines. In a December 2018 study , GAO stated that since the terrorist attacks of September 11, 2001, \"new threats to the nation's pipeline systems have evolved to include sabotage by environmental activists and cyber attack or intrusion by nations.\" Recent oversight of federal pipeline security activities has included discussion of PHMSA's role in pipeline security.\nWhile PHMSA reports cooperation with TSA in pipeline security under the terms of the pipeline security annex and subsequent collaboration, questions remain regarding exactly what this cooperation entails and the ongoing roles of the two agencies. Congress has considered in the past whether the TSA-PHMSA pipeline security annex optimally aligns staff resources and capabilities across both agencies to fulfill the nation's overall pipeline safety and security missions. More recently, some in the pipeline industry have questioned PHMSA's focus on, and ongoing commitment to, pipeline security issues, especially in cybersecurity.\nIn the 116 th Congress, the Pipeline and LNG Facility Cybersecurity Preparedness Act ( H.R. 370 , S. 300 ) would require the Secretary of Energy to enhance coordination among \"appropriate Federal agencies,\" state government agencies, and the energy sector in pipeline security; coordinate incident response and recovery; support the development of pipeline cybersecurity applications, technologies, demonstration projects, and training curricula; and provide technical tools for pipeline security. What role PHMSA might play in any future pipeline security initiatives, and what resources it might require to perform that role, may be a consideration for Congress.", "Both government and industry have taken numerous steps to improve pipeline safety over the last 10 years. In 2016, the Association of Oil Pipe Lines stated that \"the oil and natural gas industry is committed to achieving zero incidents throughout our operations.\" Likewise, the American Gas Association, which represents investor-owned natural gas distribution companies, recently stated that \"safety is the core value for America's natural gas utilities.\" Nonetheless, major oil and natural gas pipeline accidents continue to occur. Both Congress and the NTSB have called for additional regulatory measures to reduce the likelihood of future pipeline accidents.\nPast PHMSA reauthorizations included expansive pipeline safety mandates, such as requirements for the agency to impose integrity management programs, significantly increase inspector staffing, or regulate underground natural storage. In light of the most recent pipeline accidents or security incidents, Congress may consider new regulatory mandates on PHMSA or may impose new requirements directly on the pipeline industry. However, a number of broad pipeline safety rulemakings and many NTSB recommendations remain outstanding, and others have not been in place for long, so their effectiveness in improving pipeline safety have yet to be determined. As Congress continues its oversight of the federal pipeline safety program, an important focus may be the practical effects of the many changes being made to particular aspects of PHMSA's pipeline safety regulations.\nIn addition to the specific issues highlighted in this report, Congress may assess how the various elements of U.S. pipeline safety activity fit together in the nation's overall strategy to protect the public and the environment. Pipeline safety necessarily involves various groups: federal and state agencies, pipeline associations, large and small pipeline operators, and local communities. Reviewing how these groups work together to achieve common goals could be an overarching concern for Congress." ], "depth": [ 0, 1, 2, 1, 1, 2, 3, 3, 3, 4, 4, 4, 4, 2, 2, 3, 3, 3, 3, 1, 2, 1, 2, 3, 3, 3, 3, 3, 3, 2, 3, 3, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "h0_full", "", "h1_title", "h1_title", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "h2_full", "h2_full", "h0_title h2_title h1_title", "", "", "", "", "", "", "", "h1_title", "h1_full", "h1_full", "h0_full h1_full", "", "h2_full", "h0_full h3_full" ] }

{ "question": [ "Why has pipeline safety become a concern?", "Why is pipeline safety important?", "How is the federal pipeline safety program administered?", "What characterizes PHMSA's budget authority?", "Why does the agency face difficulty in retaining its staff?", "What are the implications of the Trump Administrations requested budget authority for PHMSA?", "Why have state programs recently come under scrutiny?", "What incidents have heightened concerns about pipeline security risks?", "Why do PHMSA and TSA work together?", "What characterizes the terms of this relationship?", "Why might Congress want to assess pipeline safety?", "What stakeholders would this potential approach involve?" ], "summary": [ "Recent incidents in California, Pennsylvania, Massachusetts, and other states have drawn criticism from stakeholders and have raised concerns in Congress about pipeline safety.", "The U.S. energy pipeline network is composed of approximately 3 million miles of pipeline transporting natural gas, oil, and other hazardous liquids. The Department of Energy's (DOE's) 2015 Quadrennial Energy Review also highlighted pipeline safety as an issue for the nation's energy infrastructure.", "The federal pipeline safety program is administered by the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA), which relies heavily on state partnerships for inspection and enforcement of its regulations.", "PHMSA's pipeline safety program is authorized through FY2019. For FY2019, PHMSA's estimated budget authority is approximately $164 million—more than double the agency's budget authority in FY2008 (not adjusted for inflation).", "Much of PHMSA's funding is for inspectors. However, due to private sector competition, the agency faces persistent challenges recruiting and retaining the staff for which it is funded.", "The Trump Administration's requested budget authority for PHMSA is approximately $151 million for FY2020, roughly 8% less than the FY2019 amount. The request would only slightly reduce PHMSA staffing but proposes cuts in state grants that could impact staffing at state pipeline safety agencies. The request would only slightly reduce PHMSA staffing but proposes cuts in state grants that could impact staffing at state pipeline safety agencies.", "In the wake of major incidents involving facilities under state jurisdiction, some state programs have come under scrutiny regarding their effectiveness and oversight by PHMSA.", "Ongoing physical and cyber threats against the nation's pipelines since passage of the PIPES Act have heightened concerns about pipeline security risks.", "Although the Transportation Security Administration (TSA) has the primary statutory authority over pipeline security, pipeline safety and security are intertwined—and PHMSA is involved in both. Under the terms of a 2006 agreement, PHMSA and TSA are directed to work together \"to delineate clear lines of authority … in the area of transportation security.\"", "While PHMSA reports ongoing cooperation with TSA, questions remain about what this cooperation entails and the ongoing roles of the two agencies.", "In addition to these specific issues, Congress may assess how the various elements of U.S. pipeline safety and security fit together in the nation's overall approach to protect the public and the environment.", "This approach involves federal and state agencies, pipeline associations, large and small pipeline operators, and local communities. Reviewing how these various groups work together to achieve common goals could be an overarching consideration for Congress." ], "parent_pair_index": [ -1, 0, -1, 0, -1, -1, -1, -1, -1, 1, -1, 0 ], "summary_paragraph_index": [ 0, 0, 1, 1, 1, 1, 1, 4, 4, 4, 5, 5 ] }

{ "title": [ "", "Introduction", "Controlling and Gaining Time During General Debate and the Amendment Process", "General Debate", "Controlling Time as a Manager", "Gaining Recognition to Speak Under Controlled Time", "Yielding", "Debate During the Amendment Process", "Controlled Time for Debating an Amendment", "Debate Under the Five-Minute Rule", "Pro Forma Amendments", "Yielding", "Motions to Close (or Limit) Debate", "Amendments", "Motion to Amend", "Withdrawal or Modification of Amendment", "Dispensing with Reading of Amendment", "Other Motions and Actions", "Actions Concerning Rules and Procedures", "Point of Order", "Appeal", "Parliamentary Inquiry", "Unanimous Consent Requests", "Motions to Rise", "Simple Motion to Rise", "Motion to Rise and Report", "Relating to the Enacting (or Resolving) Clause", "Voting and Quorum Procedures" ], "paragraphs": [ "", "Members of the House of Representatives have multiple opportunities to participate in the consideration of measures on the floor. They can discuss legislation, propose changes to the pending text, and suggest actions that may facilitate deliberation or expedite decision making. To achieve these legislative objectives, Members rely on standard procedures and phraseology that have evolved over the course of congressional history.\nAn important parliamentary device designed to allow greater participation in debate is the Committee of the Whole (formally, the Committee of the Whole House on the state of the Union). The Committee of the Whole can be understood as the assembly in a different form; it is a committee of the House composed of every Representative that meets in the House chamber. The House considers most major measures in the Committee of the Whole; in fact, House rules require revenue, appropriations, and authorization measures to be first considered in the Committee of the Whole (House Rule XVIII, clause 3).\nThe House can agree to resolve itself into the Committee of the Whole in one of three ways: by a special rule, by unanimous consent, or by motion. Typically, the House adopts a special rule, a simple resolution reported by the Committee on Rules, authorizing the Speaker to declare the House resolved into the Committee of the Whole to consider a particular measure. Less frequently, a Member might ask unanimous consent that the House resolve itself into the Committee of the Whole for consideration of a particular measure. Finally, in very limited circumstances a Member may make a motion to resolve into the Committee of the Whole to consider (or further consider) a bill, although it is not done in modern practice.\nThe consideration of a measure in the Committee of the Whole and in the House can be divided into five stages: (1) the House resolves itself into the Committee of the Whole; (2) Members engage in general debate on the measure; (3) Members offer, consider, and vote on amendments to the measure; (4) the Committee of the Whole rises and reports back to the House with a recommendation; and (5) the House votes on the recommendation and then on the measure itself.\nVarious rules and procedures, discussed in this report, govern how and when Members can participate in debate, offer amendments, make motions and requests, and take other actions in the Committee of the Whole. Although there is variation in the language used by Members to engage in these activities, the report also presents some examples of parliamentary phraseology.\nBefore a Member can take any action, the Member must be recognized for such purpose by the chair of the Committee of the Whole. The chair of the Committee of the Whole, who is a Member of the majority party appointed by the Speaker, exercises substantial discretion in recognition. Sometimes, the chair will ask, \"for what purpose does the gentleman (or gentlewoman) rise?\" before according recognition.\nMeasures considered in the Committee of the Whole typically are subject to conditions governing debate and amendments that are specified by a special rule from the Committee on Rules or a unanimous consent agreement. In either case, the House sets the procedural conditions under which the particular measure is considered in the Committee of the Whole. The Committee of the Whole, even by unanimous consent, may not set aside or substantially modify those conditions. Under those conditions, a Member may be prohibited from gaining recognition to debate or make a certain motion or request in the Committee of the Whole.", "Members are always limited in the amount of time they can spend speaking on the floor. The manner in which time is obtained, restricted, and distributed in the Committee of the Whole depends on the stage of consideration of the measure and the terms of any special rule or unanimous consent agreement governing the consideration of the measure.\nAfter the House resolves itself into the Committee of the Whole to consider a particular bill or resolution, Members engage in general debate on the measure. During the general debate stage, Members discuss the bill and may discuss any amendments they plan to offer, but they may not offer amendments during this time. The next stage of consideration is the amendment process. During this stage, Members seek recognition to offer amendments and to debate their merits.\nAlong with these two distinct stages of debate, there are two different methods by which time is distributed in the Committee of the Whole. Time for debate is either \"controlled\" or it is not. Under controlled time, a Member is granted a block of time from a Member, called a \"manager,\" who determines which Members may speak, for how long, and in what order. Controlled time is generally divided equally between two managers.\nIf time is not controlled, then a Member gains time to speak by seeking recognition from the chair of the Committee of the Whole. Absent any order of the House governing consideration of a measure, time in the Committee of the Whole would be controlled only during general debate. During the amendment process, the chair would distribute time in five-minute portions as described in the \" Debate Under the Five-Minute Rule \" section, below.\nThe House usually resolves into the Committee of the Whole under a special rule, however, and these orders of the House always provide for controlled time during general debate and often during the amendment process.", "Time for general debate in the Committee of the Whole is almost always set and controlled by the terms of a special rule or a unanimous consent agreement. These agreements often limit the time for general debate to one hour, although the length of general debate can vary. In practice, general debate is usually divided between the chair and the ranking minority member of the committee of jurisdiction of the measure under consideration. These Members are referred to as the majority and minority floor managers. If the measure falls under the jurisdiction of multiple committees, then the chair and ranking member of each committee might control a portion of general debate time.", "Those designated to control the time often begin discussing the measure by yielding to themselves a set number of minutes or, more often, by stating:\nI yield myself such time as I may consume.\nThe manager then controls the time until it expires or until the manager retains his or her remaining time by saying:\nI reserve the balance of my time.\nThe presiding officer will then recognize the other floor manager. By reserving his time, a floor manager gives the other floor manager a chance to speak or distribute time. Generally, the chair alternates recognition between managers from each side.\nFloor managers yield portions of time to Members who let them know in advance they wish to debate the measure. Each floor manager usually, but not necessarily, yields to Members on his or her side of the aisle. By custom, managers do not refer to other Members by name and instead designate them by state. For example, the manager might say:\nI yield two minutes to the gentlewoman from New Hampshire.\nAlternatively, the floor manager might say:\nI yield to the gentleman from California as much time as he may consume.\nIf a manager yields a portion of time to another Member, he may not take the time back. Once the time is yielded, it belongs to the Member who is speaking until he finishes and \"yields back\" his time or until the presiding officer announces that the time has expired.\nTime is kept by the clerks sitting at the House dais, and managers often ask:\nMr./Madam Chairman, how much time is available to each side?\nIn response, the presiding officer will announce how much time the majority and minority floor managers have left. It is not uncommon for the managers to discuss with each other how the remaining time will be distributed. For example, one manager might ask the other how many more Members on his side are waiting to speak.\nThe floor manager from the majority party has the right to speak last in general debate, or \"to close,\" when time is controlled. Toward the conclusion of general debate, the majority floor manager will likely reserve the balance of his time until all the time of the minority manager has been consumed or until the minority manager yields back the balance of his time.\nDebate ends when all time has expired or all time has been yielded back. The floor managers yield back time by simply stating:\nI yield back the balance of my time.\nIf the time allowed for general debate has not expired, managers sometimes discuss whether or not to end general debate. The managers might in this way determine that no more Members wish to speak on either side and they might then, in turn, yield back their remaining time. If the length of time for general debate is set by the House, as it nearly always is, the Committee of the Whole cannot extend the length of time for general debate—not even by unanimous consent.", "If a Member is not the floor manager but wishes to speak, the Member informs the floor manager on her side of her interest in speaking. The floor manager might then yield a portion of time to the Member. When the block of time the Member has been yielded is over, the chair will announce that the time yielded to the Member has expired. If the Member wishes to continue speaking, he can look to the floor manager and request additional time. The floor manager might choose to yield to the speaker an additional portion of time if any of the manager's time remains uncommitted.", "There is a difference between yielding a portion of time to another Member and yielding to another Member. Any Member who has been recognized for debate may yield, but under modern practice only managers may yield portions of time. A Member who has been yielded time by a manager, in other words, may not yield a specified amount of time, such as 30 seconds or 11 minutes, to another Member and expect the Presiding Officer to enforce the time limit. The Member might, however, \"yield to\" another Member for a question or a comment, but the yielding Member retains the floor. Thus, any time consumed by the Member yielded to is charged against the portion of time yielded originally by the manager.\nWhen a Member is yielded to, he or she is actually using the time of another Member. For this reason, Members ask permission to use another Member's time. If a Member wants to interrupt another Member to ask a question or respond to something that was said, he or she can ask:\nWill the gentleman (or gentlewoman) yield?\nThe Member speaking can decline to yield. Or, the Member can respond:\nI yield to the gentleman (or gentlewoman).\nThe Member who has yielded retains the floor and should remain standing. The time being consumed belongs to the Member who yielded. Therefore, the Member who was yielded to cannot yield to a third Member. If another Member wants to join the discussion between the yielding Member and the Member who was yielded to, he or she would have to seek permission to interrupt from the yielding Member. In this way, Members might engage in a colloquy, with one Member yielding to one or more Members in turn so that they may exchange information or debate an issue.\nFurthermore, the Member who has yielded to another Member can take the time back. Generally, this is done by interrupting the Member who had been yielded to by saying:\nReclaiming my time....\nThe following example illustrates the difference between yielding a portion of time and yielding to another Member. During general debate, Representative A, as floor manager, might yield five minutes to Representative B, another majority-party member of the committee. Representative B then may begin speaking. If at some point during the five minutes another Member, Representative C, rises while Representative B is speaking and asks \"will the gentleman (or gentlewoman) yield?,\" then Representative B can either yield or decline to yield. If Representative B yields, then any time used by Representative C is charged against the five minutes originally granted to Representative B. Representative C cannot yield to yet another Member, Representative D, because Representative B holds the floor. Representative D would have to ask Representative B to yield. Although Representative B cannot limit the time of Representative C by yielding only a set period of time, at any point Representative B can reclaim his time.", "Debate during the amendment process will occur under the five-minute rule (described below) unless a special rule specifies that time will be controlled. Special rules that permit only certain amendments to be offered, usually called structured rules by the Committee on Rules, typically provide for the debate time on those amendments to be controlled.", "If debate time on an amendment is controlled under the terms of a special rule, the rule usually specifies the Member (or a designee) who may offer the amendment and how long the amendment may be debated. Time to debate amendments is usually equally divided between the amendment's sponsor and a Member who opposes it.\nIt is unlikely that the rule will specify the Member who will control the half of the time in opposition to the amendment. Instead, after the clerk designates the amendment and the proponent is recognized and finishes speaking, a Member can stand and state:\nI rise to claim time in opposition to the amendment.\nThe majority floor manager will often ask to control the time in opposition if the amendment is not a committee amendment. The chair will then grant the available time to the Member who claims it by stating that the gentleman (or gentlewoman) will be recognized for, or will control, the specified number of minutes.\nControlled time during the amendment process operates the same way as controlled time during general debate. As described above, those controlling the time for debate on an amendment usually begin by yielding time to themselves to discuss the amendment. These managers then usually reserve the balance of their time and yield portions of their time to other Members in the same fashion as described above.\nWhen the majority floor manager (usually the committee chair) controls the time in opposition to an amendment, he or she, and not the sponsor of the amendment, has the right to close debate, or to speak last on an amendment (House Rule XVII, clause 3(c)). The general principle behind this practice is that the committee of jurisdiction defends the bill it reported against amendments.\nAt some point in the debate, accordingly, the manager of an amendment who has the right to close will normally reserve the balance of his time until all the time of the other manager has been consumed or yielded back. As is the case with all controlled time, when all time has expired or has been yielded back, debate on the amendment ends.", "Time for debating amendments is not always controlled in the Committee of the Whole. Debate sometimes takes place under what is known as the \"five-minute rule.\" Clause 5(a) of House Rule XVIII states:\nA Member, Delegate, or Resident Commissioner who offers an amendment shall be allowed five minutes to explain it, after which the Member, Delegate, or Resident Commissioner who shall first obtain the floor shall be allowed five minutes to speak in opposition to it.\nAccordingly, if a Member offers an amendment, the presiding officer will recognize him or her for five minutes. Another Member (sometimes the floor manager defending the version of the bill reported by the committee of jurisdiction) can then be recognized for five minutes to speak against the amendment by standing and stating:\nI rise in opposition to the amendment.\nTime under the five-minute rule is not controlled, meaning that there is no Member acting as a manager and allocating portions of time. Instead, any Member may seek recognition from the chair of the Committee of the Whole to speak for five minutes. A Member need not consume the full five minutes, but time cannot be reserved.\nCertain types of special rules, especially those referred to as open rules or modified open rules, normally allow for amendments under the five-minute rule.\nWhen a Member's five minutes on an amendment expires, the Member sometimes asks unanimous consent to extend his time by a specified number of additional minutes, up to five minutes.", "Although the five-minute rule technically permits only ten minutes of debate for each amendment, five for and five against the amendment, Members secure additional time through the use of \"pro forma\" amendments. Pro forma amendments are amendments to strike one or more words of the text under consideration, and they are offered solely for the purpose of gaining recognition to speak for five minutes. In other words, no change to the text under consideration is substantively proposed; the proponent is not actually suggesting a word or words be stricken.\nAfter the proponent and the opponent of an amendment have spoken for their allotted five minutes, another Member who wishes to speak may rise and state:\nI move to strike the last word.\nThe chair then recognizes the Member for five minutes, technically to speak on the pro forma amendment, but in fact to continue debate on the pending substantive amendment.\nAny number of pro forma amendments can be made, but because of a general prohibition against offering the same amendment twice, Members sometimes choose to say instead:\nI move to strike the requisite number of words.\nPro forma amendments can also be made when no amendment is pending if Members wish to discuss the measure itself. Pro forma amendments, however, are not always in order in the Committee of the Whole. If a measure is being considered under a special rule from the Committee on Rules that prohibits most or all amendments or that permits only specified amendments, then pro forma amendments are not in order unless the special rule explicitly states otherwise.", "Debate under the five-minute rule, as stated above, is not controlled time. Members therefore cannot yield portions of their five minutes to other Members. They can, however, remain standing and yield to other Members for questions or comments, and the time consumed by the other Members is deducted from the time of the yielding Member. A Member recognized under the five-minute rule also cannot yield to another Member for the purposes of offering an amendment. The Member who wishes to offer an amendment could seek recognition for that purpose later from the presiding officer.", "In some circumstances, Members might make motions to close or limit debate on (1) the portion of the measure that is open for amendment, or (2) a pending amendment. Generally, the motions are made to close debate on the pending portion of the text or the pending amendment and \"all amendments thereto.\" This action prevents further discussion of pro forma or substantive amendments to the pending section (or amendment).\nWhen the Committee of the Whole is considering a measure under a special rule that sets time limits for debate on amendments, motions to close debate are not in order. The Committee of the Whole can make minor changes to the terms of consideration specified in a special rule only by unanimous consent and only if the changes are \"congruent with the terms\" of the special rule.\nIf the Committee of the Whole is considering a measure under an open rule, however, Members may make motions to close five-minute debate. It is in order to move to close debate only on the portion of the bill that has been read or designated for amendment. Under the five-minute rule, bills are generally read section by section (except general appropriation bills, which are usually read paragraph by paragraph).\nA motion to close or limit debate on an amendment (and all amendments thereto) is in order after the proponent of the amendment has been recognized for five minutes and has finished his or her remarks. The motion is usually made by the majority floor manager, although any Member who is recognized might make the motion.\nA Member might move that debate end immediately, after the expiration of a certain length of time, or at a specified hour. For example, a Member could make any of the following motions:\nI move to close debate on the section and all amendments thereto.\nI move to limit debate on the paragraph and all amendments thereto to ten minutes.\nI move that all debate on the amendment and all amendments thereto end at 3 p.m.\nThe motion to close or limit debate is amendable but not debatable; after the motion is made the Committee of the Whole proceeds to vote on it.\nA successful motion to close debate on a section (or amendment) and all amendments thereto does not prevent Members from offering further amendments; it only prevents them from debating such amendments if offered. In other words, if the motion to close debate is agreed to, then once the time remaining for debate (if any) has expired, amendments to the section or the amendment are still in order but they cannot be discussed. If an amendment that was printed in advance in the Congressional Record is offered, however, then the proponent and an opponent will each be recognized for five minutes even after debate has been closed on a portion of a measure (House Rule XVIII, clause 8).\nThe Committee of the Whole might agree to close or limit debate by unanimous consent, rather than by motion. By unanimous consent, the Committee of the Whole could agree to close or limit debate on a portion of text not yet read. In addition, the Committee of the Whole could agree by unanimous consent to limit debate on an amendment not yet offered. If debate is limited by unanimous consent, then the Committee of the Whole can also allocate the remaining time between specified Members. Prior to proposing such unanimous consent requests, the floor managers sometimes engage in a colloquy to reach an agreement about how much time is needed to discuss a pending section or amendment.\nIf the Committee of the Whole agrees to end debate at some subsequent point, the chair might continue to recognize Members under the five-minute rule. In the past, the chair has also distributed any time provided for under a motion or unanimous consent agreement to close debate by asking Members desiring to speak to stand and then dividing remaining time among them. Alternatively, the chair might make the remaining time controlled time. The chair, for example, might announce that since the Committee of the Whole has agreed to end debate on the amendment and all amendments thereto after an additional half hour, the amendment's sponsor and a Member opposed will each control 15 minutes.", "", "Unless prohibited by a special rule, a Member may make a motion to amend a paragraph or section after that paragraph or section has been read or designated for amendment. Once the reading of the following paragraph or section has begun, offering a motion to amend the preceding paragraph or section requires unanimous consent.\nA Member can also make a motion to amend an amendment unless prohibited by a special rule. In fact, House rules permit as many as four (and in some cases five or more) amendments to be pending simultaneously before a vote is held on any of them (House Rule XVI, clause 6). (The amendment process in the Committee of the Whole rarely becomes this complicated, but interested readers should consult CRS Report 98-995, The Amending Process in the House of Representatives .)\nIn general, a motion to amend in the Committee of the Whole takes precedence over a motion to rise and report a bill with a recommendation (see \" Motion to Rise and Report \" section, below). In other words, a Member may not offer a motion to rise and report if another Member seeks recognition to offer an amendment. Under House Rule XXI, clause 2(d), however, after a general appropriations bill has been entirely read for amendment, a motion to rise and report, if offered by the majority leader or a designee, has precedence over any further motions to amend the bill. If agreed to, the motion to rise and report effectively ends consideration of the bill in the Committee of the Whole, precluding any further amendments. If such a motion to rise and report is rejected (or is not offered), Members may offer amendments proposing limitations not authorized in existing law. These specific kinds of amendments are not in order while a general appropriations bill is being read for amendment.", "Once an amendment has been offered and is pending in the Committee of the Whole, the Member offering it may withdraw or modify it only by unanimous consent.", "Under House rules, an amendment must be read in full before any action can be taken on it. The reading of the amendment may be dispensed with by motion, under House Rule XVIII, clause 7, if the amendment has been printed in the bill as reported or in the Congressional Record . The motion is not debatable. Often, however, a special rule will provide that such amendments \"shall be considered as read,\" making the motion or request unnecessary. In such cases, the clerk will designate the amendment when it is offered.\nThe reading of any amendment also may be dispensed with by unanimous consent. If necessary, a Member can state, after offering the amendment:\nMr./Madam Chairman, I ask unanimous consent that the amendment be considered as read and printed in the Record .", "During the consideration of a measure in the Committee of the Whole, a number of motions and requests can be made by Members to raise questions about the method of proceeding, obtain additional time for debate, or advance a measure closer to a final vote. Not all motions and requests available in the Committee of the Whole are listed below, although an effort has been made to include those most likely to be used by Members in the contemporary Congress.", "", "Any Member may make a point of order against a pending matter (e.g., a provision in a bill or an amendment) on the grounds that it violates a rule of the House, although a special rule, or a unanimous consent agreement, may waive certain points of order. A point of order, for example, may be raised against an amendment that violates the germaneness requirement (House Rule XVI, clause 7) or the Congressional Budget Act of 1974 (Titles I-IX of P.L. 93-344 , as amended; 2 U.S.C. 601-688). Except in certain cases, the point of order must be made after the matter has been read, or considered read, but before debate has begun on the matter. Once recognized for this purpose, a Member usually states:\nMr./Madam Chairman, I make a point of order against the [amendment, section, paragraph, etc.].\nThe Member making the point of order should refer by number or by subject matter to the rule of the House that the pending matter violates and is expected to explain why or in what way the amendment or other matter violates the rule.\nArgument on a point of order is at the discretion of the chair. Normally, however, the chair will entertain debate on the merits of the point of order; debate is limited to the alleged rule violation, not the merits of the policy. Often, the chair will recognize the sponsor of an amendment or manager of the bill to respond to a point of order against an amendment. A Member recognized for debate on the point of order does not control time, and thus cannot reserve time or yield time to another Member.\nA point of order is initially settled by a ruling of the chair on whether the matter cited does in fact violate the rule specified. If the chair rules the matter out of order, the Committee of the Whole may not consider it further. In ruling on points of order, the chair is aided by guidance from the Parliamentarian on applicable precedents. The Parliamentarian also may provide guidance to Members considering offering amendments or making points of order against them or other matters.\nA Member may withdraw a point of order at any time before the chair rules on it. Further, a point of order may be waived by a special rule, or by a unanimous consent agreement, for the consideration of the particular measure.\nIf a Member has not yet determined whether a point of order lies against an amendment about to be debated, then instead of making a point of order, a Member might, at the discretion of the chair, reserve a point of order. By this action, a Member secures the chance to review the matter without missing the opportunity to make a point of order against it. Before debate on an amendment begins, for example, a Member could seek recognition from the chair and state:\nMr./Madam Chairman, I reserve a point of order against the amendment.\nThe Member at this stage need not specify what rule he or she believes the amendment might violate. A Member who reserves a point of order can then decide, at a later time during debate, to make the point of order or withdraw the reservation. At any time, however, including immediately after the Member attempts to reserve a point of order, the chair can require the Member to state the point of order. In addition, if a Member demands regular order, the Member must state the point of order or withdraw the reservation.", "After the chair rules on a point of order, any Member may appeal the ruling of the chair, although that is rarely done. An appeal from the ruling of the chair is made on the grounds that the chair has misinterpreted or misapplied the rules and precedents; an appeal is not made on the grounds that the ruling might have an undesirable effect on the process or the underlying policy.\nThe appeal is made in the following form:\nMember: Mr./Madam Chairman, I respectfully appeal from the decision of the chair.\nChair: The question is, shall the decision of the chair stand as the judgment of the Committee?\nA majority vote in the affirmative sustains the ruling of the chair.\nThe vote on an appeal is a determination by the Committee of the Whole on the interpretation of the rule. The vote sets a precedent and could affect future rulings of the chair.\nAppeals on most rulings are debatable, and debate in the Committee of the Whole would take place under the five-minute rule. Any Member, however, may offer a motion to close debate on the appeal. In contrast to the common practice \"in the House,\" an appeal cannot be tabled in the Committee of the Whole.\nThe Member who appeals a ruling may withdraw the appeal at any time before action has been taken, such as the chair putting the question to the Committee of the Whole.", "A Member may make a parliamentary inquiry asking for an explanation of the procedural situation or the interpretation of a House rule. Recognition for a parliamentary inquiry, however, is within the discretion of the chair. A Member recognized in debate may state a parliamentary inquiry or yield to another Member to state one without losing the floor. However, the chair will not entertain inquiries relating to a hypothetical procedural situation or the effect of a special rule not yet adopted by the House. Moreover, the chair will not interpret the meaning or effect of a legislative provision before the Committee of the Whole for consideration, a statute, or the Constitution.", "This report has noted several actions that can be taken \"by unanimous consent.\" As implied, unanimous consent requests effectively require the support of all Members, or the absence of an objection from any Member, to set aside the procedures that would otherwise be followed in a particular situation. For convenience, Members sometimes ask for unanimous consent to take actions that could also be taken by motion. Examples of typical unanimous consent requests in the Committee of the Whole include requests that an amendment be withdrawn or that an amendment be considered as read.\nNot all rules and procedures can be set aside by unanimous consent; in fact, unanimous consent requests in the Committee of the Whole, as opposed to those allowed \"in the House,\" are somewhat limited. It is not in order in the Committee of the Whole to ask for unanimous consent to take any action that is properly within the jurisdiction of the House. A Member cannot ask for unanimous consent, therefore, to take actions in the Committee of the Whole that could not be done by motion, such as to reconsider a vote on an amendment.\nFurthermore, special rules also limit the unanimous consent requests Members might make regarding the consideration of a measure. Unanimous consent requests are in order only if they make \"minor variances that are congruent with the controlling special order of the House.\"\nWhen a unanimous consent request is made, a Member opposed to the request may simply state:\nMr./Madam Chairman, I object.\nA single objection would defeat a unanimous consent request.\nUnanimous consent requests are not normally debatable. However, if the Member wishes to explain his or her objection, or perhaps obtain an explanation of the unanimous consent request, then the Member could instead rise and announce:\nMr./Madam Chairman, reserving the right to object....\nIt is up to the chair to decide whether and how long to recognize a Member to speak on a reservation of the right to object to a unanimous consent request. When speaking on a reservation of objection, the Member may yield to other Members to engage in a colloquy. Any other Member, however, might demand the regular order and the Member reserving the right to object would lose the floor. The chair would then state the question, \"Is there any objection to the request of the gentleman (or gentlewoman)?,\" and the Member could object if he or she wished.", "The House resolves out of the Committee of the Whole by the Committee \"rising.\" The motion to rise may appear in several different forms: to rise, when it has not concluded consideration; to rise and report, when it has concluded consideration; or in conjunction with an attempt to strike the enacting (or resolving) clause.", "Generally, the simple motion to rise is made to resolve out of the Committee of the Whole and back to the House when the Committee of the Whole has not completed its work on a measure. Any Member may offer a motion to rise. The motion is made in the following form:\nMr./Madam Chairman, I move that the Committee do now rise.\nThe simple motion to rise is of the highest privilege; it takes precedence over other motions, for example, to amend (during debate under the five-minute rule) and to rise and report with the recommendation that the enacting clause be stricken (see \" Relating to the Enacting (or Resolving) Clause \" section, below). A simple motion to rise is in order even if a special rule provides that the Committee shall rise and report at the conclusion of its consideration of the bill. In recent Congresses, however, special rules have sometimes prohibited a motion to rise unless offered by the chair of the committee of jurisdiction.\nA motion to rise is not debatable, and the chair puts the question to the Committee of the Whole immediately. The simple motion to rise does not require a quorum for adoption. In other words, even if only a few Members are present on the floor (a quorum in the Committee of the Whole is 100 Members), those few Members can agree to a motion to rise. On the other hand, if the simple motion to rise fails by voice vote when less than a quorum is present on the floor, then a Member can make the point of order that a quorum is not present, pending a request for a recorded vote (for more details on voting and quorums, see \" Voting and Quorum Procedures \" section, below).\nIf the motion to rise is agreed to, the Committee of the Whole converts itself back into the House and the pending business is left as unfinished. It is resumed from the same point when the House resolves into the Committee of the Whole to consider that measure further.", "The Committee of the Whole recommends action on a measure to the House. It does this by rising and reporting the measure with a recommendation, typically to adopt amendments agreed to in the Committee of the Whole; it may accomplish this action by motion.\nAfter all parts of a measure have been read for amendment in the Committee of the Whole, and no further amendments are offered or are in order, a Member may offer a motion to rise and report the measure back to the House, ending the consideration of the measure in the Committee of the Whole and recommending that the House formally accept the Committee's actions. A Member (usually, in practice, the floor manager) may state:\nMr./Madam Chairman, I move that the Committee do now rise and report the bill (or resolution) back to the House with the recommendation that....\nUnder current practice, however, the special rule for consideration of a bill usually provides that \"At the conclusion of consideration of the bill for amendment the Committee shall rise and report the bill to the House with such amendments as may have been adopted.\" When a special rule includes such language, a motion to rise and report the measure is not necessary.\nHowever, after a general appropriations bill has been entirely read for amendment, under House Rule XXI, clause 2(d), the majority leader or a designee may make a motion to rise and report, even when a special rule provides for the Committee of the Whole to rise and report without motion. Such a motion by the majority leader or a designee has precedence over any further motions to amend the bill. If such a motion is defeated, or the motion is not made, a Member may offer an amendment proposing a limitation (i.e., a restriction on how some funds in the bill may be used).", "At any point after the clerk has begun to read the bill (or resolution) for amendment under the five-minute rule, a Member may move that the Committee of the Whole rise and report with the recommendation to strike the measure's enacting (or resolving) clause. The special rule providing for the consideration of the bill might prohibit this motion, however.\nIf the motion is successful and the House then accepts the recommendation, the measure effectively is rejected. If the motion is successful but the House rejects the recommendation, the House automatically resolves itself back into the Committee of the Whole for further consideration of the legislation. If the motion is unsuccessful, the Committee of the Whole continues consideration of the legislation.\nA motion to rise and report with the recommendation to strike the enacting (or resolving) clause must be made in writing and in the proper form. Thus, to avoid a point of order, a Member must offer the motion in the following form:\nMr./Madam Chairman, I move that the Committee of the Whole do now rise and report the bill (or resolution) back to the House with the recommendation that the enacting (or resolving) clause be stricken.\nA Member offering the motion to rise and report with the recommendation to strike the enacting (or resolving) clause must be opposed to the bill; a Member simply indicates as much to the chair if or when challenged. Debate on the motion is limited to 10 minutes: five minutes in favor and five minutes in opposition. If the Committee of the Whole rejects a motion to rise and report with the recommendation to strike the enacting (or resolving) clause, a second such motion may be offered only after a material modification has been made to the measure (e.g., after the measure has been amended), or on a subsequent day.\nAlthough the practice is not necessarily common, a Member might offer a motion to strike the enacting (or resolving) clause in order to obtain time for debate, especially in a situation when no time for debate is otherwise available.", "Pursuant to House standing rules, a quorum for conducting business in the Committee of the Whole is 100 Members (House Rule XVIII, clause 6(a)). A quorum is always presumed to be present unless it is otherwise demonstrated through a process that begins when a Member makes a point of order on the floor. Generally, however, the only time that Members can make the point of order that a quorum is not present is when a vote is about to take place.\nThree kinds of votes can take place in the Committee of the Whole: voice, division, and recorded. To conduct a voice vote, the chair asks all those in favor to say aye and all those opposed to say no. The chair then announces his or her opinion as to the outcome of the vote. In a division vote, the chair asks Members in favor of the question to stand to be counted. The chair then asks all those opposed to stand and be counted, and announces the results of the count. A recorded vote is conducted by an electronic voting system; Members use a card to record their votes as yea, nay, or present. In most circumstances, the chair is required to allow a minimum of 15 minutes for a recorded vote (House Rule XX, clause 2(a)). Only a recorded vote reveals how individual Members voted.\nAll votes in the Committee of the Whole are first taken as voice votes. After the chair announces his or her opinion of the outcome of the vote, but before he or she makes the result final, any Member might demand a division vote by standing and saying:\nMr./Madam Chairman, I ask for a division.\nAs noted above, a quorum is presumed to be present. Therefore, both voice votes and division votes are valid votes even if a quorum may not have been present, as long as no Member made the point of order that a quorum was not present.\nAccording to House rules, a request for a recorded, or electronic, vote in the Committee of the Whole requires the support of 24 Members in addition to the Member making the request. To secure a recorded vote in the Committee of the Whole, a Member can rise (again after the chair announces his or her opinion as to the results of a voice or division vote but before the results are made final by the chair) and state:\nMr./Madam Chairman, I request a recorded vote.\nThe chair might then ask Members who support the request to stand. If a sufficient number rise in support, then there will be a recorded vote on the question.\nUnder clause 6 of House Rule XVIII, the chair can postpone the request for a recorded vote on any amendment. When a Member requests a recorded vote on an amendment, the chair might state that further proceedings on the amendment are postponed. It is not uncommon for the chair to postpone the vote on several amendments and for the Committee of the Whole to vote on a series of amendments, one right after the other, at a later time. In other words, the chair has the authority to \"cluster\" or \"roll\" votes on amendments. After the first vote is held, clause 6 of House Rule XVIII allows the chair to reduce the minimum time for an electronic vote from 15 minutes to not less than two minutes.\nIn some situations, a Member might not believe there is sufficient support for a recorded vote, perhaps because only a few Members are present on the floor. In that case, the Member can instead say:\nMr./Madam Chairman, I request a recorded vote and, pending that, I make a point of order that a quorum is not present.\nIf the request is for a vote on an amendment, the chair still can postpone the vote under House Rule XVIII and the point of order of no quorum is considered withdrawn.\nAlternatively, if the chair determines that a quorum is not present, he or she can immediately order a quorum call in response to the Member's request and point of order. Members then usually have approximately 15 minutes to reach the floor and record their presence by electronic device. After the quorum call, the chair will then ask if there are 24 Members, in addition to the Member who made the request, who support the demand for a recorded vote. If there are, a vote on the question is held, by electronic device." ], "depth": [ 0, 1, 1, 2, 3, 3, 3, 2, 3, 3, 4, 4, 2, 1, 2, 2, 2, 1, 2, 3, 3, 3, 2, 2, 3, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title", "", "h0_title", "h0_full", "h0_full", "", "", "h0_title", "h0_full", "h0_full", "h0_full", "", "h0_full", "", "", "", "", "h2_title h1_title", "h1_title", "h1_full", "", "h1_full", "", "h2_title", "h2_full", "h2_full", "h2_full", "" ] }

{ "question": [ "How is time during a debate controlled?", "How is time during an amendent process controlled?", "How might a Member limit the five minutes?", "How does offering \"pro forma amendments\" benefit a Member?", "Why would a Member make a point of order against a pending matter?", "What situation would call for the appeal?", "Why would a Member make a parliamentary inquiry?", "How does the Committee of the Whole resolve back into House proper?", "Why would a member make a motion to rise as opposed to a motion to rise and report?", "How do special rules affect a motion to rise and report?", "How would making a motion to rise and report benefit a Member?" ], "summary": [ "Time during general debate is controlled by the chair and ranking member of the committee that reported the measure under consideration. These Members, called floor managers, determine who may speak, for how long, and in what order.", "Time during the amendment process is sometimes controlled in a similar way under the terms of a special rule. Alternatively, the amending process might proceed under the \"five-minute rule,\" whereby the proponent and an opponent of an amendment are recognized by the chair of the Committee of the Whole for five minutes each.", "In some circumstances, Members might make motions to close or limit five-minute debate.", "Additional Members may offer \"pro forma amendments\" solely for the purpose of gaining recognition to speak for five minutes.", "If a Member believes a pending matter violates a House rule, he or she may make a point of order against it; a Member may also reserve a point of order to be made later against an amendment.", "A ruling by the chair as to whether a matter violates a House rule may be appealed.", "A Member might also make a parliamentary inquiry to ask a question about a procedural situation.", "The Committee of the Whole resolves back into the House proper by \"rising.\"", "Members might make a motion simply to rise, when the Committee of the Whole has not concluded consideration of a measure, or to rise and report, when consideration has concluded.", "Special rules usually include language that makes a motion to rise and report unnecessary.", "Members occasionally make the motion to rise and report with the recommendation to strike the enacting clause." ], "parent_pair_index": [ -1, -1, 1, 1, -1, -1, -1, -1, 0, 1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 4, 4, 4, 4 ] }

{ "title": [ "Background", "Defaulted Loans to Franchisees of the Franchise Organization Resulted in $11 Million in Guarantee Payments, and Four Lenders Accounted for about 74 Percent of Defaulted Loans", "Alleged Loan Agent Fraud Could Not Be Conclusively Determined, and SBA Has Taken Initial Steps to Enhance Oversight of Loan Agents and Improve Loan Data Quality", "Results of Investigation of Alleged Fraud Were Inconclusive", "Projected and Actual Revenue Differed, and Franchisees Should Exercise Due Diligence in Obtaining Accurate First- Year Revenue Projections", "SBA Is Taking Steps to Enhance Oversight of Loan Agents", "SBA Has Initiated Efforts to Enhance Reliability of Some Franchise Loan Data", "Agency and Third- Party Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Summary of Risk-Based Reviews of Four Lenders", "Appendix III: Financial Disclosure Document (FDD) Analysis and Franchising Due Diligence", "Appendix IV: Comments from Representatives of the Franchise Organization", "Appendix V: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments" ], "paragraphs": [ "SBA’s 7(a) loan program is intended to help businesses obtain credit that they are unable to secure in the conventional lending market. Under the 7(a) program, SBA guarantees loans made by commercial lenders. Borrowers may use 7(a) loan proceeds to establish a new business, expand an existing business, or purchase an existing one, including a franchised business. Loan proceeds can be used to buy equipment, finance working capital, purchase or renovate a building, and pay for other expenses. Currently, the maximum loan amount for a 7(a) loan is $5 million. The average 7(a) loan for fiscal year 2012 was $337,730. Loan maturities vary based on the borrower’s ability to repay and the intended use of loan proceeds.\nTo qualify for a 7(a) loan, the applicant must be deemed creditworthy, have demonstrated an inability to obtain credit elsewhere on reasonable terms from nonfederal sources, and be able to reasonably ensure repayment. Lenders are required to consider these factors for each applicant. In addition, lenders are required to report any fees paid to loan agents, and other agents who assist the borrower during the loan origination process, using the “Fee Disclosure Form and Compensation Agreement” (Form 159). In general, examples of loan agents include: (1) loan packagers, who are agents compensated by loan applicants or lenders to prepare loan applications; (2) referral agents, who refer loan applicants to lenders or vice versa, and may be compensated by either party; and (3) lender service providers, who carry out lender functions in originating, disbursing, servicing, or liquidating SBA loans in return for compensation from lenders.\nSBA’s Preferred Lenders Program (PLP) is part of SBA’s effort to provide streamlined financial assistance to the small-business community, including franchisees. Under this program, SBA delegates the final credit decision, as well as most servicing and liquidation authority and responsibility, to a group of preferred lenders. SBA relies on these lenders to ensure that borrowers meet the program’s eligibility requirements. SBA considers potential preferred lenders on the basis of their performance records with SBA, and they must have demonstrated a proficiency in processing and servicing SBA-guaranteed loans. In fiscal year 2011, SBA had 3,537 active lenders in the 7(a) program, 545 of which had preferred lender status.\nSBA’s Office of Credit Risk Management conducts on-site reviews of certain lenders through a risk-based review process. On-site reviews are generally to be conducted on all 7(a) lenders with outstanding balances of $10 million or more on the SBA-guaranteed portions of their loan portfolios. SBA’s risk-based review process is to consider factors such as portfolio performance, SBA management and operations, credit administration practices for both performing and nonperforming loans, and compliance with SBA requirements. According to SBA’s procedures for conducting on-site risk-based lender reviews, SBA can assess a lender as (1) acceptable, which means the lender is managing a satisfactory SBA loan program using prudent lending practices and representing limited financial risk to SBA; (2) acceptable with corrective actions required, indicating the lender may have weaknesses, but it is reasonably expected that the lender can address the issues during the normal course of operations; (3) marginally acceptable with corrective actions required, meaning the lender demonstrates serious deficiencies and demonstrates an inadequate degree of understanding and management of the SBA loan program; and (4) less than acceptable with corrective actions required, which means the lender is operating an SBA loan program with serious deficiencies or represents significant financial risk to SBA.\nWhen a borrower with an SBA-guaranteed loan defaults, the lender has the option of submitting a purchase request to SBA to honor the guaranteed portion of the loan. Effective November 15, 2010, SBA defined an early defaulted loan as one in which the borrower defaulted within 18 months of initial disbursement. Prior to that date, early defaulted loans were those that defaulted within 18 months of final disbursement. Early defaulted loans may indicate potential deficiencies in the originating, closing, and servicing of loans. According to SBA’s procedures, the agency must review guaranty purchase requests for early defaulted loans with a higher degree of scrutiny than other defaulted loans.\n16 C.F.R. § 436.2. This regulation was issued by the Federal Trade Commission. performance representations in the FDD, which can include average revenue figures and other earnings statements, are optional and can vary by franchise organization. Current regulations stipulate that the financial performance representation must have a reasonable basis and substantiation at the time it was made. Potential borrowers have the option to request additional information from the franchise organization regarding the financial representations made in the FDD. In addition, franchise organizations may provide the names and contact information of current and former franchisees in the FDD.", "Our analysis of SBA-guaranteed loans to franchisees of the franchise organization approved from January 1, 2000, to December 31, 2011, showed that SBA approved a total of about $38.4 million for 170 loans made by 54 lenders. SBA’s guaranteed portion on these loans amounted to around $28.8 million. Of the total population of 170 loans, we identified 74 defaulted loans, 55 of which (74 percent) were originated by four lenders. Three of these four lenders are preferred lenders that have delegated authority to make lending decisions on behalf of SBA. SBA made guarantee payments of around $11 million on the defaulted loans, including about $8.5 million in guarantee payments on the 55 defaulted loans from these four lenders. Figure 1 illustrates the dollar value of SBA guarantee payments for loans from the four lenders. In addition, figure 1 shows that loans originating with Lender A and Lender B comprised about 64 percent of the $11 million in guarantee payments disbursed by SBA for loans to the franchisees of the franchise organization.\nOf the 88 loans we reviewed from the four lenders, 55 (about 63 percent) defaulted. In comparison, 19 of the 82 loans (23 percent) that originated at the other 50 lenders to the franchisees defaulted. As shown in figure 2, two lenders—Lender A and Lender B—represented about 82 percent of the defaulted SBA-guaranteed loans to franchisees from the four lenders (45 of the 55 defaulted loans), and over half of the total defaulted SBA- guaranteed loans to franchisees from all the lenders (45 of the 74 defaulted loans).\nSBA oversees preferred lenders, in part, through its risk-based review process. SBA conducted such reviews on these four lenders, and found in 16 of 17 reviews conducted that the lenders’ management of their SBA loan programs was either acceptable or acceptable with corrective actions required. One of the five reviews for one lender, Lender A, determined the lender’s management was marginally acceptable with corrective actions required, including improvements to the lender’s policies, procedures, and controls for demonstrating certain underwriting decisions. In September 2012, SBA OIG issued a report noting that during SBA’s onsite reviews, the agency did not always recognize the significance of lender weaknesses for 8 of the 16 sampled lenders and it did not require lenders to correct performance problems that could have SBA OIG made exposed SBA to unacceptable levels of financial risks.six recommendations in the report, including proposals that SBA develop and implement a process for assessing lender weaknesses in terms of their risk to the agency, and that SBA tailor the scope of on-site reviews of lenders to identify and address the weaknesses underlying lender ratings. SBA agreed with the recommendations and the report noted it has taken steps to address concerns in the lender oversight process. For additional details on SBA’s risk-based review of the four lenders, see appendix II.\nIn addition, as part of our investigative work, we interviewed the owners of 22 franchisees of the franchise organization to obtain background information on the SBA loan process and efforts to start their businesses. One franchisee we interviewed obtained an SBA-guaranteed loan that defaulted within 9 months of final disbursement, making it an early defaulted loan. The franchisee highlighted challenges related to insufficient working capital and unexpected expenses. The franchisee ultimately filed for bankruptcy in March 2010. In addition, franchisees we interviewed noted difficulties meeting anticipated revenue estimates, as well as limited access to information that would aid in business planning. While some of the franchisees we interviewed who had not defaulted on their loan expressed similar challenges faced by those with defaulted loans, one of the franchisees with a nondefaulted loan told us he maintained excess capital in order to withstand slow periods, and he highlighted previous business experience. The experiences described in our interviews with the 22 franchisees are not generalizable to the broader population of franchisees, other franchise organizations, or 7(a) borrowers in general, but they provide additional background and highlight some of the difficulties experienced by these franchisees.", "We were unable to conclusively determine whether the loan agent referred to us for investigation intentionally provided exaggerated revenue projections to franchisees to help them qualify for SBA loans; however, we found that first-year projected revenues on loan applications involving the agent or her employer were, on average, more than twice the amount of actual revenue for 19 of the 24 franchisees we reviewed in the first year of operations. Our review of the allegation included obtaining information on SBA’s efforts to track and monitor loan agent involvement during the loan origination process. SBA has taken some steps to enhance oversight of loan agents and to improve the completeness and accuracy of data in its franchise loan portfolio.", "As part of our investigative work, we examined an allegation that a specific loan agent provided exaggerated revenue projections to some franchisees of the franchise organization in our review to assist them in qualifying for SBA-guaranteed loans. Potential franchisees and lenders may choose to employ loan agents to assist in the preparation of SBA loan applications. In an interview in February 2012, the loan agent told us she obtained the revenue projections from her employer and former clients, one of which she identified. The loan agent told us she provided these revenue projections to clients. The employer and former client she identified denied providing the revenue projections to the loan agent. SBA’s Office of Credit Risk Management debarred both the loan agent and her employer, and they are ineligible to work with the federal government for a period of 3 years beginning in January 2012. SBA debarred the loan agent on the basis of evidence supporting other grounds, including charging impermissible contingency fees, encouraging 7(a) loan applicants to violate SBA requirements by inflating working capital requests, and directing prospective borrowers not to disclose fees. In addition, the loan agent’s employer was debarred for impermissible contingency fees and encouraging false statements in connection with the 7(a) program. On the basis of interviews with the loan agent, her employer, eight former franchisees, and a bank officer for the loans, and our associated audit work we could not conclusively determine whether the loan agent intentionally provided misleading first-year revenue projections to SBA loan applicants of the franchise organization.", "To better understand the role of loan agents and the preparation of SBA loan applications, we interviewed three loan agents who were not the subject of the allegation we received. These three loan agents stated that they did not provide clients with revenue projections, and one of them said it would be improper to do so. The Federal Trade Commission’s Bureau of Consumer Protection (BCP) Buying a Franchise: A Consumer Guide encourages franchisees to conduct due diligence on any earning representations, including potential earning claims that the loan agent or other individuals may provide.\nDuring our review of the 88 loans files, we identified 6 loan agents, including the subject of the allegation, who assisted franchisees in preparing SBA loan applications. For SBA loans involving these loan agents, to the extent possible, we assessed the accuracy of franchisees’ first-year revenue projections on their SBA loan applications by comparing those figures to their actual first-year revenues using the franchise organization’s revenue data. First-year revenue projections on SBA applications that involved the loan agent we reviewed as part of our investigation were, on average, higher than the franchisees’ actual first- year revenue. The magnitude of this difference was also higher than what we found for other loan agents; however, the number of loans involving loan agents with available data to make this calculation was limited and the results are not statistically significant or generalizable to other SBA loan applications.\nOf the 88 SBA-guaranteed loans from the four lenders, we identified 24 franchisees with loans that indicated the loan agent referred to in the allegation, or her employer, assisted the franchisee in preparing the SBA loan application. Revenue projections from the loan application and actual revenue data from the franchise organization were available for 19 of these 24 franchisees, all of whom were owners of start-up franchises. On average, for these 19 franchisees, first-year revenue projections on their SBA loan applications were 2.7 times the actual revenues the franchisees made in their first year of operations. The first-year revenue projections for these 19 loans ranged from 1.02 times to 8.6 times the actual revenues the franchisee made in the first year of operations.\nIn the 88 loan files we reviewed for the four lenders, we found 10 loans that involved a specific loan agent other than the one who was the subject of the allegation. We found first-year revenue projections in the loan files for 5 of these 10 loans. For these 5 loans, we compared the first-year revenue projections from the loan files to the actual revenue of the business during the first year of operations. The revenue projections for the five loans were, on average, 1.5 times the actual revenues the franchisees made in their first year of operations. The first-year revenue projections on the SBA applications for these five loans ranged from 1.03 times to 2.8 times the franchisees’ actual first-year revenues.\nIn addition, federal regulations require franchise organizations to provide potential franchisees with certain information in their FDD—the disclosure document intended to aid individuals who are considering opening or purchasing a franchise. While the franchise organization can choose to include earnings statements in the FDD, federal regulations do not require franchise organizations to provide actual first-year average revenues for start-up businesses in the disclosure document. Franchisees should include first-year revenue estimates in an SBA loan application; however, this information is not necessarily available to potential franchisees in the FDD and they may have to conduct due diligence to identify this information from other sources, if available. For example, some franchisees we interviewed said they relied solely on information provided by the loan agent for developing revenue estimates. Other franchisees we spoke to highlighted different sources of financial information about the franchise organization, including existing or previous franchisees and the franchise organization’s FDD when developing revenue estimates.\nSeveral franchisees told us that they use FDDs when developing revenue estimates, but we found that the reported average revenue in the franchise organization’s FDD tended to be higher than our calculated first- year average revenues. We reviewed the FDDs of the select franchise organization in order to determine the average revenue it reported to potential franchisees. The franchise organization’s average revenue in its FDD accounted for all franchisees in operation the full calendar year before issuance of the FDD, not just first-year average revenue. We used the franchise organization’s revenue data to calculate, to the extent possible, first-year average revenues for only its start-up businesses. We then compared our first-year average revenue calculation to the average revenue figures reported in the franchise organization’s FDD over a 10-year period. For 9 of the 10 years we reviewed, the average revenue in the franchise organization’s FDD was higher than our average revenue calculations, after we excluded from our calculation all businesses the franchise organization told us were not start-up franchises. In addition, for the 10-year period the average revenue in the franchise organization’s FDD had a median value that was 1.43 times our average revenue calculation. In addition, we calculated the average revenue figure for the franchise organization, including the 63 businesses the franchise organization told us were not start-up businesses. The result of this calculation did not differ substantially from the franchise organization’s average revenues in the FDDs. See appendix III for additional details about our analysis.\nSBA’s website offers some information about the challenges of franchising, and it directs potential franchisees to the website of the Federal Trade Commission’s BCP for additional guidance. Likewise, the BCP’s Buying a Franchise: A Consumer Guide warns potential franchisees about unauthorized or misleading earning representations, highlighting the importance of franchisees conducting due diligence when applying for a franchise loan. According to SBA officials, SBA has limited interaction with franchisees because it delegates the application process to the preferred lenders. However, officials said individuals can visit one of SBA’s district offices, which provide resources for starting a business. Further, SBA has programs that are intended to help businesses start and grow by providing training, counseling, and access to resources, such as Small Business Development Centers, which provide services through professional business advisors. We identified other resources available to potential franchisees. For instance, a third party currently submits Freedom of Information Act requests for SBA franchise loan data, which it then uses to conduct franchise performance analysis. The analysis, which includes default rates and charge-off rates listed by franchise organization, is available to the public for a fee.", "To enhance oversight of loan agents, in October 2010, SBA announced it would begin requiring lenders to submit reports on fees paid to loan agents and other agents who assist borrowers during the loan origination process. SBA requires preferred lenders to submit a form, called the Fee Disclosure Form and Compensation Agreement (Form 159), which SBA officials said can be used to document information about participants in the loan origination process, including whether a borrower used a loan agent, and if so, the loan agent’s name, company, and compensation.\nLenders submit Form 159 to SBA’s fiscal and transfer agent (FTA), who has been recording loan agent information on behalf of SBA since December 2010.\nFurther, in March 2011, SBA published a notice with guidance to lenders on how to submit the form to the agency’s FTA, and the notice highlighted SBA’s efforts to create a database that would include all information on the form. SBA’s FTA maintains the database that includes information from the form. In addition, during our review, officials said SBA is adapting the form to obtain more-complete information about the role and activities of individuals who assist potential borrowers during the loan origination process, including loan agents. SBA plans to update the form in fiscal year 2014. Officials further stated that SBA has taken, and is considering, other steps to enhance oversight of loan agents. For example, SBA has added a provision in its standard operating procedures that allows the agency to fully deny liability in the event that the lender makes a loan on the basis of a loan package prepared by a debarred loan agent. In addition, the agency publishes a list of debarred individuals including loan agents on its website.\nSmall Business Administration, Submission of Form 159 for 7(a) Loans, Information Notice Number 5000-1200.\nThe NMLS is a record for nondepository, financial services licensing or registration for participating state agencies. This is the sole system of licensure for mortgage companies for 54 state agencies and the sole system of licensure for Mortgage Loan Originators for 58 state and territorial agencies. preferred lenders, since they have delegated authority over the loan origination process.", "During the course of our review, we identified discrepancies in SBA’s franchise loan data that highlight incomplete or inaccurate data in certain fields SBA uses for risk-based oversight of its loans portfolio, which SBA has initiated efforts to address. Using data from SBA’s Loan Accounting System (LAS), in our review of the 88 loan files for four lenders of the franchise organization with the highest loan volume and default rates, we found discrepancies between the loan files and LAS. These discrepancies generally represent two facets of data reliability—completeness and accuracy. For example, we found differences with respect to dates of defaults, default status, and whether the franchise was a start-up or existing business. Table 1 provides an overview of the discrepancies we identified.\nSBA officials said the agency takes steps to ensure the reliability of its loan data and has initiated efforts intended to improve the completeness and accuracy of some fields in LAS related to its franchise loan portfolio in general. Preferred lenders enter select data into LAS, and they certify that the information they enter into the system is accurate and complete, officials said. In addition, officials noted SBA assesses the accuracy of certain data fields when the lender submits a monthly loan status report or loan files to request a guarantee payment, and an external auditor reviews a sample of loans in LAS to validate that the financial data for the loans are accurate.vendor to improve the consistency of franchise information in its database by replacing SBA’s current franchise codes with publicly available identifiers used in the franchise industry, and to verify the accuracy of franchise information in LAS that lenders previously entered. As of July 2013, officials said the franchise identifiers were ready for use, and the agency planned to notify lenders about them. In addition, in August 2013, officials said they estimate the franchise identifiers will be introduced at the beginning of fiscal year 2014. SBA officials noted efforts to improve historical franchise data would be contingent on funding. Because SBA’s Officials also said SBA is working with a third-party franchise data-improvement efforts are in the early stages, it is too soon to assess whether SBA’s actions will address the issues with data reliability we identified.", "We provided a draft of this report to SBA for its review and comment. SBA provided technical comments, which were incorporated, as appropriate. We also provided relevant sections of a draft of this report to the four lenders who made loans to franchisees of the franchise organization. We received technical comments from three of the lenders and incorporated them, as appropriate, and one lender did not provide comments.\nIn their comments, one of the lenders asked to be dropped from the report because of what it described as a relatively fewer number of loans and defaults compared to the other lenders. However, we included information on the SBA-guaranteed loans made by this lender to franchisees to provide more context and perspective on loans to franchisees. While relatively smaller based on the number of made and defaulted loans to franchisees than other lenders, it met our criteria of lenders with the highest number of loans and defaults. The only other lender with a comparable number of loans had one defaulted loan.\nIn addition, we provided a draft of this report to the franchise organization for its review and comment. The representatives of the franchise organization provided comments on a draft of this report, which we have reprinted in appendix IV. In their comments, representatives of the franchise organization stated that our comparison of average revenues in the FDD and our first-year average revenue calculations is potentially misleading and inaccurate because the two sets of data being compared are not analogous. Specifically, representatives of the franchise organization stated that we are comparing two different sets of data and that we point out a significant difference in revenue without explaining the differences in such figures. The representatives requested that we more clearly state the differences between revenue information contained in the FDD and our calculations, which we did.\nHowever, we disagree with the representatives’ comments that our comparison is potentially misleading and inaccurate. The report comments on the use of the FDD for projecting first-year revenue, not on the accuracy of the average revenue reported in the franchise organization’s FDDs. Specifically, the report states that the average revenue in the FDD accounted for all franchisees in operation the full calendar year before issuance of the FDD. However, we added additional language to clarify that our calculation is of first-year average revenue obtained from reviewing additional revenue data we obtained from the franchise organization. Our comparison highlights the difficulties of using the FDD as a basis for projecting first-year revenues, since the revenue reported in the franchise organization’s FDD is derived from businesses in operation at least the full calendar year prior to issuance of the FDD. As noted in our report, while franchise organizations can choose to include earnings statements in the FDD, federal regulations do not require them to provide first-year average revenues for start-up businesses in the disclosure document. However, franchisees are required to include first-year revenue estimates in SBA loan applications, and this information is not necessarily available to potential franchisees in the FDD; thus, they may have to conduct additional due diligence to identify this information from other sources, if available. As noted in our report, several franchisees told us that they use FDDs when developing revenue estimates, and we found that the reported average revenue in the franchise organization’s FDD tended to be higher than our first-year average revenue calculations. The purpose of our analysis was not to assess the accuracy of the franchise organization’s reported revenues in the FDD, as the representatives suggest in their comments, but to demonstrate how the FDD figures were, on average, higher than our first- year average revenue calculations.\nIn addition, as noted in the report, our calculation of average revenues including existing businesses did not vary substantially from the franchise organization’s figures. Representatives of the franchise organization requested that we state more clearly in the text of the report that we did not identify a substantial difference between our average revenue calculations and the franchise organization average revenue in the FDD when including existing businesses. We modified our report to more clearly state this information. However, by excluding existing businesses in our calculation, to the extent possible, we highlighted how average revenues disclosed in the franchise organization’s FDDs tended to be higher than first-year average revenues, which we believe is material to our discussion about the importance of franchisees’ conducting due diligence when applying for a 7(a) loan. The franchise organization agreed that potential franchisees must be careful in using information in the FDD for estimating first-year revenue. In addition, the representatives of the franchise organization noted additional provisions in the FDD that address how a prospective franchisee can gather further information. We modified the report to include language to address this issue.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the acting Administrator of the Small Business Administration, the appropriate congressional committees, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions concerning this report, please contact Stephen M. Lord at (202) 512-6722 or [email protected] or Wayne A. McElrath at (202) 512-6722 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix V.", "This report describes (1) the magnitude of Small Business Administration (SBA)-guaranteed loans to franchisees of the franchise organization, and (2) the results of our investigation into the allegation, and aspects of SBA’s oversight of its 7(a) loan program with respect to loans made to franchisees of the franchise organization.\nTo conduct our audit work, we examined data for all SBA-guaranteed loans to franchisees of the select franchise organization approved from January 1, 2000, to December 31, 2011, in order to assess loan volume, default rates, and the amount of SBA’s guarantee payments made for 170 loans to franchisees of the franchise organization from 54 lenders. We selected this date range in order to obtain a broad understanding of SBA- guaranteed loans to the franchisees during different economic conditions and from multiple lenders. The original dataset we received from SBA included 184 loans to franchisees; however, 16 of these indicated that the lender canceled the guarantee on the loan and 2 were outside the scope of our review. We therefore excluded these loans from our analysis of SBA’s loan data for the franchise organization. From these data, we selected four lenders with the highest loan volume and default rates. Three of these four lenders are preferred lenders that have delegated authority to make lending decisions on behalf of SBA. We also reviewed 88 SBA loan packages for these four lenders in order to assess characteristics of individual loans, such as the extent to which the franchisees’ projected first-year revenues differed from actual first-year revenues, and to assess the accuracy of certain data fields in the SBA franchise loan data. These loan packages included all loan packages for these lenders during this time period. We obtained copies of SBA’s risk- based review reports for the four lenders. We also searched the website PACER.gov to determine if any of the franchisees that received 1 of the 88 SBA loans filed for bankruptcy.information from the four lenders when available. To assess the reliability of the SBA franchise loan data for the franchisees of the franchise organization, we (1) interviewed agency officials knowledgeable about the data, (2) performed electronic testing for completeness and accuracy on select data fields, and (3) traced fields in SBA’s loan database to primary source files when possible. We found discrepancies between data in SBA’s loan database and information in the loan files we reviewed. We discussed reasons for the differences between the data sources, as well as the agency’s processes and policies for managing the quality of franchise loan data, with SBA officials. After discussions with SBA, we determined the SBA loan data were sufficiently reliable for reviewing loans to the franchise organization. Moreover, we analyzed revenue data that we obtained from the franchise organization to calculate actual first-year revenues of franchisees, when possible. We compared these calculations with the projected first-year revenues in SBA loan applications for 19 franchisees who used the loan agent, or her employer, who was the subject of the allegation. We also used the franchise organization’s revenue data to calculate average first- year revenues for a broader population of franchisees, and compared it to average revenues reported in the franchise organization’s disclosure documents. We noted several data limitations with the franchise organization’s revenue data. The scope of our review included businesses with a full 12 months of revenue data that began from years 2000 to 2011, since our objective was to calculate an entire year of business revenue for businesses that opened during that time period. The original revenue data provided by the franchise organization included 746 businesses. After excluding 59 businesses with fewer than 12 months of revenue data and 149 businesses that may have opened prior to January 2000 (16 businesses affected by both of these issues), the total population of businesses in the revenue data was reduced to 554. In addition, we identified 115 businesses with revenue data that highlighted potential reliability issues, including missing, duplicate, and nonsequential revenue data. For purposes of data reliability, we excluded these businesses from our calculations, and conducted analysis on the remaining 439 businesses. To the extent possible, we calculated an average revenue figure that reflected first-year revenue of start-up We obtained franchise loan franchisees. Accordingly, for part of our analysis, we excluded 63 businesses from the revenue dataset that the franchise organization identified as existing businesses, for a total population of 376 businesses. The franchise organization was not able to confirm that it identified all existing businesses, so our average revenue calculations may include both start-up franchisees and existing franchisees. Nonetheless, we believe the average revenue figures we calculated provide a reasonable basis of comparison to projected revenues for select start-up franchisees, as well the franchise organization’s disclosure documents. We discussed this methodology with representatives of the franchise organization, who confirmed our approach was reasonable. To further assess the reliability of the revenue data, we interviewed representatives of the franchise organization and performed electronic testing on the data provided. We determined that the franchise organization’s revenue data were sufficiently reliable for the purposes of this report.\nWe also interviewed SBA officials about their activities related to oversight of the four lenders, efforts to track and monitor loan agents, and the assistance provided to potential franchisees during the loan application process. In addition, we examined SBA’s policies and procedures for overseeing lenders in the 7(a) program. We also reviewed reports by SBA’s Office of Inspector General (OIG) and other related documents.\nTo conduct our investigative work, we reviewed an allegation that a loan agent intentionally exaggerated first-year revenue projections on SBA loan applications in order to ensure that franchisees would qualify for SBA 7(a) loans. We interviewed the owner of the franchise organization, the loan agent who was the subject of the allegation, her employer, eight former franchisees that were referred to us during the course of the investigation, and a bank officer that reviewed loans related to the allegation. To better understand the franchisees’ experience with the 7(a) loan program, we interviewed 14 additional franchisees of the select franchise organization who received 19 SBA-guaranteed loans from one of the four lenders with the highest loan volume and default rates. These franchisees were selected on the basis of a range of factors, including whether they used a loan agent, geographic dispersion, and performance status of the loan. We also interviewed three additional loan agents. In addition, on the basis of the 88 loan packages we reviewed for the four lenders, we identified 24 franchisees that used the loan agent connected to the allegation, or her employer, 19 of whom had data available to compare the first-year revenue projections on their SBA loan applications with the franchisees’ actual first-year revenue. We cannot generalize our findings from these interviews to other franchisees, loan agents, franchise organizations, or borrowers in the 7(a) program. Our intent was not to identify potential fraud or abuse for all franchise loans of the franchise organization or the 7(a) loan program as a whole.\nWe conducted this performance audit from March 2012 to September 2013, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence that provides a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We conducted our related investigative work in accordance with the standards prescribed by the Council of the Inspectors General on Integrity and Efficiency.", "As part of its oversight efforts, the Small Business Administration (SBA) generally conducts reviews of all 7(a) lenders with SBA-guaranteed loan portfolios of $10 million or more on a 12- to 24-month cycle. SBA can conduct additional reviews of the lenders if it identifies specific performance concerns. Officials highlighted additional factors that could determine whether a lender is subject to a risk-based review, including the lenders’ risk ratings, industry concentration, and the results of previous reviews. SBA conducted risk-based reviews of the four lenders we selected for further review. Table 2 summarizes the risk-based reviews we received from SBA for the four lenders.\nSBA has the authority to suspend, revoke, or deny renewal of or issue a shortened period for delegated authority of preferred lenders. According to officials, SBA suspended or revoked the delegated authority for two preferred lenders in the 7(a) program from 2000 through 2012. Rather than suspending or revoking delegated authority, officials said SBA is more likely to deny a renewal of delegated authority or grant a shortened renewal period, since the renewal period can be from 6 months to 2 years. From fiscal year 2009 through 2012, SBA denied delegated authority to 367 lenders. In addition, approximately 1,058 lenders received at least one shortened renewal of 6 to 12 months. SBA can also place lenders on a “watch list,” which is one of SBA’s monitoring tools to identify high-risk lenders that warrant elevated oversight attention. Officials told us that high-risk lenders on the watch list include institutions that have received a review assessment of less than acceptable with corrective actions required and marginally acceptable with corrective actions required.\nAccording to SBA, it is developing a new lender oversight framework to conduct risk-based reviews. This new framework of risk-based reviews is intended to measure the level of risk of each lender participating in the 7(a) program. As part of this effort, SBA officials said that they plan to conduct a pilot project to review 20 to 30 lenders, which is to include evaluations of issues related to loan agents and franchisees. As of August 2013, SBA had completed 18 pilot reviews. In addition, SBA officials said the agency will conduct various types of risk-based reviews based on issues unique to a particular lender.", "The franchise organization we reviewed included average revenue in the FDD that accounted for all franchisees, including both start-up and existing franchisees in operation the full calendar year before issuance of the FDDs. We obtained and analyzed the franchise organization’s revenue data to calculate first-year average revenues, to the extent possible, and compared them to average revenues reported in the franchise organization’s FDDs. We found the average revenues reported in the franchise organization’s FDDs from 2000 to 2009 were higher than our average revenue calculations, with the exception of 1 year. Specifically, for the 10-year period of FDDs we reviewed, the average revenue in the franchise organization’s FDD had a median value that was 1.43 times our average revenue calculation. The average revenue in the FDD for 1 of the 10 years was lower than our average calculation (our average revenue calculation was 90 percent of the FDD for that year). However, for the other 9 years, the FDD was at least 1.35 times and at most 1.74 times the average revenue figures we calculated.\nAs discussed, current federal regulations stipulate that franchise organizations have discretion in what they report in the section of the FDD that is devoted to earnings statements, provided there is a reasonable basis and written substantiation for the information. All of the FDDs we reviewed for the franchise organization cautioned potential franchisees that they may not achieve the average revenue reported in the FDD and that many factors influence the revenue of the franchise. These FDDs also note that the potential franchisees accept the risk of not achieving the stated average revenue, and that the franchise organization has not audited nor in any other manner substantiated the truthfulness, accuracy, or completeness of any information supplied by its franchisees.", "", "", "", "In addition to the contacts named above, Heather Dunahoo, Assistant Director; Rick Hillman; Maria McMullen; Linda Miller; Gloria Proa; Gavin Ugale; Elizabeth Wood; and Heneng Yu made key contributions to this report." ], "depth": [ 1, 1, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "h0_full h2_full", "h2_title h1_full", "h2_full h1_full", "h1_full", "", "h1_full", "h1_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What did GAO determine about SBA's loans?", "To what extent did these loans default?", "How do guarantee payments on default loans affect the SBA?", "What did GAO determine about why these loans defaulted?", "What did GAO's assessment of SBA loans determine?", "What did GAO find regarding first-year revenue estimates?", "How do federal regulations influence this process?", "What steps can SBA take to improve their oversight of loan agents?", "What did SBA's 7(a) program do?", "On what percentage of franchise loans did SBA make guarantee payments?", "Why did GAO become involved in SBA's loan affairs?" ], "summary": [ "Analysis of guaranteed loans to franchisees of a select franchise organization reviewed by GAO, approved from January 1, 2000, to December 31, 2011, showed the Small Business Administration (SBA) approved a total of about $38.4 million for 170 loans made by 54 lenders. SBA's guaranteed portion on these loans was approximately $28.8 million.", "Of the total population of 170 loans, 74 loans defaulted, 55 of which (74 percent) originated from four lenders that had the highest loan volume and default rates on loans to the franchisees. Of the 88 loans reviewed from the four lenders, 55 (63 percent) defaulted. In comparison, 19 of the 82 loans (23 percent) that originated at the other 50 lenders to the franchisees defaulted.", "SBA made guarantee payments of around $11 million on the defaulted loans to franchisees, including about $8.5 million in guarantee payments on the 55 defaulted loans from these four lenders.", "As part of GAO's investigative work, GAO interviewed the owners of 22 franchisees of the franchise organization in GAO's review, of which 16 defaulted on their loans and 10 filed for bankruptcy protection. Interviewed franchisees noted difficulties meeting anticipated revenue estimates and limited access to information that would aid in business planning.", "GAO was unable to conclusively determine whether the loan agent referred to GAO for investigation intentionally provided exaggerated revenue projections to franchisees to help them qualify for SBA loans, and SBA has taken initial steps to enhance program oversight. The loan agent stated that she obtained the revenue projections from her employer and former clients, one of which she identified. She then provided these revenue projections to clients. The employer and former client she identified denied providing the revenue projections to the loan agent. SBA's Office of Credit Risk Management debarred the loan agent and her employer for encouraging false statements, among other things, making them ineligible to work with the federal government for a period of 3 years beginning in January 2012.", "According to GAO's analysis, the first-year projected revenues on loan applications involving the loan agent or her employer were, on average, more than twice the amount of actual first-year revenue for 19 of the 24 franchisees reviewed. Potential franchisees should include first-year revenue estimates in their SBA loan applications. However, this information is not necessarily available to potential franchisees in the franchise organization's disclosure document, which provides information about the organization's financial performance representations and franchisees' estimated initial investment, among other things.", "Further, federal regulations do not require franchise organizations to provide actual first-year average revenues for start-up businesses in their disclosure document. Thus, potential franchisees may have to conduct due diligence to identify this information from other sources, if available.", "GAO also identified discrepancies and other issues in SBA's franchise loan data with respect to fields used for risk-based oversight of its loans portfolio, such as default status, number of loans, and loan agent information. SBA has taken, or is considering steps, to address these issues and enhance oversight of loan agents. For instance, SBA is working with a third-party vendor to replace SBA's current franchise codes with publicly available identifiers used in the franchise industry.", "From fiscal years 2003 to 2012, SBA guaranteed franchise loans under its 7(a) program totaling around $10.6 billion.", "SBA made guarantee payments on approximately 28 percent of these franchise loans, representing about $1.5 billion, according to SBA.", "GAO was asked to examine SBAguaranteed loans to franchisees, and to investigate an allegation that a loan agent provided exaggerated revenue projections to franchisees of the same franchise organization to help them qualify for SBA loans." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, 0, -1, -1, 0, -1 ], "summary_paragraph_index": [ 4, 4, 4, 4, 5, 5, 5, 5, 0, 0, 0 ] }

{ "title": [ "Background", "Unforeseen Site Conditions Are Common, but Impacts on Reviewed Projects Were Limited", "Both Industry Stakeholders and GSA Officials Told Us Unforeseen Site Conditions Are Common in Repair and Alteration Projects", "Most Projects We Reviewed Had Unforeseen Site Conditions, but Cost and Schedule Impacts Were Largely Limited", "Incomplete Building Drawings and Lack of Building Information Were among the Possible Causes of Unforeseen Site Conditions in Projects We Reviewed", "GSA Has a Variety of Methods to Identify and Assess Risks of Unforeseen Conditions but Risk Identification Could Benefit from Analysis of Project Information", "Variety of Methods Are Available to Identify and Assess Potential Project Risks and GSA Generally Used These Methods on Projects We Reviewed", "Although GSA Identified Risks on Projects We Reviewed, Identification of Unforeseen Site Conditions Were Inconsistent", "Risk Assessment Could Benefit from Additional Analysis of Project Information", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Description of the General Services Administration’s (GSA) Repair and Alteration Projects GAO Reviewed", "Location", "Reimbursable work authorization projects GSA Region", "Appendix III: Comments from the General Services Administration", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "In fiscal year 2014, GSA had over 1,500 federally owned buildings in its inventory. These buildings are occupied by a wide variety of federal agencies and are used to fulfill agency missions. In some instances, these buildings are old and in significant need of repair, renovation, or modernization. For example, according to GSA, the average age of its inventory is 49 years, and funding difficulties have led to deterioration of an already aged portfolio. In addition, GSA reports that more than a fourth of its inventory of federally owned buildings is listed in or eligible for the National Register of Historic Places, the nation’s listing of historic properties, and approximately half of this inventory is more than 50 years old. We have previously reported that deferring maintenance and repair can reduce the overall life of federal facilities, lead to higher costs in the long term, and pose risks to safety and agencies’ missions.\nGSA addresses the need for repairs and alterations in the buildings in its inventory through its repair and alteration program. The program is implemented through repair and alteration projects in all 11 of GSA’s regional offices. In fiscal year 2015, about $800 million was appropriated from the Federal Buildings Fund (FBF) to perform major and minor repairs and alterations. This is down slightly from the $1.1 billion appropriated in fiscal year 2014. GSA can make repairs or alterations on its own initiative or at the request of tenant agencies. Repairs or alterations made on GSA’s own initiative can be classified as “major”— that is, exceed the current $2.85 million threshold requiring preparation of a prospectus that is submitted to Congress for approval—or “minor.” Minor repair or alteration projects are those projects where the construction costs exceed $25,000 but are less than the prospectus level threshold. According to GSA officials, major repair and alteration projects, among other things, primarily focus on reducing the agency’s real property footprint, achieving energy savings, and improving the condition of and protection of public assets and occupants’ health and safety. Minor repair and alteration projects primarily focus on building repairs and equipment and other replacement issues and funding is requested as a lump sum dollar amount for the program. Financing for GSA-initiated repair and alteration work comes from the FBF. The FBF is a fund that is primarily financed by rents received from other agencies and it was authorized and established by the Public Buildings Act Amendments of 1972. Instead of GSA’s receiving direct appropriations, the FBF operates as the primary means of financing the operating and capital costs associated with federal space, although GSA sometimes receives supplemental appropriations to meet repair or new construction needs, such as appropriations received from the American Recovery and Reinvestment Act of 2009. Congress exercises control over the FBF through the appropriations process that sets annual limits—called obligational authority—on how much of the fund can be obligated for various activities.\nRepair and alteration work is also performed at the request of tenant agencies. This work is done under an RWA. RWA work can range from installation of equipment and security upgrades to major renovations of buildings. According to GSA’s RWA National Policy Document, to be accepted by GSA, an RWA must meet certain criteria, including that there is a bona fide need for the work, there is a preliminary scope of work that clearly describes the objectives and requirements of the customer request, a cost estimate, and proper funding certification and client signature. According to the RWA National Policy Document, the signed RWA authorizes GSA to execute the scope of the client agency request based on the authorized amount. The work is done on a reimbursable basis, and GSA bills the client agency as expenses are incurred. RWAs can be amended for changes in scope of work or authorized amounts as long as funding is legally available for that purpose. The RWA National Policy Document indicates there are four categories of RWAs— severable, non-severable, recurring, and non-recurring. Non-recurring RWAs, those RWAs that, according to GSA would be applicable to repair and alteration work, are established to cover an indefinite period that must not exceed 5 fiscal years from the end of the last year in which authority to obligate funds is available. In fiscal year 2014, GSA accepted about 3,400 RWA projects in federally owned buildings held by GSA with a total value of about $670 million. In general, about 75 percent of these projects were less than about $80,000; however, about 2 percent of the projects were valued at $1.9 million or higher.\nPlanning and executing repair and alteration projects follows a process which is prescribed by GSA and other federal requirements. In general, this process has five phases: (1) pre-project planning, (2) project development and design, (3) contracting, (4) construction, and (5) project closeout (see fig. 1). GSA officials told us that, with the exception of certain checklists, prospectus-level RWA projects are treated the same as regular capital projects.\nThe following briefly describes these five phases:\nPre-project planning: According to GSA’s Project Planning Guide, the pre-project planning phase is where GSA develops the contextual knowledge of its inventory, facilities, budgets, and stakeholders. This is to enable GSA to identify potential projects, alternative solutions, and implementation strategies. Among other things, this phase would include facility condition and other special studies to assess the condition of GSA’s inventory and identify repair and alteration needs.\nProject development and design: This phase is where GSA begins to develop a repair and alteration project in more detail, to refine options, and to develop project management plans (PMP). According to GSA officials, project development also includes risk assessment, including documentation of known and likely unknown conditions. GSA’s Project Planning Guide indicates both a feasibility study, which defines project goals, scopes customer need, and assesses alternatives, and a program development study, which reviews previous project assumptions, plans, and budgets and proposes a construction budget and implementation strategy, would be prepared. In addition, cost estimates are to be completed, an initial Capital PMP is to be prepared, and preliminary design concepts are to be developed. A Capital PMP is a document that, among other things, defines the goals of a project and the organization required to accomplish the goals, as well as target budgets and schedules. According to GSA, the PMP should also set forth the acquisition strategy for the project and identify any constraints or risks associated with the project.\nContracting: Acquisition planning begins in the early stages of project development and GSA’s Project Planning Guide recommends that as part of the feasibility study an implementation plan be prepared that identifies the best strategy for procuring a project. During the contracting phase, GSA solicits bids for architect/engineering services and repair and alteration work, evaluates these bids, and awards contracts.\nConstruction: This phase is when the repair and alteration work is done. Construction includes construction of building and site improvements, arranging for utilities, and preparing for building occupancy. According to GSA officials, when unforeseen site conditions are discovered they are documented through contract change orders and modifications if they require a change to the contract. GSA uses both an electronic system and paper records to record contract changes. Contract change orders and modifications are also recorded in GSA’s electronic project management system.\nProject closeout: Project closeout is when the work is completed, final payments are made, and contracts are closed. GSA’s Acquisition Manual requires that appropriate steps be taken to ensure that physically completed projects are formally closed out in accordance with FAR and GSA requirements. Project closeout includes filing as- built drawings in project records. In January 2015, GSA began implementation of a Central Facilities Repository, which will be used to house project documents, including as-built drawings and other building information.\nTo help address unexpected events or circumstances, including unforeseen site conditions, repair and alteration projects may include construction contingencies. According to GSA, contingencies are a part of total estimated project costs and cover costs that may result from incomplete design, unforeseen and unpredictable conditions, or uncertainties concerning project scope. GSA officials said contingencies are held by the owner (GSA) and are not part of the contract price at award. GSA currently recommends a 10 percent construction contingency for repairs and alterations and a 7 percent construction contingency for new construction. Contingencies are also applied to RWA projects, and according to GSA, prospectus-level repair and alteration RWAs would generally have a 10 percent construction contingency.", "", "According to industry stakeholders we interviewed, unforeseen site conditions are common in repair and alteration projects. Ten of the 11 stakeholders told us that unforeseen site conditions were very prevalent, and the other stakeholder said unforeseen site conditions were somewhat to very prevalent. Some of the stakeholders said the older the building the more likely unforeseen site conditions would be encountered. Officials from the Architect of the Capitol said they run into unforeseen site conditions on most of their projects. Officials from the U.S. Postal Service also said unforeseen site conditions are prevalent and most often appeared in paving projects, in underground storage tanks that were leaking, and in roof replacements with deteriorated decking. The industry stakeholders we interviewed identified the main types of unforeseen site conditions as: environmental hazards (such as asbestos and lead-based paint), and conditions being different than in building drawings or items not located where they were expected to be. Stakeholders also told us impacts of unforeseen site conditions are generally cost increases and schedule delays but the impacts can vary depending on the project. For example, one industry stakeholder told us typical impacts include costs, increased time and schedule delays, as well as the need for greater resources to mitigate impacts. Another stakeholder told us the impacts of unforeseen site conditions depend on how prepared the property owner is to address the condition and what was and was not planned for.\nGSA has also reported that unforeseen site conditions are common in repair and alteration projects. As noted earlier in this report, in 2001 the GSA Office of Inspector General examined 45 prospectus-level repair and alteration projects and found that in 10 projects completed in fiscal years 1998 and 1999 unforeseen site conditions accounted for about 43 percent of the cost growth in these projects. Officials in four of the five GSA regional offices we contacted described unforeseen site conditions as very prevalent and officials in one regional office said they were somewhat to very prevalent. Officials in this office went on to indicate that unexpected asbestos, lead, and mold can be found anytime during construction. The GSA officials identified hazardous materials as being one of the main types of unforeseen site conditions found.\nAlthough industry stakeholders and GSA told us unforeseen site conditions are common in repair and alteration projects, data on the overall extent and impacts of unforeseen site conditions are limited. For example, as discussed in more detail below, GSA officials told us that the agency tracks but does not analyze project change orders to determine whether they resulted from unforeseen site conditions.", "Most of the projects we reviewed had unforeseen site conditions. Specifically, unforeseen site conditions were encountered in 11 out of the 18 repair and alteration projects, including two of the three prospectus projects and nine of the 15 RWA projects (see table 1). As shown in table 1, the types of unforeseen site conditions varied. For example, in one prospectus project we reviewed—a project to, among other things, build a Pavilion at the Daniel P. Moynihan U.S. Courthouse in New York City—GSA discovered that the existing wall in the plaza area was reinforced concrete rather than a standard concrete masonry unit, which was what the building drawings indicated. The reinforced concrete made demolition of the wall more difficult and, according to the project manager, GSA spent approximately an additional $70,000 to pay for more labor to demolish the wall.\nHowever, despite the prevalence of unforeseen site conditions in our selected projects, our review showed that the overall impact of these conditions appeared largely limited. On nine of the 11 projects we selected that experienced unforeseen site conditions, the cost for remediating those conditions accounted for 1 to 5 percent of the project’s original construction contract award (see fig. 2). On one of the 11 projects—a prospectus project to, among other things, modernize the heating, ventilation, and air-conditioning system at the New Executive Office Building in Washington, D.C.—the cost for addressing unforeseen site conditions was approximately 6 percent of the original construction contract award. All of the reported costs for remediating unforeseen site conditions on the projects we reviewed were below the typical 10 percent construction contingency that GSA attaches to repair and alteration projects. In addition, the impacts on project schedules also appeared to be limited. Three of the 11 projects that encountered unforeseen site conditions experienced schedule delays. These ranged from 23 to 105 days due to the unforeseen site condition. For example, in an RWA project to replace power generators at a Social Security Administration center in Maryland, GSA encountered an unidentified masonry wall buried in the ground which interfered with the planned installation of wiring. As a result of this unforeseen condition, GSA issued a contract change order, which, among other things, called for the contractor to remove the wall. The removal added 23 days to the project’s schedule. In another project for the Social Security Administration, the existence of conduits in the ceiling that were unexpected led to a 75-day delay in the project schedule. Although only 3 of the 11 projects we reviewed appeared to experience schedule delays based on the records we reviewed, unforeseen site conditions may have caused additional delays. For example, some GSA project managers and contracting officers we interviewed said that extensions due to unforeseen site conditions can sometimes be absorbed into other project delays. As a result, it is not clear how much of a delay, if any, can be attributed to some unforeseen site conditions.\nThree of the RWA projects we reviewed were associated with larger projects that experienced unforeseen site conditions. None of the three RWA projects had unforeseen site conditions, but unforeseen site conditions were experienced in the three larger projects. The following provides information about these projects:\nOne of the RWAs we reviewed was attached to a prospectus project to renovate the St. Elizabeth’s Campus in Washington, D.C., for the Department of Homeland Security. The RWA was to complete, among other things, tenant-requested improvements to building 49 on the campus. GSA officials told us the RWA we reviewed did not encounter any unforeseen site conditions. However, they also told us the building where the tenant improvements were being made had undergone extensive renovations prior to the start of the RWA project. GSA officials said that this earlier work essentially eliminated the risks of unforeseen site conditions on the RWA project since the building was gutted as part of the prospectus project. As part of the larger prospectus project, GSA encountered unforeseen site conditions, which included steel beams that were buried in the ground under the building. According to the GSA officials, the beams were unforeseen, deteriorated, and had to be replaced. GSA also abated lead-based paint and asbestos in the building prior to the start of the RWA project. GSA officials said remediating these unforeseen site conditions cost about $2.4 million. The estimated construction cost for the renovation work conducted as part of the prospectus project was $84.3 million.\nOne RWA project called for an upgrade of security and other equipment for the Department of Homeland Security’s Customs and Border Protection at the San Ysidro Land Port of Entry in San Diego, California. This project was attached to a larger prospectus project to reconfigure and expand the entire land port of entry. According to the project manager, GSA did not encounter unforeseen site conditions during the RWA project we reviewed, but unforeseen site conditions were encountered on the prospectus project. This included greater than expected contaminated soil conditions that needed to be remediated. The remediation added almost $2 million to the cost of the prospectus project, which had an estimated site development cost of about $287 million.\nA third RWA project called for the renovation of spaces occupied by the U.S. Marshals Service at a federal building in Honolulu, Hawaii. This RWA was attached to a larger project to modernize the building funded through the American Recovery and Reinvestment Act of 2009. According to a GSA official, there were no unforeseen site conditions associated with the RWA project but unforeseen site conditions were experienced in the larger project. The project manager told us the cost to address the unforeseen site conditions was paid for from the larger project. Among the unforeseen conditions experienced were additional electrical conduits in the ceiling that were not on as-built drawings and were not discovered until the ceiling was demolished. The project manager estimated the cost to remediate the unforeseen site conditions was approximately $168,000.", "There can be a variety of causes for unforeseen site conditions in repair and alteration projects. For example, 5 of the 11 industry stakeholders we interviewed cited old, inaccurate, or not up-to-date building drawings as a cause of unforeseen site conditions. Among other causes cited by the stakeholders were the level or type of building maintenance, lack of information about previous renovations, construction, or use of hazardous materials, and an insufficient number, type, or scope of environmental tests or surveys. Some of the causes these stakeholders cited were similar to the possible causes of unforeseen site conditions we identified in the projects we reviewed based on project records and discussions with GSA officials (see fig. 3). For example, as the figure shows, for projects we reviewed, incomplete building drawings and lack of building information were among the possible causes for unforeseen site conditions. We also identified access issues, tenant alterations, and a building not built up to code as possible causes. We did not identify such things as hazardous materials, naturally occurring site conditions, and other causes (“other”) mentioned by industry stakeholders.\nWe found that incomplete, inaccurate, or out-of-date building drawings— including as-built, electrical, and mechanical drawings—were the possible cause for the unforeseen site conditions in 9 of the 11 projects we reviewed that encountered unforeseen site conditions. For example, in an RWA project to build out a mobile workplace at the headquarters of the U.S. Agency for International Development in Washington, D.C., GSA encountered a sprinkler main and storm pipe that were placed lower in a portion of the ceiling than other pipes. According to a GSA official, the height of the water main and pipe were not shown in the building’s mechanical and electrical drawings. Furthermore, the pipes were not identified during a building survey. According to the official, that section of the water main and pipe were the only ones that were lower than the rest of the main and pipe in the ceiling. This unforeseen site condition caused GSA to redesign that section of the office to have the ceiling lowered by 6 inches in order to accommodate the system and pipe.\nIn addition, lack of information about buildings was also a top possible cause. For 9 of the 11 projects we reviewed that encountered unforeseen site conditions, the possible cause was lack of information about a building’s condition. We defined this category to include unforeseen site conditions that resulted from such things as poor building records, as well as inadequate surveys and testing. For example, one RWA project we reviewed was for the renovation of the U.S. Forest Service Headquarters in Washington, D.C. to allow Forest Service staff to vacate leased space and consolidate in the headquarters building. According to project officials, during demolition, GSA discovered wood subflooring, and that the subflooring lacked fire retardant. Prior to demolition, GSA was not aware of the existence of the wood subflooring, because the wood floor was hidden by carpet. In addition, the building being renovated was built in 1880, and, according to the PMP, original construction documents were not available. In general, project officials said that there was no information available that would lead them to know that wood subflooring existed and that they did not expect to encounter wood subflooring. Remediation of the unforeseen site condition included installation of fire retardant on the floor and installation of a smoke detection system. GSA officials noted this project finished on schedule and within budget and any additional costs or time delays were absorbed by the schedule and budget contingencies.\nThe possible causes of the remaining unforeseen site conditions were tenant alterations unknown to GSA (2 out of 11 projects), a building’s not being originally built up to code (2 of 11 projects), and difficulty faced by GSA in accessing the building for surveying and testing (4 out of 11 projects).", "", "GSA policies and procedures describe a variety of methods available to identify and assess potential risks on repair and alteration projects. These methods are used throughout the planning and execution of projects. The following describes some of the methods and tools used by project phase.\nPre-project planning: GSA’s Project Planning Guide describes that during the pre-project planning phase GSA is to assess the condition of its facilities and prepare building reports and other studies (e.g., historic preservation plans) to establish project requirements. The Project Planning Guide also describes how site surveys and various tests may be conducted to identify possible project risks, such as hazardous materials. GSA officials told us reviews, employing private sector peers, are established during this phase, to assess the project team’s cohesion and the quality of communications to ensure that any issues that may arise during the project can be timely resolved so they do not turn into unforeseen conditions. Tools available during this phase include facility condition assessments and site surveys.\nProject development and design: GSA uses this phase to begin defining projects and their specifications as discussed earlier in this report. To begin identifying potential project risks the Project Planning Guide describes how GSA may conduct additional site surveys and tests and develop the initial PMP. The PMP includes a risk assessment that identifies and assesses potential risks to projects. In addition, GSA is to prepare a feasibility study and a program development study which, according to the Project Planning Guide, includes an assessment of potential project risks. A Project Definition Rating Index (PDRI) may also be prepared. GSA’s Capital Project: PM Guide describes the PDRI as, among other things, a tool used to identify a project’s readiness to move forward to the next phase, as well as identify areas of risk that may require better definition and possible mitigation. Finally, GSA’s Capital Investment and Leasing Program Call—a document used to identify requirements for repair and alteration projects to receive funding—requires various documents and checklists, including an Environmental Review Sheet and a Regional Office-Central Office Alignment checklist. These documents and checklists further identify and assess potential project risks. For RWA projects, GSA’s National Project Intake Guide, describes an initial risk determination tool that is used to assist project managers in assessing risks posed by a range of factors, including project size and complexity. Tools available during this phase include the PMP, feasibility study, program development study, PDRI, and RWA risk determination tool.\nContracting: As part of this step, GSA officials told us that during project planning architect/engineering firms are hired to identify potential project risks through site investigations, preparation of project specifications, and initial designs. GSA’s Capital Projects: PM Guide states that GSA may also use Construction Managers to assist project teams in evaluating project execution and identify potential project risks. According to GSA officials, contract clauses are also incorporated into construction contracts to address unforeseen site conditions as they arise. Finally, construction contingencies are to be added to project cost estimates to cover risks that are not identified or mitigated in up-front planning. Tools available during this phase include contract provisions and construction contingencies.\nConstruction: Risk identification and assessment during construction includes monitoring project budgets and schedules for cost growth or schedule delays and for “earned-value-management” purposes. GSA’s Capital Projects: PM Guide states that project status reports are prepared that include information on project spending and progress in meeting project schedules. According to the guide, this information is used to identify whether projects are experiencing difficulties and, if so, why. GSA officials told us that contract change orders and modifications are used to document unforeseen site conditions. Finally, GSA officials told us that lessons learned documents are sometimes prepared on repair and alteration projects. According to GSA’s Project Management Practices Guide, lessons learned documents should assess GSA’s risk response strategies. Tools available during this phase include monthly status reports, contract change orders and modifications, and lessons learned documents.\nProject closeout. GSA officials told us this step includes updating as- built drawings and filing them in project records. As mentioned, GSA’s Project Management Practices Guide also describes how project teams are to discuss projects and prepare lessons learned, including an assessment of GSA’s risk response strategies. Tools available during this phase include updated as-built drawings and lessons learned documents.\nBased on the interviews we conducted and project documentation we reviewed, GSA generally used at least one of the methods or tools to identify potential risks on 16 of the 18 projects we reviewed. To make this determination we reviewed such documents as PMPs and feasibility studies. GSA guidance calls for PMPs to identify constraints and project risks and to be used continuously throughout a project to identify risks. We found that, in general, GSA prepared PMPs for our selected projects. For example, GSA prepared PMPs for 13 of the 18 RWA and prospectus projects we reviewed. Five projects did not have PMPs—three were RWA projects associated with larger projects and no separate PMP was prepared for the RWA project, and for two projects, GSA officials were not sure if a PMP was prepared and were unable to provide documentation of a PMP. The project documents we reviewed generally discussed and identified potential project risks, including sections of the PMP that identified specific potential risks. Some of the projects we reviewed also had other risk identification documents such as feasibility studies, hazardous material surveys, and program development studies.", "Although GSA has risk assessment methods that were generally used on the projects we reviewed, these methods had inconsistent results in terms of identifying unforeseen site conditions that were later experienced. Based on the risk assessment methods, GSA identified a range of risks across the projects we reviewed and identified one or more types of unforeseen site conditions on at least 16 projects (see fig. 4). However, the risk assessment did not consistently identify the risk of specific unforeseen site conditions that materialized during 11 of the projects.\nThe risks associated with unforeseen site conditions that GSA most often identified on the projects we reviewed included: access issues (7 projects): limiting access to areas may limit building information (for example, not being able to conduct site testing and evaluation in an occupied space may lead to an unforeseen site condition); presence of hazardous materials (9 projects); lack of accurate building drawings (4 projects); and other risks (11 projects), included risks that did not fall into other categories, including risks from procurement and acquisition methods.\nOn 11 of the projects we reviewed that experienced an unforeseen site condition, GSA did not identify risks that later materialized. For example, an RWA project for the U.S. Marshals Service in Baltimore, Maryland, did not identify risks, including a lack of accurate building drawings, and the risk of tenant alterations in an occupied building, though these risks led to several unforeseen site conditions throughout the building. Another RWA project for the Social Security Administration in Richmond, California, identified the risk of hazardous materials through site testing but did not identify the risk of poor building drawings or a lack of access due to continued occupation during design and construction work.\nOn five of the projects we reviewed that experienced unforeseen site conditions, GSA identified risks, and the project experienced those specific unforeseen site conditions later. For example, a renovation RWA project for the U.S. Marshal Service in Baltimore, Maryland, identified access issues early on as a risk to the project. According to GSA officials, there were limitations to reducing or eliminating this risk since the project was performed in a building with security concerns and while still occupied. In addition, on a prospectus project at the Daniel P. Moynihan U.S. Courthouse Building in New York City, an unforeseen site condition was experienced related to inaccurate as-built drawings even though the building drawings were reviewed in detail as part of a site inspection.\nOn at least 16 of the projects, GSA both identified specific types of unforeseen site conditions, and these projects did not subsequently experience that type of unforeseen site condition during the project. For example, the presence of hazardous materials was recognized as a risk on nine of the projects, and none of these projects experienced an unforeseen site condition caused by the presence of hazardous materials. During a windows replacement RWA project for the Social Security Administration in Woodlawn, Maryland, GSA identified issues related to hazardous materials (asbestos) and re-scoped the project from replacing windows to caulking the windows. GSA officials told us this change was made so as not to disturb the asbestos. The re-scoping also resulted in a lower-cost project.", "While GSA officials noted that risks are important and that the risk assessment methods are designed to identify and assess risks associated with repair and alteration projects, we found that GSA is not analyzing project information it has available to identify risks that materialized and their impact on project costs and schedules. A good understanding of project risks and their impact on project costs and schedules is important. Standards for Internal Control in the Federal Government states that an agency’s approach to assessing risks should comprehensively identify agency risks using a variety of quantitative and qualitative methods and estimate the significance of those risks to help decide how to manage those risks and plan what actions should be taken. This approach is important in the context of repair and alteration projects given that, as discussed earlier, risks from unforeseen site conditions, if not mitigated, can increase project costs and potentially jeopardize project schedules. Similarly, GAO’s Cost Estimation and Assessment Guide states more specifically that agencies should, among other things, conduct root cause analysis; develop a list of likely risks for individual projects, including a list of emerging risk items that could impact costs and schedule; and perform trend analyses and monitor project risks to develop reliable and valid cost estimates. As discussed earlier in this report, development of cost estimates is an integral part of GSA’s project planning and execution process, as is establishing construction contingencies to cover the cost of unexpected events, such as unforeseen site conditions. Finally, the Project Management Institute’s Global Standard: Practice Standard for Project Risk Management also discusses the importance of identifying types of risks and their causes as part of project planning and management, as well as the effects of these risks on projects.\nGSA’s risk assessment methods for the most part are focused on identifying risks associated with individual projects and not identifying the risks related to change orders on a program-wide basis, or necessarily the cause of certain types of risks. GSA officials told us they use contract change orders and modifications to document unforeseen site conditions resulting in a change to the contract, and they track these for individual projects to assess project status in terms of budgets and schedules. They also told us they document reasons change orders or modifications are made using a findings-of-fact form. However, GSA officials also told us they do not analyze change orders or modifications to identify the primary causes of cost growth or schedule delays on repair and alteration projects, nor do they analyze the findings of fact to identify the primary reasons change orders or modifications were made. Furthermore, GSA officials told us this information is not used to identify types of risks experienced on repair and alteration projects or their impact on costs and schedules. GSA officials told us there are challenges to using contract change orders and modifications to identify the specific role unforeseen site conditions or other types of risks play in projects. Challenges include the inability to conduct searches of change orders, modifications, or findings of fact forms. According to GSA officials, neither the electronic project management system nor the electronic acquisition data system that GSA uses to record change orders and modifications, are structured to permit searches to identify instances where unforeseen site conditions were the reason for a change order or modification.\nSupporting documents which could indicate the possible cause of change orders or modifications also cannot be searched. Despite these challenges, GSA officials said they would be open to analyzing contract change orders and modifications, particularly if the analysis was focused on a sample of change orders and modifications and not all of them. One official told us such an analysis could help GSA identify when unforeseen site conditions occur and what their impact was during certain phases of projects. According to this official, most unforeseen site conditions are discovered during the demolition phase of projects after construction contracts have been awarded.\nAlthough the projects we reviewed largely had limited cost impacts resulting from unforeseen site conditions, change orders, including those from unforeseen site conditions, can impact the cost and schedule of repair and alteration projects. For example, during our design work for this study, we reviewed the renovation of the Department of Commerce’ headquarters building in Washington, D.C. This is an ongoing prospectus project with an estimated construction cost of $651 million. Unforeseen site conditions, including the presence of asbestos and lead paint, were experienced on this project and increased project costs by roughly $3 million. Also during the renovation of the Department of Interior’s headquarters building in Washington, D.C., another ongoing prospectus project we reviewed during our design work, contract change orders related to unforeseen site conditions resulted in $3 million in increased costs. The prospectus project had a current estimated construction cost of $282 million. GSA officials told us that unforeseen site conditions are driven by, among other things, the age of buildings. Therefore, as GSA’s average building age increases the risk of unforeseen site conditions and their related costs can be expected to increase. GSA officials also told us that unforeseen site conditions are a major driver of project risk in repair and alteration projects.\nWe have previously reported that risk assessments allow project managers to identify and manage risks related to project’s costs, schedules, and other aspects and that assessing and mitigating risks reduces the probability of later encountering problems that can cause cost increases and schedule delays. Analyzing contract modifications and change orders to identify the causes of project cost growth and schedule delays would not only allow GSA to better know what role unforeseen site conditions play in project cost growth or schedule delays but also the magnitude of this type of risk. This information would then allow GSA to potentially better target these conditions in its risk assessments and potentially reduce the probability of encountering this risk in future repair and alteration projects. This approach will be important as the federally-owned buildings in GSA’s inventory continue to age and the probability of unforeseen site conditions increases.", "GSA’s repair and alteration program serves an important function in maintaining the inventory of federal buildings and facilities, and this program will continue to increase in importance as GSA’s inventory ages and continues to deteriorate. Repairs and alterations are expensive (over $1.2 billion to address immediate deferred maintenance and repair needs as estimated by GSA), and, therefore, it is imperative that the program operate as efficiently and effectively as possible and that costs, schedule delays, and project changes are minimized to the greatest degree possible. This strategy includes identifying and assessing major types of risks to projects, including those from unforeseen site conditions. Both industry stakeholders and GSA officials have said that unforeseen site condition risks are common, particularly in aging buildings, and can lead to increases in project costs and schedule delays. Of equal importance is identifying and understanding the cause of unforeseen site conditions, such as poor quality building drawings, so these causes can be addressed and not lead to unforeseen site conditions in the future.\nGSA has risk assessment methods that consider potential risks, including those from unforeseen site conditions. GSA also has a number of tools, such as PMPs and project-rating indexes that help the agency identify and assess risks. However, GSA can improve how it identifies types of project risks and minimize their impacts on repair and alteration projects. In particular, GSA can better analyze the information it has available, like contract change orders and modifications, an approach that would allow a more comprehensive identification of types of project risks, the role these risks play in repair and alteration projects, and the impacts these risks have on project costs, schedules, or scope of work. GSA is also not assessing the information it has available to identify the cause of unforeseen site conditions and identifying steps that could be taken to address these causes in order that they do not lead to unforeseen site conditions in the future. Such an analysis could also have broader benefits, including allowing GSA to identify if unforeseen site conditions or other types of risks are common to particular types of projects or locations, and if there are common causes for certain types of risks. This type of analysis would better inform GSA’s risk assessments and help minimize cost and other project impacts from unforeseen site conditions or other types of risks.", "To improve risk assessments for repair and alteration projects, we recommend that the Administrator of GSA develop and implement a plan to periodically analyze information GSA already collects, for example, based on a representative sample of repair and alterations projects, in order to: identify the specific impacts unforeseen conditions have had on project costs, schedules, and scope of work; analyze the causes of these conditions for those projects that experienced unforeseen site conditions; and identify actions that will be taken to address the potential causes of unforeseen site conditions.", "We provided a draft of this product to GSA for comment. In its written comments reproduced in appendix III, GSA agreed with the recommendation and said it will develop a plan to address it. GSA also provided technical comments that were incorporated, as appropriate.\nWe will send copies of this report to appropriate congressional committees and the Administrator of the General Services Administration. In addition, we will make copies available to others upon request, and the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at 202-512-2834 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "The objectives of this report were to (1) identify information about the extent, impact, and cause of unforeseen site conditions during selected repair and alteration projects in federally owned buildings held by the General Services Administration (GSA) and to (2) determine how GSA identifies and assesses the risks of unforeseen site conditions. The scope of the work was limited to buildings and facilities that are federally owned and held by GSA. We did not include leased buildings or facilities since these could be owned or managed by private sector entities and may not necessarily be under GSA’s jurisdiction related to repair and alteration work. In addition, in order to determine how GSA identifies project risks we focused on projects where GSA played a role in planning and developing projects.\nTo identify information about the extent, impact, and cause of unforeseen site conditions during selected repair and alteration projects, we selected 18 repair and alteration projects across four GSA regions (National Capital, Northeast and Caribbean, Mid-Atlantic, and Pacific Rim). The projects included three prospectus projects and 15 reimbursable work authorization (RWA) projects. The prospectus projects were all those projects that received an appropriation from fiscal years 2010 through 2013. The RWA projects also received funding over this period. We chose this period to help ensure projects selected had progressed into the construction phase (where unforeseen site conditions might be identified) and yet were recent enough that electronic records were more likely to be available. To select repair and alteration projects to review, we applied four criteria: (1) project cost, (2) range of project years, (3) projects in construction, and (4) geographic diversity.\nThere were a total of six prospectus projects that received funding from fiscal years 2010 through 2013. These included the following:\nEast Wing Infrastructure Systems Replacements (Washington, D.C.)\nNew Executive Office Building (Washington, D.C.)\nEisenhower Executive Office Building (Washington, D.C.)\nDaniel P. Moynihan U.S. Courthouse (New York, NY)\nWest Wing Design Phase II (Washington, D.C.)\nWest Wing/East Wing Infrastructure Systems Replacements (Washington, D.C.)\nAfter additional research and discussion with GSA, we excluded three projects. This was because one of the projects was solely for design work (West Wing Design Phase II), not construction. According to GSA, the other two projects (West Wing Infrastructure Replacements and West Wing/East Wing Infrastructure Replacements) were combined. We selected the remaining projects for review.\nThe RWA projects we reviewed were selected based on a list of RWA projects provided by GSA. According to GSA, the list was intended to be all RWA projects between fiscal years 2010 and 2013 that were for tenant repairs and alterations and were in federally owned buildings held by GSA. GSA has different types of RWA projects. For purposes of this study we reviewed A, B, and N-type RWAs. To select specific projects we first reviewed the list to ensure no single RWA project was represented multiple times in the data. We then combined and sorted the cost information of all RWA and prospectus projects and excluded all projects below a dollar-value cutoff ($2 million) and sorted the projects into GSA regional offices. We selected the three regional offices that accounted for the highest dollar amount of projects. Finally, we selected all relevant prospectus projects (see discussion above) and randomly selected 15 RWA projects from each of three regional offices. We selected more RWA projects than we planned to review to account for potential data reliability issues we might encounter. In selecting RWA projects, we excluded projects that based on their descriptions appeared to be for services and not construction, and we excluded projects that appeared to involve multiple sites. We asked GSA to verify the final list of RWA projects to, among other things, ensure they were in federally owned buildings held by GSA. We made additional adjustments based on GSA’s verification.\nWe interviewed GSA project managers and contracting officers for the projects we selected and reviewed project documents to determine if the projects encountered unforeseen site conditions. We also interviewed these officials to identify the nature of any cost, schedule, or scope impacts from the unforeseen site conditions encountered. Finally, we reviewed project documents, including contract modifications, to obtain information about the unforeseen site conditions encountered. This included a description of the unforeseen condition, the cost to remediate the condition, and any schedule delays experienced. Where applicable, we asked GSA to clarify any discrepancies between what was in the documentation provided and what we were told in interviews. To identify the causes of unforeseen site conditions, we discussed with project managers and contracting officers the actual unforeseen site conditions experienced and their potential causes. Working independently, two analysts then coded these potential causes into one of nine different categories of unforeseen site condition causes—lack of building condition information, hazardous materials, tenant alterations, lack of accurate drawings, building not built up to code, technology changes over time, naturally occurring site conditions, access issues, and other. These nine categories were developed by reviewing the responses of (1) knowledgeable GSA officials, (2) officials in two government agencies (U.S. Postal Service and the Architect of the Capitol), and (3) individuals/representatives who were knowledgeable and experienced in private sector practices for repair and alteration projects. The results of our work are not generalizable to the universe of repair and alteration projects.\nFinally, we contacted 19 organizations and individuals (referred to in this report as industry stakeholders) with knowledge of or experience in the construction industry (see table 2). These contacts included industry trade associations as well as two construction companies that had done repair or alteration work for GSA and two public sector organizations—Architect of the Capitol and the U.S. Postal Service. Our selection of industry stakeholders was based on three methods: (1) asking GSA officials who would be the most appropriate to contact, (2) asking industry stakeholders about appropriate organizations or individuals to contact, and (3) obtaining referrals from various professional organizations. Of the 19 organizations and individuals contacted, we had an interview or some other type of positive contact from 14 organizations/individuals. Of the 14 for which we had a positive contact, we had an interview or received written responses to GAO questions from 11. In the interviews we discussed such issues as the prevalence of unforeseen site conditions, the types of conditions encountered, and the causes of unforeseen or differing site conditions. We also discussed potential impacts on projects such as cost increases or schedule delays. The results of our work are not generalizable to the entire universe of industry stakeholders.\nTo identify how GSA identifies and assesses the risks of unforeseen site conditions, we reviewed documents related to GSA’s capital-planning and execution process and reviewed planning and risk assessment documents for projects we reviewed. Among the planning and project management documents we reviewed were GSA’s Capital Planning Guide, Capital Projects: Project Management Guide, and Project Management Practices Guide. We also reviewed GSA’s Fiscal Year 2017 Capital Investment and Leasing Program Call (Program Call), GSA’s P-120, Project Estimating Guide (P-120), GSA’s RWA National Policy Document, and National Project Intake Guide. The Program Call document outlined the requirements that must be met for a project to be considered for inclusion in GSA’s Capital Investment Program and the P-120 document, among other things, discussed the technical and administrative requirements for cost estimating and cost management tasks involved with construction projects’ planning and execution stages. GSA’s RWA National Policy Document states that it is the primary resource within GSA for RWA policy and use of RWAs. The National Project Intake Guide establishes national guidance for the intake of all Public Buildings Service projects and, among other things, supplements information in the Project Management Practices Guide. Finally, we reviewed other GSA policy and procedure documents, including GSA’s policy for using Project Definition Rating Indexes, GSA’s procedures for environmental account coding, and GSA’s Initial Risk Determination tool.\nWe assessed whether or not GSA’s practices and procedures on the 18 projects we reviewed generally used a risk assessment tool as part of the project development process. The analysis of the risk assessment process and use of risk assessment tools included a review of documentation related to the project and GSA processes but was primarily focused on the project management plan (PMP), which is a key document that includes a risk assessment. Among the documents we reviewed were PMPs, feasibility studies, and program development studies. We interviewed GSA officials, both at headquarters and in five GSA regional offices (the four regional offices associated with the projects we selected plus Region 4, the Southeast-Sunbelt region), about GSA’s overall risk assessment methods and tools. These regions were selected since they accounted for about 80 percent of the funding for the RWA projects from which we selected projects to review. We also interviewed GSA project managers about how they identified and assessed risks for the specific projects we reviewed.\nOur analysis of project risks and causes of unforeseen site conditions included a comparison of the possible causes of unforeseen site conditions that were experienced on the 18 projects we reviewed with whether those same causes were identified as part of project planning. As discussed earlier, we discussed with project managers and contracting officers the possible causes of unforeseen site conditions encountered and coded the causes into nine different categories. We also reviewed such documents as PMPs, feasibility studies, program development studies, and hazardous materials studies for the projects that submitted documentation to identify the potential project risks and their causes identified during project planning. We then compared the potential project risks identified during project planning with the actual unforeseen site conditions and their potential causes that were actually experienced as coded into the nine categories of causes. This resulted in a grouping of projects based on whether or not project planning identified the risk and whether or not they experienced a related unforeseen site condition. As part of our analysis, we did not assess whether GSA did or did not comply with its stated risk assessment methods or tools, use the appropriate risk assessment tool or method, or correctly identify appropriate risks as part of its assessment. We also did not assess whether or not additional risks could or should have been identified by GSA as part of the risk assessment process. Rather, we reviewed risk assessment documents, such as PMPs and feasibility studies for each of our projects to determine whether these documents were prepared and the types of risks identified. In some instances, we used our professional judgement to determine the type of risk identified by GSA based on the language or intent contained in the source document.\nAs part of evaluating how GSA identifies and assesses project risks to determine if improvements could be made, we reviewed Standards for Internal Control in the Federal Government and GAO’s Cost Estimating and Assessment Guide: Best Practices for Developing and Managing Capital Program Costs (Cost Guide). The Standards for Internal Control in the Federal Government provides the overall framework for establishing and maintaining an effective internal control system for the federal government. Among other things, the Cost Guide addresses generally accepted best practices for ensuring credible program cost estimates. It also discusses the role of risks and risk assessment in developing cost estimates. Finally, we reviewed the Project Management Institute’s (PMI) Global Standard: Practice Standard for Project Risk Management. PMI is a not-for profit professional membership organization for the project, program, and portfolio management profession. Among other things, this organization issues standards and conducts academic research to improve the profession of project management. The Global Standard: Practice Standard for Risk Management discusses principles of effective risk management, including risk identification and risk assessment.\nWe conducted this performance audit from February 2015 to March 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "Project cost (in millions)\nWashington, D.C.\nNew Executive Office Building Washington, D.C.", "Project cost (in millions)\nWashington, D.C.\nWashington, D.C.\nWashington, D.C.\nWashington, D.C.\nRenovation to upgrade all major building systems in order to accommodate the consolidation and relocation of employees from Rosslyn, Virginia, to Washington, D.C.\nWashington, D.C.\nConstruction of firing range For Prospectus projects, project costs are the total amount appropriated or apportioned for the project and for reimbursable work authorization projects, the project costs are the original award amount and any amendments to the original award.", "", "", "", "In addition the individual named above, other key contributors to this report were Nancy Lueke, Assistant Director; Russell Burnett; Jenny Chow; Richard Jorgenson; Hannah Laufe; Malika Rice; Amy Rosewarne; Charles Schartung; and Crystal Wesco." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2, 1, 1, 2, 2 ], "alignment": [ "h0_full h2_full", "h0_title h2_title", "h0_full", "h0_full", "h0_full h2_full", "h0_title h2_title h1_title", "h1_full", "h2_full h1_full", "h0_full h2_full h1_full", "", "", "", "h0_full h2_full h1_full", "", "", "", "", "", "", "" ] }

{ "question": [ "How prevalent are unforeseen challenges in repair and alteration projects?", "How do these challenges affect projects?", "How large are the cost impacts of these challenges?", "How large is the schedule impact of these challenges?", "What are the causes of these unforeseen conditions?", "How does GSA identify unforeseen conditions?", "How frequently does GSO use risk identification methods?", "To what extent are PMPs used?", "How consistent is GSA's risk identification with real-life scenarios?", "What effects can unforeseen conditions have on projects?", "What are \"unforeseen site conditions\"?", "Why are unforeseen conditions important to evaluate?", "What was GAO asked to review?", "What does this report address?" ], "summary": [ "Both industry stakeholders and General Services Administration (GSA) officials told GAO that unforeseen conditions in repair and alteration projects are common.", "Among the impacts identified by the stakeholders were increased project costs and schedule delays.", "The overall impact of the unforeseen conditions on the 18 projects GAO reviewed was largely limited. On 9 of the 11 projects that experienced such conditions, the cost to remediate them accounted for 1 to 5 percent of the project's original construction contract award amount, and on one project the cost was approximately 6 percent. These amounts were below the typical 10 percent construction contingency GSA adds to project costs.", "Schedule impacts were also limited: 4 of the 11 projects experienced delays ranging from 23 to 105 days.", "Incomplete building drawings and lack of building information were among the possible causes of the unforeseen conditions experienced in the projects GAO reviewed.", "GSA has a variety of methods to identify and assess risks of unforeseen conditions. GSA's Project Planning Guide states that, among other things, facility condition assessments and site surveys should be conducted initially. GSA guidance also calls for preparation of a project management plan (PMP), which includes a risk assessment matrix.", "GAO found that, in general, GSA used at least one of its risk identification methods on the projects reviewed.", "For example, GAO found that GSA prepared PMPs for 13 of the 18 projects reviewed. Three of the remaining five projects were attached to larger projects that had PMPs and GSA was unable to provide a PMP for the other two projects.", "However, GSA's risk identification was sometimes inconsistent with unforeseen conditions that were actually experienced. For example, on 11 of the projects, GSA did not identify risks that later materialized during the project.", "As shown in the projects GAO reviewed, unforeseen conditions can delay schedules and increase project costs—in some cases in the millions of dollars. Analyzing project information such as change orders would allow GSA to better know what role unforeseen conditions play in repair and alteration projects and the magnitude of this risk.", "GAO's past work has indicated that GSA sometimes encounters “unforeseen site conditions”—conditions that are different from what was expected—in performing this work.", "Unforeseen conditions can add both time and cost to repair and alteration projects.", "GAO was asked to review issues related to tenant repair and alteration projects.", "This report addresses (1) information about the extent, impact, and cause of unforeseen site conditions on selected projects, and (2) how GSA identifies and assesses the risks of unforeseen conditions." ], "parent_pair_index": [ -1, 0, 1, 1, 0, -1, 0, 0, 0, 0, -1, 0, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Terminology", "Original Appointments", "Statutory Authority", "Overview", "Considerations", "Assignment", "Statutory Authority", "Overview", "Considerations", "Promotion", "Statutory Authority", "Overview", "Grade Limitations", "Promotion Timing", "Promotion Opportunity", "Best Qualified Selected for Promotion", "\"Up or Out\" and Selective Continuation", "Considerations", "Separation", "Statutory Authority", "Overview", "Voluntary Separation or Retirement", "Mandatory Separation or Retirement", "Considerations" ], "paragraphs": [ "", "In the past several years, senior policymakers in both Congress and the executive branch have proposed various changes to the way in which officers in the armed forces are managed, most notably with respect to assignment and promotion. Supporters of these proposals typically deem them to be essential to building a force that can meet the challenges of emerging strategic threats, such as cyberwarfare, and to compete with the private sector for talented individuals. Some of these proposed changes would require changes to law, including provisions enacted by the Defense Officer Personnel Management Act (DOPMA) and the Goldwater-Nichols Act (GNA). This report provides an overview of selected concepts and statutory provisions that define and shape important aspects of active duty officer personnel management along with a set of questions that policymakers may wish to consider when discussing proposed changes to current law. The topics discussed below are often inter-related, such that adjusting the parameters of one can affect the operation of others. For example, reducing the number of authorized positions at a higher grade would likely result in slower promotion timing, decreased promotion opportunity, and greater number of mandatory separations under the \"up or out\" provisions or individuals deciding to leave military service due to perceived lack of upward mobility.", "Throughout this report, reference will be made to the grade or paygrade of an officer. Table 1 below provides a summary of the various grades in the Army, Navy, Air Force, and Marine Corps.\nAs the Navy terms for its grades differ from the other services, this report will typically use paygrade or, if using grade, both terms separated by a slash. For example, the paygrade for an entry-level officer in all services is O-1, while the grade for such officers is ensign in the Navy and second lieutenant in the Army, Air Force, and Marine Corps. Thus, officers in this grade will be referred to in this report as either \"O-1\" or \"second lieutenant/ensign.\"", "", "Title 10 United States Code, Sections 531-541.", "To join the military as an officer, an individual applies for an original appointment. For original appointments in grades of Captain or Lieutenant (Navy) and below, the appointment is made by the President alone. For original appointments made in the grades of Major/Lieutenant Commander through Colonel/Captain, the appointments are made by the President with the advice and consent of the Senate.\nWhen such an appointment is made, the individual receives a commission, a document which designates the individual as an officer of the federal government. There are four main commissioning categories: the service academies, the Reserve Officer Training Corps (ROTC), Officer Candidate School (OCS), and various direct commissioning programs.\nAlthough 10 U.S.C. 531 authorizes original appointments in grades up to Colonel/Captain, in practice original appointments are typically made in the grades of Second Lieutenant/Ensign. Original appointments to higher grades, known as lateral entry, are typically limited to professions where the military is primarily interested in the civilian skills of the individual. Some common examples include medical and dental officers, lawyers, and chaplains. In 2010, the Army announced a program to fill critical shortages by directly commissioning, as Captains, individuals with certain civilian skills. The specific areas of expertise included engineering, finance, intelligence, information operations, space operations, acquisition, civil affairs, and psychological operations.\nProspective active duty officers must meet the requirements of 10 U.S.C. 532 for original appointments as \"regular\" commissioned officers. The requirements are:\nMust be a citizen of the United States; Must be able to complete 20 years of active commissioned service before age 62; Must be of good moral character; Must be physically qualified for active service; and Must have such other special qualifications as the Secretary of the military department concerned may prescribe by regulation.\nThe statute does not define \"good moral character\" or \"physically qualified for active service,\" but the Department of Defense provides more specific guidance in its internal regulations. Additionally, each of the military services has supplementary regulations concerning qualifications for appointment. Some examples of medical conditions that DOD considers disqualifying for an officer applicant are listed in Table 2 .\nPeriodically, policymakers have looked at whether these accession requirements, particularly the physical qualifications, are too strict or too lenient. Typical areas of debate include the acceptable parameters for body fat, current use or past use of certain medications, past use of illegal drugs, and ability to perform certain physical tasks. One perspective holds that physical qualifications should be lower for those in more technical or supporting specialties (e.g., cyber, finance, human resources) than those in direct combat roles (e.g., infantry, special operations). Others argue that military officers, regardless of specialty, have inherent duties—such as leading subordinates, directing the use of weapons systems when needed, and deploying to austere locations—that require a common baseline of physical and psychological fitness.\nIncreasing the opportunities for lateral entry into the officer corps has also been a topic of considerable discussion. For example, retired General Stanley McChrystal has advocated lateral entry for business executives as general officers, stating \"I've dealt with a lot of chief executive officers who could walk in and be general officers in the military tomorrow. All we'd have to do is get them a uniform and a rank.\" Critics of lateral entry, particularly for direct warfighting occupations, argue that in-depth knowledge of military systems, tactics, and decision-making processes is critical for successful leadership of military units and effective employment of military capabilities.", "What are the inherent duties of military officers in expected operational environments; what do these imply regarding qualification standards for military officers? To what extent can lateral entry be used to address critical skill shortages without decreasing military effectiveness? Is lateral entry a viable option for direct warfighting specialties? Should physical qualification criteria vary based on the officer's specialty? If so, how much variation is acceptable, and in what areas? Could some of the physical qualifications for appointment be revised without harming military effectiveness? For example, with respect to body fat, could the permissible level immediately prior to appointment be increased, with the expectation or requirement that the officer meet a stricter standard at some point thereafter? Could they body fat standards be replaced by other measures of physical fitness? Should there be a greater acceptance of ongoing use of medication for certain chronic conditions? For example, might the regular or sporadic use of an asthma inhaler be acceptable?", "", "Generally, 10 U.S.C. 3013, 5013, 8013; for joint assignments, 10 U.S.C. 663.", "In general, the military services have broad authority to assign personnel as they deem appropriate. This authority derives from the broad authority of the service secretaries to \"assign, detail, and prescribe the duties\" of their servicemembers and civilian personnel. Typically, an officer's assignments follow a fairly structured progression, starting with initial training in a specific career field, and followed by a series of progressively more responsible duty assignments in that field. There may also be opportunities to work outside one's career field. At certain points in an officer's career, he or she is required to attend professional military education schools which further develop technical and leadership skills.\nHowever, there is a major statutory provision that controls the assignments of certain officers with joint training and experience. The Goldwater-Nichols Department of Defense Reorganization Act of 1986 (GNA) included provisions to improve integration between the military services, a concept known as \"jointness.\" Among other things, GNA established a corps of \"joint qualified officers.\" Joint qualified officers are those officers who are particularly trained in, and oriented toward, \"joint matters.\"\nSection 663 of Title 10 requires the Secretary of Defense to ensure that joint qualified officers who graduate from certain schools within the National Defense University—the National War College, the Industrial College of the Armed Forces [the Dwight D. Eisenhower School for National Security and Resource Strategy], and the Joint Forces Staff College—be assigned to a \"joint duty assignment\" as their next assignment after graduation. This requirement can be waived by the Secretary of Defense on a case-by-case basis. The Secretary of Defense must also ensure that at least 50% of the other officers (non-joint qualified) who graduate from these three schools be assigned to a joint duty assignment as their first or second assignment after graduation. By law, these assignments are at least three years for officers in the ranks of Colonel/Captain and below, although the Secretary of Defense can waive this.\nSome argue that this requirement is essential to integrating the efforts of the military services, as it channels the most capable and ambitious officers into joint assignments, where they gain greater knowledge of other services' capabilities and the skills necessary to plan for and conduct joint operations. Others argue that this system is too rigid and that a broader array of assignments should qualify as joint.", "Is there evidence that current assignment policies have not adequately prepared officers to meet expectations? Will the assignments adequately prepare them for expected operational environments of the future? Does the situation require changes in statute or changes in DOD or service policy? What is the proper balance between assignments which (1) hone technical expertise, (2) provide for broadened perspectives, and (3) develop organizational leadership skills? How does this balance change over the course of an officer's career? Are military careers long enough to develop the skills needed for expected operational environments of the future? Are the substantial investments in officer education and training adequately linked to the value of subsequent assignments? On balance, does the benefit of joint duty assignments outweigh the opportunity costs of less skill development in other areas? Does current law and policy meet the needs of both the joint community and the services? Should the number of joint duty officers and the requirements for joint duty assignments be revised? Are there other areas besides joint duty that might be considered essential to the professional development of mid-grade and senior officers? For example, might duty with a reserve component be considered a required developmental assignment, either for all officers or for a segment of the officer corps?", "", "Title 10, Chapter 36 governs promotions; Title 10, Chapter 32 governs grade limitations; Title 10, Chapter 38 governs joint officer management.", "The officer promotion system is designed to be a competitive system that selects the best qualified for service at the next higher grade. Promotions take place within a grade-limited structure which caps the number of positions for each grade above captain/lieutenant. Officers are considered for promotion at specific times in their career and, due to fewer positions at the higher grades, there is a decreasing likelihood of promotion the further one progresses. Those officers who twice fail to be promoted to the next higher grade are normally separated, a statutory requirement known as \"up or out.\" These concepts of the officer promotion system are explained in more detail below.", "While there are no direct grade limits in the number of positions for paygrades O-1 to O-3, there are such limits for all higher paygrades. That is, there are progressively fewer authorized positions in each subsequent paygrade after O-3. This results in a roughly pyramidal shape to the officer corps beyond O-3. See Table 3 for a summary of current officer strength levels by grade.\nThis largely pyramidal structure exists in all military organizations, but the ratio of mid-grade and senior officers to the total officer corps can vary considerably between military organizations, both in comparison to other services and foreign nations, or within the same organization over time. There has been some contention over the appropriate ratio of officers to enlisted personnel for U.S. military organizations, where the proportion of officers has been gradually rising. One perspective on this trend is that it is related to the growth of joint organizations and the increased U.S. emphasis on coalition operations, which have created greater demand for officers to fill key staff roles. Another view is that the advanced technologies employed by the armed forces and the complexity of contemporary military operations require an officer corps composed of highly talented and technically knowledgeable individuals. Attracting and retaining such individuals, some argue, requires that there be more opportunity to rise to the higher levels of the officer corps; hence a higher ratio of mid-grade and senior officers to the total officer corps is necessary. On the other hand, some are wary of what they refer to as \"grade creep,\" particularly given the additional costs associated with it. Another concern about higher ratios of officers in the force—particularly senior officers—revolves around whether it promotes a more bureaucratic approach to military decision-making. Table 4 summarizes the changing proportion of officers within the U.S. Armed Forces over the past 50 years.\nChapter 32 of Title 10 provides the statutory framework for the maximum number of officers that can serve in each grade above captain/lieutenant. Within that chapter, 10 U.S.C. 523 provides a grade limitation table for officers in grades O-4 to O-6, setting limits based on the total size of a service's officer corps. For example, if the Air Force has 65,000 commissioned officers, 10 U.S.C. 523 limits the number of Air Force majors to 14,073 (21.65%), Air Force lieutenant colonels to 9,417 (14.49%), and Air Force colonels to 3,211 (4.94%). If the total size of the service's officer corps lies between two reference points in the table, the law requires \"mathematical interpolation between the respective numbers\" to provide the grade limit. Certain officers do not count against these limits, most notably medical and dental officers.\nSections 525 and 526 of Title 10 provide grade limitations for officers in paygrades O-7 to O-10, both for service-specific positions and for \"joint duty assignments.\" The grade limitations for these officers are numerical limits (e.g., 7 officers can be appointed to the grade of General in the Army, excluding certain joint and other designated positions).", "Promotion timing refers to the window of time in which an officer is considered for promotion to the next higher grade. The statutory minimums for \"time in grade\" before eligibility for promotion are detailed in 10 U.S.C. 619 (summarized in Table 5 ). For example, a second lieutenant/ensign must serve at least 18 months in that grade before being considered for promotion to first lieutenant/lieutenant junior grade, while a major/lieutenant commander must serve at least three years in that grade before being considered for promotion to lieutenant colonel/commander. As a practical matter, an officer's time in grade will typically be greater than the minimum specified in law, which is in keeping with the expected promotion timing guidelines described in the committee reports which accompanied the Defense Officer Personnel Management Act. These expectations are included under the heading \"Expected Years of Service at Promotion\" in Table 5 .", "Promotion opportunity refers to the percentage of officers in a given cohort who will normally be promoted to the next higher rank. For example, the expectation when DOPMA was passed was that about 80% of captains/lieutenants in a given cohort would be promoted to major/lieutenant commander. This percentage could vary in response to force structure demands. For example, it could increase if a service was expanding—say, during wartime—or decrease if it was undergoing a drawdown. Promotion opportunity is not specified in law, but guidelines were included in the House committee report which accompanied DOPMA. The expectations for promotion opportunity are included in Table 5 , along with the projected impact of death, disability, and promotion opportunity constraints on a given cohort of officers over the course of their career. Note that these cumulative promotion projections do not account for voluntary separations and retirements, so the actual proportion of an entry cohort which achieves a given rank may be lower than the figure provided.", "Officers are promoted from O-1 to O-2 if they are \"fully qualified,\" which means they meet all the minimum requirements for promotion. Those who are not fully qualified are not selected for promotion. For promotion to O-3 and above, promotions are made on a best qualified basis. Under the best qualified system, one must be fully qualified to be selected for promotion, but being fully qualified is not necessarily sufficient for promotion. Instead, all the fully qualified officers are ranked by the selection board in order from most qualified to least qualified. Those who are ranked most highly are recommended for promotion until all promotion authorizations are filled. The remaining officers, though fully qualified (and sometimes well qualified) are not recommended for promotion. This is an intentional feature of DOPMA. As stated in the House Armed Services Committee report which accompanied the bill:\nThe simple fact is that if the system is working right, it will, of necessity, result in passover for promotion of officers who are fully qualified to serve in the next-higher grade. This is because the function of the up-or-out system [discussed below] is to provide at each grade more officers who are qualified to serve in the next grade than the billets require. Thus the services will have selectivity and can pick the best from a selection of fully qualified officers.", "For over 70 years, military officers have been subject to a statutory \"up or out\" requirement. Officers in paygrade O-1 must be discharged within 18 months of being found not qualified for promotion. Officers in paygrade O-2 through O-4 who have \"failed of selection for promotion to the next higher grade for the second time\" are normally separated from military service. Those within two years of retirement eligibility are permitted to remain on active duty until retirement and others may be selectively continued, as described below. Officers in paygrades O-5 and above are subject to mandatory retirement if they are not promoted before reaching a specified number of years of commissioned service.\nThe House Armed Services Committee considered this to be the \"fundamental concept for the management of officer personnel\" within DOPMA:\nAs can be seen from the foregoing, the revised grade table, together with the selective continuation procedures and mandatory retirement and separation points in the bill, contemplates the continuation of the up-or-out system as the fundamental concept for the management of officer personnel. There is nothing new in this concept. It has been in effect for nearly 35 years and on the whole has served the country well. The system has given the armed forces what they never before had in peacetime—a youthful, vigorous, fully combat-ready officer corps.\nSelective continuation allows the services to allow certain officers to continue serving on active duty, even though they would normally be separated due to the requirements of \"up or out\". On a selective basis, officers in paygrades O-3 and O-4 who twice fail for promotion may be continued on active duty, if the service needs them and they are selected by a continuation board. Selectively continued O-3 officers may be allowed to stay on active duty until they complete 20 years of service, while selectively continued O-4s may be continued until they complete 24 years of service. Officers in paygrades O-5 and above may also be selectively continued rather than being subject to mandatory retirement for total years of commissioned service.", "Are there aspects of contemporary warfare which require revisions to the current grade structure of the armed forces? Should the grade limits be raised to allow for greater promotion opportunity and career progression for military officers, or certain categories of military officers? Or, conversely, are there more mid-grade and senior officers than are necessary? Should there be additional categories of officers exempt from the grade limits, as medical and dental officers are now? Could a guarantee of continuation be provided to officers in advance, to provide more flexibility in career progression without fear of being passed over? Do the anticipated personnel requirements of the future require military personnel, or can federal civilians or contractors fill some or most of these positions?", "", "For voluntary separation: Title 10, Chapters 367 (Army), 571 (Navy and Marine Corps), and 867 (Air Force)\nFor involuntary separation: See Table 6", "Separation refers to various actions which release the individual from active military service, and includes an officer's resignation, discharge, and retirement. Broadly speaking, separations are categorized as voluntary or mandatory, depending on whether they are initiated at the request of the officer or are imposed by the service in accordance with the statutory requirements.", "Officers are generally free to resign from the armed forces at any time after completion of their required service obligation, which is typically eight years, although some of this time can be served in a reserve component. Upon completion of 20 years of active service, officers are eligible for voluntary retirement. Under Title 10, there are several voluntary retirement authorities for officers, but the most commonly used are 10 U.S.C. 3911, 6323, and 8911 which specify that the President may retire an officer who has completed 20 years of active service, of which at least 10 were as a commissioned officer (the Secretary of Defense can authorize the service secretaries to reduce the years as a commissioned officer to 8 for retirements between January 7, 2011 and September 30, 2018). Although the statutory language is permissive—the President may approve such retirements, but is not required to—as a matter of practice such requests are routinely granted. Additionally, during the period of December 31, 2011 to December 31, 2018, the service secretaries may reduce the minimum length of service for voluntary retirement under these provisions from 20 to 15 years.\nThere has been criticism of the general practice of allowing servicemembers to retire after 20 years of service on the grounds that it encourages individuals to leave the service at a time when their experience could be of great value to the services. Others note that this practice helps maintain a youthful and vigorous military, and that the structure and budget of the armed forces is not designed to sustain an abundance of relatively senior officers (typically, at twenty years of service, such officers are lieutenant colonels/commanders).", "There are a number of statutory mechanisms that mandate the separation of military officers under certain conditions. As discussed above, several of them stem from failure to advance to the next higher grade. Others occur upon reaching a specific age, in the event of serious disability, for substandard performance, and for force shaping purposes. These provisions are below summarized in Table 6 .", "Should the routine approval of voluntary retirement requests at 20 years of service be reconsidered? If so, should the voluntary retirement age be increased uniformly, or only for certain categories of officers (for example, those in less physically demanding career fields)? If longer careers are contemplated, should the grade structure and promotion system be changed to adapt to this new career pattern? Should there be greater flexibility to move from more physically demanding specialties to less demanding ones in order to facilitate continuation of service?" ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 3, 3, 3, 3, 3, 2, 1, 2, 2, 3, 3, 2 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "", "h0_title", "", "h0_full", "", "h0_title", "", "", "h0_full", "h0_title", "", "h0_title", "", "", "h0_full", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What questions are currently being raised about officer personnel management policy?", "What is the focus of these questions?", "How does this affect any answers?", "How can more concrete answers be developed?", "Who governs military officer personnel management?", "What is the purpose of this report?", "How does this report aim to assist policymakers?" ], "summary": [ "Contemporary debates over officer personnel management policy often revolve around the fundamental questions of \"what type of officers do we need to win the next war?\" and \"what skills does the officer corps need to enable the military services to perform their missions?\"", "These questions are implicitly oriented towards future events.", "Their answers are therefore somewhat speculative.", "Still, contemporary trends and military history can provide valuable insight. Additionally, a set of broader questions can help focus the analysis:", "In the exercise of its constitutional authority over the armed forces, Congress has enacted an array of laws governing military officer personnel management and periodically changes these laws as it deems appropriate.", "This report provides an overview of selected concepts and statutory provisions that shape and define officer appointments, assignments, grade structure, promotions, and separations.", "It also provides a set of questions that policymakers may wish to consider when discussing proposed changes to current law." ], "parent_pair_index": [ -1, 0, 1, 1, -1, -1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 4, 4, 4 ] }

{ "title": [ "Background", "Directive Established Federal Records Management Requirements", "Agencies Took Actions in Response to the Directive but Did Not Fully Meet All Requirements", "All Agencies Designated a Senior Agency Official to Oversee Records Management Activities, but Not All Designated the Official at the Appropriate Level", "Agencies Have Taken Actions to Manage and Transfer Temporary and Permanent Electronic Records, but More Action Is Needed", "Most Agencies Reported Progress in Managing Permanent and Temporary E- mail Records", "Most Agencies Identified and Reported on the Transfer of Permanent Records to NARA", "Most Agencies Identified Unscheduled Records", "Most Agencies Obtained Certifications and Established Records Management Training Programs", "OPM, OMB, and NARA Took Actions to Oversee Agencies’ Implementation of the Directive, but Not All Specified Actions Were Completed", "OPM Established the Records and Information Management Occupational Series", "OMB Has Not Yet Updated Its Policy for the Management of Federal Information Resources", "NARA Acted on Nine Specific Requirements, but Work Remains", "NARA Revised Transfer Guidance for Permanent Electronic Records, but Metadata Requirements Were Not Included", "NARA Created New E-mail Guidance", "NARA Developed a Plan to Move Agencies toward the Increased Automation of Records Management", "NARA Created a Template for Reporting Cloud Initiatives", "NARA’s Feasibility Study Concluded That It Should Not Provide Government-Wide Storage and Management Services for Electronic Records", "NARA Created Community of Interest Groups to Help Support Electronic Records Management Initiatives", "NARA Identified and Enhanced an Analytical Tool to Evaluate the Effectiveness of Federal Records Management Programs", "NARA Obtained External Involvement for Development of Open Source Records Management Solutions", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Office of Personnel Management", "Appendix III: Comments from the Department of Veterans Affairs", "Appendix IV: Comments from the General Services Administration", "Appendix V: Comments from the National Science Foundation", "Appendix VI: Comments from the National Archives and Records Administration", "Appendix VII: Comments from the Department of Defense", "Appendix VIII: Comments from the Social Security Administration", "Appendix IX: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Records are the foundation of open government, supporting the principles of transparency, participation, and collaboration. Well-managed records can be used to assess the impact of programs, improve business processes, and share knowledge across the government. Effective records management is also an important tool for efficient government operations. Without adequate and readily accessible documentation, agencies may not have access to important operational information needed to make decisions and carry out their missions.", "In response to the November 2011 presidential memorandum to begin an executive branch-wide effort to reform records management policies and develop a framework for the management of electronic government records, the Director of OMB and the Archivist of the United States jointly issued a directive to heads of federal departments and agencies. The directive was aimed at creating a robust records management framework for electronic records that complies with statutes and regulations to achieve the benefits outlined in the presidential memorandum. It required agencies, to the fullest extent possible, to eliminate paper and use electronic recordkeeping.\nIn particular, the directive set forth two goals that federal agencies, including OMB and NARA, are to work toward: require electronic recordkeeping to ensure transparency, efficiency, and accountability; and demonstrate compliance with federal records management statutes and regulations.\nTo meet the two goals, the directive identified 10 requirements that agencies had to address by established deadlines. As shown in table 1, seven of the requirements had deadlines that ranged from November 15, 2012, to December 31, 2014.\nThe directive also required NARA, OMB, and OPM to take 13 actions to assist agencies with meeting goal 2 of the directive. Table 2 describes the required actions and their due dates.", "The 24 federal agencies took actions toward implementing each of the seven requirements due in November 2012, December 2013, and December 2014. These actions included designating and reaffirming senior agency officials at the appropriate level to oversee agencies’ records management programs, developing and implementing plans to manage permanent electronic records, reporting progress in managing permanent and temporary e-mail in an electronic format, identifying 30- year or older permanent records for transfer, identifying unscheduled records, obtaining the NARA federal records management training certificate, and developing records management training. However, certain requirements were not fully met by 5 of the agencies because these agencies were either still working on addressing the requirement, or did not view the requirement as being mandatory. Until agencies fully implement the directive’s requirements, the federal government may be hindered in its efforts to improve performance and promote openness and accountability through the reform of records management.", "According to the directive, by November 15, 2012, and every year thereafter, each agency is required to name or reaffirm the Senior Agency Official who is responsible for coordinating with the agency records officer and other appropriate officials to ensure the agency’s compliance with records management statutes and regulations. The Senior Agency Official should hold a position at the assistant secretary level or its equivalent. Further, according to the directive, this official should be empowered to make adjustments to agency practices, personnel, and funding, as may be necessary, to ensure compliance and support the business needs of the department or agency.\nAll 24 agencies had designated a Senior Agency Official to oversee records management and had subsequently reaffirmed or named a new official. Among these agencies, 22 had designated a Senior Agency Official at the assistant secretary level or its equivalent and had given the official responsibilities for overseeing records management, including being empowered to make adjustments to agency practices, personnel, and funding, as required.\nTwo agencies, OPM and the Department of Veterans Affairs, had not designated their officials at the appropriate level. Further, at the Department of Veterans Affairs, the official was not always reaffirmed in accordance with the directive. Additionally, the department had not assigned its Senior Agency Official the responsibilities for ensuring records management compliance in the manner called for in the directive. Specifically:\nWithin OPM, the Senior Agency Official was not at the assistant secretary level or its equivalent. Rather, the position was delegated by the Chief Information Officer to the Chief of Records Management and Data Policy, within the Office of the Chief Information Officer. The Chief Information Officer did not view the Senior Agency Official designation at the assistant secretary level or its equivalent to be mandatory, and thus, did not assign the official at that level. Further, the Senior Agency Official said the position had the full responsibility, as stated in the directive, for ensuring that the agency’s records program complies with all records management statues and regulations. Nevertheless, while OPM’s Chief Information Officer did not consider the designation at the assistant secretary level or its equivalent to be mandatory, NARA records management officials stated that doing so is mandatory.\nAt the Department of Veterans Affairs, the Senior Agency Official was named in 2012, and reaffirmed in 2013. However, the official was not reaffirmed in 2014, thus not adhering to the directive requirement to reaffirm the Senior Agency Official annually. According to records management officials, the department regarded the requirement as not applicable when the Senior Agency Official did not change, but subsequently reaffirmed the official in February 2015. These officials added that the current Senior Agency Official position is held by an Associate Deputy Assistant Secretary who is instrumental in making recommendations and follow-up justifications to ensure compliance with the directive. However, the officials acknowledged that the Senior Agency Official does not have the authority to make decisions about agency practices, personnel, and funding to ensure compliance.\nBy not designating the Senior Agency Official at the level stated in the directive, OPM has not demonstrated its commitment to ensuring that the official it assigns to oversee compliance with records management statutes and regulations is consistent with the directive requirement. Further, by not designating a Senior Agency Official with the authority to make necessary decisions about agency practices, personnel, and funding critical to its electronic records management, the Department of Veterans Affairs has not demonstrated its priority to ensuring compliance with the directive in support of the department’s business needs.", "The managing government records directive established four requirements that agencies were to complete by December 31, 2013. Specifically, agencies were to develop and begin to implement plans to manage all permanent records in an electronic format; report to NARA annually the status of the agency’s progress in managing both permanent and temporary e-mail records in an electronic format; ensure that permanent records that have been in existence for more than 30 years are identified for transfer and reported to NARA; and coordinate with NARA to identify all unscheduled records, including records stored at NARA’s and the agencies’ records storage facilities that have not yet been properly scheduled.\nAs shown in table 3, the majority of the 24 agencies took actions to implement the directive requirements.\nThe directive required each agency to develop and begin to implement plans to manage all permanent records in an electronic format. To assist agencies in meeting this requirement, NARA developed a Senior Agency Official report template.agencies report on a number of specific areas, to include In using the template, NARA requested that details on how permanent electronic records are currently captured, retained, searched, and retrieved; plans to digitize permanent records currently in hard-copy format or plans to manage all permanent electronic records in electronic format, including how the plans will be implemented; and challenges the agency faced in achieving the requirement of managing all permanent electronic records in an electronic format.\nAll but 1 of the 24 agencies described their efforts to address these areas in the Senior Agency Official reports that they submitted to NARA. For example, 1 agency stated that its permanent records were being captured in both electronic and paper format and that permanent records were retained in agency shared drives. Another agency stated that electronic records capabilities were rolled out to its components to capture, retain, search, and retrieve the agency’s permanent electronic records; while another stated that its components capture, retain, search, and retrieve permanent electronic records in a variety of ways depending on their unique missions, business processes, and available technologies.\nThe National Science Foundation did not submit a Senior Agency Official report and did not provide information to NARA on how it intends to manage permanent records electronically. According to National Science Foundation records management officials, the agency is in the process of formalizing plans to manage permanent electronic records in an electronic format and intends to complete the plan in fiscal year 2015. However, the officials did not provide a date as to when the agency intends to report its plans to NARA, as required. Until the National Science Foundation completes and reports on its plans, it will not be positioned to provide NARA with required information on how it intends to manage permanent electronic records, or to receive feedback from NARA that could help ensure the effectiveness of its approach.", "The directive required that each agency report to NARA, on an annual basis, regarding the status of its progress to manage both permanent and temporary e-mail records in an electronic format. Toward this end, 23 agencies met this reporting requirement. The agencies reported their progress through written responses in their Senior Agency Official reports. (Within the report template, a section was designated for the agency to describe its progress in managing both permanent and temporary e-mail records in an electronic format.) The 23 agencies’ written responses described how their e-mail records were currently captured, retained, searched, and retrieved, and how they identified temporary and permanent e-mail records.\nAs previously discussed, the National Science Foundation did not submit a Senior Agency Official report to NARA. In this regard, the agency’s records management officials stated that the management of permanent and temporary e-mail records was reviewed internally in May 2014 and that they were looking into whether a current agency system could be used to convert records into useable record types. However, no date was given by the officials as to when the required review for permanent and temporary e-mail records would be completed; nor did the agency provide a date as to when it will report to NARA, as required.\nBy not reporting on its progress toward managing permanent and temporary e-mail records in an electronic format, the National Science Foundation has not taken an important step toward ensuring that NARA is aware of the agency’s ability to retain e-mail records in an electronic system that supports records management and litigation requirements, including the capability to identify, retrieve, and retain the records for as long as they are needed. Further, the agency risks not receiving feedback from NARA that could help ensure it is prepared to retain e-mail records in an electronic system, as envisioned.", "The directive required agencies to ensure that permanent records that have been in existence for more than 30 years are identified for transfer and reported to NARA. In accordance with that requirement, the majority of the agencies identified for transfer and reported on their permanent records that were in existence for 30 years or more. Specifically, 21 of 24 agencies submitted to NARA, as part of their annual records management self-assessment reports, their lists of permanent records, or reported that there were no permanent 30-year-old records in their possession.\nOne agency, the National Science Foundation, did not report to NARA on its possession of permanent 30-year-old records. Records management officials at the National Science Foundation stated that the agency did not meet the reporting requirement because it did not complete its process of validating the accuracy of records that it had identified as potentially being 30 years old or older until the reporting deadline had passed. According to these officials, the agency completed this process in December 2014 and determined that there were no 30-year-old or older records in existence within the agency. The officials stated that, because the agency had no such records in its possession, the agency did not view reporting to NARA as a requirement. However, reporting that it had no permanent records in existence for 30 years or more would be a practice that is consistent with the majority of the agencies’ efforts to inform NARA regarding the state of these records and would demonstrate the National Science Foundation’s adherence with the directive.\nTwo other agencies—the General Services Administration and the Department of Transportation—had not fully addressed this requirement because they had not identified and reported on permanent 30-year-old records stored at either NARA’s federal records centers or the agency’s records storage facilities.\nAccording to General Services Administration records management officials, permanent records stored at NARA’s federal records centers were identified, but permanent records stored at agency records storage facilities had not been identified. The officials stated that the agency plans to finalize, and report to NARA on, the identification of these records as part of its next agency-wide records inventory, which is supposed to occur in the summer and fall of 2017.\nAccording to Department of Transportation records management officials, the department had met the requirement for all but 3 of its 10 components. In particular, the officials stated that 1 component had identified 30-year-old permanent records during its 2012 records inventory and, as of March 2015, was working with NARA to transfer these records by May 2015. The officials also stated that another component reported to NARA in January 2014 that it did not have permanent records that were in existence for more than 30 years. However, this component subsequently identified one 30-year-old permanent record in June 2014, and the department plans to report and transfer this record to NARA by the end of fiscal year 2015. The officials stated that the third remaining component had not completed its records inventory, but as of March 2015, had not identified any permanent 30-year-old records in its possession. Department of Transportation officials stated that they plan to report this information to NARA once their inventory is completed.\nBy not finalizing its identification of records stored at the agency’s records storage facility until approximately 4 years beyond the date specified in the directive, the General Services Administration delays its ability to report the status of, and transfer to NARA, its records that have been in existence for 30 years or more. Similarly, until the Department of Transportation ensures that its component completes the identification of permanent 30-year old records in its possession, it also limits its ability to report this information to NARA, as required.", "The directive required each agency to coordinate with NARA to identify all unscheduled records, including all records stored at NARA and at agencies’ records storage facilities that have not yet been properly scheduled. We previously found that this is an essential step since NARA considers unscheduled records an important indicator of the risk of unauthorized destruction of records.\nAmong the 24 agencies, 20 had either identified unscheduled records and reported their progress in identifying these records to NARA, or had reported that they did not have any known unscheduled records by the reporting deadline. In particular, Senior Agency Officials and records officers for these agencies had either (1) worked in conjunction with NARA staff and identified their unscheduled records, (2) independently identified the unscheduled records, or (3) reported that there were no unscheduled records in their possession.\nThree agencies—the Departments of Commerce and Transportation and the General Services Administration—did not complete the identification of their unscheduled records by the reporting deadline, although they subsequently did so for all or most of their components.\nThe Department of Commerce reported that it did not fully meet the requirement for identifying unscheduled records until the reporting deadline had passed. In particular, Commerce records management officials reported that the department completed the process of identifying the unscheduled records in September 2014.\nDepartment of Transportation records management officials stated that the department identified unscheduled records for 1 remaining component (out of 10) in December 2013 and reported to NARA on those unscheduled records in January 2014.\nAccording to General Services Administration records management officials, the agency did not identify unscheduled records stored at agency records storage facilities until November 2014, following an agency-wide records inventory in that same month.\nLastly, the National Science Foundation had not completed its identification of, or reported on, any portion of its unscheduled records. In July 2014, agency records management officials noted that they had identified the unscheduled records, but a preliminary internal inspection of the records had revealed administrative errors. Subsequently, the officials stated that a review of the unscheduled records list was under way in September 2014. However, as of March 2015, the officials stated that the review was still ongoing and they could not provide a date for when it would be completed. By not completing the identification of unscheduled records, the National Science Foundation increases the risk that its records could be destroyed without NARA’s awareness and approval.", "The records management directive established two requirements that were to be completed by December 31, 2014. The first was that each agency’s designated agency records officer must hold the NARA certificate of Federal Records Management Training and that new records officers must acquire the certification within 1 year of assuming the position of agency records officer. The second requirement was that each agency was to establish its own method to inform all employees of the agency’s records management responsibilities and develop suitable records management training for appropriate staff.\nOn December 4, 2013, NARA issued a bulletinagencies providing further guidance on agency records officer training requirements as stated in the directive. The requirement applied to all to the heads of federal formally appointed federal agency records officers. In the bulletin, NARA stated that it recognized that some designated agency records officers had years of experience and accreditation in the records management profession. In those cases, it agreed to grant the officer an exemption from obtaining the certificate of Federal Records Management Training. If an exemption was approved, no further action would be required to meet the directive training requirement. To receive an exemption from NARA, designated agency records officers must meet one of three criteria: (1) have 3 years of experience as a designated agency records officer and an Institute of Certified Records Managers certification, (2) have 3 years of experience as a designated agency records officer and an Academy of Certified Archivistsdesignated agency records officer at one or more federal agencies. certification, or (3) have 7 years of experience as a The majority of the federal agencies (22 of 24) either fully met the first requirement that each designated agency records officer hold the NARA certificate for Federal Records Management Training, were granted an exemption from obtaining the certificate, or were appointed in 2014 and have until a date in 2015 to complete the certification. Specifically, 17 agencies’ designated agency records officers had obtained the NARA certificate for federal records management; 4 agencies had received NARA exemptions for some or all of their designated agency records officers; and 1 agency had recently appointed its designated agency records officer, who has until September 2015 to complete the Federal Records Management Training.\nAmong the remaining two agencies—the Departments of Commerce and Defense—at least 1 designated agency records officer had not obtained the NARA training certificate or been granted a NARA exemption by the required deadline. Each of the agencies’ officials stated that their records officers were in the process of completing classes or obtaining the exemption. Specifically, at the Department of Commerce, 12 of 17 designated agency records officers had obtained the required NARA training certificate or received an exemption. According to the department’s records management officials, the remaining 5 designated agency records officers plan to complete their training by the end of fiscal year 2015.\nFor the Department of Defense, 23 of 24 designated agency records officers had obtained the required NARA training certificate or received an exemption. The department’s records management officials stated that the remaining designated agency records officer expects to complete training by August 2015.\nWith regard to the second requirement, all 24 agencies had established a method to inform employees of their records management responsibilities, as outlined in federal laws and policies. Specifically, these agencies had established a method to inform employees of their records management responsibilities either through agency-wide policy, departmental regulation, or through an agency-wide e-mail.\nHowever, two agencies had not yet completed the development of their agency records management training. Specifically, the Departments of Commerce and Energy were in the process of developing training for their staff, and officials from these agencies said they plan to complete the training by June 2015.", "OPM, OMB, and NARA had taken steps toward implementing the 11 of 13 actions specified in the directive as their responsibility, but selected requirements had not been fully addressed by the specified deadlines. For example, OPM had finalized an occupational series to elevate records management roles, responsibilities, and skill sets for agency records professionals. In addition, according to an official in OMB’s Office of Information and Regulatory Affairs, that agency was still in the process of updating its Circular A-130 to include records management requirements for agencies that are moving to cloud-based services or storage solutions, with the updated circular expected to be released by the end of calendar year 2015. Further, NARA had met with Senior Agency Officials and produced a plan to move agencies toward greater automation of records management. Moreover, NARA, in cooperation with the Federal Records Council, had worked with community of interest groups to identify tools that support electronic records management. However, it had not included metadata requirements in its guidance, as required. Until NARA completes the actions specified in the directive, agencies may not have the guidance needed to help improve the efficiency and effectiveness of records management across the federal government, as envisioned by the directive.", "The managing government records directive required OPM to establish, by December 31, 2013, a formal records management occupational series. In doing so, OPM was to elevate records management roles, responsibilities, and skill sets for agency records officers and other records professionals.\nIn response to the directive, OPM created a draft position classification document for the Records and Information Management Series, 0308, by the December 2013 deadline, but did not finalize it until March 2015. The document was created to establish the records management series and classify positions within this series.\nOPM disseminated the document to all federal agencies and obtained comments. Specifically, it issued a memorandum on December 27, 2013, to announce the release of the draft position classification document for the records management work. Federal agencies were asked to provide their comments by February 7, 2014.\nAll 24 agencies, including NARA, provided comments to OPM regarding the records management occupational series. Among the comments, agencies suggested that OPM incorporate changes to the position series and title, update the series to include the duties of federal records managers at senior levels and the working relationship between records management staff and senior officials, such as the Senior Agency Official, to ensure that agencies have efficient and effective records management programs.\nOther comments suggested that personnel in this series should be considered as subject matter experts, and indicated that the draft series did not acknowledge the records management position as a full-time position with full-time responsibilities. The comments also stated that OPM should revise the series and consider that some positions would be a combination of records management, knowledge and information management, and information compliance roles, including data protection and freedom of information.\nAccording to the Records and Information Management Occupational Series document, OPM summarized what it described as “major” agency comments on the occupational information, occupational title, and grading criteria, along with OPM’s response to these comments, in an appendix of the final series document. According to the document, OPM revised the occupational information to include language that addressed the modernization of records management, electronic records, and training, among other things. OPM also changed the occupational title to “Records and Information Management Specialist,” based on agency comments that it received on the title. Additionally, OPM revised the grading criteria language to align with the language of other recently issued series. By establishing a formal records management occupational series in March 2015, OPM took steps to elevate the roles, responsibilities, and skill sets for agency records officers and other records professionals.", "According to the directive, OMB is to include in its next revision of Circular A-130 provisions for federal agencies to incorporate records management requirements when moving to cloud-based services or storage solutions. The directive did not establish a date by which this was to be accomplished.\nAs of March 2015, OMB had not finalized its revisions to Circular A-130 to require agencies to incorporate records management requirements when moving to cloud-based services or storage solutions, as specified in the directive. Officials in OMB’s Office of Information and Regulatory Affairs stated, however, that the requirement is expected to be included in the circular when it is finalized.\nIn explaining the status of this initiative, an official stated that revisions to the circular began in 2012 and were distributed for interagency comments. Additional revisions to the circular continued in 2013 and, in 2014 the agency waited for the approval of legislation, such as the Federal Information Security Modernization Act of 2014, which requires OMB to amend or revise Circular A-130 to eliminate inefficient or wasteful According to OMB officials, the agency expects reporting within 1 year.to finalize and issue the revised OMB Circular A-130 in December 2015. If consistent with the directive, this planned action of revising Circular A- 130 by OMB should help agencies incorporate records management requirements when moving to cloud-based services or storage solutions.", "The directive included nine specific actions that NARA was to implement by the end of December 2012, December 2013, and December 2014. Many, but not all of NARA’s actions met the requirements of the directive.\nBy December 31, 2012, the Archivist of the United States was required to convene the first of periodic meetings of all Senior Agency Officials to discuss progress on (1) implementation of the directive, (2) agency federal records management responsibilities, and (3) partnerships for improving records management in the federal government. Additionally, by this date, NARA was to complete a review of its records management reporting requirements and produce a template for a single annual report that each Senior Agency Official was to send to the Chief Records Officer for the U.S. Government beginning on October 1, 2013.\nToward this end, in November 2012, the Archivist held the first meeting with Senior Agency Officials, agency records officers, and NARA staff.\nAccording to documentation we reviewed, meeting topics addressed two of the required areas: (1) an overview of the implementation of the directive and (2) Senior Agency Officials’ responsibilities and duties. Subsequent meetings were also held with the Senior Agency Officials of various agencies from August 2013 to August 2014 that addressed the implementation of an e-mail management approach and strategies for meeting the goals of the directive, among other topics.\nNevertheless, NARA records management officials acknowledged that the Senior Agency Official meetings did not include a discussion of partnerships for improving records management in the federal government, as required by the directive. According to the officials, the agency considered these meetings to be information-sharing discussions that would facilitate the exploration for future partnerships. The officials added that NARA planned to contact Senior Agency Officials and agencies when it dedicates more resources to address these partnerships.\nAlso in December 2012, NARA completed a review of its records management reporting requirements. Among other things, this review examined instances in which agencies were required to report on their progress through the managing government records directive, agencies’ records management self assessments, and inventories that the agencies were to conduct of electronic recordkeeping systems.\nThe review concluded that federal agencies were required to submit information to NARA for its use in measuring the state of federal records management in 11 different instances. These submissions were in addition to other information, such as plans and improvements that the agencies were making in response to the managing government records directive. NARA officials stated that, as a result of the review, it took steps to streamline agencies’ reporting requirements and reduce the number of times that agencies submit information. For example, in 2013, it eliminated the requirement for federal agencies to report semi-annually on their electronic records inventories. Instead, in 2014, NARA began requiring agencies to report annually on their electronic records as part of their records management self-assessment submissions.\nFurther, the officials stated that NARA had used the results of the review to create the required template that was to guide Senior Agency Officials in the development of their annual reports on the management of government records. NARA disseminated the template to federal agencies via an August 2013 memorandum. Subsequently, the agencies were to use the template to guide their descriptions of current and future plans to manage permanent electronic records, temporary and permanent e-mail records, and the use of cloud computing services. As discussed earlier, specific details of the template included questions about how agencies capture, retain, search, and digitize records. Also required were details on how the agencies intend to implement plans, as well as anticipated challenges to their management of permanent records electronically. According to the directive, agencies were to submit their reports based on the template by December 31, 2013.\nNARA officials stated that their assessment of information provided by agencies in the Senior Agency Official report template had disclosed that responses varied in length and detail. Specifically, some agencies provided brief generalizations while others provided an abundance of information. We also found variations in the extent of Senior Agency Official template responses and supporting information. For example, in addition to providing descriptions of its progress being made toward specific directive goals and requirements in the Senior Agency Official template, the Nuclear Regulatory Commission submitted a preliminary plan that contained, among other things, the objective, scope of work, schedule, project team members, and project costs needed to modernize its information and records management program. This degree of specificity was not common in other agency submissions.\nNARA records management officials acknowledged that the original reporting template had lacked specificity regarding the level of detail that it required agencies to provide. The officials stated that they did not require agencies to provide items, such as project plans, and did not intend to evaluate the report submissions for the sufficiency of agency plans. Rather, the officials indicated that NARA had wanted to identify what agencies were doing well, so those methods could be shared with other agencies that were in the initial stages of planning. Further, according to the officials, NARA wanted to encourage agencies to begin planning how they would meet the final December 2019 requirement to manage all permanent electronic records in an electronic format in advance of the deadline. Moreover, it wanted agencies to consider the sequential steps as well as timing and resources needed to move toward electronic recordkeeping.\nNARA records management officials recognized the need for more information and stated that the next version of the Senior Agency Official reporting template, based on the data collected in 2013, is expected to seek information to be used as metrics to show what progress is being made across the government toward meeting the directive’s goals. In particular, in September 2014 NARA revised the reporting template to collect information on, among other things, agency records officers’ efforts in obtaining the federal records management certificate, and best practices applied and lessons learned on each agency’s transition to electronic recordkeeping.\nAccording to the officials, NARA is committed to making the template instrumental to agencies, providing support to records management programs, and achieving the goals of the directive. By taking steps to ensure that agencies provide consistent and complete information regarding their efforts to manage permanent electronic records, NARA stands to have better awareness of agencies’ readiness to meet the established deadline.", "According to the records management directive, NARA was to complete and make available by December 31, 2013, revised guidance, including metadata requirements for agency transfer of permanent electronic records to NARA. The revised guidance was to include additional sustainable formats commonly used to meet agency business needs. Also, NARA was to update the guidance regularly, as required, to stay current with technology changes.\nIn January 2014, NARA revised its transfer guidance for permanent electronic records and made the document available to the public on its website in the form of NARA Bulletin 2014-04, Revised Format Guidance for the Transfer of Permanent Electronic Records.covered categories not addressed in the previous guidance, such as digital audio and moving images. Among its revisions, the bulletin applies to all electronic records that have been appraised and scheduled for permanent retention, specifies which file formats are acceptable when transferring permanent electronic records to NARA, identifies preferred and acceptable formats for each category of electronic file, and expands the number of suitable formats that NARA will accept for transfer, based on their sustainability.\nHowever, NARA’s revised guidance did not include metadata requirements, as called for in the directive. The bulletin stated that NARA would develop metadata requirements for electronic records separately, although no date was given for when it intends to do so. Further, as an alternative, NARA included in the bulletin a list of other currently available guidance for electronic records that address metadata. For example, the bulletin refers to guidance for electronic pointers (such as metadata tags) to establish linkages and the capture and maintenance of required metadata. The bulletin also specifies that agencies must comply with existing requirements for documentation and metadata as described in existing federal regulations until new requirements for metadata for electronic records are published.\nNARA records management officials stated that the previous guidance for transferring permanent electronic records had identified metadata for a few record types, including digital photographs, geospatial records, and e- mail records. However, the development of new guidance on metadata requirements will be the first time that NARA has specified individual elements of metadata for all permanent electronic records. According to the officials, NARA anticipates that agencies will use the revised metadata guidance when implementing automated technologies for records management, and to address the creation, management, and eventual transfer of permanent electronic records to NARA. Nevertheless, the officials acknowledge that NARA had not set a time frame for making the revised metadata guidance available to agencies. Until NARA establishes a time frame for and, accordingly, takes steps to include metadata requirements in its revised guidance, agencies will remain unaware of all of the information they need to provide when transferring electronic records to NARA.", "The directive required NARA to issue new e-mail guidance by December 31, 2013. The guidance was to describe methods for managing, disposing of, and transferring e-mail.\nAccordingly, in August 2013, the agency released NARA Bulletin 2013- 02, Guidance on a New Approach to Managing Email Records. The bulletin presented an e-mail management approach called Capstone. NARA records management officials described Capstone as an automated or manual method of categorizing and scheduling e-mail based on the work or positions of e-mail account owners. It is to be employed using various tools or systems and offers agencies a more simplified way to manage e-mail when compared to print and file systems or records management applications that require staff to file e-mail records individually.\nNARA records management officials anticipate that the Capstone approach will provide agencies with a feasible solution to e-mail records management challenges, especially as agencies consider cloud-based solutions. Further, according to these officials, the Capstone approach is expected to allow agencies to consider whether e-mails contain the required metadata elements at the time of transfer to NARA. For its part, NARA has supplemented Capstone with training materials and other related guidance and resources, and has made this information available to agencies on its website to assist them in evaluating or adapting Capstone features.\nBy providing agencies the Capstone bulletin and related information representing a simplified automated e-mail management methodology, NARA has taken steps to assist agencies in incorporating recordkeeping requirements into their business processes and, in identifying the specific means by which they can fulfill their responsibilities under the Federal Records Act.", "NARA was required to produce a comprehensive plan, in collaboration with the Federal Chief Information Officers Council, the Federal Records Council, private industry, and other stakeholders that describes suitable approaches for the automated management of e-mail, social media, and other types of digital record content, including advanced search techniques. The plan was to detail expected outcomes and potential associated risks and be completed by December 31, 2013.\nAlthough not completed by the required deadline, NARA finalized and released a plan in September 2014 that was developed in consultation with the Federal Chief Information Officers Council, the Federal Records Council, private industry, and other stakeholders. The plan identified approaches for federal agencies to pursue when automating electronic records management, to include automated management of e-mail, social media, and other types of digital record content, as well as advanced search techniques. The plan discussed the outcomes, benefits, and risks of these approaches and described a framework that agencies may use to help meet the goals of the directive. It also listed ideas or activities intended to help NARA, agencies, and stakeholders achieve effective federal electronic records management.\nNARA records management officials described the plan as being a living document and stated that the community of private industry and federal councils intends to continue to revise it as more is learned about automation technologies and additional efforts are made to work toward easier and consistent electronic information management. Moreover, the officials stated that NARA anticipates continuing to work with its stakeholders to identify milestones and tasks intended to, among other things, increase automation, reduce burden on end users, and achieve more consistent and affordable compliance with recordkeeping requirements. If effectively implemented, NARA’s plan could serve as an important tool to aid records management stakeholders’ awareness of recommended approaches for improving automated management of e- mail, social media, and other types of digital record content.", "The directive required NARA, by December 31, 2013, to incorporate into existing reporting requirements an annual agency update on new “cloud” initiatives, including a description of how each initiative meets Federal Records Act obligations and the goals outlined in the directive. For the initial report, agencies were to identify any existing uses of cloud services or storage, and the dates of implementation.\nThe Senior Agency Official annual reporting template created by NARA for 2013 included reporting requirements for cloud initiatives. As discussed earlier, NARA disseminated the template to federal agencies via an August 2013 memorandum.", "The directive required NARA, by December 31, 2013, to evaluate its feasibility of establishing a secure cloud-based service to store and manage unclassified electronic records on behalf of agencies. Further, the directive stated that this basic, shared service should adhere to NARA’s records management regulations and provide standards and tools to preserve records and make them accessible within their originating agency until NARA performs disposition.\nIn response to this requirement, NARA conducted a study examining the technical feasibility and cost for it to establish a repository and system to store, manage, and dispose of electronic records on behalf of federal agencies. The study included an assessment of secure cloud-based services and the cloud-based data-at-rest model. For the data-at-rest model, the study presupposed an environment where records are managed within the same clouds as agencies’ active business and administrative records. Also, these same clouds would be used for access and preservation of records. According to the study, disposition rules would then be applied where the records are stored because the data sets would be expected to continue to grow in size, thus becoming impractical to physically move them from repository to repository.\nAdditionally, the feasibility study determined that “data at rest” would require procedures, tools, and a processing environment that allows for archival records to be accessioned, preserved, and made publicly available without being physically transferred from their initial host environments. The report anticipated that these types of issues could be effectively managed with the assistance of external service providers.\nNARA also considered cost factors in conducting the feasibility study and concluded that it should not serve as a direct service provider in assisting agencies with the storage and management of electronic records. Specifically, the study determined that costs were not practical for a secure cloud-based service needed to meet the requirements of a an infrastructure capable of managing large volumes of agency- large user base, the investment required to establish a cloud-based repository, and owned records.\nConsequently, the study concluded that a more sustainable approach to improving electronic recordkeeping may be to pursue alternative service models where NARA does not store and manage electronic records on behalf of agencies. According to NARA, these services and the agency’s role in providing them could be developed and tested as part of the managing government records directive’s work with automation, open source technology development, and cloud computing.", "By December 31, 2013, NARA, in cooperation with the Federal Chief Information Officers Council, the Federal Records Council, and other government-wide councils that expressed interest, was to establish a community of interest to bring together leaders from the information technology, legal counsel, and records management communities to solve specific records management challenges. In particular, the community of interest group was to develop and propose guidance, share information, create training, and identify tools that support electronic records management.\nToward this end, NARA reported that two communities of interest were established: (1) the Electronic Records Management Automation Working Group, established in March 2013; and (2) the Federal Records Officer Network, established in May 2013.\nAccording to NARA records management officials, the Electronic Records Management Automation Working Group is made up of 133 members from the information technology, legal counsel, and records management communities in the federal government. The officials stated that, through this working group, records managers, information managers, and IT staff share information with other group members on increasing the automation of electronic records management tasks. Further, the officials stated that the Electronic Records Management Automation Working Group has suggested topics for guidance that NARA could produce, including the disposal of paper records after digitization, required metadata, and auto-categorization.\nThe Federal Records Officer Network has 172 members from various federal agencies and collaborates on projects, shares information, and develops training on records management. According to NARA’s records management officials, the Network, in consultation with NARA, has consolidated records management training materials from multiple agencies into a single e-learning product that agencies can download and use to meet training requirements. NARA records management officials also stated that the Federal Records Officer Network has made suggestions on records management best practices and training projects.\nAdditionally, NARA records management officials stated that the agency has, in cooperation with the Federal Records Council, worked with community of interest groups, including the Electronic Records Management Automation Working Group and the Federal Records Officer Network, to identify tools for records management. By creating communities of interest that proposed guidance, shared information, developed training, and helped to identify tools to support electronic records management, NARA has taken steps toward assisting agencies with records management challenges.", "By December 31, 2013, NARA was required to identify a government- wide analytical tool to evaluate the effectiveness of records management programs. The tool was intended to supplement NARA’s assessments, inspections, and studies of agencies’ records management programs. The tool was also to help NARA and agencies measure program compliance more effectively, assess risks, and aid in agency decision making.\nIn accordance with the directive, by the second quarter of fiscal year 2013, NARA had identified the Records Management Maturity Model Integrated tool developed by the Department of Homeland Security, as the most feasible foundation for a records management solution to evaluate agency records management programs. NARA then created a working group of agency officials from the Federal Records Council to modify the Records Management Maturity Model Integrated tool. The working group members represented six federal agencies: NARA; the Securities and Exchange Commission; and the Departments of Homeland Security, the Interior, Justice, and Transportation.\nThe working group’s efforts resulted in the development of the Federal Records and Information Management Program Maturity Model, a government-wide analytical tool. According to the Federal Records and Information Management Program Maturity Model’s user guide, the purpose of the tool is to help agencies or components assess areas of their records management programs to determine where improvements are most needed. The tool is also intended to measure the maturity of an agency records management program, regardless of the program’s size and records management maturity level. The working group developed organizing principles, assessment criteria, and performance measures for the tool and, as of January 2015, had completed the tool and finalized a guide for its intended users.\nNARA records management officials stated that the agency presented the Federal Records and Information Management Program Maturity Model tool at its bi-monthly records management meeting in March 2015 and posted the final product on its records management website in April 2015. If the tool and the actions planned by NARA work as intended, they could assist NARA and the agencies in evaluating the effectiveness of agencies’ records management programs and measuring agency compliance.", "The directive required NARA to collaborate with the Federal Chief Information Officers Council and the Federal Records Council, and obtain external involvement to develop open source records management solutions by December 31, 2014.\nTo address this requirement, in 2013 and 2014, NARA engaged the Federal Chief Information Officers Council, the Federal Records Council, and the private sector to develop open source records management solutions. For example, as discussed earlier, NARA generated a plan with stakeholder participation that included activities that pertained to the development of open source opportunities. Specifically, the plan, among other things, (1) identified activities that will aid in developing open source records management tools and (2) encourages external involvement to develop open source records management tools.\nThe plan described a NARA activity to identify open source records management tools by compiling a list of available open source tools that could be used for various records management functions. This list and related information would be maintained online as a resource for the federal records management community. In addition, the plan specified that NARA intends to identify gaps in open source records management tools and identify opportunities for external involvement in the development of new records management solutions. Further, to encourage external involvement in the development of open source records management tools, NARA requested information from selected private sector vendors pertaining to cloud-based and open source records management solutions for the federal government. According to NARA officials, their outreach to vendors discovered that many viable automated records management solutions are already on the market, including some open source solutions. Consequently, in collaboration with the Federal Chief Information Officers Council and the Federal Records Council, NARA worked with private industry to help familiarize agencies with existing solutions with the goal of identifying any remaining unmet requirements. For example, NARA Invited presentations to the federal records management community on particular automated solutions and provided a list of questions for vendors to answer about their products during those presentations.\nHosted an industry day event on September 10, 2013. At this event, records officers, IT staff, and chief information officers from several agencies, including NARA, discussed with vendors automated electronic records management and the kinds of solutions the agencies were seeking.\nPublished a request for information in FedBizOpps13, 2013, requesting vendor capability statements describing their solutions and services to support automated electronic records management. By April 15, 2014, NARA had received 52 capability statements in response, all of which were shared with the federal records management community through the Electronic Records Management Automation Working Group.\nAdditionally, NARA provided evidence that it worked with other stakeholders, such as in 2013, when it invited volunteers from other federal agencies to share ideas and good practices and lessons learned with each other in the Electronic Records Management Automation Working Group. Further, according to its records management officials, NARA issued the open source records management tools report in March 2015. According to NARA records management officials, the report compiled a list of available open source tools that could be used for various records management functions and maintain the information online as a resource for the federal records management community. This action, coupled with the work involving the private sector and other stakeholders, should assist NARA in identifying and developing open source records management solutions.", "The majority of the 24 federal agencies had taken steps toward addressing the seven directive requirements for managing government records that had completion dates from November 2012 through December 2014. However, certain requirements were not fully met by 5 of the agencies. Specifically, not all agencies had designated Senior Agency Officials at the assistant secretary level; reported to NARA on how they planned to manage permanent electronic records, including e-mails; identified and reported on permanent records that have been in existence for 30 years or more; or identified unscheduled records. Further, the Departments of Commerce, Defense, and Energy had not fully implemented the requirement to develop records management training for all employees, or had not ensured that all agency records officers held the NARA certificate for Federal Records Management Training. However, these 3 agencies indicated that they expect to complete their requirements by the end of fiscal year 2015. Until agencies fully implement the directive requirements, they may not be well-positioned to implement the records management reforms envisioned by the directive.\nIn addition, OPM had finalized the records management occupational series, and OMB had established a deadline for updating key guidance to direct agencies to incorporate records management requirements when moving to a cloud-based service. However, while NARA had taken action to oversee agencies’ directive compliance and identified tools for addressing electronic records management challenges, it had not developed metadata requirements, which are needed to assess progress and streamline agency efforts to process records. Completing this effort could provide agencies with resources for more efficiently managing their records.", "To help ensure that directive requirements are met, we are making 10 recommendations to specific agencies and NARA.\nWe recommend that the Director of the Office of Personnel Management take the following action:\nEnsure that the Senior Agency Official designated to oversee the agency’s compliance with records management statutes and regulations is at or equivalent to the level of an assistant secretary, as required by the directive.\nWe recommend that the Secretary of Veterans Affairs take the\nDesignate a Senior Agency Official at or equivalent to the level of assistant secretary who has direct responsibility for ensuring that the agency complies with applicable records management statutes, regulations, and NARA policy, including being able to make adjustments to agency practices, personnel, and funding.\nWe recommend that the Secretary of Transportation take the following Identify permanent records that were in existence for 30 years or more for one remaining component and report this information to NARA.\nWe recommend that the Administrator of General Services Administration take the following action:\nExpedite efforts to ensure that permanent records that were in existence for 30 years or more, including records stored at agency records storage facilities, are identified and reported to NARA.\nWe recommend that the Director of the National Science Foundation take the following four actions:\nEstablish a date by which the agency will complete, and then report to NARA, its plans for managing permanent records electronically. The plan should describe, among other things, how permanent electronic records are currently captured, retained, searched, and retrieved; plans to digitize permanent records currently in hard-copy format or other analog formats; plans to manage all permanent electronic records in electronic format, including how the plans will be implemented; and challenges the agency faced in achieving the requirement of managing all permanent electronic records in an electronic format.\nEstablish a date by which the agency will complete, and then report to NARA on, its progress toward managing permanent and temporary e-mail records in an electronic format, to include the agency’s ability to retain e-mail records in an electronic system that supports records management and litigation requirements, including the capability to identify, retrieve, and retain the records for as long as they are needed.\nReport to NARA on the identification of its permanent records in existence for 30 years or more, to include when no such records exist.\nComplete the identification of unscheduled records stored at agency records storage facilities.\nWe recommend that the Archivist of the United States take the\nEstablish a time frame and revise NARA transfer guidance for permanent electronic records to include all aspects of metadata requirements.\nIdentify tools to assist agencies with addressing records management challenges in cooperation with the Federal Chief Information Officers Council, the Federal Records Council, and other government-wide councils that express interest.", "We requested comments on a draft of this report from the 24 major agencies included in our study and from OMB and NARA. We received comments from the six agencies to which we made recommendations, which included NARA. Among these, OPM, the Department of Veterans Affairs, the General Services Administration, the National Science Foundation, and NARA provided written comments. Further, on May 5, 2015, the Deputy Director of Audit Relations for the Department of Transportation provided comments via e-mail. Four of the agencies and NARA either agreed or generally agreed with our recommendations, while one agency had no comments, as summarized below:\nThe Chief Operating Officer for OPM stated that the agency concurred with our recommendation and plans to designate its Chief Information Officer as the Senior Agency Official. According to the Chief Operating Officer, the agency’s Chief Information Officer is the equivalent of an assistant secretary, and is appropriately located within OPM to make adjustments to the agency’s practices, personnel, and funding to ensure compliance and support the business needs of OPM. The official added that the Chief Information Officer has direct responsibility for ensuring that OPM efficiently and appropriately complies with all applicable records management statutes, regulations, and NARA policy. OPM’s comments are reprinted in appendix II.\nThe Department of Veterans Affairs’ Chief of Staff stated that the department concurred with our recommendation. The Chief of Staff added that the department plans to designate its Chief Information Officer as the Senior Agency Official, with delegation of daily responsibility for complying with applicable records management statutes, regulations, and NARA policy to the Associate Deputy Assistant Secretary for Policy, Privacy, and Incident Response. The department’s comments are reprinted in appendix III.\nThe Acting Administrator of the General Services Administration stated that the agency concurred with and is developing a plan to address our recommendation. The Acting Administrator further stated that the agency would accelerate efforts to identify the location of its records by the end of fiscal year 2015. The agency’s comments are reprinted in appendix IV.\nThe National Science Foundation’s Chief Information Officer stated that the agency had no comments on the draft report but is committed to the continual improvement of information technology management, including its efforts related to records management. The agency’s comments are reprinted in appendix V.\nIn its comments, the Archivist of the United States said that NARA concurred with the recommendation to establish a time frame and revise transfer guidance for permanent electronic records to include all aspects of metadata requirements. The Archivist added that NARA believed it had met the second recommendation related to identifying tools to assist agencies with addressing records management challenges. In this regard, NARA provided us with evidence supporting its identification of tools, and in response we updated our report to reflect the actions taken. As an additional comment, the Archivist expressed concern that the report did not include a recommendation for NARA to revisit its guidance for the Senior Agency Official’s roles, responsibilities, and overall designation, especially as it pertains to independent agencies. The Archivist believed such a recommendation would further empower Senior Agency Officials within their component agencies. With regard to this comment, we believe clearly designated roles and responsibilities are important to ensuring the effectiveness of all agencies’ Senior Agency Officials and that NARA has taken an important step in recognizing its need to revisit guidance for independent agencies. As for the study results and recommendations included in this report, our work focused on the actions of NARA and the 24 major federal agencies to implement the specific requirements outlined in the Managing Government Records directive. NARA’s comments are reprinted in appendix VI.\nIn comments provided via email, the Deputy Director of Audit Relations stated that the Department of Transportation concurred with our recommendation and that the agency would provide a detailed response to the recommendation within 60 days of our report’s issuance.\nWe also received written comments from the Department of Defense (reprinted in appendix VII) and the Social Security Administration (reprinted in appendix VIII). In the comments, the Principal Deputy for the Department of Defense stated that the department concurred with the report as written. The Executive Counselor to the Commissioner of the Social Security Administration stated that the agency had no comments on the draft report.\nFurther, we received technical comments via e-mail from the Department of Justice, NARA, and the National Science Foundation, which we have incorporated, as appropriate.\nIn addition to the aforementioned comments, liaisons for 15 other agencies sent e-mails stating that their agencies had no comments on the draft report. These agencies were the Departments of Agriculture, Commerce, Education, Energy, Health and Human Services, Housing and Urban Development, the Interior, Labor, State, and Treasury; the Environmental Protection Agency; National Aeronautics and Space Administration; Small Business Administration; U.S. Agency for International Development; and Nuclear Regulatory Commission.\nTwo agencies—the Department of Homeland Security, and the Office of Management and Budget—did not provide any responses to our request for comments.\nWe are sending copies of this report to the Secretaries of the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, the Interior, Labor, State, Transportation, the Treasury, and Veterans Affairs; the Attorney General; the Administrators of the Environmental Protection Agency, General Services Administration, National Aeronautics and Space Administration, Small Business Administration, and the U.S. Agency for International Development; the Archivist of the United States; the Directors of the National Science Foundation, Office of Management and Budget, and Office of Personnel Management; the Chairman of the Nuclear Regulatory Commission; the Commissioner of Social Security; and other interested parties. This report also is available at no charge on the GAO website at http://www.gao.gov.\nShould you or your staff have any questions on information discussed in this report, please contact me at (202) 512-6304 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IX.", "Our objectives were to (1) assess the extent to which federal agencies have taken the actions called for in the Office of Management and Budget (OMB) and National Archives and Records Administration (NARA) Managing Government Records Directive, and (2) determine the extent to which the Office of Personnel Management (OPM), OMB, and NARA have taken actions called for in the directive, including overseeing agencies’ compliance. The scope of our review included the 24 major agencies covered by the Chief Financial Officers Act of 1990, as well as OMB and NARA.\nTo address the first objective, we took the following steps for each of the 24 agencies:\nCompared agency documentation, such as records management policy and departmental regulations to the requirements specified in the directive that were required to be completed by the December 31, 2014, deadline. These requirements pertained to: (1) designating a senior agency official, (2) managing permanent electronic records, (3) managing permanent and temporary e-mail records, (4) identifying permanent records and reporting on that information to NARA, (5) identifying unscheduled records, (6) obtaining the NARA certificate of Federal Records Management Training, and (7) establishing records management training.\nObtained and reviewed records management policies, procedures, and guidance.\nCollected and analyzed documentation that described actions each agency had taken to meet requirements of the directive, such as the annual records management self assessment and Senior Agency Official report.\nConducted structured interviews with records management officials from each agency to discuss steps taken to address directive areas and obtain additional supporting documentation to determine the agencies’ status in implementing the directive requirements.\nFollowed up with those agencies that did not fully meet the directive requirements to determine reasons for their noncompliance.\nFor the second objective, regarding NARA’s, OPM’s, and OMB’s implementation of their responsibilities under the directive, we took the following steps:\nCollected and analyzed documentation on senior agency official meetings held by NARA and records management communities of interest and the Federal Records and Information Management Program Maturity Model tool to evaluate agencies’ records management programs.\nObtained and analyzed NARA documentation, to include transfer guidance for permanent electronic records; guidance for managing, disposing of, and transferring e-mail; the Senior Agency Official template; and the results of a feasibility study on establishing a cloud- based service.\nObtained and reviewed NARA’s records management policies, plans, and other documentation related to electronic recordkeeping.\nConducted structured interviews with NARA’s Chief Records Officer and other agency officials regarding their interactions with the 24 agencies on the use of electronic recordkeeping and implementation of federal records management policies and practices.\nInterviewed OPM’s Chief of Records Management and other agency officials to discuss the development of the records management occupational series, and obtained and evaluated related documentation.\nInterviewed officials within OMB’s Offices of Information Regulatory Affairs and E-Government & Information Technology to discuss OMB’s efforts to update Circular A-130 and actions taken to assist agencies with meeting the goals of the records management directive.\nTo assess the reliability of what agency officials told us about how they met the requirements specified in the directive, we collected and analyzed documentation from the 24 agencies to determine the steps that each agency had taken to meet the requirements of the directive. We also collected and reviewed documentation that NARA provided regarding the status of agencies’ implementation of the directive areas.\nOur study was conducted to determine whether the agencies in our review had complied with requirements of the directive agency-wide, and did not include a comprehensive assessment of all actions that agencies may have taken to carry out responsibilities at the branch or sub-agency levels.\nWe conducted this performance audit from March 2014 to May 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "", "", "", "", "", "", "In addition to the contact named above, the following staff made significant contributions to this report: Anjalique Lawrence, Assistant Director; Sharhonda Deloach; Elena Epps; Angel Ip; Lee McCracken; and Robert Williams." ], "depth": [ 1, 2, 1, 2, 2, 3, 3, 3, 2, 1, 2, 2, 2, 3, 3, 3, 3, 3, 3, 3, 3, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "h2_full", "h0_full h1_full", "h0_full", "", "", "", "", "h0_full", "h2_full h1_full", "h1_full", "h1_full", "h2_full h1_title", "h1_full", "", "", "", "", "", "", "", "h0_full", "", "", "h3_full h2_full", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "Why were some requirements not fully met?", "What are examples of unmet requirements?", "By when will these agencies complete their training?", "What have OPM, OBM, and NARA done regarding oversight?", "What actions has OPM taken?", "What actions has OMB taken?", "What actions has NARA taken?", "How does the lack of full implementation affect the federal government?", "How does the federal government use information?", "How has the transition to electronic data affected federal agencies?", "What action have NARA and OMB taken regarding federal records management?", "What does this directive mandate?", "What was GAO asked to review?", "What were GAO's objectives?", "What data did GAO review for this report?" ], "summary": [ "However, certain requirements were not fully met by 5 of the agencies because these agencies were either still working on addressing the requirement, or did not view the requirement as mandatory.", "For example, while all 24 agencies designated a senior official to oversee records management, 2 did not designate the official at the assistant secretary level, and 1 did not reaffirm the official by the specified deadline. Further, at 2 agencies, records management officers did not obtain the NARA training certificate or had not been granted an exemption.", "These agencies expect to complete their training by the end of fiscal year 2015.", "The Office of Personnel Management (OPM), OMB, and NARA took steps to implement 11 required oversight actions, although not all actions had been completed.", "For example, OPM finalized an occupational series to elevate records management roles, responsibilities, and skill sets for agency records professionals.", "In addition, OMB was in the process of updating its Circular A-130 to include records management requirements for agencies when moving to cloud-based services or storage solutions.", "Lastly, NARA, in consultation with other stakeholders, produced a plan to move agencies toward greater automation of records management. However, it did not include metadata requirements in its guidance, as required.", "Until agencies, OMB, and NARA fully implement the directive's requirements, the federal government may be hindered in its efforts to improve performance and promote openness and accountability through the reform of records management.", "The federal government collects large amounts of information, increasingly in electronic form, to accomplish its missions.", "This greater reliance on electronic communication and information technology systems has, as a result, radically increased the information that agencies must manage.", "In 2012, NARA and OMB issued a directive to reform federal records management in response to a 2011 presidential memorandum on managing government records.", "The directive requires federal agencies, NARA, OMB, and OPM to take actions toward reforming records management policies and practices.", "GAO was requested to evaluate federal agencies' implementation of the directive.", "GAO's objectives were to (1) assess the extent to which federal agencies have taken the actions called for in the directive and (2) determine the extent to which OPM, OMB, and NARA have taken actions called for in the directive.", "To do this, GAO reviewed policies, guidance, and other documentation of actions taken through December 31, 2014, by 24 selected federal agencies, NARA, and OMB, and interviewed the agencies' records management officials." ], "parent_pair_index": [ -1, 0, 1, -1, 0, 0, 0, -1, -1, 0, -1, 2, -1, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "Internal Control Standards", "Existing Internal Supervisory Control Framework Generally Reflects Accepted Standards of Internal Control", "Offices’ Work Processes Incorporate Internal Supervisory Controls Designed to Address Identified Risks", "Corporation Finance’s Internal Supervisory Controls Are Designed to Help Ensure Financial Securities Filing Reviews Are Conducted Completely and Consistently", "Corporation Finance Internal Supervisory Control Activities", "Enforcement’s Internal Supervisory Controls Are Designed to Help Ensure Investigations Are Conducted Completely and Consistently", "Common Control Deficiencies Indicate Need for Continued Management Attention to Internal Supervisory Controls", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Securities and Exchange Commission", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "To carry out its mission, SEC’s responsibilities are organized into 5 divisions and 23 offices. Of those, OCIE, the Division of Corporation Finance, and the Division of Enforcement are subject to section 961 of the Dodd-Frank Act. The roles and responsibilities of these offices are summarized in table 1.\nSection 961 of the Dodd-Frank Act requires SEC to submit a report to Congress (1) on the assessment of the effectiveness of its internal supervisory controls and the procedures applicable to staff who perform examinations, enforcement investigations, and reviews of financial securities filings; (2) a certification that SEC has adequate internal supervisory controls to carry out examinations, reviews of financial securities filings, and investigations; and (3) a summary of the Comptroller General’s findings on the adequacy and effectiveness of SEC internal supervisory controls. According to section 961, SEC must submit these reports no later than 90 days after the end of each fiscal year.\nSEC’s first three annual reports—for fiscal years 2010, 2011, and 2012— found no significant deficiencies in internal supervisory controls, and concluded that the controls were effective. While not subject to section 961, SEC’s Office of the Chief Operating Officer (OCOO) and the Division of Risk, Strategy, and Financial Innovation provided advice and assistance to OCIE, Corporation Finance, and Enforcement, in identifying, establishing, and carrying out internal control policies and procedures. For example, the Division of Risk, Strategy, and Financial Innovation advised the offices on developing appropriate statistical methods for testing controls. The OCOO has also provided guidance and training on how to implement an internal control process.\nIn addition to the section 961 requirement, SEC is responsible for establishing and maintaining effective internal control and financial management systems that meet the objectives of the Federal Managers’ Financial Integrity Act of 1982 (FMFIA). annually assess and report on the internal controls that protect the integrity of their programs and whether financial management systems conform to related requirements. The Office of Management and Budget’s (OMB) Circular No. A-123, which requires agencies to provide an assurance statement on the effectiveness of programmatic internal controls and financial system conformance, provides guidance for implementing FMFIA. We review SEC’s internal controls for its financial management systems as part of our annual financial audit of the agency and therefore these controls are not examined in this report.", "Pub. L. No. 97-255, 96 Stat. 814 (Sept. 8, 1982). responsible for developing detailed policies and procedures to fit their agency’s operations. Agencies may implement these standards at an office level to establish an overall framework for organizing the development and implementation of internal controls. The standards also can be implemented to help ensure that specific program activities are carried out according to adopted policies and procedures. Our standards are similar to the framework for internal control developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).\nFive interrelated standards establish the minimum level of quality acceptable for internal control:\nControl Environment. Management and employees should establish and maintain an environment throughout the organization that sets a positive supportive attitude toward internal control and conscientious management. A positive control environment is the foundation for all other standards. It provides the discipline and structure as well as the climate that influences the quality of an organization’s internal control. Management’s philosophy and operating style also affect the environment, including management’s philosophy towards monitoring, audits, and evaluations.\nRisk Assessment. After establishing clear, consistent agency objectives, management should conduct an assessment of the risks the agency faces from external and internal sources. Risk assessment is the identification of risks associated with achieving the agency’s control objectives and analysis of the potential effects of the risk. Risk identification methods may include qualitative and quantitative ranking activities, management discussions, strategic planning, and consideration of findings from audits and other assessments. Risks should be analyzed for their possible effect and risk analysis generally includes estimating a risk’s likelihood of occurrence and its significance or impact if it were to occur. Because governmental, economic, regulatory, and operating conditions continually change, mechanisms should be provided to identify and appropriately deal with additional risk resulting from such changes.\nControl Activities. Control activities—policies and procedures that help management carry out its directives—help to ensure that actions are taken to address risks. Control activities are an integral part of an entity’s planning, implementing, reviewing, and accountability for stewardship of government resources and achieving effective results. The control activities should be effective and efficient in accomplishing the agency’s control objectives.\nInformation and Communications. Key information should be recorded and communicated to management and others within the entity who need it and in a form and within a time frame that enables them to carry out their internal control and other responsibilities.\nMonitoring. Management should assess the quality of internal control performance over time and ensure that the findings of audits and other reviews are promptly resolved.", "As part of their efforts to respond to section 961 requirements, OCIE, Corporation Finance, and Enforcement put in place an internal supervisory control framework that generally reflects federal internal control standards. The framework requires that each office develop a formal process for identifying and assessing risks, identifying key internal controls that address those risks, assessing the operating effectiveness of internal controls, and reporting the results of the testing.\nAccording to staff, although internal controls were in place to oversee examinations, investigations, and securities filing reviews, the offices had no formal methods for identifying, documenting, or assessing internal supervisory controls prior to 2010. Before 2010, the offices annually assessed and provided assurance statements on the adequacy of their internal controls to comply with requirements of FMFIA and OMB Circular No. A-123; however, according to SEC officials, these assessments generally focused on controls affecting SEC’s financial statements and information technology. In response to section 961 of the Dodd-Frank Act, senior officers and staff from OCIE, Corporation Finance, and Enforcement and the Offices of the Chief Accountant, General Counsel and Executive Director formed the 961 Working Group (Working Group) to coordinate the annual assessment and certification. This group also worked to coordinate the section 961 assessments with agencywide efforts to comply with FMFIA internal control requirements. The Working Group included senior-level managers who also were tasked with leading their office’s 961 annual assessment efforts. In fiscal year 2011, the Working Group expanded to include OCOO.year 2011 the MorganFranklin consulting firm, has provided assistance to the offices on certain aspects of SEC’s 961 program.\nDuring our interviews with members of the Working Group, staff demonstrated knowledge of their respective office’s internal control framework, known gaps, and efforts to address gaps. Staff discussed risks to their respective programs and how existing controls addressed those risks. For example, OCIE staff discussed a key risk of examinations being conducted in a manner inconsistent with policies and procedures due to a gap in its processes for organizing and updating policies and procedures. OCIE staff described the development of the new governance structure and how it addresses this gap. Division management and senior officer involvement in the establishment of the internal supervisory control framework and in-depth understanding of a program’s internal supervisory control framework, risks, and the design and implementation of a plan to mitigate risks reflect the control environment standard, which states that management should establish and maintain an environment throughout the organization that sets a positive and supportive attitude toward internal control and conscientious management.\nAs they worked to develop the internal supervisory control framework, the Working Group used GAO’s standards, guidance in OMB Circular No. A- 123, and the Commission’s own internal control guidance to public companies. To guide the design of the framework and internal supervisory controls assessment process, the Working Group identified three key principles—(1) control systems and assessments should be designed to provide a reasonable assurance of effectiveness, (2) management should rely on its judgment, and (3) management should make judgments based on risk and its own knowledge and expertise to implement an efficient and effective evaluation process. The Working Group also developed key definitions and criteria to better coordinate the offices’ approach for determining the scope and required evidence needed to support management’s evaluation and certification as required under section 961. For example, the group defined “internal supervisory control” to assist each office in scoping its assessment and established criteria for determining if a control evaluation finding rose to the level of a “deficiency” or “significant deficiency,” which is consistent with generally accepted government auditing standards. The resulting internal supervisory control framework generally reflects federal internal control standards. Specifically, SEC’s internal supervisory control framework includes the following elements: Identifying and assessing risks. Under SEC’s framework, each office must conduct an annual risk assessment. Consistent with the risk assessment standard of internal control, each office’s risk assessment includes processes for identifying and assessing key risks. To implement this process, each office assigned a small group, led by the managing executive or other senior officer, the task of identifying what they believed to be the key risks.\nGAO/AIMD-00-21.3.1, and OMB, Circular No A-123: Management’s Responsibility for The Working Group defines a key risk to be a risk that in the office’s informed judgment carries significant inherent risk to its ability to consistently conduct examinations, investigations, or reviews with professional competence and integrity. from MorganFranklin in conducting its 961 reviews for fiscal years 2011 and 2012. These small groups then evaluated the “inherent risk” associated with each key risk based on their judgment of the likelihood of the risk occurring and the severity of impact if it were to occur. Based on this evaluation, each risk was assigned a rating. For example, for each identified risk in fiscal year 2011, Corporation Finance rated the likelihood of the risk occurring using a three-level system (low, medium, or high). It similarly rated each identified risk’s impact. The group then used a three- by-three matrix to arrive at an overall risk rating.\nIdentifying key internal controls that address the risks. For each key risk, the small groups identified corresponding key controls, including internal supervisory controls, used to address the risks. For example, OCIE requires examination reports and workpapers to be reviewed and approved by management at the end of every examination. This helps to ensure that applicable rules and regulations are reviewed and examinations are consistently performed. The key risks and controls are documented in a risk-assessment tool called a risk and control matrix and, according to SEC staff, vetted by other managers and senior officials within each respective office, and approved by each office’s director. Specific controls implemented by each office are discussed in more detail later in this report.\nAssessing the operating effectiveness of internal controls. In developing SEC’s framework, the Working Group incorporated the required 961 annual assessments. Consistent with the internal control standard for monitoring, the assessments provide the Commission and management with annual evaluations of the design and operating effectiveness of each office’s internal supervisory controls. According to the Working Group, each office has the discretion to determine the methodology, including level of evidence and frequency, for testing each control that would provide management with reasonable assurance of the control’s effectiveness. Furthermore, the Working Group also consulted with SEC’s Division of Risk, Strategy, and Financial Innovation and used GAO’s Financial Audit Manual for assistance in determining the appropriate sample sizes, and the acceptable number of errors for a particular sample size and for pulling random samples. Each office designated an assessment team to carry out the testing and took steps to maintain the objectivity of the testing. For example, Corporation Finance’s senior assessment team segregated testing duties so that an associate director would not be involved in selecting samples or testing the work of the offices that he or she oversees. According to staff, the fiscal year 2011 assessment was the first year for which control testing was conducted under section 961. On the basis of our review of each office’s assessment procedures and documentation of assessment findings for fiscal year 2011, each used accepted methods such as inquiry, observation, inspection, and direct testing.\nIn fiscal year 2012, the director of OCR began signing the certification document.\n961(c) requires the office director to certify that, among other things, he or she has evaluated the effectiveness of the internal supervisory controls during the 90-day period ending on the final day of the fiscal year to which the report relates and disclosed to the Commission any significant deficiencies in the design or operation of internal supervisory controls that could adversely affect the ability of the office to consistently conduct inspections, investigations, or financial securities filing reviews with professional competence and integrity. Reporting assessment results constitutes a significant part of an overall internal control framework and reflects the information and communication and monitoring components of internal control standards.\nIn fiscal year 2012, the Working Group took additional steps to improve the overall internal supervisory control framework and 961 assessment processes. Notably, the group adopted a single set of procedures for conducting the annual assessments for all of the offices. In fiscal year 2011, each office used similar but separate processes for conducting its assessment. The fiscal year 2012 procedures maintain a risk-assessment methodology that continues the offices’ focus on identifying key risks, but differs in that it establishes a common scale for assessing the likelihood and impact of key risks. The fiscal year 2012 procedures also provide a common definition of key controls and information on how to identify them; allow for each office to design an appropriate control evaluation strategy; provide guidance—developed in consultation with economists from the Division of Risk, Strategy, and Financial Innovation—for conducting statistical testing of internal supervisory controls; and incorporate additional control testing guidance similar to that set forth in our Financial Audit Manual. Finally, the procedures incorporate guidance from the offices’ fiscal year 2011 procedures on reporting the results of the assessments to office or division management, SEC’s Chairman, and Congress.\nIn fiscal year 2012, the Working Group also further incorporated staff from OCOO and provided additional guidance aimed at improving the offices’ risk assessment and control identification. According to OCOO staff, in fiscal year 2012, they periodically reviewed the offices’ documentation of risks and controls, consulted with the offices to help address any challenges or questions, and helped staff use an electronic tool that assists in the identification of key risks and controls. This tool also captures control descriptions and data on control evaluation results and provides information to office management in a standardized format. Additionally, OCOO staff assisted OCIE and Enforcement with identifying potential gaps in risks and controls. OCOO staff and MorganFranklin also provided staff from each of the three offices with additional training on how to identify and evaluate risks and controls. For example, training materials outline specific questions to ask when evaluating the design of new or established controls such as (1) how often the control activity was completed, (2) how the control was documented, and (3) the purpose of the documentation. Such training can help to improve future 961 assessments, specifically the evaluation of a control’s design to help ensure it includes clear and specific implementing procedures. OCOO plans to increase its support to each office’s risk and control identification and assessment process.", "As part of developing and applying the internal supervisory control framework, each office identified internal supervisory controls to address the risks identified through the risk assessment. These internal supervisory controls are built into the offices’ work processes—that is, the processes they use to carry out examinations, filing reviews, and investigations. The controls are intended to help ensure that objectives are being met and that the procedures applicable to staff carrying out these activities are conducted completely and consistently. They range from supervisory review and approval activities to information regularly provided to management to monitor the processes as a whole. According to staff, many of the offices’ internal supervisory controls existed prior to the development of SEC’s internal supervisory control framework in 2010. Others were developed through the process of developing the framework. Our review of each office’s process for conducting examinations, filing reviews, and investigations found that each included controls generally As noted earlier, agencies reflective of the internal control standards.may implement the internal control standards at an office level to establish an overall framework for organizing the development and implementation of internal controls and at the program level to help ensure that specific activities are carried out according to adopted policies and procedures. Figure 1 shows the relationship between the internal supervisory control framework and the internal supervisory controls established by each office at the program level.\nOCIE administers SEC’s nationwide examination program. Key risks to ensuring examinations are conducted in a manner consistent with OCIE objectives include (1) not effectively or efficiently selecting high-risk examination candidates and (2) examination findings that are not generally supported by the workpapers. To address these and other identified risks, OCIE developed controls that help ensure that high-risk examination candidates are selected in accordance with OCIE program goals and that managers perform oversight of examination workpapers to better ensure that examination findings are generally supported by workpapers.\nOCIE’s recent implementation of a new governance structure, generally referred to as the National Examination Program (NEP), has the potential to provide for greater standardization of the examination process and supervisory controls. Consistent with the standard of control environment, NEP defines areas of authority and responsibility. For example, under NEP, senior officers with the title of national associate head each of the five examination program areas. The national associates are charged with setting directives and helping ensure consistency across NEP. Under NEP, OCIE also created a number of committees responsible for carrying A primary function of the committees is to help out designated activities.ensure that policies and procedures are formally discussed, approved, and communicated. Such a committee structure reflects the control environment standard by clearly delegating authority and responsibility throughout OCIE. Further, OCIE created an Office of the Managing Executive responsible for general operational areas and oversight of internal controls. Assigning responsibility for internal controls to a senior- level manager demonstrates a commitment to internal control and is consistent with establishing a positive control environment. Finally, OCIE has been working with SEC University to develop an examiner certification program based on a job analysis of examiners to identify the skills needed.ensure all personnel possess and maintain a level of competence that allows them to accomplish their assigned duties.\nIn addition to the examination program’s governance structure, OCIE established a standardized set of policies and procedures for conducting examinations under NEP. These control activities are a key part of the framework. Prior to the adoption of standardized policies and procedures, the processes for conducting and documenting supervisory review of staff work varied. For example, some regional offices used control sheets to document staff work and supervisory review, while others indicated review through management’s review of the examination report. The standardized policies and procedures outline the examination process and provide guidance to staff and supervisors for conducting and reviewing examinations. They also include existing management and supervisory activities intended to help ensure that examinations are carried out according to OCIE policies and are consistent with OCIE’s goals and objectives. Examples of internal supervisory control activities include the following:\nEntity selection. NEP management works with regional offices to determine registrants targeted for examination. Each year, NEP management holds several meetings to develop examination program goals and objectives, including guidance for the selection of registrants for examination and potential focus areas. To further assist OCIE management in selecting registrants for examination, OCIE’s Office of Risk Analysis and Surveillance staff use information from registration and other required forms, past examinations, and other sources to help identify regulated entities that likely pose the highest risk to investors. According to staff, each regional office is provided this information about the regulated entities in its jurisdiction, including specific areas of risk that a certain entity may pose. The regional offices incorporate local information and knowledge and confer with home office (headquarters) management and national associates on a semi-annual basis to determine registrants targeted for examination.\nExamination scope approval. Supervisors review and approve the initial scope of the examination and any subsequent modifications to the scope. After staff conduct the pre-examination research, procedures require the staff to schedule a pre-examination meeting with supervisors to discuss the areas that will be included in the scope of the examination and whether additional expertise or resources are needed. The staff document the decisions made and submit the scoping work to the supervisor for approval. Supervisors are expected to ensure that relevant pre-examination research is completed, including a review of: previous examinations and deficiencies; tips, complaints, and referrals; and Division of Enforcement activity. They also must determine that the proposed scope of the examination is appropriate and in line with OCIE goals and objectives.\nExamination workpaper review. Supervisors review and sign control OCIE procedures require sheets (or other examination workpapers).staff to document the steps that were taken during the course of the examination, methodology used, documents reviewed, and findings and conclusions for each aspect of the examination in the workpapers. Supervisors review the key workpapers supporting the staff’s findings to determine whether the work performed sufficiently assessed the focus areas in the scoping and planning documents. Supervisors also must review the evidence provided to determine if it sufficiently supports the findings and conclusions. Finally, procedures require that supervisors meet with the examination team after the information-gathering portion of the examination is substantially complete to discuss preliminary findings and any challenges encountered during the examination. In the event that staff discover facts that may result in an Enforcement referral, those facts should be brought to the immediate attention of an associate director. Once the appropriate associate director or national associate determines that an examination merits a referral to Enforcement, OCIE staff are to follow NEP procedures for documenting and communicating the referral to Enforcement.\nExamination report approval. An assistant director or higher-level supervisor approves the nonpublic examination report. After the examination team completes its examination but before it finalizes its nonpublic examination report, staff prepare the report and submit it for approval. Once examination findings are approved, an examination team will issue an examination summary or other closing letter to the registrant. Examination managers are responsible for ensuring that the examination summary letter includes information about any required response from the registrant and that the letter and report are properly filed in OCIE’s systems.\nExamination closing approval. An examination manager or a higher-level supervisor approves the closure of an examination. OCIE policies and procedures consider an examination to be closed after the assistant director or other authorized supervisor has approved the examination summary report, staff have sent an examination summary letter to the entity, and the entity has satisfactorily responded to the examination summary letter; or, when an Enforcement referral has been made and no further OCIE staff action is expected. According to staff, the examination manager or higher- level supervisor determines the sufficiency of an entity’s response.\nIn addition to the standardized policies and procedures, OCIE also has been implementing a new examination tracking system, the Tracking and Reporting Examinations-National Documentation System (TRENDS), which is intended to improve documentation of staff work and supervisory reviews and approvals. Consistent with the internal control standard of control activities, TRENDS is designed to provide OCIE with a means of clearly documenting significant events in the examination process and making that documentation readily available for review and reporting purposes. TRENDS was created in 2011 to capture NEP data and information, including workpapers, examination scope, deficiencies, audit techniques, and management approvals. TRENDS replaces manual methods for maintaining the results of examination work. For example, TRENDS replaces paper-based scope memorandums and examination reports with on-line “working scope” and “examination summary” screens.\nIn TRENDS, each examination workbook has three phases (prefieldwork, fieldwork, and postfieldwork). At the completion of the prefieldwork and postfieldwork phases, examination staff electronically submit the examination workbook for management approval. Supervisors then can approve the workbook or return it to the staff for corrections or additional work. When staff receives a satisfactory registrant response to the examination summary letter, supervisors then perform a final approval by closing the examination. These approvals correspond to the internal supervisory control activities described earlier. TRENDS also contains built-in workflows and checklists that help ensure staff complete certain steps before an examination moves to the next phase and automatic notifications that alert supervisors of pending reviews. TRENDS also allows staff to search associated or previously closed examinations and track the status of deficiencies, and will be used to collect examination program performance information and statistics. began a phased-in implementation of TRENDS. According to OCIE, by September 30, 2013, all OCIE examination programs will use the system for newly initiated examinations.\nStaff access rights to TRENDS examination information are based on the staff member’s role in specific examinations. In general, staff only may access examinations to which they are assigned and work on those portions of the examination to which they have been assigned. Supervisors can access any examination for which they are responsible. All staff can open, in a read-only format, any closed examinations in TRENDS. meeting described above, and where feasible, the examination exit interview or conference call. According to staff, these meetings further enable supervisors to obtain the operating information necessary to determine if an examination team is meeting its objectives.\nOCIE also established standing meetings to discuss broader examination program information. For instance, OCIE holds monthly videoconferences with staff to provide updates on policies or procedures, share information on current examination program events and trends, and provide staff with the opportunity to raise issues with management. In addition, senior officers in OCIE regional offices and headquarters conduct quarterly meetings with the assistant directors and exam managers to review all open examinations, and the NEP senior management meets weekly to discuss program performance and goal achievement. Furthermore, OCIE management obtains pertinent information, through monthly performance reports that are prepared by the Office of the Managing Executive. These reports contain key performance measures, such as the percentage of enforcement investigations resulting from examination referrals and the percentage of firms receiving examination summary letters that take corrective action in response to all examination findings. Finally, OCIE management monitors examination information to help ensure the office meets the statutory requirement that examinations be completed within the later of 180 days of the end of fieldwork or the date on which the last document was received from the registrant.\nOCIE also implemented a number of controls consistent with federal internal control standards for monitoring. In addition to the 961 annual assessments, supervisory oversight of examinations, and management review of regular reports and the meetings, OCIE hired a senior specialized examiner to develop a compliance program within its Office of Chief Counsel. Since then, a compliance group has been formed and three additional permanent staff positions have been added to the group. The group periodically tests a random sample of examinations from each NEP office to evaluate for compliance with documented procedures and make recommendations for improvement. According to staff, this group is empowered to select what to evaluate (and when) and reports to the Chief Counsel. As of March 5, 2013, the Office of Chief Counsel was in the process of filling a recently created assistant director position to lead OCIE’s compliance group. Since its creation, the group has completed six separate evaluations and, according to staff, has two additional evaluations ongoing.\nMoreover, OCIE established policies and procedures for responding to OCIE recommendations from GAO and SEC OIG audits. According to OCIE policy, management of the affected area will meet to discuss and draft a response to GAO and OIG audit findings. The Compliance, Ethics, and Internal Controls Steering Committee is responsible for reviewing management’s proposed responses to GAO or OIG recommendations and other identified deficiencies. The committee discusses the response, obtains additional information if necessary, and can elect to elevate the response to OCIE’s Executive Committee, which consists of the director of the NEP and at least seven members of the NEP’s leadership team— including at least two representatives from headquarters, two from large regional offices, and three from smaller regional offices, if necessary. All responses to GAO and OIG recommendations are presented to OCIE’s director for final approval. According to staff, any audit findings and recommendations made by OCIE’s compliance unit follow a similar process. Noncontroversial or lower-level responses to recommendations may bypass the committees and go directly to the director for approval.", "Corporation Finance selectively reviews filings made under the Securities Act of 1933 and Securities and Exchange Act of 1934 to monitor and enhance compliance with the applicable disclosure and accounting requirements. Key risks identified by the division to meeting its objectives include (1) not effectively identifying companies for review in accordance with regulations or that pose the greatest risk to investors and (2) not identifying and addressing material noncompliance in reviewing company disclosures. The division developed key internal supervisory controls to address these and other risks, including documenting procedures for determining the level and scope of reviews.\nThe review program for corporate financial securities filings, which falls under the Office of Disclosure Operations in Corporation Finance, includes a number of management efforts and processes designed to oversee the program’s performance and establish a positive control environment. division created an organizational structure with clear lines of authority and reporting. The program consists of 12 assistant director-led offices, each responsible for filings from one or more sectors of the economy. Each office includes a number of attorneys and accountants who serve as first-line supervisors. The program is overseen by senior management consisting of a deputy director and five associate directors. In addition, in 2011 Corporation Finance created an Office of the Managing Executive responsible for general operational areas and oversight of internal controls. Assigning responsibility for internal controls to a senior-level manager demonstrates a commitment to internal control and is consistent with establishing a positive control environment.\nFor the purposes of the 961 assessments, Corporation Finance defines “corporate financial securities filings” to mean filings containing financial statements and related disclosures that (1) public companies file with SEC in accordance with the Securities Act, Exchange Act, and Commission rules and regulations, and (2) fall within the scope of authority delegated by the Commission to the division.", "In addition to control environment procedures, the division has established policies and procedures for conducting filing reviews. Specifically, the division’s filing review procedures include multiple internal supervisory controls to help ensure that filing reviews are being conducted completely and consistently and that the division’s goals and objectives are being met. Examples of internal supervisory controls that reflect the control activities standard are described below.\nAnnual filing review goals. At the start of each fiscal year, division management develops goals for the filing review program. The goals include reviewing companies pursuant to section 408 of the Sarbanes-Oxley Act and internally defined criteria. The division also aims to conduct financial reviews of the most highly capitalized companies, reflecting a broad shareholder base, every year. In addition, division management suggests criteria for selecting other companies for review and allows broad discretion for assistant directors to make selections within these parameters. According to division officials, together these companies account for a substantial percentage of total market capitalization.\nSecond-level supervisory review. Once identified for selective review, a filing enters the review cycle, which generally includes four phases: screening, examination, closing, and the public posting to http://www.SEC.gov of SEC comments and responses to them (“filing review correspondence”). For most filings, a second-level review is required during each of these phases. For example, in the examination phase, examiners evaluate the disclosures in the filing and document their evaluation and any proposed comments on compliance improvements or material noncompliance with applicable disclosure or financial statement requirements in an examination report. Designated second-level review staff then review the examination reports and proposed comments to confirm that the comments are consistent with prior comments from the assistant director’s office, address appropriate issues, reflect the division’s opinions and interpretations of disclosure and financial statement requirements, and generally comply with division policies.level reviewers’ findings are documented in a review report.\nCorporation Finance created various documents and electronic databases to record and store filing review data. Recording significant events in the filing review process and ensuring that documentation is readily available for review are consistent with the control activities standard. Generally, documentation for each filing review includes a screening sheet, an examination report, a review report, and a closing memorandum. Each document captures information on the filing review and describes staff members’ participation. For example, the examination report captures factual information about the company, the filing, the staff member who performed the filing review, the nature (or type) of the filing, and any staff comments. The closing memorandum includes a list of the documents reviewed, the actions taken, when the review was concluded, and any significant issues identified during the review. The division maintains five distinct electronic databases to track, conduct, document, and report on different aspects of its filing review program. For example, the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system is the division’s primary record-keeping system. EDGAR performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others that voluntarily file or are required by law to file forms with SEC. Corporation Finance is aware of limitations within the databases that require some information to be manually entered or uploaded and that such limitations increase opportunities for error and misinformation. As a result, division management recently began conducting periodic audits of access rights and data quality.\nConsistent with the internal control standard for information and communication, the division’s management interacts with supervisors and staff using standing meetings and memorandums to share information about the program’s progress towards meeting filing review goals, quality of staff’s work, and compliance with established policies and procedures. Also, management regularly receives various standard and ad hoc reports about program performance. For example, assistant and associate directors receive weekly updates that provide a real-time snapshot of the division’s current workload. Division managers also receive monthly reports that present summary data on review activity and progress toward meeting goals for number of reviews completed and timing. Finally, the division provides guidance and other program information to staff on its intranet site.\nIn addition to the annual 961 assessment, Corporation Finance has implemented a number of controls consistent with the monitoring internal control standard. For example, according to Corporation Finance staff, their standing meetings are an important aspect of the division’s monitoring strategy and provide opportunities for senior officers to share information about resources, potential issues with filing reviews, or personnel matters within the assistant director offices. For example, associate directors, assistant directors, and the senior assistant chief accountants in disclosure operations meet regularly to share information across the division and discuss trends or issues across filing reviews. Corporation Finance staff also stated that assistant directors and senior accountants regularly meet with staff to gather information on what staff have seen in their filing reviews. Other internal supervisory controls that demonstrate the monitoring standard include the division’s practices of (1) releasing its correspondence with companies to the public, which allows for public scrutiny of its work, and (2) assigning a senior officer to manage the process of developing and tracking responses to audit recommendations. Corporation Finance also has efforts under way to help provide an overarching perspective on the quality of filing reviews.", "Enforcement is charged with investigating potential violations of the federal securities laws and litigating SEC’s enforcement actions. As documented by Enforcement, key risks to the division’s mission include (1) untimely identification and investigation of potential securities fraud and (2) failure to bring enforcement actions that could deter potential violators and protect investors. Enforcement developed internal supervisory controls to address these and other risks.\nIn 2009, Enforcement began a review of its investigative process intended to streamline procedures and maximize resources. Since that time, Enforcement implemented a number of actions that collectively reflect Enforcement management’s efforts to establish and manage its overall performance, in accordance with the internal control standard for control environment. These actions included the following: In 2009, Enforcement created the Office of the Managing Executive to oversee functions such as case-management systems and broader operational areas such as process improvement and internal controls. According SEC officials, the new office enables staff to focus on mission-critical investigative activities.\nIn 2010, the division established the Office of Market Intelligence (OMI) to centrally handle tips, complaints, and referrals, known as TCRs. OMI uses a searchable database (known as the TCR system) to triage TCRs, and assign or refer potential investigative leads. OMI has been currently piloting a tool that will add analytics capabilities to the database to improve staff’s ability to identify high-value TCRs and to search for trends and patterns.\nAlso, in 2010, the division reassigned approximately 20 percent of its staff to nationwide specialized units designed to concentrate on high- priority enforcement areas, including asset management (for example, hedge funds and investment advisors), market abuse (large-scale insider trading and market structure issues), structured and new products (such as derivatives products), Foreign Corrupt Practices Act violations, and municipal securities and public pensions. The units rely on the knowledge and expertise of experienced staff to better detect links and patterns that could suggest wrongdoing.\nFinally, Enforcement has been working with SEC University to develop a curriculum for all levels of staff to increase competency in investigative skills and knowledge of the division’s high-priority enforcement areas.\nThe division maintains procedures that reflect the internal control standard for control activities and that are intended to help ensure that investigations are being carried out according to Enforcement’s policies. Such control activities are designed to occur early in and throughout the enforcement process.\nSupervisory review of TCR recommendations. According to OMI triage procedures, OMI staff review tips, complaints, and referrals before entering them into the TCR system, then decide whether a TCR should be (1) closed because it does not suggest a violation of securities law, (2) assigned for further review, (3) referred outside of Enforcement, or (4) assigned for investigation. The division’s control activities include requirements for all decisions to be reviewed by management or senior investigative staff. In addition, TCRs that were closed without becoming an investigation may undergo additional supervisory review by an OMI attorney, assistant director, or senior- level subject-matter expert, and can be re-opened, if appropriate.\nManagement discussions and documentation of formal orders of investigation. Recommendations to pursue a formal order of investigation are discussed between investigative staff and management and rely heavily on information from sources such as the staff’s informal inquiries, publicly available information, informants, complaints, and whistleblowers. Recommendations that are approved are documented in a signed memorandum to the Commission’s Office of the Secretary.\nQuarterly meetings for ongoing investigations. In 2010, Enforcement began conducting quarterly review meetings between supervisors and senior staff to discuss major milestones, resources, and other feedback for all open and active investigations. Supervisors document quarterly reviews by using check sheets.\nSupervisory review of resolutions. As investigations are brought to resolution, assistant directors must review and approve all staff recommendations to close an investigation. Senior officers approve and sign off on the final case-closing report. Each closing approval is documented in a memorandum and recorded in Enforcement’s case tracking system, called HUB.\nEnforcement management relies heavily on information communicated by staff and internal systems to carry out internal supervisory control responsibilities. The division has established various practices intended to help ensure that information is conveyed in a timely, relevant, and reliable form, in accordance with the accepted internal control standard for information and communication. For example, staff may access common information about TCRs and active investigations through the TCR and HUB systems, which can encourage effective communication among staff about whether to exercise investigative and enforcement powers. In addition, during quarterly reviews, supervisors are expected to review the status of all open and active investigations, including information about target deadlines, potential impediments, and estimated resources. Weekly senior officer meetings and bimonthly meetings between senior division leadership and assistant directors enable discussion of key issues and developments that affect investigations. According to Enforcement officials, the meetings help ensure investigations stay on track and have the necessary resources. Finally, staff, supervisors, and senior division management hold a separate weekly meeting, known as the “To-be-calendared” meeting to discuss all recommendations to pursue an enforcement action or settle an enforcement action in litigation.\nEnforcement’s procedures for conducting the 961 assessment, in addition to many of the activities noted above, are consistent with the internal control standard for monitoring. Monitoring controls help management oversee and assess the quality of the work of Enforcement staff. For example, supervisors regularly review information to (1) determine whether investigations are meeting the division’s strategic goals, performance goals, and compliance requirements; and (2) monitor staff performance. The division also complies with SEC’s procedures for responding to external audit recommendations.", "We identified deficiencies in about half of the 60 internal supervisory controls we tested. Specifically, we reviewed a nongeneralizable sample of 60 controls—20 controls from each office’s fiscal year 2011 risk and control matrix—that reflect (1) broad aspects of the offices’ internal supervisory control structure, and (2) our knowledge of previous internal control failures or high-risk areas. We found that about half (33 controls) were effectively designed and generally operating as intended. However, the other half had deficiencies in design or operating effectiveness. Specifically, for almost half (27) of the controls in our sample (1) descriptions of the control activity did not accurately reflect policy or practice; (2) documentation demonstrating the controls’ execution was not complete, clear, or consistent; or (3) the controls lacked clearly defined control activities. These control deficiencies may not prevent management from detecting whether the activities of the offices are conducted completely and in accordance with policy. However, the deficiencies were similar in nature across all three offices and made testing the controls difficult. Without clearly defined control activities and consistent, readily accessible documentation, management and others (including external auditors) may not be able to determine whether the supervisory controls were being appropriately applied and whether they were effective in achieving their intended outcomes. The offices have addressed or have been taking steps to address all the 27 identified deficiencies. SEC officials identified some of these deficiencies as they tested the controls during their fiscal year 2011 assessments.control deficiencies in our sample were addressed during our review, after we had detailed discussions with SEC staff about the deficiencies.\nOther However, not enough time had passed to assess the effectiveness of these changes.\nFirst, in reviewing these controls we found some that some descriptions of the control activity did not accurately reflect current policy or practice. Six controls in our sample were difficult to review because the control description, as stated in the fiscal year 2011 risk and control matrix, did not accurately reflect the policy or practice in place during the audit period (see table 2). For example, one of the controls implemented by Enforcement stated that OMI was responsible for providing training on TCR system policies and procedures. However, when questioning Enforcement officials about this control, the officials said that OMI does not maintain documentation of TCR training because it is provided on an informal, as-needed basis and that attendance records are maintained by a different SEC office. Enforcement updated its fiscal year 2012 risk and control matrix to reflect the SEC office responsible for implementing the control. Similarly, an OCIE control described supervisors’ use of control sheets to conduct the review of examination workpapers; however, we found that OCIE policy did not require the use of control sheets during the audit period. As OCIE continues to implement TRENDS, all supervisory reviews and approvals of examination control sheets or similar workpapers will be captured electronically. In March 2013, OCIE officials updated the risk and control matrix to better align the control description with current policy.\nSecond, for some controls the documentation demonstrating execution of the control was not complete, clear, or consistent. For nine controls in our sample, the underlying documentation to support execution of the control was inconsistent, unclear, or missing (see table 3). For example, management reviews of OCIE examination reports were documented in different ways, conducted by different levels of management, and found in different locations in the examination file. As of April 2013, OCIE officials stated that they addressed or were addressing deficiencies in all of these controls. In another example, Enforcement’s documentation of supervisory review of case progress on a quarterly basis was not consistent and in a few instances lacked evidence demonstrating that the review took place. Specifically, we requested all checksheets from our audit period, a total of 168, used by supervisors to document their quarterly case reviews and found that the checksheets were not maintained in a manner readily available for review. As a result, we worked with Enforcement officials to select a sample of 65 checksheets to review. Upon review, we found that the practices for documenting supervisory review were inconsistent and made our review challenging. For example, in some checksheets, supervisors signed the checksheet and also initialed next to each individual case listed on the checksheet.\nOn other checksheets, supervisors signed the checksheet and either did not initial next to individual cases at all or only initialed next to select cases. Enforcement officials said that communication through standing meetings with assistant directors and executive management, rather than supervisory signatures, provided officials with confidence that the quarterly case reviews were taking place. To increase consistency in how the quarterly review sheets are executed, Enforcement officials provided guidance to its senior officers communicating that supervisors must sign the checksheet and that this signature will indicate that all matters on the checksheet have been reviewed.\nFinally, some controls lacked clearly defined control activities. Specifically, 12 controls in our sample were difficult to test because they were not designed to enable the control to operate effectively (see table 4). For example, Corporation Finance’s policy requires a review of all Securities Act initial public offerings and initial Exchange Act registrations unless an associate director determines otherwise; however, we found that the division lacked specific procedures by which an associate director could indicate and document this decision. And, although decisions to forgo a second-level review at the screening and examination stages were made consistently, the documented procedures did not completely describe when exceptions to the general requirement were acceptable. In addition, Enforcement did not have a mechanism in place to implement its control that all policies and procedures are reviewed, updated, and approved on an annual basis. As of April 2013, all of these deficiencies were addressed or were being addressed.", "Since the passage of the Dodd-Frank Act, OCIE, Corporation Finance, and Enforcement have established an internal supervisory control framework that is generally reflective of federal internal control standards. The offices’ efforts, including senior-level management and internal control experts’ involvement in the formation of the 961 Working Group, demonstrate a deliberate and coordinated approach to designing the framework. In addition, senior-level management’s involvement in the annual 961 assessments, as well as our audit, indicate a commitment to improving internal control.\nWe found deficiencies in the design or operating effectiveness of about half of the 60 internal supervisory controls we tested. Specifically, for these internal supervisory controls, the description of the control activity did not accurately reflect policy or practice; the documentation demonstrating execution of the control was not complete, clear, or consistent; or the control lacked clearly defined control activities. These control deficiencies may not prevent management from detecting whether the activities of the offices are conducted completely and in accordance with policy. However, the similarity in the nature of the deficiencies across all three offices suggests that management attention to the design and operation of internal supervisory controls is warranted. Federal internal control standards state control activities should enable effective operation and have clear, readily available documentation. The offices have addressed or have been taking steps to address all the 27 identified deficiencies. In some cases, the offices began to take corrective action before or during our audit based on their fiscal year 2011 section 961 assessment findings. Other control deficiencies were addressed during our review, after we had detailed discussions with SEC staff about the deficiencies. Because most actions became effective during our audit, not enough time had passed to test and verify the effectiveness of the actions SEC has been taking to address the identified deficiencies. Taking steps to ensure that all controls have clearly defined activities and clear and readily available documentation demonstrating execution of the activity would provide SEC management with better assurances that policies were being executed as intended and strengthen SEC’s internal supervisory control framework. Furthermore, SEC management and auditors would be better able to test and assess the effectiveness of a control, opening the doors to further improvement in individual controls.", "To help ensure that controls are properly designed and operating effectively, SEC should make certain that existing internal supervisory controls and any developed in the future have clearly defined activities and clear and readily available documentation demonstrating execution of the activities.", "We provided a draft of this report to SEC for review and comment. SEC provided written comments, which are reprinted in appendix II. In its letter, SEC agreed with our recommendation. SEC also states that GAO concluded that the agency has established an overall framework to implement section 961 that meets GAO’s internal control standards. While we found that OCIE, Corporation Finance, and Enforcement have established an internal supervisory control framework that is generally reflective of federal internal control standards, we also found deficiencies in the design or operating effectiveness of about half of the 60 internal supervisory controls we tested. The offices have addressed or have been taking steps to address all of the deficiencies. Further, SEC noted in its letter that it conducted additional testing on the effectiveness of its internal supervisory controls for the 90-day period ending September 30, 2012, and did not identify any material weakness or significant deficiencies. We did not evaluate SEC’s testing of controls for this time period as part of this report. SEC also provided technical comments on the draft report, which we incorporated as appropriate.\nWe are sending copies of this report to SEC, appropriate congressional committees and members, and other interested parties. The report also is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact me at (202) 512-8678 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.", "This report focuses on functions performed through the Office of Compliance and Examination (OCIE), Division of Corporation Finance (Corporation Finance), and Division of Enforcement (Enforcement) at the Securities and Exchange Commission (SEC)—to which we refer collectively as the offices. We examined (1) the steps the offices have taken toward developing an internal supervisory control framework over the specified programs, (2) the internal supervisory controls each office has implemented and how these controls reflect established internal control standards, and (3) the extent to which the internal supervisory controls have operated as intended.\nTo describe the steps each office has taken toward developing an internal supervisory control framework over the specified programs, we evaluated and analyzed documentation from (1) fiscal year 2011 assessments that OCIE, Corporation Finance, and Enforcement completed in accordance with requirements of section 961 of the Dodd-Frank Wall Street Reform and Consumer Protection Act; (2) SEC’s reports to Congress; and (3) documentation related to each office’s fiscal year 2011 testing of internal supervisory controls. We also reviewed documentation from the 961 Working Group and Office of the Chief Operating Officer, such as training presentations and documents describing the electronic tool used to capture risk and control information. We also reviewed previous GAO reports on other internal control frameworks and GAO’s audits of SEC’s financial statement and the Federal Managers’ Financial Integrity Act process. We compared SEC’s internal supervisory control framework with frameworks set forth in GAO’s Standards for Internal Control in the Federal Government. We interviewed officials from OCIE, Corporation Finance, Enforcement, and the Office of the Chief Operating Officer about actions taken to develop an internal supervisory control framework and how the framework addresses accepted internal control standards.\nTo describe the internal supervisory controls that exist as part of the offices’ processes for conducting complete and consistent examinations, reviews of financial securities filings, and investigations, we evaluated and analyzed documentation from OCIE, Corporation Finance, and Enforcement, including policies and procedures for conducting examinations, filing reviews, and investigations. We also analyzed the offices’ fiscal years 2011 and 2012 risk and control matrixes, in which they identify key risks and controls designed to mitigate those risks. Furthermore, we observed the information technology systems used to track and document these activities. We interviewed officials from these offices about the examination, filing review, and investigation processes; and the specific internal supervisory controls that each unit has in place. We also interviewed these officials and MorganFranklin, the consulting firm hired to help assess the offices’ internal supervisory controls, to better understand their work processes, internal supervisory controls, and how each office has been addressing individual internal control standards. Finally, we obtained staff views on each office’s internal controls and communication from focus groups of randomly selected supervisory and nonsupervisory staff from OCIE and Enforcement in the Fort Worth, Texas; Miami, Florida; and Los Angeles, California regional offices and headquarters. We obtained similar information from Corporation Finance supervisory and nonsupervisory staff.\nWe assessed a nongeneralizable sample of 60 fiscal year 2011 internal supervisory controls relevant to the conduct of examinations, filing reviews, and investigations to determine whether they operated as intended. We identified 135 controls that we categorized according to the internal control standard (control environment, risk assessment, control activities, information and communication, and monitoring) each best demonstrated. We selected a nonprobability sample of 11 OCIE, 10 Corporation Finance, and 11 Enforcement controls to review based on known information on past internal control failures and high-risk activities. We supplemented this sample with a random selection of 9 controls from OCIE and Enforcement and 10 controls from Corporation Finance from the remaining population, for a total of 20 controls from each office. For the selected controls, we reviewed the policies, procedures, and stated control objectives of the offices to determine if selected internal supervisory controls were designed in a manner capable of achieving their stated objectives. We also interviewed staff from each office on the operation of these controls. To review the operational effectiveness of the selected controls, we directly observed the electronic databases or spreadsheets described in some controls, obtained documentation or electronic data to analyze other controls, and compared the evidence with each control’s description to determine whether the control functioned as intended. The methodology used to review each control varied due to the nature of each control, the availability of control-level data, and the different methods used to document the control. In this report, we present our findings on controls with deficiencies in tables 2 through 4. The results of our reviews of the design and functioning of the specified controls are applicable only to the tested control for the audited time period and therefore are not generalizable to all of SEC’s internal supervisory controls. To review the fiscal year 2011 testing conducted by each office, we reviewed documentation describing the methodologies used and the results. As our review did not identify or test every control, it should not be interpreted as an attestation of the offices’ internal control.\nWe conducted this performance audit from February 2012 to April 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, Andrew Pauline (Assistant Director), Bethany Benitez, Tiffani Humble, Matt Keeler, Kristen Kociolek, Jonathan Kucskar, Mark Molino, Luann Moy, Mark Ramage, and Barbara Roesmann made key contributions to this report." ], "depth": [ 1, 2, 1, 1, 2, 3, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full", "", "h0_full h3_full", "h0_full h1_full", "", "", "h1_full", "h2_full", "h2_full", "", "h3_full h2_full", "h0_full h3_full", "", "", "", "" ] }

