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



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

Report 1: The Small Business Administration (SBA) administers several programs to support small businesses, including loan guaranty programs to enhance small business access to capital; contracting programs to increase small business opportunities in securing federal contracts; 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  Congressional interest in these programs has increased in recent years, primarily because assisting small business is viewed as a means to enhance economic growth  The SBA's Surety Bond Guarantee Program has been operational since April 1971  It is designed to increase small business' access to federal, state, and local government contracting, as well as private-sector contracting, by guaranteeing bid, performance, payment, and specified ancillary bonds "on contracts … for small and emerging contractors who cannot obtain bonding 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 $6 5 million limit is periodically adjusted for inflation  The SBA's guarantee currently ranges from 80% to 90% of the surety's loss if a default occurs  In FY2018, the SBA guaranteed 10,800 bid and final surety bonds (a payment bond, performance bond, or both a payment and performance bond) with a total contract value of nearly $6 5 billion  Although the surety industry does not report the total value of the bonds it issues each year, estimates based on the total amount of premiums collected by the private sector in recent years suggest that the SBA's Surety Bond Guarantee Program represents, by design, a relatively small percentage of the market for surety bonds (from about 1 1% to 6 7% of the value of surety bonds issued by the private sector)  A surety bond is a three-party instrument between a surety (that 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 contract's terms and conditions  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 of contracting  Surety bonds are viewed as a means to encourage project owners to contract with small businesses that may not have the credit history or prior experience of larger businesses and are considered to be at greater risk of failing to comply with the contract's terms and conditions  The four general types of surety bonds are bid bonds guarantee that the bidder on a contract will enter into the contract and furnish the required payment and performance bonds if awarded the contract, payment bonds guarantee that suppliers and subcontractors will be paid for work performed under the contract, performance bonds guarantee that the contractor will perform the contract in accordance with its terms and conditions, and ancillary bonds ensure completion of requirements outside of performance or payment, such as maintenance  Surety bonds are important to small businesses interested in competing for a federal contract 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 officer awarding the contract, and in an amount the contracting officer considers adequate, to protect the government  Prime contractors are also required to post a payment bond with a surety satisfactory to the contracting officer for the protection of all persons supplying labor and material in carrying out the work provided for in the contract  Both bonds become legally binding upon award of the contract and their "penal amounts," or the maximum amount of the surety's obligation, must generally be 100% of the original contract price plus 100% of any price increases  Most state and local governments have adopted similar legislation, often called "Little Miller Acts," referencing the Miller Act of 1935 that established the federal requirement  Many private project owners also require contractors to furnish a surety bond before awarding them a contract  This report opens with an examination of the SBA's Surety Bond Guarantee Program's legislative origin and provides a historical summary of the major issues that have influenced the program's development, including the decision to supplement the original Prior Approval Program with a Preferred Surety Bond Guarantee Program (PSB program) that initially provided SBA-approved sureties a lower guarantee rate (not to exceed 70%) than those participating in the Prior Approval Program (not to exceed 80% or 90%, depending on the size of the contract and the type of small business) in exchange for allowing preferred sureties to issue SBA-guaranteed bonds to small businesses without the SBA's prior approval; P L  114-92 , the National Defense Authorization Act for Fiscal Year 2016, which increased the PSB program's guarantee rate from not to exceed 70% to not to exceed 90% of losses; and the decision to increase the program's bond limit  It then examines the program's current eligibility standards and requirements, and provides performance statistics, including the number and amount of bond guarantees issued annually  In addition, it provides data concerning the number and amount of final bonds guaranteed from FY1971 through FY2017 (see Table A-1 ) and for bid and final bonds combined from FY2000 through FY2017 (see Table A-2 )  P L  91-609, the Housing and Urban Development Act of 1970, authorized the SBA's Surety Bond Guarantee Program  The act amended Title IV of the Small Business Investment Act of 1958 (P L  85-699, as amended) to provide the SBA authority to guarantee any surety against loss as the result of a breach of the terms of a bid bond, payment bond, or performance bond by a principal on any contract up to $500,000  The act specified that (1) the principal of the bond is a small business, (2) the bond is required as a condition of bidding on the contract or serving as a prime contractor or subcontractor on the project, (3) the small business is not able to obtain such bond on reasonable terms and conditions without the guarantee, (4) the SBA determines that there is a reasonable expectation that the small business will perform the covenants and conditions of the contract, (5) the contact meets SBA requirements concerning the feasibility of the contract being completed successfully and at a reasonable cost, and (6) the bond's terms and conditions are reasonable in light of the risks involved and the extent of the surety's participation  The act also required that the SBA's guarantee not exceed 90% of the loss incurred by the surety in the event of a breach of the bond's terms and conditions by the small business  The SBA was authorized to finance the program through the Leasing Guarantee Revolving Loan Fund within the Department of the Treasury, which renamed that fund the Lease and Surety Bond Guarantee Revolving Fund  The act authorized the transfer of $5 million from the SBA's Business Loan and Investment Revolving Fund to the Lease and Surety Bond Guarantee Revolving Fund, raising that fund's capital to $10 million available without fiscal year limitation, to support both the lease guarantee program and the surety bond guarantee program  The act also recommended that the program be appropriated up to $1 5 million each fiscal year for three fiscal years after its date of enactment (December 31, 1970) if additional funding were needed to offset the program's expenses  The SBA was directed to administer the program "on a prudent and economically justifiable basis " It was authorized to offset the program's administrative costs by charging a uniform annual fee, subject to periodic review to ensure that the fee is the "lowest fee that experience under the program shows to be justified," and uniform fees for the processing of applications for guarantees  The SBA also was authorized to "obligate the surety to pay the Administration such portions of the bond fee as the Administration determines to be reasonable in light of the relative risks and costs involved " The program's sponsors argued in 1970 that "there is widespread evidence that a significant number of construction contracting organizations find varying degrees of difficulty in obtaining surety bonds" and that "the major share of these organizations are small businesses, and many of them are headed by minority groups " They argued that the Surety Bond Guarantee Program would "facilitate the entry and advancement of small and minority contractors in the construction business " At that time, witnesses at congressional hearings testified that surety bonds were not necessarily required for most private sector construction contracts, but they were required for most public sector construction contracts  The SBA implemented the program on a pilot basis on April 5, 1971, in Kansas City  The program later was expanded to Los Angeles and became nationwide on September 2, 1971  Initially, the SBA guaranteed 90% of the amount of all of the surety bonds in the program and charged sureties 10% of the bond premium paid to the surety company by the contractor  It also charged small business applicants for payment and performance bonds 0 2% of the contract price upon their obtaining the contract  It did not charge for the processing of bid bonds, rejected applications, or applications that did not result in a contract award  Contractors wishing to participate in the program were required to have less than $750,000 in gross annual receipts for the past fiscal year or to have averaged less than $750,000 in gross annual receipts over the past three fiscal years  This size standard was more stringent than for other SBA programs, and it was designed "to reach that segment of small business which was obviously intended to benefit from the legislation as evidenced by the limit of $500,000 on any one contract " Demand for the program exceeded the SBA's expectations  In 1971, the SBA estimated that it would guarantee about 8,000 contracts amounting to about $540 million from FY1972 through FY1974  Instead, it guaranteed 16,118 contracts amounting to nearly $1 1 billion (see Table A-1 in the Appendix)  Because the demand for the program exceeded expectations and the initial fees proved to be insufficient to recoup the program's expenses, in 1974, the SBA requested an additional $25 million for the program  The SBA argued that the additional funds were necessary to take into account the program's projected growth and to establish a reserve fund "to protect against having to suspend [the] program in the fact of more rapid growth than is projected " In response to the SBA's request for additional funding for the program, Congress held congressional hearings to reassess the need for the program and to explore options concerning how to finance the program's proposed expansion  The financing discussions focused on the relative merits of relying primarily on higher fees to increase the program's revenue, reductions in the guarantee percentage to reduce the program's expenses, or additional appropriations to finance the program's proposed expansion  Although the SBA has periodically increased the program's fees and later instituted a tiered system of guarantee percentages, historically, the SBA has tried to keep the program's fees as low as economically feasible and the guarantee percentage as high as economically feasible to encourage the program's use  As an SBA official testified before Congress in 1975: SBA's loss exposure could be reduced by a decrease in the guarantee extended to sureties from 90% to 80%  Before proceeding with this recommendation, a thorough analysis will have to be made of the adverse effect on the willingness of sureties to participate in the program which would result from the increase from 10% to 20% of the sureties' share of the loss potential  An increase in contractor's fees would obviously be beneficial to the operating income of the program, but would also increase the bids which small business-contractors would have to make, thus placing them at a competitive disadvantage with contractors with more ready access to bonding  Moreover, as mentioned previously, the SBA is required by statute to ensure that the fees are the lowest "that experience under the program shows to be justified " Determining the program's appropriate size became a recurring theme at congressional hearings, and continues to be of congressional interest today  For example, Congress has regularly requested testimony from representatives of the surety bond industry and various construction organizations concerning the extent to which the program is necessary to assist small businesses generally, and minority-owned small businesses in particular, in gaining access to surety bonds  Congress has also periodically asked the Government Accountability Office (GAO) to examine the need for the SBA's surety bond guarantee program and to recommend ways to improve the program's management  That testimony and GAO's reports have supported a need for the program, but, as will be discussed, have had somewhat limited usefulness in helping Congress determine the program's appropriate size  In 1974, Congress responded to the SBA's request for additional funding by passing P L  93-386 , the Small Business Amendments of 1974  It established a separate Surety Bond Guarantees Revolving Fund account (hereinafter Revolving Fund) within the Department of the Treasury to support the program  The act also increased the total contract amount that could be guaranteed to $1 million from $500,000 and recommended that the Revolving Fund receive $35 million in additional funding  The Ford Administration objected to providing additional appropriations for the Revolving Fund  Instead, the Administration recommended that the Revolving Fund receive a $20 million transfer from the SBA's Business Loan and Investment Revolving Fund  The transfer would provide the program access to additional capital without affecting the federal budget deficit  Congress approved the Administration's proposal  As shown in Table 1 , the Revolving Fund received $130 5 million in additional appropriations for FY1976 through FY1979 and continued to receive additional appropriations during the 1980s and 1990s  In addition, the program's bond limit was increased to $1 25 million from $1 million in 1986  As discussed below, the increased appropriations and bond limit were not sufficient to continue the program's growth  Instead, both the number and amount of final surety bonds guaranteed by the SBA began to slowly diminish  This general trend continued until the maximum individual surety contract amount was increased, first on a temporary basis by P L  111-5 , the American Recovery and Reinvestment Act of 2009, and later, on a permanent statutory basis, by P L  112-239 , the National Defense Authorization Act for Fiscal Year 2013  As shown in Table 1 , Congress did not appropriate funding for the Revolving Fund from FY2000 to FY2004, allowing the