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



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



Report 2: The defense lab enterprise consists of 63 labs, warfare centers, and engineering centers across the Departments of the Army, Navy, and Air Force, as shown in Figure 1 below  About 50,000 federally employed scientists and engineers work at these defense labs to support warfighter needs and develop transformative capabilities  Defense labs are managed and operated within the military service chain of command  DOD budgets for technology and product development activities under its research, development, test, and evaluation budget, which DOD groups into seven budget activity categories for its annual budget estimates  Air Force and Army labs rely on appropriated funding provided from the service—often referred to as mission funding—or from customers (or some combination thereof)  Customers, such as program offices, provide funding to defense labs for technology development activities and related research  The Air Force and Army funding structure is in contrast to Navy research and development activities, which operate under the Navy Working Capital Fund—a revolving fund that finances Department of the Navy activities on a reimbursable basis  Under this funding model, the Navy employs a Capital Investment Program to obtain capital assets, including minor military construction projects for labs  The program provides the framework for planning, coordinating, and controlling Navy working capital funds and expenditures to obtain capital assets  Figure 2 illustrates the varying funding models used by the military service labs  In addition to its labs, DOD sponsors other entities to provide for its technology development needs  Specifically, these include: FFRDCs are operated by universities, other not-for-profit or nonprofit organizations, or private firms under long-term contracts and provide special research and development services that generally cannot be readily satisfied by government personnel or private contractors  For example, the Massachusetts Institute of Technology Lincoln Laboratory develops key radar and electronic warfare technologies for integrated air and missile defense systems  In addition, the Software Engineering Institute operated by Carnegie Mellon University provides cybersecurity solutions for defense entities  While DOD sponsors 10 FFRDCs in total, it designates 3 FFRDCs as research and development labs, which maintain long-term competencies in key technology areas  In addition to these, DOD sponsors 2 systems engineering and integration FFRDCs and 5 studies and analysis FFRDCs  UARCs provide specialized research and development services similar to FFRDCs and also operate under long-term contracts  However, unlike FFRDCs, DOD requires that UARCs be affiliated with a university  Generally, UARCs may not compete against industry in response to a competitive Request for Proposals for development or production that involves engineering expertise  DOD currently sponsors 13 UARCs  Key DOD offices provide oversight to the defense labs: The Under Secretary of Defense for Research and Engineering (USD(R&E))—the principal advisor to the Secretary of Defense for research, engineering, and technology development activities and programs—serves as DOD’s chief technology officer  The powers and duties of this office include establishing policies and providing oversight for DOD’s research, engineering, and technology development activities  The Defense Laboratories Office—within the Office of the USD(R&E)—supports DOD’s research and engineering mission by helping to ensure comprehensive department-level insight into the activities and capabilities of the defense labs  This office carries out a range of core functions related to the defense labs, including analysis of capabilities, alignment of activities, and advocacy  Congress has granted authorities that address hiring, infrastructure, and technology transition challenges to defense labs since 1995  These authorities provide defense lab directors with certain flexibilities within the established legal framework to manage their operations  While Congress has provided a number of authorities, in this report we focus on four authorities that our prior work on best practices in science and technology management and expedited lab hiring has shown are, or have the potential to be, the most crucial for supporting innovation within DOD labs  Laboratory Initiated Research Authority  This authority provides lab directors with the means to fund some of the research projects that the lab will pursue  The authority provided in Section 219 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, as implemented, provides lab directors with a means to fund projects they consider to be a priority in four allowable categories: (1) basic and applied research, (2) technology transition, (3) workforce development, and (4) revitalization, recapitalization, or repair or minor construction of lab infrastructure  These projects include those not specifically tied to defined requirements, outside of the normal 2-year budget planning process  The authority directs the Secretary of Defense to establish mechanisms under which lab directors may use an amount of funds equal to not less than 2 percent and not more than 4 percent of all funds available to the defense lab for projects under the four allowable categories  Further, lab directors are permitted to obtain additional funding by charging customers a fixed percentage fee that may not exceed 4 percent of costs  Direct Hire Authorities  These authorities provide lab directors with a streamlined and accelerated hiring process  Congress has enacted four types of direct hire authorities since 2008, which help labs compete with private industry and academia for high-quality scientific, engineering, and technical talent  Specific types of direct hire authorities include hiring: (1) candidates with advanced degrees; (2) candidates with bachelor’s degrees; (3) veterans; and (4) students currently enrolled in graduate or undergraduate science, technology, engineering, and mathematics (STEM) programs , Laboratory Enhancement Pilot Program  This authority provides methods for effective lab management operations  Section 233 of the National Defense Authorization Act for Fiscal Year 2017 established a pilot program for lab directors to propose alternative and innovative methods that might lead to more effectively managing labs, and authorized lab directors to waive any regulation, restriction, requirement, guidance, policy, procedure, or departmental instruction that would affect implementation of these methods, unless such implementation would be prohibited by a provision of an existing statute or common law  Micro-purchase Authority  This authority facilitates the purchasing process for labs  The FAR states a preference for government agencies to purchase and pay for micro-purchases of supplies or services using the government-wide commercial purchase card up to and at the micro-purchase threshold, but micro-purchases may be conducted using any of the simplified acquisition methods  This facilitates the ability of lab officials to quickly and easily acquire needed items for their activities and reduce the administrative costs associated with such small purchases  While the FAR micro-purchase was generally $3,500 during our review, Congress increased it to $10,000 for activities of the science and technology reinvention labs in Section 217 of the National Defense Authorization Act for Fiscal Year 2017  As we found in June 2018, the federal government spends approximately $137 billion annually government-wide on research and development (R&D) to help further agencies’ missions, including at federal labs  From fiscal years 2015 to 2017, DOD, Energy, and NASA represented three of the top four federal agencies with the highest annual federal R&D spending, accounting for about 66 percent of total federal R&D spending on average, as shown in Figure 3  While the labs primarily support the agencies that directly fund them, DOD, Energy, and NASA research entities also collaborate extensively to support activities of shared interest  For example, DOD and NASA research centers have collaborated to develop hypersonic vehicle capabilities  Further, Energy’s national labs help provide critical national security capabilities for DOD and support NASA’s deep space mission radioisotope requirements  In 2017, Energy reported performing about $2 6 billion of work per year from fiscal years 2011 through 2015 for other federal agencies and other customers, including DOD  Most defense labs have used the selected authorities since 2008, but their use has sometimes been limited for a variety of reasons  According to lab directors, this is because of DOD legal and policy restrictions and stakeholder concerns  For example: Use of the laboratory initiated research authority was limited by DOD’s military construction funding and financial management policies  Use of the direct hire authority was limited, in part, by personnel- related delays, security clearance challenges, and military hiring restrictions  Use of the laboratory enhancement pilot program was limited by stakeholder uncertainty about how to use this authority effectively  Use of the increased micro-purchase authority was limited by stakeholder concerns about the authority’s potential effect on small businesses  We found that most defense labs have used the laboratory initiated research authority  Twenty-three of 31 of respondents to our survey— about 74 percent—reported obligating funds under this authority  However, we found that most labs are not using the full 4 percent of all funds available to each lab, or charging customers the full fixed percentage fee of 4 percent of costs, as allowed by law  Specifically, we found that, as of September 2018: Navy labs reported charging customers a percentage fee of about 2 percent of costs as of fiscal year 2018  Prior to this, Navy labs only charged a 1 percent fixed fee on these costs  Because Navy labs are working capital funded organizations, they can use payments from customers for goods delivered or services performed  Army labs reported using between 2 and 3 percent of all funds available to the lab for projects under the four allowable categories and charging customers a fixed fee of between zero and 3 percent of costs to fund such activities  Only the Air Force Research Laboratory reported using the full 4 percent of all funds available to the lab  According to agency officials, the lab is using 3 percent of all funds available to the lab and is allowing individual technology directorates the option to use the additional 1 percent of funds available  In fiscal year 2018, three of the lab’s nine technology directorates chose to use this additional 1 percent  However, the lab has not charged customers a fixed percentage fee on their costs at all  As figure 4 shows, in fiscal year 2017, the aggregate fixed percentage fee charged by labs in each of the military departments totaled under the full 4 percent allowed by law for each funding source  Decisions to charge lower percentages are decisions to forego additional potential funding, although agencies have various reasons why this can happen, as we will discuss later  In total, DOD reported that this authority provided almost $300 million to labs in fiscal year 2017 and funded more than 1,750 projects across the four allowable categories, as Figure 5 illustrates  We previously found, in June 2017, that the laboratory initiated research authority provides defense lab directors with limited flexibility to initiate science and technology projects  These projects include those that are not road mapped or tied to defined requirements outside of the normal 2- year budget planning process, and are focused on both near- and long- term needs  For this review, defense lab officials we interviewed stated that the laboratory initiated research authority enables their scientists and researchers to pursue projects not necessarily tied to requirements and provides necessary funds for workforce development and lab infrastructure projects  Further, as shown in Figure 6, lab directors we surveyed generally view the authority as both fostering innovation and increasing efficiency across the four allowable categories on which funds can be used  In accordance with the one of the statutory purposes for the use of the funds, lab directors have developed new, innovative technologies using this authority  For example, DOD reported that: In fiscal year 2017, the Naval Surface Warfare Center, Crane Division, developed and fielded a solution to an urgent requirement for defeating small unmanned aerial vehicles that attack Navy assets or surveil naval activities  The center delivered this technology to the warfighter in May 2017 just 7 weeks after the Navy submitted the requirement  The Army Research Laboratory used the authority to fund a project that eventually developed a material that could increase the speed and lower the power needs of future generations of computer chips, thereby supporting Army networks  The Navy invested more than $700 thousand in laboratory initiated research authority funds to commission a Ballast Water Research Lab at Naval Surface Warfare Center, Carderock Division  Through the use of this new facility, engineers will be able to study ways to treat ballast water to prevent introduction of non- native aquatic species into a new environment that can be disastrous for the marine life that already inhabit that environment, and ensure that the Navy is able to meet various port regulations around the world for its ships  The Air Force Research Laboratory invested funds in fiscal year 2017 to renovate an existing facility to provide high performance computing capability to aid the rapid development of “game-changing” technologies and weapon systems  Officials at the Army’s Space and Missile Defense Command Technical Center noted they used the laboratory initiated research authority for the first time in fiscal year 2018 because the current executive director, who assumed the position in 2017, prioritized implementing this authority  Most of the Center’s planned investments are focused on workforce development and laboratory infrastructure projects; officials cited a high energy laser technology lab as one of the projects being supported by the revitalization, recapitalization, or minor military construction portion of this authority  Although the majority of defense labs reported using the laboratory initiated research authority, interviews we conducted throughout our review, along with other DOD reports, identified certain obstacles that have, at times, impeded wider usage  DOD-wide military construction funding restrictions  DOD restrictions limit the amount of laboratory initiated research authority funds that labs can spend on lab infrastructure  DOD’s limit is $6 million for the revitalization and recapitalization projects that can be funded under the laboratory initiated research authority  Lab officials stated that this amount is often insufficient to construct advanced lab facilities  Air Force Research Laboratory officials indicated that it is nearly impossible to construct lab facilities for less than $6 million  Officials at the Army’s Aviation and Missile Research, Development and Engineering Center echoed this sentiment and noted that they have primarily used funds to renovate existing buildings rather than fund new lab facility construction  In January 2017, the Defense Science Board identified lab infrastructure challenges, including that the average age of research and development facilities was nearly 50 years  Further, the Board reported that the labs are usually not successful in competing against broader service needs for military construction funds  Air Force does not charge customers a fixed percentage fee of costs  The Air Force Research Laboratory reported that it is not charging customers the allowable fixed percentage fee of costs to fund science and technology activities because it does not have a mechanism in place to do so  Air Force Research Laboratory officials estimated the lab would collect approximately $3 million a year if the lab charged customer activities the maximum allowable fee (4 percent)  Air Force financial management officials stated that the service’s accounting system does not currently have an automated capability to transfer the allowable percentage fee of costs to a central account at the Air Force Research Laboratory  This lack of capability, officials noted, creates a significant administrative burden for charging these fees  The officials stated that they have not yet estimated the cost to add an automated capability  Although it is possible for the Air Force Research Laboratory to charge customer work orders manually—outside of the Air Force’s accounting system—officials with the Office of the Assistant Secretary of the Air Force for Financial Management and Comptroller perceive that the resources (time and people) required to manage such a process would be cost prohibitive  However, according to these officials, the Air Force has not assessed the costs required to improve the accounting system to do so, nor has it identified the potential benefits any improvements would provide  Federal internal control standards state that changes in condition affecting an entity and its environment often require changes to the entity’s internal control system, as existing controls may not be effective for meeting objectives (or addressing risks) under changed conditions  Further, these standards state that any internal control deficiencies require further evaluation and remediation by management  By not assessing the potential costs and benefits related to the options for collecting these allowable fees, the Air Force could be missing out on a potential source of funding to support its needs  DOD lacks clear guidance on how the Navy should use the initiated research authority for some infrastructure investments within the Capital Investment Program  In our review of DOD documentation, we found that, among the military departments, Navy labs funded recapitalization and revitalization projects using the laboratory initiated research authority the least  As recently as early 2017, a DOD-commissioned study found that defense labs face substantial infrastructure deficiencies that it has not yet identified funding to address  In fiscal year 2017, Navy labs invested $7 3 million in lab recapitalization projects, compared to $32 9 million and $53 7 million at the Air Force and Army, respectively  Navy lab officials told us that their ability to fund lab recapitalization and revitalization projects using funds available under the laboratory initiated research authority is limited because they have not been provided with clear guidance as to whether and how to use the laboratory initiated research authority within the Capital Investment Program of the Navy Working Capital Fund  Some Navy lab officials stated that they have found ways to use the initiated research authority for certain infrastructure investments  These officials stated that they used authority outside of the Capital Investment Program of the Navy Working Capital Fund, for instance, for projects below applicable thresholds because using the authority within the Program creates a bureaucratic and financial burden for them  For example, officials at two separate warfare centers—Naval Surface Warfare Center, Crane Division, and the Naval Air Warfare Center, Aircraft Division, noted that they did not expend funds in either fiscal year 2016 or fiscal year 2017 for recapitalization and revitalization projects  Both cited the Capital Investment Program as a significant barrier to their desired use of the laboratory initiated research authority  Officials from the Office of Budget, within the Office of the Assistant Secretary of the Navy for Financial Management and Comptroller