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



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

Report 1: This report provides background information and issues for Congress on multiyear procurement (MYP) and block buy contracting (BBC), which are special contracting mechanisms that Congress permits the Department of Defense (DOD) to use for a limited number of defense acquisition programs  Compared to the standard or default approach of annual contracting, MYP and BBC have the potential for reducing weapon procurement costs by a few or several percent  Potential issues for Congress concerning MYP and BBC include whether to use MYP and BBC in the future more frequently, less frequently, or about as frequently as they are currently used; whether to create a permanent statute to govern the use of BBC, analogous to the permanent statute that governs the use of MYP; and whether the Coast Guard should begin making use of MYP and BBC  Congress's decisions on these issues could affect defense acquisition practices, defense funding requirements, and the defense industrial base  A contract that the Air Force has for the procurement of Evolved Expendable Launch Vehicle (EELV) Launch Services (ELS) has sometimes been referred to as a block buy, but it is not an example of block buy contracting as discussed in this report  The Air Force in this instance is using the term block buy to mean something different  This report does not discuss the ELS contract  (For additional discussion, see " Terminology Alert: Block Buy Contracting vs  Block Buys " below ) In discussing MYP, BBC, and incremental funding, it can be helpful to distinguish contracting mechanisms from funding approaches  The two are often mixed together in discussions of DOD acquisition, sometimes leading to confusion  Stated briefly Funding approaches are ways that Congress can appropriate funding for weapon procurement programs, so that DOD can then put them under contract  Examples of funding approaches include traditional full funding (the standard or default approach), incremental funding, and advance appropriations  Any of these funding approaches might make use of advance procurement (AP) funding  Contracting mechanisms are ways for DOD to contract for the procurement of weapons systems, once funding for those systems has been appropriated by Congress  Examples of contracting mechanisms include annual contracting (the standard or default DOD approach), MYP, and BBC  Contracting mechanisms can materially change the total procurement cost of a ship  The use of a particular funding approach in a defense acquisition program does not dictate the use of a particular contracting mechanism  Defense acquisition programs consequently can be implemented using various combinations of funding approaches and contracting mechanisms  Most DOD weapon acquisition programs use a combination of traditional full funding and annual contracting  A few programs, particularly certain Navy shipbuilding programs, use incremental funding as their funding approach  A limited number of DOD programs use MYP as their contracting approach, and to date three Navy shipbuilding programs have used BBC as their contracting approach  The situation is summarized in Table 1   This report focuses on the contracting approaches of MYP and BBC and how they compare to annual contracting  Other CRS reports discuss the funding approaches of traditional full funding, incremental funding, and advance appropriations  What is MYP, and how does it differ from annual contracting? MYP, also known as multiyear contracting, is an alternative to the standard or default DOD approach of annual contracting  Under annual contracting, DOD uses one or more contracts for each year's worth of procurement of a given kind of item  Under MYP, DOD instead uses a single contract for two to five years' worth of procurement of a given kind of item, without having to exercise a contract option for each year after the first year  DOD needs congressional approval for each use of MYP  To illustrate the basic difference between MYP and annual contracting, consider a hypothetical DOD program to procure 20 single-engine aircraft of a certain kind over the 5-year period FY2018-FY2022, at a rate of 4 aircraft per year: Under annual contracting , DOD would issue one or more contracts for each year's procurement of four aircraft  After Congress funds the procurement of the first four aircraft in FY2018, DOD would issue one or more contracts (or exercise a contract option) for those four aircraft  The next year, after Congress funds the procurement of the next four aircraft in FY2019, DOD would issue one or more contracts (or exercise a contract option) for those four aircraft, and so on  Under MYP , DOD would issue one contract covering all 20 aircraft to be procured during the 5-year period FY2018-FY2022  DOD would award this contract in FY2018, at the beginning of the five-year period, following congressional approval to use MYP for the program, and congressional appropriation of the FY2018 funding for the program  To continue the implementation of the contract over the next four years, DOD would request the FY2019 funding for the program as part of DOD's proposed FY2019 budget, the FY2020 funding as part of DOD's proposed FY2020 budget, and so on  How much can MYP save? Compared with estimated costs under annual contracting, estimated savings for programs being proposed for MYP have ranged from less than 5% to more than 15%, depending on the particulars of the program in question, with many estimates falling in the range of 5% to 10%  In practice, actual savings from using MYP rather than annual contracting can be difficult to observe or verify because of cost growth during the execution of the contract that was caused by developments independent of the use of MYP rather than annual contracting  A February 2012 briefing by the Cost Assessment and Program Evaluation (CAPE) office within the Office of the Secretary of Defense (OSD) states that "MYP savings analysis is difficult due to the lack of actual costs on the alternative acquisition path, i e , the path not taken " The briefing states that CAPE up to that point had assessed MYP savings for four aircraft procurement programs—F/A-18E/F strike fighters, H-60 helicopters, V-22 tilt-rotor aircraft, and CH-47F helicopters—and that CAPE's assessed savings ranged from 2% to 8%  A 2008 Government Accountability Office (GAO) report stated that DOD does not have a formal mechanism for tracking multiyear results against original expectations and makes few efforts to validate whether actual savings were achieved by multiyear procurement  It does not maintain comprehensive central records and historical information that could be used to enhance oversight and knowledge about multiyear performance to inform and improve future multiyear procurement (MYP) candidates  DOD and defense research centers officials said it is difficult to assess results because of the lack of historical information on multiyear contracts, comparable annual costs, and the dynamic acquisition environment  How does MYP potentially save money? Compared to annual contracting, using MYP can in principle reduce the cost of the weapons being procured in two primary ways: Contractor optimization of workforce and production facilities   An MYP contract gives the contractor (e g , an airplane manufacturer or shipbuilder) confidence that a multiyear stream of business of a known volume will very likely materialize  This confidence can permit the contractor to make investments in the firm's workforce and production facilities that are intended to optimize the facility for the production of the items being procured under the contract  Such investments can include payments for retaining or training workers, or for building, expanding, or modernizing production facilities  Under annual contracting, the manufacturer might not have enough confidence about its future stream of business to make these kinds of investments, or might be unable to convince its parent firm to finance them  E conomic order quan tity (EOQ) purchases of selected long-leadtime components  Under an MYP contract, DOD is permitted to bring forward selected key components of the items to be procured under the contract and to purchase the components in batch form during the first year or two of the contract  In the hypothetical example introduced earlier, using MYP could permit DOD to purchase, say, the 20 engines for the 20 aircraft in the first year or two of the 5-year contract  Procuring selected components in this manner under an MYP contract is called an economic order quantity (EOQ) purchase  EOQ purchases can reduce the procurement cost of the weapons being procured under the MYP contract by allowing the manufacturers of components to take maximum advantage of production economies of scale that are possible with batch orders  What gives the contractor confidence that the multiyear stream of business will materialize? At least two things give the contractor confidence that DOD will not terminate an MYP contract and that the multiyear stream of business consequently will materialize: For a program to qualify for MYP, DOD must certify, among other things, that the minimum need for the items to be purchased is expected to remain substantially unchanged during the contract in terms of production rate, procurement rate, and total quantities  Perhaps more important to the contractor, MYP contracts include a cancellation penalty intended to reimburse a contractor for costs that the contractor has incurred (i e , investments the contractor has made) in anticipation of the work covered under the MYP contract  The undesirability of paying a cancellation penalty acts as a disincentive for the government against canceling the contract  (And if the contract is canceled, the cancellation penalty helps to make the contractor whole ) Is there a permanent statute governing MYP contracting? There is a permanent statute governing MYP contracting—10 U S C  2306b  The statute was created by Section 909 of the FY1982 Department of Defense Authorization Act ( S  815 / P L  97-86 of December 1, 1981), revised and reorganized by Section 1022 of the Federal Acquisition Streamlining Act of 1994 ( S  1587 / P L  103-355 of October 13, 1994), and further amended on several occasions since  For the text of 10 U S C  2306b, see Appendix A   DOD's use of MYP contracting is further governed by DOD acquisition regulations  Under this statute, what criteria must a program meet to qualify for MYP? 10 U S C  2306b(a) states that to qualify for MYP, a program must meet several criteria, including the following: Significant savings  DOD must estimate that using an MYP contract would result in "significant savings" compared with using annual contracting  Realistic cost estimates   DOD's estimates of the cost of the MYP contract and the anticipated savings must be realistic  Stable need for the items  DOD must expect that its minimum need for the items will remain substantially unchanged during the contract in terms of production rate, procurement rate, and total quantities  Stable design for the items   The design for the items to be acquired must be stable, and the technical risks associated with the items must not be excessive  10 U S C  includes provisions requiring the Secretary of Defense or certain other DOD officials to find, determine, or certify that these and other statutory requirements for using MYP contracts have been met, and provisions requiring the heads of DOD agencies to provide written notifications of certain things to the congressional defense committees 30 days before awarding or initiating an MYP contract, or 10 days before terminating one  10 U S C  2306b also requires DOD MYP contracts to be fixed-price type contracts  What is meant by " significant savings"? The amount of savings required under 10 U S C  2306b to qualify for using an MYP contract has changed over time; the requirement was changed from "substantial savings" to "significant savings" by Section 811 of the FY2016 National Defense Authorization Act ( S  1356 / P L  114-92 of November 25, 2015)  The joint explanatory statement for the FY2016 National Defense Authorization Act states the following regarding Section 811: Amendment relating to multiyear contract authority for acquisition of property (sec  811) The House bill contained a provision (sec  806) that would strike the existing requirement that the head of an agency must determine that substantial savings would be achieved before entering into a multiyear contract  The Senate amendment contained no similar provision  The Senate recedes with an amendment that would require that significant savings would be achieved before entering into a multiyear contract  The conferees agree that the government should seek to maximize savings whenever it pursues multiyear procurement  However, the conferees also agree that significant savings (estimated to be greater than $250 0 million), and other benefits, may be achieved even if it does not equate to a minimum of 10 percent savings over the cost of an annual contract  The conferees expect a request for authority to enter into a multiyear contract will include (1) the estimated cost savings, (2) the minimum quantity needed, (3) confirmation that the design is stable and the technical risks are not excessive, and (4) any other rationale for entering into such a contract  In addition, 10 U S C  2306b states the following: If for any fiscal year a multiyear contract to be entered into under this section is authorized by law for a particular procurement program and that authorization is subject to certain conditions established by law (including a condition as to cost savings to be achieved under the multiyear contract in comparison to specified other contracts) and if it appears (after negotiations with contractors) that such savings cannot be achieved, but that significant savings could nevertheless be achieved through the use of a multiyear contract rather than specified other contracts, the President may submit to Congress a request for relief from the specified cost savings that must be achieved through multiyear contracting for that program  Any such request by the President shall include details about the request for a multiyear contract, including details about the negotiated contract terms and conditions  What is meant by "stable design"? The term "stable design" is generally understood to mean that the design for the items to be procured is not expected to change substantially during the period of the contract  Having a stable design is generally demonstrated by having already built at least a few items to that design (or in the case of a shipbuilding program, at least one ship to that design) and concluding, through testing and operation of those items, that the design does not require any substantial changes during the period of the contract  What happens if Congress does not provide the annual funding requested by DOD to continue the implementation of the contract? If Congress does not provide the funding requested by DOD to continue the implementation of an MYP contract, DOD would be required to renegotiate, suspend, or terminate the contract  Terminating the contract could require the government to pay a cancellation penalty to the contractor  Renegotiating or suspending the contract could also have a financial impact  What effect does using MYP have on flexibility for making procurement changes? A principal potential disadvantage of using MYP is that it can reduce Congress's and DOD's flexibility for making changes (especially reductions) in procurement programs in future years in response to changing