program to cover the cost of claim defaults through its reserve  Congress also increased the program's bond limit to $2 million from $1 25 million in 2000  Congress provided the Revolving Fund $2 9 million in FY2005, $2 86 million in FY2006, $2 86 million in FY2007, and $3 million in FY2008  During the 111 th Congress, P L  111-5 provided the Revolving Fund a separate appropriation of $15 million to support a temporary increase in the program's bond limit to $5 million, and up to $10 million if a federal contracting officer certified in writing that a guarantee in excess of $5 million was necessary, from $2 million  Those funds were in addition to the $2 million appropriation that had already been approved for FY2009  In FY2010, the Revolving Fund received $1 million  Congress has not approved appropriations for the Revolving Fund since then, noting that there have been sufficient funds in the program's reserve to cover the cost of anticipated claim defaults  As mentioned previously, the SBA relied primarily on increased appropriations to finance the program's expansion during the 1970s, but it also increased the program's fees charged to applicants and sureties  For example, in 1976, the SBA increased its fees to sureties to 20% from 10% of the bond premium, instituted a deductible clause on bond claims, and generally limited its approval for bid, participation, and performance bonds to $250,000 unless specified circumstances were met  In 1977, it increased the contractor applicant fee for payment and performance bonds to 0 5% from 0 2% of the contract price upon obtaining the contract  The program's current fee structure is discussed later in this report  Both the number and amount of final surety bonds guaranteed by the SBA increased relatively rapidly during the 1970s (see Table A-1 in the Appendix)  The number of final surety bonds guaranteed by the SBA increased from 1,339 in FY1972 to 20,095 in FY1979, and the amount guaranteed by the SBA increased from $94 4 million in FY1972 to $1 39 billion in FY1979  During the 1980s and 1990s, both the number and amount of final surety bonds guaranteed by the SBA generally declined, in both nominal and inflation-adjusted dollars  A review of congressional testimony during that period suggests that there was no single, discernible factor to account for the program's slow contraction  Because the demand for surety bonds tends to fluctuate with changes in the economy, the program might have been expected to contract somewhat during recessions, but the economy experienced periods of both economic growth and decline during the 1980s and 1990s  There also was no indication that the ability of small businesses to access surety bonds in the private marketplace without the SBA's assistance had materially improved, which, if that had been the case, might have contributed to the decline by reducing the number of small businesses applying for assistance  One possible contributing factor to the decline in SBA-guaranteed surety bonds during that period was the continuing reluctance of many surety companies to participate in the program, either because they did not view the program as particularly profitable or they "had developed alternative methods to the program, such as requiring collateral or funds controls and underwriting programs based in part on credit scores, in order to write small and emerging contractors " Another possible contributing factor was a change in the way the program was perceived by congressional leaders and their reluctance to provide additional resources to continue the program's expansion  During the 1970s, at congressional hearings, witnesses praised the program as a great success in helping small businesses access surety bonds and compete for government contracts  During the 1980s and 1990s, congressional hearings focused less on the program's successes and more on its shortcomings  For example, in 1982, the chair of the Senate Committee on Small Business indicted that the program was subject to "the most insidious types of fraud," including "evidence of involvement of organized crime figures " In addition, reports by both GAO and the SBA's inspector general questioned the SBA's management of the program, arguing, among other things, that the SBA lacked useful underwriting guidelines for surety companies and adequate procedures for verifying applicants' information  During the 1980s, the SBA guaranteed, on average, 11,840 final surety bonds each fiscal year, with the SBA's share of those bonds' value averaging $1 0 billion  During the 1990s, the SBA guaranteed, on average, 5,859 final surety bonds each fiscal year, with the SBA's share of those bonds' value averaging $823 million  During the first decade of the 2000s, the SBA guaranteed, on average, about 1,802 final surety bonds each fiscal year, with the SBA's share of those bonds' value averaging about $385 million  Since then, as indicated in Table 2 and Table A-1 , the number and amount of final surety bonds guaranteed by the SBA has generally increased  This increase is likely due to generally improving economic conditions and the increase in 2013 of the maximum individual contract amount that could be guaranteed from $2 million to $6 5 million, and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary  The surety bonding process begins when a contractor applies for a bond  As GAO has reported Surety companies are generally corporations that are licensed under various insurance laws and, under their charters, have legal power to act as a surety (making themselves responsible for another's obligations) for others  Most surety companies accept business only through independent agents and brokers  In screening a bond applicant, a surety attempts to measure the contractor's ability to undertake and complete the job  When the surety's evaluation of the contractor's acceptability to perform the contract is favorable, the surety underwrites the bond  If the surety does not provide a bond to the bond applicant, the appropriate forms are forwarded to SBA for consideration of a surety bond guarantee  Initially, the SBA surety guaranteed program's bonds were underwritten and issued by large, "standard" surety companies  However, these companies' participation in the program soon began to decline, reportedly because of the administrative burdens associated with the program, such as the SBA's requirement that sureties submit all bond applications to the SBA for review and approval  In addition, the administrative costs of dealing with relatively small bonds versus relatively large ones may have also played a role in the larger, standard surety companies leaving the program  As a congressional witness testified in 1976: You have a professional underwriter, who     is going to be asked to spend 3 or 4 days looking into a $25,000 first-time application  There are many expenses involved  That same underwriter could very easily be writing four or five bonds for $10 million for contractors that everyone knows can perform  And it becomes a matter of how much time and resources can the surety industry devote to this type of business  Another reason may have been the outbreak of the Israeli-Egyptian War in 1973, which was followed by a tripling of oil prices and double-digit inflation  This led to the failure of many smaller contracting companies  In response to the economic downturn, many surety companies enhanced their underwriting standards to protect themselves from rising defaults  As a result, many of the larger surety companies became increasingly reluctant to participate in a program in which the profit margins were relatively small given the required paperwork and the program's limitation on the bond amount, and when the risk of defaults was at a historically high level  As standard sureties left the program, "specialty" surety companies filled the void  Initially, specialty sureties devoted almost all their business exclusively to SBA-guaranteed surety bonds  These companies later expanded their business into offering other high-risk bonds not normally handled by standard sureties  Specialty sureties typically required the contractor to provide collateral for the projects they bonded, and, in most cases, charged higher premiums than standard sureties  In 1982, the SBA invited officials from the Surety Association of America, representing the standard surety companies, to recommend ways to encourage their participation in the program  As mentioned previously, at that time, some specialty surety companies had been accused of associating with organized crime and GAO and the SBA's inspector general had reported fraud and mismanagement in the program  This may help to explain why the SBA was interested in encouraging the larger, more established surety companies to return to the program  The SBA also hoped that greater participation by the larger sureties would lead to lower premiums for small business contractors  During this outreach period, standard surety companies indicated a willingness to increase their participation in the program if the SBA would create a second special program, similar to the SBA's 7(a) loan guarantee program's Preferred Lenders Program  Under the proposal, a surety meeting specified qualification standards would be designed as a "preferred surety" and would be allowed to issue SBA-guaranteed surety bonds prior to receiving the SBA's approval  To participate in the preferred program, the surety's underwriting and administrative standards and procedures would be pre-approved by the SBA, and the surety's decisions would be subject to regular, annual audits  In addition, the SBA's reporting and access to records requirements would be retained  As a measure of their confidence in their own underwriting standards and claims decisions, the standard surety firms indicated that they would accept a 70% guarantee against losses as opposed to the then-allowed 80% or 90% guarantee against losses, as long as firms would not be required to seek the SBA's prior approval for underwriting decisions, bond administration, and claims procedures  Congress subsequently authorized the proposed Preferred Surety Bond Guarantee Program in P L  100-590 , the Small Business Administration Reauthorization and Amendment Act of 1988 (Title II, the Preferred Surety Bond Guarantee Program Act of 1988)  The program was initially authorized on a three-year trial basis, and it was provided permanent statutory authority by P L  108-447 , the Consolidated Appropriations Act, 2005  As discussed in " 114th Congress: Preferred Surety Bond Guarantee Rates " below, P L  114-92 , the National Defense Authorization Act for Fiscal Year 2016, increased the SBA's guarantee for preferred sureties from not less than 70% to not less than 90% of losses  The SBA is authorized to guarantee surety bonds issued to contractors or subcontractors when the business, together with its affiliates, meets the SBA's size standard for the primary industry in which it is engaged; the bond is required; the applicant is not able to obtain such bond on reasonable terms and conditions without a guarantee; and there is a reasonable expectation that the applicant will perform the covenants and conditions of the contract, and the terms and conditions of the bond are reasonable in light of the risks involved and the extent of the surety's participation  The applicant must also "possess good character and reputation," as demonstrated by (1) not being under indictment, being convicted of a felony, or having a final civil judgment stating that the applicant has committed a breach of trust or has violated a law or regulation protecting the integrity of business transactions or business relationships; (2) not having a regulatory authority revoke, cancel, or suspend a license held by the applicant, which is necessary to perform the contract; and (3) never having obtained a bond guarantee by fraud or material misrepresentation or failing to keep the surety informed of unbonded contracts or of a contract bonded by another surety  Applicants must also certify the percentage of work under the contract to be subcontracted  The SBA does not guarantee bonds for applicants that are primarily brokers or have effectively transferred control over the project to one or more subcontractors  Applicants must also certify that they are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from transactions with any federal department or agency  In addition, the SBA will not guarantee a bond issued by a particular surety if that surety, an affiliate of that surety, or a close relative or member of the household of that surety or affiliate owns, directly or indirectly, 10% or more of the business applying for the guarantee  This conflict of interest prohibition also applies to ownership interests in any of the applicant's affiliates  As mentioned previously, the SBA guarantees contracts up to $6 5 million, and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary  There is no limit to the number of bonds that can be guaranteed for any one contractor  The SBA guarantees up to 90% of the loss incurred and paid by a surety if the contract is $100,000 or less, or if the bond is issued on behalf of a socially and economically disadvantaged-owned and controlled small business, a qualified HUBZone small business, a veteran-owned and controlled small business, or a service-disabled veteran-owned and controlled small business  The guarantee rate is 80% if the contract is greater than $100,000, and the business is not owned and controlled by socially and economically disadvantaged individuals, a qualified HUBZone small business, or a veteran-owned or service-disabled veteran-owned small business  The SBA does not charge principals (small business applicants) application or bid bond guarantee fees  If the SBA guarantees a final bond, the principal must pay a contractor fee equal to a percentage of the contract amount, which is determined by the SBA and published in the Federal Register   The FY2019 contractor fee is 0 6% of the contract price for a final bond


