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



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

Report 1: The U S  government engages with the governments of other countries in the Western Hemisphere through various inter-American organizations including the OAS, PAHO, IICA, and PAIGH  According to State, the OAS is the primary inter-American political forum through which the United States engages with other countries in the Western Hemisphere to promote democracy, human rights, security, and development  PAHO serves as the Regional Office for the Americas of the World Health Organization, the United Nations agency on health  IICA supports agricultural development and rural well-being through technical cooperation and the execution of agricultural projects throughout the hemisphere  PAIGH specializes in regional cartography, geography, history, and geophysics and has facilitated the settlement of regional border disputes  According to U S  agency officials, the organizations’ regional knowledge and technical expertise make them effective implementing partners for projects serving U S  national interests and priorities throughout the hemisphere  Member states collectively finance these organizations by providing assessed and voluntary contributions (see table 1)  For each organization, its member states’ assessed contributions are intended to finance the organization’s regular budgets, which generally cover the organization’s day-to-day operating expenses, such as facilities and salaries  Member states also finance certain OAS, PAHO, and IICA activities and projects through voluntary contributions  According to U S  officials, the United States provides voluntary contributions to the OAS, PAHO, and IICA primarily through assistance agreements for specific projects from State, USAID, HHS, and USDA  The Institute of Internal Auditors (IIA) provides the framework for international organizations to oversee funds such as the assessed contributions provided by member states to OAS, PAHO, IICA, and PAIGH  The institute’s authoritative guidance, International Standards for the Professional Practice of Internal Auditing, includes mandatory performance standards that describe the nature of internal audit activities and provide criteria for evaluating these activities  Organizations are required to subscribe to these IIA standards, according to PAIGH officials and OAS, PAHO, and IICA documents  Assistance agreements are a critical tool the U S  government uses to achieve important national objectives  As we have previously reported, effective oversight and internal control are important to provide reasonable assurance to federal managers and taxpayers that assistance agreements are awarded properly, recipients are eligible, and federal funds are used as intended and in accordance with applicable laws and regulations  State, USAID, HHS, and USDA oversee funds provided to OAS, PAHO, and IICA through assistance agreements using monitoring activities such as financial and performance reports  Within each of these agencies, various bureaus and offices are responsible for awarding and managing assistance agreements to these inter-American organizations, including State’s Office of Weapons Removal and Abatement in the Bureau of Political-Military Affairs, USAID’s Office of U S  Foreign Disaster Assistance, HHS’s Centers for Disease Control and Prevention and its Food and Drug Administration, and USDA’s Animal and Plant Health Inspection Service  The documentation of these monitoring activities as called for by federal standards for internal control enables the agencies to determine the effectiveness of the agreement activity  We found that the strategic goals of the four inter-American organizations are predominantly aligned with the high-level strategic goals for the Western Hemisphere documented by State, USAID, HHS, and USDA  According to officials, the agencies all consider U S  strategic goals when deciding which projects to fund at OAS, PAHO, and IICA  State, USAID, HHS, and USDA have goals for foreign assistance to the Western Hemisphere, as shown in table 2  For example, four of the five goals in State and USAID’s Joint Strategy correspond with goals at the OAS, IICA, and PAIGH  U S  agencies, on an ongoing basis, evaluate each inter- American organization to ensure U S  and organization goals are aligned  Officials from all four agencies provided examples of how they help to ensure alignment of U S  strategic goals when funding projects at OAS, PAHO, and IICA  State: According to State officials, State created an Annual Performance and Budget Review process in 2014 specifically to review entities, such as the OAS, that receive voluntary contributions funded through the International Organization and Programs account  This process examines performance of State-funded activities relative to those activities from the previous year and the extent to which the activities advance U S  priorities and objectives  State officials further noted that the Annual Performance and Budget Review helps inform State’s decision-making on what to include in the following year’s budget request  For example, during the 2016 review for the OAS Development Assistance Program, State reported the program’s significant activities, funds expended, and achievements such as training government officials on successful small business policies in the United States  USAID: According to USAID officials, USAID’s project design and approval policies and procedures ensure that all USAID-funded activities are linked to applicable U S  and USAID strategies  USAID’s agency guidance requires, at a minimum, that each project or activity must be formally approved in writing by the relevant Mission Director or Principal Officer for a given program  Officials stated that this approval memo and supporting documentation address a number of planning considerations, including how the proposed activity aligns with broader strategies  Furthermore, officials stated that USAID’s lawyers review project approval documentation prior to final approval and verify that the activity complies with all applicable statutes, regulations, and policies  HHS: According to HHS officials, HHS engages with PAHO on its Biennial Work Plans, which are operational planning instruments that PAHO uses to identify activities that it can implement within each of its member states  HHS officials noted that they use PAHO’s Biennial Work Plan to strengthen U S  approaches on issues of common concern and to advance U S  priorities within the region  According to HHS officials, proposals for technical cooperation projects are required to correspond to one of the technical priorities in PAHO’s strategic plan for 2014–2019 and to be aligned with the HHS global strategy and U S  priorities  USDA: USDA officials said that they compare the U S  strategic goals with IICA’s goals and objectives when they formulate project proposals with IICA to ensure that the projects are aligned with U S  priorities for the region  Additionally, USDA officials told us that USDA helped shape and influence IICA’s recent 10-year strategic plan, ensuring that IICA’s strategic objectives were closely aligned with U S  strategic goals  OAS, PAHO, IICA, and PAIGH have established mechanisms for overseeing their use of assessed and voluntary contributions, such as external auditors and internal audit boards as required by IIA standards  State and USDA have directly supported these oversight mechanisms  OAS, PAHO, IICA, and PAIGH have oversight mechanisms, as shown in table 3  The four organizations follow the internal control standards of the IIA, codified in the International Standards for the Professional Practice of Internal Auditing, according to PAIGH officials and OAS, PAHO, and IICA documents  All four organizations have internal and external auditors, as required by these standards  Furthermore, OAS, PAHO, and IICA have additional oversight mechanisms, such as anti-fraud policies and program evaluation processes  The officials we interviewed from State, USAID, HHS, and USDA expressed confidence in the four organizations’ management of their assessed and voluntary contributions  All four organizations document the status of their financial and internal control activities in audit reports posted on their public websites  For example, the OAS Office of the Inspector General’s April 2017 Annual Report included an update on its five ongoing audits and investigations  The report also outlined progress made against prior recommendations  U S  agency officials support budget and administrative subcommittees in three of the four organizations and promote the participation of U S  experts on independent audit committees, as shown in table 4  For example, according to officials, State plays a significant role in promoting policies on oversight and accountability at the four organizations through formal engagement in deliberations and decision-making of each organization’s governing body and through informal engagement with other member states and the secretariat by recommending best practices in governance, management, and oversight  State and USDA are also directly involved in implementing some of the additional oversight mechanisms at the organizations  For example, a USDA official serves as a member of IICA’s Audit Review Committee  Additionally, an IICA official told us the United States was involved in defining IICA’s Convention and Rules of Procedure for its governing bodies, which established the requirement for internal and external auditing  According to State officials, the United States led efforts to strengthen oversight at several of the organizations under review in recent years, such as advocating for the creation of an ethics officer position at PAHO, proposing language to strengthen the authority and independence of the OAS’s Office of the Inspector General, and encouraging the creation of audit committees at both organizations  In addition, State has played a lead role in supporting the ongoing reform of the OAS administration, which includes improved oversight and accountability, according to officials from the OAS and the U S  Mission to the OAS  We reviewed 12 selected assistance agreements that the four U S  agencies awarded to OAS, PAHO, and IICA that were active during calendar years 2014 through 2016, and found that two agencies did not consistently include all key monitoring provisions in their agreements  While HHS and USAID implemented applicable guidance by including all key monitoring provisions in their agreements, USDA and State did not do so  USDA and State agency officials did not explain why USDA and State did not include these monitoring provisions in their agreements  However, State has since taken corrective action to ensure that they are included in future agreements, according to State officials  Applicable agency guidance calls for agencies to conduct monitoring activities as part of their oversight of their agreements  Each of the four agencies has established agency-specific guidance that outlines the monitoring activities for assistance agreements  In some cases, the agency-specific guidance may mandate additional monitoring activities beyond those called for in applicable federal regulations, such as risk assessments  For example, State’s guidance calls for the creation of a monitoring plan  Federal standards for internal control require that agencies include in agreements all key provisions delineating the parties’ responsibilities  For the 12 agreements we reviewed, the number of total key monitoring provisions per agreement varied—including within one agency—depending on when the agency issued and updated its guidance relative to when the agreements were approved  Federal standards for