agreed that, to date, clarifying guidance on the use of the laboratory initiated research authority within the Capital Investment Program has not been issued, effectively limiting the extent to which the labs can use it for infrastructure needs  According to these officials, the Office of the Secretary of Defense (OSD) Comptroller—in coordination with the Office of Financial Policy and Systems within the Office of the Assistant Secretary of the Navy for Financial Management and Comptroller—is responsible for developing the clarifying guidance their office has sought  This persistent lack of guidance on whether or how Navy labs should use the laboratory initiated research authority within the context of the Capital Investment Program presents an opportunity cost  Namely, the Navy’s labs have missed out on, and continue to miss, opportunities to invest in needed improvements to its aging lab infrastructure  The Army requires its laboratories to apply similar percentages to what is refers to as “Army direct appropriations” and “customer funds ” The Army requires that the percentage fee applied to direct appropriations not vary from the percentage fee applied to customer funds by more than 1 percent  The Army implemented this policy to maximize the laboratory initiated research authority’s effect on its 17 laboratories  However, the Office of the USD(R&E) reported in March 2018 that the policy was having a significant limiting effect on the breadth and scope of activities executed under this authority  Similarly, we found that the policy may, in practice, create a disincentive for Army lab directors to use the authority  In their responses to our survey, Army lab directors, representing key capability areas, acknowledged their concern about the percentage fee they assessed on customer funds affecting their ability to increase or maintain their customer bases  Further, some Army lab directors reported assessing a lower percentage fee on customer funds than allowed, which could help retain customers that might otherwise be driven away with higher assessed fees to carry out activities  As a result, these labs generally are setting a lower percentage fee on their directly appropriated funds, thereby lowering the overall laboratory initiated research funding available to them  Nonetheless, the Army has not assessed its policy to determine whether changes are needed to eliminate these disincentives  Continuing to operate without such an assessment could result in Army labs using the laboratory initiated research authority to fund fewer self-initiated projects—with the downstream effect that fewer new technologies for warfighters are available  The Navy applies a consistent fixed percentage fee of costs across its labs  Within the Navy, senior leadership has set the fixed percentage fee of costs the labs charge on customer funds at 2 percent  A senior Navy science and technology official stated that Navy leadership set a uniform fixed percentage fee to charge to customer activities across the Navy lab enterprise, in part, to ensure the labs were not inadvertently competing against one another for customer funds  For example, without a uniform rate, a Navy warfare center could offer a lower fee to entice a customer to use it rather than another center  The use of a fixed percentage fee facilitates program offices selecting warfare centers on the basis of best available match in capabilities  On the other hand, the Navy’s fixed 2 percentage fee of costs does limit—by half, as compared to the maximum 4 percent allowable—the amount of fees that Navy labs can collect  Consequently, several Navy lab directors told us that they would like to have the ability to increase the fixed percentage fee of costs above the Navy’s 2 percent to provide their labs with additional resources they said they need for innovation-related investments  Among the lab directors that responded to our survey, 30 of 31 replied that their lab had used at least one of the four types of direct hire authorities previously discussed since fiscal year 2014  Officials view direct hire authority as allowing the labs to compete with private industry for qualified applicants  Lab directors reported they generally believe that each type of direct hire is extremely or very useful for fostering innovation and increasing efficiency, as shown in Figure 7  Selected Officials’ Testimony on the Value of Direct Hire Authority: The U S  Army Engineer Research and Development Center “was able to meet this important goal [of annually hiring more than 160 new researchers] in large part because of its direct hiring authorities, which save time, effort, and costs, and allow the organization to more effectively hire the best and brightest minds available ” – Dr  Jeffrey P  Holland, Past Director, U S  Army Engineer Research and Development Center, in testimony before the Senate Committee on Armed Services (Emerging Threats and Capabilities Subcommittee), May 3, 2017  “The Air Force’s ability to recruit, retain, and develop the STEM workforce is vital toward building the future Air Force; Congress has been greatly supportive of these efforts…the addition of direct hire for candidates has been extremely useful in hiring qualified scientists and engineers in less than half the time of traditional hiring methods ” – Jeffrey Stanley, Air Force Deputy Assistant Secretary— Science, Technology and Engineering in testimony before the House Committee on Armed Services (Emerging Threats and Capabilities Subcommittee), March 14, 2018  Although participation in the laboratory enhancement pilot program is open to the DOD labs—and 19 of the 31 lab directors, or 61 percent, that responded to our survey reported they were participating—to date, only the Navy has formally established a pilot program for its labs  The Army and Air Force have not yet used this relatively new authority  A senior Navy science and technology official told us the Navy took important steps to facilitate the implementation of that service’s pilot program  According to the Navy official: The Office of the Deputy Assistant Secretary of the Navy for Research, Development, Test and Evaluation led the effort across the Navy labs, compiling—from each lab’s submission—a single list of proposals to forward to Navy leadership that would apply to all participating Navy labs  The Navy pursued a three-phased approach with its pilot program, with Phase 1 primarily focused on contracting and acquisition policy- related matters  Senior Navy research and development officials perceived these matters as being the easiest from which to obtain buy-in from Navy policy officials and attorneys, as well as Navy leadership  Phase 2 will include proposals related to Information Technology systems for research and development networks, while Phase 3 will most likely address personnel issues  Navy research and development officials deferred proposals— including information technology network enhancements—that might require extensive discussions with policy officials and attorneys stakeholders across the Navy  These proposals were pushed back to allow time for those stakeholders to see how the pilot program was being implemented and executed by the labs  None of the Army and Air Force labs has yet established a laboratory enhancement pilot program  Consistent with Army policy, the Medical Research and Materiel Command and the Space and Missile Defense Command Technical Center submitted proposals; however, they have yet to establish a pilot program  The Army’s Research, Development and Engineering Command, with input from its subordinate labs and engineering centers, developed a list of lab enhancement proposals but, as of September 2018, had yet to formally submit these final proposals to Army leadership for approval  These include initiatives in business operations, contracting, finance, information technology, and personnel management  A senior Army science and technology acknowledged that organizations across the military department have concerns about providing the labs with too much autonomy to use this new authority  Air Force Research Laboratory officials said they previously submitted a list of approximately 30 proposals to the Defense Laboratories Office in September 2017, but ultimately pulled back those requests because of stakeholder concerns within the Air Force  Specifically, officials with the Office of the Deputy Assistant Secretary of the Air Force for Science, Technology, and Engineering stated that the Air Force Materiel Command, to which the lab is a subordinate organization, had not seen the proposals before they were submitted  In addition, these officials identified concerns about how various stakeholders throughout the Air Force—such as those from financial management and personnel—would react to these proposals  These proposals could potentially sidestep the stakeholders’ oversight function of related lab activities  A senior Air Force Research Laboratory official stated that the lab re-submitted its proposals to the Air Force Materiel Command and that Air Force leadership was still reviewing them at the time of this report  Twenty-six of 31 labs directors—84 percent—reported having used the $10,000 micro-purchase threshold authority granted by Congress in 2016  However, we found that contracting and small business management officials’ concerns with this authority have created implementation challenges at some defense labs  For instance, a senior Navy official indicated that multiple stakeholders from across the Navy—including its Office of Small Business Programs—raised concerns about the authority’s potential impact on small businesses as micro-purchasing allows defense labs to bypass small business set asides  Several labs reported similar stakeholder concerns that prevented implementation of the micro-purchase threshold increase  At the same time, however, lab officials we interviewed expressed the view that the increased threshold will be beneficial, consistent with their opinions about the laboratory enhancement pilot program  For example, officials at the Naval Research Laboratory stated that increasing the threshold to $10,000 allows their scientists and engineers to directly purchase necessary equipment and materials through simplified procedures  They identified examples of projects that had been delayed by as much as several months because scientists and engineers used other than simplified acquisition procedures to purchase a relatively inexpensive piece of equipment, such as a specialized microscope, because the cost was above the previous threshold of $3,500  Similarly, the Army’s Armament Research, Development and Engineering Center reported that the micro-purchase threshold increase enables the lab to use simplified acquisition procedures for more items  As a result, they noted that the new authority increases efficiency by reducing contracting time and cost for those additional items  The Navy’s Space and Naval Warfare Systems Center Atlantic similarly reported that requirements, which were previously procured using other than simplified acquisition procedures, took up to 60 to 90 days to procure, while it took as little as 3 to 4 days under this new authority, which enabled its scientists and engineers to purchase materials needed for critical, time sensitive projects  However, lab officials acknowledged that the $10,000 micro-purchase threshold authority—like the laboratory enhancement pilot program—is too new to fully understand how it will increase efficiency and foster innovation over the long term  DOD sponsors several research centers, which are governed through noncompetitive agreements, including contracts  These centers provide the department with access to scientific experts employed by universities and other non-profit organizations  Scientists employed by these external to DOD research centers—specifically, three lab FFRDCs and 13 UARCs—execute DOD-funded science and technology development projects in emerging technical areas  DOD staff oversee these centers using routine oversight of funded research tasks and comprehensive reviews, which help DOD determine whether the centers’ funding should continue  DOD and research center officials told us that their ability to authorize work at the FFRDCs that DOD sponsors is limited by legislative restrictions on the staffing levels at these centers, as well as by infrastructure modernization challenges they face  DOD sponsors three research and development FFRDC labs that were established under noncompetitive procedures  Two of the three lab FFRDCs are operated by universities and one is operated by a nonprofit company  DOD also has contracts with 13 UARCs that fulfill a similar scientific role as the lab FFRDCs, while also differing from them in other respects  These differences are described in more detail in table 1  DOD’s contractor-operated research centers received about $1 3 billion annually in DOD funding in fiscal year 2016 and fiscal year 2017, according to DOD data  The two largest research and development FFRDCs, the Lincoln Laboratory and the Software Engineering Institute, received about 67 percent of total research center funding from DOD in 2017  UARCs received an average of $27 million in DOD funding, which was a 15 percent decrease from 2016  Research centers may also receive work and funding from other federal departments and private companies after obtaining DOD sponsor approval  Appendix II provides an overview of DOD FFRDC and UARC funding in fiscal years 2016 and 2017  DOD Sponsorship and Contract Awards: We reported in 2014 that FFRDCs in the federal government are defined through the sponsoring agreement between the agency and the contractor retained to operate the FFRDC  A written agreement of sponsorship between the government and the FFRDC must be prepared when the FFRDC is established, which may be included in a contract between the government and the FFRDC, or in another legal instrument under which an FFRDC accomplishes effort, or it may be in a separate written agreement  Historically, DOD sponsors retain contractors for many years or decades as FFRDC operators  We found that research centers undertake DOD-sponsored projects and, in some limited instances, scientific projects initiated by centers that are overseen by DOD staff  Individual sponsors enter into noncompetitive contracts with FFRDCs and UARCs  DOD uses noncompetitive contracts to establish or maintain an essential engineering, research, or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center  Scientific Project Funding: We found that project sponsors provide funding to existing contracts  For example, the government issues orders for requirements under Lincoln Laboratory’s indefinite delivery indefinite quantity base contract as funding sponsors approve new projects  Individual project sponsors, along with the primary sponsor, oversee how project funds are spent by the centers  Project sponsors decide whether they will continue to work with these entities based on perceived performance success  This effectively provides an incentive for FFRDCs and UARCS to perform successfully  This work and review cycle is described in Figure 9 below  FFRDCs and UARCs also partner with DOD government-operated labs to plan and execute technology development projects  For example, according to Navy officials, Naval Surface Warfare Center, Carderock Division collaborated with Navy-sponsored UARCs, such as Penn State’s Applied Research Laboratory, to help develop Navy submarine propeller and propulsion designs  Self-initiated Projects: Research center officials said that DOD provides some research centers with limited funds to self-initiate innovative projects  This funding helps the centers ensure that development projects are not limited to just satisfying near-term DOD requirements  Instead, future generations of DOD technologies can be funded  For example, officials at Johns Hopkins University Applied Physics Laboratory proactively conducted work on advanced naval defense technologies in response to similar technology development in adversary countries  Although Navy sponsors did not fund this initial work, they subsequently provided funding in this area after Hopkins’ research identified a risk reduction strategy for the Navy, according to the Johns Hopkins officials  This allowed the UARC to move relatively quickly on a new science and technology project idea  DOD uses 13 UARCs and three lab FFRDCs to obtain direct access to scientific expertise in emerging technical areas, supplementing research conducted at DOD’s government-owned and operated labs  These research centers provide DOD with additional scientific capabilities and the ability to expand quickly into new technical fields  Hiring Scientific Personnel: Although FFRDCs are largely federally funded, they are generally operated, managed, and administered by either a university or consortium of universities, other not-for-profit or nonprofit organization, or an industrial firm, as an autonomous organization or as an identifiable separate operating unit of a parent organization  The contractor operating the FFRDC exercises primary control over its FFRDC’s business concerns, such as personnel policies and compensation  DOD-funded research centers have flexibility in hiring scientists that leverage a parent institution’s expertise in emerging scientific fields  For example, leadership officials at the Army Institute for Soldier Nanotechnologies UARC at MIT and the Software Engineering Institute FFRDC at Carnegie-Melon University noted that projects they have conducted for DOD have benefitted from university experts in fields such as dark matter physics and artificial intelligence  Personnel Compensation: Research center officials we spoke with noted that their workforce policies permit them to flexibly hire, fire, and compensate staff as needed  Although employee salaries are established separately from the government schedule, they are approved by the government  Further, officials noted that university centers typically offer salaries in line with the labor market, but do not attempt to compete on a salary basis with relatively high, unaffordable private sector company salaries  Instead, they compete on the basis of other factors, such as offering scientists the opportunity to work for a prestigious university conducting science and technology research  Research Center Infrastructure: As with personnel matters, research centers have discretion to manage infrastructure in accordance with the policies and procedures of their parent institutions  While one center, Lincoln Laboratory, is located on government property, others primarily reside on property owned or leased by their parent institutions  According to agency officials, DOD contributes funding for the use and repair of these facilities through their contracts with research centers  Officials noted that Lincoln Laboratory uses military construction funding to pay for new buildings as it is located on government property  Trusted Advisor Role: FFRDCs and UARCs function as trusted advisors for the government and operate in the public interest with objectivity and independence  FFRDCs are independent, private-sector, non-profit organization units required to be free from personal or organizational conflicts of interest, as the FFRDCs answer to the government customer  As a result, DOD’s lab FFRDCs perform tasks that are closely associated with the performance of inherently governmental functions and have access to sensitive and proprietary data  Research center officials noted challenges limiting their work providing scientific expertise to DOD  FFRDCs are also limited in executing infrastructure investments  Limitation on Available Work Hours: DOD FFRDCs are limited by an annual ceiling set by Congress on the amount of staff years of technical effort (STE) that may be funded for defense FFRDCs  We previously found in October 2008 these limits were imposed in response to concerns that DOD was inefficiently using its FFRDCs  