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



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

Report 1: To participate in federal student aid programs, postsecondary schools must be 1) certified by Education as eligible to participate in federal student aid programs, 2) accredited by a recognized accrediting agency— generally nongovernmental, nonprofit entities—and 3) authorized by the state in which the school is physically located  (See table 1 ) FSA is responsible for ensuring that schools with access to federal student aid are eligible and capable of properly administering federal student aid funds, according to standards established by Education and authorized by the Higher Education Act  These standards include requirements for schools related to communication, personnel, policies, procedures and reporting, and adequate checks and balances in a system of internal controls, among others  FSA is also responsible for conducting ongoing financial oversight of schools that receive federal student aid  This includes reviewing annual financial statement audits to assess a school’s financial responsibility and providing additional oversight to schools that do not meet financial responsibility standards outlined in the Higher Education Act  Schools that participate in federal student aid programs generally are required to submit annual compliance audits  The compliance audit provides information that FSA can use to assess the school’s administration of federal student aid programs and to identify schools that require additional oversight because they do not fully comply with federal student aid administrative requirements  The OIG is required to assess the quality of school compliance audits and selects a sample to review each year  The OIG reviews the audit documentation to ensure that it supports the auditor’s opinions and that the audit results are reliable  According to agency guidance, FSA staff should refer compliance audits to the OIG for a quality review if they have any concerns about the quality of the audits  Both FSA and OIG officials stated that the OIG has primary responsibility for issues related to audit quality  When a school first applies to be certified to administer federal student aid, FSA will either approve the school for provisional certification— generally for 1 year—or deny certification (see fig  1)  Once a school is approved for initial certification and applies for recertification, FSA will provisionally or fully recertify the school, or deny certification  According to FSA procedures, FSA uses provisional certification for initial, or first time, applicants, as well as schools that are applying for recertification  Provisional certification is the only approval status available to new schools  In addition, FSA may decide to recertify a school provisionally if it determines that a school has not fully complied with federal student aid requirements  FSA prohibits provisionally certified schools from opening new campus locations or offering new programs without approval from FSA, and provisionally certified schools that are denied recertification have a less substantive appeals process than fully certified schools  Further, recertified schools in provisional status are subject to more FSA oversight than schools that are fully certified  FSA procedures allow for some discretion in determining for how long to certify a school  Provisional recertification generally lasts 1 to 3 years, while full recertification generally lasts 4 to 6 years  Education’s FSA regional staff draw information from a variety of sources during the certification process to assess a school’s capability to administer federal student aid  According to FSA documents, regional staff are to review information collected from schools and third parties, such as annual compliance audits conducted by independent auditors, among other information sources  FSA staff responsible for different functional areas, such as financial and compliance audits, accreditation status, and student loan default rates, compile and review information on schools, according to FSA procedures  FSA officials told us that these staff meet to discuss any potential program eligibility issues and to ensure that all information relevant to a school is considered before making a certification decision  FSA’s certification procedures outline some of the key information that regional staff should assess, some of which is relevant to both initial and recertification decisions, and some of which is specific to each type of certification process (see fig  2)  Documents and policies provided by schools: FSA regional staff are directed to review documents submitted by schools, including school catalogs, and certain school policies—such as admissions and student refund policies—that are relevant to assessing administrative capability  Proof of accreditation: School accreditors are responsible for applying and enforcing standards to help ensure that the education offered by schools is of sufficient quality to achieve program objectives  Accreditation of schools, which generally includes a site visit, takes place on a cycle that may range from every few years to as many as 10 years  Proof of state authorization: States are responsible for authorizing schools to offer postsecondary education and respond to student complaints  The process for approving schools varies from state to state and may include on-site visits  Audited financial statements: FSA regional staff are directed to review information in audited financial statements to assess schools’ financial health  Schools are required to have annual audited financial statements issued by an independent certified public accountant or a government auditor  Self-reported school data: FSA regional staff are instructed to review data on continual student enrollment in eligible academic programs and student withdrawal rates  Pre-certification review and school outreach: FSA staff are responsible for contacting school personnel to verify the school’s application information and discuss relevant policies, procedures, and other materials relevant to administering federal student aid  FSA visits to newly certified schools: After schools first apply and are provisionally certified, Education requires FSA regional staff to contact them within 3 months and schedule an on-site school visit  Schools cannot administer federal student aid until they are certified, so FSA has limited information on how newly certified schools are administering federal student aid programs  School visits provide FSA with an opportunity to collect additional information about a provisionally certified school’s ability to administer federal student aid  Some FSA regional staff we interviewed told us that on-site visits to newly certified schools provide valuable first-hand information about whether these schools are administering federal student aid in accordance with program requirements  If FSA regional staff find that a school is having difficulties administering federal student aid, FSA procedures direct regional staff to assist schools by providing clarification and guidance on federal student aid policies, recommending additional training for school officials, and helping schools develop a plan to track and report on their corrective actions, among other things  Compliance audits: FSA staff are directed to review information in compliance audits to determine if schools are complying with specific federal student aid requirements  Generally, compliance audits are required to be conducted annually by an independent auditor, and submitted with the school’s audited financial statements  Program reviews: FSA regional staff are also responsible for conducting program reviews, usually on site, which evaluate school compliance with federal requirements and can provide more in-depth information on schools than compliance audits, according to some FSA staff we interviewed  Generally, FSA selects schools for program reviews that it considers to be at risk for noncompliance, according to Education documents  FSA conducts approximately 250 to 300 program reviews per year, according to FSA documentation  FSA staff from all four of our selected regional offices told us they consider results from any recent program review in decisions about recertification and noted that such information, when available, is valuable for assessing schools’ administrative capability  Education data: FSA regional office staff are also directed to review data on student loan default rates  From calendar years 2006 through 2017, FSA approved most schools applying for certification to receive federal student aid, according to Education data  From 2006 through 2017, FSA approved 89 percent of schools new to administering federal student aid for provisional certification and denied 11 percent of schools overall (see fig  3)  Denial rates for initial certification were 11 percent for public and for-profit schools and 14 percent for nonprofit schools  For more information on 2006-2017 school certification outcomes by year, see appendix I  FSA regional staff responsible for reviewing school applications told us that schools are denied initial certification for issues such as a lack of accreditation, not offering eligible programs for federal student aid, or not meeting other statutory eligibility requirements  For example, FSA staff said that for-profit and vocational schools that apply for initial certification are required to provide an eligible program continuously for 2 years prior to their initial application  FSA staff may also advise schools that do not meet basic eligibility requirements not to apply, which could result in fewer initial certification denials overall  In addition, FSA staff said they often work with schools to address compliance problems, for example, by providing guidance on revising school policies that do not meet requirements, so that the schools are able to meet FSA’s certification requirements  From 2006 through 2017, 76 percent of schools applying for recertification were fully recertified, 21 percent were provisionally recertified, and 3 percent were denied recertification  Sixty-six percent of for-profit schools were fully recertified, 28 percent were provisionally recertified, and 6 percent were denied  In comparison, 86 percent of public schools were fully recertified, 14 percent were provisionally recertified, and fewer than 1 percent were denied  Nonprofit schools had rates similar to public schools, with 80 percent fully recertified, 18 percent provisionally recertified, and 2 percent denied (see fig 4)  FSA staff from all four of our selected regional offices told us that they typically deny recertification when a school no longer meets eligibility requirements, such as losing accreditation, or when there is significant evidence of serious issues or massive wrongdoing, such as fraud  For example, managers in one regional office told us they denied recertification for a school because they had evidence that the school was accepting students without valid high school diplomas and referring them to diploma mills to boost enrollment  Staff in two FSA regional offices told us that they can also choose to fully recertify a school for shorter periods of time if they uncover issues related to administrative capability  For example, one regional staff member told us that when they found a school’s default rate for one federal student loan program had been high for the prior 3 years, the regional office decided to shorten the school’s full recertification period from 6 to 4 years, to allow FSA staff to review the school again sooner  FSA staff from all four of our selected regional offices told us that they provisionally certify schools for a variety of reasons, including when a school submits a late compliance audit or when a recent compliance audit indicates that a school could potentially have significant problems  Generally, schools in provisional certification status are subject to additional monitoring by FSA compared to schools that have been fully certified  For example, Education officials said that if they have concerns about a provisionally certified school’s student withdrawal rate, they can add provisional conditions requiring the school to submit monthly enrollment rosters for review  Staff in two FSA regional offices told us that in other cases, if they have concerns about how a school is administering federal student aid or suspected fraud, they can put a school on provisional status and conduct a program review to collect more detailed information on compliance with federal requirements  Education data also show that most schools remain in provisional status the first time they are recertified—62 percent from 2006 to 2017  In contrast, FSA staff fully recertified over three-quarters of schools that applied for recertification a second time during the same time period (see table 2)  For more information on first and second recertification outcomes by school sector, see appendix II  We found that FSA generally relies on compliance audits as the only annual on-site review to determine how schools applying for recertification administer federal student aid  The audits provide direct information collected by independent auditors from school visits and file reviews examining how schools administer federal student aid and comply with program requirements  For example, OIG audit guidance directs auditors to check whether schools are distributing federal student aid to eligible students and accurately calculating student loan amounts  FSA officials and staff from all four of our selected regional offices said that compliance audits are a key source of information they use to assess a school’s administrative capability  Officials from Education’s OIG said that the quality of information in compliance audits varies substantially and depends on the auditor  The OIG has found quality problems in some of the compliance audits it selects—based on auditor and school risk factors—for its annual quality control reviews  Because the OIG selects higher risk audits to review, its reviews are more likely to detect problems, and OIG officials said they cannot make any conclusions about the overall prevalence of quality problems in compliance audits  However, our analysis of OIG quality review data found that of the 739 compliance audits reviewed by the OIG from fiscal years 2006 through 2017, the OIG passed 23 percent (173) and failed 59 percent (436)  An additional 18 percent (130) passed with deficiencies  For example, across the 41 compliance audits it reviewed in fiscal year 2016, the OIG identified 264 quality deficiencies with the auditor’s work, according to our analysis of quality reviews provided by the OIG  The most frequently cited issues in these 41 audits were: reporting (24 audits), such as lack of evidence that the auditor tested whether the school correctly reported student enrollment status; student eligibility (20 audits), such as lack of evidence that the auditor verified student school attendance; and administrative capability (19 audits), such as lack of evidence that the auditor determined whether the accreditor had been notified about a change in school ownership within 10 days  FSA officials also identified quality issues with the compliance audits of some schools  FSA headquarters officials and staff we interviewed in several regional offices said they have seen schools with significant program review findings that had not been identified in annual compliance audits  FSA staff said they have referred some compliance audits to the OIG for quality reviews when they have had questions about the thoroughness of an audit  We also found a couple of examples in our review of school certification documents in which the findings identified in a school’s compliance audit were different from the findings identified by FSA in a program review of the same school covering the same time period  In one case, FSA staff said they probably would have fully recertified the school if they had relied solely on the compliance audit  Instead, they used the program review to determine that the school should be provisionally recertified  Compliance audits and program review findings are based on a sample of student records, and FSA staff said some differences in findings might be explained by differences in the records reviewed  FSA and OIG officials cited several issues that can affect the quality of compliance audits  FSA and OIG officials we interviewed said that some auditors conducting compliance audits have insufficient training in federal student aid, which contributes to audit quality problems  OIG staff also said that even if an auditor meets the general training hour requirements for auditors, the training content may not be relevant for federal student aid audits  In addition, FSA and OIG officials said some schools— particularly smaller schools—tend to hire less experienced auditors in order to save money, often resulting in poor quality audits  FSA officials in most selected regional offices said that additional training on federal student aid for auditors who are new to or unfamiliar with federal student aid could help improve audit quality  FSA and the OIG recently have taken steps to address audit quality and the information available to FSA staff when making certification decisions  These efforts include: Training for auditors: The OIG has taken steps to enhance training offered to auditors of schools’ administration of federal student aid and is exploring opportunities to provide additional training  In December 2017, the OIG and the American Institute of Certified Public Accountants cosponsored training for auditors on the OIG’s 2016 revised guide for audits of for-profit schools, and other topics related to auditing federal student aid  The training included discussion of common audit quality issues and areas of highest risk  According to an OIG official, about 200 auditors attended, and after the event, the American Institute of Certified Public Accountants and the OIG posted a recording of the training to their websites to make it available to additional auditors  In addition, OIG officials said they maintain an email account—listed on the OIG website—through which auditors can ask questions and receive responses  In March 2018, the OIG posted frequently asked questions and answers to the website  Timeliness of OIG quality reviews: Both FSA and OIG officials said that the OIG has recently renewed efforts to issue compliance audit quality reviews more quickly, after several years in which staffing shortages and other issues led to some delayed quality reviews  Guidance to schools on selecting an auditor: OIG officials said that at the 2017 FSA training conference for school financial aid staff, they presented to more than 400 participants about factors schools should consider when hiring an auditor  For example, they suggested that schools verify the licenses of certified public accountants, ask about the types of engagements an auditing firm has conducted, request and check references, check for any actions that may have been taken against a firm, and ask whether the auditor has been subject to a previous review by the OIG or another agency  FSA officials said they expected to invite the OIG to present at future FSA conferences, and OIG officials said they were seeking additional opportunities to share information on auditor selection with schools, including a planned presentation to an association of postsecondary schools  FSA working group: FSA recently established a working group to update its guidance to FSA staff on how to coordinate with the OIG to address compliance audits with quality problems  Among other topics, the working group has consulted with the OIG about how schools are made aware of the OIG’s findings regarding the quality of their audits  FSA officials said that OIG officials have provided input and feedback on FSA’s proposed changes to the guidance  Audit guide revisions: In addition, OIG and FSA staff told us they expected the OIG’s 2016 revisions to the for-profit school audit guide to improve the quality of compliance audits for those schools  They said that because the revised guide clarified some issues that were confusing to auditors in the previous guide issued in 2000, auditors might be better able to implement the guidance  The audit guide revisions include more testing and reporting requirements, clarified procedures, and guidance on issues such as fraud reporting and coordinating financial and compliance audits  The 2016 revisions first applied to audits for fiscal years beginning after June 30, 2016, and FSA began receiving those audits at the end of 2017  In addition, although the OIG’s 2016 revisions only apply to audits of for-profit schools, FSA officials said they planned to establish a working group to consider improvements to audit guidance for public and nonprofit schools  FSA and OIG efforts to address audit quality could help ensure that compliance audits provide accurate and reliable information on school administrative capability for Education’s recertification decisions  We provided a draft of this report to Education for review and comment  Education’s Office of Inspector General provided technical comments, which we considered and incorporated as appropriate  Education did not provide other comments on the report  We are sending copies of this report to the appropriate congressional committees; the Secretary of Education; and other interested parties  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (617) 788-0534 or emreyarrasm@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix III  In addition to the contact named above, Michelle St  Pierre (Assistant Director), Kristy Kennedy (Analyst-in-Charge), Edward Bodine, Marissa Jones, and Mark Ward made significant contributions  Also contributing to this report were Susan Aschoff, Deborah Bland, Nagla’a El-Hodiri, Monika Gomez, Sheila R  McCoy, Jessica Orr, Mimi Nguyen, John Mingus, Rhiannon Patterson, Monica Savoy, Benjamin Sinoff, and Rosemary Torres Lerma 