internal control call for agencies to document internal controls, transactions, and significant events  Specifically, internal control standards state that agency management should include internal control activities (e g , monitoring activities) in policies or directives for transactions such as assistance agreements  For the 12 assistance agreements we reviewed, USDA and State did not include provisions implementing 6 of the 55 total (11 percent) applicable monitoring activities required by applicable guidance to carry out required monitoring activities (see table 5)  State took corrective action in 2015 by issuing a standard operating procedure  USDA: USDA did not include 4 of the 13 key monitoring provisions implementing the applicable guidance for the three USDA agreements we reviewed (see table 6)  Two of the agreements and supporting documentation each included all four key applicable monitoring provisions  However, Agreement 2 in the table did not include 4 of the 5 monitoring provisions in the agreement or work plan, which documents the monitoring provisions  The agreement partially included performance goals, because it included objectives for the agreement’s activities, but did not include time frames to complete all of the activities  The USDA grant official did not explain why the work plan did not adhere to applicable federal regulations when it was drafted and approved  State: State did not include 2 of the 21 key monitoring provisions implementing the applicable guidance for the three State agreements we reviewed (see table 7)  Two of the agreements and supporting documentation we reviewed included the 7 monitoring provisions implementing the requirements in the applicable agency guidance  However, one agreement awarded in 2012 did not include 2 of the provisions: a risk assessment and a monitoring plan  That office that awarded this agreement took corrective action in 2015 by issuing a standard operating procedure requiring that risk assessments and monitoring plans accompany its grants and cooperative agreements  USAID: USAID included both key monitoring provisions implementing the applicable guidance for the three USAID agreements we reviewed (see table 8)  USAID’s Automated Directives System 308, Standard Provisions for Cost-Type Awards to Public International Organizations contains two key monitoring provisions for agreements  USAID incorporated the monitoring provisions nearly verbatim into the agreements we reviewed, using templates from this guidance for required terms and conditions  HHS: HHS included the 15 monitoring provisions implementing the applicable guidance for the three HHS agreements we reviewed (see table 9)  None of the agencies provided us with full documentation to demonstrate their adherence to the required monitoring activities called for in all of their agreements that we reviewed, including the previously mentioned key monitoring provisions that we reviewed  State and HHS have taken corrective actions to address the gaps we found in documentation for the agreements we reviewed  Agency officials told us that they use these monitoring documents, such as financial and progress reports, to inform future budgetary and programmatic decisions  Therefore, they may lack information needed to make such decisions if they do not have access to complete monitoring documentation  According to federal standards for internal control, each agency is to include key monitoring provisions as part of its agreements  In the individual assistance agreements, the agencies specify the requirements to fulfill these activities, such as requiring financial reports on a quarterly basis or including specific information in performance reports  Grants officers at times, if they deem it necessary or appropriate, include additional monitoring provisions requiring activities beyond those required by the applicable guidance, such as site visits  Federal standards for internal control call for agency management to design monitoring activities, such as financial and performance reporting, so that all transactions are completely and accurately recorded  Recording these activities maintains their relevance and value to management in controlling operations and making decisions  Without access to complete monitoring documentation, the agencies risk weakening the effectiveness of these controls  None of the four U S  agencies had full documentation of all of the monitoring activities required by their agreements we reviewed (see table 10)  The agencies did not have full documentation of monitoring activities for 9 of the 12 agreements we reviewed  For the 42 monitoring activities identified across all of the individual agreements, the four agencies did not have full documentation of 18 of the activities (43 percent)  However, State took corrective action in May 2017 to address its gaps in documentation, and according to HHS officials, the Food and Drug Administration addressed its gap in documentation by implementing its agreement monitoring program in fiscal year 2018  USDA did not have full documentation of any of the 10 monitoring activities we identified (see table 11)  USDA demonstrated that it had partially documented 2 of the 10 monitoring activities (20 percent) by providing us with some, but not all, quarterly performance reports  For one of the agreements, USDA had no documentation of the monitoring activities for that agreement  For its other two agreements, USDA did not have full documentation of the required monitoring activities  USDA officials did not explain why they did not have full documentation  Without full documentation of the required monitoring activities, USDA may not have the information it needs to make appropriate budgetary and programmatic decisions  USAID did not have full documentation of 2 of the 11 total monitoring activities (18 percent) we identified across the three agreements we reviewed (see table 12)  USAID had partial documentation of those 2 monitoring activities  For example, USAID provided us with some, but not all, records such as financial reports required by the terms of the monitoring activities in the agreements  According to USAID officials, the agencies’ lack of complete monitoring documentation was in part due to agency officials not following some of their agency’s requirements for managing agreement documents, such as placing all documents in a shared document management system  For example, for one of the agreements we reviewed, USAID officials stated that they stored some agreement documentation electronically—such as modifications, correspondence with the agreement recipient, and quarterly financial reports—but primarily maintained paper files  USAID officials told us they use the monitoring documents of these agreements, such as financial and progress reports, to inform future budgetary and programmatic decisions  For example, according to USAID officials, USAID uses monitoring documents to identify and address potential project delays or other “red flags ” For one of the agreements we reviewed, USAID officials stated these monitoring reports also assist them in determining whether to award additional funds and establish new indicators in subsequent agreements  Without full documentation of the required monitoring activities, USAID may not have the information it needs to make appropriate budgetary and programmatic decisions  State did not have full documentation for 5 of the 16 monitoring activities (31 percent) we identified across the three agreements we reviewed (see table 13)  However, State had partial documentation of 4 of those 5 monitoring activities  For example, State had some, but not all, records such as standard reporting metrics, required by the terms of the monitoring activities in one of the agreements  State did not have documentation of one of the monitoring activities (site visits)  According to State officials, the agency’s lack of complete monitoring documentation was in part due to agency officials not following some of the agency’s requirements for managing agreement documents, such as placing all documents in a shared document management system  For example, according to State officials, for one of the agreements we reviewed, the grants officer mistakenly had saved site visit reports and similar documents to personal folders because the officer did not know how to use State’s grant document storage system  As a result, neither the current grants officer nor other State officials could retrieve these documents  In May 2017, after awarding the agreements we reviewed, State took corrective action by issuing the Federal Assistance Directive to establish internal guidance, policies, and procedures for all domestic and overseas grant-making bureaus, offices, and posts within the department when administering federal financial assistance  The directive notes that State implemented a grant management system for domestic and overseas grants to resolve its “significant deficiency in the management of Federal financial assistance ” In addition, the directive indicates that officials from State’s Bureau of Administration, Office of the Procurement Executive, Federal Assistance Division will evaluate compliance with risk assessment requirements and review documentation for selected agreements each fiscal year  One of the stated purposes of these reviews is to mitigate risk by strengthening management and oversight of awards, including grants  According to a State Office of Inspector General report, State should complete the full deployment of this system for overseas grants in fiscal year 2019  HHS did not have full documentation of 1 of the 5 applicable monitoring activities (20 percent) we identified across the three agreements we reviewed (see table 14)  HHS had partial documentation of the semiannual progress report activity for one of its agreements, required by the terms of its agreement  HHS officials did not explain why they did not have full documentation for this monitoring activity  HHS had full documentation of all applicable monitoring activities for the other two agreements we reviewed  According to agency officials, the Food and Drug Administration, which administered one of the HHS agreements we reviewed, has taken corrective action to evaluate its agreement documentation and address deficiencies  According to HHS officials, the Food and Drug Administration developed a pilot program intended to provide an additional layer of oversight to ensure adherence to the terms of each agreement  Under the pilot, officials said, a grant monitoring specialist reviews the agreement documentation and monitoring reports to identify agreements that need additional assistance  According to HHS officials, the Food and Drug Administration implemented this program in fiscal year 2018 and will eventually include all Food and Drug Administration agreements  U S  assistance agreements for projects with inter-American organizations further U S  strategic goals in the Western Hemisphere, but State, HHS, USAID, and USDA did not consistently include all key monitoring provisions as part of their assistance agreements or demonstrate that they had full documentation of monitoring activities for the agreements we reviewed  Of these four agencies, USAID and USDA have not taken corrective actions  Monitoring the implementation of U S  assistance agreements and fully documenting the results of such monitoring are key management controls to help ensure that U S  agreement recipients use federal funds appropriately and effectively  The agencies risk weakening the effectiveness of these controls by not including all key monitoring provisions called for by applicable agency guidance  Further, if the agencies do not have full documentation of the agreements’ required monitoring