Report to Congressional Addressees

April 2016

GAO-16-375SP

United States Government Accountability Office

2016 ANNUAL 

REPORT: 

Additional 

Opportunities to 

Reduce

Fragmentation,

Overlap, and

Duplication and 

Achieve Other 

Financial Benefits
Page 1 GAO-16-375SP 2016 Annual Report

441 G St. N.W.

Washington, DC 20548

April 13, 2016

Congressional Addressees

The federal government continues to face an unsustainable long-term 

fiscal path based on the imbalance between federal revenue and 

spending, primarily driven by changing demographics and rising health 

care costs.1

 Addressing this imbalance will require long-term changes to 

both spending and revenue and difficult fiscal policy decisions. 

Significant action to mitigate this imbalance must be taken soon to 

minimize the disruption to individuals and the economy. 

In the near term, however, Congress and executive branch agencies can 

act to improve the efficiency and effectiveness of government programs 

and activities. Opportunities to take action exist in areas where federal 

programs or activities are fragmented, overlapping, or duplicative. To call 

attention to these opportunities, Congress included a provision in statute 

for GAO to identify and report to Congress on federal programs, 

agencies, offices, and initiatives—either within departments or 

government-wide—that have duplicative goals or activities.2 As part of 

this work, we also identify additional opportunities to achieve greater 

efficiency and effectiveness that result in cost savings or enhanced 

revenue collection.

In our first five annual reports issued from 2011 through 2015, we 

presented over 200 areas and 544 actions for Congress or executive 

branch agencies to reduce, eliminate, or better manage fragmentation, 

 1

GAO’s analysis of the Federal Fiscal Outlook can be found at 

http://www.gao.gov/fiscal_outlook/federal_fiscal_outlook/overview. Also see, GAO, 

Financial Statement Audit: U.S. Government’s Fiscal Years 2015 and 2014 Consolidated 

Financial Statements, GAO-16-357R (Washington, D.C.: Feb. 25, 2016).

2

Pub. L. No. 111-139, § 21, 124 Stat. 29 (2010), 31 U.S.C. § 712 Note. See appendix I for 

the list of congressional addressees for this work. 
Page 2 GAO-16-375SP 2016 Annual Report

overlap or duplication; achieve cost savings; or enhance revenue.3 

Figure 1 outlines the definitions we use for fragmentation, overlap, and 

duplication for this work. 

Figure 1: Definitions of Fragmentation, Overlap, and Duplication 

This report is our sixth in the series, and it identifies an additional 37 

areas where a broad range of federal agencies may be able to achieve 

 3

GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax 

Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: Mar. 1, 2011); 2012 

Annual Report: Opportunities to Reduce Duplication, Overlap and Fragmentation, Achieve 

Savings, and Enhance Revenue, GAO-12-342SP (Washington, D.C.: Feb. 28, 2012); 

2013 Annual Report: Actions Needed to Reduce Fragmentation, Overlap, and Duplication 

and Achieve Other Financial Benefits, GAO-13-279SP (Washington, D.C.: Apr. 9, 2013); 

2014 Annual Report: Additional Opportunities to Reduce Fragmentation, Overlap, and 

Duplication and Achieve Other Financial Benefits, GAO-14-343SP (Washington, D.C.: 

Apr. 8, 2014); and 2015 Annual Report: Additional Opportunities to Reduce 

Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits, GAO-15-

404SP (Washington, D.C.: Apr. 14, 2015).
Page 3 GAO-16-375SP 2016 Annual Report

greater efficiency or effectiveness. For each area, we suggest actions 

that Congress or executive branch agencies could take to reduce, 

eliminate, or better manage fragmentation, overlap, or duplication, or 

achieve other financial benefits. In addition to identifying new areas, we 

have continued to monitor the progress Congress and executive branch 

agencies have made in addressing the areas we previously identified. 

In 2013, we launched GAO’s Action Tracker, a publicly accessible 

website that allows Congress, executive branch agencies, and the public 

to track the progress the government is making in addressing the issues 

we have identified. We plan to continue to add areas and suggested 

actions identified in future reports to GAO’s Action Tracker and 

periodically update the status of all identified actions. With the release of 

this report, we are concurrently releasing the latest updates to GAO’s 

Action Tracker.

There are three main sections of this report. 

• Section I is the Report at a Glance, which provides an overall 

summary of the 37 new areas in which we identified opportunities to 

improve efficiency and effectiveness or achieve financial benefits. 

• Section II presents 12 new areas in which we found evidence that 

fragmentation, overlap, or duplication exists among federal programs 

or activities. Although it may be appropriate for multiple agencies or 

entities to be involved in the same programmatic or policy area due to 

the nature or magnitude of the federal effort, the instances of 

fragmentation, overlap, or duplication we describe in Section II occur 

in areas where multiple programs and activities may be creating 

inefficiencies. 

• Section III describes new areas where the federal government may 

achieve cost savings or enhance revenue collections. 

This report is based upon work we previously conducted in accordance 

with generally accepted government auditing standards or our quality 
Page 4 GAO-16-375SP 2016 Annual Report

assurance framework. See appendix II for more information on our scope 

and methodology.4

In this report, we present 92 new actions that Congress or executive 

branch agencies could take to improve the government’s efficiency and 

effectiveness or achieve financial benefits across 37 areas that span a 

broad range of government missions and functions. Of these, we suggest 

33 actions to address 12 areas in which we found evidence of 

fragmentation, overlap, or duplication in government missions such as 

defense, economic development, health, homeland security, and 

information technology. In addition, we present 59 opportunities for 

Congress or executive branch agencies to take action to reduce the cost 

of government operations or enhance revenue collections for the U.S. 

Treasury across 25 areas of government.

We consider programs or activities to be fragmented when more than one 

federal agency (or more than one organization within an agency) is 

involved in the same broad area of national need and there may be 

opportunities to improve how the government delivers these services, 

including the following examples: 

• Department of Defense (DOD) Commercial Satellite Communication 

Procurements: Enforcing existing acquisition policy and identifying 

opportunities to centralize DOD’s procurement of commercial satellite 

communications (SATCOM) services could create opportunities to 

potentially save tens of millions of dollars annually. 

DOD depends on commercial SATCOM to support critical mission 

needs, from unmanned aerial vehicles and intelligence to voice and 

data services for military personnel. DOD spent over $1 billion leasing 

commercial SATCOM in fiscal year 2012, the most recent information 

 4

Because this report is based on previously issued GAO products, in many cases we cite 

November 1999 internal control standards as criteria; see GAO, Standards for Internal 

Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 

1999). When cited, these criteria were effective at the time of our review. However, new 

internal control standards for the federal government became effective beginning October 

1, 2015; see GAO, Standards for Internal Control in the Federal Government, GAO-14-

704G (Washington, D.C.: September 2014). Any corrective action that agencies plan to 

take should be in accordance with the new standards.

New Opportunities 

Exist to Improve 

Efficiency and 

Effectiveness across 

the Federal 

Government 

33 New Actions to Address 

New Evidence of 

Fragmentation, Overlap, 

or Duplication in 12 Areas 
Page 5 GAO-16-375SP 2016 Annual Report

available at the time of our July 2015 report. Guidance from the 

Chairman of the Joint Chiefs of Staff requires the Defense Information 

Systems Agency (DISA) to procure all of DOD's commercial 

SATCOM. 

However, we found that the combatant commands and military 

services independently procured commercial SATCOM to meet their 

individual needs. For example, in the most recent commercial 

SATCOM usage report, DOD reported that—contrary to the Joint 

Chiefs' requirement—approximately 34 percent (about $290 million) of 

its fixed satellite commercial SATCOM services was procured outside 

of DISA in 2012. The usage report also indicated that these services 

acquired though DISA result in an approximate 15 percent cost 

savings versus those not acquired through DISA. Utilizing a central 

point of contact could better position DOD to not only meet mission 

needs, but also to maximize cost savings by consolidating commercial 

SATCOM purchases. In addition, although DOD has initiatives 

underway to improve SATCOM procurements, it has not performed an 

analysis to identify inefficiencies and opportunities to consolidate 

purchases. 

We recommended that DOD enforce current policy requiring DISA to 

acquire all commercial SATCOM and conduct a spend analysis that 

identifies procurement inefficiencies and opportunities to consolidate 

purchases. In response, DOD agreed that enforcing its current policy 

makes the best use of taxpayer dollars. It also agreed that a spend 

analysis could help DOD understand military and commercial 

SATCOM spending, but DOD has yet to fully address either 

recommendation, as of March 2016. 

• Department of Homeland Security’s (DHS) Human Resources 

Systems: DHS’s human resources administrative environment 

includes fragmented systems, duplicative and paper-based 

processes, and little uniformity in its data management practices. 

According to DHS, these issues compromise its ability to effectively 

carry out its mission. In 2003, DHS initiated the Human Resources 

Information Technology (HRIT) investment to consolidate, integrate, 

and modernize the human resources information technology 
Page 6 GAO-16-375SP 2016 Annual Report

infrastructure of the department and its eight components.5 As part of 

the HRIT effort, DHS determined that it had 422 human resources 

systems and applications. 

We found in a February 2016 report that DHS had made only limited 

progress in implementing HRIT, in part due to a lack of involvement of 

the HRIT executive steering committee. Moreover, HRIT’s strategy 

may not reflect DHS’s current priorities, in part because the 

department had not updated the HRIT strategic planning document 

since 2011. 

In addition, we reported that DHS established the Performance and 

Learning Management System (PALMS) program to provide a system 

that will consolidate DHS’s nine existing learning management 

systems into one system and enable comprehensive training reporting 

and analysis across the department, among other things. However, 

we found that selected PALMS capabilities had been deployed to 

headquarters and two components, but that full implementation at four 

components was not planned as of January 2016, leaving uncertainty 

about whether the PALMS system would be used enterprise-wide to 

accomplish these goals. Further, DHS did not fully implement effective 

acquisition management practices and therefore was limited in 

monitoring and overseeing the implementation of PALMS and 

ensuring that the department obtains a system that improves its 

learning management weaknesses, reduces duplication, and delivers 

within cost and schedule commitments. 

We made a number of recommendations to DHS to, among other 

things, address HRIT’s poor progress and ineffective management. 

DHS concurred with our recommendations and identified initial actions 

that it had taken to evaluate HRIT and improve oversight of the 

investment. As of March 2016, our recommendations have not been 

fully addressed. Until DHS implements our recommendations, it may 

be missing opportunities to use human resources system investment 

dollars more efficiently and effectively.

 5

DHS’s eight components are the Federal Emergency Management Agency, the Federal 

Law Enforcement Training Center, the Transportation Security Administration, U.S. 

Citizenship and Immigration Services, U.S. Customs and Border Protection, the U.S. 

Coast Guard, U.S. Immigration and Customs Enforcement, and the U.S. Secret Service.
Page 7 GAO-16-375SP 2016 Annual Report

Fragmentation can also be a harbinger for overlap or duplication. Overlap 

occurs when multiple agencies or programs have similar goals, engage in 

similar activities or strategies to achieve them, or target similar 

beneficiaries. We found overlap among federal programs or initiatives in a 

variety of areas, including the following examples:

• Internal Revenue Service’s (IRS) Public Referral Programs: IRS could 

potentially collect billions of dollars in tax underpayments through its 

nine public referral programs and save resources by better managing 

fragmentation and overlap, improving communication, and 

streamlining processes.

Public referral programs enable individuals to submit information to 

IRS about tax noncompliance, and they are an important piece of 

IRS’s overall enforcement strategy and can help reduce the net $385 

billion tax gap—the difference between taxes owed and those 

ultimately collected.6 We reported in February 2016 that IRS does not 

have a formal mechanism to facilitate information sharing across all 

nine referral programs, which causes both the public and IRS to 

spend resources unnecessarily. Additionally, the referral programs 

involve largely manual processes, which forces IRS to spend 

resources reading and routing the referrals. In an October 2015 

report, we also identified key problems specific to the whistleblower 

program that are discouraging whistleblowers from coming forward, 

which, in turn, limits IRS’s ability to close the tax gap. For example, 

few large awards have been paid, claims take years to process, and 

communication with whistleblowers is limited.

We made several recommendations to IRS, including that it establish 

a coordination mechanism to communicate across the multiple referral 

programs, develop an online referral submission process, streamline 

the review process, and improve external communication. IRS agreed 

with our recommendations and plans to implement the whistleblower 

recommendations by October 2016. IRS has not yet provided an 

action plan or time frames for other referral program 

recommendations as of March 2016. Until IRS takes these actions, it 

may be missing opportunities to assist the public, collect billions in 

 6

In 2012, IRS estimated the net tax gap to be $385 billion and the gross tax gap—the 

difference between taxes owed and taxes paid on time—to be $450 billion based on data 

from tax year 2006. IRS plans to release an updated tax gap estimate in 2016, which will 

be based on tax years 2008, 2009, and 2010.
Page 8 GAO-16-375SP 2016 Annual Report

uncollected taxes owed, and leverage resources to streamline 

processes, which could help it to better coordinate and identify 

possible efficiencies, as well as better manage fragmentation and 

overlap.

• Financial Regulatory Structure: The U.S. financial regulatory structure 

is complex, with responsibilities fragmented among multiple agencies 

with overlapping authorities (see fig. 2). As a result, regulatory 

processes are sometimes inefficient, regulators oversee similar types 

of institutions inconsistently, and consumers are afforded different 

levels of protection. 

Figure 2: U.S. Financial Regulatory Structure 

Notes: This figure depicts the primary regulators in the U.S. financial regulatory structure, as well 

as their primary oversight responsibilities. “Regulators” generally refers to entities that have rulemaking, supervisory, and enforcement authorities over financial institutions or entities. There are 

additional agencies involved in regulating the financial markets, and there may be other possible 

regulatory connections than those depicted in this figure.

In 2009, we established a framework for evaluating regulatory reform 

proposals and noted that an effective regulatory system would need to 

address structural shortcomings created by fragmentation and 

overlap. While changes made by the Dodd-Frank Wall Street Reform 
Page 9 GAO-16-375SP 2016 Annual Report

and Consumer Protection Act (Dodd Frank Act) were consistent with 

some of the characteristics identified in this framework, the existing 

regulatory structure does not always ensure (1) efficient and effective 

oversight, (2) consistent financial oversight, and (3) consistent 

consumer and investor protections. As a result, negative effects of 

fragmented and overlapping authorities persist throughout the system. 

For example, regulation of securities and derivatives markets by the 

Securities and Exchange Commission and the Commodity Futures 

Trading Commission, respectively, can create the potential for 

inefficiencies in the way markets are overseen because of differences 

in certain of the agencies’ rules related to similar products.

In a February 2016 report, we suggested that Congress consider 

whether additional changes to the financial regulatory structure are 

needed.7 Without congressional action, it is unlikely that remaining 

fragmentation and overlap in the U.S. financial regulatory system can 

be reduced or that more effective and efficient oversight of financial 

institutions can be achieved.

In other aspects of our work, we found evidence of duplication or risk of 

duplication, which occurs when two or more agencies or programs are 

engaged in the same activities or provide the same services to the same 

beneficiaries, including the following example:

• Medicaid and Exchange Coordination: We found that there is risk of 

duplicative federal spending on health insurance coverage for 

individuals transitioning between Medicaid and federally subsidized 

health insurance purchased through the exchanges created under the 

Patient Protection and Affordable Care Act.8

 7

While most regulators did not comment on this issue, the National Credit Union 

Administration stated that it believes the substance of our February 2016 report did not 

support the report’s conclusions or the report’s resulting suggestion that Congress 

consider whether additional changes are needed to the regulatory structure. However, our 

report documents several instances where the current structure produced inconsistent, 

inefficient, and ineffective oversight. The costs and benefits of any options for improving 

and modernizing the structure would have to be part of any consideration of additional 

changes to the regulatory structure but would not preclude considering other options as 

we suggested.

8Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and 

Education Reconciliation Act of 2010 (HCERA), Pub. L. No. 111-152, 124 Stat. 1029 

(2010). For the purposes of this report section, references to the Patient Protection and 

Affordable Care Act include the amendments made by HCERA.
Page 10 GAO-16-375SP 2016 Annual Report

If individuals have a change in income or are affected by other factors, 

their eligibility for Medicaid and for subsidized exchange coverage 

may also change. As many low-income individuals experience income 

volatility, transitions between the two coverage types are likely. 

Federal regulations require that state Medicaid agencies and 

exchanges coordinate to facilitate these transitions, including 

transferring individuals’ accounts to the appropriate form of coverage 

when eligibility changes occur.9

A limited amount of duplicate coverage may be expected—and is 

permitted under federal law—for individuals completing the transition 

from subsidized exchange to Medicaid coverage. However, we found 

in October 2015 that duplicate coverage was also occurring outside of 

this transitional period—for example, in cases where individuals did 

not end their subsidized exchange coverage after being determined 

eligible for Medicaid. While the Centers for Medicare & Medicaid 

Services (CMS)—within the Department of Health and Human 

Services (HHS)—has taken some steps to minimize the potential for 

duplicate coverage in states with federally facilitated exchanges, we 

found that its policies and procedures were not sufficient based on 

federal standards for internal control. 

We recommended that CMS establish a schedule for regular checks 

for duplicate coverage in states with federally facilitated exchanges 

and develop a plan to routinely monitor the effectiveness of the 

checks and other planned procedures to minimize duplicate coverage. 

HHS agreed and acknowledged steps it has taken and plans to take 

to minimize the risk of duplicate coverage. For example, HHS stated 

that its first check for duplicate coverage was underway in August 

2015, and that it plans to analyze the rate of duplicate coverage 

identified. HHS also stated that it plans to monitor the rate of duplicate 

coverage identified in periodic checks and that it is working to 

implement additional internal controls to reduce duplicate coverage. 

As of March 2016, HHS was in the process of refining these checks, 

but had not completed another check or established a schedule for 

doing so, which could ultimately help protect the federal government 

from unnecessary and duplicative expenditures. 

 9

See generally 42 C.F.R. §§ 433.135 et seq. 
Page 11 GAO-16-375SP 2016 Annual Report 

We also identified actions in 25 areas for Congress or executive branch 

agencies to consider that could reduce the cost of government 

operations, better target resources, or enhance revenue collections for 

the Treasury, including the following examples: 

• Disability Insurance Overpayments: The Social Security 

Administration (SSA) may be losing billions of dollars through 

overpayments to beneficiaries of the Disability Insurance (DI) program 

and through improper waivers of overpayment debt. 

In fiscal year 2014, about 11 million individuals with disabilities and 

their dependents received approximately $143 billion in DI benefits, 

$1.3 billion of which SSA identified as overpayments. Additionally, 

SSA permanently waived over $2.4 billion in overpayment debt over 

the past 10 years. In our October 2015 report, we found that SSA’s 

process for handling work reports by beneficiaries has internal control 

and other weaknesses that increase the risk of overpayments, even 

when DI beneficiaries follow program rules and report work and 

earnings. In addition, SSA’s process for handling requests to waive 

overpayments lacks sufficient controls to help ensure appropriate 

decisions are made. 

We made several recommendations to improve SSA’s handling of 

overpayments, work reports, and waivers, including that SSA study 

automated reporting options and improve oversight of work reports 

and waivers. SSA agreed with all of these except the recommendation 

to improve oversight of work reports. We clarified that oversight 

should help to ensure that staff are following proper procedures. As of 

March 2016, SSA has not fully addressed these recommendations. 

Until SSA takes these actions, it will likely continue to overpay 

beneficiaries and improperly waive overpayment debt, costing the 

federal government billions of dollars. 

• Federal Mobile Telecommunications: According to a 2012 Office of 

Management and Budget (OMB) estimate, the federal government 

spent about $1.2 billion annually on about 1.5 million mobile devices 

and associated services. OMB also reported the federal government 

could have saved about $388 million in fiscal years 2013 through 

2015 by consolidating or eliminating mobile device contracts. In May 

2015, we reported on weaknesses in 15 selected agencies’ controls 

on mobile device spending. For example, only 5 of the 15 agencies 

had complete service and device inventories at either the enterprise 

level or at the components we reviewed. As a result, agencies have 

limited abilities to monitor device usage and determine if a device 

59 New Actions to Reduce 

Costs or Enhance 

Revenues Identified in 25 

Areas 
Page 12 GAO-16-375SP 2016 Annual Report

should be canceled or moved to a more cost-effective service plan. 

Furthermore, OMB does not measure progress toward its financial 

savings goal related to mobile devices and services, which limits its 

ability to assure an effective approach.

We recommended that the 15 agencies take actions to improve their 

inventories and control processes and that OMB measure and report 

progress in achieving mobile cost savings. OMB and 14 agencies 

generally agreed with the recommendations or had no comment. DOD 

commented that maintaining an inventory would come at a 

considerable expense and effort at the headquarters level. We 

disagreed with DOD’s assessment because the inventory can be 

generated by individual components. As of February 2016, these 

recommendations have not been fully addressed. Until agencies 

implement these recommendations, the federal government may be 

foregoing significant cost savings. 

• Medicare: In fiscal year 2015, Medicare served about 55 million 

beneficiaries at a cost of $634 billion. We found that the program 

could save billions of dollars annually if Congress were to equalize the 

rates Medicare pays for certain health care services, which often vary 

depending on where the service is performed. 

For example, Medicare spending on hospital outpatient department 

services was over $40 billion in 2013 and is growing, in part because 

services that were typically performed in physician offices have shifted 

to more costly hospital settings. Following this shift, services once 

reimbursed at a lower total payment rate can be classified as hospital 

outpatient department services and reimbursed by Medicare at a 

higher rate, increasing program costs. We suggested in December 

2015 that Congress equalize payment rates between physician offices 

and hospital outpatient departments for certain services. While the 

Bipartisan Budget Act of 2015 addresses this payment differential for 

some new providers, many providers will continue to be paid more 

than necessary for certain services, such as office visits. 

• Defense Excess Property Disposal: Federal civilian agencies could 

potentially achieve millions of dollars in cost savings if they were able 

to obtain more of DOD’s available excess personal property through 

the disposal process rather than purchasing similar property through a 

private sector supplier. 

Each year the military services identify thousands of items of personal 

property—including military equipment and materiel—that they need 

to dispose of because the property is obsolete, not repairable, or 
Page 13 GAO-16-375SP 2016 Annual Report

excess to their requirements but still usable. Because this property 

was originally purchased with federal funds, the government seeks to 

promote its reuse by federal agencies to minimize new procurement 

costs. However, we found in a January 2016 report that DOD’s 

process for disposing of excess personal property gives some 

nonfederal entities that participate in special programs—such as state 

and local law enforcement agencies—priority for excess property over 

some federal civilian agencies that may have similar needs.10

Consequently, federal agencies are at risk of spending appropriated 

funds to acquire property that could potentially be obtained through 

DOD’s disposal process at a lower cost. For fiscal year 2014, DOD 

reported that excess and surplus personal property with a total 

original acquisition value of approximately $3.18 billion in nominal 

dollars was reutilized within DOD or provided to special programs, 

transferred to other federal agencies, or donated to eligible 

organizations such as state and local governments or nonprofit 

organizations.

DOD recently revised its policies and procedures for disposing of 

excess personal property so that DOD components are able to obtain 

its excess property before special programs. Still, special programs 

could obtain such property before most federal civilian agencies and 

nonfederal entities. As a result, we recommended that DOD further 

reassess its property disposal process to determine whether 

additional changes are needed in the priorities given to recipients 

within the process. DOD agreed, and stated that it plans to continue to 

review all aspects of the disposal process as part of its standard 

operating procedures. However, while we understand DOD already 

assesses its disposal process as part of normal operations, we 

maintain that DOD should separately assess the priorities in its 

disposal process to make more efficient use of federal funds. 

• Medicaid: We identified several opportunities to achieve cost savings 

within the Medicaid program, which in fiscal year 2015 covered 

approximately 69 million beneficiaries at an estimated cost of $529 

billion. For example, we found in February 2016 that CMS had not

 10There are 12 special programs that may screen and request DOD excess personal 

property during the first stage of the disposal process, including, for example, the 1033 

program, which provides excess DOD property to state and local law enforcement 

agencies.
Page 14 GAO-16-375SP 2016 Annual Report

clarified or broadly communicated guidance regarding the appropriate 

methods for distributing supplemental payments to hospitals. Without 

such guidance, states may be shifting costs to the federal government 

by distributing payments that are counter to agency policy, including 

by making payments that are not commensurate with providers’ 

provision of Medicaid services and that are based on the availability of 

provider and local government financing. We have also found that 

CMS’s oversight of Medicaid payments to institutional providers was 

limited, in part, by the lack of a policy and standard process for 

determining whether payments to individual providers are economical 

and efficient, as required by federal law. As a result, excessive 

payments states make to individual providers may not be identified or 

examined by CMS. For example, we found that some hospitals’ total 

Medicaid payments exceeded the hospitals’ total operating cost—that 

is, cost for all hospital services provided to all patients the hospital 

served. We made a number of recommendations related to Medicaid, 

and HHS concurred or partially concurred with all of them. Taking 

these actions should help CMS to achieve substantial cost savings 

and improve its oversight of the Medicaid program. 

• Treasury’s Foreclosure Prevention Efforts: As of October 2015, the 

Making Home Affordable (MHA) program—which the Department of 

the Treasury (Treasury) administers to help struggling homeowners 

avoid foreclosure—had a $7.7 billion available unexpended balance. 

In December 2015, Congress mandated that the MHA program be 

terminated on December 31, 2016, with an exemption for certain loan 

modification applications made before that date. We found that 

although Treasury monitors activity and aggregate expenditures under 

the MHA program, it has not systematically reviewed the extent to 

which it is likely to expend the full $7.7 billion available program 

balance. Although we recognize that no estimate of future 

participation and expenditures can be made with certainty, our prior 

work has concluded that reviewing unexpended balances, including 

those that have been obligated, can help agencies identify possible 

budgetary savings and financial benefits. 

We recommended that Treasury review unexpended balances and 

deobligate excess funds, and we suggested that Congress consider 

permanently rescinding any funds that Treasury deobligates. Treasury 

agreed with our recommendations, and the President’s fiscal year 

2017 budget submission indicates that Treasury is now estimating a 

$4.7 billion reduction in total outlays for the MHA program. Treasury 

deobligated $2 billion of the $4.7 billion reduction in estimated MHA 

outlays in February 2016. Given the uncertainties in estimating future 
Page 15 GAO-16-375SP 2016 Annual Report

participation and the associated expenditures, it will be important for 

Treasury to update its cost estimates as additional information 

becomes available and take timely action to deobligate likely excess 

funds. 

• DOD Excess Ammunition. DOD could potentially reduce its storage, 

demilitarization, and disposal costs by hundreds of thousands of 

dollars by transferring excess serviceable conventional ammunition, 

including small arms ammunition, to federal, state, and local 

government agencies. 

When a military service determines that serviceable ammunition is 

beyond its requirements, that ammunition is offered to the other 

services. If that ammunition is not taken, it is transferred to the Army, 

which manages the stockpile of excess conventional ammunition and 

takes actions to demilitarize and dispose of it. In fiscal year 2015, 

DOD spent about $118 million to demilitarize and dispose of 

conventional ammunition. We reported in July 2015 that DOD had 

reduced some of its demilitarization and disposal costs by transferring 

some excess ammunition to other government agencies, as opposed 

to demilitarizing and disposing of it, but that DOD does not have a 

systematic means for communicating with these agencies about 

available excess ammunition. Communicating in a systematic manner 

with other government agencies on available excess ammunition 

could help reduce the stockpile and save DOD in storage, 

demilitarization, and disposal costs.

We recommended that DOD develop a systematic means to make 

information available to other government agencies on excess 

ammunition, and DOD agreed with this recommendation. However, in 

conducting follow-up work in March 2016, we found that DOD 

continues to transfer ammunition to other government agencies on an 

informal basis and no formal process has been implemented. Without 

establishing a formal means to communicate with and provide other 

government agencies with information on available excess 

serviceable ammunition, DOD could miss opportunities to reduce its 

overall storage, demilitarization, and disposal costs. 

• National Park Service Fees: The Federal Lands Recreation 

Enhancement Act (FLREA) does not give the National Park Service 
Page 16 GAO-16-375SP 2016 Annual Report

(Park Service) and other agencies that charge recreation fees the 

authority to adjust the price of a lifetime senior pass, which has been 

$10 since 1993.11 Without this authority, the Park Service is limited in 

its ability to increase revenue from this fee. In addition, the Park 

Service does not call for periodic reviews of recreation fees that the 

agency is able to adjust. Our guide on user fees states that federal 

agencies should regularly review fees and make changes if 

warranted.12

We suggested that Congress consider amending FLREA to give the 

agencies authority to adjust the price of a lifetime senior pass. A bill 

was introduced in September 2015 to increase the price of the senior 

pass to a one-time amount matching the price of the annual 

interagency pass, which is $80, as of November 2015.13 If passed, 

this could generate millions of dollars in revenue annually. We also 

made recommendations to improve the Park Service’s management 

of recreation fees. The Department of the Interior, which administers 

the Park Service, agreed with our recommendations and plans to 

begin addressing them in 2016. Improving the management of 

recreation fees could help the Park Service to better ensure that these 

fees are set at a reasonable level.

In addition to the new areas presented in this year’s annual report, we 

identified new actions from recently issued work that relate to issues 

presented in our 2011-2015 annual reports. See appendix III for more 

information.

 11Pub. L. No. 108-447, div. J. tit. VIII, 118 Stat. 3377 (2004) (codified as amended at 16 

U.S.C. §§ 6801-6814 (2015)).

12GAO, Federal User Fees: A Design Guide, GAO-08-386SP (Washington, D.C.: May 29, 

2008).

13National Park Service Centennial Act, H.R. 3556, 114th Cong. § 602 (2015). The annual 

interagency pass covers entrance fees and certain amenity fees for all federal recreational 

lands. The amount of additional revenue generated by adjusting the price of the senior 

pass could be lower if the amount of the price increase deters seniors from purchasing the 

pass.
Page 17 GAO-16-375SP 2016 Annual Report

In addition to the new actions identified for this report, we have continued 

to monitor the progress that Congress and executive branch agencies 

have made to reduce, eliminate, or better manage fragmentation, overlap, 

or duplication or achieve other potential financial benefits. In response to 

our 2011-2015 annual reports, Congress and executive branch agencies

have addressed a total of 224 actions, including 55 actions since April 

2015.14 We found that these efforts have resulted in roughly $56 billion in 

financial benefits from fiscal years 2010 through 2015, with at least an 

additional $69 billion in estimated benefits projected to be accrued 

through 2025.15

Congress and executive branch agencies have addressed a total of 55 

actions since our last report. Of these 55 addressed actions, 44 were 

identified in our 2011-2014 annual reports, bringing the total number of 

addressed actions for the 2011-2014 annual reports to 213 actions—47 

percent of the 458 actions identified over that period (see fig. 3). 

 14Actions were assessed as of March 2, 2016, the date we completed our audit work. In 

assessing actions suggested for Congress, we applied the following criteria: “addressed”

means relevant legislation has been enacted and addresses all aspects of the action 

needed; “partially addressed” means a relevant bill has passed a committee, the House of 

Representatives, or the Senate, or relevant legislation has been enacted but only 

addressed part of the action needed; and “not addressed” means a bill may have been 

introduced but did not pass out of a committee, or no relevant legislation has been 

introduced. In assessing actions suggested for the executive branch, we applied the 

following criteria: “addressed” means implementation of the action needed has been 

completed; “partially addressed” means the action needed is in development, or started 

but not yet completed; and “not addressed” means the administration, the agencies, or 

both have made minimal or no progress toward implementing the action needed.

15In calculating these totals, we relied on individual estimates from a variety of sources, 

which considered different time periods and utilized different data sources, assumptions, 

and methodologies. They represent a rough estimate of financial benefits and have been 

rounded down to the nearest $1 billion.

Executive Branch 

Agencies and 

Congress Continue to 

Address Actions That 

Span the Federal 

Government 

Progress toward 

Addressing Actions
Page 18 GAO-16-375SP 2016 Annual Report

Figure 3: Status of 2011-2014 Actions, as of 2015 and 2016 

Note: Actions categorized as “consolidated or other” are no longer assessed. In most cases, the 

actions were replaced or subsumed by new actions based on additional audit work or other relevant 

information. For example, actions categorized as “consolidated or other” may have been consolidated 

into other actions that we track based on subsequent audit work or significant changes in agency 

circumstances, or they may have been redirected from a congressional to an executive branch action, 

or vice versa.

In our 2015 annual report, we identified 86 new actions for congressional 

or executive branch agency attention.16 As of March 2, 2016, we found 

that 11 (13 percent) of the new 2015 actions had been addressed and 33 

(38 percent) had been partially addressed.

In total, of the 544 total actions we identified in our 2011-2015 annual 

reports, we found that 224 (41 percent) were addressed, 185 (34 percent) 

 16In addition to the 66 actions identified in our 2015 annual report, we also added 19 new 

actions to existing areas that we previously identified in our 2011-2014 reports. During this 

year’s review, we also added 1 action that was inadvertently omitted from the 2015 total.
Page 19 GAO-16-375SP 2016 Annual Report

were partially addressed, and 111 (20 percent) were not addressed.17 As 

figure 4 shows, many of the actions that have been addressed were 

identified in our 2013 or earlier reports—which suggests that it frequently 

takes multiple years for actions to be fully addressed. See appendix IV for 

a list of all areas and the status of related actions.

Figure 4: Progress in Addressing 2011-2015 Actions, as of 2015 and 2016 

Note: Actions categorized as “consolidated or other” are no longer assessed. In most cases, the 

actions were replaced or subsumed by new actions based on additional audit work or other relevant 

information. For example, actions categorized as “consolidated or other” may have been consolidated 

into other actions that we track based on subsequent audit work or significant changes in agency 

circumstances, or they may have been redirected from a congressional to an executive branch action, 

 17Percentages do not add to 100 due to rounding. In addition, this year, 4 actions were 

categorized as “consolidated or other” for a total of 24 actions (4 percent) in this category 

from 2011-2015. Actions categorized as “consolidated or other” are no longer assessed. 

In most cases, the actions were replaced or subsumed by new actions based on 

additional audit work or other relevant information. For example, actions categorized as 

“consolidated or other” may have been consolidated into other actions that we track based 

on subsequent audit work or significant changes in agency circumstances, or they may 

have been redirected from a congressional to an executive branch action, or vice versa. 
Page 20 GAO-16-375SP 2016 Annual Report

or vice versa. Additionally, actions identified in 2015 were not assessed in 2015 because that was the 

year that the actions were identified.

The progress Congress and executive branch agencies have made as of 

March 2, 2016, to address the actions we identified will result in 

approximately $125 billion in financial benefits from 2010 through 2025.18

Table 1 outlines examples of our addressed actions that have resulted in 

or are expected to result in cost savings or enhanced revenue.

Table 1: Examples of Addressed Actions with Associated Cost Savings and Revenue Enhancements, 2010-2025

Annual Report Area Identified

2011 Domestic Ethanol Production (Area 13): Congress allowed the Volumetric Ethanol Excise Tax Credit to expire 

at the end of 2011, which eliminated duplicative federal efforts directed at increasing domestic ethanol 

production and reduced revenue losses by $29 billion in fiscal year 2012 to fiscal year 2016.

2011 Farm Program Payments (Area 35): The Agricultural Act of 2014 eliminated direct payments to farmers and 

should save approximately $44 billion from fiscal year 2015 through fiscal year 2023, of which $5 billion has

accrued and $39 billion is expected to accrue in fiscal year 2016 or later, according to the Congressional Budget 

Office.

2014 Real Estate-Owned Properties (Area 18): GAO estimated that the Department of Housing and Urban 

Development saved as much as $2.8 billion from July 2013 through June 2015 by implementing improvements 

to its property custody approach including reducing the number of foreclosed properties that it acquires by using 

other means of resolving troubled mortgages.

2015 Tax Policies and Enforcement (Area 17): Congress amended the audit procedures applicable to certain large 

partnerships to require that they pay audit adjustments at the partnership level. This should raise $9.3 billion

from fiscal years 2019 to 2025, according to the Joint Committee on Taxation.

2013 Combat Uniforms (Area 2): Consistent with our recommendation to avoid fragmentation, the Army chose not to 

introduce a new family of camouflage uniforms into its inventory, resulting in a cost avoidance of about $4.2 

billion over 5 years, of which $1.7 billion has accrued since fiscal year 2014 and $2.5 billion is expected to 

accrue in fiscal year 2016 or later.

2011 Federal Emergency Management Agency (FEMA) Grants (Area 26): GAO estimated savings of $2.55 

billion from fiscal years 2011 through 2013 due to Congress limiting preparedness grant funding until FEMA 

completes a national preparedness assessment of capability gaps.

2012 Overseas Defense Posture (Area 37): The United States Forces Korea conducted a series of consultations 

with the military services to evaluate the costs and benefits associated with tour normalization and decided not 

to move forward with the full tour normalization initiative because it was not affordable. The Department of 

Defense’s (DOD) decision to not move forward with this initiative saved an estimated $3.1 billion from fiscal 

years 2012 through 2016, of which $2.5 billion has accrued through fiscal year 2015 and $615 million is 

expected to accrue in fiscal year 2016.

18In calculating these totals, we relied on individual estimates from a variety of sources, 

which considered different time periods and utilized different data sources, assumptions, 

and methodologies. These totals represent a rough estimate of financial benefits and have

been rounded down to the nearest $1 billion. 

Financial Benefits Related 

to Actions Taken by 

Congress and Executive 

Branch Agencies 
Page 21 GAO-16-375SP 2016 Annual Report

Annual Report Area Identified

2011 Overseas Military Presence (Area 36): In January 2015, DOD estimated that it would save $1.2 billion 

annually by closing, consolidating, or realigning European installations after a comprehensive study of posture, 

as we had recommended.

2011 Medicare Health Care Payments (Area 74): Congress and the Centers for Medicare & Medicaid Services took 

several actions to improve the efficiencies of some Medicare payments for health care services, resulting in 

significant savings.

Source: GAO analysis. | GAO-16-375SP

Note: The estimates in this report are from a range of sources, including GAO, executive branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. The Tax Policies 

and Enforcement action (area 17) is newly addressed since GAO’s 2015 report. Some estimates 

have been updated to reflect more recent analysis.

Congress also has taken a number of additional steps to address actions 

we have identified to achieve financial benefits or improve efficiency and 

effectiveness. For example, in our 2015 report we found the Department 

of Energy (DOE) could potentially realize savings by re-examining the 

appropriate size of the Strategic Petroleum Reserve (SPR)—which was 

valued at about $22 billion as of January 2016—and depending on the 

outcome of the analysis, selling crude oil from the reserve and using the 

proceeds to fund other national priorities. In 2015, Congress required 

DOE to complete a long-range strategic review of the SPR and also 

authorized the sale of 124 million barrels of SPR oil. The Congressional 

Budget Office estimated potential savings to be $8 billion from 2018 

through 2025. In another example, in our 2011 annual report we found 

that a proliferation of programs to improve teacher quality complicated 

federal efforts to invest dollars effectively. We verified that legislation 

passed by Congress in December 2015 did not include authorization for 

19 overlapping programs that were on our 2011 list of 82 distinct 

programs designed to improve teacher quality.

19 Using Department of 

Education (Education) data, GAO estimated the decision to not 

reauthorize saved approximately $800 million based on fiscal year 2016 

appropriations for these programs. In addition, Congress included 

language in appropriations acts that eliminated some barriers to 

educational program alignment and passed legislation to give Education 

broader discretion to realign program resources.

In other instances, Congress and executive branch agencies took steps 

to address issues that we identified during the course of our work that 

could also result in financial benefits. For example, in August 2014, we 

 19Every Student Succeeds Act, Pub. L. No. 114-95 (Dec. 10, 2015).
Page 22 GAO-16-375SP 2016 Annual Report

reported that the wage information that employers report on Form W-2 

was not available to IRS until after it issued most refunds. We found that if 

IRS had access to W-2 data earlier, it could match such information to 

taxpayers’ returns and identify discrepancies before issuing billions of 

dollars of fraudulent refunds. The Consolidated Appropriations Act, 2016, 

enacted in December 2015, amended the tax code to accelerate W-2 

filing deadlines to January 31.20 According to IRS, a program that would 

match W-2 data to tax returns before refunds are issued would save 

revenue by protecting a substantial part of the billions currently paid to 

fraudsters. 

Also in August 2014, we reported that IRS had not fully assessed the 

costs and benefits of having available W-2 information for pre-refund 

matching, which could involve challenges such as a potential increase in 

W-2s that need to be corrected and required upgrades to IRS’s 

information technology systems, among others. In response to our 

recommendation, in September 2015, IRS provided us with a report 

discussing (1) adjustments to IRS systems and work processes needed 

to use accelerated W-2 information, (2) potential impacts on internal and 

external stakeholders, and (3) other changes needed to match Form W-2 

data to tax returns prior to issuing refunds. This report should help IRS 

determine how best to implement pre-refund W-2 matching, given the 

new January 31 deadline for filing W-2s.

While not all actions taken by Congress and executive agencies result in 

financial benefits to taxpayers, all of our suggested actions, when 

implemented, can result in gains in government efficiencies or the 

elimination, reduction, or improved management of fragmented, 

overlapping or duplicative programs, among other benefits. For example, 

in our 2012 annual report, we stated that we had recommended that DHS 

implement a process for tracking agency use of cybersecurity training, 

gather feedback from agencies on the training’s value and on 

opportunities for improvement, and develop a process to coordinate 

training offered to minimize the production and distribution of duplicative 

products.21 In 2014 and 2015, DHS took steps to address our 

recommendations by, among other things, implementing quarterly data 

 20Pub. L. No. 114-113, div. Q, § 201, 129 Stat. 2242 (Dec. 18, 2015). This change goes 

into effect for W-2s reporting payments made in 2016 and filed in 2017.

21In our 2012 annual report, see Cybersecurity Human Capital (Area 12).
Page 23 GAO-16-375SP 2016 Annual Report

calls to shared service centers and emphasizing the need to coordinate 

training. DHS reported that DOD, for example, has released an improved 

version of its security awareness training in response to the results of the 

data calls.