Report 2: FEMA’s mission is to help people before, during, and after disasters  It provides assistance to those affected by emergencies and disasters by supplying immediate needs (e g , ice, water, food, and temporary housing) and providing financial assistance grants for damage to personal or public property  FEMA also provides non-disaster assistance grants to improve the nation’s preparedness, readiness, and resilience to all hazards  FEMA accomplishes a large part of its mission through awarding grants to state, local, and tribal governments and nongovernmental entities to help communities prevent, prepare for, protect against, mitigate the effects of, respond to, and recover from disasters and terrorist attacks  As previously mentioned, for fiscal years 2005 through 2014, the agency obligated about $104 5 billion in disaster relief grants  In addition, as of April 2018, the four major disasters in 2017—hurricanes Harvey, Irma, and Maria; and the California wildfires—had resulted in over $22 billion in FEMA grants  The current FEMA grants management environment is highly complex with many stakeholders, IT systems, and users  Specifically, this environment is comprised of 45 active disaster and non-disaster grant programs, which are grouped into 12 distinct grant categories  For example, one program in the Preparedness: Fire category is the Assistance to Firefighters Grants (AFG) program, which provides grants to fire departments, nonaffiliated emergency medical service organizations, and state fire training academies to support firefighting and emergency response needs  As another example, the Housing Assistance grant program is in the Recovery Assistance for Individuals category and provides financial assistance to individuals and households in geographical areas that have been declared an emergency or major disaster by the President  Table 1 lists FEMA’s non-disaster and disaster-based grant categories  According to FEMA, the processes for managing these different types of grants vary because the grant programs were developed independently by at least 18 separate authorizing laws that were enacted over a 62-year period (from 1947 through 2009)  The various laws call for different administrative and reporting requirements  For example, the Robert T  Stafford Disaster Relief and Emergency Assistance Act, as amended, established the statutory authority for 11 of the grant programs, such as the administration of Public Assistance and Individual Assistance grant programs after a presidentially declared disaster  The act also requires the FEMA Administrator to submit an annual report to the President and Congress covering FEMA’s expenditures, contributions, work, and accomplishments, pursuant to the act  As another example, the National Dam Safety Program Act established one of the grant programs aimed at providing financial assistance to improve dam safety  Key stakeholders in modernizing the IT grants management environment include the internal FEMA officials that review, approve, and monitor the grants awarded, such as grant specialists, program analysts, and supervisors  FEMA has estimated that it will need to support about 5,000 simultaneous internal users of its grants management systems  Other users include the grant recipients that apply for, receive, and submit reports on their grant awards; these are considered the external system users  These grant recipients can include individuals, states, local governments, Indian tribes, institutions of higher education, and nonprofit organizations  FEMA has estimated that there are hundreds of thousands of external users of its grants systems  The administration of the many different grant programs is distributed across four divisions within FEMA’s organizational structure  Figure 1 provides an overview of FEMA’s organizational structure and the divisions that are responsible for administering grants  Within three of the four divisions—Resilience, United States Fire Administration, and Office of Response and Recovery—16 different grant program offices are collectively responsible for administering the 45 grant programs  The fourth division consists of 10 regional offices that help administer grants within their designated geographical regions  For example, the Office of Response and Recovery division oversees three different offices that administer 13 grant programs that are largely related to providing assistance in response to presidentially declared disasters  Figure 2 shows the number of grant programs administered by each of the four divisions’ grant program and regional offices  In addition, appendix II lists the names of the 45 grant programs  FEMA’s OCIO is responsible for developing, enhancing, and maintaining the agency’s IT systems, and for increasing efficiencies and cooperation across the entire organization  However, we and the DHS Office of Inspector General (OIG) have previously reported that the grant programs and regional offices develop information systems independent of the OCIO and that this has contributed to the agency’s disparate IT environment  We and the DHS OIG have reported that this disparate IT environment was due, in part, to FEMA’s decentralized IT budget and acquisition practices  For example, from fiscal years 2010 through 2015, the OCIO’s budget represented about one-third of the agency’s IT budget, with the grant program offices accounting for the remaining two-thirds of that budget  In February 2018, the OIG found that FEMA had shown limited progress in improving its IT management and that many of the issues reported in prior audits remained unchanged  As such, the OIG initiated a more comprehensive audit of the agency’s IT management that is ongoing  FEMA has identified 10 primary legacy IT systems that support its grants management activities  According to the agency, most of these systems were developed to support specific grant programs or grant categories  Table 2 summarizes the 10 primary legacy systems  According to FEMA officials, the 10 primary grant systems are all in operation (several have been for decades) and are not interoperable  As a result, individual grant programs and regional offices have independently developed work arounds intended to address existing capability gaps with the primary systems  FEMA officials stated that while these work arounds have helped the agency partially address capability gaps with its primary systems, they are often nonstandardized processes, and introduce the potential for information security risks and errors  This environment has contributed to labor-intensive manual processes and an increased burden for grant recipients  The disparate systems have also led to poor information sharing and reporting capabilities, as well as difficulty reconciling financial data  The DHS OIG and we have previously highlighted challenges with FEMA’s past attempts to modernize its grant management systems  For example, In December 2006, the DHS OIG reported that EMMIE, an effort to modernize its grants management systems and provide a single grants processing solution, was being developed without a clear understanding and definition of the future solution  The report also identified the need to ensure crosscutting participation from headquarters, regions, and states in developing and maintaining a complete, documented set of FEMA business and system requirements  In April 2016, we found weaknesses in FEMA’s development of the EMMIE system  For example, we noted that the system was implemented without sufficient documentation of system requirements, an acquisition strategy, up-to-date cost estimate and schedule, total amount spent to develop the system, or a systems integration plan  In response to our findings and related recommendations, FEMA took action to address these issues  For example, the agency implemented a requirements management process that, among other things, provided guidance to programs on analyzing requirements to ensure that they are complete and verifiable  We reported in November 2017 that EMMIE lacked the ability to collect information on all pre-award activities and, as a result, agency officials said that they and applicants used ad hoc reports and personal tracking documents to manage and monitor the progress of grant applications  FEMA officials added that applicants often struggled to access the system and that the system was not user friendly  Due to EMMIE’s shortfalls, the agency had to develop another system in 2017 to supplement EMMIE with additional grant tracking and case management capabilities  FEMA initiated GMM in 2015, in part, due to EMMIE’s failed attempt to modernize the agency’s grants management environment  The program is intended to modernize and streamline the agency’s grants management environment  To help streamline the agency’s grants management processes, the program established a standard framework intended to represent a common grants management lifecycle  The framework consists of five sequential phases—pre-award, award, post-award, closeout, and post- closeout—along with a sixth phase dedicated to continuous grant program management activities, such as analyzing data and producing reports on grant awards and managing IT systems  FEMA also established 43 distinct business functions associated with these six lifecycle phases  Figure 3 provides the general activities that may occur in each of the grant lifecycle phases, but specific activities would depend on the type of grant being administered (i e , disaster versus non-disaster)  GMM is expected to be implemented within the complex IT environment that currently exists at FEMA  For example, the program is intended to replace the 10 legacy grants management systems, and potentially many additional subsystems, with a single IT system  Each of the 10 legacy systems was developed with its own database(s) and with no standardization of the grants management data and, according to FEMA officials, this legacy data has grown significantly over time  Accordingly, FEMA will need to migrate, analyze, and standardize the grants management data before transitioning it to GMM  The agency awarded a contract in June 2016 to support the data migration efforts for GMM  The agency also implemented a data staging environment in October 2017 to migrate the legacy data and identify opportunities to improve the quality of the data  Further, the GMM system is expected to interface with a total of 38 other systems  These include 19 systems external to DHS (e g , those provided by commercial entities or other federal government agencies) and 19 systems internal to DHS or FEMA  Some of the internal FEMA systems are undergoing their own modernization efforts and will need to be coordinated with GMM, such as the agency’s financial management systems, national flood insurance systems, and enterprise data warehouses  For example, FEMA’s Financial Systems Modernization Program was originally expected to deliver a new financial system in time to interface with GMM  However, the financial modernization has been delayed until after GMM is to be fully implemented; thus, GMM will instead need to interface with the legacy financial system  As a result, GMM is in the process of removing one of its key performance parameters in the acquisition program baseline related to financial systems interoperability and timeliness of data exchanged  In May 2017, DHS approved the acquisition program baseline for GMM  The baseline estimated the total lifecycle costs to be about $251 million, initial operational capability to be achieved by September 2019, and full operational capability to be achieved by September 2020  FEMA intends to develop and deploy its own software applications for GMM using a combination of commercial-off-the-shelf software, open source software, and custom developed code  The agency plans to rely on an Agile software development approach  According to FEMA planning documentation, the agency plans to fully deliver GMM by September 2020 over eight Agile development increments  Agile development is a type of incremental development, which calls for the rapid delivery of software in small, short increments  Many organizations, especially in the federal government, are accustomed to using a waterfall software development model  This type of model typically consists of long, sequential phases, and differs significantly from the Agile development approach  We have previously reported that DHS has sought to establish Agile software development as the preferred method for acquiring and delivering IT capabilities  However, the department has not yet completed critical actions necessary to update its guidance, policies, and practices for Agile programs, in areas such as, developing lifecycle cost estimates, managing IT requirements, testing and evaluation, oversight at key decision points, and ensuring cybersecurity  (See appendix III for more details on the Agile software development approach ) FEMA’s acquisition approach includes using contract support to assist with the development and deployment efforts  The agency selected a public cloud environment to host the computing infrastructure  In addition, from March through July 2017, the agency used a short-term contract aimed at developing prototypes of GMM functionality for grant tracking and monitoring, case management of disaster survivors, grant reporting, and grant closeout  The agency planned to award a second development contract by December 2017 to complete the GMM system (beyond the prototypes) and to begin this work in September 2018  However, due to delays in awarding the second contract to develop the complete GMM system, in January 2018, the program extended the scope and time frames of the initial short-term prototype contract for an additional year to develop the first increment of the GMM system— referred to as the AFG pilot  On August 31, 2018, FEMA awarded the second development contract, which is intended to deliver the remaining functionality beyond the AFG pilot (i e , increments 2 through 8)  FEMA officials subsequently issued a 90-day planning task order for the Agile development contractor to define the work that needs to be done to deliver GMM and the level of effort needed to accomplish that work  However, the planning task order was paused after a bid protest was filed with GAO in September 2018  According to FEMA officials, they resumed work on the planning task order after the bid protest was withdrawn by the protester on November 20, 2018, and then the work was paused again during the partial government shutdown from December 22, 2018, through January 25, 2019  FEMA began working on the AFG pilot—GMM’s first increment—in January 2018  This increment was intended to pilot GMM’s use of Agile development methods to replace core functionality for the AFG system (i e , one of the 10 legacy systems) This system supports three preparedness/fire-related grant programs—Assistance to Firefighters Grants Program, Fire Prevention and Safety Grant Program, and Staffing for Adequate Fire and Emergency Response Grant Program  According to FEMA officials, the AFG system was selected as the first system to be replaced because it is costly to maintain and the DHS OIG had identified cybersecurity concerns with the system  Among the 43 GMM business functions discussed earlier in this report, FEMA officials specified 19 functions to be delivered in the AFG pilot  Figure 4 shows the planned time frames for delivering the AFG pilot in increment 1 (which consisted of four 3-month Agile development sub- increments), as of August 2018  As of August 2018, the program was working on sub-increment 1C of the pilot  In September 2018, GMM deployed its first set of functionality to a total of 19 AFG users—which included seven of 169 total internal AFG users, and 12 of more than 153,000 external AFG users  The functionality supported four of the 19 business functions that are related to the closeout of grants (i e , the process by which all applicable administrative actions and all required work to award a grant have been completed)  This functionality included tasks such as evaluation of final financial reports submitted by grant recipients and final reconciliation of finances (e g , final disbursement to recipients and return of unobligated federal funds)  According to FEMA officials, closeout functionality was selected first for deployment because it was the most costly component of the legacy AFG system to maintain, as it is an entirely manual and labor-intensive process  The remaining