We found that the STE workload limitation aimed to ensure that FFRDC work was appropriate and limited resources were being used for DOD’s highest priorities  As a result, Software Engineering Institute officials said they decline many DOD programs’ requests for assistance due to the annual work hour limitation  Further, officials at the Office of the Secretary of Defense’s Studies and FFRDC Management Office reported that this limit significantly constrains the use of DOD’s FFRDCs and that DOD customer demand for their services is significantly greater than the annual STE limit  OSD officials indicated that FFRDC related work must be deferred to later years when these limits are reached, since there are no other legally compliant alternatives capable of fulfilling these requirements  Infrastructure: FFRDC officials we interviewed identified infrastructure challenges—including aging facilities and equipment—as hindering their research and development efforts  For example, many buildings at the Massachusetts Institute of Technology (MIT) Lincoln Laboratory are over 60 years old; MIT considers over half of them to be in substandard condition  According to an MIT official, these facilities, located on government property, were not structurally designed for modern research and have relatively poor vibration isolation, resulting in inefficient workarounds or work that could not be performed  Officials from the Defense Laboratories Office noted that the MIT Lincoln Laboratory is unique among DOD’s FFRDCs in that it is operated on government- owned property  A 2013 study, conducted on behalf of the White House Office of Science and Technology Policy, found that lab infrastructure project funding proposals must compete with hospitals, barracks, runways, and roads and, therefore, tend to be lower on the priority list for military construction funding  A 2017 Defense Science Board report and DOD officials we spoke with indicated this continues to be true  While contract research centers have significant flexibility to execute infrastructure work, they are still affected by limited availability of military construction funding  Officials at another center noted that in some instances, DOD sponsors have been unable or slow to provide required secure facilities and equipment within needed time frames  Delays of this nature can affect the research centers’ ability to deliver the technologies or related services needed by DOD  The Department of Energy (Energy) primarily relies on contractor- operated FFRDCs to operate its labs, while the majority of NASA labs and centers are government-operated  Energy’s national labs form the core of the agency’s scientific work and mission  This is in contrast to DOD-funded labs, which constitute a relatively small aspect of DOD’s overall mission  We have previously found that Energy’s labs can use funding for minor infrastructure improvements  NASA centers can also approve and fund certain facility projects, in accordance with NASA policies, and they have encountered significant challenges with aging infrastructure  Also, in some cases, energy and space research centers have significant challenges with hiring replacement staff and competing with private sector employers for staff  Energy’s labs can hire scientific personnel with the flexibility of private companies, while NASA centers were previously provided hiring flexibilities by Congress in 2004 to facilitate staff hiring  While Energy and NASA’s research entities follow their specific governance models, there are broad characteristics common across these agencies as well as DOD  Table 2 illustrates that while research centers are largely government-owned, the government is not always the operator  As we have reported, Department of Energy national labs are primarily operated by for-profit, non-profit and university FFRDC contractors using management and operating contracts, which are competed on a limited basis  Energy’s funding sponsors and headquarters officials are required to reevaluate FFRDC performance in increments not to exceed 5 years by federal acquisition regulations, which inform future decisions to renew the agreement  In 1990, we designated Energy’s contract management—including both contract administration and project management—a high-risk area because of Energy’s inadequate management and oversight of contractors, leaving the department vulnerable to fraud, waste, abuse, and mismanagement  In 2009, we subsequently narrowed the focus of Energy’s high-risk designation to the National Nuclear Security Administration and Office of Environmental Management, which together oversee four national labs  Further, in our 2017 High Risk report, we found that these two agencies had made progress in addressing our contract management concerns, but we identified continued problems with the agencies having sufficient capacity to mitigate contract and project management risks  Also, we found that they had demonstrated little progress in addressing contract management challenges, particularly in the area of financial management  The Department of Energy uses performance-based management and operating contracts, which have been subject to limited competition, with universities, non-profit companies and for-profit companies to operate the national labs on government-owned property  These contractor-operated FFRDCs provide the vast majority of Energy’s science and technology capacity, rather than supplementing the work of government-operated labs like DOD’s FFRDCs  Energy has depended on the expertise of private organizations to execute its science and technology work since the Manhattan Project produced the first atomic bomb during World War II  The Spallation Neutron Source is an experimental research facility at Oak Ridge National Laboratory—a government-owned contractor-operated laboratory  The Spallation Neutron Source includes the world’s most powerful pulsed-neutron sources and provides information about the structure and properties of materials that cannot be obtained by other means  The Spallation Neutron Source is a user facility whereby researchers from universities, national laboratories, and industry submit proposals, which are peer- reviewed and must compete for time at the user facility  The primary focus of each lab varies based on its expertise and facilities  Energy largely oversees its lab contractors through its headquarters program offices, which include the National Nuclear Security Administration, Office of Science, the Office of Fossil Energy, as well as co-located government field offices  Office of Science-sponsored labs primarily support scientific research for energy and physical sciences, while the National Nuclear Security Administration-sponsored (NNSA) labs primarily focus on nuclear weapons and related science and technologies  Energy also oversees its lab contractors’ activities through on-site Energy oversight offices that work alongside lab management at each FFRDC  Some labs specialize in earlier-phase science, while other labs work on later-phase nuclear weapons technologies in addition to earlier-phase science  As Figure 10 shows, these labs are spread across the United States  Energy has only one government-operated and government-owned lab, the National Energy Technology Laboratory  Key differences between Energy’s contractor-operated and government-operated governance models are described in table 3  Energy’s FFRDCs use their own personnel systems, which Energy officials stated provide more flexibility for hiring and retaining qualified staff  Management within these FFRDCs can move staff in or out of scientific areas more quickly than government labs can, thereby providing greater agility to meet Energy’s needs in emerging science areas  For example, Energy’s lab oversight staff at Oak Ridge National Laboratory told us that use of lab contractors’ human resources management systems allows for workforce flexibilities to meet Energy’s needs  While these contractors have leeway in managing their human resources systems, Energy’s headquarters maintains oversight—through its contracting officers—over employee compensation  Energy’s FFRDC contractors manage and operate nearly all of the department’s government-owned national lab facilities—including day-to- day management of government-controlled facilities and real property  Lab operators used funding to complete minor construction projects, which cost $10 million or less  This funding comes from a percentage of science and technology projects’ funding, requires local Energy oversight office approval, and has streamlined project management requirements  In contrast, major infrastructure upgrades are funded through relatively long and complex line-item funding processes, and projects over $50 million are subject to more rigorous project management requirements  Energy’s labs use a small portion of their funding to initiate discretionary projects for science and technologies that will benefit sponsors in the long-term by maintaining the scientific and technical vitality of the laboratories  To maintain and enhance lab expertise, the National Defense Authorization Act for Fiscal Year 1991 authorized Energy’s contractor-operated labs receiving funding for national security programs to use a percentage of lab funds to perform lab-directed R&D of a creative and innovative nature  The actual percentages allowed to be used for lab-directed R&D are subject to Energy’s approval  Energy’s entities sponsor most national lab projects based on their needs and lab expertise  Typically, earlier foundational science projects are funded through a process whereby funding sponsors issue calls for proposals to Energy’s national labs  Interested scientific teams at labs provide proposals to conduct these projects for sponsor consideration  Sponsors then assess proposals for scientific merit and decide which teams receive funding to execute their projects  NNSA provides funding for later-phase nuclear technology development projects to its labs after agreement is made regarding objectives and deliverables for specific projects, according to Lawrence Livermore National Laboratory officials  Despite their flexibilities with regard to hiring and infrastructure decisions compared to government operated labs, Energy’s lab leadership and government oversight officials noted human resource and facilities related challenges, such as: Sufficiently compensating staff located in high-cost of living areas  For example, the labor market of the San Francisco area, where several Department of Energy national labs are located, is highly competitive for employers  Commercial firms offer salaries and compensation that typically exceed those of government-funded, contractor-operated labs, although Energy’s contractors have more pay flexibility than is allowed for Energy’s government employees  Obtaining government clearances in a timely manner  Energy’s NNSA oversight officials and lab management staff, in particular, cited this challenge, which they stated has led to a backlog of people needing clearances  Government hiring freeze constraining overall hiring  Officials at Energy’s government-operated National Energy Technology Laboratory reported that as a result of a government hiring freeze, the lab has increasingly hired private contractor staff to the point that more than half of the total lab staff is now comprised of contractor employees  Major infrastructure challenges at Energy labs  Energy reported in July 2018 that over half of all national lab buildings are in either substandard or inadequate condition  The Energy Inspector General also identified infrastructure modernization as one of Energy’s top management challenges  This finding followed a mandated commission’s report in 2015 that facilities and infrastructure across Energy’s national lab network were hampered by high levels of deferred maintenance and excess facilities  The majority of NASA’s science and technology facilities are operated within the governance framework of government-operated research centers, similarly to most DOD labs  While government-operated, they have been granted additional legislative flexibilities for hiring employees beyond those normally available to government entities  NASA locates its science and technology staff at four government- operated research centers, one contractor-operated FFRDC, and at five NASA centers assisting space and space flight development  These centers and the Jet Propulsion Laboratory—NASA’s sole sponsored FFRDC—execute NASA’s research missions including technology development in exploration and aeronautics  The differences between these two governance approaches are described in Table 4  NASA also works with Johns Hopkins University Applied Physics Lab, a UARC, to develop major space flight missions  The NASA Glenn Research Center—a government- operated laboratory—is currently developing solar electric propulsion technologies intended to allow manned and unmanned spacecraft to be propelled far beyond earth orbit using solar power  This project is developing large, flexible, radiation-resistant solar arrays that can be unfurled to capture solar energy powering fuel-efficient electrostatic thrusters  Scientists expect a system-level flight test within the next decade to demonstrate key technologies supporting NASA’s Lunar Orbital Platform-Gateway project, a platform to mature necessary short- and long-duration deep space exploration capabilities  Headquarters, including funding sponsors providing oversight for their individual projects  Title 51, Chapters 201 and 203 of U S  Code and technology efforts with DOD and other organizations, including use of NASA lab and test facilities  Operated by university contractor having sole source contract  Not permitted to compete against industry, except for operation of an FFRDC  property (originally part of DOD)  5-year contract renewable to 10 years total  Headquarters, including funding sponsors providing oversight for their individual projects  Title 51, Chapters 201 and 203 of U S  Code; 10 U S C  § 2304 (c) (3)(B) ; Federal Acquisition Regulation § 35 017 based NASA oversight staff  sponsors seeking FFRDC assistance with NASA approval  “Lab” as used in this context refers to science and technology organizations equivalent to NASA Research Centers, DOD UARCs and FFRDCs  Mission leadership officials at NASA Headquarters—including the Associate Administrators for Aeronautics Research, Human Exploration, Science and Space Technology—oversee NASA’s research centers as well as the Jet Propulsion Laboratory  These officials are responsible for technology programs providing funds to research centers and the Jet Propulsion Laboratory to support their specific mission areas  NASA’s science and technology project portfolios are based on the requirements and priorities established by NASA’s leaders in collaboration with key stakeholders in academia and industry among others  In planning their science and technology work, NASA’s Glenn Research Center officials noted that NASA research center directors consider the capabilities and resources—including staff and facilities—of other research centers to minimize redundant work  NASA depends on a highly skilled civil servant and contractor workforce to plan and execute its missions  Congress provided NASA with additional human resource authorities beyond those otherwise allowed for federal government personnel through the NASA Flexibility Act of 2004  We found in September 2008 that NASA sought this flexibility to ensure that it could hire and retain the workforce it desired  This law consisted of multiple provisions to address a range of human capital challenges and to strengthen all levels of the workforce  The provisions included incentives—including compensation—to allow NASA to compete successfully in the labor market with the private sector and reshape its workforce more effectively to support the Agency’s mission  NASA also employs a significant contractor workforce across its different centers  Glenn Research Center officials we interviewed stated their portfolio of science and technology projects—and funding—mostly aligns with NASA’s top requirements and priorities  They, along with NASA sponsors, create technology roadmaps and investment plans to determine their future projects  NASA policy requires that NASA’s scientific teams offer proposals for potential research and science and technology projects  This is similar in some ways to how many DOD and Energy centers must find sponsors willing to fund specific technology development projects, rather than receiving technology development funding for a given year  These proposals are reviewed by peer review teams, who identify for selecting officials those proposals they believe have the most scientific merit  Ames Research Center officials said they believe this process can foster innovation, encourage employees to keep skills honed, and mitigate complacency  Glenn Research Center officials said that while most of the work they conduct is for sponsored applied research or advanced technology development, about 2 percent of their science and technology budget is spent on early-stage scientific innovation  Recommended projects of this nature proposed by the research center are typically approved by headquarters officials, according to these Glenn officials  NASA provides technical grants for basic research and applied science to university scientists nationwide on a competitive basis, and also funds similar research done internally at research centers  As with DOD and Energy’s research centers, NASA officials have identified some key operating challenges, including: Aging infrastructure and facilities  The NASA Inspector General listed infrastructure area as one of the top five management and performance challenges facing NASA  Further, the Inspector General identified deficiencies with facilities planning and reported that about 80 percent of facilities at three of four NASA research centers are over 50 years old, while about half of the facilities at the Jet Propulsion Laboratory and the fourth research center are that old  Infrastructure projects and upgrades of $1 million or less are undertaken by research center management instead of at the NASA headquarters level  Construction above this threshold has significantly more requirements and is approved by NASA headquarters  Glenn Research Center officials indicated it is difficult to obtain funding for projects that exceed the minor infrastructure threshold, in part, due competition with major construction of facilities proposals from across the agency for limited funds  As a result, they put most of their efforts into sustaining existing infrastructure  Workforce shortages in key technical areas  As we found in May 2018, NASA has experienced workforce challenges on several major projects such as the Mars 2020 and Europa Clipper projects  Also, over 40 percent of NASA’s workforce is either eligible to retire now or will be eligible in the next 5 years  NASA headquarters officials noted that NASA’s workforce is aging because NASA has a low attrition rate—about 4 percent annually—and high numbers of staff stay several years beyond retirement  Further, in 2017, the NASA Inspector General found gaps in NASA’s workforce planning for specific capability areas and how workforce plans would meet future needs, and recommended that NASA establish standardized guidance defining the data and analyses for these planning efforts  NASA concurred with and identified its plan to implement this recommendation  However, NASA has not implemented this recommendation, according to the NASA Inspector General’s latest semiannual report to Congress  Congress provided DOD lab directors with key authorities to foster targeted, timely investments in the most pressing technology areas  Lab directors have used these authorities—such as laboratory initiated research and direct hire authorities—to varying degrees, but more needs to be done to facilitate innovation and efficiency  