{ "question": [ "What did the SEC do to maintain internal supervisory control after 2010?", "What is internal supervisory?", "To what extent is the control framework consistent with federal standards?", "How did the offices ensure that they can consistently carry out their responsibilities?", "How are these internal supervisory controls implemented in the offices?", "How are the controls built into the system at Enforcement?", "How were these controls developed?", "What deficiencies did GAO identify in its tests?", "How do these deficiencies affect management?", "What implications do these findings have for management?", "What steps have agencies taken to address these deficiencies?", "Why can't GAO assess the effectiveness of these changes?", "Why have SEC internal controls come under recent scrutiny?", "What does Section 961 of the Dodd-Frank Act mandate regarding the SEC?", "What does it require of GAO?", "What does this report cover?", "How did GAO collect data for this report?" ], "summary": [ "After the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) in 2010, the Securities and Exchange Commission's (SEC) Office of Compliance Inspections and Examinations, Division of Corporation Finance, and Division of Enforcement (herein \"the offices\") established a working group that developed an internal supervisory control framework.", "Internal supervisory controls include the processes established by management to help ensure that procedures applicable to staff are performed completely, consistent with applicable policies and procedures, and remain current.", "The overall control framework is generally consistent with federal internal control standards, which includes identifying and assessing risks, identifying and assessing internal controls, and reporting the results of testing to management and Congress.", "As part of developing and applying an internal supervisory control framework, the offices each identified internal supervisory controls to mitigate risks that could undermine their ability to consistently and competently carry out their responsibilities.", "These internal supervisory controls are built into the offices' work processes--that is, the processes they use to carry out examinations, financial securities filing reviews, and investigations--and range from specific supervisory review and approval activities to management reports used to monitor the processes as a whole.", "For example, within Enforcement, supervisors must review and approve staff recommendations that a tip, complaint, or referral be closed without further investigation.", "Many of the offices' internal supervisory controls existed prior to the development of SEC's internal supervisory control framework; others were developed through the process of developing the framework.", "GAO identified deficiencies in about half of the 60 internal supervisory controls it tested. Specifically, GAO found that for 27 internal supervisory controls (1) the description of the control activity did not accurately reflect policy or practice; (2) documentation demonstrating execution of the control was not complete, clear, or consistent; or (3) the controls lacked clearly defined control activities.", "These control deficiencies may not prevent management from detecting whether the activities of the offices are conducted completely and in accordance with policy.", "However, similarities in the nature of deficiencies across all three offices suggest that management attention to the design and operation of internal supervisory controls is warranted.", "The offices have addressed or have been taking steps to address all of the 27 identified deficiencies. Some steps have been taken based on the offices' section 961 assessments. SEC addressed other deficiencies during GAO's review after discussions with GAO detailing the identified deficiency.", "Not enough time has passed for GAO to assess the effectiveness of these changes.", "Recent high-profile securities frauds have raised questions about the internal controls that SEC has in place to help ensure that staff carry out their work completely and in a manner consistent with applicable policies and procedures.", "Section 961 of the Dodd-Frank Act directs SEC to annually assess and report on internal supervisory controls for staff performing examinations, corporate financial securities filing reviews, and investigations.", "The act also requires GAO to review SEC's structure for internal supervisory control applicable to staff working in those offices.", "This report examines the (1) steps the offices took to develop an internal supervisory control framework; (2) internal supervisory controls each office has implemented; and (3) extent to which the internal supervisory controls have operated as intended.", "GAO reviewed each office's section 961 assessments and reports; analyzed the offices' internal supervisory control framework; and tested a sample of 60 supervisory controls using random samples and nonprobability selections." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 1, 1, -1, 0, 0, 0, 3, -1, -1, 1, -1, 3 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Required Roles and Responsibilities for IT Investment Oversight", "OMB’s IT Oversight Mechanisms", "Agencies Spend Billions on Poorly Performing IT Investments", "Categorization of IT Investments Is Intended to Facilitate Identification of Similar IT Investments", "Selected Agencies Have Potentially Duplicative Investments; DOD and DOE Need to Do More to Address Them", "Potentially Duplicative IT Investments Exist at Selected Agencies", "Agencies Have Recently Initiated Plans to Address Potential Duplication in Many Investments, but Results Have Yet to Be Realized at DOD and DOE", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objective, Scope, and Methodology", "Appendix II: Further Information on Potentially Duplicative Investments", "Appendix III: Miscategorized Investments", "Appendix IV: Comments from the Department of Defense", "Appendix V: Comments from the Department of Energy", "Appendix VI: Comments from the Department of Homeland Security", "Appendix VII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Information technology should enable government to better serve the American people. However, according to OMB, despite spending more than $600 billion on IT over the past decade, the federal government has achieved little of the productivity improvements that private industry has Too often, federal IT projects run over budget, behind realized from IT.schedule, or fail to deliver promised functionality. In combating this problem, proper oversight is critical. Both OMB and federal agencies have key roles and responsibilities for overseeing IT investment management. OMB is responsible for working with agencies to ensure investments are appropriately planned and justified. Additionally, each year, OMB and federal agencies work together to determine how much the government plans to spend on IT projects and how these funds are to be allocated.", "Congress enacted several laws to assist the federal government in better managing IT investments. The three key laws are the Paperwork Reduction Act of 1995, the Clinger-Cohen Act of 1996, and the E-Government Act of 2002:\nThe Paperwork Reduction Act of 1995 specified OMB and agency responsibilities for managing information resources, including the management of IT. Among its provisions, this law established agency responsibility for assessing and managing the risks of major information systems initiatives.and oversee policies, principles, standards, and guidelines for federal agency IT functions, including periodic evaluations of major information systems.\nIt also required that OMB develop\nThe Clinger-Cohen Act of 1996 placed responsibility for managing investments with the heads of agencies and established chief information officers (CIO) to advise and assist agency heads in carrying out this responsibility. Additionally, this law required OMB to establish processes to analyze, track, and evaluate the risks and results of major capital investments in information systems made by federal agencies and report to Congress on the net program performance benefits achieved as a result of these investments.\nThe E-Government Act of 2002 established a federal e-government initiative, which encouraged the use of web-based Internet applications to enhance the access to and delivery of government information and service to citizens, to business partners, to employees, and among agencies at all levels of government. The act also required OMB to report annually to Congress on the status of e- government initiatives. In these reports, OMB is to describe the administration’s use of e-government principles to improve government performance and the delivery of information and services to the public.", "OMB uses the following mechanisms to help it fulfill its required oversight responsibilities of federal IT spending during the annual budget formulation process.\nOMB requires 27 federal departments and agencies to provide information related to their IT investments, including agency IT investment portfolios (called exhibit 53s) and capital asset plans and business cases (called exhibit 300s).\nIn June 2009, OMB publicly deployed the IT Dashboard, which is intended to display near real-time information on the cost, schedule, and performance of all major IT investments. For each major investment, the Dashboard provides performance ratings on cost and schedule, a CIO evaluation, and an overall rating. The CIO evaluation is based on his or her evaluation of the performance of each investment and takes into consideration multiple variables. This evaluation is to be updated when new information becomes available that would affect the assessment of a given investment. The CIO also has the ability to provide written comments regarding the status of each investment. The Dashboard replaced OMB’s Management Watch List and High-Risk List, which were previously used to highlight poorly planned or poorly performing investments on a quarterly basis. As of August 2011, the Dashboard displayed information on the cost, schedule, and performance of 797 major federal IT investments at 27 federal agencies.\nAccording to OMB, the public display of investment data on the IT Dashboard is intended to allow OMB, other oversight bodies, and the general public to hold government agencies accountable for results and progress. In addition, the Dashboard allows users to download exhibit 53 data, which provide details on the more than 7,200 federal IT investments (totaling $78.8 billion in planned spending for fiscal year 2011). Figure 1 shows the number of IT investments and planned spending by federal agency.\nAs we have previously reported, while the IT Dashboard provides IT investment information for 27 federal agencies, it does not include any information about 61 other agencies’ investments. Specifically, it does not include information from 58 independent executive branch agencies (such as the Securities and Exchange Commission, the Central Intelligence Agency, and the Federal Communications Commission) and 3 other agencies (such as the Legal Services Corporation). It also does not include information from the legislative or judicial branch agencies. Accordingly, we recommended that OMB specify which executive branch agencies are included when discussing the annual federal IT investment portfolio. OMB disagreed with this recommendation, stating that the agencies included in the federal IT portfolio are already identified in OMB guidance and on the IT Dashboard. However, we maintained that the recommendation had not been fully addressed because OMB officials frequently refer to the federal IT portfolio without clarifying that it does not include all agencies.", "Despite required roles and responsibilities and OMB’s oversight mechanisms, the federal government spends billions of dollars on poorly performing IT investments, as the following examples illustrate: In April 2008, due to problems identified during testing and cost overruns and schedule slippages, the Secretary of Commerce announced a redesign of the 2010 Census, resulting in a $205 million increase in life-cycle costs.\nIn February 2010, the Defense Integrated Military Human Resources System was canceled after 10 years of development and approximately $850 million spent, due, in part, to a lack of strategic alignment, governance, and requirements management, as well as the overall size and scope of the effort.\nIn July 2010, OMB directed the National Archives and Records Administration (NARA) to halt development of its Electronic Records Archive system at the end of fiscal year 2011 (1 year earlier than planned). OMB cited concerns about the system’s cost, schedule, and performance and directed NARA to better define system functionality and improve strategic planning. Through fiscal year 2010, NARA had spent about $375 million on the system.\nIn January 2011, the Secretary of Homeland Security ended the Secure Border Initiative Network program after spending about $1.5 billion because it did not meet cost-effectiveness and viability standards.\nIn February 2011, the Office of Personnel Management canceled its Retirement Systems Modernization program, after several years of trying to improve the implementation of this investment.the Office of Personnel Management, it spent approximately $231 million on this investment.\nIn March 2011, we reported that while DOD’s Navy Next Generation Enterprise Network investment’s first increment is estimated to cost $50 billion, the program was not well positioned to meet its cost and schedule estimates. As such, we recommended DOD limit further investment until it conducts an interim review to reconsider the selected acquisition approach and addresses its investment management issues. DOD stated that it did not concur with the recommendation to reconsider its acquisition approach, but we maintain that without doing so, DOD cannot be sure it is pursuing the most cost-effective approach.\nAdditionally, as of August 2011, according to the IT Dashboard, 261 of the federal government’s approximately 800 major IT investments— totaling almost $18 billion—are in need of management attention (rated “yellow” to indicate the need for attention or “red” to indicate significant concerns). (See fig. 2.)\nIn recognizing that wasteful spending continues to plague IT investment management, OMB has recently implemented additional efforts to address this problem. These efforts include the following:\nTechStat reviews. In January 2010, the Federal CIO began leading reviews—known as “TechStat” sessions—of selected IT investments involving OMB and agency leadership to increase accountability and transparency and improve performance. OMB officials stated that, as of December 2010, 58 sessions had been held and resulted in improvements to or termination of IT investments with performance problems. For example, the June 2010 TechStat session for NARA’s Electronic Records Archive investment (mentioned above) resulted in the halting of development funding pending the completion of a strategic plan. In addition, OMB has identified 26 additional high-priority IT projects and plans to develop corrective action plans with agencies at future TechStat sessions. According to the former Federal CIO, OMB’s efforts to improve management and oversight of IT investments have resulted in $3 billion in savings.\nIT reform. In December 2010, the Federal CIO issued a 25 Point Implementation Plan to Reform Federal Information Technology Management. This 18-month plan specified five major goals: strengthening program management, streamlining governance and improving accountability, increasing engagement with industry, aligning the acquisition and budget processes with the technology cycle, and applying “light technology” and shared solutions. As part of this plan, OMB outlined actions to, among other things, strengthen agencies’ investment review boards and consolidate federal data centers. The plan stated that OMB will work with Congress to consolidate commodity IT spending (e.g., e-mail, data centers, content management systems, and web infrastructure) under agency CIOs. Further, the plan called for the role of federal agency CIOs to focus more on IT portfolio management.", "In addition to these efforts to improve government spending on IT, avoiding unnecessary duplicative investments is critically important. In February 2002, OMB established the FEA initiative. According to OMB, the FEA is intended to facilitate governmentwide improvement through cross-agency analysis and identification of duplicative investments, gaps, and opportunities for collaboration, interoperability, and integration within and across agency programs. The FEA is composed of five “reference models” describing the federal government’s (1) business (or mission) processes and functions, independent of the agencies that perform them; (2) performance goals and outcome measures; (3) means of service delivery; (4) information and data definitions; and (5) technology standards. Since the fiscal year 2004 budget cycle, OMB has required agencies to categorize their IT investments in their annual exhibit 53s according to primary function and sub-function as identified in the FEA reference models. For fiscal year 2012 submissions, agencies chose from the primary functions listed in table 1.\nIn their fiscal year 2011 submissions, agencies reported the greatest number of IT investments in Information and Technology Management (1,536 investments), followed by Supply Chain Management (777 investments), and Human Resource Management (622 investments). Similarly, planned expenditures on investments were greatest in Information and Technology Management, at about $35.5 billion. Figure 3 depicts, by primary function, the total number of investments within the 27 federal agencies that report to the IT Dashboard.\nAdditionally, agencies were required to choose a sub-function for each investment related to the primary function. These sub-functions are to be selected from the business reference model. Table 2 provides examples of primary functions and their corresponding sub-functions.\nDuring the past several years, we have issued multiple reports and testimonies and made numerous recommendations to OMB and federal agencies to identify and reduce duplication within the federal government’s portfolio of IT investments.\nIn March 2011, we reported an overview of federal programs and functional areas where unnecessary duplication, overlap, or fragmentation existed.agencies, offices, or initiatives had similar or overlapping objectives or provided similar services to the same populations, or where government missions were fragmented across multiple agencies or programs. These areas spanned a range of government missions: agriculture, defense, economic development, energy, general government, health, homeland security, international affairs, and social services. Within and across these missions, the report touched on hundreds of federal programs, including IT programs, affecting virtually all major federal departments and agencies.\nSpecifically, we identified 34 areas where We reported that overlap and fragmentation among government programs or activities could be harbingers of unnecessary duplication. Thus, the reduction or elimination of duplication, overlap, or fragmentation could potentially save billions of tax dollars annually and help agencies provide more efficient and effective services. For example, we reported that, according to OMB, the number of federal data centers (defined as data processing and storage facilities) grew from 432 in 1998 to more than 2,000 in 2010. These data centers often house similar types of equipment and provide similar processing and storage capabilities. These factors have led to concerns associated with the provision of redundant capabilities, the underutilization of resources, and the significant consumption of energy. Operating such a large number of centers places costly demands on the government. In an effort to address these inefficiencies, in February 2010, OMB launched the Federal Data Center Consolidation Initiative to guide federal agencies in consolidating data centers. Specifically, OMB and agencies plan to close over 950 of the more than 2,100 federal data centers by 2015. As of November 2011, agencies reported that a total of 149 data centers have been closed across the federal government. For example, 16 DOD data centers, 3 DOE centers, and 7 DHS centers have been closed.\nIn September 2011, we reported that limitations in OMB’s guidance hindered efforts to identify IT duplication. Specifically, OMB guidance stated that each IT investment needs to be mapped to a single functional category within the FEA to allow for the identification and analysis of potentially duplicative investments across agencies. We noted that this limits OMB’s ability to identify potentially duplicative investments both within and across agencies because similar investments may be organized under different functions. Accordingly, we recommended that OMB revise guidance to federal agencies on categorizing IT investments to ensure that the categorizations are clear and that it allow agencies to choose secondary categories, where applicable, which will aid in identifying potentially duplicative investments. OMB officials generally agreed with this recommendation and stated that they plan to update the FEA reference models in the fall of 2011 to provide additional clarity on how agencies should characterize investments in order to enhance the identification of potentially duplicative investments.\nWe also reported that results of OMB initiatives to identify potentially duplicative investments were mixed and that several federal agencies did not routinely assess their entire IT portfolios to identify and remove or consolidate duplicative systems. Specifically, we said that most of OMB’s recent initiatives have not yet demonstrated results, and several agencies did not routinely assess legacy systems to determine if they are duplicative. As a result, we recommended that OMB require federal agencies to report the steps they take to ensure that their IT investments are not duplicative as part of their annual budget and IT investment submissions. OMB generally agreed with this recommendation.", "Although the Departments of Defense, Energy, and Homeland Security utilize various processes to prevent and reduce investment in duplicative programs and systems, potentially duplicative IT investments exist. Further complicating agencies’ ability to identify and address duplicative investments is miscategorization of investments within agencies. Each of the agencies has recently initiated plans to address many of these investments. DHS’s efforts have resulted in the identification and elimination of duplication, but DOD’s and DOE’s initiatives have not yet led to the elimination or consolidation of duplicative investments or functionality. Until DOD and DOE demonstrate progress on their efforts to identify and eliminate duplicative investments, and correctly categorize investments, it will remain unclear whether they are avoiding investment in unnecessary systems.", "Each of the agencies we reviewed has IT investment management processes in place that are, in part, intended to prevent, identify, and eliminate unnecessary duplicative investments. For example, DOD’s Information Technology Portfolio Management Implementation guide requires the evaluation of existing systems to identify duplication and determine whether to maintain, upgrade, delete, or replace identified systems. Similarly, DOE’s Guide to IT Capital Planning and Investment Control specifies that investment business case summaries should be reviewed for redundancies and opportunities for collaboration. Additionally, according to DHS’s Capital Planning and Investment Control Guide, proposed investments must be reviewed at the department level to determine if the proposed need is, among other things, being fulfilled by another DHS program, or already fulfilled by an existing capability.\nEven with such investment review processes, of the 810 investments we reviewed, we identified 37 potentially duplicative investments at DOD and DOE within three FEA categories (Human Resource Management, Information and Technology Management, and Supply Chain These investments account for about $1.2 billion in total Management).IT spending for fiscal years 2007 through 2012. Specifically, we identified\n31 potentially duplicative investments totaling approximately $1.2 billion at DOD, and\n6 potentially duplicative investments totaling approximately $8 million at DOE.\nThe 37 investments comprise 12 groups of investments that appear to have duplicative purposes based on our analysis of each investment’s description, budget information, and other supporting documentation from agency officials (see table 3). For example, we identified three investments at DOE that were each responsible for managing the back- end infrastructure at three different locations. We also identified four DOD Navy personnel assignment investments—one system for officers, one for enlisted personnel, one for reservists, and a general assignment system—each of which is responsible for managing similar assignment functions. Additionally, the Air Force has five investments that are each responsible for contract management, and within the Navy there are another five contract management investments. Table 3 summarizes the 12 groups of potentially duplicative investments we identified by purpose and agency. (See app. II for details on each of the 37 potentially duplicative investments.)\nWe did not identify any potentially duplicative investments at DHS within our sample; however, DHS has independently identified several duplicative investments and systems. Specifically, DHS officials have identified and, more importantly, reduced duplicative functionality in four investments by consolidating or eliminating certain systems within each of these investments. DHS officials have also identified 38 additional systems that they have determined to be duplicative. For example, officials identified multiple personnel action processing systems that could be consolidated.\nOfficials from the three agencies reported that duplicative investments exist for a number of reasons, including decentralized governance within the departments and a lack of control over contractor facilities. For example, DOE investments for the management of back-end infrastructure are for facilities which DOE oversees but does not control. In addition, DOD officials indicated that a key reason for potential duplication at the Department of the Navy is that it had traditionally used a decentralized IT management approach, which allowed offices to develop systems independent of any other office’s IT needs or acquisitions.\nFurther complicating the agencies’ ability to prevent investment in duplicative systems or programs is the miscategorization of investments. Among the 810 investments we reviewed, we identified 22 investments where the selected agencies assigned incorrect FEA primary functions or Specifically, we identified 13 miscategorized investments sub-functions.at DOD, 4 at DOE, and 5 at DHS. Examples are as follows:\nDOD’s Computer Aided Procurement System was initially categorized within the Information and Technology Management primary function, but DOD agreed that this investment should be classified within the Supply Chain Management primary function.\nDOE’s Environmental Management Headquarters Central Internet Database was initially categorized within the Information and Technology Management primary function, but DOE agreed that this investment could be assigned the Environmental Management primary function and the Environmental Monitoring and Forecasting sub-function.\nDHS’s Federal Emergency Management Agency—Minor Personnel/Training Systems investment was initially categorized within the Employee Performance Management sub-function, but DHS agreed that this investment should be assigned to the Human Resources Development sub-function.\nAgency officials agreed that they had inadvertently miscategorized 15 of the 22 investments we identified. However, proper categorization is necessary in order to analyze and identify duplicative investments, both within and across agencies. Each improper categorization represents a possible missed opportunity to identify and eliminate an unjustified duplicative investment. Until agencies correctly categorize their investments, they cannot be confident that their investments are not duplicative and are justified, and they may continue expending valuable resources developing and maintaining unnecessarily duplicative systems.", "DHS has taken action to improve its processes for identifying and eliminating duplicative investments, which has produced tangible results. Specifically, in 2010 and 2011, the DHS CIO conducted program and portfolio reviews of hundreds of IT investments and systems. DHS evaluated portfolios of investments within its components to avoid investing in systems that are duplicative or overlapping, and to identify and leverage investments across the department. Among other things, this effort contributed to the identification and consolidation of duplicative functionality within four investments. DHS also has plans to further consolidate systems within these investments by 2014, which is expected to produce approximately $41 million in cost savings. The portfolio reviews also contributed to the identification of 38 additional systems that are duplicative. Additionally, the DHS CIO and Chief Human Capital Officer are coordinating to streamline and consolidate the department’s human resources investments. A summary of the investments for which DHS eliminated duplicative functionality and systems is provided in table 4 below.\nDOD has begun taking action to address 29 of the 31 duplicative investments we identified. For example, according to DOD officials, four of the DOD Navy acquisition management investments—two for Naval Sea Systems Command and two for Space and Naval Warfare Systems Command—will be reviewed to determine whether these multiple support systems are necessary. In addition, DOD reported that the Air Force is in the process of developing a single contract writing system to replace the five potentially duplicative investments we have identified. Moreover, the Department of the Navy has implemented an executive oversight board that is chaired by the Navy CIO, and it is now the Navy’s single senior information management and technology policy and governance forum. The Department of the Navy also required all IT expenditures greater than $100,000 to be centrally reviewed and approved by the Navy CIO to ensure that they are not duplicative. Officials reported that these initiatives will include the review of Navy’s 22 potentially duplicative investments that we identified.\nSimilarly, DOE has plans under way to address each of the 6 investments we identified as potentially duplicative. Specifically, DOE officials established working groups that are addressing the two groups of duplicative investments we identified. These working groups are to address records management and back-end infrastructure, and are looking across the department to minimize redundancy in each of these areas. In addition, the CIO stated that DOE has developed a departmental strategy for electronic records management whereby a small number of approved records management applications will be identified for departmentwide use. Moreover, in a broader effort to reduce duplication across the department, in September and October 2011, DOE held technical strategic reviews, known as “TechStrat” sessions, which are aimed at exploring opportunities to consolidate DOE’s commodity IT services, such as e-mail and help desk support, among the various DOE offices. The first two sessions provided opportunities for DOE bureaus to identify and share lessons learned, and established action items to improve DOE’s IT investment portfolio.\nWhile these efforts could eventually yield results, DOD’s and DOE’s initiatives have not yet led to the consolidation or elimination of duplication. For example, while DOD provided us with documented milestones—several of which have passed—for improving the Department of the Navy’s IT investment review processes, officials did not provide us with any examples of duplicative investments that they had consolidated or eliminated. Similarly, while DOE officials have documented time frames for consolidating DOE’s commodity IT services, electronic records management investments, and identity management investments, officials were unable to demonstrate that they have consolidated or eliminated unjustified duplicative investments.\nAdditionally, DOD does not have plans under way to address the remaining 2 of the 31 potentially duplicative investments. DOD officials stated that they do not have plans to address these investments because they do not agree that they are potentially duplicative. However, agency officials were unable to demonstrate that investing in these systems and programs was justified. Table 5 provides more information on the unaddressed potentially duplicative investments at DOD.\nTable 6 summarizes the number of potentially duplicative investments for which Defense and Energy have actions under way, as well as the number of investments that remain unaddressed.\nUntil DOD and DOE demonstrate, through existing transparency mechanisms such as OMB’s IT Dashboard, that they are making progress in identifying and eliminating duplicative investments, it will remain unclear whether they are avoiding investment in unnecessary systems.", "While agencies have various investment review processes in place that are partially designed to avoid investing in systems that are duplicative, we have identified 37 potentially duplicative investments at DOD and DOE. These investments account for about $1.2 billion in total IT spending for fiscal years 2007 through 2012. Given that our review covered 11 percent (810 investments) of the total number of IT investments that agencies report to OMB, it raises questions about how much more potential duplication exists.\nDHS’s recent efforts have resulted in the identification and consolidation of duplicative functionality in several investments and related systems. DOD and DOE have also recently initiated plans to address many investments that we identified, but these recent initiatives have not yet resulted in the consolidation or elimination of duplicative investments or functionality. Further complicating agencies’ ability to prevent, identify, and eliminate duplicative investments is miscategorization of investments within agencies. Without demonstrating the progress of efforts to identity and eliminate duplicative investments, DOD and DOE will be unable to provide assurance that they are avoiding investment in unnecessary systems. Similarly, until DOD, DOE, and DHS, correctly categorize their investments, they are limiting their ability to identify opportunities to consolidate or eliminate duplicative investments.", "To better ensure agencies avoid investing in duplicative investments, we recommend that the Secretary of Defense direct the CIO to take the following two actions: utilize existing transparency mechanisms, such as the IT Dashboard, to report on the results of the department’s efforts to identify and eliminate, where appropriate, each potentially duplicative investment we have identified, as well as any other duplicative investments; and correct the miscategorizations for the DOD investments we identified and ensure that investments are correctly categorized in agency submissions.\nWe recommend that the Secretary of Energy direct the CIO to take the following two actions: utilize existing transparency mechanisms, such as the IT Dashboard, to report on the results of the department’s efforts to identify and eliminate, where appropriate, each potentially duplicative investment we have identified, as well as any other duplicative investments; and correct the miscategorizations for the DOE investments we identified and ensure that investments are correctly categorized in agency submissions.\nWe recommend that the Secretary of Homeland Security direct the CIO to take the following action: correct the miscategorizations for the DHS investments we identified and ensure that investments are correctly categorized in agency submissions.", "We provided a draft of our report to the three departments selected for our review and to OMB. In commenting on the draft, DOD and DHS generally concurred with our recommendations. DOE generally agreed with our first recommendation and disagreed with parts of our second recommendation. In addition, OMB provided oral technical comments that we incorporated, where appropriate. Each department’s comments are discussed in more detail below, and the written comments are reprinted in appendixes IV, V, and VI.\nDOD’s Deputy CIO for Information Management, Integration, and Technology within the Office of the Assistant Secretary of Defense for Networks and Information Integration provided written comments, which stated that the department agreed with both of our recommendations. DOD also provided technical comments, which we incorporated, where appropriate.\nThe Director of DHS’s Departmental GAO/Office of Inspector General Liaison Office provided written comments, which stated that the department agreed with our recommendation to correct the miscategorized investments and ensure that investments are correctly categorized. Additionally, DHS provided documentation showing that the department had recently corrected the miscategorizations in response to our recommendation. The department also provided technical comments, which we incorporated as appropriate.\nThe DOE CIO provided written comments in which the department generally agreed with the first recommendation and disagreed with parts of the second recommendation. Regarding our first recommendation, to identify and eliminate potentially duplicative investments as appropriate, DOE generally agreed with the recommendation and stated that the Office of the CIO is committed to increasing its IT investment oversight. The department added that for the non-major investments that GAO identified as being potentially duplicative, it will update GAO on its progress through means other than the IT Dashboard, since non-major investments are not individually tracked on the Dashboard. However, DOE also indicated that it does not believe certain investments that we identified are potentially duplicative. Specifically, DOE did not agree that the two card issuance and maintenance, and three logical access control investments were potentially duplicative. Rather, it stated that the investments in these groups were listed individually on the exhibit 53 for reporting purposes, in order to show how the funding was being distributed at various locations. According to DOE, these costs were for the labor involved in deploying the technology, and could not be avoided given the separate geographical locations. We reviewed this additional information, and subsequently removed these five investments from our list of potentially duplicative investments.\nRegarding our second recommendation to correct miscategorizations and ensure that investments are correctly categorized, DOE disagreed with parts of this recommendation. Specifically, DOE agreed that two of the four investments could be recategorized. However, it disagreed that the two training center investments should be recategorized, and stated that they should continue to be categorized under the Employee Performance Management FEA sub-function because of how they are funded. However, OMB guidance defines Employee Performance Management as activities that enable managers to make distinctions in performance and link individual performance to agency goals and mission accomplishment. In other words, this sub-function involves enabling managers to assess the performance of personnel—and does not involve providing training to personnel. In contrast, the Human Resources Development sub-function—which OMB guidance defines as administering, delivering, and designing employee development programs—is a more appropriate category.position. Additionally, DOE stated that we identified only 4 miscategorized investments from its total population of 876 investments. However, this implies we reviewed all 876 investments. As stated in our report, we looked at 19 percent of DOE’s reported IT investment population, or 167 investments, and identified 4 miscategorized investments from that subset.\nTherefore, we maintain our In addition, DOE stated that in our September 2011 report we highlighted limitations in OMB’s guidance regarding proper categorization of investments and further stated that, while OMB agreed to make improvements to the guidance, agencies and OMB did not have time to implement the changes before our new audit began. In our September report, we noted that, under OMB’s guidance, agencies were unable to designate a secondary category, in addition to the primary category for each of the investments. However, in this report, our concern is with the accuracy of agencies’ selections of the primary categories for certain investments. These are two independent concerns with investment categorization—both of which need to be addressed and are not necessarily dependent on each other. In other words, regardless of whether agencies are able to designate a secondary category, in addition to a primary category, it is still critically important that the primary category is accurate.\nDOE made several additional comments that we address below:\nThe department stated that it has implemented various investment review processes to help identify potentially duplicative investments and to manage these investments. We acknowledge in the report that DOE has such processes in place, and we provide examples of the department’s existing IT investment management processes that are, in part, intended to prevent, identify, and eliminate duplicative investments.\nDOE stated that our draft report mentions the Federal Data Center Consolidation Initiative but that we did not specifically discuss DOE’s accomplishment in this area. In response, we added the number of federal data centers that DOE reportedly closed.\nThe department stated that prior to the GAO audit, DOE officials realized potential duplicative investments may exist in back-end infrastructure and that a working group has been meeting regularly to identify duplicative investments and investigate the possibility of consolidating. We agree with this statement, and we acknowledge the working group’s efforts in the report. However, as we report, this initiative has not yet resulted in the consolidation or elimination of duplicative investments or functionality.\nAccording to DOE, it had developed a departmental strategy for electronic records management whereby a small number of approved records management applications will be identified for department- wide use. It added that the three records management investments cited in our report will remain in place while the departmental strategy is being implemented. In response to this comment, we updated the report to acknowledge that the CIO stated that DOE has developed a departmental strategy, in addition to establishing an electronic records management working group. However, similar to the back-end infrastructure, these efforts have not yet resulted in the consolidation or elimination of duplicative investments or functionality, and thus, DOE may continue investing in unnecessary systems until such actions are taken.\nLastly, DOE noted that in our report we discuss the Department’s TechStrat sessions related to commodity IT services but did not discuss the TechStrat sessions conducted by its Office of Environmental Management on its major investments. We did not add this activity to the report, because supporting documentation was not provided to indicate that this session was conducted to specifically reduce duplication, rather than to review major investments with performance problems.\nFinally, OMB’s Chief Architect provided comments regarding the office’s efforts to oversee IT investments, which we incorporated, as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 11 days from the report date. At that time, we will send copies of this report to the appropriate congressional committees; the Secretaries of Defense, Energy, and Homeland Security; the Director of the Office of Management and Budget; and other interested parties. In addition, the report also will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff members have any questions on the matters discussed in this report, please contact me at (202) 512-9286 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix VII.", "Our objective was to identify potentially duplicative information technology (IT) investments at selected agencies and actions these agencies are taking to address them. To select agencies for review, we used the Office of Management and Budget’s (OMB) fiscal year 2011 exhibit 53. Specifically, we downloaded this data from OMB’s IT Dashboard and used it to identify the agencies and their number of IT investments as reported on the Dashboard. We used this analysis to select for review three of the agencies with the highest number of IT investments—the Departments of Defense (DOD), Energy (DOE), and Homeland Security (DHS).\nTo identify potentially duplicative investments, we further narrowed our analysis of the exhibit 53 data to the largest Federal Enterprise Architecture (FEA) primary functions, by number of investments. Within each of the selected primary functions, we selected the two sub-functions with the most investments. Table 7 identifies the FEA primary functions and FEA sub-functions used to select the investments for review.\nThis resulted in a nongeneralizable sample of 810 IT investments, which is 11 percent of the total number of IT investments that agencies report to OMB through the IT Dashboard (810 of 7,227).The investments we reviewed represent approximately 24 percent of DOD’s IT portfolio in terms of number of investments that it reports to the Dashboard, 19 percent of DOE’s, and 16 percent of DHS’s. To determine the reliability of the data on the IT Dashboard, we reviewed recent GAO reports that identified issues with the accuracy and reliability of agency data on the IT We determined that the data were sufficiently reliable for the Dashboard.purpose of this report, which was to identify selected investments to include in our review.\nWe then reviewed the name and narrative description of each investment’s purpose to identify similarities among related investments within each agency (we did not review investments across agencies).\nThis formed the basis of establishing groupings of similar investments. We discussed the groupings with each of the selected agencies, and we obtained further information from agency officials. We also reviewed and assessed agencies’ rationales for having multiple systems that perform similar functions. Additionally, when analyzing each investment’s description, we compared each investment’s designated FEA primary category and sub-category to OMB’s definitions for each FEA primary category and sub-category and determined whether the investment was placed in the correct FEA category. We obtained additional information from agency officials about these discrepancies.\nTo identify the actions agencies have taken to address the potentially duplicative investments we identified, we reviewed agency documentation, such as agency memos and working group charters, and interviewed officials. We also reviewed documentation and interviewed agency officials to identify what investments were consolidated, eliminated, or modified to decrease duplication and the estimated cost savings (if available) associated with these actions.\nWe conducted this performance audit from June 2011 to February 2012 in accordance with generally accepted government auditing standards. Those standards required that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective.", "The tables in this appendix provide information on the 37 investments that we identified as potentially duplicative within the three selected FEA functions (Human Resource Management, Information and Technology Management, and Supply Chain Management). Specifically, we identified 31 potentially duplicative IT investments at DOD and 6 at DOE. Highlighted investments indicate the instances in which the agency does not currently have plans under way to address the potential duplication.", "The tables in this appendix provide information on the 22 investments that we identified as incorrectly categorized by the selected agencies according to OMB’s FEA. Specifically, we identified 13 miscategorized investments at DOD (2 within Air Force, 2 within Army, 3 within Navy, and 6 enterprisewide), 4 at DOE, and 5 at DHS. Highlighted investments indicate the seven instances in which the agency did not agree that the investments were miscategorized.", "", "", "", "", "", "In addition to the individual named above, the following staff made key contributions to this report: Shannin O’Neill, Assistant Director; Cortland Bradford; Javier Irizarry; Lee McCracken; and Kevin Walsh." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "", "", "", "h2_full", "h3_full h1_title h0_title", "h0_full", "h1_full", "h0_full h3_full h1_full", "h2_full", "h3_full h2_full", "h3_full h2_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How effective are DOD and DOE investment review processes?", "How do these duplicates affect IT spending?", "What is an example of duplication?", "How prevalent is duplication at DHS?", "How has DHS improved its processes for identifying duplicative investments?", "How have DOD and DOE done the same?", "To what extent have these efforts been successful?", "How does this limit the effectiveness of these efforts?", "How large is federal IT spending on information technology?", "How has GAO previously reviewed IT issues?", "What was GAO asked to review?", "How did GAO collect data for this report?", "What did GAO recommend?", "How did DOD and DHS respond?", "How did DOE respond?", "To what extent did this change GAO's stance?" ], "summary": [ "Although the Departments of Defense (DOD) and Energy (DOE) use various investment review processes to identify duplicative investments, GAO found that 37 of its sample of 810 investments were potentially duplicative.", "These investments account for about $1.2 billion in total information technology (IT) spending for fiscal years 2007 through 2012.", "For example, GAO identified four DOD Navy personnel assignment investments—one system for officers, one for enlisted personnel, one for reservists, and a general assignment system—each of which is responsible for managing similar functions.", "While GAO did not identify any potentially duplicative investments at the Department of Homeland Security (DHS) within its sample, DHS officials have independently identified several duplicative investments and systems.", "For example, through reviewing portfolios of IT investments, DHS has identified much, and eliminated some, duplicative functionality in certain investments.", "Additionally, DOD and DOE have recently initiated plans to address potential duplication in many of the investments GAO identified, which include consolidating or eliminating systems.", "While these efforts may eventually yield results, they have not yet led to the elimination of duplication. For example, while DOD and DOE have specific plans to improve their IT investment review processes, officials did not provide examples of duplicative investments that had been consolidated or eliminated.", "Until DOD and DOE demonstrate progress on these efforts, the agencies will be unable to provide assurance that they are avoiding investment in unnecessary systems.", "The federal government spends billions of dollars on information technology (IT) each year, with such investments accounting for at least $79 billion in fiscal year 2011.", "GAO has previously reported on initiatives under way to address potentially duplicative IT investments—i.e., investments providing similar functions across the government.", "GAO was asked to review the extent to which potentially duplicative IT investments exist within three categories at selected agencies (the Departments of Defense (DOD), Energy (DOE), and Homeland Security (DHS)) and actions these agencies are taking to address them.", "To accomplish this, GAO analyzed budget data on agency IT investments, reviewed agency information related to efforts to address duplication, and interviewed agency officials.", "GAO recommends that DOD and DOE report on the progress of efforts to identify and eliminate duplication, where appropriate. GAO is also recommending that DOD, DOE, and DHS correct misclassifications of investments.", "DOD and DHS agreed with the recommendations.", "DOE generally agreed with the first recommendation, but disagreed with parts of the second recommendation regarding the number of misclassified investments.", "However, GAO believes the number is accurate." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 0, 2, -1, 0, 0, 2, -1, 0, 0, 2 ], "summary_paragraph_index": [ 1, 1, 1, 1, 3, 3, 3, 3, 0, 0, 0, 0, 4, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Development of Modern Campaign Finance Law", "Policy Background", "The Federal Election Campaign Act (FECA)", "The Bipartisan Campaign Reform Act (BCRA) and Beyond", "Major Issues: What Has Changed Post-Citizens United and What Has Not", "What Has Changed", "Unlimited Corporate and Union Spending on Independent Expenditures and Electioneering Communications", "Unlimited Contributions to Independent-Expenditure-Only Political Action Committees (Super PACs)", "Unlimited Contributions to Certain Nonconnected Political Action Committees (PACs)", "FEC Rules Implementing Parts of Citizens United", "Aggregate Caps on Individual Campaign Contributions", "Higher Contribution Limits and New Accounts for Political Party Committees", "Some Public Financing Issues", "FECA Editorial Reclassification", "Electronic Filing of Senate Campaign Finance Reports", "What Has Not Changed", "Federal Ban on Corporate and Union Treasury Contributions", "Federal Ban on Soft Money Contributions to Political Parties", "Some Contribution Limits Remain Intact", "Reporting Requirements", "Potential Policy Considerations and Emerging Issues for Congress", "Recent Legislative Activity", "115th Congress", "Foreign Money in U.S. Elections", "FEC Advisory Opinions on Funding for Certain Security and Child Care Expenses", "Regulation and Enforcement by the FEC or Through Other Areas of Policy and Law", "IRS Notice of Proposed Rulemaking Concerning Certain 501(c) Entities", "Litigation About Donor Disclosure in Independent Spending", "Federal Communications Commission Rules on Political Advertising Disclosure", "Revisiting Disclosure Requirements", "Disclosure and Disclaimers in Online and Digital Communications", "Revisiting Contribution Limits", "Revisiting Coordination Requirements", "Conclusion" ], "paragraphs": [ "", "Federal law has regulated money in elections for more than a century. Concerns about limiting the potential for corruption and informing voters have been at the heart of that law and related regulations and judicial decisions . Restrictions on private money in campaigns, particularly large contributions, have been a common theme throughout the history of federal campaign finance law. The roles of corporations, unions, interest groups, and private funding from individuals have attracted consistent regulatory attention. Congress has also required that certain information about campaigns' financial transactions be made public. Collectively, three principles embodied in this regulatory tradition—limits on sources of funds, limits on contributions, and disclosure of information about these funds—constitute ongoing themes in federal campaign finance policy.\nThroughout most of the 20 th century, campaign finance policy was marked by broad legislation enacted sporadically. Major legislative action on campaign finance issues remains rare. Since the 1990s, however, momentum on federal campaign finance policy, including regulatory and judicial action, has arguably increased. Congress last enacted major campaign finance legislation in 2002. The Bipartisan Campaign Reform Act (BCRA) largely banned unregulated soft money in federal elections and restricted funding sources for pre-election broadcast advertising known as electioneering communications . As BCRA was implemented, regulatory developments at the Federal Election Commission (FEC), and some court cases, stirred controversy and renewed popular and congressional attention to campaign finance issues. Since BCRA, Congress has also continued to explore legislative options and has made comparatively minor amendments to the nation's campaign finance law. The most notable recent statutory changes occurred in 2014, when Congress eliminated public financing for presidential nominating conventions and increased limits for some contributions to political parties.\nSome of the most recent notable campaign finance developments beyond Congress have occurred at the Supreme Court. The 2010 Citizens United ruling spurred substantial legislative action during the 111 th Congress and continued interest during subsequent Congresses. The ruling was, however, only the latest—albeit perhaps the most monumental—shift in federal campaign finance policy to occur in recent years. In another 2010 decision, SpeechNow.org v. Federal Election Commission , the U.S. Court of Appeals for the District of Columbia held that contributions to political action committees (PACs) that make only independent expenditures cannot be limited—a development that led to formation of \"super PACs.\"\nThis report is intended to provide an accessible overview of major policy issues facing Congress. Citations to other CRS products, which provide additional information, appear where relevant. The report discusses selected litigation to demonstrate how those events have changed the campaign finance landscape and affected the policy issues that may confront Congress, but it is not a constitutional or legal analysis. As in the past, this version of the report contains both additions of new material and deletions of old material compared with previous versions. This update emphasizes those topics that appear to be most relevant for Congress, while also providing historical background that is broadly applicable. This report will be updated occasionally as events warrant.", "", "Dozens or hundreds of campaign finance bills have been introduced in each Congress since the 1970s. Nonetheless, major changes in campaign finance law have been rare. A generation passed between the Federal Election Campaign Act (FECA) and BCRA, the two most prominent campaign finance statutes of the past 50 years. Federal courts and the FEC played active roles in interpreting and implementing both statutes and others. Over time and in all facets of the policy process, anti-corruption themes have been consistently evident. Specifically, federal campaign finance law seeks to limit corruption or apparent corruption in the lawmaking process that might result from monetary contributions. Campaign finance law also seeks to inform voters about sources and amounts of contributions. In general, Congress has attempted to limit potential corruption and increase voter information through two major policy approaches\nlimiting sources and amounts of financial contributions, and requiring disclosure about contributions and expenditures.\nAnother hallmark of the nation's campaign finance policy concerns spending restrictions. Congress has occasionally placed restrictions on the amount candidates can spend, as it did initially through FECA. Today, candidates and political committees can generally spend unlimited amounts on their campaigns, as long as those funds are not coordinated with other parties or candidates.", "Modern campaign finance law was largely shaped in the 1970s, particularly through FECA. First enacted in 1971 and substantially amended in 1974, 1976, and 1979, FECA remains the foundation of the nation's campaign finance law. As originally enacted, FECA subsumed previous campaign finance statutes, such as the 1925 Corrupt Practices Act, which, by the 1970s, were largely regarded as ineffective, antiquated, or both. The 1971 FECA principally mandated reporting requirements similar to those in place today, such as quarterly disclosure of a political committee's receipts and expenditures. Subsequent amendments to FECA played a major role in shaping campaign finance policy as it is understood today. In brief\nAmong other requirements, the 1974 amendments, enacted in response to the Watergate scandal, placed contribution and spending limits on campaigns. The 1974 amendments also established the FEC. After the 1974 amendments were enacted, the first in a series of prominent legal challenges (most of which are beyond the scope of this report) came before the Supreme Court of the United States. In its landmark Buckley v . Valeo (1976) ruling, the Court declared mandatory spending limits unconstitutional (except for publicly financed presidential candidates) and invalidated the original appointment structure for the FEC. Congress responded to Buckley through the 1976 FECA amendments, which reconstituted the FEC, established new contribution limits, and addressed various PAC and presidential public financing issues. The 1979 amendments simplified reporting requirements for some political committees and individuals.\nTo summarize, the 1970s were devoted primarily to establishing and testing limits on contributions and expenditures, creating a disclosure regime, and constructing the FEC to administer the nation's campaign finance laws.\nDespite minor amendments, FECA remained essentially uninterrupted for the next 20 years. Although there were relatively narrow legislative changes to FECA and other statutes, such as the 1986 repeal of tax credits for political contributions, much of the debate during the 1980s and early 1990s focused on the role of interest groups, especially PACs.", "By the 1990s, attention began to shift to perceived loopholes in FECA. Two issues—soft money and issue advocacy (issue advertising)—were especially prominent. Soft money is a term of art referring to funds generally perceived to influence elections but not regulated by campaign finance law. At the federal level before BCRA, soft money came principally in the form of large contributions from otherwise prohibited sources, and went to party committees for \"party-building\" activities that indirectly supported elections. Similarly, issue advocacy traditionally fell outside FECA regulation because these advertisements praised or criticized a federal candidate—often by urging voters to contact the candidate—but did not explicitly call for election or defeat of the candidate (which would be express advocacy ).\nIn response to these and other concerns, BCRA specified several reforms. Among other provisions, the act banned national parties, federal candidates, and officeholders from raising soft money in federal elections; increased most contribution limits; and placed additional restrictions on pre-election issue advocacy. Specifically, the act's electioneering communications provision prohibited corporations and unions from using their treasury funds to air broadcast ads referring to clearly identified federal candidates within 60 days of a general election or 30 days of a primary election or caucus.\nAfter Congress enacted BCRA, momentum on federal campaign finance policy issues arguably shifted to the FEC and the courts. Implementing and interpreting BCRA were especially prominent issues. Noteworthy post-BCRA events include the following:\nThe Supreme Court upheld most of BCRA's provisions in a 2003 facial challenge ( McConnell v. Federal Election Commission ). Over time, the Court held aspects of BCRA unconstitutional as applied to specific circumstances. These included a 2008 ruling related to additional fundraising permitted for congressional candidates facing self-financed opponents (the \"Millionaire's Amendment,\" Davis v. Federal Election Commission ) and a 2007 ruling on the electioneering communication provision's restrictions on advertising by a 501(c)(4) advocacy organization ( Wisconsin Right to Life v. Federal Election Commission ). Since 2002, the FEC has undertaken several rulemakings related to BCRA and other topics. Complicated subject matter, protracted debate among commissioners, and litigation have made some rulemakings lengthy and controversial. Congress enacted some additional amendments to campaign finance law since BCRA. The 2007 Honest Leadership and Open Government Act (HLOGA) placed new disclosure requirements on lobbyists' campaign contributions (certain bundled contributions) and restricted campaign travel aboard private aircraft. In 2014, as discussed below, Congress raised some limits for contributions to political parties.", "The following discussion highlights those topics that appear to be enduring and significant in the current policy environment. The discussion begins with changes directly affected by Citizens United because those developments most fundamentally altered the campaign finance landscape.", "", "In January 2010, the Supreme Court issued a 5-4 decision in Citizens United v. Federal Election Commission . In brief, the opinion invalidated FECA's prohibitions on corporate and union treasury funding of independent expenditures and electioneering communications. As a consequence of Citizens United , corporations and unions are free to use their treasury funds to air political advertisements and make related purchases explicitly calling for election or defeat of federal or state candidates ( independent expenditures ) or advertisements that refer to those candidates during pre-election periods, but do not necessarily explicitly call for their election or defeat ( electioneering communications ). Previously, such advertising would generally have had to be financed through voluntary contributions raised by PACs affiliated with unions or corporations.\nDISCLOSE Act Consideration Following Citizens United . Since Citizens United , the House and Senate have considered various legislation designed to increase public availability of information ( disclosure ) about corporate and union spending. Particularly in the immediate aftermath of the decision, during the 111 th Congress, most congressional attention responding to the ruling focused on the DISCLOSE Act ( H.R. 5175 ; S. 3295 ; S. 3628 ). The House of Representatives passed H.R. 5175 , with amendments, on June 24, 2010, by a 219-206 vote. By a 57-41 vote, the Senate declined to invoke cloture on companion bill S. 3628 on July 27, 2010. A second cloture vote failed (59-39) on September 23, 2010. No additional action on the bill occurred during the 111 th Congress.\nThis period during the 111 th Congress marked the most substantial legislative progress that the DISCLOSE Act has made to date. Versions of the bill were introduced in both chambers in subsequent Congresses, but none advanced to floor consideration in either chamber. In the 112 th Congress, the Senate debated a motion to proceed to the measure in July 2012 but declined (by a 53-45 vote) to invoke cloture. In the 113 th Congress, the Senate Rules and Administration Committee held a hearing on a version of the bill, S. 2516 . The 114 th and 115 th Congresses considered the DISCLOSE Act again, but no substantial legislative activity occurred.", "On March 26, 2010, the U.S. Court of Appeals for the District of Columbia held in SpeechNow.org v. Federal Election Commission that contributions to PACs that make only independent expenditures—but not contributions—could not be constitutionally limited. As a result, these entities, commonly called super PACs , may accept previously prohibited amounts and sources of funds, including large corporate, union, or individual contributions used to advocate for election or defeat of federal candidates. Existing reporting requirements for PACs apply to super PACs, meaning that contributions and expenditures must be disclosed to the FEC. Additional discussion of super PACs appears in another CRS product.", "As the ramifications of Citizens United and SpeechNow continued to unfold, other forms of unlimited fundraising were also permitted. In October 2011, the FEC announced that, in response to an agreement reached in a case brought after SpeechNow ( Carey v. FEC ), the agency would permit nonconnected PACs—those that are unaffiliated with corporations or unions—to accept unlimited contributions for use in independent expenditures. The agency directed PACs choosing to do so to keep the independent expenditure contributions in a separate bank account from the one used to make contributions to federal candidates. As such, nonconnected PACs that want to raise unlimited sums for independent expenditures may create a separate bank account and meet additional reporting obligations rather than forming a separate super PAC. Super PACs have, nonetheless, continued to be an important force in American politics because only some traditional PACs would qualify for the Carey exemption to fundraising limits.", "Implementing Citizens United and SpeechNow fell to the FEC. The commission issued advisory opinions (AOs) within a few months of the rulings recognizing corporate independent expenditures and super PACs. Afterward, some corporations, unions, and other organizations began making previously prohibited expenditures or raising previously prohibited funds for electioneering communications or independent expenditures.\nDespite progress on post- Citizens United AOs, agreement on final rules took years. A December 2011 Notice of Proposed Rulemaking (NRPM) posing questions about what form post- Citizens United rules should take remained open until late 2014, reflecting an apparent stalemate over the scope of the agency's Citizens United response. In October 2014, the commission approved rules essentially to remove portions of existing regulations that Citizens United had invalidated, such as spending prohibitions on corporate and union treasury funds. The 2014 rules did not require additional disclosure surrounding independent spending, which some commenters had urged, but which others argued was beyond the agency's purview.", "On April 2, 2014, the Supreme Court invalidated aggregate contribution limits in McCutcheon v. FEC . \"Base\" limits capping the amounts that donors may give to individual candidates still apply. For 2013-2014—pre- McCutcheon —individual contributions could total no more than $123,200. Of that amount, $48,600 could go to candidates, with the remaining $74,600 to parties and PACs. Following McCutcheon , individuals may contribute to as many candidates as they wish provided that they adhere to the base contribution limits (e.g., $2,700 per-candidate, per-election for the 2018 election cycle). Additional discussion appears in another CRS product.", "For the first time since enacting BCRA in 2002, Congress raised the statutory limit on some campaign contributions in December 2014. Specifically, the FY2015 omnibus appropriations law, P.L. 113-235 , increased contribution limits to national political party committees. Most prominently, these party committees include the Democratic National Committee (DNC), Democratic Congressional Campaign Committee (DCCC), Democratic Senatorial Campaign Committee (DSCC), Republican National Committee (RNC), National Republican Congressional Committee (NRCC), and the National Republican Senatorial Committee (NRSC). The new law also permits these committees to establish new accounts, each with separate contribution limits, to support party conventions, facilities, and recounts or other legal matters.\nUnder inflation adjustments announced in February 2017, individuals could contribute at least $813,600 to a national party committee annually in 2017-2018. Political action committees (PACs) may also make larger contributions to parties. For multicandidate PACs—the most common type of PAC—contributions to a national party increased from $45,000 to at least $360,000 annually. Unlike limits for individual contributions, those for PACs are not adjusted for inflation. Additional detail appears in another CRS product.", "Two notable public financing changes have occurred since 2010, although neither is directly related to Citizens United. Most relevant for federal campaign finance policy, P.L. 113-94 , enacted in April 2014, terminated public financing for presidential nominating conventions. The 2016 conventions were the first since 1972 funded entirely with private money. Additional discussion appears in other CRS products.\nThe second major development occurred in 2011 and primarily affects state-level candidates but also has implications for federal policy options. On June 27, 2011, the Supreme Court issued a 5-4 opinion in the consolidated case Arizona Free Enterprise Club's Freedom Club PAC et al. v. Bennett and McComish v. Bennett . The decision invalidated portions of Arizona's public financing program for state-level candidates. The majority opinion, authored by Chief Justice Roberts, held that the state's use of matching funds (also called trigger funds, rescue funds , or escape hatch funds ) unconstitutionally burdened privately financed candidates' free speech and did not meet a compelling state interest. The decision has been most relevant for state-level public financing programs, as a similar matching fund system does not operate at the federal level. However, the decision also appears to preclude rescue funds in future federal proposals to restructure the existing presidential public financing program or create a congressional public financing program.", "The Office of Law Revision Counsel, which maintains the U.S. Code , moved FECA and other portions of federal election law to a new Title 52 of the U.S. Code in September 2014. Previously, FECA and most other relevant campaign finance law were housed in Title 2 of the U.S. Code . This editorial change does not affect the content of the statutes. Nonetheless, it is a major change for those who need to search or cite federal election law. Unless otherwise noted, FECA citations throughout this report have been changed to reflect the new Title 52 location.", "Congress amended FECA in an FY2019 appropriations bill to require Senate political committees to file their campaign finance reports electronically. H.R. 5895 ( P.L. 115-244 ) amends FECA to change the place of filing for Senate campaign finance reports from the Secretary of the Senate to the FEC. The text does not require electronic filing per se. However, per FECA, all political committee reports filed with the commission (except for political committees with less than $50,000 of annual activity) must be filed electronically. Therefore, changing the place of filing to the FEC changes both the place and method of filing.", "", "Corporations and unions are still banned from making contributions in federal elections. PACs affiliated with, but legally separate from, those corporations and unions may contribute to candidates, parties, and other PACs. As noted elsewhere in this report, corporations and unions may use their treasury funds to make electioneering communications, independent expenditures, or both, but this spending is not considered a contribution under FECA.", "The prohibition on using soft money in federal elections remains in effect. This includes prohibiting the pre-BCRA practice of large, generally unregulated contributions to national party committees for generic \"party building\" activities.\nAs noted elsewhere in this report, in December 2014, Congress enacted legislation, which President Obama signed ( P.L. 113-235 ), permitting far larger contributions to political parties than had been permitted previously. These funds are not soft money, in that they are subject to contribution limits and other FECA requirements (e.g., disclosure). Nonetheless, some might contend that the spirit of these contributions resembles soft money. Others contend that the increased limits allow parties to compete with newly empowered groups, such as super PACs, that are not subject to contribution limits.", "Pre-existing base limits on contributions to campaigns, parties, and PACs generally remain in effect. Despite Citizens United's implications for independent expenditures and electioneering communications, the ruling did not affect the prohibition on corporate and union treasury contributions in federal campaigns. As noted above, SpeechNow permitted unlimited contributions to independent-expenditure-only PACs ( super PACs) . The FEC has not issued rules regarding super PACs per se. In July 2011 the commission issued an advisory opinion stating that federal candidates (including officeholders) and party officials could solicit funds for super PACs, but that those solicitations were subject to the limits established in FECA and discussed below. Also as noted elsewhere in this report, the FEC announced in October 2011, per an agreement reached in Carey v. FEC , that nonconnected PACs would be permitted to raise unlimited amounts for independent expenditures if those funds are kept in a separate bank account.\nAlthough major contribution limits remain in place, as noted above, some party contribution limits have increased. More consequentially, post- McCutcheon aggregate contribution limits no longer apply. Therefore, although individuals were, for example, still prohibited from contributing more than $2,700 per candidate, per election during the 2018 cycle, the total amount of such giving is no longer capped. Table 1 below and the table notes provide additional information, as do other CRS products. The FEC announced 2018-cycle limits in February 2017.", "Other recent developments notwithstanding, disclosure requirements enacted in FECA and BCRA remain intact. In general, political committees must regularly file reports with the FEC providing information about\nreceipts and expenditures, particularly those exceeding an aggregate of $200; the identity of those making contributions of more than $200, or receiving more than $200, in campaign expenditures per election cycle; and the purpose of expenses.\nThose making independent expenditures or electioneering communications, such as party committees and PACs, have additional reporting obligations. Among other requirements\nIndependent expenditures aggregating at least $10,000 must be reported to the FEC within 48 hours; 24-hour reports for independent expenditures of at least $1,000 must be made during periods immediately preceding elections. The existing disclosure requirements concerning electioneering communications mandate 24-hour reporting of communications aggregating at least $10,000. Donor information must be included for those who designated at least $200 toward the independent expenditure, or $1,000 for electioneering communications. If 501(c) or 527 organizations make independent expenditures or electioneering communications, those activities would be reported to the FEC.", "", "", "As explained in the \" What Has Changed \" section of this report, the 115 th Congress changed the filing format for Senate political committees. The 115 th Congress has not otherwise substantially altered campaign finance law. As with other recent Congresses, provisions in enacted appropriations measures (including the electronic-filing provision) also affected campaign finance policy or law. Congress also held related oversight hearings. Additional detail appears below.\nOn February 7, 2017, the Committee on House Administration ordered H.R. 133 reported favorably. The bill would terminate the presidential public financing program. Remaining amounts in the Presidential Election Campaign Fund (PECF) would be transferred to a pediatric research fund to which previously eliminated party-convention funds were transferred under P.L. 113-94 , and to the general fund of the U.S. Treasury for deficit reduction. Additional information appears in another CRS product. Also on February 7, 2017, the Committee on House Administration ordered H.R. 634 reported favorably. The bill would terminate the Election Assistance Commission and transfer some election administration functions back to the Federal Election Commission (FEC). In addition to providing appropriations for the Federal Election Commission, the language contained in consolidated appropriations legislation enacted during the 115 th Congress (see, for example, P.L. 115-31 ; P.L. 115-141 ) continued the prohibition on requiring reporting certain political contributions or expenditures as a condition of the government-contracting process, and on requiring campaign finance disclosure to the Securities and Exchange Commission. As of this writing, four of six commissioners remain at the Federal Election Commission. One nomination occurred during the 115 th Congress. The 115 th Congress occasionally addressed issues related to campaign finance in legislative or oversight hearings. In particular, these included attention to foreign influence in U.S. elections and disclaimers in online communications.\nThe 114 th Congress enacted no major changes to campaign finance law.", "The possibility of foreign money affecting U.S. campaigns emerged as a component of some congressional hearings and agency activity beginning in the summer and fall of 2016. FECA prohibits foreign nationals from making contributions, or giving other things of value, or making expenditures in U.S. federal, state, or local elections. Some Members of Congress and Federal Election Commissioners have raised questions about whether prohibited foreign funds could have influenced recent elections, whether additional legislative or regulatory safeguards are necessary to protect future elections, or both. Some Members of Congress also raised the issue at various oversight hearings.\nIn September 2018, the FEC reported to congressional appropriators about the agency's enforcement of the FECA ban on foreign funds. Congress required the report in joint explanatory language accompanying the FY2018 Financial Services and General Government portion of the omnibus appropriations law ( H.R. 1625 ; P.L. 115-141 ). The report summarized commission processes for identifying possible foreign funds and enforcing the existing FECA ban; it did not propose additional action.", "FECA prohibits \"personal use\" of campaign funds. In practice, this means that campaigns may not use funds to pay for expenses that would exist without the campaign (the \"irrespective test\"). Recently, through advisory opinions (AOs), the FEC has permitted using campaign funds for two instances that might otherwise be considered prohibited personal use. These are (1) using campaign funds for certain security expenses; and (2) using campaign funds for certain child care expenses.\nAfter the June 14, 2017, attack on several Members of Congress, staff, and U.S. Capitol Police officers in Alexandria, Virginia, House Sergeant at Arms Paul Irving wrote to the FEC requesting guidance about the permissibility of using campaign funds to pay for residential security systems. The FEC treated the letter as an AO request. On July 13, 2017, citing similar previous requests and specific threat information and recommendations from the Capitol Police and Sergeant at Arms, the FEC approved the request. As a result, Members of Congress may use campaign funds for installing, upgrading, or monitoring residential security systems in circumstances similar to those addressed in the AO. These systems must be \"non-structural\" and may not be primarily intended to increase the home's value. The FEC also recently has determined that the FECA ban on corporate contributions does not prohibit campaigns from accepting certain information technology (IT) services. In August 2018, Microsoft asked the FEC whether it could provide free enhanced security services to \"election-sensitive users\" of its Office 365 email service, and other services without making a prohibited corporate in-kind contribution. In its request, Microsoft stated that these security services would be available to federal, state, and local campaigns, as well as parties, vendors, and \"think-tank\" organizations involved in campaigns. The commission determined that Microsoft's proposal was permissible because the company \"would be providing [enhanced security] services based on commercial and not political considerations, in the ordinary course of its business, and not merely for promotional consideration or to generate goodwill.\" In May 2018, the FEC granted New York congressional candidate Liuba Grechen Shirley's request to use campaign funds to pay for certain child care expenses. The commission based its decision on a related 1995 AO request (1995-42) and the agency's determination that the child care the candidate required resulted directly from her candidacy. Several Members of Congress urged the FEC to grant the request.", "In recent Congresses, FEC enforcement and transparency issues attracted attention in Congress and beyond. Legislation to restructure the agency has been introduced in several recent Congresses. (Additional information appears in other CRS products. ) The Senate Judiciary Subcommittee on Crime and Terrorism held a 2013 hearing on enforcement of campaign finance law. In addition, in the House, the Committee on House Administration continued to request documents from the agency about its enforcement practices. Major attention to the matter appears to have begun in November 2011, when the Committee on House Administration, Subcommittee on Elections, held an FEC oversight hearing—the first in almost a decade. Negotiations between the committee and commission appear to have resulted in the ongoing effort to approve and publicly release a new FEC enforcement manual. Debate over the matter continued at the FEC, sometimes including acrimonious meetings among commissioners. The issue remains unresolved. In addition to oversight of the agency itself, the Senate may consider nominations to the agency. As of this writing, four of six commissioners remain in office. One nomination was pending during the 115 th Congress. The FEC has civil responsibility for enforcing FECA. The Department of Justice (DOJ) enforces the act's criminal provisions, and the FEC may refer suspected criminal violations to DOJ. Throughout its history, FEC enforcement has been controversial, partially because the commission's six-member structure as established in FECA sometimes produces stalemates in enforcement actions. Some have argued that DOJ should pursue more vigorous enforcement of campaign finance law, both on its own authority and in lieu of FEC action. Some Members of Congress have proposed requiring companies to provide additional information to shareholders if the companies choose to make electioneering communications or independent expenditures. These proposals are sometimes referred to as \"shareholder protection\" measures, although the extent to which they would benefit shareholders or companies is subject to debate. In 2013, the Securities and Exchange Commission (SEC) dropped plans to consider additional corporate disclosure of political spending, although some advocates continue to urge the agency to consider the topic. Since then, some advocates of additional campaign finance regulation have continued to urge the SEC to take regulatory action to require campaign-related disclosure. As noted previously, Congress has prohibited requiring additional disclosure to the FEC, through some recent appropriations measures. In July 2010, citing Citizens United , the SEC issued new \"pay-to-play\" rules—which are otherwise beyond the scope of this report—to prohibit investment advisers from seeking business from municipalities if the adviser made political contributions to elected officials responsible for awarding contracts for advisory services. Although the rules appeared not to be targeted to federal candidates, they can implicate state-level officeholders seeking federal office. This includes, for example, governors running for President. The rules have been controversial in some cases and were the subject of litigation. During the spring of 2011, media reports indicated that the Obama Administration was considering a draft executive order to require additional disclosure of government contractors' political spending. Although the executive order was never issued, the topic continues to garner attention. The House Committee on Oversight and Government Reform and Committee on Small Business held a joint hearing on the topic on May 12, 2011. Through recent appropriations bills, including those enacted during the 115 th Congress, Congress also prohibited requiring additional contractor disclosure.", "Politically active tax-exempt organizations, regulated primarily by the Internal Revenue Code (IRC), have been engaged in elections since at least the early 2000s. Some suggest that Citizens United provided clearer permission for incorporated 501(c)(4) social welfare groups and 501(c)(6) trade associations to make electioneering communications and independent expenditures. Unions, 501(c)(5)s, have long participated in campaigns, but Citizens United has been interpreted to permit labor organizations to use their treasury funds, like corporations, to make ECs and IEs. Amid increased interest in, and activity by, the groups post-2010, controversy has emerged about how or whether their involvement in federal elections should be regulated. Currently, because 501(c) organizations are not political committees as defined in FECA, they do not fall under FEC or FECA requirements unless they make ECs or IEs. Nonetheless, many such groups engage in activity that might influence campaigns. Other CRS products that focus on tax law provide additional detail, much of which is beyond the scope of this report.\nIn November 2013, the Internal Revenue Service (IRS) and the Department of the Treasury announced a notice of proposed rulemaking (NPRM) that could significantly affect how some tax-exempt organizations engage in campaign activity. Amid controversy, that initial proposal was withdrawn, apparently to be superseded by a new proposal. The status of a rulemaking remains unclear, but, as of this writing, reports suggest that the agency continues to develop a proposal. Whether the IRS should continue with a rulemaking, and if so, what that rulemaking should cover, has generated sharp disagreement in Congress and among various advocacy groups. As of this writing, the issue remains unresolved.", "One of the most controversial elements of campaign finance disclosure concerns identifying donors to organizations that make electioneering communications and independent expenditures. Although FECA requires that those giving more than $200 \"for the purpose of furthering\" IEs must be identified in political committees' disclosure reports filed with the FEC, the \"purpose of furthering\" language does not appear in the portion of FECA covering ECs. Nonetheless, FEC regulations also use the \"purpose of furthering\" language as a threshold for identifying donors to corporations or unions making ECs. As a result, some contend that the EC regulations improperly permit those contributing to ECs to avoid disclosure by making unrestricted contributions (i.e., not \"for the purpose of furthering\" ECs). On the basis of that argument and others, then-Representative Van Hollen sued the FEC in 2011. A series of federal district and appellate court rulings occurred thereafter. In January 2016, the U.S. Court of Appeals for the D.C. Circuit upheld the FEC rules.\nAnother recent case, CREW v. FEC , considers the \"purpose of furthering\" donor-disclosure standard for IEs rather than ECs. In November 2012, Citizens for Responsibility and Ethics in Washington (CREW), which identifies itself as a \"watchdog\" group, filed a complaint with the FEC, alleging, among other things, that 501(c)(4) group Crossroads GPS failed to disclose its donors as required under FECA and agency regulations. In November 2015, FEC commissioners deadlocked on whether Crossroads GPS had violated commission regulations and FECA (Matter Under Review 6696). CREW then sued the commission for, among other things, allegedly failing to enforce disclosure requirements.\nIn August 2018, Chief Judge Beryl A. Howell, of the U.S. District Court for the District of Columbia, ruled in CREW's favor. After the court ruling took effect on September 18, 2018, certain groups that previously did not disclose some of their donors to the FEC now must do so. The FEC issued filing guidance on October 4, 2018, but another rulemaking is expected, which could change reporting requirements. Campaign practitioners offer differing interpretations of the new reporting requirements and suggest that additional litigation could occur.", "Telecommunications law administered by the Federal Communications Commission (FCC)—a topic that is otherwise beyond the scope of this report—has implications for elements of political advertising transparency. In BCRA, Congress required broadcasters to place information about political advertising prices and purchases in a \"political file\" available for public inspection. Partially in response to Citizens United , in 2011 the FCC revisited rulemaking proceedings the agency began in 2007 to consider whether broadcasters should be required to make information from the political file available on the internet rather than only through paper records at individual television stations. On April 27, 2012, the FCC approved new rules to require television broadcasters affiliated with the ABC, CBS, Fox, and NBC networks in the top 50 designated market areas (DMAs) to post political file information on the commission's website. These rules took effect on August 2, 2012. Stations outside the top 50 DMAs or unaffiliated with the top four networks were required to comply as of July 2014. In February 2016, the FCC extended the online-disclosure requirements to cable and satellite operators and broadcast radio.\nThese requirements arguably enhance transparency by making \"ad buy\" data more readily available than in the past. Broadcasters are required to post their political file information online, not to aggregate total costs or otherwise summarize advertising purchases in ways typically used by researchers and policymakers. In addition, no standard file format is required. Consequently, drawing broad conclusions from the data is challenging.", "Historically, disclosure aimed at reducing the threat of real or apparent conflicts of interest and corruption has received bipartisan support. In fact, disclosure typically has been regarded as one of the least controversial aspects of an otherwise often-contentious debate over the nation's campaign finance policy. Disclosure, then, could yield opportunities for cooperation among Members of both major parties and across both chambers. On the other hand, some recent disclosure efforts have generated controversy. Particularly since the 111 th Congress consideration of the DISCLOSE Act, some lawmakers raised concerns about whether the legislation applied fairly to various kinds of organizations (e.g., corporations versus unions) and how much information those airing independent messages rather than making direct candidate contributions should be required to report to the FEC. Revised versions of the legislation, introduced in subsequent Congresses, did not contain spending restrictions, although some observers have questioned whether required reporting could inhibit political speech.\nPost- Citizens United legislative activity among those who favor additional disclosure has generally emphasized the DISCLOSE Act, but, as noted elsewhere in this report, some have also proposed reporting particular kinds of spending to agencies such as the IRS or the SEC. As 501(c) tax-exempt organizations' spending has received attention, measures proposing somewhat similar reporting as DISCLOSE, with additional tax implications (most of which are beyond the scope of this report) have also emerged. As noted previously, litigation and FEC rulemakings in the past decade have also considered the applicability of the \"purpose of furthering\" donor-disclosure standard for ECs and IEs.\nAdditional disclosure poses the advantage of making it easier to track the flow of political money. Disclosure, however, does not guarantee complete information, nor does it necessarily guard against all forms of potential corruption. For example, current requirements generally make it possible to identify which people or organizations were involved in a political transaction. This information promotes partial transparency, but does not, in and of itself, provide detailed information about what motivates those transactions or, in some cases, where the funds in question originated. Additional disclosure requirements from Congress, the FEC, or the IRS could provide additional clarity.", "Disclosure and the related topic of disclaimers (referring to statements of attribution in political advertising) in online advertising have been especially prominent topics in recent years. In particular, after the Citizens United decision, and reports of foreign interference in the 2016 elections using social media, renewed interest in online advertising appeared in Congress and at the FEC. In 2011, the FEC announced an Advanced Notice of Proposed Rulemaking (ANPRM) to receive comments on whether it should update its rules concerning internet disclaimers, but the agency did not advance new rules. In 2016, the FEC announced that it was reopening the comment period on the 2011 ANPRM. It again reopened the comment period in October 2017. Several Members of Congress filed comments. On November 16, 2017, the FEC voted to draft revised internet-disclaimer rules (a notice of proposed rulemaking) for paid advertising. The commission may consider adopting those revised rules in the future.\nCongress has not enacted legislation focused specifically on online campaign activity, although elements of existing statute and FEC rules address internet communications. In October 2017, the Honest Ads Act ( H.R. 4077 ; S. 1989 ) was introduced to amend the Federal Election Campaign Act (FECA; 52 U.S.C. §§30101-30145) to further regulate some online ads. On October 24, 2018, the House Subcommittee on Information Technology, Committee on Oversight and Government Reform, held a hearing that addressed disclaimers and disclosures surrounding online political advertising generally.", "After Citizens United , one potential concern is how candidates will be able to field competitive campaigns amid unlimited expenditures from super PACs, 501(c) organizations, corporations, or unions. One option for providing additional financial resources to candidates, parties, or both, would be to raise or eliminate contribution limits. However, particularly if contribution limits were eliminated, corruption concerns that motivated FECA and BCRA could reemerge. As noted previously, Congress raised limits for some contributions to political parties in 2014.\nAnother option, which Congress has occasionally considered in recent years, would be to raise or eliminate current limits on coordinated party expenditures. Coordinated expenditures allow parties to buy goods or services on behalf of a campaign—in limited amounts—and to discuss those expenditures with the campaign. In a post- Citizens United and post- McCutcheon environment, additional party-coordinated expenditures could provide campaigns facing increased outside advertising with additional resources to respond. Permitting parties to provide additional coordinated expenditures may also strengthen parties as institutions by increasing their relevance for candidates and the electorate. A potential drawback of this approach is that some campaigns may feel compelled to adopt party strategies at odds with the campaign's wishes to receive the benefits of coordinated expenditures. Those concerned with the influence of money in politics may object to any attempt to increase contribution limits or coordinated party expenditures, even if those limits were raised in an effort to respond to labor- or corporate-funded advertising. Additional funding in some form, however, may be attractive to those who feel that greater resources will be necessary to compete in the modern era, or perhaps to those who support increased contribution limits as a step toward campaign deregulation. A version of the FY2016 FSGG bill ( S. 1910 ) reported in the Senate would have amended FECA to permit parties to make unlimited coordinated expenditures on behalf of their candidates if the candidate did not control or direct such spending. That provision, however, was not included in the FY2016 consolidated appropriations law ( P.L. 114-113 ; H.R. 2029 ).", "Both before and after Citizens United , questions have persisted about whether unlimited independent expenditures permit parties, PACs, and other groups to subsidize candidate campaigns. Such concerns first emerged in the 1980s with PAC spending. After Citizens United , the emergence of super PACs and increased activity by 501(c) organizations increased attention to a concept known as coordination . A product of FEC regulations, coordination restrictions are designed to ensure that valuable goods or services—such as polling or staff expertise—are not provided to campaigns in excess of federal contribution limits. In practice, establishing coordination is difficult. Existing regulations require satisfying a complex three-part test examining conduct, communications, and payment. Some Members of Congress and advocacy groups have proposed that Congress specify a more precise coordination standard by enacting legislation.", "Some elements of federal campaign finance policy have substantially changed in recent years; others have remained unchanged. Enactment of BCRA in 2002 marked the culmination of efforts to limit soft money in federal elections and place additional regulations on political advertising airing before elections. BCRA was an extension of efforts begun in the 1970s, with enactment of FECA, to regulate and document the flow of money in federal elections. BCRA's soft-money ban and some other provisions remain in effect; but Citizens United , SpeechNow , and other litigation since BCRA have reversed major elements of modern campaign finance law.\nThe changes discussed in this report suggest that the nation's campaign finance policy may be a continuing issue for Congress. Disclosure requirements, a hallmark of federal campaign finance policy, remain unchanged, but the topic has taken on new controversy. Additional information would be required to fully document the sources and rationales behind all political expenditures. For some, such disclosure would improve transparency and discourage corruption. For others, additional disclosure might be viewed with suspicion and as a potential sign of government intrusion. Particularly in recent years, tension has also developed between competing perspectives about whether disclosure limits potential corruption or stigmatizes those who might choose to support unpopular candidates or groups.\nFundraising, spending, and reporting questions have been at the forefront of recent debates in campaign finance policy, but they are not the only issues that may warrant attention. Even if no legislative changes are made, additional regulation and litigation are likely, as is the constant debate over the role of money in politics. Although some of the specifics are new, these themes discussed throughout this report have been present in campaign finance policy for decades." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 3, 4, 4, 4, 4, 4, 4, 4, 4, 4, 3, 4, 4, 4, 4, 1, 2, 3, 2, 2, 2, 2, 2, 2, 2, 3, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full", "h0_title h2_title h3_title", "", "h3_full", "", "h0_title h2_title h3_title", "h0_title h2_title h3_title", "h0_full h2_full", "", "", "", "h3_full", "h3_full", "h3_full", "", "h0_full", "h0_title", "", "", "h0_full", "", "h0_title h2_title h1_title", "h1_title", "h1_full", "h0_full h1_full", "", "", "", "", "", "h2_full", "", "", "", "h0_full" ] }

{ "question": [ "How has campaign finance law changed in recent years?", "What was the effect of Citizens United?", "What was the effect of SpeechNov.org v. FEC?", "What changes have been made to campaign finance policy since these two rulings?", "How were these provisions enacted?", "To what extent has the 115th Congress changed campaign finance law?", "What would H.R. 113 do?", "How was the use of prohibited foreign funds examined?", "How did Citizens United affect Congressional debate?", "What campaign-finance legislation was passed after Citizens United?", "What alternatives has Congress considered?", "How has the scope of the disclosure debate changed?", "How did contribution limits change in this period?", "How were contribution limits eased judicially?", "What were the effects of P.L. 113-94?", "How did Congress respond to these events?" ], "summary": [ "Major changes have occurred in campaign finance policy since 2002, when Congress substantially amended campaign finance law via the Bipartisan Campaign Reform Act (BCRA). The Supreme Court's 2010 ruling in Citizens United and a related lower-court decision, SpeechNow.org v. FEC, arguably represent the most fundamental changes to campaign finance law in decades.", "Citizens United lifted a previous ban on corporate (and union) independent expenditures advocating election or defeat of candidates.", "SpeechNow permitted unlimited contributions supporting such expenditures and facilitated the advent of super PACs.", "Although campaign finance policy remains the subject of intense debate and public interest, there have been few recent major legislative or regulatory changes. In activity related to campaign finance policy, provisions in recent appropriations laws have prohibited some additional reporting requirements surrounding contributions and expenditures.", "Enacted 115th Congress legislation containing these provisions includes FY2018 consolidated appropriations law P.L. 115-141. Also through the appropriations process, the 115th Congress enacted legislation (P.L. 115-244) amending the Federal Election Campaign Act (FECA) to require electronic filing of Senate campaign finance reports.", "The above actions notwithstanding, the 115th Congress has not enacted major changes to campaign finance law, and there have been no major regulatory changes during the same period.", "The Committee on House Administration ordered reported a bill (H.R. 133) that would terminate the Presidential Election Campaign Fund.", "In addition, in some congressional legislative hearings, some Members of Congress have raised questions about whether prohibited foreign funds could have influenced the 2016 and 2018 elections, and required the FEC to issue a report on its enforcement of the FECA ban on such funds.", "Post-Citizens United, debate over disclosure and deregulation have been recurring themes in Congress and beyond.", "Legislation to require additional information about the flow of money among various donors, the DISCLOSE Act, passed the House during the 111th Congress and was reintroduced during subsequent Congresses.", "Congress also has considered alternatives, which include some elements of DISCLOSE, or proposals that would require additional disclosure from certain 501(c) groups.", "The debate over whether or how additional disclosure is needed has also extended to the Federal Election Commission—and congressional oversight of the agency—and the courts.", "During the same period, statutory and judicial changes eased some contribution limits and affected the presidential public financing program.", "Most consequentially, the Supreme Court invalidated aggregate contribution limits in April 2014 (McCutcheon v. FEC).", "Also in 2014, Congress and President Obama terminated public funding for presidential nominating conventions (P.L. 113-94).", "Congress responded to these events by including language in the FY2015 omnibus appropriations law (P.L. 113-235) that increased limits for some contributions to political party committees, including for conventions." ], "parent_pair_index": [ -1, 0, 0, 0, 3, -1, 0, 0, -1, 0, 1, 0, -1, 0, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "The Evolution of the Export Administration Act", "Legislation", "107th Congress", "108th Congress", "109th Congress", "110th Congress", "111th Congress", "Enforcement", "Securing Exports Through Coordination and Technology Act", "Diversion Concerns", "Administration Reform Efforts", "Analysis of Provisions in EAA Legislation", "Types of Control Authority", "National Security Controls", "Foreign Availability", "Mass Market", "Foreign Policy Controls", "Enhanced Proliferation Control Initiative", "Short Supply Controls", "The Control List and Licensing Procedures", "Commerce Control List", "Commodity Jurisdiction/Classification", "License Review Procedures", "Dispute Resolution", "Issues Concerning IEEPA", "Technology and Commodities of Concern", "High Performance Computers (HPCs)", "Encryption", "Stealth Technology and Materials", "Satellites", "Machine Tools", "Aerospace", "Civil Aviation Equipment", "Deemed Exports", "Competing Perspectives in the Export Control Debate", "Foreign Availability and the Controllability of Technology", "Computing Power", "Post-Shipment Verification", "The Effectiveness of Multilateral Regimes", "China", "The \"China Rule\"", "Validated End-User (VEU) Program.", "The Licensing Process and Organization of the Export Control System" ], "paragraphs": [ "", "Legislation to rewrite and reauthorize the Export Administration Act of 1979 (EAA)( P.L. 96-72 ) may be considered in the 111 th Congress. In the 110 th Congress, several pieces of legislation were introduced that addressed various aspects of the current system, including penalties, enforcement, diversion or transhipment of goods, and the integration of export control data into the Automated Export System. The EAA provides the statutory authority for export controls on sensitive dual-use goods and technologies, items that have both civilian and military applications, including those items that can contribute to the proliferation of nuclear, biological and chemical weaponry. The EAA, which originally expired in 1989, periodically has been reauthorized for short periods of time, with the last incremental extension expiring in August 2001. At others times, including currently, the export licensing system created under the authority of EAA has been continued by the invocation of the International Emergency Economic Powers Act (IEEPA)( P.L. 95-223 ).\nThe EAA is the statutory authority for the Export Administration Regulations (EAR), which are administered by the Bureau of Industry and Security (BIS) located in the Department of Commerce. These regulations establish the framework for regulating exports of dual-use, potentially sensitive commodities, software, computers, and technology. Exports are restricted by item, country, and recipient entity. The EAA, which was written and amended during the Cold War, focuses on the regulation of exports of those civilian goods and technology that have military applications (dual-use items). Export controls under the EAA were based on strategic relationships, threats to U.S. national security, international business practices, and commercial technologies many of which have changed dramatically in the last 20 years. Some Members of Congress and most U.S. business representatives see a need to liberalize U.S. export regulations to allow American companies to engage more fully in international competition for sales of high-technology goods. Other Members and some national security analysts contend that liberalization of export controls over the last decade has contributed to foreign threats to U.S. national security, that some controls should be tightened, and that Congress should weigh further liberalization carefully.\nThis report discusses the Export Administration Act in terms of its evolution in the 20 th century, its major features including the types of controls authorized by the act, the Commerce Control List and export licensing procedures, and issues concerning the maintenance of export controls under IEEPA. It then highlights several controlled commodities that have been featured prominently in export control discussions. Finally, it discusses competing business and national security perspectives concerning several of more contentious themes in the export control debate: the controllability of technology, the effectiveness of multilateral control regimes, the organization of the export control system, and the impact of export controls on the U.S. economy and business.", "Export controls in time of war have been an element of U.S. policy for almost one hundred years. The end of WWII, however, ushered in a new era in which export control policy would become an extensive peacetime undertaking. The start of the cold war led to a major refocusing of export control policy on the Soviet-Bloc countries. Enactment of the Export Control Act of 1949 (P.L. 81-11) was a formal recognition of the new security threat and of the need for an extensive peacetime export control system.\nThe 1949 Act identified three possible reasons for imposing export controls. Short-supply controls were to be used to prevent the export of scarce goods that would have a deleterious impact on U.S. industry and national economic performance. Foreign policy controls were to be used by the President to promote the foreign policy of the United States. The broad issues of regional stability, human rights, anti-terrorism, missile technology, and chemical and biological warfare have come to be controlled under this rubric. National security controls were to be used to restrict the export of goods and technology, including nuclear non-proliferation items, that would make a significant contribution to the military capability of any country that posed a threat to the national security of the United States.\nCoincident with the establishment of the post-war U.S. export control regime was the establishment of a multilateral counterpart involving our NATO allies. The large amount of critical technology being transferred from the United States to the NATO allies, and the growing capability for technological development by the allies themselves required the establishment of a multilateral control regime. Toward this end, the Coordinating Committee for Multilateral Export Controls (CoCom) was established in 1949. CoCom controls were not a mirror image of U.S. controls but generally did reflect a uniformly high level of restrictions.\nWith little change in the perceived threat, the Export Control Act was renewed largely without amendment in 1951, 1953, 1956, 1958, 1960, 1962, and 1965. With the onset of the U.S.-Soviet era of \"detente\" in the late 1960s, however, the first serious reexamination and revision of the U.S. export control system occurred. At this time, the growing importance of trade to the U.S. economy and those of our allies began to exert significant political pressure for some liberalization of export controls. Congress passed the Export Administration Act of 1969 to replace the near-embargo characteristic of the Export Control Act of 1949. The continued shift of policy toward less restrictive export controls continued in the renewal of the act in 1974 and 1977. The act was comprehensively rewritten in 1979, and this act forms the basis of the export control system today. It was amended in 1985, and some moderate further liberalization occurred in the following years.\nThe collapse of the Soviet Union in 1989, an event some have partially attributed to the success of U.S. cold war export control policy, marked a dramatic change in the nature of the external threat the United States. Beginning with the George H.W. Bush Administration, the export control system has been reduced in scope and streamlined, but the basic structure of the law remains intact. There are many who see a need to revamp the act, whether to enhance exports, to shift the focus to current national security threats, or to increase penalties for violations.\nThe dissolution of CoCom in 1994 and its replacement by the Wassenaar Arrangement in 1997, also significantly changed the export control environment. This new multilateral arrangement is more loosely structured than CoCom and members do not have the authority to block transactions of other members. Generally more liberal control practices abroad raise important questions about the ultimate effectiveness of U.S. export controls (under either the current or a revised EAA) in achieving national security objectives and the fairness of unilateral controls to American industry.\nCongress has not been able to agree on measures to reform the Export Administration Act that regularly have been introduced since the 101 st Congress. The export control process was continued from 1989 to 1994 by temporary statutory extensions of EAA and by invocation of the International Emergency Economic Powers Act (IEEPA). Thereafter, export controls were continued for six years under the authority of Executive Order No. 12924 of August 19, 1994, issued under IEEPA authority. Many of those who favor reforming the act, whether to liberalize or to tighten controls, contend that operating under IEEPA imposes constraints on the administration of the export control process and makes it vulnerable to legal challenge, thus undermining its effectiveness. Legislation passed by the House and Senate and signed by the President on November 13, 2000 ( P.L. 106-508 ) extended the EAA of 1979 until August 20, 2001, temporarily removing the need to operate the export control system under IEEPA powers. Since then, export control authority has again been operating under IEEPA provisions pursuant to Executive Order 13222, issued August 17, 2001.", "Legislation to rewrite the Export Administration Act has been introduced in the last several Congresses. In the 104 th Congress, the House passed the Omnibus Export Administration Act of 1996 ( H.R. 361 ) on July 16, 1996, after hearings and consideration by the Committee on International Relations, the Committee on Ways and Means, and by the Committee on National Security. On July 17, 1996, the bill was received by the Senate and referred to the Committee on Banking, Housing and Urban Affairs, which held a hearing but took no further action. Export control legislation ( H.R. 1942 ) was introduced in the 105 th Congress, but no action was taken. In the 106 th Congress, the Export Administration Act of 1999 ( S. 1712 ) was introduced by Senator Michael P. Enzi. On September 23, 1999, the Senate Banking Committee voted unanimously (20-0) to report this legislation to the Senate floor ( S.Rept. 106-180 ). However, action by the Senate on S. 1712 was not taken due to the concerns of several Senators about the bill's impact on national security.", "Export control legislation was again introduced in the 107 th Congress. On January 23, 2001, Senator Enzi introduced the Export Administration Act of 2001 ( S. 149 ). Hearings were held on this legislation by the Senate Banking Housing and Urban Affairs Committee in February 2001, and the measure was reported favorably for consideration by the Senate by a vote of 19-1 on March 22, 2001 ( S.Rept. 107-10 ). The Senate debated the legislation on September 4-6, 2001, and it passed with three amendments by a vote of 85-14. This bill was similar though not identical to S. 1712 , introduced by Senator Enzi in the 106 th Congress.\nThe House International Relations Committee held hearings on EAA and export controls on May 23, June 12, and July 11, 2002. The House version of the Export Administration Act, H.R. 2581 , was introduced on July 20, 2001, by Representative Benjamin Gilman. As introduced, it was identical to S. 149 , except for the additions of provisions related to oversight of nuclear transfers to North Korea. At the markup session on August 1, the House International Relations Committee passed the legislation with 35 amendments. The House Armed Services Committee (HASC) and the House Permanent Select Committee on Intelligence(HPSCI) received H.R. 2581 through sequential referral. On March 6, 2002, HASC further amended H.R. 2581 and reported out the legislation by a vote of 44-6 ( H.Rept. 107-297 ). HPSCI held hearings on the legislation but did not alter it. The legislation received no further consideration in the 107 th Congress. The Administration supported S. 149 and opposed House attempts to revise it.", "In the 108 th Congress, Representative Dreier introduced EAA legislation ( H.R. 55 ), which was identical to S. 149 , but no action was taken on it.\nThe National Defense Authorization Act (NDAA) has also been used periodically as a vehicle to attempt to amend the export control regime. In 2004, the House version of NDAA 2005 ( H.R. 4200 ) contained two export control-related provisions that would have affected dual-use export controls. The first (Sec. 1404) would have required a license for dual-use goods controlled under the Export Administration Regulations (EAR) for technology and items contained in the Militarily Critical Technology List (MCTL), a list compiled by the Department of Defense (DOD) (see p. 6). The provision is in response to a March 2004 DOD study, which noted that several MCTL technologies were not controlled under the EAR or the International Traffic in Arms Regulations (ITAR). The second provision (Sec. 1405) would have required that exporters obtain licenses for items controlled under the EAR or the ITAR to a destination if that destination had previously exported such items to China. In addition, the granting of the license would be conditional on the written assurance of the foreign government or entity not to transfer the licensed item without the written consent of the President. The House NDAA report ( H.Rept. 108-491 ) expresses concern that military embargoes on China imposed after the Tiananmen Square massacre may be repealed which may lead to the transfer of such U.S. goods or technology to China. However, neither of these provisions were contained in the conference report ( H.Rept. 108-767 ) signed by the President on October 28, 2004.", "In the 109 th Congress, a bill to revise and extend the Export Administration Act was introduced by Representative Henry Hyde on December 16, 2005, and was referred to House International Relations Committee. It was not a comprehensive overhaul of 1979 EAA, but rather one that addressed penalties, enforcement, and the relation of the United States to multilateral control regimes. According to an administration official, the legislation reflected \"targeted changes ... that all sides can be supportive of.\" The bill also would have extended the expired EAA for two years from the date of enactment, and provided authorization of appropriations for export control activities. This bill did not receive consideration in the 109 th Congress.", "No comprehensive legislation to rewrite or reauthorized the EAA was introduced in the 110 th Congress. Legislation was introduced that sought amend the enforcement and penalty structure of the Act ( S. 2000 , Dodd; H.R. 6828 , Sherman/Manzullo), to integrate export control information into electronic filing of export data under the Automated Export System (AES) ( H.R. 6828 ), and to target countries of diversion concern ( S. 3445 , Dodd/ H.R. 7112 , Berman; H.R. 6828 ). H.R. 6828 also would have required the GAO to conduct an investigation of BIS' validated end-user program. S. 2000 and parts of other legislation reflected the draft legislation that the Administration submitted to Congress on April 24, 2007. Only S. 3445 / H.R. 7112 was acted upon in the 110 Congress; S. 3445 was reported out of the Banking, Housing, and Urban Affairs Committee on August 1,2008 ( S.Rept. 110-443 ), but received no floor consideration. H.R. 7112 was both introduced and passed in the House under suspension of the rules on September 26, 2008.", "On July 31, 2009, Representative Sherman introduced the Export Control Improvements Act ( H.R. 3515 ), co-sponsored by Representative Manzullo and Representative A. Smith, that contains provisions on export controls enforcement, integration of export control data in the AES, and diversion control. The title on export enforcement is notable in that it does not amend the enforcement section of the expired EAA (Sec.12) and bring that section solely back in force as did H.R. 6828 , or amend it with a general renewal of the existing EAA as did S. 2000 . Rather, it provides additional enforcement authority for the Export Administration Regulations, which are maintained during the lapse of the EAA under authority of the International Economic Emergency Powers Act (IEEPA).", "The draft legislation would grant investigative authority to \"any department or agency exercising any function under the EAR\" to conduct investigations in the United States, and with the Secretary of Commerce, any investigation outside the United States. It would allow for the search, detention, and seizure of goods by Commerce in locations within the United States. With the concurrence of the Secretary of Homeland Security, the bill would authorize search, detention, and seizures at U.S. ports of entry or exit and overseas. It would also direct the Secretary of Commerce to publish and update best practices guidelines for effective export control compliance programs. The measure restates the confidentiality provisions of the 1979 Act. The bill includes new language governing the use of funds for undercover investigations and operations and would establish audit and reporting requirements for such investigations.", "Title 1 of H.R. 3515 seeks to integrate the various licensing requirements, embargoes and data collection rules imposed on exporters and shippers into the Automated Export System, an electronic version of the Shipper's Export Declaration (SED) that Customs requires be submitted prior to the clearance of a shipment for export. The export control provisions of this title center on programming the AES to include export control data, and providing notification to filers of possible export control issues with their exports, in order to prevent certain improper shipments.", "The issue of evasion of U.S. export controls through the diversion of sensitive goods through transhipment hubs remains of interest to the 111 th Congress. This issue first surfaced in 2006 with reports that computer circuits exported to the United Arab Emirates were diverted to Iran, where they were fashioned into bomb detonators and used in Iraq. This revelation initially resulted in licensing requirement on UAE-based Mayrow General Trading and six other entities. However, the focus quickly shifted to the UAE as a transhipment hub, and the status of its export control regime. Perhaps as a means to goad the UAE into action on export controls, the BIS proposed in February 2007 the creation of a 'Country Category C', which would be made up of countries of diversion concern. Country Category C designees would face stricter licensing requirements for products thought to have a high degree of diversion concern. No country was designated as belonging to Category C, and the rulemaking was never completed.\nH.R. 3515 would legislate the 'Category C' concept with regards to diversion to Iran. It would require the President within 180 days to identify all countries of concern with respect to transhipment, reexportation, or diversion of items subject to the EAR to Iran. A country could either be designated as a country of possible diversion concern or a country of diversion concern. If designated the former, the bill would require the Administration to initiate government-to-government contacts to assist in strengthening that country's export control system. If cooperation or improvements were not forthcoming within a 12-month period from that country, the Administration would be required to designate that country as a Destination of Diversion Concern. If the government of a country is directly involved with such transhipments, reexportations, or diversions, then the country would be listed forthwith as a country of diversion concern. Countries of diversion concern would be subject to additional licensing requirements, more stringent license review, and increased use of end-user checks.\nA final provision of the legislation would mandate an annual report on transfers of significant dual-use U.S. technology and technical information to countries and entities of concern.", "On August 13, 2009, President Obama announced the launch of a comprehensive review of the U.S. export control system to be conducted jointly by the National Security Council and the National Economic Council. While the full scope of this review has yet to be released, Defense Secretary Robert M. Gates announced key elements of the administration's agenda for reform of the export control system in a speech on April 20, 2010. In order to replace what he referred to as a \"byzantine amalgam of authorities, roles, and missions scattered around different parts of the federal government,\" Secretary Gates proposed a 4-pronged approach that would create a single export control licensing agency for both dual-use and munitions exports, adopt a unified control list, create a single integrated information technology system, which would include a single database of sanctioned and denied parties, and would establish a single enforcement coordination agency.\nThe administration's blueprint envisions that these changes would be implemented in three phases with the final tier requiring legislative action. In the first phase, preparatory work would be undertaken to harmonize the Commerce Control List (CCL) with the U.S. Munitions List (USML) and to establish a tiered control structure that would allow items to \"cascade\" from tier-to-tier as technology evolves. Standardized licensing processes among the control agencies would be developed, and an \"Enforcement Fusion Center\" to synchronize enforcement would be created along with a single electronic gateway to access the licensing system. Phase II would implement a harmonized licensing system with two identically structured tiered control lists. According to the White House fact sheet, implementing the harmonization and tiering of the control lists would \"achieve a significant license requirement reduction.\" The factsheet also foresees that certain items would be moved from the munitions list to the dual-use list, for which congressional notification is required, unilateral controls on certain items would be examined, and consultations would take place with multilateral control regimes partners to add or remove multilateral controls on certain items.\nUnder the proposal, the new export control system would debut in Phase III. A single licensing agency would be established; the two harmonized, tiered control lists would be merged with mechanisms for review and update; a Primary Enforcement Coordination Agency would consolidate enforcement activities; and a single IT system for licensing and enforcement would become operational. In his speech, Secretary Gates predicted that the 3-phase plan will \"will unfold over the course of the next year.\"\nWhile the 3-phase plan provides a blueprint for a transition to a new export control system, it leaves many questions unanswered. Some of these proposals would require legislative action (e.g., merging the control lists; their creation is specifically mandated by statute). However, it is less clear whether legislative consent would be required to change the structure of one or both control lists, as is envisioned in Phase II. Changes to the structure of the two control lists would also entail multilateral consultations, as the CCL and USML are derived from the Wassenaar Dual-Use List and Munitions List, respectively. Changes in agency structure may also require legislation, although that it less clear. The placing of the proposed licensing agency, either within an existing Department such as Commerce, State, Defense, or Homeland Security, or as an independent entity, also has not been determined; each choice would doubtless claim proponents and detractors.", "Several principles and concepts have been common to the EAA and to efforts to renew and reauthorize the legislation. Generally, these provisions set out the types of export controls authorized (including national security, foreign policy and short supply controls), licensing procedures, the license review process, and penalty and enforcement procedures, the latter currently subject to IEEPA authority.", "Since the 1949 Act, U.S. dual-use export controls have restricted certain items based on national security, foreign policy, or for the effect of domestic exports on the national economy. These three categories form the basis by which items on the Commerce Control List (CCL) (see below, p. 7) and items subject to the Export Administration Regulations are controlled. In practice, the preponderance of items on the CCL are controlled for both national security and foreign policy reasons with different control standards determining the licensing policy of an item to a particular country.", "The 1979 Act restricted the export of goods or technology that could make a significant contribution to the military capabilities of any other country or groups of countries that would prove detrimental to the national security of the United States. National security control items fall under the National Security licensing requirement of the EAR. The list \"Country Group D-1\" presently serves as the list of controlled countries. Licenses for items controlled for national security purposes are reviewed on a case-by-case basis and are approved if it is determined the item is destined for civilian use or would not make a significant contribution to the military potential of the country of destination.\nPursuant to EAA, the goods and technology to be controlled for national security purposes are identified by the Secretary of Defense and other appropriate agencies. The Secretary of Defense and the Secretary of Commerce (the Secretary) are obligated by the act to periodically review and revise the list. For this purpose, the Secretary of Defense maintains the Military Critical Technology List (MCTL). The national security based control list is also consistent with the control list of the Wassenaar Arrangement. U.S. national security controls, however, do not cover items that are covered under nuclear, chemical, biological or missile proliferation regimes, or to countries covered by anti-terrorism controls. These items and destinations are controlled for foreign policy purposes.", "Items controlled for national security purposes are subject to a foreign availability determination. Foreign availability exists when a good is available to controlled countries from sources outside the United States in \"sufficient quantity and comparable quality\" so that control of the item would be ineffective.(Sec. 5(f)(1)(a)) The 1979 Act charges the Secretary, in conjunction with the Secretary of Defense and other appropriate agencies, with determining on a continuing basis whether any item currently subject to export control for reasons of national security meets foreign availability status. Under EAA, a request to make a foreign availability determination can be made by a license applicant or through the initiative of the Secretary. If the Secretary makes a foreign availability determination, the item must be decontrolled, although the President can overturn that decision with a determination that decontrolling such items would be detrimental to the national security of the United States. In such case, the President is directed to enter negotiations with multilateral control partners to eliminate the availability in question. The bill also created an Office of Foreign Availability to gather data for the Secretary to make foreign availability determinations and to report to Congress on operations and improvements on the ability to assess foreign availability. This office no longer exists. However, the Office of Technology Evaluation is now tasked with conducting foreign availability determinations. In addition, the Emerging Technology and Research Advisory Committee (ETRAC) was created in September 2008. This committee was created to allow university experts to play greater role in helping determine which technologies should be in the control list, particularly for purposes of deemed exports. It is also meant to assist in streamlining the CCL to better reflect the narrow set of technologies that should be protected for national security reasons which are not readily available overseas. BIS conducted an overall systemic review of the CCL in 2007-8 and plans to review 1/3 of the CCL each year to create a three review cycle.\nOn May 22, 2009, BIS issued a final rule lifting certain licensing requirements on uncooled thermal imaging cameras to 36 U.S. allied countries. This rule decontrolled low to mid-market night vision cameras, such as those used by firefighters, when they are not incorporated into military commodities and if they are not exported or reexported to be embedded in a civilian product. The rule also tightened export controls on higher-end thermal imaging cameras, unembedded camera cores, and thermal imaging cameras embedded in a military commodity. Exporters must report the transactions to BIS on a semi-annual basis. While this action does support the notion that present mechanisms can accommodate foreign availability concerns, some remain concerned at the length of time taken to resolve the issue. According to an industry source, \"it took three years to get BIS engaged on the issue and another three years for BIS to reach interagency agreement with the [Defense Technology Security Administration]. 'It's a small step too late, but it's a step nonetheless.'\"", "The concept of mass market status was proposed in EAA legislation introduced in the 106 th and 107 th Congress. Neither the 1979 EAA nor current regulations provides for decontrol of items based on mass market criterion. Mass market status was defined to apply to items produced or made available for sale in large volume or to multiple buyers. Under legislation introduced in the 106 th and 107 th Congress, the item's manner of distribution; its conduciveness to commercial shipping; or its usefulness for intended purposes without modification or service were also criteria considered when determining mass market status. This feature proved to have been a controversial part of the legislation, and was cited as a stumbling block in negotiations over the bill in the 107 th Congress with some Members arguing that its existence would provide for wholesale decontrol of sensitive items.", "The EAA authorizes the President to control exports for the purpose of promoting foreign policy objectives, complying with international obligations, or deterring and punishing terrorism. Currently, foreign policy controls are in place for anti-terrorism, regional stability, crime control, United Nations sanctions purposes, unilateral embargoes and sanctions, and non-proliferation objectives. This latter category includes adherence to multilateral non-proliferation agreements in the areas of chemical and biological weapons, nuclear proliferation, and missile technology.\nThe EAA attaches limitations on the use of foreign policy controls. Foreign policy controls must be renewed on a yearly basis. It requires the President to clearly state objectives and criteria for controls to be reported to Congress. It directs the President to engage in negotiations to remove the foreign availability of items controlled for foreign policy purposes, and it requires the President to impose controls to comply with international obligations or treaties. Furthermore, it requires a license for the export of certain items to countries that support international terrorism. Additionally, foreign policy controls are not authorized for sales of medicine or medical supplies, donations of food, medicines, seeds, and water resource equipment intended to meet basic human needs, or for sales of food if the controls would cause malnutrition or hardship. Controls on sales of agricultural products and medicines have been further amended by the Trade Sanctions Reform and Export Enhancement Act of 2000 (Title IX, P.L. 106-387 ).", "Controls based on the end-use or end-user of an item (also known as catch-all controls) are also administered as foreign policy controls. They were introduced under the Enhanced Proliferation Control Initiative (EPCI) of 1991, and they are contained in Part 744 of the EAR. Catch-all controls require a license for export or reexport of any item, not just specifically controlled items, if the applicant knows or is informed by BIS that item will be used for nuclear, missile, chemical or biological proliferation activities. The Bureau of Industry and Security (BIS) maintains an end-user list of entities requiring licenses subject to EPCI. Current regulations prescribe a presumption of denial for licenses to certain entities in Russia, China, Pakistan, India, and Israel and to foreign terrorist organizations as designated by the Secretary of State.", "The 1979 EAA authorized restriction on the export of goods and technology to protect domestic industry from shortages of scarce materials and the potential inflationary impact of foreign demand. Few short-supply controls remain in force; they include restrictions on exports of crude oil, petroleum derivatives, unprocessed western red cedar, and the export of horses by sea. The EAA legislation proposed in the 107 th Congress did not provide for short-supply control authority.", "Within the Department of Commerce, the Bureau of Industry and Security administers the license application process. In FY2008, BIS reviewed 21,213 applications with a total value of approximately $72.1 billion, which included $50.2 billion in licenses for crude oil exports in return for refined petroleum. The value of dual-use technology licenses, approximately $21.9 billion, represented 1.7% of total U.S. exports in FY2008. BIS approved 17,945(84%), denied 177 (1.0%), and returned 3,171 (15%) license applications. Most applications for licenses are referred to other government agencies for evaluation, extending the length of the review process. The average processing time for referred license applications was 27 days, down from 28 days in FY2007. China was the largest destination for controlled goods in FY2008 with 1,990 licenses approved with a value of $2.7 billion, approximately 3.7% of the value of total exports to China that year. The greatest number of approved license applications for one commodity to all destinations in FY2008 was for chemical manufacturing facilities and equipment, accounting for 2,212 applications with a value of $294 million.", "The 1979 EAA directed the Secretary of Commerce (Secretary) to create a control list, known in the Export Administration Regulations as the Commerce Control List). The CCL includes items controlled for national security, foreign policy, and short-supply purposes. Under foreign policy controls, it incorporates the control lists of the multilateral non-proliferation regimes to which the U.S. adheres. The CCL is the list of specific goods, technology, and software that are controlled by the EAR. The CCL is composed of ten categories of items: nuclear materials, facilities, and equipment; materials, organisms, microorganisms, and toxins; materials processing; electronics; computers; telecommunications and information security; lasers and sensors; navigation and avionics; marine; and propulsion systems, space vehicles, and related equipment. Each of these categories is further divided into functional groups: equipment, assemblies, and components; test, inspection, and production equipment; materials; software; and technology. Each controlled item has an export control classification number (ECCN) based on the above categories and functional group. Each ECCN is accompanied by a description of the item and the reason for control. Currently, there are about 500 ECCN listings. In addition to discrete items on the CCL, nearly all U.S.-origin commodities are \"subject to the EAR.\" This means that any product \"subject to the EAR\" may be restricted to a destination based on the end-use or end-user of the product. For example, a commodity that is not on the CCL may be denied if the good is destined for a military end-use, or to an entity known to be engaged in proliferation. In addition, items on the CCL often are eligible for license exceptions, a practice that, while not requiring prior approval for an export, vests exporters with certain due diligence and record-keeping requirements related to a given transaction. Yet some products, even if shipped to a friendly nation, will require a license due to the high risk of diversion to an unfriendly destination or because of the controversial nature of the product.", "A commodity jurisdiction (CJ) is used to determine whether a product is considered a dual-use item or a munition, and thus the regulatory regime that will apply to the product. CJs are determined by the Directorate of Defense Trade Controls at the Department of State. Given the more restrictive nature of defense controls, some exporters would like their products to be classified a dual-use goods and may submit their product for a BIS commodity classification. Under the commodity classification process, the exporter requests from BIS a classification for an export item if that item does not correspond to an existing CCL listing. As the exporter is making a calculated judgment that the item belongs under EAR jurisdiction by making this request, BIS is required to refer these requests to State and Defense under certain referral criteria promulgated in 1996. However, this has not always happened. Commerce was criticized by the General Accounting Office (GAO) for the low number of classifications the agency referred and the lack of criteria for referring classification requests to State and Defense. In a follow-up report, GAO found that out of 5,370 commodity classification requests processed in 2005, only 10 were referred to State and Defense, and that the development of renewed referral criteria with State and Defense had not been undertaken. In 2008 GAO reiterated,\nSuch jurisdictional disagreements and problems are often the result of minimal or ineffective coordination between the two departments and the departments' differing interpretations of the regulations. Despite our recommendations to do so, the two departments have not yet come together to resolve these jurisdictional disputes or develop new processes to improve coordination. Until these disagreements and coordination problems are resolved, exporters--not the government--will continue to determine which restrictions apply and, therefore, the type of governmental review that will occur.", "The EAA and the implementing Export Administration Regulations (EAR) establish policies and procedures for the review of license applications and the resolution of interagency disputes. Procedures currently employed were created by Executive Order 12981, as amended, of December 6, 1995. These procedures confer on the Secretary of Commerce (the Secretary) the power to review and to determine the disposition of export licenses. The Departments of State, Defense, and Energy have authority to review any licenses submitted, and the Secretary may refer licenses to others as he deems appropriate. These agencies may waive their right to review license applications for certain commodities or to certain destinations.\nWithin nine days of a license application's registration, the Secretary must seek additional information, refer the application to other agencies, assure the security classification is correct, return the application if a license is not required, grant the application, or notify the applicant of denial. In case of review by another agency, the reviewing agency must request any additional information from the Secretary within 10 days. After reviewing the file, the reviewing agency may request additional information which the Secretary shall promptly request from the applicant.\nWithin 30 days of receipt of the application, or of requested review information, the agency must recommend approval or denial of the application, and provide regulatory or statutory justification for a denial. If an agency fails to provide a recommendation within 30 days, the agency is deemed to have no objection to the decision of the Secretary. However, the license application is subject to several actions that can 'stop the clock' on the license application.", "The 1995 Order created a three-level interagency dispute resolution mechanism. The top tier of this structure is the Export Administration Review Board (EARB), an entity itself created by Executive Order in 1970. The Board consists of the Secretary, who serves as Chair, and the Secretaries of State, Defense, and Energy. The Chairman of the Joint Chiefs of Staff and the Director of Central Intelligence are non-voting members. The Board may also invite the heads of other agencies to participate as appropriate. Under the EARB is the Advisory Committee on Export Policy (ACEP), which consists of the Assistant Secretary for Export Administration, who serves as Chair, as well as the relevant assistant Secretaries and appropriate officials from the agencies represented in the EARB. The Operating Committee (OC) of the ACEP is the third tier which is made up of representatives of the departments listed above. The Chair is selected by the Secretary of Commerce and serves as the Executive Secretary of ACEP.\nThe dispute resolution process begins with the OC. The Chair reviews the recommendations of the examining departments and informs them of his decision within 14 days of the deadline for receiving agency recommendations. Any reviewing department may appeal the decision of the Chair to the ACEP. An appeal may be made within five days by an appointee of the President and must state the statutory or regulatory basis for the appeal. The ACEP members review recommendations and information and vote on the application within 11 days of such an appeal. Within five days of a majority decision of the ACEP, a department head of a dissenting agency may appeal the decision to the Secretary. Within 11 days of such an appeal, the EARB must decide by majority vote on the disposition of the application. A member of EARB may appeal this decision to the President within five days of the application. The interagency appeal process must be completed within 90 days of the registration of the application. However, the Order does not set a time frame for Presidential consideration of a license decision.\nBIS's denial of an export license must be supported by the statutory and regulatory basis for the denial, giving specific considerations and modifications that would allow BIS to reconsider an application. An explicit appeal procedure is specified in the EAR. One possible basis for appeal is an assessment of foreign availability (see above). If the item in question can be shown to be readily available from a non-U.S. source in sufficient quantity and of comparable quality then a license denial may, in some cases, be reversed. In FY2008, BIS reported that 422 cases were escalated to the OC, and that a further 20 were examined by the ACEP.", "When the 1979 EAA first expired in September 1990, President George H.W. Bush extended existing export regulations by executive order, invoking emergency authority contained in the International Emergency Economic Powers Act (IEEPA). As required by IEEPA, the President first declared a national emergency \"with respect to the unusual and extraordinary threat to the national security, foreign policy and economy of the United States\" posed by the expiration of the act. IEEPA-based controls were later terminated during two temporary EAA extensions enacted in 1993 and 1994 as Congress attempted to craft new export control legislation. After the second extension expired in August of 1994, President Clinton reimposed controls under IEEPA. During this period, a major restructuring and reorganization of export control regulations was published as an interim rule in the March 23, 1996 Federal Register . On November 11, 2000, President Clinton signed legislation to extend the authority of the 1979 Act until August 20, 2001, when emergency controls were renewed by President George W. Bush pursuant to Executive Order 13222. Several deficiencies have been noted in maintaining export controls under IEEPA authority:\nThe police power of enforcement agents lapsed with the EAA. Under IEEPA, these agents must obtain Special Deputy U.S. Marshal status in order to function as law enforcement officers, a complication that consumes limited resources better used on enforcement. IEEPA does not authorize the President to limit the jurisdiction of federal courts and thus does not permit him to extend the EAA's general denial of judicial review. In addition, IEEPA does not have an explicit confidentiality provision to authorize protection from public disclosure of information pertaining to the export license applications and enforcement. The IEEPA does not explicitly authorize the executive to implement provisions to discourage compliance with foreign boycotts against friendly countries. It has been argued that the United States sends the wrong message to other countries by not enacting appropriate legislation. Although the United States has been urging countries such as Russia, Kazakhstan, Ukraine, and China to strengthen their export control laws and implementing regulations, goes the argument, U.S. export controls laws have expired and U.S. credibility is diminished by its lack of a statute.\nIn addition, penalty authorities under IEEPA were substantially lower than under the EAA and thus had less of a deterrent effect. However, the International Emergency Economic Powers Enhancement Act ( P.L. 110-96 ), signed by President Bush on October 16, 2007, raised criminal penalties to $1 million (up from $50,000 previously) or up to 20 years' imprisonment for natural persons, or both. The act also raised civil penalties to $250,000 from $50,000 previously. Equivalent penalties under the EAA limit civil penalties to $10,000, or $100,000 for violations involving national security controls, and criminal violations to $250,000 and 10 years' imprisonment for individuals and $1 million or 5 times the value of exports for firms.", "Controversial exports have included telecommunications and advanced electronic equipment, precision machine tools (especially computer assisted machines), guidance technology (including Global Positioning System technology), aerospace and jet engine technology, synthetic materials (especially high-strength, light-weight, heat- and corrosion-resistant materials), specialized manufacturing and testing equipment (including mixers, high temperature ovens, heat and vibration simulators). In the last few years, congressional attention has focused on the following goods and technologies.", "These technologically advanced computers can perform multiple, complex digital operations within seconds. Sometimes also called supercomputers, HPCs are actually a wide range of technologies that also include bundled workstations, mainframe computers, advanced microprocessors, and software. Until recently, the benchmark used for gauging HPC computing performance was a metric known as composite theoretical performance (CTP), measured in millions of theoretical operations per second (MTOPS). The actual MTOPS performed by an HPC over a period of time can vary, based on which operations are performed (some can take longer than others or can be performed while other operations are taking place) and the real cycle speed of the computer. However, the Wassenaar Arrangement approved a new standard for calculating computing power in December 2005, which was incorporated into a BIS final rulemaking on April 24, 2006. The new standard, called adjusted peak performance (APP), is the \"adjusted peak rate at which digital computers perform 64-bit or larger floating point additions and multiplications,\" and is measured by a metric known as \"weighted teraflops\"(WT). The control level is set at 0.75 WT, a level which BIS states \"continues to control high-end proprietary HPCs, such as those used by the Department of Defense and the Department of Energy for advanced research, development, and simulation.\" This level replaces the 190,000 MTOPS benchmark level of January 2002. The level for computer software and technology is set at 0.04 WT and for computer development and production technology at 0.1 WT.\nSince the advent of HPC technology, there have been restrictions on U.S. exports. However, some advocates have maintained that because the computing capabilities of HPCs have advanced so rapidly, and due to the foreign availability of models comparable to some of those produced in the United States, export restrictions of HPCs are neither practical or enforceable. During the Clinton Administration, HPC export thresholds—or the amount of MTOPS capability that an HPC would need to require a license—were raised several times. The last change to the MTOPS level was in January 2002, when the Bush Administration raised the threshold for HPC exports to Tier 3 countries to 190,000 MTOPS, up from 2,000 MTOPS in 1995. (This process of decontrol has had a significant regulatory impact on BIS. It reports that in 1993 over 11,000 (42% of total license applications that year) were for computer assemblies and hardware; by 2003, that number had dropped to 14 license applications for the category that year.) Despite the conversion to the WT metric, changes in the control level are still subject to the notification requirements of Title XII (B) of Division A of the National Defense Authorization Act of 1998 (NDAA98), which allows implementation of the new performance level 60 days after a report has been submitted to Congress.\nThe National Defense Authorization Act of 1998 imposed special conditions on the export of high performance computers. This Title (a) requires the prior notification requirement for exports of HPCs above the MTOPS threshold to Tier III countries. Under this provision of NDAA, exports of these HPCs are subject to the approval of the Secretaries of Commerce, Defense, Energy, and State; (b) imposes post-shipment verification requirements for these HPCs; and (c) imposes the requirement to notify Congress of an adjustment in the MTOPS threshold levels. Each version of EAA in the 107 th Congress provided for the repeal of NDAA98 provisions.", "Encryption is the process of encoding electronic messages to transfer important information and data securely. \"Keys\" are needed to unlock or decode the message. Encryption is an important element of e-commerce security, however this technology is also central to cryptography and could affect military code-breaking capabilities. The increased civilian importance of encryption technology resulted in the transfer in control authority of certain encryption technology from the Department of State to the Department of Commerce by Executive Order 13026 on November 16, 1996. Since that time, there have been several decontrols of encryption items and technology. The result of these actions has been the progressive decontrol of \"retail\" or \"mass market\" encryption technology. Currently, retail encryption products and technology can be exported to western countries , and to non-governmental end-users in other countries through a license exemption that requires notification of the transaction. Licenses for encryption products and technology continue to be required for countries covered by anti-terrorism (AT) controls.", "Stealth design incorporates materials, shapes, and structures into a functional system to protect it against electronic detection. Stealth technology falls into two categories. Certain stealth materials can deflect an incoming radar signal to neutral space thus preventing the radar receiver from \"seeing\" the object. Conversely, other materials may absorb incoming radar signals preventing them from reflecting back to the receiver. Stealth related commodities are sensitive from an export control perspective because some materials and processes involved have civil applications that make it difficult to control dissemination and retain U.S. leadership in this technology. Concerns over the potential export of this material led the Department of State to reclassify certain stealth-related technology as munitions in the 1990s.", "Congress has debated the issues of how strictly to control exports of commercial communications satellites and whether monitoring of foreign launch operations has been effective in preventing disclosures of missile secrets. In 1998, the Cox Committee found that U.S. satellite manufacturers provided missile design information and skills to China through the improper transfer of launch failure analysis. Exports of satellites were licensed by the Department of Commerce from late 1996 until March 1999. In October 1998, Congress returned the authority, effective March 15, 1999, to license exports of commercial communications satellites to the Department of State which had traditionally licensed missile technology exports. The satellite industry claims that this transfer has led to licensing delays and lost sales resulting from regulatory uncertainty, and they have lobbied to reverse export controls to Commerce. Satellites launched for commercial communication purposes may contain embedded sensitive technology such as positioning thrusters, signal encryption, mating and separation mechanisms, and multiple satellite/reentry vehicle systems. As stand-alone items, these technologies are controlled under the U.S. Munitions List. The Foreign Relations Authorization Act of 2010-11 ( H.R. 2410 ), passed by the House on June 10, 2009, contained a provision that would grant the President flexibility to transfer commercial satellite and satellite components from the USML back to the CCL with the approval of the congressional committees of jurisdiction.", "This category covers manufacturing technology such as lathes and other manufacturing equipment used to produce parts for missiles, aircraft engines and arms. This capital equipment is increasingly sophisticated, employing advanced computer software and circuitry. The industry has been vocal in claiming that its competitive position has been hampered by the lack of multilateral controls over sales of this equipment, especially the lack of consensus on controls regarding China. On July 21, 2009, the BIS Office of Technology Evaluation released a critical technology assessment of 5-axis simultaneously controlled machine tools which found foreign availability for certain of these products in China and Taiwan and recommended their decontrol to these destinations.", "\"Hot section\" technology is used in the development, production and overhaul of jet aircraft both military and commercial. Technology developed principally by the Department of Defense is controlled by the U.S. Munitions List. However, technology actually incorporated in commercial aircraft is regulated by the Department of Commerce and falls under a separate foreign policy-based control category. During debates on EAA legislation in the 106 th Congress, several senators raised concerns about the possible decontrol of this technology and sought a \"carve-out\" of hot section and other sensitive technologies that would prevent such items from being decontrolled.", "The civilian aviation industry has long been concerned that the Directorate of Defense Trade Controls (DDTC), the agency within the Department of State that controls defense goods and technology, has been increasingly asserting jurisdiction over civilian aircraft parts and components. Section 17(c) of the EAA states, in part, that \"standard equipment certified by the Federal Aviation Administration (FAA), in civil aircraft and is an integral part of such aircraft, and which is to be exported to a country other than a controlled country, shall be subject to export controls exclusively under this act. Any such product shall not be subject to controls under Section 38(b)(2) [licensing requirements] of the AECA.\" In the aftermath of the QRS-11 case, in which DDTC asserted jurisdiction over a non-FAA component of a commercial standby instrument system (CSIS) under the jurisdiction of Commerce, commercial suppliers have complained that in order not to run afoul of the ITAR, they must submit commodity jurisdiction for items they believe are covered by 17(c).\nOn September 24, 2007, Representative Manzullo introduced legislation ( H.R. 3633 ) to clarify that civil aircraft equipment, parts, component, or technology eligible for export airworthiness approval under Federal Aviation Administration regulations are to be subject only to controls under the EAA. After negotiations with Congress and industry, DDTC released a new rulemaking clarifying the interpretation of Section 17(c) of the EAA. Under the regulation, Commerce will have jurisdiction over parts and components of civil aircraft when such components are standard equipment, covered by a civil aircraft type certificate issued by the Federal Aviation Administration, and is an integral part of the aircraft. For such parts and components not considered significant military equipment (SME), this means that suppliers will no longer have to submit the part or component for a commodity jurisdiction determination.", "Exports of technology, know-how, and non-encryption source code is \"deemed\" to have been exported when it is released to a foreign national within the United States. Such knowledge transfers are regulated by the Export Administration Regulations, which require that a license must be obtained by a U.S. entity to transfer technology to a foreign national in the United States if the same transfer to the home country of the foreign national would require a license. Deemed exports are not expressly mentioned in the 1979 EAA. House versions of EAA in the 107 th Congress sought to explicitly define deemed exports as exports falling under the jurisdiction of the act. Processing deemed export license applications has become a larger part of BIS activity. In FY2007, BIS reviewed 1,056 deemed export licenses (5.4% of the total licenses submitted to BIS) and reports that nearly 57% of deemed licenses reviewed were for Chinese nationals.\nIn March 2005, BIS established a rule-making procedure in response to an Inspector General's (IG) report, which recommended that BIS alter the standard governing which foreign nationals are subject to export controls. Currently, foreign nationals are subject to export controls requirements based on their country of citizenship or permanent residency; however, the IG recommended that country of birth should be the standard used. According to the IG, foreign nationals from controlled destinations could access technology without scrutiny if they first establish permanent residency in a third country, and foreign nationals from controlled destinations often have dual nationalities. However, Under Secretary of Commerce David McCormick announced in December 2005 that deemed export controls would continue to be based on country of citizenship or permanent residency, not place of birth.\nIn December 2007, BIS released the report of the Deemed Export Advisory Commission (DEAC), which was commissioned in September 2006 to conduct an independent assessment of the deemed export regulatory regime. The Commission recommended the establishment of a \"trusted entity\" program for academia and industrial entities to qualify for a streamlined deemed export application process. The Commission proposed an evaluation of an applicant's probable loyalties that would include consideration of an applicant's country of birth, prior country of residence, current citizenship, and an examination of a person's prior and present activities to determine eligibility for a deemed export license. The Commission also recommended streamlining certain terminology in the deemed export regulations and the establishment of an outside panel of experts to conduct an annual \"sunset\" review of technologies on the Commerce Control List.\nThe DEAC recommendations were highly criticized by industry representatives and the research community with one group summing up the proposals as \"unadministerable for the government and difficult-to-impossible to comply with for industry.\" BIS published a notice of inquiry in May 2008 seeking comment on the scope of technologies on the Commerce Control List subject to deemed export controls and on the criteria used to assess country affiliation for foreign nationals. While this inquiry has yet to result in a formal rulemaking, another DEAC recommendation, the Emerging Technologies and Research Advisory Committee (ETRAC) has begun to meet and has been grappling with these issues.", "A principal theme in debates on export administration legislation is the tension between commercial and national security concerns. These concerns are not mutually exclusive, and thus it is often difficult to characterize opposing camps. For example, nearly everyone favors reform of the current system, yet no one considers themselves opposed to national security. Generally, however, many who favor reform of the current export control accept the business perspective that such reform would assist U.S. business to compete in the global marketplace. Others view the issue more from a national security perspective. To this group, reform should be concerned less with the abilities of U.S. industry to export and more with effective controls placed on potential exports to countries that threaten the security of the United States, terrorists, violators of human rights, and proliferators of weapons of mass destruction. From these different perspectives, controversies arise regarding the controllability of technology, the effectiveness of multilateral regimes, the bureaucratic structure of the licensing process and the impact of export controls on the U.S. economy.", "The foreign availability and mass market provisions of EAA reauthorization legislation, and the underlying concept of the controllability of technology, have proved controversial in the EAA debate. Industry groups that have taken an active position on legislation to replace the 1979 EAA have considered the adoption of these provisions as a key benefit of potential EAA legislation. The foreign availability and mass market concepts are integral to their contention that the flow of technology cannot be effectively controlled, and that U.S. dominance of cutting-edge technology can no longer be assumed. According to their arguments, unilateral controls will not stop other countries from obtaining advanced technology. Advocates of this viewpoint claim that \"countries of concern\" will simply obtain this technology from other nations. Adherents to this view regard current multilateral controls on dual-use articles as ineffectual. From this perspective, only American business suffers from the unilateral nature of U.S. export controls. In the process, foreign business wins new markets or gains an incentive to enter new markets.\nAccording to the industry position, unilateral export controls are also becoming increasingly unworkable as the economy undergoes globalization. The current export control system is predicated on goods being manufactured or assembled in one country. In many industries, however, component parts are manufactured worldwide and are considered commodities. If these parts are not available from one source on a timely basis, they can be obtained elsewhere. Purchasing managers at Daimler Chrysler Aerospace, for example, reportedly have been instructed to reduce dependence on American components for defense and space technology products because of delays associated with American licensing procedures.\nOther participants in the export control debate are concerned about the mass market and foreign availability arguments advanced by industry proponents. Critics charge that the mass market standard would effectively nullify the whole U.S. control regime by decontrolling any item that met the criteria under the law. They assert that virtually any product, including dual-use items used for proliferation purposes, could qualify for mass market status. Similarly, as one non-proliferation advocate testified regarding EAA legislation in the 106 th Congress, the foreign availability criterion would allow the sale of \"anything a controlled country can purchase from a rogue buyer.\"\nA related argument made by industry is that national security is enhanced by robust export industries. This argument is predicated on the changing nature of defense procurement, research and development. During the Cold War, the formative period of the current export control regime, the military conducted considerably technical research on its own and provided funds for research and development. Now that situation is largely reversed. The military now purchases many items 'off-the-shelf' and relies to a greater extent on commercial applications. Industry argues that it is in the national security to sell current technology to generate funds to develop future technology. If American firms are competitively hindered because of export controls, the argument goes, foreign firms will gain market share, increase profits, invest more in R&D, shrink and possibly surpass our technological lead. These circumstances, in turn, potential could affect the quality of the technology available for national security purposes. Thus, industry argues it needs a streamlined export process, one that will not needlessly impede exports.\nCritics of industry's national security position reject this argument. They maintain that the United States does not promote its national security by selling advanced technology to potentially hostile states. This technology, if sold to a regime of dubious stability, could be used against the United States or allies in the future. Proponents of this argument point to the case of Iraq, which received U.S. weaponry in the 1980s when Saddam Hussein was considered a useful counterweight to Iran. Subsequently, this technology was used against Kuwait and allied forces in the Persian Gulf War. Reliance on the civilian sector for R&D, they claim, is a policy decision brought about by declining defense budgets in the 1990s. Some further argue that R&D that advances defense capabilities should be funded within the Defense Department if it is necessary to maintain controls on technology to certain nations.", "Industry groups and some other observers have used the rapid rise in computing power as an illustration both of the uncontrollable nature of technology and the inability of the export control system to account for such innovation. According to one national security analyst, attempting to control computing power is not \"feasible or effective.\" He maintains that the restraint of computer trade is self-defeating because it cedes markets and profits that could be used for R&D.\nIncreasing computing speeds combined with networking advances have blurred the distinction between super-computers and commodity computers. Microprocessors that individually comply with export regulations can be linked together to create servers with MTOPS capabilities that breach export thresholds. If enough processors are linked together, they can create a parallel processing system with capabilities that approach those of a super-computer. The Defense Science Board noted that the ability to cluster commodity computers in order to multiply computing power erodes the ability to restrict access to high-performance computing, even if high-performance stand-alone machines can be controlled.\nOther observers believe the United States can restrict access to the highest computer technology by limiting exports. They maintain that American-made computers are perceived as superior, and thus carry greater cachet than products from other nations. They note that the purchase of an American-made computer product also buys superior networking and service, often at a better price. Control advocates maintain that these distinctions are significant, that qualitative differences are important. In addition, networking a parallel processing system, as those without access to advanced computing technology must do to increase computing capability, presents additional challenges distinct from those faced by engineers of commodity computers.", "One policy that has been attempted to monitor and verify the end-use of controlled goods is the post-shipment verification requirement (PSV) on the export of HPCs mandated by Sec 1213 of NDAA98 (see above). This section requires that a PSV be made for computers destined for computers controlled to tier III destinations, including China, Russia, India, Pakistan, Israel and other nations in areas of regional instability. Lawmakers have been especially concerned with exports of HPCs to the People's Republic of China. The GAO has reported that China has restricted access to facilities that contain U.S. HPC exports. It has also found that BIS has made limited efforts to monitor or to verify compliance with the terms and conditions specified by the export license. Reportedly, the difficulty in monitoring the end-use of HPC exports in China has been exacerbated by the close ties that Chinese state owned enterprises have with the Chinese military.", "The United States participates in several multilateral export control regimes. The principal multilateral regime related to dual-use goods and technology is the Wassenaar Arrangement (WA) on Dual-Use Goods and Munitions. The WA was created in 1996 and is the successor organization to the Coordinated Committee (CoCom), the Cold War era dual-use control regime that ended in 1994. The WA dual-use control list is generally consistent with U.S. CCL items subject to national security controls. The United States also participates in four proliferation related control regimes: the Australia Group (chemical and biological weapons and precursors); the Missile Technology Control Regime, and the Nuclear Suppliers Group.\nGenerally, these groups are characterized by national discretion, a common control list, and regular reporting requirements. Each group has formulated a common control list and member nations control the exports of those goods under their own national laws, a policy know as national discretion. Unlike CoCom, however, these organizations do not perform a review function prior to the grant of a national export license. The regime's members do pledge disclosure of export licensing decisions, and pledge consultation on sensitive export licenses. Some groups adhere to a \"no undercut\" provision—that is, a member state will not license the sale of an item in which a license has been denied by another state. However, these groups operate by consensus and are hampered by limited institutional structures.\nSome observers contend that the Wassenaar Arrangement, in particular, is ineffective because it relies on consensus of member states. The necessity for consensus, critics charge, results in a level of control acceptable to all. Its minimal reporting requirements mandate notification only that an item has been sold, thus preventing effective pre-export consultation among member states.\nIndustry representatives stress the necessity of effective multilateral controls. They argue that export controls are effective only if they are adhered to by all states capable of exporting a given technology. For example, the machine tool industry has been at the forefront in criticizing the unilateral nature of our export policies, especially concerning exports to China. It notes that there is no consensus among Wassenaar Arrangement countries on the proper limits of technology transfer to China. (Indeed, no country is explicitly targeted by Wassenaar.) Stringent domestic controls combined with minimal multilateral constraints only damage American companies, according to industry spokesmen. They fault the U.S. for having an overly rigorous licensing policy towards China, without noticeably pursuing a strategy to convince our allies to follow our lead.\nProponents of tighter export restrictions note that America traditionally has taken the lead in export controls and non-proliferation efforts. These efforts included the original EAA, adopted in 1949, and the establishment of CoCom. They argue that efforts to strengthen CoCom's successor regime, the Wassenaar Arrangement, cannot succeed if Washington itself is loosening export restrictions. Thus, the United States must take the lead in order to convince other nations to follow the U.S. example. Adherents of this viewpoint argue that the successful negotiating strategy in these multilateral fora is to adopt controls first and then persuade other countries to follow suit. Hence in their view, an export control strategy pegged solely on the policies of other nations, negotiated by consensus, is ineffectual and harmful to national security.\nBoth industry spokesmen and advocates of heightened export controls agree that the multilateral controls need to be strengthened. Yet, to do this requires consensus on which goods and which countries represent a threat. There does seem to be agreement among western nations to restrict dual-use items to a limited number of 'countries of concern,' yet consensus breaks down with regard to other states, notably China. The export control dilemma in this context becomes clear. Without consensus on a particular target country, the question becomes whether the United States should impose controls unilaterally. One then needs to determine either: which non-proliferation or other foreign policy goals are sufficiently important to offset possibly damaging American business, and possibly costing American jobs; or how large an economic benefit would justify risking important national security goals.", "Debate over export controls has often focused on China. The dilemma that encapsulates U.S. export control policy to China is how to benefit from the potentially vast Chinese market and low Chinese production costs while minimizing the risk to U.S. security interests of exporting sensitive dual-use technologies to China. Some representatives of the business community have argued that U.S. export control policy toward China is too stringent. They claim such controls have hampered technology transfers to China in the past few years while the controls of U.S. allies have not. They reported that Chinese companies will not ask U.S. companies to bid on sales because of the delays associated with the U.S. licensing process. As one industry spokesman has testified: \"The result has been that the Chinese are denied nothing in terms of high technology, but U.S. firms have lost out in a crucial market. This serves neither our commercial nor our strategic interests.\"\nHowever, other analysts and several Members of Congress have expressed grave concerns about China's dual-use technology acquisitions. They cite findings of the Cox Commission that China evaded existing export controls to illegally obtain missile design and satellite technology and that China has circumvented end-user controls on high-performance computers. According to this view, the Commission's findings show the need for both tightened controls and greater enforcement of export controls against China. In addition, China has been implicated in several nuclear, missile, and chemical proliferation activities.", "On June 19, 2007, BIS published the final rule entitled \"Revisions and Clarification of Export and Re-export Controls for the People's Republic of China\" (72 Fed. Reg. 33646). The final rule is composed of three parts: a new licensing requirement for certain products for military end-use in China, a validated end-user (VEU) program, and a requirement to obtain an end-user statement for certain licensed products. The proposed rule has been driven by the concern that the export of commercial technology to certain end-users is undermining the arms embargo that the United States and others maintain against China. Others, including industry, have questioned the scope and efficacy of these new controls.\nThe new licensing policy has two distinct components: the establishment of new military end-use controls for the PRC and a revised License Review Policy for national security controlled items destined for the PRC. The aspect that has received the most attention is the establishment of new military end-use controls on 20 product categories consisting of 31 export control classification numbers (ECCN). Currently, these items are controlled primarily for anti-terrorism reasons, thus a license is required only for exports to countries determined to be state sponsors of terrorism (Cuba, Iran, North Korea, Sudan, Syria). Under the new rule, BIS will require a license for the export, reexport, or in country transfer of these items if the exporter knows, has reason to know, or is informed by BIS that the item is or may be intended for military end-uses in the PRC. The final rule also revises the long-standing licensing policy for National Security controlled items destined for the PRC contained in the EAR, Part 742.4(b)(7). It clarifies that there is a presumption of denial for license applications to export, reexport, or transfer items that would make a direct and significant contribution to the PRC's military capabilities in certain key weapons systems.\nThe second component of the Final Rule also increases the exemption threshold for obtaining End-Use Statements (EUS) from the Ministry of Foreign Commerce (MOFCOM) of the PRC. The PRC requires that MOFCOM issue an EUS before BIS can conduct a pre-license check or post-shipment verification for an export. A U.S. exporter must request that the importer obtain the EUS for a license application because the BIS inspection is often a statutory or regulatory pre-requisite for approving some applications. The rule increases the amount of the value of the license exempted from the EUS requirement from $5,000 to $50,000 for most goods to the PRC. However, it expands the EUS requirement to cover all license applications to the PRC reaching this threshold. Previously, EUS were required only for items under national security controls.", "The VEU is the third component of the China Rule. The VEU establishes a method by which trusted PRC civilian end-users can be nominated for the program, and, if approved by BIS, the eligible end-users may receive items eligible under the program without a license. The rule sets up an applications process by which an end-user can be nominated for the program. In approving a candidate for VEU status, the ERC will evaluate the entity's exclusive engagement in civilian end-use activities, its compliance record with U.S. export controls, its capability to comply with the recordkeeping requirements of the VEU authorization, agreement to on-site review prior to approval and subsequently to ensure adherence to VEU conditions, and its relationship with U.S. and foreign companies. On September 11, 2007, China's Minister of Foreign Commerce (MoFCom) announced that any company seeking VEU status would need authorization from MoFCom before allowing plant or records inspections.\nNot all items on the CCL are eligible for export under this program. Items controlled for crime control or missile technology by the EAR do not qualify for export under this program due to statutory reasons. In addition, not all items that are eligible for export under this program can be exported to all validated end-users. The approved VEU application will be accompanied by a list of items that can be exported to the end-user, and this list can be expanded or contracted by the ERC. Once approved , the VEU can import approved items from any exporter, not just the nominee.\nAccording to BIS, the proposal would streamline licensing for certain companies for whom exporters routinely request and receive licenses for the same product over time. Thus, resources that currently process these routine applications could be diverted to staff more problematic license applications. On October 2, 2007, BIS announced the expansion of the VEU program to eligible companies in India, and General Electric India was named as the first eligible company on June 17, 2009.\nOn October 19, 2007, BIS announced the first five VEU companies: Applied Materials China, National Semiconductor, Boeing Hexcel AVIC I Joint Venture, Semiconductor Manufacturing International Corporation (SMIC), and Shanghai Hua Hong NEC Corporation (HHNEC). BIS reported that these companies had imported licensed goods valued at $54.3 million in 2006. In January 2008, the Wisconsin Project on Nuclear Arms Control charged in a report that two of the entities, AVIC I and HHNEC, present diversion risks through their corporate affiliations with government-owned companies that do business with the Chinese military. The Wisconsin Project also contend that some of these entities' affiliates have run afoul of U.S. proliferation sanctions and export control laws. Then BIS Undersecretary Mario Mancuso responded to the report by maintaining that the companies had a \"demonstrable history of using U.S. technology in the past...We know a lot about these companies and know a lot about how they use the technologies they are authorized to receive through VEU. These technologies were previously available to these companies by license, and [the VEU] judgment was based on data, not conjecture.\"\nControversy regarding the VEU has not abated. A GAO study of September 2008 recommended the suspension of the VEU program with China because BIS has not been able to reach a VEU-specific inspection agreement with China for conducting on-site reviews of validated end-users. Nor has the agency developed criteria for selecting candidates for on-sites, or the procedures for conducting the on-site review itself, according to GAO. Commerce notes that it has conducted checks under the pre-existing 2004 end-use verification understanding (EUVU). However, checks conducted under this system require the aforementioned MoFCom end-use statement, running counter to the trade facilitation rationale of the program, and if the companies do not voluntarily seek an EUS from MoFCom, then an inspection cannot take place. On January 13, 2009, BIS announced full implementation of the VEU to China \"with agreement on procedures to ensure the program's secure and efficient operation.\" More recently, at a June 4, 2009, House Energy and Commerce Committee hearing, Representative Markey cited information from the Wisconsin Project claiming that another VEU approved entity, Aviza Technology China, shared an address with a state-owned firm that was sanctioned by the State Department in December 2006 for illicit sales to Iran and Syria.", "As noted earlier, the Bureau of Industry and Security (BIS) within the Department of Commerce (DOC) is responsible for regulating dual-use exports. However, other agencies also provide input into the licensing process. BIS consults with other members of the national security community on license applications and commodity classifications. The Defense Technology Security Agency in the Department of Defense conducts national security reviews for license applications referred from Commerce and State. The Department of Energy also reviews dual-use license applications referred by BIS for nuclear uses and nuclear end-users, and it and the Nuclear Regulatory Commission license exportation of nuclear materials. In addition, the Directorate of Defense Trade Controls (DDTC) at the State Department administers the International Traffic in Arms Regulations. Through the U.S. Munitions List, DDTC controls the export of weapons and military technology.\nIndustry leaders identify several problems with the existing licensing system. First, overlapping jurisdiction between the Commerce and State Departments with regard to certain dual-use products makes it unclear where the exporters need to apply for licenses. Second, extended time periods required for license approval compromise the reliability of U.S. suppliers and make it hard for manufacturers and customers to plan ahead. Third, the licensing system does not reflect advances in technology, foreign availability of dual-use items, and the economic impact of export controls on the industrial base. Finally, there is no opportunity for judicial review of licensing decisions.\nOthers consider foreign availability and economic impact to be important considerations, yet secondary to national security. Export administration officials claim that they conduct thorough, fair, and expeditious license reviews. Time is required to check proposed export items against lists of controlled items, check end users and end uses against lists of suspect recipients, and coordinate with several government agencies. Officials say they must be able to \"stop the clock\" to obtain additional information and investigate certain issues on a case-by-case basis to insure that sensitive technologies do not find their way into the wrong hands.\nSome analysts who see national security as the primary purpose of the export control regime question whether BIS belongs in the Department of Commerce. They claim that DOC's mission is mostly one of promoting exports and generally serving commercial interests. This, in some eyes, may create an institutional bias towards the granting of export licenses and skew the process against national security goals. Other analysts point to the full and equal participation of other agencies, particularly the Department of Defense, in the current structure to argue that such bias is unlikely to prevail." ], "depth": [ 0, 1, 1, 2, 3, 3, 3, 3, 3, 4, 4, 4, 2, 1, 2, 3, 4, 4, 3, 4, 3, 2, 3, 4, 3, 3, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2, 3, 3, 2, 2, 2, 3, 2 ], "alignment": [ "h0_title h1_title", "h0_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "h0_full", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_title h1_full", "h1_full", "", "", "", "h1_full", "h1_title", "h1_full", "h0_full" ] }

{ "question": [ "How does Congress delegate its regulatory authority over foreign commerce?", "What is the EAA?", "What powers does the EAA grant the President?", "What items are included on the CCL?", "What role does BIS play in regulating foreign commerce?", "What are the two main stances on export administration legislation?", "How can current export rules harm the U.S. economy?", "How useful are export controls as security measures?", "What goods are of special interest in this export debate?", "How wide-reaching are the competing perspectives on export controls?" ], "summary": [ "Through the EAA, Congress delegates to the executive branch its express constitutional authority to regulate foreign commerce by controlling exports.", "The EAA provides the statutory authority for export controls on sensitive dual-use goods and technologies: items that have both civilian and military applications, including those items that can contribute to the proliferation of nuclear, biological, and chemical weaponry. The EAA, which originally expired in 1989, periodically has been reauthorized for short periods of time, with the last incremental extension expiring in August 2001.", "EAA confers upon the President the power to control exports for national security, foreign policy or short supply purposes. It also authorizes the President to establish export licensing mechanisms for items detailed on the Commerce Control List (CCL), and it provides some guidance and places certain limits on that authority.", "The CCL currently provides detailed specifications about dual-use items including equipment, materials, software, and technology (including data and know-how) likely requiring some type of export license from the Commerce Department's Bureau of Industry and Security (BIS).", "BIS administers the Export Administration Regulations (EAR), which, in addition to the CCL, describe licensing policy and procedures such as commodity classification, licensing, and interagency dispute resolution procedures.", "In debates on export administration legislation, parties often fall into two camps: those who primarily want to liberalize controls in order to promote exports, and those who believe that further liberalization may compromise national security goals.", "According to this view, the resultant loss of competitiveness, market share, and jobs can harm the U.S. economy, and that harm to particular U.S. industries and to the economy itself can negatively impact U.S. security.", "Others believe that security concerns must be paramount in the U.S. export control system and that export controls can be an effective method to thwart proliferators, terrorist states, and countries that can threaten U.S. national security interests.", "Controversies have arisen with regard to particular exports such as high performance computers, encryption technology, stealth materials, satellites, machine tools, \"hot-section\" aerospace technology, and the issue of \"deemed exports.\"", "The competing perspectives on export controls have clearly been manifested in the debate over foreign availability and the control of technology, the efficacy of multilateral control regimes, the licensing process and organization of the export control system, and the economic effects of U.S. export controls." ], "parent_pair_index": [ -1, 0, 0, 2, 0, -1, 0, 0, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 2, 2, 2, 2, 2 ] }

{ "title": [ "", "Most Recent Developments", "Public Law P.L. 110-5 (H.J.Res. 20) Enacted", "Senate Bill S. 3708 Reported", "House Bill H.R. 5647 Reported", "President's Budget Submitted", "Note on Most Recent Data", "Overview and Key Issues", "Program Level and Current Year Appropriations", "President's Request", "Budget Highlights", "House Bill", "House Highlights", "Senate Bill", "Senate Highlights", "Public Law", "Major Discretionary Programs, FY2006-FY2007", "\"Across-the-Board\" Rescission for FY2006", "302(a) and 302(b) Allocation Ceilings", "Advance Appropriations", "Major Funding Trends", "Earmarks for Specific Projects", "Department of Labor", "Key Issues", "President's Request", "House Bill", "Senate Bill", "CRS Products", "Websites", "Detailed Appropriations Table", "Department of Health and Human Services", "Key Issues", "President's Request", "House Bill", "Senate Bill", "Abortion: Funding Restrictions", "Embryonic Stem Cell Research: Funding Restrictions", "CRS Products", "Websites", "Department of Education", "Key Issues", "President's Request", "House Bill", "Senate Bill", "ESEA Funding Shortfall?", "IDEA Funding Shortfall?", "Forward Funding and Advance Appropriations", "CRS Products", "Websites", "Detailed Appropriations Table", "Related Agencies", "Key Issues", "President's Request", "House Bill", "Senate Bill", "CRS Products", "Websites", "Detailed Appropriations Table" ], "paragraphs": [ "", "", "Following a series of three continuing resolutions, the Revised Continuing Appropriations Resolution, 2007 ( P.L. 110-5 ), was enacted into law on February 15, 2007. According to the Congressional Budget Office (CBO), the resolution provides an estimated $144.4 billion in discretionary appropriations for Labor, Health and Human Services, and Education, and Related Agencies (L-HHS-ED) activities. The FY2006 L-HHS-ED discretionary amount was $147.3 billion, which included $4.2 billion for 2005 Gulf Coast hurricane relief and pandemic influenza preparedness. Actual FY2007 appropriations for programs, projects, and activities were not specified by P.L. 110-5 ; these amounts will become available at a later time .", "On July 20, 2006, the Senate Committee on Appropriations reported S. 3708 ( S.Rept. 109-287 ), its proposal for FY2007 L-HHS-ED appropriations. The bill would provide $142.9 billion in FY2007 discretionary funds for L-HHS-ED.", "On June 20, 2006, the House Committee on Appropriations reported H.R. 5647 ( H.Rept. 109-515 ), its proposal for FY2007 appropriations for L-HHS-ED programs. The bill would provide $142.4 billion in discretionary funds for L-HHS-ED programs.", "On February 6, 2006, the President submitted the FY2007 budget to Congress; the request was for $138.3 billion in discretionary funds for L-HHS-ED programs.\nTable 1 summarizes the legislative status of FY2007 L-HHS-ED appropriations.", "In this report, unless stated otherwise, data on FY2006 appropriations and FY2007 appropriations proposals are based on the June 13, 2006, table of the House Committee on Appropriations, except FY2007 Senate amounts are based on S.Rept. 109-287 . In most cases, data represent net funding for specific programs and activities, and take into account current and forward funding and advance appropriations; however, all data are subject to additional budgetary scorekeeping. Except where noted, data refer only to those programs within the purview of L-HHS-ED appropriations, and not to all programs within the jurisdiction of the relevant departments and agencies. Funding from other appropriations bills, and entitlements funded outside of the annual appropriations process, are excluded.\nThe FY2007 data in this report reflect the provisions of H.R. 5647 , as reported by the House Committee on Appropriations on June 20, 2006 ( H.Rept. 109-515 ), and the provisions of S. 3708 , as reported by the Senate Committee on Appropriations on July 20, 2006 ( S.Rept. 109-287 ). Actual FY2007 appropriations for programs, projects, and activities were not specified by P.L. 110-5 ; these amounts will become available at a later time.\nThe FY2006 data in this report are post-rescission, and take into account the 1% cut of most FY2006 discretionary amounts required by P.L. 109-148 (see the section titled \"Across-the-Board\" Rescission for FY2006 ,\" later in this report). The FY2006 amounts include funding from some—but not all—FY2006 supplemental appropriations; amounts shown are those provided by the June 13, 2006, table of the House Committee on Appropriations. Specifically, these amounts include funding provided by P.L. 109-148 for relief from the 2005 Gulf Coast hurricanes and for pandemic influenza preparedness, as well as other supplemental funding provided by P.L. 109-13 , P.L. 109-171 , and P.L. 109-204 . However, FY2006 data do not yet take into account the supplemental appropriations for the 2005 Gulf Coast hurricanes and pandemic influenza enacted through P.L. 109-234 , the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006 (signed into law on June 15, 2006). The FY2006 amounts in this report differ from those shown for FY2006 in the H.R. 3010 conference report ( H.Rept. 109-337 , December 13, 2005) for L-HHS-ED appropriations, because the conference amounts were pre-reduction and excluded FY2006 supplemental appropriations.", "This report describes the President's proposal for FY2007 appropriations for L-HHS-ED programs, as submitted to Congress on February 6, 2006, and the congressional response to that proposal. It compares the President's FY2007 request to the FY2006 L-HHS-ED amounts. It tracks legislative action and congressional issues related to the L-HHS-ED appropriations bill, with particular attention paid to discretionary programs. However, the report does not follow specific funding issues related to mandatory L-HHS-ED programs—such as Medicare or Social Security—nor does it follow any authorizing legislation that may be needed prior to funding some of the President's budget initiatives. For a glossary of budget terms and relevant websites, see Appendix A , \"Terminology and Web Resources.\" For funding sources for L-HHS-ED agencies, see Appendix B , \"Context of L-HHS-ED Appropriations.\"\nThe L-HHS-ED bill typically is one of the more controversial of the regular appropriations bills, not only because of the size of its funding total and the scope of its programs, but also because of the continuing importance of various related issues, such as restrictions on the use of federal funds for abortion, stem cell research, and human cloning. This bill provides discretionary funds for three federal departments and 14 related agencies including the Social Security Administration (SSA).\nAmong the various appropriations bills, L-HHS-ED is the largest single source of discretionary funds for domestic federal programs; the Department of Defense (DOD) bill is the largest source of discretionary funds among all federal programs. According to the Budget of the United States Government Fiscal Year 2007 , Table S-4, the FY2006 L-HHS-ED bill accounted for $141.8 billion (16.8%) and the DOD bill accounted for $399.2 billion (47.3%) of the estimated $843.3 billion total for all federal discretionary budget authority in FY2006, excluding supplemental and emergency funding. This section summarizes major funding changes proposed for L-HHS-ED and related issues such as 302(b) allocations, advance appropriations, and earmarks for specific projects. Later sections provide details on individual L-HHS-ED departments and agencies.", "Table 2 summarizes the L-HHS-ED appropriations for FY2007, including both discretionary and mandatory appropriations. The table shows various aggregate measures of L-HHS-ED appropriations enacted for FY2006 and proposed for FY2007, including the discretionary program level, current year, and advance appropriations, as well as scorekeeping adjustments.\nProgram level appropriations reflect the total discretionary appropriations in a given bill, regardless of the year in which they will be spent, and therefore include advance funding for future years. Unless otherwise specified, proposed FY2007 appropriations levels in this report refer to program level amounts . Current year appropriations represent discretionary appropriations in a given bill for the current year, plus discretionary appropriations for the current year that were enacted in prior years—for example, FY2006 appropriations that were enacted in the FY2005 act. Current year discretionary appropriations are similar to the amount counted for the 302(b) allocation ceilings (discussed later in this report). Advance appropriations are funds that will not become available until after the fiscal year for which the appropriations are enacted (for example, funds for certain education programs like Title I Part A Grants to Local Educational Agencies for the Education of the Disadvantaged that were included in the FY2006 act that cannot be spent before FY2007 at the earliest, discussed later in this report). Scorekeeping adjustments are made to account for special funding situations, as monitored by the Congressional Budget Office (CBO).\nBecause appropriations may consist of mixtures of budget authority enacted in various years, two summary measures are frequently used—program level appropriations and current year appropriations. How are these measures related? For an \"operational definition,\" program level funding equals (a) current year, plus (b) advances for future years, minus (c) advances from prior years, and minus (d) scorekeeping adjustments. Table 2 shows each of these amounts, along with current year funding for mandatory programs and the grand total for L-HHS-ED.", "On February 6, 2006, the President's FY2007 request was submitted to Congress, less than two months after the regular FY2006 L-HHS-ED appropriations were signed into law as P.L. 109-149 (enacted December 30, 2005). With regard to the President's budget, the primary issues raised during congressional consideration of any appropriations request generally relate to proposed funding changes. The following summary highlights changes of at least $100 million proposed in FY2007 discretionary budget authority in comparison with the FY2006 amount. Viewing this list by itself should be done with caution, since the relative impact of a $100 million funding change to a $500 million program (a 20% increase or decrease) is greater than a $100 million change to a $5 billion program (a 2% increase or decrease). Later in this report, the discussion of budgets for individual departments includes tables to compare the FY2007 request with the FY2006 funding for many of the major programs in the L-HHS-ED bill.", "Overall, $138.3 billion in discretionary appropriations was requested for L-HHS-ED for FY2007, $9.0 billion (6.1%) less than the FY2006 amount of $147.3 billion; the FY2006 amount includes extra funds for relief related to the 2005 Gulf Coast hurricanes and for pandemic influenza preparedness.\nFor the Department of Labor (DOL), the FY2007 request included a decrease of $822 million for job training programs authorized by the Workforce Investment Act of 1998 (WIA), including $152 million less for WIA Adult Training, $100 million less for WIA Youth Training, and $483 million less for WIA Dislocated Worker Assistance. A decrease of $142 million was proposed for the Unemployment Compensation. Overall, $11.0 billion in FY2007 discretionary appropriations was requested for DOL, 6.0% less than the FY2006 amount of $11.7 billion. For the Department of Health and Human Services (HHS), the FY2007 request proposed an increase of $181 million for Community Health Centers. Decreases were proposed of $136 million for Health Professions programs other than those for nursing, $198 million for Children's Hospital Graduate Medical Education (CHGME), and $128 million for Buildings and Facilities at the Centers for Disease Control and Prevention (CDC). A $118 million initiative for Fraud and Abuse Control at the Centers for Medicare and Medicaid Services (CMS) was proposed. A decrease of $379 million was requested for the Low-Income Home Energy Assistance Program (LIHEAP). The $550 million funding for Social Services Block Grant (SSBG) discretionary activities would be eliminated, as would the $630 million for the Community Services Block Grant (CSBG). Pandemic Influenza Preparedness would receive no additional funds; $5.4 billion was provided in FY2006. Overall, $61.8 billion in FY2007 discretionary appropriations was requested for HHS, 7.3% less than the FY2006 amount of $66.7 billion. For the Department of Education (ED), the FY2007 request proposed an increase of $1.1 billion for Elementary and Secondary Education Act of 1965 (ESEA) programs in aggregate. It proposed five K-12 education initiatives of at least $100 million, including $1.5 billion for High School Reform. The request proposed the elimination of the $272 million Educational Technology State Grants, and the $347 million Safe and Drug-Free Schools State Grants. An increase of $100 million was requested for the Special Education Part B Grants to States program under the Individuals with Disabilities Education Act (IDEA). It proposed the elimination of the $1.3 billion Perkins Vocational Education program. A decrease of $385 million was proposed for the Pell Grants program, and a decrease of $448 million for TRIO programs. No funds were requested for the $303 million GEAR UP program. A portion of the Perkins Loan Assets would be recalled, producing a $664 million offset. No additional funds were requested for education programs funded at $1.9 billion in response to the 2005 Gulf Coast hurricanes. Overall, $54.3 billion in FY2007 discretionary appropriations was requested for ED, 5.7% less than the FY2006 amount of $57.6 billion. For the related agencies, the FY2007 budget proposed to eliminate the two-year advance appropriations for the Corporation for Public Broadcasting (CPB), which was provided with a two-year advance appropriation of $400 million in the FY2006 bill. An increase of $271 million was requested for the Supplemental Security Income (SSI) discretionary activities, and an increase of $114 million for Social Security Administration (SSA) Administrative Expenses. Overall, $11.2 billion in FY2007 discretionary appropriations was requested for related agencies, 1.8% less than the FY2006 amount of $11.4 billion.", "The House Committee on Appropriations reported its version of the FY2007 L-HHS-ED appropriations as H.R. 5647 ( H.Rept. 109-515 ) by a voice vote on June 20, 2006. Consideration of the bill by the full House has not yet begun; the Committee amendment to increase the minimum wage is reportedly one of the issues causing delay. The White House has not issued a Statement of Administration Policy regarding the bill.", "Overall, the House bill, as reported, would provide FY2007 discretionary appropriations of $142.4 billion for L-HHS-ED programs. The President requested $138.3 billion; the FY2006 amount was $147.3 billion. The House bill differs from the President's request in a number of details.\nFor DOL, the House bill would provide $5.0 billion for WIA programs in aggregate, $555 million more than requested. WIA Adult Training would receive $854 million, $142 million more than requested. WIA Dislocated Worker Assistance would receive $1.5 billion, $362 million more than requested. Dislocated Worker Assistance State Grants would receive $1.2 billion, $318 million more than requested. A rescission of $325 million of prior-year appropriations for WIA and related programs would be made under the House bill; no request was made for a rescission. Overall, the House bill would provide $11.5 billion in discretionary funds for DOL; $11.0 billion was requested; and $11.7 billion was provided for FY2006. For HHS, the House bill would fund Health Professions other than nursing at $163 million, $154 million more than requested. The CHGME would receive $300 million, $201 million more than requested. Health Care-Related Facilities and Activities would receive $248 million; no funds were requested. The Preventive Health and Health Services Block Grant (PHBG) would receive $100 million; no funds were requested. The National Institutes of Health (NIH) would receive $28.25 billion, $100 million less than requested. The Agency for Healthcare Research and Quality (AHRQ) would receive a specific appropriation of $319 million; the request was for indirect funding of $319 million. The CMS Fraud and Abuse Control initiative would not be funded; $118 million was requested. LIHEAP would receive $2.1 billion, $329 million more than requested. The CSBG would be funded at $449 million; no funds were requested. Overall, the House bill would provide $63.7 billion in discretionary funds for HHS; $61.8 billion was requested; and $66.7 billion was provided for FY2006. For ED, the House bill would fund ESEA programs in aggregate at $22.8 billion, $1.6 billion less than requested. Of the President's five major education initiatives requested in the budget, only the School Improvement Grants would receive funding, at $200 million, the same as requested. Teacher Quality State Grants would receive $2.6 billion, $300 million less than requested. Safe and Drug-Free Schools State Grants would receive $310 million; no funds were requested. Perkins Vocational Education would receive $1.3 billion; no funds were requested. Pell Grants would receive $13.0 billion, $349 million more than requested. No portion of the Perkins Loan Assets would be recalled; the President proposed a $664 million recall. TRIO programs would receive $828 million, $448 million more than requested. GEAR UP would receive $303 million; no funds were requested. Overall, the House bill would provide $56.1 billion in discretionary funds for ED; $54.3 billion was requested; and $57.6 billion was provided for FY2006. For the related agencies, the House bill would provide $6.3 billion for SSA Administrative Expenses, $141 million less than requested. Overall, the House bill would provide $11.0 billion in discretionary funds for the related agencies; $11.2 billion was requested; and $11.4 billion was provided for FY2006.", "The Senate Committee on Appropriations reported its version of the FY2007 L-HHS-ED appropriations as S. 3708 ( S.Rept. 109-287 ) by a vote of 28 to 0 on July 20, 2006. Consideration of the bill by the full Senate has not yet begun. Unlike the House bill, the Senate version does not amend minimum wage provisions. The White House has not issued a Statement of Administration Policy regarding the bill.", "Overall, the Senate bill, as reported, would provide FY2007 discretionary appropriations of $142.9 billion for L-HHS-ED programs. The House bill, as reported, would provide $142.4 billion; the President requested $138.3 billion. The comparable FY2006 amount was $147.3 billion. The Senate bill differs from the House proposal in a number of ways.\nFor DOL, the Senate bill would fund Unemployment Compensation at a level $103 million less than the House amount. The bill does not include the House provision for a $325 million rescission of funds for WIA and related programs. Overall, the Senate bill would provide $11.6 billion in discretionary appropriations for DOL programs, $0.1 billion more than the House and $0.6 billion more than the request, but $0.1 billion less than DOL funding in FY2006. For HHS, the Senate bill would provide $100 million less than the House bill for CHGME, $116 million less for Infectious Diseases at the CDC, $301 million more for NIH, and $181 million more for the CSBG. Overall, the Senate bill would provide $64.2 billion in discretionary appropriations for HHS programs, $0.5 billion more than the House, $2.4 billion more than the request, but $2.5 billion less than HHS funding in FY2006. For ED, the Senate bill would provide $116 million more for ESEA programs in aggregate, $100 million less for the School Improvement Grants Initiative, $160 million more for Teacher Quality State Grants, $150 million less for IDEA Part B Grants to States, and $402 million less for Pell Grants. The Pell Grant maximum award would not be increased; the House bill proposed a $100 increase to $4,150 for FY2007. Educational Technology State Grants would be funded at $272 million; no funds would be provided by the House bill. The Innovative Education Block Grant would receive no funds; the House bill would provide $150 million. Overall, the Senate bill would provide $55.8 billion in discretionary appropriations for ED programs, $0.3 billion less than the House, $1.5 billion more than the request, and $1.8 billion less than ED funding in FY2006. For the related agencies, the Senate bill would provide $400 million for the CPB for FY2009; no FY2009 funds would be provided by the House bill. The Senate bill would provide $158 million less than the House bill for SSA Administrative Expenses. Overall, the Senate bill would provide $11.3 billion in discretionary appropriations for related agencies, $0.3 billion more than the House, $0.1 billion more than the request, and $0.1 billion less than funding for the related agencies of L-HHS-ED in FY2006.", "P.L. 110-5 ( H.J.Res. 20 ) , the Revised Continuing Appropriations Resolution, 2007, provides FY2007 appropriations for most L-HHS-ED activities. However, it does not specify the actual amount for most programs, projects, and activities. Rather, within limits, it allows agencies flexibility to make some adjustments to the FY2006 funding levels, and also provides additional funds to pay for 50% of the mandatory salary increases for FY2007 (§111). The Office of Management and Budget (OMB) must report to the appropriations committees within 15 days of enactment regarding the FY2007 amount for each appropriation account (§114); major agencies must report to the appropriations committees within 30 days of enactment regarding the FY2007 amounts at the subaccount level (§113).\nPrior to the enactment of P.L. 110-5 , a series of three continuing resolutions, beginning with P.L. 109-289 , was necessary because the regular L-HHS-ED appropriations were not enacted by the start of FY2007 on October 1, 2006. Under these resolutions, the funding level for each activity was provided at a rate of operations not to exceed the \"current rate\" under FY2006 conditions and authority [§101(d)]. Only the most limited funding actions were authorized in order to provide for the continuation of projects and activities (§110). New initiatives were prohibited (§104). For programs with high spend-out rates that normally would occur early in the fiscal year, special restrictions prohibited spending levels that would impinge on final FY2007 funding decisions (§109). For entitlements and other mandatory activities, obligations were allowed to be made for payments due during the duration of the resolutions [§114(b)]. The amounts that would have been provided by either the House-reported or Senate-reported FY2007 L-HHS-ED appropriations—including recommendations for both program terminations and other funding changes—were excluded from the funding calculation under the continuing resolution because the bills were not passed by either the House or the Senate by October 1, 2006. For additional information, please see CRS Report RL30343, Continuing Resolutions: Latest Action and Brief Overview of Recent Practices , by [author name scrubbed].\n1 st Continuing Resolution, P.L. 109-289 ( H.R. 5631 ) , provided temporary appropriations for the period October 1, 2006, through November 17, 2006, as long as regular appropriations were not enacted sooner (§106 of Division B of P.L. 109-289 ). H.R. 5631 was passed by the House on September 26 and by the Senate on September 29, and signed into law by the President on September 29, 2006, as P.L. 109-289 . 2 nd Continuing Resolution, P.L. 109-369 ( H.J.Res. 100 ) , extended the provisions of P.L. 109-289 through December 8, 2006. H.J.Res. 100 was passed by the House and the Senate on November 15, and signed into law by the President on November 17, 2006, as P.L. 109-369 . 3 rd Continuing Resolution, P.L. 109-383 ( H.J.Res. 102 ) , extended the provisions of P.L. 109-289 through February 15, 2007. H.J.Res. 102 was passed by the House on December 8 and the Senate on December 9, and signed into law by the President on December 9, 2006, as P.L. 109-383 .", "Table 3 shows the L-HHS-ED discretionary programs with the highest funding levels in FY2006; nine programs accounted for at least 60% of all L-HHS-ED discretionary appropriations. Each of the programs shown in Table 3 received more than $3.0 billion in FY2006, and the aggregate funding for this group was $89.3 billion. As previously shown in Table 2 , L-HHS-ED discretionary funding totaled $147.3 billion in FY2006. For FY2007, under the budget request and the House and Senate bills, as reported, and despite a significant reduction in FY2007 funds proposed for Pandemic Influenza Preparedness, these nine programs still account for at least 60% of the discretionary appropriations for L-HHS-ED programs.", "Some of the FY2006 emergency appropriations for hurricane disaster assistance and avian flu preparedness were offset by an \"across-the-board\" rescission. Section 3801 of P.L. 109-148 required a 1% cut from most FY2006 discretionary appropriations for each program, project, or activity. No federal agency was exempted except for the Department of Veterans Affairs. Emergency FY2006 appropriations were excluded from the rescission, as were advance appropriations for FY2007 and beyond. The House Committee on Appropriations estimated that this cut would reduce total federal spending by approximately $8.5 billion.\nCongress specified the process for the calculation of these reductions but did not specify the actual amounts. The application of the reduction to individual accounts and line items was required to be undertaken by the Office of Management and Budget (OMB) and the individual agencies. Within 30 days of enactment, OMB was required to report back to Committees on Appropriations specifying for each account the amount of reduction resulting from the 1% rescission. Please note that the FY2006 funding levels stated in P.L. 109-149 (and the related conference report, H.Rept. 109-337 ) are pre-reduction amounts, whereas the FY2006 funding levels stated in the tables of this report are post-reduction amounts as determined by OMB.", "The maximum budget authority for annual L-HHS-ED appropriations is determined through a two-stage congressional budget process. In the first stage, Congress establishes the 302(a) allocations —the maximum spending totals for Congress for a given fiscal year. This task is sometimes accomplished through the concurrent resolution on the budget, where spending totals are specified through the statement of managers in the conference report. In years when the House and Senate do not reach a budget agreement, these totals may be set through leadership arrangements in each chamber. The 302(a) allocations determine spending totals for each of the various committees, as well as the total discretionary budget authority available for enactment in annual appropriations through the House and Senate Committees on Appropriations.\nCongress has not yet reached agreement on the FY2007 budget resolution—the House passed H.Con.Res. 378 on May 18, 2006, and the Senate passed S.Con.Res. 83 on March 16, 2006. The House resolution established a 302(a) discretionary budget allocation of $872.8 billion; the Senate allocation was somewhat higher. However, §7035 of the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006, P.L. 109-234 (enacted June 15, 2006), established $872.8 billion as the 302(a) amount for the Senate Committee on Appropriations, the same as the House amount. For the purpose of comparison, the 302(a) discretionary allocation for FY2006, established through the conference agreement on H.Con.Res. 95 ( H.Rept. 109-62 ), was $843.0 billion. For additional information, please see CRS Report RL33291, Congressional Budget Actions in 2006 , by [author name scrubbed]\nIn the second stage of the annual congressional budget process, the House and Senate Committees on Appropriations separately establish the 302(b) allocations —the maximum discretionary budget authority available to each subcommittee for each annual appropriations bill. The total of these allocations must not exceed the 302(a) discretionary total. This process creates the basis for enforcing discretionary budget discipline, since any appropriations bill reported with a total above the ceiling is subject to a point of order. The 302(b) allocations can and often do get adjusted during the year as the various appropriations bills progress toward final enactment. Table 4 shows the 302(b) discretionary allocations for the FY2007 L-HHS-ED appropriations determined by the House and Senate Committees on Appropriations. Comparable amounts for the FY2006 appropriations and the President's FY2007 budget request are also shown. Both the 302(a) and 302(b) allocations regularly become contested issues in their own right.", "Advance appropriations occur when funds enacted in one fiscal year are not available for obligation until a subsequent fiscal year. For example, P.L. 109-149 , which enacted FY2006 L-HHS-ED appropriations, provided $400 million for the Corporation for Public Broadcasting (CPB) for use in FY2008. Advance appropriations may be used to meet several objectives. These might include the provision of long-term budget information to recipients, such as state and local educational systems, to enable better planning of future program activities and personnel levels. The more contentious aspect of advance appropriations, however, involves how they are counted in budget ceilings.\nAdvance appropriations avoid the 302(a) and 302(b) allocation ceilings for the current year, but must be counted in the year in which they first become available for obligation. This procedure uses up ahead of time part of what will be counted against the allocation ceiling in future years. In FY2002, the President's budget proposed the elimination of advance appropriations for federal discretionary programs, including those for L-HHS-ED programs. Congress rejected that proposal, and the proposal has not been repeated. For an example of the impact of advance appropriations on program administration, see the discussion titled \" Forward Funding and Advance Appropriations ,\" later in this report.\nThe FY1999 and FY2000 annual L-HHS-ED appropriations bills provided significant increases in advance appropriations for discretionary programs. Following FY2000, advanced appropriations generally have been provided at $19.3 billion, with the exception of $21.5 billion in FY2003. At $19.3 billion, advance appropriations accounted for 13.7% of the L-HHS-ED current year discretionary total of $141.2 billion in FY2006. For FY2007, the President requested $18.9 billion in advance appropriations for L-HHS-ED; the House and Senate bills, as reported, would each provide $19.3 billion.\nFrom FY1998 to the present, advance appropriations included in L-HHS-ED bills have been as follows:\nFY1998, $4.0 billion; FY1999, $8.9 billion; FY2000, $19.0 billion; FY2001, $18.8 billion; FY2002, $19.3 billion; FY2003, $21.5 billion; FY2004, $19.3 billion; FY2005, $19.3 billion; FY2006, $19.3 billion; FY2007, President's budget request, $18.9 billion; FY2007, House bill, as reported, $19.3 billion; and FY2007, Senate bill, as reported, $19.3 billion.", "The L-HHS-ED appropriations bills include both mandatory and discretionary funds; however, the Appropriations Committees fully control only the discretionary funds. Mandatory funding levels for programs included in the annual appropriations bills are modified through changes in the authorizing legislation. Typically, these changes are accomplished through authorizing committees by means of reconciliation legislation, and not through appropriations committees in annual appropriations bills.\nTable 5 shows the trend in discretionary budget authority enacted in the L-HHS-ED appropriations for FY2002 through FY2006. During the past five years, L-HHS-ED discretionary funds have grown from $127.2 billion in FY2002 to an estimated $147.2 billion in FY2006, an increase of $20.0 billion, or 15.7%. During this same period—and using the Gross Domestic Product (GDP) deflator to adjust for inflation—L-HHS-ED discretionary funds in estimated FY2006 dollars have grown from $139.9 billion in FY2002 to $147.2 billion in FY2006, an increase of $7.3 billion in estimated FY2006 dollars, or 5.2%. L-HHS-ED discretionary funds as a percent of total federal discretionary funds decreased from a 17.3% share in FY2002 to an estimated 14.9% share in FY2006. L-HHS-ED discretionary funds as a percent of total federal budget authority decreased slightly from a 6.1% share in FY2002 to an estimated 5.3% share in FY2006.", "Earmarking of funds for specific projects in appropriations bills has become a topic of contention for Congress and the Administration, and the issue extends to L-HHS-ED projects. In the case of L-HHS-ED appropriations, earmarks may be defined as funds set aside within an account for a specific organization or location, either in the appropriation act or its conference report. Typically, the authorizing statute gives the general purpose for use of appropriations, such as \"projects for the improvement of postsecondary education,\" but an earmark designates a specific amount for a specific recipient. Such designations bypass the usual competitive distribution of awards by a federal agency, but otherwise require recipients to follow standard federal financial and other administrative procedures. The President has urged the elimination of congressional earmarks in appropriations in recent years, but, with the possible exception of FY2006 L-HHS-ED appropriations, Congress generally has continued the practice.\nEarmarks in L-HHS-ED appropriations generally have increased during the past decade, along with the total appropriation for L-HHS-ED programs. However, a major change in direction occurred in FY2006. Virtually all earmarks were eliminated from the FY2006 L-HHS-ED bill; in general, funding previously associated with L-HHS-ED earmarks was eliminated as well. In particular, there were estimated to be more than 3,000 in FY2005, totaling nearly $1.2 billion; for FY2006, the estimate was eight earmarks for $28.5 million. Table 6 shows the total annual L-HHS-ED appropriation, the estimated amount earmarked, the earmarked amount as a percent of the total, and the estimated number of earmarks.", "FY2006 discretionary appropriations for the Department of Labor (DOL) were $11.7 billion. For FY2007, the budget request was $11.0 billion, $0.7 billion (6.0%) less than the FY2006 amount, as shown in Table 7 . As reported, the House bill would provide $11.5 billion, and, as reported, the Senate bill would provide $11.6 billion.\nMandatory DOL programs included in the L-HHS-ED bill were funded at $3.1 billion in FY2006, and consist of the Black Lung Disability Trust Fund ($1.1 billion), Federal Unemployment Benefits and Allowances ($966 million), Advances to the Unemployment Insurance and Other Trust Funds ($465 million), Special Benefits for Disabled Coal Miners ($306 million), Employment Standards Administration (ESA) Special Benefits ($237 million), and Energy Employees Occupational Illness Compensation Fund ($96 million).", "", "The President's FY2007 budget request for DOL proposed changes in funding for a number of activities. Proposed discretionary changes of at least $100 million compared to FY2006 appropriations were as follows. The FY2006 amounts include $125 million of supplemental funding provided by P.L. 109-148 for National Reserve activities of the Workforce Investment Act of 1998 (WIA), to remain available for obligation through June 30, 2006.\nWIA programs, funded in the aggregate at $5.2 billion in FY2006, would be decreased by $822 million under the President's FY2007 budget request. WIA Adult Training, funded at $864 million in FY2006, would be reduced by $152 million. WIA Youth Training, funded at $940 million in FY2006, would be reduced by $100 million. The WIA Dislocated Worker Assistance programs, funded at $1.6 billion in FY2006, would be decreased by $483 million in FY2007, including a decrease of $315 million for state grants. Unemployment Compensation, funded at $2.5 billion in FY2006, would be increased by $142 million.", "For DOL programs, the House bill, as reported, differs by at least $100 million from the President's budget request for some of the WIA programs, as follows.\nWIA programs in aggregate would be provided $5.0 billion under the House bill, $555 million more than requested; $5.2 billion was provided in FY2006. WIA Adult Training would receive $854 million, $142 million more than requested; $864 million was provided in FY2006. WIA Dislocated Worker Assistance would receive $1.5 billion, $362 million more than requested; $1.6 billion was provided in FY2006. Dislocated Worker Assistance State Grants would receive $1.2 billion, $318 million more than requested; $1.2 billion was provided in FY2006. A rescission of $325 million of prior-year appropriations for WIA and other programs under the Training and Employment Services (TES) account would be made during FY2007 under the House bill, as reported; no request was made for a rescission.\nDuring consideration of the FY2007 L-HHS-ED bill by the House Committee on Appropriations, an amendment by Representative Steny Hoyer was offered and approved to increase in steps the minimum wage from the current amount of $5.15 per hour to $7.25 per hour by January 1, 2009. The amendment may be subject to a point of order when the bill is considered on the House floor. The Employment Standards Administration (ESA) of DOL enforces the minimum wage provision.", "As reported, the Senate bill differs from the House bill by at least $100 million for several DOL programs.\nNo rescission of prior-year appropriations for WIA or other TES activities would be made under the Senate bill; the House bill would have rescinded $325 million of such funds. No request was made for such a rescission, and no equivalent rescission was made in FY2006. Unemployment Compensation would be funded at $2.55 billion, $103 million less than the House amount of $2.65 billion; the request was $2.65 billion; and $2.51 billion was provided in FY2006.\nThe Senate bill, as reported, would not modify current minimum wage provisions.", "CRS Report RL33401, The Fair Labor Standards Act: Minimum Wage in the 109 th Congress , by [author name scrubbed].\nCRS Report RL33362, Unemployment Insurance: Available Unemployment Benefits and Legislative Activity , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL33687, The Workforce Investment Act (WIA): Program-by-Program Overview and Funding of Title I Training Programs , by [author name scrubbed].", "Department of Labor\nhttp://www.dol.gov http://www.dol.gov/_sec/Budget2007/overview.htm http://www.doleta.gov/budget/07bud.cfm", "Table 8 shows the appropriations details for offices and major programs of DOL.", "FY2006 discretionary appropriations for the Department of Health and Human Services (HHS) were $66.7 billion. For FY2007, the budget request was $61.8 billion, $4.9 billion (7.3%) less than the FY2006 amount, as shown in Table 9 . As reported, the House bill would provide $63.7 billion, and, as reported, the Senate bill would provide $64.2 billion.\nMandatory HHS programs included in the L-HHS-ED bill were funded at $411.6 billion in FY2006, and consist primarily of Medicaid Grants to States ($219.7 billion), Payments to Medicare Trust Funds ($178.6 billion, including both Part B Supplementary Medical Insurance and Part D Prescription Drugs), Foster Care and Adoption ($6.7 billion), Family Support Payments to States ($4.1 billion), and the Social Services Block Grant ($1.7 billion).", "", "The President's FY2007 budget request for HHS proposed increased support for community health centers and a fraud control initiative for the administration of Medicare and Medicaid. At the same time, it proposed funding reductions for health resources and services overall, disease control and prevention, substance abuse and prevention, programs for children and families, and services for the aging. Requests for major changes are indicated below.\nDiscretionary spending changes of at least $100 million were requested in the President's FY2007 budget request for several HHS programs, as follows.\nCommunity Health Centers, funded at $1.8 billion in FY2006, would be increased by $181 million under the President's budget request. Health Professions programs other than those for nursing, funded at $145 million in FY2006, would be decreased by $136 million. Children's Hospital Graduate Medical Education (CHGME), funded at $297 million in FY2006, would be reduced by $198 million. Buildings and Facilities at the Centers for Disease Control and Prevention (CDC), funded at $158 million in FY2006, would be reduced by $128 million. A Fraud and Abuse Control initiative at the Centers for Medicare and Medicaid Services (CMS) would be funded at $118 million. The Low-Income Home Energy Assistance Program (LIHEAP), funded at $2.2 billion in FY2006, would be decreased by $379 million. An additional $1.0 billion was made available to LIHEAP for FY2006 by P.L. 109-171 , as amended by P.L. 109-204 . Social Services Block Grant (SSBG) discretionary activities, funded at $550 million in FY2006, would be eliminated. The Community Services Block Grant (CSBG), funded at $630 million in FY2006, would be eliminated. Pandemic Influenza Preparedness was funded through two supplemental FY2006 appropriations—$3.1 billion from P.L. 109-148 and $2.3 billion from P.L. 109-234 ; it would receive $79 million under the request.", "For HHS programs, the House bill, as reported, differs by at least $100 million from the President's budget request, as follows.\nHealth Professions other than nursing would receive $163 million under the House bill, as reported, $154 million more than requested; $145 million was provided in FY2006. The CHGME would receive $300 million, $201 million more than requested; $297 million was provided in FY2006. Health Care-Related Facilities and Activities would receive $248 million; no funds were requested and none were provided in FY2006. The Preventive Health and Health Services Block Grant (PHBG) would receive $100 million. No funds were requested; $99 million was provided in FY2006. The National Institutes of Health (NIH) would receive $28.25 billion, $100 million less than requested; $28.35 billion was provided in FY2006. The CMS Fraud and Abuse Control initiative would not be funded; $118 million was requested. LIHEAP would receive $2.1 billion, $329 million more than requested; $2.2 billion was provided in FY2006. An additional $1.0 billion was made available to LIHEAP for FY2006 by P.L. 109-171 , as amended by P.L. 109-204 . The CSBG would be funded at $449 million. No funds were requested; $630 million was provided in FY2006.", "As reported, the Senate bill differs from the House bill by at least $100 million for several HHS programs.\nThe CHGME would be funded at $200 million, $100 million less than the House amount of $300 million; $99 million was requested; and $297 million was provided in FY2006. The CDC Infectious Diseases would be funded at $1.71 billion, $116 million less than the House amount of $1.83 billion; $1.77 billion was requested; and $1.68 billion was provided in FY2006. The NIH would receive $28.55 billion, $301 million more than the House amount of $28.25 billion; $28.35 billion was requested, the same as was provided in FY2006. The CSBG would receive $630 million, $181 million less than the House amount of $449 million; no funds were requested; and $630 million was provided in FY2006.", "Annual L-HHS-ED appropriations regularly contain restrictions that limit—for one year at a time—the circumstances under which federal funds can be used to pay for abortions. Restrictions on appropriated funds, popularly referred to as the \"Hyde Amendments,\" generally apply to all L-HHS-ED funds. Medicaid is the largest program affected. Given the perennial volatility of this issue, these provisions may be revisited at any time during the annual consideration of L-HHS-ED appropriations. From FY1977 to FY1993, abortions could be funded only when the life of the mother was endangered. The 103 rd Congress modified the provisions to permit federal funding of abortions in cases of rape or incest. The FY1998 L-HHS-ED appropriations, P.L. 105-78 , extended the Hyde provisions to prohibit the use of federal funds to buy managed care packages that include abortion coverage, except in the cases of rape, incest, or life endangerment. The FY1999 L-HHS-ED appropriations, P.L. 105-277 , continued the FY1998 Hyde Amendments with two added provisions: (1) a clarification to ensure that the restrictions apply to all trust fund programs (namely, Medicare), and (2) an assurance that Medicare + Choice plans cannot require the provision of abortion services. No changes were made from FY2000 through FY2004.\nThe FY2005 L-HHS-ED appropriations, P.L. 108-447 ( H.Rept. 108-792 , p. 1271), added a restriction, popularly referred to as the \"Weldon Amendment,\" that prevents federal programs or state or local governments that receive L-HHS-ED funds from discriminating against health care entities that do not provide or pay for abortions or abortion services. The FY2006 L-HHS-ED appropriations retained the Weldon amendment language and the Hyde restrictions. These provisions can be found in §507 and §508 of P.L. 109-149 . For additional information, please see CRS Report RL33467, Abortion: Legislative Response , by [author name scrubbed].", "On August 9, 2001, President Bush announced a decision to use federal funds for research on human embryonic stem cells for the first time, but limited the funding to \"existing stem cell lines.\" Embryonic stem cells have the ability to develop into virtually any cell in the body, and have the potential to treat medical conditions such as diabetes and Parkinson's disease. In response to the President's announcement, the NIH developed a registry of 78 embryonic stem cell lines eligible for use in federally funded research. However, many of these lines were found to be unavailable or unsuitable for research; only 22 of the 78 eligible stem cell lines are currently available for general research purposes. Some scientists are concerned about the quality, longevity, and availability of eligible stem cell lines. Many believe that the advancement of research requires new stem cell lines, possibly including stem cells derived from cloned embryos. The use of stem cells, however, raises ethical issues regarding embryo and fetal tissue research because the embryos are destroyed in order to obtain the cells. Given its potential volatility, the issue may be revisited at any time during the annual consideration of L-HHS-ED appropriations.\nAn FY1996 appropriations continuing resolution, P.L. 104-99 (§128), prohibited NIH funds from being used for the creation of human embryos for research purposes or for research in which human embryos are destroyed. Since FY1997, annual appropriations acts have extended the prohibition to all L-HHS-ED funds, with the NIH as the agency primarily affected. The restriction, originally introduced by Representative Jay Dickey, has not changed significantly since it was first enacted, and the FY2006 L-HHS-ED appropriations continued the restrictions without significant change. The current provision can be found in §509 of P.L. 109-149 . For additional information, please see CRS Report RL33540, Stem Cell Research: Federal Research Funding and Oversight , by [author name scrubbed] and [author name scrubbed]; and CRS Report RL31358, Human Cloning , by [author name scrubbed] and [author name scrubbed].", "CRS Report RL33467, Abortion: Legislative Response , by [author name scrubbed].\nCRS Report RL30731, AIDS Funding for Federal Government Programs: FY1981-FY2009 , by [author name scrubbed].\nCRS Report RL33279, The Ryan White HIV/AIDS Program , by [author name scrubbed].\nCRS Report RS21044, Legal Issues Related to Human Embryonic Stem Cell Research , by [author name scrubbed].\nCRS Report RL30785, The Child Care and Development Block Grant: Background and Funding , by [author name scrubbed].\nCRS Report RL32872, Community Services Block Grants (CSBG): Background and Funding , by [author name scrubbed].\nCRS Report RL33345, Federal Research and Development Funding: FY2007 , by [author name scrubbed] et al.\nCRS Report RL30952, Head Start: Background and Issues , by [author name scrubbed].\nCRS Report RL31358, Human Cloning , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL31865, The Low-Income Home Energy Assistance Program (LIHEAP): Program and Funding , by [author name scrubbed].\nCRS Report RL33695, The National Institutes of Health (NIH): Organization, Funding, and Congressional Issues , by [author name scrubbed].\nCRS Report RL33354, The Promoting Safe and Stable Families Program: Reauthorization in the 109 th Congress , by [author name scrubbed].\nCRS Report RL31940, Public Health Service Operating Agencies , by [author name scrubbed].\nCRS Report 94-953, Social Services Block Grant (Title XX of the Social Security Act) , by [author name scrubbed].\nCRS Report RL33540, Stem Cell Research: Federal Research Funding and Oversight , by [author name scrubbed] and [author name scrubbed].", "Department of Health and Human Services\nhttp://www.hhs.gov http://www.hhs.gov/budget/docbudget.htm\nDetailed Appropriations Table Table 10 shows the appropriations details for offices and major programs of HHS.", "FY2006 discretionary appropriations for the Department of Education (ED) were $57.6 billion. For FY2007, the budget request was $54.3 billion, $3.3 billion (5.7%) less than the FY2006 amount, as shown in Table 11 . As reported, the House bill would provide $56.1 billion, and, as reported, the Senate bill would provide $55.8 billion.\nA single mandatory ED program is included in the FY2007 L-HHS-ED bill; the Vocational Rehabilitation State Grants program was funded at $2.7 billion in FY2006. A one-time, mandatory appropriation of $4.3 billion was included in the FY2006 L-HHS-ED bill for the elimination of the Pell Grants shortfall.", "", "Increasing federal support for education has been a priority of both Congress and the White House in recent years. Under the FY2007 budget request, funding for several programs would be increased, and ten new education programs were proposed. However, the President's request would eliminate the funding for 42 existing programs and reduce the total discretionary funding for ED programs in FY2007.\nThe President's FY2007 budget request proposed changes of at least $100 million for ED programs, as follows.\nElementary and Secondary Education Act of 1965 (ESEA) programs, funded in aggregate at $23.3 billion in FY2006, would be increased by $1.1 billion in the President's FY2007 budget request—see discussion below on the issue of whether there is an ESEA funding shortfall. Five K-12 education initiatives of at least $100 million were proposed by the President: $200 million for School Improvement Grants; $125 million for Math Now, Elementary; $125 million for Math Now, Middle School; $1.5 billion for High School Reform; and $100 million for America's Opportunity Scholarships. Educational Technology State Grants, funded at $272 million in FY2006, would be eliminated. Safe and Drug-Free Schools State Grants, funded at $347 million in FY2006, would be eliminated. The Special Education Part B Grants to States program under the Individuals with Disabilities Education Act (IDEA), funded at $10.6 billion in FY2006, would be increased by $100 million—see discussion below on the issue of whether there is an IDEA funding shortfall. The Perkins Vocational Education program, funded at $1.3 billion in FY2006, would be terminated. The Pell Grants program, funded at $13.0 billion in FY2006, would be reduced by $385 million. The one-time, mandatory appropriation of $4.3 billion in FY2006 to eliminate the Pell Grants shortfall would not be repeated under the FY2007 request. For Perkins Loan Assets, the budget proposes the recall of the federal portion of loan repayments otherwise made during FY2007 to revolving funds held by participating institutions of higher education (IHEs), thereby creating a one-time, negative appropriation or offset of $664 million. Student Aid Administrative Costs, funded at $119 million in FY2006, would be increased by $615 million ($600 million of which was previously classified as mandatory funds); the proposed funding increase was made in response to the requirements and provisions of P.L. 109-171 , the Deficit Reduction Act of 2005. TRIO programs, funded at $828 million in FY2006, would be reduced by $448 million. GEAR UP, funded at $303 million in FY2006, would be eliminated. Hurricane Recovery programs in education, enacted in response to the 2005 Gulf Coast hurricanes, were funded at $1.9 billion in FY2006, including $1.6 billion through P.L. 109-149 (enacted December 30, 2005) and $285 million through P.L. 109-234 (enacted June 15, 2006, P.L. 109-234 amounts have not yet been included in House Committee tables); no additional funds were requested for FY2007.", "For ED programs, the House bill, as reported, differs by at least $100 million from the President's budget request, as follows.\nESEA programs in aggregate would receive $22.8 billion, $1.6 billion less than requested; $23.3 billion was provided in FY2006. Of the President's five major education initiatives, the School Improvement Grants would receive $200 million, as requested. No funds would be provided for Math Now, Elementary ($125 million requested); Math Now, Middle School ($125 million); High School Reform ($1.5 billion); and America's Opportunity Scholarships ($100 million). Teacher Quality State Grants would receive $2.6 billion, $300 million less than requested; $2.9 billion was provided in FY2006. Safe and Drug-Free Schools State Grants would receive $310 million, a decrease from the $347 million provided in FY2006; no funds were requested. Perkins Vocational Education would receive $1.3 billion, the same as in FY2006; no funds were requested. Pell Grants would receive $13.0 billion, $349 million more than requested; $13.0 billion was provided in FY2006. The Pell Grant maximum award would be increased by $100 to $4,150. Perkins Loan Assets would not be recalled; the President proposed an offset of $664 million. TRIO programs would receive $828 million, $448 million more than requested; $828 million was provided in FY2006. GEAR UP would receive $303 million, the same as in FY2006; no funds were requested.", "As reported, the Senate bill differs from the House bill by at least $100 million for several ED programs.\nESEA programs in aggregate would receive $23.0 billion, $116 million more than the House amount of $22.8 billion; $24.4 billion was requested; and $23.3 billion was provided in FY2006. The School Improvement Grants Initiative would be funded at $100 million, $100 million less than the House amount of $200 million; the request was for $200 million as well. Teacher Quality State Grants would receive $2.7 billion, $160 million more than the House amount of $2.6 billion; $2.9 billion was requested, the same as was provided in FY2006. The Innovative Education Block Grant would receive no funds; the House bill would provide $150 million; and $99 million was requested, the same as was provided in FY2006. Educational Technology State Grants would be funded at $272 million; the House bill would provide no funds; no funds were requested; and $272 million was provided in FY2006. The IDEA Part B Grants to States would receive $10.6 billion, $150 million less than the House amount of $10.7 billion; $10.7 billion was requested; and $10.6 billion was provided in FY2006. Pell Grants would receive $12.6 billion, $402 million less than the House amount of $13.0 billion; $12.7 billion was requested; and $13.0 billion was provided in FY2006. The FY2007 maximum award would be $4,050 under the Senate bill; the maximum would be raised to $4,150 under the House bill. The request was for $4,050; in FY2006, the maximum Pell Grant was $4,050.", "Since the enactment of the No Child Left Behind Act of 2001 (NCLBA), P.L. 107-110 , which amended the ESEA among other programs, there has been a continuing discussion regarding the appropriations \"promised\" and the resulting \"shortfall\" when the enacted appropriations are compared to authorization levels. Some would contend that the ESEA authorizations of appropriations, as amended by NCLBA, represent a funding commitment that was promised in return for legislative support for the new administrative requirements placed on state and local educational systems. They would contend that the authorized levels are needed for implementing the new requirements, and that the differences between promised and actual funding levels represent a shortfall of billions of dollars. Others would contend that the authorized funding levels represent no more than appropriations ceilings, and as such are no different from authorizations for most education programs. That is, when the authorization amount is specified, it represents only a maximum amount, with the actual funding level to be determined during the regular annual appropriations process. In the past, education programs with specified levels of authorization generally have been funded at lower levels; few have been funded at levels equal to or higher than the specified authorization amount.\nFive ESEA programs, as amended by NCLBA, have specific authorization levels for FY2002 through FY2007: Title I, Part A Grants to Local Educational Agencies (LEAs); 21 st Century Community Learning Centers (21CCLC); the Education Block Grant; School Choice; and the Fund for the Improvement of Education (FIE). For FY2006, the aggregate authorization for these five programs was $26.3 billion, and the appropriation was $14.3 billion, or $12.0 billion less than the amount authorized. For FY2007, the authorized amount was $28.9 billion for the five programs, and the President requested $15.6 billion, or $13.3 billion less. The FY2007 House bill, as reported, would provide $14.3 billion, and, as reported, the Senate bill would provide $14.2 billion for these five programs in FY2007. For additional information, please see CRS Report RL33058, K-12 Education Programs: Recent Appropriations , by [author name scrubbed].", "From 1975 to 2004, the IDEA Part B Grants to States program authorized state payments up to a maximum amount of 40% of the national average per-pupil expenditure (APPE) times the number of children with disabilities ages 3-21 that each state serves. Appropriations have never been sufficient to reach the 40% level. In 2004, Congress addressed the authorization issue in P.L. 108-446 , which specified authorization ceilings for Part B Grants to States for FY2005 through FY2011. For FY2006, the Part B Grants to States authorization was $14.6 billion, and the appropriation was $10.6 billion, or $4.0 billion less than the authorized amount. For FY2007, the authorized amount was $16.9 billion, and the President requested $10.7 billion, or $6.2 billion less than the amount authorized. The FY2007 House bill, as reported, would provide $10.7 billion, and, as reported, the Senate bill would provide $10.6 billion for FY2007. As with ESEA and NCLBA, some view these differences as funding shortfalls, while others see the maximum federal share and the specified authorizations as nothing more than appropriation ceilings. For additional information, please see CRS Report RL32085, Individuals with Disabilities Education Act (IDEA): Current Funding Trends , by [author name scrubbed].", "Most appropriations are available for obligation during the federal fiscal year of the appropriations bill. For example, most FY2007 appropriations will be available for obligation from October 1, 2006, through September 30, 2007. Several L-HHS-ED programs, including some of the larger ED programs, have authorization or appropriations provisions that allow funding flexibility for program years that differ from the federal fiscal year. For example, many of the elementary and secondary education formula grant programs receive appropriations that become available for obligation to the states on July 1 of the same year as the appropriations, and remain available for 15 months through the end of the following fiscal year. That is, FY2007 appropriations for some programs will become available for obligation to the states on July 1, 2007, and will remain available until September 30, 2008. This budgetary procedure is popularly known as \"forward\" or \"multi-year\" funding, and is accomplished through funding provisions in the L-HHS-ED appropriations bill.\nForward funding in the case of elementary and secondary education programs was designed to allow additional time for school officials to develop budgets in advance of the beginning of the school year. For Pell Grants for undergraduates, however, aggregate program costs for individual students applying for postsecondary educational assistance cannot be known with certainty ahead of time. Appropriations from one fiscal year primarily support Pell Grants during the following academic year, that is, the FY2007 appropriations will be used primarily to support grants for the 2007-2008 academic year. Unlike funding for elementary and secondary education programs, however, the funds for Pell Grants remain available for obligation for two full fiscal years.\nAn advance appropriation occurs when the appropriation is provided for a fiscal year beyond the fiscal year for which the appropriation was enacted. In the case of FY2007 appropriations, funds normally would have become available October 1, 2006, under regular funding provisions, but will not become available until July 1, 2007, under the forward funding provisions discussed above. However, if the July 1, 2007 forward funding date for obligation were to be postponed by three months—until October 1, 2007—the appropriation would be reclassified as an advance appropriation since the funds would become available only in a subsequent fiscal year , FY2008. For example, the FY2007 budget request for Title I, Part A Grants to LEAs for the Education for the Disadvantaged was $12.7 billion. This amount includes not only forward funding of $5.3 billion (to become available July 1, 2007), but also an advance appropriation of $7.4 billion (to become available October 1, 2007). Like forward funding provisions, these advance appropriations are specified through provisions in the annual appropriations bill.\nWhat is the impact of these changes in funding provisions? At the appropriations level, there is no difference between forward funded and advance appropriations except for the period available for obligation. At the program or service level, relatively little is changed by the three-month delay in the availability of funds, since most expenditures for a standard school year occur after October 1. At the scorekeeping level, however, a significant technical difference occurs because forward funding is counted as part of the current fiscal year, and is therefore fully included in the current 302(b) allocation for discretionary appropriations. Under federal budget scorekeeping rules, an advance appropriation is not counted in the 302(b) allocation until the following year. In essence, a three-month change from forward funding to an advance appropriation for a given program allows a one-time shift from the current year to the next year in the scoring of discretionary appropriations. For additional information, please see CRS Report RS20441, Advance Appropriations, Forward Funding, and Advance Funding , by [author name scrubbed].", "CRS Report RL32867, Adult Education and Literacy: Overview and Reauthorization Proposals of the 109 th Congress , by [author name scrubbed].\nCRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher Education Act , by [author name scrubbed].\nCRS Report RL31487, Education for the Disadvantaged: Overview of ESEA Title I-A Amendments Under the No Child Left Behind Act , by [author name scrubbed].\nCRS Report RL33236, Education-Related Hurricane Relief: Legislative Action , by [author name scrubbed] et al.\nCRS Report RL32085, Individuals with Disabilities Education Act (IDEA): Current Funding Trends , by [author name scrubbed].\nCRS Report RL33371, K-12 Education: Implementation Status of the No Child Left Behind Act of 2001 (P.L. 107-110) , coordinated by [author name scrubbed].\nCRS Report RL33058, K-12 Education Programs: Recent Appropriations , by [author name scrubbed].\nCRS Report RS20532, The Safe and Drug-Free Schools and Communities Act: Reauthorization and Appropriations , by [author name scrubbed].\nCRS Report RS22308, Student Loans and FY2006 Budget Reconciliation , by [author name scrubbed].\nCRS Report RL31240, 21 st Century Community Learning Centers: Background and Funding , by [author name scrubbed].\nCRS Report RS20441, Advance Appropriations, Forward Funding, and Advance Funding , by [author name scrubbed].", "Department of Education\nhttp://www.ed.gov/index.jhtml http://www.ed.gov/about/overview/budget/budget07/index.html", "Table 12 shows the appropriations details for offices and major programs of ED.", "FY2006 discretionary appropriations for L-HHS-ED related agencies were $11.4 billion. For FY2007, the budget request was $11.2 billion, $0.2 billion (1.8%) less than the FY2006 amount, as shown in Table 13 . As reported, the House bill would provide $11.0 billion, and, as reported, the Senate bill would provide $11.3 billion.\nMandatory programs for related agencies included in the L-HHS-ED bill were funded at $37.7 billion in FY2006, virtually all of it for the Supplemental Security Income (SSI) program.", "", "The President's FY2007 budget for related agencies proposed discretionary spending changes of at least $100 million for the following agencies.\nThe Corporation for Public Broadcasting (CPB) has been provided with a two-year advance appropriation in recent years; however, the President's FY2007 budget did not request FY2009 funds for CPB. The CPB has been funded at $400 million for FY2008 (enacted as part of the FY2006 L-HHS-ED appropriations), $400 million for FY2007 (enacted in FY2005), and $396 million for FY2006 (enacted in FY2004). The Supplemental Security Income (SSI) discretionary activities, funded at $2.7 billion in FY2006, would be increased by $271 million. Social Security Administration (SSA) Administrative Expenses, funded at $6.4 billion in FY2006, would be increased by $114 million.", "For the related agencies of the L-HHS-ED bill, the House bill, as reported, differs from the President's budget request by at least $100 million for only one program. The SSA Administrative Expenses would receive $6.3 billion, $141 million less than requested; these activities were funded at $6.4 billion in FY2006.", "As reported, the Senate bill differs from the House bill by at least $100 million for several programs administered by the L-HHS-ED related agencies.\nThe CPB would receive $400 million in advance appropriations for FY2009. No funds were requested, and no funds would be provided by the House; $400 million was appropriated in FY2006 for FY2008. SSA Administrative Expenses would be funded at $6.2 billion, $158 million less than the House amount of $6.3 billion; $6.5 billion was requested; and $6.4 billion was provided in FY2006.", "CRS Report RS22168, The Corporation for Public Broadcasting: Federal Funding Facts and Status , by [author name scrubbed] and [author name scrubbed].\nCRS Report RL31320, Federal Aid to Libraries in the Museum and Library Services Act of 2003 , by [author name scrubbed].\nCRS Report RL33544, Social Security Reform: Current Issues and Legislation , by [author name scrubbed].", "Note: Not all of the websites for the related agencies of L-HHS-ED appropriations include FY2007 budget information.\nCommittee for Purchase From People Who Are Blind or Severely Disabled http://www.jwod.gov/jwod/index.html\nCorporation for National and Community Service http://www.cns.gov\nCorporation for Public Broadcasting http://www.cpb.org\nFederal Mediation and Conciliation Service http://www.fmcs.gov/internet/\nFederal Mine Safety and Health Review Committee http://www.fmshrc.gov/\nInstitute of Museum and Library Services http://www.imls.gov/\nMedicare Payment Advisory Commission http://www.medpac.gov/\nNational Commission on Libraries and Information Science http://www.nclis.gov/\nNational Council on Disability http://www.ncd.gov/\nNational Labor Relations Board http://www.nlrb.gov/nlrb/home/default.asp\nNational Mediation Board http://www.nmb.gov/\nOccupational Health and Safety Review Commission http://www.oshrc.gov/\nRailroad Retirement Board http://www.rrb.gov\nSocial Security Administration http://www.ssa.gov http://www.ssa.gov/budget/", "Table 14 shows the appropriations details for offices and major programs of the L-HHS-ED related agencies.\nAppendix A. Terminology and Web Resources\nThe following items include some of the key budget terms used in this report; they are based on CRS Report 98-720, Manual on the Federal Budget Process , by [author name scrubbed] and Allen Schick (pdf). The websites provide general information on the federal budget and appropriations.\nAdvance appropriation is budget authority that will become available in a fiscal year beyond the fiscal year for which the appropriations act is enacted; scorekeeping counts the entire amount in the fiscal year it first becomes available for obligation.\nAppropriation is budget authority that permits federal agencies to incur obligations and to make payments out of the Treasury for specified purposes. Appropriations represent the amounts that agencies may obligate during the period of time specified in the law. Annual appropriations are provided in appropriations acts; most permanent appropriations are provided in substantive law. Major types of appropriations are regular, supplemental, and continuing.\nBudget authority is legal authority to incur financial obligations that normally result in the outlay of federal government funds. Major types of budget authority are appropriations, borrowing authority, and contract authority. Budget authority also includes the subsidy cost to the federal government of direct loans and loan guarantees, estimated on a net present value basis.\nBudget resolution is a concurrent resolution passed by both Houses of Congress, but not requiring the signature of the President, setting forth the congressional budget for at least five fiscal years. It includes various budget totals and functional allocations.\nDiscretionary spending is budget authority provided in annual appropriations acts, other than appropriated entitlements.\nEntitlement authority is the authority to make payments to persons, businesses, or governments that meet the eligibility criteria established by law; as such, it represents a legally binding obligation on the part of the federal government. Entitlement authority may be funded by either annual or permanent appropriations acts.\nForward funding is budget authority that becomes available after the beginning of the fiscal year for which the appropriation is enacted and remains available into the next fiscal year; the entire amount is counted or scored in the fiscal year in which it first becomes available.\nMandatory (direct) spending includes (a) budget authority provided in laws other than appropriations; (b) entitlement authority; and (c) the Food Stamp program.\nRescission is the cancellation of budget authority previously enacted.\nScorekeeping is a set of procedures for tracking and reporting on the status of congressional budgetary actions.\nSupplemental appropriation is budget authority provided in an appropriations act that provides funds that are in addition to regular appropriations.\nWebsites\nGeneral information on budget and appropriations may be found at these websites. Specific L-HHS-ED agency sites are listed in relevant sections of this report.\nHouse Committees http://appropriations.house.gov/ http://budget.house.gov/ http://www.house.gov/budget_democrats/\nSenate Committees http://appropriations.senate.gov/ http://www.senate.gov/~budget/republican/ http://www.senate.gov/~budget/democratic/\nCongressional Budget Office (CBO) http://www.cbo.gov\nCongressional Research Service (CRS) http://apps.crs.gov/cli/level_2.aspx?PRDS_CLI_ITEM_ID=73\nGovernment Accountability Office (GAO) http://www.gao.gov/\nGovernment Printing Office (GPO) http://www.gpoaccess.gov/usbudget/\nOffice of Management & Budget (OMB) http://www.whitehouse.gov/omb/budget/index.html http://www.whitehouse.gov/omb/legislative/sap/index.html\nAppendix B. Context of L-HHS-ED Appropriations\nBudget authority for all federal programs was estimated at $2,757.8 billion for FY2006. Budget authority for all L-HHS-ED departments and related agencies was estimated at $1,413.8 billion, or slightly more than half—51.3%—of the federal total. Table B -1 shows budget authority by agency for L-HHS-ED agencies; Table B -2 shows sources of budget authority for L-HHS-ED agencies, as discussed below.\nThe L-HHS-ED appropriations subcommittees generally had effective control over only the $147.2 billion in FY2006 current year discretionary funds (10.4% of the L-HHS-ED agency total, 5.3% of the federal total), as indicated in Table B -2 . What accounts for the remaining $1,266.6 billion of L-HHS-ED agency funds (89.6% of the L-HHS-ED agency total, 45.9% of the federal total)?\nFirst, entitlements and other mandatory programs account for three-quarters of the L-HHS-ED bill total—$460.3 billion (32.6% of the L-HHS-ED agency total, 16.7% of the federal total). Appropriations are enacted for these mandatory activities annually—they are sometimes called \"appropriated entitlements\"—but the amounts provided generally must be sufficient to cover entitlements to beneficiaries and other mandatory obligations. Federal administrative costs for these programs are, however, subject to annual discretionary appropriations. The major L-HHS-ED programs in this category include Supplemental Security Income, Black Lung Disability payments, Foster Care and Adoption, the Social Services Block Grant, Vocational Rehabilitation, and general fund support for Medicare and Medicaid.\nSecond, other appropriations bills account for a small portion of L-HHS-ED agency funding—$4.7 billion (0.3% of the L-HHS-ED agency total, 0.2% of the federal total). Two HHS agencies are fully funded through other appropriations bills, and two HHS programs are partially funded by bills other than L-HHS-ED, as described below. Prior to FY2006, the Corporation for National and Community Service (CNCS) was partially funded outside of the L-HHS-ED bill.\nThe HHS Food and Drug Administration (FDA) is funded by Agriculture appropriations ($1.5 billion in FY2006). The HHS Indian Health Service (IHS) is funded by Interior appropriations ($3.0 billion in FY2006). The Centers for Disease Control and Prevention (CDC) is primarily funded under L-HHS-ED ($6.1 billion in FY2006); it also receives funds from Interior appropriations for the Agency for Toxic Substances and Disease Registry (ATSDR) ($75 million in FY2006). The National Institutes of Health (NIH) is primarily funded under L-HHS-ED ($28.3 billion in FY2006); it also receives funds from Interior appropriations for the National Institute of Environmental Health Sciences (NIEHS) ($79 million in FY2006).\nThird, remaining L-HHS-ED agency funds are provided without additional legislative action and provided automatically outside of the annual appropriations process—$801.6 billion (56.7% of the L-HHS-ED agency total, 29.1% of the federal total). These funds are provided through trust funds and other mandatory authorities. The major L-HHS-ED programs in this category include Unemployment Compensation, Medicare, Railroad Retirement, Temporary Assistance for Needy Families (TANF, the welfare assistance program), Student Loans, State Children's Health Insurance, and Social Security benefits. Funding levels for these programs, as well as for the appropriated entitlements discussed above, generally are not changed through appropriations committees or legislation. Rather, funding is modified by amending authorization statutes; such changes typically are made through authorizing committees and the budget reconciliation process." ], "depth": [ 0, 1, 2, 2, 2, 2, 2, 1, 2, 2, 3, 2, 3, 2, 3, 2, 2, 2, 2, 2, 2, 2, 1, 2, 3, 3, 3, 2, 2, 2, 1, 2, 3, 3, 3, 3, 3, 2, 2, 1, 2, 3, 3, 3, 3, 3, 3, 2, 2, 2, 1, 2, 3, 3, 3, 2, 2, 2 ], "alignment": [ "h0_title h1_title", "", "", "", "", "", "", "h0_title h1_title", "", "h0_title h1_title", "h0_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_full", "h0_title", "h0_full", "", "", "", "", "h0_full", "", "h1_full", "h1_title", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How do HHS discretionary appropriations compare from FY2006 to FY2007?", "How would Community Health Centers funding change?", "How would CHGME funding change?", "How would LIHEAP funding change?", "How would SSBG and CSBG funding change?", "How do ED discretionary appropriations differ from FY2006 to FY2007?", "How would ESEA programs funding change?", "How would Pell Grant and TRIO funding change?", "What programs would see their funding eliminated?" ], "summary": [ "HHS discretionary appropriations were $66.7 billion in FY2006; $61.8 billion was requested for FY2007.", "Funding would be increased by $181 million for Community Health Centers.", "Funding would be decreased by $198 million for the Children's Hospital Graduate Medical Education (CHGME).", "The Low-Income Home Energy Assistance Program (LIHEAP) would be decreased by $379 million.", "The $550 million Social Services Block Grant (SSBG) and the $630 million Community Services Block Grant (CSBG) would be eliminated.", "ED discretionary appropriations were $57.6 billion in FY2006; $54.3 billion was requested for FY2007.", "Funding would be increased for Elementary and Secondary Education Act (ESEA) programs in aggregate, and five K-12 initiatives, including $1.5 billion for High School Reform, were proposed.", "Decreases of $385 million for Pell Grants and $448 million for TRIO were requested.", "Funding would be eliminated for the $272 million Educational Technology State Grants, the $303 million GEAR UP program, and the $1.9 billion education hurricane recovery programs." ], "parent_pair_index": [ -1, 0, 0, 0, 0, -1, 0, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "Background", "Financial Incentive Programs", "Federal Fraud and Abuse Laws and Enforcement Mechanisms", "Anti-kickback Statute", "Advisory Opinion Authority", "Certain Financial Incentive Programs Are Permitted under Federal Fraud and Abuse Laws, Regulations, and Guidance, but Stakeholders Reported Challenges in Designing and Implementing Programs within This Framework", "Financial Incentive Programs May Be Permitted under Stark and Anti-kickback Exceptions and Safe Harbors; Stakeholders Nevertheless Reported Challenges Structuring Permissible Programs", "Stakeholders Reported That OIG Interpretation of CMP Law Diminished Ability to Reward Any Service Reduction or Limitation, Including Services Not Medically Necessary", "OIG Permits Certain Financial Incentive Programs through Its Advisory Opinion Process, but Stakeholders Reported Challenges in Implementing These Programs", "HHS Has Approved Otherwise Prohibited Financial Incentive Programs That Incorporate Safeguards, under Demonstration Project and Other Authorities", "Concluding Observations", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Department of Health and Human Services", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "Health systems may use a variety of financial incentive programs to encourage improvements in the quality and efficiency of health care delivery. The payment of rewards to physicians, however, creates financial relationships that may implicate, that is, give rise to concern under, federal fraud and abuse laws designed to protect against undue influences on medical judgment.", "Health systems may offer a variety of financial incentive programs to encourage improvements in quality and efficiency, including those that help align incentives between hospitals and physicians. Health systems can use pay-for-performance programs to reward physicians for adherence to clinical protocols or objective improvement in individual patient care outcomes. They can also use shared savings programs to align physician incentives with those of hospitals by offering physicians a percentage of the hospitals’ cost savings attributable to the physicians’ efforts in controlling the costs and improving or maintaining the quality of patient care. These are often referred to as gainsharing arrangements.\nAlthough results from financial incentive programs tried to date have been mixed, some experts believe they have the potential to increase quality and efficiency. explicit goals of quality improvement rather than efficiency improvement, these programs can improve quality and efficiency by rewarding physicians for adhering to clinical protocols. For example, these programs may result in savings for Medicare if the programs lead to better patient health outcomes, fewer medical interventions, and a reduction in the provision of services that are not medically necessary. Similarly, shared savings programs that reward physicians for using less expensive hospital supplies may result in savings for Medicare by lowering hospital costs. Specifically, shared savings programs, if implemented on a broad scale, could lower hospital costs sufficiently to reduce Medicare’s hospital payments.\nWhile pay-for-performance programs tend to have The availability of financial incentives, however, may affect a physician’s judgment, introducing a profit motive that may lead to inappropriate referrals or reductions or limitations in services. In this respect, financial incentive programs may implicate federal fraud and abuse laws designed to protect patients and the integrity of the Medicare program.\nIn its January 2012 issue brief on programs tested by CMS, the Congressional Budget Office examined, in part, independent evaluations of four CMS programs where health care providers were given financial incentives to improve the quality and efficiency of care rather than payments based strictly on the volume and intensity of services delivered. The Congressional Budget Office concluded that results of these four programs were mixed. In one program where payments were bundled to cover all hospital and physicians services for heart bypass surgeries, Medicare spending was reduced by 10 percent, and there were no apparent adverse effects on patients’ outcomes. The remaining three programs appeared to have produced little or no savings for Medicare. Of these three programs, two slightly improved quality of care based on the measures adopted for the program. The third program had little or no effect on Medicare spending or quality in its first year.", "Federal fraud and abuse laws designed to protect the integrity of services that are reimbursed under federal health care programs, including Medicare, regulate certain types of conduct, including financial relationships that may influence the delivery of care. Health systems must operate within the framework of federal fraud and abuse laws when designing and implementing financial incentive programs. Table 1, which follows the section on advisory opinion authority, summarizes the federal fraud and abuse laws and enforcement mechanisms.\nThe Stark law and its implementing regulations prohibit physicians from making referrals for certain “designated health services” paid for by Medicare, including hospital services, to entities with which the physicians (or their immediate family members) have a financial relationship, unless the arrangement satisfies a statutory or regulatory exception. Studies have found that these self-referrals encouraged overutilization and increased health costs. The Stark law also prohibits these entities that perform the designated health services from presenting, or causing to be presented, claims to Medicare or billing any individual, third-party payer, or other entity for these services. The Stark law includes a number of exceptions and authorizes the Secretary of HHS to create regulatory exceptions for financial relationships that do not pose a risk of patient or program abuse. The Stark law was enacted to prevent physicians from referring patients and ordering tests and services that may be unnecessary—and result in overutilization—for the purpose of financial gain. Financial incentive programs implicate the Stark law because they create a financial relationship between the entity paying the incentive and the physician who receives it, which could give the physician an incentive to refer patients to that entity.\nThe Stark law prohibits physicians from making referrals to entities with which they or their immediate family members have a financial relationship, regardless of whether that relationship is intended to result in these referrals. In this regard, the Stark law is a strict liability statute. Those physicians or health systems that violate the Stark law by either making prohibited referrals or billing for the services for which the referral was made may be subject to a number of sanctions. Any amounts received for claims in violation of the Stark law must be refunded. Those who know or should know that they are submitting (or causing to be submitted) a claim in violation of the Stark law may be subject to civil monetary penalties of up to $15,000 for each service, an assessment of three times the amount claimed, and exclusion from federal health care CMS is responsible for issuing regulations under the Stark programs. law and collecting payments made in violation of the law. OIG is responsible for enforcing the Stark law’s civil monetary penalties.\nCivil monetary penalties of up to $100,000 may be imposed on those who enter into arrangements that they know or should know have the principal purpose of assuring referrals that would violate the Stark law if made directly.", "The anti-kickback statute makes it a criminal offense for anyone to knowingly and willfully solicit, receive, offer, or pay any remuneration to induce or reward referrals of items or services reimbursable under Medicare, subject to statutory exceptions and regulatory safe harbors promulgated by OIG. The law helps to limit the potential for money to influence providers’ health care decisions, and, in this respect, helps to prevent overutilization of services, the provision of unnecessary or substandard services, and the inappropriate steering of patients.\nA financial incentive program under which a hospital paid physicians who referred patients for admission would implicate the anti-kickback statute. Unlike the Stark law, the anti-kickback statute is intent-based; the action must be knowing and willful. Penalties under the anti-kickback statute include imprisonment for up to 5 years and criminal fines of up to $25,000. In addition, those individuals and entities violating the anti- kickback statute are subject to civil penalties of up to $50,000 per act, an assessment of three times the remuneration, and exclusion from participation in federal health care programs. OIG and DOJ are charged with enforcing the anti-kickback statute. OIG is responsible for issuing regulatory safe harbors under the anti-kickback statute and, as under the Stark law, has administrative enforcement responsibilities. DOJ prosecutes cases under the anti-kickback statute.\nIn addition to providing for the imposition of civil monetary penalties for certain enumerated activities, such as knowingly presenting a Medicare claim that is part of a pattern of claims for items or services that a person knows are not medically necessary, the CMP law provides penalties for hospitals that knowingly make an indirect or direct payment to a physician as an inducement to reduce or limit services to hospital patients, and for physicians who accept such payments. The statute does not contain exceptions for this prohibition and does not authorize OIG to establish exceptions by regulation. Like the Stark law and the anti-kickback statute, the CMP law reflects congressional concern that incentive payments may create a conflict of interest that may limit the ability of the physician to exercise independent professional judgment in the best interest of the patient. Financial incentive programs that reward physicians with a share of hospital cost-savings realized through a reduction or limitation of items and services implicate the CMP law. In addition, payments from a hospital to a physician designed to reward quality that lead to a reduction or limitation of services furnished to hospital patients also implicate the CMP law. Hospitals or physicians who violate the CMP law are subject to civil penalties of up to $2,000 per patient covered by the payments, and exclusion from participation in federal health care programs. OIG is responsible for enforcing the CMP law.\nThe False Claims Act (FCA) serves as another enforcement mechanism for federal fraud and abuse laws. Claims that are submitted in violation of the Stark law or the anti-kickback statute may also be considered false claims and, as a result, create additional liability under the FCA. FCA prohibits certain actions, including the knowing presentation of a false claim for payment by the federal government. For example, a financial incentive program under which a hospital submitted a claim to Medicare for a service provided by a physician when the physician and hospital had a financial relationship in violation of the Stark law, would implicate the FCA if the requisite intent were present.\nThose who violate the FCA are liable for a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by inflation, plus three times the amount of damages the government sustains, though the court may reduce damages. 31 U.S.C. § 3729(a)(1)-(2). Violators are also liable for the cost of the action. 31 U.S.C. § 3729(a)(3). alleging the submission of false claims and these “whistleblowers” can receive between 15 and 30 percent of a monetary settlement or recovery plus expenses and attorneys’ fees and costs.", "In response to requests for specific guidance from providers on whether an existing or proposed financial arrangement, including a financial incentive program, violates the fraud and abuse laws, CMS and OIG have the statutory authority to issue advisory opinions. CMS is required to issue advisory opinions on the Stark law, and OIG is required to issue advisory opinions on the CMP law and the anti-kickback statute, among other matters. Advisory opinions are issued only in response to a request regarding an existing or proposed arrangement to which the requester is a party. Advisory opinions are binding on the Secretary of HHS and the individual or entity requesting the opinion; no other parties can rely on an advisory opinion. The time between when CMS and OIG receive an advisory opinion request and when the advisory opinion is released can depend on, for example, the information contained in the request and the amount of time needed for the agencies to obtain additional information from the requester. Requesters must submit certified written requests that include information specified in regulations. If the initial request for an advisory opinion does not contain all the information the agencies need, the agencies may request whatever additional information is necessary to respond to the request. When requesting an advisory opinion, requesters must agree to pay all costs the agencies incur in responding to the request.has 10 days to notify the requesters whether their requests have been formally accepted or declined or whether additional information is needed. Once a request has been accepted, CMS has 90 days and OIG has 60 days to respond, with certain exceptions.", "Certain financial incentive programs are permitted within the framework of federal fraud and abuse laws through various Stark law and anti-kickback statute exceptions and safe harbors, respectively or because they do not implicate one or more of the laws in the first instance. OIG has interpreted the CMP law to prohibit hospitals from rewarding the reduction or limitation of services, but permits certain financial incentive programs through its advisory opinion process. However, stakeholders we spoke with reported that the laws, regulations, and agency guidance have created challenges for financial incentive program design and implementation, and some health systems have terminated or refrained from implementing these programs. Neither OIG nor DOJ took any enforcement actions against financial incentive programs in fiscal years 2005 through 2010.", "CMS and OIG have acknowledged new exceptions and safe harbors may be necessary to facilitate financial incentive programs. CMS has acknowledged that existing Stark law exceptions may not be sufficiently flexible to encourage a wider array of nonabusive and beneficial incentive programs that both promote quality and achieve cost savings. CMS can create additional exceptions as long as the exception does not pose a risk of program or patient abuse. According to CMS officials, this “no risk” requirement is high and limits their ability to create new regulatory exceptions to the Stark law. In 2008 CMS attempted to use its authority to propose a new exception covering financial incentive programs. However, the “no risk” requirement necessitated a narrow exception with many structural safeguards in light of the risk that financial incentive programs could be used to disguise payments for referrals or adversely affect patient care. In its proposed rule, CMS noted that the design of the proposed exception created a challenge in providing broad flexibility for innovative, effective programs while at the same time protecting the Medicare program and patients from abuses. The agency solicited comments, and many of the comments it received criticized the number and complexity of safeguards needed to achieve the “no risk” standard. To date, the agency has taken no further action to finalize this regulatory exception, and CMS officials told us the agency has no plans to do so in the near future. Similarly, OIG officials told us that they recognize that industry innovation may be significant enough to warrant new anti- kickback safe harbors, and the agency annually solicits input from providers on potential safe harbors, as required by statute.\nFinancial incentive programs could be structured so that they do not implicate one or more of these laws. For example, HHS stated that a program limited to commercial patients might not implicate any of the laws. exception. Employed physicians are rewarded for meeting certain clinical outcome quality measures, such as diabetes glucose measures and pediatric immunizations, as well as patient satisfaction measures. The program only includes the hospital’s employed physicians, who constitute less than 10 percent of the physicians who provide services at the hospital. As a result, this financial incentive program does not align incentives between the health system and independent physicians who have privileges at the hospital. To incentivize quality improvement on a broader scale, hospital officials told us they were able to use another Stark law exception to implement a separate financial incentive program to include independent physicians. Specifically, because the health system had a health plan component, the health system was able to use the physician incentive plan exception in creating a financial incentive program for independent physicians to reward them for meeting a separate set of quality measures—the Healthcare Effectiveness Data Information Set (HEDIS). The physician incentive plan exception permits financial incentive plans that are administered and paid through health plans under certain conditions. Hospitals or health systems without a health plan component would have to design a financial incentive program to fit into other exceptions to include independent physicians. Additionally, operating multiple financial incentive programs covering different populations of physicians may create potential inefficiencies through redundancy or conflicting program objectives.\nIn addition, most of the legal experts we spoke with told us that it is difficult for health systems to navigate the Stark law, and one legal expert told us that as a result health systems have terminated existing financial incentive programs or refrained from starting new programs. Some legal experts also told us that the requirements for complying with the Stark exceptions are difficult to apply when crafting financial incentive programs. In particular, they told us it is challenging to establish whether incentive payments meet the Stark fair market value exception, which in part requires that compensation be consistent with fair market value of services provided. One legal expert we spoke with noted that the Stark law’s fair market value exception potentially applies to payments from hospitals to physicians. For salary, the fair market value exception can be satisfied by using published surveys of wages to determine the fair market value of services provided. However, according to this legal expert, the exception becomes more difficult to apply when trying to determine the fair market value in connection with incentive payments, separate from compensation, for meeting performance goals. Specifically, some legal experts told us that the exception is unclear about how to measure the fair market value of services when those services involve meeting a clinically based outcome measure for a financial incentive program to improve quality. Additionally, it would be difficult to calculate the value of services not provided as a result of the physician providing higher quality care leading to better health outcomes.\nSome legal experts also told us that many of the Stark exceptions on which they rely require that compensation, including incentive payments from hospitals to physicians, not reflect the volume or value of referrals made by the physician. incentive programs may be structured so that incentive payments are distributed to all participating physicians without being directly related to any individual physician’s compliance with quality improvement criteria. Therefore, all participating physicians would receive the same payment without necessarily contributing the same level of effort. As a result, according to some of the legal experts we spoke with, an underperforming physician would not have an incentive to change his or her practices to improve the quality of care.\nE.g., 42 U.S.C. §§ 1395nn(e)(2)(ii), 1395nn(e)(3)(A)(v), 1395nn(e)(5)(B).\nFinancial incentive programs limited to commercial patients may also implicate federal fraud and abuse laws. Some legal experts and health systems we spoke with told us it is difficult to separate commercial patients from Medicare patients for the purposes of financial incentive programs. Financial incentive programs limited to commercial patient populations may “spill over” to Medicare patients. For example, a financial incentive program that rewards quality improvement for commercial patient outcomes may influence how a participating physician treats Medicare patients. To protect themselves from Stark law and anti- kickback statute violations, health systems may structure their programs to fit into an exception or safe harbor in case a Medicare patient is inadvertently included in the program. For example, officials from a hospital system in a major urban area in the Midwest told us the hospital entered into a financial incentive program to share savings with a commercial payer for its commercial patient population only. These officials told us their program only includes employed physicians to further protect the providers from Stark law or anti-kickback statute violations if a Medicare patient is inadvertently included in the program.\nFinancial incentive programs limited to commercial patients also might include Medicare patients in other ways. For example, a commercial insurer that used a hospital’s achievement of quality benchmarks could include the hospital’s Medicare patients in determining whether the benchmarks are met. In 2008, OIG issued a favorable advisory opinion in response to a request from a hospital seeking to implement a financial incentive program to reward physicians for meeting quality targets for commercial patients. The requester-hospital was participating in a pay- for-performance program with a private insurer, under which the hospital would be rewarded with a bonus payment for achieving quality targets based on health outcomes of all patients, including Medicare patients. The hospital stated that it needed to implement a financial incentive program with its physicians in order to achieve those quality targets and would reward physicians with a share of the bonus payment received from the private insurer. OIG determined that the program implicated the anti-kickback statute because the program relied on all hospital patient data, which included data for Medicare patients, instead of using only commercial patient data, to determine incentive payments for physicians.not to impose sanctions for this program.\nIn its advisory opinion on the matter, however, OIG elected OIG officials told us that they did not take any Stark law or anti-kickback statute enforcement actions on the basis of providers’ implementation of pay-for-performance programs or gainsharing arrangements from fiscal years 2005 through 2010. Additionally, DOJ officials were unable to identify any DOJ FCA settlements involving the Stark law or anti-kickback statute that were based on the implementation of such programs during the same time period. However, some legal experts we spoke with told us that although there have not been any FCA cases or settlements, the threat of being the first case has created a chilling effect for providers. Some legal experts told us that as a result, their clients were conservative when implementing such programs.", "In addition to the Stark law and anti-kickback statute, hospitals must comply with the CMP law, which OIG interpreted in a 1999 Special Advisory Bulletin (SAB) as prohibiting payments from hospitals to physicians to induce a reduction or limitation in Medicare services for hospital patients, even if the services are not medically necessary.violation of the CMP law may result if the hospital knows that the payment may influence the physician to reduce or limit services, even if the payment is not tied to a specific patient or to an actual diminution in care. Any hospital financial incentive program that encourages physicians through payments, indirectly or directly, to reduce or limit clinical services violates the CMP law. Unlike the Stark law and anti-kickback statute, the CMP law does not have any statutory exceptions nor does it give OIG the authority to create regulatory exceptions. However, OIG has issued A advisory opinions effectively permitting certain financial incentive programs that would otherwise violate the CMP law.\nOIG considers the CMP law a reflection of congressional concern that payments from hospitals to physicians may result in stinting on care. In its SAB, OIG stated that the CMP law is intentionally broad, and noted in the SAB that the plain language of the statute does not limit its application to those services that are “medically necessary.” According to OIG officials, historically the CMP law developed as a patient quality of care law, not just a restriction on financial relationships. In addition, the SAB indicated that OIG’s interpretation of the CMP law was based, in part, on Congress’s inclusion of “medically necessary” in the law for MCOs. According to OIG officials, OIG interpreted the enactment of a separate law for MCOs to reflect the difference between MCOs and hospitals. They stated that MCOs, unlike hospitals, can more readily identify the patients participating in the network. OIG further reasoned that patients who enroll in an MCO understand that their physicians will have an economic incentive with respect to managing their care, and in return, patients share in any savings through increased benefits, such as reduced copayments and the addition of outpatient prescription drug coverage. By contrast, in OIG’s view, patients in traditional Medicare incur substantial additional financial obligations in exchange for access to physicians of their choice.\nAccording to OIG, hospitals may align incentives with physicians to achieve cost savings through means that do not violate the CMP law. For example, depending on the circumstances, an arrangement where the hospital pays the physicians a fixed fee that is fair market value for specific services rendered would compensate the physicians for their effort and not for a reduction or limitation in services. Achieving savings through actions that do not adversely affect the quality of patient care may require substantial effort on the part of the physicians. Depending on the circumstances, if the financial incentive program is based on the physician’s efforts rather than a percentage of cost savings, the program may not violate the CMP law. According to OIG officials, even if the program leads to a reduction or limitation of services, as long as the payment is not for the purpose of reducing services, the program would not violate the CMP law. For example, a hospital could pay a physician to complete his or her rounds by a specific time, which may result in patients being evaluated for discharge earlier. The payment is not tied to a reduction or limitation of services, but if patients are not hospitalized longer than necessary, this arrangement makes it possible for the hospital to be efficient and reduce costs.\nOne legal expert and an industry group stakeholder we spoke with consider OIG’s interpretation of the CMP law overly broad—prohibiting payment from hospitals to physicians to induce the reduction or limitation of any service, regardless of medical necessity. In February 2009, an industry group stakeholder wrote to OIG contending that the agency should interpret the CMP law in the context of Medicare’s requirements that only medically necessary services are covered by the program. Since Medicare only covers medically necessary services, and the CMP law prohibits reduction or limitation of Medicare services, according to this stakeholder, the CMP law should be interpreted as prohibiting a reduction or limitation of medically necessary services.\nSome legal experts we spoke with and two industry group stakeholders consider the CMP law a major hurdle to the development and implementation of financial incentive programs that allow the hospital to reward physicians for lowering hospital costs and improving quality by reducing medically unnecessary services. Similarly, an industry group stakeholder, in a September 2010 statement to OIG, claimed that the CMP law constrains the development of financial incentive programs that would align hospital and physician incentives to provide more cost- effective care by, for example, encouraging more careful choice among available generic and brand name drugs or use of outpatient rather than inpatient services. This stakeholder noted that physicians are concerned that participation in such gainsharing arrangements exposes them to liability under the CMP law. Another industry group stakeholder, in a May 2008 statement, asserted that the CMP law has dissuaded providers from pursuing financial incentive programs using specific practice protocols, even those based on clinical evidence and recognized as best practices, because of provider concern that OIG might find that the program provided an incentive to reduce or limit services.\nSome legal experts told us that their health system clients have implemented financial incentive programs to reward quality, and they also include efficiency measures that could reduce or limit services but do not tie incentive payments to these measures to avoid implicating the CMP law. Although physicians are not rewarded for meeting these efficiency measures, their performance in meeting these benchmarks may be monitored and information may be shared with the physician as feedback, possibly providing a nonfinancial incentive to improve efficiency. For example, one legal expert described an arrangement between a hospital and its independent physicians to reward quality. The original goal of the program was to reduce the length of stay for patients. In addition to quality measures such as adhering to clinical protocols and meeting patient satisfaction benchmarks, the hospital wanted to include efficiency measures, such as standards for inpatient admission that could have limited admissions, but the physicians’ attorney was concerned that the program would violate the CMP law. Specifically, the attorney was concerned that including standards for inpatient admissions could lead to a reduction of services if, for example, a patient who did not meet these standards was denied admission to the hospital even if admission was not necessary. In response to these concerns, the hospital tied incentive Although the program retained the payments only to quality measures.efficiency measures, such as medically inappropriate days, these measures were tied to widely used clinical standards, no payment was tied to them, and they were used only to collect information on physician performance.", "In its 1999 SAB, OIG interpreted the CMP law to prohibit gainsharing arrangements in response to hospitals’ implementation of “black box” gainsharing arrangements in the 1990s. In OIG’s view, those gainsharing arrangements, in which physicians were paid for overall cost savings without the hospitals determining the specific actions the physicians took to generate the savings, posed a high risk of abuse. According to OIG, the black box gainsharing arrangements provided little accountability, insufficient safeguards against improper referral payments, and lacked objective performance measures to ensure that quality of care was not In various documents addressing the matter, OIG adversely affected.has noted its concern with the potential effect gainsharing has on the quality of care provided to Medicare patients. Specifically, OIG’s concerns include stinting on patient care, “cherry picking” healthy patients and steering sicker and more costly patients to hospitals that do not offer such arrangements, payments in exchange for patient referrals, and unfair competition among hospitals offering cost-sharing programs to foster physician loyalty and to attract more referrals.\nOIG has recognized, however, that certain gainsharing arrangements may reduce costs and improve quality without compromising care or rewarding referrals. Specifically, OIG has recognized that certain gainsharing arrangements, while potentially violating the CMP law and the anti-kickback statute, present a minimal risk of fraud and abuse that these laws were intended to address. On this basis, OIG has indicated that it would not subject specific arrangements approved in advisory opinions to sanctions. Through its advisory opinion process, OIG has evaluated certain gainsharing arrangements that could implicate the CMP law and anti-kickback statute. Since 2001, OIG has issued 14 advisory In these opinions, OIG opinions on specific gainsharing arrangements.concluded that the arrangements presented a low risk of abuse and that they would not, therefore, be subject to sanction. While OIG advisory opinions provide important guidance to providers about what may or may not be sanctioned by OIG, the opinions only address the anti-kickback statute and the CMP law. Because CMS, not OIG, has responsibility for interpreting the Stark law, OIG gainsharing opinions do not address the legality of these arrangements under the Stark law. CMS has not received any requests to issue advisory opinions on gainsharing arrangements, and therefore has not done so.\nIn evaluating the risks posed by these gainsharing arrangements, OIG looked for measures that promote accountability, provide adequate quality controls, and protect against payments for referrals. The cost saving measures included in the approved gainsharing arrangements can generally be categorized as product standardization measures, product substitution, opening packaged items only when needed, or limiting the use of certain supplies or devices.features that, when taken together, OIG determined they provided sufficient safeguards to reduce the risk of program and patient abuse so that OIG would not seek sanctions against the health system for violation of the CMP law. These safeguards include specific cost-saving actions and resulting savings that are clearly and separately identified; credible medical support that implementation of the arrangement would not adversely affect patient care; payments that are based on all procedures and do not reflect the differences among individual patients’ insurance coverage; protection against inappropriate reductions in services by utilizing objective historical and clinical measures to establish baseline thresholds below which no savings accrue to the physicians; protections in the product standardization portion of the arrangement to further protect against inappropriate reductions in services by ensuring that individual physicians will still have available the same selection of devices after implementation of the arrangement as before; written disclosure provided to patients whose care may be affected by the arrangement and an opportunity for patients to review the cost savings recommendations prior to admission to the hospital; financial incentives that are reasonably limited in duration and amount; and profits that are distributed to the physicians on a per capita basis, mitigating any incentive for an individual physician to generate disproportionate cost savings.\nAccording to OIG, improperly designed or implemented arrangements could be vehicles to disguise payments for referrals. OIG found that the specific gainsharing arrangements evaluated in the advisory opinions could violate the anti-kickback statute, but the agency stated it would not impose sanctions for those arrangements because they included safeguards that reduced the likelihood that the arrangement would be used to attract referring physicians or to increase referrals from existing physicians. Due to the circumstances of the arrangements, as well as the included safeguards, OIG determined that the arrangements presented a low risk of fraud or abuse under the anti-kickback statute. Although the advisory opinions have focused on specific service lines, such as cardiac and orthopedic surgery, OIG officials stated that they are willing to evaluate gainsharing arrangements for other service lines. However, to date, OIG has not been asked to do so.\nIn February 2009, one industry group stakeholder asked OIG in writing to withdraw the agency’s SAB that interpreted the CMP law as prohibiting gainsharing. The industry group asserted that the agency’s subsequent advisory opinions permitting implementation of certain gainsharing arrangements represent an “implicit acknowledgment that the experiences and context that gave rise to the 1999 Bulletin have changed significantly.” Specifically, according to this stakeholder, tools, such as the proliferation of quality measures, are now available to prevent financial incentives from causing harm to patients. However, according to OIG officials, although the health care delivery environment has changed since the CMP law was enacted, the payment systems that led to the enactment of the CMP law are still in use.\nLegal experts and stakeholders told us that multiple challenges are associated with implementing gainsharing arrangements since OIG issued its SAB, despite the availability of OIG’s advisory opinion process. Some legal experts told us they were reluctant to use the advisory opinion process because it is expensive and time-consuming. Some experts noted that, in their experience, legal expenses incurred in obtaining an advisory opinion ranged from $15,000 to over $50,000 depending on the complexity of the arrangement, in addition to other costs associated with developing arrangements. The financial incentive program expert we spoke with reported that it took over a year of review before OIG issued its first advisory opinion approving a novel gainsharing program. Some industry group stakeholders said that because the advisory opinions are only applicable to the requesting health system, other health systems cannot rely on the advisory opinions for assurance that OIG will not enforce the CMP law, even though OIG officials told us the agency did not take any enforcement actions against financial incentive programs for fiscal years 2005 through 2010.\nHealth systems implementing gainsharing arrangements have structured their arrangements to be identical to those already approved, thereby lowering but not eliminating the overall risk that the arrangement would result in sanction for violating the CMP law. For example, we spoke with officials from a health system in the Northeast that is implementing a gainsharing arrangement with its orthopedics division. According to these officials, the health system is relying exclusively on the elements of previous OIG gainsharing advisory opinions to define the parameters of its gainsharing arrangement. Officials told us that they will not be pursuing areas for savings that OIG has not previously approved. However, even when implementing a gainsharing arrangement that has already been approved, legal experts told us there are challenges. Some legal experts told us that gainsharing arrangements permissible under OIG’s advisory opinions are narrow, and the approved gainsharing arrangements focus on certain procedural areas and include specific measures, such as limiting the use of certain surgical supplies and substitution of less costly items for those items currently used by the physicians. In addition, financial incentives to physicians must be distributed equally per capita regardless of the level of effort on the part of the physician.", "HHS has permitted implementation of certain financial incentive programs that otherwise might not be permitted under federal fraud and abuse laws, but it has required safeguards to protect program and patient integrity. CMS has conducted these programs through authorized demonstration projects, the Medicare Shared Savings Program, and the Innovation Center. These demonstration projects and programs are designed for specific types of providers and health systems, and some health systems may not be willing or eligible to participate.\nCMS has conducted demonstration projects to test financial incentive programs that include safeguards to protect program and patient integrity. For example, CMS, as authorized by the Deficit Reduction Act of 2005, designed the Medicare Hospital Gainsharing Demonstration to determine whether gainsharing arrangements could align incentives between hospitals and physicians to improve the quality and efficiency of care as well as hospital operation and financial performance. The demonstration project involved arrangements between hospitals and physicians under which the hospitals made gainsharing payments to physicians that were a share of the savings incurred directly as a result of collaborative efforts to improve overall quality and efficiency. CMS officials told us that this demonstration incorporated safeguards to protect program and patient integrity. Specifically, these safeguards included the requirement that providers meet quality thresholds by linking incentive payments to quality measures; that the financial incentive payment be limited to 25 percent of the amount normally paid for similar cases; and that payments not be based on the volume or value of referrals. CMS monitored physician referral and admission patterns throughout the demonstration to ensure that care provided to patients was not compromised. Although CMS has not completed its evaluation of this demonstration, officials told us they had not observed participants engaging in fraudulent behavior or become aware of harmful effects on patients.\nAccording to CMS officials, CMS has incorporated safeguards from previous demonstrations and MCOs in its rule for the Medicare Shared Savings Program, which allows ACOs to participate in a shared savings arrangement with the Medicare program. The Medicare Shared Savings Program is designed to pay providers on a fee-for-service basis, and will, at least in theory, help align incentives by sharing potential savings with providers that agree to meet quality and efficiency standards. According to CMS, the program incorporates the following broad categories of safeguards: quality measures; legal structure and governance requirements; patient-centeredness; monitoring; disclosure and transparency requirements; and program integrity screens. These safeguards are intended to protect patient and program integrity by ensuring that patient needs and experiences inform the delivery of care and ACO governance. An ACO’s continued participation in the Medicare Shared Savings Program is contingent on its performance. CMS has the authority to terminate an ACO’s participation in the program based on the agency’s findings.\nCMS and OIG have issued an interim final rule with comment period that establishes waivers of the fraud and abuse laws for the Medicare Shared Savings Program, including, among others, a shared savings distribution waiver. This waiver applies to distribution of shared savings from the ACO and within the ACO to ACO participants or ACO providers or suppliers. It also applies to the distribution of shared savings to providers outside the ACO but only for activities that are reasonably related to the purposes of the Medicare Shared Savings Program. In both cases, among other requirements, CMS and OIG require that the ACO does not limit or reduce medically necessary services.distribution of savings accrued during the period in which the ACO is The waiver covers the participating in the Medicare Shared Savings Program, even if those savings are distributed after this period. According to CMS and OIG, the waiver for the distribution of shared savings within the ACO is premised, in part, on recognition that an award of shared savings necessarily reflects the collective achievement by the ACO and its constituent parts of the quality, efficiency, and cost reduction goals of the Medicare Shared Savings Program. These goals are consistent with interests protected by the fraud and abuse laws.\nSee Medicare Program; Pioneer Accountable Care Organization Model: Request for Applications, 76 Fed. Reg. 29,249 (May 20, 2011). models it tests through multiple mechanisms, including routinely analyzing data on service utilization, measuring beneficiary experience of care through surveys, and assessing beneficiary complaints. In the Pioneer ACO Model, CMS stated it will determine whether there are systematic differences in health status or other characteristics between patients who remain aligned with a given ACO over the life of the Pioneer ACO Model, and those who do not. ACOs that participate in the Pioneer ACO Model will also conduct surveys of their aligned beneficiaries on an annual basis, and according to CMS, the agency may investigate the practices of ACOs that generate beneficiary complaints. CMS stated it will also publicly report the performance of ACOs on quality metrics, including patient experience ratings, on its website.", "CMS and OIG recognize that properly structured financial incentive programs have the potential to improve quality and reduce costs but that improperly structured programs can disguise payments for referrals or adversely affect patient care. The federal fraud and abuse laws discussed in this report apply variously to financial relationships among hospitals, physicians, and health plans, among other entities. As a type of financial relationship, health systems must take these laws into account when structuring financial incentive programs. Health systems can implement certain types of financial incentive programs through, for example, various Stark law exceptions, anti-kickback safe harbors, or the agencies’ advisory opinion processes, although hospitals may not reward the limitation or reduction of services—even those services that are not medically necessary—without first obtaining OIG approval.\nAlthough health systems can implement certain types of financial incentive programs that may result in better patient health outcomes and lower health care costs, the challenges of implementing these programs within the current legal framework may, for some health systems, outweigh the potential benefits of doing so. As the stakeholders we spoke with reported, there are significant challenges to designing and implementing financial incentive programs through the available options. There are no exceptions and safe harbors specifically for financial incentive programs, and the Stark law’s “no risk” requirement for new exceptions, makes it difficult for CMS to craft an exception that allows for innovative, effective programs while ensuring that the Medicare program and patients face no risk from abuses. As such, the constraints of existing exceptions and safe harbors make it difficult to design and implement a comprehensive program for all participating physicians and patient populations. Furthermore, for some health systems, OIG’s interpretation of the CMP law constrains the development of financial incentive programs that would align hospital and physician incentives to provide more cost-effective care, and hospitals may be reluctant to pursue an advisory opinion because of the time, expense, and uncertainty involved. As a result, health systems are more likely to implement only those programs that mirror already approved programs or none at all.\nCMS’s various demonstrations, the Medicare Shared Savings Program, and programs implemented by the Innovation Center provide other opportunities for some health systems to implement these programs without the associated challenges of conforming to some of the federal fraud and abuse laws. The demonstrations, however, are time-limited and not all health systems are eligible or willing to participate. Under the Medicare Shared Savings Program, which is a permanent program, CMS and OIG will waive fraud and abuse laws for financial incentive programs under certain circumstances, but there may be limits on health systems’ ability to participate.\nOur work suggests that stakeholders’ concerns may hinder implementation of financial incentive programs to improve quality and efficiency on a broad scale. Different stakeholders—government agencies and health care providers—will likely continue to have differing perspectives about the optimal balance between innovative approaches to improve quality and lower costs and retaining appropriate patient and program safeguards.", "HHS provided written comments on a draft of this report, which are reprinted in appendix I. HHS and DOJ provided technical comments which we incorporated as appropriate.\nIn its written comments, HHS sought to clarify the Department’s position on CMS’s use of its authorities to permit certain financial incentive programs—using regulatory exceptions and waivers—that the Department did not believe we had clearly described in the draft. Specifically, we had attributed the narrowness of the proposed 2008 Stark law exception to agency concern that financial incentive programs could be used to disguise payments for referrals or adversely affect patient care, as the agency had noted in the proposed rule. HHS clarified that the SSA requirement that Stark law exceptions pose “no risk of patient or program abuse” is a high standard that prevents the agency from balancing flexibility with beneficiary protection in creating exceptions. HHS commented that the narrowness of the proposed 2008 Stark law exception was dictated by this strict legal standard. HHS also commented that CMS has much greater authority in balancing flexibility with beneficiary protection under its waiver authority, and crafted much broader waivers when authorized to do so by the statutory authorities of the Medicare Shared Savings Program and Innovation Center. We modified the draft to reflect the agency’s position on this issue.\nIn addition, HHS commented that our draft focused on the shared savings-only waiver, rather than the full scope of waivers that CMS and OIG determined were necessary for the success of the program. We highlighted the shared savings distribution waiver as an example of a waiver of the fraud and abuse laws that ACOs can use when distributing savings to providers and suppliers, and included a description of the additional waivers in a footnote, which we determined was sufficient detail for this report.\nHHS also commented that our discussion of the proposed 2008 Stark law exception does not include a discussion of the Medicare Shared Savings Program or Innovation Center waivers, which cover substantially the same gainsharing arrangements addressed in the proposed exception. We added a footnote addressing this issue but maintain that organizations that do not have programs under either the Medicare Shared Savings Program or Innovation Center are still required to comply with the Stark Law and its existing exceptions, which our stakeholders noted was challenging.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the date of the report. At that time we will send copies of the report to the Secretary of Health and Human Services and the U.S. Attorney General. This report also will be available at no charge on the GAO Web site at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or [email protected]. Contact points for our offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact named above, Christine Brudevold, Assistant Director; Helen Desaulniers, Assistant General Counsel; Jasleen Modi; Elizabeth T. Morrison; Sarah Resavy; Lillian Shields; Hemi Tewarson; and Jennifer Whitworth made key contributions to this report.", "Medicare Physician Feedback Program: CMS Faces Challenges with Methodology and Distribution of Physician Reports. GAO-11-720. Washington, D.C.: August 12, 2011.\nValue in Health Care: Key Information for Policymakers to Assess Efforts to Improve Quality While Reducing Costs. GAO-11-445. Washington, D.C.: July 26, 2011.\nHigh-Risk Series: An Update. GAO-11-278. Washington, D.C.: February 2011.\nMedicare: Private Sector Initiatives to Bundle Hospital and Physician Payments for an Episode of Care. GAO-11-126R. Washington, D.C.: January 31, 2011.\nMedicare: Per Capita Method Can Be Used to Profile Physicians and Provide Feedback on Resource Use. GAO-09-802. Washington, D.C.: September 25, 2009.\nMedicare Physician Payment: Care Coordination Programs Used in Demonstration Show Promise, but Wider Use of Payment Approach May Be Limited. GAO-08-65. Washington, D.C.: February 15, 2008.\nMedicare: Focus on Physician Practice Patterns Can Lead to Greater Program Efficiency. GAO-07-307. Washington, D.C.: April 30, 2007.\nMedicare: Advisory Opinions as a Means of Clarifying Program Requirements. GAO-05-129. Washington, D.C.: December 8, 2004.\nMedicare: Referrals to Physician-Owned Imaging Facilities Warrant HCFA’s Scrutiny. GAO/HEHS-95-2. Washington, D.C.: October 20, 1994.\nMedicare: Physician Incentive Payments by Prepaid Health Plans Could Lower Quality of Care. GAO/HRD-89-29. Washington, D.C.: December 12, 1988.\nMedicare: Physician Incentive Payments by Hospitals Could Lead to Abuse. GAO/HRD-86-103. Washington, D.C.: July 22, 1986." ], "depth": [ 1, 2, 2, 3, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h0_title h2_title", "h2_full", "h0_title h2_title", "h0_full h2_full", "", "h0_full h2_title", "h0_full h2_full", "h0_full", "h0_full", "", "h0_full h1_full", "h2_full h1_full", "", "", "", "", "h2_full" ] }