strategic or budgetary circumstances, at least without incurring cancellation penalties  In general, the greater the portion of DOD's procurement account that is executed under MYP contracts, the greater the potential loss of flexibility  The use of MYP for executing some portion of the DOD procurement account means that if policymakers in future years decide to reduce procurement spending below previously planned levels, the spending reduction might fall more heavily on procurement programs that do not use MYP, which in turn might result in a less-than-optimally balanced DOD procurement effort  How does Congress approve the use of MYP? Congress approves the use of MYP on a case-by-case basis, typically in response to requests by DOD  Congressional approval for DOD MYP contracts with a value of more than $500 million must occur in two places: an annual DOD appropriations act and an act other than the annual DOD appropriations act  In annual DOD appropriations acts, the provision permitting the use of MYP for one or more defense acquisition programs is typically included in the title containing general provisions, which typically is Title VIII  As shown in Table B-2 , since FY2011, it has been Section 8010  An annual national defense authorization act (NDAA) is usually the act other than an appropriations act in which provisions granting authority for using MYP contracting on individual defense acquisition programs are included  Such provisions typically occur in Title I of the NDAA, the title covering procurement programs  Provisions in which Congress approves the use of MYP for a particular defense acquisition program may include specific conditions for that program in addition to the requirements and conditions of 10 U S C  2306b  How often is MYP used? MYP is used for a limited number of DOD acquisition programs  As shown in the Appendix B , annual DOD appropriations acts since FY1990 typically have approved the use of MYP for zero to a few DOD programs each year  An August 28, 2017, press report states the following: The Pentagon's portfolio of active multiyear procurement contracts is on track to taper from $10 7 billion in fiscal year 2017—or more than 8 percent of DOD procurement spending—to $1 2 billion by FY-19, according to data recently compiled by the Pentagon comptroller for lawmakers  However, there are potential new block-buy deals in the works, including several large Navy deals  According to the Multiyear Procurement Contracts Report for FY-17, which includes data current as of June 27, seven major defense acquisition programs are being purchased through multiyear procurement contracts, collectively obligating the U S  government to spend $16 billion across the five-year spending plan with $14 5 billion of the commitments lashed to FY-17 and FY-18  In an interview published on January 13, 2014, Sean Stackley, the Assistant Secretary of the Navy for Research, Development, and Acquisition (i e , the Navy's acquisition executive), stated the following: What the industrial base clamors for is stability, so they can plan, invest, train their work force  It gives them the ability in working with say, the Street [Wall Street], to better predict their own performance, then meet expectations in the same fashion we try to meet our expectations with the Hill  It's emblematic of stability that we've got more multiyear programs in the Department of the Navy than the rest of the Department of Defense combined  We've been able to harvest from that significant savings, and that has been key to solving some of our budget problems  It's allowed us in certain cases to put the savings right back into other programs tied to requirements  A February 2012 briefing by the Cost Assessment and Program Evaluation (CAPE) office within the Office of the Secretary of Defense (OSD) shows that the total dollar value of DOD MYP contracts has remained more or less stable between FY2000 and FY2012 at roughly $7 billion to $13 billion per year  The briefing shows that since the total size of DOD's procurement budget has increased during this period, the portion of DOD's total procurement budget accounted for by programs using MYP contracts has declined from about 17% in FY2000 to less than 8% in FY2012  The briefing also shows that the Navy makes more use of MYP contracts than does the Army or Air Force, and that the Air Force made very little use of MYP in FY2010-FY2012  A 2008 Government Accountability Office (GAO) report stated the following: Although DOD had been entering into multiyear contracts on a limited basis prior to the 1980s, the Department of Defense Authorization Act, [for fiscal year] 1982, codified the authority for DOD to procure on a multiyear basis major weapon systems that meet certain criteria  Since that time, DOD has annually submitted various weapon systems as multiyear procurement candidates for congressional authorization  Over the past 25 years, Congress has authorized the use of multiyear procurement for approximately 140 acquisition programs, including some systems approved more than once  What is BBC, and how does it compare to MYP? BBC is similar to MYP in that it permits DOD to use a single contract for more than one year's worth of procurement of a given kind of item without having to exercise a contract option for each year after the first year  BBC is also similar to MYP in that DOD needs congressional approval for each use of BBC  BBC differs from MYP in the following ways: There is no permanent statute governing the use of BBC  There is no requirement that BBC be approved in both a DOD appropriations act and an act other than a DOD appropriations act  Programs being considered for BBC do not need to meet any legal criteria to qualify for BBC because there is no permanent statute governing the use of BBC that establishes such criteria  A BBC contract can cover more than five years of planned procurements  The BBC contracts that were used by the Navy for procuring Littoral Combat Ships (LCSs), for example, covered a period of seven years (FY2010-FY2016)  Economic order quantity (EOQ) authority does not come automatically as part of BBC authority because there is no permanent statute governing the use of BBC that includes EOQ authority as an automatic feature  To provide EOQ authority as part of a BBC contract, the provision granting authority for using BBC in a program may need to state explicitly that the authority to use BBC includes the authority to use EOQ  BBC contracts are less likely to include cancellation penalties  Given the one key similarity between BBC and MYP (the use of a single contract for more than one year's worth of procurement), and the various differences between BBC and MYP, BBC might be thought of as a less formal stepchild of MYP  When and why was BBC invented? BBC was invented by Section 121(b) of the FY1998 National Defense Authorization Act ( H R  1119 / P L  105-85 of November 18, 1997), which granted the Navy the authority to use a single contract for the procurement of the first four Virginia (SSN-774) class attack submarines  The 4 boats were scheduled to be procured during the 5-year period FY1998-FY2002 in annual quantities of 1-1-0-1-1  Congress provided the authority granted in Section 121(b) at least in part to reduce the combined procurement cost of the four submarines  Using MYP was not an option for the Virginia-class program at that time because the Navy had not even begun, let alone finished, construction of the first Virginia-class submarine, and consequently could not demonstrate that it had a stable design for the program  When Section 121(b) was enacted, there was no name for the contracting authority it provided  The term block buy contracting came into use later, when observers needed a term to refer to the kind of contracting authority that Congress authorized in Section 121(b)  As discussed in the next section, this can cause confusion, because the term block buy was already being used in discussions of DOD acquisition to refer to something else  What's the difference between block buy cont r acting and block buys? In discussions of defense procurement, the term "block buy" by itself (without "contracting" at the end) is sometimes used to refer to something quite different from block buy contracting—namely, the simple act of funding the procurement of more than one copy of an item in a single year, particularly when no more than one item of that kind might normally be funded in a single year  For example, when Congress funded the procurement of two aircraft carriers in FY1983, and another two in FY1988, these acts were each referred to as block buys, because aircraft carriers are normally procured one at a time, several years apart from one another  This alternate meaning of the term block buy predates by many years the emergence of the term block buy contracting  The term block buy is still used in this alternate manner, which can lead to confusion in discussions of defense procurement  For example, for FY2017, the Air Force requested funding for procuring five Evolved Expendable Launch Vehicles (EELVs) for its EELV Launch Services (ELS) program  At the same time, Navy officials sometimes refer to the use of block buy contracts for the first four Virginia-class submarines, and in the LCS program, as block buys, when they might be more specifically referred to as instances of block buy contract ing   How much can BBC save, compared with MYP? BBC can reduce the unit procurement costs of ships by amounts less than or perhaps comparable to those of MYP, if the authority granted for using BBC explicitly includes authority for making economic order quantity (EOQ) purchases of components  If the authority granted for using BBC does not explicitly include authority for making EOQ purchases, then the savings from BBC will be less  Potential savings under BBC might also be less than those under MYP if the BBC contract does not include a cancellation penalty, or includes one that is more limited than typically found in an MYP contract, because this might give the contractor less confidence than would be the case under an MYP contract that the future stream of business will materialize as planned, which in turn might reduce the amount of money the contractor invests to optimize its workforce and production facilities for producing the items to be procured under the contract  How frequently has BBC been used? Since its use at the start of the Virginia-class program, BBC has been used very rarely  The Navy did not use it again in a shipbuilding program until December 2010, when it awarded two block buy contracts, each covering 10 LCSs to be procured over the six-year period FY2010-FY2015, to the two LCS builders  (Each contract was later amended to include an 11 th ship in FY2016, making for a total of 22 ships under the two contracts ) A third example is the John Lewis (TAO-205) class oiler program, in which the Navy is using a block buy contract to procure the first six ships in the program  A fourth example, arguably, is the Air Force's KC-46 aerial refueling tanker program, which is employing a fixed price incentive fee (FPIF) development contract that includes a "back end" commitment to procure certain minimum numbers of KC-46s in certain fiscal years  When might BBC be suitable as an alternative to MYP? BBC might be particularly suitable as an alternative to MYP in cases where using a multiyear contract can reduce costs, but the program in question cannot meet all the statutory criteria needed to qualify for MYP  As shown in the case of the first four Virginia-class boats, this can occur at or near the start of a procurement program, when design stability has not been demonstrated through the production of at least a few of the items to be procured (or, for a shipbuilding program, at least one ship)  What i s the difference between an MYP or block buy contract and a contract with options? The military services sometimes use contracts with options to procure multiple copies of an item that are procured over a period of several years  The Navy, for example, used a contract with options to procure Lewis and Clark (TAKE-1) class dry cargo ships that were procured over a period of several years  A contract with options can be viewed as somewhat similar to an MYP or block buy contract in that a single contract is used to procure several years' worth of procurement of a given kind of item  There is, however, a key difference between an MYP or block buy contract and a contract with options: In a contract with options, the service is under no obligation to exercise any of the options, and a service can choose to not exercise an option without having to make a penalty payment to the contractor  In contrast, in an MYP or block buy contract, the service is under an obligation to continue implementing the contract beyond the first year, provided that Congress appropriates the necessary funds  If the service chooses to terminate an MYP or block buy contract, and does so as a termination for government convenience rather than as a termination for contractor default, then the contractor can, under the contract's termination for convenience clause, seek a payment from the government for cost incurred for work that is complete or in process at the time of termination, and may include the cost of some of the investments made in anticipation of the MYP or block buy contract being fully implemented  The contractor can do this even if the MYP or block buy contract does not elsewhere include a provision for a cancellation penalty  As a result of this key difference, although a contract with options looks like a multiyear contract, it operates more like a series of annual contracts, and it cannot achieve the kinds of savings that are possible under MYP and BBC  Potential issues for Congress concerning MYP and BBC include whether to use MYP and BBC in the future more frequently, less frequently, or about as frequently as they are currently used; and whether to create a permanent statute to govern the use of BBC, analogous to the permanent statute that governs the use of MYP  Should MYP and BBC in the future be used more frequently, less frequently, or about as frequently as they are currently used? Supporters of using MYP and BBC more frequently in the future might argue the following: Since MYP and BBC can reduce procurement costs, making greater use of MYP and BBC can help DOD get more value out of its available procurement funding  This can be particularly important if DOD's budget in real (i e , inflation-adjusted) terms remains flat or declines in coming years, as many observers anticipate  The risks of using MYP have been reduced by Section 811 of the FY2008 National Defense Authorization Act ( H R  4986 / P L  110-181 of January 28, 2008), which amended 10 U S C  2306b to strengthen the process for ensuring that programs proposed for MYP meet certain criteria (see " Permanent Statute Governing MYP ")  Since the value of MYP contracts equated to less than 8% of DOD's procurement budget in FY2012, compared to about 17% of DOD's procurement budget in FY2000, MYP likely could be used more frequently without exceeding past experience regarding the share of DOD's procurement budget accounted for by MYP contracts  Supporters of using MYP and BBC less frequently in the future, or at least no more frequently than now, might argue the following: Using MYP and BBC more frequently would further reduce Congress's and DOD's flexibility for making changes in DOD procurement programs in future years in response to changing strategic or budgetary circumstances  The risks of reducing flexibility in this regard are increased now because of uncertainties in the current strategic environment and because