prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.



Report 2: The Forest Service’s mission includes sustaining the nation’s forests and grasslands; managing the productivity of those lands for the benefit of citizens; conserving open space; enhancing outdoor recreation opportunities; and conducting research and development in the biological, physical, and social sciences  The agency carries out its responsibilities in three main program areas: (1) managing public lands, known collectively as the National Forest System, through nine regional offices, 154 national forests, 20 national grasslands, and over 600 ranger districts; (2) conducting research through its network of seven research stations, multiple associated research laboratories, and 81 experimental forests and ranges; and (3) working with state and local governments, forest industries, and private landowners and forest users in the management, protection, and development of forest land in nonfederal ownership, largely through its nine regional offices  According to the Forest Service, it employs a workforce of over 30,000 employees across the country  However, this number grows by thousands in the summer months, when the agency hires seasonal employees to conduct fieldwork, respond to wildland fires, and meet the visiting public’s needs  The Office of the Chief of the Forest Service is located in Washington, D C , with 27 offices reporting directly to the Office of the Chief, as illustrated in figure 1  The nine national forest regions, each led by a regional forester, oversee the national forests and grasslands located in their respective regions  Each national forest or grassland is headed by a supervisor, the seven research stations are each led by a station director, and a state and private forestry area is headed by an area director  The Forest Service collectively refers to its forest regions, research stations, and area as RSAs  The RSAs are organized differently according to their operations, and comparable operations within the RSAs, such as collections from reimbursable agreements, may be processed differently in the various regions and stations, resulting in highly decentralized operations  In addition, the offices of the Chief Financial Officer (CFO); Deputy Chief of Business Operations (includes the budget office); and eight other offices located in the Washington, D C , headquarters also report directly to the Office of the Chief of the Forest Service  The Forest Service receives appropriations for its various programs and for specific purposes to meet its mission goals  Prior to fiscal year 2017, the Forest Service’s budgetary resources consisted primarily of no-year funds  Its budget office in Washington, D C , initiates apportionment requests and monitors the receipt of Department of the Treasury (Treasury) warrants  Upon receipt of the warrant, the apportionment is recorded in the financial system and then the budget office develops an allocation summary detailing the allocation of its budget authority by fund, programs within the funds, and distribution of funds at the regional, station, and area levels  The Forest Service may also transfer funds from other appropriations to the appropriations account that funds its fire suppression activities when available funds appropriated for fire suppression and the Federal Land Assistance, Management, and Enhancement (FLAME) fund will be exhausted within 30 days  The Forest Service’s administrative policies, practices, and procedures are issued in its Directive System, which provides a unified system for issuing, storing, and retrieving internal direction that governs Forest Service programs and activities  The Directive System consists of the Forest Service’s manuals and handbooks  The manuals contain management objectives, policies, and responsibilities and provide general direction to Forest Service line officers and staff directors for planning and executing their assigned programs and activities  The handbooks provide detailed direction to employees and are the principal source of specialized guidance and instruction for carrying out directions issued in the manuals  Line officers at the national and RSA levels have authority to issue directives in the manuals and handbooks under their respective jurisdictions  The Forest Service’s policy states that the Directive System is the only place where Forest Service policy and procedures are issued  In addition to the Directive System, Forest Service staff have also developed standard operating procedures (SOP) and desk guides to supplement guidance provided in directives  However, the SOPs and desk guides are not part of the Forest Service Directive System and therefore are not official policy and procedures  While the Forest Service had documented processes for allotting its budgetary resources, it did not have an adequate process and related control activities for reasonably assuring that (1) amounts designated in appropriations acts for specific purposes are used as designated and (2) unobligated no-year appropriation balances from prior years were reviewed for their continuing need  In addition, the Forest Service did not have a properly designed and documented system for administrative control of funds  Finally, the Forest Service had not properly designed control activities for fund transfers for fire suppression activities under its Wildland Fire Management program  While the Forest Service had documented processes for allotting its budgetary resources, it did not have an adequate process and related control activities to reasonably assure that amounts designated in appropriations acts for specific purposes are used as designated—as required by the purpose statute, which states that “appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law ” We reviewed Forest Service documents about its budget authority processes, which included control objectives, related control activities, and processes over the allotment of its budgetary resources  We found that these documents, including manuals and handbooks, did not include an adequate process and related control activities for assuring that appropriated amounts are used for the purposes designated  For example, such a process would include the Forest Service allotting appropriated funds for specific programs or objects as provided in the applicable appropriation act, by either using specific budget line items already defined in the Forest Service’s financial system or creating new budget line items, as needed  Standards for Internal Control in the Federal Government states that management should define objectives clearly to enable the identification of risks and design appropriate control activities to achieve objectives and respond to the risks identified  As a result of the Forest Service not having an adequate process and related control activities for assuring that appropriated amounts are used for the purposes designated, the Forest Service did not properly allocate certain funds for specific purposes detailed in the appropriations acts for fiscal years 2015 and 2016  For example, in fiscal year 2015, the Forest Service did not set aside in its financial system the $65 million specified in the fiscal year 2015 appropriations act for acquiring aircraft for the next- generation airtanker fleet  According to Forest Service documents, as of January 6, 2016, $35 million of the designated funds was used for other purposes  In February 2017, we issued a legal opinion, related to the Forest Service’s use of the $65 million, which concluded that the Forest Service had failed to comply with the purpose statute  According to USDA’s Office of General Counsel, “this lack of any separate apportionment or account for the next-generation airtanker fleet was due to the fact that it was a new item, not included in the agency’s budget request, and added late in the appropriations process ” Similarly, in fiscal year 2016, the Forest Service did not create new budget line items to reserve in its financial system $75 million for the Forest Inventory and Analysis Program specified in the fiscal year 2016 appropriations act  Rather than creating a new budget line item for the program specified in the appropriations act, the funds were combined with an existing budget line item, making it difficult to track related budget amounts and actual expenditures  The lack of an adequate process and related control activities to reasonably assure that appropriated amounts are used for the purpose designated also increases the risk that the Forest Service may violate the Antideficiency Act  The Forest Service did not have a process and related control activities to reasonably assure that unobligated, no-year funds from prior years were reviewed for continuing need  We reviewed the Forest Service’s budget authority process document and related manuals and handbooks, which documented control objectives and procedures over its budgetary resources and the guidance for administrative control of funds  We found that these documents did not include a process for reviewing the Forest Service’s unobligated, no-year funds from prior years and related control activities to reasonably assure that such funds were reviewed for continuing need  Such reviews, if performed, may identify unneeded funds that could be reallocated to other programs needing additional budgetary resources, if consistent with the purposes designated in appropriations acts  The USDA Budget Manual states as a department policy that “agencies of the Department have a responsibility to review their programs continually and recommend, when appropriate, deferrals or rescissions ” The USDA Budget Manual further states the following: “Agency officials should remain alert to this responsibility since the establishment of reserves is an important phase of budgetary administration  If it becomes evident during the fiscal year that any amount of funds available will not be needed to carry out foreseeable program requirements, it is in the interest of good management to recommend appropriate actions, thereby maintaining a realistic relationship between apportionments, allotments, and obligations ” However, the Forest Service did not develop a directive addressing the control objectives, related risks, and control activities for implementing this USDA policy  Up until fiscal year 2017, Forest Service budgetary resources consisted primarily of no-year funds  At the beginning of each fiscal year, unobligated balances of no-year funds are carried forward and reapportioned to become part of budget authority available for obligation in the new fiscal year  Unobligated balances can increase during the fiscal year due to deobligation of prior years’ unliquidated obligations that the Forest Service determines it no longer needs  These resources are immediately available to the Forest Service to the extent authorized by law without further legislation or action from Office of Management and Budget (OMB) unless the apportionment states otherwise  According to Forest Service officials, unobligated funds reported in the Forest Service’s September 30, 2016, Statement of Budgetary Resources included $351 million in discretionary unobligated no-year funds, appropriated as far back as fiscal year 1999  The Forest Service did not identify and define a process and control objectives related to its review of unobligated no-year funds from prior years for continuing need  As a result, the Forest Service did not have reasonable assurance that prior no-year unobligated balances were properly managed and considered in its annual budget requests  This increased the risk that the Forest Service may make budget requests in excess of its needs  Additionally, the Forest Service could miss opportunities to use its prior year unobligated no-year funds more timely and effectively, for example, using these funds for other Forest Service program needs, if consistent with the purposes designated in appropriations acts  During our work, we brought this issue to management’s attention, and in response, Forest Service officials stated that the Forest Service is planning to develop a quarterly process to review available balances and, as needed, redirect funds to agency priorities  However, as of July 2017, the Forest Service had not yet developed this review process  Further, Congress rescinded about $18 million of the Forest Service’s prior year unobligated balances and required it to report unobligated balances quarterly within 30 days after the close of each quarter and appropriated multi-year funds instead of no- year funds to the Forest Service for fiscal year 2017  The Forest Service issued guidance related to administrative control of funds in manuals and handbooks, which USDA did not review and approve prior to their issuance  Based on our review of these documents, we found that the processes and related control activities over the administrative control of funds were dispersed in numerous manuals and handbooks, which may hamper a clear understanding of the overall system  Further, the system lacked key elements that would allow it to serve as an adequate system of administrative control of funds  For example, in its manuals and handbooks the Forest Service did not identify, by title or office, those officials with the authority and responsibility for obligating the service’s appropriated funds, such as funds for contracts, travel, and training  As a result, the responsibility for obligating funds was not clearly described and properly assigned in Forest Service policy as required by the USDA Budget Manual and OMB Circular No  A-11  OMB Circular No  A-11 states that the Antideficiency Act requires that the agency head prescribe, by regulation, a system of administrative control of funds, and OMB provided a checklist in appendix H to the circular that agencies can use for drafting their fund control regulations  This requirement is consistent with those in the USDA Budget Manual, which prescribes budgetary administration through a system of administrative controls for its component agencies, including the Forest Service  The USDA Budget Manual states that to the extent necessary for effective administration, (1) the heads of USDA component agencies may delegate to subordinate officials responsibilities in connection with the administrative distribution of funds within apportionments and allotments and the monitoring, control, and reporting of the occurrence of obligations and expenditures under apportionments and allotments and (2) the chain of such responsibility shall be clearly defined  In addition, USDA requires its component agencies to promulgate and maintain administrative control of funds regulation and to send such regulation to USDA’s Office of Program and Budget Analysis for review and approval prior to issuance  Because the Forest Service has not developed and issued a comprehensive system for administrative control of funds that considers all aspects of the budget execution processes, it cannot reasonably assure that (1) programs will achieve their intended results; (2) the use of resources is consistent with the agency’s mission; (3) programs and resources are protected from waste, fraud, and mismanagement; and (4) laws and regulations are followed  We also found that the Forest Service had not reviewed and updated most of its administrative control of funds guidance in the manuals and handbooks for over 5 years  The USDA Budget Manual requires each component to periodically review its funds control system for overall effectiveness and to assure that it is consistent with its agency programs and organizational structures  Further, Forest Service policy also requires routine review, every 5 years, of policies and procedures in its Directive System  According to Forest Service officials, when directives are up for review and update, a staff from the Office of Regulatory and Management Services (ORMS) sends an e-mail reminder to notify responsible personnel that updates to applicable directives are needed  However, we found that the Forest Service does not have adequate controls in place to monitor the reviews and any updates of the manuals and handbooks in its Directive System to reasonably assure that their efforts resulted in timely updates  As a result, the Forest Service is at risk that guidance for its system for administrative control of funds may lose relevance as processes change over time and control activities may become inadequate  The Forest Service did not have properly designed control activities over its process for fund transfers related to wildland fire suppression activities  The Forest Service receives appropriations for necessary expenses for (1) fire suppression activities on National Forest System lands, (2) emergency fire suppression on or adjacent to such lands or other lands under fire protection agreement, (3) hazardous fuels management on or adjacent to such lands, and (4) state and volunteer fire assistance  Transfer of funds from other Forest Service programs to its fire suppression activities occurs when the Forest Service has exhausted all available funds appropriated for the purpose of fire suppression and the FLAME fund  A key aspect of this process is assessing the FLAME forecast, which the Forest Service uses to predict the costs of fighting wildland fires for a given season, and developing a strategy to identify specific programs and the amounts that may be transferred to pay for fire suppression activities when needed  The process for reviewing the FLAME forecast and strategizing the fund transfers was documented in the Basic Budget Desk Guide created by staff in the Forest Service’s Strategic Planning and Budget Analysis Office  However, the desk guide did not contain evidence of review by responsible officials  As a result, the Forest Service lacked reasonable assurance that the desk guide was complete and appropriate for its use  The Basic Budget Desk Guide included a listing of actions to be performed by the analyst for reviewing the FLAME forecast report and developing a strategy for fund transfer from other programs  However, the desk guide did not specify the factors to be considered when developing the strategy  For example, it did not call for documentation addressing the rationale for the strategy or an assessment of the risk that the fund transfer could have on the programs from which the funds would be transferred  The desk guide also did not describe the review and approval of the strategy by a responsible official(s) prior to the fund transfer request sent to the Chief of the Forest Service  According to Standards for Internal Control in the Federal Government, management should design control activities to achieve objectives and respond to risks and that such control activities should be designed at the appropriate levels in the organizational structure  Further, management may design a variety of transaction control activities for operational processes, which may include verifications, authorizations and approvals, and supervisory control activities  The lack of properly designed control activities for supervisory review of the desk guide and strategy to identify the amounts for fund transfers does not provide the Forest Service reasonable assurance that the objectives of the fund transfers—including mitigating the risk of a shortfall of funding for other critical Forest Service program activities, such as payroll or other day-to-day operating costs—will be efficiently and effectively achieved  The Forest Service enters into various reimbursable agreements with agencies within USDA, other federal agencies, state and local government agencies, and nongovernment entities to carry out its mission for public benefit  The reimbursable agreements may be for the Forest Service to provide goods and services to a third party or to receive goods and services from a third party, or may be a partnership agreement with a third party for a common goal  According to Forest Service officials, the two distinct types of Forest Service reimbursable agreements are (1) fire incident cooperative agreements and (2) reimbursable and advanced collection agreements (RACA)  The Forest Service did not have documented processes and related control activities for its fire incident cooperative agreements to reasonably assure the effectiveness and efficiency of its related fire incident operations  In addition, processes and related control activities applicable to RACAs were not adequately described in applicable manuals and handbooks in the Directive System, to reasonably assure that control activities could be performed consistently and effectively  Further, certain RACA processes in the Directive System had not been timely reviewed by management and did not reflect current processes  Moreover, as previously discussed, SOPs and desk guides developed in field offices related to RACA processes were not in the Forest Service’s Directive System  Finally, the Forest Service lacked control activities segregating incompatible duties performed by line officers and program managers in creating reimbursable agreements and the final disposition of related receivables  The Forest Service did not have documented processes and related control activities for its fire incident cooperative agreements to reasonably assure the effectiveness and efficiency of its related fire incident operations and reliable reporting internally and externally  As part of the service’s mission objective to suppress wildland fires, Forest Service officials stated that they enter into 5-year agreements referred to as master cooperative agreements with federal, state, and other entities  These agreements document the framework for commitment and support efficient and effective coordination and cooperation among the parties in suppressing fires, when they occur  The master cooperative agreements do not require specific funding commitments as amounts are not yet known  These agreements vary from region to region because of the differing laws and regulations pertaining to the participating states and other entities  These variations can also result in different billing and collection processes between regions  When a fire occurs, supplemental agreements, which are based on the framework established in the applicable master cooperative agreements, are signed by relevant parties for each fire incident  These agreements establish the share of fire suppression costs incurred by the Forest Service and amounts related to entities that benefitted from those fire suppression efforts  These supplemental agreements require commitment and obligation of funds  As indicated in figure 2, the Forest Service’s obligations for fire suppression activities ranged from $412 million to $1 4 billion over the 10-year period from fiscal years 2007 through 2016  In response to our request for documentation of processes and related control activities over its fire incident cooperative agreements, Forest Service officials stated that processes and related control activities over reimbursable agreements were applicable to both fire incident cooperative agreements and RACAs  However, based on our review of the Forest Service’s processes and related control activities over its reimbursable agreements, we found that the unique features of fire incident cooperative agreements (as compared to features of RACAs) were not addressed in the processes and related controls for reimbursable agreements  For example, there was