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 potential oversight issues for Congress on war-related and other international emergency or contingency-designated funding since FY2001  Since the terrorist attacks of September 11, 2001, Congress has appropriated approximately $2 trillion in discretionary budget authority designated for emergencies or OCO/GWOT in support of the broad U S  government response to the 9/11 attacks and for other related international affairs activities  This figure includes $1 8 trillion for the Department of Defense (DOD), $154 billion for the Department of State and U S  Agency for International Development (USAID), and $3 billion for the Department of Homeland Security (DHS) and Coast Guard (see Figure 1 )  This CRS report is meant to serve as a reference on certain funding designated as emergency requirement s or for Overseas Contingency Ope rations/Global War on Terrorism (OCO/GWOT), as well as related budgetary and policy issues  It does not provide an estimate of war costs within the OCO/GWOT account (all of which may not be for activities associated with war or defense) or such costs in the DOD base budget or other agency funding (which may be related to war activities, such as the cost of health care for combat veterans)  For additional information on the FY2019 budget and related issues, see CRS Report R45202, The Federal Budget: Overview and Issues for FY2019 and Beyond , by [author name scrubbed]; CRS In Focus IF10942, FY2019 National Defense Authorization Act: An Overview of H R  5515 , by [author name scrubbed] and [author name scrubbed]; and CRS Report R45168, Department of State, Foreign Operations and Related Programs: FY2019 Budget and Appropriations , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]  For additional information on the Budget Control Act as amended, see CRS Report R44874, The Budget Control Act: Frequently Asked Questions , by [author name scrubbed] and [author name scrubbed], and CRS Report R44039, The Defense Budget and the Budget Control Act: Frequently Asked Questions , by [author name scrubbed]  For additional information on U S  policy in Afghanistan and the Middle East, see CRS Report R45122, Afghanistan: Background and U S  Policy , by [author name scrubbed], CRS Report R45096, Iraq: Issues in the 115th Congress , by [author name scrubbed], and CRS Report RL33487, Armed Conflict in Syria: Overview and U S  Response , coordinated by [author name scrubbed]  Congress may consider one or more supplemental appropriations bills (colloquially called supplementals) for a fiscal year to provide funding for unforeseen needs (such as a response to a national security threat or a natural disaster), or to increase appropriations for other activities that have already been funded  Supplemental appropriations measures generally provide additional funding for selected activities over and above the amount provided through annual or continuing appropriations  Throughout the 20 th century, Congress relied on supplemental appropriations to fund war-related activities, particularly in the period immediately following the start of hostilities  For example, in 1951, a year after the start of the Korean War, Congress approved DOD supplemental appropriations totaling $32 8 billion ($268 billion in constant FY2019 dollars)  In 1952, DOD supplemental appropriations totaled just $1 4 billion ($11 billion in constant FY2019), as the base budget incorporated costs related to the war effort  A similar pattern occurred, to varying degrees, during the Vietnam War and 1990-1991 Gulf War  During the post-9/11 conflicts, primarily conducted in Afghanistan and Iraq but also in other countries, Congress has, for an extended period and to a much greater degree than in previous conflicts in the 20 th century, appropriated supplemental and specially designated funding over and above the base DOD budget—that is, funding for planned or regularly occurring costs to man, train, and equip the military force  Since FY2001, DOD funding designated for OCO/GWOT has averaged 17% of the department's total budget authority (see Figure 2 )  By comparison, during the conflict in Vietnam—the only other to last more than a decade—DOD funding designated for non-base activities averaged 6% of the department's total budget authority  Supplemental appropriations can provide flexibility for policymakers to address demands that arise after funding has been appropriated  However, that flexibility has caused some to question whether supplementals should only be used to respond to unforeseen events, or whether they should also provide funding for activities that could reasonably be covered in regular appropriations acts  Congress used supplemental appropriations to provide funds for defense and foreign affairs activities related to operations in Afghanistan and Iraq following 9/11, and each subsequent fiscal year through FY2010  Initially understood as reflecting needs that were not anticipated during the regular appropriations cycle, supplemental appropriations were generally enacted as requested, and almost always designated as emergency requirements  Beginning in FY2004, DOD received some of its war-related funding in its regular annual appropriations; these funds were designated as emergency  When funding needs for war and non-war-related activities were higher than anticipated, the Bush Administration submitted supplemental requests  In the FY2011 appropriations cycle, the Obama Administration moved away from submitting supplemental appropriations requests to Congress for war-related activities and used the regular budget and appropriation process to fund operations  This approach implied that while the funds might be war-related, they largely supported predictable ongoing activities rather than unanticipated needs  In concert with this change in budgetary approach, the Obama Administration began formally using the term Overseas Contingency Op erations in place of the Bush Administration's term Global War on Terror   Both the Obama and Trump Administrations requested that OCO funding be designated in a manner that would effectively exempt such funding from the BCA limits on discretionary defense spending  Currently, there is no overall procedural or statutory limit on the amount of emergency or OCO/GWOT-designated spending that may be appropriated on an annual basis  Both Congress and the President have roles in determining how much emergency or OCO/GWOT spending is provided to federal agencies each fiscal year  Such spending must be designated as such within the President's budget request for congressional consideration  The President must separately designate the spending after Congress enacts appropriations for it to be available for expenditure  The emergency funding designation predated the OCO/GWOT designation  Through definitions statutorily established by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA; P L  99-177 ), spending designated as emergency requirements is for "unanticipated" purposes, such as those that are "sudden     urgent     unforeseen     and temporary " The BBEDCA does not further specify the types of activities that are eligible for that designation  Thus, any discretionary funding designated by Congress and the President as being for an emergency is effectively exempted from certain statutory and procedural budget enforcement mechanisms, such as the BCA limits on discretionary spending  Debate of what should constitute OCO/GWOT or emergency activities and expenses has shifted over time, reflecting differing viewpoints about the extent, nature, and duration of U S  military operations in Afghanistan, Iraq, Syria, and elsewhere  Over the years, both Congress and the President have at times adopted more, and at times less, expansive definitions of such designations to accommodate the strategic, budgetary, and political needs of the moment  Prior to February 2009, U S  operations in response to the 9/11 attacks were collectively referred to as the Global War on Terror , or GWOT  Between September 2001 and February 2009, there was no separate budgetary designation for GWOT funds—instead, funding associated with those operations was designated as an emergency requirement  The term OCO was not applied to the post-9/11 military operations in Iraq and Afghanistan until 2009  In February 2009, the Obama Administration released A New Era of Responsibili ty: Renewing America's Promise , a presidential fiscal policy document  That document did not mention or reference GWOT; instead, it used the term OCO in reference to ongoing military operations in Iraq and Afghanistan  The first request for emergency funding for OCO—not GWOT—was delivered to Congress in April 2009  Since the FY2010 budget cycle, DOD has requested both base budget and OCO funding as part of its annual budget submission to Congress  Beginning with the National Defense Authorization Act for Fiscal Year 2010 (NDAA; P L  111-84 ), the annual defense authorization bills have referenced the authorization of additional appropriations for OCO rather than the names of U S  military operations conducted primarily in Afghanistan and Iraq  In 2011, the BCA ( P L  112-125 ) amended the BBEDCA to create the Overseas Contingency Ope rations/Global War on Terrorism designation, which provided Congress and the President with an alternate way to exempt funding from the BCA caps without using the emergency designation  Beginning with the Consolidated Appropriations Act, 2012 ( P L  112-74 ), annual appropriations bills have referenced the OCO/GWOT designation  The foreign affairs agencies began formally requesting OCO/GWOT funding in FY2012, distinguishing between what is referred to as enduring, ongoing or base costs versus any extraordinary, temporary costs of the State Department and USAID in supporting ongoing U S  operations and policies in Iraq, Afghanistan, and Pakistan  Congress, having used OCO/GWOT exemption for DOD, adopted this approach for foreign affairs, though its uses for State, Foreign Operations, and Related Programs (SFOPS) activities have never been permanently defined in statute  For the first foreign affairs OCO/GWOT appropriation, in FY2012, funds were provided for a wide range of recipient countries beyond the countries in the President's request, including Yemen, Somalia, Kenya, and the Philippines  In addition to country-specific uses, OCO/GWOT-designated funds were also appropriated for the Global Security Contingency Fund  All budgetary legislation is subject to a set of enforcement procedures associated with the Congressional Budget Act of 1974 ( P L  93-344 ), as well as other rules, such as those imposed by the Budget Control Act of 2011 ( P L  112-125 ) as amended  Those rules provide mechanisms to enforce both procedural and statutory limits on discretionary spending  Enacted on August 2, 2011, the BCA as amended sets limits on defense and nondefense spending  As part of an agreement to increase the statutory limit on public debt, the BCA aimed to reduce annual federal budget deficits by a total of at least $2 1 trillion from FY2012 through FY2021, with approximately half of the savings to come from defense  The spending limits (or caps ) apply separately to defense and nondefense discretionary budget authority  The caps are enforced by a mechanism called sequestration   Sequestration automatically cancels previously enacted appropriations (a form of budget authority) by an amount necessary to reach prespecified levels  The BCA effectively exempted certain types of discretionary spending from the statutory limits, including funding designated for OCO/GWOT  As a result, Congress and the President have designated funding for OCO to support activities that, in previous times, had been funded within the base budget  This was done, in part, as a response to the discretionary spending limits enacted by the BCA  By designating funding for OCO for certain activities not directly related to contingency operations, Congress and the President can effectively continue to increase topline defense, foreign affairs, and other related discretionary spending without triggering sequestration  Congress has repeatedly amended the legislation to raise the spending limits (thus lowering its deficit-reduction effect by corresponding amounts)  Congress has passed four bills that revised the automatic spending caps initially established by the BCA, including the following: American Taxpayer Relief Act of 2012 (ATRA; P L  112-240 ); Bipartisan Budget Act of 2013 (BBA 2013; P L  113-67 ); Bipartisan Budget Act of 2015 (BBA 2015; P L  114-74 ); and Bipartisan Budget Act of 2018 (BBA 2018; P L  115-123 )  On February 9, 2018, three days before President Donald Trump submitted his FY2019 budget request, Congress passed the Bipartisan Budget Act of 2018 (BBA 2018, P L  115-123 )  The act raised the discretionary spending limits set by the BCA from $1 069 trillion for FY2017 to $1 208 trillion for FY2018 and to $1 244 trillion for FY2019  The BBA 2018 increased FY2019 discretionary defense funding levels (excluding OCO) by the largest amounts to date—$85 billion, from $562 billion to $647 billion, and nondefense funding (including SFOPS) by $68 billion, from $529 billion to $597 billion  It did not change discretionary spending limits for FY2020 and FY2021  DOD documents indicate the department in recent years has used OCO funding for activities viewed as unrelated to war  For example, the department's FY2019 budget request estimates $358 billion in OCO funding from FY2015 through FY2019  Of that amount, DOD categorizes $68 billion (19%) for activities unrelated to operations in Afghanistan, Iraq, and Syria  These activities are described as "EDI/Non-War," referring in part to the European Deterrence Initiative, and "Base-to-OCO," referring to OCO funding used for base-budget requirements  Similarly, a DOD Cost of War report from June 2018 shows $1 8 trillion in war-related appropriations from FY2001 through FY2018 for operations primarily conducted in Afghanistan, Iraq, and Syria  Of that total, DOD categorizes $219 billion (12%) as other than "war funds " These funds are described as "Classified," "Modularity," "Fuel (non-war)," "Noble Eagle (Base)," and "Non-War " International affairs agencies also began increasing the share of their budgets designated for OCO, and applying the designation to an increasing range of activities apparently unrelated to conflicts  OCO as a share of the international affairs budget grew from about 21% in FY2012 to nearly 35% in FY2017  Unlike DOD, however, the State Department and USAID have not specified whether any OCO-designated funds are considered part of the agencies' base budgets  According to a DOD budget document from FY2016, the Obama Administration planned to "transition all enduring costs currently funded in the OCO budget to the base budget beginning in 2017 and ending by 2020 " The plan was to describe "which OCO costs should endure as the United States shifts from major combat operations, how the Administration will budget for the uncertainty surrounding unforeseen future crises, and the implications for the base budgets of DOD, the Intelligence Community, and State/OIP  This transition will not be possible if the sequester-level discretionary spending caps remain in place " The BCA remained in effect and OCO funding was used for base-budget requirements  Some defense officials and policymakers say OCO funding enables a flexible and timely response to an emergency or contingency and provides a political and fiscal safety valve to the BCA caps and threat of sequestration  They say if OCO funding were not used in such a manner and discretionary spending limits remained in place, DOD and other federal agencies would be forced to cut base budgets and revise strategic priorities  For example, former Defense Secretary Jim Mattis has said if Congress allows the FY2020 and FY2021 defense spending caps to take effect, the 2018 National Defense Strategy, which calls for the United States to bolster its military advantage against potential competitors such as Russia and China, "is not sustainable " Critics, including Acting White House Chief of Staff Mick Mulvaney, have described the OCO account as a "slush fund" for military and foreign affairs spending unrelated to contingency operations  Mulvaney, former director of the White House Office of Management and Budget (OMB), has described the use of OCO funding for base budget requirements as "budget gimmicks " Critics argue what was once generally restricted to a fund for replacing combat losses of equipment, resupplying expended munitions, transporting troops to and through war zones, and distributing foreign aid to frontline states has "ballooned into an ambiguous part of the budget to which government financiers increasingly turn to pay for other, at times unrelated, costs " OMB criteria for OCO funding include the combat losses of ground vehicles, aircraft, and other equipment; replenishment of munitions expended in combat operations; facilities and infrastructure in the theater of operations; transport of personnel, equipment, and supplies to and from the theater; among other items and activities  Determining which activities are directly related, tangentially related, or unrelated to war operations is often a point of debate  Some have questioned the use of OCO funding to purchase F-35 fighter jets: "It is jumping the shark     There's no pretense that it has anything to do with the region " Others have argued it makes sense for the military to use OCO funding to purchase new aircraft to replace planes used in current conflicts and no longer in production: "What are the conditions that are making the combatant commanders and those with train/equip authority to say, 'We need more of this?'" Congress has appropriated approximately $2 trillion in discretionary budget authority for war-related and other international emergency or contingency-designated activities since 9/11  This figure is a CRS estimate of funding designated for emergencies or OCO/GWOT in support of the broad U S  government response to the 9/11 attacks, as well as other foreign affairs activities, from FY2001 through FY2019  This includes $1 8 trillion for DOD, $154 billion for the Department of State and USAID, and $3 billion for DHS and the Coast Guard (see Table 1 )  These figures do not include emergency-designated funding appropriated in this period for domestic programs, such as disaster response  From FY2001 through FY2009, DOD received $1 8 trillion in appropriations for OCO/GWOT, or approximately 17% of the department's total discretionary budget authority of $10 8 trillion during the period  The department's OCO/GWOT funding peaked in FY2008 both in terms of nominal dollars, at $186 9 billion, and as a share of its discretionary budget, at 28 1% (see Figure 3 ), after the Bush Administration surged additional U S  military personnel to Iraq  The department's OCO funding also increased as a share of its discretionary spending from FY2009 to FY2010 following the Obama Administration's deployment of more U S  military personnel to Afghanistan, and again in FY2017 following enactment of legislation in response to the Trump Administration's request for additional appropriations  In FY2019, the department's OCO/GWOT funding totaled $68 8 billion, or 10% of its discretionary spending  In terms of appropriations titles, more than two-thirds of OCO/GWOT funding since FY2001 has been for Operation and Maintenance (O&M)—nearly double the percentage of base budget funding for O&M over the same period (see Figure 4 )  O&M funds pay for the operating costs of the military such as fuel, maintenance to repair facilities and equipment, and the mobilization of forces  DOD describes "war-related operational costs" as operations, training, overseas facilities and base support, equipment maintenance, communications, and replacement of combat losses and enhancements  In terms of the military services, more than half (55%) of OCO/GWOT funding since FY2001 has gone to the Army—more than double the percentage of base budget funding for the service during this period (see Figure 5 )  Emergency appropriations were initially provided as general "defense-wide" appropriations  Beginning in FY2003, as operations evolved and planning developed, allocations increased and were specifically provided for the services  OCO funding for DOD has not decreased at the same rate as the number of U S  troops in Afghanistan, Iraq, and Syria has decreased  For example, the number of U S  military personnel in Afghanistan, Iraq, and Syria decreased from a peak of 187,000 personnel in FY2008 (including 148,000 in Iraq and 39,000 in Afghanistan) to an assumed level of nearly 18,000 personnel in FY2019 (including 11,958 personnel in Afghanistan and 5,765 personnel in Iraq and Syria)—a decline of approximately 169,000 personnel (90%)  Meanwhile, OCO funding decreased from a peak of $187 billion in FY2008 to $69 billion in FY2019—a decline of approximately $118 billion (63%)  While the number of U S  forces in Afghanistan, Iraq, and Syria has decreased since FY2009, the number of U S  troops deployed or stationed elsewhere to support those personnel has fallen by a lesser degree and, in recent years, remained relatively steady  For example, the number of support forces—that is, personnel from units and forces operating outside of Afghanistan, Iraq, Syria, and other countries (including those stationed in the continental United States or otherwise mobilized) decreased from 112,000 personnel in FY2009 to an assumed level of 76,073 personnel in FY2019—a decline of 35,927 personnel (32%)  In addition, when these support forces are combined with in-country force levels, the total force level decreases by a percentage more similar to the OCO budget, from 297,000 personnel in FY2009 to an assumed level of 93,796 personnel in FY2019—a decline of 203,204 personnel (68%) (see Figure 6 )  Some of these support forces serve in U S  Central Command's area of responsibility, which includes 20 countries in West Asia, North Africa, and Central Asia, and whose forward headquarters is based in Al Udeid Air Base in Qatar  According to DOD, the reason OCO funding has not fallen in proportion to the number of U S  troops in Afghanistan, Iraq, and Syria is "due to the fixed, and often inelastic, costs of infrastructure, support requirements, and in-theater presence to support contingency operations " For example, in FY2019, the department requested $20 billion in OCO funding for "in-theater support"—nearly 30% of the OCO request and more than any other functional category  However, some analysts have noted the U S  military's fixed costs in Afghanistan remained relatively stable at roughly $7 billion a year from FY2005 through FY2013 until after the BCA went into effect—and have since increased to roughly $32 billion a year, suggesting "that roughly $25 billion in 'enduring' or base budget costs migrated into the Afghanistan budget, effectively circumventing the budget caps  The actual funding needed for operations in Afghanistan is roughly $20 billion in FY2019 " Title 10, Section 101, of the United States Code, defines a contingency operation as any Secretary of Defense-designated military operation "in which members of the armed forces are or may become involved in military actions, operations, or hostilities against an enemy of the United States or against an opposing military force " Since the 1990s NATO intervention in the Balkans, DOD Financial Management Regulations (FMR) have defined contingency operations costs as those expenses necessary to cover incremental costs "that would not have been incurred had the contingency operation not been supported " Such incremental costs would not include, for example, base pay for troops or planned equipment modernization, as those expenditures are normal peacetime needs of the DOD  In September 2010, the Office of Management and Budget (OMB), in collaboration with DOD, issued criteria for the department to use in making war/overseas contingency operations funding requests (see Appendix A )  In January 2017, the Government Accountability Office (GAO) concluded the criteria for deciding whether items belong in the base budget or OCO funding "are outdated and do not address the full scope of activities" in the budget request  "For example, they do not address geographic areas such as Syria and Libya, where DOD has begun military operations; DOD's deterrence and counterterrorism initiatives; or requests for OCO funding to support requirements not related to ongoing contingency operations" it states  Section 1524 of the National Defense Authorization Act for Fiscal Year 2018 ( P L  115-91 ), directed the Secretary of Defense to "update the guidelines regarding the budget items that may be covered by overseas contingency operations accounts " Congress has enacted legislation directing DOD to compile reports on the costs of certain contingency operations  Section 1266 of the National Defense Authorization Act for Fiscal Year 2018 ( P L  115-91 ) directs the Secretary of Defense to submit the Department of Defense Supplemental and Cost of War Execution report, known as the Cost of War report, on a quarterly basis to the congressional defense committees and the GAO: "Not later than 45 days after the end of each fiscal year quarter, the Secretary of Defense shall submit to the congressional defense committees and the Comptroller General of the United States the Department of Defense Supplemental and Cost of War Execution report for such fiscal year quarter " The conference report accompanying the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 ( P L  115-245 ) requires DOD to report incremental costs for operations in Afghanistan, Iraq, and other countries in the U S  Central Command area of responsibility and directs: the Secretary of Defense to continue to report incremental costs for all named operations in the Central Command Area of Responsibility on a quarterly basis and to submit, also on a quarterly basis, commitment, obligation, and expenditure data for the Afghanistan Security Forces Fund, the Counter-Islamic State of Iraq and Syria Train and Equip Fund, and for all security cooperation programs funded under the Defense Security Cooperation Agency in the Operation and Maintenance, Defense-Wide Account  DOD's June 2018 Cost of War report to Congress details $1 5 trillion in obligations associated with certain contingency operations from FY2001 through FY2018  That figure includes $757 1 billion for those conducted primarily in Iraq—Operation Iraqi Freedom (OIF), Operation New Dawn (OND), and Operation Inherent Resolve (OIR); $727 7 billion for those conducted primarily in Afghanistan—Operation Enduring Freedom (OEF) and Operation Freedom's Sentinel (OFS); and $27 8 billion for those conducted primarily in the United States (see Table 2 and Figure 7 )  DOD's quarterly Cost of War reports are intended to provide Congress, GAO, and other stakeholders insight into the how the department obligates war-related appropriations  The reports include base and OCO obligations related to war activities, as well as obligation data broken down by certain major operations, service, component, agency, and appropriation  However, as GAO has noted, "the proportion of OCO appropriations not associated with specific operations identified in the statutory Cost of War reporting requirement has trended upward" in part because the criteria DOD uses for making OCO funding requests is outdated and not always used  More recently, the June 2018 Cost of War report does not appear to reference three recently classified overseas contingency operations targeting militants affiliated with al-Qaeda and the Islamic State of Iraq and Syria (ISIS): Operation Yukon Journey in the Middle East, Northwest Africa Counterterrorism, and East Africa Counterterrorism  Some observers have noted other limitations to Cost of War reports, such as incomplete accounting of costs, limited distribution of the documents and underlying data, and formatting that makes it difficult to reconcile the data with information contained in budget justification documents  Between FY2001 and FY2018, Congress appropriated a total of $154 billion in OCO funds for State Department and USAID  For FY2018 (the most recent full-year appropriations for foreign affairs agencies), OCO funding amounted to 22% of the total appropriations for State Department, Foreign Operations and Related Programs appropriation  The Obama Administration's FY2012 International Affairs budget request was the first to include a request for OCO funds for "extraordinary and temporary costs of operations in Iraq, Afghanistan, and Pakistan " At the time, the Administration indicated that the use of this designation was intended to provide a transparent, whole-of-government approach to the exceptional war-related costs incurred in those three countries, thus better aligning the associated military and civilian costs  This first foreign affairs OCO request identified the significant resource demands placed on the State Department as a result of the transitions from military-led to civilian-led missions in Iraq and Afghanistan, as well as the importance of a stable Pakistan for the U S  effort in Afghanistan  The FY2012 foreign affairs OCO request included: for Iraq, funding for the U S  Embassy in Baghdad, consulates throughout Iraq, security costs in light of the then-planned U S  military withdrawal, a then-planned civilian-led Police Development and Criminal Justice Program, military and development assistance in Iraq, and oversight of U S  foreign assistance through the Special Inspector General for Iraq Reconstruction; for Afghanistan, funding to strengthen the Afghan government and build institutional capacity, support State/USAID and other U S  government agency civilians deployed in Afghanistan, provide short-term economic assistance to address counterinsurgency and stabilization efforts, and provide oversight of U S  foreign assistance programs in Afghanistan through the Office of the Special Inspector General for Afghanistan Reconstruction; and for Pakistan, funding to support U S  diplomatic presence and diplomatic security in Pakistan, provide Pakistan Counterinsurgency Capability Funds (PCCF) to train and equip Pakistani forces to eliminate insurgent sanctuaries and promote stability and security in neighboring Afghanistan and the region  In subsequent years, the Administration designated certain State Department activities in Syria and other peacekeeping activities as OCO, and Congress accepted and broadened this expanded use of OCO in annual appropriations  In the FY2017 budget request, the Administration further broadened its use of State OCO funds, applying the designation to funds for countering Russian aggression, counterterrorism, humanitarian assistance, and aid to Africa  In addition to OCO funds requested through the normal appropriations process, the Administration in recent years requested emergency supplemental funding (designated as OCO) to support State/USAID efforts in countering the Islamic State and to respond to global health threats such as the Ebola and Zika viruses  For FY2019, the Trump Administration requested no OCO/GWOT funding for the Department of State and USAID, although the FY2019 House and Senate SFOPS bills ( H R  6385 and S  3108 , 115 th Congress) would have appropriated approximately $8 billion in OCO-designated funding for various priorities  The estimated $154 1 billion in emergency and OCO/GWOT appropriations enacted to date for State/USAID includes major non-war-related programs, such as aid for the 2004 tsunami along Indian Ocean coasts, 2010 earthquake in Haiti, 2013 Ebola outbreak in West Africa, and 2015 worldwide outbreak of the Zika virus; as well as diplomatic operations (e g , paying staff, providing security, and building and maintaining embassies)  OCO/GWOT has also funded a variety of foreign aid programs, ranging from the Economic Support Fund to counter-narcotics in Afghanistan, Pakistan, and Iraq, among other activities in other countries  Figure 8 depicts the emergency or OCO appropriations for foreign affairs activities  Since 2012, when the OCO designation was first used for foreign affairs, more OCO funds have been appropriated than were requested each year, and those have also been authorized to be used in additional countries  Since January 2002, approximately $3 billion of post-9/11 emergency and OCO-designated funding has been provided to the U S  Coast Guard (USCG) for its traditional homeland security missions and for USCG operations in support of U S  Navy activities  This funding has been provided at various times as either an appropriation to the Coast Guard's operating expenses accounts, or as a transfer from Navy accounts to the Coast Guard  Open-source information on the use of those funds has varied  One FY2009 supplemental appropriations request included funding as a transfer, with the intent of funding "Coast Guard operations in support of OIF and OEF, as well as other classified activities " The FY2017 OCO request for annual appropriations for Navy Operations and Maintenance included $163 million for Coast Guard operational support for the deployment of patrol boats to the Northern Arabian Gulf and a port security unit to Guantanamo Bay, among other pay and equipment expenses  The Trump Administration initially requested a total of $89 billion in OCO funding for FY2019  All the funding was requested by DOD  In an amendment to the budget after Congress raised the BCA spending caps as part of the Bipartisan Budget Act of 2018 (BBA 2018; P L  115-123 ), the Administration removed the OCO designation from $20 billion of the funding, in effect, shifting that amount into the DOD base budget request  In a statement on the budget amendment, Mulvaney said the request fixes "long-time budget gimmicks" in which OCO funding has been used for base budget requirements  Beginning in FY2020, "the Administration proposes returning to OCO's original purpose by shifting certain costs funded in OCO to the base budget where they belong," he wrote  Of the revised amount of $69 billion requested for DOD OCO funding in FY2019: $46 3 billion (67%) was for Operation Freedom's Sentinel (OFS) in Afghanistan and related missions; $13 billion (22%) for Operation Inherent Resolve (OIR) in Iraq and Syria and related missions; $4 8 billion (9%) for the European Deterrence Initiative (EDI) to boost the U S  military presence in eastern Europe to deter Russian military aggression; and $0 9 billion (1%) for security cooperation (see Figure 9 )  The FY2019 OCO budget assumes a total force level (average annual troop strength) of 93,796 personnel  That figure includes: 11,958 primarily in Afghanistan (OFS); 5,765 primarily in Iraq and Syria (OIR); 59,463 for in-theater support; and 16,610 primarily in the continental United States (CONUS) or otherwise mobilized (see Figure 10 )  The number of personnel actually in-country or in-theater at any given time may exceed or fall below those assumed levels  The FY2019 force level assumes an increase of 3,153 personnel (3 5%) from the FY2018 assumed level, all of which is assumed for in-theater support  (For analysis of troop level and budget trends, see the section, " Trends in OCO Funding and Troop Levels ," earlier in this report ) As previously discussed, DOD acknowledges "OCO funding has not declined at the same rate as the in-country troop strength … due to the fixed, and often inelastic, costs of infrastructure, support requirements, and in-theater presence to support contingency operations " The departments lists the following as OCO cost drivers: In-theater support, including infrastructure costs like command, control, communications, computers, and intelligence (C4I) and base operations for U S  Central Command (CENTCOM) locations; Persistent demand for combat support such as intelligence, surveillance, and reconnaissance (ISR) assets used to enhance force protection; Equipment reset, which lags troop level changes and procurement of contingency-focused assets like munitions, unmanned aerial vehicles and force protection capabilities that may not be linked directly to in-country operations; and International programs and deterrence activities, which are linked to U S  engagement in contingency operations and support U S  interests but are not directly proportional to U S  troop presence  DOD also breaks down the FY2019 OCO budget request by functional category (see Table 3 )  By this measure, the largest portion of OCO funding was $20 billion for in-theater support, followed by operations and force protection (including the incremental cost of military operations in Afghanistan, Iraq, Syria, and other countries), at $14 7 billion; and unspecified classified programs, at $9 9 billion  According to the Congressional Budget Office (CBO), approximately $47 billion (68%) of the FY2019 OCO budget request consists of enduring activities—that is, "those that would probably continue in the absence of overseas conflicts"—that could be funded in the DOD base budget  CBO associates enduring activities with the following DOD functional categories: in-theater support, classified programs, equipment reset and readiness, European Deterrence Initiative, security cooperation, and joint improvised-threat defeat  Executive Branch budget documents for FY2019 show differing projections for how much OCO would be apportioned over the Future Years Defense Program (also known as the FYDP, pronounced "fiddip," the five-year period from FY2019 through FY2023)  For example, Table 1-11 in DOD's National Defense Budget Estimates for FY2019, citing OMB data, projects five-year OCO funding at $359 billion  However, Table 1-9 of the same document puts the figure at $149 billion after assuming a higher amount of OCO funding shifting into the base budget  According to OMB, the President's initial FY2019 budget request projected increasing caps on defense discretionary base budget authority by $84 billion (15%) to $660 billion in FY2020 and by $87 billion (15%) to $677 billion in FY2021  It also projected defense funding for Overseas Contingency Operations (OCO) totaling $73 billion in FY2020 and $66 billion in FY2021  Thus, projected defense discretionary funding would total $733 billion in FY2020 and $743 billion in FY2021  FY2019 DOD budget documents show the same defense discretionary topline for FY2020 and FY2021  But they list an "Outyears Placeholder for OCO" of $20 billion in fiscal years FY2020-FY2023, and an "OCO to Base" amount of $53 billion in FY2020 and $45 8 billion in each year from FY2021-FY2023  The documents do not break down what accounts or activities are included in these amounts  The emergence of any new contingencies or conflicts would likely change DOD assumptions about OCO needs  Congress has appropriated a total of $68 8 billion for DOD OCO funding in FY2019, including the following amounts: $67 9 billion in defense funds provided in the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 ( P L  115-245 ), which Congress passed on September 26, 2018; and $921 million in defense funds provided in the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019 ( P L  115-244 ), which Congress passed on September, 21, 2018  For the Department of State and USAID, as well as the Department of Homeland Security and U S  Coast Guard, FY2019 OCO levels have not yet been determined  They remain at prorated FY2018 levels because of continuing resolutions (CR) to fund certain agencies through December 21, 2018  The FY2019 House and Senate SFOPS bills ( H R  6385 and S  3108 , 115 th Congress) would have appropriated approximately $8 billion in OCO-designated funding for various priorities  The House committee-reported version of the Homeland Security appropriations bill ( H R  6776 , 115 th Congress) would not have appropriated any OCO/GWOT funding for the Coast Guard, while the Senate committee-reported version of the bill ( S  3109 , 115 th Congress) would have appropriated $165 million for OCO/GWOT funding for the Coast Guard  Any decision by the 116 th Congress to change discretionary defense and nondefense spending limits that remain in effect for FY2020 and FY2021 under the Budget Control Act (BCA; P L  112-25 ) could impact future OCO funding levels  Lawmakers may consider the following questions: Will Congress keep the BCA as is and rely on OCO funding that is not subject to the caps to meet agency requirements? Will Congress repeal the BCA and use less OCO funding? Will Congress amend the BCA limits for future years and continue to use OCO funding, as it has in the past? Will Congress significantly reduce DOD and international affairs funding to stay within the BCA caps and not use OCO funding? In a November 2018 report, the National Defense Strategy Commission, a bipartisan panel created by Congress, issued recommendations related to OCO and the BCA  Recommendation No  24 states, "Congress should eliminate the final two years of caps under the BCA " Recommendation 29 states, "To better prepare for major-power competition, Congress should gradually integrate OCO spending back into the base Pentagon budget  This also requires a dollar-for-dollar increase in the BCA spending caps, should they remain in force, so that this transfer does not result in an overall spending cut " Both House and Senate FY2019 committee-reported appropriations bills from the 115 th Congress included about $8 billion in OCO funding for State/USAID  It remains to be seen if the 116 th Congress will pass this OCO level as requested or extend the continuing resolution  Congress could enact legislation to authorize and appropriate a level of base and OCO spending to meet current or revised discretionary defense spending caps in any number of ways  In FY2019 budget documents from OMB and DOD, the Trump Administration projected increasing defense spending in FY2020 and FY2021 beyond the statutory limits of the Budget Control Act of 2011 ( P L  112-25 ), but by differing amounts based on differing OCO projections  These figures serve as possible scenarios or options for Congress to consider  According to OMB budget documents, the President's initial FY2019 budget request projected $733 billion in defense discretionary spending in FY2020, including a base budget of $660 billion (which assumes an $84 billion, or 15%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO defense budget of $73 billion (see Figure 11 )  According to DOD budget documents, the President's revised FY2019 budget request projected $733 billion in defense discretionary spending in FY2020, including a base budget of $713 billion (which assumes a $137 billion, or 24%, increase in the BCA defense cap—what would be the largest increase to the BCA defense caps yet—or repeal of the legislation altogether) and an OCO budget of $20 billion  Alternatively, assuming no change in the cap and congressional support for the Administration's projected $733 billion topline in FY2020, Congress could keep the BCA defense cap unchanged at $576 billion and designate an additional $157 billion for OCO  According to OMB budget documents, the President's initial FY2019 budget request projected $743 billion in defense discretionary spending in FY2021, including a base budget of $677 billion (which assumes an $87 billion, or 15%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO budget of $66 billion (see Figure 11 )  According to DOD budget documents, the President's revised FY2019 budget request projected $743 billion in defense discretionary spending in FY2021, including a base budget of $723 billion (which assumes a $133 billion, or 23%, increase in the BCA defense cap—or repeal of the legislation altogether) and an OCO budget of $20 billion  Alternatively, assuming no change in the cap and congressional support for the Administration's projected $743 billion topline in FY2020, Congress could keep the BCA defense cap unchanged at $590 billion and designate an additional $153 billion for OCO  As previously discussed, these figures would change with different toplines for the national defense budget function (050)  Former Defense Secretary Jim Mattis and the National Defense Strategy Commission have recommended that Congress increase the defense budget between 3% and 5% a year above inflation ("real growth") to meet U S  strategic goals  President Donald Trump has said the discretionary defense spending request would total $700 billion in FY2020, a decrease of 2% in nominal terms from FY2019  Trump said, "We know what the budget—the new budget is for the Defense Department  It will probably be $700 billion " However, some media outlets have since reported that the President intends to request a discretionary defense budget of $750 billion in FY2020  Senator James Inhofe, chairman of the Senate Armed Services Committee, and Representative Mac Thornberry, ranking member of the House Armed Services Committees in the 116 th Congress, have argued, "Any cut in the defense budget would be a senseless step backward " Thornberry has also said transferring recurring OCO costs into the regular budget "makes sense … it makes for more predictable budgeting, but it's all about what happens on the topline " Representative Adam Smith, chairman of the House Armed Services Committee in the 116 th Congress, has said of the defense budget: "I think the number is too high, and it's certainly not going to be there in the future … We've got a debt, we've got a deficit, we've got infrastructure problems, we've got healthcare, education—there's a whole lot that is necessary to make our country safe, secure, and prosperous " Acting Defense Secretary Patrick Shanahan has talked about a flat topline for national defense: "When you look at the $700 billion, it's not just for one year drop down, [or] a phase, it's a drop and then held constant" over the FYDP  Under Secretary of Defense (Comptroller)/Chief Financial Officer David Norquist, who is also performing the duties of the Deputy Secretary of Defense, at one time was reportedly preparing two budgets for FY2020—one assuming $733 billion for national defense and another assuming $700 billion  An analyst has noted "returning enduring OCO costs to the base budget, particularly a vast majority of those enduring costs over a short period as DOD has outlined, could significantly complicate an agreement between congressional Democrats and Republicans to increase both the defense and nondefense BCA budget caps for FY2020 and FY2021 " As analyst noted, "OCO has become an even less-defined pot of money … Congress needs to properly question the DOD budget planners on the future of OCO " In a January 2017 report, GAO concluded, "Without a reliable estimate of DOD's enduring OCO costs, decision makers will not have a complete picture of the department's future funding needs or be able to make informed choices and trade-offs in budget formulation and decision making " The department states it has not fully estimated those costs in part because of the BCA  In a response to GAO, DOD wrote, "Developing reliable estimates of enduring OCO costs is an important first step to any future effort to transition enduring OCO costs to the base budget  In the context of such an effort, the Department would consider developing and reporting formal estimates of those costs  However, until there is sufficient relief from the budgetary caps established in the Budget Control Act of 2011, the Department will need OCO to finance counterterrorism operations, in particular [OFS] and [OIR] " In an October 2018 report, the Congressional Budget Office estimated OCO funding for DOD enduring activities—that is, those that would probably continue in the absence of overseas conflicts—totaled more than $50 billion a year (in 2019 dollars) from 2006 to 2018—and are projected to total about $47 billion a year starting in FY2020  This figure appears to be consistent with projections published by DOD  According to the department's FY2019 budget documents, DOD projected $53 billion for "OCO to Base" in FY2020 and $45 8 billion for "OCO to Base" for FY2021 through FY2023  Some analysts have concluded: Uncertainty created by current reliance on OCO, particularly to fund base budget needs, could be detrimental to national security on three levels: (a) by undermining budget controls and contributing thereby to larger deficits, (b) by generating insecurity in the defense workforce and in defense suppliers, and (c) by creating long-term uncertainty in defense planning  The alternative, transitioning longer-term OCO expenses to the base budget, could be achieved through a combination of increased budget caps, targeted cuts in inefficient Defense programs, and increased revenues  For example, a potential enduring activity in the OCO budget is the European Deterrence Initiative (EDI)  It was previously known as the European Reassurance Initiative (ERI), an effort that began in June 2014 to increase the number of U S  military personnel and prepositioned equipment in Central and Eastern Europe intended in part to reassure NATO allies after Russia's military seized Crimea  As some analysts have noted, "Because it is in the OCO part of the budget request, EDI funding does not include a projection for how much funding will be allocated in future years, which can create uncertainty in the minds of allies and adversaries alike about the U S  military's commitment to the program " On the other hand, some contend that it is precisely EDI's flexibility that allows the commander of European Command to quickly respond to changing security and posture needs in Europe, and ensure that monies intended for European deterrence will not be redirected to other DOD priorities  In its November 2018 report, the National Defense Strategy Commission quoted the late military strategist Bernard Brodie, who wrote "strategy wears a dollar sign " The panel concluded that relying on OCO funding to increase the defense budget "is not the way to provide adequate and stable resources" for the type of great power competition outlined in the Secretary of Defense's 2018 National Defense Strategy (NDS), which calls for the United States to bolster its competitive military advantage relative to threats posed by China and Russia: Because of budgetary constraints imposed by the BCA, lawmakers and the Department of Defense have increasingly relied upon the overseas contingency operations (OCO) fund to pay for warfighting operations in the greater Middle East, as well as other activities and initiatives  Yet this approach to resourcing has produced problems and distortions of its own  For one thing, the amount of money devoted to OCO since the BCA was enacted no longer corresponds to warfighting operations in the greater Middle East  Furthermore, such operations are no longer a top priority as articulated in the NDS  Finally, reorienting the military toward high-end competition and conflict will require new capabilities beyond the current program of record  OCO is not the way to provide adequate and stable resources for such a long-term endeavor, given its lack of predictability and the limitations on what OCO funds can be used to buy " Appendix A  Statutes, Guidance, and Regulations The designation of funding as emergency requirements or for Overseas Contingency Operations/Global War on Terrorism (OCO/GWOT) is governed by several statues as well as Office of Management and Budget (OMB) guidance and the Department of Defense (DOD) Financial Management Regulation (FMR)  The Balanced Budget and Emergency Deficit Control Act (BBEDCA) of 1985 BBEDCA, as amended, includes the statutory definitions of emergency and unanticipated as they relate to budget enforcement through sequestration  The act also allows for appropriations to be designated by Congress and the President as emergency requirements or for Overseas Contingency Operations/Global War on Terrorism   Such appropriations are effectively exempt from the statutory discretionary spending limits  Title 10, United States Code—Armed Forces 10 U S C  101—Definitions Section 101 provides definitions of terms applicable to Title 10  While it does not define overseas contingency operations, it does include a definition of a contingency operations   Administration and Internal Guidance In addition to statutory requirements, the DOD and the Department of State are subject to guidance on OCO spending from the Administration  In October 2006 , under the Bush Administration, then-Deputy Secretary of Defense Gordon England directed the services to break with long-standing DOD regulatory policies and expand their request for supplemental funding to reflect incremental costs related to the "longer war on terror " There was no specific definition for the "longer war on terror," now one of the core missions of the DOD  In February 2009, at the beginning of the Obama Administration, the Office of Management and Budget (OMB) issued updated budget guidance that required DOD to move some OCO costs back into the base budget  