While Congress and executive branch agencies have made progress 

toward addressing the actions we have identified, further steps are 

needed to fully address the remaining actions, as shown in table 2. More 

specifically, 53 percent of the actions (243 of 459) directed to executive 

branch agencies and 62 percent of the actions (53 of 85) directed to 

Congress that were identified in our 2011-2015 reports remain partially or 

not addressed. In addition, we identified 92 new actions in 2016. We 

estimate that tens of billions of additional dollars would be saved should 

Congress and executive branch agencies fully address our actions that 

currently are partially addressed or not addressed, including the new 

ones we identified in 2016.22

Table 2: Status of 2011-2015 Actions Directed to Congress and the Executive Branch, as of March 2, 2016

Status

Executive brancha Congressb Grand totals

Number

of actions Percentage

Number

of actions Percentage

Total number

of actions

Overall 

percentagec

Addressed 197 43% 27 32% 224 41%

Partially addressed/not 

addressed

243 53 53 62 296 54

Consolidated or other 19 4 5 6 24 4

Total 459 100 85 100 544 99

Source: GAO. | GAO-16-375SP

Notes: This year, 4 actions were categorized as “consolidated or other” for a total of 24 actions in this 

category from 2011-2015. Actions categorized as “consolidated or other” are no longer assessed. In 

most cases, these actions were replaced or subsumed by new actions based on additional audit work 

or other relevant information. For example, actions categorized as “consolidated or other” may have 

been consolidated into other actions that we track based on subsequent audit work or significant 

changes in agency circumstances, or they may have been redirected from a congressional to an 

executive branch action, or vice versa.

a

Executive branch agencies took steps that addressed five actions directed to Congress.

 22In calculating this estimate, we relied on individual estimates from a variety of sources, 

which considered different time periods, and utilized different data sources, assumptions, 

and methodologies. These individual estimates are subject to increased uncertainty, 

depending on whether, how, and when they are addressed. This amount represents a 

rough estimate of financial benefits. 

Action in Several 

Remaining Areas 

Could Yield 

Significant Additional 

Benefits
Page 24 GAO-16-375SP 2016 Annual Report

b

Congress took steps that fully addressed one action and partially addressed another action directed 

to executive branch agencies. 

c

Numbers do not add to 100 percent due to rounding.

Our suggested actions that remain open span the government.23 We 

have directed actions to all 15 cabinet-level executive departments and at 

least 17 other federal entities (see fig. 5). In particular, a substantial 

number of our actions are directed to three departments that made up 55 

percent of federal obligations in fiscal year 2015—HHS, DOD, and 

Treasury.24 Specifically, we have directed a total of 82 actions to HHS, 

152 actions to DOD, and 112 actions to Treasury since 2011. Given the 

amount of federal dollars represented and number of unaddressed 

actions in the health care, defense, and tax areas, significant 

opportunities for cost savings and revenue enhancement exist in these 

three areas. 

 23In some cases, these actions may be included in areas that have other actions with no 

associated cost savings or revenue enhancements.

24HHS includes Medicaid and Medicare. DOD includes the Office of the Secretary of 

Defense, military services, and defense agencies. Treasury consists of 10 bureaus, the 

largest of which is IRS.
Page 25 GAO-16-375SP 2016 Annual Report

Figure 5: Fiscal Year 2015 Obligations and Number of Not Addressed and Partially 

Addressed Actions since 2011, by Agency

Notes: Individual actions are counted multiple times when they are directed to more than one federal 

department or agency. Actions directed to multiple agencies are not assessed as addressed until all 

agencies have made necessary progress. Percentages are rounded to the nearest whole percent for 

items greater than 1 percent. 

a

This includes actions that are partially addressed and not addressed. b

Treasury’s percentage of fiscal year 2015 obligations includes interest on the national debt. 

c

U.S. Postal Service obligations are primarily funded by postal revenues, although the U.S. Postal 

Service receives minimal appropriations for overseas voting and mail for the blind. Additionally, the 

U.S. Postal Service has a maximum $15 billion in borrowing authority. 

d

The judicial branch represented 0.2 percent of federal obligations in fiscal year 2015. 

e

Actions have also been directed to agencies and other federal entities that each represented less 

than 0.2 percent of federal obligations in fiscal year 2015.
Page 26 GAO-16-375SP 2016 Annual Report

According to the Congressional Budget Office (CBO), gross federal 

outlays for Medicare, Medicaid, and other major health care programs 

totaled $1 trillion in 2015, equaling 5.8 percent of the gross domestic 

product (GDP).25 CBO estimates that gross federal outlays for those 

programs will jump to $1.1 trillion, or 6.2 percent of GDP, in 2016.26 CBO 

further estimates that such spending will grow robustly, nearly doubling in 

dollar terms between 2016 and 2026, reaching $2.0 trillion, or 7.4 percent 

of GDP, by the end of that period. This level of spending contributes to 

the fiscal challenges facing the nation.

In our 2011-2015 annual reports, we directed 64 actions to HHS to 

improve the efficiency and effectiveness of health care programs, among 

other areas. In addition, we directed 18 new actions to HHS in this year’s 

annual report. Fifty-five of the 82 (67 percent) total actions we directed to 

HHS remain partially addressed or not addressed.27 Many of these 

actions are directed at the Medicare and Medicaid programs, which had a 

combined total of over $900 billion in federal outlays in 2015. Effectively 

implementing these actions would result in significant cost savings or 

revenue enhancement, including the examples shown in table 3. 

Table 3: Examples of Health Care Areas in 2011-2016 Annual Reports with Actions Remaining to Be Addressed

Annual report Area identified (Click area name for more information)

Medicare

2011/2013 Program Integrity (Areas 73/25): To help prevent billions of dollars in improper payments, the Centers for 

Medicare & Medicaid Services (CMS) should better target its claims review by requiring its contractors to develop 

thresholds for unexplained increases in billing and use them to develop automated prepayment controls, and by

requiring that physicians receive a statement of home health services that beneficiaries received based on the 

physicians’ certification.

 25Due to their size, complexity, and susceptibility to mismanagement and improper 

payments, we designated Medicare and Medicaid as high-risk programs in 1990 and 

2003, respectively. See GAO, High-Risk Series: An Update, GAO-15-290 (Feb. 11, 2015). 

26Congressional Budget Office, The Budget and Economic Outlook: 2016 to 2026 

(Washington, D.C.: January 2016).

27This includes new actions identified in this report. In addition, actions directed to multiple 

agencies are not assessed as addressed until all agencies have made necessary 

progress.

Improving the Efficiency of 

Heath Care Programs 
Page 27 GAO-16-375SP 2016 Annual Report

Annual report Area identified (Click area name for more information)

Medicare

2012 Medicare Advantage Payments (Area 45): To help ensure appropriate payments to Medicare Advantage plans, 

CMS should take steps to improve the accuracy of the adjustment made for differences in diagnostic coding 

practices between Medicare Advantage plans and traditional Medicare providers. We previously reported that these 

shortcomings in CMS’s adjustment resulted in excess payments to Medicare Advantage plans totaling an estimated

$3.2 billion to $5.1 billion over a 3-year period from 2010 through 2012.

2015 Medicare Payments to Certain Cancer Hospitals (Area 19): To achieve almost $500 million per year in program 

savings, Congress should consider modifying how Medicare pays certain cancer hospitals.

2016 Medicare Payments by Place of Service (Area 30): Medicare could save billions of dollars if Congress were to 

equalize the rates Medicare pays for certain health care services, which often vary depending on where the service 

is performed.

2016 Eligibility of Medicare Providers and Suppliers (Area 26): CMS could use better information to help prevent 

ineligible providers and suppliers from enrolling in the Medicare program and improperly obtaining Medicare funds, 

potentially reducing the billions of dollars in improper payments that the program has paid out in recent years. 

Medicaid

2013/2016 Supplemental Payments (Areas 26/25): To save Medicaid hundreds of millions of dollars, (1) Congress should 

consider requiring CMS to take steps that would facilitate the agency’s ability to oversee these payments, including 

identifying payments that are not used for Medicaid purposes or are otherwise inconsistent with Medicaid payment 

principles, and (2) CMS should clarify its requirement that supplemental payments be linked to the provision of 

Medicaid-covered services, and that such payments not be made contingent on the availability of local funding for 

the nonfederal share.

2014/2016 Demonstration Spending (Areas 21/27): To save billions of dollars, (1) Congress should consider requiring the 

Department of Health and Human Services (HHS) to improve the process for reviewing, approving, and making 

transparent the basis for approving spending limits, including ensuring that valid methods are used to demonstrate 

budget neutrality and (2) HHS should establish specific criteria for assessing whether demonstration spending 

furthers Medicaid objectives and take other steps to improve the transparency and accountability of the approval 

process.

2015 State Sources of Funds (Area 20): To potentially save hundreds of millions of dollars, CMS should ensure that 

states report accurate and complete data on state Medicaid sources of funds so that it may better oversee states’ 

financing arrangements that can increase costs for the federal government.

2016 Medicaid and Exchange Coordination (Area 7): CMS should take actions to minimize the risk of duplicative federal 

spending on health insurance coverage for individuals transitioning between Medicaid and exchange coverage.

2016 Payments to Institutional Providers (Area 29): CMS should take steps to improve the oversight of state Medicaid 

payments to institutional providers and better ensure that the federal government does not provide funds for 

excessive state payments made to certain providers, which could result in savings of hundreds of millions of 

dollars.

2016 Medicaid Eligibility Determinations (Area 28): CMS should assess the accuracy of federal Medicaid eligibility

determinations to minimize the risk of improper payments.

Source: GAO analysis. | GAO-16-375SP

Note: The estimates in this report are from a range of sources, including GAO, executive branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates 

have been updated to reflect more recent analysis. 
Page 28 GAO-16-375SP 2016 Annual Report

Defense outlays represented about 17 percent of the government’s 2015 

total outlays and was the largest component—almost half—of the federal 

government’s $1.2 trillion discretionary spending in that year.28 Avoiding 

fragmented, overlapping, and duplicative investments could help ensure 

more efficient and effective use of resources. 

In our 2011-2015 annual reports, we directed 130 actions to DOD, and in 

this year’s annual report, we direct an additional 22 actions.29 Ninety-five

of the 152 (63 percent) total actions we identified remain partially 

addressed or not addressed.

30 Many of the actions fall within a few key 

areas, including acquisitions and contract management, support 

infrastructure, and headquarters management. Our work suggests that 

effectively implementing these actions, such as the examples in table 4, 

would yield significant financial benefits. 

Table 4: Examples of Defense Areas in 2011-2016 Annual Reports with Actions Remaining to Be Addressed 

Annual report Area identified (Click area name for more information)

2013 Agencies’ Use of Strategic Sourcing (Area 23): The Department of Defense (DOD) and other selected 

agencies could better leverage their buying power and achieve additional savings by directing more 

procurement spending to existing strategically sourced contracts and further expanding strategic sourcing 

practices to their highest-spending procurement categories. GAO estimated that savings of 1 percent from 

selected agencies’ procurement spending alone would equate to over $4 billion.

2013 Joint Basing (Area 20): DOD needs an implementation plan to guide joint bases to achieve $2.3 billion

dollars in cost savings over a 20-year period and efficiencies anticipated from combining support services at 

26 installations located close to one another. 

2015 Defense Facilities Consolidation and Disposal (Area 13): DOD should ensure that data on the utilization of 

DOD facilities—which were collectively valued at around $880 billion in fiscal year 2014—are complete and 

accurate in order to identify opportunities for saving costs by consolidating or disposing of unutilized or 

underutilized facilities.

 28Discretionary spending refers to outlays from budget authority that is provided in and 

controlled by appropriations acts. DOD program management has been on our High Risk 

List since 1990. See GAO-15-290.

29The 22 new actions include 19 actions in new defense-related areas and 3 actions 

added to an existing area from our 2013 annual report. See appendix III for more 

information on actions added to existing areas in 2016.

30This includes new actions identified in this report. In addition, actions directed to multiple 

agencies are not assessed as addressed until all agencies have made necessary 

progress.

More Effectively Targeting 

Defense Resources
Page 29 GAO-16-375SP 2016 Annual Report

Annual report Area identified (Click area name for more information)

2015 DOD Headquarters Reductions (Area 14): DOD could potentially achieve hundreds of millions of dollars in 

cost savings and help ensure that headquarters organizations are sized properly to meet their assigned mission 

by re-evaluating its headquarters reductions efforts and conducting periodic reassessments of workforce 

requirements.

2015 Department of Defense US Family Health Plan (Area 6): To potentially save millions of dollars and eliminate 

duplication within DOD’s health care system, Congress should terminate the statutorily required US Family

Health Plan because it offers military beneficiaries the same health care benefit offered by other DOD health 

care contractors. GAO estimates this action could save $189 million from fiscal years 2017 to 2022.

2016 DOD Commercial Satellite Communication Procurement (Area 1): Enforcing existing acquisition policy and 

identifying opportunities to centralize DOD’s procurement of commercial satellite communications services 

could create opportunities to potentially save tens of millions of dollars annually. 

2016 DOD Excess Ammunition (Area 15): DOD could potentially reduce its storage, demilitarization, and disposal 

costs by hundreds of thousands of dollars by transferring excess serviceable conventional ammunition, 

including small arms ammunition, to federal, state, and local government agencies. 

2016 DOD Leases and Use of Underutilized Space at Military Installations (Area 16): DOD could potentially 

achieve millions of dollars in savings by identifying and implementing actions to increase use of underutilized 

facilities at its military installations, such as identifying opportunities to relocate some of its organizations

currently in leased space to installations, communicating the availability of underutilized space to potential 

tenants, and seeking use by other federal agencies.

2016 Defense Excess Property Disposal (Area 13): Federal civilian agencies could potentially achieve millions of 

dollars in cost savings if they were able to obtain more of DOD’s available excess personal property through 

the disposal process rather than purchasing similar property through a private sector supplier. 

2016 DOD’s Eligibility Determinations for Living Quarters Allowance (Area 14): DOD could potentially achieve 

cost savings by monitoring its components’ reviews of eligibility determinations for the over $500 million spent 

annually on living quarters allowance for civilian employees to better ensure that DOD components are not 

improperly providing this allowance.

Source: GAO analysis. | GAO-16-375SP

Note: The estimates in this report are from a range of sources, including GAO, executive branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates 

have been updated to reflect more recent analysis.

IRS collected $3.3 trillion in gross taxes, or 93 percent of federal receipts, 

in fiscal year 2015. Among the challenges IRS faces in collecting this 

money are combatting tax refund fraud associated with identity theft, 

addressing factors that contribute to the $385 billion net tax gap, and 

reducing the causes of Earned Income Tax Credit improper payments.31

In our 2011-2015 annual reports, we directed 99 actions to the 

Department of the Treasury, and we include 13 additional actions in this 

31The tax gap does not include taxes due from illegally derived income or various forms of 

fraud. For example, in general, refund fraud related to identity theft would not be included 

in the tax gap estimate because it does not involve evading a tax liability.

Addressing Challenges in 

Collecting Tax Revenue 

and Reducing the Tax Gap
Page 30 GAO-16-375SP 2016 Annual Report

year’s report. Seventy of the 112 (63 percent) total actions we identified 

remain open.32 Effectively implementing our open recommendations, 

including the examples in table 5, would increase revenues or reduce 

costs.

Table 5: Examples of Tax Areas in 2011-2016 Annual Reports with Actions Remaining to Be Addressed 

Annual report Area identified (Click area name for more information)

2011 Real Estate Tax Deductions (Area 59): Better information and outreach could help increase revenues by tens 

or hundreds of millions of dollars annually by addressing overstated real estate tax deductions.

2011 Simple Tax Return Errors (Area 56): Broadening the Internal Revenue Service’s (IRS) authority to correct 

simple tax return errors could facilitate correct tax payments and help IRS avoid costly, burdensome audits. The 

Joint Committee on Taxation estimated this action could raise $274 million from fiscal years 2018 through 

2026.

2013/2015 Tax Policy and Enforcement (Areas 22/17): By using more rigorous analyses to allocate enforcement 

resources and using data to improve management of enforcement programs such as large partnership and 

correspondence audits, among other things, IRS can increase revenue collections by billions of dollars.

2014 Online Taxpayer Services (Area 17): IRS could potentially realize hundreds of millions of dollars in cost 

savings and increased revenues by enhancing its online services, which would improve service to taxpayers 

and encourage greater tax law compliance.

2016 IRS’s Public Referral Programs (Area 6): IRS could potentially collect billions of dollars in tax 

underpayments through its nine public referral programs and save resources by better managing fragmentation 

and overlap, improving communication, and streamlining processes. 

2016 Identity Theft Refund Fraud (Area 22): IRS and Congress could potentially save billions of dollars in 

fraudulent refunds by improving the agency’s efforts to prevent refund fraud associated with identity theft. 

Source: GAO analysis. | GAO-16-375SP

Note: The estimates in this report are from a range of sources, including GAO, executive branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates 

have been updated to reflect more recent analysis.

In addition to the health care, defense, and tax areas, we have suggested 

a number of other actions that, if addressed, would result in significant 

cost savings or revenue enhancement across the government.33 Table 6 

summarizes examples where additional leadership attention could 

promote progress.

 32This includes new actions identified in this report. Actions directed to multiple agencies 

are not assessed as addressed until all agencies have made necessary progress.

33In some cases, these actions may be included in areas that have other actions with no 

associated cost savings or revenue enhancements.

Additional Areas with 

Significant Open Actions 
Page 31 GAO-16-375SP 2016 Annual Report

Table 6: Examples of Areas in 2011-2016 Annual Reports with Actions Remaining to Be Addressed

Annual report Area identified (Click area name for more information)

Energy and Agriculture

2011 Oil and Gas Resources (Area 45): Improved management of federal oil and gas resources 

could result in $1.7 billion of additional revenue over 10 years, according to the Department of 

the Interior.

2012 Excess Uranium Inventories (Area 40): Marketing the Department of Energy’s excess uranium 

could provide substantial revenue for the government. In 2014, GAO estimated that actions in 

this area could increase revenue by about $1 billion.

2013 Crop Insurance (Area 19): To achieve up to $2 billion annually in cost savings in the crop 

insurance program, Congress could consider limiting the subsidy for premiums that are provided 

on behalf of individual farmers, reducing the subsidy, or some combination of limiting and 

reducing these subsidies.

2015 U.S. Enrichment Corporation (USEC) Fund (Area 16): Congress may wish to permanently 

rescind the entire $1.6 billion balance of the USEC fund—a revolving fund in the U.S. 

Treasury—because its purposes have been fulfilled.

General Government

2016 National Park Service Fees (Area 23): The National Park Service could potentially increase 

revenues from the recreation fees it collects by millions of dollars annually if Congress were to 

amend the authorizing legislation for this program and if the agency required park units to 

periodically review these fees.

2016 Financing of Improvements to Federally Leased Space (Area 21): In order to achieve 

millions in potential cost savings, the General Services Administration should explore the 

benefits and risks of loaning unobligated Federal Buildings Fund balances to tenant agencies to 

cover the costs of improving newly leased space, which would otherwise be financed by private 

lessors at private-sector interest rates.

2016 Unobligated Balances (Area 24): To help ensure effective use of federal funds, the 

Departments of Energy and State should develop and finalize strategies for reducing tens and 

hundreds of millions of dollars of excess unobligated balances, respectively, in two budget 

accounts.

Homeland Security/Law Enforcement

2012 Immigration Inspection Fee (Area 49): The air passenger immigration inspection user fee 

should be reviewed and adjusted to fully recover the cost of the air passenger immigration 

inspection activities conducted by the Department of Homeland Security’s U.S. Immigration and 

Customs Enforcement and U.S. Customs and Border Protection rather than using general fund 

appropriations. GAO estimated this action could increase revenue by almost $175 million.

2013 Checked Baggage Screening (Area 28): By reviewing the appropriateness of the federal cost 

share the Transportation Security Administration applies to agreements financing airport facility 

modification projects related to the installation of checked baggage screening systems, the 

Transportation Security Administration could, if a reduced cost share was deemed appropriate, 

achieve cost efficiencies and be positioned to install a greater number of optimal baggage 

screening systems than it currently anticipates. More efficient baggage screening systems could 

result in roughly $234 million in cost savings from 2015 through 2027, according to the 

Transportation Security Agency.
Page 32 GAO-16-375SP 2016 Annual Report

Annual report Area identified (Click area name for more information)

Income Security

2011 Social Security Offsets (Area 80): Social Security needs data on pensions from noncovered 

earnings to better enforce offsets and ensure benefit fairness. This action could result in 

estimated savings of $2.4 billion to $7.9 billion over 10 years if enforced both retrospectively 

and prospectively, according to the Congressional Budget Office and the Social Security 

Administration. If Social Security only enforced the offsets prospectively, the overall savings 

would be less as it would not reduce benefits already received.

2014 Veterans’ and Survivors’ Benefits (Area 23): The Department of Veterans Affairs’ direct 

spending could be reduced—by an average of about $4 million annually, according to the 

Congressional Budget Office—if new statutory provisions were enacted, namely, a look-back 

review and penalty period for claimants who transfer assets for less than fair market value before 

applying for pension benefits that are available to low-income wartime veterans who are at least 

65 years old or have disabilities unrelated to their military service.

2014 Disability and Unemployment Benefits (Area 8): Congress should consider passing legislation 

to prevent individuals from collecting both full Disability Insurance benefits and Unemployment 

Insurance benefits that cover the same period, which could save $1.9 billion from fiscal years 

2016 through 2025, according to the Congressional Budget Office.

2015 Children’s Disability Reviews (Area 21): To prevent an estimated $3.1 billion in potential 

overpayments over 5 years, the Social Security Administration needs to conduct timely disability 

reviews to better ensure that only eligible children receive cash benefits from the Supplemental 

Security Income program.

2016 VA’s Individual Unemployability Benefit (Area 34): To potentially achieve cost savings, the 

Department of Veterans Affairs should develop a plan to study whether age should be 

considered when deciding if veterans are unemployable due to service-connected disabilities. By 

comparison, other benefit programs, such as Social Security Disability Insurance, consider 

retirement age a cause for ineligibility and convert benefits for those reaching their retirement 

age to a Social Security retirement benefit. If the department were to determine that Total 

Disability Individual Unemployability benefits should be provided only to veterans younger than 

their full Social Security retirement age, it could achieve an estimated $15 billion in savings from 

2015 through 2023, according to the Congressional Budget Office.

2016 Disability Insurance and Federal Workers’ Compensation (Area 31): The Social Security 

Administration should take steps to minimize overpayments from the Social Security Disability 

Insurance program to individuals who also received federal workers’ compensation, which could 

help to achieve potential cost savings associated with millions of dollars of overpayments from 

the Social Security Disability Insurance program.

2016 Disability Insurance Overpayments (Area 32): To help prevent the loss of billions of dollars, 

the Social Security Administration should take steps to prevent overpayments to beneficiaries of 

the Disability Insurance program and improper waivers of beneficiaries’ overpayment debt.

2016 Disability Reviews (Area 33): The Social Security Administration may increase federal savings 

realized as a result of disability reviews by further considering factors that affect individuals’ 

expected lifetime benefits when prioritizing its reviews of Disability Insurance and Supplemental 

Security Income cases.

Information Technology

2011 Federal Data Centers (Area 15): Consolidating federal data centers would provide an 

opportunity to improve government efficiency. Action in this area could potentially achieve cost 

savings and avoidances of $8.2 billion through fiscal year 2019, of which $2.8 billion has 

accrued from actions already taken and $5.4 billion could potentially accrue if further action is 

taken, according to GAO’s analysis of data from 24 agencies involved in the Federal Data 

Center Consolidation Initiative.
Page 33 GAO-16-375SP 2016 Annual Report

Annual report Area identified (Click area name for more information)

2013 Cloud Computing (Area 29): Better planning of cloud-based computing solutions provides an 

opportunity for potential savings of millions of dollars.

2013 Information Technology Operations and Maintenance (Area 30): Strengthening oversight of 

key federal agencies’ major information technology investments in operations and maintenance 

would provide an opportunity for savings on billions in information technology investments.

2014 Information Technology Investment Portfolio Management (Area 24): The Office of 

Management and Budget and multiple agencies could help the federal government realize 

billions of dollars in savings by taking steps to better implement PortfolioStat, a process to help 

agencies manage their information technology investments. 

International Affairs

2016 Cargo Preference for Food Aid (Area 36): A clearer definition of “geographic area” in 

legislation on cargo preference for food aid could allow the U.S. Department of Agriculture to 

achieve financial savings by more fully utilizing the flexibility Congress granted when it lowered 

the statutory cargo preference requirement.

Training, Employment, and Education

2016 Post 9/11 GI Bill Overpayments (Area 37): The Department of Veterans Affairs could achieve 

substantial savings by developing guidance and controls to reduce the volume of annual Post9/11 GI Bill overpayments—which amounted to over $400 million in fiscal year 2014—and to 

improve the collection of overpayment debts, of which $262 million was still outstanding as of 

November 2014.

Source: GAO analysis. | GAO-16-375SP

Note: The estimates in this report are from a range of sources, including GAO, executive branch 

agencies, the Congressional Budget Office, and the Joint Committee on Taxation. Some estimates 

have been updated to reflect more recent analysis.

This report was prepared under the coordination of Orice Williams Brown, 

Managing Director, Financial Markets and Community Investment, who 

may be reached at (202) 512-8678 or williamso@gao.gov; and A. Nicole 

Clowers, Managing Director, Health Care, who may be reached at (202) 

512-8678 or clowersa@gao.gov. Specific questions about individual 

issues may be directed to the area contact listed at the end of each 

summary. 

Gene L. Dodaro

Comptroller General of the United States
Page 34 GAO-16-375SP Abbreviations

Abbreviations 

APTC advance payments of the premium tax credit

BIA Bureau of Indian Affairs

BRAC Base Realignment and Closure

CAD conventional ammunition awaiting demilitarization and disposal

CBO Congressional Budget Office

CBPS Consular and Border Security Programs

CDR continuing disability review

CMRA Commercial Mail Receiving Agency

CMS Centers for Medicare & Medicaid Services

COLA cost of living adjustments

CPFA cargo preference for food aid

CROM Construction, Rehabilitation, Operation and Maintenance

D&CP Diplomatic and Consular Programs

DS Diplomatic Security

DCPAS Defense Civilian Personnel Advisory Service

DHS Department of Homeland Security

DI Disability Insurance

DISA Defense Information Systems Agency

DIV Development Innovation Ventures

DLA Defense Logistics Agency

DMEPOS durable medical equipment, prosthetics, orthotics, and supplies

DOD Department of Defense

DOE Department of Energy

DOEHRS Defense Occupational and Environmental Health Readiness System

DOJ Department of Justice

DOL Department of Labor

DOT Department of Transportation

DSSR Department of State Standardized Regulations

EDA Economic Development Administration

EESA Emergency Economic Stabilization Act of 2008

EITC Earned Income Tax Credit

EPA Environmental Protection Agency 

FAR Federal Acquisition Regulation

FAS Foreign Agricultural Service

FBF Federal Buildings Fund

FBI Federal Bureau of Investigation

FCC Federal Communications Commission

FDA Food and Drug Administration

FECA Federal Employees’ Compensation Act

FEMA Federal Emergency Management Agency

FFE federally facilitated exchanges

FLREA Federal Lands Recreation Enhancement Act

FMAP Federal Medical Assistance Percentage

FPDS-NG Federal Procurement Data System-Next Generation

FPMR Federal Property Management Regulations

FPS Federal Protective Service

FSMB Federation of State Medical Boards

FSOC Financial Stability Oversight Council
Page 35 GAO-16-375SP Abbreviations

FSS Fixed Satellite Service

FSS Federal Supply Schedules

GDP gross domestic product

GPRA Government Performance and Results Act

GSA General Services Administration

HAMP Home Affordable Modification Program

HCERA Health Care and Education Reconciliation Act of 2010

HHS Department of Health and Human Services

HRIT Human Resources Information Technology

HUD Department of Housing and Urban Development

IDT identity theft

IRS Internal Revenue Service

IT information technology

ITM Innovative Technologies in Manufacturing

LCM License Continuous Monitoring

LQA living quarters allowance

MAC Medicare Administrative Contractors

MARAD Maritime Administration

MESL Military Exposure Surveillance Library

MHA Making Home Affordable

MOA memorandum of agreement

MOU memorandum of understanding

MSIS Medicaid Statistical Information System

NASA National Aeronautics and Space Administration

NIH National Institutes of Health

NIST National Institute of Standards and Technology

NPS National Park Service

OBO Overseas Buildings Operations

OCC Office of the Comptroller of Currency

OCHCO Office of the Chief Human Capital Officer

OCIO Office of the Chief Information Officer

OEHS occupational and environmental health surveillance

OEP Occupant Emergency Plan

OFPP Office of Federal Procurement Policy

OIG Office of Inspector General

OMB Office of Management and Budget

OTSA Oklahoma Tribal Statistical Areas

PALMS Performance and Learning Management System

PECOS Provider Enrollment, Chain and Ownership System

PERM Payment Error Rate Measurement

PIN personal identification number

POMS Program Operations Manual System

PPACA Patient Protection and Affordable Care Act

ROAR Recovery of Overpayments, Accounting and Reporting

SATCOM satellite communications

SBA Small Business Administration

SCA Bureau of South and Central Asian Affairs

SMCA Single Manager for Conventional Ammunition

SRAP Special Representative for Afghanistan and Pakistan

SSA Social Security Administration

SSDI Social Security Disability Insurance

SSI Supplemental Security Income
Page 36 GAO-16-375SP Abbreviations

TARP Troubled Asset Relief Program

TDIU Total Disability Individual Unemployability

TROR Treasury Report on Receivables

TSA Transportation Security Administration

UPL Upper Payment Limit

UPS United Parcel Service

USAID U.S. Agency for International Development

USDA Department of Agriculture

USPS United States Postal Service

VA Department of Veterans Affairs

VHA Veterans Health Administration

WAPA Western Area Power Administration
Page 37 GAO-16-375SP Report at a Glance

Section I: Report at a Glance

The Report at a Glance provides an overall summary of the 37 new areas 

in which we identified opportunities to improve efficiency and 

effectiveness or achieve financial benefits.
Page 38 GAO-16-375SP Report at a Glance

Report at a Glance

Table 1 summarizes the 12 areas in which we found evidence of 

fragmentation, overlap, or duplication among federal government 

programs, which we present in detail in Section II.

Table 1: Fragmentation, Overlap, and Duplication Areas Identified in This Report

Mission Areas Identified Page

Defense 1. DOD Commercial Satellite Communication Procurements: Enforcing existing acquisition policy 

and identifying opportunities to centralize the Department of Defense’s procurement of commercial 

satellite communications services could create opportunities to potentially save tens of millions of 

dollars annually. 

2. DOD’s Storage of Occupational and Environmental Health Surveillance Data: Inconsistencies 

among the policies of the Department of Defense and the military services have contributed to 

fragmented and duplicative efforts to store occupational and environmental health surveillance data 

needed to track and assess service-related health conditions of returning servicemembers and 

veterans.

3. Weapon System Portfolio Management: By using portfolio management more effectively, the 

Department of Defense could help ensure that the more than $100 billion it spends annually on 

weapon system acquisitions contributes to its strategic goals and could reduce the potential for 

overlapping and unnecessarily duplicative investments.

43

47

53

Economic 

development

4. Manufacturing Loan Guarantees: The Economic Development Administration could better ensure 

that the activities carried out under the Innovative Technologies in Manufacturing program do not 

duplicate the efforts of other federal loan guarantee programs by working with other agencies to 

identify and target capital access gaps not filled by other programs.

58

General 

government

5. Financial Regulatory Structure: To reduce or better manage fragmentation and overlap, Congress 

should consider changes to the financial regulatory structure, and the Board of Governors of the 

Federal Reserve System and the Office of Financial Research should take steps to improve 

collaboration in monitoring systemic risk.

6. IRS’s Public Referral Programs: The Internal Revenue Service could potentially collect billions of 

dollars in tax underpayments through its nine public referral programs and save resources by better 

managing fragmentation and overlap, improving communication, and streamlining processes. 

63

72

Health 7. Medicaid and Exchange Coordination: The Centers for Medicare & Medicaid Services should take 

actions to minimize the risk of duplicative federal spending on health insurance coverage for 

individuals transitioning between Medicaid and exchange coverage. 

79

Homeland 

security/law

enforcement

8. Department of Homeland Security’s Human Resources Systems: To address issues related to 

fragmented systems and duplicative processes, the Department of Homeland Security should take 

steps to (1) ensure that its Human Resources Information Technology investment receives necessary 

oversight and attention from its steering committee and (2) evaluate and update the investment’s 

strategic planning document.

9. Security of Federal Facilities: The Federal Protective Service and General Services Administration 

need to improve collaboration in key areas to better manage fragmentation and enhance the 

agencies’ ability to protect federal facilities. 

85

92

Information

technology

10. Tribal Internet Access: Greater coordination among the Federal Communications Commission’s 

Universal Service Fund subsidy programs and the U.S. Department of Agriculture’s Rural Utilities 

Service grant programs could result in more efficient and effective support of Internet access for tribal 

communities.

96

International

affairs

11. U.S. Embassy Kabul Construction: A strategic facilities plan for construction projects in Kabul, 

Afghanistan, could enhance the planning and coordination among Department of State bureaus and 

reduce the likelihood of fragmented construction efforts and duplicative facilities. 

12. U.S.-Funded Development Innovation Programs: The U.S. Agency for International Development 

should establish a joint approach to collaboration among its Development Innovation Ventures 

program and other similar U.S.-funded programs in India to better manage overlap.

101

107
Page 39 GAO-16-375SP Report at a Glance

Table 2 summarizes 25 additional opportunities for Congress or executive 

branch agencies to consider taking action that could either reduce the 

cost of government operations or enhance revenue collections for the 

Treasury, which we present in detail in Section III.

Table 2: Cost Savings and Revenue Enhancement Opportunities Identified in This Report

Mission Areas Identified Page

Defense 13. Defense Excess Property Disposal: Federal civilian agencies could potentially achieve millions 

of dollars in cost savings if they were able to obtain more of the Department of Defense’s 

available excess personal property through the disposal process rather than purchasing similar 

property through a private sector supplier.

14. DOD’s Eligibility Determinations for Living Quarters Allowance: The Department of Defense 

(DOD) could potentially achieve cost savings by monitoring its components’ reviews of eligibility 

determinations for the over $500 million spent annually on living quarters allowance for civilian 

employees to better ensure that DOD components are not improperly providing this allowance.

15. DOD Excess Ammunition: The Department of Defense could potentially reduce its storage, 

demilitarization, and disposal costs by hundreds of thousands of dollars by transferring excess 

serviceable conventional ammunition, including small arms ammunition, to federal, state, and 

local government agencies.

16. DOD Leases and Use of Underutilized Space at Military Installations: The Department of 

Defense could potentially achieve millions of dollars in savings by identifying and implementing 

actions to increase use of underutilized facilities at its military installations, such as identifying 

opportunities to relocate some of its organizations currently in leased space to installations, 

communicating the availability of underutilized space to potential tenants, and seeking use by 

other federal agencies.

113

121

126

131

Economic 

development

17. Treasury’s Foreclosure Prevention Efforts: The Department of the Treasury could potentially 

achieve billions in financial benefits by reviewing the potential for unexpended balances for the 

Making Home Affordable Program and deobligating excess funds, which Congress could rescind 

and direct to other priorities.

141

General 

government

18. Bridge Contracts: When bridge contracts—which include extensions to existing contracts and 

short-term noncompetitive contracts to avoid a gap in service—are used frequently or for 

prolonged periods of time, the government is at risk of paying more than it should for goods and 

services.

19. Federal Supply Schedules: Agencies are paying insufficient attention to prices when using the 

Federal Supply Schedules program and may be missing opportunities for cost savings.

20. Federally Leased Vehicles: The General Services Administration and selected agencies could 

potentially reduce costs by improving the processes for justifying the use of vehicles in the federal 

fleet and taking actions for any vehicles that may be underutilized.

21. Financing of Improvements of Federally Leased Space: In order to achieve millions in 

potential cost savings, the General Services Administration should explore the benefits and risks 

of loaning unobligated Federal Buildings Fund balances to tenant agencies to cover the costs of 

improving newly leased space, which would otherwise be financed by private lessors at privatesector interest rates. 

22. Identity Theft Refund Fraud: The Internal Revenue Service and Congress could potentially save 

billions of dollars in fraudulent refunds by improving the agency’s efforts to prevent refund fraud 

associated with identity theft.

23. National Park Service Fees: The National Park Service could potentially increase revenues from 

the recreation fees it collects by millions of dollars annually if Congress were to amend the 

authorizing legislation for this program and if the agency required park units to periodically review 

these fees. 

24. Unobligated Balances: To help ensure effective use of federal funds, the Departments of 

Energy and State should develop and finalize strategies for reducing tens and hundreds of 

millions of dollars of excess unobligated balances, respectively, in two budget accounts.

146

150

153

157

163

169

174
Page 40 GAO-16-375SP Report at a Glance

Mission Areas Identified Page

Health 25. Distribution of Medicaid Supplemental Payments: The Centers for Medicare & Medicaid 

Services should provide written guidance to state Medicaid programs clarifying its policies that the 

distribution of Medicaid supplemental payments be linked to the provision of Medicaid-covered 

services, and that such payments not be made contingent on the availability of local funding for 

the nonfederal share—actions that could result in substantial cost savings.

26. Eligibility of Medicare Providers and Suppliers: The Centers for Medicare & Medicaid 

Services could use better information to help prevent ineligible providers and suppliers from 

enrolling in the Medicare program and improperly obtaining Medicare funds, potentially reducing 

the billions of dollars in improper payments that the program has paid out in recent years. 

27. Medicaid Demonstration Approved Spending: The Secretary of Health and Human Services 

could potentially curtail spending growth of Medicaid demonstrations, which have resulted in the 

authorization of billions of dollars in federal spending, by establishing specific criteria for 

assessing whether demonstration spending furthers Medicaid objectives and taking other steps to 

improve the transparency and accountability of the approval process. 

28. Medicaid Eligibility Determinations: The Centers for Medicare & Medicaid Services should 

assess the accuracy of federal Medicaid eligibility determinations to minimize the risk of improper 

payments.

29. Medicaid Payments to Institutional Providers: The Centers for Medicare & Medicaid Services 

should take steps to improve the oversight of state Medicaid payments to institutional providers 

and better ensure that the federal government does not provide funds for excessive state 

payments made to certain providers, which could result in savings of hundreds of millions of 

dollars. 

30. Medicare Payments by Place of Service: Medicare could save billions of dollars if Congress 

were to equalize the rates Medicare pays for certain health care services, which often vary 

depending on where the service is performed.

181

188

195

201

206

211

Income security 31. Disability Insurance and Federal Workers’ Compensation: The Social Security Administration 

should take steps to minimize overpayments from the Social Security Disability Insurance 

program to individuals who also received federal workers’ compensation, which could help to 

achieve potential cost savings associated with millions of dollars of overpayments from the Social 

Security Disability Insurance program.

32. Disability Insurance Overpayments: To help prevent the loss of billions of dollars, the Social 

Security Administration should take steps to prevent overpayments to beneficiaries of the 

Disability Insurance program and improper waivers of beneficiaries’ overpayment debt. 

33. Disability Reviews: The Social Security Administration may increase federal savings realized as 

a result of disability reviews by further considering factors that affect individuals’ expected lifetime 

benefits when prioritizing its reviews of Disability Insurance and Supplemental Security Income 

cases.

34. VA’s Individual Unemployability Benefit: To potentially achieve cost savings, the Department 

of Veterans Affairs should develop a plan to study whether age should be considered when 

deciding if veterans are unemployable due to service-connected disabilities. By comparison, other 

benefit programs, such as Social Security Disability Insurance, consider retirement age a cause 

for ineligibility and convert benefits for those reaching their retirement age to a Social Security 

retirement benefit. If the department were to determine that Total Disability Individual 

Unemployability benefits should be provided only to veterans younger than their full Social 

Security retirement age, it could achieve an estimated $15 billion in savings from 2015 through 

2023, according to the Congressional Budget Office.

216

222

229

233

Information

technology

35. Federal Mobile Telecommunications: In order to achieve substantial government-wide savings, 

federal agencies should establish better controls on mobile device spending, and the Office of 

Management and Budget should monitor progress in achieving these savings.

238

International affairs 36. Cargo Preference for Food Aid: A clearer definition of “geographic area” in legislation on cargo 

preference for food aid could allow the U.S. Department of Agriculture to achieve financial savings 

by more fully utilizing the flexibility Congress granted when it lowered the statutory cargo 

preference requirement. 

244

Training, 

employment, and

education

37. Post 9/11 GI Bill Overpayments: The Department of Veterans Affairs could achieve substantial 

savings by developing guidance and controls to reduce the volume of annual Post-9/11 GI Bill 

overpayments—which amounted to over $400 million in fiscal year 2014—and to improve the 

collection of overpayment debts, of which $262 million was still outstanding as of November 2014.

249
Page 41 GAO-16-375SP Report at a Glance

Table 3: Appendixes

Appendix Page

Appendix I: List of Congressional Addressees 255

Appendix II: Objectives, Scope, and Methodology 257

Appendix III: New Actions Added to Existing Areas in 2016 263

Appendix IV: Areas Identified in 2011-2016 Annual Reports, by Mission 264

Appendix V: Lists of Programs Identified 287
Page 42 GAO-16-375SP Fragmentation, Overlap, and Duplication

Section II: Areas in Which GAO Has 

Identified Fragmentation, Overlap, or 

Duplication

This section presents 12 areas in which we found evidence of 

fragmentation, overlap, or duplication among federal government 

programs.
Page 43 GAO-16-375SP Fragmentation, Overlap, and Duplication

Defense

1. DOD Commercial Satellite 

Communication Procurements

Enforcing existing acquisition policy and identifying opportunities to centralize the Department of Defense's 

procurement of commercial satellite communications services could create opportunities to potentially save 

tens of millions of dollars annually.

