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



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



Report 2: Oil and petroleum products markets have changed substantially in the years since the establishment of the SPR  Specifically, U S  domestic crude oil production has generally been increasing, consumption has been relatively stable, and crude oil and petroleum products markets have become increasingly global  Additionally, U S  crude oil production is projected to rise further in the future, according to EIA and IEA projections, further reversing a decades-long decline  Recent technological improvements have made onshore production from shale formations economically viable, and domestic crude oil production began to rise in about 2008  The combination of increasing production and relatively stable consumption has resulted in declining net crude oil and petroleum products imports, from a high of about 12 million barrels per day in 2005 to fewer than 4 million barrels per day in 2017  Since these trends are expected to continue, the IEA and EIA both project net U S  crude oil and petroleum products imports will decline to zero sometime in the late 2020s and the United States will become a net exporter shortly thereafter  Since the IEA 90-day reserve obligation is based on a country’s net imports, there is no such obligation for net exporters; therefore, the United States would have no 90-day reserve obligation as long as it is a net exporter, though it would still be obligated to release reserves in response to supply disruptions  Over the longer term, EIA’s projections show U S  net exports peaking in 2037 and the United States again becoming a net importer between 2040 and 2050  At the time of the Arab oil embargo, price controls in the United States prevented the prices of oil and petroleum products from increasing as much as they otherwise might have, contributing to a physical oil shortage that caused long lines at gasoline stations throughout the United States  In addition, in the 1970s, oil prices were often set in long-term contracts, which meant that prices would not automatically rise in the face of greater scarcity  This generally reduced incentives for producers to expand production and sales as well as for consumers to reduce consumption in the face of greater scarcity caused by a supply disruption  Now that crude oil and petroleum product markets are global, the prices of these commodities are determined in the world market, primarily on the basis of supply and demand  In the absence of long-term contracted prices or price controls, scarcity from a supply disruption is generally expressed in the form of higher prices, as purchasers are free to bid as high as they are willing to pay to secure oil supply  In a global market, a large enough supply disruption anywhere in the world raises prices everywhere  This creates incentives for producers unaffected by the disruption to increase their production and release existing inventories and for consumers everywhere to reduce consumption in the ways they find most efficient and least disruptive  While it can take time for some of these actions to affect crude oil and petroleum product markets—according to DOE officials, it can take approximately 6 months from when a producer drills an oil well until oil production comes on line—all these actions tend to mitigate the effects of supply disruptions  The Energy Policy and Conservation Act of 1975 authorized the creation of the SPR, partly in response to the Arab oil embargo of 1973-1974 that caused a shortfall in the international oil market  The purposes of the SPR are, among other things, to reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program  Specifically, the 1974 International Energy Program Agreement, a joint strategy and treaty, established the IEA to address oil security issues on an international scale  The SPR is owned by the federal government, managed by DOE’s Office of Petroleum Reserves, and maintained by Fluor Federal Petroleum Operations LLC  The SPR stores crude oil in underground salt caverns along the Gulf Coast in Louisiana and Texas  The SPR currently maintains four storage sites—Bayou Choctaw, Big Hill, Bryan Mound, and West Hackberry—with a design capacity of 713 5 million barrels  Under conditions prescribed by the Energy Policy and Conservation Act, as amended, the President has discretion to authorize the release of petroleum products from the SPR to minimize significant supply disruptions  When oil is released from the SPR, it is distributed through commercial pipelines or on waterborne vessels to refineries, where it is converted into gasoline and other petroleum products, and then transported to distribution centers for sale to the public  According to DOE documents, well-functioning infrastructure is fundamental to the SPR’s ability to maintain operational readiness and meet mission requirements  However, most of the critical infrastructure for moving SPR oil has exceeded its serviceable life, which has led to increasing maintenance costs and decreasing system reliability  Specifically, the reserve relies on a complex system of salt caverns, pipelines, wells, and pumps, with other infrastructure and equipment  Any failures, such as ruptured pipelines, could affect the readiness of a site for an oil release  According to DOE officials, a growing backlog of major maintenance needs raises concerns about the ability of the system to operate as designed  In addition, there have been equipment failures that have rendered parts of the system temporarily inoperable  For example, the SPR has experienced at least five major equipment failures since fiscal year 2013, including the Big Hill site pipe failure shown in figure 1  The United States has two regional petroleum product reserves—the Northeast Home Heating Oil Reserve and the Northeast Gasoline Supply Reserve  The Northeast Home Heating Oil Reserve, which is not part of the SPR, holds 1 million barrels of ultra low sulfur distillate, a petroleum product essentially equivalent to diesel fuel but that is also used for heating oil  The Northeast United States is heavily dependent on the use of heating oil in winter months  The distillate is stored in leased commercial tank storage in terminals in Connecticut, Massachusetts, and New Jersey  In 2000, the President directed the creation of the reserve to hold approximately 10 days of inventory, the time required for ships to carry additional heating oil from the Gulf of Mexico to New York Harbor  The Northeast Gasoline Supply Reserve, a part of the SPR, holds 1 million barrels of gasoline for consumers in the northeastern United States  According to DOE’s website, this region is particularly vulnerable to gasoline disruptions as a result of hurricanes and other natural events  For example, Hurricane Sandy caused widespread gasoline shortages in the region in 2012  DOE conducted a test sale of the SPR in 2014 and used a portion of the proceeds from the sale to create the reserve  The gasoline is stored in leased commercial tank storage in terminals in Maine, Massachusetts, and New Jersey  The SPR helps the United States meet its IEA obligation to hold the equivalent of 90 days of net imports of crude oil and petroleum products  In order to meet the IEA 90-day reserve obligation, countries, including the United States, can count existing private reserves of crude oil and petroleum products in addition to public reserves (in the United States, the SPR)  In most years, the United States has met its 90-day reserve obligation with a combination of SPR and private reserves  The days of import protection may vary based on actual net U S  crude oil and petroleum products imports as well as the inventory levels of the SPR and private reserves  As discussed previously, because the IEA 90-day reserve obligation is based on a country’s net imports, there is no such reserve obligation for countries that are net exporters of crude oil and petroleum products  The United States also relies on the SPR to meet its IEA obligation to release reserves in the event of a collective action to respond to a supply disruption  Countries contribute to an IEA collective action based on their share of IEA oil consumption, and they can meet their obligation by whatever measure they choose, including release of public or private reserves, or demand restraint  IEA collective actions are designed to mitigate the negative effects of sudden supply shortages by making additional crude oil and petroleum products available to the global market through a combination of emergency response measures, which include increasing supply and reducing demand  In the event of a global market disruption, IEA member countries can call for a collective action after reaching consensus on whether a response is needed  DOE stated that the collective action IEA obligation is more relevant to the SPR’s mission of protecting the U S  economy from severe petroleum supply interruptions than the 90-day reserve obligation  The United States has participated in each of the three IEA collective actions  In 1991, with the commencement of Operation Desert Storm, DOE released 17 3 million barrels of SPR crude oil  After Hurricane Katrina in 2005, DOE released 11 million barrels of SPR crude oil  Most recently, in June 2011, in response to crude oil supply disruptions driven by hostilities in Libya, DOE released 30 6 million barrels of crude oil from the SPR  The Libya collective action is an example of how, in practice, member countries participate according to national circumstances  After consultations with IEA member countries, all IEA member countries agreed to the Libya collective action, under which 12 of the 28 members at that time contributed to the action  In addition to the three IEA collective actions, the SPR has been used 10 times in response to U S  domestic supply disturbances that were not IEA collective actions, most notably in response to severe weather events  In terms of how they meet their IEA obligations, most other IEA members differ from the United States in two basic ways  Specifically, as of December 2017, most IEA members rely at least in part on private rather than public reserves to meet their obligations, and most hold significant proportions of these reserves as petroleum products rather than as crude oil  In December 2017, before Mexico joined the IEA in early 2018, there were 29 member countries  Of these 29 countries, 25 IEA members had two common attributes: (1) as net importers, they had a 90-day reserve obligation and met that obligation, and (2) they had formal processes for holding and releasing these reserves  As of December 2017, 18 of these 25 members relied entirely or in part on private reserves to meet their reserve obligations  Specifically, based on IEA data as of December 2017, these 18 countries met their 90-day reserve obligation through private reserves and either had no public reserves or had public reserves of less than 90 days  According to a 2014 IEA report, some of these countries require industry to hold reserves and, when needed, release them  For example, according to a 2014 IEA report and documentation provided by government officials, the United Kingdom meets its entire obligation by requiring private industry to hold reserves  In contrast, New Zealand had publicly held reserves amounting to 26 days of net imports, according to IEA data as of December 2017  According to a 2014 IEA report, New Zealand relied on industry reserves held for commercial purposes to meet the rest of its 90-day reserve obligation, although New Zealand does not formally require industry to hold reserves specifically for this purpose  Unlike the 18 countries that rely at least in part on private reserves, as of December 2017, the