Specifically, service specific obstacles in the Air Force, Navy, and Army impede lab directors from capitalizing on laboratory initiated research authority to a greater extent  Service leadership can take actions to better understand and potentially remove barriers to more fully use laboratory initiated research tools  We are making the following three recommendations to DOD: The Secretary of the Air Force should assess the potential costs and benefits of implementing accounting system improvements that would allow the Air Force Research Laboratory to charge customers a fixed percentage fee on provided science and technology activities to the extent allowed under the laboratory initiated research authority  (Recommendation 1) The Secretary of the Navy should clarify whether and how to use the laboratory initiated research authority within the Capital Investment Program  (Recommendation 2) The Secretary of the Army should assess existing Army policy for laboratory initiated research authority and determine whether to implement changes to eliminate disincentives for lab usage of the authority  (Recommendation 3) We provided a draft of this report to DOD, Energy, and NASA for review and comment  Energy and NASA did not provide any comments on the draft report  In DOD’s written comments, reproduced in appendix III, DOD concurred with our three recommendations  Further, in its response to our third recommendation, DOD stated that the Army plans to initiate a study by January 2, 2019, regarding its use of the laboratory initiated research authority  According to DOD, the Army’s study will identify potential opportunities for policy improvements  We are sending copies of this report to the appropriate congressional committees and offices; the Secretary of Defense; the Secretaries of the Army, Navy, and Air Force; the Secretary of Energy; and the NASA Administrator  In addition, the report will be made available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions concerning this report, please contact me at (202) 512-4841  Contact points for our offices of Congressional Relations and Public Affairs may be found on the last page of this report  Staff members making key contributions to the report are listed in appendix IV  This report examines (1) how the Department of Defense (DOD) labs have used selected legislative authorities to foster innovation and efficiency and identify what barriers impede their use; (2) identifies and describes governance models used by selected DOD-sponsored federally funded research centers and university affiliated research centers; and (3) identifies and describes governance models used non-defense labs, specifically at the Department of Energy (Energy) and National Aeronautics and Space Administration (NASA)  To address the first objective, we selected four specific authorities for our review based on previous work identifying science and technology best practices and expedited lab hiring: Laboratory Initiated Research Authority  The authority provided in Section 219 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, as implemented, provides lab directors with flexibility to fund projects in four allowable categories: basic and applied research; technology transition; workforce development; and revitalization, recapitalization, or repair or minor military construction of lab infrastructure  Laboratory Enhancement Pilot Program  Section 233 of the National Defense Authorization Act for Fiscal Year 2017 established a pilot program for lab directors to propose alternative and innovative methods that might lead to more effectively managing and operating labs and authorized lab directors to waive any regulation, restriction, requirement, guidance, policy, procedure, or departmental instruction that would affect implementation of these methods unless such implementation would be prohibited by a provision of an existing statute or common law  Direct Hire Authority  Four types of direct hire authorities authorized by Congress since 2008 are intended to provide a streamlined and accelerated hiring process to allow the labs to successfully compete with private industry and academia for high-quality scientific, engineering, and technician talent  Micro-purchase Authority  The Federal Acquisition Regulation states a preference for government agencies, to purchase and pay for micro-purchases of supplies or services using the government-wide commercial purchase card up to and at the micro-purchase threshold, but micro-purchases may be conducted using any of the simplified acquisition methods  While the FAR micro-purchase threshold was generally $3,500 at the time of our review, Congress increased this threshold to $10,000 for activities of DOD science and technology reinvention laboratories in Section 217 the National Defense Authorization Act for Fiscal Year 2017  Although Congress has provided additional legislative authorities to defense lab directors to address hiring, infrastructure, and technology transition challenges, the authorities that we covered in our review are the ones that our prior and current work have shown are currently, or have the potential to be, the most critical for supporting science and technology reinvention laboratories’ innovation mission within DOD labs  DOD lab leaders use these authorities to flexibly fund projects intended to facilitate research and development; propose alternative and innovative methods that might lead to more effective lab management; directly hire personnel at DOD labs including students currently enrolled in science, technology, engineering, and mathematics (STEM) programs; and expand critical science and technology purchases using simplified acquisition methods  To identify the extent to which DOD laboratories have used these authorities as well as to identify what potential barriers existed to using these authorities, we administered a survey to 44 STRL directors (or their equivalent) to collect information on the use of these specific authorities, their perceptions about the effectiveness of those authorities, and their perceptions about any barriers to using these authorities  The members of the population surveyed were the 44 defense laboratories defined as science and technology reinvention laboratories  For the purposes of our review, we defined laboratories as inclusive of Air Force technical directorates (10), Army warfare centers (17), and Navy warfare centers (17)  We emailed questionnaires to the laboratories beginning in late March 2018, and survey data collection ended in early May 2018, with 31 labs returning completed questionnaires, for an overall response rate of 71 percent at the laboratory level  We took steps to minimize the potential errors that the practical difficulties of conducting any survey may introduce  Nonresponse error can result when a survey fails to capture information from all population members selected into a survey sample  Of the 13 questionnaires not returned, 4 were Army warfare centers, and 9 were Air Force research directorates  Throughout the data collection period, we made multiple follow-up attempts by email and phone to those labs not yet responding  The Air Force Research Laboratory (AFRL) provided a single survey response for the entire laboratory enterprise  Not all returned questionnaires may have answers to every question applicable to a respondent  However, this question-level nonresponse did not exceed one for any of the questions applicable to all 31 labs  Because we selected the entire population of laboratories for our survey, our estimates are not subject to sampling error  We developed our list of the 44 labs in our population in consultation with DOD, and are confident that none were left out, so our or survey has no known sources of coverage error  We conducted pretests of the draft questionnaire with 3 laboratories in the population and made revisions to reduce the possibility of measurement error from differences in how questions were interpreted and the sources of information available to respondents  After reviewing the answers received, we also followed up as necessary with respondents to clarify apparent inconsistencies or other possible misreports, and made changes to responses where corrections were needed  A second, independent analyst checked the accuracy of all computer analyses to minimize the likelihood of errors in data processing  To obtain additional information on this objective, we reviewed relevant legislation which established or amended these authorities and reviewed applicable DOD and service policy documentation  Further, we collected military service related information on the usage of two authorities, such as: Spending data on the use of the laboratory initiated research authority  We gathered this information from DOD-mandated reports to Congress on the use of this authority and military service officials  We determined these data to be reliable based on reviews of agency documentation collected and interviews with agency officials  Data on the usage of direct hire authorities by the service laboratories  We collected direct hire data from each of the military services including the number of direct hire authority candidates hired as well as the number of direct hire positions the laboratories were authorized to hire  We determined these data to be reliable based on reviews of agency documentation collected and interviews with agency officials  We also used select findings from our May 2018 report where we evaluated DOD’s use of hiring authorities, including direct hire authority  More information about the scope and methodology of our prior work can be found in that report  In addition, we also collected information on military service proposals to utilize the laboratory enhancement pilot program authority  To obtain further information on department- and service-level involvement in and perspectives of defense laboratory authorities and challenges, we interviewed officials responsible for the management, execution, and oversight of DOD’s science and technology enterprise, including military service labs  At the Office of the Secretary of Defense and military department headquarters level, those responsible for the management and oversight of science and technology activities, we met with officials from the: Office of the Assistant Secretary of Defense for Research and DOD Defense Laboratories Office; Office of the Deputy Assistant Secretary of the Army for Research and Office of the Deputy Assistant Secretary of the Air Force for Science, Technology, and Engineering; Office of the Assistant Secretary of the Air Force for Financial Office of the Deputy Assistant Secretary of the Navy for Research, Development, Test, and Evaluation; and Office of the Budget, within the Office of the Assistant Secretary of the Navy for Financial Management and Comptroller We also met with military department lab officials responsible for the management and execution of science and technology activities from the: Army Research, Development and Engineering Command; Army Research Laboratory; Army Aviation and Missile Research, Development, and Engineering Air Force Research Laboratory; Naval Research Laboratory; Naval Surface Warfare Center, Headquarters; and Naval Surface Warfare Center, Carderock Division To identify and describe governance models used by selected DOD- sponsored federally funded research centers (FFRDCs) and university affiliated research centers (UARCs), we focused our review on the 3 FFRDCs designated as research and development labs as well as all 13 UARCS sponsored by DOD entities  We reviewed appropriate sections of the FAR language related to FFRDCs and UARCs, DOD guidance for working with FFRDCs and UARCs, relevant contracts, and performance assessments  Further, we met with officials from the office of the Deputy Director, OSD Studies and Federally Funded Research & Development Centers Management and Office to discuss overall FFRDC and UARC management, policies, and challenges facing FFRDCs and UARCs  We interviewed officials at selected research and development FFRDCs and UARCS to discuss their experience conducting DOD research and interactions with their customers, such as defense program executive offices  We met with officials at the two major research and development lab FFRDCs—The Lincoln Laboratory at the Massachusetts Institute of Technology (MIT) and the Software Engineering Institute at Carnegie Mellon University  We also selected a university affiliated research center sponsored by the Army and Navy: The Applied Physics Laboratory at Johns Hopkins University and the Institute for Soldier Nanotechnologies also at the MIT  To identify and describe governance models by non-defense labs, we selected Energy and NASA to focus our efforts  We identified 17 Energy national labs and 4 NASA research centers conducting basic and applied research similar to DOD labs  These agencies, along with DOD, represent 3 of the top 4 agencies in terms of average federal research and development spending from fiscal years 2015 to 2017  In our August 2016 GAO Technology Readiness Assessment Guide, we drew heavily from DOD, NASA, and Energy for best practices, terminology, and examples  This contributed to our decision to focus on Energy and NASA’s research entities in this laboratory governance review  We did not include the fourth agency—the National Institutes of Health—in our review because it is not as similar to DOD  We also reviewed relevant Energy and NASA guidance as well as relevant FAR sections  At Energy, we met with officials from the National Nuclear Security Administration which is semi-autonomous entity within Energy responsible for managing the nation’s nuclear weapons and nuclear security  We also met with Officials from the Office of Science, a program office responsible for supporting energy related fundamental science and research  To gain further insights on operating structures, funding arrangements, and their overall experience we met with lab leadership at selected Energy labs which were chosen based on initial discussions with agency officials and our review of past GAO work: Oak Ridge National Laboratory, Lawrence Berkeley National Laboratory, Lawrence Livermore National Laboratory, and National Energy Technology Laboratory (the sole Energy government owned and operated laboratory) We also met with leadership from Battelle Memorial Institute, which is the sole or joint contract manager for five Energy national labs including Oak Ridge National Laboratory  In addition, Battelle is an integrated subcontractor at Lawrence Livermore National Laboratory  At NASA, we met with officials with NASA’s Science Mission Directorate and Mission Support Directorate to discuss overall research center management and operations  We also leveraged ongoing and recently completed work at GAO to gain additional insight on NASA’s operations such as human capital management  Almost all of NASA’s research, space, and space flight centers conduct research and development activities  However, we focused our review on four research centers where NASA primarily conducts its aeronautics research, which has substantial overlap with DOD activities  To gain additional insight into the experience of lab leaders at NASA research centers, we met with officials at NASA’s Glenn Research Center and Ames Research Center  In addition, we also met with officials at the NASA Jet Propulsion Center, which is the only NASA-sponsored FFRDC  We conducted this performance audit from July 2017 to December 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  Office of the Secretary of Defense (OSD) In addition to the contact named above, Christopher R  Durbin (Assistant Director); Charlie Shivers, III (Analyst-in-Charge); Emily Bond; Lorraine Ettaro; Carl Ramirez; Sylvia Schatz; Sean Seales; Brian Smith; and Robin Wilson made significant contributions to this report 
Report 2:  During an inspection of a mine in Tennessee, a nonprimacy state, OSMRE determined that the operator had not correctly reclaimed a portion of the mine because the slope of the regraded area was too steep, according to an OSMRE official  For the reclamation work that would be needed to regrade that area, OSMRE determined that the operator needed to provide an additional financial assurance of $272,000  Under SMCRA, OSMRE is required to evaluate each primacy state’s coal program annually to ensure that it complies with SMCRA  SMCRA includes a requirement that the regulatory authority secure necessary financial assurances to assure the reclamation of each permitted mine site  While OSMRE’s directive on oversight of state and tribal regulatory programs does not instruct the agency to review state regulatory authority calculations of financial assurance amounts, it instructs OSMRE to focus on the state programs’ success in achieving the overall purposes of SMCRA  For example, OSMRE, in conducting its oversight, is to evaluate the states’ effectiveness in successfully reclaiming lands affected by mining and in avoiding negative effects outside of areas authorized for mining activities  If OSMRE’s review of a state program identifies an issue that could result in the state not effectively implementing, administering, enforcing, or maintaining all or any portion of its approved coal program, OSMRE can work with the state regulatory authority to develop an action plan to correct the issue  If a state regulatory authority does not take the necessary corrective action, OSMRE may begin the process of withdrawing approval for a part or all of the state’s primacy  In addition to annually evaluating state programs, OSMRE can conduct national or regional reviews on specific topics  For example, OSMRE conducted a national review in 2010 that examined how state regulatory authorities calculated the required amount of financial assurances for coal mine reclamation  The review examined financial assurance practices in 23 states and reported that on the basis of the sample of mining permits reviewed, OSMRE was unable to determine if the amount of financial assurances was adequate for at least one of the permits it reviewed in 10 of the 23 states  Among the potential issues OSMRE identified were errors in the methods state regulatory authorities used to calculate financial assurance amounts and insufficient information in the reclamation plan upon which to calculate reclamation costs  OSMRE has worked with the 10 state regulatory authorities to address the financial assurance issues identified in the 2010 review  For example, OSMRE’s review found that the regulatory authority in Pennsylvania did not secure sufficient financial assurances to complete reclamation plans, in part because amounts were not calculated based on the actual sizes of the areas excavated for mining  In August 2014, OSMRE and Pennsylvania’s regulatory authority agreed to an action plan to ensure that the financial assurances for all active and new permits would be calculated using the actual sizes of the excavated areas  According to an OSMRE official, as of February 2017, the state regulatory authority had recalculated the financial assurance amount for all mines and had secured the additional financial assurances needed from operators of all but two of the mines  State officials said in October 2017 that they were continuing to work to obtain the assurances required for the two mines  OSMRE’s 2010 review also found that financial assurances in Kentucky were not always sufficient to cover required reclamation costs, in part because the method Kentucky’s regulatory authority used to calculate financial assurance amounts did not factor in all costs, such as the cost of moving equipment to and from the reclamation site  In February 2011, OSMRE and Kentucky’s regulatory authority signed an action plan identifying steps needed to address the issues OSMRE had identified  However, in May 2012, OSMRE determined that the state regulatory authority’s proposed changes to its method for calculating financial assurance amounts was an improvement