efforts to reduce federal budget deficits could include reducing DOD spending, which could lead to a reassessment of U S  defense strategy and associated DOD acquisition programs  Since actual savings from using MYP and BBC rather than annual contracting can be difficult to observe or verify, it is not clear that the financial benefits of using MYP or BBC more frequently in the future would be worth the resulting further reduction in Congress's and DOD's flexibility for making changes in procurement programs in future years in response to changing strategic or budgetary circumstances  Should Congress create a permanent statute to govern the use of BBC, analogous to the permanent statute (10 U S C  2306b) that governs the use of MYP? Supporters of creating a permanent statute to govern the use of BBC might argue the following: Such a statute could encourage greater use of BBC, and thereby increase savings in DOD procurement programs by giving BBC contracting a formal legal standing and by establishing a clear process for DOD program managers to use in assessing whether their programs might be considered suitable for BBC  Such a statute could make BBC more advantageous by including a provision that automatically grants EOQ authority to programs using BBC, as well as provisions establishing qualifying criteria and other conditions intended to reduce the risks of using BBC  Opponents of creating a permanent statute to govern the use of BBC might argue the following: A key advantage of BBC is that it is not governed by a permanent statute  The lack of such a statute gives DOD and Congress full flexibility in determining when and how to use BBC for programs that may not qualify for MYP, but for which a multiyear contract of some kind might produce substantial savings  Such a statute could encourage DOD program managers to pursue their programs using BBC rather than MYP  This could reduce discipline in DOD multiyear contracting if the qualifying criteria in the BBC statute are less demanding than the qualifying criteria in 10 U S C  2306b  Should the Coast Guard should begin making use of MYP and BBC? Although the Coast Guard is part of the Department of Homeland Security (DHS), the Coast Guard is a military service and a branch of the U S  Armed Forces at all times (14 U S C  1), and 10 U S C  2306b provides authority for using MYP not only to DOD, but also to the Coast Guard (and the National Aeronautics and Space Administration as well)  In addition, Section 311 of the Frank LoBiondo Coast Guard Authorization Act of 2018 ( S  140 / P L  115-282 of December 4, 2018) provides permanent authority for the Coast Guard to use block buy contracting with EOQ purchases of components in its major acquisition programs  The authority is now codified at 14 U S C  1137  As discussed earlier in this report, the Navy in recent years has made extensive use of MYP and BBC in its ship and aircraft acquisition programs, reducing the collective costs of those programs, the Navy estimates, by billions of dollars  The Coast Guard, like the Navy, procures ships and aircraft  In contrast to the Navy, however, the Coast Guard has never used MYP or BBC in its ship or aircraft acquisition programs  Instead, the Coast has tended to use contracts with options  As discussed earlier, although a contract with options looks like a multiyear contract, it operates more like a series of annual contracts, and it cannot achieve the kinds of savings that are possible under MYP and BBC  CRS in recent years has testified and reported on the possibility of using BBC or MYP in Coast Guard ship acquisition programs, particularly the Coast Guard's 25-ship Offshore Patrol Cutter (OPC) program and the Coast Guard's three-ship polar icebreaker program  CRS estimates that using multiyear contracting rather than contracts with options for the entire 25-ship OPC program could reduce the cost of the OPC program by about $1 billion  The OPC program is the Coast Guard's top-priority acquisition program, and it represents a once-in-a-generation opportunity to reduce the acquisition cost of a Coast Guard acquisition program by an estimated $1 billion  CRS also estimates that using BBC for a three-ship polar icebreaker program could reduce the cost of that program by upwards of $150 million  The Coast Guard has expressed some interest in using BBC in the polar icebreaker program, but its baseline acquisition strategy for that program, like its current acquisition strategy for the OPC program, is to use a contract with options  As part of its FY2020 budget submission, the Department of Defense is proposing continued funding for implementing several MYP contracts initiated in fiscal years prior to FY2020, but it has not highlighted any requests for authority for new MYP or block buy contracts for major acquisition programs that would begin in FY2020  Appendix A  Text of 10 U S C  2306b The text of 10 U S C  2306b as of April 29, 2019, is as follows: §2306b  Multiyear contracts: acquisition of property (a) In General -To the extent that funds are otherwise available for obligation, the head of an agency may enter into multiyear contracts for the purchase of property whenever the head of that agency finds each of the following: (1) That the use of such a contract will result in significant savings of the total anticipated costs of carrying out the program through annual contracts  (2) That the minimum need for the property to be purchased is expected to remain substantially unchanged during the contemplated contract period in terms of production rate, procurement rate, and total quantities  (3) That there is a reasonable expectation that throughout the contemplated contract period the head of the agency will request funding for the contract at the level required to avoid contract cancellation  (4) That there is a stable design for the property to be acquired and that the technical risks associated with such property are not excessive  (5) That the estimates of both the cost of the contract and the anticipated cost avoidance through the use of a multiyear contract are realistic  (6) In the case of a purchase by the Department of Defense, that the use of such a contract will promote the national security of the United States  (7) In the case of a contract in an amount equal to or greater than $500,000,000, that the conditions required by subparagraphs (C) through (F) of subsection (i)(3) will be met, in accordance with the Secretary's certification and determination under such subsection, by such contract  (b) Regulations -(1) Each official named in paragraph (2) shall prescribe acquisition regulations for the agency or agencies under the jurisdiction of such official to promote the use of multiyear contracting as authorized by subsection (a) in a manner that will allow the most efficient use of multiyear contracting  (2)(A) The Secretary of Defense shall prescribe the regulations applicable to the Department of Defense  (B) The Secretary of Homeland Security shall prescribe the regulations applicable to the Coast Guard, except that the regulations prescribed by the Secretary of Defense shall apply to the Coast Guard when it is operating as a service in the Navy  (C) The Administrator of the National Aeronautics and Space Administration shall prescribe the regulations applicable to the National Aeronautics and Space Administration  (c) Contract Cancellations -The regulations may provide for cancellation provisions in multiyear contracts to the extent that such provisions are necessary and in the best interests of the United States  The cancellation provisions may include consideration of both recurring and nonrecurring costs of the contractor associated with the production of the items to be delivered under the contract  (d) Participation by Subcontractors, Vendors, and Suppliers -In order to broaden the defense industrial base, the regulations shall provide that, to the extent practicable- (1) multiyear contracting under subsection (a) shall be used in such a manner as to seek, retain, and promote the use under such contracts of companies that are subcontractors, vendors, or suppliers; and (2) upon accrual of any payment or other benefit under such a multiyear contract to any subcontractor, vendor, or supplier company participating in such contract, such payment or benefit shall be delivered to such company in the most expeditious manner practicable  (e) Protection of Existing Authority -The regulations shall provide that, to the extent practicable, the administration of this section, and of the regulations prescribed under this section, shall not be carried out in a manner to preclude or curtail the existing ability of an agency- (1) to provide for competition in the production of items to be delivered under such a contract; or (2) to provide for termination of a prime contract the performance of which is deficient with respect to cost, quality, or schedule  (f) Cancellation or Termination for Insufficient Funding -In the event funds are not made available for the continuation of a contract made under this section into a subsequent fiscal year, the contract shall be canceled or terminated  The costs of cancellation or termination may be paid from- (1) appropriations originally available for the performance of the contract concerned; (2) appropriations currently available for procurement of the type of property concerned, and not otherwise obligated; or (3) funds appropriated for those payments  (g) Contract Cancellation Ceilings Exceeding $100,000,000 -(1) Before any contract described in subsection (a) that contains a clause setting forth a cancellation ceiling in excess of $100,000,000 may be awarded, the head of the agency concerned shall give written notification of the proposed contract and of the proposed cancellation ceiling for that contract to the congressional defense committees, and such contract may not then be awarded until the end of a period of 30 days beginning on the date of such notification  (2) In the case of a contract described in subsection (a) with a cancellation ceiling described in paragraph (1), if the budget for the contract does not include proposed funding for the costs of contract cancellation up to the cancellation ceiling established in the contract, the head of the agency concerned shall, as part of the certification required by subsection (i)(1)(A),1 give written notification to the congressional defense committees of- (A) the cancellation ceiling amounts planned for each program year in the proposed multiyear procurement contract, together with the reasons for the amounts planned; (B) the extent to which costs of contract cancellation are not included in the budget for the contract; and (C) a financial risk assessment of not including budgeting for costs of contract cancellation  (h) Defense Acquisitions of Weapon Systems -In the case of the Department of Defense, the authority under subsection (a) includes authority to enter into the following multiyear contracts in accordance with this section: (1) A multiyear contract for the purchase of a weapon system, items and services associated with a weapon system, and logistics support for a weapon system  (2) A multiyear contract for advance procurement of components, parts, and materials necessary to the manufacture of a weapon system, including a multiyear contract for such advance procurement that is entered into in order to achieve economic-lot purchases and more efficient production rates  (i) Defense Acquisitions Specifically Authorized by Law -(1) In the case of the Department of Defense, a multiyear contract in an amount equal to or greater than $500,000,000 may not be entered into under this section unless the contract is specifically authorized by law in an Act other than an appropriations Act  (2) In submitting a request for a specific authorization by law to carry out a defense acquisition program using multiyear contract authority under this section, the Secretary of Defense shall include in the request the following: (A) A report containing preliminary findings of the agency head required in paragraphs (1) through (6) of subsection (a), together with the basis for such findings  (B) Confirmation that the preliminary findings of the agency head under subparagraph (A) were supported by a preliminary cost analysis performed by the Director of Cost Assessment and Program Evaluation  (3) A multiyear contract may not be entered into under this section for a defense acquisition program that has been specifically authorized by law to be carried out using multiyear contract authority unless the Secretary of Defense certifies in writing, not later than 30 days before entry into the contract, that each of the following conditions is satisfied: (A) The Secretary has determined that each of the requirements in paragraphs (1) through (6) of subsection (a) will be met by such contract and has provided the basis for such determination to the congressional defense committees  (B) The Secretary's determination under subparagraph (A) was made after completion of a cost analysis conducted on the basis of section 2334(e)(2) 1 of this title, and the analysis supports the determination  (C) The system being acquired pursuant to such contract has not been determined to have experienced cost growth in excess of the critical cost growth threshold pursuant to section 2433(d) of this title within 5 years prior to the date the Secretary anticipates such contract (or a contract for advance procurement entered into consistent with the authorization for such contract) will be awarded  (D) A sufficient number of end items of the system being acquired under such contract have been delivered at or within the most current estimates of the program acquisition unit cost or procurement unit cost for such system to determine that current estimates of such unit costs are realistic  (E) During the fiscal year in which such contract is to be awarded, sufficient funds will be available to perform the contract in such fiscal year, and the future-years defense program for such fiscal year will include the funding required to execute the program without cancellation  (F) The contract is a fixed price type contract  (G) The proposed multiyear contract provides for production at not less than minimum economic rates given the existing tooling and facilities  (4) If for any fiscal year a multiyear contract to be entered into under this section is authorized by law for a particular procurement program and that authorization is subject to certain conditions established by law (including a condition as to cost savings to be achieved under the multiyear contract in comparison to specified other contracts) and if it appears (after negotiations with contractors) that such savings cannot be achieved, but that significant savings could nevertheless be achieved through the use of a multiyear contract rather than specified other contracts, the President may submit to Congress a request for relief from the specified cost savings that must be achieved through multiyear contracting for that program  Any such request by the President shall include details about the request for a multiyear contract, including details about the negotiated contract terms and conditions  (5)(A) The Secretary may obligate funds for procurement of an end item under a multiyear contract for the purchase of property only for procurement of a complete and usable end item  (B) The Secretary may obligate funds appropriated for any fiscal year for advance procurement under a contract for the purchase of property only for the procurement of those long-lead items necessary in order to meet a planned delivery schedule for complete major end items that are programmed under the contract