no process and related control activities over the negotiation and review of (1) a fire incident master cooperative agreement, which is developed before a fire occurs, and (2) supplemental agreements, which are signed by all relevant parties after the start of a fire incident  These supplemental agreements detail, among other things, the terms for (1) fire department resource use, (2) financial arrangements, and (3) specific cost-sharing agreements  Another unique feature of fire incident cooperative agreements, which was not covered in process documents for its reimbursable agreements, was the preparation of the Cost Settlement Package  The preparation of this package does not start until after the fire has ended and the Forest Service has received and paid all bills  According to Forest Service officials, a fire incident is deemed to have ended when there are no more resources (firefighters and equipment) on the ground putting out the fire  However, this definition was not documented in the Forest Service’s manuals and handbooks in the Directive System  Based on our review of documentation that the Forest Service provided for four fire incidents, we found that for these incidents the Cost Settlement Packages and the billings took several months to years to complete after the fire incident  According to Forest Service officials, delays in preparing the Cost Settlement Package in many cases were due to parties involved in suppressing the fires taking a long time to submit their invoices to the Forest Service for payment  Because the preparation of Cost Settlement Packages was not included in the process documents, the Forest Service did not have a defined time frame for when, in relation to the end of the fire, the Cost Settlement Package must be completed  For example, in one case we reviewed, the bill for a cost settlement was sent 9 months after the fire occurred, and in another case, settlement occurred approximately 2 years after the fire occurred  For both fire incidents, based on the reports we reviewed, the fires were contained within a week or two, but the Forest Service does not have a policy for documenting the date when the fire incident is deemed to have ended  Because of the complexity of the process for negotiating and determining the reimbursable amounts from all the costs that the Forest Service pays for a fire incident, the reimbursable amounts may take time to negotiate, and subsequent billing to and collection from parties may take much longer  Forest Service officials stated that some receivables that were not going to be collected until after its financial system’s aging process for receivables deemed such receivables uncollectible and a bad debt are tracked in a spreadsheet outside its financial system  We found that the Forest Service did not have a documented process and related control activities to reasonably assure that its Budget Office was informed of these older receivables being tracked in a spreadsheet and the related progress of collection activities that local program managers and line officers perform, which could affect the reliability of the reported reimbursable receivable amounts  According to Standards for Internal Control in the Federal Government, management should internally communicate the necessary quality information to achieve the entity’s objectives  Without proper communication, important information, such as amounts that the Forest Service will receive from fire incident cost settlement negotiations, may not be considered in the Forest Service’s strategy for the effective and efficient management of fund transfers for fire suppression activities  Processes and related control activities applicable to RACAs were not adequately described in Forest Service manuals and handbooks in its Directive System  RACAs, which may be for research or other nonemergency purposes, are billed and collected based on previously agreed upon billing and collection terms  In accordance with the Forest Service’s Directive System, policies related to business processes, such as RACAs, are documented in its manuals while procedures for performing specialized activities are documented in its handbooks  We found that the manuals and handbooks in the Directive System did not adequately describe the processes and related control activities over the RACA processes to enable efficient and effective performance of the work by appropriate and responsible personnel  The manuals and handbooks related to RACAs state that a manager review the documentation to ensure that the funding supports the objective of the agreement, the agreement is the correct instrument for funding the project, all relevant terms and conditions have been included in the agreement, the entity’s financial strength and capability are acceptable, and all applicable regulations and OMB circulars have been addressed  However, there was no discussion in the manuals and handbooks about when the manager needs to perform the reviews and how these reviews were to be documented  Further, in response to our inquiry regarding procedures performed to assess the entity’s financial strength and capability are acceptable before a RACA is signed, Forest Service officials stated that there is currently no formal process for determining financial capability for RACAs  For reimbursable agreements, the Forest Service’s process documented in its handbook consisted of completing a creditworthiness checklist  However, the handbook did not describe procedures for (1) completing the checklist and (2) documenting responsible personnel’s review and approval of an entity’s acceptable financial capability  Standards for Internal Control in the Federal Government states that management should design control activities to achieve objectives and respond to risks  Management’s design of internal control establishes and communicates the who, what, when, where, and why of internal control execution to personnel  Documentation also provides a means to retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel  Further, the standards also explain that management clearly document internal control in a manner that allows the documentation to be readily available and properly managed and maintained  In addition, the manuals and handbooks applicable to the RACAs have not been timely reviewed by management, and had not been updated to reflect current processes  For example, the document that serves as direction for Forest Service personnel on how to enter into RACAs referred to an outdated financial system that was replaced in fiscal year 2013  Further, the manuals and handbooks for the RACA processes had no indication that they had been reviewed within the past 5 years  Forest Service policy requires routine review, every 5 years, of policies and procedures in its Directive System  According to Forest Service officials, a staff member from ORMS sends an e-mail to officials responsible for updating these policies and procedures  However, appropriate control activities have not been designed to reasonably assure that updates were made, reviewed, approved, and issued as needed for continued relevance and effectiveness  Without adequate descriptions of processes and related control activities in its manuals and handbooks over RACAs, the Forest Service is at risk that processes and related control activities may not be properly, consistently, and timely performed  Further, because it lacks a process and related controls for monitoring and reviewing the updates of the guidance and various process documents in the Directive System, the Forest Service is at risk that its policies and procedures may not provide appropriate agency-wide direction in achieving control objectives, particularly when financial systems change and old processes may no longer be applicable  SOPs and desk guides related to RACA processes were not in the Directive System and are not considered official Forest Service policy and procedures  Forest Service field staff responsible for various processes generally developed SOPs and desk guides to document day-to-day procedures for employees in carrying out RACA processes to supplement the manuals and handbooks  However, the SOPs and desk guides did not reference the applicable manuals and handbooks they supplemented  Further, the SOPs and desk guides did not provide descriptions of (1) review procedures for authorization, completeness, and validity of RACAs and related receivables; (2) detailed review procedures to be performed and by whom; (3) timing of review procedures; and (4) how to document the completion of the review procedures  Finally, SOPs and desk guides did not have evidence that responsible officials reviewed and approved them to authorize their use  These SOPs and desk guides are only available in the field office where these were developed, and if similar SOPs and desk guides were developed in other field offices, control activities and how they are performed could vary  We also noted that these SOPs and desk guides were not timely updated to reflect processes and systems currently in use  For example, there were many instances where the SOPs and desk guides referred to systems that the Forest Service no longer used  Standards for Internal Control in the Federal Government states that management should establish an organizational structure, assign responsibility, and delegate authority to achieve the entity’s objectives  Effective documentation assists in management’s design of internal control by establishing and communicating the who, what, when, where, and why of internal control execution to personnel  Documentation also provides a means to retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel and to achieve the entity’s objectives  Management assigns responsibility and delegates authority to key roles throughout the entity  As a result of the issues discussed above, the Forest Service is at risk that control activities may not be properly and consistently performed and its related control objectives may not be achieved efficiently and effectively  In addition, the Forest Service is at risk that knowledge for performing the control activities may be limited to a few personnel or lost altogether in the event of employee turnover  The Forest Service lacked control activities over the segregation of incompatible duties performed by line officers and program managers for reimbursable agreements and any adjustments affecting the final disposition of related receivables  Field offices manage the majority of Forest Service projects, including authorizing the agreements and monitoring related collection  The Forest Service line officer for fire incident cooperative agreements and program managers for RACA at the RSA, unit, or field levels initiate and develop the terms of the agreements and are also responsible for any subsequent negotiation of the agreements  In the process of negotiating and settling costs, the line officer or program manager has the authority to cancel or change related receivables that they deemed uncollectible  For example, in a fire incident, the line officer at the region or field level is involved in both developing a Cost Share Agreement and after the fire incident has ended, negotiating the Cost Settlement Package with parties involved in the agreement to determine the final settlement amount that the Forest Service will be reimbursed for expenses paid in suppressing the fire incident  Therefore, the line officer is responsible for initiating the Cost Share Agreement, modifying the Cost Settlement Package, and changing or canceling the related receivable, which represent conflicting duties  We also found that the Forest Service did not have any mitigating controls, such as independent approval of any adjustments affecting the final disposition of receivables, to mitigate the risk of these incompatible duties  Standards for Internal Control in the Federal Government states that management should design control activities to achieve objectives and respond to risks  Segregation of duties contributes to the design, implementation, and operating effectiveness of control activities  To achieve segregation of key functions, management can divide responsibilities among different people to reduce the risk of error, misuse, or fraud  This may include separating the responsibilities for authorizing or approving transactions, processing and recording them, and reviewing the transactions so that no one individual controls all key aspects of a transaction or event  Forest Service officials stated they did not consider segregating the conflicting duties related to reimbursable agreements because these line officers and program managers were most familiar with the terms of the agreement and the activities performed  However, a lack of adequate segregation of conflicting duties or proper monitoring and review of conflicting duties for receivables from reimbursable agreements could result in receivables not being collected, and an increased risk of fraud  The Forest Service’s processes and related control activities over review of unliquidated obligations were not properly designed to reasonably assure optimum utilization of funds and were inconsistent with USDA and Forest Service policy  Further, Forest Service manuals and handbooks related to the review of unliquidated obligations did not clearly describe control activities and were not timely reviewed by management  The Forest Service reported unliquidated obligations of approximately $2 6 billion and $2 5 billion in its financial statements as of September 30, 2015, and 2016, respectively  In fiscal year 2016, the Forest Service deobligated about $319 million of its unliquidated obligations from prior years  The Forest Service’s procedures related to the review of unliquidated obligations were not properly designed and were inconsistent with USDA and Forest Service policy  In accordance with USDA Departmental Regulation (Regulation 2230-001) and related Forest Service policy, the Forest Service identifies and reviews unliquidated obligations that have been inactive for at least 12 months to determine whether delivery or performance of goods or services is still expected to occur  Once a determination has been made that an unliquidated obligation can be deobligated, program or procurement personnel are to notify finance personnel, in writing, within 5 days of the determination to process the deobligation  Within 15 days of receipt of the written notification, the unliquidated obligations are to be adjusted in the financial management system  The Forest Service CFO is then to be notified in writing that the deobligation was processed  Within 1 month of the close of each quarter, the Forest Service CFO is to submit to USDA’s Associate CFO for Financial Operations a certification stating that the Forest Service has performed reviews of its unliquidated obligations and taken appropriate actions, such as promptly deobligating an unliquidated obligation that is no longer needed  However, the Forest Service’s quarterly certifications are inconsistent with USDA and Forest Service policy because the months included in each quarterly review do not line up with the months outlined in policy  For example, as shown in table 1, based on policy the certification due on October 31, covers the months July through September  However in practice, the certification that the Forest Service prepared for October 31 covers May through July  As a result, the review and certification for August and September would be delayed an entire quarter  According to Forest Service officials, it takes considerable time to produce accurate unliquidated obligations reports from USDA’s financial system and then distribute them to field offices  Therefore, there is not sufficient time for the field offices to review and deobligate amounts not needed from the unliquidated obligations balances to meet USDA’s certification timing and requirements  However, the Forest Service has not developed other processes and control activities that could help meet USDA and Forest Service policy and reasonably assure that unliquidated obligations are reviewed timely and appropriate actions are taken  As a result, there is an increased risk that the Forest Service may not achieve its control objectives of optimum utilization of funds and timely adjustments of obligated balances  The Forest Service’s process and related control activities over its review of unliquidated obligations and resulting certifications were not adequately described in manuals and handbooks in its Directive System  Further, the manuals and handbooks were not timely reviewed and updated to reflect processes and systems currently in use  In accordance with the Forest Service’s Directive System, policies are documented in its manuals while procedures for performing specialized activities are documented in its handbooks  However, we found that the Forest Service’s processes and related control activities for reviewing unliquidated obligations were not adequately described and documented in such manuals and handbooks  Although parts of the applicable section of the handbook referred to procedures, there were no detailed descriptions of the processes, and only references to objectives of the procedures for reviewing unliquidated obligations were listed  For example, in identifying unliquidated obligations for review, the narrative description of the procedures in the handbook states that the responsible obligating official must review each selected unliquidated obligation to determine whether (1) delivery or performance of goods or services has occurred or is expected to occur and (2) accounting corrections to the obligation data in the accounting system are necessary  The handbook also refers to an unliquidated obligations report listing the unliquidated obligations that must be reviewed  The narrative does not provide any detailed procedures that obligating officials or responsible personnel need to perform, how to perform those procedures, and how those control activities are to be documented  The guidance in the handbook was supplemented by two desk guides  However, the desk guides are outside the Forest Service’s Directive System and, as previously noted, the Directive System is the only place where the Forest Service’s policy and procedures are issued  In addition, these desk guides did not reference the applicable guidance in the Directive System that they were supplementing  Further, the process and related control activities for adjusting unliquidated obligations within 15 days of receipt of written notification, as stated in USDA’s policy, were not described in either the handbooks or the desk guides  Standards for Internal Control in the Federal Government states that management should design control activities to achieve objectives and respond to risks to achieve an effective internal control system  Management’s design of internal control establishes and communicates the who, what, when, where, and why of internal control execution to personnel  Documentation also provides a means to retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel  Further, the standards also explain that management clearly document internal control in a manner that allows documentation to be readily available and that documentation be properly managed and maintained  In addition, manuals and handbooks for processes related to review and certification of unliquidated obligations had no evidence that they had been reviewed within the past 5 years for ongoing relevance and effectiveness  According to a Forest Service manual, all service-wide directives, except interim directives, shall be reviewed at least once every 5 years  The Forest Service does not have an effective process in place to monitor the reviews and any updates of the manuals and handbooks in its Directive System  As previously discussed, while ORMS sends an e- mail requesting that the applicable officials review and update the guidance in the manuals and handbooks, there is no follow-up process to help ensure that documents were reviewed and updated as needed  Because the Forest Service’s process and related control activities over its review and certification of unliquidated obligations were not adequately described in its manuals and handbooks, the Forest Service is at risk that its control activities may not reasonably assure that control objectives provide (1) optimum utilization of funds and (2) for unliquidated obligations that are no longer needed to be efficiently and effectively deobligated and made available for other program needs  Adequate processes and related control activities over the Forest Service’s budgetary resources are critical in reasonably assuring that these resources are timely and effectively available for its mission operations, including fire suppression  However, we identified deficiencies in the Forest Service’s processes and related controls over allotments, unobligated no-year funds from prior years, administrative control of funds, fund transfers, reimbursable agreements, and available funds from deobligation of unliquidated obligations  Deficiencies ranged from a lack of processes to control activities that were not properly designed, resulting in an increased risk that Forest Service funds may not be effectively and efficiently monitored and used  In addition, the Forest Service’s manuals and handbooks, which provide the directives for the areas we reviewed, had not been reviewed by management in accordance with the Forest Service’s 5-year review policy  Further, Forest Service staff prepared SOPs and desk guides that documented control activities, but they were not issued as official policy and had not been reviewed and approved by responsible officials  As a result, the Forest Service is at increased risk that the control activities may not be consistently performed across the agency and that the guidance in the SOPs and desk guides may not comply with agency policy in the Directive System  To improve internal controls over the Forest Service’s budget execution processes, we are making the following 11 recommendations: The Chief of the Forest Service should (1) revise its process and (2) design, document, and implement related control activities to reasonably assure that amounts designated in appropriations acts for specific purposes are properly used for the purposes specifically designated  (Recommendation 1) The Chief of the Forest Service should (1) develop a process and (2) design, document, and implement related control activities to reasonably assure that unobligated no-year funds from prior years are reviewed for continuing need  (Recommendation 2) The Chief of the Forest Service should (1) design, document, and implement a comprehensive system for administrative control of funds and (2) submit it for review and approval by USDA before issuance, as required by the USDA Budget Manual  (Recommendation 3) The Chief of the Forest Service should design, document, and implement control activities over the preparation and approval of a fire suppression fund transfers strategy, to specify all appropriate factors to be considered in developing and documenting the strategy, and incorporate these control activities into the Directive System  (Recommendation 4) The Chief of the Forest Service should design, document, and implement processes and related control activities for its fire incident cooperative agreements to reasonably assure efficient and effective