{ "question": [ "What are the Stark law and anti-kickback statue?", "What challenges do these laws introduce?", "What is the effect of the CMP law?", "To what extent does the CMP law include exceptions?", "How does OIG persecute violators of the CMP law?", "How may stakeholders' concerns affect the implementation of these programs?", "How varied are the stances of these stakeholders?", "How did HHS comment on this report?", "How did GAO make use of HHS's opinions?", "What is GAO's stance regarding increased Medicare spending?", "How do traditional Medicare payment systems operate?", "How does this compare to financial incentive programs used by some health systems?", "How does Medicare affect financial incentive programs?", "How are these laws enforced?" ], "summary": [ "The Stark law and anti-kickback statute, which restrict financial relationships among providers, have statutory and regulatory exceptions and safe harbors, respectively, that permit financial incentive programs that meet specific criteria.", "However, there are no exceptions or safe harbors specifically for financial incentive programs intended to improve quality and efficiency, and legal experts reported that the constraints of existing exceptions and safe harbors make it difficult to design and implement a comprehensive program for all participating physicians and patient populations.", "The CMP law prohibits hospitals from paying physicians to reduce or limit services, and OIG has interpreted the law to apply to the reduction or limitation of any services, whether or not those services are medically necessary.", "The CMP law does not include statutory exceptions to this prohibition, and OIG does not have the authority to create exceptions through regulation.", "Through its advisory opinion process, OIG, however, has indicated that it would not impose sanctions for specific financial incentive programs that otherwise violated the CMP law but presented a low risk of fraud and abuse.", "GAO’s work suggests that stakeholders’ concerns may hinder implementation of financial incentive programs to improve quality and efficiency on a broad scale.", "Stakeholders—government agencies and health care providers—likely will continue to have different perspectives about the optimal balance between innovative approaches to improve quality and lower costs and retaining appropriate patient safeguards.", "HHS reviewed a draft of this report and in its written comments, clarified its position on CMS’s authorities to create exceptions and issue waivers to permit certain financial incentive programs, noting that its authority to issue waivers is broader than its authority to create Stark exceptions.", "We modified the draft to reflect the Department’s position.", "GAO has long expressed concern that increases in Medicare spending are unsustainable and do not necessarily enhance health care quality.", "Traditional Medicare provider payment systems reward the volume of services instead of the quality or efficiency of care by paying physicians for each service provided.", "Some health systems, which can be hospitals, physicians, health plans, or a combination, use financial incentive programs to reward physicians for improving quality and efficiency with the goal of better outcomes for patients and savings for hospitals and payers.", "Federal laws that protect patients and the integrity of federal programs, including Medicare, limit health systems’ ability to implement financial incentive programs. These fraud and abuse laws include the physician self-referral law, or Stark law; the anti-kickback statute; and the Civil Monetary Penalties (CMP) law.", "The Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General (OIG) within the Department of Health and Human Services (HHS), and the Department of Justice oversee and enforce these laws." ], "parent_pair_index": [ -1, 0, -1, 2, 2, -1, 0, -1, 2, -1, 0, 1, 0, 3 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 4, 4, 4, 4, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Introduction to the Voucher Program5", "Effects on the Voucher Program", "Initial Guidance", "KDHAP and the Disaster Voucher Program", "Structure", "Families Homeless Prior to Hurricane Katrina", "Status", "Use of Existing Vouchers for Displaced Families", "Creation of New Vouchers", "Legislation", "FEMA Assistance31", "DHAP", "Conclusion" ], "paragraphs": [ "", "Hurricane Katrina's devastation to the nation's housing stock was unprecedented. The 2005 hurricanes (Katrina, Rita, and Wilma) and their related flooding were estimated to have damaged 1.2 million units of housing; of those, over 300,000 were seriously damaged or destroyed. The Congressional Research Service (CRS) estimated that 700,000 people may have lived in the areas most adversely affected by Hurricane Katrina, and were most likely to be displaced. Data provided to CRS by FEMA in June 2006 showed that, at peak, approximately 1.25 million people were living outside their original zip code because of Hurricanes Katrina and Rita.\nThese displaced families fell into a range of categories. Some were homeowners whose property sustained only minor damage and who quickly secured loans to begin repair. Some were homeowners whose property sustained massive damage and who were left waiting, even a year later, for information on their insurance settlements and options. Some were renters whose dwellings were quickly repaired, while others were renters whose dwellings will never be rebuilt. Some were homeless before the storm—about these people little is known. Even within these categories there is variation. Some of the families found permanent homes in new communities, others stayed with friends and family temporarily but were able to make their way back, and still others, a year after the storm, are still displaced and unsure whether they will ever return. Some of these families were economically stable, had sizeable savings, good insurance, and were able to maintain their employment; others were economically unstable before the disaster and lost what little they had. Many probably fell somewhere in between.\nThe full effect of Hurricane Katrina and the circumstances of the families affected may never be fully known. However, existing data provide some insights. For example, CRS estimates that the poverty rate in the Katrina-damaged areas was 21% in 2000—well above the national poverty rate of 12%—and the rate of homeownership in Katrina-damaged areas was 55%, compared with 66% nationally in 2000. In light of the characteristics of the damaged communities—poorer than average and more likely to rent—it is not surprising that many questions arose about the role of the nation's primary housing assistance program for the poor, the Section 8 Housing Choice Voucher program. These questions generally fall into three categories. First, what was the effect of the hurricane on existing voucher holders in the damaged regions? Second, to what extent is the program being used to serve displaced families, regardless of whether they previously received vouchers or other HUD assistance? Third, to what extent, if at all, should the program be modified and expanded to serve additional displaced families? This report also reviews the forms of assistance FEMA has provided to displaced families in lieu of Section 8 vouchers.", "To answer these three questions, it is important first to understand what the Section 8 voucher program is and how it works. Section 8 vouchers are rent subsidies that poor families can use to reduce their housing costs in the private market to an \"affordable\" level. Families with vouchers pay 30% of their incomes toward rent, and the federal government pays the difference between the families' contributions and the actual rent, up to a limit. That limit is called the payment standard, and its value ranges between 90% and 110% of the local Fair Market Rent (FMR). Very low-income families are eligible for vouchers, and extremely low-income families are given priority for vouchers. The subsidies are portable, meaning that families can move anywhere in the country with their vouchers. The demand for vouchers is greater than the supply. In some communities, waiting lists are many years long; in others, the waiting lists are closed.\nThe Department of Housing and Urban Development (HUD) oversees the Section 8 voucher program at the federal level, but the program is administered at the local level by quasi-governmental Public Housing Authorities (PHAs). More than 2,000 PHAs participate in the program, and each receives an allocation of the more than 2 million vouchers currently authorized and funded by Congress. PHAs run their programs on a fixed budget, determined by a formula developed annually by Congress. They also receive administrative fees that in recent years have been based on what they received in the prior year.", "Hurricane Katrina affected both PHAs and assisted families. Some PHAs in the path of the storm temporarily ceased operations, including the Housing Authority of New Orleans (HANO) and the Housing Authority of the City of Slidell. Others took in displaced voucher holders, most notably the Housing Authority of the City of Houston. An unknown number of families in the hurricane-damaged areas were receiving federal help with their housing costs, either through a Section 8 housing voucher or by living in federally subsidized rental housing, such as public housing, before the storm hit. While these families retain their assistance, the process of using this assistance in other areas can be cumbersome. HUD developed several policies and procedures for storm-affected agencies and families to follow.", "On August 31, 2005, HUD posted on its website a list of immediate and pending actions it would take in response to the hurricane. Immediate actions included the identification of vacant public housing units available for displaced families and the issuance of regulatory waivers. Longer-term actions included the establishment of a redevelopment corporation and a proposed new residential-homes tax credit for developers.\nOn September 3, 2005, HUD announced that it had established a toll-free number for displaced public housing and voucher residents to call for assistance. Guidance issued that same day informed PHAs on how to serve displaced families. Under existing authority, PHAs could use vacant public housing units for either displaced public housing residents or displaced voucher holders, and they could provide available vouchers to displaced public housing residents. However, in order to prioritize displaced HUD families for assistance, PHAs must first amend their PHA plans if a preference for disaster-affected families is not already included. A PHA's board must approve any changes, and can determine whether they are significant enough to warrant a public hearing.\nThe same guidance reminded PHAs that they must accept families with vouchers who wish to move, or port, into their jurisdiction. The PHAs can then choose whether to take a family into their own programs and fund the vouchers themselves, a process called absorbing—or administer the voucher on behalf of the pre-disaster PHA, a process called billing. There are pros and cons to both options. Billing requires more complicated paperwork, payments can be delayed, and the receiving housing authority is entitled to only 80% of the originating PHA's administrative fees. Billing can also present problems for originating agencies when families move to more expensive areas, since the PHAs are required to pay the increased subsidy. Absorbing is simpler administratively; however, it requires the receiving PHA to allow porting families to jump ahead of other families on the waiting list for available vouchers. HUD's September 3, 2005 guidance encouraged PHAs to show utmost flexibility, stating:\nDo not let portability billings get in the way of providing vouchers to displaced voucher holders from any of the PHAs affected by Hurricane Katrina. The Department will make sure that PHAs are paid for legitimate ports from affected PHAs.", "On September 24, 2005, the Secretaries of HUD and the Department of Homeland Security (DHS) announced a new initiative for HUD-assisted families displaced by Hurricane Katrina. The Katrina Disaster Housing Assistance Program (KDHAP) was funded by DHS through its sub-agency, the Federal Emergency Management Agency (FEMA)—but was administered by HUD. HUD issued guidance on the new program on October 4, 2005. The program provided a new form of rental housing voucher, a KDHAP voucher, to displaced HUD-assisted families. KDHAP was meant to eliminate the need to prioritize displaced families over other families for available assistance and eliminate portability billings.\nIn December 2005, a supplemental appropriations bill attached to the Defense Department FY2006 Appropriations bill ( P.L. 109-148 ) transferred $390 million from FEMA's Disaster Relief Fund to HUD's Section 8 tenant-based rental assistance account for Katrina rental assistance. HUD issued guidance on February 3, 2006 implementing a new Disaster Voucher Program (DVP) to replace the KDHAP program. DVP differs from KDHAP in several ways. First, DVP is governed by Section 8 rules, unlike KDHAP, although the Secretary is permitted to waive income and eligibility requirements. The amount of subsidy provided is capped at a level set by local PHAs for the voucher program, called a payment standard, rather than the fair market rent, as under KDHAP. Security deposit and utility deposit assistance, which was guaranteed under KDHAP, is provided at the discretion of the PHA under DVP. Initially, not all families that were eligible for KDHAP assistance were eligible for DVP assistance, although Congress later amended DVP to cover all KDHAP-eligible families. Finally, KDHAP was limited to Hurricane Katrina evacuees, whereas DVP is available to both Hurricane Katrina and Rita evacuees.", "Families who were homeless or receiving rental assistance from HUD before their homes were made uninhabitable by Hurricane Katrina are eligible to receive DVP assistance. DVP provides a monthly rent subsidy equal to the lesser of the PHA's payment standard or the actual rent, for the duration of the program. Families are not required to make a minimum payment, although they are required to pay any rental costs above the payment standard. For many families, this will mean a reduction in their housing costs, since under most HUD rental assistance programs, families are required to contribute at least 30% of their incomes toward their housing costs. Families must pay the costs of utilities not included in the rent, although PHAs can provide a utility allowance to families. Like the Section 8 voucher program, DVP is administered by PHAs. PHAs that choose to participate are paid a flat fee of $1,500 for each DVP family that they house (up from $1,000 under KDHAP), plus an ongoing administrative fee equal to 10% of the voucher.\nThe DVP process differs for families depending on whether the family requested assistance after the DVP program was announced, the family received KDHAP assistance prior to the announcement of DVP, or the family received assistance under normal portability procedures before either KDHAP or DVP were announced.\nNew families enter the program after they apply to a PHA or call a national toll-free intake number established by HUD. The PHA or the intake worker at the call center first screens the family for eligibility by cross-referencing them with a database of eligible families maintained by HUD. If the family's original project-based assistance unit is available for occupancy, the family is given the option to move back. If the family chooses not to move back, they are instead given a DVP voucher, although they forfeit their right to return to their original housing and will have to reapply for assistance at the end of their DVP eligibility. If the family's original housing is not available, then the family is given a DVP voucher with the right to return to their original unit when it becomes available or at the end of their DVP eligibility. No additional families will be admitted to the program after September 1, 2007.\nOnce a family is awarded a DVP voucher, the family is either admitted by the PHA or referred to a participating PHA in the area of the country where the family wishes to relocate. PHAs heavily affected by the hurricanes can choose to serve their returning families under the DVP program rather than the regular voucher program and HUD has encouraged them to do so, noting that DVP is more flexible than the regular voucher program and that it permits PHAs to combine DVP funds with public housing funds.\nFamilies with KDHAP vouchers were to be transitioned over to DVP by March 1, 2006. The transition required PHAs to file lease addendums both with landlords and tenants. Since DVP uses PHA payment standards—which can be set between 90% and 110% of fair market rent—to determine families' subsidies rather than 100% of FMR used under KDHAP, some families may have to pay less in rent under DVP and some may have to pay more, depending on whether their rent is higher or lower than the payment standard.\nThose families who evacuated and began receiving assistance under regular portability procedures prior to the announcement of KDHAP could have chosen to transfer to KDHAP or stay within the rules of the current voucher program. Regardless of the family's choice, the receiving PHA was required to bill KDHAP for the cost of the assistance (up to 100% of FMR), rather than the originating PHA. If the family chose to stay in the regular voucher program, and the cost of the family's actual assistance was higher than 100% of FMR, then the receiving PHA was to bill the originating PHA for the difference in cost. Under DVP, families can still choose between DVP and the regular voucher program rules; however, the PHA bills HUD for the entire cost of the voucher.\nThe 7,600 voucher families in the DVP program will return to the regular voucher program on December 31, 2007. For HUD-assisted families without Section 8 vouchers (for example, families who had lived in public housing before the storm), if their previous housing is not rebuilt, then the family is to receive a voucher. If their previous housing is rebuilt but they want to continue to receive voucher assistance, then they must apply for a voucher in the community in which they want to live. HUD's DVP guidance states that storm-damaged PHAs whose clients are being served under DVP should prepare financially for the families' return at the end of the DVP program, as those agencies will have to resume providing assistance to all families assisted before the storm who choose to return.", "Under both KDHAP and DVP, families and individuals who were homeless prior to Hurricane Katrina are treated somewhat differently than HUD-assisted families. After creating KDHAP, HUD announced that those who were previously homeless would be served separately, along with residents of the Housing Opportunities for Persons with AIDS (HOPWA) program, in a program called KDHAP Special Needs (KDHAP-SN). HUD issued additional guidance in a December 1, 2005 notice, and later made operating requirements available on its website. Homeless families then became eligible for DVP when the new program took effect on February 1, 2006.\nHomeless families are eligible for the DVP if they were living in a Presidentially declared disaster area in the week immediately prior to Hurricane Katrina or Rita, and either sleeping in a place not meant for human habitation or residing in an emergency shelter, transitional housing or housing provided through the Supportive Housing Program (SHP), Shelter Plus Care (S+C) program, or HOPWA program. To receive DVP housing assistance, homeless families must first verify their eligibility. If families lived in SHP, S+C, or HOPWA housing, the housing provider must confirm their residency. If families were living on the street or staying in emergency shelters, a homeless service provider must provide written records or statements to confirm that families were homeless in the weeks prior to Hurricanes Katrina and Rita.\nOnce families are found to be eligible for DVP, they may attempt to find housing within the jurisdiction of any participating PHA. HUD recommends that PHAs contract with local homeless service providers to assist families in finding and maintaining housing. In addition, an initiative called Katrina Aid Today, made up of ten social service and voluntary organizations, is to provide case management assistance to those displaced by Hurricane Katrina. If Katrina Aid Today's services are available where previously homeless families live, HUD requires that PHAs use their services, rather than those of other providers.", "Several concerns were raised about KDHAP. Some PHAs were reluctant to participate because they were required to shelter and transport families until they found housing and the PHAs argued that the costs to do so were higher than the fees they received. Low-income housing advocates criticized the program because it did not include utility payments, which can pose a heavy cost burden on very poor families. KDHAP was also criticized as too complex. While the benefit calculation was simpler than the calculation under the Section 8 voucher program, the interaction between the two forms of voucher was complicated. Many voiced concern about what will happen at the end of 18 months, and how smoothly families will be able to transition out of DVP and into other assistance or out of assistance altogether.\nThe $390 million supplemental for DVP—administered by HUD, largely under existing rules—helped address the concerns raised within KDHAP about participation, utility costs, and interaction with regular vouchers. However, DVP does not address the issue of transition at the end of the program.\nThe HUD Assistant Secretary for Public and Indian Housing testified before the House Financial Services Committee on December 14, 2005 that, as of that date, 12,500 households had been processed under KDHAP, although potentially 75,000 evacuees were eligible. He noted that it has been difficult to reach eligible families, which is why such a small percentage have actually been served. The President's February supplemental request revised down the estimated number of DVP eligible families to 44,000. One year after the storm, HUD reported that more than 27,000 families have been assisted. According to information provided to CRS by HUD, as of August 31, 2006, HUD had obligated $110 million of the supplemental funding for DVP assistance and $97 million of that amount had been spent. As of that same date, the Department had obligated $46 million for KDHAP under its mission assignment with FEMA and $44 million of that amount had been spent.", "Outside of KDHAP and DVP, Congress did not fund, and HUD did not provide, additional Section 8 vouchers for families displaced by Hurricane Katrina. Displaced families could apply for existing HUD assistance, including Section 8 vouchers, if they were otherwise eligible; however, in most communities, waiting lists for vouchers are very long—in some cases up to 10 years. In response to the disaster, some PHAs chose to give waiting list preference to families displaced by Hurricane Katrina. In order to offer such a preference, PHAs must generally modify their existing PHA Plan. Such changes require board approval and are generally subject to public scrutiny.\nThe decision to prioritize displaced families can be controversial. Given the limited supply of vouchers, prioritizing evacuees from other communities requires preempting other poor families who have been on waiting lists for many years. Prioritizing displaced families may also have budget implications. In recent years, PHAs have received a fixed budget based on their inflated costs in 2004. Since costs are driven by the difference between the rent and income of the families served, increases or decreases in either can change the cost in ways beyond what is captured in the aforementioned inflation factor. Given that many displaced families were very poor before the storm and many were at least temporarily unemployed after the storm, they may have qualified for larger subsidies than a PHA's typical caseload. Since PHAs' budgets do not adapt to changes in their caseloads, it may be more expensive to serve displaced families. If PHAs' budgets are squeezed, they may either have to reduce the amount of assistance they are able to provide to families or reduce the total number of families served. Also, because vouchers are portable, displaced families may leave the jurisdiction of the PHA that issued the voucher and move back to devastated areas after they are rebuilt. If families leave with their vouchers, unless the vouchers are absorbed in the new community, they will effectively be lost to the communities that issued them.\nNo database of PHA preferences exists, so the number of PHAs that changed their preferences to prioritize Katrina evacuees is unknown. Since revisions to plans require a public process, a search by CRS of newspaper articles in early November found some reports of activity in local communities. Several PHAs chose to prioritize evacuees; others considered making changes but ultimately decided not to; and still others did not consider changes, given the need in their own communities.\nEven if given top priority for existing vouchers, some families displaced by Hurricane Katrina were ineligible to receive assistance because their incomes were too high. Recognizing this concern, on September 26, 2005, members of the Louisiana House delegation introduced the Hurricane Katrina Emergency Housing Act of 2005 ( H.R. 3894 ). The bill would have waived a number of the rules in the Section 8 voucher and project-based programs, including those regarding income eligibility and subsidy determination, for families displaced by Hurricane Katrina. The bill did not include additional appropriations for the Section 8 program, nor did it authorize any additional vouchers. H.R. 3894 passed the full House on October 6, 2005, but similar legislation was not introduced in the Senate, and it was not enacted before the close of the 109 th Congress.", "After Hurricane Katrina struck, housing policy advocates and analysts from across the political spectrum called for the creation of additional Section 8 vouchers to help house the hundreds of thousands of displaced families. There is past precedent for the creation of temporary vouchers after an emergency, including after the 1994 Northridge earthquake. Advocates for vouchers cite a number of advantages vouchers have over the use of trailers and cash grants, which are the two primary methods FEMA used to house displaced families following the storm. Vouchers are portable and allow families to move to the locations of their choice. If administered by local housing authorities, they connect families with organizations that are knowledgeable about local markets and can help families locate housing. Since vouchers utilize the existing housing stock, they may cost less than trailers, which often need basic infrastructure to be developed before they can be installed.\nArguments against using vouchers include the complexity of the eligibility and benefit calculation, although both can be modified by Congress when authorizing and funding new vouchers. Also, sufficient rental units may not exist in the areas where families wish to live, and unlike trailers, vouchers cannot expand the stock to address that problem. Finally, once a voucher is authorized, it can be difficult to eliminate. This was the case after the Northridge earthquake. Many families with temporary vouchers were still using them when the assistance was set to expire, and, fearing the social and political implications of evicting families, Congress extended the assistance several times before it was eventually made permanent. Given recent concerns voiced by Congress about the cost of the Section 8 program and Administration initiatives to replace it with a new program, there may be political reluctance to expand it.", "Several pieces of legislation were introduced to create new, temporary vouchers for families displaced by Hurricane Katrina, although none was enacted before the close of the 109 th Congress. On September 8, 2005, Senator Reid introduced the Katrina Emergency Relief Act of 2005 ( S. 1637 ). Title III of the bill includes the \"Helping to House Victims of Hurricane Katrina Act of 2005.\" The bill would have provided $3.5 billion in emergency supplemental appropriations to HUD to fund temporary vouchers for families displaced by Hurricane Katrina. The vouchers would be authorized for six months, but would be extended for an additional six months unless the HUD Secretary determined that they were no longer needed. Funding would also be available to provide related assistance to families, such as security deposits and relocation assistance. Many of the rules regarding eligibility and tenant payments would be waived, and the upper limit on the amount of available assistance would be raised from the current standard of 110% of the local FMR to 150% of the local FMR. Also on September 8, Senator Sarbanes offered the same \"Helping to House Victims of Hurricane Katrina Act of 2005\" as a floor amendment to the Commerce-Justice-Science FY2006 appropriations bill ( H.R. 2862 ). The amendment was adopted, but dropped in the final bill.\nOn September 22, 2005, the Senators from Louisiana introduced identical bipartisan relief and recovery bills. The Hurricane Katrina Disaster Relief and Economic Recovery Act ( S. 1765 and S. 1766 ) called for new programs and additional funding in areas ranging from defense, to energy, to health care, to the environment. The housing section would have provided $3.5 billion for emergency Section 8 vouchers in much the same form as those proposed in the Reid bill. The bills were referred to the Senate Finance Committee, but no further action was taken.", "After the storm, the President did not request Section 8 vouchers for displaced families outside of the limited KDHAP/DVP assistance. Instead, FEMA provided cash grants to families to use for housing costs. Referred to as transitional housing assistance, these payments are governed by the Individual and Household Assistance authority provided in the Stafford Act. The first of these payments, at the amount of $2,358, was made in September 2005. The grant amount was meant to represent three months of housing costs, and was calculated using the national average fair market rent for a two-bedroom apartment. Families who received the assistance were required to show receipts to prove that it was used for eligible housing expenses; however, those rules were loosened for the first grant because FEMA acknowledged that families were given payments without sufficient direction as to how it was to be used. The grants count against FEMA's $26,200 limit on assistance provided to an individual household.\nFEMA indicated that the housing assistance could be extended for up to 18 months, and that future amounts might be adjusted to reflect regional rent variations. Families' eligibility for this assistance was determined when they registered with FEMA, and was based on the amount of damage to their homes. As of August 14, 2006, 718,976 applicants had received rental assistance and as of August 23, 2006, 632,808 of those applicants, at their last recertification, were still eligible for ongoing rental assistance.\nIn addition to transitional housing assistance payments, FEMA can provide several other forms of housing assistance. FEMA can provide trailer homes to families for up to 18 months after a disaster. As of August 29, 2006, FEMA had provided more than 116,000 trailers and mobile homes to hurricane victims, of which more than 115,000 were occupied.\nFEMA can also pay the cost of hotel rooms for hurricane evacuees. At its peak, FEMA was paying for 85,000 rooms, for Katrina and Rita evacuees; by the end of February 2006, the agency was making payments for 10,000 rooms. FEMA announced that hotel payments were only a temporary solution, and initially stated that it would cease such payments by December 1, 2005, with the exception of short-term extensions for the 12,000 hotel rooms occupied by evacuees in Louisiana and Mississippi. That deadline was later extended to December 15, 2005, with 10 states eligible for extensions to January 7, 2006. Following a judge's ruling against the agency, FEMA first agreed to continue making payments for families until at least February 7, 2006, a date that was later extended to March 15, 2006. FEMA reported that it had \"an aggressive plan to help place these families in longer-term housing,\" which included a contract to provide case management assistance, continuation of transitional housing payments, and referrals to social service agencies. By the end of August 2006, the agency was still authorizing payments for 29 rooms.\nSome cities established their own voucher programs, for which FEMA had been providing reimbursements. Newspapers reported that Houston has issued 35,000 vouchers to families to cover one year of rent. FEMA reported that approximately 60,000 apartments were leased by state or local governments, or authorized partners, on behalf of evacuees in 32 of the states that received disaster declarations. FEMA initially stated that it was phasing out the program and that it would cease reimbursing cities by March 1, 2006. In late February, FEMA issued a notice to cities informing them that they were to transition all of their existing leases from one FEMA program (FEMA's Section 403 Interim Sheltering program) to another (FEMA's Section 408 Housing program) with the aid of a FEMA contractor. In this transition, the cities are removed from the lease and the evacuees are added.", "In July 2007, HUD and FEMA entered into an Interagency Agreement through which FEMA will transfer responsibility for ongoing housing assistance for families displaced by Katrina to HUD. According to the FEMA notice in the Federal Register announcing the agreement,\nDue to the severity of Hurricanes Katrina and Rita, the Department of Housing and Urban Development's (HUD) expertise in assisting families with long-term housing needs through its existing infrastructure of Public Housing Agencies (PHAs), the President determined that housing assistance should be transitioned to HUD to address this continuing need.\nAccording to the Interagency Agreement, FEMA will provide resources for up to 18 months of rental assistance and case management services for approximately 45,000 families at a total estimated cost of $565 million. Eligible families will include those\ncurrently receiving FEMA Section 408 assistance and still eligible to continue receiving such assistance; currently receiving other FEMA housing assistance (e.g. living in a FEMA-provided trailer) and still eligible to continue receiving such assistance; eligible to be receiving FEMA housing assistance but not currently receiving such assistance; and living in a Real Estate Owned (REO) property through an arrangement between FEMA and HUD and determined to be eligible for rental assistance upon relocation out of the REO property.\nHUD invited PHAs in areas where families receiving FEMA housing assistance are located to participate in the new Disaster Housing Assistance Pilot Program (DHAP). Participating PHAs were to begin providing pre-transitional case management to eligible families on or after September 1, 2007. Through October 1, 2007, families were to continue to receive rental assistance payments directly from FEMA. Beginning November 1, 2007, PHAs were to begin receiving rental assistance payments for eligible families from HUD, and PHAs would then make payments to landlords for participating families. The rental payments would be equivalent to the FMR in the community. Beginning in January 2008, HUD was to work with FEMA to transition eligible families out of travel trailers and into rental housing in the private market.\nThe initial start of DHAP was delayed, with HUD and PHAs assuming responsibility on December 1, 2008, rather than November 1, 2008. According to HUD, 30,200 families were referred by FEMA to HUD to receive DHAP assistance initially, and an additional 8,400 families, who were previously assisted with FEMA trailers, have been referred to HUD and will be transitioned to the DHAP with a target date of March 2008.\nBeginning on March 1, 2008, families will be required to contribute $50 per month towards their rent, increasing by $50 per month for each subsequent month for the duration of the program, which is slated to end March 1, 2009. PHAs will coordinate case management services for residents to help them \"get back on their feet\" and HUD will work to help transition seniors and persons with disabilities into HUD programs at the end of DHAP.", "Hurricane Katrina was an unprecedented housing disaster. It affected the lives of hundreds of thousands of people, many of them poor before the storm and many who may become poor because of the storm. The nation's largest housing program for the poor, the Section 8 voucher program, played a minor role in aiding displaced families, despite calls for its use from across the political spectrum. Instead, the Administration has relied on FEMA emergency provisions and, to a limited degree, the marshaling of existing HUD resources. In some parts of the country, local housing authorities prioritized hurricane evacuees for the limited supply of available vouchers. In September, the KDHAP/DVP program was created to serve the relatively small number of hurricane evacuees who previously received HUD assistance. To serve other displaced families, FEMA developed a number of interim policies, ranging from the provision of trailers to the awarding of cash grants. Some cities and states developed their own voucher programs, with the expectation of FEMA reimbursement.\nThe Administration's approach to housing families displaced by the 2005 Gulf Coast hurricanes has come under intense criticism. Generally, the response was criticized as disorganized and inefficient. The final report of a congressional review of the government's response to the disaster, A Failure of Initiative , found that \"the government plans for ... shelter were far from adequate.\" Low-income housing advocates voiced concerns that some families could not find ways to use their transitional housing funds, both because rental markets have become very tight in the areas immediately surrounding the most heavily damaged areas, and because families were unfamiliar with the rental markets in the areas to which they had relocated. Advocates also contended that FEMA did not make it clear to families that the transitional housing payments were to be used only for housing. Stories surfaced of families who used the funds for purposes other than rent, and are now facing eviction and possible sanctions from FEMA. Some argued that the mix of trailers, cash payments, and mission assignments is not cost effective when compared to vouchers.\nIn light of these criticisms and others, the Administration undertook a review of its Katrina response. The final report, The Federal Response to Hurricane Katrina: Lessons Learned , recommends that HUD be designated as the lead federal agency for the provision of temporary housing in future disasters. It noted that HUD has extensive experience in providing housing resources for those in need, and that it must use its extensive network of regional offices and state and local housing agencies to prepare for potential relocation emergencies. It further notes that the provision of trailers should not be the default means of temporary housing offered to evacuees leaving shelters. The congressional panel's review, in A Failure of Initiative , found that \"FEMA failed to take full advantage of HUD's expertise and perspective on large-scale housing challenges, such as the agency's experience with the voucher program.\" Nearly two years after the storm, the Administration decided to transfer administrative responsibility for ongoing housing assistance from FEMA to HUD. Whether these findings and recommendations will mean that vouchers will play a larger role in future disasters is yet to be determined." ], "depth": [ 0, 1, 2, 1, 2, 2, 3, 4, 3, 1, 1, 2, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_title", "h0_full", "h0_title", "", "h0_full", "", "", "", "h1_full", "h1_full", "h1_full", "h2_full", "h0_full h2_full", "h0_full h2_full" ] }

{ "question": [ "What impact did the voucher program have among affected families?", "What was HUD's focus after the storm?", "How did KDHAP affect HUD programs?", "How has KDHAP funding changed recently?", "How common was HUD assistance before the storm among displaced families?", "How did PHAs attempt to help these families?", "How does voucher supply compare to demand?", "What are benefits of the voucher program?", "What was the Administration's approach instead of vouchers?", "How successful was this approach?", "What agencies are responsible for housing assistance for Katrina evacuees?", "How will this report stay current?" ], "summary": [ "The voucher program played a minor role in serving the overall population of affected families.", "The Department of Housing and Urban Development (HUD) focused primarily on serving the estimated 44,000 displaced families who had already received HUD assistance or were homeless before the storm.", "Under KDHAP, FEMA funded HUD to provide vouchers to displaced, HUD-assisted families.", "Most recently, a supplemental funding measure transferred funding for KDHAP from FEMA to HUD's Section 8 tenant-based rental assistance account. HUD renamed the program the Disaster Voucher Program (DVP).", "The majority of displaced families, however, did not receive HUD assistance before the storm.", "To serve these families, some PHAs allowed otherwise-eligible families displaced by the hurricane to jump to the top of local waiting lists. Other PHAs considered adopting such a policy, but decided that the need was too great in their own communities.", "The demand for vouchers nationwide is greater than the supply; thus few existing vouchers are available to new families.", "They claimed that vouchers are more cost-efficient, provide more family choice, and can avoid many of the problems associated with such policies as the temporary provision of trailers.", "In lieu of vouchers, the Administration chose to provide families with short term stays in motel rooms, cash grants, and trailers through FEMA.", "This approach came under criticism, and Administration reviews post-Katrina have recommended major changes to the way housing assistance is provided, including transferring temporary housing responsibilities to HUD.", "In July 2007, HUD and FEMA entered into an Interagency Agreement to transfer responsibility for ongoing housing assistance for Katrina evacuees from FEMA to HUD.", "This report may be updated, as necessary." ], "parent_pair_index": [ -1, -1, 1, 1, -1, 0, -1, 2, -1, 0, 0, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "What is the Disaster Relief Fund and how is it used?", "What determines whether an incident qualifies as an emergency or disaster?", "Does all federally funded disaster relief come from the DRF?", "What federal government activities are funded under the DRF?", "Under what statute is the Disaster Relief Fund authorized?", "Where are appropriations for the Disaster Relief Fund provided?", "Are specific Disaster Relief Fund appropriations for specific disasters?", "How is the DRF being spent?", "Historical Context for Federal Disaster Relief Funding", "1789-1947: Case by Case, After the Fact", "1947-1950: General Disaster Relief Funding from the Federal Government Begins", "1950-1966: The Disaster Relief Act of 1950—General Relief and Specific Relief", "1966-1974: The Disaster Relief Act of 1966—General Relief Broadens", "1974-Present: The Era of Federally Coordinated Emergency Management", "Appropriations for General Disaster Relief", "Types of Appropriations for Disaster Relief", "Supplemental Appropriations for Disaster Relief", "Annual Appropriations", "Disaster Relief Designation", "Continuing Appropriations", "DRF Funding History: FY1964-FY2018", "Factors in Changing Appropriations Levels", "Incident Frequency and Severity", "Programmatic Changes in Disaster Relief", "Changes in the Budget Process", "Budgeting Practices for Disaster Relief", "Management of Disaster Relief Funds", "1978: The Creation of the Federal Emergency Management Agency", "Calculation of the Annual Appropriations Request", "\"Past Experience\" and Various Averages", "Five-Year Averages (With Exceptions)", "The Budget Control Act Era: Ten-Year Averages, Reserves, and Flexibility", "Emergency Contingency Funding and Reserve Funds", "Contingent Appropriations", "Reserve Funds", "Issues for Congress", "Should the purpose of the DRF be rescoped?", "How much is enough to have on hand?", "What accommodations should be made in the federal budget for disaster relief?", "Appendix. General Disaster Relief Appropriations, FY1964-FY2018" ], "paragraphs": [ "", "The Disaster Relief Fund (DRF) is one of the most-tracked single accounts funded by Congress each year. Managed by the Federal Emergency Management Agency (FEMA), it is the primary source of funding for the federal government's domestic general disaster relief programs. These programs, authorized under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended (42 U.S.C. 5121 et seq.), outline the federal role in supporting state, local, tribal, and territorial governments as they respond to and recover from a variety of incidents. They take effect in the event that nonfederal levels of government find their own capacity to deal with an incident is overwhelmed.\nThe current emergency management policy environment assumes this federal role in domestic disaster relief as the default position and the availability of resources through the DRF a necessary requirement. However, this was not always the case. The concept of general disaster relief from the federal government predates both FEMA and the Stafford Act, but federal involvement in relief after natural and man-made disasters was very rare before the Civil War, and was at times considered unconstitutional. Domestic disaster relief efforts became more common after the Civil War, but were not seen as a necessary obligation of the federal government. Standing federal domestic disaster relief programs and a pool of resources to fund them only emerged after the Second World War. Prior to the development of these programs, domestic disaster relief and recovery was a matter for private nongovernmental organizations and state and local governments.\nOnce established, the federal role in domestic disaster response and recovery grew, proving politically popular and resilient despite periodic concerns about management, execution, and budgetary impacts. As the DRF is the source of funding for most general disaster relief programs, it is an indicator of the scope of those programs and the volume of taxpayer-funded aid they provide. Understanding the trends in the growth of the federal government's role in general disaster relief and recovery, and the associated costs of that role, may be useful as Congress considers changes in both emergency management and budgetary policies.\nThis report introduces the DRF and outlines how its resources are made available through a series of simple questions, presents a brief history of the federal government's involvement in domestic disaster relief, describes how the request for general disaster relief funding has been formulated over time, and examines the congressional response to those requests. It also provides the funding history for the DRF, and discusses several issues before Congress connected to the fund and the general disaster relief programs it supports.", "The DRF is the primary source of funding for the federal government's general disaster relief program—response and recovery efforts pursuant to a range of domestic emergencies and disasters in existing law—as opposed to specific relief and recovery initiatives that may be enacted for individual incidents.", "Under the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( P.L. 93-288 , as amended; hereinafter \"the Stafford Act\"), the President can declare that an emergency exists or a major disaster is occurring. These declarations make state, tribal, territorial, and local governments eligible for a variety of assistance programs, many of which are funded from the DRF. Usually declarations are made at the request of a state, tribal, or territorial government.", "While the DRF funds Stafford Act disaster relief and recovery programs, several other federal departments and agencies have significant roles in disaster preparedness, relief, recovery, and mitigation. They include the Department of Housing and Urban Development, the Small Business Administration, U.S. Department of Agriculture, U.S. Army Corps of Engineers, and the Department of Health and Human Services. While FEMA may fund some of their activities from the DRF through mission assignments, their larger programs are funded through separate appropriations.", "The role of the federal government has evolved over the years, but emergency response and disaster relief has historically been a federalized \"bottom-up\" operation, starting from the local or tribal governments affected, backed up by the state or territorial government, and then turning to the federal government if their capacity is overwhelmed. The broadening of the federal role has been a factor in which activities are funded under the DRF.\nCurrently, the Federal Emergency Management Agency (FEMA) coordinates federal disaster response and recovery efforts, and manages the DRF, which funds activities in five categories:\n1. Activity pursuant to a major disaster declaration— This activity represents the vast majority of spending from the DRF. FEMA's primary \"Direct Disaster Programs\" are the Individual Assistance (IA), Public Assistance (PA), and the Hazard Mitigation Grant Program (HMGP) programs. Federal assistance provided by other federal agencies at FEMA's direction through \"mission assignments\" is also paid for from the DRF. 2. Pre declaration surge activities —These are activities undertaken prior to an emergency or major disaster declaration to prepare for response and recovery, such as deploying response teams or prepositioning equipment. 3. Activit y pursuant to an emergency declaration —This is federal assistance to supplement state and local efforts in providing emergency services in any part of the United States. 4. Fire Management Assistance Grants (FMAGs) for large wildfires —This is assistance for the mitigation, management, and control of any fires on public or private lands that could, if unchecked, worsen and result in a major disaster declaration. 5. Disaster Readiness and Support (DRS) activities —These are ongoing, non-incident specific activities that allow FEMA to provide timely disaster response, operate its programs responsively and effectively, and provide oversight of its emergency and disaster programs.", "The DRF is not separately authorized as a distinct entity, but the activities it funds are authorized under the Stafford Act (42 U.S.C. 5121 et seq.).", "Since FY1980—FEMA's first annual appropriation—the DRF has been funded through its own appropriation within FEMA's budget, first under the heading \"Disaster Relief,\" and then \"Disaster Relief Fund\" starting in FY2012. FEMA's annual appropriations were first provided through the VA, HUD, and Independent Agencies Appropriations Act, but have been included in the Department of Homeland Security Appropriations act since FY2004. Since the first \"Disaster Relief\" appropriation for FY1948, most of the DRF's appropriations have been provided through supplemental appropriations.", "DRF appropriations have historically been provided for general disaster relief, rather than specific presidentially declared disasters or emergencies.\nThe most recent iterations of the accompanying language indicate the funds are provided for the \"necessary expenses in carrying out the Robert T. Stafford Disaster Relief and Emergency Assistance Act,\" thus covering all past and future disaster and emergency declarations. Previous versions of the appropriations language going back to 1950 also referenced the legislation authorizing general disaster relief rather than targeting specific disasters. On a number of occasions, specific disasters have been mentioned in the appropriation, but funding was not specifically directed to one disaster over others.\nWhile many disaster supplemental appropriations bills are associated with a specific incident or incidents—such as P.L. 113-2 , \"the Sandy Supplemental\"—the language in that act does not limit the use of the disaster relief appropriation to that specific incident.", "Since the enactment of P.L. 112-74 , Congress has received regular reporting on spending from the DRF. Monthly reports on such spending since March 2013 are available on FEMA's website. Currently, the reports include information on DRF balances, actual and projected obligations from the DRF for large-scale disasters broken down by disaster declaration, and obligations and expenditures aggregated by incident. These reports also include estimates of the DRF balance through the end of the current fiscal year.", "Disaster relief has not always been a part of the mission of the federal government. For nearly 80 years, federal domestic disaster relief was minimal, extremely narrow in scope, and largely ignored the humanitarian side of the relief equation, leaving that to private organizations and local levels of government. Even as the country emerged from the Civil War with more of a national identity and a sense that the federal government could act to provide relief in some circumstances, disaster aid remained limited, responding only after the fact on a case-by-case basis. Only after World War II did the concept emerge of a federal role in responding to disasters broadly defined, led by the President and funded in advance, as opposed to case-by-case responses to needs in the wake of the most severe events led by ad hoc congressional action. Over the ensuing years, the general disaster relief program and its funding grew, adopting concepts of assistance that had been reserved for catastrophic events. In the 1970s, the Federal Emergency Management Agency (FEMA) was established, institutionalizing the federal role in disaster response, recovery, mitigation, and preparedness—the role we recognize today. At the heart of that role is the set of relief programs that have evolved since the 1940s, known collectively as the Stafford Act, which are funded by the Disaster Relief Fund appropriation.", "The Constitution provides little specific direction on the question of how the United States should confront disasters. While allusions to the intent of the Constitution speak to promoting domestic tranquility and promoting the general welfare, limitations on the federal role in state affairs combined with practical politics of the day to limit federal involvement in disaster relief and recovery in the early years of the country.\nThe federal government did provide disaster relief on some occasions. Some observers note at least 128 instances from 1803 to 1947 when natural disasters prompted the federal government to provide some type of ad hoc relief on a case-by-case basis for specific incidents after they occurred. Prior to the Civil War, these measures largely consisted of refunds of duties paid on goods destroyed in customs house fires, allowance for delayed payments of bonds, and land grants for resettlement.\nProponents of disaster relief argued that the \"general welfare\" clause of the Constitution warranted the federal role in disaster relief. Opponents did not find this justification convincing, as it was nonspecific, and argued that certain natural disasters (such as flooding of the Mississippi River) were foreseeable, and therefore state and local governments had an obligation to be prepared; that it was improper for the government to provide relief for specific places with money it collected for the common good; and that the federal government could not afford to provide universal relief.\nAs the U.S. economy became more robust, federal revenues grew, weakening the position of those in Congress who opposed a federal role in disaster assistance on the basis of the lack of such resources.\nCongressional willingness to provide assistance was not always sufficient to ensure its provision, however. In 1887, President Grover Cleveland vetoed a bill that would have provided $10,000 to pay for seeds for farmers in Texas after a drought, arguing as follows:\nI can find no warrant for such an appropriation in the Constitution; and I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. A prevalent tendency to disregard the limited mission of this power and duty should, I think, be steadfastly resisted, to the end that the lesson should be constantly enforced that though the people support the Government, the Government should not support the people.\nThe friendliness and charity of our countrymen can always be relied upon to relieve their fellow-citizens in misfortune. This has been repeatedly and quite lately demonstrated. Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood.\nMuch of the disaster relief provided in this period was nongovernmental in nature. In 1881, Clara Barton founded the American National Red Cross (ANRC), which provided disaster aid from funds it raised from private sources. One year before a catastrophic earthquake struck San Francisco in 1906, revised incorporating legislation for the ANRC tasked the organization with \"mitigating the sufferings caused by pestilence, famine, fire, floods, and other great national calamities, and to devise and carry on measures for preventing the same.\" In the days after the earthquake, President Theodore Roosevelt issued an appeal for assistance from the public to be channeled through the ANRC:\nIn the face of so horrible and appalling a national calamity as that which has befallen San Francisco, the outpouring of the nation's aid should, as far as possible, be entrusted to the American Red Cross, the national organization best fitted to undertake such relief work.... In order that this work may be well systematized and in order that the contributions, which I am sure will flow in with lavish generosity, may be wisely administered, I appeal to the people of the United States, to all cities, chambers of commerce, boards of trade, relief committees and individuals to express their sympathy and render their aid by contributions to the American Red Cross.\nWhile the federal government provided assistance in response and recovery in the San Francisco case on an ad hoc basis, the majority of the assistance provided was through private means. Congress appropriated $2.5 million in the days after the quake for the Secretary of War to provide \"subsistence and quartermaster's supplies ... to such destitute persons as have been rendered homeless or are in needy circumstances as a result of the earthquake and commissary stores to such injured and destitute persons as may require assistance,\" but nonfederal cash contributions to the ANRC and the local relief organizations exceeded $9 million in the two years following the disaster.\nThe ANRC served as the major institutional source of relief for disaster victims in the United States, serving communities and individuals in cooperation with state and local governments with relatively little direct contributions from the federal government for many years. The Red Cross continued to play a leading role in nongovernmental disaster relief as the federal government's role in disaster aid evolved and expanded through the 20 th century and into the 21 st .", "After the Second World War, the federal government started becoming more involved in disaster relief beyond specific incident-by-incident relief efforts. In 1947, P.L. 80-233 authorized the federal government to provide surplus property to state and local governments for disaster relief under the Disaster Surplus Property Program. Less than eight months later, the Administrator of the Federal Works Agency noted in a letter to President Harry S. Truman that the program would not provide adequate relief to communities over the longer term.\nThe next year, Congress made its first appropriation for general disaster relief. The Second Deficiency Appropriation Act, 1948, which was enacted on June 25, 1948, provided funding directly to the President as follows:\nDISASTER RELIEF\nDisaster Relief: To enable the President, through such agency or agencies as he may designate, and in such manner as he shall determine, to supplement the efforts and available resources of State and local governments or other agencies, whenever he finds that any flood, fire, hurricane, earthquake, or other catastrophe in any part of the United States is of sufficient severity and magnitude to warrant emergency assistance by the Federal Government in alleviating hardship, or suffering caused thereby, and if the governor of any State in which such catastrophe shall occur shall certify that such assistance is required, $500,000, to remain available until June 30, 1949, and to be expended without regard to such provisions regulating the expenditure of Government funds or the employment of persons in the Government service as he shall specify: Provided, That no expenditures shall be made with respect to any such catastrophe in any State until the governor of such State shall have entered into an agreement with such agency of the Government as the President may designate giving assurance of expenditure of a reasonable amount of the funds of the government of such State, local governments therein, or other agencies, for the same or similar purposes with respect to such catastrophe: Provided further, That no part of this appropriation shall be expended for departmental personal services: Provided further, That no part of this appropriation shall be expended for permanent construction: Provided further, That within any affected area Federal agencies are authorized to participate in any such emergency assistance.\nAlthough this legislation comes with broad latitude for the President in expending these funds, this appropriation contained several hallmarks that continue in today's disaster relief structure:\nthe President makes the determination that a disaster has occurred, and that federal aid is required; the state has a role in certifying the need and committing state resources to be eligible for federal support; aid is to \"supplement the efforts and available resources of State and local governments or other agencies,\" rather than to fund the entire relief effort; and the President may direct federal agencies to participate in emergency assistance.\nThe conditions laid out in this appropriation were echoed in the next two appropriations, provided in 1949, which totaled $1 million.", "The Disaster Relief Act of 1950 formalized the structure outlined in the initial appropriations legislation, and indicated for the first time that\nit is the intent of Congress to provide an orderly and continuing means of assistance by the Federal Government to States and local governments in carrying out their responsibilities to alleviate suffering and damage resulting from major disasters, to repair essential public facilities in major disasters, and to foster the development of such State and local organizations and plans to cope with major disasters as may be necessary.\nSection 8 of the act limited the authorized disaster relief funding to $5 million in total. This restriction did not effectively constrain funding, however. The first supplemental appropriation for general disaster relief authorized under the Disaster Relief Act for 1950 provided $25 million, and a waiver of the Section 8 limitation. The first authorized annual appropriation for general disaster relief was for $800,000, enacted August 31, 1951, less than two months later. Annual appropriations were \"to be available until expended,\" rather than expiring as previous general disaster relief appropriations had, and their use for administrative expenses was statutorily capped at 2% per year.\nUnder the Kennedy and Johnson Administrations, the federal government's role in disaster relief expanded further. Federal general disaster relief programs broadened in 1962, with the inclusion of several American territories, and grants for repair of state facilities.\nHowever, Congress still passed specific legislation authorizing relief programs pursuant to other major disasters. In 1964 and 1965, post-disaster legislation provided specific relief for victims of an earthquake in Alaska, flooding in western states, and victims of Hurricane Betsy in Florida, Louisiana, and Mississippi. In a history of disaster relief legislation, one observer described the situation thus:\nIn 1962, 1964, and 1965, Congress had sought to preserve P.L. 81-875 [the Disaster Relief Act of 1950] and yet provide disaster assistance in the case of the very big disasters by special legislation only for the states named. Although no one at the time appeared aware that the new types of assistance would become precedents for general legislation, it was in the nature of the system that ultimately they would be reenacted for general use.\nThis would change the following year.", "The Disaster Relief Act of 1966 abolished the Disaster Relief Act of 1950, and revised the general disaster assistance program by providing more assistance to public colleges and universities, as well as authorizing assistance to repair local public facilities. According to some observers, the agencies charged with carrying out most of the disaster relief activity felt the 1966 legislation was unnecessary and the work could be carried out under existing authorities.\nThe Disaster Relief Act of 1969 was enacted in response to Hurricane Camille, although the expansion of the federal role in disaster assistance it represented had been included in legislation since 1965. It included broader public and individual assistance, including temporary housing, food assistance, unemployment assistance, and the federal government funding up to half the cost of repair and restoration of public facilities, and providing matching funds to help states develop preparedness plans. Not all of these costs would be borne by the funding provided to the President, and the programs were only authorized through calendar 1970, but they represented a significant broadening of federal government involvement.\nThe Disaster Relief Act of 1970 consolidated the previous disaster relief legislation into a single act, and made many of the Camille-driven programs permanent, including a permanent program to provide temporary housing assistance, and programs for debris removal and permanent repair and replacement of state and local public facilities.", "The Disaster Relief Act of 1974 provided for a more robust preparedness program, and introduced the concept of \"emergency\" declarations to accommodate assistance in cases where an incident did not rise to the \"major disaster\" threshold.\nThe Disaster Relief and Emergency Assistance Amendments of 1988 ( P.L. 100-707 , hereinafter DREAA) was enacted 14 years later; it renamed the Disaster Relief Act of 1974 as the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the aforementioned Stafford Act). It made the following programmatic changes:\nAuthorized the President to declare an emergency under the Stafford Act in \"any occasion or instance\" in which federal aid is needed—allowing for assistance without a major disaster declaration; Defined a \"major disaster\" as \"any natural catastrophe ... or, regardless of cause, any fire, flood, or explosion, in any part of the United States, which in the determination of the President causes damage of sufficient severity and magnitude to warrant major disaster assistance....\" Established a 75% minimum level of assistance for the immediate response, debris removal, and repair of public facilities; and Provided for a 50/50 cost share for hazard mitigation grants.\nOver the course of the 40 years after the original $500,000 appropriation for general disaster relief with associated programmatic language, the now-renamed Stafford Act and the DREAA are the pieces of legislation that structure the current relationship between the federal and state government in emergency management and disaster relief. These laws, which appear at 42 U.S.C. 5121 et seq., continue to be amended through such vehicles as the Sandy Recovery Improvement Act ( P.L. 113-2 , Division B) and the Disaster Recovery Reform Act of 2018 ( P.L. 115-254 , Division D). Other CRS analyses will address such amendments to the general disaster relief program in detail.", "", "General disaster relief activities by the federal government under the Stafford Act are funded through the appropriations process. Three types of appropriations support these activities:\nSupplemental Appropriations are requested by the Administration on an ad hoc basis, generally to address a need not sufficiently covered in the annual appropriations process. These move on a short timetable and generally do not go through the complete committee process. More than 85% of net appropriations for the DRF have been provided through supplemental appropriations.\nAnnual Appropriations: Requested by the Administration in February as a part of the annual budget process, these are expected to be passed by Congress and enacted into law prior to the start of the fiscal year in October. Annual appropriations measures fund the core activities of the government and are developed through the committee process.\nContinuing Appropriations: Provided when annual appropriations work remains unresolved at the beginning of the new fiscal year, these appropriations are temporary budget authority provided at a rate for operations based on the prior fiscal year to allow the government to continue functioning. The measure that provides them is termed a \"continuing resolution,\" or \"CR.\" These continuing appropriations may expire (in the case of an interim CR), or extend to the end of the fiscal year (in the case of a \"long-term\" CR).", "The current Disaster Relief Fund concept can trace its birth back to an appropriations bill in the 1940s—the Second Deficiency Appropriations Act, 1948. Deficiency appropriations bills, which provided funding to meet unanticipated needs during the fiscal year, were a forerunner of modern supplemental appropriations bills. As the severity, frequency, and resultant costs to the federal government of the array of disasters that will strike the United States in a given year have always been unpredictable in an annual budgetary context, disaster relief funding frequently has been provided through deficiency, and later supplemental, appropriations.\nWhen Congress and the Administration began to express concerns about the budget deficit in the 1980s, efforts were made to restrain supplemental spending by limiting it to cases of \"dire emergency.\" With the implementation of budget control in the 1990s, a special designation for emergency spending was created. If both Congress and the Administration agreed certain spending was an emergency requirement, budget limits would be adjusted to accommodate that spending. Congress used the emergency designation on a disaster relief appropriation for the first time in an FY1992 supplemental appropriations act. Congress continues to use emergency designations in supplemental appropriations legislation to provide budgetary flexibility.\nAt one point, Congress was statutorily required to use the designation for disaster relief appropriations. Under the terms of the aforementioned FY1992 supplemental appropriations act, beginning in FY1993, Congress required \"all amounts appropriated for disaster assistance payments [under the Stafford Act] that are in excess of either the historical annual average obligation of $320,000,000, or the amount submitted in the President's initial budget request, whichever is lower\" to be designated as emergency requirements under a specific provision of the Balanced Budget and Emergency Deficit Control Act of 1985. This practice of emergency designation above a particular threshold was followed until FY2000, when a clause appeared in the appropriation noting that discretionary appropriations were being provided notwithstanding the restrictions of this section of the U.S. Code.\nWith the passage of the Budget Control Act in 2011, which provided additional budgetary flexibility for the costs for major disasters, supplemental disaster relief appropriations declined in frequency, but remained a primary contributor to balances in the DRF. See the \" DRF Funding History: FY1964-FY2018 \" section below for details.", "As was noted above, the first general disaster relief funding was provided in an appropriations act in 1948, and carried its own authorizing provisions. Stand-alone authorization for general disaster relief first came in 1950.\nOnce the initial separate authorization was put in place for general disaster relief, appropriations were provided for FY1952, FY1956-FY1958, and FY1962. With the broadening of the relief program to cover more types of damages and the authorization of aid on general terms that had only been made on a case-by-case basis before the mid-1960s, appropriations for general disaster relief became more common—and larger. Annual appropriations for general disaster relief have been provided each year since FY1964, with only two exceptions. Each time this occurred, the DRF was deemed to have an adequate unobligated balance to meet anticipated needs.", "As will be discussed later in this report, the adoption of a special designation for the costs of major disasters under the Stafford Act as a part of the Budget Control Act of 2011 ( P.L. 112-25 ) made it easier to provide budget authority to the DRF in the annual appropriations process. In the seven appropriations cycles since the implementation of this designation in FY2012, more budget authority was provided for the DRF in annual appropriations measures than in the 63 prior cycles combined, accounting for inflation.\nSince the FY2013 budget request, FEMA has bifurcated its annual appropriations request between the costs of major disasters—the \"Disaster Relief Category\"—and everything else funded by the DRF—\"Base Disaster Relief,\" which includes funding for emergency designations, fire management assistance, pre-disaster declaration surge activities, and Disaster Readiness and Support Programs. The former category is eligible for the designation as \"disaster relief,\" a designation that triggers an upward adjustment of statutory discretionary spending limits to accommodate it without triggering sequestration. The latter category is not, and scores as discretionary spending.", "Even though the DRF is a \"no-year\" fund, and its appropriations are available until expended, it does get temporary replenishment from continuing resolutions (CRs) at times, until its annual appropriations are finalized.\nIn FY1982, for the first time, interim general disaster relief funding was provided in a CR through an \"anomaly,\" a provision providing funds at an operating rate different from that base rate of operations provided in the resolution.\nThese \"anomaly\" provisions may also provide flexibility that can help avoid some of the complications that can arise under the constraints of operating under continuing appropriations. For example, CRs generally provide funding at a constant rate of operations, with certain restrictions. This can complicate disaster response and recovery, when calls for funding vary in scale and timing from year to year. When FEMA responds to major disasters of significant size while operating under a CR, either FEMA requests special flexibility from the Office of Management and Budget (OMB)—which apportions funding to agencies—or CRs direct flexibility to be provided to ensure adequate resources are available for disaster response and recovery. An example of this can be found in the initial FY2019 CR. Section 124 of Division C of P.L. 115-245 provides that the funds provided under the CR \"may be apportioned up to the rate for operations necessary to carry out response and recovery activities.\"", "The following figures show appropriations for the DRF from FY1964 through FY2018.\nEach fiscal year shows a gross total of annual appropriations and discretionary appropriations (represented by a two-part bar) and a net total (represented by a black mark on each bar), which takes into account rescissions and transfers from the DRF. An inset graphic provides the scale to include funding levels for several outlier years, while showing the detail of appropriations for the more typical years. The first figure shows data in nominal dollars, and the second shows constant FY2018 dollars.\nThe figures show an increase in appropriations for the DRF starting in the 1990s, largely due to increases in supplemental appropriations. Annual appropriations rose significantly in the early 2000s and again starting in FY2013. Even with the surge in appropriations for the 2017 catastrophic series of disasters, which included Hurricane Harvey, Hurricane Maria, and the California wildfires, FY2005 remains the single highest year for appropriations for the DRF, when a series of hurricanes, including Katrina, Rita, and Wilma hit the southeastern United States.\nA table showing the underlying data for each figure appears in the Appendix .", "FEMA's budget justifications have noted for years, in one form or another, that \"[t]he primary cost driver associated with Major Disasters is disaster activity.\" Although year-to-year disaster relief appropriations are largely driven by disaster activity and ongoing recovery needs, when analyzing historical data over an extended time frame, other factors such as programmatic changes in general disaster relief and certain changes in the budget process may also warrant consideration.", "The two largest factors affecting year-to-year disaster relief appropriations are disaster activity, which varies in frequency and severity, and the ongoing recovery costs from previous disasters. Federal involvement in disaster response and recovery occurs when lower levels of government find their capabilities are overwhelmed and turn to the federal government for help. Reduced (or increased) numbers of calls for relief mean reduced (or increased) need for disaster relief appropriations.\nThe incidents that lead to expenditures from the DRF vary in scale. Equally powerful storms may strike a community a glancing blow or a direct hit. An earthquake may hit a rural area, or a major city with complex infrastructure. Stricken communities, states, territories, and tribes have varying levels of preparedness for particular types of disaster. Some observers have noted that as the U.S. population grows and develops property in disaster-prone areas, and as patterns of severe weather shift, the costs of disasters are likely to continue to rise. According to the National Centers for Environmental Information of the National Oceanic and Atmospheric Administration, from 1980 through October 2018, the United States has averaged six weather-related disaster events that each cost $1 billion or more each year. 2016 had 15 such events, 2017 had 16, and 2018, as of October 9, had 11. Spending to help large, complex communities rebuild disaster-damaged facilities and infrastructure and mitigate against future disasters is a significant multiyear cost largely paid for from the Disaster Relief Fund.\nUsing Figure 2 , one can contrast this period of high-frequency, high-impact events of the 2010s to the relatively calm period of the 1980s. Without the driver of large disasters, DRF appropriations remained modest. Over the period from FY1981 to FY1991, abnormally low levels of disaster activity led to no supplemental appropriations for 7 of those 11 fiscal years, and no annual appropriations in either FY1984 or FY1991—the only two fiscal years that has occurred since FY1964. By contrast, over the last six years, the DRF has required sustained high levels of appropriations, including three of its five highest total appropriations by fiscal year, even adjusting for inflation.", "Over the long term, alterations to the scope of federal disaster relief programs affect the type and level of federal spending when disasters occur. The Disaster Relief Act of 1950 authorized funding to repair local public facilities at the President's discretion. As the brief history above relates, the federal program for general disaster relief has evolved into a much broader program, of which local public facilities is only one facet.\nThis evolution has occurred gradually. Some of this evolution was the result of incorporating assistance offered in response to specific disasters in the 1960s and 1970s into the general relief programs under the Stafford Act. Another facet of this evolution was the broadening of the federal role in helping respond to smaller-scale incidents, including proactive declarations prior to potential disasters to reduce their impact. In addition, disaster relief programs funded through the DRF now include disaster mitigation programs that are not limited to mitigating the disaster that triggered them, but are also intended to reduce the impact (and by extension, the cost) of disasters over the long term.\nThe impacts of programmatic expansions are reflected in Figure 2 , with the trend of increased general disaster relief appropriations on a small scale associated with expansions under the Disaster Relief Act of 1969 and the Disaster Relief Act of 1970, and on a larger scale with the expansion of programs under the Disaster Relief and Emergency Assistance Amendments of 1988. While the decrease in disaster activities in the 1980s reduced the annual demand for disaster relief appropriations, once the number of declared disasters rose again, and emergencies and mitigation also drew on DRF resources, demand for those resources grew rapidly.\nThis evolution continues, with reform legislation frequently following on the heels of exceptionally large disasters, or complexes of disasters. This was the case when the federal response to a series of hurricanes and wildfires in 2017 helped drive interest in the Disaster Recovery Reform Act of 2018.", "Changes in congressional budget processes have at times been discussed as a means of limiting the budgetary impact of disaster relief spending. However, the budget controls that have been approved and implemented have more often been provided with provisions to ensure disaster relief budget authority remains available if needed.\nPrior to 1985, Congress provided appropriations to fund the federal government without specific statutory limitations on overall spending. The 1985 Balanced Budget and Emergency Deficit Control Act put limits on deficit spending in place. The Budget Enforcement Act of 1990 placed express limits on discretionary spending for the first time.\nThe 1990 act also provided an exception to those limits, allowing Congress, together with the President, to declare certain spending to be an emergency requirement, and therefore not subject to those limits. This was used to provide additional appropriations for disaster relief. Although the original set of discretionary limits expired, the emergency spending designation has continued as part of the appropriations process.\nIn 2011, the Budget Control Act ( P.L. 112-25 ) not only reestablished statutory spending limits, but also provided a special designation for the costs of major disasters, in addition to the emergency designation. The amount of funding that can be designated as disaster relief—defined as spending pursuant to a major disaster declaration—is limited by a formula based on past spending on disaster relief. It is not a restriction on how much can be spent on disasters, however—funding in excess of the allowable adjustment for disaster relief is still eligible for an emergency designation. This formula was adjusted by the Bipartisan Budget Act of 2018 to account for emergency-designated spending on disasters. The special designation for disaster spending will expire along with the discretionary spending limits in 2021.\nThe impact of these changes in the budget process on disaster relief appropriations appears to be limited to the structure of the total appropriations, rather than the amount. The Congressional Budget Office (CBO) noted that in the 1970s, \"about 5%\" of supplemental funding was for disasters. In a report reviewing supplemental appropriations enacted during the 1980s, CBO indicated that number fell to less than 1%. This can be attributed to the drop in disaster activity discussed above. In a similar report on the 1990s, CBO observed an increase in the use of supplemental appropriations to provide disaster relief, noting the following:\n[I]n the 1990s, Presidents Bush and Clinton tended to request—and the Congress tended to provide in regular appropriations—less than what would eventually be spent in those disaster-related accounts. (Some observers say the underfunding was an effort to keep total appropriations under the [budget enforcement] caps.) When a disaster or emergency arose, the Congress enacted supplemental appropriations during the fiscal year, usually at the request of the President. That supplemental funding was designated emergency spending and was therefore not counted under the discretionary spending caps.\nFigure 1 and Figure 2 do not show a distinct impact of budget controls on the overall level of disaster spending. However, they do show an increase in the amount of funding provided in annual appropriations versus supplemental appropriations starting in FY2012. The addition of the disaster relief designation under the Budget Control Act enabled higher funding levels for disasters in the annual appropriations bills, as disaster relief-designated appropriations did not compete with other appropriations for limited discretionary resources, within the allocations provided to the subcommittee funding FEMA, or within the overall discretionary spending limit. In the early years of the disaster relief designation, this increased annual funding also reduced the frequency and urgency of supplemental appropriations for the DRF. However, Congress has provided emergency-designated relief for catastrophic disasters in supplemental appropriations, whether statutory budget controls were in place or not.", "", "The responsibility for managing DRF appropriations has shifted among agencies as the general disaster relief function grew. In March 1951, President Truman initially delegated the authority for directing federal agencies in a disaster to the Housing and Home Finance Administrator at the Department of Housing and Urban Development (HUD); then in January 1953 the responsibility was shifted to the Federal Civil Defense Administration in the Department of Defense (DOD). In 1961, the authority was moved within the department to the Office of Civil Defense Mobilization, which had its name changed in 1961 to the Office of Emergency Planning, and changed again in 1968 to the Office of Emergency Preparedness. It remained with that office until its abolishment in 1973, when disaster relief powers were transferred from DOD back to HUD, where those powers were exercised by the Federal Disaster Assistance Administration (FDAA).\nAlthough management responsibilities were vested in various parts of the federal bureaucracy, appropriations for general disaster relief were provided directly to the Executive Office of the President from FY1948 through FY1973. For FY1974, funds were still described as \"Funds Appropriated to the President,\" but they were provided within HUD's appropriations.", "In 1978, responding to support for a more cohesive emergency management structure at the federal level, President Jimmy Carter issued Reorganization Plan #3, which created the Federal Emergency Management Agency (FEMA). At the time, disaster relief functions were vested in three agencies: the FDAA (at HUD, managing general federal disaster relief), the Federal Preparedness Agency (FPA—part of the General Services Administration); and the Defense Civil Preparedness Agency (DCPA—part of the Department of Defense). This was the first time that emergency management functions at the national level were expressly centralized into a single federal agency. FEMA had a three-part role:\nMobilizing federal resources, Coordinating federal efforts with state and local governments, and Managing the efforts of the public and private sectors in disaster responses.\nFY1980 was the first year appropriations for \"Disaster Relief\" were provided to FEMA.", "A review of selected FEMA budget justifications shows how the executive branch has discussed its decision on how much to request for disaster relief.", "In the early 1980s (1983-1985), FEMA provided justifications for the Disaster Relief appropriation that included management and coordination, individual assistance, and public assistance activities. These activities were also supported under the Emergency Management Planning and Assistance appropriation and the Salaries and Expenses appropriation for FEMA. These justifications noted that actual disaster relief requirements were based on unpredictable external factors. The FY1984 justification noted, \"The budget requests mentioned are based on average projection of disaster occurrence. Any significant change from the projected totals, through either more or larger size incidents, could generate an increased request.\"\nHowever, despite that uncertainty, a request for a specific budget number leads to questions about the basis for that particular number. In the FY1986 process, FEMA explicitly noted it was projecting its anticipated need \"on the basis of past experience with disasters.\" Between September 1984, when FEMA submitted its budget request to the Office of Management and Budget for review, and February 1985, when the budget justification was provided to Congress, additional \"experience\" was apparently accumulated that reduced the projected demand for disaster relief from $350 million to $275 million.\nBy the FY1989 appropriations cycle, the language justifying the request had evolved into \"an assessment of historical averages,\" and included specific data on the average annual disaster relief obligations for a seven-year period, as well as the disaster relief obligations for the most recently concluded fiscal year. The budget justification then included a request, noting the request and the projected obligation data that justified it included $30 million in savings through unspecified \"legislative and administrative reforms.\"\nBy the late 1980s and into the 1990s, concerns about deficit spending led to the discussion of budget controls, and ultimately their implementation.\nThe FY1992 request highlighted the difficulty in simply using averages of past obligations. According to the justification, the average annual obligation from 1981 to 1989 of $270 million was exceeded by the FY1990 obligation of over $2 billion for costs related to Hurricane Hugo and the Lomo Prieta earthquake.\nThe FY1994 request included a great deal of information on prior-year activities, discussing these elements in the context of average levels of obligations, and noting the impact of larger disasters in prior years, but did little to specifically justify the request level of $292 million.", "For FY1995, the budget discussion evolved, as FEMA justified the request on the basis of the first five years of activities under the Stafford Act, and the series of major disasters that had struck. The use of the five-year average continued through the 1990s and early 2000s, with disaster support costs—the costs of maintaining disaster response capabilities that are not attributable to a specific disaster—included as well. Certain very large disasters were not included in the average. For example, for FY1999, FEMA explicitly excluded the costs of the Northridge earthquake, plus disaster support costs. For FY2003, not only was Northridge excluded from the average, but so were the impacts of the 9/11 terrorist attacks.\nBy FY2009, the justification had again evolved: \"Coupled with funding from recoveries of prior year obligations and unobligated funds carried forward, the appropriation request will fund the five-year average obligation level for direct disaster activity (excluding extraordinary events, such as the terrorist attack of September 11, 2001, the 2004 hurricanes in Florida and other states, and Hurricanes Katrina, Rita, and Wilma in 2005 and 2006 and excluding disaster readiness and support functions).\" In FY2011, the Administration simplified the request language by referring to disasters that cost less than $500 million as \"non-catastrophic disaster activity.\" That year, in addition to the request for the DRF based on the five-year average of \"non-catastrophic\" disaster relief obligations, the Administration made a concurrent request for $3.6 billion for the costs of prior catastrophic storms and wildfires.", "The 2010s saw continued debate on deficit spending, coupled with a continuing desire to fund disaster relief programs. When Congress passed the Budget Control Act of 2011 ( P.L. 112-25 ), it created statutory caps on spending as well as a special mechanism to exempt some of the costs of major disasters from those caps. (See \" Changes in the Budget Process \" for details.)\nA $500 million reserve fund was included in the Administration's budget request for FY2012. This was intended to help ensure resources were available on short notice in hurricane season. This rose to $1 billion in FY2015. For FY2019, the reserve request increased to $2 billion \"due to the uncertainty around the availability of additional supplemental funding to continue addressing the 2017 hurricanes.\"\nIn FY2013, FEMA shifted from using a 5-year average to using a 10-year average of non-catastrophic obligations, plus the estimated requirements for past catastrophic disasters, plus the reserve, as the basis for their overall DRF request.", "At times, the Administration and Congress have examined methods of speeding up or broadening the availability of funds to address emergencies and disasters by changing how they were appropriated. Examples of this include the use of contingent appropriations and the proposal to establish a reserve fund for disaster relief.", "In some of its first exercises of the emergency designation, Congress chose to provide a portion of the appropriation for the DRF as emergency-designated budget authority contingent on the Administration specifically requesting the additional funds and designating them as an emergency requirement. An example of this structure can be found in P.L. 103-75 , a supplemental appropriations bill for FY1993:\nFor an additional amount for ''Disaster relief\", $1,735,000,000, and in addition, $265,000,000, which shall be available only to the extent an official budget request for a specific dollar amount, that includes designation of the entire amount of the request as an emergency requirement as defined in the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, is transmitted by the President to Congress, to remain available until September 30, 1997, for the Midwest floods and other disasters: Provided , That the entire amount is designated by Congress as an emergency requirement pursuant to section 251(b)(2)(D)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, and title I, chapter II, of Public Law 102-229.\nThe FY2002 annual disaster relief appropriation was the last annual appropriation that included this type of contingent appropriation.", "While current appropriations requests for the DRF include a special appropriated reserve within the DRF for unanticipated catastrophic disasters, the concept of a budgetary reserve fund outside the DRF has also been proposed in the past, which would enable appropriations for broader non-Stafford disaster relief initiatives.\nIn FY2002, alongside a request for the DRF that included disaster support costs and funding for prior-year disasters, the Administration proposed the creation a of $5.6 billion National Emergency Reserve allowance to support the costs of \"significant new disasters.\" The DRF, the Small Business Administration (SBA) Disaster Loan Program, and wildfire programs at the Department of Agriculture and Department of the Interior would have been the primary recipients of this funding. The annual reserve would have been established in the budget resolution, and based on the average annual spending on \"extraordinarily large events.\" It would have been allocated to the appropriations subcommittees to fund presidential requests for emergency requirements if two criteria were met: \"the events were sudden, urgent, unforeseen, and not permanent; and adequate funding for a normal year has been provided for the applicable program by the Appropriations Committees.\" Unused reserve amounts could be rolled over into the next year. The proposal was not ultimately adopted.", "The federal government has defined a role for itself in emergency management and disaster recovery, as a backstop for state, local, territorial, and tribal governments, with roles in providing limited relief for individuals and support for mitigation efforts. FEMA's DRF appropriation funds a great deal of the federal effort. As the DRF appropriation is simply an amount of budget authority provided to support a role in disasters that is defined through separately crafted laws and policies, many of the issues related to the DRF are less about the appropriation than they are about that separately defined federal role.", "Despite the magnitude of funding provided through the DRF for a range of activities and programs, other appropriations support disaster-related activities in other departments and agencies. As noted earlier, HUD, USDA, DOT, DOD, and SBA all fund various disaster relief and recovery programs.\nAt various times in the past, efforts have been made to fund activities through the DRF that are not part of the current portfolio of Stafford Act programs. The Stafford Act already encompasses a wide range of emergency management, disaster relief, and disaster response activities. Making non-Stafford programs eligible for DRF funding is something Congress could choose to do, but it would not provide any obvious policy or budgetary advantage. Existing non-Stafford programs have their own funding streams, management, and oversight. Providing their resources through a new appropriation could complicate their funding stream and congressional oversight. While making the programs eligible for funding from the DRF could make additional budget authority available, it would be more transparent and direct for Congress to simply fund the program through its existing appropriation.\nThere is no special budgetary treatment for appropriations for the DRF—only for appropriations which are designated for the costs of major disasters under the BCA. Shifting discretionary spending out of one appropriations subcommittee's jurisdiction into another provides no overall budgetary benefit—the total amount of spending remains the same. Subcommittee allocations are set and reset every year (sometimes multiple times each year) at the discretion of the House and Senate appropriations committees, so such a move could well result in no net impact on available resources.\nThe concept of a broader funding stream providing discretionary resources for DRF, SBA, and USDA disaster relief programs has also been considered before. Such an idea, floated by a previous Administration but rejected by Congress, might have made more resources available in the immediate aftermath of a disaster, but it is not clear that reorganizing funding would make the programs subject to more thorough oversight or make them more effective. It could limit the ability of Congress to provide specific oversight or direction through appropriations to the separate programs.\nCongress could also break up the DRF into appropriations for the individual Stafford Act programs or groups of programs. This might allow for additional specific congressional oversight and direction, but it could reduce the flexibility that exists within the DRF to shift its resources to meet unanticipated disaster needs by segmenting the available resources.", "Appropriations are frequently provided on the basis of what can be spent on a project in a given fiscal year. This thinking informs part of the funding request, as it includes a basis of spending on open disasters, where recovery is ongoing. A 10-year average informs the portion of the DRF budget request that pays for response and recovery from disasters that cost less than $500 million. Previous and current Administrations have sought additional reserve funds over and above those projected needs to pay for potential \"no notice\" events. On the other hand, from FY2014 to FY2017, almost $2.5 billion in funding was rescinded from unobligated balances in the DRF. In the present constrained budget environment, Congress continues to weigh the proper level of reserves for FEMA to keep on hand in the DRF.", "While disaster relief is a relatively small part of the discretionary budget, and an even smaller part of the overall federal budget, disaster relief spending is anticipated to continue growing in the coming years. In modern history, Congress has been generally willing to provide resources for major disasters on an as-needed basis. However, discussions of deficit and debt continue in Congress, and may increase in frequency and volume as the Budget Control Act nears expiration in FY2021. The central question is this: Does disaster relief represent enough of a priority for the federal government to maintain the status quo notwithstanding potential increasing costs?\nWhen budget controls were put in place in the 1980s, 1990s, and 2010s, exceptions were provided to help ensure relief and recovery efforts would continue to be funded. With the expiration of the Budget Control Act statutory caps on discretionary spending, one limitation on disaster relief spending—albeit one with a limited practical effect, as noted above—will go away. The allowable adjustment for disaster relief will expire as well, which may have more of an impact, as Congress has used it to move disaster relief spending more fully into the annual appropriations process. The adjustment has effectively allowed most of the annual DRF appropriation to be provided without competing against other homeland security priorities for the discretionary funding provided under the Homeland Security appropriations subcommittee's allocation. Congress may consider whether they want that process to continue.\nCongress may also debate whether to try to limit disaster relief spending. The most direct means of doing this would not be to change the DRF appropriation, but by changing the underlying laws that authorize the programs it funds. Implementing relief limits or deductibles for states or smaller jurisdictions, larger nonfederal cost shares, or changes in the declaration process may prove unpopular, and having to vote for them once in more durable authorizing legislation may be more practical than doing so annually in appropriations legislation, which expires.", "" ], "depth": [ 0, 1, 2, 3, 3, 3, 3, 3, 3, 3, 1, 2, 2, 2, 2, 2, 1, 2, 3, 3, 4, 3, 2, 2, 3, 3, 3, 1, 2, 3, 3, 4, 4, 4, 3, 4, 4, 1, 2, 2, 2, 3 ], "alignment": [ "h0_title h1_title", "h0_title h1_full", "h0_title", "", "", "", "", "h0_full", "", "", "h0_full", "", "h0_full", "", "", "", "h1_title", "h1_title", "h1_full", "h1_title", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How long has the appropriation that feeds the DRF existed?", "How was it originally used?", "In what ways was the appropriation flexible?", "How was this a shift in policy?", "How did the government fund disaster responses prior to this shift?", "How has the appropriation to the DRF changed since 1948?", "What is the topic of this report?", "What details does this report offer?", "How does this report conclude?" ], "summary": [ "The appropriation which feeds the DRF predates current disaster relief programs and FEMA itself.", "It dates back to a half-million dollar deficiency appropriation to the President in 1948 that was drafted to allow him to use these resources to provide temporary emergency assistance to communities in the wake of unspecified potential natural disasters.", "Although the appropriation was provided with one particular Upper Midwest flooding incident in mind, the legislative language allowed the funding to be used more broadly, if the President wished to do so.", "This policy of providing general disaster relief was a shift from previous policy, which largely left emergency management, disaster relief, and disaster recovery in the hands of other levels of government and private relief organizations.", "Prior to the development of the general relief program, when the federal government got involved in disaster response and recovery, it was on an ad hoc, case-by-case basis.", "By comparison, the annual appropriation for the DRF in FY2018—70 years after the initial appropriation for general disaster relief—was $7.9 billion.", "This report introduces the DRF and provides a brief history of federal disaster relief programs.", "It goes on to discuss the appropriations that fund the DRF, and provides a funding history from FY1964 to the present day, discussing factors that contributed to those changing appropriations levels.", "It concludes with discussion of how the budget request for the DRF has been developed and structured, given the unpredictability of the annual budgetary impact of disasters, and raises some potential issues for congressional consideration." ], "parent_pair_index": [ -1, 0, 0, 2, 2, -1, -1, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 3, 3, 3 ] }

{ "title": [ "Background", "Despite Challenges Converting State Data to the T-MSIS Format, Nearly All States are Reporting T-MSIS Data, and CMS Has Shifted Its Focus to Improving Data Quality", "Overall, 49 States Are Reporting T-MSIS Data; Selected States Identified Converting their Data into the T-MSIS Format as a Significant Reporting Challenge", "CMS’s Efforts to Support States Have Shifted from Reporting T-MSIS Data to Improving T-MSIS Data Quality", "Data Completeness and Comparability Concerns Hinder CMS’s and States’ Use of T-MSIS for Oversight", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Department of Health and Human Services", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "CMS intends for the T-MSIS initiative to provide a national data repository that would support federal and state program management, financial management, and program integrity activities, among other functions. T- MSIS is also intended to benefit states by reducing the number of reports CMS requires them to submit, and by improving program efficiency by allowing states to compare their data with other states’ data in the national repository or with information in other CMS repositories, including Medicare data. For example, CMS intends to use T-MSIS data for reports that states are currently required to submit, such as Early and Periodic Screening, Diagnostic, and Treatment Program reports.\nT-MSIS is designed to capture significantly more data from states than is the case with MSIS, thereby collecting data not previously reported that should provide CMS and states with information to enhance their oversight efforts. T-MSIS includes the five data files that were collected through MSIS: an eligibility file and four claims files (inpatient, long-term care, pharmacy, and other). The scope of data to be collected from these five previously defined MSIS files has expanded to include more detailed information on enrollees, such as their citizenship, immigration, and disability status; and expanded diagnosis and procedure codes associated with their treatments.\nAdditionally, T-MSIS requires states to report three new data files on (1) providers, (2) third-party liability, and (3) managed care organizations (MCO).\nThe provider file includes a unique identifier for each provider, as well as data fields to show provider specialty and practice locations. Each of these identifiers can assist CMS and state oversight by providing information on provider referrals, Medicaid payments to specific providers, and identifying ineligible providers.\nThe third-party liability file includes data on whether a beneficiary has any health insurance in addition to Medicaid, or other potential sources of funds that could reduce Medicaid’s expenditures. Medicaid is generally the payer of last resort, meaning if Medicaid enrollees have another source of health care coverage, that source should pay, to the extent of its liability, before Medicaid does. Information on beneficiaries’ other sources of coverage could help ensure that Medicaid pays only those expenditures for which it is liable.\nThe managed care file includes more detailed information on MCOs, such as type and name of managed care plans, covered eligibility groups, service areas, and reimbursement arrangements. In addition to identifying which MCOs are reporting encounter data as required, this file could help CMS’s oversight by allowing the agency to identify excess plan profits and volatility of expenditures for some beneficiary groups across states.\nIn total, T-MSIS includes approximately 1,400 data elements, according to CMS. Many of these elements, however, have content that is used in more than one of the eight T-MSIS files. For example, the element “DATE OF BIRTH” is required in five T-MSIS files—Eligibility, Claim Inpatient, Claim Long-term Care, Claim Prescription, and Claim Other. CMS requires states to report all T-MSIS elements that are applicable to their programs, and has worked closely with states to facilitate their efforts to report these data. For example, before CMS approves a state for reporting T-MSIS data, states must complete a number of activities, including developing detailed work plans and completing a series of data testing phases. For a state to meet CMS’s requirements for submitting T-MSIS data, it must report data for all eight files, but not necessarily all elements within each file.\nIn addition, T-MSIS includes aspects aimed at improving the timeliness and accuracy of data submitted by states. For example, CMS requires states to report T-MSIS data monthly, rather than quarterly, as was the case with MSIS. Regarding data accuracy, T-MSIS includes approximately 2,800 automated quality checks that provide states with feedback on data format and consistency, according to CMS; this is in contrast to MSIS, which had relatively few automated checks. Other quality checks are to ensure logical relationships across T-MSIS files.\nBoth we and the HHS-OIG have previously recommended that CMS take steps to address the quality of T-MSIS data. In our January 2017 report, we recommended that CMS take immediate steps to assess and improve T-MSIS data. As part of that effort, we noted that CMS could refine their T-MSIS data priority areas to identify those that are critical for reducing improper payments and expedite efforts to assess and ensure their quality. CMS agreed with our recommendation, but as of September 2017, the agency had not implemented it. More recently, the HHS-OIG reported that CMS and states continue to have concerns regarding the completeness and reliability of T-MSIS data, echoing concerns raised in its 2013 review of CMS’s T-MSIS pilot program. The HHS-OIG noted it was concerned that CMS and states would delay further efforts rather than assign the resources needed to address the outstanding challenges, and reaffirmed its 2013 recommendation that CMS establish a deadline for when T-MSIS data will be available for program analysis and other management functions.", "Despite challenges converting their data to the T-MSIS format, most states were reporting T-MSIS data as of November 2017, representing significant progress over the past year. With most states reporting, CMS has shifted its efforts to working with states to improve the quality of T- MSIS data.", "As of November 2017, 49 states have begun reporting T-MSIS data, a significant increase from the 18 states that had started reporting these data in October 2016. These reporting states represent over 97 percent of the 2017 Medicaid population nationwide. CMS officials told us that they expect all states to report T-MSIS data by 2018. (See fig. 1.)\nAs of November 2017, all eight of our selected states were reporting T- MSIS data, with seven of them having begun in September 2016 or later. Selected states’ estimated spending a collective $14.16 million on their efforts to report T-MSIS data from October 2011 through June 2017, ranging from approximately $850,000 in Virginia to $4.42 million in Minnesota. (See table 1.) The age and scope of states’ existing Medicaid Management Information Systems (MMIS) were among the factors that affected certain states’ spending and timing on this effort.\nMapping the data—the process by which states convert their data to the T-MSIS format on an element-by-element basis—was the primary challenge our eight selected states identified in reporting T-MSIS data. In some cases, before converting their data to the T-MSIS format, states had to obtain data they had not previously collected from other state entities, MCOs, or providers. For example, Minnesota had to begin collecting information on denied claims from MCOs, and Utah had to collect third-party liability information from other state agencies. In addition, while some state data elements could be converted to the T- MSIS format fairly easily, because the relationships between the two were clear, the conversion of other data elements was more complicated. For example, the T-MSIS data element for male and female is “M” and “F,” respectively. Accordingly, in states that identified gender by a numeric value, “1” for male and “2” for female, the conversion to T-MSIS for this element was a fairly straightforward one-to-one relationship. However, for other data elements, the conversion process was more complex, requiring states to expand or collapse their data to match the T-MSIS format. (See fig. 2.) Selected states shared examples of steps they took to convert state data to the T-MSIS format.\nLouisiana officials noted that they had to map the state’s single durable medical equipment (DME) element to multiple specific T- MSIS DME elements, such as DME pharmacy or DME orthotics.\nVirginia officials said they had to combine three state ambulance service provider elements into a single T-MSIS element.\nIn addition, individuals who had experience with other states’ T-MSIS reporting efforts also noted that states may not have always collapsed categories in the same way. For example, one state collapsed its 109 provider categories to match T-MSIS’s 57 provider categories, according to an individual who worked with the state on this effort. This individual noted that there were 32 state provider elements that did not directly match a specific T-MSIS element, so the state grouped them all into the “other” T-MSIS element.\nChanges in CMS’s data reporting requirements further complicated some states’ efforts to convert their data to the T-MSIS format, according to officials from our selected states. CMS updated the T-MSIS data dictionary—the document that defines the required T-MSIS elements and their reporting formats—twice in 2013 and again in November 2015. According to CMS officials, they updated the data dictionary to clarify and remove inconsistencies from guidance in response to feedback from states. Some of the selected states reported that the changes included in this update required considerable rework, and in some cases, delayed their T-MSIS reporting. For example, Washington officials noted that the 2015 update became available at the point it was completing a T-MSIS testing phase. Due to the rework required to comply with the new data specifications, the state’s efforts to report T-MSIS data were delayed by nearly one year. Similarly, Minnesota officials also cited rework associated with changes to the 2015 data dictionary, which contributed to delays in their efforts to report T-MSIS data.", "Over the past six years, CMS has relied on a variety of mechanisms to support states’ efforts to report T-MSIS data.\nCMS assigned technical assistants to help states understand the T- MSIS requirements, prioritize steps to report T-MSIS data, and serve as a resource on technical issues. The majority of selected states had positive comments about the technical assistance they received. For example, Pennsylvania officials said its technical assistant regularly met with them, answered any questions they had, and facilitated their efforts to complete T-MSIS testing.\nCMS began hosting national webinars covering a range of topics, including clarification on specific T-MSIS elements that CMS identified as challenging or subject to error, and updates on the nationwide implementation. The webinars also provided an opportunity for states to ask CMS questions about T-MSIS requirements.\nCMS established web-based avenues through which the agency could compile and disseminate information, as well as elicit questions from states and contractors. For example, CMS provided an electronic option for states to submit questions regarding policy and technical issues.\nCMS took additional steps to help states, including creating a SharePoint web site through which states are notified about changes in guidance.\nWith nearly all states having begun reporting T-MSIS data, CMS has shifted its efforts to improving the quality of the T-MSIS data reported, and these efforts are still evolving. For example, to provide states with immediate feedback on their reported T-MSIS data, CMS created an online “operational dashboard” for each state, which provides specific information on errors in its reported data. Using information on the operational dashboard, states can identify the frequency and cause of certain errors, which facilitates their efforts to resolve them more expeditiously and to improve future submissions. All six of the selected states reporting T-MSIS data had positive comments about the value of the operational dashboard, with some of them noting that the feedback on errors was a significant improvement from their experience with MSIS, where feedback had a considerable time-lag. More recently, according to agency officials, CMS has initiated a pilot study with four states to identify anomalies in their reported data that merit further attention, obtain feedback on automated quality measures, and determine the best approach for ongoing quality review. While work on the pilot is ongoing, CMS officials anticipate using what they learned to expand the agency’s quality review to include all states.\nIn addition, CMS has turned to external stakeholders to evaluate the quality of T-MSIS data. Specifically, CMS has shared T-MSIS data with a Technical Expert Panel it formed to obtain feedback on inconsistencies and other quality concerns. According to CMS officials, the Technical Expert Panel focused on a preliminary set of T-MSIS data from a limited number of states. The agency officials noted that Technical Expert Panel members include individuals from HHS’s Office of the Actuary, the Congressional Budget Office, and the Medicaid and CHIP Payment and Access Commission, among others. Panel participants analyzed the T- MSIS data from 11 states on the specific topics in which they have expertise. According to CMS officials, the panel is to provide its results to the agency in a summary report.", "Ongoing data concerns raise questions about how soon—and to what extent—T-MSIS data will be sufficient to achieve the goals of improving CMS’s and states’ ability to use Medicaid data for oversight. For example, none of the six selected states that were reporting T-MSIS data as of August 2017 were reporting complete data at that time. In reviewing selected states’ documentation of unreported data elements, we determined that the number of unreported data elements ranged from about 80 elements to 260 elements. Although T-MSIS includes about 1,400 data elements, the number of data elements relevant to each state varies, in part, because certain elements may not be applicable to all states and others may be populated at the state’s discretion. In addition, the content of some data elements are present in more than one of the eight T-MSIS files. As a result, the number of unreported elements may overstate the extent of state efforts needed to report complete T-MSIS data.\nOur selected states provided a range of reasons for not reporting T-MSIS data elements, including that certain elements were contingent on federal or state actions. In other cases, state officials indicated that data elements were too costly to report, so they would not be reporting them. We identified further examples of where certain data elements were not applicable to states’ Medicaid programs, and therefore were not required. (See table 2.)\nAlthough CMS requires states to report all T-MSIS data elements applicable to their program, CMS officials said they did not specify a reporting deadline for states, and selected states’ documentation to CMS did not always include the reasons they did not report certain elements, or whether or when they planned to report them. Due to the lack of clarity and completeness in selected states’ documentation, we were not able to identify the reasons for all unreported data elements. However, among our selected states, Virginia’s documentation more clearly specified most—but not all—of the reasons it was not reporting 260 T-MSIS elements.\nVirginia identified 167 elements that its MMIS did not capture, and noted that once the state’s new Medicaid information system is fully implemented in 2019, the state will be able to report them.\nVirginia identified 16 elements as pending other state or related actions.\nVirginia identified 18 elements as pending the implementation of HHS efforts.\nVirginia identified 53 elements as not applicable to aspects of its Medicaid program.\nWithout complete information from all states on unreported data elements and their plans to report them, it is unclear when—and to what extent—T- MSIS data will be available to use for oversight, which is inconsistent with federal internal control standards for using quality information to achieve objectives.\nIn some cases, data elements important for program oversight were not reported by two or more of the six selected states reporting T-MSIS data, limiting T-MSIS’s usefulness for oversight in these areas. (See table 3.)\nAnother factor affecting the ability of CMS and states to use T-MSIS data for oversight is that not all of the 49 states submitting T-MSIS data are submitting current data. According to CMS officials, before beginning to report T-MSIS data, each state stops reporting MSIS data. At that point, there is a temporary gap in the state’s reporting until it receives CMS’s approval to begin reporting T-MSIS data. After a state gets CMS’s approval, it must first submit the T-MSIS data that correspond to the date that it stopped submitting MSIS data; the data for previous months is known as “catch up” data. Once a state reports that data, it then shifts to reporting current T-MSIS data. According to CMS, as of November 2017, 42 of the 49 states reporting T-MSIS data were reporting current data; the remaining 7 states were still reporting catch up data for previous months.\nRegarding the comparability of T-MSIS data across states, state officials we interviewed cited concerns that could affect their use of T-MSIS for oversight. Officials from most selected states cited the benefit that a national repository of T-MSIS data could provide by allowing them to compare their Medicaid program data—such as spending or utilization rates—to other states, which could potentially improve their oversight. However, concerns about comparability of the data make officials from most selected states hesitant to use the data for this purpose. In particular, officials from six of eight selected states, and other individuals we interviewed, are not confident that the decisions states made when converting their data to the T-MSIS format were consistent across states. An individual who worked with other states on T-MSIS reporting efforts noted that states may have made different decisions about what types of providers to include as part of the “all other” category of providers within T-MSIS. While one state he worked with included a range of provider types, such as licensed drug and alcohol counselors and non-emergency medical transportation providers, in the “all other” T-MSIS provider category, other states may have made different decisions. Some state officials and individuals working with states noted that states’ different decisions may complicate their ability to use the data for cross-state comparisons. Further, officials from some of the selected states noted that they were not familiar with the quality of other states’ T-MSIS data.\nCMS has begun to take steps to address the quality of the T-MSIS data; however, its efforts are still evolving. For example, in May 2017, CMS identified 12 data quality priority areas for states to focus on for improving the accuracy and consistency of T-MSIS data, including accurately categorizing beneficiaries into T-MSIS eligibility groups and ensuring consistency related to MCO reporting. CMS has worked to identify existing or develop new guidance for each of these priority areas, and to compile the guidance in a central location for states’ reference. As of August 2017, CMS officials said they compiled guidance for 11 of the 12 areas, and intended to continue work with states on these priorities.\nIn addition, CMS has not created a mechanism to disseminate information about states’ data limitations or states’ efforts to improve and use the data, which also affects their utility for oversight. Officials from four of the eight selected states said that learning more about other states’ T-MSIS data could help allay their concerns about comparability, and two of the four states said it could also help them address their own data quality issues. Additionally, officials from all eight selected states were interested in opportunities to learn more about other states’ use of the data.\nCMS officials acknowledged the benefits of a mechanism to disseminate information about states’ data limitations more broadly, and to facilitate information sharing among states. CMS officials told us that they plan to launch a Learning Collaborative with states to facilitate feedback and collaboration. This effort could address a range of data-related topics, including data quality. CMS officials told us they were taking actions to put the Learning Collaborative in place, and may launch the collaborative in early 2018.\nThe lack of an effort to facilitate information sharing is inconsistent with CMS’s goals for T-MSIS and with federal internal control standards for using and communicating quality information to achieve objectives. Absent such an effort, CMS is missing an opportunity to help states understand ways they could improve the quality of their T-MSIS data and facilitate states’ use of the data for oversight. CMS is also missing an opportunity to expedite quality improvements that could result from states conducting their own independent analyses.\nAlthough CMS has taken steps to begin using T-MSIS data, it has not yet fully articulated a plan for how and when it will use T-MSIS data for its own broader oversight efforts of state Medicaid programs. For example, according to CMS officials, the agency has begun to use T-MSIS data to generate Money Follow the Person reports, and has begun exploring additional uses of T-MSIS data to reduce states’ reporting burden. These preliminary efforts are consistent with one of CMS’s stated goals for T-MSIS, which is to reduce states’ reporting burden by relying on T- MSIS data in place of separate reports that states currently submit, and officials from six of eight selected states indicated that such an effort would reduce their reporting burden.\nHowever, as of August 2017, CMS officials acknowledged that they had yet to outline how best to use T-MSIS data for program monitoring, oversight, and management, because they were still largely focused on working with the remaining states to begin reporting T-MSIS data, analyzing the quality and usability of the T-MSIS data, and preparing the data for research purposes. CMS’s lack of a specific plan and time frames for using T-MSIS data is inconsistent with federal internal control standards related to using and communicating quality information to achieve objectives. Absent a specific plan and time frames, CMS’s ability to use these data to oversee the program, including ensuring proper payments and beneficiaries’ access to services, is limited.", "As part of its efforts to address longstanding concerns about the data available to oversee the Medicaid program, CMS has taken important steps toward developing a reliable national repository for Medicaid data. T-MSIS has the potential to improve CMS’s ability to identify improper payments, help ensure beneficiaries’ access to services, and improve program transparency, among other benefits. By providing more standardized data on various aspects of Medicaid—such as spending or utilization rates—states could be better positioned to compare their programs to other states, thereby improving their ability to identify program inefficiencies or opportunities for improvement.\nImplementing the T-MSIS initiative has been a significant undertaking. Over the past 6 years, CMS has worked closely with states and has reached a point where nearly all states are reporting T-MSIS data. While recognizing the progress that has been made, more work needs to be done before CMS or states can use these data for program oversight. It remains unclear when all states will report complete and comparable T- MSIS data, and how CMS and states will use them to improve oversight. In the interim, improper Medicaid payments continue to increase, reaching $36.7 billion in fiscal year 2017. Further delays in T-MSIS’s use limit CMS’s ability to reverse that trend in the near term, underscoring the need for CMS to take additional steps to expedite the use of the data.", "We are making the following two recommendations to CMS.\nThe Administrator of CMS, in partnership with the states, should take additional steps to expedite the use of T-MSIS data for program oversight. Such steps should include, but are not limited to, efforts to obtain complete information from all states on unreported T-MSIS data elements and their plans to report applicable data elements; identify and share information across states on known T-MSIS data limitations to improve data comparability; and implement mechanisms, such as the Learning Collaborative, by which states can collaborate on an ongoing basis to improve the completeness, comparability, and utility of T-MSIS data. (Recommendation 1)\nThe Administrator of CMS should articulate a specific plan and associated time frames for using T-MSIS data for oversight. (Recommendation 2)", "We provided a draft of this report to HHS for comment. In its written comments, HHS concurred with our recommendations, and noted that strong Medicaid data can help the federal government and the states move toward better health outcomes and improve program integrity, performance, and financial management. With most states now reporting T-MSIS data, HHS highlighted efforts it has taken to improve the quality of T-MSIS data. For example, HHS developed a database on data quality findings, which could be used to identify solutions for common problems across states, and has begun to develop a data quality scorecard for T- MSIS users, which aggregates data quality findings in a user-friendly tool. Regarding taking steps to expedite the use of T-MSIS data for program oversight, HHS stated that it will (1) continue to work to obtain complete T-MSIS information from all states; (2) take additional steps to share information across states on T-MSIS data limitations; and (3) implement ways for states to collaborate regarding T-MSIS. HHS also noted that it is in the process of developing a plan for using T-MSIS data for oversight. HHS emphasized that it is dependent on states—and their available staffing and resources—to address data quality and reporting issues. HHS also provided technical comments, which we incorporated as appropriate. HHS’s comments are reprinted in appendix I.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees, the Secretary of HHS, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs can be found on the last page of this report. Major contributors to this report are listed in appendix II.", "", "", "Carolyn L. Yocom, (202) 512-7114 or [email protected].", "In addition to the contact named above, individuals making key contributions to this report include Susan Anthony (Assistant Director), Manuel Buentello (Analyst-in-Charge), Anna Bonelli, and Robin Burke. Also contributing were Muriel Brown, Drew Long, and Jennifer Rudisill." ], "depth": [ 1, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "h0_title", "h0_full", "", "h2_full h1_full", "", "", "", "", "", "", "" ] }

{ "question": [ "How had T-MSIS reporting volume changed as of November 2017 compared to one year earlier?", "What did states identify as their biggest challenge in their reporting efforts?", "What did states have to do to match the T-MSIS format?", "How were T-MSIS data reports in August 2017 inadequate?", "How did states justify this inadequacy?", "What did states specify about future reporting?", "What was GAO asked to review?", "What does this report examine?", "How did GAO collect data for this report?" ], "summary": [ "As of November 2017, 49 states had begun reporting Transformed Medicaid Statistical Information System (T-MSIS) data—a significant increase from 18 states reporting these data one year earlier.", "All eight states GAO reviewed identified converting their data to the T-MSIS format on an element-by-element basis as the main challenge in their reporting efforts.", "For some data elements, states had to expand or collapse their data to match the T-MSIS format.", "None of the six selected states reporting T-MSIS data in August 2017 was reporting complete data.", "These states said that certain unreported elements were contingent on federal or state actions, and others were not applicable to the state's Medicaid program.", "States did not always specify in their documentation whether they planned to report elements in the future or when they would report complete data.", "GAO was asked to review states' experiences with T-MSIS implementation and planned uses of T-MSIS data.", "This report examines (1) states' experiences regarding T-MSIS implementation, and (2) challenges to CMS's and states' use of T-MSIS data for oversight.", "GAO reviewed federal laws, guidance, and internal control standards; reviewed documents and interviewed officials from eight states, selected based on their T-MSIS reporting status, location, program expenditures, and other factors; and interviewed CMS officials, CMS contractors, and individuals involved with other states' T-MSIS efforts." ], "parent_pair_index": [ -1, -1, 1, -1, 0, 0, -1, -1, 1 ], "summary_paragraph_index": [ 3, 3, 3, 5, 5, 5, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "Administrative Procedure Act (APA)", "Remedies for Unreasonably Delayed Actions", "Compelling Actions Unreasonably Delayed with No Statutory Deadlines", "Delay in Adjudication Proceedings with No Statutory Deadline", "Delay in Rulemaking Proceedings with No Statutory Deadline", "Compelling Delayed Actions That Violate Statutory Deadlines", "Legislative Tools to Compel Agency Action" ], "paragraphs": [ "", "Congress maintains an active interest in the effective implementation of regulatory systems adopted by federal agencies. A common concern is the pace at which agencies establish rules and complete adjudications. Commentators and courts have noted that agency delay can impact the effectiveness of a regulatory system. Delays can also negatively affect regulated entities that must wait for final agency action. As one court noted: \"Quite simply, excessive delay saps the public confidence in an agency's ability to discharge its responsibilities and creates uncertainty for the parties, who must incorporate the potential effect of possible agency decisionmaking into future plans.\" Substantial case law has emerged on how courts will treat agency delay in a variety of circumstances.\nThe Administrative Procedure Act (APA) imposes a general time restraint on administrative agencies—they must act within a \"reasonable time.\" If a person meets the necessary standing requirements, he can sue the agency for failing to act within a reasonable time. However, when there is no hard deadline imposed on the agency, courts are often reluctant to compel an agency to act and often allow an agency to set its own priorities.\nIn addition to the general timing requirements imposed by the APA, Congress also has the power to require agencies to act on issues within a specific time frame by establishing a statutory deadline in the agency's enabling statute. When an agency fails to meet a statutory deadline, courts are more willing to compel the agency to take prompt action.\nJudicial remedies available for delayed agency actions are somewhat limited. Generally, a court is restricted to ordering an agency to act by a specific deadline. The following sections outline the timing requirements imposed by the APA, discuss the available judicial remedies when actions are found to be unreasonably delayed, and provide an examination of cases where courts have been asked to compel agency action. Finally, the report concludes with a discussion of legislative tools that Congress can use to try to set agency priorities.", "The APA does not provide any concrete time limits for agency actions. Instead, the APA leaves most deadlines to be established in the particular agency's enabling statute, if at all. However, the APA states that \"within a reasonable time, each agency shall proceed to conclude a matter presented to it.\" Further, the APA states that courts shall \"compel agency action unlawfully withheld or unreasonably delayed.\" As such, the APA provides individuals with a cause of action when agency action has been unreasonably delayed.\nA court may hear a claim for unreasonable delay despite the fact that the agency has yet to take a final action on the subject. Generally, under Section 704 of the APA, a court does not have jurisdiction over an agency matter until the agency action is final. However, a court can have jurisdiction over a matter pending before an agency when a party claims that there has been an unlawful or unreasonable delay. In Norton v. SUWA , the Supreme Court stated that \"when an agency is compelled by law to act within a certain time period ... a court can compel the agency to act.\" The United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has also noted that the language of the APA indicates that Congress intended the courts to play a role in ensuring that agencies fulfill their obligation to act within a reasonable time, and other circuits have noted that a claim of unreasonable delay qualifies for judicial review despite a lack of \"final agency action.\"\nClaims for unreasonable delay can be brought under the APA against an agency in court. However, a claim of unreasonable delay can only be brought against an agency for actions that the agency is legally obligated to take. The Supreme Court has stated that \"a claim under § 706(1) [of the APA] can proceed only when a plaintiff asserts that an agency failed to take a discrete agency action that it is required to take.\" If taking a certain action is \"committed to agency discretion by law,\" then no claim can be made against the agency for failing to take such an action. In other words, an agency must be required to act by law in order to establish a claim that the agency has unreasonably delayed in acting.", "Before discussing how a court determines whether an unreasonable delay has occurred, it is important to understand the limitations on available judicial remedies. When a court determines that an action has been unreasonably delayed, it must then decide what remedy to provide the plaintiff. First, although a court can order an agency to take prompt action on an issue, the Supreme Court has declared that a court cannot dictate what conclusion the agency should reach. The Court stated that when an agency misses a deadline, a court can issue \"a judicial decree under the APA requiring the prompt issuance of regulations, but not a judicial decree setting forth the content of those regulations.\" For example, if an agency must determine critical habitat for an endangered species, the court can direct the agency to act immediately, but the court cannot determine which habitat is critical. Furthermore, the Supreme Court has stated that regulations issued after a deadline has passed still maintain the force of law, despite the tardiness of their promulgation. Therefore, a plaintiff cannot challenge the validity of regulations merely based on their promulgation after a deadline. Thus, judicial remedies are generally limited to imposing deadlines on the agency.\nCourts take varying approaches when fashioning a remedy for an agency action that has been unduly delayed. In some cases a court will order an agency to act promptly. In other situations, a court might impose a deadline on the agency. Sometimes courts merely direct the agency to impose a deadline on itself, which the court will accept unless the agency's proposed deadline is unreasonable. Additionally, courts will often maintain jurisdiction over the case until the agency action has been completed. In these situations, the court will require the agency to file regular reports with the court detailing the progress the agency has made on the action to ensure the agency is actively working to comply. Examples of how courts fashion remedies are provided in the cases discussed in this report.", "Generally, courts tend to avoid compelling agency action because they do not want to impose agendas on the more politically accountable regulatory agencies. Courts will look to enabling statutes to see if there are statutory time requirements imposed on the agency. When there is no statutory deadline for the agency action, courts tend to be more deferential to the agency's priorities. According to the Blackletter Statement of Federal Administrative Law from the American Bar Association:\nAn agency's delay in completing a pending action as to which there is no statutory deadline may not be held unlawful unless the delay is unreasonable in light of such considerations as the agency's need to set priorities among lawful objectives, the challenger's interest in prompt action, and any relevant indications of legislative intent. In considering such challenges courts are deferential to agencies' allocation of their own limited resources.\nThe D.C. Circuit, in Telecommunications Research & Action Center v. FCC (\" TRAC \"), established guidelines to consider when determining whether an agency delay warrants mandamus compelling the agency to act. The court stated that \"[i]n the context of a claim of unreasonable delay, the first stage of judicial inquiry is to consider whether the agency's delay is so egregious as to warrant mandamus.\" The court then enumerated several factors, known as the TRAC factors, to consider when answering this question:\n(1) the time agencies take to make decisions must be governed by a \"rule of reason;\" (2) where Congress has provided a timetable or other indication of the speed with which it expects the agency to proceed in the enabling statute, that statutory scheme may supply content for this rule of reason; (3) delays that might be reasonable in the sphere of economic regulation are less tolerable when human health and welfare are at stake; (4) the court should consider the effect of expediting delayed action on agency activities of a higher or competing priority; (5) the court should also take into account the nature and extent of the interests prejudiced by delay; and (6) the court need not find any impropriety lurking behind agency lassitude in order to hold that agency action is unreasonably delayed.\nAlthough the TRAC factors are widely cited with regard to whether a court should issue mandamus to compel agency action, courts have also been quick to point out that \"mandamus is a drastic remedy, suitable only in extraordinary situations.\"", "In cases where there are no statutory deadlines imposed, agency delay of several years on an adjudication may pass before a court issues a writ of mandamus. Decisions seem to vary, and it can be difficult to predict how a court will rule on a question of unreasonable delay. The D.C. Circuit has noted that \"[t]here is no per se rule as to how long is too long to wait for agency action,\" and it can be hard to determine which TRAC factor a court will decide to rely on most heavily. As a result, it appears that each claim of agency delay is determined on a case-by-case basis. This section explores some court decisions to illustrate the difficulty in determining which way a court will rule on a claim of unreasonable delay. For example, in one circumstance, a court determined a delay of 10 years on reaching a decision to be reasonable, while in another situation, a court determined an eight-year delay to be unreasonable.\nIn TRAC , the petitioners claimed that the Federal Communications Commission (FCC) had unreasonably delayed in determining whether AT&T should reimburse ratepayers for certain alleged overcharges. Despite the fact that the proceeding had taken five years and had not yet been resolved, the court decided that the delay did not warrant mandamus in light of the fact that mere economic interests were involved and that the agency had assured the court that it was working expeditiously to resolve the proceeding. Instead of compelling the agency to act, the court required the FCC to provide the anticipated date of resolution and maintained jurisdiction in order to ensure that the agency proceeded accordingly.\nIn Potomac Elec. Power Co. v. ICC , a court found an eight-year adjudication to determine the justness and reasonableness of a railroad's rates to be unreasonable. In this case, the court issued a writ of mandamus and required a final agency order to be issued within sixty days. In justifying the writ of mandamus, despite the fact that the matter merely involved economic interests, the court pointed to legislative history that indicated that Congress wanted the Interstate Commerce Commission (ICC) to act quickly in these rate proceedings. However, in Kokajko v. FERC , despite the presence of similar legislative history—\"FERC is statutorily required to give preference and speedy consideration to questions concerning increased rates or charges for the transmission or sale of electric energy\"—the court determined that five years was not an unreasonable amount of time to wait for a final agency determination and dismissed the petitioner's claim. In Kokajko , the court focused on the fact that the case merely involved an economic interest and that there was no \"significant length of unexplained agency inaction.\" The court stated, however, that \"a five year delay is approaching the threshold of unreasonableness.\"\nThe United States Court of Appeals for the Fourth Circuit, in In re City of Virginia Beach , determined that mandamus was not warranted for a four and one-half year wait for approval of a water pipeline construction project. Although the court noted that the water pipeline affected \"human health and welfare,\" the court declined to compel immediate agency action in light of the Federal Energy Regulatory Commission's (FERC) assurances that the project was a high priority and would be expedited. Because the delay was not entirely caused by FERC, the court determined that mandamus was not warranted despite the fact that the court was \"[not] happy about the overall time elapsed.\"\nThe United States Court of Appeals for the Eighth Circuit upheld a ten-year delay by the Citizenship and Immigration Services (CIS) on an application for permanent residence. The court noted that the application was given considerable attention by the agency and that the delays were partially caused by changes in legislation regarding required investigations of applicants. The court held that the agency had thus not unreasonably delayed in reaching a final determination on the proceeding within 10 years.", "Courts have treated an agency's delay in promulgating rules similarly to agency delay in adjudication procedures. Courts still apply the TRAC factors when determining whether a delay is unreasonable in the rulemaking setting. Again, it can be difficult to predict whether a court will compel an agency to act on a claim for unreasonable delay when there is no statutory deadline.\nIn one case involving rulemaking proceedings, the court found that a three-year delay by the Environmental Protection Agency (EPA) was reasonable. The EPA had undertaken a rulemaking to determine if it should regulate strip mines under the Clean Air Act. The court noted that \"absent a precise statutory timetable or other factors counseling expeditious action, an agency's control over the timetable of a rulemaking procedure is entitled to considerable deference.\" The court again applied the TRAC factors and considered the fact that human health and welfare was at stake. It also noted that the agency had been progressing on the rule by holding public meetings, accepting comments, and issuing reports on the issue. After weighing all the considerations, the court stated \"given the complexity of the issues facing EPA and the highly controversial nature of the proposal, agency deliberation for less than three years ... can hardly be considered unreasonable.\"\nHowever, in a different case, Public Citizen Health Research Group v. Auchter , the same court held that the Occupational Safety and Health Administration's (OSHA) three-year delay in promulgating a final rule for ethylene oxide (EtO) safety standards was unreasonably delayed. Although this case was decided prior to TRAC , the court still made reference to the same factors. It stated that \"[d]elays that might be altogether reasonable in the sphere of economic regulation are less tolerable when human lives are at stake.\" Emphasizing the delay's potential impact to human health, the court ordered that a notice of proposed rulemaking be issued within thirty days and stated that it expected a final rule within a year.\nIn In re International Chemical Workers Union , the court determined that a six-year delay in promulgating a rule regarding cadmium exposure safety standards was unreasonable. In this case the agency acknowledged that a new standard for cadmium exposure limits was necessary, but repeatedly pushed back the expected release date for the final rule. The court used the TRAC standards and noted that the purpose of the OSHA statute was to protect the health of American workers. It balanced this against the agency's limited resources and other competing activities. In the end, the court accepted the agency's \"estimate of the additional time it needs to complete the final stages of the rulemaking,\" but warned that any additional postponement \"would violate [the] court's order.\" The agency was forced to promulgate a final standard within seven months of the court order.\nThese few examples show that it can be challenging to pinpoint when a court will compel agency action in both rulemaking and adjudication proceedings when there are no statutory deadlines in place.", "Courts more readily compel agencies to act in cases where there is a statutory deadline imposed on an agency. The Supreme Court declared, in Norton v. SUWA , that \"when an agency is compelled by law to act within a certain time period ... a court can compel the agency to act.\" Some lower courts have made a distinction between actions \"unlawfully withheld\" (actions that are delayed beyond a statutory deadline) and actions \"unreasonably delayed\" (actions that are only governed by the APA's \"reasonable time\" provision) and have determined that a missed statutory deadline compels the court to mandate prompt agency action. Although it is commonplace for courts to compel agencies to act if a deadline has been missed, some courts, as illustrated below, may decline to compel an agency to act in such circumstances. For example, despite the existence of a statutory deadline, the D.C. Circuit still applies the TRAC test to determine whether it is appropriate to issue an order compelling the agency to act.\nIn Forrest Guardians v. Babbitt , the United States Court of Appeals for the Tenth Circuit (Tenth Circuit) stated that when an agency fails to act by a \"statutorily imposed absolute deadline,\" the action has been \"unlawfully withheld\" and the court has no choice but to compel the agency to act. The Tenth Circuit noted that Section 706(1) of the APA states that courts \"shall compel agency action unlawfully withheld,\" and declared that the court, because of Congress's use of the word \"shall,\" had no discretion on the issue. The court stated that although the TRAC factors might be helpful when considering action guided by a mere general timing provision, the court could not apply the TRAC test to situations where an agency has failed to meet a specific statutory deadline. The court remanded the case and directed the district court to order the Secretary to \"issue a final critical habitat designation ... as soon as possible, without regard to the Secretary's other priorities under the [Endangered Species Act].\"\nSimilarly, the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) has held that a court must compel agency action when the agency fails to comply with a statutory deadline. In Biodiversity Legal Foundation v. Badgley , the Ninth Circuit found that it was required to issue an injunction to require the Fish and Wildlife Service (FWS) to comply with a twelve-month deadline imposed by the Endangered Species Act. Although the Ninth Circuit acknowledged that it follows the TRAC standard in cases involving general timing provisions, the court stated that \"Congress has specifically provided a deadline for performance by the Service, so no balancing of factors is required or permitted.\" The court stated that the missed deadline \"compelled the court to grant injunctive relief\" and that the \"court had no discretion to consider the Service's stated priorities.\"\nOther courts, however, do not follow this distinction. For these courts, a statutory deadline acts only as one of the factors to consider when applying the TRAC test for unreasonable delay and is not, by itself, determinative. Although a deadline will weigh heavily in favor of compelling an agency to act, some courts have declined to order an agency to take action even in the face of deadlines that have long passed.\nThe United States District Court for the District of Columbia, in Ctr. for Biological Diversity v. Pirie , criticized the reasoning followed by the Tenth Circuit in the Forrest Guardians decision. Although the court acknowledged that Section 706 of the APA states that the courts \" shall compel agency action unlawfully withheld or unreasonably delayed,\" the court determined that courts still have discretion when determining whether to issue a writ of mandamus or injunction against an agency. The court pointed to Section 702 of the APA, and declared that the language of this section preserved the courts' equitable discretion in these cases: \"Because 702 of the APA explicitly states that a court retains equitable discretion, this Court cannot hold that Congress has clearly and unequivocally limited that discretion under the APA.\" Therefore, the court determined that it is not forced to compel agency action, even if the agency has missed a statutory deadline.\nIn its opinion from In Re Barr Laboratories, Inc. , the D.C. Circuit noted that \"a finding that delay is unreasonable does not, alone, justify judicial intervention.\" In this case, the Food and Drug Administration (FDA) had missed a statutory deadline for reviewing \"generic drug\" applications. By statute, the FDA was supposed to review these applications within 180 days. However, the FDA estimated that its response time could range from 389 to 669 days. Barr Laboratories sought mandamus compelling the agency to review its application and claimed that, by missing the statutory deadline, the FDA had unreasonably delayed. The court responded: \"Though we agree with Barr that FDA's sluggish pace violates a statutory deadline, we conclude that this is not an appropriate case for equitable relief.\" The court looked at all of the TRAC factors and determined that mandamus was not appropriate despite the fact that the FDA failed to meet their statutory deadline by a significant margin. The court noted that simply putting one drug manufacturer's case to the front of the line would necessarily push other similar cases further back and would not ultimately promote Congress's objective of having all applications dealt with swiftly. The court did not want to determine the agency's priorities; however, the court did note that if Barr Laboratories had been singled out for mistreatment, an order of mandamus might have been appropriate.\nFinally, the D.C. Circuit held that a nine-year delay by the United States Coast Guard, in the face of a one-year deadline for promulgating regulations regarding oil tanker standards, was unreasonable. The court ordered the agency to take \"prompt\" action. However, it applied the TRAC factors, indicating that merely missing the deadline was not, by itself, enough for the court to issue mandamus to compel the agency to act.\nThe TRAC factors remain the most common approach to determining whether agency actions have been unreasonably delayed in both rulemaking proceedings and adjudicatory proceedings. One potential problem with the TRAC test is that it fails to provide any clear answer to whether an agency has delayed unreasonably. Even the D.C. Circuit acknowledges \"[t]here is no per se rule as to how long is too long to wait for agency action\" and that the TRAC balancing test \"sometimes suffers from vagueness.\" With no clear standard, it can be difficult for regulated entities to estimate when they could expect agency action finally to occur or when it would be appropriate to sue an agency for their delays. However, it seems that two factors always tend to receive ample discussion from the courts. First, statutory deadlines appear to be a significant factor in determining a case of unreasonable delay. When Congress signifies that it wants an agency to prioritize an action, the courts are more willing to enforce that priority. Second, courts appear to be more willing to compel an agency to act when the action involves public health or safety, compared to mere economic interests. Ultimately, however, the determination is made on a fact specific, case-by-case basis.", "Congress often attempts to press agencies to resolve issues and promulgate rules in swift fashion. Perhaps Congress's most effective tool, discussed above, is the statutory deadline. Although in some circumstances courts will decline to enforce the deadline on the agency, claims for unreasonable delay are vastly more successful when there is a statutory deadline imposed by Congress. Recent scholarship also notes that rulemakings that are undertaken with an imposed statutory deadline are, on average, completed sooner than similar rules with no deadline imposed. It is important to note, however, that when overly imposing deadlines are placed on agency action, agencies often have to act hastily and may reduce the time available for public participation in a rulemaking. In some circumstances, a tight deadline can lead an agency to avoid normal notice and comment procedures by invoking the \"good cause\" provision under the APA.\nAnother tool available to Congress is the imposition of \"hammer\" provisions. These provisions, which may be written in tandem with a statutory deadline, dictate what is to happen if a regulatory deadline is missed. These provisions, therefore, impose a consequence if the agency fails to meet the statutory deadline. The consequences for missing a deadline vary. Some laws establish a regulatory scheme that will be put in place if a deadline is missed; others mandate that the agency's proposed rule would go into effect if a final rule is not promulgated by the deadline. At least one law has withheld funding from an agency until certain rules are promulgated. Although these provisions can force an agency to act quickly, they can also be difficult for Congress to establish. For example, for laws that require a congressionally mandated regulatory scheme to go into effect if the agency misses a deadline, subject matter expertise may be helpful or necessary to establish a statutorily imposed regulatory scheme.\nCongress also maintains the \"power of the purse\" and can place restrictions on appropriations or threaten to do so if Congress determines that an agency is failing to act in a timely manner. Finally, in the event that an agency is taking too long to take an action, Congress also has the ability to exert political pressure on the agency. Congressional committees can call oversight hearings to question an agency leader regarding delays. Individual members are also permitted to express their concerns to agencies and often send letters to pressure agencies to act promptly on certain issues. Although courts will ultimately determine whether an action has been delayed unreasonably, Congress is able to use these tools to try to establish priorities for the federal agencies' agendas." ], "depth": [ 0, 1, 1, 1, 1, 2, 2, 1, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full h1_full", "h2_full", "h0_full h3_full", "h2_full h1_full", "h1_full", "h2_full h1_full", "h3_full h2_full h1_full", "" ] }

{ "question": [ "What is a common concern about federal agencies?", "How do federal agencies justify delays?", "How do critics respond to such justifications?", "How do delays negatively impact agencies' regulatory process?", "How are such delays regulated in court?", "How do courts act in cases where an agency has delayed but is not required to act by any deadline?", "What occurs if this delay becomes unreasonable?", "How do courts determine is a delay is unreasonable?", "What are the factors courts look at?", "How are these factors used?", "What difficulty does this method entail?", "Why is it difficult to predict which way a court will decide?", "What may Congress establish to avoid unreasonable delays?", "What occurs when a deadline is not met?", "How have some courts taken a strict stance on missed deadlines?", "How have other courts taken a looser stance?", "How abundant are judicial remedies for delayed agency actions?", "What has the Supreme Court ruled on this matter?", "How has the Supreme Court defended agency rules?", "What does this indicate?" ], "summary": [ "One common concern about federal agencies is the speed with which they are able to issue and implement regulations.", "Federal regulatory schemes can be quite complex, and establishing rules and completing adjudications can sometimes require substantial agency resources and significant amounts of time.", "However, critics point out that sometimes an agency can simply take too long to a complete task.", "Commentators and courts have noted that such agency delay can impact the effectiveness of a regulatory scheme. It can also impact regulated entities that must wait for final agency action.", "Substantial case law has emerged for how courts will treat agency delay in a variety of circumstances.", "When an agency has delayed, but does not have to act by any statutorily imposed deadline, courts are more deferential to the agency's priorities and are less willing to compel an agency to take action.", "However, if a delay becomes egregious, courts will compel an agency to take prompt action.", "Generally, courts follow the TRAC factors, from Telecommunications Research & Action Center v. FCC, to determine whether a delay is unreasonable.", "The court will see if Congress has established any indication for how quickly the agency should proceed; determine whether a danger to human health is implicated by the delay; consider the agency's competing priorities; evaluate the interests prejudiced by the delay; and determine whether the agency has treated the complaining party disparately from others.", "A court balances these TRAC factors to reach a conclusion on a case-by-case basis.", "It can be difficult to predict which way a court will decide any particular case.", "There is no strict rule on how long is too long to wait for an agency action.", "In addition to the APA's general requirement to act within a reasonable time, Congress may also establish specific deadlines for agency actions by statute.", "When an agency fails to meet a statutory deadline, courts generally compel the agency to take prompt action.", "Some courts have determined that a court has no choice but to compel agency action in the face of a missed statutory deadline. For these courts, no balancing is permitted when a deadline has been violated.", "However, other courts note that a statutory deadline is merely one of the factors to consider when determining whether the delay is unreasonable. For these courts, the TRAC factors are still evaluated to determine whether the court should compel the agency to act after a deadline has been missed.", "Judicial remedies for delayed agency actions are somewhat limited.", "The Supreme Court has ruled that a court is permitted to compel an agency to take action, but cannot determine what conclusion the agency shall ultimately reach on the issue.", "Furthermore, the Supreme Court has also established that agency rules still maintain the force of law, even when they are promulgated after a statutory deadline.", "Therefore, a court's only remedy for unreasonable agency delay is essentially to impose a deadline on the agency." ], "parent_pair_index": [ -1, 0, 1, 0, 0, -1, 0, 0, 2, 2, 2, 5, -1, 0, 1, 1, -1, 0, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 2, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Scope of the Report", "Brief General Background", "Why Status Might be Relevant for Congress", "Brief Political Status and Policy History", "Political Parties and Status", "Recent Policy and Political Developments Most Relevant for Congress", "The 2012 Plebiscite in Brief", "The 2016 Elections in Puerto Rico", "The 2017 Plebiscite", "Initial Plebiscite Ballot and DOJ Reaction", "Amended Plebiscite Ballot", "2017 Plebiscite Results", "Status Legislation Introduced in the 115th Congress", "Legislation in the 114th Congress", "Statehood Admission Bill", "PROMESA and Status", "Policy and Political Developments After Sanchez Valle" ], "paragraphs": [ "", "This report provides policy and historical background about Puerto Rico's political status —referring to the relationship between the federal government and a territorial one. Congress has not altered the island's status since 1952, when it approved a territorial constitution. Status is the lifeblood of Puerto Rican politics, spanning policy and partisan lines in ways that are unfamiliar on the mainland.\nPuerto Rico has been in political flux in recent years, culminating most recently in the 2017 plebiscite. Momentum toward that outcome began in the 2016 elections, when Puerto Ricans selected a prostatehood New Progressive Party (NPP/PNP) Governor, Resident Commissioner, and majorities in the Legislative Assembly. Shortly after assuming office, the Governor and legislature enacted a territorial law authorizing a plebiscite containing two ballot choices: statehood or free association/independence. (Free association is a form of independence entailing negotiated close ties between two countries.) After the U.S. Department of Justice declined to certify the release of federal funds to support the plebiscite, Puerto Rico amended its plebiscite law to add a status-quo option on the ballot. Some political parties and other groups on the island encouraged their supporters to boycott the plebiscite. On June 11, 23.0% of voters turned out for the plebiscite, where 97.2% selected statehood; 1.5% selected free association/independence; and 1.3% chose the \"current territorial status.\"\nIn anticipation of a statehood victory in the plebiscite, the territorial legislature enacted, and the Governor signed, legislation in June 2017 to pursue a \"Tennessee Plan\" path to statehood. That method traditionally involves sending an appointed or elected \"delegation\" to Washington to lobby Congress to grant statehood. Because the U.S. Constitution grants Congress broad discretion over territories, the House and Senate may choose to reexamine Puerto Rico's political status, or to decline to do so. If Congress chose to alter Puerto Rico's political status, it could do so through statute regardless of whether a plebiscite were held or what sentiment such a vote revealed.", "As with all CRS reports, this product provides background information and analysis for Congress. It emphasizes those facets of the status policy debate that historically have been most relevant for House and Senate consideration, and that appear to remain most relevant for Members and staff who are considering those issues. It emphasizes the current status debate in Puerto Rico specifically rather than examining status in all U.S. territories.\nThis report is not intended to substitute for a comprehensive analysis of the complex and culturally sensitive issues surrounding Puerto Rico's more than 100-year affiliation with the United States. The report also is not intended to be an analysis of the various legal, economic, or social issues that might arise in considering Puerto Rico's political status or a change in its relationship with the United States. Parts of this report are adapted from another CRS product, which provides additional discussion of the 2012 plebiscite.", "Puerto Rico has been the subject of strategic and political attention for more than 500 years. Spain was the first colonial power to claim the island. Christopher Columbus landed on the west coast of the main island of present-day Puerto Rico on November 19, 1493. There, he encountered native Taíno Indians, who called the island \"Borinquén\" (or, in some spellings, \"Borinkén\"). As one scholar has noted, \"[a] permanent foothold was finally established in 1508, when Juan Ponce León led a group of settlers from Hispaniola.\" Spanish colonizers forced the Taíno into servitude, and \"[b]y 1521, the Indian Borinquén had become another Spanish settlement in an expanding empire.\" For the next 400 years, Puerto Rico served as a Spanish agricultural and mining outpost in the Caribbean.\nWhen the United States defeated Spain in the Spanish-American War (1898), the United States acquired Puerto Rico, Guam, and the Philippines from Spain via the Treaty of Paris. Puerto Rico provided the United States with a central location from which to exercise military and strategic power in the Caribbean, particularly before World War II. The U.S. military briefly administered the island until Congress established a civilian government in 1900.\nToday, Puerto Rico is both deeply integrated into American society and insulated from it. On one hand, the American flag has flown over San Juan, the capital, for more than 100 years. In addition, those born in Puerto Rico are U.S. citizens. Many live and work on the mainland and serve in the military. On the other hand, as shown in Figure 1 , the island is geographically isolated from the mainland United States; it lies approximately 1,500 miles from Washington and 1,000 miles from Miami. Residents of Puerto Rico lack full voting representation in Congress, typically do not pay federal income taxes on income earned on the island, do not have the same eligibility for some federal programs as those in the states, do not vote in presidential elections (although they may do so in party primaries), and enjoy a culture and predominant Spanish language that some argue more closely resembles Latin America than most of the 50 states.", "Some regard status as the fundamental political question that drives everything else about the Puerto Rico-U.S. relationship. Others see status as a distraction from more compelling everyday policy and economic challenges. Perhaps because that debate remains unsettled, status is an undercurrent in virtually every policy matter on the island. Federal policy debates generally are less affected by status, but here, too, status often arises at least tangentially. As such, even a basic knowledge of the topic may be helpful in multiple policy areas.\nIn the foreseeable future, oversight of Puerto Rico is likely to be relevant for Congress as the House and Senate monitor the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) enacted during the 114 th Congress (discussed elsewhere in this report and in other CRS products) in response to the island's financial crisis. Legislation introduced in the 115 th Congress, discussed elsewhere in this report, could affect the island's political status. In addition, the House and Senate could choose to respond to the 2017 plebiscite through oversight, legislation, or both. (Congress also could choose to take no action.)\nFinally, before proceeding, it is noteworthy that much of the status debate in Puerto Rico concerns attitudes surrounding past or future plebiscites. Whether in the past or future, Puerto Rico may choose to hold its own plebiscites without congressional authorization. Recently, however, plebiscite supporters have argued that federal support for a plebiscite could increase the perceived legitimacy of the results. Plebiscites are not required to revisit status. Whether or not a plebiscite were held, Congress could admit Puerto Rico as a state, or decline to do so, at its discretion, through statute.", "Puerto Rico is a U.S. territory subject to congressional authority derived from the Territory Clause of the U.S. Constitution. The Territory Clause grants Congress \"Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States.\" Congress has enacted various statutes to address specific matters concerning the island's political status. Puerto Rico's current political status, as determined by federal statute (or otherwise, as noted), is summarized briefly below.\nAfter military governance since the United States acquired Puerto Rico in 1898, Congress established a civilian government on the island in 1900. Among other points, the Foraker Act established an \"executive council\" consisting of a presidentially appointed civilian governor and various department heads. The new government also included a popularly elected House of Delegates (which shared decisionmaking power with the executive council) and a U.S.-style judiciary system. The Foraker Act also established the Resident Commissioner position to represent island interests in Washington. These duties came to include nonvoting service in the U.S. House of Representatives (the primary role of the Resident Commissioner today). Through the Jones Act (1917), Congress authorized appropriations for legislative staff and franking privileges for the Resident Commissioner. Devoted primarily to strengthening Puerto Rico's civil government, the Jones Act also extended U.S. citizenship to Puerto Ricans and established a bill of rights for the island. Major governmental changes included establishing a three-branch government similar to the one on the mainland. Congress recognized island authority over matters of internal governance in 1950 through the Federal Relations Act (FRA) and when it approved the island's Constitution in 1952. No major status changes have occurred since.\nAfter enactment of the FRA and approval of the territorial constitution, Puerto Rico became known formally as the \"Commonwealth of Puerto Rico.\" Use of the word \"commonwealth\" and whether the term carries particular legal or political significance is a topic of substantial historical and scholarly debate—most of which is not addressed herein. A brief summary of the competing major perspectives, however, provides important context for understanding the ongoing status debate.\nSome contend that Puerto Rico's commonwealth status signifies a unique recognition somewhere between territory and state. This perspective is often called \"enhanced commonwealth\" or \"new commonwealth.\" As longtime territories scholar Arnold H. Leibowitz has summarized, those holding this view have\nargued that more than local self-government was achieved by the 1950-1952 legislation. It contends that a new legal entity was created with a unique status in American law: the Commonwealth, a status which is an internationally recognized non-colonial status.... Most important, in this view, Commonwealth is not a \"territory\" covered by the 'Territory Clause' of the Constitution, nor quite obviously is it a state; rather, Commonwealth is sui generis and its judicial bounds are determined by a \"compact\" which cannot be changed without the consent of both Puerto Rico and the United States.\nOthers, however, contend that, at least in the Puerto Rican context, the term \"commonwealth\" does not hold particular legal or political significance. From this viewpoint, \"commonwealth\" is a stylistic or historical term of art, as used in the formal names of states such as the Commonwealth of Pennsylvania. Some also suggest that commonwealth refers to a form of government, but does not designate a unique nonterritorial status. As Leibowitz has observed,\nFrom the outset the non-Commonwealth parties in Puerto Rico, seeking either Statehood or independence ... questioned the concept of the Commonwealth. They have argued that although Congress may delegate powers to a territorial government, the broad powers granted to Congress under the Territorial Clause of the Constitution and the implied powers of the national government remain and may be exercised should the need arise. Further they cite the legislative history of Public Law 600 [the FRA] to challenge the compact and Commonwealth concept.\nDebate over significance of the \"commonwealth\" term notwithstanding, action by Congress would be necessary to alter Puerto Rico's political status. Doing so, of course, would require passage of legislation by Congress and approval by the President.\nFinally, those rejecting the status quo also generally suggest that Puerto Rico's current status was not intended to be—or perhaps should not be—permanent, and that statehood or independence are natural next steps.", "The dominant Democratic and Republican party labels found in the mainland United States do not necessarily translate to Puerto Rican politics. In Puerto Rico, politics tends to revolve around three status perspectives represented by the three most established political parties:\nThe status quo or \"procommonwealth\" position is generally associated with the Popular Democratic Party (PDP/PPD). The prostatehood position is generally associated with the New Progressive Party (NPP/PNP). The independence position is generally associated with the Independence Party (PIP or Independ en t istas ). In recent years, the PIP has not received sufficient electoral support to be certified a major party, but the independence perspective continues to be a factor in the status debate.\nViews within the three major parties, as well as among other parties and interest groups, are not necessarily uniform. These differences regularly produce active factional groups or officially recognized minor parties. The PDP, NPP, and PIP nonetheless remain the most consistent partisan forces in Puerto Rican politics.\nOther options that call for modified versions of the current commonwealth status or independence may appeal to members of one or more parties. Typically, the two major perspectives other than the status quo, statehood, or independence are (1) \"enhanced commonwealth\" and (2) \"free association.\" The former arguably signals a semiautonomous status whereas the latter suggests independence with closer ties to the United States than a more traditional independence option. The viability of the \"enhanced commonwealth\" position is not universally accepted.\nAt the federal level, positions on status do not necessarily follow clear partisan patterns. For those Members of Congress who have firm positions on status, personal preference or constituent issues appear to be key motivations. Particularly in recent years, members of both parties in Congress have generally argued that if the island is to choose a different status, clear consensus is necessary among the Puerto Rican people, regardless of the selected option.", "", "Before the 2017 plebiscite, Puerto Rico had held five status plebiscites or referenda since adopting its current relationship with the United States. These votes were held in 2012, 1998, 1993, 1991, and 1967. Ballot wording and options during each plebiscite or referendum differed. Most recently, in 2012, voters were asked to answer two questions: (1) whether they wished to maintain Puerto Rico's current political status; and (2) regardless of the choice in the first question, whether they preferred statehood, independence, or to be a \"sovereign free associated state.\" Figure 2 shows a sample ballot.\nAccording to results certified by the Puerto Rico State Elections Commission, approximately 54.0% of those who cast ballots answered \"no\" to the first question. In the second question, approximately 61.2% of voters chose statehood. However, results of the plebiscite were controversial. Debate focused on whether almost 500,000 blank answers on the second question should be included in the total, thereby affecting whether any option received a majority. A concurrent resolution approved by the territorial legislature and supported by PDP Governor Alejandro García Pad illa (who was elected on the same day as the plebiscite) contended that the results were \"inconclusive.\" Another CRS report provides additional detail about the 2012 plebiscite. After Governor García Padilla assumed office in 2013, momentum toward revisiting status waned on the island. As explained below, interest in status rebounded in 2016.\nIn Washington, the House and Senate provided federal funds to support a future plebiscite. Specifically, in the FY2014 omnibus appropriations law, Congress appropriated $2.5 million for \"objective, nonpartisan voter education about, and a plebiscite on, options that would resolve Puerto Rico's future political status.\" These plebiscite-education funds remain available until expended, but Congress placed conditions on their release that appear to exclude the \"enhanced commonwealth\" status option as a choice on the ballot. As discussed below, the Justice Department determined in 2017 that enhanced commonwealth remained inconsistent with the U.S. Constitution.", "In the 2016 general election, Puerto Rico voters selected NPP candidates for both the Governor and Resident Commissioner posts. The prostatehood NPP also retained majorities in the territorial House and Senate. Governor-Elect Ricardo Rosselló announced that he \"intend[ed] to make joining the union [as a state] the central focus of his administration.\" Soon after the November election, some in the NPP began urging congressional action to admit Puerto Rico as a state.\nIn his election night victory speech, according to one media report, Rosselló called his election an \"'unequivocal mandate to tell the world that the transition to statehood has started,' which he will promote through the Tennessee Plan.\" The \"Tennessee Plan\" is a term of art referring to the method by which Tennessee and six other states joined the union. Each territory employed this method somewhat differently, but the central thrust of the Tennessee Plan involves organizing a political entity that is essentially a state in all but name. Steps typically include drafting of a state constitution, election of state officers, and sending an elected congressional delegation to Washington to lobby for statehood. These developments notwithstanding, there is no single path to statehood. Changing Puerto Rico's political status by the Tennessee Plan or any other method ultimately would require a statutory change by Congress with presidential approval.", "In January 2017, Rosselló assumed the governorship and the NPP assumed the majority in the legislature. Puerto Rico was thus now primarily represented by a Governor, legislative majority, and Resident Commissioner who publicly favored statehood. On February 3, 2017, the legislature enacted, and the Governor subsequently signed, legislation setting the June 11, 2017, plebiscite date. The new NPP government framed the 2017 plebiscite as the first \"sanctioned\" by the federal government (through the FY2014 appropriations language discussed above). The legislature also characterized the 2017 plebiscite as a way to \"reassert the desire for decolonization and the request for Statehood\" from 2012. Similar arguments that had surrounded the previous plebiscite language resurfaced in 2017. Similar criticisms also emerged from those who opposed the plebiscite.", "As explained below, the initial ballot was subsequently amended after the U.S. Department of Justice (DOJ) declined to certify the federal funds appropriated in FY2014 (discussed above) to administer the plebiscite.\nNPP supporters argued that the 2012 plebiscite established that Puerto Rican voters preferred a nonterritorial option, and that statehood or a form of independence were the only constitutionally permissible choices. The plebiscite law thus included two \"non-territorial and non-colonial political status\" options on the ballot: (1) \"Statehood\" and (2) \"Free Association/Independence.\" The law further specified that only ballots marking one of those options would be counted—a reference to controversy over \"blank\" ballots believed to be cast in protest in 2012. The law also directed that if the \"Free Association/Independence\" option received a majority in the June 11 plebiscite, an October 8, 2017, referendum would be held for voters to select from these two choices. Both free association and independence would entail Puerto Rico becoming an independent country. The former suggests an ongoing, mutually negotiated relationship in which the United States might continue to provide some benefits or services, such as the United States today has with the Western Pacific nations of the Federated States of Micronesia (FSM), the Republic of Micronesia, and the Republic of Palau. PDP supporters objected to the ballot wording and choices. They argued that the ballot improperly omitted a status-quo option and was biased to favor a statehood outcome. After the legislature enacted the initial law establishing the plebiscite date and ballot, attention turned to whether the U.S. Justice Department would approve releasing the federal funds appropriated in FY2014. Importantly, Puerto Rico does not require federal approval to conduct a plebiscite or to otherwise reconsider its political status, but plebiscite supporters argued that federal approval would enhance the vote's perceived legitimacy in Washington. On April 13, 2017, Acting Deputy Attorney General Dana Boente wrote to Governor Rosselló that \"multiple considerations preclude [DOJ] from notifying Congress that it approves of the plebiscite ballot and obligating the funds.\" According to the letter, \"the Department does not believe that the results of the 2012 plebiscite justify omitting Puerto Rico's current status as an option on the [2017] ballot.\" Boente explained that DOJ also had determined that the ballot language included \"several ambiguous and potentially misleading statements, which may hinder voters' ability to make a fully informed choice as well as efforts to ascertain the will of the people from the plebiscite results.\" In particular, DOJ raised concerns about what it regarded as deficiencies in how U.S. citizenship rights were explained in the \"statehood\" ballot description; and the chance that voters could \"misperceive\" the \"free association\" option as a constitutionally impermissible form of \"enhanced commonwealth.\"", "After DOJ issued its determination, attention shifted back to the island. As discussed briefly below, the prostatehood government amended the plebiscite law to include a commonwealth option.\nSoon after the DOJ issued its April 13 letter, the Rosselló Administration and the NPP majority in the legislature announced that they would amend the plebiscite law. The amended \"statement of motives\" declared that,\"[D]ue to the position stated by the U.S. Department of Justice, [the Legislative Assembly has] acted, under protest, on [DOJ's] recommendation to include the current territorial status among the options, so that the Plebiscite may be fully supported by the Federal Government.\" As Figure 3 below shows, the revised ballot included three options: (1) statehood, (2) \"free association/independence,\" and (3) \"current territorial status.\" The Justice Department did not formally respond to the ballot changes before voters went to the polls. However, supporters framed the new ballot options as tantamount to federal endorsement for the plebiscite. Opponents noted that the department had not approved the language. Changing the ballot language was intended to address the Justice Department's concerns, but it also reignited political controversy among the island's political parties. The Independence Party (PIP), which initially announced that it would encourage its supporters to participate in the plebiscite in hopes of defeating statehood, changed its position. In light of what it regarded as a colonial \"commonwealth\" ballot option now being included, the PIP announced that it would boycott the plebiscite, as did the PDP, in addition to some other nonparty groups. PDP leadership called for repealing the plebiscite law and beginning anew.", "On June 11, 2017, voters in Puerto Rico chose among the three options on the revised plebiscite ballot.\n97.2% of voters chose statehood, 1.5% of voters chose free association/independence, and 1.3% of voters chose the \"current territorial status.\"\nTurnout for the plebiscite was 23% (approximately 518,000 of 2.3 million voters).\nIn anticipation of a statehood victory in the plebiscite, the territorial legislature enacted, and the Governor signed, legislation in June 2017 to pursue a \"Tennessee Plan\" path to statehood, including appointing a \"delegation\" to advocate for statehood before the House and Senate in Washington. The PDP opposition criticized the law and vowed to challenge it in court and in future elections. As discussed elsewhere in this report, the House and Senate may determine how or whether to respond to these developments.", "Two status bills have been introduced in the 115 th Congress. One proposes statehood, while the other proposes a form of independence. Brief discussion appears below.\nOne day after assuming office, Puerto Rico's newly elected Resident Commissioner, Jenniffer González-Cólon, introduced legislation to admit the island as a state. H.R. 260 proposes that if voters choose statehood in the plebiscite provided for in the FY2014 omnibus appropriations law (discussed previously), Puerto Rico would join the union as a state by January 3, 2025.\nSeparate legislation, introduced in February 2017, would require the Puerto Rico legislature to \"provide for a referendum\" between two status options. Specifically, H.R. 900 , introduced by Representative Gutiérrez, proposes a popular vote between independence and free association. The bill also authorizes treaty negotiations to implement either outcome. Unlike H.R. 260 , H.R. 900 would permit mainlanders (or others) of Puerto Rican descent to participate in the referendum. The bill specifies voting eligibility for those \"born in Puerto Rico\" or those who \"[have] a parent who was born in Puerto Rico.\"", "Status was not a major component of debate in the 114 th Congress. Status was, however, a contextual issue as Congress considered legislation related to the island's ongoing economic crisis. The 114 th Congress did not enact any legislation directly affecting Puerto Rico's political status, but committees held hearings that partially addressed the topic.", "One bill devoted to Puerto Rico's political status was introduced in the 114 th Congress. H.R. 727 (Pierluisi) would have authorized the Puerto Rico State Elections Commission to \"provide for a vote\" in the territory on admitting Puerto Rico as a state. The bill did not advance beyond introduction.\nH.R. 727 specified that the proposed ballot \"shall\" include a single question: \"Shall Puerto Rico be admitted as a State of the United States? Yes___ No___.\" The bill further specified a statehood admission process to be followed, to conclude on January 1, 2021, if a majority of voters selected statehood.", "Much of the status debate emphasizes governance, political participation, and democratic principles rather than economic issues or other policy matters. Furthermore, the relationship between status and economics is subject to ongoing debate, with some arguing that the two issues are inextricably linked and others replying that the status debate distracts from long-standing economic problems. Most recently, Puerto Rico's ongoing financial crisis has, however, shaped some aspects of recent attention to status, as discussed briefly below. As noted previously, economic issues are otherwise beyond the scope of this report.\nIn June 2016, Congress enacted legislation responding to an ongoing economic crisis in Puerto Rico. The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; P.L. 114-187 ) establishes a process for restructuring the island government's public debt. PROMESA also establishes a federal oversight board, formally known as the Financial Oversight and Management Board for Puerto Rico, with \"broad powers of budgetary and financial control over\" the island.\nStatus was not a central component of the congressional deliberation over PROMESA, although some Members addressed status in testimony or floor statements. Some hearings also addressed the topic. Perhaps most consequentially for the status debate, some of those who opposed PROMESA, including some Members of Congress, characterized the broad powers provided to the oversight board as undemocratic. In particular, opponents objected to the board's powers to approve fiscal plans submitted by the Governor and to approve territorial budgets, among others. Although not necessarily addressing the oversight board explicitly, proponents generally argued that, in the absence of bankruptcy protection for territories, PROMESA was necessary to help the island's government to restructure its debts in an orderly fashion. Critics, on the other hand, contended that the oversight board undermines the mutually agreed status relationship established in 1952. Connections between PROMESA and status also were a component of the 2016 Puerto Rico elections (discussed previously).\nOne brief section of PROMESA explicitly addresses status. Section 402 of the law states that \"[n]othing in this Act shall be interpreted to restrict Puerto Rico's right to determine its future political status, including\" through another plebiscite as authorized in the FY2014 omnibus appropriations law ( P.L. 113-76 ). A December 2016 report released by a congressional task force established in PROMESA (devoted primarily to economic issues) recommended that if such a plebiscite is held, Congress \"analyze the result ... with care and seriousness of purpose, and take any appropriate legislative action.\"", "Just as status provides context for debates about other areas of public policy, status also can arise in legal cases that primarily concern other topics. In June 2016, the Supreme Court of the United States issued an opinion in Puerto Rico v. Sanchez Valle . This report does not provide a legal overview of the case, which concerned the application of the U.S. Constitution's Double Jeopardy Clause to criminal prosecutions in Puerto Rico. As another CRS product explains, the case examined \"whether defendants in a criminal case can be prosecuted under the local laws of Puerto Rico if they have been previously convicted under federal criminal law for the same conduct.\"\nThe Court's opinion did not alter Puerto Rico's political status. However, those interested in the status debate followed the case closely in anticipation of how the Court would describe the island's relationship with the United States. The majority opinion addressed the island's political and status history to establish background for the double-jeopardy analysis. Particularly important for status discussions, the Court traced the \"ultimate source\" of Puerto Rico's prosecutorial power to Congress. As the Court summarized, Puerto Rico's \"Constitution, significant though it is, does not break the chain\" of congressional authority. As CRS has written elsewhere, although Sanchez Valle was \"limited [and] did not address broader issues of Puerto Rico's sovereignty,\" the holding suggests that \"when Congress passes legislation affecting Puerto Rico's government, as it did recently with the passage of ... PROMESA, Sanchez Valle would not appear to suggest a limit on Congress's constitutional authority over Puerto Rico.\"\nPuerto Rican politicians representing diverse perspectives have suggested that Sanchez Valle signals that the commonwealth status does not provide the local autonomy that some, particularly in the PDP, have long suggested. In addition, some have suggested that Sanchez Valle is inconsistent with the U.S. government's previous characterization to the United Nations (U.N.) of Puerto Rico's status. In brief, the U.N. determined in 1953 that Puerto Rico, in light of enactment of the territorial constitution and the Federal Relations Act, was sufficiently self-governing to terminate a previous U.S. reporting requirement that applied to non-self-governing territories. However, meetings of the U.N. Special Committee on Decolonization remain a venue for debating the island's political status and for U.N. monitoring of the island's relationship with the United States.\nAt the Special Committee's June 2016 meetings, after Sanchez Valle , representatives of various Puerto Rican parties and interest groups testified that the ruling suggested the need to reexamine the island's relationship with the United States. In particular, Governor García Padilla (PDP) has suggested that in light of Sanchez Valle and \"through PROMESA, the United States has effectively backtracked from the democratic accomplishments of 1953 and must respond for this new position before the international community.\"\nThe Special Committee's attention to Puerto Rico post- Sanchez Valle is not necessarily remarkable in and of itself, as the committee and the U.N. regularly examine territorial issues worldwide. Furthermore, as a practical matter, the Decolonization Committee's inquiries on Puerto Rico tend to be comparatively less prominent in Washington policy debates than in those held on the island. Consequently, the topic might or might not be a prominent aspect of future congressional attention to Puerto Rico's status debate. Nonetheless, it is potentially noteworthy that both the departing and incoming Governors, representing two opposing political parties (PDP and NPP, respectively), testified that Sanchez Valle raises questions about the island's degree of self-governance." ], "depth": [ 0, 1, 1, 1, 2, 1, 2, 1, 2, 2, 2, 3, 3, 3, 2, 2, 3, 3, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h1_full", "", "h3_title", "h3_full", "h1_full", "h1_full", "h0_title h2_title h1_title h3_title", "h1_full", "", "h0_title h1_title", "h0_full h1_full", "h0_full", "h0_full", "h2_full", "h3_full h2_title", "h2_full", "", "h3_full" ] }

{ "question": [ "What is an undercurrent in virtually every policy matter in Puerto Rico?", "What were the results of a June 2017 vote on political status?", "What was the turnout for this vote?", "Why was turnout so low?", "How was the ballot amended?", "What occurred in 2012?", "On that occasion, what were voters asked?", "What did the majority choose?", "How were these results received?", "If Congress were to act on these results, what could they do?", "What does the Territory Clause of the Constitution grant Congress?", "What action, if any, has Congress taken regarding Puerto Rico's status?", "What bills have been proposed during the 115th Congress?", "What does H.R. 260 propose?", "What does H.R. 900 propose?", "What would H.R 727 have authorized had it advanced in the 114th Congress?", "How is Puerto Rico's status treated in Congress?", "How is Puerto Rico's status relevant for Congress in the near future?", "How has Puerto Rico's status proved relevant to the Supreme Court?", "What does this report provide?" ], "summary": [ "Puerto Rico's political status—referring to the relationship between the federal government and a territorial one—is an undercurrent in virtually every policy matter on the island.", "In a June 11, 2017, plebiscite (popular vote), 97.2% of voters chose statehood when presented with three options on the ballot.", "Turnout for the plebiscite was 23.0% of eligible voters.", "Some parties and other groups opposing the plebiscite had urged their bases to boycott the vote.", "After initially including only statehood and free association/independence options, an amended territorial law ultimately permitted three options on the plebiscite ballot: statehood, free association/independence, or current territorial status.", "Before the latest plebiscite, Puerto Ricans most recently reconsidered their status through a 2012 plebiscite.", "On that occasion, voters were asked two questions: whether to maintain the status quo, and if a change were selected, whether to pursue statehood, independence, or status as a \"sovereign free associated state.\"", "Majorities chose a change in the status quo in answering the first question, and statehood in answering the second.", "The results have been controversial.", "If Congress chose to alter Puerto Rico's political status, it could do so through statute.", "Ultimately, the Territory Clause of the U.S. Constitution grants Congress broad discretion over Puerto Rico and other territories.", "Congress has not enacted any recent legislation devoted specifically to status.", "Two bills have been introduced during the 115th Congress.", "H.R. 260 proposes to admit Puerto Rico as a state if residents choose statehood in a plebiscite.", "H.R. 900 proposes a popular vote between independence and free association (which entails an ongoing relationship between independent countries).", "In the 114th Congress, H.R. 727, which did not advance beyond introduction, would have authorized a plebiscite on statehood.", "Even in seemingly unrelated federal policy debates, Puerto Rico status often arises at least tangentially.", "In the foreseeable future, oversight of Puerto Rico is likely to be relevant for Congress as the House and Senate monitor the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; P.L. 114-187; 48 U.S.C. §2101 et seq.) enacted during the 114th Congress.", "Status also shaped the policy context surrounding the U.S. Supreme Court's decision in the 2016 Sanchez Valle case.", "This report does not provide an economic or legal analysis of these topics; instead, it provides policy and historical background for understanding status and its current relevance for Congress." ], "parent_pair_index": [ -1, -1, 1, 2, 1, -1, 0, 0, 2, 2, -1, -1, -1, 1, 1, -1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "", "Overview1", "Lebanon: Context and Recent Developments", "Government Collapse and New Pro-Syrian Cabinet", "Special Tribunal for Lebanon, Hezbollah, and Syria", "Syrian Unrest and Lebanese Political Dynamics", "Hezbollah and the March 8 Coalition", "The March 14 Coalition", "Lebanese Christians and the Maronite Church", "Current Effects of the Syrian Unrest on Lebanon", "The Economy", "Border Control", "Arms Transfers, Hezbollah Arms, and Militants", "Population Movements", "How Might Future Events in Syria Affect Lebanon?", "Possible Impact on Lebanon", "Hezbollah and Regional Implications", "Issues for Congress", "U.S. Security Assistance to Lebanon61", "International Sanctions and U.S. Economic Support to Lebanon", "Legislation in the 112th Congress", "Conclusion" ], "paragraphs": [ "", "As Congress exercises oversight and prepares to consider programs for Lebanon in the coming year, uncertainty about Syria's future is now raising questions about how unrest there may affect the security and stability of Lebanon. While many analysts posit that the government of Syrian President Bashar Al Asad will fall, specific outcomes and timelines remain subject to debate. Lebanese concerns center on the potential for conflict or regime change in Syria to disrupt Lebanon's security directly and to reshape the context in which Lebanon's fragile sectarian political balance has endured since the end of the Lebanese civil war in 1990.\nA complex relationship exists between Lebanon and Syria as a result of geography, history, and networks of political, economic, and social ties that bind the countries' populations. Over time, Lebanese leaders have sought to manage the influence of their larger and more powerful neighbor while maintaining domestic stability and preserving strong bilateral economic ties. Syrian leaders have sought to influence developments in Lebanon in order to prevent forces hostile to the Syrian government from consolidating a position of strength there. This approach has often led to direct Syrian intervention in Lebanese affairs. At present, Syria continues to exert a great deal of influence in Lebanon through its patronage relationships with Hezbollah and the Hezbollah-affiliated, pro-Syrian March 8 governing coalition. The outsized role that Syria plays in Lebanon's affairs and its role as a lifeline for Hezbollah further raises the stakes of the unrest for both Lebanon and Israel. Hezbollah and the Asad government have warned that third-party intervention in Syria's crisis could lead to regional conflagration, widely interpreted as a message for Israel.\nThe unrest in Syria and the possibility for spillover into Lebanon affect the current policy priorities of the United States, which include preserving regional peace, strengthening Lebanon's weak democratic institutions, limiting Iranian and Syrian influence in Lebanon's political process, and countering transnational threats from Hezbollah and other militant groups. Since 2006, Congress has authorized and appropriated hundreds of millions of dollars for Lebanon, with parallel goals of supporting the implementation of United Nations Security Council resolutions; reducing sectarianism and unifying national institutions; providing military equipment and basic supplies to the Lebanese Armed Forces (LAF); and providing support to the Internal Security Forces (ISF) for training, equipment and vehicles, community policing assistance, and communications. These programs began in the wake of the withdrawal of Syrian military forces in 2005 and the Israel-Hezbollah war of July and August 2006. Over the last five years, U.S. programs have steadily improved the capabilities of nonsectarian security forces in Lebanon, while Lebanese politics have remained deadlocked by competition between rival camps defined in part by their differing perspectives toward the assertive Asad government and the future of its Hezbollah allies. The prospect of political change in Syria is now challenging core assumptions that have guided the decisions of leaders in Lebanon, Syria, the United States, Israel and other regional powers. This report reviews recent developments in light of those assumptions and analyzes issues of potential concern to Congress as Members exercise oversight and prepare to consider new appropriations and authorization requests from the Obama Administration.", "Lebanon has largely escaped the protests and prolonged unrest that much of the region, including Syria, has faced since early 2011. Two primary factors distinguish Lebanon from other regional states and may explain this dynamic: the absence of a strong, repressive, and autocratic government and a long history of civil war ingrained in collective memory. At the same time, two main issues contributed to Syria-related domestic political wrangling in Lebanon in 2011:\nThe collapse of the government on January 12, 2011, and the subsequent nomination of Prime Minister Najib Miqati, who was backed by Hezbollah and is widely viewed as pro-Syria; and, developments pertaining to the Special Tribunal for Lebanon.", "Miqati's nomination in January 2011 shifted power away from the Sunni-led, anti-Syria Future Movement, angering many Sunnis. Miqati was unable to form a government for nearly five months, partially because of sectarian contention. Political uncertainty culminated in a public demonstration in March 2011 in Beirut in which protestors called for an end to the confessional system and reportedly echoed the popular regional chant, \"the people want the fall of the regime!\" Clashes in the northern Lebanese city of Tripoli in June 2011, chiefly between Sunnis and Alawites, also underscored the delicate sectarian balance.\nAfter a lengthy political impasse, Miqati announced a new cabinet on June 13, 2011. The pro-Syria, Hezbollah-led March 8 coalition dominated the cabinet, filling 18 of the 30 seats. Hezbollah continues to hold 2 of these 18 seats, in line with its cabinet representation prior to the shift from former Prime Minister Saad Hariri. Additional members from the March 8 coalition filled the remaining 16 of the allotted 18 seats. Independents filled the other 12; none of the seats were allotted to the predominantly Sunni, anti-Syria March 14 coalition. Walid Jumblatt, head of the Druze-led Progressive Socialist Party, switched his allegiance from the March 14 to the March 8 alliance, providing March 8 with crucial support to break the political stalemate.\nWhile domestic political infighting played a significant role in the governmental gridlock, many analysts believe that the instability in Syria factored into Miqati's inability to form a government. Some political players apparently wanted to wait and see how the Syrian uprising would affect Lebanon before forming a cabinet; others hoped to limit the influence that the unrest might have on Lebanon. Some Lebanese politicians suggest that Syria increased its interference in the hopes of engineering a cabinet dominated by its supporters.", "On June 30, the Special Tribunal for Lebanon (STL) indicted four members of Hezbollah on charges of assassinating former Prime Minister Rafiq Hariri on February 14, 2005. Hezbollah, which had launched a public relations campaign to discredit the STL, disavowed the allegations and refused to turn over the named individuals. The group's leader, Sayyid Hassan Nasrallah, announced that, \"[The STL] cannot find or arrest the accused in 30 days or 60 days, 30 years or 300 years.\" On February 1, the STL Trial Chamber announced its intention to try the four accused in absentia because of their disappearance and an inability to find them. The STL credited the Lebanese government's \"multiple attempts …to find the accused at their last known residences, places of employment, family homes and other locations.\"\nMany observers had expressed concern that the STL could derail the already tenuous government of Prime Minister Miqati, particularly given Lebanon's financial responsibility to pay dues to the STL and Hezbollah's objection to contributing these funds. However, Miqati announced on November 30 that Lebanon would adhere to its financial obligations to the STL, and his subsequent payment of these dues did not lead to the government's collapse. Reportedly, Syrian President Bashar Al Asad instructed Hezbollah to allow Miqati to make the payment in order to maintain the continuity of the pro-Syria Lebanese government.\nThe debate over the STL underscores the inherent sectarian divides in Lebanon. The Sunni community views the STL as integral to holding Hariri's killers accountable, while Hezbollah and the Shiite community decry the STL as part of a conspiracy to weaken Hezbollah and remove it as an obstacle to U.S. and Israeli policy in the Middle East. The Druze community vacillates between the two positions. The Christian community is split; some leaders support the STL while others deride its legitimacy, reflecting \"deeper angst within the community as it struggles to contend with its waning power.\" As a result, many analysts were concerned that the STL would ignite sectarian tensions and foster domestic instability, particularly given the disagreements within March 8 over the payments. Concerns about the possible impact of the unrest in Syria on Lebanon may have tempered the effects.", "The Lebanese government has stated that its official policy on the Syrian uprising is one of neutrality. Although Lebanon sat on the United Nations Security Council in 2011, Lebanon did not vote in favor of resolutions criticizing the Syrian regime. Lebanon abstained from voting on the October 2011 U.N. Security Council resolution condemning Syria's brutal crackdown. Nawaf Salam, Lebanon's Special Envoy to the U.N., stated that \"Lebanon is committed to defend the sovereignty of (Syria) and the unity of its people...but in order to protect Lebanon's unity and stability, it abstains from voting.\" Similarly, Lebanon did not vote for Syria's suspension from the Arab League or opt to send delegates with the Arab League observer mission to Syria.", "Since the unrest started in Syria, March 8 has largely backed the Asad regime. Both Prime Minister Miqati and Parliament Speaker Nabih Berri, are pro-Syrian politicians, although President Michel Suleiman is largely viewed as neutral. Hezbollah has been particularly supportive of its patron, reiterating Asad's claims that foreign agents who aim to destabilize the country have caused the unrest. In a speech given in December 2011, Nasrallah claimed that, \"[t]here are some who don't want civil peace or stability and want to destroy Syria. There are some who want to make up for their defeat and their inevitable loss in any change in the situation in Syria for the benefit of Israel.\" However, by wholly supporting Asad, Hezbollah has found itself in a difficult position. The organization has largely endorsed the other popular uprisings in the Arab world, qualifying them as resistance movements; thus, many in the Arab world, and particularly Sunnis, view Hezbollah's continued backing for Syria as contradictory. Prime Minister Miqati, who needs to maintain the support of March 8 while still working with other prominent political players, including those who are anti-Syria, is also in a political quandary. As a result, he has consistently reiterated his view that Lebanon should remain neutral with regard to the situation in Syria.\nHezbollah's unwavering support for Syria has created some dissent within the March 8 coalition. Walid Jumblatt, head of the PSP, has notably and increasingly diverged from March 8's position. Jumblatt, often referred to as the weathervane of Lebanese politics for the frequency with which he shifts his political alliances toward whichever side seems to be gaining dominance, has grown progressively critical of the Asad regime since January 2011 and has called for political reforms in Syria. He has refrained from saying outright that Asad should step down. However, on January 3, 2012, he implored Russia and Iran to reassess their positions on Syria and convince Asad that \"fundamental regime change is the only solution for the unrest.\" Jumblatt has also urged the Syrian Druze community not to join the attacks carried out by the Syrian army and police forces against the protesters.", "In contrast, the Sunni-dominated, anti-Syria March 14 coalition is staunchly opposed to Asad. March 14 has expressed anger with Syria, accusing the Asad regime of violating Lebanese sovereignty by repeatedly launching incursions into Lebanese territory, and kidnapping Syrian and Lebanese nationals within Lebanon who are connected to the Syrian opposition. The coalition has also criticized the March 8 response to the uprising. March 14 members have been meeting with other regional powers, including Saudi Arabia, to prepare for expected changes in Syria should Asad fall.\nThe unrest in Syria has potentially provided March 14 with an opportunity to rejuvenate its base, which had lost its cohesion and energy after achieving its primary goal of driving Syrian forces out of the country. Coalition leaders, who suffered significant political losses after losing control of the government in January 2011, have rallied the Sunni-based constituency by expressing solidarity with the largely Sunni opposition movement in Syria and voicing support for the protestors. They have also visited Syrian refugees and publically called for Asad to step down. The downside to this mobilization is its potential to increase sectarian and political tensions in Lebanon, particularly among Christians who may fear an expected regional Sunni Islamist ascendancy and among Hezbollah supporters fearful of losing an important life-line to Iran.", "For Christians in Lebanon, the uprising in Syria presents a tricky situation. While many in the Christian community do not support the actions of the Asad regime, others fear that Asad's fall may lead to a Sunni Islamist government that will discriminate against Christians and inspire the Lebanese Sunni community. The difficulties facing the Maronite Church exemplify this conundrum. Traditionally, the Maronite patriarch has aligned with the anti-Syria March 14 coalition. The current head, Archbishop Bechara Rai, is generally considered to have better relations with the Syrian regime and March 8 than his predecessor, Nasrallah Sfeir.\nIn September 2011, Rai suggested that the Syrian government required more time to implement the reforms to which Asad had previously agreed. He later claimed these comments were taken out of context, noting that the patriarchate \"cannot relinquish any party and does not want to eliminate or marginalize any party, because Lebanon needs all its citizens, parties, and sects.\" Rai has also reiterated his concern for the Christian population in Syria, many of whom publically support the Asad regime, intimating that the end of Asad's government could negatively affect the Syrian Christian population. Some states with close ties to Lebanon, including France, registered their dismay at Rai's comments. Many within the Lebanese Christian community also expressed concern at his remarks, demonstrating an internal split. The March 8 coalition supported Rai's comments, claiming that \"a stable Syrian government is important for Lebanon.\"\nThough some Christians have joined the Syrian opposition, most Christian leaders in Syria continue to publicly support the Asad regime. This is partially because of Syrian Christians' prominent government-supported role in the business community, but it also reflects Syrian Christian fears that a Sunni-led and potentially Islamist-dominated government will replace Asad.", "", "Pro-Syrian business interests are deeply influential within the Lebanese economy. The current unrest has significantly affected the Lebanese economy overall; the effects are particularly noticeable in trade relations, the banking industry, and tourism. Within Syria, the unrest has primarily impacted its oil and tourism industries. IMF estimates indicate that the Syrian economy may shrink up to 2% in 2012 as a result of the sanctions, a weakened currency, an expanding recession, and a significant decline in tourism. Some officials have speculated that a weak economy could cause Asad to fall within 6-18 months.\nWith the continued unrest in Syria and increased efforts to impose international sanctions, the Lebanese economy has come under increasing scrutiny from the international community. It remains unclear whether Lebanon will participate in the sanctions levied by the Arab League, which the organization has no legal mechanism to enforce. Lebanon voted against the sanctions. However, Lebanon's Economy Minister, Nicolas Nahas, who is Greek Orthodox, has publically announced that the country will adhere to them.\nLebanon's hesitation is unsurprising. Syria is Lebanon's only overland trade route and is integral to Lebanon's ability to export. In tandem, Lebanon provides Syria with an important trading partner. Bilateral trade between the two totals $560 million. Observers in Lebanon have already noted substantial price increases in many basic goods. Agreeing to impose the sanctions may significantly harm the Lebanese economy and subject it to Syrian reprisals.\nThe Lebanese banking sector figures prominently in Syrian-Lebanese economic relations. One economist notes that the banking industry would feel the primary effects of the sanctions; Syrian operations comprise 10% of consolidated balance sheets in Lebanese banks and Lebanese banks have loaned more than $1 billion to Syrian individuals and corporations.\nHowever, the effects of the sanctions on the banking industry remain unclear. The governor of Lebanon's Central Bank, Riad Salameh, maintains that the Syrian government has not deposited any funds in the Bank and thus the Bank has not been impacted by the sanctions. Yet the annual report from at least one Lebanese bank, the Bank of Byblos, indicates that deposits have decreased by 20% over the past year.\nAccording to the Lebanese Ministry of Tourism, tourism in Lebanon decreased by 25% in the first seven months of 2011. Approximately 25% of all tourist arrivals in Lebanon travel via Syria. Tourist activity on the Lebanese-Syrian border has decreased between 75%-90%. Greater disruptions are reportedly visible in the northern border crossings than the eastern border.", "Border security remains a preeminent concern, particularly because the border between Syria and Lebanon is not demarcated in many places. Syria has historically disregarded Lebanese sovereignty, in violation of U.N. Security Resolutions 1559 and 1680. According to one U.S. State Department official, although Syrian officials agreed to participate in a committee to demarcate the border between the two countries in 2008, they have yet to appoint anyone to serve in an official capacity.\nThe Syrian army has entered Lebanese territory numerous times since the beginning of the uprising. A number of individuals have been killed by gunfire that either came from the Syrian side of the border or by Syrian troops who had crossed over the border. Others have been kidnapped by Syrian troops. The U.S. State Department denounced these territorial violations, noting grave concern about Syria's disregard for Lebanese sovereignty and urging the Lebanese to adhere to their international obligations and protect the security and rights of all, including refugees.\nThe Syrian government maintains that the incursions have been integral to neutralizing foreign agents who are entering Syria through Lebanon and inciting unrest within Syria. Syrian forces began laying antipersonnel landmines along several sections of the Lebanese border in October 2011. Many of these mines are near the Syrian city of Homs, which has witnessed large-scale protests and unrest; this area includes the portion of the Lebanese-Syrian border that is disputed. While Syrian officials have stated that mining the border is meant to decrease arms smuggling, some analysts posit that the forces have laid the mines to prevent refugees from fleeing into Lebanon and members of the opposition from launching attacks against Syria from within Lebanon.", "Arms transfers across the Lebanese-Syrian border present challenges for both the Asad regime and the Lebanese government. The porous nature of the border facilitates the easy transfer of arms in both directions. Some U.S. officials have noted that arms smuggling is extensive and unlikely to be curtailed in the near future, particularly given the political situation.\nThe Syrian government has accused some Lebanese, particularly those in the March 14 coalition, of smuggling weapons across the border to aid the Syrian opposition in the uprising. March 14 has vociferously denied this claim. Simultaneously, Hezbollah reportedly has moved many of its long-range missiles from Syria to Lebanon, fearful that Asad's regime will collapse and the group will be unable to access its stockpile of arms. According to one observer, \"there's so much stuff coming across the border…Hezbollah doesn't know where to put it.\" The effect of the Syrian uprising on Hezbollah's weapons cache may present Israel with particular concerns. One retired Israeli military official has speculated that if Asad falls, Hezbollah will acquire Syria's chemical weapons.\nAsad has claimed that al-Qaeda militants are entering Syria via the Syria-Lebanon border and inciting violence in Syria. The Lebanese Defense Minister, Fayez Ghosn, a Hezbollah ally and supporter of the Asad regime, backed these assertions when he announced in December 2011 that Al Qaeda militants were based in the Lebanese border town of Arsal under the pretext of being Syrian dissidents. Although President Michel Suleiman, Prime Minister Miqati, and the Lebanese Interior Minister, Marwan Charbel, have all rejected these claims, the statements have sparked a national political debate about the possibility of Al Qaeda's presence and what it means both for Syria and Lebanon.", "Many Syrian dissidents are escaping to Lebanon to find safe haven. Parts of Lebanon, particularly in the north near Wadi Khaled, have experienced an influx of refugees fleeing the violence in Syria. Most recently, refugees have come from the cities of Homs and Tal Kalakh. The porous nature of the border, as well as the lack of demarcation, allows for significant movement. By the end of December, nearly 5,000 Syrian refugees had registered with the Office of the U.N. High Commission for Refugees (UNHCR). Most of these refugees are residing with host families. One U.S. State Department official noted that some wealthy Syrians have enrolled their children in Lebanese schools as a result of the unrest.\nHowever, reports indicate that dissidents are not necessarily safe in Lebanon; one advocacy group noted in March 2011 that Lebanon had detained some protestors and activists of Syrian origin and that their whereabouts remained unknown. Accounts persist that Syrian operatives have entered Lebanese territory and targeted protestors who have fled Syria. The head of internal security in Lebanon has accused the Syrians of kidnapping dissidents within Lebanon. Some organizations have accused the Lebanese forces of aiding the Asad regime both by detaining and refusing refugees. Human Rights Watch has called on Lebanon to provide detained refugees with temporary asylum.", "Many analysts argue that the Asad regime will fall within the next six to 18 months, and others express skepticism or decline to place an expected time frame on the potential collapse of the regime. Regardless of the time frame, the course of events in Syria and the responses of key actors will determine the broad effects on Lebanon and the region. In all future scenarios, Israel, Iran, and other regional and international actors, including the United States, serve as wildcards. Any could shape developments in both Syria and Lebanon through their interactions with various players.", "The responses of key actors and the potential for a political and security vacuum will largely determine the impact of unrest or change in Syria on Lebanon. Hezbollah and the Sunni communities will figure chiefly in these situations. If Hezbollah feels threatened and increases its militarization, the group may encourage sectarian strife within Lebanon. Conversely, if Hezbollah feels the need to further separate itself from Syria and preserve itself by acting in greater accordance with discrete Lebanese interests, this may stave off political infighting. If heightened sectarianism in Syria deepens the chasm between Amal, Hezbollah, Lebanese Christians, and the Sunni community, both the Lebanese government and society could become destabilized. If members of the Lebanese Sunni community feel emboldened by the rise of a Sunni-led government in Syria, they could overreach, upset the political balance, and prompt a military response from Hezbollah or Christian groups.\nWhile a full-scale civil war in Lebanon is unlikely, the outbreak of some civil conflict is a possibility. Key factors to monitor may include increased flow of refugees, the degree of mobilization and/or radicalization among Syrian and Lebanese Sunnis and Christians, cross-border flows of arms, and the incidence of sectarian clashes. Each of these factors has the potential to shape the responses of key actors and rupture Lebanon's delicate political balance.", "Regardless of its dwindling legitimacy among Lebanese Sunnis, Hezbollah will likely remain the most powerful domestic political actor, due to its military capabilities and support among Shiites and some Christians. Nevertheless, as unrest in Syria continues, Hezbollah faces perhaps the most complex set of questions about the future, some of which could prove existential. Hezbollah's most significant struggle involves its domestic political legitimacy, now tarnished by its staunch support for the Asad regime's crackdown. That support in turn has been dictated by Hezbollah leaders' operational concerns about losing a major patron and facilitator and the effects that could have on the group's military capabilities and survival. Some analysts posit that if Asad falls, Hezbollah will have to shift the way in which it operates by either becoming bolder or narrowing its scope of operations. This may prove difficult, if, as some observers argue, the priorities of its leadership and rank-and-file supporters are divergent. For example, the International Crisis Group has argued that, \"[f]or Hizbollah, the core issue remains the regional balance of power and the struggle against Israel; for its Shiite rank-and-file, sectarian anxiety looms large; should Sunnis dominate a new Syrian regime, they fear being caught between it and Lebanon's own Sunni community.\"\nMany analysts agree that regime change in Syria could shift the power dynamic that presently exists between Syria, Israel, and Lebanon, particularly given Hezbollah's role in the Lebanese government. If Asad feels threatened, he may encourage either Hezbollah or radical Palestinian jihadist elements located in southern Lebanon to attack Israel and deflect from his own domestic difficulties. Asad, who routinely claims that foreign agents have incited the unrest in Syria, may provoke Israel under the guise of seeking revenge. In this situation, Israel would likely respond by attacking or counterattacking Hezbollah, with the minimum goal of neutralizing its rocket threat to northern and central Israel. Hezbollah, cognizant of the damage that it incurred during the 2006 war, might try to avoid direct fighting with Israel. It is likely that the LAF and the ISF would have an easier time subduing an attack by the Palestinian militants than Hezbollah.\nShould Hezbollah or Israel react provocatively, conflict could ignite. Israel maintains a qualitative military edge and could likely defeat Hezbollah, yet the combination of the regional unrest and the war could destabilize Lebanon, increasing the overall danger to Israel. Additionally, such a conflict could significantly harm Lebanon and shift the power dynamics in the Levant.\nAsad's fall may usher in a Syrian government that is less inclined to align with Iran and Hezbollah, particularly if a Sunni-dominated government replaces the current Alawite regime. Burhan Ghalioun, the leader of one prominent Syrian opposition coalition, the Syrian National Council, has noted that a new Syrian government would shift away from Iran, and presumably Hezbollah, and align more closely with the Arab League and the GCC countries. It is not certain that a new Syrian government would take a more accommodating stance toward Israel, particularly in light of the long-standing Israeli-Syrian dispute over the Golan Heights and the Israeli-Palestinian conflict. The calculations and security imperatives that have driven Syrian influence over the affairs of its smaller neighbor Lebanon may also survive a change of regime in Damascus.", "The unrest in Syria may affect the pursuit and implementation of current policy priorities for the United States, including strengthening Lebanon's weak democratic institutions, limiting the influence of Iran and Syria in Lebanon's political process, and countering transnational threats from Hezbollah and other militant groups in Lebanon. Given the current security and political situation in Syria, Members may consider the following questions as they discuss future U.S. security assistance to Lebanon:\nWhat are the rationales for key U.S. foreign assistance programs related to the security forces, border control, and combating terrorism? How might U.S. programs limit the potential for spillover from Syria into Lebanon? How will the Syrian uprising affect key U.S. foreign assistance programs in Lebanon? Will U.S. goals and modes of engagement change? To what extent should U.S. policymakers seek to impose further conditions on U.S. aid to Lebanon in light of events to curtail Hezbollah's political influence? Is Lebanon circumventing international sanctions on Syria? If a civil war begins in Syria, would it spill over into Lebanon? Would Hezbollah be party to the conflict? Is the Syrian uprising weakening Hezbollah within Lebanon? What are the potential ramifications of a Syrian or Hezbollah attack on Israel, and what are the possible U.S. responses to such an attack? Will the uprising in Syria negatively impact the religions sects/minorities in Lebanon, including the Christian community?", "Following Syrian withdrawal from Lebanon in 2005 and the war between Israel and Hezbollah in the summer of 2006, the George W. Bush Administration requested and Congress appropriated a significant increase in U.S. assistance to Lebanon. Since 2006, U.S. assistance to Lebanon has topped $1 billion, particularly with regard to:\nSupporting the implementation of United Nations Security Council resolutions; Reducing sectarianism and unifying national institutions; Providing military equipment and basic supplies to the Lebanese Armed Forces (LAF); Providing support to the Internal Security Forces (ISF) for training, equipment and vehicles, community policing assistance, corrections reform, and communications; and, Increasing economic opportunities for the impoverished in Lebanese society. Current U.S. assistance is based on a 5-year (2010-2014), $1.1 billion plan to modernize and equip the LAF.\nThe Obama Administration and some Members of the 112th Congress have supported the continuation of this assistance. In the short term, some of the continued funding is intended to help secure Lebanon's borders, which are now an important factor in Syrian-Lebanese relations. Over the long term, U.S. officials hope that building the security apparatus of the Lebanese state will improve internal stability and public confidence in the LAF and ISF, creating political space for the Lebanese government to address more complex, politically sensitive issues ranging from political reform to developing a national defense strategy.\nU.S. State Department officials have praised the cooperation between the United States, the LAF, and the ISF. Some officials have suggested that U.S. assistance to strengthen the LAF and the ISF will prevent outside actors from destabilizing the internal political situation in Lebanon and minimize the possibility for domestic political upheaval. However, some State Department officials note that the unrest in Syria, as well as Syrian intransigence in demarcating the border between Syria and Lebanon, have slowed the implementation of U.S. assistance plans.", "Lebanon's economy has previously demonstrated resilience in the face of external shocks. Traditionally, economic recovery has occurred quickly when the country is politically stable. However, the economy is currently constrained by spiraling fiscal debt, an inhospitable business environment, and problems with the infrastructure. Enforcement of new U.S., EU, and Arab League sanctions against Syria may exacerbate these issues.\nU.S. economic assistance may be able to counteract some of these difficulties, but may also be subject to concerns about the role of Hezbollah and its allies in the Lebanese government. Current Economic Support Fund (ESF) program priorities focus in part on promoting economic opportunity and stabilization among the impoverished areas of the country. Plans for FY2012 assistance include improving the competitiveness of some agribusiness and tourism operations, facilitating a pro-business environment, and providing Lebanese entrepreneurs with greater financial access. The United States also plans to supplement EU and UN efforts to support the Ministry of Agriculture with complementary assistance to developing the private sector.", "Developments in Syria, and any changes they create in Hezbollah's strategic position, may inform future debates about the scope and conditions of U.S. assistance. As a result of increasing Hezbollah participation in the Lebanese government in 2011, some Members of Congress have questioned the advisability of funding U.S.-sponsored initiatives in Lebanon at the current level, particularly in an era of pressing budgetary constraints.\nIn June 2011, Representatives Berman, Issa, Boustany, and Rahall proposed H.R. 2215 , the Hezbollah Anti-Terrorism Act (HATA), which is designed to limit certain types of assistance to the LAF while Hezbollah is part of the governing coalition in Lebanon; the bill did not preclude supporting those programs that foster democracy and rule of law, educational funding, or LAF training through International Military Education and Training (IMET). Representative Berman later offered HATA as an amendment to H.R. 2583 , the Foreign Relations Authorization Act. While some Members support these initiatives, others suggest that the best way to weaken Hezbollah is to continue to assist the LAF and provide a military and security counterweight.\nIn December 2011, P.L. 112-74 , the Consolidated Appropriations Act of 2012, provided that the $100 million in Foreign Military Financing (FMF) funds appropriated in FY2012 for the LAF may not be allocated to the LAF if it is controlled by a foreign terrorist organization (FTO); Hezbollah is so designated. LAF command rests with General Jean Kahwaji. Fayez Ghosn of the March 8 aligned Marada Movement currently serves as Defense Minister.", "Continued unrest in Syria leaves the future of Asad's regime uncertain, and the extent of the impact on Lebanon is still being determined. This ambiguity raises a wide range of questions for the goals and implementation of U.S. policy priorities in Lebanon. As the Obama Administration and Congress review U.S. policy priorities in this shifting landscape, issues that Members may encounter include:\nWhether and how U.S. assistance programs in Lebanon are being affected by developments in Syria and what, if any, changes in assistance program goals or implementation may be necessary in light of changing conditions; Whether events in Syria and Lebanon create new concerns regarding the protection of religious minorities, particularly in light of proposed H.R. 440 , which provides for the establishment of a special envoy to promote the religious freedom of religious minorities in the Near East and South Central Asia; How U.S. support for the LAF, the ISF, and Lebanon's security apparatus can best minimize risks posed by Hezbollah as its strategic alliance with Syria remains in question; How might the United States engage with Lebanon to better protect Israel in light of continuing regional unrest; and, How might U.S. assistance and trade and investment policy most effectively shield the Lebanese economy from the effects of political unrest?" ], "depth": [ 0, 1, 1, 2, 2, 2, 3, 3, 3, 2, 3, 3, 3, 3, 1, 2, 2, 1, 2, 2, 2, 1 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "h1_title", "h1_full", "", "h1_title", "h1_full", "", "", "", "", "", "", "", "h1_title", "h1_full", "h1_full", "h1_title", "", "", "h1_full", "" ] }