The Department of Defense (DOD) uses satellite communications 

(SATCOM) to support land, sea, air, and space operations. For example, 

DOD utilizes SATCOM to support a variety of mission critical needs, such 

as surveillance being performed by unmanned aerial vehicles and 

communications between commanders and field units. DOD partially 

meets these communication needs through leasing commercial SATCOM

services. This analysis focuses on the Fixed Satellite Service (FSS) 

portion of commercial SATCOM because it represents the largest 

percentage (over 70 percent) of DOD’s annual expenditures for 

commercial SATCOM for fiscal year 2012—the most recent year for 

which data are available—and also because it favors long-term 

purchases of bulk commercial SATCOM capacity that might benefit from 

a multi-year contracting strategy. DOD has become increasingly reliant 

upon commercial SATCOM, which now represents a significant portion of 

the DOD SATCOM architecture.1 For fiscal year 2012 DOD reported that 

it spent over $1 billion to lease SATCOM services from commercial 

providers. According to a 2013 Defense Business Board report, DOD’s 

SATCOM requirements are expected to grow by nearly 70 percent over 

the next decade.

As GAO reported in July 2015, guidance from the Chairman of the Joint 

Chiefs of Staff requires the Defense Information Systems Agency (DISA) 

to procure all of DOD's commercial SATCOM. However, because DOD 

has not enforced this policy, the combatant commands and military 

services (known as DOD components) independently procure commercial 

SATCOM to meet their individual needs. As a result, DOD misses 

opportunities to achieve cost savings by consolidating its commercial 

SATCOM purchases. 

 1

DOD’s military SATCOM architecture consists of three segments: a protected segment 

that provides secure, jam-resistant communications; a wideband segment, which supports 

Army mobile ground terminals and Navy ships and submarines, among other things; and 

a narrowband segment, which provides complementary capability to the other segments, 

such as beyond line-of-sight secure tactical communications capabilities. In comparison, 

the commercial SATCOM architecture consists of two segments—fixed and mobile 

satellite services—which provide functions similar to the military wideband and 

narrowband segments, respectively. There is no commercial counterpart to the military 

protected segment.

Why This Area Is 

Important

What GAO Found
Page 44 GAO-16-375SP Fragmentation, Overlap, and Duplication

Once commercial SATCOM is procured, U.S. Strategic Command, the 

DOD agency responsible for providing satellite capability for military 

operations, assumes operational responsibility. Although the Joint Chiefs' 

policy sets the foundation for a centralized commercial SATCOM 

acquisition and management approach, according to DISA and Strategic 

Command officials, neither DISA nor Strategic Command has 

enforcement power to ensure that all components adhere to the policy. To 

begin addressing this policy goal, the Joint Requirements Oversight 

Council recently approved the commercial SATCOM Centralized 

Management Concept of Operations, which intends to implement a threephased approach to centralize management of military and commercial 

wideband SATCOM.

Some combatant commands and military services believe they can 

acquire commercial SATCOM faster, better, and cheaper than DISA. 

Moreover, having an ability to quickly procure commercial SATCOM on 

their own has helped the military services meet pressing needs in recent 

military conflicts. While we recognize DOD is often confronted with 

addressing immediate needs to help ensure mission effectiveness, 

particularly in times of conflict, this fragmented approach to acquiring 

commercial SATCOM places DOD at risk of not leveraging its own buying 

power through efficiencies, such as combining acquisitions. Utilizing a 

central point of contact could better position DOD to not only meet 

mission needs but to do so both effectively and efficiently. In the most 

recent commercial SATCOM usage report, DOD reported that—contrary 

to the Joint Chiefs' requirement—approximately 34 percent (about $290 

million) of its fixed satellite commercial SATCOM services was procured 

outside of DISA in 2012. The usage report also indicated that these 

services acquired though DISA result in an approximate 15 percent cost 

savings versus those not acquired through DISA. Comparatively, in 2011, 

about 32 percent of commercial SATCOM was procured outside of DISA, 

illustrating that the condition had worsened in 2012. 

Over the past decade, several entities, including GAO, have 

recommended that DOD move toward a more strategic approach for 

commercial SATCOM procurement. For example, the Defense Business 

Board found in 2013 that DOD’s strategy and management structure for 

procuring commercial SATCOM was not optimized and recommended 

that DOD designate a single lead organization for overall satellite 

communication strategy.2 Specifically, the report recommended that DOD 

designate and resource a single organization, possibly DISA, to acquire 

and manage all SATCOM assets—including fixed and mobile services as 

well as DOD’s procurement of commercial satellites—under a managed 

service-type approach in the same manner that the Defense Logistics 

Agency is a one-stop shop for the military services' common logistical 

 2

Defense Business Board. Report to the Secretary of Defense: Taking Advantage of 

Opportunities for Commercial Satellite Communications Services, Report FY13-02.
Page 45 GAO-16-375SP Fragmentation, Overlap, and Duplication

commodities. Under this construct, all commercial SATCOM acquisition 

and management would be handled in a managed service type approach, 

with the designated organization maintaining an inventory of available 

resources, ensuring their disciplined use, and procuring SATCOM 

resources in manner to obtain the best value. Additionally, in 2013, 

executives from five leading commercial satellite operators co-authored a 

paper stating that a single focal point would be better positioned to 

determine how to best meet the overall demand for SATCOM.3 While 

DOD is investigating ways to how best meet overall demand, it will be 

several years before these efforts are expected to be completed.

Although DOD has several initiatives under way aimed at improving the 

procurement of commercial SATCOM, to date, DOD has not performed 

its own assessment to identify procurement inefficiencies and 

opportunities to consolidate purchases. As a result, DOD may be missing 

opportunities to further save money and improve efficiency. However, 

DOD faces considerable challenges in making these improvements, 

including a lack of data needed to support spend analyses. While DOD 

has recently initiated a number of small scale approaches to address 

fiscal, operational, and policy challenges that could potentially improve 

commercial SATCOM acquisition and management, DOD still does not 

know what it spends annually on commercial SATCOM. Without this 

knowledge, DOD cannot effectively manage and plan for its SATCOM 

procurement.

To reform DOD's commercial SATCOM procurement processes and 

better leverage DOD's buying power, GAO recommended in July 2015 

that the Secretary of Defense—in coordination with stakeholders 

including the Joint Chiefs of Staff, U.S. Strategic Command, combatant 

commands, the military services, and DISA—should take the following 

actions:

• Enforce current policy requiring DISA to acquire all commercial 

SATCOM for DOD.

• Conduct a spend analysis that identifies procurement inefficiencies 

and opportunities to consolidate purchases. Specifically, the analysis 

should identify how much is being spent for which services, who the 

buyers are, who the suppliers are, duplicative contracts and 

opportunities to aggregate demand, and where the opportunities are 

for leveraged buying and other tactics to save money and improve 

performance. 

Implementation of these recommendations could help the government 

more efficiently and effectively procure commercial SATCOM, potentially 

saving tens of millions of dollars annually. GAO estimated that if, in 2012, 

DOD had procured all of its fixed satellite commercial SATCOM services 

 3

Seven Ways to Make the DOD a Better Buyer of Commercial SATCOM (Jan. 14, 2013). 

Actions Needed and 

Potential Financial or 

Other Benefits
Page 46 GAO-16-375SP Fragmentation, Overlap, and Duplication

through DISA, as required by guidance from the Chairman of the Joint 

Chiefs of Staff, the department may have realized a savings of almost 

$44 million.

In commenting on the July 2015 report on which this analysis is based, 

DOD concurred with GAO's recommendations to improve the 

department’s procurement of SATCOM, stating that (1) enforcing current 

policy requiring DISA to procure all commercial SATCOM for DOD makes 

the best use of taxpayer dollars and supports acquisitions that are fully 

compliant with applicable laws and regulations; and (2) a spend analysis 

could help the department understand its military and commercial 

SATCOM spending and leverage its buying power.

GAO also provided a draft of this report section to DOD for review and 

comment. DOD provided technical comments and in response GAO

made changes to this report section where appropriate.

The information contained in this analysis is based on findings from the 

product in the related GAO product section. To assess the extent to which 

DOD efficiently procures bandwidth, GAO reviewed DOD guidance and 

recent DOD studies and reports to identify criteria for procuring 

commercial satellite services as well as for evidence DOD has identified 

its future SATCOM requirements. GAO met with agency officials from 

DISA, the U.S. Strategic Command, DOD’s Chief Information Officer, 

Joint Staff, Combatant Commands, and the military services to obtain 

their perspectives on how DOD procures bandwidth. Additionally, GAO 

reviewed recent DOD studies and reports, such as its August 2014 

Satellite Communications Strategy Report and its Fiscal Year 2012 

Commercial Satellite Communications Usage Report, as well as DISA’s 

April 2013 Commercial Satellite Communications Analysis of Alternatives 

Final Report, in which past and current acquisition strategies are 

described. GAO then compared these acquisition strategies to the 

prescribed Chairman of the Joint Chiefs of Staff Instruction procurement 

policy. 

Table 1 in appendix V lists the programs GAO identified that might have 

opportunities for cost savings or revenue enhancement. 

Defense Satellite Communications: DOD Needs Additional Information to 

Improve Procurements. GAO-15-459. Washington, D.C.: July 17, 2015.

For additional information about this area, contact Cristina Chaplain at 

(202) 512-4841 or chaplainc@gao.gov.

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work

Related GAO Product

Contact Information
Page 47 GAO-16-375SP Fragmentation, Overlap, and Duplication

2. DOD’s Storage of Occupational and 

Environmental Health Surveillance Data

Inconsistencies among the policies of the Department of Defense and the military services have contributed to 

fragmented and duplicative efforts to store occupational and environmental health surveillance data needed to 

track and assess service-related health conditions of returning servicemembers and veterans.

Since the end of the 1991 Persian Gulf War, servicemembers’ and 

veterans’ reports of unexplained illnesses that they attributed to servicerelated occupational and environmental exposures have led to increasing 

interest in health effects related to military deployments. In 1997, the 

Department of Defense (DOD) developed a military-wide health 

surveillance framework that includes occupational and environmental 

health surveillance (OEHS)—the regular collection and reporting of 

occupational and environmental health hazard data by the military 

services during deployments that can be used to help prevent, treat, or 

control disease or injury. Despite these efforts, attempts to research and 

investigate whether post-deployment health conditions are the result of 

military service continue to be problematic. This is of particular concern 

for those servicemembers and veterans returning from more recent 

conflicts, who have health concerns they believe are related to their 

deployment, such as conditions related to smoke inhalation from open-air 

burn pits—used for waste disposal—on military bases in Iraq and 

Afghanistan.

Establishing a service connection for health conditions is important 

because federal law generally entitles veterans with service-connected 

disabilities (i.e., injuries or diseases incurred or aggravated while on 

active military duty) to Department of Veterans Affairs disability 

compensation benefits.

1 However, establishing a relationship between 

occupational and environmental exposures and health issues can be 

difficult. In light of such difficulties, Congress has, on several occasions, 

legislated “presumptive service connections,” which allow veterans to 

receive compensation for certain conditions without having to prove 

cause.2

In July 2005, GAO reported that improvements were needed with OEHS 

during deployments to address immediate and long-term health issues. 

 1

38 U.S.C. §§ 1110 and 1131. Service-connected disability status does not include 

disabilities caused by a veteran’s own “willful misconduct or abuse of alcohol or drugs.”

2

A presumptive service connection relieves veterans of the burden to prove that a 

disability or illness was caused by a specific exposure that occurred during service in the 

Armed Forces, and instead shifts the burden of proof concerning whether a disease or 

disability was caused or aggravated due to service from the veteran to the Department of 

Veterans Affairs.

Why This Area Is 

Important
Page 48 GAO-16-375SP Fragmentation, Overlap, and Duplication

Specifically, GAO recommended that DOD improve deployment OEHS 

data collection and reporting, including the development of cross-service 

guidance to facilitate more consistent implementation of OEHS policy, 

which DOD developed in 2007. From the July 2005 report through 

December 31, 2014, there have been about 2.1 million servicemember 

deployments to Iraq and Afghanistan, involving about 1.4 million 

individual servicemembers.3

In May 2015, GAO found that inconsistencies among the policies of DOD 

and the military services regarding OEHS data storage had led to 

fragmentation and duplication of OEHS data between the department’s 

two information technology systems—the Military Exposure Surveillance 

Library (MESL) and the Defense Occupational and Environmental Health 

Readiness System (DOEHRS): 

• MESL, originally implemented in 2003, contains both classified and 

unclassified documents that have been scanned and uploaded into 

the system.4

• DOEHRS—which DOD began implementing in 2006—only contains 

unclassified data, but incorporates additional functionalities, including 

OEHS data collection, management, and assessment, into a single 

system. 

DOD officials told GAO that DOD is transitioning from the use of MESL to 

DOEHRS, which has greater functionality, and that this transition would 

eventually include the transfer of all unclassified documents currently in 

MESL to DOEHRS (once DOEHRS had been sufficiently upgraded) while 

classified data would remain in MESL. However, departmental policy last

updated in 2011 states that all classified and unclassified OEHS data 

should be stored in MESL even though DOEHRS was implemented more 

recently.

5 DOD officials told GAO that the policy DOD currently has in 

place does not reflect the potential transition from MESL to DOEHRS 

because developing the functionality of DOEHRS in archiving data from 

deployments was still under way when the policy was last updated in 

2011—about 5 years after DOEHRS was implemented. These officials 

also told GAO that the policy was being revised to require the storage of 

unclassified OEHS data in DOEHRS, and they expected the updated 

policy to be released in 2016.

 3

Of these approximately 1.4 million individual servicemembers, about 470,000 were 

deployed more than once—potentially multiple times—to Iraq and Afghanistan during this 

period.

4

MESL was originally established by DOD as the OEHS Document Archival Portal and 

went through several name changes before being renamed the MESL in October 2011.

5

See DOD Instruction 6490.03, Deployment Health (Aug. 11, 2006; certified current as of 

Sept. 30, 2011).

What GAO Found
Page 49 GAO-16-375SP Fragmentation, Overlap, and Duplication

Further, when GAO reviewed all of DOD’s relevant OEHS policies as well 

as corresponding policies developed by each of the military services—all 

dated after 2006—GAO identified additional inconsistencies about which 

system should be used to store OEHS data.6 Specifically, only 3 of the 14 

policies GAO reviewed instructed officials to store OEHS data in 

DOEHRS, while 4 others instruct officials to store OEHS data in MESL. In 

addition, 6 of the policies instruct the use of both systems as appropriate, 

depending on the type of document being submitted and the availability of 

DOEHRS during a deployment. One of the policies does not specifically 

mention DOEHRS or MESL, although it notes that databases are 

necessary for OEHS data storage. The table below shows the list of 14 

policies related to OEHS data storage that GAO reviewed.

Policies That Direct the Storage of Occupational and Environmental Health Surveillance Data to the Defense Occupational 

and Environmental Health Readiness System (DOEHRS) or the Military Exposure Surveillance Library (MESL)

Policy DOEHRS MESL Neither

Department of Defense Instruction 6490.03 (2011) X

Department of Defense Instruction 6055.05 (2008) X Xa

Joint Chiefs of Staff Memorandum MCM 0017-12 (2012) X

Central Command Regulation 40-2 (2014) X

Army Regulation 11-35 (2007) Xb

U.S. Army Public Health Command Technical Guidance 230 (2013) X

Air Force Instruction 48-145 (2014) X

U.S. Air Force Central Command Public Health Guide (2014) X X

U.S. Air Force Central Command Special Instruction 13-04 (2014) X X

U.S. Air Force Central Command Bioenvironmental Engineering Deployment Guide (2014) X X

Air Force Manual 48-146 (2012) X

Secretary of the Navy Instruction 6200.1 (2014) X

Occupational and Environmental Health Site Assessment Guide (2012)c X X

Technical Bulletin: Sanitary Control and Surveillance of Field Water Supplies (2010)d X X

Source: GAO analysis of DOD information. │ GAO-16-375SP

a

Although DOD Instruction 6055.05 does not directly reference MESL in the policy, it does reference 

the “DOEHRS data portal,” a prior name for MESL.

b

Army Regulation 11-35 (May 2007) highlights the importance of collecting and storing OEHS data, 

but does not specifically mention DOERHS or MESL. According to DOD officials, the regulation is 

currently under revision.

c

The Army, the Air Force, and the Navy jointly developed this guide on occupational and 

environmental health site assessments for all officials to follow, and each of the military services has 

its own reference for it (NTRP 4-02.9, AFTTP 3-2.82_IP, and ATP 4-02.82). 

d

The Army, the Air Force, and the Navy jointly developed this technical bulletin regarding the 

sanitation and safety of water during deployments for all officials to follow, and each of the military 

services has its own reference for it (TB MED 577, AFMAN 48-138_IP, and NAVMED P-5010-10).

 6

All but one of these policies referenced DOD Instruction 6490.03, which reflects the 

departmental policy on OEHS storage. The only policy that did not directly reference DOD 

Instruction 6490.03 referenced another policy, which refers to DOD Instruction 6490.03.
Page 50 GAO-16-375SP Fragmentation, Overlap, and Duplication

Inconsistent policies are contrary to federal standards for internal control, 

which state that management should have policies in place that are both 

appropriate and clear.7 Without consistent policies on which system 

should be used to store unclassified OEHS data, officials’ efforts to store 

these data are inefficient and have resulted in both fragmentation and 

duplication. Specifically, in some cases, similar types of unclassified 

OEHS data have been submitted to both MESL and DOEHRS, and in 

other cases, identical unclassified OEHS data have been submitted to 

both systems. A DOD official who has technical expertise in both systems 

confirmed that there is duplication of stored OEHS data, but told GAO 

that there was no reasonable way to determine the extent because only 

DOEHRS has specific data level querying abilities. As neither system 

serves as a central repository for OEHS data, it is difficult to identify 

complete and comprehensive data sets for specific types of OEHS data, 

which may impede future efforts to identify and fully assess servicerelated health conditions, or in conducting other important research. 

GAO recommended in its May 2015 report that to eliminate the 

fragmentation and duplication in the storage of unclassified OEHS data, 

the Secretary of Defense should

• determine which information technology system—MESL or 

DOEHRS—should be used to store specific types of unclassified 

OEHS data and clarify the department’s policy accordingly; and

• require all other departmental and military-service-specific policies to 

be likewise amended and implemented to ensure consistency.

Because GAO found that DOD cannot readily determine the extent to 

which identical unclassified OEHS data are stored repetitively in both 

MESL and DOEHRS, the potential costs associated with the fragmented 

and duplicative data storage efforts, such as any additional administrative 

costs expended in uploading data into both systems, could not be 

determined. However, taking these actions should help ensure that the 

storage of OEHS data does not compromise the future ability of officials 

to use the data in determining service connections for specific health 

conditions, or in conducting other important research.

In commenting on the May 2015 report on which this analysis is based, 

DOD concurred with GAO’s recommendations. DOD noted that it plans to 

clarify DOD Instruction 6490.03 in a subsequent version and issue 

appropriate guidance on the use of MESL and DOEHRS. Additionally, 

DOD noted that once a new instruction is published, the entire 

department, including the military services, is to revise related policies 

 7

See GAO/AIMD-00-21.3.1.

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation
Page 51 GAO-16-375SP Fragmentation, Overlap, and Duplication

accordingly. However, while this may be the case, GAO found that not all 

of the departmental and military services’ policies were revised to reflect 

the main DOD instruction regarding which system to use for storing 

OEHS data. As a result, GAO maintains that it is important for the 

department to ensure that the appropriate revisions are made to all 

related policies.

GAO provided a draft of this report section to DOD for review and 

comment. In an email received in March 2016, the Executive Officer to 

the Deputy Assistant Secretary of Defense for Health Readiness Policy 

and Oversight stated that a draft version of the revised DOD Instruction 

6490.03 is under review within the department. In addition, the Executive 

Officer stated that once DOD Instruction 6490.03 is published, military 

service and combatant command policy and guidance documents will be 

revised to ensure consistency.

The information contained in this analysis is based on the findings from 

products listed in the related GAO products section. To conduct this work, 

GAO reviewed and analyzed DOD and military-service-specific policies 

that describe OEHS data storage.8 GAO also obtained information on the 

functionalities and capabilities of DOD’s two information technology 

systems used to store OEHS data: MESL and DOEHRS. GAO reviewed 

the numbers and types of OESH data entries in each system to better 

understand how OEHS data were being stored. In addition, GAO 

interviewed DOD and military service officials about their practices for 

storing OEHS data.

Defense Health Care: DOD Needs to Clarify Policies Related to 

Occupational and Environmental Health Surveillance and Monitor Risk 

Mitigation Activities. GAO-15-487. Washington, D.C.: May 22, 2015.

Defense Infrastructure: DOD Can Improve Its Response to Environmental 

Exposures on Military Installations. GAO-12-412. Washington, D.C.: May 

1, 2012.

Afghanistan and Iraq: DOD Should Improve Its Adherence to Its 

Guidance on Open Pit Burning and Solid Waste Management. 

GAO-11-63. Washington, D.C.: October 15, 2010.

 8

In total, GAO reviewed 64 DOD and military service policies to determine which policies 

described how OEHS data should be stored. GAO also confirmed with officials that these 

policies were still current as of May 2015. GAO found that 14 of those policies described 

the storage of OEHS data. For the purposes of the May 2015 report and this report 

section, “policies” include directives, instructions, technical guides, and memorandums.

How GAO Conducted 

Its Work

Related GAO

Products
Page 52 GAO-16-375SP Fragmentation, Overlap, and Duplication

Defense Health Care: Occupational and Environmental Health 

Surveillance Conducted during Deployments Need Improvement. 

GAO-05-903T. Washington, D.C.: July 19, 2005.

Defense Health Care: Improvements Needed in Occupational and 

Environmental Health Surveillance during Deployments to Address 

Immediate and Long-term Health Issues. GAO-05-632. Washington, D.C.: 

July 14, 2005.

For additional information about this area, contact Debra A. Draper at Contact Information (202) 512-7114 or draperd@gao.gov.
Page 53 GAO-16-375SP Fragmentation, Overlap, and Duplication

3. Weapon System Portfolio Management

By using portfolio management more effectively, the Department of Defense could help ensure that the more 

than $100 billion it spends annually on weapon system acquisitions contributes to its strategic goals and could 

reduce the potential for overlapping and unnecessarily duplicative investments.

The Department of Defense’s (DOD) 2014 portfolio of 78 major weapon 

system programs had total estimated acquisition costs of over $1 trillion, 

yet DOD has not consistently managed these investments as a portfolio 

to ensure they are strategy driven, affordable, and balance near- and 

long-term needs. Rather, DOD and the military services plan to acquire 

more weapons than they can afford given anticipated levels of funding. 

Furthermore, as GAO has reported since at least 2011, when multiple 

services have weapon system needs in common, they sometimes 

develop separate, rather than common, solutions that result in inefficient 

and, in some cases, potentially duplicative investments.

Weapon system investment decision making in DOD is highly complex. It 

involves numerous entities, levels, and policies at the military service and 

enterprise level. The military services make initial decisions regarding 

what to buy, how to buy it, and how much it will cost. These decisions are 

made by the military service organizations responsible for determining 

weapon system requirements, managing the acquisition of those 

systems, and developing defense budgets and go through multilayered 

review processes within the services. For major investments, the military 

services’ decisions may be reviewed and approved or disapproved at the 

enterprise level.

Leading commercial companies use portfolio management—a disciplined 

process that helps optimize investments by ensuring organizations have 

the right mix of new products that meet customer needs within available 

resources—to make a wide variety of decisions, including capability and 

funding trade-offs, to achieve the optimal capability mix for a given 

investment. Rather than optimizing individual programs, portfolio 

management focuses on products collectively at an enterprise level and 

involves evaluating, selecting, prioritizing, and allocating limited resources 

to projects that best accomplish strategic or organizational goals.

In August 2015, GAO found that DOD is not effectively using portfolio 

management to optimize its weapon system investments and improve 

agency-wide governance of weapon system investment decisions. Best 

practices recommend assessing investments collectively from an 

enterprise-wide perspective and integrating requirements, acquisition, 

and budget information, but DOD’s fragmented governance structure for 

making weapon system investment decisions makes implementing these 

practices difficult. As GAO reported in August 2015, DOD has numerous 

fragmented processes, organizations, and decision makers to oversee its 

weapon system investments, which generally do not operate as an 

Why This Area Is 

Important

What GAO Found
Page 54 GAO-16-375SP Fragmentation, Overlap, and Duplication

integrated whole. As a result of this fragmentation, most weapon system 

investment decisions are made on a piecemeal basis within DOD’s 

requirements, acquisition, and budget processes.

Best practices also call for providing sustained leadership for portfolio 

management, which as GAO reported in August 2015, DOD has lacked. 

DOD leadership made a concerted effort to implement portfolio 

management by initiating portfolio management pilots in 2006 to improve 

strategic decisions on resource allocation across programs and by issuing 

DOD Directive 7045.20 on capability portfolio management in 2008. 

However, soon afterward, leadership priorities shifted away from portfolio 

management. DOD eliminated the pilots, did not document the results of 

the pilots, and stopped implementing that directive, although it has not 

been rescinded. This was attributed to a variety of factors, including the 

lack of a senior-level champion for the effort as political leadership 

changed, which can happen every few years in DOD. Officials from the 

acquisition and requirements communities told GAO in 2015 that DOD no 

longer has a champion for portfolio management.

In addition to lacking sustained leadership, GAO reported in August 2015 

that DOD does not have a policy to guide portfolio management across 

the department that fully reflects key best practices, nor has department 

leadership assigned an appropriate office to ensure its implementation. 

For example, best practices state that leadership should be empowered 

to make investment decisions. However, under DOD Directive 7045.20, 

the department's current policy, portfolio managers do not have sufficient 

authority to effectively influence weapon system investment decisions. 

Leadership responsibilities in DOD Directive 7045.20 are also 

fragmented, and there is no one office responsible for ensuring the 

policy’s implementation. The office with primary responsibility for the 

directive, the Office of the Under Secretary of Defense for Policy, does 

not have direct management authority over the organizations responsible 

for implementing it. 

Portfolio management best practices and the Project Management 

Institute’s portfolio management standard also state that organizations 

should conduct regular reviews to adjust to strategic changes or changes 

in the mix of products within a portfolio, among other reasons. However, 

DOD does not conduct regular enterprise-level portfolio reviews that 

integrate the requirements, acquisition, and budget communities. Instead, 

the requirements, acquisition, and budget communities each have their 

own limited portfolio review efforts, some of which are still being 

developed. As a result, DOD may be missing opportunities to better 

leverage its resources and identify investment priorities that best reflect 

DOD-wide needs. Regular, DOD-wide portfolio reviews can help increase 

return on taxpayers’ substantial investments in weapon systems by 

helping ensure that those investments align with national security and 

military strategies, prioritizing the most important investments, selecting 

the optimum mix of investments, identifying and eliminating unwarranted 

duplication, and determining whether investments are affordable.
Page 55 GAO-16-375SP Fragmentation, Overlap, and Duplication

In interviews for GAO's August 2015 report, officials from DOD’s 

requirements, acquisition, and budget communities said they lacked the 

resources, readily accessible data, and analytical tools to regularly or 

effectively conduct integrated portfolio reviews. GAO has previously found 

that one way to better manage fragmented activities is to improve 

collaboration and coordination.1 This includes engaging in key practices 

such as defining and articulating common outcomes, agreeing on roles 

and responsibilities, and identifying and addressing needs by leveraging 

resources. Without better coordination and collaboration, DOD will likely 

struggle both from an information and resource perspective to implement 

integrated portfolio reviews. In addition, GAO reported that the Joint Staff 

was developing a database to provide it with a better analytical tool to 

support portfolio management, but the database was difficult to populate 

with requirements, acquisition, and budget information, and there has 

been limited coordination to determine if and how it could be useful to 

others. DOD does not have a formal implementation plan for improving 

the Joint Staff database or investing in other means, such as new 

analytical tools, to meet agency-wide portfolio management data needs. 

Without establishing this planning foundation, the Joint Staff may not be 

in a sound position to effectively monitor and evaluate the implementation 

of its efforts to provide quality information for reviews.

In August 2015, GAO recommended that DOD take the following four 

actions to increase accountability for portfolio management efforts and 

enable more integrated portfolio reviews and analyses of weapon system 

investments at the department-wide level:

• designate the Deputy Secretary of Defense, or some appropriate 

delegate, responsibility for providing sustained leadership for portfolio 

management efforts and implementing DOD Directive 7045.20 on 

Capability Portfolio Management;

• revise DOD Directive 7045.20 on Capability Portfolio Management in 

accordance with the best practices GAO has identified;

• require annual enterprise-level portfolio reviews that incorporate key 

portfolio review elements, including information from the 

requirements, acquisition, and budget processes; and

• direct the requirements, acquisition, and budget communities to 

collaborate on their portfolio management data needs and develop a 

formal implementation plan for meeting those needs either by building 

on the database the Joint Staff is developing or investing in new 

analytical tools.

 1

GAO, Fragmentation, Overlap, and Duplication: An Evaluation and Management Guide, 

GAO-15-49SP (Washington, D.C.: Apr. 14, 2015).

Actions Needed and 

Potential Financial or 

Other Benefits
Page 56 GAO-16-375SP Fragmentation, Overlap, and Duplication

Taking these actions should enable DOD to better manage weapon 

system investments at the portfolio level by ensuring that weapon system 

funding is spent on the programs that contribute most to achieving DOD’s 

short-term and long-term strategic goals and reducing the risk of 

potentially overlapping and duplicative investments across the military 

services. In general, these actions could result in a more efficient use of 

the more than $100 billion dollars the department spends annually on its 

weapon system investments. However, the precise cost savings 

associated with such efficiencies is not possible to quantify because the 

actual cost of inefficient and unnecessary duplicative weapon system 

investments across DOD is unknown.

In commenting on the August 2015 report on which this analysis is based, 

DOD partially concurred with GAO’s recommendation to revise DOD 

Directive 7045.20 on Capability Portfolio Management in accordance with 

best practices and promote the development of better tools to enable 

more integrated portfolio reviews and analyses of weapon system 

investments. However, DOD’s planned actions will not fully address the 

issues we raised in our report. DOD agreed with the need to further 

develop portfolio management tools and ensure access to authoritative 

data, but stated that other aspects of our recommendation were 

redundant to and would conflict with other processes and activities in 

place to perform portfolio management. DOD’s response presumed that 

its existing portfolio management processes and activities have been 

effective and failed to acknowledge that they have not successfully 

addressed affordability issues in some portfolios and potential duplication 

among some programs. We continue to believe that our 

recommendations to revamp DOD’s portfolio management policy to align 

with best practices, establish clear leadership responsibility for its 

implementation, and conduct annual portfolio reviews would provide the 

foundation for improved weapon system investment planning and 

management. 

GAO provided a draft of this report section to DOD for review and 

comment. The department did not provide comments on this report 

section.

The information contained in this analysis is based on findings from the 

products listed in the related GAO product section. To perform this work, 

GAO compared DOD’s weapon system investment policies and decisionmaking processes, which include the requirements, acquisition, and 

budget processes, to portfolio management best practices. GAO 

identified these best practices in prior GAO reports and conducted a 

literature review to ensure they were still current. To determine the extent 

to which DOD conducts integrated portfolio reviews at the enterprise 

level, GAO analyzed enterprise-level portfolio reviews and other portfoliolevel analyses. GAO also interviewed DOD requirements, acquisition, and 

budget officials. 

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 57 GAO-16-375SP Fragmentation, Overlap, and Duplication

Table 2 in appendix V lists the program GAO identified that might have 

similar or overlapping objectives, provide similar services, or be 

fragmented across government missions. Overlap and fragmentation 

might not necessarily lead to actual duplication, and some degree of 

overlap and duplication may be justified.

Weapon System Acquisitions: Opportunities Exist to Improve the 

Department of Defense’s Portfolio Management. GAO-15-466. 

Washington, D.C.: August 27, 2015.

Best Practices: An Integrated Portfolio Management Approach to Weapon 

System Investments Could Improve DOD's Acquisition Outcomes. 

GAO-07-388. Washington, D.C.: March 30, 2007.

For additional information about this area, contact Michael J. Sullivan at 

(202) 512-4841 or sullivanm@gao.gov.

Related GAO 

Products

Contact Information
Page 58 GAO-16-375SP Fragmentation, Overlap, and Duplication

Economic development

4. Manufacturing Loan Guarantees

The Economic Development Administration could better ensure that the activities carried out under the 

Innovative Technologies in Manufacturing program do not duplicate the efforts of other federal loan guarantee 

programs by working with other agencies to identify and target capital access gaps not filled by other 

programs.

Manufacturing plays a key role in the U.S. economy as a source of 

economic growth, high-paying jobs, and innovation. According to data 

from the Bureau of Economic Analysis and the Bureau of Labor Statistics,

in 2014, the manufacturing sector accounted for about $2 trillion—or 12 

percent of the U.S. economy—and employed approximately 12 million 

workers—or about 9 percent of the U.S. workforce.1 The development of 

innovative products and processes serves as an important driver of U.S. 

competitiveness, and small- and medium-sized manufacturers are 

particularly important to U.S. competitiveness because they represent a 

majority of manufacturers in the country. However, small- and mediumsized manufacturers often lag behind large firms in innovation and 

adopting new technologies and, according to a report by the National 

Institute of Standards and Technology (NIST) Hollings Manufacturing 

Extension Partnership program, many have reported difficulty gaining 

access to capital, which could present a challenge to developing and 

commercializing innovative technologies.2

To invest in innovation, improve U.S. competitiveness, and help address 

the capital needs of small- and medium-sized manufacturers, the America 

COMPETES Reauthorization Act of 2010 (COMPETES 2010), among 

other things, directed the Secretary of Commerce to establish the Federal 

Loan Guarantees for Innovative Technologies in Manufacturing (ITM) 

program, which is intended to support loan guarantees for small- and 

medium-sized manufacturers for the use or production of innovative 

technologies.3 Through fiscal year 2015, Congress has appropriated $19 

million for the ITM program; each year’s appropriation can support up to 

 1

The number and percentage of workers is based on Bureau of Labor Statistics data on 

nonfarm employment estimates.

2

The National Institute of Standards and Technology Hollings Manufacturing Extension 

Partnership, Connecting Small Manufacturers with the Capital Needed to Grow, Compete, 

and Succeed: Small Manufacturers Capital Access Inventory and Needs Assessment 

Report (Gaithersburg, MD: November 2011). 

3 Pub. L. No. 111-358, § 602, 124 Stat. 3982, 4026-27 (2011). This law reauthorized the 

America Creating Opportunities to Meaningfully Promote Excellence in Technology, 

Education, and Science (COMPETES) Act.

Why This Area Is 

Important
Page 59 GAO-16-375SP Fragmentation, Overlap, and Duplication

$70 million in guaranteed loans.4 As the federal government continues to 

experience budgetary constraints, there is an ever-increasing need to 

ensure that governmental resources are appropriately targeted and that 

unnecessary duplication is mitigated, and a key issue debated during 

consideration of COMPETES 2010 was whether the ITM program would 

duplicate existing loan guarantee programs at other federal agencies. 

COMPETES 2010 directs the Secretary of Commerce to ensure, to the 

maximum extent practicable, that the activities carried out under the ITM 

program are coordinated with, and do not duplicate, the efforts of other 

federal loan guarantee programs. Ultimately, the Department of 

Commerce’s Economic Development Administration (EDA) was assigned 

the task of implementing the ITM program.

In February 2016, GAO found that EDA has not yet begun issuing ITM 

loan guarantees; according to the agency’s fiscal year 2017 

congressional budget justification, EDA plans to begin issuing loan 

guarantees in fiscal year 2017. GAO found that EDA coordinated with 

other federal agencies with comparable loan guarantee programs to learn 

from their experiences in implementing such programs, but EDA has not 

clearly differentiated the ITM program from other programs, which creates 

the risk of duplication. GAO identified four examples of programs

implemented by the Small Business Administration (SBA), the U.S. 

Department of Agriculture (USDA), and the Department of Energy that 

are comparable to the ITM program because they provide loan 

guarantees for domestic manufacturers and allow or specifically target 

businesses producing, using, or commercializing innovative technologies, 

among other criteria. EDA officials said that, based on what they learned 

from officials at these agencies, they decided to largely model the ITM 

program after an SBA program. EDA officials also said they have adapted 

or plan to adapt the SBA program’s application forms, regulations, and 

manuals, among other things. EDA’s coordination with other agencies 

and its adaptation of existing federal loan guarantee program materials 

has helped avoid duplication of the effort those agencies have already 

expended in designing those programs. 

However, as currently designed, the ITM program does not clearly 

differentiate its potential applicants from those of the comparable federal 

loan guarantee programs GAO identified. Those programs already 

provide loan guarantees to a pool of borrowers similar to those who would 

be eligible for the ITM program, with roughly equivalent limitations. For 

example, the ITM program and all four examples of comparable programs 

 4

A federal loan guarantee is a binding agreement between an agency and a lender. If a 

borrower defaults on a guaranteed loan, the lender is to be reimbursed by the agency for 

the balance of the guaranteed portion of the loan. Consistent with statutory language, 

each year’s appropriation, for example the $5 million provided in fiscal year 2013, can 

support up to $70 million in guaranteed loans. The $70 million in guaranteed loans can 

potentially be supported with a smaller appropriation because the government incurs costs 

only when a borrower defaults on a loan.

What GAO Found
Page 60 GAO-16-375SP Fragmentation, Overlap, and Duplication

provide loan guarantees for manufacturers producing, using, or 

commercializing innovative technologies, although for a couple of the 

comparable programs this support is limited to certain types of 

technologies.

EDA officials acknowledged that the ITM program is potentially 

duplicative with other programs in a number of respects, and they said 

that it is possible that loan guarantees ultimately issued under the ITM 

program could be similar to those issued by another agency, such as 

SBA or USDA. For example, according to an EDA analysis of SBA 7(a) 

loan data, roughly 11 percent of the loans made under SBA’s 7(a) 

program from October 1991 through March 2014 were to manufacturers 

in subsectors identified as innovative.5 In addition, USDA officials 

estimated that about 25 percent of the agency’s Business and Industry 

program loan guarantees are issued to manufacturers.6 However, as 

discussed, COMPETES 2010 directs the Secretary of Commerce to 

ensure, to the maximum extent practicable, that the activities carried out 

under the ITM program do not duplicate the efforts of other federal loan 

guarantee programs. 

GAO’s fragmentation, overlap, and duplication analysis guide states that 

one way to help minimize duplication among government programs is to 

identify and target service gaps that the programs could fill. While EDA 

officials coordinated with other agencies to design the ITM program, they 

did not work with agencies specifically to target service gaps—in this 

case, capital access gaps—because they have not yet developed a 

marketing and outreach strategy for the program. SBA officials stated that 

EDA did not specifically seek information from them on how to target the 

ITM program so as not to duplicate the efforts of SBA’s program. 

Similarly, while EDA officials coordinated with NIST about relevant topics, 

such as the optimal loan sizes and loan guarantee percentages to 

support small- and medium-sized manufacturers, EDA did not specifically 

coordinate with NIST about how to help address the capital access needs 

of manufacturers identified in its Hollings Manufacturing Extension 

Partnership program report. EDA officials stated that they intend to work 

with NIST by using its Hollings Manufacturing Extension Partnership 

centers to conduct ITM program marketing and outreach to borrowers 

and manufacturers, as was authorized by COMPETES 2010. However, 

according to a NIST Hollings Manufacturing Extension Partnership 

program official, as of November 2015, EDA had not worked with NIST to 

develop marketing materials or an outreach strategy and had not 

discussed other ways to ensure that the ITM program addresses capital 

 5

The SBA 7(a) program is authorized by Section 7(a) of the Small Business Act. 15 U.S.C. 

§ 636(a). The 7(a) program provides loan guarantees to small businesses, including 

manufacturers, for a variety of purposes.

6

The USDA Business and Industry program provides loan guarantees to improve, 

develop, or finance business, industry, and employment and improve the economic and 

environmental climate in rural communities. 
Page 61 GAO-16-375SP Fragmentation, Overlap, and Duplication

access gaps. As a result, EDA has not taken full advantage of SBA and 

NIST officials’ expertise regarding the capital needs of small- and 

medium-sized manufacturers. Coordinating more extensively with SBA 

and NIST on targeting the ITM program could provide EDA with greater 

assurance that ITM loan guarantees will not duplicate support that could 

be provided by other federal loan guarantee programs.

GAO recommended in February 2016 that the Secretary of Commerce 

should take the following action:

• Direct EDA to work with SBA and NIST to further identify any gaps in 

capital access that may be present that the program could fill, and 

then develop marketing materials and conduct outreach to help target 

those gaps.

Implementing this recommendation could better ensure that the ITM 

program is appropriately targeted and does not duplicate the efforts of 

other federal loan guarantee programs, such as SBA’s 7(a) program. 

Financial benefits associated with this action cannot be quantified 

because they relate to loan guarantees for innovative technologies in 

manufacturing that have not yet been requested or provided. However, by 

helping to ensure that future ITM program activities do not duplicate the 

efforts of other federal loan guarantee programs, this action should 

enable more efficient use of federal funds associated with the ITM 

program’s credit subsidy costs.

In commenting on the February 2016 report on which this analysis is 

based, Commerce concurred with GAO’s recommendation and said that 

EDA plans to work with SBA and NIST to further identify capital access 

gaps that can be filled by the ITM program. Commerce also noted that 

there can be no assurance that loan guarantees provided by the ITM 

program will never duplicate the efforts of other agencies’ programs. 

However, GAO’s recommendation to work with SBA and NIST to identify 

capital access gaps and then target those gaps in marketing the program 

would better ensure that the activities carried out in implementing the ITM 

program do not duplicate the efforts of other federal loan guarantee 

programs, but the recommendation would not eliminate the possibility of 

duplication completely. In addition to Commerce’s written comments, 

EDA provided technical comments, which GAO incorporated as 

appropriate. The Department of Energy and SBA also provided technical 

comments that GAO incorporated, as appropriate. USDA and the Office 

of Management and Budget indicated they had no comments on the 

report.

GAO provided a draft of this report section to the Departments of 

Agriculture, Commerce, and Energy and the Small Business 

Administration for review and comment. The Department of Energy 

indicated it had no comments on this report section. The Departments of 

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation
Page 62 GAO-16-375SP Fragmentation, Overlap, and Duplication

Commerce and Agriculture, and Small Business Administration did not 

provide comments on this report section.