but would not result in the authority obtaining sufficient funds to cover required reclamation  As a result, OSMRE initiated the process of revoking Kentucky’s primacy for this aspect of its program  In response, Kentucky implemented regulations to increase the minimum financial assurance required  The regulations also required the state regulatory authority to evaluate financial assurance amounts every 2 years to determine whether they need to be increased, among other things  The state regulatory authority sent a set of program amendments to OSMRE designed to address the identified deficiencies, some of which OSMRE is currently reviewing  OSMRE and state regulatory authorities face a number of challenges in managing financial assurances for coal mine reclamation—including those related to self-bonding, unanticipated reclamation costs, and the financial stability of surety companies—according to federal and selected state regulatory authority officials, representatives from organizations associated with the mining and financial assurance industries, and representatives from environmental nongovernmental organizations whom we interviewed  Challenges facing OSMRE and state regulatory authorities related to self- bonding include the following: Not knowing the complete financial health of an operator  The information federal regulations require operators to provide to regulatory authorities may provide an incomplete picture of the financial health of an operator, according to some parties we interviewed  For example, the financial information that operators provide reflects their past financial health, which may not reflect the operators’ current financial position, according to OSMRE’s response to the 2016 petition seeking revisions to its self-bonding regulations  In addition, if an operator applying for a self-bond is a subsidiary of another company, the operator is not required by regulation to submit information on the financial health of its parent company  While the operator applying may have sufficient financial assets to qualify for self-bonding, if its parent company experiences financial difficulties, the operator’s assets may be drawn on to meet the parent’s obligations, which could worsen the financial health of the self-bonded operator  In addition, according to OSMRE officials, even if OSMRE or a state regulatory authority were to become aware that an operator’s parent company was at financial risk, it would be difficult for the agency to deny the operator’s request for a self-bond because eligibility is specific to the entity applying for the self-bond, according to regulations  OSMRE could change its self-bonding regulations to require more information, according to OSMRE officials  However, the financial relationships between parent and subsidiary companies have become increasingly complex, making it difficult to ascertain an operator’s financial health on the basis of information reported in company financial and accounting documents, according to officials  When OSMRE first approved its self-bonding regulations in 1983, it noted that it was attempting to provide rules that would allow self-bonding without necessitating regulatory authorities to employ financial experts to determine which companies should be allowed to self-bond  However, according to OSMRE officials, financial expertise is now often needed to evaluate the current complex financial structures of large coal companies, which was not envisioned when the regulations were developed  Difficulty in determining whether an operator qualifies for self- bonding  The regulatory authority in a given state may not be aware that an operator had self-bonded in other states, making it difficult for the agency to determine whether the operator qualifies for self- bonding, according to some parties we interviewed  Operators are only allowed to self-bond for up to 25 percent of their net worth in the United States, according to regulations  Regulatory authority decisions on accepting self-bonds generally focus on assessing activities occurring in a specific state, not nationwide, according to the Interstate Mining Compact Commission  As a result, the state regulatory authority or OSMRE may know whether an operator has applied for self-bonds in other states that if approved would exceed 25 percent of its net worth in total  Difficulty in replacing existing self-bonds with other assurances if needed  OSMRE and state regulatory authorities may find it difficult to get operators to replace existing self-bonds with another type of financial assurance when needed, according to some parties we interviewed  If an operator no longer qualifies for self-bonding (e g , if it has declared bankruptcy), federal regulations require it to either replace self-bonds with other types of financial assurances or stop mining and reclaim the site  In either case, however, some parties noted that such actions could lead to a worsening of the operator’s financial condition, which could make it less likely that the operator will successfully reclaim the site  Some parties we interviewed have noted that regulatory authorities may be reluctant to direct the operator to replace a self-bond with another type of financial assurance and may instead allow the operator to keep mining so that any generated revenue could help the operator reclaim the site  For example, in 2015 the Wyoming regulatory authority determined that an operator no longer qualified for self-bonding and ordered it to replace a $411 million self-bond  However, the operator entered into bankruptcy without having replaced the self-bond  In this case, the state regulatory authority determined that reclamation was more likely to occur if the operator continued mining and allowed the operator to do so without a valid financial assurance  The operator replaced its self-bond as a part of its bankruptcy settlement approximately 17 months after the state regulatory authority’s order to replace the self-bond, according to OSMRE officials  However, if a self-bonded operator were to enter bankruptcy and did not secure a financial assurance to replace the self-bond or complete the required reclamation, the state regulatory authority would have to work through the bankruptcy proceedings to obtain funds for reclamation, according to OSMRE’s preamble to its 1983 self-bonding regulations  As a result, the state may recover only some, or possibly none, of the funds promised through the self- bond, and the cost of reclamation could fall on taxpayers  Difficulty in managing the risk associated with self-bonding  The risk associated with self-bonding is greater now than when the practice was first authorized under SMCRA, according to some parties we interviewed  According to SMCRA, the purpose of financial assurances is to ensure that regulatory authorities have sufficient funds to complete required reclamation if the operator does not do so  While SMCRA allows self-bonding in certain circumstances, when OSMRE first approved its self-bonding regulations, the agency did so noting that at the time there were companies financially sound enough that the probability of bankruptcy was small  Furthermore, the regulations stated that the intent was to avoid, to the extent reasonably possible, the acceptance of a self-bond from a company that would enter bankruptcy  However, as previously mentioned, three of the largest coal companies in the United States declared bankruptcy in 2015 and 2016, and these companies held approximately $2 billion in self-bonds at the time, according to an OSMRE August 2016 policy advisory, making it a very different risk landscape than originally envisioned  Following these bankruptcies—and recognizing that the coal industry was likely to continue to face economic challenges for several more years— OSMRE initiated steps in 2016 to reexamine the role of self-bonding for coal mine reclamation  Specifically, as previously mentioned, OSMRE issued a policy advisory in August 2016 noting that given these circumstances, state regulatory authorities should exercise their discretion under SMCRA and not accept new or additional self-bonds for any permit until coal production and consumption market conditions reach equilibrium  OSMRE has reported that it is not likely for that to occur until at least 2021  OSMRE also announced in September 2016 that the agency planned to examine changes to its bonding regulations that would, among other things, help ensure that reclamation is completed if a self-bonded operator does not do so  However, following a review of department actions that could affect domestic energy production, Interior announced in October 2017 that it was reconsidering the need for and scope of potential changes to its bonding regulations  OSMRE officials said that they did not have a timeline for finalizing a decision on potential changes in its bonding regulations  In addition, OSMRE rescinded its August 2016 policy advisory that states take steps to assess whether operators currently using self-bonds can still quality to do so and that states not accept any new self-bonds  Similar issues involving bankruptcies of hardrock mining operators led the Bureau of Land Management to implement regulations in 2001 eliminating the use of self-bonding for hardrock mining  In doing so, the Bureau of Land Management determined that a self-bond is less secure than other types of financial assurances, especially in cases where commodity prices fluctuate  The agency also noted that operators that would otherwise be eligible to self-bond should not have a significant problem obtaining another type of financial assurance  In our previous work examining other types of environmental cleanup, we found that the financial risk to the government and the amount of oversight needed for self-bonds are relatively high compared to other forms of financial assurances  Furthermore, we also previously reviewed federal financial assurance requirements for coal mining, hardrock mining, onshore oil and gas extraction, and wind and solar energy production and found that of these activities coal mining is the only one where self-bonding was allowed  Because SMCRA explicitly allows states to decide whether to accept self-bonds, eliminating the risk that self-bonding poses to the federal government and states would require that SMCRA be amended  Unanticipated reclamation costs, such as those related to long-term treatment for water pollution, may arise late in a mine’s projected lifespan, and the operator may not have the financial means to cover the additional costs, according to OSMRE officials  Under SMCRA, OSMRE and state regulatory authorities are not to approve a permit for a coal mine if the regulatory authority expects the mine to result in long-term water pollution  As a result, since long-term water pollution is not anticipated to occur, the cost of addressing it would not be included in the initial financial assurance that the operator provides  If the regulatory authority later determines that long-term water treatment is needed, the regulatory authority must adjust the amount of financial assurance that the operator is required to provide  Some parties we interviewed have also noted that the costs and duration of long-term water treatment are not well defined and that surety bonds are not well-suited to provide assurance for such indefinite long-term costs  For example, according to the Interstate Mining Compact Commission, surety bonds are designed for shorter-term, defined obligations that have a high certainty for bond release following the completion of reclamation  To help address this challenge, some states have established, or allowed operators to establish, trust funds to help cover such unanticipated reclamation costs  For example, West Virginia established a fund, primarily supported through a tax on the amount of coal mined, to operate water treatment systems on forfeited sites  West Virginia’s regulatory authority is also working to evaluate permits for sites with water pollution to estimate water treatment costs within the state more precisely  Similarly, Pennsylvania allows operators to establish trust funds that are maintained by foundations and monitored by the state regulatory authority and are intended to ensure that there are sufficient funds to cover the costs of long-term water treatment, according to state regulatory authority officials  In addition, the OSMRE-run coal program in Tennessee allows trust funds for water treatment, in part because an assurance system that provides an income stream may be better suited to ensuring the treatment of long-term water pollution than conventional financial assurances, according to an OSMRE notice in the Federal Register  The utility of surety bonds in providing a financial assurance depends on the surety company’s ability to pay the amount pledged if the operator forfeits  OSMRE regulations require that a surety company be licensed to do business in the state where a mine is located  Some parties we interviewed noted that surety companies have declared bankruptcy or experienced financial difficulties in the past and could experience similar difficulties in the future  In addition, two states reported recent issues related to surety companies  For example, state regulatory authority officials in Alabama said that a surety company that had provided surety bonds totaling $760,000 for four mines in that state had gone bankrupt or was insolvent  As of May 2017, the state had collected only $127,000  Similarly, state regulatory authority officials in Alaska said that as of August 2017, the state had not collected any part of a forfeited $150,000 surety bond because the surety company had gone bankrupt  In our previous work examining other types of environmental cleanup, we have found that the financial risk to the government and the amount of oversight needed for surety bonds are relatively low to moderate compared to other forms of financial assurances  Billions have been spent to reclaim mines abandoned prior to the financial assurance requirements SMCRA put in place, and billions more remain  Under SMCRA, self-bonding is allowed for coal mine operators with a history of financial solvency and continuous operation—the only type of energy production or mineral extraction activity we have reviewed for which this is allowed  Bankruptcies of coal mine operators in 2015 and 2016 have highlighted risks that OSMRE and state regulatory authorities face in managing self-bonding—a risk that may be greater today than when self-bonding was first authorized under SMCRA  If a self-bonded operator were to enter bankruptcy and does not provide a different type of financial assurance or complete the required reclamation, the regulatory authority and the taxpayer potentially assume the risk of paying for the reclamation  Although OSMRE said it would examine changes to its self- bonding regulations following recent bankruptcies, Interior recently said that it is reconsidering the need to do so  Because SMCRA explicitly allows states to decide whether to accept self-bonds, eliminating the risk that self-bonding poses would require amending SMCRA  Until such a change is made, the government will remain potentially at financial risk for future reclamation costs resulting from coal mines with unsecured financial assurances  Congress should consider amending SMCRA to eliminate the use of self- bonding as a type of financial assurance for coal mine reclamation  (Matter for Consideration 1) We provided a draft of this report to the Department of the Interior for review and comment  Interior did not provide written comments on our findings and matter for congressional consideration  OSMRE provided technical comments in an e-mail, which we incorporated as appropriate  As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date  At that time, we will send copies to the appropriate congressional committees, the Secretary of the Interior, the Acting Director of OSMRE, and other interested parties  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions, please contact Anne-Marie Fennell at (202) 512-3841 or fennella@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  Major contributors to this report are listed in appendix II  We selected a nonprobability sample of states to examine the Office of Surface Mining Reclamation and Enforcement’s (OSMRE) oversight activities in more detail  We generally selected states that produced the most coal in 2015 but also selected states in order to achieve some variation in factors such as geographic location, the dominant type of coal mining conducted (e g , surface or underground mining), whether the state had primacy, and whether the state allowed self-bonding (see table 2)  In addition to the contact named above, Elizabeth Erdmann (Assistant Director), Antoinette Capaccio, Jonathan Dent, Cynthia Grant, Marya Link, Anne Rhodes-Kline, Sheryl Stein, Guiovany Venegas, and Jack Wang made key contributions to this report 

ground_truth: IHS is charged with providing health care to AI/AN people who are members or descendants of 573 tribes. According to IHS, AI/AN people born today have a life expectancy that is 5.5 years less than all races in the United States, and they die at higher rates than other Americans from preventable causes. The ability to recruit and retain a stable clinical workforce capable of providing quality and timely care is critical for IHS. GAO was asked to review provider vacancies at IHS. This report examines (1) IHS provider vacancies and challenges filling them; (2) strategies IHS has used to recruit and retain providers; and (3) strategies IHS has used to mitigate the negative effects of provider vacancies. GAO reviewed IHS human resources data for the provider positions that the agency tracks. GAO also reviewed policies, federal internal control standards, and legal authorities related to providers in federally operated IHS facilities. GAO interviewed IHS officials at the headquarters and area level and at selected facilities. GAO selected facilities based on variation in their number of direct care outpatient visits and inpatient hospital beds in 2014. Indian Health Service (IHS) data show sizeable vacancy rates for clinical care providers in the eight IHS geographic areas where the agency provides substantial direct care to American Indian/Alaska Native (AI/AN) people. The overall vacancy rate for providers—physicians, nurses, nurse practitioners, certified registered nurse anesthetists, certified nurse midwives, physician assistants, dentists, and pharmacists—was 25 percent, ranging from 13 to 31 percent across the areas. IHS officials told GAO that challenges to filling these vacancies include the rural location of many IHS facilities and insufficient housing for providers. Officials said long-standing vacancies have a negative effect on patient access, quality of care, and employee morale. IHS uses multiple strategies to recruit and retain providers, including offering increased salaries for certain positions, but it still faces challenges matching local market salaries. IHS also offers other financial incentives, and has made some housing available when possible. In addition, IHS uses strategies, such as contracting with temporary providers, to maintain patient access to services and reduce provider burnout. Officials said these temporary providers are more costly than salaried employees and can interrupt patients' continuity of care. However, IHS lacks agency-wide information on the costs and number of temporary providers used at its facilities, which impedes IHS officials' ability to target its resources to address gaps in provider staffing and ensure access to health services across IHS facilities. GAO recommends that IHS obtain, on an agency-wide basis, information on temporary provider contractors, including their associated cost and number of full-time equivalents, and use this information to inform decisions about resource allocation and provider staffing. IHS concurred with GAO's recommendation.