to be acquired with funds appropriated for a subsequent fiscal year (including an economic order quantity of such long-lead items when authorized by law)  (6) The Secretary may make the certification under paragraph (3) notwithstanding the fact that one or more of the conditions of such certification are not met, if the Secretary determines that, due to exceptional circumstances, proceeding with a multiyear contract under this section is in the best interest of the Department of Defense and the Secretary provides the basis for such determination with the certification  (7) The Secretary may not delegate the authority to make the certification under paragraph (3) or the determination under paragraph (6) to an official below the level of Under Secretary of Defense for Acquisition, Technology, and Logistics  (j) Defense Contract Options for Varying Quantities -The Secretary of Defense may instruct the Secretary of the military department concerned to incorporate into a proposed multiyear contract negotiated priced options for varying the quantities of end items to be procured over the period of the contract  (k) Multiyear Contract Defined -For the purposes of this section, a multiyear contract is a contract for the purchase of property for more than one, but not more than five, program years  Such a contract may provide that performance under the contract during the second and subsequent years of the contract is contingent upon the appropriation of funds and (if it does so provide) may provide for a cancellation payment to be made to the contractor if such appropriations are not made  (l) Various Additional Requirements With Respect to Multiyear Defense Contracts -(1)(A) The head of an agency may not initiate a contract described in subparagraph (B) unless the congressional defense committees are notified of the proposed contract at least 30 days in advance of the award of the proposed contract  (B) Subparagraph (A) applies to the following contracts: (i) A multiyear contract- (I) that employs economic order quantity procurement in excess of $20,000,000 in any one year of the contract; or (II) that includes an unfunded contingent liability in excess of $20,000,000  (ii) Any contract for advance procurement leading to a multiyear contract that employs economic order quantity procurement in excess of $20,000,000 in any one year  (2) The head of an agency may not initiate a multiyear contract for which the economic order quantity advance procurement is not funded at least to the limits of the Government's liability  (3) The head of an agency may not initiate a multiyear procurement contract for any system (or component thereof) if the value of the multiyear contract would exceed $500,000,000 unless authority for the contract is specifically provided in an appropriations Act  (4) Each report required by paragraph (5) with respect to a contract (or contract extension) shall contain the following: (A) The amount of total obligational authority under the contract (or contract extension) and the percentage that such amount represents of- (i) the applicable procurement account; and (ii) the agency procurement total  (B) The amount of total obligational authority under all multiyear procurements of the agency concerned (determined without regard to the amount of the multiyear contract (or contract extension)) under multiyear contracts in effect at the time the report is submitted and the percentage that such amount represents of- (i) the applicable procurement account; and (ii) the agency procurement total  (C) The amount equal to the sum of the amounts under subparagraphs (A) and (B), and the percentage that such amount represents of- (i) the applicable procurement account; and (ii) the agency procurement total  (D) The amount of total obligational authority under all Department of Defense multiyear procurements (determined without regard to the amount of the multiyear contract (or contract extension)), including any multiyear contract (or contract extension) that has been authorized by the Congress but not yet entered into, and the percentage that such amount represents of the procurement accounts of the Department of Defense treated in the aggregate  (5) The head of an agency may not enter into a multiyear contract (or extend an existing multiyear contract), the value of which would exceed $500,000,000 (when entered into or when extended, as the case may be), until the Secretary of Defense submits to the congressional defense committees a report containing the information described in paragraph (4) with respect to the contract (or contract extension)  (6) The head of an agency may not terminate a multiyear procurement contract until 10 days after the date on which notice of the proposed termination is provided to the congressional defense committees  (7) The execution of multiyear contracting authority shall require the use of a present value analysis to determine lowest cost compared to an annual procurement  (8) This subsection does not apply to the National Aeronautics and Space Administration or to the Coast Guard  (9) In this subsection: (A) The term "applicable procurement account" means, with respect to a multiyear procurement contract (or contract extension), the appropriation account from which payments to execute the contract will be made  (B) The term "agency procurement total" means the procurement accounts of the agency entering into a multiyear procurement contract (or contract extension) treated in the aggregate  (m) Increased Funding and Reprogramming Requests -Any request for increased funding for the procurement of a major system under a multiyear contract authorized under this section shall be accompanied by an explanation of how the request for increased funding affects the determinations made by the Secretary under subsection (i)  Appendix B  Programs Approved for MYP in Annual DOD Appropriations Acts Since FY1990 This appendix presents, in two tables, programs approved for MYP in annual DOD appropriations acts since FY1990  Table B-1 covers FY2011 to the present, and Table B-2 covers FY1990 through FY2010 


Report 2: Title IV of the Higher Education Act (HEA; P L  89-329), as amended, authorizes programs that provide financial assistance to students to attend certain institutions of higher education (IHEs)  In academic year (AY) 2016-2017, 6,760 institutions were classified as Title IV eligible IHEs  Of these IHEs eligible to participate in Title IV programs, approximately 29 4% were public institutions, 27 8% were private nonprofit institutions, and 42 9% were proprietary (or private, for-profit) institutions  It is estimated that $122 5 billion was made available to students through Title IV federal student aid in FY2017  To be able to receive Title IV assistance, students must attend an institution that is eligible to participate in the Title IV programs  IHEs must meet a variety of requirements to participate in the Title IV programs  First, an IHE must meet basic eligibility criteria, including offering at least one eligible program of education  In addition, an IHE must satisfy the program integrity triad, under which it must be legally authorized to provide a postsecondary education in the state in which it is located; accredited or preaccredited by an agency recognized by the Department of Education (ED) for such purposes, and certified by ED as eligible to participate in Title IV programs  The state authorization and accreditation components of the triad were developed independently to address the issues of quality assurance and consumer protection, and the federal government (ED specifically) generally relies on states and accrediting agencies to determine standards of educational program quality  The federal government's only direct role in determining Title IV eligibility is through the process of certification of eligibility and ensuring IHEs meet some additional Title IV requirements  Certification, as a component of the program integrity triad, focuses on an institution's fiscal responsibility and administrative capacity to administer Title IV funds  An IHE must fulfill a variety of other related requirements, including those that relate to institutional recruiting practices, student policies and procedures, and Title IV program administration  Finally, additional criteria may apply to an institution depending on its control or the type of educational programs it offers  For instance, proprietary institutions must derive at least 10% of their revenues from non-Title IV funds (also known as the 90/10 rule)  Failure to fulfill some of these requirements does not necessarily end an IHE's participation in the Title IV programs, but may lead to additional oversight from ED and/or restrictions placed an IHE's Title IV participation  This report provides a general overview of HEA provisions that affect a postsecondary institution's eligibility for participation in Title IV student aid programs  It first describes general eligibility criteria at both the institutional and programmatic level and then, in more detail, the program integrity triad  Next, it discusses several issues that are closely related to institutional eligibility: Program Participation Agreements, campus safety policies and crime reporting required under the Clery Act, the return of Title IV funds, and distance education  To be eligible to participate in HEA Title IV student aid programs, institutions must meet several criteria  These criteria include requirements related to programs offered by the institutions, student enrollment, institutional operations, and the length of academic programs  This section discusses the definition of an eligible IHE for the purposes of Title IV participation and program eligibility requirements  The HEA contains two definitions of institutions of higher education  Section 101 provides a general definition of IHE that applies to institutional eligibility for participation in HEA programs other than Title IV programs  The Section 102 definition of IHE is used only to determine institutional eligibility to participate in HEA Title IV programs  Section 101 of the HEA provides a general definition of IHE  This definition applies to institutional participation in non-Title IV HEA programs  Section 101 IHEs can be public or private nonprofit educational institutions  Section 101 specifies criteria both public and private nonprofit educational institutions must meet to be considered IHEs  Neither the HEA nor regulations specifically define a public institution of higher education  However, in general, public institutions can be described as those whose educational programs are operated by states or other government entities and are primarily supported by public funds  Regulations define a nonprofit IHE as one that (1) is owned and operated by a nonprofit corporation or association, with no part of the corporation's or association's net earnings benefiting a private shareholder or individual, (2) is determined by the Internal Revenue Service to be a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRC), and (3) is legally authorized to operate as a nonprofit organization by each state in which it is physically located  To be considered a Section 101 IHE, public and private nonprofit educational institutions must admit as regular students only individuals with a high school diploma or its equivalent, individuals beyond the age of compulsory school attendance, or individuals who are dually or concurrently enrolled in both the institution and in a secondary school; be legally authorized to provide a postsecondary education within the state in which they are located; offer a bachelor's degree, provide a program of at least two-years that is acceptable for full credit toward a bachelor's degree, award a degree that is accepted for admission to a graduate or professional program, or provide a training program of at least a one-year that prepares students for gainful employment in a recognized occupation; and be accredited or preaccredited by an accrediting agency recognized by ED to grant accreditation or preaccreditation status Section 102 of the HEA defines IHE only for the purposes of Title IV participation  The Section 102 definition includes all institutions included in the Section 101 definition (i e , public and private nonprofit IHEs) and also includes proprietary institutions, postsecondary vocational institutions, and foreign institutions that have been approved by ED  Section 102 specifies that proprietary and postsecondary vocational institutions must meet many of the same Section 101 requirements that are applicable to public and private nonprofit institutions  In addition, Section 102 specifies other criteria that all types of educational institutions must meet to be considered Title IV eligible IHEs  HEA Section 102 specifies that a proprietary IHEs is an institution that is neither a public nor a private nonprofit institution  In addition to the basic Title IV eligibility criteria that all IHEs must meet (e g , state authorization, accreditation by an ED-recognized accrediting agency), proprietary IHEs must meet additional criteria to be considered Title IV eligible  Specifically, a proprietary IHE must (1) provide an eligible program of training "to prepare students for gainful employment in a recognized occupation" or (2) provide a program leading to a baccalaureate degree in liberal arts that has been continuously accredited by a regional accrediting agency since October 1, 2007, and have provided the program continuously since January 1, 2009  Additionally, it must have been legally authorized to provide (and have continuously been providing) the same or a substantially similar educational program for at least two consecutive years  HEA Section 102 defines a postsecondary vocational institution as a public or private nonprofit institution that provides an eligible program of training "to prepare students for gainful employment in a recognized occupation," and has been legally authorized to provide (and has continuously been providing) the same or a substantially similar educational program for at least two consecutive years  It is possible for a public or private nonprofit IHE that offers a degree program (e g , an associate's or bachelor's degree) to also qualify as a postsecondary vocational institution by offering programs that are less than one academic year and that lead to a nondegree recognized credential such as a certificate  Institutional participation in Title IV student aid programs allows students from the United States to borrow through the federal Direct Loan program to attend postsecondary institutions located outside of the United States  In general, a foreign institution is eligible to participate in the Direct Loan program if it is comparable to an eligible IHE (as defined in HEA Section 101) within the United States, is a public or private nonprofit institution, and has been approved by ED  Foreign graduate medical schools, veterinary schools, and nursing schools are also eligible to participate in Title IV student aid programs, but must meet additional requirements  Freestanding foreign graduate medical schools, veterinary schools, and nursing schools may be proprietary institutions  Additional requirements for foreign institutions to participate in Title IV student aid programs are beyond the scope of this report and, generally, will not be discussed hereinafter  The definitions of proprietary institutions and postsecondary vocational institutions contained in Section 102 have several overlapping components with the Section 101 definition of IHE  For instance, both proprietary and postsecondary vocational institutions must (1) admit as regular students only those