United States and 6 other IEA members met the 90- day reserve obligation exclusively through public reserves  Specifically, according to IEA data on member reserves, Estonia, Finland, Germany, Hungary, Ireland, Japan, and the United States held public reserves equal to 90 days or more of net imports  Although the United States currently meets its IEA 90-day reserve obligation solely with public reserves, for most of the SPR’s existence, public reserves were insufficient to meet this obligation, so the United States also had to rely on private reserves  Specifically, according to EIA data, the United States has relied, at least in part, on private reserves together with the SPR to meet the 90-day reserve obligation with the exception of two time periods (1984-1987 and 2012-present), when the United States has relied solely on the SPR  The United States does not require industry to hold reserves for the purposes of meeting IEA obligations  Figure 2 compares the United States’ reserves in days of net imports to the IEA’s 90-day reserve obligation  According to a 2014 IEA report, most IEA members hold at least a third of their reserves as petroleum products, such as gasoline and diesel fuel, rather than as crude oil  Holding petroleum products can be advantageous during certain disruptions because such reserves can be directly distributed to consumers, whereas crude oil must first be refined and turned into products, adding response time  According to the IEA’s 2014 report, Germany’s stockholding agency holds 55 percent of its reserve as petroleum products  Similarly, France holds only petroleum products that are distributed geographically across the country so that the reserves can be used quickly in the event of a supply disruption  In contrast, more than 99 percent of the SPR (665 5 million barrels as of March 2018) is held as crude oil, all of which is stored at the four storage sites in Louisiana and Texas  The exception is the Northeast Gasoline Supply Reserve, which, as mentioned previously, is a 1 million barrel gasoline reserve in terminals in Maine, Massachusetts, and New Jersey that was established in 2014 after Hurricane Sandy and that is considered part of the SPR  According to DOE officials, there are several reasons the SPR holds predominantly crude oil, including that it is more costly to store petroleum products than crude oil and that the United States has the largest refining capacity of any IEA member country  Because of the large U S  refining sector, crude oil from the SPR can be domestically refined into petroleum products to meet demand  Some IEA member countries store some of their reserves abroad, though the United States does not  According to a 2014 IEA report, some IEA member countries allow part of their reserves to be stored abroad to leverage spare storage capacity or more cost-effective storage by utilizing available storage space or excess private reserves in other countries  For example, approximately 30 percent of Ireland’s reserves are held in other European Union countries  In some of these cases, countries use short-term contracts, also known as tickets, instead of directly acquiring and storing oil and petroleum products  For example, according to documents provided by government officials, since 1995 the United Kingdom has increased its reserves held under ticket agreements outside of the country from around 10 percent of its total reserves to more than 25 percent  In addition, unlike the United States, some IEA countries specify the size of their public or private reserves in terms of net imports or consumption, rather than a specific volume  In the United States, the total volume of crude oil and petroleum products held in the SPR is the result of amounts historically purchased to fill the reserve and subsequent sales as mandated by Congress or released in response to a supply disruption  According to DOE, it cannot otherwise reduce or increase volumes held in reserve without congressional action—either through requirements to purchase additional oil or laws authorizing or mandating sales  On the other hand, some IEA countries have tied their reserves’ volumes of crude oil and petroleum products to a metric such as days of net imports or a percent of consumption  For example, according to documentation provided by government officials, in 2015 Japan changed how it specifies its target reserves from a specified amount to days of net imports  In specifying the size of reserves in this way, the amount held is adjusted as market conditions change—for example, if net imports change and require more or fewer reserves to meet the IEA 90-day reserve obligation, or when other underlying factors affecting a nation’s energy security needs change  While DOE has examined a range of sizes for the SPR, it has not identified the optimal size for the SPR to meet U S  energy security needs and IEA obligations, and DOE’s analysis of SPR sizes was limited in three ways  DOE also has not identified whether additional regional petroleum product reserves should be part of the SPR in U S  regions identified as vulnerable to fuel supply disruptions  DOE has not identified the optimal size for the SPR and though the agency examined a range of SPR sizes, its analysis was limited in at least three ways  In response to direction from Congress and recommendations from GAO and the DOE Inspector General, DOE developed and published a long-term strategic review of the SPR in August 2016  In DOE’s 2016 review, the agency examined the expected economic benefits of SPR sizes ranging from 430 million to 695 million barrels of oil over a 25-year time horizon (2016 through 2040), but it did not recommend an optimal size for the reserve  DOE’s review did not identify the optimal size for the SPR because of three limitations: DOE did not fully evaluate implications of market fluctuations and estimate needs  DOE did not fully evaluate the implications of falling net imports of crude oil and petroleum products with respect to meeting IEA obligations to hold the equivalent of 90 days of net imports and to respond to collective actions  As mentioned previously, the United States is expected to become a net exporter of crude oil and petroleum products by the late 2020s  Since the IEA 90-day reserve obligation is based on a country’s net imports, this means that at that point the United States would not have a 90-day reserve obligation  However, even as a net exporter, the United States would still have to meet the IEA obligation to respond to a collective action  Yet, DOE’s analysis did not evaluate the SPR’s configuration as it relates to projected fluctuations in net imports or estimate the minimal amount of reserves needed to meet potential future collective actions  Without considering projected fluctuations in net imports or providing an analysis of how much oil is estimated to be needed to meet IEA collective actions, DOE cannot fully advise Congress on the optimal size of the SPR  DOE did not consider private-sector response  DOE’s analyses in its 2016 review focused on the publicly held reserves in the SPR as the only means to respond to oil supply disruptions and did not consider a response from the private sector or through consumers reducing demand  According to DOE’s 2016 review, the underlying analysis for the benefits of the SPR did not consider a response from the private sector for three reasons: (1) while U S  commercial stocks could conceivably address part of a supply disruption, private industry could also hold oil inventories in a crisis instead of releasing them; (2) unlike most other IEA member countries, the United States does not require private-sector response; and (3) research on the exact nature of private-sector response during a disruption is needed  DOE officials told us the agency has not studied the extent to which SPR releases of crude oil displace what would otherwise have been private releases of inventories  As we reported in September 2014, changing market conditions— most importantly the significant increase in domestic production of oil—have implications for the SPR’s size because increased production has led to increasing private reserves  According to IEA data as of December 2017, U S  private reserves held the equivalent of 194 days of net import protection coverage, up from about 59 days in 2006  Further, private reserves in the United States consist of both crude oil and petroleum products with more than half in the latter category  For example, as of January 2018, total private reserves of crude oil and petroleum products were about 1 215 billion barrels, of which about 420 million barrels were in the form of crude oil and 795 million barrels were petroleum products, according to the EIA  As of 2013, these private reserves were distributed across the entire country in more than 1,400 terminals, according to the EIA  As we reported in December 2007, international trade in oil and petroleum products has expanded significantly over the past 2 decades, making markets for gasoline and other petroleum products increasingly global in nature  In such a global oil market, higher levels of private reserves can benefit the United States and the rest of the world by helping mitigate a supply disruption  Most experts and stakeholders we interviewed generally agreed that the private sector is in a better position to respond to supply disruptions than they were when the SPR was created  With regard to demand response, DOE officials told us they do not consider this because there is no mechanism to require industry to respond to supply disruptions or consumers to reduce demand in response to a supply disruption  However, DOE has not studied how voluntary response to changes in petroleum product prices affects the need for or efficacy of strategic releases  Without conducting an analysis of how private parties respond to supply disruptions, DOE cannot advise Congress on the optimal size of the SPR because it cannot know how effective such private responses could be in mitigating supply disruptions  DOE did not fully examine costs of differently sized reserves  DOE’s review of the expected economic benefits of differently sized reserves did not fully examine the corresponding costs of those sizes  According to DOE officials, there was no requirement or need to conduct a formal cost benefit analysis of the SPR because the SPR’s oil acquisition and initial capital costs to create the reserve are sunk costs and the ongoing operational costs to maintain the reserve are minimal in comparison  However, this does not take into account the opportunity cost to the government that holding reserves represents; as Congress has mandated several times recently, crude oil from the reserve can be sold to fund other federal priorities  Without additional analysis, such as of the costs and benefits of SPR’s size, DOE cannot fully advise Congress on the optimal size of the SPR  When we reviewed the SPR in 2006 and 2014, we found that DOE had not periodically re-examined the strategic reserves  In 2006, we recommended that the Secretary of Energy reexamine the appropriate size of the SPR  In its response to our recommendation, DOE stated that its reexamination had taken the form of more “actionable items,” including not requesting expansion funding in its 2011 budget and canceling and redirecting the prior year’s expansion funding to general operations of the SPR, based on the Administration’s decision that the SPR’s current size at the time was adequate  Similarly, as previously mentioned, in 2014 we found that changing market conditions have implications for the size, location, and composition of the SPR, but DOE had not reexamined the SPR’s size since 2005  Accordingly, we recommended that the Secretary of Energy undertake a comprehensive reexamination of the appropriate size of the SPR  In response to our recommendation, the 2014 DOE Inspector General recommendation mentioned previously, and the Bipartisan Budget Act of 2015, DOE published its 2016 review  As previously mentioned and reported, crude oil and petroleum markets are constantly changing, but DOE conducted its full evaluations of the SPR more than a decade apart  According to DOE officials, there is no formal policy to periodically reevaluate the SPR