However, within six months of issuing the new criteria, officials waived restrictions related to pay and that would have prohibited end-strength growth  In a letter from OMB to the then-Under Secretary of Defense (Comptroller) Robert Hale, the agency characterized its 2009 criteria as "very successful" for delineating base and OCO spending but stated, "This update clarifies language, eliminates areas of confusion and provides guidance for areas previously unanticipated " GAO subsequently reported that the revised guidance significantly changed the criteria used to build the fiscal year 2010 OCO funding request by: specifying stricter definitions for repair and procurement of equipment; limiting applicability of OCO funds for RDT&E; excluding pay and allowances for end-strength above the level requested in the budget; excluding enduring family support initiatives; and excluding base realignment and closures (BRAC) amounts  OMB again revised its guidance in September 2010 following a number of GAO reports that had concluded DOD reporting on OCO costs was of "questionable reliability," due in part to imprecisely defined financial management regulations related to OCO spending  (as of September 9, 2010) Source: Letter from Steven M  Kosiak, Associate Director for Defense and Foreign Affairs, OMB, to Robert Hale, Under Secretary of Defense, Comptroller, "Revised War Funding Criteria," September 9, 2010  DOD Financial Management Regulations DOD incorporated the September 2010 OMB criteria for war costs into the Financial Management Regulation  Table 1 includes the general cost categories DOD uses in accounting for costs of contingency operations  Appendix B  Transfer Authorities, Special Purpose Accounts In addition to the supplemental appropriations and emergency or OCO/GWOT designation, the Department of Defense and the Department of State also have the authority to shift funds from one budget account to another in response to operational needs  For DOD, these transfers (sometimes called reprogramings ) are statutorily authorized by 10 U S C  2214—Transfer of funds: procedures and limitations  This authority allows the Secretary of Defense to reallocate funds for higher priority items, based on unforeseen military requirements, after receiving written approval from the four congressional defense committees  DOD may also reprogram funds within an account from one activity to another, as long as the general purpose for the use of those funds remains unchanged  Specific limits to transfer or reprogramming authorities have also been added to these general authorities through provisions in annual defense authorization and appropriation acts  The FY2019 defense appropriations bill sets the base budget transfer cap at $4 billion and the OCO transfer cap at $2 billion  The Department of State's OCO transfer authority has been provided in appropriations acts and has specifically authorized the Administration to transfer OCO funds only to other OCO funds within Title VIII SFOPS appropriations, not between OCO and base accounts  The transfer authority is capped, specified by account, and requires regular congressional notification procedures  Overseas Contingency Operations Transfer Fund (OCOTF) The OCOTF was established for DOD in FY1997 as a no year transfer account (meaning amounts are available until expended) in order to provide additional flexibility to meet operational requirements  Transfers from the OCOTF are processed using existing reprogramming procedures  A quarterly report is submitted to the congressional oversight committees, documenting all transfers from the OCOTF to DOD components base budget accounts  Beginning in FY2002, funds to support Southwest Asia, Kosovo, and Bosnia contingency requirements were appropriated directly to DOD components' Operation and Maintenance (O&M) and Military Personnel accounts rather than to the OCOTF for later disbursement  FY2014 was the last year the Administration requested a direct appropriation to the OCOTF  Contingency Operations Funded in the DOD Base Budget As first mandated by section 8091 of the Department of Defense Appropriations Act, 2008 ( P L  110-116 ), Congress has required DOD to provide separate annual budget justification documents detailing the costs of U S  armed forces' participation in all named contingency operations where the total cost of the operation exceeds $100 million or is staffed by more than 1,000 U S  military personnel  Funding for certain DOD contingency operations has been moved to the base budget request, and is no longer designated as emergency or OCO/GWOT requirements  This movement of funding from the OCO request to the base budget request typically occurs as the operational activities of an enduring contingency operation evolve over time and DOD determines that certain elements of the associated military operations have become stable enough to be planned, financed, and executed within the base budget  For example, funding for Operation Noble Eagle, which provides fighter aircraft on 24/7 alert at several U S  military bases, was moved from the GWOT request to the base budget request in 2005  Contingency operations and other activities funded wholly or in part through DOD's base budget have included: NATO Operations in the Balkans   The U S  Army and U S  Air Force provide support to the North Atlantic Treaty Organization-led operations in the Balkans region  Most U S  forces are deployed to Kosovo in support of the NATO-led Kosovo Force (KFOR)  A small number of U S  personnel are deployed to the NATO headquarters in Sarajevo in Bosnia and Herzegovina; Joint Task Force - Bravo   U S  forces support this task force, which operates from Soto Cano Air Base in Honduras and supports joint, combined, and interagency exercises and operations in Central America to counter the influence of transnational organized crime; carry out humanitarian assistance and disaster relief; and build military capacity with regional partners and allied nations to promote regional cooperation and security; Operation Juniper Shield  Previously known as Operation Enduring Freedom-Trans Sahara (OEF-TS), this operation supports efforts to defeat violent extremist organizations in East Africa  This operation also provides military-to-military engagement with partner African countries, as well as readiness for crisis response and evacuation of U S  military, diplomatic, and civilian personnel; Operation Noble Eagle   This operation funds the continuing efforts to defend the United States from airborne attacks, maintain the sovereignty of the United States airspace, and defend critical U S  facilities from potentially hostile threats or unconventional attacks; Operation Enduring Freedom- Horn of Africa   This operation was established to support efforts to defeat violent extremist organizations in East Africa; provide military-to-military engagement with partner African countries, as well as readiness for crisis response and evacuation of U S  military, diplomatic, and civilian personnel throughout East Africa; Operation Enduring Freedom- Caribbean and Central America   A U S  regional military operation initiated in 2008, under the operational control of Special Operations Command-South, this operation was established to focus on counterterrorism to support DOD's overall military objectives and the larger fight against terrorism  Operation Observant Compass   This operation was established to support the deployment of approximately 100 U S  military personnel assisting the Ugandan People's Defense Force and neighboring partner African countries in countering the Lord's Resistance Army operations  Operation Spartan Shield  This operation was established to support ongoing U S  Central Command missions  Other Congressionally Authorized Funds or Programs Through the OCO authorization and appropriation process, Congress has created numerous funds and programs that are designed to finance specific overseas contingency operations-related activities that do not fit into traditional budgetary accounts  Many of these funds and programs are supplied with amounts that are available until expended—however, authorization for the specified fund or program has an expiration date, thereby requiring further congressional action for reauthorization of affected funds or programs  Congress has also provided increased transfer authority to provide greater flexibility for U S  government activities in situations that are typically unpredictable  Examples of these types of congressionally authorized OCO programs or funds have included: Afghan istan Security Forces Fund (ASFF) and Counter-ISIS Train and Equip Fund (CTEF)   These funds were established to provide funding and support for the training, equipping, and expansion of selected military and security forces in support of U S  objectives; Counterterrorism Partnership s Fund   This fund was established to provide funding and support to partner nations engaged in counterterrorism and crisis response activities; Command er's Emergency Response Program  This program was established to support infrastructure improvements, such as road repair and construction and enable military commanders on the ground to respond to urgent humanitarian relief and reconstruction needs by undertaking activities that will immediately aid local populations and assist U S  forces in maintaining security gains; Joint Improvised Explosive Device (IEDs) Defeat Fund   This fund was established to coordinate and focus all counter-IED efforts, including ongoing research and development, throughout DOD  Due to the enduring nature of the threat, DOD began moving associated funding to the base budget in FY2010; Mine Resistant Ambush Protected Vehicle (MRAP) Fund   This fund was intended to expedite the procurement and deployment of MRAPs to Iraq and Afghanistan; European Deterrence Initiative (EDI)   Initially the European Reassurance Initiative (ERI), this effort was established to provide funding and support to NATO allies and partners to "reassure allies of the U S  commitment to their security and territorial integrity as members of the NATO Alliance, provide near-term flexibility and responsiveness to the evolving concerns of our allies and partners in Europe, especially Central and Eastern Europe, and help increase the capability and readiness of U S  allies and partners;" Global Security Contingency Fund   This fund was established to provide funding for the Department of State and the Department of Defense "to facilitate an interagency approach to confronting security challenges;" Complex Crise s Fund   This fund was established to provide funding through the State Department and USAID "to help prevent crises and promote recovery in post-conflict situations during unforeseen political, social, or economic challenges that threaten regional security;" Migration and Refugee Assistance Fund   This fund was established to provide funding to respond to refugee crises in Africa, the Near East, South and Central Asia, and Europe and Eurasia; and Ukraine Security Assistance Initiative   This initiative was established to provide assistance, including training, equipment, lethal weapons, of a defensive nature; logistics support; supplies and services; sustainment; and intelligence support to the military and national security forces of Ukraine  This is an update to a report originally co-authored by [author name scrubbed], former CRS Specialist in Defense Readiness and Infrastructure  It references research previously compiled by [author name scrubbed], former CRS Specialist in U S  Defense Policy and Budget; Christopher Mann, Analyst in Defense Policy and Trade; [author name scrubbed], Analyst in U S  Defense Acquisition Policy; [author name scrubbed], CRS Specialist on Congress and the Legislative Process; and [author name scrubbed], CRS Analyst in Public Finance  [author name scrubbed], Research Assistant, helped compile the graphics 


Report 2: The defense lab enterprise consists of 63 labs, warfare centers, and engineering centers across the Departments of the Army, Navy, and Air Force, as shown in Figure 1 below  About 50,000 federally employed scientists and engineers work at these defense labs to support warfighter needs and develop transformative capabilities  Defense labs are managed and operated within the military service chain of command  DOD budgets for technology and product development activities under its research, development, test, and evaluation budget, which DOD groups into seven budget activity categories for its annual budget estimates  Air Force and Army labs rely on appropriated funding provided from the service—often referred to as mission funding—or from customers (or some combination thereof)  Customers, such as program offices, provide funding to defense labs for technology development activities and related research  The Air Force and Army funding structure is in contrast to Navy research and development activities, which operate under the Navy Working Capital Fund—a revolving fund that finances Department of the Navy activities on a reimbursable basis  Under this funding model, the Navy employs a Capital Investment Program to obtain capital assets, including minor military construction projects for labs  The program provides the framework for planning, coordinating, and controlling Navy working capital funds and expenditures to obtain capital assets  Figure 2 illustrates the varying funding models used by the military service labs  In addition to its labs, DOD sponsors other entities to provide for its technology development needs  Specifically, these include: FFRDCs are operated by universities, other not-for-profit or nonprofit organizations, or private firms under long-term contracts and provide special research and development services that generally cannot be readily satisfied by government personnel or private contractors  For example, the Massachusetts Institute of Technology Lincoln Laboratory develops key radar and electronic warfare technologies for integrated air and missile defense systems  In addition, the Software Engineering Institute operated by Carnegie Mellon University provides cybersecurity solutions for defense entities  While DOD sponsors 10 FFRDCs in total, it designates 3 FFRDCs as research and development labs, which maintain long-term competencies in key technology areas  In addition to these, DOD sponsors 2 systems engineering and integration FFRDCs and 5 studies and analysis FFRDCs  UARCs provide specialized research and development services similar to FFRDCs and also operate under long-term contracts  However, unlike FFRDCs, DOD requires that UARCs be affiliated with a university  Generally, UARCs may not compete against industry in response to a competitive Request for Proposals for development or production that involves engineering expertise  DOD currently sponsors 13 UARCs  Key DOD offices provide oversight to the defense labs: The Under Secretary of Defense for Research and Engineering (USD(R&E))—the principal advisor to the Secretary of Defense for research, engineering, and technology development activities and programs—serves as DOD’s chief technology officer  The powers and duties of this office include establishing policies and providing oversight for DOD’s research, engineering, and technology development activities  The Defense Laboratories Office—within the Office of the USD(R&E)—supports DOD’s research and engineering mission by helping to ensure comprehensive department-level insight into the activities and capabilities of the defense labs  This office carries out a range of core functions related to the defense labs, including analysis of capabilities, alignment of activities, and advocacy  Congress has granted authorities that address hiring, infrastructure, and technology transition challenges to defense labs since 1995  These authorities provide defense lab directors with certain flexibilities within the established legal framework to manage their operations  While Congress has provided a number of authorities, in this report we focus on four authorities that our prior work on best practices in science and technology management and expedited lab hiring has shown are, or have the potential to be, the most crucial for supporting innovation within DOD labs  Laboratory Initiated Research Authority  This authority provides lab directors with the means to fund some of the research projects that the lab will pursue  The authority provided in Section 219 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, as implemented, provides lab directors with a means to fund projects they consider to be a priority in four allowable categories: (1) basic and applied research, (2) technology transition, (3) workforce development, and (4) revitalization, recapitalization, or repair or minor construction of lab infrastructure  These projects include those not specifically tied to defined requirements, outside of the normal 2-year budget planning process  The authority directs the Secretary of Defense to establish mechanisms under which lab directors may use an amount of funds equal to not less than 2 percent and not more than 4 percent of all funds available to the defense lab for projects under the four allowable categories  Further, lab directors are permitted to obtain additional funding by charging customers a fixed percentage fee that may not exceed 4 percent of costs  Direct Hire Authorities  These authorities provide lab directors with a streamlined and accelerated hiring process  Congress has enacted four types of direct hire authorities since 2008, which help labs compete with private industry and academia for high-quality scientific, engineering, and technical talent  Specific types of direct hire authorities include hiring: (1) candidates with advanced degrees; (2) candidates with bachelor’s degrees; (3) veterans; and (4) students currently enrolled in graduate or undergraduate science, technology, engineering, and mathematics (STEM) programs , Laboratory Enhancement Pilot Program  This authority provides methods for effective lab management operations  Section 233 of the National Defense Authorization Act for Fiscal Year 2017 established a pilot program for lab directors to propose alternative and innovative methods that might lead to more effectively managing labs, and authorized lab directors to waive any regulation, restriction, requirement, guidance, policy, procedure, or departmental instruction that would affect implementation of these methods, unless such implementation would be prohibited by a provision of an existing statute or common law  Micro-purchase Authority  This authority facilitates the purchasing process for labs  The FAR states a preference for government agencies to purchase and pay for micro-purchases of supplies or services using the government-wide commercial purchase card up to and at the micro-purchase threshold, but micro-purchases may be conducted using any of the simplified acquisition methods  This facilitates the ability of lab officials to quickly and easily acquire needed items for their activities and reduce the administrative costs associated with such small purchases  While the FAR micro-purchase was generally $3,500 during our review, Congress increased it to $10,000 for activities of the science and technology reinvention labs in Section 217 of the National Defense Authorization Act for Fiscal Year 2017  As we found in June 2018, the federal government spends approximately $137 billion annually government-wide on research and development (R&D) to help further agencies’ missions, including at federal labs  From fiscal years 2015 to 2017, DOD, Energy, and NASA represented three of the top four federal agencies with the highest annual federal R&D spending, accounting for about 66 percent of total federal R&D spending on average, as shown in Figure 3  While the labs primarily support the agencies that directly fund them, DOD, Energy, and NASA research entities also collaborate extensively to support activities of shared interest  For example, DOD and NASA research centers have collaborated to develop hypersonic vehicle capabilities  Further, Energy’s national labs help provide critical national security capabilities for DOD and support NASA’s deep space mission radioisotope requirements  In 2017, Energy reported performing about $2 6 billion of work per year from fiscal years 2011 through 2015 for other federal agencies and other customers, including DOD  Most defense labs have used the selected authorities since 2008, but their use has sometimes been limited for a variety of reasons  According to lab directors, this is because of DOD legal and policy restrictions and stakeholder concerns  For example: Use of the laboratory initiated research authority was limited by DOD’s military construction funding and financial management policies  Use of the direct hire authority was limited, in part, by personnel- related delays, security clearance challenges, and military hiring restrictions  Use of the laboratory enhancement pilot program was limited by stakeholder uncertainty about how to use this authority effectively  Use of the increased micro-purchase authority was limited by stakeholder concerns about the authority’s potential effect on small businesses  We found that most defense labs have used the laboratory initiated research authority  Twenty-three of 31 of respondents to our survey— about 74 percent—reported obligating funds under this authority  However, we found that most labs are not using the full 4 percent of all funds available to each lab, or charging customers the full fixed percentage fee of 4 percent of costs, as allowed by law  Specifically, we found that, as of September 2018: Navy labs reported charging customers a percentage fee of about 2 percent of costs as of fiscal year 2018  Prior to this, Navy labs only charged a 1 percent fixed fee on these costs  Because Navy labs are working capital funded organizations, they can use payments from customers for goods delivered or services performed  Army labs reported using between 2 and 3 percent of all funds available to the lab for projects under the four allowable categories and charging customers a fixed fee of between zero and 3 percent of costs to fund such activities  Only the Air Force Research Laboratory reported using the full 4 percent of all funds available to the lab  According to agency officials, the lab is using 3 percent of all funds available to the lab and is allowing individual technology directorates the option to use the additional 1 percent of funds available  In fiscal year 2018, three of the lab’s nine technology directorates chose to use this additional 1 percent  However, the lab has not charged customers a fixed percentage fee on their costs at all  As figure 4 shows, in fiscal year 2017, the aggregate fixed percentage fee charged by labs in each of the military departments totaled under the full 4 percent allowed by law for each funding source  Decisions to charge lower percentages are decisions to forego additional potential funding, although agencies have various reasons why this can happen, as we will discuss later  In total, DOD reported that this authority provided almost $300 million to labs in fiscal year 2017 and funded more than 1,750 projects across the four allowable categories, as Figure 5 illustrates  We previously found, in June 2017, that the laboratory initiated research authority provides defense lab directors with limited flexibility to initiate science and technology projects  These projects include those that are not road mapped or tied to defined requirements outside of the normal 2- year budget planning process, and are focused on both near- and long- term needs  For this review, defense lab officials we interviewed stated that the laboratory initiated research authority enables their scientists and researchers to pursue projects not necessarily tied to requirements and provides necessary funds for workforce development and lab infrastructure projects  Further, as shown in Figure 6, lab directors we surveyed generally view the authority as both fostering innovation and increasing efficiency across the four allowable categories on which funds can be used  In accordance with the one of the statutory purposes for the use of the funds, lab directors have developed new, innovative technologies using this authority  For example, DOD reported that: In fiscal year 2017, the Naval Surface Warfare Center, Crane Division, developed and fielded a solution to an urgent requirement for defeating small unmanned aerial vehicles that attack Navy assets or surveil naval activities  The center delivered this technology to the warfighter in May 2017 just 7 weeks after the Navy submitted the requirement  The Army Research Laboratory used the authority to fund a project that eventually developed a material that could increase the speed and lower the power needs of future generations of computer chips, thereby supporting Army networks  The Navy invested more than $700 thousand in laboratory initiated research authority funds to commission a Ballast Water Research Lab at Naval Surface Warfare Center, Carderock Division  Through the use of this new facility, engineers will be able to study ways to treat ballast water to prevent introduction of non- native aquatic species into a new environment that can be disastrous for the marine life that already inhabit that environment, and ensure that the Navy is able to meet various port regulations around the world for its ships  The Air Force Research Laboratory invested funds in fiscal year 2017 to renovate an existing facility to provide high performance computing capability to aid the rapid development of “game-changing” technologies and weapon systems  Officials at the Army’s Space and Missile Defense Command Technical Center noted they used the laboratory initiated research authority for the first time in fiscal year 2018 because the current executive director, who assumed the position in 2017, prioritized implementing this authority  Most of the Center’s planned investments are focused on workforce development and laboratory infrastructure projects; officials cited a high energy laser technology lab as one of the projects being supported by the revitalization, recapitalization, or minor military construction portion of this authority  Although the majority of defense labs reported using the laboratory initiated research authority, interviews we conducted throughout our review, along with other DOD reports, identified certain obstacles that have, at