The information contained in this analysis is based on findings in the 

February 2016 report listed in the related GAO products section. GAO 

analyzed applicable laws and program documents, interviewed EDA 

officials, and interviewed officials from agencies with comparable loan 

guarantee programs or with other expertise about the needs of small- and 

medium-sized manufacturers. In addition, GAO reviewed the 2014 

Catalog of Federal Domestic Assistance to identify examples of 

comparable loan guarantee programs at other federal agencies and 

verified the program information listed against other sources.7 Using this 

methodology, GAO identified four examples of programs that are 

comparable to the ITM program.8

Table 3 in appendix V lists the programs GAO identified that might have 

similar or overlapping objectives, provide similar services, or be 

fragmented across government missions. Overlap and fragmentation 

might not necessarily lead to actual duplication, and some degree of 

overlap and duplication may be justified.

Innovative Manufacturing: Commerce Should Target Program Outreach 

to Address Capital Access Gaps. GAO-16-271. Washington, D.C.: 

February 4, 2016. 

COMPETES Reauthorization Act: Federal Loan Guarantees for 

Innovative Technologies in Manufacturing. GAO-13-717R. Washington, 

D.C.: July 24, 2013.

For additional information about this area, contact John Neumann at 

(202) 512-3841 or neumannj@gao.gov.

 7

The Catalog of Federal Domestic Assistance is a government-wide compendium of 

federal programs, projects, services, and activities that provide assistance or benefits to 

the American public.

8

GAO relied on the Catalog of Federal Domestic Assistance as an initial source for 

information and did not verify that the Catalog of Federal Domestic Assistance includes all 

potentially comparable loan guarantee programs. GAO asked agency officials to identify 

other potentially comparable programs that they were aware of and included those in its 

analysis as appropriate. 

How GAO Conducted 

Its Work

Related GAO 

Products

Contact Information
Page 63 GAO-16-375SP Fragmentation, Overlap, and Duplication

General government

5. Financial Regulatory Structure

To reduce or better manage fragmentation and overlap, Congress should consider changes to the financial 

regulatory structure, and the Board of Governors of the Federal Reserve System and the Office of Financial 

Research should take steps to improve collaboration in monitoring systemic risk.

While a fully functioning financial system is critical to the well-being of our 

citizens and overall economic growth, financial services activities can, at 

times, cause significant harm. For example, mortgage and mortgagerelated activity played a role in triggering the 2007-2009 financial crisis, 

which resulted in unprecedented federal support being provided to many 

firms, and many households suffered as a result of falling asset prices, 

tightening credit, and increasing unemployment. These events 

demonstrated that the fragmented U.S. financial regulatory system was in 

need of significant reform. In particular, the crisis highlighted gaps and 

weaknesses in the supervision and regulation of the U.S. financial 

system, including the lack of an agency or mechanism responsible for 

monitoring and addressing risks across the financial system and a 

shortage of timely information to facilitate this oversight. GAO has 

designated modernizing the U.S. financial regulatory system as a highrisk area.1

Financial regulation generally aims to ensure the safety and soundness of 

depository institutions, adequate consumer and investor protections, the 

integrity and fairness of markets, and the stability of the overall financial 

system. As GAO reported in February 2016, the U.S. financial regulatory 

structure is complex, with responsibilities fragmented among multiple 

agencies that have overlapping authorities. Responsibilities for 

overseeing the financial services industry are spread among over a dozen 

entities, including federal banking, securities, derivatives, and other 

regulatory agencies and entities; numerous self-regulatory organizations;

and hundreds of state financial regulatory agencies (see figure). 

 1

See GAO, High-Risk Series: An Update, GAO-15-290 (Washington, D.C.: Feb. 11, 

2015).

Why This Area Is 

Important
Page 64 GAO-16-375SP Fragmentation, Overlap, and Duplication

U.S. Financial Regulatory Structure, 2016

Notes: This figure depicts the primary regulators in the U.S. financial regulatory structure, as well as 

their primary oversight responsibilities. “Regulators” generally refers to entities that have rule-making, 

supervisory, and enforcement authorities over financial institutions or entities. There are additional 

agencies involved in regulating the financial markets, and there may be other possible regulatory 

connections than those depicted in this figure.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act) was enacted in 2010.2 The Act made changes to the financial 

regulatory system to help address shortcomings identified by the 2007-

2009 financial crisis. For example, it abolished the former regulator of 

thrifts and thrift holding companies, and transferred its authorities to other 

depository institution and holding company regulators; created the Bureau 

of Consumer Financial Protection (also known as the Consumer Financial 

Protection Bureau, or CFPB), a new federal consumer financial protection 

regulator; created the Financial Stability Oversight Council (FSOC), and 

two additional nonregulatory offices with mandates that include certain 

responsibilities related to monitoring systemic risk.3 However, other than 

these changes, the Act it generally left the regulatory structure 

unchanged. Prior to the Dodd-Frank Act, GAO reported on numerous 

instances in multiple areas of the regulatory structure in which 

fragmentation and overlap created inefficiencies in regulatory processes, 

 2

Pub. L. No. 111-203, 124 Stat. 1376 (2010).

3

The term “thrifts” refers to federal and state savings associations and “thrift holding 

companies” refers to savings and loan holding companies that control a thrift or another 

thrift holding company. FSOC is a council of the heads of the federal financial regulatory 

agencies, as well as representatives from state regulatory agencies and others, tasked 

with identifying and responding to systemic risks.
Page 65 GAO-16-375SP Fragmentation, Overlap, and Duplication

inconsistencies in how regulators oversee similar types of institutions, and 

differences in the levels of protection afforded to consumers.4 While 

agencies have taken actions to help mitigate the negative effects of 

fragmentation and overlap that GAO identified in its previous work, more 

recent examples cited below demonstrate a pattern of inconsistencies 

and inefficiencies that continue to persist because of the fragmented 

regulatory structure.

In January 2009, GAO established a framework for evaluating regulatory 

reform proposals that describes nine characteristics that should be 

reflected in a new regulatory system.5 In a February 2016 report, GAO 

used this framework to evaluate the current regulatory structure and 

found that while changes made by the Dodd-Frank Act were consistent 

with some of the framework’s characteristics, the Act did not address 

three characteristics that would likely help to reduce the negative effects 

of fragmentation and overlap in the structure. In particular, the current 

regulatory structure does not always ensure (1) efficient and effective 

oversight, (2) consistent financial oversight, and (3) consistent consumer 

and investor protections. Because these characteristics have not been 

fully addressed, negative effects of fragmented and overlapping 

authorities persist throughout the system. In its February 2016 report, 

GAO found a number of instances of these negative effects, including the 

following examples: 

• While the Dodd-Frank Act helped to reduce fragmentation in 

consumer financial protection oversight by consolidating authority for 

a number of consumer financial protection laws that had been 

previously handled by seven different agencies, the Act also 

fragmented consumer protection supervision and enforcement for 

depository institutions, based on a depository institution’s size.6 This 

 4

For example, see GAO, Bank and Thrift Regulation: Improvements Needed in 

Examination Quality and Regulatory Structure, GAO/AFMD-93-15 (Washington, D.C.: 

Feb. 16, 1993); Financial Market Regulation: Benefits and Risks of Merging SEC and 

CFTC, GAO/T-GGD-95-153 (Washington, D.C.: May 3, 1995); Insurance Reciprocity and 

Uniformity: NAIC and State Regulators Have Made Progress in Producer Licensing, 

Product Approval, and Market Conduct Regulation, but Challenges Remain, GAO-09-372

(Washington, D.C.: Apr. 6, 2009); Fair Lending: Data Limitations and the Fragmented U.S. 

Financial Regulatory Structure Challenge Federal Oversight and Enforcement Efforts, 

GAO-09-704 (Washington, D.C.: July 15, 2009); and Financial Regulation: Clearer Goals 

and Reporting Requirements Could Enhance Efforts by CFTC and SEC to Harmonize 

Their Regulatory Approaches, GAO-10-410 (Washington, D.C.: Apr. 22, 2010).

5

GAO, Financial Regulation: A Framework for Crafting and Assessing Proposals to 

Modernize the Outdated U.S. Financial Regulatory System, GAO-09-216 (Washington, 

D.C.: Jan. 8, 2009).

6

The seven agencies were the Board of Governors of the Federal Reserve System, Office 

of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift 

Supervision, National Credit Union Administration, Federal Trade Commission, and the 

Department of Housing and Urban Development. The Dodd-Frank Act gave CFPB 

authority in connection with a number of federal consumer protection laws.

What GAO Found
Page 66 GAO-16-375SP Fragmentation, Overlap, and Duplication

fragmentation may result in inefficiencies, such as duplication in 

examinations, because while most consumer protection oversight 

responsibilities were transferred from the federal depository institution 

regulators to CFPB, federal depository institution regulators retained 

authority for certain consumer protection laws for depository 

institutions with more than $10 billion in assets. As a result, examiners 

from the federal depository institution regulators and CFPB examine 

the compliance management systems at the same depository 

institutions for their respective supervisory purposes. 

• The Dodd-Frank Act also created a new oversight regime for the 

swaps and security-based swaps markets and generally divided the 

oversight of these markets between the Commodity Futures Trading 

Commission and the Securities and Exchange Commission, 

respectively.7 In GAO’s February 2016 report, market participants 

noted that regulation of these markets by separate agencies may 

create market inefficiencies because of differences in certain of the 

agencies’ rules that have been developed for each type of product. 

The regulators coordinate in many areas and, in some cases, are 

required to coordinate, to help reduce the negative effects of 

fragmentation and overlap. However, the fragmented structure creates a 

significant responsibility and burden for regulators, which must cooperate 

and effectively coordinate their activities. GAO has previously made 

suggestions to Congress to modernize and improve the effectiveness of 

the financial regulatory structure.8 Without congressional action, it is 

unlikely that remaining fragmentation and overlap in the U.S. financial 

 7

In general, the Dodd-Frank Act defines a swap to include, among other things, an 

agreement that provides for the exchange of one or more payments based on the value or 

level of one or more assets, liabilities, or indices or other financial or economic interests or 

property of any kind that transfers, in whole or in part, the financial risk associated with a 

future change in the value or level without also conveying a current or future ownership 

interest in an asset or liability that incorporates the financial risk transferred. Pub. L. No. 

111-203, § 721(a)(21), 124 Stat. 1376, 1666 (2010).

8

For example, in 1996, GAO suggested that the regulatory structure could be modernized

by reducing the number of federal agencies with responsibility for the oversight of 

depository institutions, which GAO stated should help improve the consistency of 

oversight and reduce regulatory burden. In 2004, GAO suggested that Congress may 

want to consider some consolidation or modification of the regulatory structure to 

(1) better address the risks posed by large, complex, internationally active firms and their 

consolidated risk management approaches; (2) promote competition domestically and 

internationally; and (3) contain systemic risk. Congress has not taken actions to

significantly modify the regulatory structure since GAO made these suggestions, although 

through the Dodd-Frank Act, Congress did take some actions consistent with GAO’s 

suggestions. For example, the Dodd-Frank Act eliminated the former regulator of thrifts 

and thrift holding companies—the Office of Thrift Supervision—and transferred its 

responsibilities to other depository institution and holding company regulators. The Act 

also established the Financial Stability Oversight Council to monitor the stability of the 

U.S. financial system and take actions to mitigate risks that might destabilize the system. 

See GAO, Bank Oversight Structure: U.S. and Foreign Experience May Offer Lessons for 

Modernizing U.S. Structure, GAO/GGD-97-23 (Washington, D.C.: Nov. 20, 1996), and 

Financial Regulation: Industry Changes Prompt Need to Reconsider U.S. Regulatory 

Structure, GAO-05-61 (Washington, D.C.: Oct. 6, 2004). 
Page 67 GAO-16-375SP Fragmentation, Overlap, and Duplication

regulatory system can be reduced or that more effective and efficient 

oversight of financial institutions can be achieved.

The 2007-2009 financial crisis also highlighted the lack of an agency or 

mechanism responsible for monitoring and addressing risks across the 

financial system. The Dodd-Frank Act tried to address this gap in 

systemic risk oversight by placing this responsibility on a collective group 

of financial regulators and other entities through the creation of FSOC 

and also gave the Office of Financial Research broad systemic risk 

monitoring mandates.

9 These reforms aim to create ways to monitor, 

identify, and mitigate systemic risks within a regulatory structure that is

fragmented among numerous agencies. In February 2016, GAO reported 

that these reforms create the potential for unnecessary duplication in 

activities or gaps in systemic risk oversight.

For example, the Board of Governors of the Federal Reserve (Federal 

Reserve) and the Office of Financial Research both have developed 

broad-based systemic risk monitoring efforts that use quantitative and 

qualitative information to monitor the breadth of the financial system for 

potential threats to financial stability. GAO found that the agencies had

articulated similar goals with respect to their systemic risk monitoring

activities; however, they have engaged in these efforts largely 

independently, leading to lost collaborative opportunities that could 

improve their ability to identify systemic risks and reduce the potential for 

unnecessary duplication. The Federal Reserve’s and the Office of 

Financial Research’s actions have not been consistent with key practices 

for collaboration that GAO has previously identified, such as establishing

mutually reinforcing or joint strategies, leveraging resources, and 

agreeing on roles and responsibilities.10 Both agencies told GAO that they 

believe the current nature and level of their collaboration is appropriate, 

and they stated that they believe that their participation in FSOC’s 

Systemic Risk Committee—its main staff-level committee for collaboration 

on systemic risk monitoring across the many federal and state financial 

regulators and other members—ensures communication between the two 

agencies about their systemic risk monitoring efforts. Separate entities 

monitoring systemic risk from different perspectives could help reduce the 

likelihood that potential systemic risks will not be identified in time. As 

such, systemic risk monitoring efforts need not be harmonized across 

agencies. However, failure to use some key collaboration practices could 

result in the Office of Financial Research and the Federal Reserve 

missing opportunities to leverage each other’s resources and identify 

 9

The Office of Financial Research was created within the U.S. Department of the Treasury 

to support FSOC and its member agencies, in part, by performing financial research and 

collecting data.

10GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain 

Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005).
Page 68 GAO-16-375SP Fragmentation, Overlap, and Duplication

important and mutually beneficial ways to improve their systemic risk 

monitoring activities. 

Further, in February 2016 GAO reported that FSOC’s Systemic Risk 

Committee did not have full and consistent access to existing monitoring 

tools or other outputs developed by the Office of Financial Research and 

the Federal Reserve. Office of Financial Research officials told GAO that 

the use of disaggregated or otherwise confidential data in its systemic risk 

monitoring tools restricts the agency’s ability to share such information 

with Systemic Risk Committee participants. Officials from both the Office 

of Financial Research and the Federal Reserve stated that participation of 

key staff in the Systemic Risk Committee allows for the proper sharing of 

information on systemic risks identified by their respective efforts. 

However, federal internal control standards call for the use of relevant, 

reliable, and timely information to achieve the entity’s responsibilities, and 

international best practices for systemic risk oversight state that efforts to 

monitor the financial system for systemic risks must be based on a 

continuous assessment of evolving risks that uses available qualitative 

and quantitative information.11 Without better access to existing systemic 

risk monitoring tools or other outputs, the committee may miss some risks 

or not identify them in a timely manner.

Finally, in February 2016 GAO also reported that while FSOC’s mission is 

to respond to systemic risks, it has limited authorities to do so. The DoddFrank Act left the responsibility for overseeing financial entities and 

activities with individual financial regulatory agencies.12 FSOC has 

authorities to designate certain entities or activities for enhanced 

supervision by a specific regulator, but these authorities may not allow it

to address certain broader risks that are not specific to a particular 

entity.13 For such risks, FSOC can recommend but not compel action. 

GAO’s January 2009 framework states that financial systems should 

include a mechanism for managing risks regardless of the source of the 

risks, and international best practices for systemic risk oversight state that 

macroprudential entities require authorities to foster the ability to act and 

ensure regulatory responses.

14 Because of the limitations in FSOC’s 

authorities, without congressional action FSOC may not have the tools it 

needs to carry out its mission to comprehensively respond to systemic 

 11GAO, Standards for Internal Control in the Federal Government, GAO-14-704G

(Washington, D.C.: September 2014) and GAO/AIMD-00-21.3.1 (Washington, D.C.: 

November 1999), and International Monetary Fund, Staff Guidance Note on 

Macroprudential Policy (Washington, D.C.: December 2014), and Key Aspects of 

Macroprudential Policy, IMF Policy Paper (Washington D.C.: June 2013).

12FSOC’s own authorities do not divest its members of their existing authorities.

13Pub. L. No. 111-203, §§ 113, 804, 124 Stat. 1376, 1398, 1807 (2010).

14International Monetary Fund, Staff Guidance Note on Macroprudential Policy; Key 

Aspects of Macroprudential Policy; and Macroprudential Policy: An Organizing 

Framework, IMF Policy Paper (Washington D.C.: March 2011).
Page 69 GAO-16-375SP Fragmentation, Overlap, and Duplication

risks, and it may be difficult to hold the council accountable for responding 

to such risks.

GAO suggested in its February 2016 report that to reduce or better 

manage fragmentation and overlap in the oversight of financial 

institutions, activities, and risks, Congress should take the following two 

actions:

• Consider whether additional changes to the financial regulatory 

structure are needed to improve (1) the efficiency and effectiveness of 

oversight; (2) the consistency of consumer and investor protections; 

and (3) the consistency of financial oversight for similar institutions, 

products, risks, and services.

• Consider whether legislative changes are necessary to align FSOC’s 

authorities with its mission to respond to systemic risks.

In February 2016, GAO also recommended the following three actions to 

help regulators address regulatory fragmentation and to improve the 

effectiveness of monitoring systemic risks:

• The Office of Financial Research and the Federal Reserve should 

jointly articulate individual and common goals for their systemic risk 

monitoring activities, including a plan to monitor progress toward 

articulated goals, and formalize regular strategic and technical 

discussions around their activities and outputs to support those goals.

• The Office of Financial Research should work with FSOC to 

determine ways in which to fully and regularly incorporate current and 

future monitors and assessments into Systemic Risk Committee 

deliberations, including, where relevant, those that present 

disaggregated or otherwise confidential supervisory information.

• The Federal Reserve should work with FSOC to regularly incorporate 

the comprehensive results of its systemic risk monitoring activities into 

Systemic Risk Committee deliberations.

While it is possible that restructuring the financial regulatory system could 

result in savings to the federal government, such restructuring would 

involve many unknown variables and would depend on a number of

congressional decisions. As such, the financial benefits cannot be 

quantified. However, the 2007-2009 financial crisis—in which the 

fragmented regulatory structure contributed to failures by regulators to 

adequately protect consumers and ensure financial stability—

demonstrated the high costs of inefficiency and ineffectiveness in 

regulation and, conversely, the enormous benefits that can be achieved 

by promoting consistency, efficiency, and effectiveness in the regulatory 

structure. 

Actions Needed and 

Potential Financial or 

Other Benefits
Page 70 GAO-16-375SP Fragmentation, Overlap, and Duplication

GAO provided a draft of its February 2016 report on which this analysis is 

based to 12 federal financial regulators or entities for their review and 

comment. The National Credit Union Administration stated that it believes 

the report’s substance did not support GAO’s conclusions leading to the 

suggestion that Congress consider whether additional changes are 

needed to the regulatory structure and believes that consideration of 

changes to the regulatory structure would need to include a careful review 

of the costs and benefits. The National Credit Union Administration also 

emphasized that it is the only federal agency with regulatory and 

supervisory authority over federal credit unions, in contrast with the 

federal banking regulators. GAO maintains that changes to the regulatory 

structure could help to reduce and better manage fragmentation and 

overlap in the oversight of financial institutions and activities. The report 

documents several instances where the current structure produced 

inconsistent, inefficient, and ineffective oversight. The costs and benefits 

of any options for improving and modernizing the structure would have to 

be part of any consideration of additional changes to the regulatory 

structure but would not preclude considering other options as GAO 

suggested. 

The Commodity Futures Trading Commission noted that while the 

securities and derivatives markets are interconnected, they remain 

separate and serve distinct functions within the financial system. In 

addition, it stated that it has worked and continues to work closely with 

the Securities and Exchange Commission. The report discusses areas in 

which these agencies have worked together in the past to resolve 

jurisdictional disputes and address areas of overlap in the oversight of 

their respective markets, as well as recent examples of their coordination 

efforts on the swaps and security-based swaps rulemakings. GAO also 

notes that despite these efforts there were still substantive differences 

between certain of the agencies’ rules, which create the potential for 

inefficiencies in the way the markets are overseen. 

Both the Federal Reserve and Office of Financial Research agreed with 

GAO’s recommendations to the agencies. The Federal Reserve stated 

that close collaboration with FSOC is essential to improving the council’s 

ability to identify emerging systemic risks and that communication with the 

Office of Financial Research is a key aspect of monitoring the financial 

system for systemic risks. The Office of Financial Research stated that it 

has initiated conversations with both FSOC staff and the Federal Reserve 

in response to GAO’s recommendations. 

GAO provided a draft of this report section to 11 federal financial 

regulators or entities for review and comment. In response, CFPB noted 

that GAO should acknowledge the benefits associated with the creation of 

CFPB, including that the agency reduced fragmentation in consumer 

protection responsibilities by consolidating consumer protection 

responsibilities from multiple agencies into one. To address this concern, 

GAO added language on additional benefits created by the Dodd-Frank 

Act. In addition, the National Credit Union Administration noted that the 

way in which GAO summarized the agency’s response to the February 

Agency Comments 

and GAO’s Evaluation
Page 71 GAO-16-375SP Fragmentation, Overlap, and Duplication

2016 report was not consistent with its intent. The National Credit Union 

Administration stated that it did not disagree with GAO’s suggestion that 

Congress should consider if additional changes are needed to the 

regulatory structure but rather that it believed the report’s substance did 

not support GAO’s conclusion. GAO’s February 2016 report, however, 

documented multiple instances of inconsistent, inefficient, and ineffective 

oversight produced by the current regulatory structure. GAO adjusted its 

summary of the agency’s response in this report section to reflect these 

concerns. In addition, the Federal Deposit Insurance Corporation, Federal 

Trade Commission, Financial Stability Oversight Council, Office of the 

Comptroller of the Currency, Office of Financial Research, and Securities 

and Exchange Commission provided technical comments, which were 

incorporated as appropriate.

The information contained in this analysis is based on findings from the 

February 2016 product in the related GAO products section. To identify 

fragmentation and overlap in the U.S. financial regulatory structure and 

their effects, GAO reviewed relevant financial statutes, agencies’

documents on their oversight activities, and previous GAO reports and 

other reports on financial regulatory reform. GAO also interviewed agency 

officials and industry and policy groups that represented the different 

areas of the financial system or had expertise in evaluating areas of the 

financial regulatory structure. GAO also held four discussion groups on 

areas where the Dodd-Frank Act altered the regulatory structure and on 

issues widely identified as potential causes of the 2007-2009 financial 

crisis. The groups consisted of former regulatory officials, industry and 

advocacy group representatives, and experts. GAO also reviewed 

agendas and presentations from monthly meetings of FSOC’s Systemic 

Risk Committee from July 2012 through August 2014 and interviewed 

relevant FSOC member agency staff. GAO did not include assessments 

of fragmentation and overlap in two areas within the financial regulatory 

structure: housing finance oversight and the farm credit system.

Financial Regulation: Complex and Fragmented Structure Could Be 

Streamlined to Improve Effectiveness. GAO-16-175. Washington, D.C.: 

February 25, 2016.

Financial Regulation: A Framework for Crafting and Assessing Proposals 

to Modernize the Outdated U.S. Financial Regulatory System. 

GAO-09-216. Washington, D.C.: January 8, 2009.

For additional information about this area, contact Lawrance Evans, Jr. at 

(202) 512-8678 or evansl@gao.gov.

How GAO Conducted 

Its Work

Related GAO 

Products

Contact Information
Page 72 GAO-16-375SP Fragmentation, Overlap, and Duplication

6. IRS’s Public Referral Programs

The Internal Revenue Service could potentially collect billions of dollars in tax underpayments through its nine 

public referral programs and save resources by better managing fragmentation and overlap, improving 

communication, and streamlining processes.

Individuals who submit information to the Internal Revenue Service (IRS) 

about tax noncompliance by others through IRS’s public referral programs 

can help IRS identify taxes that may otherwise go uncollected. Such 

efforts are an important piece of IRS’s overall enforcement strategy and 

can help reduce the net $385 billion tax gap—the difference between 

taxes owed and those ultimately collected.

1 IRS has nine referral 

programs that allow others to report possible tax law violations by 

individuals and businesses. Of these nine programs, IRS’s whistleblower 

program, in which qualifying whistleblowers are paid from 15 to 30 

percent of collected proceeds, received over 12,000 claims in fiscal year 

2015 and is the largest in terms of revenue collected—more than $3 

billion since fiscal year 2007. The information referral process, which 

covers underreporting of income, false claims of tax benefits, failure to file 

a return, and failure to withhold and pay taxes, received over 87,000 

referrals in fiscal year 2015. This general program resulted in at least 

$209 million in recommended tax assessments from fiscal year 2012 

through fiscal year 2015. The other referral programs are specific to 

certain issues, such as identity theft or misconduct by return preparers. 

The following table describes IRS’s nine referral programs. 

 1

This estimate is for fiscal year 2006, which is the most recent available. 

Why This Area Is 

Important
Page 73 GAO-16-375SP Fragmentation, Overlap, and Duplication

IRS’s Nine Programs for Public Reporting of Alleged Tax Noncompliance and Misconduct

Referral program Type of tax issue

Whistleblower Office Any tax violation; serves as an application for monetary award

Information Referral Process Any tax violation by individual or business taxpayers; for those not 

seeking award

Identity Theft Actual or potential incidents of identity theft

Return Preparer Office Tax return preparers that filed or altered a tax return without 

taxpayer consent

Small Business/Self-Employed Abusive Transactions Suspected abusive tax avoidance schemes or tax return 

preparers that promote such schemes

Large Business and International Office of Tax Shelter Analysis Abusive tax shelters involving large numbers of taxpayers and 

posing greater compliance risk

Tax Exempt and Government Entities Exempt Organizations Violation by a tax-exempt organization

Tax Exempt and Government Entities Employee Plans Abusive tax transactions by a retirement plan

Electronic Filing Program Fraudulent and abusive returns

Source: GAO analysis of IRS referral forms and IRS.gov. | GAO-16-375SP

In a February 2016 report, GAO found that IRS does not have a 

mechanism to facilitate information sharing across its nine referral 

programs. Such a mechanism would help IRS better coordinate and 

identify possible efficiencies, as well as better manage fragmentation and 

overlap. Internal control standards require management to ensure that

there are adequate means of communicating and obtaining information 

from stakeholders.2 GAO found that while a few of IRS’s referral 

programs with overlapping responsibilities coordinate with each other, no 

formal mechanism exists for all nine of the programs to do so. For 

example, IRS’s Return Preparer Office and Identity Theft Program 

coordinate on identity theft referrals. In addition, the Return Preparer 

Office and Small Business/Self-Employed Abusive Transactions unit 

coordinate on abusive transactions involving tax preparers, and they also 

can access a common electronic information system to identify 

overlapping referrals. 

However, the other programs do not regularly collaborate. This lack of 

collaboration has resulted, for example, in confusion for the individuals 

coming forward to report tax noncompliance. GAO found that individuals 

reporting noncompliance may report one allegation to multiple referral 

programs, which causes both the public and IRS to spend resources 

unnecessarily. Without a broader collaborative mechanism to 

communicate across the multiple referral programs, IRS may be missing 

opportunities to assist the public, collect revenue owed, and leverage 

resources to streamline processes.

 2

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1.

(Washington, D.C.: November 1999).

What GAO Found
Page 74 GAO-16-375SP Fragmentation, Overlap, and Duplication

In addition, IRS’s referral programs involve largely manual processes, 

which forces IRS to spend resources reading and routing each of the 

referrals received. Clerks in the general information referral program, for 

example, manually screened over 87,000 letters and Forms 3949-A, 

Information Referral, in 2015. They then routed the referrals to other IRS 

divisions for additional manual screening and possible examination. Also 

in 2015, the information referral program rerouted more than 2,900 

referrals related to identify theft and return preparer misconduct that were 

submitted on the wrong form to the wrong referral program, which 

resulted in inefficiencies and processing delays. Similarly, IRS’s 

Whistleblower Office staff manually screen an average of 10,000 Forms 

211, Application for Award for Original Information, annually and 

sometimes multiple times before the information is sent to an examination 

team. For example, whistleblower claims alleging over $2 million in tax 

noncompliance are generally reviewed three times: first, by intake staff to 

check for completeness; second, by another group to identify whether to 

send the information to the operating divisions for a more rigorous review; 

and third, by subject matter experts in the operating division who 

recommend whether the operating division should take action.

Internal control standards state that effective information technology 

management is critical to achieving the useful, reliable, and continuous 

reporting and communication of information.3 According to IRS’s strategic 

plan for fiscal years 2014 through 2017, the public prefers Internet-based 

service over other service channels, such as phones, paper, or in person. 

A senior official in IRS’s Online Services office stated that a universal 

online referral intake system to control the routing of referrals would be 

preferable to the separate systems that presently exist for each referral 

form. Currently, IRS’s referral forms are received within IRS units through 

different channels (e.g., mail, fax, and e-mail). According to one official, 

IRS’s Return Preparer Office is exploring the conversion of its specialized 

referral form to an online form. However, if the various referral programs 

separately explore developing online form submissions, IRS risks 

replicating or compounding the fragmented referral forms and means of 

submitting these forms. An IRS plan and timeline for developing a 

consolidated, online referral submission could assist IRS in leveraging 

specialized expertise to further consolidate the referral intake process. 

IRS says it is committed to expanding its portfolio of digital service 

offerings to meet customer expectations while continuing to keep 

taxpayer data secure. Strengthened collaboration across the nine referral 

programs could enable IRS to explore a more systemic online referral 

submission process. Such an effort could help IRS improve its ability to 

more efficiently receive and process referrals, while also reducing the 

public confusion caused by trying to choose among multiple forms. 

 3

GAO/AIMD-00-21.3.1.
Page 75 GAO-16-375SP Fragmentation, Overlap, and Duplication

In an October 2015 report, GAO also identified key problems specific to 

the whistleblower program that are discouraging whistleblowers from 

coming forward: few large awards have been paid, claims take years to 

process, and communication with whistleblowers is limited. Since 

expanding the whistleblower program in fiscal year 2007, IRS has 

received thousands of high-dollar claims (those alleging noncompliance 

of more than $2 million), but it had paid only 31 high-dollar awards as of 

September 30, 2015. The manual intake and review process previously 

described, as well as staffing shortfalls, resulted in claim processing 

backlogs—more than 5,000 in the intake review process alone in fiscal 

year 2015. GAO found that resource allocation decisions, including the 

use of short-term detailees, did not completely address these work flow 

backlogs; as of January 2016, IRS reported that the backlog had shrunk 

to about 400 claims.4 This backlog resulted in delays in the intake and 

processing of claims. 

IRS’s Whistleblower Office has studied its claim review work flow to 

identify opportunities to more efficiently use staff by consolidating 

processes. However, as of January 2016, IRS had put implementation of 

any significant changes on hold while it awaits additional 

recommendations from an internal process improvement review. 

Increasing efficiency can help government make better use of scarce 

resources.5 Improving efficiency in claim intake and processing may help 

IRS process claims more quickly and pay more awards, which, in turn, 

may encourage more individuals with information about tax 

noncompliance to come forward. 

Regarding communications, GAO also found in October 2015 that IRS’s 

recently published information for whistleblowers lacked important 

information, such as an outline of the claim submission and review 

process, key information about taxpayer rights, and examples of what to 

include when submitting Form 211, Application for Award for Original 

Information. Consistent with internal control standards, IRS’s 

Whistleblower Office should be the primary source of information to the 

public about the program. Program managers should ensure that there 

are adequate means of communicating with external stakeholders who 

may have a significant impact on the agency achieving its goals.6

Providing such information to whistleblowers and their representatives 

could potentially reduce the administrative burden on IRS and alleviate 

 4

A detailee is a federal employee who is temporarily assigned or loaned to another unit, 

agency, or department without a permanent change of position. The detailees assigned to 

the Whistleblower Office were from other areas of IRS.

5

See GAO, Fragmentation, Overlap, and Duplication: An Evaluation and Management 

Guide, GAO-15-49SP (Washington, D.C.: Apr. 14, 2015). This guide defines economy and 

efficiency as maintaining services or outcomes using fewer resources (such as time, 

money, and staff) or improving or increasing the quality or quantity of services or 

outcomes while maintaining (or reducing) resources expended.

6

GAO/AIMD-00-21.3.1.
Page 76 GAO-16-375SP Fragmentation, Overlap, and Duplication

workload. In addition, if whistleblowers are not clear about the Form 211 

submission and review process or are discouraged by timeliness and 

communications concerns, they are less likely to come forward with 

information that could help IRS address noncompliance and collect 

additional revenues.

Further, GAO found that IRS was not collecting comprehensive 

information to evaluate whether the benefit of a recent pilot program to 

send letters to whistleblowers annually with a limited update on the status 

of their claim was worth the costs. For example, IRS’s Whistleblower 

Office did not have plans to reach out to letter recipients for feedback on 

the usefulness of the status update letters because, according to IRS 

officials, reaching out for feedback would be contrary to the intent of the 

pilot program, which is to reduce incoming calls and correspondence from 

whistleblowers. A comprehensive analysis of the various costs and 

benefits of a project is the Office of Management and Budget’s 

recommended technique for formally evaluating government projects. If 

IRS’s Whistleblower Office is not collecting enough information to 

evaluate efforts to improve communication, IRS may be using resources 

inefficiently and further discouraging whistleblowers from coming forward.

To enhance revenue, better manage fragmentation and overlap across 

multiple referral programs, and improve efficiency in receiving information 

from the public on possible tax noncompliance, GAO recommended in 

February 2016 that the Commissioner of Internal Revenue should take 

the following two actions: 

• Establish a coordination mechanism to facilitate communication and 

information sharing across IRS referral programs on crosscutting tax 

issues and ways to improve efficiency in the mechanisms for public 

reporting of possible tax violations.

• Direct the referral programs to establish a mechanism to coordinate 

on a plan and timeline for developing a consolidated, online referral 

submission in order better position IRS to leverage specialized 

expertise while exploring options to further consolidate the initial 

screening operations. 

In October 2015, GAO also recommended that to improve the intake and 

claim review process of IRS’s Whistleblower Office, and evaluate how to 

increase information available to whistleblowers, the Commissioner of 

Internal Revenue should take the following three actions: 

• Implement a staffing plan for streamlining the intake and initial review 

process for the whistleblower program to make more efficient use of 

staff resources. 

• Develop an additional or revised fact sheet, publish additional 

information about the whistleblower program on the IRS website, or 

both.

Actions Needed and 

Potential Financial or 

Other Benefits
Page 77 GAO-16-375SP Fragmentation, Overlap, and Duplication

• Develop a comprehensive plan for evaluating the costs and benefits 

of the pilot annual status letter program, including obtaining feedback 

from whistleblowers in the pilot regarding the usefulness of the letter. 

Improving coordination among referral programs and streamlining 

processes could reduce the negative effects of fragmentation and overlap 

and facilitate IRS’s efforts to collect taxes owed and reduce the tax gap. 

Although there is uncertainty in the cost savings and additional revenues 

these actions would generate for IRS, these programs could potentially 

help IRS identify and collect billions of dollars in tax revenue that would 

otherwise go uncollected. 

In commenting on GAO’s February 2016 report on which much of this 

analysis is based, the IRS Deputy Commissioner for Services and 

Enforcement agreed with GAO’s recommendations and stated that IRS 

will be exploring the feasibility of using a single form for referral reporting 

as well as considering an online option for the public to submit referrals to 

IRS. As of February 2016, the Deputy Commissioner stated that IRS set 

up a cross-functional working group and is working to identify the specific 

actions, responsible officials, and timelines to address GAO’s 

recommendations. As of March 2016, IRS has provided no further 

update.

In commenting on GAO’s October 2015 report on which some of this 

analysis is based, the IRS Deputy Commissioner for Services and 

Enforcement agreed with GAO’s recommendations and underscored the 

importance of the whistleblower program as part of IRS’s overall 

enforcement efforts. The Deputy Commissioner also stated that IRS is 

committed to improving the whistleblower claim review process and 

implementing the recommendations in GAO’s report. In a letter dated 

January 29, 2016, IRS stated that it expects to implement the 

recommendations by October 1, 2016.

GAO provided a draft of this report section to IRS for review and 

comment. IRS did not have comments.

The information contained in this analysis is based on findings from the 

products in the related GAO products section. For IRS’s referral 

programs, GAO reviewed IRS guidance and forms for making referrals,

assessed coordination among the programs using Standards for Internal 

Control in the Federal Government and GAO’s body of work on 

interagency collaboration, and interviewed IRS officials. For the 

Whistleblower Office, GAO reviewed award files for 17 paid high-value

whistleblower program claims; reviewed IRS guidance and 

documentation; analyzed IRS data; and interviewed IRS officials, 

whistleblowers, and whistleblower attorneys. 

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 78 GAO-16-375SP Fragmentation, Overlap, and Duplication

Table 4 in appendix V lists the referral programs and related budgetary 

information. 

IRS Referral Programs: Opportunities Exist to Strengthen Controls and 

Increase Coordination across Overlapping Programs. GAO-16-155. 

Washington, D.C.: February 23, 2016.

IRS Whistleblower Program: Billions Collected, but Timeliness and 

Communication Concerns May Discourage Whistleblowers. GAO-16-20. 

Washington, D.C.: October 29, 2015.

For additional information about this area, contact James R. McTigue, Jr. 

at (202) 512-9110 or mctiguej@gao.gov or Jessica Lucas-Judy at (202) 

512-9110 or lucasjudyj@gao.gov.

Related GAO 

Products

Contact Information
Page 79 GAO-16-375SP Fragmentation, Overlap, and Duplication

Health

7. Medicaid and Exchange Coordination

The Centers for Medicare & Medicaid Services should take actions to minimize the risk of duplicative federal 

spending on health insurance coverage for individuals transitioning between Medicaid and exchange coverage.

The Patient Protection and Affordable Care Act (PPACA) provided many 

low-income Americans with a new pathway for maintaining health 

insurance coverage.1 Specifically, under PPACA, states may opt to 

expand eligibility for Medicaid—the joint federal-state program that 

finances health insurance coverage for certain categories of low-income 

individuals—to individuals who are not eligible for Medicare and whose 

incomes are at or below 133 percent of the federal poverty level.2 As of 

March 2015, 29 states had chosen to expand their Medicaid programs.

Additionally, PPACA required that health insurance exchanges—that is, 

marketplaces where eligible individuals may compare and select among 

private health plans—be established in all states. As of March 2015, 17 

states had chosen to establish and operate their own exchanges, referred 

to as state-based exchanges. Thirty-four states allowed the Centers for 

Medicare & Medicaid Services (CMS)—the agency within the Department 

of Health and Human Services (HHS) responsible for overseeing 

Medicaid and the exchanges—to do so; such exchanges are known as 

federally facilitated exchanges (FFE). 

PPACA also provided for federal subsidies to assist qualifying low-income 

individuals in affording exchange coverage, referred to as subsidized 

exchange coverage. For example, individuals may be eligible for premium 

tax credits if their incomes fall between 100 and 400 percent of the 

federal poverty level, and they do not have access to Medicaid or other 

minimum essential coverage.3 Eligible individuals may choose to have 

advance payments of the premium tax credit (APTC) made on their behalf 

to issuers of health coverage to reduce their premium costs for exchange 

plans. The amount of APTC for which an individual is eligible is based on 

an estimate of the premium tax credit the individual will claim on his or her 

tax return. Individuals receiving APTC must file a federal income tax 

return with the Internal Revenue Service (IRS) to reconcile the amount of 

 1

Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and 

Education Reconciliation Act of 2010 (HCERA), Pub. L. No. 111-152, 124 Stat. 1029 

(2010). For the purposes of this report section, references to PPACA include the 

amendments made by HCERA.

2

PPACA also provides for a 5 percent disregard when calculating income for determining 

Medicaid eligibility, which effectively increases this income level to 138 percent of the 

federal poverty level. For the purposes of this report section, the District of Columbia is 

considered a state. 

3

References to Medicaid coverage in this report section do not include Medicaid plans that 

provide less than full benefits, such as Medicaid plans that cover only family planning.

Why This Area Is 

Important
Page 80 GAO-16-375SP Fragmentation, Overlap, and Duplication

the tax credit allowed with the amount received in advance and may be 

liable to pay back any excess credits received.

Changes in income and other factors can change an individual’s eligibility 

for Medicaid and for subsidized exchange coverage, and as many lowincome individuals experience income volatility, transitions between the 

two coverage types are likely under the law. Previous research has 

estimated that out of all individuals who receive either Medicaid or 

exchange subsidies, 6.9 million (7 percent) will experience a change in 

eligibility from one to the other each year.4 In October 2015, GAO 

reported that a relatively small percentage of Medicaid and exchange 

coverage enrollees transitioned between the coverage types in three 

selected states in 2014, but that such transitions may increase in the 

future.

PPACA required the establishment of a coordinated eligibility and 

enrollment process for Medicaid and exchange coverage. This process 

helps ensure that individuals are enrolled in the coverage for which they 

are eligible and transferred to the appropriate form of coverage if their 

eligibility changes. Since the enactment of the law, CMS has issued 

regulations and technical guidance outlining aspects of this process, 

which can involve significant coordination between state and federal 

information technology (IT) systems. Given the complexity of designing 

coordinated policies and systems, challenges could arise during the 

transition process. For example, individuals may become simultaneously 

enrolled in both Medicaid and subsidized exchange coverage (referred to 

as duplicate coverage), which is only allowed in limited circumstances 

under federal law.5

In October 2015, GAO reported that CMS’s policies and procedures do 

not sufficiently minimize the potential for duplicate coverage in states with 

FFEs, which increases the risk that the federal government could be 

paying twice—subsidizing exchange coverage and reimbursing states for 

Medicaid spending—for the same individuals.6 GAO found that a limited 

 4

See M. Buettgens, A. Nichols, and S. Dorn, Churning Under the ACA and State Policy 

Options for Mitigation (Washington, D.C.: Urban Institute and Robert Wood Johnson 

Foundation, June 2012). This study also notes that some of these individuals may choose 

not to enroll in the coverage for which they become eligible and instead become 

uninsured.