activities, they may not be able to effectively manage federally funded projects that support U S  strategic goals  In addition, agencies may not have all the information they need to make budgetary and programmatic decisions  We are making a total of three recommendations: one to USAID and two to USDA  The USAID Administrator should ensure that USAID officials have full documentation of required monitoring activities in agreements with inter- American organizations  (Recommendation 1) The Secretary of Agriculture should ensure that USDA includes all key monitoring provisions specified by applicable guidance as part of agreements with inter-American organizations  (Recommendation 2) The Secretary of Agriculture should ensure that USDA officials have full documentation of required monitoring activities in agreements with inter- American organizations  (Recommendation 3) We provided a draft of this report for comment to State, USAID, HHS, and USDA  USDA concurred with our recommendations in an e-mail  In its written comments, reproduced in appendix IV, USAID stated that it has policies, procedures, and training in place for the officials who manage these agreements  In response to our recommendations, USAID stated that it will issue an agency notice to remind all such officials of these responsibilities, including the requirement to maintain complete files for each agreement  State and HHS did not provide formal comments  They did provide 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 of this report to the appropriate congressional committees, the Secretary of State, the Administrator of the U S  Agency for International Development, the Secretary of Health and Human Services, and the Secretary of Agriculture  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff have questions about this report, please contact me at (202) 512-9601, or melitot@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 V  Congressional requesters asked us to review several issues related to the Organization of American States (OAS), the Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute of Geography and History (PAIGH)  In this report, we (1) assess the extent to which the organizations’ strategic goals align with those of U S  agencies; (2) examine how the organizations oversee the use of their funds and the extent to which U S  agencies have supported those efforts; (3) assess the extent to which U S  agencies included key monitoring provisions as part of their assistance agreements; and (4) assess the extent to which U S  agencies had documentation of monitoring activities, including those called for by these provisions  To address the first objective, we gathered documentation and interviewed officials from the four U S  agencies and the four organizations to determine the U S  strategic goals for foreign assistance to the Western Hemisphere and the goals of the four organizations  According to Department of State (State) and U S  Agency for International Development (USAID) officials, the strategic document that underpins their foreign assistance priorities for the region is The Department of State’s Bureau of Western Hemisphere Affairs’ and USAID’s Bureau for Latin American and Caribbean Affairs’ Joint Regional Strategy  Department of Health and Human Services (HHS) officials said that HHS’s relevant strategic document is The Global Strategy of the U S  Department of Health and Human Services  U S  Department of Agriculture’s (USDA) strategic goals for foreign assistance, according to officials, are outlined in the United States Department of Agriculture Strategic Plan FY2015–2018  The OAS outlined its strategic goals in the Comprehensive Strategic Plan of the Organization, adopted on October 31, 2016  PAHO’s goals are laid out in Strategic Plan of the Pan American Health Organization 2014–2019  IICA’s strategic document is the IICA 2010–2020 Strategic Plan, which took effect in October 2010  PAIGH’s strategic document is the Declaration and Guide for the Pan American Agenda 2010-2020  We compared the strategic goals articulated by the four organizations against U S  strategic goals to assess the extent to which the organizations’ goals contribute to U S  interests in the region  We then interviewed officials from the four agencies and reviewed relevant documentation on efforts they undertake to ensure that U S -funded activities align with U S  strategic goals  To address the second objective, we reviewed documentation of the organizations’ internal control mechanisms and confirmed our findings with the organizations  We identified mechanisms to include policies, directives, rules, practices, and organizational structures that can have an oversight role in the use of the organizations’ funds  We also interviewed officials from State, USAID, HHS, and USDA to discuss their support of these mechanisms  To address the third objective, we identified 60 active assistance agreements that these agencies oversaw with OAS, PAHO, and IICA during calendar years 2014 through 2016 and selected a nongeneralizable sample of 12 agreements, three each from State, USAID, HHS, and USDA  To determine which agreements we would review for each agency, we selected the three agreements with the lowest, median, and highest dollar value  If any of an agency’s agreements supported the same country or activity or were for one-time projects such as seminars, we selected the next appropriate agreement based on dollar value  For these selected agreements, we then identified the applicable agency guidance for monitoring activities in the agreements, which we define as all documents related to each agreement provided to us by the agencies, such as monitoring reports  The number of key monitoring provisions varied—even within each agency—depending on when agency guidance was issued and updated relative to when the agreements were approved  USDA did not have applicable internal agency-specific guidance for monitoring of assistance agreements at the time it awarded the agreements we reviewed; thus, with USDA’s input, we used the applicable sections of the Code of Federal Regulations, which together have five key monitoring provisions for agreements  However, USDA approved two of the agreements in 2012 and the third agreement in 2016, and this third agreement was subject to an amended version of the Code of Federal Regulations, which added an additional provision for performance goals  State’s four applicable grants policy directives have seven key monitoring provisions for agreements that were applicable at the time the agreements we reviewed were approved  USAID’s Standard Provisions for Cost-Type Awards to Public International Organizations (PIOs): A Mandatory Reference to ADS Chapter 308 has two key monitoring provisions for agreements: audits and records, and the organization’s adherence to their rules  HHS’s grants policy has five key monitoring provisions for grant documentation  We identified key monitoring provisions for agencies to include as part of agreements to ensure oversight of the use of funds, such as financial and progress reports  For the 12 agreements in our sample, we analyzed the assistance agreements from the four agencies, and then determined the extent to which the agencies’ agreements included key monitoring provisions implementing monitoring activities called for by applicable agency guidance  We did not include subsequent amendments to these 12 agreements in our review of key monitoring provisions  We interviewed officials from State, USAID, HHS, and USDA (1) to confirm we were applying the appropriate federal or agency guidance and (2) to discuss instances in which the agreements did not include key monitoring provisions  To address the fourth objective, we reviewed the 12 selected assistance agreements and guidance to identify specific required monitoring activities, such as financial and program reports, site visits, and other forms of oversight  The agreements specify the requirements for these activities such as requiring financial reports on a quarterly basis  For these 12 agreements, we reviewed all the documentation provided to us by the agencies, then determined the extent to which the agencies had full documentation of key monitoring activities as specified in the assistance agreements, including those called for by key monitoring provisions, as well as those called for by guidance when the monitoring provisions were absent  We did not include subsequent amendments to these 12 agreements in our review of monitoring activities  We interviewed officials from State, USAID, HHS, and USDA to discuss instances in which the agency did not have full documentation of key monitoring activities  We also discussed how State, USAID, and HHS agency officials manage their agreement documentation and use the information in the agreements’ required monitoring documentation  We conducted this performance audit from July 2016 to December 2017 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  The Organization of American States (OAS), Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute on Geography and History (PAIGH) have established mechanisms for overseeing their use of funds  Tables 15–18 show the mechanisms (oversight policies and oversight committees and organizations) for each of these inter-American organizations, as confirmed by the organizations’ officials  To oversee the execution of their agreements, the Department of State (State), the U S  Agency for International Development (USAID), the Department of Health and Human Services (HHS), and U S  Department of Agriculture (USDA) are to conduct monitoring activities called for by applicable federal regulations or agency guidance and document these provisions in assistance agreements as called for by federal standards for internal control  We identified key monitoring provisions implementing the applicable agency guidance for State, USAID, HHS, and the applicable regulations for USDA, as shown in table 19  For both the agency guidance and the federal regulations, those listed are the ones that were in effect when the agreements in our sample were approved  Some of the agency guidance and regulations have since been amended or superseded  In addition to the contact named above, Pierre Toureille (Assistant Director), Julia Jebo Grant (Analyst-in-Charge), Leslie Stubbs, and Paul Sturm, Alana Miller, and Shirley Min made key contributions to this report  In addition, David Dayton, Martin de Alteriis, Neil Doherty, Jeff Isaacs, and Alex Welsh provided technical assistance 