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



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

Report 1: IHS was established within the Public Health Service in 1955 to provide health services to members of AI/AN tribes, primarily in rural areas on or near reservations  IHS provides these services directly through a network of hospitals, clinics and health stations, while also providing funds to tribally operated facilities  These federally and tribally operated facilities are located primarily in service areas that are rural, isolated, and underserved  In fiscal year 2017, IHS allocated about $1 9 billion for health services provided by federally and tribally operated facilities  Federally operated IHS facilities, which received over 5 2 million outpatient visits and over 15,000 inpatient admissions in 2016, provide mostly primary and emergency care, as well as some ancillary and specialty services in 26 hospitals, 55 health centers, and 21 health stations  According to IHS, federally operated IHS hospitals range in size from 4 to 133 beds and generally are open 24 hours a day for emergency care needs; health centers offer a range of care, including primary care services and some ancillary services, such as pharmacy, laboratory, and X-ray services, and are open for at least 40 hours a week; and health stations offer only primary care services on a regularly scheduled basis and are open fewer than 40 hours a week  The 12 IHS area offices are responsible for distributing funds to the facilities in their areas, monitoring their operation, and providing guidance and technical assistance (see fig  1)  In addition, five human resources regional offices assist the area offices in the recruitment and hiring of providers  IHS federally operated facilities employ both federal civil service personnel and Commissioned Corps officers  IHS may pay higher salaries for certain federal civil service providers through the development and implementation of special pay tables, which specify the ranges of salaries that these certain providers can receive  According to IHS officials, the Commissioned Corps officers follow the same process for applying for positions at IHS as federal civil service employees  However, the Commissioned Corps officers are uniformed health professionals whose pay and allowances are different  IHS also supplements its workforce capacity with both temporary and long-term contracts with individual physicians or a medical staffing company  IHS downloads information on all funded and active positions from the Capital Human Resource Management System, an HHS data system used for personnel and payment transactions that IHS began using in 2016 to track all employee vacancies  According to IHS officials, the accuracy of the data is verified quarterly by regional human resources officers  As the IHS health care workforce also includes Commissioned Corps officers—who have a separate personnel system—the information on Commissioned Corps officers assigned to IHS are entered into the Capital Human Resource Management System manually, according to IHS officials  According to the National Rural Health Association, the challenges of rural health care delivery are different than those in urban areas  These challenges include those related to more complex patient health status and poorer socioeconomic conditions, as well as physician workforce shortages  According to the Agency for Healthcare Research and Quality, compared with their urban counterparts, residents of rural counties are older, poorer, more likely to be overweight or obese, and sicker  Those living in rural areas also have greater transportation difficulties reaching health care providers, often traveling great distances to reach a doctor or hospital  Exacerbating these challenges is a relative scarcity of medical providers in rural areas compared to urban areas  For example, the National Center for Health Statistics reported the primary care physician- to-patient ratio in rural areas in 2012 was 39 8 physicians per 100,000 people, compared to 53 3 physicians per 100,000 in urban areas  IHS data demonstrate large percentages of vacancies for providers in the 8 areas in which IHS has substantial direct care responsibilities  As of November 2017, the overall percentage of vacancies for physicians, nurses, nurse practitioners, CRNAs, certified nurse midwives, physician assistants, dentists, and pharmacists in these areas was 25 percent, ranging from 13 to 31 percent across the areas  (See fig  2) However, variation in vacancy rates existed among provider types across IHS areas  For example, while the overall percentage of vacancies for physicians, nurses, nurse practitioners, dentists, and physician assistants each exceeded 25 percent, the vacancy rate for pharmacists was less than 25 percent  In addition, for certain provider types in some areas, more than one-third of the positions were vacant  For example, although 29 percent of the total positions for physicians across these 8 areas were vacant, the vacancy rate ranged from 21 percent in the Oklahoma City area to 46 percent in the Bemidji and Billings areas  (See fig  3 ) As another example, although 27 percent of the total positions for nurses across these 8 areas were vacant, the vacancy rate ranged from 10 percent in the Oklahoma City area to 36 percent in the Albuquerque and Bemidji areas  (See fig  4 ) Similarly, across these 8 areas 32 percent of the total positions for nurse practitioners were vacant, ranging from 12 percent in the Oklahoma City area to 47 percent in the Albuquerque area; 27 percent of the total positions for dentists were vacant, ranging from 14 percent in the Phoenix area to 39 percent in the Bemidji area; and 30 percent of the total positions for physician assistants were vacant, and although 4 of the areas had few such positions (the Albuquerque, Bemidji, Oklahoma City, and Portland areas each had 7 or fewer positions), the percentage of vacancies in the 4 areas with 15 or more such positions ranged from 21 percent in the Phoenix area to 40 percent in the Billings area  In contrast, 13 percent of the total positions for pharmacists were vacant, ranging from 3 percent in the Bemidji area to 17 percent in the Albuquerque area  For more information about the vacancies for specific clinical positions, see appendix I  While sizeable vacancies existed across provider types and areas, the majority of positions in all eight areas were occupied by civilians, and about 13 percent were filled by Commissioned Corps officers who are fulfilling assignments with a minimum 2-year term  The percentages of positions by IHS area that were vacant, filled by civilians, and filled by Commissioned Corps officers as of November 2017 are shown in figure 5  IHS officials told us they have experienced considerable challenges in filling vacancies for providers—as well as negative effects on patient care and provider satisfaction when positions are vacant  According to IHS officials, the rural locations and geographic isolation of some IHS facilities create recruitment and retention difficulties  IHS data indicate that 36 of the 102 IHS facilities, including four hospitals, are identified as isolated hardship (ISOHAR) posts  Agency documentation describes ISOHAR posts as ‘‘unusually difficult, which may present moderate to severe physical hardships for individuals assigned to that geographic location,’’ and states that physical hardships may include crime or violence, pollution, isolation, a harsh climate, scarcity of goods on the local market, and other problems  In addition, IHS has reported that insufficient housing, substandard schools, lack of entertainment opportunities, and shopping centers located more than three hours away are all typical not only of ISOHAR posts, but also of many other IHS facility locations  Officials stated that, especially for job candidates and employees with families, these can be critical factors in choosing whether or not to accept or stay in a position  For example, officials from the Portland Area office told us the Colville Service Unit has experienced challenges recruiting physicians because the service unit is 110 miles away from Spokane, and many of the smaller towns nearby have limited amenities—including limited employment opportunities for spouses and school systems that may not meet the expectations of some prospective employees  In addition to hardships generally associated with rural locations, IHS facilities can experience additional challenges specific to recruiting and retaining providers for facilities on tribal lands  For example, Navajo area officials told us that providers who are non-native or are not married to a tribal member generally must go off the reservation to find housing if it is not provided by IHS  According to IHS, the Navajo Nation is one of the largest Indian reservations in the United States, consisting of more than 25,000 contiguous square miles and three satellite communities, and extending into portions of Arizona, New Mexico, and Utah  Living off the reservation can result in long commutes, contributing to a difficult work- life balance  Furthermore, IHS officials noted, public transportation such as buses or trains do not exist in proximity to most IHS facilities  IHS facility staff told us long-standing vacancies have a direct negative effect on patient access to quality health care, as well as employee morale  Officials from multiple facilities we visited told us they have had to cut certain patient services due to ongoing provider vacancies  For example, officials from the Phoenix Area office told us the Nevada Skies Youth Wellness Center, an adolescent substance abuse treatment center, decreased the number of beds available due to staffing vacancies  Similarly, officials from the Rosebud Hospital stated the facility has diverted obstetrics patients to other facilities since July 2016 due to a shortage of physicians, nurses, and nurse anesthetists  During the diversion, those patients were referred to other hospitals in Valentine, Nebraska, and Winner, South Dakota—about 45 miles away  An official from the Sioux San Hospital said that because of vacancies in the diagnostic testing laboratory, the hospital stopped conducting Chlamydia tests in-house and instead sends specimens out to another laboratory for testing  As a result, the official stated it takes about a week longer to get the test results, which can delay treatment  In addition facility staff we interviewed told us the increased stress and fatigue of providers working to make up for staffing shortages results in decreased employee morale  These staff stated that, in some cases, this stress and fatigue has caused providers to leave IHS  One doctor we spoke with described this dynamic of vacancies begetting additional vacancies as a “never-ending cycle” for the facility  In an effort to recruit and retain permanent employees, IHS has used strategies that are similar to strategies used by VHA and tribal facilities in our review  Specifically, IHS has provided financial incentives, professional development opportunities, and some access to housing  The agency has also taken steps to recruit students and connect with potential applicants through webinars, career fairs, and conferences  IHS offers increased special salary rates for certain health care positions, as well as other financial incentives, such as recruitment and retention bonuses  IHS also offers student loan repayments, in return for health professionals’ commitment to work at IHS for a specified period of time  Special salary rates  IHS offers special higher salary rates for physicians, dentists, nurses, CRNAs, certified nurse midwives, nurse practitioners, optometrists, pharmacists, and physician assistants  IHS officials stated that special salary rates are an important recruitment and retention tool for providers, and that without them, federally operated IHS facilities would be at a competitive disadvantage with the private sector, VHA, and tribally operated facilities  In 2015 IHS reported that recruiting and retaining CRNAs was “an ongoing problem for IHS—mostly due to pay,” and the agency rarely had “a sufficient applicant pool ” IHS reported “CRNA services were integral to IHS operations” and without the ability to recruit and retain these providers, IHS was “at risk of having to curtail services to clients ” As a result, according to IHS officials, the agency developed special salary rates for CRNAs, which became effective on December 31, 2015  As of November 2017, IHS had no CRNA vacancies  However, according to IHS officials, the agency has only developed seven national special pay tables and two local special pay tables for Alaska, as of January 2018, due to a lack of human resources personnel trained in this process  Officials told us only one human resources staff person at IHS is experienced with developing special pay tables, which takes a substantial amount of work  However, they stated that this task is only one of her job responsibilities, and she can complete about one special pay table each year  In comparison, according to an official, VHA has developed and regularly revises over 3,000 special salary rates based on local market conditions  For example, IHS officials stated that Phoenix Indian Medical Center cannot offer salaries that are competitive with VHA because salaries for providers in the Phoenix area are relatively high compared to national salaries, and IHS has not developed local salary rates in the Phoenix market  For example, using pay rates effective January 7, 2018, a nurse just starting a career in the Phoenix area could make $63,871 at VHA (local pay table), versus $44,835 at IHS (national pay table)  Although offering increased salaries is an important strategy that IHS uses for recruitment, IHS still experiences challenges in offering competitive salaries  Officials from two area offices told us the maximum amount for a physician salary or certain nursing salaries were not enough for some potential hires, who sought employment elsewhere  While IHS may seek approval from HHS to exceed the maximum salary of certain pay tables, IHS officials said the approval process can be lengthy, which has resulted in the loss of promising candidates—including emergency medicine, general surgery, radiology, and anesthesiologist providers  Similarly, officials from one area office stated that federally operated IHS facilities have experienced challenges competing with other health care systems in recruiting local health care providers, including tribally operated facilities  For example, officials from the Oklahoma City area office told us their area has four of the largest American Indian tribes in the country running their own health systems  According to these officials, in addition to IHS funds, these tribes use money from other sources to pay health care salaries  IHS officials explained that, as a result, tribes can pay higher salaries and may be able to offer other incentives that IHS is unable to provide  Recruitment, relocation, and retention incentives  IHS may offer recruitment, relocation, and retention incentives  Specifically, for positions that are difficult to fill or for individuals who are unlikely to accept the position without an incentive, IHS may offer potential employees a recruitment incentive up to 25 percent of their annual salary  IHS may also pay a relocation incentive for a current employee who must relocate for a position that would otherwise be difficult to fill  In addition, IHS may pay a retention incentive of up to 25 percent of an employee’s current salary if he or she (1) has unusually high or unique qualifications or if there is a special need of the agency, which makes retention essential, or (2) is likely to leave IHS without the retention incentive  Officials from the Phoenix area office told us IHS facilities use the retention bonuses extensively for nursing staff, in particular, to help match the market pay  IHS also analyzed the recruitment and retention of nurses and, as a result of this analysis, requested an exception to the 25 percent limit on recruitment, relocation, and retention incentives, from the Office of Personnel Management (OPM)  In December, 2017, OPM approved IHS’s request to offer incentives up to 50 percent, and IHS officials told us that they are currently reviewing implementation options  Loan repayment  IHS’s Loan Repayment Program pays provider education loans in exchange for an initial two-year service commitment to practice in health facilities serving AI/AN communities  Recipients agree to serve two years in exchange for up to $20,000 per year in loan repayment funding and up to an additional $5,000 per year to offset tax liability, which IHS pays directly to the Internal Revenue Service  Loan repayment recipients can extend their initial two-year contract on an annual basis until their original approved educational loan debt is paid  In fiscal year 2017, a total of 1,267 providers—about 8 percent of the federal IHS workforce—were receiving IHS loan repayments  This included 434 new two-year contracts, 396 one-year extension contracts, and 437 providers starting the second year of their fiscal year 2016 two-year contract  However, IHS’s Loan Repayment Program is not able to pay for the loans of all providers who request it due to limited funding  According to officials in one area office, this has caused providers to either decline a job offer or leave IHS  According to IHS’s fiscal year 2019 budget justification, in fiscal year 2017, 412 providers employed by IHS who applied for loan repayment, did not receive one  An additional 376 applicants either declined a job offer because they did not receive loan repayment funding or were unable to find a suitable assignment meeting their personal or professional needs  Officials in the Billings Area Office told us several physicians stated during exit interviews that they were leaving because they did not receive the loan repayment funding they hoped to receive  According to area office officials, the Billings area lost 5 physicians in 2 weeks because they were not awarded loan repayments  In addition to its own loan repayment program, IHS has worked with HHS’s Health Resources and Services Administration (HRSA) to increase opportunities for providers to apply for loan repayment through the National Health Service Corps  Specifically, IHS worked with HRSA to increase the number of facilities deemed medically underserved and therefore designated Health Professional Shortage Areas  According to IHS, this resulted in 684 health care delivery sites for placement of National Health Service Corps providers, and the number of placements increased to 443 providers as of August 2016  As of January 2018, according to IHS officials, there were 499 providers serving at 797 eligible sites  Applicants cannot receive loan repayment from more than one program concurrently  Officials from several facilities told us they provide access to professional development opportunities for IHS employees as a retention tool  For example, Northern Navajo Medical Facility (Shiprock) officials said they are sending nurse managers and two to three potential future leaders to the American Organization of Nurse Executive trainings  Officials told us this training allows the nurses to network with private executives and look at fellowships  In addition, Chinle Comprehensive Health Care Facility officials told us they paid for a 2-year residency at University of Texas Health Science Center so one of their dentists could obtain additional training in pediatric dentistry  Officials told us that, in return, the dentist agreed to stay at the Chinle Comprehensive Health Care Facility for 6 years  In addition, Shiprock service unit officials told us they have offered their providers, through a partnership with the University of New Mexico, an online Masters of Science in Public Health program in health management  When housing is limited near IHS facilities, IHS has made some housing available to assist with recruitment and retention of providers  Area officials told us federally operated IHS facilities in the Albuquerque, Great Plains, Phoenix, Billings, and Navajo areas provide some government- subsidized housing for providers and their families  At four of the seven facilities we visited—the Kayenta Health Center, Chinle Comprehensive Health Care Facility, Rosebud Hospital, and Pine Ridge Hospital—we observed some staff housing  Kayenta Health Center  Officials from Kayenta Health Center told us that they provide 158 housing units, from 1 bedroom to 4 bedrooms  In addition, the facility has a 19-unit building, similar to a hotel (fully furnished), for temporary contract providers  Officials said they are considering opening units in this building to permanent employees  Chinle Comprehensive Health Care Facility  Officials from Chinle Comprehensive Health Care Facility told us there are 264, 1 to 4 bedroom housing units available for providers both on its campus and nearby  IHS officials also told us they provide access to 19 parking spaces for camping vehicles  Rosebud Hospital  Officials from Rosebud Hospital stated they provide 150 housing units and are also constructing a 19-unit hotel- style building  They said that most, if not all, candidates from outside of the area ask about housing unit availability when deciding whether to accept a position  Pine Ridge Hospital  Officials from Pine Ridge Hospital told us that IHS also provides 105 housing units for its employees  IHS officials explained the housing is a necessity for on-call providers because staff without on-site housing are required to commute extreme distances in very harsh environments to locate housing outside of reservation boundaries  See figure 6 for examples of government-subsidized provider housing near the Kayenta Health Center, Chinle Comprehensive Health Care Facility, Rosebud Hospital, and Pine Ridge Hospital  See appendix II for information about housing provided by one selected tribe  However, there is a greater demand for housing than IHS can provide  During our site visit, Chinle Health Care Facility officials stated that government-subsidized housing availability to meet employee demand is severely limited at all of their three facilities, and the availability of private housing in the community is “non-existent ” As a result, IHS officials from Chinle told us that some