AFG functionality and remaining AFG users are to be deployed by the end of the AFG pilot  The GMM program is executed by a program management office, which is overseen by a program manager and program executive  This office is responsible for directing the day-to-day operations and ensuring completion of GMM program goals and objectives  The program office resides within the Office of Response and Recovery, which is headed by an Associate Administrator who reports to the FEMA Administrator  In addition, the GMM program executive (who is also the Regional Administrator for FEMA Region IX) reports directly to the FEMA Administrator  GMM is designated as a level 2 major acquisition, which means that it is subject to oversight by the DHS acquisition review board  The board is chaired by the DHS Undersecretary for Management and is made up of executive-level members, such as the DHS Chief Information Officer  The acquisition review board serves as the departmental executive board that decides whether to approve GMM through key acquisition milestones and reviews the program’s progress and its compliance with approved documentation every 6 months  The board approved the acquisition program baseline for GMM in May 2017 (i e , estimated costs to be about $251 million and full operational capability to be achieved by September 2020)  In addition, the program is reviewed on a monthly basis by FEMA’s Grants Management Executive Steering Group  This group is chaired by the Deputy Administrator of FEMA  Further, DHS’s Financial Systems Modernization Executive Steering Committee, chaired by the DHS Chief Financial Officer, meets monthly and is to provide guidance, oversight, and support to GMM  For government organizations, including FEMA, cybersecurity is a key element in maintaining the public trust  Inadequately protected systems may be vulnerable to insider threats  Such systems are also vulnerable to the risk of intrusion by individuals or groups with malicious intent who could unlawfully access the systems to obtain sensitive information, disrupt operations, or launch attacks against other computer systems and networks  Moreover, cyber-based threats to federal information systems are evolving and growing  Accordingly, we designated cybersecurity as a government-wide high risk area 22 years ago, in 1997, and it has since remained on our high-risk list  Federal law and guidance specify requirements for protecting federal information and information systems  The Federal Information Security Modernization Act (FISMA) of 2014 requires executive branch agencies to develop, document, and implement an agency-wide cybersecurity program to provide security for the information and information systems that support operations and assets of the agency  The act also tasks NIST with developing, for systems other than those for national security, standards and guidelines to be used by all agencies to establish minimum cybersecurity requirements for information and information systems based on their level of cybersecurity risk  Accordingly, NIST developed a risk management framework of standards and guidelines for agencies to follow in developing cybersecurity programs  The framework addresses broad cybersecurity and risk management activities, including categorizing the system’s impact level; selecting, implementing, and assessing security controls; authorizing the system to operate (based on progress in remediating control weaknesses and an assessment of residual risk); and monitoring the efficacy of controls on an ongoing basis  Figure 5 provides an overview of this framework  Prior DHS OIG assessments, such as the annual evaluation of DHS’s cybersecurity program, have identified issues with FEMA’s cybersecurity practices  For example, in 2016, the OIG reported that FEMA was operating 111 systems without an authorization to operate  In addition, the agency had not created any corrective action plans for 11 of the systems that were classified as “Secret” or “Top Secret,” thus limiting its ability to ensure that all identified cybersecurity weaknesses were mitigated in a timely manner  The OIG further reported that, for several years, FEMA was consistently below DHS’s 90 percent target for remediating corrective action plans, with scores ranging from 73 to 84 percent  Further, the OIG reported that FEMA had a significant number of open corrective action plans (18,654) and that most of these plans did not contain sufficient information to address identified weaknesses  In 2017, the OIG reported that FEMA had made progress in addressing security weaknesses  For example, it reported that the agency had reduced the number of systems it was operating without an authorization to operate from 111 to 15 systems  According to GAO’s Business Process Reengineering Assessment Guide and the Software Engineering Institute’s Capability Maturity Model Integration® for Development, successful business process reengineering can enable agencies to replace their inefficient and outmoded processes with streamlined processes that can more effectively serve the needs of the public and significantly reduce costs and improve performance  Many times, new IT systems are implemented to support these improved business processes  Thus, effective management of IT requirements is critical for ensuring the successful design, development, and delivery of such new systems  These leading practices state that effective business process reengineering and IT requirements management involve, among other things, (1) ensuring strong executive leadership support for process reengineering; (2) assessing the current and target business environment and business performance goals; (3) establishing plans for implementing new business processes; (4) establishing clear, prioritized, and traceable IT requirements; (5) tracking progress in delivering IT requirements; and (6) incorporating input from end user stakeholders  Among these six selected leading practices for reengineering business processes and managing IT requirements, FEMA fully implemented four and partially implemented two of them for its GMM program  For example, the agency ensured strong senior leadership commitment to changing the way it manages its grants, took steps to assess and document its business environment and performance goals, defined initial IT requirements for GMM, took recent actions to better track progress in delivering planned IT requirements, and incorporated input from end user stakeholders  In addition, FEMA had begun planning for business process reengineering; however, it had not finalized plans for transitioning users to the new business processes  Further, while GMM took steps to establish clearly defined and prioritized IT requirements, key requirements were not always traceable  Table 3 summarizes the extent to which FEMA implemented the selected leading practices  According to GAO’s Business Process Reengineering Assessment Guide, the most critical factor for engaging in a reengineering effort is having strong executive leadership support to establish credibility regarding the seriousness of the effort and to maintain the momentum as the agency faces potentially extensive changes to its organizational structure and values  Without such leadership, even the best process design may fail to be accepted and implemented  Agencies should also ensure that there is ongoing executive support (e g , executive steering committee meetings headed by the agency leader) to oversee the reengineering effort from start to finish  FEMA senior leadership consistently demonstrated its commitment and support for streamlining the agency’s grants management business processes and provided ongoing executive support  For example, one of the Administrator’s top priorities highlighted in FEMA’s 2014 through 2022 strategic plans was to strengthen grants management through innovative systems and business processes to rapidly and effectively deliver the agency’s mission  In accordance with this strategic priority, FEMA initiated GMM with the intent to streamline and modernize grants management across the agency  In addition, FEMA established the Grants Management Executive Steering Group in September 2015  This group is responsible for transforming the agency’s grants management capabilities through its evaluation, prioritization, and oversight of grants management modernization programs, such as GMM  The group’s membership consists of FEMA senior leaders from across the agency’s program and business support areas, such as FEMA regions, Individual Assistance, Public Assistance, Preparedness, Office of the Chief Financial Officer, Office of Chief Counsel, OCIO, and the Office of Policy and Program Analysis  In this group’s ongoing commitment to reengineering grants management processes, it meets monthly to review GMM’s updates, risks, and action items, as well as the program’s budget, schedule, and acquisition activities  For example, the group reviewed the status of key acquisition activities and program milestones, such as the follow-on award for the pilot contractor and the program’s initial operational capability date  The group also reviewed GMM’s program risks, such as data migration challenges (discussed later in this report) and delays in the Agile development contract award  With this continuous executive involvement, FEMA is better positioned to maintain momentum for reengineering the new grants management business processes that the GMM system is intended to support  GAO’s Business Process Reengineering Assessment Guide states that agencies undergoing business process reengineering should develop a common understanding of the current environment by documenting existing core business processes to show how the processes work and how they are interconnected  The agencies should then develop a deeper understanding of the target environment by modeling the workflow of each target business process in enough detail to provide a common understanding of exactly what will be changed and who will be affected by a future solution  Agencies should also assess the performance of their current major business processes to identify problem areas that need to be changed or eliminated and to set realistically achievable, customer- oriented, and measurable business performance improvement goals  FEMA has taken steps to document the current and target grants management business processes  Specifically, The agency took steps to develop a common understanding of its grants management processes by documenting each of the 12 grant categories  For example, in 2016 and 2017, the agency conducted several nationwide user outreach sessions with representatives from FEMA headquarters, the 10 regional offices, and state and local grant recipients to discuss the grant categories and the current grants management business environment  In addition, FEMA’s Office of Chief Counsel developed a Grants Management Manual in January 2018 that outlined the authorizing laws, regulations, and agency policies for all of its grant programs  According to the Grants Management Executive Steering Group, the manual is intended to promote standardized grants management procedures across the agency  Additionally, the group expects grant program and regional offices to assess the manual against their own practices, make updates as needed, and ensure that their staff are properly informed and trained  FEMA also documented target grants management business process workflows for 18 of the 19 business functions that were notionally planned to be developed and deployed in the AFG pilot by December 2018  However, the program experienced delays in developing the AFG pilot (discussed later in this report) and, thus, deferred defining the remaining business function until the program gets closer to developing that function, which is now planned for August 2019  In addition, FEMA established measurable business performance goals for GMM that are aimed at addressing problem areas and improving grants management processes  Specifically, the agency established 14 business performance goals and associated thresholds in an October 2017 acquisition program baseline addendum, as well as 126 performance metrics for all 43 of the target grants management business functions in its March 2017 test and evaluation master plan  According to FEMA, the 14 business performance goals are intended to represent essential outcomes that will indicate whether GMM has successfully met critical, business-focused mission needs  GMM performance goals include areas such as improvements in the satisfaction level of users with GMM compared to the legacy systems and improvements in the timeliness of grant award processing  For example, one of GMM’s goals is to get at least 40 percent of users surveyed to agree or strongly agree that their grants management business processes are easier to accomplish with GMM, compared to the legacy systems  Program officials stated that they plan to work with the Agile development contractor to refine their performance goals and target thresholds, develop a plan for collecting the data and calculating the metrics, and establish a performance baseline with the legacy systems  Program officials also stated that they plan to complete these steps by September 2019—GMM’s initial operational capability date—which is when they are required to begin reporting these metrics to the DHS acquisition review board  According to GAO’s Business Process Reengineering Assessment Guide, agencies undergoing business process reengineering should (1) establish an overall plan to guide the effort (commonly referred to as an organizational change management plan) and (2) provide a common understanding for stakeholders of what to expect and how to plan for process changes  Agencies should develop the plan at the beginning of the reengineering effort and provide specific details on upcoming process changes, such as critical milestones and deliverables for an orderly transition, roles and responsibilities for change management activities, reengineering goals, skills and resource needs, key barriers to change, communication expectations, training, and any staff redeployments or reductions-in-force  The agency should develop and begin implementing its change management plan ahead of introducing new processes to ensure sufficient support among stakeholders for the reengineered processes  While FEMA has begun planning its business process reengineering activities, it has not finalized its plans or established time frames for their completion  Specifically, as of September 2018, program officials were in the process of drafting an organizational change management plan that is intended to establish an approach for preparing grants management stakeholders for upcoming changes  According to FEMA, this document is intended to help avoid uncertainty and confusion among stakeholders as changes are made to the agency’s grant programs, and ensure successful adoption of new business processes, strategies, and technologies  As discussed previously in this report, the transition to GMM will involve changes to FEMA’s disparate grants management processes that are managed by many different stakeholders across the agency  Program officials acknowledged that change management is the biggest challenge they face in implementing GMM and said they had begun taking several actions intended to support the agency’s change management activities  For example, program officials reported in October 2018 that they had recently created an executive-level working group intended to address FEMA’s policy challenges related to the standardization of grants management processes  Additionally, program officials reported that they planned to: (1) hire additional support staff focused on coordinating grants change management activities; and (2) pursue regional office outreach to encourage broad support among GMM’s decentralized stakeholders, such as state, local, and tribal territories  However, despite these actions, the officials were unable to provide time frames for completing the organizational change management plan or the additional actions  Until the plan and actions are complete, the program lacks assurance that it will have sufficient support among stakeholders for the reengineered processes  In addition, GMM did not establish plans and time frames for the activities that needed to take place prior to, during, and after the transition from the legacy AFG to GMM  Instead, program officials stated that they had worked collaboratively with the legacy AFG program and planned these details informally by discussing them in various communications, such as emails and meetings  However, this informal planning approach is not a repeatable process, which is essential to this program as FEMA plans to transition many sets of functionality to many different users during the lifecycle of this program  Program officials acknowledged that for future transitions they will need more repeatable transition planning and stated that they intend to establish such plans, but did not provide a time frame for when such changes would be made  Until FEMA develops a repeatable process, with established time frames for communicating the transition details to its customers prior to each transition, the agency risks that the transition from the legacy systems to GMM will not occur as intended  It also increases its risk that stakeholders will not support the implementation of reengineered grants management processes  Leading practices for software development efforts state that IT requirements are to be clearly defined and prioritized  This includes, among other things, maintaining bidirectional traceability as the requirements evolve, to ensure there are no inconsistencies among program plans and requirements  In addition, programs using Agile software development are to maintain a product vision, or roadmap, to guide the planning of major program milestones and provide a high-level view of planned requirements  Programs should also maintain a prioritized list (referred to as a backlog) of narrowly defined requirements (referred to as lower-level requirements) that are to be delivered  Programs should maintain this backlog with the product owner to ensure the program is always working on the highest priority requirements that will deliver the most value to the users  The GMM program established clearly defined and prioritized requirements and maintained bidirectional traceability among the various levels of requirements: Grant lifecycle phases: In its Concept of Operations document, the program established six grants management lifecycle phases that represent the highest level of GMM’s requirements, through which it derives lower-level requirements  Business functions: The Concept of Operations document also identifies the next level of GMM requirements—the 43 business functions that describe how FEMA officials, grant recipients, and other stakeholders are to manage grants  According to program officials, the 43 business functions are to be refined, prioritized, and delivered to GMM customers iteratively  Further, for the AFG pilot, the GMM program office prioritized 19 business functions with the product owner and planned the development of these functions in a roadmap  Epics: GMM’s business functions are decomposed into