Report 2: Agencies generally acquire equipment from commercial vendors and through GSA, which contracts for the equipment from commercial vendors  In acquiring heavy equipment from a commercial vendor or GSA, agencies can purchase or lease the equipment  Generally, agencies use the term “lease” to refer to acquisitions that are time-limited and therefore distinct from purchases  The term “lease” is used to refer to both long-term and short-term leases  For example, the three agencies we reviewed in-depth use the term “rental” to refer to short-term leases of varying time periods  According to Air Force officials, they define rentals as leases that are less than 120 days while FWS and NPS officials said they generally use the term rental to refer to leases that are a year or less  For the purposes of this report, we use the term “rental” to refer to short-term leases defined as rentals by the agency and “long-term lease” to refer to a lease that is not considered a rental by the agency  (See fig  1 ) In 2013, GSA began offering heavy equipment through its Short-Term Rental program, which had previously been limited to passenger vehicles, in part to eliminate ownership and maintenance cost for infrequently used heavy equipment  Under this program, agencies can request a short-term equipment rental (less than a year) from GSA, and GSA will work with a network of commercial vendors to provide the requested heavy equipment  Unlike for some other types of federal property, there are no central reporting requirements for agencies’ inventories of heavy equipment  However, each federal agency is required to maintain inventory controls for its property, which includes heavy equipment  Agencies maintain inventory data through the use of agency-specific databases, and each agency can set its own requirements for what data are required and how these data are maintained  For example, while an agency may choose to maintain data in a headquarters database, it could also choose to maintain data at the local level  As another example, an agency may decide to track and maintain data on the utilization of its heavy equipment (such as the hours used) or may choose not to have such data or require any particular utilization levels  The Federal Acquisition Regulation (FAR) governs the acquisition process of executive branch agencies when acquiring certain goods and services, including heavy equipment  Under the FAR, agencies should consider whether to lease equipment instead of purchasing it based on several factors  Specifically, the FAR provides that agency officials should evaluate cost and other factors by conducting a “lease-versus-purchase” analysis before acquiring heavy equipment  Additionally, DOD’s regulations require its component agencies to prepare a justification supporting lease-versus-purchase decisions if the equipment is to be leased for more than 60 days  Twenty agencies reported data on their owned heavy equipment, including the (1) number, (2) types, (3) acquisition year, and (4) location of agencies’ owned heavy equipment in their inventories as of June 2017  The 20 agencies reported owning over 136,000 heavy equipment items  DOD reported owning most of this heavy equipment—over 100,000 items, about 74 percent  (See app  I for more information on agencies’ ownership of these items ) The Department of Agriculture reported owning the second highest number of heavy equipment items—almost 9,000 items, about 6 percent  (See fig  2 ) Four agencies—the Nuclear Regulatory Commission, the Department of Housing and Urban Development, the Office of Personnel Management, and the Agency for International Development—reported owning five or fewer heavy equipment items each  The 20 agencies reported owning various types of heavy equipment, such as cranes, backhoes, and road maintenance equipment in five categories: (1) construction, mining, excavating, and highway maintenance equipment; (2) airfield-specialized trucks and trailers; (3) self-propelled warehouse trucks and tractors; (4) tractors; and (5) soil preparation and harvesting equipment  Thirty-eight percent (almost 52,000 items) were in the construction, mining, excavating, and highway maintenance category (see fig  3)  Fifteen of the 20 agencies reported owning at least some items in this category  Twenty-four percent (over 33,000 items) were in the airfield- specialized trucks and trailers category, generally used to service and re-position aircraft on runways  DOD reported owning 99 percent (over 32,000) of these items, while 9 other agencies, including the Department of Labor and the National Aeronautics and Space Administration, reported owning the other one percent (317 items)  Twenty-two percent (over 29,000 items) were in the self-propelled warehouse trucks and tractors category, which includes equipment such as forklift trucks  All 20 agencies reported owning at least one item in this category, and five agencies—the Agency for International Development, Department of Housing and Urban Development, the Environmental Protection Agency, the Nuclear Regulatory Commission, and the Office of Personnel Management—reported owning only items in this category  (For additional information on agencies’ ownership of heavy equipment in various categories, see app  I ) The twenty agencies reported acquiring their owned heavy equipment between 1944 and 2017, with an average of about 13 years since acquisition (see fig  4)  One heavy equipment manager we interviewed reported that a dump truck can last 10 to 15 years, whereas other types of equipment can last for decades if regularly used and well-maintained  The 20 agencies reported that over 117,000 heavy equipment items (86 percent) were located within the United States or its territories  Of these, about one-fifth (over 26,000) were located in California and Virginia, the two states with the most heavy equipment (see fig  5)  Of the equipment located outside of the United States and its territories, 94 percent was owned by the Department of Defense  The rest was owned by the Department of State (714 items in 141 countries from Afghanistan to Zimbabwe) and the National Science Foundation (237 items in areas such as Antarctica)  The twenty agencies reported spending over $7 4 billion in 2016 dollars to acquire the heavy equipment they own (see table 1)  However, actual spending was higher because this inflation-adjusted figure excludes over 37,000 heavy equipment items for which the agencies did not report acquisition cost or acquisition year, or both  Without this information, we could not determine the inflation-adjusted cost and therefore did not include the cost of these items in our calculation  The Army owns almost all of these items, having not reported acquisition cost or acquisition year, or both, for 36,589 heavy equipment items because, according to Army officials, the data were not available centrally but may have been available at individual Army units and would have been resource- intensive to obtain  The heavy equipment items reported by the 20 agencies ranged in acquisition cost from zero dollars to over $2 million in 2016 dollars, with an average acquisition cost in 2016 dollars of about $78,000, excluding assets with a reported acquisition cost of $0  Of the items which we adjusted to 2016 dollars and for which non-zero acquisition costs were provided: 94 percent cost less than $250,000 and accounted for 57 percent of the total adjusted acquisition costs (See fig  6 ) 6 percent of items cost more than $250,000 and accounted for 43 percent of the adjusted acquisition costs  (See fig  6 ) High-cost items included a $779,000 hydraulic crane acquired by the National Aeronautics and Space Administration in 1997 ($1 2 million in 2016 dollars), a $1 4 million ultra-deep drilling simulator acquired by the Department of Energy in 2009 ($1 6 million in 2016 dollars), and several $2 2 million well-drilling machines acquired by the Air Force in 2013 ($2 3 million in 2016 dollars)  In calendar years 2012 through 2016, the Air Force, FWS, and NPS purchased almost 3,500 pieces of heavy equipment through GSA and private vendors at a total cost of about $360 million to support mission needs  (See table 2 ) These agencies also spent over $5 million on long- term leases and rentals during this time period  The Air Force spent over $300 million to purchase over 2,600 heavy equipment assets in calendar years 2012 through 2016 that were used to support and maintain its bases globally  For example, according to Air Force officials, heavy equipment is often used to maintain runways and service and reposition aircraft on runways  While the majority of Air Force heavy equipment purchased in this time period is located in the United States, 41 percent of this heavy equipment is located outside the United States and its territories in 17 foreign countries to support global military bases  The Air Force could not provide complete information on its heavy equipment leases for fiscal years 2012 through 2016  Specifically, the Air Force provided data on 33 commercial heavy equipment leases that were ongoing as of August 2017 but could not provide cost data for these leases because this information is not tracked centrally  Additionally, the Air Force could not provide any data on leases that occurred previously because, according to Air Force officials, lease records are removed from the Air Force database upon termination of the lease  Officials said that rentals are generally handled locally and obtaining complete data would require a data call to over 300 base contracting offices  Air Force officials stated that rentals are generally used in unique situations involving short- term needs such as responding to natural disasters  For example, following Hurricane Sandy, staff at Langley Air Force Base in Virginia used rental equipment to clean up and repair the base  Although Air Force did not provide complete information on rentals, data we obtained from GSA’s Short-Term Rental program indicated that Air Force rented heavy equipment in 46 transactions not reflected in the Air Force data we received totaling over $3 7 million since GSA began offering heavy equipment through its Short-Term Rental program, which had previously been limited to passenger vehicles, in part program in 2013  FWS spent over $32 million to purchase 348 heavy equipment assets from calendar years 2012 through 2016  FWS used its heavy equipment to maintain refuge areas throughout the United States and its territories, including maintaining roads and nature trails  FWS also used heavy equipment to respond to inclement weather and natural disasters  Most of the heavy equipment items purchased by FWS were in the construction, mining, excavating, and highway maintenance equipment category and include items such as excavators, which were used for moving soil, supplies, and other resources  FWS officials reported that they did not have any long-term leases for any heavy equipment in fiscal years 2012 through 2016 because they encourage equipment sharing and rentals to avoid long-term leases whenever possible  FWS officials provided data on 228 rentals for this time period with a total cost of over $1 million  Information regarding these rentals is contained in an Interior-wide property management system, the Financial Business Management System (FBMS)  FWS officials told us that they have not rented heavy equipment through GSA’s program because they have found lower prices through local equipment rental companies  NPS spent over $27 million to purchase 471 heavy equipment assets from calendar years 2012 through 2016  NPS uses heavy equipment— located throughout the United States and its territories—to maintain national parks and respond to inclement weather and natural disasters  For example, NPS used heavy equipment such as dump trucks, snow plows, road graders, and wheel loaders to clear and salt the George Washington Memorial Parkway in Washington, D C , following snow and ice storms  Most of the heavy equipment items purchased by NPS were in the construction, mining, excavating, and highway maintenance equipment category and include items such as excavators, which are used for moving soil, supplies, and other resources  NPS reported spending about $360,000 on 230 long-term leases and rentals in fiscal years 2012 through 2016, not including rentals through GSA’s Short-Term Rental program, which had previously been limited to passenger vehicles, in part program  As with FWS, NPS leases and rentals are contained in FBMS, which is Interior’s property management system  Data we obtained from GSA’s Short-Term Rental program, which had previously been limited to passenger vehicles, in part program indicated that NPS rented heavy equipment in 26 transactions totaling over $200,000 since GSA began offering heavy equipment through its Short-Term Rental program, which had previously been limited to passenger vehicles, in part program in 2013, for a potential total cost of over $560,000 for these long-term leases