Report 2:  The contractor fee is rounded to the nearest dollar, paid to the surety, and the surety remits the fee to the SBA  Sureties also charge principals a premium for issuing and servicing the bond  Sureties are not allowed to charge principals a premium that is more than the amount permitted under applicable state law  Premiums vary depending on the surety's assessment of the risk involved and job size; typically ranging from 1 5% to 3 0% of the contract amount  Sureties interested in participating in the Prior Approval Program or the Preferred Surety Bond Guarantee Program (PSB program) must apply in writing to the SBA  Applicants must be a corporation listed by the U S  Treasury as eligible to issue bonds in connection with federal procurement contracts  The SBA considers several factors when evaluating sureties for the PSB program: the surety must have an underwriting limitation of at least $6 5 million on the Department of the Treasury's list of acceptable sureties; the surety must agree that it will neither charge a bond premium in excess of that authorized by the appropriate state insurance department nor impose any non-premium fee unless such fee is permitted by applicable state law and approved by the SBA; the surety's premium income from contract bonds guaranteed by any government agency (federal, state, or local) can account for no more than one-quarter of the surety's total contract bond premium income; and the surety must vest the underwriting authority for SBA guaranteed bonds to its own employees and final settlement authority for claims and recovery to employees in the surety's permanent claims department  The SBA also considers the surety's rating or ranking designation assigned by a recognized authority  Sureties participating in the PSB program are not eligible to participate in the Prior Approval Program  However, this prohibition does not apply to the surety's affiliates provided that the affiliate is not a participant in the PSB program, their affiliation has been fully disclosed to the SBA, and the affiliate has been approved to participate in the Prior Approval Program  Sureties in the Prior Approval Program must obtain the SBA's approval before issuing a guaranteed bond  Sureties in the PSB program may issue, monitor, and service SBA-guaranteed bonds without prior approval  However, these sureties must notify the SBA electronically of all bonds issued and, for final bonds, they must report and submit to the SBA on a monthly basis all contractor and surety fees that are due  These sureties are also subject to a periodic maximum guarantee authority amount set by the SBA  In addition, effective August 21, 2017, sureties are required, during their initial nine months in the PSB program, to obtain the SBA's prior written approval before executing a bond greater than $2 million  The SBA argued that it was in the taxpayer's interest to require newer sureties to "demonstrate an understanding of the program before being allowed to issue bonds larger than $2 million without SBA's oversight " The terms and conditions of the SBA's bond guarantee agreements with the surety, including the guarantee percentage, may vary from surety to surety, depending on past experience with the SBA  The SBA may take into consideration, among other things, the rating or ranking assigned to the surety by recognized authorities, the surety's loss rate, average contract amount, average bond penalty per guaranteed bond, and the ratio of bid bonds to final bonds, all in comparison with other sureties participating in the same SBA Surety Bond Guarantee Program (Prior Approval or PSB programs)  Sureties are required, among other things, to evaluate the credit, capacity, and character of a principal using standards generally accepted by the surety industry and in accordance with the SBA's standard operating procedures on underwriting and the surety's principles and practices on unguaranteed bonds; reasonably expect that the principal will successfully perform the contract to be bonded; provide bond terms and conditions that are reasonable in light of the risks involved and the extent of the surety's participation; be satisfied as to the reasonableness of cost and the feasibility of successful completion of the contract; ensure that the principal remains viable and eligible for the program; monitor the principal's progress on guaranteed contracts; maintain documentation of job status requests; take all reasonable action to minimize risk of loss, including, but not limited to, obtaining from each principal a written indemnity agreement, secured by such collateral as the surety or the SBA finds appropriate, which covers actual losses under the contract and imminent breach payments; and in the case of loss, pursue all possible sources of salvage and recovery  Participating sureties are subject to audits by SBA-selected and -approved examiners  Prior Approval Program sureties are audited at least once each year and PSB sureties are audited at least once every three years  The SBA does not charge sureties (or small businesses) application or bid bond guarantee fees  It does require sureties to pay a guarantee fee on each SBA-guaranteed bond (other than bid bonds)  The surety fee, which is determined by the SBA and published in the Federal Register , is a percentage of the bond premium  The FY2019 surety fee is 20% of the bond premium that the surety charges the small business, rounded to the nearest dollar  The surety fee is due within 60 days after the SBA's approval of the prior approval payment or performance bond  The SBA does not receive any portion of a surety's non-premium charges  As shown in Table 2 , the number and amount of bid bonds guaranteed by the SBA has generally increased in recent years  For example, in FY2007, the SBA guaranteed 4,192 bid bonds totaling $1 7 billion  In FY2018, the SBA guaranteed 7,354 bid bonds totaling $4 7 billion  Table 2 also shows that the number and amount of SBA-guaranteed final bonds declined somewhat from FY2007 through FY2009 (coinciding with the 2007-2009 recession), and has generally increased since then  Recent increases are likely due to generally improving economic conditions and legislation that temporarily ( P L  111-5 ) and then permanently ( P L  112-239 ) raised the program's maximum individual contract amount from $2 million to $5 million, and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary  As shown in Table 3 , excluding program costs of about $4 million annually, the program has experienced a net positive cash flow in each of the past 12 fiscal years  There is about $97 million in the Surety Bond Guarantee Program Revolving Fund  Historically, the program's default rate has averaged about 3% to 5%  According to the SBA, on average, the default rate on larger contracts tends to be lower than for smaller contracts and the recovery rate for larger contract defaults tends to be greater than for smaller contract defaults  Currently, 28 sureties participate in the Prior Approval Program and 6 participate in the PSB program  Agents empowered to represent a participating surety company are located, or licensed, in all 50 states, American Samoa, the District of Columbia, Guam, the Marshall Islands, Micronesia, the Northern Mariana Islands, Palau, Puerto Rico, and the Virgin Islands  About 80% of the SBA's surety bonds are issued through the Prior Approval Program and 20% through the PSB program  P L  111-5 , the American Recovery and Reinvestment Act of 2009 (ARRA), provided the program an additional appropriation of $15 million and temporarily increased, from February 17, 2009, through September 30, 2010, the maximum bond amount from $2 million to $5 million  The act also authorized the SBA to guarantee a bond of up to $10 million if a federal contracting officer certified in writing that a guarantee in excess of $5 million was necessary  It also revised the program's size standard to "the size standard for the primary industry in which such business concern, and the affiliates of such business concern, is engaged, as determined by the Administrator in accordance with the North American Industry Classification System " The new size standard (e g , up to $36 5 million in average annual receipts over the previous three years for most heavy construction contractors, and up to $15 million in average annual receipts over the previous three years for specialty trade contractors) increased the number of businesses that qualified for the program  Using its rulemaking authority, the SBA made ARRA's temporary size standard permanent on August 11, 2010  Proponents argued that the increased bond limit and size were necessary to "ensure that small businesses are able to secure the surety bonds they need to compete for contracts, grow, and hire more employees " They also argued that "in our current economic recession, small businesses are finding it even more difficult to secure the credit lines necessary to get bonds in the private sector " In their view, the temporary changes would create "significant opportunities to create jobs now in which small businesses will participate and be the driving engine for creation of new jobs in our country " There was no apparent organized opposition to these specific temporary changes to the Surety Bond Guarantee Program  However, there was opposition to ARRA's package of program enhancements for the SBA as a whole, which among other things, provided the SBA $730 million in additional funding, including $255 million for a temporary, two-year small business stabilization program to guarantee loans of $35,000 or less to small businesses for qualified debt consolidation, later named the America's Recovery Capital (ARC) Loan program and $375 million to temporarily subsidize fees for the SBA's 7(a) and 504/CDC loan guaranty programs and increase the 7(a) program's maximum loan guaranty percentage to 90%  Instead of modifying the SBA's program requirements and increasing the SBA's appropriation, opponents advocated business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to assist small businesses, generate economic growth, and create jobs  On September 12, 2011, the Obama Administration advocated, as part of its proposed American Jobs Act, a temporary increase in the SBA surety bond limit to $5 million until the end of FY2012  The Administration argued that raising the program's bond limit "will make it easier for small businesses to take advantage of contracting opportunities generated by the American Jobs Act's proposed infrastructure investments " On December 7, 2012, the Administration also recommended, as part of its request for an additional $60 4 billion in federal resources to address damage caused by Hurricane Sandy, that the SBA surety bond limit be increased to $5 million to enable "more small businesses to participate in the recovery efforts " There were several legislative efforts during the 112 th Congress to increase the program's bond limit  S  1334 , the Expanding Opportunities for Main Street Act of 2011, and its companion bill in the House, H R  2424 , would have reinstated and made permanent ARRA's higher limits (up to $5 million and up to $10 million if a federal contracting officer certifies in writing that a guarantee in excess of $5 million is necessary)  Neither of these bills was reported by a committee for consideration by the House or the Senate  S  1660 , the American Jobs Act of 2011, and its companion bill in the House, H R  12 , would have provided $3 million in additional funding to pay for the cost of temporarily increasing the program's bond limit to $5 million from $2 million until the end of FY2012  Cloture on a motion to proceed to S  1660 was not invoked in the Senate on October 11, 2011, by a vote of 50 to 49  H R  12 was not reported by a committee for consideration in the House  On December 12, 2012, the Senate Committee on Appropriations released its draft of the Hurricane Sandy Emergency Assistance Supplemental bill  It included a provision to increase the program's bond limit to $5 million  This provision was later removed following congressional approval of H R  4310 , the National Defense Authorization Act for Fiscal Year 2013, which became law ( P L  112-239 ) on January 2, 2013  It increased the program's bond limit to $6 5 million, and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary  There was relatively little discussion in the legislative record concerning the reasons for increasing the surety bond program's bond limits, and even less discussion of the reasons for not increasing the limits  Hearings were not held on S  1334 and H R  2424   Also, only one witness during hearings on H R  4310 addressed the SBA surety bond program  That witness supported an increase in the surety bond limit to $5 million, and up to $10 million if a contracting officer certifies its necessity  Advocates argued that bond limits should be raised to bring them more in line with the contracting amounts for other small business programs, such as the 8(a) Minority Small Business and Capital Ownership Development Program, the Historically Underutilized Business Zone (HUBZone) program, the Women-Owned Small Business Federal Contract program, and the Service-Disabled Veteran-Owned Small Business Concerns Program  For example, under 8(a) Minority Small Business and Capital Ownership Development Program, federal contracting officials, at that time, could provide a sole source award to a 8(a) small business if the anticipated award price of the contract did not exceed $6 5 million for manufacturing contracts (now $7 0 million) or $4 million for other contract opportunities, and the contracting officer believed that the award could be made at a fair and reasonable price  Advocates argued that raising the program's bond limit would provide more consistency across small business contracting programs and make it easier for agencies experiencing difficulty issuing contracts in increments of $2 million or less (e g , the Department of Defense [DOD], the General Services Administration, and the Department of State) to participate in the program  Advocates also argued that small businesses awarded contracts exceeding $2 million under the other small business contracting programs are at risk of not being able to complete those contracts due to difficulties in securing a surety bond  For example, the House Committee on Armed Services' Panel on Business Challenges in the Defense Industry argued that the SBA surety bond program's limit should be increased to $6 5 million to match the 8(a) program's $6 5 million threshold for manufacturing contracts and to "increase the opportunities for small businesses to compete for federal contracts, especially in those departments, such as the Department of Defense, where the average size of construction contracts awarded to small businesses for FY2010 exceeded $5 9 million—nearly triple the size for which SBA can provide bonding support " There was no organized opposition to raising the program's bond limits  One possible argument that could have been raised is that higher limits could lead to higher amounts being guaranteed by the SBA and, as a result, increase the risk of program losses  However, the SBA's experience with Recovery Act bonds (over $2 million) suggested that raising the limit may not lead to an increased risk of program losses  The SBA reported that the program's default rate on Recovery Act bonds was lower, in 2009 and 2010, than for its