times, impeded wider usage  DOD-wide military construction funding restrictions  DOD restrictions limit the amount of laboratory initiated research authority funds that labs can spend on lab infrastructure  DOD’s limit is $6 million for the revitalization and recapitalization projects that can be funded under the laboratory initiated research authority  Lab officials stated that this amount is often insufficient to construct advanced lab facilities  Air Force Research Laboratory officials indicated that it is nearly impossible to construct lab facilities for less than $6 million  Officials at the Army’s Aviation and Missile Research, Development and Engineering Center echoed this sentiment and noted that they have primarily used funds to renovate existing buildings rather than fund new lab facility construction  In January 2017, the Defense Science Board identified lab infrastructure challenges, including that the average age of research and development facilities was nearly 50 years  Further, the Board reported that the labs are usually not successful in competing against broader service needs for military construction funds  Air Force does not charge customers a fixed percentage fee of costs  The Air Force Research Laboratory reported that it is not charging customers the allowable fixed percentage fee of costs to fund science and technology activities because it does not have a mechanism in place to do so  Air Force Research Laboratory officials estimated the lab would collect approximately $3 million a year if the lab charged customer activities the maximum allowable fee (4 percent)  Air Force financial management officials stated that the service’s accounting system does not currently have an automated capability to transfer the allowable percentage fee of costs to a central account at the Air Force Research Laboratory  This lack of capability, officials noted, creates a significant administrative burden for charging these fees  The officials stated that they have not yet estimated the cost to add an automated capability  Although it is possible for the Air Force Research Laboratory to charge customer work orders manually—outside of the Air Force’s accounting system—officials with the Office of the Assistant Secretary of the Air Force for Financial Management and Comptroller perceive that the resources (time and people) required to manage such a process would be cost prohibitive  However, according to these officials, the Air Force has not assessed the costs required to improve the accounting system to do so, nor has it identified the potential benefits any improvements would provide  Federal internal control standards state that changes in condition affecting an entity and its environment often require changes to the entity’s internal control system, as existing controls may not be effective for meeting objectives (or addressing risks) under changed conditions  Further, these standards state that any internal control deficiencies require further evaluation and remediation by management  By not assessing the potential costs and benefits related to the options for collecting these allowable fees, the Air Force could be missing out on a potential source of funding to support its needs  DOD lacks clear guidance on how the Navy should use the initiated research authority for some infrastructure investments within the Capital Investment Program  In our review of DOD documentation, we found that, among the military departments, Navy labs funded recapitalization and revitalization projects using the laboratory initiated research authority the least  As recently as early 2017, a DOD-commissioned study found that defense labs face substantial infrastructure deficiencies that it has not yet identified funding to address  In fiscal year 2017, Navy labs invested $7 3 million in lab recapitalization projects, compared to $32 9 million and $53 7 million at the Air Force and Army, respectively  Navy lab officials told us that their ability to fund lab recapitalization and revitalization projects using funds available under the laboratory initiated research authority is limited because they have not been provided with clear guidance as to whether and how to use the laboratory initiated research authority within the Capital Investment Program of the Navy Working Capital Fund  Some Navy lab officials stated that they have found ways to use the initiated research authority for certain infrastructure investments  These officials stated that they used authority outside of the Capital Investment Program of the Navy Working Capital Fund, for instance, for projects below applicable thresholds because using the authority within the Program creates a bureaucratic and financial burden for them  For example, officials at two separate warfare centers—Naval Surface Warfare Center, Crane Division, and the Naval Air Warfare Center, Aircraft Division, noted that they did not expend funds in either fiscal year 2016 or fiscal year 2017 for recapitalization and revitalization projects  Both cited the Capital Investment Program as a significant barrier to their desired use of the laboratory initiated research authority  Officials from the Office of Budget, within the Office of the Assistant Secretary of the Navy for Financial Management and Comptroller agreed that, to date, clarifying guidance on the use of the laboratory initiated research authority within the Capital Investment Program has not been issued, effectively limiting the extent to which the labs can use it for infrastructure needs  According to these officials, the Office of the Secretary of Defense (OSD) Comptroller—in coordination with the Office of Financial Policy and Systems within the Office of the Assistant Secretary of the Navy for Financial Management and Comptroller—is responsible for developing the clarifying guidance their office has sought  This persistent lack of guidance on whether or how Navy labs should use the laboratory initiated research authority within the context of the Capital Investment Program presents an opportunity cost  Namely, the Navy’s labs have missed out on, and continue to miss, opportunities to invest in needed improvements to its aging lab infrastructure  The Army requires its laboratories to apply similar percentages to what is refers to as “Army direct appropriations” and “customer funds ” The Army requires that the percentage fee applied to direct appropriations not vary from the percentage fee applied to customer funds by more than 1 percent  The Army implemented this policy to maximize the laboratory initiated research authority’s effect on its 17 laboratories  However, the Office of the USD(R&E) reported in March 2018 that the policy was having a significant limiting effect on the breadth and scope of activities executed under this authority  Similarly, we found that the policy may, in practice, create a disincentive for Army lab directors to use the authority  In their responses to our survey, Army lab directors, representing key capability areas, acknowledged their concern about the percentage fee they assessed on customer funds affecting their ability to increase or maintain their customer bases  Further, some Army lab directors reported assessing a lower percentage fee on customer funds than allowed, which could help retain customers that might otherwise be driven away with higher assessed fees to carry out activities  As a result, these labs generally are setting a lower percentage fee on their directly appropriated funds, thereby lowering the overall laboratory initiated research funding available to them  Nonetheless, the Army has not assessed its policy to determine whether changes are needed to eliminate these disincentives  Continuing to operate without such an assessment could result in Army labs using the laboratory initiated research authority to fund fewer self-initiated projects—with the downstream effect that fewer new technologies for warfighters are available  The Navy applies a consistent fixed percentage fee of costs across its labs  Within the Navy, senior leadership has set the fixed percentage fee of costs the labs charge on customer funds at 2 percent  A senior Navy science and technology official stated that Navy leadership set a uniform fixed percentage fee to charge to customer activities across the Navy lab enterprise, in part, to ensure the labs were not inadvertently competing against one another for customer funds  For example, without a uniform rate, a Navy warfare center could offer a lower fee to entice a customer to use it rather than another center  The use of a fixed percentage fee facilitates program offices selecting warfare centers on the basis of best available match in capabilities  On the other hand, the Navy’s fixed 2 percentage fee of costs does limit—by half, as compared to the maximum 4 percent allowable—the amount of fees that Navy labs can collect  Consequently, several Navy lab directors told us that they would like to have the ability to increase the fixed percentage fee of costs above the Navy’s 2 percent to provide their labs with additional resources they said they need for innovation-related investments  Among the lab directors that responded to our survey, 30 of 31 replied that their lab had used at least one of the four types of direct hire authorities previously discussed since fiscal year 2014  Officials view direct hire authority as allowing the labs to compete with private industry for qualified applicants  Lab directors reported they generally believe that each type of direct hire is extremely or very useful for fostering innovation and increasing efficiency, as shown in Figure 7  Selected Officials’ Testimony on the Value of Direct Hire Authority: The U S  Army Engineer Research and Development Center “was able to meet this important goal [of annually hiring more than 160 new researchers] in large part because of its direct hiring authorities, which save time, effort, and costs, and allow the organization to more effectively hire the best and brightest minds available ” – Dr  Jeffrey P  Holland, Past Director, U S  Army Engineer Research and Development Center, in testimony before the Senate Committee on Armed Services (Emerging Threats and Capabilities Subcommittee), May 3, 2017  “The Air Force’s ability to recruit, retain, and develop the STEM workforce is vital toward building the future Air Force; Congress has been greatly supportive of these efforts…the addition of direct hire for candidates has been extremely useful in hiring qualified scientists and engineers in less than half the time of traditional hiring methods ” – Jeffrey Stanley, Air Force Deputy Assistant Secretary— Science, Technology and Engineering in testimony before the House Committee on Armed Services (Emerging Threats and Capabilities Subcommittee), March 14, 2018  Although participation in the laboratory enhancement pilot program is open to the DOD labs—and 19 of the 31 lab directors, or 61 percent, that responded to our survey reported they were participating—to date, only the Navy has formally established a pilot program for its labs  The Army and Air Force have not yet used this relatively new authority  A senior Navy science and technology official told us the Navy took important steps to facilitate the implementation of that service’s pilot program  According to the Navy official: The Office of the Deputy Assistant Secretary of the Navy for Research, Development, Test and Evaluation led the effort across the Navy labs, compiling—from each lab’s submission—a single list of proposals to forward to Navy leadership that would apply to all participating Navy labs  The Navy pursued a three-phased approach with its pilot program, with Phase 1 primarily focused on contracting and acquisition policy- related matters  Senior Navy research and development officials perceived these matters as being the easiest from which to obtain buy-in from Navy policy officials and attorneys, as well as Navy leadership  Phase 2 will include proposals related to Information Technology systems for research and development networks, while Phase 3 will most likely address personnel issues  Navy research and development officials deferred proposals— including information technology network enhancements—that might require extensive discussions with policy officials and attorneys stakeholders across the Navy  These proposals were pushed back to allow time for those stakeholders to see how the pilot program was being implemented and executed by the labs  None of the Army and Air Force labs has yet established a laboratory enhancement pilot program  Consistent with Army policy, the Medical Research and Materiel Command and the Space and Missile Defense Command Technical Center submitted proposals; however, they have yet to establish a pilot program  The Army’s Research, Development and Engineering Command, with input from its subordinate labs and engineering centers, developed a list of lab enhancement proposals but, as of September 2018, had yet to formally submit these final proposals to Army leadership for approval  These include initiatives in business operations, contracting, finance, information technology, and personnel management  A senior Army science and technology acknowledged that organizations across the military department have concerns about providing the labs with too much autonomy to use this new authority  Air Force Research Laboratory officials said they previously submitted a list of approximately 30 proposals to the Defense Laboratories Office in September 2017, but ultimately pulled back those requests because of stakeholder concerns within the Air Force  Specifically, officials with the Office of the Deputy Assistant Secretary of the Air Force for Science, Technology, and Engineering stated that the Air Force Materiel Command, to which the lab is a subordinate organization, had not seen the proposals before they were submitted  In addition, these officials identified concerns about how various stakeholders throughout the Air Force—such as those from financial management and personnel—would react to these proposals  These proposals could potentially sidestep the stakeholders’ oversight function of related lab activities  A senior Air Force Research Laboratory official stated that the lab re-submitted its proposals to the Air Force Materiel Command and that Air Force leadership was still reviewing them at the time of this report  Twenty-six of 31 labs directors—84 percent—reported having used the $10,000 micro-purchase threshold authority granted by Congress in 2016  However, we found that contracting and small business management officials’ concerns with this authority have created implementation challenges at some defense labs  For instance, a senior Navy official indicated that multiple stakeholders from across the Navy—including its Office of Small Business Programs—raised concerns about the authority’s potential impact on small businesses as micro-purchasing allows defense labs to bypass small business set asides  Several labs reported similar stakeholder concerns that prevented implementation of the micro-purchase threshold increase  At the same time, however, lab officials we interviewed expressed the view that the increased threshold will be beneficial, consistent with their opinions about the laboratory enhancement pilot program  For example, officials at the Naval Research Laboratory stated that increasing the threshold to $10,000 allows their scientists and engineers to directly purchase necessary equipment and materials through simplified procedures  They identified examples of projects that had been delayed by as much as several months because scientists and engineers used other than simplified acquisition procedures to purchase a relatively inexpensive piece of equipment, such as a specialized microscope, because the cost was above the previous threshold of $3,500  Similarly, the Army’s Armament Research, Development and Engineering Center reported that the micro-purchase threshold increase enables the lab to use simplified acquisition procedures for more items  As a result, they noted that the new authority increases efficiency by reducing contracting time and cost for those additional items  The Navy’s Space and Naval Warfare Systems Center Atlantic similarly reported that requirements, which were previously procured using other than simplified acquisition procedures, took up to 60 to 90 days to procure, while it took as little as 3 to 4 days under this new authority, which enabled its scientists and engineers to purchase materials needed for critical, time sensitive projects  However, lab officials acknowledged that the $10,000 micro-purchase threshold authority—like the laboratory enhancement pilot program—is too new to fully understand how it will increase efficiency and foster innovation over the long term  DOD sponsors several research centers, which are governed through noncompetitive agreements, including contracts  These centers provide the department with access to scientific experts employed by universities and other non-profit organizations  Scientists employed by these external to DOD research centers—specifically, three lab FFRDCs and 13 UARCs—execute DOD-funded science and technology development projects in emerging technical areas  DOD staff oversee these centers using routine oversight of funded research tasks and comprehensive reviews, which help DOD determine whether the centers’ funding should continue  DOD and research center officials told us that their ability to authorize work at the FFRDCs that DOD sponsors is limited by legislative restrictions on the staffing levels at these centers, as well as by infrastructure modernization challenges they face  DOD sponsors three research and development FFRDC labs that were established under noncompetitive procedures  Two of the three lab FFRDCs are operated by universities and one is operated by a nonprofit company  DOD also has contracts with 13 UARCs that fulfill a similar scientific role as the lab FFRDCs, while also differing from them in other respects  These differences are described in more detail in table 1  DOD’s contractor-operated research centers received about $1 3 billion annually in DOD funding in fiscal year 2016 and fiscal year 2017, according to DOD data  The two largest research and development FFRDCs, the Lincoln Laboratory and the Software Engineering Institute, received about 67 percent of total research center funding from DOD in 2017  UARCs received an average of $27 million in DOD funding, which was a 15 percent decrease from 2016  Research centers may also receive work and funding from other federal departments and private companies after obtaining DOD sponsor approval  Appendix II provides an overview of DOD FFRDC and UARC funding in fiscal years 2016 and 2017  DOD Sponsorship and Contract Awards: We reported in 2014 that FFRDCs in the federal government are defined through the sponsoring agreement between the agency and the contractor retained to operate the FFRDC  A written agreement of sponsorship between the government and the FFRDC must be prepared when the FFRDC is established, which may be included in a contract between the government and the FFRDC, or in another legal instrument under which an FFRDC accomplishes effort, or it may be in a separate written agreement  Historically, DOD sponsors retain contractors for many years or decades as FFRDC operators  We found that research centers undertake DOD-sponsored projects and, in some limited instances, scientific projects initiated by centers that are overseen by DOD staff  Individual sponsors enter into noncompetitive contracts with FFRDCs and UARCs  DOD uses noncompetitive contracts to establish or maintain an essential engineering, research, or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center  Scientific Project Funding: We found that project sponsors provide funding to existing contracts  For example, the government issues orders for requirements under Lincoln Laboratory’s indefinite delivery indefinite quantity base contract as funding sponsors approve new projects  Individual project sponsors, along with the primary sponsor, oversee how project funds are spent by the centers  Project sponsors decide whether they will continue to work with these entities based on perceived performance success  This effectively provides an incentive for FFRDCs and UARCS to perform successfully  This work and review cycle is described in Figure 9 below  FFRDCs and UARCs also partner with DOD government-operated labs to plan and execute technology development projects  For example, according to Navy officials, Naval Surface Warfare Center, Carderock Division collaborated with Navy-sponsored UARCs, such as Penn State’s Applied Research Laboratory, to help develop Navy submarine propeller and propulsion designs  Self-initiated Projects: Research center officials said that DOD provides some research centers with limited funds to self-initiate innovative projects  This funding helps the centers ensure that development projects are not limited to just satisfying near-term DOD requirements  Instead, future generations of DOD technologies can be funded  For example, officials at Johns Hopkins University Applied Physics Laboratory proactively conducted work on advanced naval defense technologies in response to similar technology development in adversary countries  Although Navy sponsors did not fund this initial work, they subsequently provided funding in this area after Hopkins’ research identified a risk reduction strategy for the Navy, according to the Johns Hopkins officials  This allowed the UARC to move relatively quickly on a new science and technology project idea  DOD uses 13 UARCs and three lab FFRDCs to obtain direct access to scientific expertise in emerging technical areas, supplementing research conducted at DOD’s government-owned and operated labs  These research centers provide DOD with additional scientific capabilities and the ability to expand quickly into new technical fields  Hiring Scientific Personnel: Although FFRDCs are largely federally funded, they are generally operated, managed, and administered by either a university or consortium of universities, other not-for-profit or nonprofit organization, or an industrial firm, as an autonomous organization or as an identifiable separate operating unit of a parent organization  The contractor operating the FFRDC exercises primary control over its FFRDC’s business concerns, such as personnel policies and compensation  DOD-funded research centers have flexibility in hiring scientists that leverage a parent institution’s expertise in emerging scientific fields  For example, leadership officials at the Army Institute for Soldier Nanotechnologies UARC at MIT and the Software Engineering Institute FFRDC at Carnegie-Melon University noted that projects they have conducted for DOD have benefitted from university experts in fields such as dark matter physics and artificial intelligence  Personnel Compensation: Research center officials we spoke with noted that their workforce policies permit them to flexibly hire, fire, and compensate staff as needed  Although employee salaries are established separately from the government schedule, they are approved by the government  Further, officials noted that university centers typically offer salaries in line with the labor market, but do not attempt to compete on a salary basis with relatively high, unaffordable private sector company salaries  Instead, they compete on the basis of other factors, such as offering scientists the opportunity to work for a prestigious university conducting science and technology research  Research Center Infrastructure: As with personnel matters, research centers have discretion to manage infrastructure in accordance with the policies and procedures of their parent institutions  While one center, Lincoln Laboratory, is located on government property, others primarily reside on property owned or leased by their parent institutions  According to agency officials, DOD contributes funding for the use and repair of these facilities through their contracts with research centers  Officials noted that Lincoln Laboratory uses military construction funding to pay for new buildings as it is located on government property  Trusted Advisor Role: FFRDCs and UARCs function as trusted advisors for the government and operate in the public interest with objectivity and independence  FFRDCs are independent, private-sector, non-profit organization units required to be free from personal or organizational conflicts of interest, as the FFRDCs answer to the government customer  As a result, DOD’s lab FFRDCs perform tasks that are closely associated with the performance of inherently governmental functions and have access to sensitive and proprietary data  Research center officials noted challenges limiting their work providing scientific expertise to DOD  FFRDCs are also limited in executing infrastructure investments  Limitation on Available Work Hours: DOD FFRDCs are limited by an annual ceiling set by Congress on the amount of staff years of technical effort (STE) that may be funded for defense FFRDCs  We previously found in October 2008 these limits were imposed in response to concerns that DOD was inefficiently using its FFRDCs  We found that the STE workload limitation aimed to ensure that FFRDC work was appropriate and limited resources were being used for DOD’s highest priorities  As a result, Software Engineering Institute officials said they decline many DOD programs’ requests for assistance due to the annual work hour limitation  Further, officials at the Office of the Secretary of Defense’s Studies and FFRDC Management Office reported that this limit significantly constrains the use of DOD’s FFRDCs and that DOD customer demand for their services is significantly greater than the annual STE limit  OSD officials indicated that FFRDC related work must be deferred to later years when these limits are reached, since there are no other legally compliant alternatives capable of fulfilling these requirements  Infrastructure: FFRDC officials we interviewed identified infrastructure challenges—including aging facilities and equipment—as hindering their research and development efforts  For example, many buildings at the Massachusetts Institute of Technology (MIT) Lincoln Laboratory are over 60 years old; MIT considers over half of them to be in substandard condition  According to an MIT official, these facilities, located on government property, were not