Report 2: 1 prototypes for evaluation  BAE's contract was for $103 8 million and SAIC's for $121 5 million, and each company is to build 16 prototypes  The Marines expect to down select to a single vendor in 2018  Initial operational capability (IOC) was expected by the end of 2020, and all ACV 1 1 vehicles are planned to be fielded by summer 2023  Plans are to equip six battalions with ACV 1 1s and 392 existing upgraded AAVs  Both BAE and SAIC reportedly have a long history related to amphibious vehicles, as BAE built the Marines' original AAV and SAIC has built hundreds of Terrex 1 vehicles used by Singapore, and both companies had Marine Corps contracts to modernize AAVs  ACV 1 1 is intended to have some amphibious capability but would rely on ship-to-shore connectors  ACV 1 2 is intended to have greater amphibious capability, including greater water speed and the ability to self-deploy from amphibious ships  BAE planned to team with Italian manufacturer Iveco (which owns Chrysler and Ferrari)  BAE's prototype would accommodate 13 Marines and travel 11 5 miles at about 7 miles per hour (mph) in surf and 65 mph on land  BAE's version would incorporate a V hull design intended to protect passengers from underside blasts and have external fuel tanks for increased safety  BAE intends to produce its prototypes at its York, PA, facility  SAIC planned to team with Singapore Technology Kinetics to develop its prototype based on an existing design called Terrex  SAIC's version is said to travel 7 mph in water and incorporates a V hull design as well as blast-mitigating seats  It would carry a crew of 3 and can accommodate 11 Marines  SAIC's version plans for a Common Remote Weapons System (CROWS) ( 50 calibre machine gun and a 30 mm cannon), which could be operated from inside the vehicle while buttoned up, therefore not exposing crewmen to hostile fire  On December 7, 2015, it was reported that GDLS would protest the award of the ACV 1 1 contract to BAE and SAIC, claiming the Marines asked for particular capabilities and then evaluated vendors by a different set of standards  On March 15, 2016, GAO denied GDLS's protest, noting that "the Marine Corps' evaluation was reasonable and consistent with the evaluation scheme identified in the solicitation " The Marines reportedly stated that the protest put the ACV 1 1 program about 45 days behind schedule but anticipated the ACV 1 1 would still be fielded on time  BAE and SAIC reportedly delivered their ACV 1 1 prototypes, with BAE delivering its first prototype in December 2016 and SAIC delivering its prototype in February 2017  This early delivery could potentially result in an unspecified incentive fee award for both companies  EMD testing began the week of March 13 and was scheduled to last eight months  In early December 2017, the Marines reportedly sent the ACV 1 1 down select request for proposals to BAE and SAIC  Plans called for operational testing to start in January 2018, with the Marines anticipating announcing a contract winner in June 2018 for the delivery of 204 ACV 1 1s over a four-year period  In accordance with the provisions of the FY2014 National Defence Authorization Act ( P L  113-66 ) Section 251, GAO submitted its annual report to Congress on the ACV program in April 2018  GAO reviewed program cost estimates, updated schedules, and program assessments of test results and production readiness, and compared ACV acquisition efforts to DOD guidance and GAO-identified best practices  GAO found the following: The first version of the Amphibious Combat Vehicle (ACV 1 1) is on track to meet development cost goals with no additional anticipated delays for major acquisition milestones  With regard to costs, the development phase of ACV 1 1 is on pace to not exceed cost goals that were established at the start of development, based on a recent Navy estimate, the ACV program office, and reporting from the contractors  GAO recommended that the Marine Corps (1) not enter the second year of low rate production for ACV 1 1 until after the contractor has achieved an overall Manufacturing Readiness Level (MRL) of 8 and (2) not enter full-rate production until achieving an overall MRL of 9  DOD partially concurred with this recommendation but noted that it was "reasonable to proceed at lower MRL levels if steps are taken to mitigate risks " On June 19, 2018, the Marine Corps selected BAE Systems to produce the ACV  Reportedly, the initial contract—valued at $198 million—will be for low-rate production of 30 vehicles to be delivered by the autumn of 2019  Eventually, 204 vehicles are to be delivered under the ACV 1 1 phase of the project  BAE will also produce the ACV 1 2 variant and, all told, the entire ACV 1 1 and 1 2 project is expected to deliver 700 vehicles, and, if all options are exercised, the total contract will reportedly be worth $1 2 billion  In December 2018, the Navy reportedly awarded BAE Systems a $140 million contract modification to build 30 Low Rate Initial Production (LRIP) ACVs as part of Lot 2, with the first vehicles expected to be delivered in the summer of 2020  Lot 1 is reportedly still scheduled to start delivery in the summer of 2019  In DOT&E's December 2018 FY2018 Annual Report, it was noted During the operational evaluation (OA), the ACV-equipped unit demonstrated the ability to maneuver to an objective, conduct immediate action drills, and provide suppressive fires in support of dismounted infantry maneuver in a desert environment  The ACV-equipped unit was able to maneuver in the littorals; embark aboard a landing craft air cushioned (LCAC), transit the open ocean and surf zone, and debark from the LCAC  The ACV demonstrated water mobility and the ability to self-deploy from the beach, cross the surf zone, enter the ocean, swim, and return to the beach  Based on data from the OA, reliability is below the program reliability growth curve (58 hours Mean Time Between Operational Mission Failures [MTBOMF])  BAE vehicles demonstrated 24 9 hours MTBOMF  There were no systemic problems identified that indicate a major redesign is required  The ACV section was successful in 15 of 16 missions and demonstrated the capability to negotiate terrain in the desert and littorals, operate with tanks and light armored vehicles, and maneuver to achieve tactical advantage over the opposing threat force  ACV crews, supported infantry, and the opposing force noted that the vehicles performed better than the legacy vehicle in a wide variety of areas  In terms of recommendations, DOT&E noted the Program Manager, Advanced Amphibious Assault should do the following: Modify the infantry troop commander's station to make it easier to move between the hatch and seat  Assess the capability of all existing Marine Corps recovery assets to recover the ACV  Investigate options for preventing damage to steering/suspension when encountering battlefield debris, such as concertina wire  According to reports, the Marines envisioned that the successor to ACV 1 1—the ACV 1 2—would have a threshold requirement of 12 miles from ship-to-shore  If this threshold can be achieved, it could help to reduce the vulnerability of U S  naval vessels supporting Marine amphibious operations to enemy shore fire  On April 10, 2019, during testimony to the Subcommittee on Seapower of the Senate Armed Services Committee, Navy and Marine Corps leadership noted During the fall of 2018, ACV 1 1 prototypes demonstrated satisfactory water mobility performance in high surf conditions, and in doing so met the full water mobility transition requirement for ACV 1 2 capability  Subsequently, the Milestone Decision Authority Assistant Secretary of the Navy for Research, Development and Acquisition (ASN (RD&A)) approved the consolidation of increments one and two into a single program to enable continuous production of ACVs to completely replace the AAV  The next key acquisition event is the Full Rate Production decision scheduled for the third quarter of FY 2020 following Initial Operational Test & Evaluation  ACV remains on schedule to achieve Initial Operational Capability in the fourth quarter of FY 2020  With the consolidation of ACV variants into a single variant, there will likely be a number of programmatic changes and potential ramifications for the ACV and ACV 2 0 programs  Reportedly, the Marines plan to develop an ACV 2 0, capable of carrying 10 to 13 Marines plus crew, capable of high water speeds and deployment from ships far from the coast  ACV 2 0 is planned to be capable of operating on land alongside tanks and light armored vehicles  According to the Marines ACV 2 0 serves as a conceptual placeholder for a future Decision Point (~ 2025, or sooner) at which time knowledge gained in the fielding and employment of the first phase of ACV (1 1 and 1 2), the state of the naval connector strategy, and science & technology work towards a high water speed capable self-deploying vehicle will support an informed decision  The FY2020 presidential budget request includes RDT&E and Procurement funding requests in the Base Budget, as well as FY2020 requested quantities  The Marines did not request ACV Overseas Contingency operations (OCO) funding in FY2020  According to DOD, the FY2020 ACV budget request will fund The ACV 1 1 Full Rate Production (FRP) Lot 3 of 56 vehicles, plus procurement of related items such as production support, systems engineering, program management, Engineering Change Orders (ECOs), Government Furnished Equipment (GFE), and integrated logistics support  Research and Development efforts include the procurement of ACV 1 2 MRV test articles, associated GFE, and initiation of a Vehicle Protective System trade study and integration efforts  While from an overall programmatic perspective, the consolidation of the ACV 1 1 and ACV 1 2 variants could be viewed as a favourable programmatic outcome, there are likely ramifications that might be of interest to policymakers  Potential issues include the following: Will the consolidation of ACV 1 1 and ACV 1 2 result in an overall cost savings? Will this consolidation permit the acquisition of additional ACVs because of potential cost savings? With the consolidation and the stated intent to replace AAVs, what is the revised timeline for the replacement of AAVs and will this result in cost savings from not having to upgrade and maintain AAVs longer than previously intended? How will the consolidation of ACV 1 1 and ACV 1 2 affect the ACV 2 0 program? If the Navy and Marine Corps decide to adopt Expeditionary Advance Base Operations (EABO) as an operational concept, it could possibly have implications for the ACV program, including the following: At the weapon systems level, would EABO require any changes to the vehicles themselves, such as enhanced survivability, lethality, or Command, Control, Communications, Computer, Intelligence, Surveillance, and Reconnaissance (C4ISR) features? If changes are required to facilitate EABO, how would this affect the program's overall acquisition timeline and cost? If EABO does not require any technical changes in the ACV program, would the adoption of EABO modify the Marines' current procurement quantities of ACVs? If EABO requires different procurement quantities for the different ACV versions (more or fewer), how might this affect program timelines and program costs?

