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  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 


Report 2: U S  Code, Title 10, Section 5063, United States Marine Corps: Composition and Functions, dated October 1, 1986, states the following: The Marine Corps will be organized, trained and equipped to provide an amphibious and land operations capability to seize advanced naval bases and to conduct naval land campaigns  In this regard, the Marines are required by law to have the necessary equipment to conduct amphibious operations and land operations  The ACV and MPC were considered integral systems by the Department of Defense (DOD) and Marine Corps to meet this legal requirement, as well as providing critical capabilities to execute the nation's military strategy  On January 6, 2011, after spending approximately $3 billion in developmental funding, the Marine Corps—with "encouragement" from DOD—cancelled the Expeditionary Fighting Vehicle (EFV) program  The EFV was intended to replace the 40-year-old Amphibious Assault Vehicle (AAV), which currently transports Marines from ships to shore under hostile conditions  The Marine Corps cancelled the EFV due to excessive cost growth and poor performance in operational testing  Recognizing the need to replace the AAV, the Pentagon pledged to move quickly to develop a "more affordable and sustainable" vehicle to take the place of the EFV  The Amphibious Combat Vehicle (ACV) is intended to replace the AAV, incorporating some EFV capabilities but in a more practical and cost-efficient manner  In concert with the ACV, the Marines were developing the Marine Personnel Carrier (MPC) to serve as a survivable and mobile platform to transport Marines when ashore  At present, the Marines do not have a wheeled armored fighting vehicle that can operate as a dedicated infantry carrier with Marine maneuver forces inland  The MPC was not intended to be amphibious like an AAV, EFV, or the ACV but instead would be required to have a swim capability for inland waterways such as rivers, lakes, and other water obstacles such as shore-to-shore operations in the littorals  Because of a perceived amphibious "redundancy," some have questioned the need for both the ACV and MPC  In June 2013, citing budgetary pressures, the Marines reportedly put the MPC program "on ice" and suggested that it might not be resurrected for about 10 years  Although some have questioned why the Marines cannot simply "adopt" a U S  Army personnel carrier, Marine requirements for a personnel carrier reflect the need for this vehicle to be compatible with amphibious assault craft, as well as to have an enhanced amphibious capability, which is not necessarily an Army requirement  With the Marines involved in decades-long land conflicts in Iraq and Afghanistan and proliferating anti-access technologies such as guided missiles, some analysts questioned whether the Marines would ever again be called on to conduct a large-scale amphibious assault operation  In response to these questions and the perceived need to examine the post-Iraq and Afghanistan Marine Corps, the Department of the Navy and DOD studied the requirement to conduct large-scale amphibious operations and in early 2012 released a strategic vision for how amphibious operations will be conducted in the future  The primary assertion of this study is that the Marine Corps' and Navy's amphibious capabilities serve a central role in the defense of the global interests of a maritime nation  The need to maintain an amphibious assault capability is viewed by Marine Corps leadership as establishing the requirement for the ACV and MPC (as discussed in greater detail below)  Congress is responsible for authorizing and appropriating funds for all weapon systems programs, including the ACV  In its oversight role, Congress could be concerned about how the ACV enables the Marines to conduct not only amphibious operations but also operations ashore  Another possible congressional concern is to what extent a robust amphibious assault capability is a necessary component of U S  national security  Cost is another issue of interest to Congress  At present, the Marines use the AAV-7A1 series amphibious assault vehicle to move Marines from ship to shore  The Marines have used the AAV since 1971 and expect to continue to use it until replaced by the ACV or a similar vehicle  Over the years, the Marines have claimed the AAV has become increasingly difficult to operate, maintain, and sustain  As weapons technology and threat capabilities have evolved since the early 1970s, the AAV—despite upgrades—is viewed as having capabilities shortfalls in the areas of water and land mobility performance, lethality, protection, and network capability  The AAV's two-mile ship-to-shore range is viewed by many as a significant survivability issue not only for the vehicle itself but also for naval amphibious forces  Although the AAV has some armor protection and can operate inland to a limited extent, it is not intended for use as an infantry combat vehicle  The Marines do have the LAV-25, Light Armored Vehicle-25, an eight-wheeled armored vehicle that carries a crew of three and six additional marines  The LAV-25 is armed with a 25 mm chain gun and a 7 62 mm machine gun but is not fully amphibious, as it cannot cross a surf zone and would get to the beach via some type of connector such as the Landing Craft, Air Cushioned (LCAC)  The LAV-25 has been in service since 1983  According to the Marine Program Executive Office (PEO) Land Systems, the