structurally designed for modern research and have relatively poor vibration isolation, resulting in inefficient workarounds or work that could not be performed  Officials from the Defense Laboratories Office noted that the MIT Lincoln Laboratory is unique among DOD’s FFRDCs in that it is operated on government- owned property  A 2013 study, conducted on behalf of the White House Office of Science and Technology Policy, found that lab infrastructure project funding proposals must compete with hospitals, barracks, runways, and roads and, therefore, tend to be lower on the priority list for military construction funding  A 2017 Defense Science Board report and DOD officials we spoke with indicated this continues to be true  While contract research centers have significant flexibility to execute infrastructure work, they are still affected by limited availability of military construction funding  Officials at another center noted that in some instances, DOD sponsors have been unable or slow to provide required secure facilities and equipment within needed time frames  Delays of this nature can affect the research centers’ ability to deliver the technologies or related services needed by DOD  The Department of Energy (Energy) primarily relies on contractor- operated FFRDCs to operate its labs, while the majority of NASA labs and centers are government-operated  Energy’s national labs form the core of the agency’s scientific work and mission  This is in contrast to DOD-funded labs, which constitute a relatively small aspect of DOD’s overall mission  We have previously found that Energy’s labs can use funding for minor infrastructure improvements  NASA centers can also approve and fund certain facility projects, in accordance with NASA policies, and they have encountered significant challenges with aging infrastructure  Also, in some cases, energy and space research centers have significant challenges with hiring replacement staff and competing with private sector employers for staff  Energy’s labs can hire scientific personnel with the flexibility of private companies, while NASA centers were previously provided hiring flexibilities by Congress in 2004 to facilitate staff hiring  While Energy and NASA’s research entities follow their specific governance models, there are broad characteristics common across these agencies as well as DOD  Table 2 illustrates that while research centers are largely government-owned, the government is not always the operator  As we have reported, Department of Energy national labs are primarily operated by for-profit, non-profit and university FFRDC contractors using management and operating contracts, which are competed on a limited basis  Energy’s funding sponsors and headquarters officials are required to reevaluate FFRDC performance in increments not to exceed 5 years by federal acquisition regulations, which inform future decisions to renew the agreement  In 1990, we designated Energy’s contract management—including both contract administration and project management—a high-risk area because of Energy’s inadequate management and oversight of contractors, leaving the department vulnerable to fraud, waste, abuse, and mismanagement  In 2009, we subsequently narrowed the focus of Energy’s high-risk designation to the National Nuclear Security Administration and Office of Environmental Management, which together oversee four national labs  Further, in our 2017 High Risk report, we found that these two agencies had made progress in addressing our contract management concerns, but we identified continued problems with the agencies having sufficient capacity to mitigate contract and project management risks  Also, we found that they had demonstrated little progress in addressing contract management challenges, particularly in the area of financial management  The Department of Energy uses performance-based management and operating contracts, which have been subject to limited competition, with universities, non-profit companies and for-profit companies to operate the national labs on government-owned property  These contractor-operated FFRDCs provide the vast majority of Energy’s science and technology capacity, rather than supplementing the work of government-operated labs like DOD’s FFRDCs  Energy has depended on the expertise of private organizations to execute its science and technology work since the Manhattan Project produced the first atomic bomb during World War II  The Spallation Neutron Source is an experimental research facility at Oak Ridge National Laboratory—a government-owned contractor-operated laboratory  The Spallation Neutron Source includes the world’s most powerful pulsed-neutron sources and provides information about the structure and properties of materials that cannot be obtained by other means  The Spallation Neutron Source is a user facility whereby researchers from universities, national laboratories, and industry submit proposals, which are peer- reviewed and must compete for time at the user facility  The primary focus of each lab varies based on its expertise and facilities  Energy largely oversees its lab contractors through its headquarters program offices, which include the National Nuclear Security Administration, Office of Science, the Office of Fossil Energy, as well as co-located government field offices  Office of Science-sponsored labs primarily support scientific research for energy and physical sciences, while the National Nuclear Security Administration-sponsored (NNSA) labs primarily focus on nuclear weapons and related science and technologies  Energy also oversees its lab contractors’ activities through on-site Energy oversight offices that work alongside lab management at each FFRDC  Some labs specialize in earlier-phase science, while other labs work on later-phase nuclear weapons technologies in addition to earlier-phase science  As Figure 10 shows, these labs are spread across the United States  Energy has only one government-operated and government-owned lab, the National Energy Technology Laboratory  Key differences between Energy’s contractor-operated and government-operated governance models are described in table 3  Energy’s FFRDCs use their own personnel systems, which Energy officials stated provide more flexibility for hiring and retaining qualified staff  Management within these FFRDCs can move staff in or out of scientific areas more quickly than government labs can, thereby providing greater agility to meet Energy’s needs in emerging science areas  For example, Energy’s lab oversight staff at Oak Ridge National Laboratory told us that use of lab contractors’ human resources management systems allows for workforce flexibilities to meet Energy’s needs  While these contractors have leeway in managing their human resources systems, Energy’s headquarters maintains oversight—through its contracting officers—over employee compensation  Energy’s FFRDC contractors manage and operate nearly all of the department’s government-owned national lab facilities—including day-to- day management of government-controlled facilities and real property  Lab operators used funding to complete minor construction projects, which cost $10 million or less  This funding comes from a percentage of science and technology projects’ funding, requires local Energy oversight office approval, and has streamlined project management requirements  In contrast, major infrastructure upgrades are funded through relatively long and complex line-item funding processes, and projects over $50 million are subject to more rigorous project management requirements  Energy’s labs use a small portion of their funding to initiate discretionary projects for science and technologies that will benefit sponsors in the long-term by maintaining the scientific and technical vitality of the laboratories  To maintain and enhance lab expertise, the National Defense Authorization Act for Fiscal Year 1991 authorized Energy’s contractor-operated labs receiving funding for national security programs to use a percentage of lab funds to perform lab-directed R&D of a creative and innovative nature  The actual percentages allowed to be used for lab-directed R&D are subject to Energy’s approval  Energy’s entities sponsor most national lab projects based on their needs and lab expertise  Typically, earlier foundational science projects are funded through a process whereby funding sponsors issue calls for proposals to Energy’s national labs  Interested scientific teams at labs provide proposals to conduct these projects for sponsor consideration  Sponsors then assess proposals for scientific merit and decide which teams receive funding to execute their projects  NNSA provides funding for later-phase nuclear technology development projects to its labs after agreement is made regarding objectives and deliverables for specific projects, according to Lawrence Livermore National Laboratory officials  Despite their flexibilities with regard to hiring and infrastructure decisions compared to government operated labs, Energy’s lab leadership and government oversight officials noted human resource and facilities related challenges, such as: Sufficiently compensating staff located in high-cost of living areas  For example, the labor market of the San Francisco area, where several Department of Energy national labs are located, is highly competitive for employers  Commercial firms offer salaries and compensation that typically exceed those of government-funded, contractor-operated labs, although Energy’s contractors have more pay flexibility than is allowed for Energy’s government employees  Obtaining government clearances in a timely manner  Energy’s NNSA oversight officials and lab management staff, in particular, cited this challenge, which they stated has led to a backlog of people needing clearances  Government hiring freeze constraining overall hiring  Officials at Energy’s government-operated National Energy Technology Laboratory reported that as a result of a government hiring freeze, the lab has increasingly hired private contractor staff to the point that more than half of the total lab staff is now comprised of contractor employees  Major infrastructure challenges at Energy labs  Energy reported in July 2018 that over half of all national lab buildings are in either substandard or inadequate condition  The Energy Inspector General also identified infrastructure modernization as one of Energy’s top management challenges  This finding followed a mandated commission’s report in 2015 that facilities and infrastructure across Energy’s national lab network were hampered by high levels of deferred maintenance and excess facilities  The majority of NASA’s science and technology facilities are operated within the governance framework of government-operated research centers, similarly to most DOD labs  While government-operated, they have been granted additional legislative flexibilities for hiring employees beyond those normally available to government entities  NASA locates its science and technology staff at four government- operated research centers, one contractor-operated FFRDC, and at five NASA centers assisting space and space flight development  These centers and the Jet Propulsion Laboratory—NASA’s sole sponsored FFRDC—execute NASA’s research missions including technology development in exploration and aeronautics  The differences between these two governance approaches are described in Table 4  NASA also works with Johns Hopkins University Applied Physics Lab, a UARC, to develop major space flight missions  The NASA Glenn Research Center—a government- operated laboratory—is currently developing solar electric propulsion technologies intended to allow manned and unmanned spacecraft to be propelled far beyond earth orbit using solar power  This project is developing large, flexible, radiation-resistant solar arrays that can be unfurled to capture solar energy powering fuel-efficient electrostatic thrusters  Scientists expect a system-level flight test within the next decade to demonstrate key technologies supporting NASA’s Lunar Orbital Platform-Gateway project, a platform to mature necessary short- and long-duration deep space exploration capabilities  Headquarters, including funding sponsors providing oversight for their individual projects  Title 51, Chapters 201 and 203 of U S  Code and technology efforts with DOD and other organizations, including use of NASA lab and test facilities  Operated by university contractor having sole source contract  Not permitted to compete against industry, except for operation of an FFRDC  property (originally part of DOD)  5-year contract renewable to 10 years total  Headquarters, including funding sponsors providing oversight for their individual projects  Title 51, Chapters 201 and 203 of U S  Code; 10 U S C  § 2304 (c) (3)(B) ; Federal Acquisition Regulation § 35 017 based NASA oversight staff  sponsors seeking FFRDC assistance with NASA approval  “Lab” as used in this context refers to science and technology organizations equivalent to NASA Research Centers, DOD UARCs and FFRDCs  Mission leadership officials at NASA Headquarters—including the Associate Administrators for Aeronautics Research, Human Exploration, Science and Space Technology—oversee NASA’s research centers as well as the Jet Propulsion Laboratory  These officials are responsible for technology programs providing funds to research centers and the Jet Propulsion Laboratory to support their specific mission areas  NASA’s science and technology project portfolios are based on the requirements and priorities established by NASA’s leaders in collaboration with key stakeholders in academia and industry among others  In planning their science and technology work, NASA’s Glenn Research Center officials noted that NASA research center directors consider the capabilities and resources—including staff and facilities—of other research centers to minimize redundant work  NASA depends on a highly skilled civil servant and contractor workforce to plan and execute its missions  Congress provided NASA with additional human resource authorities beyond those otherwise allowed for federal government personnel through the NASA Flexibility Act of 2004  We found in September 2008 that NASA sought this flexibility to ensure that it could hire and retain the workforce it desired  This law consisted of multiple provisions to address a range of human capital challenges and to strengthen all levels of the workforce  The provisions included incentives—including compensation—to allow NASA to compete successfully in the labor market with the private sector and reshape its workforce more effectively to support the Agency’s mission  NASA also employs a significant contractor workforce across its different centers  Glenn Research Center officials we interviewed stated their portfolio of science and technology projects—and funding—mostly aligns with NASA’s top requirements and priorities  They, along with NASA sponsors, create technology roadmaps and investment plans to determine their future projects  NASA policy requires that NASA’s scientific teams offer proposals for potential research and science and technology projects  This is similar in some ways to how many DOD and Energy centers must find sponsors willing to fund specific technology development projects, rather than receiving technology development funding for a given year  These proposals are reviewed by peer review teams, who identify for selecting officials those proposals they believe have the most scientific merit  Ames Research Center officials said they believe this process can foster innovation, encourage employees to keep skills honed, and mitigate complacency  Glenn Research Center officials said that while most of the work they conduct is for sponsored applied research or advanced technology development, about 2 percent of their science and technology budget is spent on early-stage scientific innovation  Recommended projects of this nature proposed by the research center are typically approved by headquarters officials, according to these Glenn officials  NASA provides technical grants for basic research and applied science to university scientists nationwide on a competitive basis, and also funds similar research done internally at research centers  As with DOD and Energy’s research centers, NASA officials have identified some key operating challenges, including: Aging infrastructure and facilities  The NASA Inspector General listed infrastructure area as one of the top five management and performance challenges facing NASA  Further, the Inspector General identified deficiencies with facilities planning and reported that about 80 percent of facilities at three of four NASA research centers are over 50 years old, while about half of the facilities at the Jet Propulsion Laboratory and the fourth research center are that old  Infrastructure projects and upgrades of $1 million or less are undertaken by research center management instead of at the NASA headquarters level  Construction above this threshold has significantly more requirements and is approved by NASA headquarters  Glenn Research Center officials indicated it is difficult to obtain funding for projects that exceed the minor infrastructure threshold, in part, due competition with major construction of facilities proposals from across the agency for limited funds  As a result, they put most of their efforts into sustaining existing infrastructure  Workforce shortages in key technical areas  As we found in May 2018, NASA has experienced workforce challenges on several major projects such as the Mars 2020 and Europa Clipper projects  Also, over 40 percent of NASA’s workforce is either eligible to retire now or will be eligible in the next 5 years  NASA headquarters officials noted that NASA’s workforce is aging because NASA has a low attrition rate—about 4 percent annually—and high numbers of staff stay several years beyond retirement  Further, in 2017, the NASA Inspector General found gaps in NASA’s workforce planning for specific capability areas and how workforce plans would meet future needs, and recommended that NASA establish standardized guidance defining the data and analyses for these planning efforts  NASA concurred with and identified its plan to implement this recommendation  However, NASA has not implemented this recommendation, according to the NASA Inspector General’s latest semiannual report to Congress  Congress provided DOD lab directors with key authorities to foster targeted, timely investments in the most pressing technology areas  Lab directors have used these authorities—such as laboratory initiated research and direct hire authorities—to varying degrees, but more needs to be done to facilitate innovation and efficiency  Specifically, service specific obstacles in the Air Force, Navy, and Army impede lab directors from capitalizing on laboratory initiated research authority to a greater extent  Service leadership can take actions to better understand and potentially remove barriers to more fully use laboratory initiated research tools  We are making the following three recommendations to DOD: The Secretary of the Air Force should assess the potential costs and benefits of implementing accounting system improvements that would allow the Air Force Research Laboratory to charge customers a fixed percentage fee on provided science and technology activities to the extent allowed under the laboratory initiated research authority  (Recommendation 1) The Secretary of the Navy should clarify whether and how to use the laboratory initiated research authority within the Capital Investment Program  (Recommendation 2) The Secretary of the Army should assess existing Army policy for laboratory initiated research authority and determine whether to implement changes to eliminate disincentives for lab usage of the authority  (Recommendation 3) We provided a draft of this report to DOD, Energy, and NASA for review and comment  Energy and NASA did not provide any comments on the draft report  In DOD’s written comments, reproduced in appendix III, DOD concurred with our three recommendations  Further, in its response to our third recommendation, DOD stated that the Army plans to initiate a study by January 2, 2019, regarding its use of the laboratory initiated research authority  According to DOD, the Army’s study will identify potential opportunities for policy improvements  We are sending copies of this report to the appropriate congressional committees and offices; the Secretary of Defense; the Secretaries of the Army, Navy, and Air Force; the Secretary of Energy; and the NASA Administrator  In addition, the report will be made available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions concerning this report, please contact me at (202) 512-4841  Contact points for our offices of Congressional Relations and Public Affairs may be found on the last page of this report  Staff members making key contributions to the report are listed in appendix IV  This report examines (1) how the Department of Defense (DOD) labs have used selected legislative authorities to foster innovation and efficiency and identify what barriers impede their use; (2) identifies and describes governance models used by selected DOD-sponsored federally funded research centers and university affiliated research centers; and (3) identifies and describes governance models used non-defense labs, specifically at the Department of Energy (Energy) and National Aeronautics and Space Administration (NASA)  To address the first objective, we selected four specific authorities for our review based on previous work identifying science and technology best practices and expedited lab hiring: Laboratory Initiated Research Authority  The authority provided in Section 219 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, as implemented, provides lab directors with flexibility to fund projects in four allowable categories: basic and applied research; technology transition; workforce development; and revitalization, recapitalization, or repair or minor military construction of lab infrastructure  Laboratory Enhancement Pilot Program  Section 233 of the National Defense Authorization Act for Fiscal Year 2017 established a pilot program for lab directors to propose alternative and innovative methods that might lead to more effectively managing and operating labs and authorized lab directors to waive any regulation, restriction, requirement, guidance, policy, procedure, or departmental instruction that would affect implementation of these methods unless such implementation would be prohibited by a provision of an existing statute or common law  Direct Hire Authority  Four types of direct hire authorities authorized by Congress since 2008 are intended to provide a streamlined and accelerated hiring process to allow the labs to successfully compete with private industry and academia for high-quality scientific, engineering, and technician talent  Micro-purchase Authority  The Federal Acquisition Regulation states a preference for government agencies, to purchase and pay for micro-purchases of supplies or services using the government-wide commercial purchase card up to and at the micro-purchase threshold, but micro-purchases may be conducted using any of the simplified acquisition methods  While the FAR micro-purchase threshold was generally $3,500 at the time of our review, Congress increased this threshold to $10,000 for activities of DOD science and technology reinvention laboratories in Section 217 the National Defense Authorization Act for Fiscal Year 2017  Although Congress has provided additional legislative authorities to defense lab directors to address hiring, infrastructure, and technology transition challenges, the authorities that we covered in our review are the ones that our prior and current work have shown are currently, or have the potential to be, the most critical for supporting science and technology reinvention laboratories’ innovation mission within DOD labs  DOD lab leaders use these authorities to flexibly fund projects intended to facilitate research and development; propose alternative and innovative methods that might lead to more effective lab management; directly hire personnel at DOD labs including students currently enrolled in science, technology, engineering, and mathematics (STEM) programs; and expand critical science and technology purchases using simplified acquisition methods  To identify the extent to which DOD laboratories have used these authorities as well as to identify what potential barriers existed to using these authorities, we administered a survey to 44 STRL directors (or their equivalent) to collect information on the use of these specific authorities, their perceptions about the effectiveness of those authorities, and their perceptions about any barriers to using these authorities  The members of the population surveyed were the 44 defense laboratories defined as science and technology reinvention laboratories  For the purposes of our review, we defined laboratories as inclusive of Air Force technical directorates (10), Army warfare centers (17), and Navy warfare centers (17)  We emailed questionnaires to the laboratories beginning in late March 2018, and survey data collection ended in early May 2018, with 31 labs returning completed questionnaires, for an overall response rate of 71 percent at the laboratory level  We took steps to minimize the potential errors that the practical difficulties of conducting any survey may introduce  Nonresponse error can result when a survey fails to capture information from all population members selected into a survey sample  Of the 13 questionnaires not returned, 4 were Army warfare centers, and 9 were Air Force research directorates  Throughout the data collection period, we made multiple follow-up attempts by email and phone to those labs not yet responding  The Air Force Research Laboratory (AFRL) provided a single survey response for the entire laboratory enterprise  Not all returned questionnaires may have answers to every question applicable to a respondent  However, this question-level nonresponse did not exceed one for any of the questions applicable to all 31 labs  Because we selected the entire population of laboratories for our survey, our estimates are not subject to sampling error  We developed our list of the 44 labs in our population in consultation with DOD, and are confident that none were left out, so our or survey has no known sources of coverage