operations and timely and reliable reporting of reimbursable receivables related to fire incident cooperative agreements, and incorporate them in the Directive System  (Recommendation 5) The Chief of the Forest Service should update the RACA manuals and handbooks to adequately describe the processes and related control activities applicable to RACAs to reasonably assure that staff will know (1) how and when to perform processes and control activities and (2) how to document their performance  (Recommendation 6) The Chief of the Forest Service should design, document, and implement segregation of duties or mitigating control activities over reimbursable agreements and any adjustments affecting the final disposition of related receivables  (Recommendation 7) The Chief of the Forest Service should modify, document, and implement control activities consistent with USDA and Forest Service policy to reasonably assure that unliquidated obligations are reviewed timely and appropriate actions are taken  (Recommendation 8) The Chief of the Forest Service should adequately describe the processes and related control activities for unliquidated obligations review and certification processes in manuals and handbooks within the Directive System  (Recommendation 9) The Chief of the Forest Service should develop, document, and implement a process and related control activities to reasonably assure that manuals and handbooks for allotments, reimbursable agreements, and review of unliquidated obligations are reviewed and updated every 5 years, consistent with Forest Service policy  (Recommendation 10) The Chief of the Forest Service should develop, document, and implement a process and related control activities to reasonably assure that SOPs and desk guides (1) clearly refer to guidance in the Directive System for allotments, reimbursable agreements, and review of unliquidated obligations and (2) are reviewed and approved by responsible officials prior to use  (Recommendation 11) We provided a draft of this report to USDA for comment  In its comments, reproduced in appendix III, the Forest Service stated that it generally agreed with the report and that it has made significant progress to address the report’s findings  Specifically, the Forest Service stated that its financial policies concerning budget execution have been revised to address our concerns with allotments, unliquidated obligations, commitments, and administrative control of funds as prescribed by OMB Circular No  A-11  Further, the Forest Service stated that it has undertaken an in-depth review of its unliquidated obligations and modified the certification process to comply with the USDA requirement  We are sending copies of this report to the appropriate congressional committees and to the Secretary of Agriculture and the Chief of the Forest Service  In addition, this report is available at no charge on the GAO website at http://www gao gov  If you or your staff members have any questions about this report, please contact me at (202) 512-9869 or khana@gao gov  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 key contributions to this report are listed in appendix IV  Our objectives were to determine the extent to which the Forest Service properly designed control activities over (1) allotments of budgetary resources, its system for administrative control of funds, and any fund transfers between Forest Service appropriations; (2) reimbursables and related collections; and (3) unliquidated obligations  We reviewed the Forest Service’s process documents and control activities, policies and procedures from its manual and handbooks in its Directive System, and other guidance in the form of standard operating procedures (SOP) and desk guides to obtain an understanding of internal controls at the Forest Service related to our three objectives  We reviewed the control activities that the Forest Service identified to determine whether the activities would achieve the control objectives that the service identified and whether the activities were consistent with Standards for Internal Control in the Federal Government  We also reviewed recent relevant GAO and U S  Department of Agriculture (USDA) Office of Inspector General reports to obtain background information related to the Forest Service’s budget execution processes  We evaluated the design of the Forest Service’s control activities based on data for fiscal year 2016  To address our first objective, we reviewed Forest Service process documents related to allotments and budget authority to obtain an understanding of control activities over the allotments of budgetary resources, its system for administrative control of funds, and any related fund transfers between Forest Service appropriations  The process documents included a list of control objectives and related control activities that the Forest Service had used to assess its internal controls  We also reviewed the related guidance in appendix H to Office of Management and Budget Circular No  A-11, Preparation, Submission, and Execution of the Budget for Administrative Control of Funds, to identify requirements that agencies must meet to ascertain whether their controls over funds management are properly designed  We interviewed key officials from the Forest Service’s Strategic Planning, Budget and Accountability Office to gain an understanding of their processes for allotments of budgetary resources, its system for administrative control of funds, and fund transfers between Forest Service appropriations for wildland fire suppression activities, including how each of their risk assessments were performed and their plans to mitigate the risks  We reviewed and analyzed the processes documented in the manuals and handbooks collectively referred to as directives to determine whether the processes and control activities were designed to achieve the Forest Service’s stated objectives  Specifically, we examined the Forest Service’s control activities to determine whether these sufficiently communicated the procedures to be performed and the documentation to be prepared  We also reviewed USDA Budget Manual to determine whether Forest Service guidance was consistent with USDA’s requirements for all of its component agencies, specifically requirements related to the administrative control of funds  To address our second objective, we reviewed the Forest Service’s policies, procedures, and other documentation and interviewed agency officials to develop an understanding of its processes related to reimbursable agreements and related collection activities  We first identified, through interviews with Forest Service officials, the different kinds of reimbursable agreements that the Forest Service enters into with other USDA components, other federal agencies, state and local government agencies, and nongovernment entities to carry out its mission for the benefit of the public  Two distinct types of reimbursable agreements include (1) fire incident cooperative agreements and (2) reimbursable and advanced collection agreements  We reviewed Forest Service process documents and templates related to these two types of reimbursable agreements provided to obtain an understanding of control activities over reimbursable processes  We reviewed the list of control objectives and related control activities that the Forest Service identified to determine whether the control activities were designed to achieve the applicable control objectives  To address our third objective, we reviewed the Forest Service’s policies, procedures, and other documentation related to and interviewed agency officials about unliquidated obligations to develop an understanding of the Forest Service’s review and certification processes for unliquidated obligations balances  We reviewed the Forest Service’s control activities related to its process for reviewing unliquidated obligations to obtain an understanding of control activities around its process and to determine whether the control activities were designed to achieve the applicable control objectives  Based on the results of our evaluation of the Forest Service’s design of internal control activities over the budget execution processes, we did not evaluate the implementation of the control activities or whether they were operating as designed  While our audit objectives focused on certain control activities related to (1) allotments of budgetary resources, the Forest Service’s system for administrative control of funds, and related fund transfers; (2) reimbursables and related collections for reimbursable agreements; and (3) unliquidated obligations, we did not evaluate all control activities and other components of internal control  If we had done so, additional deficiencies may or may not have been identified that could impair the effectiveness of the control activities evaluated as part of this audit  We conducted this performance audit from August 2016 to January 2018 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  Standards for Internal Control in the Federal Government provides the overall framework for establishing and maintaining internal control  Internal control represents an agency’s plans, methods, policies, and procedures used to fulfill its mission, strategic plan, goals, and objectives  Internal control is a process by an entity’s oversight body, management, and other personnel to provide reasonable assurance that the objectives of the entity will be achieved  When properly designed, implemented, and operating effectively, it provides reasonable assurance that the following objectives are achieved: (1) effectiveness and efficiency of operations, (2) reliability of internal and external reporting, and (3) compliance with applicable laws and regulations  Internal control is not one event, but a series of actions that occur throughout an entity’s operations  The five components of internal control are as follows: Control Environment - The foundation for an internal control system that provides the discipline and structure to help an entity achieve its objectives  Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives and provides the basis for developing appropriate risk responses  Control Activities - The actions management establishes through policies and procedures to achieve objectives and respond to risks in the internal control system, which includes the entity’s information system  Information and Communication - The quality information management and personnel communicate and use to support the internal control system  Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews  An effective internal control system has each of the five components of internal control effectively designed, implemented, and operating with the components operating together in an integrated manner  In this audit, we assessed the design of control activities at the Forest Service related to its (1) allotments of budgetary resources and any related fund transfers between Forest Service appropriations, (2) reimbursables and related collections, and (3) review of unliquidated obligations  In addition to the contact named above, the following individuals made key contributions to this report: Roger Stoltz (Assistant Director), Meafelia P  Gusukuma (Auditor-in-Charge), Tulsi Bhojwani, Cory Mazer, Sabrina Rivera, and Randy Voorhees 
Report 2: 1 billion in emergency and OCO/GWOT appropriations enacted to date for State/USAID includes major non-war-related programs, such as aid for the 2004 tsunami along Indian Ocean coasts, 2010 earthquake in Haiti, 2013 Ebola outbreak in West Africa, and 2015 worldwide outbreak of the Zika virus; as well as diplomatic operations (e g , paying staff, providing security, and building and maintaining embassies)  OCO/GWOT has also funded a variety of foreign aid programs, ranging from the Economic Support Fund to counter-narcotics in Afghanistan, Pakistan, and Iraq, among other activities in other countries  Figure 8 depicts the emergency or OCO appropriations for foreign affairs activities  Since 2012, when the OCO designation was first used for foreign affairs, more OCO funds have been appropriated than were requested each year, and those have also been authorized to be used in additional countries  Since January 2002, approximately $3 billion of post-9/11 emergency and OCO-designated funding has been provided to the U S  Coast Guard (USCG) for its traditional homeland security missions and for USCG operations in support of U S  Navy activities  This funding has been provided at various times as either an appropriation to the Coast Guard's operating expenses accounts, or as a transfer from Navy accounts to the Coast Guard  Open-source information on the use of those funds has varied  One FY2009 supplemental appropriations request included funding as a transfer, with the intent of funding "Coast Guard operations in support of OIF and OEF, as well as other classified activities " The FY2017 OCO request for annual appropriations for Navy Operations and Maintenance included $163 million for Coast Guard operational support for the deployment of patrol boats to the Northern Arabian Gulf and a port security unit to Guantanamo Bay, among other pay and equipment expenses  The Trump Administration initially requested a total of $89 billion in OCO funding for FY2019  All the funding was requested by DOD  In an amendment to the budget after Congress raised the BCA spending caps as part of the Bipartisan Budget Act of 2018 (BBA 2018; P L  115-123 ), the Administration removed the OCO designation from $20 billion of the funding, in effect, shifting that amount into the DOD base budget request  In a statement on the budget amendment, Mulvaney said the request fixes "long-time budget gimmicks" in which OCO funding has been used for base budget requirements  Beginning in FY2020, "the Administration proposes returning to OCO's original purpose by shifting certain costs funded in OCO to the base budget where they belong," he wrote  Of the revised amount of $69 billion requested for DOD OCO funding in FY2019: $46 3 billion (67%) was for Operation Freedom's Sentinel (OFS) in Afghanistan and related missions; $13 billion (22%) for Operation Inherent Resolve (OIR) in Iraq and Syria and related missions; $4 8 billion (9%) for the European Deterrence Initiative (EDI) to boost the U S  military presence in eastern Europe to deter Russian military aggression; and $0 9 billion (1%) for security cooperation (see Figure 9 )  The FY2019 OCO budget assumes a total force level (average annual troop strength) of 93,796 personnel  That figure includes: 11,958 primarily in Afghanistan (OFS); 5,765 primarily in Iraq and Syria (OIR); 59,463 for in-theater support; and 16,610 primarily in the continental United States (CONUS) or otherwise mobilized (see Figure 10 )  The number of personnel actually in-country or in-theater at any given time may exceed or fall below those assumed levels  The FY2019 force level assumes an increase of 3,153 personnel (3 5%) from the FY2018 assumed level, all of which is assumed for in-theater support  (For analysis of troop level and budget trends, see the section, " Trends in OCO Funding and Troop Levels ," earlier in this report ) As previously discussed, DOD acknowledges "OCO funding has not declined at the same rate as the in-country troop strength … due to the fixed, and often inelastic, costs of infrastructure, support requirements, and in-theater presence to support contingency operations " The departments lists the following as OCO cost drivers: In-theater support, including infrastructure costs like command, control, communications, computers, and intelligence (C4I) and base operations for U S  Central Command (CENTCOM) locations; Persistent demand for combat support such as intelligence, surveillance, and reconnaissance (ISR) assets used to enhance force protection; Equipment reset, which lags troop level changes and procurement of contingency-focused assets like munitions, unmanned aerial vehicles and force protection capabilities that may not be linked directly to in-country operations; and International programs and deterrence activities, which are linked to U S  engagement in contingency operations and support U S  interests but are not directly proportional to U S  troop presence  DOD also breaks down the FY2019 OCO budget request by functional category (see Table 3 )  By this measure, the largest portion of OCO funding was $20 billion for in-theater support, followed by operations and force protection (including the incremental cost of military operations in Afghanistan, Iraq, Syria, and other countries), at $14 7 billion; and unspecified classified programs, at $9 9 billion  According to the Congressional Budget Office (CBO), approximately $47 billion (68%) of the FY2019 OCO budget request consists of enduring activities—that is, "those that would probably continue in the absence of overseas conflicts"—that could be funded in the DOD base budget  CBO associates enduring activities with the following DOD functional categories: in-theater support, classified programs, equipment reset and readiness, European Deterrence Initiative, security cooperation, and joint improvised-threat defeat  Executive Branch budget documents for FY2019 show differing projections for how much OCO would be apportioned over the Future Years Defense Program (also known as the FYDP, pronounced "fiddip," the five-year period from FY2019 through FY2023)  For example, Table 1-11 in DOD's National Defense Budget Estimates for FY2019, citing OMB data, projects five-year OCO funding at $359 billion  However, Table 1-9 of the same document puts the figure at $149 billion after assuming a higher amount of OCO funding shifting into the base budget  According to OMB, the President's initial FY2019 budget request projected increasing caps on defense discretionary base budget authority by $84 billion (15%) to $660 billion in FY2020 and by $87 billion (15%) to $677 billion in FY2021  It also projected defense funding for Overseas Contingency Operations (OCO) totaling $73 billion in FY2020 and $66 billion in FY2021  Thus, projected defense discretionary funding would total $733 billion in FY2020 and $743 billion in FY2021  FY2019 DOD budget documents show the same defense discretionary topline for FY2020 and FY2021  But they list an "Outyears Placeholder for OCO" of $20 billion in fiscal years FY2020-FY2023, and an "OCO to Base" amount of $53 billion in FY2020 and $45 8 billion in each year from FY2021-FY2023  The documents do not break down what accounts or activities are included in these amounts  The emergence of any new contingencies or conflicts would likely change DOD assumptions about OCO needs  Congress has appropriated a total of $68 8 billion for DOD OCO funding in FY2019, including the following amounts: $67 9 billion in defense funds provided in the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 ( P L  115-245 ), which Congress passed on September 26, 2018; and $921 million in defense funds provided in the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019 ( P L  115-244 ), which Congress passed on September, 21, 2018  For the Department of State and USAID, as well as the Department of Homeland Security and U S  Coast Guard, FY2019 OCO levels have not yet been determined  They remain at prorated FY2018 levels because of continuing resolutions (CR) to fund certain agencies through December 21, 2018  The FY2019 House and Senate SFOPS bills ( H R  6385 and S  3108 , 115 th Congress) would have appropriated approximately $8 billion in OCO-designated funding for various priorities  The House committee-reported version of the Homeland Security appropriations bill ( H R  6776 , 115 th Congress) would not have appropriated any OCO/GWOT funding for the Coast Guard, while the Senate committee-reported version of the bill ( S  3109 , 115 th Congress) would have appropriated $165 million for OCO/GWOT funding for the Coast Guard  Any decision by the 116 th Congress to change discretionary defense and nondefense spending limits that remain in effect for FY2020 and FY2021 under the Budget Control Act (BCA; P L  112-25 ) could impact future OCO funding levels  Lawmakers may consider the following questions: Will Congress keep the BCA as is and rely on OCO funding that is not subject to the caps to meet agency requirements? Will Congress repeal the BCA and use less OCO funding? Will Congress amend the BCA limits for future years and continue to use OCO funding, as it has in the past? Will Congress significantly reduce DOD and international affairs funding to stay within the BCA caps and not use OCO funding? In a November 2018 report, the National Defense Strategy Commission, a bipartisan panel created by Congress, issued recommendations related to OCO and the BCA  Recommendation No  24 states, "Congress should eliminate the final two years of caps under the BCA " Recommendation 29 states, "To better prepare for major-power competition, Congress should gradually integrate OCO spending back into the base Pentagon budget  This also requires a dollar-for-dollar increase in the BCA spending caps, should they remain in force, so that this transfer does not result in an overall spending cut " Both House and Senate FY2019 committee-reported appropriations bills from the 115 th Congress included about $8 billion in OCO funding for State/USAID  It remains to be seen if the 116 th Congress will pass this OCO level as requested or extend the continuing resolution  Congress could enact legislation to authorize and appropriate a level of base and OCO spending to meet current or revised discretionary defense spending caps in any number of ways  In FY2019 budget documents from OMB and DOD, the Trump Administration projected increasing defense spending in FY2020 and FY2021 beyond the statutory limits of the Budget Control Act of 2011 ( P L  112-25 ), but by differing amounts based on differing OCO projections  These figures serve as possible scenarios or options for Congress to consider  According to OMB budget documents, the President's initial FY2019 budget request projected $733 billion in defense discretionary spending in FY2020, including a base budget of $660 billion (which assumes an $84 billion, or 15%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO defense budget of $73 billion (see Figure 11 )  According to DOD budget documents, the President's revised FY2019 budget request projected $733 billion in defense discretionary spending in FY2020, including a base budget of $713 billion (which assumes a $137 billion, or 24%, increase in the BCA defense cap—what would be the largest increase to the BCA defense caps yet—or repeal of the legislation altogether) and an OCO budget of $20 billion  Alternatively, assuming no change in the cap and congressional support for the Administration's projected $733 billion topline in FY2020, Congress could keep the BCA defense cap unchanged at $576 billion and designate an additional $157 billion for OCO  According to OMB budget documents, the President's initial FY2019 budget request projected $743 billion in defense discretionary spending in FY2021, including a base budget of $677 billion (which assumes an $87 billion, or 15%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO budget of $66 billion (see Figure 11 )  According to DOD budget documents, the President's revised FY2019 budget request projected $743 billion in defense discretionary spending in FY2021, including a base budget of $723 billion (which