5

Individuals enrolled in subsidized exchange coverage who are found to be eligible for 

Medicaid are permitted to be enrolled in both types of coverage through the end of the 

month of the eligibility determination. See 26 U.S.C. § 36B(c)(2)(A)-(B); 26 C.F.R. § 

1.36B-2(c)(iv).

6

Our review focused primarily on federal controls for the FFE. At the time of the review, 

these controls affected 34 FFE states and 3 additional states that rely on the FFE IT 

systems. The 4 states in our review with state-based exchanges had implemented 

integrated eligibility and enrollment systems for Medicaid and exchange coverage, which 

included IT system rules that help prevent duplicate coverage.

What GAO Found
Page 81 GAO-16-375SP Fragmentation, Overlap, and Duplication

amount of duplicate coverage may be expected, and is permitted under 

federal law, for individuals completing the transition from subsidized 

exchange to Medicaid coverage. However, GAO found that duplicate 

coverage was also occurring outside of this transitional period in cases 

where individuals did not end their subsidized exchange coverage after 

being determined eligible for Medicaid, or where they enrolled in 

subsidized exchange coverage when already enrolled in Medicaid. For 

example, one state reported that 3,500 individuals had duplicate 

coverage at some point from January to July 2014. However, the full 

extent to which duplicate coverage was occurring was unknown.

While CMS has taken some steps to minimize the potential for duplicate 

coverage in states with FFEs, GAO found that its current policies and 

procedures were not sufficient based on federal standards for internal 

control.7

• GAO found vulnerabilities in CMS’s methods for preventing individuals 

from maintaining subsidized exchange coverage after being 

determined eligible for Medicaid. For example, CMS does not have 

procedures to automatically terminate exchange subsidies when 

individuals are determined eligible for Medicaid—a practice that some 

states with state-based exchanges have in place.

• GAO found vulnerabilities in CMS’s methods for preventing individuals 

enrolled in Medicaid from also enrolling in subsidized exchange 

coverage. While CMS generally performs an automated check of state 

IT systems to determine whether individuals already have Medicaid 

before initially determining them eligible for subsidized exchange 

coverage, CMS officials recognize that there are a number of 

limitations to this check. For example, officials said the checks identify 

at a point in time whether an individual is enrolled in Medicaid, and so 

would not indicate if a Medicaid determination was pending. In 

addition, CMS did not perform a check for Medicaid coverage for the 

1.96 million individuals who were enrolled in exchange coverage in 

2014 and were automatically reenrolled for 2015, thereby increasing 

the risk that duplicate coverage occurring during the year would 

continue in the next year. 

• GAO found that CMS did not have procedures in place as of July 

2015 to detect and resolve duplicate coverage. CMS officials told 

GAO that the agency planned to implement periodic checks for 

duplicate coverage beginning in the summer of 2015. Officials also 

said that in 2016, if CMS can build the necessary functionality, the 

agency plans to begin automatically terminating exchange subsidies 

for those with duplicate coverage who do not do so themselves, as 

appropriate, upon agency notification. However, the effectiveness of 

 7

See GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-

21.3.1 (Washington, D.C.: November 1999).
Page 82 GAO-16-375SP Fragmentation, Overlap, and Duplication

these plans will depend in part on how frequently the checks are 

conducted. As of July 2015, CMS had not yet decided the frequency, 

with officials noting that it will depend in part on the agency’s analysis 

of the first check. In addition, while CMS officials told us they intend to 

monitor the results of the checks, they do not have a specific plan, 

including thresholds for the level of duplicate coverage that the 

agency deems acceptable, to routinely monitor the effectiveness of 

these and other procedures.

These weaknesses increase the risk of duplicative federal spending on 

health insurance coverage for individuals transitioning between Medicaid 

and subsidized exchange coverage in states with FFEs. In states where 

Medicaid agencies have identified that individuals are enrolled in 

exchange coverage—and Medicaid is operating as the payer of last 

resort, as required—there may not be a significant difference in federal 

costs for the individual during the period of duplicate coverage compared 

with what would have been spent if duplicate coverage had not occurred.8

However, GAO previously reported that some states may face challenges 

identifying exchange coverage.9 If a state is not aware of an individual’s 

exchange coverage, the federal government could be both subsidizing 

exchange coverage and reimbursing states for Medicaid spending for the 

same individual. The risk of duplicate payments may be higher in states 

where a large proportion of Medicaid enrollees use Medicaid managed 

care because the state pays issuers a monthly fee for each enrolled 

individual, regardless of whether services are received.10 Further, while 

the tax reconciliation process for the APTC has the potential to reduce the 

financial implications of duplicate payments, IRS officials stated that the 

agency will generally not have the data necessary to identify duplicate 

coverage until 2016. They added that the agency’s ability to identify the 

need for repayment of the APTC because of duplicate coverage at that 

time will depend on the quality of the data and IRS’s available resources.

To better minimize the risk of duplicate coverage for individuals 

transitioning between Medicaid and exchange coverage in FFE states, 

GAO recommended in October 2015 that the Administrator of CMS take 

the following two actions:

 8

See generally 42 C.F.R. § 433.135 et seq. Where individuals are enrolled in Medicaid 

along with another form of coverage, the other source of coverage must pay to the extent 

of its liability before Medicaid pays. States are required to take certain steps to identify 

these other sources of coverage and ensure that they pay to the extent of their liability.

9

See GAO, Medicaid: Additional Federal Action Needed to Further Improve Third-Party 

Liability Efforts, GAO-15-208 (Washington, D.C.: Jan. 28, 2015).

10The alternative to a managed care a model is a fee-for-service model, in which states 

pay health care providers for each service delivered. In fiscal year 2014, about 37 percent 

of national Medicaid spending was attributable to Medicaid managed care.

Actions Needed and 

Potential Financial or 

Other Benefits
Page 83 GAO-16-375SP Fragmentation, Overlap, and Duplication

• Establish a schedule for regular checks for duplicate coverage and 

ensure that the checks are carried out according to schedule.

• Develop a plan, including thresholds for the level of duplicate 

coverage it deems acceptable, to routinely monitor the effectiveness 

of the checks and other planned procedures to minimize duplicate 

coverage, and take additional actions as appropriate.

Because GAO found that CMS did not have a process in place to identify 

individuals with duplicate coverage, the extent to which duplicate 

coverage was occurring and the extent to which duplicative payments 

were being made for such individuals could not be determined. Therefore, 

GAO cannot estimate the costs associated with this duplication. However, 

taking these actions should help minimize the occurrence of duplicate 

coverage, thus helping protect the federal government from unnecessary 

and duplicative expenditures.

In commenting on the October 2015 report on which this analysis is 

based, HHS concurred with GAO’s recommendations and described 

steps it has taken and plans to take to minimize the risk of duplicate 

coverage. For example, HHS stated that its first check for duplicate 

coverage was under way in August 2015, and that HHS plans to analyze 

the rate of duplicate coverage identified and gather other relevant input in 

order to establish the frequency of checks going forward. HHS also stated 

that it plans to monitor the rate of duplicate coverage identified in periodic 

checks and that it is working to implement additional internal controls to 

reduce duplicate coverage, including automatically ending exchange 

subsidies for individuals also found to have been determined eligible for 

Medicaid.

GAO provided a draft of this report section to HHS for review and 

comment. The department did not provide comments on this report 

section.

The information contained in this analysis is based on findings from the 

products listed in the related GAO products section. To examine the 

extent to which the federal government had policies and procedures that 

minimize the potential for duplicate coverage when individuals transition 

between Medicaid and exchange coverage, GAO reviewed relevant 

PPACA provisions, federal regulations, and guidance for Medicaid and 

the exchanges. GAO also reviewed FFE procedures and interviewed 

CMS officials to determine whether CMS’s policies and procedures for 

FFE states included internal controls consistent with federal standards. In 

addition, GAO collected information from and interviewed Medicaid 

officials from eight states selected, among other factors, to include four 

with FFEs; representatives of five issuers, selected because they offered 

both types of coverage in one or more selected states; and a trade 

association representing issuers that offered both types of coverage in 

multiple states throughout the country. GAO also interviewed IRS officials 

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 84 GAO-16-375SP Fragmentation, Overlap, and Duplication

on the agency’s process for reconciling APTC, including how the agency 

might identify cases of duplicate coverage.

Table 5 in appendix V lists the programs GAO identified that might have 

similar or overlapping objectives, provide similar services, or be 

fragmented across government missions. Overlap and fragmentation 

might not necessarily lead to actual duplication, and some degree of 

overlap and duplication may be justified.

Medicaid and Insurance Exchanges: Additional Federal Controls Needed 

to Minimize Potential for Gaps and Duplication in Coverage. GAO-16-73. 

Washington, D.C.: October 9, 2015.

Medicaid: Additional Federal Action Needed to Further Improve ThirdParty Liability Efforts. GAO-15-208. Washington, D.C.: January 28, 2015.

For additional information about this area, contact Carolyn L. Yocom at 

(202) 512-7114 or yocomc@gao.gov or John E. Dicken at (202) 512-7114 

or dickenj@gao.gov.

Related GAO 

Products

Contact Information
Page 85 GAO-16-375SP Fragmentation, Overlap, and Duplication

Homeland security/law enforcement

8. Department of Homeland Security’s 

Human Resources Systems

To address issues related to fragmented systems and duplicative processes, the Department of Homeland 

Security should take steps to (1) ensure that its Human Resources Information Technology investment 

receives necessary oversight and attention from its steering committee and (2) evaluate and update the 

investment’s strategic planning document.

Since the Department of Homeland Security (DHS) was created, its 

human resources environment has included fragmented systems, 

duplicative and paper-based processes, and little uniformity of data 

management practices. According to DHS, these limitations in its human 

resources environment compromise the department’s ability to effectively 

and efficiently carry out its mission. For example, according to DHS, 

reporting and analyzing enterprise human capital data are timeconsuming, labor-intensive, and challenging because the department’s 

data management largely consists of disconnected, standalone systems, 

with multiple data sources for the same content.

In 2003, DHS initiated the Human Resources Information Technology 

(HRIT) investment, which is intended to consolidate, integrate, and 

modernize the human resources IT infrastructure of the department and 

its eight components.1 From 2003 to 2010, DHS made limited progress 

on the HRIT investment due to, among other things, limited coordination 

with and commitment from DHS’s components, as reported by DHS’s 

Inspector General.

2 To address this problem, in 2010, the DHS Deputy 

Secretary issued a memorandum emphasizing that DHS’s wide variety of 

human resources processes and IT systems inhibited DHS’s unity and 

negatively impacted operating costs. Among other things, the 

memorandum directed the Office of the Chief Human Capital Officer 

(OCHCO) and the Office of the Chief Information Officer (OCIO) to 

develop a department-wide human resources architecture.

In response to the Deputy Secretary’s direction, in 2011 the department 

developed a strategic planning document referred to as the Human 

Capital Segment Architecture Blueprint, which redefined the HRIT 

investment's scope and implementation time frames. As part of the effort

 1

DHS’s eight components include the Federal Emergency Management Agency, the 

Federal Law Enforcement Training Center, the Transportation Security Administration, 

U.S. Citizenship and Immigration Services, U.S. Customs and Border Protection, the U.S. 

Coast Guard, U.S. Immigration and Customs Enforcement, and the U.S. Secret Service.

2

DHS Office of Inspector General, Management Oversight and Component Participation 

Are Necessary to Complete DHS' Human Resource Systems Consolidation Effort, OIG10-99 (Washington, D.C.: July 1, 2010).

Why This Area Is 

Important
Page 86 GAO-16-375SP Fragmentation, Overlap, and Duplication

to develop the blueprint, DHS conducted a system inventory and reported 

in its blueprint that it had 422 human resources systems and applications. 

DHS also reported that these numerous, antiquated, and fragmented 

systems reduced its ability to efficiently and effectively perform basic 

workforce management functions necessary to support mission-critical 

programs. The blueprint articulated that HRIT would be comprised of 15 

strategic improvement opportunity areas (e.g., enabling seamless, 

efficient, and transparent end-to-end hiring) and outlined 77 associated 

projects (e.g., deploying a department-wide hiring system and

establishing an integrated data repository and reporting mechanism) to 

implement these 15 opportunities.

While OCHCO officials had not prepared a complete life-cycle cost 

estimate for the HRIT investment, for fiscal years 2005 through 2015, the 

investment received line item appropriations totaling at least $180 

million.3 However, this figure is not a complete cost estimate because, as 

GAO reported in February 2016, DHS was unable to provide all cost 

information on HRIT activities since it began in 2003.

HRIT’s Performance and Learning Management System (PALMS) is 

intended to fully address HRIT’s Performance Management strategic 

improvement opportunity area. PALMS is attempting to implement a 

commercial off-the-shelf software product intended to allow DHS to 

consolidate nine existing learning management systems into one system 

and enable comprehensive enterprise-wide tracking, reporting, and 

analysis of employee learning and performance for DHS headquarters 

and its eight components. 

In February 2016, GAO reported that DHS had made very little progress 

in addressing the 15 strategic improvement opportunities and the 77 

associated projects included in HRIT. According to the Human Capital 

Segment Architecture Blueprint, DHS planned to implement 14 of the 15 

strategic improvement opportunities and 68 of the 77 associated projects 

by June 2015, and the remaining improvement opportunity and 9 

associated projects by December 2016. However, as of November 2015, 

DHS had fully implemented only 1 of the strategic improvement 

opportunities, which included 2 associated projects. DHS has partially 

implemented 5 of the other strategic improvement opportunities, but it is 

unknown when they will be fully addressed. As one example, HRIT’s only 

active program—PALMS—is intended to fully address HRIT’s 

Performance Management strategic improvement opportunity area; 

however, while progress to implement PALMS has been made, many 

 3

Appropriations acts passed for fiscal years 2003 through 2004 did not include a line item 

appropriating specific funds to HRIT. 

What GAO Found

Limited Progress Made in 

Implementing HRIT, Due 

in Part to Lack of Steering 

Committee Involvement 
Page 87 GAO-16-375SP Fragmentation, Overlap, and Duplication

actions remain before it can be fully implemented and it is unknown when 

those actions will be taken. Further, HRIT officials stated that DHS has 

not yet started to work on the remaining 9 improvement opportunities, and 

the officials did not know when they would be addressed.

GAO also reported in February 2016 that DHS had made limited progress 

in achieving two performance targets related to the delivery of human 

resources IT services across DHS, as identified in DHS’s HRIT strategic 

plan for fiscal years 2012 through 2016. This plan outlined the 

investment’s key goals and objectives, including reducing duplication and 

improving efficiencies in the department’s human resources processes 

and systems. The plan also identified two performance metrics that were 

focused on reductions in the number of component-specific human 

resources IT services provided and increases in the number of 

department-wide HRIT services provided by the end of fiscal year 2016. 

The figure below provides a summary of HRIT’s limited progress towards 

achieving its performance targets.

Human Resources Information Technology’s Progress towards Achieving Its 

Performance Targets, as of November 2015
Page 88 GAO-16-375SP Fragmentation, Overlap, and Duplication

Specifically,

• DHS’s goal is to reduce its component-specific HRIT services by 46 

percentage points—from 81 percent to 35 percent—however, it had 

reduced these services by 8 percentage points as of November 2015, 

according to OCHCO officials.

• Additionally, while DHS is aiming to increase its DHS-wide HRIT 

services by 38 percentage points—from 2 percent to 40 percent—as 

of November 2015, OCHCO officials stated that the department had 

increased these services by 8 percentage points.

Among other things, GAO reported that a key cause for DHS’s lack of 

progress in implementing HRIT and its associated strategic improvement 

opportunities was the lack of involvement of the HRIT executive steering 

committee. This committee—which is chaired by the department’s Under 

Secretary for Management and co-chaired by the Chief Information 

Officer and Chief Human Capital Officer—is intended to be the core 

oversight and advisory body for all DHS-wide matters related to human 

capital IT investments, expenditures, projects, and initiatives. In addition, 

according to the committee’s charter, the committee is to approve and 

provide guidance on the department’s mission, vision, and strategies for 

the HRIT program. 

However, the executive steering committee only met once from 

September 2013 through June 2015—in July 2014—and was minimally 

involved with HRIT for that period. In addition, DHS replaced its Chief 

Information Officer (the executive steering committee’s co-chair) in 

December 2013. Also during this period, PALMS was experiencing 

significant problems, including schedule slippages and frequent turnover 

in its program manager position. As a result of the executive steering 

committee not meeting, key governance activities were not completed on 

HRIT. For example, the committee did not approve HRIT’s notional 

operational plan for fiscal years 2014 through 2019. OCHCO and OCIO 

officials attributed the lack of HRIT executive steering committee 

meetings and committee involvement in HRIT to the investment’s focus 

being only on the PALMS program to address its issues. However, 

because the committee did not regularly meet and provide oversight 

during a time when a new co-chair for the executive steering committee 

assumed responsibility and PALMS was experiencing problems, the 

committee’s guidance to the troubled program was limited. 

As we reported in February, the HRIT executive steering committee met 

in June and October 2015, and OCIO and OCHCO officials stated that 

the committee planned to meet quarterly going forward. However, while 

the committee’s charter specified that it meet on at least a monthly basis 

for the first year, the charter did not specify the frequency of meetings 

following that year. Furthermore, the committee’s charter had not been 

updated to reflect the increased frequency of these meetings. In response 

to our February report, OCIO officials stated that the executive steering 

committee met twice in February and, going forward, will be meeting on a 
Page 89 GAO-16-375SP Fragmentation, Overlap, and Duplication

regular schedule. Officials also stated that they are in the process of 

updating their HRIT committee charter.

Nevertheless, as a result of the limited progress in implementing HRIT, 

DHS is unaware of when critical weaknesses, including unnecessary 

duplication and inefficient fragmentation in the department’s human 

capital environment, will be addressed, which, among other things, 

impacts DHS’s ability to efficiently and effectively carry out its mission. 

Additionally, without HRIT’s executive steering committee effectively 

carrying out its oversight responsibility, DHS is limited in its ability to 

improve HRIT investment results and accountability.

GAO also reported in February 2016 that HRIT’s blueprint may not be 

valid and reflective of DHS’s current priorities and goals. According to the 

HRIT executive steering committee’s charter, the Under Secretary for 

Management (as the chair of the committee) is to ensure that the 

department’s human resources IT business needs are met, as outlined in 

the blueprint. Also, according to the GPRA (Government Performance 

and Results Act) Modernization Act of 2010, agency strategic plans 

should be updated at least every 4 years. While the Human Capital 

Segment Architecture blueprint does not fall under the category of an 

“agency strategic plan,” the requirement to update at least every 4 years

is considered a leading practice for other strategic planning documents, 

such as the blueprint.

The department issued the blueprint in August 2011 (approximately 4.5 

years ago) and has not updated it since. As a result, the department does 

not know whether the remaining 14 strategic improvement opportunities 

and associated projects that it has not fully implemented—many of which 

were to help reduce duplicative and fragmented systems and 

processes—are still valid and reflect DHS’s current priorities and are 

appropriately prioritized based on current mission and business needs. 

Additionally, DHS does not know whether new or emerging opportunities 

or business needs need to be addressed. 

Officials stated that the department is still committed to implementing the 

blueprint but agreed that it should be re-evaluated. To this end, OCHCO 

and OCIO officials told GAO that HRIT was asked by the Deputy Under 

Secretary of Management in late October 2015 to re-evaluate the 

blueprint’s strategic improvement opportunities and to determine the way 

forward for those improvement opportunities and the HRIT investment. 

However, officials did not know when this re-evaluation and determination 

would occur.

Further, according to OCIO officials, DHS has not updated its complete 

systems inventory since it was originally developed as part of the 

blueprint effort. DHS developed the original systems inventory in 

response to a 2010 Office of Inspector General report that stated that 

DHS had not identified all human resource systems at the components. 

This report also emphasized that without an accurate inventory of human 

HRIT’s 2011 Blueprint May 

Not Be Valid and 

Reflective of DHS’s 

Current Priorities and 

Goals
Page 90 GAO-16-375SP Fragmentation, Overlap, and Duplication

resource systems, DHS cannot determine whether components are using 

redundant systems. Moreover, OCIO officials were unable to identify 

whether and how DHS’s inventory of human resources systems had 

changed. Without time frames for re-evaluating the blueprint to reflect 

DHS’s HRIT current priorities and an updated human resources system 

inventory, the department is limited in its ability to address the duplicative, 

fragmented, and inefficient human resources environment that has 

plagued the department since it was first created.

In February 2016, GAO recommended that the Secretary of Homeland 

Security direct the Under Secretary of Management to take the following 

two actions:

• Update the HRIT executive steering committee charter to establish 

the frequency with which HRIT executive steering committee 

meetings are to be held.

• Ensure that the HRIT executive steering committee is consistently 

involved in overseeing and advising HRIT, including approving key 

program management documents, such as HRIT’s operational plan.

Additionally, GAO recommended that the Secretary of Homeland Security 

direct the Under Secretary of Management to direct the Chief Human 

Capital Officer to direct the HRIT investment to take the following three 

actions:

• Establish time frames for re-evaluating the strategic improvement 

opportunities and associated projects in the Human Capital Segment 

Architecture Blueprint and determining how to move forward with 

HRIT.

• Evaluate the strategic improvement opportunities and projects within 

the Human Capital Segment Architecture Blueprint to determine 

whether they and the goals of the blueprint are still valid and reflect 

DHS’s HRIT priorities going forward, and update the blueprint 

accordingly.

• Update and maintain the department’s human resources system 

inventory.

Financial benefits associated with these actions cannot be quantified 

because they are related to programs and projects for implementing 

human resources process changes and potential future systems whose 

costs have not yet been determined. However, taking these actions 

should help result in the implementation of department-wide human 

resources systems, rather than duplicative, component-specific systems, 

which should enable a more efficient use of human resources system 

investment dollars.

Actions Needed and 

Potential Financial or 

Other Benefits
Page 91 GAO-16-375SP Fragmentation, Overlap, and Duplication

In commenting on the February 2016 report on which this analysis is 

based, DHS concurred with GAO’s recommendations and identified initial 

actions that it had taken to evaluate HRIT and improve oversight of the 

investment. The department also identified estimated completion dates 

for implementing GAO’s recommendations.

GAO provided a draft of this report section to DHS for review and 

comment. The department provided technical comments, which GAO

incorporated, as appropriate.

The information contained in this analysis is based on findings from the 

product listed in the related GAO products section. To perform this work, 

GAO compared HRIT’s goals, scope, and implementation time frames (as 

defined in the Human Capital Segment Architecture Blueprint, which was 

completed in August 2011) to the investment’s actual accomplishments. 

Specifically, GAO compared the completed and in-progress HRIT projects 

against the strategic improvement opportunities and projects that were 

outlined in the blueprint to determine which of the improvement 

opportunities and projects had been fully implemented or were inprogress. GAO also compared DHS’s planned schedule for implementing 

the improvement opportunities and projects against DHS’s current 

planned schedule for implementing them as of November 2015. GAO 

interviewed officials from DHS’s Office of the Chief Information Officer 

and Office of the Chief Human Capital Officer, as well as DHS’s eight 

components, to obtain additional information on how HRIT reduced or 

would reduce duplicative human resources systems.

Homeland Security: Oversight of Neglected Human Resources 

Information Technology Investment Is Needed. GAO-16-253. 

Washington, D.C., February 11, 2016.

For additional information about this area, contact Carol R. Cha at (202) 

512-4456 or chac@gao.gov, or Rebecca S. Gambler at (202) 512-6912 

or gamblerr@gao.gov.

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work

Related GAO Product

Contact Information
Page 92 GAO-16-375SP Fragmentation, Overlap, and Duplication

9. Security of Federal Facilities

The Federal Protective Service and General Services Administration need to improve collaboration in key 

areas to better manage fragmentation and enhance the agencies’ ability to protect federal facilities.

Over 1 million employees and a wide range of visitors seeking services 

depend on the government to provide security and protection at 

approximately 8,900 facilities held or leased by the General Services 

Administration (GSA). Two federal agencies—the Federal Protective 

Service (FPS), an agency within the Department of Homeland Security 

(DHS), and GSA—are critical to ensuring security. The Homeland 

Security Act of 2002 vested both the Secretary of Homeland Security and 

the Administrator of GSA with responsibilities for the protection of federal 

facilities.1 FPS and GSA’s related missions regarding facility protection 

require them to collaborate at the agency headquarters, regional, and 

facility levels. 

GAO has designated federal real-property management as a high-risk 

area in part because of physical security challenges at federal facilities.2

GAO and others have identified physical security of federal facilities as an 

area facing ongoing challenges, specifically with regard to collaboration 

between FPS and GSA. For example, GAO has reported on FPS’s and 

GSA’s difficulty collaborating in areas including sharing information and 

clearly defining roles and responsibilities.3 To the extent that collaboration 

affects these agencies’ ability to adequately protect facilities, security may 

be compromised.

 1

The Homeland Security Act of 2002 transferred FPS along with its law enforcement and 

security functions from GSA to DHS. Pub. L. No. 107-296, § 403(3), 116 Stat. 2135, 2178 

(2002). GSA manages federal facilities, including courthouses, and is responsible for 

federal courthouse design, construction, and maintenance. The U.S. Marshals Service, a 

component of the Department of Justice, has primary responsibility for protecting federal 

judicial facilities and personnel. FPS is responsible for enforcing federal laws and 

providing building-entry and perimeter security at GSA-held or GSA-leased facilities 

including facilities housing federal courts. For the purpose of this report section, GAO 

focuses on collaboration between FPS and GSA related to federal facilities. For more 

information on collaboration issues at federal courthouses, see GAO, Federal 

Courthouses: Improved Collaboration Needed to Meet Demands of a Complex Security 

Environment, GAO-11-857 (Washington, D.C.: Sept. 28, 2011).

2

GAO designated the broader area of federal real property management as a high-risk 

area due to overreliance on leasing, the presence of unneeded and underutilized facilities, 

and security challenges at federal facilities. GAO, High Risk Series: An Update, GAO-15-

290 (Washington, D.C.: February 2015). 

3

See GAO, Federal Facility Cybersecurity: DHS and GSA Should Address Cyber Risk to 

Building and Access Control Systems, GAO-15-6 (Washington, D.C.: Dec. 12, 2014); 

Federal Protective Service: Better Data on Facility Jurisdictions Needed to Enhance 

Collaboration with State and Local Law Enforcement, GAO-12-434 (Washington, D.C.: 

Mar. 27, 2012); and Homeland Security: Greater Attention to Key Practices Would 

Improve the Federal Protective Service’s Approach to Facility Protection, GAO-10-142

(Washington, D.C.: Oct. 23, 2009).

Why This Area Is 

Important
Page 93 GAO-16-375SP Fragmentation, Overlap, and Duplication

In a December 2015 report, GAO found that FPS and GSA have taken 

some steps to improve collaboration, such as drafting a joint strategy and 

renewing negotiations to update their 2006 memorandum of agreement 

(MOA) on roles, responsibilities, and operational relationships concerning 

the security of GSA-controlled space. However, at the time of our report, 

GAO found that the two agencies have not reached final agreement in 

these areas. While each agency has some individual policies for 

collaboration, the two agencies have made limited progress in agreeing 

on several key practices GAO has identified in prior work that can 

enhance and strengthen collaboration.4 For example, they have not fully 

defined or articulated a common outcome or established mutually 

reinforcing joint strategies; collaborated in communicating existing 

policies and procedures to operate across agencies and regions; or jointly 

developed mechanisms to monitor, evaluate, and report on the results of 

their related missions regarding facility protection. As of December 2015, 

the two agencies continued to work toward reaching agreement in these 

areas. FPS and GSA officials have not previously focused on these areas 

of collaboration largely because they have not made it a priority to 

address how they can better work together. 

As a result of not having key practices in place, officials GAO interviewed 

in the four FPS and GSA regions said they were not aware of agreed 

upon collaborative policies and procedures to conduct day-to-day 

operations. GAO found that this created inefficiencies and security risks 

at the regional level, such as in the following examples:

• GSA officials in two different regions told GAO that they did not have 

sufficient information from FPS about security plans for upcoming 

events—a dignitary’s visit and a major world conference—to prepare 

tenants for changes to security procedures. Without sufficient 

information, GSA officials said that they could not fully inform their 

tenants of necessary security measures. 

• FPS and GSA officials told GAO of a bomb threat to a building that 

houses more than 3,000 tenants. Officials from both agencies said 

they were uncertain about which agency had responsibility for making 

building-wide decisions during the event, such as whether or not to 

evacuate the tenants. The problem resulted, in part, from the building 

not having an accurate and up-to-date Occupant Emergency Plan 

(OEP) for addressing such issues. Uncertainty about responsibilities 

could have serious consequences—such as the loss of lives, injuries 

to tenants and visitors, and property damage in the facility. 

• FPS officials identified two cases in which GSA did not notify FPS of 

projects, an oversight that prevented FPS from reviewing the project 

 4

See GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain 

Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005).

What GAO Found
Page 94 GAO-16-375SP Fragmentation, Overlap, and Duplication

for possible security enhancements as part of the renovation. FPS 

officials said the two projects are expected to total approximately $1.1 

million. FPS was only informed of the two renovation projects when 

notified by U.S. Marshals Service officials. FPS officials told GAO 

these are isolated incidents, and that the FPS region plans to reach 

out to GSA to ensure that FPS is brought into the process during the 

early stages of planning, specifically in smaller areas. Better 

communication between FPS, as security experts, and GSA could 

have helped to prevent this problem. Although the 2006 MOA requires 

GSA to notify FPS of alteration projects, without GSA developing 

mechanisms to ensure that notification and consultation occur with 

FPS, projects may not include recommended security enhancements. 

The incomplete implementation of key collaboration practices—

particularly with regard to agreement on roles and responsibilities, 

compatible policies and procedures, and mechanisms to monitor, 

evaluate, and report on results—leaves day-to-day operational decisions 

to the regional and facility levels, a situation that may result in 

inconsistent management practices among regions across the country. 

As noted in the cases previously described, this practice could lead to 

FPS and GSA not making the best use of limited resources to build and 

renovate facilities, and may increase security lapses, putting facilities, 

tenants, and the public at greater risk.

To improve collaboration, in December 2015, GAO recommended that 

FPS and GSA take the following four actions:

• Establish a plan with time frames for reaching agreement on a joint 

strategy and finalizing it in order to define and articulate a common 

understanding of expected outcomes and align the two agencies’ 

activities and core processes. 

• Establish a plan with time frames for reaching agreement on the two 

agencies’ respective roles and responsibilities for federal facility 

security, and update and finalize the two agencies’ MOA accordingly.

• Develop a process to ensure that compatible policies and procedures 

are communicated at the regional level so that regional officials at 

both agencies have common information.

• Develop mechanisms to monitor, evaluate, and report on their 

collaborative efforts to protect federal facilities in order to identify 

possible areas for improvement and to reinforce accountability.

GAO was not able to quantify the potential financial benefits of taking 

these actions because different roles and responsibilities prevent direct 

comparison between the two agencies. However, implementation of 

these actions could improve coordination in protecting federal facilities, 

help ensure more efficient and effective use of federal resources, and 

reduce confusion that can arise from multiple agencies working toward a 

common goal.

Actions Needed and 

Potential Financial or 

Other Benefits
Page 95 GAO-16-375SP Fragmentation, Overlap, and Duplication

In commenting on the December 2015 report on which this analysis is 

based, DHS and GSA provided written comments. DHS concurred with 

GAO’s recommendations and provided actions and time frames for 

completion. DHS officials stated that they are working to update their 

respective roles and responsibilities and to define a joint strategy and 

outcome for federal facility protection. Specifically, DHS stated that the 

MOA is to include roles and responsibilities for each organization where 

there are clear dependencies. DHS also stated that in collaboration with 

GSA, FPS plans to document how field personnel can better execute their 

responsibilities. Furthermore, DHS stated that FPS and GSA 

headquarters personnel have agreed to meet monthly to review and 

address identified areas for improvement, and the officials expect to 

further define mechanisms to monitor, evaluate, and report on their 

collaborative efforts to protect federal facilities during these monthly 

meetings. GSA agreed with GAO’s findings and agreed to work with FPS 

to address them. DHS’s and GSA’s responses are a positive step toward 

addressing GAO’s recommendations.

GAO provided a draft of this report section to DHS and GSA for their 

review and comment. Both agencies responded and did not provide any 

new comments to those already provided on the report.

GAO analyzed pertinent laws; reviewed DHS, National Protection and 

Programs Directorate, FPS, and GSA regulations, policy documents, and 

strategic plans; and compared FPS’s and GSA’s collaboration efforts 

against GAO’s selected key collaboration practices. GAO also 

interviewed agency officials at the headquarters and regional levels. GAO 

selected four FPS and GSA regions because they comprise about 41 

percent of all GSA-leased facilities and GSA-controlled federally-owned 

facilities, are geographically dispersed, and include a mix of urban and 

rural federal facilities and a range of facility security levels. While the 

results from regions cannot be generalized, they provided illustrative 

examples.

Homeland Security: FPS and GSA Should Strengthen Collaboration to 

Enhance Facility Security. GAO-16-135. Washington, D.C.: December 16, 

2015.

For additional information about this area, contact Lori Rectanus at (202) 

512-2834 or rectanusl@gao.gov.

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work

Related GAO Product

Contact Information
Page 96 GAO-16-375SP Fragmentation, Overlap, and Duplication

Information technology

10. Tribal Internet Access

Greater coordination among the Federal Communications Commission’s Universal Service Fund subsidy 

programs and the U.S. Department of Agriculture’s Rural Utilities Service grant programs could result in more 

efficient and effective support of Internet access for tribal communities.

High-speed Internet service is viewed as a critical component of the 

nation’s infrastructure and an economic driver. The Internet is particularly

useful to tribal communities—which are generally located in remote, rural 

locations—as access to it offers new opportunities for growth, 

productivity, and innovation. In 2012, the Federal Communications 

Commission (FCC) reported that the lack of service in rural and tribal 

lands presents impediments to efforts of tribal nations to build their 

internal structures for self-governance, economic opportunity, education, 

public safety, and cultural preservation.1 The communications 

infrastructure that supports Internet access is, by and large, built and 

operated by private industry, but the federal government provides funding 

to promote greater access and adoption of high-speed Internet through 

FCC’s Universal Service Fund and the U.S. Department of Agriculture’s 

(USDA) Rural Utilities Service. From fiscal years 2010 to 2014, the 

federal government provided over $33 billion in assistance to 

telecommunications service providers and municipalities to build or 

improve networks in order to further the national goal of universal highspeed Internet access in underserved areas, including tribal lands.2

FCC and USDA implement several mutually supportive, interrelated highspeed Internet access programs that offer assistance to tribes and the 

providers that serve tribal lands. 

• FCC’s Universal Service Fund supports three programs—the Connect 

America Fund, the Schools and Library Support Program, and the 

Healthcare Connect Fund—that provide subsidies or discounts to 

improve telecommunications services, including services in tribal 

lands. The goals of these programs include increasing access to 

Internet service for all consumers at reasonable and affordable rates.

• USDA’s Rural Utilities Service supports programs—the Distance 

Learning and Telemedicine program and the Community Connect 

 1

For this report, GAO has defined tribal lands as lands that include any federally 

recognized Indian tribe’s reservation, off-reservation trust lands, pueblo, or colony, and 

Alaska Native regions established pursuant to the Alaska Native Claims Settlement Act, 

Pub. L. No. 92-203, 85 Stat. 688 (1971) (codified as amended at 43 U.S.C. §§ 1601 et 

seq.). Tribal lands do not include Oklahoma Tribal Statistical Areas (OTSA), and the 

population figure of 640,000 does not include the 401,000 Native Americans living on 

OTSAs.

2

Due to a lack of specific data, GAO was unable to determine the portion of funds that 

went to tribal lands from each of the programs.

Why This Area Is 

Important
Page 97 GAO-16-375SP Fragmentation, Overlap, and Duplication

Program—that also help to improve infrastructure for high-speed 

Internet and other telecommunications services through grants, loans, 

and loan guarantees. These programs seek to extend high-speed 

Internet access in rural communities, where it is least likely to be 

commercially available.

FCC’s and USDA’s programs have similar goals to increase access to 

Internet service on tribal lands, and both agencies’ programs offer funding 

to either tribal entities or service providers to achieve this goal of 

increased access. For example, FCC’s Health Care Connect and USDA’s 

Distance Learning and Telemedicine programs both seek to assist clinics 

in connecting to the Internet, including those clinics on tribal lands. 

Further, both FCC and USDA programs have eligibility requirements such 

as the need and condition of the Internet infrastructure in a region. Tribes 

sometimes qualify for benefits from more than one of these programs, 

either directly or through private-sector Internet providers.

In a January 2016 report, GAO found that FCC and USDA do not 

coordinate to develop joint outreach and training for their programs that 

promote high-speed Internet access in tribal lands, which could result in 

an inefficient use of federal resources and missed opportunities for 

resource leveraging between the two agencies. About half of the 21 tribes 

GAO interviewed for its January 2016 report said that a lack of tribal 

members with sufficient administrative and technical expertise is a barrier 

to increasing high-speed Internet access on tribal lands. Tribal officials 

said that tribal members do not always have the bureaucratic expertise 

required to apply for federal funds, which can lead to mistakes or the 

need to hire consultants. The National Broadband Plan recognized the 

challenges of administrative and technical capacity and recommended 

that FCC and Congress support technical training and capacity 

development on tribal lands, such as by considering additional funding for 

tribal leaders to participate in FCC training at no cost.3 However, despite 

the importance of training and outreach, FCC’s and USDA’s programs in 

this area are not always well coordinated. 

One area in which FCC and USDA lack coordination is their outreach and 

technical assistance efforts when planning visits to tribes or training 

events. Synchronizing these activities could improve the efficiency, reach, 

and effectiveness of these programs. However, both FCC and USDA 

independently conduct outreach and training efforts for related programs 

promoting Internet access, including the following examples:

 3

In March 2010, FCC issued the National Broadband Plan, which included a centralized 

vision for achieving affordability and maximizing use of high-speed Internet to advance 

community development, health care delivery, education, job creation, and other national 

purposes. FCC, Connecting America: The National Broadband Plan (Washington D.C.: 

2010).

What GAO Found
Page 98 GAO-16-375SP Fragmentation, Overlap, and Duplication

• FCC spent $300,000 on tribal consultation and training in fiscal year 

2015. While FCC officials said they invite USDA officials to FCC 

training workshops and are sometimes invited to USDA training 

workshops, they said that they do not coordinate to develop joint 

outreach or training events. This lack of coordination could result in an 

inefficient use of federal resources to improve access to high-speed 

Internet, missed opportunities for resource leveraging between FCC 

and USDA, and the need for tribes to attend multiple events. 

• While USDA held a training event in Washington State in fiscal year 

2015, FCC hosted a training event in Oregon the same year. The two 

agencies could have planned a joint training event in the Pacific 

Northwest Region and each contributed toward the costs of the event 

while reducing the cost burdens for tribes, which would not have had 

to travel twice or choose between the two training events given limited 

budgets. 

Officials from one tribe said that multiple federal programs offering similar 

grants were confusing and that a federal one-stop-shop for outreach and 

training would help them better target the right programs for their 

situation. Officials from a different tribe said that the tribe benefits from 

FCC programs but not USDA programs, in part because tribal officials did 

not have a strong understanding of the USDA programs that might benefit 

their community’s Internet access. 

GAO’s body of work has shown that interagency coordination in general 

can help agencies with interrelated programs ensure efficient use of 

resources and effective programs.4 Agencies can enhance and sustain 

their coordinated efforts by engaging in key practices, such as 

establishing compatible policies and procedures through official 

agreements.5 Agencies can also develop means to operate across 

agency boundaries, including leveraging resources across agencies for 

joint activities such as training and outreach.6 Through better coordination 

where feasible on joint training and outreach efforts to build tribal 

administrative and technical capacity, FCC and USDA could better 

ensure that their programs are efficient and remain mutually supportive 

and accessible to tribal governments.

 4

GAO, Managing for Results: Barriers to Interagency Coordination, GAO/GGD-00-106

(Washington, D.C.: Mar. 29, 2000).

5

GAO, Managing for Results: Key Considerations for Implementing Interagency 

Collaborative Mechanisms, GAO-12-1022 (Washington, D.C.: Sept. 27, 2012).

6

GAO, Fragmentation, Overlap, and Duplication: An Evaluation and Management Guide, 

GAO-15-49SP (Washington, D.C.: Apr. 14, 2015).
Page 99 GAO-16-375SP Fragmentation, Overlap, and Duplication

GAO recommended in January 2016 that the Chairman of the Federal 

Communications Commission take the following action:

• Develop joint outreach and training efforts with USDA whenever 

feasible to help improve Internet availability and adoption on tribal 

lands.

GAO cannot quantify financial benefits due to a lack of specific data on 

which service providers serve tribal areas. However, implementing this 

action could result in more efficient and effective use of federal resources 

and reduce confusion that can arise from multiple programs.

In commenting on the January 2016 report on which this analysis is 

based, FCC concurred with GAO’s recommendation. FCC summarized 

the areas in which it coordinates with USDA and said that it will continue 

to work with USDA to ensure more strategic and routine coordination. 

GAO provided a draft of this report section to FCC and USDA for review 

and comment. FCC concurred with the recommendation and said that it 

will continue to work with USDA to ensure more strategic and routine 

coordination. FCC invited USDA officials to their 2016 training events. 

USDA did not provide comments on this report section.