error  We conducted pretests of the draft questionnaire with 3 laboratories in the population and made revisions to reduce the possibility of measurement error from differences in how questions were interpreted and the sources of information available to respondents  After reviewing the answers received, we also followed up as necessary with respondents to clarify apparent inconsistencies or other possible misreports, and made changes to responses where corrections were needed  A second, independent analyst checked the accuracy of all computer analyses to minimize the likelihood of errors in data processing  To obtain additional information on this objective, we reviewed relevant legislation which established or amended these authorities and reviewed applicable DOD and service policy documentation  Further, we collected military service related information on the usage of two authorities, such as: Spending data on the use of the laboratory initiated research authority  We gathered this information from DOD-mandated reports to Congress on the use of this authority and military service officials  We determined these data to be reliable based on reviews of agency documentation collected and interviews with agency officials  Data on the usage of direct hire authorities by the service laboratories  We collected direct hire data from each of the military services including the number of direct hire authority candidates hired as well as the number of direct hire positions the laboratories were authorized to hire  We determined these data to be reliable based on reviews of agency documentation collected and interviews with agency officials  We also used select findings from our May 2018 report where we evaluated DOD’s use of hiring authorities, including direct hire authority  More information about the scope and methodology of our prior work can be found in that report  In addition, we also collected information on military service proposals to utilize the laboratory enhancement pilot program authority  To obtain further information on department- and service-level involvement in and perspectives of defense laboratory authorities and challenges, we interviewed officials responsible for the management, execution, and oversight of DOD’s science and technology enterprise, including military service labs  At the Office of the Secretary of Defense and military department headquarters level, those responsible for the management and oversight of science and technology activities, we met with officials from the: Office of the Assistant Secretary of Defense for Research and DOD Defense Laboratories Office; Office of the Deputy Assistant Secretary of the Army for Research and Office of the Deputy Assistant Secretary of the Air Force for Science, Technology, and Engineering; Office of the Assistant Secretary of the Air Force for Financial Office of the Deputy Assistant Secretary of the Navy for Research, Development, Test, and Evaluation; and Office of the Budget, within the Office of the Assistant Secretary of the Navy for Financial Management and Comptroller We also met with military department lab officials responsible for the management and execution of science and technology activities from the: Army Research, Development and Engineering Command; Army Research Laboratory; Army Aviation and Missile Research, Development, and Engineering Air Force Research Laboratory; Naval Research Laboratory; Naval Surface Warfare Center, Headquarters; and Naval Surface Warfare Center, Carderock Division To identify and describe governance models used by selected DOD- sponsored federally funded research centers (FFRDCs) and university affiliated research centers (UARCs), we focused our review on the 3 FFRDCs designated as research and development labs as well as all 13 UARCS sponsored by DOD entities  We reviewed appropriate sections of the FAR language related to FFRDCs and UARCs, DOD guidance for working with FFRDCs and UARCs, relevant contracts, and performance assessments  Further, we met with officials from the office of the Deputy Director, OSD Studies and Federally Funded Research & Development Centers Management and Office to discuss overall FFRDC and UARC management, policies, and challenges facing FFRDCs and UARCs  We interviewed officials at selected research and development FFRDCs and UARCS to discuss their experience conducting DOD research and interactions with their customers, such as defense program executive offices  We met with officials at the two major research and development lab FFRDCs—The Lincoln Laboratory at the Massachusetts Institute of Technology (MIT) and the Software Engineering Institute at Carnegie Mellon University  We also selected a university affiliated research center sponsored by the Army and Navy: The Applied Physics Laboratory at Johns Hopkins University and the Institute for Soldier Nanotechnologies also at the MIT  To identify and describe governance models by non-defense labs, we selected Energy and NASA to focus our efforts  We identified 17 Energy national labs and 4 NASA research centers conducting basic and applied research similar to DOD labs  These agencies, along with DOD, represent 3 of the top 4 agencies in terms of average federal research and development spending from fiscal years 2015 to 2017  In our August 2016 GAO Technology Readiness Assessment Guide, we drew heavily from DOD, NASA, and Energy for best practices, terminology, and examples  This contributed to our decision to focus on Energy and NASA’s research entities in this laboratory governance review  We did not include the fourth agency—the National Institutes of Health—in our review because it is not as similar to DOD  We also reviewed relevant Energy and NASA guidance as well as relevant FAR sections  At Energy, we met with officials from the National Nuclear Security Administration which is semi-autonomous entity within Energy responsible for managing the nation’s nuclear weapons and nuclear security  We also met with Officials from the Office of Science, a program office responsible for supporting energy related fundamental science and research  To gain further insights on operating structures, funding arrangements, and their overall experience we met with lab leadership at selected Energy labs which were chosen based on initial discussions with agency officials and our review of past GAO work: Oak Ridge National Laboratory, Lawrence Berkeley National Laboratory, Lawrence Livermore National Laboratory, and National Energy Technology Laboratory (the sole Energy government owned and operated laboratory) We also met with leadership from Battelle Memorial Institute, which is the sole or joint contract manager for five Energy national labs including Oak Ridge National Laboratory  In addition, Battelle is an integrated subcontractor at Lawrence Livermore National Laboratory  At NASA, we met with officials with NASA’s Science Mission Directorate and Mission Support Directorate to discuss overall research center management and operations  We also leveraged ongoing and recently completed work at GAO to gain additional insight on NASA’s operations such as human capital management  Almost all of NASA’s research, space, and space flight centers conduct research and development activities  However, we focused our review on four research centers where NASA primarily conducts its aeronautics research, which has substantial overlap with DOD activities  To gain additional insight into the experience of lab leaders at NASA research centers, we met with officials at NASA’s Glenn Research Center and Ames Research Center  In addition, we also met with officials at the NASA Jet Propulsion Center, which is the only NASA-sponsored FFRDC  We conducted this performance audit from July 2017 to December 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  Office of the Secretary of Defense (OSD) In addition to the contact named above, Christopher R  Durbin (Assistant Director); Charlie Shivers, III (Analyst-in-Charge); Emily Bond; Lorraine Ettaro; Carl Ramirez; Sylvia Schatz; Sean Seales; Brian Smith; and Robin Wilson made significant contributions to this report 

ground_truth: Congressional interest in Overseas Contingency Operation (OCO) funding has continued as Members debate ways of funding priorities without breaching discretionary spending limits set in law. Since the terrorist attacks of September 11, 2001, Congress has appropriated approximately $2 trillion in discretionary budget authority designated as emergency requirements or for Overseas Contingency Operations/Global War on Terrorism (OCO/GWOT) in support of the broad U.S. government response to the 9/11 attacks and for other related international affairs activities. This figure amounts to approximately 9.4% of total discretionary spending during this period. Congress has used supplemental appropriation acts or designated funding for emergency requirements or OCO/GWOT—or both—in statute. These funds are not subject to limits on discretionary spending in congressional budget resolutions or to the statutory discretionary spending limits established by the Budget Control Act of 2011 (BCA; P.L. 112-125). The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA; P.L. 99-177) allows emergency funding to be excluded from budget control limits. The BCA added the OCO/GWOT designation to the BBEDCA exemption, thereby providing Congress and the President with an alternate way to exclude funding from the BCA spending limits. While there is no overall statutory limit on the amount of emergency or OCO/GWOT spending, both Congress and the President have fundamental roles in determining how much of the spending to provide each fiscal year. Congress must designate any such funding in statute on an account-by-account basis. The President is also required to designate it as such after it is appropriated to be available for expenditure. Debate over what should constitute OCO/GWOT or emergency activities and expenses has shifted over time, reflecting differing viewpoints about the extent, nature, and duration of U.S. military operations in Afghanistan, Iraq, Syria, and elsewhere. Funding designated for OCO/GWOT has also been used to fund base-budget requirements of the DOD and State Department and to prevent or respond to crises abroad, including armed conflict, as well as human-caused and natural disasters. Some defense officials and policymakers argue OCO funding allows for flexible response to contingencies, and provides a "safety valve" to the spending caps and threat of sequestration—the automatic cancellation of budget authority largely through across-the-board reductions of nonexempt programs and activities—under the BCA. Critics, however, have described OCO/GWOT as a loophole or "gimmick"—morphing from an account for replacing combat losses of equipment, resupplying expended munitions, and transporting troops through war zones, to a "slush fund" for activities unrelated to contingency operations. Congress appropriated approximately $103 billion for OCO in FY2017 (8.5% of all discretionary appropriations), $78 billion for OCO in FY2018 (5.5% of all discretionary appropriations), and $68.8 billion for OCO so far in FY2019. Discretionary appropriations for FY2019 are not yet final; a continuing resolution expired December 21, 2018. Following passage of the Bipartisan Budget Act of 2018 (P.L. 115-123), which raised discretionary budget caps for defense and foreign affairs agencies in FY2018 and FY2019, the Administration proposed shifting some OCO funding into the base, or regular, budget. Although Congress has generally not followed Administration requests for reduced funding for foreign affairs and domestic activities and has increased funding for defense, the President has asked cabinet secretaries to propose spending cuts of 5% in FY2020. Such proposals, if requested in a budget submission, may create difficult choices for Congress in FY2020 and FY2021—the final two years of the BCA discretionary spending limits. Congress's decisions on OCO/GWOT designations will affect how much agency funding is available for military operations and foreign affairs activities overseas, how much is subject to the BCA caps, and how much is incorporated into regular budgets and long-term budget projections.

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



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

Report 1: During World War II and then again after the outbreak of fighting in Korea, Congress found that the existence of thousands of small business concerns was being threatened by war-induced shortages of materials coupled with an inability to obtain defense contracts or financial assistance  Concerned that many small businesses might fail without government assistance, in 1953, Congress passed and President Dwight Eisenhower signed into law the Small Business Act (P L  83-163), which authorized the Small Business Administration (SBA)  The act specifies that it is the declared policy of Congress to promote the interests of small businesses to "preserve free competitive enterprise " Congress specified that one of the ways to preserve free competitive enterprise was to insure that small businesses received a "fair proportion" of federal contracts and subcontracts: It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation  Congress indicated that its intent in supporting small businesses was not to "favor small business at the expense of its larger competitors  Our only purpose in supporting the creation and effective operation of the SBA is to equalize the scales when necessary to guarantee the continued vigor of our competitive free enterprise system " More recently, a House committee report indicated that the primary rationale for small business contracting programs is the positive economic benefits they provide, as well as assisting small businesses overcome the complexities of the system  The economic benefits of these programs can be seen in two primary areas—market competition and local economic development  First, [these] programs … are designed to increase and diversify small contractors with the intent of expanding the federal supplier base  This leads to increased competition, which results in higher quality, greater product variety, and lower prices  Second, these contracting initiatives lower barriers to entry in a wide range of markets for small businesses  This provides greater market access for small firms' goods and services  From an economic perspective, such access is critical to generating positive macroeconomic benefits, including higher job creation, wage growth, and greater income distribution  Over the years, Congress has approved legislation to support small business in various ways  For example, the SBA administers several types of programs to support small businesses, including loan guaranty and venture capital programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion  In recent years, congressional interest in these programs has increased, primarily because assisting small businesses is viewed as a means to stimulate economic activity and create jobs  This report describes the various federal programs, requirements, procurement officers, and procurement offices involved in promoting federal contracting and subcontracting with small businesses, small disadvantaged businesses (SDBs), SDBs participating the SBA's "8(a) Program," Historically Underutilized Business Zone (HUBZone) small businesses, women-owned small businesses (WOSBs), and service-disabled veteran-owned small businesses (SDVOSBs)  The SBA administers many, but not all, of these programs  It examines the following federal requirements and authorities in promoting contracting and subcontracting with small businesses: 1  The requirement that federal agencies generally reserve contracts that have an anticipated value greater than the micro-purchase threshold (currently $10,000) but not greater than the simplified acquisition threshold (currently $250,000) exclusively for small businesses unless the contracting officer is unable to obtain offers from two or more small businesses that are competitive with market prices and the quality and delivery of the goods or services being purchased  2  The establishment of small business procurement goals, both government-wide and agency specific, to promote the awarding of contracts to small businesses  3  The requirement that federal agencies generally set aside contracts that have an anticipated value exceeding the simplified acquisition threshold exclusively for small businesses when there is a reasonable expectation that offers will be obtained from at least two responsible small businesses offering the products of different small businesses (Rule of Two) and the award will be made at a fair market price  4  The authority provided federal agencies to make sole source awards to small businesses when the award could not otherwise be made (e g , only a single source is available, under urgent and compelling circumstances)  5  The authority provided federal agencies to set aside contracts for, or grant other contracting preference to, specific types of small businesses (e g , 8(a) small businesses, HUBZone small businesses, WOSBs, and SDVOSBs)  It discusses the SBA's oversight and responsibilities concerning the small business goaling program, small business mentor-protégé programs, the 7(j) management and training program, and the surety bond guaranty program  It also discusses the role of the Office of Small and Disadvantaged Business Utilization (OSDBU), located in each federal agency, in promoting contracting with small businesses, and examines the role and responsibilities of various federal procurement officers, including procurement center representatives, commercial market representatives, and business opportunity specialists, in promoting small business contracting opportunities  This report concludes with a brief discussion of the strong bipartisan support for small business contracting programs  However, that does not mean that these programs face no opposition, or that issues have not been raised concerning the impact and operations of specific programs  For example, small business advocates note that implementing regulations in the Federal Acquisition Regulation (FAR) narrow the reach (and impact) of some small business contracting preferences by excluding specific types of contracts, such as those listed in the Federal Supply Schedules, from FAR requirements pertaining to small business contracting  Advocates want the federal government to enact policies that reduce or eliminate exclusions that narrow the reach of small business contracting preferences  Critics have questioned some of these programs' effectiveness, in terms of promoting both small business opportunities to win federal contracts and a more diversified, robust economy  With a few exceptions, businesses interested in bidding on a federal contract must obtain a Dun & Bradstreet Data Universal Numbering System (DUNS) number (i e , a unique nine-digit identification number) for each of the business's physical locations, and register with the federal government's System for Award Management (SAM)  SAM is used by government agencies for several purposes, including to find contractors  Businesses also must match their products and services to a North American Industry Classification System (NAICS) code  Businesses generally have a primary NAICS code, and may have multiple NAICS codes if they sell multiple products and services  Businesses that identify themselves as a small business in SAM must (1) meet the Small Business Act's definition of a small business and (2) not exceed size standards established, and updated periodically, by the SBA  The Small Business Act defines a small business as one that is organized for profit; has a place of business in the United States; operates primarily within the United States or makes a significant contribution to the U S  economy through payment of taxes or use of American products, materials, or labor; is independently owned and operated; and is not dominant in its field on a national basis  The business may be a sole proprietorship, partnership, corporation, or any other legal form  The Small Business Act authorizes the SBA to establish size standards to ensure that only small businesses are provided SBA assistance  The SBA currently uses two types of size standards to determine SBA program eligibility: industry-specific size standards and alternative size standards , for some lending and venture capital investment programs based on the applicant's maximum tangible net worth and average net income after federal taxes  The SBA's industry-specific size standards are used to determine eligibility for federal small business contracting purposes  The SBA determines if a business is small by comparing that business's economic characteristics (typically number of employees or average annual receipts) to size standards listed in the SBA's Table of Small Business Size Standards   The table has size standards for 1,036 industrial classifications in the North American Industrial Classification System  Businesses that exceed the applicable size standard for their primary industry do not meet the requirement of being small  The SBA's size standards are designed to (1) encourage competition within each industry and (2) ensure that SBA assistance is provided only to firms that are not dominant in their field on a national basis  The size standards are derived through an assessment of four economic factors: (1) the average firm size, (2) the average assets size as a proxy of start-up costs and entry barriers, (3) the four-firm concentration ratio (the cumulative share of total industry receipts of that industry's four biggest firms) as a measure of industry competition, and (4) the size distribution of firms  The SBA also considers the ability of small businesses to compete for federal contracting opportunities and, when necessary, several secondary factors "as they are relevant to the industries and the interests of small businesses, including technological change, competition among industries, industry growth trends, and impacts of size standard revisions on small businesses " Historically, the SBA has used the number of employees to determine if manufacturing and mining companies are small (ranging from fewer than 50 employees for some industries to fewer than 1,500 employees for others) and average annual receipts for most other industries (ranging from no more than $1 million for some industries to no more than $40 million for others)  To make it easier to determine if an offeror meets the SBA's definition of a small business, prior to soliciting bids, federal agencies are required to classify a product or service being acquired in only one (NAICS code) industry, "whose definition best describes the principal nature of the product or service being acquired even though for other purposes it could be classified in more than one " When acquiring a product or service that could be classified in two or more industries with different size standards, contracting officers must "apply the size standard for the industry accounting for the greatest percentage of the contract price " If a solicitation calls for more than one item and allows offers to be submitted on any or all of the items, "an offeror must meet the size standard for each item it offers to furnish " If a solicitation calling for more than one item requires offers on all or none of the items, "an offeror may qualify as a small business by meeting the size standard for the item accounting for the greatest percentage of the total contract price " With several notable exceptions (e g , HUBZone small businesses, SBA 8(a) program participants, and veteran-owned small businesses [VOSBs] and SDVOSBs seeking contracts with the Department of Veterans Affairs), businesses generally self-certify their status as small when they register their business in the SAM database  The contracting officer is required to accept an offeror's representation in a specific bid or proposal that it is a small business unless "(1) another offeror or interested party challenges the concern's small business representation or (2) the contracting officer has a reason to question the representation " If an offeror's small business status is challenged, the contracting officer is generally not allowed to award the contract until the SBA has made a size determination or 15 business days after the SBA receives the protest, whichever occurs first  The SBA's Office of Government Contracting Area Office (Area Office) serving the area in which the headquarters of the offeror is located initially reviews the protest  The Area Office is required, by regulation, to determine the offeror's size status within 15 business days after receipt of the protest, or "within any extension of time granted by the contracting officer " If the SBA does not make a determination within the required time, the contracting officer "may award the contract after determining in writing that there is an immediate need to award the contract and that waiting until SBA makes its determination will be disadvantageous to the government " An appeal of the Area Office's decision may be filed with the SBA's Office of Hearings and Appeals (OHA)   If the OHA accepts the appeal for consideration and finds the protested concern to be ineligible for award, the contracting officer must "terminate the contract unless termination is not in the best interests of the government, in keeping with the circumstances described in the [aforementioned] written determination  However, the contracting officer shall not exercise any options or award further task or delivery orders " Furthermore, a concern cannot become eligible for a specific award after the SBA has determined that it is not a small business, even if the concern takes action to meet the definition of a small business  The SBA or the federal agency may suspend or debar a firm from future government contracts for misrepresenting its size status  In addition, individuals that knowingly misrepresent a business's size to secure a federal contract can be subject to civil and criminal penalties  15 U S C  §644(e)(1) states, "To the maximum extent practicable, procurement strategies used by a Federal department or agency having contracting authority shall facilitate the maximum participation of small business concerns as prime contractors, subcontractors, and suppliers " To accomplish this goal, FAR regulations (FAR §19 202-1) require contracting