assumes a $133 billion, or 23%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO budget of $20 billion  Alternatively, assuming no change in the cap and congressional support for the Administration's projected $743 billion topline in FY2020, Congress could keep the BCA defense cap unchanged at $590 billion and designate an additional $153 billion for OCO  As previously discussed, these figures would change with different toplines for the national defense budget function (050)  Former Defense Secretary Jim Mattis and the National Defense Strategy Commission have recommended that Congress increase the defense budget between 3% and 5% a year above inflation ("real growth") to meet U S  strategic goals  President Donald Trump has said the discretionary defense spending request would total $700 billion in FY2020, a decrease of 2% in nominal terms from FY2019  Trump said, "We know what the budget—the new budget is for the Defense Department  It will probably be $700 billion " However, some media outlets have since reported that the President intends to request a discretionary defense budget of $750 billion in FY2020  Senator James Inhofe, chairman of the Senate Armed Services Committee, and Representative Mac Thornberry, ranking member of the House Armed Services Committees in the 116 th Congress, have argued, "Any cut in the defense budget would be a senseless step backward " Thornberry has also said transferring recurring OCO costs into the regular budget "makes sense … it makes for more predictable budgeting, but it's all about what happens on the topline " Representative Adam Smith, chairman of the House Armed Services Committee in the 116 th Congress, has said of the defense budget: "I think the number is too high, and it's certainly not going to be there in the future … We've got a debt, we've got a deficit, we've got infrastructure problems, we've got healthcare, education—there's a whole lot that is necessary to make our country safe, secure, and prosperous " Acting Defense Secretary Patrick Shanahan has talked about a flat topline for national defense: "When you look at the $700 billion, it's not just for one year drop down, [or] a phase, it's a drop and then held constant" over the FYDP  Under Secretary of Defense (Comptroller)/Chief Financial Officer David Norquist, who is also performing the duties of the Deputy Secretary of Defense, at one time was reportedly preparing two budgets for FY2020—one assuming $733 billion for national defense and another assuming $700 billion  An analyst has noted "returning enduring OCO costs to the base budget, particularly a vast majority of those enduring costs over a short period as DOD has outlined, could significantly complicate an agreement between congressional Democrats and Republicans to increase both the defense and nondefense BCA budget caps for FY2020 and FY2021 " As analyst noted, "OCO has become an even less-defined pot of money … Congress needs to properly question the DOD budget planners on the future of OCO " In a January 2017 report, GAO concluded, "Without a reliable estimate of DOD's enduring OCO costs, decision makers will not have a complete picture of the department's future funding needs or be able to make informed choices and trade-offs in budget formulation and decision making " The department states it has not fully estimated those costs in part because of the BCA  In a response to GAO, DOD wrote, "Developing reliable estimates of enduring OCO costs is an important first step to any future effort to transition enduring OCO costs to the base budget  In the context of such an effort, the Department would consider developing and reporting formal estimates of those costs  However, until there is sufficient relief from the budgetary caps established in the Budget Control Act of 2011, the Department will need OCO to finance counterterrorism operations, in particular [OFS] and [OIR] " In an October 2018 report, the Congressional Budget Office estimated OCO funding for DOD enduring activities—that is, those that would probably continue in the absence of overseas conflicts—totaled more than $50 billion a year (in 2019 dollars) from 2006 to 2018—and are projected to total about $47 billion a year starting in FY2020  This figure appears to be consistent with projections published by DOD  According to the department's FY2019 budget documents, DOD projected $53 billion for "OCO to Base" in FY2020 and $45 8 billion for "OCO to Base" for FY2021 through FY2023  Some analysts have concluded: Uncertainty created by current reliance on OCO, particularly to fund base budget needs, could be detrimental to national security on three levels: (a) by undermining budget controls and contributing thereby to larger deficits, (b) by generating insecurity in the defense workforce and in defense suppliers, and (c) by creating long-term uncertainty in defense planning  The alternative, transitioning longer-term OCO expenses to the base budget, could be achieved through a combination of increased budget caps, targeted cuts in inefficient Defense programs, and increased revenues  For example, a potential enduring activity in the OCO budget is the European Deterrence Initiative (EDI)  It was previously known as the European Reassurance Initiative (ERI), an effort that began in June 2014 to increase the number of U S  military personnel and prepositioned equipment in Central and Eastern Europe intended in part to reassure NATO allies after Russia's military seized Crimea  As some analysts have noted, "Because it is in the OCO part of the budget request, EDI funding does not include a projection for how much funding will be allocated in future years, which can create uncertainty in the minds of allies and adversaries alike about the U S  military's commitment to the program " On the other hand, some contend that it is precisely EDI's flexibility that allows the commander of European Command to quickly respond to changing security and posture needs in Europe, and ensure that monies intended for European deterrence will not be redirected to other DOD priorities  In its November 2018 report, the National Defense Strategy Commission quoted the late military strategist Bernard Brodie, who wrote "strategy wears a dollar sign " The panel concluded that relying on OCO funding to increase the defense budget "is not the way to provide adequate and stable resources" for the type of great power competition outlined in the Secretary of Defense's 2018 National Defense Strategy (NDS), which calls for the United States to bolster its competitive military advantage relative to threats posed by China and Russia: Because of budgetary constraints imposed by the BCA, lawmakers and the Department of Defense have increasingly relied upon the overseas contingency operations (OCO) fund to pay for warfighting operations in the greater Middle East, as well as other activities and initiatives  Yet this approach to resourcing has produced problems and distortions of its own  For one thing, the amount of money devoted to OCO since the BCA was enacted no longer corresponds to warfighting operations in the greater Middle East  Furthermore, such operations are no longer a top priority as articulated in the NDS  Finally, reorienting the military toward high-end competition and conflict will require new capabilities beyond the current program of record  OCO is not the way to provide adequate and stable resources for such a long-term endeavor, given its lack of predictability and the limitations on what OCO funds can be used to buy " Appendix A  Statutes, Guidance, and Regulations The designation of funding as emergency requirements or for Overseas Contingency Operations/Global War on Terrorism (OCO/GWOT) is governed by several statues as well as Office of Management and Budget (OMB) guidance and the Department of Defense (DOD) Financial Management Regulation (FMR)  The Balanced Budget and Emergency Deficit Control Act (BBEDCA) of 1985 BBEDCA, as amended, includes the statutory definitions of emergency and unanticipated as they relate to budget enforcement through sequestration  The act also allows for appropriations to be designated by Congress and the President as emergency requirements or for Overseas Contingency Operations/Global War on Terrorism   Such appropriations are effectively exempt from the statutory discretionary spending limits  Title 10, United States Code—Armed Forces 10 U S C  101—Definitions Section 101 provides definitions of terms applicable to Title 10  While it does not define overseas contingency operations, it does include a definition of a contingency operations   Administration and Internal Guidance In addition to statutory requirements, the DOD and the Department of State are subject to guidance on OCO spending from the Administration  In October 2006 , under the Bush Administration, then-Deputy Secretary of Defense Gordon England directed the services to break with long-standing DOD regulatory policies and expand their request for supplemental funding to reflect incremental costs related to the "longer war on terror " There was no specific definition for the "longer war on terror," now one of the core missions of the DOD  In February 2009, at the beginning of the Obama Administration, the Office of Management and Budget (OMB) issued updated budget guidance that required DOD to move some OCO costs back into the base budget  However, within six months of issuing the new criteria, officials waived restrictions related to pay and that would have prohibited end-strength growth  In a letter from OMB to the then-Under Secretary of Defense (Comptroller) Robert Hale, the agency characterized its 2009 criteria as "very successful" for delineating base and OCO spending but stated, "This update clarifies language, eliminates areas of confusion and provides guidance for areas previously unanticipated " GAO subsequently reported that the revised guidance significantly changed the criteria used to build the fiscal year 2010 OCO funding request by: specifying stricter definitions for repair and procurement of equipment; limiting applicability of OCO funds for RDT&E; excluding pay and allowances for end-strength above the level requested in the budget; excluding enduring family support initiatives; and excluding base realignment and closures (BRAC) amounts  OMB again revised its guidance in September 2010 following a number of GAO reports that had concluded DOD reporting on OCO costs was of "questionable reliability," due in part to imprecisely defined financial management regulations related to OCO spending  (as of September 9, 2010) Source: Letter from Steven M  Kosiak, Associate Director for Defense and Foreign Affairs, OMB, to Robert Hale, Under Secretary of Defense, Comptroller, "Revised War Funding Criteria," September 9, 2010  DOD Financial Management Regulations DOD incorporated the September 2010 OMB criteria for war costs into the Financial Management Regulation  Table 1 includes the general cost categories DOD uses in accounting for costs of contingency operations  Appendix B  Transfer Authorities, Special Purpose Accounts In addition to the supplemental appropriations and emergency or OCO/GWOT designation, the Department of Defense and the Department of State also have the authority to shift funds from one budget account to another in response to operational needs  For DOD, these transfers (sometimes called reprogramings ) are statutorily authorized by 10 U S C  2214—Transfer of funds: procedures and limitations  This authority allows the Secretary of Defense to reallocate funds for higher priority items, based on unforeseen military requirements, after receiving written approval from the four congressional defense committees  DOD may also reprogram funds within an account from one activity to another, as long as the general purpose for the use of those funds remains unchanged  Specific limits to transfer or reprogramming authorities have also been added to these general authorities through provisions in annual defense authorization and appropriation acts  The FY2019 defense appropriations bill sets the base budget transfer cap at $4 billion and the OCO transfer cap at $2 billion  The Department of State's OCO transfer authority has been provided in appropriations acts and has specifically authorized the Administration to transfer OCO funds only to other OCO funds within Title VIII SFOPS appropriations, not between OCO and base accounts  The transfer authority is capped, specified by account, and requires regular congressional notification procedures  Overseas Contingency Operations Transfer Fund (OCOTF) The OCOTF was established for DOD in FY1997 as a no year transfer account (meaning amounts are available until expended) in order to provide additional flexibility to meet operational requirements  Transfers from the OCOTF are processed using existing reprogramming procedures  A quarterly report is submitted to the congressional oversight committees, documenting all transfers from the OCOTF to DOD components base budget accounts  Beginning in FY2002, funds to support Southwest Asia, Kosovo, and Bosnia contingency requirements were appropriated directly to DOD components' Operation and Maintenance (O&M) and Military Personnel accounts rather than to the OCOTF for later disbursement  FY2014 was the last year the Administration requested a direct appropriation to the OCOTF  Contingency Operations Funded in the DOD Base Budget As first mandated by section 8091 of the Department of Defense Appropriations Act, 2008 ( P L  110-116 ), Congress has required DOD to provide separate annual budget justification documents detailing the costs of U S  armed forces' participation in all named contingency operations where the total cost of the operation exceeds $100 million or is staffed by more than 1,000 U S  military personnel  Funding for certain DOD contingency operations has been moved to the base budget request, and is no longer designated as emergency or OCO/GWOT requirements  This movement of funding from the OCO request to the base budget request typically occurs as the operational activities of an enduring contingency operation evolve over time and DOD determines that certain elements of the associated military operations have become stable enough to be planned, financed, and executed within the base budget  For example, funding for Operation Noble Eagle, which provides fighter aircraft on 24/7 alert at several U S  military bases, was moved from the GWOT request to the base budget request in 2005  Contingency operations and other activities funded wholly or in part through DOD's base budget have included: NATO Operations in the Balkans   The U S  Army and U S  Air Force provide support to the North Atlantic Treaty Organization-led operations in the Balkans region  Most U S  forces are deployed to Kosovo in support of the NATO-led Kosovo Force (KFOR)  A small number of U S  personnel are deployed to the NATO headquarters in Sarajevo in Bosnia and Herzegovina; Joint Task Force - Bravo   U S  forces support this task force, which operates from Soto Cano Air Base in Honduras and supports joint, combined, and interagency exercises and operations in Central America to counter the influence of transnational organized crime; carry out humanitarian assistance and disaster relief; and build military capacity with regional partners and allied nations to promote regional cooperation and security; Operation Juniper Shield  Previously known as Operation Enduring Freedom-Trans Sahara (OEF-TS), this operation supports efforts to defeat violent extremist organizations in East Africa  This operation also provides military-to-military engagement with partner African countries, as well as readiness for crisis response and evacuation of U S  military, diplomatic, and civilian personnel; Operation Noble Eagle   This operation funds the continuing efforts to defend the United States from airborne attacks, maintain the sovereignty of the United States airspace, and defend critical U S  facilities from potentially hostile threats or unconventional attacks; Operation Enduring Freedom- Horn of Africa   This operation was established to support efforts to defeat violent extremist organizations in East Africa; provide military-to-military engagement with partner African countries, as well as readiness for crisis response and evacuation of U S  military, diplomatic, and civilian personnel throughout East Africa; Operation Enduring Freedom- Caribbean and Central America   A U S  regional military operation initiated in 2008, under the operational control of Special Operations Command-South, this operation was established to focus on counterterrorism to support DOD's overall military objectives and the larger fight against terrorism  Operation Observant Compass   This operation was established to support the deployment of approximately 100 U S  military personnel assisting the Ugandan People's Defense Force and neighboring partner African countries in countering the Lord's Resistance Army operations  Operation Spartan Shield  This operation was established to support ongoing U S  Central Command missions  Other Congressionally Authorized Funds or Programs Through the OCO authorization and appropriation process, Congress has created numerous funds and programs that are designed to finance specific overseas contingency operations-related activities that do not fit into traditional budgetary accounts  Many of these funds and programs are supplied with amounts that are available until expended—however, authorization for the specified fund or program has an expiration date, thereby requiring further congressional action for reauthorization of affected funds or programs  Congress has also provided increased transfer authority to provide greater flexibility for U S  government activities in situations that are typically unpredictable  Examples of these types of congressionally authorized OCO programs or funds have included: Afghan istan Security Forces Fund (ASFF) and Counter-ISIS Train and Equip Fund (CTEF)   These funds were established to provide funding and support for the training, equipping, and expansion of selected military and security forces in support of U S  objectives; Counterterrorism Partnership s Fund   This fund was established to provide funding and support to partner nations engaged in counterterrorism and crisis response activities; Command er's Emergency Response Program  This program was established to support infrastructure improvements, such as road repair and construction and enable military commanders on the ground to respond to urgent humanitarian relief and reconstruction needs by undertaking activities that will immediately aid local populations and assist U S  forces in maintaining security gains; Joint Improvised Explosive Device (IEDs) Defeat Fund   This fund was established to coordinate and focus all counter-IED efforts, including ongoing research and development, throughout DOD  Due to the enduring nature of the threat, DOD began moving associated funding to the base budget in FY2010; Mine Resistant Ambush Protected Vehicle (MRAP) Fund   This fund was intended to expedite the procurement and deployment of MRAPs to Iraq and Afghanistan; European Deterrence Initiative (EDI)   Initially the European Reassurance Initiative (ERI), this effort was established to provide funding and support to NATO allies and partners to "reassure allies of the U S  commitment to their security and territorial integrity as members of the NATO Alliance, provide near-term flexibility and responsiveness to the evolving concerns of our allies and partners in Europe, especially Central and Eastern Europe, and help increase the capability and readiness of U S  allies and partners;" Global Security Contingency Fund   This fund was established to provide funding for the Department of State and the Department of Defense "to facilitate an interagency approach to confronting security challenges;" Complex Crise s Fund   This fund was established to provide funding through the State Department and USAID "to help prevent crises and promote recovery in post-conflict situations during unforeseen political, social, or economic challenges that threaten regional security;" Migration and Refugee Assistance Fund   This fund was established to provide funding to respond to refugee crises in Africa, the Near East, South and Central Asia, and Europe and Eurasia; and Ukraine Security Assistance Initiative   This initiative was established to provide assistance, including training, equipment, lethal weapons, of a defensive nature; logistics support; supplies and services; sustainment; and intelligence support to the military and national security forces of Ukraine  This is an update to a report originally co-authored by [author name scrubbed], former CRS Specialist in Defense Readiness and Infrastructure  It references research previously compiled by [author name scrubbed], former CRS Specialist in U S  Defense Policy and Budget; Christopher Mann, Analyst in Defense Policy and Trade; [author name scrubbed], Analyst in U S  Defense Acquisition Policy; [author name scrubbed], CRS Specialist on Congress and the Legislative Process; and [author name scrubbed], CRS Analyst in Public Finance  [author name scrubbed], Research Assistant, helped compile the graphics 