LAV is not employed as an armored personnel carrier and usually carries a four-person Marine scout/reconnaissance team in addition to its crew  In this regard, the MPC was viewed as necessary by Marine leadership for the transport and enhanced armor protection of Marine infantry forces  The Marines' 2011 Request for Information (RFI) to industry provides an overview of the operational requirements for the ACV  These requirements include the following: The proposed vehicle must be able to self-deploy from amphibious shipping and deliver a reinforced Marine infantry squad (17 marines) from a launch distance at or beyond 12 miles with a speed of not less than 8 knots in seas with 1-foot significant wave height and must be able to operate in seas up to 3-foot significant wave height  The vehicle must be able to maneuver with the mechanized task force for sustained operations ashore in all types of terrain  The vehicle's road and cross-country speed as well as its range should be greater than or equal to the M-1A1  The vehicle's protection characteristics should be able to protect against direct and indirect fire and mines and improvised explosive device (IED) threats  The vehicle should be able to accommodate command and control (C2) systems that permit it to operate both at sea and on land  The vehicle, at a minimum, should have a stabilized machine gun in order to engage enemy infantry and light vehicles  The Marine Corps' 2011 Request for Information (RFI) to industry provided an overview of the operational requirements for the MPC  These requirements included the following: The vehicle must accommodate nine marines and two crew members and have a "robust tactical swim capability (shore-to-shore [not designed to embark from an amphibious ship]) and be capable of operating at 6 knots in a fully developed sea " The vehicle must be able to operate on land with M-1A1s in mechanized task forces across the Marine Corps' mission profile  The vehicle shall provide protection for the occupants from the blasts, fragments, and incapacitating effects of attack from kinetic threats, indirect fire, and improvised explosive devices and mines  The vehicle shall be capable of firing existing Marine anti-structure and anti-armor missiles and should be able to accommodate existing command and control (C2) systems  Defense officials have noted the Marine Corps is "not currently organized, trained and equipped to face a peer adversary in the year 2025" and enemies with advanced air and shore defense will make amphibious operations even riskier  To counter this, the Navy is developing the Expeditionary Advance Base Operations (EABO) operational concept to address these concerns  EABO is described as follows: Expeditionary Advance Base Operations is a naval operational concept that anticipates the requirements of the next paradigm of US Joint expeditionary operations  The concept is adversary based, cost informed and advantage focused  EABO calls for an alternative, difficult to target forward basing infrastructure that will enable US naval and joint forces to create a more resilient forward based posture to persist, partner and operate within range of adversary long range precision fires  The alternative forward posture enabled by Expeditionary Advance Bases (EABs) is designed to mitigate the growing threat posed by the abundant quantity, expanded range and enhanced precision of potential adversary weaponry—particularly ballistic and cruise missiles designed to attack critical joint fixed forward infrastructure and large platforms  EABs provide a dispersed and largely mobile forward basing infrastructure that enables a persistent alternative force capability set that is similarly designed to be difficult to target and inherently resilient  The resilient, reduced signature infrastructure of EABs, combined with naval forces designed and structured to persist and operate within the arc of adversary anti-access/aerial denial (A2AD) capabilities enables naval commanders to conduct Expeditionary Advance Base Operations to support Joint Force Maritime Component Commander (JFMCC), and Fleet Commanders in the fight for sea control, by exploiting the opportunities afforded by key maritime terrain, particularly in close and confined seas  EABO advances, sustains and maintains the naval and joint sensor, shooter and sustainment capabilities of dispersed forces to leverage the decisive massed capabilities of the larger joint force with enhanced situational awareness, augmented fires and logistical support  The EABO Concept enables US naval forces to exercise 21 st Century naval operational art, meet new enemy A2AD threats with new capabilities and operate and thrive in and around close and confined seas  In terms of Marine Corps amphibious assault operations, the adoption of EABO could reportedly result in "an entirely different approach to amphibious assaults as well as new weapon systems " Noting that "missiles can now hit ships and landing craft while they are hundreds of miles from shore, making it far too dangerous for Marines to storm a beach with current capabilities," Marine officials are reportedly exploring ways to create temporary "bubbles" where Marines can get ashore  In response to these challenges, current and planned weapons systems might need to be modified to accommodate EABO operational concepts  As previously noted, in June 2013, citing budgetary pressures, the Marines reportedly put the MPC program "on ice" and suggested it might not be resurrected for about 10 years  At the time