epics, which represent smaller portions of functionality that can be developed over multiple increments  According to program officials, GMM intends to develop, refine, and prioritize the epics iteratively  As of August 2018, the program had developed 67 epics in the program backlog  An example of one of the epics for the AFG pilot is to prepare and submit grant closeout materials  User stories: The epics are decomposed into user stories, which convey the customers’ requirements at the smallest and most discrete unit of work that must be done within a single sprint to create working software  GMM develops, refines, and prioritizes the user stories iteratively  As of August 2018, the program had developed 1,118 user stories in the backlog  An example of a user story is “As an external user, I can log in with a username and password ” Figure 6 provides an example of how GMM’s different levels of requirements are decomposed  Nevertheless, while we found requirements to be traceable at the sprint- level (i e , epics and user stories), traceability of requirements at the increment-level (i e , business functions) were inconsistent among different requirements planning documents  Specifically, the capabilities and constraints document shows that five business functions are planned to be developed within sub-increment 1A, whereas the other key planning document—the roadmap for the AFG pilot—showed one of those five functions as being planned for the sub-increment 1B  In addition, the capabilities and constraints document shows that nine business functions are planned to be developed within sub-increment 1B, but the roadmap showed one of those nine functions as being planned for the sub- increment 1C  Program officials stated that they decided to defer these functions to later sub-increments due to unexpected technical difficulties encountered when developing functionality and reprioritizing functions with the product owners  While the officials updated the roadmap to reflect the deferred functionality, they did not update the capabilities and constraints document to maintain traceability between these two important requirements planning documents  Program officials stated that they learned during the AFG pilot that the use of a capabilities and constraints document for increment-level scope planning was not ideal and that they intended to change the process for how they documented planned requirements for future increments  However, program officials did not provide a time frame for when this change would be made  Until the program makes this change and then ensures it maintains traceability of increment-level requirements between requirements planning documents, it will continue to risk confusion among stakeholders about what is to be delivered  In addition, until recently, GMM’s planning documents were missing up- to-date information regarding when most of the legacy systems will be transitioned to GMM  Specifically, while the program’s planning documents (including the GMM roadmap) provided key milestones for the entire lifecycle of the program and high-level capabilities to be delivered in the AFG pilot, these documents lacked up-to-date time frames for when FEMA planned to transition the nine remaining legacy systems  For example, in May 2017, GMM drafted notional time frames for transitioning the legacy systems, including plans for AFG to be the seventh system replaced by GMM  However, in December 2017, the program decided to reprioritize the legacy systems so that AFG would be replaced first—yet this major change was not reflected in the program’s roadmap  Moreover, while AFG program officials were informed of the decision to transition the AFG program first, in June 2018 officials from other grant programs told us that they had not been informed on when their systems were to be replaced  As a result, these programs were uncertain about when they should start planning for their respective transitions  In August 2018, GMM program officials acknowledged that they were delayed in deciding the sequencing order for the legacy system transitions  Program officials stated that the delay was due to their need to factor the Agile development contractor’s perspective into these decisions; yet, at that time, the contract award had been delayed by approximately 8 months  Subsequently, in October 2018, program officials identified tentative time frames for transitioning the remaining legacy systems  Program officials stated that they determined the tentative time frames for transitioning the legacy systems based on key factors, such as mission need, cost, security vulnerabilities, and technical obsolescence, and that they had shared these new time frames with grant program officials  The officials also stated that, once the Agile contractor begins contract performance, they expect to be able to validate the contractor’s capacity and finalize these time frames by obtaining approval from the Grants Management Executive Steering Group  By taking steps to update and communicate these important time frames, FEMA should be better positioned to ensure that each of the grant programs are prepared for transitioning to GMM  According to leading practices, Agile programs should track their progress in delivering planned IT requirements within a sprint (i e , short iterations that produce working software)  Given that sprints are very short cycles of development (e g , 2 weeks), the efficiency of completing planned work within a sprint relies on a disciplined approach that includes using a fixed pace, referred to as the sprint cadence, that provides a consistent and predictable development routine  A disciplined approach also includes identifying by the start of a sprint which user stories will be developed, developing those stories to completion (e g , fully tested and demonstrated to, and accepted by, the product owner), and tracking completion progress of those stories  Progress should be communicated to relevant stakeholders and used by the development teams to better understand their capacity to develop stories, continuously improve on their processes, and forecast how long it will take to deliver all remaining capabilities  The GMM program did not effectively track progress in delivering IT requirements during the first nine sprints, which occurred from January to June 2018  These gaps in tracking the progress of requirements, in part, had an impact on the program’s progress in delivering the 19 AFG business functions that were originally planned by December 2018 and are now deferred to August 2019  However, beginning in July 2018, in response to our ongoing review, the program took steps to improve in these areas  Specifically, GMM did not communicate the status of its Agile development progress to program stakeholders, such as the grant programs, the regional offices, and the development teams, during most of the first nine sprints  Program officials acknowledged that they should use metrics to track development progress and, in July 2018, they began reporting metrics to program stakeholders  For example, they began collecting and providing data on the number of stories planned and delivered, estimated capacity for development teams, and the number of days spent working on the sprint, as part of the program’s weekly status reports to program stakeholders, such as product owners  Rather than using a fixed, predictable sprint cadence, GMM allowed a variable development cadence, meaning that sprint durations varied from 1 to 4 weeks throughout the first nine sprints  Program officials noted that they had experimented with the use of a variable cadence to allow more time to complete complex technical work  Program officials stated that they realized that varying the sprints was not effective and, in July 2018 for sprint 10, they reverted back to a fixed, 2 week cadence  GMM added a significant amount of scope during its first nine sprints, after the development work had already begun  For example, the program committed to 28 user stories at the beginning of sprint eight, and then nearly doubled the work by adding 25 additional stories in the middle of the sprint  Program officials cited multiple reasons for adding more stories, including that an insufficient number of stories had been defined in the backlog when the sprint began, the realization that planned stories were too large and needed to be decomposed into smaller stories, and the realization that other work would be needed in addition to what was originally planned  Program officials recognized that, by the start of a sprint, the requirements should be sufficiently defined, such that they are ready for development without requiring major changes during the sprint  The program made recent improvements in sprints 11 and 12, which had only five stories added after the start of a sprint  By taking these steps to establish consistency among sprints, the program has better positioned itself to more effectively monitor and manage the remaining IT development work  In addition, this improvement in consistency should help the program avoid future deferments of functionality  Leading practices state that programs should regularly collaborate with, and collect input from, relevant stakeholders; monitor the status of stakeholder involvement; incorporate stakeholder input; and measure how well stakeholders’ needs are being met  For Agile programs, it is especially important to track user satisfaction to determine how well the program has met stakeholders’ needs  Consistent stakeholder participation ensures that the program meets its stakeholders’ needs  FEMA implemented its responsibilities in this area through several means, such as stakeholder outreach activities; development of a strategic communications plan; and continuous monitoring, solicitation, and recording of stakeholder involvement and feedback  For example, the agency conducted nationwide outreach sessions from January 2016 through August 2017 and began conducting additional outreach sessions in April 2018  These outreach sessions involved hundreds of representatives from FEMA headquarters, the 10 regional offices, and state and local grant recipients to collect information on the current grants management environment and opportunities for streamlining grants management processes  FEMA also held oversight and stakeholder outreach activities and actively solicited and recorded feedback from its stakeholders on a regular basis  For example, GMM regularly verified with users that the new functionality met their IT requirements, as part of the Agile development cycle  Additionally, we observed several GMM biweekly requirements validation sessions where the program’s stakeholders were involved and provided feedback as part of the requirements development and refinement process  In addition, FEMA identified GMM stakeholders and tracked its engagement with these stakeholders using a stakeholder register  The agency also defined processes for how the GMM program is to collaborate with its stakeholders in a stakeholder communication plan and Agile development team agreement  Also, while several officials from the selected grant program and regional offices that we interviewed indicated that the program could improve in communicating its plans for GMM and incorporating stakeholder input, most of the representatives from these offices stated that GMM is doing well at interacting with its stakeholders  Finally, in October 2018, program officials reported that they had recently begun measuring user satisfaction by conducting surveys and interviews with users that have utilized the new functionality within GMM  The program’s outreach activities, collection of stakeholder input, and measurement of user satisfaction demonstrate that the program is taking the appropriate steps to incorporate stakeholder input  Reliable cost estimates are critical for successfully delivering IT programs  Such estimates provide the basis for informed decision making, realistic budget formulation, meaningful progress measurement, and accountability for results  GAO’s Cost Estimating and Assessment Guide defines leading practices related to the following four characteristics of a high-quality, reliable estimate  Comprehensive  The estimate accounts for all possible costs associated with a program, is structured in sufficient detail to ensure that costs are neither omitted nor double counted, and documents all cost-influencing assumptions  Well-documented  Supporting documentation explains the process, sources, and methods used to create the estimate; contains the underlying data used to develop the estimate; and is adequately reviewed and approved by management  Accurate  The estimate is not overly conservative or optimistic, is based on an assessment of the costs most likely to be incurred, and is regularly updated so that it always reflects the program’s current status  Credible  Discusses any limitations of the analysis because of uncertainty or sensitivity surrounding data or assumptions, the estimate’s results are cross-checked, and an independent cost estimate is conducted by a group outside the acquiring organization to determine whether other estimating methods produce similar results  In May 2017, DHS approved GMM’s lifecycle cost estimate of about $251 million for fiscal years 2015 through 2030  We found this initial estimate to be reliable because it fully or substantially addressed all the characteristics associated with a reliable cost estimate  For example, the estimate comprehensively included government and contractor costs, all elements of the program’s work breakdown structure, and all phases of the system lifecycle; and was aligned with the program’s technical documentation at the time the estimate was developed  GMM also fully documented the key assumptions, data sources, estimating methodology, and calculations for the estimate  Further, the program conducted a risk assessment and sensitivity analysis, and DHS conducted an independent assessment of the cost estimate to validate the accuracy and credibility of the cost estimate  However, key assumptions that FEMA made about the program changed soon after DHS approved the cost estimate in May 2017  Thus, the initial cost estimate no longer reflects the current approach for the program  For example, key assumptions about the program that changed include: Change in the technical approach: The initial cost estimate assumed that GMM would implement a software-as-a-service model, meaning that FEMA would rely on a service provider to deliver software applications and the underlying infrastructure to run them  However, in December 2017, the program instead decided to implement an infrastructure-as-a-service model, meaning that FEMA would develop and deploy its own software application and rely on a service provider to deliver and manage the computing infrastructure (e g , servers, software, storage, and network equipment)  According to program officials, this decision was made after learning from the Agile prototypes that the infrastructure-as-a-service model would allow GMM to develop the system in a more flexible environment  Increase in the number of system development personnel: A key factor with Agile development is the number of development teams (each consisting of experts in software development, testing, and cybersecurity) that are operating concurrently and producing separate portions of software functionality  Program officials initially assumed that they would need three to four concurrent Agile development teams, but subsequently realized that they would instead need to expend more resources to achieve GMM’s original completion date  Specifically, program officials now expect they will need to at least double, and potentially triple, the number of concurrent development teams to meet GMM’s original target dates  Significant delays and complexities with data migration: In 2016 and 2017, GMM experienced various technical challenges in its effort to transfer legacy system data to a data staging platform  This data transfer effort needed to be done to standardize the data before eventually migrating the data to GMM  These challenges resulted in significant delays and cost increases  Program officials reported that, by February 2018—at least 9 months later than planned—all legacy data had been transferred to a data staging platform so that FEMA officials could begin analyzing and standardizing the data prior to migrating it into GMM  FEMA officials reported that they anticipated the cost estimate to increase, and for this increase to be high enough to breach the $251 million threshold set in GMM’s May 2017 acquisition program baseline  Thus, consistent with DHS’s acquisition guidance, the program informed the DHS acquisition review board of this anticipated breach  The board declared that the program was in a cost breach status, as of September 12, 2018  As of October 2018, program officials stated that they were in the process of revising the cost estimate to reflect the changes in the program and to incorporate actual costs  In addition, the officials stated that the program was applying a new cost estimating methodology tailored for Agile programs that DHS’s Cost Analysis Division had been developing  In December 2018, program officials stated that they had completed the revised cost estimate but it was still undergoing departmental approval  Establishing an updated cost estimate should help FEMA better understand the expected costs to deliver GMM under the program’s current approach and time frames  The success of an IT program depends, in part, on having an integrated and reliable master schedule that defines when the program’s set of work activities and milestone events are to occur, how long they will take, and how they are related to one another  Among other things, a reliable schedule provides a roadmap for systematic execution of an IT program and the means by which to gauge progress, identify and address potential problems, and promote accountability  GAO’s Schedule Assessment Guide defines leading practices related to the following four characteristics that are vital to having a reliable integrated master schedule  Comprehensive  A comprehensive schedule reflects all activities for both the government and its contractors that are necessary to accomplish a program’s objectives, as defined in the program’s work breakdown structure  The schedule also includes the labor, materials, and overhead needed to do the work and depicts when those resources are needed and when they will be available  It realistically reflects how long each activity will take and allows for discrete progress measurement  Well-constructed  A schedule is well-constructed if all of its activities are logically sequenced with the most straightforward logic possible  Unusual or complicated logic techniques are used judiciously and justified in the schedule documentation  The schedule’s critical path represents a true model of the activities that drive the program’s earliest completion date and total float accurately depicts schedule flexibility  Credible  A schedule that is credible is horizontally traceable—that is, it reflects the order of events necessary to achieve aggregated products or outcomes  It is also vertically traceable—that is, activities in varying levels of the schedule map