{ "question": [ "What have observers expressed concern about regarding Syrian instability?", "What is the relationship between Syria and Lebanon?", "How are Lebanon and Syria similar?", "How could continued unrest in Syria negatively affect Lebanon?", "How does Syria exercise influence in Lebanon?", "How has this coalition complicated Lebanese-Syrian relations?", "What do major analysts agree on regarding Lebanon's attitude towards Syria?", "What challenges do Lebanon's political players face?" ], "summary": [ "As Congress exercises oversight and prepares to consider programs for Lebanon in the coming year, some observers have expressed fear that Syrian instability may negatively affect Lebanon.", "Syria exerts a strong political influence on Lebanon and Syrian business interests remain prominent in the Lebanese economy.", "Both Lebanon and Syria have diverse societies where ethnic and sectarian groups compete and cooperate as they seek power within the confines of a rigid political system.", "Continued unrest could exacerbate all of these problems, while complicating sectarian relations in Lebanon, reshaping Hezbollah's strategic position, and contributing to regional instability.", "Although Syrian troops withdrew from Lebanon in 2005, Syria continues to exercise influence through its patronage relationships with members of the pro-Syrian and Hezbollah-affiliated March 8 governing coalition This coalition includes Hezbollah, the Shiite party Amal, the Maronite Christian Free Patriotic Movement, and the Druze-led Progressive Socialist Party (PSP).", "Its members have mostly supported the Asad regime since unrest in Syria began in early 2011, complicating Lebanese politics and Lebanese-Syrian relations.", "Despite these complications, many analysts agree that the major political players in Lebanon share a desire to insulate Lebanon from the unrest in Syria and avoid risking domestic conflict by dramatically upsetting the current Lebanese balance of power.", "However, the fractious nature of Lebanese politics makes discord likely; a small provocation could easily disrupt the tenuous peace. Increased unrest in Syria or dramatic regime change there may incite instability in Lebanon." ], "parent_pair_index": [ -1, -1, 1, -1, 0, 1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 2, 2, 2, 2, 2 ] }

{ "title": [ "Background", "DOD’s Expeditionary Forensic Capabilities", "DOD Policy Governing Its Forensic Enterprise", "DOD Has Taken Steps to Establish an Enduring Expeditionary Forensic Capability, but Additional Actions Are Needed", "DOD Has Issued Guidance but Its Draft Strategic Plan Does Not Include Some Key Elements", "OUSD(AT&L) Has Not Reviewed and Evaluated the Adequacy of Expeditionary Forensic Budget Estimates for Fiscal Years 2013 through 2018", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Comments from the Department of Defense", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "", "Improvised explosive devices have caused numerous injuries and fatalities among U.S. and coalition forces while carrying out operations in Iraq and Afghanistan. To mitigate this threat, DOD has taken a number of actions, such as deploying its expeditionary forensic capabilities. In 2003, DOD established the Combined Explosives Exploitation Cells to provide technical intelligence on improvised explosive devices and render safe these devices and other combustible materials so that they can be forensically analyzed to obtain, among other things, latent fingerprints of the individuals responsible for manufacturing and placing the devices. In 2006, DOD further expanded its use of expeditionary forensics by establishing the joint expeditionary forensic facilities to analyze materials, such as ammunition and clothing items collected on the battlefield, to help identify enemy combatants through latent prints and DNA analysis, among other things. In 2011, DOD consolidated the Combined Explosives Exploitation Cells and the joint expeditionary forensic facilities to form Expeditionary Forensic Laboratories under the purview of the Army in order to realize efficiencies and minimize redundancies. These combined laboratories, like their predecessors, are modular, deployable, containerized units that can operate 24 hours a day, 7 days a week, and provide the capability to forensically analyze material such as latent fingerprints, DNA, explosives, drugs, and firearms and tool marks in response to warfighter needs. Figure 1 shows three of the Expeditionary Forensic Laboratory modules operating in Afghanistan.\nThe Army also established a reachback operations center to oversee the deployment of Expeditionary Forensic Laboratories and to provide forensic expertise and analytical capabilities to process any overflow of forensic cases from Iraq and Afghanistan. In addition to the Army’s expeditionary forensic capabilities, the Navy has provided staff support to the Combined Explosives Exploitation Cells through its Explosive Ordnance Disposal Technical Division. The Marine Corps has relied on the Army’s Expeditionary Forensic Laboratories to forensically analyze material that the Marine Corps has collected on the battlefield for subsequent targeting and prosecutions. The Special Operations Command has developed expeditionary forensic toolkits and exploitation analysis centers as part of its sensitive site exploitation program to collect latent fingerprint and DNA samples, among other things. The Air Force focuses on digital and multimedia forensic applications to support operations such as counterintelligence to process, analyze, and translate data collected from electronic devices. We did not include the Air Force in our review because we focused on the forensic disciplines of latent fingerprints and DNA.", "In 2008, DOD issued a concept of operations that identifies existing, emerging, and future forensic capabilities, and calls for the department to plan for robust, fully-coordinated, and well-resourced forensic applications across the full range of military operations. The concept of operations states that integrating forensics—particularly expeditionary forensics—is necessary to meet current and emerging requirements. The concept of operations identifies several areas that the department needs to address to develop an enduring expeditionary forensic capability, including the following:\nDoctrine—forensic doctrine to address the multiple uses of information, varying timelines, and scientific challenges across the strategic, operational, and tactical levels;\nTraining, Leadership and Education—forensic training and education for all levels of operations, and to ensure leadership understands the value of forensics;\nMateriel—equipment and systems for the collection, transfer, exploitation, dissemination, and storage of forensic material and information; and\nFacilities—deployed and institutional forensic laboratories to meet mission requirements.\nIn an effort to address the areas identified in the concept of operations, in 2009, DOD initiated a capabilities based assessment, which includes validating expeditionary forensic requirements as an enduring capability within the department, through the Joint Capabilities Integration and Development System. This system guides the development of capabilities from a joint perspective, to help identify capability gaps and validate the requirements of proposed capability solutions to mitigate those gaps. As part of this process, from 2011 to 2013, DOD developed and validated an initial capabilities document that contained information on those capabilities needed to support current and future forensic activities across the department—including expeditionary forensics. Furthermore, in early 2013, DOD initiated a change recommendation that will lay out specified required forensic capabilities and projected costs. The process to review and approve the change recommendation is scheduled to begin in January 2014.\nDepartment of Defense, DOD Directive 5205.15E. The directive does not cover unique forensic applications that support technical nuclear or technical chemical and biological disciplines, and specialized intelligence collected through reconnaissance programs.\nIn October, 2011, USD(AT&L) appointed a Director, Defense Biometrics and Forensics, to oversee his responsibilities for the Defense Forensics Enterprise.\nWe did not examine digital and multimedia forensics because it is outside the scope of our review. validate joint requirements for forensic capabilities for the joint force, and coordinate theater-specific requirements for forensic capabilities.", "DOD has taken some important steps to establish an enduring expeditionary forensic capability by issuing a concept of operations, and a directive that calls for a strategic plan addressing DOD’s enterprise-wide forensics, including expeditionary forensics, but has not completed its strategic plan or reviewed and evaluated the adequacy of DOD components’ budget estimates. DOD has drafted a forensic strategic plan; however, it does not include three of the five key elements identified by GAO as integral to a well-developed strategic plan. Specifically, the plan does not include approaches for how the goals and objectives will be achieved, milestones and metrics to gauge progress, and resources needed to achieve the goals and objectives. Also, the forensic strategic plan has been in draft for 2 years without a scheduled completion date. OUSD(AT&L) officials stated that the draft is still undergoing internal review within the department. DOD plans to capture some of the elements of a strategic plan in implementation plans to be developed by DOD components; however, the timeframe for issuance of these implementation plans is unknown since they will follow publication of the strategic plan. In addition, according to DOD’s forensic directive, USD(AT&L) is to review the adequacy of DOD components’ forensic- related acquisition programs and associated budget submissions to ensure they meet DOD’s overarching forensic requirements and objectives. However, at the time of our review, OUSD(AT&L) had not reviewed and evaluated forensic budget estimates for fiscal years 2013 through 2018 to ensure they meet the Defense Forensic Enterprise requirements and objectives. OUSD(AT&L) officials said that they had difficulty identifying forensic activities that are not specifically cited within the DOD components’ forensic budget estimates. Further, OUSD(AT&L) officials said that while the DOD directive calls for OUSD(AT&L) to conduct a review of forensic-related programs and budget submissions, it does not provide guidance on how forensic budget data should be collected and reported by the DOD components.", "DOD has taken some important steps to establish an expeditionary forensic capability by issuing a concept of operations in 2008 and a directive in 2011 to establish policy and assign responsibilities. Consistent with the directive, DOD has drafted a strategic plan to guide the activities of the Defense Forensic Enterprise, including expeditionary forensics. However, DOD’s strategic plan does not include three of the five key elements identified by GAO as integral to a well-developed strategic plan. The plan includes a mission statement and goals and objectives, but does not include approaches for how these goals and objectives will be achieved, milestones and metrics to gauge progress, and resources (e.g., funding and personnel) needed to achieve these goals and objectives. GAO’s prior work on strategic planning has shown that organizations need a well-developed strategic plan to identify and achieve their goals Table 1, below, lists the key and objectives effectively and efficiently.elements of a strategic plan and indicates those that are and are not included in DOD’s draft strategic plan for the Defense Forensic Enterprise.\nConsistent with these criteria, the draft strategic plan includes a mission statement and four broad goals that outline DOD’s intent to meet the department’s overarching needs for the Defense Forensic Enterprise. These goals are to (1) provide forensic information that is accurate and timely, (2) develop cost-effective methods for providing forensic capabilities, (3) maximize the availability and accessibility of forensic- related information, and (4) invest in forensic research and technology. The strategic plan also includes a number of subordinate objectives that are linked to the four goals. However, the strategic plan does not include some key elements, such as approaches for how the objectives will be achieved, milestones and metrics to gauge DOD’s progress, and the resources needed to meet its goals and objectives. For example, the two objectives under the plan’s third goal—to maximize the availability and accessibility of forensic-related information—call for creating and promoting a forensic information-sharing culture that supports multiple users within DOD as well as with interagency and international partners. However, these objectives neither describe an approach for accomplishing them, nor include milestones, metrics, and resources. Without these key elements, DOD will be unable to measure its progress and adjust its approach when warranted, and identify the resources necessary to achieve the goals and objectives outlined in the strategic plan. Consequently, DOD may not have the information it needs to make well-informed decisions about forensics, including setting priorities for expeditionary forensic capabilities in an increasingly constrained fiscal environment.\nThe April 2011 DOD directive assigned OUSD(AT&L) responsibility for coordinating and publishing the DOD enterprisewide forensics strategic plan. An OUSD(AT&L) official stated that his office decided to create a concise, high-level strategic plan that included broad goals and subordinate objectives, but not milestones. According to this official, this decision was consistent with several other DOD strategic documents including the National Defense Strategy. OUSD(AT&L) officials said that after the strategic plan is issued, their office plans to issue guidance that will task the DOD components to develop individual implementation plans that include milestones. However, neither the draft strategic plan nor the proposed implementation plans would include approaches for how the goals and objectives will be achieved, metrics to gauge DOD’s progress, or the resources needed to accomplish its goals and objectives. Based on our observations of the draft guidance, OUSD(AT&L) is revising its guidance to direct the DOD components to include approaches and metrics, in addition to milestones, in their proposed implementation plans. OUSD(AT&L) officials explained that resource information will continue to be omitted because OUSD(AT&L) does not have the authority to direct the DOD components on how to allocate their resources. However, OUSD(AT&L) can advise DOD components’ resourcing decisions in a manner consistent with the goals and objectives articulated in the Defense Forensic Enterprise strategic plan.\nThe concept of operations, forensic directive, and strategic plan are important actions DOD has taken to establish expeditionary forensics as an enduring capability since 2008. However, the forensic strategic plan has undergone multiple revisions and has been in draft for 2 years. An OUSD(AT&L) official said that a publication date has not been set for the strategic plan, and by extension, a publication date has not been set for the proposed DOD component implementation plans. OUSD(AT&L) officials stated that the draft is still undergoing internal review within the department. GAO’s Standards for Internal Control in the Federal Government notes that organizations must have relevant, reliable, and timely information to achieve their goals and objectives. Otherwise, their ability to achieve their goals and objectives can be adversely affected.\nIn the absence of an approved forensic strategic plan, and in accordance with DOD’s forensic directive, several of the military services and combatant commands have been independently developing guidance and plans to address their specific expeditionary forensic needs as shown in the following examples.\nThe Army, as the DOD Executive Agent for Forensics, is developing guidance that includes a process for identifying and prioritizing DOD’s expeditionary forensic requirements and capabilities that are common to all of the DOD components.\nThe Marine Corps issued an identity operations strategy that includes a discussion of expeditionary forensic force structure and equipment considerations.\nThe Special Operations Command established a program with funding and issued guidance on sensitive site exploitation that includes training and education, and equipment such as forensic toolkits for expeditionary forensic activities.\nAfrica Command issued guidance to support requests for conducting forensic activities on behalf of foreign partners in Africa.\nEuropean Command published guidance on using forensic capabilities to support operations in Europe.\nAdditionally, the DOD forensic directive established a Forensic Executive Committee, in 2011, to, among other things, facilitate the coordination of forensic activities throughout DOD. At the time of our review, the Forensic Executive Committee had not met because, according to an OUSD(AT&L) official, there had not been any significant issues on forensic activities that required the attention of OUSD(AT&L) senior leadership. OUSD(AT&L) created a Coordination Steering Group in 2011 as a forum for DOD components to collectively identify and prioritize issues, analyze alternatives, and develop recommendations for approval by the Forensic Executive Committee. The Coordination Steering Group has created working groups to examine performance metrics, research and development efforts, and policy related to maintaining an enduring expeditionary forensic capability. OUSD(AT&L) officials stated that the Coordination Steering Group has reviewed the draft strategic plan and provided its comments. Nonetheless, the lack of an approved strategic plan, and associated implementation plans, limits DOD’s ability to effectively and efficiently prioritize its efforts to develop an enduring expeditionary forensic capability by the end of 2014.", "OUSD(AT&L) has not reviewed and evaluated the adequacy of the DOD components’ expeditionary forensic budget estimates for fiscal years 2013 through 2018. As required by the directive, USD(AT&L) is to review the adequacy of forensic-related acquisition programs and associated budget submissions to ensure they meet the Defense Forensic Enterprise requirements and objectives. At the time of our review, OUSD(AT&L) officials stated that they had most recently reviewed the DOD components’ fiscal year 2012 forensic budget estimates, which includes expeditionary forensic budget data. In addition, OUSD(AT&L) officials said that they had requested the DOD components’ forensic budget estimates for fiscal year 2013, but had not reviewed and evaluated these estimates to ensure they meet the Defense Forensic Enterprise requirements and objectives because the department was operating under a continuing resolution and therefore was adhering to fiscal year 2012 budget levels. However, OUSD(AT&L) officials stated that they had not reviewed and evaluated the adequacy of the DOD components’ expeditionary proposed forensic budget estimates for fiscal years 2014 through 2018, and had not issued a data call to obtain this information from the DOD components until our formal request in September 2012 in order to conduct our review. Based on the data from our formal request, OUSD(AT&L) officials estimated that the DOD components need about $363.5 million to fund expeditionary forensic capabilities from fiscal years 2013 through 2018; however, this conclusion was drawn without OUSD(AT&L) evaluating the data. OUSD(AT&L) officials said that they had not reviewed and evaluated DOD components’ forensic budget estimates because, among other things, OUSD(AT&L) was waiting for the DOD components to finalize their proposed budget estimates for fiscal years 2014 through 2018, and waiting for the Joint Capabilities Integration and Development System to validate their forensic requirements. Regardless of not having validated forensic requirements, reviewing and evaluating the DOD components’ proposed budget estimates allows OUSD(AT&L) to advise the DOD components on their resource allocation decisions with respect to expeditionary forensic capabilities and ascertain whether the proposed funding is adequate to meet the department’s overarching requirements and objectives. Moreover, DOD officials have noted the need to establish base funding for expeditionary forensic capabilities in advance of expected reductions in Overseas Contingency Operations funding. Given the competition for limited resources within their base budgets, DOD officials said that if the department does not take proactive measures to reprogram funds for expeditionary forensic activities from Overseas Contingency Operations to base budget accounts, the military services will experience a significant funding gap that could limit their ability to respond to current and future warfighting requirements.\nOUSD(AT&L) officials cited several factors that also affected their ability to review and evaluate the DOD components’ forensic budget data, including expeditionary forensics. For example, the DOD components’ budget estimates for expeditionary forensics are often aggregated with other costs and distributed across numerous budget accounts that are not explicitly identified as forensic activities. As a result, these officials noted the difficulty in being able to identify forensic activities within operation and maintenance accounts. In addition, these officials cited issues in determining which types of forensic-related costs to identify, such as training, research and development, and information systems. We also identified similar issues concerning the reliability of the forensic budget data.\nOUSD(AT&L) officials said that if DOD components were instructed to collect budget data on forensic activities, such as Expeditionary Forensic Laboratories, training, personnel, and research and development, then OUSD(AT&L) would be better positioned to review and evaluate their forensic budget estimates. However, OUSD(AT&L) said the DOD components do not have guidance on collecting and reporting their expeditionary forensic activities. Furthermore, the DOD directive does not include instructions on collecting and reporting forensic budget data. According to GAO’s Standards for Internal Control in the Federal Government, agencies should provide policy and guidance to determine the effectiveness and efficiency of operations, including the use of resources needed to achieve their goals. Without collection and reporting guidance, OUSD(AT&L) will continue to experience challenges with reviewing and evaluating the costs associated with DOD’s expeditionary forensic capabilities.", "DOD recognizes the value of expeditionary forensics for identifying and targeting enemy combatants and terrorists, and has taken actions to establish expeditionary forensics as an enduring capability across the full range of military operations by the end of 2014. To achieve a coordinated, holistic approach across the department, DOD has issued a forensic directive that requires, among other things, USD(AT&L) to publish a strategic plan and review the adequacy of forensic-related acquisition programs and associated budget submissions. However, the strategic plan has been in draft for 2 years with no publication date set—and by extension, no publication date has been set for the proposed implementation plans. Further, without key elements, such as approaches, milestones and metrics, and identification of needed resources, DOD will be unable to measure its progress and adjust its approach and resourcing as necessary to achieve the goals and objectives outlined in the forensic strategic plan. In the absence of an approved strategic plan, several military services and combatant commands have been independently developing their own guidance and plans to inform their specific forensic activities. Further, because USD(AT&L) has not reviewed and evaluated the adequacy of the DOD components’ expeditionary forensic budget estimates, there is no assurance that these proposed budget estimates are consistent with one another and with the department’s overarching goals and objectives. As a result, DOD’s ability to fund its expeditionary forensic requirements in the most efficient and effective manner may be adversely affected.", "As DOD establishes an enduring expeditionary forensic capability prior to the projected drawdown of operations in Afghanistan by the end of 2014, we recommend that the Secretary of Defense direct the Under Secretary of Defense for Acquisition, Technology, and Logistics to take the following four actions: Incorporate key elements in its forensic strategic plan, implementation plans, and other associated guidance that are currently absent including approaches for achieving goals and objectives, milestones and metrics to gauge the department’s progress, and resources needed to meet its goals and objectives.\nSet a date to publish the strategic plan for the Defense Forensic Enterprise.\nPeriodically review and evaluate the DOD components’ proposed forensic budget estimates—including expeditionary forensics—to help ensure the department’s overarching requirements and objectives will be met, in accordance with the DOD Defense Forensic Enterprise directive.\nIssue guidance on how DOD components are to collect and report their forensic budget data—including expeditionary forensic budget data.", "In written comments on this draft, DOD agreed with all four of our recommendations and discussed steps it plans to take to address these recommendations. DOD’s written comments are reprinted in their entirety in appendix II. DOD also provided technical comments, which we have incorporated into the report where appropriate.\nDOD concurred with our first recommendation that the Secretary of Defense direct the Under Secretary of Defense for Acquisition, Technology, and Logistics to incorporate key elements which are currently absent in its forensic strategic plan, implementation plans and other associated guidance. DOD stated that upon approval of the Defense Forensic Enterprise Strategic Plan, it will begin drafting the forensic strategy’s implementation plan to include specific priorities and tasks that support the goals and objectives of the strategic plan. The forensics implementation plan also will assign an office of primary responsibility to accomplish each task, propose milestones, develop success metrics, and estimate required resources.\nDOD concurred with our second recommendation to the Secretary of Defense to direct the Under Secretary of Defense for Acquisition, Technology, and Logistics to set a date to publish the strategic plan for the Defense Forensic Enterprise and stated that it anticipates publishing the Defense Forensic Enterprise Strategic Plan prior to the end of fiscal year 2013.\nDOD concurred with our third recommendation to the Secretary of Defense to direct the Under Secretary of Defense for Acquisition, Technology, and Logistics to periodically review and evaluate the DOD components’ proposed forensic budget estimates—including expeditionary forensics—to help ensure the department’s overarching requirements and objectives will be met in accordance with the DOD Defense Forensic Enterprise directive. DOD said that the Under Secretary, Comptroller, the Joint Staff, and the military services will coordinate to identify mechanisms to more efficiently and reliably review DOD components’ proposed forensic budget estimates against validated requirements. While we are encouraged with DOD’s decision, we believe that it is important that DOD schedule its reviews at regular intervals, in accordance with the Defense Forensic Enterprise directive.\nDOD concurred with our fourth recommendation to the Secretary of Defense to direct the Under Secretary of Defense for Acquisition, Technology, and Logistics to issue guidance on how DOD components are to collect and report their forensic budget data—including expeditionary forensic budget data. DOD stated that the Under Secretary, Comptroller, and the military services will coordinate to develop and issue guidance on reporting forensic budget data prior to the beginning of the fiscal year 2016 budget planning cycle.\nWe are sending copies of this report to appropriate congressional committees; the Secretary of Defense; the Under Secretary of Defense for Acquisition, Technology and Logistics; the Chairman, Joint Chiefs of Staff; the Secretaries of the Army, the Navy, and the Air Force; the Commandant of the Marine Corps; and the Director, Office of Management and Budget. In addition, this report will be available at no charge on the GAO Website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-4523 or at [email protected]. Contact points for our Office of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix III.", "To assess the steps DOD has taken to establish an enduring expeditionary forensic capability, we analyzed relevant policies and guidance from the Office of the Secretary of Defense, such as the Department of Defense’s (DOD) forensic directive, draft strategic plan for the Defense Forensic Enterprise, and the capstone concept of operations for forensics. In addition, we analyzed relevant Army, Marine Corps, and combatant command plans, policies and guidance that describe DOD’s efforts to organize, train, and equip forces to carry out expeditionary forensic activities. To understand DOD’s current expeditionary forensic capabilities, including those of the Expeditionary Forensic Laboratories, we visited the Army’s Criminal Investigation Laboratory at Fort Gillem, Georgia, which is primarily responsible for conducting both traditional and expeditionary forensic activities for the department and is known as DOD’s forensic science center of excellence. We also met with officials from CNA’s Center for Naval Analyses to discuss their efforts to review DOD’s overall defense forensic activities. Further, we interviewed officials from the DOD organizations identified in table 2 to discuss DOD’s efforts to establish an enduring expeditionary forensic capability.\nWe also reviewed and analyzed the military services’ and Special Operations Command’s current and projected forensic budget estimates to determine if the data were sufficiently reliable and met the department’s requirements in the DOD forensic directive. We assessed the reliability of this budget data by interviewing knowledgeable officials and reviewing related documentation and written responses to our questions on data reliability. We identified several issues concerning the reliability of the budget data obtained from Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics (OUSD(AT&L)), the military services and Special Operations Command, including the sources from which the data were derived, the consistency in how the data were compiled, and the manner in which the data were verified. As a result, we determined that the data were not sufficiently reliable. Therefore, we are making a recommendation that addresses OUSD(AT&L)’s ability to review and evaluate the DOD components’ forensic budget data by calling for the development of budget collecting and reporting guidance.\nWe interviewed officials from the Department of Justice, Federal Bureau of Investigation, and Department of Homeland Security to obtain their perspective on DOD’s efforts to develop an expeditionary forensic capability. We also met with officials from the National Science and Technology Council within the Executive Office of the President to gain an understanding of national policy trends on forensics.\nWe conducted this performance audit from May 2012 through June 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, Marc Schwartz, Assistant Director; Grace Coleman; Latrealle Lee; Alberto Leff; Amber Lopez Roberts; Tim Persons; Terry Richardson; Amie Steele; Sabrina Streagle; John Van Schaik; and Nicole Willems made key contributions to this report.", "Afghanistan: Key Oversight Issues, GAO-13-218SP. Washington, D.C.: February 11, 2013.\nCounter-Improvised Explosive Devices: Multiple DOD Organizations Are Developing Numerous Initiatives. GAO-12-861R. Washington, D.C.: August 1, 2012.\nUrgent Warfighter Needs: Opportunities Exist to Expedite Development of Fielding of Joint Capabilities. GAO-12-385. Washington, D.C.: April 24, 2012.\nDefense Biometrics: Additional Training for Leaders and More Timely Transmission of Data Could Enhance the Use of Biometrics in Afghanistan. GAO-12-442. Washington, D.C.: April 23, 2012.\nDefense Biometrics: DOD Can Better Conform to Standards and Share Biometric Information with Federal Agencies. GAO-11-276. Washington, D.C.: March 31, 2011.\nWarfighter Support: Actions Needed to Improve Visibility and Coordination of DOD’s Counter-Improvised Explosive Device Efforts. GAO-10-95. Washington, D.C.: October 29, 2009.\nDefense Management: DOD Can Establish More Guidance for Biometrics Collection and Explore Broader Data Sharing. GAO-09-49. Washington, D.C.: October 15, 2008.\nDefense Management: DOD Needs to Establish Clear Goals and Objectives, Guidance, and a Designated Budget to Manage Its Biometrics Activities. GAO-08-1065. Washington, D.C: September 26, 2008." ], "depth": [ 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h2_title", "h2_full", "", "h0_title h2_full h1_title", "h0_full", "h0_full h1_full", "h2_full", "h2_full h1_full", "", "h2_full", "", "", "", "", "" ] }

{ "question": [ "What steps has DOD taken to establish an enduring expeditionary forensic capability?", "What did this directive require?", "To what extent is this plan adequate?", "Why does GAO consider this plan inadequate?", "What did officials in the OUSD say in regards to creating a strategic plan?", "What did their stated plan lack?", "How do these inadequacies limit DOD?", "How has OUSD failed to act according DOD's directive?", "How did OUSD officials justify this?", "What would these evaluations provide for OUSD officials?", "What issues did OUSD officials cite?", "What do GAO's Standards for Internal Control note?", "What does this indicate for OUSD operations in the future?", "How did the DOD use expeditionary forensics in Iraq and Afghanistan?", "What led to increased demand for expeditionary forensics?", "How are the DOD's expeditionary forensic activities funded?", "How is this funding expected to change by the end of 2014?", "What did the DOD doing in response to this change?", "What was GAO asked to report?", "How did GAO address this?" ], "summary": [ "The Department of Defense (DOD) has taken some important steps to establish an enduring expeditionary forensic capability by issuing a concept of operations in 2008, followed by a directive in 2011 to establish policy and assign responsibilities.", "As required by the directive, DOD has drafted a strategic plan to guide the activities of the Defense Forensic Enterprise, including expeditionary forensics.", "Although the plan includes a mission statement, and goals and objectives--two of the five key elements identified by GAO as integral to a well-developed strategic plan--it does not identify approaches for how goals and objectives will be achieved, milestones and metrics to gauge progress, and resources needed to achieve goals and objectives.", "GAO's prior work has shown that organizations need a well-developed strategic plan to identify and achieve their goals and objectives effectively and efficiently.", "Officials in the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics (OUSD(AT&L)) said that they decided to create a concise, high-level strategic plan and that they plan to issue guidance tasking the DOD components to develop individual implementation plans that include milestones.", "However, approaches, metrics, and resources needed to accomplish its goals and objectives were absent from the draft guidance. GAO discussed this omission with OUSD(AT&L), and in response, this office plans to revise its draft guidance. Also, the forensic strategic plan has been in draft for 2 years having undergone multiple revisions, and is still undergoing DOD internal review with no publication date set, and by extension, a publication date has not been set for the proposed DOD component implementation plans.", "The lack of an approved strategic plan and associated implementation plans limits DOD's ability to prioritize its efforts to develop an enduring expeditionary forensic capability by the end of 2014.", "Moreover, OUSD(AT&L) has not reviewed and evaluated the adequacy of DOD components' expeditionary forensic budget estimates for fiscal years 2013 through 2018, as required by DOD's directive.", "OUSD(AT&L) officials said that they were waiting for the DOD components to finalize their budget estimates for fiscal years 2013 through 2018, and waiting for the Joint Capabilities Integration Development System to validate their forensic requirements.", "Regardless, reviewing and evaluating the DOD components' proposed budget estimates allows OUSD(AT&L) to advise the DOD components on their resource allocation decisions with respect to expeditionary forensic capabilities.", "OUSD(AT&L) officials cited several factors that also affected their ability to review and evaluate the DOD components' forensic budget data, such as aggregation of components' forensic budget estimates with other costs. Moreover, these officials said the directive does not provide guidance to DOD components on how to collect and report forensic budget data.", "GAO's Standards for Internal Control in the Federal Government notes that agencies should provide policy and guidance to determine the effectiveness and efficiency of operations.", "Until OUSD(AT&L) reviews and evaluates the adequacy of DOD components' forensic budget estimates, and guidance is in place to inform forensic budget collection and reporting, OUSD(AT&L) will continue to experience challenges with identifying the costs associated with DOD's expeditionary forensic capabilities.", "DOD used expeditionary forensics for collecting fingerprints and deoxyribonucleic acid (DNA) to identify, target, and disrupt terrorists and enemy combatants in Iraq and Afghanistan.", "The increased incidence of improvised explosive devices and other asymmetric threats has increased demand for expeditionary forensic capabilities.", "Many of DOD's expeditionary forensic activities are resourced through DOD's Overseas Contingency Operations funds. DOD estimates that it cost between $800 million and $1 billion of these funds from 2005 through 2012 to support expeditionary forensics activities in Iraq and Afghanistan.", "However, as military operations are projected to draw down in Afghanistan, this funding is expected to substantially decline by the end of 2014.", "Consequently, DOD is taking steps to establish expeditionary forensics as an enduring capability in DOD's base budget.", "GAO was asked to examine DOD's expeditionary forensic capability. This report assessed the extent to which DOD has taken steps to establish an enduring expeditionary forensic capability.", "To address this objective, GAO reviewed relevant policy, plans, and budget estimates, and interviewed cognizant DOD officials." ], "parent_pair_index": [ -1, 0, 1, 1, -1, 4, 5, -1, 0, 0, 0, -1, 4, -1, 0, -1, 2, 3, -1, 5 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 0, 0, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Energy Sector Lending at the World Bank", "Current Practices", "Critiques", "Developing Countries", "Developed Countries", "Environmental Groups", "The World Bank Group's \"Energy Sector Strategy\"", "Timeline for the Strategy", "Provisions in the Strategy", "Reactions to the Strategy", "Developing Countries", "Developed Countries", "Environmental Groups", "Issues for Congress" ], "paragraphs": [ "", "Over the past several decades, sustainable energy and environmental issues have gained an increasing level of attention in international humanitarian and development assistance, as countries have tried to integrate poverty reduction and economic growth initiatives with a shared concern for the global environment. This integration is reflected in several international conventions including the 1972 United Nations Conference on the Human Environment (the Stockholm Convention), the 1992 United Nations Conference on Environment and Development (the Rio Convention), the 1992 United Nations Framework Convention on Climate Change (UNFCCC), and the 2002 World Summit on Sustainable Development (the Johannesburg Summit), among others. Donor countries, including the United States, that provide financial assistance to lower-income countries to aid in their economic development, have increasingly targeted projects that address the full range of economic growth indicators. These indicators include financial viability, social inclusivity, and environmental sustainability at both the local and the global level. The World Bank Group (WBG), as the world's largest multilateral lending institution for development assistance, sits at the nexus of these efforts.\nAs an international organization, the WBG is generally exempt from U.S. law. However, the United States—through its role as a financial contributor to the WBG and as a member on the various WBG governing boards—has influence on WBG policy. This influence manifests itself through voting power on the Board, general advocacy, reporting requirements, and financial leverage. Through these efforts, various U.S. Administrations have focused on the institution's lending practices as a means to induce greater environmental sustainability in multilateral development assistance. Similarly, the U.S. Congress—through its role in WBG appointments, appropriations, and legislative guidance—has significant input on these issues.\nCongressional debate over the WBG's environmental practices is long-running. As early as 1983, a campaign to call attention to environmental problems caused by WBG projects was undertaken by several U.S. environmental groups, including the Sierra Club, Environmental Defense Fund, National Wildlife Federation, Natural Resources Defense Council, and others. The U.S. Congress subsequently held hearings on the issues documented by these groups, and began a process that saw annual investigations by a wide range of committees, including those on banking, foreign affairs and foreign relations, appropriations, environment, and others. Witnesses included environmental groups from the United States and affected countries and the U.S. officials charged with directing U.S. participation in the WBG institutions. When asked by Congress to look into the problems identified by environmental groups, U.S. Treasury officials also became concerned about possible negative environmental impacts of WBG projects—a subject that had received little or no official attention at that time.\nBeginning in the mid-1980s and continuing to the present, Congress has passed a succession of laws that aim to influence environmental practices at the WBG. Legislative guidance to help direct the U.S. officials in encouraging and promoting sustainability goals at WBG institutions has been included in many authorizing legislations and annual foreign operations appropriations bills. The primary legislative vehicle for U.S. interaction with the WBG has been the International Financial Institutions Act of 1977, as amended ( P.L. 95-118 ), as well as various annual appropriations acts, provisions of which are found in the U.S. Code, Title 22, Chapter 7. The U.S. Code has several sections related to energy and environmental issues at the WBG, including guidance for the sustainable use of natural resources and the protection of the environment, public health, and the status of indigenous peoples in developing countries; requirements for environmental impact assessments and the identification of proposals likely to have adverse impacts; mandates for the creation of information exchange systems among countries and civil society organizations related to the environment; promotions for loans supporting environmentally beneficial policies, projects, and project components; and directives to adopt and implement greenhouse gas accounting in analyzing the benefits and costs of individual projects and ensure the expansion of activities supporting climate change mitigation.\nThrough the years, the WBG has incorporated guidance provided by the U.S. Congress via the U.S. Executive Directors in various lending reforms and operational policies. In 2009, U.S. environmental guidance—as well as other internal and external pressures—led to the WBG reporting its intentions to revise its decade-old strategy for energy and infrastructure lending. After releasing an Energy Strategy Approach Paper in October 2009, and consulting with government and civil society stakeholders from January 2010 to July 2010, a strategy document, Energizing Sustainable Development: Energy Sector Strategy of the World Bank Group (ESS), dated March 16, 2011, was presented to the WBG Committee on Development Effectiveness (CODE) on April 11, 2011, for consent and subsequent delivery to the WBG Board of Executive Directors for a vote during the summer of 2011. The ESS, however, stalled during debate in CODE. With the appointment of Jim Yong Kim as the 12th President of the World Bank Group on July 1, 2012, the ESS process was discontinued. Efforts to revise energy and infrastructure lending have since been incorporated into the broader initiatives of the new administration.\nThis report summarizes the provisions of the proposed Energy Sector Strategy of the World Bank Group. It situates the strategy within current WBG lending practices and in response to various stakeholder critiques. A final section outlines issues for Congress.", "The core mission of the World Bank Group, as stated in its literature and outreach, is poverty alleviation and environmentally sustainable development. Research shows an estimated 1.4 billion people worldwide (i.e., 20% of the world population) are without access to electricity or modern energy resources, and many more face recurrent supply disruptions. Demand for primary energy is estimated to increase by 80% in lower-income countries by 2035, and achieving universal access to electricity is estimated to require an additional annual average investment of $36 billion. Also, approximately 3 billion people continue to rely on traditional solid fuels for heating and cooking, with estimates that nearly 2 million die annually, and many more fall ill, from indoor air pollution caused by this practice. Further, it is speculated that lower-income countries may bear up to 80% of the cost of future damages caused by global climate change. Research suggests that energy-saving policies and low-emission technologies could be ways for meeting future energy needs in a globally sustainable manner as well as for mitigating local environmental problems associated with energy production and use. The WBG claims that achieving these goals could contribute significantly to eradicating poverty and hunger, supporting primary education, promoting gender equity, combating disease, and ensuring environmental stability, as well as increasing entrepreneurial business activities and economic development in lower-income countries.\nBut World Bank environmental strategies are not without their critics. Throughout the years, many of the WBG's lending practices have supported projects with potentially negative environmental implications. Road construction, large dams, fossil-fuel power generation, mining and extractive industries, and agricultural and forestry projects sponsored by WBG lending have been criticized by many who believe they are not only environmentally destructive, but are often harmful to large segments of the population in the societies they are intended to help (e.g., farm fertility may be harmed by unsustainable agriculture practices, soil may be contaminated by adjacent energy or mining industries, fisheries may be affected by pollution from excess fertilizer use or industrial runoff).", "World Bank Group lending for energy infrastructure projects totaled $13 billion in 2010. Projects included investment in upstream exploration, new and retrofitted facilities for power generation, transmission and distribution systems, demand side management and energy efficiency programs, and policy and technical advice. Energy lending currently accounts for 17% of the WBG's investment portfolio (see Figure 1 ), and has grown steadily over the past decade (e.g., energy sector lending averaged approximately $2.4 billion annually from 2000-2004, and accounted for roughly 4%-6% of the WBG's investment portfolio during those years). In 2003, at the request of the Board of Executive Directors, WBG management established an Infrastructure Action Plan to revitalize the WBG's engagement with the energy sector. Further, in response to the global financial and economic crisis, the WBG launched the Infrastructure Recovery and Assets Platform in April 2009 (to support counter-cyclical spending on infrastructure) and the Infrastructure Crisis Facility in December 2009 (to ensure the availability of long-term debt to support private infrastructure projects affected by capital shortages). Due in part to these initiatives, total commitments in the sector have grown significantly. Figure 2 presents recent lending figures by energy sector. See also Appendix B for numerical data related to lending by sector, by financing institution, and by geographic region.\nThe WBG reported that 2010 marked an all-time record in renewable energy and energy efficiency financing, as well as a new record in low carbon financing. Figures for new investment showed a 62% increase in low carbon commitments to $5.5 billion compared to 2009, and low carbon energy financing accounted for 42% of all 2010 commitments. Additionally, 30 out of 34 country assistance and partnership strategies prepared in 2010 addressed climate change and sustainable development. However, critics noted that the WBG's \"low carbon financing\" category funded fossil fuel projects that supported increased use of \"cleaner\" fuels to displace more carbon intensive ones. Similarly, focusing solely on the categories for \"renewable energy\" and \"energy efficiency,\" rather than the broader category for \"low carbon,\" showed a decrease in these sectors' shares of total energy investment, from 39% in 2009 to 26% in 2010. Likewise, while renewable energy and energy efficiency financing established all-time highs in 2010, at $1.6 billion and $1.8 billion respectively, so did new fossil fuel thermal power generation, up to $4.3 billion, a fourfold increase over 2009.\nThe WBG promoted additional initiatives during 2010 as having supported increased energy access and environmentally sustainable development. These included (1) the World Bank Carbon Finance Unit, which backed 250 projects through the purchase of carbon credits representing a monitored 141 million tons of greenhouse gas emissions; (2) the Climate Investment Funds, a trust-funded global partnership hosted by the World Bank, which assisted countries' transitions toward low carbon and climate-resilient development; (3) the World Bank Forest Carbon Partnership Facility, which mobilized $165 million for capacity building and performance-based payments to pilot projects in forest and land management; (4) the Global Facility for Disaster Risk Reduction and Recovery, another trust-funded global partnership hosted by the World Bank, which promoted the integration of climate risk management into the WBG's development efforts; and (5) the Global Environment Facility, another trust-funded global partnership hosted in part by the World Bank since 1991, which assisted countries with environmental projects related to six areas: biodiversity, climate change, international waters, the ozone layer, land degradation, and persistent organic pollutants.", "", "Many lower-income countries continue to view the WBG primarily as a financial institution to assist in poverty alleviation and economic development, not as an organization to address environmental issues. They may be interested in low-cost, high-growth energy and infrastructure technologies that can rapidly and reliably deliver benefits to their target populations over short time periods. For this reason, they may be concerned that an emphasis on renewable energy, such as solar power, wind, and biofuels, may not sufficiently meet the growing demand for electricity in an affordable and reliable manner. They may view renewable alternatives with skepticism—especially if they are not widely used in industrialized economies—and they may likely prefer more traditional fossil fuel-based options, even if the consequences on long-term sustainability are more damaging. Additionally, they may see efforts by industrialized countries to require measurement, reporting, and verification of greenhouse gas emissions and other environmental pollutants as an unnecessary burden on short-term project development, economic growth, and national sovereignty.", "There are some segments in higher-income countries that support the economic growth arguments of developing countries, and see little need for investment in low-carbon or renewable energy technologies. Further, some observers are opposed to the practice of foreign aid in general. They argue that grant and loan-based financial assistance is a detriment to economic growth in developing countries because it removes incentives, institutes dependency, and fuels corruption.\nOther segments, including recent U.S. Administrations, have generally supported the environmental efforts of the WBG and have followed its progress on such initiatives as (1) the updating and consolidating of its environmental and social safeguard policies into an integrated environmental and social policy framework, (2) the updating of its energy sector strategy, and (3) the development of the \"World Bank Framework and IFC Strategy for Engagement in the Palm Oil Sector,\" which would guide future engagement in the sector following the September 2009 moratorium on new investments. The United States is also seeking to strengthen the IFC's environmental and social performance standards as well as its Policy and Performance Standards on Environmental and Social Sustainability and its Access to Information Policy. The United States continues to work with the World Bank to ensure that its lending practices reinforce efforts to promote lower carbon development pathways, and has recently provided a policy document which suggests baseline requirements for fossil-fuel projects, Guidance to Multilateral Development Banks for Engaging with Developing Countries on Coal-fired Power Generation . (See Appendix C for provisions in the U.S. guidance.) The greatest concern of developed countries often tends to be the dislocation between the WBG's stated policies and its subsequent actions—a dislocation often characterized as a split between its visionary or aspirational flagship studies for external audiences and its internally operational practices. In this regard, some countries suggest that any practical guidance for the WBG's engagement in the energy and environment sector should be grounded in regional and country programs, as well as in its Strategic Framework for Development and Climate Change.", "Many environmental observers claim that the history of the WBG's energy and infrastructure lending wholly undermines its credibility as an institution committed to combating the impacts of environmental degradation and climate change. Environmental groups often highlight the inconsistencies between the WBG's rhetoric on climate change and sustainable development and its operational policies and practices. They emphasize that while the WBG may have increased financing for renewable energy and energy efficiency in recent years, its fossil fuel lending still accounts for a large portion of its portfolio (see Appendix B for a comparison of energy sector investments). They argue that the controversy is compounded by the WBG's inability to reach a consensus on the definition of \"clean energy technology,\" retaining provisions for natural gas and ultra-supercritical coal-fired power generation in its sustainability strategies.\nFurther, some environmental groups contend that the WBG misrepresents its practices when reporting information on energy access, environmentally sustainable development, and clean energy projects. They claim that WBG investment is more heavily weighted in favor of fossil fuels than officially reported because the institutions do not provide accurate accounting for fossil fuel development in such lending categories as \"transmission and distribution\" and \"policy and technical assistance.\" Likewise, critics claim that the WBG fails to account for fossil fuel investments that are taking place through financial intermediaries (i.e., arrangements for loans or equity financing to a foreign entity such as a local commercial bank, private equity fund, or special government managed fund). Critics suggest that financial intermediary arrangements may represent a substantial portion of WBG funding. For example, the Bank Information Center reports that financial intermediary funding comprises over 40% of investments by the International Finance Corporation, the WBG's private sector lending arm. Finally, critics argue that the WBG misrepresents its lending for energy efficiency and renewable energy technologies, contending that the greater part of these programs are financed through specific donor funds, such as the Global Environment Facility and the Climate Investment Funds, that are not structurally a part of the WBG.\nMany observers agree that continued investment by the WBG in fossil fuel energy and infrastructure may have several unintended effects, including (1) counteracting any gains made with the WBG's renewable portfolio, (2) directing resources toward large-scale power generation for industrial use rather than energy access and poverty reduction in poor urban and rural communities, and (3) drawing the WBG's professional and technical staff away from a concentration on energy efficiency and renewable energy activities to remain involved with fossil fuel generation.", "", "The core mission of the World Bank Group is poverty alleviation and environmentally sustainable development, as introduced through the Millennium Development Goals. As a reflection of this mission statement, the WBG has sought to devise a strategy for financing energy and infrastructure projects that could best address these two concerns. Over the past few years, through research and analysis both internal and external, the WBG has surmised that a departure from existing energy policy and lending approaches would be required in order to (1) provide adequate, equitable, and reliable energy for future economic development and poverty reduction; (2) extend energy access and support household energy programs; (3) ensure the long-term environmental sustainability of the energy sector; and (4) address global climate change. For these purposes, the WBG set forth to prepare an updated energy sector strategy, as the existing framework—provided in a 1999 document, Fuel for Thought (FFT), and an informal 2001 paper entitled The World Bank Group's Energy Program: Poverty Alleviation, Sustainability, and Selectivity— dated back over a decade. An Energy Strategy Approach Paper was released in the fall of 2009. The WBG held a series of meetings, videoconferences, and other events during a consultations phase from January 2010 to July 2010 in which a reported 2,100 participants from government, civil society, the private sector, and academia were surveyed through 50 face-to-face meetings and 170 written submissions.\nThe revised strategy, Energizing Sustainable Development: Energy Sector Strategy of the World Bank Group (ESS), was presented to the WBG Board Committee on Development Effectiveness (CODE) on April 11, 2011, for consent and subsequent delivery to the WBG Executive Board for a vote. Prior WBG statements had mentioned a proposed second consultation phase between the presentation to CODE and delivery to the Executive Board. The ESS, however, stalled during debate in CODE. According to the WBG's website, as of April 11, 2011, \"The World Bank Group's Board Committee on Development Effectiveness is now reviewing a draft energy sector strategy for the organization. The strategy document will be posted on the website when this review is completed.\" Posting of the draft strategy is still pending. Some WBG observers have reported that the ESS is to be modified as necessary to reach consensus in CODE, with little or no external consultation, before an informal Board date in July or later. Media reports indicate that the interruption was caused by a stalemate in CODE over provisions in the ESS for coal-fired power generation (i.e., the ESS no longer supports new coal-fired power generation in middle-income countries). Sources report that China and some other countries claimed that the ESS's coal provisions were \"discriminatory.\"\nWith the appointment of Jim Yong Kim as the 12th President of the World Bank Group on July 1, 2012, the ESS process was discontinued. Efforts to revise energy and infrastructure lending have since been incorporated into the broader initiatives of the new administration.", "The WBG states that the ESS is a 10-year strategy document. Provisions are to cover lending and investment activities in all five WBG sub-institutions: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). The ESS, however, would not cover activities at the regional development banks (i.e., Inter-American Development Bank, African Development Bank, Asian Development Bank, and European Bank for Reconstruction and Development), the International Monetary Fund, or other independent, international financial institutions.\nThe March 16 draft text of the ESS contains the following provisions, among others:\nFocusing on Alternatives to Coal-Fired Power Generation. The ESS aims to focus on ways to help countries identify alternatives to coal. The strategy calls for eliminating loans for all new coal-based power generation projects (i.e., \"greenfield\" projects) in middle-income countries (i.e., IBRD and Blend countries). (See Appendix A for WBG \"IBRD,\" \"Blend,\" and \"IDA\" country classifications; the distinction reflects the level of income and the credit-worthiness of a country). The strategy supports consideration for new coal-based power generation projects in IDA countries under strict compliance with WBG guidelines. The strategy also maintains financing to increase the efficiency of existing coal plants (i.e., \"brownfield\" projects), to be undertaken only after considering the impact of greenhouse gas emissions over the lifetime of the power plant. Further, the strategy approves natural gas projects that can demonstrate a lower emissions potential compared to available alternatives and that can serve as a base-load complement to intermittent renewable energy generation. Developing Large-Scale Hydropower Where Appropriate. The ESS allows consideration of large-scale hydropower projects in developing countries that conform to environmentally and socially sustainable criteria. The WBG describes its support for hydropower as a means to provide low-emissions electricity, expand markets, facilitate interconnected power systems, and tap the potentially large and cost-efficient resources available to lower-income countries, particularly in Sub-Saharan Africa and South Asia. Establishing Greenhouse Gas Emissions Analysis Programs. The ESS proposes to begin a greenhouse gas emissions analysis program for all new power generation projects starting in 2012 and for all other energy investment projects once methodologies have been developed. The WBG describes its support for greenhouse gas monitoring as a means to address global climate change, generate and transfer knowledge, identify opportunities for energy diversification, and help access low carbon financing. Increasing Lending for Clean Energy Projects. The ESS aims to substantially and steadily increase lending for clean energy projects, raising its share of investment in projects classified as \"energy efficiency,\" \"renewable energy,\" \"energy policy,\" and \"electricity transmission and distribution\" from an average of 67% in 2008-2010 to over 75% by 2015. Currently the number of governments that have set policy targets or introduced incentives for renewable energy has doubled since 2005 and now exceeds 100; half of these are in lower-income countries. The WBG describes its support for a shift toward low carbon energy technologies as a means to address sustainable development and global climate change. Prioritizing Energy Efficiency Initiatives. The ESS aims to assist countries in designing incentives and removing technical and non-technical barriers to increase energy efficiency in all economic sectors. Estimates show that considerable scope exists for energy efficiency improvements in all countries, with the International Energy Association supporting scenarios wherein efficiency improvements could provide 67% of energy-related greenhouse gas reductions in 2020, and 47% in 2035. The WBG describes its support for improving energy efficiency as a means to address global climate change, lower energy demand, enhance reliability, potentially make energy more affordable to the poor, and reduce the vulnerability of the energy sector to external shocks and supply constraints. Expanding Access to Modern Energy Services. The ESS aims to provide reliable access to modern energy services at the lowest price financially viable and sustainable for energy suppliers. Current WBG projects in the energy sector between 2012 and 2015 are targeted to extend access to 25 million to 30 million people. The ESS proposes to extend additional access to 65 million to 80 million people through commitments made between 2012 and 2020, including construction of 8-12 gigawatts of additional generation capacity in Sub-Saharan Africa. The WBG describes its support for expanding access as a means to provide basic services, enhanced opportunities for education and health care, and greater entrepreneurial opportunities for developing economies. Improving Household Fuel and Distributed Energy Programs. The ESS aims to expand programs in household energy to increase the quality of energy services and decrease the impacts of energy poverty. The ESS proposes to promote initiatives such as solar-based energy services, high-performance cook-stoves, sustainable production of biomass-based energy, and other distributed energy supply options. The WBG describes its support for improving household fuel sources as a means to free families and communities from the debilitating health burdens exacted by indoor air pollution and to alleviate the impacts of energy poverty on women, children, and socioeconomic groups that may pay higher costs (in terms of time, labor, and finances) for these services. Encouraging Local Community Engagement and Empowerment. The ESS aims to harness the benefits of local community participation in terms of improving design, mobilizing contributions, and increasing local ownership and operational sustainability. Gender equity is also promoted. Promoting Innovative Policy. High and volatile fuel prices, energy shortages, and a continuing inability to finance essential energy infrastructure continue to affect development finance in lower-income countries. The ESS aims to promote innovative policy tools, transparent market designs, new financial models and instruments (including carbon markets), strengthened governance across energy supply chains, and private sector participation to address investment barriers.", "While the World Bank Group may function independently as a lending institution and technical consultant, its funding remains tied to the financial contributions of donor country governments. This fact necessarily puts a limit on the WBG's resources. Due to these limitations, questions regarding the ways and means of financial disbursements become substance for debate among the lending institutions, contributing governments, recipient countries, and civil society stakeholders (e.g., questions include the following: How best to use scarce resources? Which countries and which projects receive funding? Why?). Policies such as the ESS position the WBG between outspoken environmental groups that advocate for substantial reform, higher-income countries like the United States that support raising the bar for environmental and social safeguards, and lower-income countries that insist on having the ability to address poverty alleviation and economic development as they see fit. Some of the critiques by various stakeholders regarding the WBG's energy lending practices in general and the ESS in particular are as follows:", "The media report that reactions by lower- and middle-income countries to the March 16 draft of the WBG ESS centered primarily around the language on coal. Sources report that China and some other countries claimed the ESS's coal provisions were \"discriminatory.\" In a recent interview with Environment & Energy Publishing, Rogério Studart, the World Bank Executive Director for Brazil, is reported as stating that the agency's plan to prevent middle-income countries from accessing loans for new coal plants, while still allowing them for the poorest countries, is \"a dangerous precedent.\" He claims that banning coal would only hurt the poorest countries that currently cannot afford cleaner or renewable alternatives. He argues that \"some countries cannot provide energy access, particularly in Africa, without coal, and the Bank knows that.\" Some countries also raised concerns over the WBG's reliance on markets and the private sector as the principal means of developmental assistance delivery, and said the WBG should do more to promote technology transfer for renewable energy and energy efficiency.", "Most of the provisions outlined in the March 16 draft of the WBG ESS are consistent with policy guidance that has been provided by higher-income, donor country governments. With respect to the United States government, the IDA-only criteria for new coal-fired power generation, and the provisions for more efficient brownfield coal retrofits, are consistent with the December 2009 U.S. Treasury Guidance to Multilateral Development Banks for Engaging with Developing Countries on Coal-fired Power Generation . (See Appendix C for provisions in the U.S. guidance.) Further, the greenhouse gas accounting is consistent with legislative mandates given in the Supplemental Appropriations Act of 2009 ( P.L. 111-32 ). Language on increased energy access and promotion of renewable energy alternatives is also consistent with many previously legislated mandates. The United States has commonly supported large-scale hydropower projects if they are accompanied by substantial upstream and downstream environmental and social accounting.", "Media and nongovernmental organizations report that reactions to the March 16 draft of the WBG ESS by environmental groups has been generally positive. The coal provisions are seen as a victory by many (although some have advocated for eliminating coal investments entirely). Other groups have stated they remain concerned about possible loopholes in the strategy. These include (1) a failure to define \"brownfield,\" leaving open the possibility for wider coal lending; (2) a push to fund \"emerging technologies,\" causing concern over whether that definition would allow the WBG to loan money for carbon capture and storage development (an implicit support for coal); and (3) continued emphasis on hydropower, prompting concerns over the environmental and social impacts of more large dams. Continued stakeholder engagement is also desired by the environmental community.", "The proposed Energy Sector Strategy before the World Bank Group Committee on Development Effectiveness and the Board of Executive Directors is a potential vehicle for the U.S. Congress and the U.S. Administration to address concerns regarding energy and infrastructure lending in lower-income countries and its effect on poverty alleviation and environmentally sustainable development. Whether the provisions in the March 16 draft of the ESS are retained in the final version depends upon negotiations currently taking place in CODE and in the subsequent vote by the Board of Executive Directors. WBG debate on the ESS also coincides with several other institutional initiatives, including (1) the drafting of a coordinated set of environmental and social safeguards, (2) the introduction of a new results-based lending platform, and (3) the request for increases in its capital base to fund the continued expansion of its development lending programs. The final version of the ESS may influence negotiations on any of these initiatives, and vice versa. Further, authorizations and appropriations for U.S. participation in the capital increases at the WBG are currently included in the U.S. Administration's FY2012 budget request. Levels of U.S. funding for the capital increase may likewise influence negotiations on these initiatives.\nThe United States carries one—albeit a significant—voice and vote in the policies of the WBG. The U.S. Congress retains the role of deciding the overall terms of U.S. involvement in the WBG by setting the level of U.S. contributions and by influencing how the United States votes on policies and projects. The House Committee on Financial Services (Subcommittee on International Monetary Policy and Trade) and the Senate Committee on Foreign Relations (Subcommittee on International Development and Foreign Assistance, Economic Affairs, and International Environmental Protection) are responsible for managing WBG authorization legislation. The U.S. House and Senate Committees on Appropriations (Subcommittees on State, Foreign Operations, and Related Programs) manage the relevant appropriations legislation. Congress can enact legislative mandates that oversee and regulate U.S. participation in the WBG. These mandates fall into one of four main categories. First, legislative mandates direct how the U.S. representatives at the WBG can vote on various policies and projects. Second, legislative mandates direct the U.S. representatives at the WBG to advocate for specific policies. Third, Congress may require the Secretary of the Treasury to submit reports on WBG activities. Fourth, Congress may attempt to influence policies at the WBG through the \"power of the purse,\" that is, by withholding funding from the WBG or attaching stipulations on the WBG's use of funds.\nAppendix A. World Bank Group Classifications\nWBG institutions base their lending on levels of economic development.\nAppendix B. World Bank Group Energy Portfolio, FY2003-FY2010\nAppendix C. U.S. Department of the Treasury Guidance to the Multilateral Development Banks on Coal\nIn December 2009, the U.S. Treasury Department transmitted to the senior management of the multilateral development banks (MDBs) guidance for engaging with developing countries on coal-fired power generation. The guidance is intended to be adapted by individual MDBs and incorporated into their respective operational policies, country and sector strategies, and other procedures that are related to the public or private project cycle for coal-powered generation operations. It covers a range of issues including alternatives analysis, power sector policy reform, and capacity building. It is intended to supplement rather than supersede other MDB operational policies (e.g., environmental impact assessment, other environmental and social safeguards, procurement) and to be used to help determine U.S. interactions with the MDBs as they update relevant sector strategies and operational policies. Provisions in the guidance include the following, among others:\nhaving the MDBs incorporate procedures to ensure full consideration of no or low carbon options before appraising a proposed new or retrofit coal-fired power generation project; identifying \"no or low carbon options\" as including (1) more carbon efficient fossil fuel generation, (2) renewable resources, (3) supply side efficiency improvements in other plants, and (4) demand side management; supporting the use of best internationally available technology for reducing GHG emissions if proceeding with appraisal of a new or retrofit coal generation project; for projects in IBRD and Blend countries, incorporating offsetting actions (i.e., a package of significant and measurable actions elsewhere in the power sector that, in the aggregate, are intended to reduce emissions by an amount equivalent to the emissions to be added by the proposed project); and, for projects in IDA-only countries, proceeding with appraisal of a coal project that does not meet the above best available technology criteria, if the project (1) addresses critical national energy security needs, (2) responds to national short-term emergencies, or (3) overcomes binding constraints on national economic development when no viable alternatives exist." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 3, 1, 2, 2, 2, 3, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "h0_full h2_title h1_full", "", "h2_title", "", "", "h2_full", "h0_title h1_title", "h0_full h1_full", "h1_full", "h0_full", "", "", "", "h2_full" ] }

{ "question": [ "How does worldwide electricity lack affect financial institutions?", "How might access to modern energy sources to such countries assist economic growth?", "How might access to modern energy sources to such countries create new issues?", "How has the WBG responded to these risks?", "What documents has the WBG released to acknowledge these risks?", "How did the appointment of Jim Yong Kim as President of the WBG affect the ESS process?", "How have energy and infrastructure issues been addressed since then?", "Why must the World Bank Group revise its energy strategy?", "What factors does this include?", "What does the ESS comprise?", "What is the WBG criticized for?", "What is the relationship between the United States and the WBG?", "How does this influence manifest itself?", "How is this influence shared between Congress and the Administration?", "What has US guidance to the WBG focused on?", "What does this entail for the ESS?" ], "summary": [ "One in five people worldwide lack access to electricity. This is among the many challenges that financial institutions face when providing assistance to lower-income countries in order to promote economic and social development.", "Access to modern energy sources has the potential to substantially increase worldwide economic growth, creating markets in the developing world for products from the developed world, and vice versa.", "Filling this need may also result in environmental problems that could threaten development, including an increase in pollution that damages fisheries, reduces farm fertility, poses health risks, and contributes to climate change.", "In response to these risks, the World Bank Group (WBG) has reported its intentions to revise its strategy for energy and infrastructure lending to better address energy poverty alleviation and environmentally sustainable development.", "After releasing an Approach Paper in October 2009, and consulting with government and civil society stakeholders from January 2010 to July 2010, a strategy document, Energizing Sustainable Development: Energy Sector Strategy of the World Bank Group (ESS), was presented to the WBG Committee on Development Effectiveness (CODE) on April 11, 2011, for consent and subsequent delivery to the WBG Board of Executive Directors for a vote during the summer of 2011.", "With the appointment of Jim Yong Kim as the 12th President of the World Bank Group on July 1, 2012, the ESS process was discontinued.", "Efforts to revise energy and infrastructure lending have since been incorporated into the broader initiatives of the new administration.", "The impetus for the World Bank Group's revision of its energy strategy rests on many factors.", "Over the past several decades, sustainable energy and environmental issues have gained an increasing level of attention in international humanitarian and development assistance, as countries have tried to integrate poverty reduction and economic growth initiatives with a shared concern for the global environment. Further, lack of access to modern energy resources, recurrent supply disruptions, and increased exposure to the risks of global climate change have hindered social and economic development in many lower-income countries.", "The ESS comprises an initiative to support energy poverty alleviation and environmentally sustainable development with provisions that include deemphasizing coal-fired power generation, developing large-scale hydropower where appropriate, establishing greenhouse gas emissions programs, increasing lending for clean energy projects, promoting energy efficiency initiatives, expanding access to modern energy services, improving household fuel and distributed energy programs, encouraging local community engagement and empowerment, and supporting innovative energy policy.", "While some observers of the WBG have applauded provisions in the revised strategy, many claim that the history of the WBG's energy and infrastructure lending undermines its credibility as an institution committed to combating the impacts of environmental degradation and climate change.", "The United States—through its role as financial contributor to the WBG and as member on the WBG governing boards—has influence on WBG policy.", "This influence manifests itself through Board votes, general advocacy, reporting requirements, and financial leverage.", "While the U.S. Administration oversees the day-to-day participation in WBG operations, the U.S. Congress—through its role in WBG appointments, appropriations, and legislative guidance—retains significant input.", "U.S. guidance to the WBG has focused on the institution's lending practices as a means to induce greater environmental sustainability in multilateral development assistance.", "The ESS thus becomes another potential vehicle for the U.S. Congress and the U.S. Administration to further address concerns regarding energy and infrastructure lending in lower-income countries." ], "parent_pair_index": [ -1, 0, 0, 2, 2, -1, 5, -1, 0, -1, -1, -1, 1, 1, -1, 4 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 2, 2 ] }

{ "title": [ "Background", "Inter-American Organizations", "U.S. Contributions to Inter- American Organizations", "Organizations’ Oversight of Their Funds", "U.S. Agencies Oversee the Execution of Their Assistance Agreements", "The Strategic Goals of the Four Inter- American Organizations Are Predominantly Aligned with U.S. Agencies’ Strategic Goals", "OAS, PAHO, IICA, and PAIGH Have Established Oversight Mechanisms", "The Four Organizations Have Oversight Mechanisms as Required by the IIA", "U.S. Agencies Support Oversight Mechanisms at OAS, PAHO, and IICA", "Two of Four U.S. Agencies Did Not Include All Key Monitoring Provisions in the Agreements We Reviewed", "Agency Guidance Calls for Agencies to Conduct Monitoring Activities; Internal Control Standards State That Agencies Should Document These Requirements with Provisions in the Agreements", "HHS and USAID Included All Key Monitoring Provisions in Their Assistance Agreements, but USDA and State Did Not", "None of the U.S. Agencies Had Full Documentation of Monitoring Activities Called for by All of Their Assistance Agreements That We Reviewed", "Assistance Agreements Include Requirements for Monitoring Activities; Internal Control Standards Say Agencies Should Document These Activities", "U.S. Agencies Did Not Have Full Documentation of Monitoring Activities for Most of the Agreements We Reviewed", "State", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Financial Oversight Mechanisms of Four Inter-American Organizations", "Appendix III: Key Monitoring Provisions Implementing Federal Regulations or Agency Guidance", "Appendix IV: Comments from the U.S. Agency for International Development", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "The U.S. government engages with the governments of other countries in the Western Hemisphere through various inter-American organizations including the OAS, PAHO, IICA, and PAIGH. According to State, the OAS is the primary inter-American political forum through which the United States engages with other countries in the Western Hemisphere to promote democracy, human rights, security, and development. PAHO serves as the Regional Office for the Americas of the World Health Organization, the United Nations agency on health. IICA supports agricultural development and rural well-being through technical cooperation and the execution of agricultural projects throughout the hemisphere. PAIGH specializes in regional cartography, geography, history, and geophysics and has facilitated the settlement of regional border disputes. According to U.S. agency officials, the organizations’ regional knowledge and technical expertise make them effective implementing partners for projects serving U.S. national interests and priorities throughout the hemisphere.", "Member states collectively finance these organizations by providing assessed and voluntary contributions (see table 1).\nFor each organization, its member states’ assessed contributions are intended to finance the organization’s regular budgets, which generally cover the organization’s day-to-day operating expenses, such as facilities and salaries. Member states also finance certain OAS, PAHO, and IICA activities and projects through voluntary contributions. According to U.S. officials, the United States provides voluntary contributions to the OAS, PAHO, and IICA primarily through assistance agreements for specific projects from State, USAID, HHS, and USDA.", "The Institute of Internal Auditors (IIA) provides the framework for international organizations to oversee funds such as the assessed contributions provided by member states to OAS, PAHO, IICA, and PAIGH. The institute’s authoritative guidance, International Standards for the Professional Practice of Internal Auditing, includes mandatory performance standards that describe the nature of internal audit activities and provide criteria for evaluating these activities. Organizations are required to subscribe to these IIA standards, according to PAIGH officials and OAS, PAHO, and IICA documents.", "Assistance agreements are a critical tool the U.S. government uses to achieve important national objectives. As we have previously reported, effective oversight and internal control are important to provide reasonable assurance to federal managers and taxpayers that assistance agreements are awarded properly, recipients are eligible, and federal funds are used as intended and in accordance with applicable laws and regulations. State, USAID, HHS, and USDA oversee funds provided to OAS, PAHO, and IICA through assistance agreements using monitoring activities such as financial and performance reports. Within each of these agencies, various bureaus and offices are responsible for awarding and managing assistance agreements to these inter-American organizations, including State’s Office of Weapons Removal and Abatement in the Bureau of Political-Military Affairs, USAID’s Office of U.S. Foreign Disaster Assistance, HHS’s Centers for Disease Control and Prevention and its Food and Drug Administration, and USDA’s Animal and Plant Health Inspection Service. The documentation of these monitoring activities as called for by federal standards for internal control enables the agencies to determine the effectiveness of the agreement activity.", "We found that the strategic goals of the four inter-American organizations are predominantly aligned with the high-level strategic goals for the Western Hemisphere documented by State, USAID, HHS, and USDA. According to officials, the agencies all consider U.S. strategic goals when deciding which projects to fund at OAS, PAHO, and IICA. State, USAID, HHS, and USDA have goals for foreign assistance to the Western Hemisphere, as shown in table 2. For example, four of the five goals in State and USAID’s Joint Strategy correspond with goals at the OAS, IICA, and PAIGH. U.S. agencies, on an ongoing basis, evaluate each inter- American organization to ensure U.S. and organization goals are aligned.\nOfficials from all four agencies provided examples of how they help to ensure alignment of U.S. strategic goals when funding projects at OAS, PAHO, and IICA.\nState: According to State officials, State created an Annual Performance and Budget Review process in 2014 specifically to review entities, such as the OAS, that receive voluntary contributions funded through the International Organization and Programs account. This process examines performance of State-funded activities relative to those activities from the previous year and the extent to which the activities advance U.S. priorities and objectives. State officials further noted that the Annual Performance and Budget Review helps inform State’s decision-making on what to include in the following year’s budget request. For example, during the 2016 review for the OAS Development Assistance Program, State reported the program’s significant activities, funds expended, and achievements such as training government officials on successful small business policies in the United States.\nUSAID: According to USAID officials, USAID’s project design and approval policies and procedures ensure that all USAID-funded activities are linked to applicable U.S. and USAID strategies. USAID’s agency guidance requires, at a minimum, that each project or activity must be formally approved in writing by the relevant Mission Director or Principal Officer for a given program. Officials stated that this approval memo and supporting documentation address a number of planning considerations, including how the proposed activity aligns with broader strategies. Furthermore, officials stated that USAID’s lawyers review project approval documentation prior to final approval and verify that the activity complies with all applicable statutes, regulations, and policies.\nHHS: According to HHS officials, HHS engages with PAHO on its Biennial Work Plans, which are operational planning instruments that PAHO uses to identify activities that it can implement within each of its member states. HHS officials noted that they use PAHO’s Biennial Work Plan to strengthen U.S. approaches on issues of common concern and to advance U.S. priorities within the region. According to HHS officials, proposals for technical cooperation projects are required to correspond to one of the technical priorities in PAHO’s strategic plan for 2014–2019 and to be aligned with the HHS global strategy and U.S. priorities.\nUSDA: USDA officials said that they compare the U.S. strategic goals with IICA’s goals and objectives when they formulate project proposals with IICA to ensure that the projects are aligned with U.S. priorities for the region. Additionally, USDA officials told us that USDA helped shape and influence IICA’s recent 10-year strategic plan, ensuring that IICA’s strategic objectives were closely aligned with U.S. strategic goals.", "OAS, PAHO, IICA, and PAIGH have established mechanisms for overseeing their use of assessed and voluntary contributions, such as external auditors and internal audit boards as required by IIA standards. State and USDA have directly supported these oversight mechanisms.", "OAS, PAHO, IICA, and PAIGH have oversight mechanisms, as shown in table 3. The four organizations follow the internal control standards of the IIA, codified in the International Standards for the Professional Practice of Internal Auditing, according to PAIGH officials and OAS, PAHO, and IICA documents. All four organizations have internal and external auditors, as required by these standards. Furthermore, OAS, PAHO, and IICA have additional oversight mechanisms, such as anti-fraud policies and program evaluation processes. The officials we interviewed from State, USAID, HHS, and USDA expressed confidence in the four organizations’ management of their assessed and voluntary contributions.\nAll four organizations document the status of their financial and internal control activities in audit reports posted on their public websites. For example, the OAS Office of the Inspector General’s April 2017 Annual Report included an update on its five ongoing audits and investigations. The report also outlined progress made against prior recommendations.", "U.S. agency officials support budget and administrative subcommittees in three of the four organizations and promote the participation of U.S. experts on independent audit committees, as shown in table 4. For example, according to officials, State plays a significant role in promoting policies on oversight and accountability at the four organizations through formal engagement in deliberations and decision-making of each organization’s governing body and through informal engagement with other member states and the secretariat by recommending best practices in governance, management, and oversight. State and USDA are also directly involved in implementing some of the additional oversight mechanisms at the organizations. For example, a USDA official serves as a member of IICA’s Audit Review Committee. Additionally, an IICA official told us the United States was involved in defining IICA’s Convention and Rules of Procedure for its governing bodies, which established the requirement for internal and external auditing.\nAccording to State officials, the United States led efforts to strengthen oversight at several of the organizations under review in recent years, such as advocating for the creation of an ethics officer position at PAHO, proposing language to strengthen the authority and independence of the OAS’s Office of the Inspector General, and encouraging the creation of audit committees at both organizations. In addition, State has played a lead role in supporting the ongoing reform of the OAS administration, which includes improved oversight and accountability, according to officials from the OAS and the U.S. Mission to the OAS.", "We reviewed 12 selected assistance agreements that the four U.S. agencies awarded to OAS, PAHO, and IICA that were active during calendar years 2014 through 2016, and found that two agencies did not consistently include all key monitoring provisions in their agreements. While HHS and USAID implemented applicable guidance by including all key monitoring provisions in their agreements, USDA and State did not do so. USDA and State agency officials did not explain why USDA and State did not include these monitoring provisions in their agreements. However, State has since taken corrective action to ensure that they are included in future agreements, according to State officials.", "Applicable agency guidance calls for agencies to conduct monitoring activities as part of their oversight of their agreements. Each of the four agencies has established agency-specific guidance that outlines the monitoring activities for assistance agreements. In some cases, the agency-specific guidance may mandate additional monitoring activities beyond those called for in applicable federal regulations, such as risk assessments. For example, State’s guidance calls for the creation of a monitoring plan. Federal standards for internal control require that agencies include in agreements all key provisions delineating the parties’ responsibilities. For the 12 agreements we reviewed, the number of total key monitoring provisions per agreement varied—including within one agency—depending on when the agency issued and updated its guidance relative to when the agreements were approved.\nFederal standards for internal control call for agencies to document internal controls, transactions, and significant events. Specifically, internal control standards state that agency management should include internal control activities (e.g., monitoring activities) in policies or directives for transactions such as assistance agreements.", "For the 12 assistance agreements we reviewed, USDA and State did not include provisions implementing 6 of the 55 total (11 percent) applicable monitoring activities required by applicable guidance to carry out required monitoring activities (see table 5). State took corrective action in 2015 by issuing a standard operating procedure.\nUSDA: USDA did not include 4 of the 13 key monitoring provisions implementing the applicable guidance for the three USDA agreements we reviewed (see table 6). Two of the agreements and supporting documentation each included all four key applicable monitoring provisions. However, Agreement 2 in the table did not include 4 of the 5 monitoring provisions in the agreement or work plan, which documents the monitoring provisions. The agreement partially included performance goals, because it included objectives for the agreement’s activities, but did not include time frames to complete all of the activities. The USDA grant official did not explain why the work plan did not adhere to applicable federal regulations when it was drafted and approved.\nState: State did not include 2 of the 21 key monitoring provisions implementing the applicable guidance for the three State agreements we reviewed (see table 7). Two of the agreements and supporting documentation we reviewed included the 7 monitoring provisions implementing the requirements in the applicable agency guidance. However, one agreement awarded in 2012 did not include 2 of the provisions: a risk assessment and a monitoring plan. That office that awarded this agreement took corrective action in 2015 by issuing a standard operating procedure requiring that risk assessments and monitoring plans accompany its grants and cooperative agreements.\nUSAID: USAID included both key monitoring provisions implementing the applicable guidance for the three USAID agreements we reviewed (see table 8). USAID’s Automated Directives System 308, Standard Provisions for Cost-Type Awards to Public International Organizations contains two key monitoring provisions for agreements. USAID incorporated the monitoring provisions nearly verbatim into the agreements we reviewed, using templates from this guidance for required terms and conditions.\nHHS: HHS included the 15 monitoring provisions implementing the applicable guidance for the three HHS agreements we reviewed (see table 9).", "None of the agencies provided us with full documentation to demonstrate their adherence to the required monitoring activities called for in all of their agreements that we reviewed, including the previously mentioned key monitoring provisions that we reviewed. State and HHS have taken corrective actions to address the gaps we found in documentation for the agreements we reviewed. Agency officials told us that they use these monitoring documents, such as financial and progress reports, to inform future budgetary and programmatic decisions. Therefore, they may lack information needed to make such decisions if they do not have access to complete monitoring documentation.", "According to federal standards for internal control, each agency is to include key monitoring provisions as part of its agreements. In the individual assistance agreements, the agencies specify the requirements to fulfill these activities, such as requiring financial reports on a quarterly basis or including specific information in performance reports. Grants officers at times, if they deem it necessary or appropriate, include additional monitoring provisions requiring activities beyond those required by the applicable guidance, such as site visits.\nFederal standards for internal control call for agency management to design monitoring activities, such as financial and performance reporting, so that all transactions are completely and accurately recorded.\nRecording these activities maintains their relevance and value to management in controlling operations and making decisions. Without access to complete monitoring documentation, the agencies risk weakening the effectiveness of these controls.", "None of the four U.S. agencies had full documentation of all of the monitoring activities required by their agreements we reviewed (see table 10). The agencies did not have full documentation of monitoring activities for 9 of the 12 agreements we reviewed. For the 42 monitoring activities identified across all of the individual agreements, the four agencies did not have full documentation of 18 of the activities (43 percent). However, State took corrective action in May 2017 to address its gaps in documentation, and according to HHS officials, the Food and Drug Administration addressed its gap in documentation by implementing its agreement monitoring program in fiscal year 2018.\nUSDA did not have full documentation of any of the 10 monitoring activities we identified (see table 11). USDA demonstrated that it had partially documented 2 of the 10 monitoring activities (20 percent) by providing us with some, but not all, quarterly performance reports. For one of the agreements, USDA had no documentation of the monitoring activities for that agreement. For its other two agreements, USDA did not have full documentation of the required monitoring activities. USDA officials did not explain why they did not have full documentation. Without full documentation of the required monitoring activities, USDA may not have the information it needs to make appropriate budgetary and programmatic decisions.\nUSAID did not have full documentation of 2 of the 11 total monitoring activities (18 percent) we identified across the three agreements we reviewed (see table 12). USAID had partial documentation of those 2 monitoring activities. For example, USAID provided us with some, but not all, records such as financial reports required by the terms of the monitoring activities in the agreements.\nAccording to USAID officials, the agencies’ lack of complete monitoring documentation was in part due to agency officials not following some of their agency’s requirements for managing agreement documents, such as placing all documents in a shared document management system. For example, for one of the agreements we reviewed, USAID officials stated that they stored some agreement documentation electronically—such as modifications, correspondence with the agreement recipient, and quarterly financial reports—but primarily maintained paper files.\nUSAID officials told us they use the monitoring documents of these agreements, such as financial and progress reports, to inform future budgetary and programmatic decisions. For example, according to USAID officials, USAID uses monitoring documents to identify and address potential project delays or other “red flags.” For one of the agreements we reviewed, USAID officials stated these monitoring reports also assist them in determining whether to award additional funds and establish new indicators in subsequent agreements. Without full documentation of the required monitoring activities, USAID may not have the information it needs to make appropriate budgetary and programmatic decisions.", "State did not have full documentation for 5 of the 16 monitoring activities (31 percent) we identified across the three agreements we reviewed (see table 13). However, State had partial documentation of 4 of those 5 monitoring activities. For example, State had some, but not all, records such as standard reporting metrics, required by the terms of the monitoring activities in one of the agreements. State did not have documentation of one of the monitoring activities (site visits).\nAccording to State officials, the agency’s lack of complete monitoring documentation was in part due to agency officials not following some of the agency’s requirements for managing agreement documents, such as placing all documents in a shared document management system. For example, according to State officials, for one of the agreements we reviewed, the grants officer mistakenly had saved site visit reports and similar documents to personal folders because the officer did not know how to use State’s grant document storage system. As a result, neither the current grants officer nor other State officials could retrieve these documents.\nIn May 2017, after awarding the agreements we reviewed, State took corrective action by issuing the Federal Assistance Directive to establish internal guidance, policies, and procedures for all domestic and overseas grant-making bureaus, offices, and posts within the department when administering federal financial assistance. The directive notes that State implemented a grant management system for domestic and overseas grants to resolve its “significant deficiency in the management of Federal financial assistance.” In addition, the directive indicates that officials from State’s Bureau of Administration, Office of the Procurement Executive, Federal Assistance Division will evaluate compliance with risk assessment requirements and review documentation for selected agreements each fiscal year. One of the stated purposes of these reviews is to mitigate risk by strengthening management and oversight of awards, including grants. According to a State Office of Inspector General report, State should complete the full deployment of this system for overseas grants in fiscal year 2019.\nHHS did not have full documentation of 1 of the 5 applicable monitoring activities (20 percent) we identified across the three agreements we reviewed (see table 14). HHS had partial documentation of the semiannual progress report activity for one of its agreements, required by the terms of its agreement. HHS officials did not explain why they did not have full documentation for this monitoring activity. HHS had full documentation of all applicable monitoring activities for the other two agreements we reviewed.\nAccording to agency officials, the Food and Drug Administration, which administered one of the HHS agreements we reviewed, has taken corrective action to evaluate its agreement documentation and address deficiencies. According to HHS officials, the Food and Drug Administration developed a pilot program intended to provide an additional layer of oversight to ensure adherence to the terms of each agreement. Under the pilot, officials said, a grant monitoring specialist reviews the agreement documentation and monitoring reports to identify agreements that need additional assistance. According to HHS officials, the Food and Drug Administration implemented this program in fiscal year 2018 and will eventually include all Food and Drug Administration agreements.", "U.S. assistance agreements for projects with inter-American organizations further U.S. strategic goals in the Western Hemisphere, but State, HHS, USAID, and USDA did not consistently include all key monitoring provisions as part of their assistance agreements or demonstrate that they had full documentation of monitoring activities for the agreements we reviewed. Of these four agencies, USAID and USDA have not taken corrective actions. Monitoring the implementation of U.S. assistance agreements and fully documenting the results of such monitoring are key management controls to help ensure that U.S. agreement recipients use federal funds appropriately and effectively. The agencies risk weakening the effectiveness of these controls by not including all key monitoring provisions called for by applicable agency guidance. Further, if the agencies do not have full documentation of the agreements’ required monitoring activities, they may not be able to effectively manage federally funded projects that support U.S. strategic goals. In addition, agencies may not have all the information they need to make budgetary and programmatic decisions.", "We are making a total of three recommendations: one to USAID and two to USDA.\nThe USAID Administrator should ensure that USAID officials have full documentation of required monitoring activities in agreements with inter- American organizations. (Recommendation 1)\nThe Secretary of Agriculture should ensure that USDA includes all key monitoring provisions specified by applicable guidance as part of agreements with inter-American organizations. (Recommendation 2)\nThe Secretary of Agriculture should ensure that USDA officials have full documentation of required monitoring activities in agreements with inter- American organizations. (Recommendation 3)", "We provided a draft of this report for comment to State, USAID, HHS, and USDA. USDA concurred with our recommendations in an e-mail. In its written comments, reproduced in appendix IV, USAID stated that it has policies, procedures, and training in place for the officials who manage these agreements. In response to our recommendations, USAID stated that it will issue an agency notice to remind all such officials of these responsibilities, including the requirement to maintain complete files for each agreement.\nState and HHS did not provide formal comments. They did provide technical comments, which we incorporated as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the appropriate congressional committees, the Secretary of State, the Administrator of the U.S. Agency for International Development, the Secretary of Health and Human Services, and the Secretary of Agriculture. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have questions about this report, please contact me at (202) 512-9601, or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix V.", "Congressional requesters asked us to review several issues related to the Organization of American States (OAS), the Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute of Geography and History (PAIGH). In this report, we (1) assess the extent to which the organizations’ strategic goals align with those of U.S. agencies; (2) examine how the organizations oversee the use of their funds and the extent to which U.S. agencies have supported those efforts; (3) assess the extent to which U.S. agencies included key monitoring provisions as part of their assistance agreements; and (4) assess the extent to which U.S. agencies had documentation of monitoring activities, including those called for by these provisions.\nTo address the first objective, we gathered documentation and interviewed officials from the four U.S. agencies and the four organizations to determine the U.S. strategic goals for foreign assistance to the Western Hemisphere and the goals of the four organizations. According to Department of State (State) and U.S. Agency for International Development (USAID) officials, the strategic document that underpins their foreign assistance priorities for the region is The Department of State’s Bureau of Western Hemisphere Affairs’ and USAID’s Bureau for Latin American and Caribbean Affairs’ Joint Regional Strategy. Department of Health and Human Services (HHS) officials said that HHS’s relevant strategic document is The Global Strategy of the U.S. Department of Health and Human Services. U.S. Department of Agriculture’s (USDA) strategic goals for foreign assistance, according to officials, are outlined in the United States Department of Agriculture Strategic Plan FY2015–2018. The OAS outlined its strategic goals in the Comprehensive Strategic Plan of the Organization, adopted on October 31, 2016. PAHO’s goals are laid out in Strategic Plan of the Pan American Health Organization 2014–2019. IICA’s strategic document is the IICA 2010–2020 Strategic Plan, which took effect in October 2010. PAIGH’s strategic document is the Declaration and Guide for the Pan American Agenda 2010-2020. We compared the strategic goals articulated by the four organizations against U.S. strategic goals to assess the extent to which the organizations’ goals contribute to U.S. interests in the region. We then interviewed officials from the four agencies and reviewed relevant documentation on efforts they undertake to ensure that U.S.-funded activities align with U.S. strategic goals.\nTo address the second objective, we reviewed documentation of the organizations’ internal control mechanisms and confirmed our findings with the organizations. We identified mechanisms to include policies, directives, rules, practices, and organizational structures that can have an oversight role in the use of the organizations’ funds. We also interviewed officials from State, USAID, HHS, and USDA to discuss their support of these mechanisms.\nTo address the third objective, we identified 60 active assistance agreements that these agencies oversaw with OAS, PAHO, and IICA during calendar years 2014 through 2016 and selected a nongeneralizable sample of 12 agreements, three each from State, USAID, HHS, and USDA. To determine which agreements we would review for each agency, we selected the three agreements with the lowest, median, and highest dollar value. If any of an agency’s agreements supported the same country or activity or were for one-time projects such as seminars, we selected the next appropriate agreement based on dollar value.\nFor these selected agreements, we then identified the applicable agency guidance for monitoring activities in the agreements, which we define as all documents related to each agreement provided to us by the agencies, such as monitoring reports. The number of key monitoring provisions varied—even within each agency—depending on when agency guidance was issued and updated relative to when the agreements were approved. USDA did not have applicable internal agency-specific guidance for monitoring of assistance agreements at the time it awarded the agreements we reviewed; thus, with USDA’s input, we used the applicable sections of the Code of Federal Regulations, which together have five key monitoring provisions for agreements. However, USDA approved two of the agreements in 2012 and the third agreement in 2016, and this third agreement was subject to an amended version of the Code of Federal Regulations, which added an additional provision for performance goals. State’s four applicable grants policy directives have seven key monitoring provisions for agreements that were applicable at the time the agreements we reviewed were approved. USAID’s Standard Provisions for Cost-Type Awards to Public International Organizations (PIOs): A Mandatory Reference to ADS Chapter 308 has two key monitoring provisions for agreements: audits and records, and the organization’s adherence to their rules. HHS’s grants policy has five key monitoring provisions for grant documentation.\nWe identified key monitoring provisions for agencies to include as part of agreements to ensure oversight of the use of funds, such as financial and progress reports. For the 12 agreements in our sample, we analyzed the assistance agreements from the four agencies, and then determined the extent to which the agencies’ agreements included key monitoring provisions implementing monitoring activities called for by applicable agency guidance. We did not include subsequent amendments to these 12 agreements in our review of key monitoring provisions. We interviewed officials from State, USAID, HHS, and USDA (1) to confirm we were applying the appropriate federal or agency guidance and (2) to discuss instances in which the agreements did not include key monitoring provisions.\nTo address the fourth objective, we reviewed the 12 selected assistance agreements and guidance to identify specific required monitoring activities, such as financial and program reports, site visits, and other forms of oversight. The agreements specify the requirements for these activities such as requiring financial reports on a quarterly basis. For these 12 agreements, we reviewed all the documentation provided to us by the agencies, then determined the extent to which the agencies had full documentation of key monitoring activities as specified in the assistance agreements, including those called for by key monitoring provisions, as well as those called for by guidance when the monitoring provisions were absent. We did not include subsequent amendments to these 12 agreements in our review of monitoring activities. We interviewed officials from State, USAID, HHS, and USDA to discuss instances in which the agency did not have full documentation of key monitoring activities. We also discussed how State, USAID, and HHS agency officials manage their agreement documentation and use the information in the agreements’ required monitoring documentation.\nWe conducted this performance audit from July 2016 to December 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "The Organization of American States (OAS), Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute on Geography and History (PAIGH) have established mechanisms for overseeing their use of funds. Tables 15–18 show the mechanisms (oversight policies and oversight committees and organizations) for each of these inter-American organizations, as confirmed by the organizations’ officials.", "To oversee the execution of their agreements, the Department of State (State), the U.S. Agency for International Development (USAID), the Department of Health and Human Services (HHS), and U.S. Department of Agriculture (USDA) are to conduct monitoring activities called for by applicable federal regulations or agency guidance and document these provisions in assistance agreements as called for by federal standards for internal control. We identified key monitoring provisions implementing the applicable agency guidance for State, USAID, HHS, and the applicable regulations for USDA, as shown in table 19. For both the agency guidance and the federal regulations, those listed are the ones that were in effect when the agreements in our sample were approved. Some of the agency guidance and regulations have since been amended or superseded.", "", "", "", "In addition to the contact named above, Pierre Toureille (Assistant Director), Julia Jebo Grant (Analyst-in-Charge), Leslie Stubbs, and Paul Sturm, Alana Miller, and Shirley Min made key contributions to this report. In addition, David Dayton, Martin de Alteriis, Neil Doherty, Jeff Isaacs, and Alex Welsh provided technical assistance." ], "depth": [ 1, 2, 2, 2, 2, 1, 1, 2, 2, 1, 2, 2, 1, 2, 2, 3, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title", "", "h0_full", "", "", "h0_full", "", "", "", "", "", "", "h1_full", "", "h1_full", "h1_full", "", "", "", "h0_full", "", "", "", "", "", "" ] }

{ "question": [ "What did GAO find regarding the alignment of strategic goals among agencies?", "How do the IICA and USDA demonstrate this?", "How do such agencies cooperate with each other?", "How do agencies align with U.S. strategic goals?", "What did GAO find?", "How was this demonstrated by the USDA?", "How was this justified by USAID?", "How did State and HHS respond to this discovery?", "How may lack of documentation negatively affect an agency's operations?" ], "summary": [ "GAO found that strategic goals of the Organization of American States (OAS), the Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute of Geography and History (PAIGH) are predominantly aligned with the strategic goals of the Department of State (State), the U.S. Agency for International Development (USAID), the Department of Health and Human Services (HHS), and the U.S. Department of Agriculture (USDA).", "For example, IICA's strategic goals of a productive agricultural sector, enhancing agricultural development, and food security are aligned with USDA's foreign assistance goals.", "State, USAID, HHS, and USDA fund activities in the form of assistance agreements (e.g., grants and cooperative agreements) with OAS, PAHO, and IICA, which in 2016 totaled $32 million.", "According to agency officials, the agencies employ mechanisms to ensure that these agreements align with U.S. strategic goals.", "GAO found that U.S. agencies did not have full documentation of 18 of the 42 monitoring activities required by the 12 assistance agreements GAO reviewed (see table).", "For example, USDA did not have full documentation, such as for financial reports, of any of its 10 required monitoring activities and USDA officials did not explain their lack of documentation.", "USAID officials explained that their lack of full documentation was due, in part, to grant officers not always following their document management policies.", "State and HHS have since taken corrective action.", "If an agency does not have full documentation of monitoring activities, it may lack information needed to make appropriate budgetary and programmatic decisions." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 0, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 5, 5, 5, 5, 5 ] }

{ "title": [ "", "Introduction", "Convention Financing: An Overview", "Federal Funds", "PECF Funds", "DOJ Funds", "Recent Federal Convention Funding", "Conditions on PECF Funds", "Conditions on Security Funds", "Nonfederal Funds", "Convention-Related Activities", "Security Operations", "Recent Legislative Activity", "Legislation That Would Affect PECF Convention Funding", "Policy Issues and Options", "PECF Convention Funding", "Maintaining the Status Quo", "Options that Could Increase or Decrease Federal Convention Funding50", "Changing the Prioritization of Convention Funds", "Appropriating Funds", "Altering the Checkoff-Designation Question", "Altering the Checkoff Amount", "Repealing Convention Funding", "Security Funds", "Maintaining the Status Quo", "Options that Could Increase or Decrease Federal Convention Security Funding", "Authorize HSGP Amounts for Convention Locations", "Authorize USSS to Reimburse State and Local Government Costs", "Discontinue Convention Security Funding to States and Localities", "Conclusion" ], "paragraphs": [ "", "Every four years, the two major political parties, and some third parties, select their presidential nominees at conventions. These conventions are run by and for parties, without a formal role for the federal government. Federal funds do, however, provide certain financial support to convention committees that choose to accept public money. Additionally, Congress appropriates federal funding for the securing of the convention venues.\nA variety of policy issues surrounds convention financing. Some observers have questioned why federal funds subsidize conventions, considering the availability of substantial private resources and that they are party, rather than governmental, events. Others have contended that private funds, particularly so-called \"soft money,\" which falls outside the scope of federal campaign finance law, have become too pervasive in conventions and that tighter restrictions are needed. These divergent views on the use of public funds to support party conventions also appear in other contexts in the debate surrounding campaign finance policy.\nTwo taxpayer-supported revenue sources are available to conventions: (1) presidential public campaign funds; and (2) security funds. Approximately $136.5 million from those sources went toward the 2012 Democratic and Republican national conventions. No third parties received convention funds for the 2012 election cycle. The 2012 Democratic and Republican conventions received a total of approximately $36.5 million from the Presidential Election Campaign Fund (which generally excludes security costs).\nBefore proceeding, it is important to note the distinction between presidential public funds and security funds. Presidential public funds and security funds come from separate revenue sources. They are allocated differently, are used for different purposes, and are subject to different points of debate. Although both presidential public funds and security funds support conventions, Congress may reassess them separately.\nThis report will not be updated. Discussion of subsequent developments appears in another CRS product that supersedes this report. For additional detail, see CRS Report R43976, Funding of Presidential Nominating Conventions: An Overview , by [author name scrubbed] and [author name scrubbed].", "", "Two sources of federal funds support different aspects of presidential nominating conventions. First, funds for convention operations come from the Presidential Election Campaign Fund (PECF), which provides financial assistance to publicly financed presidential campaigns. Second, funds are appropriated by Congress to the Department of Justice (DOJ) for security costs incurred by state and local governments hosting the conventions.", "Congress makes no appropriations for PECF funds (including amounts used to support conventions). Rather, amounts in the PECF are determined by \"checkoff\" designations on individuals' federal income tax returns. Individuals may choose to designate $3 of their tax liability to the PECF. Married couples filing jointly may designate a total of $6 to the fund.\nFederal law permitted the two major parties' conventions to receive grants of approximately $18.2 million each for the 2012 election cycle (an inflation-adjusted base amount of $4 million each). These grants are awarded to the relevant party's convention committee. Qualifying convention committees are not obligated to accept PECF funds, but doing so is standard practice. Third parties are eligible for limited public convention funds, but they rarely qualify. Grants for 2016 have not yet been announced, but barring a change in law, the amounts will be the 2012 grants of $18.2 million adjusted for future inflation.\nUnder federal law, PECF convention grants must first be reserved before other elements of presidential public funding can be distributed. Once convention grants are reserved, the Treasury Department may distribute general election grants and primary matching funds to participating presidential candidates. The Federal Election Commission (FEC) determines eligibility for PECF funds based on requirements established in Title 26 of the U.S. Code (the Internal Revenue Code), the Federal Election Campaign Act (FECA), and FEC regulations.", "The second source of federal convention funds comes through the Office of Justice Programs (OJP), within the Department of Justice (DOJ). This OJP funding has only been available in FY2004, FY2008, and FY2012, arguably as a result of the September 11, 2001, terrorist attacks. In 2004, Congress appropriated $100 million, through DOJ, for the Democratic and Republican presidential nominating conventions in Boston and New York City. In 2008, Congress appropriated $100 million for the Democratic and Republican presidential nominating convention security in Denver and Minneapolis-St. Paul, respectively. In 2012, the $100 million was administered through OJP's Edward Byrne Memorial State and Local Law Enforcement Assistance Programs for convention security in Charlotte and Tampa. DOJ used most of this funding to reimburse state and local law enforcement entities for overtime costs associated with convention security.\nEven though DOJ administered the convention security funding, DOJ was not responsible for security at the presidential nominating conventions. Rather, the U.S. Secret Service (USSS) was responsible for planning, coordinating, and implementing security operations at conventions. Congress authorized the USSS—when directed by the President—to be the lead federal agency for convention security in P.L. 106-544 (the Presidential Threat Protection Act of 2000) because the conventions are designated as National Special Security Events (NSSE). In addition to presidential nominating conventions, NSSEs include such events as presidential inaugurations, major international summits held in the United States, and some major sporting events.", "As Table 1 shows, the federal government provided a total of approximately $136.5 million—combining PECF grants and security expenditures—to support the 2012 Democratic and Republican conventions. Each convention was allocated approximately $68.2 million.\nNo third parties qualified for any federal funding in 2012. A third party most recently received PECF funds in 2000. That year, the Reform Party reportedly qualified for $2.5 million in federal funds. Congress has never appropriated funds for a third party's convention security.", "In exchange for receiving public funds, a party's convention committee must agree not to raise or spend additional funds. Certain exceptions are permitted for legal or accounting fees. (As is discussed later in this report, nonfederal funds also supplement conventions, although those funds do not flow through the convention committees.) Among other requirements, convention committees receiving public funds must file disclosure reports with the FEC, agree to provide the commission with any requested documents, and submit to an audit of their PECF spending.\nFederal law places relatively few restrictions on how PECF convention funds are spent, as long as purchases are lawful and are used to \"defray expenses incurred with respect to a presidential nominating convention.\"\nFEC regulations provide additional guidance on permissible and prohibited spending. Per FEC regulations, permissible PECF convention expenses include items such as:\n\"preparing, maintaining, and dismantling\" the convention site; personnel and staff expenses (including bonuses); convention operations and planning; security; transportation; certain entertainment; administrative items (e.g., office supplies); gifts for convention staff or volunteers (limited to $150 per person or $20,000 total); production of candidate biographical films; or investment of PECF funds if the profits are to be used to defray convention costs.\nIt is important to note, however, that although federal regulations permit the types of spending described above, individual convention committees do not necessarily choose to fund all of those activities.\nConvention committees are prohibited from spending PECF funds on items including\ncandidate or delegate participation in the convention, except in limited circumstances; any item that would violate federal or state laws; penalties resulting from enforcement of federal election law; or replacing lost or stolen items, except in limited circumstances.", "There were no conditions on security funds per se; however, convention security funding could only be used for costs associated with specifically identified presidential nominating conventions. In 2012, the Democratic convention in Charlotte and the Republican convention in Tampa were the only ones authorized to receive federal security funding. This funding was primarily used to reimburse state and local law enforcement entities directly for their expenses, thus neither major party was an eligible recipient of this security funding.\nThe $100 million Congress appropriated for the FY2012 presidential nominating conventions was, reportedly, primarily to reimburse states and localities for law enforcement costs associated with their participation in securing the convention sites. In 2004, the main security costs that state and local law enforcement entities incurred involved overtime payments. This overtime of state and local law enforcement personnel might be the result of their participation in not only securing the convention venue, but participating in such activities as advance planning, conducting liaison for venue and air space security, training, and establishing and maintaining communications.\nAdditionally, there may have been other security costs incurred by the federal government associated with the conventions that were not part of the $100 million appropriated in FY2012. Some of these additional security costs may have included the USSS protection of the major presidential candidates (whether at the convention or at other campaign locations) and the use of other federal government personnel which assisted in securing the convention sites, such as Federal Protective Service law enforcement officers. Other federal security costs included the securing of the convention venue through the positioning of fencing and barricades, as well as the pre-positioning of federal law enforcement K-9 units and other teams such as the U.S. Department of Homeland Security's (DHS's) Domestic Emergency Support Teams, and Urban Search and Rescue Teams.", "As discussed below, conventions also benefit from nonfederal money that supports certain activities and security operations. In both cases, amounts of nonfederal funds can vary widely and are not necessarily centrally reported.", "Nonfederal funds are a major source of money associated with the political (as opposed to security) side of presidential nominating conventions. The Campaign Finance Institute has estimated that more than 75% of money related to the 2004 Democratic and Republican conventions came from private sources. The 2008 conventions also appear to have been heavily subsidized, albeit indirectly, by nonfederal funds. In August 2008, CFI and the Center for Responsive Politics estimated that 80% of funds for the 2008 Democratic and Republican conventions would come from private (nonfederal) sources. Similar estimates for 2012 appear to be unavailable, but it is clear that substantial private fundraising surrounding conventions—albeit not for the convention committees themselves—remains steady. For 2012, the Charlotte \"host committee\" for the Democratic National Convention reported raising a total of $37.5 million, compared with $57.1 million for the Tampa Republican host committee. As is discussed below, state and local governments may also spend additional amounts on security.\nNonfederal funds are generally not subject to the limits on contribution sources and amounts found in federal campaign finance law, although some FEC reporting requirements apply. Although convention committees may not accept private funds (other than certain amounts to offset legal and accounting needs), local host committees may solicit and spend private contributions for activities related to the convention, such as \"use of an auditorium or convention center,\" promoting the convention city, and hosting receptions or tours for attendees.\nAs a practical matter, the regulation of federal versus nonfederal funds rests largely on how FECA and the FEC have treated each source. FECA is largely silent on campaign finance aspects of nonfederal funds, and the FEC has determined that nonfederal funds do not explicitly support the conventions per se, even if they support events associated with those conventions. In particular, a 2003 FEC rulemaking reaffirmed the commission's long-held view that\ndonations of funds to host committees are, as a matter of law, distinct from other donations by prohibited sources [defined in FECA] in that they are motivated by a desire to promote the convention city and hence are not subject to the absolute ban on corporate contributions in 2 U.S.C. 441b [a FECA provision]. This conclusion is buttressed by the fact that frequently members of the opposite political party have played prominent and active roles in convention host committees.\nState or local governments, or coalitions of those governments, may also provide financial assistance to conventions through entities known as \"municipal funds.\" The FEC has also permitted corporations and labor unions, which may not provide direct financial support to federal campaigns, to make certain contributions of goods or services to host committees and municipal funds. In addition, \"commercial vendors\" may provide goods or services to convention committees \"at reduced or discounted rates, or at no charge\" in certain circumstances.", "Even though the primary use of the $100 million of federal funds through DOJ's security grants was intended to offset the security costs incurred by state and local governments, additional funds may have been needed. Therefore, one can assume that nonfederal funding (state and local government funding) was also used to secure the conventions. The amount of nonfederal funding was based on the costs to state and local law enforcement entities that work with the USSS and other federal law enforcement agencies during the convention. Additionally, unlike the funding used by party convention committees, any nonfederal funds used for convention security came from state and local governments, not PECF designations.", "", "Legislation introduced during the 113 th Congress that would affect convention financing is largely similar to other legislation considered in recent Congresses. On December 11, 2013, the House passed (295-103) H.R. 2019 . Relevant provisions of an amended version of the bill would eliminate PECF convention funding and convert amounts to a \"10-Year Pediatric Research Initiative Fund.\" The Committee on House Administration has reported two other related bills ( H.R. 94 ; H.R. 95 ). H.R. 94 would eliminate convention financing; H.R. 95 would eliminate the entire public financing program. Other bills that would eliminate convention financing include H.R. 260 , H.R. 1724 , H.R. 2857 , and S. 118 . Another bill, H.R. 270 , would eliminate convention financing but revamp other parts of the presidential public financing program.\nIn the 112 th Congress, both chambers passed separate bills to eliminate PECF convention funding, but none became law. In the Senate, an amendment (containing text from S. 3257 (Coburn)) to the 2012 Agriculture Reform, Food and Jobs Act, S. 3240 , would have eliminated PECF convention funding. The amendment and the underlying bill passed the Senate on June 21, 2012. Separately, S. 194 (McConnell) proposed to eliminate the entire public financing program. The House passed (239-160) H.R. 359 (Cole) on January 26, 2011. On December 1, 2011, the House passed (235-190) H.R. 3463 (Harper). That bill's public financing provisions were virtually identical to H.R. 359 . H.R. 3463 also would have eliminated the Election Assistance Commission (EAC), a topic that is unrelated to public financing of presidential campaigns and conventions. Another bill, H.R. 5912 (Cole), would have eliminated only convention financing. Other legislation would have maintained the public financing program for candidates but would alter convention financing. These bills include H.R. 414 (Price, NC) and S. 3312 (Udall, CO). Both would eliminate convention funding.\nIn the 111 th Congress, H.R. 2992 proposed to eliminate PECF convention funding. Two other 111 th bills, H.R. 6061 and S. 3681 , although bolstering other elements of the public financing program, also would have eliminated convention funding. None of these measures appeared to affect separate security funding discussed in this report.\nFour bills introduced in the 110 th Congress would have affected PECF convention financing. Only one of those bills ( H.R. 72 ) was principally concerned with convention funding. Others emphasized broader presidential public financing issues. None of these measures became law. Additional discussion appears in the \" Policy Issues and Options \" section of this report.\nPresently, there is no legislation pending that would affect convention security funding. The 112 th Congress appropriated $100 million for convention security in FY2012 ( P.L. 112-55 ).", "", "As Congress considers whether, or how, to address PECF convention funds, Members may first examine what role it wishes those funds (or other federal funds) to play in modern conventions. The current system of PECF convention grants (and the presidential public financing program generally) has been in place since the 1976 election cycle and has remained essentially unchanged since that time. Although this report is not focused on nonfederal funds (e.g., \"soft money\"), it is widely accepted that such funds play a prominent, even if indirect, role in convention financing. As discussed below, the tension between federal and nonfederal funds is likely to shape congressional consideration of convention financing.\nThose who are wary of private, \"interested\" money in politics typically argue that public funds are a way to insulate conventions (or other aspects of elections) from undue individual, corporate, or labor influence and from real or apparent corruption stemming from private funds. From that perspective, maintaining or expanding public financing of conventions could be attractive. Similarly, Congress could choose to restrict sources of nonfederal funds. On the other hand, in light of the availability of nonfederal funds, even those who support public financing in general might argue that federal funding for conventions is unnecessary or that it should be diminished. Finally, those opposed to campaign finance regulation often view any public financial assistance to campaigns (or conventions) as an inappropriate use of taxpayer funds.\nAs is evident from the preceding discussion, the policy options addressed below, or others, would likely be part of a larger debate surrounding convention financing and presidential public financing in general.", "If Congress chooses to make no policy changes, the role of PECF convention funds will remain as it is today. Convention committees that choose to accept public funds would continue to be bound by the regulations discussed above, and nonfederal funds would likely continue playing a role in convention financing. Barring a statutory change, the amount of PECF funds available to convention committees will continue to increase incrementally with inflation.", "The policy options discussed below could change the amount of federal funding available to conventions. Some of these options are proposed in recent legislation. Others provide additional approaches that have been offered for consideration, but are not the subject of recent legislation.\nRegardless of the particular approach, expanding federal funding could decrease the perceived need for nonfederal funds. However, in the absence of additional regulation of nonfederal funds, or voluntary decreases in spending by entities providing nonfederal funds, expanded federal funding could also increase the total amount of money surrounding conventions. Any change in federal convention funding would require amending the amounts currently specified in federal law.", "As noted previously, PECF convention grants are reserved before matching funds or general-election grants are paid to publicly financed presidential candidates. If, however, Congress believes that funding candidates should be the top priority for the public financing program, de-prioritizing convention funding could be an option. Doing so might help avoid future financial shortfalls in other aspects of the public financing program (particularly primary matching funds). Nonetheless, it is possible that shortfalls could then affect convention funds, especially if convention funds were distributed after candidate funds.", "Appropriating funds would permit Congress to annually (or every four years) determine the amount of money available to conventions, as opposed (or in addition) to the most recent PECF amount of $18.2 million per major party. If the PECF grant structure were abandoned in favor of appropriated funds, Congress could legislate any other funding amount (or none, as discussed below). Accordingly, although appropriations might yield more funding for conventions than is currently available, Congress might also appropriate less funding. Appropriating convention funds would also mark a departure from Congress's traditional approach to presidential public financing, which has always emphasized taxpayers' roles in determining available funding.", "As noted previously, federal financing of presidential campaigns—including convention financing—relies entirely on \"checkoff\" designations by individual taxpayers. Currently, the checkoff question allows taxpayers only to designate to the PECF $3 for individuals, or $6 for married couples filing jointly. Available funds are then distributed through convention grants, general election grants, and matching funds, as described previously. Congress could, however, choose to alter the checkoff designation by posing two separate questions to taxpayers: one for candidate financing, and another for convention financing. Of course, taxpayers might choose to either provide more or less funding to conventions (and candidate campaigns).", "Increasing the checkoff designation amount is frequently proposed as a way to provide additional funds to the PECF in general. The same could be proposed for convention funding in particular. For the first and only time, Congress tripled the checkoff amount (from $1 to $3 and $2 to $6) to their current levels in 1993. Although increasing the checkoff amount did provide an influx of money to the PECF, it did not increase the percentage of taxpayers contributing to the fund. If that same scenario occurred with another increase in the checkoff amount, more money would be available for public financing (including conventions if Congress so designates), but declining participation could threaten available funds in the long term.", "If Congress determined that convention funding were no longer necessary—or if it wanted to concentrate remaining funding on candidate campaigns—convention grants could be eliminated entirely. This outcome could be accomplished by repealing relevant sections of federal law, or by amending the law to prohibit the FEC from certifying convention grants, or the Treasury Secretary from making convention payments. Those concerned about the influence of private money, particularly soft money, in convention financing would likely object to conventions that are completely dependent upon private funds.", "During the presidential election years of 2004, 2008, and 2012, Congress appropriated funding through DOJ for convention security; however, DOJ does not plan, provide training for, exercise, or implement convention security operations. Instead, the USSS (a DHS entity) is the lead federal agency for convention security and any other National Special Security Event, such as the 2013 inauguration of President Barack Obama. DOJ's role in providing convention security funding, the mission of the USSS, and the relationship between federal funding and nonfederal costs associated with convention security could be issues that Congress might choose to address prior to the conventions in 2016.\nPresently, the USSS is responsible for administering the convention security operations, in coordination with nonfederal entities, and using its own funding to cover any costs incurred by federal agencies involved in the security operations. However, state and local governments, following the convention, had to apply to DOJ for reimbursement of their costs associated with convention security. DOJ administered the security grants because the USSS is not authorized to reimburse state and local government costs associated with any NSSE, and specifically any costs associated with presidential nominating conventions. It may be argued that the federal security activities executed by the USSS require coordination with the distribution of federal funds.\nState and local law enforcement entities are responsible for providing personnel and equipment during conventions and working with the USSS to \"develop and implement a seamless security plan that will create a safe and secure environment for the general public, event participants, Secret Service protectees, and other dignitaries.\" To support this effort, the 112 th Congress appropriated $19 million for NSSE costs within the USSS in FY2012.", "If Congress chooses to make no policy changes, the routine of appropriating convention security funds during presidential election years would remain unchanged. State and local law enforcement entities would continue assisting the USSS in securing the convention venues and then apply to DOJ for reimbursement following the completion of the conventions.\nState and local governments can use some DHS grants, such as the Homeland Security Grant Program (HSGP) for convention security activities, even though DHS did not administer the convention security grants that Congress appropriated in FY2004, FY2008, and 2012. The grant approval process for the DHS programs, however, is not flexible, so the programs have limited application to conventions. States and localities, when hosting a convention, would need to incorporate plans to use HSGP funding for convention security in their grant applications. DHS does authorize states and localities to reprogram HSGP funding with the DHS Secretary's approval; however, that may result in states and localities not funding other planned homeland security activities.", "The policy options discussed below could change the amount of federal security funding available to conventions. None of these options have been proposed in legislation.", "For presidential election years, Congress could fund convention security through DHS's HSGP grants. This could be achieved by either increasing the HSGP allocations for convention locations in election years, or by requiring convention states and localities to apply HSGP funding specifically for convention security during election years. As noted above, this is an option that states and localities can utilize; however, it may result in not funding other planned homeland security activities.\nThis option would also remove DOJ from the convention security funding cycle. States and localities have an established grant application mechanism with DHS related to homeland security funding and activities, and the use of HSGP appropriations for convention security, arguably, are homeland security activities.", "Another option Congress may consider is authorizing the USSS to reimburse state and local convention security costs. Because the USSS is the federal agency responsible for convention security, one could argue that Congress could appropriate funding to the USSS to reimburse state and local costs. Arguably, the USSS could be more effective in auditing state and local law enforcement costs and determine reimbursement amounts since the USSS is the lead federal agency for convention security. This option, like the preceding one, would remove DOJ from administering the convention security funding. Conversely, this option would require the USSS to establish and administer a grant process that is not, at present, a responsibility of the agency.", "Congress could also choose to not appropriate funding to reimburse state and local governments for convention security costs. This might result in a reduced security role for state and local law enforcement entities or force state and local governments to fund all of their convention security activities. However, this option seems unlikely given the present national concern with homeland security, and the national interest in protecting major presidential candidates and ensuring the security of mass political events.", "Although PECF funding of convention operations has been in place since the 1976 election cycle, the role of federal convention funding remains subject to debate in Congress and beyond. Most of that debate, however, occurs within the broader discussions of presidential public financing and \"hard\" versus \"soft\" money in campaigns. Congress has several options for revisiting the federal role in PECF funding, if it chooses to do so.\nThe role of the federal government in funding convention security is a fairly new development since the terrorist attacks of September 11, 2001. As federal, state, and local governments further refine their homeland security activities generally, and specifically convention security operations, Congress may consider different options for how the federal government provides funding for state and local costs incurred in securing convention venues." ], "depth": [ 0, 1, 1, 2, 3, 3, 3, 3, 3, 2, 3, 3, 1, 2, 1, 2, 3, 3, 4, 4, 4, 4, 4, 2, 3, 3, 4, 4, 4, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h2_full", "h0_title h2_title", "h0_full h2_full", "", "", "h2_full", "", "", "", "", "", "h0_title h1_title h3_title", "h0_full h3_full h1_full", "h0_title h3_title", "h3_full h0_title", "", "h0_title h3_title", "", "h0_full", "", "", "h3_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What does this report provide?", "How did the 113th Congress address nonsecurity funding?", "What effect could other bills potentially have on financing?", "How did the 112th Congress address convention funding?", "What would an amendment to S. 3240 have done?", "What did S. 194 propose?", "What would S. 3312 have done?", "What would H.R. 359 and H.R. 4363 have done?", "To what extent do these measures affect separate security funding discussed in this report?", "What funding did the 2012 Democratic and Republican convention committees receive?", "What federal funding supported the 2008 Democratic and Republican conventions?", "How was such funding provided?", "How have Members of Congress responded to federal convention funding?", "How have supporters of public funding responded?", "How might this report be helpful if Congress decides to revisit convention financing?" ], "summary": [ "This report provides overview and analysis of two recurring questions surrounding the federal government's role in financing presidential nominating conventions. First, how much public funding supports presidential nominating conventions? Second, what options exist for changing that amount if Congress chooses to do so?", "In the 113th Congress, the House passed legislation (H.R. 2019) to eliminate nonsecurity funding.", "Other bills that would eliminate convention financing include H.R. 260, H.R. 1724, H.R. 2857, and S. 118. Another bill, H.R. 270, would eliminate convention financing but revamp other parts of the presidential public financing program.", "The 112th Congress also considered legislation to end convention funding.", "In the Senate, an amendment (containing text from S. 3257) to the 2012 Agriculture Reform, Food and Jobs Act, S. 3240, would have eliminated the convention funding portion of the presidential public financing program. Separately, S. 194 proposed to eliminate the entire public financing program.", "Separately, S. 194 proposed to eliminate the entire public financing program.", "Another Senate bill, S. 3312, would reform the public financing program partially by eliminating convention funding.", "Two measures that would have eliminated convention funding passed the House (H.R. 359 and H.R. 3463). Both would have eliminated the entire public financing program. H.R. 5912 would have eliminated only convention financing. H.R. 414 would have revamped the public financing system but eliminated convention financing.", "These measures do not appear to affect separate security funding discussed in this report.", "The 2012 Democratic and Republican convention committees each received grants, financed with public funds, of approximately $18.2 million (for a total of approximately $36.5 million, as rounded).", "A total of approximately $133.6 million in federal funds supported the 2008 Democratic and Republican conventions.", "Such funding was provided through separate federal programs that support public financing of presidential campaigns and convention security.", "Some Members of Congress and others have objected to federal convention funding and have argued that the events should be entirely self-supporting.", "Others, however, contend that public funding is necessary to avoid real or apparent corruption in this aspect of the presidential nominating process.", "If Congress decides to revisit convention financing, a variety of policy options discussed in this report might present alternatives to current funding arrangements." ], "parent_pair_index": [ -1, -1, -1, -1, 0, 0, 0, -1, 4, -1, 0, 0, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 1, 1, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "Background", "Definition of Sexual Assault", "Centers for Disease Control and Prevention (CDC) and Its Sexual Violence Prevention Efforts", "DOD’s Sexual Assault Prevention and Response Program", "DOD Entities with Key Roles and Responsibilities in the Prevention of Sexual Assault", "DOD Used CDC Guidance to Develop Its Sexual-Assault Prevention Strategy but It Did Not Specify How Related Activities Are Linked to Desired Outcomes or Fully Identify Factors Needed to Focus Its Prevention Efforts", "DOD Updated Its Sexual- Assault Prevention Strategy to Include Some Concepts That CDC Developed for Effective Sexual-Violence Prevention Strategies", "DOD’s Sexual Assault Prevention Strategy Does Not Link Activities to Desired Outcomes", "DOD’s Strategy Does Not Fully Identify Risk and Protective Factors That May Put a Person at Risk for Committing Sexual Assault or, Alternatively, That May Prevent Harm", "DOD and the Services Are Implementing Prevention Activities but They Have Not Taken Steps to Help Ensure That Installation- Developed Activities Are Consistent with the Objectives of DOD’s Prevention Strategy", "DOD’s Implementation of Most Activities in Its Prevention Strategy Are Ongoing", "The Services Have Implemented Installation- Developed Prevention Activities Even Though DOD’s Prevention Strategy Has Not Been Thoroughly Communicated or Disseminated", "Challenges Identified in Cross-Service Collaboration at Selected Sites", "DOD Has Identified Prevention-Focused Measures, but They Are Missing Some Key Attributes Needed to Successfully Assess Program Performance", "DOD Has Identified Performance Measures to Assess Its Efforts to Prevent Sexual Assault", "DOD’s Prevention- Focused Measures Are Missing Many of the 10 Attributes That Contribute to Assessing Program Performance", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Prevention-Focused Program Improvements since 2013 That DOD Highlighted in Its November 2014 Report to the President", "Appendix II: Timeline of Selected GAO Reports and DOD and Congressional Actions on Sexual Assault Prevention and Response in the Military", "Appendix III: Scope and Methodology", "Appendix IV: Comments from the Department of Defense", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "", "DOD defines sexual assault as intentional sexual contact, characterized by use of force, threats, intimidation, abuse of authority, or when the victim does not or cannot consent. The term includes a broad category of sexual offenses consisting of the following specific Uniform Code of Military Justice offenses: rape, sexual assault, aggravated sexual contact, abusive sexual contact, forcible sodomy (forced oral or anal sex), or attempts to commit these acts.", "CDC is one of the major operating components of the Department of Health and Human Services, which serves as the federal government’s principal agency for protecting the health of all U.S. citizens. As part of its health-related mission, CDC serves as the national focal point for developing and applying disease prevention and control, environmental health, and health promotion and education activities. Specifically, CDC, among other things, conducts research to enhance prevention, develops and advocates public-health policies, implements prevention strategies, promotes healthy behaviors, fosters safe and healthful environments, and provides associated training.\nIn 1992, CDC established the National Center for Injury Prevention and Control as the lead federal organization for violence prevention. The center’s Division of Violence Prevention focuses on stopping violence, including sexual violence, before it begins, and it works to achieve this by conducting research on the factors that put people at risk for violence, examining the effective adoption and dissemination of prevention strategies, and evaluating the effectiveness of violence-prevention programs. In addition, CDC operates the Rape Prevention and Education grant program in all 50 states, the District of Columbia, Puerto Rico, and four U.S. territories to strengthen sexual-violence prevention efforts at the local, state, and national level.\nIn 2004, CDC published a framework for effective sexual-violence prevention strategies. This framework includes prevention concepts and strategies, such as identifying risk and protective factors (i.e., factors that may put a person at risk for committing sexual assault or that, alternatively, may prevent harm). CDC suggests that grantees of the Rape Prevention and Education program use this framework as a foundation for planning, implementing, and evaluating activities conducted.", "Since fiscal year 2004, Congress has mandated, and in response DOD has implemented, a number of improvements to its sexual-assault prevention and response program. For example, in 2004, Congress required the Secretary of Defense to develop a comprehensive policy for DOD on the prevention of and response to sexual assaults involving servicemembers and to submit an annual report that includes, among other things, data on reported incidents within each military service and the results of an evaluation of the effectiveness of DOD’s sexual-assault prevention and response policy. In 2005, DOD established its sexual- assault prevention and response program to promote the prevention of sexual assault, to encourage increased reporting of such incidents, and to improve victim response capabilities; and DOD has issued annual reports tracking the number of sexual assaults reported each year.\nSince that time, DOD has undertaken a variety of activities both to prevent sexual assaults from occurring and to increase the department’s visibility over and awareness of sexual-assault incidents that do occur. Specifically, in response to statutory requirements, DOD has provided active-duty servicemembers with two options for reporting a sexual assault: (1) restricted and (2) unrestricted. DOD’s restricted reporting option allows sexual-assault victims to confidentially disclose an alleged sexual assault to select individuals and receive medical and mental health-care treatment without initiating an official investigation. In cases where a victim elects restricted reporting, first responders may not disclose confidential communications to law-enforcement or command authorities unless certain exceptions apply, and improper disclosure of confidential communications and medical information may result in discipline pursuant to the Uniform Code of Military Justice or other adverse personnel actions. In contrast, DOD’s unrestricted reporting option triggers an investigation by a military criminal-investigative organization. In an effort to increase victims’ confidence in the military- justice process and to encourage reporting, DOD revised its sexual- assault prevention and response policy in January 2012 to protect victims of sexual assault from coercion, retaliation, and reprisal.", "Various offices and organizations within DOD play a role in preventing and responding to sexual assault within the military. The Under Secretary of Defense for Personnel and Readiness is responsible for developing the overall policy and guidance for the department’s sexual-assault prevention and response program, except for criminal-investigative policy matters assigned to the DOD Inspector General and legal processes in the Uniform Code of Military Justice. Accordingly, the Under Secretary of Defense for Personnel and Readiness oversees SAPRO, which serves as the department’s single point of authority, accountability, and oversight for its sexual-assault prevention and response program. The responsibilities of the Under Secretary of Defense for Personnel and Readiness and SAPRO with regard to sexual-assault prevention and response include providing the military services with guidance and technical support and facilitating the identification and resolution of issues; developing programs, policies, and training standards for the prevention of, reporting of, and response to sexual assault; developing strategic program guidance and joint planning objectives; overseeing the department’s collection and maintenance of data on reported alleged sexual assaults involving servicemembers; establishing mechanisms to measure the effectiveness of the department’s sexual-assault prevention and response program; and preparing the department’s mandated annual reports to Congress on sexual assaults involving servicemembers.\nEach military service has established a sexual-assault prevention and response office that is responsible for overseeing and managing the service’s sexual-assault program. Each military service has also established the SARC position to serve as the single point of contact for ensuring that sexual-assault victims receive appropriate and responsive care and are generally responsible for implementing their respective services’ SAPR program. According to DOD’s instruction, commanders, supervisors, and managers at all levels are responsible for the effective implementation of both the policy and the program. Other responders include victim advocates, judge advocates, medical and mental health- care providers, criminal-investigative personnel, law-enforcement personnel, and chaplains.\nThe Secretaries of the military departments are responsible for establishing policies to implement the sexual-assault prevention and response program and procedures, and ensuring compliance with DOD’s policy. Further, they are responsible for establishing policies that ensure commander accountability for program implementation and execution. Each military service maintains a primary policy document on its sexual- assault prevention and response program. Much like DOD’s directive and instruction on sexual-assault prevention and response, the service policies outline responsibilities of relevant stakeholders, including commanders, SARCs, and victim advocates, and training requirements for all personnel.", "DOD developed its sexual-assault prevention strategy in 2014 using CDC’s framework for effective sexual-violence prevention strategies, but DOD did not link prevention activities to desired outcomes or fully identify risk and protective factors. Specifically, DOD identified 18 prevention- related activities in its strategy, but did not specify how these activities are linked with the desired outcomes of the department’s overall prevention efforts. Further, in adapting CDC’s framework to address the unique nature of the military environment, DOD did not fully identify risk and protective factors (i.e., factors that may put a person at risk for committing sexual assault or that, alternatively, may prevent harm) in its updated strategy.", "In April 2014, DOD published an updated prevention strategy using concepts from CDC’s framework for effective sexual-violence prevention strategies. Following guidance outlined by the Secretary of Defense in the 2013 Department of Defense Sexual Assault Prevention and Response Strategic Plan, SAPRO developed and executed a sexual-assault prevention campaign to identify evidence-based prevention practices and lessons learned, in order to update the department’s 2008 Sexual Assault Prevention Strategy. Though not required to do so, DOD consulted with and incorporated CDC’s framework and prevention-related concepts into its prevention strategy. Specifically, DOD incorporated CDC’s concept that defines the different levels at which prevention efforts occur and another CDC concept that describes the importance of identifying and understanding the domains in which sexual violence takes place. For example, in the “Defining Prevention” section of its strategy, DOD notes that it adopted the CDC’s concept that there are three levels of prevention based on when the prevention efforts occur:\nPrimary Prevention: Approaches that take place before sexual violence has occurred to prevent initial perpetration.\nSecondary Prevention: Immediate responses after sexual violence has occurred to address the early identification of victims and the short-term consequences of violence.\nTertiary Prevention: Long-term responses after sexual violence has occurred to address the lasting consequences of violence and sex- offender treatment interventions.\nAccording to DOD, primary prevention is at the core of its focus in developing prevention-related activities, which seek to reduce, with the goal of eliminating factors leading to or associated with, sexual violence, thereby stopping the crime before it occurs. DOD further states that its prevention programs will not rely solely on the training and education of individuals considered to be at risk. Rather, DOD states that its focus on primary prevention will involve empowered and competent individuals interacting in an environment that has been sustained to promote the best possible outcomes.\nDOD’s strategy also incorporates CDC’s concept that there are risk and protective factors that influence the occurrence of sexual violence. According to CDC, identification of risk factors and protective factors is a key step in developing an effective prevention strategy in that it helps to build an understanding of the circumstances—both positive and negative—that may play a role in the perpetration of such incidents. To further enhance the effectiveness of its efforts, CDC categorizes these factors relative to the four domains in which they are identified to exist: (1) society; (2) community; (3) relationship; and (4) individual. According to CDC, this enables an organization to tailor its prevention strategy based on the characteristics of a specific population.\nIn its 2014–16 prevention strategy, DOD adapted CDC’s approach by identifying five domains in which it would focus its prevention efforts: (1) society; (2) the military community (DOD/services/units); (3) leaders at all levels; (4) relationships; and (5) individuals. As depicted in figure 1, while DOD’s model largely mirrors the one created by CDC, it also included “leaders” as a distinct domain of influence because, according to its 2014–16 strategy, the department wanted to recognize the essential role of leadership and to highlight the necessity that commanders and their staffs develop and execute tactics that target this “center of gravity” for prevention efforts. DOD further notes in its strategy that the inherent complexities of preventing sexual assault necessitates that a number of interventions that span multiple levels must take place to achieve the greatest, and most lasting impact.\nDOD’s strategy also incorporates key concepts that CDC has identified as being included in the public health approach to prevention. We reviewed DOD’s 2014–16 prevention strategy and found that it identifies, and categorizes according to the applicable domain, the four concepts that CDC identified as being included in effective public health strategies, including (1) inputs, (2) activities, (3) outputs, and (4) outcomes. For example, within its society domain, DOD identifies inputs, or the resources on which the effectiveness of an effort depends, such as community volunteers and collaboration with federal partners, coalitions, and other primary prevention experts. In addition, DOD’s strategy specifies outputs, which are the direct products of implemented activities and are different from outcomes, which are also included in DOD’s strategy and defined as the intended effect of these activities. For example, DOD identifies the development of courses that instruct and empower members as one of the outputs of its efforts, whereas it notes that the establishment and maintenance of a culture that supports the prevention of sexual assault is a desired outcome of its efforts within the “leaders” domain.", "DOD’s strategy identifies 18 prevention-focused activities that it plans to implement as part of its effort to prevent sexual assault, but it does not link these activities to desired outcomes. According to CDC, effective public-health strategies establish a link between activities and their intended outcomes to help determine whether the actual events that take place as part of a program will logically lead to the intended effect. Further, providing a step-by-step roadmap can help identify gaps in program logic that might not otherwise be apparent; persuade skeptics that progress is being made in the right direction, even if the destination has not yet been reached; and aid program managers in identifying what needs to be emphasized right now or what can be done to accelerate progress. In addition to CDC guidance, DOD’s Strategic Management Plan for Fiscal Years 2014–2015 identifies the alignment of activities and goals as a key step in achieving desired outcomes. Our prior work on effective agency strategic reviews has also shown that it is important to review progress toward strategic objectives in that it can help to determine subsequent actions, and that leaders and responsible managers should be held accountable for knowing the progress being made in achieving outcomes.\nIn DOD’s 2014–16 prevention strategy, DOD identifies 18 targeted activities, the general time frame in which they are to be accomplished, and the office(s) responsible for their implementation. Specifically, DOD’s strategy includes activities such as conducting specialized leader sexual- assault prevention training, establishing collaboration forums to capture and share prevention best practices and lessons learned, and incorporating specific sexual-assault monitoring, measures, and education into normal command training, readiness assessments, and safety forums. In a different section of DOD’s strategy, it lists five general outcomes of its prevention efforts such as acceptance and endorsement of the values that seek to prevent sexual assault and an environment in which servicemembers’ networks support a culture of sexual-assault prevention. Although both are identified in the strategy, DOD does not discuss what, if any, connection exists between activities and outcomes in the department’s efforts to prevent sexual assault.\nDuring our review, we spoke with DOD officials responsible for developing the department’s strategy who acknowledged that while it was modeled after CDC’s guidance on effective public-health strategies, it did not specify how the activities and outcomes identified in the strategy are linked. According to these officials, the department did not link its prevention activities with outcomes because of a complex interplay that exists between these elements. For example, officials described a scenario in which a single prevention activity could be connected with multiple outcomes. We recognize that such a scenario is possible and believe that it reinforces the importance of understanding how specific activities are expected to contribute to desired outcomes. Thus, without a defined link, DOD may not be able to determine which activities are having the desired effect or, when necessary, to make timely and informed adjustments to its efforts to help ensure it continues to progress toward desired outcomes. Furthermore, DOD may lack the information that is needed to conduct a rigorous evaluation of the effectiveness of its efforts to prevent sexual assault.", "DOD’s strategy is based on CDC’s framework for effective sexual- violence prevention strategies, and it addresses some but not all of the elements that CDC identified as necessary to maximize the effectiveness of prevention efforts. According to CDC, there are factors that may put a person at risk for sexual-violence perpetration and victimization while other factors may prevent them from harm. Specifically referred to as risk factors and protective factors, CDC’s work has demonstrated that by identifying such influences—relative to the domain or environment in which they exist—organizations can focus their efforts on eliminating factors that promote sexual violence while also supporting the factors that prevent it. In addition to CDC’s work on prevention strategies, the Office of Management and Budget issued guidance in 2015 on agencies’ strategic reviews in which it acknowledged that while agencies cannot mitigate all risks related to achieving strategic objectives and performance goals, they should identify, measure, and assess challenges related to mission delivery, to the extent possible.\nAs noted previously, DOD adapted CDC’s framework for sexual-violence prevention strategies by identifying five domains to which it would tailor its prevention program, including: (1) society; (2) the military community (DOD/services/units); (3) leaders at all levels; (4) relationships; and (5) individuals. We reviewed DOD’s strategy and found that it includes risk factors identified by CDC for three of these domains—individuals, relationships, and society. For example, within the individual risk domain, DOD identified factors such as alcohol and drug use and hostility toward women as risks that may influence sexual violence. Within the relationship domain, DOD identified factors such as associating with sexually aggressive and delinquent peers and having an emotionally unsupportive familial environment as possible influences on the incidence of sexual violence. However, DOD does not specify risk factors for the two domains over which it potentially has the greatest influence—leaders at all levels of DOD and the military community (i.e., DOD/services/units). For example, the strategy does not identify potential risk factors associated with these domains, such as recognizing that the inherent nature of certain types of commands or units may cultivate an environment in which there is an increased risk of sexual assault.\nWhile not specifically tailored to its military-community domain, DOD’s prevention strategy includes risk factors that CDC had identified as generally applicable to the community domain. For example, DOD’s 2014–16 prevention strategy identifies general tolerance of sexual violence within the community and weak community sanctions against sexual-violence perpetrators as risk factors for that category. While these risk factors may generally apply to DOD, they do not meet CDC’s criteria for effective prevention programs because DOD did not identify risk factors and mitigation techniques based on the unique aspects of the military-community domain.\nAccording to officials with DOD SAPRO, they did not identify risk factors specific to DOD’s military community and leaders domains because insufficient research existed on risk factors for these domains and the department did not independently take steps to identify relevant risk factors prior to the strategy’s publication. A senior DOD official added that DOD asked the RAND Corporation, after the strategy was published, to analyze risk factors, including the military community and leaders domains, as a part of its work on the 2014 Military Workplace Study. In its fiscal year 2014 Department of Defense Annual Report on Sexual Assault in the Military, DOD reported on the findings of RAND’s analysis, which included several risk factors for the military-community domain such as differences between service branches as well as between the active-duty and reserve components. RAND did not conduct a similar analysis to identify risk factors for DOD’s leader domain.\nDOD also included six protective factors identified by CDC in its prevention strategy, but it does not specify how they relate to the five domains. For example, emotional health and connectedness were listed as protective factors for high-school boys that may help to curb the initiation of sexual violence. For high-school girls, academic achievement was listed as a factor that may reduce their exposure to sexual violence. However, the protective factors that DOD included in its strategy are grouped together in a general category rather than being listed under the domain to which they corresponds. During our review, we spoke with a senior DOD official responsible for developing the strategy who acknowledged that more research is needed to identify risk and protective factors for each of the domains in its model. Without a more comprehensive list of such factors that correspond to each of the domains in its strategy, DOD may be limited in its ability to take an evidence-based approach to the prevention of sexual assault. Further, DOD may not be able to accurately characterize the environment in which sexual assaults occur or to develop activities and interventions to more effectively prevent them. Table 1 provides additional details about the risk factors identified by domain in DOD’s 2014-16 Sexual Assault Prevention Strategy.", "DOD and the military services developed and are in the process of implementing prevention-focused activities, but they have not taken steps to help ensure that activities developed at the local level are consistent with the overarching objectives of DOD’s strategy. As noted previously, DOD’s 2014–16 prevention strategy identifies 18 prevention-focused activities and, according to SAPRO officials, 2 have been implemented and efforts to address the remaining 16 are ongoing. In addition to the activities listed in DOD’s strategy, installation-based personnel have developed and implemented various prevention activities at military- service installations. However, these installation-developed activities may not be consistent with DOD’s prevention strategy because DOD and the services have not communicated the purpose of the strategy and disseminated it to the installation-based personnel responsible for developing and implementing activities at the local level. Further, the military services’ SAPR policies—key conduits of such communication— have not been updated to align with the guidance in the strategy. During visits to selected installations, we also found that there is limited collaboration taking place on the prevention activities developed locally, which could further affect the effectiveness and efficiency of the department’s efforts to prevent sexual assault within the military.", "DOD and the military services are in the process of implementing the prevention-focused activities noted in DOD’s 2014-16 Sexual Assault Prevention Strategy. In its strategy, DOD specifies that one of the department’s goals is to deliver consistent and effective sexual-assault prevention methods and programs. In doing so, DOD believes that it will help to instill a culture of mutual respect and trust, professional values, and team commitment, which are reinforced to create an environment where sexual assault is not tolerated, condoned, or ignored. To achieve this goal, DOD identified 18 activities in its prevention strategy as well as their general time frame for completion, their priority relative to the overall strategy, and the office with primary responsibility for their implementation (i.e., SAPRO, military department, or service). For example, one activity assigns SAPRO responsibility for developing a military community of practice focused on primary prevention within 1 year of the strategy’s April 2014 publication. Other activities, such as implementing policies that appropriately address high-risk situations targeted by offenders are designated as responsibilities of the military services and are to be completed within 3 years of the strategy’s implementation. Table 2 provides a comprehensive list of the 18 prevention-focused activities identified in DOD’s 2014-16 Sexual Assault Prevention Strategy as well as the time frames in which they are to be implemented and the offices responsible for their implementation.\nAccording to SAPRO, the office responsible for developing the department’s strategy, 2 of the 18 activities identified in the strategy have been fully implemented. Specifically, SAPRO officials said its activities “Implementation of the 2014-16 Sexual Assault Prevention Strategy” and “Develop a military community of practice focused on primary prevention of sexual assault” are complete and the remaining 16 activities are ongoing. Officials stated that the implementation of the 2014-16 Sexual Assault Prevention Strategy activity was completed with its publication in April 2014. SAPRO also noted that a military community of practice was started with the August 2014 implementation of “SAPR Connect”—an online community in which DOD SAPR personnel can collaborate and share ideas, news, research, and insights from experts on issues related to sexual assault.\nIn addition to the 2 activities it identified as implemented, efforts are under way to implement the remaining 16. However, SAPRO officials said that the remaining 16 activities identified in its strategy will never be considered “complete” because, as the program develops, the department will consistently revise and renew its approach in these areas. As such, officials stated that the status of the remaining 16 activities is, and will indefinitely remain, designated as “ongoing.” Though the remaining activities are not considered complete, each service has taken steps to support the ongoing efforts specified in the department’s strategy. For example, each military service annually administers sexual- assault prevention and response training that addresses the nature of sexual assault in the military environment using scenario-based, real-life situations to demonstrate the entire cycle of prevention, reporting, response, and accountability procedures. In addition, each service has developed and implemented its own prevention-focused training. For example, in the spring of 2014, the Air Force held a SAPR Stand-Down Day focused on teaching airmen to identify sexual-assault offenders by showing how they operate and to impart the effect that offenders can have on their victims. In 2014, the Marine Corps also expanded its SAPR training efforts to include courses that emphasize character, social courage, and mutual respect among Marines. Specifically, the Marine Corps instituted a 2-hour ethics course of instruction for new recruits who are awaiting travel to their initial military training, which focuses on developing an understanding of sexual assault, harassment, hazing, and alcohol abuse.\nThe services have also taken steps to address the activity that directs them to review and, if necessary, expand alcohol policies to address factors beyond individual use. For example, some Army installations have adopted more stringent alcohol policies, such as limiting the amount of alcohol that soldiers may have in the barracks or purchase from installation facilities, and the Navy took steps to improve its training of alcohol providers and to engage local-community leadership and organizations to expand prevention efforts off base. In addition, the Marine Corps restricted on-base retail alcoholic beverage sales to the hours of 8:00 a.m. to 10:00 p.m. and limited its availability in non– package stores to no more than 10 percent of the total retail selling floor space, while the Air Force revised its alcoholic beverage policy to deglamorize behavior associated with excessive drinking.", "The military services have developed and implemented activities at the installation level, independent of DOD’s prevention strategy, in an effort to prevent sexual assault. DOD acknowledged that the 18 activities in the 2014–16 prevention strategy are not the only required prevention activities and encouraged the services to develop their own specific activities. However, DOD also noted that the objectives of DOD’s prevention strategy are to achieve unity of effort and purpose across all of DOD in the execution of sexual-assault prevention. During our visits to selected installations, we found that program personnel were largely unfamiliar with DOD’s prevention strategy and hence may not be implementing activities in a manner consistent with the objectives of DOD’s strategy. In its 2014-16 prevention strategy, DOD highlights that it is important for leaders to employ targeted interventions, standards, and messaging to address issues unique to their unit climate, and that prevention programs should be tailored to specific audiences and for specific purposes and circumstances. However, DOD also notes that the strategy provides a framework, means, ways, and supporting end states to assist leaders and planners in the development of appropriate activities. SAPRO officials stated that they have implemented several initiatives to communicate directly with the SAPR Program Leads on prevention strategy as well as servicemembers in the field. For example, as of October 1, 2015 SAPRO has provided workshops to SARCs from the Navy and Marine Corps on implementation of the prevention strategy via webinar or face-to-face to help participants translate the strategy into action. Other workshops’ dates are being finalized.\nDuring the course of our review, we met with military officials and program personnel from a joint base and three service-specific installations who described prevention activities that had been developed locally and were not listed in DOD’s strategy. The efforts at these installations included a variety of activities ranging from displays of sexual-assault awareness symbols to service-sponsored sporting events that were generally based on the theme of preventing sexual assault. Despite their responsibilities for and experience with coordinating and implementing prevention-focused activities, the program personnel we met with consistently said that DOD and their respective services had not communicated and disseminated guidance to them on the department’s prevention strategy and that they were generally unaware of how the department’s 2014–16 prevention strategy related to their development and implementation of sexual-assault prevention activities.\nIn the absence of such guidance, we discussed with SAPR personnel at the installations we visited their processes for determining which prevention-focused activities to sponsor. For example, we spoke with program personnel at one installation who said that while they were aware of DOD’s prevention strategy, they had not received any headquarter-level guidance or direction on the types of activities they should sponsor in support of their efforts to prevent sexual assault. At another installation, we spoke with program personnel who stated they didn’t think that the communication flow between the headquarters-level SAPR office and the installation was as fast or as formal as it needs to be to address a constantly changing program. In addition, SAPR personnel provided a briefing on their program in which prevention-focused activities were categorized according to the five domains identified in DOD’s 2014- 16 prevention strategy. When we asked how they became familiar with DOD’s prevention strategy, a program official said she had found the information during a self-initiated search through documents on SAPRO’s website. Such an action is noteworthy; however, without a plan to communicate the prevention strategy and roles and responsibilities for its implementation, DOD and the military services cannot be sure that all installation-based program personnel are implementing activities that are designed to achieve the goals and objectives of the department’s prevention strategy.\nWe also found that the services’ SAPR policies—a key conduit for communicating a program’s purpose and corresponding roles and responsibilities to relevant personnel—have not been updated to reflect the tenets of DOD’s most recent prevention strategy. DOD’s 2014-16 Sexual Assault Prevention Strategy specifies that one of the department’s objectives is to achieve unity of effort and purpose across all of DOD in the execution of sexual-assault prevention and also directs the DOD components and the Secretaries of the military departments to align their implementing plans and policies with the department’s prevention strategy. While the services’ SAPR policies generally address the prevention of sexual assault, they have not been updated to align with and operationalize the principles outlined in DOD’s most recent prevention strategy. Specifically, the Army and Air Force have revised their policies after the issuance of DOD’s 2014–16 prevention strategy, but neither incorporates specific elements of DOD’s prevention strategy. The Navy and Marine Corps SAPR policies were issued in 2013 prior to the issuance of DOD’s 2014–2016 prevention strategy and have yet to be updated..\nWe recognize that DOD’s most recent prevention strategy was published approximately a year and a half ago and that it takes time for its prevention strategy to take root in an organization as large as DOD. However, there may be a disconnect between DOD’s SAPR policies and what is being implemented by the services—something that has previously been identified within the department as a challenge. Notably, in May 2012, the Joint Chiefs of Staff issued its Strategic Direction to the Joint Force on Sexual Assault Prevention and Response in which it noted that evidence clearly indicated that gaps remain between the precepts of the DOD’s SAPR program and its full implementation at command and unit levels. Thus, without SAPR policies that are aligned with the department’s prevention strategy, the military services will be limited in their ability to promote consistency in the prevention efforts that are being developed and implemented throughout DOD.", "During site visits to a joint base and three service-specific installations in the same geographic location, we found limited collaboration among the services on their efforts to prevent sexual assault. DOD’s 2014-16 Sexual Assault Prevention Strategy directs the military services to collaborate so they can capture and share best practices and lessons learned related to the prevention of sexual assault. This direction is further reinforced in both the 2013 and 2015 versions of its SAPR strategic plan, which note that it is the department’s objective to deliver consistent and effective prevention methods and programs. Further, the May 2012 Strategic Direction from the Joint Chiefs of Staff, which predates DOD’s current prevention strategy, directed commanders and leaders across the military services to synchronize their respective sexual-assault prevention and response programs to increase unity of effort through a joint perspective and consistent application of prevention, intervention, and response.\nDuring our site visits, we met with military officials and SAPR program personnel who consistently acknowledged the need to improve cross- service collaboration on the prevention of sexual assault. However, they added that the different structures and processes of their respective services’ SAPR programs complicated such collaboration. For example, during a visit to an Army base, program personnel informed us of an attempt to collaborate with the other services on SAPR activities. However, they added that the other services declined to collaborate because the other services, whose programs were solely focused on addressing sexual assault, thought it would be confusing to collaborate with the Army since their program now addressed both sexual harassment and assault. During a visit to another installation, a military official stated that the extent of cross-service collaboration on SAPR is based on the individuals involved and the level of importance that they place on pursuing joint activities. The official added that he was not aware of any overarching headquarters-level guidance that promoted such collaboration when the cross-service relationship and desire to work together did not exist.\nIn addition to the structural differences of each service, program personnel said that they do not have the number of personnel needed to cultivate more cross-service SAPR activities. Specifically, program personnel said that their SAPR offices were consistently understaffed and that the staff who are available are focused on the needs of their respective service’s program. For example, we met with SAPR personnel at one installation who said that there is one SARC and one victim advocate assigned to serve a population of 1,200 servicemembers. Additionally, SAPR personnel from another installation said that it can be difficult to maintain a sufficient number of SAPR personnel because many of their staff and volunteers are servicemembers who become unavailable, and in some cases, not replaced when they deploy.\nDuring the course of our review, we met with headquarters-level officials in SAPRO who explained that, during joint-base negotiations, the services decided that SAPR programs would remain separate. Specifically, SAPRO officials said that while the Army has made an effort to develop joint response centers, all of the military services wanted procedures, such as sexual-assault investigations, to be handled by their respective service. SAPRO officials stated, however, that one of the assessment tasks in its strategic plan is to conduct a review of joint environments and that they have added questions on joint basing for the military services to respond to and include as part of their input to DOD’s Annual Report on Sexual Assault in the Military.", "DOD has identified performance measures to assess the extent to which its prevention efforts are achieving its goal to eliminate sexual assault in the military, but these measures are missing many of the 10 key attributes that our prior work has shown can contribute to assessing program performance effectively. Specifically, DOD has identified 12 performance measures that it will use to assess the overall effectiveness of its sexual- assault prevention and response program, and 5 of these measures are specifically designed to gauge the effectiveness of its prevention line of effort. While all 5 of DOD’s prevention-focused measures demonstrate some of the key attributes, collectively they are missing more than half of these attributes.", "DOD has recently identified a new set of performance measures to assess its efforts to prevent sexual assault. Since 2005, DOD’s SAPR policy has required that the Under Secretary of Defense for Personnel and Readiness develop metrics to measure compliance and effectiveness of training, awareness, prevention, and response policies and programs. Since that time, we have recommended, among other things, that DOD develop an oversight framework that contained performance goals, strategies to be used to accomplish goals, and criteria to measure the progress of its prevention and response efforts. In October 2009, Congress required DOD to submit a revised SAPR implementation plan to include, among other things, methods to measure the effectiveness of plans that implement DOD policies regarding sexual assaults involving members of the armed forces. In response, in April 2010, DOD conceptualized several measures and further directed in its 2013 SAPR strategic plan that they be developed. In its Annual Report on Sexual Assault in the Military Services for Fiscal Year 2013, DOD identified six performance measures, referred to as SAPR Metrics 1.0, that had been developed to measure the effectiveness of its SAPR program. However, none of the six performance measures were developed specifically to assess DOD’s progress toward preventing sexual assault.\nMore recently, the President directed the Secretary of Defense to develop a comprehensive report on major improvements to DOD’s SAPR program since August 2013 and to identify clear benchmarks and metrics that will enable the department to measure the effectiveness of its SAPR efforts. In response to this direction, DOD collaborated with the White House and identified 12 performance measures that the department plans to use to assess the effectiveness of its SAPR program and that were included in DOD’s November 2014 report to the President. Of the 12 performance measures, 5 were designed to specifically measure the effectiveness of DOD’s prevention line of effort. Table 3 further describes DOD’s 5 prevention-focused performance measures.", "We analyzed DOD’s five prevention-focused measures and found that they are missing many of the 10 key attributes that contribute to assessing program performance effectively. Our prior work has shown that agencies successful in measuring performance used measures that demonstrated results, were limited to the vital few, covered multiple priorities, and provided information that was useful for decision making. To determine whether DOD’s prevention-focused performance measures satisfy these four general characteristics, we assessed the measures using 10 specific attributes. Our work cited these specific attributes as key to successful performance measures. Table 4 shows the 10 attributes, their definitions, and the potentially adverse consequences of not having the attributes.\nOur analysis determined that all five of DOD’s prevention-focused performance measures demonstrate some of the key attributes, but collectively they are missing more than half of the key attributes of successful performance measures that we identified in our prior work. Specifically, DOD’s performance measures have linkage in that they are aligned with the prevention line of effort set forth in DOD’s 2014–16 prevention strategy, include baseline and trend data, and exhibit little to no overlap with other measures. We also found, however, that DOD’s prevention-focused performance measures’ usefulness to the department may be limited because they each do not have between 5 and 7 of the 10 key attributes that we identified as necessary to successfully measure program performance. Table 5 shows the results of our evaluation of DOD’s prevention-focused performance measures using the 10 key attributes of successful performance measures.\nAs shown in table 5, all of DOD’s prevention-focused performance measures are missing the attribute of measurable targets. Leading practices in federal agency performance management state that, where appropriate, performance measures should have quantifiable, numerical targets and that agencies could use baselines to set realistic but challenging targets. As noted previously, DOD has established baseline and trend data for each of its prevention-focused performance measures, but none of these measures have measurable targets because it has not used these data to set numerical goals nor has it provided the information needed to appropriately interpret the results of the measures and determine program achievements. For example, for its “Prevalence versus Reporting” measure, while DOD has expressed that it aims to close the gap by decreasing the prevalence of sexual-assault incidents and increasing the number of victims willing to report a sexual assault, it does not identify—in either case—a numerical target for the department to work towards. DOD officials told us that the department has not established numerical targets for its prevention-focused performance measures, because it instead uses indicators such as positive results from surveys or a decrease in the sexual-assault prevalence rate when compared to previous years as measures of success. Further, officials stated they have not established numerical targets because there is not enough research to determine what an appropriate target should be for its measures related to prevalence.\nWe recognize the challenges associated with measuring the progress of activities with complex outcomes and limited examples to replicate, such as DOD’s efforts to prevent sexual assault. In these instances, our prior work on effective agency strategic reviews has shown that setting measurable targets is an evolutionary process involving trial and error and that agencies may need to break their strategic objectives into pieces that can be more easily be measured or assessed. Further, for activities with long-term, scientific discovery–oriented outcomes, agencies can also rely on underlying multiyear performance goals, annual performance indicators, and milestones to better plan for and understand near-term progress towards those objectives. Without a numerical target, DOD and other decision makers may be unable to gauge the extent of progress from the department’s prevention efforts because there are no goals that can be used to compare projected performance with actual results. Furthermore, without targets against which it can measure its progress, DOD may not be able to ensure that it is allocating resources to its most effective activities—a key determination given the increasingly limited fiscal resources across the federal government.\nOur analysis also determined that all five of DOD’s prevention-focused performance measures are missing the attribute of clarity because the corresponding methodology is not clearly defined. For example, DOD did not specify that it would assess program performance by gender or rank; however, we found that three of DOD’s five prevention-focused performance measures assessed performance both by gender and by rank, while another was focused solely on results broken out by servicemember gender. According to a senior official, DOD chooses to measure performance by gender and rank because data show that women and junior enlisted servicemembers in general are at higher risk of sexual assault. However, DOD did not use gender or rank when calculating its “Prevalence versus Reporting” measure. In our March 2015 report focusing on male-servicemember sexual-assault victims, we reported that developing clear goals and associated metrics related to male victims and articulating them throughout the department would provide DOD with additional information to assess its progress and determine whether any adjustments are needed in its approach for addressing sexual assault in the military. Similarly, DOD would benefit in developing clear goals and associated performance measures by gender and rank so it can effectively assess its progress of preventing sexual assaults from occurring in the military.\nFurther, DOD’s Prevalence versus reporting measure is not clearly defined. Specifically, the measure’s name and definition suggests that the department intends to compare the estimated prevalence of unwanted sexual contact with the number of sexual assaults reported by servicemembers while serving in the military by fiscal year. However, DOD’s annual data on sexual-assault incidents reported to the military services by fiscal year include assaults that occurred prior to the fiscal year in which they were reported. As a result, DOD is comparing the prevalence of unwanted sexual contact that occurred in the past year to reported sexual assaults, regardless of when they occurred. Given the lack of available data on the fiscal year in which the sexual-assault incidents occurred, we are unable to accurately compare the prevalence of unwanted sexual contact to reported sexual assault by fiscal year. However, our analysis of DOD’s annual reports since fiscal year 2008 shows an increase in the percentage of unrestricted reports of sexual assault made for an incident that occurred prior to the fiscal year it was reported, with about 12 percent reporting a prior-year incident in fiscal year 2008 compared to at least 24 percent reporting a prior-year incident in fiscal year 2013. The lack of clarity of what actually is being measured may lead decision makers to believe that performance was better or worse than it actually was.\nOur analysis also determined that objectivity and reliability may be limited for three of the five prevention-focused performance measures, because they are based on the results of a convenience sample of servicemembers who respond to the Defense Equal Opportunity Management Institute (DEOMI) Organizational Climate Survey request and voluntarily complete the command-climate survey. As such, the aggregated results are not generalizable to the larger servicemember population. According to a senior DOD official, DOD is still determining the usefulness of using the command-climate survey at the department level by exploring ways to make the results more representative and meaningful at the department level. Performance measures lacking objectivity and reliability may affect the conclusions about the extent to which progress has been made.\nAdditionally, our analysis determined that DOD’s overall suite of prevention-focused performance measures does not identify core program activities that relate to its prevention efforts, does not address government-wide priorities such as cost, quality, and timeliness, and, as a result, is not balanced among priorities. For example, DOD identifies SAPR education and training as a key component of its prevention program, but it is unclear how DOD will determine their effectiveness given that none of DOD’s measures are designed to gauge the effectiveness of such activities. Senior DOD officials acknowledged that DOD has more work to do on refining its sexual-assault prevention metrics. However, until DOD has fully developed its prevention-focused performance measures, DOD and other decision makers may be unable to effectively gauge the progress of the department’s prevention efforts.", "Since our first report in 2008 on sexual assault in the military, DOD has made progress in improving its efforts to prevent and respond to sexual assault across the department. For example, to further develop its strategy to prevent sexual assault, DOD consulted with CDC and incorporated CDC’s framework and prevention-related concepts into its prevention strategy. This included, among other things, defining the different levels at which sexual-assault prevention efforts occur and describing the importance of identifying and understanding the domains in which sexual violence takes place. However, DOD’s 2014-16 Prevention Strategy does not provide a linkage between its prevention-focused activities and their desired outcomes and it does not identify risk factors for two of its domains. These actions could help DOD ensure that it is taking an evidence-based approach to the prevention of sexual assault. Further, the prevention strategy has not been systematically communicated or disseminated to the installation-based program personnel responsible for its implementation, and the services’ SAPR policies—another means for communicating direction to program personnel—have not been aligned with the strategy to reinforce its purpose. Finally, while DOD has identified performance measures, the measures are not, in all cases, in line with the key attributes of successful performance measures, which make it difficult for the department to reliably determine which activities are helping to prevent sexual assault. Without fully developing its strategy to prevent sexual assault by linking prevention activities to desired outcomes, identifying risk factors for all domains, and including fully developed performance measures, leadership at all levels of DOD may face challenges in determining the best prevention efforts to implement in order to prevent sexual assault. Further, without communicating, disseminating, and aligning the department’s overarching strategy to prevent sexual assault with the installation level of the military services, DOD could encounter difficulties in carrying out its vision to eliminate sexual assault in the military. Lastly, at the three service-specific and one joint installation we visited, we found challenges related to collaboration in implementing sexual-assault prevention activities across the services. While this may not be indicative of all service-specific or joint installations, it may require DOD’s attention in the future.", "To improve the effectiveness of DOD’s strategy for preventing sexual assault in the military, we recommend that, as part of the department’s next biennial update to the 2014–16 sexual-assault prevention strategy, the Secretary of Defense direct the Under Secretary of Defense for Personnel and Readiness, in conjunction with the Secretaries of the military departments, take the following five actions: link sexual-assault prevention activities with desired outcomes, and identify risk and protective factors for all of its domains, including the military community and its leaders.\nTo help ensure widespread adoption and implementation of DOD’s sexual-assault prevention strategy and to fulfill its role as a framework that can assist leaders and planners in the development of appropriate tasks, we recommend that the Secretary of Defense direct the Under Secretary of Defense for Personnel and Readiness, in conjunction with the Secretaries of the military departments, to communicate and disseminate DOD’s prevention strategy and its purpose to the appropriate levels of program personnel as well as their roles and responsibilities for its implementation, and ensure the military services’ SAPR policies are aligned with the department’s prevention strategy.\nTo help improve DOD’s ability to measure the effectiveness of the department’s efforts in preventing sexual assault in the military, we recommend that the Secretary of Defense direct the Under Secretary of Defense for Personnel and Readiness, in collaboration with the Secretaries of the military departments, to fully develop the department’s performance measures for the prevention of sexual assault so that the measures include all key attributes of successful performance measures.", "In written comments on a draft of this report, DOD concurred with each of our five recommendations. DOD’s comments are summarized below and reprinted in appendix IV. DOD also provided technical comments on the draft report, which we incorporated as appropriate.\nDOD concurred with our first and second recommendations that seek to improve the effectiveness of the department’s strategy for preventing sexual assault by linking sexual assault prevention activities with desired outcomes and identifying risk and protective factors for all of its domains, including the military community and its leaders. In its comments, DOD agreed that linking prevention activities to desired outcomes is important and stated that it had developed a methodology to identify the full range of risk and protective factors for the five domains in which it will focus its efforts to prevent sexual assault. DOD also stated that in future phases of the study, it will attempt to link future prevention activities with changes in indicators for risk and protective factors as well as the occurrence of sexual assault. We are encouraged by the efforts DOD has underway to more comprehensively identify risk and protective factors and believe that these efforts will better position the department to focus on eliminating factors that promote sexual assault and to support the factors that may prevent it.\nRegarding the implementation of DOD’s prevention strategy and its use as a framework to develop appropriate tasks, DOD concurred with our third and fourth recommendations that it communicate and disseminate the prevention strategy and its purpose to the appropriate levels of program personnel as well as their roles and responsibilities for its implementation, and ensure the military services’ SAPR policies are aligned with the department’s prevention strategy. In its comments, DOD identified several efforts that it had initiated related to the communication and implementation of its sexual assault prevention strategy. For example, DOD described a prevention roundtable that includes representatives from the military services, the National Guard Bureau, and the Coast Guard and meets quarterly to collaborate on sexual assault prevention requirements and to share their efforts to prevent sexual assault. DOD also highlighted that, for more than 2 years, it has hosted quarterly webinars on topics that can assist with the implementation of its prevention strategy. We are encouraged by the variety of forums that DOD sponsors to facilitate information-sharing on prevention initiatives and, in particular, its recent institution of workshops that help participants to operationalize the prevention strategy. However, as we noted in our report, it is important for DOD to develop a plan for communicating the prevention strategy and its purpose to all personnel to help ensure that it achieves its goal of department-wide unity of effort in the prevention of sexual assault.\nWith regard to the department’s ability to measure the effectiveness of its efforts to prevent sexual assault, DOD concurred with our fifth recommendation that it fully develop its performance measures for the prevention of sexual assault so that they include all key attributes of successful performance measures. In its comments, DOD stated that CDC and leading researchers have recognized sexual assault is a non- standard public health issue that requires different metrics to determine the causal linkages that exist between preventive indicators and prevention-related outcomes. DOD also stated that it would continue to monitor best practices in civilian prevention initiatives, and translate them to military populations as appropriate. As noted in our report, we recognize the challenges associated with measuring the progress of activities with complex outcomes, such as DOD’s efforts to prevent sexual assault. In these instances, our prior work on effective agency strategic reviews has shown that the development of performance measures is an evolutionary process that involves trial and error, particularly for activities with long-term, scientific discovery-oriented outcomes such as the prevention of sexual assault. We also recognize the difficulties that are posed to emergent initiatives—such as the prevention of sexual assault in the military—by the limited number of examples from civilian initiatives that may exist to be replicated. However, given the substantive differences between military and civilian culture, we encourage DOD to pioneer measures that will most effectively depict the department’s performance.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, the Under Secretary of Defense for Personnel and Readiness, the Secretaries of the Army, the Navy, and the Air Force, and the Commandant of the Marine Corps. In addition, this report will also be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions regarding this report, please contact me at (202) 512-3604 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix V.", "In a December 2013 letter, the President of the United States directed the Secretary of Defense to provide a comprehensive report—by the following December—on the Department of Defense’s (DOD) progress in addressing the issue of sexual assault. Specifically, the report was to address major programmatic improvements made by DOD since August 2013, including those related to the prevention of sexual assault. Accordingly, in November 2014, DOD submitted its report to the President in which it noted that the department had increased its focus on prevention and had demonstrated progress in preventing sexual assault, and that it planned to intensify its prevention-focused efforts in the coming years. Table 6 provides further details about the prevention-focused efforts highlighted in DOD’s November 2014 report.", "Appendix II: Timeline of Selected GAO Reports and DOD and Congressional Actions on Sexual Assault Prevention and Response in the Military We also made one recommendation related to the Coast Guard’s efforts to prevent and respond to incidents of sexual assault.", "To determine the extent to which the Department of Defense (DOD) developed an effective strategy to prevent sexual assault in the military, we obtained and reviewed DOD’s 2014-16 Sexual Assault Prevention Strategy. We also obtained and reviewed DOD’s 2008 Sexual Assault Prevention Strategy, its 2012 Strategic Direction to the Joint Force on Sexual Assault Prevention and Response, its 2013 Sexual Assault Prevention and Response Strategic Plan, and relevant provisions in DOD and military service policies and guidance pertaining to the prevention of sexual assault incidents. We interviewed officials in the Under Secretary of Defense for Personnel and Readiness’s Sexual Assault Prevention and Response Office (SAPRO) as well as SAPR program officials with the Army, the Navy, the Marine Corps, and the Air Force to obtain an understanding of their respective roles in developing DOD’s prevention strategy and the extent to which current military-service policies and guidance are consistent with the department’s goals and objectives for preventing sexual assault. We also interviewed officials from the Centers for Disease Control and Prevention (CDC) about their work developing and evaluating sexual-violence prevention programs and we reviewed and used CDC’s social-ecological model and public-health model to evaluate the extent to which DOD identified elements such as domains, risk factors, and protective factors. Further, we used CDC’s program planning and development model to assess the extent to which DOD’s 2014–16 prevention strategy and related documents contain all of the elements of a framework for effective sexual-violence prevention programs identified by CDC. We used Office of Management and Budget issued guidance on the budget preparation, submission, and execution, which, among other things, includes information regarding agency strategic reviews and mitigating risks related to achieving strategic objectives and performance goals. We also used our prior work on effective agency strategic reviews, which has shown that it is important to review progress toward strategic objectives in that it can help to determine subsequent actions and that leaders and responsible managers should be held accountable for knowing the progress being made in achieving outcomes. We compared DOD’s strategy with prior related GAO reports to determine the extent to which the strategy addressed any of our previous recommendations on the prevention of sexual assault in the military. We discussed the results of our analyses with officials in DOD SAPRO and officials in each of the military services responsible for developing and implementing DOD’s strategy to prevent sexual assault in the military.\nTo determine the extent to which DOD implemented activities department-wide and at service-specific and joint installations related to the department’s efforts to prevent sexual assault in the military, we reviewed DOD’s 2008 and 2014-16 Sexual Assault Prevention Strategies, its 2012 Strategic Direction to the Joint Force on Sexual Assault Prevention and Response, its 2013 Sexual Assault Prevention and Response Strategic Plan, and relevant provisions in DOD and military service policies and guidance and the National Defense Authorization Acts for fiscal years 2004–2015 to identify any required prevention activities. We also used CDC’s evaluation model for public health programs to assess whether DOD’s 2014-16 Sexual Assault Prevention Strategy included the six key elements of effective public health strategies identified by CDC. To determine the extent to which the military services have implemented activities to prevent sexual assault, we visited three service-specific installations—Fort Shafter (Army), Schofield Barracks (Army), and Marine Corps Base Hawaii—and 1 joint base—Joint Base Pearl Harbor-Hickam (Navy and Air Force)—on Oahu, Hawaii. We chose these locations based on the reported high numbers of unrestricted reported sexual assaults relative to other installations within the same branch of military service and their close proximity to each other. During these visits, we met with military officials and program personnel who were identified as having a role in preventing sexual assault, including commanders, sexual-assault response coordinators, sexual harassment/assault response and prevention program managers, victim advocates, chaplains, criminal investigators, legal personnel, and medical and mental health-care providers to discuss their familiarity with DOD’s prevention strategy and whether it had a role in the prevention activities sponsored at their respective installations. We also discussed the extent of cross-service collaboration on sexual-assault prevention activities at these installations and compared them with guidance from the Joint Chiefs of Staff and leading practices on interagency collaboration to determine whether the military services have taken the steps necessary to effectively collaborate on similar prevention efforts.\nTo determine the extent to which DOD has developed performance measures to assess the effectiveness of its efforts to prevent sexual assault in the military, we reviewed DOD’s 2013 Sexual Assault Prevention and Response Strategic Plan, its 2014 Report to the President of the United States on Sexual Assault Prevention and Response, its annual report on sexual assault in the military for fiscal year 2014, its 2014-16 Sexual Assault Prevention Strategy, and other related documents to identify performance measures that the department uses or plans to use to assess its progress in preventing sexual assault in the military. Additionally, we met with DOD and military service officials to verify the performance measures identified and to discuss how they will be used to assess the effectiveness of the department’s prevention efforts. We also compared DOD’s five prevention-focused performance measures with GAO criteria on key attributes of successful performance measures.\nWe conducted this performance audit from August 2014 to October 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, key contributors to this report were Kimberly Mayo, Assistant Director; Tracy Barnes; Elizabeth Curda; Marcia Fernandez; Mae Jones; Ron La Due Lake; Amie Lesser; Brian Pegram; Garrett Riba; and Stephanie Santoso.", "Military Personnel: Actions Needed to Address Sexual Assaults of Male Servicemembers. GAO-15-284. Washington, D.C.: March 19, 2015.\nMilitary Personnel: DOD Needs to Take Further Actions to Prevent Sexual Assault during Initial Military Training. GAO-14-806. Washington, D.C.: September 9, 2014.\nMilitary Personnel: DOD Has Taken Steps to Meet the Health Needs of Deployed Servicewomen, but Actions Are Needed to Enhance Care for Sexual Assault Victims. GAO-13-182. Washington, D.C.: January 29, 2013.\nMilitary Personnel: Prior GAO Work on DOD’s Actions to Prevent and Respond to Sexual Assault in the Military. GAO-12-571R. Washington, D.C.: March 30, 2012.\nPreventing Sexual Harassment: DOD Needs Greater Leadership Commitment and an Oversight Framework. GAO-11-809. Washington, D.C.: September 21, 2011.\nMilitary Justice: Oversight and Better Collaboration Needed for Sexual Assault Investigations and Adjudications. GAO-11-579. Washington, D.C.: June 22, 2011.\nMilitary Personnel: DOD’s and the Coast Guard’s Sexual Assault Prevention and Response Programs Need to Be Further Strengthened. GAO-10-405T. Washington, D.C.: February 24, 2010.\nMilitary Personnel: Additional Actions Are Needed to Strengthen DOD’s and the Coast Guard’s Sexual Assault Prevention and Response Programs. GAO-10-215. Washington, D.C.: February 3, 2010.\nMilitary Personnel: Actions Needed to Strengthen Implementation and Oversight of DOD’s and the Coast Guard’s Sexual Assault Prevention and Response Programs. GAO-08-1146T. Washington, D.C.: September 10, 2008.\nMilitary Personnel: DOD’s and the Coast Guard’s Sexual Assault Prevention and Response Programs Face Implementation and Oversight Challenges. GAO-08-924. Washington, D.C.: August 29, 2008.\nMilitary Personnel: Preliminary Observations on DOD’s and the Coast Guard’s Sexual Assault Prevention and Response Programs. GAO-08-1013T. Washington, D.C.: July 31, 2008.\nMilitary Personnel: The DOD and Coast Guard Academies Have Taken Steps to Address Incidents of Sexual Harassment and Assault, but Greater Federal Oversight Is Needed. GAO-08-296. Washington, D.C.: January 17, 2008." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h3_title", "h3_full", "", "", "", "h0_full h3_title", "", "h0_full", "h0_full h3_full", "h1_full", "h1_full", "h1_full", "", "h2_title", "", "h2_full", "h0_full", "", "", "", "h4_full", "h4_full", "", "", "", "", "h3_full" ] }

{ "question": [ "What characterizes the DOD sexual-violence prevention strategy?", "To what extent does the strategy deal with outcomes?", "What else does the CDC framework emphasize?", "In what way did DOD implement these ideas?", "What are the implications of these limitations?", "To what extent has DOD's sexual-violence prevention efforts been successful?", "What is one program that DOD implemented?", "According to GAO, what characterized the implementation?", "What did the review determine about DOD's communication?", "What are the stakes of DOD's failure to fully implement these strategies?", "How thorough are the DOD's measures?", "What is the extent of this lack of development?", "Why does fully developing the measures matter?", "What is the impact of sexual assault in DOD?", "What is the trend in sexual assault cases?", "What is the estimation of sexual assault prevalence?", "What is Senate Report 113-176?", "What specifically is included in the report?", "How did GAO evaluate the DOD?" ], "summary": [ "The Department of Defense (DOD) developed its strategy to prevent sexual assault using the Centers for Disease Control and Prevention (CDC) framework for effective sexual-violence prevention strategies, but DOD does not link activities to desired outcomes or fully identify risk and protective factors.", "Specifically, DOD's strategy identifies 18 prevention-related activities, but they are not linked to desired outcomes—a step that CDC says is necessary to determine whether efforts are producing the intended effect.", "CDC has also demonstrated that by identifying risk and protective factors—relative to the domain or environment in which they exist—organizations can focus efforts on eliminating risk factors that promote sexual violence while also supporting the protective factors that prevent it.", "DOD identifies five domains in its strategy and includes risk factors for three—individuals, relationships, and society—but it does not specify risk factors for the other two domains—leaders at all levels of DOD and the military community.", "Thus, DOD may be limited in its ability to take an evidence-based approach to the prevention of sexual assault.", "DOD and the military services are in the process of implementing prevention-focused activities, but they have not taken steps to ensure that installation-level activities are consistent with the overarching objectives of DOD's strategy. DOD's strategy identifies 18 activities, 2 of which DOD considers implemented while efforts to address the remaining 16 are ongoing.", "For example, DOD officials report that they have implemented the activity directing the development of a military community of practice.", "Additionally, GAO identified activities that had been developed and implemented at the four installations GAO visited, but found that they may not be consistent with DOD's strategy because it has not been communicated or disseminated to the personnel responsible for implementing the activities.", "Further, service policies—key conduits of such communication—do not provide the guidance necessary to unify the department's prevention efforts because they have not been updated to align with and operationalize the principles outlined in DOD's most recent strategy.", "Thus, DOD cannot be sure that all prevention-related activities are achieving the goals and objectives of the department's strategy.", "DOD has identified five performance measures to assess the effectiveness of its prevention efforts, but these measures are not fully developed as they are missing many of the 10 key attributes that GAO has found can contribute to assessing program performance effectively, such as baseline and trend data, measurable target, and clarity.", "Specifically, all five performance measures demonstrate some of these attributes but collectively they are missing more than half of these attributes. All of the prevention efforts' measures demonstrate baseline and trend data but none of the measures have measurable target, clarity, and some of the other attributes.", "Without fully developed measures, DOD and other decision makers may not be able to effectively gauge the progress of the department's prevention efforts.", "Sexual assault is a crime that devastates victims and has a far-reaching negative impact for DOD because it undermines DOD's core values, degrades mission readiness, and raises financial costs.", "DOD data show that reported sexual assaults involving servicemembers more than doubled from about 2,800 reports in fiscal year 2007 to about 6,100 reports in fiscal year 2014.", "Based on results of a 2014 survey, RAND estimated that 20,300 active-duty servicemembers were sexually assaulted in the prior year.", "Senate Report 113-176 includes a provision for GAO to review DOD's efforts to prevent sexual assault.", "This report addresses the extent to which DOD (1) developed an effective prevention strategy, (2) implemented activities department-wide and at military installations related to the department's effort to prevent sexual assault, and (3) developed performance measures to determine the effectiveness of its efforts to prevent sexual assault in the military.", "GAO evaluated DOD's strategy against CDC's framework for effective sexual-violence prevention strategies, reviewed DOD policies, and interviewed cognizant officials." ], "parent_pair_index": [ -1, 0, 0, 2, 0, -1, 0, 1, 2, 0, -1, 0, 0, -1, -1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Background", "The Unemployment Insurance System", "Current Law—Individuals Must Receive UI Benefits Regardless of Individual or Household Income", "Distribution of Household Income and Unemployment Benefits", "Policy Considerations", "Potential Impact of Restricting UI Benefits on Federal Outlays", "Potential Administrative Costs", "Other Potential Administrative Issues", "Other Considerations", "Legislation", "The 112th Congress", "The 113th Congress", "The 114th Congress" ], "paragraphs": [ "", "In response to the sustained period of high unemployment during the last recession, which began in December 2007 and ended in June 2009, Congress enacted several temporary laws to extend Unemployment Ins urance (UI) benefits. For instance, from July 2008 through December 2013, the now-expired Emergency Unemployment Compensation (EUC08) program provided federally financed UI benefits in addition to state-financed, regular benefits available through the permanent-law Unemployment Compensation (UC) program. This temporary extension of UI benefits took place at a time when the federal government and the states faced serious budgetary pressures. In recent years, various proposals have been offered to reduce the large and growing federal budget deficits, as well as to make various reforms to the UI system, including measures to alleviate state UI financing stress and to improve the solvency of the UI trust fund.\nIn this context of increased spending on UI benefits amidst ongoing concerns about the level of federal budget deficits, proposals to restrict the receipt of unemployment benefits by high-income individuals emerged. For example, in the 112 th Congress, the House-passed version of H.R. 3630 , the Middle Class Tax Relief and Job Creation Act, included a provision that would have imposed an income tax on unemployment benefits for high-income individuals. Using a scaled approach, the percentage of unemployment benefits subject to tax would have increased with an individual's Adjusted Gross Income (AGI)—beginning with AGI of $750,000 for a single tax filer and $1.5 million for a married couple filing a joint return. Under this proposal, unemployment benefits would have been taxed at 100% for a single tax filer with AGI of $1 million and for a married couple filing a joint return with AGI of $2 million. The final version of H.R. 3630 enacted by Congress and signed into law by President Obama ( P.L. 112-96 , signed on February 22, 2012) extended UI benefits, among other provisions. It did not, however, include the provision in the House-passed version of the bill that would have restricted unemployment benefit receipt based on income.\nWhile the debate in Congress commonly refers to a proposed policy of restricting the receipt of unemployment benefits by \"millionaires,\" various proposals have specified different income thresholds. For example, one proposal would have placed restrictions on unemployment benefit income for a single tax filer with AGI of at least $750,000 (or at least $1.5 million for a married couple filing a joint return). Another proposal would have placed restrictions on unemployment benefit income for a single tax filer with AGI of at least $500,000 (or at least $1 million for a married couple filing jointly). Although the proposals varied in how they define high-income individuals, each would have restricted individuals and households with incomes above a specified threshold from receiving unemployment benefits.\nThis report addresses many of the questions that have arisen regarding such proposals, including the potential number of people who would be affected and the potential savings to federal and state governments. To place these proposals into context, the report provides a brief overview of the UI system and explains why receipt of UI benefits is not restricted based on income under current law. It then presents Internal Revenue Service (IRS) data on the distribution of household income and unemployment benefits for two tax years: 2010, when UI receipt was at a recent peak, and 2014, the most recently available data, to shed light on the size of the group potentially affected by such proposals. The report raises policy considerations such as the potential impact of such proposals on federal expenditures, given the joint federal-state nature of unemployment programs. Finally, it summarizes relevant, recent legislation.", "A variety of benefits are available to involuntarily unemployed workers to provide them with income support during their spell of unemployment. These benefits include the Unemployment Compensation (UC) program and the Extended Benefit (EB) program. UC is a joint federal-state program financed by federal taxes under the Federal Unemployment Tax Act (FUTA) and by state payroll taxes under the State Unemployment Tax Acts (SUTA). The federal taxes fund federal and state UC program administration, the federal share of EB payments, and federal loans to insolvent state UC programs. State taxes fund the UC payments and the state share of EB payments.\nMost states provide for up to 26 weeks of UC benefits to eligible workers who become unemployed through no fault of their own, and meet certain other eligibility requirements. The EB program may provide additional benefits after UC program benefits have been exhausted. Within broad federal guidelines, states determine many of the substantive aspects of their UC program, including the level of payment, duration, and eligibility. This authority for the states to decide on program matters effectively results in 53 different UC programs that are financed by the 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.", "Currently, states may not restrict UI benefits by income level other than those income sources deemed related to their unemployment. This requirement is based upon a 1964 U.S. Department of Labor (DOL) decision that precludes states from means-testing to determine UC eligibility. The U.S. Labor Secretary expanded the restriction on means-testing to severely limit the factors states may use to determine UC entitlement. Under this interpretation, federal law requires entitlement to compensation to be determined from facts or causes related to the individual's state of unemployment.\nThus, the DOL requires that states pay compensation for unemployment to all eligible beneficiaries regardless of their income level because individual or household income would not be considered to impact the fact or cause of unemployment.", "Table 1 shows the number of tax filers that received unemployment benefit income by categories of AGI for tax years 2010 (a recent peak in UI receipt) and 2014 (most recent year available). For income tax purposes, unemployment benefits include more than regular UC. They include any amounts received under the unemployment compensation laws of the United States or of a state; state unemployment insurance benefits and benefits paid to an individual by a state or the District of Columbia from the Federal Unemployment Trust Fund; and railroad unemployment compensation benefits, disability benefits paid as a substitute for unemployment compensation, Trade Adjustment Assistance, and Disaster Relief and Emergency Assistance. Unemployment benefits do not include workers compensation.\nAmong tax filers with AGI of $1 million or more, 3,171 reported receipt of unemployment benefit income in 2010. This represents 0.02% of all tax filers that reported receiving unemployment benefit income in each year. In tax year 2014, however, there were no tax filers with an AGI of $1 million or more who reported UI benefit income.\nThere is a difference between the number of tax filers, the number of persons (or individuals), and the number of households. Households, which consist of one or more persons, may contain more than one tax filer. For example, a married couple may file separate tax returns or a joint tax return. This may impact the number of beneficiaries counted in Table 1 if both persons in a married couple receive unemployment compensation, and the couple files a single joint return, the number of tax filers receiving unemployment compensation would be equal to one. If they file separate tax returns, then they would be counted as two.\nNote that the tax filing data shown here somewhat understate the total number receiving unemployment benefit income. If an individual or married couple's total income from taxable sources is below the filing threshold, he or she is not required to file a tax return and therefore may not be included in the data for tax years 2010 and 2014. This would particularly understate the number of tax filers in the lower AGI categories.\nTable 2 shows the amount of unemployment benefit income received by tax filers by AGI category for tax years 2010 and 2014, where incomes are not adjusted for inflation. As shown in the table, the amount of unemployment benefit income received by tax filers with AGI of $1 million or more is relatively small. For tax year 2010, tax filers with at least $1 million in AGI reported receiving $40 million in unemployment benefit income, which represents 0.03% of total reported unemployment benefit income. For tax year 2014, however, there were no tax filers with at least $1 million in AGI who received unemployment benefits; therefore, there was $0 in reported unemployment benefit in come for this group.", "This section addresses some of the policy considerations associated with proposals to restrict the payment of UI benefits to those with high incomes. These include the potential effect on federal expenditures given the joint federal-state nature of unemployment programs and the potential increase in administrative costs associated with such proposals.", "Under permanent law, most UI benefit outlays are state funded (i.e., most UI benefits are funded with state taxes and paid by the states). This in turn implies that any savings under permanent law would mostly accrue to the states.\nStates largely fund the primary program, the UC program, by collecting taxes from employers. The EB program is funded 50% by the federal government and 50% by the states under permanent law. However, until recently there were several temporary laws that provided 100% federal funding for (now-expired) EUC08 and EB benefits. For instance, P.L. 111-5 , as amended, temporarily provided for 100% federal funding of the EB program through December 31, 2013. The EUC08 program, which was 100% federally funded, was authorized under the American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) until the week ending on or before January 1, 2014 (i.e., December 28, 2013, in all states except New York State, in which the program ends December 29, 2013). Given the small amount of unemployment benefit income paid to \"millionaires\" and in the absence of further legislative action to extend the now-expired federal laws, potential savings to the federal government diminished at the end of calendar year 2013.\nThe amount of savings associated with such proposals would depend on the income threshold at which UI benefit receipt is restricted (the higher the income threshold, the lower the savings). If only millionaires were restricted from receiving UI benefits, there would be a small amount of savings. The savings estimate for a provision in the House-passed version of the Middle Class Tax Relief and Job Creation Act of 2012 ( H.R. 3630 ) serves as a guide. A provision in the House-passed bill would have taxed unemployment benefit income at 100% for single tax filers with AGI of $1 million (or for married couples filing a joint return with AGI of $2 million). The provision would have taxed unemployment benefit income at a lower percentage for single tax filers with AGI beginning at $750,000 (or for married couples filing jointly with AGI beginning at $1.5 million). The Joint Committee on Taxation (JCT), in conjunction with the Congressional Budget Office (CBO), estimated that this provision would have reduced federal outlays by $20 million over 10 years (2012-2021). This estimate excluded any increase in administrative costs because administrative costs are considered a discretionary item. Any additional funding for the administration of this provision of the bill (i.e., over and above the current funding for administration of the tax and UI systems) would have had to be written explicitly in the bill and passed into law.\nLowering the proposed income threshold at which the proposed restriction is applied would make more people unable to receive UI benefit income and result in greater savings. However, determining the level at which to set the income threshold may depend upon the goals of the program. For example, making large numbers of people ineligible for UI benefits based on income to achieve greater savings may be perceived as unfair and may further compromise the objective of providing insurance against involuntary unemployment for all workers.", "The potential administrative costs could outweigh the potential savings. Although lawmakers could choose among different ways to administer the provision, one of the more cost effective ways may be to recoup UI benefits through the tax system rather than make high-income groups ineligible for benefits. For example, H.R. 3630 , S. 1931 , and S. 1944 of the 112 th Congress, which are summarized briefly in the \" Legislation \" section, would have imposed an income tax rate (of up to 100% in the case of H.R. 3630 and S. 1931 ) on unemployment benefit income for tax filers with AGI above a specified threshold. This approach would allow the federal government to recoup the value of UI benefits paid to certain individuals when they file their income tax returns. Taking advantage of the existing tax system to administer the provision may be more cost effective than other approaches because the tax system already requires individuals to report their unemployment benefits and other sources of income and it has a mechanism in place for individuals to pay back the value of UI benefits with a check to the federal government.\nAlthough administering the provision through the tax system may be a relatively cost effective approach, there are some potential disadvantages. Adding a separate tax rate for UI benefits may further complicate an already complicated tax form. Among the alternatives, one could restrict UI benefits for those who have or are expected to have at least $1 million in earnings . For example, states collect information on earnings for each job covered under the UI system. UI benefits could be denied to those with more than $333,333 of earnings in a four-month period. This would be a cost effective approach in that the UI database, which contains data collected by the states, could be used to identify such individuals. However, the UI database would not identify those who have at least $1 million in total income when other sources of income (such as stocks) are taken into account. Moreover, it would not identify all married couples or households that have at least $1 million in earnings or total income.", "Proposals to restrict the payment of UI benefits to those with high incomes may pose administrative issues for the states as well. This would be the case, for example, if the provision were to be administered by making modifications to the UI system, rather than by recouping benefits already paid through the tax system. Some of the potential administrative issues from the perspective of the states are described below.\nState UI administrators currently do not have the infrastructure needed to restrict UI benefits based on income. UI program administrators do not collect comprehensive income information. Earnings are used to calculate UI benefit amounts, but state UI administrators may not collect information on capital gains, interest, or other sources of income. In addition, income information for spouses and other family members is not collected for purposes of UC and other UI programs. This implies that any restriction based on household income would require states to collect additional data. Setting up such a system may prove expensive in comparison to the cost savings derived from restricting UI benefit payments to certain individuals. Some of the costs associated with establishing a system to administer the provision may be related to setting up new administrative procedures, setting up software programs, creating databases, and automating ways to validate income statements. In this case, the costs may be largely one-time setup costs. As the savings derived from restricting UI benefit payments to certain individuals accrue over time, they may eventually offset the one-time setup costs. However, the ongoing year-to-year administrative costs (related to working with applicants to collect the proper income statements, etc.) could prove to be large relative to the benefit savings.", "A policy of restricting UI benefit receipt based on income may discourage some eligible individuals from applying for benefits. For example, if the tax system were used to recoup some or all of the value of UI benefits paid to certain high-income individuals, some eligible unemployed workers may choose not to apply for UI benefits if they consider the time and other costs associated with applying for benefits to outweigh the additional funds. There may be other reasons why an eligible individual may not apply for UI benefits. For example, a person who becomes unemployed early in the year may expect (erroneously) to have income over the course of the year above the applicable threshold, and therefore may choose not to apply for benefits based on an expectation that those benefits would only be recaptured later through the tax system.\nAlternatively, if a restriction on the payment of UI benefits to certain high-income individuals were administered through the UI system, all applicants for UI benefits would be required to complete additional forms for the purpose of reporting income from various sources. (In addition to his or her own income, the applicant may be required to report the income of others in the household, such as a spouse.) Adding this complexity to the application process for UI benefits could discourage some eligible individuals from applying for benefits. An eligible individual may have trouble filling out the forms, expect little in UI benefits, and decide not to apply for benefits (e.g., new immigrants with language barriers).", "In the 112 th and 113 th Congresses, a number of proposals were introduced that would restrict or highly tax the unemployment benefit income of unemployed workers with high incomes. These bills are summarized below. As of the date of this report, no bills have been introduced in the 114 th Congress to restrict UI receipt based on income.", "H.R. 3630 . On December 9, 2011, Representative Camp introduced H.R. 3630 , the Middle Class Tax Relief and Job Creation Act of 2011. Among other provisions, House-passed version of H.R. 3630 would have taxed unemployment benefit income at 100% for single tax filers with AGI of $1 million (or for married couples filing a joint return with AGI of $2 million). The measure would have taxed unemployment benefit income at a lower percentage for single tax filers with AGI beginning at $750,000 (or for married couples filing jointly with AGI beginning at $1.5 million). (The unemployment benefit income would have continued to be counted in the calculation of AGI and thus subject to \"regular\" federal income tax.)\nS. 1944 . On December 5, 2011, Senator Casey introduced S. 1944 , the Middle Class Tax Cut Act of 2011. Among other provisions, S. 1944 would have created a new income tax on unemployment benefit income for a single tax filer with AGI of at least $500,000 (or at least $1 million for a married couple filing a joint return). The tax rate for unemployment benefit income would be 55% in tax years 2011 and 2012 and 50% for tax years after 2012. (The unemployment benefit income would continue to be counted in the calculation of AGI and thus subject to \"regular\" federal income tax.)\nS. 1931 . On November 30, 2011, Senator Heller introduced S. 1931 , the Temporary Tax Holiday and Government Reduction Act. Among other provisions, S. 1931 would have taxed the unemployment benefit income of certain high-income tax filers. The provision in this bill is the same as the one in H.R. 3630 (described above).\nH.R. 235 . On January 7, 2011, Representative Brady introduced H.R. 235 , the Cut Unsustainable and Top-Heavy Spending Act of 2011. Among other provisions, H.R. 235 would have prohibited the use of federal funds—from the EUC08 and EB programs—to pay unemployment benefits to an individual with resources of at least $1 million in the preceding year. An individual's resources would have been determined in the same way as the resource test for the Medicare Part D drug benefit subsidy (for purposes of the drug benefit subsidy, resources are defined by the individual states and include savings and investments but do not include the value of a primary residence or the value of a car). This provision would be effective for any weeks of unemployment benefits beginning on or after January 1, 2011.\nS. 310 . On February 8, 2011, Senator Coburn introduced S. 310 , the Ending Unemployment Payments to Jobless Millionaires Act of 2011 (see also companion bill H.R. 569 introduced by Representative Lankford). The bill would have prohibited any EUC08 or EB benefit payments to an individual with resources in the preceding year of at least $1 million, as determined through the resource test for the Medicare Part D drug benefit subsidy. For the purposes of the drug benefit subsidy, resources are defined by the individual states and include savings and investments but do not include the value of a primary residence or the value of a car. Unlike H.R. 235 , this provision in S. 310 would have been effective on Table 1 or after the date of enactment of this legislation.", "S. 18 . On February 27, 2013, Senator Ayotte introduced S. 18 , the Sequester Replacement and Spending Reduction Act of 2013. Section 401 of S. 18 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving federal unemployment compensation, including EB and (now-expired) EUC08 payments. The effective date for this provision would have been the day after enactment. The CBO estimated that there would be no measurable savings from this proposal.\nH.R. 2448 . On June 20, 2013, Representative Lankford introduced H.R. 2448 , the Ending Unemployment Payment to Millionaires Act of 2013. Like S. 310 and H.R. 569 in the 112 th Congress, this bill would have prohibited any EUC08 or EB benefit payments to an individual with resources in the preceding year of at least $1 million, as determined through the resource test for the Medicare Part D drug benefit subsidy. This bill would have been effective for weeks of unemployment beginning on or after enactment.\nH.R. 3979 . On January 31, 2014, Representative Barletta introduced H.R. 3979 , the Emergency Unemployment Compensation Extension Act of 2014. Section 7 of H.R. 3979 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments. This provision would have been effective for weeks of unemployment beginning on or after enactment.\nS.Amdt. 2714 . On February 4, 2014, Senator Reid (for Senator Reed) proposed S.Amdt. 2714 to S. 1845 , the Emergency Unemployment Compensation Extension Act. Section 7 of S.Amdt. 2714 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving federal unemployment compensation, including EB and (now-expired) EUC08 payments. The effective date for this provision would have been the day after enactment. This bill would have been effective for weeks of unemployment beginning on or after enactment.\nS. 2097 . On March 6, 2014, Senator Heller introduced S. 2097 , the Responsible Unemployment Compensation Extension Act of 2014. Section 9 of S. 2097 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving federal unemployment compensation, including EB and (now-expired) EUC08 payments, effective for weeks of unemployment beginning on or after enactment.\nS. 2148 and S. 2149 . On March 13, 2014, Senator Reed introduced S. 2148 , the Emergency Unemployment Compensation Extension Act of 2014. On March 24, 2014, Senator Reed introduced S. 2149 , a technical correction to S. 2149 . Section 7 of both S. 2148 and S. 2149 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments, effective for weeks of unemployment beginning on or after enactment.\nS. 2532 . On June 25, 2014, Senator Reed introduced S. 2532 , the Emergency Unemployment Compensation Extension Act of 2014. Like H.R. 3979 , S. 2148 , and S. 2149 , Section 7 of S. 2532 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments. This provision would have been effective for weeks of unemployment beginning on or after enactment.\nH.R. 4415 . On April 7, 2014, Representative Kildee introduced H.R. 4415 , the Emergency Unemployment Compensation Extension Act of 2014. Like H.R. 3979 , S. 2148 , S. 2149 , and S. 2532 , Section 7 of H.R. 4415 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments. This provision would have been effective for weeks of unemployment beginning on or after enactment.\nH.R. 4550 . On May 1, 2014, Representative Fitzpatrick introduced H.R. 4550 , the Emergency Unemployment Compensation Extension Act of 2014. Like H.R. 3979 , H.R. 4415 , S. 2148 , S. 2149 , and S. 2532 , Section 106 of H.R. 4550 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments, effective for weeks of unemployment beginning on or after enactment.\nH.R. 4970 . On June 25, 2014, Representative LoBiondo introduced H.R. 4970 , the Emergency Unemployment Compensation Extension Act of 2014. Like H.R. 3979 , H.R. 4415 , H.R. 4550 , S. 2148 , S. 2149 , and S. 2532 , Section 7 of H.R. 4970 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments, effective for weeks of unemployment beginning on or after enactment.", "As of the date of this report, no bills have been introduced in the 114 th Congress to restrict UI receipt based on income." ], "depth": [ 0, 1, 2, 2, 2, 1, 2, 3, 2, 2, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "", "", "h2_full", "h0_full h2_full", "", "", "", "", "h1_full", "", "h1_full", "h1_full" ] }

{ "question": [ "What has Congress considered regarding high-income individuals?", "How is high income defined?", "What is an example of a step taken towards that goal?", "What was the result of that proposal?", "What other bills regarding unemployment were introduced in the 112th Congress?", "Were any such bills introduced in the 113th Congress?", "To what extent did the 114th Congress have any similar introductions?", "What information does this report provide?", "What are the areas of interest to lawmakers therein?", "Why do the latter two areas matter?", "What is the trend in high-income people receiving UI benefits?" ], "summary": [ "Recent Congresses, however, have considered proposals to restrict the payment of unemployment benefits to high-income individuals.", "These proposals define high income in a variety of ways—often prohibiting UI benefits for \"millionaires.\"", "For instance, in the 112th Congress, the House-passed version of H.R. 3630 (the Middle Class Tax Relief and Job Creation Act) included a provision that would have imposed an income tax on unemployment benefits for high-income individuals. Based on a scaled approach, the tax would have increased to 100% for a single tax filer with Adjusted Gross Income (AGI) of $1 million (or AGI of $2 million for a married couple filing a joint return).", "The provision, however, was not included in the final version of the legislation that became P.L. 112-96.", "Several other bills introduced in the 112th Congress would have restricted unemployment benefit receipt based on income (i.e., they would change the current requirement to provide unemployment benefits to all workers without income restrictions): S. 1944, H.R. 235, and S. 310.", "A number of bills in the 113th Congress would also have imposed income restrictions for the purposes of UI benefits: S. 18, H.R. 2448, H.R. 3979, H.R. 4415, H.R. 4550, H.R. 4970, S.Amdt. 2714, S. 2097, S. 2148, S. 2149, and S. 2532.", "As of the date of this report, no bills have been introduced in the 114th Congress to restrict UI receipt based on income.", "To inform the ongoing policy debate, this report provides information relevant to proposals that would restrict the payment of unemployment benefits to individuals with high incomes.", "Three primary areas that may be of interest to lawmakers are addressed: (1) the current U.S. Department of Labor (DOL) opinion on means-testing UI benefits; (2) the potential number of people who would be affected by such proposals; and (3) policy considerations such as the potential savings associated with such proposals, particularly in terms of federal expenditures.", "The latter two issues are discussed because a small percentage of tax filers who receive unemployment benefit income have an AGI of $1 million or more.", "For example, in tax year 2010, when UI receipt was at a recent peak, approximately 0.02% of tax filers had an AGI of at least $1 million, based on Internal Revenue Service (IRS) data. In tax year 2014 (most recent data available), however, there were no tax filers with AGI of $1 million who received UI benefits, according to IRS data." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 0, -1, -1, 1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Basis for Asylum in International and U.S. Law", "Application of the INA's Definition of Refugee", "\"Persecution\"", "\"Well-Founded Fear\"", "\"On Account of\"", "Protected Grounds", "Evolution in the Construction of Particular Social Group", "Specific Social Groups", "Persons Resistant to Gang Recruitment", "Former Gang Members", "Witnesses or Informants against Gangs", "Family Members of Persons in the Foregoing Categories", "Bars to Asylum" ], "paragraphs": [ "The recent increase in the number of unaccompanied alien children (UACs) apprehended at the border between Mexico and the United States has raised questions about the role that gang-related violence in Central America may play in determining eligibility for refugee status and asylum. Gang activity is wide-spread in El Salvador, Guatemala, and Honduras, and attempts by these governments to control such activity have been seen as ineffective, at best, or as violating the civil rights of persons perceived as gang members or associates, at worst. The Office of the United Nations High Commissioner for Refugees (UNHCR) repeatedly noted this gang-related violence in its 2014 report, Children on the Run: Unaccompanied Children Leaving Central America and Mexico and the Need for International Protection . Subsequently, in discussing the \"surge\" in the number of UACs arriving at the U.S.-Mexican border in FY2014, the UNHRC reiterated that 58% of these children cite \"violence\" in their home countries as \"at least one key reason\" for leaving.\nRefugee status and asylum are two forms of discretionary relief that could enable UACs to enter or remain in the United States, and the Immigration and Nationality Act (INA) relies upon the same definition in determining eligibility for both. In both cases, to be eligible, aliens must prove that they have experienced past persecution, or have a well-founded fear of future persecution, on account of race, religion, nationality, political opinion, or membership in a particular social group. However, refugee status may only be granted to aliens outside the United States, while asylum may only be granted to aliens arriving at a port of entry or the U.S. border, or within the United States. Applicants for refugee status are also barred from appealing denials of their applications, while applicants for asylum are not. Thus, an equivalent to the extensive body of case law construing and applying the INA's definition of refugee in the context of asylum is lacking in the context of refugee status. Instead, the meaning of refugee for purposes of refugee status is typically construed in light of asylum cases, and asylum is the focus of this report.\nThe report provides an overview of the basis for asylum in U.S. law. It also discusses how key elements of the INA's definition of refugee have been construed and applied in gang-related asylum cases. The report briefly notes, in relevant places, related forms of relief from removal, such as withholding of removal under Section 241 of the INA or the Convention against Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment, but does not provide a comprehensive treatment of these topics.\nIt is also important to note that many potentially relevant decisions—namely, those by asylum officers within U.S. Citizenship and Immigration Services (USCIS) and immigration judges within the Executive Office for Immigration Review (EOIR) at the Department of Justice (DOJ)—are not published. There are reasons to believe that USCIS and EOIR may be more receptive to gang-related asylum claims than the decisions by the Board of Immigration Appeals (BIA) and the federal courts of appeals discussed here. However, USCIS and immigration judge decisions are not publicly available in the same way that published BIA decisions and federal court decisions are.", "The INA's current protections for refugees and asylees are grounded in the 1951 Convention Relating to the Status of Refugees and the 1967 Protocol Relating to the Status of Refugees. The Convention generally defined a refugee as any person who\n[a]s a result of events occurring before 1 January 1951 and owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group, or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country,\nalthough persons who had \"committed a crime against peace, a war crime, or a crime against humanity\" were expressly excluded from this definition. Most notably, the Convention barred nations which are parties to it from returning refugees to their home country (or another country) where they feared persecution. It also obligated these nations to grant refugees freedom of religion and movement, the right to work and public education, and access to identity papers and travel documents, among other things. Conversely, it required refugees to respect the laws and regulations of their country of asylum. The United States was involved in drafting the Convention, but did not sign on as a party to it. However, it did sign on as a party to the Protocol, which amended the Convention by removing the temporal restrictions (i.e., \"events occurring before 1 January 1951\") from its definition of refugee .\nThe Refugee Act of 1980 ( P.L. 96-212 ) is widely recognized as having been enacted to bring U.S. domestic law into conformity with the United States' commitments under the Protocol. Among other things, the Refugee Act amended Section 101(a)(42) of the INA to define refugee in largely the same terms used by the Convention and Protocol:\nThe term \"refugee\" means ... any person who is outside any country of such person's nationality or, in the case of a person having no nationality, is outside any country in which such person last habitually resided, and who is unable or unwilling to return to, and is unable or unwilling to avail himself or herself of the protection of, that country because of persecution or a well-founded fear of persecution on account of race, religion, nationality, membership in a particular social group, or political opinion.\nThe Refugee Act also added the current Sections 207, 208, and 209 to the INA, which, respectively, address refugee admissions, the granting of asylum, and the adjustment of refugees' and asylees' status to that of lawfully permanent resident aliens (LPRs). In addition, the Refugee Act amended then-Section 243 of the INA to generally bar the return of aliens to countries where the \"alien's life or freedom would be threatened ... on account of race, religion, nationality, membership in a particular social group, or political opinion.\" Subsequently relocated to Section 241 of the INA, this prohibition forms the basis for what is referred to as withholding of removal .\nWithholding of removal under Section 241 of the INA represents the U.S.'s primary obligation under the Convention and Protocol. That is, as a party to the Protocol, the United States is barred from removing aliens, including aliens arriving at the U.S. border, to a county where he or she would be persecuted. The United States is not required, by the Protocol or otherwise, to admit refugees to the United States, grant asylum to persons in the United States, or permit refugees or asylees to adjust to LPR status or obtain citizenship. To the contrary, the INA expressly notes that the granting of asylum is discretionary, and courts have upheld its denial even when an alien fulfills the requirements of the statutory definition of refugee .\nIt is also important to note that, even though the United States signed on as a party to the Protocol, and the INA's definition of refugee generally corresponds to that in the Convention and Protocol, it is U.S. domestic law—not international law—that governs U.S. obligations as to individual aliens. Relatedly, the same terms (e.g., persecution , particular social group ) may be construed differently when used in the Convention and Protocol than when used in the INA.", "Aliens seeking asylum in the United States have the burden of establishing, by a preponderance of the evidence, that they are \"refugees\" under the INA's definition of this term. This means showing that they (1) have suffered persecution, or (2) have a well-founded fear of persecution (3) on account of (4) a protected ground (i.e., race, religion, nationality, political opinion, or membership in a particular social group). However, the meaning of certain of these terms—such as persecution and particular social group —is not established by Convention or Protocol, or by the INA and its implementing regulations. Instead, their meaning has been determined by the Board of Immigration Appeals (BIA)—the highest administrative tribunal for interpreting and applying immigration law—through case-by-case adjudication, with the federal courts generally deferring to the BIA's interpretation so long as it is based on a \"permissible construction\" of the INA. In other cases, such as with the meaning of well-founded fear , the executive branch has interpreted particular language within the INA's definition of refugee through the promulgation of regulations. These regulatory interpretations are also afforded deference by the courts insofar as they are based on \"permissible\" constructions of the statutory language. In yet other cases, Congress has enacted legislation that affects how particular terms within the refugee definition are construed. Perhaps the most notable example of this is the REAL ID Act of 2005 ( P.L. 109-13 ), which amended the INA to require that a protected ground (e.g., race, religion, nationality) \"was or will be at least one central reason\" for the persecution.\nThe application of the INA's definition of refugee to aliens seeking asylum in the United States due, in whole or in part, to gang-related violence is, thus, complicated because it involves consideration of an extensive body of statutes, regulations, and administrative and judicial decisions. In addition, the federal courts of appeals can sometimes have differing opinions on whether particular interpretations advanced by the BIA are \"permissible\" and, thus, entitled to deference. Such differences of opinion can result in aliens' applications for asylum faring differently depending upon the territorial jurisdiction in which they are made (e.g., some courts are willing to consider former gang members as a particular social group, while others are not).", "\"Persecution\"—or a well-founded fear thereof, discussed below (see \"Well-Founded Fear\" )—underlies international and domestic protections for refugees and asylees. However, neither the Convention and Protocol nor the INA defines persecution . Instead, what have been described as the \"working parameters of this term\" for purposes of U.S. law were established by the BIA in its 1983 decision in Matter of Laipenieks . There, the BIA characterized persecution as\n[t]he infliction of suffering or harm, under government sanction, upon persons who differ in a way regarded as offensive (e.g., race, religion, political opinion, etc.), in a manner condemned by civilized governments. The harm or suffering need not be physical, but may take other forms, such as the deliberate imposition of severe economic disadvantage or the deprivation of liberty, food, housing, employment or other essentials of life.\nSubsequent decisions built upon this formulation by distinguishing harm that rises to the level of persecution (i.e., harm inflicted \"in a manner condemned by civilized governments\") from harm that does not, and by clarifying when the actions of private persons can be said to be \"under government sanction.\"\nIn distinguishing between persecution and other types of harm, the BIA and the courts have contrasted the \"extreme\" or \"serious\" nature of the harm that constitutes persecution with harassment, discrimination, and other \"lesser\" harms that do not rise to the level of persecution. For example, in its 2013 decision in Martinez-Beltrand v. Attorney General , the U.S. Court of Appeals for the Third Circuit upheld the denial of asylum to an alien who claimed to have been persecuted by gang members in Honduras on the grounds that the alien had suffered \"harassment\" that \"did not rise to the level of persecution.\" The alien alleged that she had been persecuted in the past by gang members coming to the funeral home her family operated, and asking her to give them money and join the gang. Thereafter, gang members allegedly called the funeral home periodically, asking for money. However, the Third Circuit likened these harms to \"minor assaults that do not require medical care\" or \"unfulfilled threats,\" both of which are generally seen as insufficient to show persecution. It also viewed the gang's actions as \"attempt[s] to extort money\" and, thus, \"ordinary criminal activity\" of the sort that \"does not rise to the level of persecution necessary to establish eligibility for asylum.\"\nThe U.S. Court of Appeals for the Tenth Circuit relied upon similar logic in its 2013 decision in Cosenza-Cruz v. Holder , where the extortion attempts and threats experienced by two brothers in Guatemala were seen as ordinary criminal activity, not persecution. The Tenth Circuit also emphasized that the alien petitioners were not \"targeted\" or singled out for harm on a protected ground, a factor that some courts, in particular, note in their discussions of persecution. However, the link between the harm suffered and any protected grounds is arguably better considered in conjunction with the \"nexus\" requirement in the refugee definition (see \"On Account of\" ), and USCIS has explicitly instructed asylum officers to \"separate the analysis of motivation from the evaluation of whether the harm is persecution, in order to make the basis of their decision as clear as possible.\"\nThe harm suffered or feared must also have \"some connection to governmental action or inaction.\" In cases where the government is not directly responsible for the harm, this means showing that the government knowingly tolerates the harm inflicted by private parties, or is unwilling or unable to control the actions of these parties. If such toleration, or unwillingness or inability to control, is found, the BIA and the federal courts may recognize harm arising to the level of persecution. However, the BIA and the courts are sometimes reluctant to find an inability or unwillingness to control the actions of private persons based solely on the fact that the government's efforts have been ineffective. For example, in its 2005 decision in Romero-Rodriguez v. U.S. Attorney General , the U.S. Court of Appeals for the Eleventh Circuit upheld the denial of asylum to two brothers who fled alleged gang recruitment in Honduras. In so doing, the court relied, in part, on the immigration judge's finding that the \"Honduran government was attempting to control the lawlessness that exists in that country.\" The U.S. Court of Appeals for the Seventh Circuit relied upon similar logic in its 2004 decision in Lleshanaku v. Ashcroft . There, the court upheld the denial of asylum to a woman who claimed to have been trailed and threatened by gang members in Albania on the grounds that she alleged \"criminal racketeering [of a type] that almost all governments have trouble controlling, as opposed to the type of government conduct on which most grants of asylum are based.\"\nBoth elements within the standard construction of persecution —i.e., the seriousness of the harm and government action or inaction—can be difficult to show in gang-related cases, as the foregoing examples illustrate. Indeed, as one court noted, the very pervasiveness of gang activity within a society can make a finding of persecution less likely, insofar as gang actions can be characterized as \"widespread violence\" or \"ordinary criminal activity.\"", "A showing of past persecution gives rise to a rebuttable presumption that the alien has a well-founded fear of future persecution. Otherwise, absent a showing of past persecution, the alien must show that he or she has a \"well-founded fear\" of future persecution in order to be eligible for asylum in the United States. Federal regulations further provide that applicants for asylum have a well-founded fear of persecution if\n(A) [t]he applicant has a fear of persecution in his or her country of nationality or, if stateless, in his or her country of last habitual residence, on account of race, religion, nationality, membership in a particular social group, or political opinion; (B) [t]here is a reasonable possibility of suffering such persecution if he or she were to return to that country; and (C) [h]e or she is unable or unwilling to return to, or avail himself or herself of the protection of, that country because of such fear.\nAs these regulations suggest, the test for whether aliens have a well-founded fear of persecution is partly subjective in that it focuses upon whether the alien actually \"has a fear of persecution.\" The subjective element is satisfied if the applicant's fear of persecution is genuine. A genuine fear of persecution must be the applicant's \"primary motive\" in seeking asylum, but it need not be the only motive.\nOn the other hand, the test for a well-founded fear of persecution is also objective in that there must be a \"reasonable possibility\" that the alien would suffer persecution if returned to his or her home country. The regulations do not define what is meant by a reasonable possibility of persecution. However, the Supreme Court helped establish the meaning of this term with its 1987 decision in INS v. Cardoza-Fonseca , which found that \"[o]ne can ... have a well-founded fear of an event happening when there is less than a 50% chance of the occurrence taking place.\" Following the Cardoza-Fonseca decision, the BIA emphasized that determinations as to whether a fear is well-founded ultimately rest not on the statistical probability of persecution occurring, but on whether a reasonable person in the alien's position would fear persecution. Federal courts have generally deferred to the BIA on the meaning of reasonable possibility , with some courts opining that a reasonable possibility of persecution can exist where there is as little as a one-in-ten chance of the feared harm occurring.\nA well-founded fear of persecution has been found to be lacking in some gang-related asylum cases, often in cases where past harms are not viewed as persecution. The genuineness of the alien's fear is often not in doubt. However, such fear can be seen as unreasonable in light of the circumstances.", "The refugee definition's proviso that the persecution be \"on account of\" a protected ground has been construed to require that there be a \"nexus\" between the harm that the alien has incurred or fears and the alien's race, religion, nationality, political opinion, or membership in a particular social group. To establish the requisite nexus, the alien must provide some evidence (direct or circumstantial) that the persecutor is motivated to persecute the victim because the victim possesses—or is believed to possess—the protected characteristic. The alien need not prove the actual, exact reason for the persecution. Rather, he or she need only establish facts on which a reasonable person would fear that the danger \"arises on account of ... race, religion, nationality, membership in a particular social group, or political opinion.\" However, as a result of amendments made to Section 208 of the INA by the REAL ID Act of 2005 ( P.L. 109-13 ), the alien must also show his or her race, religion, nationality, political opinion, or membership in a particular social group \"was or will be at least one central reason\" for his or her persecution. A central reason has been construed to mean a reason that is more than \"incidental, tangential, superficial, or subordinate to another reason for harm.\" A central reason need not be the only reason, or even a \"primary\" reason, though. So-called \"mixed motive\" claims—where the persecutor is motivated by the alien's possession of a protected characteristic as well as other factors (e.g., greed, revenge)—are still possible post-REAL ID Act.\nLack of the requisite nexus between the alleged persecution and a protected ground is another reason that gang-related asylum claims may fail. For example, in its 2011 decision in Bueso-Avila v. Holder , the Seventh Circuit upheld the executive branch's denial of asylum to an alien who claimed to have been persecuted by gangs in Honduras because of his Evangelical Christian religion. The Seventh Circuit did so, in part, because it viewed the executive branch's conclusion that the gang was either unaware of or unconcerned about the alien's religious beliefs as \"legitimate\" in light of \"all the evidence\" presented by the alien. The U.S. Court of Appeals for the First Circuit relied upon similar logic in its 2012 decision in Carreanza-Vargas v. Holder . There, in upholding the executive branch's denial of asylum to alien who claimed to fear persecution by gangs in El Salvador based on his membership in the particular social group of \"former police and army members who fear harm by gangs,\" the First Circuit noted that the evidence supported the conclusion that the gangs were motivated by economic gain, not the alien's membership in any particular social group. As these examples suggest, conventional understandings of gangs' motives can shape the outcomes in these cases, with courts upholding denials of asylum where the evidence can be seen as demonstrating \"typical\" gang activities (e.g., robbery, extortion, recruitment of new members).", "The refugee definition encompasses five so-called protected grounds: race, religion, nationality, political opinion, and membership in a particular social group. Gang-related asylum claims have been made on various grounds, including religion and political opinion. The most common ground, however, has arguably been membership in a particular social group, a construct which has been described as \"an especially contested and problematic area in asylum law.\" Particular social group is the ground upon which all asylum claims not based on race, religion, nationality, or political opinion must be made. However, the executive branch and the federal courts have been reluctant to treat \"particular social group\" as a \"catch-all,\" permitting anyone who experiences harm anywhere in the world to obtain refugee status or asylum in the United States. This reluctance would appear to underlie, in part, the evolution in the executive branch's construction of the term particular social group between 1985 and the present, a development which some commentators have suggested underlies the failure of many gang-based asylum claims.", "Because there is no statutory or regulatory definition of particular social group , the BIA has established the meaning of this term through case-by-case adjudication, beginning with its 1985 decision in Matter of Acosta . The alien in Acosta claimed to fear persecution in El Salvador because he co-founded and actively participated in a cooperative organization of taxi drivers—known as COTAXI—that refused to participate in work stoppages allegedly requested by anti-government guerillas. However, the immigration judge denied the alien asylum because he found the alien's testimony insufficient to prove the alleged harm. The BIA affirmed this denial on other grounds, including on the grounds that the particular social group proposed by the alien—\"COTAXI drivers and persons engaged in the transportation industry of El Salvador\"—was not cognizable under the INA. The BIA reached this conclusion by resorting to the doctrine of eiusdem generis in construing the meaning of the words \"particular social group.\" In keeping with the doctrine's holding that \"general words used in an enumeration with specific words should be construed in a manner consistent with the specific words,\" the BIA considered \"particular social group\" in conjunction with \"race,\" \"religion,\" \"nationality,\" and \"political opinion,\" and noted that each of the other grounds \"describes persecution aimed at an immutable characteristic: a characteristic that either is beyond the power of an individual to change or is so fundamental to individual identity or conscience that it ought not be required to be changed.\" Thus, it concluded, \"particular social group\" is to be construed as describing a \"group of persons all of whom share a common, immutable characteristic.\" According to the BIA, this characteristic can be \"innate,\" such as \"sex, color, or kinship ties,\" or based on \"shared past experiences,\" such as former military leadership or land ownership. However, it cannot be based on something that is \"not immutable,\" and the BIA viewed driving a taxi or refusing to participate in work stoppages as not immutable.\nThe federal courts generally deferred to the BIA's construction of particular social group in Acosta , finding that it constituted a \"reasonable\" and \"permissible\" interpretation of an ambiguous statutory term. Similarly, the UNHCR incorporated Acosta 's construction of this term into its own definition of particular social group , suggesting that it viewed the BIA's interpretation as consistent with the Convention and Protocol.\nDespite this deference, the BIA revisited and reformulated the meaning of particular social group in its 2006 decision in Matter of C-A- . There, the BIA rejected aliens' challenge to the denial of their asylum application after finding that \"noncriminal informants\"—specifically, informants against the Cali drug cartel in Columbia—do not constitute a particular social group for purposes of the INA. In so finding, the BIA retained Acosta 's requirement that members of a particular social group share a common, immutable characteristic, but emphasized the further requirement that the group be \"recognizable\" as such (i.e., possess \"social visibility\"). The BIA did so, in part, because it viewed the specific social groups based on innate characteristics, recognized pursuant to previous applications of the standard articulated in Acosta , as \"generally easily recognizable and understood by others to constitute social groups.\" In contrast, it viewed the proposed social group of noncriminal informants as different because\nthe very nature of the conduct at issue is such that it is generally out of the public view. In the normal course of events, an informant against the Cali cartel intends to remain unknown and undiscovered. Recognizability or visibility is limited to those informants who are discovered because they appear as witnesses or otherwise come to the attention of cartel members.\nThe BIA also noted that the proposed grouping of noncriminal informants was \"too loosely defined to meet the requirement of particularity,\" since it could include persons who \"passed along information concerning any of the numerous guerrilla factions or narco-trafficking cartels currently active in Colombia to the Government or to a competing faction or cartel.\"\nTwo years later, in its 2008 decision in Matter of S-E-G- , the BIA applied the social visibility and particularity requirements to three siblings who had fled alleged persecution by the MS-13 gang in El Salvador. There, in affirming the immigration judge's denial of asylum, the BIA found that the siblings' proposed group of \"Salvadoran youth who have been subjected to recruitment efforts by MS-13 and who have rejected or resisted membership based on their own personal, moral, and religious opposition to the gang's values and activities\" lacked both social visibility and particularity. As to social visibility, the BIA emphasized that the purported group was not recognized as a discrete class of persons by Salvadoran society. Similarly, as to particularity, the BIA noted that the group lacked well-defined boundaries, such that it could be readily determined who fell within, or outside of, the group. Further, the BIA noted that the youths' attempt to limit their proposed group by claiming it was comprised of male children who \"lack stable families and meaningful adult protection\" and \"who are from middle and low income classes\" relied upon \"amorphous\" characteristics, as \"people's ideas of what those terms mean can vary.\"\nThe BIA's decisions in Matter of C-A- and Matter of S-E-G- prompted a somewhat different response than its earlier decision in Matter of Acosta . While most federal courts of appeals deferred to the BIA's revised interpretation of particular social group , two did not. First, the Seventh Circuit rejected the \"social visibility\" requirement in its 2009 decision in Gatimi v. Holder , in part, on the grounds that it was inconsistent with the BIA's prior decisions, and the BIA did not articulate a principled reason for the change. The Seventh Circuit also indicated that it viewed the BIA's discussion of social visibility as referring to literal or ocular visibility, an interpretation that has elsewhere been suggested to constitute an impermissible construction of the INA. Subsequently, the Third Circuit relied on similar reasoning as to social visibility—and also rejected the particularity requirement—in its 2011 decision in Valdiviezo-Galdamez v. Attorney General . The Third Circuit did so, in part, because it viewed particularity as \"little more than a reworked definition\" of the \"discredited requirement of 'social visability.'\" The UNHCR also objected to the BIA's construction of particular social group in Matter of C-A- and its application to gang-related asylum claims in Matter of S-E-G -. Among other things, the UNHCR filed an amicus brief with the BIA in Matter of Thomas in 2007, calling for the BIA to eliminate the \"social visibility\" and \"particularity\" requirements and return to the \"common, immutable characteristic\" standard of Acosta . The UNHCR also petitioned Attorney General Holder in 2009 to certify Matter of S-E-G- to himself for review. In both cases, the UNHCR asserted that the executive branch's construction of particular social group was inconsistent with UNHCR guidance and U.S. obligations under international law.\nSubsequently, the BIA revisited and reformulated the construction of particular social group once more in its 2014 decisions in Matter of W-G-R- and Matter of M-E-V-G- . In these two decisions, issued on the same day, the BIA retained the requirements that particular social groups possess common, immutable characteristics and particularity, but renamed the former \"social visibility\" requirement as \"social distinction.\" In so doing, the BIA emphasized that it viewed social distinction as\nreferr[ing] to recognition by society, taking as its basis the plain language of the Act—in this case, the word 'social.' To be socially distinct, a group need not be seen by society; it must instead be perceived as a group by society. Members of the group may be visibly recognizable, but society can also consider persons to be a group without being able to identify the members by sight.\nThe BIA also emphasized that it viewed the requirement of social distinction as consistent with prior BIA precedents recognizing \"young tribal women who are opposed to female genital mutilation,\" \"homosexuals in Cuba,\" and \"former national police members,\" among others, as particular social groups. Further, while acknowledging that its approach differs from UNHCR guidelines, the BIA noted that its approach is similar to that adopted by the European Union, which \"also declines to follow the ... definition set forth by the UNHCR.\"\nIt remains to be seen whether federal courts of appeals will defer to the BIA's \"social visibility\" requirement in determining what constitutes a particular social group for purposes of refugee status and asylum. However, the evolution in the construction of the term particular social group arguably helps explain the limited success of gang-related asylum claims to date. Especially since the BIA's decision in Matter of C-A- , these claims have generally failed, in part, because the various social groups articulated by individual aliens are seen as lacking social visibility and/or particularity. Some commentators have suggested that the BIA's recent shift from \"social visibility\" to \"social distinction\" could potentially make it more difficult for aliens to obtain asylum by requiring that aliens produce sociological studies or other evidence demonstrating that the alien's home society recognizes the group as distinct. On the other hand, given the deference that the courts have generally afforded to the executive branch's construction of particular social group , this term and/or social distinction could conceivably be reinterpreted by the executive branch in the future to make it easier for aliens to obtain asylum on account of membership in a particular social group.", "While the particular social groups proposed in individual cases vary somewhat in their specific formulations, they can generally be seen as involving one of four broad categories: (1) persons resistant to gang recruitment; (2) former gang members; (3) witnesses and informants against gangs; and (4) the family members of persons in the foregoing groups. Most courts have not considered these proposed groupings as constituting particular social groups for purposes of granting asylum, although groups involving former gang members, witnesses or informants against the gangs, and family members may be cognizable as particular social groups in certain jurisdictions.", "In a number of cases, courts have upheld the denial of asylum to aliens based on their purported membership in particular social groups made up of persons who are targeted for or resist gang recruitment, generally because the courts view the proposed group as lacking both social visibility (now, distinction) and/or particularity. For example, in its 2012 decision in Mayorga-Vidal v. Holder , the First Circuit upheld the denial of asylum to an alien who claimed to fear persecution due to his membership in the group of \"young Salvadoran men who have resisted gang recruitment and whose parents are unavailable to protect them.\" The First Circuit did so, in part, because it found no evidence in the record suggesting that Salvadoran society viewed the purported group as a \"discrete class of persons.\" It also deferred to the BIA's view that the proposed grouping of \"youths who resist gang recruitment\" was \"too subjective and open-ended\" to meet the particularity requirement since it represented a \"large, diffuse portion of society.\" It gave similar deference to the BIA's view that \"lack of parental protection\" failed the \"particularity\" requirement, as there are no \"objective criteria\" to define what it means to lack parental protection. The U.S. Court of Appeals for the Tenth Circuit relied upon similar logic in upholding the denial of asylum based on membership in the proposed social group of \"El Salvadoran women between the ages of 12 and 25 who have resisted gang recruitment\" in its 2012 decision in Rivera-Barrientos v. Holder . There, the court opined that the proposed group could potentially be seen as possessing particularity, as the meaning of each of its terms is unambiguous. However, it found that the group lacked social visibility (now social distinction) since there was no evidence that \"women between the ages of 12 and 25 who have resisted gang recruitment are perceived to be a social group by Salvadoran society.\"\nThese and other cases suggest that obtaining asylum based on membership in a group of persons targeted for, or resistant to, gang recruitment may be complicated by pervasiveness of gang violence in certain societies. Because the gangs are generally seen as targeting everyone who seems a likely candidate for membership, regardless of their personal attributes or associations, it can be hard to show that persons who have been targeted for or refused gang recruitment are seen as a discrete group by society. It can also be hard to show that clear boundaries demarcate persons who have been targeted for or refused gang recruitment, particularly since the BIA and the federal courts have generally taken the view that a particular social group cannot be defined \"circularly\" by the fact that its members have been targeted for persecution.", "Granting asylum to aliens based on their membership in groups made up of former gang members is more complicated in that several federal courts of appeals have evidenced at least some willingness to view former gang members as a particular social group, while others have suggested that granting asylum to those who belong to organizations that have perpetrated acts of violence or other crimes in their home countries is contrary to the humanitarian purposes of asylum. For example, in its 2010 decision in Urbina-Mejia v. Holder , the Sixth Circuit found that being a member of a gang is a characteristic that is \"impossible to change, except perhaps by rejoining the group.\" The Seventh Circuit relied upon similar logic in its 2009 decision in Benitez Ramos v. Holder , finding that \"[a] gang is a group, and being a former member of a group is a characteristic impossible to change.\" However, neither decision took into account the social visibility (now, distinction) and particularity of the group in reaching this conclusion, and other tribunals have taken the opposite view. The Ninth Circuit, for example, has found that former gang members are categorically excluded from consideration as a particular social group on the grounds that recognizing former members of \"violent criminal gangs\" would \"undermine the legislative purpose of the INA.\" The First Circuit has similarly quoted, with apparent approval, the BIA's view that \"[t]reating affiliation with a criminal organization as ... membership in a social group is inconsistent with the principles underlying the bars to asylum and withholding of removal based on criminal behavior,\" discussed below ( \" Bars to Asylum \").\nWhether a claim to asylum based on former gang membership succeeds may thus depend, in large part, upon the jurisdiction in which it is made. The BIA's decision in 2014 in Matter of W-G-R- could potentially also complicate matters. The alien in that case alleged membership in a particular social group made up of \"former members of the Mara 18 gang in El Salvador who have renounced their gang membership.\" In upholding the immigration judge's denial of asylum to the alien, the BIA left open the possibility of successful gang-related claims. However, it suggested that, even when former membership is an immutable characteristic that defines a particular social group, the group will \"often need to be further defined with respect to the duration or strength of the members' active participation in the activity and the recency of their active participation if it is to qualify as a particular social group.\" It also emphasized that showing that a group of former gang members is socially distinct will require documentation about the treatment or status of former gang members in society, not just documentation about gangs, gang violence, and treatment of current gang members.", "Witnesses and informants against gangs have also been recognized as comprising a particular social group in some cases, the most notable of which is arguably the decision by the en banc Ninth Circuit in 2013 in Henriquiz-Rivas v. Holder . There, a majority of the Ninth Circuit reversed a BIA decision denying asylum to an alien who claimed to fear persecution on account of her membership in a group made up of \"person[s] who testified in a criminal trial against members of a gang\" in El Salvador. The majority did so because it viewed the BIA's decision as inconsistent with Matter of C-A- , wherein the BIA had contrasted the lack of social visibility of noncriminal informants with the social visibility of \"those who testify against cartel members.\" The majority also suggested that the perception of the persecutor may matter more in determining the cognizability of particular social groups than that of society generally, since those who are persecuted are persecuted \"precisely because the persecutor recognizes the object of his persecution.\" This view—which is not shared by all other tribunals —would seem to have informed the majority's approach insofar as gangs may well perceive persons who testify against them as a \"group\" even if the rest of society does not.\nHowever, as Judge Kozinski's dissent in Henriquiz-Rivas illustrates, not all courts would necessarily adopt the view that witnesses against the gangs make up a particular social group. Judge Kozinski's concerns centered upon the majority's reading of Matter of C-A- and, particularly, whether the BIA, in fact, found that witnesses are a cognizable social group in Matter of C-A- , or whether its statement contrasting witnesses with informants is best viewed as a nonbinding dictum . He also noted that defining a particular social group based on its visibility to the persecutors runs the risk of defining the group circularly, based on the fact that its members have been subjected to harm.\nOther cases involving groups of witnesses or informants have failed on nexus grounds, because the persecutors are seen as motivated not by the alien's membership in a particular social group, but by personal retribution (see \"On Account of\" ).", "Groups based on families were among the first social groups recognized by the BIA, and family has since been described as a \"prototypical example\" of a particular social group. In keeping with this view, some courts have been willing to consider the families of persons in some way affected by gang violence as a cognizable social group for purposes of asylum. Other courts have been more skeptical. Whether the group members share a common, immutable characteristic (i.e., family membership), and whether the group is defined with particularity, have generally not been at issue. The requirement of social visibility (now social distinction), in contrast, has posed greater difficulties, since the family group must be one that is recognized as a discrete group. Such recognition from the alien's society at large can be hard to come by unless the family in question is particularly famous or otherwise well known, although it could potentially be more easily shown when the focus is upon the perceptions of the alleged persecutor.\nA perceived lack of a \"nexus\" between the feared persecution and the alien's belonging to a particular family could also pose issues.", "The INA also articulates certain bars to asylum, expressly prohibiting the executive branch from granting asylum to aliens who ordered, incited, assisted, or otherwise participated in the persecution of any person on account of race, religion, nationality, political opinion, or membership in a particular social group. Also barred are aliens who may otherwise meet the requirements of the refugee definition, but (1) having been convicted of a \"particularly serious crime,\" constitute a danger to the U.S. community; (2) committed a \"serious nonpolitical crime\" outside the United States prior to arriving here; (3) are reasonably believed to be a danger to U.S. security; (4) are inadmissible or deportable on certain terrorist grounds; or (5) were firmly resettled in another country prior to coming to the United States. The INA further provides that aliens who have been convicted of \"aggravated felonies\"—which the INA defines to mean certain specified crimes (e.g., murder, rape, sexual abuse of a minor), as well as \"crimes of violence\" for which the term of imprisonment is at least one year —are considered to have been convicted of particularly serious crimes.\nThese bars can present potentially significant issues for former gang members, as to whom there could be \"serious reasons\" to believe they have committed \"serious nonpolitical crimes\" outside the United States. Those who are not former gang members are generally less likely to be affected by such bars." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 3, 3, 4, 4, 4, 4, 1 ], "alignment": [ "h0_title h2_title h1_title", "", "h0_full h2_full h1_full", "h1_full", "h0_full h2_full h1_full", "h1_full", "h0_full h2_title h1_full", "h2_full h1_full", "", "", "", "", "", "" ] }