of the decision, the Marines' acquisition priorities were refocused to the ACV as well as the Joint Light Tactical Vehicle (JLTV)  Although the Marines refocused budgetary resources to the ACV, difficulties in developing an affordable high water speed capability for the ACV continued to confront Marine leadership  In what was described as a "drastic shift," the Marines decided in March 2014 to "resurrect" the MPC and designate it as ACV Increment 1 1 and initially acquire about 200 vehicles  The Marines also plan to develop ACV Increment 1 2, a tracked version, and to acquire about 470 vehicles and fund an ongoing high water speed study  Although ACV Increment 1 1 will have a swim capability, a connector will be required to get the vehicles from ship to shore  Plans called for ACV Increment 1 1 to enter the acquisition cycle at Milestone B (Engineering and Manufacturing Development) in FY2016, award prototype contracts leading to a down select to one vendor in FY2018, and enter low-rate initial production  On April 23, 2014, the Marines released an RFI for ACV Increment 1 1  Some of the required capabilities included the following:     operate in a significant wave height of two feet and sufficient reserve buoyancy to enable safe operations; a high level of survivability and force protection; operate in four to six feet plunging surf with ship-to-shore operations and launch from amphibious ships as an objective; land mobility, operate on 30 percent improved surfaces and 70 percent unimproved surfaces; ability to integrate a  50 calibre remote weapon station (RWS) with growth potential to a dual mount 40 mm/ 50 calibre RWS or a 30 mm cannon RWS; carrying capacity to include three crew and 10 embarked troops as the threshold, 13 embarked troops as the objective, carry mission essential equipment and vehicle ammunition; and the ability to integrate a command, control and communications suite provided as government furnished equipment     The RFI included a requirement for industry to deliver 16 prototype vehicles nine months after contract award in April 2016 at a rate of 4 vehicles per month  The Marines estimated ACV Increment 1 1 would cost about $5 million to $6 million per vehicle, about $10 million less than what the previous ACV version was expected to cost  On November 5, 2014, the Marines reportedly released a draft RFP for ACV Increment 1 1  The Marines were looking for information from industry regarding program milestones, delivery schedules, and where in the program cost savings could be achieved  Plans were for two companies to build 16 prototype vehicles each for testing  Companies who competed for the two contracts included BAE Systems, General Dynamics Land Systems (GDLS), Lockheed Martin, and Scientific Applications International Corporation (SAIC)  Under the provisions of the RFP, the ACV 1 1 was envisioned as an eight-wheeled vehicle capable of carrying 10 Marines and a crew of 3 that would cost between $4 million to $7 5 million per copy—a change from the RFI estimate of $5 million to $6 million per vehicle  In terms of mobility, the ACV 1 1 would need to be able to travel at least 3 nautical miles from ship to shore, negotiate waves up to at least 2 feet, travel 5 to 6 knots in calm seas, and be able to keep up with the M-1 Abrams tank once ashore  Proposals were due in April 2016 and the Marines reportedly planned to award two EMD contracts for 16 vehicles each to be delivered in November 2016  In 2018, the Marines would then down select to one vendor and start full production  The Marines reportedly plan to acquire 204 ACV 1 1s, to be allocated as follows: 1 st Marine Expeditionary Force, Camp Pendleton, CA— 67 ; 2 nd Marine Expeditionary Force, Camp Lejeune, NC— 46 ; 3 rd Marine Expeditionary Force, Okinawa, Japan— 21 ; Assault Amphibian School, Camp Pendleton, CA— 25 ; Exercise Support Division, Marine Corps Air Ground Combat Center, Twenty Nine Palms, CA— 25 ; and Program Manager, Quantico, VA, and Amphibious Vehicle Test Branch, Camp Pendleton, CA— 20   In April 2016 testimony to the Senate Armed Services Committee, the Deputy Commandant for Combat Development and Integration testified that the Marines' Acquisition Objective for the ACV 1 1 remained at 204 vehicles, which would provide lift for two infantry battalions  Full Operational Capability (FOC) for ACV 1 1 is planned for FY2020  On November 24, 2015, the Marine Corps awarded BAE Systems and SAIC contracts to develop ACV 1

ground_truth: The Small Business Administration's (SBA's) Surety Bond Guarantee Program is designed to increase small businesses' access to federal, state, and local government contracting, as well as private-sector contracts, by guaranteeing bid, performance, and payment bonds for small businesses that cannot obtain surety bonds through regular commercial channels. The program guarantees individual contracts of up to $6.5 million, and up to $10 million if a federal contracting officer certifies that such a guarantee is necessary. The SBA's guarantee 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 with a total contract value of nearly $6.5 billion. A surety bond is a three-party instrument between a surety (who agrees to be responsible for the debt or obligation of another), a contractor, and a project owner. The agreement binds the contractor to comply with the 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. Surety bonds encourage project owners to contract with small businesses that may not have the credit history or prior experience of larger businesses