ground_truth: Gender-related price differences occur when consumers are charged different prices for the same or similar goods and services because of factors related to gender. While variation in costs and consumer demand may give rise to such price differences, some policymakers have raised concerns that gender bias may also be a factor. While the Equal Credit Opportunity Act and Fair Housing Act prohibit discrimination based on sex in credit and housing transactions, no federal law prohibits businesses from charging consumers different prices for the same or similar goods targeted to different genders. GAO was asked to review gender-related price differences for consumer goods and services sold in the United States. This report examines, among other things, (1) how prices compared for selected goods and services marketed to men and women, and potential reasons for any price differences; (2) what is known about price differences for men and women for products not differentiated by gender, such as mortgages; and (3) the extent to which federal agencies have identified and addressed any concerns about gender-related price differences. To examine these issues, GAO analyzed retail price data, reviewed relevant academic studies, analyzed federal consumer complaint data, and interviewed federal agency officials, industry experts, and academics. Firms differentiate many consumer products to appeal separately to men and women by slightly altering product attributes like color or scent. Products differentiated by gender may sell for different prices if men and women have different demands or willingness to pay for these product attributes. Of 10 personal care product categories (e.g., deodorants and shaving products) that GAO analyzed, average retail prices paid were significantly higher for women's products than for men's in 5 categories. In 2 categories—shaving gel and nondisposable razors—men's versions sold at a significantly higher price. One category—razor blades--had mixed results based on two price measures analyzed, and two others—disposable razors and mass-market perfumes—showed no significant gender price differences. GAO found that the target gender for a product is a significant factor contributing to price differences identified, but GAO did not have sufficient information to determine the extent to which these gender-related price differences were due to gender bias as opposed to other factors, such as different advertising costs. Though the analysis controlled for several observable product attributes, such as product size and packaging type, all underlying differences in costs and demand for products targeted to different genders could not be fully observed. Studies GAO reviewed found limited evidence of gender price differences for four products or services not differentiated by gender—mortgages, small business credit, auto purchases, and auto repairs. For example, with regard to mortgages, women as a group paid higher average mortgage rates than men, in part due to weaker credit characteristics, such as lower average income. However, after controlling for borrower credit characteristics and other factors, three studies did not find statistically significant differences in borrowing costs between men and women, while one found women paid higher rates for certain subprime loans. In addition, one study found that female borrowers defaulted less frequently than male borrowers with similar credit characteristics, and the study suggested that women may pay higher mortgage rates than men relative to their default risk. While these studies controlled for factors other than gender that could affect borrowing costs, several lacked important data on certain borrower risk characteristics, such as credit scores, which could affect analysis of gender disparities. Also, several studies analyzed small samples of subprime loans that were originated in 2005 or earlier, which limits the generalizability of the results. In their oversight of federal antidiscrimination statutes, the Bureau of Consumer Financial Protection, Federal Trade Commission, and Department of Housing and Urban Development have identified limited consumer concerns based on gender-related pricing differences. GAO's analysis of complaint data received by the three agencies from 2012–2017 found that they had received limited consumer complaints about gender-related price differences. The agencies provide general consumer education resources on discrimination and consumer awareness. However, given the limited consumer concern, they have not identified a need to incorporate additional materials specific to gender-related price differences into their existing consumer education resources.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: Many consumer products—such as deodorants, shaving products, and hair care products—are differentiated to appeal specifically to men or women through differences in packaging, scent, or other product characteristics (see fig  1)  These differences related to gender can affect manufacturing and marketing costs that may contribute to price differences in products targeted to different genders  However, firms may also charge consumers different prices for the same (or very similar) goods and services even when there are no differences in costs to produce  To maximize profits, firms use a variety of techniques to charge prices close to the highest price different consumers are willing to pay  Firms may attempt to get segments of the consumer market to pay a higher price than another segment by slightly altering or differentiating the product  Based on the differentiated products, consumers self-select into different groups according to their preferences and what they are willing to pay  For example, some consumer goods have different versions of what is essentially the same product—except for differences in packaging or features, such as scent—with one version intended for women and another version intended for men  The two products may be priced differently because the firm expects that one gender will be willing to pay more for the product than the other based on preference for certain product attributes  Firms may also use some group characteristic, such as age or gender, to charge different prices because some groups may have differences in willingness or ability to pay  For example, a firm may offer discounted movie tickets to students or seniors, as they may have less disposable income  For the seller the cost of providing the movie is the same for any customer, but the seller is able to maximize its profits by offering tickets to different groups of customers at different prices  A firm’s ability to differentiate prices depends on multiple factors, such as the firm’s market power (so that competitors cannot put downward pressure on prices to eliminate the price differences), the presence of consumer segments with different demands and willingness to pay, and control over the sale of its product so it cannot be easily resold to exploit price differences  In addition, the extent to which consumers pay different prices for the same or similar goods can depend on other factors, such as consumers’: willingness to purchase an item they believe may be priced higher for ability to compare prices and product characteristics and choose a product based on its characteristics rather than its price, choices about whether to purchase a more expensive version of the product (e g , a branded item versus a cheaper store brand), choices about where to purchase the item (i e , when different retailers sell the same item at different prices), and use of coupons or promotions  No federal law expressly prohibits businesses from charging different prices for the same or similar consumer goods and services targeted to men and women  However, consumer protection laws do prohibit sex discrimination in credit and real estate transactions  Specifically, the Equal Credit Opportunity Act (ECOA) prohibits creditors from discriminating against credit applicants based on sex or certain other characteristics and the Fair Housing Act (FHA) prohibits discrimination in the housing market on the basis of sex or certain other characteristics  ECOA and FHA (collectively known as the fair lending laws) prohibit lenders from, among other things, refusing to extend credit or using different standards in determining to extend credit based on sex  Credit, such as a credit card account or mortgage loan, is generally made available and priced based on a number of risk factors, including credit score, income, and employment history  A borrower with a lower credit score is likely to pay a higher interest rate on a loan, reflecting the greater risk to the lender that the borrower could default on the loan  In addition to the interest rate, borrowing costs for consumers can also include fees and other costs charged by lenders or brokers  However, there may be differences in average outcomes for men and women—such as for availability of credit or interest rates—if there are differences related to gender in the factors that determine creditworthiness, such as income  BCFP, FTC, the federal prudential regulators, and DOJ have the authority to investigate alleged violations of ECOA and are primarily responsible for enforcing the act’s requirements, while HUD and DOJ share responsibility for enforcing the provisions of FHA  Further, BCFP and the prudential regulators oversee regulated entities for compliance with ECOA by, among other things, collecting complaints from the public and through routine inspections of the financial institutions they oversee  HUD and DOJ have the authority to bring enforcement actions for alleged violations of FHA  In 5 out of 10 product categories we analyzed, personal care products targeted to women sold at higher average prices than those targeted to men after controlling for certain observable factors  For 2 of the 10 product categories, men’s versions sold at higher average prices  While the factors we controlled for likely proxy for various costs and consumer preferences, we could not fully observe all underlying differences in costs and demand for products targeted to different genders  As a result, we could not determine the extent to which the gender-based price differences we observed may be attributed to gender bias as opposed to other factors  Women’s versions of personal care products sold at a statistically significant higher average price than men’s versions for 5 of the 10 personal care product categories we analyzed—using two different price measures and after controlling for observable factors that could affect price, such as brands, product size or quantity, promotional expenses (see table 1) and other product-specific attributes (e g , scent, special claims, form)  Because women’s and men’s versions of the same product were frequently sold in different sizes, we compared prices using two price measures: average item price and average price per ounce or count of product  For 2 of the 10 product categories—shaving gel and nondisposable razors—men’s versions sold at a statistically significant higher price using both price measures  For one category (razor blades), women’s versions sold at a statistically significant higher average price per count, but there was no gender price difference using average item prices  Additionally, for two product categories—disposable razors and mass-market perfumes—there were no statistically significant price differences between men’s and women’s products using either price measure  In addition to this analysis of retail price scanner data, we also manually collected advertised online prices for a limited selection of personal care products targeted to women and men from several online retailers  Some price comparisons of advertised online prices for men’s and women’s versions of a product were similar to comparisons of average prices paid based on the Nielsen retail price scanner data  For example, for three pairs of comparable underarm deodorants, the women’s deodorant was listed at a higher price per ounce on average than the men’s deodorant (see app  II)  In addition, for one pair of shaving gel products we analyzed, the men’s shaving gel was listed at a higher price per ounce on average  However, for both pairs of nondisposable razors we analyzed, the women’s razors were listed at a higher average price per count than the men’s razors  This contrasted with the Nielsen data showing that men’s nondisposable razors sold at higher prices on average than women’s  An important limitation of our analysis of these advertised prices is that we were unable to determine the extent to which consumers actually paid these prices and in what volume the products were sold, and our results are not generalizable to the broader universe of prices for these products sold at other times or by other online retailers  Though we found that the target gender for a product is a significant factor contributing to price differences we identified, we do not have sufficient information to determine the extent to which these gender- related price differences were due to gender bias as opposed to other factors  Versions differentiated to appeal to men and women can result in different costs for the manufacturer  Our econometric analysis controlled for many observable factors related to costs, such as product size, promotional activity, and packaging type  We also controlled for many product attributes such as forms, scents, and special claims that products make to account for underlying manufacturing cost differences  In addition, we controlled for brands, which can reflect consumer preferences  However, we do not have firm-level data on all cost differences—for example, those related to advertising and packaging  As a result, we could not determine the extent to which the price differences we observed may be explained by remaining cost differences between men’s and women’s products  We also do not have the data to determine the extent to which men and women have different demands and willingness to pay for a product, which would be expected to affect the prices firms charge for differentiated products  For example, some academic experts we spoke with said that women may value some product attributes, such as design and scent, more than men do  If products differentiated to incorporate those attributes do not result in different costs, then differences in prices could be part of a firm’s pricing strategy based on the willingness of one gender to pay more than another  The conditions necessary for firms to be able to implement a strategy of price differentiation likely exist for the personal care products we analyzed  First, our analysis suggests that due to industry concentration, there is limited market competition for the 10 personal care products we analyzed  With more market power, firms can more easily set different prices for different consumer segments  Second, firms have the ability to segment the market for personal care products by tailoring product characteristics related to gender, such as by labeling the product as women’s deodorant or men’s deodorant, or by altering scent or colors  Third, while men and women are able to freely purchase a product targeted to the opposite gender, certain factors may limit the extent to which this occurs  For example, some product differences such as scents may discourage one gender from buying products targeted to another gender  In addition, consumers may find it difficult and time- consuming to compare prices for similar men’s and women’s products because of the ways they are differentiated (such as product size and scents) and because they may be sold in different parts of a store  We reviewed studies that compared prices for men and women in four markets where the product or service is not differentiated by gender: mortgages, small business credit, auto purchases, and auto repairs  First, we reviewed studies on mortgage and small business credit that analyzed interest rates and access to credit to identify any differences for men and women  Second, we reviewed studies that compared prices quoted to men and women in auto purchase and repair markets  However, several of these studies have important limitations, such as using nonrepresentative data samples, and the results are not generalizable  Studies we reviewed found that women as a group pay higher interest rates on average than men in part due to weaker credit characteristics  After controlling for borrower credit characteristics and other factors, three studies did not find statistically significant differences in interest rates between men and women for the same type of mortgage, while one study found that women paid higher mortgage rates for certain subprime loans  In addition, one study found that female borrowers defaulted less frequently on their loans than male borrowers with similar credit characteristics, suggesting that women as a group may pay higher mortgage rates than men relative to their default risk  While these studies attempted to control for factors other than gender or sex that could affect borrowing costs, several lacked important data on certain borrower risk characteristics  For example, several studies we reviewed rely on Home Mortgage Disclosure Act of 1975 (HMDA) data, which did not include data on risk factors such as borrower credit scores that could affect analysis of disparities between men and women  Also, several studies analyzed nonrepresentative samples of loans, such as subprime loans or loans originated more than 10 years ago, which limits the generalizability of the results (see table 2)  Three of the studies we reviewed found that while women on average were charged higher interest rates on mortgage loans than men, this difference was not statistically significant after controlling for other factors  For example, one study found that differences in mortgage interest rates between men and women became insignificant after controlling for differences in how men and women shop for mortgage rates  The authors used data from the 2004 Survey of Consumer Finances (SCF) to analyze the effect on interest rates of mortgage features, borrower characteristics such as gender, and market conditions  However, their analysis did not include data on some borrower credit characteristics such as credit score and debt-to-income ratio that could affect borrowing costs  Another study found that women were charged higher interest rates for subprime loans made in 2005, but once the authors controlled for observed risk characteristics there was no evidence of disparity in interest rates by gender of the borrower in the subprime market  However, the authors’ data did not include any fees paid at loan origination, which could affect the overall cost of borrowing  A third study that examined disparities between men and women in subprime loans found no significant evidence that gender affected the cost of borrowing within the subprime market, though it did find that women—particularly African American women—were more likely to have subprime loans  The authors found that, even after controlling for some financial characteristics and loan terms, single African American women were more likely than non-Hispanic white couples to have subprime loans  One study analyzed subprime loans made by one large lender from 2003 through 2005 and found that women paid more for subprime mortgages than men after controlling for some risk factors  This study found that women had higher average borrowing costs—as measured by annual percentage rate—than men, and controlling for credit characteristics such as credit scores and debt-to-income ratios did not fully explain the differences  However, the authors did not control for other factors that could also affect borrowing costs, such as differences in education, shopping behaviors, and geographic location  Additionally, a research paper found that female-only borrowers—that is, where the only borrower is a woman—default less than male-only borrowers with similar loans and credit characteristics  The authors found that female-only borrowers on average pay more for their mortgage loans because they generally have weaker credit characteristics, such as lower income, and also because a higher percentage of these mortgage loans are subprime  However, after controlling for credit characteristics such as credit score, loan term, and loan-to-value ratio, among others, the analysis showed that these weaker credit characteristics do not accurately predict how well women pay their mortgage loans  Since pricing is tied to credit characteristics and not performance, women may pay more relative to their actual risk than do similar men  Studies we reviewed on small business loans generally did not find differences in interest rates, though some found differences in denial rates and other accessibility issues between female- and male-owned firms  Most of the studies we reviewed used data from the 1993, 1998, or 2003 Survey of Small Business Finances (SSBF), which could limit the applicability or relevance of their findings today  A study that analyzed data from the 1993 SSBF did not find evidence that businesses owned by women paid more for credit than firms owned by white men  However, when the authors took into account the market concentration and competition, they found that white female-owned firms experienced increased denial rates in less competitive markets  In addition, the study found that women may avoid applying for credit in those markets because of the fear of being denied  For example, almost half of all small business owners who needed credit reported that they did not apply for credit, and these rates were even higher for businesses owned by women and minorities  Other studies found that women may have less access to small business credit than men, in part because of higher denial rates and because they may not apply for credit out of fear of rejection  For example, one study found that women-owned firms have higher loan denial rates compared with men; however, this is mainly due to differences in business characteristics of female- and male-owned firms  The authors also found that even when denial rates are the same for small businesses with similar characteristics, women’s loan application rates are lower, suggesting that women may be discouraged from applying for credit by the higher overall denial rates for female-owned firms  Another study by one of the same authors examined the reasons why female borrowers may be discouraged from applying for a business loan compared to male business owners and found that it was mainly because they fear that their application will be rejected  A third study by the same author found that women in general did not have less access to credit than men, though newer female-owned firms received significantly lower loan amounts than requested compared to their male-owned counterparts  Similarly, the study also found that women with few years of experience managing or owning a business received significantly lower loan amounts compared with men with similar years of experience  A fourth study looked at six different types of loans, including lines of credit, and found that white women were significantly more likely than white men to avoid applying for a loan because they assume they would be denied  However, once the authors’ model controlled for education differences, all gender disparities in applying for credit disappeared, though white women were still less likely than white men to have loans  Studies we reviewed on auto purchases and repairs found that a seller’s expectation of what customers are willing to pay and how informed they seemed can differ by gender, which can affect the price customers are quoted  However, these studies were published in 1995 and 2001, which may limit the applicability or relevance of their findings today  The 2001 study we reviewed on auto purchases found that though women paid higher prices than men for car purchases on average, these differences declined when cars were purchased online  The authors suggest that this may be because Internet consumers can effectively convey their level of price knowledge and therefore may seem better informed to the sellers  They also suggest it could be because the dealerships have less information about online consumers and their willingness to pay, which may limit the extent of price differentiation  The 1995 study on auto purchases found that the dealers quoted significantly lower prices to white males than to female or African American test buyers using identical, scripted bargaining strategies in part because dealers may have made assumptions about women’s willingness to bargain for lower prices  We also reviewed one study on auto repairs that found that women were quoted higher prices than men if they seemed uninformed about the cost of car repair when requesting a quote, but the price differences disappeared if the study participant mentioned an expected price  The study suggests that a potential explanation for this result could be that auto repair shops expect women to accept a price that is higher than the market average and men to accept a price below it  BCFP and HUD have responsibilities to monitor consumer complaints in the consumer credit and housing markets, respectively  Additionally, FTC monitors complaints about the consumer credit and consumer goods markets  All three agencies play a role in potentially monitoring or addressing issues of gender-related price differences and have online complaint forms for submission of consumer complaints: BCFP collects and reviews consumer complaints about financial products and