individuals with a high school diploma or its equivalent, individuals beyond the age of compulsory school attendance, or individuals who are dually or concurrently enrolled in both the institution and in a secondary school; (2) be legally authorized to provide a postsecondary education by the state in which they are located; and (3) be accredited or preaccredited by an accrediting agency recognized by ED to grant such statuses  In addition, all types of institutions (including public and private nonprofit institutions) must meet requirements related to the course of study offered at the institution and student enrollment to be considered Title IV eligible under Section 102  In general, any type of institution is considered ineligible to participate in Title IV programs if more than 25% of its enrolled students are incarcerated, or if more than 50% of the its enrolled students do not have a secondary school diploma or equivalent and the institution does not provide a two-year associate's degree or a four-year bachelor's degree  Also, in general, an institution is ineligible if more than 50% of the courses offered are correspondence courses or if 50% or more of its students are enrolled in correspondence courses  These "50% rules" are discussed in more detail in the distance education section of this report  Finally, an institution is considered ineligible to participate in Title IV programs if the institution has filed for bankruptcy or the institution (or its owner or chief executive officer) has been convicted of or pled no contest or guilty to a crime involving the use of Title IV funds  While the above-described criteria generally apply to most types of Section 102 institutions, specific criteria apply to individual types of Section 102 institutions  The following sections provide information on Title IV eligibility criteria that apply to those additional types of IHEs not specified in Section 101, but specified in Section 102: proprietary IHEs, postsecondary vocational institutions, and foreign institutions  Hereinafter, unless otherwise noted, the term "institution of high education (IHE)" only refers to Section 102 institutions  To qualify as an eligible institution for Title IV participation, an institution must offer at least one eligible program, but overall institutional eligibility does not necessarily extend to all programs offered by the institution  Not all of an institution's programs must meet program eligibility requirements for an IHE to participate in Title IV, but, in general, students enrolled solely in ineligible programs cannot receive Title IV student aid  To be Title IV eligible, a program must lead to a degree (e g , an associate's or bachelor's degree) or certificate or prepare students for gainful employment in a recognized occupation  Before awarding Title IV aid to students, an IHE must determine that the program in which a student is participating is Title IV eligible, ensure that the program is included in its accreditation notice, and ensure that the the IHE is authorized by the appropriate state to offer the program  In addition to the general criteria for all types of institutions, a program must meet specific eligibility requirements depending on whether the institution at which it is offered is a public or private nonprofit IHE, a proprietary IHE, or a postsecondary vocational IHE  At a public or private nonprofit IHE, the following types of programs are Title IV eligible: (1) programs that lead to an associate's, bachelor's, professional, or graduate degree; (2) transfer programs that are at least two academic years in length and for which the institution does not award a credential but that are acceptable for full credit toward a bachelor's degree; (3) programs that lead to a certificate or other recognized nondegree credential, that prepare students for gainful employment in a recognized occupation, and that are at least one academic year in length; (4) certificate or diploma training programs that are less than one year in length, if the institution also meets the definition of a postsecondary vocational institution; and (5) programs consisting of courses required for elementary or secondary teacher certification in the state in which the student intends to teach  For all of these, an academic year must also require an undergraduate course of study to contain an amount of instructional time in which a full-time student is expected to complete at least 24 semester or trimester credit hours, 36 quarter credit hours, or 900 clock hours  In general, eligible programs at proprietary and postsecondary vocational institutions must meet a specified number of weeks of instruction and must provide training that prepares students for gainful employment in a recognized occupation (described below)  At proprietary and postsecondary vocational institutions, the following types of programs are Title IV eligible: undergraduate programs that provide at least 600 clock hours, 16 semester or trimester hours, or 24 quarter hours of instruction offered over a minimum of at least 15 weeks ; such programs may admit, as regular students, individuals who have not completed the equivalent of an associate's degree; programs that provide at least 300 clock hours, 8 semester hours, or 12 quarter hours of instruction offered over a minimum of 10 weeks; such programs must be graduate or professional programs or must admit as regular students only individuals who have completed the equivalent of an associate's degree; short-term programs that provide between 300 and 600 clock hours of instruction over a minimum of 10 weeks ; such programs must have been in existence for at least one year, have verified completion and placement rates of at least 70%, may not last more than 50% longer than the minimum training period required by the state or federal agency for the occupation for which the program is being offered, and must admit as regular students some individuals who have not completed the equivalent of an associate's degree; and programs offered by accredited proprietary IHEs that lead to a bachelor's degree in liberal arts; the school must have been continuously accredited by an ED-recognized accrediting agency since at least October 1, 2007 and must have provided the program continuously since January 1, 2009  Most nondegree programs offered by public and private nonprofit IHEs must prepare students for "gainful employment in a recognized occupation " Gainful employment requirements also apply to almost all programs offered by proprietary and postsecondary vocational institutions, regardless of whether they lead to a degree  In response to concerns about the quality of programs that prepare students for gainful employment and the level of student debt assumed by individuals who attend these programs, ED issued final rules on gainful employment on October 31, 2014  The regulations require that educational programs subject to gainful employment requirements offered by IHEs meet minimum performance standards to be considered offering education that prepares students for gainful employment in a recognized occupation  They also require IHEs to disclose specified information about each of its gainful employment programs to enrolled or prospective students  Finally, the gainful employment rules require IHEs to report information to ED necessary to calculate the debt-to-earnings ratios  Although the gainful employment regulations became effective July 1, 2015, various aspects of them have not yet been fully implemented or have been delayed in implementation  For example, ED delayed until July 1, 2019, some portions of the rule relating to certain disclosure requirements  Additionally, to enable ED to calculate whether an IHE's programs meet the minimum performance standards (discussed below), regulations specify that ED obtains data from the Social Security Administration (SSA)  However, a memorandum of understanding relating to data sharing between ED and SSA lapsed in 2018  In August 2018, ED issued a Notice of Proposed Rulemaking that proposes to rescind the gainful employment rules in their entirety  Based on HEA requirements relating to the implementation date for Title IV regulations, the earliest possible date the proposed rules could go into effect is July 1, 2020  The gainful employment regulations establish a framework within which educational programs offered by IHEs must meet minimum performance standards to be considered offering education that prepares students for gainful employment in a recognized occupation  Under the framework, ED annually calculates two debt-to-earnings (D/E) rates for each gainful employment program offered by an IHE, the discretionary income rate and the annual earnings rate  These rates measure a gainful employment program's completers' debt (their annual loan payments) as a percentage of their post-completion earnings  Using these measures, institutions will be determined to be "passing," "in the zone," or "failing " Thresholds for each category are as follows: Passing : Programs whose completers have annual loan payments less than or equal to 8% of annual earnings (the annual earnings rate) or less than or equal to 20% of discretionary income (the discretionary income rate)  In the zone: Programs whose completers have annual loan payments greater than 8% but less than or equal to 12% of annual earnings or greater than 20% but less than or equal to 30% of discretionary income  Failing : Programs whose completers have annual loan payments greater than 12% of annual earnings and greater than 30% of discretionary income  Programs that are failing in two out of any three consecutive years or that are in the zone for four consecutive years will be ineligible for Title IV participation for three years  The gainful employment rules also contain several disclosure requirements  For any year in which ED notifies an IHE that a gainful employment program could become ineligible in the next year based on its debt-to-earnings ratios (i e , one year of failure or three years in the zone), the IHE must provide a warning to current and prospective students that the program does not meet the gainful employment standards and that if the program does not meet the gainful employment standards in the future, students would not be able to receive Title IV aid  In addition, an IHE must disclose specified information about each of its gainful employment programs to enrolled and prospective students  Information to be disclosed includes the following: the primary occupation that the program prepares students to enter; whether the program satisfies applicable educational prerequisites for professional licensure or certification in each state within the institution's metropolitan statistical area (MSA); program length and number of clock or credit hours, or equivalent, in the program; the program's completion rates for full-time and less-than-full-time students and the program's withdrawal rates; Federal Family Education Loan (FFEL) and Direct Loan program loan repayment rates for all students who entered repayment on Title IV loans and who enrolled in the program, for those who withdrew from the program, and for those who completed the program; the program tuition, fees, and additional costs incurred by a student who completes the program within the program's published length; the job placement rate for the program, if otherwise required by the institution's accrediting agency or state; the percentage of enrolled students who received Title IV or private loans for enrollment in the program; the median loan debt and mean or median earnings of students who completed the program, of students who withdrew from the program, and of both groups combined; the program cohort default rate; and the annual earnings rate for the program  Institutions must also certify that each of their gainful employment programs is included in the IHE's accreditation, meets any state or federal entity accreditation requirements, and meets any state licensing and certification requirements for the state in which the IHE is located  Title IV of the HEA sets forth three requirements to ensure program integrity in postsecondary education, known as the program integrity triad  The three requirements are state authorization, accreditation by an accrediting agency recognized by ED, and eligibility and certification by ED  This triad is intended to provide a balance in the Title IV eligibility requirements  The states' role is to provide consumer protection, the accrediting agencies' role is to provide quality assurance, and the federal government's role is to provide oversight of compliance to ensure administrative and fiscal integrity of Title IV programs at IHEs  The state role in the program integrity triad is to provide legal authority for an institution to operate a postsecondary educational program in the state in which it is physically located  There are two basic requirements for an IHE to be considered legally authorized by a state: 1  the state must authorize the IHE by name to operate postsecondary educational programs, and 2  the state must have in place a process to review and address complaints concerning IHEs, including enforcing applicable state law  An IHE can be authorized by name through a state charter, statute, constitutional provision, or other action by an appropriate state agency (e g , authorization to conduct business or operate as a nonprofit organization)  Additionally, an institution must also comply with any applicable state approval or licensure requirements  The state agency responsible for the authorization of postsecondary institutions must also perform three additional functions: upon request, provide the Secretary with information about the process it uses to authorize institutions to operate within its borders; notify the Secretary if it has evidence to believe that an institution within its borders has committed fraud in the administration of Title IV programs; and notify the Secretary if it revokes an institution's authorization to operate  On December 19, 2016, ED issued final regulations related to state authorization for IHEs offering postsecondary distance or correspondence education (discussed later in this report)  The regulations would require an IHE offering postsecondary distance or correspondence education to students residing in a state in which the IHE is not physically located to meet any requirements within the student's state of residence  Under the rules, an IHE may meet this requirement if it participates in a state authorization reciprocity agreement  These regulations were scheduled to become effective July 1, 2018  However, on July 3, 2018 (and effective June 29, 2018), the Secretary of Education (Secretary) issued a final rule delaying the implementation of these requirements until July 1, 2020  The second component of the program integrity triad is accreditation by an ED-recognized accrediting agency or association  In higher education, accreditation is intended to help ensure an acceptable level of quality within IHEs  For Title IV purposes, an institution must be accredited or preaccredited by an ED-recognized accrediting agency  Each accrediting agency must meet HEA-specified standards to be recognized by ED  From its inception, accreditation has been a voluntary process  It developed with the formation of associations that distinguished between IHEs that merited the designation of college or university from those that did not  Since then, accreditation has been used as a form of "external quality review     to scrutinize colleges, universities and programs for quality assurance and quality improvement " In 1952, shortly after the passage of the Veterans' Readjustment Act of 1952 (the Korean GI Bill; P L  82-550), the federal government began formally recognizing accrediting agencies  This was done as one means to assess higher education quality and link it to determining which institutions would qualify to receive federal aid under the Korean GI Bill  Rather than creating a centralized authority to assess quality, the federal government chose to rely in part on the existing expertise of accrediting agencies  Today, ED's formal recognition of accrediting agencies is important, because an IHE's Title IV eligibility is conditioned upon accreditation from an ED-recognized accreditation organization  As part of the accreditation system's development, three types of accrediting agencies have emerged: Regional accrediting agencies  These operate in six regions of the United States, with each agency concentrating on a specific region  Generally, these accredit entire public and private nonprofit degree-granting IHEs  National accrediting agencies  These operate across the United States and also accredit entire institutions  There are two types of national accrediting agencies: faith-based agencies that accredit religiously affiliated or doctrinally based institutions, which are typically private nonprofit degree-granting institutions, and career-related agencies that typically accredit proprietary, career-based, degree- and nondegree-granting institutions  Specialized or programmatic accrediting agencies  These operate throughout the United States and accredit individual educational programs (e g , law) and single-purpose institutions (e g , freestanding medical schools)  Specific educational programs are often accredited by a specialized accrediting agency, and the institution at which the program is offered is accredited by a regional or national accrediting organization  Generally, an institution must be accredited by an ED-recognized accrediting agency that has the authority to cover all of the institution's programs  Alternatively, a public or private nonprofit IHE may be preaccredited by an agency recognized by ED to grant such preaccreditation, and a public postsecondary vocational institution may be accredited by a state agency that ED determines is a reliable authority  Proprietary institutions must be accredited by an ED-recognized accrediting agency  The accreditation process begins with an institution or program requesting accreditation  Institutional accreditation is cyclical, with a cycle ranging from every few years up to 10 years  Initial accreditation does not guarantee subsequent renewal of the accredited status  Typically, an institution seeking accreditation will first perform a self-assessment to determine whether its operations and performance meet the basic standards required by the relevant accrediting agency  Next, an outside group of higher education peers (e g , faculty and administrators) and members of the public conduct an on-site visit at the institution during which the team determines whether the accrediting organization's standards are being met  Based on the results of the self-assessment and site visit, the accrediting organization determines whether accreditation will be awarded, renewed, denied, or provisionally awarded to an institution  Educational programs within institutions can be accredited by programmatic accrediting agencies; however, a program is not required to be accredited by a programmatic accrediting agency for Title IV purposes  Rather, it only needs to be covered by the IHE's primary accrediting agency  Frequently, programmatic accrediting agencies review a specific program within an IHE that is accredited by a regional or national accrediting agency  An institution that has had its accreditation revoked or terminated for cause cannot be recertified as an IHE eligible to participate in Title IV programs for 24 months following the loss of accreditation, unless the accrediting agency rescinds the loss  The same rules apply if an institution voluntarily withdraws its accreditation  The Secretary can, however, continue the eligibility of a religious institution whose loss of accreditation, whether voluntary or not, is related to its religious mission and not to the HEA accreditation standards  If an institution's accrediting agency loses its recognition from ED, it has up to 18 months to obtain accreditation from another ED-recognized agency  Although the federal government does not set specific standards for institutional or programmatic accreditation, generally, it does require that institutions be accredited or preaccredited by a recognized accrediting organization to be eligible for Title IV participation  ED's primary role in accreditation is to recognize an accrediting agency as a "reliable authority regarding the quality of education or training offered" at IHEs through the processes and conditions set forth in the HEA and federal regulations  For ED recognition, Section 496 of the HEA specifically requires that an accrediting agency be a state, regional, or national agency that demonstrates the ability to operate as an accrediting agency within the relevant state or region or nationally  Additionally, agencies must meet one of the following criteria: IHE membership with the agency must be voluntary, and one of the primary purposes of the agency must be accreditation of the IHEs  The agency must be a state agency approved by the Secretary as an accrediting agency on or before October 1, 1991  The agency must either conduct accreditation through a voluntary membership of individuals in a profession, or it must have as its primary purpose the accreditation of programs within institutions that have already been accredited by another ED-recognized agency  Agencies that meet the first or third criterion listed above must also be administratively and financially separate and independent of any related trade association or membership organization  For an agency that meets the third criterion and that was ED-recognized on or before October 1, 1991, the Secretary may waive the requirement that the agency be administratively and financially independent of any related organization, but only if the agency can show that the existing relationship with the related organization has not compromised its independence in the accreditation process  All types of accrediting agencies must show that they consistently apply and enforce standards that ensure that the education programs, training, or courses of study offered by an IHE are of sufficient quality to meet the stated objectives for which the programs, training, or courses are offered  The standards used by the accrediting agencies must assess student achievement in relation to the institution's mission; this may include course completion, job placement rates, and passage rates of state licensing exams  Agencies must also consider curricula, faculty, facilities, fiscal and administrative capacity, student support services, and admissions practices  Accrediting agencies must also meet requirements that focus on the review of an institution's operating procedures, including reviewing an institution's policies and procedures for determining credit hours, the application of those policies and procedures to programs and coursework, and reviewing any newly established branch campuses  They must also perform regular on-site visits that focus on the quality of education and program effectiveness  The final component of the program integrity triad is eligibility and certification by ED  Here, ED is responsible for verifying an institution's legal authority to operate within a state and its accreditation status  ED also evaluates an institution's financial responsibility and administrative capability to administer Title IV student aid programs  An institution can be certified to participate in Title IV for up to six years before applying for recertification  ED determines an IHE's financial responsibility based on its ability to provide the services described in its official publications, to administer the Title IV programs in which it participates, and to meet all of its financial obligations  A public IHE is deemed financially responsible if its debts and liabilities are backed by the full faith and credit of the state or another government entity  A proprietary or private nonprofit IHE is financially responsible if it meets specific financial ratios (e g , equity ratio) established by ED, has sufficient cash reserves to make any required refunds (including the return of Title IV funds), is meeting all of its financial obligations, and is current on its debt payments  Even if an institution meets the above requirements, ED does not consider it financially responsible if the IHE does not meet third-party financial audit requirements or if the IHE violated past performance requirements, such as failing to satisfactorily resolve any compliance issues identified in program reviews or audits  Alternatively, if an institution does not meet the above standards of financial responsibility, ED may still consider it financially responsible or give it provisional certification, under which it may operate for a time, if it qualifies under an alternative standard  These alternative standards include submitting an irrevocable letter of credit to ED that is equal to at least 50% of the Federal Student Aid (FSA) program funds that the IHE received during its most recently completed fiscal year, meeting specific monitoring requirements, or participating in the Title IV programs under provisional certification  Along with demonstrating financial responsibility, an institution must demonstrate its ability to properly administer the Title IV programs in which it participates and to provide the education it describes in public documents (e g , marketing brochures)  Administrative capability focuses on the processes, procedures, and personnel used in administering Title IV funds and indicators of student success  Administrative capability standards address numerous aspects of Title IV administration  For example, to administer Title IV programs an institution must use ED's electronic processes and develop a system to identify and resolve discrepancies in Title IV information received by various institutional offices  The IHE must also refer cases of Title IV student fraud or criminal misconduct to ED's Office of Inspector General for resolution, and it must provide all enrolled and prospective students financial aid counseling  Finally, the IHE must have an adequate internal system of checks and balances that includes dividing the functions of authorizing payments and disbursing funds between two separate offices  Institutions are required to have a capable staff member to administer Title IV programs and coordinate those programs with other aid received by students  This person must also have an adequate number of qualified staff to assist with aid administration  Before receiving Title IV funds, an IHE must certify that neither it nor its employees have been debarred or suspended by a federal agency; similar limitations apply to lenders, loan servicers, and third-party servicers  Relating to indicators of student success, an institution must have satisfactory academic progress (SAP) standards for students receiving Title IV funds  In general, IHEs must develop SAP standards that establish a minimum grade point average (or its equivalent) for students and a maximum time frame in which students must complete their educational programs  A student who fails to meet the SAP requirements becomes ineligible to receive Title IV funds  Also related to student success indicators, an institution that seeks to participate in Title IV programs for the first time may not have an undergraduate withdrawal rate for regular students that is greater than 33% during its most recently completed award year  An institution may be deemed administratively incapable if it has a high cohort default rate (CDR)  In general, the CDR is the number of an IHE's federal loan recipients who enter repayment in a given fiscal year (the cohort fiscal year) and who default within a certain period of time after entering repayment (cohort default period; CDP), divided by the total number of borrowers who entered repayment in the cohort fiscal year  Since 2014, ED has used a three-year CDP in calculating an institution's CDR  An IHE will be found administratively incapable if one of the following conditions is met: 1  an institution's CDR is greater than 40% in one year for loans made under the FFEL and Direct Loans programs; 2  an institution's CDR is 30% or greater for each of the three most recent fiscal years for loans made under the FFEL and Direct Loans programs; or 3  an institution's CDR is 15% or greater in any single year for loans made under the Federal Perkins Loan Program  When an IHE is determined to be administratively incapable due to a high CDR, it may become ineligible to participate in the Direct Loan, Pell Grant, and/or Perkins Loan programs (but not other Title IV programs)  ED may grant provisional certification for up to three years to an institution that would be deemed administratively capable except for its high cohort default rates  If an institution is seeking initial certification, ED can grant it up to one year of provisional certification  ED can also grant an institution provisional certification for up to three years if ED is determining the IHE's administrative capacity and financial responsibility for the first time, if the IHE has experienced a partial or total change in ownership, or if ED determines that the administrative or financial condition of the IHE may hinder its ability to meet its financial responsibilities  Additionally, if an accrediting agency loses its ED recognition, any institution that was accredited by that agency may continue to participate in Title IV programs for up to 18 months after ED's withdrawal of recognition  To ensure that an institution is conforming to eligibility requirements, ED can conduct program reviews  During a program review, ED evaluates an institution's compliance with Title IV requirements and identifies actions the IHE must take to correct any problem(s)  Review priority is given to those institutions with high cohort default rates; IHEs with significant fluctuations in Pell Grant awards or Direct Loan volume that are not accounted for by changes in programs offered; IHEs that are reported to have deficiencies or financial aid problems by their state or accrediting agency; IHEs with high annual dropout rates; and IHEs determined by ED to pose a significant risk of failing to comply with the administrative capability or financial responsibility requirements  If, during a review, ED determines that an institution is not administratively capable or financially responsible or is violating Title IV program rules, ED may grant it provisional certification, take corrective actions, or impose sanctions  ED has the authority to impose a variety of sanctions and corrective actions on an institution that violates Title IV program rules, a Program Participation Agreement (discussed later in this report) or any other agreement made under the laws or regulations, or if it substantially misrepresents the nature of its educational programs, financial charges, or graduates' employability  Sanctions include fines, limitations, suspensions, emergency actions, and terminations  ED can also sanction third-party servicers performing tasks related to the institution's Title IV programs  ED may impose several types of sanctions on institutions for statutory and regulatory violations, including fines, limitations, and suspensions  ED can fine an institution up to $55,907 for each statutory or regulatory violation it