providers commute 60 to 90 minutes to work one-way each day  IHS officials told us that, after conducting a needs assessment in 2016, they determined the unmet need for housing at IHS facilities was 1,100 units  According to these officials, the needs assessment also helped them identify some of the greatest needs for housing  The President’s fiscal year 2017 budget proposal for IHS requested $12 million to build new staff housing units “in isolated and remote locations for healthcare professionals to enhance recruitment and retention ” According to agency officials, based on its needs assessment, HHS provided $24 million to build new staff housing units at the Rosebud and Pine Ridge hospitals in the Great Plains area, at the Crownpoint and Chinle health care facilities in the Navajo areas, and at the Supai clinic in the Phoenix area  IHS has also taken steps to recruit future providers by providing scholarships, externships, internships, and residency rotations to health professional students  Scholarships  IHS’s scholarship program provides financial support to qualified AI/AN candidates in exchange for a minimum 2-year service commitment within an Indian health program  Nearly 7,000 AI/AN students have received scholarship awards since the program started in 1978  The awards include (1) scholarships for candidates enrolled in preparatory or undergraduate prerequisite courses in preparation for entry to a health professions school, (2) pre-graduate scholarships for candidates enrolled in courses leading to a bachelor’s degree, including pre-medicine, pre-dentistry, and pre-podiatry, and (3) health professions scholarships for candidates who are enrolled in an eligible health profession degree program  According to IHS, in fiscal year 2017, there were 805 new scholarship applications submitted  After evaluating the applications, 331 applications were deemed eligible for funding, and the program was able to fund 108 new awards  The IHS Scholarship program also reviewed applications from previously awarded scholars who were continuing their education  In fiscal year 2017, 154 continuation awards were funded  In addition to the scholarship program, according to IHS officials, the agency funds two medical students enrolled at the Uniformed Service University of the Health Sciences each year  Each graduate agrees to a 10-year obligation to IHS after medical school graduation and completion of training  In future years, IHS endeavors to fund two additional medical students at the Uniformed Service University of Health Sciences  Externships and internships  IHS provides scholarship recipients with opportunities to receive clinical experience in IHS facilities  In fiscal year 2017, the agency funded 94 students, who were employed for 30 to 120 workdays per calendar year  In addition, IHS provides externships to students temporarily called to active duty as Commissioned Corps officers through the Commissioned Officer Student Training and Extern Program (COSTEP)  IHS officials said that the agency funded about 60-70 students in COSTEP in 2016  IHS also offers a Virtual Internship program through a partnership with the Department of State  Virtual interns spend 10 hours a week from September through May working remotely on their projects, which have included producing bilingual Navajo and English videos for rural health clinics, developing Navajo-specific health education materials on palliative care, improving behavioral health data collection methods, and creating social media strategies and campaigns for health promotion  For the 2017-2018 academic year, about 15 students are participating in virtual internships with IHS  Residency rotations  IHS service units offer rotation opportunities for medical, nursing, optometry, dental, and pharmacy residents as a recruitment tool because research shows students are likely to stay and practice medicine in the area where they studied  For example, the Oklahoma City area has a Memorandum of Agreement with the Oklahoma State College of Medicine, which permits area officials to annually recruit up to two residents from the current year’s residency class to become federal employees while completing their residency program  For every year that IHS sponsors the residents’ position at the university, the resident has a one-year service obligation  In addition, IHS officials from Chinle stated that the service unit participates in educational agreements with numerous universities and residency programs to host medical students, nursing students, and medical residents for rotations  According to officials, recent graduates from residency programs applying for permanent positions with the Chinle Comprehensive Health Care Facility often cite prior rotations at the service unit, or word of mouth from students or residents who have rotated through the service unit, as a reason for applying  The IHS Pharmacy Resident Program is another recruitment program that offers residency training to pharmacists who are willing to serve in high-need locations  Pharmacy residents who are Commissioned Corps officers are required to complete 2 years of service at an IHS federal or tribal facility  Twenty-six Commissioned Corps and civilian pharmacists participate in the Pharmacy Residency Program  See app  II for information on residency programs at tribally operated facilities  IHS officials said they have conducted webinars and career fairs in an attempt to connect with health professional students  For example, in 2016, IHS conducted two informational webinars to recruit Commissioned Corps applicants to facilities in the Great Plains area with critical clinical vacancies  According to IHS officials, approximately 60 applicants attended the two webinars, resulting in 15 nurse hires  In addition, Nashville area officials stated that the area office conducted a marketing campaign at the National Congress of American Indians Conference  Officials explained that the area office provided information about desirable aspects of living in the Nashville area and collected e-mail addresses and areas of interest from potential job candidates  IHS’s Office of Human Resources also partners with HRSA’s Bureau of Health Workforce by participating in nationwide virtual career fairs to promote the National Health Service Corps scholarship and loan repayment opportunities  IHS has also worked with the Office of the Surgeon General to increase the recruitment and retention of Commissioned Corps officers  In May 2017, the Office of the Surgeon General gave IHS priority access to new Commissioned Corps leads—meaning IHS has at least 30 days to make contact with potential applicants to the Commissioned Corps before other agencies have the opportunity to contact them  According to IHS officials, since being given priority access to Commissioned Corps leads, the agency has made 20 direct clinical care selections, of which 15 have entered on duty  In addition to its recruitment and retention strategies, IHS uses strategies to mitigate the negative effects of vacancies by helping to maintain patient access to services, and helping to reduce provider burnout when positions are vacant  Specifically, IHS provides telehealth services; implements alternative staffing models, including hiring nurse practitioners and physician assistants in lieu of physicians; temporarily assigns Commissioned Corps officers to alternate duty stations as needed; and contracts with temporary providers  IHS’s telehealth services include two agency-wide programs that provide teleophthalmology and telebehavioral health services  Teleophthalmology  The IHS Joslin Vision Network (IHS-JVN) Teleophthalmology Program provides annual diabetic eye exams to AI/AN patients in almost all IHS areas with federally operated facilities  According to IHS, patients’ retinal images are scanned locally and sent to a reading center where doctors interpret the images and report back  Officials told us the IHS-JVN program examined 22,000 patients in 2016  Telebehavioral health  The Telebehavioral Health Center of Excellence provides direct care services through video conferencing to patients at remote facilities from providers at IHS facilities that are able to provide the services  These services are provided in all IHS areas with federally operated facilities, and more than 5,800 patient visits occurred in 2016  Additionally, officials told us there are regional telebehavioral health programs, such as in the Oklahoma City area that, combined with the Telebehavioral Health Center of Excellence, saw over 10,000 patients in 2016  IHS officials stated that patients appreciate the telebehavioral services in their communities, because they are the only behavioral health services available in many communities  The IHS psychiatrist who provides services is located in Oklahoma City because, according to IHS officials, it is easier to recruit providers to a more urban location  In addition to these agency-wide telehealth programs, IHS officials identified multiple other local telehealth arrangements that facility staff have developed to help maintain patient access to medical services  For example, there is a diabetes consultant for the Portland area who conducts telenutrition services  There is also a teledermatology program for the Phoenix Area federal facilities operated out of the Phoenix Indian Medical Center  Additionally, several service units—including Pine Ridge Hospital, Rosebud Hospital, and the Sioux San Medical Center—have contracts for emergency department telehealth services  Figure 7 shows telehealth equipment in the Rosebud Hospital emergency department  Staff from multiple facilities told us they have implemented alternative staffing models to focus on hiring for non-physician practitioner positions because these positions are slightly easier to fill  For example, Northern Navajo Medical Center officials told us the facility, facing an emergency department physician shortage, hired physician assistants and nurse practitioners instead  These officials said they converted two physician positions into four physician assistant and nurse practitioner positions  In addition, Chinle officials stated that they added two physician assistants to the urgent care department due to complaints about patient wait times, and patient wait times have decreased as a result  Officials also mentioned dental therapists as an additional type of clinical professional who may be added to the Chinle Health Care Facility staffing model because the service unit has been unable to recruit and retain enough dentists to meet patient need  IHS officials stated that they have worked with the Office the Surgeon General to deploy Commissioned Corps officers, mainly to the Great Plains area, and have also coordinated voluntary temporary duty assignments of Commissioned Corps officers (within IHS and from other agencies) to temporarily fill staffing shortages or meet other mission- critical needs  IHS officials stated that Commissioned Corps officers may also be temporarily assigned to an IHS site to provide services, such as behavioral health support during a suicide cluster  IHS officials from 9 of the 10 geographic areas with federally operated facilities and all seven facilities in our review told us they regularly use temporary contract providers—such as through locum tenens contracts and contracts with university fellowship programs—to maintain patient access to care when positions are vacant  Locum tenens  Officials from the Kayenta Health Center said they contract with temporary providers to compensate for vacancies, and the facility contracts with about 9 providers who rotate to fill 3 vacant emergency department positions  Officials from the Portland area stated that they use temporary providers when there is a staffing shortage with providers  They explained that the Portland area has provider vacancies that have been open for years, and temporary providers fill these vacancies for an extended period of time, usually with a rotating series of providers  Chinle Health Care Facility officials said temporary providers, when of sufficiently high quality, have been recruited to join the permanent corps of civilian service staff  However, they told us locum tenens can cost between $50,000-$200,000 more annually than permanent physicians’ salaries, exclusive of benefits, depending on the specialties and hourly rates associated with the contracts  They said they are finding that increasingly higher hourly rates are needed to ensure a sufficient supply of high-quality temporary providers  IHS officials at all levels of the agency told us they prefer to hire permanent providers, rather than use locum tenens contracts  Facility officials explained that persistent turnover in temporary staff may jeopardize continuity of care  For example, Sioux San Medical Center officials expressed concern about the quality of the care provided by temporary contractors, as well as the consistency of the care provided because the contractors rotate frequently  IHS officials told us that many providers prefer to be on contract due to the higher compensation rates as a contractor, even when taking federal benefits into account  University physicians  IHS officials explained that area offices may also contract with university fellowship programs to provide visiting providers  For example, according to IHS, the Chinle Health Care Facility has entered into long-term contractual agreements with two academic fellowship programs—University of California-San Francisco Health Program and the University of Utah Global Health Fellowship  Officials told us these programs provide U S  residency- trained, board certified physicians interested in global health to work 6-month assignments alternating with another fellow at an international site  In addition, IHS officials stated that the Navajo area office is collaborating with the University of California-San Francisco and its global health fellowship to assign global health fellows to a Navajo Area site for 6 months out of each year  The officials explained that 24 fellows were placed in Navajo-area facilities in 2017 at costs substantially lower than that of locum tenens contracts  According to IHS, the Great Plains area office has collaborated with the University of Washington’s global health fellowship program to assign global health fellows in Internal Medicine to Pine Ridge Hospital for 11- month placements  Agency-wide information on the extent to which facilities use these temporary providers, and the amount spent on them, is not readily available to IHS leadership  While IHS has agency-wide information on vacancies through the Capital Human Resource Management System, IHS delegates the acquisitions process for temporary provider contracts to the head of each area-level Contracting Office  Therefore, agency-wide information on the number of full-time equivalent employees that are temporary providers working at IHS facilities, as well as the cost of these providers, is not readily available  As discussed, officials we spoke with at IHS facilities told us that temporary providers can cost more depending on the specialties and hourly rates  Without agency-wide information on the extent to which such providers are used, IHS is not fully informed about facilities’ reliance and expenditures on temporary providers or their potential effect on patient care, which is inconsistent with federal internal control standards regarding the availability of relevant information to facilitate management decision making and performance monitoring  Specifically, federal internal controls standards state that agency management should obtain, process, and use quality information to make informed decisions and evaluate the agency’s performance in achieving key objectives and addressing risks  IHS’s lack of agency-wide information on the costs and number of temporary providers used at its facilities impedes its ability to make decisions about how best to target its resources to address gaps in provider staffing and ensure that health services are available and accessible across IHS facilities  Maintaining a stable clinical workforce capable of providing quality and timely care is critical for IHS to ensure that comprehensive health services are available and accessible to American Indian/Alaska Native people  However, despite efforts to recruit and retain providers, IHS continues to face considerable challenges to overcome its long-standing struggle to fill sizeable provider vacancies, including geographic isolation and limited amenities  Although IHS is authorized to offer recruitment and retention incentives, such as loan repayments and subsidized housing, the demand for these incentives has been greater than the agency can meet due to resource constraints  However, more complete information on contract providers could help IHS officials make decisions on where to better target its limited resources to address gaps in provider staffing and ensure that health services are available and accessible to American Indian/Alaska Native people across IHS facilities  We are making the following recommendation to IHS: The Director of IHS should obtain, on an agency-wide basis, information on temporary provider contractors, including their associated cost and number of full-time equivalents, and use this information to inform decisions about resource allocation and provider staffing  (Recommendation 1) We provided a draft of this report to HHS and the Department of Veterans Affairs (VA) for review and comment  We received written comments from HHS that are reprinted in appendix III  HHS concurred with our recommendation  In its comments, HHS stated that IHS plans to update its policies by December 2018 to include a centralized reporting mechanism requirement for all temporary contracts issued for providers  HHS also stated that, upon finalization of the policy, IHS will broadly incorporate and implement the reporting mechanism agency-wide and maintain it on an annual basis  HHS also provided technical comments, which we incorporated as appropriate  VA provided comments on a draft of this report in an email, stating that VA officials continue to work to improve recruitment and retention of providers at VHA to ensure that they have the correct number of providers with the appropriate skills  We are sending copies of this report to HHS, the Department of Veterans Affairs, and appropriate congressional committees  In addition, the report will be available at no charge on GAO’s website at http://www gao gov/  If you or your staff have any questions about this report, please contact me at (202) 512-7114 or farbj@gao gov  Contact points for our Office of Congressional Relations and Office of Public Affairs can be found on the last page of this report  Other major contributors to this report are listed in appendix IV  Appendix I: Provider Vacancies with the Indian Health Service (IHS) IHS data collected in November 2017, included the number of positions and vacancies for several types of providers, including physicians, nurses, dentists, pharmacists, nurse practitioners, certified registered nurse anesthetists, certified nurse midwives, and physician assistants  Most of these positions are in the 8 of 12 IHS areas in which IHS has substantial direct care responsibilities  Vacancies for nurse practitioners, nurse midwives, dentists, pharmacists, and physician assistants are provided in this appendix  Nurse practitioners  Nationwide, 97 of 303 positions were vacant in November 2017, and vacancy rates in the 8 areas in which IHS has substantial direct care responsibilities ranged from 12 percent in the Oklahoma City area to 47 percent in the Albuquerque area  (See fig  8) Certified nurse midwives  Nationwide, 8 of 55 positions were vacant in November 2017  See table 1  Dentists  Nationwide, 81 of 306 positions were vacant in November 2017 and vacancy rates in the 8 areas in which IHS has substantial direct care responsibilities ranged from 14 percent in the Phoenix area to 39 percent in the Bemidji area  (See fig  9 ) Pharmacists  Nationwide, 80 of 637 positions were vacant in November 2017 and vacancy rates in the 8 areas in which IHS has substantial direct care responsibilities ranged from 3 percent in the Bemidji area to 17 percent in the Albuquerque area  (See fig  10 ) Physician assistants  Nationwide, 37 of 125 positions were vacant in November 2017  See table 2  Tribal officials from the Chickasaw Nation and Choctaw Nation described their use of strategies to address vacancies, which were very similar to strategies used by the Indian Health Service (IHS)  Like the IHS, one tribe uses the availability of housing units near its medical facility as a recruitment tool for health care providers  Both tribes that described their strategies to recruit and retain providers told us they use their physician residency program in Family Medicine as a recruitment tool  Availability of housing units near the medical facility  Tribal officials from the Choctaw Nation told us the tribe uses housing units—58 housing units that range from studio apartments to multi- room houses—as a recruitment strategy for providers  The provider housing units are occupied by physicians, as well as by physician residents who need housing during their residency or for medical students doing clinical rotations through the facility  According to tribal officials, a factor they considered in making housing units available for providers was the location of its hospital in a rural area of Oklahoma, in a town with a population of about 1,000, which lacks sufficient housing  In September 2017, tribal officials told us all the available housing units were occupied, and the tribe was in the process of constructing at least two 4-bedroom houses  See fig  11 for photos of a completed multi-room house and one under construction  Offering the housing units to provider staff is also part of the tribe’s overall strategy of offering quality-of-life benefits to attract and retain providers  Implementing Accredited Physician Residency Programs  Tribal officials we interviewed noted that they developed physician training programs—specifically graduate medical education, commonly known as residency training—which they use as an important recruitment tool for physicians  One tribe has implemented its Family Medicine residency program, while the other tribe intends for its Family Medicine residency program to be operational in July 2018  Both residency programs are accredited by the American Osteopathic Association, in addition to the American College of Osteopathic Family Practice for one tribe and the American Council for Graduate Medical Education for the other tribe  One program is accredited for 3 resident physicians per year for a total of 9 physician residents at a time, while the other program is accredited for 4 resident physicians per year  We previously found that physicians may practice in geographic areas similar to those where they complete their residency training  Tribal officials with the implemented Family Medicine residency program told us it is successful in that they hired 7 of the 9 residents who completed the residency program  There is also a retention benefit—current providers have the opportunity to stay up-to-date on the latest medical treatment methods by serving as either mentors or as faculty for the residents  In addition to the contact named above, Kathleen M  King (Director), Ann Tynan (Assistant Director), Kelly DeMots (Assistant Director/Analyst-in- Charge), Sam Amrhein, Kristen Anderson, Muriel Brown, Kaitlin Farquharson, Peter Mann-King, Maria Ralenkotter, Lisa Rogers, and Jennifer Whitworth made key contributions to this report 