other bonds  The SBA guaranteed 166 Recovery Act bid bonds valued at $518 million and 52 Recovery Act final bonds valued at $145 4 million  There were two defaults, with a bond value of $2 7 million and $2 2 million, respectively  In an effort to enhance surety participation in the SBA's program, H R  776 , the Security in Bonding Act of 2013, introduced and referred to the House Committee on the Judiciary and the House Committee on Small Business on February 15, 2013, would have increased the PSB program's guarantee rate from not to exceed 70% to not to exceed 90% of losses  The bill was reported favorably by both committees on May 21, 2014, and included in H R  4435 , the Howard P  "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015, which was passed by the House on May 22, 2014  This provision was not included in the final version of the bill which was subsequently passed by Congress  Advocates of increasing the PSB program's guarantee rate argued that Despite the different guarantee amounts and the differing levels of review, both the PAP [Prior Approval Program] and PSBP [Preferred Surety Bond Guarantee Program] have similar levels of default  However, over the years, the PSBP program has become less effective for small businesses since only four sureties currently participate in the program because the guarantee rates are no longer competitive enough to encourage commercial sureties to participate  Therefore, since the PSBP is the more efficient program and … does not expose taxpayers to any risk, this legislation amends the SBIA [Small Business Investment Act] to standardize the guarantee rate at 90 percent  The SBA did not formally endorse the proposed guarantee rate increase  However, in its FY2015 and FY2016 congressional budget justification documents, the SBA indicated that it "will investigate establishing a single guaranty percentage in the Prior Approval and PSB programs and restructuring the Prior Approval program " Also, when asked at a congressional hearing held on May 23, 2013, about the proposed guarantee rate increase, an SBA official testified that We are looking very closely at the program  We have seen a decline in the preferred sureties going down from 50% to 14% of our program, which is a very small number  We would like to see more participation in that program  Because of the additional cash flow we have, we do not expect it to increase our costs  And we have some history in our other programs that demonstrate that having the same guarantee level is not a disincentive  There was no discussion in the legislative record during the 113 th Congress opposing an increase in the guarantee rate for the PSB program  One possible objection might have been that increasing the guarantee rate could increase the risk of program losses and result in higher program fees  Higher fees, in turn, could cause hardship for some companies seeking a surety bond  H R  838 , the Security in Bonding Act of 2015, was introduced and referred to the House Committee on the Judiciary and the House Committee on Small Business on February 10, 2015  The bill would have increased the PSB program's guarantee rate from not to exceed 70% to not to exceed 90%, specify requirements concerning the pledge of assets by individual sureties, and require GAO to examine the effects of these changes on small businesses  The House-passed version of H R  1735 , the National Defense Authorization Act for Fiscal Year 2016, included H R  838 's provisions  The Senate-passed version of the bill did not  The conference agreement for H R  1735 , which became P L  114-92 , included H R  838 's provision to increase the PSB program's guarantee rate from not to exceed 70% to not to exceed 90% of losses and its provision to specify requirements concerning the pledge of assets by individual sureties, subject to a one-year delay "to allow for the necessary rulemaking " Congress specified additional requirements concerning the pledge of assets by individual sureties as a means to ensure that "individual sureties have sufficient assets to redeem the bonds " The SBA's final rule implementing the increased PSB program's guarantee rate was effective as of September 20, 2017  The SBA has reported that it is focusing on "strengthening relationships with individual surety companies and the large network of bond agents and producers across the country in order to reach more small businesses in need of bonding " As part of this outreach effort, the SBA has reported that it will continue to emphasize "process improvements that will streamline the application requirements for small businesses and surety companies and their agents " For example, in August 2012, the SBA announced a "Quick APP" for surety bonds up to $250,000 that provides a streamlined underwriting and application process by combining "two applications into one to make it easier and faster for small businesses and contractors, including veteran-owned small businesses, to compete for contracts " The SBA increased the Quick APP (now called the Quick Bond Program) eligibility threshold to $400,000 in 2017  In addition, the SBA reported in 2016 that it was also considering combing the Prior Approval Program and PSB program into a single program featuring the streamlined bond approval and monitoring processes under the PSB program  Several industry groups, including the National Association of Surety Bond Producers and The Surety & Fidelity Association of America, have recommended that the programs be merged, the emphasis on reduced regulatory burdens under the PSB program be maintained, and the program's fees kept as low as economically feasible as a means to encourage more sureties to participate in the program  Perhaps because the proposal has not been formally introduced as a bill, there are no public statements opposing the merger of the two programs  Opposition might come from (1) those who are not convinced that the Surety Bond Guarantee Program is necessary to supplement the private market for surety bonds and would prefer that the program be eliminated rather than reformed or (2) those who believe that a federal program is necessary to supplement the private market for surety bonds, but the existing program is sufficient to meet that need and does not require changes to encourage its expansion  Still other opponents might argue that providing additional authority to sureties to approve and monitor bonds could increase the risk of defaults and program losses  Throughout the program's history, both congressional testimony and GAO examinations have indicated that smaller contracting firms, and especially minority-owned and women-owned small business contracting firms, often have a more difficult time accessing surety bonds in the private marketplace than larger firms  For example, in 1995, GAO reported that "it is not unusual for a small construction company to have some difficulty in obtaining a surety bond " GAO found that about one in three of the smallest contracting firms it surveyed, compared with about one in six of the larger contracting firms it surveyed, reported that they were required to provide collateral  GAO also reported The experiences of the minority-owned firms differed from those of the firms not owned by minorities in several areas  For example, these firms were more likely to be asked to provide certain types of financial documentation, as well as to provide collateral or to meet other conditions; were more likely to be denied a bond and to report losing an opportunity to bid because of delays in processing their request for a bond; and were more likely to depend on jobs requiring bonds for a higher proportion of their revenues  The women-owned firms differed from the firms not owned by women in a few key respects  For example, they … were more likely to be asked to provide more types of financial or other documentation to obtain a bond  In addition, the minority-owned firms reported more often than the firms not owned by minorities that they had to (1) establish an escrow account controlled by the surety company, (2) hire a CPA or a management or consulting firm selected by the surety company to manage the contract, and (3) enter into an arrangement that allows the surety company to manage the job even when the firm is not in default  Although congressional testimony and GAO examinations have supported the need for a program such as the SBA's Surety Bond Guarantee Program, that testimony and GAO's surveys of businesses have been somewhat less useful in helping Congress determine the appropriate size for the program  For example, a review of congressional hearings since the program's inception suggests that congressional witnesses representing the surety companies and various construction organizations, including minority-owned small contracting businesses, have focused their testimony on the need to reduce the SBA's paperwork requirements, which are designed to prevent fraud but increase the sureties' costs; keep the program's fees as low as possible; and keep the program's guarantee rates as high as possible  The SBA's testimony has tended to focus on the need to attract more sureties to the program so that it can reverse the slow downward trajectory the program has experienced over the past two decades in the number and amount of final bonds guaranteed  There has been relatively little testimony provided concerning the broader issue of how large the program should be in comparison with the private sector and what measures or metrics could be used to help make that determination  One possible starting point for determining the program's size in comparison with the private sector is to examine congressional testimony concerning the supply and demand for sureties in the private sector  That testimony suggests that the supply and demand for sureties tends to fluctuate with changes in the overall economy, with the supply of sureties contracting during economic recessions and expanding during economic expansions and the demand for sureties slowing during economic recessions and increasing during economic expansions  Arguably, federal policies could take these fluctuations into account—enacting policies that expand federal support for surety guarantees when supply is tight and reducing federal support for surety guarantees when supply is more plentiful  Of course, when making these decisions, it is necessary to first establish measures or metrics to determine current market conditions  In addition, this line of reasoning assumes that having a federal presence in the surety marketplace is desirable, an assumption not held by all  Ultimately, although having established measures or metrics concerning the supply and demand for surety bonds might be helpful in determining the appropriate size for the SBA's Surety Bond Guarantee Program, that decision will largely rest on personal views concerning the role of the federal government in the private marketplace and the level of acceptable risk in assisting small businesses to gain greater access to surety bonds 

ground_truth: Over the past decade, the United States and the international community have sought to improve security in the DRC. In the eastern DRC, armed groups have committed severe human rights abuses, including sexual violence, and reportedly profit from the exploitation of “conflict minerals”— in particular, tin, tungsten, tantalum, and gold, according to the United Nations. Congress included a provision in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that, among other things, required the SEC to promulgate regulations regarding the use of conflict minerals from the DRC and adjoining countries. The SEC adopted these regulations in 2012. The act also included a provision for GAO to annually assess the SEC regulations' effectiveness in promoting peace and security and report on the rate of sexual violence in the DRC and adjoining countries. In this report, GAO provides information about (1) companies' conflict minerals disclosures filed with the SEC in 2017 compared with disclosures filed in the prior 2 years and (2) the rate of sexual violence in the eastern DRC and adjoining countries published in 2017 and early 2018. GAO analyzed a generalizable random sample of SEC filings and interviewed relevant officials. GAO reviewed U.S., United Nations, and international organizations' reports; interviewed DRC officials, and other stakeholders; and conducted fieldwork in New York at the United Nations headquarters. GAO is not making any recommendations. GAO's review of companies' conflict minerals disclosures filed with the U.S. Securities and Exchange Commission (SEC) in 2017 found that, in general, they were similar to disclosures filed in the prior 2 years. In 2017, 1,165 companies filed conflict minerals disclosures—about the same as in 2016 and 2015. Percentages of companies reporting country-of-origin inquiries in 2017 were also similar to the percentages from those 2 prior years. As a result of the inquiries they conducted, an estimated 53 percent of companies reported in 2017 whether the conflict minerals in their products came from the Democratic Republic of the Congo (DRC) and adjoining countries—similar to the estimated 49 percent in 2016 and 2015 but significantly higher than the estimate of 30 percent in 2014 (see figure). In their 2017 disclosure reports, many companies described actions they took to improve data collection processes, and most companies indicated some challenges in determining the country of origin. Similar to the prior 2 years, almost all companies required to conduct due diligence, as a result of their country-of-origin inquiries, reported doing so. After conducting due diligence to determine the source and chain of custody of any conflict minerals used, an estimated 37 percent of these companies reported in 2017 that they were able to determine that their conflict minerals came from covered countries or from scrap or recycled sources, compared with 39 and 23 percent in 2016 and 2015, respectively. Four companies in GAO's sample declared their products “DRC conflict-free,” and of those, three included the required Independent Private Sector Audit report (IPSA), and one did not. In 2017, 16 companies filed an IPSA; 19 did so in 2016. GAO found information on the rate of sexual violence in the 2017 Uganda and Burundi Demographic and Health Surveys. For Uganda, 22 percent of women and 9 percent of men reported they had experienced sexual violence at least once in their lifetime. For Burundi, 23 percent of women and 6 percent of men reported they had experienced sexual violence at least once in their lifetime. The most recent information on the rate of sexual violence for eastern DRC and Rwanda is from 2016 and is discussed in our previous GAO reports.