ground_truth: USPS's competitive products have become increasingly important, comprising about 28 percent of USPS's total revenue. USPS scans these packages at various points throughout the postal network. When scans are inaccurate or missing, questions are raised about the veracity of USPS's data on scanning performance and can lead to customer complaints. GAO was asked to review USPS's scanning policies and procedures. In this report, GAO (1) describes USPS's scanning performance and (2) examines how USPS ensures accurate scanning. GAO reviewed USPS's policies and procedures and assessed them against internal control standards; interviewed officials from USPS and five high-volume mailers; and conducted site visits to six post offices in two USPS districts that represented a range of volume, number of routes, and performance. Mail products over which the United States Postal Service (USPS) does not exercise market dominance, such as many of its packages, are called competitive products. These items are scanned throughout the mail delivery system to track their progress (see figure). USPS data show that these products are almost always scanned. For example, USPS data showed that for the first three quarters of fiscal year 2018; all but one of USPS's 67 districts met their scanning goals. Additionally, mailers that account for a high volume of USPS's competitive products told GAO that they believed USPS was generally scanning products correctly. However, a small percentage of missed or inaccurate scans occur. For example, a report from one USPS district showed that for one week, 0.73 percent of the products delivered were missing a scan and that for the fiscal year to date almost 155,000 competitive products were missing a delivery scan. USPS has designed and implemented procedures and activities to help ensure accurate scanning, but some limitations could contribute to scanning errors. For example, USPS has not based its operational procedures for scanning on any internal control standards. USPS officials said the procedures were based on USPS's unique responsibilities, management experience, and sound business practices, but the officials could not identify specific standards or a framework that they followed as the basis for the procedures. USPS officials said they did not believe any internal controls standards applied to these procedures. By not basing procedures on standards, USPS may miss opportunities to improve how it achieves its mission to scan and measure the performance of competitive products. Additionally, USPS's scanning procedure documents, such as for outlining specific delivery scanning steps, are not always consistent, and USPS relies on more informal methods, such as meetings with employees to communicate changes. Thus, employees may not have accurate procedures available to them. Finally, USPS lacks procedures to help managers identify and address incorrect scans, address customer complaints or otherwise address scanning irregularities. For example, USPS's guidance for managers is limited to a list of bullet-points that do not detail the steps managers should follow to resolve scanning irregularities. In addition, this list has not been updated since 2005. Without consistent or detailed procedures, USPS's employees and managers may not scan items accurately or find information needed to resolve scanning issues—a situation that could hinder USPS's ability to reduce inaccurate or missing scans for these important mail products. GAO recommends that USPS: (1) identify and adopt internal control standards for its operational activities such as for scanning of competitive products; (2) improve the communication of procedures for scanning competitive products; and, (3) create procedures for supervisors on how to address inaccurate scans and resolve scanning issues. USPS agreed to explore addressing the first recommendation and agreed with the other two recommendations.

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



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

Report 1: USPS has a wide range of domestic competitive products that are a growing sector of its business  The volume of USPS’s competitive products increased from approximately 750 million pieces in fiscal year 2008 to 4 9 billion pieces in fiscal year 2017  Revenue from these products increased from about 10 percent of all USPS mail revenues in fiscal year 2008 to about 28 percent in fiscal year 2017 (see fig  1)  USPS forecasts that continued growth in e-commerce will increase the volume of its competitive products, especially for the “last-mile” delivery service to consumers—which involves delivery from retail locations and fulfillment centers (i e , where online orders are processed, packaged, and shipped out to USPS for delivery) to customers  USPS reported that in fiscal year 2017, revenue from competitive products exceeded USPS’s expectations by $500 million due to the growth in e-commerce and successful marketing and sales campaigns  USPS expects increased competition, though, in the first- and last-mile delivery services—collection and delivery of packages—from other delivery providers  To remain competitive in the competitive product delivery market, USPS officials have stated that information gained from scanning is leveraged to provide customers with real-time visibility for the location of a competitive product in USPS’s delivery process as well as accurate estimates of the delivery time of USPS’s competitive products  Further, USPS’s latest strategic plan states that this information is one factor used to reduce its own costs through optimizing its network, including processing facilities, post offices, and numerous other facilities across the United States, and streamlining its operations  USPS delivers competitive products across the nation, which it divides into seven postal areas comprised of 67 postal districts (see fig  2)  Managers at each level—postal area, postal district, and post office—are responsible for overseeing and reporting on the performance of the level below them  For example, each district manager is accountable to the area vice president  Postmasters, who manage individual post offices, are accountable to district managers and also monitor the performance of employees at their post office  To track the movement of competitive products, USPS leverages automation (i e , scanning by postal-processing equipment) and passive and active scan technology (i e , scanning devices used by postal employees) to capture barcode information  In addition, when competitive products are not able to go through all the automated scans, USPS employees are to manually scan barcodes that have been placed on each item  These barcodes link the item with information in USPS’s databases such as: the delivery address, the type of USPS product, and when the item was accepted by USPS  According to USPS procedures, competitive products could be scanned up to 13 times to generate visibility necessary for USPS, mailers, and customers to track their packages as they move through USPS’s network (see fig  3)  For example, the first scan of the product—the “Acceptance” scan—is made when the item is dropped off at the post office or by a carrier if the product is picked up at a mailbox or customer address  The last scan—the “Acceptable Delivery Event” scan—generally means the item was successfully delivered to the addressee or that a delivery attempt was made (e g , the product requires a signature but the recipient was not at home so another attempt will need to be made or the recipient will need to pick up the product)  The interim scans reflect the product’s progress through the postal network, including through mail-processing plants and equipment  The scan data are transmitted to USPS’s data systems throughout the day  Scan information from these systems is available to USPS managers as well as mailers and customers who wish to track the progress of their items  USPS’s employees use devices to scan competitive products in postal facilities and on delivery routes (see scans 1, 2, and 11–13 in fig  3)  Carriers usually use a handheld Mobile Delivery Device (MDD) to scan a package’s barcode  MDDs contain Global Positioning System (GPS) technology and transmit package scanning data and carrier location data using a cellular network  USPS employees working inside post offices or other facilities use similar scanning devices without GPS technology, such as the handheld Intelligent Mail Device (IMD) to perform the manual scans (see fig  4)  USPS reports we reviewed indicate that competitive products are almost always scanned and scanned correctly  USPS has an overall organizational goal of accurately scanning 100 percent of all mail pieces—both competitive and other products—that have a barcode  This includes scanning each competitive product at several points from acceptance, as described earlier  However, individual management employee-performance goals for scanning are set slightly lower than 100 percent, as USPS officials stated that they recognize that some scanning issues, such as for missing or damaged barcodes, may occur across post offices  According to USPS data we reviewed for the first three quarters of fiscal year 2018, all but one of USPS’s 67 districts met USPS’s scanning goals for all five required scans for competitive products  Additionally, in one district we visited, a USPS internal report showed that every group of post offices in the district met its scanning goal for the arrival-at-unit scan for the week, the preceding 4 weeks, and the year-to- date periods, and all but one group of post offices met their scanning goals for the acceptable delivery scan for the same measurement period  In addition, representatives for mailers we interviewed that use USPS’s competitive products stated that they were generally satisfied with USPS’s scanning performance  Representatives of all the major mailers we spoke with that rely on USPS’s delivery network said they believed that USPS is generally scanning competitive products accurately, although issues still occur  Representatives of mailers told us that they receive scanning data from USPS for their items throughout the day, with some mailers receiving the data every 15 minutes, a rate that allows them to track their items through USPS  Some mailers use this information to calculate the expected time of delivery and monitor USPS’s progress against their own estimates of delivery time to measure USPS’s performance  Representatives for major mailers we spoke with said they also get complaints from customers if items are late, lost, or inaccurately scanned, so the customers provide another source of information on any scanning issues  Four of the five representatives for major mailers we interviewed that sent items via USPS competitive products told us that they have seen improvement in USPS’s scanning performance in recent years  Additionally, all of the representatives for mailers we spoke with stated that USPS has increased the amount of scanning and the information provided from the scans in recent years  Although USPS has a high scanning rate, some missed and inaccurate scans for competitive products do occur, errors that could potentially affect millions of competitive products  For example, several USPS OIG reports between 2016 and 2018 found that instances of missed or inaccurate scans still occurred both nationwide and that in nine USPS districts they analyzed, were due in part, to post office personnel not always following proper scanning procedures and post office supervisors not adequately monitoring how scanning procedures were implemented  For example, the USPS OIG analyzed approximately 2 billion delivery scans over a 6-month period in 2017 and found that 1 9 million delivery scans (about 0 1 percent) occurred at the post office instead of at the delivery address and were considered improper scans  Furthermore, examples of USPS’s internal reports we reviewed containing scanning performance results showed that a small percentage of competitive mail items had not been scanned  For example, one USPS internal report for a district we visited showed that for one week, USPS employees in the district missed about 0 73 percent of the expected delivery scans for competitive products  Due to USPS’s large volume of competitive products, a small percentage of products not scanned can represent large numbers of items  For example, about 155,000 competitive products were missing a delivery scan in one district’s 2018 year-to-date report we reviewed  Additionally, the representatives of mailers we interviewed also reported occasional scanning issues with USPS’s competitive products  Most of the mailers’ representatives stated that when they see competitive items missing scanning data, it is generally an isolated situation and USPS usually fixes the issue  According to these representatives, USPS provides them with points of contact to work with to resolve scanning issues immediately and on a regular basis  However, one major mailer’s representative we spoke with stated that even though USPS’s employees are generally good at scanning packages, inaccurate delivery scanning is an issue  The representative stated that about 8 to 10 percent of the company’s products sent through USPS were scanned by carriers as delivered, but not at the customer’s delivery address—contrary to USPS’s standard operating procedures for scanning  The representative stated that, although this percentage has decreased in recent years, the mailer would like to see that number decrease further because delivery to the destination address assures them that the item was left as close as possible to the customer  USPS is taking some steps to address missed or inaccurate scans  For example, USPS officials