Report 2:  During an inspection of a mine in Tennessee, a nonprimacy state, OSMRE determined that the operator had not correctly reclaimed a portion of the mine because the slope of the regraded area was too steep, according to an OSMRE official  For the reclamation work that would be needed to regrade that area, OSMRE determined that the operator needed to provide an additional financial assurance of $272,000  Under SMCRA, OSMRE is required to evaluate each primacy state’s coal program annually to ensure that it complies with SMCRA  SMCRA includes a requirement that the regulatory authority secure necessary financial assurances to assure the reclamation of each permitted mine site  While OSMRE’s directive on oversight of state and tribal regulatory programs does not instruct the agency to review state regulatory authority calculations of financial assurance amounts, it instructs OSMRE to focus on the state programs’ success in achieving the overall purposes of SMCRA  For example, OSMRE, in conducting its oversight, is to evaluate the states’ effectiveness in successfully reclaiming lands affected by mining and in avoiding negative effects outside of areas authorized for mining activities  If OSMRE’s review of a state program identifies an issue that could result in the state not effectively implementing, administering, enforcing, or maintaining all or any portion of its approved coal program, OSMRE can work with the state regulatory authority to develop an action plan to correct the issue  If a state regulatory authority does not take the necessary corrective action, OSMRE may begin the process of withdrawing approval for a part or all of the state’s primacy  In addition to annually evaluating state programs, OSMRE can conduct national or regional reviews on specific topics  For example, OSMRE conducted a national review in 2010 that examined how state regulatory authorities calculated the required amount of financial assurances for coal mine reclamation  The review examined financial assurance practices in 23 states and reported that on the basis of the sample of mining permits reviewed, OSMRE was unable to determine if the amount of financial assurances was adequate for at least one of the permits it reviewed in 10 of the 23 states  Among the potential issues OSMRE identified were errors in the methods state regulatory authorities used to calculate financial assurance amounts and insufficient information in the reclamation plan upon which to calculate reclamation costs  OSMRE has worked with the 10 state regulatory authorities to address the financial assurance issues identified in the 2010 review  For example, OSMRE’s review found that the regulatory authority in Pennsylvania did not secure sufficient financial assurances to complete reclamation plans, in part because amounts were not calculated based on the actual sizes of the areas excavated for mining  In August 2014, OSMRE and Pennsylvania’s regulatory authority agreed to an action plan to ensure that the financial assurances for all active and new permits would be calculated using the actual sizes of the excavated areas  According to an OSMRE official, as of February 2017, the state regulatory authority had recalculated the financial assurance amount for all mines and had secured the additional financial assurances needed from operators of all but two of the mines  State officials said in October 2017 that they were continuing to work to obtain the assurances required for the two mines  OSMRE’s 2010 review also found that financial assurances in Kentucky were not always sufficient to cover required reclamation costs, in part because the method Kentucky’s regulatory authority used to calculate financial assurance amounts did not factor in all costs, such as the cost of moving equipment to and from the reclamation site  In February 2011, OSMRE and Kentucky’s regulatory authority signed an action plan identifying steps needed to address the issues OSMRE had identified  However, in May 2012, OSMRE determined that the state regulatory authority’s proposed changes to its method for calculating financial assurance amounts was an improvement but would not result in the authority obtaining sufficient funds to cover required reclamation  As a result, OSMRE initiated the process of revoking Kentucky’s primacy for this aspect of its program  In response, Kentucky implemented regulations to increase the minimum financial assurance required  The regulations also required the state regulatory authority to evaluate financial assurance amounts every 2 years to determine whether they need to be increased, among other things  The state regulatory authority sent a set of program amendments to OSMRE designed to address the identified deficiencies, some of which OSMRE is currently reviewing  OSMRE and state regulatory authorities face a number of challenges in managing financial assurances for coal mine reclamation—including those related to self-bonding, unanticipated reclamation costs, and the financial stability of surety companies—according to federal and selected state regulatory authority officials, representatives from organizations associated with the mining and financial assurance industries, and representatives from environmental nongovernmental organizations whom we interviewed  Challenges facing OSMRE and state regulatory authorities related to self- bonding include the following: Not knowing the complete financial health of an operator  The information federal regulations require operators to provide to regulatory authorities may provide an incomplete picture of the financial health of an operator, according to some parties we interviewed  For example, the financial information that operators provide reflects their past financial health, which may not reflect the operators’ current financial position, according to OSMRE’s response to the 2016 petition seeking revisions to its self-bonding regulations  In addition, if an operator applying for a self-bond is a subsidiary of another company, the operator is not required by regulation to submit information on the financial health of its parent company  While the operator applying may have sufficient financial assets to qualify for self-bonding, if its parent company experiences financial difficulties, the operator’s assets may be drawn on to meet the parent’s obligations, which could worsen the financial health of the self-bonded operator  In addition, according to OSMRE officials, even if OSMRE or a state regulatory authority were to become aware that an operator’s parent company was at financial risk, it would be difficult for the agency to deny the operator’s request for a self-bond because eligibility is specific to the entity applying for the self-bond, according to regulations  OSMRE could change its self-bonding regulations to require more information, according to OSMRE officials  However, the financial relationships between parent and subsidiary companies have become increasingly complex, making it difficult to ascertain an operator’s financial health on the basis of information reported in company financial and accounting documents, according to officials  When OSMRE first approved its self-bonding regulations in 1983, it noted that it was attempting to provide rules that would allow self-bonding without necessitating regulatory authorities to employ financial experts to determine which companies should be allowed to self-bond  However, according to OSMRE officials, financial expertise is now often needed to evaluate the current complex financial structures of large coal companies, which was not envisioned when the regulations were developed  Difficulty in determining whether an operator qualifies for self- bonding  The regulatory authority in a given state may not be aware that an operator had self-bonded in other states, making it difficult for the agency to determine whether the operator qualifies for self- bonding, according to some parties we interviewed  Operators are only allowed to self-bond for up to 25 percent of their net worth in the United States, according to regulations  Regulatory authority decisions on accepting self-bonds generally focus on assessing activities occurring in a specific state, not nationwide, according to the Interstate Mining Compact Commission  As a result, the state regulatory authority or OSMRE may know whether an operator has applied for self-bonds in other states that if approved would exceed 25 percent of its net worth in total  Difficulty in replacing existing self-bonds with other assurances if needed  OSMRE and state regulatory authorities may find it difficult to get operators to replace existing self-bonds with another type of financial assurance when needed, according to some parties we interviewed  If an operator no longer qualifies for self-bonding (e g , if it has declared bankruptcy), federal regulations require it to either replace self-bonds with other types of financial assurances or stop mining and reclaim the site  In either case, however, some parties noted that such actions could lead to a worsening of the operator’s financial condition, which could make it less likely that the operator will successfully reclaim the site  Some parties we interviewed have noted that regulatory authorities may be reluctant to direct the operator to replace a self-bond with another type of financial assurance and may instead allow the operator to keep mining so that any generated revenue could help the operator reclaim the site  For example, in 2015 the Wyoming regulatory authority determined that an operator no longer qualified for self-bonding and ordered it to replace a $411 million self-bond  However, the operator entered into bankruptcy without having replaced the self-bond  In this case, the state regulatory authority determined that reclamation was more likely to occur if the operator continued mining and allowed the operator to do so without a valid financial assurance  The operator replaced its self-bond as a part of its bankruptcy settlement approximately 17 months after the state regulatory authority’s order to replace the self-bond, according to OSMRE officials  However, if a self-bonded operator were to enter bankruptcy and did not secure a financial assurance to replace the self-bond or complete the required reclamation, the state regulatory authority would have to work through the bankruptcy proceedings to obtain funds for reclamation, according to OSMRE’s preamble to its 1983 self-bonding regulations  As a result, the state may recover only some, or possibly none, of the funds promised through the self- bond, and the cost of reclamation could fall on taxpayers  Difficulty in managing the risk associated with self-bonding  The risk associated with self-bonding is greater now than when the practice was first authorized under SMCRA, according to some parties we interviewed  According to SMCRA, the purpose of financial assurances is to ensure that regulatory authorities have sufficient funds to complete required reclamation if the operator does not do so  While SMCRA allows self-bonding in certain circumstances, when OSMRE first approved its self-bonding regulations, the agency did so noting that at the time there were companies financially sound enough that the probability of bankruptcy was small  Furthermore, the regulations stated that the intent was to avoid, to the extent reasonably possible, the acceptance of a self-bond from a company that would enter bankruptcy  However, as previously mentioned, three of the largest coal companies in the United States declared bankruptcy in 2015 and 2016, and these companies held approximately $2 billion in self-bonds at the time, according to an OSMRE August 2016 policy advisory, making it a very different risk landscape than originally envisioned  Following these bankruptcies—and recognizing that the coal industry was likely to continue to face economic challenges for several more years— OSMRE initiated steps in 2016 to reexamine the role of self-bonding for coal mine reclamation  Specifically, as previously mentioned, OSMRE issued a policy advisory in August 2016 noting that given these circumstances, state regulatory authorities should exercise their discretion under SMCRA and not accept new or additional self-bonds for any permit until coal production and consumption market conditions reach equilibrium  OSMRE has reported that it is not likely for that to occur until at least 2021  OSMRE also announced in September 2016 that the agency planned to examine changes to its bonding regulations that would, among other things, help ensure that reclamation is completed if a self-bonded operator does not do so  However, following a review of department actions that could affect domestic energy production, Interior announced in October 2017 that it was reconsidering the need for and scope of potential changes to its bonding regulations  OSMRE officials said that they did not have a timeline for finalizing a decision on potential changes in its bonding regulations  In addition, OSMRE rescinded its August 2016 policy advisory that states take steps to assess whether operators currently using self-bonds can still quality to do so and that states not accept any new self-bonds  Similar issues involving bankruptcies of hardrock mining operators led the Bureau of Land Management to implement regulations in 2001 eliminating the use of self-bonding for hardrock mining  In doing so, the Bureau of Land Management determined that a self-bond is less secure than other types of financial assurances, especially in cases where commodity prices fluctuate  The agency also noted that operators that would otherwise be eligible to self-bond should not have a significant problem obtaining another type of financial assurance  In our previous work examining other types of environmental cleanup, we found that the financial risk to the government and the amount of oversight needed for self-bonds are relatively high compared to other forms of financial assurances  Furthermore, we also previously reviewed federal financial assurance requirements for coal mining, hardrock mining, onshore oil and gas extraction, and wind and solar energy production and found that of these activities coal mining is the only one where self-bonding was allowed  Because SMCRA explicitly allows states to decide whether to accept self-bonds, eliminating the risk that self-bonding poses to the federal government and states would require that SMCRA be amended  Unanticipated reclamation costs, such as those related to long-term treatment for water pollution, may arise late in a mine’s projected lifespan, and the operator may not have the financial means to cover the additional costs, according to OSMRE officials  Under SMCRA, OSMRE and state regulatory authorities are not to approve a permit for a coal mine if the regulatory authority expects the mine to result in long-term water pollution  As a result, since long-term water pollution is not anticipated to occur, the cost of addressing it would not be included in the initial financial assurance that the operator provides  If the regulatory authority later determines that long-term water treatment is needed, the regulatory authority must adjust the amount of financial assurance that the operator is required to provide  Some parties we interviewed have also noted that the costs and duration of long-term water treatment are not well defined and that surety bonds are not well-suited to provide assurance for such indefinite long-term costs  For example, according to the Interstate Mining Compact Commission, surety bonds are designed for shorter-term, defined obligations that have a high certainty for bond release following the completion of reclamation  To help address this challenge, some states have established, or allowed operators to establish, trust funds to help cover such unanticipated reclamation costs  For example, West Virginia established a fund, primarily supported through a tax on the amount of coal mined, to operate water treatment systems on forfeited sites  West Virginia’s regulatory authority is also working to evaluate permits for sites with water pollution to estimate water treatment costs within the state more precisely  Similarly, Pennsylvania allows operators to establish trust funds that are maintained by foundations and monitored by the state regulatory authority and are intended to ensure that there are sufficient funds to cover the costs of long-term water treatment, according to state regulatory authority officials  In addition, the OSMRE-run coal program in Tennessee allows trust funds for water treatment, in part because an assurance system that provides an income stream may be better suited to ensuring the treatment of long-term water pollution than conventional financial assurances, according to an OSMRE notice in the Federal Register  The utility of surety bonds in providing a financial assurance depends on the surety company’s ability to pay the amount pledged if the operator forfeits  OSMRE regulations require that a surety company be licensed to do business in the state where a mine is located  Some parties we interviewed noted that surety companies have declared bankruptcy or experienced financial difficulties in the past and could experience similar difficulties in the future  In addition, two states reported recent issues related to surety companies  For example, state regulatory authority officials in Alabama said that a surety company that had provided surety bonds totaling $760,000 for four mines in that state had gone bankrupt or was insolvent  As of May 2017, the state had collected only $127,000  Similarly, state regulatory authority officials in Alaska said that as of August 2017, the state had not collected any part of a forfeited $150,000 surety bond because the surety company had gone bankrupt  In our previous work examining other types of environmental cleanup, we have found that the financial risk to the government and the amount of oversight needed for surety bonds are relatively low to moderate compared to other forms of financial assurances  Billions have been spent to reclaim mines abandoned prior to the financial assurance requirements SMCRA put in place, and billions more remain  Under SMCRA, self-bonding is allowed for coal mine operators with a history of financial solvency and continuous operation—the only type of energy production or mineral extraction activity we have reviewed for which this is allowed  Bankruptcies of coal mine operators in 2015 and 2016 have highlighted risks that OSMRE and state regulatory authorities face in managing self-bonding—a risk that may be greater today than when self-bonding was first authorized under SMCRA  If a self-bonded operator were to enter bankruptcy and does not provide a different type of financial assurance or complete the required reclamation, the regulatory authority and the taxpayer potentially assume the risk of paying for the reclamation  Although OSMRE said it would examine changes to its self- bonding regulations following recent bankruptcies, Interior recently said that it is reconsidering the need to do so  Because SMCRA explicitly allows states to decide whether to accept self-bonds, eliminating the risk that self-bonding poses would require amending SMCRA  Until such a change is made, the government will remain potentially at financial risk for future reclamation costs resulting from coal mines with unsecured financial assurances  Congress should consider amending SMCRA to eliminate the use of self- bonding as a type of financial assurance for coal mine reclamation  (Matter for Consideration 1) We provided a draft of this report to the Department of the Interior for review and comment  Interior did not provide written comments on our findings and matter for congressional consideration  OSMRE provided technical comments in an e-mail, which we incorporated as appropriate  As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date  At that time, we will send copies to the appropriate congressional committees, the Secretary of the Interior, the Acting Director of OSMRE, and other interested parties  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions, please contact Anne-Marie Fennell at (202) 512-3841 or fennella@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  Major contributors to this report are listed in appendix II  We selected a nonprobability sample of states to examine the Office of Surface Mining Reclamation and Enforcement’s (OSMRE) oversight activities in more detail  We generally selected states that produced the most coal in 2015 but also selected states in order to achieve some variation in factors such as geographic location, the dominant type of coal mining conducted (e g , surface or underground mining), whether the state had primacy, and whether the state allowed self-bonding (see table 2)  In addition to the contact named above, Elizabeth Erdmann (Assistant Director), Antoinette Capaccio, Jonathan Dent, Cynthia Grant, Marya Link, Anne Rhodes-Kline, Sheryl Stein, Guiovany Venegas, and Jack Wang made key contributions to this report 

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