and rentals  As mentioned earlier, the FAR provides that executive branch agencies seeking to acquire equipment should consider whether it is more economical to lease equipment rather than purchase it and identifies factors agencies should consider in this analysis, such as estimated length of the period that the equipment is to be used, the extent of use in that time period, and maintenance costs  This analysis is commonly referred to as a lease-versus-purchase analysis  While the FAR does not specifically require that agencies document their lease-versus-purchase analyses, according to federal internal control standards, management should clearly document all transactions and other significant events in a manner that allows the documentation to be readily available for examination and also communicate quality information to enable staff to complete their responsibilities  As discussed below, we found that most acquisitions we reviewed from FWS, NPS, and the Air Force did not contain any documentation of a lease-versus-purchase analysis  Specifically, officials were unable to provide documentation of a lease-versus-purchase analysis for six of the eight acquisitions we reviewed  FWS officials were able to provide documentation for the other two  Officials told us that a lease-versus- purchase analysis was not conducted for five of the six acquisitions and did not know if such analysis was conducted for the other acquisition  According to agency officials, the main reason why analyses were not conducted or documented for these six acquisitions is that the circumstances in which such analyses were to be performed or documented were not always clear to FWS, NPS, and Air Force officials  In addition to the FAR, Interior has agency guidance stating that bureaus should conduct and document lease-versus-purchase analyses  This July 2013 guidance—that FWS and NPS are to follow—states that requesters of equipment valued at $15,000 or greater should perform a lease-versus- purchase analysis when requesting heavy equipment  According to the guidance, this analysis should address criteria in the FAR and include a discussion of the financial and operating advantages of alternate approaches that would help contracting officials determine the final appropriate acquisition method  At the time the guidance was issued, Interior also provided a lease-versus-purchase analysis tool to aid officials in conducting this analysis  Additionally, in April 2016, Interior issued a policy to implement the July 2013 guidance  The 2016 policy clarifies that program offices are required to complete Interior’s lease-versus-purchase analysis tool and provide the completed analysis to the relevant contracting officer  Within Interior, bureaus are responsible for ensuring that procurement requirements are met, including the requirements and directives outlined in Interior’s 2013 guidance and 2016 policy on lease-versus-purchase analyses, according to agency officials  Within FWS, local procurement specialists prepare procurement requests and ensure that procurement requirements are met and that all viable options have been considered  Regional equipment managers review these procurement requests, decide whether to purchase or lease the requested equipment, and prepare the lease-versus-purchase analysis tool if the procurement specialist has indicated that it is required  Within NPS, local procurement specialists are responsible for ensuring that all procurements adhere to relevant requirements and directives, including documenting the lease- versus-purchase analysis  Of the three FWS heavy equipment acquisitions we reviewed for which the 2013 Interior guidance was applicable, one included a completed lease-versus-purchase analysis tool; one documented the rationale for purchasing rather than leasing, although it did not include Interior’s lease- versus-purchase analysis tool; and one did not include any documentation related to a lease-versus-purchase analysis  (See table 3 ) Regarding the acquisition for which no documentation of a lease-versus- purchase analysis was provided—a 12-month lease of an excavator and associated labor costs for over $19,000—FWS officials initially told us that a lease-versus-purchase analysis was not required because the equipment lease was less than $15,000, and Interior’s guidance required a lease-versus-purchase analysis for procurements of equipment valued at $15,000 or greater  However, we found the guidance did not specify whether the $15,000 threshold includes the cost of labor  We also found that Interior’s guidance did not specify if a lease-versus-purchase analysis was required if the total cost of a rental is less than the purchase price  FWS officials acknowledged that Interior guidance is not clear and that it would be helpful for Interior to clarify whether these leases require a lease-versus-purchase analysis  NPS officials were unable to provide documentation of a lease-versus- purchase analysis for the single heavy equipment acquisition we reviewed—the purchase of a wheeled tractor in 2015 for $43,177  According to these officials, they could not do so because of personnel turnover in the contracting office that would have documented the analysis  In addition, they told us that they believe that such analyses are not always completed for heavy equipment acquisitions because responsibility for completing these analyses is unclear  Specifically, they told us that it was unclear whether the responsibility lies with the official requesting the equipment, the contracting personnel who facilitate the acquisition, or the property personnel who manage inventory data  However, when we discussed our findings with Interior and NPS officials, NPS officials were made aware of the 2016 Interior policy that specifically requires program offices—the officials requesting the equipment—to complete the lease-versus-purchase analysis and provide documentation of this analysis to the contracting officer  As a result, NPS officials told us at the end of our review that program office officials will now be required to complete the lease-versus-purchase analysis tool and document this analysis  According to Air Force officials responsible for managing heavy equipment, financial or budget personnel at individual bases are responsible for conducting lease-versus-purchase analyses, also called economic analyses, to support purchase and lease requests  Air Force fleet officials told us that they then review these requests from a fleet perspective, considering factors such as whether the cost information provided in the request is from a reputable source, expected maintenance costs, and whether a requesting base has the capability to maintain the requested equipment  However, they said they do not check to ensure that a lease-versus-purchase analysis was completed or review the analysis  Equipment rentals can be approved at individual bases  In our review of four Air Force heavy equipment acquisitions, we found no instances in which Air Force officials documented a lease-versus- purchase analysis (see table 4)  For the acquisitions that we reviewed, Air Force officials told us they did not believe a lease-versus-purchase analysis was required because the new equipment was either replacing old equipment that was previously approved or could be deployed  Accordingly, the Air Force purchased two forklifts in 2013 without conducting lease-versus-purchase analyses because the forklifts were replacing old forklifts that were authorized in 1997 and 2005  Furthermore, Air Force officials told us that both of these forklifts could be deployed and indicated that lease-versus-purchase analyses are not required for deployable equipment  However, the Air Force does not have guidance that describes the circumstances that require either a lease-versus-purchase analysis or documentation of the rationale for not completing such analysis  Although we identified several instances in which officials in the three selected agencies did not document lease-versus-purchase analyses, officials from these agencies stated that they consider mission needs and equipment availability, among other factors, when making these decisions  For example, Air Force officials told us following Hurricane Sandy, staff at Langley Air Force Base in Virginia used rental equipment to clean and repair the base because the equipment was needed immediately to ensure the base could meet its mission  Moreover, availability of heavy equipment for lease or rental, which can be affected by factors such as geography and competition for equipment, is a key consideration  For example, FWS officials told us that the specialized heavy equipment sometimes needed may not be available for long-term lease or rent in remote areas such as Alaska and the Midway Islands, so the agency purchases the equipment  In addition, some agency officials told us that they may purchase heavy equipment even if that equipment is needed only sporadically if there is likely to be high demand for rental equipment  For example, following inclement weather or a natural disaster, demand for certain heavy equipment rentals can be high and equipment may not be available to rent when it is needed  While we recognize that mission needs and other factors are important considerations, without greater clarity regarding when to conduct or document lease-versus-purchase analyses, officials at FWS, NPS, and Air Force may not be conducting such analyses when appropriate and may not always make the best acquisition decisions  These agencies could be overspending on leased equipment that would be more cost- effective if purchased or overspending to purchase equipment when it would be more cost-effective to lease or rent  Moreover, without documenting decisions on whether to purchase or lease equipment, they lack information that could be used to inform future acquisition decisions for similar types of equipment or projects  Air Force guidance requires that fleet managers collect utilization data for both vehicles and heavy equipment items, such as the number of hours used, miles traveled, and maintenance costs  The Air Force provided us with utilization data for over 18,000 heavy equipment items and uses such data to inform periodic base validations  Specifically, Air Force officials said that every 3 to 5 years each Air Force base reviews the on- base equipment to ensure that the installation has the appropriate heavy equipment to complete its mission and reviews utilization data to identify items that are underutilized  If heavy equipment is considered underutilized, the equipment is relocated—either moved to another location or sent to the Defense Logistics Agency for reuse or transfer to another agency  According to Air Force officials the Air Force has relocated over 700 heavy equipment items based on the results of the validation process and other factors such as replacing older items and agency needs since 2014  Similarly, FWS guidance for managing heavy equipment utilization sets forth minimum utilization hours for certain types of heavy equipment and describes requirements for reporting utilization data  FWS provided us with utilization data on over 3,000 heavy equipment items  According to officials, condition assessments of heavy equipment are required by FWS guidance every 3 to 5 years  According to FWS officials, condition assessments inform regional-level decision making about whether to move equipment to another FWS location or dispose of the equipment  In contrast, NPS does not require the collection of utilization data to evaluate heavy equipment use and does not have guidance for managing heavy equipment utilization  However, NPS officials told us that they recognize the need for such guidance  NPS officials shared with us draft guidance that they have developed, which would require collection of utilization data for heavy equipment such as hours or days of usage each month  According to NPS officials, they plan to send the guidance to the NPS policy office for final review in March 2018  Until this guidance is completed and published, NPS is taking interim actions to manage the utilization of its heavy equipment  For example, NPS officials stated that they have asked NPS locations to collect and post monthly utilization data, discussed the collection of utilization data at fleet meetings, and distributed job aids to support this effort  During the course of our review, NPS officials provided us with some utilization data for about 1,400 of the more than 2,400 NPS heavy equipment items  Specifically, for the 1,459 heavy equipment items for which NPS provided utilization data, 541 items had utilization data for each month  For the remaining 918 items, utilization data were reported for some, but not all months  The federal government has spent billions of dollars to acquire heavy equipment  There is no requirement that agencies report on the inventory of this equipment, as there is no standard definition of heavy equipment  When deciding how to acquire this equipment, agencies’ should conduct a lease-versus-purchase analysis as provided in the FAR, which is a critical mechanism to ensure agencies are acquiring the equipment in the most cost-effective manner  Because FWS, NPS and the Air Force were unclear when such an analysis was required, they did not consistently conduct or document analyses of whether it was more economical to purchase or lease heavy equipment