{ "question": [ "What does the INA consider asylum conditions?", "How strong are those definitions?", "How were those definitions created?", "What is the process of gaining asylum eligibility?", "What is persecution defined as?", "What is the legal standard for persecution?", "How is \"reasonable possiblity\" defined?", "How did the REAL ID Act change the legal grounds for persecution?", "How has the idea of a \"central reason\" been construed?", "How do gang-related violence asylum claims fare?", "Why is that so?", "Why are claims to persecutive typically ineffective?", "What issues confront claims about social groups?" ], "summary": [ "The INA's definition, in turn, generally encompasses individuals outside their home country who are unable or unwilling to return to that country because of \"persecution or a well-founded fear of persecution on account of race, religion, nationality, membership in a particular social group, or political opinion.\"", "However, key terms within this definition—including persecution and particular social group—are not defined by statute or regulation.", "Instead, they have been construed by the Board of Immigration Appeals (BIA), the highest administrative tribunal for interpreting and applying immigration law, through a process of case-by-case adjudication, with the federal courts generally deferring to the BIA's interpretation insofar as it is based on a \"permissible construction\" of the INA.", "These cases center upon eligibility for asylum, because denials of applications for refugee status cannot be appealed. Denials of asylum by immigration judges in the course of formal removal proceedings, in contrast, may be appealed to the BIA and the federal courts of appeals.", "Persecution has been construed to mean the infliction of harm by the government, or an entity the government is unable or unwilling to control, \"upon persons who differ in a way regarded as offensive ..., in a manner condemned by civilized governments.\"", "A showing of past persecution establishes a rebuttable presumption that the alien has a well-founded fear of future persecution. Otherwise, aliens must prove they subjectively fear persecution, and there is a \"reasonable possibility\" they would suffer persecution if returned to their home country.", "Such a \"reasonable possibility\" can exist when there is less than a 50% chance of the occurrence taking place. This persecution must also be \"on account of\" a protected ground (e.g., race).", "The REAL ID Act of 2005 (P.L. 109-13) amended the INA to require that a protected ground \"was or will be at least one central reason\" for the persecution.", "However, central reason has been construed to mean a reason that is more than \"incidental, tangential, superficial, or subordinate to another reason,\" not as the only or primary reason. Most protected grounds (i.e., race, religion, nationality, political opinion) are fairly straightforward in their definition, if not in their application in specific cases. Particular social group, however, has been construed in various ways by the BIA over the years.", "When considered by the BIA or appellate courts in light of how the INA's definition of refugee is construed, claims to asylum based on gang-related violence frequently (although not inevitably) fail.", "In some cases, this is because the harm experienced or feared by the alien is seen not as persecution, but as generalized lawlessness or criminal activity.", "In other cases, persecution has been found to be lacking because governmental ineffectiveness in controlling the gangs is distinguished from inability or unwillingness to control them. In yet other cases, any persecution that is found is seen as lacking the requisite connection to a protected ground, and instead arising from activities \"typical\" to gangs, such as extortion and recruitment of new members.", "The particular social group articulated by the alien (e.g., former gang members, recruits) may also been seen as lacking a \"common, immutable characteristic,\" social visibility (now, social distinction), or particularity." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, 1, -1, 3, -1, 0, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Three Offices Have Responsibility for Audit Selection, but Automated Programs Select the Majority of Returns That W&I Audits", "Three W&I Offices Largely Determine What Returns Get Selected for Audit", "Automated System Led to the Most W&I Audit Selections", "Audit Start Management Effectively Acts as an Additional Return Selection Method", "W&I Designed and Implemented Certain Controls for Audit Selection, but Should Develop and Strengthen Others to Reduce Risk of Unfair Practices", "W&I Generally Has Established a Positive Environment for Promoting Internal Controls", "W&I Has Not Clearly Defined Key Terms and Program-Level Objectives to Evaluate Whether Its Audit Selection Process Is Meeting Its Mission", "Lack of Clear Program Objectives Creates Challenges for Effective Risk Assessment in Audit Selection", "W&I Assigns and Communicates Internal Control Responsibilities to Managers, but Not to Its Non-Managers, Raising the Potential Risk for Unfair Selection", "W&I Has Guidance for Automated Systems to Control Access and Modifications to its Audit Selection Criteria", "IRS Has Documented Policies to Support Internal Controls but Shows Weaknesses in Documenting Aspects of Audit Selection", "Monitoring Procedures Do Not Ensure Effective Implementation of Corrective Actions", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Internal Revenue Service", "Appendix III: GAO Contacts and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "W&I supports IRS’s mission by maintaining an enforcement presence and encouraging the correct reporting of income tax to instill the highest degree of public confidence in the tax system’s integrity, fairness, and efficiency. Audit programs in W&I cover mainly refundable credits on the Form 1040 U.S. Individual Income Tax Return.\nAll W&I’s audits are correspondence audits—a type of audit conducted through the mail. Audits have two compliance effects. First, they directly detect and correct noncompliance by the audited taxpayers. Second, audits indirectly encourage nonaudited taxpayers to comply voluntarily.\nW&I’s audit responsibilities generally concern refundable credits claimed on individual income tax returns. A refundable credit can give taxpayers a refund even if they owe no tax and are not otherwise required to file a tax return. Nonrefundable credits also can reduce taxpayers’ tax, but any excess is not refunded.\nThe most common refundable credit that W&I audits is the Earned Income Tax Credit (EITC), which is a benefit for working people with low to moderate income. EITC will cost an estimated $58 billion in federal outlays in fiscal year 2016, according to the Office of Management and Budget (OMB). IRS measures noncompliance in claiming EITC and also uses those measures to estimate its portion of federal improper payments. EITC was the second biggest contributor to the federal government’s estimated $124.7 billion in improper payments in fiscal year 2014. Specifically, EITC accounted for an estimated $17.7 billion in improper payments, which is approximately 27 percent of its outlays during fiscal year 2014. OMB has established guidance for federal agencies on reporting, reducing, and recovering improper payments as required by the Improper Payments Information Act of 2002, as amended. Other refundable credits that W&I covers include the Additional Child Tax Credit, American Opportunity Tax Credit, and Premium Tax Credit.\nIRS also operates other compliance programs that may lead to tax returns being referred to the audit function but are not audit programs. Examples of these programs include the following.\nThe math error program corrects certain obvious errors on tax returns at the time they are filed, such as claiming a credit above the allowed income threshold.\nThe Automated Underreporter program matches income data reported on a tax return with third-party information about income and expenses provided to IRS by employers and financial institutions. Mismatches can result in IRS asking the taxpayer to successfully explain the discrepancy or pay additional tax.\nThe nonfiler program uses third-party information to identify people who do not file a required tax return. Some nonfiler cases may be forwarded for audit, according to IRS officials.\nThe unallowables program identifies items reported on a tax return that are specifically disallowed by law or rule and result in the tax return not being accepted by IRS. These can include taxpayers’ claims of deductions, items exceeding statutory limits, or items not supported by the proper information or schedule.\nIn November 2014, IRS realigned its tax compliance organizations that served individual and small business taxpayers to improve efficiency and identify emerging compliance issues more quickly, as well as streamline decision making and resources in audit and collection while avoiding duplication. The realignment changed what the W&I and Small Business and Self-Employed (SB/SE) divisions audit. W&I kept work focused on EITC. Most post-refund discretionary programs moved from W&I to SB/SE except EITC post-refund work. Under the realignment, W&I also took on new responsibilities, such as certain audits of returns reporting income on Schedule C Profit or Loss from Business.", "", "W&I’s audit programs are managed out of an office called Return Integrity and Compliance Services (RICS), which operates three other offices that directly or indirectly review tax return data for potential audits. These other three offices include:\nRefundable Credits Policy and Program Management (RCPPM);\nDeputy Director’s Return Integrity, and Compliance Services; and\nRefundable Credits Examination Operations.\nFigure 1 shows how RICS’s audit offices are connected to the W&I Commissioner’s office in W&I’s organization.\nRCPPM: This office oversees refundable credit enforcement and establishes filters for computerized selection of returns for audit. The main tools RCPPM uses for selecting returns for audit are filters from the Dependent Database (DDb). These filters identify returns and use risk- based scoring to select the returns. DDb creates the scores after W&I enters tax return data but before refunds are issued. Some of the rules/criteria include the use of taxpayer’s dependent information, such as related children data, qualifying children claimed with multiple taxpayers, birth parents, and birth parents’ Social Security numbers and dates of birth. If information from a tax return creates a high enough score, the return may be made available for audit in Refundable Credits Examination Operations. If the return is audited, letters will systemically be issued to the taxpayers asking them to explain an issue on the tax return.\nW&I holds an annual 3-day working session to set and evaluate the effectiveness of its DDb filters for selecting returns for possible audit. W&I conducts analyses throughout the year in support of this meeting, which includes W&I research, the Information Technology (IT) Office, and RICS. The May 2015 working session included more than two dozen officials, including two executives. The officials review new laws and audit results to help evaluate the effectiveness of the business rules. An example of a law that W&I discussed during its annual working session included the Patient Protection and Affordable Care Act, which created the Premium Tax Credit. Audit results that the officials also consider during the meeting include no-change rates, defined as the proportion of audits that resulted in no changes to the assessed tax amount for the tax return). Modifications to the selection criteria are incorporated into a unified work request for W&I’s IT Office. The request is reviewed and approved by the Business Modernization Office, IT, and stakeholder division executives before programming is done to incorporate the new criteria.\nDeputy Director’s RICS office: This office operates the Integrity and Verification Operations (IVO), which is not an audit program, but may refer returns with refundable credits for audit. IVO uses several computer systems, including DDb, to identify fraud and refund abuse across many types of taxes, including refundable credits. W&I annually reviews tolerances that IVO uses to search tax return data for potential fraud, abuse, or other noncompliance. IVO also has a program that processes leads from external stakeholder partners, such as financial institutions, state agencies, or other third parties. This program focuses on stopping fraudulent refunds from issuing and/or recovering fraudulent refunds that were issued and are identified via external sources.\nRefundable Credits Examination Operations: The Refundable Credits Examination Operations office performs classification duties and conducts audits. Classification is the process of determining whether a return has potential noncompliance worth auditing and what issues should be audited. The criteria that classifiers use to decide what issues should be sent for audit are listed in IRM 4.1.5 and 4.19.11.\nIn W&I, classification is conducted on Form 1040x Amended Return submissions or returns that were referred from other parts of IRS. The returns referred from other parts of IRS that W&I classifies generally do not meet existing DDb criteria for return selection or were amended returns submitted to IRS on paper. Referrals from other business units are one of IRS’s priority audit categories, which also includes new employee audits and mandatory work, such as nationally coordinated research projects. Once a classifier classifies the return and identifies the issues, the letter is generated and the audit is started. This inventory is not assigned to an auditor until correspondence is received. In some cases, W&I classifiers may send a return to another business unit, such as SB/SE. W&I also classifies returns filed with an Individual Tax Identification Number (ITIN) to check for tax noncompliance. For example, returns that are filed with an ITIN and that meet audit referral criteria for the refundable Additional Child Tax Credit are set aside for classification.", "In fiscal year 2014, DDb selected 59 percent of W&I’s audit inventory, as shown in figure 2. The next largest source of audits was referrals from IVO. Manual classification of ITIN and amended returns, as well as other referrals, together accounted for a relatively smaller fraction of the overall number of W&I audits in fiscal year 2014—meaning that most W&I case selection was computer driven. W&I audits resulted in $2.5 billion in recommended additional tax in fiscal year 2014, down from $3.3 billion in fiscal year 2013. W&I also had $49 million and $69 million in revenue protection in 2014 and 2013 respectively. IRS did not have reliable data to analyze the number of audits or assessments in prior years. However, these totals include audits of issues that W&I is no longer responsible for addressing, such as referrals from state agencies. IRS officials told us that they did not have reliable data for the most recent fiscal year at the time of our audit.", "In addition to setting criteria for automated systems to apply to tax return data, managers at W&I’s headquarters set the number of audit starts at the beginning of the fiscal year and make weekly adjustments in the number of returns selected for audit that will be worked by audit staff. Because IRS does not audit every return identified by the automated systems, this workload management is a form of audit selection.\nThe tool that W&I officials use to manage the audit starts is the work plan, a spreadsheet with the projected number of audits by type of tax that W&I managers write before cases are selected at the beginning of the fiscal year. Audit managers use the spreadsheet to allocate returns audit starts based on the goals W&I has set for closing cases, work already in process, and the available number of auditors. Auditors then generally work returns on a first in, first out basis. At the end of fiscal year 2015, W&I reported having 683 tax examiners of which about 584 conducted correspondence audits and the others did support work, including taxpayers’ requests to reconsider previous audit findings. W&I also reported having 47 tax compliance officers. In developing the work plan, W&I managers said they also take overall compliance strategies for specific refundable credits into account that include audit as one component. Figure 3 shows where RICS’s audit processes operate in a simplified illustration of return processing.\nBeyond available resources, another measure that W&I officials say they use to review their audit selection methods is the no-change rate. As an example, W&I requested changing criteria on qualifying children for EITC reviews for fiscal year 2015 to reduce no-change rates. Audits that end with no change to the reported tax assessment on the return impose burdens on compliant taxpayers. W&I officials also said a low no-change rate reflects more efficient use of IRS resources. IRS officials said they calculated W&I’s overall no-change rate as 10.1 percent for work compiled through September of fiscal year 2015, with the no-change rate specifically for DDb selections under the realignment as 12.5 percent.", "Implementation of an effective internal control system can improve accountability in achieving an entity’s mission. As set forth in Standards for Internal Control in the Federal Government, internal control is a major part of managing an organization as it comprises the plans, methods, and procedures used to meet missions, goals, and objectives, which support performance-based management. In addition, internal controls help agency program managers achieve desired results and provide reasonable assurance through the effectiveness and efficiency of operations, among other things. Further, internal control is not one singular event, but a series of actions and activities that occur throughout an entity’s operations and on an ongoing basis. Examples of internal controls include establishing clear, consistent agency objectives, documenting significant events, and ongoing monitoring. While W&I has documented how some of its procedures meet the internal control standards, we found some potential issues that increase the risk that W&I audit selection activities may not fully contribute to its mission to treat all taxpayers fairly and with integrity.", "Internal control standards require that management and employees establish and maintain a positive and supportive environment toward internal control and conscientious management. Several key factors affect the control environment such as ethical values maintained and demonstrated by management and staff, management’s philosophy towards performance-based management, and delegation of authority and responsibility, among others.\nWe found several IRS procedures that demonstrated some factors of a positive environment for promoting internal controls. First, IRS’s IRM includes various ethics guidance for all staff. For example, IRM cross- references federal and IRS agency ethics regulations that include 14 principles of ethical conduct, such as conflicts of interest and political activities of staff. IRS requires all managers to hold an annual ethics discussion with their staff and all IRS staff to certify that they attended the discussion. While the code of conduct does not specifically address audit selection, IRS provided sufficient documentation to demonstrate that staff should be aware of the need to act ethically when conducting their duties—such as by not letting personal biases affect audit selection. In addition, W&I officials stated that they were not aware of any staff responsible for audit selection violating the code of conduct.\nSecond, IRS staff are rated annually on their performance, including whether they met the retention standard for the fair and equitable treatment of taxpayers. IRM requires supervisors to brief staff on what types of behaviors would meet or not meet the standard. For instance, if a staff member’s communications with taxpayers are professional and courteous and accurately state the facts, the standard would be met. While the performance appraisal criteria do not specifically address fairness for audit selection, IRS has documentation to demonstrate that staff should conduct their duties according to the standard.\nThird, W&I has clearly assigned authority and responsibility for its audit selection processes. W&I demonstrated this by providing a list of (1) IRS stakeholders who participated in W&I’s annual meetings to discuss any revisions to audit selection criteria for fiscal year 2015, 2) program analysts involved in modifying audit selection rules, and 3) Submissions Processing staff tasked with referring returns that meet certain criteria to staff classifying tax returns, such as amended individual tax returns that include certain tax credits. In addition, staff who are responsible for modifying audit selection criteria do not audit returns. Similarly, staff who classify a return cannot audit that return.\nFourth, staff that manually classify amended returns for potential audit are to receive training to help them maintain a level of competence necessary for assigned duties. Other IRS staff responsible for revising W&I criteria used in automated programs do not receive any formal training in revising the criteria. W&I officials told us they believed that most of these staff are well versed and proficient in their respective areas of tax law because they are either IRS executives or senior managers with at least 20 years of experience. They said that such staff have had years of related training in specialized areas for their former positions (e.g., revenue agents and department managers) and use their experience as well as feedback from W&I staff involved in the audits, research data, and audit results to help inform their decision in revising audit selection criteria.", "Internal control standards call for specific terms to be clearly defined and set forth so they can be easily understood. Management should define program objectives that align with an entity’s mission, strategic plan, goals, and requirements of applicable laws and regulations. Clearly defined objectives can enhance program effectiveness and efficiency. Documenting objectives allow agency officials and staff to have a consistent understanding of the organization’s purpose.\nInternal control standard: define objectives Program objectives are to be clearly defined in measurable terms to enable the design of internal control. Specific terms should be fully defined and clearly set forth so they can be easily understood at all levels of the organization.\nW&I has not clearly defined, documented, or communicated key terms. For example, while the concepts of “fairness” and “integrity” are highlighted in IRS’s mission and policy statements and W&I’s mission statement, W&I has not defined or documented fairness and integrity, particularly for audit selection. As a result, each staff member is left to define these terms.\nW&I officials shared views on how fairness and integrity might be defined for audit selection. For fairness, a senior W&I official informally defined it as having a low no-change rate and incorporating eligibility requirements as outlined by the Internal Revenue Code or other legislation into audit selection criteria. In addition, W&I officials said they believed that W&I’s audit selection process is fair because all individual tax returns that run through DDb are scored by the same audit selection criteria. Further, Submissions Processing staff apply audit criteria for all amended returns, which may require classification by classifiers if they are flagged for potential audit. For integrity, W&I officials highlighted all of IRS’s six core values, including honesty and integrity, which focuses on upholding “the public trust” and being “honest and forthright in all internal and external dealings.” However, they did not indicate how they know integrity is provided in audit selection. As a result, by not communicating a clear definition of fairness and integrity to all staff involved in audit selection, W&I is vulnerable to inconsistent selections.\nIn addition, W&I has not established program-level objectives on the selection of returns for audit that support its and IRS’s shared mission of applying the tax law with integrity and fairness to all. Rather, W&I has four broad audit goals, including: measuring the degree of voluntary compliance on filed returns; making quality contacts to determine the correct taxable amount. reducing noncompliance by identifying and cost-effectively allocating resources to those returns most in need of audit; conducting timely and quality audits of tax returns; and These audit goals do not refer to fairness and integrity because these terms have not been defined by IRS or W&I. W&I officials confirmed that they do not have program-level objectives for how returns are selected. However, W&I has developed fiscal year 2016 activities for its annual operations plan that has references to potential objectives. For instance, one of RCPPM’s action item focuses on RICS reviewing and creating workload selection filters intended to ensure fairness and integrity, running all individual tax returns against such filters, and pursuing audits with high probable changes with the intent of reducing no-change rates.\nInternal control standards also require management to establish activities to monitor performance measures and indicators. Performance measures and targets are used to compare actual results to planned performance. Without clearly defined program-level objectives on its audit selection process, W&I cannot measure whether its selection criteria are meeting its mission of applying the tax law with fairness and integrity. Existing performance measures focus on audit results rather than audit selection. W&I officials stated that the no-change rate could be viewed as a performance measure to evaluate whether W&I was meeting its mission of applying the tax law with integrity and fairness to all. W&I’s stated goal is to decrease the no-change rate to assure that the right taxpayers are claiming a credit, for example, based on its selection criteria. W&I officials stated that they use different no-change rates by issue type, such as the Earned Income Tax Credit, and strive to keep them as low as possible. However, W&I has not created indicators to evaluate what no-change rate is good or bad, or what rate would indicate fair selections. We reported in June 2014 that IRS did not document criteria on how its managers were to use performance data, such as the no-change rate, or to make program decisions, such as the number of audits or tax issues to audit.", "Internal control standards state that management needs to identify and analyze relevant internal and external risks, and then decide how to manage those risks; a precondition to risk assessment is the establishment of clear program objectives. The first and most critical step of risk assessment is risk identification. Management should have well- documented procedures for regularly identifying internal and external risks to program objectives and procedures, such as in short- and long- term forecasting and strategic planning.\nBecause W&I does not have clearly formulated and communicated program objectives for audit selection, W&I cannot fully implement a process to identify potential risks in its audit selection process. Without risk identification and assessments linked to program objectives, vulnerabilities may go unaddressed, resulting in unfair case selection, decreased dollars collected, greater noncompliance, or other negative program effects.\nAdditionally, W&I does not have reasonable assurance that it is appropriately assessing risk in its audit selection process in two areas in which W&I officials believe the risks are low. First, W&I officials said that they do not think certain internal control elements related to risk assessment—such as downsizing operations or changing operating processes—affect the audit selection process; however the federal internal control tool views these factors as applicable. Second, IRS had identified no risk of bias for automated audit selection programs because the programs compare data on a taxpayer’s return with third-party data. Robust internal controls to address risks that threaten the automated selection criteria are especially important because automated programs select the majority of returns that W&I audits.\nIRS is implementing an Enterprise Risk Management (ERM) program to consider risks more systematically across IRS. As we recently reported, IRS implemented ERM, among other reasons, to serve as an early- warning system to identify and address emerging challenges and address them before they affect operations. According to IRS’s Chief Risk Officer, the goal is to embed risk management principles and practices into the daily operations of the business units and integrate long-standing processes into the new, more holistic ERM approach. Since the implementation of the ERM process is ongoing, it is too early to determine the effectiveness of ERM in identifying and managing risk. ERM is intended to help organizations in setting strategy to consider risk and how much risk the organization is willing to accept. According to IRS officials, ERM is broader in scope than internal controls, focusing on agency-wide risks. It is important for agencies to assess risk at both the agency-wide and the program level.", "We found that IRS has various procedures that convey the importance of internal controls at the managerial level, such as IRM guidance on monitoring internal controls, an annual managerial self-assessment of adherence to internal controls, and a classification quality review process. To the extent that managers report deficiencies and W&I uses the results, the annual self-assessment of IRS’s internal controls can provide assurance that the importance of internal controls is understood at the managerial level. W&I officials provided an example of a completed fiscal year 2014 self-assessment that included a manager’s sign-off of a reasonable assurance that IRS’s controls are effective and operating as intended. However, beyond “yes” and “not applicable” responses, the documentation did not provide any detailed responses on the internal controls assessed and their relationship to the audit selection process.\nIn response to how internal control responsibilities were communicated to all staff, including non-managers, W&I officials stated that internal controls are built into their processes, such as the annual meetings, staffing designations and tasks, automated systems, risk identification and assessments, and monitoring. In addition, they said that the annual self-assessment process requires managers to certify that the operations and staff they manage are in compliance with internal controls. The fiscal year 2014 self-assessment includes a question regarding whether managers communicated policies on a routine basis that enabled staff to meet and understand their internal control and other responsibilities effectively. Beyond a “yes” response by one of W&I’s managers, IRS did not provide evidence that W&I directly assigned and communicated internal control responsibilities to non-managers, such as program analysts and classifiers who are tasked with revising or applying audit selection criteria, respectively. By not relaying information on internal control responsibilities to all employees, W&I has less assurance that its employees understand internal controls and increases the risk of not being aware of potential internal control issues that could result in unfair audit selection.", "Internal control standard: control activities for information systems Access security control protects the systems and network from inappropriate access and unauthorized use. Application control is designed to help ensure completeness, accuracy, authorization, and validity of all transactions during application processing.\nFederal internal control standards require a variety of control activities for information processing, such as controlling access to data, files, and programs. In addition, access to resources should be limited to authorized individuals, and accountability for their use should be assigned and maintained. Access rights are used to implement security policies that determine what a user can do after being allowed into the system, such as allowing the user to read or write to a certain file or directory. Maintaining access rights is an important aspect of administering system security. In addition to access controls, other controls should be in place to ensure the integrity of an organization’s information. These controls can include, but are not limited to, policies, procedures, and techniques for securely configuring information systems with software updates.\nWe found IRM guidance that specifies procedures to restrict access to authorized users as well as various software testing mechanisms. Specifically, IRM sections on information technology (IT) security documented access to data, files, and programs for modifying IT systems, including those that cover W&I’s audit selection criteria. For example, IRS uses a process to register all users for access to any IRS IT resource when their access is authorized by the user’s manager. By obtaining such access, IT programmers can utilize the official change management system to add new or modify W&I audit selection criteria that are based on the unified work request that is approved by IRS management. However, we reported in March 2015 that IRS had not updated the security authorization for IRS’s access request and approval system to reflect significant changes made to the operating environment. As a result, we recommended that IRS update the security authorization for the access request as well as the approval system to reflect the significant changes to the operating environment. In response to this recommendation, IRS agreed to provide corrective action plans where appropriate. In addition, the Tax Inspector General for Tax Administration (TIGTA) has an ongoing audit related to the request and approval process in obtaining access to IRS systems.\nIRM has a section on testing procedures to ensure accurate revisions are made, such as modifying W&I’s audit selection criteria. IT officials also provided other guidance, such as the IT Test Reference Guide, to address how new or revised software is to be thoroughly tested and approved. IT officials provided examples of output reports to show how DDb modifications to W&I audit selection criteria were tested, approved, and working as designed.", "Internal control standards state that documentation should clearly identify procedures and should allow agency officials and staff to understand the purpose of internal control procedures and be readily available for audit. Documenting procedures is evidence that the right controls are identified and that those procedures are capable of being communicated to those responsible for their performance, and capable of being monitored and evaluated.\nInternal control standard: document controls to address risks to program objectives Procedures should be clearly documented to ensure that management's plans, policies, and procedures are sufficiently and fully carried out.\nIRS has documented some agency-wide policies to support internal controls, but these are not always linked to W&I’s audit selection process. For example, as noted previously, IRS provided sufficient documentation to demonstrate that staff should be aware of the need to act ethically when conducting their duties, such as not letting personal biases affect their work (e.g. selecting returns for audit). Other IRS policies—including the retention standard—reference the fair and equitable treatment of taxpayers in general, but do not consistently reference audit selection in particular.\nWe also found some weaknesses in documenting parts of the audit selection plan. W&I has workload selection templates that describe the methods that IRS uses to identify and select tax returns for audit. The templates are intended to explain how W&I determined, tested, and approved the steps involved in each method, as well as what types of staff and functions are involved. While some elements of the selection process are described in detail in the workload selection templates, not all elements of the selection process—ranging from determining audit potential to inter-office interactions—are covered.\nFor example, one workload selection template notes that returns with the highest audit potential are marked, but it does not describe how audit potential is determined. Additionally, the workload selection templates do not describe how the systems and processes described in the templates are related. For example, W&I lacks clear documentation about how the three offices which select the majority of returns W&I audits—Refundable Credits Policy and Program Management; the Deputy Director’s Return Integrity, and Compliance Services; and Refundable Credits Examination Operations—interact with one another. The lack of comprehensive documentation to describe W&I’s audit selection process results in less assurance that these processes effectively address risks. Additionally, the absence of a fully documented selection process may make it difficult for W&I to defend against accusations that it is not appropriately following its processes and procedures, since the incomplete documentation makes it difficult to clearly communicate about how audit selection works.", "Internal control standard: monitor controls Internal control design should assure that ongoing monitoring of controls occurs in the course of normal operations.\nAccording to internal control standards, program managers should have a strategy and establish procedures for ongoing monitoring to assure the effectiveness of its control activities, and that deficiencies found during separate evaluations should be resolved in a timely manner. Monitoring involves management assessing the design and operational effectiveness of internal control systems as well as ensuring that corrective actions are effectively implemented in a timely manner. Serious deficiencies and internal control problems should be reported to top management in a timely manner. Managers and supervisors should know their responsibilities for internal control and the need to make control and control monitoring part of their regular operating processes.\nWhile W&I’s policy is clear that internal control issues should be reported to the next level of management, the mechanism to elevate potential internal control issues to management is limited. The IRM states that a problem in the design or operation of an internal control should be reported to the next level of management as a significant deficiency. It does not, however, specify how non-managers should report it or that it should be reported in a timely manner. The form that W&I staff would use to report such deficiencies in the automated filters used for return selection—the Compliance Data Environment Production Filter Modification Approval form—includes space for submitting modification requests for the automated filters, but not for reporting internal control deficiencies that do not have a proposed solution. The form also states that the reason for modification should be self-explanatory, which may not appropriately highlight the deficiency the modification seeks to address. W&I officials said that IRS has no guidance beyond the instructions on the form to report deficiencies and that no deficiencies have been identified with this form.\nW&I officials subsequently identified general ways in which staff could report internal control deficiencies. They said that staff can send e-mails directly to the Commissioner, submit help desk tickets for IT issues, provide feedback during a regularly-scheduled forum, make a submission to the “I suggest” program to improve a program or process, or supply feedback on IRM sections. When asked to provide examples of employees elevating potential internal control issues, W&I officials also provided examples of internal control issues identified during the monitoring process.\nThis limitation in the reporting mechanism—including the limited examples of staff reporting deficiencies—increases the risk that W&I would not know about a potential deficiency that staff perceive or experience. Without a clear means of elevating possible internal control deficiencies to top management in a timely manner, W&I does not have reasonable assurance that concerns noticed by an employee are reported appropriately or in a timely manner.\nIn addition, we found some limitations in the timeliness of W&I’s monitoring. W&I officials said that, at the beginning of each filing season, a team made up of experienced analysts and managers reviews selections and notices generated from the new programming to ensure programming is working as intended, and that the generated notices are correct. They also said that they continuously monitor audit selections and results to ensure that implemented corrective actions were appropriate.\nHowever, the documentation indicates that it is an annual—rather than continuous—review as part of W&I’s annual 3-day working session that included evaluating the effectiveness of its criteria for selecting returns for possible audit. Further, W&I did not clearly document what corrective actions, if any, were taken and how they were implemented in response to the deficiencies it identified at the annual working session. W&I officials provided documentation of issues identified with the Premium Tax Credit; however, the deadlines for actions items were all at least 6 months past, and W&I did not provide support that those changes were appropriately implemented. Because of this, W&I lacks reasonable assurance that the issues were addressed in an appropriate or timely manner and that they have been sufficiently resolved. Without ensuring that it has sufficient controls to identify deficiencies and take necessary corrective action, W&I may be missing opportunities to ensure that the changes work as intended and lower the risk of selecting audits unfairly.", "W&I auditors have interacted with hundreds of thousands of taxpayers and assessed billions of dollars in tax changes, making W&I’s mission of applying the tax law with fairness and integrity all the more critical. Failure to accomplish that mission could undermine the public’s confidence in the tax system, waste resources, and burden taxpayers. Properly designed and maintained internal controls for audit selection can help W&I better assure its mission. While we found that W&I had implemented some internal controls over its array of audit selection processes, we also identified a series of internal control weaknesses that reduce the assurance that current or future audit.\nMost importantly, IRS lacks clearly defined and documented program- level objectives, performance measures, indicators, and definitions of key concepts such as fairness, reducing the assurance that W&I employees are treating taxpayers equally. Without defining, documenting, and communicating to staff these aspects of internal control, IRS cannot know whether it is meeting its and W&I’s shared mission of applying the tax law with fairness and integrity to all taxpayers. W&I’s use of the no-change rate could be viewed as a performance measure, but it is not sufficient to assure that the audit selection criteria are fair. Having program-level objectives, performance measures, indicators, and definitions that link to its mission and goals would enhance W&I’s ability assure that its audit selection processes are fair and have integrity.\nHaving program-level objectives for audit selection in place is a precondition to developing a risk assessment strategy for audit selection, which W&I has not adopted. With an effective risk assessment strategy for audit selection, W&I could gauge potential internal and external risks that may hinder its ability to meet its mission of treating taxpayers fairly and equally. Such a strategy would increase the assurance that W&I is appropriately selecting returns for audit, consistent with its mission.\nWe also found opportunities for improvement in other areas. First, W&I has not communicated internal control responsibilities to all staff tasked with audit selection, including non-managers and classifiers who revise or apply audit selection criteria, respectively. Second, W&I does not have complete documentation its audit selection procedures; doing so would improve the assurance that W&I staff have a common understanding of how the selection process work and their role in the process. Third, while W&I’s policy is clear that internal control issues should be reported to the next level of management, the mechanism to elevate potential internal control issues to management is limited. Lastly, W&I did not provide support that changes to audit selection processes and procedures were appropriately monitored and implemented in a timely manner. Taking such actions to address these areas would help provide W&I reasonable assurance that its audit selection criteria are fair.", "To help ensure W&I meets its mission and selects audits fairly and with integrity, we recommend that the Commissioner of Internal Revenue take the following seven actions:\nClearly define and document: (1) key terms such as “fairness”; and (2)\nW&I program level objectives, performance measures, and indicators for audit selection to evaluate whether the audit selection process is meeting its mission of applying the tax law with integrity and fairness to all.\nClearly communicate these terms, objectives, measures, and indicators to all staff involved in the selection of returns for audit.\nIncorporate the new objective(s) into W&I risk assessments done for audit selection processes.\nEnsure that internal control responsibilities are communicated and documented for all employees, including non-managers, tasked with revising or applying W&I audit selection criteria for potential audits.\nDevelop and implement procedures to ensure that all criteria or methods used in programs to select returns for audit are consistently documented and approved.\nDevelop and document a clear means for IRS staff members to promptly elevate to top management possible internal control issues related to audit selection in a timely manner.\nDevelop, document, and implement additional monitoring procedures to ensure audit selection controls and corrective actions are implemented in a timely manner.", "We provided a draft of this report to the Commissioner of Internal Revenue for review and comment. The Deputy Commissioner for Services and Enforcement provided written comments, including planned actions to implement each of our recommendations, dated November 23, 2015, which are summarized below and reprinted in appendix II. In an email received November 24, 2015, the Deputy Commissioner indicated through the IRS Office of Audit Coordination that IRS generally agreed with our seven recommendations. The enclosure to IRS’s letter listed specific actions planned to implement the recommendations.\nIRS stated in its letter that the concept of fairness has both a collective and individual component: (1) W&I pursues those individuals who fail to comply with their tax obligations to ensure fairness to those who do and to promote public confidence in the tax system; and (2) it discharges its responsibilities with a focus on taxpayer rights. IRS can build on these components to clarify how they relate to return selection, especially when the components also cover what happens after return selection, such as when pursuing noncompliance and interacting with taxpayers during the audit. Documenting these clarifications in its definition, as well as the examples of fair selections, would help staff involved in return selection to know the specific actions that they should take to produce selections that meet IRS’s definition of fairness.\nWe highlight this clarification because the letter discusses various features of IRS’s audit program—such as existing objectives, measures, and definitions of key concepts—that IRS stated relate to fair selection. We agree that having these features is important. However, as our report discusses, these features cited in IRS’s letter do not clarify what fair selection of returns for audit entails and how IRS would know whether fair selections are occurring, unless a taxpayer or other individual raises a question about the fairness of return selection. IRS’s commitment to applying tax law with fairness and integrity is contained in its mission statement, as discussed in our report, but our recommendations focus on clearly explaining how that aspect of the mission is operationalized for audit selection.\nIRS identified actions that specifically reflected or were generally consistent with four of the recommendations we made. These include our recommendation on communicating the definition of terms such as fairness as well as related objectives, measures, and indicators to all staff involved in audit selection; incorporating any new selection objectives into the risk assessment process that IRS would modify in fulfilling our recommendation on defining fairness; communicating and documenting internal control responsibilities to all staff involved in audit selection; and developing a means for IRS staff to elevate internal control concerns about audit selection.\nFor our recommendation on defining and documenting “fairness” for return selection activities, IRS’s letter listed a number of ways in which it believes the selection process is fair. For example, IRS said that its audit selections are fair because IRS policies state that audit selections should be fair and that taxpayer rights should be a prime focus. IRS’s letter also cited its reliance on rules and automation rather than human intervention and its desire to select the most noncompliant returns. While striving to be fair and respectful of taxpayer rights as well as to weed out selection bias or selections that focus on less noncompliant returns is important, IRS has not provided a formal definition of what fairness entails. As a result, individuals are left to define it for themselves.\nSimilarly, this recommendation also focused on defining and documenting related objectives, measures, and indicators for audit selection. IRS stated that it will review these areas to further ensure that audit selection meets its mission to apply the tax law with integrity and fairness. As discussed in our report, existing IRS objectives and measures did not allow IRS to evaluate whether its selection decisions were fair. We believe IRS should develop at least one objective and measure that reflects its definition of fairness. Doing so would better enable IRS to clarify how it operationalizes fairness in the selection process and assess whether its actions are meeting that objective.\nIn regard to our recommendation on developing and implementing procedures to ensure that all criteria or methods used in programs to select returns for audit are consistently documented and approved, IRS stated that it has procedures in place to document criteria and methods used in return selection. However, we found instances, discussed in our report, in which IRS’s documentation was not specific to return selection as well as instances in which procedures were not fully documented. Incomplete documentation makes it difficult for IRS to clearly communicate how audit selection works and defend against accusations that it is not appropriately following its processes and procedures. IRS also stated that it would review existing procedures to ensure consistent documentation and approval. Our report shows evidence of this need, such as being able to show how the selection criteria and methods were used consistently.\nFor our recommendation on having additional procedures for monitoring audit selection controls and corrective actions, IRS stated that it will review the processes in place for documentation and timely implementation of selection controls and corrective actions to further ensure the controls and actions are implemented in a timely manner. However, our report indicated a need to do more than a review by developing additional monitoring procedures.\nAs arranged with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days from the date of this letter. At that time, we will send copies to Secretary of the Treasury, Secretary of Labor, IRS and SEC. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-9110 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.", "This report (1) describes the Wage and Investment (W&I) process for selecting tax returns for audit; and (2) determines how well W&I’s procedures for selecting tax returns for audit support its mission and goal to apply the tax law with integrity and fairness to all.\nTo describe the W&I process for selecting returns for review and audit, we reviewed documentation on program procedures from the Internal Revenue Manual (IRM) and Internal Revenue Service (IRS) documents describing audit procedures. We also interviewed IRS officials who oversee or who work on W&I’s audit selection process. For context, we compiled statistical information for fiscal years 2013 and 2014 about W&I audit program closures from IRS’s Compliance Data Warehouse (CDW) and Examination Operational Automation Database (EOAD). CDW provides a variety of tax return, enforcement, compliance and other data. EOAD has information on the type of issue audited. Our data reliability assessment included reviewing relevant documentation, interviewing knowledgeable IRS officials, and reviewing the data to identify obvious errors or outliers. Based on our testing of the data and review of documentation and interviews, we determined that these data were reliable for the purposes of this report. We categorized the data by project codes with input from W&I audit officials. Because of the recent realignment of audit duties among divisions, some of the project codes in our analysis—such as those associated with the Discretionary Exam Business Rules—are no longer worked by W&I.\nTo determine how well W&I’s procedures for selecting tax returns for audit support its mission, we reviewed W&I’s audit selection procedures and related internal controls intended to help W&I achieve its stated mission of “applying the tax law with integrity and fairness to all.” We then assessed whether these relevant W&I procedures followed selected internal control standards from Standards for Internal Control in the Federal Government. We also interviewed relevant IRS officials concerning their understanding of W&I’s mission, objectives, and internal controls related to W&I’s audit selection. In addition, we reviewed the Internal Revenue Service’s Strategic Plan FY2014-2017, IRM sections related to W&I’s mission statement and program objectives, IRS’s policy statement for audits, information technology controls, W&I’s fiscal year 2014 program letter, and other IRS documentation related to W&I’s audit selection process, including internal risk assessment documents and annual meeting notes.\nTo determine which internal control standards were most relevant for our review, we used the five internal control standards in Standards for Internal Control in the Federal Government as primary criteria and used our Internal Control Management and Evaluation Tool to identify specific factors that could be used to operationalize the internal control standards, in conjunction with observations from our preliminary audit work. We assessed whether W&I’s audit selection process addressed the selected internal control standards by reviewing documentation and interviewing IRS officials familiar with the selection process. The controls we chose applied to the processes and procedures that W&I officials described or for which they provided documentation regarding how audits were selected. While we relied on documentation demonstrating whether the standards were addressed, we did not test whether they were systemically applied.\nTo determine IRS’s definition of fairness and integrity as it applied to W&I’s audit selection, we reviewed W&I’s mission statement and other documentation related to how W&I selects audits for examination and interviewed relevant IRS officials concerning their understanding of how integrity and fairness applies to W&I audit selection activities.\nWe conducted this performance audit from October 2014 to December 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, Tom Short (Assistant Director), Lisette Baylor, Sara Daleski, David Dornisch, Eric Gorman, David Hayes, Ted Hu, Melissa King, Jeffrey Knott, Sabine Paul, Susan Sato, Stewart Small, and A.J. Stephens made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full", "h0_title", "", "h0_full", "h0_full", "h0_title h2_title h1_title", "h1_full", "h1_full", "", "", "", "h2_full", "h0_full h2_full", "h3_full h2_full h1_full", "h1_full", "h3_full h1_full", "h0_full h4_full", "", "", "", "" ] }

{ "question": [ "Who selects returns for audits?", "How are returns selected?", "How frequently are return criteria reviewed?", "What did GAO conclude about W&I?", "What procedures did GAO praise?", "What did GAO criticize?", "Why is it essential that W&I improve their standards?", "What did GAO find about W&I?", "in what ways are they not appropriately documented?", "What did find about W&I's implementation of audits?", "Why should W&I improve their audit implementation?", "What is the purpose of audit activities?", "On what do most audit programs focus?", "What makes tax law so critical?", "Why is it so important for selection to be accurate?", "What was GAO asked to do?", "What does this report review?", "How did GAO go about reviewing W&I?" ], "summary": [ "Three offices in the Internal Revenue Service's (IRS) Wage and Investment division (W&I) are responsible for selecting returns for audit.", "Most returns are selected via computer systems that automatically send notices to taxpayers based on certain criteria, such as the validity of dependents. In 2014, about 59 percent of all W&I audits—more than 516,000—were selected with a specialized computer tool called the Dependent Database, while the remainder was selected through a combination of referrals and manual selection methods.", "W&I program officials annually review the criteria and apply updates to the following filing season's returns.", "W&I generally has established a positive environment for internal controls but could improve several areas in its audit selection procedures to support its mission.", "GAO found several procedures that establish a positive environment for promoting internal controls, such as ethics training. In addition, IRS has guidance to help ensure that decisions about updates to audit selection criteria are correctly implemented in its automated systems.", "However, W&I does not have established objectives for its audit selection process, and existing performance measures focus on audit results rather than audit selection. In addition, W&I has not defined key terms such as “fairness and integrity,” as required by internal control standards.", "Documented objectives and key terms would help W&I hone the measures it uses to assess its audit selection efforts and bring a consistent understanding of “fairness and integrity” to audit selection staff.", "GAO also found that not all elements of the selection process were appropriately documented.", "For example, W&I does not have clear documentation about how the three offices that select the majority of returns W&I audits interact with one another. Additionally, one guidance document notes that returns with the highest audit potential should be marked, but it does not describe how audit potential is determined or any related internal controls.", "Further, W&I also did not provide support showing that changes to automated audit selection processes and procedures were appropriately implemented in a timely manner. Moreover, the documentation indicates that W&I conducts an annual—rather than continuous—review of its audit selections and results as part of an annual 3-day working session.", "Strengthening controls in these areas would help provide greater assurance that W&I is fulfilling its mission to select tax returns with fairness and integrity. Additionally, the absence of a fully documented selection process may make it difficult for W&I to defend against accusations that it is not appropriately following its processes and procedures.", "Audit activities help ensure taxpayers pay the right amount of tax and help address the net $385 billion tax gap—the difference between the amount of taxes paid voluntarily and on time, and the amount owed.", "Audit programs in W&I mainly cover refundable credits reported on the Form 1040, Individual Income Tax Return.", "The hundreds of thousands of taxpayers whom W&I interacts with annually during audits make it critical to apply the tax law fairly.", "Unfair selection would increase burden on taxpayers and reduce public confidence in IRS.", "GAO was asked to review W&I's audit selection process.", "This report (1) describes the W&I process for selecting tax returns for audit, and (2) determines how well W&I's audit selection procedures support its mission and goal to apply the tax law with integrity and fairness to all.", "GAO reviewed documentation on program procedures, an audit work plan, and various Internal Revenue Manual sections; analyzed audit data from fiscal years 2013 and 2014; and interviewed relevant IRS officials." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 0, 2, -1, 0, 0, -1, -1, -1, -1, 2, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "A Brief Overview of Improper Payments and Overclaims", "Improper Payments and Administrative Costs of the EITC", "Tax Filer Errors that Lead to EITC Overclaims", "Qualifying Child Errors", "Study Results", "Challenges in Detecting and Reducing the Error", "Income Reporting Errors", "Study Results", "Challenges in Detecting and Reducing the Error", "Filing Status Errors", "Study Results", "Challenges in Detecting and Reducing the Error", "Paid Tax Preparer Errors", "Study Results", "Challenges in Detecting and Reducing the Error", "Concluding Remarks", "Appendix. The Relationship Between Improper Payments and Overclaims" ], "paragraphs": [ "", "The Earned Income Tax Credit (EITC) is a refundable tax credit available to eligible workers earning relatively low wages. Because the credit is refundable, an EITC recipient need not owe taxes to receive the benefit. Hence, many working poor (especially those with children) who have little or no tax liability receive financial assistance from this tax provision. The amount of the EITC is based on a variety of factors, including number of qualifying children, earned income, and tax filing status.\nOne concern with the EITC is the credit's complex rules and formulas make it difficult for taxpayers to comply with and difficult for the Internal Revenue Service (IRS) to administer. Studies indicate that EITC errors (both unintentional and intentional) result in a relatively high proportion of EITC payments being issued incorrectly. The Department of the Treasury's Agency Financial Report (AFR) for fiscal year (FY) 2017 estimates that in FY2017 between 21.9% and 25.8% of EITC payments—between $14.9 billion and $17.6 billion—were issued improperly.\nIn 2014, the IRS issued a study examining the major factors that lead taxpayers to erroneously claim the EITC. This study found that the majority of taxpayers who overclaim the EITC are ultimately ineligible for the credit, rather than eligible for a smaller credit. (While the study was released in 2014, it is also referred to as the 2006-2008 EITC Compliance Study in this report, because it examined tax returns between 2006 through 2008.) In addition, the IRS may have difficulty ensuring that tax filers are in compliance with all the parameters of the credit, a problem that may be exacerbated in light of budgetary constraints faced by the agency.\nThis report examines findings from the 2014 IRS study. The report first briefly defines and compares two common measures of EITC noncompliance: improper payments and overclaims. Next, the report provides an overview of the major factors leading to EITC noncompliance identified in the 2014 study on this issue, as well as challenges the IRS may face in their efforts to reduce each type of error. These factors include claiming ineligible children as qualifying children for the credit, income reporting errors, and filing status errors. Finally, the report describes the role of paid preparers in EITC noncompliance. This report does not provide a detailed overview of the credit. For more information on eligibility for and calculation of the EITC, see CRS Report R43805, The Earned Income Tax Credit (EITC): An Overview , by [author name scrubbed] and [author name scrubbed]", "This report discusses two measures of EITC noncompliance: improper payments and overclaims. Although these two measures of EITC noncompliance are related, they do differ.\nEITC improper payments are an annual fiscal year measure of the amount of the credit that is erroneously claimed (generally overclaimed) and not recovered by the IRS. In other words, recovered amounts of the credit are subtracted from erroneous claims of the credit to calculate improper payments. EITC overclaims are the amount of the credit claimed incorrectly and do not include the impact of enforcement activities.\nHence, the major difference between improper payments and overclaims is that improper payments net out amounts recovered or protected by the IRS, while overclaims do not. Hence, improper payments are generally smaller than overclaims.\nIn addition, in contrast to improper payments which are published annually, overclaims have historically been reported less frequently (the last two comprehensive IRS studies that examined overclaims were released in 1999 and 2014). For a more detailed explanation of the relationship between improper payments and overclaims, see the Appendix .", "The IRS estimates that in FY2017, between $14.9 and $17.6 billion in EITC payments (i.e., between 21.9% and 25.8% of payments) were issued improperly. EITC improper payments and rates are often compared to the improper payments and rates of traditional spending programs. For example, the Office of Management and Budget (OMB) has designated the EITC as a \"high-error program\" in comparison to other spending programs, with EITC improper payments the second highest in terms of the total dollar amount (behind Medicare Fee-for-Service) and the highest in terms of improper payment rate (improper payments as a percentage of total payments). ,\nHowever, in order to make accurate comparisons of improper payments between tax benefits and traditional spending programs, it may be necessary to also consider the comparative costs of administering tax benefits and spending programs. The federal government must spend money to administer its tax laws—as well as other government programs (e.g., food stamps, veteran's benefits). The IRS's administrative expenses include processing tax returns, auditing tax returns, and collecting unpaid tax liabilities. To the extent that additional administrative expenses are associated with fewer errors (unintentional mistakes and fraud) and ultimately a reduction in improper payments, these administrative costs should be considered when comparing the improper payments of tax benefits to traditional spending programs.\nFor example, some experts stress that spending programs may have lower improper payment rates than the EITC because they screen every participant before the benefit can be claimed. Such screenings generally involve high administrative costs. In contrast, the administrative cost of the EITC is relatively minimal. In congressional testimony, the IRS Taxpayer Advocate noted that\nUsing tax returns as the \"application\" for EITC benefits rather than a traditional screening process results in low cost with high participation as well as the risk of improper payment. The IRS has pointed out that for the EITC current administration costs are less than 1% of benefits delivered. This is quite different from other non-tax benefits programs in which administrative costs related to determining eligibility can range as high as 20% of program expenditures.\nIn addition to comparing the EITC's improper payments to the improper payments of other spending programs, they can also be compared to revenue losses that arise from taxpayer noncompliance with other provisions of the tax code. EITC errors are not the major source of revenue losses arising from taxpayer noncompliance. The most recent IRS report on the tax gap—tax liabilities not paid—estimated that the annual average gross tax gap for the tax years 2008 to 2010 period was $458 billion. The net tax gap, which nets out amounts subsequently collected, was estimated to be $406 billion over the same time period. The majority of the net tax gap—$291 billion—is associated with the individual income tax. The largest source of noncompliance with individual income tax laws was the underreporting of business income on individual income tax returns, resulting in $125 billion of the tax gap The next largest source of the tax gap (in dollar terms) was the underreporting of self-employment tax, estimated to be $65 billion annually during the 2008 to 2010 period. As the Taxpayer Advocate stated in the Fiscal Year 2015 Objectives, when comparing the tax gap from the EITC noncompliance versus underreporting business income, \"EITC overclaims account for 6% of the gross individual income tax noncompliance while business income underreported by individuals accounts for 51.9%.\" ,", "In August 2014, the IRS released a new EITC compliance study examining the causes of EITC overclaims on 2006, 2007, and 2008 tax returns (henceforth referred to as the \"2006-2008 EITC Compliance Study\"). This study found that the majority of tax filers who overclaim the EITC are ineligible for the credit, instead of eligible for a smaller credit. Specifically, between 79% and 85% of EITC dollars claimed incorrectly were claimed by tax filers ineligible for the credit.\nThis study concluded that there were three major reasons for errors among claimants:\nEITC claimants claimed children who were not their qualifying children for the credit; EITC claimants misreported their income; and EITC claimants used an incorrect filing status when claiming the credit.\nThe 2006-2008 EITC Compliance Study found that the most frequent EITC error was incorrectly reporting income, and the largest error (in terms of overclaim dollars) was incorrectly claiming a child for the credit, as illustrated in Table 1 . The study also found that filing status errors are a source of EITC overclaims, although they are a relatively smaller cause of errors in comparison to income reporting and qualifying child errors. Unlike previous studies (which did not examine error among paid preparers), this study also found that among paid tax preparers, unenrolled preparers were the most common type of preparers of tax returns which include the EITC. In addition, unenrolled preparers were found to be most prone to error when claiming the credit.\nTotal overclaims from the 2006-2008 EITC Compliance Study were estimated to be between $14.0 billion (low estimate) and $19.3 billion (high estimate).\nFor policymakers, it may be important to understand not only the types of taxpayer errors that lead to EITC overclaims, but also how the IRS may or may not be able to detect these errors and administer this tax benefit.\nThe IRS examines a small sample of all tax returns every year, including those with the EITC, to verify that taxpayers are complying with tax laws. In FY2017, the IRS examined over one million tax returns, of which more than a third (36.0%) included an EITC claim. (By way of comparison, the IRS processed over 245 million returns in the same time period.) The IRS estimated that of $29.0 billion of additional tax owed as a result of all examinations, 6.9% ($2.0 billion) came from tax returns which included an EITC claim.\nGenerally, the IRS does not reveal how it detects errors or flags questionable tax returns to prevent persons from using this information to circumvent IRS detection. However, public documents that evaluate the efficacy of the IRS error detection procedures do provide a general overview of some of the ways the IRS can attempt to detect errors, especially before a refund is issued. An overview and analysis of challenges the IRS may face in detecting and reducing specific errors is provided for each type of error. While not a complete evaluation, they are intended to highlight how the IRS may prevent overclaims from different types of error as well as the agency's limitations in effectively administering the EITC.\nIn addition to detecting and preventing errors, the IRS can, once they have determined a tax filer improperly claimed the EITC, subject that taxpayer to both financial penalties and disallow them from claiming the credit in future years. If upon examination by the IRS, all or part of a taxpayer's EITC is denied, the taxpayer\n(1) must pay back the amount in error with interest; (2) may need to file the Form 8862, Information to Claim Earned Income Credit after Disallowance; (3) may be banned from claiming EITC for the next two years if we [the IRS] find the error is because of reckless or intentional disregard of the rules; or (4) may be banned from claiming EITC for the next ten years if we [the IRS] find the error is because of fraud.\nTax return preparers who erroneously claim the credit on behalf of clients may also be subject to financial penalties, suspension or expulsion from e-file, injunction preventing them from preparing returns or subjecting them to certain limitations, and other disciplinary action.", "A child must meet three requirements or \"tests\" to be considered a \"qualifying child\" of an EITC claimant. First, the child must have a specific relationship to the tax filer (son, daughter, stepchild or foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, or descendent of such a relative). Second, the child must share a residence with the tax filer for more than half the year in the United States. Third, the child must meet certain age requirements ; namely, the child must be under the age of 19 (or age 24, if a full-time student). These age requirements are waived if the child is permanently and totally disabled. If the child claimed for the EITC does not meet all of these requirements, they are considered to be claimed in error.\nErroneously claiming a child can result in a significant EITC overclaim per taxpayer. For example, in 2018, the maximum credit amount for taxpayers with no qualifying children is $519. This increases to $3,461 for taxpayers with one qualifying child, $5,716 for taxpayers with two qualifying children, and $6,431 for taxpayers with three or more qualifying children.", "The 2006-2008 EITC Compliance Study found that in terms of dollar amounts of overclaims, errors in claiming the qualifying child were the largest source of EITC overclaims. Specifically, the 2006-2008 EITC Compliance Study found that of the aggregate amount overclaimed, 38% of overclaim dollars were associated with a qualifying child error, averaging $2,384 per return in overclaim. (These estimates reflect overclaims from known errors where a taxpayer selected for the audit fully participated in the audit. Hence, these numbers are not comparable to the \"high\" and \"low\" estimate provided in Table 1 .) Errors in claiming qualifying children were the second most common error, found on 21% of returns with an EITC overclaim.\nAlthough qualifying children errors were the largest EITC error in dollar terms, the majority of children claimed for the EITC are claimed correctly. The 2006-2008 EITC Compliance Study found that 87% of children were claimed correctly. Of the 13% of children claimed in error, the most frequent type of qualifying child error was the failure of the tax filer's qualifying child to meet the residency requirement. As previously discussed, a qualifying child for the EITC must share a residence with the taxpayer for more than half the year in the United States. Taxpayers may claim the EITC in error if they presume that providing for or being a parent of a child entitles them to the EITC. The 2006-2008 EITC Compliance Study found that among those children known to be claimed in error, more than three-quarters (76%) were due to the tax filer's child failing to meet the residency requirement of the credit.\nThe second most common \"qualifying child error,\" accounting for 20% of known qualifying child errors, was the failure of the child to meet the relationship test. In other words, the child claimed for the EITC was not the son, daughter, stepchild, foster child, brother, sister, half-brother, half-sister, stepbrother, or stepsister (or descendent of such a relative) of the EITC claimant.", "When the IRS receives a federal income tax return from a taxpayer with qualifying children claiming the EITC, it may have limited data to verify that the child meets the relevant EITC requirements. As previously discussed, one of the largest sources of qualifying child errors is the child failing to meet the EITC's residency requirement. Currently the IRS has the authority to use the Federal Case Registry of child support orders (FCR) to attempt to determine if the child is living with the EITC claimant during the filing season, and summarily deny the credit if a claimant is deemed ineligible. Summarily denying the credit effectively means that the refund money is \"stopped before going out the door,\" as opposed to issuing the refund and then verifying information after filing season. Researchers have suggested using the FCR data because\nthe case registry identifies child support payees and child support payors. It [is] further assumed that the payee generally has physical custody of the child. If the assumption is true, then EITC claims made by someone other than the child support payee would be noncompliant since they would not meet the \"residence test\" that requires an EITC qualifying child to live with the claimant for more than half the year.\nHowever, the IRS does not currently use the FCR during filing season to summarily deny claims before a refund is issued. A 2011 IRS report found that the FCR resulted in a relatively high percentage of \"false positives\" in terms of identifying children that failed to meet the residency test of the EITC. Specifically, the IRS audited a statistically valid random sample of tax returns that the FCR identified as including children who failed to meet the EITC residency requirement. A failure to meet the residency requirement would result in a substantially smaller EITC for the taxpayer. The IRS found the FCR incorrectly identified a significant proportion of the sample as failing to meet the residency requirement, a proportion that was deemed too high to be used in pre-refund compliance.\nThe FCR which includes information on children, custodial parents, and non-custodial parents, may lead to inaccurately classifying a child as not meeting the EITC residency requirement for a variety of reasons. For example, a court order may require that the custodial parent of the child be the mother. Hence, the father would be the noncustodial parent, and based on the FCR, the father would be ineligible to claim the child for the credit. However, if due to some unforeseen circumstances, like the mother's job loss, the child moved in with the father for a given year, without notifying the court, this change would not be noted in the FCR. The child would now (assuming the child met the age test) be the qualifying child of the father for the purposes of claiming the EITC. However, based on the FCR data alone, the father would be incorrectly denied the EITC. As the Taxpayer Advocate has stated with respect to using the FCR to summarily deny the EITC during filing season\napplying data collected for other purposes to an EITC claim is akin to verifying addresses with a telephone directory to deny a home mortgage interest deduction. Even if virtually all of the entries in a directory were accurate, they were compiled for a different purpose, do not disprove eligibility under the tax law, were compiled at a prior date and many not be current, and should not deprive a taxpayer of a due process right to present his or her own facts.\nTo verify a child meets the residency requirement of the EITC, the IRS has several Social Security Administration databases to verify the relationship test. These include DM-1, which contains the names, Social Security numbers (SSNs), and dates of birth for all SSN holders; Kidlink, which links SSNs of children to at least one of their parents (but only for children who received SSNs after 1998); and Numident, which provides information from birth certificates, including parents' names. Currently, it appears that the IRS does not cross-reference all EITC returns to these databases during the filing season. This may be due to limitations of these databases to accurately document that the child fulfills the relationship requirement. As the IRS Taxpayer Advocate has stated, \"a child's relationship and residence with respect to a low-income taxpayer are highly circumstantial facts to be validated on a case-by-case basis.\" ,\nInstead, in conjunction with the Federal Case Registry, the IRS may use these databases to construct filters that identify EITC returns with a high probability of error in claiming a qualifying child for the credit. After a return is flagged \"the return is placed in queue for possible prefund or post-refund audit. Depending on available resources, [the] IRS will audit a portion of the returns ... before complete refunds are sent to the taxpayers. To the extent returns are not handled in prerefund audits, [the] IRS will include them for possible postrefund audits.\" Nonetheless, it is generally harder to recover refunds that have already been released as opposed to those denied during filing season.", "The amount of the EITC depends in part on a taxpayer's income. For a taxpayer with a given number of children and marital status, the EITC is structured to vary by income—gradually increasing, then remaining constant at its maximum level, and finally gradually declining in value. Figure 1 illustrates the EITC amount by earnings level for an unmarried taxpayer with one child for 2018. It illustrates the three distinct ranges of EITC's value by income, with specific dollar amounts and rates applicable to this type of family:\nPhase-in Range: The EITC increases with earnings from the first dollar of earnings up to earnings of $10,180. Over this earnings range, the credit equals the credit rate (34% for a tax filer with one child) times the amount of annual earnings. The $10,180 threshold is called the earned income amount and is the earnings level at which the EITC stops increasing with earned income. The income interval up to the earned income amount, where the EITC increases with earnings, is known as the phase-in range. Plateau: The EITC remains at its maximum level of $3,461 from the earned income amount ($10,180) until earnings exceed $18,660. The $3,461 credit represents the maximum credit for a tax filer with one child in 2018. The income interval over which the EITC remains at its maximum value is often referred to as the plateau. Phase-out Range: Once earnings (or adjusted gross income (AGI), whichever is greater) exceed $18,660, the EITC is reduced for every additional dollar over that amount. The $18,660 threshold is known as the phase-out amount threshold for a single taxpayer with one child in 2018. For each dollar over the phase-out amount threshold, the EITC is reduced by 15.98%. The 15.98% rate is known as the phase-out rate . The income interval from the phase-out income level until the EITC is completely phased out is known as the phase-out range .\nIncorrectly reporting income (sometimes referred to as \"income misreporting\") was the most common source of error identified in the 2006-2008 EITC Compliance Study. Income can be overreported or underreported to increase the value of the credit. For tax filers with earnings below the earned income amount, overreporting income can result in a larger credit. In contrast, tax filers whose income is above the phase-out threshold amount may receive a larger credit if they underreport their income. Income underreporting may be more common than overreporting since the majority of EITC claimants—51.8% of claimants in 2008—have income that places them in the phase-out range of the credit.", "The 2006-2008 EITC Compliance Study found that errors in income reporting were the second-largest source of EITC overclaims, in terms of dollar amounts of overclaims. Specifically, the 2006-2008 EITC Compliance Study found that of the total dollar amount overclaimed, 35% was associated with income reporting errors, averaging $807 per return in overclaimed credit. (These estimates reflect overclaims from known errors where a taxpayer selected for the audit fully participated in the audit. Hence, these numbers are not comparable to the \"high\" and \"low\" estimates provided in Table 1 .) In terms of number of returns with an EITC overclaim, known errors related to incorrectly reporting income were the most common error and found on 58% of returns with an EITC overclaim.\nAs illustrated in Table 2 , the most frequent type of income reporting error in the 2006-2008 EITC Compliance Study was incorrectly reporting earned income, primarily self-employment income. According to estimates based on audit results, $3.7 billion to $4.5 billion in EITC overclaims were attributable to incorrectly reporting earned income, of which between $3.2 billion and $3.8 billion was associated with self-employment income misreporting. Incorrectly reporting wage income was the smallest contributor to income reporting overclaims.\nThe major sources of income reporting errors are different from the major sources of income among EITC claimants. Most EITC recipients—76%—only have wage income. In contrast, 24% earn at least some self-employment income and 10% report both wages and self-employment income. Hence, the majority of income reporting errors come from a minority of taxpayers, namely those with self-employment income.", "In the administration of the EITC, some observers have suggested that the IRS may be able to compare income reported on the tax filer's tax return to information reported on third-party forms. In other cases—especially among the self-employed—the IRS may have incomplete information. Self-employed individuals generally have their compensation reported on a Form 1099. But this compensation does not necessarily represent self-employment income . Taxpayers may deduct a variety of business expenses from their compensation to determine their self-employment income. The IRS, however, does not receive third-party verification of these deductible expenses when a taxpayer files his or her income tax return. In contrast, wage income is directly reported on form W-2 and is provided to both the taxpayer and the IRS. Indeed, the availability of wage income information to both the taxpayer and the IRS may be a factor in the lower dollar amount of overclaims attributable to wage income reporting errors.\nBefore 2017, another challenge in detecting this type of error was the time gap between when the IRS processes tax returns and when it receives third-party reporting data on income. (As previously discussed, wage income is reported on the Form W-2 and other forms of compensation are reported on other forms like the 1099-MISC). One GAO study found that in 2012, for example, the \"IRS issued 50% of tax year 2011 refunds to individuals by the end of February, but had only received 3% of information returns.\"\nThe Protecting Americans from Tax Hikes Act (PATH Act; Division Q of P.L. 114-113 ) included a provision requiring the IRS to hold income tax refunds until February 15 if the tax return included a claim for the EITC (or the additional child tax credit, known as the ACTC). This provision was coupled with a requirement that employers furnish the IRS with W-2s and information returns on nonemployee compensation (e.g., 1099-MISCs) earlier in the filing season. These legislative changes were made \"to help prevent revenue loss due to identity theft and refund fraud related to fabricated wages and withholdings.\" With more time to cross-check income on information returns, it is believed that this will help reduce erroneous payments of the EITC by the IRS. This change began in 2017 (affecting 2016 income tax returns). As of yet, there is no research indicating if and to what extent these legislative changes have reduced the frequency or dollar amount of this type of error.", "The EITC can be claimed by taxpayers filing their tax return as married filing jointly, head of household, or single. Tax filers cannot claim the EITC if they use the filing status of married filing separately.\nThe EITC's value depends in part on the tax filer's filing status. Notably, as a result of the structure of the EITC, certain married tax filers may receive a smaller EITC as a married couple than the combined EITC they would receive as two unmarried individuals—often referred to as the EITC \"marriage penalty.\" For example, in 2014, two single parents, each with one child and earned income of $15,000, would receive an EITC of $3,305 each for a total EITC of $6,610. If they married, their combined income would be $30,000, and with two children their EITC would be $4,041. The EITC marriage penalty for this couple would be $2,659. (While some EITC claimants are subject to a marriage penalty, and hence may have an incentive to claim the credit as unmarried, other tax filers may be subject to an EITC marriage bonus. These recipients receive a larger credit as a married couple than their combined credit as two singles.) The IRS states that most EITC filing status errors arise as a result of a married couple filing two separate returns as unmarried tax filers. In other words, most filing status errors likely occur among married tax filers subject to a marriage penalty and who incorrectly file as \"head of household\" or \"single,\" when they should file as married filing jointly.", "The 2006-2008 EITC Compliance Study found that filing status errors were the third-largest EITC error in dollar terms, accounting for between $2.3 billion and $3.3 billion of EITC overclaims, illustrated in Table 1 . According to the study results, filing status errors fall \"somewhere between self-employment income misreporting and other types of income misreporting in relative importance.\" In many cases where the wrong filing status was used, \"using the proper filing status would have substantially reduced the amount of the EITC received or made those taxpayers ineligible for the credit altogether.\" Unlike qualifying child and income reporting errors, a more detailed evaluation of this EITC error was not provided by the IRS in this study.", "When taxpayers file their income tax returns, they must select the appropriate filing status based on their marital status and the presence of dependent children. The IRS does not request third-party documentation to verify a taxpayer's marital status during filing season. Indeed, such a request could be viewed as intrusive and burdensome. Instead, the IRS may use marital data from the Social Security Administration to flag questionable returns. There is currently a lack of public information on how the IRS may detect filing status errors.", "Historically, a majority of EITC claimants—approximately two-thirds—have used a paid tax preparer. EITC recipients may use paid preparers for a number of reasons, including\nthe belief that having their tax return prepared by a paid preparer will result in a larger tax refund and fewer errors, the belief that refunds are received faster when the return is prepared by a paid preparer, language differences or taxpayer literacy problems, the IRS's close review of EITC returns or the belief that using a paid preparer will reduce the chance of audit, less effort (work) by the tax filer, and the incorrect belief that the paid preparer (and not the taxpayer) will pay any penalty associated with an error.\nHowever, use of a paid tax preparer does not guarantee an accurate tax return as tax preparers vary in terms of training and experience.", "The 2006-2008 EITC Compliance Study collected data on both the usage of different types of paid preparers among EITC claimants, and overclaims among these different types of preparers, as illustrated in Table 3 . The data indicate that among those who reported using a paid preparer, EITC claimants were more likely to use an unenrolled agent or tax preparer from a national tax preparation company (43% and 35%, respectively) compared to non-EITC claimants (28% and 14%, respectively). Notably, unenrolled preparers have a higher frequency of overclaims (between 49% and 54% of EITC returns prepared by these preparers had an overclaim) than almost all other types of paid preparers, including attorneys (35%), CPAs (between 47% and 49%), and enrolled agents (between 42% and 46%). Volunteer tax preparation services provided by the IRS had the lowest frequency of overclaims (between 20% and 26% of EITC returns prepared by IRS volunteer programs had an overclaim).\nEITC returns prepared by unenrolled agents also account for the highest percentage of overclaim dollars (the ratio of total overclaim dollars to total claim dollars, by preparer). The IRS estimates that of the $14.5 billion of EITC claimed on tax returns prepared by unenrolled agents, between $4.7 billion and $5.8 billion (33% to 40%) was overclaimed. In comparison, the IRS estimates that between $2.4 billion and $3.6 billion (20% to 30%) of the $11.8 billion of EITC claimed on tax returns prepared by national tax return preparation firms was overclaimed. Tax returns prepared by IRS volunteer services processed $0.8 billion of EITC claims, of which between 11% and 13% was overclaimed.\nThe IRS does not conclude that these data are sufficient to indicate which preparers tend to be less capable or unscrupulous. A 2008 Taxpayer Advocate study found that both taxpayers and tax preparers tend to fall into one of three groups: (1) those intent to commit fraud and understate their liabilities or overstate their refunds; (2) those who are indifferent and who defer decisions to the other party (i.e., the tax preparer defers to the taxpayer and vice versa); and (3) those who seek to comply with the tax laws. As this study stated, it is important to understand the dynamic relationship between taxpayers and paid preparers. Certain compliant paid preparers might choose not to assist people who seek to claim the EITC incorrectly. Conversely, a noncompliant taxpayer may seek out a noncompliant paid preparer. Echoing this idea, the IRS in the 2006-2008 EITC Compliance Study notes that error rates among preparers may be influenced by selection bias. For example, taxpayers with more complicated tax returns, or who are seeking to intentionally overclaim the credit, may seek out an unenrolled agent. More research may help to determine \"the relative ability or integrity of unenrolled preparers.\"\nSeveral Government Accountability Office (GAO) investigations of small samples of returns prepared by paid tax preparers have also highlighted the variability in quality and accuracy of paid tax preparation services. In a 2014 study, GAO found that of their limited sample of paid tax preparers (19), most of them (17) made some mistakes when preparing tax returns that resulted in an incorrect refund amount. As GAO reported, \"nearly all of the returns prepared for our undercover investigations were incorrect to some degrees, and several of the preparers gave us incorrect advice, particularly when it came to reporting non-Form W-2 income (i.e., wage income) and the EITC. Only 2 of the 19 tax returns showed the correct refund amount.\" The report also found that in 3 out of 10 cases, the tax preparers claimed an ineligible child for the EITC. In other cases, the tax preparers did not report cash tips of the taxpayer, leading to overstated refunds. Overstated refunds resulting from these two errors ranged from $654 (underreporting income) to $3,718 (underreporting income and claiming an ineligible child).", "There have been a variety of proposals to improve the quality of services by paid tax preparers and to increase compliance among these preparers. Under current law, since 2011 paid tax preparers who prepare returns which include an EITC claim must follow several due diligence requirements, including the following:\nCompleting IRS Form 8867 and filing this form with each tax return they prepare. Form 8867 is a checklist for the preparers asking questions concerning the taxpayer's filing status, income, and any children claimed for the credit. Completing an EITC worksheet found in the Form 1040 instructional booklet. \"Tak[ing] steps to ensure that all taxpayer information provided to them is correct and complete by asking follow-up questions to the taxpayer and requesting additional documentation.\"\nCopies of all forms and relevant information must be kept by the preparer for three years. Paid preparers who do not meet these requirements can face a penalty of up to $500 for each return for which they fail to meet the due diligence requirements.\nIn addition, the IRS requires that any individual who prepares a tax return for compensation must obtain a Preparer Taxpayer Identification Number (PTIN). A PTIN is intended to enable the IRS to quickly and efficiently identify tax preparers who prepare tax returns with a high number of errors or overclaims. Some advocates, however, have pushed for more regulation at the federal level of paid preparers. Before January 2013, the IRS had also begun implementation of new testing and continuing education requirements for certain paid preparers not already subject to IRS oversight. A Treasury Inspector General Report on EITC improper payments noted that these initiatives to regulate previously unregulated preparers were \"considered the most promising strategy for curbing EITC improper payments.\"\nHowever, as a result of a ruling in Loving v. Internal Revenue Service in 2013, the IRS was enjoined from enforcing these new requirements. Ultimately, the IRS chose not to appeal the decision in Loving. The IRS does provide a voluntary education and testing program for unregulated preparers.\nNonetheless, the IRS Taxpayer Advocate stated at a 2014 hearing,\nThe single most useful step Congress can take to improve EITC compliance and reduce Improper Payments is to enact a regulatory regime that requires unenrolled preparers who prepare returns for a fee to demonstrate minimum levels of competency by passing an initial test and then taking annual continuing education courses (including ethics).\nCongress has in the past introduced legislation that would give the IRS the statutory authority to regulate paid tax preparers, including S. 832 in the 109 th Congress and S. 1219 in the 110 th Congress. More recently, the Senate Finance committee held a hearing in 2014 concerning paid preparers. At that hearing the IRS Commissioner requested Congress provide the IRS with the explicit legal authority to regulate currently unregulated tax preparers. In his FY2019 budget proposal, President Trump proposed increasing oversight of paid tax preparers, noting that \"[e]nsuring that these preparers understand the tax code would help taxpayers get higher quality service and prevent unscrupulous tax preparers from exploiting the system and vulnerable taxpayers.\" To date in the 115 th Congress, no legislation has been introduced to regulate paid tax preparers.", "In summary, the recent EITC compliance study found that the most common error tax filers make when claiming the EITC is incorrectly reporting income. The largest EITC error in dollar terms is incorrectly claiming a child for the credit. The 2006-2008 EITC Compliance Study however, did not provide estimates of what proportion of EITC errors were due to taxpayer confusion versus intentional error (i.e., fraud). This may be of particular interest to policymakers seeking to reduce EITC errors because the strategies to reduce \"honest mistakes\" versus \"fraud\" differ. Insofar as these errors are due to taxpayer (or paid tax preparer) confusion with the EITC eligibility rules, the most effective policy response may be to simplify these rules and create greater uniformity for all child-related tax benefits in conjunction with increasing taxpayer education on EITC eligibility. This may be particularly relevant for EITC claimants given that about one-third of the EITC claimants in a given year did not participate in the program the previous year and may be unfamiliar with the complex eligibility requirements of the credit.\nIncreasing enforcement activities and auditing could be the best policy response for errors resulting from fraudulent claims of the credit. The IRS would need data on taxpayers' compliance with EITC parameters (e.g., whether the child claimed was a qualifying child) to enforce the rules of the credit. However, the IRS currently may not have sufficient information to verify qualifying child eligibility and self-employment income. The issues surrounding the IRS ability to detect and correct EITC errors highlight a more general problem with administering complex provisions like the EITC—the lack of accurate and timely third-party data to verify complex eligibility rules. The IRS's budgetary constraints may also hinder enforcement activities. Problems with administration of the EITC also highlight more general problems of administering a variety of child-related tax benefits (like the dependent exemption, the child tax credit, and the child and dependent care credit), each with slightly different eligibility rules. A taxpayer, for example, may incorrectly believe that eligibility for one child-related tax benefit, like the child tax credit, makes them eligible for the EITC, and vice versa, when that may not be the case.\nThere are a variety of legislative options to improve the administration of the EITC, alone and in the context of other child-related tax benefits. Congress could simplify tax provisions such that they are enforceable with current third-party data (e.g., by making the EITC purely a work-based credit, based on earnings, not qualifying children). Or Congress could simplify eligibility for all child-related tax benefits, such that a qualifying child for one benefit would be a qualifying child for all other child-related tax benefits.\nThe IRS's administration of the EITC has highlighted the agency's shifting role from tax collector to tax collector and benefit administrator. Unlike other agencies that administer social and economic benefit programs, the IRS does not expend significant resources to determine a taxpayer's eligibility for the EITC before a tax return is filed. Instead, taxpayers file for the EITC, and then the IRS may verify if the taxpayer is eligible for the credit. Some tax returns are checked during tax filing season and others are checked post filing season, after the credit has been paid. Minimal pre-filing eligibility verification may reduce administrative costs but also lead to substantial amounts of the credit being claimed in error.\nMore broadly, improper payments of refundable tax credits may increase as the number of refundable credits the IRS administers increases or participation in existing credits increases. Given the high percentage of EITC improper payments and data limitations in detecting certain EITC errors, Congress may choose to reconsider providing social benefits through the tax code in the form of refundable credits. Alternatively, if Congress remained interested in providing social benefits in the form of refundable tax credits, the IRS's mission statement could be broadened to include both tax collection and the administration of social benefits. Without any changes in the way the IRS administers social benefits like the EITC, improper payments of refundable credits and the suitability of the IRS in administering social benefits could continue to be a prominent issue in tax administration.", "As previously mentioned, this report discusses two measures of EITC noncompliance: improper payments and overclaims. Although these two measures of EITC noncompliance are related, they do differ.\nImproper payments are an annual fiscal year measure of the amount of the credit that is erroneously claimed and not recovered by the IRS. Overclaims and the overclaim rate are the amount of the credit claimed incorrectly on successfully processed tax returns and do not include the impact of enforcement activities. In addition, overclaims and the overclaim rate are generally reported less frequently than improper payments and the improper payment rate. The IRS released studies in 1999 and 2014 which examined EITC overclaims.\nImproper Payments, the Improper Payment Rate, and Overclaims\nEITC improper payments are defined as erroneous amounts of the credit (including both the nonrefundable and refundable portion of the credit) that are \"paid out to taxpayers and are not later recovered or corrected by the IRS.\" To determine an estimate of the dollar amount of improper payments in a given fiscal year, an estimated improper payment rate is multiplied by an estimate of total EITC claims for that fiscal year.\nThe estimated improper payment rate is based on a sample of the most recent individual income tax reporting compliance data, which can be several years older than the estimate of total EITC claims. For example, the estimated improper payment rate used to estimate the dollar amount of improper payments in FY2012 used tax data from 2008 tax returns. This estimated improper payment rate (based on a sample of 2008 tax returns) was then multiplied by an estimate of total EITC claims for FY2012 to determine the dollar amount of improper payments for FY2012.\nAn EITC overclaim is \"the difference between the EITC amount claimed by the taxpayer on his or her return and the amount the taxpayer should have claimed.\" To determine why some tax filers erroneously claim the EITC, the IRS examines tax returns with an EITC overclaim instead of examining returns with an improper payment. This allows the IRS to determine the factors that lead tax filers to claim the credit incorrectly. If instead, the IRS examined tax returns with EITC improper payments, their sample would exclude those tax returns whose EITC overclaims were either never paid (due to prerefund compliance checks) or were recovered (as a result of postrefund audits). Excluding these tax returns could result in inaccurate estimates of the major factors that lead to incorrect EITC claims.\nBefore FY2013, the EITC improper payment rate was calculated as total overclaims dollars net of EITC overclaim dollars recovered, divided by the total amount of EITC dollars claimed on all returns. Beginning in FY2013, the IRS's calculation of improper payments includes underpayments. EITC underpayments are \"the amount of the EITC disallowed by the IRS in processing that should have been allowed.\" Under this new calculation of the improper payment rate, the dollar amounts of underpayments and overclaims are added together and the total amount of recovered EITC overclaims is then subtracted from this sum (see Figure A-1 ). This modification has a small effect on the improper payment rate, with Treasury noting that \"underpayments increase the overall improper payment rate by less than 0.05 percent.\"\nDo Improper Payments Measure the Cost of EITC Noncompliance to the Government?\nThe cost of EITC errors to the Treasury equals credit overpayments (overclaims net any overclaims blocked or which were recovered by compliance measures) net of any underclaims or offsetting errors . An underclaim is the amount of the credit a taxpayer is entitled to claim but neglects to claim, and includes eligible taxpayers who fail to claim the credit entirely as well as those who claim less than they should. An offsetting error is an underclaim that may partially or fully offset an overclaim. For example an offsetting error occurs when a child claimed in error by taxpayer A could have been correctly claimed by taxpayer B, but taxpayer B did not claim that child. Depending on the size of underclaims and offsetting errors, estimated improper payments \"may or may not represent a loss to the government.\"\nFor example, if tax filers overclaimed $10 billion of the EITC (net of amounts never paid or recovered), but $2 billion of the credit was never claimed by eligible claimants, the net amount of the credit paid in error would be $8 billion. When underclaims are large in relation to overclaims, improper payment amount may overstate the cost of EITC errors to the Treasury. When underclaims are relatively small compared to overclaims, improper payment amounts may be accurate approximations of the cost of EITC errors to the Treasury. Currently, there are no publicly available estimates of underclaims and offsetting errors. The IRS does estimate that 21% of eligible EITC claimants do not claim the credit. However, an estimate of the amount of EITC dollars underclaimed by these 21% of eligible recipients is not currently available." ], "depth": [ 0, 1, 1, 1, 1, 2, 3, 3, 2, 3, 3, 2, 3, 3, 2, 3, 3, 1, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "", "", "h2_full", "", "", "", "", "", "", "", "", "", "h2_title", "h2_full", "", "h0_title h1_full", "h0_full" ] }

{ "question": [ "What do studies indicate about EITC payments?", "What numbers support that claim?", "How are mispayments categorized?", "What did the most recent IRS study conclude about this issue?", "What did the study find?", "What did the 2014 study find?", "What did the 2014 study omit?", "How did the 2014 study differ from previous studies?", "What did the study find?", "Why is this the case?" ], "summary": [ "Studies indicate that a relatively high proportion of EITC payments are issued incorrectly.", "The Treasury Department estimates that in FY2017 between 21.9% and 25.8% of EITC payments—between $14.9 billion and $17.6 billion—were issued improperly.", "These improper payments can be overpayments or underpayments.", "The IRS's most recent study (released in 2014) of the factors that lead to EITC overclaims—the difference between the amount of EITC claimed by the taxpayer on his or her return and the amount the taxpayer should have claimed—concluded that there were three major reasons that tax filers claimed the wrong amount of the credit:", "This IRS study—also referred to as the 2006-2008 EITC Compliance Study in this report, because it examined tax returns between 2006 through 2008—found largely the same results as a previous IRS study on overclaims, released in 1999.", "The 2014 study also found that the majority of taxpayers who overclaim the EITC are ultimately ineligible for the credit, rather than eligible for a smaller credit.", "The 2014 study did not estimate the proportion of errors which were intentional (i.e., fraud) versus \"honest mistakes\" made while attempting to comply with EITC rules", "Unlike previous studies, the 2014 study also examined different types of paid tax preparers who prepared tax returns which included EITC claims (these tax returns are sometimes referred to as \"EITC returns\").", "The study found that among paid tax preparers, unenrolled preparers were both the most common type of tax preparers of EITC returns and among the most prone to erroneous claims of the credit.", "Unenrolled tax preparers generally do not pass the same testing requirements as enrolled preparers (e.g., attorneys and CPAs) and in contrast to enrolled tax preparers are limited in how they can represent their clients before the IRS." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 1, -1, 0, 1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "Background", "Security Cooperation and Assistance Programs", "The FMS and Pseudo- FMS Process", "DSCA Workload Measures", "Information Systems", "DOD Has Improved the Timeliness of the FMS Process but Has Not Met Its Goals or Sufficiently Analyzed Performance Data", "The Military Departments’ Workload and Workforce Have Increased While DSCA’s Workforce Has Declined, and DSCA Has Not Developed a Workforce Plan", "The Military Departments’ Workloads and Workforces to Process FMS and Pseudo-FMS Increased; DSCA’s Workforce Decreased", "DSCA Has Not Developed a Workforce Plan or Workload Measures for its FMS Workforce As A Whole", "DOD Has Taken Steps to Address Recommendations Made by GAO and Others to Improve the FMS Process", "DOD Has Addressed All but One of GAO’s Previous Recommendations to Improve the FMS Process", "DOD Has Addressed Most of the Recommendations Made by the Inspector General", "DOD Has Taken Steps to Address the Recommendations Made by Its Security Cooperation Reform Task Force, but Implementation Is Uneven", "DSCA Partially Implemented 16 Task Force Recommendations", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comparative Information on Foreign Military Sales (FMS) and Pseudo- FMS Case Processing", "Appendix III: Fiscal Years 2009-2016 Army, Air Force, and Navy Foreign Military Sales (FMS) and Pseudo-FMS Workload", "Appendix IV: Comments from the Department of Defense", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "The United States provides military equipment and training to partner countries through a variety of security cooperation and assistance programs authorized under Title 22 and Title 10 of the U.S. Code as well as various public laws. When foreign partners choose to use the FMS program, they pay the U.S. Government to administer the acquisition of materiel and services on their behalf. The United States also provides grants to some foreign partners through the Foreign Military Financing (FMF) program to fund the partner’s purchase of materiel and services through the process used for FMS. DOD administers a number of security cooperation programs that focus on building partner capacity with appropriated funds. The Afghanistan Security Forces Fund and the authority to build the capacity of foreign security forces are examples of such security cooperation programs. The security assistance services provided through these programs use the same workforce to manage and acquire military equipment and services as the FMS program and are referred to as pseudo-FMS. Both FMS and pseudo-FMS program administrative costs are funded through FMS case surcharges that are administered through the FMS Trust Fund. Figure 1 shows an F-15 Eagle fighter, which is an example of an item that has been procured under FMS.", "DSCA administers all FMS and pseudo-FMS cases and works with various implementing agencies to execute them. DSCA’s workforce establishes security assistance procedures and systems and provides training, oversight, and guidance. DSCA’s workforce also implements a small number of cases. The workforces of the implementing agencies and their components are responsible for preparing, processing, and executing security assistance agreements. This includes working with foreign partners to determine requirements and managing cases. Fourteen agencies and DOD components act as implementing agencies, including the three military services—the Army, the Air Force, and the Navy—which manage the vast majority of FMS and pseudo-FMS cases. Each service has a designated component that leads and coordinates the development and implementation of FMS and pseudo-FMS cases: the Deputy Assistant Secretary of the Army for Defense Exports and Cooperation, the Deputy Under Secretary of the Air Force for International Affairs, and the Navy International Programs Office.\nWhile the many steps of the process used for FMS and pseudo-FMS cases can be grouped in different ways, they fall into five general phases: assistance request, agreement development, acquisition, delivery, and case closure. FMS and pseudo-FMS transactions follow the same five- phase process, but the roles, responsibilities, and actors involved can differ. For example, in the assistance request phase for FMS cases, the partner country identifies its needs and drafts a letter of request. For a pseudo-FMS case, the U.S. combatant commands and in-country security cooperation organizations identify needs and draft the request. In the agreement development phase, for an FMS case, the implementing agency, with input from the partner country, develops an assistance agreement called a Letter of Offer and Acceptance (LOA). For a pseudo- FMS case, the implementing agency prepares the assistance agreement. See figure 2 for the differences in each phase under the two programs.", "DSCA uses workload data obtained from two DOD systems to determine each service’s future year funding for FMS and pseudo-FMS program administrative costs. In fiscal year 2016, the three services began reporting to DSCA on seven quantifiable workload measures that together capture the workload required to implement FMS and pseudo-FMS cases. According to DSCA officials, these seven workload measures are used in a workload model to generate a funding target for each military department, which DSCA allocates. Based on the funding allocation, the military departments then determine the FMS administrative surcharge workforce levels for each component that processes FMS cases. According to DSCA officials, before developing these seven measures, workload was self-reported to DSCA by the military departments based on an estimation of their respective FMS sales and other factors, such as undelivered value.", "The implementing agencies use the Defense Security Assistance Management System (DSAMS) to write their FMS and pseudo-FMS cases. However, each military department also uses several systems, specific to each military department, to manage their execution of these programs. Since 2009, we have reported that DSCA has been working to replace these various military department-specific legacy data systems with the Security Cooperation Enterprise Solution (SCES). With SCES, DSCA aims to improve its communications with the services and to increase the efficiency of security cooperation programs. According to DSCA, once deployed, SCES will serve as the primary requisition system for DSCA and the three services.", "DSCA has established three measures of performance relating to FMS case duration but has not met its goals for two of these metrics and does not collect information on the third. The first metric tracks the time taken from the receipt of a partner country’s request to the transmission of a completed LOA to the partner country for approval. DOD’s timeliness has improved, but it is not meeting this metric’s goal of 85 percent of LOAs sent to partner countries within established time frames. DOD tracks performance and establishes goals based in part on the complexity of the cases. Specifically, simple cases that involve routine or repeat purchases of the same item, such as spare parts, training, and technical support, have an anticipated offer date (AOD) goal of 45 days. Standard cases that include purchases by experienced users of FMS, such as a purchase of a Blackhawk helicopter with all associated equipment and services, have an AOD goal of 100 days. Complex cases involve factors that are expected to substantially impact the time taken to complete the LOA or involve significant modifications and, therefore, have an AOD goal of 150 days. For example, the sale of new F-35A Joint Strike Fighter Conventional Take Off and Landing aircraft, which includes spares, support equipment, technical orders, contractor services, program management, software support, and training, would be categorized as complex. Table 1 shows the percentage of FMS cases meeting the timeliness goal for each type of LOA. In addition, appendix II provides information on how FMS time frames compare with pseudo-FMS time frames.\nThe second metric is the time taken for the review of FMS cases as they are processed through DSCA headquarters. DSCA established this performance measure in late 2013, with a goal of 1 day. However, we found that, based on data provided by DSCA, it is not meeting this 1-day headquarters review goal, and its performance with respect to this goal has declined over time. The DSCA-provided data show that in fiscal year 2016, the average review time was approximately 1.97 days, up from 1.47 days in 2014. DSCA officials said that they would revisit the goal if the average approval time were to exceed 2 days. Table 2 shows the average time DSCA has taken to approve LOAs from fiscal year 2014 to 2016.\nDSCA officials cited various factors adversely affecting the timeliness of FMS cases, including shifting partner country requirements and delays due to policy or financial reasons. For example, they reported that sales have been put on hold as the United States tried to influence human rights policies in some countries. In addition, DSCA officials said that when pseudo-FMS cases, such as those to build partner capacity, are prioritized due to the possibility that the availability of appropriated funds may expire, traditional FMS cases are delayed as the workforce shifts priorities. DSCA could not identify the amount of time these factors can add to the FMS process. While DSCA hosts meetings with the military departments periodically to review data, the evidence DSCA provided to document the results of these meetings did not include an analysis to identify the underlying causes of the failure to meet goals. DSCA officials said that, collectively, the information systems of the implementing agencies and DSCA could potentially be used to determine the amount of time that each factor costs in the process but that doing so would be time-consuming and difficult. However, because they have not conducted this analysis, DSCA officials could not substantiate the relative importance of the various factors affecting the timeliness of the FMS process.\nFederal internal control standards state that management should establish activities to monitor performance measures and indicators. These may include comparisons and assessments relating different sets of data to one another so that analyses of the relationships can be made and appropriate actions taken. These standards also require that management conduct reviews at the functional or activity level to compare actual performance to planned or expected results throughout the organization and analyze significant differences. Without such an analysis, it is uncertain whether DSCA will be able to accurately identify the underlying root causes for the weak performance on timeliness for FMS cases so that it can identify and implement effective corrective measures and to analyze lessons learned and apply these across the security cooperation enterprise.\nThe third metric is the time taken for DOD to deliver the first item or service on an FMS case to the recipient country. DSCA established this metric in August 2013, noting that the quick delivery of the initial equipment and services is most important to U.S. partners. DSCA established a goal that 50 percent of all LOAs for a given purchaser country deliver the first article, service, or training within 180 days. This goal recognized that a number of complex systems cannot be produced within 180 days, but the majority of cases do not involve complex acquisitions. DSCA officials stated that they have not collected data on this delivery measure, although some of it resides within the individual departments; thus, DOD’s performance on this metric cannot be assessed. Federal standards for internal controls state that management should use quality information to achieve the entity’s objective, including obtaining relevant data. Until DSCA collects information on this metric, it will not be able to determine whether it is achieving its goal.", "During fiscal year 2009 through 2016, the military departments’ FMS workload and workforce generally increased; over the same time period, DSCA, which does not have workload measures for its FMS workforce as a whole, experienced a decrease in its workforce. Although DSCA is required to develop a strategic workforce plan, and has plans to develop one, it has not yet done so.", "Fiscal year 2009 through 2016 data show that, for each military department, the overall workload to process FMS and pseudo-FMS cases generally increased, as did their overall workforces. DSCA and Army officials stated that, while no one measure can provide a full picture of the military departments’ workloads, implementing agencies use case line data to measure workload trends because those data capture the amount of work needed to procure each item in an FMS or pseudo-FMS case. However, DSCA officials also noted that because the military departments do not present case line data uniformly, the data cannot be compared to one another. For example, while the Army’s logistics system requires each item to be requisitioned separately, and typically identifies each component in a weapons system as a separate case line, the other military departments do not. According to DSCA, workload trends can be affected by several factors, including partner country budgets, exchange rates, prices of staple goods, import and export restrictions, and regional instability. As a result, we used case line data to show workload trends for each of the services separately, along with their individual workforce trends in full-time equivalents (see tables 3, 4, and 5). The upward trend in case line data presented in each of these tables is generally consistent with other workload measures, which are shown in appendix III.\nThe data indicate that, from fiscal year 2009 through 2016, the Army’s workload increased by about 47 percent, and its actual workforce increased by about 42 percent (see table 3).\nThe data also show that, during the same time period, the Air Force’s workload increased by about 48 percent, while its actual workforce increased by about 45 percent (see table 4).\nFinally, the data show that the Navy’s workload during fiscal year 2009 through 2016 increased by about 38 percent, while its actual workforce increased by about 45 percent (see table 5).\nIn contrast to the upward trend in the workforces of the three military departments, DSCA maintained a relatively stable workforce from 2009 through 2014 but then experienced a decrease in the workforce since 2014. DSCA officials attributed this decrease to the transfer of some responsibilities and staff to another DOD component. In percentage terms, from fiscal year 2009 through 2016, DSCA’s FMS authorized workforce dropped by 3 percent, while its actual FMS workforce decreased by 19 percent. See table 6 for DSCA’s authorized and actual workforce that directly processes FMS and pseudo-FMS. DSCA officials said that the drop in personnel has not adversely affected their capacity to process FMS and pseudo-FMS. However, they expressed concern that a continued drop—combined with continued increases in the workload— could adversely affect DSCA’s capacity to review, coordinate, and perform financial management for FMS and pseudo-FMS cases.", "DSCA has not developed a workforce plan, although it is required to do so. A DOD June 2016 requirement related to strategic human capital planning applies to DOD components, such as DSCA, and calls for the component heads to develop, manage, execute, and assess their component’s strategic workforce plans, including manpower allocations and resources. Under this requirement, components are expected to also establish a methodology to assess the current state of their respective workforces, identify skill and competency gaps and strengths, and forecast emerging and future workforce requirements to support DOD’s mission.\nIn October 2014, DSCA released a 6-year strategic plan to improve how security cooperation programs are implemented, taking into account the complexity of DOD’s security cooperation workforce. This plan, called “Vision 2020,” was updated in October 2015 and October 2016. As part of the Vision 2020 update, DSCA announced that it would address issues involving DSCA’s headquarters workforce in a human capital strategic plan. DSCA reported in October 2016 that it planned to complete the new human capital strategic workforce plan by October 2017 and to publish it separately from the Vision 2020 strategic plan. However, according to DSCA officials, as of May 2017, DSCA had not yet begun developing its plan. DSCA officials stated that the plan would probably not be ready by the planned issue date. In commenting on a draft of this report, DSCA stated that it was working to obtain the contractor support needed to develop a human capital strategic plan. DSCA also stated that it planned to obtain the contractor support by the end of fiscal year 2017 and to complete the preparation of a human capital strategic plan within eight months of having obtained the contractor support. Moreover, DSCA stated that it was in the process of updating various human capital-related instructions and policies.\nIn addition, as discussed previously, DSCA has not met its performance time frames for reviewing FMS and pseudo-FMS. While DSCA collects FMS workload data from the military departments, it does not have workload measures for its own FMS workforce as a whole. In commenting on a draft of this report, DSCA stated that it has developed workload models and measures to help identify specific needs and provided evidence for two such models, but it did not state that it has workload measures for its FMS workforce as a whole. DSCA officials also stated that the nature of their work, which, among other things, involves overseeing the processing of cases, preparing policy memos and congressional notifications, and managing the FMS Trust Fund, makes it difficult to collect and quantify appropriate workload measures for their workforce. However, without such key workload data, DSCA cannot determine the cause for the decrease in timeliness as measured by their metric and whether a declining FMS workforce is contributing to it. In May 2017, DSCA officials stated that they did not intend to include a workload measure in their forthcoming human capital strategic plan.\nAccording to Vision 2020, the human capital strategic plan, when complete, is intended to enable DSCA to align its human capital to support the goals of the agency’s strategic plan. Since 2001, we have developed a significant body of work related to strategic workforce planning. The work stresses the importance of strategic workforce planning that includes, among other things, aligning an organization’s human capital program with its current and emerging mission and programmatic goals. Workforce planning that is linked to an agency’s strategic goals is one of the tools agencies can use to systematically identify the workforce needed for the future and to develop strategies for shaping this workforce. One tool for ensuring that an agency’s workforce is aligned with its current and emerging mission and program goals is the use of appropriate workload measures, particularly quantifiable workload measures, since these enable the agency to analyze and assess workload trends with more precision. Because DSCA does not have workload measures for its FMS workforce as a whole, it cannot be certain if its forthcoming strategic workforce plan will be aligned with current and emerging FMS mission requirements.", "DOD has taken some steps to address long-standing concerns about the timeliness of FMS delivery. GAO, DOD’s Inspector General, and others have made numerous prior recommendations to improve the FMS process. DOD has taken steps to address three of the recommendations GAO made in 2012 but has yet to implement the fourth—the establishment of a performance measure to assess timeliness for the acquisition phase of the security assistance process. Similarly, DOD has implemented most of the recommendations made by the DOD Inspector General. Furthermore, DOD has taken steps to address recommendations made by its Security Cooperation Reform Task Force in 2011 and 2012, but further steps are needed.", "In a 2012 report, GAO made four recommendations to improve the FMS process. In 2012, we recommended that to improve the ability to measure the timeliness and efficiency of the security assistance process, the Secretary of Defense should establish performance measures to assess timeliness for the acquisition phase, the delivery phase, and the case closure phase of the security assistance process. To improve the ability of officials responsible for security cooperation to obtain information on the acquisition and delivery status of assistance agreements, we also recommended that the Secretary of Defense establish procedures to help ensure that DOD agencies are populating security assistance information systems with complete data.\nDOD has not established a performance measure to assess timeliness for the acquisition phase of the security assistance process. According to DSCA officials, they do not own the information systems or databases that have the data necessary to measure the timeliness of the acquisition phase. However, DOD has taken steps to respond to the other three recommendations. Specifically, DSCA updated the Security Assistance Management Manual (SAMM) in August 2013 to include a metric for the delivery phase of standard requests. However, as discussed earlier in this report, information provided by DSCA did not include timeliness data for the delivery phase of the process, and DSCA officials reported that they are not collecting data for this performance metric.\nIn addition, DSCA reported that it developed a tool within the Security Cooperation Management Suite to capture case closure data from implementing agencies. As of September 2015, DSCA reported that the tool now included metrics and measurements for the “aging” of cases within the different milestones and allowed for analysis of closure times based on the type and relative complexity of categories or cases.\nFinally, in response to our fourth recommendation, DSCA reported taking a number of actions. In early May 2014, it finalized programming the Enhanced Freight Tracking System (EFTS) that allows a daily upload of available data for FMS and pseudo-FMS materiel. DSCA reported that by mid-May 2014, EFTS had in-transit visibility over 75 percent of shipments. In addition, DOD reported the establishment of an electronic link between two of its information systems, which should improve the ability to share contract information.\nAccording to DSCA officials, the Security Cooperation Enterprise Solution (SCES) was proposed as a way to solve the problems stemming from the older, unique information systems maintained by each of the military services, which contribute to DSCA’s inability to facilitate data collection and analysis across the military departments. In 2012, DSCA officials told us that they would begin piloting the new system in 2015 and that SCES would be fully implemented by 2020. According to DSCA officials, the deployment schedule for SCES is behind schedule and is being revised. The pilot SCES deployment began on June 6, 2016. DSCA is working to convert data currently in legacy systems and, once a sufficient number of cases have been successfully executed in the pilot phase, limited deployment will occur. As of May 2017, DSCA officials could not provide a date for when this will happen.", "Three reports by the DOD Inspector General, issued between 2009 and 2013, contained 10 recommendations related to FMS, 8 of which DOD implemented. Examples of actions DOD has taken include the following:\nA 2013 audit found that an FMS contract involved an unallowable markup and made five recommendations to improve contracting quality assurance procedures. For example, the Inspector General recommended that the Deputy Assistant Secretary for Contracting, Office of the Assistant Secretary of the Air Force for Acquisition, assess practices for negotiating contracts and establish quality assurance procedures for contracting officers. In response, the Air Force established additional levels of oversight for contracting personnel and planned to create and implement additional training.\nA 2010 audit found that, although DSCA ensured that funds appropriated for assistance to Afghanistan and Iraq that it processed through the FMS network were used for their intended purpose and were properly reported, improvements were needed to ensure effective management of appropriated funds. Three recommendations were made. For example, the Inspector General recommended that the Director of DSCA perform a review of appropriated funds that have expired to return excess funds to the original fund holders. DSCA agreed to review excess appropriated funds that expired in previous fiscal years and to return unneeded funds.\nIn addition, a 2009 audit evaluated the cash management of the FMS Trust Fund, determined whether internal control was adequate, and reviewed the management control program in place for the FMS Trust Fund. Two recommendations were made, including that DSCA discontinue transferring funds appropriated for the Afghanistan Security Forces Fund and Iraq Security Forces Fund to the Foreign Military Sales Trust Fund, and discontinue the use of administrative fee surcharges for certain transactions. However, DSCA did not concur with either recommendation and has not taken action to implement them.", "At the request of the Secretary of Defense, DOD created the Security Cooperation Reform Task Force (Task Force) in 2010 to study ways to improve security cooperation and security assistance programs, including FMS. The Task Force produced two reports. In its first report, the Task Force made more than 50 recommendations addressed to the Secretary of Defense for improving security cooperation processes. The second report provided information on the status of the recommendations. Our review of these two reports identified 17 recommendations that the Task Force addressed to DSCA. We found that DOD had implemented one recommendation and partially implemented 16 recommendations, as summarized in table 7.\nOne of the Security Cooperation Reform Task Force recommendations was that DOD “maintain an inventory of high-demand and long lead-time items via the Special Defense Acquisition Fund (SDAF).” The SDAF is a revolving fund that allows DOD and State to purchase select types of defense equipment and services in anticipation of partner countries’ future FMS needs. The fund reduces the amount of time it takes the United States to provide some items and enhances U.S. readiness by reducing the need to divert assets to meet urgent partner needs. The best candidates for purchase through SDAF are items that take a long time to purchase, make, and deliver. According to documents provided by DSCA, the use of the SDAF over the last 5 years has facilitated the sale of about $584 million in procurements to purchase equipment for about 45 countries worldwide. For example, the DSCA response shows that the SDAF has been used to purchase a stock of night vision devices that typically have procurement lead-times of more than 18 months. DSCA reports that this has allowed the United States to transfer the devices more quickly to meet the urgent needs of partner countries, including Afghanistan and Iraq. Overall, SDAF has cut FMS procurement lead- times for key equipment by 6 months or more, according to the documents provided by DSCA.", "DSCA officials provided some evidence that actions had been taken to address the remaining 16 recommendations. We consider these recommendations as partially implemented because the evidence indicated that not all aspects of the recommendation were addressed. For some of these recommendations, DSCA officials stated that the recommended measures, or similar measures, would be undertaken as part of the reforms mandated by the fiscal year 2017 NDAA.\nFor example, one of the task force’s recommendations was for DSCA to establish and deploy Expeditionary Requirements Generation Teams (ERGT) to partner countries. The task force recommended the ERGTs to provide rapid support to partner countries and the U.S. country teams in developing high-quality, precise requirements for security cooperation cases. According to DSCA officials, the expeditionary teams were popular with partner country officials who were relatively inexperienced with the FMS process. DSCA officials said that the expeditionary teams have been used only three times because forming and deploying the teams turned out to be expensive and disruptive to the processing of other FMS cases. DSCA was unable to provide documentation for the number of times and for which countries ERGTs were used, what results were obtained from using ERGTs, or a formal determination of the effectiveness of using the ERGTs.\nAnother recommendation called for DSCA to “update the Security Assistance Management Manual (SAMM) and amend the Defense Federal Acquisition Regulation Supplement (DFARS)to direct that implementing agencies—in specific instances when sensitive or classified materials are being transported—use a clear, comprehensive “pre-case transportation assessment” document for assessing transportation and distribution requirements following receipt of a Letter of Request and before issuance of an LOA.” According to DSCA officials, the change to the SAMM was in the final stages of being approved as of May 2017. The DSCA response to our request stated that, contrary to the recommendation, officials were not considering an amendment to DFARS for this purpose.", "Foreign Military Sales totaled about $300 billion between fiscal year 2009 and 2016. In that time, the FMS workforce and workloads of the three military departments have grown significantly, while the DSCA workforce has decreased. Since 2009, DOD has implemented a number of reforms designed to improve its capacity to deliver FMS assistance in a timely manner. However, although performance for the program has improved, two of the performance measures set for the program are generally not being met. DSCA has not sufficiently analyzed the reasons for not meeting these goals. For the third metric established to monitor the timeliness of the delivery phase, DSCA is not collecting data and therefore does not know how it is performing against this goal. Without a comprehensive analysis of the entire FMS process facilitated by the collection of data, DOD is unable to identify the reasons it is not meeting its performance goals and to target efforts to address those reasons.\nFurther, as part of its Vision 2020 strategy, DSCA reported that it would develop a strategic workforce plan by October 2017 but as of July 2017, DSCA had not yet begun developing the plan. Finally, DSCA lacks workload measures for its FMS workforce as a whole and, without such key data, cannot be certain that its workforce plan, when complete, will meet current and emerging program requirements.", "We are making the following four recommendations to DOD: The Acting Director of DSCA should take steps to ensure the collection of data measuring the timeliness of the delivery of equipment and services to recipient countries. (Recommendation 1)\nThe Acting Director of DSCA should analyze data on all performance metrics to better identify deficiencies. (Recommendation 2)\nThe Acting Director of DSCA should develop a workforce plan. (Recommendation 3)\nThe Acting Director of DSCA should develop workload measures for its FMS workforce. (Recommendation 4)", "We provided a draft of this report to DOD and State for their review and comment. DOD’s written comments are reproduced in appendix IV, and its technical comments were incorporated as appropriate. State did not provide comments.\nIn its comments, DOD partially concurred with our first and second recommendations, concurred with our third recommendation, and did not concur with our fourth recommendation.\nIn partially concurring with our first recommendation, DOD stated that it intends to rescind or replace, in the near future, the metric established to measure the time DOD takes to deliver the first items to recipient countries. DOD commented that collecting data on when the first spare part or support equipment is delivered does not provide meaningful data. DOD also stated that DSCA will work with the implementing agencies to establish a metric that will be useful in tracking the delivery of defense articles and services to recipient countries. Based on these comments and following discussions with DSCA officials, we revised the recommendation to clarify the steps DSCA should take.\nIn partially concurring with our second recommendation, DOD stated that it will continue to gather and analyze data on performance metrics for which it has established timelines and where the data are available in security assistance or cooperation data systems. While we agree that these actions are useful for DOD to oversee the execution of security assistance, we continue to believe that DOD needs to improve its analysis of performance data in order to identify the root causes of any delays and determine the steps needed to improve the timeliness of the process.\nIn concurring with our third recommendation to develop a workforce plan for DSCA, DOD stated that DSCA is working with DOD’s Washington Headquarters Services on workforce planning. DOD also stated that DSCA is working to determine hard-to-fill positions and lay out a plan for filling such positions and identifying gaps caused by attrition. In addition, DOD stated that it planned to obtain contractor support by the end of 2017 in order to develop a human capital strategic plan and planned to publish the strategy within 8 months of obtaining contractor support.\nIn disagreeing with our fourth recommendation, DOD noted that there are not enough measureable requirements within a headquarters activity to provide meaningful workload determinations, that the workload at headquarters is independent of FMS volume, and that the broad responsibilities across the agency have little relevance from one area to another. We have clarified the report to reflect that agencies can develop more than one workload measure and to more clearly refer to the development of appropriate workload measures for the agency’s FMS workforce. We also clarified our recommendation to reflect that agencies can have more than one workload measure. However, while we recognize that the work performed by some organizations may be challenging to measure, we continue to believe that a reliable measure of workload is integral to effective workforce planning.\nWe are sending copies of this report to the Secretaries of Defense and State and appropriate congressional committees. In addition, the report is available at no charge on our website at http://www.gao.gov.\nIf you or your staff have any questions concerning this report, please contact me at (202) 512-9601 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix V.", "House Report numbers 114-154 and 114-537 include provisions for GAO to assess the Foreign Military Sales (FMS) process. This report assesses (1) the extent to which the Department of Defense (DOD) has met performance goals with respect to the timeliness of the FMS process, (2) DOD’s FMS workforce planning efforts and fiscal year 2009 through 2016 FMS workload and workforce trends, and (3) the actions DOD has taken to address recommendations made since 2009 to improve FMS. In addition, appendix II provides information about how the timeframes for processing FMS compare with the timeframes for processing certain security cooperation cases authorized under Title 10 of the U.S. Code and various public laws.\nTo perform our assessment, we first identified the principal agencies and components that process FMS. Although 14 U.S. government agencies and DOD components process FMS cases, the Departments of the Army, Air Force, and Navy process 95 percent of all FMS cases. For this reason, our review focuses on the FMS cases processed by these military departments. Because the Defense Security Cooperation Agency (DSCA) also plays a key role in the FMS process, we also included DSCA in our assessment. We also collected data and met with officials of the Defense Logistics Agency and the Defense Contract Management Agency to better understand the role these agencies play in supporting the FMS process. In addition, we collected data from and met with officials from the Department of State, which is responsible for supervising and directing FMS.\nWe reviewed established DSCA and military department performance goals and determined the extent to which those goals were being met, and, where applicable, the factors contributing to agencies not meeting those goals. We interviewed officials from State, DSCA, and the military departments and reviewed guidance in the Security Assistance Management Manual to identify existing performance goals across FMS case development and case execution and to identify the information DSCA and the military departments collect to assess their performance against established goals. We reviewed GAO’s Standards for Internal Control to assess the requirement for managers to compare actual performance data to planned or expected results. For all performance goals that we identified, we interviewed agency officials about how performance was measured according to established goals and collected data on how performance results were communicated throughout the security assistance community. To assess the extent to which established performance goals have been met, we reviewed and summarized performance data and interviewed officials from DSCA. We reviewed data on military department case development performance in terms of mean case development time and DSCA’s anticipated offer date standards for fiscal years 2010 through 2016. For the information presented in table 1, the performance statistics are based upon the following number of cases: We met with Navy and Air Force officials about systems for tracking timeliness of case execution. Where the team’s review of case performance data showed that agencies were not meeting established performance goals, we interviewed agency officials and reviewed data on cases whose processing times surpassed established goals to assess what factors affected case duration. We interviewed officials from DSCA, State, and the military departments to build a qualitative understanding of the factors that have historically affected FMS case development and execution times.\nTo assess DOD’s fiscal year 2009 through 2016 workload and workforce trends, and workforce planning efforts, we obtained fiscal year 2009 through 2016 workload and workforce data from DSCA and the military departments. In referring to the FMS workforce, we refer to DOD officials who process FMS and whose salaries are paid for with funding from the FMS Administrative Surcharge Account and not DOD officials who help process FMS whose salaries are paid for with appropriated funds. We also do not include officials assigned to security cooperation organizations at U.S. embassies throughout the world. The FMS Administrative Surcharge Account is part of the FMS Trust Fund, which is used to collect, among other things, payments from foreign partners for purchases of equipment and services through the FMS system. For DSCA, we asked DSCA officials to provide us with data on the workforce that processes FMS and not the workforce that supports the FMS workforce by providing training and other services. We obtained both authorized and actual FMS workforce data for DSCA and the military departments, as well as some authorized and actual mission critical occupation data. The Army, Air Force, and Navy all use the same process and structure for both FMS and pseudo-FMS cases; for that reason, we collected fiscal year 2009 through 2016 authorized and actual pseudo-FMS workforce data. To address the extent to which DOD’s existing workforce plans address the FMS workforce, we reviewed DOD’s Fiscal Year 2010-2018 and Fiscal Year 2013-2018 strategic workforce plans. In addition, we reviewed DOD’s April 2010 Defense Acquisition Workforce Improvement Strategy, and its Fiscal Year 2016-2021 Acquisition Workforce Strategic Plan to determine the extent to which these plans specifically address the FMS workforce. We also reviewed various military department strategic plans, including the Air Force’s 2010 to 2018 strategic workforce plan, to examine the extent to which they address the FMS workforce. In addition, we reviewed DSCA’s “Vision 2020” strategic plan. We interviewed appropriate officials from DSCA and the military departments.\nTo assess the actions taken by DOD to address recommendations made since 2009 to improve FMS processing, we conducted searches for and queried relevant DOD officials about audits, studies or reports making recommendations or suggesting reforms to improve the FMS process since 2009. We identified and reviewed a total of two prior reports by GAO, one report by the State Inspector General, and three reports by the DOD Office of the Inspector General, as well as two reports by DOD’s Security Cooperation Reform Task Force concerning aspects of the Foreign Military Sales program. To determine the extent to which DOD implemented the recommendations we requested documents providing the details of the implementation including the number of times the recommendation or reform was implemented, the results, and any analysis of the results. We also interviewed DOD officials to ask them about the recommendations and what was done by way of implementation to determine the extent to which they had implemented the recommendations. The ratings we used in this analysis are as follows: “Not Implemented” means DOD provided no evidence that the recommended actions were taken. “Partially Implemented” means that DOD provided evidence that some portion of the recommended actions was taken. This includes recommendations for which DOD provided only testimonial evidence that the recommendation had been implemented. “Implemented” means that DOD provided evidence that the recommended actions were taken such as changes in policy, the collection and use of data, records of transactions, results of initiatives conducted, or records of reforms implemented. We discussed the recommendations contained in these reports with appropriate DSCA officials. In addition, we reviewed a memo discussing the status of DSCA’s Security Cooperation Enterprise Solution and met with DSCA officials to discuss the status of the system.\nWe collected the data used in our analyses from a number of DOD systems. The data used to assess the extent to which DOD has met performance goals with respect to the timeliness of the FMS process were collected from DSCA’s Defense Security Assistance Management System (DSAMS), and the Army’s Centralized Integrated System- Integrated Logistics system. The data used to assess workload and workforce trends were collected from DSCA’s DSAMS, and DSCA’s Business Objects Enterprise Reporting System and BeSMART systems, as well as the Air Force’s Security Assistance Manpower Requirements system, and DOD’s Defense Civilian Personnel Data System. To assess the reliability of the performance, workload, and workforce data collected, we reviewed existing information about the data and the systems that produced them. We also interviewed agency officials knowledgeable about the data and the systems that produced the data using a standard set of questions. We found that the data provided to us were generally reliable for purposes of our analysis, but that there were also some limitations in the use of the data. For example, the military departments differ in the definition of a “case line,” which makes it impossible to compare case line workload data by military department. We discuss these limitations, as appropriate, in the main part of the report.\nWe conducted this performance audit from May 2016 through August 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "The United States provides military equipment and training to partner countries through a variety of programs. Foreign partners may pay the U.S. government to administer the acquisition of materiel and services on their behalf through the FMS program. The United States also provides grants to some foreign partners through the Foreign Military Financing (FMF) program to fund the partner’s purchase of materiel and services through the process used for FMS. In recent years, Congress has expanded the number of security cooperation programs to include several new programs with funds appropriated to the Department of Defense (DOD), as well as administered and implemented by DOD, that focus on building partner capacity. In this report, we refer to these programs as “pseudo-FMS” cases. FMS and pseudo-FMS transactions follow the same process, but the roles, responsibilities, and actors involved can differ. One important difference highlighted by DOD and Department of State (State) officials is that with FMS, there is a much greater level of involvement on the part of the partner country in defining requirements and developing the Letters of Offer and Acceptance (LOA). As a result, the amount of time it takes to develop FMS cases on average will tend to exceed the time it takes for pseudo-FMS cases. According to DOD and State officials, there may also be differences in the types of equipment that tend to be provided via FMS as opposed to pseudo-FMS cases. For example, pseudo-FMS is not typically used to provide complex weapons systems with long production cycles such as advanced fighter aircraft.\nAccording to DOD and State officials, pseudo-FMS cases are often prioritized because the funds used for these programs generally are only available for obligation for 1 or 2 years, depending on the program. These officials note that funds for traditional FMF programs do not have such time constraints. As a result, pseudo-FMS cases are, on average, processed faster than FMS cases. Army and Air Force officials noted that pseudo-FMS cases tend to be more labor intensive than FMS cases for several reasons. For example, according to Air Force officials, pseudo- FMS cases often involve items that frequently require a new contract because the item is not part of the Air Force inventory. For that reason, Air Force officials noted that they cannot modify an existing contract to add additional items. Army officials said that pseudo-FMS cases require more work because of the nature of expiring funds. This requires an acceleration of almost all their processes.\nFigure 3 shows the average number of days it took to complete the case development phase, which is measured by the processing time from “Letter of Request Receipt” to “Document sent to purchaser.”", "Tables 9, 10, and 11 present Army, Air Force, and Navy workload data using six of the seven measures. It shows that the FMS and pseudo-FMS workload of each of the services generally increased from fiscal years 2009 through 2016.\nThe Defense Security Cooperation Agency (DSCA) did not provide a breakout of official sales data by military department but did provide these data in the aggregate. These data are seen in Table 12.", "", "", "", "In addition to the contact named above, Hynek Kalkus (Assistant Director), Jeff Phillips (Assistant Director), Claude Adrien (Analyst-in- Charge), Wesley Collins, Lynn Cothern, Jessica Mausner, and Jose M. Pena III made significant contributions to this report. Ashley Alley, Martin de Alteriis, and Mark Dowling provided technical assistance." ], "depth": [ 1, 2, 2, 2, 2, 1, 1, 2, 2, 1, 2, 2, 2, 3, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_title", "h3_full", "h3_full", "", "", "h0_full", "h1_full", "h1_full", "h1_full", "h5_full h0_title h2_full", "h0_full h2_full", "", "", "", "h0_full h3_full h1_full", "", "h5_full", "h5_full h4_full h2_full", "", "", "", "", "", "" ] }

{ "question": [ "To what extent has DOD reached its goals regarding FMS requests?", "What is the first FMS metric?", "How close is this metric to DOD's goal?", "What is the second FMS metric?", "What is the third FMS metric?", "Why has DOD been unable to meet its goals?", "How does the FMS workload compare to DSCA's FMS workforce?", "To what extent has the size of the workforce affected timeliness?", "What would the strategic workforce planning framework suggest about this problem?", "Why is DSCA unable to balance its workload with its workforce?", "In what way has DOD addressed the FMS recommendations?", "To what extent has DOD addressed the DOD task force's recommendations?", "How has DOD implemented the task force's recommendations?", "What characterizes DSCA's data standardization efforts?", "How is U.S. national security affected by foreign military sales?", "How is the FMS program administered?", "What concerns exist regarding the FMS process?", "Why did GAO assess the FMS process?", "What does this report assess?", "How did GAO collect data for this report?", "What changes did GAO recommend to DSCA?", "How did DOD respond to the recommendations?", "To what extent did the DOD response affect GAO's stance?" ], "summary": [ "The Department of Defense's (DOD) performance on Foreign Military Sales (FMS) has improved, but DOD is not meeting two out of three performance metrics for the timely processing of FMS requests and does not collect data for the third metric.", "The first metric tracks the time taken from the receipt of a country's request for an item to when a Letter of Offer and Acceptance (LOA) is sent to the partner country for approval.", "As shown in the table, this metric is based on the complexity of the requests, and although DOD's timeliness has improved, it is still short of the 85 percent goal.", "The second missed metric is the time the Defense Security Cooperation Agency (DSCA) takes to review and approve FMS cases.", "The third metric is the time DOD takes to deliver the first item to the recipient country; however, DSCA does not collect data on this metric and therefore does not know if it is meeting the goal.", "DOD officials cited several factors that adversely affect their ability to meet the timeliness goals, such as changing customer requirements or delays due to policy concerns regarding particular sales. However, because DOD has not collected data on one metric and has not identified the underlying causes for not meeting its goals, it does not know the extent to which these or other factors are impacting program delivery.", "During fiscal years 2009 through 2016, the FMS workload increased and while the three military services' FMS workforces generally increased, DSCA's FMS workforce decreased.", "DSCA officials do not believe the size of their workforce has impacted timeliness; but the data provided to GAO shows that DSCA's timeliness has decreased as the size of its FMS workforce has decreased.", "A key principle of strategic workforce planning is that an agency's workforce must be aligned with its workload.", "However, DSCA lacks workload measures for its FMS workforce as a whole, and therefore cannot ensure that its workforce is sufficient to meet programmatic goals. Moreover, despite a DOD requirement, DSCA has not yet developed a workforce plan that could help identify any skill or competency gaps in its workforce.", "DOD has a taken some steps to address recommendations to improve the FMS process, but additional actions are still needed. For example, DOD implemented three of GAO's prior recommendations, such as establishing performance metrics, but has yet to establish a metric to assess timeliness of the acquisition phase.", "DOD has partially implemented several of the recommendations made by an internal DOD task force.", "For example, DOD has partially implemented the recommendations to enhance the skills of the FMS workforce.", "In addition, DSCA's efforts to standardize data that are maintained separately by the military services on a new information system have fallen behind schedule.", "U.S. national security benefits from the timely provision of military equipment and services that enable foreign partners and allies to build or enhance their security capability.", "State has overall responsibility for the FMS program, while DOD administers the program through DSCA and implementing agencies in the military departments.", "Since 2009, DSCA has taken steps to improve the timeliness of the FMS process, but concerns remain that the delivery of FMS equipment is not timely, leaving foreign partners waiting for items needed to achieve security objectives.", "House and Senate committees requested that GAO assess the FMS process.", "This report assesses (1) the extent to which DOD has met FMS timeliness goals, (2) FMS workload and workforce trends, and (3) actions DOD has taken to address recommendations to improve the FMS process made by GAO and others.", "GAO analyzed performance data for FMS from 2012 to 2016; workforce and workload data from the military departments; reviewed relevant DOD regulations and policies for FMS; and interviewed DOD officials.", "GAO recommends that DSCA (1) collect data on delivery of items or services, (2) analyze FMS performance metric data to determine why goals have not been met, (3) develop a DSCA workforce plan, and (4) develop DSCA workload measures.", "DOD partially concurred with the first two recommendations, concurred with the third, and did not concur with the fourth.", "GAO continues to believe action is needed as discussed in the report." ], "parent_pair_index": [ -1, 0, 1, 0, 0, -1, -1, 0, 0, 2, -1, -1, 1, -1, -1, 0, -1, -1, 0, 0, -1, 0, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1, 5, 5, 5 ] }

{ "title": [ "Background", "Overview of Credit Union and Deposit Insurance Markets", "American Share Insurance", "Federal Law and Regulation I", "FAST Act and Federal Home Loan Bank System", "Regulatory and Other Assessments Indicate ASI Has Had Adequate Reserves and Strong Claims- Paying Ability", "Regulators Have Not Cited Concerns about ASI", "Independent Actuarial Reviews Found That ASI Had a Strong Financial Ability to Pay Claims under Different Scenarios", "Capital Adequacy", "Loss Reserves", "Privately and Federally Insured Credit Unions Had Similar Regulatory Ratings, but Differed in Geographic and Deposit Concentration", "Credit Unions We Reviewed Largely Complied with Disclosure Requirements, but Some Disclosure Provisions Lack Specificity", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Reasons Credit Unions Chose Private or Federal Deposit Insurance", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Credit unions can be federally or state-chartered, which determines their primary regulator for safety and soundness and also their options for deposit insurance. Federally chartered credit unions are regulated by NCUA and must be federally insured by the National Credit Union Share Insurance Fund, which is administered by NCUA and provides up to $250,000 of insurance per depositor for each account ownership type. State-chartered credit unions are usually regulated by credit union supervisors in their respective state. These credit unions can be federally insured (and thus also supervised) by NCUA or, in some states, can choose to be privately insured. As of February 2017, ASI was the only company providing private primary deposit insurance. ASI provides up to $250,000 of insurance per account (rather than per depositor for each ownership type, as with NCUA). Deposit insurance covers deposit products such as checking and savings accounts, money market deposit accounts, and certificates of deposit. It does not cover other financial products, such as investments in stocks, bonds, or mutual funds.", "The vast majority of credit unions are federally insured. As seen in figure 1, in 2015, there were more than 6,000 federally insured credit unions with more than $1 trillion in insured deposits, and 125 privately insured credit unions with $13 billion in insured deposits.\nThe mix of asset sizes is largely similar for federally and privately insured credit unions, and the majority of both have assets of less than $100 million. Between 2011 and 2015, the number of federally and privately insured credit unions declined by about 15 percent, due largely to mergers and liquidations. Some credit unions chose to convert between private and federal deposit insurance and appendix II contains information about the reasons that some credit unions switch insurers.", "ASI is a private, not-for-profit company, headquartered in Ohio. The company is governed by Ohio law and licensed by the Ohio Department of Insurance, and its primary regulators are the Ohio Departments of Insurance and Commerce, although regulators in the other eight states in which ASI operates also have an oversight role. ASI has provided deposit insurance since 1974 and the company is owned by the credit unions for which it provides deposit insurance. The company does not normally charge premiums, which are common in the insurance industry, but instead requires its credit unions to maintain a capital contribution with the company, adjusted annually, equal to a rate of 1.3 percent of the credit union’s total insured deposits. In addition, ASI has the authority to charge special premium assessments under certain conditions with regulator approval, as it did in 2009–2013.\nASI is overseen by a board of directors that is made up of six chief executives from the credit unions it insures, as well as one ASI management representative. Quarterly, according to ASI management, ASI’s board of directors meets to review and monitor the company’s financial statements, investment activities, risk management practices, information technology issues, and sales and marketing activities. An independent auditor annually audits and renders an opinion on ASI’s consolidated financial statements prepared in accordance with generally accepted accounting principles. Additionally, ASI retains an independent actuarial firm to conduct a capital adequacy study (at least every 3 years), annually review and help estimate loss reserves, and render an annual actuarial opinion on the adequacy of its loss reserves.", "Federal law requires that any depository institution that does not have federal deposit insurance clearly and conspicuously disclose that the institution is not federally insured. CFPB and the Federal Trade Commission (FTC) are the federal entities responsible for enforcing these requirements. In December 2011, CFPB issued an interim final rule restating the implementing regulation, which had been promulgated by FTC. This regulation, known as Regulation I, contains the disclosure requirements for credit unions that do not have federal deposit insurance. CFPB published a final rule in April 2016, which adopted its 2011 interim final rule without changes.\nRegulation I requires disclosure that an institution does not have federal deposit insurance (1) at locations where deposits are normally received (stations or windows) except enumerated exceptions, (2) on the institution’s main Internet page (website), (3) in all advertising except enumerated exceptions, and (4) in periodic statements and account records. Regulation I generally requires depository institutions to obtain a written acknowledgment from depositors that the institution does not have federal deposit insurance.", "The FAST Act amended the Federal Home Loan Bank Act to permit privately insured credit unions to apply for membership in a Federal Home Loan Bank (FHLBank) and, if approved, obtain the benefits of membership, including access to loans (known as advances). The FHLBank System is a government-sponsored enterprise, composed of 11 regional banks. Federally insured credit unions have been allowed to apply for membership since 1989; other members of the FHLBank System include commercial banks, thrifts, and insurance companies. The FHLBank of Cincinnati approved ASI as a member in June 2011.\nThe Federal Housing Finance Agency (FHFA) regulates the FHLBanks and issued a proposed rule in September 2016 to implement provisions of the FAST Act. By law, certain types of prospective FHLBank members must have at least 10 percent of their assets in residential mortgage loans to be eligible. As of December 31, 2015, FHFA estimated that 78 of the 125 privately insured credit unions met this eligibility criterion. As of December 31, 2016, the FHLBanks had approved 16 privately insured credit unions for membership.", "", "The Ohio Department of Insurance’s most recent examination of ASI, which covered 2008–2012, did not identify any deficiencies in ASI’s financial condition and determined that ASI’s reserves for losses were consistent with Ohio’s legal requirements and were adequate and appropriate. According to Ohio Department of Insurance staff, the department has not identified any issues and was not aware of any problems with ASI’s loss reserves in at least the past 10 years. They noted that ASI is classified as a nonpriority insurer by the department, which means that the company is considered low-risk and does not require enhanced oversight. This determination was based on factors such as ASI’s Insurance Regulatory Information System (IRIS) ratios and management competency. As a result of this classification, the department conducts full-scope examinations of ASI every 5 years, rather than annually or every 3 years as conducted for insurers deemed riskier.\nOhio Department of Insurance staff told us that as part of their full-scope examinations every 5 years, the examination team reviews ASI’s audited financial statements, analyzes estimates for loss reserves, and evaluates any risks to the company by reviewing legal issues, corporate governance, and management. In particular, the department’s actuary performs an analysis of ASI’s information to derive the department’s own estimate for ASI’s loss reserves. The department compares its derived estimate to ASI’s held reserves, as well as to the range of estimates reported by ASI’s third-party actuarial firm. Staff said that if the department were to identify significant differences in the estimates, it would request additional information from ASI to understand the reasons for the differences. Additionally, the department uses the IRIS ratios to aid in evaluation of the adequacy of ASI’s loss reserves. According to representatives from the National Association of Insurance Commissioners (NAIC), the procedures the department uses for assessing ASI’s capital, including its loss reserves estimates, are consistent with NAIC’s guidelines for conducting such assessments.\nOhio Department of Insurance staff also told us that on an annual basis they review the statement of actuarial opinion of ASI’s loss reserve estimates (as rendered by the third-party actuarial firm and discussed later in this report) and ASI’s audited financial statements, and also compute financial ratios. According to the staff, as part of this review, analysts review ASI’s capital position and monitor ASI’s asset quality to ensure they did not deteriorate significantly in a given period. Under Ohio law, ASI is required to maintain at least $5 million in capital, and as of December 31, 2015, ASI’s capital was roughly $219 million. In addition, Ohio Department of Insurance staff said they consider any risks that could affect ASI’s financial condition. For example, they said they evaluate risk in terms of growth, underwriting, how the company invested its assets, and any legal concerns. In addition, the department analyzes the risk-based capital ratio. They also said that a company’s risk-based capital ratio must be at least 200 percent of its calculated authorized control level risk-based capital. From 2009 through 2015, according to examination records from the Ohio Department of Insurance, ASI’s risk- based capital ratio was well above this standard. Ohio Department of Insurance staff told us that ASI management is very transparent about disclosing risk that new credit unions may pose to the company. The staff said that they engage in quarterly discussions with ASI management about the company’s quarterly financial statements and the credit unions for which ASI is considering providing deposit insurance coverage.\nOhio Department of Insurance staff said that their concern with ASI, as with any insurer, generally has been the risk posed by macroeconomic issues. For example, they stated fluctuations in the economy could pose significant concerns for insurers such as ASI. Therefore, a decline in the economy could have a significant (negative) impact on a company like ASI. The staff further noted that while the frequency of claims for losses for ASI would be low, the severity of such losses could potentially be high, which could pose a risk to the company. According to ASI management, roughly 2 percent of its privately insured credit unions failed during or since the 2007–2009 financial crisis (as compared to roughly 2 percent of federally insured credit unions, according to NCUA). In 2009, ASI reported that almost all of its loss expense was related to just two of its insured credit unions, both in Nevada. One of these credit unions merged with another. The second troubled credit union had approximately $1 billion in total assets when it received assistance from ASI. Department staff told us that during and just after the financial crisis, they monitored ASI more frequently and met monthly with ASI management to discuss the company’s exposures and potential losses, but the department never determined there was a need to conduct an additional full-scope examination.\nIn addition to the Ohio Department of Insurance’s oversight, the Ohio Department of Commerce annually performs a risk-based safety and soundness examination of ASI in collaboration with the eight other state credit union supervisors that regulate privately insured credit unions. However, the Ohio Department of Commerce could not share with us the results of these examinations because, as interpreted by the department, it is prohibited by law from providing details about its examination findings to third parties other than those specified in the regulations. According to Ohio Department of Commerce staff, their annual safety and soundness examination of ASI focuses on risk areas similar to those reviewed during the examination of a credit union. As a part of this process, the Ohio Department of Commerce reviews ASI’s audited financial statements, statement of actuarial opinion, and reports from ASI’s internal system used to monitor insured credit unions. Ohio Department of Commerce staff told us that on a quarterly basis, examiners review quarterly financial statements and monitor any troubled credit unions that ASI insures.\nAs well as participating in the Ohio Department of Commerce’s annual examination of ASI, the eight other state credit union supervisors told us that they monitor ASI’s financial condition on an annual or quarterly basis. This process generally involves a review of ASI’s annual audited or quarterly unaudited financial statements and its actuarial reports. None of the eight state supervisors with whom we spoke raised concerns about ASI’s financial condition at the time of our review. But one state credit union supervisor expressed concern that during volatile economic times, ASI might not be able to cover losses once it had exhausted its capital because ASI is not backed by the full faith and credit of the U.S. government and has no access to state guaranty funds. According to the National Conference of Insurance Guaranty Funds—whose funds provide protection for various property and casualty lines of insurance written by its member insurers––private deposit insurers are not covered. Additionally, representatives from the state credit union supervisors also told us that none of the states in which ASI operates, including Ohio, had a state guaranty fund to assist in covering losses or credit union member deposits if ASI ran into financial difficulties. However, in the event of potential impairment of ASI’s funding, Ohio law allows ASI to charge a special assessment, with regulator approval, against the credit unions it insures.\nMoreover, FHFA reviews information about ASI as part of its oversight of the FHLBanks. As noted earlier, ASI is a member of the FHLBank of Cincinnati and bank representatives told us that they monitor ASI’s financial condition by reviewing ASI’s annual audited financial statements, statutory quarterly financial filings, and reports on ASI’s loss reserves. FHLBanks protect against credit risk on advances by requiring members to pledge collateral. Representatives from the FHLBank of Cincinnati told us ASI, like all FHLBank members (including privately insured credit unions), must pledge collateral to receive advances. According to FHFA staff, while FHFA may review ASI information as part of its supervision of FHLBanks, FHFA has no supervisory authority over ASI and no plans to independently assess the company’s financial condition. The FAST Act does require ASI to provide FHFA a copy of its annual audit. The audit must be conducted by an independent auditor and must include an assessment by the auditor that ASI follows generally accepted accounting principles and has set aside sufficient reserves for losses. This FAST Act requirement allows FHFA to review the independent auditor’s opinion to confirm that ASI has met these requirements. FHFA staff told us FHFA planned to use the ASI audited financial statements to prepare for its next annual examination of the FHLBank of Cincinnati.\nASI has several processes in place to mitigate risk and help prevent and control losses to the company. ASI management told us that applicant credit unions undergo an insurability assessment that includes a review of the credit union’s financial data, corporate governance, and CAMEL rating, and an evaluation of its operating policies and procedures. Additionally, the company continuously monitors the financial condition of the credit unions the company insures. ASI management said that quarterly they compare their credit unions against federally insured credit unions in terms of capital adequacy, earnings, and liquidity. The company conducts an examination of about 70 percent of its credit unions annually, and the rest on a 2–3 year cycle. ASI management noted that they conduct most of their examinations jointly with state credit union supervisors. For credit unions with at least $100 million in assets, ASI has a process of enhanced monitoring, which includes quarterly reviews, as well as on-site reviews annually or semiannually. As needed, ASI can issue a corrective action, such as advancing funds to an insured credit union on a short-term basis to aid in the credit union’s liquidity needs.", "ASI retains an independent actuarial firm to conduct analyses for the company. The actuarial firm conducts a study of the adequacy of ASI’s capital every 3 years, which looks at the company as a whole and its ability to pay present and future claims for losses experienced by the credit unions it insures, under different economic scenarios; and an annual study of ASI’s loss experience to help estimate loss reserves and render an annual statement of actuarial opinion on the adequacy of its loss reserves.", "The four most recent capital adequacy studies, which covered calendar years 2009–2015, indicated that ASI’s ability to pay claims was strong. The 2010 capital adequacy study—conducted near the end of the financial crisis—indicated ASI’s ability to pay claims was strong, but it also reported that ASI’s ability to pay claims had decreased. For the most recent capital adequacy study, the actuarial firm’s analysis found that ASI’s ability to pay claims was strong under each of three economic scenarios (expansion, recession, and depression). For example, the actuarial firm estimated the probability that ASI could withstand a 1-year and 5-year recession as 99.7 percent and 97.3 percent, respectively. According to staff from the actuarial firm, the capital adequacy study serves as a financial model to assist ASI management in its decision making. They noted ASI’s management is as important as the study’s findings because even with adequate capital, a company could fail based on mismanagement or fraud, which cannot be modeled.\nAccording to staff from the actuarial firm, ASI could face difficulty paying claims for losses if one or more of its largest credit unions were to suffer severe losses. The firm reported that as of December 31, 2015, ASI had $218 million in assets (cash and investments) readily available to pay claims, but as of year-end 2015, 14 of its credit unions each had more than that amount in total insured deposits. However, the actuarial staff told us they factored this risk into their analysis and that the larger the credit union (by asset size), the smaller the probability of a severe loss (expressed as a percentage of the credit union’s total assets).\nAdditionally, the actuarial firm analyzed the capital adequacy of ASI’s wholly owned subsidiary, Excess Share Insurance Corporation, which can affect ASI’s financial condition because ASI offers it various funding sources and a guarantee. The actuarial firm’s 2016 study showed the subsidiary’s ability to pay claims under the three economic scenarios was strong. ASI management told us they believe the risk posed by its subsidiary to be small, and that multiple adverse events would have to occur simultaneously for it to impair ASI’s financial condition. To transfer some of this risk, the subsidiary carries a reinsurance policy for its excess insurance line of business.\nThe actuarial studies also noted that ASI has other sources of funding to help pay claims, including special assessments, lines of credit, and increases to the capital contribution rate it charges. For example, during and after the 2007–2009 financial crisis, ASI (1) charged its insured credit unions a special premium assessment each year in 2009–2013; (2) borrowed $22 million from its line of credit to pay initial claims in 2009 (which according to ASI management was repaid in full within 6 months); and (3) increased the credit unions’ capital contributions rate in 2010, from a rate ranging between 1 percent and 1.3 percent to a rate of 1.3 percent of total insured deposits, which ASI management told us enhanced the company’s capital adequacy.", "Each of the actuarial firm’s annual loss reserve studies conducted during 2011–2015 found that ASI’s reserves for losses were reasonable and consistent with amounts computed based on actuarial standards of practice, and met the requirements of Ohio insurance laws. ASI maintains a reserve for losses to cover its estimated unpaid liability for reported and unreported loss claims. To assist management with its determination of loss reserves, the actuarial firm annually analyzes ASI’s loss reserve experience and reviews the assumptions ASI uses to determine its reserves for losses. The reserve studies identified some potential risks—for example, the possibility that some of ASI’s credit unions could cancel their deposit insurance coverage and withdraw their capital contributions, which would reduce ASI’s capital (but also reduce its exposure to potential losses).\nIn its 2016 loss reserve study, the actuarial firm stated that it did not believe that significant risks and uncertainties were present that could result in material adverse deviation of ASI’s loss reserves. The firm based its conclusion on the presence of certain favorable factors that offset the risks and uncertainties identified in previous years. These factors included the low ratio of the company’s held reserves to its capital, and that ASI’s held reserves were at the high end of the actuarially- determined range of reserves estimated to be reasonable. However, the actuarial firm staff stated that the absence of such risks and uncertainties did not imply that factors could not be identified in the future that could have a significant influence on ASI’s reserves.", "ASI’s risk profile depends in large part on the financial condition of the privately insured credit unions that it insures. We reviewed the CAMEL ratings (which regulators use to rate a credit union’s performance and risk profile) of privately insured credit unions, and compared them to those of federally insured credit unions. We found that, in the aggregate, privately and federally insured credit unions had similar CAMEL ratings during 2006–2015. For example, as seen in figure 2, roughly the same percentages of privately and federally insured credit unions were rated satisfactory (CAMEL ratings of 1 or 2). For both groups, the percentage of troubled credit unions (CAMEL ratings of 4 or 5) peaked in 2011 and then declined. These similarities remained roughly the same (for both satisfactory and troubled credit unions) when we reviewed the percentage of assets in credit unions by CAMEL rating rather than percentage of individual credit unions.\nFor further review, we also selected one indicator in each of five categories––capital adequacy, asset quality, loss coverage, profitability, and liquidity––regulators commonly use to assess the financial health of credit unions. The median values for all of these indicators were similar for privately and federally insured credit unions from 2011–2015.\nThe sizes of privately and federally insured credit unions also were roughly similar. In 2015, the majority of insured credit unions had less than $100 million in total assets (see table 1). For privately and federally insured credit unions, respectively, the median total assets were roughly $34 million and $27 million, and the median numbers of members were roughly 4,300 and 3,200.\nHowever, our analysis shows that privately insured credit unions have higher geographic and deposit concentration than federally insured credit unions, which can present risks. Specifically,\nPrivately insured credit unions are much less geographically diverse than federally insured credit unions because they operate solely in nine states. Forty-two percent of ASI-insured credit unions are in Ohio and an additional 30 percent are in Illinois (18 percent) and Indiana (12 percent). This geographic concentration may create risks for ASI because economic downturns are sometimes concentrated in particular regions of the country. NCUA staff noted that previous private deposit insurers have failed mostly as a result of severe regional economic shocks (or in some cases a single major fraud).\nThe total insured deposits of privately insured credit unions are concentrated in a much smaller number of credit unions than for federally insured credit unions. In 2015, ASI’s 2 largest credit unions (by total assets) represented 15 percent of its total insured deposits, and its 10 largest represented 54 percent of its insured deposits. In comparison, NCUA’s 10 largest insured credit unions (by total assets) made up 15 percent of total insured deposits in 2015. This concentration of insured deposits may be viewed as a risk to ASI because, as discussed previously, ASI could face difficulty paying claims for losses if one or more of its largest credit unions were to suffer severe losses.", "Privately insured credit unions we reviewed largely complied with requirements to disclose that they are not federally insured. But a lack of specificity in Regulation I provisions that relate to disclosure location (drive-through windows), format (signage dimensions and font size), and advertising (printed materials) may have contributed to some variations we saw in compliance with disclosure rules.\nDisclosure signage at teller and drive-through windows. The 47 privately insured credit unions we visited were largely in compliance with CFPB’s requirement for disclosures at each station or window where deposits are normally received. For example, 45 of the 47 credit unions displayed a disclosure at teller windows. Of the two that did not display signs at teller windows (both of which were small employer-based credit unions), one had a disclosure on the front door and the other had a disclosure on a bulletin board outside the credit union, but still within the employer’s building. However, 7 of the 17 credit unions we visited that had drive-through windows did not have disclosures at the window (see fig. 3). While Regulation I states disclosures are needed at each station or window where deposits are normally received, it does not specifically cite drive-through windows. In contrast, the regulation specifically excludes certain other places of deposit from requiring the disclosure. For example, it states that disclosure is not needed at automated teller machines or point-of-sale terminals. CFPB staff told us that, in their view, a plain reading of Regulation I would include a drive-through window as a “station or window where deposits are normally received,” and thus require disclosure.\nWe also observed that the dimensions and font sizes of the disclosure signage varied among credit unions, with some having signage too small to be easily read, or not placed conspicuously. At 28 of 47 credit unions we visited the signs measured smaller than 3 by 7 inches. The sign we commonly observed measured 2-¼ inches by 4 inches, which is larger than a business card, but smaller than an index card (see fig. 4). Additionally, in more than half the credit unions we visited, we found the font size of the disclosures was too small to be easily read when standing at the teller window. Further, at 7 of 47 credit unions, disclosures were placed where they were not easily noticed. For example, one was placed on a windowsill across the room, another at a teller station covered with other materials, and another at the bottom of an 8 by 10 inch sign containing a lot of other information about the credit union’s policies.\nCFPB does not provide official signage to privately insured credit unions and Regulation I does not specify signage dimensions or font size requirements. Instead, Regulation I states the disclosures must be “clear and conspicuous and presented in a simple and easy-to-understand format, type size, and manner” but does not provide definitions, parameters, or illustrative examples of what would constitute simple and easy to understand. By comparison, NCUA provides official signs to federally insured credit unions to display at each station or window where insured account funds or deposits are normally received. NCUA’s regulation notes credit unions should not alter the font size of the official sign when used for this purpose. The sign itself, which measures 3 by 7 inches. can be ordered and downloaded from NCUA’s website.\nDisclosures on websites. We also reviewed 102 privately insured credit union websites and found that almost all of these websites complied with CFPB’s requirement to disclose on their main Internet page that the institution is not federally insured. Three credit unions did not have the disclosure on their main Internet page (each of the three had the disclosure on a different page of its website). However, on many websites (28 of 99) the disclosures were not easily seen or readable. For example, the overall space the disclosure occupied or its placement next to or between colorful or larger graphics made it difficult to notice the disclosures in these cases. Additionally, we observed that more than half the websites (60 of 99) used a font size that was smaller than that used for the other text on the same webpage (see fig. 5).\nCFPB’s Regulation I states that the website disclosures, like all other required advertising and premises disclosures, should be “clear and conspicuous and presented in a simple and easy to understand format, type size, and manner,” but CFPB does not define these terms or specify font size requirements for websites. In comparison, NCUA’s regulation for federally insured credit unions specifies that the disclosure must be in a size and print that is clearly legible and no smaller than the smallest font size used elsewhere.\nDisclosures in advertising (printed materials). On our visits to privately insured credit unions we obtained printed materials (such as brochures, promotional flyers, and newsletters which could be considered advertisements), and 8 of the 36 credit unions from which we obtained samples of printed materials had at least one item that did not contain a disclosure. Regulation I states “all advertisements” except those specifically enumerated must disclose a lack of federal deposit insurance, but the regulation does not define what constitutes an advertisement. CFPB staff told us the agency does not have any guidance or commentary on what constitutes “all advertisements.” In comparison, NCUA’s regulation for federally insured credit unions defines advertising, and also provides examples. In NCUA’s regulation, an advertisement is “a commercial message, in any medium, that is designed to attract public attention or patronage to a product or business.” Furthermore, NCUA’s regulation specifies that advertising includes print, electronic, or broadcast media, displays and signs, stationery, and other promotional material.\nDisclosures in periodic statements, account records, and signature cards. Representatives of all nine state credit union supervisors with whom we spoke told us that privately insured credit unions were generally compliant with the requirements to (1) disclose on periodic statements and certain other account records a lack of federal deposit insurance, and (2) obtain written acknowledgment from depositors on this lack of federal insurance, as is generally required. The state credit union supervisors said they checked a sample of periodic statements, account records, and signature cards for new accounts as part of their routine examinations of privately insured credit unions.\nReviews of compliance. Overall, compliance levels with disclosure requirements have improved since our 2003 review of privately insured credit unions, which included an assessment of their compliance with federal disclosure rules. In 2003, we found that 36 of 57 credit unions had the required disclosures on premises. Similarly, in 2003, 39 of 78 websites and 93 of 227 printed materials we reviewed had the required disclosures.\nCFPB has not had any findings, observations, or evaluations regarding privately insured credit unions’ disclosures. CFPB staff told us the agency has not received any complaints related to private deposit insurance. CFPB staff said they have reviewed privately insured credit unions’ websites at a very informal level and the websites seemed to be complying with Regulation I. As previously noted, CFPB shares enforcement authority for Regulation I with FTC. CFPB staff told us that state credit union supervisors and attorneys general also have the authority to enforce Regulation I, as necessary.\nThe state credit union supervisors in the nine states with privately insured credit unions similarly told us that compliance with disclosure requirements has not been a problem in recent years. They said that their routine examinations of state-chartered credit unions check for disclosures on premises, on websites, in advertising materials, and, as noted earlier, by reviewing selected periodic statements, account records, and signature cards. They said that if examiners observe noncompliance with disclosure requirements, they cite it as an examination finding and expect the credit union to promptly correct the issue and display the proper signage or disclosure.\nWhile we generally found that compliance levels were high, Regulation I may be interpreted and enforced differently by different credit unions and state regulators. Without clarity on whether or not drive-through windows are required to have disclosures, some credit unions may continue to not display them at these windows. Additionally, without more clarity or guidance around dimensions and font sizes for disclosures, the disclosures may be too small to be easily read or noticed. Further, there may continue to be confusion about what constitutes “advertising” and whether certain printed materials are required to include disclosures. As a result, the state credit union supervisors and the credit unions themselves may face challenges consistently monitoring and complying with Regulation I. In turn, credit union members may not always be consistently and adequately informed that deposits are not federally insured.", "Deposit insurance helps protect depositors from losing their money in the event a financial institution fails. By law, any institution that does not have federal deposit insurance must clearly and conspicuously inform consumers that the institution is not federally insured and privately insured credit unions we reviewed largely complied with disclosure requirements. However, the instances we observed of missing disclosures or disclosures that were too small to be easily read or inconspicuous suggest that the lack of specificity in some provisions of Regulation I has led to inconsistencies in interpretation. By clarifying Regulation I, CFPB would facilitate state credit union supervisor monitoring and credit union compliance and would better ensure that consumers were informed that their deposits are not federally insured.", "We are making three recommendations to help state credit union supervisors and privately insured credit unions better interpret Regulation I and inform consumers when an institution is not federally insured. CFPB should issue guidance to (1) clarify whether drive-through windows require disclosures; (2) describe what constitutes clear and conspicuous disclosure, including minimum signage dimensions and font size for disclosures; and (3) explain and provide examples of which communications are advertising.", "We provided CFPB, FHFA, and NCUA with a draft of this report for review and comment. In its written comments, reproduced in appendix III, CFPB agreed with our recommendations. CFPB noted that the agency recognizes that providing guidance clarifying Regulation I may improve privately insured credit unions’ understanding of and compliance with the federal disclosure requirements. Additionally, CFPB stated that the agency intends to explore options that will most effectively provide guidance regarding Regulation I, such as issuing a bulletin that could be published in the Federal Register or posted on the agency’s website. CFPB, FHFA, and NCUA also provided technical comments, which we incorporated as appropriate. We also provided selected relevant portions of the draft to ASI, its third-party actuarial firm, the Ohio Departments of Insurance and Commerce, and the other eight state credit union supervisory authorities for their technical review, and we incorporated their comments as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, agencies, and other interested parties. In addition, this report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8678 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "This report (1) discusses regulatory and other assessments of American Share Insurance (ASI), the sole private deposit insurer, and (2) examines the level of compliance with disclosure requirements by credit unions that do not have federal deposit insurance. The Fixing America’s Surface Transportation Act (FAST Act) includes a provision for us to review private deposit insurers and privately insured credit unions’ disclosure compliance in the United States. Our scope includes the nine states that permit credit unions to use private deposit insurance and have credit unions that have chosen to do so: Alabama, California, Idaho, Illinois, Indiana, Maryland, Nevada, Ohio, and Texas. Some credit unions in Puerto Rico are insured by a quasi-governmental entity––the Public Corporation for the Supervision and Insurance of Cooperatives––and these credit unions are not included in the scope of this report. In addition, this report does not compare ASI’s reserves and capital adequacy to those of the National Credit Union Administration’s (NCUA) National Credit Union Share Insurance Fund because the two entities have different legal requirements and risk profiles, use different models to help estimate reserves, and use different assumptions and methods to help determine capital adequacy. Based on this, we limited the scope of the report to solely cover regulatory and other assessments of ASI, instead of an analysis or comparison of the two entities.\nTo gather information about ASI, we identified the company’s regulators and legal requirements and reviewed laws and regulations pertaining to the company. We reviewed Ohio law and implementing regulations, which establish the powers and authorities governing credit union guaranty corporations, such as ASI. We interviewed the company’s primary regulators (Ohio Departments of Insurance and Commerce), as well as representatives from the state credit union supervisors in the other eight states in which ASI operates. To determine how the Ohio Department of Insurance assessed ASI’s financial condition, we reviewed documentation such as the most recent examination report covering calendar years 2008–2012 and financial analyses of ASI covering calendar years 2013– 2015. We also compared the department’s process with the guidelines recommended by the National Association of Insurance Commissioners (NAIC) and confirmed with NAIC staff that the department’s procedures were consistent with NAIC guidelines. Finally, we interviewed staff at the Federal Housing Finance Agency (FHFA), which oversees the Federal Home Loan Bank (FHLBank) System, and the FHLBank of Cincinnati (of which ASI is a member) to determine their oversight role with regard to ASI and to obtain information about the number and status of privately insured credit unions applying for membership to the FHLBanks.\nWe reviewed ASI’s annual reports and audited financial statements for 2008–2015 and other documentation, such as the company’s investment policy, its examination and insurance policy, and its application form and process for credit unions seeking private deposit insurance. We interviewed ASI management about the company’s history, governance structure, regulatory and financial reporting requirements, underwriting policies, and capital and reserves requirements. We also reviewed reports from the third-party actuarial firm that ASI retains, including the firm’s analyses of ASI’s capital adequacy for 2009–2015 (conducted every 3 years), annual analyses of ASI’s unpaid loss and loss adjustment expense for 2011–2015, and annual statements of actuarial opinion for 2011–2015, as well as the firm’s analysis of capital adequacy for ASI’s wholly-owned subsidiary for 2015. We interviewed the actuarial firm’s staff about their analyses related to these studies and obtained information about the assumptions and methods used. For the most recent capital adequacy study, our internal actuarial staff reviewed the actuarial firm’s modeling approach and certain key methods and assumptions, including those related to the three economic scenarios used in the study. Additionally, we inquired about the firm’s internal peer review process and steps taken to ensure the completeness and accuracy of the models used to assess ASI’s capital adequacy and reserves for losses. We did not conduct our own independent assessment of ASI’s capital adequacy and reserves for losses and therefore cannot make our own actuarial determination or opinion.\nTo review information about the credit unions that ASI insures, we reviewed CAMEL ratings for privately and federally insured credit unions for 2006–2015. We also used financial data from SNL Financial (2011–2015) to analyze selected financial indicators for privately and federally insured credit unions. We selected these financial indicators for further review because they had been previously identified by regulators as metrics to assess a credit union’s financial health and used in prior reports looking at credit unions. For our previous work, we had obtained information from NCUA on the indicators it typically uses to assess credit unions’ financial health and we selected one indicator in each of the following five categories: capital adequacy, asset quality, loss coverage, profitability, and liquidity. We analyzed data from SNL Financial in September 2016 for year-end 2011–2015. We presented median rather than the mean because means can be skewed by extremely high or low values. We assessed the reliability of the CAMEL ratings for privately and federally insured credit unions, as well as the SNL Financial data for the five financial indicators, by requesting information about the underlying data, how they are collected, and data reliability testing. We found the data to be sufficiently reliable for the purposes of our review.\nTo determine compliance with disclosure requirements, we identified disclosure requirements for credit unions that do not have federal deposit insurance by reviewing the Federal Deposit Insurance Act disclosure provisions and the Bureau of Consumer Financial Protection’s (CFPB) corresponding Regulation I. To review on-site disclosure requirements (at stations or windows), we selected a nonprobability sample of 53 privately insured credit unions and conducted in-person, unannounced site visits at 47 of these 53 (41 site visits to unique credit unions and 6 site visits to multiple locations of the 41 credit unions). We were unable to enter the other six credit unions, usually because they were closed when we attempted our visit. The sample was selected to ensure diversity across a number of criteria related to possible differences in compliance. We selected credit unions for their geographic diversity (credit unions in different regions of the country and different states), and to achieve a mix of credit unions of different asset sizes, main retail and branch locations, and urban and nonurban areas. We also took proximity to GAO offices into account as a secondary criterion. Because there may be variation in how state regulators and examiners check for compliance with disclosure requirements, we conducted site visits in four different states. We selected these states to obtain a mix of states in terms of numbers of privately insured credit unions––two with many (Ohio and Illinois), one with a moderate number (California), and one with few (Maryland)––and for geographic diversity. For the geographic distribution (by number and percentage) of all the privately insured credit unions across the nine states that have them, see table 2.\nWe selected privately insured credit unions of varying sizes, as defined by total assets, and selected credit unions for site visits that were roughly representative of the overall population of credit unions. For instance, almost 75 percent of privately insured credit unions had total assets of less than $100 million and therefore the majority of credit unions we selected for our site visits did as well.\nWe conducted site visits at both main retail and branch locations. We selected locations to include both urban and nonurban areas. We roughly defined “urban” as a downtown area where consumers are more likely to walk to the credit union and “nonurban” as an area where they are more likely to drive. Credit unions in nonurban areas were more likely to have drive-through teller windows. Staff conducted site visits between June and August 2016. On each visit, staff followed a protocol to help ensure consistency and completed a data collection instrument to record their observations. The protocol included checking for signs at teller and drive- through windows and observing sizes and clarity of signs, among other items. When possible, we obtained photographic evidence to document examples of disclosure signage. Two GAO analysts recorded their observations at each site, and any discrepancies were reconciled by discussions and photographic evidence where available. We aggregated the site visit data and present summary-level information in this report.\nTo determine compliance with disclosure requirements for the credit unions’ main Internet page, we reviewed the websites of all 102 privately insured credit unions that had a website during the time of our review. Analysts followed a protocol to help ensure consistency of observations about the clarity, placement, and font size of disclosures observed and completed a data collection instrument for each credit union. A second analyst independently reviewed each credit union’s website to verify the accuracy of information collected by the first analyst. Any discrepancies between the two analysts were identified, discussed, and resolved by referring to the source websites.\nTo determine compliance with disclosure requirements for advertising (printed materials), we obtained samples of printed materials (such as brochures, promotional flyers, and newsletters) from 36 of the 41 unique credit unions we visited where such printed materials were readily available. We assessed whether these printed materials had proper disclosures, taking into account the specified exclusions regarding advertising noted in Regulation I. To determine compliance with the requirement to (1) provide disclosures in periodic (monthly) statements and account records, and (2) get written acknowledgment from depositors that the institution does not have federal deposit insurance, we relied on testimonial evidence from the nine state credit union supervisors we interviewed because we determined that their compliance review in this area was adequate for our purposes—for example, each state reviews a sample of new accounts as part of the routine examination each credit union receives.\nBecause CFPB is the federal entity responsible for issuing disclosure regulations, we interviewed CFPB staff about the agency’s oversight and findings related to compliance with these disclosure requirements. We compared CFPB’s disclosure requirements for credit unions that do not have federal insurance with those of NCUA for federally insured credit unions. Because privately insured credit unions are state-chartered, we interviewed the respective state credit union supervisors in each of the nine states about their annual examinations of privately insured credit unions, including their review of compliance with requirements to disclose a lack of federal insurance. We also interviewed representatives from the Credit Union National Association, National Association of State Credit Union Supervisors, and the Ohio Credit Union League to ask whether they were aware of any issues or concerns related to compliance with disclosure requirements for privately insured credit unions.\nTo determine reasons why credit unions chose private or federal deposit insurance and to obtain views on the benefits and risks of each, we interviewed representatives from 10 credit unions that had switched to or from private insurance in recent years. We identified these credit unions by reviewing NCUA’s Insurance Activity Reports (from January 2008 to July 2016), which identify deposit insurance conversions, and then confirmed these conversions with NCUA and ASI. We interviewed representatives from five of the eight credit unions that converted from federal insurance provided by NCUA to private deposit insurance provided by ASI within the past 5 years. Additionally, we interviewed representatives from five credit unions that most recently converted from private (ASI) to federal (NCUA) deposit insurance. The conversions took place in 2008–2009. These selection criteria were chosen because representatives from credit unions that recently converted should be able to provide reasons why their credit union made the choice to switch from federal to private deposit insurance, or vice versa, and have the most up- to-date information. We also interviewed representatives from credit union trade associations, NCUA, and ASI about the reasons credit unions choose private versus federal deposit insurance.\nWe conducted this performance audit from February 2016 to March 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Credit unions in the United States can be federally or state-chartered, which determines their primary regulator for safety and soundness and also their options for deposit insurance. Federally chartered credit unions are regulated by the National Credit Union Administration (NCUA) and must be federally insured by NCUA’s National Credit Union Share Insurance Fund, which provides up to $250,000 of insurance per depositor for each account ownership type. State-chartered credit unions are regulated by credit union supervisors in their respective state and also can be federally insured by NCUA or, in some states, choose a private insurer. American Share Insurance (ASI) is the sole insurer for private deposit insurance to credit unions and provides coverage up to $250,000 per account. Credit unions sometimes change deposit insurers—for example, converting between federal and private deposit insurance. According to information provided by NCUA, eight credit unions converted from federal to private deposit insurance in 2012–2016, and five converted from private to federal deposit insurance in 2008–2009 (the most recent such conversions).\nRepresentatives of some credit unions that converted from federal to private deposit insurance cited the following reasons:\nGreater coverage for members. ASI insures $250,000 per account, whereas NCUA insures $250,000 per depositer for each account ownership type. Thus, ASI provides more coverage for members with more than $250,000 in a particular deposit type because they can structure their deposits into multiple accounts of $250,000 or less.\nReduced federal oversight. Representatives of some state- chartered credit unions described state regulation and oversight, including the examination process, as less burdensome than federal regulation and oversight.\nCost savings. Credit union representatives said that private deposit insurance was less expensive than federal deposit insurance following the 2007-2009 financial crisis because ASI’s special premium assessments were lower than the premiums of the National Credit Union Share Insurance Fund, and state regulatory fees are less than those of NCUA.\nComparable business models. A credit union representative noted that the credit union business model aligns well with ASI—both are not-for-profit organizations that exist to serve their members, and member credit unions sit on ASI’s board of directors.\nRepresentatives of some credit unions that converted from private to federal deposit insurance cited the following reasons:\nFull faith and credit of U.S. government. Deposits are backed by the full faith and credit of the U.S. government, which provides depositors with greater confidence and security.\nConcern about private insurer during financial crisis. A representative of one credit union told us the main reason it switched to NCUA insurance was because it was concerned that ASI might not survive the 2007–2009 financial crisis.\nAccess to additional funding source. One credit union representative told us the credit union switched to federal deposit insurance in 2008 to allow it to join a Federal Home Loan Bank, which provided it with access to an additional funding source.", "", "", "In addition to the contact name above, Jason Bromberg (Assistant Director), Beth Faraguna (Analyst in Charge), Caitlin Cusati, Paul Foderaro, Alice Hur, Risto Laboski, Yola Lewis, Ned Malone, Scott McNulty, Marc Molino, Barbara Roesmann, Jessica Sandler, Frank Todisco, and Shana Wallace made key contributions to the report." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 3, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "h0_title", "h0_full", "h0_full", "", "", "", "h1_full", "h1_full", "", "h2_full", "h2_full h1_full", "h0_full", "", "", "" ] }

{ "question": [ "To what extent do credit unions have private deposit insurance?", "What have various assessments determine about ASI's coverage?", "What external factors might harm ASI's financial condition?", "How could ASI ensure credit flow in case of financial difficulties?", "To what extent did privately insured credit unions comply with CFPB requirements?", "What do CFPB regulations stipulate regarding advertising disclosure?", "To what extent were the disclosures noticeable and legible?", "What do the regulations stipulate regarding text specifications?", "What are the risks that accompany a lack of disclosure requirements?", "How does the Federal Deposit Insurance Act affect privately insured credit unions?", "What does this report examine?", "What data did GAO use for this report?", "To what extent did GAO review regulatory information?", "What information did GAO collect from privately insured credit unions?", "Why did GAO conduct this review?" ], "summary": [ "About 2 percent of credit unions (125) have private deposit insurance, which is provided by one company—American Share Insurance (ASI).", "Regulatory and other assessments have suggested that ASI's reserves have been adequate and that the company has had a strong ability to cover present and future losses for the credit unions it insures. The most recent examination of ASI by its primary regulator (Ohio Department of Insurance) determined that ASI's reserves for losses were adequate and appropriate and consistent with legal requirements. An independent actuarial firm hired by ASI reported that it had a strong ability to cover losses under different economic scenarios.", "The Ohio regulator and the actuarial firm both noted risk factors that could affect ASI's financial condition, including changes in macroeconomic conditions or major losses by the largest credit unions it insures.", "In the event of financial difficulties, Ohio law allows ASI to tap into additional sources of funding, including lines of credit and special assessments from its insured credit unions.", "Privately insured credit unions largely complied with the Bureau of Consumer Financial Protection (CFPB) requirements to disclose that they do not have federal deposit insurance. For instance, 45 of 47 credit unions GAO visited displayed required disclosures at teller windows (see fig.), and 99 of 102 websites GAO reviewed included the disclosure on their main Internet page, as required. However, 7 of 17 credit unions with drive-through windows that GAO visited did not have disclosure signs at these windows. Additionally, printed materials (such as brochures and flyers) GAO reviewed from 8 of 36 credit unions did not include disclosures.", "The regulations require all advertising to include a disclosure, but do not define what constitutes advertising.", "In some cases, disclosure signs or text size were too small to be easily read, or were not placed conspicuously.", "CFPB's regulations on disclosures for privately insured credit unions do not specify signage dimensions or font size.", "Without clear disclosure requirements, state credit union supervisors and credit unions may not be consistent in how they interpret disclosure requirements and some consumers may not be informed that their deposits are not federally insured.", "The Federal Deposit Insurance Act requires privately insured credit unions to disclose to consumers that they do not have federal deposit insurance and CFPB has implemented regulations on these requirements.", "This report (1) discusses regulatory and other assessments of ASI, the sole private insurer, and (2) examines the level of compliance with disclosure requirements for privately insured credit unions.", "GAO reviewed documentation from and interviewed federal and state regulators, ASI management, and ASI's third-party actuarial firm. GAO reviewed certain key methods and assumptions used by the actuarial firm.", "GAO also analyzed regulatory ratings (2006–2015) and selected financial data (2011–2015) on privately and federally insured credit unions.", "In addition, GAO reviewed 102 websites for all privately insured credit unions that had websites, conducted unannounced site visits at 47 credit unions (selected based largely on asset size and geography), and reviewed printed materials from 36 of the credit unions it visited that had materials readily available.", "The Fixing America's Surface Transportation Act includes a provision for GAO to review private deposit insurers and privately insured credit unions' compliance with disclosures." ], "parent_pair_index": [ -1, 0, -1, 2, -1, -1, 1, 2, -1, -1, -1, 1, 2, 2, 1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 2, 0, 0, 0, 0, 0, 0 ] }

{ "title": [ "Background", "VHA Uses a Multi- Step Strategic Planning Process to Identify Strategic Goals and Objectives", "VISNs and VAMCs Are Responsible for Operationalizing VHA’s Strategic Goals and Objectives, but VHA Has Not Developed Adequate Strategies or an Effective Oversight Process to Ensure Operationalization", "VISNs and VAMCs Have Responsibility for Operationalizing VHA’s Strategic Goals and Objectives, but VHA Has Not Defined VAMCs’ Role", "VHA Has Not Developed Adequate Strategies or an Effective Oversight Process to Ensure Operationalization of Its Strategic Goals and Objectives", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: VHA Strategic Plan FY 2013 – 2018", "Appendix II: Comments from the Department of Veterans Affairs", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "In carrying out its mission of providing services to veterans, VA’s programs are administered through its three major administrations—VHA, Veterans Benefits Administration, and National Cemetery Administration—and VA engages all of its administrations in its strategic planning process. VA’s Office of Policy is responsible for ensuring integration, collaboration, and cooperation across VA with regard to policy and strategy development. This office also leads VA’s strategic planning efforts and is involved with managing VA’s governance process. Within the Office of Policy, the Policy Analysis Services, the Strategic Studies Group, and the Strategic Planning Service support this work. In March 2014, VA published its current strategic plan, Department of Veterans Affairs FY 2014 - 2020 Strategic Plan, which identifies the department’s mission, values, and three strategic goals.\nWithin VHA, the Office of the Assistant Deputy Under Secretary for Health for Policy and Planning supports and advises several VHA offices—the offices of the Under Secretary for Health, Principal Deputy Under Secretary for Health, and the Deputy Under Secretary for Health for Policy and Services—on the development and implementation of VHA policy, strategic planning, and forecasting. VHA’s Under Secretary for Health directs all aspects of VHA’s health care system, including its annual budget and overseeing the delivery of care to veterans, as well as the health care professionals and support staff that deliver that care.\nIn December 2012, VHA published its current strategic plan, VHA Strategic Plan FY 2013 – 2018, which identifies its mission and vision and guides budgeting, performance management, and service alignment across VHA, and its plans for how to provide for the health care needs of veterans. (See app. I.) The plan also outlines VHA’s three goals and 17 objectives that are to be used to guide planning, budgeting, performance management, and service alignment across VHA; those three goals are to: (1) provide veterans personalized, proactive, patient-driven health care, (2) achieve measurable improvements in health outcomes, and (3) align resources to deliver sustained value to veterans. VHA Directive 1075: Strategic Planning Process is VHA’s most current strategic planning guidance, and it outlines how VHA will identify its strategic priorities and establish and execute its strategic plan, as well as identifies roles and responsibilities in this process.\nIn recent years, VA and VHA have established several new initiatives, activities, and priorities in response to changes in internal and external factors—including VHA leadership changes, congressional concerns regarding veterans’ access to care, and the placement of VHA on our High-Risk List. Specifically, VA and VHA have developed the following new initiatives and priorities in the last 2 years:\nMyVA: This VA-wide initiative was launched in July 2015 and is aimed towards transforming the veterans’ experience. VA has developed five priorities for this initiative: (1) improving the veteran’s experience, (2) improving the employee experience, (3) improving internal support services, (4) establishing a culture of continuous improvement, and (5) enhancing strategic partnerships. “The Under Secretary for Health’s Five Priorities:” VHA’s Under Secretary for Health established these priorities after being appointed to his position in July 2015. The five priorities are to (1) improve access, (2) increase employee engagement, (3) establish consistent best practices, (4) build a high-performing network (which includes VA and non-VA providers), and (5) rebuild the trust of the American people. “The Secretary’s 12 Breakthrough Priorities:” These priorities describe focus areas for the MyVA initiative and were first presented in a January 2016 testimony by the Secretary of VA to the Senate Committee on Veterans’ Affairs. Several of these priorities—such as improving the veterans experience, increasing access to health care, and improving community care—are relevant to health care delivery in VHA.\nAdditionally, in September 2014, VHA developed the Blueprint for Excellence, which presents strategies for transforming VHA health care service delivery in response to concerns regarding the VHA access and wait-time crisis that year. These strategies, which are linked to the goals and objectives in VHA’s current strategic plan, include operating a health care network that anticipates and meets the unique needs of enrolled veterans, in general, and the service disabled and most vulnerable veterans, and delivering high-quality, veteran-centered care that compares favorably to the best of private sector in measured outcomes, value, access, and patient experience. More recently, VHA developed a crosswalk for internal discussion documenting how the various VA and VHA initiatives, activities, and priorities—such as MyVA, Blueprint for Excellence strategies, the Under Secretary for Health’s Five Priorities, and the Commission on Care report—relate to each other. See fig. 1 for a timeline of internal and external factors that have affected or may affect VHA’s strategic goals and objectives.", "VHA conducts a strategic planning process annually and through this process also established its current strategic plan. According to officials, VHA’s current strategic plan was developed through its FY 2012 strategic planning process. VHA officials told us that they currently do not have plans to revise VHA’s current strategic plan or develop a new one, but may, however, develop an operational plan that will cascade from and operationalize VA’s strategic plan. VHA officials told us that they do plan to continue to use their current annual strategic planning process to identify VHA’s future strategic goals and objectives.\nAccording to VHA officials, VHA’s strategic planning process includes two key steps—(1) assessing the environment, which VHA refers to as environmental scanning, and (2) holding the annual NLC Strategic Planning Summit. These steps are consistent with leading practices in strategic planning. VHA conducts environmental scanning to identify and assess factors that may affect its future health care delivery. According to VHA policy, data from VHA’s environmental scan, such as the projected number of veterans to be served, are to be used by VHA in developing its goals and objectives. In addition, the results from VHA’s environmental scanning are to be used by VHA’s Office of Policy and Planning and VHA program offices, in strategic decision making.\nIn addition to environmental scanning, the NLC Strategic Planning Summit is also key to VHA’s strategic planning process, in that it is the primary forum through which VHA leadership identifies and discusses the strategic goals and objectives for the next year. The NLC is responsible for recommending new or revised strategic goals and objectives and for formulating strategies to achieve them. VHA’s Office of Policy and Planning coordinates the summit and invites various stakeholders to attend—such as officials from VHA central office, including program offices; VA central office; Veterans Benefits Administration; National Cemetery Administration; VISNs; and representatives of veterans service organizations. Veterans Benefits Administration and National Cemetery Administration officials indicated that they have varied levels of participation. Veterans Benefits Administration officials told us that they have historically attended several days of the summit, and National Cemetery Administration officials indicated that they may listen to the VHA’s general body sessions during the summit. Even though officials from both administrations indicated they believe their input and coordination with VHA regarding its strategic planning was sufficient, Veterans Benefits Administration officials noted that increased engagement in VHA’s strategic planning process would be beneficial, given the direct correlation between veterans’ disability compensation ratings assigned by them and the subsequent care delivered from VHA.\nDuring the course of the summit, the NLC determines if changes to VHA’s strategic goals and objectives are needed. If there are changes, VHA’s Office of Policy and Planning drafts a document, gathers additional stakeholder feedback, and presents the document to VHA’s Under Secretary for Health for approval.\nVHA also obtains and uses information from VA to inform its strategic planning process. For example, according to VA and VHA officials, VHA’s environmental scanning process is, and has historically been, health-care focused, and is adjunct to the broad environmental scanning process conducted by VA. Officials noted that though distinct processes, VA’s and VHA’s environmental scanning processes are interrelated. VHA officials told us that they leverage VA’s environmental scanning results in making decisions regarding VHA’s strategic goals and objectives. Additionally, VA officials have historically been invited to participate in VHA’s NLC Strategic Planning Summit, including the 2016 summit. VA’s draft report of its environmental scanning identified changes in the veteran population, including growth in the number of veteran enrollees aged 65 and older, which VA officials reiterated at the 2016 NLC summit.", "", "VISNs and VAMCs have responsibility for operationalizing VHA’s strategic goals and objectives, including its strategic plan, according to VHA officials. Operationalizing involves putting strategic goals and objectives into use by an organization, and includes developing initiatives, programs, or actions that will be used to accomplish those goals and objectives. VISNs and VAMCs must allocate resources, develop day-to- day activities, and create policies as part of that process.\nHowever, we found that VHA provides limited guidance for VAMCs in how to operationalize VHA’s strategic goals and objectives. First, VHA has not clearly identified VAMCs’ responsibilities in operationalizing its strategic goals and objectives as it has for VISNs. For example, VHA Directive 1075 states that VISN directors are to be responsible for: developing operational plans; annually tracking and reporting accomplishments in support of the VHA strategic plan; regularly updating plans to address local issues, such as geographic-specific needs; and providing input to inform future VHA goals, objectives, and strategies. However, there are no such stated responsibilities for VAMCs. According to federal internal control standards, successful organizations should assign responsibility to discrete units, and delegate authority to achieve organizational objectives. VHA and VISN officials told us that it is inferred that the VAMCs are part of the overall process even though there is no specific policy or guidance for VAMCs. All three VISNs in our review reported developing operational plans or strategies to operationalize VHA’s goals and objectives at the VISN level, but two of the nine VAMCs in our review had not developed such strategies.\nSecond, in FY 2013, VHA provided VISNs with a strategic planning guide for operationalizing the current strategic plan, but did not provide a similar guide for VAMCs. According to the guide, its purpose was to assist VISNs in outlining a multi-year plan that aligned with VHA’s current strategic plan and provide relevant information regarding the development of strategies, the process for conducting a strategic analysis, and the time frame for providing strategic planning information, such as strategies, to VHA central office.\nThe lack of guidance for VAMCs may hinder them from effectively operationalizing VHA’s strategic goals and objectives, and may lead to inconsistencies in time frames, documentation, and data used for the strategic planning process. For those VAMCs in our review that developed strategies to operationalize VHA’s strategic goals and objectives, for example, almost all developed local strategies on a fiscal- year cycle, which aligns with VHA’s budgeting and strategic planning processes, but one VAMC developed strategies on a calendar-year cycle. Although there is no requirement for VAMCs to conduct strategic planning on a specific timeline, per leading practices for strategic planning, organizations should align their activities, core processes, and resources to ensure achievement of the agency’s objectives. In addition, per federal internal control standards, management should effectively communicate information throughout the organization, as the organization performs key activities in achieving the objectives of the organization.", "VHA has not developed adequate strategies or an effective oversight process to ensure VHA’s strategic goals and objectives are effectively operationalized. Specifically, VISNs and VAMCs lack consistently developed strategies for operationalizing VHA’s strategic goals and objectives, and existing performance assessments are limited in measuring progress towards meeting these goals and objectives.\nLack of consistently developed strategies. VHA has not consistently developed strategies for VISNs and VAMCs to use in operationalizing its strategic goals and objectives. Strategies should describe how a strategic plan’s goals and objectives are to be achieved, and should include a description of the operational processes, staff skills, use of technology, as well as the resources— such as, human, capital, and information—required. Among other things, our previous work has shown that strategies should have clearly defined milestones, outline how an organization will hold managers and staff accountable for achieving its goals, and be linked to the day-to-day activities of the organization. In addition, individual strategies should be linked to a specific goal or objective. In September 2014, VHA published the Blueprint for Excellence to provide strategies for transforming VHA health care service delivery in response to concerns regarding the VHA wait-time crisis that year. However, VHA did not develop a similar document for the other strategic planning years despite the development of multiple strategic documents, such as the Under Secretary for Health’s five priorities.\nWithout developing adequate strategies to correspond to all of its strategic goals and objectives, the VISNs and VAMCs have limited guidance to help them operationalize VHA’s strategic goals and objectives. Moreover, the day-to-day activities and initiatives developed by VISNs and VAMCs may not appropriately align with those goals and objectives. A direct alignment between strategic goals and their associated strategies is important in assessing an organization’s ability to achieve those goals.\nNo process for ensuring and assessing progress in meeting all of VHA’s strategic goals and objectives. As our previous work has shown, assessments can provide feedback to an organization on how well day-to-day activities and programs developed to operationalize strategic goals and objectives contribute to the achievement of those goals and objectives. Specifically, formal assessments are to be objective and measure the results, impact, or effects of a program or policy, as well as the implementation and results of programs, operating policies, and practices; they can also help in determining the appropriateness of goals or the effectiveness of strategies. However, VHA does not have effective oversight process for ensuring that VISNs and VAMCs are meeting all of its strategic goals and objectives.\nAccording to VHA officials, there are currently two methods for assessing VHA’s performance towards meeting selected strategic goals and objectives. One method is VISN and VAMC directors’ individual annual performance plans. For FY 2016, these plans present VHA’s strategies for providing a successful health care delivery system, including those outlined in its Blueprint for Excellence. The directors’ plans include performance metrics, which VHA, as well as VISNs and VAMCs, can use to measure demonstrated progress of a VISN or VAMC in meeting these strategies. However, multiple strategic goals and objectives have been communicated to the field, such as the Under Secretary for Health’s five priorities, and it is not clear how these goals align with the strategies in the current directors’ performance plans or how progress towards them can be assessed. A VHA official, who is a member of the workgroup reviewing VHA’s performance metrics, told us that over the years, performance metrics were added to the director performance plans as problems or needs arose without considering the overall purpose of the metric. VHA officials reported that they have reviewed the current plans and have revised them. According to a VHA official, the new plans will have fewer metrics, and will be more strategically focused on VA’s and VHA’s strategic priorities, such as the Under Secretary for Health’s five priorities. According to VHA officials, implementation is planned for October 1, 2016. However, it is not clear how these metrics will be linked to the strategic goals and objectives in VHA’s current strategic plan.\nVeterans’ satisfaction with VA’s health care system is the second method for assessing VHA’s performance towards meeting strategic goals and objectives, according to VHA officials. VHA currently collects information from a survey of veterans that addresses two of VA’s priority goals, including improving access to health care, as experienced by the veteran. According to VHA officials, for the veterans’ access goal, there is a large degree of alignment between the department-wide goal and how VHA measures its progress towards meeting some of its access goals and objectives in its strategic plan. However, it is not clear how VAMCs and VISNs are to use veterans’ satisfaction to assess progress toward meeting other goals and objectives that have been communicated to them—such as the Under Secretary for Health’s five priorities that are not focused on access. VHA officials told us that no additional VHA-level assessments had been conducted to measure progress towards meeting strategic goals and objectives. Though VHA has performance information from VISN and VAMC directors’ performance plans and veteran satisfaction surveys, the performance of the agency toward meeting VA’s and VHA’s other strategic goals and objectives may help provide a more complete picture of overall effectiveness.\nIn addition to a lack of adequate strategies and an effective oversight process, a large number of vacant, acting, and interim positions at some of the VISNs and VAMCs in our review have also created challenges for VHA in operationalizing its strategic goals and objectives. For example, officials from one VISN reported that acting and interim senior leadership positions within a facility in their region have had an effect on the operations of the VAMC, including the operationalization of VHA’s strategic goals and objectives. They added that the acting and interim senior leaders did not feel empowered to make long-term decisions regarding the operations of the medical center because they did not know how long they would hold the position. The Under Secretary for Health told us that one of VHA’s top priorities for 2016 is to fill 90 percent of VAMC director positions with permanent appointments by the end of the year. The Under Secretary added that filling these positions would help address the current gaps in leadership and provide stability for the VAMCs.", "As the demand for health care by our nation’s veterans increases, and concerns about VA’s health care system persist, it is essential that VHA conduct the necessary strategic planning to achieve its goals and objectives. VHA has established a strategic planning process to identify strategic goals and objectives for accomplishing its mission, and VISNs and VAMCs are expected to operationalize these goals and objectives. However, VHA has not delineated a role for VAMCs in this process as it has for VISNs. Moreover, the lack of adequate strategies to operationalize VHA’s strategic goals and objectives, as well as the lack of an effective oversight process for assessing progress, may hinder the achievement of VHA’s goals and objectives. Without consistently developed strategies, the day-to-day activities and initiatives that are developed to operationalize VHA’s strategic goals and objectives may not appropriately align with those goals and objectives. This may result in VHA not being able to determine if it is adequately addressing top management concerns or department-wide strategic goals. Further, because VHA does not have an effective process to assess progress in meeting its strategic goals and objectives, it does not have needed information on how well the day-to-day activities and programs of VISNs and VAMCs are contributing to their achievement.", "We recommend that the Secretary of Veterans Affairs direct the Under Secretary for Health to take the following three actions: 1. Define the roles and responsibilities of VAMCs in operationalizing VHA’s strategic goals and objectives; this could be accomplished by establishing roles and responsibilities for VAMCs similar to how VHA defines roles and responsibilities for VISNs in VHA Directive 1075 and by developing guidance for VAMCs similar to guidance developed for VISNs. 2. Consistently develop strategies that can be used by VISNs and VAMCs to operationalize VHA’s goals and objectives, ensuring that they clearly link directly to VHA’s goals and objectives. 3. Develop an oversight process to assess progress made in meeting VHA’s strategic goals and objectives, including feedback on how well activities and programs are contributing to achieving these goals and objectives.", "We provided VA with a draft of this report for its review and comment. In its written comments, reproduced in appendix II, VA concurred with our three recommendations, and described the actions it is taking to implement them by September 2017. VA described the role that community-based outpatient clinics and health care centers play as critical health care access points for veterans and commented that our draft report does not mention these access points as components of VAMC service delivery systems. While our report draft noted the role of community-based outpatient clinics and health care centers in VA’s service delivery system, we clarified that these facilities are components of VAMCs. VA also commented that our report draft does not mention the essential role that VHA program offices play in contributing to and implementing the VHA strategic plan. Our report states that program offices contribute to VHA’s strategic planning process by developing some of the programs and actions that VISNs and VAMCs use to provide health care services to veterans. VA also provided technical comments, which we incorporated as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to appropriate congressional committees, the Secretary of Veterans Affairs, the Under Secretary for Health, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.", "", "", "", "", "In addition to the contact named above, Janina Austin, Assistant Director; Kelli A. Jones, Analyst-in-Charge; Jennie Apter; and LaKendra Beard made key contributions to this report. Also contributing were George Bogart, Christine Davis, Jacquelyn Hamilton, and Vikki Porter." ], "depth": [ 1, 1, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h1_full", "h2_full", "h0_title h2_title h1_title", "h0_full h2_full", "h1_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What guidance has VHA given for VAMC's role in stragetic planning?", "How has VHA clarified the roles of VISN directors regarding operational plans?", "How has VHA helped the planning work of VISNs?", "To what extent has VHA developed strategies for operationalizing its strategic goals?", "What should well-detailed strategies consist of?", "What detailed strategies has VHA published?", "To what extent has VHA followed up with similar strategy documents?", "What was GAO asked to review?", "What did this report examine?", "What data did GAO review for this report?", "How did GAO compare these findings to related standards?" ], "summary": [ "VHA has not specified VAMCs' role and responsibilities in its strategic planning guidance, as it has for VISNs.", "For example, VHA's directive for VISNs clearly states how VISN directors are to operationalize VHA's operational plans; no such directive exists for VAMC officials.", "Similarly, VHA provided VISNs a strategic planning guide for operationalizing its current strategic plan, but did not provide a similar guide to the VAMCs.", "VHA has not developed detailed strategies for VISNs and VAMCs to use in operationalizing all of its strategic goals and objectives.", "According to leading practices for strategic planning, strategies should describe how strategic goals and objectives are to be achieved, including a description of the operational processes, staff skills, technology and other resources required.", "In September 2014, VHA published the Blueprint for Excellence to provide strategies for transforming VHA health care service delivery in response to concerns regarding the VHA wait-time crisis that year.", "However, it did not develop similar strategy documents for other years or for the other goals and objectives in its strategic plan.", "GAO was asked to review VHA's strategic planning.", "This report examines (1) VHA's strategic planning process and (2) the extent to which VHA operationalizes its strategic goals and objectives.", "GAO reviewed VHA strategic planning documents; and interviewed officials from VA and VHA central office, three VISNs selected to provide variation in geographic location, and nine VAMCs within these VISNs selected to provide variation in factors such as geographic location and facility complexity.", "GAO evaluated VHA's actions against federal standards for internal control and leading practices for strategic planning." ], "parent_pair_index": [ -1, 0, 0, -1, 0, -1, 2, -1, -1, 1, 2 ], "summary_paragraph_index": [ 4, 4, 4, 5, 5, 5, 5, 1, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "TVA's Mission", "TVA's Electric Power Program", "Existing Power Generation Capacity", "TVA Electricity Rates", "Technology Innovation", "Electric Power—An Industry in Transition", "TVA Planning for Change", "TVA's Regulatory Assets", "TVA's Statutory Debt Limit", "Electricity Sales Fund TVA's Water Resource Management Programs", "Discussion and Issues for Congress" ], "paragraphs": [ "", "In its budget proposal for FY2014, the Obama Administration proposed a \"strategic review\" of the Tennessee Valley Authority (TVA), a federal government corporation established by the Tennessee Valley Authority Act (TVA Act) (16 U.S.C. 831).\nReform TVA. Since its creation in the 1930s during the Great Depression, the federally owned and operated Tennessee Valley Authority (TVA) has been producing low-cost electricity and managing natural resources for a large portion of the Southeastern United States. TVA's power service territory includes most of Tennessee and parts of Alabama, Georgia, Kentucky, Mississippi, North Carolina, and Virginia, covering 80,000 square miles and serving more than nine million people.\nTVA is a self-financing Government corporation, funding operations through electricity sales and bond financing. In order to meet its future capacity needs, fulfill its environmental responsibilities, and modernize its aging generation system, TVA's current capital investment plan includes more than $25 billion of expenditures over the next 10 years. However, TVA's anticipated capital needs are likely to quickly exceed the agency's $30 billion statutory cap on indebtedness. Reducing or eliminating the federal Government's role in programs such as TVA, which have achieved their original objectives and no longer require Federal participation, can help put the Nation on a sustainable fiscal path. Given TVA's debt constraints and the impact to the Federal deficit of its increasing capital expenditures, the Administration intends to undertake a strategic review of options for addressing TVA's financial situation, including the possible divestiture of TVA, in part or as a whole.\nIn proposing the strategic review, the Administration says that TVA has achieved its original objectives, and thus no longer requires federal participation. However, some have expressed their disagreement with the Administration's position, and support TVA's current role. The strategic review (to be conducted by the Office of Management and Budget) may thus consider options for addressing TVA's financial situation and its effect on the federal deficit, with divestiture of TVA (in whole or part) to be considered among the potential alternatives. TVA, for its part, is cooperating with the strategic review.\nThis report will discuss the history and role of TVA mostly from an energy standpoint, considering current and future obligations, and other issues related to TVA's provision of electrical energy. Issues for Congress may involve consideration of whether a federal role is still necessary to achieve the TVA Act's objectives.", "TVA is a federal government corporation originally established by Congress in response to the Great Depression, essentially to \"exist in perpetuity.\" The preamble to the TVA Act of 1933 lists flood control, reforestation, and agricultural and industrial development as primary considerations in the original establishment of the TVA.\nTo improve the navigability and to provide for the flood control of the Tennessee River; to provide for reforestation and the proper use of marginal lands in the Tennessee Valley; to provide for the agricultural and industrial development of said valley; to provide for the national defense by the creation of a corporation for the operation of Government properties at and near Muscle Shoals in the State of Alabama, and for other purposes.\nTVA has incorporated the preamble into its mission statement, which lists these duties essentially in terms of TVA priorities.\nThe mission of the Tennessee Valley Authority is to develop and operate the Tennessee River system to improve navigation, minimize flood damage, and to provide energy and related products and services safely, reliably, and at the lowest feasible cost to residents and businesses in the multi-state Tennessee Valley region. TVA's integrated management of the entire Tennessee River watershed optimizes the benefits of the water resource. Major functions of the corporation include:\nManagement of the Tennessee River system for multiple purposes including navigation, flood control, power generation, water quality, public lands conservation, recreation, and economic development; Generation of electricity; Sale and transmission of electricity to wholesale and large industrial customers; Stimulation of economic development activities that generate a higher quality of life for citizens of the Tennessee Valley; Preservation and environmentally-sensitive management of TVA assets and federal lands entrusted to TVA; and Research and technology development that addresses environmental problems related to TVA's statutory responsibilities for river and land management and power generation.\nThe operation of the Tennessee River system to improve navigation and minimize flood damage arguably remains TVA's primary obligation. Power generation at TVA was a part of the industrial development mission of TVA, with hydroelectric generation possibly being viewed as an opportunity which arose from dams mostly built for flood control and navigation purposes.", "While the focus of TVA's activities originally was largely on its flood control and economic development roles, TVA is now essentially a power generation company. TVA's business metrics are focused on optimizing TVA's financial position, and its operational goals are focused on providing electricity at the lowest feasible rates to its wholesale customers in the multi-state Tennessee Valley region.\nInitially, federal appropriations funded all TVA operations. Appropriations for the TVA power program ended in 1959, and appropriations for TVA's environmental stewardship and economic development activities were phased out by 1999. TVA is now fully self-financing, funding operations through electricity sales and power system bond financing. TVA makes no profit and receives no tax money.\nAs shown in Figure 1 , TVA's electric power service territory covers almost all of Tennessee, and portions of Alabama, Georgia, Kentucky, Mississippi, North Carolina, and Virginia. TVA is overseen by a Board of Directors with nine members (appointed by the President and confirmed by the U.S. Senate), each of whom serves a staggered five-year term. The Board of Directors sets TVA's wholesale electric power rates without approval by any other regulatory body.\nTVA provides electricity in an area that is largely free of competition from other electric power providers. This service territory is defined primarily by two provisions of federal law: the \"fence,\" and the \"anti-cherrypicking\" provision. The fence limits the region in which TVA or distributors of TVA power may provide power. The anti-cherrypicking provision limits the ability of others to use the TVA transmission system for the purpose of serving customers within TVA's service area. From time to time there have been unsuccessful efforts to modify the protection of the anti-cherrypicking provision.", "Table 1 lists TVA's electric power generation capacity by category. As of 2010, TVA owned 11 coal-fired power generating stations, with a net summer capacity of 14,573 MegaWatts (MW). Units range in size from 107 MW (Johnsonville Units 1-6) to Cumberland Unit 1 at 1,239 MW. TVA operates 92 natural gas-fired combustion turbines with a net summer capacity of about 5,270 MW, mostly co-located at the coal power stations. Five combined cycle units are located at three stand-alone power stations, adding a further 2,143 MW of capacity. TVA also operates three nuclear power stations with six units currently operating with a total net summer capacity of 6,632 MW. TVA is currently completing construction of a second nuclear unit at the Watts Bar station, which will add a further 1,180 MW of net summer capacity.\nTVA's conventional hydropower system consists of 109 generating units at 28 sites mostly along the Tennessee River, with a total net summer capacity of approximately 4,157 MW. Pumped storage hydropower adds a further 1,653 MW from the Raccoon Mountain facility. TVA also sells hydropower produced by eight U.S. Army Corps of Engineers dams, and four dams owned by Alcoa on the Little Tennessee River.\nTVA owns very little non-hydro renewable generation itself, opting to rely instead on a \"Standard Offer\" (SO) for purchasing renewable energy. TVA says the SO \"will help support TVA's vision and long-term strategy to emphasize cleaner air and greater energy efficiency.\" TVA buys various amounts of renewable energy throughout the year, varying generally by season and time of day for fixed rates of 4 to 16 cents per kiloWatt-hour (kWh) of energy produced. Power purchase agreements (PPAs) are available for up to 20 years for projects between 200 kiloWatts and 20 MW in capacity located within the TVA footprint. The SO resulted in four renewable projects with the potential for approximately eight MegaWatts of generating capacity.\nTo connect generating facilities to its customers, TVA's transmission system consists primarily of approximately 15,940 circuit miles of transmission lines operating at the 500 kiloVolt (kV) and 161 kV levels, supported by 498 transmission substations, switchyards, and switching stations.", "The sale of electric power by the TVA is governed by the Tennessee Valley Authority Act of 1933, which requires electricity rates to cover power system operating costs, debt service, and other costs at rates as low as feasible.\nThe Corporation shall charge rates for power which will produce gross revenues sufficient to provide funds for operation, maintenance, and administration of its power system; payments to States and counties in lieu of taxes; debt service on outstanding bonds, including provision and maintenance of reserve funds and other funds established in connection therewith; payments to the Treasury as a return on the appropriation investment pursuant to subsection (e) hereof; payment to the Treasury of the repayment sums specified in subsection (e) hereof; and such additional margin as the Board may consider desirable for investment in power system assets, retirement of outstanding bonds in advance of maturity, additional reduction of appropriation investment, and other purposes connected with the Corporation's power business having due regard for the primary objectives of the Act, including the objective that power shall be sold at rates as low as are feasible.\nMost of the power generated by TVA is sold at wholesale rates to electric distribution utilities. Rates for electricity are established by the TVA Board, in accord with the TVA Act. There are 155 distribution companies—municipal utility companies and cooperatives—that resell TVA power to end-use consumers. The municipal utilities make up the largest block of TVA customers. Cooperatives are customer-owned companies, many of which were originally formed to bring electricity to the most remote parts of the TVA region. Municipals and cooperatives represent the wholesale base of TVA's business, accounting for 85% of total revenue. TVA also sells power directly to 50 large industrial customers, and 6 federal government installations, and sells power to 12 utilities outside TVA's service territory.\nWhen comparing rates for electricity with electric utilities in other states, it should be noted that these are often the result of a number of local factors. Rates in two neighboring states in a region can differ measurably due to regulatory regime, types and sizes of power generation plants, costs of fuel, infrastructure, local geography, and other factors.\nTVA provided retail rate data for purposes of comparison with other states, submitting the following summary information for a \"residential average effective rate,\" and a \"non-residential average effective rate\" (which represent retail residential and commercial rates).\nBoth sets of rates are shown in Table 2 .\nTVA states that it has a goal to have its overall effective retail rate in the top quartile (with regard to being among electric utilities with the lowest rates) as benchmarked against the top 100 electric utilities by 2020. This is intended to help ensure that TVA's rates are competitive and conducive to its economic development goals.\nEffective residential rates may be directly compared to residential rates reported to the U.S. Department of Energy's Energy Information Administration (EIA) by electric utilities. Figure 2 shows electric utility residential rates for the period 2000 to 2010 reported from states surrounding TVA's service territory, compared to TVA's reported effective residential rate. As the figure shows, the residential electricity rates for the TVA are lower in the early years of the period than all compared states except Kentucky, and rise to mid-range for the latter years in the period. Given the overlap of TVA's service territory into several states (principally Mississippi, Alabama, and Kentucky), some of the state rates include TVA rates as a component.\nA similar representation of commercial customer rates from electric utilities is shown in Figure 3 . As shown in the graph, the TVA non-residential average effective rate (e.g., commercial rate) is the lowest band for all compared states for most years in the period.", "As also directed by the TVA Act, TVA has a role in providing economic and agricultural development, environmental stewardship, and the mission which is closest to electricity provision—technological innovation in the use of electric power. TVA's technology innovation mission comes from Section 10 of the TVA Act:\n... the Board is hereby authorized and directed to make studies, experiments, and determinations to promote the wider and better use of electric power for agricultural and domestic use, or for small or local industries, and it may cooperate with State governments, or their subdivisions or agencies, with educational or research institutions, and with cooperatives or other organizations, in the application of electric power to the fuller and better balanced development of the resources of the region.\nTVA appears to have embraced this mission, with current initiatives including grid modernization and the Smart Grid, energy utilization (focused on technologies that can lead to new and potentially more efficient ways of using electricity in residential, commercial, and industrial settings, and the transportation sector), clean energy (investigating the performance, cost, sustainability, and availability of clean energy technologies), and electric vehicles and support systems. TVA is also preparing for the deployment of four small modular nuclear reactors (SMRs) at its Clinch River site, in connection with the mPower America consortium, which received a U.S. Department of Energy (DOE) cost-sharing award in 2012 for design and licensing. DOE will reimburse TVA for up to 50% of the eligible costs toward licensing the SMRs.\nPast TVA initiatives in technology innovation have helped with development of synchronous compensators, which can regulate voltage without expensive external capacitors or reactors, and can provide voltage support in the form of reactive power to the transmission grid. TVA also conducts an environmental research program at the TVA Environmental Research Center in Muscle Shoals, AL.", "The electric power industry in the United States is in a period of transition. The average age of power plants in the United States is now over 30 years, with the average life expectancy of most power plants being about 40 years. As with electric power plants, electric transmission and distribution system components are also aging, with power transformers averaging over 40 years of age, and 70% of transmission lines being 25 years or older. New environmental regulations under development at the U.S. Environmental Protection Agency (EPA) are imposing additional costs, and lower prices for natural gas resulting from new supplies of shale gas are bringing competition with regard to power generation choices.\nNew and proposed EPA regulations would impose new requirements on fossil fuel-fired power plants. Some of these rules would be implemented at the federal level, while others would be implemented at the state level. They include the Cross-State Air Pollution Rule (which replaced the Clean Air Interstate Rule); the Mercury and Air Toxics Standards (MATS) (also known as the Utility Maximum Achievable Control Technology [MACT]) rule to reduce emissions of mercury, other metallic toxics, acid gases, and organic air toxics; proposals to regulate coal combustion residues; and the Clean Water Act Section 316(b) cooling water intake rule. However, only the Utility MACT rule is currently in effect. EPA also proposed standards in April 2012 for greenhouse gas (GHG) emissions which would require all new power plants to meet carbon dioxide emissions standards.\nPresident Obama recently announced a new climate change initiative in June 2013 which directed EPA to re-propose GHG emission standards for new electric power plants, and directed the agency to develop GHG standards for existing power plants by June 2015. Electric power generation is responsible for approximately 37% of U.S. domestic carbon dioxide emissions (the primary anthropogenic GHG), and over one-third of all U.S. GHG emissions. While most of these plants are well-maintained, they are generally not as efficient as newer power plants. With electric plant aging and new environmental requirements necessitating investment to continue operations, many utilities are looking at retirement or replacement decisions, especially for older coal plants.", "TVA is facing the same forces driving change as is the rest of the electric power industry. To plan for the future of its system, TVA was required by the Energy Policy Act of 1992 ( P.L. 102-486 ) to use a least-cost planning process to select energy resources for system use. TVA thus employs the integrated resource plan (IRP) methodology to account for system costs which set the cost of service used as the basis for its electricity rates.\nThe [IRP] will equip TVA to meet its customers' needs effectively while addressing the substantial challenges that face the electric utility industry. The planning direction it recommends will give TVA flexibility to make sound choices amid economic and regulatory uncertainty. This recommended planning direction balances costs, energy efficiency and reliability, environmental responsibility and competitive prices for customers.\nIn the 2011 IRP, TVA states that it expects growth in the demand for electricity in its service territory, but not at the levels in past periods. However, when considering overall growth in demand and the levels of power generation it can expect from its viable generation resources, TVA identified a need for additional resources.\nTVA listed increasing competition, technological change, fuel costs, and environmental concerns as issues it faces. A primary concern has been the cost of complying with existing and anticipated emissions reduction requirements, which could make continued operation of many of TVA's aging coal-fired generation units not cost-effective, possibly resulting in their removal from service, perhaps permanently.\nTVA faces challenges related to fluctuating fuel prices and compliance with current and emerging environmental laws and regulations. In order to comply with these laws and regulations, TVA may install clean air equipment on coal-fired units and replace generating capacity of idled coal-fired units with cleaner-emissions nuclear and gas-fired units. Meeting these needs will require significant capital expenditures on TVA's part ...\nTVA states its goal in the IRP process is to \"[c]reate a flexible plan that allows for uncertainty and permits adjustment in response to changed circumstances.\" The 2011 IRP developed a \"recommended planning direction,\" which TVA has accepted as being consistent with its environmental policy and strategic vision. Among other actions, the IRP anticipates the idling of 2,400 MW to 4,700 MW of coal-fired capacity, replacing it with a variety of sources (as summarized in Table 3 ).\nTVA's 2011 IRP also plans for the addition of 850 MW of pumped-storage hydropower in the 2020 to 2024 timeframe to \"increase reliability and operational flexibility.\" It should be noted that while the IRP presents a range of options for generating resource development, it does not present a specific commitment or timeline for new generating resources.\nTable 4 lists TVA's current estimate of costs and its planned expenditures for dealing with current and expected environmental requirements related to its coal-fired power plants.\nHowever, with new and proposed environmental requirements for power plants, the long-term costs of meeting these requirements and modernizing TVA's power plants are expected to be much greater. The Obama Administration's 2014 budget projects that the capital costs to fulfill TVA's environmental responsibilities and modernize its aging generation system will likely cause TVA to exceed its $30 billion statutory cap on indebtedness.", "As of March 2013, TVA recorded provisions for almost $11 billion in regulatory assets, which it regards as \"incurred costs that have been deferred because such costs are probable of future recovery in customer rates.\" They include funds for decommissioning of its nuclear plants, non-nuclear decommissioning, clean-up of the coal ash spill at its Kingston coal plant, and unrealized losses on its commodity and interest rate derivatives. TVA's largest regulatory asset, accounting for over $5 billion of the total amount, is for deferred pension and other post-retirement benefits costs. TVA describes the process for recording regulatory assets, and the probability of recovering these costs (subject to approval by the TVA Board of Directors), as follows:\nTVA assesses whether the regulatory assets are probable of future recovery by considering factors such as applicable regulatory changes, potential legislation, and changes in technology. Based on these assessments, TVA believes the existing regulatory assets are probable of recovery. This determination reflects the current regulatory and political environment and is subject to change in the future. In the event that accounting rules for rate regulation were no longer applicable, TVA would be required to write off its regulatory assets and liabilities, resulting in charges to net income and other comprehensive income.\nIf TVA is to undergo privatization or some change of its status as a government corporation, it is possible that a write-down or write-off of these regulatory assets will occur, as large deferred regulatory assets and costs present a potential financial risk to any acquiring entity in terms of cost recovery.", "TVA is required by the TVA Act to be self-supported using funds from the sale of electric power. The TVA Act also authorizes TVA to issue bonds, notes, or other forms of indebtedness up to $30 billion (total outstanding amount) at any one time. These instruments of indebtedness are used to provide financing for construction of power plants and other related capital needs.\nThe Corporation [i.e., TVA] is authorized to issue and sell bonds, notes and other evidences of indebtedness (hereinafter collectively referred to as \"bonds\") in an amount not exceeding $30,000,000,000 outstanding at any one time to assist in financing its power program and to refund such bonds. The Corporation may, in performing functions authorized by this Act, use the proceeds of such bonds for the construction, acquisition, enlargement, improvement, or replacement of any plant or other facility used or to be used for the generation or transmission of electric power (including the portion of any multiple-purpose structure used or to be used for power generation); as may be required in connection with the lease, lease-purchase, or any contract for the power output of any such plant or other facility; and for other purposes incidental thereto.\nTVA recognizes the challenge that this limit poses to its plans to comply with environmental requirements and modernize its power plants, and has begun to explore ways to fund these needs.\nTVA faces challenges related to fluctuating fuel prices and compliance with current and emerging environmental laws and regulations. In order to comply with these laws and regulations, TVA may install clean air equipment on coal-fired units and replace generating capacity of idled coal-fired units with cleaner-emissions nuclear and gas-fired units. Meeting these needs will require significant capital expenditures on TVA's part, but TVA is constrained by the TVA Act which authorizes TVA to issues bonds, notes, or other evidences of indebtedness (\"Bonds\") in an amount not to exceed $30.0 billion outstanding at any one time. Without a legislative solution, this limitation may require TVA to seek alternative financing arrangements.\n... The TVA Act authorizes TVA to issue Bonds in an amount not to exceed $30.0 billion outstanding at any time. Due to this limit on Bonds, TVA may not be able to use Bonds to finance all of the capital investments planned over the next decade. However, TVA believes that other forms of financing not subject to the limit on Bonds, including lease financings (such as the lease-purchase transaction involving the John Sevier [combined cycle facility]), can provide supplementary funding. Also, the impact of energy efficiency and demand response initiatives may reduce generation requirements and thereby reduce capital needs.\nTVA had revenues of $11.2 billion in FY2012, but had a net income on those revenues of only $60 million, with fuel costs and purchased power being TVA's single largest expense at $3.9 billion, followed by operations and maintenance expense at $3.5 billion. TVA currently has approximately $24.1 billion in indebtedness in outstanding bonds and notes, which counts toward the statutory cap of $30 billion (which has been in place since 1979). TVA's debts are paid solely from TVA's net proceeds for the sale of electricity. TVA's debts are not guaranteed by, nor are they obligations of, the federal government. However, while TVA pays for this debt principally using (non-federally guaranteed) bonds, the federal government still records TVA's debt as part of the federal deficit since it is a federal government corporation.", "TVA's principal mission is arguably the minimization of flood damage and stewardship of navigation, with the dams on TVA's system being key to this mission. Hydropower may thus be seen as a secondary opportunity arising from the control of the Tennessee River and its tributaries. However, revenues from the sale of electricity are now required to fund TVA water resource programs which were previously funded by federal appropriations and user fees. In 2011, TVA received almost $12 billion from sales of electricity.\nMultiple purpose dams and reservoirs are designed to balance water flows, taking in water during periods of high flow when rainfall is high to prevent or reduce downstream flooding, and releasing water during periods of low flow. During dry periods, hydroelectric generation may be curtailed to allow reservoirs to fill.\nThe dam and reservoir system must maintain sufficient water volumes to accommodate other water resource needs, including drinking water, navigation, maintenance of fish habitats, and maintaining downstream water quality. The operation of multiple use dams must therefore accommodate several objectives, and releases of water for hydroelectric generation must include these other uses. If the hydropower assets were to be sold to private owners, how the navigation, flood damage mitigation, water quality, recreation, water supply, and land use missions could be safely and legally accomplished would be at question. Maximization of water flows for optimum power generation may not always be consistent with other demands of the river and reservoir system.", "In its FY2014 budget, the Obama Administration proposed a strategic review of the TVA, concerned that the agency is likely to incur substantial future costs as it seeks to modernize and meet environmental requirements. The strategic review may involve the definition of various options affecting the structure of TVA, and may involve some type of cost vs. benefits analysis of these options. At this time, however, the details and direction of the Administration's review of TVA are not publicly known.\nThe opinion of most TVA stakeholders seems to be in favor of keeping TVA as a federal government corporation, and they would likely oppose any proposal which might result in higher electricity rates. However, implementation of the current or a revised IRP is likely to result in increased electricity rates, even without a change in TVA's status.\nThe Energy Policy Act of 1992 required TVA to institute a least cost planning program, which is manifested in TVA's current IRP process. Under the TVA's 2011 IRP, certain capital expenditures were envisioned requiring TVA to plan for more than $25 billion over the next 10 years in capital investment. This projected level of investment could mean that the agency's $30 billion statutory limit would be quickly exceeded, given that current indebtedness is approximately $24 billion. TVA's own concerns on how to fund the costs of meeting anticipated environmental requirements and modernizing power plants highlighted the issue, with cost reductions, higher rates, creative lease and leaseback agreements, or raising the $30 billion statutory cap on indebtedness suggested as possible solutions. While the potential for a sale of TVA's assets (in whole or part) has been raised, Congress may wish to examine the issue of TVA's indebtedness and investigate whether it should:\nRaise the statutory limit. This option would allow TVA to fund the projected capital investment plan recommended by the 2011 IRP.\nThe current $30 billion statutory limit has been in place since 1979. An average expected service life for a fossil or nuclear steam power plant is approximately 40 years. Such an option would allow TVA to continue functioning as it does now, but would increase the federal deficit.\nAnother option would be to allow other electricity providers or competition within TVA's service territory, thus reducing the need for new TVA-owned or leased generation resources. A revision to the TVA Act would likely be required.\nMaintain the current statutory limit.\nSuch an option may require a reduced power generation mission, with strict limits on power plants or related infrastructure built to replace retired units. A new IRP would be focused on a reduced capital investment plan. The TVA Act would likely have to be revised to allow other or competing entities to supply power in TVA's service territory to make up for lost TVA generation.\nReduce the statutory limit.\nSuch an option would likely involve a federal plan to restructure TVA's indebtedness, with a goal of either reducing or paying off TVA's indebtedness. Such a plan may ultimately reduce the power generation mission of TVA. Funding of TVA's navigation, flood damage control, and other water resource missions may have to revert to federal government appropriations. The TVA Act would likely have to be revised to allow other or competing entities to supply power in TVA's service territory to make up for lost TVA generation.\nTVA's electric power mission requires that \"power shall be sold at rates as low as are feasible.\" Largely because of this directive, TVA's electric rates have been among the lower rates for electricity. However, given TVA's projected capital requirements identified by the IRP process, and TVA's statutory limit on indebtedness, Congress may want to consider:\nWhether to amend the TVA Act, allowing TVA to sell (either in whole or in part) its wholesale power at market-based rates.\nSuch an option may modify the mission to provide power at costs as low as possible, but may reduce the need for TVA to finance some portion of its future power plant construction needs, and thus may reduce TVA indebtedness.\nThe Administration has stated its belief that TVA has achieved its original objectives, and these original objectives no longer require federal participation. However, keeping TVA as a federal government corporation appears to be the preference of most TVA stakeholders. In looking at the issue, Congress may want to:\nAllow TVA to continue as it does, funding its needs from operating revenues, power program financing, and creative approaches to financing new power plant construction.\nNo change to the current mission of TVA would be made. However, given the ongoing strategic review, some type of administrative determination may be required at some point to ensure that TVA has the means to capably address its projected future cost obligations.\nRedefine TVA's status and designation as a government corporation.\nSince TVA debt securities are not obligations of the U.S. government and do not carry a government guarantee, TVA's current indebtedness has arguably little or no real impact on the federal budget. Since no single definition of \"government corporation\" currently exists, a potential definition of a new \"self-sustaining\" entity may be designed to remove TVA's indebtedness from the balance sheets of the federal government. New legislation would likely be required.\nAmong other implications, such an approach is likely to increase TVA's financing costs, since any perceived backing of TVA's debt by the federal government would be removed.\nConsider modifying TVA's missions.\nFor example, TVA's navigation, flood control, and related obligations and funding could be separated from its economic development, power generation, and technology innovation missions, perhaps investing these roles in at least two separate federal corporations. Such an option would likely require legislation to revise or repeal the TVA Act.\nExamine TVA's diverse missions, and determine itself whether these missions have been accomplished to such an extent that, going forward, federal participation is no longer warranted.\nEnding the federal role may mean a substantial portion of TVA's debt could be removed from being counted under the federal deficit. Such an option would likely require legislation to revise or repeal the TVA Act.\nIf privatization were to follow, dissolution of TVA as a single entity may ensue. A market-based valuation of TVA's assets would likely be required, with possible write-downs of some of these assets. It is possible that some of TVA's nuclear or fossil power generation may remain under federal ownership or trust, as decommissioning or other obligations related to these plants may inhibit sale at a fair market price or discourage private ownership altogether.\nIf the hydropower assets were to be sold to private owners, how the navigation, flood damage mitigation, water quality, recreation, water supply, and land use missions could be safely and legally accomplished would be at question. Maximization of water flows for optimum power generation may not always be consistent with other demands of the river and reservoir system." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h2_full", "", "", "", "", "", "h1_title", "h1_full", "", "h0_full", "h3_full", "h3_full h2_full" ] }