to one another and key dates presented to management in periodic briefings are consistent with the schedule  Data about risks are used to predict a level of confidence in meeting the program’s completion date  The level of necessary schedule contingency and high-priority risks are identified by conducting a robust schedule risk analysis  Controlled  A schedule is controlled if it is updated regularly by trained schedulers using actual progress and logic to realistically forecast dates for program activities  It is compared to a designated baseline schedule to measure, monitor, and report the program’s progress  The baseline schedule is accompanied by a baseline document that explains the overall approach to the program, defines ground rules and assumptions, and describes the unique features of the schedule  The baseline schedule and current schedule are subject to a configuration management control process  GMM’s schedule was unreliable because it minimally addressed three characteristics—comprehensive, credible, and controlled—and did not address the fourth characteristic of a reliable estimate—well-constructed  One of the most significant issues was that the program’s fast approaching, final delivery date of September 2020 was not informed by a realistic assessment of GMM development activities, and rather was determined by imposing an unsubstantiated delivery date  Table 4 summarizes our assessment of GMM’s schedule  In discussing the reasons for the shortfalls in these practices, program officials stated that they had been uncertain about the level of rigor that should be applied to the GMM schedule, given their use of Agile development  However, leading practices state that program schedules should meet all the scheduling practices, regardless of whether a program is using Agile development  As discussed earlier in this report, GMM has already experienced significant schedule delays  For example, the legacy data migration effort, the AFG pilot, and the Agile development contract have been delayed  Program officials also stated that the delay in awarding and starting the Agile contract has delayed other important activities, such as establishing time frames for transitioning legacy systems  A more robust schedule could have helped FEMA predict the impact of delays on remaining activities and identify which activities appeared most critical so that the program could ensure that any risks in delaying those activities were properly mitigated  In response to our review and findings, program officials recognized the need to continually enhance their schedule practices to improve the management and communication of program activities  As a result, in August 2018, the officials stated that they planned to add a master scheduler to the team to improve the program’s schedule practices and ensure that all of the areas of concern we identified are adequately addressed  In October 2018, the officials reported that they had recently added two master schedulers to GMM  According to the statement of objectives, the Agile contractor is expected to develop an integrated master schedule soon after it begins performance  However, program officials stated that GMM is schedule-driven—due to the Executive Steering Group’s expectation that the solution will be delivered by September 2020  The officials added that, if GMM encounters challenges in meeting this time frame, the program plans to seek additional resources to allow it to meet the 2020 target  GMM’s schedule-driven approach has already led to an increase in estimated costs and resources  For example, as previously mentioned, the program has determined that, to meet its original target dates, GMM needs to at least double, and possibly triple, the number of concurrent Agile development teams  In addition, we have previously reported that schedule pressure on federal IT programs can lead to omissions and skipping of key activities, especially system testing  In August 2018, program officials acknowledged that September 2020 may not be feasible and that the overall completion time frames established in the acquisition program baseline may eventually need to be rebaselined  Without a robust schedule to forecast whether FEMA’s aggressive delivery goal for GMM is realistic to achieve, leadership will be limited in its ability to make informed decisions on what additional increases in cost or reductions in scope might be needed to fully deliver the system  NIST’s risk management framework establishes standards and guidelines for agencies to follow in developing cybersecurity programs  Agencies are expected to use this framework to achieve more secure information and information systems through the implementation of appropriate risk mitigation strategies and by performing activities that ensure that necessary security controls are integrated into agencies’ processes  The framework addresses broad cybersecurity and risk management activities, which include the following: Categorize the system: Programs are to categorize systems by identifying the types of information used, selecting a potential impact level (e g , low, moderate, or high), and assigning a category based on the highest level of impact to the system’s confidentiality, integrity, and availability, if the system was compromised  Programs are also to document a description of the information system and its boundaries and should register the system with appropriate program management offices  System categorization is documented in a system security plan  Select and implement security controls: Programs are to determine protective measures, or security controls, to be implemented based on the system categorization results  These security controls are documented in a system security plan  For example, control areas include access controls, incident response, security assessment and authorization, identification and authentication, and configuration management  Once controls are identified, programs are to determine planned implementation actions for each of the designated controls  These implementation actions are also specified in the system security plan  Assess security controls: Programs are to develop, review, and approve a security assessment plan  The purpose of the security assessment plan approval is to establish the appropriate expectations for the security control assessment  Programs are to also perform a security control assessment by evaluating the security controls in accordance with the procedures defined in the security assessment plan, in order to determine the extent to which the controls were implemented correctly  The output of this process is intended to produce a security assessment report to document the issues, findings, and recommendations  Programs are to conduct initial remediation actions on security controls and reassess those security controls, as appropriate  Obtain an authorization to operate the system: Programs are to obtain security authorization approval in order to operate a system  Resolving weaknesses and vulnerabilities identified during testing is an important step leading up to achieving an authorization to operate  Programs are to establish corrective action plans to address any deficiencies in cybersecurity policies, procedures, and practices  DHS guidance also states that corrective action plans must be developed for every weakness identified during a security control assessment and within a security assessment report  Monitor security controls on an ongoing basis: Programs are to monitor their security controls on an ongoing basis after deployment, including determining the security impact of proposed or actual changes to the information system and assessing the security controls in accordance with a monitoring strategy that determines the frequency of monitoring the controls  For the GMM program’s engineering and test environment, which went live in February 2018, FEMA fully addressed three of the five key cybersecurity practices in NIST’s risk management framework and partially addressed two of the practices  Specifically, FEMA categorized GMM’s environment based on security risk, implemented select security controls, and monitored security controls on an ongoing basis  However, the agency partially addressed the areas of assessing security controls and obtaining an authorization to operate the system  Table 5 provides a summary of the extent to which FEMA addressed NIST’s key cybersecurity practices for GMM’s engineering and test environment  Consistent with NIST’s framework, GMM categorized the security risk of its engineering and test environment and identified it as a moderate- impact environment  A moderate-impact environment is one where the loss of confidentiality, integrity, or availability could be expected to have a serious or adverse effect on organizational operations, organizational assets, or individuals  GMM completed the following steps leading to this categorization: The program documented in its System Security Plan the various types of data and information that the environment will collect, process, and store, such as conducting technology research, building or enhancing technology, and maintaining IT networks  The program established three information types and assigned security levels of low, moderate, or high impact in the areas of confidentiality, availability, and integrity  A low-impact security level was assigned to two information types: (1) conducting technology research and (2) building or enhancing technology; and a moderate- impact security level was assigned to the third information type: maintaining IT networks  The engineering and test environment was categorized as an overall moderate-impact system, based on the highest security impact level assignment  GMM documented a description of the environment, including a diagram depicting the system’s boundaries, which illustrates, among other things, databases and firewalls  GMM properly registered its engineering and test environment with FEMA’s Chief Information Officer, Chief Financial Officer, and acting Chief Information Security Officer  By conducting the security categorization process, GMM has taken steps that should ensure that the appropriate security controls are selected for the program’s engineering and test environment  Consistent with NIST’s framework and the system categorization results, GMM appropriately determined which security controls to implement and planned actions for implementing those controls in its System Security Plan for the engineering and test environment  For example, the program utilized NIST guidance to select standard controls for a system categorized with a moderate-impact security level  These control areas include, for example, access controls, risk assessment, incident response, identification and authentication, and configuration management  Further, the program documented its planned actions to implement each control in its System Security Plan  For example, GMM documented that the program plans to implement its Incident Response Testing control by participating in an agency-wide exercise and unannounced vulnerability scans  As another example, GMM documented that the program plans to implement its Contingency Plan Testing control by testing the contingency plan annually, reviewing the test results, and preparing after action reports  By selecting and planning for the implementation of security controls, GMM has taken steps to mitigate its security risks and protect the confidentiality, integrity, and availability of the information system  Consistent with NIST’s framework, in January 2018, GMM program officials developed a security assessment plan for the engineering and test environment  According to GMM program officials, this plan was reviewed by the security assessment team  However, the security assessment plan lacked essential details  Specifically, while the plan included the general process for evaluating the environment’s security controls, the planned assessment procedures for all 964 security controls were not sufficiently defined  Specifically, GMM program officials copied example assessment procedures from NIST guidance and inserted them into its security assessment documentation for all of its 964 controls, without making further adjustments to explain the steps that should be taken specific to GMM  Table 6 shows an example of a security assessment procedure copied from the NIST guidance that should have been further adjusted for GMM  In addition, the actual assessment procedures that the GMM assessors used to evaluate the security controls were not documented  Instead, the program only documented whether each control passed or failed each test  GMM program officials stated that the planned assessment procedures are based on an agency template that was exported from a DHS compliance tool, and that FEMA security officials have been instructed by the DHS OCIO not to tailor or make any adjustments to the template language  However, the assessment procedures outlined in NIST’s guidance are to serve as a starting point for organizations preparing their program specific assessments  According to NIST, organizations are expected to select and tailor their assessment procedures for each security control from NIST’s list of suggested assessment options (e g , review, analyze, or inspect policies, procedures, and related documentation options)  DHS OCIO officials stated that, consistent with NIST’s guidance, they expect that components will ensure they are in compliance with the minimum standards and will also add details and additional rigor, as appropriate, to tailor the planned security assessment procedures to fit their unique missions or needs  In November 2018, in response to our audit, DHS OCIO officials stated that they were meeting with FEMA OCIO officials to understand why they did not document the planned and actual assessment procedures performed by the assessors for GMM  Until FEMA ensures that detailed planned evaluation methods and actual evaluation procedures specific to GMM are defined, the program risks assessing security controls incorrectly, having controls that do not work as intended, and producing undesirable outcomes with respect to meeting the security requirements  In addition, the security assessment plan was not approved by FEMA’s OCIO before proceeding with the security assessment  Program officials stated that approval was not required for the security assessment plan prior to the development of the security assessment report  However, NIST guidance states that the purpose of the security assessment plan approval is to establish the appropriate expectations for the security control assessment  By not getting the security assessment plan approved by FEMA’s OCIO before security assessment reviews were conducted, GMM risks inconsistencies with the plan and security objectives of the organization  Finally, consistent with NIST guidance, GMM performed a security assessment in December 2017 of the engineering and test environment’s controls, which identified 36 vulnerabilities (23 critical- and high-impact vulnerabilities and 13 medium- and low-impact vulnerabilities)  The program also documented these vulnerabilities and associated findings and recommendations in a security assessment report  GMM conducted initial remediation actions (i e , remediation of vulnerabilities that should be corrected immediately) for 12 of the critical- and high-impact vulnerabilities and a reassessment of those security controls confirmed that they were resolved by January 2018  Remediation of the remaining 11 critical- and high-impact vulnerabilities and 13 medium- and low- impact vulnerabilities were to be addressed by corrective action plans as part of the authorization to operate process, which is discussed in the next section  The authorization to operate GMM’s engineering and test environment was granted on February 5, 2018  Among other things, this decision was based on the important stipulation that the remaining 11 critical- and high- impact vulnerabilities associated with multifactor authentication would be addressed within 45 days, or by March 22, 2018  However, the program did not meet this deadline and, instead, approximately 2 months after this deadline passed, obtained a waiver to remediate these vulnerabilities by May 9, 2019  These vulnerabilities are related to a multifactor authentication capability  Program officials stated that they worked with FEMA OCIO officials to attempt to address these vulnerabilities by the initial deadline, but they were unsuccessful in finding a viable solution  Therefore, GMM program officials developed a waiver at the recommendation of the OCIO to provide additional time to develop a viable solution  However, a multifactor authentication capability is essential to ensuring that users are who they say they are, prior to granting users access to the GMM engineering and test environment, in order to reduce the risk of harmful actors accessing the system  In addition, as of September 2018, the program had not established corrective action plans for the 13 medium- and low-impact vulnerabilities  Program officials stated that they do not typically address low-impact vulnerabilities; however, this is in conflict with DHS guidance that specifies that corrective action plans must be developed for every weakness identified during a security control assessment and within a security assessment report  In response to our audit, in October 2018, GMM program officials developed these remaining corrective action plans  The plans indicated that these vulnerabilities were to be fully addressed by January 2019 and April 2019  While the program eventually took corrective actions in response to our audit by developing the missing plans, the GMM program initially failed to follow DHS’s guidance on preparing corrective actions plans for all security vulnerabilities  Until GMM consistently follows DHS’s guidance, it will be difficult for FEMA to determine the extent to which GMM’s security weaknesses identified during its security control assessments are remediated  Additionally, as we have reported at other agencies, vulnerabilities can be indicators of more significant underlying issues and, thus, without appropriate management attention or prompt remediation, GMM is at risk of unnecessarily exposing the program to potential exploits  Moreover, GMM was required to assess all untested controls by March 7, 2018, or no later than 30 days after the approval of the authorization to operate; however, it did not meet this deadline  Specifically, we found that, by October 2018, FEMA had not fully tested 190 security controls in the GMM engineering and test environment  These controls were related to areas such as security incident handling and allocation of resources required to protect an information system  In response to our findings, in October 2018, GMM program officials reported that they had since fully tested 27 controls and partially tested the remaining 163 controls  Program officials stated that testing of the 163 controls is a shared responsibility between GMM and other parties (e g , the cloud service provider)  They added that GMM had completed its portion of the testing but was in the process of verifying the completion of testing by other parties  Program officials stated that