and may be at greater risk of failing to comply with the contract's terms and conditions. Surety bonds are important to small businesses interested in competing for federal contracts because the federal government requires prime contractors—prior to the award of a federal contract exceeding $150,000 for the construction, alteration, or repair of any building or public work of the United States—to furnish a performance bond issued by a surety satisfactory to the contracting officer in an amount that the officer considers adequate to protect the government. P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, increased the program's bond limit to $6.5 million, or up to $10 million if a federal contracting officer certifies that such a guarantee is necessary. The limit had been $2 million since 2000, with a temporary increase from February 17, 2009, through September 30, 2010, to $5 million, and up to $10 million if a federal contracting officer certified in writing that such a guarantee was necessary. Advocates of raising the program's bond limit argued that doing so would increase contracting opportunities for small businesses and bring the limit more in line with limits of other small business programs, such as the 8(a) Minority Small Business and Capital Ownership Development Program and the Historically Underutilized Business Zone (HUBZone) Program. Opponents argued that raising the limit could lead to higher amounts being guaranteed by the SBA and, as a result, increase the risk of program losses. This report examines the program's origin and development, including (1) the decision to supplement the original Prior Approval Program with the Preferred Surety Bond Guarantee Program that initially provided a lower guarantee rate (not to exceed 70%) than 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 surety bonds without the SBA's prior approval; (2) P.L. 114-92, the National Defense Authorization Act for Fiscal Year 2016, which increased the Preferred Surety Bond Guarantee Program's guarantee rate from not to exceed 70% to not to exceed 90% of losses; and (3) the decision to increase the program's bond limit.

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



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



Report 2: 1 prototypes for evaluation  BAE's contract was for $103 8 million and SAIC's for $121 5 million, and each company is to build 16 prototypes  The Marines expect to down select to a single vendor in 2018  Initial operational capability (IOC) was expected by the end of 2020, and all ACV 1 1 vehicles are planned to be fielded by summer 2023  Plans are to equip six battalions with ACV 1 1s and 392 existing upgraded AAVs  Both BAE and SAIC reportedly have a long history related to amphibious vehicles, as BAE built the Marines' original AAV and SAIC has built hundreds of Terrex 1 vehicles used by Singapore, and both companies had Marine Corps contracts to modernize AAVs  ACV 1 1 is intended to have some amphibious capability but would rely on ship-to-shore connectors  ACV 1 2 is intended to have greater amphibious capability, including greater water speed and the ability to self-deploy from amphibious ships  BAE planned to team with Italian manufacturer Iveco (which owns Chrysler and Ferrari)  BAE's prototype would accommodate 13 Marines and travel 11 5 miles at about 7 miles per hour (mph) in surf and 65 mph on land  BAE's version would incorporate a V hull design intended to protect passengers from underside blasts and have external fuel tanks for increased safety  BAE intends to produce its prototypes at its York, PA, facility  SAIC planned to team with Singapore Technology Kinetics to develop its prototype based on an existing design called Terrex  SAIC's version is said to travel 7 mph in water and incorporates a V hull design as well as blast-mitigating seats  It would carry a crew of 3 and can accommodate 11 Marines  SAIC's version plans for a Common Remote Weapons System (CROWS) ( 50 calibre machine gun and a 30 mm cannon), which could be operated from inside the vehicle while buttoned up, therefore not exposing crewmen to hostile fire  On December 7, 2015, it was reported that GDLS would protest the award of the ACV 1 1 contract to BAE and SAIC, claiming the Marines asked for particular capabilities and then evaluated vendors by a different set of standards  On March 15, 2016, GAO denied GDLS's protest, noting that "the Marine Corps' evaluation was reasonable and consistent with the evaluation scheme identified in the solicitation " The Marines reportedly stated that the protest put the ACV 1 1 program about 45 days behind schedule but anticipated the ACV 1 1 would still be fielded on time  BAE and SAIC reportedly delivered their ACV 1 1 prototypes, with BAE delivering its first prototype in December 2016 and SAIC delivering its prototype in February 2017  This early delivery could potentially result in an unspecified incentive fee award for both companies  EMD testing began the week of March 13 and was scheduled to last eight months  In early December 2017, the Marines reportedly sent the ACV 1 1 down select request for proposals to BAE and SAIC  Plans called for operational testing to start in January 2018, with the Marines anticipating announcing a contract winner in June 2018 for the delivery of 204 ACV 1 1s over a four-year period  In accordance with the provisions of the FY2014 National Defence Authorization Act ( P L  113-66 ) Section 251, GAO submitted its annual report to Congress on the ACV program in April 2018  GAO