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



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

Report 1: The DRC is a vast, mineral-rich nation with an estimated population of about 83 million people and an area that is roughly one-quarter the size of the United States, according to the United Nations  Figure 1 shows the DRC’s provinces and adjoining countries  Since gaining its independence from Belgium in 1960, the DRC has undergone political upheaval and armed conflict  From 1998 to 2003, the DRC and eight other African countries were involved in what has become known as “Africa’s World War,” which resulted in a death toll of an estimated 5 million people in the DRC, according to the U S  Department of State (State)  The eastern DRC has continued to be plagued by violence, often perpetrated against civilians by illegal armed groups and some members of the Congolese national military  Notably, in 2012, an illegal armed group occupied the city of Goma and other cities in the eastern DRC and clashed with the Congolese national army  During this time, the United Nations reported numerous cases of sexual violence against civilians, including women and children, which were perpetrated by armed groups and some members of the Congolese national military  In 2017, the United Nations reported that serious violations of human rights remain widespread in the DRC, including continued acts of sexual violence by government security forces as well as nonstate armed groups  Various industries, particularly manufacturing industries, use the four conflict minerals specifically named in the Dodd-Frank Act—tin, tungsten, tantalum, and gold—in a wide variety of products  For example, tin is used to solder metal pieces and is also found in food packaging, steel coatings on automobile parts, and some plastics  Tungsten is used in automobile manufacturing, drill bits and cutting tools, and other industrial manufacturing tools and is the primary component of filaments in incandescent light bulbs  Most tantalum is used to manufacture capacitors that enable energy storage in electronic products such as cell phones and computers or to produce alloy additives used in turbines in jet engines  Gold is held as bullion by central bank reserves and used in making jewelry and also in the electronics industry, for example, to manufacture cell phones and laptops  In August 2012, SEC adopted its conflict minerals disclosure rule in response to Section 1502(b) of the Dodd-Frank Act  The act required that SEC promulgate disclosure and reporting regulations regarding the use of conflict minerals originating from the DRC and covered countries  In the summary section of the adopting release for the rule, SEC noted that to accomplish the goal of helping to end the human rights abuses in the DRC caused by the conflict, Congress chose to use the Dodd-Frank Act’s disclosure requirements to bring greater public awareness of the sources of companies’ conflict minerals and to promote the exercise of due diligence on conflict mineral supply chains  The SEC disclosure rule addresses the four conflict minerals named in the Dodd-Frank Act from the DRC and covered countries  The rule outlines a process for companies to follow, as applicable, to comply with the rule (see app  II)  The process broadly requires a company to 1  determine whether it manufactures, or contracts to be manufactured, products with “necessary” conflict minerals; 2  conduct a reasonable country-of-origin inquiry (RCOI) concerning the origin of those conflict minerals; and 3  exercise due diligence, if appropriate, to determine the source and chain of custody of those conflict minerals, adhering to a nationally or internationally recognized due diligence framework, if such a framework is available for these necessary conflict minerals  If companies choose to disclose that their products are “DRC conflict free,” the SEC disclosure rule requires companies to obtain an independent private-sector audit (IPSA)  Our review of companies’ conflict minerals disclosures filed with the SEC in 2017 found that, in general, they were similar to disclosures filed in the prior 2 years  In 2017, a similar number of companies filed conflict minerals disclosures as in 2015 and 2016  Based on our review of a generalizable sample, we found that almost all companies that filed conflict minerals disclosures in 2017 reported performing inquiries about their conflict minerals’ country of origin, similar to the results we previously reported for 2016 and 2015  In their 2017 disclosure reports, many companies described actions they took to improve data collection processes, and most companies indicated challenges in determining the country of origin  Our review of company filings found that almost all companies required to conduct due diligence, as a result of their country- of-origin inquires, reported performing it  SEC issued revised guidance in April 2017, indicating that the SEC’s Division of Corporation Finance would not recommend enforcement action if companies did not report on specified due diligence disclosure requirements  In 2017, 1,165 companies filed conflict minerals disclosures—almost as many companies as filed in 2016 and 2015 (1,230 and 1,281 respectively)  Our analysis of a generalizable sample of filings found that an estimated 90 percent of the companies that filed in 2017 were domestic and an estimated 10 percent were foreign companies, similar to the domestic-to-foreign ratio we found in 2016 and 2015  While not all companies reported the minerals used, of those that disclosed this information, an estimated 69 percent reported using tin, 54 percent reported using tantalum, 59 percent reported using tungsten, and 63 percent reported using gold, figures that are similar to the percentages reported in 2016  Our analysis of a generalizable sample of 2017 filings found that, as in 2016 and 2015, almost all companies that filed conflict minerals disclosures indicated that they performed country-of-origin inquiries  Specifically, an estimated 100 percent of the companies reported that they performed such an inquiry, similar to the percentages that we estimated reported doing so in 2016 and 2015  As a result of the inquiries they conducted, an estimated 53 percent of companies reported in 2017 whether the conflict minerals in their products came from covered countries—similar to the estimate of 49 percent in 2016 and in 2015 but significantly higher than the estimate of 30 percent in 2014 (see fig  2)  In the filings we reviewed, many companies indicated they had taken actions to improve their data collection processes, such as gathering missing information about their supply chains and working with suppliers to encourage conflict-free sourcing  In interviews, representatives of selected companies that filed conflict minerals disclosures in 2017 and other industry participants noted that (1) awareness among suppliers about the use of conflict minerals had continued to increase and (2) the process for collecting data on supply chains had become more routine and standardized  However, as in prior years, our review of filings found that most companies reported challenges in determining the country of origin of conflict minerals, in part due to lack of access to suppliers and complex supply chains involving many suppliers and processing facilities  Our review of company filings found that almost all companies that were required, as a result of their country-of-origin inquires, to conduct due diligence on the source and chain of custody of the conflict minerals in their products reported doing so  In 2017, an estimated 96 percent reported conducting due diligence, compared with 96 and 97 percent in 2016 and 2015 respectively  An estimated 87 percent of companies in 2017 reported using a due diligence framework prescribed by the Organization for Economic Co-operation and Development (OECD) guidance for conducting due diligence on the source and chain of custody of the conflict minerals in their products  That result is comparable to an estimated 92 percent that we reported in 2016 and an estimated 95 percent that we reported in 2015  The remaining 13 percent of the companies that reported conducting due diligence in 2017 did not specify a framework for their due diligence activities  After conducting due diligence, an estimated 37 percent of the companies reported in 2017 that they were able to determine that their conflict minerals came from covered countries or from scrap or recycled sources, compared with an estimated 39 and 23 percent in 2016 and 2015, respectively  An estimated 47 percent of the companies in 2017 reported that they could not definitively confirm the source of the conflict minerals in their products, compared with an estimated 55 and 67 percent in 2016 and 2015, respectively  However, as in previous years, almost all of the companies that reported conducting due diligence in 2017 reported that they could not determine whether the conflict minerals financed or benefited armed groups  Four companies in our sample reported determining that the minerals in their products did not finance or benefit armed groups in covered countries, and declared some products “DRC- conflict free ” Three of these companies included the required independent private-sector audit (IPSA) report, and one company did not include an IPSA report  Overall, a total of 16 companies filed an IPSA report in 2017, compared with 19 in 2016  In April 2017, the SEC’s Division of Corporation Finance issued revised guidance indicating that it would not recommend enforcement action to the Commission if companies did not report on specified due diligence disclosure requirements  The SEC disclosure rule requires companies, if applicable, to report on their due diligence in a conflict minerals report (see app  II for additional detail on the disclosure requirements)  SEC’s Division of Corporation Finance staff told us that they received inquiries from a small number of companies about the filing process for 2017  In response to these inquiries, these staff noted that they advised companies that the companies had the flexibility to determine whether or not to report on their due diligence and to report their country-of-origin inquiry findings in either the Form SD or in a conflict minerals report  However, the Division of Corporation Finance staff also told us that, regardless of the division’s revised guidance, the SEC could still initiate enforcement action if companies do not report on their due diligence, as required by the SEC disclosure rule  In our sample, three companies cited the updated guidance and other statements issued by the SEC in their filings as a rationale for not reporting on due diligence activities  In interviews, representatives of some companies and other industry participants told us that even though the revised guidance and other statements made by the SEC raised some uncertainty about the filing process, generally, companies plan to continue to report similar conflict minerals disclosure information  We identified two new population-based surveys since our last report related to sexual violence in Burundi and Uganda published in 2018; the most recent information for eastern DRC and Rwanda is from 2016  We also identified some new case-file data on sexual violence in the DRC; however, as we reported previously, case-file data on sexual violence are not suitable for estimating an overall rate of sexual violence  We identified two new population-based surveys related to sexual violence that were conducted in Uganda and Burundi in 2016 and 2017, respectively, and whose results were published in 2018  The Uganda Demographic and Health Survey was conducted from June to December 2016 by the Uganda Bureau of Statistics with technical assistance from ICF International  The survey estimated that 12 7 percent of women nationwide, ages 15-49, reported they had experienced sexual violence in the 12-month period preceding the survey, while 21 9 percent reported they had experienced sexual violence at some point in their lifetime  In addition, 4 percent of men nationwide, ages 15-49, reported they had experienced sexual violence in the 12-month period preceding the survey, while 8 3 percent reported they had experienced sexual violence at some point in their lifetime  The Burundi Demographic and Health Survey was conducted from October of 2016 to March of 2017 by the Burundi Institute of Statistics and Economic Studies with technical assistance from ICF International  The survey estimated that 12 7 percent of women nationwide, ages 15- 49, reported they had experienced sexual violence in the 12-month period preceding the survey, while 23 1 percent reported they had experienced sexual violence at some point in their lifetime  In addition, 1 9 percent of men nationwide, ages 15-49, reported they had experienced sexual violence in the 12-month period preceding the