services and provides complaints and related data in its Consumer Complaint Database  In 2017 BCFP received approximately 320,200 consumer complaints  The products that generated the most complaints in 2017 were “Credit or consumer reporting,” “Debt collection,” and “Mortgage " According to BCFP officials, BCFP also analyzes loan and demographics data collected through HMDA and other data sources to monitor and identify market trends  In addition, BCFP and the federal financial regulators examine fair lending practices of the institutions they regulate, and these examinations have uncovered sex discrimination in credit products by FDIC and NCUA  FTC receives complaints and the complaints are stored in the Consumer Sentinel Network, a database of consumer complaints received by FTC, as well as those filed with other federal and state agencies and organizations, such as mass marketing fraud complaints from the Council of Better Business Bureaus  The complaints in the Consumer Sentinel Network focus on consumer fraud, identity theft, and other consumer protection matters, such as debt collection, and can include complaints related to consumer credit markets  HUD receives consumer complaints about potential FHA violations through its website, via its toll-free phone hotline, and in writing  HUD monitors those complaints through its online HUD Enforcement Management System  HUD investigates all complaints for which it has jurisdictional authority  HUD may monitor complaints to identify trends, but HUD officials stated that the agency does not generally monitor consumer credit and housing market data, absent a specific complaint  In cases where HUD has jurisdictional authority under FHA, HUD offers conciliation between the parties  If resolution is not reached, and HUD determines there is reasonable cause to believe a violation has occurred, the parties may elect to have the matter heard in U S  District Court or at HUD  In their oversight of federal antidiscrimination statutes, BCFP officials said they have not identified significant consumer concerns about price differences based on a consumer’s sex or gender  FTC and HUD officials identified some examples of concerns of this nature  For example, FTC has taken enforcement actions alleging unlawful race- and gender-related price differences  HUD has also identified several cases where pregnant women and their partners applied for a mortgage while the woman was on maternity leave, and the couple’s mortgage loan application was denied  BCFP, FTC, and HUD have received few consumer complaints about price differences related to sex or gender, according to our analysis of a sample of each agency’s 2012–2017 complaint data (see table 3)  In separate samples of 100 gender-related complaints at BCFP, HUD, and FTC, we found that 0, 4, and 1 complaint, respectively, were related to price differences based on sex or gender  Three of the complaints from HUD also cited differences in price based on other protected classes (such as race or ethnicity)  Half of the academic experts and consumer groups we interviewed told us that in some markets it is difficult for consumers to observe and compare prices paid by other consumers, such as when prices are not posted or can be negotiated (e g , car sales)  In such cases, consumers may not know if other consumers are paying a higher or lower price than the price quoted to them  Most academic experts also told us that when consumers are aware that price differences could exist, they may make different decisions when making purchases  Additionally, officials from BCFP noted that price differences related to gender may be difficult for consumers to identify, or that consumers may not know where to complain  The consumer education resources of BCFP, FTC, and HUD provide general consumer education resources on discrimination (i e , consumer user guide or a website) and consumer awareness  Officials from BCFP and HUD said they have not identified a need to develop other consumer education resources specific to gender-related price differences  For example, BCFP’s print and online consumer education materials are intended to inform consumers of their rights and protections related to credit discrimination, which includes discrimination based on sex or gender  The three agencies’ consumer education materials also provide advice that could help consumers avoid paying higher prices regardless of their gender—such as home-buying resources and resources on comparison shopping  However, the agencies have not developed additional educational resources focused specifically on potential gender- related price differences in part because few complaints on this topic have been collected in their databases, agency officials told us  FTC officials noted that it tries to focus its education efforts on topics that will have the greatest benefit to consumers, often determined by information it gathers through complaints and investigations  Representatives of five consumer groups and industry associations told us that they have received few complaints about gender-related price differences  However, four consumer groups noted that low concern could be the result of consumers being unaware of price differences related to gender  For example, as indicated above, price differences related to gender may be difficult for consumers to identify when they cannot determine whether they are paying a higher price than others  Representatives of two retailing industry associations similarly stated that they have not heard concerns about price differences related to gender  In response to consumer complaints or concerns about gender disparities in pricing, at least one state (California) and two municipalities (Miami- Dade County and New York City) have passed laws or ordinances to prohibit businesses from charging different prices for the same or similar goods or services solely based on gender (see table 4)  In addition, two of these laws included requirements related to promoting price transparency  California enacted the Gender Tax Repeal Act of 1995, which prohibits businesses from charging different prices for the same or similar services based on a consumer’s gender  The law also requires certain businesses to display price information and disclose prices upon request, according to state officials with whom we spoke  Similarly, in 1997, Miami-Dade County passed the Gender Pricing Ordinance, which prohibits businesses from charging different prices based solely on a consumer’s gender (though businesses are permitted to charge different prices if the goods or services involve more time, difficulty, or cost)  In the same year, it also passed an ordinance that prohibits dry cleaning businesses from charging different prices for similar services based on gender  This ordinance also requires those businesses to post all prices on a clear and conspicuous sign, according to county officials with whom we spoke  State and local officials we interviewed identified benefits and challenges associated with these laws  For example, California, New York City, and Miami-Dade County officials noted that these laws give them the ability to intervene to address pricing practices that may lead to discrimination based on gender  In addition, California state officials said that the state’s efforts to implement the Gender Tax Repeal Act helped to improve consumer awareness about gender price differences  However, officials from California and Miami-Dade County cited challenges associated with tracking relevant complaints  For example, Miami-Dade County’s online complaint form includes a narrative section but does not ask for the complainant’s gender  Consumers do not always identify their gender in the narrative or state that that was the reason for their treatment  Additionally, officials from California and Miami-Dade County stated that seeking out violations would be very resource-intensive, and they rely on residents to submit complaints about violations  We provided a draft of this report to BCFP, DOJ, FTC, and HUD  BCFP, FTC, and HUD provided technical comments on the report draft, which we incorporated where appropriate  As 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 appropriate congressional committees, BCFP, DOJ, FTC, HUD, and other interested parties  In addition, the report will be 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) 512-8678 or cackleya@gao gov  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  We used a multivariate regression model to estimate the effect of gender (to which a product is targeted to) on the price of that product while controlling for other factors that may also affect the product’s price  The factors that we controlled for were the product size, promotional and packaging costs, and other product characteristics discussed in detail later  We used scanner data from the Nielsen Company (Nielsen) for calendar year 2016 and analyzed the following 10 product categories: (1) underarm deodorants, (2) body deodorants, (3) shaving cream, (4) shaving gel, (5) disposable razors, (6) nondisposable razors, (7) razor blades, (8) designer perfumes, (9) mass-market perfumes, and (10) mass-market body sprays  We estimated the following regression model for each of our 10 product categories: P=α+β*Male + λ* Size + θ*Owner +η*Promotion+ μ*X + δ*Y + ε The dependent variable P in the above equation represents price  For our analysis, we constructed two measures of price  The first is the item price, estimated as the total dollar sales of an item (each item is depicted by a unique Universal Product Code (UPC) in the Nielsen data), divided by the total units sold of that item  The second measure of price that we use is price per ounce or price per count  This is estimated as the item price divided by the total quantity of product, where quantity or size depicts the number of ounces (as in the case of fragrances) or the count of blades in razor blade packs  The total quantity of the product is the ounces or counts of one item multiplied by the number of items included in a specific product configuration  For example, a 2-pack of deodorant sticks where each deodorant stick is 2 7 ounces would be a total quantity of 5 4 ounces  The variable Male in the above equation is an indicator variable depicting whether the product is designated as a “men’s” product in the Nielsen data  It is represented as a value of “1” for men’s products and a value of “0” for women’s products  The co-efficient for this variable, parameter β, would therefore show the price difference between a men’s and women’s product  A negative value would imply a lower price for products designated as men’s products  The variable Size represents the most appropriate specification of the size of the product  Owner is a set of indicator variables representing all the brand owners selling a particular product  The brand of a product can be expected to have a substantial effect on prices for the kind of products we analyze because brands can be a proxy for quality for some consumers  However, we also found that firms often create gender-specific brands, so holding brands constant rendered most gender-based price comparisons infeasible  To overcome this, we hold owners instead of brands constant for our price comparison analysis  The variable Promotion represents the percentage of dollar sales that were sold on any type of promotion  This variable proxies for promotional costs to some extent based on the assumption that the greater the proportion of sales due to promotional activity, the greater the promotional costs  The variables X represent a set of indicator variables for packaging characteristics such as package delivery method (for example, roll-on or aerosol spray deodorants) or package shape (for example, bottle, tube, or can)  We expect these characteristics to proxy for different costs associated with different packaging methods  The variables Y represent a set of indicator variables representing different product characteristics (for example, forms such as gel stick or smooth solid and claims such as “active cooling” or “anti-wetness” for underarm deodorants, and blade types such as “triple edge” and “flexible six” for razors)  These product characteristics may proxy for some underlying manufacturing costs or even consumer preferences  Since firms may create gender-specific product attributes—scents like “sweet petals” and “pure sport” or razor head types and colors to differentiate products between genders—we did not always keep every product attribute constant when comparing prices  The idiosyncratic error term is represented by ε  All of our regressions are weighted, with the proportion of units sold for a particular item in that year as the weight  This is because, for personal care products, there are large differences in units sold of various product types and brands, and therefore it not useful to compare simple un- weighted average prices  For example, for one company the highest selling men’s deodorant stick sold almost 12 million units in 2016, and the highest selling women’s deodorant stick sold over 8 million units  The average units sold for underarm deodorants as a whole was just over 300,000 units, and 1,000 products out of a total of almost 3,000 products had less than 100 units sold in 2016  The linear model we used has the usual shortcomings of being subject to specification bias to the extent the relationship between price and each of the independent variables is not linear  The model also does not include complete data on costs, such as advertising and packaging, or consumers’ willingness to pay, both of which have an effect on the price differences  The model may thus also be subject to omitted variable bias  In addition, the model may have some endogeneity issues to the extent the product characteristics themselves are influenced by consumers’ willingness to pay for some of those product features  To reduce the impact of any model misspecifications or heteroscedasticity, we used the robust (or Huber-White sandwich) estimator  We estimated the regression model above for each of the 10 products separately and for each of the two measures of price  We used Nielsen’s in-store, retail price scanner data, which include information on total volume sold and dollar sales for items purchased at 228 retailers including grocery stores, drug stores, mass merchandisers (such as Target), dollar stores, club stores (such as Sam’s Club), and convenience stores  The data capture 82 percent of all U S  sales  Nielsen also projects sales for the remaining noncooperating retailers, and that information is included in this dataset  We excluded some very small brands that did not have enough units sold from our regression analysis in order to avoid outliers  These brands usually had less than 50,000 units sold over the entire year, and for some products they represented less than 1 percent of all units sold  We found that average retail prices paid were significantly higher for women’s products than for men’s in 5 out of 10 personal care products  In 2 categories, men’s versions sold at a significantly higher price  One category had mixed results based on two price measures analyzed, and two others showed no significant gender price differences  A summary of our regression results is presented in table 5  We manually collected prices for 16 pairs of selected personal care products from the websites of four online retailers that also operated physical store locations  We selected comparable pairs of similar men’s and women’s products that were differentiated by product attributes, such as scent or color, and were sold at most or all of the four retailers  The products were selected based on several comparability factors such as brand, product claims, and number of blades in a razor  For two 1-week time periods in January and March 2018, we collected prices manually between 1:00 p m  and 7:00 p m  (ET) over two 7-day time periods  We collected listed prices and did not adjust the prices for any promotions that were available, such as online coupons or buy-one-get-one-free offers  Table 6 presents the results of our online price collection  These results have important limitations: The average prices shown are not generalizable to the broader universe of prices for these products sold at other times or by other online retailers  The data reflect prices advertised to consumers rather than the prices consumers actually paid  The data do not capture the volume of sales for each item for each retailer; in our analysis, we weighted all advertised prices equally across the retailers  As a result, differences we found within these advertised prices may not have translated into comparable differences in prices female and male consumers paid for these products online  The prices do not reflect any promotional discounts, volume discounts, or other discounts that may have been available to some or all consumers  This report examines (1) how prices compared for selected categories of consumer goods that are differentiated for men and women, and potential reasons for any significant price differences; (2) what is known about the extent to which men and women may pay different prices in, or experience different levels of access to, markets for credit and goods and services that are not differentiated based on gender; (3) the extent to which federal agencies have identified and taken steps to address any concerns about gender-related price differences; and (4) state and local government efforts to address concerns about gender-related price differences  To compare prices for selected goods that are differentiated for men and women, we purchased and analyzed Nielsen Company (Nielsen) data on retail prices paid for 10 personal care product categories for calendar year 2016  The product categories included underarm deodorants, body deodorants (typically sold as a spray), disposable razors, nondisposable razors, razor blades, shaving creams, shaving gels, and three categories of fragrances  We selected these categories of personal care products because they are commonly purchased consumer goods that were categorized by gender in the Nielsen data  The women’s and men’s versions of personal care products we selected are generally more similar in terms of the form, size, and packaging in comparison to certain other consumer product categories that are also differentiated by gender, such as clothing  We used regression models to analyze data on retail prices paid for the 10 categories of personal care products differentiated for women and men  To assess the reliability of the Nielsen data, we reviewed relevant documentation and conducted interviews with Nielsen representatives to review steps they took to collect and ensure the reliability of the data  In addition, we electronically tested data fields for missing values, outliers, and obvious errors  We determined that these data were sufficiently reliable for our purposes  For more details on the methodology for, and limitations of, our analysis of these retail price data, see appendix I  We also manually collected listed prices for 16 pairs of selected personal care products from four different retailer websites over two 7-day periods in January and March 2018  For each pair, we selected comparable men’s and women’s products that were differentiated by product attributes, such as scent or color, and were commonly sold across retailers  For more details on our online price data collection and the limitations associated with interpreting the results, see appendix II  To examine what is known about the extent to which men and women may be offered different prices or access for the same goods or services, we reviewed academic literature identified through a literature search covering the last 25 years  To identify existing studies from peer-reviewed journals, we conducted searches using subject and keyword searches of various databases, such as EconLit, Scopus, ProQuest, and Social SciSearch  We also used a snowball search technique—meaning we reviewed relevant academic literature cited in our selected studies—to identify additional studies  We performed these searches and identified articles from December 2016 to April 2018  From these searches, we identified 21 studies that appeared in peer-reviewed journals or research institutions’ publications from 1995 through 2016 and were relevant to gender-related price differences for the same products  We reviewed and assessed each study’s evaluation methodology based on generally accepted social science standards  See the bibliography at the end of this report for a list of the 21 studies  We then summarized the research findings  A GAO economist read and assessed each study, using the same data collection instrument  The assessment focused on information such as the types of disparities examined, the research design and data sources used, and methods of data analysis  The assessment also focused on the quality of the data used in the studies as reported by the researchers and any limitations of data sources for the purposes for which they were used  A second GAO economist reviewed each completed data collection instrument to verify the accuracy of the information included  As a result, the 21 studies that we selected for our review met our criteria for methodological quality  We found the studies we reviewed to be reliable for purposes of determining what is known about price differences for the same products  However, these studies have important limitations, such as using nonrepresentative data samples, and the results are not generalizable  To examine the federal role in overseeing gender-related price differences, we reviewed relevant federal statutes and agency guidance, and interviewed officials from the Federal Trade Commission (FTC), Bureau of Consumer Financial Protection (BCFP), the Department of Housing and Urban Development (HUD), and the Department of Justice (DOJ)  To help identify the extent of concerns about gender-related price differences, we interviewed representatives from eight consumer groups, three industry associations, and four academic experts  Additionally, we reviewed a sample of consumer complaints from databases managed by BCFP, FTC, and HUD (Consumer Complaint Database, Consumer Sentinel Network, and Enforcement Management System, respectively)  Complaints were submitted by consumers across the United States about various financial products, housing grievances, and other consumer protection concerns  To identify our universe of gender-related consumer complaints in BCFP and FTC databases, we used the following search terms that targeted sex or gender discrimination: discriminat, unfair, treat, decept, abus, female, woman, women, man, men, male, gender, sex, female, woman, women, man, men, male, gender, and sex  HUD’s consumer complaint database is categorized by protected class (e g , race, sex, national origin), so we did not need to use search terms to identify gender-related complaints  For the years 2012 through 2017, we identified 6,117 BCFP consumer complaint narratives; 10,472 FTC consumer complaints narratives; and 5,421 HUD consumer complaint narratives that were relevant to our scope  We then drew a stratified random probability sample of 100 gender-related consumer complaints from each database  To determine which complaints in our samples were about price differences related to gender or sex, two team members read through each complaint narrative and coded