stated that the current electronic scanning device carried by almost all carriers on their routes does not prevent scanning a mail item as delivered to an address that is not the delivery address associated with the item’s barcode information  They also stated that USPS is updating scanning devices to alert carriers when they scan items as delivered when not physically at the correct delivery address  According to USPS officials, as of May 2018, 80 percent of hand-held electronic scanning devices used by USPS carriers had this functionality and that this functionality is being fine-tuned  This capability, though, still does not preclude all scanning errors, as it only affects the final delivery scan  USPS officials also stated that employees may still encounter scanning issues, such as damaged barcodes, which could lead to missed scans  USPS has not based its operational policies and procedures, such as those that support the accurate scanning of competitive products, on any standards for internal controls  USPS officials told us that they have not used any specific criteria for designing, implementing, and operating an internal control system for meeting its operational policies and internal controls, such as those that help ensure competitive products are accurately scanned  According to USPS officials, USPS does not follow the COSO Framework to design, implement or evaluate its operational internal controls as they believe that the COSO Framework standards are traditionally related to internal controls over financial reporting  In addition, USPS officials stated that USPS is not required to follow Standards for Internal Control in the Federal Government, and therefore USPS does not follow these standards as well  Instead, USPS officials stated that USPS has designed its operational policies and internal controls over the years based on its unique responsibilities, management experience, and sound business practices  However, officials could not identify any specific standards or framework they had followed  We have reported that standards for the design, implementation, and operation of their internal-control system provide an overall framework for establishing and maintaining an effective internal-control system—which is a key factor in achieving an entity’s mission  Further, internal controls help managers achieve desired results through effective stewardship of public resources  USPS has options to choose from in selecting standards for internal controls  Two widely used standards are the COSO Framework and Standards for Internal Control in the Federal Government, which was adapted for federal entities from the COSO Framework  Both standards are designed to help an entity design, implement, and maintain an effective internal-control system  Such a system should encompass all aspects of an entity’s objectives, including operations, reporting, and compliance objectives, and can help an entity adapt to shifting environments, evolving demands, changing risks, and new priorities  Non-federal entities can adopt either of these standards in their efforts to design, implement, and operate an effective internal control system  As stated above, we found that the COSO Framework to be a reasonable and relevant set of internal control standards to evaluate USPS’s operational internal-control activities  However, we and the USPS OIG have applied both the COSO Framework and Standards for Internal Control in the Federal Government in evaluating USPS’s operational internal controls in recent reports  Without standards for an effective internal-control system for its operational policies and procedures for scanning competitive products, USPS may miss opportunities to improve how it achieves its mission to deliver those important products  USPS management has designed standard operating procedures to provide assurance that competitive products are scanned accurately  We found some of these procedures to be consistent with the COSO Framework, which states that an organization should deploy control activities through policies that establish what is expected and procedures that put policies into action  USPS has developed a scanning policy for its products, stating that “properly scanning all barcodes will result in World Class Visibility and be instrumental in retaining and growing our shipping business and providing valuable data to drive improved operational performance and reduce costs ” USPS also has procedures that establish the responsibilities of employees for accurately scanning barcodes for competitive products at various points in the mail flow  Although USPS officials stated that employees should rely on prompts from their scanning devices to ensure scans are done correctly, USPS communicates these procedures in three main ways: documents, such as City Carrier Handbook and Rural Carrier Handbook, that outline scanning procedures and that explain carriers’ duties, including scanning; job aids, such as posters showing proper scanning procedures (see fig  5); and, standard work steps or guidance that lists procedural steps either for competitive products or for scanning mail in general (see fig  6)  Following these procedures is important to fulfill USPS’s scanning goals  As stated above, the USPS OIG found instances of missed or inaccurate scans for competitive items in recent reports  Further, the USPS OIG also recently found that USPS employees at all 15 postal facilities it visited in the Los Angeles District did not follow correct scanning procedures for USPS’s competitive Parcel Return Service product, leading to inconsistent counts for these products  Such errors can put USPS at risk of not collecting revenue for these products  The USPS OIG has made several recommendations in its recent reports to USPS management to reinforce the importance of these procedures to employees  USPS officials agreed with some of these recommendations and stated that they are taking action to address them  While reinforcing these procedures can be helpful, we found that USPS’s scanning procedures may not provide the necessary assurance for accurate scanning because they are not consistent  For example: The USPS’s City Carrier Handbook states that mail with a barcode should be scanned at the delivery point (or address)  However, a standard operating procedures document for city carriers at a post office we visited stated that carriers must scan each delivery confirmation mail piece but did not specify that this scan had to be at the delivery point or address  Locally developed procedures may not be uncommon, as one district manager told us that USPS headquarters allows managers to make a certain amount of flexibility to adapt the standard operating procedures for each post office  The USPS document, SCANNING at a Glance: Delivering 100% Visibility, states that all mail items that require delivery scanning should be scanned at the delivery address, but this document also provides additional scanning procedures not contained in the City Carrier Handbook and other standard operating procedures documents we examined  In particular, the document contained procedures for scanning to account for mail being held for customers on vacation; scanning items correctly to account for mail not delivered to business that were closed; and for mail that was refused by the addressee  This inconsistency in USPS’s scanning procedures has likely occurred because many of the documents have been updated at different times and have not always reflected new operations  For city carriers, the online version of the USPS’s City Carrier Handbook was last updated in April 2001  USPS officials stated that the most recent update regarding scanning was issued in November 2015 via a separate Postal Bulletin  Further, a separate standard operating procedure document for city carriers at a post office we visited was dated June 2006  For rural carriers, the most recently updated scanning procedures we found was dated 2013  As a result, some of these documents are not updated with the latest information on new scanning procedures  In a related example, the USPS OIG recently found that employees at three of the six USPS facilities the USPS OIG visited did not have an adequate understanding of the procedures for processing election and political mail due, in part, to guidance that was not updated, even though the procedures were centrally documented on an internal USPS website  USPS officials recognized this issue and stated that these handbooks are not updated regularly as the content of the handbooks are subject to labor negotiations  Therefore, new procedures are presented to USPS employees outside of the handbooks  However, given that these efforts rely on employees to orally communicate information, having consistent documented procedures is even more important  In addition to stating that the organization should deploy control activities through policies and procedures, the COSO Framework states that senior management should communicate objectives clearly through the organization so that other management and personnel understand their individual roles in the organization  By not having consistent procedures, USPS risks not clearly communicating to its employees how they should carry out scanning procedures and therefore contributing to scanning errors  As discussed below, USPS officials told us that management updates its procedures typically through regular meetings with employees, which are documented in handouts or slides  USPS officials stated that management stresses the importance of scanning and that employees should follow the prompts on their electronic devices when scanning competitive products  However, employees can still scan competitive products as delivered even if they are not, as device prompts can be misread, misinterpreted, or ignored  Furthermore, even with current prompts, scanning errors can and do occur  Consistent procedures, clearly communicated to employees, have become increasingly important as USPS hires new employees to handle, in part, anticipated growth in the volume of competitive packages  For example, GAO analysis of USPS data showed that USPS’s carrier workforce increased by 6 4 percent between fiscal years 2015 and 2017  The USPS OIG has found that these new employees require training and guidance to properly perform their roles and to reduce turnover  In addition to deploying policies and procedures to achieve an organization’s objectives, the COSO Framework states that an organization should internally communicate objectives and responsibilities that are necessary to support the functioning of internal controls  This process can be accomplished through training and meetings  Specifically, the COSO Framework states that training should enable individuals to develop competencies appropriate for assigned roles and responsibilities, among other things, and that active forms of communication such as face-to-face meetings are often more effective than passive forms such as broadcast e-mails and intranet postings  To communicate how its procedures should be correctly implemented, USPS has developed both initial and on-going training for employees  USPS officials stated that new employees are formally trained in scanning procedures when they start their employment  For example, carriers are trained how to use USPS’s electronic scanning devices, when to scan competitive items, the correct codes to use for different delivery situations (i e , signature required, vacation holds, how to code where a package was left at a delivery address)  Any new procedures can be introduced through presentations given by managers during meetings, as described below  Required regular meetings may be tracked by USPS management to ensure they are completed  Some district officials we spoke with stated that they certify that their employees have received required training and send that certification to area and USPS headquarters officials  Additional training also helps USPS reinforce correct scanning procedures  When scanning procedures are not being followed or scanning goals are not met at a post office, USPS officials stated that reminders of the correct procedures designed to reinforce USPS’s scanning procedures are presented to employees through presentations, posters, job aids, and additional documents such as carriers’ handbooks  For example, the representative of the major mailer we spoke with that had 8 to 10 percent of competitive products not scanned to the final delivery address stated that training was needed for both new and experienced carriers to reinforce that they should scan items at the delivery address  To further ensure the accurate scanning of competitive products, USPS reported that it holds internal and external meetings  Specifically, these meetings are designed to: Reinforce procedures: Post office managers can use stand-up talks— weekly meetings between management and employees at the post office—to discuss scanning issues with employees and opportunities to address those issues  For example, the postmaster at one post office we visited stated that this post office reinforces the standard work procedures designed to improve the scanning performance of employees during these meetings  Carriers and clerks can ask questions and learn why they are asked to do something or how to do a specific task, allowing for additional training and reinforcement of procedures  For example, we reviewed a handout developed by USPS headquarters to provide managers with talking points for service talks  This handout provided information on carriers delivering and scanning accurately and instructions on scanning at point of delivery on rural routes  Introduce new procedures: USPS officials told us that post office managers use stand-up talks to introduce new