survey, while 6 1 percent reported they had experienced sexual violence at some point in their lifetime  The most recent information on the rate of sexual violence for eastern DRC and Rwanda is from 2016 and is discussed in our previous reports  Figure 3 shows the publication dates for the population-based surveys with data on rates of sexual violence in the eastern DRC, Rwanda, Uganda, and Burundi that have been published since 2007  State and United Nations entities have provided additional case-file information about instances of sexual violence in the DRC and adjoining countries  State’s annual country reports on human rights practices provided the following case-file data pertaining to sexual violence in the DRC and Burundi: DRC  In 2017, the UN documented 267 adult victims and 171 child victims, including two boys, of sexual violence in conflict  This violence was perpetrated by illegal armed groups as well as state security forces and civilians and was concentrated in North Kivu Province and in the Kasai region, according to State  Burundi  One government organization—Humara Center— responsible for investigating cases of sexual violence and rape received 197 cases of sexual and gender-based violence through early December 2017, according to State  Observers stated many women were reluctant to report rape, in part due to fear of reprisal, according to State  In addition, UN entities reported the following case-file data about sexual violence in the DRC: DRC  In 2017, the United Nations Organization Stabilization Mission in the DRC verified 195 cases of conflict-related sexual violence, with illegal armed groups responsible for 80 percent of the cases and DRC security forces responsible for the remaining 20 percent  United Nations officials we interviewed raised concerns about a resurgence of sexual violence in certain regions in the DRC due to a variety of factors, including political instability arising from the government’s postponement of the presidential election originally scheduled to take place in November 2016  We provided a draft of this report to the SEC, State, and the U S  Agency for International Development for comment  SEC provided technical comments, which we incorporated as appropriate  State and USAID did not provide comments  We are sending copies of this report to appropriate congressional committees and to the Chairman of the Securities and Exchange Commission, the Secretary of State, and the Administrator of the U S  Agency for International Development  The report is also available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-8612 or gianopoulosk@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix III  In this report, we provide information about (1) companies’ disclosures filed with the U S  Securities and Exchange Commission (SEC) in 2017 compared with disclosures filed in the prior 2 years and (2) the rate of sexual violence in the eastern Democratic Republic of the Congo and neighboring countries published in 2017 and early 2018  To examine the fourth annual company disclosures filed with the SEC in 2017 in response to the SEC disclosure rule, we downloaded the specialized disclosure reports (Form SD) and conflict minerals reports (CMR) from SEC’s publically available Electronic Data Gathering, Analysis, and Retrieval (EDGAR) database in September 2017  We downloaded 1,165 filings identified as Form SDs and the CMRs included in EDGAR  To review the completeness and accuracy of the EDGAR database, we reviewed relevant documentation, interviewed knowledgeable SEC officials, and reviewed prior GAO reports on internal controls related to SEC’s financial systems  We determined that the EDGAR database was sufficiently reliable for identifying the universe of SD filings  We reviewed the conflict minerals section of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and the requirements of the SEC disclosure rule to develop a data collection instrument (DCI) that guided our analysis of Form SDs and CMRs that contain the information disclosed by the filing companies  Our DCI was not a compliance review of the Form SDs and CMRs  The questions were written in both yes-no and multiple-choice formats  An analyst reviewed the Form SDs and CMRs and recorded responses to the DCI for all of the companies in the sample  A second analyst also reviewed the Form SDs and CMRs and verified the responses recorded by the first analyst  Analysts met to discuss and resolve any discrepancies  We randomly sampled 100 Form SDs from a population of 1,165 to create estimates generalizable to the population of all companies that filed  All estimates based on our sample have a margin of error of plus or minus 10 percentage points or less at the 95-percent confidence level  Because we followed a probability procedure based on random selections, our sample is only one of a large number of samples that we might have drawn  Since each sample could have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 95-percent confidence interval  This is the interval that would contain the actual population value for 95 percent of the samples we could have drawn  We also attended an industry conference on conflict minerals and spoke with company representatives to provide additional perspective  To address our second objective, we identified and assessed any information on sexual violence in the eastern DRC and the three adjoining countries—Rwanda, Uganda, and Burundi—that had been published or otherwise had become available in 2017 and early 2018  We discussed the collection of sexual violence–related data in the DRC and adjoining countries, including population-based survey data and case-file data, during interviews with U S  Department of State and U S  Agency for International Development officials and with representatives of nongovernmental organizations and researchers whom we interviewed for our prior review of sexual violence rates in the eastern DRC and adjoining countries  We also interviewed officials from the United Nations Population Fund and the United Nations Special Representative of the Secretary-General in New York on Sexual Violence in Conflict  In addition, we conducted Internet searches to identify new academic articles containing any additional information on sexual violence published in 2017 and early 2018  We conducted this performance audit from September 2017 to June 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  The U S  Securities and Exchange Commission (SEC) conflict minerals disclosure rule requires certain companies to file a specialized disclosure report, known as the Form SD, if the company manufactures, or contracts to have manufactured, a product or products containing conflict minerals that are necessary to the functionality or the production of those products  The rule also requires each company, as applicable, to provide a description of the measures the company took to exercise due diligence in determining the source and chain of custody of the conflict minerals, the facilities used to process them, their country of origin, and the efforts made to determine the mine or location of origin with the greatest possible specificity  Form SD provides general instructions for filing conflict minerals disclosures and specifies the information that companies must provide  Companies were required to file under the rule for the first time by June 2, 2014, and annually thereafter on May 31  Figure 4 shows the SEC’s flowchart summarizing the conflict minerals disclosure rule  In addition to the individual named above, Godwin Agbara (Assistant Director), Farahnaaz Khakoo-Mausel (Analyst-in-Charge), Diana Blumenfeld, Andrew Kurtzman, Justin Fisher, Grace Lui, David Dayton, Christopher Keblitis, and Michael McAtee made key contributions to this report  Conflict Minerals: Information on Artisanal Mined Gold and Efforts to Encourage Responsible Sourcing in the Democratic Republic of the Congo  GAO-17-733  Washington, D C : August 23, 2017  SEC Conflict Minerals Rule: 2017 Review of Company Disclosures in Response to the U S  Securities and Exchange Commission Rule  GAO-17-517R  Washington, D C : April 26, 2017  Conflict Minerals: Insights from Company Disclosures and Agency Actions  GAO-17-544T  Washington, D C : April 5, 2017  SEC Conflict Minerals Rule: Companies Face Continuing Challenges in Determining Whether Their Conflict Minerals Benefit Armed Groups  GAO-16-805  Washington, D C : August 25, 2016  SEC Conflict Minerals Rule: Insights from Companies’ Initial Disclosures and State and USAID Actions in the Democratic Republic of the Congo Region  GAO-16-200T  Washington, D C : November 17, 2015  SEC Conflict Minerals Rule: Initial Disclosures Indicate Most Companies Were Unable to Determine the Source of Their Conflict Minerals  GAO-15-561  Washington, D C : August 18, 2015  Conflict Minerals: Stakeholder Options for Responsible Sourcing Are Expanding, but More Information on Smelters Is Needed  GAO-14-575  Washington, D C : June 26, 2014  SEC Conflict Minerals Rule: Information on Responsible Sourcing and Companies Affected  GAO-13-689  Washington D C : July 18, 2013  Conflict Minerals Disclosure Rule: SEC’s Actions and Stakeholder- Developed Initiatives  GAO-12-763  Washington, D C : July 16, 2012  The Democratic Republic of Congo: Information on the Rate of Sexual Violence in War-Torn Eastern DRC and Adjoining Countries  GAO-11-702  Washington, D C : July 13, 2011  The Democratic Republic of the Congo: U S  Agencies Should Take Further Actions to Contribute to the Effective Regulation and Control of the Minerals Trade in Eastern Democratic Republic of the Congo  GAO-10-1030  Washington, D C : September 30, 2010 


Report 2: This report provides an overview of the FY2019 budget request and appropriations for the International Trade Administration (ITA), the U S  International Trade Commission (USITC), and the Office of the United States Trade Representative (USTR)  These three trade-related agencies are funded through the annual Commerce, Justice, Science, and Related Agencies (CJS) appropriations  This report also provides a review of these trade agencies' programs  When comparing the Administration's FY2019 request with FY2018 funding, one may want to consider that the Administration formulated its FY2019 budget request before full-year appropriations for FY2018 were enacted  In this report, FY2018 funding levels reflect the amounts appropriated in the Consolidated Appropriations Act, 2018 ( P L  115-141 ), enacted on March 23, 2018  The Consolidated Appropriations Act, 2018, provided $482 0 million in direct funding for ITA, $93 7 million for USTIC, and a total of $72 6 million for USTR for FY2018  The FY2018 appropriation for the three CJS trade-related agencies totaled $648 3 million  The Consolidated Appropriations Act, 2019, provided $484 0 million in direct appropriations for ITA, $95 0 million in funding for USITC, and a total of $68 0 million for USTR  The FY2019 appropriations for three CJS trade-related agencies totaled $647 0 million, a 0 2% decrease from FY2018 appropriations  See the Appendix for enacted budget authority for the trade-related agencies for FY2009-FY2019  The President submitted his FY2019 budget request to Congress on February 12, 2018  In it, the Administration requested a total of $590 8 million for the three CJS trade-related agencies (see Table 1 )  This request represented an 8 9% decrease in funding from the FY2018 appropriated amount  The request included reduced funding for all three trade agencies: $440 1 million in direct funding for ITA (an 8 7% decrease from the FY2018 appropriation), $87 6 million for USITC (a 6 5% decrease), and $63 0 million for USTR (a 13 2% decrease)  Despite the proposed overall decrease in funding for CJS trade-related agencies, the Administration proposed increasing some trade enforcement activities within ITA and USTR  For ITA, the Administration proposed increasing trade enforcement activities while reducing funding for certain export promotion activities  For USTR, the Administration requested funds to increase staffing; however, the request did not include a request for funding to be drawn from the Trade Enforcement Trust Fund  (For a description of the " Trade Enforcement Trust Fund ," see section below ) The President's budget did not provide a rationale for requesting a decrease in funding for USITC  A more detailed overview of these agencies' FY2019 budget requests is provided below  The House and Senate Appropriations Committees reported their CJS appropriation bills in the spring of 2018  Both committees largely declined the budget cuts requested by the Administration for these three trade agencies  (See Table 1  ) The House Committee on Appropriations reported H R  5952 on May 17, 2018  The House committee bill included a total of $647 6 million for the three trade-related agencies, which was $56 8 million more (9 6%) than the Administration's request and $0 7 