reviewed program cost estimates, updated schedules, and program assessments of test results and production readiness, and compared ACV acquisition efforts to DOD guidance and GAO-identified best practices  GAO found the following: The first version of the Amphibious Combat Vehicle (ACV 1 1) is on track to meet development cost goals with no additional anticipated delays for major acquisition milestones  With regard to costs, the development phase of ACV 1 1 is on pace to not exceed cost goals that were established at the start of development, based on a recent Navy estimate, the ACV program office, and reporting from the contractors  GAO recommended that the Marine Corps (1) not enter the second year of low rate production for ACV 1 1 until after the contractor has achieved an overall Manufacturing Readiness Level (MRL) of 8 and (2) not enter full-rate production until achieving an overall MRL of 9  DOD partially concurred with this recommendation but noted that it was "reasonable to proceed at lower MRL levels if steps are taken to mitigate risks " On June 19, 2018, the Marine Corps selected BAE Systems to produce the ACV  Reportedly, the initial contract—valued at $198 million—will be for low-rate production of 30 vehicles to be delivered by the autumn of 2019  Eventually, 204 vehicles are to be delivered under the ACV 1 1 phase of the project  BAE will also produce the ACV 1 2 variant and, all told, the entire ACV 1 1 and 1 2 project is expected to deliver 700 vehicles, and, if all options are exercised, the total contract will reportedly be worth $1 2 billion  In December 2018, the Navy reportedly awarded BAE Systems a $140 million contract modification to build 30 Low Rate Initial Production (LRIP) ACVs as part of Lot 2, with the first vehicles expected to be delivered in the summer of 2020  Lot 1 is reportedly still scheduled to start delivery in the summer of 2019  In DOT&E's December 2018 FY2018 Annual Report, it was noted During the operational evaluation (OA), the ACV-equipped unit demonstrated the ability to maneuver to an objective, conduct immediate action drills, and provide suppressive fires in support of dismounted infantry maneuver in a desert environment  The ACV-equipped unit was able to maneuver in the littorals; embark aboard a landing craft air cushioned (LCAC), transit the open ocean and surf zone, and debark from the LCAC  The ACV demonstrated water mobility and the ability to self-deploy from the beach, cross the surf zone, enter the ocean, swim, and return to the beach  Based on data from the OA, reliability is below the program reliability growth curve (58 hours Mean Time Between Operational Mission Failures [MTBOMF])  BAE vehicles demonstrated 24 9 hours MTBOMF  There were no systemic problems identified that indicate a major redesign is required  The ACV section was successful in 15 of 16 missions and demonstrated the capability to negotiate terrain in the desert and littorals, operate with tanks and light armored vehicles, and maneuver to achieve tactical advantage over the opposing threat force  ACV crews, supported infantry, and the opposing force noted that the vehicles performed better than the legacy vehicle in a wide variety of areas  In terms of recommendations, DOT&E noted the Program Manager, Advanced Amphibious Assault should do the following: Modify the infantry troop commander's station to make it easier to move between the hatch and seat  Assess the capability of all existing Marine Corps recovery assets to recover the ACV  Investigate options for preventing damage to steering/suspension when encountering battlefield debris, such as concertina wire  According to reports, the Marines envisioned that the successor to ACV 1 1—the ACV 1 2—would have a threshold requirement of 12 miles from ship-to-shore  If this threshold can be achieved, it could help to reduce the vulnerability of U S  naval vessels supporting Marine amphibious operations to enemy shore fire  On April 10, 2019, during testimony to the Subcommittee on Seapower of the Senate Armed Services Committee, Navy and Marine Corps leadership noted During the fall of 2018, ACV 1 1 prototypes demonstrated satisfactory water mobility performance in high surf conditions, and in doing so met the full water mobility transition requirement for ACV 1 2 capability  Subsequently, the Milestone Decision Authority Assistant Secretary of the Navy for Research, Development and Acquisition (ASN (RD&A)) approved the consolidation of increments one and two into a single program to enable continuous production of ACVs to completely replace the AAV  The next key acquisition event is the Full Rate Production decision scheduled for the third quarter of FY 2020 following Initial Operational Test & Evaluation  ACV remains on schedule to achieve Initial Operational Capability in the fourth quarter of FY 2020  With the consolidation of ACV variants into a single variant, there will likely be a number of programmatic changes and potential ramifications for the ACV and ACV 2 0 programs  Reportedly, the Marines plan to develop an ACV 2 0, capable of carrying 10 to 13 Marines plus crew, capable of high water speeds and deployment from ships far from the coast  ACV 2 0 is planned to be capable of operating on land alongside tanks and light armored vehicles  According to the Marines ACV 2 0 serves as a conceptual placeholder for a future Decision Point (~ 2025, or sooner) at which time knowledge gained in the fielding and employment of the first phase of ACV (1 1 and 1 2), the state of the naval connector