the untested controls were not addressed sooner, in part, because of errors resulting from configuration changes in the program’s compliance tool during a system upgrade, which have now been resolved  Until GMM ensures that all security controls have been tested, it remains at an increased risk of exposing programs to potential exploits  Consistent with the NIST framework, GMM established methods for assessing and monitoring security controls to be conducted after an authorization to operate has been approved  GMM has tailored its cybersecurity policies and practices for monitoring its controls to take into account the frequent and iterative pace with which system functionality is continuously being introduced into the GMM environment  Specifically, the GMM program established a process for assessing security impact changes to the system and conducting reauthorizations to operate within the rapid Agile delivery environment  As part of this process, GMM embedded cybersecurity experts on each Agile development team so that they are involved early and can impact security considerations from the beginning of requirements development through testing and deployment of system functionality  In addition, the process involves important steps for ensuring that the system moves from development to completion, while producing a secure and reliable system  For example, it includes procedures for creating, reviewing, and testing new system functionality  As the new system functionality is integrated with existing system functionality, it is to undergo automated testing and security scans in order to ensure that the integrity of the security of the system has not been compromised  Further, an automated process is to deploy the code if it passes all security scans, code tests, and code quality checks  GMM’s process for conducting a reauthorization to operate within the rapid delivery Agile development environment is to follow FEMA guidance that states that all high-level changes made to a FEMA IT system must receive approval from both a change advisory board and the FEMA Chief Information Officer  The board and FEMA Chief Information Officer are to focus their review and approval on scheduled releases and epics (i e , collections of user stories)  Additionally, the Information System Security Officer is to review each planned user story and, if it is determined that the proposed changes may impact the integrity of the authorization, the Information System Security Officer is to work with the development team to begin the process of updating the system authorization  Finally, GMM uses automated tools to track the frequency in which security controls are assessed and to ensure that required scanning data are received by FEMA for reporting purposes  Program officials stated that, in the absence of department-level and agency-level guidance, they have coordinated with DHS and FEMA OCIO officials to ensure that these officials are in agreement with GMM’s approach to continuous monitoring  By having monitoring control policies and procedures in place, FEMA management is positioned to more effectively prioritize and plan its risk response to current threats and vulnerabilities for the GMM program  Given FEMA’s highly complex grants management environment, with its many stakeholders, IT systems, and internal and external users, implementing leading practices for business process reengineering and IT requirements management is critical for success  FEMA has taken many positive steps, including ensuring executive leadership support for business process reengineering, documenting the agency’s grants management processes and performance improvement goals, defining initial IT requirements for the program, incorporating input from end user stakeholders into the development and implementation process, and taking recent actions to improve its delivery of planned IT requirements  Nevertheless, until the GMM program finalizes plans and time frames for implementing its organizational change management actions, plans and communicates system transition activities, and maintains clear traceability of IT requirements, FEMA will be limited in its ability to provide streamlined grants management processes and effectively deliver a modernized IT system to meet the needs of its large range of users  While GMM’s initial cost estimate was reliable, key assumptions about the program since the initial estimate had changed and, therefore, it no longer reflected the current approach for the program  The forthcoming updated cost schedule is expected to better reflect the current approach  However, the program’s unreliable schedule to fully deliver GMM by September 2020 is aggressive and unrealistic  The delays the program has experienced to date further compound GMM’s schedule issues  Without a robust schedule that has been informed by a realistic assessment of GMM’s development activities, leadership will be limited in its ability to make informed decisions on what additional increases in cost or reductions in scope might be needed to achieve their goals  Further, FEMA’s implementation of cybersecurity practices for GMM in the areas of system categorization, selection and implementation, and monitoring will help the program  However, GMM lacked essential details for evaluating security controls, did not approve the security assessment plan before proceeding with the security assessment, did not follow DHS’s guidance to develop corrective action plans for all security vulnerabilities, and did not fully test all security controls  As a result, the GMM engineering and test environment remains at an increased risk of exploitations  We are making eight recommendations to FEMA: The FEMA Administrator should ensure that the GMM program management office finalizes the organizational change management plan and time frames for implementing change management actions  (Recommendation 1) The FEMA Administrator should ensure that the GMM program management office plans and communicates its detailed transition activities to its affected customers before they transition to GMM and undergo significant changes to their processes  (Recommendation 2) The FEMA Administrator should ensure that the GMM program management office implements its planned changes to its processes for documenting requirements for future increments and ensures it maintains traceability among key IT requirements documents  (Recommendation 3) The FEMA Administrator should ensure that the GMM program management office updates the program schedule to address the leading practices for a reliable schedule identified in this report  (Recommendation 4) The FEMA Administrator should ensure that the FEMA OCIO defines sufficiently detailed planned evaluation methods and actual evaluation methods for assessing security controls  (Recommendation 5) The FEMA Administrator should ensure that the FEMA OCIO approves a security assessment plan before security assessment reviews are conducted  (Recommendation 6) The FEMA Administrator should ensure that the GMM program management office follows DHS guidance on preparing corrective action plans for all security vulnerabilities  (Recommendation 7) The FEMA Administrator should ensure that the GMM program management office fully tests all of its security controls for the system  (Recommendation 8) DHS provided written comments on a draft of this report, which are reprinted in appendix IV  In its comments, the department concurred with all eight of our recommendations and provided estimated completion dates for implementing each of them  For example, with regard to recommendation 4, the department stated that FEMA plans to update the GMM program schedule to address the leading practices for a reliable schedule by April 30, 2019  In addition, for recommendation 7, the department stated that FEMA plans to ensure that corrective action plans are prepared by July 31, 2019, to address all identified security vulnerabilities for GMM  If implemented effectively, the actions that FEMA plans to take in response to the recommendations should address the weaknesses we identified  We also received technical comments from DHS and FEMA officials, which we incorporated, as appropriate  We are sending copies of this report to the Secretary of Homeland Security and interested congressional committees  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-4456 or harriscc@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  Our objectives were to (1) determine the extent to which the Federal Emergency Management Agency (FEMA) is implementing leading practices for reengineering its grants management business processes and incorporating business needs into Grants Management Modernization (GMM) information technology (IT) requirements; (2) assess the reliability of the program’s estimated costs and schedule; and (3) determine the extent to which FEMA is addressing key cybersecurity practices for GMM  To address the first objective, we reviewed GAO’s Business Process Reengineering Assessment Guide and Software Engineering Institute’s Capability Maturity Model for Integration for Development to identify practices associated with business process reengineering and IT requirements management  We then selected six areas that, in our professional judgment, represented foundational practices that were of particular importance to the successful implementation of an IT modernization effort that is using Agile development processes  We also selected the practices that were most relevant based on where GMM was in the system development lifecycle and we discussed the practice areas with FEMA officials  The practices are: Ensuring executive leadership support for process reengineering Assessing the current and target business environment and business Establishing plans for implementing new business processes Establishing clear, prioritized, and traceable IT requirements Tracking progress in delivering IT requirements Incorporating input from end user stakeholders We also reviewed selected chapters of GAO’s draft Agile Assessment Guide (Version 6A), which is intended to establish a consistent framework based on best practices that can be used across the federal government for developing, implementing, managing, and evaluating agencies’ IT investments that rely on Agile methods  To develop this guide, GAO worked closely with Agile experts in the public and private sector; some chapters of the guide are considered more mature because they have been reviewed by the expert panel  We reviewed these chapters to ensure that our expectations for how FEMA should apply the six practices for business process reengineering and IT requirements management are appropriate for an Agile program and are consistent with the draft guidance that is under development  Additionally, since Agile development programs may use different terminology to describe their software development processes, the Agile terms used in this report (e g , increment, sprint, epic, etc ) are specific to the GMM program  We obtained and analyzed FEMA grants management modernization documentation, such as current and target grants management business processes, acquisition program baseline, operational requirements document, concept of operations, requirements analyses workbooks, Grants Management Executive Steering Group artifacts, stakeholder outreach artifacts, Agile increment- and sprint-level planning and development artifacts, and the requirements backlog  We assessed the program documentation against the selected practices to determine the extent to which the agency had implemented them  We then assessed each practice area as: fully implemented—FEMA provided complete evidence that showed it fully implemented the practice area; partially implemented—FEMA provided evidence that showed it partially implemented the practice area; not implemented—FEMA did not provide evidence that showed it implemented any of the practice area  Additionally, we observed Agile increment and sprint development activities at GMM facilities in Washington, D C  We also observed a demonstration of how the program manages its lower level requirements (i e , user stories and epics) and maintains traceability of the requirements using an automated tool at GMM facilities in Washington, D C  We also interviewed FEMA officials, including the GMM Program Executive, GMM Program Manager, GMM Business Transformation Team Lead, and Product Owner regarding their efforts to streamline grants management business processes, collect and incorporate stakeholder input, and manage GMM’s requirements  In addition, we interviewed FEMA officials from four out of 16 grant program offices and two out of 10 regional offices to obtain contextual information and illustrative examples of FEMA’s efforts to reengineer grants management business processes and collect business requirements for GMM  Specifically, We selected the four grant program offices based on a range of grant programs managed, legacy systems used, and the amount of grant funding awarded  We also sought to select a cross section of different characteristics, such as selecting larger grant program offices, as well as smaller offices  In addition, we ensured that our selection included the Assistance to Firefighters Grants (AFG) program office because officials in this office represent the first GMM users and, therefore, are more actively involved with the program’s Agile development practices  Based on these factors, we selected: Public Assistance Division, Individual Assistance Division, AFG, and National Fire Academy  Additionally, the four selected grant program offices are responsible for 16 of the total 45 grant programs and are users of five of the nine primary legacy IT systems  The four selected grant program offices also represent about 68 percent of the total grant funding awarded by FEMA from fiscal years 2005 through 2016  We selected two regional offices based on (1) the largest amount of total FEMA grant funding for fiscal years 2005 through 2016—Region 6 located in Denton, Texas; and (2) the highest percentage of AFG funding compared to the office’s total grant funding awarded from fiscal years 2005 through 2016—Region 5 located in Chicago, Illinois  To assess the reliability of data from the program’s automated IT requirements management tool, we interviewed knowledgeable officials about the quality control procedures used by the program to assure accuracy and completeness of the data  We also compared the data to other relevant program documentation on GMM requirements  We determined that the data used were sufficiently reliable for the purpose of evaluating GMM’s practices for managing IT requirements  For our second objective, to assess the reliability of GMM’s estimated costs and schedule, we reviewed documentation on GMM’s May 2017 lifecycle cost estimate and on the program’s schedule, dated May 2018  To assess the reliability of the May 2017 lifecycle cost estimate, we evaluated documentation supporting the estimate, such as the cost estimating model, the report on GMM’s Cost Estimating Baseline Document and Life Cycle Cost Estimate, and briefings provided to the Department of Homeland Security (DHS) and FEMA management regarding the cost estimate  We assessed the cost estimating methodologies, assumptions, and results against leading practices for developing a comprehensive, accurate, well-documented, and credible cost estimate, identified in GAO’s Cost Estimating and Assessment Guide  We also interviewed program officials responsible for developing and reviewing the cost estimate to understand their methodology, data, and approach for developing the estimate  We found that the cost data were sufficiently reliable  To assess the reliability of the May 2018 GMM program schedule, we evaluated documentation supporting the schedule, such as the integrated master schedule, acquisition program baseline, and Agile artifacts  We assessed the schedule documentation against leading practices for developing a comprehensive, well-constructed, credible, and controlled schedule, identified in GAO’s Schedule Assessment Guide  We also interviewed GMM program officials responsible for developing and managing the program schedule to understand their practices for creating and maintaining the schedule  We noted in our report the instances where the quality of the schedule data impacted the reliability of the program’s schedule  For both the cost estimate and program schedule, we assessed each leading practice as: fully addressed—FEMA provided complete evidence that showed it implemented the entire practice area; substantially addressed—FEMA provided evidence that showed it implemented more than half of the practice area; partially addressed—FEMA provided evidence that showed it implemented about half of the practice area; minimally addressed—FEMA provided evidence that showed it implemented less than half of the practice area; not addressed—FEMA did not provide evidence that showed it implemented any of the practice area  Finally, we provided FEMA with draft versions of our detailed analyses of the GMM cost estimate and schedule  This was done to verify that the information on which we based our findings was complete, accurate, and up-to-date  Regarding our third objective, to determine the extent to which FEMA is addressing key cybersecurity practices for GMM, we reviewed documentation regarding DHS and FEMA cybersecurity policies and guidance, and FEMA’s authorization to operate for the program’s engineering and test environment  We evaluated the documentation against all six cybersecurity practices identified in the National Institute of Standards and Technology’s (NIST) Risk Management Framework  While NIST’s Risk Management Framework identifies six total practices, for reporting purposes, we combined two interrelated practices—selection of security controls and implementation of security controls—into a single practice  The resulting five practices were: categorizing the system based on security risk, selecting and implementing security controls, assessing security controls, obtaining an authorization to operate the system, and monitoring security controls on an ongoing basis  We obtained and analyzed key artifacts supporting the program’s efforts to address these risk management practices, including the program’s System Security Plan, the Security Assessment Plan and Report, Authorization to Operate documentation, and the program’s continuous monitoring documentation  We also interviewed officials from the GMM program office and FEMA’s Office of the Chief Information Officer, such as the GMM Security Engineering Lead, GMM Information System Security Officer, and FEMA’s Acting Chief Information Security Officer, regarding their efforts to assess, document, and review security controls for GMM  We assessed the evidence against the five practices to determine the extent to which the agency had addressed them  We then assessed each practice area as: fully addressed—FEMA provided complete evidence that showed it fully implemented the practice area; partially addressed—FEMA provided evidence that showed it partially implemented the practice area; not addressed—FEMA did not provide evidence that showed it implemented any of the practice area  To assess the reliability of data from the program’s automated