officers, when applicable, to take the following actions prior to awarding a federal contract: 1  "Divide proposed acquisitions of supplies and services (except construction) into reasonably small lots (not less than economic production runs) to permit offers on quantities less than the total requirement " 2  "Plan acquisitions such that, if practicable, more than one small business concern may perform the work, if the work exceeds the amount for which a surety may be guaranteed by the SBA against loss under 15 U S C  §694b [generally $6 5 million, or $10 million if the contracting officer certifies that the higher amount is necessary] " 3  "Ensure that delivery schedules are established on a realistic basis that will encourage small business participation to the extent consistent with the actual requirements of the Government " 4  "Encourage prime contractors to subcontract with small business concerns [primarily through the agency's role in negotiating an acceptable small business subcontracting plan with prime contractors on contracts anticipated to exceed $700,000 or $1 5 million for construction contracts] " 5  "Provide a copy of the proposed acquisition package to the SBA procurement center representative [PCR, duties are described later]" for his or her review, comment and recommendation, or, if a PCR is not assigned, to the SBA Area Office serving the area in which the procuring activity is located "at least 30 days prior to the issuance of the solicitation if (i) The proposed acquisition is for supplies or services currently being provided by a small business and the proposed acquisition is of a quantity or estimated dollar value, the magnitude of which makes it unlikely that small businesses can compete for the prime contract; (ii) The proposed acquisition is for construction and seeks to package or consolidate discrete construction projects and the magnitude of this consolidation makes it unlikely that small businesses can compete for the prime contract; or (iii) The proposed acquisition is for a consolidated or bundled requirement … The contracting officer shall provide all information relative to the justification for the consolidation or bundling, including the acquisition plan or strategy and if the acquisition involves substantial bundling, the information identified in [FAR] 7 107-4  The contracting officer shall also provide the same information to the agency Office of Small and Disadvantaged Business Utilization [duties are described later] " 6  "Provide a statement explaining why the (i) Proposed acquisition cannot be divided into reasonably small lots (not less than economic production runs) to permit offers on quantities less than the total requirement; (ii) Delivery schedules cannot be established on a realistic basis that will encourage small business participation to the extent consistent with the actual requirements of the government; (iii) Proposed acquisition cannot be structured so as to make it likely that small businesses can compete for the prime contract; (iv) Consolidated construction project cannot be acquired as separate discrete projects; or (v) Consolidation or bundling is necessary and justified " 7  "Process the 30-day notification concurrently with other processing steps required prior to the issuance of the solicitation " 8  "If the contracting officer rejects the SBA procurement center representative's recommendation … document the basis for the rejection and notify the SBA procurement center representative [who (as described later) may appeal the rejection to the chief of the contracting office and, ultimately, to the agency head] " The SBA may assign one or more procurement center representatives (PCRs) to any contracting activity or contract administration office to implement the SBA's policies and programs  The SBA currently has 49 PCRs located in the SBA's six Area Offices  PCRs are required to comply with the contracting agency's directives governing the conduct of contracting personnel and the release of contract information  PCR duties include the following: Review proposed acquisitions to recommend "the setting aside of selected acquisitions not unilaterally set aside by the contracting officer;" new qualified small business sources; and the feasibility of breaking out components of the contract for competitive acquisitions  Review proposed acquisition packages  If the PCR (or, if a PCR is not assigned, the SBA Area Office serving the area in which the procuring activity is located) "believes that the acquisition, as proposed, makes it unlikely that small businesses can compete for the prime contract," the PCR can recommend any alternate contracting method that he or she "reasonably believes will increase small business prime contracting opportunities " The recommendation must be made to the contracting officer within 15 days after the package's receipt  Recommend small businesses "for inclusion on a list of concerns to be solicited in a specific acquisition " Appeal to the contracting office's chief "any contracting officer's determination not to solicit a concern recommended by the SBA for a particular acquisition, when not doing so results in no small business being solicited " This appeal may be further appealed to the agency head  Conduct periodic reviews of the agency's contracting activity, including the agency's assessment of any required small business subcontracting plan, "to ascertain whether the agency is complying with the small business policies in this regulation " Sponsor and participate in conferences and training "designed to increase small business participation in the contracting activities of the office " Every federal agency (except the SBA) that has procurement powers is required to have an OSDBU, whose director, by statute, reports directly to the head of the agency and has supervisory authority over agency staff performing certain procurement functions  The OSDBU's primary responsibility is to ensure that small businesses, SDBs, WOSBs, SDVOSBs, and HUBZone small businesses are treated fairly and that they have an opportunity to compete and be selected for a fair amount of the agency's contract dollars  Among its statutory responsibilities are the following: "Identify proposed solicitations that involve significant bundling of contract requirements, and work with the agency acquisition officials and the Administration to revise the procurement strategies for such proposed solicitations where appropriate to increase the probability of participation by small businesses as prime contractors, or to facilitate small business participation as subcontractors and suppliers, if a solicitation for a bundled contract is to be issued " Assist small businesses "to obtain payments, required late payment interest penalties, or information regarding payments due to the concern from an executive agency or a contractor " Assign "a small business technical adviser to each office to which the SBA has assigned" a PCR  The small business technical advisor "shall be a full-time employee of the procuring activity, well qualified, technically trained and familiar with the supplies or services purchased at the activity; and whose principal duty shall be to assist" the PCR  Provide the agency's "Chief Acquisition Officer and senior procurement executive … with advice and comments on acquisition strategies, market research, and justifications [related to limitations on the consolidation of contracts as a means to provide small businesses appropriate opportunities to participate as prime contractors and subcontractors] " Provide training to small businesses and contract specialists, provided that the training does not interfere with the director carrying out his or her other responsibilities  Ensure that a small business that notifies the PCR prior to a contract's award that "a solicitation, request for proposal, or request for quotation unduly restricts [its] ability … to compete for the award … is aware of other resources and processes available to address unduly restrictive provisions … even if such resources and processes are provided by such agency, the Administration, the Comptroller General, or a Department of Defense (DOD) procurement technical assistance program [described below] " Review all subcontracting plans "to ensure that the plan provides maximum practicable opportunity for small business concerns to participate in the performance of the contract to which the plan applies " In accordance with P L  109-163 , the National Defense Authorization Act of 2006, the DOD renamed its OSDBU the Office of Small Business Programs (OSBP)  The act also redesignated the Army, Navy, and Air Force's OSDBUs to OSBPs of the Department of the Army, Navy, and Air Force, respectively  At the agency level, procurement department heads (sometimes titled senior procurement executive ) are responsible for implementing small business programs at their agencies, including achieving program goals  In general, procurement department staff who work on small business issues (often titled small business specialists ) coordinate with OSDBU directors on their agencies' small business programs  Chief acquisition officers provide a focal point for acquisition in agency operations  Their key functions include "monitoring and evaluating agency acquisition activities, increasing the use of full and open competition, increasing performance-based contracting, making acquisition decisions, managing agency acquisition policy, acquisition career management, acquisition resources planning, and conducting acquisition assessments " The SBA must assign a breakout procurement center representative (breakout PCR) to each major procurement center  A major procurement center is, in the opinion of the SBA Administrator, a procurement center that purchases substantial dollar amounts of other than commercial items, and has the potential to incur significant savings as a result of the placement of a breakout PCR  The breakout PCR advocates for (1) the appropriate use of full and open competition, and (2) the breakout of items, "when appropriate and while maintaining the integrity of the system in which such items are used " The breakout PCR is in addition to the PCR  When a breakout PCR is assigned, the SBA must assign at least two co-located small business technical advisors  SBA breakout PCRs and technical advisors must comply with the contracting agency's directives governing the conduct of contracting personnel and the release of contract information  The SBA must obtain security clearances for its breakout PCRs and technical advisors as required by the contracting agency  The SBA has four commercial market r epresentatives who, among other duties, help prime contractors find small businesses that are capable of performing subcontracts; provide counseling on the contractor's responsibility to maximize subcontracting opportunities for small businesses; and conduct periodic reviews of contractors awarded contracts requiring an acceptable subcontracting plan that provides small businesses "the maximum practicable opportunity to participate in contract performance consistent with its efficient performance" (generally any solicitation to perform a contract that is expected to exceed $700,000 ($1 5 million for construction) and that has subcontracting possibilities)  The SBA's business opportunity s pecialists provide, among other duties, guidance, counseling, and referrals for assistance with technical, management, financial, or other matters intended to improve the competitive viability of SBA 8(a) program participants  They provide 8(a) program participants comprehensive assessments of the firm's strengths and weaknesses; monitor and document their compliance with 8(a) program requirements; advise them on compliance with contracting regulations after the award of a 8(a) program contract or subcontract; review and monitor their compliance with mentor-protégé agreements; represent the interests of the SBA Administrator and small businesses in the award, modification, and administration of 8(a) program contracts and subcontracts; and report fraud or abuse involving the 8(a) program  The Small Business Procurement Advisory Council (SBPAC), whose members are composed of the SBA Administrator (or his or her designee), the director of the Minority Business Development Agency, and the head of each OSDBU in each federal agency having procurement powers, has the following statutory duties: 1  Develop positions on proposed procurement regulations affecting the small business community  2  Submit comments reflecting such positions to appropriate regulatory authorities  3  Conduct reviews of each OSDBU to determine the office's compliance with its statutory requirements  4  Identify best practices for maximizing small business utilization in federal contracting that may be implemented by federal agencies having procurement powers  5  Submit annually, to the House Committee on Small Business and Senate Committee on Small Business and Entrepreneurship, a report describing (1) the comments submitted to appropriate regulatory authorities, including any outcomes related to the comments; (2) the results of its review of each OSDBU ; and (3) best practices identified for maximizing small business contracting   The Defense Logistic Agency's Procurement Technical Assistance Program (PTAC) helps "businesses pursue and perform under contracts with the Department of Defense, other federal agencies, state and local governments and with government prime contractors  Most of the assistance the PTACs provide is free  PTAC support to businesses includes registration in systems such as the System for Award Management (SAM), identification of contract opportunities, and help in understanding requirements and in preparing and submitting bids " The Competition in Contracting Act of 1984 generally requires "full and open competition" for government procurement contracts  However, various provisions of the Small Business Act authorize or, in some cases, require federal agencies to provide for other than "full and open competition through the use of competitive procedures" when contracting with small businesses  For example, as mentioned previously, federal agencies are generally required to reserve contracts that have an anticipated value greater than the micro-purchase threshold (currently $10,000), but not greater than the simplified acquisition threshold (currently $250,000) exclusively for small businesses unless the contracting officer is unable to obtain offers from two or more small businesses that are competitive with market prices and the quality and delivery of the goods or services being purchased  In addition, federal agencies are generally required to set aside contracts that have an anticipated value exceeding the simplified acquisition threshold exclusively for small businesses when there is a reasonable expectation by the contracting officer that offers will be obtained by at least two responsible small businesses offering the products of different small businesses (Rule of Two) and the award will be made at a fair market price; may similarly set aside contracts exceeding the simplified acquisition threshold for competition reserved for specific types of small businesses (e g , 8(a) small businesses, HUBZone small businesses, WOSBs and SDVOSBs); may enter into negotiations directly with particular types of small businesses (e g , a sole source award) when the award could not otherwise be made (e g , only a single source is available or under urgent and compelling circumstances); and are required to grant HUBZone small businesses a price evaluation preference of not more than 10% in open and unrestricted competitions  Several SBA programs assist small businesses in obtaining and performing federal contracts and subcontracts  These include various prime contracting programs; subcontracting programs; and other assistance (e g , contracting technical training assistance and oversight of the federal small business goaling program and the Surety Bond Guarantee program)  Several contracting programs allow small businesses to compete only with similar firms for government contracts or receive sole source awards in circumstances in which such awards could not be made to other firms  These programs provide small businesses an opportunity to win government contracts without having to compete against larger and more experienced companies  The 8(a) Minority Small Business and Capital Ownership Development Program (named for the section of the Small Business Act from which it derives its authority) provides business development assistance to businesses owned and controlled by persons who are socially and economically disadvantaged  African Americans, Hispanics, Native Americans (including American Indians, Eskimos, Aleuts, and Native Hawaiians), Asian-Pacific Americans, and Subcontinent Asian Americans are presumed to be socially and economically disadvantaged  Other individuals can also qualify as socially and economically disadvantaged on a case-by-case basis  To be considered economically disadvantaged, an individual's net worth, excluding ownership interest in the 8(a) firm and equity in his or her primary personal residence, must be less than $250,000 at the time of application to the 8(a) Program, and less than $750,000 thereafter  Federal agencies are authorized to award contracts for goods or services, or to perform construction work, to the SBA for subcontracting to 8(a) firms  The SBA is authorized to delegate the function of executing contracts to the procuring agencies and often does so  Once the SBA has accepted a contract for the 8(a) Program, the contract is awarded through either a set-aside or on a sole source basis, with the contract amount generally determining the acquisition method used  When the contract's anticipated total value, including any options, is less than $4 million ($7 million for manufacturing contracts), the contract is normally awarded without competition (as a sole source award)  In contrast, when the contract's anticipated value exceeds these thresholds, the contract generally must be awarded via a set-aside with competition limited to 8(a) firms so long as there is a reasonable expectation that at least two eligible and responsible 8(a) firms will submit offers and the award can be made at fair market price  The SBA also provides technical assistance and training to 8(a) firms  Firms may participate in the 8(a) Program for no more than nine years  In FY2017, the federal government awarded $27 2 billion to 8(a) firms  $16 4 billion was awarded with an 8(a) preference ($8 billion through an 8(a) set-aside and $8 4 billion through an 8(a) sole source award); $4 8 billion was awarded to an 8(a) firm in open competition with other firms; and $6 billion was awarded with another small business preference (e g , set-asides and sole source awards for small businesses generally and for HUBZone firms, women-owned small businesses, and service-disabled veteran-owned small businesses)  This program assists small businesses located in Historically Underutilized Business Zones (HUBZones) through set-asides, sole source awards (so long as the award can be made at a fair and reasonable price, and the anticipated total value of the contract, including any options, is below $4 million, or $7 million for manufacturing contracts) and price evaluation preferences (of up to 10%) in full and open competitions  The HUBZone program targets assistance to small businesses located in areas with low income, high poverty, or high unemployment


Report 2:  To be certified as a HUBZone small business, at least 35% of the small business's employees must generally reside in a HUBZone  In FY2017, the federal government awarded $7 53 billion to HUBZone-certified small businesses  $1 90 billion was awarded with a HUBZone preference ($1 49 billion through a HUBZone set-aside, $65 3 million through a HUBZone sole source award, and $346 9 million through a HUBZone price-evaluation preference); $1 53 billion was awarded to HUBZone-certified small businesses in open competition with other firms; and $4 10 billion was awarded with another small business preference (e g , set-asides and sole source awards for small businesses generally and for 8(a), women-owned, and service-disabled veteran-owned small businesses)  This program allows agencies to set aside contracts for SDVOSBs  Also, federal agencies may award sole source contracts to SDVOSBs so long as the award can be made at a fair and reasonable price, and the anticipated total value of the contract, including any options, is below $4 million ($6 5 million for manufacturing contracts)  For purposes of this program, veterans and service-related disabilities are defined as they are under the statutes governing veterans affairs  In FY2017, the federal government awarded $18 2 billion to SDVOSBs  $6 8 billion was awarded through a SDVOSB set-aside award; $4 3 billion was awarded to a SDVOSB in open competition with other firms; and $7 1 billion was awarded with another small business preference (e g , set-asides and sole source awards for small businesses generally and for HUBZone firms, 8(a) firms, and WOSBs)  Under this program, contracts may be set aside for economically disadvantaged WOSBs in industries in which women are underrepresented and substantially underrepresented  Federal agencies may award sole source contracts to WOSBs so long as the award can be made at a fair and reasonable price, and the anticipated total value of the contract, including any options, is below $4 million ($6 5 million for manufacturing contracts)  In FY2017, the federal government awarded $21 3 billion to WOSBs  $648 9 million was awarded with a WOSB preference ($580 5 million through a WOSB set-aside and $68 4 million through a WOSB sole source award); $7 0 billion was awarded to a WOSB in open competition with other firms; and $13 7 billion was awarded with another small business preference (e g , set-asides and sole source awards for small businesses generally and for HUBZone firms, 8(a) firms, and SDVOSBs)  Federal contracting officers are required to provide the SBA's PCR (or, if a PCR is not assigned, the SBA Area Office serving the procuring activity area) a "reasonable period of time" to review any solicitation requiring submission of a small business subcontracting plan and to submit advisory findings before the solicitation is issued  The PCR's advisory comments regarding the small business subcontracting plan's acceptability must be submitted, in writing, to the appropriate contracting officer within five working days after the plan's receipt  As mentioned previously, the SBA's commercial market representatives help prime contractors find small businesses to perform subcontracts; counsel contractors on their responsibility to maximize subcontracting opportunities for small businesses; and conduct periodic reviews, often in concert with a SBA PCR, of contractors awarded contracts that require an acceptable small business subcontracting plan  Federal agencies may also set aside contracts or make sole source awards to small businesses not participating in any other program under certain conditions  The Department of Transportation's (DOT's) Disadvantaged Business Enterprise (DBE) Program originally began in 1980 as a minority/women's business enterprise program "established by regulation under the authority of Title VI of the Civil Rights Act of 1964 and other nondiscrimination statutes that apply to DOT financial assistance programs " Congress has reauthorized the DBE program several times since its inception; most recently in P L  114-94 , the Fixing America's Surface Transportation Act (FAST-Act)  The FAST-Act provides, that, except to the extent the Secretary of Transportation determines otherwise, not less than 10% of the amounts made available for any program under Titles I (federal-aid highways), II (innovative project finance), III (public transportation) and VI (innovation) of the act and 23 U S  Code 403 (highway safety research and development), shall be expended with DBEs  DOT also has a separate DBE program for airport concessions  A DBE is a for-profit small business owned and controlled by socially and economically disadvantaged individuals  Eligibility for the DBE program differs somewhat from the 8(a) program  For example, under the DBE program, women are presumed to be socially and economically disadvantaged individuals  Also, to be regarded as economically disadvantaged, an individual must have a personal net worth (excluding ownership interest in the firm and equity in his or her primary personal residence) that does not exceed $1 32 million  The DBE must also meet SBA size criteria and have average annual gross receipts not exceeding $23 98 million  Size limits for the airport concessions DBE program are higher  The DBE program's eight objectives are to 1  ensure nondiscrimination in the award and administration of DOT-assisted contracts in the department's highway, transit, and airport financial assistance programs; 2  create a level playing field on which DBEs can compete fairly for DOT-assisted contracts; 3  ensure that the department's DBE program is narrowly tailored in accordance with applicable law; 4  ensure that only firms that fully meet the program's eligibility standards are permitted to participate as DBEs; 5  help remove DBE-participation barriers in DOT-assisted contracts; 6  promote the use of DBEs in all types of federally-assisted contracts and procurement activities conducted by recipients; 7  assist the development of firms that can compete successfully in the marketplace outside the DBE program; and 8  provide appropriate flexibility to recipients of federal financial assistance in establishing and providing opportunities for DBEs  Other federal programs promote subcontracting with small disadvantaged businesses (SDBs)  SDBs include 8(a) participants and other small businesses that are at least 51% unconditionally owned and controlled by socially or economically disadvantaged individuals or groups  Individuals owning and controlling non-8(a) SDBs may have net worth of up to $750,000 (excluding ownership interests in the SDB firm and equity in their primary personal residence)  Otherwise, however, SDBs must generally satisfy the same eligibility requirements as 8(a) firms, although they do not apply to the SBA to be designated SDBs in the same way that 8(a) firms do  Federal agencies must negotiate "subcontracting plans" with the apparently successful bidder or offeror