ground_truth: The United States is a member of the OAS, PAHO, IICA, and PAIGH, which promote democracy, health care, agricultural development, and scientific exchange. GAO was asked to review U.S. assistance to these four organizations. In this report, GAO (1) assesses the extent to which the organizations' strategic goals align with those of U.S. agencies; (2) examines how the organizations oversee the use of their funds and the extent to which U.S. agencies have supported those efforts; (3) assesses the extent to which U.S. agencies included key monitoring provisions as part of assistance agreements; and (4) assesses the extent to which U.S. agencies had documentation of monitoring activities, including those called for by these provisions. GAO analyzed documents and interviewed officials from State, USAID, HHS, USDA, and the organizations. GAO also analyzed a nongeneralizable sample of 12 of the 60 assistance agreements that were awarded by State, USAID, HHS, and USDA to OAS, PAHO, and IICA and were active during calendar years 2014 through 2016. For each agency, GAO selected three agreements with the lowest, median, and highest dollar value. GAO found that strategic goals of the Organization of American States (OAS), the Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute of Geography and History (PAIGH) are predominantly aligned with the strategic goals of the Department of State (State), the U.S. Agency for International Development (USAID), the Department of Health and Human Services (HHS), and the U.S. Department of Agriculture (USDA). For example, IICA's strategic goals of a productive agricultural sector, enhancing agricultural development, and food security are aligned with USDA's foreign assistance goals. State, USAID, HHS, and USDA fund activities in the form of assistance agreements (e.g., grants and cooperative agreements) with OAS, PAHO, and IICA, which in 2016 totaled $32 million. According to agency officials, the agencies employ mechanisms to ensure that these agreements align with U.S. strategic goals. OAS, PAHO, IICA, and PAIGH have established mechanisms for overseeing their use of funds, such as external auditors, internal audit boards, and anti-fraud and ethics policies. State and USDA have directly supported these mechanisms. For example, State engaged in the selection process for OAS's Inspector General. GAO's review of 12 selected assistance agreements found that USDA included no financial or performance monitoring provisions in one of its agreements and that State did not include two key monitoring provisions in one of its agreements, called for by applicable guidance. GAO found that the remaining 10 agreements it reviewed contained all key monitoring provisions and that State has since taken corrective action. GAO found that U.S. agencies did not have full documentation of 18 of the 42 monitoring activities required by the 12 assistance agreements GAO reviewed (see table). For example, USDA did not have full documentation, such as for financial reports, of any of its 10 required monitoring activities and USDA officials did not explain their lack of documentation. USAID officials explained that their lack of full documentation was due, in part, to grant officers not always following their document management policies. State and HHS have since taken corrective action. If an agency does not have full documentation of monitoring activities, it may lack information needed to make appropriate budgetary and programmatic decisions. GAO recommends that (1) USDA ensure inclusion of all monitoring provisions as part of agreements and (2) USAID and USDA ensure full documentation of monitoring activities. USDA and USAID concurred with GAO's recommendations.

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



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



Report 2:  In the absence of clarity on the circumstances in which lease-versus-purchase analyses for heavy equipment acquisitions are to be conducted and documented, the agencies may not be spending funds on heavy equipment cost- effectively  We are making two recommendations—one to the Air Force and one to the Department of the Interior  The Secretary of the Air Force should develop guidance to clarify the circumstances in which lease-versus-purchase analyses for heavy equipment acquisitions are to be conducted and documented  (Recommendation 1) The Secretary of the Interior should further clarify in guidance the circumstances in which lease-versus-purchase analyses for heavy equipment acquisitions are to be conducted and documented  (Recommendation 2) We provided a draft of this report to the Departments of Agriculture, Defense, Energy, Homeland Security, Housing and Urban Development, the Interior, Justice, Labor, State, and Veterans Affairs; General Services Administration; National Aeronautics and Space Administration; National Science Foundation; Nuclear Regulatory Commission; Office of Personnel Management; and U S  Agency for International Development  The departments of Agriculture, Energy, Homeland Security, Housing and Urban Development, Justice, State and Veterans Affairs, as well as the General Services Administration, National Aeronautics and Space Administration, National Science Foundation, Nuclear Regulatory Commission, Office of Personnel Management; and U S  Agency for International Development did not have comments  The Department of Labor provided technical comments, which we incorporated as appropriate  In written comments, reproduced in appendix III, the Department of Defense stated that it concurred with our recommendation and plans to issue a bulletin to Air Force contracting officials  In written comments, reproduced in appendix IV, the Department of the Interior stated that it concurred with our recommendation and plans to implement it  If you or members of 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  Major contributors to this report are listed in appendix V  Specialized Trucks and Trailers 37   Self-Propelled Warehouse Trucks and Tractors 1,733 3                                       Specialized Trucks and Trailers 7   Self-Propelled Warehouse Trucks and Tractors 2,925 134                                     Specialized Trucks and Trailers   Self-Propelled Warehouse Trucks and Tractors 146             7       - 109       Self-Propelled Warehouse Trucks and Tractors 575 64 40                       4                   Nuclear Regulatory Commission Office of Personnel Management Social Security Administration United States Agency for International Development Grand Total         This report addresses: (1) the number, type, and cost of heavy equipment items that are owned by the 24 CFO Act agencies; (2) the heavy equipment items selected agencies have recently acquired and how selected agencies decided to purchase or lease this equipment; and (3) how selected agencies manage the utilization of their heavy equipment  To identify the number, type, and cost of heavy equipment owned by federal agencies, we first interviewed officials at the General Services Administration to determine whether there were government-wide reporting requirements for owned heavy equipment and learned that there are no such requirements  We then obtained and analyzed data on agencies’ spending on equipment purchases and leases from the Federal Procurement Data System–Next Generation (FPDS-NG), which contains government-wide data on agencies’ contracts  However, in reviewing the data available and identifying issues with the reliability of the data, we determined that data on contracts would not be sufficient to answer the question of what heavy equipment the 24 CFO Act agencies own  We therefore conducted a data collection effort to obtain heavy equipment inventory information from the 24 CFO Act agencies, which are the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, the Interior, Justice, Labor, State, Transportation, the Treasury, and Veterans Affairs; Environmental Protection Agency; General Services Administration; National Aeronautics and Space Administration; National Science Foundation; Nuclear Regulatory Commission; Office of Personnel Management; Small Business Administration; Social Security Administration; and Agency for International Development  Because there is no generally accepted definition of heavy equipment, we identified 12 federal supply classes in which the majority of items are self- propelled equipment but not passenger vehicles or items that are specific to combat and tactical purposes, as these items are generally not considered to be heavy equipment  (See table 5 ) We then vetted the appropriateness of these selected supply classes with Interior, FWS, NPS, and Air Force agency officials, as well as with representatives from a fleet management consultancy and a rental company, and they generally agreed that items in selected federal supply classes are considered heavy equipment  Federal supply classes are used in FPDS- NG and are widely used in agencies’ inventory systems  Overall, about 90 percent of the heavy equipment items that agencies reported were assigned a federal supply class in the agency’s inventory data  In discussing heavy equipment categories in the report, we use the category titles below  To identify points of contact at the 24 CFO Act agencies, we obtained GSA’s list of contact information for agencies’ national utilization officers, who are agency property officers who coordinate with GSA  As a preliminary step, we contacted these individuals at each of the 24 CFO Act agencies and asked them to either confirm that they were the appropriate contacts or provide contact information for the appropriate contact and to inform us if they do not own heavy equipment  Officials at 4 agencies—Department of Education, Department of the Treasury, General Services Administration, and Small Business Administration— indicated that the agency did not own any items in the relevant federal supply classes  Officials at 16 of these agencies indicated that they would be able to respond on a departmental level because the relevant inventory data are maintained