security controls management tool, we interviewed knowledgeable officials about the quality control procedures used by the program to assure accuracy and completeness of the data  We also compared the data to other relevant program documentation on GMM security controls for the engineering and test environment  We found that some of the security controls data we examined were sufficiently reliable for the purpose of evaluating FEMA’s cybersecurity practices for GMM, and we noted in our report the instances where the accuracy of the data impacted the program’s ability to address key cybersecurity practices  We conducted this performance audit from December 2017 to April 2019 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 Federal Emergency Management Agency (FEMA) awards many different types of grants to state, local, and tribal governments and nongovernmental entities  These grants are to help communities prevent, prepare for, protect against, mitigate the effects of, respond to, and recover from disasters and terrorist attacks  Agile software development is a type of incremental development that calls for the rapid delivery of software in small, short increments  The use of an incremental approach is consistent with the Office of Management and Budget’s guidance as specified in its information technology (IT) Reform Plan, as well as the legislation commonly referred to as the Federal Information Technology Acquisition Reform Act  Many organizations, especially in the federal government, are accustomed to using a waterfall software development model, which typically consists of long, sequential phases, and differs significantly from the Agile development approach  Agile practices integrate planning, design, development, and testing into an iterative lifecycle to deliver software early and often  Figure 7 provides a depiction of software development using the Agile approach, as compared to a waterfall approach  The frequent iterations of Agile development are intended to effectively measure progress, reduce technical and programmatic risk, and respond to feedback from stakeholders in changes to IT requirements more quickly than traditional methods  Despite these intended benefits, organizations adopting Agile must overcome challenges in making significant changes to how they are accustomed to developing software  The significant differences between Agile and waterfall development impact how IT programs are planned, implemented, and monitored in terms of cost, schedule, and scope  For example, in waterfall development, significant effort is devoted upfront to document detailed plans and all IT requirements for the entire scope of work at the beginning of the program, and cost and schedule can be varied to complete that work  However, for Agile programs the precise details are unknown upfront, so initial planning of cost, scope, and timing would be conducted at a high level, and then supplemented with more specific plans for each iteration  While cost and schedule are set for each iteration, requirements for each iteration (or increment) can be variable as they are learned over time and revised to reflect experiences from completed iterations and to accommodate changing priorities of the end users  The differences in these two software development approaches are shown in figure 8  Looking at figure 8, the benefit provided from using traditional program management practices such as establishing a cost estimate or a robust schedule, is not obvious  However, unlike a theoretical environment, many government programs may not have the autonomy to manage completely flexible scope, as they must deliver certain minimal specifications with the cost and schedule provided  In those cases, it is vital for the team to understand and differentiate the IT requirements that are “must haves” from the “nice to haves” early in the planning effort  This would help facilitate delivery of the “must-haves” requirements first, thereby providing users with the greatest benefits as soon as possible  In addition to the contact named above, the following staff made key contributions to this report: Shannin G  O’Neill (Assistant Director), Jeanne Sung (Analyst in Charge), Andrew Beggs, Rebecca Eyler, Kendrick Johnson, Thomas J  Johnson, Jason Lee, Jennifer Leotta, and Melissa Melvin 

ground_truth: Education provided over $122 billion in grants, loans and work study funds to help students pay for college at about 6,000 schools in fiscal year 2017. Education is responsible for certifying that these schools are eligible for and capable of properly administering federal student aid funds. Schools are required to submit an annual compliance audit that provides information on schools' administrative capability, which Education considers in its school certification decisions. GAO was asked to review Education's process for certifying schools to receive federal student aid. This report examines (1) how Education certifies schools to administer federal student aid and how frequently schools are approved and denied certification; and (2) the role of compliance audits in the certification process and what, if any, steps Education has taken to address the quality of the audit information. GAO analyzed data on school certification outcomes for calendar years 2006-2017 (when GAO determined data were most reliable); reviewed data and reports summarizing Education's reviews of compliance audit quality for fiscal years 2006-2017; reviewed a non-generalizable sample of 21 school certification decisions from fiscal years 2015 and 2016, selected for a mix of decisions, school characteristics, and geographic regions; examined relevant federal laws, regulations, policy manuals and guidance; and interviewed Education officials. The Department of Education (Education) is responsible for evaluating a variety of information to determine whether a postsecondary school should be certified to administer federal student aid programs, and agency data show that it approves most schools that apply. Education procedures instruct regional office staff to review school policies, financial statements, and compliance audits prepared by independent auditors, among other things. Education can certify schools to participate in federal student aid programs for up to 6 years, or it can provisionally certify them for less time if it determines that increased oversight is needed—for example, when a school applies for certification for the first time or when it has met some but not all requirements to be fully certified. In calendar years 2006 through 2017, Education fully or provisionally approved most schools applying for initial or recertification to receive federal student aid (see figure). Note: Schools applying for certification for the first time and approved are placed in provisional certification. In deciding whether to certify schools, Education particularly relies on compliance audits for direct information about how well schools are administering federal student aid, and Education's offices of Federal Student Aid and Inspector General have taken steps to address audit quality. The Inspector General annually selects a sample of compliance audits for quality reviews based on risk factors, such as auditors previously cited for errors. In fiscal years 2006 through 2017, 59 percent of the 739 selected audits received failing scores. Audits that fail must be corrected; if not, the school generally must repay federal student aid covered by the audit. Because higher risk audits are selected for review, Inspector General officials said they cannot assess the overall prevalence of quality problems in compliance audits. These two Education offices have taken steps to improve audit quality. For example, the Inspector General offered additional training to auditors on its revised 2016 audit guide and provided guidance to schools on hiring an auditor, while Federal Student Aid created a working group to strengthen its procedures for addressing poor quality compliance audits. Education's efforts to address audit quality could help ensure that these audits provide reliable information for school certification decisions. GAO is not making recommendations in this report.

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



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

Report 1: The Commercial Space Launch Act Amendments of 1988 established the foundation for the current U S  policy to potentially provide federal payment for a portion of claims by third parties for injury, damage, or loss that results from a commercial launch or reentry accident  A stated goal of the act was to provide a competitive environment for the U S  commercial space launch industry  The act also provided for, among other things, government protection against some losses—referred to as indemnification—while still minimizing the cost to taxpayers  All FAA- licensed commercial launches and reentries by U S  companies, whether unmanned or manned and from the United States or overseas, are covered by federal indemnification for third-party damages that result from the launch or reentry  According to agency officials, in 2016 FAA issued five active licenses, which had an average third-party MPL of about $51 million and ranged from $10 million to $99 million  The amount of insurance coverage that FAA requires launch companies to purchase—the MPL value—is intended to reflect the greatest dollar amount of loss to third parties and the federal government for bodily injury and property damage that can be reasonably expected to result from a launch or reentry accident  FAA calculates separate MPL values for potential damages to third parties and the federal government  For each launch license that it issues, FAA determines MPL values for third parties with the intent of estimating the greatest dollar amount of losses that reasonably could be expected from a launch or reentry accident, which have no less than a 1 in 10 million chance of occurring  For damages to the federal government, FAA determines MPL values with the intent of estimating the greatest dollar amount of losses that reasonably could be expected from a launch or reentry accident, which have no less than a 1 in 100,000 chance of occurring  According to FAA, the agency defines these probability thresholds to estimate the federal government’s exposure to losses above the MPL  Agency officials said that the current probability thresholds are set such that losses are very unlikely to exceed launch companies’ private insurance and become potential costs for the government under CSLCA  FAA’s process for determining the MPL value for a launch or reentry license generally includes three elements: 1  Number of casualties  Estimating the number of third-party casualties involves adding the number of direct and secondary casualties that could result from a launch accident  Direct casualty estimates include serious injuries and deaths  Secondary casualties include those resulting from fires and collapsing buildings  2  Cost of casualties  FAA uses $3 million as an estimate of the average loss per casualty, which is multiplied by the number of estimated casualties  3  Property damage  FAA applies a predetermined factor—which it recently changed from 50 percent to 25 percent—to the estimated cost of casualties to derive estimated losses from property damage  The total MPL is equal to the estimated cost of casualties plus property damage  FAA has revised two components of its MPL methodology since our 2012 report  For example, in April 2016, the agency adopted a new method for estimating the number of casualties, known as the risk profile method  This method uses different tools to simulate a range of possible scenarios to create a distribution of potential casualty numbers and the simulated probability of different levels of casualty numbers  The risk profile method replaced FAA’s “overlay method,” which was a method it had used since the early 1990s which the agency said did not work well for launches of small launch vehicles in remote areas, or for reentries  In addition, FAA reduced the factor it uses to estimate losses due to property damage, based on tests of a new process for estimating such losses that showed the previous factor was too high  We have previously reviewed FAA’s MPL methodology in 2012 and 2017  In 2012 we examined the U S  government’s indemnification policy, the federal government’s potential costs for indemnification, and the effects of ending indemnification on the competitiveness of U S  launch companies, among other aspects of FAA’s MPL methodology  In 2017 we examined the extent to which FAA had revised its MPL methodology since our 2012 report to address previously cited weaknesses and the potential effect of any changes to that methodology on financial liabilities for the federal government  The findings and recommendations of those reports, including any unaddressed weaknesses, are discussed later in this report  CSLCA required FAA to evaluate its MPL methodology incorporating three requirements, but the agency’s report did not fully address these requirements  First, the act required FAA to ensure a balance of risk between launch companies and the federal government  However, agency officials told us that they did not re-evaluate the probability thresholds—which are used to divide the risk of loss between launch companies and the federal government—as part of evaluating its MPL methodology when implementing the risk profile method due to resource constraints  Second, the act required FAA to consider the cost impact of implementing an updated MPL methodology, but the agency did not evaluate the impact of implementing its revised methodology on the direct costs to launch companies (insurance premiums) and to the federal government (indemnification liability)  Third, the act required FAA to consult with the commercial space sector and insurance providers in evaluating its MPL, but they did not consult such parties in response to the act  Without fully addressing CSLCA’s mandated requirements, FAA cannot ensure that the federal government is not exposed to greater liability costs than intended or that launch companies are not required to purchase more insurance coverage than necessary  In its report, FAA states that implementing an updated MPL methodology in April 2016—the risk profile method—helps ensure that the federal government is not exposed to greater liability costs than intended and that launch companies are not required to purchase more insurance coverage than necessary, as required under CSLCA  Further, agency officials told us that their updated methodology is technically more valid and improves their ability to avoid overestimating MPL values (which can cause launch companies to purchase more insurance coverage than necessary) or significantly underestimating MPL values (which can expose the federal government to greater costs than intended)  While an improved model may provide a more realistic calculation of the MPL, by changing the resulting estimates it can also change the balance between the federal government’s exposure to liability costs and the amount of insurance launch companies are required to purchase  For example, if the more realistic results produced by the revised methodology increased the MPL estimates, this would increase insurance costs for the launch companies and reduce the federal government’s exposure, thereby shifting the balance of costs between the two and suggesting a reevaluation of the thresholds  In addition, FAA officials told us that they had not reevaluated the probability thresholds upon implementing the revised MPL methodology, although defining these thresholds is their primary mechanism for adjusting the balance of risk between launch companies and the federal government  Agency officials acknowledged that an examination of the thresholds’ continued appropriateness would be warranted in the future  However, they told us that changing the probability thresholds would require significant effort because it would require them to change federal regulations and that resources are currently allocated to other rulemaking priorities  Nevertheless, without evaluating the appropriateness of the probability threshold as part of the mandated evaluation of the MPL methodology, FAA cannot ensure that the federal government is not exposed to greater liability costs than intended or that launch companies are not required to purchase more insurance coverage than necessary  CSLCA also required FAA to consider the cost impact on both the commercial space launch industry and the federal government of implementing an updated MPL methodology  In its report to Congress, the agency discussed indirect costs to launch applicants and the federal government  For example, FAA discussed indirect data burden costs on launch company applicants and FAA analysts associated with the agency’s risk profile method implementation  The report states that the risk profile method requires more data from a launch applicant than the previous method, but that the added burden is minimal because the information is similar to the type of information required by FAA for a risk analysis  Agency officials also said that the risk profile method requires more of an FAA analyst’s time than the overlay method, but that the added burden is minimal because the work done by FAA on risk analysis provides much of the foundation for an MPL analysis  However, FAA’s report did not include an evaluation of the direct costs to launch companies and the federal government of implementing an updated MPL methodology  The report identifies the direct cost to the launch industry as insurance premiums, and the direct cost to the federal government include potential indemnification payments  Agency officials also told us that the agency does not track commercial space launch insurance costs, and that they do not have meaningful insights on insurance premiums paid by commercial launch companies  FAA officials told us that they only have a general notion of insurance premiums because the industry is reluctant to share such information  FAA officials also told us that, outside of the work done for the report, they have not evaluated the economic implications for launch companies of implementing an updated MPL methodology  Without evaluating direct costs to both the launch companies and the federal government, FAA will be limited in its ability to consider the impact of the cost to both the industry and the federal government of implementing an updated methodology  Although CSLCA required FAA to consult with the commercial space sector and insurance providers in evaluating its MPL methodology for the mandated report, it obtained limited input  For example, FAA officials told us that they obtained input from their Commercial Space Transportation Advisory Committee (COMSTAC) in April 2016 about what to include in their report to Congress, but did not consult with the commercial space sector and insurance providers to evaluate their MPL methodology in response to CSLCA  FAA officials also said that, to respond to CSLCA’s consultation requirement, they did not think they needed to repeat the consultations they took in 2013  In January 2013, the agency solicited input from COMSTAC’s Business/Legal Working Group about how to best conduct a review of FAA’s methodology for calculating MPL, in response to our July 2012 report  FAA also briefed the Business/Legal Working Group in May 2013 to solicit input on MPL methodologies, including the risk profile method  In the January 2013 meeting, a COMSTAC member suggested several contractors for a study by outside experts of the complete MPL methodology, and FAA subsequently hired one of these contractors to develop the risk profile method that it implemented in April 2016  However, the agency did not solicit input from COMSTAC about its risk profile methodology prior to its April 2016 implementation or following CSLCA’s November 2015 mandated evaluation  As a result, FAA lacks input on the effect of its revised MPL methodology on launch companies and the federal government, making it difficult to evaluate the balance of risk between the two  Our 2012 report identified concerns with all three components of FAA’s MPL methodology: estimating the number of casualties, estimating the cost of casualties, and deriving estimated property damage costs from estimated casualty costs  In that report we recommended that the agency reassess its methodology, including the reasonableness of several key elements  As noted in our 2017 report, FAA has since made improvements to its methodology  However, it still has not yet updated the cost of a casualty