commits, depending on the size of the IHE and the seriousness of the violation  Under a limitation, ED imposes specific conditions or restrictions on an institution related to its administration of Title IV funds  A limitation lasts for at least 12 months, and if an institution fails to abide by the limitation, ED may initiate a termination proceeding  Finally, under a suspension, an institution is not allowed to participate in Title IV programs for up to 60 days  Each of these sanctions may require an institution to take corrective actions as well, which may include repaying illegally used funds or making payments to eligible students from the IHE's own funds  ED can take emergency action to withhold Title IV funds from an institution if it receives reliable information that an IHE is violating applicable laws or regulations, agreements, or limitations  ED must determine that the institution is misusing federal funds, that immediate action is necessary to stop misuses, and that the potential losses outweigh the importance of using established procedures for limitation, suspension, or termination  An emergency action suspends an institution's participation in Title IV programs and prohibits it from disbursing such funds  Typically, the emergency action may not last more than 30 days  The final action ED can take is the termination of an institution's participation in Title IV programs  Generally, an institution that has had its participation terminated cannot reapply to be reinstated for at least 18 months  To request reinstatement, an institution must submit a fully completed application to ED and demonstrate that it has corrected the violation(s) for which its participation was terminated  ED may then approve, approve subject to limitations, or deny the institution's request  Several other requirements affect institutional eligibility for Title IV programs  Some of these requirements include institution Program Participation Agreements, which include provisions related to incentive compensation and campus crime reporting requirements; return of Title IV funds; and distance education  The failure to meet the requirements for any of these may result in the loss of Title IV eligibility or other sanctions  HEA Section 487 specifies that each institution wanting to participate in Title IV student aid programs is required to have a current Program Participation Agreement (PPA)  A PPA is a document in which the institution agrees to comply with the laws, regulations, and policies applicable to the Title IV programs; it applies to an IHE's branch campuses and locations that meet Title IV requirements, as well as its main campus  It also lists all of the Title IV programs in which the IHE is eligible to participate, the date on which the PPA expires, and the date on which the IHE must reapply for participation  By signing a PPA, an institution agrees that it will act as a fiduciary responsible for properly administering Title IV funds, will not charge students a processing fee to determine a student's eligibility for such funds, and will establish and maintain administrative and fiscal procedures to ensure the proper administration of Title IV programs  The PPA reiterates many provisions required for institutional eligibility and ED certification discussed earlier in this report and contains several additional notable requirements that may affect an IHE's Title IV eligibility, which are described below  Along with the general participation requirements with which an institution must comply, a PPA may also contain institution-specific requirements  As part of their PPAs, domestic and foreign proprietary IHEs must agree to derive at least 10% of their revenue from non-Title IV funds (i e , no more than 90% of their revenue can come from Title IV funds)  This is known as the 90/10 rule  Examples of non-Title IV funds include private education loans and some military and veterans' benefits, such as benefits provided under the Post-9/11 GI Bill program  If an IHE violates the 90/10 rule in one year, it does not immediately lose its Title IV eligibility  Rather, it is placed on a provisional eligibility status for two years  If the IHE violates the 90/10 rule for two consecutive years, it loses its eligibility for at least two years  In a PPA, an IHE must agree it will not provide any commission or incentive compensation to individuals based directly or indirectly on their success in enrolling students or the enrolled students' obtaining financial aid; however, some exceptions apply to this general rule  For instance, IHEs can provide incentive compensation to individuals for the recruitment of foreign students who are ineligible to receive Title IV funds or they can provide incentive compensation through a profit-sharing plan  The ban on incentive compensation only applies to the activities of securing enrollment (recruitment) and securing financial aid  Other activities are not banned, and ED draws a distinction between activities that involve directly working with individual students and policy-level determinations that affect recruitment and financial aid awards  For instance, an individual who is responsible for contacting potential student applicants or assisting students in filling out an enrollment application cannot receive incentive compensation, but an individual who conducts marketing activities, such as the broad dissemination of informational brochures or the collection of contact information, can receive incentive compensation  HEA Section 485(f), referred to as the Clery Act, requires domestic Title IV participating IHEs (1) to report to ED campus crime statistics and (2) establish and disseminate campus safety and security policies  Both the campus crime statistics and campus safety and security policies must be compiled and disseminated to current and prospective students and employees in an IHE's annual security report (ASR)  Campus crime statistics required to be reported to ED and included in an ASR include data on the occurrence on campus of a range of offenses specified in statute, including murder, burglary, robbery, domestic violence, rape, and other forms of sexual violence  In addition to campus crime statistics, ASRs must include statements of campus safety and security policies regarding, for example, procedures and facilities for students and others to report criminal actions or other emergencies occurring on campus and an IHE's response to such reports; security and access to campus facilities; campus law enforcement, including the law enforcement authority of campus security personnel, and the working relationship between campus security personnel and state and local law enforcement; programs designed to inform students and employees about the prevention of crimes; and the possession, use, and sale of alcoholic beverages and illegal drugs; enforcement of state underage drinking laws; enforcement of federal and state drug laws; and any drug or alcohol abuse education programs required under the HEA  An ASR must also include statements of policies specifically relating to incidence of domestic and sexual violence  For example, an ASR must include statements of policy regarding programs to prevent such incidents; procedures a victim should follow if such an incident as occurred; procedures an IHE will follow once such an incident has been reported and procedures for institutional disciplinary actions in cases of alleged incidents (including a statement of the standard of evidence that will be used in any school proceeding arising from the incident report); and possible sanctions and protective measures that an IHE may impose following a final determination in an institutional proceeding regarding such incidences  The Clery Act prohibits the Secretary of Education from requiring IHEs to adopt particular policies, procedures, or practices; and prohibits retaliation against anyone exercising his or her rights or responsibilities under the act  HEA Section 484B specifies that when a Title IV aid recipient withdraws from an IHE before the end of the payment or enrollment period for which funds were disbursed, Title IV funds must be returned to ED according to a statutorily prescribed schedule  In general, when a student withdraws from an IHE, an IHE first determines the portion of Title IV aid considered to be "earned" by the student while enrolled and the portion considered to be "unearned " Unearned aid must be returned to ED  Up to the 60% point of a payment or enrollment period, unearned funds must be returned on a pro rata schedule  After the 60% point of a payment or enrollment period, the total amount of funds awarded is considered to have been earned by the student and no funds are required to be returned  Whether an IHE and/or the student is required to return the funds to ED depends on a variety of circumstances, including whether Title IV funds have been applied directly to a student's institutional charges  Unearned funds must be returned to their respective programs in a specified order, with loans being returned first, followed by Pell Grants, and then other Title IV aid  In some instances, a student may have earned more aid than has been disbursed, and the difference is disbursed to the student after the student withdraws  Generally, distance education and correspondence education refers to educational instruction with a separation in time, place, or both between the student and instructor  It is a way in which institutions can increase student access to postsecondary education by offering alternatives to traditional on-campus instruction  Recently, due to the greater availability of new technologies, there has been substantial growth in the amount and types of courses institutions offer  Section 103(7)(A) and (B) of the HEA and the accompanying regulations define distance education as instruction that uses "(1) the internet; (2) one-way and two-way transmissions through open broadcast, closed circuit, cable, microwave, broadband lines, fiber optics, satellite, or wireless communications devices; [or]     (3) audio conferencing" to deliver instruction to students separated from the instructor  A course taught through a video cassette, DVD, or CD-ROM is considered a distance education course if one of the above-mentioned technologies is used to support student-instructor interaction  Regardless of the technology used, "regular and substantive interaction between the students and the instructor" must be ensured  Correspondence courses are expressly excluded from the definition of distance education  A correspondence course is one for which an institution provides instructional materials and exams for students who do not physically attend classes at the IHE, but does not include those courses that are delivered with "regular and substantive interaction between the students and the instructor" via one of the above-described technologies  In 1992, partially in response to cases of some correspondence institutions' fraudulent and abusive practices used to attract unqualified students to enroll in programs of poor or questionable quality, Congress incorporated provisions referred to as the "50% rules" into the HEA  The rules affected both the eligibility of institutions offering correspondence courses and their students' eligibility for Title IV aid  In general, under the rules, an institution is ineligible for Title IV aid if more than 50% of its courses are offered by correspondence, or if 50% or more of its students are enrolled in correspondence courses  As discussed earlier in this report, rules promulgated in 2016 would have required an IHE offering postsecondary distance or correspondence education in a state in which it is not physically located to meet any state authorization requirements within that state  Under the regulations, an IHE could meet this requirement if it participates in a state authorization reciprocity agreement  These regulations were scheduled to become effective July 1, 2018  However, on July 3, 2018 (and effective June 29, 2018), the Secretary of Education issued a final rule delaying the implementation of these requirements until July 1, 2020  The distinction between distance education and traditional instruction is also important for the purposes of Title IV program eligibility  Distance education programs provided by domestic IHEs are eligible for Title IV participation if they have been accredited by an accrediting agency recognized by ED to evaluate distance education programs  A program offered by a foreign IHE, in whole or in part, through distance education (including telecommunications) or correspondence is ineligible for Title IV participation 

ground_truth: Multiyear procurement (MYP) and block buy contracting (BBC) are special contracting mechanisms that Congress permits the Department of Defense (DOD) to use for a limited number of defense acquisition programs. Compared to the standard or default approach of annual contracting, MYP and BBC have the potential for reducing weapon procurement costs by a few or several percent. Under annual contracting, DOD uses one or more contracts for each year's worth of procurement of a given kind of item. Under MYP, DOD instead uses a single contract for two to five years' worth of procurement of a given kind of item without having to exercise a contract option for each year after the first year. DOD needs congressional approval for each use of MYP. There is a permanent statute governing MYP contracting—10 U.S.C. 2306b. Under this statute, a program must meet several criteria to qualify for MYP. Compared with estimated costs under annual contracting, estimated savings for programs being proposed for MYP have ranged from less than 5% to more than 15%, depending on the particulars of the program in question, with many estimates falling in the range of 5% to 10%. In practice, actual savings from using MYP rather than annual contracting can be difficult to observe or verify because of cost growth during the execution of the contract due to changes in the program independent of the use of MYP rather than annual contracting. BBC is similar to MYP in that it permits DOD to use a single contract for more than one year's worth of procurement of a given kind of item without having to exercise a contract option for each year after the first year. BBC is also similar to MYP in that DOD needs congressional approval for each use of BBC. BBC differs from MYP in the following ways: There is no permanent statute governing the use of BBC. There is no requirement that BBC be approved in both a DOD appropriations act and an act other than a DOD appropriations act. Programs being considered for BBC do not need to meet any legal criteria to qualify for BBC, because there is no permanent statute governing the use of BBC that establishes such criteria. A BBC contract can cover more than five years of planned procurements. Economic order quantity (EOQ) authority—the authority to bring forward selected key components of the items to be procured under the contract and purchase the components in batch form during the first year or two of the contract—does not come automatically as part of BBC authority because there is no permanent statute governing the use of BBC that includes EOQ authority as an automatic feature. BBC contracts are less likely to include cancellation penalties. Potential issues for Congress concerning MYP and BBC include whether to use MYP and BBC in the future more frequently, less frequently, or about as frequently as they are currently used; whether to create a permanent statute to govern the use of BBC, analogous to the permanent statute that governs the use of MYP; and whether the Coast Guard should begin making use of MYP and BBC.