centrally, while officials at 4 agencies indicated that we would need to obtain responses from officials at some other level because the relevant inventory data are not maintained centrally  (See table 7 for a list of organizations within the 20 CFO Act agencies that indicated they own relevant equipment and responded to our data collection effort ) After identifying contacts responsible for agencies’ heavy-equipment inventory data, we prepared data collection instruments for requesting information on heavy equipment and tested these documents with representatives from 4 of the 20 CFO Act agencies that indicated they own heavy equipment to ensure that the documents were clear and logical and that respondents would be able to provide the requested data and answer the questions without undue burden  These agency representatives were selected to provide a variety of spending on federal supply group 38 equipment as reported in FPDS-NG, civilian and military agencies, and different levels at which the agency would be responding to the data collection effort (e g , at the departmental level or at a sub- departmental level)  Our data collection instrument requested the following data on respondent organizations’ owned assets in 12 federal supply classes as of June 2017: Respondents provided data on original acquisition costs in nominal terms, with some acquisitions occurring over 50 years ago  In order to provide a fixed point of reference for appropriate comparison, we present in our report inflation-adjusted acquisition costs using calendar year 2016 as the reference  To adjust these dollar amounts for inflation, we used the Bureau of Labor Statistic’s Producer Price Index by Commodity for Machinery and Equipment: Construction Machinery and Equipment (WPU112), compiled by the Federal Reserve Bank of St  Louis  We conducted the data collection effort from July 2017 through October 2017 and received responses from all 20 agencies that indicated they own heavy equipment  In order to assess the reliability of agencies’ reported data, we collected and reviewed agencies’ responses regarding descriptions of their inventory systems, frequency of data entry, agency uses of the data, and agencies’ opinions on potential limitations of the use of their data in our analysis  We conducted some data cleaning, which included examining the data for obvious errors and eliminating outliers  We did not verify the data or responses received; the results of our data collection effort are used only for descriptive purposes and are not generalizable beyond the 24 CFO Act agencies  Based on the steps we took, we found these data to be sufficiently reliable for our purposes  To determine the heavy equipment items that selected agencies recently acquired and how these agencies decided whether to purchase or lease this equipment, we first used data from the FPDS-NG to identify agencies that appeared to have the highest obligations for construction or heavy equipment, or both, and used this information, along with other factors, to select DOD and Interior  At the time, in the absence of a generally accepted definition of heavy equipment, we reviewed data related to federal supply group 38—construction, mining, excavating, and highway maintenance equipment—because (1) we had not yet defined heavy equipment for the purposes of our review; (2) agency officials had told us that most of what could be considered heavy equipment was in this federal supply group; and (3) our analysis of data from usaspending gov showed that about 80 percent of spending on items that may be considered heavy equipment were in this federal supply group  In meeting with officials at these departments, we learned that agencies within each department manage heavy equipment independently, so we requested current inventory data for Interior bureaus and the DOD military departments and selected three agencies that had among the largest inventories of construction and/or heavy equipment at the time, among other criteria: the U S  Air Force (Air Force); the Fish and Wildlife Service (FWS); and the National Park Service (NPS)  We then used information from our data collection effort—which included the number, type, cost, acquisition year and other data elements—to determine heavy equipment items that these agencies acquired during 2012 through 2016  We interviewed agency officials to determine what lease data were available from the three selected agencies  We assessed the reliability of these data with agency official interviews and reviewed the data for completeness and potential outliers  We determined that the data provided were sufficiently reliable for the purposes of documenting leased and rental heavy equipment  We also obtained data from GSA’s Short- Term Rental program, which had previously been limited to passenger vehicles, in part program for August 2012, when the first item was rented under this program, to February 2017, when GSA provided the data  We used these data to identify selected agencies’ rentals of heavy equipment through GSA’s Short-Term Rental program, which had previously been limited to passenger vehicles, in part program and associated costs  We interviewed officials from GSA’s Short-Term Rental program to discuss the program history as well as the reliability of their data on these rented heavy equipment items  We determined that the data were sufficiently reliable for our purposes  To determine how the three selected agencies decide whether to purchase or lease heavy equipment, we interviewed fleet and property managers at these selected agencies and asked them to describe their process for making these decisions as well as to identify relevant federal and agency regulations and guidance  We reviewed relevant federal and agency regulations and guidance regarding how agencies should make these decisions, including: Federal Acquisition Regulation, Office of Management Budget’s A-94, Guidelines and Discount Rates for Benefit- Cost Analysis of Federal Programs, Defense Federal Acquisition Regulation Supplement, Air Force Manual 65-506, Air Force Guidance Memorandum to Air Force Instruction 65-501, and Interior’s Guidance On Lease Versus Purchase Analysis and Capital Lease Determination for Equipment Leases  We also reviewed the Standards for Internal Control in the Federal Government for guidance on documentation as well as past GAO work that reviewed agencies’ lease-versus-purchase analyses  To determine whether the three selected federal agencies documented lease-versus-purchase decisions for selected acquisitions and adhered to relevant agency guidance, we selected and reviewed a non-generalizable sample of 10 heavy equipment acquisitions—two purchases each from the Air Force, FWS, and NPS, and two leases each from the Air Force and FWS  Specifically, we used inventory data obtained through our data collection effort, described above, to randomly select two heavy equipment purchases from each selected agency using the following criteria: calendar years 2012 through 2016; the two federal supply classes most prevalent in each selected agency’s heavy equipment inventory, as determined by the data collection effort described above; and for NPS and FWS, acquisition costs of over $15,000  In addition, we used lease data provided by the Air Force and FWS to randomly selected two heavy equipment leases per agency  Because NPS could not provide data on heavy equipment leases, we did not select or review any NPS lease decisions  To select the Air Force and FWS leases we used the following criteria: fiscal years 2012 through 2016; for the Air Force, which included federal supply classes in the lease data provided, the two federal supply classes most prevalent in the lease data and for FWS, which did not include federal supply class in the lease data provided, the two federal supply classes most prevalent in the purchase data; and for FWS, leases over $15,000  After selecting these acquisitions, we determined that one FWS lease and one NPS purchase we selected pre-dated Interior’s 2013 guidance on lease-versus-purchase analysis and excluded these acquisitions from our analysis for a total of eight acquisitions  In reviewing agencies’ documentation related to these acquisitions, we developed a data collection instrument to assess the extent to which agencies documented lease-versus-purchase analyses and, in the case of FWS and NPS, adhered to relevant Interior guidance  We supplemented our review of these acquisition decisions with additional information by interviewing officials at the three selected agencies and requesting additional information to understand specific circumstances surrounding each procurement  Our findings are not generalizable across the federal government or within each selected department  To determine how selected agencies manage heavy equipment utilization, we interviewed officials at the three selected agencies to identify departmental and agency-specific guidance and policies and to determine whether utilization requirements exist  We reviewed guidance identified by these officials, including Interior and Air Force vehicle guidance, both of which apply to heavy equipment, and FWS’s Heavy Equipment Utilization and Replacement Handbook  We also compared their practices to relevant Standards for Internal Control in the Federal Government  For the selected agencies with guidance for managing heavy equipment—Air Force and FWS—we reviewed the guidance to determine if and how selected agencies measured and documented heavy equipment utilization  For example, we reviewed whether selected agencies developed reports for managing heavy equipment utilization such as Air Force validation reports and FWS conditional assessment reports  We also reviewed Air Force, FWS, and NPS utilization data for heavy equipment but we did not independently calculate or verify the utilization rate for individual heavy equipment items because each heavy equipment item (backhoe, forklift, tractor, etc ,) has different utilization requirements depending on various factors such as the brand, model, or age of equipment  However, we did request information about agency procedures to develop and verify utilization rates  We assessed the reliability of the utilization data with agency official interviews and a review of the data for completeness and potential outliers  We determined that the data were sufficiently reliable for the purposes of providing evidence of utilization data collection for heavy equipment assets  We also visited the NPS George Washington Memorial Parkway to interview equipment maintenance officials regarding the procurement and management of heavy equipment and to document photos of heavy equipment  We selected this site because of its range of heavy equipment and close proximity to the Capital region  We conducted this performance audit from October 2016 to February 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  In addition to the individual named above, John W  Shumann (Assistant Director), Rebecca Rygg (Analyst in Charge), Nelsie Alcoser, Melissa Bodeau, Terence Lam, Ying Long, Josh Ormond, Kelly Rubin, Crystal Wesco, and Elizabeth Wood made key contributions to this report 