procedures and processes with carriers and clerks  For example, postmasters stated that they used these meetings to introduce and train carriers on new scanning features at the post offices  USPS district and area management develop and disseminate memos and handouts to assist managers conducting these meetings  We reviewed handouts USPS provided to managers for service talks  These handouts provided information on the rollout of some of the most recent scanning procedure changes  Continuously improve operations: District managers we interviewed stated that post offices with low scanning performance scores are placed on a district’s list of underperforming post offices  USPS district managers we interviewed told us that they meet with these post offices to determine how each post office plans to improve its scanning performance  District management also conducts audits of underperforming post offices and post offices that are in need of improvement  Our review of one district office’s service review checklist identified the key areas of audit for underperforming post offices  Reassess procedures: Representatives of mailers we interviewed told us that they meet with USPS representatives to discuss ways USPS can share scanning information for competitive products  Given that inaccurate scans can and do occur, it is important that postal managers explore and investigate any instances of missed or inaccurate scans  To do so, USPS managers—including area vice presidents, district managers, and postmasters—use a variety of reports as tools to ensure that the required scans are made at the appropriate place and time, and take action to monitor the status of competitive products, track lost items, and identify scanning issues  USPS headquarters designs reports used by managers to review performance at the local level across the country  Managers at each level are responsible for overseeing and reporting on the performances of the level below them  For example, the postmaster monitors performance of employees at the post office and is accountable to the district manager  In turn, each district manager is held accountable by the area vice president  To monitor performance of scanning of competitive products, these managers have access to several USPS data systems to generate reports  They can use the reports to monitor scanning performance of carriers and clerks at each post office and to identify the causes of scanning issues, such as missing or incorrect scans  Managers can also use these reports to track the status of competitive products or to investigate customer complaints of lost items  Some examples of reports available to managers include the following: Report 1: USPS officials told us that each post office receives this report from their District Office  The report identifies competitive products that do not have all the required scans, such as scans when the item arrives at the post office or when a delivery attempt was made  For example, one district official sends postmasters weekly reports on competitive products that do not have all the required scans  The officials told us that these reports help managers investigate the cause of incorrect scans identified in the report and how to prevent future occurrences  Report 2: USPS officials told us that this report is generated by district managers to proactively identify scanning irregularities, such as scans that may be out of sequence or multiple competitive products that are scanned at the same time but are for different addresses  District management can query postmasters about these scans and ask them to investigate the reason for the irregularities and determine if the scan was appropriate  Report 3: USPS officials told us that this report is generated by postmasters to monitor scanning status and performances for each competitive product that has received an arrival scan but lacks a delivery scan  While this may indicate a problem, it could also just reflect that the final scan had not been made by the end of the day or the scan that had not been uploaded into the USPS data systems when the report was generated  While having these reports are helpful, their full potential to help USPS managers may be limited because USPS lacks detailed and up-to-date standard operating procedures for how managers should use these reports or conduct other activities to efficiently investigate and resolve scanning issues  USPS’s Scanning Performance: Delivery Standard Operating Procedures for managers are a list of bullet points outlining managers’ responsibilities to meet scanning performance target goals and not a list of detailed procedures for managers to follow, such as how to use Report 1 to identify items that do not have all the required scans  In addition, USPS officials told us that this list has not been updated since approximately October 2005  The COSO Framework states that organizations should internally communicate information, including objectives and responsibilities for internal control, necessary to support the functioning of internal control  Further, it states that a process should be in place to communicate required information to enable all personnel to understand and carry out their internal-control responsibilities  Absent such communication, managers may take different actions to address problems or may have difficulty knowing where to find the appropriate information to locate a missing item to resolve a customer’s complaint quickly  For example, one post office manager told us that he will look at the scanning history in the USPS data systems to determine if the item received an acceptable delivery event scan or what the status of the item is on the route, while another post office manager told us he will use GPS data to see where the scans were made to determine if the item was delivered to the right address  If managers do not know where to find the appropriate information, they may spend more time investigating and be less efficient in resolving issues  Further, not having detailed standard operating procedures means managers may not be aware of all the reports available to them  For example, some post office managers told us that they use Report 3 while other post office managers told us that this report was not available to them  Without using Report 3, some managers told us that they look in several sources to find the same information needed to resolve the issue, such as locating a lost package  Some managers told us that USPS management discontinued the report because it was being misused by some managers  Specifically, managers told us that some managers were manually entering scanning or service-performance information retroactively to improve their performance scores  However, they told us that USPS management recently made Report 3 available to managers again but changed features to reduce any misuse  Additionally, USPS may miss opportunities to prevent scanning issues from happening again by not clearly communicating how managers should use the various reports to address specific scanning issues  For example, the USPS OIG recently determined that instances of missed and inaccurate scans for competitive products were a result of USPS management not adequately monitoring the implementation of those procedures  Without detailed procedures to guide managers in finding and using specific information in available reports and other tools, managers will not have consistent information to use to investigate and resolve customer complaints quickly or accurately  In addition, new managers may not know where to go for the most appropriate information and how to use this information to address some issues  As competitive products have become essential to USPS’s economic viability, it is increasingly important for USPS to accurately track them to remain competitive in this market  While USPS may be scanning most mail accurately, there continue to be instances where mail is not scanned accurately or is missing scans  Given the volume and growth in these competitive products, even a small percentage of inaccurately scanned products could be a large number of such products  Since USPS’s procedures were developed absent standards for internal control, the adoption of a set of internal control standards could enhance USPS’s efforts to continuously improve the design, implementation, and evaluation of its operational internal controls for scanning of competitive products  Further, since USPS’s standard operating procedures for scanning are located in numerous documents and are not always consistent—and given USPS’s reliance on stand-up talks and meetings to keep employees current—USPS employees may not always have accurate scanning procedures easily accessible to them  Having consistent standard operating procedures is increasingly important to ensure that employees are making accurate scans  Additionally, standard procedures that guide managers to investigate and resolve scanning issues would help managers more efficiently address these issues and ideally prevent these issues from happening again  To improve USPS’s competitive products scanning, we recommend that the Postmaster General take the following three actions  The Postmaster General should identify and adopt a set of internal control standards that can be used as the basis for operational internal-control activities, such as those for scanning competitive products  (Recommendation 1) The Postmaster General should improve the communication of standard operating procedures for scanning competitive products by, for example, updating or consolidating USPS documents, job aids, and standard work steps  (Recommendation 2) The Postmaster General should create standard operating procedures for managers on how to address inaccurate scans and use available reports to investigate and resolve scanning issues  (Recommendation 3) We provided a draft of this product to USPS for its review and comment  USPS’s comments are reproduced in appendix I  USPS stated that it cannot agree with our recommendation to identify and adopt a set of internal control standards for USPS’s operational internal control activities at this time  Although USPS has adopted an internal control framework for its financial internal control activities, USPS does not know what the benefits and costs are of adopting internal control standards for its operational internal control activities  As a result, USPS agreed to conduct a cost study to determine whether to commit resources to identifying and adopting a set of internal control standards for its operational internal control activities  We are encouraged that USPS is planning to conduct such a study and anticipate that performing this study will result in the implementation of an appropriate set of internal control standards  USPS agreed with the two recommendations regarding scanning procedures and committed to completing corrective actions by November of 2018  In its general comments, USPS noted that our reference to the USPS OIG’s report, Processing Readiness for Election and Political Mail for the 2018 Midterm Elections did not appear germane to the scanning of competitive mail  We recognize that this report was focused on a different type of mail, but as USPS noted in its letter, we use the OIG report as a related example of how USPS has taken efforts to improve the communication of its scanning procedures to employees  Therefore, we determined that our use of the report is appropriate  We have added information from the OIG report to characterize the OIG’s recommendations and USPS’s actions to address those recommendations  USPS also provided technical comments, which we incorporated as appropriate  We will send copies of this report to the appropriate congressional committees, the Postmaster General, the Chairman of the Postal Regulatory Commission, 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 about this report, please contact me at (202) 512-2834 or rectanusl@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff making key contributions to this report are listed in appendix II  In addition to the individual named above, Kyle Browning (Assistant Director); Greg Hanna (Analyst-in-Charge); Michael Hansen; Thanh Lu; John Mingus; Faye Morrison; Malika Rice; Amy Rosewarne; Crystal Wesco; Elizabeth Wood; and Matthew Zaun made key contributions to this report 