To determine the level of interrelation and coordination between federal 

programs at FCC and USDA that promote high-speed Internet access on 

tribal lands, GAO reviewed FCC and USDA program funding and 

guidance materials for fiscal year 2010 through 2014. GAO also

interviewed FCC and USDA officials, as well as officials from 18 tribal 

governments in the continental United States, 3 Alaska Native regions, 

and 6 service providers operating on tribal lands. To identify tribes to 

interview, GAO reviewed the types and amounts of assistance provided 

by FCC and USDA between fiscal years 2010 and 2014 and Bureau of 

the Census 2013 data regarding population and poverty rates. Tribes

were selected to have a range of population, poverty rates, and locations, 

both remote and closer to urban areas. These interviews were not 

generalizable to all tribes or all service providers. GAO evaluated 

Universal Service Fund and Rural Utilities Service program coordination 

based on criteria for implementing interrelated programs developed in 

previous GAO work on fragmentation, overlap, duplication, and 

interagency coordination within the federal government.7

 7

GAO, Fragmentation, Overlap, and Duplication: An Evaluation and Management Guide, 

GAO-15-49SP (Washington, D.C.: Apr. 14, 2015); Managing for Results: Barriers to 

Interagency Coordination, GAO/GGD-00-106 (Washington, D.C.: Mar. 29, 2000); and

Managing for Results: Key Considerations for Implementing Interagency Collaborative 

Mechanisms, GAO-12-1022 (Washington, D.C.: Sept. 27, 2012).

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 100 GAO-16-375SP Fragmentation, Overlap, and Duplication

Table 6 in appendix V lists the programs GAO identified that might have 

similar or overlapping objectives, provide similar services, or be 

fragmented across government missions. Overlap and fragmentation 

might not necessarily lead to actual duplication, and some degree of 

overlap and duplication may be justified.

Telecommunications: Additional Coordination and Performance 

Measurement Needed for High-speed Internet Access Programs on Tribal 

Lands. GAO-16-222. Washington D.C.: January 29, 2016.

Telecommunications: Challenges to Assessing and Improving 

Telecommunications for Native Americans on Tribal Lands. GAO-06-189. 

Washington D.C.: January 11, 2006.

For additional information about this area, contact Mark L. Goldstein, 

(202) 512-2834 or goldsteinm@gao.gov.

Related GAO 

Products

Contact Information
Page 101 GAO-16-375SP Fragmentation, Overlap, and Duplication

International affairs

11. U.S. Embassy Kabul Construction

A strategic facilities plan for construction projects in Kabul, Afghanistan, could enhance the planning and 

coordination among Department of State bureaus and reduce the likelihood of fragmented construction efforts 

and duplicative facilities.

Since the reopening of the U.S. embassy in Kabul, Afghanistan, in 2002, 

the Department of State (State) has invested or plans to invest a total of 

$2.17 billion in its facilities in Kabul to address current and projected 

space needs in a difficult environment that has experienced constantly 

evolving security threats.1

State’s Bureau of Overseas Buildings Operations (OBO) is responsible 

for the acquisition, design, construction, maintenance, and sale of U.S. 

government diplomatic property abroad. State’s Bureau of Diplomatic 

Security (DS) is responsible for, among other things, establishing and 

operating security and protective procedures at posts, developing and 

implementing posts’ physical security programs, and chairing the 

interagency process that sets security standards. Accordingly, DS is 

responsible for ensuring that new diplomatic construction meets security 

standards. State’s Bureau of South and Central Asian Affairs (SCA) is 

responsible for coordinating foreign policy related to countries in the 

region, including Afghanistan. In that capacity, SCA guides the operation 

of U.S. diplomatic missions—embassies and consulates, including 

Kabul—within those countries.

From 2002 through 2009, State took several actions to expand the U.S. 

embassy compound in Kabul—a challenging location with a dynamic, 

unpredictable, and dangerous operating environment. Moreover, this 

construction occurred on an already fully operational embassy compound. 

Initially, OBO refurbished an existing office building, built in the 1960s.2

OBO also constructed a new chancery office building, staff apartments, 

and support facilities. Additionally, OBO constructed temporary offices 

and housing. In fiscal years 2009 and 2010, State awarded two contracts 

originally worth $625.4 million in total to meet growing facility 

requirements at the U.S. embassy in Kabul. This project, which is 

ongoing, includes temporary and permanent housing and office buildings. 

Once the current construction is completed, the Kabul embassy’s 

permanent facilities— both older structures and the newly constructed 

office and apartment buildings—will contain 1,487 desks and 819 beds. In 

addition, the post has used a variety of off-compound facilities to meet 

 1

State’s past and planned capital construction investments in Kabul from 2002 through 

March 2015 total $2.17 billion in project funding, which includes awarded construction 

contracts and other costs State incurs that are not part of those contracts.

2

The U.S. government vacated the existing office building in 1989, reoccupying it in 2002.

Why This Area Is 

Important
Page 102 GAO-16-375SP Fragmentation, Overlap, and Duplication

some needs that could not be met on-compound. Key off-compound 

facilities include Camps Alvarado, Eggers, Seitz, and Sullivan, which 

represent a total State construction investment of almost $731.4 million.

GAO reported in May 2015 that State’s lack of a strategic facilities plan 

led to coordination challenges in addressing the Kabul embassy’s future 

facility needs. State officials indicate that additional capital construction 

investments are needed to address interim and future facility needs of the 

U.S. embassy in Kabul, both on and off compound. State stakeholders in 

Washington, D.C., and at the post are working to identify, prioritize, and 

address the post’s facility needs through various coordination meetings 

and working groups. However, State does not have a strategic facilities 

plan for Kabul that documents current and future embassy needs, 

comprehensively outlines existing facilities, analyzes gaps, provides 

projected costs, and documents decisions made. Lack of such a plan has 

inhibited coordination and undermined the continuity necessary to 

address emergent needs at the Kabul embassy.

Guidance issued by the International Facility Management Association, 

GAO, and the Office of Management and Budget (OMB) recommend that 

an organization view all real property asset investments as a single 

portfolio with strategic linkages when determining the right mix of projects 

to undertake.3 The International Facility Management Association

describes a strategic facility plan as a 2- to 5-year facilities plan 

encompassing an entire portfolio of owned and/or leased properties that 

sets strategic facility goals based on the organization’s strategic 

objectives. It contains a needs statement (i.e., mission need), analysis of 

all real property assets and their condition (owned and leased), analysis 

of gaps between needs and current asset capabilities, recommendations 

for new spaces or buildings, and facility cost projections. The International 

Facility Management Association also indicates that the plan should 

document findings to include expected timelines for implementation but 

allow flexibility for updates, as appropriate. Similarly, GAO and OMB 

capital planning guidance emphasize the importance of identifying current 

capabilities of real property assets, determining gaps between current 

assets and needed capabilities, deciding how best to meet the gap by 

identifying and evaluating alternative approaches, documenting decisions, 

and making updates as needed.4

 3

The International Facility Management Association is an international professional 

association that advances facilities management through professional credentialing of 

facility managers, research, and training. OBO recognizes the International Facility 

Management Association, and OBO’s facility managers have used its training programs.

4

GAO, Executive Guide: Leading Practices in Capital Decision-Making, GAO/AIMD-99-32

(Washington, D.C.: Dec. 1, 1998), and Office of Management and Budget, Capital 

Programming Guide, Supplement to Office of Management and Budget Circular A-11, 

Planning, Budgeting, and Acquisition of Capital Assets (June 2015).

What GAO Found
Page 103 GAO-16-375SP Fragmentation, Overlap, and Duplication

State officials responsible for embassy management, facilities, security, 

and construction all cited the lack of an overarching plan as an obstacle 

to project coordination intended to address the embassy’s emergent 

facility needs. According to State officials in Kabul and Washington, 

coordination to address the Kabul embassy’s future needs is particularly 

difficult due to the large number of stakeholders in Kabul and in 

Washington. Additionally, the constant personnel turnover caused by the 

1-year tours served by most management, facilities, and security staff in 

Kabul results in lack of continuity in decision making. As far back as 

January 2006, the State Office of Inspector General also identified “the 

near total lack of institutional memory” stemming from the lack of staff 

continuity and a “never-ending” learning curve as the most serious 

impediments to good executive direction at the U.S. embassy in Kabul.

State officials in Kabul noted the growing number and frequency of 

coordination meetings and teleconferences intended to address the 

embassy’s future facility needs. However, they also reported that 

communication at such meetings can be difficult as parties seek to 

reconcile planning differences on proposed projects. Without a 

comprehensive plan that provides a strategic framework to document 

mission needs, catalog existing facilities, analyze gaps, provide projected 

costs, and document recommendations, the competing proposals of the 

post’s many stakeholders are difficult to manage, prioritize, and reconcile. 

As a result, State officials in Kabul said that these meetings suffer from no 

common vision and a lack of decision making.

Consequently, State has been challenged to efficiently address changing 

embassy needs in several instances on and off compound. For example:

• Interference with on-compound construction—OBO officials in Kabul 

expressed frustration that proposals for new projects would often 

conflict with plans previously agreed to by previous post management 

staff. For example, during GAO’s fieldwork, post management 

proposed to locate a helicopter landing zone near the embassy 

warehouse. However, according to OBO officials on-site, they had 

arranged with the previous management team to reserve that space 

as a staging area for the contractor to build the warehouse expansion. 

When asked about this, post management officials stated that they 

had no continuity document that informed them of this earlier decision.

• On-compound physical security upgrades—DS first requested 

changes to the embassy compound’s security perimeter in December 

2010 and added more requirements in response to attacks against the 

compound in September 2011. In February 2013, the post urged OBO 

to provide a project schedule and expedite the upgrades. However, 

that was not done, and as of March 2015, OBO and DS had not 

reached agreement on schedules and costs for some security 

upgrade projects.

• Camp Seitz construction—In 2013, DS and post management 

decided to relocate the Kabul Embassy Guard Force from Camp 
Page 104 GAO-16-375SP Fragmentation, Overlap, and Duplication

Sullivan and the Protective Security Detail (movement protection) 

Guard forces from another camp to sites closer to the embassy 

compound due to security concerns. To facilitate this, DS initiated the 

acquisition of the Camp Seitz site through OBO. However, according 

to State officials, DS then began construction of temporary housing at 

Camp Seitz without submitting the design to OBO for review or 

applying for a building permit. After OBO became aware of the 

completed construction, it identified fire safety deficiencies that DS 

had to correct.

• Camp Sullivan, Camp Eggers, and Qasemi Lot Vehicle Maintenance 

Facility—As part of the security contractor relocation, post 

management and DS asked OBO in September 2013 to remove

several support facilities, including a vehicle maintenance facility, from 

an ongoing construction project at Camp Sullivan, and instead 

proposed to build them at Camp Eggers. Post management and DS 

officials stated that once the temporary vehicle maintenance facility 

on-compound is demolished to make way for two new apartment 

buildings, it would be better for security and logistics to build the 

replacement vehicle maintenance facility close to the compound

rather than at Camp Sullivan. However, OBO continued to proceed 

with its plan to build the Sullivan vehicle maintenance facility because 

negotiations for the 30 leases that would comprise the Camp Eggers 

compound were not complete. Also, OBO was concerned that if an 

alternative vehicle maintenance facility was not available for the 

embassy’s use, construction of the apartment buildings could be 

delayed and their costs increased. Discussions continued among 

OBO, DS, and post management, and the proposed temporary 

vehicle maintenance facility was shifted to Qasemi Lot, a site adjacent 

to Camp Seitz. However, OBO decided not to eliminate the Camp 

Sullivan vehicle maintenance facility until plans for a replacement 

facility at Qasemi Lot were approved by OBO and DS had awarded a 

construction contract with a scheduled completion date prior to the 

demolition date for the existing vehicle maintenance facility oncompound. As a result, State is funding two new, temporary vehicle 

maintenance facilities—one at Camp Sullivan (built by OBO) and one 

at Qasemi Lot (to be built by DS).5

A strategic facilities plan could have facilitated coordination in the above 

cases by providing a common vision of embassy needs, comprehensively 

cataloging existing assets and alternatives considered for meeting those 

needs, documenting expected project timelines and estimated costs, and 

facilitating continuity by documenting decisions made, while allowing for 

updates.

 5

GAO was unable to estimate the cost of these vehicle maintenance facilities as they were 

part of off-compound projects outside the scope of the on-compound construction 

contracts that were the primary focus of the May 2015 report.
Page 105 GAO-16-375SP Fragmentation, Overlap, and Duplication

To strengthen coordination efforts to address facility needs of the U.S. 

embassy in Kabul, in May 2015 GAO recommended that the Secretary of 

State take the following action:

• Develop a Kabul strategic facilities plan. Such a plan should 

comprehensively outline existing facilities, identify embassy needs, 

establish gaps between facilities and needs, and document decisions 

on meeting those needs.

GAO was unable to estimate the financial benefits of greater coordination

in Kabul. However, as of May 2015 State’s investments to properly house 

and protect U.S. staff in Kabul were on track to surpass $2 billion and 

likely to increase further. Additionally, it is clear that the changing facility 

needs of the Kabul embassy will require a combination of further 

permanent and temporary construction on and off compound. 

Coordination would be strengthened by the development of a strategic 

facilities plan. Such a plan for Kabul would need to be tailored to the 

specific context of the post and would likely go through repeated updates. 

However, such a common framework would strengthen existing 

coordination and facilitate greater continuity of decision making. This 

would lower the likelihood of fragmented or unnecessarily duplicative 

construction in addressing the embassy’s future needs. 

In commenting on the May 2015 report upon which this analysis is based, 

State concurred with GAO’s recommendation to develop a Kabul strategic 

facilities plan. According to State, OBO plans to continue to work with 

post and State stakeholders to formalize current and future embassy 

needs into a plan that outlines existing facilities, identifies embassy 

needs, establishes gaps between facilities and needs, and documents 

decisions on meeting those needs.

GAO provided a draft of this report section to State for review and 

comment. The department did not provide comments on this report 

section.

The information contained in this analysis is based on findings in GAO’s 

May 2015 report listed in the related GAO products section. To conduct 

this review, GAO obtained information from agency planning, funding, 

and reporting documents and interviewed State officials from OBO; DS; 

the Office of Acquisitions Management; SCA; the Office of the Special 

Representative for Afghanistan and Pakistan (SRAP); and the Office of 

Management Policy, Rightsizing, and Innovation. In February 2014, GAO 

conducted fieldwork in Kabul, Afghanistan, to observe construction 

progress and meet with U.S. embassy officials responsible for 

construction, facilities management, post management, and security. 

GAO also met with contractor officials in Kabul and in the United States. 

In addition, GAO’s Kabul Field Office conducted follow-up meetings with 

officials in Kabul and their successors through December 2014.

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 106 GAO-16-375SP Fragmentation, Overlap, and Duplication

To examine State’s planning for projected embassy facility needs, GAO

analyzed State coordination and planning documents, as well as funding 

proposals for new construction in Kabul. In addition, GAO reviewed State 

policy regarding master planning and strategic facilities planning. GAO 

also consulted best practices for such planning established by the 

International Facility Management Association as well as GAO and OMB 

capital planning guidance. To discuss changing post facility needs and 

the various coordination efforts to address those needs, GAO met with 

State officials from OBO, SCA, SRAP, and DS, as well as with post 

officials responsible for management, facilities, and security in Kabul.

Afghanistan: Embassy Construction Cost and Schedule Have Increased, 

and Further Facilities Planning Is Needed. GAO-15-410. Washington, 

D.C.: May 19, 2015.

For additional information about this area, contact either Michael J. 

Courts at (202) 512-8980 or courtsm@gao.gov or David J. Wise at (202) 

512-5731 or wised@gao.gov.

Related GAO Product

Contact Information
Page 107 GAO-16-375SP Fragmentation, Overlap, and Duplication

12. U.S.-Funded Development Innovation 

Programs

The U.S. Agency for International Development should establish a joint approach to collaboration among its 

Development Innovation Ventures program and other similar U.S.-funded programs in India to better manage 

overlap.

In October 2010, the U.S. Agency for International Development (USAID) 

established the Development Innovation Ventures (DIV) program as a key 

component of the USAID Forward initiative to strengthen USAID by 

pursuing a more results-oriented approach, developing new partnerships, 

and investing in innovative solutions to development challenges. DIV’s 

goal is to create a portfolio of innovations that improve the lives of millions 

of people around the world within 10 years, especially those living in 

poverty or extreme poverty. DIV seeks to test new approaches to 

development assistance and identify those that can deliver more impact 

per dollar spent. DIV also aims to manage risks by investing relatively 

small amounts of funding in new and innovative ideas for solving 

development problems and investing larger amounts in ideas that have 

been proven to work through rigorous evaluation. From fiscal years 2010 

to 2015, DIV obligated approximately $72.5 million for innovation projects 

to reduce poverty across a range of sectors, including energy, health, and 

education. 

Managed at USAID headquarters, DIV takes a venture capital approach 

to investing in innovations by awarding grants through a three-stage 

funding model. The model is intended to identify, evaluate, and scale up 

development innovations that demonstrate widespread impact and costeffectiveness. In stage 1 (proof of concept), DIV provides small grants for 

testing the viability of an innovation in a real-world setting. In stage 2 

(testing and positioning for scale), grantees determine through rigorous 

evaluations whether the solution can achieve greater impact and can be 

implemented successfully at a larger scale. In stage 3 (transitioning 

proven solutions to scale), DIV funding supports innovations that seek to 

transition a solution from large-scale implementation to widespread 

adoption in one country or to replication in an additional country.

In a December 2015 report, GAO found that DIV and other U.S.-funded 

innovation programs in India supported similar objectives and 

beneficiaries among poor, underserved populations in India. For example, 

in 2012 the USAID mission in India (“USAID India”) established the 

Millennium Alliance, an innovation grant program modeled on DIV. This 

program provides funding to Indian grantees that demonstrate costeffective solutions that address the needs of the extreme poor in India.

Like DIV, the program uses a staged funding model to make relatively 

small initial investments, test more developed solutions, and scale up 

those that have proven development impact through rigorous evaluations. 

USAID India also created the India Partnerships program in 2013 to 

Why This Area Is 

Important

What GAO Found
Page 108 GAO-16-375SP Fragmentation, Overlap, and Duplication

overcome critical development challenges through new technologies and 

other innovations that can be rigorously tested, shared, and scaled up in 

India and abroad. In addition, in 2012, the Department of State (State) 

began funding innovations to support economic growth for underserved 

populations in India through the U.S.-India Science and Technology 

Endowment Fund.

GAO’s review of project data for these programs identified instances 

where DIV and other USAID and State innovation programs funded 

similar projects in India, as shown in the figure below. These included 

projects to test the viability of “clean” cook stoves in rural markets, the 

provision of inexpensive eye care and eyewear for poor and underserved 

populations, and multiple projects to support the development, testing, or 

implementation of micro grids for people living in rural areas who are 

unconnected to the power grid.

Innovation Projects Funded by Development Innovation Ventures and Other U.S.-Funded Innovation Programs in India

USAID and State officials who GAO interviewed in India stated that they 

generally supported the implementation of similar innovation programs in 

India by different organizations if the programs resulted in additional 

resources being made available to poor and underserved populations. 

According to these officials, there is a vast need for innovations such as 

clean energy and off-grid electricity that improve the lives of the poor in 

that country. These officials said that as a result, in some cases it may be 

necessary to fund several similar or competing solutions in an effort to 

identify the few that demonstrate widespread impact and costeffectiveness. However, GAO has previously noted that without enhanced 

collaboration, overlap may have a negative effect in that limited resources 
Page 109 GAO-16-375SP Fragmentation, Overlap, and Duplication

may not be used in the most effective and efficient manner.1 GAO has 

also previously found that several key practices that enhance 

collaboration—including articulating a joint strategy and common 

outcomes, agreeing on roles and responsibilities, and identifying and 

addressing needs by leveraging resources—can help manage programs 

with similar objectives and beneficiaries.2

Collaboration among DIV and U.S.-funded innovation programs in India 

has not routinely or systematically included the key practices GAO has 

identified that enhance collaboration and, with some exceptions, has 

been limited to USAID India’s providing initial input to DIV regarding grant 

award decisions. For example, during USAID India’s technical reviews of 

DIV applications, DIV communicated with USAID India officials, 

requesting that USAID India review applications for projects that DIV 

subsequently funded in India. DIV officials also provided some additional 

examples of communication and consultation with USAID India beyond 

the initial consultation on DIV applications, such as joint funding of a 

project to rigorously test an innovation to increase full immunization rates 

in rural areas. 

However, according to DIV officials and a wide range of USAID India and 

State officials GAO spoke with in India, collaboration among programs 

beyond these examples has been limited. These officials indicated that 

after award decisions were made, DIV and the other programs did not 

systematically share information about project results or reach 

agreements on their respective roles and responsibilities, such as roles in 

coordinating planning for the use of grant funds or in monitoring the 

implementation of grants. State officials who manage other innovation 

programs in India also stated that while they were aware of some of the 

activities that DIV supported in India, DIV had not communicated with 

these programs to collaborate on ongoing or upcoming efforts.

USAID India and State officials who GAO interviewed in India who 

manage innovation programs that are similar to DIV said that limited 

collaboration among these programs and DIV had resulted in missed

opportunities to share information and leverage USAID India resources. 

These included missed opportunities to provide outreach to DIV grantees 

and monitor project implementation and to market DIV innovations to 

government of India officials and other stakeholders with the means to 

scale them up, if appropriate.

During the course of GAO’s review, DIV officials acknowledged that 

collaboration could be improved and began implementing an action plan

 1

See GAO, Fragmentation, Overlap, and Duplication: An Evaluation and Management 

Guide, GAO-15-49SP (Washington, D.C.: Apr. 14, 2015) and Results-Oriented 

Government: Practices That Can Help Enhance and Sustain Collaboration among Federal 

Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005).

2

GAO-15-49SP, GAO-06-15.
Page 110 GAO-16-375SP Fragmentation, Overlap, and Duplication

to improve collaboration with missions and bureaus within USAID. The 

plan outlines steps to share information on DIV’s activities across the 

agency, including establishing DIV points of contact for outreach with 

missions and bureaus and developing tools for providing more frequent 

updates on DIV projects with the missions. However, DIV’s action plan, 

while a promising step toward improving collaboration, does not yet 

represent a joint approach among the overlapping innovation programs 

that GAO identified in India or include key practices of successful 

collaboration. For example, DIV has not extended its action plan outside 

of USAID India to include State’s U.S.-India Science and Technology 

Endowment Fund. DIV also has not harmonized its award selection 

processes with those of the other innovation programs to help ensure that 

funding for similar projects is appropriate and not duplicative. Thus, DIV 

cannot maximize the likelihood that the benefits of its initial outreach 

efforts will be realized. 

To help ensure that DIV is making progress toward achieving its global 

development goal, in December 2015, GAO recommended that the 

Administrator of USAID take the following action:

• Establish a joint approach to collaboration reflecting agreement with 

the USAID mission in India and with other related U.S. agency 

programs in India, and consider where such a joint approach would be 

beneficial in other countries. 

Data are not available to quantify the financial benefit of establishing a 

joint approach to collaboration among USAID’s Development Innovation 

Ventures program and other similar U.S. programs in India and 

considering such an approach in other countries. However, taking these 

actions could strengthen coordination among U.S.-funded innovation 

programs and help result in more efficient use of U.S. financial support for 

innovation projects in India and other developing countries.

In commenting on the December 2015 report on which this analysis is 

based, USAID agreed with GAO’s recommendation, stating that GAO’s

review had helped identify areas for improvement. USAID also discussed 

steps it is taking to respond to the recommendation. Specifically, USAID 

discussed collaboration and coordination between DIV and the USAID 

mission in India that had occurred during the course of GAO’s review. 

USAID also stated that it would build on these collaboration efforts, 

discuss where improvements could be made, and take action to formalize 

them.

GAO provided a draft on this report section to USAID and State for review 

and comment. Neither USAID nor State provided comments on this report 

section.

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation
Page 111 GAO-16-375SP Fragmentation, Overlap, and Duplication

The information contained in this analysis is based on findings from the 

product listed in the related GAO products section. GAO examined DIV’s 

collaboration with other similar U.S. development assistance innovation 

programs, using India as a nongeneralizable case study. GAO selected 

India as a case study based on analysis of USAID project data. As of 

2014, India was the largest recipient of DIV funding representing 

approximately one-third of the program’s portfolio. To determine the 

extent to which DIV overlaps with programs from USAID and other U.S. 

agencies in India, and the extent to which it has funded projects that 

could overlap or duplicate projects funded by U.S. agencies in India, GAO 

obtained and analyzed program and project data and information for fiscal 

years 2010 to 2015 from DIV officials in Washington, D.C., and from 

USAID India and State officials in New Delhi, India. To examine DIV’s 

collaboration with similar U.S. development assistance innovation 

programs in India, GAO interviewed officials at USAID, State, the 

Department of Agriculture’s Foreign Agricultural Service (FAS), and the 

Department of Energy, in Washington, D.C., and traveled to the USAID 

Mission in New Delhi, India, to interview officials from USAID, State, FAS, 

the U.S. Trade and Development Agency, and the Department of 

Commerce. During this fieldwork, GAO identified programs at USAID 

India and the U.S. Embassy in New Delhi that had innovation and 

development components. GAO interviewed program officials from these 

agencies, including the Chief of Mission and the Deputy Chief of Mission, 

to obtain information on the programs and their experiences in 

collaborating with the DIV office in Washington, D.C. 

Table 7 in appendix V lists the programs GAO identified that might have 

similar or overlapping objectives, provide similar services, or be 

fragmented across government missions. Overlap and fragmentation 

might not necessarily lead to actual duplication, and some degree of 

overlap and duplication may be justified.

Foreign Assistance: USAID Venture Capital Approach Relies on Evidence 

of Results but Could Strengthen Collaboration among Similar Programs.

GAO-16-142. Washington, D.C.: December 21, 2015.

For additional information about this area, contact David B. Gootnick at 

(202) 512-3149 or gootnickd@gao.gov.

How GAO Conducted 

Its Work

Related GAO Product

Contact Information
Page 112 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Section III: Areas in Which GAO Has 

Identified Other Cost Savings or Revenue 

Enhancement Opportunities

This section summarizes 25 areas for agencies or Congress to consider 

taking action that could either reduce the cost of government operations 

or enhance revenue collections for the Treasury.
Page 113 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Defense

13. Defense Excess Property Disposal

Federal civilian agencies could potentially achieve millions of dollars in cost savings if they were able to obtain 

more of the Department of Defense’s available excess personal property through the disposal process rather 

than purchasing similar property through a private sector supplier.

Each year the military services identify thousands of items of personal 

property—including military equipment and materiel—that they need to 

dispose of because the property is obsolete, not repairable, or excess to 

their requirements but still usable.1 According to Department of Defense 

(DOD) guidance for disposing of its excess personal property, the 

objectives of the defense material disposition process are to dispose of 

the property in a manner that ensures maximum use to satisfy valid 

needs, permits authorized donations of surplus property, obtains optimum 

monetary return to the U.S. government for property sold, and, among 

other things, minimizes the need for abandoning or destroying property.2

The Defense Logistics Agency’s (DLA) Disposition Services executes the 

disposal of DOD personal property. Because this property was originally 

purchased with federal funds, the government seeks to promote its reuse 

by federal agencies to minimize new procurement costs. GAO has 

reported that the federal government is facing serious long-term fiscal 

challenges, and that DOD and other federal agencies will likely encounter 

considerable budget pressures over the coming years.3 These challenges 

make it potentially attractive for DOD and other federal agencies to obtain 

usable personal property that is already in the federal inventory, rather 

than procuring similar new items.

 1

DOD defines personal property as all DOD property except real property, records of the 

federal government, and certain naval vessels (battleships, cruisers, aircraft carriers, 

destroyers, and submarines). DOD excess property is not required for the needs and the 

discharge of the responsibilities of any DOD activity. DOD defines property disposition as 

the process of reusing, recycling, converting, redistributing, transferring, donating, selling, 

demilitarizing, treating, destroying, or other ultimate disposition of personal property. DOD 

Manual 4160.21, Defense Materiel Disposition: Disposal Guidance and Procedures, vol. 1 

(Oct. 22, 2015).

2

Department of Defense, DOD 4160.21-M, Defense Materiel Disposition Manual (August 

1997). According to the manual, eligible recipients of Department of Defense (DOD)

excess and surplus property are responsible for all costs associated with the preparation, 

handling, and movement of the property. During the audit period for the January 2016 

report, GAO relied on the August 1997 manual, which implemented the requirements of 

the Federal Property Management Regulation and other laws as appropriate, as they 

apply to the disposition of DOD’s excess, surplus, and foreign excess personal property. 

On October 22, 2015, DOD released an updated four-volume Materiel Disposition Manual, 

which, in general, clarifies aspects of DOD’s disposition process while maintaining the 

essential structure of the program. Because the 1997 manual was in effect during the 

audit period, GAO’s report relied on the 1997 guidance.

3

GAO, The Federal Government's Long-Term Fiscal Outlook: Spring 2013 Update, GAO13-481SP (Washington, D.C.: Apr. 11, 2013). This report is part of GAO’s body of work on 

the federal debt and long-term fiscal challenges.

Why This Area Is 

Important
Page 114 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

DOD‘s disposal process allows multiple opportunities for potential 

recipients to obtain personal property no longer needed by DOD. The 

process includes a 42-day period known as the “screening cycle,” during 

which potential recipients may screen, request, and obtain excess 

property at the stages in which they are eligible to do so, after which any 

remaining property may be sold. The property may remain a specific 

number of days in each stage, as shown in the figure below. If the 

property is not disposed of during one stage of the cycle, it moves on to 

the next stage. First, usable property may be reutilized within DOD or 

provided to certain special programs, such as the program authorized by 

Section 2576a of the United States Code, Title 10 that provides excess 

DOD property to state and local law enforcement agencies.4 If not 

reutilized, this property may be transferred—working through the General 

Services Administration (GSA)—to federal agencies, after which it 

becomes surplus and may be donated to other parties, such as state 

governments. Remaining property may be sold to the general public, if 

appropriate and safe, or rendered useless for its original military purpose 

(demilitarized) and sold as scrap or destroyed. For fiscal year 2014, DOD 

reported that excess and surplus property with a total original acquisition 

value of approximately $3.18 billion in nominal dollars was reutilized 

within DOD or provided to special programs, transferred to other federal 

agencies, or donated to eligible organizations (such as state and local 

governments or nonprofit organizations).

5 DOD further reported total 

revenues of almost $128 million from items sold in fiscal year 2014.6

Overview of DOD’s Disposal Process

 4

There are 12 special programs that may screen and request DOD excess personal 

property during the reutilization stage of the disposal process. Of these, 6 programs are 

found in laws and codified in statutes, and 6 were established by DOD, and no separate 

legal authorities apply. Programs found in law and statute include the program that 

authorizes DOD to transfer excess DOD property that is suitable for use by law 

enforcement activities, including counter-drug and counter-terrorism activities (called the 

“1033 program,” for the section of the law that authorizes it). Programs established by 

DOD include the civil air patrol, which is the official auxiliary of the U.S. Air Force, and is 

eligible to receive excess DOD property without reimbursement.

5

The acquisition value is the amount identified as the original cost of the property or the 

estimated replacement cost. DLA uses this figure when reporting on its excess property 

disposal process. During the transfer stage, both federal and nonfederal agencies may 

view the property on the GSA website. Federal agencies—including DOD components—

may also request property during this stage.

6

DOD reported approximately $39 million in sales of usable property, $34 million in scrap 

sales, and $55 million from other contracts in fiscal year 2014.
Page 115 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

GAO found in the January 2016 report that the priorities outlined in DOD’s 

disposal process guidance place special program recipients in the first 

stage of the process (reutilization) versus the later stages (transfer or 

donation). This approach gives some nonfederal entities priority for 

excess property over some federal civilian agencies that may have similar 

needs.7 One of these special programs is the 1033 program, which 

provides excess DOD personal property to federal, state, local, and tribal 

law enforcement agencies. Among the special programs, the 1033 

program receives the largest proportion of DOD excess personal property 

in terms of original acquisition value.

For fiscal year 2014, approximately 85 percent of the property obtained 

under the 1033 program, by original acquisition value, went to state and 

local law enforcement agencies.8 DLA’s 1033 program guidance states 

that participating law enforcement agencies must meet eligibility 

requirements and comply with program guidelines. Specifically, program 

participants must be government agencies whose primary function is the 

enforcement of applicable federal, state, and local laws, and whose 

compensated law enforcement officers have powers to apprehend and 

arrest. All requests for property are required to be based on current, bona 

fide law enforcement requirements, and any property obtained is to be 

placed into use within 1 year.9 Within the 1033 program, law enforcement 

agencies may obtain DOD property even if the property does not appear 

to be exclusively related to law enforcement activities so long as the law 

enforcement agency provides the required justification for obtaining the 

property, and a state coordinator and the Law Enforcement Support 

Office at DLA Disposition Services approve the request.

In January 2016, GAO reported that law enforcement agencies at all 

levels have used the 1033 program to obtain property—such as 

excavating equipment, fencing, and musical instruments—that could also 

be used by other types of potential recipient organizations, including 

federal civilian agencies. During calendar years 2013 and 2014, 150 law 

enforcement agencies obtained 285 pieces of earth-moving and 

excavating equipment through the 1033 program, with original acquisition 

 7

In this report, we refer to federal civilian agencies as those which are not military, law 

enforcement, or firefighting agencies.

8

The remaining 15 percent of property obtained under the 1033 program went to federal 

and tribal law enforcement agencies. In total, federal, state, local, and tribal law 

enforcement agencies obtained 32.6 percent—about $922 million in original acquisition 

value (in nominal dollars)—of property obtained at the reutilization stage in fiscal year 

2014.

9

Defense Logistics Agency Instruction 8160.01, Law Enforcement Support Office (July 21, 

2014). 

What GAO Found
Page 116 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

values totaling just over $25 million.10 GAO reported in January 2016 that 

at least 9 federal agencies purchased earth-moving equipment to meet 

their mission requirements during the same period. For purposes of this 

report section, GAO performed additional analyses outside of the January 

2016 report, reviewing financial obligation data related to 249 federal 

agency contracts for earth-moving and excavating equipment from those 

9 agencies in calendar years 2013 and 2014. GAO found that federal 

agencies obligated over $28 million to purchase earth-moving and 

excavating equipment similar to the equipment obtained by state and 

local law enforcement agencies through the 1033 program. The following 

table shows more information about federal civilian agency contracts for 

earth-moving and excavating equipment.

Categories of Earth-Moving and Excavating Equipment Procured by Federal Civilian Agencies during 2013-2014

Property type Total number of contractsa Total numberof federal agencies

Total action

obligation valueb

Ditching machines 1 1 $28,465

Dump trucks and trailer 5 2 416,833

Excavators 50 7 5,096,764

Loadersc 160 8 14,537,004

Road graders 22 4 6,760,585

Tractor scrapers 11 2 1,177,946

Total 249 9d $28,017,597

Source: GAO analysis of Federal Procurement Data System data. | GAO-16-375SP

a

Contracts may include procurements for more than one asset.

b

Total action obligation values are rounded to the nearest dollar.

c

Loaders include scoop loaders, backhoes, skid steer loaders, and multiterrain loaders.

d

Agencies procured multiple product types, and so the total reflects the total number of unique 

agencies contracting for these products. Federal agencies include the Department of Agriculture; 

Department of Justice; Department of Transportation; Department of Health and Human Services; 

Department of Homeland Security; International Boundary and Water Commission: U.S.-Mexico; 

Department of the Interior; Department of State; and Department of Veterans Affairs.

As reported in January 2016, GAO could not determine whether any 

specific item that DLA Disposition Services provided to state and local law 

enforcement agencies would have filled the need that one of these 

federal agencies met by using appropriated funds for a new procurement. 

Nonetheless, DLA’s implementation of the disposal process risks such an 

occurrence because state and local law enforcement agencies obtain the 

majority of the excess property available under the 1033 program. By 

providing access to excess property to special programs in the first stage 

of the disposal process, DOD’s disposal process gives preference to 

special programs over potential federal civilian agency recipients for 

obtaining excess property. Consequently, in some cases, federal 

 10For instance, officials from U.S. Customs and Border Protection said they use such 

items for operations such as maintaining roads on the border to ensure safe operations for 

agents in the field.
Page 117 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

agencies may be disadvantaged in favor of nonfederal agencies in their 

ability to obtain property that was originally purchased with federal funds. 

In such cases, federal agencies are at risk of spending appropriated 

funds to acquire property that could potentially be obtained through 

DOD’s disposal process at a lower cost. While the property that was 

available might not have been suitable to meet federal agency 

requirements due to matters such as quantity, timing, condition, and 

transportation costs, it is possible that some of this equipment may have 

been suitable and could have allowed the federal government to 

postpone or even avoid some of these purchases—resulting in potentially 

millions of dollars in cost savings.11 There may also be additional potential 

savings for other types of equipment not included in GAO’s analysis.

In October 2015, DOD issued an update to its 1997 disposition guidance. 

In its new manual, DOD now explicitly gives priority to DOD components 

over the special programs for obtaining excess property during the 

reutilization stage.12 However, special programs remain in the reutilization 

stage and thus would still be able to obtain property ahead of federal 

civilian agencies. DOD officials acknowledged that they have the authority 

within their 1033 program to give preference to federal law enforcement 

agencies over state and local law enforcement agencies. However, at the 

time of GAO’s review, these officials told GAO they were not planning 

further revisions to the screening and issuance priorities in the disposal 

process because there has been no demand from federal agencies, other 

than Customs and Border Protection, to change these priorities.

A key internal control for federal agencies is management’s ability to 

assess and manage risks associated with achieving agency objectives, 

including consideration of an assessment of significant interaction 

between the organization and other parties and development of 

mechanisms to respond to changes in governmental and operating 

conditions, among other special risks.13 Unless DOD further reassesses 

its disposal process to determine if it needs to make additional changes to 

 11GAO does not know what proportion of the $28 million in contracts awarded by federal 

civilian agencies to private sector suppliers for earth-moving and excavating equipment 

could have been avoided if similar assets had been obtained through the disposal process 

for DOD excess property. However, if even a relatively small proportion of such equipment 

could be obtained through the disposal process, this could result in savings of over a 

million dollars. Moreover, GAO’s review of contracts awarded by federal civilian agencies 

was confined to earth-moving and excavating equipment and did not include other 

categories of excess property, which could also potentially be obtained through the 

disposal process and yield savings as well. Therefore, GAO concludes that obtaining 

assets through DOD’s disposal process could eventually result in millions of dollars in 

savings for federal civilian agencies.

12DOD Manual 4160.21, Defense Materiel Disposition: Reutilization, Transfer, and Sale of 

Property, vol. 3, encl. 5, § 3(b)(3) (Oct. 22, 2015). While special programs may continue to 

screen and request excess DOD personal property during this stage, property is now not 

to be issued to the special programs until the reutilization stage has ended.

13GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: 1999).
Page 118 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

its guidance governing the priorities of the disposal process—specifically 

for property obtained by special programs such as the 1033 program—

and revises its guidance reflecting these priorities accordingly, the risk 

remains that federal civilian agencies may spend additional appropriated 

federal funds to procure equipment rather than pursue obtaining equal or 

similar items at little or no additional cost to the federal government 

through DOD’s disposal process.

GAO recommended in January 2016 that the Secretary of Defense direct 

the Director, DLA, to take the following action:

• Further reassess DOD’s disposal process to determine whether 

additional changes are needed in the priority given to recipients within 

the process, including potential changes to the categories and 

quantities of property that special programs may obtain, and revise its 

guidance reflecting those priorities accordingly to better enable DOD 

to fulfill the disposal program’s objectives.

Federal agencies could potentially save millions of dollars by obtaining 

excess property from DOD rather than procuring new property. There 

may also be opportunities for additional savings if federal agencies are 

able to obtain other types of excess personal property from DOD.

In commenting on the January 2016 draft report on which this analysis is 

largely based, DOD concurred with GAO’s recommendation and stated 

that it would continue to assess all aspects of the disposal process as 

part of its standard operating procedures. As discussed in the report, 

GAO’s analysis indicates that DOD should separately assess the 

priorities in its disposal process, to include preferences provided to the 

special programs. Absent such an assessment, risk remains that federal 

agencies may spend additional appropriated federal funds to procure 

equipment, rather than pursue obtaining equal or similar items at little or 

no additional cost to the federal government through DOD’s disposal 

process. While GAO understands that DOD already assesses its disposal 

process as part of its normal operations, GAO maintains that the potential 

to make more efficient use of federal funds warrants further efforts in this 

area.

GAO provided a draft of this report section to DOD for review and 

comment. DOD provided technical comments and in response we made 

changes to this report when appropriate.

The information contained in this analysis is based on findings from the 

report listed in the related GAO products section and additional work 

GAO conducted. To identify types of excess property obtained by law 

enforcement agencies, GAO obtained and analyzed data on DOD’s 1033 

program from an extract of the Federal Excess Property Management 

Information System provided by the U.S. Forest Service, which manages 

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 119 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

this database on behalf of the Law Enforcement Support Office at DLA 

Disposition Services. To assess the reliability of these data, GAO 

interviewed knowledgeable officials at the U.S. Forest Service and the 

Law Enforcement Support Office, performed electronic testing of key data 

elements, and met with both the 1033 program coordinator and a local 

law enforcement agency in two states to compare the property on hand 

with the records in the database. Based on these efforts, GAO concluded 

that the data were sufficiently reliable for GAO’s purpose of identifying 

types of excess property obtained by law enforcement agencies. GAO 

then used the data to examine property obtained by law enforcement 

agencies from calendar years 2013 and 2014—the most recent full 

calendar year data available—that did not appear to be exclusive to law 

enforcement activities and that did not possess military attributes. To 

provide some examples of types of property that could fall into these 

categories, GAO analyzed data from six federal supply classes, including 

earth-moving and excavating equipment (federal supply class #3805); 

self-propelled warehouse trucks and tractors (3930); fencing, fences, 

gates, and components (5660); food cooking, baking, and serving 

equipment (7310); kitchen equipment and appliances (7320); and musical 

instruments (7710). GAO selected these broad categories of property 

based on testimonial evidence gathered during site visits to the four 

states in which the audit team conducted field work, and GAO’s judgment 

that these types of property, which had recently been obtained by law 

enforcement agencies, did not seem to be exclusively related to law 

enforcement activities. GAO used the national stock numbers to calculate 

the number of items, number of distinct law enforcement agencies, 

number of states, and range of acquisition values for various equipment 

types within each federal supply class.14

To identify potential savings, GAO did further analysis on the federal 

supply class of earth-moving and excavating equipment by identifying 

federal agency contracts for this type of equipment in calendar years 

2013 and 2014 that is similar to equipment given to state and local law 

enforcement agencies through DOD’s 1033 program during the same 

period. This federal supply class was selected because of the value of 

such personal property given to state and local law enforcement agencies 

through the 1033 program, and the likelihood that a number of federal 

agencies might be able to use such equipment. Using the Federal 

Procurement Data System, GAO identified procurement records for 

purchased earth-moving and excavating equipment for all federal 

agencies that procured such equipment and reviewed all records to 

identify the procured equipment that was comparable to the equipment 

given to state and local law enforcement agencies based on the 

 14GAO did not include in its analysis property that had been turned in to DLA Disposition 

Services using locally assigned stock numbers since the numbers vary by location and it 

is difficult to make comparisons among them. For these federal supply classes, including 

local stock numbers would increase the amount of property obtained by law enforcement 

agencies during this time frame.
Page 120 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

description of the requested equipment. In performing this work, GAO did 

not determine whether donated property would have been suitable for the 

needs of the purchasing agency or confirm that the purchased equipment 

had been delivered.