strategy, and science & technology work towards a high water speed capable self-deploying vehicle will support an informed decision  The FY2020 presidential budget request includes RDT&E and Procurement funding requests in the Base Budget, as well as FY2020 requested quantities  The Marines did not request ACV Overseas Contingency operations (OCO) funding in FY2020  According to DOD, the FY2020 ACV budget request will fund The ACV 1 1 Full Rate Production (FRP) Lot 3 of 56 vehicles, plus procurement of related items such as production support, systems engineering, program management, Engineering Change Orders (ECOs), Government Furnished Equipment (GFE), and integrated logistics support  Research and Development efforts include the procurement of ACV 1 2 MRV test articles, associated GFE, and initiation of a Vehicle Protective System trade study and integration efforts  While from an overall programmatic perspective, the consolidation of the ACV 1 1 and ACV 1 2 variants could be viewed as a favourable programmatic outcome, there are likely ramifications that might be of interest to policymakers  Potential issues include the following: Will the consolidation of ACV 1 1 and ACV 1 2 result in an overall cost savings? Will this consolidation permit the acquisition of additional ACVs because of potential cost savings? With the consolidation and the stated intent to replace AAVs, what is the revised timeline for the replacement of AAVs and will this result in cost savings from not having to upgrade and maintain AAVs longer than previously intended? How will the consolidation of ACV 1 1 and ACV 1 2 affect the ACV 2 0 program? If the Navy and Marine Corps decide to adopt Expeditionary Advance Base Operations (EABO) as an operational concept, it could possibly have implications for the ACV program, including the following: At the weapon systems level, would EABO require any changes to the vehicles themselves, such as enhanced survivability, lethality, or Command, Control, Communications, Computer, Intelligence, Surveillance, and Reconnaissance (C4ISR) features? If changes are required to facilitate EABO, how would this affect the program's overall acquisition timeline and cost? If EABO does not require any technical changes in the ACV program, would the adoption of EABO modify the Marines' current procurement quantities of ACVs? If EABO requires different procurement quantities for the different ACV versions (more or fewer), how might this affect program timelines and program costs?
Report 2:  FSA staff from all four of our selected regional offices told us that they provisionally certify schools for a variety of reasons, including when a school submits a late compliance audit or when a recent compliance audit indicates that a school could potentially have significant problems  Generally, schools in provisional certification status are subject to additional monitoring by FSA compared to schools that have been fully certified  For example, Education officials said that if they have concerns about a provisionally certified school’s student withdrawal rate, they can add provisional conditions requiring the school to submit monthly enrollment rosters for review  Staff in two FSA regional offices told us that in other cases, if they have concerns about how a school is administering federal student aid or suspected fraud, they can put a school on provisional status and conduct a program review to collect more detailed information on compliance with federal requirements  Education data also show that most schools remain in provisional status the first time they are recertified—62 percent from 2006 to 2017  In contrast, FSA staff fully recertified over three-quarters of schools that applied for recertification a second time during the same time period (see table 2)  For more information on first and second recertification outcomes by school sector, see appendix II  We found that FSA generally relies on compliance audits as the only annual on-site review to determine how schools applying for recertification administer federal student aid  The audits provide direct information collected by independent auditors from school visits and file reviews examining how schools administer federal student aid and comply with program requirements  For example, OIG audit guidance directs auditors to check whether schools are distributing federal student aid to eligible students and accurately calculating student loan amounts  FSA officials and staff from all four of our selected regional offices said that compliance audits are a key source of information they use to assess a school’s administrative capability  Officials from Education’s OIG said that the quality of information in compliance audits varies substantially and depends on the auditor  The OIG has found quality problems in some of the compliance audits it selects—based on auditor and school risk factors—for its annual quality control reviews  Because the OIG selects higher risk audits to review, its reviews are more likely to detect problems, and OIG officials said they cannot make any conclusions about the overall prevalence of quality problems in compliance audits  However, our analysis of OIG quality review data found that of the 739 compliance audits reviewed by the OIG from fiscal years 2006 through 2017, the OIG passed 23 percent (173) and failed 59 percent (436)  An additional 18 percent (130) passed with deficiencies  For example, across the 41 compliance audits it reviewed in fiscal year 2016, the OIG identified 264 quality