on eligible prime contracts prior to awarding the contract  Subcontracting plans set goals for the percentage of subcontract dollars to be awarded to SDBs, among others, and describe efforts that will be made to ensure that SDBs "have an equitable opportunity to compete for subcontracts " Federal agencies may also consider the extent of subcontracting with SDBs in determining to whom to award a contract or give contractors "monetary incentives" to subcontract with SDBs  As of February 11, 2019, the SBA's Dynamic Small Business Search database included 2,538 SBA-certified SDBs and 100,595 self-certified SDBs  The SBA's 7(j) Management and Technical Assistance program provides "a wide variety of management and technical assistance to eligible individuals or concerns to meet their specific needs, including: (a) counseling and training in the areas of financing, management, accounting, bookkeeping, marketing, and operation of small business concerns; and (b) the identification and development of new business opportunities " Eligible individuals and businesses include "8(a) certified firms, SDBs, businesses operating in areas of high unemployment, or low income or firms owned by low income individuals " In FY2017, the 7(j) Management and Technical Assistance program assisted 4,100 small businesses  The SBA's Surety Bond Guarantee program aims to increase small businesses' access to federal, state, and local government contracting, as well as private-sector contracts, by guaranteeing bid, performance, and payment bonds for small businesses that cannot obtain surety bonds through regular commercial channels  The program guarantees individual contracts of up to $6 5 million and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary  The SBA's guarantee ranges from not to exceed 80% to not to exceed 90% of the surety's loss if a default occurs  In FY2017, the SBA guaranteed 10,397 bid and final surety bonds with a total contract value of more than $6 3 billion  A surety bond is a three-party instrument between a surety (someone who agrees to be responsible for the debt or obligation of another), a contractor, and a project owner  The agreement binds the contractor to comply with the terms and conditions of a contract  If the contractor is unable to successfully perform the contract, the surety assumes the contractor's responsibilities and ensures that the project is completed  The surety bond reduces the risk associated with contracting  Surety bonds are meant to encourage project owners to contract with small businesses that may not have the credit history or prior experience of larger businesses and may be at greater risk of failing to comply with the contract's terms and conditions  Surety bonds are important to small businesses interested in competing for federal contracts because the federal government requires prime contractors—prior to the award of a federal contract exceeding $150,000 for the construction, alteration, or repair of any building or public work of the United States—to furnish a performance bond issued by a surety satisfactory to the contracting officer in an amount that the officer considers adequate to protect the government  Small business mentor-protégé programs typically seek to pair new businesses with more experienced businesses in mutually beneficial relationships  Protégés may receive financial, technical, or management assistance from mentors in obtaining and performing federal contracts or subcontracts, or serving as suppliers under such contracts or subcontracts  Mentors may receive credit toward subcontracting goals, reimbursement of certain expenses, or other incentives  The federal government currently has several mentor-protégé programs to assist small businesses in various ways  The 8(a) Mentor-Protégé Program is a government-wide program designed to assist small businesses "owned and controlled by socially and economically disadvantaged individuals" participating in the SBA's Minority Small Business and Capital Ownership Development Program (commonly known as the 8(a) program) in obtaining and performing federal contracts  For that purpose, mentors may (1) form joint ventures with protégés that are eligible to perform federal contracts set aside for small businesses; (2) make certain equity investments in protégé firms; (3) lend or subcontract to protégé firms; and (4) provide technical or management assistance to their protégés  The SBA's A ll S mall B usiness Mentor-Protégé Program is a government-wide mentor-protégé program for all small business concerns, consistent with the SBA's mentor-protégé program for participants in the SBA's 8(a) Business Development program  The Department of Defense (DOD) Mentor-Protégé Program , in contrast, is agency-specific  It assists various types of small businesses and other entities in obtaining and performing DOD subcontracts and serving as suppliers on DOD contracts  Mentors may (1) make advance or progress payments to their protégés that DOD reimburses; (2) award subcontracts to their protégés on a noncompetitive basis when they would not otherwise be able to do so; (3) lend money to or make investments in protégé firms; and (4) provide or arrange for other assistance  Other agencies also have agency-specific mentor-protégé programs to assist various types of small businesses or other entities in obtaining and performing subcontracts under agency prime contracts  The Department of Homeland Security (DHS), for example, has a mentor-protégé program wherein mentors may provide protégés with rent-free use of facilities or equipment, temporary personnel for training, property, loans, or other assistance  Because these programs are not based in statute, unlike the SBA and DOD programs, they generally rely upon preexisting authorities (e g , authorizing use of evaluation factors) or publicity to incentivize mentor participation  Currently, more than 1,200 mentor-protégé agreements are in place, even though there are issues with the accuracy and thoroughness of some federal agency records  Since 1978, federal agency heads have been required to establish federal procurement goals, in consultation with the SBA, "that realistically reflect the potential of small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals" to participate in federal procurement  Each agency is required, at the conclusion of each fiscal year, to report its progress in meeting the goals to the SBA  In 1988, Congress authorized the President annually to establish government-wide minimum participation goals for procurement contracts awarded to small businesses and small businesses owned and controlled by socially and economically disadvantaged individuals  Congress required the government-wide minimum participation goal for small businesses to be "not less than 20% of the total value of all prime contract awards for each fiscal year" and "not less than 5% of the total value of all prime contract and subcontract awards for each fiscal year" for small businesses owned and controlled by socially and economically disadvantaged individuals  Each federal agency was also directed to "have an annual goal that presents, for that agency, the maximum practicable opportunity for small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals to participate in the performance of contracts let by such agency " The SBA was also required to report to the President annually on the attainment of the goals and to include the information in an annual report to Congress  The SBA negotiates the goals with each federal agency and establishes a small business eligible baseline for evaluating the agency's performance  The agency head is required to "make consistent efforts to annually expand participation by small business concerns from each industry category " If the SBA and the agency cannot agree on the goals, the agency may submit the case to the Office of Management and Budget (OMB) Office of Federal Procurement Policy (OFPP) for resolution  The small business eligible baseline excludes certain contracts that the SBA has determined do not realistically reflect the potential for small business participation in federal procurement (such as those awarded to mandatory and directed sources), contracts funded predominately from agency-generated sources (i e , non-appropriated funds), contracts not covered by the FAR, acquisitions on behalf of foreign governments, and contracts not reported in the Federal Procurement Data System – Next Generation, or FPDS-NG (such as government procurement card purchases and contracts valued less than $10,000)  These exclusions typically account for 18% to 20% of all federal prime contracts each year  The SBA then evaluates the agencies' performance against their negotiated goals annually, using FPDS-NG data, managed by the U S  General Services Administration (GSA), to generate the small business eligible baseline  This information is compiled into the official Small Business Goaling Report, which the SBA releases annually  Each agency that fails to achieve any proposed prime or subcontract goal is required to submit a justification to the SBA on why it failed to achieve a proposed or negotiated goal with a proposed plan of corrective action  Agencies can take credit in every category that is applicable to the recipient of the contract  For example, "when counting goaling achievements, a contract awarded to a service-disabled Veteran-Owned Woman-Owned Small Business would be counted toward the Small Business (SB) goal, the Service-Disabled Veteran-Owned Small Business (SDVOSB) goal and the Women-Owned Small Business (WOSB) goal  However, these category counts are not summed to triple the total count  The Sum of Parts Does Not Equal the Whole (italics in original) " Over the years, federal government-wide procurement goals have been established for small businesses generally ( P L  100-656 , the Business Opportunity Development Reform Act of 1988, and P L  105-135 , the HUBZone Act of 1997—Title VI of the Small Business Reauthorization Act of 1997); small businesses owned and controlled by socially and economically disadvantaged individuals ( P L  100-656 ); women ( P L  103-355 , the Federal Acquisition Streamlining Act of 1994); small businesses located within a HUBZone ( P L  105-135 ); and small businesses owned and controlled by a service-disabled veteran ( P L  106-50 , the Veterans Entrepreneurship and Small Business Development Act of 1999)  The current federal small business procurement goals are at least 23 0% of the total value of all small business eligible prime contract awards to small businesses for each fiscal year; 5 0% of the total value of all small business eligible prime contract awards and subcontract awards to small disadvantaged businesses (including participants in the SBA's 8(a) Program) for each fiscal year; 5 0% of the total value of all small business eligible prime contract awards and subcontract awards to women-owned small businesses; 3 0% of the total value of all small business eligible prime contract awards and subcontract awards to HUBZone small businesses; and 3 0% of the total value of all small business eligible prime contract awards and subcontract awards to service-disabled veteran-owned small businesses  There are no punitive consequences for not meeting these goals  However, the SBA's Small Business Goaling Report is distributed widely, receives media attention, and serves to heighten public awareness of the issue of small business contracting  For example, agency performance as reported in the SBA's Small Business Goaling Report is often cited by Members during their questioning of federal agency witnesses during congressional hearings  As shown in Table 1 , the FY2017 Small Business Goaling Report , using FPDS-NG data, indicates that federal agencies met the federal procurement goal for small businesses generally, small disadvantaged businesses, and service-disabled veteran-owned small businesses in FY2017  Table 1 also provides, for comparative purposes, the percentage of total reported federal contracts (without exclusions) awarded to those small businesses in FY2017  Before awarding a federal contract, the contracting officer must affirmatively determine that the business is responsible to perform the contract  If the contracting officer determines that an apparent successful small business offeror lacks certain elements of responsibility (e g , is unable to fulfill the requirements of a specific government procurement because it lacks capability, competency, capacity, credit, integrity, perseverance, tenacity, or limitations on subcontracting), the officer is required to refer the matter in writing to the SBA for review and a possible Certificate of Competency (COC), even if the next acceptable offer is also from a small business  The COC certifies in writing that the small business meets all required elements of responsibility for the purpose of receiving and performing a specific government contract  The "COC program empowers the SBA to certify to contracting officers as to all elements of responsibility of any small business concern to receive and perform a specific government contract  The COC program does not extend to questions concerning regulatory requirements imposed and enforced by other federal agencies " As mentioned previously, the SBA's commercial market representatives conduct periodic compliance reviews of contractors awarded contracts that require an acceptable small business subcontracting plan  In addition, once the contract is completed, federal agencies are required to pay the contractor on a timely basis and pay interest penalties for late payments  Under specified circumstances, federal agencies may also pay contractors before the contract's payment's due date  The periodic compliance review can take place on-site, at the contracting agency, or virtual  Materials that may be reviewed include the contractor's contract files, correspondence that is directly or indirectly related to the contract, IT systems, subcontracting methods, and procedures  Contractors are selected randomly for audit  The SBA may enter into agreements with other federal agencies to conduct these assessments  The compliance report includes compliant and non-compliant items found during the assessment of the contractor's subcontracting activities and a rating indicating the contractor's level of compliance or non-compliance, ranging from unsatisfactory to outstanding  If any deficiencies are found, the contractor is required to submit, within 30 days of the compliance review rating letter date, a corrective action plan (CAP)  The CAP is submitted to the SBA Area Office via email, or any method designated by the SBA  The commercial market representative conducts a follow-up compliance report within six months to a year of the date the SBA acknowledges receipt of the contractor's CAP to ensure that corrective actions have been taken to eliminate the deficiencies  The SBA keeps the federal agency that awarded the contract informed of the contractor's adherence to correcting the deficiencies  If the contractor refuses to provide or address all deficiencies in the CAP, a delinquent CAP letter is sent advising the contractor that it has 15 days from the letter's date to comply with federal regulations  If an acceptable CAP is not received in the allotted time frame the case is escalated to the SBA's subcontracting program manager who informs the SBA's Office of Government Contracting director and works with the SBA's Office of General Counsel and the federal agency that awarded the contract for resolution or to begin accessing liquidated damages  Once a contract is awarded, federal agencies are generally required to pay interest to prime contractors on any invoice payments the agency fails to make by the date(s) specified in the contract, or within 30 days of receipt of a proper invoice for the amount due if no date is specified in the contract  Similar requirements exist for prime contractors in paying subcontractors on construction contracts  These requirements are especially important for small businesses in the construction industry  Specifically, every construction contract awarded by a federal agency must contain clauses obligating the prime contractor to (1) pay the subcontractor for "satisfactory performance" under the subcontract within seven days of receiving payment from the agency and (2) pay interest on any amounts that are not paid within the proper time frame  The contract must also obligate the prime contractor to include similar payment and interest penalty terms in its subcontracts, as well as require its subcontractors to impose these terms on their subcontractors  This latter provision ensures that the payment and interest penalty requirements flow down to all tiers of construction subcontractors  In addition, required subcontracting plans must incorporate terms obligating the prime contractor to notify the agency awarding the contract in writing if a subcontractor is paid a reduced price for goods supplied or services completed under the contract, or if payment is made to the subcontractor more than 90 days past due  The prime contractor must include the reason for the reduction in payment or failure to pay a subcontractor within 90 days  If the contracting officer for a covered contract (a contract that requires an acceptable subcontracting plan) determines that a prime contractor has a history of unjustified, untimely payments to contractors, the contracting officer shall record the contractor's identity, describe the circumstances under which the contractor may be determined to have a history of unjustified, untimely payments to subcontractors, and include the contractor's identity in, and make publicly available through, the Federal Awardee Performance and Integrity Information System, or any successor  This information is used by federal agencies to "evaluate the business ethics and quality of prospective contractors competing for Federal contracts and to protect taxpayers from doing business with contractors that are not responsible sources " Federal agencies are permitted to make an accelerated payment up to seven days before the required payment date in a federal contract, or earlier if the agency deems it necessary on a case-by-case basis if, after receiving a proper invoice, it is in the best interest of the government, and any of the following is true: the invoice in under $2,500; the payment is to a small business; or the payment is related to an emergency, disaster, or military deployment  In addition, the Secretary of Defense is required, to the fullest extent permitted by law, to establish an accelerated payment date for its small business prime contractors, with a goal of 15 days after receipt of a proper invoice for the amount due if a specific payment date is not established by contract  The Secretary of Defense is also required to establish, to the fullest extent permitted by law, an accelerated payment date for its prime contractors that subcontract with small businesses, with a goal of 15 days after receipt of a proper invoice for the amount due if a specific payment date is not established by contract and the prime contractor agrees to make payments to the subcontractor "in accordance with the accelerated payment date, to the maximum extent practicable, without any further consideration from or fees charged to the subcontractor " The small business contracting programs described in this report generally have strong bipartisan support  However, that does not mean that these programs face no opposition or that issues have not been raised concerning the impact or operations of specific programs  For example, small business advocates seek policies that reduce or eliminate exclusions that narrow the reach of small business contracting preferences, want the SBA to use the total value of all prime contract awards in the Small Business Goaling Report, and want the SBA to use a more discerning methodology for awarding performance grades to federal agencies in meeting its small business contracting goals  Critics have questioned some of these programs' effectiveness, in terms of both promoting small business opportunities to win federal contracts and a more diversified, robust economy  Many observers judge the relative success or failure of federal efforts to enhance small business contracting opportunities by whether the federal government and individual federal agencies meet the procurement goals in the annual Small Business Goaling Report  In recent years, the federal government has generally succeeded in meeting the government-wide goals of awarding 23% of the total value of all small business eligible prime contract awards to small businesses generally, 5% to SDBs, and 3% to SDVOSBs  However, it has had difficulty meeting the goals of 5% to WOSBs and 3% to HUBZone small businesses  The Small Business Goaling Report is the most convenient measure available to compare federal small business contracting performance over time, but it has limitations  For example, the report does not include all federal contracts, because some are not deemed to be small business eligible and others are not recorded in the FPDS-NG  In addition, the report does not evaluate the effect these contracts have on small businesses, industry competitiveness, or the overall economy  As one group of researchers has argued, the entire goal-setting process … is geared to measuring the dollars and contracts awarded to small business, and pays little attention to the effect that access to government contracts has on small business starts, growth, and wealth generation  Results of the program are also hard to isolate, difficult to measure, and generally not judged against the next best or other alternative policies [emphasis in original]  Comprehensive studies examining the effect of small business contracting preferences on small business startups, growth, wealth generation, and industry competitiveness may prove useful for congressional oversight  In the meantime, although the Small Business Goaling Report has its limitations, it can help policymakers identify programs most in need of examination  For example, the SBA has announced that it is focusing additional efforts on promoting the HUBZone program to federal contracting officials, primarily due to the continuing difficulties federal agencies have had in meeting the 3% goal for HUBZone small businesses 

ground_truth: Congress created several authorities that provide DOD research labs with ways to increase efficiency and foster innovation. Senate report 114-255 contained a provision for GAO to study governance models used by federal labs. This report evaluates DOD labs' use of authorities to foster innovation and efficiency. GAO selected four authorities that recent work on best practices for science and technology management and expedited defense lab hiring have shown to be the most crucial for supporting innovation; administered a survey to 44 lab directors to gain insight into their use of the authorities; interviewed key lab officials and contractors; and reviewed relevant policies and guidance. Congress has provided the Department of Defense's (DOD) research labs with several authorities to enhance management and operations. Four authorities that GAO examined provide lab directors with greater ability to make their own decisions regarding the funding of projects, hiring, lab management, and purchasing of equipment or services. 1. Laboratory initiated research authority. This authority, as implemented, provides labs with a means to fund new science and technology projects that they consider a priority. Labs may use a percentage of all funds available to the lab and are permitted to charge customers of the lab a percentage fee of the costs for activities performed by the lab for the customer. 2. Direct hire authority. This authority enables labs to compete with private industry for high-quality talent. For example, it provides for streamlined hiring of applicants with relevant advanced degrees, or students enrolled in science, technology, engineering, and mathematics programs. 3. Laboratory enhancement pilot program authority. This authority generally allows lab directors to propose alternative methods that might lead to more effective lab management, and waive certain policies or procedures that might affect implementation of these methods. 4. Micro-purchase authority. This authority raises the threshold for small purchases for DOD research lab activities from $3,500 to $10,000 to facilitate acquisitions. While labs have used these authorities, their use has sometimes been limited, particularly with the laboratory initiated research authority. DOD lab directors at Air Force, Navy, and Army cited several obstacles that impede wider use of that authority, specifically: Air Force: Financial management officials at the Air Force stated that the service's accounting system does not currently have an automated capability to transfer the allowable percentage fee of costs to a central account at the Air Force Research Laboratory. This lack of capability, officials noted, creates a significant administrative burden related to charging these fees. Navy: In fiscal year 2017, Navy labs invested $7.3 million in lab infrastructure projects, compared to $32.9 million and $53.7 million at the Air Force and Army, respectively. Navy lab officials told us that they were restricted in their use of infrastructure funds available under the laboratory initiated research authority due to a lack of clear guidance as to whether and how to use this authority within the Capital Investment Program of the Navy Working Capital Fund. Army: The Army requires its labs to use a similar percentage of funds from two sources: (1) what it refers to as directly appropriated funds and (2) funds labs charge for customer activities. Some Army lab directors reported assessing a lower rate on customer funds than allowed so as not to drive customers away. The labs then generally charge a lower than desired rate on their directly appropriated funds, which further constrains the total funding available to them. GAO is making three recommendations to enhance DOD's use of laboratory initiated research authority, including that the Air Force assess potential accounting system improvements, the Navy clarify how labs can use the authority for infrastructure improvements, and the Army assess its policy to determine whether changes are needed to remove disincentives for labs to use the authority. DOD concurred with the recommendations.