whether or not the complainant’s narrative indicated that they felt that they paid or were charged more because of their gender or sex  A third team member conducted a final review of the results, and made a final determination in cases where there were differences in the first two team member’s assessments  With this probability sample, each member of the study population had a nonzero probability of being included, and that probability could be computed for any member  We followed a probability procedure based on random selections and our sample is only one of a large number of samples that we might have drawn  Since each sample could have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 95 percent confidence interval (with a margin of error of 5 9 percent)  This is the interval that would contain the actual population value for 95 percent of the samples we could have drawn  We assessed the reliability of these data by reviewing documentation and interviewing agency officials about the databases used to collect these complaints  We determined that these data were sufficiently reliable for our purposes of identifying complaints of gender- related price differences  To explore state and local efforts to address concerns about gender- related price differences, we conducted a literature search and identified three state or local laws or ordinances that specifically address gender- related price differences: California, Miami-Dade County, Florida, and New York City, New York  We reviewed these laws and ordinances and interviewed officials from these jurisdictions to discuss motivations for, oversight of, and the impact of these laws  We conducted this performance audit from October 2016 to August 2018 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  For each of 10 personal care product categories we analyzed, we compared the overall average prices for women’s products and men’s products using two measures of average price: average item price and average price per ounce or count  While the second price measure adjusts the average price for quantity of product, these comparisons did not take into account the effect on price of differences in product brand, packaging, and other characteristics  As shown in table 7, adjusting the average item price to account for differences in product quantity (ounces or count) significantly affected the size and magnitude of gender price differences for several product categories  This is because men’s products in the dataset were frequently larger in size or count compared with women’s products in the same category  For example, women’s disposable razors sold for 11 percent less than those targeted to men when we compared average item prices  However, when we compared average price per count of razors, women’s disposable razors sold for 19 percent more on average than men’s  This is because women’s disposable razors had on average about one fewer razor per package  In 5 out of 10 product categories, women’s versions of the product on average sold for a higher price per ounce or count than men’s and these differences were statistically significant at the 95 percent confidence level for 4 products and at the 90 percent level for one product  Information about sales and relative sizes of different products targeted to men and women are presented in table 8 below  This appendix provides additional details about the consumer complaint processes at the Bureau of Consumer Financial Protection (BCFP), Federal Trade Commission (FTC), and Department of Housing and Urban Development (HUD)  Consumers with a complaint about unfair treatment related to gender could submit a complaint to one of these agencies  BCFP and FTC monitor consumer complaints related to violations under the Equal Credit Opportunity Act, while HUD and the Department of Justice (DOJ) investigate housing discrimination complaints under the Fair Housing Act  These complaints could be about price differences because of gender  Alicia Puente Cackley, (202) 512-8678 or cackleya@gao gov  In addition to the contact named above, John Fisher (Assistant Director), Jeff Harner (Analyst in Charge), Vida Awumey, Bethany Benitez, Namita Bhatia-Sabharwal, Kelsey Kreider, and Kelsey Sagawa made key contributions to this report  Also contributing to this report were Abigail Brown, Michael Hoffman, Jill Lacey, Oliver Richard, Tovah Rom, and Paul Schmidt  We reviewed literature to identify what is known about the extent to which female and male consumers may face different prices or access in markets for credit and goods and services that are not differentiated based on gender  This bibliography contains citations for the 20 studies and articles that we reviewed that compared prices or access for female and male consumers in markets where the product is not differentiated by gender (mortgages, small business credit, auto purchases, and auto repairs)  Asiedu, Elizabeth, James A  Freeman, and Akwasi Nti-Addae  “Access to Credit by Small Businesses: How Relevant Are Race, Ethnicity, and Gender?” The American Economic Review, vol  102, no  3 (2012): 532- 537  Ayers, Ian and Peter Siegelman  “Race and Gender Discrimination in Bargaining for a New Car ” The American Economic Review, vol  85, no  3  (1995): 304-321  Blanchard, Lloyd, Bo Zhaob, and John Yinger  “Do lenders discriminate against minority and woman entrepreneurs?” Journal of Urban Economics 63 (2008): 467–497  Blanchflower, David G , Phillip B  Levine, and David J  Zimmerman  “Discrimination in the Small-Business Credit Market ” The Review of Economics and Statistics, vol  85, no  4 (2003): 930-943  Busse, Meghan R , Ayelet Israeli, and Florian Zettelmeyer  “Repairing the Damage: The Effect of Price Expectations on Auto Repair Price Quotes ” National Bureau of Economic Research, Working Paper 19154 (2013)  Cavalluzzo, Ken S , Linda C  Cavalluzzo, and John D  Wolken  “Competition, Small Business Financing, and Discrimination: Evidence from a New Survey ” The Journal of Business, vol  75, no  4 (2002): 641- 679  Cheng, Ping, Zhenguo Lin, and Yingchun Liu  “Do Women Pay More for Mortgages?” The Journal of Real Estate Finance and Economics, vol  43 (2011): 423-440  Cheng, Ping, Zhenguo Lin, and Yingchun Liu  “Racial Discrepancy in Mortgage Interest Rates ” The Journal of Real Estate Finance and Economics, vol  51 (2015): 101-120  Cole, Rebel, and Tatyana Sokolyk  “Who Needs Credit and Who Gets Credit? Evidence from the Surveys of Small Business Finances”  Journal of Financial Stability, vol  24 (2016), 40-60  Coleman, Susan  “Access to Debt Capital for Women- and Minority- Owned Small Firms: Does Educational Attainment Have an Impact?” Journal of Developmental Entrepreneurship, vol  9, no  2 (2004): 127-143  Duesterhas, Megan, Liz Grauerholz, Rebecca Weichsel, and Nicholas A  Guittar  “The Cost of Doing Femininity: Gendered Disparities in Pricing of Personal Care Products and Services,” Gender Issues, vol  28, (2011): 175-191  Goodman, Laurie, Jun Zhu, and Bing Bai  “Women Are Better than Men at Paying Their Mortgages ” Urban Institute, Research Report (2016)  Haughwout, Andrew, et al  “Subprime Mortgage Pricing: The Impact of Race, Ethnicity, and Gender on the Cost of Borrowing ” Brookings- Wharton Papers on Urban Affairs (2009): 33-63  Mijid, Naranchimeg  “Gender differences in Type 1 credit rationing of small businesses in the US ” Cogent Economics & Finance, vol  3 (2015)  Mijid, Naranchimeg  “Why are female small business owners in the United States less likely to apply for bank loans than their male counterparts?” Journal of Small Business & Entrepreneurship, vol  27, no  2 (2015): 229- 249  Mijid, Naranchimeg and Alexandra Bernasek  “Gender and the credit rationing of small businesses ” The Social Science Journal, vol  50 (2013): 55-65  Morton, Fiona Scott, Florian Zettelmeyer, and Jorge Silva-Risso  “Consumer Information and Price Discrimination: Does the Internet Affect the Pricing of New Cars to Women and Minorities?” National Bureau of Economic Research, Working Paper 8668 (2001)  O’Connor, Sally  “The Impact of Gender in the Mortgage Credit Market ” University of Wisconsin-Milwaukee Doctoral Dissertation (1996)  Van Rensselaer, Kristy N , et al  “Mortgage Pricing and Gender: A Study of New Century Financial Corporation ” Academy of Accounting and Financial Studies Journal, vol  18, no  4 (2014): 95-110  Wyly, Elvin and C S  Ponder  “Gender, age, and race in subprime America ” Housing Policy Debate, vol  21, no  4 (2011): 529-564  Zimmerman Treichel, Monica and Jonathan A  Scott  “Women-Owned Businesses and Access to Bank Credit: Evidence from Three Surveys Since 1987 ” Venture Capital, vol  8, no  1 (2006): 51-67 


Report 2: 1 billion in emergency and OCO/GWOT appropriations enacted to date for State/USAID includes major non-war-related programs, such as aid for the 2004 tsunami along Indian Ocean coasts, 2010 earthquake in Haiti, 2013 Ebola outbreak in West Africa, and 2015 worldwide outbreak of the Zika virus; as well as diplomatic operations (e g , paying staff, providing security, and building and maintaining embassies)  OCO/GWOT has also funded a variety of foreign aid programs, ranging from the Economic Support Fund to counter-narcotics in Afghanistan, Pakistan, and Iraq, among other activities in other countries  Figure 8 depicts the emergency or OCO appropriations for foreign affairs activities  Since 2012, when the OCO designation was first used for foreign affairs, more OCO funds have been appropriated than were requested each year, and those have also been authorized to be used in additional countries  Since January 2002, approximately $3 billion of post-9/11 emergency and OCO-designated funding has been provided to the U S  Coast Guard (USCG) for its traditional homeland security missions and for USCG operations in support of U S  Navy activities  This funding has been provided at various times as either an appropriation to the Coast Guard's operating expenses accounts, or as a transfer from Navy accounts to the Coast Guard  Open-source information on the use of those funds has varied  One FY2009 supplemental appropriations request included funding as a transfer, with the intent of funding "Coast Guard operations in support of OIF and OEF, as well as other classified activities " The FY2017 OCO request for annual appropriations for Navy Operations and Maintenance included $163 million for Coast Guard operational support for the deployment of patrol boats to the Northern Arabian Gulf and a port security unit to Guantanamo Bay, among other pay and equipment expenses  The Trump Administration initially requested a total of $89 billion in OCO funding for FY2019  All the funding was requested by DOD  In an amendment to the budget after Congress raised the BCA spending caps as part of the Bipartisan Budget Act of 2018 (BBA 2018; P L  115-123 ), the Administration removed the OCO designation from $20 billion of the funding, in effect, shifting that amount into the DOD base budget request  In a statement on the budget amendment, Mulvaney said the request fixes "long-time budget gimmicks" in which OCO funding has been used for base budget requirements  Beginning in FY2020, "the Administration proposes returning to OCO's original purpose by shifting certain costs funded in OCO to the base budget where they belong," he wrote  Of the revised amount of $69 billion requested for DOD OCO funding in FY2019: $46 3 billion (67%) was for Operation Freedom's Sentinel (OFS) in Afghanistan and related missions; $13 billion (22%) for Operation Inherent Resolve (OIR) in Iraq and Syria and related missions; $4 8 billion (9%) for the European Deterrence Initiative (EDI) to boost the U S  military presence in eastern Europe to deter Russian military aggression; and $0 9 billion (1%) for security cooperation (see Figure 9 )  The FY2019 OCO budget assumes a total force level (average annual troop strength) of 93,796 personnel  That figure includes: 11,958 primarily in Afghanistan (OFS); 5,765 primarily in Iraq and Syria (OIR); 59,463 for in-theater support; and 16,610 primarily in the continental United States (CONUS) or otherwise mobilized (see Figure 10 )  The number of personnel actually in-country or in-theater at any given time may exceed or fall below those assumed levels  The FY2019 force level assumes an increase of 3,153 personnel (3 5%) from the FY2018 assumed level, all of which is assumed for in-theater support  (For analysis of troop level and budget trends, see the section, " Trends in OCO Funding and Troop Levels ," earlier in this report ) As previously discussed, DOD acknowledges "OCO funding has not declined at the same rate as the in-country troop strength … due to the fixed, and often inelastic, costs of infrastructure, support requirements, and in-theater presence to support contingency operations " The departments lists the following as OCO cost drivers: In-theater support, including infrastructure costs like command, control, communications, computers, and intelligence (C4I) and base operations for U S  Central Command (CENTCOM) locations; Persistent demand for combat support such as intelligence, surveillance, and reconnaissance (ISR) assets used to enhance force protection; Equipment reset, which lags troop level changes and procurement of contingency-focused assets like munitions, unmanned aerial vehicles and force protection capabilities that may not be linked directly to in-country operations; and International programs and deterrence activities, which are linked to U S  engagement in contingency operations and support U S  interests but are not directly proportional to U S  troop presence  DOD also breaks down the FY2019 OCO budget request by functional category (see Table 3 )  By this measure, the largest portion of OCO funding was $20 billion for in-theater support, followed by operations and force protection (including the incremental cost of military operations in Afghanistan, Iraq, Syria, and other countries), at $14 7 billion; and unspecified classified programs, at $9 9 billion  According to the Congressional Budget Office (CBO), approximately $47 billion (68%) of the FY2019 OCO budget request consists of enduring activities—that is, "those that would probably continue in the absence of overseas conflicts"—that could be funded in the DOD base budget  CBO associates enduring activities with the following DOD functional categories: in-theater support, classified programs, equipment reset and readiness, European Deterrence Initiative, security cooperation, and joint improvised-threat defeat  Executive Branch budget documents for FY2019 show differing projections for how much OCO would be apportioned over the Future Years Defense Program (also known as the FYDP, pronounced "fiddip," the five-year period from FY2019 through FY2023)  For example, Table 1-11 in DOD's National Defense Budget Estimates for FY2019, citing OMB data, projects five-year OCO funding at $359 billion  However, Table 1-9 of the same document puts the figure at $149 billion after assuming a higher amount of OCO funding shifting into the base budget  According to OMB, the President's initial FY2019 budget request projected increasing caps on defense discretionary base budget authority by $84 billion (15%) to $660 billion in FY2020 and by $87 billion (15%) to $677 billion in FY2021  It also projected defense funding for Overseas Contingency Operations (OCO) totaling $73 billion in FY2020 and $66 billion in FY2021  Thus, projected defense discretionary funding would total $733 billion in FY2020 and $743 billion in FY2021  FY2019 DOD budget documents show the same defense discretionary topline for FY2020 and FY2021  But they list an "Outyears Placeholder for OCO" of $20 billion in fiscal years FY2020-FY2023, and an "OCO to Base" amount of $53 billion in FY2020 and $45 8 billion in each year from FY2021-FY2023  The documents do not break down what accounts or activities are included in these amounts  The emergence of any new contingencies or conflicts would likely change DOD assumptions about OCO needs  Congress has appropriated a total of $68 8 billion for DOD OCO funding in FY2019, including the following amounts: $67 9 billion in defense funds provided in the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 ( P L  115-245 ), which Congress passed on September 26, 2018; and $921 million in defense funds provided in the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019 ( P L  115-244 ), which Congress passed on September, 21, 2018  For the Department of State and USAID, as well as the Department of Homeland Security and U S  Coast Guard, FY2019 OCO levels have not yet been determined  They remain at prorated FY2018 levels because of continuing resolutions (CR) to fund certain agencies through December 21, 2018  The FY2019 House and Senate SFOPS bills ( H R  6385 and S  3108 , 115 th Congress) would have appropriated approximately $8 billion in OCO-designated funding for various priorities  The House committee-reported version of the Homeland Security appropriations bill ( H R  6776 , 115 th Congress) would not have appropriated any OCO/GWOT funding for the Coast Guard, while the Senate committee-reported version of the bill ( S  3109 , 115 th Congress) would have appropriated $165 million for OCO/GWOT funding for the Coast Guard  Any decision by the 116 th Congress to change discretionary defense and nondefense spending limits that remain in effect for FY2020 and FY2021 under the Budget Control Act (BCA; P L  112-25 ) could impact future OCO funding levels  Lawmakers may consider the following questions: Will Congress keep the BCA as is and rely on OCO funding that is not subject to the caps to meet agency requirements? Will Congress repeal the BCA and use less OCO funding? Will Congress amend the BCA limits for future years and continue to use OCO funding, as it has in the past? Will Congress significantly reduce DOD and international affairs funding to stay within the BCA caps and not use OCO funding? In a November 2018 report, the National Defense Strategy Commission, a bipartisan panel created by Congress, issued recommendations related to OCO and the BCA  Recommendation No  24 states, "Congress should eliminate the final two years of caps under the BCA " Recommendation 29 states, "To better prepare for major-power competition, Congress should gradually integrate OCO spending back into the base Pentagon budget  This also requires a dollar-for-dollar increase in the BCA spending caps, should they remain in force, so that this transfer does not result in an overall spending cut " Both House and Senate FY2019 committee-reported appropriations bills from the 115 th Congress included about $8 billion in OCO funding for State/USAID  It remains to be seen if the 116 th Congress will pass this OCO level as requested or extend the continuing resolution  Congress could enact legislation to authorize and appropriate a level of base and OCO spending to meet current or revised discretionary defense spending caps in any number of ways  In FY2019 budget documents from OMB and DOD, the Trump Administration projected increasing defense spending in FY2020 and FY2021 beyond the statutory limits of the Budget Control Act of 2011 ( P L  112-25 ), but by differing amounts based on differing OCO projections  These figures serve as possible scenarios or options for Congress to consider  According to OMB budget documents, the President's initial FY2019 budget request projected $733 billion in defense discretionary spending in FY2020, including a base budget of $660 billion (which assumes an $84 billion, or 15%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO defense budget of $73 billion (see Figure 11 )  According to DOD budget documents, the President's revised FY2019 budget request projected $733 billion in defense discretionary spending in FY2020, including a base budget of $713 billion (which assumes a $137 billion, or 24%, increase in the BCA defense cap—what would be the largest increase to the BCA defense caps yet—or repeal of the legislation altogether) and an OCO budget of $20 billion  Alternatively, assuming no change in the cap and congressional support for the Administration's projected $733 billion topline in FY2020, Congress could keep the BCA defense cap unchanged at $576 billion and designate an additional $157 billion for OCO  According to OMB budget documents, the President's initial FY2019 budget request projected $743 billion in defense discretionary spending in FY2021, including a base budget of $677 billion (which assumes an $87 billion, or 15%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO budget of $66 billion (see Figure 11 )  According to DOD budget documents, the President's revised FY2019 budget request projected $743 billion in defense discretionary spending in FY2021, including a base budget of $723 billion (which assumes a $133 billion, or 23%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO budget of $20 billion  Alternatively, assuming no change in the cap and congressional support for the Administration's projected $743 billion topline in FY2020, Congress could keep the BCA defense cap unchanged at $590 billion and designate an additional $153 billion for OCO  As previously discussed, these figures would change with different toplines for the national defense budget function (050)  Former Defense Secretary Jim Mattis and the National Defense Strategy Commission have recommended that Congress increase the defense budget between 3% and 5% a year above inflation ("real growth") to meet U S  strategic goals  President Donald Trump has said the discretionary defense spending request would total $700 billion in FY2020, a decrease of 2% in nominal terms from FY2019  Trump said, "We know what the budget—the new budget is for the Defense Department  It will probably be $700 billion " However, some media outlets have since reported that the President intends to request a discretionary defense budget of $750 billion in FY2020  Senator James Inhofe, chairman of the Senate Armed Services Committee, and Representative Mac Thornberry, ranking member of the House Armed Services Committees in the 116 th Congress, have argued, "Any cut in the defense budget would be a senseless step backward " Thornberry has also said transferring recurring OCO costs into the regular budget "makes sense … it makes for more predictable budgeting, but it's all about what happens on the topline " Representative Adam Smith, chairman of the House Armed Services Committee in the 116 th Congress, has said of the defense budget: "I think the number is too high, and it's certainly not going to be there in the future … We've got a debt, we've got a deficit, we've got infrastructure problems, we've got healthcare, education—there's a whole lot that is necessary to make our country safe, secure, and prosperous " Acting Defense Secretary Patrick Shanahan has talked about a flat topline for national defense: "When you look at the $700 billion, it's not just for one year drop down, [or] a phase, it's a drop and then held constant" over the FYDP  Under Secretary of Defense (Comptroller)/Chief Financial Officer David Norquist, who is also performing the duties of the Deputy Secretary of Defense, at one time was reportedly preparing two budgets for FY2020—one assuming $733 billion for national defense and another assuming $700 billion  An analyst has noted "returning enduring OCO costs to the base budget, particularly a vast majority of those enduring costs over a short period as