Report 2:  We previously found that federal programs should be reexamined if there have been significant changes in the country or the world that relate to the reason for initiating the program  In that report, we found that many federal programs and policies were designed decades ago to respond to trends and challenges that existed at the time of their creation  Moreover, the Office of Management and Budget Circular A-94 for benefit-cost analysis of federal programs includes guidelines that apply to any analysis used to support government decisions to initiate, renew, or expand programs or projects that would result in a series of measurable benefits or costs extending for 3 or more years into the future  Given changing market conditions and future projections, without conducting additional analysis to supplement its 2016 review and thereafter periodically reexamining the SPR to take into account changes in market conditions and include a thorough consideration of the costs and benefits of a wide range of SPR sizes, DOE cannot provide information to Congress to inform decisions about the appropriate size of the SPR and risks holding too much or too little in the SPR to meet the United States’ evolving energy security needs and IEA obligations  DOE has also not fully identified whether additional regional petroleum product reserves should be part of the SPR  Because the SPR stores oil nearly exclusively along the Gulf Coast, the SPR is configured primarily to respond to global oil supply disruptions  However, as we reported in November 2017, the SPR has primarily been used in response to domestic disruptions  The SPR is limited in its ability to respond to domestic disruptions because reserves are almost entirely composed of crude oil and not refined petroleum products, which may not be effective in responding to disruptions that affect the refining sector  For example, as we reported in November 2017, Hurricanes Harvey, Irma, and Maria damaged infrastructure and property, caused the loss of life, and disrupted the operations of refineries representing at least 15 percent of the nation’s refining capacity  DOE has identified regions subject to product supply vulnerabilities as shown in Figure 3  The Quadrennial Energy Review of 2015 recommended that the agency analyze the need for additional or expanded regional product reserves by undertaking updated cost-benefit analyses for all of the regions of the United States that have been identified as vulnerable to fuel supply disruptions  In response to this recommendation, DOE studied the costs and benefits of regional petroleum product reserves in the West Coast and Southeast Coast  According to DOE officials, weather events in the Southeast Coast are of higher probability but lower consequence, and events in the West Coast are of lower probability but higher consequence  DOE did not finalize its 2015 studies on regional petroleum product reserves and make them publicly available  However, the draft 2015 studies concluded that a product reserve in the Southeast would provide significant net economic benefits to the region and the United States, particularly in the event of a major hurricane, while further analyses are needed to determine the potential benefits of a reserve on the West Coast  A prior DOE study also suggests that petroleum product reserves merit consideration—in 2011, DOE carried out a cost-benefit study of the establishment of a refined product reserve in the Southeast and estimated that such a reserve would reduce the average gasoline price rise by 50 percent to 70 percent in the weeks immediately after a hurricane landfall, resulting in consumer cost savings, according to the Quadrennial Energy Review of 2015  According to DOE officials, the agency has no plans to conduct additional studies  DOE’s 2016 review of the SPR did not fully assess whether there is a need for additional regional product reserves in other U S  regions identified as vulnerable to fuel supply disruptions, as recommended by DOE’s studies and the 2015 Quadrennial Energy Review  Without completing studies on the costs and benefits of regional petroleum product reserves for all the vulnerable U S  regions and publicly releasing the results, DOE cannot ensure that it and Congress have the information they need to make decisions about whether additional regional product reserves are needed  DOE has taken steps to take into account the effects of congressionally mandated oil sales in its plans for modernizing the SPR, though DOE’s current plans are based on information largely developed prior to the most recent congressionally mandated oil sales  According to DOE, the SPR modernization program is focused on a life extension project to modernize aging infrastructure to ensure the SPR will be able to meet its mission requirements for the next several decades  The project’s scope of work has undergone several revisions since its inception in response to changing conditions and requirements, according to the agency  DOE has estimated the total cost for the SPR’s modernization at up to $1 4 billion  DOE raised about $323 million for modernization through the sale of SPR oil in fiscal year 2017, and the Consolidated Appropriations Act of 2018 provided that DOE is to draw down and sell an amount of crude oil not to exceed $350 million for modernization in fiscal year 2018  As of the end of February 2018, DOE has spent $22 million on modernization efforts and the additional funds will allow DOE to continue moving forward with the project, according to agency officials  According to DOE’s modernization plans, the first major construction is scheduled for fiscal year 2019  However, these plans are largely based on information DOE analyzed before recent congressionally mandated sales of an additional 117 million barrels of oil  Since the most recent mandated sales, DOE has taken steps to update its modernization plans and has changed its assumptions for SPR’s modernization  For example, DOE now assumes that the reserve will hold about 405 million barrels of oil and that one of the four SPR sites may close after congressionally mandated sales are completed at the end of fiscal year 2027, according to agency officials  However, DOE has not fully updated the SPR’s modernization plans based on these assumptions  According to DOE officials, in March 2018, DOE commenced a study—the SPR post-sale configuration study—to examine potential future reserve configurations  This study is to take into account the effects of congressionally mandated sales on the reserve and its modernization, and is targeted for completion in October 2018, according to agency officials  Information from the study will inform DOE’s updates to the SPR’s modernization plans, according to DOE officials  As part of its post-sale configuration study, DOE plans to examine how the agency may handle the potentially excess SPR facilities created by the mandated sales  In January 2017, the SPR had a design capacity to hold 713 5 million barrels of oil and actually held 695 million barrels  As shown in figure 4, without action by DOE to reduce the SPR’s design capacity or otherwise use SPR facilities, congressionally mandated sales will cause excess storage capacity to grow to 308 million barrels or more by the end of fiscal year 2027—meaning that about 43 percent of the SPR’s total design capacity to store oil would be unused  DOE plans to explore some options to use these potentially excess SPR assets in its ongoing post-sale configuration study  In withdrawing oil to meet congressionally mandated oil sales currently in place (290 million barrels through fiscal year 2027), DOE could close at least one SPR site based on our analysis of projected excess storage capacity  For example, if DOE were to close the smallest SPR site, Bayou Choctaw, the agency could also explore selling the connected pipeline and marine terminal, which are currently being leased to a private company  DOE could also consider leasing excess storage capacity to other countries so that they could store oil at the SPR  DOE has not entered into any such leases with other countries and has not considered such leases because, according to DOE, the SPR has historically lacked capacity to store additional oil  DOE has not proposed any of these options or explored the revenue the agency could generate by selling or leasing these assets  According to DOE officials, the agency will examine the feasibility of such options in the ongoing SPR post-sale configuration study  As DOE takes steps to plan for the SPR’s modernization, ongoing uncertainty regarding the SPR’s long-term size and configuration have complicated DOE’s efforts  According to DOE officials, this uncertainty makes it extremely difficult to effectively perform any mid-to long-range planning efforts for the SPR’s modernization project, including the execution of major maintenance projects  Congress has generally set the SPR’s size by mandating purchases or sales of oil, and has established and amended the minimum size of the SPR as it pertains to the release of oil for emergency protection  Since 2015, Congress has, across six pieces of legislation, mandated 290 million barrels in additional oil sales  However, DOE developed its modernization plans in 2016  DOE officials told us they do not know whether additional sales will be mandated over the next 10 years or whether other changes may be required to the configuration of the reserve  Any additional congressionally mandated sales or direction to pursue additional petroleum product reserves would require DOE to again revisit its modernization plans and assessments of the potential uses of any excess SPR assets  Oil market projections also have implications for the future of the SPR  Under current projections, the United States may fluctuate between being a net importer and net exporter over the next several decades  Specifically, the United States is projected to become a net exporter by the late 2020s and would then no longer have a 90-day reserve obligation, but it is projected to return to being a net importer between 2040 and 2050  These projected fluctuations could affect the desired size of the SPR in the future  This uncertainty creates risks for DOE’s modernization plans, as DOE may end up spending funds on facilities that later turn out to be unnecessary should Congress ultimately decide on a larger- or smaller-sized SPR than DOE anticipates  Having a long-term target for the size and configuration of reserves helps other IEA member countries manage their reserves  For example, as previously discussed, unlike the United States, some other IEA members have specified in dynamic terms the amount of reserves to be held, such as days of net import protection or days of consumption, rather than specifying a specific static volume amount  Under such approaches, the amount held varies over time as entities managing the reserve acquire or sell reserves in order to meet the target  Setting a long-term target for the size and configuration of the SPR—taking into account projections for oil production, consumption, and IEA obligations—could better position DOE to ensure that funds spent on the SPR’s modernization do not modernize a system that is no longer needed and that DOE is able to adequately plan for potentially excess SPR assets  In the course of our work, we also identified other options for handling potentially excess SPR assets that DOE is not planning on examining, largely because DOE does not currently have the authority to pursue them, according to agency officials  First, DOE could explore leasing storage capacity to private industry  U S  oil production has generally increased over the last decade  As a result, the private sector may want to lease excess SPR capacity, which may be cheaper than above-ground storage, according to a representative of a private company we spoke with  Fees for doing so could help defray public reserve storage costs  However, officials told us that the Energy Policy and Conservation Act gives DOE authority to lease underutilized storage to other countries, but not to the private sector  Second, if Congress determines that the SPR holds oil in excess of that needed domestically, DOE could explore selling contracts or tickets for the excess oil rather than selling the oil outright  Australian and New Zealand officials told us that if DOE were to sell tickets for SPR oil, tickets would help these countries meet their IEA 90- day reserve obligations  Australian officials told us they have discussed this option with DOE  Currently the United States and Australia have agreed, through an arrangement, to allow Australia to contract for petroleum stocks located in the United States and controlled by commercial entities  According to DOE officials, the arrangement would permit Australia to receive credit from the IEA for tickets it purchases from the U S  private sector  While the arrangement does not cover government-owned oil in the SPR, if it did, based on our analysis, DOE could generate up to approximately $15 million annually if Australia purchased the maximum allowable amount of oil specified in an arrangement through tickets for excess SPR oil  However, although the Energy Policy and Conservation Act allows DOE to lease underutilized storage to other countries, DOE lacks the authority to sell tickets and does not plan to seek this authority, according to DOE officials  DOE officials told us that they do not plan to examine these options  According to DOE’s real property asset management order, the agency is to identify real property assets that are no longer needed to meet the program’s mission needs and that may be candidates for reuse or disposal  Once identified, the agency is to undertake certain actions, including determining whether to dispose of these assets by sale or lease  As part of its SPR post-sale configuration study, DOE plans to determine whether it is appropriate to close SPR facilities, and the relative benefit of any closures would be informed by potential lease revenues from maintaining sites so they could be leased, according to officials  However, without examining a full range of options in the post-sale configuration study, DOE risks missing beneficial ways to modernize the SPR while saving taxpayer resources  Given changing crude oil and petroleum product market conditions and the constrained budget environment, it is important that DOE ensures the SPR is effective at meeting U S  energy security needs and IEA obligations while being managed and maintained in an efficient manner  In response to congressional direction and recommendations from GAO and DOE Inspector General, DOE conducted a long-term strategic review of the SPR in 2016 after its last comprehensive examination in 2005  In its review, DOE did not determine an optimal size for the SPR, and its analysis was limited in several ways  In particular, DOE did not fully consider recent and expected future changes in crude oil and petroleum market conditions such as the implications of projected fluctuations in U S  net imports or the role that increased levels of private reserves could play in responding to supply disruptions  DOE also did not perform a full cost-benefit analysis