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



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

Report 1: The federal government is the nation's largest employer, with over two million workers employed in the United States, U S  Territories, and foreign countries  A majority of these employees work in the competitive service of the executive branch  Applicants for competitive service positions compete with other applicants and are evaluated according to objective standards  The executive branch includes two other service classifications—the excepted service and the Senior Executive Service (SES)—with hiring and removal standards that diverge from those prescribed for the competitive service  Positions in the excepted service are specifically excepted from the competitive service by statute, by the President, or by the Office of Personnel Management (OPM)  SES positions are also not in the competitive service  The SES includes senior managerial, supervisory, and policy positions that are subject to a different pay scale, as well as different hiring and removal standards  This report examines the three service classifications, and reviews some of the central features and notable differences among these classifications  The competitive service consists of all civil service positions in the executive branch, except the following: positions that are specifically excepted from the competitive service by or under statute; positions to which appointments are made by presidential nomination for confirmation by the Senate, unless the Senate otherwise directs; and positions in the SES  The competitive service also includes non-executive branch positions and positions in the District of Columbia government that are specifically included in the competitive service by statute  OPM administers examinations for entrance into the competitive service  These examinations are meant to be "practical in character" and relate to "matters that fairly test the relative capacity and fitness of the applicants for the appointment sought[ ]" OPM identifies the relative weights for the subjects in an examination, and assigns numerical ratings on a 100-point scale  Applicants who meet the minimum requirements for entrance to an examination, such as citizenship and residence requirements, and are rated 70 or more in the examination are eligible for appointment in the competitive service  These individuals are placed on registers or lists of eligibles  When an agency seeks to fill a competitive service position, it requests a certificate of eligibles from OPM  This certificate is to include enough names from the top of the relevant register to allow an agency appointing official to consider at least three individuals for every position to be filled  The competitive service includes several types of appointments  An individual selected for a continuing position is generally appointed as a career-conditional employee subject to an initial one-year probationary period  After three continuous years of service in a career-conditional appointment, an employee will be converted to a career appointment  A term appointment is a nonpermanent appointment for a period of more than one year, but less than four years  An agency may make a term appointment when the need for an employee's services is not permanent, but involves a special project, extraordinary workload, or reorganization  A temporary appointment is a time-limited appointment for a period not to exceed one year  An agency may make a temporary appointment to fill a short-term position or meet an employment need that is scheduled to end within a specified timeframe  Employees in the competitive service are generally paid in accordance with the General Schedule, a schedule of annual basic pay rates that consists of 15 grades, designated "GS-1" through "GS-15 " The grades include 10 steps that provide for increasing rates of pay  An employee who has not reached the maximum pay rate for his or her position is generally advanced to the next step at specified intervals  General Schedule salaries are based on the principles that there is equal pay for substantially equal work within a local pay area, that any pay distinctions are based on work and performance, that federal pay rates are comparable with non-federal pay rates for the same level of work, and that any pay disparities between federal and non-federal employees should be eliminated  Employees in the competitive service who are not serving a probationary or trial period, or have completed one year of current continuous service in a position other than a temporary appointment limited to one year or less, maintain specified notice and appeal rights for adverse personnel actions  Before an agency may suspend such a qualifying employee for 14 days or less, the employee must be given an advance written notice that identifies the specific reasons for the suspension  The employee must also be provided a reasonable time to answer the notice and furnish affidavits and other evidence to support the answer  Similar notice is required before an agency may subject a qualifying employee to other adverse personnel actions  Before a removal, a suspension for more than 14 days, a reduction in grade or pay, or a furlough of 30 days or less, the agency must provide at least 30 days' advance written notice to the employee  The employee must also be given a reasonable time to respond to the notice and provide affidavits and other evidence to support the answer  Unlike suspensions for 14 days or less, these adverse actions may be appealed to the Merit Systems Protection Board (MSPB or Board), an independent, quasi-judicial agency that reviews and adjudicates specified personnel actions taken against qualifying federal employees  In general, an agency must establish three factors to withstand an individual's challenge of his or her adverse personnel action  First, the agency must prove, by a preponderance of the evidence, that the charged conduct occurred  Second, it must establish a nexus between that conduct and the efficiency of the civil service  Finally, the agency must show that the penalty imposed on the employee is reasonable  An agency's action may not be sustained if the appellant shows: (1) harmful error in applying the agency's procedures in arriving at its decision; (2) that the decision was based on a prohibited personnel practice; or (3) that the decision was not in accordance with law  About one-third of all federal workers are employed in the excepted service  The excepted service consists of those civil service positions that are not in the competitive service or the SES  Positions in the excepted service may be designated by statute or by OPM, and are not subject to competitive examination  OPM will exempt a position from the competitive service when it determines that an appointment through competitive examination is not practicable, or the recruitment of certain students or recent graduates would be better achieved through alternate recruitment and assessment processes  For example, OPM may determine that a position should be excepted from the competitive service because it is impracticable to examine the knowledge, skills, and abilities required for a position  Positions in the excepted service are categorized into four schedules  Schedule A includes positions that are not of a confidential or policy-determining character for which it is not practicable to examine applicants  Attorneys, chaplains, and short-term positions for which there is a critical hiring need are examples of schedule A positions  Schedule B also includes positions that are not of a confidential or policy-determining character for which it is not practicable to examine applicants  Unlike Schedule A positions, however, these positions require an applicant to satisfy basic qualification standards established by OPM for the relevant occupation and grade level  Individuals appointed to schedule B positions engage in a variety of activities, including policy analysis, teaching, and technical assistance  Positions in schedule C are policy-determining or involve a close and confidential working relationship with the head of an agency or other key appointed officials  These positions include most political appointees below the cabinet and subcabinet levels  An agency's senior advisor and special assistant positions are typically in schedule C  Finally, schedule D includes positions that are not of a confidential or policy-determining character for which competitive examination makes it difficult to recruit a sufficient number of certain students or recent graduates


Report 2:  Examples of schedule D positions include those involving science, technology, engineering, or mathematics (STEM) occupations and positions in the Presidential Management Fellows Program  Schedule D positions generally require an applicant to satisfy basic qualification standards established by OPM for the relevant occupation and grade level  Like employees in the competitive service, excepted service employees are generally paid in accordance with the General Schedule  In addition, excepted service employees maintain the same notice and appeal rights for adverse personnel actions  Some employees in the excepted service, however, must satisfy different durational requirements before these rights become available  So-called "preference eligibles" in an executive agency, the Postal Service, or the Postal Rate Commission must complete one year of current continuous service to avail themselves of the relevant notice and appeal rights  The term "preference eligible" refers to specified military veterans and some of their family members, such as an unmarried widow, and the wife or husband of a service-connected disabled veteran  Employees in the excepted service who are not preference eligibles and (1) are not serving a probationary or trial period under an initial appointment pending conversion to the competitive service, or (2) have completed two years of current or continuous service in the same or similar position, have the same notice and appeal rights as qualifying employees in the competitive service  The SES is a cadre of high-level government administrators who manage major programs and projects within most federal agencies  While they are considered federal employees within the civil service system, the SES is governed by a regulatory structure separate from the competitive and excepted services  As defined in statute, SES positions are generally managerial or supervisory positions that are classified above the GS-15 grade (or certain equivalent positions) and need not be appointed by the President and confirmed by the Senate  In these leadership roles, SES members may serve as intermediaries between top-level political appointees of an agency who seek to carry out the objectives of a particular President and career civil servants with institutional experience relating to relevant issues  According to a 2018 report, there are currently more than 7,000 permanent SES positions  There are two types of SES positions: (1) career reserved and (2) general  Career reserved positions must be filled with career appointees to shield certain SES roles from political influence  Generally, agency heads are to determine whether a particular SES position warrants a career reserved designation, to "ensure impartiality, or the public's confidence in the impartiality, of the Government " OPM regulations reflect the types of SES roles in which this designation is appropriate, including those involving adjudication and appeals, auditing, and law enforcement duties  General positions may be filled by career appointees, as well as other noncareer and limited term (i e , political) appointees  There are four types of SES appointments: career, noncareer, limited term, and limited emergency appointees  The SES mainly consists of "career appointees" chosen through a merit-based competitive hiring process  As part of this process, each agency must maintain a recruitment program for career appointees, as well as at least one executive board that reviews qualifications and makes recommendations regarding SES candidates  An OPM-convened Qualification Review Board (QRB) must certify the executive and managerial qualifications of a selected candidate before a career appointment may be made to an SES position  Unlike career appointees, noncareer appointees are not subject to the competitive selection process, but agency heads must determine that these appointees meet the qualifications of the SES position  While noncareer appointees are not QRB-certified, OPM must approve these appointees  Limited term and limited emergency appointees make up a small subset of the SES, and their terms are non-renewable  These appointments are used when a position is needed for a specified period (such as to manage a special project), or a position is established to meet a "bona fide, unanticipated, urgent need " Limited term and limited emergency appointments are also subject to OPM approval  To restrict the politicization of the SES, Title 5 of the U S  Code (Title 5) limits the number of noncareer and limited term appointees who may serve in SES positions  The SES pay structure is also distinct from the rest of the civil service  Title 5 specifies that the pay rate of each senior executive is based on the executive's individual performance or contribution to agency performance (or both), as measured under a "rigorous" performance appraisal system  Each federal agency must maintain at least one of these appraisal systems, subject to OPM standards, review, and approval  Performance appraisals of SES members may consider factors such as improvements in efficiency, productivity, and quality of work or service, cost efficiency, and performance timeliness  In response to earlier concerns that SES appraisal systems were flawed because most executives received the highest rating, Title 5 tasks OPM, in collaboration with the Office of Management and Budget, with the establishment and maintenance of a government-wide performance appraisal system certification process, in an effort to ensure that an agency's appraisal systems for SES employees make "meaningful distinctions based on relative performance " Title 5 also sets out different pay rates for the SES, with a minimum rate of basic pay equal to 120 percent of the rate for GS-15, step 1, and a maximum rate of basic pay equal to the rate for Level III of the Executive Schedule  But SES members' annual aggregate pay (that includes additional compensation such as bonuses, awards, and other payments in addition to basic pay) is capped at the rate for Level I of the Executive Schedule  If a senior executive's total compensation exceeds the aggregate limitation, the executive receives the overage in the following calendar year  To encourage federal agencies to establish and maintain an OPM-certified performance appraisal system, Title 5 allows for a higher range of SES pay for agencies that have these certified systems  Title 5 also articulates conditions and procedures for removing, suspending, or taking other adverse actions against a member of the SES  Career SES appointees who have successfully completed a one-year probationary period may be removed or subject to adverse action only for specified reasons  For example, an SES career appointee may be removed from the civil service or suspended for more than 14 days only for misconduct, neglect of duty, malfeasance, or failure to accept a directed reassignment or to accompany a position in a transfer of function  SES members must receive advance written notice about the action and opportunity to provide an answer or receive hearing, subject to exception  The senior executive may also appeal the employment action to the MSPB  A career appointee receiving a single unsatisfactory performance rating may be reassigned or transferred within the SES or removed from the SES  A career SES member who receives two unsatisfactory ratings in any period of five consecutive years, or twice in any period of three consecutive years receives less than fully successful ratings, must be removed from the SES  Affected SES career appointees must receive advance written notice of these actions  While these appointees may not appeal these actions to the MSPB, they may request an informal hearing before the Board  SES career appointees are also generally entitled to be placed in a civil service position at GS-15 or above (or an equivalent position)  In comparison, noncareer, limited term, and limited emergency appointees are generally not subject to the same removal protections and may be removed from the SES at any time  The procedures for removal of noncareer and limited term appointees are largely not addressed in federal statute, and the terms and procedures for their removal are mainly at the discretion of the agency head  In response to concerns about performance and accountability of SES members employed by the Department of Veterans Affairs (VA), Congress recently created special removal requirements that apply to these positions  In 2017, Congress passed the Department of Veterans Affairs Accountability and Whistleblower Protection Act, which amended an existing provision concerning removal procedures for these covered senior executives  Under the 2017 Act, the VA Secretary has discretion to suspend, demote, remove, or take other actions against SES career appointees or other high-level executives if the Secretary determines that the individual's misconduct or performance warrants such action  To address SES job performance issues more expeditiously, SES employees at the VA Department are entitled to abbreviated notice and appeals rights, as compared to the removal procedures in place in other federal agencies 

ground_truth: Title IV of the Higher Education Act (HEA) authorizes programs that provide financial assistance to students to assist them in obtaining a postsecondary education at certain institutions of higher education (IHEs). These IHEs include public, private nonprofit, and proprietary institutions. For students attending such institutions to be able to receive Title IV assistance, an institution must meet basic criteria, including offering at least one eligible program of education (e.g., programs leading to a degree or preparing a student for gainful employment in a recognized occupation). In addition, an IHE must satisfy the program integrity triad, under which it must be licensed or otherwise legally authorized to operate in the state in which it is physically located, accredited or preaccredited by an agency recognized for that purpose by the Department of Education (ED), and certified by ED as eligible to participate in Title IV programs. These requirements are intended to provide a balance between consumer protection, quality assurance, and oversight and compliance in postsecondary education providers participating in Title IV student aid programs. An IHE must also fulfill a variety of other related requirements, including those that relate to institutional recruiting practices, student policies and procedures, and the administration of the Title IV student aid programs. Finally, additional criteria may apply to an institution depending on its control or the type of educational programs it offers. For example, proprietary institutions must meet HEA requirements that are otherwise inapplicable to public and private nonprofit institutions, including deriving at least 10% of their revenues from non-Title IV funds (also known as the 90/10 rule). While an institution is ineligible to participate in Title IV programs if more than 50% of its courses are offered by correspondence or if 50% or more of its students are enrolled in correspondence courses. This report first describes the types of institutions eligible to participate in Title IV programs and discusses the program integrity triad. It then discusses additional issues related to institutional eligibility, including program participations agreements, required campus safety policies and crime reporting, and distance and correspondence education.