deficiencies with the auditor’s work, according to our analysis of quality reviews provided by the OIG  The most frequently cited issues in these 41 audits were: reporting (24 audits), such as lack of evidence that the auditor tested whether the school correctly reported student enrollment status; student eligibility (20 audits), such as lack of evidence that the auditor verified student school attendance; and administrative capability (19 audits), such as lack of evidence that the auditor determined whether the accreditor had been notified about a change in school ownership within 10 days  FSA officials also identified quality issues with the compliance audits of some schools  FSA headquarters officials and staff we interviewed in several regional offices said they have seen schools with significant program review findings that had not been identified in annual compliance audits  FSA staff said they have referred some compliance audits to the OIG for quality reviews when they have had questions about the thoroughness of an audit  We also found a couple of examples in our review of school certification documents in which the findings identified in a school’s compliance audit were different from the findings identified by FSA in a program review of the same school covering the same time period  In one case, FSA staff said they probably would have fully recertified the school if they had relied solely on the compliance audit  Instead, they used the program review to determine that the school should be provisionally recertified  Compliance audits and program review findings are based on a sample of student records, and FSA staff said some differences in findings might be explained by differences in the records reviewed  FSA and OIG officials cited several issues that can affect the quality of compliance audits  FSA and OIG officials we interviewed said that some auditors conducting compliance audits have insufficient training in federal student aid, which contributes to audit quality problems  OIG staff also said that even if an auditor meets the general training hour requirements for auditors, the training content may not be relevant for federal student aid audits  In addition, FSA and OIG officials said some schools— particularly smaller schools—tend to hire less experienced auditors in order to save money, often resulting in poor quality audits  FSA officials in most selected regional offices said that additional training on federal student aid for auditors who are new to or unfamiliar with federal student aid could help improve audit quality  FSA and the OIG recently have taken steps to address audit quality and the information available to FSA staff when making certification decisions  These efforts include: Training for auditors: The OIG has taken steps to enhance training offered to auditors of schools’ administration of federal student aid and is exploring opportunities to provide additional training  In December 2017, the OIG and the American Institute of Certified Public Accountants cosponsored training for auditors on the OIG’s 2016 revised guide for audits of for-profit schools, and other topics related to auditing federal student aid  The training included discussion of common audit quality issues and areas of highest risk  According to an OIG official, about 200 auditors attended, and after the event, the American Institute of Certified Public Accountants and the OIG posted a recording of the training to their websites to make it available to additional auditors  In addition, OIG officials said they maintain an email account—listed on the OIG website—through which auditors can ask questions and receive responses  In March 2018, the OIG posted frequently asked questions and answers to the website  Timeliness of OIG quality reviews: Both FSA and OIG officials said that the OIG has recently renewed efforts to issue compliance audit quality reviews more quickly, after several years in which staffing shortages and other issues led to some delayed quality reviews  Guidance to schools on selecting an auditor: OIG officials said that at the 2017 FSA training conference for school financial aid staff, they presented to more than 400 participants about factors schools should consider when hiring an auditor  For example, they suggested that schools verify the licenses of certified public accountants, ask about the types of engagements an auditing firm has conducted, request and check references, check for any actions that may have been taken against a firm, and ask whether the auditor has been subject to a previous review by the OIG or another agency  FSA officials said they expected to invite the OIG to present at future FSA conferences, and OIG officials said they were seeking additional opportunities to share information on auditor selection with schools, including a planned presentation to an association of postsecondary schools  FSA working group: FSA recently established a working group to update its guidance to FSA staff on how to coordinate with the OIG to address compliance audits with quality problems  Among other topics, the working group has consulted with the OIG about how schools are made aware of the OIG’s findings regarding the quality of their audits  FSA officials said that OIG officials have provided input and feedback on FSA’s proposed changes to the guidance  Audit guide revisions: In addition, OIG and FSA staff told us they expected the OIG’s 2016 revisions to the for-profit school audit guide to improve the quality of compliance audits for those schools  