{ "question": [ "What authority does the TVA Act grant the TVA?", "How does the TVA use these abilities?", "To what extent has the TVA's statutory cap been reached?", "How are the TVA's debts guaranteed?", "What external changes impact the TVA?", "What factors affect the cost-efficiency of TVA energy generation units?", "How will these changes affect the TVA's indebtedness?", "Why did the Administration propose this review?", "What changes might the review consider?", "What options regarding the TVA might Congress consider?", "How does the TVA debt affect the federal budget?", "What options might Congress consider regarding TVA's indebtedness?", "What is the TVA's mission?", "How can the TVA dams be used?", "How do multiple-use dams complicate a potential privatized scenario?" ], "summary": [ "The TVA Act authorizes TVA to issue bonds, notes, or other forms of indebtedness up to $30 billion at any one time.", "These instruments are used to provide financing for construction of power plants and other related capital needs.", "TVA currently has approximately $24.1 billion in indebtedness in outstanding bonds and notes which counts toward the statutory cap of $30 billion (which has been in place since 1979).", "TVA's debts are paid solely from TVA's net proceeds for the sale of electricity. TVA's debts are not guaranteed by, nor are they obligations of, the federal government. However, while TVA pays for this debt principally using bonds, the federal government still records TVA's debt as part of the federal deficit since it is a federal government corporation.", "The electric power industry in the United States is in a period of transition, and TVA is facing the same forces driving change as is the rest of the electric power industry.", "Primary concerns include fuel cost issues of coal-fired power generation vs. natural gas, and the cost of complying with existing and anticipated environmental requirements, which could make continued operation of many of TVA's aging coal-fired generation units not cost-effective, and perhaps result in their retirement.", "The Obama Administration's FY2014 budget projects that the capital costs to fulfill TVA's environmental responsibilities and modernize its aging generation system will likely cause TVA to exceed its $30 billion statutory cap on indebtedness.", "In proposing the strategic review, the Administration says that TVA has achieved its original objectives, and thus no longer requires federal participation.", "The strategic review may thus consider options for addressing TVA's financial situation and its effect on the federal deficit, with divestiture of TVA (in whole or part) to be considered among the potential alternatives, most of which would require amending the TVA Act.", "Congress may want to consider various options for TVA, which range from allowing TVA to continue as it does, funding its capital needs from operating revenues and power program financings, to modifying TVA's missions. Congress may also opt to redefine TVA's status and designation as a government corporation.", "Since TVA debt securities are not obligations of the U.S. government and do not carry a government guarantee, TVA's current indebtedness has arguably little or no real impact on the federal budget.", "These may include raising the statutory limit thus allowing TVA to fund the projected investment, examining TVA's capital investment plans and process, investigating ways to reduce TVA's statutory cap with an eye to reducing the impact on the federal deficit, or looking at ways to restructure TVA's indebtedness, with a goal of either reducing or paying off TVA's indebtedness.", "TVA's principal mission is arguably the minimization of flood damage and stewardship of water resources and navigation, with the dams on TVA's system being key to this mission and power generation arguably being a secondary concern.", "The operation of multiple use dams must be designed to accommodate several objectives, and releases of water for hydroelectric generation can also contribute to other water uses.", "Congress may want to consider how the navigation, flood control, and related missions may be safely and legally accomplished under a privatized scenario, since maximization of flows for optimum power generation may not be consistent with other demands of the river and reservoir system." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, 1, -1, 0, 0, -1, -1, -1, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Sea-Level Rise Issues for Federal Policymakers", "Part I. What Is Sea-Level Rise?", "Global Sea Level", "Regional Variation in GSL", "Relative Sea Level", "Causes of Sea-Level Rise", "Global Sea-Level Rise", "Greenhouse Gas Emissions and Natural Variability", "Uncertainties in Future Global Sea-Level Rise Projections", "Relative Sea-Level Rise", "Natural Forces Influencing Relative Sea Level", "Human Activities That Affect Relative Sea Level", "Addressing Activities Contributing to Relative Sea-Level Rise", "Part II. Sea-Level Rise and U.S. Coasts", "Introduction to Effects of Sea-Level Rise on Coasts", "Effects on Shorelines and Ecosystems", "Coastal Wetlands and Habitats", "Coastal Erosion", "Effects on Coastal Development and Society", "Coastal Development", "Coastal Storm Risk", "Coastal Nuisance Flooding", "Actions Addressing the Effects of Sea-Level Rise", "Federal Actions and Agencies", "Existing Federal Coastal Management Statutes", "Coastal Zone Management Act", "Coastal Barrier Resources Act", "Private and Local Actions", "Part III. Policy Considerations and Questions", "Considerations Related to the Causes of Sea-Level Rise", "Considerations Related to the Effects of Sea-Level Rise", "Federalism Considerations", "General Policy Considerations" ], "paragraphs": [ "", "Although the extent of future sea-level rise remains uncertain, sea-level rise generally is anticipated to have a range of economic, social, and environmental effects on U.S. coasts. Global sea level is rising due to warming and expanding oceans, melting glaciers, and melting ice sheets in Greenland and Antarctica, among other reasons. From 1901 to 2010, global sea levels rose an estimated 187 millimeters (mm; 7.4 inches), averaging a 1.7 mm rise annually; estimates are that from 1992 to 2010, the rate increased to 3.2 mm annually. The rates of relative sea-level rise at specific locations are likely more important to coastal communities and coastal ecosystems than the global sea-level average trends. Sea levels are rising between 9 mm and 12 mm per year (0.4 inches to 0.5 inches per year) along the Mississippi delta near New Orleans and between 1 mm and 2 mm (0.04 inches and 0.08 inches, or less) per year along some coastal shorelines in Oregon and Washington. Since the beginning of the 20 th century, coastal and tidal areas have seen significant population growth and associated development and infrastructure investments. The consequences of sea-level rise are of interest to Congress not only because of the local impacts on coastal communities and ecosystems but also because of the direct and indirect impacts and risks for the federal government.\nFollowing an introduction to sea-level rise issues for policymakers, the report is divided into three primary parts:\nPart I describes the phenomenon of sea-level rise. It introduces key terminology, measurements, trends, and causes. (See \" Part I. What Is Sea-Level Rise? \") Part II describes the types of effects that sea-level rise can have on U.S. coasts. It addresses effects on shorelines and coastal ecosystems and on coastal development and society. Part II describes federal actions to address sea-level rise and the tension between the federal role and actions taken by state, local, and private stakeholders. (See \" Part II. Sea-Level Rise and U.S. Coasts .\") Part III provides a primer on policy considerations. It raises considerations and questions associated with policies to address the causes and effects of sea-level rise. It also discusses federalism issues and general considerations associated with sea-level rise policies and investments. (See \" Part III. Policy Considerations and Questions .\")", "In 2010, roughly 100 million people lived in U.S. coastal shoreline counties (exclusive of the Great Lakes) and 2.9 million people resided in coastal shoreline counties of the U.S. territories. Many of these people may not be directly exposed to sea-level rise but may experience indirect effects on their communities or shoreline amenities. Of the U.S. coastal shoreline population, nearly 8 million people live in the 1% coastal flood zone (i.e., area in which the annual probability of coastal flooding is 1 in 100 or higher). Sea-level rise represents an increase in coastal flood and erosion hazards for exposed and protected shorelines, potentially expanding inland the 1% coastal flood zone. Higher sea levels may allow coastal storms to affect more people and cause more damage, which can result in broader social and economic effects.\nHigher sea levels increase permanent or temporary coastal land inundation, change shoreline dynamics and coastal erosion, and increase saltwater intrusion and hydrodynamic changes to coastal freshwater aquifers. These impacts are anticipated to result in more nuisance flooding and impeded drainage, more loss of lands to inundation, more shifts in habitat types (e.g., freshwater wetlands converting to brackish wetlands), less freshwater supply, and potential water-quality impairment. These changes may affect coastal species as well as coastal developments and their amenities (e.g., sandy beaches).\nSea-level rise affects the federal government both directly and indirectly. Federal facilities (e.g., military installations) and federal projects, such as navigation improvements and coastal storm damage reduction projects, often are located on U.S. coasts. Federally assisted infrastructure, such as roads and bridges, and docks, also may be affected by sea-level rise; they may experience more intermittent flooding or a decrease in their useful life. Private-sector enterprises and individuals own or control large portions of coastline real estate and infrastructure. If sea-level rise contributes to flooding and associated damages, the federal government can become involved through disaster assistance and the National Flood Insurance Program (NFIP) for homeowners and businesses. Much public infrastructure is uninsured.\nSeveral federal agencies are affected by sea-level rise and address sea-level rise in their work. The following are examples of how federal agencies are involved with sea-level rise:\nScience . Federal entities engaged in understanding sea-level rise include the National Oceanic and Atmospheric Administration (NOAA) in the Department of Commerce and the U.S. Geological Survey (USGS) in the Department of the Interior. NOAA, USGS, and other federal agencies survey coastlines and conduct research to understand coastal processes, hazards, and resources. Flood Mitigation and Recovery . The Federal Emergency Management Agency (FEMA) in the Department of Homeland Security works to reduce flood losses through risk-mitigation activities and disaster response and recovery, including the NFIP. Federal Facilities, Projects , and Programs . The Department of Defense, the U.S. Coast Guard, and the National Aeronautics and Space Administration (NASA) have extensive coastal facilities that are central to their missions. The U.S. Army Corps of Engineers (Army Corps) in the Department of Defense also has significant civil works in coastal areas, including its navigation improvements and its coastal flood risk reduction projects. A significant number of federal agencies have projects and programs that are relevant to or used in coastal areas that may be affected by sea-level rise, such as the Department of Transportation and the Department of Housing and Urban Development. Environmental Protection and Restoration . Department of the Interior agencies (e.g., U.S. Fish and Wildlife Service, National Park Service), NOAA, Army Corps, and U.S. Environmental Protection Agency (EPA) also are involved in coastal ecosystem restoration and protection activities. Regulatory and Planning . Much private and nonfederal coastal construction may also require Army Corps and EPA permits. Coastal states and territories develop and maintain their coastal zone management programs under the federal Coastal Zone Management Act (CZMA; P.L. 92-532, 16 U.S.C. §1451-1464) as implemented by NOAA.\nFuture development and economic growth along U.S. coasts may depend, to a certain extent, on the perceived risk of coastal hazards and the efficacy and efficiency of policies and investments at the local, state, and federal levels to mitigate that risk. Arguably, rising sea levels and extreme coastal storms during the 20 th and now 21 st centuries generally have not curtailed growth and investments along U.S. coasts. A long-standing concern has been the extent to which the federal government may contribute to vulnerable coastal development directly or inadvertently (e.g., federal disaster assistance, federal infrastructure programs, and federal tax policies). For example, some contend that local stakeholders may make decisions that benefit them under the anticipation that they will receive federal disaster assistance when coastal flooding occurs.", "Two descriptions of sea level are commonly used by scientists: global sea level (GSL) and relative sea level (RSL).", "Global sea level (GSL, sometimes global mean sea level ) is the average height of the Earth's oceans, as measured by satellite altimetry relative to a calculated reference ellipsoid. These global measurements, available since the first satellite ocean altimeters were placed in orbit in 1992, are combined so that the height of the world's oceans can be averaged into one number. The GSL value is significant because it allows scientists to measure trends, namely GSL rise, without having to consider whether the land surface is moving up or down along the coastline.\nSince 1992, satellites have measured an average GSL rise of about 3.2 mm per year (with a measurement error of +/- 0.4 mm per year, so that the range of GSL rise is 2.8 mm-3.6 mm per year). (See Table 1 and Figure 1 .) Thermal expansion of the oceans and melting from glaciers have been the dominant contributors to 20 th -century GSL rise. Meltwaters from the Greenland and Antarctic ice sheets have also contributed to GSL rise, and these contributions may have increased in the 21 st century. Another contributing factor comes from water storage on land—water impounded behind dams would reduce the amount of GSL rise because less water reaches the oceans, whereas groundwater pumped from wells would contribute to GSL rise because more water reaches the oceans as runoff or in other parts of the hydrologic cycle.\nSince the early 1990s, the satellite record has provided a relatively direct measurement of GSL. However, this record is short—about 25 years—compared with other sea-level measurements using tide gages. Tide gage records stretch back to the 18 th century in Europe, and systematic tide gage measurements began in the United States in the 19 th century. Several investigations have applied a variety of techniques to estimate the trend in GSL since the beginning of the 20 th century using tide gage data. (See Figure 2 .) The IPCC reported that even though different strategies were employed to account for changes in land motion, it is very likely that GSL rose an average of 1.7 mm per year (+/- 0.2 mm per year) from 1901 to 2010 (about 187 mm total, or approximately 7.4 inches). The IPCC also reported that it is likely that the rate of GSL rise increased from the 19 th century to the 20 th century. The average rate of 1.7 mm per year since 1901 is less than the rate measured by satellite altimeters since 1992; however, the rise in GSL has not been constant, according to the IPCC. For example, the IPCC reported that the trend of GSL rise in the satellite era is very likely higher than the average rate since 1901 but noted that it is also likely that GSL rose between 1920 and 1950 at a rate similar to that observed since 1992.\nOther factors complicate interpretation of satellite measurements, such as the role of volcanic eruptions. One recent study noted that the eruption of Mt. Pinatubo in 1991 had a cooling effect on the atmosphere, which affected sea-level rise, suggesting that the era of satellite measurements began in a highly anomalous environment. The study used a combination of modeling and analysis of satellite altimeter data to surmise that the Mt. Pinatubo eruption may have masked an acceleration of GSL that might otherwise have occurred. The study further concluded that barring another volcanic eruption, satellites may detect an acceleration of GSL rise in the coming decade.", "GSL represents the average value for the elevation of the surface of the world's oceans, but any particular location in Earth's oceans will likely differ from the average value. Several factors influence sea-surface height at any particular location on Earth. For example, average sea-surface heights off Bermuda are typically 1 meter higher than average sea-surface heights off Charleston, SC, because the Gulf Stream changes direction toward Bermuda. For the United States, average sea-surface heights are about 20 centimeters higher on the Pacific Ocean side than the Atlantic Ocean side because the water is less dense, on average, in the Pacific due to prevailing weather and ocean conditions.\nOverall GSL is rising, as Figure 1 , Figure 2 , and Table 1 show; however, significant regional variation in trends of sea-surface height around the globe—in addition to the factors discussed above—adds further complexity. For example, coastal communities on the U.S. West Coast did not experience significant sea-level rise from 1993 to 2012, even though the global average rose 3.2 mm per year, because the eastern Pacific Ocean exhibited a decrease in sea-surface height (shown in blue on Figure 3 ). That decrease in sea-surface height has been attributed to natural climate variability, such as El Niño, and the resulting changes to winds, ocean currents, temperature, and salinity, all of which affect sea level. However, some research indicates that the trend may have stopped and even reversed since 2012. This research indicates that another natural source of climate variability, the Pacific Decadal Oscillation (PDO), is undergoing a shift that is leading to higher sea levels in the eastern Pacific and lower sea levels in the western Pacific since 2012, the opposite of what is shown in Figure 3 .", "Relative sea level (RSL) refers to the elevation of sea level relative to the land surface from which it is measured. In many parts of the U.S. coastline, the elevation of the land surface is changing, due to a number of different causes. A change in RSL represents the combination of the change in land surface elevation and the change in GSL. At any two spots along the U.S. coastline, the trend in RSL value may be significantly different. This variation occurs because of the regional variation in GSL (discussed above) combined with regional variation in how the land surface elevation is changing. Figure 4 illustrates how different the change in the trend of RSL can be within the United States.\nAs the colored dots on Figure 4 indicate, the trend and direction of RSL varies dramatically in the United States. RSL is rising at a rate of 9 mm-12 mm per year along Louisiana's Mississippi Delta region near New Orleans, and RSL is dropping along parts of the Pacific Northwest coastline and southern Alaska. The land surface is sinking in places such as coastal southern Louisiana, increasing the rate of RSL rise, and the land surface is rising in parts of Alaska, outpacing the rise of GSL.\nRSL rise has been recorded primarily using tide gages. In the United States, the National Water Level Observation Network, currently operated by NOAA, provides tide gage sea-level data from 210 stations, two of which date to the 1850s. The tide gage network was established to ensure that nautical maps; shoreline maps; and elevations of homes, levees, and other coastal infrastructure were accurately referenced to sea level. Trends detected in the tide gage network data, along with other sources of information, provide the long-term record of RSL for the U.S. coastlines.", "GSL and RSL pose different policy challenges. Figure 5 illustrates the factors contributing to GSL and RSL rise. The drivers for rising GSL since 1900 are predominantly thermal expansion of the oceans due to warming ocean water and melting glaciers and ice sheets ( Table 2 ). The oceans have warmed due to a combination of natural variability and the influence of greenhouse gas (GHG) emissions on atmospheric temperatures. Similarly, glaciers and polar ice sheets have melted since 1900 due to a combination of natural variability and GHG-induced climate change and deposition of pollutants.\nThe global factors driving RSL change include those that influence GSL, but in some cases regional or local factors are responsible for the largest changes in RSL along the coastlines. These regional or local factors can be natural, such as the land rebounding upward after continental ice sheets melted at the end of the last ice age, or they can be due to human activities, such as groundwater pumping, oil and gas extraction, sediment compaction, land management practices, or other factors. (See Table 2 .) Understanding the relative contributions from these different drivers of RSL rise is important for crafting responses to help coastal communities predict, mitigate, and adapt to the changing risks that sea-level rise brings.", "According to some studies, precise satellite measurements of the Earth's energy budget and other global measurements since 1970 indicate that the net energy inflow to the climate system has increased and that the oceans have stored more than 90% of the increase in recent decades. These studies also indicate that the expansion of seawater associated with this energy storage has contributed about 40% of the associated GSL rise since 1971. Melting glaciers, combined with seawater expansion, explain about 75% of the rise in GSL over that period. The contribution to GSL rise from the Greenland and Antarctic ice sheets is considered to have increased since the early 1990s, although the precise amounts are not well understood.", "Global GHG emissions have increased significantly since the late 19 th century, and there is broad scientific agreement that the increased concentration of GHG in the atmosphere has exerted a discernible warming influence on both air and ocean temperatures, at least since the 1970s. Global atmospheric temperatures have risen since the late 1800s, but what portion of warming can be attributed to human activities over that time period is not precisely known. GSL has risen at an average of 1.7 mm per year since about 1880, as shown in Figure 2 . As with atmospheric temperatures, it is difficult to precisely attribute what proportion of GSL rise stems from human activities and what has been driven by natural influences (this is discussed further below in \" Uncertainties in Future Global Sea-Level Rise Projections \").\nThe three different studies of GSL rise plotted in Figure 2 show variations at the interannual and decadal-scale time spans, but overall all three studies indicate a fairly similar upward slope over the century. As mentioned above, satellite measurements show that GSL rise has averaged about 3.2 mm per year since the early 1990s, an increase compared with the 100+ year average of 1.7 mm per year. The current average rate of GSL probably is not unprecedented; studies indicate that a similar rate of GSL rise likely also occurred from 1920 to 1950.\nA challenge for policymakers and coastal communities is how to anticipate, plan for, and mitigate the effects of a longer-term overall rise in sea levels. The significant variations in sea-level rise occurring regionally and at the decadal time scale, such as those influenced by El Niño or the PDO, are superimposed on and may temporarily mask long-term trends of GSL rise.", "Policymakers may contend with a pattern of GSL rise that could look very different in the 21 st century compared to what Figure 2 shows, as the longer-term trends accumulate over time and regional trends change. The IPCC, for example, concludes that it is very likely that the rate of GSL rise in the 21 st century will exceed the rate observed in the 20 th century. Further, the IPCC states that sea level will continue to rise for centuries, with the amount dependent on future GHG emissions. In its assessment of future GSL rise, the U.S. National Climate Assessment expressed very high confidence that GSL will rise at least 0.2 meters but no more than 2.0 meters by 2100 (i.e., at least 8 inches to as much as 6.6 feet). For coastal communities, highly confident assertions that sea level will rise are significant for planning. However, the difference between a rise of 0.2 meters and a rise of 2.0 meters between now and the year 2100 could signify different approaches to planning for, mitigating, and responding to the effects of sea-level rise. This is discussed in more detail below in \" Part II. Sea-Level Rise and U.S. Coasts .\"\nBoth the rate of future global sea-level rise and its exact dependence on future GHG emissions appear uncertain for several reasons. Probably the biggest uncertainty is the future behavior of the Greenland and Antarctic ice sheets.\nEstimates of the Antarctic ice sheet contributions to GSL rise between now and 2100 vary widely. Continued GHG-driven warming in the future could create instability in the large ice sheets of West and East Antarctica and lead to collapse. The collapse of large Antarctic ice sheets presents the largest potential for sudden GSL rise, but current scientific understanding of ice sheet dynamics does not identify what factor or factors would unambiguously lead to a rapid and unstable ice sheet retreat.\nIn Greenland, melting has exceeded snow accumulation over the last few decades, so its ice sheet appears to have contributed to GSL rise. This trend is expected to continue and even increase in the next century. Unlike Antarctica, however, Greenland does not appear to be at risk of sudden ice sheet collapse.\nBecause the future behavior of both the Greenland and Antarctic ice sheets is relatively uncertain, an additional GSL rise of a few tenths of a meter on top of current projections is possible in the latter half of this century. GHG-driven climate forcing appears to be the main driver for future GSL rise. This implies that policies directed toward reducing sea-level rise would need to address the issue of global GHG emissions as a long-term approach to mitigating the effects of GSL rise. However, many scientists conclude that GSL will continue to rise for centuries even if GHG concentrations in the atmosphere are stabilized and that other measures may be needed to address the consequences of such rise.", "In many locations along the U.S. coastline, the elevation of the land surface near the shore is changing in a vertical direction. Where the land is moving down, the rate of RSL rise increases; where the land is moving up, the rate of RSL rise decreases.\nSeveral natural and human-caused factors influence RSL rise locally. Many of these factors could be amenable to regional and local policy alternatives to mitigate risks to communities and ecosystems. Some of these factors are discussed below.", "Some of the changes in land elevation are caused by natural forces, such as post-glacial rebound (also called glacial isostatic adjustment, or GIA). GIA raising land elevation is occurring most rapidly where the ice was thickest in North America about 20,000 years ago, during the peak of the last ice age, in the region around Hudson Bay and in parts of the southern Alaskan coastline (see Figure 4 ). However, as the land previously buried under thick ice is now rising, land in most of the contiguous United States is sinking. This land is sinking in response to GIA because as the ice pressed down on the crust in the north 20,000 years ago, the land not buried under ice tilted up. Now the reverse is happening, and land previously tilted up is tilting back down, like a continent-sized seesaw. For much of the U.S. coastline, downward tilting is occurring at rates between 0.5 mm and 2 mm per year. For the U.S. East Coast, land subsidence from GIA is about 1 mm-2 mm per year. Policymakers cannot change GIA, but coastal communities could account for its contribution to RSL in their planning, mitigation, and response activities.\nPlate tectonics and natural compaction of sedimentary layers in places such as river deltas are two other naturally occurring processes that cause vertical land movement. Regional uplift in parts of the Pacific Northwest coastline is likely occurring in response to tectonic activity associated with the Cascadia subduction zone (see Figure 4 ). Loading of sediments from the Mississippi River, shallow and deep compaction of sediments, and possibly faulting are likely responsible for some of the high rates of land subsidence in southern Louisiana, including the New Orleans area.", "Despite the contributions from natural forces, most land subsidence in the United States is caused by human activities. (See Table 2 .) Groundwater withdrawals in excess of recharge to the aquifer from precipitation are responsible for about 80% of land subsidence in the United States. Groundwater pumped to the surface decreases pressure in the aquifer, and the aquifer system compacts, resulting in land subsidence. For example, groundwater withdrawals in the southern Chesapeake Bay region have accounted for more than half of overall land subsidence in the region—about 1 mm-5 mm per year. Combined with GIA, these withdrawals have resulted in the region having the highest rate of RSL rise on the U.S. East Coast ( Figure 6 ). On the West Coast, land subsidence due to groundwater pumping was first recognized in the Santa Clara Valley in California. At the northern end of the valley, land adjacent to San Francisco Bay dropped 2 feet-8 feet in elevation by 1969 since groundwater pumping began in the early 20 th century, resulting in 17 square miles of formerly dry land sinking below high-tide level.\nIn some locations, oil and gas extraction also causes land subsidence. Oil and gas pumped to the surface decreases pressure in the reservoir, and the reservoir system compacts, resulting in land subsidence. Land subsidence in the Houston-Galveston area in Texas from both groundwater and oil and gas extraction has resulted in RSL rates exceeding 25 mm per year in some locations at different times in the 20 th century. Oil and gas pumping-induced subsidence is largely restricted to the production field, whereas subsidence from groundwater pumping may have a more regional effect. Land subsidence in the Houston-Galveston area and the high rates of RSL rise likely have increased the frequency and severity of flooding in the region.\nLand subsidence also occurs when organic rich soils (often called peats ) are drained of water for agricultural or other purposes. Organic rich soils can be up to 80%-90% water by volume. When these soils are drained, the effects of compaction, desiccation, and oxidation can result in subsidence. Reclamation of organic rich soils mainly for agricultural purposes in the Sacramento-San Joaquin Delta in California led to land subsidence of up to 25 mm-75 mm per year in places, resulting in some Delta islands subsiding as much as 15 feet below sea level.", "Groundwater withdrawal, oil and gas extraction, and draining of organic soils have long been recognized as factors leading to land subsidence. Land subsidence along the coastline exacerbates sea-level rise and increases the risks of flooding, seawater intrusion, and other impacts. Unlike for GIA or tectonic movements, policymakers could enact policies that mitigate land subsidence and potentially alter the rate of RSL rise along the coastlines. For example, some conclude that subsidence in the Houston-Galveston region led the Texas legislature to create the Harris-Galveston Subsidence District, which has the authority to restrict groundwater withdrawal. In the Santa Clara Valley, local management of groundwater resources reduced land subsidence that had dropped 2 feet-8 feet in elevation by 1969 caused by groundwater pumping since the beginning of the century.", "After a brief introduction to the effects of sea-level rise on U.S. coasts, Part II of the report is divided into the following three sections:\neffects on shorelines and ecosystems, which discusses how coastal processes and topography influence how U.S. shorelines and ecosystems may change with sea-level rise; effects on development and society, which describes U.S. coastal development and its coastal storm and nuisance flooding risks; and actions addressing the impacts of sea-level rise, which describes the activities of various federal agencies, existing federal coastal management statutes, and the role of public and private actions.", "The effects of sea-level rise on U.S. coasts can be broadly categorized as\npermanent or episodic inundation of low-lying lands, increased erosion and shoreline change (e.g., barrier island migration), increased impacts and damages from coastal storms, and saltwater intrusion of estuaries and aquifers.\nThese physical effects have both environmental and societal consequences. Figure 7 illustrates how a rising sea level influences coastal processes and resources and shows some of the societal implications.\nA suite of potential policy response options exists for each effect. Policy choices on how to respond to sea-level rise may influence not only human behavior and investments along the coast but also what types of physical response (e.g., hard or nature-based shoreline stabilization) are undertaken to manage the impacts for undeveloped, somewhat developed, and extensively developed coastlines. For policymakers, choosing a response is challenging because of the difficult tradeoffs that each response represents (e.g., short- versus long-term costs and benefits, environmental or development losses or benefits). As previously noted, uncertainty in future rates of sea-level rise also complicates the decision context; for example, the estimated range of 0.2 meter (8 inches) to 2.0 meter (6.6 feet) of sea-level rise by 2100 makes it challenging to agree upon how to evaluate and compare the costs and benefits of alternative responses, policies, and investments.", "The effects of sea-level rise are dependent on a shoreline's topography and hydrodynamics. Coastal topography varies dramatically across the United States. Shorelines have varied forms—marsh, rocks, bluffs, beach, forest, and developed areas and infrastructure; each is affected differently by rising sea levels. Some shorelines are directly exposed to wave action, whereas others are sheltered. Some shorelines are highly erodible; others are resistant to erosion.\nBecause of natural coastal processes, some less-developed and undeveloped coastal areas may not necessarily be inundated by sea-level rise; instead, these areas may adapt to rising sea levels. Recent research suggests that 70% of the coastal landscape of the northeastern United States may have some capacity to adapt to sea-level rise—that is, many low-lying areas may be able to adapt rather than be inundated (e.g., marshes may build vertically in response to sea-level rise). For example, unconsolidated sandy coasts have the capacity to adjust to changing conditions if nearby sand sources are available. The availability of sand can be influenced by forces and events that shape coastal sediment transport and dispersion. For developed and rocky areas, a direct relationship between sea-level rise and inundation is likely. This diversity in vulnerability to sea-level rise is captured by the U.S. Geological Survey's effort to assess the U.S. Atlantic, Pacific, and Gulf of Mexico coasts, as shown in Figure 8 .\nFor small islands and their populations, the options for adjustment to higher sea levels are particularly constrained. Understanding where inundation and dynamic coastal responses may occur is significant for understanding how coasts may evolve. How coasts evolve may determine which policies and investments are likely to be most effective for adjusting to higher sea levels.\nIn addition to sea-level rise, other local physical factors shape how higher sea levels affect shorelines. These factors include coastal slope, tidal range, wave height, sediment availability, and other geomorphic characteristics. Short-term events, such as a large storm with intense surge and wave action, may contribute to rapid and concentrated coastal land loss or, in some other cases, cause land growth through accretion. Discerning where and under what climate conditions coastal processes are dominated by short-term events, such as storms, rather than long-term processes, such as sea-level rise, is part of the challenge of anticipating the evolution of U.S. coasts.\nAssessing the potential effects of sea-level rise depends in part on the accuracy of coastal data and mapping, especially elevation information. Advances in research, monitoring, and data analyses—combined with greater incorporation of morphologic, ecologic, and anthropogenic factors—are anticipated to improve understanding of coastal dynamics and to enhance the efficacy of sea-level rise planning efforts. Some effects of sea-level rise are particularly hard to predict. For example, complex interactions may influence the extent to which sea-level rise contributes to coastal lagoons experiencing changes in circulation, tidal exchange, and turbidity. How coastal changes may ultimately affect societal concerns, such as commercial fishing harvests, is challenging to predict. Moreover, fisheries changes may be more influenced by factors other than sea-level rise, such as higher water temperatures, coastal development impacts on habitat, and mortality from fishing activities.", "Wetlands' ability to adjust to higher sea levels may depend in part on their ability to adjust vertically and to migrate inland. Inland migration is partially determined by topography, as well as by the presence or absence of human settlements and coastal flood defenses. For undeveloped coasts, the types of habitat and species in wetlands, bays, and estuaries may change with higher sea levels due to alterations in inundation frequency, salinity, and shoreline dynamics. For example, parts of a low-lying terrestrial ecosystem, such as the Florida Everglades, may transition from freshwater-dependent species to salt-tolerant species.\nTo illustrate variation in the effects of sea-level rise, one study attempted to identify how six coastal estuaries in Florida would lose or gain certain coastal terrestrial ecosystems under a 1-meter sea-level rise scenario. Certain coastal habitat types—most notably coastal forest and undeveloped dry land—are likely to be lost, whereas other coastal habitats, such as mangroves, transitional saltmarsh, and saltmarsh, may become more common. Habitat transitions may take decades depending on the plant species involved. Changes in estuaries are of particular interest because of estuaries' productivity and value. Estuarine fish and shellfish species comprise a substantial portion of commercial and recreational catch.\nThe rate of sea-level rise also may determine whether the coasts experience rapid and irreversible change or whether marshes, beaches, and barrier islands are able to adapt. For example, slower rates of sea-level rise may allow for some coastal ecosystems (mangroves, estuarine beach, and ocean beach) to adjust and persist. However, these ecosystem types may convert into open water with faster rates of sea-level rise. The relatively rapid rate of RSL rise in portions of Louisiana and the low elevation of coastal lands make portions of the state particularly susceptible to the conversion of land into open water.", "How sea-level rise may alter coastal erosion is a function of the land forms and the nearshore hydrodynamics (e.g., the changing role of reefs and wetlands in dampening wave energy as the result of higher water levels and potential changes in storm surges). The extent to which erosion can be attributed to sea-level rise versus other human activities (e.g., dredged navigation channels, shoreline armoring, inland dams' capture of sediment) is often difficult to distinguish. For the mid-Atlantic, erosion is anticipated to dominate changes in shoreline position in response to sea-level rise and storms over the next century. For some higher sea-level rise scenarios, some barrier islands may undergo significant changes, such as segmentation or rapid island migration. Research on coastal erosion in Hawaii found that shoreline change rates varied greatly around each island; the study estimated that the average shoreline recession in 2050 would be nearly twice the historical extrapolation of past recession rates.", "In addition to the anticipated effects of sea-level rise on shorelines and coastal ecosystems, sea-level rise may have broader societal implications through its effects on developed areas of the U.S. coast. For developed coastal areas, higher relative sea levels can increase the frequency and duration of nuisance flooding, as well as contribute to the risk associated with coastal storms. Saltwater intrusion into estuaries and aquifers may also affect freshwater availability for coastal communities. (For more, see the box \"Sea-Level Rise and Groundwater.\") Sea-level rise may pose particular physical, economic, and cultural challenges for islands and their economies (e.g., Hawaiian islands, Florida Keys) as well as the islands of U.S. territories and freely associated states.", "Some U.S. coastal activities and developments are located at the coast due to necessity, such as ports and fishing operations and certain military installations, or for cultural reasons, such as communities of indigenous coastal peoples. Other investors and households choose to locate on the coast. The recreational, aesthetic, and lifestyle amenities of the coasts often are a particular attraction. Some coastal areas are known for high property values and incomes. Other coastal areas have populations with more limited economic means or are otherwise considered to be socially vulnerable; these groups may have fewer resources available to prepare for sea-level rise or to cope with some of the consequences.\nU.S. states vary in how much of their coasts are developed, intermediately developed, undeveloped, or actively conserved. For example, along the Atlantic coast, the jurisdictions (including areas that are tidally influenced) with the highest percentage of developed lands within 1 meter of sea level are the District of Columbia (82%), Connecticut (80%), and New York (73%). The Atlantic coastal states with the most land within 1 meter of sea level that is either undeveloped or conserved are Maryland (65%), North Carolina (58%), and Georgia (57%).\nMany factors shape development patterns, including state and local restrictions on land use and coastal structures, as well as demand and financing for such development. Land use in the United States, other than federal lands, is the jurisdiction of state and local governments. Similarly, state and local entities adopt building requirements and building codes (although some federal programs may require compliance with certain standards and requirements). Some states have considerably more assets, people, and businesses at risk than others. For example, many of Florida's coastal counties have vulnerable roads, ports, airports, and energy facilities and a significant coastal recreation economy, as well as significant population centers and private property, which may be impacted by rising sea levels. For a discussion of the implications of sea-level rise for California's shorelines and the state's water supply system, see \"California and Sea-Level Rise\" box.", "Sea-level rise exacerbates the risks associated with flooding from coastal storms and precipitation. The extent to which sea-level rise may increase the risk of flooding from coastal storms to developed areas depends on the specifics of the storm (e.g., occurrence during high or low tide) as well as on the local characteristics of the coast. In some locations, new coastal and tidal areas may be at risk of coastal storm flooding due to higher seas allowing storm surge and floodwaters to penetrate further inland. Sea-level rise also may increase flood damages by inhibiting drainage of precipitation and floodwaters in low-lying areas.\nCoastal storms can result in some of the most expensive natural disasters in the United States; therefore, potential increases in damages may raise federal, state, and local financial concerns related to disaster response and recovery. A U.S. Environmental Protection Agency report using climate change projections estimated the potential future economic impacts of combined storm surge and sea-level rise on U.S. coastal property. The report estimated that cumulatively during this century (2000-2100), adaptation to and damages from the combined coastal flood hazard to infrastructure and property could cost $0.8 trillion in the United States; these costs represent investments in cost-effective protective measures, storm damages (not addressed by the protective measures), and abandoned property.\nSea-level rise increases flood risk by increasing the flood hazard from storms and precipitation; the higher hazard means that more coastal areas are more vulnerable. Flood and other types of natural-disaster risk are often expressed as a probabilistic function of\na hazard, which is the local threat of an event (e.g., probability of a Category 5 hurricane storm surge); vulnerability, which allows a threat to cause consequences (e.g., level of protection and performance of shore-protection measures); and consequences of an event (e.g., loss of life, property damage, economic loss, environmental damage, reduced health and safety, and social disruption).\nFor sea-level rise, some stakeholders promote policies to reduce the hazard (e.g., climate change mitigation, reduced groundwater withdrawal). Others are interested in reducing vulnerability (e.g., shore-protection measures, storm-surge gates). Other stakeholders support policies to reduce consequences through hazard-mitigation measures, such as development restrictions, building codes, flood-proofing of structures, buyouts of vulnerable properties, and improved evacuation routes.", "Relative sea-level rise contributes not only to flooding from large storms but also to the incidence and duration of lesser flood events (e.g., regular flooding during high tides); these events are known as nuisance flooding, because a main impact is public inconvenience, or sometimes referred to as \"sunny day\" flooding because the flooding often is not associated with a storm or precipitation. Nuisance flooding often consists of shallow flooding of infrastructure and buildings, as shown in Figure 11 . According to NOAA's 2014 report, Sea Level Rise and Nuisance Flood Frequency Changes around the United States , nuisance flooding has increased dramatically in many U.S. coastal regions since the mid-20 th century. Some scholars argue that the widespread, cumulative annualized costs associated with regular nuisance flooding may be much greater than the costs associated with the annual average flood damages from larger storms. Nuisance or minor flooding can also contribute to environmental change in affected areas. Nuisance flooding, when considered as a single event, is high probability but relatively low consequence; its full impacts are often due to the cumulative damages from repeated nuisance flooding. Although this flooding may be regularly repeated, it often may fall outside the purview or priorities of many federal disaster programs and efforts, which target their efforts on events that overwhelm local and state emergency response resources or on more disruptive and costly events.\nDecisionmakers in developed areas subject to nuisance flooding and other persistent sea-level rise impacts are turning to a variety of engineering solutions to cope with the near-term impacts. These solutions include adding pumping capacity and control valves to storm sewers; armoring sewer systems to keep storm water out; raising roadways; using gravity, injection wells, and trenches to drain neighborhoods; adding salinity control structures; and injecting water into aquifers to retard salinity intrusion. Decisionmakers in these areas also are employing public communication campaigns and developing public health efforts, as well as using public acquisition of at-risk properties in some instances.", "Adjusting to sea-level rise presents an array of policy challenges and raises federalism questions regarding decisionmaking and responsibility. Part of the reason that the federal response to sea-level rise is particularly challenging is that regulations for coastal land use and requirements for coastal buildings and developments often are central to adjustment choices. According to a 2009 report by the U.S. Climate Change Science Program,\nKey opportunities for preparing for sea level rise include: provisions for preserving public access along the shore; land-use planning to ensure that wetlands, beaches, and associated coastal ecosystem services are preserved; siting and design decisions such as retrofitting (e.g., elevating buildings and homes); and examining whether and how changing risk due to sea-level rise is reflected in flood insurance rate maps.\nFor coastal developments, the fundamental question for public and private decisionmakers is under what circumstances to protect, accommodate, or retreat in light of sea-level rise and other coastal hazards and their risks. In general, restrictions on private land-use decisions are largely the domain of local and state governments. Similarly, the requirements for coastal developments (e.g., required coastal setbacks) and buildings (e.g., building codes related to elevation of structures and equipment) have been set by local and state governments. The federal government, however, bears part of the financial burden associated with the consequences of coastal flooding through its disaster assistance and the National Flood Insurance Program (NFIP).\nA challenge will be that the options some local stakeholders may want to pursue may not be affordable or sustainable in the long run or when evaluated from a national perspective. That is, local stakeholders may make decisions that produce benefits for them if they anticipate being protected from negative outcomes; this is known as a \"moral hazard\" problem. For example, local entities may approve coastal developments that are at risk and make related public infrastructure investments in roads, schools, water systems, and the like, if the local entities believe federal disaster assistance (and related federal tax treatment of disaster losses) would be available when a coastal disaster occurs. This is also the case for decisionmaking by private interests. Some of the burden of the risk is transferred from the private interest and local government to the federal taxpayers. Another aspect that may be shaping decisionmaking behavior is a decision bias to underrate the risks, especially related to low-probability, high-consequence events such as large coastal storm surges.\nA public policy challenge related to sea-level rise is the intergenerational transfer of risk. Sea-level rise trends indicate that the coastal community will likely be at more risk in 25 years and 50 years. To not develop because of those future risks would represent a decision to forgo current use and enjoyment benefits to avoid future costs. Some view this as an unnecessary sacrifice given the uncertainty related to sea-level rise at the end of the 21 st century and the ability to adapt to some sea-level rise. For others, this choice would be altering current practices to reduce the potential consequences of sea-level rise for future generations.", "For Congress, a related policy question is to what extent federal programs, regulations, and funding influence how coasts develop, redevelop after extreme events, and respond to coastal erosion and shoreline dynamics. For example, most communities in the United States adopt minimum floodplain management standards as a condition of their participation in the NFIP. Other examples of how federal programs are directly involved in preparing for sea-level rise are described in the box \"Selected Examples of Sea-Level Rise-Related Federal Action Since 2012\" and the later box on the \"Proposed 'Living Shoreline' General Permit.\" In addition to federal agencies that are directly involved in sea-level rise science and research and coastal regulatory activities, several federal agencies are indirectly involved in coastal projects and programs that address or could respond to, be affected by, or be exacerbated by sea-level rise. The effect of these federal actions will be determined as they are implemented.", "The primary federal statutes that directly address coastal development pressures are the Coastal Zone Management Act of 1972, as amended (CZMA, P.L. 92-532, 16 U.S.C. §1451-1464) and the Coastal Barrier Resources Act of 1982, as amended (CBRA, P.L. 97-348 ). CBRA designates undeveloped coastal barriers and adjacent areas. Most federal spending that would support additional development is prohibited in the CBRA designated areas. Under the CZMA, NOAA approves the coastal zone management programs developed by participating coastal states and U.S. territories and provides limited funding for coastal zone planning and management.", "The CZMA was enacted to encourage planning to protect natural resources while fostering wise development in the coastal zone. The CZMA recognizes that states (and, in some states, local government) have the lead responsibility for planning and managing their coastal zones. The CZMA authorizes grants to states and territories to develop and implement coastal management programs to address competing development, economic, and recreation pressures. Thirty-four of the 35 eligible states and 5 territories participate in CZMA. CZMA grants can be used for numerous CZMA-defined coastal zone enhancement objectives, including managing the effects of sea-level rise and reducing threats to life and property. Participating states and territories have developed widely varying programs that emphasize different elements of coastal management. The state programs are intended to discourage unwise development in flood-prone and exposed areas and to encourage protection of natural protective features along the coast, including beach systems, coastal barriers, and wetlands. For more on the act, see CRS Report RL34339, Coastal Zone Management: Background and Reauthorization Issues , by Harold F. Upton.", "The CBRA and subsequent amendments to it have designated undeveloped or relatively undeveloped coastal barriers and adjacent areas, where most federal spending that would support additional development is prohibited. There are 585 of these \"system units\" encompassing nearly 1.3 million acres of land and associated aquatic areas. The units are along the Gulf of Mexico, the Atlantic Coast, and the Great Lakes and around Puerto Rico and the U.S. Virgin Islands. Every CBRA unit is identified in law and with a reference to a map. The designation of units and the drawing of boundaries have been contentious for some units. Only Congress can modify the unit boundaries, and it has enacted numerous site-specific amendments. This program does not prohibit or regulate any activity; it merely prohibits the federal government and federal programs from being used to support additional development within any designated unit. Even with the CBRA prohibitions on federal programs, development has occurred at some units, especially along the southeast Atlantic coast. Also, CBRA does not preclude federal expenditures to restore designated units to former levels of development after natural disasters (e.g., reconstruction of roads and water or sewer systems to former dimensions and capacity). In addition to system units, the CBRA system also includes 272 \"otherwise protected areas\" encompassing 1.9 million acres, which generally coincide with existing conservation or recreation areas, such as state parks and national wildlife refuges. Unlike the broader prohibitions of the system units, the only CBRA spending prohibition in these areas is the prohibition on federal flood insurance.", "Decisions of how to respond to coastal hazards are largely made by individual landowners, communities, and states. The result is a wide variety of responses across the United States. Historically, landowners and communities facing coastal erosion and coastal flood risks have invested in protection, typically using hard coastal defenses, such as seawalls or groins, or nonstructural approaches, such as dune construction and beach replenishment. Some researchers estimate that as much as 14% of the shoreline of the contiguous United States on the Pacific Ocean, Atlantic Ocean, and Gulf of Mexico has hardened infrastructure, such as seawalls, jetties, and groins. Much of this shoreline armoring has occurred along the sheltered shorelines of the Atlantic and Pacific coasts (e.g., estuaries, lagoons, tidally influenced rivers). According to NOAA, if shoreline hardening continues at the current rate of around 200 kilometers per year (125 miles per year), nearly one-third of the contiguous U.S. shoreline may be hardened by 2100.\nHardened shorelines generally support fewer species than the more complex habitats of natural shorelines and may require additional financial investments in operation and maintenance and in rehabilitation and replacement. Given some of the less-desirable unintended effects of coastal armoring (e.g., beach loss following seawall or jetty construction), alternative means to manage erosion and reduce storm-surge impacts are also being pursued, such as protection of natural dunes and bluffs and investments in oyster-reef restoration or marsh creation. Researchers have identified that 50% of the tidal wetlands of the South Atlantic and Gulf of Mexico are threatened by potential future hardening based on population, development, and storm trends. Although softer approaches to shoreline stabilization may require maintenance investments over time (e.g., replantings), they often become more stable as plants, roots, or oyster reefs grow.\nMany private and local government efforts to manage erosion require a federal permit under the Clean Water Act. Advocates for nature-based approaches for stabilizing shorelines have argued that the current regulatory programs have favored the use of hard solutions rather than nature-based approaches. In 2016, the Army Corps of Engineers proposed a general permit for \"living shorelines\" that may facilitate the permitting, and therefore the adoption, of nature-based approaches for managing coastal erosion. (For more on this proposal, see the box \"Proposed 'Living Shoreline' General Permit.\")", "Sea-level rise raises several questions: What does sea-level rise portend for future economic development of U.S. coasts? How does sea-level rise affect the safety and quality of life of coastal residents? How does sea-level rise alter the coastal ecosystems and potentially alter the benefits that society derives from those ecosystems, such as recreation and commercial fisheries? Near-term choices on managing and adapting to sea-level rise have the potential to significantly shape the responses to these questions and the future of U.S. coastal development.\nGeneral categories of policy options related to sea-level rise include the following:\nMaintaining the status q uo . Current government programs, policies, and funding would continue. Reducing the g lobal r ise in sea l evel . Policies for addressing the human activities influencing sea-level rise could include pursuing domestic and international GHG-mitigation efforts. Reducing the r elative r ise in sea l evel . Policies to address the local or regional drivers of sea-level rise could focus on activities that contribute to land subsidence. Reducing v ulnerabilities to sea-level r ise . Policies could foster reducing vulnerability to the effects of sea-level rise (e.g., coastal flood risk reduction projects using dunes or storm-surge gates). Policies also could attempt to foster environmental and social resilience; these policies could include protection of certain coastal habitats, including those that contribute to natural coastal flood defenses. Reducing c onsequences of sea-level r ise . Policies could promote actions that reduce the consequences of the effects of sea-level rise. These actions could include various hazard-mitigation measures, such as development restrictions, building codes, flood-proofing of structures, buyouts of vulnerable properties, and improved evacuation routes.\nFor all of the policy options, there are the underlying questions of the policies' costs and benefits and of who will bear the costs of not pursuing or pursuing the policies.", "Future rates and levels of sea-level rise are uncertain and likely will be determined by a complex mix of phenomena and activities. This uncertainty complicates public and private decisionmaking regarding policies and investments related to coastal development and protection. Considerations for Congress related to the causes of sea-level rise include the following:\nHow well understood is the current and projected rate of sea-level rise? What factors contribute to changes in sea level, and which of these represent natural variability and which may be influenced by human activities? How may factors that affect sea level change in the future? What are the local, state, and federal responsibilities for managing and mitigating activities that may exacerbate the rate of relative sea-level rise?\nPolicymakers may contend with a pattern of sea-level rise that could look very different in the 21 st century compared to the 20 th century. Global sea levels may rise at least 0.2 meters (about 8 inches) but could rise 10 times that amount, or even higher, depending on the behavior of the Antarctic and Greenland ice sheets, according to many scientists. A better scientific understanding of how the two large ice sheets will contribute to sea-level rise may assist coastal communities with their approaches to planning for, mitigating, and responding to potential impacts. Further, recognizing the multiple factors that contribute to relative sea-level rise, such as the local and regional activities that exacerbate or mitigate land subsidence, may be of first-order importance.", "A 2007 report of the National Academy of Sciences entitled Mitigating Shore Erosion Along Sheltered Coasts stated that \"sea-level rise is chronic and progressive, requiring a response that is correspondingly progressive. Attempts to follow a 'hold the line' mitigation strategy against erosion and sea-level rise by coastal armoring will result in a steady escalation in both the costs of maintenance and the consequences of failure.\" The report's statement acknowledges that actions may be taken to manage the impacts of sea-level rise and that significant financial investments in protective and stabilization actions may be cost-effective for some developed areas. However, these actions will have costs, and the consequences of failure may be significant. Some responses may work well for a few decades but may eventually lose their utility or efficacy in the face of steadily higher sea levels. Communities and nature, however, have been adjusting to shoreline dynamics and coastal hazards for centuries; the current question is how to respond efficiently and effectively.\nConsiderations for Congress associated with the impacts of sea-level rise include the following:\nWhat is the risk of sea-level rise to the nation, its population, federal facilities, federal operations, critical infrastructure and systems, and the national economy? What are the guiding principles for the federal role in coastal projects and activities given sea-level rise and other coastal hazards (e.g., what defines the boundaries and nature of the federal role in erosion control, shoreline stabilizations, and nuisance flooding)? What is the role for federal funding in adjusting to sea-level rise and its impacts given that coastal development is determined largely by local and state policies and private decisions? To what extent do federal regulations, programs, and funding influence the adoption and approaches used for managing coastal sea-level rise impacts or decisions that unintentionally exacerbate the impacts? What is the appropriate way to manage risks posed by sea-level rise to existing infrastructure, new infrastructure, and economic and social systems (e.g., multimodal transportation network)?", "Although most decisions about coastal land development and protection are made by states, localities, and other stakeholders, the federal government has an interest in how coasts are developing and adjusting to sea-level rise. A challenge for federal lawmakers and other policymakers is how to deal with the tension between federal efforts to manage national and federal government risks (e.g., federal disaster costs, coastal ecosystem shifts) related to sea-level rise and the local, state, and private roles in shaping coastal development and ecosystem health. States and local governments have significant discretion in coastal land use and development decisions. At the same time, local adoption of minimum floodplain management standards as a requirement for NFIP participation influences the locations and design of coastal structures. Past and future land-use, development, and building-code choices and the resulting public and private investments are factors shaping the future financial impacts of sea-level rise for the nation. Among the policy questions associated with sea-level rise facing federal policymakers are the following:\nIn the U.S. federalist system of shared responsibilities, who is responsible for the costs associated with adjusting to sea-level rise? Is the federal role and responsibility related to coastal flood hazards clearly articulated and consistently applied across federal agencies, programs, projects, and disasters? Who is currently bearing the costs associated with sea-level rise and related coastal erosion, coastal storms, and habitat shifts? Are local, regional, and state land-use and development decisions and building requirements contributing to or eroding resilience to sea-level rise and coastal hazards, and what are the implications for the federal role in addressing sea-level rise? To what extent do federal programs transfer the risk associated with coastal development to the federal taxpayer? How does the suite of federal disaster assistance and coastal programs harm or bolster coastal resilience? Are federal investments in infrastructure and mitigation of flood damages in coastal areas coordinated?", "Various federal agencies are providing guidance and data to inform state, local, and private efforts to prepare for and respond to sea-level rise. Some stakeholders are concerned that insufficient attention is paid to the risk posed by sea-level rise, as well as to the existing risk associated with coastal hazards. Because of the value of coastal developments at risk from coastal flood hazards and how the risk may increase with sea-level rise, decisionmakers may invest in more coastal protections in many locations. What types of protections (hard, soft, hybrid) and policy choices (e.g., restricting human activities that exacerbate subsidence) are implemented may determine the future of U.S. coastal communities and coastal habitats. Other stakeholders are concerned that overestimating the risk of sea-level rise could result in overinvesting and overdesigning protections and mitigations to sea-level rise.\nDecisions about coastal land use and land protections, coastal development and infrastructure, and building codes and the resulting public and private investments can shape the future financial impacts of sea-level rise for the nation. Future growth in coastal areas may be shaped by the perceived risk from coastal hazards, such as sea-level rise and coastal storms, and by the efficacy of private and public responses to mitigate that risk." ], "depth": [ 0, 1, 2, 1, 2, 3, 2, 1, 2, 3, 3, 2, 3, 3, 3, 1, 2, 2, 3, 3, 2, 3, 3, 3, 2, 3, 3, 4, 4, 3, 1, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full h1_title", "h0_full h1_full", "h2_full", "", "", "", "h3_full h2_full", "h2_title", "", "h2_full", "", "", "", "", "h1_title h3_title", "", "h3_full", "h3_full", "", "h1_full", "", "", "", "", "", "", "", "", "", "h0_title", "", "", "", "h0_full" ] }

{ "question": [ "Why are policymakers interested in sea-level rise?", "How has the rate of sea-level rise changed in the past century?", "What are some ways the U.S. will be affected by continued sea-level rise?", "What states are particularly vulnerable to rising sea levels?", "What is the scale of potential harm due to sea-level rise?", "What government programs will be affected by increased sea-levle rise?", "How do these federal programs support local communities?", "What is the distinction between global and relative sea levels?", "By 2100, what does the U.S. National Climate Assessment predict regarding global sea levels?", "What are the main drivers of global sea-level rise?", "How have greenhouse gas emissions influenced the ocean temperature?", "What are some factors that can accelerate sea-level rise?", "How are the sea levels changing in relation to the coastlines of the U.S?" ], "summary": [ "Policymakers are interested in sea-level rise because of the risk to coastal populations and infrastructure and the consequences for coastal species and ecosystems.", "From 1901 to 2010, global sea levels rose an estimated 187 millimeters (mm; 7.4 inches), averaging a 1.7 mm (0.07 inch) rise annually. Estimates are that the annual rate rose to 3.2 mm (0.13 inches) from 1992 to 2010.", "Although the extent of future sea-level rise remains uncertain, sea-level rise is anticipated to have a range of effects on U.S. coasts. It is anticipated to contribute to flood and erosion hazards, permanent or temporary land inundation, saltwater intrusion into coastal freshwaters, and changes in coastal terrestrial and estuarine ecosystems.", "Some states, such as Florida and Louisiana, and U.S. territories have a considerable share of their assets, people, economies, and water supplies vulnerable to sea-level rise.", "In 2010, roughly 100 million people lived in U.S. coastal shoreline counties. Sea-level rise also is anticipated to affect numerous federal facilities.", "Increased flood risk associated with sea-level rise may increase demand for federal disaster assistance and challenge the National Flood Insurance Program.", "Federal programs support local and state infrastructure investments that may be damaged or impaired, such as roads, bridges, and municipal water facilities.", "Sea levels are expressed in terms of global sea levels, which is the average value of sea surface heights around the globe, and relative sea levels, which is the sea level relative to the land surface.", "In 2012, the U.S. National Climate Assessment expressed very high confidence in global sea levels rising at least 0.2 meters (8 inches) but no more than 2.0 meters (6.6 feet) by 2100.", "Since 1900, expanding oceans due to warming ocean water and melting glaciers and ice sheets have been the main drivers of global sea-level rise. Similarly, glaciers and ice sheets since 1900 have been melting due to both natural variability and greenhouse gas emissions.", "Oceans have warmed due to a combination of natural variability and the influence of greenhouse gas emissions on atmospheric temperatures.", "There are regional and local variations in the rate of sea-level rise. Regional or local factors can be natural, such as the land rebounding upward after continental ice sheets melted at the end of the last ice age, or they may be due to human activities, such as groundwater pumping, oil and gas extraction, sediment compaction, and land management practices, among others.", "With few exceptions, sea levels are rising relative to the coastlines of the contiguous United States, as well as parts of the Alaskan and Hawaiian coastlines." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, 2, -1, 0, 0, 2, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3 ] }

{ "title": [ "Background", "Interoperability: An Overview", "DOD and VA Have a Long History of Efforts to Achieve Electronic Health Record Interoperability", "DOD and VA Committed to a Joint System to Address Common Business Needs", "Departments Return to Two- System Approach with a Need to Ensure Interoperability", "DOD, VA, and the IPO Have Taken Steps toward Achieving Interoperability, but All Key Activities Will Not Be Completed until Future Years, and Plans Lack Outcome- Oriented Metrics and Goals", "DOD, VA, and the IPO have Taken Actions to Achieve Interoperability", "Additional Actions Planned Beyond 2016 to Meet Interoperability Requirements", "DOD, VA, and the IPO Lack Outcome-Oriented Metrics and Goals for Defining and Measuring Interoperability Progress", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objective, Scope, and Methodology", "Appendix II: Comments from the Department of Veterans Affairs", "Appendix III: Comments from the Department of Defense", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Historically, patient health information has been scattered across paper records kept by many different caregivers in many different locations, making it difficult for a clinician to access all of a patient’s health information at the time of care. Lacking access to these critical data, a clinician may be challenged in making the most informed decisions on treatment options, potentially putting the patient’s health at risk. The use of technology to electronically collect, store, retrieve, and transfer clinical, administrative, and financial health information has the potential to improve the quality and efficiency of health care.\nElectronic health records are particularly crucial for optimizing the health care provided to military personnel and veterans. While in active military status and later as veterans, many DOD and VA personnel, along with their family members, tend to be highly mobile and may have health records residing at multiple medical facilities within and outside the United States.\nEach department operates separate electronic health record systems that they rely on to create and manage patient health information. In particular, DOD currently relies on AHLTA, which comprises multiple legacy medical information systems that were developed from commercial software products and customized for specific uses. For example, the Composite Health Care System (CHCS), which was formerly DOD’s primary health information system, is used to capture information related to pharmacy, radiology, and laboratory order management. In addition, the department uses Essentris (also called the Clinical Information System), a commercial health information system customized to support inpatient treatment at military medical facilities.\nFor its part, VA currently uses its integrated medical information system— VistA—which was developed in-house by VA clinicians and information technology (IT) personnel. The system consists of 104 separate computer applications, including 56 health provider applications; 19 management and financial applications; 8 registration, enrollment, and eligibility applications; 5 health data applications; and 3 information and education applications.", "The sharing of health information among organizations is especially important because the health care system is highly fragmented, with care and services provided in multiple settings, such as physician offices and hospitals, that may not be able to coordinate patient medical care records. Thus, a means for sharing information among providers, such as between DOD’s and VA’s health care systems, is achieving interoperability.\nThe Office of the National Coordinator for Health IT (ONC), within the Department of Health and Human Services, has issued draft guidance,describing interoperability as: 1. the ability of systems to exchange electronic health information and 2. the ability to use the electronic health information that has been exchanged from other systems without special effort on the part of the user.\nSimilarly, the fiscal year 2014 NDAA defines interoperability, as used in the provision governing the departments’ electronic health records, as “the ability of different electronic health records systems or software to meaningfully exchange information in real time and provide useful results to one or more systems.” Thus, in these contexts, interoperability allows patients’ electronic health information to be available from provider to provider, regardless of where the information originated.\nAchieving interoperability depends on, among other things, the use of agreed-upon health data standards to ensure that information can be shared and used. If electronic health records conform to interoperability standards, they potentially can be created, managed, and consulted by authorized clinicians and staff across more than one health care organization, thus providing patients and their caregivers the information needed for optimal care. Information that is electronically exchanged from one provider to another must adhere to the same standards in order to be interpreted and used in electronic health records, thereby permitting interoperability. In the health IT field, standards may govern areas ranging from technical issues, such as file types and interchange systems, to content issues, such as medical terminology. On a national level, ONC has been assigned responsibility for identifying health data standards and technical specifications for electronic health record technology and overseeing the certification of this technology.\nIn addition to exchanging the information, systems must be able to use the information that is exchanged. Thus, electronic health record technology has the potential to improve the quality of care that patients receive and to reduce health care costs, if the technology is used in a way that improves providers’ and patients’ access to critical information. For example, with interoperability, medical providers have the ability to query data from other sources while managing chronically ill patients, regardless of geography or the network on which the data resides.", "Since 1998, DOD and VA have relied on a patchwork of initiatives involving their health information systems to exchange information and to increase electronic health record interoperability. These have included initiatives to share viewable data in existing (legacy) systems; link and share computable data between the departments’ updated health data repositories; develop a virtual lifetime electronic health record to enable private sector interoperability; implement IT capabilities for the first joint federal health care center; and jointly develop a single integrated system. Table 1 provides a brief description of the history of these various initiatives.\nIn addition to the initiatives mentioned in table 1, DOD and VA previously responded to provisions in the fiscal year 2008 NDAA directing the departments to jointly develop and implement fully interoperable electronic health record systems or capabilities in 2009.called for the departments to set up an interagency program office to be a single point of accountability for their efforts to implement these systems or capabilities by the September 30, 2009, deadline. In January 2009, the IPO completed its charter, articulating, among other things, its mission and functions with respect to attaining interoperable electronic health data.\nThe act also Further, the departments’ Interagency Clinical Informatics Boardestablished the following six interoperability objectives for meeting the departments’ data-sharing needs and facilitating compliance with the fiscal year 2008 NDAA: demonstrate initial network gateway operation, expand questionnaires and self-assessment tools, expand Essentris in DOD, and demonstrate initial document scanning between the departments. refine social history data, share physical exam data, The departments’ officials, including the co-chairs of the group responsible for representing the clinician user community, asserted that they had met the priorities established by the Interagency Clinical Informatics Board and, in conjunction with capabilities previously attained (e.g., the Federal Health Information Exchange and the Bidirectional Health Information Exchange), had met the deadline for achieving full interoperability as required by the act. Nonetheless, in prior reviews, we have identified a number of challenges the departments have faced in managing their efforts in response to the fiscal year 2008 NDAA and to address their common health IT needs.\nWhile these initiatives, collectively, have yielded increased data sharing in various capacities, we previously reported that they nonetheless experienced persistent management challenges and did not result in the fully interoperable electronic health record capabilities that the departments had long sought. We have also noted that the manner in which DOD and VA reported progress toward achieving interoperability lacked results-oriented (i.e., objective, quantifiable, and measurable) goals. Specifically, we noted that the departmental plans lacked associated performance goals and measures that are a necessary basis to provide the departments and their stakeholders with a comprehensive picture to effectively manage their progress toward realizing increased interoperability.", "In March 2011, the Secretaries of Defense and Veterans Affairs committed the two departments to the development of a new, joint integrated electronic health record (iEHR) system. Further, in May 2012, they announced their goal of implementing the integrated health record across both departments by 2017. According to program documentation, pursuing iEHR was expected to enable the departments to align resources and investments with common business needs and programs, resulting in a platform that would replace the two departments’ separate electronic health record systems with a common system. In addition, because it would involve both departments using the same system, this approach was expected to largely sidestep the challenges they had historically encountered in trying to achieve interoperability between separate systems.\nToward this end, initial development plans called for the single, joint iEHR system to consist of 54 clinical capabilities that would be delivered in six increments between 2014 and 2017, with all existing applications in VistA and AHLTA continuing uninterrupted until full delivery of the new capabilities. The initiative was to deliver several common infrastructure components—an enterprise architecture;user interface; data centers; and system interface and data exchange standards. The system was to be primarily built by purchasing commercially available solutions for joint use, with noncommercial solutions developed or adopted only when a commercial alternative was unavailable.\nHowever, in February 2013, about 2 years after initiating iEHR, the departments’ Secretaries announced changes to their approach— essentially abandoning their effort to develop a single, integrated electronic health record system for both departments. This decision resulted from an assessment of the iEHR program that the Secretaries had requested in December 2012 because of their concerns about the program facing challenges in meeting deadlines, costing too much, and taking too long to deliver capabilities. The IPO reported spending about $564 million on iEHR between October 2011 and June 2013.", "In place of the iEHR initiative, DOD determined that it would buy a commercially available system to replace its existing AHLTA system and VA decided that it would modernize its existing VistA health information system. In this regard, DOD is pursuing the acquisition of a replacement system for its multiple legacy electronic health record systems under a new program—the DHMSM program. For its part, VA intends to enhance and modernize its existing VistA system under a new program called VistA Evolution. The departments indicated that they would ensure interoperability between their two new systems, and with other public and private health care providers.\nIn December 2013, the IPO was re-chartered and recognized as the single point of accountability in the development and implementation of electronic health records systems or capabilities that allow for full interoperability of health care information between DOD and VA. According to the IPO charter, the office is responsible for, among other things, establishing technical and clinical standards and processes to ensure integration of health data between the two departments and other public and private health care providers. Further, it is to monitor and report on the departments’ progress in implementing the technical standards during the development of their respective systems. It is also to coordinate with the departments to ensure that advances in interoperable capabilities enhance the quality, safety, efficiency, and effectiveness of health care services.\nWhile the departments have chosen their current approach to modernize two separate systems, we have previously reported that they did not substantiate their claims that the current approach would be less expensive and faster than the single-system approach. Further, we have noted that the departments’ efforts to modernize their two separate systems were duplicative. We stressed that major investment decisions—including terminating or significantly restructuring an ongoing program—should be justified using analyses that compare the costs and schedules of alternative proposals.\nAccordingly, we recommended that DOD and VA develop a cost and schedule estimate for their current approach from the perspective of both departments that includes the estimated cost and schedule of VA’s VistA Evolution program, DOD’s DHMSM program, and the departments’ joint efforts to achieve interoperability between the two systems, and then compare the cost and schedule estimates of the current and previous (i.e., single-system) approaches and, if applicable, provide a rationale for pursuing a more costly or time-consuming approach. The departments agreed with our recommendation and stated that, while initial comparisons indicated that their current approach would be more cost effective, they would continue to refine cost estimates as part of both departments’ acquisition programs.", "DOD, VA, and the IPO have undertaken various activities aimed at achieving interoperability between the two departments’ electronic health record systems. In this regard, DOD and VA have initiated work focused on near-term objectives including standardizing their existing health data and making them viewable by both departments’ clinicians in an integrated format. The departments have also developed plans related to their efforts to modernize their respective electronic health record systems. Further, the IPO has issued guidance outlining the technical approach for achieving interoperable capabilities between the departments’ systems. Even with the actions taken, however, the two departments did not, by the October 2014 deadline established in the fiscal year 2014 NDAA for compliance with national data standards, certify that all health care data in their systems complied with national standards and were computable in real time. Further, the departments’ system modernization plans identify a number of key activities to be implemented beyond the 2016 deadline established in the act, suggesting that deployment of the new systems with interoperability capabilities will not be completed across the departments until years later. In addition, while the IPO has begun steps to measure and report on the progress of the exchange of health data, its efforts have not included the use of outcome-oriented metrics and established goals essential to gauging the extent to which interoperability is being delivered and having an impact on improving health outcomes.", "As part of the approach toward achieving interoperability between their electronic health record systems, both DOD and VA, along with the IPO, have taken actions focused on near-term objectives including standardizing data and expanding the functionality and availability of patient health information. Specifically, both departments have taken actions to:\nAnalyze data related to 25 health data domains that were identified and prioritized by the Interagency Clinical Informatics Board and map the data in their respective electronic health record systems—AHLTA and VistA—to health data standards identified by the IPO. Such standards include RxNorm and the Systematized Nomenclature of Medicine Clinical Terms (SNOMED CT).\nExpand functionality of the Joint Legacy Viewer—a tool that provides a real-time, integrated, categorized, and chronological view of electronic health record information contained in existing DOD and VA systems. For example, it allows both departments to share certain healthcare data (e.g., patient demographics, allergies, medications) in a viewable interface that is available to clinicians. In expanding its functionality, the departments took steps to make more computable (mapped) data from both departments available via the Joint Legacy Viewer and to increase user access to this tool.\nIssue plans for their respective electronic health records modernization or acquisition programs consistent with IPO guidance that describes the technical approach to interoperability.\nWith regard to its specific actions, DOD’s recent work on interoperability has been implemented by the Defense Medical Information Exchange program. This program is focused on increasing the amount of data shared with VA and with the private sector. The program has also been working to make more data viewable through the Joint Legacy Viewer, consolidate DOD data flow through a single exchange mechanism to achieve the near-term interoperability objectives, and prepare for the deployment of the department’s new electronic health record.\nAccording to the program manager, the program has performed the infrastructure testing intended to ensure that DOD and VA have the necessary capacity to accommodate the increasing number of users of the Joint Legacy Viewer. According to DOD documentation, during fiscal years 2015 and 2016, the program’s plans include continuing to enhance the Joint Legacy Viewer by adding additional private sector data and incorporating capabilities for viewing data from existing tools, such as the Bidirectional Health Information Exchange.\nDOD also issued a request for proposals for the DHMSM program in August 2014 that described the department’s plans to replace its legacy systems and acquire a modernized electronic health record system with interoperable capabilities across the military operations. The department has developed a series of planning documents, including an acquisition strategy that called for awarding the DHMSM contract by the end of fiscal year 2015. The department noted in a January 2015 briefing to Congress that it plans to reach initial operational capability for the modernized system by December 2016. This is expected to include the deployment of modernized electronic health record software at eight locations. The time frame for reaching full operating capability for the new system is to be determined after contract award.\nFor its part, VA has developed plans, such as the VA Interoperability Plan and the VistA 4 Roadmap. Both documents describe the department’s approach for modernizing its existing electronic health record system through the VistA Evolution program, while helping to facilitate interoperability with DOD’s system and the private sector. For example, the VA Interoperability Plan, issued in June 2014, describes activities intended to improve VistA’s technical interoperability, such as standardizing the VistA software across the department to simplify sharing data.\nIn addition, the VistA 4 Roadmap, last revised in February 2015, describes four sets of functional capabilities that are expected to be incrementally deployed during fiscal years 2014 through 2018 to modernize the VistA system and enhance interoperability. According to the road map, the first set of capabilities was delivered by the end of September 2014 and included access to the Joint Legacy Viewer and a foundation for future functionality, such as an enhanced graphical user interface and enterprise messaging infrastructure. Another interoperable capability that is expected to be incrementally delivered over the course of the VistA modernization program is the enterprise health management platform. This platform is intended to provide clinicians with a customizable view of a longitudinal health record that can integrate data from DOD, VA, and third-party providers. Also, when fully deployed, VA expects the enterprise health management platform to replace the Joint Legacy Viewer.\nAdditionally, with regard to its actions to facilitate department interoperability efforts, the IPO has developed guidance that describes a technical approach for standardizing health data, to include related roles and responsibilities and near-term actions intended to increase interoperability. Specifically,\nThe IPO’s Healthcare Information Interoperability Technical Package, first issued in July 2014 and subsequently updated twice, describes a standards-based approach and technical objectives for interoperability. This guidance addresses issues such as how the DOD and VA systems are to exchange information consistent with national and international standards. It also identifies the standards that the IPO has selected for the 25 prioritized health data domains.\nThe Joint Interoperability Plan, most recently updated in January 2015, is characterized by the IPO as a working document to be regularly updated. It summarizes the departments’ actions to increase interoperability, including discussions of completed actions as well as near-term goals and deliverables through 2016, such as improvements to the Joint Legacy Viewer and VistA Evolution capabilities and the DHMSM contract award, among others. In addition, the plan identifies challenges to achieving interoperability, such as the evolving nature of health care data standards and the complexity of integrating interoperable data with clinicians’ current workflows. Further, the plan includes four approved “use cases,” which are scenarios that help describe areas where increased interoperability would be most valuable. The use cases are intended to help identify additional requirements for the development and testing of interoperability capabilities beyond 2016.\nThe IPO’s Health Data Interoperability Management Plan, issued in September 2014, outlines a high-level approach and roles and responsibilities for achieving electronic health data exchange and terminology standardization for DOD, VA, other government entities, and private sector healthcare partners. The plan also establishes the Health Data Interoperability Standards Lifecycle Model, which describes the process by which data standards are expected to be selected—consistent with national and international health data standards as they evolve and are implemented by the departments.\nOverall, the recent actions taken by DOD, VA, and the IPO have focused on ensuring that health care data used by the two departments’ existing systems, AHLTA and VistA, are compliant with national standards. In particular, following the technical approach outlined by the IPO, the departments have increased the amount of data from these systems that are mapped to national standards; they also have made that data available in the Joint Legacy Viewer.\nNonetheless, DOD and VA program officials acknowledged that these actions did not result in the two departments meeting the October 1, 2014, deadline established in section 713 of the fiscal year 2014 NDAA for certifying that all health care data in their systems complied with national standards and were computable in real time. While the departments did provide Congress with an update on their progress, DOD officials stated that the department plans to certify that it has met the requirement in the next several months. VA officials stated that the department plans to certify that it has met the requirement later in calendar year 2015.", "While important actions are being taken, the departments have indicated that they do not intend to complete a number of key activities related to the deployment of their modernized systems and interoperability until after the December 31, 2016, statutory deadline for deploying modernized electronic health record software. DHMSM program officials have acknowledged that additional project details to guide the department’s efforts towards achieving full operating capability for the modernized system have yet to be determined. The officials said that they expect these details to be developed after the contract for the DHMSM service provider integrator and system solution has been awarded. The department also currently estimates full operational capability to occur at the end of fiscal year 2022. Thus, while initial deployment of an interoperable electronic health record system is expected at eight locations by the statutory deadline, additional work beyond 2016, which DOD has yet to fully define, will be required to extend access to the modernized software, provide interoperable capabilities throughout the department, and include all users who would benefit from access.\nIn addition, deployment of VA’s modernized VistA system at all locations and for all necessary users is not scheduled until 2018. The department plans to deliver functionality in a phased approach in four product releases over 5 years to improve performance and increase interoperable capabilities in additional clinical areas. For example, according to its plans, the department intends to deliver additional features through fiscal year 2018 to improve the functionality of the enterprise health management platform. It also plans to increase interoperable capabilities in additional clinical areas as it replaces its legacy scheduling system that is intended to reduce VA patient wait times. Thus, additional actions beyond the 2016 statutory deadline are still planned for deploying a modernized electronic health record system.", "Prior work and guidance that we have issued stress the importance of measuring program performance,reporting of accomplishments. This guidance further states that performance measurement should evaluate both processes and outcomes related to program activities. Specifically, process metrics address the type or level of program activities conducted and the direct products or services delivered by a program, such as the number of electronic health records queried in an hour or day. Outcome metrics address the results of products and services, such as improvements on the quality of health care services or clinician satisfaction. Outcome which is the ongoing monitoring and metrics can help in assessing the status of program operations, identifying areas that need improvement, and ensuring accountability for end results. Further, measuring program performance is essential for monitoring progress toward pre-established goals and should be tied to program goals that allow organizations to demonstrate and report the degree to which desired results are achieved.\nThe IPO’s responsibilities include monitoring and reporting on progress made by the departments to standardize their health care data and coordinating with the departments to ensure that interoperable capabilities enhance health care services. With DOD and VA continuing their activities to increase the sharing of health care data, the IPO has begun taking steps to measure and report on the progress of the two departments’ efforts.\nToward this end, the office has issued guidance describing process metrics that are to be tracked and formally reported to the Health Executive Committee and congressional stakeholders. For example, among these metrics, the Health Data Interoperability Management Plan calls for tracking the percentage of data domains within the departments’ current health information systems that are mapped to selected national standards.\nThe plan also identifies metrics to be collected and reported that relate to tracking health information exchanges through the departments’ existing initiatives. These metrics include, for example, the number of laboratory reports and the number of consultation reports exchanged from DOD to VA through the Federal Health Information Exchange for separated service members and the number of patient queries by providers from both departments through the Bidirectional Health Information Exchange. The measurements are included in a DOD/VA quarterly data sharing report that the departments prepare and send to Congress. The report is intended to provide a snapshot of the amount of data shared between the departments.\nWhile the IPO has developed process metrics and begun reporting the departments’ progress related to standardizing and exchanging health data, the office has not specified outcome-oriented metrics and established goals that are important to gauging the impact that increased interoperability has on improving health care services. The IPO’s Health Data Interoperability Management Plan indicates that the DHMSM and VistA Evolution programs are to develop outcome metrics related to their respective acquisition and modernization programs. However, the guidance does not identify outcome metrics or establish goals that the IPO expects to use to measure progress toward improving health care services resulting from the departments’ interoperable capabilities.\nThe IPO Acting Director said that he has tasked a team with working to identify better metrics to capture both the technical and clinical progress resulting from interoperability efforts between the departments. According to the official, this team is working with DOD, VA, and ONC subject matter experts to identify metrics that would be more meaningful for determining the impact of increased interoperability, such as metrics on the quality of a user’s experience and improvements in health outcomes.\nHowever, as of late May 2015, the IPO had not established a time frame for when the metrics would be completed and incorporated into their guidance. Officials of the departments and the IPO explained that defining appropriate outcome metrics for interoperability is not just a DOD and VA issue; rather, it is a national challenge to identify how to measure interoperability and what data are needed.\nUsing an effective outcome-based metrics approach could provide DOD and VA a more accurate, ongoing picture of their progress toward achieving interoperability and the value and benefits generated. Doing so would also better position them to assess and report on the status of interoperability-related activities in terms of results, and to determine areas that need improvement. Until they establish a time frame, complete steps to define outcome metrics and goals, and incorporate these into IPO guidance, the departments and the IPO risk not knowing the status of program operations and areas that need improvement, and ensuring accountability for end results.", "DOD and VA, with guidance from the IPO, have taken actions to increase interoperability between their electronic health record systems, as called for in the fiscal year 2014 NDAA. However, the departments have indicated that they do not intend to complete a number of key activities related to the deployment of their modernized systems and interoperability until after the December 31, 2016, statutory deadline for deploying modernized electronic health record software. To address the 2016 requirement, DOD has issued plans and announced the award of a contract for acquiring a modernized system to include interoperability capabilities across military operations. VA, for its part, has issued plans describing an incremental approach to modernizing its existing electronic health records system. However, these plans—if implemented as currently described—show that interoperability delivered by the new systems is not expected to be completely deployed until after 2018, which is beyond the statutory deadline. To date, the departments have kept Congress informed of their efforts, and we believe it is critical that they continue to do so.\nFurther, the IPO has taken steps to develop guidance that includes process-oriented metrics for monitoring and reporting on the increasing exchange of health information between the departments. However, it has yet to develop outcome-oriented metrics that are important to gauging the impact that increased interoperability has on improving health care services. While IPO officials have said that a team has been tasked to identify metrics that would be more meaningful for determining the impact of increased interoperability, no time frame has been identified for when this team will report its results and when the IPO plans to incorporate these metrics into its guidance. Further, the office has yet to identify goals that can be used to indicate the status of interoperability-related activities and the extent to which progress is being made to achieve full interoperability of health care information by the departments. Without defining outcome-oriented metrics and related goals and incorporating these into the current approach, the departments and the IPO will not be positioned to assess and report on the status of interoperability-related activities and determine areas that need improvement.", "To facilitate oversight and inform decision making regarding their respective department’s interoperability-related activities, we recommend that the Secretaries of Defense and Veterans Affairs, working with the Interagency Program Office, take the following three actions: establish a time frame for identifying outcome-oriented metrics, ensure related goals are defined to provide a basis for assessing and reporting on the status of interoperability-related activities and the extent to which interoperability is being achieved by the departments’ modernized electronic health record systems, and update IPO guidance to reflect the metrics and goals identified.", "We provided a draft of this report to VA and DOD and received written comments, which are reprinted in appendixes II and III, respectively. In addition, VA provided technical comments, which we incorporated, as appropriate.\nIn its comments, VA generally agreed with our conclusions and concurred with our recommendations. With regard to our recommendation to establish a time frame for identifying outcome-oriented metrics, the department described recent actions it has taken toward the development of interoperability milestones and metrics, which are intended to serve as a blueprint for the IPO’s efforts to synchronize outcome-oriented metrics between DOD and VA. In addition, VA noted that it has begun to develop standardized metrics related to VistA Evolution that are tied to desired business goals. VA also described its collaborative efforts with DOD and the IPO to mature interoperability metrics into more meaningful, outcome- oriented metrics and to establish timelines for formal reporting through IPO guidance and data sharing reports.\nIn its comments, DOD also concurred with our recommendations and stated that the department continues to work with the IPO and VA stakeholders to develop baseline interoperability metrics. The department added that it plans to meet with the IPO and VA on a regular basis to mature these metrics into more meaningful, outcome-oriented measures.\nNevertheless, DOD took issue with selected aspects of our discussion related to requirements in section 713 of the fiscal year 2014 NDAA. For example, the department contended that its limited initial deployment of the new system, combined with the pending documentation of interoperability, will satisfy the statutory requirement to “deploy modernized electronic health record software supporting clinicians of the departments by no later than December 31, 2016, while ensuring continued support and compatibility with the interoperability platform and full standards-based interoperability.” We disagree with DOD’s position and reaffirm our finding that DOD’s and VA’s plans—if implemented as currently described—indicate that deployment of the new systems will not be completed across the departments until after 2016 and that much additional work is needed to extend access to the modernized software to all relevant users and department locations.\nThe history and framework of statutory requirements has long called for the departments to take steps to achieve interoperable health record capabilities. In this regard, the fiscal year 2008 NDAA included a mandate to achieve fully interoperable health record capabilities. Further, in section 713 of the fiscal year 2014 NDAA, Congress stated that the departments “…have failed to implement a solution that allows for seamless electronic sharing of medical health care data…” and that “most of the information shared…is not standardized or available in real time to support all clinical decisions.” We recognize that section 713 of the fiscal year 2014 NDAA does not qualify the degree of deployment. Nevertheless, we believe it is reasonable to expect that electronic health records interoperability between the departments should be demonstrated by more than a limited number of users and locations and, more importantly, should be made available to all relevant clinicians at all relevant locations as expeditiously as possible.\nDOD also disagreed that the fiscal year 2014 NDAA specified a date by which certification of compliance with existing national data standards was required and stated that the timetable for certification is distinct from the October 1, 2014 deadline for compliance with national standards. We assert that the October 1, 2014 deadline in section 713(g)(1) of the fiscal year 2014 NDAA is linked to the departments’ certification that is required in section 713(g)(2). As DOD points out, the certification requirement depends on achieving the capability described in section 713(b)(1). This capability is to be “interoperable with an integrated display of data…by complying with the national standards…”. The national standards referred to here are those national data standards described in section 713(g)’s certification provision. Section 713(g)(2) requires a certification that DOD and VA have complied with data standards referred to in section 713(g)(1). These data standards are described in section 713(g)(1) as the existing national data standards to which all health data in the DOD and VA systems must comply with by October 1, 2014. DOD and VA’s required certification involves certification of compliance with existing national data standards and that compliance was required by October 1, 2014. Thus, we stand by our statement in the report on this matter.\nFurther, the department expressed concern about our use of the terms “full” deployment and “enhanced” interoperability, stating that these terms are not cited in the act. We agree that section 713 of the fiscal year 2014 NDAA does not use the term “full” deployment and we have revised our report accordingly to remove references to this term. On the other hand, “interoperability enhancements” is a term that VA has used when describing features to be delivered throughout its phased approach to the VistA Evolution modernization. We used the term “enhanced” interoperability to describe the improvements planned as the modernized systems mature beyond October 1, 2014. However, to resolve any ambiguity, we have revised our report to remove the term.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Veterans Affairs, the Secretary of Defense, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staffs have questions about this report, please contact me at (202) 512-6304 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix IV.", "Our objective was to evaluate the actions taken by the Department of Defense (DOD), the Department of Veterans Affairs (VA), and the Interagency Program Office (IPO) to plan and measure the progress toward achieving interoperability between the departments’ electronic health record systems.\nTo evaluate the actions taken with regard to planning for electronic health record interoperability between the departments’ systems, we reviewed our previous work related to electronic health records and DOD and VA efforts to develop health information systems, interoperable health records, and interoperability standards to be implemented in federal health care programs. We obtained and analyzed DOD, VA, and IPO documentation to evaluate the departments’ plans and identify recent actions taken toward achieving interoperability consistent with the requirements specified in the National Defense Authorization Act (NDAA) for Fiscal Year 2014. Specifically, we analyzed DOD, VA, and IPO plans to evaluate how they relate to NDAA requirements that direct the DOD and VA to each (1) ensure that all health care data contained in DOD’s Armed Forces Health Longitudinal Technology Application (AHLTA) and VA’s Veterans Health Information Systems and Technology Architecture (VistA) systems complied with national standards and were computable in real time by October 1, 2014, and (2) deploy modernized electronic health record software supporting clinicians by no later than December 31, 2016, while ensuring continued support and compatibility with the interoperability platform and full standards-based interoperability.\nFurther, we reviewed and analyzed DOD’s request for proposals, the Defense Healthcare Management System Modernization Program Acquisition Strategy, VA’s VistA 4 Roadmap, the VistA Evolution Program Plan, VA’s Interoperability Plan, and the IPO guidance including the Healthcare Information Interoperability Technical Package, the Health Data Information Management Plan, and the Joint Interoperability Plan. Further, we identified what the departments plan to deliver by the 2014 and 2016 deadlines and compared planned activities to the statutory requirements.\nTo evaluate the actions taken by DOD, VA, and IPO to measure the progress toward achieving interoperability between the departments’ electronic health record systems, we reviewed the December 2013 IPO Charter. Our review determined that DOD and VA have assigned the IPO responsibility for, among other things, monitoring and reporting on the progress of the departments’ use of national and international health data standards; compliance with the implementation of IPO’s technical standards; and coordinating and communicating with the departments to ensure advances in interoperability capabilities enhance the quality, safety, efficiency, and effectiveness of health care services. Accordingly, we reviewed IPO documentation, such as the Healthcare Information Interoperability Technical Package, the Health Data Interoperability Management Plan, the Joint Interoperability Plan, the IPO Executive Committee quarterly reports, and DOD/VA quarterly data sharing reports to identify performance measures related to measuring and reporting progress toward achieving interoperability. We compared the performance measures identified in program documentation and reported to Congress on our guidance related to process and outcome-oriented metrics and goals reported in our prior work.\nWe supplemented our analyses with interviews of DOD, VA, and IPO officials with knowledge of the interoperability efforts, including the IPO Acting Director (also the current Program Executive Officer for the Defense Healthcare Management Systems), IPO Deputy Director, DOD officials from the Defense Medical Information Exchange program, VA officials from the Office of Information and Technology and the Veterans Health Administration with knowledge of the VistA Evolution program, and members of the Interagency Clinical Informatics Board.\nWe conducted this performance audit from September 2014 to August 2015, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective.", "", "", "", "", "In addition to the contact named above, Mark Bird (Assistant Director), Neelaxi Lakhmani (Assistant Director), Kami Brown, Nancy Glover, Jennifer Stavros-Turner, and Marshall Williams, Jr., made key contributions to this report." ], "depth": [ 1, 2, 2, 3, 3, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_title", "", "h3_full", "", "", "h0_full h2_title h1_title", "h1_full", "", "h2_full", "h3_full h2_full h1_full", "", "", "h0_full", "", "", "", "", "" ] }

{ "question": [ "What have DOD and VA been doing regarding their electronic health record systems?", "What near-term work have DOD and VA begun?", "What longer-term plans have they developed?", "How has the IPO been involved in this process?", "To what extent were DOD and VA successful in meeting their deadline to comply with national data standards?", "What is the agencies' expected timeline for meeting these standards?", "What have DOD and VA done in an effort to meet this deadline?", "What do these plans indicate about the timeline?", "What steps has the IPO taken to monitor progress?", "How are tracking metrics part of the IPO's guidance?", "What is lacking in these efforts?", "To what extent have IPO officials responded to this concern?", "What gaps exist in this reponse?", "Why is it necessary to improve this process?", "What is the scale of DOD and VA's services?", "How have these agencies attempted to improve their operations?", "Most recently, what is the DOD and VA Secretaries' mission regarding their electronic health record systems?" ], "summary": [ "The Departments of Defense (DOD) and Veterans Affairs (VA), with guidance from the Interagency Program Office (IPO) that is tasked with facilitating the departments' efforts to share health information, have taken actions to increase interoperability between their electronic health record systems.", "Among other things, DOD and VA have initiated work focused on near-term objectives, including standardizing their existing health data and making them viewable by both departments' clinicians in an integrated format.", "The departments also have developed longer-term plans to modernize their respective electronic health record systems.", "For its part, the IPO has issued guidance outlining the technical approach for achieving interoperability between the departments' systems.", "Even with the actions taken, DOD and VA did not, by the October 1, 2014, deadline established in the National Defense Authorization Act (NDAA) for Fiscal Year 2014 for compliance with national data standards, certify that all health care data in their systems complied with national standards and were computable in real time.", "Both departments stated that they intend to do so later in calendar year 2015. Further, the departments' system modernization plans identify a number of key activities to be implemented beyond December 31, 2016—the deadline established in the NDAA for the two departments to deploy modernized electronic health record software to support clinicians while ensuring full standards-based interoperability.", "Specifically, DOD has issued plans and announced the contract award for acquiring a modernized system to include interoperability capabilities across military operations. In addition, VA has issued plans describing an incremental approach to modernizing its existing electronic health records system.", "These plans—if implemented as currently described—indicate that deployment of the new systems with interoperability capabilities will not be completed across the departments until after 2018.", "The IPO has taken steps to develop process metrics intended to monitor progress related to the data standardization and exchange of health information consistent with its responsibilities.", "For example, it has issued guidance that calls for tracking metrics, such as the percentage of data domains within the departments' current health information systems that are mapped to national standards.", "However, the office has not yet specified outcome-oriented metrics and established related goals that are important to gauging the impact that interoperability capabilities have on improving health care services for shared patients.", "IPO officials said this work is ongoing and that a team is working with DOD, VA, and subject matter experts to identify metrics that would provide more meaningful measures of the impact of increased interoperability.", "However, the IPO has not identified a time frame for when this team will report its results and when the IPO plans to incorporate these metrics and goals into its guidance.", "Without ensuring that outcome-oriented metrics and related goals are defined and incorporated into the current approach, the departments and the IPO will not be positioned to assess and report on the status of interoperability-related activities and determine areas that need improvement.", "DOD and VA operate two of the nation's largest health care systems, serving approximately 16 million veterans and active duty service members and their beneficiaries, at a cost of more than $100 billion a year.", "For almost two decades, the departments have been engaged in various efforts to advance DOD and VA electronic health record interoperability.", "Among their most recent efforts, the DOD and VA Secretaries have committed the departments to achieving interoperability between their separate electronic health record systems." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 1, 2, -1, 0, 0, 2, 2, 4, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 0, 0, 0 ] }

{ "title": [ "Background", "VA Has Made Changes to Improve Its Verification Program, but Continues to Face Challenges in Its Strategic Planning Efforts and Information Technology Infrastructure", "VA Has Adopted Changes to Improve Verification Operations and Address Some Identified Weaknesses and Concerns", "OSDBU’s Initial Strategic Planning Effort Applied Some Best Practices, but Stakeholder Involvement, Performance Metrics, and Long-term Focus Could Be Improved", "Information Technology Limitations Have Hampered VA’s Ability to Manage the Verification Program", "Expanding Its Verification Program Government-wide Would Require VA to Improve the Program and Address Policy Issues", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Verification Program Data as of September 30, 2012", "Appendix III: Verification Program Organizational Structure, December 2011 and October 2012", "Appendix IV: Verification or Certification Requirements Associated with Federal Small Business Contracting Preference Programs", "Appendix V: Comments from the Department of Veterans Affairs", "Appendix VI: Comments from the Small Business Administration", "Appendix VII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The 2006 Act requires VA to establish annual contracting goals for SDVOSBs and other nonservice-disabled VOSBs; the goal for SDVOSBs must at least match the government-wide SDVOSB contracting goal of 3 percent of federal contract dollars. VA set its goals at 3 percent for SDVOSBs and 7 percent for all VOSBs (SDVOSBs and other VOSBs) for fiscal years 2006 and 2007, and subsequently has set and achieved increasing contracting goals for VOSBs and SDVOSBs, as shown in figure 1. VA’s total contracting awards to VOSBs increased from $616 million (including $356 million to SDVOSBs) in fiscal year 2006 to $3.6 billion (including $3.2 billion to SDVOSBs) in fiscal year 2011.\nVA’s OSDBU has overall responsibility for the SDVOSB/VOSB verification program. Within OSDBU, the Center for Veterans Enterprise (CVE), maintains a database of eligible SDVOSBs and VOSBs and is responsible for verification operations, such as processing applications. To implement the requirements of the 2006 Act, VA began verifying businesses in May 2008 under interim final rules, which the agency did not finalize until February 2010.the verification program, see fig. 2.) To be eligible for verification under VA’s rules (For a timeline of major events affecting the small business concern must be unconditionally owned and controlled by one or more eligible parties (veterans, service-disabled veterans, or surviving spouses); the owners of the small business must have good character (any small business owner or concern that has been debarred or suspended is ineligible); the applicant cannot knowingly make false statements in the application process; the firm and its eligible owners must not have significant financial obligations owed to the federal government; and the firm must not have been found ineligible due to an SBA protest decision.\nVA launched its verification process under the 2006 Act in 2008 and shifted to a more robust process in 2010. VA’s verification process under the 2006 Act (2006 process) initially consisted of (1) checking VA databases to confirm veteran status and, if applicable, service-disability status; and (2) reviewing publicly available, primarily self-reported information about control and ownership for all businesses that applied for verification. Beginning in September 2008, VA also adopted a risk-based approach to conducting site visits or other means, such as additional document reviews and telephone interviews, to further investigate selected high-risk businesses. VA adopted a more thorough verification process in 2010 (2010 process), which included reviewing and analyzing a standardized set of documents that each applicant is required to submit. VA refined the 2010 process over time so that, as of October 2012, the verification process consisted of four phases—initiation, examination, evaluation, and determination. Denied applicant firms are able to request a reconsideration of the denial decision.\nInitiation: CVE employees are to confirm that applicants meet minimum requirements for the program by, among other things, verifying the owners’ veteran and service-disability status and determining that they have submitted all of the required documents or adequate explanations for missing documents.to check the Excluded Parties List System to ensure that the applicant business and all owners are not on the list.\nExamination: Contractors are to review completed applications to determine whether firms meet the eligibility requirements and make an initial recommendation for approval, denial, or additional review (i.e., a site visit).\nEvaluation: Contractors and staff are to review the initial recommendations to ensure that the screening has met quality standards and that firms have received an appropriate recommendation. They may decide as well that a site visit is necessary. Contractors are to conduct site visits if they are recommended, and CVE employees are to recommend approval or denial.\nDetermination: CVE supervisors are to review staff recommendations and issue eligibility decisions. A determination letter is to be emailed to the applicant, and approved companies appear as verified in the Vendor Information Pages (VIP) database.\nRequest for Reconsideration: Through an optional Request for Reconsideration process, denied applicants can remedy the issue(s) that caused their applications to be initially denied. Based on a review by staff from VA’s Office of General Counsel, VA may approve the application, deny it on the same grounds as the original decision, or deny it on other grounds. If VA denies a request for reconsideration solely on issues not raised in the initial denial, the applicant may ask for reconsideration as if it were an initial denial. Denied applicants can also request a legal review if they believe their application was denied in error.\nVA’s database of SDVOSBs and VOSBs previously listed unverified and verified firms, but currently is required to list only verified firms, as a result of the Veterans Small Business Verification Act (2010 Act), part of the Veterans’ Benefits Act of 2010.2008, VA modified its VIP database of self-certified SDVOSBs and After the verification program began in VOSBs to receive verification applications and publicly display names of verified firms. Once VA approved a business, the business name appeared with a verified logo in VIP, but the database continued to display self-certified firms as well. The 2010 Act requires that no new applicant appear in the VIP database unless it has been verified by VA as owned and controlled by a veteran or service-disabled veteran. The 2010 Act also required VA, within 60 days of enactment, to notify all unverified (self-certified) firms in VIP about the verification requirement and also required firms to apply for verification within 90 days or be removed from the database. VA officials reported that by September 2011, the agency had removed from the VIP database all firms that had self-certified so that the database would include only verified firms. As of October 2012, the database included both firms verified under the 2006 Act process and the 2010 process.", "VA has made significant changes to its verification processes in an effort to improve its operations and address program weaknesses, but continues to face challenges in establishing a stable and efficient program to verify firms on a timely and consistent basis. Since December 2011, VA has instituted a number of significant operational changes, including revising standard operating procedures and enhancing quality assurance protocols. However, it has not had a comprehensive, long-term strategic plan for the verification program and has consistently prioritized addressing immediate operational challenges, contributing to programmatic inefficiencies. In response to our observations, VA’s OSDBU initiated action in late October 2012 to compile a strategic planning document that encompasses the verification program. OSDBU appears to have at least partially applied key leading strategic planning practices in its initial planning effort. But the plan lacked performance measures to assess whether the desired outcomes are being achieved and had a shorter-term focus than typically associated with a strategic plan. Furthermore, VA had not shared the plan with key stakeholders, such as veteran support organizations and business associations or congressional staff. In addition, the verification program’s information technology (IT) system has shortcomings that have hindered VA’s ability to operate, oversee, and monitor the program. VA is planning to modify or replace the system, but has not directly tied this effort into its long-term strategic planning efforts to ensure that the new system meets the verification program’s long-term information needs.", "As of September 30, 2012, the VIP database listed 6,257 firms that had been verified as VOSBs or SDVOSBs. Of these, VA reported that 1,733 were verified under the initial 2006 Act process and 4,524 under the more rigorous 2010 process. VA’s database also listed a substantial number of pending cases at that time: 691 new applications for verification, 131 firms seeking reverification to remain in VIP, and 165 requests for reconsideration from firms that were denied verification. See appendix II for additional data on the verification program as of September 30, 2012.\nGAO-12-697. process that VA previously used represented a continuing vulnerability. By September 30, 2012, VA had reverified or removed from the VIP database 622 of the firms that were originally verified under the 2006 Act process, but had yet to reverify the remaining 1,733 firms, according to VA’s inventory of verified firms. The inventory indicated that the 2-year verification period for 1,159 of these remaining firms expired on or before September 30, 2012, so they were not eligible to receive VA contracts after that date and were due to be removed from the database. VA officials said that firms whose 2-year verification period had not yet expired would be removed from the database upon expiration if they had not been verified under the 2010 process. According to VA, fewer than 120 companies that were verified under the 2006 process remained in VIP as of December 1, 2012.\nIn interviews with us between April 2012 and June 2012, veterans’ organizations cited applicant concerns about other aspects of the verification program, such as the rationale for determinations and the time it took VA to make determinations, as the following examples illustrate.\nWe observed several outreach sessions that VA conducted in May and June 2012 with veterans’ organizations and an association of organizations that provided technical assistance with procurement. In these sessions and in our follow-up interviews with participants, the organizations stated that VA’s guidance for applicants did not always adequately explain how VA interpreted some of the subjective eligibility standards in its regulations, such as the requirements that owners have good character. They also said that they and applicants sometimes found the rationale for denial to be unclear or inconsistent.\nRepresentatives from two of the veteran service organizations that we interviewed also raised concerns about the length of time it could take to process an application. According to VA officials, it took on average more than 130 days after receiving a complete application to make a determination in July 2011. As of October 2012, it took approximately 85 days.\nWith the hiring of a new CVE director in December 2011, CVE conducted a review of the verification process to identify ways to increase its efficiency and began adopting changes to the verification process to improve its operations and address program weaknesses and applicants’ concerns. For example, as a result of this review, CVE did the following:\nCVE revised its Standard Operating Procedures (SOP) to reflect current practices and help ensure greater consistency in its verification processes. These procedures describe the purpose, scope, statutory references, staff roles, and implementation steps.\nCVE instituted a more robust quality assurance process to ensure that staff adhered to the approved procedures. For example, CVE employees and contractors are now subject to both scheduled and spot audits and must resolve any major deficiencies within 10 days.\nCVE hired its first training officer and revised its training program with the goals of ensuring that CVE staff were properly trained and qualified to perform their duties, achieved high performance, and were responsive to changing business requirements, among other things. The training officer is responsible for coordinating training for staff (including contractors), including weekly training on the verification program and customer service, as well as monthly fraud education.\nCVE added specific methods of communicating with applicant firms, with the goal of ensuring that applicants receive an email from VA at least every 30 days with an update on the status of their application.\nCVE began using the initiation phase, rather than the examination phase, to determine whether an application was complete, so that any missing documentation or inadequate explanations can be addressed before the examination process begins.\nCVE began tracking staff productivity levels and more closely monitoring the quality of their work. For example, beginning in the spring of 2012, CVE started setting targets for the numbers of cases that individual staff members should review each day. Also, in September and October 2012, CVE’s evaluation team reviewed the results of contractors’ examinations to identify cases that had not been properly completed or in which the recommended finding should be overturned.recommended for additional training.\nContractor staff with the most rejected cases were VA has also revised the organizational structure for the verification program, but VA officials said that human capital challenges remained. In general, CVE is structured so that a federal employee oversees a team of contractors. VA uses a mix of federal employees and contractors to complete verifications because contractors have greater flexibility to adjust staffing levels in response to variations in the number of applications submitted, according to VA officials. Between December 2011 and October 2012, VA adopted changes to the verification program’s organizational structure to make it more efficient, increase oversight of federal staff and contractors, and strengthen functions that did not previously have dedicated staff, such as training. VA officials (1) reorganized and increased the number of employees and contractors assigned to the verification process and (2) created several new teams including quality assurance, training, records management, and customer service. During this period, VA added about 3 full-time equivalent staff and 64 contractors to the verification program.organization charts as of December 2011 and October 2012.) However, VA officials said that the verification program faces ongoing human capital challenges. For example, 5 of the verification program’s 27 full-time federal positions were vacant as of November 2012. As of early November 2012, CVE was developing a business case to justify the staff organization necessary to support verification operations, including revised federal employee labor categories and modifications to contractor support. (See app. III for the verification program’s VA has also sought to improve outreach to applicants through additional online resources and a new Verification Counseling program. In November 2011, VA began posting on its website verification assistance briefs intended to clarify aspects of the program’s rules. These briefs cover topics that VA officials have determined cause the majority of denials, such as full-time control and transfer restrictions. In addition, VA launched a self-assessment tool in June 2012 to help applicants understand the rules, regulations, eligibility criteria, and review process for verification. Recognizing that some applicants needed additional support, VA launched a Verification Counseling program in June 2012. According to VA, this program integrates the Verification Assistance Partner counselors (initially, selected veterans’ support organizations and business associations and Procurement Technical Assistance Centers) into the regular training provided to CVE examination and evaluation staff. These counselors in turn provide counseling to firms interested in becoming verified. The program is intended to increase understanding of the verification program’s eligibility requirements so that ineligible firms would be less likely to apply and eligible firms would be more likely to submit the materials necessary for them to succeed in their initial applications.\nTo mitigate an anticipated increase in its workflow over time, VA initiated two efforts in early 2012 to modify its approach to reverifying firms’ eligibility. VA’s verification regulations issued in May 2008 limited the term of the verification status of a firm to a 1-year time period. However, as growing numbers of firms verified under the 2010 process began to require reverification in early 2012, VA recognized that it would face a mounting workload over time if it reverified firms annually using its full examination procedures. As a result, VA began to develop procedures for a simplified reverification process, which it introduced in early June 2012. VA also began the process of modifying the verification program regulations to extend the verification period from 1 year to 2 years and published an interim final rule to this effect in late June 2012. As a result of the rule change, additional firms eligible for simplified reverification will not begin reaching the expiration of their verification period until February 2013. In late October 2012, VA determined that a firm would be eligible for simplified reverification one time before again requiring full examination (i.e., once every 4 years).\nDespite the steps that VA had taken since December 2011, the Secretary of Veterans Affairs acknowledged ongoing concerns about the program and announced the creation of a senior executive task force to review the verification program and determine whether it had sufficient resources and support. The task force, created in June 2012, was initially charged with reporting back within 60 days with suggested changes that would help streamline the verification process. In August 2012, the task force adopted a charter stating that its purpose was to review all aspects of the verification program, including processes, operating policies, management information systems, staffing, and resources. The task force presented its preliminary findings to the VA Chief of Staff in early November 2012. The review results and recommendations of the task force were expected to be provided to the Office of the Secretary for final approval during the second quarter of fiscal year 2013.", "During the period covered by our review, VA had not created a formal strategic plan for the verification program. However, in response to our inquiries, OSDBU compiled a strategic planning document in late October 2012 that covered the verification program. This plan was based on a series of planning documents that were initially developed between June and December 2011 for internal discussions and conversations with congressional staff. This initial strategic planning effort appears to have at least partially followed key leading federal strategic planning practices, but additional progress is needed to improve the usefulness of the plan. We have previously reported that agency-wide strategic planning practices required under the Government Performance and Results Act of 1993 (GPRA)—which was amended by the GPRA Modernization Act of 2010 (GPRAMA)—can also serve as leading practices for planning at lower levels within federal agencies, such as individual programs or initiatives. We have also previously identified six leading practices in federal strategic planning that are most relevant to initial strategic planning efforts: (1) defining the mission and goal; (2) defining strategies that address management challenges and identifying resources needed to achieve goals; (3) ensuring leadership involvement and accountability; (4) involving stakeholders; (5) coordinating with other federal agencies; and (6) developing and using performance measures.of each of these practices, see appendix I.\nAccording to OSDBU and CVE officials, VA did not develop a formal strategic plan when it was initially developing the verification program because the primary concern at the time was to develop and implement initial verification procedures and program regulations. Once the program was launched in 2008, CVE continued to make its immediate operational challenges a higher priority than long-range strategic planning. Although VA’s focus on getting the verification program running and reacting to legislative change may have seemed reasonable at the time, its failure to develop a comprehensive strategic plan contributed to programmatic inefficiencies. For example, as discussed in greater detail later, VA developed the data system for the verification program without fully considering its long-term information needs. Resulting shortcomings of the system have required CVE to develop inefficient workarounds to operate and oversee the program.\nAfter the new OSDBU executive director started in April 2011, OSDBU began developing planning documents for 2011 through 2012 that covered OSDBU and its three mission areas—the verification program, strategic outreach, and acquisition support. After we asked VA about the lack of a strategic plan for the verification program, OSDBU officials compiled the separate OSDBU planning documents into a single document and updated them to include some milestones, tasks, and metrics for 2013. VA officials said that they considered this document to be the strategic plan for OSDBU and the foundation of its efforts for fiscal year 2013, and found that the compiled document could serve as a more comprehensive basis for future planning.\nBased on our review of the strategic plan and the six documents OSDBU drew upon to compile it, as well as OSDBU officials’ description of the process they undertook to develop these documents, OSDBU appears to have at least partially applied the six leading federal strategic planning practices that we previously identified, as described below.\nDefining the mission and goals. The plan provides OSDBU’s primary mission and alludes to the components of the mission for the verification program (verifying eligible firms and preventing ineligible firms from being verified), but does not explicitly describe the verification program’s mission. The plan identifies broad, long-term goals for OSDBU, which according to OSDBU officials were initially intended to be achieved by 2012. These goals include achieving a sustainable organizational structure to support its mission and ensuring compliance with all statutory requirements. Long-term objectives for the verification program include, among other things, meeting all regulatory requirements, providing quality customer experience, certifying CVE’s processes and staff, and preventing ineligible firms from being verified through rigorous quality control. As we have previously reported, goals in strategic plans should ideally explain what results are expected and when to expect those results. Thus, such goals are an outgrowth of the mission and are often results-oriented. However, based on the broad wording of some of the goals and objectives for the verification program, assessing whether they have been accomplished and the results achieved would be difficult.\nDefining strategies that address management challenges and identify resources needed to achieve goals. The planning documents identify management challenges that affect the verification program, such as human capital and technology. For example, the planning documents note that verification staff need training on the verification requirements. While the compiled strategic plan does not identify the specific resources necessary to overcome these challenges, it lays out strategies with more specific tasks to address them, such as developing and conducting staff training for verification.\nEnsuring leadership involvement and accountability. According to OSDBU officials, more senior VA officials were aware of OSDBU’s long-term goals, and OSDBU regularly briefed VA’s Chief of Staff and other senior VA officials on its plans and progress. However, while OSDBU compiled the strategic plan itself in late October 2012, it had not yet been reviewed or approved outside of OSDBU as of early November 2012, and we could not assess whether or how senior VA leaders would be involved in monitoring its implementation. To help hold managers accountable for elements in the plan, OSDBU officials said that the Executive Director met regularly with staff to discuss their plans and performance. For example, the officials said that OSDBU and CVE officials hold weekly meetings to discuss the status of the verification program and applications reviewed.\nInvolving stakeholders. OSDBU officials said that they had briefed stakeholders, including congressional staff and committees, while developing the initial planning documents for 2011 and 2012 that formed the basis for OSDBU’s strategic plan. The officials said that OSDBU’s planning was informed by extensive feedback on the verification program from the VA acquisition community, congressional staff and committees, veteran support organizations and business associations, and veteran-oriented media, as well as through direct contact with applicants. However, since the strategic plan was only recently compiled in response to our review, VA had not shared the plan with key stakeholders, thus missing an opportunity to promote transparency of the verification program’s plans and priorities and to facilitate continued stakeholder involvement.\nCoordinating with other federal agencies. OSDBU officials said that they met with officials from other agencies’ OSDBUs prior to the development of the planning documents to discuss the verification program, in particular the program’s potential government-wide expansion. An official said that they did not coordinate with SBA— which administers the government-wide SDVOSB contracting program and certifies the eligibility of firms for other government-wide contracting programs—when they were developing the planning documents.\nDeveloping and using performance measures. The strategic plan that OSDBU compiled contained “metrics” related to the verification program that consisted of a combination of output, efficiency, and customer service measures but lacked quality and outcome measures aligned with long-term goals. Over 80 percent of the metrics in the plan (31 of 38 items) related to the implementation of a specific task rather than whether the desired outcomes are being achieved. For example, the verification-related metrics for 2013 include “provid improved training of CVE staff” and “review fraud training program with OIG,” in support of a strategy to improve the capability of CVE staff to perform accurate and timely evaluation of applications and detect misrepresentation and fraud. But the plan does not identify measures that could be used to assess the impact of the identified long-term goals and strategies, such as a reduction in the number of examinations that are not properly completed. As previously discussed, CVE has begun tracking staff productivity levels and more closely monitoring the quality of their work, but these measures are not included in the strategic plan. Recognizing some of the challenges with its existing measures, VA has undertaken a recent initiative with a university to improve OSDBU’s performance measures. OSDBU officials expected to incorporate these measures into future planning efforts.\nLastly, OSDBU’s initial strategic planning effort was more short-range than long-range in focus. GPRAMA requires that agency-level strategic plans cover at least a 4-year period.OSDBU developed in 2011 only covered 2011 through 2012 because they expected the program to have achieved its initial long-term goals within that time, according to OSDBU officials. In compiling the strategic plan to respond to our enquiries, OSDBU officials told us that they recognized the value of expanding the coverage of the plan to include strategies and metrics for activities to be completed in 2013. But the plan did not include strategies and metrics beyond 2013. The longer-term focus of a strategic plan is one of the key distinctions from a performance plan that focuses on annual goals and measures. Without a longer-term perspective, the current strategic plan serves as more of a short-term management plan rather than as a longer-term guide to help frame the needs and direction of the verification program.", "The verification program’s current data system lacks certain data fields and reporting and workflow management capabilities needed to provide key information for program management. We have previously reported that an agency must have relevant, reliable information to run and control its operations. More specifically, we have noted that pertinent information should be identified, captured, and distributed to the right people in sufficient detail, in the right form, and at the appropriate time to enable them to carry out their duties and responsibilities efficiently and effectively.\nSince the verification program began in 2008, VA has relied on data systems that it developed on an incremental, ad hoc basis in response to immediate needs, without an overarching plan or vision, and without centralized oversight by VA’s Office of Information and Technology (OI&T). As stated earlier, VA initially did not develop a strategic plan that might have provided a framework for envisioning the verification program’s information needs from the outset. Rather, VA initially modified its existing VIP database to address only its immediate need to accept firms’ application forms and identify verified firms. VA staff also created a separate database to track the results of checks that it used to verify that firms met its basic eligibility requirements, such as veteran and service- disability status. When VA began requiring firms to submit a standardized set of documents under the 2010 process, these documents were collected in a variety of formats, and paper copies had to be manually uploaded to CVE secure servers, according to VA officials.According to VA, in some cases documentation was shredded to protect confidential information without first being uploaded to the server. In response to these problems, VA hired a contractor to develop the Verification Case Management System (VCMS), which went online in 2011. VCMS was integrated with VIP to enable VA to better track and retrieve documents and manage the verification process. According to VA officials, the project was managed by the program office because VIP and VCMS were funded by VA’s Supply Fund, and not through appropriated information technology funds, which are overseen by OI&T.\nThe resulting VIP/VCMS system aids in performing some tasks. For example, VIP/VCMS allows applicants to upload documents directly into the web-based system, and applicants and VA to track applicants’ broad phase of review (i.e., initiation, examination, or evaluation). VA staff and contractors can also use VIP/VCMS to send and maintain a record of emails to the applicant to, for example, request additional documentation, provide status updates, or send the determination letter. The system also allows VA officials to run some reports, such as the number of initial applications and requests for reconsideration that have been approved, denied, withdrawn or completed by year as well as the open applications that have been in the system for more than 90 days.\nHowever, VIP/VCMS has significant shortcomings that could have been avoided with better planning for and oversight of the system’s development. Specific areas with remaining shortcomings include the following:\nData fields. VA officials said that, because of the need to get a system in place quickly, the responsible staff at the time did not consider all of the data elements that would be useful for monitoring program trends and staff performance and did not plan for future phases that would add more data fields. For example, VCMS did not include data fields to track the reasons for denial (i.e., specific eligibility, ownership, or control issues); the basis for requests for reconsideration and their outcomes; and the incidence and reasons for applications being returned to a lower level of the process for rework or for a reversal of a contractor or staff member’s recommendation to approve or deny an application. VCMS also lacks fields to facilitate monitoring the reasons for and results of customer service inquiries.\nReporting. VCMS currently also allows only limited reporting, and users cannot always customize their search criteria to obtain data in the form they need to monitor the program. We noted in our August 2012 report that VCMS’s limited reporting capabilities, and the lack of certain data within the system, resulted in inconsistent aggregate reporting and made tracking the inventory of firms difficult for VA. In response, VA conducted a laborious process to develop a manual inventory of firms that have been verified under the 2006 and 2010 Act processes and the dates that those firms were verified, which VA staff could not obtain directly from VCMS.\nWorkflow management. VCMS has the capability to track which broad phase of the verification process an application is in and to record which staff completed certain actions in the system, but it does not meet VA staff or contractors’ needs for assigning and monitoring the progress of applications. As a result, the contractor that initially examines applications relies on a workflow management system outside of VCMS to assign and track applications as they move through the steps of the examination phase. Similarly, each of the team supervisors that we talked to has created spreadsheets to track the status of applications as their team reviews them. The reliance on these other systems is inefficient and increases the risk that data will not be completely or accurately recorded across systems.\nIn addition, VCMS experienced periodic outages following its initial launch in 2011 and after its most recent modification. According to VA officials, VCMS crashed almost immediately after its launch in May 2011 because it could not handle the volume of data that VA began receiving. The system was also off-line for a month in September 2011 following another modification. During these outages, firms that had a contract pending and needed to be verified in order to receive the contract could be manually processed on a case-by-case basis. More recently, VCMS was unavailable from May 9 to June 6, 2012, during which time applicants could not submit new applications, and staff could not request additional documentation through the system. This outage was caused by a security problem that was identified in routine testing by OI&T as VA was preparing to launch a modification to the system.\nVA is in the process of planning to either modify or replace the current version of VCMS to address the identified shortcomings, but this planning effort has not been tied to broader long-term strategic planning for the verification program. VA officials have identified elements that the next iteration of VCMS should include. For example, the officials would like the program to automate some aspects of the background company research and generally make the verification process less burdensome on veterans. Following the program outage in May 2012, verification program officials began reaching out to OI&T for assistance in overseeing both the current system and a potential modification or replacement. These discussions received further emphasis through the previously discussed senior executive task force, which included representatives of OI&T. As a result of an expected recommendation by the task force, OI&T assigned staff in July 2012 to begin formally planning for either a modification or a replacement system, a process that OI&T will manage. VA is considering short- and long-term information needs as it defines the business requirements for the system. But, as we have seen, the initial strategic plan that OSDBU developed in late October 2012 does not specify longer-term goals for the verification program or define program strategies and activities beyond 2013. Without tying the effort to modify or replace the verification program’s data system to more comprehensive, long-term strategic planning, the resulting system risks again failing to meet the verification program’s long-term needs and goals.", "Expanding VA’s verification program to support the government-wide SDVOSB contracting program would require VA to increase the scale of its program to verify potentially thousands of additional firms. VA has faced ongoing challenges implementing its verification program, and it would need to continue to stabilize and improve its verification operations by addressing remaining vulnerabilities to fraud and abuse, demonstrating whether recent operational changes have resulted in improved performance and whether new methods for educating applicants are effective, and addressing data system limitations. Also, as VA revises its verification program regulation, it is considering policy issues that would impact a government-wide verification program.\nVA has not formally projected how many firms it might need to verify under a government-wide SDVOSB verification program, and a number of factors make such a projection difficult. For example, the scale of a program would depend on whether firms would be required to obtain verification to bid on contracts or only to receive contract awards, how likely firms that are already self-certified as SDVOSBs would be to seek verification if it were required, and how many new or existing SDVOSBs that have not yet self-certified might seek verification in the future.\nThe estimate of 12,800 firms is based on the number of self-certified SDVOSBs (i.e., registered in CCR but not yet verified by VA as of Sept. 30, 2012) that did not receive contract obligations in fiscal years 2010 or 2011 (the last full fiscal year available), according to FPDS-NG. future. As a result, predicting how many would actually be motivated to seek verification if it were required is difficult.\nBeyond firms that have already registered as prospective federal contractors, thousands of existing or new SDVOSBs could eventually register and seek verification if it were required. We did not identify a current estimate of the number of SDVOSBs in the United States. However, an SBA analysis of data from the Census Bureau’s 2007 Survey of Business Owners found that there were around 200,000 service-disabled veteran-owned businesses (of any size) at that time.\nConsidering the additional operational challenges that VA would face in preparing to verify potentially thousands of additional firms, VA would need to continue to address existing program weaknesses to stabilize and improve its verification program. Our prior and current work indicates that several aspects of VA’s current verification program, specified below, would have to be addressed before the program could be effectively implemented government-wide.\nU.S. Small Business Administration, Office of Advocacy, Veteran-owned Businesses and their Owners—Data from the Census Bureau’s Survey of Business Owners (Washington, D.C.: March 2012). SBA reported that there were more than 2.1 million nonservice-disabled veteran-owned businesses (of any size) in 2007. debarments and prosecutions of firms found to be misrepresenting their SDVOSB status, had not been implemented. As of January 4, 2013, we were reviewing documentation that VA had recently provided to determine whether VA’s actions are sufficient to consider some of the recommendations implemented.\nOperations. A major expansion of the verification program would have a greater chance at success if its priorities and operations were more stable and if the recent changes that VA adopted were shown to have improved the program’s performance. For example, the steps VA has taken to standardize its procedures and make them more efficient, improve its quality assurance process, and enhance training of CVE employees and contractors are promising. However, it is too soon for us to test the effectiveness of these evolving procedures, and it is not clear whether VA will adopt further significant changes as a result of the recommendations of the senior executive task force reviewing the verification program.\nApplicant Education. Because a government-wide program would potentially affect thousands of additional firms, VA would need to have in place effective methods for educating business owners about the program and for obtaining and responding to their feedback. VA officials suggested that the agency’s recent efforts to clarify online guidance for applicants and to partner with organizations to better educate applicants about the verification requirements were intended to help firms understand the rationale for the required documentation and explain how VA interprets the documents submitted in making its determinations. The officials described plans for collecting the data they would need to evaluate these efforts, which included assessing whether denial rates differed for firms that used the online guidance or received assistance from a partner organization and those that did not.\nInformation technology. As we noted earlier, the limitations of the verification program’s information system (VIP/VCMS) have hampered VA’s ability to effectively manage, monitor, and report on the program’s operations and results. Addressing these limitations by, for example, ensuring that the information system collects the data needed to monitor the consistency and accuracy of VA’s determinations, allows customized reporting to meet managers’ needs, and supports efficient workflow management would also help position VA to manage an expanded government-wide program. Furthermore, CVE and OI&T officials said that, in planning to modify or replace VIP/VCMS, they were factoring in the potential need for the system to have the capacity and flexibility to expand to a government- wide scale and to be adapted for automated interagency information sharing. For example, the officials said they were planning to consider how to enable contracting officers from other agencies to determine whether an SDVOSB was verified without having to manually search for the firm in VIP.\nIn addition, VA has begun a process to revise the verification program’s regulations, which would likely serve as the starting point if VA were charged with implementing a government-wide verification program. VA officials said that they were planning to revise the regulations partly in response to applicants’ and veterans’ organizations concerns about VA’s eligibility standards. For example, two veterans’ organizations questioned VA’s regulatory requirement that veteran owners be able to transfer their ownership interest without restriction by nonveteran owners, effectively suggesting that VA’s standard for establishing control of a firm is too strict. The organizations stated that because nonveteran owners might reasonably expect to have a say in such transfers, the requirement limited the ability of SDVOSBs and VOSBs with nonveteran minority owners to participate in the Veterans First program. VA officials said that they would weigh this and other concerns as they developed proposed revisions to the regulation, a process that they expected to result in a final rule by mid-2014.\nAny changes to VA’s verification requirements could create or widen differences between the various government-wide small business contracting programs’ requirements and VA’s, a consideration that would likely be of even greater importance if VA’s verification program were expanded. In addition to the government-wide SDVOSB program, federal contracting preference programs give federal agencies the authority to set aside contracts for small business concerns and specific types of small businesses: women-owned small businesses, businesses located in historically underutilized business zones (HUBZone), and socially and economically disadvantaged small businesses participating in SBA’s 8(a) program. While the SDVOSB and women-owned small business programs allow firms to self-certify their eligibility, SBA reviews supporting documentation to certify HUBZone and 8(a) firms, with the 8(a) program requiring more extensive documentation similar to what is required under VA’s verification program. (See app. IV for a description of these programs and their verification requirements.) Some veterans’ organizations and others with whom we spoke have cited perceived differences between VA’s eligibility standards and SBA’s standards for the government-wide SDVOSB program and the 8(a) program, whose certification process is most similar to VA’s verification program.\nHowever, VA and SBA officials worked together to compare the three programs’ regulations and VA’s and the 8(a) program’s documentation requirements. Initially, VA and SBA officials told us that they did not find major differences in the programs’ regulatory eligibility requirements, the agencies’ interpretation of them, or the documentation requirements for verification. In commenting on a draft of this report, SBA subsequently stated that, while the wording of the regulations pertaining to eligibility requirements was comparable, there was a distinction regarding ownership by spouses of disabled veterans. SBA also stated in its comment letter that there were some key differences in how the agencies interpreted the regulations and that the agencies were consulting with one another to determine whether those differences could or should be resolved. Going forward, if VA adopts unilateral changes to its verification policies and procedures, these changes could have the effect of making it more difficult to align the programs. VA officials told us that the tension between competing calls for VA to ease its requirements and to be consistent with the government-wide SDVOSB and 8(a) programs would be a major consideration as VA considered changes to its regulations— particularly considering the potential for a government-wide SDVOSB verification program. Accordingly, the officials said that they were consulting with SBA as they began to develop proposed changes to VA’s verification program regulation.", "The opportunity to receive set-aside or sole-source contract awards under the Veterans First program is a significant benefit that provides billions of dollars in contracts annually to SDVOSBs and VOSBs. As a result, the program warrants strong internal controls to provide reasonable assurance that the contracts VA enters into are awarded to eligible firms. At the same time, an inherent tension exists between the need for effective internal controls and the Veterans First program’s goal of increasing contracting opportunities for SDVOSBs. If VA fails to correctly verify eligible firms, or if firms’ concerns about the verification process deter them from applying, VA’s ability to sustain its high levels of contracting with SDVOSBs and VOSBs could ultimately be at risk. VA has made progress toward reducing its vulnerability to fraud and abuse, and CVE’s new management team has initiated a variety of operational changes in an effort to improve the program. VA has also initiated efforts to develop a comprehensive strategic plan for the verification program. This initial strategic planning effort represents a positive step that appears to have at least partially applied key leading federal strategic planning practices. However, the initial plan includes only goals intended to be met within 2 years, and many of the performance measures focus on the implementation rather than the outcomes of activities. Additionally, VA has not shared the plan with key stakeholders. As it continues to develop and refine its strategic plan, VA could strengthen its effort by ensuring that the plan articulates results-oriented, long-term goals and objectives for the verification program, that the metrics are focused on outcome measurements that can be used to monitor the verification program’s performance and demonstrate results, and that key stakeholders are involved in evaluating the plan.\nThe initial lack of a comprehensive strategic plan for the verification program has also contributed to the development of a data system that has proven to be inadequate. The system does not collect data for monitoring program trends and staff performance, has limited reporting and workflow management capabilities, and has been unable to accept applications for extended periods, hindering VA’s ability to operate and monitor the verification program. VA has started taking steps to address the shortcomings in the data system by shifting responsibility for developing plans to enhance or replace VCMS from CVE to OI&T. But without tying that effort to long-term strategic planning, VA risks failing to meet the program’s information needs going forward.\nAs VA revises its verification program regulations and considers the relationship between its policies and those of other federal small business contracting preference programs, the agency faces a tension between competing calls to reduce the burden on applicants and to be vigilant in preventing and detecting fraud. This tension would underlie a government-wide SDVOSB verification program as well. Addressing these policy issues for its own program—or ultimately for a government- wide verification program—will require VA to weigh certain tradeoffs. These include deciding how to reduce the administrative burden that the verification process places on eligible firms and maintain sufficient fraud prevention and detection controls to provide reasonable assurance that the billions of VA contract dollars set aside for SDVOSBs and VOSBs reach their intended beneficiaries.", "To improve the management and oversight of VA’s SDVOSB and VOSB verification program, we recommend that the Secretary of Veterans Affairs take the following two actions:\nDirect OSDBU to continue to develop, refine, and implement a formal strategic plan to provide a comprehensive framework to guide, integrate, and monitor the verification program’s activities over time. As OSDBU refines the strategic plan, it should incorporate longer- term goals and objectives for the verification program. The plan should also incorporate outcome measures that OSDBU can use to better monitor the verification program’s progress and demonstrate its results. OSDBU should also share the plan with key stakeholders.\nDirect OSDBU and OI&T, as they modify or replace the verification program’s data system, to integrate their efforts with OSDBU’s broader strategic planning effort for the verification program to ensure that the new system not only addresses the short-term needs of the program but also can be readily adapted to meet longer-term needs.", "We provided a draft of this report to the Department of Veterans Affairs and the Small Business Administration for comment. In its written comments, VA generally agreed with GAO’s conclusions and concurred with the two recommendations. VA stated that it had actions under way that would address each recommendation. VA indicated that it anticipated submitting a strategic plan to the Office of the Secretary in fiscal year 2013 and would develop a schedule to brief VA senior leaders and other key stakeholders once the plan is approved. VA also provided additional information about its efforts to replace the verification program’s data system. VA noted that it had begun the process of replacing the existing system and had developed a work statement for the replacement system. VA also provided technical comments that we incorporated as appropriate into the report. In its technical comments, VA disagreed with the status of some of the prior GAO recommendations that we noted had not been fully implemented, including the provision of regular fraud awareness training and unannounced random and risk-based audits of verified firms to ensure compliance with the program rules. We have revised the report to indicate that, as of January 4, 2013, we were reviewing documentation provided by VA in December 2012 to determine if VA’s actions taken to address some of our prior recommendations are sufficient to consider them implemented. We also noted that we will continue to review documentation provided by VA in the future to assess whether the remaining recommendations have been implemented.\nIn its written comments, SBA provided additional information on its views on eligibility requirements for VA’s Veterans First Contracting Program, the government-wide SDVOSB contracting program, and the 8(a) program. In particular, SBA stated that a statement in our draft report was not accurate—specifically, our comment that VA and SBA did not find major differences in the programs’ eligibility requirements, the agencies’ interpretation of the requirements, or the documentation required for verification. SBA noted that, statutorily, surviving spouses of disabled veterans might be eligible for VA verification but that they were not eligible under SBA’s regulations for the government-wide SDVOSB program. SBA also noted that it provided an avenue of appeal through its SDVOSB status protest and 8(a) eligibility processes but that VA did not have a similar appellate procedure. Finally, SBA stated that the wording of the regulations pertaining to VA’s and SBA’s eligibility requirements was similar but that there were some key differences in interpretation that the two agencies were reviewing. We have revised our discussion of VA’s and SBA’s effort to compare the programs’ eligibility and documentation requirements, citing the difference noted by SBA with respect to the eligibility of surviving spouses and noting that the agencies were consulting with each other to determine whether differences of interpretation could or needed to be resolved. We also added clarifying language in appendix I describing how we obtained information on VA and SBA efforts to compare program regulations. In addition, we clarified the differences between SBA’s and VA’s status protest mechanisms in appendix IV. VA’s and SBA’s comments are reprinted in appendixes V and VI.\nWe are sending copies of this report to the appropriate congressional committees, the Administrator of SBA, the Secretary of Veterans Affairs, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8678 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VII.", "Our objectives were to (1) describe and assess the progress that the Department of Veterans Affairs (VA) has made in establishing a program to verify the eligibility of service-disabled veteran-owned small businesses (SDVOSB) and veteran-owned small businesses (VOSB) on a timely and consistent basis, and (2) describe the key operational and policy issues that VA would need to address should its verification program be implemented government-wide. Because VA was introducing significant changes to its procedures and operations at the time of our study, we determined that evaluating VA’s compliance with its past procedures would be of limited value and that testing the effectiveness of verification procedures that were still evolving would be premature. We focused instead on issues related to planning for and designing the verification program and on changes in its management and operations that the Center for Veterans Enterprise (CVE) instituted since December 2011.\n75 Fed. Reg. 6098 (Feb. 8, 2010); 77 Fed. Reg. 38181 (June 27, 2012).\nNovember 1, 2011, and September 30, 2012, and VA’s Verification Master Inventory List, a manually maintained inventory of all verified firms that VA uses to supplement VCMS. We assessed the data by interviewing knowledgeable VA officials, reviewing related documentation, and checking the data for illogical values or obvious errors and found them to be sufficiently reliable for the purpose of illustrating general characteristics of the verification program. We also interviewed officials from three of the contractors who perform aspects of the verification process—GCC Technologies, LLC; HeiTech Services, Inc.; and Addx Corporation—to understand their roles in the verification program, and representatives from three veteran service organizations and a technical assistance association that were participating in the Verification Counseling program–VETForce, American Legion, National Veteran Small Business Coalition, and Association of Procurement Technical Assistance Centers—to discuss their views on the verification program and their expectations of the Verification Counseling program.\nPub. L. No. 103-62 (August 3, 1993); Pub. L. No. 111-352 (Jan. 4, 2011). GPRAMA provides federal agencies with an approach to focusing on results and improving government performance by, among other things, developing strategic plans. Examples of GPRAMA plan components include a mission statement; general goals and objectives, including outcome-oriented goals; and a description of how the goals and objectives are to be achieved, including the processes and resources required. leading practices that we had previously identified as being relevant to agencies’ initial strategic planning efforts. We reviewed a strategic planning document that OSDBU compiled in 2012 in response to our study, and six planning documents prepared between June 2011 and December 2011 that OSDBU officials said provided the basis for the strategic plan. We compared these documents, and the planning activities associated with them, to the six leading practices, as shown in table 1. Because VA prepared the initial strategic planning document as we were completing our draft report, we did not conduct a comprehensive review of the strategic plan, the supporting documents that VA provided, or the process that VA undertook to develop these documents.\nWe also assessed the extent to which the verification program’s data system provided the information needed to run and control the verification program’s operations, a key standard for effective internal controls. In particular, we focused on the timely availability of pertinent information sufficient to enable people to carry out their duties efficiently and effectively, a factor that we previously identified as important in assessing this standard. We reviewed data system documentation and reports that the system produces and interviewed officials from VA and the contractors that perform aspects of the verification process to determine how the data system was developed and how VA uses it, and to identify the capabilities and limitations of the data system.\nFor verified SDVOSBs that did not appear as self-certified in CCR as of March 2012, we cross-referenced the Small Business Administration’s (SBA) Dynamic Small Business Search, which includes supplemental information on registered firms that meet SBA’s size standard for the firms’ industries. under VA’s existing program regardless of whether a government-wide program was adopted. In addition, we could not determine how many of these firms have been actively seeking contracts or how likely they would be to do so in the future, making it difficult to predict how many would actually be motivated to seek verification if it were required. We assessed these data by interviewing VA officials knowledgeable about the VA data, reviewing documentation related to all of the data systems, and checking the data for illogical values or obvious errors and found them to be sufficiently reliable for the purpose of illustrating the potential scale of a government-wide verification program. We also reviewed our prior work on the verification program and that of the VA Office of Inspector General, as well as our assessment of the current status of the program, to identify issues that VA would need to address in implementing a government-wide program. Because of the Small Business Administration’s (SBA) role administering the government-wide SDVOSB program, we also interviewed VA and SBA staff about how the statutory and regulatory provisions implemented by the two agencies compare. In addition, we reviewed SBA documents and interviewed SBA staff for their views on a potential government-wide verification program. However, the SBA staff said that it would be inappropriate for them to comment on VA’s or SBA’s potential roles or other considerations in implementing a potential program.\nFor both objectives we interviewed officials in VA’s Office of Small and Disadvantaged Business Utilization (OSDBU), CVE, Office of the General Counsel, and the Office of Information and Technology to understand their historical, current, and expected roles in the verification program. We also reviewed prior GAO reports and a VA Office of Inspector General report on the verification program and testimonies from congressional hearings on the government-wide SDVOSB program and VA’s verification program.\nWe conducted this performance audit from February 2012 to January 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "We reviewed VA’s database known as the Verification Case Management System (VCMS) to obtain data on the status of initial applications, requests for reconsideration, and applications for reverification submitted to VA between November 1, 2011, and September 30, 2012. We chose this period because fiscal year 2012 roughly coincided with the December 2011 to November 2012 period that was the focus of our work. Because we were primarily interested in the progress that VA had made processing applications that were submitted during the period that was the focus of our work, we excluded from our analysis applications VA processed during the period but that were submitted prior to November 1, 2011. We used these data to determine the volume of applications that VA received between November 1, 2011, and September 30, 2012, and their status (pending, withdrawn, approved, or denied) as of September 30, 2012. Because our analysis included applications that had been submitted less than 90 days ago, we expected a significant number of the cases to be pending as of September 30, 2012.\nBased on our analysis of VCMS data, VA received approximately 4,900 initial applications between November 2011 and September 2012. The monthly volume of initial applications fluctuated during this period, with VA receiving an average of about 450 initial applications per month. As shown in figure 3, approximately 14 percent of the 4,900 initial applications submitted during the period were pending a determination as of September 30, 2012, and another 43 percent had been withdrawn.\nThe remaining 43 percent of applications had received a determination and, of these, 61 percent were approved and 39 percent were denied.\nApplicants can withdraw their applications at any time, or VA can withdraw an application if the applicant does not respond to requests to provide missing or additional requested documentation within 30 days.", "Between December 2011 and October 2012, VA revised the organizational structure for the verification program. As shown in figures 6 and 7, VA officials (1) reorganized and increased the number of employees and contractors assigned to the verification process and (2) created several new teams including quality assurance, training, records management, and customer service. As of October 2012, the verification program had about 28 full-time equivalent federal employees and 174 contractors, an increase of about 3 full-time equivalent staff and 64 contractors to the verification program since December 2011.", "All federal agencies have the authority to set aside contracts for small business concerns and for several specific types of small businesses: SDVOSBs, women-owned small businesses, businesses located in historically underutilized business zones (HUBZone), and socially and economically disadvantaged small businesses participating in SBA’s 8(a) program (table 2). Some programs are also authorized to make sole- source awards to these groups. For the government-wide SDVOSB program, business owners are required only to certify their eligibility online in the System for Award Management (SAM) and do not need to submit any supporting documentation. SBA does not verify the eligibility of these firms. Women-owned small businesses may obtain certification by an entity approved by SBA or self-certify their eligibility online in SAM; in either case, the firms must upload supporting documents to SBA’s online Women-Owned Small Business Program Repository for potential review by contracting officers or SBA. In contrast with these self- certification programs, SBA must certify firms’ eligibility to receive contracts under the HUBZone and 8(a) programs. SBA reviews supporting documentation to certify HUBZone and 8(a) firms, with the 8(a) program requiring more extensive documentation that is similar to that required by CVE for its verification program. For each of the government-wide small business contracting preference programs except for the 8(a) program, SBA provides a “status protest” mechanism for interested parties to a contract award to protest if they feel a firm misrepresented its eligibility in its bid submission. SBA’s status protest mechanism for the SDVOSB and women-owned small business programs and its certification process for the 8(a) program also provide interested parties with an avenue of appeal to SBA’s Office of Hearings and Appeals. However, VA’s OSDBU decides any SDVOSB or VOSB status protests arising from a VA solicitation.appellate procedure for such decisions.", "", "", "", "", "In addition to the contact named above, Harry Medina (Assistant Director), Emily Chalmers, Pamela Davidson, Julianne Dieterich, Julia Kennon, Cory Marzullo, John McGrail, Daniel Newman, Jena Sinkfield, James Sweetman, and William Woods made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_full h1_title", "", "h0_full h1_full", "", "h1_full", "h0_full", "", "", "h1_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What is the current status of VA's verification processes?", "In response, what operational changes has the VA made?", "What problems exist in these changes?", "How is OSDBU working to improve the verification program?", "To what extent has OSDBU's work been successful?", "What other problems exist with the plan?", "What plans does the VA have regarding the system?", "How are service-disabled and veteran-owned small businesses helped by VA?", "Before contracting, what must the VA do regarding the ownership of these businesses?", "What did reviews conclude about the program?", "What did GAO assess in their report?", "In the creation of this report, what data did the GEO review, analyze, and collect?" ], "summary": [ "The Department of Veterans Affairs (VA) has made significant changes to its verification processes for service-disabled and other veteran-owned small businesses to improve operations and address program weaknesses, but continues to face challenges in establishing a stable and efficient program to verify firms on a timely and consistent basis.", "Since December 2011, VA has instituted a number of significant operational changes, including revising standard operating procedures and enhancing quality assurance protocols for its verification program.", "However, GAO found that VA did not have a comprehensive, long-term strategic plan for the program and had prioritized addressing immediate operational challenges, contributing to programmatic inefficiencies.", "In response to this observation, VA's Office of Small and Disadvantaged Business Utilization (OSDBU) initiated action in late October 2012 to compile a strategic planning document that encompassed the verification program.", "VA's OSDBU appears to have partially applied key leading strategic planning practices in its initial planning effort. But the plan lacks performance measures to assess whether the desired outcomes are being achieved and has a short-term focus that is not typically associated with a strategic plan.", "VA also has not shared the plan with key stakeholders, including congressional staff. Further, the verification program's data system has shortcomings that have hindered VA's ability to operate, oversee, and monitor the program. Among other things, the system does not collect important data and has limited reporting and workflow management capabilities.", "VA plans to modify or replace the system, but has not directly tied this effort into its long-term strategic planning efforts to ensure that the new system meets the verification program's long-term information needs.", "VA is required to give contracting preference to service-disabled and other veteran-owned small businesses.", "It must also verify the ownership and control of these firms to confirm eligibility.", "Prior reports by GAO and VA's Office of Inspector General identified weaknesses in VA's processes and controls that allowed ineligible firms to be verified.", "For this report, GAO assessed (1) VA's progress in establishing a program for verifying firms' eligibility on a timely and consistent basis and (2) key operational and policy issues that VA would have to address should its verification program be implemented government-wide.", "GAO reviewed VA's policies and procedures; compared its initial strategic planning effort with previously identified leading strategic planning practices; interviewed VA officials and veterans' organizations; and analyzed government-wide contracting databases." ], "parent_pair_index": [ -1, 0, 1, -1, 3, 3, 5, -1, 0, 0, -1, 3 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 1, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Background on Federal Marijuana Policy", "Trends in States", "Decriminalization", "Medical Marijuana Exceptions", "Recreational Legalization", "Enforcement Priorities: A Focus on Traffickers", "Selected Counter-Drug Trafficking Efforts", "High Intensity Drug Trafficking Areas (HIDTA) Program", "Organized Crime Drug Enforcement Task Force (OCDETF) Program", "Domestic Cannabis Eradication/Suppression Program (DCE/SP)", "Border Enforcement Security Task Force (BEST): Tunnel Task Force", "Prosecutions and Convictions Data", "Implications for Federal Law Enforcement", "Federal, State, and Local Cooperation", "Synthetic Alternatives91", "Legalization Impact on Criminal Networks", "Going Forward: Congressional Options", "Federal Marijuana Policy—The Controlled Substances Act", "Oversight of Federal Law Enforcement Activities", "Review of Agency Missions", "Cooperation with State and Local Law Enforcement", "Oversight of Federal Enforcement Priorities", "Policy-Linked Funding for States" ], "paragraphs": [ "", "Marijuana is the most commonly used illicit drug in the United States. In 2013, an estimated 19.8 million individuals in the United States aged 12 or older (7.5% of this population) were current (past month) users of marijuana. While reported marijuana use is similar to that in 2012, it has generally increased since 2007 when 5.8% of individuals aged 12 or older were current users of marijuana. The past decade has seen a decline in youth perceptions of risk tied to smoking marijuana; however, the rate of past-month marijuana use among youth declined between 2011 and 2013 (7.1%). Youth also perceive that obtaining marijuana—if they desire it—is relatively easy. Indeed, marijuana availability in the United States has increased, according to the Drug Enforcement Administration (DEA). This increase has been linked to factors such as rising marijuana production in Mexico and increasing marijuana cultivation in the United States led by criminal networks including Mexican drug trafficking organizations.\nThe uptick in availability and use of marijuana in the United States is coupled with a general shift in public attitudes toward the substance. In 1969, 12% of the surveyed population supported legalizing marijuana; today, more than half (52%) of surveyed adults feel that marijuana should be legalized. In addition, 60% indicate that the federal government should not enforce federal laws prohibiting marijuana use in those states that allow for its use.\nMarijuana is currently listed as a Schedule I controlled substance under the Controlled Substances Act (CSA). This indicates that the federal government has determined that\n(A) The drug or other substance has a high potential for abuse.\n(B) The drug or other substance has no currently accepted medical use in treatment in the United States.\n(C) There is a lack of accepted safety for use of the drug or other substance under medical supervision.\nU.S. federal drug control policies—and specifically those positions relating to marijuana—continue to generate debates among policy makers, law enforcement officials, scholars, and the public. Even prior to the federal government's move in 1970 to criminalize the manufacture, distribution, dispensation, and possession of marijuana, there were significant discussions over marijuana's place in American society.\nWhile the federal government maintains marijuana's current place as a Schedule I controlled substance, states have established a range of views and policies regarding its medical and recreational use. As of November 2014, over half of all states and the District of Columbia allowed for the medical use of marijuana in some capacity. In the November 2012 elections, voters in Washington State and Colorado voted to legalize, regulate, and tax small amounts of marijuana for recreational use . In the November 2014 elections, voters in the District of Columbia, Oregon, and Alaska also passed recreational legalization initiatives. These moves have spurred a number of questions regarding their potential implications for related federal law enforcement activities and for the nation's drug policies on the whole.\nThis report provides a background on federal marijuana policy as well as an overview of state trends with respect to marijuana decriminalization and legalization—for both medical and recreational uses. It then analyzes relevant issues for U.S. federal law enforcement as well as for the criminal organizations involved in producing, distributing, and profiting from the black market sale of marijuana. This report also outlines a number of related policy questions that Congress may confront. Of note, it does not discuss the legal issues associated with state-level initiatives to legalize marijuana for recreational use.", "Until 1937, the growth and use of marijuana was legal under federal law. The federal government unofficially banned marijuana under the Marihuana Tax Act of 1937 (MTA; P.L. 75-238). The MTA imposed a strict regulation requiring a high-cost transfer tax stamp for every sale of marijuana, and these stamps were rarely issued by the federal government. Shortly after passage of the MTA, all states made the possession of marijuana illegal.\nThe Controlled Substances Act (CSA), enacted as Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970 (P.L. 91-513), placed the control of marijuana and other plant, drug, and chemical substances under federal jurisdiction regardless of state regulations and laws. In designating marijuana as a Schedule I controlled substance, this legislation officially prohibited the manufacture, distribution, dispensation, and possession of marijuana.\nAs part of the CSA, the National Commission on Marihuana and Drug Abuse, also known as the Shafer Commission, was established to study marijuana in the United States. Specifically, this commission was charged with examining issues such as\n(A) the extent of use of marihuana in the United States to include its various sources of users, number of arrests, number of convictions, amount of marihuana seized, type of user, nature of use;\n(B) an evaluation of the efficacy of existing marihuana laws;\n(C) a study of the pharmacology of marihuana and its immediate and long-term effects, both physiological and psychological;\n(D) the relationship of marihuana use to aggressive behavior and crime;\n(E) the relationship between marihuana and the use of other drugs; and\n(F) the international control of marihuana.\nThe Shafer Commission, in concluding its review, produced two reports: (1) Marihuana: A Signal of Misunderstanding , and (2) Drug Use in America: Problem in Perspective .\nIn its first report, the Shafer Commission discussed the perception of marijuana as a major social problem and how it came to be viewed as such. It made a number of recommendations, including the development of a \"social control policy seeking to discourage marihuana use, while concentrating primarily on the prevention of heavy and very heavy use.\" In this first report, the Shafer Commission also called the application of the criminal law in cases of personal use of marijuana \"constitutionally suspect\" and declared that \"total prohibition is functionally inappropriate.\" Of note, federal criminalization and prohibition of marijuana was never altered, either administratively or legislatively, to comply with the recommendations of the Shafer Commission.\nIn its second report, the Shafer Commission reviewed the use of all drugs in the United States, not solely marijuana. It examined the origins of the drug problem in the United States, including the social costs of drug use, and once again made specific recommendations regarding social policy. Among other conclusions regarding marijuana, the Shafer Commission indicated that aggressive behavior generally cannot be attributed to marijuana use. The Shafer Commission also reaffirmed its previous findings and recommendations regarding marijuana and added the following statement:\nThe risk potential of marihuana is quite low compared to the potent psychoactive substances, and even its widespread consumption does not involve social cost now associated with most of the stimulants and depressants (Jones, 1973; Tinklenberg, 1971). Nonetheless, the Commission remains persuaded that availability of this drug should not be institutionalized at this time.\nAt the conclusion of the second report, the Shafer Commission recommended that Congress launch a subsequent commission to reexamine the broad issues surrounding drug use and societal response. While a number of congressionally directed commissions regarding drugs have since been established, no such commission has been directed to review the comprehensive issues of drug use, abuse, and response in the United States. Going forward, policy makers may debate the utility of a complete re-examination of federal drug policy or, more narrowly, federal marijuana policy.", "Over the past few decades, some states have deviated from an across-the-board prohibition of marijuana. Evolving state-level positions on marijuana include decriminalization initiatives, legal exceptions for medical use, and legalization of certain quantities for recreational use.", "Marijuana decriminalization differs markedly from legalization . A state decriminalizes conduct by removing the accompanying criminal penalties; however, civil penalties remain. If, for instance, a state decriminalizes the possession of marijuana in small amounts, possession of marijuana still violates state law; however, possession of marijuana within the specified small amount is considered a civil offense and subject to a civil penalty, not criminal prosecution. By decriminalizing possession of marijuana in small amounts, states are not legalizing its possession. In addition, as these initiatives generally relate to the possession (rather than the manufacture or distribution) of small amounts of marijuana, decriminalization initiatives do not conflict with federal law enforcement's priority of targeting high-level drug offenders, or so-called \"big fish.\"\nDecriminalization initiatives by the states do not appear at odds with the CSA because both maintain that possessing marijuana is in violation of the law. For example, individuals in possession of small amounts of marijuana in Massachusetts—a state that has decriminalized possession in small amounts—are in violation of both the CSA and Massachusetts state law. The difference lies in the associated penalties for these federal and state violations. Under the CSA, a person convicted of simple possession (1 st offense) of marijuana may be punished with up to one year imprisonment and/or fined not less than $1,000. Under Massachusetts state law, a person in possession of an ounce or less of marijuana is subject to a civil penalty of $100.\nIn recent years, several states have decriminalized the possession of small amounts of marijuana; however, some of these states, such as New York, continue to treat possession of small amounts of marijuana as a criminal offense under specific circumstances. In New York, the possession of small amounts of marijuana is still considered a crime when it is \"open to public view.\" In 2010, nearly 55,000 individuals in New York State were arrested for criminal possession of marijuana in the fifth degree, a misdemeanor in New York State. In November 2014, New York City (NYC) Mayor de Blasio and NYC Police Commissioner Bratton announced a change in marijuana enforcement policy; individuals found to be in possession of marijuana (25 grams or less) may be eligible to receive a summons instead of being arrested.", "In 1996, California became the first state to amend its drug laws to allow for the medicinal use of marijuana. As of November 2014, over half of all states and the District of Columbia allow for medicinal use of marijuana, but do so in various ways. For example, while some states exempt qualified users of medical marijuana from state prosecution, others specifically authorize and regulate medical marijuana.\nThe CSA does not distinguish between the medical and recreational use of marijuana. Under the CSA, marijuana has \"no currently accepted medical use in treatment in the United States,\" and states' allowance of its use for medical purposes appears to be at odds with the federal position. Federal law enforcement has investigated, arrested, and prosecuted individuals for medical marijuana-related offenses regardless of whether they are in compliance with state law. However, as discussed in the section on \" Enforcement Priorities ,\" federal law enforcement emphasizes the investigation and prosecution of growers and dispensers over the individual users of medical marijuana.", "In contrast to marijuana decriminalization initiatives wherein civil penalties remain for violations involving marijuana possession, marijuana legalization measures remove all state-imposed penalties for specified activities involving marijuana. Until 2012, the recreational use of marijuana had not been legal in any U.S. state since prior to the passage of the CSA in 1970. The CSA explicitly prohibits the cultivation, distribution, and possession of marijuana for any purpose other than to conduct federally approved research. In November 2012, citizens of Colorado and Washington voted to legalize, regulate, and tax small amounts of marijuana for recreational use. In the November 2014 elections, legalization initiatives also passed in Alaska, Oregon, and the District of Columbia (DC), further expanding the disparities between federal and state marijuana laws in the United States.\nThese recreational legalization initiatives all legalize the possession of specific quantities of marijuana by individuals aged 21 and over and, with the exception of DC, set up state-administered regulatory schemes for the sale of marijuana; however, the initiatives also vary. For example, Colorado, Alaska, Oregon, and DC allow for individuals to grow their own marijuana plants while Washington Initiative 502 did not allow for private citizen cultivation. These legalization initiatives also specify that many actions involving marijuana remain crimes. For example, Washington Initiative 502 specifies that the operation of a motor vehicle while under the influence of marijuana remains a crime. Colorado's Amendment 64 allows any individual over the age of 21 to grow small amounts of marijuana for personal use, but specifies that marijuana may not be consumed \"openly and publicly or in a manner that endangers others.\"\nLegalization initiatives in the states reflect growing public support for the legalization of marijuana. As noted, just prior to passage of the CSA in 1970, 12% of surveyed individuals aged 18 and older felt that marijuana should be made legal. In 2014, more than half (52%) of surveyed U.S. adults expressed that marijuana should be legalized.", "Federal law enforcement has generally tailored its efforts to target criminal networks rather than individual criminals; its stance regarding drug (particularly marijuana) offenders appears consistent with this position. In the years since the enactment of the CSA and the establishment of the U.S. Drug Enforcement Administration (DEA), federal counter-drug efforts have largely been focused toward traffickers and distributors of illicit drugs, rather than the low-level users of illicit substances.\nAfter some states began to legalize the medical use of marijuana, the Department of Justice (DOJ) reaffirmed that marijuana growth, possession, and trafficking remain crimes under federal law irrespective of how individual states may change their laws and positions on marijuana. DOJ has continued to enforce the CSA in those states, and federal agents and U.S. Attorneys have arrested and prosecuted medical marijuana producers (growers) and distributors for violations of federal drug laws regardless of their compliance with state laws.\nDOJ has clarified federal marijuana policy through several memos providing direction for U.S. Attorneys in states that allow the medical use of marijuana. In the so-called Ogden Memo of 2009, Deputy Attorney General David Ogden reiterated that combating major drug traffickers remains a central priority and stated:\n[t]he prosecution of significant traffickers of illegal drugs, including marijuana, and the disruption of illegal drug manufacturing and trafficking networks continues to be a core priority in the [Justice] Department's efforts against narcotics and dangerous drugs, and the Department's investigative and prosecutorial resources should be directed towards these objectives. As a general matter, pursuit of these priorities should not focus federal resources in your States on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana.\nIn a follow-up memorandum to U.S. Attorneys, Deputy Attorney General James Cole restated that enforcing the CSA remained a core priority of DOJ, even in states that had legalized medical marijuana. He clarified that \"the Ogden Memorandum was never intended to shield such activities from federal enforcement action and prosecution, even where those activities purport to comply with state law.\"\nIn his memo, Deputy Attorney General Cole warned those who might assist medical marijuana dispensaries in any way. He stated that \"persons who are in the business of cultivating, selling or distributing marijuana, and those who knowingly facilitate such activities [emphasis added], are in violation of the Controlled Substances Act, regardless of state law.\" This has been interpreted by some to mean, for example, that building owners and managers are in violation of the CSA by allowing medical marijuana dispensaries to operate in their buildings. Deputy Attorney General Cole further warned that \"those who engage in transactions involving the proceeds of such activity [cultivating, selling, or distributing of marijuana] may be in violation of federal money laundering statutes and other federal financial laws.\" This warning may be one reason why medical marijuana dispensaries have had difficulty accessing bank services.\nIn an August 2013 memorandum, Deputy Attorney General Cole stated that while marijuana remains an illegal substance under the Controlled Substances Act, the Department of Justice would focus its resources on the \"most significant threats in the most effective, consistent, and rational way.\" The memo outlined eight enforcement priorities for the Department of Justice:\nPreventing the distribution of marijuana to minors;\nPreventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;\nPreventing the diversion of marijuana from states where it is legal under state law in some form to other states;\nPreventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;\nPreventing violence and the use of firearms in the cultivation and distribution of marijuana;\nPreventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;\nPreventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and\nPreventing marijuana possession or use on federal property.\nThese priorities are to guide U.S. Attorneys and federal law enforcement to focus their resources and efforts on those who interfere with any of these priorities, regardless of state law. In an interview with ABC News, President Obama noted that \"[it] would not make sense from a prioritization point of view for us to focus on recreational drug users in a state that has already said that under state law that's legal.\"\nOf note, under the Supremacy Clause of the U.S. Constitution, state laws that conflict with federal law are generally preempted and therefore are void; however, courts have generally not viewed the relationship between state and federal marijuana laws in such a manner. Further, Congress did not intend that the CSA should displace all state laws associated with controlled substances.\nIt is unclear whether or how the Department of Justice is tracking activity to ensure that standards are being met in states that have legalized marijuana. At minimum, it appears that the DEA discusses trafficking issues with state and local law enforcement. According to DEA Administrator Michele Leonhart, there has been increased marijuana trafficking in states surrounding Colorado since Colorado legalized for recreational use.", "As the Department of Justice (DOJ) has continued to focus its counterdrug efforts on large production and trafficking organizations, this section provides snapshots of selected federal law enforcement efforts to counter drug trafficking and associated criminal networks. The majority of these programs and initiatives are not drug type-specific, but rather focus on countering the manufacturing (including growth), transportation, and sale of illegal drugs in the United States. In addition, many federal counter-drug law enforcement efforts—including those discussed in this section—involve collaborations or partnerships with state and local law enforcement and include efforts to combat a vast range of illicit activities carried out by criminal networks.", "The HIDTA program provides assistance to law enforcement agencies—at the federal, state, local, and tribal levels—that are operating in regions of the United States that have been deemed as critical drug trafficking regions. The program aims to reduce drug production and trafficking through four means: (1) promoting coordination and information sharing between federal, state, local, and tribal law enforcement; (2) bolstering intelligence sharing between federal, state, local, and tribal law enforcement; (3) providing reliable intelligence to law enforcement agencies such that they may be better equipped to design effective enforcement operations and strategies; and (4) promoting coordinated law enforcement strategies that rely upon available resources to reduce illegal drug supplies not only in a given area, but throughout the country. There are 28 designated HIDTAs in the United States and its territories. On the whole, the HIDTA program is administered by the Office of National Drug Control Policy (ONDCP) within the White House. However, each of the HIDTA regions is governed by its own Executive Board. Notably, \"a central feature of the HIDTA program is the discretion granted to the Executive Boards to design and implement initiatives that confront the drug trafficking threat in each HIDTA region.\" Of note, \"[m]ultiple HIDTA task forces may make up an overarching HIDTA enforcement or investigative initiative.\"\nIn May 2013, 21 individuals were arrested for their alleged roles in two overlapping drug trafficking rings—one distributing marijuana and the other, powder and crack cocaine. This case was investigated by the FBI, Madison-Morgan County (AL) HIDTA Task Force, as well as other federal, state, and local law enforcement agencies.", "The OCDETF program targets—with the intent to disrupt and dismantle—major drug trafficking and money laundering organizations. Federal agencies that participate in the OCDETF program include the Drug Enforcement Administration (DEA); Federal Bureau of Investigation (FBI); Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF); U.S. Marshals; Internal Revenue Service (IRS); U.S. Immigration and Customs Enforcement (ICE); U.S. Coast Guard (USCG); the 94 U.S. Attorneys Offices; and DOJ's Criminal Division. These federal agencies also collaborate with state and local law enforcement on the task forces. There are 11 OCDETF strike forces around the country as well as an OCDETF Fusion Center. The OCDETFs target those organizations that have been identified on the Consolidated Priority Organization Targets (CPOT) List, which is the \"most wanted\" list for leaders of drug trafficking and money laundering organizations. For FY2013, 16% (822 cases) of active OCDETF investigations were linked to valid CPOTs, and an additional 5% (275 cases) were also linked to Regional Priority Organization Targets (RPOTs).\nIn January 2013, an OCDETF operation in the Dallas-Fort Worth, TX, area resulted in the indictment of 20 individuals for their alleged roles in a marijuana trafficking conspiracy. The conspiracy reportedly involved distributing and selling drugs as well as laundering the monetary proceeds. The OCDETF investigation led to the seizure of over 600 marijuana plants, 25 pounds of hydroponic marijuana, 10 vehicles, and 5 firearms. The leader of the marijuana distribution conspiracy was sentenced to federal prison in April 2014.", "The DEA has indicated that \"[m]arijuana is the only major drug of abuse grown within the U.S. borders.\" As one of its efforts to stop the growth of this illegal substance, the DEA funds the DCE/SP—a nationwide law enforcement program targeting the cultivation of marijuana by drug trafficking organizations. The DCE/SP was involved in the eradication of 4,033,513 cannabis plants that had been cultivated at 6,376 outdoor grow sites and 361,727 plants that had been cultivated at 2,754 indoor sites in 2013. Of note, there are no concrete data to delineate the proportion of domestically grown marijuana cultivated by drug trafficking organizations—separately from gangs or lone growers—nor are there reliable data on the amount cultivated by specific criminal networks.\nIn October 2012, the DEA (through the DCE/SP) and Arizona Department of Public Safety eradicated over 4,500 marijuana plants across four separate grow sites in Arizona. Each of these grow sites \"had its own irrigation system powered by a pump that emitted water through an underground watering drip system.\"", "The Border Enforcement Security Task Force (BEST) initiative, led by ICE within the Department of Homeland Security (DHS), is a series of multi-agency investigative task forces that aim to identify, disrupt, and dismantle criminal organizations posing significant threats to border security along the northern border with Canada and the Southwest border with Mexico as well as within Mexico. While the BEST initiative broadly targets criminal networks, tailored task forces have been established to target specific threats; in order to focus efforts on criminal networks exploiting the U.S.-Mexican border via underground tunnels (which have been primarily used to smuggle marijuana), ICE established the first tunnel task force in San Diego in 2003. The task force was created as a partnership between ICE, DEA, and the U.S. Border Patrol, along with state law enforcement and Mexican counterparts. The tunnel task force was incorporated into ICE's BEST initiative in 2006 in order to further enhance multilateral law enforcement intelligence and information sharing. Since 1990, over 150 tunneling attempts have been discovered along the U.S.-Mexican border.\nIn April 2014, the San Diego tunnel task force, along with Mexican counterparts, uncovered two sophisticated cross-border tunnels connecting commercial buildings in Otay Mesa, CA, with warehouses in Tijuana, Mexico. The tunnels were about 600 and 700 yards long, respectively, and were equipped with lighting, ventilation, and electric rail cars. They were two of seven underground, cross-border tunnels revealed in the San Diego area in fewer than four years.", "In its drug-related investigations and prosecutions, federal law enforcement has focused more efforts on investigations of criminal networks and drug traffickers and has generally placed less emphasis on going after individuals for simple drug possession. Data from the U.S. Attorneys' case filings follow these patterns. As illustrated in Figure 1 , of the 13,383 drug cases filed in FY2013 with the U.S. Attorneys, 21% (2,841) were OCDETF cases. The remaining 10,542 non-OCDETF drug cases can be broken down between what the U.S. Attorneys categorize as drug dealing and drug possession cases; of these non-OCDETF cases, 99% (10,394) of cases filed were for allegations of drug dealing rather than drug possession. While these data suggest a general prioritization of drug trafficking cases over cases of possession, they do not detail trends in investigations and prosecutions of cases involving specific drug types such as marijuana.\nThe U.S. Sentencing Commission data provide more nuanced information relating to federal drug prosecutions resulting in convictions and sentences, including for those cases involving marijuana-related offenses. Of note, these data only reflect information on the primary offense for which any given offender was sentenced.\nOf the 72,180 cases from FY2013 with sufficient information for Sentencing Commission analysis, 32% of the cases (23,179) were determined to be drug cases. Moreover, the vast majority (93%) of these drug cases were drug trafficking cases. As illustrated in Figure 2 , of the drug cases for which information on primary drug type was available, 4,942 cases (almost 22%) involved marijuana as the primary drug in FY2013. Of the drug cases with marijuana as the primary drug type in FY2013, nearly 98% involved a drug trafficking sentence.", "", "As experts have noted, \"[t]he federal government maintains the power to enforce federal law; however, it cannot compel states to assist in enforcing that law, and the states have no obligation to forbid the same drugs that the federal government forbids.\" As such, some policy makers may question whether the disparity between federal drug laws and those in states that have passed or enacted recreational legalization initiatives may pose challenges for the operation of collaborative law enforcement efforts and relationships—such as task forces and intelligence fusion centers in which federal, state, and local law enforcement all participate.\nIf, in a task force setting for example, state and local law enforcement prioritize going after marijuana users over traffickers and other members of criminal networks, there could be reasonable concerns regarding a lack of alignment between the drug enforcement priorities of the participating federal, state, and local agencies. However, most drug-related task forces with federal involvement appear to devote greater energy to identifying and apprehending individuals involved in criminal networks producing, transporting, and selling large quantities of drugs. As such, there is no evidence to suggest that the operation of these collaborative bodies will be impacted by the recreational legalization initiatives in the states.\nExamining how task forces have responded to medical marijuana legalization initiatives may provide some insight into how they may operate with respect to recreational marijuana legalization initiatives. Consistent with the Administration's indication that federal law enforcement prioritizes the investigation and prosecution of drug trafficking organizations and criminal networks over low-level drug users, it appears that investigations and arrests relating to medical marijuana follow similar trends. Federal law enforcement press releases suggest that investigations relating to medical marijuana generally target individuals \"who are in the commercial business of cultivating, selling, or distributing marijuana, and those who knowingly facilitate such activities ... and will not focus enforcement efforts on individuals with cancer or other serious illnesses who use marijuana as part of a recommended medical treatment regimen consistent with applicable state law, or their caregivers.\"\nIn January 2013, the owner of two medical marijuana dispensaries in San Diego, CA, was sentenced for his role in distributing marijuana and laundering the proceeds. The investigation, conducted by the San Diego DEA's Narcotics Task Force and Internal Revenue Service (IRS), revealed that these dispensaries were grossing about $3.5 million each year. In May 2013, the owner of a medical marijuana dispensary in Sacramento, CA, was sentenced for his role in growing marijuana and operating the dispensary. The case was investigated by local law enforcement with assistance from the Sacramento HIDTA Task Force.\nIf federal law enforcement priorities relating to recreational marijuana in states that have passed such initiatives follow the enforcement priorities regarding medical marijuana in states such as California, observers may see a focus on investigating marijuana growers and commercial sellers and less emphasis on the individual users of recreational marijuana.", "Officials began to see synthetic cannabinoids marketed as \"legal alternatives to marijuana\" in 2008. Synthetic cannabinoids are substances chemically produced to mimic tetrahydrocannabinol (THC), the active ingredient in marijuana. When these substances are sprayed onto dried herbs and then consumed through smoking or oral ingestion, they can produce psychoactive effects similar to those of marijuana. They are often sold as herbal incense, and common brand names under which synthetic cannabinoids are marketed are \"Spice\" and \"K2.\"\nAt least 41 states and Puerto Rico have legislatively banned chemical substances contained in synthetic cannabinoids. In June 2012, Congress passed legislation (the Synthetic Drug Abuse Prevention Act of 2012—Subtitle D of Title XI of the Food and Drug Administration Safety and Innovation Act ( P.L. 112-144 )) that, among other things, permanently added \"cannabimimetic agents\" to Schedule I of the CSA.\nThe American Association of Poison Control Centers (AAPCC) noted that poison control centers around the country received 2,663 calls about synthetic cannabinoid substances in 2013. In the first 10 months of 2014, AAPCC logged 2,996 calls to poison control centers regarding these substances.\nIt is currently unclear whether synthetic alternatives will continue to be developed and consumed in an attempt to circumvent federal and state marijuana laws. Policy makers may be interested in following the trends in sales, arrests, calls to poison control centers, and emergency department visits related to synthetic cannabinoids in states that have legalized small quantities of marijuana for recreational use. It is currently unclear what kind of impact—if any—state decriminalization and legalization initiatives may have on the use of synthetic substances.", "A number of criminal networks rely on profits generated from the sale of illegal drugs—including marijuana—in the United States. Mexican drug trafficking organizations control more of the wholesale distribution of marijuana than other major drug trafficking organizations in the United States. One estimate has placed the proportion of U.S.-consumed marijuana that was imported from Mexico at somewhere between 40% and 67%. While the Mexican criminal networks control the wholesale marijuana distribution of illicit drugs in the United States, they \"are not generally directly involved in retail distribution of illicit drugs.\" In order to facilitate the distribution and sale of drugs in the United States, Mexican drug traffickers have formed relationships with U.S. street gangs, prison gangs, and outlaw motorcycle gangs. Although these gangs have historically been involved with retail-level drug distribution, their ties to the Mexican criminal networks have allowed them to become increasingly involved at the wholesale level as well. These gangs facilitate the movement of illicit drugs to urban, suburban, and rural areas of the United States. Not only do these domestic gangs distribute and sell the drugs, but they also \"provide warehousing, security, and/or transportation services as well.\"\nBarrio Azteca is a prominent U.S. prison gang with ties to Mexican drug trafficking organizations. Barrio Azteca primarily generates money from smuggling marijuana, heroin, and cocaine across the Southwest border for the drug trafficking organizations—namely, the Juárez cartel—but they are also involved in other crimes, such as extortion, kidnapping, and alien smuggling.\nA number of organizations have assessed the potential profits generated from illicit drug sales, both worldwide and in the United States, but \"[e]stimates of marijuana ... revenues suffer particularly high rates of uncertainty.\" The former National Drug Intelligence Center (NDIC), for instance, estimated that the sale of illicit drugs in the United States generates between $18 billion and $39 billion in U.S. wholesale drug proceeds for the Colombian and Mexican drug trafficking organizations annually. The proportion that is attributable to marijuana sales, however, is unknown. Without a clear understanding of (1) actual proceeds generated by the sale of illicit drugs in the United States, (2) the proportion of total proceeds attributable to the sale of marijuana, and (3) the proportion of marijuana sales controlled by criminal organizations and affiliated gangs, any estimates of how marijuana legalization might impact the drug trafficking organizations are purely speculative.\nMarijuana proceeds are generated at many points along the supply chain, including production, transportation, and distribution. Experts have debated which aspects of this chain—and the related proceeds—would be most heavily impacted by marijuana legalization. In addition, the potential impact of marijuana legalization in four of the 50 U.S. states and the District of Colombia (complicated by varying legal frameworks and regulatory regimes) may be more difficult to model than the impact of federal marijuana legalization. For instance, in evaluating the potential fiscal impact of the 2012 Washington and Colorado legalization initiatives on the profits of Mexican drug trafficking organizations, the Organization of American States (OAS) hypothesized that \"[a]t the extreme, Mexican drug trafficking organizations could lose some 20 to 25 percent of their drug export income, and a smaller, though difficult to estimate, percentage of their total revenues.\"\nOther scholars have, in estimating the potential financial impact of marijuana legalization, based their estimates on a hypothetical federal legalization of marijuana. Under this scenario, small scale growers at the start of the marijuana production-to-consumption chain might be put out of business by professional farmers, a few dozen of which \"could produce enough marijuana to meet U.S. consumption at prices small-scale producers couldn't possibly match.\" Large drug trafficking organizations generate a majority of their marijuana-related income (which some estimates place at between $1.1 billion to $2.0 billion) from exporting the drug to the United States and selling it to wholesalers on the U.S. side of the border. This revenue could be jeopardized if the United States were to legalize the production and consumption of recreational marijuana.\nAside from the fiscal impact of U.S. marijuana legalization on drug revenues generated by the criminal networks in Mexico, some have also questioned whether there might be an impact on the levels of drug trafficking-related violence in Mexico. In short, there is no definitive answer to this question, and arguments have been presented to support both the stance that marijuana legalization in the United States could drive violence higher (because of increased competition for the scarce revenues that would be generated from an expected dwindling market of Mexican-produced marijuana) and the position that such legalization could help in reducing drug trafficking-related violence (because the profit motive for entering and dominating the drug trade might be reduced). Either way, \"[a]ny changes in cannabis markets will take time to develop and may occur simultaneously with other changes that also affect violence rates in Mexico.\"\nThe diversification of drug trafficking organizations' illicit activities could also mitigate the impacts they might feel from various levels of marijuana legalization in the United States. While these criminal networks might generate a substantial portion of their proceeds from the growth, production, transportation, and sale of marijuana, they have enhanced their dominance over the market of other illicit substances. Mexican drug trafficking organizations control more of the wholesale cocaine, heroin, and methamphetamine distribution than any other major drug trafficking organizations in the United States. In addition to their drug-related illegal activities, Mexican criminal networks have diversified their operations, adding to their portfolio crimes ranging from kidnapping and extortion to human trafficking and intellectual property rights violations. Profits from these enterprises may help supplement their drug trafficking-related income.", "Given the differences in marijuana policies of the federal government and those of Alaska, Colorado, Oregon, Washington, and the District of Columbia, Congress may choose to address state legalization initiatives in a number of ways, or not at all. There are a host of options available to policy makers should they choose to address state-level legalization of marijuana, including affirming federal marijuana policy, exercising oversight over federal law enforcement activities, or incentivizing state policies through the provision or denial of certain funds. Alternatively, Congress may opt not to address the policy conflict with state legalization of marijuana.", "For over 40 years, the federal government's official position, as implied by sustaining marijuana's position as a Schedule I controlled substance under the CSA, has been that marijuana is a dangerous drug with no accepted medical use and a high potential for abuse. Since passing the CSA, Congress has not altered marijuana's status as a Schedule I drug.\nIn addressing states' most recent legalization efforts, Congress could take one of two general routes. On one hand, Congress could elect to take no action, thereby upholding the federal government's current marijuana policy. On the other hand, Congress could choose to reevaluate marijuana's placement as a Schedule I controlled substance. On this path, Congress could consider a variety of actions. For one, it could once again exercise its authority to establish a policy commission to examine marijuana, its impacts, and the efficacy of current marijuana laws in the United States, just as it did in establishing the Shafer Commission. Additionally, Congress could direct the Secretary of Health and Human Services (HHS) and/or the Attorney General to reevaluate marijuana and its position within the schedules of controlled substances. Of note, the Attorney General—through the DEA, and in consultation with the Secretary of HHS—may reschedule a substance or remove a substance altogether from control.\nIn addition to establishing commissions and directing additional research, congressional options include legislatively amending the CSA. This could involve keeping—with caveats—marijuana as a Schedule I substance, moving it to a different schedule, or removing it from the schedule altogether. Without altering marijuana's position as a Schedule I controlled substance on the whole, one option might be to build additional flexibility into existing law. For example, policy makers could amend the CSA to make certain criminal liability exceptions for individuals operating in compliance with state marijuana laws.\nUpon reevaluation, should Congress determine that marijuana no longer meets the criteria to be a Schedule I substance, it could take legislative action to remove marijuana from Schedule I of the CSA. In doing so, Congress may (1) place marijuana on one of the other Schedules (II, III, IV, or V) of controlled substances or (2) remove marijuana as a controlled substance altogether; however, if marijuana remains a controlled substance under the CSA under any Schedule, then this would not eliminate the existing policy conflict with those states that have legalized to allow recreational use. If Congress chooses to remove marijuana as a controlled substance, it could alternatively seek to regulate and tax marijuana. If Congress were to take this route of legalizing and regulating marijuana, and given agencies' current authorities over controlled and legal substances, one path may then be to transfer jurisdiction over marijuana from the DEA to the ATF for regulation.", "", "In exercising its oversight authorities, Congress may choose to examine the extent to which the carrying out of federal law enforcement missions might be impacted by state initiatives to decriminalize or legalize—either for medical or recreational purposes—marijuana. For instance, policy makers may elect to review the mission of each federal law enforcement agency involved in enforcing the CSA and examine how its drug-related investigations may be influenced by the varying state-level policies regarding marijuana. As noted, federal law enforcement has generally prioritized the investigation of drug traffickers and dealers over that of low-level drug users. Policy makers may question whether these priorities are consistent across states with different forms of drug policies regarding marijuana. Policy makers may question whether federal law enforcement priorities have shifted in states that have altered their marijuana laws and regulations.", "With respect to the coordination of federal, state, and local efforts to combat drug trafficking networks and other drug offenders, one issue policy makers may debate is whether or how to incentivize task forces, fusion centers, and other coordinating bodies charged with combating drug-related crimes. Before determining whether to increase, decrease, or maintain funding for coordinated efforts such as task forces, policy makers may consider whether state and local counterparts are able to effectively achieve task force goals if the respective state marijuana policy is not in agreement with federal marijuana policy. Policy makers may choose to evaluate whether certain drug task forces are sustainable in states that have established policies that are either inconsistent—such as in states that have decriminalized small amounts of marijuana possession—or are in direct conflict—including states that have legalized either medical or recreational marijuana—with federal drug policy. For instance, might there be any internal conflicts that prevent task force partners from collaborating effectively to carry out their investigations?", "As noted, in responding to states with recreational legalization initiatives, the Department of Justice (DOJ) issued federal enforcement priorities for states with legal marijuana. It is unclear whether or how DOJ is tracking activity in these states to ensure that these priorities are being emphasized. The metrics to evaluate these priorities, whether in place or not, are also unknown. For example, one of the eight enforcement priorities listed by Deputy Attorney General Cole was to prevent the diversion of marijuana to other states. While it seems the DEA is aware of increased marijuana trafficking from Colorado to Kansas, it is unclear what level of increased trafficking might trigger action by the federal government against state marijuana laws. Congress may choose to exercise oversight over DOJ's enforcement priorities and metrics for tracking illicit activity in the states. Congress may also request research or investigation of this issue outside of actions by the Obama Administration.", "Congress has long used the provision of monies as a carrot to influence states' policies. If policy makers are interested in affecting states' drug policies, one means may be through some form of policy-contingent funding. For instance, Congress could consider compliance with federal marijuana policy as an eligibility requirement to receive certain federal grant funds. In the past, Congress has exercised its authority to withhold federal grant funds to states in order to achieve agreement with federal policy. For example, under the Sex Offender Registration and Notification Act (SORNA; P.L. 109-248 ), Congress established a set of minimum standards for sex offender registration and notification for all 50 states, the District of Columbia, territories, and federally recognized American Indian tribes. To assure compliance with these standards, SORNA mandated a 10% reduction in annual formula funding under the Edward Byrne Memorial Justice Assistance Grant (JAG) Program for the states, territories, and District of Columbia if these jurisdictions did not substantially implement SORNA by July 27, 2009. Congress may choose to establish similar financial penalties to influence states' drug policies or ensure consistency between state-level laws and those outlined under the CSA.\nWhether or not linking funding to state-level compliance with federal drug policy standards might produce the desired outcomes is unknown. One question that remains is whether Congress could withhold sufficient money from programs such as JAG to provide a true incentive for states to acquiesce to federal drug policy requirements. Might states that legalize and tax marijuana generate enough revenue to offset any losses from grant program funding that Congress might impose? In addition, could states see some savings in criminal justice expenditures from not investigating, prosecuting, and incarcerating low-level marijuana offenders? These savings could also compensate for any losses from congressionally imposed financial penalties." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 1, 2, 3, 3, 3, 3, 2, 1, 2, 2, 1, 1, 2, 2, 3, 3, 3, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h0_full", "h0_full", "", "", "h0_full", "h2_title h1_full", "", "", "", "", "", "h2_full", "h2_title", "h2_full", "", "", "h0_title h1_title", "", "h0_title h1_title", "h0_full", "", "h1_full", "" ] }

{ "question": [ "What does the Controlled Substances Act dictate regarding marijuana?", "How have states deviated from this prohibition?", "How has the discrepancy between federal and state marijuana laws increased in recent elections?", "What questions has this discrepancy provoked?", "How has federal law enforcement tailored its efforts regarding marijuana?", "How did the Obama Administration further influence these efforts?", "What did the Deputy Attorney General state regarding marijuana?", "What enforcement policies were outlined in the memo?", "What confusion remains regarding the Department of Justice's position?", "What concern is there regarding conflicting state and federal laws regarding marijuana prohibition?", "What does current evidence suggest regarding the validity of this concern?", "Per the U.S. Sentencing Commission's data, where does it seem the federal law enforcement is most focused?" ], "summary": [ "The federal government—through the Controlled Substances Act (CSA; P.L. 91-513; 21 U.S.C. §801 et. seq.)—prohibits the manufacture, distribution, dispensation, and possession of marijuana.", "Over the last few decades, some states have deviated from an across-the-board prohibition of marijuana. Evolving state-level positions on marijuana include decriminalization initiatives, legal exceptions for medical use, and legalization of certain quantities for recreational use.", "Notably, in the November 2012 elections, voters in Washington State and Colorado voted to legalize, regulate, and tax the recreational use of small amounts of marijuana. In the November 2014 elections, legalization initiatives passed in Alaska, Oregon, and the District of Columbia, further spreading the discrepancy between federal and state marijuana laws in the United States.", "These latest moves have spurred a number of questions regarding their potential implications for related federal law enforcement activities and for the nation's drug policies on the whole. Among these questions is whether or to what extent state initiatives to decriminalize or legalize the use of marijuana conflict with federal law.", "In general, federal law enforcement has tailored its efforts to target criminal networks rather than individual criminals; its stance regarding marijuana offenders appears consistent with this position.", "While drug-related investigations and prosecutions remain a priority for federal law enforcement, the Obama Administration has suggested that efforts will be harnessed against large-scale trafficking organizations rather than on recreational users of marijuana.", "In an August 2013 memorandum, Deputy Attorney General Cole stated that while marijuana remains an illegal substance under the Controlled Substances Act, the Department of Justice would focus its resources on the \"most significant threats in the most effective, consistent, and rational way.\"", "The memo outlined eight enforcement priorities including preventing the distribution of marijuana to minors and preventing the diversion of marijuana from states where it is legal under state law into other states.", "It is unclear whether or how the Department of Justice is tracking activity to ensure that federal enforcement priorities are being followed in states that have legalized marijuana.", "Some may question whether state-level laws and regulations regarding marijuana prohibition—in particular those that clash with federal laws—may adversely impact collaborative law enforcement efforts and relationships.", "Currently, there is no evidence to suggest that the operation of these collaborative bodies has been impacted by current state-level marijuana decriminalization or legalization initiatives.", "Data from the U.S. Sentencing Commission seem to indicate a federal law enforcement focus on trafficking as opposed to possession offenses. Of the federal drug cases with marijuana listed as the primary drug type (21.6% of total drug cases sentenced), over 98% involved a sentence for drug trafficking in FY2013." ], "parent_pair_index": [ -1, 0, 1, 1, -1, 0, -1, 2, 2, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "Background", "CDR Process", "SSA Prioritizes CDRs Using Several Inputs but Does Not Fully Incorporate Potential Cost-Savings", "SSA Uses a Variety of Inputs, Including Legal Requirements and Statistical Models, to Prioritize CDRs", "SSA Tests the Accuracy of Its Models but Has Not Updated Them to Reflect Changing Conditions in Recent Years", "SSA Considers Cost Savings Information to a Limited Extent When Prioritizing CDRs", "SSA Reviews a Sample of CDRs for Quality but Does Not Comprehensively Analyze and Report Errors", "SSA Reasonably Estimates CDR Cost Savings but Has Conducted Limited Sensitivity Analysis and Documentation", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "CDR Prioritization", "Quality Reviews of CDR Decisions", "CDR Cost-Savings Estimate", "Appendix II: Comments from the Social Security Administration", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "SSA administers two disability programs that provide monthly cash benefits to eligible individuals: (1) Disability Insurance (DI) for individuals (and their dependents) who have paid into the Disability Insurance Trust Fund and (2) Supplemental Security Income (SSI) for low-income individuals. To be eligible for DI or SSI benefits based on a disability, an individual must have a medically determinable physical or mental impairment that (1) prevents the individual from engaging in any substantial gainful activity and (2) is expected to result in death or has lasted or is expected to last at least 1 year.\nFederal law generally requires CDRs to be conducted at least once every 3 years for all DI beneficiaries whose disabilities are not considered permanent, and at intervals determined appropriate by SSA for those whose impairments are considered permanent. For SSI, federal law generally requires SSA to (1) conduct CDRs for infants during their first year of life if they are receiving SSI benefits due in part to low birth weight, and at least once every 3 years for SSI children under age 18 if their impairments are considered likely to improve, and (2) review the cases of all SSI children beginning on their 18th birthday to determine whether they are eligible for disability benefits under adult disability criteria. SSA may waive the requirement to conduct periodic legislatively- required CDRs on a state-by-state basis. SSA may also conduct CDRs that are not required by law as it deems appropriate.", "SSA contracts with state Disability Determination Services (DDS) agencies to initially determine whether applicants are disabled and to conduct periodic CDRs to determine whether beneficiaries continue to be disabled. DDS examiners assess whether individuals are eligible for benefits based on several criteria, including their current medical condition and ability to work. At the time beneficiaries enter the DI or SSI programs or continue their benefits following a CDR, a DDS examiner determines beneficiaries’ due dates for a subsequent CDR based on their potential for medical improvement. Beneficiaries classified as “medical improvement expected” are generally scheduled for a CDR within 6 to 18 months, beneficiaries classified as “medical improvement possible” are scheduled once every 3 years, and beneficiaries classified as “medical improvement not expected” are scheduled once every 5 to 7 years.\nTo cost-effectively manage its CDR workload, SSA conducts CDRs in different ways. In general, beneficiaries with a high likelihood of medical improvement are referred for a full medical review—an in-depth assessment of a beneficiary’s medical and vocational status. Beneficiaries with a low likelihood of medical improvement are, at least initially, sent a questionnaire known as a mailer. If beneficiaries respond to a mailer in certain ways, SSA may refer these individuals for a full medical review. In contrast to mailers, full medical reviews are more labor intensive and expensive. Full medical reviews result in a decision to either cease or continue an individual’s benefits. In fiscal year 2013, the cessation rate for CDRs involving full medical reviews was about 19 percent, whereas the cessation rate for all CDRs including mailers was about 5 percent. Each year, SSA allocates a portion of its program integrity budget to CDRs, which affects the number of full medical reviews and mailers that the agency initiates during the year. When the number of cases due for a CDR exceeds SSA’s capacity to conduct full medical reviews and mailers, the cases not initiated during the year are considered backlogged for future review.\nThe number of CDRs completed as full medical reviews, as mailers only, or backlogged varied during fiscal years 2003 through 2013 (see fig. 1). After the authority for special funding to process CDRs expired in fiscal year 2002, backlogged CDRs increased from about 100,000 cases in fiscal year 2003 to more than 1 million in fiscal year 2007, reaching a peak of nearly 1.5 million in fiscal year 2009. At the same time, the number of full medical reviews fell from nearly 670,000 in fiscal year 2003 to less than 190,000 in fiscal year 2007 before rebounding to nearly 429,000 in fiscal year 2013.\nSSA estimates the accuracy rate of CDRs and separately estimates the cost savings that result from CDRs. In addition to annually reporting the nationwide accuracy rate of all CDRs to the Congress, SSA internally tracks CDR accuracy rates by state and generates estimates for the accuracy of cessations and continuances, separately as well as combined. For fiscal year 2013, SSA reported an accuracy rate of 97.2 percent for CDR decisions. For the same year, SSA reported an estimated ratio of federal program savings to costs for performing CDRs as $15 to $1. Savings from CDRs include federal benefits that would be paid to individuals were it not for a CDR that resulted in a cessation. Such benefits include those from Medicare and Medicaid because in certain situations individuals’ eligibility for DI or SSI confers eligibility for these other programs.", "", "Because SSA does not complete all CDRs as scheduled due to competing priorities and existing resources, the agency must decide which cases will receive a full medical review. SSA uses a range of inputs to prioritize which CDRs to conduct, such as:\nStatutory requirements: Legal requirements to review SSI children beginning at age 18 to determine if they are eligible for benefits under adult disability criteria, and reviews of children up to 1 year old who are receiving SSI benefits due in part to low birth weight.\nSSA policies: Rules established by SSA to guide prioritization. For example, SSA prioritizes cases with particular responses to its mailers and cases with a “medical improvement expected” designation that are coming up for review for the first time.\nStatistical models: A set of statistical models that score each case according to the likelihood of medical improvement, typically the sole criterion for ceasing benefits.\nSSA’s prioritization process determines which CDRs are initiated and in what form: full medical review or mailer. To begin, SSA initiates full medical reviews of cases that fall into two high-priority categories: first, statutory requirements, and then SSA policies. Once full medical reviews of all high-priority cases are initiated, SSA prioritizes the remaining cases by using its statistical models. Full medical reviews of cases with the highest scores (i.e., highest likelihood of medical improvement) are initiated as resources permit, first by beneficiary group (i.e., DI, SSI children, SSI adults) and then by the statistical scores of cases within the group (see fig. 2). Cases with lower scores (i.e., lower likelihood of medical improvement) receive a mailer or are backlogged for future review.\nThe extent to which the statistical models have been used to select cases for full medical reviews has varied by year, but the models have been consistently used for determining who receives mailers. Specifically, we found that the extent to which SSA’s statistical models were used to select cases for full medical review was related to the combination of budget fluctuations for CDRs, SSA’s statutory requirements, and agency policies. We estimate that the statistical models were the basis for selecting 11 to 60 percent of full medical reviews completed annually in fiscal years 2003 through 2013 (see fig. 3). In contrast, SSA has used the models consistently since 1993 to determine which cases should receive a mailer.", "Although SSA annually assesses its models’ performance, the agency has not updated the models since 2007. The models’ effectiveness depends on their ability to accurately predict beneficiaries’ likelihood of medical improvement. To test the accuracy of the models, SSA conducts an annual validation process using a sample of completed cases to evaluate how well the models predicted medical improvement. According to SSA officials, the model validation process has shown that the models’ accuracy in predicting medical improvement has not degraded substantially in recent years.\nIn addition to model validation, in the past SSA has conducted periodic re-estimation of its statistical models to help ensure that they are up-to- date. In re-estimating its models, SSA updates the relationship between existing variables and medical improvement and tests whether new variables should be included. Re-estimation is particularly important when advances in medicine and assistive technology affect people’s ability to work. In recent years, SSA has changed its classification of certain beneficiaries’ impairments to reflect advances in medical knowledge. For example, in 2015, SSA revised its codes for cancer in light of new diagnoses and treatments. Because these codes can appear as variables in the statistical models, it is possible that the models are no longer accurately capturing the effect of cancer-related impairments on the likelihood of medical improvement. Although SSA officials believe that some advances would not markedly affect the accuracy of the models, the agency has not completed a re-estimation to confirm the effect of such changes. In addition, demographic changes in the underlying population of disability beneficiaries, which has grown substantially in recent years due in part to baby boomers reaching their disability-prone years, could also affect the accuracy of the models. The contractor that SSA hired to handle its last model re-estimation in 2007 provided SSA with a set of programs that would allow the agency to re-estimate the models in-house. Regular re-estimation and updating of predictive models is a best practice, and the contractor anticipated that SSA would do so at least every 3 years.\nModel accuracy leads to savings for SSA in two ways. First, model accuracy is important for identifying cases that are unlikely to result in medical improvement and can therefore be handled as mailers. According to SSA’s contractor, the models’ last re-estimation in 2007 increased the accuracy of the models while allowing SSA to process over 25,000 additional cases as mailers, potentially saving the agency over $20 million by performing fewer full medical reviews. Second, greater model accuracy means the models are more likely to correctly assign high scores to cases most likely to demonstrate medical improvement, potentially leading to more medical cessations among beneficiaries who receive full medical reviews.\nAlthough SSA acknowledged the importance of re-estimating its models again, it has yet to complete concrete actions toward doing so. In December 2015, SSA officials indicated that they were in the process of re-estimating the models, but the agency had not yet documented its efforts. In addition, according to SSA officials, the agency had not yet established plans to re-estimate the models on a regular basis. Without re-estimating its models on a regular basis, the agency risks losing the predictive accuracy of the models and could compromise its ability to use CDR resources efficiently.", "Although SSA considers cost savings when prioritizing CDR cases, it does not do so in a manner that will maximize potential savings. According to federal internal control standards, federal agencies should ensure effective stewardship of public resources. The order in which SSA prioritizes beneficiary groups for CDRs generally aligns with the average savings per full medical review conducted for those groups in recent years. For example, the two highest priority groups—statutorily required reviews for age-18 redeterminations and low birth-weight children—have the highest average savings in foregone disability benefits as a result of full medical reviews (see fig. 4).\nHowever, the priority ranking of beneficiary groups is not exclusively reliant upon the average savings achieved from conducting full medical reviews, because the agency takes other factors into consideration. For example, the average savings per full medical review of children receiving SSI benefits on the basis of low birth weight is higher than that of SSI children at age 18. Although reviews of 18-year-olds are automatically initiated 2 months before the beneficiary’s 18th birthday, not all reviews of low birth-weight children are conducted as scheduled. Specifically, in fiscal years 2009 through 2014, approximately 3,900 to 21,700 low birth- weight reviews were backlogged annually. In addition, although the SSI Other Children group has a higher average savings in foregone disability benefits than DI beneficiaries, SSI Other Children are prioritized after DI beneficiaries. In fiscal year 2013, SSA conducted more than twice as many full medical reviews on DI beneficiaries as on SSI Other Children beneficiaries and backlogged tens of thousands more full medical reviews for SSI Other Children than for DI beneficiaries. DI cases have been given priority over SSI Other Children partly to protect the Disability Insurance Trust Fund, which is the source of benefit payments to most DI recipients. However, recent action to address the solvency of the Disability Insurance Trust Fund somewhat mitigates this rationale. If SSA had switched the number of full medical reviews conducted for these groups in 2013, it is possible that the agency would have generated over $100 million more in savings.\nFurthermore, in focusing on beneficiary groups, SSA’s prioritization process does not capture any differences among subgroups’ average savings in foregone disability benefits as a result of full medical reviews. For example, the DI group can be split into four subgroups, and the average lifetime savings per full medical review among these subgroups differed by as much as approximately $3,000 (or about 21 percent) in recent years (see fig. 5).\nThe aggregate mix of cases across different beneficiary groups reviewed during a fiscal year directly affects the agency’s total savings from conducting CDRs. If SSA were to shift the mix of discretionary cases it reviews among subgroups within beneficiary groups while still taking likelihood of medical improvement into account, it could realize greater savings. For example, shifting the mix of DI cases reviewed to better align with historical average savings performance among different DI subgroups would likely increase SSA’s total savings. Furthermore, we reported in 2012 that certain subgroups of SSI children beneficiaries, such as those with speech and language disorders as well as other mental impairments, demonstrated higher rates of initial cessation (i.e., prior to the appeals process) stemming from full medical review than other SSI children beneficiaries. As a result, reviews of these subgroups are more likely to contribute to savings for the agency than other non- required SSI children reviews. Without considering average savings at the beneficiary subgroup level, SSA may not be maximizing the total savings it realizes from conducting full medical reviews.\nIn addition to differences in savings from shifts in the aggregate mix of cases receiving full medical reviews, savings can also differ when comparing individual cases. When an individual’s benefits are ceased as the result of a CDR, the foregone benefits represent savings to the federal government. The amount of savings depends on various factors that affect how much SSA would have paid had the individual continued to receive disability benefits over time. These factors include the individual’s age, life expectancy, and monthly benefit payment. For example, two individuals who are different ages but are otherwise similar (e.g., they live in the same state, have the same benefit amount, and have the same likelihood of medical improvement as determined by SSA’s statistical models) would generate different expected savings from a CDR because the younger individual would likely receive benefits for a longer period of time. Similarly, two individuals who have different benefit amounts but are otherwise similar would generate different expected savings from a CDR because the individual with higher monthly benefits would likely receive greater total benefits over time. Prioritizing the CDR for the younger individual or the individual with a higher benefit level could result in greater savings for SSA. The simplified scenarios below illustrate this point; however, if SSA were to further incorporate such factors for individuals into its CDR prioritization process, a more complete set of inputs and assumptions would be needed (see fig. 6).\nDespite the potentially substantial differences in savings among beneficiaries, SSA lacks a mechanism for factoring expected savings from benefit cessation into its CDR prioritization process on a case- specific basis. As a program integrity effort, CDRs are intended to assess the continued eligibility of beneficiaries to ensure that payments are made only to those individuals who should be receiving them, and SSA’s statistical models use an appropriate proxy of eligibility—potential for medical improvement—to prioritize cases for review. However, for beneficiaries with the same likelihood of medical improvement, SSA officials told us the agency does not further differentiate among individuals in the same beneficiary group on the basis of potential benefit savings. In SSA’s current prioritization process, the individuals depicted in the hypothetical scenarios in figure 6 would be equally likely to receive a full medical review because the agency does not consider the potential savings from individual cessations. As demonstrated in the analysis presented above, SSA could miss additional savings because it does not further consider beneficiaries’ potential savings when prioritizing cases for full medical review.", "To assess the ability of DDSs to correctly apply policy and fully document CDRs, SSA performs quality reviews of a sample of continuances and cessations. The SSA quality reviewers who perform these reviews have guidance for checking specific elements of the decisions, and they are guided through a step-by-step computer program for conducting and documenting the reviews. SSA’s quality reviewers check CDRs for three types of errors: (1) decision errors, which include incorrect decisions or incomplete evidence to support a decision; (2) date errors, including incorrect benefit cessation dates; and (3) administrative errors. The reviewers return CDRs with decision errors to the DDS to perform additional work but generally correct those with date and administrative errors themselves.\nSSA uses these quality reviews for multiple purposes. First, SSA estimates state, regional, and national CDR accuracy rates—the percentage of CDRs estimated to be accurate on the basis of a statistical sample. SSA also uses these accuracy rates to help monitor DDSs’ performance and shares this information with the DDSs. In addition, SSA uses the results of quality reviews to correct identified errors before the DDS decisions take effect.\nAlthough SSA has reported high nationwide CDR accuracy rates in recent years, we identified shortcomings in how SSA prevents errors, defines and reports accuracy, and samples CDRs for quality review:\nPreventing errors: Although SSA tracks the number and types of CDR decision errors and disseminates this information to state DDSs, it does not analyze the characteristics of CDR errors to help identify error trends associated with particular types of cases and address root causes. According to SSA officials, SSA probes CDR quality review data to uncover error trends by, for example, general groupings of impairments such as mental disorders. However, SSA does not analyze the data to uncover error trends for specific impairments, beneficiary types, or other characteristics. Federal internal control standards stipulate that management should assess the quality of performance over time and promptly resolve findings from audits and other reviews. According to officials, SSA does not analyze the characteristics of CDRs with errors because CDR accuracy rates are generally high and resources are limited. In addition, officials stated that SSA does not have sufficient data to do statistical modeling for such analyses. However, it is possible to analyze the characteristics of CDRs with errors by comparing relevant percentages without modeling, using data from multiple years if necessary. According to SSA and DDS officials, certain types of cases may be more error-prone than others. For example, cases involving mental impairments are thought to be relatively error-prone because they can be more challenging to document. In addition, officials reported challenges in conducting CDRs of low birth-weight children receiving SSI benefits because of the lack of documentation of other impairments they may have. However, because SSA has not analyzed the incidence of inaccurate CDRs by impairment, beneficiary type, or other characteristics, it cannot efficiently identify common types of errors and their root causes to help the DDSs take steps to prevent them.\nDefining and reporting accuracy: In determining CDR accuracy rates, SSA does not include date errors, including incorrect cessation dates. As a result, decision makers do not have a complete picture of the CDR errors that affect disability payments. We have previously reported that to be useful, performance information must be complete, accurate, and valid, among other factors. However, per SSA regulation, the agency does not consider date errors when calculating accuracy rates because date errors do not affect the decision to cease or continue benefits, according to officials.28, 29 Nonetheless, such errors can affect the number of payments a beneficiary receives and thus SSA’s costs. For example, cessation date errors in a CDR can result in some beneficiaries receiving payments for longer or shorter periods of time, and thus accruing overpayments or underpayments for the period in question. Without including date errors in its reported accuracy rates, SSA does not provide its management and other decision makers and the public with complete information about errors that can affect disability payments. In addition, if SSA had counted date errors in CDR cessations, its accuracy rate for cessations in fiscal year 2014 would have fallen 1.6 percentage points from 95.5 percent to 93.9 percent. For some states, the effect of considering these errors is more pronounced. We examined SSA’s fiscal year 2014 cessation accuracy rate estimates and found that for 13 states, the accuracy rates would have decreased by at least 2 percentage points had SSA counted date errors; and, in one state the accuracy rate for cessations would have fallen 7 percentage points, from 95.4 percent to 88.4 percent.\nSSA regulations define accuracy in this context as the percentage of cases that do not have to be returned to state DDSs for further development or correction of decisions based on evidence in the files. See 20 C.F.R. §§ 404.1643, 416.1043. In explaining the accuracy standard, SSA stated that its primary purpose was to improve the initial claims process and ensure that only properly entitled claimants receive disability benefits and that its approach was to specify outputs (i.e., performance accuracy), rather than specifying all inputs that could go into the standard.\nSSA conducts stewardship reviews which examine the non-medical quality of various decisions related to benefit payments, including date designations. To do so, SSA reviews a sample of individuals receiving payments. In conducting and reporting on these reviews, however, SSA does not specifically focus on CDRs.\nSampling CDRs for quality review: SSA produces accuracy rate estimates by state DDS, but its sampling approach does not reliably and efficiently generate accuracy rate estimates for continuances and cessations separately in every state. According to federal guidance for developing statistical estimates, agencies should develop a sampling plan that is reflective of the level of detail and precision needed of the key estimates. CDR accuracy rates vary by state, and continuances are consistently more accurate than cessations. In fiscal year 2014, for example, the states’ estimated CDR accuracy rates varied from 92.4 percent to 99.8 percent. In the same year, the estimated accuracy rate for continuances was 98.3 percent nationwide, whereas the equivalent for cessations was 95.5 percent. Moreover, the range of accuracy rates across states is much larger for cessations. In fiscal year 2014, state-level accuracy rates for cessations ranged from 78.3 to 100 percent, while the accuracy rates for continuances ranged from 92 to 100 percent. To monitor CDR accuracy, SSA randomly selects about 70 continuances and 70 cessations for quality review each quarter from each state. Despite this sampling approach, SSA officials stated that their sampling design is not intended to produce precise estimates for continuations and cessations separately by state. However, precise accuracy rate estimates for continuations and cessations separately by state are needed to monitor DDS performance because of the difference in accuracy by decision type and because the state DDSs are managed separately.\nIn analyzing CDR workload and accuracy data, we found that SSA’s sampling approach produced accuracy rate estimates with margins of error that were consistently wide in seven states and consistently narrow in six states for either one type of CDR decision or both. A wide margin of error occurs when there are not enough CDR decisions in the sample to produce a reliable estimate. In these instances, such as in Vermont and Wyoming, we found SSA could not produce an estimate with a margin of error of plus or minus 5 percentage points using its current approach unless it sampled more CDR decisions. When SSA does not sample enough decisions and produces estimates with wide margins of error, decision makers may be relying on misleading information to assess CDR accuracy. Conversely, when SSA samples too many decisions and produces estimates with margins of error that are narrower than necessary to achieve reliable results, the agency may be wasting time and resources on such quality reviews.", "SSA’s annual process for estimating the cost savings of CDRs—the estimated ratio of federal program savings to costs for performing CDRs—involves many steps. To calculate the federal program savings generated by CDRs in a particular year, SSA estimates the present value of expected future benefits over 40 years that are saved as a result of the reviews. In forecasting these savings, SSA considers benefits from programs administered by SSA (i.e., DI and SSI) as well as programs that are not administered by SSA (i.e., Medicare and Medicaid). To do so, SSA estimates the number of people whose benefits would be ceased by CDRs and considers the effect of appeals in determining these estimates. SSA then estimates the savings associated with the cessations that are forecasted not to be overturned. It considers the age of individuals whose benefits would be ceased, and uses separate models to forecast savings from DI, SSI, Medicare, and Medicaid. SSA also forecasts and accounts for the number and timing of beneficiaries who would stop receiving disability benefits regardless of a CDR. Similarly, it forecasts and excludes the number of former beneficiaries who will successfully reapply for benefits after, for example, a new disabling condition arises. To generate the overall CDR cost savings rate (i.e., the amount saved for every dollar invested in CDRs) for a particular year, SSA divides the present value of future benefit savings by SSA’s actual cost of conducting CDRs during the relevant year (see fig. 7). To determine the cost of conducting CDRs, SSA considers its relevant expenses as well as those of the state DDSs.\nWe determined that SSA’s methods and assumptions for estimating CDR cost savings were reasonable, but, in certain respects, inconsistent with guidance for conducting cost savings analysis of federal programs. Specifically, we identified two areas of weakness:\nSensitivity analysis: According to federal guidance for conducting cost savings analysis, “major assumptions should be varied and net present value and other outcomes recomputed to determine how sensitive outcomes are to changes in the assumptions.” In reviewing SSA’s approach to estimating CDR cost savings for fiscal year 2012, we determined that SSA did not conduct sensitivity analysis of the overall cost savings rate. However, SSA separately performed some limited sensitivity analysis on savings from DI and SSI, which collectively represented about 82 percent of the savings that SSA forecasted for fiscal year 2012 CDRs. SSA calculated the effect of using inputs from fiscal year 2011, such as the average benefit amount, on the savings estimates for fiscal year 2012. However, SSA did not vary its assumptions (e.g., from optimistic to pessimistic) to generate a range of estimated savings. In addition, SSA has not reported the effect of changing its assumptions about SSI and DI savings on the overall cost savings estimate. According to an SSA official, doing sensitivity analysis on the reported cost savings estimate would require additional coordination with CMS about Medicare and Medicaid. However, SSA could conduct more complete sensitivity analysis by, for example, estimating a combined range of savings from DI and SSI without additional coordination. By not including a range of estimated savings for at least SSA’s programs, decision makers lack data on the extent to which the estimates could vary under different assumptions.\nDocumentation: According to federal guidance, models used in cost savings analysis should also be well documented and, where possible, available to facilitate independent review. SSA uses multiple complex models to estimate the cost savings of CDRs, but it has limited documentation about its methods, including data sources, assumptions, and limitations that factor into the estimates. For example, SSA has not documented how it estimates the number and timing of beneficiaries who stop receiving disability benefits because of a CDR, as well as the number of former beneficiaries who will successfully reapply for benefits. According to SSA officials, the agency has not yet documented the assumptions and procedures used to calculate CDR cost savings because of competing priorities and limited resources. Consequently, knowledge of SSA’s models is limited to the few SSA actuaries who work with them, and this information is not readily available or transferrable to others, including external reviewers.", "In light of SSA’s current backlog of CDRs and the long-term financial challenges of the Disability Insurance Trust Fund, conducting timely, high- quality, and cost-effective CDRs is particularly important. In an effort to use its resources efficiently, SSA applies several sound practices to help prioritize CDRs. However, without further integrating comparative cost savings information in its prioritization process, SSA is missing an opportunity not only to focus on CDRs that are likely to save the federal government the most money, but also to more efficiently use its resources for program integrity work. Maximizing cost savings is not the only goal of this work, but it is an important criterion to help SSA prioritize CDRs and ensure that beneficiaries are being more effectively selected for review.\nFurther, although SSA has an extensive process for reviewing the quality of CDR decisions and a high overall accuracy rate, until the agency systematically uses available data to identify error-prone cases and root causes, it will be hard-pressed to prevent similar errors from recurring. In addition, absent tracking all meaningful errors that it identifies, such as date errors, the agency and other stakeholders lack an accurate sense of the true error rate of CDRs. Similarly, SSA’s current approach to sampling state decisions means the agency may be relying on misleading performance information for making management decisions.\nSSA has demonstrated that CDRs are cost-effective, and it applies sound methods and assumptions for estimating cost savings. However, because it does not vary the assumptions that it uses to estimate a range of potential returns on investment for CDRs, the Congress and other stakeholders do not have complete information on the precision of these estimates and the extent to which they could vary with changes in assumptions. Finally, SSA’s limited documentation about its actuarial models leaves the agency vulnerable in the event of turnover of the few staff who use these models and challenges external reviewers’ ability to understand and audit the integrity of its models.", "We recommend that the Acting Commissioner of Social Security: 1. Direct the Deputy Commissioner of Operations to further consider cost savings as part of its prioritization of full medical reviews. Such options could include considering the feasibility of prioritizing different types of beneficiaries on the basis of their estimated average savings and, as appropriate, integrating case-specific indicators of potential cost savings, such as beneficiary age and benefit amount, into its modeling or prioritization process. 2. Direct the Deputy Commissioner of Budget, Finance, Quality, and Management to complete a re-estimation of the statistical models that are used to prioritize CDRs and determine a plan for re-estimating these models on a regular basis to ensure that they reflect current conditions. 3. Direct the Deputy Commissioner of Budget, Finance, Quality, and Management to monitor the characteristics of CDR errors to identify potential root causes and report results to the Disability Determination Services. For example, SSA could analyze CDRs with and without errors to identify trends by impairment, beneficiary type, or other characteristics. 4. Direct the Deputy Commissioner of Budget, Finance, Quality, and Management to regularly track the number and rate of date errors, which can affect benefit payments (e.g., incorrect cessation dates), and consider including those errors in its reported CDR accuracy rates. 5. Direct the Deputy Commissioner of Budget, Finance, Quality, and Management to adjust its approach to sampling CDRs to efficiently produce reliable accuracy rate estimates for continuances and cessations separately in each state. 6. Direct the Chief Actuary to conduct sensitivity analyses on SSI and DI’s contributions to CDR cost savings estimates and report the results reflecting a range of inputs (e.g., from optimistic to pessimistic). 7. Direct the Chief Actuary to better document the methods including data sources, assumptions, and limitations that factor into its estimates of CDR cost savings.", "We provided a draft of this report to SSA for review and comment, and its written comments are reproduced as appendix II in this report. SSA stated that it generally agreed with our recommendations, but noted that the level of program integrity funding it receives has affected the number of CDRs performed annually and, at times, the size of the CDR backlog. SSA also noted that our report implied that SSA is not focused on the CDRs that are most likely to save the government money and that the report did not fully convey the accuracy of the agency’s statistical models and its treatment of CDR errors. We agree that SSA’s CDR process is generally designed to use its program integrity resources efficiently and note in our report that SSA applies several sound practices to help prioritize CDRs including annually assessing its statistical models’ performance. However, we maintain additional steps are warranted to ensure ongoing accuracy of the models and to maximize potential savings. We also note that the agency has a process in place to identify and evaluate errors, but maintain that additional steps could be taken to systematically analyze error trends and uncover root causes of errors. SSA agreed with four of our recommendations, partially agreed with one recommendation, and disagreed with two recommendations. The agency’s specific concerns and our responses are described below:\nRegarding our recommendation to further consider cost savings as part of its prioritization of full medical reviews, SSA partially agreed. Although SSA agreed that it could look for ways to improve its return on conducting CDRs, it also stated that its statistical models and prioritization process already do much of what we recommend. For example, SSA stated that age is already a strong variable in its statistical models. However, these models predict medical improvement and are not designed to take expected cost savings into account. We continue to believe that to maximize expected cost savings SSA could refine its prioritization process by factoring in actuarial considerations. For example, SSA could consider the effect of a beneficiary’s age on expected costs savings, in addition to its existing statistical models that account for the effect of age on the likelihood of medical improvement.\nRegarding our recommendation to complete a re-estimation of the statistical models that are used to prioritize CDRs and determine a plan for re-estimating these models on a regular basis, SSA agreed and stated that it plans to complete its ongoing re- estimation and to document a process for determining when to re- estimate the models in the future.\nRegarding our recommendation to monitor the characteristics of CDRs with errors to identify root causes, SSA agreed and stated that it reports all errors to the relevant DDS for corrective action. SSA further stated that its identification of root causes is limited by the relatively few reviewed CDRs that have errors. However, in fiscal year 2014 as an example, SSA identified over 600 CDRs with errors. Although these CDRs make up a small percentage of the CDRs reviewed by SSA that year, the agency could analyze the characteristics of CDRs with errors by comparing relevant percentages without modeling. In addition, SSA could combine data from multiple years if it determined that considering more CDRs with errors would be helpful.\nRegarding our recommendation to track the number and rate of date errors and consider including them in its reported CDR accuracy rates, SSA disagreed and stated that, per SSA regulation, the agency does not consider date errors when calculating accuracy rates because date errors do not affect the decision to cease or continue benefits. SSA also stated its stewardship reviews examine the non-medical quality of benefit payment decisions. However, these reviews are not focused on CDRs, and SSA does not report results from them for CDRs specifically. SSA also explained that it does not track the number and rate of date errors because they are infrequent. However, SSA’s regulations do not prevent the agency from tracking date errors, and until it does, SSA cannot definitively determine the frequency of these errors. In addition, we found that considering date errors substantially reduced some states’ estimated CDR accuracy rates. Without tracking these errors, SSA cannot assess their effect and consider whether including them in its reported CDR accuracy rates has merit.\nRegarding our recommendation to adjust its approach to sampling CDRs to efficiently produce reliable accuracy rate estimates for continuances and cessations separately in each state, SSA disagreed and stated that some states do not generate enough CDR decisions, particularly cessations, to generate statistically valid samples. However, for states with CDR samples that are consistently too small to produce reliable results, SSA could, for example, pool decisions from more months than it currently does to generate statistically valid samples by state. Conversely, for states with CDR samples that are consistently larger than necessary to efficiently achieve reliable results, SSA could, for example, reduce sample sizes. Because CDR accuracy rates vary by state and cessations are consistently less accurate than continuances, we maintain that SSA should adjust its approach to sampling CDRs.\nRegarding our recommendation to conduct sensitivity analyses on SSI and DI’s contributions to CDR cost savings estimates and report the results reflecting a range of inputs, SSA agreed and stated that it will expand on its current sensitivity analyses as time and resources permit.\nRegarding our recommendation to better document the methods that factor into its estimates of CDR cost savings, SSA agreed and stated that it will improve and expand its existing documentation as time and resources permit.\nSSA also provided technical comments, which we incorporated into the report as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees and the Acting Commissioner of Social Security. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7215 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.", "The objectives of this report were to examine (1) how the Social Security Administration (SSA) selects which Continuing Disability Reviews (CDR) to conduct, (2) the extent to which SSA reviews the quality of CDR decisions, and (3) how SSA calculates cost savings from CDRs.", "To evaluate how SSA selects which CDRs to conduct, we reviewed relevant federal laws and interviewed SSA officials from the agency’s offices of Public Service and Operations Support, Budget, and Quality Improvement. We also reviewed internal SSA documents on the agency’s approach to prioritizing and processing CDRs, including its use of statistical models.\nTo evaluate the statistical models that SSA uses to help prioritize CDRs, we reviewed internal SSA documents about the statistical models, including lists of variables, tests of model fit, and detailed technical reports provided by the external contractor that last re-estimated the models. The technical reports provided by the contractor explained how each of the models was developed and tested, including the data sources and variables that were considered and used, how SSA impairment codes were aggregated into impairment groups, and how the functional form and interaction terms were identified. In 2007, the contractor compared the performance of models for adult beneficiaries against that of SSA’s prior models—which had been estimated last in 2005—and only specifications and variables that improved model performance were retained. We evaluated the technical specifications and tests of model fit and predictive accuracy for the models for each of the beneficiary cohorts.\nTo estimate the proportion of full medical reviews completed because of their score from SSA’s statistical models, we analyzed CDR annual report data from fiscal years 2003 through 2013. We assessed the reliability of these data by reviewing related documentation and interviewing knowledgeable agency officials, and we found these data sufficiently reliable for our purposes. To assist with the analysis, we obtained information from SSA’s Office of Public Service and Operations Support on the number of SSA policy priority cases processed annually. From the total number of full medical reviews completed during a fiscal year, we subtracted completed full medical reviews that were prioritized because they were statutorily required (e.g., reviews of SSI children at age 18 and reviews of children under 1 year old who are receiving SSI benefits due in part to low birth weight) and because of SSA policy (e.g., mailers with certain responses and first-time reviews for beneficiaries in the “medical improvement expected” diary category). To avoid potential double- counting, we did not count the sample of approximately 60,000 cases that SSA initiates annually to validate its statistical models among the policy priority cases because the sample consists of cases across all beneficiary groups, including statutorily required cases. As a result, our calculations may underestimate the number of required priority cases and overestimate the number of cases selected because of the statistical models.\nTo illustrate the impact of further incorporating cost savings into the prioritization process, we obtained and analyzed data from SSA on the average savings per full medical review by beneficiary group in each of fiscal years 2012 and 2013. Using weighted averages of these data, we calculated the average savings for fiscal years 2012 and 2013 separately and combined. We also developed two hypothetical scenarios that pair near-identical beneficiaries with different ages or monthly benefit payments to demonstrate the effect of considering cost savings on an individual basis. We used information from the fiscal year 2013 statistical supplements on the DI and SSI programs to develop reasonable ages and benefit levels for the hypothetical beneficiaries. We calculated the expected savings in foregone benefits after cessation for each beneficiary by multiplying the monthly benefit by the number of months until the beneficiaries would have aged out of the disability programs.", "To understand the process that SSA uses to review the quality of CDR decisions, we reviewed relevant federal laws, regulations, policies, and procedures; interviewed SSA officials about these policies and procedures; and analyzed SSA’s CDR workload and decision accuracy data. This work included reviewing documentation of the Disability Case Adjudication and Review System (DICARS), the software program in which SSA completes quality reviews. We interviewed SSA officials about how the quality reviews are conducted and how the agency uses the results, and compared the agency’s policies and procedures to generally accepted statistical practices and federal internal control standards. We also interviewed state Disability Determination Services officials about factors that challenge CDR quality. We assessed the reliability of SSA’s CDR workload and decision accuracy data by performing data testing, reviewing related documentation, and interviewing agency officials, and we found the data to be sufficiently reliable for the purposes of this review.\nTo evaluate the extent to which SSA reviews the quality of CDR decisions, we analyzed SSA’s CDR workload and decision accuracy data to determine whether its method for sampling CDRs and estimating CDR accuracy are consistent with generally accepted statistical practices and SSA’s reporting goals. SSA reports accuracy rate estimates for each state every month using the most recent 3 or 6 months of quality review data. Its goal is to produce estimates with 95 percent confidence intervals that are within plus or minus 5 percentage points of the estimate. We analyzed SSA’s CDR workload and accuracy data, consistent with SSA’s sampling and reporting methods, from June 2013 through April 2015. Specifically, we identified the number of continuance and cessation determinations in each state, the District of Columbia, and Puerto Rico; SSA’s accuracy rate estimates for these determinations for each 6-month period; and the 95 percent confidence interval margins of error for each estimate. To identify states that had estimates that consistently do not achieve the reporting goals, we compared the workload, accuracy rate estimates, and margins of errors to those specified in SSA’s sample design and reporting goals. We calculated margins of error for estimates in which SSA did not provide them. We used a statistical formula that produces appropriate margins of error, including when standard formula do not apply, to determine and examine a margin of error for all estimates. We chose this formula because in some cases CDR accuracy is so high or the sampling fraction is so large that the standard statistical formula used for these purposes would compute margins of error that are not appropriate, such as those resulting in confidence intervals above 100 percent. Since CDR accuracy cannot be greater than 100 percent, the standard formula is not appropriate. We also analyzed CDR workload data from fiscal years 2001 through 2014 to inform our evaluation of SSA’s sampling method.\nTo determine the effect of date errors on accuracy rates, we analyzed data about CDR date errors and cessations. We considered data from fiscal years 2010 through 2014 to determine the frequency with which date errors occur. We calculated fiscal year 2014 cessation accuracy rate estimates for each state by combining the number of cessation decision errors and the number of date errors and dividing the total by the number of cessations SSA reviewed. SSA’s date error data were not broken down by decision type (i.e., continuance or cessation), but we assigned these errors to cessations because of input from SSA and our corroborating analysis. According to SSA officials, the most common date error on a CDR is a cessation date error and other date errors, such as incorrectly inputting an onset date, can occur in a cessation or continuance but are rare. Our analysis corroborated this information. For example, in fiscal year 2014, of 127 date errors identified in CDRs nationally, 125 of them were cessation date errors. In addition, we calculated margins of error for each estimate to assess the statistical reliability of each estimate. We used the statistical formula that produces appropriate margins of error, consistent with our approach to calculating margins of error in our analysis of SSA’s sampling method.", "To evaluate SSA’s approach to calculating cost savings from CDRs, we compared SSA’s estimation process to actuarial standards of practice and federal guidelines for benefit-cost analyses of federal programs. Specifically, we interviewed SSA actuaries about the models and methods they used to perform the cost-savings calculation for fiscal year 2012. We also reviewed portions of the programming code related to these models to corroborate the information from the actuaries. In addition, we examined the assumptions that SSA uses to calculate the present value of future benefits saved from ceasing a person’s benefits as the result of a CDR by examining where and how SSA incorporates assumptions into its calculation process. Finally, we reviewed the fiscal year 2012 CDR cessation data and information SSA provided to the Centers for Medicare & Medicaid Services (CMS) that informed CMS’s estimates of Medicare and Medicaid savings resulting from CDR cessations, but we did not review CMS’s models.\nWe conducted this performance audit from December 2014 to February 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, Erin Godtland (Assistant Director), Joel Green (Analyst-in-Charge), Susan Aschoff, James Bennett, Grace Cho, Alexander Galuten, Emei Li, Isabella Johnson, Rhiannon Patterson, Almeta Spencer, Daren Sweeney, Jeff Tessin, Kristen Timko, Frank Todisco, Sonya Vartivarian, and Shana Wallace made key contributions to this report." ], "depth": [ 1, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2, 2, 1, 1, 2, 2 ], "alignment": [ "h0_full h2_title", "h0_full h2_full", "h0_title", "", "", "h0_full", "h1_full", "", "h2_full h1_full", "", "h0_full h3_full h1_full", "h0_full h2_title h1_title", "h2_full", "h1_full", "", "", "", "", "" ] }

{ "question": [ "What is a weakness regarding the SSA's decisions in selecting cases for CDR?", "How does the SSA determine which cases to select for CDR?", "What else do the statistical models determine?", "What problem exists with this process?", "To what extent does SSA consider cost savings?", "In what cases could SSA better promote cost savings?", "What weaknesses are there in the SSA's reviewing of CDRs?", "What is SSA's process?", "What is lacking in this process?", "What forms of review is SSA missing?", "What is the purpose of periodic CDRs?", "Historically, why have the CDRs generally been economically sound?", "What has hampered this money-saving effort in recent years?", "What was GAO asked to do, as a result of this CDR backlog?", "What did GAO recommend to SSA?", "What was SSA's response ot these recommendations?", "How did GAO respond to this assertion?" ], "summary": [ "The Social Security Administration (SSA) selects cases for continuing disability reviews (CDR) using several inputs, but it does not do so in a manner that maximizes potential savings.", "SSA first prioritizes CDRs required by law or agency policy such as those for children under 1 year old who are receiving benefits due in part to low birth weight. Then SSA uses statistical models to identify the remaining CDRs to be conducted each year.", "The models also determine which cases will receive an in-depth review of medical records by the Disability Determination Services—the state agencies that conduct CDRs—versus a lower-cost questionnaire sent directly to the beneficiary.", "As shown in the figure below, a growing number of cases have been set aside for future review (backlogged) over the last 10 years.", "Although SSA somewhat considers potential cost savings when selecting cases for in-depth reviews, its approach does not maximize potential savings for the government.", "For example, estimated average savings from conducting CDRs are higher for some groups of Disability Insurance (DI) beneficiaries than others, but SSA's selection process does not differentiate among these groups. As a result, it may be missing opportunities to efficiently and effectively use federal resources.", "SSA reviews a sample of CDRs for quality, but its analysis and reporting of errors is not comprehensive.", "Specifically, SSA randomly selects CDR decisions to check for a variety of potential errors. For example, SSA regularly monitors and reports on the frequency of errors that affect whether benefits are continued or ceased.", "However, contrary to federal internal control standards, SSA does not systematically analyze errors to detect and address root causes. Consequently, SSA lacks information that could help improve the quality of the reviews conducted by the Disability Determination Services.", "Further, in determining CDR accuracy rates, SSA does not count date errors, including incorrect cessation dates, which can affect disability benefit payments. As a result, decision makers do not have a complete picture of the CDR errors that affect disability payments.", "To help ensure that only eligible individuals receive disability benefits, SSA conducts periodic CDRs to assess beneficiaries' medical condition.", "CDRs have historically saved the government money.", "However, in recent years, SSA has had difficulty conducting timely CDRs resulting in a backlog of over 900,000 CDRs in fiscal year 2014.", "With this backdrop, GAO was asked to study SSA's ability to conduct and manage timely, high-quality CDRs.", "GAO recommends SSA, among other things, further consider cost savings as part of its prioritization of CDRs, analyze the root causes of CDRs with errors, and track date errors.", "SSA agreed with most of GAO's recommendations, but disagreed that there is a need to track date errors and to adjust its approach to sampling CDRs for quality review.", "GAO maintains actions are warranted and feasible as discussed in the report." ], "parent_pair_index": [ -1, 0, 1, 1, -1, 4, -1, 0, 1, 1, -1, 0, 1, 2, -1, 0, 1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 5, 5, 5 ] }