Report 2:  Space Fence: The Air Force has also determined it will no longer have a requirement for Cobra Dane to provide space surveillance once the Space Fence is fully operational  The Air Force plans for the Space Fence to be operational in fiscal year 2019  According to a U S  Strategic Command briefing, the Space Fence will provide the same capabilities as Cobra Dane  Air Force officials noted that they want to continue relying on Cobra Dane for space surveillance when the Space Fence is operational, as long as the radar is available and used to contribute to ballistic missile defense  In its January 2018 report to Congress, the Air Force noted that Cobra Dane met its requirement for operational availability—i e , the percentage of time that the radar system is able to meet its ballistic missile defense and space surveillance missions  Specifically, the Air Force report noted that Cobra Dane had been available an average of 91 percent of the time over a 2-year period (January 2016 through December 2017), which exceeded the 90 percent requirement for operational availability  Information that we reviewed from a more recent 2-year period (August 2016 through July 2018) showed that Cobra Dane’s 2-year average for operational availability had declined to approximately 88 percent—below the 90 percent requirement  Air Force officials stated that the decline in the operational availability over the more recent two-year period was due to a few instances where they needed to take Cobra Dane off-line for extended periods of scheduled downtime (e g , regular operations and maintenance, calibration of instruments)  Further, they noted that when Cobra Dane is not operationally available, the reason is usually due to scheduled downtime  Officials also told us there was one instance of unscheduled downtime (e g , part or system failure) in that 2-year period which required emergency maintenance on the radar’s mission control hardware  We also reviewed Air Force data on the frequency of unscheduled downtime between August 2016 and July 2018, which show that Cobra Dane is able to contribute to its missions without unscheduled downtime 99 7 percent of the time  According to U S  Northern Command and MDA officials, they can mitigate the effect on the ballistic missile defense mission if they know far enough in advance that Cobra Dane will not be operationally available— such as during scheduled downtime  Officials stated that they do this by moving a transportable radar, known as the Sea-Based X-band radar, to specific locations in the Pacific Ocean to provide additional tracking coverage of missile threats  A U S  Northern Command analysis that we reviewed describes how DOD can deploy the Sea-Based X-band radar at particular locations in the Pacific Ocean to supplement Cobra Dane  This analysis found that U S  Northern Command can lose the ability to track some missile threat trajectories if Cobra Dane is not available and the Sea-Based X-band radar is not deployed  We also reviewed Air Force data on space surveillance, which shows that the Air Force would face some limitations in its ability to complete its space surveillance mission when Cobra Dane is not operationally available  According to the data, Cobra Dane tracks 3,300 space objects each day that cannot be tracked by any other radar system  Air Force officials noted that when Cobra Dane is not operationally available for space surveillance for short periods (less than 24 hours), they can overcome that downtime without losing track of those unique objects  However, officials told us that it would take six months to reacquire all of the small space objects that Cobra Dane tracks, if they encounter any significant scheduled or unscheduled downtime  MDA officials told us there are no scheduled plans to take Cobra Dane down long enough to compromise DOD’s ability to conduct space surveillance  In its January 2018 report to Congress, the Air Force projected that the Air Force and MDA would contribute total funding of $278 6 million based on their fiscal year 2019 budget plans for the operation and sustainment of Cobra Dane  According to the report, the Air Force and MDA plan to share funding for the operation and maintenance of the Cobra Dane radar, and for three modernization projects that make up their sustainment plan for the radar  Table 3 outlines the plan for how the Air Force and MDA will share funding for the operation and maintenance of Cobra Dane  In addition, the Air Force included information in its report on how the Air Force and MDA plan to share funding to support Cobra Dane’s three modernization projects  Specifically, the Air Force and MDA plan to redesign parts for three sets of obsolete systems: (1) mission system replacement; (2) traveling wave tubes; and (3) transmitter groups  The Air Force has identified that it no longer has vendors that manufacture some critical parts, and failure of any of the three systems could result in Cobra Dane not being available to meet mission requirements  As such, the Air Force determined that it could sustain these three systems more effectively if they were redesigned  Table 4 summarizes the reported funding for the three projects that make up the Cobra Dane sustainment plan  In addition to what the Air Force reported, we identified that the Air Force developed a total cost estimate for its transmitter group replacement, but not for its other two projects  For the other two projects, Air Force officials stated that they plan to complete estimates for the total costs in conjunction with their fiscal year 2020 budget submission  In August 2016, the Air Force estimated that the transmitter group replacement would have a total cost of $91 2 million, but reported it would fund this project at $94 0 million through fiscal year 2023 (see table 4)  Air Force officials plan to request the transfer of any unused funding to the other projects once it completes the transmitter group project  The Air Force also completed a partial cost estimate for the traveling wave tube redesign—covering the redesign of the parts and replacement of 1 of 12 groups of parts—estimating that the first phase would cost $16 0 million  Further, Air Force officials told us that they have not yet developed a total cost estimate for the mission system replacement  We also found that the Air Force and MDA expedited Cobra Dane’s mission system replacement project, but Air Force officials told us they face challenges in expediting the other two projects without compromising Cobra Dane’s operational availability  For the mission system replacement, MDA requested additional funding in fiscal year 2018  Air Force and MDA officials told us that the additional funding they received allowed them to prioritize the mission system replacement and advance its timeline earlier that year  Air Force officials stated that they explored ways to expedite the two other projects: the traveling wave tubes and transmitter groups  However, they stated that replacing too many parts at the same time will result in their having to take Cobra Dane off-line for longer periods of time  According to Air Force and MDA officials, they may look for opportunities to expedite timeframes for their other two projects as long as the amount of scheduled downtime is kept to acceptable levels  In its report to Congress, the Air Force identified that it plans to provide $140 million in funding for the sustainment and maintenance of operational access to Cobra Dane’s site at Shemya Island based on its fiscal year 2019 budget plans  According to the report, the Air Force is solely responsible for funding all work related to the operation and sustainment of Shemya Island, shared between two of its major commands: Air Force Space Command and Pacific Air Forces  Table 5 summarizes the information the Air Force included in its report on how funding will be shared for Shemya Island  We also reviewed a support agreement between Air Force Space Command and Pacific Air Forces that identifies how they will sustain the site and the calculation for sharing costs  The agreement describes the specific work to sustain the site, including maintaining the airfield, support facilities, and communication infrastructure  Air Force officials told us that they are constantly addressing challenges related to operational access to the site at Shemya Island, but Air Force Space Command and Pacific Air Forces work together to address those challenges  We provided a draft of this report to DOD for review and comment  DOD told us that it had no comments on the draft report  We are sending copies of this report to the Secretary of Defense; the Under Secretary of Defense for Acquisitions and Sustainment; the Secretary of the Air Force; the Director of the Missile Defense Agency; and the Commanders of U S  Northern Command and U S  Strategic Command  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact Joe Kirschbaum at (202) 512-9971 or kirschbaumj@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 contributions to the report are listed in Appendix I  In addition to the contact named above, Kevin O’Neill (Assistant Director), Scott Bruckner, Vincent Buquicchio, Martin De Alteriis, Amie Lesser, and Richard Powelson made key contributions to the report 

ground_truth: Federal agencies use heavy equipment such as cranes and forklifts to carry out their missions, but there is no government-wide data on federal agencies' acquisition or management of this equipment. GAO was asked to review federal agencies' management of heavy equipment. This report, among other objectives, examines: (1) the number, type, and costs of heavy equipment items that are owned by 20 federal agencies and (2) the heavy equipment that selected agencies recently acquired as well as how they decided whether to purchase or lease this equipment. GAO collected heavy equipment inventory data as of June 2017 from the 24 agencies that have chief financial officers responsible for overseeing financial management. GAO also selected three agencies (using factors such as the heavy equipment fleet's size) and reviewed their acquisitions of and guidance on heavy equipment. These agencies' practices are not generalizable to all acquisitions but provide insight into what efforts these agencies take to acquire thousands of heavy equipment items. GAO also interviewed officials at the three selected agencies. Of the 24 agencies GAO reviewed, 20 reported owning over 136,000 heavy equipment items such as cranes, backhoes, and forklifts, and spending over $7.4 billion (in 2016 dollars) to acquire this equipment. The remaining 4 agencies reported that they do not own any heavy equipment. The three selected agencies GAO reviewed in-depth—the Air Force within the Department of Defense (DOD), and the Fish and Wildlife Service and the National Park Service within the Department of the Interior (Interior)—spent about $360 million to purchase about 3,500 heavy equipment assets in calendar years 2012 through 2016 and over $5 million to lease heavy equipment from fiscal years 2012 through 2016. Officials from all three agencies stated that they consider mission needs and the availability of equipment leases when deciding whether to lease or purchase heavy equipment. Federal regulations provide that agencies should consider whether it is more economical to lease or purchase equipment when acquiring heavy equipment, and federal internal control standards require that management clearly document all transactions in a manner that allows the documentation to be readily available for examination. However, in reviewing selected leases and purchases of heavy equipment from these three agencies, GAO found that officials did not consistently conduct or document lease-versus-purchase analyses. Officials at the Air Force and Interior said that there was a lack of clarity in agency policies about when they were required to conduct and document such analyses. Without greater clarity on when lease-versus-purchase analyses should be conducted and documented, these agencies may not be spending funds on heavy equipment effectively. The Department of the Interior and the Air Force should clarify the circumstances in which lease-versus-purchases analyses for heavy equipment acquisitions are to be conducted and documented. The Departments of the Interior and Defense concurred with these recommendations.