DOD has outlined, could significantly complicate an agreement between congressional Democrats and Republicans to increase both the defense and nondefense BCA budget caps for FY2020 and FY2021 " As analyst noted, "OCO has become an even less-defined pot of money … Congress needs to properly question the DOD budget planners on the future of OCO " In a January 2017 report, GAO concluded, "Without a reliable estimate of DOD's enduring OCO costs, decision makers will not have a complete picture of the department's future funding needs or be able to make informed choices and trade-offs in budget formulation and decision making " The department states it has not fully estimated those costs in part because of the BCA  In a response to GAO, DOD wrote, "Developing reliable estimates of enduring OCO costs is an important first step to any future effort to transition enduring OCO costs to the base budget  In the context of such an effort, the Department would consider developing and reporting formal estimates of those costs  However, until there is sufficient relief from the budgetary caps established in the Budget Control Act of 2011, the Department will need OCO to finance counterterrorism operations, in particular [OFS] and [OIR] " In an October 2018 report, the Congressional Budget Office estimated OCO funding for DOD enduring activities—that is, those that would probably continue in the absence of overseas conflicts—totaled more than $50 billion a year (in 2019 dollars) from 2006 to 2018—and are projected to total about $47 billion a year starting in FY2020  This figure appears to be consistent with projections published by DOD  According to the department's FY2019 budget documents, DOD projected $53 billion for "OCO to Base" in FY2020 and $45 8 billion for "OCO to Base" for FY2021 through FY2023  Some analysts have concluded: Uncertainty created by current reliance on OCO, particularly to fund base budget needs, could be detrimental to national security on three levels: (a) by undermining budget controls and contributing thereby to larger deficits, (b) by generating insecurity in the defense workforce and in defense suppliers, and (c) by creating long-term uncertainty in defense planning  The alternative, transitioning longer-term OCO expenses to the base budget, could be achieved through a combination of increased budget caps, targeted cuts in inefficient Defense programs, and increased revenues  For example, a potential enduring activity in the OCO budget is the European Deterrence Initiative (EDI)  It was previously known as the European Reassurance Initiative (ERI), an effort that began in June 2014 to increase the number of U S  military personnel and prepositioned equipment in Central and Eastern Europe intended in part to reassure NATO allies after Russia's military seized Crimea  As some analysts have noted, "Because it is in the OCO part of the budget request, EDI funding does not include a projection for how much funding will be allocated in future years, which can create uncertainty in the minds of allies and adversaries alike about the U S  military's commitment to the program " On the other hand, some contend that it is precisely EDI's flexibility that allows the commander of European Command to quickly respond to changing security and posture needs in Europe, and ensure that monies intended for European deterrence will not be redirected to other DOD priorities  In its November 2018 report, the National Defense Strategy Commission quoted the late military strategist Bernard Brodie, who wrote "strategy wears a dollar sign " The panel concluded that relying on OCO funding to increase the defense budget "is not the way to provide adequate and stable resources" for the type of great power competition outlined in the Secretary of Defense's 2018 National Defense Strategy (NDS), which calls for the United States to bolster its competitive military advantage relative to threats posed by China and Russia: Because of budgetary constraints imposed by the BCA, lawmakers and the Department of Defense have increasingly relied upon the overseas contingency operations (OCO) fund to pay for warfighting operations in the greater Middle East, as well as other activities and initiatives  Yet this approach to resourcing has produced problems and distortions of its own  For one thing, the amount of money devoted to OCO since the BCA was enacted no longer corresponds to warfighting operations in the greater Middle East  Furthermore, such operations are no longer a top priority as articulated in the NDS  Finally, reorienting the military toward high-end competition and conflict will require new capabilities beyond the current program of record  OCO is not the way to provide adequate and stable resources for such a long-term endeavor, given its lack of predictability and the limitations on what OCO funds can be used to buy " Appendix A  Statutes, Guidance, and Regulations The designation of funding as emergency requirements or for Overseas Contingency Operations/Global War on Terrorism (OCO/GWOT) is governed by several statues as well as Office of Management and Budget (OMB) guidance and the Department of Defense (DOD) Financial Management Regulation (FMR)  The Balanced Budget and Emergency Deficit Control Act (BBEDCA) of 1985 BBEDCA, as amended, includes the statutory definitions of emergency and unanticipated as they relate to budget enforcement through sequestration  The act also allows for appropriations to be designated by Congress and the President as emergency requirements or for Overseas Contingency Operations/Global War on Terrorism   Such appropriations are effectively exempt from the statutory discretionary spending limits  Title 10, United States Code—Armed Forces 10 U S C  101—Definitions Section 101 provides definitions of terms applicable to Title 10  While it does not define overseas contingency operations, it does include a definition of a contingency operations   Administration and Internal Guidance In addition to statutory requirements, the DOD and the Department of State are subject to guidance on OCO spending from the Administration  In October 2006 , under the Bush Administration, then-Deputy Secretary of Defense Gordon England directed the services to break with long-standing DOD regulatory policies and expand their request for supplemental funding to reflect incremental costs related to the "longer war on terror " There was no specific definition for the "longer war on terror," now one of the core missions of the DOD  In February 2009, at the beginning of the Obama Administration, the Office of Management and Budget (OMB) issued updated budget guidance that required DOD to move some OCO costs back into the base budget  However, within six months of issuing the new criteria, officials waived restrictions related to pay and that would have prohibited end-strength growth  In a letter from OMB to the then-Under Secretary of Defense (Comptroller) Robert Hale, the agency characterized its 2009 criteria as "very successful" for delineating base and OCO spending but stated, "This update clarifies language, eliminates areas of confusion and provides guidance for areas previously unanticipated " GAO subsequently reported that the revised guidance significantly changed the criteria used to build the fiscal year 2010 OCO funding request by: specifying stricter definitions for repair and procurement of equipment; limiting applicability of OCO funds for RDT&E; excluding pay and allowances for end-strength above the level requested in the budget; excluding enduring family support initiatives; and excluding base realignment and closures (BRAC) amounts  OMB again revised its guidance in September 2010 following a number of GAO reports that had concluded DOD reporting on OCO costs was of "questionable reliability," due in part to imprecisely defined financial management regulations related to OCO spending  (as of September 9, 2010) Source: Letter from Steven M  Kosiak, Associate Director for Defense and Foreign Affairs, OMB, to Robert Hale, Under Secretary of Defense, Comptroller, "Revised War Funding Criteria," September 9, 2010  DOD Financial Management Regulations DOD incorporated the September 2010 OMB criteria for war costs into the Financial Management Regulation  Table 1 includes the general cost categories DOD uses in accounting for costs of contingency operations  Appendix B  Transfer Authorities, Special Purpose Accounts In addition to the supplemental appropriations and emergency or OCO/GWOT designation, the Department of Defense and the Department of State also have the authority to shift funds from one budget account to another in response to operational needs  For DOD, these transfers (sometimes called reprogramings ) are statutorily authorized by 10 U S C  2214—Transfer of funds: procedures and limitations  This authority allows the Secretary of Defense to reallocate funds for higher priority items, based on unforeseen military requirements, after receiving written approval from the four congressional defense committees  DOD may also reprogram funds within an account from one activity to another, as long as the general purpose for the use of those funds remains unchanged  Specific limits to transfer or reprogramming authorities have also been added to these general authorities through provisions in annual defense authorization and appropriation acts  The FY2019 defense appropriations bill sets the base budget transfer cap at $4 billion and the OCO transfer cap at $2 billion  The Department of State's OCO transfer authority has been provided in appropriations acts and has specifically authorized the Administration to transfer OCO funds only to other OCO funds within Title VIII SFOPS appropriations, not between OCO and base accounts  The transfer authority is capped, specified by account, and requires regular congressional notification procedures  Overseas Contingency Operations Transfer Fund (OCOTF) The OCOTF was established for DOD in FY1997 as a no year transfer account (meaning amounts are available until expended) in order to provide additional flexibility to meet operational requirements  Transfers from the OCOTF are processed using existing reprogramming procedures  A quarterly report is submitted to the congressional oversight committees, documenting all transfers from the OCOTF to DOD components base budget accounts  Beginning in FY2002, funds to support Southwest Asia, Kosovo, and Bosnia contingency requirements were appropriated directly to DOD components' Operation and Maintenance (O&M) and Military Personnel accounts rather than to the OCOTF for later disbursement  FY2014 was the last year the Administration requested a direct appropriation to the OCOTF  Contingency Operations Funded in the DOD Base Budget As first mandated by section 8091 of the Department of Defense Appropriations Act, 2008 ( P L  110-116 ), Congress has required DOD to provide separate annual budget justification documents detailing the costs of U S  armed forces' participation in all named contingency operations where the total cost of the operation exceeds $100 million or is staffed by more than 1,000 U S  military personnel  Funding for certain DOD contingency operations has been moved to the base budget request, and is no longer designated as emergency or OCO/GWOT requirements  This movement of funding from the OCO request to the base budget request typically occurs as the operational activities of an enduring contingency operation evolve over time and DOD determines that certain elements of the associated military operations have become stable enough to be planned, financed, and executed within the base budget  For example, funding for Operation Noble Eagle, which provides fighter aircraft on 24/7 alert at several U S  military bases, was moved from the GWOT request to the base budget request in 2005  Contingency operations and other activities funded wholly or in part through DOD's base budget have included: NATO Operations in the Balkans   The U S  Army and U S  Air Force provide support to the North Atlantic Treaty Organization-led operations in the Balkans region  Most U S  forces are deployed to Kosovo in support of the NATO-led Kosovo Force (KFOR)  A small number of U S  personnel are deployed to the NATO headquarters in Sarajevo in Bosnia and Herzegovina; Joint Task Force - Bravo   U S  forces support this task force, which operates from Soto Cano Air Base in Honduras and supports joint, combined, and interagency exercises and operations in Central America to counter the influence of transnational organized crime; carry out humanitarian assistance and disaster relief; and build military capacity with regional partners and allied nations to promote regional cooperation and security; Operation Juniper Shield  Previously known as Operation Enduring Freedom-Trans Sahara (OEF-TS), this operation supports efforts to defeat violent extremist organizations in East Africa  This operation also provides military-to-military engagement with partner African countries, as well as readiness for crisis response and evacuation of U S  military, diplomatic, and civilian personnel; Operation Noble Eagle   This operation funds the continuing efforts to defend the United States from airborne attacks, maintain the sovereignty of the United States airspace, and defend critical U S  facilities from potentially hostile threats or unconventional attacks; Operation Enduring Freedom- Horn of Africa   This operation was established to support efforts to defeat violent extremist organizations in East Africa; provide military-to-military engagement with partner African countries, as well as readiness for crisis response and evacuation of U S  military, diplomatic, and civilian personnel throughout East Africa; Operation Enduring Freedom- Caribbean and Central America   A U S  regional military operation initiated in 2008, under the operational control of Special Operations Command-South, this operation was established to focus on counterterrorism to support DOD's overall military objectives and the larger fight against terrorism  Operation Observant Compass   This operation was established to support the deployment of approximately 100 U S  military personnel assisting the Ugandan People's Defense Force and neighboring partner African countries in countering the Lord's Resistance Army operations  Operation Spartan Shield  This operation was established to support ongoing U S  Central Command missions  Other Congressionally Authorized Funds or Programs Through the OCO authorization and appropriation process, Congress has created numerous funds and programs that are designed to finance specific overseas contingency operations-related activities that do not fit into traditional budgetary accounts  Many of these funds and programs are supplied with amounts that are available until expended—however, authorization for the specified fund or program has an expiration date, thereby requiring further congressional action for reauthorization of affected funds or programs  Congress has also provided increased transfer authority to provide greater flexibility for U S  government activities in situations that are typically unpredictable  Examples of these types of congressionally authorized OCO programs or funds have included: Afghan istan Security Forces Fund (ASFF) and Counter-ISIS Train and Equip Fund (CTEF)   These funds were established to provide funding and support for the training, equipping, and expansion of selected military and security forces in support of U S  objectives; Counterterrorism Partnership s Fund   This fund was established to provide funding and support to partner nations engaged in counterterrorism and crisis response activities; Command er's Emergency Response Program  This program was established to support infrastructure improvements, such as road repair and construction and enable military commanders on the ground to respond to urgent humanitarian relief and reconstruction needs by undertaking activities that will immediately aid local populations and assist U S  forces in maintaining security gains; Joint Improvised Explosive Device (IEDs) Defeat Fund   This fund was established to coordinate and focus all counter-IED efforts, including ongoing research and development, throughout DOD  Due to the enduring nature of the threat, DOD began moving associated funding to the base budget in FY2010; Mine Resistant Ambush Protected Vehicle (MRAP) Fund   This fund was intended to expedite the procurement and deployment of MRAPs to Iraq and Afghanistan; European Deterrence Initiative (EDI)   Initially the European Reassurance Initiative (ERI), this effort was established to provide funding and support to NATO allies and partners to "reassure allies of the U S  commitment to their security and territorial integrity as members of the NATO Alliance, provide near-term flexibility and responsiveness to the evolving concerns of our allies and partners in Europe, especially Central and Eastern Europe, and help increase the capability and readiness of U S  allies and partners;" Global Security Contingency Fund   This fund was established to provide funding for the Department of State and the Department of Defense "to facilitate an interagency approach to confronting security challenges;" Complex Crise s Fund   This fund was established to provide funding through the State Department and USAID "to help prevent crises and promote recovery in post-conflict situations during unforeseen political, social, or economic challenges that threaten regional security;" Migration and Refugee Assistance Fund   This fund was established to provide funding to respond to refugee crises in Africa, the Near East, South and Central Asia, and Europe and Eurasia; and Ukraine Security Assistance Initiative   This initiative was established to provide assistance, including training, equipment, lethal weapons, of a defensive nature; logistics support; supplies and services; sustainment; and intelligence support to the military and national security forces of Ukraine  This is an update to a report originally co-authored by [author name scrubbed], former CRS Specialist in Defense Readiness and Infrastructure  It references research previously compiled by [author name scrubbed], former CRS Specialist in U S  Defense Policy and Budget; Christopher Mann, Analyst in Defense Policy and Trade; [author name scrubbed], Analyst in U S  Defense Acquisition Policy; [author name scrubbed], CRS Specialist on Congress and the Legislative Process; and [author name scrubbed], CRS Analyst in Public Finance  [author name scrubbed], Research Assistant, helped compile the graphics 

ground_truth: The Forest Service, an agency within USDA, performs a variety of tasks as steward of 193 million acres of public forests and grasslands. Its budget execution process for carrying out its mission includes (1) allotments, which are authorizations by an agency to incur obligations within a specified amount, and (2) unliquidated obligations, which represent budgetary resources that have been committed but not yet paid. Deobligation refers to an agency's cancellation or downward adjustments of previously incurred obligations, which may result in funds that may be available for reobligation. GAO was asked to review the Forest Service's internal controls over its budget execution processes. This report examines the extent to which the Forest Service properly designed control activities over (1) allotments of budgetary resources, its system for administrative control of funds, and any fund transfers between Forest Service appropriations; (2) reimbursables and related collections; and (3) review and certification of unliquidated obligations. GAO reviewed the Forest Service's policies, procedures, and other documentation and interviewed agency officials. In fiscal years 2015 and 2016, the Forest Service received discretionary no-year appropriations of $5.1 billion and $5.7 billion, respectively. It is critical for the Forest Service to manage its budgetary resources efficiently and effectively. While the Forest Service had processes over certain of its budget execution activities, GAO found the following internal control deficiencies: Budgetary resources . The purpose statute requires that amounts designated in appropriations acts for specific purposes are used as designated. The Forest Service did not have an adequate process and related control activities to reasonably assure that amounts were used as designated. In fiscal year 2017, GAO issued a legal opinion that the Forest Service had failed to comply with the purpose statute with regard to a $65 million line-item appropriation specifically provided for the purpose of acquiring aircraft for the next-generation airtanker fleet. Further, the Forest Service lacked a process and related control activities to reasonably assure that unobligated no-year appropriation balances from prior years were reviewed for their continuing need; did not have a properly designed system for administrative control of funds, which keeps obligations and expenditures from exceeding limits authorized by law; and had not properly designed control activities for fund transfers to its Wildland Fire Management program. These deficiencies increase the risk that the Forest Service may make budget requests in excess of its needs. Reimbursable agreements . To carry out its mission, the Forest Service enters into reimbursable agreements with agencies within the U.S. Department of Agriculture (USDA), other federal agencies, state and local government agencies, and nongovernment entities. The Forest Service (1) did not have adequately described processes and related control activities in manuals and handbooks for its reimbursable agreement processes and (2) lacked control activities related to segregating incompatible duties performed by line officers and program managers. For example, line officers may be responsible for initiating cost sharing agreements, modifying cost settlement packages, and changing or canceling the related receivable, which represent incompatible duties. As a result, programs and resources may not be protected from waste, fraud, and mismanagement. Unliquidated obligations . The Forest Service's processes and control activities over the review and certification of unliquidated obligations were not properly designed to reasonably assure the best use of funds and that unliquidated obligations would be efficiently and effectively deobligated and made available for other program needs. Further, the current process, as designed, was inconsistent with USDA and Forest Service policy. In addition, the Forest Service's manuals and handbooks, which provide directives for the areas that GAO reviewed, had not been reviewed by management in accordance with the Forest Service's 5-year review policy. Further, standard operating procedures and desk guides prepared by staff to supplement the manuals and handbooks were not issued as directives and therefore were not considered official policy. This increases the risk that control activities may not be consistently performed across the agency. GAO is making 11 recommendations to improve processes and related internal control activities over the management of the Forest Service's budgetary resources, reimbursable receivables and collections, and its process for reviewing unliquidated obligations. The Forest Service generally agreed with the report and stated that it has made significant progress to address the report findings.