{ "title": [ "Background", "The Attack History", "The FBI’s Genetic Analyses of the Attack Spores", "Verification and Validation", "Reviews of the Strength of the Scientific Evidence", "Genetic Tests Generally Were Verified and Validated but Lack of a Validation Framework Limited Statistical Confidence for Interpreting Results", "Three Phases in a Validation Framework for Genetic Test Development", "The FBI Set Minimum Performance Requirements and Relied on Contractors to Conduct Verification Testing", "Validation Test Results Met the FBI Requirements but Did Not Demonstrate a Level of Statistical Confidence", "DHS Validates FBI’s Microbial Forensics Methods That Can Support FBI Investigations", "Characteristics of a Statistical Framework That Would Strengthen the Significance of Microbial Forensic Evidence in Future Investigations", "The Six Characteristics of a Statistical Framework", "The FBI’s Statistical Approach Could Have Been Improved for Three of the Six Characteristics of a Statistical Framework", "The FBI’s Research Did Not Provide Full Understanding of the Methods and Environmental Conditions That Give Rise to Genetic Mutations", "The FBI Established an Adequate Relevant Source Population", "The FBI Did Not Fully Ensure the Completeness and Accuracy of the Repository", "The Statistical Analyses Did Not Account for the Genetic Markers’ Mode of Inheritance", "The FBI Did Not Include Uncertainty Measures in the Interpretation of Results", "The FBI Is Addressing the Need for Formal Statistical Expertise In Future Investigations", "Scientific Gaps Remain Related to Verification, Validation, and Statistical Analyses and Research Is Ongoing", "The NAS Report Identified Scientific and Technical Gaps", "A Key Gap Remains on the Significance of Using Genetic Mutations as Markers In Analyzing Evidentiary Samples", "DHS-Funded Research on the Evolution of Morphological Variants is Ongoing", "Conclusions", "Recommendations", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Performance Parameters Evaluated by Genetic Test", "Appendix III: The Effect of Assay Sensitivity and Data Trimming Assumptions in the Statistical Analyses", "Appendix IV: Comments from the FBI", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "", "In September and October 2001, at least seven envelopes containing significant quantities of B. anthracis spores were mailed through the U.S. postal system to two senators at their congressional offices in the District of Columbia and to media organizations in New York City and Boca Raton, Florida. According to the FBI, the evidence supports the conclusion that the mail attacks occurred on two separate occasions. The two letters of the first attack were postmarked September 18, 2001, and sent to NBC News and the New York Post, both in New York City. Three weeks later, two letters postmarked October 9, 2001, were mailed to two senators—Thomas Daschle and Patrick Leahy—at their Washington, D.C., offices. Other letters were sent to ABC, CBS, and American Media, Inc. Hard evidence of the attacks surfaced on October 3, 2001, when Robert Stevens, an American Media Inc. employee who worked in Boca Raton, Florida, was diagnosed as having contracted inhalational anthrax, from which he later died. However, because a contaminated envelope or package was not recovered in Florida, the agencies could not initially establish how the B. anthracis spores were delivered. According to the Postal Service, the combination of the Florida incident and the opening of the letter to Senator Tom Daschle on October 15 established the link to the U.S. mail system. At least 22 victims contracted anthrax as a result of the mailings. Eleven individuals developed inhalational anthrax, and another 11 developed cutaneous infections. Five of the inhalational anthrax victims died from their infections.\nThe attack highlighted the need for enhanced capabilities for full forensic exploitation and interpretation of microbial evidence from acts of bioterrorism. Ideally, forensic evidence obtained in an investigation is sufficient to support conclusions about the culpability of a group, an individual, or the source of material used in such an act. Forensic evidence is used to support conclusions by classifying evidence into one of several categories that distinguish possible sources from one another. While classification does not unequivocally demonstrate a connection with an individual or a single source, it can be used to reduce the number of possible sources and thus can provide important leads in an investigation.\nThe development and application of microbial forensics was essential to the FBI’s scientific investigation, which relied heavily on genetics and comparative genomics to classify the spore materials used in the attack, reduce the number of possible sources and suspects, and provide investigative leads. In fact, according to the NAS, this investigation accelerated the development of the then nascent field of microbial forensics.", "The FBI’s investigation, assisted by government, university, and commercial laboratories, was an effort to develop the physical, chemical, genetic, and forensic profiles of the anthrax spores in the letters and envelopes used in the attacks. The investigation employed myriad traditional and novel investigative and scientific methods. The scientific methods involved efforts to develop the physical, chemical, genetic, and forensic profiles of the anthrax spores and letters and envelopes used in the attacks so as to identify the source of the spores. The FBI faced many difficult and complex scientific challenges over the course of this investigation, according to the NAS. New microbial forensic methods were developed and implemented over several years, and some of them provided valuable evidence and significant leads in the case. For example, according to the FBI, new methods to determine the source of the growth media for the mailed spores were inconclusive while the use of the genetic mutations provided an investigative lead.\nBy October 2001, CDC had identified the microorganism used in the attack as Bacillus anthracis (B. anthracis). This was a key step in the classification of the microorganism used in the attack letters and was one of the first scientific findings that allowed the FBI to begin to reduce the number of possible sources of the spores. B. anthracis is a gram positive, rod-shaped bacterium that causes the disease anthrax. It is a member of the larger genus Bacillus that includes other commonly found species, such as B. cereus, B. subtilis, and B. thuringiensis. B. anthracis, a species of Bacillus that can be found on all continents except Antarctica, typically shows little genetic variation among isolates. However, during the investigation scientific methods were being developed that allowed scientists to find some genetic differences among natural isolates of B. anthracis. Applying these methods allowed the FBI to refine the classification of the spores used in the attack and further reduce the number of possible sources of the spores.\nEven in the most homogeneous species, some differences are usual in genome sequences among populations. Although few in number, these differences are sufficient to characterize subgroups, or “strains.” in the attack letters. In fact, this scientific evidence allowed the FBI to focus its investigation on the limited number of laboratories that had had access to the Ames strain before the attacks (see figure 1).\nWhile classifying the spore material as the Ames strain was instrumental in reducing the number of possible sources, it was not sufficient by itself to definitively identify the source of the material used in the attack as a single laboratory, flask, or person. The FBI then sought to identify additional characteristics of the spores used in the attack that could further discriminate between possible sources of the Ames strain.\nScientists from the Department of Defense (DOD) tested samples of the spore materials found in the letters and identified several morphological variants (or morphs).the spores from the letters over an extended period observed that a small percentage of the colonies differed in texture, color, and growth patterns A laboratory technician who had grown (cultured) from those typical for the Ames strain of B. anthracis, referred to in figure 2 as the “wild type.”\nIn an effort to identify the source of the letters, investigators and FBI scientists began to evaluate whether they could first identify and characterize these morphs genetically and then determine whether any of them were present in the repository of Ames samples. This involved genome sequencing to identify whether specific deoxyribonucleic acid (DNA) sequences underlay the morphs. Eventually, as shown in figure 2, the morphs were associated with several types of genetic mutations: duplications, single nucleotide polymorphisms (SNP), and deletions, referred to as INDELS.\nAfterward, over several years, outside contractors’ laboratories developed and validated several genetic tests to analyze the B. anthracis samples for the presence of certain genetic mutations. Specifically, the testing revealed the presence or absence in a sample of a specific DNA sequence (that is, the genetic mutation) associated with a given morph.\nThe FBI contractors generally referred to the tests they developed as A1, A3, D, and E. Commonwealth Biotechnologies (CBI) developed the two A tests (A1 and A3), which targeted two different DNA sequences; and the Institute for Genomic Research (TIGR) developed the E test, targeting another DNA sequence. However, unlike the others, the Illinois Institute of Technology Research Institute (IITRI) and Midwest Research Institute (MRI) both developed a test targeting the same DNA sequence. For clarity, we refer to the IITRI-developed test as D-1 and the MRI- developed tests as D-2.\nGenetic test A1: detects the presence of a specific duplicated DNA sequence associated with morph A;\nGenetic test A3: detects a different duplicated DNA sequence from that targeted by A1 but also associated with morph A;\nGenetic test D-1: detects the presence of a specific deleted DNA sequence associated with morph D;\nGenetic test D-2: detects the presence of the same deleted DNA sequence associated with morph D as that targeted by the D-1 test; and\nGenetic test E: detects a deleted DNA sequence associated with morph E.\nIn 2002, the FBI began collecting samples from laboratories in possession of the Ames strain to compare them with the material used in the attack. A grand jury issued subpoenas to 16 domestic laboratories and the FBI requested submissions from 3 foreign laboratories that investigators had determined possessed the Ames strain. The subpoenas required each laboratory to identify and submit two representative samples from each distinct stock of the Ames strain it held. The subpoena included instructions to the laboratories on how to identify, select, and submit samples to the FBI. Laboratories were required to ship sample submissions to DOD scientists at USAMRIID for preparation and entry into the FBI repository of Ames samples.\nIn addition to the samples submitted in response to the subpoena, searches were conducted at three domestic laboratories to ensure that samples were taken from each stock of Ames strain in those facilities. The FBI assembled a repository of 1,070 Ames strain samples, of which From 2004 through 2007, each of the 1,059 viable 1,059 were viable. repository submissions was compared to the evidentiary material using the five genetic tests (see figure 3). The results of the genetic testing indicated that only 8 of the 1,059 FBI repository Ames samples tested positive for the presence of the four genetic mutations originally found in the anthrax letter evidence.\nUsing submission records, investigators concluded that these 8 samples were derived from a single source—a flask identified as RMR-1029. According to the FBI, this information constituted a groundbreaking lead in the development in the investigation. It allowed the investigators to reduce drastically the number of possible suspects, because only very few individuals had ever had access to this specific flask. Armed with this new information obtained from the scientific evidence, the task force focused its investigation on researchers who had had access to the laboratory at USAMRIID where RMR-1029 was stored. In 2008, the FBI sought to conduct statistical analyses in order to determine (1) the probative value of genetic markers found in a sample, and (2) possible inferences regarding the relationships of similar samples. A contractor submitted the Final Statistical Analyses Report in October 2008.\nIn February 2010, the FBI closed the case concluding that a scientist at USAMRIID had perpetrated the attack alone. Neither the case nor the totality of the evidence, including the scientific evidence that provided the FBI with valuable leads, was brought to trial in a court of law. The alleged perpetrator of the attack died on July 29, 2008, from an overdose of over- the-counter medication.", "At the start of the investigation no standards or guidelines existed for verifying and validating microbial forensic methods, including the polymerase chain reaction (PCR)-based tests that were eventually used to identify the genetic mutations in the repository samples. The first contractor, Commonwealth Biotechnologies (CBI), an established forensics laboratory, had begun developing the A1 and A3 genetic tests in 2002. A CBI official stated that it had relied upon the National Institute of Standards (NIST) guidance on the validation of methods for detecting human DNA, and also on the DNA Advisory Board standard for forensics. For the remaining three contractors, the Illinois Institute of Technology Research Institute (IITRI), Midwest Research Institute (MRI), and The Institute for Genomic Research (TIGR), the FBI provided “Quality Assurance Guidelines for Laboratories Performing Microbial Forensic Work”—guidelines that the FBI’s Scientific Working Group on Microbial Genetics and Forensics (SWGMGF) developed and published in October 2003. These guidelines defined validation as a process by which a test procedure is evaluated to determine its efficacy and reliability for analysis.confidence in the ability of the test (the measurement tool) to accurately identify the properties of interest in samples that are to be analyzed.\nVerifying and validating a test method provides a level of Verification, confirms by objective evidence, from laboratory experiments, that the given test meets the user’s specific requirements, such as criteria for accuracy. If the verification testing were not to produce consistent results, then the scientist or the laboratory would have to return to the optimization phase to further refine the method and materials and then revise the test’s standard operating procedure (SOP) accordingly. Verification of the acceptance criteria must include repeated testing to account for measurement uncertainty, and confidence in performance statistics should be reported. Depending on the intended use of a test, sensitivity, specificity, limit of detection (LOD), reproducibility, bias, and precision may all be measures of performance (performance statistics) that should be evaluated. The type of test (qualitative, quantitative, or semi-quantitative) may also determine which of these performance parameters is to be evaluated. The testing protocol and materials, including quantities that optimize test performance are recorded in a test’s SOP.\nValidation confirms by examination, from laboratory experiments, and the provision of objective evidence that the particular requirements for a specific intended use are fulfilled. Successful validation offers some assurance that a given genetic test is sufficiently robust to provide reproducible results, regardless of the practitioner, agency, contractor, or laboratory applying it to a sample. Validation is frequently used to connote confidence, but it may also be thought of as defining the limitations of a method. Studies are conducted that enable the estimation of the limits of the procedures and the measurements of the test. To the extent possible, the validation of a method should mimic “real world” conditions. The limits of the method must be known, demonstrated and documented. In essence, validation measures the uncertainty in the test output.", "In 2007 the FBI convened a team of scientists to review selected scientific methods used in the case. Referred to as the AMX Red Team, it was asked to assess whether the science used was sound and to consider what additional tests might be performed to benefit the investigation. The team, finding no shortfalls or deficiencies in the basic methodologies it reviewed, concluded that the “genetic signatures correlating with specific morphs were valid tools for eliminating those repository samples not closely related to the spores used in the attack.” However, the team also stated that the extent of research and development of the genetic tests at the date of its review was insufficient to determine whether the presence or absence of one or several of the morphs in a sample was associated with the evidence, was merely characteristic of normal culture practices, or possibly was affected by the genetic tests’ sensitivity of detection. The team recommended additional studies to characterize the genetic markers as a function of growth conditions, including the influence of growth time, growth media, and temperature. It also recommended additional evaluation of the sensitivity of detection of each genetic test to ensure a reliable interpretation of analyses.\nIn 2008, the FBI asked the National Research Council (NRC) of the National Academy of Sciences (NAS) to review the scientific approaches it had used to support its conclusions. In 2011, the NAS issued its report, concluding that “it is not possible to reach a definitive conclusion about the origins of the B. anthracis in the mailing based on the available scientific evidence alone.” Additionally, the report included the following findings related to the development and validation of the genetic tests: “Specific molecular assays were developed for some of the B. anthracis Ames genotypes (those designated A1, A3, D, and E) found in the letters. These assays provided a useful approach for assessing possible relationships among the populations of B. anthracis spores in the letters and samples subsequently collected for the FBIR. . . . However, more could have been done to determine the performance characteristics of these genetic tests. In addition, the assays did not measure the relative abundance of the variant morphotype mutations, which might have been valuable and could be important in future investigations. . . .” “The development and validation of the variant morphotype mutation assays took a long time and slowed the investigation. The committee recognizes that the genomic science used to analyze the forensic markers identified in the colony morphotypes was a large-scale endeavor and required the application of emerging science and technology. Although the committee lauds and supports the effort dedicated to the development of well- validated assays and procedures, looking toward the future, these processes need to be more efficient.”\nAdditionally, the NAS report included the following findings related to the statistical approach taken to quantify the significance of finding the genetic markers in a small number of repository samples: “The results of the genetic analyses of the repository samples were consistent with the finding that the spores in the attack letters were derived from RMR-1029, but the analyses did not definitively demonstrate such a relationship.” . . . . . “Some of the mutations identified in the spores of the attack letters and detected in RMR-1029 might have arisen by parallel evolution rather than by derivation from RMR-1029. This possible explanation of genetic similarity between spores in the letters and in RMR-1029 was not rigorously explored during the course of the investigation, further complicating the interpretation of the apparent association between the B. anthracis genotypes discovered in the attack letters and those found in RMR-1029.”", "We found that the genetic tests used to screen the FBI’s repository of B. anthracis samples demonstrated through the verification and validation testing that they generally met the FBI’s minimum validation requirements. However, the FBI’s validation procedure did not require and the tests did not demonstrate a level of statistical confidence for interpreting the validation results. Also, tests conducted after validation— although not required by the quality assurance guidelines provided to the contractors—yielded valuable information on the performance characteristics of the genetic tests. Therefore, by not having a comprehensive validation approach, or framework, that sets out consistent steps for achieving minimum performance standards, and includes an assessment and measurement of the uncertainty in the test performance (see table 1 for the phases of a validation framework), the FBI cannot have statistical confidence in its validation test results. Knowledge of uncertainty is essential for subsequent statistical analysis that can provide quantitative measures of confidence in conclusions drawn from tests applied to forensic samples. According to DHS, it now validates methods and tests used to support FBI investigations and has an established ISO-accredited program.", "In our review of scientific literature and agency and industry standards along with guidelines regarding the verification and validation of methods for analyzing both microbial and human DNA, we found that terminology and the extent of verification and validation differed across industries. However, we identified three distinct phases in genetic test development: (1) optimization, (2) verification testing, and (3) validation testing. While the literature and various validation standards and guidelines that we reviewed identify the specific types of tasks for each phase, we found that a clear boundary does not always exist between the first two phases. That is, optimization and verification are sometimes treated as a single continuous process. Further, we found that verification and validation are sometimes used interchangeably to describe the same process. Thus, the process could combine either optimization and verification or optimization and validation. Nevertheless, what is important is that the approach, or framework, to test development generally includes these phases and the associated key tasks, as shown in table 1.", "The FBI set limited performance requirements for the genetic tests and relied on the contractors’ expertise to determine the processes they would use to develop (i.e., optimize and verify) their tests (see table 1 for types of performance parameters to be evaluated). According to the FBI, it provided minimal direction to the four contractors on how they were to develop their genetic tests in order to allow creative development. It stated that, with a few exceptions, it left the development mostly to the contractors who were experienced in developing tests. However, we found that the contractor’s approaches differed in their (1) use of verification and validation guidelines, (2) steps in conducting optimization and verification testing, and (3) interpretation criteria for results generated by the genetic tests.\nThe FBI required that the genetic tests detect the target mutations in an overwhelming background of bacteria consisting of predominantly wild type B. anthracis Ames, which had been found in the evidentiary material (that is, the letters). Further, the FBI specified that sensitivity was to be demonstrated by the LOD—that is, the lowest concentration level that can be reliably detected for a qualitative and quantitative test. The FBI did not require a specific calculation or value for the LOD. According to the FBI, it was looking for the presence or absence of the morphs (genetic mutations) in the repository samples and the LOD was an important factor. Three contractors developed qualitative tests; the fourth developed a semi-quantitative test. In this regard, the FBI wanted to know the lowest concentration at which the genetic tests could detect the presence of a specific genetic mutation in a sample. Specificity was to be demonstrated by the detection of the target in a sample containing an overwhelming background of predominantly B. anthracis Ames. We found that the contractors evaluated other performance parameters at their discretion (see appendix II).\nWe also found that standards for the verification and validation of microbial forensics methods did not exist at the start of the investigation and were only limited after it had begun. At that time, more was known about verifying and validating human DNA testing methods for forensics than about microbial forensics methods, as reflected in the revised quality assurance guidelines. In addition, we found that the contractors’ disparate experience and the FBI’s minimal instruction to them contributed to the differences in their expectations and approaches. Most of the contractors had worked for other federal agencies whose processes differed and thus their approaches to optimizing and verifying their genetic tests differed.\nWhile most of the contractors had developed methods for the federal government, one contractor said that each of its federal sponsors had its own processes for validation and that it followed a particular agency’s processes when working with it. The contractor also stated that its own internal quality assurance guidelines were more stringent than the SWGMGF guidelines for validation. One contractor was a forensics laboratory that was familiar with analyzing human DNA samples and using associated quality assurance standards, including the DNA Advisory Board standards. Another contractor was engaged in genomic research. Finally, the FBI stated that it was more confident after the two A tests were developed; it had required the contractor for the two A tests to subject material from each polymerase chain reaction (PCR) well to genetic sequence analysis, regardless of the result (positive or negative). Further, it stated that after the first four genetic tests were developed, it had been unsure as to whether it wanted to proceed with the last one— the E test.\nWe found that the contractors generally conducted the tasks we identified in table 1 under the first two phases—optimization and verification—to develop the genetic tests and determine their performance, although one did not conduct a verification test. Specifically, CBI conducted an “internal qualification” study that is included in the SWGMGF guidelines. CBI’s qualification study involved multiple experiments using internally blinded samples following an SOP to determine whether (1) the A1 and A3 genetic tests could correctly identify the targeted genetic mutations and (2) the staff involved could be considered qualified to perform the genetic tests. The first appeared to be equivalent to verification testing and the second to proficiency testing. Similarly, both MRI and ITRI conducted internal verification testing and followed it with a qualification test of laboratory personnel. While the distinction between, interpretation of, and expectations for the verification and any qualification testing were not always explicit in the documentation we were provided, we found that they were both intended to precede the validation testing. However, TIGR—the last contractor to develop its genetic test—did not conduct the equivalent of either a verification or a qualification study.\nThe FBI indicated that it believed that the contractors had conducted verification testing but acknowledged that it was possible that one had not been conducted for the last genetic test that was developed. Thus, the verification testing was not consistent for all the tests—with one relying solely on the validation testing to determine whether it met the FBI’s requirements and also was fit for use on the repository samples.\nWe also found that there was no clear rationale for the lack of complementary interpretation criteria for the results generated by the two genetic tests that targeted the D mutation, which proved problematic during the repository screening, after verification and validation had been completed. Each contractor independently developed interpretation criteria for positive, negative and inconclusive results through laboratory experimentation, which when defined became part of its SOP. Initially, for the A1 and A3 tests interpretation criteria were for a positive or negative result only. For the A1 and A3 tests, validation results were reported as the number of correct positive and negative results for the FBI-provided samples, and excluded blind samples for which, at this stage of the investigation, it was not yet known whether they contained the targeted genetic mutations.were reported as the number of correct positive and negative results, detection limit, false positive rate, and inconclusive rate.\nFor the D-1 and D-2 tests and the one E test, results Criteria for an inconclusive result included several types of occurrences that varied by the particular genetic test. The FBI stated that it reviewed the interpretation criteria for each genetic test. However, after the repository screening, disparate interpretation criteria for the D-1 and D-2 genetic tests determined the samples that had usable test results. Ultimately, contradictory interpretations of the D-1 and D-2 test results were a reason for eliminating the results of the D-1 genetic test’s screening of the repository samples; thus, the D-1 results were not part of This issue did the final statistical analyses, according to the NAS report.not surface during the validation of the genetic tests.", "We found that (1) the genetic tests used to screen the FBI’s repository of B. anthracis samples met the FBI’s validation requirements, (2) the validation tests were not required to and did not demonstrate a level of statistical confidence for interpreting the validation test results, and (3) some information on the sensitivity and specificity of the genetic tests was not characterized until after validation (postvalidation testing). As a result, the performance characteristics of the genetic tests were not fully understood when they were applied to the repository samples and more could have been done to strengthen the quality of the data and ultimately the validation results.\nThe validation test results showed that the genetic tests met the FBI’s requirements in that they were able to detect the targeted genetic mutation when it was present at a low level (that is, at less than 1 percent, in a validation sample containing predominantly B.anthracis Ames), although no measurement of statistical confidence in these results was provided. As shown in table 2, the A3 genetic test had the lowest LOD, at 0.001 percent, while the others ranged from 0.005 percent to 0.01 percent. The validation results led the FBI to determine that there were no false positives for any of the genetic tests, and that the inconclusive rates were 0.12 percent and 0.02 percent for the D-1 and D-2 tests, respectively. During validation, inconclusive rates could not all be computed for all the genetic tests.\nSince the FBI’s requirements stated that the LOD was to be used as a measure of sensitivity, it was an important measure of the performance of a given genetic test. LOD provides interpretations of results generated by a genetic test with the known limitations of such data, but it is a difficult quantity to estimate reliably. Our review of existing and current guidelines for validation suggests that using an appropriate estimate of LOD does provide a reliable measurement of sensitivity, but LOD estimates, like any performance statistic, should be reported with some measure of confidence. For example, the Environmental Protection Agency defines the method detection limit as the “minimum concentration of substance that can be measured and reported with 99-percent confidence that the analyte concentration is greater than zero.” If test sensitivity is an important performance criterion, then both verification and validation procedures for a genetic test should report LOD, along with a measure of confidence. However, the LODs for the genetic tests the four contractors performed neither required a confidence measure nor determined one by using statistical measurements of confidence.\nValidation testing should to the extent possible simulate the conditions of the intended use of a given genetic test, using known case samples (see tasks under the third phase in the validation framework in table 1). Calculating uncertainties of measurement is also an important task. All steps in validation testing, such as sample collection, sample preparation, transport, storage and analysis can introduce stochasticity and increase uncertainty in the test results. Most such stochasticities (and others) will also affect the testing of repository samples. These additional uncertainties can be measured and understood using repeated (replicate) experiments including all relevant steps (from collection to analysis) of samples with known concentration levels. By designing a validation study with a sufficient number of replicate samples, the FBI could have quantified the level of statistical confidence in the sensitivity and specificity of the tests.\nWhile the SWGMGF guidelines did not require them, tests as part of validation that examined stochastic (random) effects of the process would have made it possible to draw more rigorous conclusions, with measures of confidence, regarding the test results for the repository samples. addition, we found that additional information on the sensitivity and specificity of the PCR-based genetic tests was characterized during postvalidation testing that the FBI’s expert advisers recommended. Our analysis of these post-validation test results suggests that the negative rates of the genetic tests were high for samples that could be expected to contain the genetic mutations when using the sample collection and processing methods as required for the repository samples and that there were stochastic (random) effects in the repository screening process.\nThe SWGDAM guidelines do suggest such tests for PCR-based methods, which is important when samples contain low concentrations of the target to be detected. Sampling fluctuations can occur in PCR-based tests. According to the 2004 SWGDAM guidelines, for PCR-based assays, validation studies must address stochastic effects and sensitivity levels. sequence, growth conditions would vary slightly. However, according to the FBI, the purpose of the additional testing was to determine whether stochastic sampling error had been introduced into the repository preparation process as instructed in the subpoena. Therefore, the postvalidation tests were to determine whether the procedures by which the repository samples were processed could affect the accuracy of the interpretation of the data. The postvalidation tests were conducted in August and September 2007 under conditions that closely mimicked the intended use for each of the genetic tests. According to the FBI, the screening of the repository samples with the genetic tests was about three-fourths complete when this testing took place.\nSpecifically, in the postvalidation tests, the contractors applied their genetic tests to replicate samples derived directly from some of the evidentiary material—including flask RMR-1029. The results revealed that the genetic tests did not always detect the genetic mutations in samples that had been derived directly from the evidence and thus were expected to contain all four mutations—a best-case scenario.\nOur evaluation of measures of the sensitivity and specificity of the genetic tests revealed differences between the validation and postvalidation test results. Regarding sensitivity, under the assumption that undiluted samples from flask RMR-1029 are positive for all four genetic mutations (supported by the preponderance of genetic and non-genetic data), we can estimate the negative rate as the frequency of negative results in replicate tests of undiluted samples from RMR-1029.\nValidation testing showed that for those results expected to be positive, no negative results were observed at or above the LOD for any of the genetic tests. However, in the postvalidation testing, the negative rates were generally high. As shown in table 3, the negative rates for the postvalidation tests ranged from 0 percent to 43 percent for the undiluted samples from flask RMR-1029. (Appendix III breaks down the results of the replicate testing for each genetic test.)\nThe NAS report stated that the FBI did not address false negative results and inconclusive results, and it was concerned about the restriction of the statistical analyses to the repository samples that had no inconclusive or variant results.results of only D-2 were used in the FBI’s analysis of the repository screening—that is, the analysis was restricted to the 947 samples that contained no inconclusive or variant results, which resulted in the exclusion of 112 samples from the analysis. Thus, the knowledge about sensitivity and specificity obtained by the replicate testing, as well as ensuring that these two genetic tests’ interpretation criteria were complementary, would have been more useful if it had been completed in the validation process.\nOf the two genetic tests that targeted the D mutation, the Regarding measures of specificity, the effect of the repeated analysis of the undiluted nonpositive samples during the postvalidation testing showed evidence of a nonzero false positive rate for the D-2 genetic test. As shown in table 4, the 3.3 percent false positive rate for the D-2 genetic test demonstrates the likelihood of a random effect in the postvalidation tests that was not apparent from the validation results.\nAlthough not a requirement at the time, repeated testing—such as that conducted postvalidation—would have provided additional information on the performance of the genetic tests. We recognize that neither the FBI nor the SWGMGF guidelines required contractors to conduct replicate tests of case samples to identify the stochastic (or random) effects of the genetic tests when they were used under realistic test conditions to further evaluate the genetic tests’ sensitivity—an important step in validating PCR-based genetic tests. In contrast, the SWGDAM guidelines suggested using experiments to determine the sensitivity of real-time PCR-based tests as a part of validation. Importantly, while the LOD is a critical performance indicator for a genetic test, LOD calculations do not account for the data that PCR-based tests sometimes generate but that The FBI also stated that during the development of the are not typical.genetic tests it was concerned that stochastic effects might be a problem, stating, for example, that it had discussed its concerns with the contractors about evidence growth steps and the possible stochastic effects, that is, in the context of the growth rates of the wild type cells (B. anthracis Ames) versus the morph cells in culturing, among other things. The postvalidation tests were able to estimate valuable performance statistics of the genetic tests and under more realistic testing conditions than the original validation tests.\nMore extensive validation testing could have reduced uncertainties in the testing procedure. For example, the sensitivity of a given genetic test relies on the sampling procedures, the rarity of the targeted genetic mutation in a sample, and other factors that vary by genetic test. Incorporating these types of tests into the validation would have resulted in more information on the uncertainties inherent in the use of the genetic tests and would have been a way to simulate the conditions of their intended use. Future validation efforts would be strengthened by including experiments designed to identify and eliminate likely uncertainties in test performance.\nThe differences we have highlighted regarding the contractors’ approaches to verification and validation indicate that the use of a comprehensive validation framework could help ensure greater consistency. Such a framework would need to specify the defined level of statistical confidence to be calculated for the interpretation of validation results before they are applied to evidentiary samples. Minimally, the statistical confidence achievable in each test should be estimated during validation.\nThe development of such a framework could be facilitated by DHS’s National Bioforensics Analysis Center (NBFAC), which validates tests used to support FBI bioforensic investigations. According to DHS, NBFAC will take steps to ensure that the results it generates will meet Daubert standards for “appropriate validation” and third party review and will thus meet admissibility requirements for evidence in federal court proceedings. NBFAC—an ISO 17025 accredited forensic laboratory—is experienced in working with multiple outside laboratories to verify and validate their methods. It has an established ISO 17025 accredited process.\nThe combination of limited communication among the contractors, varied timing in the validation efforts, uncertainties the FBI faced as the investigation unfolded, and increasing knowledge about the repository samples made it clear, with hindsight, that the contractors’ verification and validation approaches were likely to differ. Thus, in the future, standardizing the approach to verification and validation testing—by the means of a validation framework—would be more efficient, especially in clearly communicating expectations to multiple contractors.", "In contrast to 2001, DHS’s NBFAC validates assays (or tests) that can be used to support FBI bioforensic attribution investigations. Generally, the NBFAC validation process involves the evaluation of methods transferred from others, such as DOD and academic laboratories, and sometimes the development of a new method. For forensic tests, NBFAC and the FBI are provided with a “validation package” for each test that encompasses data on testing previously conducted during the development stage or before the transfer to the laboratory.have to provide information on the performance parameters (e.g., accuracy, LOD, precision) that they have previously verified. Next, NBFAC conducts its own test, evaluation, and validation of the transferred method. When evidence stemming from the use of validated methods is needed as evidence in court, it must be defensible by meeting evidentiary standards.\nAccording to DHS, developers Questions may be raised in court about the standards used for the validation of such methods. Results generated by forensic methods, including microbial forensics, must meet a high standard. According to NBFAC, to ensure that results generated by a validated test will meet Daubert standards for “appropriate validation,” the deliverables from the Bioforensics R&D Program include SOPs for the methodologies and technical and peer-reviewed published reports. Also, quality project performance plans are required of researchers, who must define method performance parameters to provide a baseline for verification and further validation if required by law enforcement. accreditation of tests requires the demonstration of previously described method parameters in NBFAC laboratories with trained staff followed by a third-party review of the supporting data, procedures, equipment, and staff training that supports ISO 17025 accreditation.\nIn this context, a method that has been validated elsewhere and that is transferred would be evaluated to ensure that the NBFAC successfully used the method as intended in the NBFAC laboratory. Performance parameters include accuracy, precision, specificity, selectivity, LOD, limit of quantitation, linearity, ruggedness, and robustness.", "We identified six characteristics of a statistical framework that would strengthen the significance of microbial forensic evidence. When we compared the FBI’s statistical approach to these six characteristics, we found that three could be improved to strengthen the significance of its evidence for future investigations. That is, the FBI (1) could do more to understand the methods and conditions that give rise to the chosen genetic markers, (2) institute more rigorous controls over sample identification and collection, and (3) include measures of uncertainty when interpreting the results. We found that the FBI has taken some steps to include such expertise in future investigations by building formal forensic statistical expertise both internally and externally.", "Although not always possible, an important goal of a microbial forensic investigation is to generate meaningful comparative analyses of evidentiary samples and suspect samples to establish their relatedness or to exclude suspect samples from an investigation. Statistically meaningful comparative analyses can allow the use of statistical inferences relating to the process to produce the sample, the provenance of a sample, or the relatedness of samples. The significance of such statistical inference relies on the analyst’s ability to quantify both the confidence in test results and the frequency with which results match. Confidence, in this context, refers to the level of reliability and accuracy investigators assign to the test results obtained from the measurement tools used to identify the properties of interest in the samples. The frequency of the sample properties’ presence, or generation in a relevant population of possible sources, is a measure of how common or rare the properties are and provides context to the probative value of the evidence. According to a 2009 NRC report, a statistical framework is needed to quantify the probative value of forensic evidence in terms of the frequency of that evidence in a population.\nFormulating an appropriate statistical framework that is adequate for all microbial forensic investigations is not feasible because the diversity of many potential pathogens is unknown or, at best, difficult to describe. For this reason, frameworks must be adapted to the specific circumstances of each case. As shown in table 5, our review of scientific literature in forensic science, statistics, epidemiology, and population genetics identified the six general characteristics that a framework needs for statistically meaningful comparative analyses of the attack material to repository samples for the specific set of circumstances of the FBI’s investigation.\nFirst, a definition of what constitutes a matching type should be clearly established. A genetic signature, or a set of genetic markers, can be chosen to establish a genetic type (or genotype) that is used to differentiate the samples. The genetic signature should be sufficient to identify the target of interest at the resolution needed for an investigation. In this case, the target of interest was the B. anthracis Ames strain, capable of producing spores with a set of specific genetic markers linked to morphs observed after a prolonged period of growth. The requisite resolution was the ability to differentiate among the individual stocks (or collections of organisms) of B. anthracis. Determining that two or more samples have a matching type must take into account the source of the organisms (for example, nature or the laboratory), the stability of genetic markers, storage conditions, and conditions giving rise to the markers. Specific growth or environmental conditions may selectively advantage or disadvantage mutations and affect the stability of genetic markers. Therefore, if the significance of a matching genetic signature is to be understood, the genetic markers should be well characterized, and the conditions giving rise to the presence of markers in a sample should be understood.\nSecond, once the genetic signature has been established and a match has been clearly defined, it is then necessary to identify and define the population of relevant sources that may have the genetic signature in order to understand how common or rare the genetic signature is. This relevant source population is critical in identifying the probative value of any match or nonmatch between samples. In a criminal investigation, a relevant source population may be considered the population of suspects, and it should be defined as specifically as possible to identify the smallest population related to the evidentiary material. The definition of the relevant source population should be based on the population related to characteristics of the evidence and not on characteristics of a suspected source. The relevant source population in this case is all stocks of B. anthracis that could have been used to grow the material used in the attack letters.\nIn defining the source population, the structure of the relevant source population of bacteria should be understood. When a population is divided into subgroups that do not mix freely, that population is said to have structure. In this case, the relevant reference population of stocks of B. anthracis was highly structured among the laboratories included in the investigation. The lack of independence between stocks in a structured population affects inferences about the evidentiary material and its most and least likely sources.\nThird, in order to quantify or estimate how common or rare a genetic signature is in the relevant source population, a database that accurately represents the relevant source population’s genetics should be created. The extent to which the database reflects the population will affect the accuracy of the match probability. The size and quality of the data in the database will affect the power of match probability, determining the potential probative power of the signature for distinguishing one source from another. A large and comprehensive database is the theoretical goal but in most cases may not be possible. However, in this case, the FBI determined that it was possible to identify all sources of the B. anthracis Ames strain, and it set out to create a comprehensive database. For completeness the genetic information in the database should have included samples from all sources of the B. anthracis Ames strain. In such cases, the database should be complete—excluding sources results in underrepresentation—and should avoid duplication (although replication can be beneficial)—unknowingly including sources more than once results in overrepresentation. Methods used to select samples from each stock should be adequate to ensure representation of the organisms within each stock. In an ideal situation, the database of genetic information should be constructed to the same quality standards as the actual evidentiary analysis. These quality standards should apply to the selection of samples from stocks to the results of the genetic tests.\nFourth, the limitations of the measurement tools used to generate the genetic information in the database should be identified. When quantitative inference is attempted, care must be taken not to overemphasize data; the limits of the methods used to generate the data should be considered. The power and limitations of microbial forensics methods need to be understood through validation. Validation frequently connotes confidence, but it may be thought of as defining the limitations of the method. This does not mean that a method must be 100 percent accurate to be useful. Studies should allow the estimation of the limits of the measurements. The limits of the methods must be demonstrated and documented for all steps in the process, including sample collection, preservation, extraction, analytical characterization, and data interpretation.\nFifth, the choice of statistical methods should be appropriate for the data and should properly account for the mode of inheritance of the genetic markers and any structure in the populations. An important aspect of computing association statistics and probability estimates is properly accounting for the mode of inheritance. Methods appropriate for computing probability estimates and statistical tests of significance differ by the mode of inheritance of the genetic markers. In organisms that reproduce asexually, such as B. anthracis, genetic diversity is driven by mutation processes, not by random mixing. Computing match probabilities using methods that assume independence and random mixing within populations is not appropriate because the genetic variation in such organisms is highly correlated. In organisms that reproduce asexually, the frequency of a particular genetic type in the population must be determined by direct observation. The frequency of the evidentiary genotype in a relevant source population can be based on counting the number of times the genotype is observed in a reference database. The strength of this approach is affected greatly by the genetic database and whether it has sufficiently sampled relevant populations.\nSixth and finally, the interpretation of results should include quantifications of uncertainty. It is crucial to clarify the type of question the analysis is addressing when evaluating the accuracy of a forensic analysis. Although some techniques may be too imprecise to permit the accurate identification of a specific individual, they may still provide useful and accurate information about questions and classification. The interpretation of results will be stronger with the proper use of statistical and probabilistic analyses, but the strengths and weakness of any result should be communicated. Results should indicate the uncertainty in the measurements, and studies must be conducted that enable the estimation of those values.", "We believe that the six general characteristics described above make up a comprehensive statistical framework that could have allowed the FBI to quantify significance and probative value of the scientific evidence collected in a statistically meaningful way and could have strengthened the evidence it collected. However, we found that at the outset of its investigation, the FBI did not have a comprehensive framework that would allow for statistically meaningful comparative analyses between samples from the attack letters and samples in the FBI repository of B. anthracis Ames strain. Specifically, we found that the FBI’s approach to three of the six characteristics could be improved to strengthen the significance of evidence in future investigations.", "Although the specific genetic mutations used as genetic markers to determine a match or exclusion were adequately characterized, the FBI did not conduct studies to understand the methods and environmental conditions that gave rise to the mutations. The FBI convened a team of scientists in 2007 to review the scientific methods. Finding no shortfalls or deficiencies in the basic methodologies they reviewed, they determined that the usefulness of the genetic markers was sufficient. The team also stated that the extent of research and development of the genetic tests at the date of their review was insufficient to determine whether the presence or absence of one or several of the genetic markers was associated with the evidence, was merely characteristic of normal culture practices, or possibly was affected by the sensitivity of detections of the genetic tests. The team recommended additional studies to characterize the genetic markers as a function of growth conditions, including the influence of growth time, growth media, and temperature.\nIn response to questions from the NAS panel about this recommendation, the FBI stated that it considered such studies academic and did not conduct the recommended research. Consequently, experimental data are missing that would have shown the frequency with which particular genetic mutations occur under growth conditions that could affect their retention or loss. In its report, NAS opined that some of the morphs used as genetic markers might have arisen independently from RMR-1029.\nAccording to the report and experts we spoke with, the genetic markers might have had a selective advantage under growth conditions used for large-scale production of spores, such as in a fermenter or in a batch culture. If so, the presence of the genetic markers would be a function of the growth conditions rather than direct derivation from parent material, such as RMR-1029. This is problematic for the quantification of the rarity of the results because it is not possible to calculate the probability of two independent cultures having the same genetic markers if either was subjected to growth conditions that provide selective advantage or disadvantage.\nWithout the experimental data, the usefulness of the genetic markers as an identifying signature to determine a match or exclusion was not fully understood. For example, it is not known whether the genetic markers could have arisen independently. To identify repository samples that received a direct or indirect transfer from the laboratory that possessed RMR-1029 after it was created in 1997, we examined the FBI’s documentation of historic transfer records of B. anthracis Ames strain between laboratories from 1981 through 2001. We supplemented this with information from laboratory officials and researchers we interviewed. Then, we compared the frequency of positive genetic markers in these groups of samples to the 119 samples that we verified were independent of transfers from the laboratory that possessed RMR-1029.\nOur analysis of repository data found no evidence of independent evolution in three of the four genetic markers (A1, A3, and E). However, we found that repository samples with no direct or indirect relationship to RMR-1029 tested positive for the D genetic marker at rates similar to those of the samples that were submitted from laboratories with direct transfers from the laboratory that possessed RMR-1029. table 6, the D genetic marker was detected in about 6.6 percent of the repository samples submitted from laboratories with direct transfers from the laboratory that possessed RMR-1029 compared to 6.7 percent of the samples that were independent of the laboratory that possessed RMR- 1029.\nAdditionally, the NAS report found that in repository samples associated with experiments conducted before the 2001 attacks, the D genetic marker was the only marker detected and it occurred in about 1 percent (3 of 296) of those samples. This provides additional evidence that the D genetic marker may have arisen independently of RMR-1029. Additional studies recommended to the FBI that it did not conduct could have provided the experimental data needed to fully understand the probative value of this genetic marker.", "Because the FBI adequately identified the relevant source population as all stocks of B. anthracis Ames strain, it significantly reduced the number of possible sources. The NAS report found that the dominant organism in the letters was correctly and efficiently identified as the Ames strain of B. anthracis. The science performed on behalf of the FBI for identifying the Bacillus species and B. anthracis strain was appropriate, was properly executed, and reflected the contemporary state of the art. The correct identification of the specific strain of B. anthracis allowed the FBI to adequately define the relevant source population as stocks of the Ames strain in laboratories that had the Ames strain in their inventories before the attacks. This significantly reduced the number of possible sources.", "We found that the FBI’s effort to create a comprehensive repository containing samples from all known stocks of the Ames strain of B. anthracis was appropriate for assessing the rarity of the genetic markers in the relevant source population. Its adequacy, however, was affected by the incompleteness and inaccuracy in the repository. The NAS report found that the repository was not optimal for a variety of reasons. It stated, for example, that the instructions in the subpoena issued to laboratories for preparing samples were not precise enough to ensure that they would follow a consistent procedure for producing samples that would be most suitable for later comparisons.\nOur analysis of FBI documents shows that FBI searches at three specific laboratories identified hundreds of additional relevant stocks that laboratories did not submit to the repository in response to the subpoena. Specifically, we found that the FBI collected about 29 percent of the 1,059 repository samples through these searches. The proportions of samples thus obtained were 34 percent, 96 percent, and 22 percent in these laboratories (see table 7).\nWe were unable to determine how two of the three laboratories identified and selected samples from relevant stocks in response to the subpoena, but we found that individuals at one laboratory differed in interpreting the subpoena’s instructions. Laboratory officials acknowledged differences in interpreting the instructions on how to identify distinct Ames strains of B. anthracis. Identifying the specific stocks to submit in response to the subpoena at that laboratory was left up to the principal investigator because, at that time, no one else actually working with the stocks would have understood what was in them.\nFBI officials acknowledged that the interpretation of the instructions to determine what strains to submit to the repository varied across laboratories, stating that the subpoena was not as precise as it needed to be. However, they emphasized that every laboratory that submitted samples to the repository was investigated thoroughly and that, when the FBI conducted searches at the three laboratories, those investigations eliminated many laboratories from being suspects. Furthermore, FBI officials told us that the decision to conduct searches at these three laboratories was an investigative decision, not a scientific one.\nThe NAS report also raised concerns that the decision to remove samples with inconclusive or variant results contributed to the lack of completeness of the repository data. The report stated that a major concern was the restriction of its statistical analyses to the 947 samples that contained no inconclusive or variant results. Notably, the report showed that 4 of the 112 samples that were disregarded for having a single inconclusive or variant result scored positive for the three remaining genetic tests.\nIn addition, our analysis of FBI documents shows that FBI searches contributed to inaccuracies in the repository by collecting samples from stocks that had already been submitted to the repository. We identified 14 duplicate samples from a search conducted at one laboratory in April 2004.\nFBI officials stated that they were not concerned about duplicate samples in the repository because duplicate samples may have served other important investigative purposes such as verifying if two samples were related or answering other important questions related to investigative information. They also stated that additional information collected about the samples would allow them to reconcile duplicates. However, our analysis of the FBI repository data indicates that known duplicates were not removed from the repository before the statistical analysis.\nAs a result of these examples of incompleteness and inaccuracies in the repository, a statistically meaningful extrapolation of the statistics and frequencies derived from the repository to the relevant source population was not possible. By instituting more rigorous controls over sample identification and collection for future investigations, the FBI can improve the completeness and accuracy of a repository.", "The results from statistical analyses conducted in 2008 did not adequately account for the mode of inheritance of the genetic markers, and they added little probative value to the investigation. Many of the methods used for the 2008 statistical analyses inappropriately relied on the assumption of independence among the repository samples. For example, the NAS report stated that because the repository samples were not independent, the proportion of samples testing positive for all four genetic markers was not a meaningful estimate of the probability of occurrence. The FBI did not use the results of the statistical analyses and did not quantify the confidence it had in, or the probative value of, the repository results in its conclusions included in its final investigative summary. An FBI official stated that the statistical analyses were viewed from an academic standpoint and were not part of the investigation. That official also stated that the results of the statistical analyses did not contradict the conclusions of the investigation.", "In its final investigative summary, the FBI concluded that only 8 of more than 1,000 samples tested positive for all four genetic markers, but it did not provide any measure of the confidence it had in this conclusion.\nWe found that the genetic tests show variability in the results on samples selected from the same stock. As we previously indicated in our assessment of the validation of the genetic tests, the additional postvalidation tests conducted in 2007 demonstrated variability in the results of the genetic tests when they were applied to samples under conditions intended to mimic their use on repository samples.\nAdditionally, the two genetic tests for the D marker did not always give the same result for the same sample. An analysis included in the FBI contractor’s Statistical Analysis Report identified 24 repository samples for which the two genetic tests yielded opposite results from the same sample. The NAS report stated that this lack of agreement between the two genetic tests for the D mutation illustrated the differing sensitivities and specificities of the tests. This lack of agreement was also evident in the eight samples that tested positive for all four genetic markers. As shown in figure 4, our analysis of the repository data demonstrated that one of these eight samples also tested negative using the other genetic test for the D marker.\nFurther, our analysis of duplicate samples in the repository showed differences in the results of genetic tests on samples selected from the same stock. As shown in figure 5, only 3 of the 14 duplicate samples we identified showed the same results across the five genetic tests. For example, FBI repository sample number 049-004 tested positive for all five genetic tests while a duplicate sample selected from the same stock (066-044) tested positive for only four of the five genetic tests. In another example, FBI repository sample number 049-016 tested positive for all five genetic tests while the duplicate sample (047-002) tested negative for all five genetic tests.\nFBI officials stated that these results may have differed for a number of reasons, including uncertainty from the sampling process (sampling error) and uncertainty from the genetic test itself (stochastic error). Each step in the process the FBI used to collect, prepare, and test repository samples could have added uncertainty to the results of the genetic test.\nAs noted previously, before its searches, the FBI relied on laboratory officials to identify and select subsamples of distinct Ames strains for submission to the repository. The NAS report stated that the subpoena’s instructions to laboratories for preparing samples were not precise enough to ensure consistent procedures for producing samples that would be most suitable for later comparisons. For example, the subpoena instructed laboratories to select a representative sample from each stock but did not provide guidance on how many cells or colonies to select. Although steps were taken in the genetic tests to standardize the number of cells being tested, the number of initial cells or colonies selected from each stock would have affected the probability of selecting material capable of producing the genetic markers.\nThis is particularly important because the mutations chosen as genetic markers were infrequent in the evidentiary material. For example, we interviewed the scientist who submitted the duplicate samples we identified above as having opposite results (all five negative versus all five positive). He told us that, in the presence of an FBI investigator, he had not followed the subpoena instructions when he selected the sample (047-002) that tested negative for all five genetic markers.\nIn addition to the selection methods we have discussed in this report, the methods used to prepare and test the repository samples could have introduced uncertainty to the results of the genetic tests. The NAS report stated that replication could have been used in the design of the FBI repository to provide measures of the uncertainty of the genetic tests. Although laboratories were required to submit to the repository two samples from each stock, only one of those samples was tested for the genetic signature. Without replication, the FBI was unable to assess uncertainty in the results of the genetic tests in the context of testing actual repository samples.\nBecause the FBI did not include measures of uncertainty when presenting the results of the genetic testing, questions have been raised about samples that tested positive for three or fewer genetic markers. For example, NAS stated that the FBI did not address false negative results and raised concern regarding the restriction of the statistical analyses to the repository samples that contained no inconclusive or variant results. NAS further highlighted 21 samples that contained an inconclusive or variant result and tested positive for 1, 2, or 3 genetic markers.\nTo illustrate the potential effect this uncertainty could have had on the interpretation of the results, we conducted an analysis using the estimates of false negative rates obtained from the additional replicate testing, combined with a sensitivity analysis accounting for the decision to restrict the statistical analyses to the 947 samples that contained no inconclusive or variant results. We computed a range of probabilities, given the observed results of the genetic testing, that each repository sample was selected from a stock that could have produced all four genetic markers. We found an additional 16 repository samples with probabilities that exceeded a 1 percent chance of being selected from a stock that contained all four genetic markers. We determined that 15 of these 16 additional samples were selected from stocks held at the same two laboratories that were the source of one or more of the 8 samples that tested positive for all four genetic markers.\nThe remaining sample identified in our analysis was a sample that we had determined was independent from RMR-1029 and tested positive for the D marker. In addition, this sample was inconclusive for both the A1 and A3 markers and negative for the E marker. We computed a 0 to 19 percent range of probabilities for this sample, the maximum occurring when the model made the assumption that both inconclusive results for A1 and A3 markers were positive.\nAdditionally, the results of the genetic tests for this sample further highlight the importance of including measures of uncertainty. According to the transfer inventory records we reviewed and the laboratory official we interviewed, this sample was selected from a stock that was one of four copies of the same material. As shown in figure 6, the repository samples selected from the remaining three copies tested negative for all five genetic markers. This demonstrates that the genetic tests could have yielded different results for samples selected from the same material and, as the NAS stated, replication could have been used to provide measures of the uncertainty induced by these varying results.", "The FBI has taken steps to include statistical expertise in future investigations. The NAS report stated that the FBI appeared not to have sought formal statistical expertise early in this investigation and that similar investigations would benefit from including statistical expertise in their design and implementation. It noted that because many inferences depend on the design and analysis of complex data, the FBI should consult with expert statisticians throughout experimental design and planning, sample collection, sample analysis, and data interpretation. Further, the 2009 NRC report on strengthening forensic science in the United States highlighted the importance of statistical and quantitative proficiency for improving forensic science methods.\nAn FBI official told us that since the 2009 NRC report, the FBI has been building formal forensic statistical expertise both internally and externally.\nFor example, he said that the FBI laboratory division had created an internal statistical working group to examine the FBI’s statistical needs in its forensic methods. The group included a professor of statistics visiting for 6 months to examine the statistical questions related to patterns, such as fingerprints, and also other science, such as chemistry and explosives. Additionally, the FBI has established a working relationship with members of the American Statistical Association’s Ad-Hoc Advisory Committee on Forensic Science in order to discuss its statistical capacity. The FBI has also worked with other agencies to identify areas of statistical research needed for future investigations.", "After the 2001 attack, the FBI did not conduct a lessons learned study but considers the NAS report to be one. The NAS report identified some scientific gaps related to the development of genetic tests and statistical analyses. In addition, we identified a key scientific gap that is related to the verification and validation of the genetic tests and the statistical analyses—that is, the significance of using genetic mutations in B. anthracis as genetic markers for analyzing evidentiary samples. DHS has funded some research on this gap but this research is not yet complete, and it is not yet known whether it will fully address the gap.", "The FBI has not conducted a formal lessons-learned study of the scientific and technical methods it used in the investigation and thus has not specifically identified any scientific gaps in research related to the validation of genetic tests and statistical approaches. An FBI official stated that such a study was not needed because the 2001 incident was unique and the case is closed. This FBI official also told us that he considered the NAS report to be the lessons-learned study because it had identified several scientific gaps. For example, the NAS report indicated that the investigation lacked 1. a method for interpreting the genetic similarity between the attack spores in the letters and those in RMR 1029; and 2. an experimental design that included statistical input in the early stages of the investigation.\nNevertheless, the FBI does not necessarily agree with the scientific gaps that NAS highlighted in that report. However, the FBI stated in 2010 that the active dynamics of the microbial genome for any given species need to be understood—for example, the location on the genome of “hot spots” for mutation and diversity and whether there is a high rate of genetic mobility and change in any given species. Further, in September 2014, according to an FBI official, technology has changed since the investigation, and in the future genome sequencing will be used to analyze evidence samples.", "In addition to the gaps identified in the NAS report, we identified a key scientific gap that has not been fully addressed. This gap is related to the significance of using genetic mutations as genetic markers for analyzing evidentiary samples to determine their origins. Recognized by NAS, this issue is associated with the gaps it identified. With respect to verification and validation, the genetic tests targeted specific DNA sequences of certain genetic mutations in their screening of the repository samples. The FBI used the results of the analysis of the repository screening by those tests to narrow the source of the attack spores. However, during the investigation, it was not known how stable genetic mutations were in a microbial genome or how significant they were as genetic markers.\nWe found that conditions causing the rise of the genetic mutations in the evidence were not known before or after validation or during the subsequent statistical analysis of the results of the repository screening. During the investigation, it was not known what conditions would have promoted or inhibited the presence of the genetic mutations at detectable levels. Such knowledge would have indicated whether they were associated with the evidence itself or with the culture practices normally used in a laboratory. Although FBI expert advisers recommended experiments, none were conducted at that time to attempt to obtain this information. Such experiments could have helped in understanding the evolution of these particular genetic mutations.", "DHS has recognized the need for a methodology to determine how a material has been grown and produced and for obtaining information on the biology of agents, including their mutation rates and genome “hotspots” for mutation, so that their “relatedness” can be measured. In this context, an expert who reviewed this report stated that computational methods are also needed to reconstruct (or assemble) genome sequencing data so that the relationship between markers that are not independent, as is common in asexually reproducing bacterial genomes, can be inferred.\nAs a result, DHS has funded research that is intended to provide a better understanding of how morphological variants, or mutations, could emerge and evolve in bacterial genomes. Some of the technologies involved in DHS’s research, such as whole genome sequencing, are still evolving. DHS-funded research includes studies of the population genetics of bacterial agents, including B. anthracis, at Northern Arizona University This research involves studies of diversity that include mutations (NAU).among these agents. DHS’s NBFAC is also studying genome sequencing methods. The purpose of these studies is to develop the capability to perform a metagenomic analysis of an entire sample using a hybrid- assembly. According to DHS, the field of “metagenomics,” is broad but unified by its focus on a community of genomes rather than individual isolates. Such research is a step in the right direction, since the FBI has indicated that it is likely to use genome sequencing methods in future investigations to analyze evidence. However, since this research is ongoing it is not clear when it will close the gap or whether it can do so alone.", "Although we identified several aspects of the FBI’s scientific methods we reviewed that could be improved in a future investigation, we recognize that in 2001, the FBI was faced with an unprecedented case. Determining the source of the spores in the envelopes was complicated by many factors, including the uncertain provenance of samples in the FBI repository, an unknown mutation rate for B. anthracis under laboratory growth conditions, and the performance of the genetic tests under “real- world” conditions.\nThe genetic tests were generally verified, validated and demonstrated through the validation testing that they met the FBI’s acceptance criteria, but the lack of a comprehensive approach—that is, a validation framework—allowed for differences in the contractors’ approaches. Further, the results of the postvalidation testing raise questions about whether additional information could have been obtained during verification and validation and, thus, whether the validation testing could have been more rigorous. The use of a standardized approach to verification and validation from the beginning could have more definitively established the performance of all the genetic tests. It could have helped in communicating expectations clearly, ensuring confidence in results generated by any genetic tests developed.\nDHS could be instrumental in developing a validation framework and future efforts using a framework could help achieve minimum performance standards during verification and validation, particularly under multiple contracts. Also, incorporating statistical analyses in the framework would allow the calculation of statistical confidence for interpreting the validation testing results.\nThe FBI’s statistical approach to its study design and plan, sample collection and analysis, and interpretation of data and scientific evidence lacked several important characteristics that could have strengthened the significance of that evidence. Although the complexity and novelty of the scientific methods at the time of the FBI’s investigation made it challenging for the FBI to adequately address all these problems, the agency could have improved its approach by including formal statistical expertise early in the investigation and establishing a statistical framework that could identify and account for many of the problems. In future investigations, statistical expertise early in the investigation will help identify the importance and role of fully understanding the (1) evolution of the genetic markers, (2) sources of dependence between samples, and (3) uncertainty in the measurement tools used to identify a genetic signature. This expertise could influence an investigation’s methods and strengthen the significance of scientific evidence.\nA key scientific gap—how stable genetic mutations are in a microbial genome and thus their suitability as genetic markers—remains an issue. Lack of this knowledge has implications for both the development of genetic tests, or other investigative approaches and technologies, and the analysis of the results they generate. For example, how likely it is that the same genetic mutations will arise independently in separate cultures is currently unknown, and so is whether different culture conditions can change the ratio of the mutations significantly enough to provide a negative rather than a positive result. DHS-funded research into the evolutionary behavior of variants in the genome of B. anthracis and other microbial agents and the use of genome sequencing is a step in the right direction because the FBI is planning to use sequencing in future investigations to analyze all the material in evidence samples. However, in determining the significance of using mutations as genetic markers, an understanding is still needed about the stability of genetic mutations. DHS’s ongoing research is likely to take several years and some of the technologies it entails, such as whole genome sequencing, are still evolving. Therefore, it is not clear when and whether this research alone will address this gap.", "To ensure that a structured approach guides the validation of the FBI’s future microbial forensic tests, we recommend that the Director of the Federal Bureau of Investigation work with the Secretary of Homeland Security to develop a verification and validation framework. The framework should be applied at the outset of an investigation involving an intentional release of B. anthracis, or any other microbial pathogen. It should (1) incorporate specific statistical analyses allowing the calculation of statistical confidence for interpreting the results and specifying the need for any additional testing to fully explore uncertainties relative to the type of genetic test being validated and (2) applied and adapted to a specific scenario and employs multiple contractors.\nIn addition, we recommend that the Director of the FBI establish a general statistical framework that would require input from statistical experts throughout design and planning, sample collection, sample processing, sample analysis, and data interpretation that can applied and adapted to address a specific scenario involving an intentional release of B. anthracis or any other microbial pathogen.", "We provided a draft of this report to the FBI and DHS for review and comment. The FBI provided written comments, which are reprinted in appendix IV. In its comments, the FBI agreed with our recommendations and stated that it had taken significant steps toward addressing them. In addition, the FBI provided technical comments that we have addressed in the body of our report as appropriate. DHS stated that it had no comments on the draft report.\nWith respect to the first recommendation, the FBI stated that “NBFAC programs have developed analytical capabilities in microbial forensics for numerous biological agents” in “support of investigations of the use or suspected use of biological weapons.” It stated that “these assays are validated and accredited under international standards (ISO17025) . . . .” According to the FBI, these capabilities, and those still being developed, “address part 2” of our recommendation “…applied and adapted to a specific scenario…” in as much as they represent capabilities addressing numerous biological agents and toxins. Further, the FBI stated that the NBFAC is pursuing the most current techniques of microbial genetic analyses and that some of these may soon be accredited.\nThe FBI added that it actively participates in the National Strategy for Countering Biological Threats, under which the agency has helped in “Establishing a National level research and development strategy and investment plan for advancing the field of microbial forensics.” Further, it stated that it is helping to maintain “the National Biological Forensics Analysis Center (NBFAC) as the Nation’s lead Federal facility for forensic analysis of biological material in support of law enforcement investigations,” which advances the field of microbial forensics through scientific workshops sponsored by the FBI. According to the FBI, such workshops have included work on interpreting microbial genetic data acquired by next generation sequencing platforms. The FBI stated that this work has included “statistical analyses of the confidence in base calling” using these platforms and “bioinformatic software.” We recognize the importance of the FBI’s active participation in microbial forensic research and scientific workshops that address key issues related to the performance of emerging microbial forensic tests. We also recognize that establishing the error rates of genome sequencing platforms, which the FBI stated it may use in future investigations, would be an important step in verification and validation. Further, as we state in this report, developing a framework for verification and validation when employing multiple contractors in the same investigation could help standardize the process with minimum performance standards. Thus, we believe that the FBI’s continued work with DHS could help ensure the development of such a framework and improve its approaches to future investigations. A written plan could assist in the development of the framework.\nWith respect to the second recommendation, the FBI stated that scientists from the FBI and NBFAC participate in the Food and Drug Administration’s related efforts, the “Global Microbial Identifier” symposiums, “whose activities include statistical analyses for interpreting microbial genetic data in investigations of food-borne illness.” We recognize the importance of the FBI’s continued participation in research on the statistical interpretation of microbial genetic data. The evidence we present in this report suggests that if statistical expertise had been included early in the FBI’s investigation, it could have improved the significance of the collected microbial forensic evidence. By establishing a general statistical framework, the FBI will be able to provide some assurance that input from statistical experts will be included in future investigations so that they will benefit from statistical expertise. Developing such a framework could also be facilitated by a written plan. We believe that the actions that the FBI states it has taken are a step in the right direction toward addressing our two recommendations.\nWe are sending copies of the report to the FBI and DHS, appropriate congressional committees, and other interested parties. The report is also available at no charge on the GAO website at www.gao.gov.\nIf you or your staff have any questions about this report, please contact Timothy M. Persons, Ph.D. at (202) 512-6412 or [email protected]. Contact points for our Office of Congressional Relations and Office of Public Affairs appear on the last page of this report. Key contributors to the report are listed in appendix V.", "The scope of our work was limited to a review of the scientific methods employed to validate the genetic tests used to screen the FBI’s repository of Ames B. anthracis samples, the procedures used to identify and collect samples of Ames B. anthracis in the creation of the FBI’s repository, and the statistical analyses and interpretation of the results of the genetic tests. We did not address any other scientific methods or any of the traditional investigative techniques used to support the FBI’s conclusions in this case, and we take no position on the FBI’s conclusions when it closed its investigation in 2010.\nOur objective for this performance audit was to answer the following questions: 1. To what extent were the genetic assays used to screen the FBI repository of Ames samples scientifically verified and validated? 2. What are the characteristics of an adequate statistical approach for analyzing the repository samples and to what extent was the statistical approach used adequate? If not adequate, how could this approach be improved for future efforts? 3. What remaining scientific concerns and uncertainties, if any, regarding the validation of genetic assays and statistical approaches will need to be addressed in future analyses? What additional research, if any, would be helpful in resolving such scientific uncertainties in any future investigation?\nTo determine the extent to which the genetic tests were verified and validated, we collected and reviewed data regarding (1) the FBI’s requirements for validation, (2) documentation from the FBI’s contractors on their verification and validation testing, and (3) documentation from the FBI on the contractors’ efforts to develop their genetic tests as well as results from the validation testing. We also reviewed related scientific literature and agency and industry standards and guidelines regarding the verification and validation of analytical methods, including real-time PCR- based tests for detecting B. anthracis, among others. We developed criteria for assessing the extent of the validation. We used references from agency standards, reports, and guidelines for validation and from scientific literature to identify the essential phases in an approach, or framework, for developing genetic tests. We compared what the FBI and its contractors had done to verify and validate the genetic tests against these phases and tasks.\nSpecifically, we reviewed the FBI’s and its contractors’ laboratory documentation to determine for each genetic test (1) the steps each took to verify the genetic tests’ performance and conduct the FBI-administered validation, (2) whether the validation test results met the FBI’s acceptance criteria and minimum requirements, and (3) whether the FBI’s postvalidation testing of the genetic tests on the flask RMR-1029 provided further insights into the sensitivity and specificity of the genetic tests beyond those obtained by the validation. We also determined whether the processes the contractors’ laboratories followed for verifying and validating their genetic tests were consistent. Finally, we reviewed the NAS report’s observations on the performance of the genetic tests in screening the FBI’s repository samples. We interviewed officials and scientists at the FBI contractors, the FBI, and elsewhere on how the genetic tests had been verified and validated, standards or guidelines had been applied, and the FBI’s rationale for its requirements and acceptance of the five genetic tests as validated.\nWe also compared the validation test results with the results of the additional testing that was conducted after validation to determine if any additional information was provided on the performance characteristics of the genetic tests. We did not independently verify whether the contractors followed their quality assurance guidelines in developing, verifying, and validating their genetic tests, but we assumed that they did so from the documentation provided.\nTo determine the extent to which the statistical approach used for analyzing the repository samples was adequate, we used three approaches. First, we collected and analyzed documentation from the FBI, the three domestic laboratories searched by the FBI, and the contractor who did the statistical analyses. We reviewed contract records and conducted interviews with the FBI and laboratory officials. We conducted a literature review to collect relevant references from forensic science, statistics, epidemiology, and population genetics. Informed by the relevant literature, we identified and developed the set of characteristics that would be a statistical approach adequate to achieve the stated purposes of the FBI’s statistical analyses.\nWe submitted the set of desirable characteristics described in this report to our experts and a subcommittee of the American Statistical Association’s (ASA) Ad Hoc Advisory Committee on Forensic Science for their review and comment. To obtain information about how samples were selected from stocks and submitted to the repository, we reviewed the FBI subpoena protocols, conducted semi-structured interviews with officials, and collected relevant laboratory documentation from the three laboratories that the FBI searched.\nSecond, to obtain information about samples collected through the three follow-up searches, we interviewed FBI officials and reviewed the agency’s documentation, conducted semi-structured interviews with officials from the three laboratories that the FBI searched, and reviewed relevant laboratory documentation. To identify duplicate samples in the repository, we compared the documentation of samples obtained through the searches to samples submitted through the subpoena process.\nThird, to demonstrate the impact of the sensitivity of the genetic tests and data trimming assumptions made in the statistical analyses, we analyzed the FBI repository data and estimated false negative rates for each genetic test under repository conditions, using the post-validation results from replicate testing of RMR-1029 and evidentiary material. We conducted sensitivity analyses to examine the impact of data trimming assumptions made in the FBI’s statistical analysis by varying the assumptions made to remove all inconclusive, no-growth, and variant results from the analysis. We computed conditional probabilities that a repository sample was selected from a stock containing all four morphs, given the observed combinations of genetic test results. We combined the probability analysis with the data trimming sensitivity analysis to compute a range of conditional probabilities for each repository sample. We identified the samples that had a maximum conditional probability of greater than 1 percent (nontrivial).\nTo assess the reliability of the FBI repository data, we summarized the data and compared the results to the contractor’s final report on the statistical analysis and to published reports by the FBI and the National Academies to ensure external validity of the data. From the results of this testing, we found the data to be sufficiently reliable for the purposes of our review.\nTo determine any remaining scientific concerns and uncertainties regarding the validation of the genetic tests and statistical approaches that would need to be addressed in future analyses, we reviewed relevant federal agencies’ and their contractors’ documents, published literature, and industry documentation on the validation of polymerase chain- reaction based tests, such as those for detecting rare variants, and related scientific concerns and uncertainties that could affect a future investigation. We reviewed the contractors’ final reports on the statistical analysis, reviewed contract documents, and interviewed FBI officials to identify where improvements to the approach could be made. In addition, we reviewed the Centers for Disease Control and Prevention’s (CDC), the Animal and Plant Health Inspection Service’s (APHIS), and the Department of Defense’s (DOD) select agent requirements for storing, handling, shipping, and maintaining inventory controls. We interviewed agency officials to determine if gaps exist in documenting important information about the provenance of B. anthracis stocks.\nFurther, to identify scientific concerns arising during the FBI’s investigation of the validation of the genetic tests and statistical approaches, we reviewed pertinent documentation on scientific issues or problems the FBI and NAS had identified and their effect on the FBI’s ability to validate the genetic tests or develop appropriate statistical approaches. Assisted by experts, we determined which gaps were significant and their potential effect on a future investigation with a similar scenario. We also interviewed officials and scientists at the contractors, the FBI, DHS, the National Bioforensic Analysis Center (NBFAC), DOD (at Dugway and USAMRIID), the Department of Energy’s (DOE) Lawrence Livermore National Laboratory (LLNL), the Joint Genome Institute (JGI), EurekaGenomics, and the Executive Office of the President’s Office of Science and Technology Policy (OSTP), regarding scientific challenges to genetic test validation, statistical analyses of the repository data, scientific gaps related to the FBI’s investigation, and any federal research being conducted, or planned, to fill those gaps.\nTo determine additional research that would be helpful in resolving such scientific uncertainties in any future investigation, we reviewed documentation on research DHS is conducting to address any scientific gaps we found related to the validation of the genetic assays and issues related to the statistical analyses of the results of the repository screening. We reviewed the identified gaps and DHS’s research and determined the progress that had been made to close them. Further, following on interviews with scientists and agency officials, and input by our experts, we determined whether any additional research is needed.\nWe asked scientists with expertise in public health and microbial forensic investigations to review and comment on a draft of our report. They included Jim Bristow, M.D., Deputy Director for Scientific Programs, DOE Joint Genome Institute; Karin S. Dorman, Associate Professor, Departments of Statistics and Genetics, Development, and Cell Biology, Iowa State University; George V. Ludwig, Ph.D., Deputy Principal Assistant for Research and Technology, U.S. Army Medical Research and Materiel Command; Jack Melling Ph.D., Director (retired), U.K. Centre for Applied Microbiology and Research, Porton Down, U.K.; Jeff Mohr, Ph.D., Chief (retired), Life Sciences Division, U.S. Army, Dugway Proving Grounds; and Stephen Velsko, Ph.D., Senior Scientist and Associate Program Leader, Lawrence Livermore National Laboratory.\nFinally, we asked a subcommittee of the American Statistical Association’s (ASA) Ad-hoc Advisory Committee on Forensic Science for its review and comment on the statistical aspects of a draft of our report. The subcommittee provided us with detailed comments that expressed general agreement with the statistical aspects of the draft, suggested changes to terminology related to the frequency with which microbial properties are present in a population, and suggested appropriate caveats and limitations to analyses we conducted. We incorporated these comments as appropriate throughout the report.\nWe conducted this performance audit from January 2013 to November 2014 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Appendix II: Performance Parameters Evaluated by Genetic Test n.a. n.a. n.a. n.a. n.a.\nLegend:  = evaluated; ο = not evaluated; n.a. = not applicable for qualitative tests.", "To illustrate the potential effect of the sensitivity of the genetic tests and data trimming assumptions made in the statistical analyses, we analyzed the FBI repository data and estimated false negative rates for each assay under repository conditions using the results from postvalidation replicate testing of RMR-1029 and evidentiary material. We conducted a sensitivity analysis to examine the effect of data trimming assumptions in the FBI’s statistical analysis by varying the assumptions to remove all inconclusive, no-growth, and variant results. We computed the conditional probabilities that a repository sample was selected from a stock containing all four genetic markers, given the observed combinations of results. We combined the probability analysis with the data trimming sensitivity analysis to compute a range of conditional probabilities for each repository sample. We then identified the samples that had a maximum conditional probability of greater than 1 percent (nontrivial).\nTo build a model to compute this probability, we defined the sample space of possible outcomes. There are 16 combinations for a binary measure of the presence (+) or absence (-) of each of the four genetic markers. Therefore we defined the possible outcomes for the four genetic markers (A1, A3, D, and E) as S1 through S16, as shown in figure 7.\nThe observed assay results have the 16 possible outcomes listed in figure 7. Since the goal of this analysis was to compute the probability that a repository sample had been selected from a stock that contained all four genetic markers, given the observed test result, we are interested in the probability of S, given the observed test result for a repository sample, 𝑃(𝑆1 |𝑜𝑏𝑠). Using Bayes’ theorem, this can be written as a , where posterior probability, (𝑆1|𝑜𝑏𝑠)= 𝑃(𝑜𝑏𝑠|𝑆1)𝑃(𝑆1)\n𝑃(𝑜𝑏𝑠|𝑆𝑖)𝑃(𝑆𝑖)\n𝑃(𝑜𝑏𝑠|𝑆𝑖)\n𝑃(𝑜𝑏𝑠|𝑆1)=𝑃𝐴1(𝑜𝑏𝑠𝐴1|+)∗𝑃𝐴3(𝑜𝑏𝑠𝐴3|+)𝑃𝐷(𝑜𝑏𝑠𝐷|+)∗𝑃𝐸(𝑜𝑏𝑠𝐸|+)\nWe used statistics derived from the results of postvalidation replicate testing conducted on RMR-1029 and letter material to estimate false negative rates.\nFigure 8 shows the breakdown of the results of the replicate testing.\nThe sensitivity analysis examined the effect of two data trimming decisions made in the FBI’s statistical analysis of the repository samples─the choice of D assay results and the treatment of inconclusive results. The D marker was typed by two assay procedures (D-1 and D-2), only one of which (D-2) the FBI used in its analysis. The Statistical Analysis Report was restricted to the analysis of 947 samples that contained no inconclusive or variant results and, therefore, excluded 112 samples. To explore the potential effect of the inconclusive exclusion on the probabilities of observing all four morphs, we explored three possible outcomes for inconclusive results. We treated all inconclusive results as first positive and then negative, and then we excluded the inconclusive results from the analysis. The sensitivity analysis examined the six different combinations of outcomes, the two D assay possibilities, and the three potential outcomes of the inconclusive data.\nThe computation included all 1,059 repository samples and varied the assumptions made around data trimming from most to least conservative. The results for each set of estimated false negative rates show that 7 of the 16 possible outcomes of the genetic testing had a range of probabilities that included values exceeding a 1 percent chance of being selected from a stock that contained all four genetic markers (table 8).\nFurther, when we computed the probabilities for the repository samples, we found that only a small subset of the 1,059 repository samples had a range of probabilities that included values that exceeded a 1 percent chance of being selected from a stock that contained all four genetic markers. Specifically, we identified 24 repository samples, including the 8 that tested positive for all four genetic markers, which had a nontrivial chance of being selected from a stock that contained all four genetic markers.\nBy using estimates of false negative rates from the results of the postvalidation replicate tests on RMR-1029 and the letter material, we have made an assumption that the genetic variants in all samples in the FBI repository were at least as concentrated as in RMR-1029 or the letter material. Additionally, since these replicate samples were selected in a controlled environment, false negative rates may have been underestimated because they are not affected by variation in test results caused by the sampling procedures used to submit samples to the repository. These assumptions contribute to a conservative estimate of the probability of a source matching all four genetic markers.", "", "", "Timothy M. Persons (Chief Scientist), (202) 512-6412 or [email protected].", "In addition to the contact named above, Sushil Sharma, Assistant Director, Pille Anvelt, James Ashley, Hazel Bailey, Amy Bowser, Mae Liles, Jan Montgomery, Penny Pickett, and Elaine Vaurio also made key contributions to this report.", "Anthrax: DHS Faces Challenges in Validating Methods for Sample Collection and Analysis GAO-12-488 (Washington D.C.: July 31, 2012).\nFederal Agencies Have Taken Some Steps to Validate Sampling Methods and to Develop a Next-Generation Anthrax Vaccine, GAO-06-756T (Washington D.C.: May 9, 2006).\nAnthrax Detection: Agencies Need to Validate Sampling Activities in Order to Increase Confidence in Negative Results, GAO-05-251 (Washington D.C.: March 31, 2005).\nU.S. Postal Service: Better Guidance Is Needed to Ensure an Appropriate Response to Anthrax Contamination, GAO-04-239 (Washington D.C.: September 9, 2004).\nU.S. Postal Service: Issues Associated with Anthrax Testing at the Wallingford Facility, GAO-03-787T (Washington D.C.: May 19, 2003).\nU.S. Postal Service: Better Guidance Is Needed to Improve Communication Should Anthrax Contamination Occur in the Future, GAO-03-316 (Washington D.C.: April 7, 2003)." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 3, 3, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "", "", "", "", "", "h0_title h1_title", "", "h0_full", "h1_full", "", "h1_title", "", "h1_full", "", "", "", "", "h1_full", "h1_full", "h2_full h1_full", "", "h2_full", "h2_full", "h0_full h2_full", "", "", "h0_full h3_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What was determined about the FBI's tests after the 2001 Anthrax attacks?", "What shortcomings did GAO find in the FBI's approach?", "What was the result of this lack of comprehensiveness?", "What else did GAO find about the tests?", "How could the FBI better respond to future incidents?", "What did the GAO identify regarding analyzing scientific evidence?", "In relation to these framework, what shortcomings did the FBI's approach have?", "How could the FBI respond to this problem?", "What scientific gap remains regarding these incidents?", "How does this gap affect the genetic tests?", "In response to this scientific gap, what is DHS doing?", "Why is this research a necessary step?", "What is a shortcoming of this research?", "What was the GAO asked to review for the FBI?", "What does GAO's report address?", "What was did GAO decline to review?", "In preparing the report, what did GAO review?" ], "summary": [ "After the 2001 Anthrax attacks, the genetic tests that were conducted by the Federal Bureau of Investigation's (FBI) four contractors were generally scientifically verified and validated, and met the FBI's criteria.", "However, GAO found that the FBI lacked a comprehensive approach—or framework—that could have ensured standardization of the testing process.", "As a result, each of the contractors developed their tests differently, and one contractor did not conduct verification testing, a key step in determining whether a test will meet a user's requirements, such as for sensitivity or accuracy.", "Also, GAO found that the contractors did not develop the level of statistical confidence for interpreting the testing results for the validation tests they performed.", "Responses to future incidents could be improved by using a standardized framework for achieving minimum performance standards during verification and validation, and by incorporating statistical analyses when interpreting validation testing results.", "GAO identified six characteristics of a statistical framework that can be applied for analyzing scientific evidence.", "When GAO compared the approach the FBI used to this framework, it found that that the FBI's approach could have been improved in three of six areas. First, the FBI's research did not provide a full understanding of the methods and conditions that give rise to genetic mutations used to differentiate between samples of B. anthracis . Second, the FBI did not institute rigorous controls over the sampling procedures it used to build the repository of B. anthracis samples. Third, the FBI did not include measures of uncertainty to strengthen the interpretation of the scientific evidence. GAO found that since 2001 the FBI has taken some steps to build formal forensic statistical expertise.", "GAO found that since 2001 the FBI has taken some steps to build formal forensic statistical expertise. The FBI's approach to future incidents could benefit from including such expertise early in an investigation.", "The lack of an understanding of how bacteria change (mutate) in their natural environment and in a laboratory is a key scientific gap that remains and could affect testing conducted in future incidents. Specifically, the significance of using such mutations as genetic markers for analyzing evidentiary samples to determine their origins is not clear.", "This gap affects both the development of genetic tests targeting such mutations and statistical analyses of the results of their use on evidentiary samples.", "The Department of Homeland Security is currently funding some research on genetic changes in bacteria and genome sequencing methods, among others.", "Such research is a step in the right direction since the FBI is planning to use genome sequencing methods in future investigations.", "However, because this research may not be complete for several more years, the extent to which it will close this gap is not known.", "GAO was asked to review the FBI's genetic test development process and statistical analyses.", "This report addresses (1) the extent to which these genetic tests were scientifically verified and validated; (2) the characteristics of an adequate statistical approach for analyzing samples, whether the approach used was adequate, and how it could be improved for future efforts; and (3) whether any remaining scientific concerns regarding the validation of genetic tests and statistical approaches need to be addressed for future analyses.", "GAO did not review and is not taking a position on the conclusions the FBI reached when it closed its investigation in 2010.", "GAO reviewed agency and contractor documentation, conducted literature reviews, and conducted statistical analyses of the repository data. GAO's review focused solely on two aspects of the FBI's scientific evidence: the validation of the genetic tests and the statistical approach for the analyses of the results." ], "parent_pair_index": [ -1, 0, 1, 0, 0, -1, 0, 1, -1, 0, 0, 2, 2, -1, 0, 1, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 4, 1, 1, 1, 1 ] }

{ "title": [ "Background", "The Administration’s 2018 Plan Generally Addressed the Reporting Requirements but Did Not Identify Costs and Funding Needs", "Plan and Roadmap", "International Engagement Plan", "Research and Development Plan", "Interagency Engagement", "Conclusion", "Recommendation for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Department of Energy", "Appendix II: GAO Contact and Staff Acknowledgments:", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Countering the proliferation of nuclear weapons and other weapons of mass destruction (WMD) remains a U.S. national security priority. According to the 2017 National Security Strategy, terrorist groups continue to pursue WMD-related materials, which pose a grave danger to the United States. As also stated in the 2017 National Security Strategy, Russia’s nuclear arsenal remains the most existential threat to the United States, China’s nuclear arsenal is growing and diversifying, Iran has the potential of renewing its nuclear program and North Korea has pursued nuclear weapons despite international commitments. As the DSB report noted, U.S. monitoring abilities are increasingly challenged by evolving risks in 1) the capability of existing nuclear states and 2) the number of state and nonstate actors possessing or attempting to possess nuclear weapons. U.S. nonproliferation activities are conducted and coordinated across multiple government agencies and organizations, as well as the intelligence community. In addition, these efforts are coordinated with international entities, national laboratories, industry, and academia.\nU.S. nuclear nonproliferation verification and monitoring efforts are guided by, among other things, U.S. obligations under the Treaty on the Non- Proliferation of Nuclear Weapons (NPT) and U.S. support for the Preparatory Commission for the Comprehensive Nuclear Test-Ban Treaty Organization (CTBTO). The NPT lays out the respective responsibilities of nuclear-weapon and nonnuclear-weapon states with regard to the transfer, acquisition, possession, control, and manufacture of nuclear weapons. All nonnuclear-weapon states are required to have a comprehensive safeguards agreement with the International Atomic Energy Agency (IAEA) to facilitate IAEA’s safeguards activities. IAEA safeguards are a set of technical measures and activities by which IAEA seeks to verify that nuclear material subject to safeguards is not diverted to nuclear weapons or other proscribed purposes. Under the Comprehensive Nuclear Test-Ban Treaty (CTBT), which has yet to enter into force, parties agree not to carry out any nuclear explosions. The United States supports the work of the CTBTO to build up a verification regime in preparation for the treaty’s entry into force.\nThe Administration’s fiscal year 2018 plan for verification and monitoring described ongoing interagency efforts to support nuclear proliferation verification and monitoring and includes information about relevant national priorities, capability gaps, R&D initiatives, and roles and responsibilities. The 2018 plan (40 pages) is longer and more detailed than the 2015 plan (2 pages) or the 2017 update (4 pages). The bulk of the 2018 plan is contained in two chapters—one chapter broadly describes U.S. and international efforts and roles and responsibilities, and the other chapter describes ongoing U.S. R&D efforts.", "We found the Administration’s 2018 plan provided details on each of the four major reporting requirements called for in the fiscal year 2018 NDAA with the exception of future costs and funding needs (see table 1).", "The first reporting requirement called for a plan and roadmap for verification, detection, and monitoring with respect to policy, operations, and research, development, testing, and evaluation, including— Identifying requirements for verification, detection, and monitoring; Identifying and integrating roles, responsibilities, and planning for verification, detection, and monitoring activities; and\nThe costs and funding requirements over 10 years for these activities.\nWe found that the 2018 plan provided detail on verification, detection, and monitoring requirements and roles and responsibilities, but did not provide details on future costs and funding needed to support the activities in the plan.\nWe found that the plan identified requirements for verification, detection, and monitoring as required. To identify these requirements, the plan notes that interagency partners first identified a set of verification and monitoring priorities. From these priorities they identified a number of technical gaps. The plan then described dozens of examples of R&D efforts and non-technical activities to address those technical gaps. For example, for one gap the plan identifies eight current efforts to address this gap, including continued Department of Energy and NNSA investment in sensor capabilities that are small, light, and can operate in low power.\nWe found that the plan provided details on the requirement to identify and integrate roles and responsibilities and planning. The plan includes details of the roles and responsibilities of interagency partners and international bodies that cooperate in the nonproliferation realm. For example, the plan describes how the Department of Defense is to support U.S. verification activities under the CTBT, including the installation, operation, and maintenance of U.S. International Monitoring Systems.\nWe found that the plan did not identify costs and funding needs over a 10- year period. NNSA officials stated that they believed providing funding information over a 10-year period is unrealistic for several reasons. First, according to NNSA officials, it is not feasible to achieve agreement on actual or implied budgets outside of the existing President’s budget process. Second, according to NNSA officials, agencies have little influence over the funding priorities of other departments outside of existing budget efforts. Third, according to NNSA officials, long-term funding estimates are infeasible because the President’s budget only identifies funding levels five years into the future. However, the 2018 NDAA did not ask for budget information. Instead, the NDAA reporting requirement called for long-term costs and funding information necessary to support the verification and monitoring activities in the plan. Finally, NNSA officials told us that they and officials from other agencies briefed the appropriate congressional committees prior to the release of the 2018 plan, and discussed the challenges with providing cost and funding data.\nAccording to NNSA officials, they verified with the congressional committees that providing such information in the plan would be impractical.\nWe have previously reported that providing estimates of future costs and funding needs can help congressional decisionmakers prioritize projects and identify long-term funding needs. NNSA as well as other agencies within the federal government already develop plans with long-term funding priorities and cost estimates. For example, in June 2014, we reported on 10-year estimates for sustaining and modernizing U.S. nuclear weapons capabilities. As we found in this and other reports, even when budgets are preliminary or not yet known, plans that include a range of potential estimates help Congress prioritize projects and funding. Because the plan does not include any information on interagency costs and funding needs, it limits 1) congressional understanding of the long-term affordability of the nation’s verification and monitoring efforts and 2) Congress’s ability to make necessary funding and policy decisions. By including in its plan estimates of future costs and funding needed to support the activities in the plan, NNSA could help provide assurance that agencies are allocating appropriate resources to the verification and monitoring effort.\nIn addition, including estimates of future costs and funding needs in the plan can help ensure that interagency partners understand the amount of resources necessary to support verification and monitoring efforts, and determine if these resources align with agency activities. We have previously reported on the importance of identifying resources among collaborating agencies; we noted that without information on resource contributions from partners in a collaborative effort, there is less assurance that agency contributions are appropriate to successfully sustain the effort. Similarly, providing information on future costs and funding needs is important to help interagency partners coordinate and develop long-term strategic plans that align with future interagency efforts. We have found that for strategic planning to be done well, plans should demonstrate alignment between activities, core processes, and resources that support mission outcome. By including in its plan estimates of future costs and funding needed to support the activities in the plan, NNSA could help provide assurance that agencies are allocating appropriate resources for interagency efforts and that these resources are aligned with future activities and processes.", "The second reporting requirement called for an international engagement plan for building cooperation and transparency—including bilateral and multilateral efforts—to improve inspections, detection, and monitoring activities. We found that the 2018 plan provided detail on this requirement. The 2018 plan reiterates the nation’s commitment to the NPT and includes information on IAEA’s safeguards programs and U.S support for those programs. For example, under the plan, interagency partners are to continue to encourage countries through diplomatic outreach to conclude Additional Protocol agreements with IAEA.", "The third reporting requirement called for the plan to describe current and planned R&D efforts toward improving monitoring, detection, and in-field inspection and analysis capabilities, including persistent surveillance, remote monitoring, and rapid analysis of large data sets; and measures to coordinate technical and operational requirements early in the process. We found that the 2018 plan provided detail on this requirement. The plan includes detail on a wide range of R&D efforts and non-technical efforts that agencies are pursuing. For example, the plan reports that the Defense Advanced Research Projects Agency is starting a program that models millions of nodes and billions of connections to support the detection of WMD proliferation activities. In addition, the plan describes interagency groups involved in coordinating R&D requirements, such as the National Science and Technology Council Subcommittee on Nuclear Defense Research and Development.", "The fourth reporting requirement called for the plan to describe the engagement of relevant federal departments and agencies; the military departments; national laboratories; industry; and academia. We found that the 2018 plan provided detail on this requirement. The plan includes detail on the roles and responsibilities for interagency partners, as well as information on interagency organizations and working groups to coordinate efforts and reduce duplication. For example, the plan discusses the Department of State’s efforts to lead the interagency policy process on nonproliferation and manage global U.S. security policy, and the Department of Defense’s support of U.S. diplomatic efforts, including agreements with other defense departments, R&D cooperation, and multinational exercises.", "This 2018 plan represents the third effort by Administrations to address the nation’s nuclear proliferation verification and monitoring efforts. The 2018 plan provides more detail on these efforts than the 2015 plan and 2017 update. However, the plan does not include estimates of future costs and funding needs as required by the fiscal year 2018 NDAA. Costs and funding information can help congressional decisionmakers prioritize projects and identify potential long-term funding needs. Similarly, costs and funding information helps interagency partners understand what resources they are expected to contribute in the future and helps to ensure long-term strategic plans reflect an alignment between resources and interagency activities. By including in its plan estimates of future costs and funding needed to support the activities in the plan, NNSA could help provide assurance that agencies are allocating appropriate resources to the verification and monitoring effort and interagency activities, and that these resources are aligned with future activities and processes.", "We are making the following recommendation to NNSA: The Administrator of NNSA should include in its plan for verification and monitoring estimates of future costs and funding needed to support the activities in the plan. (Recommendation 1)", "We provided NNSA with a draft of this report for review and comment. NNSA provided written comments, which are summarized below and reproduced in appendix I; the agency neither agreed nor disagreed with our recommendation to include estimates of future costs and funding needed to support the activities in its plan for nuclear proliferation verification and monitoring. However, NNSA stated that it planned no further action with regard to costs and funding data. NNSA also provided technical comments, which we incorporated as appropriate.\nNNSA stated that it appreciated our recognition of improvements in the 2018 plan for verification and monitoring over the 2015 plan and the 2017 update. In its written comments, NNSA acknowledged that it did not include interagency cost and funding requirements in the 2018 plan over 10 years as required in the NDAA. The agency stated that it briefed the appropriate congressional committees before the release of the plan about the challenges and feasibility of providing the cost and funding data and received no objections on the omission of the data from the plan. NNSA also stated that it informed us of the briefings. We have added clarification in our report that NNSA officials believed they received agreement from congressional staff to exclude funding and cost estimates from its plan.\nNNSA stated that the NDAA did not prioritize the relative importance of the reporting requirements, and that we disproportionately weighted the one omission in our assessment, effectively overstating the importance of providing cost and funding information. In addition, NNSA identified challenges to the feasibility of providing interagency out-year cost and funding estimates, including the difficulty to quantify the level of R&D and associated funding required to achieve specific outcomes and that departments and agencies are unable to commit to aligning 10 year funding estimates with individual agencies’ timelines and internal processes for planning, programming, budgeting, and execution.\nNNSA’s statement suggests that it views nuclear proliferation verification and monitoring programs as being unique and different from other federal programs and that they should therefore be exempt from estimating their potential long-term resource burden on the federal budget. We disagree. Developing future cost and funding estimates for programs is central to effective interagency planning efforts. The efforts described in NNSA’s 2018 nuclear verification and monitoring plan span a diverse range of activities that are implemented across multiple agencies. The absence of cost and funding estimates for these efforts in NNSA’s plan raises questions as to whether there is an effective interagency process to coordinate these efforts and if the process is taking adequate account of resource constraints and making realistic assessments of program resource needs. In addition, information on future cost and funding estimates of federal programs provides Congress with a better understanding of the potential long-term funding needs and costs of the diverse efforts supporting the proliferation verification and monitoring mission. We believe this big picture view is important given the multiple congressional committees of jurisdiction—including appropriations, authorization, and oversight committees—for the efforts identified in NNSA’s plan.\nRegarding the feasibility of providing 10-year cost and funding estimates, we recognize the difficulty and uncertainty agencies face in estimating future funding needs. However, we do not believe developing such estimates is impossible. As we reported, the Department of Defense (DOD) and the Department of Energy (DOE) prepare an annual plan with 10 year cost and funding estimates for their ongoing nuclear sustainment and modernization efforts, including R&D efforts.\nNNSA also provided general technical comments addressing our findings on the cost and funding estimates that were not included in the plan, including comments on NNSA’s authority to obtain 10-year estimates from other agencies, and on the examples we cited of other interagency plans that include similar estimates.\nNNSA stated that it did not have authority to require other agencies to submit 10-year budget estimates for their efforts that are included in the plan. We noted in our report that Congress directed the President to include this element in the nuclear proliferation verification and monitoring plan. However, responsibility to prepare and submit the plan was delegated by the President to DOE.\nNNSA commented that the joint DOD-DOE annual nuclear sustainment and modernization plan is not comparable to the NNSA plan because the former primarily addresses capital projects and other material products, while the latter primarily addresses R&D activities. The reporting requirements for NNSA’s nuclear proliferation verification and monitoring plan were not limited to R&D efforts, but included cost and funding estimates for related activities and capabilities, including policy, operations, testing, and evaluation. NNSA’s comment focuses only on the difficulty of addressing cost and funding estimates for only one aspect (R&D) of nuclear proliferation verification and monitoring and ignores the possibility that estimates for non-R&D efforts may be more feasible and less difficult to report. Moreover, we have reported that the joint DOD- DOE plan on nuclear modernization includes 10-year DOD and DOE estimates for R&D, as well as estimates for related modernization efforts, including infrastructure, nuclear weapon life extension programs, delivery systems, nuclear command, control, and communications systems, and other related activities.\nWe are sending copies of this report to the appropriate congressional committees, the Administrator of NNSA, and other interested parties. In addition, this report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-3841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made significant contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact named above, William Hoehn (Assistant Director), Dave Messman (Analyst-in-Charge), Alisa Carrigan, Antoinette Capaccio, Ben Licht, Steven Putansu, and Gwen Kirby." ], "depth": [ 1, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "h0_full h2_title h1_title", "h2_full h1_full", "", "", "", "h2_full", "", "h0_full", "", "", "", "" ] }

{ "question": [ "What information was lacking in the NDAA's 2018 plan?", "What four requirements were expected in the President's plan?", "What group developed the plan?", "Why did NNSA officials say they did not include long-term costs and funding needs in the report?", "What is the problem with this logic?", "How does this missing information limit congressional understanding of the issue?", "What is GAO's stance on this issue?", "How would NNSA benefit from including cost estimates?", "How do existing nuclear states challenge national security priorities?", "How did Congress attempt to address this issue?", "How was GAO involved in this process?", "What did GAO find?" ], "summary": [ "GAO found that the 2018 plan provided details on most of the reporting requirements in the National Defense Authorization Act (NDAA) for Fiscal Year 2018, but did not include information on future costs and funding needs (see table below).", "In the NDAA, Congress directed the President to produce a plan that would address four reporting requirements: (1) a plan and roadmap on verification, detection and monitoring efforts, including details on costs and funding needs over 10 years, (2) an international engagement plan, (3) a research and development plan, and (4) a description of interagency engagement.", "The National Nuclear Security Administration (NNSA), a separately organized agency within the Department of Energy, developed the plan and submitted it to Congress in April 2018.", "According to NNSA officials, NNSA did not include long-term costs and funding needs in the plan because identifying these needs is unrealistic for several reasons, including because agencies have little influence over the spending priorities of other departments outside of the President's budget process.", "However, NNSA and other agencies already develop plans with long-term funding priorities and cost estimates for other programs.", "Because the plan does not include any estimates on future costs and funding needs, it limits congressional understanding of the long-term affordability of the nation's verification and monitoring efforts and its ability to make necessary funding and policy decisions.", "GAO has previously reported that providing estimates of future costs and funding needs can help congressional decisionmakers prioritize projects and identify long-term funding needs.", "By including in its plan estimates of future costs and funding needed to support the activities in the plan, NNSA could help provide assurance that agencies are allocating appropriate resources to the verification and monitoring effort and that these resources are aligned with future activities and processes.", "Countering the proliferation of nuclear weapons is a national security priority that is challenged by weapons advances from existing nuclear states and other actors possessing or attempting to possess nuclear weapons.", "To help address these issues, Congress directed the Administration in 2015 and 2017 to develop a plan for verification and monitoring relating to the potential proliferation of nuclear weapons, components of such weapons, and fissile material.", "GAO reviewed the first plan submitted to Congress in 2015, and an update submitted in 2017.", "GAO reported in March 2018 that this plan and update generally did not address the congressionally mandated reporting requirements." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 0, 0, 0, -1, 0, 1, 2 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 4, 4, 0, 0, 0, 0 ] }

{ "title": [ "", "Federal Debt Policy and the Debt Limit", "Current Situation", "Debt Limit Suspensions", "Extraordinary Measures and Debt Issuance Suspension Periods", "Timing Uncertainties", "Recent Increases in the Debt Limit", "The 2011 Debt Limit Episode", "The 2011 Debt Ceiling Episode Begins", "Proposed Solutions in the Spring of 2011", "The Budget Control Act of 2011", "Debt Limit Increases Under the BCA", "The Debt Limit in 2013", "Debt Limit Reached at End of December 2012", "Suspension of the Debt Limit Until May 19, 2013", "Replenishing the U.S. Treasury's Extraordinary Measures", "Debt Limit Reset and Return of Extraordinary Measures in May 2013", "Debt Limit Forecasts in 2013", "Fannie Mae and Freddie Mac Dividend Payments to the U.S. Treasury", "Treasury Secretary Lew's Message to Congress in 2013", "When Might the Debt Limit Have Been Binding?", "Market Reaction to the Impending Exhaustion of Treasury's Borrowing Capacity in October 2013", "Debt Limit Issues in 2013", "Hearings in 2013", "Debt Prioritization and H.R. 807", "Resolution of the Debt Limit Issue in October 2013", "Other Proposals Regarding the Debt Limit in October 2013", "The Debt Limit in 2014", "Debt Limit Forecasts in Late 2013 and 2014", "Treasury Secretary Lew Notifies Congress in Early 2014", "Debt Limit Suspension Lapses in February 2014", "Debt Limit Again Suspended Until March 2015", "The Debt Limit in 2015", "Treasury's Extraordinary Measures in 2015", "Cash Management Changes", "U.S. Treasury's Headroom Under the Debt Limit", "How Long Would Have Extraordinary Measures Lasted in 2015?", "Why Did the Estimated Date of Treasury's Exhaustion of Borrowing Capacity Move Up?", "Bipartisan Budget Act of 2015 and the Resolution of the 2015 Debt Limit Episode", "Other Developments in 2015 and 2016", "Developments in 2017 and 2018", "Administration Officials Urge Congress to Act", "Debt Limit Again Suspended in September 2017", "Debt Limit Suspension Reset on March 2, 2019" ], "paragraphs": [ "", "The Constitution grants Congress the power to borrow money on the credit of the United States—one part of its power of the purs e—and thus mandates that Congress exercise control over federal debt. Control of debt policy provides Congress with one means of expressing views on appropriate fiscal policies.\nBefore 1917 Congress typically controlled individual issues of debt. In September 1917, while raising funds for the United States' entry into World War I, Congress also imposed an aggregate limit on federal debt in addition to individual issuance limits. Over time, Congress granted Treasury Secretaries more leeway in debt management. In 1939, Congress agreed to impose an aggregate limit that gave the U.S. Treasury authority to manage the structure of federal debt.\nThe statutory debt limit applies to almost all federal debt. The limit applies to federal debt held by the public (that is, debt held outside the federal government itself) and to federal debt held by the government's own accounts. Federal trust funds, such as Social Security, Medicare, Transportation, and Civil Service Retirement accounts, hold most of this internally held debt. For most federal trust funds, net inflows by law must be invested in special federal government securities. When holdings of those trust funds increase, federal debt subject to limit will therefore increase as well. The government's on-budget fiscal balance, which excludes the net surplus or deficit of the U.S. Postal Service and the Social Security program, does not directly affect debt held in government accounts.\nThe change in debt held by the public is mostly determined by the government's surpluses or deficits. The net expansion of the federal government's balance sheet through loan programs also increases the government's borrowing requirements. Under federal budgetary rules, however, only the net subsidy cost of those loans is included in the calculation of deficits.", "The most recent suspension of the debt limit lapsed after March 1, 2019. The limit was then reset at $21.988 trillion, a level that accommodates federal obligations incurred during the suspension period. On March 4, 2019, the first business day after the debt limit suspension had lapsed, U.S. Treasury Secretary Steven Mnuchin invoked extraordinary authorities. Those extraordinary measures (described below in more detail), along with cash balances and incoming revenues, can be used to meet federal obligations in coming months.\nIn anticipation of the lapse of the debt limit suspension, the U.S. Treasury had announced it would stop issuing state and local government securities (SLGs) on March 1, 2019. SLGs are used by state and local governments as one way of complying with IRS anti-arbitrage rules. Issuance of SLGs is expected to resume once the current debt limit episode is resolved.\nCBO estimates that Treasury could meet federal obligations until just before or just after October 1, 2019. One estimate suggested those resources would suffice to cover federal payments until August, if not later. Another estimate of an informed Treasury market observer suggests federal payments could be made until \"just before Labor Day,\" albeit while noting substantial uncertainties. The current size of federal deficits, which are now higher than those in previous years, or economic uncertainty could affect that timing. Changes in the federal tax system and Internal Revenue Service (IRS) operations could also add uncertainties to projections of Treasury cash flows.\nIn late 2017 and early 2018 the debt limit issue was tied to consideration of funding measures for FY2018. On September 8, 2017, enactment of a continuing resolution (Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017; P.L. 115-56 ) suspended the debt limit through December 8, 2018. Once that suspension lapsed, extraordinary measures were used to meet federal obligations. The Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ), enacted on February 9, 2018, included a provision (Section 30301) that suspended the debt limit through March 1, 2019. A section near the end of this report summarizes recent debt limit activity in more detail.\nIn January 2019, the House adopted Rule XXVIII that when the House approves a budget resolution, a measure to suspend the debt limit for the remainder of the fiscal year would be automatically engrossed and transmitted to the Senate.", "In recent years, Congress has chosen to suspend the debt limit for a set amount of time instead of raising the debt limit by a fixed dollar amount. When a suspension ends, the debt limit is reestablished at a level that accommodates federal spending during the suspension period. The U.S. Treasury is thus left with minimal headroom under the debt limit after a suspension ends, leaving only a cash balance similar to that when the suspension began. Therefore, the Treasury Secretary typically invokes a set of extraordinary measures, which are described below.", "Congress has authorized the Treasury Secretary to invoke a \"debt issuance suspension period,\" which triggers the availability of extraordinary measures, which are special strategies to handle cash and debt management. Actions taken in the past include suspending sales of nonmarketable debt, postponing or downsizing marketable debt auctions, and withholding receipts that would be transferred to certain government trust funds. In particular, extraordinary strategies include suspending investments in Civil Service Retirement and Disability Fund (CSRDF) and the G-Fund of the Federal Employees' Retirement System (FERS), as well as redeeming a limited amount of CSRDF securities. The Treasury Secretary is also mandated to make those funds whole after the resolution of a debt limit episode.", "The amount of time that extraordinary measures allow the U.S. Treasury to extend its borrowing capacity depends on the pace of deficit spending, the timing of cash receipts and outlays, and other technical factors. Tax deadlines and processing dates for some federal disbursements are scheduled, but amounts of collections and outlays depend on decisions and actions of private entities and other federal agencies, which are more difficult to predict. The effects of recent tax changes ( P.L. 115-97 ) and the possibility that further changes could occur in the 116 th Congress could also affect revenue projections. Treasury cash flow projections are therefore subject to uncertainty, which complicates attempts to estimate how long extraordinary measures would enable the federal government to meet its financial obligations.\nEstimates calculated by others of when Treasury would reach the debt limit and how long extraordinary measures would extend federal borrowing capacity have typically been close to Treasury's estimates. The U.S. Treasury Inspector General reported in 2012 that \"the margin of error in these estimates at a 98 percent confidence level is plus or minus $18 billion for one week into the future and plus or minus $30 billion for two weeks into the future.\"\nAn impending debt ceiling constraint presents more than one deadline. A first deadline is the exhaustion of borrowing capacity. The U.S. Treasury, however, could continue to meet obligations using available cash balances. As cash balances run down, however, other complications could emerge and Treasury's cash resources could fall below levels deemed prudent by outside advisors well before extraordinary measures were exhausted. Low cash balances could complicate federal debt management and Treasury auctions. The Government Accountability Office (GAO) has also noted that debt limit episodes generate severe strains for Treasury staff, especially when its room for maneuver is severely restricted. Finally, if the U.S. Treasury were to run out of cash, the Treasury Secretary would face difficult choices in how to comply simultaneously with the debt limit and the mandate to pay federal obligations in a timely fashion.\nSevere financial dislocation could result if the U.S. Treasury were unable to make timely payments. For example, repo lending arrangements, which rely heavily on Treasury securities for collateral, could become more expensive or could be disrupted. \"Repo\" is short for repurchase agreement, which provides a common means of secured lending among financial institutions. Repo lending rates rose sharply in early August 2011 during the 2011 debt limit episode, but fell to previous levels once that episode was resolved.\nThe Federal Reserve Open Market Committee indicated in an October 16, 2013, discussion that \"in the event of delayed payments on Treasury securities,\" discount window and other operations would proceed \"under the usual terms.\" That statement has been taken to imply that the Federal Reserve would be \"prepared to backstop the Treasury market in the event of a political deadlock.\" In addition, the Federal Reserve Bank of New York issued a description of contingency plans in December 2013 in the event of Treasury payment delays, but warned that such measures \"only modestly reduce, not eliminate, the operational difficulties posed by a delayed payment on Treasury debt. Indeed, even with these limited contingency practices, a temporary delayed payment on Treasury debt could cause significant damage to, and undermine confidence in, the markets for Treasury securities and other assets.\"", "Table 1 presents debt limit changes over the past two decades. The debt limit was modified six times from 1993 through 1997. Two of those modifications were enacted to prevent the debt limit restriction from delaying payment of Social Security benefits in March 1996 before a broader increase in the debt was passed at the end of that month.\nAfter 1997, debt limit increases were unnecessary due to the appearance of federal surpluses that ran from FY1998 through FY2001. Since FY2002 the federal government has run persistent deficits, which have been ascribed to major tax cuts enacted in 2001 and 2003 and higher spending. Those deficits required a series of increases in the debt limit.\nStarting with passage of the BCA in August 2011, Congress has employed measures that have led to debt limit increases that occur some time after a law is enacted. Dates in the first column of Table 1 in general refer to dates of enactment, which do not match dates when debt limit increases have occurred. For instance, the debt limit was suspended when P.L. 113-83 was enacted on February 12, 2014, and was reestablished on March 16, 2015, when that suspension lapsed. One result of suspending the debt limit, as has been the practice in recent years, is that no fixed number appears in legislation and that a new debt limit level is set only when the suspension lapses.", "The 2011 debt limit episode attracted far more attention than other recent debt limit episodes. In mid-2011 several credit ratings agencies and investment banks expressed concerns about the consequences to the financial system and the economy if the U.S. Treasury were unable to fund federal obligations. Many economists and financial institutions stated that if the market associated Treasury securities with default risks, the effects on global capital markets could be significant.\nDebate during the 2011 debt limit episode reflected a growing concern with the fiscal sustainability of the federal government. While projections issued in 2011 indicated that federal deficits would shrink over the next half decade, deficits later in the decade were expected to rise. Without major changes in federal policies, the amount of federal debt would increase substantially. CBO has repeatedly warned that the current trajectory of federal borrowing is unsustainable and could lead to slower economic growth in the long run as debt rises as a percentage of GDP. Unless federal policies change, Congress would repeatedly face demands to raise the debt limit to accommodate the growing federal debt in order to provide the government with the means to meet its financial obligations.\nThe next section provides a brief chronology of events from the 2011 debt limit episode.", "On May 16, 2011, U.S. Treasury Secretary Timothy Geithner announced that the federal debt had reached its statutory limit and declared a debt issuance suspension period, which would allow certain extraordinary measures to extend Treasury's borrowing capacity until about August 2, 2011. Had the U.S. Treasury exhausted its borrowing authority, it could have used cash balances to meet obligations for some period of time.\nOver the course of the 2011 debt limit episode Treasury estimates of when the debt limit would begin to bind and how long extraordinary measures would suffice to meet federal obligations shifted. For instance, in April 2011 the U.S. Treasury had projected that its borrowing capacity, even using extraordinary measures, would be exhausted by about July 8, 2011. The Treasury Secretary, in a letter to Congress dated May 2, 2011, had indicated that he would declare a debt issuance suspension period on May 16, unless Congress acted beforehand, which would allow certain extraordinary measures to extend Treasury's borrowing capacity until early August 2011. On July 1, 2011, the U.S. Treasury confirmed its view that its borrowing authority would be exhausted on August 2, the date cited in Treasury Secretary Geithner's May 16, 2011, letter that invoked the debt issuance suspension period.", "A bill ( H.R. 1954 ) to raise the debt limit to $16,700 billion was introduced on May 24 and was defeated in a May 31, 2011, House vote of 97 to 318. The House passed the Cut, Cap, and Balance Act of 2011 ( H.R. 2560 ; 234-190 vote) on July 19, 2011. The measure would have increased the statutory limit on federal debt from $14,294 billion to $16,700 billion once a proposal for a constitutional amendment requiring a balanced federal budget was transmitted to the states. On July 22, the Senate tabled the bill on a 51-46 vote.\nSome commentators in early 2011 suggested that cutting federal spending could slow the growth in federal debt enough to avoid an increase in the debt limit. The scale of required spending reductions, as of the middle of FY2011, would have been large. For example, at the start of the third quarter of FY2011 on April 1, 2011, federal debt was within $95 billion of its limit. According to CBO baseline estimates issued at the time, the expected deficit for the remainder of FY2011 would be about $570 billion. Reaching the end of FY2011 on September 30, 2011, without an increase in the debt limit or the use of extraordinary measures would have thus required a spending reduction of at least $570 billion, or about 85% of discretionary spending for the rest of that fiscal year.\nSome have suggested that the Fourteenth Amendment (Section 4), which states that \"(t)he validity of the public debt of the United States ... shall not be questioned,\" could provide the President with authority to ignore the statutory debt limit. President Obama rejected such claims, as did most legal analysts.", "On July 25, 2011, the Budget Control Act of 2011 was introduced in different forms by both House Speaker Boehner (House Substitute Amendment to S. 627 ) and Majority Leader Reid ( S.Amdt. 581 to S. 1323 ). Subsequently, on August 2, 2011, President Obama signed into law a substantially revised compromise measure (Budget Control Act, BCA; P.L. 112-25 ), following House approval by a vote of 269-161 on August 1, 2011, and Senate approval by a vote of 74-26 on August 2, 2011. This measure included numerous provisions aimed at deficit reduction, and would allow a series of increases in the debt limit of up to $2,400 billion ($2.4 trillion) subject to certain conditions. These provisions eliminated the need for further increases in the debt limit until early 2013.\nIn particular, the BCA included major provisions that\nimposed discretionary spending caps, enforced by automatic spending reductions, referred to as a \"sequester\"; established a Joint Select Committee on Deficit Reduction, whose recommendations would be eligible for expedited consideration; required a vote on a joint resolution on a proposed constitutional amendment to mandate a balanced federal budget; and instituted a mechanism allowing for the President and Treasury Secretary to raise the debt ceiling, subject to congressional disapproval.", "The legislation provides a three-step procedure by which the debt limit can be increased. First, the debt limit was raised by $400 billion, to $14,694 billion on August 2, 2011, following a certification of the President that the debt was within $100 billion of its legal limit.\nA second increase of $500 billion occurred on September 22, 2011, which was also triggered by the President's certification of August 2. The second increase, scheduled for 50 days after that certification, was subject to a joint resolution of disapproval. Because such a resolution could be vetoed, blocking a debt limit increase would be challenging. The Senate rejected a disapproval measure ( S.J.Res. 25 ) on September 8, 2011, on a 45-52 vote. The House passed a disapproval measure ( H.J.Res. 77 ) on a 232-186 vote, although the Senate declined to act on that measure. The resulting increase brought the debt limit to $15,194 billion.\nIn late December 2011, the debt limit came within $100 billion of its statutory limit, which triggered a provision allowing the President to issue a certification that would lead to a third increase of $1,200 billion. By design, that increase matched budget reductions slated to be made through sequestration and related mechanisms over the FY2013-FY2021 period. That increase was also subject to a joint resolution of disapproval. The President reportedly delayed that request to allow Congress to consider a disapproval measure. On January 18, 2012, the House passed such a measure ( H.J.Res. 98 ) on a 239-176 vote. The Senate declined to take up a companion measure ( S.J.Res. 34 ) and on January 26, 2012, voted down a motion to proceed (44-52) on the House-passed measure ( H.J.Res. 98 ), thus clearing the way for the increase, resulting in a debt limit of $16,394 billion.\nThe third increase could also have been triggered in two other ways. A debt limit increase of $1,500 billion would have been permitted if the states had received a balanced budget amendment for ratification. A measure ( H.J.Res. 2 ) to accomplish that, however, failed to reach the constitutionally mandated two-thirds threshold in the House in a 261–165 vote held on November 18, 2011. The debt limit could also have been increased by between $1,200 billion and $1,500 billion had recommendations from the Joint Select Committee on Deficit Reduction, popularly known as the Super Committee, been reported to and passed by each chamber. If those recommendations had been estimated to achieve an amount between $1,200 billion and $1,500 billion, the debt limit increase would be matched to that figure. The Joint Select Committee, however, was unable to agree on a set of recommendations.", "", "On December 26, 2012, the U.S. Treasury stated that the debt would reach its limit on December 31 and that the Treasury Secretary would declare a debt issuance suspension period to authorize extraordinary measures (noted above, described below) that could be used to meet federal payments for approximately two months. As predicted, federal debt did reach its limit on December 31, when large biannual interest payments, in the form of Treasury securities, were made to certain trust funds.\nThe U.S. Treasury stressed that these extraordinary measures would be exhausted more quickly than in recent debt limit episodes for various technical reasons. A January 14, 2013, letter from Treasury Secretary Geithner also estimated that extraordinary measures would be exhausted sometime between mid-February or early March 2013. CBO had previously estimated that federal debt would reach its limit near the end of December 2012, and that the extraordinary measures could be used to fund government activities until mid-February or early March 2013. During the 112 th Congress, Speaker John Boehner had stated that a future debt limit increase should be linked to spending cuts of at least the same magnitude, a position that reflects the structure of the Budget Control Act.", "House Republicans decided on January 18, 2013, to propose a three-month suspension of the debt limit tied to a provision that would delay Members' salaries in the event that their chamber of Congress had not agreed to a budget resolution. H.R. 325 , according to its sponsor, would allow Treasury to pay bills coming due before May 18, 2013. A new debt limit would then be set on May 19. The measure would also cause salaries of Members of Congress to be held in escrow \"(i)f by April 15, 2013, a House of Congress had not agreed to\" a budget resolution. Such a provision, however, could raise constitutional issues under the Twenty-Seventh Amendment.\nOn January 23, 2013, the House passed H.R. 325 , which suspended the debt limit until May 19, 2013, on a 285-144 vote. The Senate passed the measure on January 31 on a 64-34 vote; it was then signed into law ( P.L. 113-3 ) on February 4.", "Once H.R. 325 was signed into law on February 4, the U.S. Treasury replenished funds that had been used to meet federal payments, thus resetting its ability to use extraordinary measures. As of February 1, 2013, the U.S. Treasury had used about $31 billion in extraordinary measures. Statutory language that grants the Treasury Secretary the authority to declare a \"debt issuance suspension period\" (DISP), which permits certain extraordinary measures, also requires that \"the Secretary of the Treasury shall immediately issue\" amounts to replenish those funds once a debt issuance suspension period (DISP) is over. A DISP extends through \"any period for which the Secretary of the Treasury determines for purposes of this subsection that the issuance of obligations of the United States may not be made without exceeding the public debt limit.\"\nShortly after the declaration of a new debt issuance suspension period in February 2013, Jacob Lew was confirmed as Treasury Secretary, replacing Timothy Geithner.", "Once the debt limit suspension lapsed after May 18, 2013, the U.S. Treasury reset the debt limit at $16,699 billion, or $305 billion above the previous statutory limit. On May 20, 2013, the first business day after the expiration of the suspension, debt subject to limit was just $25 million below the limit.\nSome Members, as noted above, stated that H.R. 325 ( P.L. 113-3 ) was intended to prevent the U.S. Treasury from accumulating cash balances. The U.S. Treasury's operating cash balances at the start of May 20, 2013 ($34 billion), were well below balances ($60 billion) at the close of February 4, 2013, when H.R. 325 was enacted. Some experienced analysts had stated that the exact method by which the debt limit would be computed according to the provisions of P.L. 113-3 was not fully clear. The U.S. Treasury has not provided details of how it computed the debt limit after the suspension lapsed.\nTreasury Secretary Jacob Lew notified Congress on May 20, 2013, that he had declared a new debt issuance suspension period (DISP), triggering authorities that allow the Treasury Secretary to use extraordinary measures to meet federal obligations until August 2. On August 2, 2013, Secretary Lew notified Congress that the DISP would be extended to October 11, 2013. In those notifications, as well in other communications, Secretary Lew urged Congress to raise the debt limit in a \"timely fashion.\"", "How long the U.S. Treasury could have continued to pay federal obligations absent an increase in the debt limit depended on economic conditions, which affect tax receipts and spending on some automatic stabilizer programs, and the pace of federal spending. Stronger federal revenue collections and a slower pace of federal outlays in 2013 reduced the FY2013 deficit compared to previous years. CBO estimates for July 2013 put the total federal deficit at $606 billion in FY2013, well below the FY2012 deficit of $1,087 billion, implying a slower overall pace of borrowing. Special dividends from mortgage giants Fannie Mae and Freddie Mac also extended the U.S. Treasury's ability to meet federal obligations.\nIn May 2013, the investment bank Goldman Sachs projected that, with the addition of the Fannie Mae dividend and an estimated postsuspension $16.70 trillion limit, federal borrowing capacity would be exhausted in early October.\nEstimates of Treasury cash flows are subject to substantial uncertainty. The U.S. Treasury Inspector General reported in 2012 that \"the margin of error in these estimates at a 98 percent confidence level is plus or minus $18 billion for one week into the future and plus or minus $30 billion for two weeks into the future.\"", "In September 2008, Fannie Mae and Freddie Mac entered voluntary conservatorship. As part of their separate conservatorship agreements, Treasury agreed to support Fannie Mae and Freddie Mac in return for senior preferred stock that would pay dividends. Losses for Fannie Mae and Freddie Mac while in conservatorship have totaled $123 billion, although each has been profitable since the start of 2012. For a profitable firm, some past losses can offset future tax liabilities and would be recognized on its balance sheet as a \"deferred tax asset\" under standard accounting practices. Fannie Mae and Freddie Mac wrote down the value of their tax assets because their return to profitability was viewed as unlikely.\nThe return of Fannie Mae and Freddie Mac to profitability opened the possibility for a reversal of those writedowns. On May 9, 2013, Fannie Mae announced that it would reverse the writedown of its deferred tax assets. The Treasury agreements, as amended, set the dividend payments to a sweep (i.e., an automatic transfer at the end of a quarter) of Fannie Mae's and Freddie Mac's net worth. Thus a reversal of that writedown of the deferred tax assets triggered a payment of about $60 billion from Fannie Mae to the U.S. Treasury on June 28, 2013. The U.S. Treasury received $66.3 billion from Fannie Mae and Freddie Mac on that date. Fannie Mae stated that it would pay an additional $10.2 billion in September 2013. On August 7, 2013, Freddie Mac announced that it had not yet decided to write down its deferred tax assets of $28.6 billion.", "In May 2013, Secretary Lew had notified Congress that he expects the U.S. Treasury will be able to meet federal obligations until at least Labor Day. Some private estimates suggest that the U.S. Treasury, with the assistance of extraordinary measures, would probably be able to meet federal obligations until mid-October or November 2013. By comparison, in 2011, Treasury Secretary Geithner invoked authority to use extraordinary measures on May 16, 2011, which helped fund payments until the debt ceiling was raised on August 2, 2011.\nOn August 26, 2013, Treasury Secretary Lew notified congressional leaders that the government would exhaust its ability to borrow in mid-October according to U.S. Treasury projections. At that point, the U.S. Treasury would have only an estimated $50 billion in cash to meet federal obligations. With that cash and incoming receipts, the U.S. Treasury would be able to meet obligations for some weeks after mid-October according to independent analysts, although projecting when cash balances would be exhausted is difficult.\nOn September 25, 2013, Secretary Lew sent another letter to Congress with updated forecasts of the U.S. Treasury's fiscal situation. According to those forecasts, the U.S. Treasury would exhaust its borrowing capacity no later than October 17. At that point, the U.S. Treasury would have about $30 billion in cash balances on hand to meet federal obligations. At the close of business on October 8, 2013, the U.S. Treasury had an operating cash balance of $35 billion.\nOn October 3, 2013, the U.S. Treasury issued a brief outlining potential macroeconomic effects of the prospect that the federal government would be unable to pay its obligations in a timely fashion. The brief provided data on how various measures of economic confidence, asset prices, and market volatility responded to the debt limit episode in the summer of 2011.", "In the absence of a debt limit increase, the cash balances on hand when the U.S. Treasury's borrowing capacity ran out would then dwindle. At the close of business on October 11, 2013, the U.S. Treasury's cash balance was $35 billion. Those low cash balances, however, could raise two complications even before that point.\nFirst, low cash balances could have complicated federal debt management and Treasury auctions in late October or early November. Yields for Treasury bills maturing after the October 17 date mentioned in Secretary Lew's September 25 letter have increased relative to other yields on other Treasury securities. This appeared to signal reluctance among some investors to hold Treasury securities that might be affected by debt limit complications.\nSecond, repo lending, which relies heavily on Treasury securities for collateral, could become more expensive or could be disrupted. Repo lending rates rose sharply in early August 2011 during the 2011 debt limit episode, but fell to previous levels once that episode was resolved.", "In the past, some financial markets have reacted to impending debt limit deadlines, signaling concerns about the federal government's ability to meet obligations in a timely manner. In early October 2013, the U.S. Treasury issued a brief that outlined how various measures of economic confidence, asset prices, and market volatility responded to the debt limit episode in the summer of 2011, and the prospect that the federal government might not have been able to pay its obligations in a timely fashion.\nSome investors expressed reluctance to hold Treasury securities that might be affected by debt limit complications. Fidelity Investments, J.P. Morgan Investment Management Inc., and certain other funds stated in October 2013 that they had sold holdings of Treasury securities scheduled to mature or to have coupon payments between October 16 and November 6, 2013.\nIn October 2013, yields for Treasury bills maturing in the weeks after October 17—when the U.S. Treasury's borrowing capacity was projected to be exhausted—rose sharply relative to yields on Treasury securities maturing in 2014. Figure 1 shows secondary market yields on Treasury bills set to mature after the projected date when the Treasury's borrowing capacity would be exhausted. The horizontal axis shows days before the end of the DISP, and the vertical scale shows basis points (bps). For instance, the yield for the Treasury bill maturing October 24, 2013, rose from close to zero to 46 bps on October 15, 2013. Those yields are about 10 times larger than for similar bills that mature in calendar year 2014. A four-week Treasury bill auctioned on October 8, 2013, sold with a yield of 35 bps. By contrast, a four-week bill sold on September 4, 2013, sold with a yield of 2 bps. After enactment of a debt limit measure ( H.R. 2775 ; P.L. 113-46 ) on October 16, 2013, however, those yields returned to their previous levels.", "Congressional consideration of federal debt policy raised several policy issues that were explored in hearings and in broader policy discussions.", "On January 22, 2013, the House Ways and Means Committee held hearings on the history of the debt limit and how past Congresses and Presidents have negotiated changes in the debt limit. On April 10, 2013, the House Ways and Means Subcommittee on Oversight held hearings on federal debt and fiscal management when the debt limit binds. The Joint Economic Committee held hearings on the economic costs of uncertainty linked to the debt limit on September 18, 2013.\nOn October 10, 2013, the Senate Finance Committee held hearings on the debt limit and heard testimony from Treasury Secretary Jacob Lew. On the same morning, the Senate Banking Committee held hearings on the effects of a possible federal default on financial stability and economic growth, and heard testimony from heads of financial industry trade associations.", "On April 30, 2013, the House Ways and Means Committee reported H.R. 807 , which would grant the Treasury Secretary the authority to borrow to fund principal and interest payments on debt held by the public and the Social Security trust funds if the debt limit were reached. The Treasury Secretary would also have had to submit weekly reports to Congress after that authority were exercised. On May 9, 2013, the House passed and amended version of H.R. 807 . The House also passed a version of H.J.Res. 59 that incorporated the text of H.R. 807 on September 20. On September 27, the Senate passed an amended version of the measure that did not contain provisions from H.R. 807 . The Obama Administration indicated that it would veto H.R. 807 or H.J.Res. 59 containing similar provisions, were either to be approved by Congress. The October 2013 debt limit measure ( H.R. 2775 ; P.L. 113-46 ) contained no payment prioritization provisions.\nH.R. 807 would have affected one aspect of the U.S. Treasury's financial management of the Social Security program, but would not alter other aspects. If the debt limit were reached, the U.S. Treasury could still face constraints that could raise challenges in financial management. The U.S. Treasury is responsible for (1) making Social Security beneficiary payments; (2) reinvesting Social Security payroll taxes and retirement contributions in special Treasury securities held by the Social Security trust fund; and (3) paying interest to the Social Security trust funds, in the form of special Treasury securities, at the end of June and December. Those special Treasury securities, either funded via Social Security payroll receipts or biannual interest payments, are subject to the debt limit. Thus, sufficient headroom under the debt limit is needed to issue those special Treasury securities. If the debt limit were reached and extraordinary measures were exhausted, the Treasury Secretary's legal requirement to reinvest Social Security receipts by issuing special Treasury securities could at times be difficult to reconcile with his legal requirement not to exceed the statutory debt limit.", "On September 25, Treasury Secretary Lew notified Congress that the government would exhaust its borrowing capacity around October 17 according to updated estimates. At that point, the U.S. Treasury would have had a projected cash balance of only $30 billion to meet federal obligations.\nOn October 16, 2013, Congress passed a continuing resolution (Continuing Appropriations Act, 2014; H.R. 2775 ; P.L. 113-46 ) that included a provision to allow a suspension of the debt limit. That measure passed the Senate on an 81-18 vote. The House then passed the measure on a 285-144 vote. The President signed the bill ( P.L. 113-46 ) early the next morning. The measure suspended the debt limit until February 8, 2014, once the President certified that the U.S. Treasury would be unable to meet existing commitments without issuing debt. The President sent congressional leaders a certification on October 17, 2013, to trigger a suspension of the debt limit through February 7, 2014.\nThat suspension, however, was subject to a congressional resolution of disapproval. If a resolution of disapproval had been enacted, the debt limit suspension would end on that date. Specific expedited procedures in each chamber governed the consideration of the resolution of disapproval. The resolution, if passed, was subject to veto. A resolution of disapproval ( H.J.Res. 99 ) was passed in the House on October 20, 2013, on a 222-191 vote. A similar measure, S.J.Res. 26 , was not approved by the Senate, so the debt limit increase was not blocked.\nThe debt limit suspension ended on February 7, and a limit was set to reflect the amount of debt necessary to fund government operations before the end of the suspension. The U.S. Treasury was precluded in P.L. 113-46 from accumulating excess cash reserves that might have allowed an extension of extraordinary measures.\nThe debt limit provisions enacted in October 2013 resemble provisions enacted in 2011 and earlier in 2013. For example, the Budget Control Act of 2011 ( P.L. 112-25 ) also provided for a congressional resolution of disapproval of a debt limit increase. The suspension of the debt limit in H.R. 2775 resembles the suspension enacted in February 2013 ( H.R. 325 ; P.L. 113-3 ).", "Passage of the Continuing Appropriations Act, 2014 was preceded by other proposals to modify the debt limit. On October 8, 2013, Senate Majority Leader Reid introduced S. 1569 , a measure intended to ensure complete and timely payment of federal obligations. The measure would have extended the suspension of the debt limit enacted in February 2013 ( P.L. 113-3 ). On October 15, 2013, an announcement of a hearing on a proposal to amend the Senate amendment to H.J.Res. 59 appeared on the House Rules Committee website. That hearing, according to a subsequent announcement, was postponed that evening. The measure would extend the debt limit through February 15, 2014, and restrict the Treasury Secretary's ability to employ extraordinary measures through April 15, 2014. The measure would also extend discretionary funding at \"sequester levels\" through December 15, 2013.", "The resolution of the debt limit episode and the ending of the federal shutdown in October 2013 set up a subsequent episode in early 2014.", "In late November 2013, CBO issued an analysis of Treasury cash flows and available extraordinary measures. Treasury, according to those estimates, might exhaust its ability to meet federal obligations in March. Because Treasury cash flows can be highly uncertain during tax refund season, CBO stated that that date could arrive as soon as February 2014 or as late as early June.\nGoldman Sachs had estimated that Treasury would probably exhaust its headroom—the sum of projected cash balances and remaining borrowing authority under the debt limit—in mid to late March, but might in fortuitous circumstances be able to meet its obligations until June. While Goldman Sachs and other independent forecasters noted that that the U.S. Treasury might possibly avoid running out of headroom in late March or early April, waiting until mid-March to address the debt limit could have raised serious risks for the U.S. government's financial situation.", "As the end of the debt limit suspension neared, the U.S. Treasury continued to warn Congress of the consequences on not raising the debt limit. While the Treasury could again employ extraordinary measures after the suspension ended after February 7, 2014, its ability to continue meeting federal obligations would be limited by large outflows of cash resulting from individual income tax refunds. In December 2013, the U.S. Treasury had notified congressional leaders that according to its estimates, extraordinary measures would extend its borrowing authority \"only until late February or early March 2014.\" On January 22, 2014, Secretary Lew called for an increase in the debt limit before the end of debt limit suspension on February 7, 2014, or the end of February. In the first week of February 2014, Secretary Lew stated that the U.S. Treasury could not be certain that extraordinary measures would last beyond February 27, 2014.", "On February 7, 2014, the debt limit suspension ended and the U.S. Treasury reset the debt limit to $17,212 billion. On the same day, the U.S. Treasury also suspended sales of State and Local Government Series (SLGS), the first of its extraordinary measures. On February 10, Secretary Lew notified Congress that he had declared a debt issuance suspension period (DISP) that authorizes use of other extraordinary measures. In particular, during a DISP the Treasury Secretary is authorized to suspend investments in the Civil Service and Retirement and Disability Fund and the G Fund of the Federal Employees' Retirement System. The DISP was scheduled to last until February 27.", "Following the lapse of the debt limit suspension, Congress moved quickly to address the debt limit issue. On February 10, 2014, the House Rules Committee posted an amended version of S. 540 that would suspend the debt limit through March 15, 2015. The debt limit would be raised the following day by an amount tied to the amount of borrowing required by federal obligations during the suspension period. The U.S. Treasury would also be prohibited from creating a cash reserve above that level. The measure also would have reversed a 1% reduction in the cost-of-living adjustment for certain working-age military retirees that had been included in the Bipartisan Budget Act of 2013 (BBA; P.L. 113-67 ). In addition, sequestration of nonexempt mandatory spending would be extended from FY2023 to FY2024. CBO issued a cost estimate of the measure on February 11, 2014.\nOn February 11, 2014, the House voted 221-201 to suspend the debt limit ( S. 540 ) through March 15, 2015. The amended measure included restrictions on Treasury debt management in the version reported by the Rules Committee, but omitted provisions to reverse reductions in cost-of-living adjustments to working-age military retiree pensions and an extension of nondefense mandatory sequestration. The Senate voted to concur in the House amendment the following day on a 55-43 vote. The President signed the measure ( P.L. 113-83 ) on February 15, 2014. Unlike previous measures that suspended the debt limit, a presidential certification was not required. A separate measure was also signed into law on the same day ( P.L. 113-82 ) to reverse reductions in cost-of-living adjustments to working-age military retiree pensions for those who entered the military before the beginning of 2014.", "The debt limit, which had been suspended through March 15, 2015, was reestablished the following day at $18,113 billion. The debt limit was raised, in essence, by the sum of payments made during the suspension period to meet federal obligations.", "Treasury Secretary Lew sent congressional leaders a letter on March 6, 2015, stating that Treasury would suspend issuance of State and Local Government Series (SLGS) bonds on March 13, 2015, the last business day during the current debt limit suspension. SLGS are used by state and local governments to manage certain intergovernmental funds in a way that complies with federal tax laws.\nOnce the most recent debt limit suspension lapsed, Treasury Secretary Lew declared a Debt Issuance Suspension Period (DISP) on March 16, 2015, which empowered him to use extraordinary measures to meet federal fiscal obligations until July 30, 2015. On July 30, 2015, Treasury Secretary Lew sent congressional leaders a letter to invoke extraordinary powers again until the end of October. Secretary Lew indicated in a separate letter, sent the previous day, that those extraordinary measures would enable the U.S. Treasury to meet federal financial obligations \"for at least a brief additional period of time\" after the end of October. Secretary Lew sent another letter on September 10, 2015, that reiterated those points.", "In May 2015, the U.S. Treasury changed its cash management policy to adopt recommendations of the Treasury Borrowing Advisory Committee and an internal review. The new policy is intended to ensure that the U.S. Treasury could continue to meet federal obligations even if its market access were disrupted for a week or so. Treasury Secretary Lew noted that an event of the scale such as \"Hurricane Sandy, September 11, or a potential cyber-attack disruption\" might cause a lapse in market access. The new cash management policy does not affect the date when the debt limit might constrain the U.S. Treasury's ability to meet federal obligations.", "The U.S. Treasury's headroom under the debt limit consists of remaining amounts of funds available for extraordinary measures and available cash reserves. When federal receipts exceed federal outlays, that headroom expands, except for those receipts or outlays that are linked to intragovernmental accounts such as Social Security. The headroom gained by those receipts is exactly offset because Treasury must issue special securities to the appropriate intragovernmental trust fund, and those securities are subject to the debt limit. Conversely, when outlays are funded by such intragovernmental accounts, the increase in Treasury's headroom due to redemption of special securities is offset by Treasury's need to provide funding for that redemption either by drawing down cash balances or additional borrowing.", "On October 15, 2015, Secretary Lew stated that extraordinary measures would have been exhausted \"no later than\" November 3, 2015, although a relatively small cash reserve—projected at less than $30 billion—would be on hand. Secretary Lew had previously stated that extraordinary measures would be exhausted about November 5, 2015.\nIndependent forecasts of when extraordinary measures would be exhausted were close to the date estimated by the U.S. Treasury. One private forecast estimated Treasury's headroom under the debt limit at $38 billion on November 5, 2015. CBO, according to an October 14, 2015, report, projected that \"Treasury will begin running a very low cash balance in early November, and the extraordinary measures will be exhausted and the cash balance entirely depleted sometime during the first half of November.\" Figure 2 shows one recent independent estimate of Treasury's headroom that shows Treasury's available resources falling below $50 billion after the first few days of November 2015.", "Previous independent estimates of when Treasury's borrowing capacity would be exhausted suggested that leaving the debt limit at its present level would suffice until the end of November or even early December. For example, CBO's August 2015 projections had put the estimated date of exhaustion somewhere between mid-November and early December 2015.\nLower than expected tax receipts during the fall of 2015 and higher than expected federal trust fund investments pushed the date back from what outside forecasters had expected earlier in the year. For example, net issuance of Government Account Series securities—which includes special Treasury securities held by federal trust funds—was about $10 billion higher on the first day of FY2016 as compared to the first day of FY2015. On October 9, 2015, the U.S. Treasury issued a summary of debt balances that provided a more detailed view of its headroom under the debt limit. According to that summary, Treasury had used $355 billion of its available $369 billion in extraordinary measures as of October 7, 2015, leaving $14 billion to meet forthcoming obligations.\nSecretary Lew noted in previous correspondence with Congress that projections of Treasury's ability to meet federal obligations were subject to significant uncertainty due to the variability of federal tax collections and expenditure patterns. While the U.S. Treasury's payment calendar, tax due dates, and securities auction schedule are generally regular and predictable, the amounts paid or received on a given day can fluctuate substantially.", "Late on the night of October 26, 2015, text of the Bipartisan Budget Agreement of 2015 was issued. The proposal included a provision to suspend the debt limit until March 15, 2017. The debt limit would then come back into effect on the following day at a level reflecting the payment of federal obligations incurred during the suspension period. As with previous debt limit suspensions, the measure prohibits the U.S. Treasury from creating a cash reserve beyond amounts necessary to meet federal obligations during the suspension period. The Bipartisan Budget Act of 2015 would also increase statutory caps on discretionary spending for FY2016 and FY2017, along with measures aimed at offsetting those increases.\nOn October 27, 2015, the House Rules Committee provided a summary of its provisions and put forth an amendment aimed at addressing certain scoring issues. The following day, the House concurred with a modified version of the Senate amendments to H.R. 1314 on a 266-167 vote. The Senate concurred with that version on October 30, 2015, on a 64-35 vote, sending the measure to the President, who signed it ( P.L. 114-74 ) on November 2, 2015. Enactment of the measure thus resolved the 2015 debt limit episode by suspending the debt limit until March 15, 2017.", "On September 10, 2015, the House Ways and Means Committee reported H.R. 692 , which would grant the Treasury Secretary the authority to borrow to fund principal and interest payments on debt held by the public. The measure resembles H.R. 807 , which was considered in 2013 and is discussed above. The House passed H.R. 692 on October 21, 2015, by a 235-194 vote.\nThe House Ways and Means Committee also reported H.R. 3442 on the same date, which would require the Treasury Secretary to appear before the House Committee on Ways and Means and the Senate Committee on Finance during a debt limit episode and to submit a report on the federal debt.\nThe U.S. Treasury submitted two reports to Congress on extraordinary measures used during the 2015 debt limit episode. The first described actions affecting the G Fund and the second described actions taken affecting the Civil Service Retirement and Disability Fund.\nIn May 2015, Treasury officials announced a policy shift to maintain a larger cash balance—not less than approximately $150 billion in normal circumstances—that would suffice to meet federal obligations in the event of a week-long disruption of access to capital markets. During a November 2, 2016, meeting between Treasury officials and a panel of financiers, concerns were raised that the interaction of debt limit constraints in 2017 with changes in the structure of money market funds (MMFs) that have increased demand for Treasury bills could risk disruption of short-term funding markets.", "On March 7, 2017, CBO issued estimates that extraordinary measures could suffice to meet federal obligations until sometime in the fall of 2017. Such estimates are subject to substantial uncertainty due to changes in economic conditions, federal revenue flows, changes in the amounts and timing of federal payments, and other factors. On March 8, 2017, Treasury Secretary Mnuchin notified Congress that he would invoke authorities to use extraordinary measures after March 15, 2017, to ensure continued payment of federal obligations. On March 16, 2017, Secretary Mnuchin notified congressional leaders that he had indeed exercised those authorities. The debt limit on that date was reset at $19,809 billion.", "In testimony before Congress on May 24, 2017, Administration officials urged Congress to raise the debt limit before its summer recess. Office of Management and Budget (OMB) Director Mick Mulvaney stated that the federal receipts were coming in more slowly than projected, which could imply that Treasury's capacity to meet federal obligations could be exhausted sooner than previously projected. A Goldman Sachs analysis found, however, that some major categories of tax receipts had shown stronger growth.\nOn July 28, 2017, Treasury Secretary Mnuchin sent a letter to Congress stating that extraordinary measures would be used until September 29, 2017. Secretary Mnuchin's letter did not state that Treasury's cash reserves or borrowing capacity would be exhausted on that date, but he did describe the need for legislative action by that date as \"critical.\" Others had estimated that the U.S. Treasury would likely be able to meet federal obligations until sometime in early October 2017. Treasury cash balances and borrowing capacity in mid-September, however, were projected to fall well below levels the U.S. Treasury has considered prudent to maintain operations in the face of significant adverse events.", "On September 3, 2017, Secretary Mnuchin argued that a debt limit measure should be tied to legislation responding to Hurricane Harvey, which caused extensive damage in southeast Texas. On September 6, 2017, outlines of an agreement on the debt limit and a continuing resolution were announced between President Trump and congressional leaders. The following day, the Senate, by an 80-17 vote, passed an amended version of H.R. 601 , which included an amendment ( S.Amdt. 808 ) to suspend the debt limit and provide funding for government operations through December 8, 2017, as well as supplemental appropriations for disaster relief. On September 8, 2017, the House agreed on a 316-90 vote to the amended measure, which the President signed the same day (Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017; P.L. 115-56 ).\nTreasury Secretary Mnuchin invoked authorities to use extraordinary measures once that debt limit suspension lapsed after December 8, 2017. He extended those authorities on January 30, 2018, through the end of February and urged congressional leaders to act on the debt limit before that time. Secretary Mnuchin did not indicate that the U.S. Treasury would exhaust its borrowing capacity or cash reserves by that date. CBO estimates and independent analysts had suggested that those extraordinary measures would have lasted until sometime in early March. In July 2018, Secretary Mnuchin issued a report to Congress detailing its use of extraordinary measures.", "On February 9, 2018, enactment of the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ) resolved the debt limit issue until 2019. BBA 2018 employed a legislative vehicle, H.R. 1892 , which had passed in both the House and Senate in different forms in 2017. On February 9, 2018, differences in the amended measure were resolved by a vote of 71 to 28 in the Senate and a vote of 240 to 186 in the House. BBA 2018 also increased statutory caps on discretionary spending, extended funding of the government until March 23, 2018 (Section 20101), and funded certain disaster assistance programs, among other provisions.\nSection 30301 of BBA 2018 suspended the debt limit through March 1, 2019, as noted above. The limit was reset on March 2, 2019, at $21.988 trillion, a level that accommodates federal obligations during the suspension period. On the following Monday—March 4, 2019—Treasury Secretary Steven Mnuchin invoked extraordinary authorities by declaring a debt issuance suspension period, during which the U.S. Treasury will then use its cash balances, incoming revenues, and extraordinary measures to meet federal obligations. CBO estimated that Treasury would have financial resources to meet federal obligations until just before or just after October 1, 2019. Some private forecasts have estimated Treasury's resources would be exhausted around August 2019." ], "depth": [ 0, 1, 2, 2, 2, 2, 2, 1, 2, 3, 2, 3, 1, 2, 2, 3, 3, 2, 3, 3, 3, 3, 3, 4, 4, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 3, 3, 2, 2, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_title", "h3_full", "", "", "", "h0_full", "h1_title", "", "", "h1_full", "h1_full", "h0_title h2_title", "h2_full", "h2_full", "", "", "h0_title", "", "", "", "", "h0_full", "", "", "h2_full", "", "h2_title", "", "", "", "h2_full", "h2_title", "", "", "", "", "", "h2_full", "", "h3_full", "", "h3_full", "h3_full" ] }

{ "question": [ "What characterizes Congress' ability to borrow money?", "How does control of debt policy affect Congressional concerns over fiscal policies?", "Why have fiscal policy debates become more frequent in recent years?", "What were the causes of recent debt limit episodes?", "How was the 2011 debt limit episode resolved?", "How did the BCA affect the deficit?", "How did President Obama follow up on the BCA?", "How frequently were such certifications used?", "What happened to the federal debt in 2012?", "How was the debt limit overridden?", "What did H.R. 2775; P.L. 113-46 do?", "What was done after H.R. 2775; P.L. 113-46 expired?", "What happened to the debt limit in 2017?", "How did President Trump and congressional leaders collaborate with regards to the debt limit?", "How was this agreement enacted?", "What was done after this suspension lapsed?", "How was the debt limit issue addressed?", "How did the BBA 2018 affect the debt limit?" ], "summary": [ "The Constitution grants Congress the power to borrow money on the credit of the United States—one part of its power of the purse—and thus mandates that Congress exercise control over federal debt.", "Control of debt policy has at times provided Congress with a means of raising concerns regarding fiscal policies.", "Debates over federal fiscal policy have been especially animated in the past decade, in part because of the accumulation of federal debt in the wake of the 2007-2008 financial crisis and subsequent recession.", "Rising debt levels, along with continued differences in views of fiscal policy, led to a series of contentious debt limit episodes in recent years.", "The 2011 debt limit episode was resolved on August 2, 2011, when President Obama signed the Budget Control Act of 2011 (BCA; S. 365; P.L. 112-25).", "The BCA included provisions aimed at deficit reduction and allowing the debt limit to rise in three stages, the latter two subject to congressional disapproval.", "Once the BCA was enacted, a presidential certification triggered a $400 billion increase.", "A second certification led to a $500 billion increase on September 22, 2011, and a third, $1,200 billion increase took place on January 28, 2012.", "Federal debt again reached its limit on December 31, 2012.", "Extraordinary measures were again used to allow payment of government obligations until February 4, 2013, when H.R. 325, which suspended the debt limit until May 19, 2013, was signed into law (P.L. 113-3), which reset extraordinary measures.", "On October 16, 2013, enactment of a continuing resolution (H.R. 2775; P.L. 113-46) resolved a funding lapse and suspended the debt limit through February 7, 2014.", "On February 15, 2014, a measure to suspend the debt limit (S. 540; P.L. 113-83) through March 15, 2015, was enacted. On November 2, 2015, the Bipartisan Budget Act of 2015 (BBA2015; H.R. 1314; P.L. 114-74) was enacted, which suspended the debt limit through March 15, 2017, and relaxed some discretionary spending limits.", "On March 16, 2017, the debt limit was reset at $19,809 billion, and Treasury Secretary Mnuchin notified Congress that he had invoked authorities to use extraordinary measures.", "On September 6, 2017, an agreement on the debt limit and a continuing resolution was announced between President Trump and congressional leaders.", "Two days later a measure (P.L. 115-56) was enacted to implement that agreement, which included a suspension of the debt limit through December 8, 2017.", "Once that suspension lapsed—with a new debt limit set at $20,456 billion—Treasury Secretary Mnuchin invoked authorities to employ extraordinary measures, which estimates had suggested would last until early March.", "The debt limit issue was addressed when the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123) was enacted on February 9, 2018.", "Section 30301 of the BBA 2018 suspended the debt limit through March 1, 2019." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 0, 2, -1, 0, -1, 2, -1, 0, 1, -1, 3, 3 ], "summary_paragraph_index": [ 0, 0, 0, 0, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4 ] }

{ "title": [ "Background", "Economic Significance of Intellectual Property Protection and Theft", "Importance of IP Has Long Been Recognized in the United States", "The U.S. Economy May Experience Slower Growth Due to Lost Sales and Reduced Incentives to Innovate", "Quantifying Economic Impacts Is Difficult, However Industry Research Suggests the Impacts Are Sizable", "Lack of Data Is the Primary Challenge for Quantifying Economic Impacts of Counterfeiting and Piracy", "No Single Approach for Quantifying Impacts of Counterfeiting and Piracy Can be Used", "Economy-Wide Impact of Counterfeiting and Piracy Is Unknown", "GAO Contact and Staff Acknowledgement" ], "paragraphs": [ "Both government and private entities increasingly depend on computerized information systems to carry out operations and to process, maintain, and report essential information. Public and private organizations rely on computer systems to transmit sensitive and proprietary information, develop and maintain intellectual capital, conduct operations, process business transactions, transfer funds, and deliver services. In addition, the Internet serves as a medium for hundreds of billions of dollars of commerce each year.\nCyberspace—where much business activity and the development of new ideas often take place—amplifies potential threats by making it possible for malicious actors to quickly steal and transfer massive quantities of Threat actors data while remaining anonymous and difficult to detect.may target businesses, among others targets, resulting in the compromise of proprietary information or intellectual property. In addition, the rapid growth of Internet use has significantly contributed to the development of technologies that enable the unauthorized distribution of copyrighted works and is widely recognized as leading to an increase in piracy. Digital products are not physical or tangible, can be reproduced at very low cost, and have the potential for immediate delivery through the Internet across virtually unlimited geographic markets. Sectors facing threats from digital piracy include the music, motion picture, television, publishing, and software industries. Piracy of these products over the Internet can occur through methods including peer-to-peer networks, streaming sites, and one-click hosting services.", "As we reported in April 2010, IP is an important component of the U.S. economy and IP-related industries pay higher wages and contribute a significant percentage to the U.S. economy. However, the U.S. economy as a whole may grow at a slower pace than it otherwise would because of counterfeiting and piracy’s effect on U.S. industries, government, and consumers.", "The importance of patents and other mechanisms to enable inventors to capture some of the benefits of their innovations has long been recognized in the United States as a tool to encourage innovation, dating back to Article 1 of the U.S. Constitution and the 1790 patent law. Ensuring the protection of IP rights encourages the introduction of innovative products and creative works to the public. Protection is granted by guaranteeing proprietors limited exclusive rights to whatever economic reward the market may provide for their creations and products.\nAs we reported in April 2010, intellectual property is an important component of the U.S. economy, and the United States is an acknowledged global leader in the creation of intellectual property. According to the United States Trade Representative, “Americans are the world’s leading innovators, and our ideas and intellectual property are a key ingredient to our competitiveness and prosperity.” The United States has generally been very active in advocating strong IP protection and encouraging other nations to improve these systems for two key reasons. First, the U.S. has been the source of a large share of technological improvements for many years and, therefore, stands to lose if the associated IP rights are not respected in other nations. Secondly, a prominent economist noted that IP protection appears to be one of the factors that has helped to generate the enormous growth in the world economy and in the standard of living that has occurred in the last 150 years. This economist pointed out that the last two centuries have created an unprecedented surge in growth compared to prior periods. Among the factors attributed to creating the conditions for this explosion in economic growth are the rule of law, including property rights and the enforceability of contracts.", "The U.S. economy as a whole may grow at a slower pace than it otherwise would because of counterfeiting and piracy’s effect on U.S. industries, government, and consumers. As we reported in April 2010, according to officials we interviewed and a 2008 OECD study, to the extent that companies experience a loss of revenues or incentives to invest in research and development for new products, slower economic growth could occur. IP-related industries play an important role in the growth of the U.S. economy and contribute a significant percentage to the U.S. gross domestic product. IP-related industries also pay significantly higher wages than other industries and contribute to a higher standard of living in the United States. To the extent that counterfeiting and piracy reduce investments in research and development, these companies may hire fewer workers and may contribute less to U.S. economic growth, overall. The U.S. economy may also experience slower growth due to a decline in trade with countries where widespread counterfeiting hinders the activities of U.S. companies operating overseas.\nThe U.S. economy, as a whole, also may experience effects of losses by consumers and government. An economy’s gross domestic product could be measured as either the total expenditures by households (consumers), or as the total wages paid by the private sector (industry). Hence, the effect of counterfeiting and piracy on industry would affect consumers by reducing their wages, which could reduce consumption of goods and services and the gross domestic product. Finally, the government is also affected by the reduction of economic activity, since fewer taxes are collected.\nIn addition to the U.S. economy-wide effects, as we reported in April 2010, counterfeit or pirated products that act as substitutes for genuine goods can have a wide range of negative effects on industries, according to experts we spoke with and literature we reviewed. These sources further noted that the economic effects vary widely among industries and among companies within an industry. The most commonly identified effect cited was lost sales, which leads to decreased revenues and/or market share.\nLost revenues can also occur when lower-priced counterfeit and pirated goods pressure producers or IP owners to reduce prices of genuine goods. In some industries, such as the audiovisual sector, marketing strategies must be adjusted to minimize the impact of counterfeiting on lost revenues. Movie studios that use time-related marketing strategies— introducing different formats of a movie after certain periods of time— have reduced the time periods or “windows” for each format as a countermeasure, reducing the overall revenue acquired in each window. Experts stated that companies may also experience losses due to the dilution of brand value or damage to reputation and public image, as counterfeiting and piracy may reduce consumers’ confidence in the brand’s quality.\nCompanies are affected in additional ways. For example, to avoid losing sales and liability issues, companies may increase spending on IP protection efforts. In addition, experts we spoke with stated that companies could experience a decline in innovation and production of new goods if counterfeiting leads to reductions in corporate investments in research and development. Another variation in the nature of the effects of counterfeiting and piracy is that some effects are experienced immediately, while others are more long-term, according to the OECD. The OECD’s 2008 report cited loss of sales volume and lower prices as short-term effects, while the medium- and long-term effects include loss of brand value and reputation, lost investment, increased costs of countermeasures, potentially reduced scope of operations, and reduced innovation. Finally, one expert emphasized to us that the loss of IP rights is much more important than the loss of revenue. He stated that the danger for the United States is in the accelerated “learning effects”— companies learn how to produce and will improve upon patented goods. They will no longer need to illegally copy a given brand—they will create their own aftermarket product. He suggested that companies should work to ensure their competitive advantage in the future by inhibiting undesired knowledge transfer.\nIn addition, private sector organizations have experienced a wide range of incidents involving data loss or theft, economic loss, computer intrusions, and privacy breaches, underscoring the need for improved security practices. The following examples from news media and other public sources illustrate types of cyber crimes.\nIn February 2011, media reports stated that computer hackers had broken into and stolen proprietary information worth millions of dollars from the networks of six U.S. and European energy companies.\nIn mid-2009 a research chemist with DuPont Corporation reportedly downloaded proprietary information to a personal e- mail account and thumb drive with the intention of transferring this information to Peking University in China and also sought Chinese government funding to commercialize research related to the information he had stolen.\nBetween 2008 and 2009, a chemist with Valspar Corporation reportedly used access to an internal computer network to download secret formulas for paints and coatings, reportedly intending to take this proprietary information to a new job with a paint company in Shanghai, China.\nIn December 2006, a product engineer with Ford Motor Company reportedly copied approximately 4,000 Ford documents onto an external hard drive in order to acquire a job with a Chinese automotive company.", "Generally, as we reported in April 2010, the illicit nature of counterfeiting and piracy makes estimating the economic impact of IP infringements extremely difficult, so assumptions must be used to offset the lack of data. Efforts to estimate losses involve assumptions such as the rate at which consumers would substitute counterfeit for legitimate products, which can have enormous impacts on the resulting estimates. Because of the significant differences in types of counterfeited and pirated goods and industries involved, no single method can be used to develop estimates. Each method has limitations, and most experts observed that it is difficult, if not impossible, to quantify the economy-wide impacts. Nonetheless, research in specific industries suggests that the problem is sizeable.", "As we reported in April 2010, quantifying the economic impact of counterfeit and pirated goods on the U.S. economy is challenging primarily because of the lack of available data on the extent and value of counterfeit trade. Counterfeiting and piracy are illicit activities, which makes data on them inherently difficult to obtain. In discussing their own effort to develop a global estimate on the scale of counterfeit trade, OECD officials told us that obtaining reliable data is the most important and difficult part of any attempt to quantify the economic impact of counterfeiting and piracy. OECD’s 2008 report stated that available information on the scope and magnitude of counterfeiting and piracy provides only a crude indication of how widespread they may be, and that neither governments nor industry were able to provide solid assessments of their respective situations. The report stated that one of the key problems is that data have not been systematically collected or evaluated and, in many cases, assessments “rely excessively on fragmentary and anecdotal information; where data are lacking, unsubstantiated opinions are often treated as facts.”\nBecause of the lack of data on illicit trade, methods for calculating estimates of economic losses must involve certain assumptions, and the resulting economic loss estimates are highly sensitive to the assumptions used. Two experts told us that the selection and weighting of these assumptions and variables are critical to the results of counterfeit estimates, and the assumptions should, therefore, be identified and evaluated. Transparency in how these estimates are developed is essential for assessing the usefulness of an estimate. However, according to experts and government officials, industry associations do not always disclose their proprietary data sources and methods, making it difficult to verify their estimates. Industries collect this information to address counterfeiting problems associated with their products and may be reluctant to discuss instances of counterfeiting because consumers might lose confidence. OECD officials, for example, told us that one reason some industry representatives were hesitant to participate in their study was that they did not want information to be widely released about the scale of the counterfeiting problem in their sectors.", "As we reported in April 2010, there is no single methodology to collect and analyze data that can be applied across industries to estimate the effects of counterfeiting and piracy on the U.S. economy or industry sectors. The nature of data collection, the substitution rate, value of goods, and level of deception are not the same across industries. Due to these challenges and the lack of data, researchers have developed different methodologies. In addition, some experts we interviewed noted the methodological and data challenges they face when the nature of the problem has changed substantially over time. Some commented that they have not updated earlier estimates or were required to change methodologies for these reasons.\nA commonly used method to collect and analyze data, based on our literature review and interviews with experts, is the use of economic multipliers to estimate effects on the U.S. economy. Economic multipliers show how capital changes in one industry affect output and employment of associated industries. Commerce’s Bureau of Economic Analysis guidelines make regional multipliers available through its Regional Input- Output Modeling System (RIMS II). These multipliers estimate the extent to which a one-time or sustained change in economic activity will be Multipliers can provide an attributed to specific industries in a region.illustration of the possible “induced” effects from a one-time change in final demand. For example, if a new facility is to be created with a determined investment amount, one can estimate how many new jobs can be created, as well as the benefit to the region in terms of output (e.g., extra construction, manufacturing, supplies, and other products needed). It must be noted that RIMS II multipliers assume no job immigration or substitution effect. That is, if new jobs are created as a result of investing more capital, those jobs would not be filled by the labor force from another industry. Most of the experts we interviewed were reluctant to use economic multipliers to calculate losses from counterfeiting because this methodology was developed to look at a one- time change in output and employment. Nonetheless, the use of this methodology corroborates that the effect of counterfeiting and piracy goes beyond the infringed industry. For example, when pirated movies are sold, it damages not only the motion picture industry, but all other industries linked to those sales.", "While experts and literature we reviewed in our April 2010 report provided different examples of effects on the U.S. economy, most observed that despite significant efforts, it is difficult, if not impossible, to quantify the net effect of counterfeiting and piracy on the economy as a whole. For example, according to the 2008 OECD study, it attempted to develop an estimate of the economic impact of counterfeiting and concluded that an acceptable overall estimate of counterfeit goods could not be developed. OECD further stated that information that can be obtained, such as data on enforcement and information developed through surveys, “has significant limitations, however, and falls far short of what is needed to develop a robust overall estimate.” Nonetheless, the studies and experts we spoke with suggested that counterfeiting and piracy is a sizeable problem, which affects consumer behavior and firms’ incentives to innovate.\nChairman Murphy, Ranking Member DeGette, and Members of the Subcommittee, this completes my prepared statement. I would be pleased to respond to any questions you may have at this time.", "If you or your staff have any questions about this testimony, please contact me at 202-512-3763 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. GAO staff who made key contributions to this testimony include Christine Broderick, Assistant Director; Pedro Almoguera; Karen Deans; and Rachel Girshick.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 2, 1 ], "alignment": [ "h2_full", "h0_full h2_title", "h0_full h2_full", "h0_full", "h2_full h1_full", "", "", "h2_full", "" ] }

{ "question": [ "How important is IP in the U.S.?", "How do IP-related industries compare to others in terms of employee standards?", "How does ensuring IP protection benefit the public?", "How do counterfeiting and piracy affect the U.S.?", "How do such issues affect the private sector?", "What makes cost-estimates of IP infringements difficult to calculate?", "How large is the issue of IP infringements in the U.S,?", "How are cost-estimates for IP infringements calculated?", "To what extent can a single method be used to calculate the cost of IP infringements?", "What is the United States' global role in intellectual property?", "Why is IP theft a growing threat?", "What is IP?", "What are IP rights?", "How can IP be targeted by bad actors?", "What does this statement discuss?", "What data is this statement based on?" ], "summary": [ "In April 2010, GAO reported that intellectual property (IP) is an important component of the U.S. economy and IP-related industries contribute a significant percentage to the U.S. gross domestic product.", "IP-related industries also pay significantly higher wages than other industries and contribute to a higher standard of living in the United States.", "Ensuring the protection of IP rights encourages the introduction of innovative products and creative works to the public.", "According to experts and literature GAO reviewed, counterfeiting and piracy have produced a wide range of effects on consumers, industry, government, and the economy as a whole. The U.S. economy as a whole may grow more slowly because of reduced innovation and loss of trade revenue. To the extent that counterfeiting and piracy reduce investments in research and development, companies may hire fewer workers and may contribute less to U.S. economic growth, overall.", "Furthermore, as GAO reported in June 2012, private sector organizations have experienced data loss or theft, economic loss, computer intrusions, and privacy breaches. For example, in February 2011, media reports stated that computer hackers had broken into and stolen proprietary information worth millions of dollars from the networks of six U.S. and European energy companies.", "Generally, as GAO reported in April 2010, the illicit nature of counterfeiting and piracy makes estimating the economic impact of IP infringements extremely difficult.", "Nonetheless, research in specific industries suggests that the problem is sizeable, which is of particular concern as many U.S. industries are leaders in the creation of intellectual property.", "Because of the difficulty in estimating the economic impact of IP infringements, assumptions must be used to offset the lack of data. Efforts to estimate losses involve assumptions such as the rate at which consumers would substitute counterfeit for legitimate products, which can have enormous impacts on the resulting estimates.", "Because of the significant differences in types of counterfeited and pirated goods and industries involved, no single method can be used to develop estimates. Each method has limitations, and most experts observed that it is difficult, if not impossible, to quantify the economy-wide impacts.", "The United States is an acknowledged global leader in the creation of intellectual property.", "According to the Federal Bureau of Investigation, IP theft is a growing threat which is heightened by the rise of the use of digital technologies.", "IP is any innovation, commercial or artistic, or any unique name, symbol, logo, or design used commercially.", "IP rights protect the economic interests of the creators of these works by giving them property rights over their creations.", "Cyber attacks are one way that threat actors--whether nations, companies, or criminals--can target IP and other sensitive information of federal agencies and American businesses. While bringing significant benefits, increasing computer interconnectivity can create vulnerabilities to cyber-based threats.", "GAO was asked to testify on efforts to estimate the economic impacts of theft of intellectual property. Accordingly, this statement discusses (1) the economic significance of intellectual property protection and theft on the U.S. economy and (2) insights from efforts to quantify the economic impacts of counterfeiting and piracy on the U.S. economy.", "This statement is based on products GAO issued from April 2010 through June 2012 on the economic impacts of theft of intellectual property and on cyber threats and economic espionage." ], "parent_pair_index": [ -1, 0, -1, -1, 3, -1, 0, 0, 2, -1, -1, -1, 2, 2, -1, 5 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 2, 2, 2, 2, 0, 0, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "What Are Fannie Mae and Freddie Mac?", "Present", "How Profitable Are Fannie Mae and Freddie Mac?", "How Much Have the GSEs Paid to Treasury in Dividends?", "Has the Profit Sweep Increased the GSEs' Dividend Payments to Treasury?", "What Is Happening to Fannie Mae's and Freddie Mac's Affordable Housing Initiatives?", "What Is Happening to Executive Compensation?", "Risks", "What Risks Do Fannie Mae and Freddie Mac Face?", "What Are Fannie Mae and Freddie Mac Doing to Reduce Risks?", "What Risks Do Fannie Mae and Freddie Mac Create for the U.S. Government?", "What Is Common Securitization Solutions?", "What Has Conservatorship Done to Stockholders and Other Stakeholders?", "Future", "How Can Fannie Mae and Freddie Mac Leave Conservatorship?", "Could the GSEs Return to Stockholder Control?", "What Are Some of Congress's Options for Restructuring the GSEs?", "Context", "Why Were Fannie Mae and Freddie Mac Created?", "What Is Conservatorship?", "How Much Support Has Treasury Extended?", "What Recent Legislation Has Affected the GSEs?", "What Happened?", "Why Did FHFA Place Fannie Mae and Freddie Mac Under Conservatorship?", "What Had Congress Done Previously to Aid the GSEs?", "What Other Actions Has the Federal Government Taken to Address the Financial Condition of the GSEs?", "Glossary" ], "paragraphs": [ "", "Fannie Mae and Freddie Mac are stockholder-owned, government-sponsored enterprises (GSEs), which purchase existing mortgages and pool the mortgages into mortgage-backed securities (MBSs), which they guarantee will be paid on time. The GSEs either keep the MBSs as an investment or sell the MBSs to investors. Their congressional charters give the GSEs a special relationship with the federal government, and it is widely believed that the federal government implicitly guarantees their $808 billion in bonds and $4.6 trillion in MBSs. Their charters give these GSEs special public policy goals aimed at providing liquidity in the mortgage market and promoting homeownership for underserved groups and locations.\nIn 2008, the GSEs' financial condition had weakened, and there were concerns over their ability to meet obligations. On September 7, 2008, the Federal Housing Finance Agency (FHFA) took control of these GSEs from their stockholders and management in a process known as conservatorship. The Housing and Economic Recovery Act of 2008 (HERA) specifies that as conservator, FHFA has the right to operate the GSEs. HERA specifies:\n(D) Powers as Conservator—The [Federal Housing Finance] Agency may, as conservator, take such actions as may be—\n(i) necessary to put the regulated entity in a sound and solvent condition; and\n(ii) appropriate to carry on the business of the regulated entity and preserve and conserve the assets and property of the regulated entity.\nIn certain circumstances these two powers can conflict. For example, if a GSE were placed in conservatorship because of a \"violation of any law or regulation ... that is likely to ... weaken the condition of the regulated entity,\" it might be relatively simple to come into compliance and quickly leave conservatorship. In contrast, a more fundamental problem might take longer and lead to conflicts between quickly ending conservatorship by returning a GSE to stockholder control and the GSEs' charters, which require them to support the mortgage market.\nCongressional interest in Fannie Mae and Freddie Mac has increased in recent years, primarily because the federal government's continuing conservatorship of these GSEs has raised doubts about their future and concerns about the potential cost of supporting them. Congressional interest has been reflected by the introduction of bills to reform or replace the GSEs and by oversight hearings. Other reasons for congressional concern include the large role that the GSEs and government-guaranteed mortgages (such as those guaranteed by the Federal Housing Administration) play in the overall mortgage market and Treasury's contract to purchase up to $200 billion in special senior preferred stock from each GSE.\nThis report presents, in analytical question and answer form, the major issues surrounding Fannie Mae's and Freddie Mac's financial conditions, and various public policy options under discussion. A glossary of terms is included at the end of this report.", "", "Since Fannie Mae and Freddie Mac went into conservatorship in September 2008, Fannie Mae has reported a cumulative loss of slightly less than $1.7 billion, while Freddie Mac has reported a cumulative profit of slightly more than $9.0 billion (see Figure 1 ). Both have reported annual profits since 2012. In 2015, Fannie Mae showed an $11 billion annual profit, and Freddie Mac showed an annual profit of $6 billion.\nThe GSEs' losses that started in late 2006 were notable because the GSEs had previously been consistently profitable. Prior to 2006, Fannie Mae had not reported a full-year loss since 1985, and Freddie Mac had never reported a full-year loss since it became publicly traded in 1989.\nIn examining the annual profits or losses ( Figure 2 ), it is notable that both Fannie Mae and Freddie Mac were extremely profitable in 2013, reporting profits of nearly $84 billion and $49 billion, respectively. For both Fannie Mae and Freddie Mac, three factors largely created these profits. First, much of the money previously set aside to cover anticipated future losses (called loss reserves) was reversed, adding $14.7 billion in profits to Fannie Mae and $6.2 billion in profits to Freddie Mac. Second, certain financial assets that could be used only to pay their taxes (\"deferred tax assets,\" such as low income tax credits) increased in value because Fannie Mae and Freddie Mac had become profitable in 2012. This increased Fannie Mae's profits by $45.4 billion and increased Freddie Mac's profits by $31.7 billion. Third, the GSEs negotiated agreements with certain companies that had sold them mortgages that were riskier than documented, increasing Fannie Mae's profits by $17.9 billion and Freddie Mac's profits by $5.6 billion.\nIn 2013, these three factors combined to add $78.0 billion to Fannie Mae's bottom line and added $43.5 billion to Freddie Mac's bottom line. Without these three sources of income, Fannie Mae would have reported a profit of $6.0 billion, and Freddie Mac would have reported a profit of $5.2 billion. These factors will not contribute as much to the GSEs' profits going forward. In 2014 and 2015, both GSEs had very little in mortgage repurchase requests outstanding, and neither has deferred tax assets valuation allowance. In contrast, at the end of 2015, Fannie Mae had $28.3 billion in loss reserves, and Freddie Mac had $15.3 billion in loss reserves.\nDespite being profitable for the year 2015, Freddie Mac reported a loss of $475 million in the third quarter. It attributed the loss to derivatives used to hedge interest rate risk. Freddie Mac had sufficient reserves, so it was not forced to request additional financial support from Treasury. Freddie Mac's loss was the first quarterly loss for either GSE since the fourth quarter of 2011. Freddie Mac reported a first quarter 2016 net loss of $354 million, largely attributable to losses from derivatives.\nFannie Mae has not reported quarterly losses in 2015 or 2016.", "To expedite reducing assets of the GSEs, Treasury, FHFA, and each of the GSEs amended the separate support contracts on August 17, 2012, so that each GSE pays Treasury all profits it earns each quarter. If there are no profits, there is no payment. Previously each GSE made quarterly payments on a 10% annual dividend on the senior preferred stock regardless of profits or losses earned in the quarter. As of the end of calendar year 2015, Fannie Mae had paid $148 billion in dividends, and Freddie Mac had paid $98 billion in dividends.", "Under the dividend profit sweep, Fannie Mae has paid dividends of $148 billion to Treasury, and Freddie Mac has paid dividends of $98 billion to Treasury. If the profit sweep had not replaced paying dividends to Treasury at a 10% annual rate, Fannie Mae would have paid $69 billion and Freddie Mac would have paid $47 billion to Treasury in dividends. These dividend payments are illustrated in Figure 4 for Fannie Mae and Figure 5 for Freddie Mac.", "The Housing and Economic Recovery Act of 2008 (HERA) gives the FHFA authority to set housing goals for Fannie Mae and Freddie Mac and added a new group of goals called \"duty to serve\" to the previously existing affordable housing goals. The housing goals support affordable housing by requiring each of the GSEs to purchase a specified amount of mortgages that meet the goal.\nThere are single-family and multifamily goals. The single-family affordable housing benchmarks listed in Table 1 are measured with reference to numbers of mortgages purchased.\nA GSE has two ways to meet its single-family affordable housing goals. First, a GSE can meet a goal (e.g., the low-income families home purchase goal) by meeting or exceeding the benchmark percentage (e.g., at least 24% of mortgages purchased by a GSE must have allowed a low-income family to purchase a home). Second, a GSE can meet an affordable housing goal if its qualifying purchases meet or exceed the market as measured by data collected under the Home Mortgage Disclosure Act (HMDA). For example, if a GSE's purchases of low-income family refinance mortgages were 10%, this would not meet the benchmark goal of 21% but could meet the alternative goal if less than 10% of the market were these mortgages. The single-family housing goals are the same for each GSE in percentage terms, but the numbers are likely to be different because Fannie Mae usually purchases more mortgages than Freddie Mac does.\nFHFA also sets multifamily housing goals, which are listed in Table 2 . These are defined in terms of rental units that are affordable at the specified income limits. For the purpose of these multifamily goals, small properties have between 5 and 50 units.\nHERA created a new duty to serve three underserved markets: manufactured housing, affordable housing preservation, and rural housing. FHFA has issued a proposed rule that would require Fannie Mae and Freddie Mac to submit drafts of an Underserved Markets Plan. The comment period for the plan ended on March 18, 2016.\nIn addition, HERA requires the GSEs to contribute to the HOPE Reserve Fund, the Housing Trust Fund, and the Capital Magnet Fund. The HOPE Reserve Fund provides a financial cushion for the HOPE for Homeowners refinance program. The Housing Trust Fund provides grants to states to preserve and increase owner-occupied and rental housing for low- and very-low income families. The Department of Housing and Urban Development (HUD) uses the Capital Magnet Fund to fund competitive block grants to states to attract private capital to develop, preserve, rehabilitate, or purchase affordable housing, economic development, and community service facilities for low-income, very low-income, and extremely low-income families. FHFA suspended these contributions when the GSEs entered conservatorship but reinstated the contributions effective in 2015.\nEach GSE is required to set aside 4.2 basis points (0.042%) of the unpaid principal balance of mortgages purchased in a year for this purpose. These funds are divided, with 25% going to the HOPE reserve fund to pay ongoing costs for the HOPE for homeowners program, 49% going to the Housing Trust Fund, and 26% to the Capital Magnet Fund.\nFor 2015, Fannie Mae contributed $54 million to the HOPE Reserve Fund, $106 million to the Housing Trust Fund, and $57 million to the Capital Magnet Fund. Freddie Mac contributed $41.3 million to the HOPE Reserve Fund, $80.6 million to the Housing Trust Fund, and $43.4 million to the Capital Magnet Fund.", "In most corporations, executive compensation is set by the board of directors and management. For 2007, the year before they went into conservatorship, Fannie Mae reported that it paid its chief executive officer (CEO) $12.2 million, and Freddie Mac reported paying its CEO $18 million. Once the GSEs entered conservatorship, their senior management was replaced; the new managers received greatly reduced compensation.\nHERA strengthened FHFA's regulatory oversight over executive compensation and so-called golden parachutes. The senior preferred stock agreement with FHFA and Treasury signed by each GSE requires the GSEs to get approval for new compensation agreements with executives. The Equity in Government Compensation Act of 2015 prevented FHFA from approving raises for the CEOs from $600,000 to $4 million.", "", "In any economic environment, Fannie Mae and Freddie Mac face the variety of risks that many other companies face. The GSEs purchase home mortgages. They package most mortgages into MBSs and sell most MBS to institutional investors such as banks, hedge funds, central banks, and sovereign wealth funds.\nThe GSEs finance their portfolios of long-term (typically 30-year) mortgages with short-term borrowing (typically three months to five years). This financing strategy increases the GSEs' profits, because short-term borrowing is usually less expensive than longer-term loans. At the same time, it creates interest rate risk —that is, if short-term interest rates increase, profitability can be reduced or can even turn into losses. For example, if interest rates were to increase to 6%, mortgages at 5% would not be profitable.\nThe GSEs try to reduce the risk of rising interest rates with derivative contracts and by borrowing money for longer periods of time. Derivative contracts that hedge increased interest rates generally reduce the benefits if interest rates decline. In certain cases, these hedges can result in a GSE losing money instead of showing a profit. For example, Freddie Mac says this is what happened to it in the third quarter of 2015 and the first quarter of 2016.\nUnder terms of the third amendments to their Treasury support agreements, Fannie Mae and Freddie Mac must keep their mortgage portfolios under a ceiling that declines each year until 2018, when each of their portfolios must be no more than $250 billion.\nThe GSEs are also subject to credit risk . The GSEs guarantee timely payment of principal and interest of the mortgages to MBS investors. Mortgage foreclosure rates climbed and losses became more severe after 2006. Nationally, these trends have reversed, reducing credit risk.", "Two major sources of losses for mortgage lenders in the aftermath of the 2008 housing bust have been loans to borrowers with less than prime (subprime) credit and certain types of mortgages to borrowers with credit between prime and subprime (Alt-A). At the end of 2015, Fannie Mae held $8.9 billion in private-label MBSs backed by subprime mortgages (down from $24.5 billion at the end of 2008) and held $7.7 billion in private-label MBSs backed by Alt-A mortgages (down from $27.9 billion at the end of 2008).\nFreddie Mac held $27.7 billion in private-label MBSs backed by subprime mortgages (down from $74.9 billion at the end of 2008) and $6.0 billion in private-label MBSs backed by Alt-A mortgages (down from $25.1 billion at the end of 2008).\nSince 2008, Fannie Mae and Freddie Mac have tightened their lending standards. For example, the average FICO score of a 2007 mortgage purchased by Freddie Mac was 703, in 2008 it was 722, and in the fourth quarter of 2015 it was 750. Fannie Mae shows a similar increase in FICO scores. Approximately 76% of Fannie Mae's single-family book of business has been purchased in 2008 or more recently; the number for Freddie Mac is approximately 71%.\nShortly after the GSEs entered conservatorship, they increased loan loss reserves in anticipation of continuing losses. As the foreclosure rate and the average loss on a foreclosure have declined in recent years, the GSEs have been able to reduce their loss reserves.\nThe GSEs agreed with Treasury to reduce their capital reserves from $3 billion starting in 2013 to zero starting in 2018. This shifts some risk to Treasury, which will provide additional financial support to a GSE if one's net worth becomes negative.\nIn 2012, FHFA directed Fannie Mae and Freddie Mac to develop ways to share their credit risk with the private sector, thereby reducing the risk to the government and taxpayers. The GSEs have worked together on this initiative but have implemented different programs.\nFHFA categorizes mortgage losses as expected, unexpected, and catastrophic. Expected losses occur under normal economic conditions and are mainly due to foreclosures resulting from illness, unemployment, and divorce. Unexpected losses occur during stressful times, such as recessions or financial turmoil. Catastrophic losses occur only under very extreme economic circumstances.\nThe GSEs are reducing their credit risk by paying private sector investors to assume some of their expected and unexpected losses. The GSEs' risk sharing has covered the first 3% to 6% of the unpaid balance on the covered mortgages. The GSEs say that they have found that sharing catastrophic losses was more expensive than it was worth.\nThe GSEs have both issued bonds known as \"pre-funded capital markets transactions,\" which Fannie Mae calls Connecticut Avenue Securities (CAS) and Freddie Mac calls Structured Agency Credit Risk securities (STACRs). Investors purchase these bonds and are paid based on the performance of a reference pool of mortgages. If the pool performs well, the investors receive a higher return; if the pool performs poorly, the investors receive a lower return. In the case of extremely poor pool performance, investors could lose their investments.\nBoth GSEs have increased participation in more traditional insurance or guarantee agreements with mortgage insurers, re-insurers, or other companies. The counterparty pays the GSE in the event of a covered loss.\nIn August 2012, the GSEs agreed to reduce their portfolios to $250 billion each by 2018. In 2008, Fannie Mae held $792 billion in mortgage assets (MBS and mortgages), and Freddie Mac held $805 billion in mortgage assets. These smaller portfolios are financed with correspondingly less borrowing and reduce interest rate risk .\nLike all other businesses, the GSEs have operational risk due to the failure of internal controls. FHFA has directed the GSEs to reduce operational risk by improving their information technology, data quality, and internal controls.\nAs financial corporations, the GSEs are also subject to model risk , or the risk that their models (especially credit models) are not accurate. FHFA has directed the GSEs to update their financial models to reflect changing conditions.", "If either Fannie Mae or Freddie Mac has quarterly losses that exceed their reserves and capital, they would remain solvent by selling additional preferred stock to Treasury. Treasury's contract with Fannie Mae has $117.6 billion remaining that could be drawn down to remain solvent, and Freddie Mac has $140.5 billion in potential Treasury support.\nIf either GSE were to draw down all of its remaining Treasury support, it is possible that it would be dissolved in a process known as receivership. In receivership, the usual priority of claims on remaining assets is administrative expenses of the receivership, senior and general debt, subordinated debt, and stock. This would seem to place the MBSs with their guarantee at a fairly senior position, followed by GSE bonds, which would be ahead of the government's senior preferred stock, which would be ahead of all other stockholders. It is not clear how the mortgage market would function if one or both GSEs were to go into receivership.\nIf a GSE were unable to perform on the timely payment guarantee because it went into receivership, the value of the outstanding MBSs would depend on the payment of the underlying mortgages, the rules of receivership, and any action the government might take (or not take) to support the MBSs. On the one hand, the value of its MBSs could decline, because the value of the GSE's guarantee of timely payment of the MBSs could be called into question. On the other hand, if the government were to step in and back the MBSs, the value of the MBSs could increase due to the stronger guarantee.\nThe eventual value of the bonds would depend on the cause of the receivership and the details of the liquidation process. For example, if mortgage defaults and losses were to increase, the assets available for creditors would decrease.\nIf the GSEs were put into receivership as part of housing finance reform, the value of the senior preferred stock would depend on the details of the new law.", "Fannie Mae and Freddie Mac created Common Securitization Solutions (CSS) as a joint venture to standardize the process of issuing and managing MBSs. FHFA determined that the GSEs' computer operations needed to be modernized and that it would be more efficient to create one system for the two enterprises, as the MBSs issued by Fannie Mae are similar to, but not identical to, those issued by Freddie Mac. Due to technical differences, if Fannie Mae and Freddie Mac were to purchase identical mortgages and pool them into their MBSs, Freddie Mac's would sell for less. This difference led to an additional goal to standardize the two enterprises' MBSs.\nThe common securitization platform (CSP) is a large part of this effort and is planned for two releases. Only Freddie Mac will use CSP Release 1, which will perform data acceptance, issuance support, and bond administration functions for relatively straightforward types of MBSs. Both Fannie Mae and Freddie Mac will use Release 2 to perform data acceptance, issuance support, disclosure, and bond administration activities for a wider range of MBSs. In the longer run, CSP will be available to other entities. Release 1 is scheduled for 2016 and Release 2 for 2018.\nThe common MBS is a long-range goal.", "Common stockholders own 100% of the GSEs. While a company is in conservatorship, the powers of common stockholders, who formerly elected the boards of directors and approved certain enterprise actions, are transferred to the conservator—in this case, FHFA. As part of the support agreements with Treasury, each GSE issued Treasury long-term options (called warrants) to purchase 80% of each GSE at a nominal cost. If Treasury were to exercise these warrants, current common stockholders would own 20% of the enterprises. Arguably, 20% of a healthy enterprise is worth more than 100% of GSEs whose liabilities exceed their assets.\nOn August 17, 2012, Treasury signed new agreements with Fannie Mae and Freddie Mac changing the quarterly dividend to be all the profits earned in the quarter. If no profits are earned, no dividend is paid. Treasury said that the purpose of the change was to wind down the GSEs and benefit taxpayers. Without the ability to retain earnings, the GSEs cannot accumulate the capital required by law to return to stockholder control.\nStockholders seeking to regain control of the GSEs have sued the federal government over this new agreement.", "", "There are two ways that Fannie Mae and Freddie Mac could exit their conservatorships without congressional action. First, if they become financially viable, they could return to stockholder control. This is unlikely for the reasons discussed in \" Could the GSEs Return to Stockholder Control? \" below.\nIf they did become financially viable, it appears that Treasury and FHFA would have to approve the GSEs leaving conservatorship. One issue is that as long as the profit sweep remains in place, the companies have little value. And what value there is can be captured by the government by using its warrants to purchase 80% ownership of each GSE.\nSection 702 of the Consolidated Appropriations Act, 2016, prohibits Treasury from disposing of its senior preferred stock in the GSEs without enabling legislation before January 1, 2018. In effect, this requires Congress to approve any major change to the GSEs' status.\nIn addition, as part of the support agreements, the GSEs each gave Treasury warrants (long-term options) to purchase 79.9% of each at a nominal cost. On other occasions when the federal government has provided significant financial support to companies, such as Chrysler and General Motors, Treasury has auctioned off similar warrants at a profit.\nSecond, if they are unable to become financially viable, they could enter receivership. There is no legal reason that one GSE could not go into receivership and the other GSE return to stockholder control, although this might present some policy questions about the desirability of having a monopoly GSE.", "It appears to be impossible for the GSEs to return to stockholder control without congressional or executive action. So long as all profits are swept into the Treasury, there is little reason for other investors to purchase any GSE stock.\nIn addition, under terms of Treasury's support agreement, the GSEs must reduce their capital reserves (funds set aside against future expenses). These capital reserves were $3 billion each in 2013 and are to decline by $600 million each year until they reach zero on January 1, 2018. Without any capital reserves, which are used for large, anticipated expenses, the GSEs would not be financially viable.\nIn particular, any financial intermediary, such as Fannie Mae and Freddie Mac, must keep reserves against losses. In the case of Fannie Mae and Freddie Mac, they need to set aside reserves to cover losses from foreclosures and other events. Currently, the profit sweep prevents them from accumulating capital.\nBy law, the GSEs have two capital requirements: One is risk based, and the other is a minimum requirement. At the end of 2014, Fannie Mae had a deficit of $142 billion in minimum capital, and Freddie Mac had a deficit of $92 billion in minimum capital. The last time risk-based capital requirements were calculated—in 2007, prior to conservatorship—Fannie Mae needed $25 billion, and Freddie Mac needed $14 billion.\nThere are multiple shareholder lawsuits seeking to reverse certain of FHFA's actions as conservator.", "Going forward, Congress has many options for reorganizing Fannie Mae and Freddie Mac. If Congress were to decide to keep and reorganize Fannie Mae and Freddie Mac, options include (but are not limited to) the following:\nCongress could take no action. Congress could repeal the GSEs' charters and allow the private sector to replace them to the extent that the private sector finds this attractive. Congress could make Fannie Mae and Freddie Mac part of the government. Both GSEs were originally government corporations. They could return to being government corporations or become part of an agency such as the Department of Housing and Urban Development. Congress could repeal the GSEs' charters and create new entities (perhaps new GSEs) to assume some or all of their role in the mortgage market.\nFor additional information, see CRS Report R40800, GSEs and the Government's Role in Housing Finance: Issues for the 113th Congress , by [author name scrubbed] and CRS Report R41822, Proposals to Reform Fannie Mae and Freddie Mac in the 112th Congress , by [author name scrubbed].", "", "Prior to the development of the modern secondary mortgage market, mortgage markets were essentially local, and there were significant differences across the nation in mortgage rates and relatively large fluctuations in lending activity. Primary lenders had to balance their lending practices with their deposits received, which led to severe credit shortages during economic downturns, when savings accounts were depleted by withdrawals. This shortage was exacerbated due to the concentration of major money centers in areas like Chicago and New York, far from many who needed home loans. There was no efficient way to move funds from these areas where mortgage money was available to other areas, such as California, where it was in relatively short supply. In effect, this amounted to a geographic barrier that prevented the law of supply and demand from operating on a national level in the home loan market. The secondary mortgage market combined these many regional mortgage markets into a single national market that draws financing from around the world.\nTo encourage improvement in housing standards and conditions and to provide a system of mutual mortgage insurance, Congress passed, and President Franklin D. Roosevelt signed into law, the National Housing Act in 1934. Title III of the National Housing Act established national mortgage associations, giving rise to the creation of the Federal National Mortgage Association, which now uses the name Fannie Mae. In its original form, Fannie Mae was a federal government agency that was chartered to support government-backed mortgages and carry out some government subsidy functions. In 1954, Congress re-chartered Fannie Mae as a mixed government and private-sector entity, with a clearly delineated separation between its market-oriented (i.e., secondary mortgage trading) and governmental (i.e., special assistance and managing and liquidating government-held mortgages) functions. In 1968, Congress split the firm into two distinct organizations, with the secondary market arm retaining the Fannie Mae name and the government functions arm taking the name Ginnie Mae, short for the Government National Mortgage Association. The partitioning legislation re-chartered Fannie Mae as a GSE to become completely privately owned with no federal funding. Fannie Mae completed this transition in 1970.\nIn 1970, Congress enacted the Emergency Home Finance Act, which authorized Fannie Mae to buy conventional mortgages. Fannie Mae bought most of the mortgages from mortgage bankers. Savings and loans, the other major source of mortgage money, were restricted to holding mortgages and were generally unable to work with Fannie Mae. To facilitate secondary market trading of conventional mortgages for savings and loan associations, the act created the Federal Home Loan Mortgage Corporation, which now uses the name Freddie Mac, as a wholly owned subsidiary of the Federal Home Loan Bank System (FHLBS). In 1989, Congress re-chartered Freddie Mac so that its shares could trade on the New York Stock Exchange, in the same manner as Fannie Mae's. The 1989 act also did away with the separate missions of Fannie Mae and Freddie Mac, with the result that today the two enterprises have similar characteristics.\nFannie Mae and Freddie Mac purchase mortgages that lenders have already made to homeowners. These mortgages must meet Fannie Mae's and Freddie Mac's standards and not exceed the conforming loan limit. These mortgages are pooled into MBSs, which are guaranteed by the issuing GSE, and either sold to investors or kept by the GSE as an investment.", "Conservatorship of Fannie Mae and Freddie Mac involves FHFA taking control of the GSEs. As conservator, the powers of the board of directors, officers, and shareholders are transferred to FHFA. A conservator can cancel certain contracts, but FHFA elected not to do so in 2008. Conservatorship is authorized by HERA. One goal of conservatorship is to preserve each GSE's assets and return it to sound financial condition, which would allow the conservatorship to be ended.", "Since the third quarter of 2008, FHFA, as conservator of the GSEs, has asked Treasury for a total of $116.1 billion to increase Fannie Mae's assets to offset its liabilities, and a total of $71.3 billion for Freddie Mac. Neither GSE has required Treasury's support since the second quarter of 2012.\nTreasury support supports the GSEs purchasing new senior preferred stock. When they went into conservatorship, each of the GSEs paid Treasury $1 billion of senior preferred stock for the promise of future financial support. This stock (and that purchased subsequently) is senior to (has priority over) all other common and preferred stock; it is the only stock currently receiving dividends.", "Since the 110 th Congress, two continuing resolutions and seven other bills have been signed into law that have had significant impacts on Fannie Mae and Freddie Mac. (See Table 3 .)", "", "In September 2008, as regulator of Fannie Mae and Freddie Mac, FHFA announced that Fannie Mae and Freddie Mac agreed to voluntary conservatorship because of their deteriorating financial positions and the \"critical importance\" that each company has to the continued functioning of the residential financial markets.\nFHFA has said that subsequent audits of the GSEs determined that their financial positions were weaker than previously thought and that the GSEs were unlikely to survive without conservatorship. FHFA cited previous public statements that the GSEs needed to increase their capital and needed to strengthen management controls over operations.", "Prior to their conservatorship in 2008, Congress had assisted GSEs that were in financial difficulty. When Fannie Mae was losing significant amounts of money in 1982, Congress passed the Miscellaneous Revenue Act of 1982 that provided tax benefits for Fannie Mae. The Farm Credit System, another GSE, was aided by the Agricultural Credit Act of 1987, which authorized the issuance of $4 billion in bonds to support system members.\nSection 1117 of HERA authorized the Treasury to purchase any amount of GSE securities—debt or equity—if necessary to provide stability to financial markets, prevent disruptions in the availability of mortgage credit, or protect the taxpayer. This permitted the federal government to purchase the debt securities (bonds and MBSs) that the firms were unable to sell elsewhere and purchase stock. These contracts sent a signal to the markets that the Treasury was prepared to intervene rather than let either GSE fail. This authority expired on December 31, 2009.", "Conservatorship and the support agreements with Treasury are not the only actions that the federal government took to support Fannie Mae and Freddie Mac.\nOn July 15, 2008, the SEC issued an emergency order restricting short selling in the stock of 19 financial institutions, including Fannie and Freddie. The SEC acted to prevent the possibility that false rumors could drive share prices down and cause the market to lose confidence, thereby cutting off the firms' access to credit markets, as happened to Bear Stearns in March 2008. The order restricting short sales of Fannie Mae and Freddie Mac stock was renewed on July 29, 2008, and expired on August 12, 2008.\nThe government has also taken steps to prepare for possible future support for the GSEs. On July 13, 2008, the Federal Reserve Board of Governors granted the New York Fed the authority to lend directly to the GSEs. Section 1118 of HERA requires the new GSE regulator to consult with the Fed to ensure financial market stability.\nIn addition to the Fed's existing general authority to be a lender of last resort, the GSEs' charters give the GSEs a special relationship to the nation's central bank. The Fed uses the GSEs' bonds purchased on the secondary market for open market operations. These bond purchases could indirectly help the GSEs by adding to the demand for their debt and increasing their liquidity.\nThe Fed announced that it would conduct a special program to purchase GSE debt and MBSs in calendar year 2009 and the first quarter of 2010. Under this program, the Fed purchased more than $1 trillion of GSE debt and GSE-issued MBSs.\nIn programs that started in September 2008 and ended in March 2010, the Fed and Treasury together purchased more than $1.1 trillion in MBSs. On September 21, 2011, the Fed decided to begin reinvesting MBS principal repayments in other MBSs. As of March 6, 2016, the Fed held $1.4 trillion of Fannie Mae's and Freddie Mac's MBSs.", "" ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 3, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 3, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h1_full", "h2_title h3_title", "", "h2_full", "h2_full", "", "", "h3_title", "h3_full", "", "", "", "h2_full", "h0_title", "h0_full", "", "", "h1_title", "", "", "h1_full", "", "", "", "", "", "" ] }

{ "question": [ "What are Fannie Mae and Freddie Mac?", "What do Fannie Mae and Freddie Mac do?", "What role does the federal government have in MBSs?", "What was the financial condition of the GSEs in 2008?", "How did the federal government react to the instability of the GSEs?", "What were the terms of the GSEs agreement with the Treasury?", "How did this agreement affect other stockholders?", "What did the GSEs do if they didn't have enough cash to pay their Treasury dividend?", "How was the 10% dividend replaced?", "How did the profit sweep affect the Treasury?", "Why has Congressional interest in Fannie Mae and Freddie Mac increased recently?", "Why are the futures of the GSEs important?", "How could Congress shape the future of the GSEs?" ], "summary": [ "Fannie Mae and Freddie Mac are chartered by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and to promote homeownership for underserved groups and locations.", "They purchase mortgages, guarantee them, and package them in mortgage-backed securities (MBSs), which they either keep as investments or sell to institutional investors.", "In addition to the GSEs' explicit guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government.", "In 2008, the GSEs' financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed.", "In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market. The GSEs accepted going into conservatorship, and Treasury agreed to provide up to $200 billion each to keep them solvent.", "The GSEs agreed to pay Treasury a 10% cash dividend on funds received. If the GSEs do not have sufficient cash, they can pay Treasury a 12% dividend in special stock.", "Dividends were suspended for all other stockholders. If the GSEs had enough profit at the end of the quarter, the dividend came out of the profit.", "When the GSEs actually did not have enough cash to pay their dividend to Treasury, they asked for additional cash to make the payment instead of issuing additional stock.", "In August 2012, the 10% dividend was replaced with a \"profit sweep\" dividend.", "Under the profit sweep, Treasury received all of the profits above a declining capital reserve, but if there was no profit, there was no dividend.", "Congressional interest in Fannie Mae and Freddie Mac has increased in recent years, primarily because of the federal government's continuing conservatorship of these GSEs. Uncertainty in the housing, mortgage, and financial markets has raised doubts about the future of the enterprises and the potential cost to the Treasury of guaranteeing the enterprises' debt.", "Since more than 60% of households are homeowners, a large number of citizens could be affected by the future of the GSEs.", "Congress exercises oversight over the Federal Housing Finance Agency (FHFA), which is both regulator and conservator of the GSEs, and is considering legislation to shape the future of the GSEs." ], "parent_pair_index": [ -1, 0, -1, -1, 0, -1, 0, -1, -1, 3, -1, 0, 1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 2, 2, 2, 2, 2, 5, 5, 5 ] }

{ "title": [ "", "History of the SPR", "Establishment of the SPR", "The Drawdown Authorities", "Proposals in the 111th Congress to Amend the Authorities", "Acquisition of Crude Oil for the SPR", "Resumption of Fill (2009)", "Royalty-in-Kind Acquisition", "When Should the SPR Be Used?: The Debate Over the Years", "Use of the SPR in the Persian Gulf War (1990)", "Hurricanes and Changes in the Market Dynamics (2005-2008)", "The Call for an SPR Drawdown: Summer 2008", "Establishment of a Regional Home Heating Oil Reserve" ], "paragraphs": [ "", "", "From the mid-1970s until 2007, world markets have had to absorb roughly five significant spikes in the price of crude oil and petroleum products. Whether driven by disruptions in the physical supply of crude or refined fuels, or by uncertainties owing to international conflicts and instabilities, these price increases have consequences for the United States. Elevated petroleum prices affect the balance of trade and, owing to the relative inelasticity of demand for gasoline at prices less than $4.00 per gallon, siphon away disposable income that might be spent to support spending, investment, or savings.\nThe origin of the U.S. Strategic Petroleum Reserve (SPR) stems from the 1973 Arab-Israeli War. In response to the United States' support for Israel, the Organization of Arab Exporting Countries (OAPEC) imposed an oil embargo on the United States, the Netherlands, and Canada, and reduced production. While some Arab crude did reach the United States, the price of imported crude oil rose from roughly $4/barrel (bbl) during the last quarter of 1973 to an average price of $12.50/bbl in 1974. While no amount of strategic stocks can insulate any oil-consuming nation from paying the market price for oil in a supply emergency, the availability of strategic stocks can help blunt the magnitude of the market's reaction to a crisis. One of the original perceptions of the value of a strategic stockpile was also that its very existence would discourage the use of oil as a political weapon. The embargo imposed by the Arab producers was intended to create a very discernible physical disruption. This explains, in part, why the genesis of the SPR was focused especially on deliberate and dramatic physical disruptions of oil flow, and on blunting the significant economic impacts of a shortage stemming from international events.\nIn response to the experience of the embargo, Congress authorized the Strategic Petroleum Reserve in the Energy Policy and Conservation Act (EPCA, P.L. 94-163 ) to help prevent a repetition of the economic dislocation caused by the Arab oil embargo. In the event of an interruption, introduction into the market of oil from the Reserve was expected to help calm markets, mitigate sharp price spikes, and reduce the economic dislocation that had accompanied the 1973 disruption. In so doing, the Reserve would also buy time for the crisis to sort itself out or for diplomacy to seek some resolution before a potentially severe oil shortage escalated the crisis beyond diplomacy. The SPR was to contain enough crude oil to replace imports for 90 days, with a goal initially of 500 million barrels in storage. In May 1978, plans for a 750-million-barrel Reserve were implemented. The SPR is currently authorized for expansion to 1 billion barrels. The George W. Bush Administration was unsuccessful in persuading Congress to raise the authorized size further to 1.5 billion barrels.\nThe program is managed by the Department of Energy (DOE). Physically, the SPR comprises five underground storage facilities, hollowed out from naturally occurring salt domes, located in Texas and Louisiana. The caverns were finished by injecting water and removing the brine. Similarly, oil is removed by displacing it with water injection. For this reason, crude stored in the SPR remains undisturbed, except in the event of a sale or exchange. Multiple injections of water, over time, will compromise the structural integrity of the caverns. By 2005, the capacity of the SPR reached 727 million barrels. Its inventory reached nearly 700 million barrels before Hurricanes Katrina and Rita in 2005. Following the storms, some crude was loaned to refiners and some was sold. Loans of SPR oil are \"paid\" by the return of larger amounts of oil than were borrowed. By the end of 2009, was virtually filled to its capacity at 726 million barrels of crude oil.\nSPR oil is sold competitively. A Notice of Sale is issued, including the volume, characteristics, and location of the petroleum for sale; delivery dates and procedures for submitting offers; as well as measures for assuring performance and financial responsibility. Bids are reviewed by DOE and awards offered. The Department of Energy estimates that oil could enter the market roughly two weeks after the appearance of a notice of sale.\nThe SPR could be drawn down initially at a rate of roughly 4.4 mbd for up to 90 days; thereafter, the rate would begin to decline. Although fears were expressed periodically during the 1980s about whether the facilities for withdrawing oil from the Reserve were in proper readiness, the absence of problems during the first real drawdown in early 1991 (the Persian Gulf War) appeared to allay much of that concern. However, some SPR facilities and infrastructure were beginning to reach the end of their operational life. A Life Extension Program, initiated in 1993, upgraded or replaced all major systems to ensure the SPR's readiness to 2025.\nThe Arab oil embargo also fostered the establishment of the International Energy Agency (IEA) to develop plans and measures for emergency responses to energy crises. Strategic stocks are one of the policies included in the agency's International Energy Program (IEP). Signatories to the IEA are committed to maintaining emergency reserves representing 90 days of net imports, developing programs for demand restraint in the event of emergencies, and agreeing to participate in allocation of oil deliveries among the signatory nations to balance a shortage among IEA members. The calculation of net imports for measuring compliance with the IEA requirement includes private stocks. By that measure, the United States has more than 100 days' cushion. However, it is likely that less than 20% of the privately held stocks would technically be available in an emergency, because most of that inventory supports movement of product through the delivery infrastructure. At full capacity, the SPR might afford the United States roughly 70 days or more of net import protection, depending upon the pace of recovery of the domestic economy. These measures of days' protection assume a total cessation of oil supply to importing nations, a scenario that is highly unlikely. This would be especially true for the United States, given that Canada is currently the nation's principal source for crude oil.\nSome IEA member nations require a level of stocks to be held by the private sector or by both the public and private sectors. Including the U.S. SPR, roughly two-thirds of IEA stocks are held by the oil industry, whereas one-third is held by governments and supervisory agencies.\nThe Energy Policy Act of 2005 (EPACT) requires, \"as expeditiously as practicable,\" expansion of the SPR to its authorized maximum of 1 billion barrels. Advocates for expansion argue that the SPR will need to be larger if the United States is to be able to maintain stocks equivalent to 90 days of net imports. Congress approved $25 million in the FY2008 budget for expansion activities. A site in Richton, MS, has been evaluated for the addition of 160 million barrels of capacity. The FY2010 budget, at $229 million, includes $43.5 million for purchase of a cavern at Bayou Choctaw to replace a cavern posing environmental risks, as well as $25 million for expansion activities. However, it is not apparent that expansion remains a high priority.\nThe conferees accepted language in the Senate version of the bill that prohibits SPR appropriations expended to anyone engaged in providing refined products to Iran or contributing in any way to expansion of refining capacity in Iran. Firms providing, or insuring tankers carrying, refined product to Iran would also be included in the prohibition.", "The Energy Policy and Conservation Act (EPCA, P.L. 94-163 ) authorized drawdown of the Reserve upon a finding by the President that there is a \"severe energy supply interruption.\" This was deemed by the statute to exist if three conditions were joined: If \"(a) an emergency situation exists and there is a significant reduction in supply which is of significant scope and duration; (b) a severe increase in the price of petroleum products has resulted from such emergency situation; and (c) such price increase is likely to cause a major adverse impact on the national economy.\"\nCongress enacted additional drawdown authority in 1990 (Energy Policy and Conservation Act Amendments of 1990, P.L. 101-383 ) after the Exxon Valdez oil spill, which interrupted the shipment of Alaskan oil, triggering spot shortages and price increases. The intention was to provide for an SPR drawdown under a less rigorous finding than that mandated by EPCA. This section, 42 U.S.C. § 6241(h), has allowed the President to use the SPR for a short period without having to declare the existence of a \"severe energy supply interruption\" or the need to meet obligations of the United States under the international energy program. As noted previously, the Energy Policy Act of 2005 made the SPR authorities permanent. These authorities also provided for U.S. participation in emergency-sharing activities of the International Energy Agency without risking violation of antitrust law and regulation.\nUnder the additional authorities authorized in P.L. 101-383 , a drawdown may be initiated in the event of a circumstance that \"constitutes, or is likely to become, a domestic or international energy supply shortage of significant scope or duration\" and where \"action taken ... would assist directly and significantly in preventing or reducing the adverse impact of such shortage.\" This authority allows for a limited use of the SPR. No more than 30 million barrels may be sold over a maximum period of 60 days, and this limited authority may not be exercised at all if the level of the SPR is below 500 million barrels. This was the authority behind the Bush Administration's offer of 30 million barrels of SPR oil on September 2, 2005, which was part of the coordinated drawdown called for by the International Energy Agency. The same authority may have been the model for a swap ordered by President Clinton on September 22, 2000.", "Legislation has been reported in the Senate that would alter significantly the authorities governing drawdown and sale from the SPR. The American Clean Energy Leadership Act of 2009 ( S. 1462 ) would require that the SPR include 30 million barrels of refined product (distinct from the 2 million barrels of home heating oil held in the Northeast Heating Oil Reserve); would transfer authority for a drawdown from the President to the Secretary of Energy; and would amend the drawdown authority to permit drawdown and sale in the event of a \"severe energy market supply interruption\" that has caused, or is expected to cause \"a severe increase\" in prices. This language is a significant departure from existing authorities which predicate drawdown disruptions in supply, and discourages use of the SPR to address high prices, per se.\nThe refined product reserves that would be established by S. 1462 could be drawn down if the Secretary of Energy determines that \"a sale of refined products will mitigate the impacts of weather-related events or other acts of nature that have resulted in a severe energy market supply disruption.\" However, the proposed language would amend the broader authorities to allow drawdown in the event of a \"severe energy market disruption,\" deemed to exist if \"a severe increase in the price of petroleum products has resulted or is likely to result from the emergency situation\" and that the increase in price \"is likely to cause a major adverse impact\" on the economy.\nHistorically, use of the SPR is premised on a physical shortage of supply—which normally will manifest itself, in part, in an increase in price. However, price was deliberately kept out of the authorities as grounds for a drawdown because it invited the question: at what price? A concern was that, if there were any hint of a price threshold that would trigger a drawdown, it could influence private sector and industry inventory practices.\nBehind this also lies the assumption and expectation that refined product prices are driven, in large measure, by crude supply and price. However this dynamic was severed in recent years. During 2008, for example, with the exception of supply uncertainties caused by Hurricanes Gustav and Ike, high prices were not associated with shortages, but with significantly higher prices for crude that reflected international anxiety about the sufficiency of supply in the future. Though some policymakers urged the Bush Administration to release crude from the SPR, a drawdown would have been unlikely to significantly affect price. High prices were softened when slumping demand in the face of those prices, and pessimistic economic forecasts, triggered a plummeting in the price of crude oil that was eventually reflected in product prices.\nIf enacted, the legislation would require a report to Congress within 180 days describing what refined products would be acquired for the Reserve and how they would be acquired at minimal cost or disruption of markets. The report would be required to assess storage options (which would need to be above-ground) and \"the anticipated location of existing or new facilities.\" Presumably, some analysis would need to be undertaken to identify regions that might be likeliest affected by incapacitation of normal product distribution, as well as seasonal differences in the refined product itself. The report would be directed to assess the option of exchanging crude oil in the SPR for refined products.\nArguments in favor of establishing a refined product reserve are that U.S. oil imports include refined products and that it could be more efficient and calming to markets if it were not necessary to first draw down SPR crude and then refine it into needed products. The effect that SPR crude might have on moderating price increases could also be offset if refineries themselves or oil pipelines carrying crude to refineries were compromised. The availability of refined product reserves would address that scenario. Having a regional product reserve would also lessen the likelihood that delivery of crude or product from the stocks of IEA signatories might overwhelm U.S. port facilities; this happened in the wake of the European response that followed Hurricanes Rita and Katrina.\nArguments against a product reserve include the prospect that the availability of supplemental supplies of gasoline from abroad may increase as European demand for diesel vehicles displaces gasoline consumption there. Additionally, storage of refined product is more expensive than for crude. Storage of crude in salt caverns is estimated to cost roughly $3.50/barrel while above-ground storage of product in tanks might cost $15-$18/barrel. Refined product will also deteriorate and would need to be periodically sold and replaced to assure the quality of the product held in the product reserve. Many states also use different gasoline blends, adding to the complexity of identifying which blends should be stored where, and in what volume. It would be simpler to hold conventional gasoline in a product reserve with the expectation that the Environmental Protection Agency (EPA) would waive Clean Air Act (CAA) requirements during an emergency.", "", "As already noted, legislation ( P.L. 110-232 ) enacted in May 2008 forbade DOE from initiating any new activities to acquire royalty-in-kind (RIK) oil for the SPR during the balance of 2008. The sharp decline in crude oil prices since spiking to $147/barrel in the summer of 2008 has spurred interest in resuming fill of the SPR. On January 2, 2009, the Bush Administration announced plans to purchase oil for the SPR, and to reschedule deferred deliveries. There are four components in the resumption of fill: (1) a purchase announced on January 16, 2009, of nearly 10.7 million barrels to replace oil that was sold after Hurricanes Katrina and Rita in 2005; (2) the return of roughly 5.4 million barrels of oil borrowed by refiners after Hurricane Gustav in 2008; (3) delivery of roughly 2.2 million barrels of RIK oil that had been deferred; and (4) resumption of RIK fill in May 2009 at a volume of 26,000 barrels per day, totaling over 6.1 million barrels to be delivered over a period from May 2009 to January 2010. These activities are intended to fill the SPR to its current capacity of 727 million barrels by early 2010. The government has not acquired oil for the SPR by outright purchase since 1994, when oil purchases ended. The SPR held 592 million barrels.", "From 1995 until the latter part of 1998, sales of SPR oil, not acquisition, were at the center of debate. However, the subsequent reduction and brief elimination of the annual federal budget deficit—as well as a precipitous drop in crude oil prices into early 1999—generated new interest in replenishing the SPR, either to further energy security objectives or as a means of providing price support to domestic producers who were struggling to keep higher-cost, marginal production in service. As an initiative to help domestic producers, Secretary of Energy Bill Richardson requested that the Office of Management and Budget (OMB) include $100 million in the FY2000 budget request for oil purchases. The proposal was rejected.\nAs an alternative to appropriations for the purchase of SPR oil, DOE proposed that a portion of the royalties paid to the government from oil leases in the Gulf of Mexico be accepted \"in kind\" (in the form of oil) rather than as revenues. The Department of the Interior (DOI) was reported to be unfavorably disposed to the royalty-in-kind (RIK) proposal, but a plan to proceed with such an arrangement was announced on February 11, 1999. (Legislation had also been introduced [H.R. 498] in the 106 th Congress to direct the Minerals Management Service to accept royalty-in-kind oil.) Producers were supportive, maintaining that the system for valuation of oil at the wellhead is complex and flawed. While acquiring oil for the SPR by RIK avoids the necessity for Congress to make outlays to finance direct purchase of oil, it also means a loss of revenues in so far as the royalties are settled in wet barrels rather than paid to the U.S. Treasury in cash. Final details were worked out during the late winter of 1999.\nIn mid-November of 2001, President Bush ordered fill of the SPR to 700 million barrels, principally through oil acquired as royalty-in-kind (RIK). At its inception, the RIK plan was generally greeted as a well-intended first step toward filling the SPR to its capacity of 727 million barrels. However, it became controversial when crude prices began to rise sharply in 2002. Some policymakers and studies asserted that diverting RIK oil to the SPR instead of selling it in the open market was putting additional pressure on crude prices. A number of industry analysts argued that the quantity of SPR fill was not enough to have driven the market. The Administration strongly disagreed with claims that RIK fill bore responsibility for the continuing spike in prices.\nLegislative attempts to suspend RIK fill began in 2004, during the 108 th Congress. The Energy Policy Act of 2005 ( P.L. 109-58 ), enacted in the summer of 2005, required the Secretary of Energy to develop and publish for comment procedures for filling the SPR that take into consideration a number of factors. Among these are the loss of revenue to the Treasury from accepting royalties in the form of crude oil, how the resumed fill might affect prices of both crude and products, and whether additional fill would be justified by national security. On November 8, 2006, DOE issued its final rule, \"Procedures for the Acquisition of Petroleum for the Strategic Petroleum Reserve.\" The rule essentially indicated that DOE would take into account all the parameters required by P.L. 109-58 to be taken into consideration before moving ahead with any acquisition strategy. DOE rejected tying decisions to acquire oil to any specific, measurable differentials in current and historic oil prices.\nIn the summer of 2007, DOE resumed RIK fill of the SPR. On May 19, 2008, with gasoline prices exceeding, on average, $3.60 gallon, and approaching $4.00/gallon in some regions, Congress passed P.L. 110-232 . However, a few days earlier, on May 16, DOE announced it would not accept bids for an additional 13 million barrels of RIK oil that had been intended for delivery during the second half of 2008.\nThrough FY2007, royalty-in-kind deliveries to the SPR totaled roughly 140 million barrels and forgone receipts to the Department of Interior an estimated $4.6 billion. DOE had estimated deliveries of 19.1 million barrels of RIK oil during FY2008 and $1.170 billion in forgone revenues.\nOpponents of RIK fill in the 110 th Congress were not necessarily opposed to the concept of an SPR. When the price of crude was much less of an issue, objections to RIK fill were also ideological. Opponents of RIK fill in principle contended that a government-owned strategic stock of petroleum is inappropriate under any circumstance—that it essentially saddled the public sector with the expense of acquiring and holding stocks, the cost for which might have otherwise been borne by the private sector. The existence of the SPR, this argument goes, has blunted the level of stocks held in the private sector. As already noted, RIK fill resumed in 2009 and will end in early 2010, pending establishment of additional storage. As has been noted, a site in Richton, MS, has been evaluated as a possible site for expansion of the SPR. However, while $25 million for expansion activities was included in the FY2010 budget, it is not apparent that expansion is a high priority.", "The history of the SPR traces differences of opinion over what could be deemed a \"severe energy supply interruption.\" As has been noted, the original intention of the SPR was to create a reserve of crude oil stocks that could be tapped in the event of an interruption in crude supply. However, in the last few years, there have been increases in the price of products independent of crude prices, as well as increases in crude prices that correlate to \"tight\" markets, but not to measurable shortages in crude supply. Legislation introduced in the 111 th Congress to amend the authorities for drawdown of both the SPR and the Northeast Heating Oil Reserve ( S. 967 , S. 283 ) would allow a drawdown under such a set of circumstances, which would have been seen as anomalous in the past.\nAuthorizing a drawdown of the SPR and the NHOR in the event of a \"severe energy supply disruption,\" both bills have language that includes a price component in the definition of what constitutes such a \"disruption\"—either an observed price increase, or the likelihood of one.\nA debate during the 1980s over when, and for what purpose, to initiate a drawdown of SPR oil reflected the significant shifts that were taking place in the operation of oil markets after the experiences of the 1970s, and deregulation of oil price and supply. Sales of SPR oil authorized by the 104 th Congress—and in committee in the 105 th —renewed the debate for a time. The rise in oil prices from 2005-2008 renewed interest in the debate over the appropriate time to call upon the SPR.\nThe SPR Drawdown Plan, submitted by the Reagan Administration in late 1982, provided for price-competitive sale of SPR oil. The plan rejected the idea of conditioning a decision to distribute SPR oil on any \"trigger\" or formula. To do so, the Administration argued, would discourage private sector initiatives for preparedness or investment in contingency inventories. Many analysts, in and out of Congress, agreed with the Administration that reliance upon the marketplace during the shortages of 1973 and 1979 would probably have been less disruptive than the price and allocation regulations that were imposed. But many argued that the SPR should be used to moderate the price effects that can be triggered by shortages like those of the 1970s or the tight inventories experienced during the spring of 1996, and lack of confidence in supply availability. Early drawdown of the SPR, some argued, was essential to achieve these objectives.\nThe Reagan Administration revised its position in January 1984, announcing that the SPR would be drawn upon early in a disruption. This new policy was hailed as a significant departure, considerably easing congressional discontent over the Administration's preparedness policy, but it also had international implications. Some analysts began to stress the importance of coordinating stock drawdowns worldwide during an emergency lest stocks drawn down by one nation merely transfer into the stocks of another and defeat the price-stabilizing objectives of a stock drawdown. In July 1984, responding to pressure from the United States, the International Energy Agency agreed \"in principle\" to an early drawdown, reserving decisions on \"timing, magnitude, rate and duration of an appropriate stockdraw\" until a specific situation needed to be addressed.", "This debate was revisited in the aftermath of the Iraqi invasion of Kuwait on August 2, 1990. The escalation of gasoline prices and the prospect that there might be a worldwide crude shortfall approaching 4.5-5.0 million barrels daily prompted some to call for drawdown of the SPR. The debate focused on whether SPR oil should be used to moderate anticipated price increases, before oil supply problems had become physically evident.\nIn the days immediately following the Iraqi invasion of Kuwait, the George H. W. Bush Administration indicated that it would not draw down the SPR in the absence of a physical shortage simply to lower prices. On the other hand, some argued that a perceived shortage does as much and more immediate damage than a real one, and that flooding the market with stockpiled oil to calm markets is a desirable end in itself. From this perspective, the best opportunity to use the SPR during the first months of the crisis was squandered. It became clear during the fall of 1990 that in a decontrolled market, physical shortages are less likely to occur. Instead, shortages are likely to be expressed in the form of higher prices, as purchasers are free to bid as high as they wish to secure scarce supply.\nWithin hours of the first air strike against Iraq in January 1991, the White House announced that President Bush was authorizing a drawdown of the SPR, and the IEA activated the plan on January 17. Crude prices plummeted by nearly $10/barrel in the next day's trading, falling below $20/bbl for the first time since the original invasion. The price drop was attributed to optimistic reports about the allied forces' crippling of Iraqi air power and the diminished likelihood, despite the outbreak of war, of further jeopardy to world oil supply. The IEA plan and the SPR drawdown did not appear to be needed to help settle markets, and there was some criticism of it. Nonetheless, more than 30 million barrels of SPR oil was put out to bid, but DOE accepted bids deemed reasonable for 17.3 million barrels. The oil was sold and delivered in early 1991.\nThe Persian Gulf War was an important learning experience about ways in which the SPR might be deployed to maximize its usefulness in decontrolled markets. As previously noted, legislation enacted by the 101 st Congress, P.L. 101-383 , liberalized drawdown authority for the SPR to allow for its use to prevent minor or regional shortages from escalating into larger ones; an example was the shortages on the West Coast and price jump that followed the Alaskan oil spill of March 1989. In the 102 nd Congress, omnibus energy legislation ( H.R. 776 , P.L. 102-486 ) broadened the drawdown authority further to include instances where a reduction in supply appeared sufficiently severe to bring about an increase in the price of petroleum likely to \"cause a major adverse impact on the national economy.\" The original EPCA authorities permit \"exchanges\" of oil for the purpose of acquiring additional oil for the SPR. Under an exchange, a company borrows SPR crude and later replaces it, including an additional quantity of oil as a premium for the loan. There were seven exchanges between 1996 and 2005. The most recent one (with the exception of a test exchange in the spring of 2008) was in June 2006. ConocoPhillips and Citgo borrowed 750 thousand barrels of sour crude for two refineries affected by temporary closure of a ship channel.\nA new dimension of SPR drawdown and sale was introduced by the Clinton Administration's proposal in its FY1996 budget to sell 7 million barrels to help finance the SPR program. While agreeing that a sale of slightly more than 1% of SPR oil was not about to cripple U.S. emergency preparedness, some in the Congress vigorously opposed the idea, in part because it might establish a precedent that would bring about additional sales of SPR oil for purely budgetary reasons, as did indeed occur. There were three sales of SPR oil during FY1996. The first was to pay for the decommissioning of the Weeks Island site. The second was for the purpose of reducing the federal budget deficit, and the third was to offset FY1997 appropriations. The total quantity of SPR sold was 28.1 million barrels, and the revenues raised were $544.7 million. Fill of the SPR with RIK oil was initiated in some measure to replace the volume of oil that had been sold during this period.", "Prior to Hurricanes Ivan, Katrina, and Rita in 2005, growth in oil demand had begun to strap U.S. refinery capacity. A result has been an altering in a once-observed historic correlation between crude oil and refined oil product prices. In the past, changes in the price of crude had driven changes in the cost of refined products. The assumption that product prices are driven by, and follow the path of, crude prices, was at the center of debates from the 1980s until early in the decade of 2000 whether an SPR drawdown was warranted when prices spiked.\nHowever, beginning in the middle of the first decade of the new century, pressure on product supplies and the accompanying anxiety stoked by international tensions caused a divorce in that traditional correlation between crude and product prices. The increases in prices of gasoline and other petroleum products following Hurricanes Katrina and Rita, for example, were not a response to any shortage of crude, but to shortages of products owing to the shutdown of major refining capacity in the United States, and to an interruption of product transportation systems.\nThe rise in crude prices to over $140/barrel by the summer of 2008 was attributable to many contributing factors, including increasing international demand, and concern that demand for crude might outstrip world production. Markets were described as \"tight,\" meaning that there might be little cushion in terms of spare production capacity to replace any crude lost to the market, or to provide adequate supply of petroleum products. In such a market, where demand seems to be brushing against the limits to meet that demand, refinery outages, whether routine or unexpected, can spur a spike in crude and product prices, as can weekly reports of U.S. crude and petroleum stocks, if the numbers reported are not consistent with expectations. As prices continued to increase during 2007-2008, some argued that market conditions did not support the high prices. One market analyst remarked at the end of October 2007, \"The market at this stage totally ignores any bearish news [that would soften the price of oil], but it tends to exaggerate bullish news.\" Significant and sustained increases in oil prices were observed in the absence of the sort of \"severe energy supply interruption\" that remains the basis for use of the SPR. As has been noted, legislation in the Senate ( S. 1462 ) would introduce a price basis for authorizing a drawdown of the SPR. A release from the SPR might not lower prices under every scenario.", "Some policymakers were urging the Administration to release oil from the SPR during the spring and summer of 2008. A review of the dynamics in the oil market during this period provides a demonstration of why an SPR release in the face of high prices will not necessarily foster a decline in petroleum prices.\nBy mid-July 2008, U.S. gasoline prices were exceeding $4.00/gallon and diesel fuel was averaging $4.75/gallon. Crude oil prices had briefly exceeded more than $145/barrel, but declined late in the month to less than $128/barrel. Oil prices had risen in recent years in the absence of the normal association with the concept of \"disruption\" or \"shortage.\" The escalation in prices to their observed peak in July 2008 was driven by several factors that are difficult to weigh. Chief among them was the existence of little or no spare oil production capacity worldwide, and a general inelasticity in demand for oil products despite high prices. Prices also generally prove sensitive to the ebb and flow of international tensions, the value of the U.S. dollar, and even the appearance of storms that could develop into hurricanes that might make landfall in the Gulf of Mexico.\nIn the months prior to Hurricanes Gustav and Ike, there were some calls for an SPR drawdown despite the absence of any discernible shortage. On July 24, 2008, legislation ( H.R. 6578 ) to require a 10% drawdown of SPR oil failed to achieve a two-thirds majority in the House under suspension of the rules (226-190). The language was included in H.R. 6899 , the Comprehensive American Energy Security and Consumer Protection Act, which passed the House on September 16 th (236-189).\nThe bill would have required a sale of 70 million barrels of light grade petroleum from the SPR within six months following enactment. The bill stipulated that 20 million barrels must be offered for sale during the first 60 days. All oil from the sale would be replaced with \"sour\" crude to be acquired after the six-month sale period, with the replacement acquisition completed not later than five years after enactment.\nThe genesis of the proposal lay partly in an analysis by the Government Accountability Office, which observed that the proportion of grades of oil in the SPR was not as compatible as it could be with the trend of refineries toward being able to handle heavier grades of crudes. Refiners reported to GAO that running lighter crude in units designed to handle heavy crudes could impose as much as an 11% penalty in gasoline production and 35% in diesel production. The agency reported that other refiners indicated that they might have to shut down some of their units.\nIt was unclear what sort of effect a roughly 70 million barrel draw on the SPR would have on prices. In a market where there is no physical shortage, oil companies may have limited interest in SPR oil unless they have spare refining capacity to turn the crude into useful products, or want to build crude oil stocks. SPR oil is not sold at below-market prices. Bids on SPR oil are accepted only if the bids are deemed fair to the U.S. government. If the announcement itself that the SPR is going to be tapped does not prompt or contribute to a softening of prices, there may be limited interest on the part of the oil industry in bidding on SPR supply. Although the possibility exists that prices might decline if additional refined product is released into the market, it was impossible to predict what effect an SPR drawdown would have had on oil prices at any time in 2008, given the many other factors that bear on daily oil prices.\nThere are additional considerations. A unilateral draw on U.S. stocks will probably have less impact on the world oil market than a coordinated international drawdown of the sort that occurred after Hurricanes Katrina and Rita in 2005. Some might argue that it would be unwise under any scenario for the U.S. to draw down its strategic stocks while other nations continue to hold theirs at current levels. Additionally, it is always possible that producing nations might reduce production to offset any SPR oil delivered into the market. In the setting of 2008, producing, exporting nations could have argued that the market was already well-supplied and that short-term supply concerns were not what was supporting elevated prices.\nThe SPR has been perceived as a defensive policy tool against high oil prices, but if it is used without a discernible impact on oil prices, it is possible that the SPR will lose some of whatever psychological leverage it exercises on prices when left as an untapped option.", "Although a number of factors contributed to the virtual doubling in some Northeastern locales of home heating oil prices during the winter of 1999-2000, one that drew the particular attention of lawmakers was the sharply lower level of middle distillate stocks—from which both home heating oil and diesel fuels are produced—immediately beforehand. It renewed interest in establishment of a regional reserve of home heating oil. EPCA includes authority for the Secretary of Energy to establish regional reserves as part of the broader Strategic Petroleum Reserve. With support from the Clinton Administration, Congress moved to specifically authorize and fund a regional heating oil reserve in the Northeast. The FY2001 Interior Appropriations Act ( P.L. 106-291 ) provided $8 million for the Northeast Heating Oil Reserve (NHOR). The regional reserve was filled by the middle of October 2000 at two sites in New Haven, CT, and terminals in Woodbridge, NJ, and Providence, RI. The NHOR is intended to provide roughly 10 days of Northeast home heating oil demand.\nThere was controversy over the language that would govern its use. Opponents of establishing a regional reserve suspected that it might be tapped at times that some consider inappropriate, and that the potential availability of the reserve could be a disincentive for the private sector to maintain inventories as aggressively as it would if there were no reserve. The approach enacted predicated drawdown on a regional supply shortage of \"significant scope and duration,\" or if—for seven consecutive days—the price differential between crude oil and home heating oil increased by more than 60% over its five-year rolling average. The intention was to make the threshold for use of the regional reserve high enough so that it would not discourage oil marketers and distributors from stockbuilding. The President could also authorize a release of the NHOR in the event that a \"circumstance exists (other than the defined dislocation) that is a regional supply shortage of significant scope and duration,\" the adverse impacts of which would be \"significantly\" reduced by use of the NHOR.\nDuring mid- and late December 2000, the 60% differential was breached. However, this was due to a sharp decline in crude prices rather than to a rise in home heating oil prices. In fact, home heating oil prices were drifting slightly lower during the same reporting period. As a consequence, while the 60% differential was satisfied, other conditions prerequisite to authorizing a drawdown of the NHOR were not.\nA general strike in Venezuela that began in late 2002 resulted, for a time, in a loss of as much as 1.5 million barrels of daily crude supply to the United States. With refinery utilization lower than usual owing to less crude reaching the United States, domestic markets for home heating oil had to rely on refined product inventories to meet demand during a particularly cold winter. Prices rose, and there were calls for use of the NHOR; still, the price of heating oil fell significantly short of meeting the guidelines for a drawdown. In connection with the FY2004 Interior appropriations, both the House and Senate Appropriations Committees included language in their committee reports directing that DOE advise Congress as to the \"circumstances\" under which the NHOR might be used. The provision implied that some in Congress were not satisfied with the formula currently in place that would permit drawdown of the NHOR. The language was not included in the final FY2004 Interior appropriations bill. As the sharp increases in home heating oil prices during 2005 are averaged into the five-year rolling average, the price differential needed to trigger use of the NHOR will increase further. However, the President can invoke the authorities for an NHOR drawdown even if the price threshold is not met.\nS. 283 , introduced on January 21, 2009, would permit drawdown on the basis of price as well as supply. The bill would mandate a release of 20% of the heating oil held in the Reserve if the average retail price for home heating oil in the Northeast exceeds $4.00 per gallon on November 1 of the fiscal year. An additional 20% would be released in four additional installments if the average retail price exceeded $4.00/gallon on the first of each month, December through March." ], "depth": [ 0, 1, 2, 1, 2, 1, 2, 2, 1, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_title h2_title h1_title", "h0_full h2_full h1_full", "h1_full", "h1_full", "h2_title", "h2_full", "h2_full", "h1_full", "", "", "", "h0_full" ] }