Table 8 in appendix V lists the program GAO identified that might have 

opportunities for cost savings or revenue enhancement.

Excess Personal Property: DOD Should Further Reassess the Priorities 

of Its Disposal Process. GAO-16-44. Washington, D.C.: January 29, 

2016.

For additional information about this area, contact Brian J. Lepore at 

(202) 512-4523, or leporeb@gao.gov.

Related GAO Product

Contact Information
Page 121 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

14. DOD’s Eligibility Determinations for 

Living Quarters Allowance

The Department of Defense (DOD) could potentially achieve cost savings by monitoring its components’ 

reviews of eligibility determinations for the over $500 million spent annually on living quarters allowance for 

civilian employees to better ensure that DOD components are not improperly providing this allowance.

The Department of Defense (DOD) provides a living quarters allowance 

(LQA) as an incentive to recruit eligible U.S. citizens for civilian employee 

assignments overseas. This allowance helps defray expenses, such as 

rent and utilities, associated with living overseas. In fiscal year 2014, the 

most recent year for which data are available, DOD paid about 16,880 

U.S. civilian employees assigned overseas over $504 million for LQA. 

After conducting a worldwide audit in 2013, DOD determined some 

civilian employees had, over the course of their employment, erroneously 

received a total of about $104.5 million for LQA, in part because of 

misinterpretations of eligibility requirements for this allowance. 

Specifically, 444 employees were identified as having been erroneously 

paid LQA because they were incorrectly identified by DOD components 

as having been initially recruited in the United States or as having

maintained continuous employment with only a single prior employer 

since being hired overseas.1

Within DOD, the Deputy Assistant Secretary of Defense for Civilian 

Personnel Policy is to develop, revise, and monitor the implementation of 

overseas allowance and differential policies and procedures, including 

those for LQA.2 This responsibility has been delegated to the Defense 

Civilian Personnel Advisory Service (DCPAS), a component of the 

Defense Human Resources Activity. DCPAS is responsible for monitoring 

other DOD components’ LQA determinations.3

In June 2015, GAO found that DCPAS had not monitored DOD 

components’ LQA eligibility determinations for civilian employees 

overseas to help ensure the consistent application of eligibility 

requirements across the department. In 2010, the DOD Office of the 

 1

This recruitment must have been by the U.S. government, a private U.S. organization, an 

international organization in which the United States participates, or a foreign government, 

and having remained in continuous employment with that employer.

2

This responsibility is outlined in DOD Instruction 1400.25, Volume 1250, DOD Civilian 

Personnel Management System: Overseas Allowances and Differentials (Feb. 23, 2012), 

which we refer to as the LQA Instruction.

3

DOD makes LQA eligibility determinations in accordance with Department of State 

Standardized Regulations (DSSR); DOD Instruction 1400.25, Volume 1250; and 

department-wide and component-level guidance.

Why This Area Is 

Important

What GAO Found
Page 122 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Inspector General recommended that the Deputy Assistant Secretary of 

Defense for Civilian Personnel Policy conduct periodic quality assurance 

reviews of overseas allowance and differential payments, including LQA.4

In implementing the Office of the Inspector General’s recommendation, 

DOD updated its LQA Instruction in February 2012 to include a 

requirement that ongoing quality assurance reviews be conducted to 

verify that overseas allowance and differential payments are proper and 

consistent with applicable statutory and regulatory provisions. However, 

DOD delegated this requirement to its components that make the 

eligibility determinations for LQA, thereby having them periodically review 

their own actions, rather than having the office responsible for oversight 

of such allowances perform the reviews. Further, according to DCPAS 

officials, these reviews have not consistently been conducted. DCPAS 

officials explained that they became aware of issues with inconsistent 

LQA eligibility determinations shortly after the February 2012 LQA 

Instruction containing the new requirement for ongoing quality assurance 

reviews was issued. DCPAS officials chose not to have DOD components 

begin conducting the periodic quality assurance reviews because they 

anticipated that the components would soon be involved in the 2013 LQA 

audit, which was conducted by DCPAS. DCPAS officials also told GAO 

that they are not responsible for monitoring the LQA eligibility 

determinations of DOD components. In the absence of a specific 

requirement to conduct this monitoring, it is unclear whether DCPAS 

officials would fulfill this responsibility.

As a result of the issues that arose from the 2013 audit, DOD is in the 

process of revising its LQA Instruction. A February 2015 draft LQA 

Instruction that GAO reviewed included, among other things, a proposal 

that the heads of DOD components annually conduct an audit of 

employees who receive overseas allowances and differentials and report 

the results to the Deputy Assistant Secretary of Defense for Civilian 

Personnel Policy by March of each year. However, there is no specific 

requirement in the draft LQA Instruction for the Office of the Deputy 

Assistant Secretary or DCPAS to monitor the reviews conducted by DOD 

components to identify any potentially inconsistent eligibility 

determinations and ensure corrective action is taken. Furthermore, 

according to DCPAS officials, the draft was subsequently modified to 

require DOD components to report to the Deputy Assistant Secretary of 

Defense for Civilian Personnel Policy only when component officials 

identify a problem during the course of an audit. 

Standards for Internal Control in the Federal Government state that 

internal control monitoring should assess the quality of performance over 

time and ensure that the findings of audits and other reviews are promptly 

 4

DOD Inspector General, Report No. D-2010-075: Foreign Allowances and Differentials 

Paid to DOD Civilian Employees Supporting Overseas Contingency Operations (Aug. 17, 

2010).
Page 123 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

resolved.5 Without actively monitoring the reviews, DCPAS cannot 

independently verify that DOD components are making LQA eligibility 

determinations in accordance with applicable statutory and regulatory 

provisions and are promptly and appropriately taking action to resolve any 

findings and recommendations from their reviews. Further, DOD cannot 

ensure the consistent application of LQA eligibility requirements

throughout the department and is at risk for future erroneous payments of 

this allowance to its civilian employees overseas. If, through consistent 

monitoring, DCPAS concludes that DOD components are improperly 

providing LQA to civilian employees who are not eligible to receive it, 

DOD may identify cost savings.

To better ensure that DOD components are determining LQA eligibility 

consistently with applicable regulations and policies, GAO recommended 

in June 2015 that the Secretary of Defense 

• require the Deputy Assistant Secretary of Defense for Civilian 

Personnel Policy or DCPAS, as delegated, to monitor reviews of LQA 

eligibility determinations conducted by DOD components.

Estimated cost savings in this area cannot be determined because the 

net savings will depend on the results of DOD components’ periodic 

quality assurance reviews. If DOD components identify a significant 

number of civilian employees who have improperly received LQA for a 

number of years, then DOD could realize significant cost savings if the 

relevant component(s) discontinue LQA for those employees. Further, 

DOD may altogether avoid costs that it would have otherwise incurred 

through improper payments of LQA by identifying and discontinuing LQA 

for such employees earlier than would have occurred without monitoring 

the reviews of LQA determinations. For example, in its 2013 audit, DOD 

concluded that LQA payments totaling $104.5 million were paid to 

employees who should not have been authorized to receive LQA at all. 

By monitoring the components’ reviews, the Deputy Assistant Secretary 

of Defense for Civilian Personnel Policy or DCPAS, as delegated, can 

ensure that potential improper payments are promptly identified and 

resolved and do not result in conditions similar to those that were 

revealed in the 2013 LQA audit.

In commenting on GAO’s June 2015 report on which this analysis is 

based, DOD concurred with the recommendation to monitor reviews of 

LQA eligibility determinations. DOD stated that it was in the process of 

revising DOD’s LQA Instruction. As stated earlier, according to DCPAS 

officials, the updated LQA Instruction is to require the DOD components 

to conduct annual reviews of LQA payments and communicate any 

 5

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation
Page 124 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

inconsistencies to the Deputy Assistant Secretary of Defense for Civilian 

Personnel Policy. While a notable development, the draft LQA Instruction 

still does not require the Office of the Deputy Assistant Secretary or 

DCPAS to monitor the reviews conducted by DOD components to identify 

any potentially inconsistent eligibility determinations and ensure 

corrective action is taken, as was the intent of GAO’s June 2015 

recommendation. As of March 2016, DOD had not yet issued the revision 

to DOD LQA Instruction, but according to DCPAS officials, they had 

begun the intradepartmental coordination process that is necessary prior 

to issuance. DCPAS officials submitted the draft for internal legal review 

in September 2015, which was still underway as of March 2016. 

According to the officials, this review has taken longer than expected due 

to legal staff working on other department priorities. DCPAS officials 

estimated that the LQA Instruction would not be finalized and issued until 

April 2016 at the earliest. 

GAO provided a draft of this report section to DOD for review and 

comment. In an email received on March 11, 2016, DOD officials stated 

their intent to meet the recommendation when the LQA Instruction is 

finalized and issued. The Department also recently directed components 

to complete another review and submit a report of overseas allowances 

and differentials paid to a sampling of overseas employees. Component 

headquarters are required to submit specific information on each 

allowance approved by their subordinate offices along with supporting 

laws and regulations that authorize each allowance. DOD officials stated 

that this will allow the department to review and monitor LQA eligibility 

determinations. The issuance of such a review is a positive interim step, 

but until DOD issues its revised LQA Instruction to include a requirement 

to monitor DOD components’ reviews of LQA determinations, there is no 

assurance that such monitoring will be regularly conducted in the future.

The information contained in this analysis is based on findings in the 

report identified in the related GAO product section. For this report, GAO 

reviewed the DSSR, DOD’s current LQA Instruction, and DOD’s draft 

LQA Instruction dated February 2015. GAO interviewed officials from 

DCPAS and DOD components with employees who were determined to 

have been erroneously paid LQA in DOD’s 2013 audit to assess 

DCPAS’s oversight of LQA eligibility determinations. GAO used Defense 

Finance and Accounting Service’s payroll data for fiscal years 2011 

through 2014 to identify the number of employees who received LQA, the 

total dollar amount of LQA spent, and the debt incurred by the employees 

determined by DOD’s 2013 LQA audit to have been erroneously paid 

LQA. GAO also interviewed officials from the Army, Navy, Air Force, and 

Marine Corps who are involved in creating and implementing LQA 

guidance for the military services as well as providing support to the 

overseas officials who make LQA eligibility determinations.

Table 9 in appendix V lists the program GAO identified that might have 

opportunities for cost savings or revenue enhancement. 

How GAO Conducted 

Its Work
Page 125 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Defense Civilian Compensation: DOD and OPM Could Improve the 

Consistency of DOD’s Eligibility Determinations for Living Quarters 

Allowances. GAO-15-511. Washington, D.C.: June 16, 2015.

Johana Ayers, (202) 512-5741 or ayersj@gao.gov.

Related GAO Product

Contact Information
Page 126 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

15. DOD Excess Ammunition

The Department of Defense could potentially reduce its storage, demilitarization, and disposal costs by 

hundreds of thousands of dollars by transferring excess serviceable conventional ammunition, including small 

arms ammunition, to federal, state, and local government agencies. 

The Department of Defense (DOD) manages conventional small arms 

ammunition that includes bullets for rifles, hand guns, and shotguns, 

some of which are also used by other government agencies and 

departments. When a military service determines that serviceable 

ammunition is beyond its requirements, that ammunition is offered to the 

other services. If that ammunition is not taken, it is transferred to the 

Army, which manages the stockpile of conventional ammunition awaiting 

demilitarization and disposal (CAD stockpile) and takes actions to 

demilitarize and dispose of the ammunition in the stockpile. 

According to data provided by DOD officials, as of February 2015, the 

CAD stockpile was about 529,373 tons, which included 3,533 tons of 

serviceable small arms ammunition.1 DOD estimates that from fiscal year 

2016 to fiscal year 2020, it will add an additional 582,789 tons of 

conventional ammunition to this CAD stockpile, making the proper 

management of the disposal of such large quantities of explosive materiel 

critical. DOD demilitarizes and disposes of the conventional ammunition 

by burning it, detonating it with other explosives, or using a number of 

closed disposal technologies that control or clean the discharge waste 

from the demilitarization process.2 In fiscal year 2015, DOD spent about 

$118 million to demilitarize and dispose of conventional ammunition. 

DOD can also reduce the CAD stockpile by transferring useable small 

arms ammunition to other federal, state, and local agencies.

GAO reported in July 2015 that DOD had reduced some of its 

demilitarization and disposal costs by transferring some excess 

ammunition to other government agencies as opposed to demilitarizing 

and disposing of it, but that DOD does not have a systematic means for 

communicating with these agencies about available excess ammunition. 

Communicating in a systematic manner with other government agencies 

on available excess ammunition could help reduce the CAD stockpile and 

 1

The February 2015 data were the latest available information that GAO reported in its 

July 2015 report, on which this report section is based. The types of ammunition in the 

stockpile include items ranging from small arms cartridges, to rockets, mortars, and 

artillery, to tactical missiles.

2

The Secretary of the Army serves as DOD’s Single Manager for Conventional 

Ammunition (SMCA), and is responsible for centrally managing all aspects of the life cycle 

management of conventional ammunition, from research and development through 

demilitarization and disposal. Because the Army centrally manages DOD’s demilitarization 

activities as the SMCA, in this context, GAO refers to the Army as DOD.

Why This Area Is 

Important

What GAO Found
Page 127 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

save DOD hundreds of thousands of dollars in storage, demilitarization, 

and disposal costs. 

Section 346 of the Ike Skelton National Defense Authorization Act, as 

amended, requires, among other things, that serviceable small arms 

ammunition and ammunition components in excess of military needs not 

be demilitarized, destroyed, or disposed of unless they are in excess of 

commercial demands or certified as unserviceable or unsafe by the 

Secretary of Defense.3 Before offering the excess serviceable small arms 

ammunition for commercial sale, this provision outlines a preference that 

DOD offer the small arms ammunition, such as bullets and ammunition 

components, for purchase or transfer to other federal government 

agencies and departments, or for sale to state and local law enforcement, 

firefighting, homeland security, and emergency management agencies, 

subject to certain conditions. In addition, DOD Manual 4140.01, Volume 

6, states that the Secretary of Defense can transfer excess ammunition 

suitable for law enforcement activities, including counter-drug and 

counter-terrorism activities, to other federal and state agencies.

4

 

However, the DOD manual does not specify how the transfer of the 

ammunition should be facilitated. 

In July 2015, GAO reported that there have been instances of DOD 

transfers of ammunition to other government agencies but that these 

have been done informally and on a limited basis. For example, GAO 

reported that in fiscal year 2014, DOD provided 38 million rounds of small 

arms ammunition to the Federal Bureau of Investigation (FBI) and 7.5 

million rounds of small arms ammunition to the U.S. Marshals Service. In 

2015, according to DOD officials, the department also transferred 

approximately 10 million rounds of 5.56 millimeter ammunition to the U.S. 

Marshals Service, which uses the ammunition for training purposes. DOD 

officials stated that this transfer saved the department approximately 

$968,000 in demilitarization and disposal costs. In addition, DOD officials 

noted that DOD transferred an unspecified amount of small arms 

ammunition to state enforcement agencies—the Texas Rangers and 

Pennsylvania State Police—about a decade ago, but they could not 

 3

The Ike Skelton National Defense Authorization Act for Fiscal Year 2011, Pub. L. No. 

111-383, § 346 (2011), as amended by the National Defense Authorization Act for Fiscal 

Year 2012, Pub. L. No. 112-81, § 361 (2011).

4

This manual references 10 U.S.C. § 2576a, under which DOD is permitted to transfer 

(sell or donate) ammunition to federal or state agencies where the Secretary of Defense 

determines that the ammunition is “(A) suitable for use by the agencies in law enforcement 

activities, including counter-drug and counter-terrorism activities; and (B) excess to the 

needs of the Department of Defense.” The ammunition must also be part of the existing 

stock of DOD, accepted by the recipient agency on an as-is, where-is basis, transferred 

without the expenditure of any funds available to DOD for the procurement of defense 

equipment, and transferred such that all costs incurred subsequent to the transfer of the 

property are borne or reimbursed by the recipient agency. Finally, there is a stated 

preference for those applications indicating that the transferred property will be used in 

counter-drug or counter-terrorism activities of the recipient agency.
Page 128 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

identify any additional requests from or transfers to state or local 

agencies.

According to DOD officials, DOD uses informal methods—such as relying 

on relationships with agency officials and contacting them by phone or email—to communicate information about available excess ammunition. 

DOD could potentially save hundreds of thousands of dollars in future 

storage, demilitarization and disposal costs if it provided information 

about excess ammunition to law enforcement agencies in a more 

systematic manner. Law enforcement agencies, such as the Department 

of Justice and Department of Homeland Security (including the 

Immigration and Customs Enforcement), annually procure millions of 

dollars in ammunition. GAO reported in January 2014 that the ammunition 

purchases are driven primarily by firearms training and qualification 

requirements for the firearm-carrying workforce. For example, according 

to Department of Homeland Security officials, Immigration and Customs 

Enforcement has an estimated annual 5.56 millimeter ammunition 

requirement of approximately 25 million rounds. Department of Homeland 

Security officials stated that the agency uses the ammunition for training 

and weapons qualifications and has expressed interest in meeting a 

significant amount of its annual usage with serviceable excess DOD 5.56 

millimeter ammunition. Such a transfer could also produce cost savings 

for DOD in avoiding the disposal and demilitarization of this ammunition.

How much DOD could save in storage, demilitarization, and disposal 

costs would depend upon how much ammunition could be transferred to 

other services. According to officials with several law enforcement 

agencies within the Department of Justice, there are potential challenges

to using the military version of the conventional ammunition. For example, 

FBI officials stated that they obtained excess ammunition from DOD in 

2014 for training purposes but initially experienced problems in using the 

military version of the ammunition. The agency modified their weapons to 

avoid damage. FBI officials stated that they would like to continue to 

obtain ammunition from DOD but would need to test the ammunition first 

before use. The U.S. Marshals Service did not note any challenges with 

using the ammunition that it received from DOD, and reported that it could 

use DOD’s ammunition for firearms training but not for qualification 

because there is a different standard and type of ammunition required for 

these purposes. While in some cases challenges associated with 

acquiring DOD ammunition would need to be addressed, without 

establishing a formal means to communicate with and provide other 

government agencies with information on available excess serviceable 

ammunition, DOD could miss opportunities to reduce its overall storage, 

demilitarization, and disposal costs by transferring such ammunition to 

other government agencies. 
Page 129 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

To improve the visibility and awareness of serviceable excess 

ammunition in the CAD stockpile that could potentially be transferred to 

other government agencies, thereby reducing costs to DOD, in July 2015, 

GAO recommended that the Secretary of Defense direct the Secretary of 

the Army to take the following action:

• Develop a systematic means to make information available to other 

government agencies on excess ammunition to include small arms 

ammunition that could be used to meet their needs. 

Taking the action would allow DOD to potentially save hundreds of 

thousands of dollars by reducing the storage, demilitarization, and 

disposal costs for DOD. A more precise estimated amount of future

potential cost savings is difficult to quantify because the quantities of 

available DOD excess ammunition as well as the government agencies 

and departments annual requirements for ammunition vary from year to 

year.

In commenting on GAO’s July 2015 report on which this analysis is 

based, DOD concurred with the recommendation. DOD stated that Office 

of the Under Secretary of Defense for Acquisition, Technology, and 

Logistics would ensure that the Secretary of the Army is tasked to 

develop a systematic means to make information available to other 

government agencies on excess ammunition. However, in conducting 

follow-up work, GAO found that DOD continues to transfer ammunition to 

federal law enforcement agencies on an informal basis and no formal 

process has been implemented.

GAO provided a draft of this report section to the Departments of 

Homeland Security and Justice for review and comment. In an email 

received on March 3, 2016, the Department of Homeland Security agreed 

with the material facts as presented and provided technical comments, 

which were incorporated as appropriate. In an email received on March 

4, 2016, the Department of Justice agreed with the material facts as 

presented. GAO provided a Statement of Facts of this draft report section 

to the Department of Defense for review and comment. In an email 

received on February 27, 2016, the Department of Defense agreed with 

the material facts as presented. 

The information contained in this analysis is based on findings from the 

reports listed in the related GAO products section and additional work 

GAO conducted to follow up on its recommendation in 2015. To assess 

the extent to which DOD adequately shared information on the quantity, 

condition, and location of excess, obsolete, and unserviceable 

conventional ammunition for each military service, GAO reviewed DOD’s 

inventory data on excess, obsolete, and unserviceable conventional 

ammunition held in the CAD stockpile as of February 2015. Further, GAO 

obtained information from and interviewed officials at DOD and federal 

law enforcement agencies, specifically those from the Department of 

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 130 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Homeland Security (Immigration and Customs Enforcement) and 

Department of Justice (U.S. Marshals Service and Federal Bureau of 

Investigation). GAO used its January 2014 report, which described 

ammunition purchases of the Departments of Homeland Security and 

Justice, to select the federal law enforcement agencies that could 

potentially use excess serviceable ammunition in the CAD stockpile for 

training purposes. In addition, GAO reviewed documents from the federal 

law enforcement agencies that obtained excess ammunition from DOD to 

identify the amount of ammunition transferred. Agencies that are able to 

obtain serviceable ammunition in transfers from DOD would see 

reductions in their procurement costs, although we did not estimate the 

extent of such savings. 

Table 10 in appendix V lists the programs GAO identified that might have 

opportunities for cost savings. 

Defense Logistics: Improved Data and Information Sharing Could Aid in 

DOD’s Management of Ammunition Categorized for Disposal. GAO-15-

538. Washington, D.C.: July 21, 2015.

Department of Homeland Security: Ammunition Purchases Have Declined 

since 2009. GAO-14-119. Washington, D.C.: January 13, 2014.

For additional information about this area, contact Zina Merritt at (202) 

512-5257 or merrittz@gao.gov.

Related GAO 

Products

Contact Information
Page 131 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

16. DOD Leases and Use of Underutilized 

Space at Military Installations

The Department of Defense could potentially achieve millions of dollars in savings by identifying and 

implementing actions to increase use of underutilized facilities at its military installations, such as identifying 

opportunities to relocate some of its organizations currently in leased space to installations, communicating the 

availability of underutilized space to potential tenants, and seeking use by other federal agencies.

GAO has designated the federal government’s management of its real 

property assets as high risk, in part because of overreliance on costly 

leasing and challenges in reducing excess infrastructure.

1 In particular, 

the Department of Defense (DOD)—one of the federal government’s 

largest owners of real estate—continues to rely on and pay for leased 

commercial space while also operating and maintaining underutilized 

(vacant or partially vacant) facilities on its military installations. DOD 

expends valuable resources on these underutilized facilities that could 

potentially be eliminated from the budget or allocated to other uses. The 

need to better utilize existing real property has been the focus of 

government-wide efforts since the President issued an executive order to 

promote the efficient and economical use of federal real property assets 

in 2004.2 On March 25, 2015, the Office of Management and Budget 

(OMB) issued a memorandum to clarify the existing policy to dispose of 

excess properties and promote more efficient use of real property 

assets.3

DOD manages a global real property portfolio that consists of nearly 

562,000 facilities, which are located on over 4,800 sites worldwide and 

cover over 24.9 million acres. DOD estimates that its facilities have a 

plant replacement value of about $880 billion. This portfolio includes 

property that is currently underutilized but is retained because it may be 

needed in the future. DOD can allow use of underutilized property on its 

installations by moving DOD organizations out of leased space and onto 

military installations or by establishing agreements to move other tenants, 

such as non-DOD federal agencies and other government and private 

entities, onto military installations. Such agreements may offer potential 

opportunities for financial benefits, including reduced maintenance costs 

and, in some circumstances, revenue to DOD. However, while DOD 

continues to operate and maintain underutilized facilities, as of 

 1

GAO, High-Risk Series: An Update, GAO-15-290 (Washington, D.C.: Feb. 11, 2015).

2

Exec. Order No. 13327, Federal Real Property Asset Management, 69 Fed. Reg. 5897 

(Feb. 6, 2004).

3

Office of Management and Budget, Implementation of OMB Memorandum M-12-12 

Section 3: Reduce the Footprint, Management Procedures Memorandum No. 2015-01

(Washington, D.C.: Mar. 25, 2015).

Why This Area Is 

Important
Page 132 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

September 2013 it had over 5,500 leases to use space owned or held by 

private organizations, the General Services Administration (GSA), and 

state organizations. GSA has key leadership responsibilities related to 

real property management for the federal government, including 

acquiring, managing, utilizing, and disposing of real property for most 

federal agencies, as well as entering into, renewing, and terminating 

contracts for leased properties. Notably, DOD facilities are not generally 

subject to GSA authority, as DOD has authority under law to acquire, 

manage, and dispose of its real property.4 GAO reported in March 2016 

that although DOD cannot fully determine the total cost of its leases, 

GAO’s work over the years has shown that operating leases often costs 

more than owning buildings, especially where there are long-term needs 

for space. 

GAO reported in March 2016 that DOD has underutilized space at military 

installations but may miss opportunities to reduce its reliance on leased 

facilities and assess the use of available space resulting from planned 

force reductions at its installations. GAO also reported that DOD also 

does not systematically identify the availability of underutilized space on 

its installations to leasing agencies. GAO reported in June 2015 that DOD 

and GSA do not routinely share information on opportunities to move nonDOD federal agencies onto military installations to use underutilized 

space. GAO found that both DOD and non-DOD agencies could benefit 

from this use of underutilized space. DOD avoids the cost of utilities and 

maintenance, which typically are paid by the tenant, and the tenant 

agency avoids the cost of rent for commercial leases, as DOD charges for 

use of space by other federal entities on a cost-recovery basis but does 

not charge rent.

In March 2016, GAO reported that while DOD has taken some actions to 

reduce its leased space, DOD had projected minimal change in its overall 

lease activities in response to a presidential memorandum and a series of 

OMB memorandums instructing federal agencies to maintain or reduce 

 4

See 40 U.S.C. § 582; 10 U.S.C. §§ 2661, et seq.

What GAO Found
Page 133 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

both owned and leased space.5 Specifically, in its October 2013 Freeze 

the Footprint report to GSA, DOD stated that most of the military 

departments did not anticipate significant year-to-year changes in their 

current leasing activities.6 GAO also reported in March 2016 that DOD 

has not assessed effects of future force reductions on existing leased 

facilities. Potential future force structure reductions may offer DOD and 

the military departments an opportunity to further reduce reliance on 

leased space. For example, in December 2013, GAO reported that the 

Army planned to inactivate 10 Army brigade combat teams on some of its 

installations starting in fiscal year 2017, which would likely result in 

additional unutilized or underutilized buildings as a result of these 

reductions in force structure. To illustrate potential cost savings, for its 

March 2016 report, GAO reviewed all leasing data in DOD’s real property 

database and identified six leases for administrative office space within 

50 miles of four of the installations where the Army plans to inactivate 

brigade combat teams. Each of the installations is projected to have 

available administrative office space once the Army brigade combat 

teams are inactivated. GAO’s analysis of these leases of general 

administrative space shows the annual rent cost of maintaining these 

leases for another 2 years, starting on January 1, 2016, is about $8.2 

million. 

Further, although DOD guidance directs the military departments to 

maintain a program monitoring the use of real property to ensure that it is 

being used to the maximum extent possible consistent with both 

peacetime and mobilization requirements, GAO reported in March 2016 

that officials do not share information on available unutilized or 

underutilized space that can potentially be used when there is a new 

lease requirement or when a lease is up for renewal. While each of the 

military departments told GAO that it has a process for requesting leased 

space, GAO found that officials managing leased space did not always 

have information on unutilized or underutilized space. According to

 5

Pursuant to a Presidential Memorandum, Disposing of Unneeded Federal Real Estate

(June 10, 2010), federal agencies are to take actions to include accelerating cycle times 

for identifying excess assets and disposing of surplus assets; eliminating lease 

arrangements that are not cost-effective; pursuing consolidation opportunities within and 

across agencies in common asset types (such as data centers, office space, warehouses, 

and laboratories); increasing occupancy rates in current facilities through innovative 

approaches to space management and alternative workplace arrangements, such as 

telework; and identifying offsetting reductions in inventory when new space is acquired. 

This Presidential Memorandum is cited as an ongoing effort in OMB Memorandum M-12-

12, Promoting Efficient Spending to Support Agency Operations (May 11, 2012), which 

describes a series of policies and practices related to reducing costs and improving 

efficiencies in government real estate, among other things, and builds on measures 

already in place at various agencies. In March 2013, OMB issued clarifying guidance for 

implementing the real property portion of the May 2012 memorandum, OMB Management 

Procedures Memorandum No. 2013-02, Implementation of OMB M-12-12 Section 3: 

Freeze the Footprint (Mar. 14, 2013).

6

Department of Defense, Revised Real Property Cost Savings and Innovation Plan for 

Fiscal Year 2013 to 2015 (October 2015).
Page 134 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

military department officials, the process of requesting leased space 

takes several steps to ensure that leased space is used efficiently, 

including assessing whether DOD-held or government-owned space is 

available within a 50-mile radius of a lease location. For example, Navy 

officials said that the Navy pursues leasing space only when it has 

determined that suitable government-owned space does not exist. 

Additionally, Air Force and Army officials provided informational checklists 

that are to be used when acquiring or renewing leases, including 

surveying the availability of government-controlled or DOD-held space 

within a 50-mile radius of the lease location. However, based on

discussions with Army officials, GAO determined that the U.S. Army 

Corps of Engineers officials who manage the Army’s rental facilities 

database had not been contacted by the installation officials with 

projected unutilized or underutilized space because of the inactivation of 

the brigade combat teams on their installations—space that is close to 

DOD lease locations. If installation officials do not routinely share

information on unutilized and underutilized space, DOD leasing agents 

may not know whether government owns suitable space, thereby leaving 

DOD at risk of relying on more costly leased space when governmentowned space may be available. 

DOD officials stated that there are many factors to consider before 

deciding to move an activity from leased space onto an installation, such 

as suitability of the space to meet the tenants’ needs and security 

concerns with non-mission-related tenants. While the military 

departments have reported that they have initiatives under way to reduce 

leased space, greater opportunities are possible because of planned 

force structure reductions, which will lead to increasing vacancies of oninstallation facilities. If DOD does not require that the military departments 

evaluate these likely-to-be-vacated facilities in conjunction with leases 

being renewed—or before entering into new leases—DOD will likely not 

have reasonable assurance that it will be able to fully identify 

opportunities to vacate more costly leased space when appropriate and to 

move into DOD-owned space.

In addition, in June 2015 GAO reported that routine information sharing 

does not occur between DOD and GSA concerning opportunities to use 

underutilized space by moving non-DOD federal agencies onto military 

installations. Government-wide efforts, such as OMB’s 2015 Reduce the 

Footprint policy, continue to focus on the need to better utilize existing 

real property assets in order to promote efficiency and leverage 

government resources, which can be facilitated by coordination between 

federal agencies.7 GAO has previously reported that agencies can 

become better stewards of government resources through enhancing and 

sustaining collaboration and coordination, which can be accomplished 

 7

Office of Management and Budget, National Strategy for the Efficient Use of Real 

Property 2015–2020, Reducing the Federal Portfolio through Improved Space Utilization, 

Consolidation, and Disposal (Mar. 25, 2015).
Page 135 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

through various practices, including operating across agency boundaries 

through compatible policies, procedures, and frequent communication.8

GSA works with non-DOD federal agencies to help them seek and obtain 

space because, according to GSA, placing a federal agency in 

government-owned space is generally a better long-term solution than 

commercial leasing and provides cost savings over time.9 According to 

GSA officials, the search for suitable federally controlled space includes a 

check of federally owned and GSA-leased real property before helping its 

clients to acquire space through a commercial lease. However, even 

though DOD holds over 60 percent of all federal real property and GSA 

may have information on agencies near an installation needing space, 

according to GSA officials, GSA’s process for seeking and assigning

space to its non-DOD federal agency clients does not include sharing this 

information with DOD or other federal landholding agencies. The officials

stated that if a client were to express interest in space on a military 

installation, GSA would direct the client to contact the installation directly,

and GSA would have little to no involvement with the details of any 

agreement between DOD and the non-DOD federal agency for the use of 

space on a military installation. 

The GSA officials with whom GAO spoke said that a primary reason GSA 

does not routinely coordinate with DOD concerning the availability of 

unutilized and underutilized space is that they assume that space in 

DOD-held facilities typically would not meet the needs of GSA’s non-DOD 

federal agency clients because installation security requirements and 

locations are not likely to be compatible with the non-DOD federal agency 

missions. However, although such factors can limit some non-DOD 

federal agencies from being located on a military installation in some 

circumstances, DOD reports having non-DOD federal tenants on many of 

its installations. Therefore, there are instances when a non-DOD federal 

agency’s space needs can be met on military installations. Further, GSA’s 

assumption that agencies’ needs cannot be met on a military installation 

may preemptively limit options available to the agencies for which GSA is 

working to find space, and non-DOD federal agency tenants may not 

receive full information on potential facilities located on the installations.

In its June 2015 report, GAO also reported that DOD also does not 

routinely share information with GSA or other non-DOD federal agencies 

when space is available on military installations, although DOD guidance 

 8

GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain 

Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005).

9

For example, non-DOD federal agencies could receive a financial benefit from being 

located on a military installation because of differences in costs charged by DOD when 

compared with the costs of commercial leases. Specifically, a DOD instruction allows 

military installations to collect reimbursements from non-DOD federal agencies for direct 

and indirect costs, such as utilities, maintenance, and services provided, but generally 

does not allow installations to collect additional rent beyond cost recovery.
Page 136 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

directs military services to ensure that real property is being used to the 

maximum extent possible consistent with both peacetime and 

mobilization requirements. Routine sharing does not occur when space is 

available, in part because officials told GAO that military installations 

generally wait for non-DOD federal agencies to inquire about available 

space. DOD officials at various levels said that they do not conduct 

outreach to communicate information regarding unutilized and 

underutilized space on military installations, in part because the 

installations primarily focus on supporting missions within DOD, not other 

non-DOD federal agencies. However, when there is available space on 

military installations that is not currently used by other DOD entities, 

DOD’s approach of waiting for agencies to contact installations does not 

assist installations in utilizing space to the maximum extent possible, 

consistent with DOD policy.

Officials at the Office of the Secretary of Defense and at the service and 

installation levels also stated that actively pursuing potential tenants 

would be an administrative burden on the installations, especially if there 

is not a significant amount of available space on the installation. However, 

there are ways that DOD could accomplish this without significantly 

increasing the administrative burden, such as by ensuring that regional 

GSA offices know whom to contact at the installations when seeking 

space for tenants. At the time of GAO’s review, DOD did not provide 

regional or local contacts or information on the process for requesting 

space for installations to GSA or other non-DOD federal agencies. 

Without actions to share information at the regional and local levels, GSA 

offices working with non-DOD federal agencies may risk missing 

opportunities for clients to use available underutilized or unused federal 

space at lower cost than commercial leases. In addition, DOD may be 

missing opportunities to leverage resources with GSA to enhance 

utilization of its unutilized and underutilized facilities and reduce costs 

associated with maintaining these facilities.

To help reduce facility costs and reliance on leased space, GAO 

recommended the following two actions:

• In March 2016, GAO recommended that DOD look for opportunities to 

relocate DOD organizations in leased space to installations that may 

have underutilized space because of force structure reductions or 

other indicators of potentially available space, where such relocation 

is cost-effective and does not interfere with the installation’s ongoing 

military mission.

• In June 2015, GAO recommended that DOD, in collaboration with the 

Administrator of GSA, identify and implement actions to enable and 

enhance routine information sharing between DOD and GSA about 

the utilization of facilities on military installations. Such actions should 

include establishing recurring processes to (1) share information 

about non-DOD federal agencies seeking workspace and (2) ensure 

Actions Needed and 

Potential Financial or 

Other Benefits
Page 137 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

that GSA and DOD organizations are aware of the appropriate points 

of contacts within their organizations at the regional and local levels.

DOD could potentially save millions of dollars each year by identifying 

opportunities to relocate some of its organizations in leased space to 

installations that may have underutilized facilities. GAO analyzed all 5,566 

lease records in DOD’s real property database for fiscal year 2013 (the 

most recent year for which data were available) and found that there were 

407 records for general administrative space.10 The total annual rent plus 

other costs for these leases was approximately $326 million for about 

17.6 million square feet of leased space. Further, without systematically 

sharing information, DOD may be missing opportunities for installations to 

maximize the use of space and reduce costs, while reducing its leased 

space, and GSA risks missing opportunities for some of its clients to 

reduce or avoid rental costs altogether and to reduce their reliance on 

commercial leases.

In commenting on GAO’s March 2016 report on which portions of this 

analysis are based, DOD did not concur with the recommendation for 

military departments to look for opportunities to relocate DOD 

organizations in leased space onto installations that may have 

underutilized space. DOD stated that its existing policy requires the 

effective and efficient use of DOD real property and that current initiatives 

undertaken by each of the military departments and Washington 

Headquarters Services reflect, in DOD’s opinion, adherence to this policy, 

and therefore no additional actions are necessary at this time. 

Although DOD sees no immediate requirement for additional action, GAO 

found that—existing guidance notwithstanding—DOD will need to assess 

the likely effects of future force reductions and the implementation of the 

Reduce the Footprint Plan on its use of leased space. Although DOD 

noted that the Army issued an execution order in March 2015 requiring 

that commanders plan and implement footprint reductions, the impact of 

that effort is not yet known as the requirements of the execution order are 

still on-going. Specifically, according to the Army execution order, the 

Army plans to take a phased approach to infrastructure reductions. 

During Phase One, the Army plans to accurately document existing 

facility utilization and update its real property master plan. In Phase Two,

the Army intends to implement the updated plan by consolidating its 

footprint to the minimum appropriate space and disposing of unneeded 

leases and facilities. OSD and Army officials told GAO that they have 

identified some leases for elimination but that further analysis would need 

to be completed before such actions could be taken. Officials also said 

that good execution data would not be available for this effort until the end 

of 2016. At present, data on Army leases to be eliminated are not 

 10According to DOD officials, general administrative space is more likely to be usable by 

tenants, compared to more specialized military-mission-oriented facilities.

Agency Comments 

and GAO’s Evaluation
Page 138 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

available. However, if the process laid out in the execution order is 

effectively and fully implemented, it may meet the intent of GAO’s 

recommendation.11 Until the Army effort is completed, however, DOD 

may be at risk of missing opportunities to reduce its leased space at a 

DOD-wide level.

In commenting on the June 2015 report on opportunities to move nonDOD federal agencies onto military installations, DOD and GSA both 

concurred with the recommendation to enhance information sharing on 

space availability on military installations. DOD stated that it would 

support GSA’s efforts to share information about the non-DOD federal 

agencies seeking workspace and that it would work with GSA to ensure 

that GSA and DOD organizations are aware of the appropriate points of 

contacts within their organizations at the regional and local levels. GSA 

stated that it would take actions to implement the recommendation, 

consisting of (1) convening a working group with DOD real property 

officials to understand DOD’s national landholding portfolio and identify 

unutilized and underutilized space at military installations,

(2) collaborating with DOD to establish a shared real property inventory 

database, (3) reviewing GSA’s inventory of customer agencies’ current 

and future needs, and (4) revising the Federal Management Regulations 

to include DOD in GSA’s priorities for housing federal agencies. As of 

March 2016, GSA and DOD began setting up a working group to share 

information on available space and to establish points of contact and 

other participants to address the recommendation.

GAO also provided a draft of this report section to DOD for review and 

comment. DOD provided technical comments and in response GAO 

made changes to this report section where appropriate.

The information contained in this analysis is based on findings from two 

products in the related GAO products section: GAO’s March 2016 report 

on DOD’s use of leased space and GAO’s June 2015 report on non-DOD 

tenants’ use of DOD-owned space. To determine the extent to which 

DOD has taken actions to reduce its reliance on leased space since 2011

(the final year of a 6-year period to implement the 2005 Base 

Realignment and Closure (BRAC) recommendations), GAO obtained and 

reviewed the 2005 BRAC Commission report and identified the 

commission’s recommendations for realigning and closing some DOD 

leased facilities that had to be implemented by September 15, 2011.12

GAO also reviewed DOD’s 2013 Freeze the Footprint reports that were 

submitted to OMB—the most current reports available when GAO 

 11According to DOD officials, the Army is the executive agent for the majority of DOD 

leases, including those for joint service programs and defense agencies.

122005 Defense Base Closure and Realignment Commission: Report to the President

(Sept. 8, 2005).