million less (-0 1%) than the FY2018-enacted amount  The House committee recommended $480 0 million in direct funding for ITA, $95 0 million for USTIC, and a total of $72 6 million for USTR  The Senate Committee on Appropriations reported S  3072 on June 14, 2018  The Senate bill included a total of $655 6 million for the three agencies, which was $64 8 million (11 0%) more than the Administration's request and $7 3 million (1 1%) more than the FY2018-enacted appropriation  The Senate committee recommended $488 0 million in direct funding for ITA, $95 0 million for USITC, and a total of $72 6 million for USTR  Through February 15, 2019, the CJS trade-related agencies operated under continuing resolutions (CR)—with the exception of a three-week lapse in funding when agencies halted most operations  Congress passed final FY2019 appropriations in the Consolidated Appropriations Act, 2019 ( P L  116-6 ), which was signed into law on February 15, 2019  The act included a total of $647 0 million in funding for the three trade-related agencies—a 0 2% decrease from FY2018 appropriations  For FY2019, the Consolidated Appropriations Act, 2019, included $484 0 million in direct appropriations for ITA (a 0 4% increase from the FY2018 appropriation), $95 0 million in funding for USITC (a 1 4% increase), and a total of $68 0 million for USTR (a 0 2% decrease)  Within the Department of Commerce, ITA's mission is to improve U S  prosperity by strengthening the competitiveness of U S  industry, promoting trade and investment, and ensuring compliance with trade laws and agreements  ITA provides export promotion services; works to enforce and ensure compliance with trade laws and agreements; administers trade remedies such as antidumping and countervailing duties; and provides analytical support for ongoing trade negotiations  ITA went through a major organizational change in October 2013 in which it consolidated four organizational units into three more functionally aligned units: (1) Global Markets; (2) Industry and Analysis; and (3) Enforcement and Compliance  ITA also has a fourth organizational unit, the Executive and Administrative Directorate, which is responsible for providing policy leadership, information technology support, and administration services for all of ITA  ( Table A-1 shows budget amounts for ITA by unit between FY2009 and FY2019 ) For FY2019, the Administration requested $440 1 million for ITA in direct funding, with an additional $11 0 million to be collected in user fees, for a total of $451 1 million in authorized spending  The request for direct funding represents a $41 9 million decrease (-8 7%) from the FY2018-enacted amount ($482 0 million)  According to ITA's budget justification, the Administration proposed increasing ITA's enforcement and compliance efforts in FY2019, while deemphasizing other initiatives, such as export promotion  The Administration specifically proposed closing some domestic and international offices of the United States and Foreign Commercial Service (US&FCS)  The House committee-reported H R  5952 proposed $480 0 million for ITA in direct funding, with an additional $11 0 million to be collected from user fees, for a total of $491 0 million in authorized spending  The amount in direct funding proposed by the House Committee on Appropriations was $39 9 million (9 1%) more than the Administration's request and $2 0 million less (-0 4%) than the FY2018-enacted amount  The Senate committee-reported S  3072 included $488 0 million in direct funding for ITA, with an additional $11 0 million in user fees, for a total of $499 0 million in authorized spending  The amount in direct funding proposed by the Senate Committee on Appropriations was $47 9 million (10 9%) more than the Administration's request and $6 0 million (1 2%) more than the FY2018-enacted amount  The Consolidated Appropriations Act, 2019 ( P L  116-6 ) provided $484 0 million in direct appropriations for ITA, with an additional $11 0 million to be collected in user fees, for a total of $495 0 in authorized spending  The act provided $2 million more (0 4%) in direct appropriations for ITA than the FY2018-enacted amount and $43 9 million more (10 0%) than the Administration's request  ITA's Global Markets (GM) unit is a combination of the United States and Foreign Commercial Service (US&FCS) unit, a program that provides export promotion services to U S  businesses, and SelectUSA, a program that works to attract foreign investment into the United States  Through US&FCS, GM promotes U S  exports by helping U S  exporters research foreign markets and identify opportunities abroad  GM's country and regional experts―in domestic and overseas offices—help to advise U S  companies on market access, local standards, and regulations  The unit also helps to make connections through business-to-business trade shows, fairs, and missions  GM is designed to advance U S  commercial interests by engaging with foreign governments and U S  businesses, identifying and resolving market barriers, and leading efforts that advocate for U S  firms with foreign governments  Through its SelectUSA program, the GM unit also promotes the United States as a destination for foreign investment  (For more on SelectUSA, see section below, " SelectUSA Program  ") For FY2019, the Administration proposed reducing funding for the Global Markets unit  The Administration requested $276 5 million for Global Markets in direct funding, a 13 4% decrease from the FY2018-enacted appropriation  In its FY2019 budget submission, ITA proposed "rescaling export promotion" activities in the GM unit by reducing staff and its domestic and overseas offices, with a total reduction of 133 positions  The budget submission did not indicate how many or which domestic and overseas offices it was proposing to close  The House and Senate Appropriation Committees did not adopt the proposed cuts  The House Appropriations Committee recommended $319 0 million for the Global Markets unit for FY2019  This was $42 5 million (15 4%) more than the Administration's request  According to the committee report, "the recommendation does not adopt the proposal to reduce U S  and Foreign Commercial Service staff or close overseas offices or U S  Export Assistance Centers " The Senate Appropriations Committee report did not provide an exact funding amount, but recommended that ITA "fund US&FCS, and its core mission of export promotion, at the highest possible level in fiscal year 2019, and at no less than the amount provided in fiscal year 2018 " Like the House committee, the Senate committee did not adopt the Administration's proposal to close offices  The Senate committee report specifically noted, "No offices shall be closed in fiscal year 2019 unless the Committee approves a reprogramming request to close such office or offices  Additionally, the Committee will not approve requests to close any domestic offices, called U S  Export Assistance Centers, if such Center is the only one located in a given State " According to the conference report accompanying the Consolidated Appropriations Act, 2019 ( P L  116-6 ), the final agreement for FY2019 appropriations included "no less than $320 million" in funding for Global Markets and required ITA to report quarterly to the Committees on staffing levels within the US&FCS  ITA's Industry and Analysis unit brings together ITA's industry, trade, and economic experts to advance the competitiveness of U S  industries through the development and execution of international trade and investment policies, export promotion strategies, and investment promotion  It develops economic and international policy analysis to improve market access for U S  businesses, and designs and implements trade and investment promotion programs  The unit serves as the primary liaison between U S  industries and the federal government on trade and investment promotion  It administers programs that support small and medium-sized enterprises, such as the Market Development Cooperator Program  For FY2019, the Administration requested $52 3 million for Industry and Analysis  The request is $3 4 million less than the FY2018 funding level  The Administration proposed refocusing some of the unit's priorities away from export promotion and toward trade enforcement  Specifically, the Administration proposed reducing activities related to trade missions, the International Buyer Program, and certified trade fairs, and eliminating Market Development Cooperator Program grants  The House committee proposed $52 0 million for Industry and Analysis  This represented $0 3 million less (-0 5%) than the Administration's request  The Senate committee-reported bill did not include a specific recommendation for Industry and Analysis  The Consolidated Appropriations Act, 2019 ( P L  116-6 ), did not provide an exact funding guidance for Industry and Analysis  The mission of ITA's Enforcement and Compliance unit is to enforce U S  trade laws and ensure compliance with negotiated international trade agreements  It is responsible for enforcing U S  antidumping and countervailing duty (AD/CVD) laws; overseeing a variety of programs and policies regarding the enforcement and administration of U S  trade remedy laws; assisting U S  industry and businesses with unfair trade matters; and administering the Foreign Trade Zone program and other U S  import programs  For FY2019, the Administration requested $90 6 million for the Enforcement and Compliance unit, an increase of $3 1 million (3 6%) from the FY2018-enacted amount  For the requested increase in funding, ITA cited the unit's increasing number of AD/CVD investigations, its new focus on self-initiating AD/CVD cases, and the increased workload due to the tariffs and investigations initiated through Section 232 of the Trade Expansion Act of 1962  The House Appropriations Committee proposed $85 5 million for Enforcement and Compliance  The House committee proposal represented $2 1 million less (-2 3%) than the Administration's request, and $1 0 million (1 1%) more than the FY2018-enacted amount   The Senate Committee on Appropriations recommended $91 5 million for Enforcement and Compliance  The Senate recommendation represented $0 9 million more than the Administration's request and $4 0 million more than the 2018-enacted amount  The Senate committee report noted that the committee was supportive of the Administration's request to self-initiate AD/CVD cases  For FY2019 appropriations, the conference report accompanying the Consolidated Appropriations Act, 2019 ( P L  116-6 ), included $88 5 million for Enforcement and Compliance  This amount was $1 0 million more (1 1%) than the FY2018 funding, and $2 1 million less (-2 1%) than the Administration's request  USITC is an independent, quasi-judicial agency responsible for conducting trade-related investigations and providing independent technical advice related to U S  international trade policy to Congress, the President, and the USTR  The commission (1) investigates and determines whether imports injure a domestic industry or violate U S  intellectual property rights; (2) provides independent tariff, trade, and competitiveness-related analysis to the President and Congress; and (3) maintains the U S  tariff schedule  USITC also serves as a federal resource for trade data and other trade policy information  It makes most of its information and analyses available to the public to promote understanding of competitiveness, international trade issues, and the role that international trade plays in the U S  economy  In addition to the President's budget request for the commission, USITC also has bypass authority to submit its budget directly to Congress without revision by the President, pursuant to Section 175 of the Trade Act of 1975  For FY2019, the President requested $87 6 million for USITC, which represented a $6 1 million decrease (-6 5%) from the FY2018-enacted amount ($93 7 million)  While the President requested a decrease in funding for USITC, the commission's independent budget submission—sent directly to Congress without revision by the President—requested $97 5 million for FY2019, an increase of $3 8 million (4 0%) from the FY2018-enacted amount  USITC cited the increasing number of import injury cases in the previous five years and projected that the caseload would increase further in FY2019  Both the House and Senate committee-reported bills recommended $95 0 million for USITC  This amount was $7 4 million (8 4%) more than the President's request and $1 3 million (1 4%) more than the FY2018-enacted amount  The Consolidated Appropriations Act, 2019 ( P L  116-6 ), provided $95 0 million for USITC, which was $7 4 million (8 4%) more than the President's request and $1 3 million (1 4%) more than the FY2018-enacted amount  USTR, located in the Executive Office of the President, is responsible for developing and coordinating U S  international trade and direct investment