of holding different volumes of reserves  Without supplementing its 2016 strategic review by conducting additional analysis, and periodically conducting such analyses going forward, DOE cannot provide information to Congress to inform decisions about the appropriate amounts of crude oil and petroleum products to hold in the SPR and risks holding too much or too little in the SPR to meet the United States’ energy security needs and international obligations  Such information is needed on a timely basis, to reflect the pace of change in oil and petroleum markets and other relevant factors that affect the optimal size of the SPR  Though the SPR has primarily been used in response to domestic supply disruptions, such as hurricanes, the reserve is limited in this role because it is almost entirely composed of crude oil, and not petroleum products  In this regard, the Quadrennial Energy Review of 2015 recommended that DOE analyze the need for additional regional product reserves for U S  regions that have been identified as vulnerable to fuel supply disruptions  DOE has not identified whether additional regional product reserves should be part of the SPR or completed studies of all vulnerable U S  regions, and it has no plans to do so, according to DOE officials  Without conducting or completing studies for all the vulnerable U S  regions and releasing the results, DOE cannot ensure it and Congress have the information they need to make decisions about potential additional regional product reserves  In the face of declining net U S  imports, Congress has taken repeated steps to reduce the size of the reserve  Given that net imports are projected to continue to decline through the late 2020s and fluctuate in the future, there may be additional congressionally mandated SPR oil sales  This has created long-term uncertainty regarding the future size and configuration of the SPR  Congress could address this uncertainty by identifying a long-term target for the size of the SPR—either by volume or in terms tied to factors, such as consumption or net import protection, that affect the country’s energy security needs and IEA obligations  Setting such a long-term target could better position DOE to ensure the efficiency and efficacy of federal funds spent on the reserve  DOE has recently begun to study the potential effects of congressionally mandated sales on its modernization plans  As part of its SPR post-sale configuration study, DOE plans to determine whether it is appropriate to close SPR facilities, and the relative benefit of any closures would be informed by potential lease revenues from maintaining sites so they could be leased, according to officials  However, we identified other options for handling potentially excess SPR assets that DOE is not planning to examine in its study, inconsistent with the agency’s order on real property asset management  Although DOE does not currently have the authority to implement these options, according to officials, examining their potential use, including possible revenue enhancement, could inform Congress as it examines whether it should grant such authority  Without examining a full range of options in the post-sale configuration study for handling potentially excess SPR assets, DOE risks missing beneficial ways to modernize the SPR while saving taxpayer resources  We are making the following matter for congressional consideration: Congress may wish to consider setting a long-range target for the size and configuration of the SPR that takes into account projections for future oil production, oil consumption, the efficacy of the existing SPR to respond to domestic supply disruptions, and U S  IEA obligations  (Matter 1) We are making four recommendations to DOE: The Secretary of Energy should supplement the agency’s 2016 long-term strategic review by conducting an additional analysis that takes into account private-sector response, oil market projections, and costs and benefits of a wide range of different SPR sizes  (Recommendation 1) The Secretary of Energy should take actions to ensure that the agency periodically conducts and provides to Congress a strategic review of the SPR that, among other things, takes into account changes in crude oil and petroleum product market conditions and contains additional analysis, such as the costs and benefits of a wide range of different SPR sizes  (Recommendation 2) The Secretary of Energy should conduct or complete studies on the costs and benefits of regional petroleum product reserves for all U S  regions that have been identified as vulnerable to fuel supply disruptions, and the Secretary should report the results to Congress  (Recommendation 3) The Secretary of Energy, in completing DOE’s ongoing study on the effects of congressionally mandated sales, should consider a full range of options for handling potentially excess assets and, if needed, request congressional authority for the disposition of these assets  (Recommendation 4) We provided a draft of this report to DOE for review and comment  DOE provided written comments, which are reproduced in appendix I  Of the four recommendations, DOE agreed with two, partially agreed with one, and disagreed with one  Regarding our recommendation that DOE supplement its 2016 long- term strategic review with an additional analysis that takes into account private sector response, oil market projections, and costs and benefits of a wide range of different SPR sizes, the agency partially agreed with the recommendation  DOE agreed to conduct an additional analysis to assess the purpose, goals, and objectives of the SPR, taking into account private sector response, oil market projections, and any other relevant factors, that will lead to an evaluation of possible optimal sizes of the SPR in the future  In response to taking into account the costs and benefits of a wide range of different SPR sizes, DOE stated that the agency determined the projected benefits of a wide range of different SPR sizes ranging from 430 million barrels of oil to 695 million barrels of oil in its 2016 review  However, the minimum SPR size considered by DOE is greater than the projected SPR size after congressionally mandated sales have occurred  Further, the SPR size after congressionally mandated sales is projected to be far in excess of the IEA obligation to hold a minimum of 90 days of net imports  DOE must also consider the minimum size needed to meet its IEA obligations in the event of a collective action  In conducting additional analysis, DOE should consider a smaller lower bound, in line with congressionally mandated sales, for the size of the SPR, and more fully consider the size needed to meet the IEA 90-day net import and collective action obligations  Regarding our recommendation that DOE conduct periodic reviews of the SPR, the agency agreed with the recommendation  DOE stated that a 5-year time interval between reviews would strike an appropriate balance between the need to periodically conduct a strategic assessment and evaluation of the SPR and the limitations on resources to plan and conduct such a review  Regarding our recommendation that DOE conduct or complete studies on the costs and benefits of regional petroleum product reserves, the agency disagreed  DOE stated that it is the agency's position that government owned and operated regional petroleum product reserves are an inefficient and expensive solution to respond to regional fuel supply disruptions  DOE further stated, based on studies done in 2015 that DOE officials told us were pre-decisional and therefore could not be reported, that there are additional concerns associated with government-owned and operated regional refined petroleum product reserves, including little to no storage capacity for lease in commercial terminals and high costs for government owned and operated regional product reserves  However, these same studies took these concerns into account, and concluded that a product reserve in the Southeast would provide significant net economic benefits (benefits minus costs) to the region and the United States in the event of a major hurricane  These studies also concluded that additional analyses are required to inform decisions regarding the potential benefits of a similar reserve on the West Coast  Further, the Quadrennial Energy Review of 2015 recommended that similar analyses be completed for other areas deemed by DOE to be vulnerable to fuel supply disruptions  Therefore, we continue to believe that conducting these analyses, as recommended in the Quadrennial Energy Review of 2015, will provide Congress with information needed to make decisions about regional product reserves  Regarding our recommendation that DOE consider a full range of options for handling potentially excess assets, DOE agreed with the recommendation  DOE stated that in its ongoing study, the agency will include an assessment of disposition options for any potential excess or underutilized SPR assets, to include the need for new legislative authority, as necessary, for the disposition of assets  DOE expects this study to be completed in October 2018  DOE also provided technical comments, 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 Energy, 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 members have any questions about this report, please contact me at (202) 512-3841 or ruscof@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix II  In addition to the individual named above, Quindi Franco (Assistant Director), Nkenge Gibson (Analyst-in-Charge), Philip Farah, Ellen Fried, Cindy Gilbert, Greg Marchand, Celia Mendive, Patricia Moye, Camille Pease, Oliver Richard, Dan Royer, Rachel Stoiko, and Marie Suding made key contributions to this report 

ground_truth: More than 4 decades ago, Congress authorized the creation of the SPR to reduce the impact of disruptions in supplies of petroleum products. DOE manages the SPR. As a member of the International Energy Agency, the United States is obligated to maintain reserves equivalent to at least 90 days of the previous year's net imports (imports minus exports). The SPR's storage and related infrastructure is aging, and DOE has plans to modernize these facilities. Since 2015, Congress has mandated crude oil sales. As of March 2018, the SPR held about 665 million barrels of crude oil. GAO was asked to examine the SPR's ability to meet U.S. energy security needs. This report examines, among other things, the extent to which (1) DOE has identified the optimal size of the SPR, and (2) DOE's plans for modernizing the SPR take into account the effects of congressionally mandated crude oil sales. GAO reviewed DOE's plans and studies, and interviewed agency officials and nine experts selected based on prior work, referrals, and a literature review. The Department of Energy (DOE) has not identified the optimal size of the Strategic Petroleum Reserve (SPR). In 2016, DOE completed a long-term strategic review of the SPR after its last comprehensive examination conducted in 2005. The 2016 review examined the benefits of several SPR sizes, but it did not identify an optimal size and its review was limited in several ways. In particular, DOE did not fully consider recent and expected future changes in market conditions, such as the implications of falling net imports, or the role that increased levels of private reserves (reserves held by private companies for their own purposes) may play in responding to supply disruptions. These changes have contributed to SPR and private reserves reaching historically high levels on a net imports basis (see figure). These changes are expected to continue to evolve—according to government projections, the United States will become a net exporter in the late 2020s before again becoming a net importer between 2040 and 2050. GAO has found that agencies should reexamine their programs if conditions change. Without addressing the limitations of its 2016 review and periodically performing reexaminations in the future, DOE cannot be assured that the SPR will be sized appropriately into the future. DOE has taken steps to take into account congressionally mandated sales of SPR crude oil in its $1.4 billion modernization plans for SPR's infrastructure and facilities. The SPR is projected to hold 405 million barrels of oil by the end of fiscal year 2027. However, DOE's current plans are based on information analyzed prior to recently mandated sales. According to DOE officials, the agency began a study in March 2018 to assess the effects of these sales on the SPR's modernization. However, this study is not examining all options for handling any excess SPR assets that may be created by currently mandated sales or any additional sales that may be mandated in the future, inconsistent with an agency order on real property asset management that calls for identifying excess assets. For example, DOE does not plan to examine the potential to lease unused SPR storage capacity to the private sector because DOE is not currently authorized to enter into such leases, according to agency officials. If authorized, leasing capacity could generate revenues that could help offset the costs of modernization. By not examining a full range of options, DOE risks missing beneficial ways to modernize the SPR while saving taxpayer resources. GAO is making four recommendations, including that DOE (1) supplement the 2016 review by conducting an additional analysis, (2) ensure that the agency periodically reexamines the size of the SPR, and (3) consider a full range of options for handling potentially excess assets as it conducts its study, among other things. DOE agreed with two, partially agreed with one, and disagreed with another recommendation on refined product reserve studies. GAO maintains that the recommendations are valid.