They said that because the revised guide clarified some issues that were confusing to auditors in the previous guide issued in 2000, auditors might be better able to implement the guidance  The audit guide revisions include more testing and reporting requirements, clarified procedures, and guidance on issues such as fraud reporting and coordinating financial and compliance audits  The 2016 revisions first applied to audits for fiscal years beginning after June 30, 2016, and FSA began receiving those audits at the end of 2017  In addition, although the OIG’s 2016 revisions only apply to audits of for-profit schools, FSA officials said they planned to establish a working group to consider improvements to audit guidance for public and nonprofit schools  FSA and OIG efforts to address audit quality could help ensure that compliance audits provide accurate and reliable information on school administrative capability for Education’s recertification decisions  We provided a draft of this report to Education for review and comment  Education’s Office of Inspector General provided technical comments, which we considered and incorporated as appropriate  Education did not provide other comments on the report  We are sending copies of this report to the appropriate congressional committees; the Secretary of Education; and other interested parties  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (617) 788-0534 or emreyarrasm@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 addition to the contact named above, Michelle St  Pierre (Assistant Director), Kristy Kennedy (Analyst-in-Charge), Edward Bodine, Marissa Jones, and Mark Ward made significant contributions  Also contributing to this report were Susan Aschoff, Deborah Bland, Nagla’a El-Hodiri, Monika Gomez, Sheila R  McCoy, Jessica Orr, Mimi Nguyen, John Mingus, Rhiannon Patterson, Monica Savoy, Benjamin Sinoff, and Rosemary Torres Lerma 

ground_truth: On January 6, 2011, after spending approximately $3 billion in developmental funding, the Marine Corps cancelled the Expeditionary Fighting Vehicle (EFV) program due to poor reliability demonstrated during operational testing and excessive cost growth. Because the EFV was intended to replace the 40-year-old Amphibious Assault Vehicle (AAV), the Pentagon pledged to move quickly to develop a "more affordable and sustainable" vehicle to replace the EFV. The Amphibious Combat Vehicle (ACV) is intended to replace the AAV, incorporating some EFV capabilities but in a more practical and cost-efficient manner. In concert with the ACV, the Marines were developing the Marine Personnel Carrier (MPC) to serve as a survivable and mobile platform to transport Marines when ashore. The MPC was not intended to be amphibious like an AAV, EFV, or the ACV but instead would be required to have a swim capability for inland waterways such as rivers, lakes, and other water obstacles such as shore-to-shore operations in the littorals. Both vehicles were intended to play central roles in future Marine amphibious operations. On June 14, 2013, Marine leadership put the MPC program "on ice" due to budgetary pressures but suggested the program might be resurrected some 10 years down the road when budgetary resources might be more favorable. In what was described as a "drastic shift," the Marines decided to "resurrect" the MPC in March 2014. The Marines designated the MPC as ACV Increment 1.1 and planned to acquire about 200 vehicles. The Marines also plan to develop ACV Increment 1.2, a tracked, fully amphibious version, and at the time planned to acquire about 470 vehicles and fund an ongoing high water speed study. Although ACV Increment 1.1 is to have a swim capability, another mode of transport (ship or aircraft) would be required to get the vehicles from ship to shore. The Marines are reportedly exploring the possibility of developing a high water speed ACV 2.0, which could accompany tanks and light armored vehicles into combat. On November 5, 2014, the Marines released a draft Request for Proposal (RFP) for ACV Increment 1.1. On November 24, 2015, the Marine Corps awarded BAE Systems and SAIC contracts to develop ACV 1.1 prototypes for evaluation. BAE's contract was for $103.8 million and SAIC's for $121.5 million, and each company was to build 16 prototypes to be tested over the next two years. Both BAE and SAIC delivered their prototypes early, and Engineering and Manufacturing Development (EMD) testing began mid-March 2017. In early December 2017, the Marines reportedly sent the ACV 1.1 down select request for proposals to BAE and Science Applications International Corporation (SAIC). On June 19, 2018, the Marine Corps selected BAE Systems to produce the ACV. The initial contract—valued at $198 million—was for low-rate production of 30 vehicles to be delivered by the autumn of 2019. On April 10, 2019, during testimony to the Senate Armed Services Committee, Navy and Marine Corps leadership announced that during the fall of 2018, ACV 1.1 prototypes demonstrated satisfactory water mobility performance in high surf conditions and, in doing so, met the full water mobility transition requirement for ACV 1.2 capability. As a result, ACV 1.1 and ACV 1.2 were to be consolidated into a single variant—the ACV—which is intended to replace all AAVs. Potential issues for Congress include the potential ramifications of the consolidation of the ACV 1.1 and ACV 1.2 programs and how the possible adoption of the Expeditionary Advance Base Operations (EABO) operational concept could affect the ACV program.