Report 2:  In addition, in our 2017 report we also noted that there are instances where deriving estimated property damage from estimated casualty costs is inappropriate  As of November 2017, FAA does not have guidance to identify such instances or to guide decisions on which tools to use in developing the MPL estimate  FAA has taken steps designed to improve two of three elements of its MPL methodology, including revising its methodology for estimating the number of potential casualties for a given launch and changing the factor it uses to derive estimated property damage from estimated casualties  However, the agency has not updated the third element, the amount it uses for the cost of an individual casualty, leaving a previously identified weakness unaddressed  Our 2012 report raised concerns with each of the three components of FAA’s MPL calculation methodology  First, we found that FAA’s method for estimating the number of casualties involved use of a single loss scenario instead of applying the insurance industry’s standard practice of catastrophe modeling, and that the agency’s method might significantly understate the number of potential casualties  Catastrophe modeling, unlike the single-loss approach, generally estimates losses by using various tools to simulate tens of thousands of scenarios to create a distribution of potential losses and the simulated probability of different levels of loss  Second, we reported that FAA had been using an outdated and likely understated figure of $3 million to estimate the cost of a single casualty—including injury or death—which Office of Commercial Space Transportation officials said has not been updated since they began using it in 1988  Third, we reported that the agency’s approach of estimating potential property damage by adding a flat 50 percent to the estimated casualty damage could lead to estimates that were too high in some cases  Given these weaknesses, we recommended that FAA reassess its MPL methodology, including assessing the reasonableness of the cost-of- casualty amount and other assumptions used  Because the agency took actions to assess its MPL methodology, we closed the recommendation as implemented  In March 2017 we reported that FAA had taken steps to address weaknesses in two of these three areas  Specifically, we reported that FAA’s adoption of the risk profile method in April 2016 had improved its estimates of the number of potential casualties associated with a particular license launch  In addition, we reported that the agency had revised the factor it uses to estimate losses from property damage in the MPL calculation from 50 percent to 25 percent  This change has resulted in property damage estimates that FAA officials believe are still conservative but more realistic than previous estimates  However, in our March 2017 report we also determined that FAA had not yet addressed weaknesses in the cost-of-casualty amount we had previously identified; despite the conclusion by a contractor it had hired to study the cost-of-casualty that it was too low  Agency officials told us that they had not addressed this weakness because of other priorities  Given the significance of the cost-of-casualty amount to the MPL calculations, we recommended that FAA prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount, including setting time frames for action, and update the amount based on current information  In October 2017, FAA officials told us that they had not yet updated the cost-of-casualty because they have continued to prioritize completing other work with their limited resources, such as reviewing launch applications and fulfilling other safety responsibilities  As a result, our recommendation remains open  FAA officials told us that they have identified potential steps to update the cost-of-casualty amount, including seeking public input on whether and how to revise the amount, but that they do not expect to make a decision on whether to make any changes to the cost-of-casualty amount until June 30, 2018, at the earliest  FAA officials told us that in order to prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount they will need to consult with both the commercial space and insurance industries about the necessity and implications of any potential increase in the cost-of-casualty amount  Agency officials said that they plan to do such consultations through COMSTAC  However, because COMSTAC was just reestablished in June 2017 after not having been active since November 2016 and new members had not been approved as of October 2017, the anticipated decision date of June 2018 could be further delayed  As we reported in March 2017, an understated cost-of-casualty amount can lead to an inaccurate loss calculation, which in turn understates the amount of insurance a launch company must obtain  This could increase the potential exposure to the federal government, as the insurance amount would be less than the potential losses associated with the launch activity and the property would be inadequately protected  Because of this potential exposure, we maintain that addressing this weakness is a priority  As noted above, in our 2012 report we raised concerns about the first element of FAA’s MPL methodology, which is estimating the number of potential casualties  FAA officials said that they have implemented two tools for estimating the number of potential casualties, and that each tool requires a different level of resources and is more appropriate for different launch scenarios  The Range Risk Analysis Tool creates physics-based simulations of possible accidents using launch vehicle data, such as launch trajectory and types of failures, and assigns each simulated accident a probability of occurrence based on the failure rates of the different elements of the launch vehicle  According to agency officials, the Range Risk Analysis Tool is a comprehensive, high-fidelity tool and is the most appropriate tool for coastal launch sites, which are often located in heavily populated areas, and is labor intensive  The Risk Estimator Sub- orbital and Orbital Launch Vehicle and Entry tool, which in contrast to the Range Risk Analysis Tool, is a medium-fidelity tool that can be used for low-risk launches, such as launch sites located in very sparsely populated areas and reentry operations that do not need the use of a high-fidelity tool  According to FAA, this tool significantly reduces the time required to estimate the risk from launch and reentry vehicle operations  In our 2017 report, we also reiterated that there are cases where the third element of FAA’s methodology, deriving estimated property damage from estimated casualties, could lead to misleading MPL calculations  Specifically, in March 2017 we reported that estimating losses from property damage as a percentage of losses from casualties could lead to overestimates  For example, FAA’s contractor found that, if a launch accident affected a residential area, the agency’s practice of estimating property damage based on casualties would likely overstate property damages because residential structures have relatively low values compared to losses from casualties  We also reported in March 2017 that in some accidents the number of casualties may be low but property losses could still be very large, in which case FAA’s estimating property losses based on casualties would likely understate potential property damage  For example, a launch vehicle could strike an unoccupied structure that is very expensive, such as a neighboring launch complex  Agency officials said that while deriving property losses from casualty losses is a simpler method that may be an effective use of limited FAA resources, it could be inappropriate in scenarios where the number of casualties might be low but property losses could still be very large  In October 2017, agency officials said that FAA had not developed guidance for determining, for a given launch license, which of the available tools would be most appropriate to estimate the number of potential casualties, and whether it would be more appropriate to estimate property losses separately rather than derive them from estimated casualties  While FAA officials said they believe their current decision process is adequate and that they do not need more formal guidance at this time, they also told us that they were in the process of developing internal guidance on the most appropriate tool to use for future launches  The officials said that they did not have a projected completion date for the guidance, primarily because the agency has other priorities and resource limitations  As noted earlier, these priorities include reviewing commercial space launch license applications and managing program safety  Federal internal control standards state that, as part of an entity’s risk assessment component, management should identify, analyze, and respond to risks to achieving objectives  For example, the standards state that management should design control activities in response to the entity’s objectives and risks to achieve an effective internal control system  Without such guidance, FAA could face challenges in ensuring that it is using the most appropriate method to calculate an MPL for a given launch and is making the most efficient use of its resources  Such guidance could become more important as the number of commercial space launches increases, potentially creating greater demands on its resources  We have previously reported that the commercial space launch industry has experienced significant growth in the number and complexity of launches in the past half-decade  FAA has also reported that its licensed launches have increased 60 percent and industry revenue has increased 471 percent since 2012  FAA’s MPL methodology is critical in balancing the encouragement of the U S  commercial space industry with the need to manage the federal government’s risk exposure because it determines how much risk each party will bear for third-party damages resulting from potential space launch accidents  However, despite changes to the methodology, the probability threshold that the agency uses to achieve this balance of risk has been the same since the 1990s, and has not been reviewed for appropriateness  In addition, while FAA evaluated the effect of its MPL methodology on the indirect costs of launch companies and the federal government, it did not similarly evaluate direct costs  Further, although FAA has obtained input from some stakeholders on certain aspects of its MPL methodology, it has not consulted with launch providers and insurance companies to evaluate effects on key potential costs to launch companies and the federal government, as required under CSLCA  FAA officials told us that resource issues and pursuing other priorities have prevented them from taking these actions  However, the longstanding nature of these issues, as well as their importance in determining the federal government’s financial exposure, makes their completion a priority  FAA has also begun improving other aspects of its MPL process, but important actions remain incomplete  For example, the cost of a casualty, a key component of the methodology, has not been updated since 1988  While FAA has identified potential steps to update this amount, it has not implemented these steps and our March 2017 recommendation to prioritize the updating of this amount remains open  Further, agency officials said they have begun to develop internal guidance on how to determine which methodological tools should be used for a given launch, but are not sure when this process will be completed  These are important steps to help ensure the validity of the MPL methodology and the results obtained for each launch, which in turn determine the balance between the amount of insurance launch companies are required to purchase and the potential financial exposure for the federal government  We are making the following four recommendations to FAA: The FAA Administrator should fulfill the CSLCA mandate to include ensuring a balance of risk between the federal government and launch companies as part of FAA’s MPL methodology evaluation by reexamining the current probability thresholds  (Recommendation 1) The FAA Administrator should fulfill the CSLCA mandate to analyze the cost impact of implementing its revised MPL methodology by evaluating the impact on the direct costs of launch companies and the federal government  (Recommendation 2) The FAA Administrator should fulfill the CSLCA mandate to evaluate its MPL methodology in consultation with the commercial space sector and insurance providers by consulting with those entities on the cost impact of its revised MPL methodology, including an updated cost-of-casualty amount, on the launch industry and the federal government  (Recommendation 3) The FAA Administrator should establish an estimated completion date for developing and implementing a plan to establish guidance on the most appropriate MPL methodologies and tools to use for each launch  (Recommendation 4) We provided a draft of this report to the Department of Transportation for their review and comment  In its comments, reproduced in appendix I, the Department of Transportation concurred with our recommendations  The Department of Transportation also provided technical comments, which we incorporated as appropriate  We are sending copies of this report to interested congressional committees and the Secretary of the Department of Transportation  In addition, this report will be available at no charge on GAO’s website at http://www gao gov  If you or your staff have any questions or would like to discuss this work, please contact Alicia Puente Cackley at (202) 512-8678 or cackleya@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  Individuals making key contributions to this report are listed in appendix II  In addition to the contact named above, Patrick Ward (Assistant Director), Jessica Artis, Isidro Gomez (Analyst in Charge), Courtney La Fountain, Maureen Luna-Long, Jessica Sandler, Jennifer Schwartz, Joseph Silvestri, and Shana Wallace made key contributions to this report 

ground_truth: FEMA, a component of DHS, annually awards billions of dollars in grants to help communities prepare for, mitigate the effects of, and recover from major disasters. However, FEMA's complex IT environment supporting grants management consists of many disparate systems. In 2008, the agency attempted to modernize these systems but experienced significant challenges. In 2015, FEMA initiated a new endeavor (the GMM program) aimed at streamlining and modernizing the grants management IT environment. GAO was asked to review the GMM program. GAO's objectives were to (1) determine the extent to which FEMA is implementing leading practices for reengineering its grants management processes and incorporating needs into IT requirements; (2) assess the reliability of the program's estimated costs and schedule; and (3) determine the extent to which FEMA is addressing key cybersecurity practices. GAO compared program documentation to leading practices for process reengineering and requirements management, cost and schedule estimation, and cybersecurity risk management, as established by the Software Engineering Institute, National Institute of Standards and Technology, and GAO. Of six important leading practices for effective business process reengineering and information technology (IT) requirements management, the Federal Emergency Management Agency (FEMA) fully implemented four and partially implemented two for the Grants Management Modernization (GMM) program (see table). Specifically, FEMA ensured senior leadership commitment, took steps to assess its business environment and performance goals, took recent actions to track progress in delivering IT requirements, and incorporated input from end user stakeholders. However, FEMA has not yet fully established plans for implementing new business processes or established complete traceability of IT requirements. Until FEMA fully implements the remaining two practices, it risks delivering an IT solution that does not fully modernize FEMA's grants management systems. While GMM's initial May 2017 cost estimate of about $251 million was generally consistent with leading practices for a reliable, high-quality estimate, it no longer reflects current assumptions about the program. FEMA officials stated in December 2018 that they had completed a revised cost estimate, but it was undergoing departmental approval. GMM's program schedule was inconsistent with leading practices; of particular concern was that the program's final delivery date of September 2020 was not informed by a realistic assessment of GMM development activities, and rather was determined by imposing an unsubstantiated delivery date. Developing sound cost and schedule estimates is necessary to ensure that FEMA has a clear understanding of program risks. Of five key cybersecurity practices, FEMA fully addressed three and partially addressed two for GMM. Specifically, it categorized GMM's system based on security risk, selected and implemented security controls, and monitored security controls on an ongoing basis. However, the program had not initially established corrective action plans for 13 medium- and low-risk vulnerabilities. This conflicts with the Department of Homeland Security's (DHS) guidance that specifies that corrective action plans must be developed for every weakness identified. Until FEMA, among other things, ensures that the program consistently follows the department's guidance on preparing corrective action plans for all security vulnerabilities, GMM's system will remain at increased risk of exploits. GAO is making eight recommendations to FEMA to implement leading practices related to reengineering processes, managing requirements, scheduling, and implementing cybersecurity. DHS concurred with all recommendations and provided estimated dates for implementing each of them.