{ "question": [ "Why did Congress authorize the SPR?", "Who manages the program?", "To what extent is the capacity of the SPR in use?", "What is the SPR?", "Why did EPCA authorize drawdown of the reserve?", "Why is the meaning of a \"severe energy supply interruption\" c?", "How does this language compare to existing authorities?", "How did the DOE make additions to the SPR?", "How did Congress restrict the DOE RIK acquisitions?", "How did P.L. 110-232 affect the DOE's RIK acquisitions?", "How did the Bush Administration take action regarding the SPR?", "What is the consequence of these activities?" ], "summary": [ "Congress authorized the Strategic Petroleum Reserve (SPR) in the Energy Policy and Conservation Act (EPCA, P.L. 94-163) to help prevent a repetition of the economic dislocation caused by the 1973-1974 Arab oil embargo.", "The program is managed by the Department of Energy (DOE).", "The capacity of the SPR is 727 million barrels, and by the end of 2009, was virtually filled to its capacity at 726 million barrels of crude oil. In addition, a Northeast Heating Oil Reserve (NHOR) holds 2 million barrels of heating oil in above-ground storage.", "The SPR comprises five underground storage facilities, hollowed out from naturally occurring salt domes in Texas and Louisiana.", "EPCA authorized drawdown of the Reserve upon a finding by the President that there is a \"severe energy supply interruption.\" Congress enacted additional authority in 1990 (Energy Policy and Conservation Act Amendments of 1990, P.L. 101-383), to permit use of the SPR for short periods to resolve supply interruptions stemming from situations internal to the United States.", "The meaning of a \"severe energy supply interruption\" has been controversial. EPCA intended use of the SPR only to ameliorate discernible physical shortages of crude oil. However, the American Clean Energy Leadership Act of 2009 (S. 1462), reported in the Senate, would require that the SPR include 30 million barrels of refined product; would transfer authority for a drawdown from the President to the Secretary of Energy; and would amend the drawdown authority to permit drawdown and sale in the event of a \"severe energy market supply interruption\" that has caused, or is expected to cause, \"a severe increase\" in prices.", "This language is a significant departure from existing authorities which predicate drawdown disruptions in supply, and discourages use of the SPR to address high prices, per se.", "Beginning in 2000, additions to the SPR were made with royalty-in-kind (RIK) oil acquired by the Department of Energy in lieu of cash royalties paid on production from federal offshore leases.", "In May 2008, Congress passed legislation (P.L. 110-232) ordering DOE to suspend RIK fill for the balance of the calendar year unless the price of crude oil dropped below $75/barrel.", "However, the sharp decline in crude oil prices since spiking to $147/barrel in the summer of 2008 brought about a resumption of fill of the SPR.", "On January 2, 2009, the Bush Administration announced plans that included the purchase of nearly 10.7 million barrels for the SPR to replace oil that was sold after Hurricanes Katrina and Rita in 2005. In May 2009, RIK fill was resumed at an average volume of 26,000 barrels per day, totaling over 6.1 million barrels to be delivered by January 2010.", "These activities have brought the SPR essentially to capacity. The government has not purchased oil for the SPR since 1994." ], "parent_pair_index": [ -1, 0, 0, -1, -1, -1, 2, -1, 0, 0, -1, 3 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "Land Exchange Data", "Pros and Cons of Land Exchanges", "Basic Rules for Exchanges", "Same State", "Public Interest", "Equal Value", "Costs", "Assembled Land Exchanges", "Management of Exchanged Lands", "Overview of Exchange Process18", "Phase 1: Development of a Land Exchange Proposal", "Phase 2: Feasibility Evaluation", "Phase 3: Processing and Documentation", "Phase 4: Decision Analysis and Approval", "Phase 5: Title Transfer", "Legislated Land Exchanges", "History of Exchange Controversies and Reforms", "Issues and Actions Prior to 2009", "2009 Reports and Subsequent Reforms", "GAO Report, June 2009", "FY2010 Interior Appropriations Direction, June and October 2009", "DOI Office of Inspector General Report, December 2009", "DOI Reform Plan, March 2010", "Implementation of Reforms", "Issues for Congress" ], "paragraphs": [ "", "A land exchange, po pularly viewed as a swap or a trade, is a real estate transaction where the disposal (sale) and acquisition (purchase) of land are combined. The Bureau of Land Management (BLM), in the Department of the Interior (DOI), is authorized to exchange land or interests in land under the Federal Land Policy and Management Act of 1976 (FLPMA), as amended by the Federal Land Exchange Facilitation Act of 1988 (FLEFA), as well as under other authorities. Administrative exchanges under FLPMA often are referred to as discretionary exchanges, because FLPMA does not require the agency and nonfederal parties to exchange lands. BLM implementing regulations are contained in 43 C.F.R. §2200. Additional information is contained in BLM's Land Exchange Handbook and various agency instruction memoranda. Selected provisions of these sources are summarized below in the section entitled \" Basic Rules for Exchanges .\"\nAdditionally, Congress sometimes enacts legislation authorizing and governing specific land exchanges. Legislated land exchanges generally follow the process and procedures outlined in this report, unless the statute provides otherwise. Legislated exchanges are discussed below under \" Legislated Land Exchanges .\"", "The total number of land exchanges completed by BLM, their acreage, and their value, vary from year to year. (See Table 1 and Table 2 .) From FY2006 to FY2015, BLM issued 218 patents or deeds for exchanged lands, totaling 159,130 acres with an appraised value of $86.7 million. In FY2015, the number of patents or deeds issued was the lowest during the 10-year period (tied with FY2011) and the associated acreage was the lowest during the decade. The dollar value was lower than all years except FY2014. Specifically, two deeds or patents were issued for exchanged lands in FY2015, encompassing 95 acres with a value of $17,200.\nAlso from FY2006 to FY2015, BLM received 91 deeds for exchanged land, totaling 193,663 acres with a value of $107.7 million. In FY2015, BLM did not receive any deeds for exchanged lands. Rather, the agency received a cash equalization payment of $17,200 for 95 acres patented or deeded out, as shown in Table 1 . FY2015 was the only year during the decade in which BLM did not acquire lands by exchange.\nIn general, the number of BLM exchanges has declined over at least the past 25 years. For instance, the Government Accountability Office (GAO) reported that BLM completed about 2,600 exchange transactions during the 11-year period from FY1989 to FY1999, consisting of about 1,700 transactions to convey BLM land and 900 transactions to acquire nonfederal land. On average, 238 exchange transactions occurred annually during this period. By contrast, BLM completed 309 exchange transactions during the 10-year period from FY2006 to FY2015, consisting of 218 transactions to convey BLM land and 91 transactions to acquire nonfederal land, as noted. An average of about 31 exchange transactions occurred annually during this period. The decline has been attributed to a variety of reasons, such as reductions in experienced realty staff and in funding for exchanges, changing priorities, and preferences for land sales under other authorities.", "Exchanges can be used to change the \"checkerboard\" pattern of federal, state, and privately owned lands in the West that resulted from early land grants. Land consolidation can increase the efficiency of land management and decrease management costs. Exchanges allow for land transactions on a large scale; they can be used to consolidate hundreds of scattered, isolated tracts that likely would have no chance of sale to one owner. Also, exchanges may be valuable for facilitating transactions with private landowners who want land instead of cash and for reconfiguring state lands.\nExchanges can be difficult, because an agency must find another landowner who is willing to trade, wants to acquire what is being offered, and owns a desired parcel of about the same value. Also, provisions of law limiting exchanges to lands in the same state can be too restrictive to accomplish desirable land swaps. Further, other agency authorities providing for either land sale or land acquisition can be more flexible tools for meeting land consolidation and management needs.\nBLM land exchanges sometimes have been controversial. Federal audits performed over the last decade (2000-2009) criticized some exchanges for short-changing the public. For instance, audits concluded that in some cases BLM did not demonstrate that the public value of the lands acquired at least matched the public value of the land disposed of. In other cases, audits found that there were political pressures to change or ignore determinations of market value to facilitate the exchange. Audits were performed by GAO, the DOI Office of Inspector General (OIG), and the Appraisal Foundation (TAF). These audits received significant attention from Congress, DOI, the media, and interest groups. In response, BLM and DOI implemented changes, perhaps most notably the consolidation of appraisal functions in a new office in 2003 and the subsequent reorganization of that office in 2010 (see \" History of Exchange Controversies and Reforms ,\" below).", "This section briefly summarizes the rules and process for conducting administrative land exchanges. As noted, legislated land exchanges generally follow the process and procedures outlined below, unless Congress provides otherwise. Additional information on legislated exchanges follows this section under the heading \" Legislated Land Exchanges .\"", "FLPMA requires that the federal and nonfederal lands in an exchange must be located within the same state.", "Land exchanges must be in the public interest. Public land may be exchanged if the Secretary of the Interior determines that the public interest will be \"well served.\" FLPMA requires that when determining the public interest, the Secretary must consider a number of factors. These factors include better federal land management and the needs of state and local people for economic, community, and recreation purposes. BLM often trades land to achieve better federal land management, for instance, by consolidating ownership and disposing of land that is isolated or difficult to manage. Under BLM regulations, considerations include protection of fish and wildlife habitat, cultural resources, watersheds, wilderness, and aesthetic values; enhancement of recreational opportunities and public access; consolidation of lands to improve development; and expansion of communities. Also, the Secretary must find that the resource values and public benefits of the federal lands to be conveyed are not more than those of the nonfederal lands being acquired. Further, the intended use of the conveyed federal lands should not conflict significantly with management of adjacent federal and Indian trust lands. In making an exchange, BLM must reserve any rights or interests that are needed to protect the public interest and may impose restrictions on the use of lands conveyed.", "Under FLPMA, the values of the lands exchanged are to be equal or, if they are not equal, they are to be equalized by the payment of money up to 25% of the value of the federal lands conveyed in the exchange. The parties in the exchange may agree to waive this payment, within limitations, including if it involves not more than 3% of the value of the federal lands or $15,000. Another way of equalizing value is for either party to add or remove lands. Further, the Secretary of the Interior may exchange lands that are of \"approximately\" equal value under certain conditions, including if the value of the federal lands does not exceed $150,000. The appraisal might be performed by DOI appraisers or by appraisers contracted by the department. Often the same person conducts the appraisal of both the federal and the nonfederal parcels in an exchange, although this is not required.", "Typically, BLM and other parties share equally in the administrative costs of an exchange, for instance, by sharing the cost of land appraisal, mineral examinations, and cultural resource surveys and by addressing deficiencies preventing highest and best use of the land. However, the parties can agree that one party may bear costs and responsibilities typically assumed by the other, subject to certain terms.", "BLM regulations define an assembled land exchange as consolidation of multiple parcels of federal or nonfederal land for the purpose of one or more exchange transactions over a period of time. An assembled land exchange may be used to facilitate exchanges and reduce costs, for instance, by consolidating many federal parcels of limited value. In other cases, third parties secure lands that BLM wants to acquire from multiple owners to facilitate negotiations. Both for-profit and nonprofit organizations have facilitated assembled land exchanges, typically functioning as brokers/agents for the exchange.", "Lands acquired by BLM by exchange become public lands and are to be managed under existing law, regulations, and land-use plans. Acquired lands that are within the boundaries of an area having an administrative or congressional designation, such as a national conservation area, become part of that unit or area and are managed accordingly.", "Exchanges may be proposed by BLM, private citizens, or state or local government officials, among others. However, BLM is to consider only proposals that conform to land-use plans. Additionally, the Secretary of the Interior may restrict, for up to five years, application of the mining laws and other public land laws to federal lands under consideration for exchange. The exchange process typically occurs in five phases: (1) development of a land exchange proposal, (2) feasibility evaluation, (3) processing and documentation, (4) decision analysis and approval, and (5) title transfer. BLM field offices take the lead in negotiating and processing exchanges, but BLM headquarters ultimately must concur.\nThe length of time generally required to complete land exchanges depends on the circumstances. The BLM handbook advises that many exchanges take between 18 months and 24 months, but the time depends on the complexities. The GAO review of BLM and Forest Service (FS) land exchanges from October 2004 through June 2008 revealed completion times for the agencies ranging from two months to 12 years. The average time to complete BLM's exchanges was about four years.", "During the first phase, development of a land exchange proposal, the federal and nonfederal parties have preliminary discussions to share information about goals and constraints and to screen proposals. BLM checks the title of the nonfederal land to ensure its acceptability for acquisition and the survey and land status of the federal land to ensure its availability for disposal. The parties develop a written exchange proposal that includes a legal description of the lands to be conveyed and their responsibilities.", "During the second phase, the feasibility evaluation, BLM prepares a feasibility report. This report documents the preliminary information on all aspects of the exchange, including the public benefits, consistency with BLM's land-use plan, projection of costs, cost and processing responsibilities, anticipated land uses, analysis of value, schedule for completion, and alternatives. All exchanges require review and concurrence of the documentation at the feasibility stage. This review includes analysis of the adequacy of the feasibility report, a draft Agreement to Initiate (ATI) an exchange, and a draft Notice of Exchange Proposal (NOEP). Review and concurrence is required at several levels: the DOI Office of the Solicitor; the state director of the state where the lands would be exchanged; BLM's National Land Exchange Team; the BLM assistant director, Minerals and Realty Management; and, ultimately, the director of BLM. If the parties agree to proceed, they sign a nonbinding ATI that serves as a framework, with roles, responsibilities, and time frames. The agreement should address 17 items identified in BLM regulations (43 C.F.R. §2201.1(c)-(g)) and, for exchanges involving third-party facilitators, must include a full disclosure provision. At this stage, the BLM and nonfederal parties might consider developing a binding exchange agreement, which would be executed at a later stage of the exchange process. (See \" Phase 5: Title Transfer ,\" below.)\nBLM is prevented, through Appropriations Committee direction, from completing exchanges involving federal lands valued at more than $1 million until the House and Senate Committees on Appropriations have had 30 days to review the exchange. Further, BLM is required to provide advance notice to the House and Senate Appropriations Committees of exchanges involving federal lands valued at between $500,000 and $1 million.", "The third phase, exchange processing and documentation, centers on the evaluation and documentation of the properties and their values. This phase includes title review; public notice and comment; identification and resolution of environmental issues under the National Environmental Policy Act of 1969 (NEPA); assessments of mineral, cultural, and other resources; Native American consultations; threatened and endangered species consultations; and preparation and review of appraisals. During title review, BLM seeks to confirm that it can acquire clear title to the nonfederal land. BLM is to issue an NOEP and publish it in local newspapers to give public notice of the exchange and to notify authorized land users, state and local governments, tribal governments, and the congressional delegation. The notice must invite the public to comment on the exchange. BLM also must give public notice of its decision to approve or disapprove an exchange.\nThe environmental analysis under NEPA and the appraisal often are the most challenging and time-consuming activities. The environmental analysis documents the impact of the exchange on the environment, taking into account the likely future uses of the lands. The analysis includes evaluations of resources on the federal and nonfederal lands. Ordinarily, these analyses evaluate mineral potential of the lands; identify wildlife and vegetation species; detail water sources, locations, and rights; assess forestry resources; catalogue cultural and historic resources; list recreational and other land uses; inventory contaminants; and address the responsibilities of the parties.\nAppraisals are guided by laws, regulations, policies, and other authorities. These authorities include the Uniform Appraisal Standards for Federal Land Acquisitions and the Uniform Standards of Professional Appraisal Practice. BLM regulations state that an exchange of lands shall be based on the market value of the federal and nonfederal lands as determined by the Secretary through appraisals, bargaining based on appraisals, or arbitration. In estimating market value, the appraiser must determine the highest and best use of the property—the highest and most profitable use for which the property is physically adaptable and needed. Factors include historic, wildlife, recreation, wilderness, scenic, cultural, or other resource values or amenities that are reflected in prices paid for comparable properties in the open market. Interests in land—such as minerals or water rights—also are considered to the extent consistent with highest and best use, according to BLM regulations. In the absence of current market information, the parties may use other methods to estimate market value. FLEFA provides that disputes over the appraised values of lands can be resolved by arbitration, bargaining, or other methods.\nBoth federal employees and contractors may conduct appraisals. The appraiser prepares a report estimating market value that describes the work conducted and sets forth the information and analysis supporting the estimate. Each appraisal report will be reviewed by a DOI review appraiser.", "At the decision analysis and approval stage, all proposed exchanges require review and concurrence at several levels, as at the feasibility stage. BLM issues a decision to approve or disapprove the land exchange. The decision document, called a decision record or record of decision, must contain certain information, such as a determination of the public interest value of the exchange; a legal description of the lands being exchanged; a statement that the lands are of equal value and, if not, of any cash equalization payment; a statement of conformance with the pertinent BLM land-use plan; and acknowledgement that the decision is implemented after the 45-day protest period (which begins with the publication of a Notice of Decision) and resolution of any protests. BLM then publishes and distributes a Notice of Decision, in accordance with specified publication and distribution requirements.", "After approval of a land exchange decision, the parties might execute a binding exchange agreement, which legally commits them to conduct the exchange. A binding exchange agreement is optional except where the nonfederal lands contain hazardous substances, so that the agreement can address removal and other actions prior to the exchange. Other actions at this final phase, called title transfer, involve reviewing the title evidence and land status, transferring the title to the federal and nonfederal lands, and closing the transaction.", "Legislation can authorize exchanges that otherwise would not be allowed under law, such as the exchange of land in different states. Legislation also would be required to exempt agencies from mandates that otherwise apply, such as those pertaining to appraisals, analysis under NEPA, and the land-use-planning requirements of FLPMA. Recent Congresses typically have considered and enacted measures providing for exchange of BLM lands. In its 2009 report, GAO identified provisions of legislated exchanges that affected the standard processing of exchanges, such as those directing BLM to initiate an exchange upon request of the nonfederal party, establishing a time frame for completing the exchange, and altering the appraisal requirements. Legislation may provide for land exchanges even where additional authority may not be needed by BLM but where Congress wants a certain exchange to occur. Provisions of legislated land exchanges have been controversial in some cases.\nBLM's Land Exchange Handbook states that because legislated exchanges have considerable variability, they must be handled on a case-by-case basis. The handbook notes that legislated exchanges sometimes direct that these exchanges be completed relatively quickly and that the time frame might affect the applicability of statutory and regulatory requirements. It advises BLM staff to consult with their regional solicitor as to whether typical actions (e.g., NEPA) apply in legislated exchanges. The handbook further notes that some general requirements not typically mentioned in legislation, such as hazardous materials assessments and title standards, might still need to be addressed.\nBLM conducted far fewer legislated exchanges than administrative ones in recent years. Of the 309 exchange transactions from FY2006 to FY2015, 56 (18%) were legislated. This figure includes 30 patents or deeds for lands conveyed by exchange and 26 deeds for lands received by exchange. Similarly, a 2009 GAO report determined that of the 76 exchanges processed by BLM from October 2004 through June 2008, 9 exchanges (12%) were specifically legislated by Congress. Legislated land exchanges also have been enacted for other agencies, including the Forest Service, Fish and Wildlife Service, and National Park Service.", "", "From 2000 to 2009, BLM land exchanges received considerable scrutiny in governmental and other reports. Prior to 2009, concerns centered on the benefits to the public, determinations of market value, and contradictions in policies and procedures. For instance, a 2000 GAO report concluded that BLM did not follow requirements to show that \"the public benefits of acquiring the nonfederal land in an exchange matched or exceeded the public benefits of retaining federal land, raising doubts about whether these exchanges served the public interest.\" Audit reports also criticized BLM for valuing its land at far less than market value, or for overvaluing nonfederal land to be acquired, to make deals more attractive to nonfederal landowners. A 2002 report by the Appraisal Foundation (TAF) determined that there were political pressures to change or ignore qualified market value opinions to create the appearance that exchanges were conducted at market value. TAF also concluded that inconsistencies among BLM's guidance and directives resulted in inconsistent development of market value opinions, improper management of appraisal efforts, and a lack of compliance with laws and regulations.\nIn response, BLM took steps to increase oversight of exchanges; demonstrate how exchanges serve the public interest; ensure that land is properly valued; and ensure that exchanges are completed in compliance with law, regulation, and policy. In 2003, BLM formed the Appraisal and Exchange Workgroup, composed of staff from federal and state agencies, to advise the agency on changes needed to address problems with appraisals and exchanges that were raised in audits. BLM chose to implement many of the group's recommendations, including those to strengthen management of exchanges; build public confidence; develop new authorities; enhance training and skills; facilitate exchanges with states; strengthen the ability to reach agreement on value; define the role of facilitators; and develop guidance for processing legislated exchanges.\nBeginning in 2003, a significant change at DOI involved consolidating real estate appraisal functions from several DOI agencies into a new Appraisal Services Directorate (ASD). For decades, audit reports had recommended an independent appraisal office to protect appraisers from possible political pressures. Under the reorganization, to separate the appraisal function from realty decisions, appraisers reported to the ASD rather than to DOI realty personnel. A 2006 GAO report found that this consolidation \"vastly improved\" the objectivity of appraisers but that some problems remained. For instance, some appraisals did not appear to comply with industry standards, making their accuracy uncertain. The extent to which any such problems applied to BLM exchanges is unclear, as these exchanges were not separately identified in the analysis. In other changes, the ASD developed a web-based system for DOI agencies to submit and track requests for appraisals, DOI issued a consolidated handbook for appraisals, and BLM revised its Land Exchange Handbook . The ASD organization was changed in 2010, due to continued concerns with appraisal services, as discussed below.", "", "In 2009, auditors continued to examine issues related to land exchanges and. A 2009 GAO report examined the numbers, trends, and characteristics of BLM and FS land exchanges from October 2004 through June 2008; the actions taken by the agencies to improve the exchange process; and the effectiveness of these actions. GAO concluded that the BLM and FS had taken actions to address most of the problems previously identified with the agencies' land exchange programs but that the effectiveness of the changes was mixed and additional changes were needed. Among the GAO's conclusions were the following:\nAgency reviews had at least somewhat improved the quality of exchanges and often ensured that exchanges complied with existing authorities. However, the reviews sometimes did not document problems or how any problems were resolved, reducing transparency. BLM had improved procedures for those exchanges conducted in phases, such as by ceasing to use interest-bearing accounts outside the Treasury and issuing new guidance on using ledgers to track land-value imbalances in multiple phase exchanges. However, the agency did not always use ledgers in accordance with the guidance and thus could not reliably know how much was owed. New guidance required full disclosure of the relationship between third-party facilitators and other parties. However, the guidance did not clearly define third-party facilitators and agencies did not consistently apply the disclosure policy. This inconsistency could reduce the ability of the agencies to control the exchange process. Although the agencies clarified their guidance on exchanges and revised their training on exchanges accordingly, they generally did not require staff to attend the training. Therefore, the agencies could not be sure that staff members have the appropriate skills. BLM had acted to improve the timeliness of appraisals, but delays continued. The agency did not have a national strategy for land transactions and did not track costs of individual land exchanges.\nStemming from its conclusions, GAO made 13 recommendations for BLM to improve its land exchanges. The recommendations focused on strengthening the review process; improving management of value imbalances in multiple phase exchanges; defining and applying disclosure guidelines to third-party facilitators of land exchanges; issuing a national land tenure strategy; tracking the costs of individual exchanges; and training land exchange staff.", "During consideration of the FY2010 Interior, Environment, and Related Agencies Appropriations bill, the House Appropriations Committee and the conferees noted improvements with the exchange and appraisal processes, while at the same time expressing concerns and providing related direction to DOI. In its June 23, 2009, report on the bill, the House Committee noted the GAO and DOI OIG conclusion that the consolidation of the appraisal services into the ASD improved the objectivity and quality of appraisals. However, the committee asserted that \"numerous problems exist that are an unacceptable barrier to communications, collaboration, and acquisition of lands.\" The causes of these problems, according to the committee, included a loss of realty expertise in DOI agencies, unnecessary delays in contracting for appraisals, and a reluctance to share information on the status of appraisals with landowners. The committee further observed that opportunities for agencies to make key acquisitions were missed, partnerships with nonprofit land organizations were strained, and public confidence in the government's commitment to land acquisition was weakened.\nTo expedite completion of appraisals, and thus land exchanges and other acquisitions, the House Appropriations Committee directed DOI to reconsider the consolidation of the appraisal services, examine alternative organizational arrangements, and streamline the appraisal process. The committee further directed DOI to report back within 90 days of enactment of the appropriations law on its progress in improving land appraisals. Similarly, in their October 28, 2009, conference report on the bill, the conferees concurred with the House Committee in directing DOI to revisit the consolidation of the appraisal services function and to address the delays in obtaining appraisals.\nThe House Appropriations Committee further expressed that BLM (and other agencies) needed to improve the process for land exchanges and should seriously consider the findings and recommendations of the GAO report on land exchanges. The committee directed the Secretary of the Interior to ensure that land exchange decisions are fully documented and carefully reviewed by the national review team. BLM should clearly define third-party facilitators and apply disclosure policies to them, ensure that agency land exchange staff are adequately trained, and track the costs of processing individual exchanges, according to the committee. Further, the committee stated that BLM should address GAO's other recommendations, including to clarify the retention policy for exchange documents, improve management of ledgers to track imbalances in multiphase land exchanges, and develop a national land exchange strategy.", "A 2009 DOI OIG evaluation of the appraisal services of the ASD concluded that the office had not been able to fulfill its mission to become a strong and independent appraisal organization that provides DOI with timely, independent appraisals. The report cited both internal and external contributing factors. Externally, the ASD did not receive support from the National Business Center (NBC), DOI agencies, or the department. The NBC did not provide timely support and services, particularly in the key area of contracting for appraisals. The DOI agencies did not agree with the need for consolidated appraisal services and made multiple attempts to regain control of this responsibility. The department did not resolve these issues or protect the independence and operational integrity of the ASD. Internally, the ASD lacked consistently strong leadership, leaving the office dependent on others to address problems with contracting and other policy and enforcement issues. The OIG attributed this leadership vacuum primarily to the placement of the ASD within the NBC.\nThe OIG asserted that, based on its evaluation and the recent concerns expressed by Congress (discussed above), DOI appraisers should remain organizationally independent of agency realty offices and staff. However, although the placement of the ASD within the NBC had appeared at first to be beneficial, it turned out to be a \"hindrance to the appraisal organization,\" according to the OIG. The OIG made three recommendations to address identified problems: (1) to provide responsibility and resources to ensure that ASD has full control over contracting; (2) to select a \"strong and competent\" chief appraiser for ASD to provide effective leadership and final authority on appraisals; and (3) to consider making ASD an independent office within DOI's Office of Policy, Management, and Budget.", "On March 23, 2010, DOI responded to the congressional direction to consider alternatives to the current appraisal services organization and to address delays in obtaining appraisals. In a letter to congressional appropriators, the department presented conclusions and proposals resulting from a review of the appraisal function. The department \"acknowledged [that] there are serious operational and organizational issues and action is required.\" Issues included delays in the appraisal process leading to delays in land transactions, with a worsening trend; problems with contracting, such as the high cost, complex funding model, length of time to contract for appraisal services, and frequent inability to find qualified local appraisers; weak communication between appraisers and the DOI agencies and poor responsiveness of appraisers to DOI agencies; and difficulties in prioritization of work, such as handling of the competing and changing appraisal priorities of the DOI agencies.\nTo address these issues, DOI proposed a reprogramming and reforms that incorporated the OIG recommendations and went further, according to the department. DOI expressed a commitment to its reform proposals to improve the timeliness, cost-effectiveness, efficiency, and agency satisfaction with appraisals. Among the proposals were the following:\nASD would be moved out of the NBC and would become an independent office, reporting directly to the Deputy Assistant Secretary for Technology, Information, and Business Services, within the Office of the Assistant Secretary for Policy, Management, and Budget. The office would be renamed as the Office of Valuation Services (OVS). The OVS would be structured so that a team of appraisers would serve each DOI agency to address problems, with prioritization of appraisal needs among the agencies. Contracting processes would be reformed to increase speed, reduce cost and funding complexity, and increase the number of qualified local appraisers. Communications processes between the appraisal office and DOI agencies would be changed and new performance plan elements would be introduced for appraisers and realty staff for timeliness, responsiveness, and other elements.", "In 2010, DOI and BLM took actions in response to many of the recommendations and issues raised by GAO, Congress, and the OIG. For instance, with regard to appraisals, a Secretarial Order signed on May 21, 2010, made changes in the organization and operation of the appraisal services function. Specifically, the order renamed the ASD as the Office of Valuation Services (OVS) and removed it from the National Business Center. The OVS now reports to the Deputy Assistant Secretary for Technology, Information, and Business Services, within the Office of Policy, Management, and Budget. The order gave the OVS sole responsibility for contracting for appraisal services for DOI agencies to provide timelier, more consistent, and more centralized contracting services that capitalize on the expertise of appraisal staff. Further, the OVS was restructured to assign a team of appraisers to each agency, a change from the former arrangement based on appraisal teams by geographic area.\nIn addition, on May 14, 2010, BLM issued a series of instruction memoranda on land exchanges that stemmed primarily from the GAO recommendations and congressional concerns. The first memorandum included guidance on the processes for reviewing and approving land exchanges, documenting and resolving substantive issues raised during the exchange process, and managing and retaining exchange records. A second memorandum contained direction on issues such as the processing of assembled and multiple-phase assembled land exchanges, using ledgers to manage imbalances in federal and nonfederal lands being exchanged, securing (bonding) imbalances, and minimizing cash equalization (where appraised values are not equal and payment is made to equalize the imbalance). The third memorandum defined and addressed the role of facilitators in land exchanges and contained disclosure requirements for facilitated and certain non-facilitated land exchanges. The fourth memorandum focused on training for agency staff involved in exchanges.", "A key issue for Congress is the extent to which the reorganization of the appraisal function and the implementation of other appraisal and exchange reforms addressed perceived problems and improved land transactions. Congress continues to oversee agency processes as reformed in recent years and the underlying authorities, through authorizing and appropriating committees.\nDespite the reforms implemented by BLM and DOI, continuing questions include whether to amend the FLPMA exchange authority or to discontinue exchanges. Critics assert that administrative exchanges are inherently difficult and that this difficulty has contributed to a decrease in exchanges over the past quarter century. Some seek to facilitate exchanges through changes to requirements pertaining to equal value, same state, appraisal processes, and NEPA analyses, among others.\nOthers have suggested ending exchanges in favor of existing authorities to buy and sell land for cash, such as those provided under other provisions of FLPMA. With cash sales, agencies could sell unwanted parcels and use the cash to buy parcels they prefer. Exchange critics believe that this approach takes the subjectivity out of estimating value through appraisal, procures the best price, and simplifies transactions because there is no requirement to equalize value or act within the same state.\nStill other observers assert that renewal of authority allowing BLM to sell or exchange land and keep the money in a special account for subsequent acquisitions would be preferable to exchanges under FLPMA. One such authority was contained in the Federal Land Transaction Facilitation Act. This law, which expired in 2010 and was extended for one year (through July 25, 2011), provided for the sale or exchange of land identified for disposal under BLM's land-use plans. The proceeds were available to acquire certain lands containing exceptional resources. A similar current authority, the Southern Nevada Public Land Management Act, is more limited. It allows BLM to sell or exchange land around Las Vegas, with proceeds available to acquire environmentally sensitive lands in Nevada (as well as for other purposes in Nevada). Advocates prefer these authorities because land values can be determined through the market and agencies can purchase lands independent of annual appropriations.\nBLM, among others, supports exchanging land under FLPMA for the many uses noted above under \" Pros and Cons of Land Exchanges .\" Exchange supporters contend that controversies over valuing properties with unique attributes or in high-growth areas are as likely to occur for land that is sold or acquired under other authorities as for land that is exchanged under FLPMA. Further, BLM asserts that the majority of exchanges are not controversial. Exchange proponents also contend that for many years BLM has had limited funding for purchasing land and that BLM thus needs exchange authority to acquire additional valuable land. By equalizing value by adding or removing land parcels, BLM typically does not spend money for land exchanges. Finally, exchange proponents believe that past reforms have addressed concerns with exchanges and appraisals." ], "depth": [ 0, 1, 2, 2, 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h2_title h3_title h1_full", "", "h3_full h2_full", "h0_title", "", "h0_full", "h0_full", "h0_full", "h0_full", "h0_full", "h3_title h1_full", "", "", "h1_full", "", "", "h3_full h1_full", "h2_title", "h2_full", "h2_title", "", "", "", "", "h2_full", "h0_full h3_full" ] }

{ "question": [ "What is FLPMA's purpose?", "How does this affect land exchanges?", "How must administrative costs be shared?", "What are assembled land exchanges?", "What are the phases of the land exchange process?", "What does the processing and documentation phase consist of?", "What parts of the process are typically the most challenging?", "To what extent do legislated exchanges follow this process?", "Why were some BLM land exchanges controversial?", "To what extent were these exchanges reviewed and reported on?", "How did the BLM and DOI respond to these reports?", "How did the Secretary of the Interior respond to the reports?", "What is a key issue for Congress regarding the land exchange process?", "What are other Congressional issues regarding the BLM?", "What do opponents of administrative exchanges see them as detrimental?", "Why do supporters see administrative exchanges as useful?" ], "summary": [ "FLPMA governs how administrative exchanges are to occur.", "For instance, land exchanges must be in the public interest, and the federal and nonfederal lands in the exchange are to be in the same state. Further, the values of the lands exchanged are to be equal, although payments to equalize value may be made under specified terms.", "Typically, BLM and the other parties share equally in the administrative costs.", "While some exchanges involve single parcels, assembled land exchanges consist of a consolidation of multiple parcels for one or more exchanges over time. Lands acquired by BLM by exchange become public lands managed under existing authorities.", "The land exchange process generally has five phases: development of an exchange proposal, feasibility evaluation, processing and documentation, decision analysis and approval, and title transfer. Each phase typically involves multiple actions.", "For example, processing and documentation includes title review; public notice and comment; identification and resolution of environmental issues; assessments of mineral, cultural, and other resources; Native American consultations; threatened and endangered species consultations; and preparation of land appraisals.", "The appraisal and environmental analysis often are the most challenging and time-consuming parts of the process.", "Legislated exchanges generally follow this process as well, unless otherwise directed by Congress.", "In the past, some BLM land exchanges were controversial. Concerns during the 2000-2009 decade centered on benefits to the public, determinations of market value, contradictions in policies and procedures, delays in appraisals, and various aspects of the exchange process.", "These topics were the subject of various governmental and nongovernmental reports, for instance by the Government Accountability Office (2000, 2006, and 2009), the Appraisal Foundation (2002), Interior appropriators (2009), and the Office of Inspector General of the Department of the Interior (DOI, 2009).", "In response, BLM and DOI implemented changes to the appraisal and exchange processes. For instance, BLM formed and adopted the recommendations of the Appraisal and Exchange Workgroup. Later, BLM also issued instruction memoranda on land exchanges containing additional policies and guidance.", "As another example, the Secretary of the Interior changed the organization and operation of the appraisal services function.", "A key issue for Congress is the extent to which the reforms to the exchange process and appraisal function addressed perceived problems and improved land transactions.", "Other issues for Congress are whether to amend BLM's exchange authority or to discontinue BLM's administrative exchanges.", "Opponents of exchanges view them as inherently difficult and thus favor other authorities to sell or exchange land.", "Supporters continue to view administrative exchanges as useful to change the \"checkerboard\" pattern of land ownership in the West and to increase the efficiency of land management while decreasing management costs." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, 1, 0, -1, 0, 1, 1, -1, 0, 1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "Background", "VHA’s Nurse Workforce", "VHA Nurse Skill Mix", "Roles and Responsibilities for VHA Nurse Recruitment and Retention", "VHA Has Multiple Nurse Recruitment and Retention Initiatives, but Some Medical Centers Face Challenges That Limit the Initiatives’ Usefulness", "VHA’s Oversight of Its Nurse Recruitment and Retention Initiatives Is Limited", "VHA Conducts Limited Monitoring of VA Medical Centers’ Compliance with Nurse Recruitment and Retention Initiatives", "VHA Has Conducted Limited Evaluations of the Training Resources Provided and Overall Nurse Recruitment and Retention Initiatives", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Selected Characteristics of Veterans Health Administration’s (VHA) Nurse Workforce", "Total", "Appendix II: Selected Characteristics of Veterans Health Administration’s (VHA) Key Nurse Recruitment and Retention Initiatives", "Appendix III: Comments from the Department of Veterans Affairs", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Nurse recruitment and retention is essential for VHA to carry out its mission to provide quality care that improves the health and well-being of veterans. In its 2014 Interim Workforce and Succession Strategic Plan, VHA identified nurses as the second most mission-critical occupation for recruitment and retention; only physicians ranked higher. As the demand for health care services increases, effective nurse recruitment and retention is increasingly important for VHA to ensure an adequate and qualified workforce.", "In the last 5 years, the number of nurses providing care to veterans has increased, and VHA expects it will continue to increase because of the expected increased demand for services. In FY 2014, VHA employed more than 85,000 nurses who provided both direct and indirect care to patients through its health care system. The number of nurses providing direct patient care has increased from about 72,000 to about 82,000— approximately a 14 percent increase—from FY 2010 through FY 2014, while the number of unique patients served increased from about 6.0 million to about 6.6 million—approximately a 10 percent increase—during this same time period. VHA projects that approximately 40,000 new RNs will be needed through FY 2018 to maintain adequate staffing levels, including replacing retired nurses, to meet veterans’ needs. (See app. I for the number of nurses providing direct and indirect care at VA medical centers from FY 2010 through FY 2014.)\nIn addition to the need for more nurses due to an increasing number of veterans, VHA anticipates that changes in veteran demographics, including an aging population, will increase the need for nurses to provide more complex types of services to care for veterans. In its 2014 Interim Workforce and Succession Strategic Plan, VHA reported that after 2015, the largest segment of the veteran population will be between 65 and 84 years of age. Also, the number of women veterans receiving care through VHA has nearly doubled since 2004, requiring changes to the type of care provided and corresponding skills needed. VHA estimates that veteran usage of primary care, surgical specialty care, and mental health care will each increase by more than 20 percent over the next 10 years.", "The nurse skill mix—the proportion of each type of nurse (NPs, RNs, LPNs, and NAs) of the total nursing staff in a particular unit or medical center—is an important component of VHA nurse staffing, as the level of education and training for each nurse position determines the types of services that can be provided. (See table 1 for VHA nurse positions, responsibilities, and educational requirements.) For example, intensive care units require higher intensity nursing, and may have a skill mix that is primarily composed of RNs compared to other types of units that may provide less complex care, such as outpatient clinics.\nIn the last 5 fiscal years, RNs comprised the largest percentage of nurses within VHA, and were approximately 64 percent of the nurse workforce in FY 2014. NPs comprised the smallest percentage over the same period. (See fig. 1.)\nFor the first time, in FY 2015, VA began collecting data on the number of nurse hires and vacancies at each of its medical centers. For FY 2015, as of June, VA medical centers hired approximately 8,600 nurses; approximately 5,100 (59 percent) were RNs, and approximately 430 were NPs (5 percent), reflecting VHA’s need for nurses with advanced skills and education. Despite these new hires, VHA estimated that there were about 17,000 vacancies across VA medical centers as of June 2015, with about 12,100 (71 percent) for RN positions. (See app. I for the number of nurse hires and losses at VA medical centers for FY 2015, as of June.)\nThe average national nurse turnover rate for VHA from FY 2010 through FY 2014 was 7.6 percent. The turnover rates for NPs and RNs increased over this same period, and in FY 2014, were 9.1 percent and 7.8 percent, respectively. VHA reported high projected losses for nurses, such as from retirement, in the next few fiscal years. In 2014, for example, VHA reported that by FY 2019, approximately 20 percent of its nurses will be eligible for retirement. Retirement and career advancement through opportunities elsewhere were the top two reasons why nurses reportedly left VHA. In addition, according to findings from VHA’s 2015 Workforce Planning Report, approximately 12 percent of all nurses that left VHA in FY 2012 did so in their first year of employment. (See app I. for annual nurse turnover rates by position type for FY 2010 through FY 2014.)", "VA medical centers are responsible for recruiting and retaining nurses in their respective facilities, with VHA providing support to assist them. Specifically, VHA has developed initiatives that medical centers may offer to help with the recruitment and retention of nurses. VHA also provides guidance and policies to its medical centers on the process of recruiting and hiring nurses and on the initiatives medical centers may use to help with recruitment and retention. Additionally, VHA provides marketing services and tools to medical centers, including marketing campaigns that advertise the benefits of working at VHA and recruitment brochures that medical centers can use at local career fairs. Nurse recruitment begins with advertising and publicizing available positions to encourage potential candidates to apply, through various channels, including through local publications, job fairs, and USAjobs.gov. Once medical centers recruit, interview, and select a nursing candidate, that nursing candidate goes through a process known as onboarding and credentialing.\nMost medical centers employ nurse recruiters, who are responsible for managing the administrative components of the hiring process, as well as various aspects of nurse recruitment and retention. The nurse recruiter position varies among medical centers. Some medical centers assign the nurse recruiter to the medical center’s clinical nursing services office, and these nurse recruiters are typically RNs. Other medical centers assign nurse recruiters to the medical center’s human resources office, and these nurse recruiters may not have clinical backgrounds.", "VHA has multiple system-wide initiatives to recruit and retain its nurse workforce, but some VA medical centers face challenges in offering them to nurses and with recruitment and retention more broadly. We found that VHA has eight key initiatives that medical centers may offer to help them recruit and retain nurses. (See table 2.) VHA’s initiatives focus primarily on providing (1) education and training, and (2) financial benefits and incentives. (See app. II for VHA expenditures for and nurse participation in key recruitment and retention initiatives from FY 2010 through FY 2014.)\nWith the exception of the mandatory RN Transition to Practice initiative, VA medical centers generally have discretion to offer any of VHA’s initiatives to nurses, including the discretion to submit requests for proposals for any of the initiatives that require them. The four VA medical centers in our review varied in the number of initiatives they offered from FY 2010 through FY 2014. (See table 3.) For example, one of the medical centers in our review offered three of the four education and training initiatives—RN Transition to Practice, VA Nursing Academic Partnerships, and VA Learning Opportunities Residency. This medical center also offered the Post-Baccalaureate Nurse Residency—which, beginning in FY 2015, is part of the VA Nursing Academic Partnerships—and developed curricula to move participants through the initiatives. This medical center also offered all four of the financial initiatives—recruitment, retention, and relocation incentives; the Education Debt Reduction Program; the Employee Incentive Scholarship Program; and flexible work schedules. The medical center ceased offering recruitment, retention, and relocation incentives in 2013; according to medical center officials, VHA introduced new employee performance criteria that medical center officials felt were too difficult for employees to achieve or for medical centers to provide justification for retention incentives. Officials from all four medical centers reported offering flexible work schedules to provide nurses with options when trying to maintain work life balance, such as offering nurses compressed schedules (e.g., 10-hour shifts, 4 days a week).\nWhile VA medical centers generally have discretion to offer any of VHA’s initiatives, all medical centers that employed RNs with less than 1 year of nursing experience were required to offer the RN Transition to Practice initiative. However, officials from two medical centers in our review reported not offering the initiative at all or not offering it across all 5 fiscal years. Officials from one medical center offered the RN Transition to Practice initiative for 1 year, beginning in 2012, but subsequently decided not to hire newly graduated nurses because of the extensive orientation and training they required. According to officials, after one of its current LPNs returned to school to become an RN, this medical center coordinated with another VA medical center in the region for this new RN to participate in that medical center’s RN Transition to Practice curriculum. Officials from the second medical center told us that it offered a 16-week program designed to help new nurses acclimate to VA but did not offer VHA’s 12-month RN Transition to Practice initiative because they did not believe it was required.\nIn addition to offering VHA’s initiatives, three of the four medical centers in our review developed local recruitment and retention initiatives. Two medical centers developed initiatives to provide employment to train student nurses; the medical centers’ initiatives were similar to the VA Learning Opportunities Residency. Officials from one of these medical centers told us that the medical center developed a local initiative because the nursing schools in the region offered associate degrees only; whereas, VHA’s initiative requires medical centers to partner with schools of nursing with baccalaureate degree programs. The other medical center offered the VA Learning Opportunities Residency, as well as its own student nurse employment and training initiative. Officials from a third medical center in our review told us that the medical center offered a 16- week RN Transition to Practice initiative to train new RN graduates; these RNs are hired on a temporary basis and are hired as full-time employees when RN vacancies open.\nOfficials from three of the four medical centers in our review reported that VHA’s initiatives helped improve their ability to recruit and retain nurses, as shown in the following examples:\nOfficials from one medical center reported that they hired 9 of the 10 nurses who participated in the VHA Post-Baccalaureate Nurse Residency as full-time nurses in academic year 2012-2013, the first year the medical center offered the initiative. The medical center retained 7 of these 9 nurses as of the end of the following academic year 2013-2014.\nOfficials from another medical center that offered the Education Debt Reduction Program reported that, of the six nurses that began the program since 2010, five completed the 5-year service agreement and, as of April 2015, remained employees of the medical center.\nOfficials from one medical center that offered the Employee Incentive Scholarship Program reported that 23 nurses completed the program over the past 10 years, and, as of February 2015, 21 of those nurses have remained employees of the medical center.\nDespite these successes, however, officials from three of the four medical centers in our review reported challenges with offering VHA’s initiatives specifically, and recruiting and retaining nurses more broadly, both of which limited the initiatives’ usefulness. These challenges—lack of sufficient administrative support, competition with private sector medical facilities for qualified and skilled nurses, the rural location of the medical center, and employee dissatisfaction—may affect medical centers’ ability to effectively and efficiently recruit and retain nurses.\nLack of sufficient administrative support. Officials from one medical center reported challenges in efficiently offering some of the initiatives due to the lack of sufficient administrative support. Specifically, medical center officials reported not having sufficient human resources and clerical staff to process in a timely manner the paperwork associated with specific VHA recruitment and retention initiatives, such as the Employee Incentive Scholarship Program.\nCompetition with the private sector. Officials from two medical centers reported challenges in recruiting and retaining nurses because of competition with private hospitals in the area. Officials from one medical center told us that they face significant competition from local hospitals, as there are multiple private boutique and specialty hospitals in their area. Officials stated that competing with these hospitals, especially for entry-level nurses, is difficult because the hospitals offer generous signing bonuses. Officials from another medical center told us that the high cost of living and lower nursing salaries compared to the salaries offered by competing medical facilities in the area negatively affects the medical center’s ability to successfully recruit and retain nurses, specifically RNs and NPs. Officials from this medical center told us that they do not have sufficient funds, such as funds from VHA’s Education Debt Reduction Program, to offer nurses financial incentives to make up for the large difference in salaries. In addition, while the Choice Act increased the maximum repayment amount for each recipient of the Education Debt Reduction Program from $60,000 to $120,000, VHA officials told us that VHA did not increase the medical center’s annual funding allocation for the program to account for that increase. In FY 2014, this medical center had turnover rates of 10 percent or higher for NPs, RNs, and LPNs, above the national average of 7.9 percent for all nurses.\nRural location. Officials from one medical center that has community outpatient clinics located in rural areas reported challenges recruiting qualified nurses with the requisite experience to work in critical care or other specialized units such as mental health. Officials from another medical center located in a rural area reported that, while the medical center receives high interest in nurse employment generally from the community and has a ready applicant pool for some nurses, it also faces challenges in recruiting nurses with advanced degrees or advanced training and expertise to work in the emergency department or intensive care unit because of its rural location.\nEmployee dissatisfaction. Officials from one medical center and its union reported high levels of nurse dissatisfaction with medical center leadership as a result of recent investigations, including by VA’s OIG, examining access to care issues in the facility. This dissatisfaction has negatively affected the medical center’s ability to retain nurses, according to officials from this medical center. In FY 2014, for example, this medical center had a 12 percent turnover rate for NPs and close to a 30 percent turnover rate for NAs. With some nurses on administrative leave and high nurse turnover, officials stated that nurses are stepping into positions temporarily and are being asked to work additional or longer shifts. Officials stated that the medical center’s units are inadequately staffed to care for the medical center’s current patient load, which they believe is affecting access and the quality of care provided to veterans.\nIn addition to challenges identified by the medical centers in our review, VHA also identified a challenge specific to the RN Transition to Practice initiative. Officials from the Office of Nursing Services told us that, when VHA began to require medical centers to offer the RN Transition to Practice initiative in November 2011, VHA did not provide specific funding to medical centers to do so and relied on medical centers to determine how to fund the initiative, which is financially and staff-resource intensive. According to VHA officials, there have been two unintended consequences of requiring medical centers to offer this initiative without VHA funding. First, some medical centers are deciding to hire experienced RNs only, who would not be eligible for the initiative, rather than hiring new RNs because of the financial burden associated with the initiative. Second, some medical centers in rural locations have found it difficult to offer the initiative because of a lack of available instructors qualified to provide the required training.", "", "VHA conducts limited monitoring of VA medical centers to ensure they are in compliance with its key nurse recruitment and retention initiatives. Consistent with federal internal control standards, monitoring should be ongoing in the course of normal program operations and provide reasonable assurance of compliance with applicable laws and regulations. VHA’s Office of Academic Affiliations has a system in place for conducting site visits to the medical centers that offer the VA Nursing Academic Partnerships initiative. Office of Academic Affiliations officials reported that the site visits occur at least once per year to gauge a medical center’s adherence to the residency’s policies and contractual requirements. In addition to providing consulting services during these site visits to all medical centers that offer this initiative, these officials also told us that site visit reports are specifically generated for medical centers that are offering the initiative for the first time, and these reports are provided to the nursing school and medical center leadership. Officials told us that they have stopped three medical centers from offering the VA Nursing Academic Partnerships initiative when it was in the pilot phase due to non-compliance with program policies.\nVHA Healthcare Talent Management officials told us that although they conducted site visits to medical centers in the past that offered the Education Debt Reduction Program, they are currently not conducting site visits. Officials reported that these site visits were in response to a medical center reporting difficulty implementing the initiatives the office manages, and were a method of comprehensively assessing individual medical center’s compliance with policies or guidance, as well as being consultative in nature. A Healthcare Talent Management official reported that the office lacked sufficient staff to enable them to conduct any site visits in FY 2015 and that additional staff have been hired, which will enable the office to resume site visits in FY 2016.\nIn addition, although VHA required VA medical centers, as of November 2011, to offer VHA’s RN Transition to Practice initiative to RNs with 1 year or less of experience, the Office of Nursing Services does not have a process in place to determine if all medical centers are in compliance. We found, for example, that one medical center in our review that employed RNs with less than 1 year of experience had not offered the RN Transition to Practice initiative; officials from this medical center stated that they thought the initiative was recommended and not required. Officials from the Office of Nursing Services told us that, when the RN Transition to Practice initiative became a requirement in November 2011, there was no specific funding provided to medical centers to offer it. Because of this lack of funding, officials said that it has been difficult to provide oversight of this initiative. With limited monitoring taking place as part of its oversight, VHA lacks assurance that its medical centers are complying with the recruitment and retention initiatives’ policies and requirements, and that any problems can be identified and resolved in a timely and appropriate manner.", "Although three VA medical centers in our review reported that VHA’s key recruitment and retention initiatives for nurses have been helpful, VHA has conducted limited evaluations to determine any needed training resources or to determine the initiatives’ effectiveness system-wide and whether any changes are needed. This lack of evaluation may affect VHA’s ability to improve the initiatives and ultimately medical centers’ ability to recruit and retain nurses. Consistent with federal internal control standards, measuring performance allows organizations to track the progress they are making towards program goals and objectives, and provides managers important information on which to make management decisions and resolve any problems or program weaknesses.\nAccording to VHA officials, there are processes in place to determine if problems exist with several of its recruitment and retention initiatives. First, for the first time, in FY 2015, VHA’s Healthcare Talent Management conducted a survey of medical centers as part of the data collection process for VHA’s Interim Workforce and Succession Strategic Plan.\nThe purpose of the survey was to collect information on workforce priorities in the field and to gauge barriers to medical centers as they offer the three recruitment and retention initiatives managed by Healthcare Talent Management. The survey responses provided feedback on some of the barriers that medical centers faced with offering the initiatives, such as an application process for the Education Debt Reduction Program that was not user friendly. Healthcare Talent Management officials said they plan to use these survey results to make changes to the initiatives it manages, and the office plans to continue including questions regarding workforce planning priorities in future surveys.\nSecond, VHA’s Office of Nursing Services is currently conducting a formal evaluation of the RN Transition to Practice initiative. According to an official, the purpose of the evaluation is to gather information on any successes that medical centers have experienced with offering the initiative. As part of the data collection process, the evaluation team has started interviewing program coordinators at selected medical centers, and will analyze available participant survey data. In addition, the evaluation team plans to survey all medical centers to gauge their compliance with the requirement that all medical centers with RNs with 1 year or less of experience offer the initiative. According to officials, the initiative is set to expire in 2016, and VHA will use the information from the evaluation to make decisions and set goals regarding the program moving forward.\nLastly, the Office of Academic Affiliations uses various tools to assess nurse residents’ skill competency and satisfaction with the initiatives it manages. For example, it uses an assessment tool to measure nurses’ progress toward the development of core clinical competencies at set intervals throughout their participation in the VA Nursing Academic Partnerships, specifically the Post-Baccalaureate Nurse Residency. The Office of Academic Affiliations also uses a survey to gauge participating students’ satisfaction with its training programs and residencies, including the VA Nursing Academic Partnerships - Graduate Education initiative, on topics such as the learning and working environments, as well as clinical faculty skills.\nHowever, VHA has not conducted any assessments of the adequacy of training resources for nurse recruiters. In particular, there are substantial differences in the availability of training resources for nurse recruiters, who can play a key role in medical centers offering VHA’s nurse recruitment and retention initiatives to nurses, according to officials from VHA and representatives of a national nursing organization. According to a VHA official, there is currently no face-to-face training provided by VHA specifically for nurse recruiters, but there is regular training available to those assigned to a human resources office as part of training available to all human resources staff. Representatives of a national nursing organization reported that the clinical nurse recruiters at VA medical centers often feel overwhelmed and unprepared in the position because of a lack of training and human resources-related information, which may have resulted in turnover in that position. VHA officials told us that these differences in training for different types of nurse recruiters have existed for years, but no review of the training provided to nurse recruiters has been conducted. Further, VHA officials told us there are no current plans to assess the differences in the training and the effect that it has on the effectiveness of nurse recruiters. VHA officials reported that the barrier to conducting this type of assessment was resources, both a lack of funding, as well as a lack of staff to conduct the assessment.\nFurthermore, VHA has not conducted any evaluations of the overall effectiveness of the key initiatives in meeting VHA’s system-wide nurse recruitment and retention goals. In its 2014 Interim Workforce and Succession Strategic Plan, VHA reported that its plan included recruiting highly skilled employees in mission critical occupations, which includes nurses, who are able to function at the top of the competency level, as well as retaining these employees as VHA develops a pipeline of qualified nurses that will take on more senior roles. In addition, VHA reported that it is challenged with ensuring it has the appropriate workforce to meet current and future needs that result from shortages and competition for certain health care positions, such as nurses. For example, 42 percent of VHA’s senior leadership, which includes senior-level nurses, is eligible for retirement in 2015, and this percentage will increase over the next 7 years. The strategic plan noted that VHA has several initiatives, such as the Education Debt Reduction Program, to address some of its recruitment challenges, but does not discuss the effectiveness of this initiative in meeting recruitment goals. VA’s annual report to Congress presents statistical information on some of VHA’s recruitment and retention initiatives, such as the number of nurses that received financial incentives in FY 2014 and the amount of financial incentives paid during that time, but does not provide information on the effectiveness of those initiatives in the recruitment and retention of nurses.\nVHA officials reported that they hold regular and ad hoc meetings for all offices that manage VHA’s nurse recruitment and retention initiatives to discuss a variety of topics, such as coordination and effectiveness. For example, the Office of Academic Affiliations holds ad hoc meetings with the Office of Nursing Services and Healthcare Talent Management to coordinate their initiatives related to recruitment and retention. In addition, Healthcare Talent Management holds quarterly meetings with the Office of Academic Affiliations and the Office of Nursing Services to share data, coordinate resources, and offer support for the other offices’ programs. Although these offices may meet to discuss the management of the initiatives, VHA officials reported no current plans to evaluate the overall effectiveness of the initiatives in meeting strategic goals.\nA VHA official noted that the lack of evaluations of the overall effectiveness of VHA’s initiatives is a gap in the organization’s oversight. This official said that the recruitment and retention initiatives for nurses are offered at the local medical center level, and their role has primarily been to provide consultative services to those facilities. VHA officials noted that some data are regularly maintained at the national level, and although they are able to gather limited data on the initiatives from the medical centers, they need to develop a process to evaluate its initiatives to provide better support.\nOversight that includes evaluations of individual initiatives, if conducted, could provide VHA with data to identify any resource needs, such as training or administrative needs, and difficulties that medical centers are experiencing offering the initiatives, such as the lack of adequate administrative support as reported to us by medical centers in our review. A system-wide evaluation could help ensure that VHA’s recruitment and retention initiatives are effective in meeting departmental goals and that resources are effectively allocated across all VA medical centers. Evaluation results could also be useful if communicated to relevant stakeholders, such as medical centers, to inform them of any compliance issues or any operational changes that may be needed. Under federal internal control standards, relevant program information and guidance are needed throughout an agency to achieve all of its objectives, and should be communicated to management and others within the organization in a reliable form and within a time frame that enables them to carry out their organizational responsibilities, such as the implementation of a program or policy.", "Adequate numbers of qualified nurses are essential for VHA to meet its mission of providing quality and timely health care for veterans. As the number of veterans seeking health care increases and the demographics of that population continue to change, VHA faces challenges ensuring it has the appropriate nurse workforce needed to provide care, including more complex, specialized services. In addition, the Choice Act required VHA to add additional clinical staff, including nurses, to its workforce to increase access to care for veterans. VHA has a number of key initiatives to help medical centers recruit and retain nurses; however, challenges, including competition with the private sector for qualified and skilled nurses and the lack of sufficient administrative support, may limit their effectiveness.\nFurthermore, VHA’s limited oversight of its key nurse recruitment and retention initiatives hinders its ability to assess the effectiveness of these initiatives and make any needed adjustments to help ensure its nurse workforce is keeping pace with the health care needs of veterans. Because of its limited monitoring, VHA lacks assurance that its medical centers are offering recruitment and retention initiatives in accordance with the policies and guidance that it has developed. Further, limited evaluations of medical centers offering VHA’s initiatives have meant VHA is unable to systematically identify problems or needed program changes to ensure that the initiatives are being offered efficiently and effectively, including determining whether medical centers have sufficient training resources to support its nurse recruitment and retention initiatives. Further, without system-wide evaluations of its collective initiatives, VHA is unable to determine to what extent its nurse recruitment and retention initiatives are effective in meeting VHA polices and Choice Act provisions, or ultimately, whether VHA’s initiatives are sufficient to meet veterans’ health care needs.", "To help ensure the effective recruitment and retention of nurses across VA medical centers, we recommend the Secretary of Veterans Affairs direct the Under Secretary for Health to take the following three actions: 1. Develop a periodic reporting process to help monitor VA medical center compliance with the policies and procedures for each of its key recruitment and retention initiatives; 2. Evaluate the adequacy of training resources provided to all nurse recruiters at VA medical centers to ensure that they have the tools and information to perform their duties efficiently and effectively; and 3. Conduct a system-wide evaluation of VHA’s key nurse recruitment and retention initiatives, to determine the overall effectiveness of these initiatives, including any needed improvements, and communicate results and information in a timely manner to relevant stakeholders.", "We provided a draft of this report to VA for comment. In its written comments, reproduced in appendix III, VA generally agreed with our conclusions and concurred with our recommendations. In its comments, VA also provided information on workgroups it was planning to establish, as well as its plans for implementing each recommendation, with an estimated completion date of October 2017.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to appropriate congressional committees, the Secretary of Veterans Affairs, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "", "", "Appendix II: Selected Characteristics of Veterans Health Administration’s (VHA) Key Nurse Recruitment and Retention Initiatives (Number of participating nurses)\nInitiative Education and training initiatives RN Transition to Practice n/a (n/a) n/a (n/a) n/a (n/a) n/a (n/a) n/a (n/a)\n2,856,845 (335)\n3,194,961 (349)\n3,128,159 (368)\n3,675,841 (434)\n3,999,113 (475)\n16,162,888 (640)\n14,829,597 (440)\n8,479,674 (260)\n10,590,642 (162)\n10,950,556 (366)\nVA Nursing Academic Partnerships – Graduate Education Financial benefits and incentives initiatives Recruitment, retention, and relocation incentives Education Debt Reduction Program n/a (n/a) n/a (n/a) n/a (n/a) n/a (n/a)\n427,469 (5)\n35,976,421 (6,514)\n31,355,259 (5,358)\n24,214,577 (5,880)\n16,345,604 (2,692)\n11,243,725 (1,899)\n5,938,084 (1,607)\n5,554,648 (1,353)\n6,015,672 (1,300)\n4,599,492 (961)\n3,079,405 (643)\n30,965,399 (3,483)\n30,006,001 (3,697)\n23,353,940 (3,699)\n20,701,054 (3,445)\n23,806,109 (2,965) n/a (n/a) n/a (n/a) n/a (n/a) n/a (n/a) n/a (n/a)", "", "", "", "In addition to the contact named above, Janina Austin, Assistant Director; Jennie Apter; Shana R. Deitch; Jacquelyn Hamilton; Kelli A. Jones; Vikki Porter; and Jessica L. Preston made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 1, 2, 2, 1, 1, 1, 1, 2, 1, 1, 1, 2, 2 ], "alignment": [ "h1_full", "", "", "", "h0_full h2_full", "h2_title", "", "h2_full", "h1_full", "", "h2_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What is the status of the VHA's workforce recruitment programs?", "What is the nature of these initiatives?", "How did the medical centers in GAO's review vary?", "What else did GAO find?", "What was the nature of these challenges?", "What is the status of nurses in the VA system?", "What challenges does VHA face in this regard?", "What kinds of nurses are particularly hard to recruit and retain?", "What was GAO asked to provide?", "What does this report analyze?", "What did GAO review?", "What standards did GAO use to evaluate VHA's oversight?" ], "summary": [ "The Department of Veterans Affairs' (VA) Veterans Health Administration (VHA) has multiple system-wide initiatives to recruit and retain its nurse workforce, but three of the four VA medical centers in GAO's review faced challenges offering them.", "VHA identified a number of key initiatives it offers to help medical centers recruit and retain nurses, which focus primarily on providing (1) education and training, and (2) financial benefits and incentives. VA medical centers generally have discretion in offering these initiatives.", "The four medical centers in GAO's review varied in the number of initiatives they offered, and three of these medical centers developed local recruitment and retention initiatives in addition to those offered by VHA.", "GAO also found that while three of the four medical centers reported improvements in their ability to recruit and retain nurses through their offering of VHA's initiatives; they also reported challenges.", "The challenges included a lack of sufficient administrative support for medical centers, competition with private sector medical facilities, reduced pool of nurses in rural locations with advanced training, and employee dissatisfaction.", "GAO and others have highlighted the need for an adequate and qualified nurse workforce to provide quality and timely care to veterans.", "VHA faces challenges such as increased competition for skilled clinicians in hard-to-fill occupations such as nurses.", "As GAO has previously reported, recruitment and retention is particularly difficult for nurses with advanced professional skills, knowledge, and experience, which is critical given veterans' needs for more complex specialized services.", "GAO was asked to provide information on the recruitment and retention of nurses within VHA.", "This report reviews (1) the initiatives VHA has to recruit and retain its nurse workforce and (2) the extent to which VHA oversees its nurse recruitment and retention initiatives.", "GAO reviewed documents and interviewed officials from VHA, four VA medical centers selected to reflect variation in factors such as nurse turnover, and regional offices for these medical centers. GAO also interviewed selected stakeholder organizations.", "GAO used federal internal control standards to evaluate VHA's oversight." ], "parent_pair_index": [ -1, 0, 0, 2, 3, -1, 0, 0, -1, 0, 0, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "", "Patents and Innovation Policy", "The Mechanics of the Patent System", "Innovation Policy", "The Phenomenon of Tax Strategy Patents", "Patents on Methods of Doing Business", "Patents on Tax Strategies", "Bilski v. Kappos", "Innovation Policy Issues", "Stated Concerns Over Tax Strategy Patents", "Support for Tax Strategy Patents", "Congressional Issues and Options", "Concluding Observations" ], "paragraphs": [ "Proposed legislation in previous sessions of Congress demonstrates legislative interest in the recently recognized phenomenon of patented tax strategies. The proposed, but unenacted legislation would have stipulated that patents upon tax strategies could not be obtained. As discussion of tax strategy patents may continue in the 112 th Congress, a review of this controversial category of patents is appropriate.\nPreviously introduced, but unenacted legislation defined a \"tax planning invention\" as \"a plan, strategy, technique, scheme, process, or system that is designed to reduce, minimize, determine, avoid, or defer, or has, when implemented, the effect of reducing, minimizing, determining, avoiding, or deferring, a taxpayer's tax liability or is designed to facilitate compliance with tax laws....\" Under the proposed legislation, such inventions would not have been patentable. However, \"tax preparation software and other tools or systems used solely to prepare tax or information returns\" were not subject to this ban.\nTax strategy patents are the subject of a spirited debate. Some observers believe that such patents negatively impact social welfare. According to some experts, tax strategy patents may limit the ability of taxpayers to utilize provisions of the tax code, interfering with congressional intent and leading to distortions in tax obligations. Others assert that tax strategy patents potentially complicate legal compliance by tax professionals and taxpayers alike. Still others believe that the patent system should not provide incentives for individuals to develop new ways to reduce their tax liability.\nOther commentators explain that patents on \"business methods\" have been obtained and enforced for many years. Legislation enacted in 1999 that accounted expressly for patents claiming \"a method of doing or conducting business\" arguably approved of such patents. In addition, some commentators believe that tax strategy patents present a positive development, potentially improving the public disclosure of tax shelters for the attention of Congress and federal tax authorities. They also observe that many kinds of patents, on subject matter ranging from automobile seat belts to airplane navigation systems, potentially involve legal compliance.\nAlthough views on tax strategy patents vary, evidence suggests that numerous applications that arguably cover tax planning methods have been filed at the USPTO. Some of these applications have been approved as issued patents. Further, several of them have been the subject of infringement litigation in the federal judicial system. Discussion of the recently appreciated phenomenon of tax strategy patents therefore appears to be timely.\nThis report introduces the concept of tax strategy patents and reviews their implications for intellectual property and tax policy. The report begins by providing an overview of both the practical workings and innovation policy aspirations of the patent system. It then provides a brief history of the phenomenon of tax strategy patents. The report next reviews competing views about the impact of tax patents upon innovation policy. This report concludes with a summary of congressional issues and options.", "", "The U.S. Constitution provides Congress with the power \"To promote the Progress of Science and useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their ... Discoveries.... \" In accordance with the Patent Act of 1952, an inventor may seek the grant of a patent by preparing and submitting an application to the USPTO. USPTO officials known as examiners then determine whether the invention disclosed in the application merits the award of a patent.\nIn determining whether to approve a patent application, a USPTO examiner will consider whether the submitted application fully discloses and distinctly claims the invention. In particular, the application must enable persons skilled in the art to make and use the invention without undue experimentation. In addition, the application must disclose the \"best mode,\" or preferred way, that the applicant knows to practice the invention.\nThe examiner will also determine whether the invention itself fulfills certain substantive standards set by the patent statute. To be patentable, an invention must meet four primary requirements. First, the invention must fall within at least one category of patentable subject matter. According to the Patent Act, an invention which is a \"process, machine, manufacture, or composition of matter\" is eligible for patenting. Second, the invention must be useful, a requirement that is satisfied if the invention is operable and provides a tangible benefit.\nThird, the invention must be novel, or different, from subject matter disclosed by an earlier patent, publication, or other state-of-the-art knowledge. Finally, an invention is not patentable if \"the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.\" This requirement of \"nonobviousness\" prevents the issuance of patents claiming subject matter that a skilled artisan would have been able to implement in view of the knowledge of the state of the art.\nIf the USPTO allows the patent to issue, its owner obtains the right to exclude others from making, using, selling, offering to sell or importing into the United States the patented invention. Those who engage in those acts without the permission of the patentee during the term of the patent can be held liable for infringement. Adjudicated infringers may be enjoined from further infringing acts. The patent statute also provides for an award of damages \"adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.\"\nThe maximum term of patent protection is ordinarily set at 20 years from the date the application is filed. At the end of that period, others may employ that invention without regard to the expired patent.\nPatent rights do not enforce themselves. Patent proprietors who wish to compel others to respect their rights must commence enforcement proceedings, which most commonly consist of litigation in the federal courts. Although issued patents enjoy a presumption of validity, accused infringers may assert that a patent is invalid or unenforceable on a number of grounds. The Court of Appeals for the Federal Circuit (Federal Circuit) possesses nationwide jurisdiction over most patent appeals from the district courts. The Supreme Court enjoys discretionary authority to review cases decided by the Federal Circuit.", "Patent ownership is perceived to encourage innovation, which in turn leads to industry advancement and economic growth. One characteristic of the new knowledge that results from innovation is that it is a \"public good.\" Public goods are non-rivalrous and non-excludable, for use of the good by one individual does not limit the amount of the good available for consumption by others, and no one can be prevented from using that good.\nThe lack of excludability in particular is believed to result in an environment where too few inventions would be made. Absent a patent system, \"free riders\" could easily duplicate and exploit the inventions of others. Further, because they incurred no cost to develop and perfect the technology involved, copyists could undersell the original inventor. Aware that they would be unable to capitalize upon their inventions, individuals might be discouraged from innovating in the first instance. The patent system ameliorates this market failure by providing innovators with a time-limited exclusive interest in their inventions, thereby allowing them to capture their marketplace value.\nThe patent system purportedly serves other goals as well. The patent law encourages the disclosure of new products and processes, for each issued patent must include a description sufficient to enable skilled artisans to practice the patented invention. At the close of the patent's twenty-year term, others may employ the claimed invention without regard to the expired patent. In this manner the patent system ultimately contributes to the growth of the public domain.\nEven during their term, issued patents may encourage others to \"invent around\" the patentee's proprietary interest. A patentee may point the way to new products, markets, economies of production and even entire industries. Others can build upon the disclosure of a patent instrument to produce their own technologies that fall outside the exclusive rights associated with the patent.\nThe regime of patents has also been identified as a facilitator of markets. Absent patent rights, an inventor may have scant tangible assets to sell or license. In addition, an inventor might otherwise be unable to police the conduct of a contracting party. Any technology or know-how that has been disclosed to a prospective licensee might be appropriated without compensation to the inventor. The availability of patent protection decreases the ability of contracting parties to engage in opportunistic behavior. By lowering such transaction costs, the patent system may make exchanges concerning information goods more feasible.\nThrough these mechanisms, the patent system can act in a more socially desirable way than its chief legal alternative, trade secret protection. Trade secrecy guards against the improper appropriation of valuable, commercially useful and secret information. In contrast to patenting, trade secret protection does not result in the disclosure of publicly available information. That is because an enterprise must take reasonable measures to keep secret the information for which trade secret protection is sought. Taking the steps necessary to maintain secrecy, such as implementing physical security measures, also imposes costs that may ultimately be unproductive for society.\nThe patent system has long been subject to criticism, however. Some observers have asserted that the patent system is unnecessary due to market forces that already suffice to create an optimal level of innovation. The desire to obtain a lead time advantage over competitors, as well as the recognition that passive firms may lose out to their more innovative rivals, may provide sufficient inducement to invent without the need for further incentives. Other commentators believe that the patent system encourages industry concentration and presents a barrier to entry in some markets.\nBecause the relationship between the rate of innovation and the availability of patent rights is not well understood, we lack rigorous analytical methods for studying the impact of the patent system upon the economy as a whole. As a result, current economic and policy tools do not allow us to calibrate the patent system precisely in order to produce an optimal level of investment in innovation. Thus, each of these arguments for and against the patent system remains open to challenge by those who are unpersuaded by their internal logic.", "", "The availability of patents on tax strategies has been linked to the grant of patents on the broader category of business methods. Prior to 1998, several judicial opinions could arguably be read to hold that patents could not be granted on methods of doing business. For example, in the 1908 opinion in Hotel Security Checking Co. v. Lorraine Co. , the court considered \"a method of and means for cash-registering and account-checking\" designed to prevent fraud by waiters and cashiers. At one point the court stated that a \"system of transacting business disconnected from the means for carrying out the system is not, within the most liberal interpretation of the term, an art\" that could be patented. However, the court also explained that the invention claimed in the patent \"would occur to anyone conversant with the business\" and that it was \"unable to discover any patentable improvements.... \" As a result, it was unclear whether the court meant to establish a categorical rule that business methods were not patentable subject matter, or merely state that the particular invention before the court would have been obvious. In any event, the USPTO issued some patents that were arguably directed towards business methods during its long history.\nThis long period of ambiguity over the patentability of business methods ended with the 1998 opinion of the U.S. Court of Appeals for the Federal Circuit in State Street Bank & Trust Co. v. Signature Financial Group . The patent at issue in that case concerned a data-processing system for implementing an investment structure known as a \"Hub and Spoke\" system. This system allowed individual mutual funds (\"Spokes\") to pool their assets in an investment portfolio (\"Hub\") organized as a partnership. According to the patent, this investment regime provided the advantageous combination of economies of scale in administering investments coupled with the tax advantages of a partnership. The patented system purported to allow administrators to monitor financial information and complete the accounting necessary to maintain this particular investment structure. In addition, it tracked \"all the relevant data determined on a daily basis for the Hub and each Spoke, so that aggregate year end income, expenses, and capital gain or loss can be determined for accounting and tax purposes for the Hub and, as a result, for each publicly traded Spoke.\"\nLitigation arose between Signature, the patent owner, and State Street Bank over the latter firm's alleged use of the patented invention. Among the defenses offered by State Street Bank was that the asserted patent claimed subject matter that was not within one of the four categories of statutory subject matter, and hence was invalid. The district court sided with State Street Bank. The trial judge explained:\nAt bottom, the invention is an accounting system for a certain type of financial investment vehicle claimed as [a] means for performing a series of mathematical functions. Quite simply, it involves no further physical transformation or reduction than inputting numbers, calculating numbers, outputting numbers, and storing numbers. The same functions could be performed, albeit less efficiently, by an accountant armed with pencil, paper, calculator, and a filing system.\nThe trial court further relied upon \"the long-established principle that business 'plans' and 'systems' are not patentable.\" The court judged that \"patenting an accounting system necessary to carry on a certain type of business is tantamount to a patent on the business itself.\" Because the court found that \"abstract ideas are not patentable, either as methods of doing business or as mathematical algorithms,\" the patent was held to be invalid.\nFollowing an appeal, the Federal Circuit reversed. The court of appeals concluded that the patent claimed not merely an abstract idea, but rather a programmed machine that produced a \"useful, concrete, and tangible result.\" Because the invention achieved a useful result, it constituted patentable subject matter even though its result was expressed numerically. The court further explained that:\nToday, we hold that the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula, or calculation, because it produces \"a useful, concrete and tangible result\"—a final share price momentarily fixed for recording and reporting purposes and even accepted and relied upon by regulatory authorities and in subsequent trades.\nThe court of appeals then turned to the district court's business methods rejection, opting to \"take [the] opportunity to lay this ill-conceived exception to rest.\" The court explained restrictions upon patents for methods of doing business had not been the law since at least the enactment of the 1952 Patent Act. The Federal Circuit then concluded that methods of doing business should be subject to the same patentability analysis as any other sort of process. In the wake of State Street Bank , numerous patents that arguably claim business methods have issued from the USPTO, and several have been the subject of litigation in the federal courts.\nCongressional reaction to the patenting of business methods has to this point been limited. In 1999, Congress enacted the First Inventor Defense Act as part of the American Inventors Protection Act. That statute provides an earlier inventor of a \"method of doing or conducting business\" that was later patented by another to assert a defense to patent infringement in certain circumstances.\nIn enacting the First Inventor Defense Act, Congress recognized that some firms may have operated under the view that business methods could not be patented prior to the State Street Bank decision. As a result, they may have maintained their innovative business methods as trade secrets. Having used these trade secrets in furtherance of their marketplace activities for a period of time, however, these firms may be unable to obtain a patent upon their business method. Further, should a competitor later independently invent and patent the same business method, the trade secret holder would potentially be liable for patent infringement. Following the confirmation of the patenting of business methods by the State Street Bank court, the creation of the first inventor defense was intended to provide a defense to patent infringement in favor of the first inventor/trade secret holder.\nBy stipulating that the first inventor defense applied only to a \"method of doing or conducting business,\" Congress arguably recognized the validity of these sorts of patents. The First Inventor Defense Act did not define the term \"method of doing or conducting business,\" however. To date, no published judicial opinion addresses the precise scope of this defense.", "Although the State Street Bank opinion rejected a per se rule denying patents on business methods, the invention claimed by the Signature patent was arguably motivated by a desire to reduce tax liability. In some sense, then, State Street Bank may be seen as the first tax patent case. Some commentators believe that the \"increase in the number of tax strategy patents requested and approved by the [USPTO] came on the heels\" of State Street Bank .\nNotably, at least one observer rejects this view. Attorney Andrew Schwartz has opined that although business methods may be patented following State Street Bank , the conclusion that tax and other legal methods are patentable subject matter does not result. Mr. Schwartz has asserted that while \"most if not all novel business methods either save time or harness a law of nature for human benefit,\" legal methods instead manipulate \"positive law\" in order to achieve their advantages. According to Mr. Schwartz, legal methods, including tax strategies, therefore do not qualify as inventions within the meaning of the Patent Act. It remains to be seen whether this view will gain more widespread acceptance.\nThe USPTO classification scheme reflects the relationship between business method patents and tax patents. Under USPTO practice, business method patents are organized within class 705, titled \"Data Processing: Financial, Business Practice, Management, or Cost/Price Determination.\" Tax strategy patents fall into a subclass under this heading, being identified under classification number 705/36T.\nAs of January 6, 2011, the USPTO identified 130 issued patents and 155 published applications under classification number 705/36T. As the USPTO received 482,871 patent applications in 2009, and granted 191,927 patents during that year, it should be appreciated that tax strategy patents represent a very small share of that agency's workload. Among the titles of the issued patents are:\nMethod and apparatus for tax efficient investment management, U.S. Patent No. 7,031,937 Method and apparatus for tax-efficient investment using both long and short positions, U.S. Patent No. 6,832,209 Tax advantaged transaction structure (TATS) and method, U.S. Patent No. 6,578,016 Use tax optimization process and system, U.S. Patent No. 6,298,333 Computerized system and method for optimizing after-tax proceeds, U.S. Patent No. 6,115,697\nA notable tax strategy patent that has been subject to enforcement litigation is the so-called \"SOGRAT\" patent, U.S. Patent No. 6,567,790. The SOGRAT patent is titled \"[e]stablishing and managing grantor retained annuity trusts funded by nonqualified stock options.\" The patent's abstract explains that it concerns:\nAn estate planning method for minimizing transfer tax liability with respect to the transfer of the value of stock options from a holder of stock options to a family member of the holder. The method comprises establishing a Grantor Retained Annuity Trust (GRAT) funded with nonqualified stock options. The method maximizes the transfer of wealth from the grantor of the GRAT to a family member by minimizing the amount of estate and gift taxes paid. By placing the options outside the grantor's estate, the method takes advantage of the appreciation of the options in said GRAT.\nOn January 6, 2006, the proprietor of the SOGRAT patent, Wealth Transfer Group L.L.C., brought charges of infringement against John W. Rowe, the former executive chairman of Aetna Inc. Wealth Transfer Group reportedly asserted that Rowe had infringed the SOGRAT patent by establishing one or more GRATs that were funded by nonqualified stock options from Aetna. Because the parties to the litigation reached a confidential settlement on March 12, 2007, the courts did not have the opportunity to address the validity and infringement of the SOGRAT patent specifically, nor the concept of tax strategy patents more generally.\nOther tax patents have also been subject to litigation. The litigation in H&R Block Tax Services, Inc. v. Jackson Hewitt Tax Service, Inc . involved U.S. Patent No. 7,177,829, which \"relates generally to a system for distributing tax refunds to taxpayers and, more particularly, to a system for reallocating some or all of a taxpayer's tax refund into a spending vehicle.\" That litigation is ongoing at the date of the publication of this report. Another case, Simplification LLC v. Block Financial Corp. , concerned two patents claiming methods, apparatus, and computer-readable media allowing automated tax reporting, payment, and refunds. That litigation concluded with a settlement between the parties.", "Increasing public scrutiny of business and tax strategy patents in recent years has corresponded with heightened attention to patent eligibility issues by the USPTO and the courts. On June 28, 2010, the Supreme Court issued its decision in Bilski v. Kappos concerning patentable subject matter. Bilski's application concerned a method of hedging risk in the field of commodities trading. In particular, his application claimed the following method:\nA method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:\ninitiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;\nidentifying market participants for said commodity having a counter-risk position to said consumers; and\ninitiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.\nThe USPTO rejected the application as claiming subject matter that was ineligible for patenting under section 101.\nOn appeal, the Federal Circuit characterized the \"true issue before us then is whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or a mental process.\" The Federal Circuit explained:\nA claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.\nApplying this standard, the Federal Circuit concluded that Bilski's application did not claim patentable subject matter. The Court of Appeals acknowledged Bilski's admission that his claimed invention was not limited to any specific machine or apparatus, and therefore did not satisfy the first prong of the section 101 inquiry. The Federal Circuit also reasoned that the claimed process did not achieve a physical transformation. According to Chief Judge Michel, \"[p]urported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.\" As a result, the USPTO decision to deny Bilski's application was affirmed.\nAfter agreeing to hear the case, the Supreme Court issued a total of three opinions, consisting of a plurality opinion for the Court and two concurring opinions. No single opinion was joined by a majority of Justices for all of its parts. The opinion for the Court, authored by Justice Kennedy, agreed that Bilski's invention could not be patented. But the plurality rejected the Federal Circuit's conclusion that the machine or transformation test was the sole standard for identifying patentable processes. Rather, that standard was deemed \"an important and useful clue.\" The Court also confirmed that laws of nature, physical phenomenon, and abstract ideas were not patentable subject matter.\nThe majority also rejected the assertion that business methods should not be considered patentable subject matter per se . In reaching this conclusion, Justice Kennedy pointed to the First Inventor Defense Act, which explicitly speaks to patents claiming a \"method of doing or conducting business.\" As he explained, the \"argument that business methods are categorically outside of §101's scope is further undermined by the fact that federal law explicitly contemplates the existence of at least some business method patents.\"\nJustice Stevens, joined by Justices Breyer, Ginsburg, and Sotomayor, issued a lengthy concurring opinion on the day of his retirement from the Supreme Court. He agreed that the machine-or-transformation test was \"reliable in most cases\" but \"not the exclusive test.\" In his view, the Court should \"restore patent law to its historical and constitutional moorings\" by declaring that \"methods of doing business are not, in themselves, covered by the statute.\"\nJustice Breyer also issued a concurring opinion that Justice Scalia joined in part. Justice Breyer identified four points on which all nine justices agreed: (1) the range of patentable subject matter is broad but not without limit; (2) the machine-or-transformation test has proven to be of use in determining whether a process is patentable or not; (3) the machine-or-transformation test is not the sole standard for assessing the patentability of processes; and (4) not everything that merely achieves a \"useful, concrete, and tangible result\" qualifies as patentable subject matter.\nOpinions vary upon the impact of Bilski v. Kappos on tax strategy patents. Attorney Marvin Petry explains that \" Bilski seems, once and for all, to have ended the tax practitioners' concern with tax strategy patents because it conclusively rejects tax strategy patents which were of significant concern, those that involve pure method steps....\" On the other hand, Ellen P. Aprill, a member of the faculty of Loyola Law School of Los Angeles, writes that Bilski v. Kappos \"leaves us in a greater state of uncertainty than that which existed before it was decided.\" In her view, the Supreme Court ruling \"demonstrates that for those who believe that tax strategies should not be patented, legislation is needed.\" Future developments will provide better perspectives upon the effect of the Bilski opinion upon business methods and tax strategy patents.", "Although business method patents have been held to be patentable at least since the issuance of the State Street Bank opinion in 1998, the more recent phenomenon of tax strategy patents has resulted in a spirited discussion. Some commentators, and in particular tax professionals, have found tax strategy patents to be \"ridiculous,\" \"bizarre\" and \"deeply unsettling.\" On the other hand, other observers, including many patent professionals, believe both that concerns over tax patents are overstated, and that the patenting of tax strategies may lead to numerous positive consequences. This report next reviews some of the competing concerns about tax strategy patents.", "Many commentators have asserted that the issuance of tax strategy patents is improvident as a matter of both innovation and tax policy. Some observers believe that innovation in tax avoidance techniques has flourished absent the stimulus of patent protection. For example, the Tax Section of the New York State Bar Association has stated that \"[o]ur experience suggests ... that tax advisors do not need the protection of the patent laws to develop tax strategies or to comply with their obligations to represent the interests of their (usually paying) clients.\" The views of the American Institute of Certified Public Accountants (AICPA) are similar. According to the AICPA, \"[p]eople already have substantial incentives to comply with tax law and lower their taxes.\"\nOther observers go further, believing that to the extent that tax patents encourage further innovation in developing innovative tax avoidance strategies, such an incentive is not socially desirable. William A. Drennan, a member of the law faculty at Southern Illinois University, contrasts the grant of tax strategy patents with recent Treasury Department Regulations that, in his view, \"reduce the economic incentive to create tax loopholes.\" Mr. Drennan thus explains:\n[O]ne government agency—the Treasury Department—is taking action to discourage loopholes. In contrast, the Patent Office (at the direction of the Federal Circuit) is providing a new incentive to create loopholes. Since the Treasury Department is in charge of the sound administration of the U.S. tax system, the Treasury Department's views on sound tax policy should be given greater weight than the view of the Patent Office on this subject.\nAs summarized by the Joint Committee on Taxation, \"some may argue that innovation is either not socially beneficial, or requires no special protection to encourage its undertaking, and thus a fundamental premise behind a patent system is missing.\"\nOther experts believe that tax strategy patents are inappropriate because they are said to inject private control over a system of public laws. Under this view, a patent may potentially grant one individual the ability to prevent others from using a new tax provision. In turn, private actors may effect the ability of federal, state, and local governments to raise revenue, influence taxpayer behavior, and otherwise achieve the intended purposes of the tax laws. These concerns were voiced by the AICPA in the following way:\nTax strategy patents also preempt Congress's prerogative to have full legislative control over tax policy. Congress enacts tax law provisions applicable to various taxpayers and intends that taxpayers will be able to use them. Tax strategy patents thwart this Congressional intent by giving tax strategy patent holders the power to decide how select tax law provisions can be used and who can use them.\nTax professionals have also expressed concerns over the impact of tax strategy patents upon their own practices, as well as taxpayers in general. Some observers believe that the burdens of investigating whether a taxpayer's planned course of action is covered by a tax strategy patent, determining whether the patent was providently granted by the USPTO, and potentially negotiating with the patent proprietor in order to employ the strategy, will be costly and impractical for many taxpayers. Further, because compliance with the tax laws and its self-assessment system is obligatory for all citizens of the United States, the scope of this burden could be considerable.\nSome commentators have also opined that the grant of a patent may mislead taxpayers. They believe that issuance of a patent may be seen as the government's imprimatur that a particular technique may be useful in limiting an individual's tax obligations. Because the USPTO does not necessarily evaluate the legality and comparative effectiveness of a particular tax strategy as part of its decision to issue a patent, however, such an impression would be mistaken. As the AICPA has stated:\nTaxpayers may be misled into believing that a patented tax strategy bears the approval of other government agencies, such as the IRS, and therefore is a valid and viable technique under tax law. This is not the case.\nFinally, some commentators have expressed concerns that the USPTO does not have sufficient expertise to assess whether a particular tax strategy meets the patentability criteria of novelty and nonobviousness. As Ellen P. Aprill, a member of the law faculty of the Loyola Law School of Los Angeles, has asserted:\nIt is the duty of patent examiners in the PTO to make the determination that a patent is novel and not obvious. In order to review the validity under the patent law of applications for tax strategy patents, patent examiners need expertise not only in software and finance, but also, of course, tax. They need to understand the conceptual basis of a range of areas of tax—financial products, estate and gift tax, pension and deferred compensation, to name a few where tax strategy patents already exist. Such expertise is difficult to obtain. Few tax practitioners have such broad knowledge in such varied aspects of the tax law. Most work very hard just to keep up in developments and changes in the law in their areas of specialization. Yet the patent examiners evaluating these tax strategy patents are trained as engineers, with few having some additional financial education, such as an MBA. They are not tax lawyers or accountants.\nIn addition, identifying state of the art knowledge may present complications within the tax field. Tax return information is maintained in confidence, and communications between taxpayers and their advisors may also be subject to a legal privilege of nondisclosure. Due to these circumstances, reportedly \"tax practitioners are concerned that many of the patents that have or will be issued for tax strategies will inevitably involve techniques that have long been accepted as routine.\"", "In contrast, other observers have expressed support for the allowance of patents on tax strategies. Some of these commentators believe that previously articulated concerns about tax strategy patents are overstated. Others make the affirmative case that tax strategy patents will produce positive social benefits.\nSome experts disagree that patents will necessarily prove ineffective in encouraging the development of new tax strategies. Patent attorney Michael Sandonato is reported as explaining: \"Of course, tax advisers will give their best advice, but if they can patent it and have some exclusive rights to it, you may see the extra level of activity that patents can motivate.\" Others observe that new ways to reduce tax liability can be both costly to develop and the source of considerable value for a particular inventor. As with more traditional sorts of patents, tax strategy patents may reward these efforts and differentiate products and services among competing tax advisors.\nTax strategy patenting is also said to lead to the affirmative social benefit of enhanced public disclosure. Each issued patent is required to incorporate a full description of the patented invention. As a result, patents may provide an effective mechanism for disseminating information regarding the current state of the art in particular disciplines. Although existing regulations require that certain \"tax shelters\" be disclosed to the Department of the Treasury, the patent system could arguably improve the availability of information regarding tax strategies to tax professionals and regulators alike.\nSome commentators further discount stated concerns that tax strategy patents potentially allow someone to appropriate a method of complying with the law. They observe that a variety of patented inventions could be described in this manner. As explained by patent professionals Stephen T. Schreiner and George Y. Wang, \"[m]any different types of patentable inventions involve a manner of complying with the law, but they are not prohibited from patenting for that reason.\" Schreiner and Wang explain that such inventions as an improved catalytic converter, child's safety seat, and machine for weighing trucks may relate to laws governing automobile emissions, transportation safety, and highway traffic. Because each of these inventions is nonetheless eligible for patenting, Schreiner and Wang assert that \"eligibility for patent protection should not turn on whether the inventions pertain to compliance with the law.\"\nObservers also note that professionals in many spheres of endeavor have long had to account for the patent system during their decision-making process. Chemists, biologists, engineers, computer scientists, and medical doctors are among those individuals who may obtain patents, but must also be mindful of the patents of others during the course of their professional activities. These observers find no persuasive justification for treating tax professionals differently. As Schreiner and Wang state:\n[S]ome seem to have taken the position that tax attorneys and wealthy tax clients should simply not have to be burdened with tax patents. However, this is not persuasive. If doctors and patients must observe patent restrictions on new medical techniques and new medicines that may have life-altering consequences, we can think of no moral, legal or policy basis for why tax attorneys and their clients should enjoy a special exemption while those in the medical profession do not.\nPatent experts also explain that patents do not provide the affirmative right to use the patented invention, but rather the right to exclude others from doing so. As a result, in their view the notion that the grant of patent implies that the patented invention is effective and approved for use is simply incorrect. This situation is commonplace in other fields of endeavor: For example, the USPTO commonly issues patents on pharmaceuticals and medical devices that have not yet received marketing approval from the Food and Drug Administration. In the view of these experts, if taxpayers mistakenly believe that the grant of a patent implies government approval of the patented strategy, then the proper response is to promote taxpayer awareness, not to limit or prohibit tax strategy patents altogether.\nObservers further note that the USPTO has consistently been called upon to address new categories of inventions throughout that agency's long history. For example, contemporary USPTO examiners must respond to cutting-edge innovations in fields such as nanotechnology by developing technical expertise and establishing documentation regarding the state of the art. The USPTO potentially faces a similar challenge with respect to tax strategies, but many observers believe that there is nothing particularly noteworthy or unusual about this task.", "Should Congress conclude that the current situation with respect to tax strategy patents is satisfactory, then no action need be taken. If Congress wishes to intervene, however, a number of options present themselves.\nIn the 111 th Congress, three bills were introduced that would limit the enforcement of tax strategy patents. None were enacted. H.R. 1265 and S. 506 defined the excluded category of \"tax planning invention[s]\" to mean \"a plan, strategy, technique, scheme, process, or system that is designed to reduce, minimize, determine, avoid, or defer, or has, when implemented, the effect of reducing, minimizing, determining, avoiding, or deferring, a taxpayer's tax liability or is designed to facilitate compliance with tax laws, but does not include tax preparation software and other tools or systems used solely to prepare tax or information returns.... \" H.R. 2584 would have prevented any patent claiming a \"tax planning method,\" which is defined similarly. The legislation would have applied to any application filed at the USPTO on or after the date of enactment.\nOther legislative responses are also possible. In furtherance of its oversight over the USPTO, Congress could continue to track that agency's activities with respect to tax strategy patents. In this vein, commentators have proposed several reforms, including USPTO hiring of examiners with expertise in taxation and related disciplines. Congress could also encourage continued cooperation between the USPTO and the IRS with respect to tax strategy patents.\nCongress may also wish to promote the engagement of the community of tax professionals with the patent system. The patent laws allow members of the public both to comment upon many pending patent applications and to challenge issued patents through administrative proceedings. The voluntary contributions of knowledgeable specialists, through these and other mechanisms, may help promote a high level of quality of issued tax strategy patents.", "Tax strategies represent the latest area of controversy regarding patentable subject matter. Other sorts of inventions, such as business methods, biotechnologies, and computer software, have also raised considerable legal and policy questions when they were initially brought before the patent system. Some observers believe that patents on these and other innovations have been allowed for many years, without any evidence of harm to the U.S. innovation environment. Others contend that the affirmative case for granting patents on business methods remains weak, and that patents on tax strategies present uniquely deleterious social consequences. Although proposed legislative responses to the phenomenon of tax strategy patents have thus far been limited to those instruments, this episode might also promote broader congressional thinking of the sorts of inventions that may be appropriately patented." ], "depth": [ 0, 1, 2, 2, 1, 2, 2, 2, 1, 2, 2, 1, 1 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h0_title", "h0_full", "", "h1_title", "h1_full", "h1_full", "h1_full", "h2_title h3_title", "h2_full", "h3_full", "h0_full h4_full", "h0_full h3_full h2_full" ] }

{ "question": [ "What tax-related bills were introduced in previous sessions of Congress?", "What would these inititatives have done?", "How might these issues arise?", "What is the origin of the rise of tax strategy patents?", "How have subsequent courts treated this ruling?", "What has been the role of the USPTO in tax strategy?", "What have several of these patents been subject to?", "What is the state of the current discourse on tax strategy patents?", "What is the opposing position?", "What other viewpoints exist on this issue?", "What other concerns have been expressed?", "What is the supporting position for tax strategy patents?", "How do they explain this position?", "What else do they observe about the patents?", "What is their position on innovation?", "What would be the social good of these patents?", "What would bills H.R. 1265, H.R. 2584, and S. 506 have done?", "What other legislative responses are possible?" ], "summary": [ "Several bills were introduced in previous sessions of Congress that would have addressed the recently recognized phenomenon of patented tax strategies.", "These legislative initiatives would have prevented the grant of exclusive intellectual property rights by the United States Patent and Trademark Office (USPTO) on methods that individuals and enterprises might use in order to minimize their tax obligations.", "This issue may arise before the 112th Congress.", "Many commentators trace the rise of tax strategy patents to the 1998 opinion of the Federal Circuit in State Street Bank v. Signature Financial Group, which rejected a per se rule that business methods could not be patented.", "The 2010 decision of the Supreme Court in Bilski v. Kappos continues to allow for the possibility of business method patents, and potentially tax strategy patents as well.", "In recent years, the USPTO has issued a number of patents that pertain to tax strategies.", "Several of these patents have been subject to enforcement litigation in federal court.", "The impact of tax strategy patents upon social welfare has been subject to a spirited debate.", "Some observers are opposed to tax strategy patents. These commentators believe that patent protection is unnecessary with respect to tax avoidance techniques due to a high level of current innovation.", "Others believe that patent-based incentives to develop tax avoidance strategies are not socially desirable. They assert that patents may limit the ability of individuals to utilize provisions of the tax code intended for all taxpayers, interfering with congressional intent and leading to distortions in tax obligations.", "Others have expressed concerns that tax strategy patents may potentially complicate legal compliance by tax professionals and individual taxpayers alike.", "Other experts believe that these concerns are overstated, and also make the affirmative case that tax strategy patents may provide positive social benefits.", "They explain that patents on \"business methods\" have been obtained and enforced for many years.", "They also observe that the grant of a patent does not imply government approval of the practice of the patented invention, and that professionals in many spheres of endeavor have long had to account for the patent system during their decision-making process.", "They also believe that the availability of tax strategy patents may promote innovation in a field of endeavor that is demonstrably valuable.", "Further, such patents might promote public disclosure of tax strategies to tax professionals, taxpayers, and responsible government officials alike.", "Three bills that were introduced, but not enacted, in the 111th Congress—H.R. 1265, H.R. 2584, and S. 506—would have prohibited the issuance of patents on tax strategies.", "Other legislative responses, including oversight of the USPTO, promotion of cooperation between the USPTO and the IRS, and the encouragement of private sector contributions to the patent examination process, are also possible." ], "parent_pair_index": [ -1, 0, 0, -1, 0, -1, 2, -1, 0, 1, 1, -1, 0, 0, 0, 0, -1, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4 ] }

{ "title": [ "Management of Arlington Contracts Improved, but Additional Steps Are Needed to Ensure Continued Progress", "Army Has Made Progress in Addressing Other Management Deficiencies at Arlington, but Challenges Remain", "Formal Collaboration between the Army and VA Could Lead to Improvements across All National Cemeteries", "Summary of Recommendations for Further Improvements at Arlington National Cemetery", "Contacts and Staff Acknowledgments" ], "paragraphs": [ "The Army has taken a number of steps since June 2010 at different levels to provide for more effective management and oversight of contracts supporting Arlington, including improving visibility of contracts, establishing new support relationships, formalizing policies and procedures, and increasing the use of dedicated contracting staff to manage and improve acquisition processes. While significant progress has been made, we have recommended that the Army take further action in these areas to ensure continued improvement and institutionalize progress made to date. These recommendations and the agency's response are discussed later in this statement.\nArlington does not have its own contracting authority and, as such, relies on other contracting offices to award and manage contracts on its behalf. ANCP receives contracting support in one of two main ways, either by (1) working directly with contracting offices to define requirements, ensure the appropriate contract vehicle, and provide contract oversight, or (2) partnering with another program office to leverage expertise and get help with defining requirements and providing contract oversight. Those program offices, in turn, use other contracting arrangements to obtain services and perform work for Arlington. Using data from multiple sources, we identified 56 contracts and task orders that were active during fiscal year 2010 and the first three quarters of fiscal year 2011 under which these contracting offices obligated roughly $35.2 million on Arlington’s behalf. These contracts and task orders supported cemetery operations, such as landscaping, custodial, and guard services; construction and facility maintenance; and new efforts to enhance information technology systems for the automation of burial operations. Figure 1 identifies the contracting relationships, along with the number of contracts and dollars obligated by contracting office, for the contracts and task orders we reviewed.\nAt the time of our review, we found that ANCP did not maintain complete data on contracts supporting its operations. We have previously reported that the effective acquisition of services requires reliable data to enable informed management decisions.leadership may be without sufficient information to identify, track, and ensure the effective management and oversight of its contracts. While we obtained information on Arlington contracts from various sources, limitations associated with each of these sources make identifying and tracking Arlington’s contracts as a whole difficult. For example: Without complete data, ANCP Internal ANCP data. A contract specialist detailed to ANCP in September 2010 developed and maintained a spreadsheet to identify and track data for specific contracts covering daily cemetery operations and maintenance services. Likewise, ANCP resource management staff maintain a separate spreadsheet that tracks purchase requests and some associated contracts, as well as the amount of funding provided to other organizations through the use of military interdepartmental purchase requests. Neither of these spreadsheets identifies the specific contracts and obligations associated with Arlington’s current information technology and construction requirements.\nExisting contract and financial systems. The Federal Procurement Data System-Next Generation (FPDS-NG) is the primary system used to track governmentwide contract data, including those for the Department of Defense (DOD) and the Army. The Arlington funding office identification number, a unique code that is intended to identify transactions specific to Arlington, is not consistently used in this system and, in fact, was used for only 34 of the 56 contracts in our review. In October 2010 and consistent with a broader Army initiative, ANCP implemented the General Fund Enterprise Business System (GFEBS) to enhance financial management and oversight and to improve its capability to track expenditures. We found that data in this system did not identify the specific information technology contracts supported by the Army Communications-Electronics Command, Army Geospatial Center, Naval Supply Systems Command Weapon Systems Support office, and others. Officials at ANCP and at the MICC-Fort Belvoir stated that they were exploring the use of additional data resources to assist in tracking Arlington contracts, including the Virtual Contracting Enterprise, an electronic tool intended to help enable visibility and analysis of elements of the contracting process.\nContracting support organizations. We also found that Army contracting offices had difficulty in readily providing complete and accurate data to us on Arlington contracts. For example, the National Capital Region Contracting Center could not provide a complete list of active contracts supporting Arlington during fiscal years 2010 and 2011 and in some cases did not provide accurate dollar amounts associated with the contracts it identified. USACE also had difficulty providing a complete list of active Arlington contracts for this time frame. The MICC-Fort Belvoir contracting office was able to provide a complete list of the recently awarded contracts supporting Arlington with accurate dollar amounts for this time frame, and those data were supported by similar information from Arlington.\nThe Army has also taken a number of steps to better align ANCP contract support with the expertise of its partners. However, some of the agreements governing these relationships do not yet fully define roles and responsibilities for contracting support. We have previously reported that a key factor in improving DOD’s service acquisition outcomes—that is, obtaining the right service, at the right price, in the right manner—is having defined responsibilities and associated support structures. Going forward, sustained attention on the part of ANCP and its partners will be important to ensure that contracts of all types and risk levels are managed effectively. The following summarizes ongoing efforts in this area:\nANCP established a new contracting support agreement with the Army Contracting Command in August 2010. The agreement states that the command will assign appropriate contracting offices to provide support, in coordination with ANCP, and will conduct joint periodic reviews of new and ongoing contract requirements. In April 2011, ANCP also signed a separate agreement with the MICC, part of the Army Contracting Command, which outlines additional responsibilities for providing contracting support to ANCP. While this agreement states that the MICC, through the Fort Belvoir contracting office, will provide the full range of contracting support, it does not specify the types of requirements that will be supported, nor does it specify that other offices within the command may also do so.\nANCP signed an updated support agreement with USACE in December 2010, which states that these organizations will coordinate to assign appropriate offices to provide contracting support and that USACE will provide periodic joint reviews of ongoing and upcoming requirements. At the time of our review, USACE officials noted that they were in the process of finalizing an overarching program management plan with ANCP, which, if implemented, provides additional detail about the structure of and roles and responsibilities for support. USACE and ANCP have also established a Senior Executive Review Group, which updates the senior leadership at both organizations on the status of ongoing efforts.\nANCP has also put agreements in place with the Army Information Technology Agency (ITA) and the Army Analytics Group, which provide program support for managing information technology infrastructure and enhance operational capabilities. Officials at ANCP decided to leverage this existing Army expertise, rather than attempting to develop such capabilities independently as was the case under the previous Arlington management. For example, the agreement in place with ITA identifies the services that will be provided to Arlington, performance metrics against which ITA will be measured, as well as Arlington’s responsibilities. These organizations are also responsible for managing the use of contracts in support of their efforts; however, the agreement with ANCP does not specifically address roles and responsibilities associated with the use and management of these contracts supporting Arlington requirements. Although officials from these organizations told us that they currently understand their responsibilities, without being clearly defined in the existing agreements, roles and responsibilities may be less clear in the future when personnel change.\nANCP has developed new internal policies and procedures and improved training for staff serving as contracting officer’s representatives, and has dedicated additional staff resources to improve contract management. Many of these efforts were in process at the time of our review, including decisions on contracting staff needs, and their success will depend on continued management attention. The following summarizes our findings in this area:\nArlington has taken several steps to more formally define its own internal policies and procedures for contract management. In July 2010, the Executive Director of ANCP issued guidance stating that the Army Contracting Command and USACE are the only authorized contracting centers for Arlington. Further, ANCP is continuing efforts to (1) develop standard operating procedures associated with purchase requests; (2) develop memorandums for all ANCP employees that outline principles of the procurement process, as well as training requirements for contracting officer’s representatives; and (3) create a common location for reference materials and information associated with Arlington contracts. In May 2011, the Executive Director issued guidance requiring contracting officer’s representative training for all personnel assigned to perform that role, and at the time of our review, all of the individuals serving as contracting officer’s representatives had received training for that position.\nANCP, in coordination with the MICC-Fort Belvoir contracting office is evaluating staffing requirements to determine the appropriate number, skill level, and location of contracting personnel. In July 2010, the Army completed a study that assessed Arlington’s manpower requirements and identified the need for three full-time contract specialist positions. While these positions have not been filled to date, ANCP’s needs have instead been met through the use of staff provided by the MICC. At the time of our review, the MICC-Fort Belvoir was providing a total of 10 contracting staff positions in support of Arlington, 5 of which are funded by ANCP, with the other 5 funded by the MICC-Fort Belvoir to help ensure adequate support for Arlington requirements. ANCP officials have identified the need for a more senior contracting specialist and stated that they intend to request an update to their staffing allowance for fiscal year 2013 to fill this new position.\nPrior reviews of Arlington have identified numerous issues with contracts in place prior to the new leadership at ANCP. While our review of similar contracts found common concerns, we also found that contracts and task orders awarded since June 2010 reflect improvements in acquisition practices. Our previous contracting-related work has identified the need to have well-defined requirements, sound business arrangements (i.e., contracts in place), and the right oversight mechanisms to ensure positive outcomes. We found examples of improved documentation, better definition and consolidation of existing requirements for services supporting daily cemetery operations, and more specific requirements for contractor performance. At the time of our review, many of these efforts were still under way, so while initial steps taken reflect improvement, their ultimate success is not yet certain.", "The Army has also taken positive steps and implemented improvements to address other management deficiencies and to provide information and assistance to families. It has implemented improvements across a broad range of areas at Arlington, including developing procedures for ensuring accountability over remains, taking actions to better provide information- assurance, and improving its capability to respond to the public and to families’ inquiries. For example, Arlington officials have updated and documented the cemetery’s chain-of-custody procedures for remains, to include multiple verification steps by staff members and the tracking of decedent information through a daily schedule, electronic databases, and tags affixed to urns and caskets entering Arlington. Nevertheless, we identified several areas where challenges remain:\nManaging information-technology investments. Since June 2010, ANCP has invested in information-technology improvements to correct existing problems at Arlington and has begun projects to further enhance the cemetery’s information-technology capabilities. However, these investments and planned improvements are not yet guided by an enterprise architecture—or modernization blueprint. Our experience has shown that developing this type of architecture can help minimize risk of developing systems that are duplicative, poorly integrated, and unnecessarily costly to maintain. ANCP is working to develop an enterprise architecture, and officials told us in January that they expect the architecture will be finalized in September 2012. Until the architecture is in place and ANCP’s ongoing and planned information technology investments are assessed against that architecture, ANCP lacks assurance that these investments will be aligned with its future operational environment, increasing the risk that modernization efforts will not adequately meet the organization’s needs.\nUpdating workforce plans. The Army took a number of positive steps to address deficiencies in its workforce plans, including completing an initial assessment of its organizational structure in July 2010 after the Army IG found that Arlington was significantly understaffed. However, ANCP’s staffing requirements and business processes have continued to evolve, and these changes have made that initial workforce assessment outdated. Since the July 2010 assessment, officials have identified the need for a number of new positions, including positions in ANCP’s public-affairs office and a new security and emergency-response group. Additionally, Arlington has revised a number of its business processes, which could result in a change in staffing needs. Although ANCP has adjusted its staffing levels to address emerging requirements, its staffing needs have not been formally reassessed. Our prior work has demonstrated that this kind of assessment can improve workforce planning, which can enable an organization to remain aware of and be prepared for its current and future needs as an organization. ANCP officials have periodically updated Arlington’s organizational structure as they identify new requirements, and officials told us in January that they plan to completely reassess staffing within ANCP in the summer of 2012 to ensure that it has the staff needed to achieve its goals and objectives. Until this reassessment is completed and documented, ANCP lacks assurance that it has the correct number and types of staff needed to achieve its goals and objectives.\nDeveloping an organizational assessment program. Since 2009 ANCP has been the subject of a number of audits and assessments by external organizations that have reviewed many aspects of its management and operations, but it has not yet developed its own assessment program for evaluating and improving cemetery performance on a continuous basis. Both the Army IG and VA have noted the importance of assessment programs in identifying and enabling improvements of cemetery operations to ensure that cemetery standards are met. Further, the Army has emphasized the importance of maintaining an inspection program that includes a management tool to identify, prevent, or eliminate problem areas. At the time of our review, ANCP officials told us they were in the process of developing an assessment program and were adapting VA’s program to meet the needs of the Army’s national cemeteries. ANCP officials estimated in January that they will be ready to perform their first self-assessment in late 2012. Until ANCP institutes an assessment program that includes an ability to complete a self- assessment of operations and an external assessment by cemetery subject-matter experts, it is limited in its ability to evaluate and improve aspects of cemetery performance.\nCoordinating with key partners. While ANCP has improved its coordination with other Army organizations, we found that it has encountered challenges in coordinating with key operational partners, such as the Military District of Washington, the military service honor guards, and Joint Base Myer-Henderson Hall. Officials from these organizations told us that communication and collaboration with Arlington have improved, but they have encountered challenges and there are opportunities for continued improvement. For example, officials from the Military District of Washington and the military service honor guards indicated that at times they have experienced difficulties working with Arlington’s Interment Scheduling Branch and provided records showing that from June 24, 2010, through December 15, 2010, there were at least 27 instances where scheduling conflicts took place. These challenges are due in part to a lack of written agreements that fully define how these operational partners will support and interact with Arlington. Our prior work has found that agencies can derive benefits from enhancing and sustaining their collaborative efforts by institutionalizing these efforts with agreements that define common outcomes, establish agreed-upon roles and responsibilities, identify mechanisms used to monitor and evaluate collaborative efforts, and enable the organizations to leverage their resources. ANCP has a written agreement in place with Joint Base Myer-Henderson Hall, but this agreement does not address the full scope of how these organizations work together. Additionally, ANCP has drafted, but has not yet signed, a memorandum of agreement with the Military District of Washington. ANCP has not drafted memorandums of agreement with the military service honor guards despite each military service honor guard having its own scheduling procedure that it implements directly with Arlington and each service working with Arlington to address operational challenges. ANCP, by developing memorandums of agreement with its key operational partners, will be better positioned to ensure effective collaboration with these organizations and help to minimize future communication and coordination challenges.\nDeveloping a strategic plan. Although ANCP officials have been taking steps to address challenges at Arlington, at the time of our review they had not adopted a strategic plan aimed at achieving the cemetery’s longer-term goals. An effective strategic plan can help managers to prioritize goals; identify actions, milestones, and resource requirements for achieving those goals; and establish measures for assessing progress and outcomes. Our prior work has shown that leading organizations prepare strategic plans that define a clear mission statement, a set of outcome-related goals, and a description of how the organization intends to achieve those goals. Without a strategic plan, ANCP is not well positioned to ensure that cemetery improvements are in line with the organizational mission and achieve desired outcomes. ANCP officials told us during our review that they were at a point where the immediate crisis at the cemetery had subsided and they could focus their efforts on implementing their longer-term goals and priorities. In January, ANCP officials showed us a newly developed campaign plan. While we have not evaluated this plan, our preliminary review found that it contains elements of an effective strategic plan, including expected outcomes and objectives for the cemetery and related performance metrics and milestones.\nDeveloping written guidance for providing assistance to families. After the Army IG issued its findings in June 2010, numerous families called Arlington to verify the burial locations of their loved ones. ANCP developed a protocol for investigating these cases and responding to the families. Our review found that ANCP implemented this protocol, and we reviewed file documentation for a sample of these cases. In reviewing the assistance provided by ANCP when a burial error occurred, we found that ANCP’s Executive Director or Chief of Staff contacted the affected families. ANCP’s Executive Director—in consultation with cemetery officials and affected families— made decisions on a case-by-case basis about the assistance that was provided to each family. For instance, some families who lived outside of the Washington, D.C., area were reimbursed for hotel and travel costs. However, the factors that were considered when making these decisions were not documented in a written policy. In its June 2010 report, the Army IG noted in general that the absence of written policies left Arlington at risk of developing knowledge gaps as employees leave the cemetery. By developing written guidance that addresses the cemetery’s interactions with families affected by burial errors, ANCP could identify pertinent DOD and Army regulations and other guidance that should be considered when making such decisions. Also, with written guidance the program staff could identify the types of assistance that can be provided to families. In January, ANCP provided us with a revised protocol for both agency-identified and family member-initiated gravesite inquiries. The revised protocol provides guidance on the cemetery's interactions with the next of kin and emphasizes the importance of maintaining transparency and open communication with affected families.", "A transfer of jurisdiction for the Army’s two national cemeteries to VA is feasible based on historical precedent for the national cemeteries and examples of other reorganization efforts in the federal government. However, we identified several factors that may affect the advisability of making such a change, including the potential costs and benefits, potential transition challenges, and the potential effect on Arlington’s unique characteristics. In addition, given that the Army has taken steps to address deficiencies at Arlington and has improved its management, it may be premature to move forward with a change in jurisdiction, particularly if other options for improvement exist that entail less disruption. During our review, we identified opportunities for enhancing collaboration between the Army and VA that could leverage their strengths and potentially lead to improvements at all national cemeteries.\nTransferring cemetery jurisdiction could have both benefits and costs. Our prior work suggests that government reorganization can provide an opportunity for greater effectiveness in program management and result in improved efficiency over the long-term, and can also result in short- term operational costs.told us they were not aware of relevant studies that may provide insight into the potential benefits and costs of making a change in cemetery jurisdiction. However, our review identified areas where VA’s and the Army’s national cemeteries have similar, but not identical, needs and have developed independent capabilities to meet those needs. For example, each agency has its own staff, processes, and systems for determining burial eligibility and scheduling and managing burials. While consolidating these capabilities may result in long-term efficiencies, there could also be challenges and short-term costs.\nAt the time of our review, Army and VA officials Potential transition challenges may arise in transferring cemetery jurisdiction. Army and VA cemeteries have similar operational requirements to provide burial services for service members, veterans, and veterans’ family members; however, officials identified areas where the organizations differ and stated that there could be transition challenges if VA were to manage Arlington, including challenges pertaining to the regulatory framework, appropriations structure, and contracts. For example, Arlington has more restrictive eligibility criteria for in-ground burials, which has the result of limiting the number of individuals eligible for burial at the cemetery. If Arlington cemetery were to be subject to the same eligibility criteria as VA’s cemeteries, the eligibility for in-ground burials at Arlington would be greatly expanded. Additionally, the Army’s national cemeteries are funded through a different appropriations structure than VA’s national cemeteries. If the Army’s national cemeteries were transferred to VA, Congress would have to choose whether to alter the funding structure currently in place for Arlington.\nBurial eligibility at VA’s national cemeteries is governed by 38 U.S.C. § 2402 and 38 C.F.R. § 38.620. Burial eligibility at Arlington is governed by 38 U.S.C. § 2410 and 32 C.F.R. § 553.15.\nMission and vision statements. The Army and VA have developed their own mission and vision statements for their national cemeteries that differ in several ways. Specifically, VA seeks to be a model of excellence for burials and memorials, while Arlington seeks to be the nation’s premier military cemetery.\nMilitary honors provided to veterans. The Army and VA have varying approaches to providing military funeral honors. VA is not responsible for providing honors to veterans, and VA cemeteries generally are not involved in helping families obtain military honors from DOD. In contrast, Arlington provides a range of burial honors depending on whether an individual is a service member killed in action, a veteran, or an officer.\nCeremonies and special events. Arlington hosts a large number of ceremonies and special events in a given year, some of which may involve the President of the United States as well as visiting heads of state. From June 10, 2010, through October 1, 2011, Arlington hosted more than 3,200 wreath-laying ceremonies, over 70 memorial ceremonies, and 19 state visits, in addition to Veterans Day and Memorial Day ceremonies, and also special honors for Corporal Frank Buckles, the last American servicemember from World War I. VA officials told us that their cemeteries do not support a similar volume of ceremonies, and as a result they have less experience in this area than the Army.\nDuring our review, we found that there are opportunities to expand collaboration between the Army and VA that could improve the efficiency and effectiveness of these organizations’ cemetery operations. Our prior work has shown that achieving results for the nation increasingly requires that federal agencies work together, and when considering the nation’s long-range fiscal challenges, the federal government must identify ways to deliver results more efficiently and in a way that is consistent with its limited resources. Since the Army IG issued its findings in June 2010, the Army and VA have taken steps to partner more effectively. The Army’s hiring of several senior VA employees to help manage Arlington has helped to foster collaboration, and the two agencies signed a memorandum of understanding that allows ANCP employees to attend classes at VA’s National Training Center.\nHowever, the Army and VA may have opportunities to collaborate and avoid duplication in other areas that could benefit the operations of either or both cemetery organizations. For example, the Army and VA are upgrading or redesigning some of their core information technology systems supporting cemetery operations. By continuing to collaborate in this area, the agencies can better ensure that their information-technology systems are able to communicate, thereby helping to prevent operational challenges stemming from a lack of compatibility between these systems in the future. In addition, each agency may have specialized capabilities that it could share with the other. VA, for example, has staff dedicated to determining burial eligibility, and the Army has an agency that provides geographic-information-system and global-positioning-system capabilities—technologies that VA officials said that they are examining for use at VA’s national cemeteries.\nWhile the Army and VA have taken steps to improve collaboration, at the time of our review the agencies had not established a formal mechanism to identify and analyze issues of shared interest, such as process improvements, lessons learned, areas for reducing duplication, and solutions to common problems. VA officials indicated that they planned to meet with ANCP officials in the second quarter of fiscal year 2012, with the aim of enhancing collaboration between the two agencies. Unless the Army and VA collaborate to identify areas where the agencies can assist each other, they could miss opportunities to take advantage of each other’s strengths—thereby missing chances to improve the efficiency and effectiveness of cemetery operations—and are at risk of investing in duplicative capabilities.", "The success of the Army’s efforts to improve contracting and management at Arlington will depend on continued focus in various areas. Accordingly, we made a number of recommendations in our December 2011 reports. In the area of contracting, we recommended that the Army implement a method to track complete and accurate contract data, ensure that support agreements clearly identify roles and responsibilities for contracting, and determine the number and skills necessary for contracting staff. In its written comments, DOD partially concurred with these recommendations, agreeing that there is a need to take actions to address the issues we raised, but indicating that our recommendations did not adequately capture Army efforts currently underway. We believe our report reflects the significant progress made by Arlington and that implementation of our recommendations will help to institutionalize the positive steps taken to date.\nWith regard to our recommendation to identify and implement a method to track complete and accurate contact data, DOD noted that Arlington intends to implement, by April 2012, a methodology based on an electronic tool which is expected to collect and reconcile information from a number of existing data systems. Should this methodology consider the shortcomings within these data systems as identified in our report, we believe this would satisfy our recommendations.\nDOD noted planned actions, expected for completion by March 2012 that, if implemented, would satisfy the intent of our other two recommendations.\nWith regard to other management challenges at Arlington, we recommended that the Army implement its enterprise architecture and reassess ongoing and planned information-technology investments; update its assessment of ANCP’s workforce needs; develop and implement a program for assessing and improving cemetery operations; develop memorandums of understanding with Arlington’s key operational partners; develop a strategic plan; and develop written guidance to help determine the types of assistance that will be provided to families affected by burial errors. DOD fully agreed with our recommendations that the Army update its assessment of ANCP's workforce needs and implement a program for assessing and improving cemetery operations. DOD partially agreed with our other recommendations. In January, ANCP officials provided us with updates on its plans to take corrective actions, as discussed in this statement.\nWith regard to implementing an enterprise architecture, DOD stated that investments made to date in information technology have been modest and necessary to address critical deficiencies. We recognize that some vulnerabilities must be expeditiously addressed. Nevertheless, our prior work shows that organizations increase the risk that their information technology investments will not align with their future operational environment if these investments are not guided by an approved enterprise architecture.\nRegarding its work with key operational partners, DOD stated that it recognizes the value of establishing memorandums of agreement and noted the progress that the Army has made in developing memorandums of agreement with some of its operational partners. We believe that the Army should continue to pursue and finalize agreements with key operational partners that cover the full range of areas where these organizations must work effectively together.\nWith regard to a strategic plan, DOD stated that is was in the process of developing such a plan. As discussed previously, ANCP officials in January showed us a newly developed campaign plan that, based on our preliminary review, contains elements of an effective strategic plan.\nRegarding written guidance on the factors that the Executive Director will consider when determining the types of assistance provided to families affected by burial errors, DOD stated that such guidance would limit the Executive Director's ability to exercise leadership and judgment to make an appropriate determination. We disagree with this view. Our recommendation does not limit the Executive Director's discretion, which we consider to be an essential part of ensuring that families receive the assistance they require in these difficult situations. Our recommendation, if implemented, would improve visibility into the factors that guide decision-making in these cases.\nFinally, we recommended that the Army and VA implement a joint working group or other such mechanism to enable ANCP and VA’s National Cemetery Administration to collaborate more closely in the future. Both DOD and VA concurred with this recommendation. As noted, VA stated that a planning meeting to enhance collaboration is planned for the second quarter of 2012.\nChairman McCaskill, Ranking Member Portman, and Members of the Subcommittee, this completes our prepared statement. We would be pleased to respond to any questions that you may have at this time.", "For questions about this statement, please contact Brian Lepore, Director, Defense Capabilities and Management, on (202) 512-4523 or [email protected] or Belva Martin, Director, Acquisition and Sourcing Management, on (202) 512-4841 or [email protected]. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this testimony. Individuals who made key contributions to this testimony include Tom Gosling, Assistant Director; Brian Mullins, Assistant Director; Kyler Arnold; Russell Bryan; George M. Duncan, Kathryn Edelman; Julie Hadley; Kristine Hassinger; Lina Khan; and Alex Winograd.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 1, 1, 1, 1 ], "alignment": [ "h0_full", "h1_full", "h2_full", "h0_full h2_full h1_full", "h1_full" ] }

{ "question": [ "What contracts did GAO identify for Arlington?", "What did these contracts support?", "What has the Army done to provide for more effective management and oversight of contracts?", "What is missing from these efforts?", "Why is it important that Arlington fix these problems?", "What recommendations did GAO make?", "How did DOD respond?", "What steps has the Army taken to address management deficiencies?", "What progress has it implemented?", "What remaining management challenges does the Army have?", "What recommendations did GAO make?", "How did DOD respond?", "Why is a transfer of jursidiction for the Army's two national cemeteries to VA considered feasible?", "What might affect the viability of this change?", "Why could it be premature to move foward with this change in jurisdiction?", "What did GAO identify for Army and VA?", "What did GAO recommend?", "How did DOD and VA respond?" ], "summary": [ "GAO identified 56 contracts and task orders that were active during fiscal year 2010 and the first three quarters of fiscal year 2011 under which contracting offices obligated roughly $35.2 million on Arlington’s behalf.", "These contracts supported cemetery operations, construction and facility maintenance, and new efforts to enhance information technology systems for the automation of burial operations.", "The Army has taken a number of steps since June 2010 at different levels to provide for more effective management and oversight of contracts, establishing new support relationships, formalizing policies and procedures, and increasing the use of dedicated contracting staff to manage and improve its acquisition processes.", "However, GAO found that ANCP does not maintain complete data on its contracts, responsibilities for contracting support are not yet fully defined, and dedicated contract staffing arrangements still need to be determined.", "The success of Arlington’s acquisition outcomes will depend on continued management focus from ANCP and its contracting partners to ensure sustained attention to contract management and institutionalize progress made to date.", "GAO made three recommendations to continue improvements in contract management.", "The Department of Defense (DOD) partially concurred and noted actions in progress to address these areas.", "The Army has taken positive steps and implemented improvements to address other management deficiencies and to provide information and assistance to families.", "It has implemented improvements across a broad range of areas at Arlington, including developing procedures for ensuring accountability over remains and improving its capability to respond to the public and to families’ inquiries.", "Nevertheless, the Army has remaining management challenges in several areas—managing information technology investments, updating workforce plans, developing an organizational assessment program, coordinating with key partners, developing a strategic plan, and developing guidance for providing assistance to families.", "GAO made six recommendations to help address these areas.", "DOD concurred or partially concurred and has begun to take some corrective actions.", "A transfer of jurisdiction for the Army’s two national cemeteries to VA is feasible based on historical precedent for the national cemeteries and examples of other reorganization efforts in the federal government.", "However, several factors may affect the advisability of making such a change, including the potential costs and benefits, potential transition challenges, and the potential effect on Arlington’s unique characteristics.", "In addition, given that the Army has taken steps to address deficiencies at Arlington and has improved its management, it may be premature to move forward with a change in jurisdiction, particularly if other options for improvement exist that entail less disruption.", "GAO identified opportunities for enhancing collaboration between the Army and VA that could leverage their strengths and potentially lead to improvements at all national cemeteries.", "GAO recommended that the Army and VA develop a mechanism to formalize collaboration between these organizations.", "DOD and VA concurred with this recommendation." ], "parent_pair_index": [ -1, 0, 0, 2, 3, 2, 5, -1, 0, 0, -1, 3, -1, 0, 0, -1, 3, 4 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Congressional Research Service Products", "CRS Products", "Government Accountability Office", "House and Senate Committee Prints and Hearings", "Committee Prints", "Hearings", "Office of Management and Budget", "Guidance Documents for Agencies", "Agency Contingency Plans", "Impacts and Costs of Shutdowns", "FY1996", "FY2014", "FY2019", "Office of Personnel Management", "Presidential Materials", "Presidential Statements Related to FY1996 Shutdowns", "The November 1995 Shutdown", "The December 1995-January 1996 Shutdown", "Presidential Statements Related to FY2014 Shutdown", "Presidential and Administration Statements Related to the FY2018 Shutdown", "Presidential Statements Related to FY2019 Shutdown" ], "paragraphs": [ "", "This report provides historical documents and other resources related to past government shutdowns, along with brief annotations that describe the contents of the documents. The report includes links to full-text documents when available. There is limited information and guidance related to shutdowns, and it is difficult to predict what might happen in the event of one, but information about past events may help inform future deliberations.\nThe following annotated resources are meant to guide readers to relevant materials from governmental and selected nongovernmental sources.", "The following select CRS products include information related to past government shutdowns.", "CRS Report RL34680, Shutdown of the Federal Government: Causes, Processes, and Effects , coordinated by Clinton T. Brass.\nThis report discusses the causes, processes, and effects of federal government shutdowns, including potential issues for Congress.\nCRS Report RS20348, Federal Funding Gaps: A Brief Overview , by James V. Saturno\nThis report provides a discussion of funding gaps in recent decades and a more detailed chronology of legislative actions and funding gaps that led to the two shutdowns of FY1996 and the single shutdown of FY2014.\nCRS Report R43292, The FY2014 Government Shutdown: Economic Effects , by Marc Labonte\nThis report discusses the effects of the FY2014 government shutdown on the economy and financial markets. It also reviews third-party estimates of the effects of the shutdown on the economy.\nCRS Report R43250, CRS Resources on the FY2014 Funding Gap, Shutdown, and Status of Appropriations , by Justin Murray\nThis brief report includes short annotations and links to CRS products related to the October 2013 government shutdown.\nCRS Legal Sidebar LSB10243, How a Government Shutdown Affects Government Contracts, by David H. Carpenter\nThis Legal Sidebar briefly covers potential effects of a shutdown on new and existing contracts.\nCRS In Focus, IF11079, National Park Service: Issues Related to a Government Shutdown, by Laura B. Comay and Carol Hardy Vincent This In Focus covers the National Parks Service and topics such as the accessibility and funding for limited operations during a government shutdown. CRS Insight, CRS Insight IN11011, Economic Effects of the FY2019 Government Shutdown, by Marc Labonte This Insight briefly covers the FY2019 shutdown and its effects on economic activity and employment. CRS Insight, CRS Insight IN11020, Federal Grants to State and Local Governments: Issues Raised by the Partial Government Shutdown, by Natalie Keegan This Insight briefly covers the FY2019 shutdown and its effect on the timing and payment of grant awards.", "The U.S. Government Accountability Office (GAO) has published reports related to past and potential shutdowns. The following documents investigate possible issues and provide historical context surrounding government shutdowns.\nU.S. Government Accountability Office, Government Shutdown: Three Departments Reporting Varying Degrees of Impacts on Operations, Grants, and Contracts , GAO-15-86, November 14, 2014, available at https://www.gao.gov/products/GAO-15-86 .\nGAO reviewed how the 2013 shutdown affected some operations and services at three departments: the Departments of Energy, Health and Human Services (HHS), and Transportation (DOT). GAO selected these three departments for review based on the value of grants and contracts, the percentage of employees expected to be furloughed, and the potential for longer-term effects.\nGAO recommended that the Office of Management and Budget (OMB) instruct agencies to document lessons learned in planning for and implementing a shutdown, as well as for resuming activities following a shutdown should a funding gap longer than five days occur in the future. OMB staff did not state whether they agreed or disagreed with the recommendation.\nU.S. General Accounting Office, Cost of the Recent Partial Shutdown of Government Offices , PAD-82-24, December 10, 1981, available at http://www.gao.gov/products/PAD-82-24 .\nAccording to GAO, this report was completed \"in response to congressional requests,\" for which \"GAO contacted 13 cabinet departments and 12 selected agencies and offices to obtain information about the costs of a 1981 partial shutdown of government offices.\" It includes cost estimates, background information about the costs, and GAO recommendations to Congress concerning agency operations in the event of a government shutdown.\nU.S. General Accounting Office, Funding Gaps Jeopardize Federal Government Operations , PAD-81-31, March 3, 1981, available at http://www.gao.gov/products/PAD-81-31 .\nAccording to GAO, as of March 1981, \"interruptions in federal agency funding at the beginning of the fiscal year (FY) and operations on continuing resolutions have become the norm rather than the exception.\" For years, many federal agencies continued to operate during a funding gap, while \"minimizing all nonessential operations and obligations, believing that Congress did not intend that agencies close down\" while waiting for the enactment of annual appropriations acts or continuing resolutions. During the FY1981 appropriations process, the President requested opinions on the Antideficiency Act from the then-U.S. Attorney General, Benjamin Civiletti. In two memoranda issued in 1980 and 1981, the Attorney General stated that the act required agencies to terminate all operations when their current appropriations expired. According to GAO, agencies were uncertain how to respond to the Attorney General's opinion and what activities they would be able to continue if appropriations expired. This GAO report outlines some of the problems surrounding late appropriations and funding gaps. It also includes Attorney General Civiletti's opinions within Appendices IV and VIII.\nU.S. General Accounting Office, Government Shutdown: Funding Lapse Furlough Information , GGD-96-52R, December 1, 1995, available at http://www.gao.gov/products/GGD-96-52R .\nGAO was asked to provide available information on the numbers of federal employees who might have been subject to furlough in the event of a second shutdown in 1995. GAO provided numbers that were based on plans provided by the Office of Management and Budget (OMB) to GAO in October 1995. The numbers included within this document do not represent actual furloughs. The numbers represent planned furloughs in advance of the two shutdowns, which occurred later in November and December–January.\nU.S. General Accounting Office, Government Shutdown: Permanent Funding Lapse Legislation Needed , GGD-91-76, June 6, 1991, available at http://www.gao.gov/products/GGD-91-76 .\nIn 1990, GAO issued a questionnaire to government agencies in an attempt to measure the effects of a partial shutdown which occurred on Columbus Day weekend. This report also includes estimates on the effects of a hypothetical three-day shutdown during a nonholiday workweek.", "", "The following committee print includes historical information on a past government shutdown.\nU.S. Congress, House Committee on Post Office and Civil Service, Cost of Shutting Down Federal Government on November, 23, 1981 , committee print, 97 th Congress, 2 nd session, March 25, 1982 (Washington: GPO, 1982), available at http://hdl.handle.net/2027/pur1.32754077662413 .\nThis committee print assessed the cost of the November 23, 1981, shutdown of federal offices resulting from a presidential veto of a continuing resolution for FY1982. The committee print includes individual federal departments' and agencies' shutdown impact assessments that were collected by GAO (pp. 73-212). It also includes cost estimates, an OMB memorandum, and a presidential veto statement.", "The following are congressional hearings that include historical information on past shutdowns. Some of these hearings include items for the record such as OMB memoranda.\nU.S. Congress, House and Senate Committees on the Budget, Effects of Potential Government Shutdown , hearing, 104 th Congress, 1 st session, September 19, 1995 (Washington: GPO, 1995), available at http://www.archive.org/stream/effectsofpotenti00unit .\nThis hearing took place before the November 1995 shutdown, and it examined potential scenarios if a shutdown were to occur. The hearing includes testimony from Walter Dellinger, Assistant Attorney General, U.S. Department of Justice, and Alice M. Rivlin, Director, OMB. The hearing includes additional materials such as articles, letters from the Federal Reserve System, and a memo from Walter Dellinger to Alice Rivlin.\nU.S. Congress, House Committee on Government Reform and Oversight, Subcommittee on Civil Service, Government Shutdown I: What's Essential ?, hearings, 104 th Congress, 1 st session, December 6, and 14, 1995 (Washington: GPO 1997), available at http://www.gpo.gov/fdsys/pkg/CHRG-104hhrg23275/pdf/CHRG-104hhrg23275.pdf .\nThese hearings were held in December 1995 and generally covered the November 1995 shutdown. Because the hearings were not published until 1997, some additional information related to the December 1995-January 1996 government shutdown is included.\nU.S. Congress, House Committee on Resources, State Service Donations in Budgetary Shutdowns , hearing, 104 th Congress, 1 st session, December 5, 1995 (Washington: GPO 1996), available at http://www.archive.org/stream/stateservicedona00unit .\nThe hearing was held to consider legislation that would have directed the Department of the Interior to accept donations of assistance from state governments' employee services for operating national parks and wildlife refuges during federal government shutdowns.\nU.S. Congress, House Committee on Oversight and Government Reform, As Difficult As Possible: The National Park Service's Implementation of the Government Shutdown , hearing, 113 th Congress, 1 st session, October 16, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg88621/pdf/CHRG-113hhrg88621.pdf .\nThe hearing was held during the October 2013 shutdown and looked at the National Park Service's implementation of the government shutdown.\nU.S. Congress, House Committee on Veterans' Affairs. Effect of Government Shutdown on VA Benefits and Services to Veteran s , hearing, 113 th Congress, 1 st session, October 9, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg85863/pdf/CHRG-113hhrg85863.pdf .\nThe hearing was held during the October 2013 shutdown and focused on the impact of the shutdown on benefits payments and services for veterans.\nU.S. Congress, Senate Committee on Commerce, Science, and Transportation. Impacts of the Government Shutdown on Our Economic Security , hearing, 113 th Congress, 1 st session, October 11, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113shrg93946/pdf/CHRG-113shrg93946.pdf .\nThe hearing was held during the October 2013 shutdown and focused on the possible and emerging economic and other impacts related to the shutdown.\nU.S. Congress, Senate Committee on Small Business and Entrepreneurship. Small Businesses Speak: Surviving the Government Shutdown? , hearing, 113 th Congress, 1 st session, October 15, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113shrg87989/pdf/CHRG-113shrg87989.pdf .\nThe hearing was held during the October 2013 shutdown and it examined the impacts the shutdown was having on small businesses.\nU.S. Congress, House Committee on Armed Services, Subcommittee on Readiness. The Interpretation of H.R. 3210 : 'Pay Our Military Act', hearing, 113 th Congress, 1 st session, October 10, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg85325/pdf/CHRG-113hhrg85325.pdf .\nThe hearing was held during the October 2013 shutdown, and it examined interpretations of H.R. 3210 , the Pay Our Military Act, which ultimately was enacted as P.L. 113-39 .\nU.S. Congress, Senate Joint Economic Committee. The Way Forward: Long-Term Fiscal Responsibility and Economic Growth , hearing, 113 th Congress, 1 st session, October 11, 2013. Available at http://www.gpo.gov/fdsys/pkg/CHRG-113shrg85408/pdf/CHRG-113shrg85408.pdf .\nThe hearing was held during the October 2013 shutdown. The hearing examined policy options for ending the shutdown and addressing the debt ceiling, and it also reviewed potential solutions to promote fiscal sustainability and economic growth.", "", "OMB documents and guidance regarding potential or actual funding gaps and shutdowns may provide insights into current and future practices. The Office of Personnel Management (OPM) has provided links to copies of previous OMB bulletins and memoranda for reference. This website, entitled Pay & Leave Furlough Guidance: Shutdown Furlough , is available at http://www.opm.gov/policy-data-oversight/pay-leave/furlough-guidance/#url=Shutdown-Furlough .\nSome of the OMB documents include the following.\nOMB Bulletin No. 80-14, Shutdown of Agency Operations Upon Failure by the Congress to Enact Appropriations , August 28, 1980 (citing the 1980 Civiletti opinion and requiring agencies to develop shutdown plans); OMB Memorandum, Agency Operations in the Absence of Appropriations , November 17, 1981 (referencing OMB Bulletin No. 80-14; stating the 1981 Civiletti opinion remains in effect; and providing examples of \"excepted activities\" that may be continued under a funding gap); OMB Bulletin No. 80-14, Supplement No. 1, Agency Operations in the Absence of Appropriations , August 20, 1982 (\"updating\" OMB Bulletin No. 80-14 and newly requiring agencies to submit contingency plans for review by OMB); OMB Memorandum M-91-02, Agency Operations in the Absence of Appropriations , October 5, 1990 (referencing OMB Bulletin No. 80-14; stating that OMB Bulletin No. 80-14 was \"amended\" by the OMB Memorandum of November 17, 1981; stating the 1981 Civiletti opinion remains in effect; and directing agencies how to respond to an anticipated funding gap that would begin during the weekend); OMB Memorandum M-95-18, Agency Plans for Operations During Funding Hiatus , August 22, 1995 (referencing OMB Bulletin No. 80-14, as amended; citing the 1981 Civiletti opinion; transmitting to agencies a 1995 Office of Legal Counsel opinion as an \"update\" to the 1981 Civiletti opinion; and directing agencies to send updated contingency plans to OMB); and OMB Memorandum M-13-22, Planning for Agency Operations during a Potential Lapse in Appropriations , September 17, 2013 (citing Section 124 of Circular A-11 and providing guidance and coordinating efforts to facilitate contingency planning in accordance with the Antideficiency Act). OMB Memorandum M-18-05, Planning for Agency Operations during a Potential Lapse in Appropriations , January 19, 2018 (citing Section 124 of Circular A-11 and providing guidance and coordinating efforts to facilitate contingency planning in accordance with the Antideficiency Act).\nOMB also provides agencies with annual instructions in Circular No. A-11 on how to prepare for and operate during a funding gap.\nU.S. Executive Office of the President, Office of Management and Budget, Circular No. A-11: Preparation, Submission, and Execution of the Budget , June 2018, Section 124, available at https://www.whitehouse.gov/wp-content/uploads/2018/06/s124.pdf .\nThe circular establishes two \"policies\" regarding the absence of appropriations: (1) a prohibition on incurring obligations unless the obligations are otherwise authorized by law and (2) permission to incur obligations \"as necessary for orderly termination of an agency's functions,\" but prohibition of any disbursement (i.e., payment).\nThe circular also directs agency heads to develop and maintain shutdown plans, which are to be submitted to OMB at a minimum every two years starting August 1, 2015, and also when revised to reflect certain changes in circumstances. Agency heads are to use the Civiletti opinions, a 1995 Department of Justice, Office of Legal Counsel opinion, and the circular to \"decide what agency activities are excepted or otherwise legally authorized to continue during a lapse in appropriations.\"", "OMB has a website with links to agency shutdown contingency plans arranged by agency. This website, entitled \"Agency Contingency Plans,\" is available at https://www.whitehouse.gov/omb/information-for-agencies/Agency-Contingency-Plans .", "", "The hearing entitled Government Shutdown I: What's Essential ?, includes some estimates related to the December 1995–January 1996 shutdowns. The hearing includes an OMB letter with information about the effects of the shutdowns and counts of employees who were excepted and not excepted from furlough, pp. 266-270 and 272-274. This hearing is available at http://www.gpo.gov/fdsys/pkg/CHRG-104hhrg23275/pdf/CHRG-104hhrg23275.pdf .", "OMB released a report on November 7, 2013, with some estimates on the cost of the October 2013 shutdown. The report includes information on federal employee furloughs, economic effects of the shutdown, and some impact estimates related to select programs. This report is available at http://web.archive.org/web/20140701035515/http://www.whitehouse.gov/sites/default/files/omb/reports/impacts-and-costs-of-october-2013-federal-government-shutdown-report.pdf .", "The Congressional Budget Office (CBO) released a report on January 28, 2019, with some estimates of effects of the December-January partial government shutdown. The report includes estimates related to the shutdown's effect on discretionary spending, economic activity and GDP. The report is available at https://www.cbo.gov/publication/54937 .", "OPM has some information publicly available on the internet related to government shutdowns and furloughs.\nU.S. Office of Personnel Management, Pay & Leave Furlough Guidance , available at https://www.opm.gov/policy-data-oversight/pay-leave/furlough-guidance/#url=Shutdown-Furlough .\nThis website includes links to guidance related to administrative and shutdown furloughs. The shutdown portion of this website includes the following additional references to historical guidance including\nU.S. Office of Personnel Management, Memorandum to Agencies on Retroactive Pay and Other Matters , October 17, 2013; U.S. Office of Personnel Management, Information on Paychecks for September 22 through October 5, 2013 Pay Period; U.S. Office of Personnel Management, Guidance for Shutdown Furloughs , September 2015; U.S. Chief Human Capital Council, Memorandum for Heads of Executive Departments and Agencies . Fact Sheet: Pay and Benefits Information for Employees Affected by the Lapse in Appropriations. January 23, 2019; U.S. Chief Human Capital Council, Memorandum for Heads of Executive Departments and Agencies. Government Fair Treatment Act of 2019 , January 23, 2019; U.S. Chief Human Capital Council, Memorandum for Heads of Executive Departments and Agencies. Telework and other Workplace Flexibilities for Excepted Employees during a Lapse in Appropriations . January 23, 2019.", "The following documents are from the National Archives and Records Administration (NARA) and current Administration websites. These documents cover statements made by Presidents and Administration officials during government shutdowns and are arranged by date.", "", "Historical Context . The November 1995 shutdown began on November 14, 1995, and ended on November 19, 1995. An estimated 800,000 federal employees were furloughed during the five full days of the shutdown. The furlough action was due to the expiration of a continuing resolution ( P.L. 104-31 ), which funded the government through November 13, 1995. On November 13, President William Clinton vetoed a second continuing resolution ( H.J.Res. 115 ) and a debt limit extension bill ( H.R. 2586 ) and instructed agencies to begin shutdown operations. The following presidential statements occurred during this time period.\nU.S. President (Clinton), November 13, 1995, President's Message to Congress on Continuing Resolution Veto , available at https://clintonwhitehouse6.archives.gov/1995/11/1995-11-13-president-message-to-congress-on-continuing-res-veto.html . U.S. President (Clinton), November 14, 1995, Statement by the President on Government Shutdown , available at https://clintonwhitehouse6.archives.gov/1995/11/1995-11-14-for-the-record-president-on-government-shutdown.html . U.S. President (Clinton), November 17, 1995, Transmittal to Congress of Presidential C.R ., available at https://clintonwhitehouse6.archives.gov/1995/11/1995-11-17-transmittal-to-congress-of-presidential-cr.html . U.S. President (Clinton), November 18, 1995, Radio Address by the President to the Nation , available at https://clintonwhitehouse6.archives.gov/1995/11/1995-11-18-radio-address-by-the-president-to-the-nation.html . U.S. President (Clinton), November 19, 1995, Statement by the President on Budget Agreement , available at https://clintonwhitehouse6.archives.gov/1995/11/1995-11-19-statement-by-the-president-on-budget-agreement.html .", "Historical Context . The December 1995-January 1996 shutdown began on December 16, 1995, and ended on January 6, 1996. The shutdown was triggered by the expiration of a continuing funding resolution enacted on November 20, 1995 ( P.L. 104-56 ), which funded the government through December 15, 1995. This shutdown officially ended on January 6, with the passage of three continuing resolutions (CRs) ( P.L. 104-91 , P.L. 104-92 , and P.L. 104-94 ). There were five additional short-term continuing resolutions needed to prevent further funding gaps from occurring through April 26, 1996, when the Omnibus Consolidated Rescissions and Appropriations Act of 1996 ( P.L. 104-134 ) was enacted to fund any agencies or programs not yet funded through FY1996. The following presidential statements occurred during the time period of December 15, 1995, through January 6, 1996.\nU.S. President (Clinton), December 15, 1995, Statement by the President on Budget Negotiations , available at https://clintonwhitehouse6.archives.gov/1995/12/1995-12-15-president-statement-on-budget-negotiations.html . U.S. President (Clinton), December 16, 1995, Radio Address by the President to the Nation , available at https://clintonwhitehouse6.archives.gov/1995/12/1995-12-16-radio-address-by-the-president-to-the-nation.html . U.S. President (Clinton), December 18, 1995, Statement by the President on the Budget , available at https://clintonwhitehouse6.archives.gov/1995/12/1995-12-18-statement-by-the-president-on-the-budget.html . U.S. President (Clinton), December 22, 1995, Statement by the President on Signing House Joint Res. 136 , available at https://clintonwhitehouse6.archives.gov/1995/12/1995-12-22-president-statement-on-signing-house-joint-res.html . U.S. President (Clinton), December 23, 1995, Radio Address by the President to the Nation , available at https://clintonwhitehouse6.archives.gov/1995/12/1995-12-23-radio-address-by-the-president-to-the-nation.html . U.S. President (Clinton), January 4, 1996, Statement by the President on House Joint Resolution 153 , available at https://clintonwhitehouse6.archives.gov/1996/01/1996-01-04-president-statement-on-house-joint-resolution.html . U.S. President (Clinton), January 6, 1996, Statement by the President on Balanced Budget Proposal , available at https://clintonwhitehouse6.archives.gov/1996/01/1996-01-06-president-remarks-on-balanced-budget-proposal.html . U.S. President (Clinton), January 6, 1996, Statement by the President in Signing H.R. 1358 , available at https://clintonwhitehouse6.archives.gov/1996/01/1996-01-06-president-statement-in-signing-hr.html . U.S. President (Clinton), January 6, 1996, Statement by the President in Signing H.R. 1643 , available at https://clintonwhitehouse6.archives.gov/1996/01/1996-01-06-president-statement-in-signing-hr-a.html . U.S. President (Clinton), January 6, 1996, Radio Address by the President to the Nation , available at https://clintonwhitehouse6.archives.gov/1996/01/1996-01-06-radio-address-by-the-president-to-the-nation.html .", "Historical Context . A shutdown occurred at the beginning of FY2014 (October 1, 2013) and lasted for a total of 16 full days. At the beginning of the fiscal year, none of the 12 regular appropriations bills for FY2014 were enacted. In addition, a continuing resolution to provide temporary funding for the previous year's projects and activities had also not been enacted. On September 30, however, an automatic continuing resolution was enacted that covered FY2014 pay and allowances for (1) certain members of the Armed Forces, (2) certain Department of Defense (DOD) civilian personnel, and (3) other specified DOD and Department of Homeland Security contractors ( P.L. 113-39 ).\nA continuing resolution was signed into law ( P.L. 113-46 ) on October 17, 2013, which ended the shutdown and allowed government departments and agencies to reopen. The following presidential statements occurred during the time period of September 30, 2013, through October 19, 2013, and included discussion of the shutdown.\nU.S. President (Obama), September 30, 2013, Statement by the President , available at https://obamawhitehouse.archives.gov/the-press-office/2013/09/30/statement-president . U.S. President (Obama), September 30, 2013, Weekly Address: Averting a Government Shutdown and Expanding Access to Affordable Healthcare , available at https://obamawhitehouse.archives.gov/blog/2013/09/28/weekly-address-averting-government-shutdown-and-expanding-access-affordable-healthca . U.S. President (Obama), October 1, 2013, Remarks by the President on the Affordable Care Act and the Government Shutdown , available at https://obamawhitehouse.archives.gov/the-press-office/2013/10/01/remarks-president-affordable-care-act-and-government-shutdown . U.S. President (Obama), October 3, 2013, Remarks by the President on the Government Shutdown, available at https://obamawhitehouse.archives.gov/the-press-office/2013/10/03/remarks-president-government-shutdown . U.S. President (Obama), October 5, 2013, Weekly Address: End This Government Shutdown , available at https://obamawhitehouse.archives.gov/blog/2013/10/05/your-weekly-address-end-government-shutdown . U.S. President (Obama), October 7, 2013, Remarks by the President at FEMA Headquarters, available at https://obamawhitehouse.archives.gov/the-press-office/2013/10/07/remarks-president-fema-headquarters . U.S. President (Obama), October 12, 2013, Weekly Address: Let's Get Back to the Work of the American People , available at https://obamawhitehouse.archives.gov/blog/2013/10/12/weekly-address-let-s-get-back-work-american-people . U.S. President (Obama), October 16, 2013, Statement by the President of the United States, available at https://obamawhitehouse.archives.gov/the-press-office/2013/10/16/statement-president-united-states . U.S. President (Obama), October 17, 2013, Remarks by the President on the Reopening of the Government , available at https://obamawhitehouse.archives.gov/the-press-office/2013/10/17/remarks-president-reopening-government . U.S. President (Obama), October 19, 2013, Weekly Address: Working Together on Behalf of the American People, available at https://obamawhitehouse.archives.gov/blog/2013/10/19/weekly-address-working-together-behalf-american-people .", "Historical Context. At the beginning of FY2018, none of the 12 regular appropriations bills had been enacted, so the federal government operated under a series of CRs. The first, P.L. 115-56 , provided government-wide funding through December 8, 2017. The second, P.L. 115-90 , extended funding through December 22, and the third, P.L. 115-96 , extended it through January 19, 2018.\nIn the absence of agreement on legislation that would further extend the period of these CRs, a funding gap began with the expiration of P.L. 115-96 at midnight on January 19. A furlough of federal personnel began over the weekend and continued through Monday of the following week, ending with enactment of a fourth CR, P.L. 115-120 , on January 22.\nThe following presidential and Trump Administration statements occurred during the time period of January 19, 2018, through January 22, 2018, and included discussion of the shutdown.\nJanuary19, 2018, Press Briefing by OMB Director Mick Mulvaney and Legislative Affairs Director Marc Short on the Potential Government Shutdown, available at https://www.whitehouse.gov/briefings-statements/press-briefing-by-omb-director-mick-mulvaney-and-legislative-affairs-director-marc-short-on-the-potential-government-shutdown01192018/ .\nJanuary 20, 2018, Press Briefing by OMB Director Mick Mulvaney and Legislative Affairs Director Marc Short on the Government Shutdown , available at https://www.whitehouse.gov/briefings-statements/press-briefing-omb-director-mick-mulvaney-legislative-affairs-director-marc-short-government-shutdown/ .\nU.S. President (Trump) January 22, 2018, Statement from President Donald J. Trump , available at https://www.whitehouse.gov/briefings-statements/statement-president-donald-j-trump-8/ .\nJanuary 22, 2018, Press Briefing by Press Secretary Sarah Sanders available at https://www.whitehouse.gov/briefings-statements/press-briefing-press-secretary-sarah-sanders-012218/ .", "Historical Context. The December 2018-January 2019 partial government shutdown began on December 22, 2018, and ended on January 25, 2019. At the beginning of FY2019 (October 1, 2018), five of the 12 regular appropriations bills had been enacted in consolidated appropriations bills and the other seven appropriations bills were funded under two CRs. The first CR , P.L. 115-245 , provided funding for these remaining seven appropriations bills through December 7, 2018. The second CR, P.L. 115-298 , extended funding for these seven appropriations bills through December 21, 2018. When no agreement was reached on legislation to further extend the period of these CRs for the remaining seven appropriations bills, a funding gap began with the expiration of the funding in P.L. 115-298 at midnight at the end of the day on December 21, 2018.\nThe funding gap ended when a CR was signed into law on January 25, 2019, which ended the partial government shutdown and allowed government departments and agencies to reopen. The partial government shutdown lasted 35 days making it the longest shutdown in history, compared with other shutdowns that have occurred since key Department of Justice opinions were issued in 1980 and 1981. The following presidential statements occurred during the time period of December 21, 2019, through January 25, 2019, and included discussion of the shutdown.\nU.S. President (Trump), December 27, 2018, Remarks by President Trump in Christmas Video Teleconference with Members of the Military , available at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-christmas-video-teleconference-members-military/ .\nU.S. President (Trump), January 4, 2019, Remarks by President Trump After Meeting with Congressional Leadership on Border Security , available at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-meeting-congressional-leadership-border-security/ . U.S. President (Trump), January 8, 2019, President Donald J. Trump's Address to the Nation on the Crisis at the Border , available at https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-address-nation-crisis-border/ . U.S. President (Trump), January 11, 2019, Remarks by President Trump During Briefing at the Rio Grande Valley U.S.-Mexico Border , available at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-briefing-rio-grande-valley-u-s-mexico-border/ . January 11, 2019, Remarks by Vice President Pence Before Meet-and-Greet with U.S. Customs and Border Patrol Employees , available at https://www.whitehouse.gov/briefings-statements/remarks-vice-president-pence-meet-greet-u-s-customs-border-patrol-employees/ . U.S. President (Trump), January 25, 2019, Remarks by President Trump on the Government Shutdown , available at https://www.whitehouse.gov/briefings-statements/remarks-president-trump-government-shutdown/ ." ], "depth": [ 0, 1, 1, 2, 1, 1, 2, 2, 1, 2, 2, 2, 3, 3, 3, 1, 1, 2, 3, 3, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h2_full h1_full", "h1_title", "h1_full", "h0_full", "", "", "", "h2_title h1_title", "h2_full h1_full", "", "", "", "", "", "", "h0_title", "h0_title", "", "h0_full", "h0_full", "", "h0_full" ] }

{ "question": [ "What happens when federal government agencies and programs lack budget authority?", "What happens to the government agencies and programs under the Antideficiency Act?", "What happens when there is a funding gap that affects many federal entities?", "What has happened in the past in the case of funding gaps?", "What happened during recent shutdowns?", "What was the longest shutdown?", "To what extent have government-shutdown laws changed in recent years?", "What authority do agencies and officails have regarding these laws?", "Why might historical information be helpful here?", "What does this report provide?", "What are some sources for these documents?", "How does this report include links to full-text documents?" ], "summary": [ "When federal government agencies and programs lack budget authority after the expiration of either full-year or interim appropriations, they experience a \"funding gap.\"", "Under the Antideficiency Act (31 U.S.C. §§1341 et seq.), they must cease operations, except in certain circumstances when continued activities are authorized by law.", "When there is a funding gap that affects many federal entities, the situation is often referred to as a government shutdown.", "In the past, there have occasionally been funding gaps that led to government shutdowns, one of which lasted 21 days, from December 16, 1995, to January 6, 1996.", "A shutdown occurred at the beginning of FY2014 (October 1, 2013) and lasted for a total of 16 days. Subsequently, two comparatively brief shutdowns occurred during FY2018, in January and February 2018, respectively.", "The longest shutdown occurred in FY2019—beginning at the end of the day on December 21, 2018, and lasting 35 days.", "The relevant laws that govern shutdowns have remained relatively constant in recent decades.", "However, agencies and officials may exercise some discretion in how they interpret the laws, and circumstances that confront agencies and officials may differ over time.", "Still, information about past events may offer some insight into possible outcomes and help inform future deliberations.", "This report provides an annotated list of historical documents and other resources related to several past government shutdowns.", "Sources for these documents and resources include the Congressional Research Service (CRS), Government Accountability Office (GAO), House and Senate Committees, Office of Management and Budget (OMB), Office of Personnel Management (OPM), and Executive Office of the President.", "When possible, the report includes links to full-text documents." ], "parent_pair_index": [ -1, 0, 0, 0, 3, 4, -1, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 1, 1, 1, 2, 2, 2 ] }

{ "title": [ "Recent Trends in Federal Civilian Employment", "Federal Civilian Workforce Grew by 10.3 Percent from 2005 through 2014", "Fourteen Percent of On Board Employees Were Eligible to Retire in 2014", "OPM Needs to Improve the Design, Management, and Oversight of the Federal Classification System", "OPM Has Not Conducted Oversight of Agency Classification Programs", "OPM and Agencies Need to Strengthen Efforts to Identify and Close Mission-Critical Skills Gaps", "OPM Plans to Strengthen the Methodology Used to Identify Emerging Skills Gaps", "Management Challenges and Strategies to Help Agencies Meet Their Missions in an Era of Highly Constrained Resources", "Opportunities Exist to Deal with Poor Performance and Strengthen Performance Management", "Agencies Have Multiple Avenues Available to Address Employee Poor Performance", "OPM Needs to Do More to Ensure Meaningful Distinctions Are Made in Senior Executive Service (SES) Ratings and Performance Awards", "Retaining Employees: Strengthening Employee Engagement during Challenging Times", "Contacts and Acknowledgments", "Appendix I: Content and Status of Prior Human Capital GAO Recommendations", "Product ISSUE AREA: IMPROVING MANAGEMENT AND OVERSIGHT OF THE FEDERAL CLASSIFICATION SYSTEM GAO-14-677", "Product ISSUE AREA: CLOSING MISSION CRITICAL SKILLS GAPS GAO-15-223", "Product ISSUE AREA: DEVELOPING STRATEGIES TO HELP AGENCIES MEET THEIR MISSION IN AN ERA OF HIGHLY CONSTRAINED RESOURCES GAO-14-168", "Product", "Product", "Product", "Product", "Product", "Product", "Product", "Product", "Product", "Product" ], "paragraphs": [ "", "From 2005 to 2014, the civilian workforce (excluding the U.S. Postal Service) grew from 1.88 million to 2.07 million, an increase of 10.3 percent, or 192,951 individuals. Most of this growth (76 percent) occurred between 2009 and 2014. The number of permanent career executive branch employees grew by 221,672, from about 1.7 million in 2005 to 1.92 million in 2014 (an increase of 13 percent). Of the 24 Chief Financial Officers (CFO) Act agencies, 13 had a higher percentage of permanent career employees in 2014 than they did in 2005, and 11 had a lower percentage (see figure 1).", "The retirement rate of federal civilian employees rose from 3.2 percent in 2004 to a high of 3.6 percent in 2007 when, according to data from the National Bureau of Economic Research, the recession began. During the recession, the total attrition rate dropped to a low of 2.5 percent in 2009 before rebounding to pre-recession levels in 2011 and 2012. Beginning at the end of 2007, the recession saw retirement rates decline to 3.3 percent in 2008, 2.5 percent in 2009, and 2.7 percent in 2010, before increasing again to 3.5 percent in 2014.\nWith respect to retirement eligibility, of the 1.92 million permanent career employees on board in 2014, approximately 270,000 (14 percent) were eligible to retire. By September 2019, approximately 590,000 (31 percent) of on board staff will be eligible to retire. Not all agencies will be equally affected. Also by September 2019, 18 of the 24 CFO Act agencies will have a higher percentage of staff eligible to retire than the current overall average of 31 percent. About 23 percent of Department of Homeland Security staff on board as of September 2014 will be eligible to retire in 2019, while more than 43 percent will be eligible to retire at both the Department of Housing and Urban Development and the Small Business Administration (see figure 2). Certain occupations—such as air traffic controllers, customs and border protection agents, and those involved in implementing government programs—will also have particularly high retirement-eligibility rates by 2019. About 63 percent of career executives may be eligible to retire by 2016.", "As we reported in 2014, the General Schedule (GS) classification system is a mechanism for organizing federal white-collar work, notably for the purpose of determining pay, based on a position’s duties, responsibilities, and difficulty, among other things. The GS system, which is administered by OPM and includes a standardized set of 420 occupations, grouped in 23 occupational families and 15 statutorily-defined grade levels, influences other human capital practices such as training, since training opportunities link position competencies with the employee’s performance. In 2013, the GS system covered about 80 percent of the civilian white-collar workforce (about 1.6 million employees).\nThe GS system was designed to uphold the key merit system principle of equal pay for work of substantially equal value and other important goals. However, some OPM reports and several public policy groups have questioned the GS system’s ability to meet agencies’ needs for flexible talent management tools that enable them to align employees with mission requirements. For example, in 2002, OPM outlined the advantages and disadvantages of the GS classification system and concluded that agencies should be allowed to tailor their pay practices to better recruit, manage, and retain employees to accomplish their mission. In 2014, the Partnership for Public Service reported that by treating all occupations equally and linking them to the current pay scales, the GS system is unable to distinguish between meaningful differences in complexity and skill across occupations. Also, as federal agencies have taken on additional roles and responsibilities, their missions have become increasingly complex, and their employees need to possess a range of expertise and skills that may not be adequately captured by the GS system.\nWe reported in July 2014 on the attributes of a modern, effective classification system and the extent to which the current GS system balances those attributes. Our analysis of subject matter specialists’s comments, related literature, and interviews with OPM officials identified a number of important characteristics for a modern, effective classification system, which we consolidated in eight key attributes (see table 1).\nIn 2014 we found that, in concept, the current GS classification system’s design incorporates several key attributes including internal and external equity, transparency, simplicity, and rank in position. However, as OPM implemented the system, the attributes of transparency, internal equity, simplicity, flexibility, and adaptability were reduced. This occurred, in part, because some attributes are at odds with one another. So, fully achieving one attribute comes at the expense of another. Thus, OPM, working with its stakeholders, is challenged to determine how best to optimize each attribute.\nWe also reported that the GS system’s standardized set of 420 occupations incorporates several key attributes, but falls short in implementation. For example, the occupational standard for an information technology specialist clearly describes the routine duties, tasks, and experience required for the position. This kind of information is published for the 420 occupations so all agencies are using the same, consistent standards when classifying positions—embodying the attributes of transparency and internal equity. However, in implementation, having numerous, narrowly defined occupational standards inhibits the system’s ability to optimize these attributes. Specifically, classifying occupations and developing position descriptions in the GS system requires officials to maintain an understanding of the individual position and the nuances between similar occupations. We concluded that without this understanding, the transparency and internal equity of the system may be inhibited as agency officials may not be classifying positions consistently, comparable employees may not be treated equitably, and the system may seem unpredictable.\nWe believe that, going forward, these eight attributes of a more modern, effective classification system can help provide criteria for policymakers and other stakeholders to use in determining whether refinements to the current GS system or wholesale reforms are needed. In our July 2014 report, we recommended that OPM, working through the Chief Human Capital Officer (CHCO) Council and in conjunction with key stakeholders such as the Office of Management and Budget, unions, and others, examine ways to make the GS system’s design and implementation more consistent with the attributes of a modern, effective classification system. OPM partially concurred with our recommendation to work with key stakeholders to use prior studies and lessons learned to examine ways to make the GS system more consistent with the attributes of a modern, effective classification system. But it also noted several efforts to assist agencies with classification issues, including its interagency classification policy forum and partnering with agencies to address challenges related to specific occupational areas. While these examples of assisting agencies to better implement the GS system on a case-by- case basis are helpful, they do not fully address the fundamental challenges facing the GS system, which we and others have said is not meeting the needs of federal agencies.", "In 2014, we also reported that OPM is responsible for establishing new— and revising existing—occupational standards after consulting with agencies. From 2003 to 2014, OPM revised almost 20 percent of the occupational standards and established 14 new ones. However, there was no published review or update of 124 occupations since 1990. OPM officials said they first review occupations identified in presidential memorandums as needing review; however, they do not systemically track and prioritize the remaining occupational standards for review. Therefore, we concluded that OPM had limited assurance that it is updating the highest priority occupations.\nOPM is required by law to oversee agencies’ implementation of the GS system. However, OPM officials said OPM has not reviewed any agency’s classification program since the 1980s because OPM leadership at the time concluded that the reviews were ineffective and time consuming. As a result, we also concluded that OPM has limited assurance that agencies are correctly classifying positions according to standards.\nIn 2014, we determined that, going forward, OPM could improve its management and oversight of the GS system, and like all agencies, must consider cost-effective ways to fulfill its responsibilities in an era of constrained resources. Using a more strategic approach to track and prioritize reviews of occupational standards—that perhaps better reflects evolving occupations—could help OPM better meet agencies’s needs and the changing nature of government work. We therefore recommended that OPM develop a strategy to systematically track and prioritize updates to occupational standards. However, OPM did not concur with our recommendation and noted that occupational standards are updated in response to a systematic, prioritized process informed by working with agencies and other stakeholders and analysis of occupational trends. OPM officials were unable to provide us with the documentation of such efforts. As we noted in our 2014 report, OPM had not published a review or update of roughly 30 percent of the total number of occupations on the GS system since 1990. Further, OPM officials could not provide the near- or long-term prioritization of occupations scheduled for review. As a result, we concluded that OPM cannot demonstrate whether it is keeping pace with agencies’ needs nor does it have reasonable assurance that it is fulfilling its responsibilities to establish new or revise existing occupational standards based on the highest priorities. We continue to believe that OPM should take action to fully address our recommendation.\nWe also recommended in 2014 that OPM develop a strategy that would enable it to more effectively and routinely monitor agencies’s implementation of classification standards. OPM partially concurred with our recommendation and stated that it will continue to leverage the classification appeals program to provide interpretative guidance to agencies to assist them in classifying positions. OPM also stated it will direct consistency reviews as appropriate, however as we noted in the report, OPM does not review agencies’ internal oversight efforts. We continue to believe that OPM should develop a strategy to fully address the recommendation, and we will continue to monitor OPM’s efforts in that regard.", "Our past work has shown that mission-critical skills gaps in such occupations as cybersecurity and acquisition pose a high-risk to the nation. Whether these gaps are within specific federal agencies or across the federal government, they impede federal agencies from cost- effectively serving the public and achieving results. To address complex challenges such as disaster response, national and homeland security, and rapidly evolving technology and privacy security issues, the federal government requires a high-quality federal workforce able to work seamlessly with other agencies and levels of government, and across sectors. However, efforts are threatened by trends that include current budget and long-term fiscal pressures, declining levels of federal employee satisfaction, the changing nature of federal work, and a potential wave of employee retirements that could produce gaps in leadership and institutional knowledge.", "In our 2011 High Risk report we stated that OPM, agencies, and the CHCO Council need to address critical skills gaps that cut across several agencies. As we reported earlier this year, OPM and agencies have taken promising steps, but additional efforts are needed to coordinate and sustain their efforts. Additionally, agencies and OPM need to make better use of workforce analytics which can be used to predict newly emerging skills gaps. An important government-wide effort we identified in this area was the CHCO Council’s Working Group (Working Group). The Working Group has identified skills gaps in six government-wide, mission- critical occupations: cybersecurity specialist, auditor, human resources specialist, contract specialist, economist, and the science, technology, engineering, and mathematics (STEM) professions. Although this effort was an important step forward, our 2015 work identified skills gaps in nearly two dozen occupations with significant programmatic impact. We also determined that the Working Group did not develop a more comprehensive list because of various methodological shortcomings. Going forward, we concluded that OPM and the CHCO Council will need to use lessons learned to inform a new round of work expected in this year. Specifically, the Working Group’s experience underscored the importance of (1) using a robust, data-driven approach to identify potential mission-critical occupations early in the process; (2) prioritizing occupations using criteria that consider programmatic impact; and (3) consulting with subject matter experts and other stakeholders prior to identifying mission-critical occupations.\nOur January 2015 report also noted that, to make further progress on this issue, the federal government needs to build a predictive capacity for identifying emerging mission-critical skills gaps. Realizing this, OPM has established an interagency working group known as the Federal Agency Skills Team (FAST), which is composed of agency officials with workforce planning and data analysis skills. OPM has tasked the group with implementing a standard and repeatable methodology for identifying and addressing government-wide skills gaps, as well as mission-critical competencies, over a 4-year cycle. OPM officials said that, in its first year, FAST intends to meet regularly until it identifies a new set of government- wide skills gaps. OPM officials expect this to occur by June 2015.\nBecause we identified a number of shortcomings in the implementation of FAST, our January 2015 report recommended that the Director of OPM, in conjunction with the CHCO Council, take the following actions:\nAssist FAST in developing goals for closing skills gaps with targets that are both clear and measurable.\nWork with FAST to design outcome-oriented performance metrics that align with overall targets for closing skills gaps and link to the activities for addressing skills gaps. Incorporate greater input from subject matter experts, as planned.\nOPM concurred with these recommendations and has reported that it will implement all of these actions. However, not all actions will be implemented through FAST but instead will rely on subject matter experts from across the federal workforce. In the same report, we recommended that the Director of OPM work with agency CHCOs to bolster the ability of agencies to assess workforce competencies by sharing competency surveys, lessons learned, and other tools and resources. These actions will help ensure that OPM builds the predictive capacity to identify emerging skills gaps across the government—including the ability to collect and use reliable information on the competencies of the federal workforce for government-wide workforce analysis. OPM also agreed with this recommendation.\nFinally, in January 2015 we also reported on OPM’s efforts to assist in addressing skills gaps at the agency level. OPM created HRstat, a process of holding regularly scheduled, data-driven review meetings led by an agency’s CHCO to review performance metrics for driving progress on the agency’s human capital management priorities and goals, such as closing mission-critical skills gaps. OPM launched HRstat as a 3-year pilot program in May 2012, with an initial group of eight agencies. However, our work determined that OPM should take a greater leadership role in helping agencies include a core set of metrics in their HRstat reviews so that OPM and agency leaders can have a clear view of progress made closing skills gaps. While it is important for agencies to have ownership over their HRstat reviews, OPM should also maximize its opportunity to use HRstat to gain greater visibility over the federal workforce. Therefore, in our January 2015 report we recommended that the Director of OPM take the following actions:\nWork with the CHCO Council to develop a core set of metrics that all agencies should use as part of their HRstat data-driven reviews.\nCoordinate with FAST personnel and explore the feasibility of collecting information needed by FAST as part of agencies’s HRstat reviews.\nOPM agreed with our recommendation to develop a core set of metrics and plans to convene agency officials responsible for conducting HRstat reviews within their agencies, and have them identify a useful set of core metrics. OPM expects to complete this by the end of 2015. In regards to coordinating the efforts of FAST and agencies’ HRstat reviews, OPM stated that integrating these efforts would not be appropriate because of differing data requirements and goals of the two processes. We continue to believe that OPM should explore coordinating these efforts to gain greater visibility over the federal workforce and to monitor progress toward closing skills gaps.\nEfforts to close mission-critical skills gaps are often couched in discussions about interagency initiatives and working groups, as well as technical terms, such as staffing numbers, competencies, and metrics. Yet, the ultimate goal is a higher-performing, cost-effective government.\nWith a continual focus on implementing the recommendations we have made in these areas, we believe that OPM, the CHCO Council, and agencies should begin to make progress on addressing current and emerging skills gaps.", "In May 2014, we reported on strategies for managing the federal workforce and planning for future needs in an era of constrained resources. The strategies we identified included the following:\nStrengthening collaboration to address a fragmented human capital community. Our analysis found that the federal human capital community is highly fragmented with multiple actors inside government informing and executing personnel policies and initiatives in ways that are not always aligned with broader, government-wide human capital efforts. The CHCO Council was established to improve coordination across federal agencies on personnel issues. But, according to CHCOs we spoke to, the council is not carrying out this responsibility as well as it could. This challenge manifests itself in two ways. First, across organizations, many actors are making human capital decisions in an uncoordinated manner. Second, within agencies, CHCOs and the human capital staff are excluded from key agency decisions.\nUsing enterprise solutions to address shared challenges. Our analysis found that agencies have many common human capital challenges. But, they tend to address these issues independently without looking to enterprise solutions (i.e., government-wide) that could resolve them more effectively. Across government, there are examples of agencies and OPM initiating enterprise solutions to address crosscutting issues, including the consolidation of federal payroll systems into shared-services centers. CHCOs we spoke to highlighted human resource information technology and strategic workforce planning as two areas that are ripe for government-wide collaboration.\nCreating more agile talent management to address inflexibilities in the current system. Our analysis found talent management tools lack two key ingredients for developing an agile workforce, namely the ability to (1) identify the skills available in their existing workforces, and (2) move people with specific skills to address emerging, temporary, or permanent needs within and across agencies.\nIn our May 2014 report, we stated that the CHCOs said OPM needs to do more to raise awareness and assess the utility of the tools and guidance they provide to agencies to address key human capital challenges. The CHCOs said they were either unfamiliar with OPM’s tools and guidance, or they fell short of their agency’s needs. OPM officials said they had not evaluated the tools and guidance they provide to the agencies. As a result, a key resource for helping agencies improve the capacity of their personnel offices is likely being underutilized.\nTherefore, we recommended that OPM, in conjunction with the CHCO Council, (1) strengthen coordination and leadership on government-wide human capital issues, (2) explore expanded use of enterprise solutions to more efficiently and effectively address shared challenges, (3) review the extent to which new capabilities are needed to promote agile talent management, and (4) evaluate the communication strategy for and effectiveness of tools, guidance, or leading practices OPM or agencies provide for addressing human capital challenges. OPM and the CHCO Council concurred with our recommendations.", "Managing employee performance has been a long-standing government- wide issue and the subject of numerous reforms since the beginning of the modern civil service. Without effective performance management, agencies risk losing (or failing to utilize) the skills of top talent. They also may miss the opportunity to observe and correct poor performance. Our past work has shown that a long-standing challenge for federal agencies has been developing credible and effective performance management systems that can serve as a strategic tool to drive internal change and achieve results.\nMore than a decade ago, we reported that day-to-day performance management activities benefit from performance management systems that, among other things, (1) create a clear “line of sight” between individual performance and organizational success; (2) provide adequate training on the performance management system; (3) use core competencies to reinforce organizational objectives; (4) address performance regularly; and (5) contain transparent processes that help agencies address performance “upstream” in the process within a merit- based system that contains appropriate safeguards. Implementing such a system requires supervisors to communicate clear performance standards and expectations, to provide regular feedback, and to document instances of poor performance.", "Managers’ ability to deal with poor performers is also a concern of federal employees. OPM’s Federal Employee Viewpoint Survey (FEVS) data from 2011 to 2014 show that around 30 percent of respondents provided positive responses to whether managers took steps to deal with poor performers. In 2014, over 40 percent of respondents disagreed that managers consistently take steps to deal with poor performers. Almost 30 percent neither agreed nor disagreed.\nIn general, agencies have three means to address employees’ poor performance: (1) day-to-day performance management activities (which should be provided to all employees, regardless of their performance levels), (2) dismissal during probationary periods, and (3) use of formal procedures. Agencies’ choices will depend on the circumstances at hand. Day-to-day performance management activities such as providing regular performance feedback to employees can produce more desirable outcomes for agencies and employees than dismissal options, which are a last resort. As we reported in February 2015, supervisors do not always have the skills to identify, communicate, and help address employee performance issues. Given the critical role that supervisors play in performance management, it is important for agencies to identify, promote and continue to develop effective supervisors.\nProbationary periods for new employees provide supervisors with an opportunity to evaluate an individual’s performance to determine if an appointment to the civil service should become final. However, CHCOs we interviewed told us supervisors often do not use this time to make decisions about an employee’s performance because they may not know that the probationary period is ending or they have not had time to observe performance in all critical areas. We agree with OPM that notifying supervisors that a probationary period is coming to an end is an agency’s responsibility. However, we maintain that more could be done to educate agencies on the benefits of using automated notifications to notify supervisors that an individual’s probationary period is ending and that the supervisor needs to make an affirmative decision or otherwise take appropriate action. OPM also needs to determine whether occupations exist in which—because of the nature of work and complexity—the probationary period should extend beyond 1-year and, if so, take appropriate actions which may include developing legislative proposals for congressional consideration. OPM agreed to consult with stakeholders to determine whether longer probationary periods are needed for certain complex positions.\nIn our February 2015 report, we noted that OPM provides guidance, tools, and training to help agencies attain human capital management goals that meet its strategic goal of enhancing the integrity of the federal workforce. In addition to its regulations, OPM makes a range of different tools and guidance available to help agencies address poor performance through multiple formats, including through its website, webinars, webcasts, in-person training, guidebooks, and through one-on-one assistance and consultation with agencies, according to OPM officials. We identified in our report promising practices that some agencies employ to more effectively ensure that that they have a well-qualified cadre of supervisors capable of effectively addressing poor performance. The practices include: extending the employee’s supervisory probationary period beyond 1 year to include at least one full employee appraisal cycle; providing temporary duty opportunities outside the agency or rotational assignments to supervisory candidates prior to promotion, where the candidate can develop and demonstrate supervisory competencies; and using a dual career ladder structure as a way to advance employees who may have particular technical skills or education but who are not interested in or inclined to pursue a management or supervisory track.\nWe recommended that OPM determine if these practices should be more widely used government-wide. OPM partially concurred with our recommendation, noting that agencies already have authority to take these actions. We acknowledged OPM’s point, but maintain that OPM can still take a leadership role and encourage agencies to take these steps. Also in our February 2015 report, we found that OPM, in conjunction with the CHCO Council and other key stakeholders, needs to assess the adequacy of leadership training that agencies provide to supervisors to help ensure supervisors obtain the skills needed to effectively conduct performance management responsibilities. We recommended that OPM assess the adequacy of leadership training and OPM concurred.", "In 2012, OPM facilitated development of an SES performance appraisal system with a more uniform framework to communicate expectations and evaluate the performance of executive branch agency SES members, the government’s cadre of senior leaders. The system is expected to promote consistency, clarity, and transferability of SES performance standards and ratings across agencies. Career SES employees receive a base salary and benefits. But, pay increases—as well as performance awards—are to be performance driven, based on annual ratings of executives’ performance following reviews within their agencies. To obtain SES appraisal system certification for agencies seeking access to higher levels of pay, agencies are required to make meaningful distinctions based on the relative performance of their executives as measured through performance and pay criteria. OPM stressed that a major improvement of the system included dealing with the wide disparity in distribution of ratings by agency through the provision of clear, descriptive performance standards and rating score ranges that establish mid-level ratings as the norm and top-level ratings as truly exceptional.\nIn our January 2015 report, we found that more than 85 percent of career Chief Financial Officers Act agency SES were rated in the top two of five categories for fiscal years 2010 through 2013, and career SES received approximately $42 million in awards for fiscal year 2013. In a closer examination of five departments (Departments of Defense, Energy, Health and Human Services, Justice, and Treasury) for fiscal year 2013, we found that, similar to the government-wide results, these five departments rated SES primarily in the top two categories. In addition, four of five departments awarded the same or higher performance awards to some SES with lower ratings.\nEffective performance management systems recognize that merit-based pay increases should make meaningful distinctions in relative performance. This principle is central to the SES performance management system, where under the law, to be certified and thereby able to access the higher levels of pay, the appraisal system must make meaningful distinctions based on relative performance. OPM certification guidelines state that the SES modal rating—the rating level assigned most frequently among the actual ratings—should be below “outstanding” and that multiple rating levels should be used. However, OPM’s guidelines also state that if an agency’s modal rating level is “outstanding,” the appraisal system can still be certified if accompanied with a full, acceptable justification. Nonetheless, the continued concentration of senior executives at the top two rating levels indicates that meaningful distinctions in SES performance may not be being made across government. OPM plans to convene a cross-agency working group in 2015 to revisit the SES certification process.\nIn our January 2015 report, we recommended that the Director of OPM consider various refinements to better ensure the SES performance appraisal system certification guidelines promote making meaningful distinctions in performance without using a forced distribution. Options could include not certifying appraisal systems where the modal rating is “outstanding” or increasing transparency in cases where the modal rating is “outstanding.” OPM disagreed with the recommendation stating that, among other things, it could result in forced distributions in ratings. We maintain that additional action should be considered to ensure equity in ratings and performance awards across departments.", "A growing body of research on both private- and public-sector organizations has found that increased levels of engagement—generally defined as the sense of purpose and commitment employees feel towards their employer and its mission—can lead to better organizational performance. Engaged employees are more than simply satisfied with their jobs. Rather, they take pride in their work, are passionate about what they do, and are committed to the organization, the mission, and their job. They are also more likely to put forth extra effort to get the job done.\nPut another way, if a talented workforce is the engine of productivity and mission accomplishment, then a workplace that fosters high levels of employee engagement helps fuel that engine. Preliminary observations from our ongoing work have found that government-wide levels of employee engagement have recently declined 4 percentage points, from an estimated 67 percent in 2011, to an estimated 63 percent in 2014, as measured by the OPM FEVS, and a score derived by OPM from FEVS— the Employee Engagement Index (EEI).\nHowever, our ongoing work also indicates that the recent government- wide average decline in EEI masks the fact that the majority of federal agencies either sustained or increased employee engagement levels during the same period. The decline is the result of several large agencies bringing down the government-wide average. Our preliminary work indicates that 13 of 47 agencies saw a statistically significant decline in their EEIs from 2013 to 2014. While this is only 28 percent of agencies, nearly 69 percent of federal employees are at one of those agencies, including the Departments of Defense, Homeland Security, and Veterans Affairs. Meanwhile, the majority of agencies sustained or improved engagement. Between 2013 and 2014, of 47 agencies included in our analysis of the EEI, 3 increased their scores; 31 held steady; and 13 declined, as shown in figure 3.\nEven one agency with a downward trending engagement score is not to be taken lightly. There is room for improvement with all federal agencies. Yet, the large number of agencies that sustained or increased their levels of employee engagement during challenging times suggests that agencies can influence employee engagement levels in the face of difficult external circumstances. For example, the Federal Trade Commission maintained a consistent estimate of 75 percent engagement index score—well above the government-wide average—throughout the period of general decline.\nIn conclusion, strategic human capital management must be the centerpiece of any serious effort to ensure federal agencies operate as high-performing organizations. A high-quality federal workforce is especially critical now given the complex and cross-cutting issues facing the nation. Through a variety of initiatives, Congress, OPM, and individual agencies have strengthened the government’s human capital efforts since we first identified strategic human capital management as a high-risk area in 2001. Still, while many actions towards progress have been taken over the last 13 years, the job is far from over. Indeed, the focus areas discussed today are not an exhaustive list of challenges facing federal agencies and are long-standing in nature.\nGreater progress will require continued collaborative efforts between OPM, the CHCO Council, and individual agencies, as well as the continued attention of top-level leadership. Progress will also require effective planning, responsive implementation, robust measurement and evaluation, and continued congressional oversight to hold agencies accountable for results. In short, while the core human capital processes and functions—such as workforce planning and talent management— may sound somewhat bureaucratic and transactional, our prior work has consistently shown the direct link between effective strategic human capital management and successful organizational performance. At the end of the day, strategic human capital management is about mission accomplishment, accountability, and responsive, cost-effective government.\nChairman Lankford, Ranking Member Heitkamp, and Members of the Subcommittee, this completes my prepared statement. I would be pleased to respond to any questions you may have at this time.", "For further information regarding this statement, please contact Yvonne D. Jones, Director, Strategic Issues, at (202) 512-2717 or [email protected].\nIndividuals making key contributions to this statement include Clifton G. Douglas Jr., Assistant Director; Dewi Djunaidy, Analyst-in-Charge; Joseph Fread; Sara Daleski; and Robert Robinson. Key contributors for the earlier work that supports this testimony are listed in each product.", "", "Human Capital: OPM Needs to Improve the Design, Management, and Oversight of the Federal Classification System (July 2014) To improve the classification system and to strengthen OPM’s management and oversight, the Director of OPM, working through the Chief Human Capital Officer Council, and in conjunction with key stakeholders such as the Office of Management and Budget, unions, and others, should use prior studies and lessons learned from demonstration projects and alternative systems to examine ways to make the GS system’s design and implementation more consistent with the attributes of a modern, effective classification system. To the extent warranted, develop a legislative proposal for congressional consideration.\nIn July 2014, OPM stated that it partially concurred with our recommendation to work with key stakeholders to use prior studies and lessons learned to examine ways to make the GS system more consistent with the attributes of a modern, effective classification system. OPM agreed that the system needs reform but OPM noted several efforts to assist agencies with classification issues, including its interagency classification policy forum and partnering with agencies to address challenges related to specific occupational areas. While these examples of assisting agencies to better implement the GS system on a case-by-case basis are helpful, they are not fully addressing the fundamental challenges facing the GS system, which we and others have said is not meeting the needs of federal agencies.\nTo improve the classification system and to strengthen OPM’s management and oversight, the Director of OPM should develop cost- effective mechanisms to oversee agency implementation of the classification system as required by law, and develop a strategy to systematically track and prioritize updates to occupational standards.\nIn July 2014, OPM stated that it did not concur with our recommendation to develop a strategy to systematically track and prioritize updates to occupational standards. Specifically, OPM noted that occupational standards are updated in response to a systematic, prioritized process informed by working with agencies and other stakeholders and analysis of occupational trends. However, OPM officials were unable to provide us with the documentation of their efforts. As noted in our report, OPM has not published a review or update of 124 occupations, roughly 30 percent of the total number of occupations on the GS system, since 1990. Further, OPM officials could not provide the near- or long-term prioritization of occupations schedule for review. As a result, OPM cannot demonstrate whether it is keeping pace with agencies’ needs nor does it have reasonable assurance that it is fulfilling its responsibilities to establish new, or revise existing occupational standards based on the highest priorities. We continue to believe that OPM should take action to fully address our recommendation.\nTo improve the classification system and to strengthen OPM’s management and oversight, the Director of OPM should develop cost- effective mechanisms to oversee agency implementation of the classification system as required by law, and develop a strategy that will enable OPM to more effectively and routinely monitor agencies’ implementation of classification standards.\nIn July 2014, OPM stated that it partially concurred with our recommendation to develop a strategy to more effectively and routinely monitor agencies’ implementation of classification standards. OPM stated that it will continue to leverage the classification appeals program to provide interpretative guidance to agencies to assist them in classifying positions. OPM also stated it will direct consistency reviews as appropriate, however as we noted in the report, OPM does not review agencies’ internal oversight efforts.", "Federal Workforce: OPM and Agencies Need to Strengthen Efforts to Identify and Close Mission- Critical Skills Gaps (January 2015) To assist the interagency working group, known as the Federal Agency Skills Team (FAST), to better identify government-wide skills gaps having programmatic impacts and measure its progress towards closing them, the Director of OPM-in conjunction with the CHCO Council- should strengthen its approach and methodology by (1) assisting FAST in developing goals for closing skills gaps with targets that are both clear and measurable; (2) working with FAST to design outcome-oriented performance metrics that align with overall targets for closing skills gaps and link to the activities for addressing skills gaps; (3) incorporating greater input from subject matter experts, as planned; and (4) ensuring FAST consistently follows key practices for project planning.\nIn January 2015, OPM stated that it partially concurred with our recommendation to strengthen the approach and methodology used by the interagency working group, known as FAST, to better identify skills gaps. OPM noted it agreed with, and planned to implement, the principles of each recommended action. However, OPM said it needed to clarify how its terminology and planned process differs from the description in our recommendation. In particular, OPM stated its process will identify government-wide rather than agency-specific skills gaps as it believes our draft recommendation suggests. We recognize that FAST was established to address government-wide skills gaps and have clarified the language in our recommendation accordingly.\nTo ensure that OPM builds the predictive capacity to identify emerging skills gaps across the government-including the ability to collect and use reliable information on the competencies of the federal workforce for government-wide workforce analysis-the Director of OPM should (1) establish a schedule specifying when OPM will modify its Enterprise Human Resources Integration (EHRI) database to capture staffing data that it currently collects from agencies through its annual workforce data reporting process; and (2) work with agency CHCOs to bolster the ability of agencies to assess workforce competencies by sharing competency surveys, lessons learned, and other tools and resources.\nIn January 2015, OPM stated that it did not concur with our recommendation. Regarding EHRI, OPM maintained that it is impossible for the EHRI database to automatically capture staffing data currently included in MCO Resource Charts because some of these data includes specific agency projections and targets, which are provided via a manual data feed. OPM stated that it is assessing whether EHRI can be modified to allow agencies to supply these manual feed data into the database system. We have modified our report to recognize that EHRI cannot automatically capture the same agency staffing data that are captured through the MCO Resource Charts. In addition, OPM noted that there are funding implications associated with its ability to anticipate whether and when a modification schedule to the EHRI online database could be established.\nTo help agencies and OPM better monitor progress toward closing skills gaps within agencies and government-wide, the Director of OPM should (1) work with the CHCO Council to develop a core set of metrics that all agencies should use as part of their HRstat data-driven reviews; and (2) coordinate with FAST personnel and explore the feasibility of collecting information needed by FAST as part of agencies’ HRstat reviews.\nIn January 2015, OPM concurred with our recommendation to develop a core set of metrics that all agencies should use as part of their HRstat data-driven reviews, and explore the feasibility of collecting information needed by FAST as part of agencies’ HRstat reviews.", "Human Capital: Strategies to Help Agencies Meet Their Missions in an Era of Highly Constrained Resources (May 2014) To create a more effective human capital system that is more responsive to managing priorities and future workforce needs, the Director of OPM, in conjunction with the CHCO Council, should strengthen OPM’s coordination and leadership of government-wide human capital issues to ensure government-wide initiatives are coordinated, decision makers have all relevant information, and there is greater continuity in the human capital community for key reforms. Such actions could include: (1) developing a government-wide human capital strategic plan that, among other things, would establish strategic priorities, time frames, responsibilities, and metrics to better align the efforts of members of the federal human capital community with government-wide human capital goals and issues; and (2) coordinating communication on government-wide human capital issues with other members of the human capital community so that there is greater consistency, transparency, and completeness in exchanging and using information by stakeholders and decision makers.\nIn April 2014, OPM provided examples of working groups and other efforts to address issues such as closing skills gaps and developing HRStat, many of which are described in our report. Further, although the CHCO Council agreed that more could be done to coordinate, share resources, and explore talent management strategies, the CHCO Council disagreed with our finding that the human capital community was highly fragmented. Our analysis of the comments made by the CHCO Council found that the human capital community is fragmented and that our recommendation for a government-wide human capital strategic plan could help to coordinate these efforts to ensure initiatives were not duplicative and were aligned with the most pressing human capital challenges. A government-wide strategic plan should include input from the many participants in the human capital community—reflecting the different perspectives, missions, and resources of these organizations.\nTo create a more effective human capital system that is more responsive to managing priorities and future workforce needs, the Director of OPM, in conjunction with the CHCO Council, should explore the feasibility of expanded use of enterprise solutions to more efficiently and effectively address shared or government-wide human capital challenges. Such actions could include: (1) seeking cost savings and improved functionality through coordinated government- wide Human Resources Information Technology planning and acquisition, (2) seeking agency input to ensure OPM’s workforce planning tools provide effective guidance for agencies, and (3) sharing workforce planning lessons learned and successful models across the government.", "Recommendation inform agency recruitment, retention, and training needs; and (2) mechanisms for increasing staff mobility within an agency and government-wide to assist agencies in aligning their workforces with evolving needs.\nTo create a more effective human capital system that is more responsive to managing priorities and future workforce needs, the Director of OPM, in conjunction with the CHCO Council, should ensure agencies are getting the guidance and tools that they need by evaluating the communication strategy for and effectiveness of relevant tools, guidance, or leading practices created by OPM or the agencies to address crosscutting human capital management challenges.\nIn April 2014, OPM stated that it would expand its collaboration with agencies to design and deliver the tools agencies need through use of the LAB@OPM, OPM’s innovation lab. We previously reported that OPM needs clear and specific outcome measures to help meet its goals of enhancing skills in innovation and supporting project-based problem solving. Otherwise, OPM’s innovation lab efforts may not be able to demonstrate the types of results initially envisioned. It will be important for OPM to understand how the tools and guidance it develops through the innovation lab and other methods are being used by agencies.\nFederal Employees: Opportunities Exist to Strengthen Performance Management Pilot (September 2013) Recognizing that moving toward a more performance-oriented culture within federal agencies is likely to be a continuous effort and to ensure that the opportunity GEAR recommendations offer to improve performance management is not lost, the Acting Director of OPM, in collaboration with the CHCO Council, should define roles and responsibilities of OPM, the CHCO Council, and participating federal agencies going forward as the GEAR framework is implemented government-wide. In doing so, OPM, in collaboration with the CHCO Council, could define roles and responsibilities such as supplementing the GEAR report and updating the diagnostic toolkit as needed to reflect additional promising practices and lessons learned (such as those GAO identified) and guidance on using metrics. This should include considering whether connecting performance expectations to crosscutting goals should be part of the GEAR framework.\nAs of June 2010, the Executive Director of the CHCO Council told us that the implementation of GEAR needs to be a community effort and individual agencies need take ownership for implementing the parts of the GEAR framework that best suit their needs. The CHCO Council would like to avoid dictating roles and responsibilities to agencies on what to do and how to do it. OPM and CHCO Council officials did not indicate whether they planned to connect performance expectations to cross-cutting goals.\nTo improve agencies’ GEAR implementation plans, the Secretary of the Department of Homeland Security (DHS) should direct the Commandant of the Coast Guard to update the agency’s GEAR implementation plan to include (1) performance measures that permit comparison between desired outcomes and actual results and (2) additional information schedules that are linked to specific actions.\nAs of September 2014, DHS had not provided updates on the status of the Coast Guard’s effort to update its GEAR implementation plan to include (1) performance measures that permit comparison between desired outcomes and actual results or (2) additional information schedules that are linked to specific actions.\nRecommendation Results Oriented Management: OPM Needs to Do More to Ensure Meaningful Distinctions Are Made in SES Ratings and Performance Awards (January 2015) As OPM convenes the cross-agency working group, the Director of OPM, as the head of the agency that certifies-with OMB concurrence-SES performance appraisal systems, should consider the need for refinements to the performance certification guidelines addressing distinctions in performance and pay differentiation. Options could include\nRevisiting and perhaps eliminating the guideline that allows OPM to certify agencies’ performance management systems with an SES modal rating of “outstanding. Strengthening the accountability and transparency of this guideline by activities such as\nReporting agencies’ justifications for high ratings to OPM on its website.\nReporting agencies’ justifications for high ratings to Congress.\nObtaining third party input on agencies’ justifications for high ratings, such as by the Chief Human Capital Officers Council.\nIn January 2015, OPM generally agreed with the information in our report but did not agree with our recommendation. OPM expressed concerns that imposing such a criterion would lead to arbitrary manipulation of the final ratings rather than an appropriate comparison of performance to standards. OPM asserted that this situation would be ripe for forced distribution of the ratings, which is explicitly prohibited by regulation. OPM also stated that the more appropriate action is to continue emphasizing the importance of setting appropriate, rigorous performance requirements and standards that logically support meaningful distinctions in performance. As recognized in our report, OPM’s regulations contemplate that it is possible to apply standards that make meaningful performance distinctions and to use a range of ratings while avoiding the use of forced distributions. As we also note, since our 2008 report on SES performance management systems—continuing through the career SES performance ratings for fiscal year 2013—questions persist about the extent to which meaningful distinctions based on relative SES performance are being made... OPM stated that it did not support the second part of our recommendation regarding three suggestions for increasing transparency for those agencies that are certified with a modal rating of “outstanding.” Although we suggested that OPM report high rating justifications to Congress through its Annual Performance Report, we understand that this may not be the most appropriate vehicle to use; another avenue of reporting to Congress would certainly be acceptable, and we adjusted the text accordingly.\nFederal Workforce: Improved Supervision and Better Use of Probationary Periods Are Needed to Address Substandard Employee Performance (February 2015) To help strengthen the ability of agencies to deal with poor performers and to help ensure supervisors obtain the skills needed to effectively conduct performance management responsibilities, the Director of OPM, in conjunction with the CHCO Council and, as appropriate, with key stakeholders such as federal employee labor unions, should assess the adequacy of leadership training that agencies provide to supervisors.\nIn January 2015, OPM said that it concurred with our recommendation. OPM stated it would assess what and how agencies are training new supervisors and provide feedback for improving the curriculum. In addition, OPM stated that it would continue to provide agencies guidance on evaluating the effectiveness of leadership training.", "Status employees to advance without taking on supervisory or managerial duties. In each of these cases, OPM noted that agencies already have authority to take these actions. We acknowledged OPM’s point and clarified the report accordingly. We maintain, however, that OPM can still play a leadership role and encourage agencies to take these steps. educate agencies on the benefits of using automated notifications to notify supervisors that an individual’s probationary period is ending and that the supervisor needs to make an affirmative decision or otherwise take appropriate action, and encourage its use to the extent it is appropriate and cost- effective for the agency; and determine whether there are occupations in which-because of the nature of work and complexity-the probationary period should extend beyond 1-year to provide supervisors with sufficient time to assess an individual’s performance. If determined to be warranted, initiate the regulatory process to extend existing probationary periods and, where necessary, develop a legislative proposal for congressional action to ensure that formal procedures for taking action against an employee for poor performance (and a right to appeal such an action) are not afforded until after the completion of any extended probationary period.\nIn January 2015, OPM said that it partially concurred with the part of our recommendation calling on OPM to determine if certain occupations require a probationary period longer than 1-year to allow supervisor sufficient time to assess and individual’s performance. In particular OPM agreed to consult with stakeholders to determine, among other things, if an extension to the probationary period for certain complex occupations is needed and, if necessary, pursue the established Executive Branch deliberation process for suggesting legislative proposals. OPM noted that it has authority to provide for longer probationary periods under certain circumstances and we have modified the recommendation so that it also calls on OPM to initiate the regulatory process to do so if warranted. As stated in our report, however, extending the probationary period and concurrently limiting appeal rights during that time would require legislative action under certain circumstances. At the same time, OPM did not concur with the part of our recommendation for OPM to determine the benefits and costs of providing automated notifications to supervisors that an individual’s probationary period is ending and that the supervisor needs to make an affirmative decision. OPM stated that choosing the best method to ensure that supervisors are aware that the probationary period is ending and appeal rights will accrue is an agency responsibility. We agreed. OPM also wrote that HR systems at all Shared Service Centers have the functionality to notify supervisors when an employee’s probationary period is ending. However, as our report notes, even though OPM considers having a tool in place to notify supervisors that a probationary period is ending to be a leading practice, not all agencies have implemented that practice. Accordingly, we clarified the recommendation so that it calls on OPM to educate agencies on the benefits and availability of automated notifications to alert supervisors.", "Recommendation To help strengthen the ability of agencies to deal with poor performers, and to help ensure OPM’s tools and guidance for dealing with poor performers are cost-effectively meeting agencies’ and supervisors’ needs, the Director of OPM, in conjunction with the CHCO Council and, as appropriate, with key stakeholders such as federal employee labor unions, should use Strategic Human Capital Management survey results (once available), Federal Employee Viewpoint Survey results, Performance Appraisal Assessment Tool responses, and other existing information, as relevant, to inform decisions on content and distribution methods. The importance of effective performance management and addressing poor performance may need to be reinforced with agency supervisors so that they more routinely seek out tools and guidance.\nStatus OPM partially concurred with our recommendation to use the results of various surveys such as the FEVS and other information sources to help determine the extent to which its tools and guidance for dealing with poor performers are cost-effectively meeting agencies’ needs. Specifically, OPM said it would use relevant data from these resources to inform decisions about content and distribution methods for the material OPM makes available to agencies. At the same time, OPM noted that the information contained in these surveys and other data sources had certain limitations and may not always be relevant. We agreed and clarified the recommendation accordingly.\nFederal Telework: Program Measurement Continues to Confront Data Reliability Issues (April 2012) To improve OPM’s annual reporting of telework to Congress, the OPM Director should continue efforts to improve data collection and gather information that allows for the appropriate qualification of year-to-year comparisons and informs users about the effects of data collection changes going forward.\nAs of June 2012, OPM had revised its collection of telework participation data from agencies to include full FY participation data from FY12. This action should enable OPM to report year-to-year comparisons of telework participation in its 2014 Status of Telework in the Federal Government Report to Congress. This report is expected to be issued by OPM in late 2014/early 2015. Reporting an accurate year to year comparison of telework participation would complete the implementation of this recommendation.", "Recommendation include requesting that agencies consistently utilize Standard Form (SF) 182 to document and report training costs associated with the different delivery mechanisms employed.\nStatus sound training programs and financial plans for training.\nTo improve federal training investment decision- making processes, the Director of OPM should, in line with statutory and regulatory provisions on maintenance and reporting of training information, work with the CHCO Council to improve the reliability of agency training investment information by: (1) ensuring that agencies are familiar with and follow guidance outlined in OPM’s Guide for the Collection and Management of Training Information regarding which training events should be documented as training and reported to OPM; (2) developing policies to strengthen the utilization of Standard Form- 182 to document and report training costs; (3) encouraging agencies through guidance and technical assistance, to develop policies that require consistent reporting of training data to their learning management systems; and (4) encouraging each agency to assess its existing training information system(s) and identify whether it is providing complete and reliable data and, if not, to develop approaches to improve the system(s), in order to do so.\nIn February 2015, OPM provided a document that summarized efforts that are underway to address the recommendation. According to the document, during FY 14, OPM & the Chief Learning Officers (CLO) Council co- chaired a working group to develop proposed standardized data elements/metrics and data quality scorecard. This task has been folded into the agenda of the OPM-led working groups under the OMB/GSA Category Management Initiative. OPM stated that by September 30, 2015, it expects to develop and approve proposed standardized data elements and metrics and a quality scorecard. In the summer of 2014, OPM administered a survey to the Training & Development List Serv members on the utilization of OPM’s Training and Development Wiki on opm.gov. Survey results revealed that over 50 percent of the respondents Were not aware of the Wiki. A plan to revitalize the Wiki in order to provide improved guidance to agencies has been developed but OPM’s Employee Services still needs to determine what funding is available for the product.\nTo improve federal training investment decision- making processes, the Director of OPM should provide regular report summaries to agencies on Enterprise Human Resources Integration (EHRI) training investment data and its reliability, in order to improve the transparency and reliability of federal training investment data.\nIn February 2015, OPM provided a document that summarized efforts that are underway to address our recommendation. According to the document, OPM stated that by September 30, 2015, it expects to develop and approve proposed standardized data elements and metrics and a quality scorecard. In addition, OPM stated that the agency will provide agencies their training data reports from EHRI for FY 14 in FY 15.\nTo improve federal training investment decision- making processes, the Director of OPM should, once federal training data reliability has been sufficiently improved, consistent with Executive Order No. 11348, use EHRI data to: a) counsel heads of agencies and other agency officials on the improvement of training, and b) assist agencies in developing sound programs and financial plans for training and provide advice, information, and assistance to agencies on planning and budgeting training programs.", "Status in late 2015.\nTo improve federal training investment decision- making processes, the Director of OPM should, in collaboration with the CHCO and Chief Learning Officer (CLO) Councils, identify the best existing courses that fulfill government-wide training requirements, such as mandatory Equal Employment Opportunity training, or training in common federal occupations, such as basic training in financial management, and offer them to all agencies through HR University or other appropriate platform to reduce costly and duplicative federal training investments.\nIn February 2015, OPM officials provided a document that summarized OPM’s continuing efforts to address our recommendation. According to the document, OPM is designing and building a Government-wide University prototype known as Gov U. Through Gov U all federal employees will access accredited training and education through a centralized portal that links them to federally mandated training, occupational and management/leadership courses and degree programs, so the government can reduce costs, increase quality and assure access for all employees. According to OPM, the CLO Council’s Mandatory Training Working Group drafted the government-wide mandatory training curriculum and also met to discuss the process for selecting federally mandated training courses to share across agencies in different modalities. The working group is currently developing the Domestic Violence, Sexual Assault and Stalking training. The course structure and interface have been designed and the course storyboarding is expected to be completed by the end of April 2015.\nFederal Employees: Office of Personnel Management’s 2012 Telework Report Shows Opportunities for Improvement (June 2013) In preparation for the 2014 telework report, OPM should provide goal setting assistance for agencies not yet able to report telework goals, including agencies which intend to establish nonparticipation goals but are not yet able to report on these goals. OPM should request in its data call that each of these agencies report by what year the agency will be able to report its goals, including each agency’s timetable for complete reporting and the status of action steps and milestones they established to gauge progress.\nWhile OPM has taken several actions to implement our recommendation, it is premature to assess the results of these efforts. OPM has conducted several training sessions with agencies and added an appendix to its 2013 data call to assist agencies establish standards for setting and evaluating telework goals. Our analysis of OPM’s 2012 telework report did not indicate a high number of agencies had set numeric goals, calling into question the value of OPM’s techniques to assist agencies in setting goals. Since the time of our report, the evidence OPM has provided continues to emphasis similar training techniques it has traditionally used with no evidence it has yielded improvements. We will review the status of this recommendation when OPM releases its 2014 telework report.\nOPM should include in its 2014 report to Congress the amount of cost savings resulting from the impacts of telework each agency may have identified, and the method the agency used to assess or verify the savings.\nOPM added questions to its 2013 telework data call to gather the amount of cost savings and the method the agency used to assess the savings. When OPM issues its 2014 telework report to Congress in 2015, we will assess the extent to which OPM has identified cost savings and how agencies assess or verify the savings.\nTo improve the reliability of data collection, OPM should work with the Chief Human Capital Officers (CHCO) Council and its leadership to develop documented agreements and a timetable to complete an automated tracking system or other reliable data gathering method that can be validated by OPM.", "Status payroll providers, or the CHCO Council, or (2) a timetable to complete an automated tracking system or other reliable data gathering methods that can be validated by OPM. We followed-up with OPM in August and September 2014, and OPM confirmed there was no new information to report.\nHuman Capital: Agencies Should More Fully Evaluate the Costs and Benefits of Executive Training (January 2014) To help ensure that agencies track and report comparable and reliable cost data and perform evaluations that assess the impact of executive training on agency performance or missions, the Director of OPM, in coordination with the CHCO Council, should establish interim milestones for meeting with agencies in order to address training data deficiencies and to establish well- defined timeframes for improving the reliability of the data in its Enterprise Human Resources Integration database.\nIn May 2014, OPM outlined its action plan to address our recommendation. According to OPM, the agency will work with agencies via the Chief Human Capital Officers Council and Chief Learning Officers Council to poll agencies to establish an “as is” state of training data reliability and deficiencies. Based on evidence gathered, OPM plans to develop proposed standardized data elements, metrics and a data quality scorecard. Once both Councils approve the proposal, OPM plans to make changes to training data elements in the Enterprise Human Resource Integration data warehouse and Guide to Human Resources Reporting. OPM also has plans to monitor agency progress for improving data.\nTo help ensure that agencies track and report comparable and reliable cost data and perform evaluations that assess the impact of executive training on agency performance or missions, the Director of OPM, in coordination with the CHCO Council, should improve assistance to agencies regarding evaluating the impact of executive training on mission and goals, for example by sharing information and examples of how agencies could better conduct such evaluations.\nIn May 2014, OPM outlined its action plan to address our recommendation. According to OPM, the agency will work through the Chief Learning Officers Council to encourage agencies to incorporate training evaluation in their executive training in a more robust way. OPM plans to use OPM-hosted roundtables and best practice sessions to provide agencies assistance on evaluating the impact of executive training. OPM will encourage agencies to adopt an evaluation approach that considers individual agency management practices while being consistent with OPM’s Training Evaluation Field Guide.\nTo enhance the efficiency of executive training, the Director of OPM, in coordination with the CHCO Council, should assess potential efficiencies identified by agencies for possible government-wide implementation, and then take the steps necessary to implement these, such as updating the guidance governing executive training programs.\nIn May 2014, OPM outlined its action plan to address our recommendation. According to OPM, the agency plans to survey agencies about the components and effectiveness of their executive onboarding programs and use the information, and other current research, to offer Government-wide Best Practice sessions. OPM will also use the results to update guidance governing executive onboarding programs and the Federal Leadership Development Program website.", "Recommendation targets and measures should correspond to the lab’s overarching goals to build organizational capacity to innovate and achieve specific innovations in concrete operational challenges.\nStatus suite of measures also includes outcome related measures for the lab, including the amount of estimated tax dollars saved as a result of lab activities and the satisfaction levels of participants in lab activities. OPM indicated that draft targets for these measures Were in review by the agency and that Lab officials had also developed a retrospective document on the lab that highlights key projects and the results of those projects.\nTo help substantiate the lab’s original goals of enhancing skills in innovation and supporting project-based problem solving, the Director of OPM should direct lab staff to review and refine the set of survey instruments to ensure that taken as a whole, they will yield data of sufficient credibility and relevance to indicate the nature and extent to which the lab is achieving what it intends to accomplish or is demonstrating its value to those who use the lab space. For example, lab staff should consider the following actions: (1) Developing a standard set of questions across all service offerings. (2) Revising the format and wording of existing questions related to skills development to diminish the likelihood of social desirability bias and use post-session questions that ask, in a straight-forward way, about whether, or the extent to which, new information was acquired. (3) Replacing words or phrases that are ambiguous or vague with defined or relevant terminology (e.g., terms actually used in the session) so that the respondent can easily recognize a link between what is being asked and the content of the session.\nAs of March 2015, OPM had revised its survey instruments to include standard, understandable surveys for (1) those receiving coaching skills in human centered design, (2) Lab Fellows who will use human-centered design techniques in their home agencies, and (3) human- centered design workshops. The surveys aim to measure participant’s satisfaction with sessions in the lab, as well as anticipated return on investment and other job-related improvements from work conducted in OPM’s and innovation lab.\nTo help substantiate the lab’s original goals of enhancing skills in innovation and supporting project-based problem solving, the Director of OPM should direct lab staff to build on existing efforts to share information and knowledge within the federal innovation community. For example, OPM lab staff could reach out to other agencies with labs such as Census, the Department of Housing and Urban Development, and the National Aeronautics and Space Administration’s Kennedy Space Center to share best practices and develop a credible evaluation framework.\nIn March 2015, OPM stated that it participates regularly in communities of practice with government innovation professionals and experts in human-centered design. OPM also stated that its lab staff members make presentations about OPM’s lab and innovation practices to multiple audiences, including members of the federal innovation community. For example, in December 2014 the director of OPM’s lab provided subject matter expertise to the Department of Health and Human Services to try to help ignite its innovation program curriculum. In addition, OPM noted that it engages regularly with its innovation lab workshop alumni to support their efforts to bring design-led innovation to their agencies.", "Recommendation other approaches to developing its cost estimate. considering whether to continue using its current methodology. OPM stated that its cost estimates have been based on (1) official time and average salary data provided to OPM through EHRI; (2) official time data manually provided directly to OPM by certain agencies; and (3) official time data manually updated by a number of agencies. OPM said that the approach we used in the report linking official time hours taken by specific individuals to those individuals’ actual salaries is not always possible using EHRI in all instances and is a labor intensive, and thus more costly process to undertake for the entire executive branch. The methodology we used was intended as an example of an alternative method for producing a cost estimate. OPM reported in October 2014 that 52 of the 62 agencies that reported fiscal year 2012 official time data to OPM did so using EHRI, thus OPM would be able to link official time hours used by specific individuals to the actual salaries for the overwhelming majority of reporting agencies. Although our approach may be slightly more labor intensive, it provides greater assurance that the cost reported is more representative of actual cost and, ultimately, more useful for oversight purposes.\nTo help ensure that OPM and agencies collect, track, and report reliable data on the use of official time, the Director of OPM should work with agencies to identify opportunities to increase efficiency of data collection and reporting through EHRI.\nTo help ensure that OPM and agencies collect, track, and report reliable data on the use of official time, the Director of OPM should consider whether it would be useful to share agencies’ practices on monitoring use of official time through existing forums such as the Employee Labor Relations (ELR) network.", "Status strengthen its assistance to agencies by sharing techniques and approaches on monitoring official time in a collaborative manner through its membership in the ELR network.\nFederal Paid Administrative Leave: Additional Guidance Needed to Improve OPM Data (October 2014) To help ensure that agencies report comparable and reliable data to Enterprise Human Resources Integration (EHRI), the Director of OPM, in coordination with agencies and payroll service providers Develop guidance for agencies on which activities to enter, or not enter, as paid administrative leave in agency time and attendance systems Provide updated and specific guidance to payroll service providers on which activities to report, or not report, to the paid administrative leave data element in EHRI.\nIn October 2014, OPM partially agreed with our recommendation. OPM agreed that (1) some reporting requirements should be clarified, in particular, guidance regarding reporting holiday time; (2) it would clarify that the paid administrative leave category is a catch-all category for paid leave that does not fall into another EHRI category; and (3) it will collaborate with agencies and payroll providers in developing changes in guidance and EHRI payroll data elements. OPM said that its role does not include directing guidance to agencies on how to collect time and attendance data, but it does including issuing guidance on EHRI data requirements that agency systems should support. We believe that in directing EHRI data requirements to all responsible agency officials and payroll providers, OPM can provide such guidance to agencies. We continue to believe our recommendation is valid because we found that payroll providers were reporting time for activities as paid administrative leave that they should not, according to OPM.\nHuman Capital: OPM Needs to Better Analyze and Manage Dual Compensation Waiver Data (December 2014) To improve OPM’s assistance to agencies and management of its dual compensation waiver program, the Director of OPM should analyze dual compensation waivers to identify trends that can inform OPM’s human capital management tools.", "Status analyze waivers and identify trends that could improve its other tools.\nTo improve OPM’s assistance to agencies and management of its dual compensation waiver program, the Director of OPM should establish policies and procedures for documenting the dual compensation waiver review process.\nIn December 2014, OPM stated that it partially concurred with our recommendation to establish policies and procedures for documenting the dual compensation waiver review process. OPM noted that it has policies and procedures for adjudicating waivers and that it is in compliance with the National Archives and Records Administration policies. However, OPM was unable to provide evidence of any such policies and procedures. In fact, OPM could not demonstrate adherence to federal internal control standards stating agencies should clearly document significant transactions and events and the documentation should be readily available for examination. Further, while OPM was able to ultimately produce 16 waiver decision letters, it was unable to provide a single complete, agency waiver application along with the supporting documentation and corresponding OPM decision letter. OPM also could not identify the total number of waivers for any given time period, meaning that even if OPM individually reviewed the thousands of documents in its document management system, it would not know if all materials were maintained appropriately. We continue to believe that OPM should take action to fully address this recommendation and comply with federal internal control standards.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 2, 2, 1, 2, 1, 2, 1, 1, 2, 2, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2 ], "alignment": [ "", "", "", "h1_full", "", "h0_full h5_full h2_title", "h5_full h2_full", "", "h2_title h3_title", "h3_full h2_full", "h3_full", "h0_full h4_full h5_full", "", "h3_title", "", "", "", "h3_full", "h3_full", "h3_full", "h3_full", "h3_full", "h3_full", "h3_full", "h3_full", "h3_full", "h3_full" ] }

{ "question": [ "How do human capital shortfalls affect federal agencies?", "How has the government approached this issue?", "What has GAO's prior work shown about human resources?", "What did GAO determine about general schedule classification systems?", "How well did the GS system's design reflect this principles?", "Why did this reduction occur?", "What were GAO's recommendations about this issue?", "How well did the Chief Human Capital Officers Council Working Group address agency challenges?", "What did GAO identify on this subject?", "How did OPM respond?", "What does OPM do to help agencies adress poor performance?", "What did GAO conclude about employee performance in 2015?", "How did OPM respond to GAO's findings on employee performance?", "What other conclusions did GAO offer?", "How did OPM respond this suggestion?", "What was GAO's stance regarding this disagreement?", "What does GAO's ongoing work on human resources indicate?", "What is the nature of this decline?", "What is the main cause of this decline?", "How have the other agencies performed?", "What was GAO's 2001 action on human capital management?", "What has happened since?", "What factors have emphasized the importance of this issue?" ], "summary": [ "Serious human capital shortfalls can erode the capacity of federal agencies and threaten their ability to cost-effectively carry out their missions.", "Key areas where the federal government has taken some actions but additional attention is still needed include the following:", "GAO's prior work has shown that continued attention is needed to ensure agencies have the human resources to drive performance and achieve the results the nation demands.", "General Schedule (GS) Classification System: In 2014, GAO identified eight key attributes of a modern, effective classification system, such as, flexibility, transparency, and simplicity.", "The GS system's design reflects some of these eight attributes, but when the Office of Personnel Management (OPM) implemented the system, the attributes of transparency, internal equity, simplicity, flexibility, and adaptability were reduced.", "This occurred, in part, because some attributes are at odds with others so fully achieving one comes at the expense of another.", "GAO recommended and OPM partially concurred with the need to examine ways to make the GS system consistent with the eight attributes of an effective classification system.", "Mission-Critical Skills Gaps: The challenges that agencies face were not fully captured by the Chief Human Capital Officers Council Working Group's efforts that identified skills gaps in six government-wide, mission-critical occupations.", "In 2015, GAO identified skills gaps in nearly two dozen occupations with significant program implementation impacts. As a result, GAO recommended OPM take a number of steps to address this issue.", "OPM concurred and in response has established an interagency working group, which is expected to identify a new set of government-wide skills gaps by June 2015.", "Improving Performance Management: OPM makes a range of tools and guidance available to help agencies address poor performance.", "In 2015, GAO concluded that improved supervision and better use of probationary periods are needed to address substandard employee performance.", "In response, OPM agreed to consult with stakeholders regarding the need for longer probationary periods for some complex positions.", "In 2015, GAO also found that OPM needed to do more to ensure meaningful distinctions are made in senior executive ratings and performance awards.", "OPM disagreed with the recommendation.", "GAO maintains that additional action should be considered to ensure equity in ratings and performance awards across departments.", "Strengthening Employee Engagement: GAO's ongoing work indicates that the recent government-wide decline in engagement, as measured by OPM's Employee Engagement Index, masks the fact that the majority of agencies either have sustained or increased their employee engagement levels.", "Government-wide, engagement has declined 4 percentage points from an estimated 67 percent in 2011 to an estimated 63 percent in 2014.", "However, this decline is primarily attributable to 13 agencies where employee engagement declined from 2013 to 2014.", "In contrast, 31 of 47 agencies have sustained and 3 agencies have increased their employee engagement levels from 2013 to 2014.", "GAO designated strategic human capital management as a government-wide, high-risk area in 2001.", "Since then, important progress has been made.", "However, retirements and the potential loss of leadership and institutional knowledge, coupled with fiscal pressures, underscore the importance of a strategic and efficient approach to acquiring and retaining individuals with needed critical skills. As a result, strategic human capital management remains a high-risk area." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 1, 0, -1, 0, 1, -1, -1, 1, 1, 3, 4, -1, 0, 0, 2, -1, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 4, 5, 5, 5, 6, 6, 6, 6, 6, 6, 7, 7, 7, 7, 1, 1, 1 ] }