policies  USTR is the President's chief negotiator for international trade agreements, including commodity and direct investment negotiations  It negotiates directly with foreign governments to create trade agreements, resolve disputes, and participate in global trade policy organizations such as the World Trade Organization  It also meets with business groups, policymakers, and public interest groups on trade policy issues  In 2018, USTR led the negotiations for the modernization of the North American Free Trade Agreement (NAFTA) and the investigations into Chinese intellectual property practices  In addition to direct appropriations for USTR, supplementary funding for the agency is available through the congressionally established Trade Enforcement Trust Fund  For more detail on the trust fund, see section " Trade Enforcement Trust Fund ," below  For FY2019, the Administration requested $63 0 million for USTR's salaries and expenses, and no additional funding from the Trade Enforcement Trust Fund  The request represents a $9 6 million decrease (-13 2%) from the FY2018-enacted amounts ($72 6 million)  In the Administration's budget request, USTR outlined the Trump Administration's "aggressive trade agenda," and its goals of "(1) defending U S  national sovereignty over trade policy; (2) strictly enforcing U S  trade laws; (3) using all possible sources of leverage to encourage other countries to open their markets to U S  exports of goods and services, and protecting U S  intellectual property rights; and (4) negotiating better trade deals with countries in key markets around the world " Both the House and Senate committee-reported bills recommended a total of $72 6 million for USTR for FY2019  These proposals included $57 6 million for USTR's salaries and expenses and $15 0 million from the Trade Enforcement Trust Fund for enforcement activities authorized in Section 611 of the Trade Facilitation and Trade Enforcement Act of 2015 ( P L  114-125 )  The total proposals were $9 6 million (15 2%) more than the Administration's request, and were equal to the FY2018-enacted amount  The Consolidated Appropriations Act, 2019 ( P L  116-6 ), provided a total of $63 0 million for USTR, which included $53 0 million in salaries and expenses for USTR and an additional $15 0 million to be derived from the Trade Enforcement Trust Fund  The total funding was $4 6 million less (-6 3%) than the FY2018 appropriated amount  Over the past decade, Congress has provided funding for specific trade-related programs, including (1) China trade enforcement and compliance activities; (2) trade promotion and attracting foreign direct investment to the United States through ITA's SelectUSA program; and (3) trade enforcement activities through the Trade Enforcement Trust Fund and the Interagency Center on Trade Implementation, Monitoring, and Enforcement (ICTIME, formerly the Interagency Trade Enforcement Center (ITEC))  Since 2004, Congress has dedicated some of ITA's funding to AD/CVD enforcement and compliance activities with respect to China and other nonmarket economies  ITA's Office of China Compliance was established by the Consolidated Appropriations Act of 2004 ( P L  108-199 )  Its primary role has been to enforce U S  AD/CVD laws and to develop and implement other policies and programs aimed at countering unfair foreign trade practices in China  ITA's China Countervailing Duty Group was established in FY2009 to accommodate the workload that resulted from the application of countervailing duty law to imports from nonmarket economy countries  The Office of China Compliance is within the Enforcement and Compliance unit at ITA  ITA's FY2019 budget justification did not provide a breakdown of funding for its China AD/CVD activities  Both the House and Senate committee-reported bills included $16 4 million from ITA's funding for China AD/CVD enforcement and compliance activities for FY2019  The Consolidated Appropriations Act, 2019 ( P L  116-6 ), provided $16 4 million from ITA's funding for China AD/CVD enforcement and compliance activities for FY2019  This amount was equal to the FY2018-enacted amount  SelectUSA was created in 2011 and is now part of ITA's Global Markets unit  It coordinates investment-related resources across more than 20 federal agencies to (1) promote the United States as an investment market and (2) address investor climate concerns that may impede investment in the United States  The program serves as an information resource for international investors and advocates for U S  cities, states, and regions as investment destinations  ITA's budget justification did not provide a breakdown for requested funding for SelectUSA  The House committee-reported bill did not propose a specific funding amount for SelectUSA  The Senate committee report recommended $10 0 million in funding for SelectUSA, an amount equal to the FY2018-enacted amount  The Senate Committee on Appropriation proposed making funding contingent on (1) SelectUSA updating its protocol to ensure that its programs did not encourage foreign investments by state-owned entities into the United States and (2) SelectUSA reporting its updated protocol to the committee within 30 days of enactment of the bill  According to the conference report accompanying the Consolidated Appropriations Act, 2019 ( P L  116-6 ), the final agreement adopted the Senate committee report language regarding SelectUSA  ITA's Survey of International Air Travelers (SIAT) gathers statistics about air passenger travelers in the United States  These statistics are used across federal agencies, for a variety of purposes, such as to estimate the contribution of international travel to the economy, develop public policy on the travel industry, and forecast staffing needs at consulates and ports of entry  The Administration requested $5 0 million for FY2019 for SIAT to expand the survey and data collection  The Administration proposed that "$5 million in fee revenues collected from the surcharge on international travelers utilizing the Electronic System for Travel Authorization (ESTA) be redirected to fully fund the SIAT " The House committee-reported bill did not include a specific recommendation for SIAT  According to the Senate committee report, the Senate Committee on Appropriations did not adopt the Administration's proposal to seek alternative funding sources for SIAT and "direct[ed] ITA to continue funding SIAT out of its base budget  Within funds provided, ITA [was] encouraged to increase the sample size for SIAT " The Consolidated Appropriations Act, 2019 ( P L  116-6 ), and the accompanying conference report did not provide specific language regarding SIAT  In order to provide additional funding for USTR's trade enforcement activities, Congress established the Trade Enforcement Trust Fund (TETF) in 2016  In Section 611 of the Trade Facilitation and Trade Enforcement Act of 2015 ( P L  114-125 ), Congress set up the trust fund and outlined authorized uses of the funds  According to Section 611(d), USTR can use funds from the TETF to monitor and enforce trade agreements and WTO commitments and to support trade capacity-building assistance to help partner countries meet their free-trade agreement obligations and commitments  USTR can also transfer funds to select federal agencies for trade enforcement activities authorized in Section 611(d) of the Trade Facilitation and Trade Enforcement Act of 2015  For FY2019, the Administration requested no funding to be derived from the TETF; the FY2018-enacted amount was $15 0 million  Both the House and Senate committee bills proposed $15 0 million from the TETF for enforcement activities authorized in Section 611 of the Trade Facilitation and Trade Enforcement Act of 2015  These proposals were equal to the FY2018-enacted amount  The Consolidated Appropriations Act, 2019 ( P L  116-6 ), provided $15 0 million to be derived from the TETF for USTR, for enforcement activities authorized in Section 611 of the Trade Facilitation and Trade Enforcement Act of 2015  This amount is equal to the FY2018-enacted amount  ITEC was established by executive order in 2012 to take a "whole-of-government" approach to monitoring and enforcing U S  trade rights by using expertise from across the federal government  In 2016, the ITEC was succeeded by ICTIME, which Congress established through the Trade Facilitation and Trade Enforcement Act of 2015 ( P L  114-125 )  The executive-established ITEC received its funding through ITA; funding for ICTIME is now appropriated through USTR  ICTIME's purpose is to advance U S  trade policy through strengthened and coordinated enforcement of U S  trade rights  ICTIME investigates potential disputes under the auspices of the World Trade Organization; inspects potential disputes pursuant to bilateral and regional trade agreements to which the United States is a party; and carries out the functions of USTR with respect to the monitoring and enforcement of trade agreements to which the United States is a party  USTR and ITA work closely within the ICTIME to identify issues and develop information in areas of economic importance to U S  industries  The USTR's budget justification did not provide a breakdown for requested funding for ICTIME  The House and Senate committee-reported bills did not include a specific funding amount for ICTIME  The Senate committee report did note that the Senate committee supports ICTIME within the funds provided for USTR  The Consolidated Appropriations Act, 2019 ( P L  116-6 ) and the accompanying conference report also did not provide specific language regarding ICTIME 

ground_truth: The Consolidated Appropriations Act, 2019 (P.L. 116-6), was signed into law on February 15, 2019. The act included a total of $647.0 million in funding for three trade-related agencies under the Commerce, Justice, Science and Related Agencies (CJS) account—the International Trade Administration (ITA), the U.S. International Trade Commission (USITC), and the office of the United States Trade Representative (USTR). This represents a 0.2% decrease from FY2018 appropriations. For FY2019, the Consolidated Appropriations Act, 2019, included $484.0 million in direct appropriations for ITA (a 0.4% increase from the FY2018 appropriation), $95.0 million in funding for USITC (a 1.4% increase), and a total of $68.0 million for USTR (a 0.2% decrease). The Administration's Request On February 12, 2018, the Trump Administration submitted its FY2019 budget request to Congress. The FY2019 proposal included a total of $590.8 million for the three CJS trade-related agencies, an 8.9% decrease from FY2018 total appropriated amounts for these agencies. The Administration requested reducing funding for all three trade-related agencies. For FY2019, the request included $440.1 million in direct funding for ITA (an 8.7% decrease from the FY2018 appropriation), $87.6 million for USITC (a 6.5% decrease), and $63.0 million for USTR (a 13.2% decrease). Congressional Actions In the spring of 2018, the House and Senate reported FY2019 CJS appropriations bills, which included proposed funding for ITA, USITC, and USTR. The reported bills did not adopt many of the Administration's budget reductions, and instead proposed funding levels that were more similar to the FY2018-enacted amounts. The House Committee on Appropriations reported H.R. 5952 on May 17, 2018. The House proposal recommended a total of $647.6 million for the three CJS trade-related agencies. This proposal was $56.8 million more (9.6%) than the Administration's request, and $0.7 million less (-0.1%) than the FY2018-enacted legislation. The House committee proposed $480.0 million in direct funding for ITA, $95.0 million for USTIC, and a total of $72.6 million for USTR, comprised of $57.6 million for salaries and expenses and an additional $15.0 million from the Trade Enforcement Trust Fund for trade enforcement activities as authorized by the Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114-125). The Senate Committee on Appropriations reported S. 3072 on June 14, 2018. The Senate committee-reported proposal recommended a total of $655.6 million for the three CJS trade-related agencies. This is $64.8 million (11.0%) more than the Administration's request and $7.3 million (1.1%) more than the FY2018-enacted appropriations. The Senate committee proposed $488.0 million in direct funding for ITA, $95 million for USITC, and a total of $72.6 million for USTR, comprised of $57.6 million for salaries and expenses and an additional $15.0 million from the Trade Enforcement Trust Fund for trade enforcement activities. After three continuing resolutions and a three-week lapse in funding, Congress passed the Consolidated Appropriations Act. 2019 (P.L. 116-6), which was signed into law on February 15, 2019. The act included a total of $647.0 million in funding for the three trade-related agencies, which represented a 0.2% decrease from FY2018 funding levels.