How GAO Conducted 

Its Work
Page 139 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

initiated the review—to identify DOD’s planned initiatives to reduce its 

domestic office and warehouse space (including both leased and owned 

space). GAO interviewed officials from the Office of the Assistant 

Secretary of Defense (Energy, Installations, and Environment) to discuss 

DOD’s policies and ongoing initiatives involving DOD’s use of leased 

space. GAO also interviewed real property officials from the Department 

of the Army and gathered documentation on its initiatives regarding 

leased space that would assist it in meeting the Freeze the Footprint 

requirements. GAO focused on the Army because it has more leases 

than the other military departments and Washington Headquarters 

Services combined. GAO interviewed and gathered documentation from 

officials at Washington Headquarters Services to determine if DOD was 

reoccupying leased space previously vacated in the National Capital 

Region as a result of the 2005 BRAC recommendations. The National 

Capital Region was a primary focus of the 2005 BRAC recommendations 

that involved moving DOD activities from leased space to governmentowned space. For fiscal year 2013, GAO obtained DOD reports on the 

number and location of DOD’s leases and interviewed officials who 

maintain the leases. GAO also analyzed the lease data from DOD’s Real 

Property Assets Database to see if any opportunities existed for DOD to 

reduce its leased space based on the proximity of leased space to 

installations that could have additional underutilized buildings in the future 

as a result of planned reductions in force structure. GAO chose fiscal year 

2013 data because they were the most recent data available at the time 

the review began.

To determine the extent to which DOD and other federal agencies 

coordinate to enhance use of unutilized and underutilized facilities on 

military installations, GAO reviewed GSA guidance on its process to seek 

and assign space to its clients and interviewed cognizant GSA officials 

concerning that process, to determine whether the process includes 

coordination with landholding agencies such as DOD. GAO compared 

that information to criteria on practices to enhance collaboration among 

federal agencies that GAO identified previously. Specifically, GAO

identified certain practices that can help enhance and sustain 

collaboration among federal agencies, including establishing compatible 

policies, procedures, and other means to operate across agency 

boundaries, which can be accomplished through frequent communication 

among collaborating agencies.13 GAO also interviewed responsible 

officials at the Office of the Secretary of Defense, military department 

headquarters, and military installations to obtain their perspectives on 

coordination between DOD and GSA.

 13GAO-06-15.
Page 140 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Defense Infrastructure: More Accurate Data Would Allow DOD to Improve 

the Tracking, Management, and Security of Its Leased Facilities. 

GAO-16-101. Washington, D.C.: March 15, 2016.

Underutilized Facilities: DOD and GSA Information Sharing May Enhance 

Opportunities to Use Space at Military Installations. GAO-15-346. 

Washington, D.C.: June 18, 2015.

Defense Infrastructure: DOD Needs to Improve Its Efforts to Identify 

Unutilized and Underutilized Facilities. GAO-14-538. Washington, D.C.: 

September 8, 2014.

Defense Infrastructure: Army Brigade Combat Team Inactivations 

Informed by Analyses, but Actions Needed to Improve Stationing 

Process. GAO-14-76. Washington, D.C.: December 11, 2013.

Federal Real Property: Strategic Partnerships and Local Coordination 

Could Help Agencies Better Utilize Space. GAO-12-779. Washington, 

D.C.: July 25, 2012.

Excess Facilities: DOD Needs More Complete Information and a Strategy 

to Guide Its Future Disposal Efforts. GAO-11-814. Washington, D.C.: 

September 19, 2011.

For additional information about this area, contact Brian J. Lepore at 

(202) 512-4523 or leporeb@gao.gov.

Related GAO 

Products

Contact Information
Page 141 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Economic development 

17. Treasury’s Foreclosure Prevention

Efforts 

The Department of the Treasury could potentially achieve billions in financial benefits by reviewing the potential 

for unexpended balances for the Making Home Affordable Program and deobligating excess funds, which 

Congress could rescind and direct to other priorities.

Since 2009, the U.S. Department of the Treasury (Treasury) has been 

using funds under the Troubled Asset Relief Program (TARP) authorized 

by the Emergency Economic Stabilization Act of 2008 (EESA) to address 

weaknesses in the U.S. housing market.1 Treasury initially announced 

that up to $50 billion would be used to help as many as 3 million to 4 

million struggling homeowners avoid preventable foreclosure but 

subsequently reduced the amount to $37.5 billion. Of that amount, 

Treasury obligated $27.8 billion (as of February 2016) in TARP funds for 

the Making Home Affordable (MHA) program. 2 The cornerstone program 

under MHA is the Home Affordable Modification Program (HAMP), which 

provides financial incentives for eligible borrowers, servicers, and 

mortgage holders/investors to modify first-lien mortgages. These 

modifications are intended to prevent foreclosure by reducing 

homeowners’ monthly mortgage payments to affordable levels. 

Treasury has made extensive modifications to MHA programs, including 

HAMP, since their introduction. These modifications include expanding 

HAMP to cover additional homeowners and investors, providing additional 

payment relief, and granting underwater borrowers principal reduction. 

The modifications could result in additional expenditures of program funds 

in the billions of dollars. However, billions of dollars obligated under the 

MHA program remain unexpended, and GAO and the Congressional 

Budget Office have raised questions about the potential for excess funds.

In December 2015, Congress mandated that the MHA programs be 

terminated on December 31, 2016, with an exemption for HAMP loan 

1

Pub. L. No 110-343, 122 Stat. 3765 (codified at 12 U.S.C. §§ 5201-5261). EESA 

provided Treasury with authority to purchase up to $700 billion worth of troubled assets. 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (1) reduced Treasury’s 

authority to purchase or insure troubled assets to a maximum of $475 billion and (2) 

prohibited Treasury, under EESA, from incurring any obligations for a program or initiative 

that was not initiated prior to June 25, 2010. Pub. L. No. 111-203, § 1302, 124 Stat. 1376, 

2133 (2010) (codified as amended at 12 U.S.C. § 5225(a)).

2

Treasury has also allocated $7.6 billion in TARP funds to state housing finance agencies 

to help borrowers in the areas most affected by the housing crisis, and plans to allocate an 

additional $2 billion in TARP funds to the state housing finance agencies in 2016. Also, 

Treasury has allocated $100 million to support the Department of Housing and Urban 

Development’s Federal Housing Administration refinance program for borrowers in 

negative equity positions.

Why This Area Is 

Important
Page 142 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

modification applications made before that date.3 At that time, Congress 

also provided Treasury with the authority to obligate up to $2 billion to 

current program participants in the Housing Finance Agency Innovation 

Fund for the Hardest Hit Housing Markets (Hardest Hit Fund).

4

As of October 2015, Treasury had obligated $29.8 billion for all MHA 

programs, $12.6 billion of which had been expended, leaving $17.2 billion 

in obligated but unexpended funds. Of this $17.2 billion, according to 

Treasury’s estimate, a maximum of $9.5 billion could be expended 

through future payments to servicers for HAMP loan modifications 

completed before October 2015 and for other activities that servicers 

have already initiated. The remaining $7.7 billion in obligations 

represented the amount potentially available to servicers for future HAMP 

modifications and other MHA transactions, as established in the original 

contracts. Due to restrictions imposed by the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, Treasury may obligate TARP 

funds only for programs that were initiated prior to June 25, 2010.

Treasury monitors activity and aggregate expenditures under the MHA 

program, but it has not systematically reviewed the extent to which it is 

likely to use all obligated funds. Treasury did not update its estimate of 

potential future participation and associated expenditures of HAMP—the 

largest MHA program—between 2009 and 2015. In a July 2009 report, 

GAO found that Treasury’s estimates may have been overstated, 

reflecting uncertainty caused by data gaps and assumptions that had to 

be made, and recommended that Treasury periodically review and update 

its estimates. 

In response, Treasury started performing periodic estimations of the 

eligible HAMP population, but it has not used these estimates to assess 

likely future expenditures or excess MHA program funds. Instead of 

producing updated estimates of future program participation and related 

expenditures, Treasury historically had assumed that all funds obligated 

for MHA would be spent. GAO recognizes that no estimate of future 

participation and expenditures can be made with certainty. However, prior 

GAO work has concluded that reviewing unexpended balances, including 

those that have been obligated, can help agencies identify possible 

budgetary savings.5 Moreover, Congress’s recent action to terminate the 

 3

See Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, Div.O, tit. VII, § 709, 

129 Stat. 2242 (2015).

4

First announced in February 2010, the Hardest Hit Fund provided $7.6 billion in TARP 

funds to 18 states, plus the District of Columbia, to develop locally tailored programs to 

assist struggling homeowners in their communities. In February 2016, Treasury officials 

stated that they expect to obligate $2 billion to the Hardest Hit Fund.

5

GAO, Budget Issues: Key Questions to Consider When Evaluating Balances in Federal 

Accounts, GAO-13-798 (Washington, D.C.: Sept. 30, 2013).

What GAO Found
Page 143 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

MHA program on December 31, 2016, and to allow Treasury to obligate 

up to $2 billion in TARP funds to current program participants in the 

Hardest Hit Fund, provides Treasury with greater certainty and 

opportunity with respect to estimating and reprogramming any excess 

MHA fund balances.6

GAO performed its own analysis of mortgage data to estimate potential 

future HAMP participation and costs. This analysis resulted in estimates 

of MHA program balances as of October 16, 2015, that ranged from using 

the full $7.7 billion in funds available at that time (a surplus of $0) to a 

surplus of $2.5 billion. In preparing these estimates, GAO attempted to 

provide a wide range of possible outcomes and generally used inclusive 

assumptions about program participation levels. Thus, the actual amount 

of unexpended MHA program funds would likely have been higher than 

GAO’s estimates. The President’s fiscal year 2017 budget submission 

indicates that Treasury estimated a $4.7 billion reduction in total outlays 

for the MHA program. Treasury deobligated $2 billion of the $4.7 billion 

on February 25, 2016. In addition, Treasury has indicated it plans to 

commit $2 billion to the Hardest Hit Fund. Treasury officials also told 

GAO that deobligating all MHA funds in excess of the current cost 

estimate would unduly increase the risk of insufficient funding for program 

expenditures. Estimating likely future participation and associated 

expenditures would allow Treasury to identify and deobligate excess 

funds, and, to the extent funds are deobligated, Congress may then have 

an opportunity to use those funds for other priorities.

To better ensure that taxpayer funds are being used effectively, in March 

2016, GAO suggested that Congress consider taking the following action:

• Rescind any Treasury-deobligated excess MHA balances that 

Treasury does not move into the Hardest Hit Fund.

In addition, in order to provide Congress and others with accurate 

assessments of the funding that has been and will likely be used to help 

troubled borrowers and to identify any obligations not likely to be used, in 

March 2016, GAO recommended that the Secretary of the Treasury take 

the following two actions:

• Review potential unexpended balances by estimating future 

expenditures of the MHA program.

• Deobligate funds that Treasury’s review shows will likely not be 

expended and move up to $2 billion of such funds to the TARP-

 6

See Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, Div. O, tit. VII, § 709, 

129 Stat. 2242. The termination of the MHA program will not apply to MHA loan 

modification applications made before December 31, 2016.

Actions Needed and 

Potential Financial or 

Other Benefits
Page 144 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

funded Hardest Hit Fund, as authorized by the Consolidated 

Appropriations Act, 2016.

While the actual financial benefits associated with these actions are

unknown, GAO’s analysis resulted in estimates of unused funds that 

ranged from using all available funds to a surplus of $2.5 billion. 

Treasury’s estimation of its future expenditures will require it to make 

assumptions that may differ from those made during GAO’s estimation. 

Additionally, taking these actions should better position Treasury for the 

eventual end of the MHA program, mandated by Congress to occur on 

December 31, 2016. Treasury agreed with the recommendations in 

GAO’s March report and wrote that it plans to evaluate whether to 

deobligate additional funds after the complete universe of MHA 

transactions (i.e., mortgage modifications, short sales, and deeds-in-lieu 

of foreclosure) is known, sometime after all MHA transactions are 

completed in late 2017. These actions are consistent with the intent of 

GAO’s recommendation. 

In commenting on a draft of GAO’s March 2016 report on which this 

analysis is based, Treasury agreed with each of GAO’s 

recommendations, and noted that it was planning to address each of the 

recommendations. Specifically, Treasury indicated that it had updated its 

MHA program cost estimates and, as a result, subsequently deobligated 

$2 billion of MHA funds on February 25, 2016. Treasury also indicated 

that it plans to commit $2 billion to the Hardest Hit Fund program. 

GAO provided a draft of this report section to Treasury for review and 

comment. Treasury provided technical comments which are incorporated 

as appropriate.

The information contained in this analysis is based on findings from the 

March 2016 report listed in Related GAO Product section. To assess the 

extent to which Treasury was reviewing unexpended balances and cost 

projections for the MHA program, GAO collected and reviewed internal 

Treasury memoranda on the purpose and justification of program 

changes made in 2014 and 2015. GAO reviewed servicer survey results 

as well as projections of eligible borrowers and loans to understand the 

factors that might affect program participation.7 GAO reviewed internal 

Treasury estimates of the average cost of modifications and of 

obligations, outlays, and remaining funds for the MHA programs. GAO

also reviewed a prior GAO report on best practices concerning reviews of 

unexpended balances and cost projections.8 In addition, GAO conducted 

its own analysis of potential future program participation and the likely 

 7

Treasury initiated HAMP and the other TARP housing programs using its authority under 

EESA and authorized Fannie Mae to act as a financial agent.

8

GAO-13-798.

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 145 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

associated costs to illustrate the potential for unexpended balances. To 

do so, GAO used analyses it directed that were prepared by a private 

data vendor, Black Knight Data & Analytics LLC.

9 GAO also conducted 

and reviewed past interviews with Treasury officials about the status of 

the programs, including any future program changes, and their 

projections for completing disbursement of TARP-housing funds. 

Table 11 in appendix V lists the programs GAO identified that might have 

opportunities for cost savings or revenue enhancement. 

Troubled Asset Relief Program: Treasury Should Estimate Future 

Expenditures for the Making Home Affordable Program. GAO-16-351.

Washington, D.C.: March 8, 2016.

Troubled Asset Relief Program: Treasury Actions Needed to Make the 

Home Affordable Modification Program More Transparent and 

Accountable. GAO-09-837. Washington, D.C.: July 23, 2009.

For additional information about this area, contact Mathew Scire at (202) 

512-8678 or sciremj@gao.gov.

 9

Black Knight Data & Analytics LLC is a private data vendor that provides comprehensive 

property, multiple listing service, and mortgage performance data. According to Black 

Knight Data & Analytics, there were about 30 million active first-lien mortgages in its

mortgage performance database, which they estimated to cover about 60 percent of the 

total mortgage universe.

Related GAO 

Products

Contact Information
Page 146 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

General government 

18. Bridge Contracts

When bridge contracts—which include extensions to existing contracts and short-term noncompetitive 

contracts to avoid a gap in service—are used frequently or for prolonged periods of time, the government is at 

risk of paying more than it should for goods and services.

When a contract is set to expire and there is a continuing need for 

services, but the follow-on contract is not ready to be awarded, the 

government can extend the existing contract or award a short-term solesource contract to an incumbent contractor. These types of contracting 

arrangements have been referred to as “bridge contracts,” and they are 

used to ensure there is no gap in services. Bridge contracts are almost 

always noncompetitive, which may put the government at risk of paying 

more than it should for goods and services. While bridge contracts can be 

a necessary and appropriate tool, their use has also been associated with 

negative effects, such as higher contract prices due to a lack of 

competition and the inefficient use of staff and resources. No formal 

definition of bridge contracts exists, nor is there a requirement for 

agencies to track them in the Federal Acquisition Regulation (FAR), which 

provides uniform acquisition policies and procedures for executive 

agencies. In addition, bridge contracts are not identified in the Federal 

Procurement Data System-Next Generation (FPDS-NG) or any other 

federal database.

In an October 2015 report, GAO found that, although bridge contracts are 

typically envisioned as short-term, 17 of 29 bridge contracts it reviewed 

in-depth spanned longer than a year, with six lasting more than 3 years, 

potentially undetected by approving officials. The value of the 29 bridge 

contracts included in our review was over $225 million.1

 Of the 26 cases 

in GAO’s review where follow-on contracts were later awarded—even 

after a lengthy bridge contract period—23 were awarded competitively. 

Some of these competitively awarded contracts lead to savings for the 

government, highlighting the importance of better management controls 

over the use of bridge contracts. For example, GAO found that when the 

Air Force awarded a competitive follow-on contract to provide logistics 

support services, it resulted in a monthly rate reduction of approximately 

$22,400 (34 percent). 

For its October 2015 report, GAO also found that the three agencies it 

reviewed—the Departments of Defense (DOD), Health and Human 

1

The $225 million includes stand-alone bridge contracts for 20 of the 29 contracts we 

reviewed in-depth. The other 9 contracts used only contract extensions to bridge the gap 

in services. Fourteen of the 29 contracts used a combination of stand-alone bridge 

contracts and contract extensions. We were unable to calculate the value of contract 

extensions, as these values are reported as part of the predecessor contract in FPDS-NG.

Why This Area Is 

Important

What GAO Found
Page 147 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Services (HHS), and Justice (DOJ)—had limited or no insight into their 

use of bridge contracts.2 None of the agencies have agency-level policies 

to manage and track their use of bridge contracts, nor do their acquisition 

regulations define bridge contracts. HHS officials told GAO that their 

agency has no overarching policy because the agency does not have a 

standard definition for bridge contracts. Officials at DOD said that, at the 

department level, the agency did not have any policies because bridge 

contracts had not previously been raised as a specific concern at the 

department. DOJ officials indicated they see defining bridge contracts as 

a government-wide issue, and officials from one of their components told 

GAO that the concept of defining bridge contracts was new to them. 

However, GAO found that two DOD components, the Navy and Defense 

Logistics Agency, have established policies that provide definitions and 

procedures to manage and track their use. The components took these 

steps due to concerns that bridge contracts were being used too 

frequently and can be an impediment to competition. 

Federal internal control standards state that agencies should identify, 

analyze, and monitor risks associated with achieving objectives, and that 

information needs to be recorded and communicated to management so 

as to achieve agency objectives.3 One common procurement objective at 

federal agencies is to maximize competition. However, without a definition 

for bridge contracts and strategies for tracking and managing their use, 

agencies are not able to fully identify and monitor the risks related to 

these contracts, and therefore may be missing opportunities to increase 

competition. The Federal Acquisition Regulation (FAR) does not define 

bridge contracts. Staff from the Office of Management and Budget’s 

(OMB) Office of Federal Procurement Policy (OFPP), one of the entities 

responsible for initiating revisions to the FAR, acknowledged that the use 

of bridge contracts may introduce risks related to a lack of competition, 

such as the risk of higher contract prices. Similarly, contracting, program, 

and policy officials GAO spoke with also stated that while bridge contracts 

are an important “tool in their toolbox” for ensuring continuity of services, 

their prolonged use poses a risk to competition and that use of bridge 

contracts should be avoided when possible.

By defining bridge contracts and implementing a policy related to their 

use, the Navy and DLA have taken important steps to enhance these 

components’ management of bridge contracts. However, bridge contracts 

have been identified not only across the three agencies and eight 

components included in GAO’s review, but at other agencies as well, as 

 2

For its October 2015 report, GAO reviewed available policies and procedures for bridge 

contracts at DOD, HHS, and DOJ and several components within each agency. The eight 

components GAO reviewed were Air Force, Army, Navy, and Defense Logistics Agency 

within DOD; the National Institutes of Health and the Indian Health Service within HHS; 

and the Drug Enforcement Administration and Federal Bureau of Prisons within DOJ. 

3

GAO, Internal Control: Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
Page 148 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

evidenced by GAO’s past work and that of others (see, for example, 

GAO’s March 2012 and March 2014 reports). Therefore, the importance 

of defining and tracking bridge contracts is not limited to those agencies 

included in GAO’s review. 

A uniform, government-wide definition and strategies for tracking and 

managing the use of bridge contracts would help ensure all agencies 

have better insights into their use of these contracts and provide agencies 

with the information necessary to manage their use. Otherwise, agencies 

are left without a complete picture or understanding of how long a bridge 

contract has been in place. Without such information, it is difficult for 

agencies to take steps to reduce their reliance on noncompetitive bridge 

contracts or remediate internal deficiencies—such as issues related to 

acquisition planning or challenges with the acquisition workforce—that 

may lead to delays in the award of follow-on contracts.

GAO recommended in October 2015 that to gain visibility and enable 

efficient management of the use of bridge contracts in federal agencies, 

the Administrator of OFPP take the following two actions:

• Take appropriate steps to develop a standard definition for bridge 

contracts and incorporate it as appropriate into relevant FAR sections.

• As an interim measure until the FAR is amended, provide guidance to 

agencies on (1) a definition of bridge contracts, with consideration of 

contract extensions and stand-alone bridge contracts, and (2) 

suggestions for agencies to track and manage their use of these 

contracts. 

The financial benefits of implementing these recommendations cannot be 

quantified because the universe of bridge contracts is currently unknown. 

However, implementing GAO’s recommendations would enable agencies 

to obtain the information necessary to help them determine the extent to 

which they can achieve cost savings through better management of these 

contracts.

In commenting on the October 2015 report on which this analysis is 

based, OFPP concurred with GAO's recommendation to provide guidance 

to agencies on bridge contracts. With regard to GAO's recommendation 

to develop a definition of bridge contracts and incorporate it in the FAR, 

OFPP stated its intention to work with members of the FAR Council to 

explore the value of doing so. GAO maintains that a uniform, governmentwide definition for bridge contracts is imperative to providing agencies 

with the information necessary to monitor these contracts and to ensure 

they are being used as intended. 

GAO provided a draft of this report section to DOD, DOJ, HHS, and OMB 

for review and comment. DOD, DOJ and HHS did not provide comments. 

In an email response, OMB staff stated that OFPP is developing guidance 

to address the use of bridge contracts in the context of agencies’ 

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation
Page 149 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

responsibility to manage risks associated with noncompetitive contracts. 

The response also stated that while a decision has not yet been made 

regarding changes to the FAR, OFPP is discussing the issue with the 

FAR Council and believes that the development of guidance will help 

clarify where regulatory coverage may be needed.

The information contained in this analysis is based on findings from 

GAO’s October 2015 report. Because bridge contracts are not defined in 

the FAR or tracked in the federal procurement data system, GAO 

developed a definition based on its prior work and that of other federal 

agencies and developed a customized search of the federal procurement 

data system to identify potential bridge contracts. For the purposes of the 

October 2015 report, GAO defined the term “bridge contract” as (1) an 

extension to an existing contract beyond the period of performance 

(including base and option years), or (2) a new, short-term contract 

awarded on a sole-source basis to an incumbent contractor to avoid a 

lapse in service caused by a delay in awarding a follow-on contract. GAO 

focused its review on DOD, HHS, and DOJ and selected components 

because they were among those agencies with the highest number of 

potential bridge contracts. GAO reviewed policies and procedures at 

these three agencies and conducted an in-depth review of 29 contracts, 

which included interviews with program and contracting officials, contract 

file reviews of the bridge contract, the contract preceding the bridge

contract, and, if awarded at the time of GAO's review, the follow-on 

contract.

Sole Source Contracting: Defining and Tracking Bridge Contracts Would 

Help Agencies Manage Their Use. GAO-16-15. Washington, D.C.: 

October 14, 2015.

Federal Contracting: Noncompetitive Contracts Based on Urgency Need 

Additional Oversight. GAO-14-304. Washington, D.C.: March 26, 2014.

Defense Contracting: Competition for Services and Recent Initiatives to 

Increase Competitive Procurements. GAO 12-384. Washington, D.C. 

March 15, 2012.

For additional information about this area, contact Michele Mackin at 

(202) 512-4841 or mackinm@gao.gov.

How GAO Conducted 

Its Work

Related GAO 

Products

Contact Information
Page 150 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

19. Federal Supply Schedules

Agencies are paying insufficient attention to prices when using the Federal Supply Schedules program and 

may be missing opportunities for cost savings.

The Federal Supply Schedules (FSS) program, managed by the General 

Services Administration (GSA), provides federal agencies a simplified 

method of purchasing commercial products and services at prices 

associated with volume buying. A schedule is a set of contracts awarded 

to multiple vendors that provide similar products and services. According 

to GSA, total sales through the program in fiscal year 2014 were $33.1 

billion. The FSS program must be used properly to help ensure that the 

government is obtaining a good price and competition to the maximum 

extent possible. For example, while contractors are not required to offer 

discounts from their FSS prices, ordering activities are required by the 

Federal Acquisition Regulation (FAR) to seek discounts when placing

orders with values over a certain amount, and may seek discounts for all 

orders.

1

In a July 2015 report, GAO reviewed the extent to which agencies 

examine prices to be paid for FSS orders. GAO focused its review on the 

three agencies with the highest use of the program: the Department of 

Defense (DOD), GSA, and the Department of Health and Human 

Services (HHS).

2 GAO's analysis of how these agencies assessed prices 

for a nongeneralizable sample of 60 orders showed that agencies are not 

paying sufficient attention to prices for goods and services under FSS 

orders. Ordering agencies did not consistently seek discounts from 

schedule prices, even when required to do so by the FAR. GAO found a 

significant number of cases—16 out of 45 orders reviewed—in which 

contracting officers did not seek discounts from FSS prices as required. 

When contracting officers sought discounts, vendors generally offered 

them, including a 57 percent discount for a $19.9 million order. In other 

instances, agencies purchased items not on the schedule contract—

called open market items—without performing a separate price or cost 

analysis, as required by the FAR, or they did not obtain sufficient 

information to determine whether an item was on the schedule. Despite 

existing training programs, contracting officials GAO interviewed were not 

always aware of the requirement to seek discounts. Agency officials 

noted that some of the problems stem from inexperienced staff who are 

unfamiliar with schedule ordering procedures. When contracting officers 

 1

FAR Subsection 8.405-4.

2

GAO identified these agencies based on obligations reported in Federal Procurement 

Data System-Next Generation, the government’s procurement database, for fiscal years 

2010-2014. 

Why This Area Is 

Important

What GAO Found
Page 151 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

do not seek discounts for FSS orders, the government may miss 

opportunities for cost savings. Further, when contracting officers do not 

evaluate prices for non-FSS items purchased in conjunction with an FSS 

order—which is allowed for administrative convenience—the government 

cannot be sure that items are being purchased at a fair and reasonable 

price.

To help ensure contracting officers follow ordering procedures when 

using FSS, and to enhance internal controls, GAO recommended that the 

Secretaries of Defense and Health and Human Services and the 

Administrator of GSA take the following three actions:

• Issue guidance emphasizing the requirement to seek discounts and 

outlining effective strategies for negotiating discounts when using the 

FSS program.

• Issue guidance reminding contracting officials of the procedures they 

must follow with respect to purchasing open market items through the 

FSS program, including the requirement to perform a separate 

determination that the prices of these items are fair and reasonable.

• Assess existing training programs to determine whether they are 

adequate to ensure that contracting officials are aware of the ordering 

procedures of the FSS program. 

The financial benefits of implementing these recommendations cannot be 

precisely quantified because the effect this would have on thousands of 

individual transactions is unknown, but given the size of the FSS 

program, the savings could be quite substantial. For example, if agencies 

routinely obtained discounts on the more than $30 billion dollars obligated 

under FSS orders, the savings could exceed tens of millions 

government-wide.

All three agencies concurred with GAO's recommendations to issue 

guidance emphasizing the requirement to seek discounts, issue guidance 

reminding contracting officials of procedures for open market items, and 

assess the adequacy of training programs related to FSS ordering 

procedures. In response to GAO’s recommendations, DOD and GSA 

issued guidance reminding the contracting workforce to seek discounts 

when placing orders against FSS contracts and to follow the required 

FSS procedures for purchasing open market items. In addition, GSA has 

started to take steps to examine training curricula.

GAO provided a draft of this report section to all three agencies for review 

and comment. None of the agencies provided comments on this report 

section.

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation
Page 152 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

GAO analyzed data from the Federal Procurement Data System-Next 

Generation on obligations through the FSS program for fiscal years 2010-

2014 and reviewed a nongeneralizable sample of 60 FSS orders awarded 

in fiscal year 2013 by DOD, HHS, and GSA, the agencies with the highest 

use of the FSS program. GAO also interviewed officials from these 

agencies and FSS vendors.

Defense Contracts: DOD's Requests for Information from Contractors to 

Assess Prices. GAO-15-680. Washington D.C.: August 12, 2015.

Federal Supply Schedules: More Attention Needed to Competition and 

Prices. GAO-15-590. Washington D.C.: July 9, 2015.

Strategic Sourcing: Office Supplies Pricing Study Had Limitations, but

New Initiative Shows Potential for Savings. GAO-12-178. Washington 

D.C.: December 20, 2011.

Contract Management: Agencies Are Not Maximizing Opportunities for 

Competition or Savings under Blanket Purchase Agreements despite 

Significant Increase in Usage. GAO-09-792. Washington D.C.: 

September 9, 2009.

For additional information about this area, contact William T. Woods at 

(202) 512-4841 or woodsw@gao.gov.

How GAO Conducted 

Its Work

Related GAO 

Products

Contact Information
Page 153 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

20. Federally Leased Vehicles

The General Services Administration and selected agencies could potentially reduce costs by improving the 

processes for justifying the use of vehicles in the federal fleet and taking actions for any vehicles that may be 

underutilized.

In fiscal year 2014, federal agencies paid over $1 billion to lease over 

186,000 vehicles from the General Services Administration (GSA) to carry 

out agencies’ missions. Ranging from busses to compact sedans, these 

vehicles transport personnel, haul equipment, and ferry clients to agencyprovided service locations, among other activities. In recent years, 

Members of Congress and the President have raised questions about the 

size and cost of the federal fleet, and legislative proposals have been 

aimed at reducing its size and cost. 

Each federal agency is responsible for managing its own vehicle fleet. At 

agency request, GSA leases vehicles to each agency. GSA also provides 

guidance and advice to agencies on the management of their federal 

fleet. Additionally, the Federal Property Management Regulations (FPMR) 

require agencies to ensure that each vehicle within their fleets either 

meets an agency-wide utilization standard or is individually justified. The 

FPMR recommend—but do not require—that the annual mileage 

minimum be 12,000 miles for passenger vehicles and 10,000 miles for 

light trucks. For both utilization metrics and justification, agencies are 

allowed to define their own criteria for their vehicle fleets. For its January 

2016 report, GAO reviewed the leased vehicle fleets at five agencies: the 

Bureau of Indian Affairs (BIA), the National Aeronautics and Space 

Administration (NASA), the National Park Service (NPS), the U.S. Air 

Force (Air Force), and the Veterans Health Administration (VHA). BIA and 

NPS are within the Department of the Interior, and VHA is within the 

Department of Veterans Affairs. 

While agencies are allowed to determine their criteria for keeping vehicles 

in their fleet, GAO found that some federal agencies kept vehicles that did 

not meet the agency’s utilization criteria and for which the agency could 

not readily provide a justification, including the following examples. 

• Air Force officials could not readily provide the justifications for 413 

vehicles that did not meet Air Force’s utilization criteria. The agency 

paid $1.5 million to GSA for these vehicles in fiscal year 2014. Air 

Force officials told GAO that the justifications for these vehicles are 

not stored in Air Force’s Fleet Management Information System 

because these vehicles are used by the Air National Guard, which has 

its own justification process. However, Air Force is administratively 

responsible for these vehicles, according to agency officials. 

• VHA was unable to locate justifications for 181 vehicles for which it 

had data indicating that the vehicle had not met VHA’s utilization 

Why This Area Is 

Important

What GAO Found
Page 154 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

criteria. VHA paid $0.6 million to GSA for these vehicles in fiscal year 

2014. According to VHA officials, justifications are stored with local 

fleet managers and are not readily accessible to headquarters 

officials. Agency officials said the justification system was developed 

to assist local fleet managers and that previously, it was not 

necessary for headquarters to access these records. 

Agencies are allowed to individually justify vehicles that do not meet the 

agency’s utilization criteria, but the regulations do not specify how 

agencies should conduct this justification process or how the justifications 

should be documented. While the FPMR state that agencies may be 

required to provide written justification, the regulations do not require 

agencies to clearly document the justifications before a request to provide 

such documentation is made. Federal internal control standards state that 

all transactions and significant events need to be clearly documented and 

that the documentation should be readily available for examination.1

Without readily available documentation, the agencies could not 

determine whether any of these vehicles should be eliminated from 

agency fleets.

In addition to the vehicles for which agencies could not locate 

justifications in a timely manner, three agencies kept vehicles that did not 

pass their justification process. While regulations do not require agencies 

to take any action for unjustified vehicles, federal internal control 

standards call for agencies to be accountable for stewardship of 

government resources.2 All five selected agencies in GAO’s review have 

established approaches to address unjustified vehicles, which can include 

placing them in a shared pool, transferring them to a new mission, 

rotating them with higher-mileage vehicles, or eliminating them from their 

fleet. All five agencies took actions to reduce vehicles that did not meet 

utilization criteria or pass the justification process, but two agencies still 

cumulatively retained over 500 unjustified vehicles.3

 

• NPS retained 109 vehicles that did not meet the agency-defined 

utilization criteria and did not pass the agency’s justification process. 

The agency paid GSA $0.4 million for these vehicles in fiscal year 

2014.

• VHA retained 393 vehicles that did not meet agency-defined utilization 

criteria and did not pass the agency’s justification process. The 

agency paid GSA $1.3 million for these vehicles in fiscal year 2014. 

VHA policy does not require justification for all vehicles that do not 

meet utilization criteria. As a result, these 393 vehicles were never 

 1

See GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-

21.3.1 (Washington, D.C.: November 1999). 

2

GAO/AIMD-00-21.3.1. 

3

A third agency retained one vehicle.
Page 155 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

subject to a justification process, even though they did not meet 

utilization criteria. 

By not taking corrective action to eliminate or reassign vehicles that did 

not meet utilization criteria or pass a justification review, agencies could 

be spending federal tax dollars on vehicles that may not be needed.

In its January 2016 report, GAO recommended the following actions: 

• The Secretaries of the Department of Defense and the Department of 

Veterans Affairs should modify their current processes to ensure that 

each leased vehicle in the agencies’ fleets meets the agencies’

utilization criteria or has readily available justification documentation. 

Such action could lead to these agencies identifying unneeded 

vehicles and reducing costs by eliminating vehicles from their fleets. 

• The Secretaries of the Department of the Interior and Veterans Affairs 

should take corrective action to address each leased vehicle that has 

not met the agencies’ utilization criteria or passed the justification 

process. This corrective action could include eliminating unneeded 

vehicles, which would reduce costs. 

• The Administrator of GSA should examine the FPMR to determine if 

these regulations should be amended to require that vehicle 

justifications are clearly documented and readily available, and adjust 

them accordingly. Such action could lead to agencies identifying 

unneeded vehicles and reducing costs by eliminating vehicles from 

their fleets. 

GAO was not able to quantify the financial benefits of these actions 

because potential savings would depend on how many vehicles were 

eliminated from the federal fleet as a result. In fiscal year 2014, selected 

agencies paid about $8.7 million for leased vehicles that did not meet 

agency-set utilization criteria and did not have readily available individual 

justifications. Costs paid may not equal cost savings from eliminating 

vehicles because agencies may need to spend resources on other means 

to accomplish the work performed by these vehicles. However, without 

justifications and corrective actions, agencies could be spending taxpayer 

dollars on vehicles that may not be needed.

GAO provided a draft of its January 2016 report to GSA; the Departments 

of Defense, Interior and Veterans Affairs; and NASA. GSA and the 

Departments of Defense, Interior, and Veterans Affairs provided written 

comments in which they concurred with GAO’s recommendations. These 

agencies also provided technical comments, which were incorporated as 

appropriate. NASA provided no comments. GSA stated that it was 

developing a comprehensive plan to address the recommendations. 

Interior stated that NPS and BIA both plan to develop processes to 

ensure that vehicle justifications are readily available. The Department of 

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation
Page 156 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Veterans Affairs set a target date of January 2017 to implement both of 

GAO’s recommendations. 

GAO provided a draft of this report section to GSA, the Departments of 

Defense, Interior, and Veterans Affairs, and to NASA for review and 

comment. The agencies did not provide comments on this report section.

The information contained in this analysis is based on findings from the 

product in the related GAO product section. GAO reviewed the leased 

vehicle fleets at five agencies: Air Force, BIA, NASA, NPS, and VHA. 

GAO selected these five agencies to include a mix of (1) fleet sizes, but 

none smaller than 1,000 vehicles; (2) military and civilian fleets; (3) fleets 

with varying annual mileage compared to federal miles-traveled 

guidelines; and (4) agencies’ use of telematics, among other 

considerations. Telematics is a technology that sends, receives, and 

stores information related to remote objects, such as vehicles. Agencies 

that use telematics may have more opportunities to measure utilization 

than agencies that do not use such technology.

For each agency, GAO analyzed the agencies’ policies and other relevant 

documentation on their utilization review processes. GAO compared 

agency processes to standards for internal control in the federal 

government. GAO also obtained fiscal year 2014 data from GSA for each 

agency’s leased passenger vehicles and light trucks. GAO excluded 

certain vehicles, such as those that were leased by more than one 

agency during fiscal year 2014, emergency responder and law 

enforcement vehicles, and vehicles outside the continental United States. 

GAO determined which vehicles did not meet the miles-traveled 

guidelines in the FPMR and sent a list of these vehicles to each agency. 

GAO asked each agency to identify if the vehicles had justification 

documentation or had passed a justification review. GAO then analyzed 

the costs paid to GSA for any unjustified vehicles. 

Federally Leased Vehicles: Agencies Should Strengthen Assessment 

Processes to Reduce Underutilized Vehicles. GAO 16-136. Washington, 

D.C.: January 14, 2016.

For additional information about this area, contact Lori Rectanus at (202) 

512-2834 or rectanusl@gao.gov.

How GAO Conducted 

Its Work

Related GAO Product

Contact Information
Page 157 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

21. Financing of Improvements to Federally 

Leased Space

In order to achieve millions in potential cost savings, the General Services Administration should explore the 

benefits and risks of loaning unobligated Federal Buildings Fund balances to tenant agencies to cover the 

costs of improving newly leased space, which would otherwise be financed by private lessors at private-sector

interest rates.

Within the federal government’s portfolio of civilian real property 

holdings—which costs billions of dollars annually to rent, operate, and 

maintain—the General Services Administration (GSA) plays the role of 

broker and property manager to many civilian agencies. Although some 

agencies have independent authority to lease real property, others lease 

space through GSA. As of fiscal year 2014, the most recent year for 

which GSA published portfolio information, GSA had a total of 377 million 

rentable square feet of space in its inventory—slightly more than half of 

which was leased from the private sector.1 Due to complex and longstanding issues related to the federal government’s management of real 

property, including an overreliance on leasing of privately-owned space in 

situations where ownership for stable agency needs would be more costefficient in the long run, the issue remains on GAO’s high-risk list.2

Because leasing is likely to be a stable or growing part of agencies’ 

building portfolios—due in part to capital limitations—it is important to 

identify opportunities that could increase the efficiency of the GSA leasing 

process and result in federal cost savings. One such opportunity would be 

to reduce the amount of interest that agencies pay to private lessors to 

cover the costs of improving newly leased space. 

In January 2016, GAO found that new GSA leases often involve costs 

related to the customization of a space for an agency to fulfill its mission, 

such as changes to walls, electrical outlets, and secure rooms. These 

changes are made by a lessor—typically the private-sector owner of a 

property—between GSA’s execution of a lease and the point when a 

tenant agency takes occupancy. These tenant improvement costs are 

usually amortized over the term of the lease and are paid by the tenant to 

the lessor through GSA. Tenant agencies can fund these costs in two 

ways: (1) pay for the improvements at the outset, prior to moving into the 

 1

GSA’s government-owned properties constitute the remaining 183 million rentable 

square feet in the Public Buildings Service portfolio. GSA Public Buildings Service, 

FY2014 State of the Portfolio (Washington, D.C.: 2014). 

2

GAO, High-Risk Series: An Update, GAO-15-290 (Washington, D.C.: Feb. 11, 2015).

Why This Area Is 

Important

What GAO Found
Page 158 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

space, when negotiations between GSA and a property owner permit,3 or 

(2) amortize the costs of the improvements over time, during the lease,

with costs being financed by the property owner. 

GSA regional officials have stated that nearly all tenants choose to 

amortize their basic tenant improvements over the firm term of the lease, 

and GAO’s January 2016 analysis of GSA leases supports this 

assertion.4 Nearly 60 percent of leases in a sample of 4,285 leases 

analyzed by GAO involved tenant improvement costs, and all of these 

tenants opted to amortize at least some of these costs during the lease. 

Because private owners that lease to the federal government assume this 

responsibility and obtain the resources required to construct, operate, and 

maintain the space being altered, they charge federal agencies privatesector interest rates over the firm term of their GSA lease.

The federal government’s overall cost of leasing space increases 

considerably when agencies opt to amortize their tenant improvement 

costs instead of paying them at the outset. When agencies amortize their 

tenant improvements during their lease, they pay substantial sums to 

private lessors in the form of interest based on the rates that GSA 

negotiates with private lessors on agencies’ behalf. In this approach, 

tenant agencies pay the principal, interest, and additional GSA fees—

either 5 or 7 percent—typically over the firm term of the lease.5 Nine of 

the 11 leases GAO reviewed in detail had tenant improvement costs, and 

more than one-third of the improvement costs will be due to interest fees 

over the lease term, as the tenants in all 9 cases amortized these costs. 

In total, these 9 leases will incur a total of $39 million in tenant 

improvement costs, of which nearly 40 percent ($15 million) will be due to 

interest paid to private lessors. For example, in one lease GAO reviewed, 

the tenant agency chose to amortize its $2.1 million of tenant 

improvement costs over the life of a 15-year lease at a 9 percent interest 

 3

One tenant agency stated that GSA does not always permit them the option to make a 

lump sum payment for their tenant improvements; they said this is dependent upon the 

stage of GSA’s negotiations with the property owner.

4

Many GSA leases have a “firm” and “soft” term. While GSA considers 80 percent of the 

4,258 leases GAO reviewed to be 10-year leases or longer, many of these leases have a 

5-year guaranteed (“firm”) term followed by an optional (“soft”) term. GAO found that 70 

percent of the new GSA leases analyzed, finalized from 2008 through 2014, have firm 

terms of 5 years or less. The private sector views leases structured in this way as 5-year 

leases because that is the only part that is guaranteed.

5

Included in federal agencies’ monthly rent is a monthly fee to GSA for its services related 

to leased space; as of 2015, tenants paid 5 or 7 percent of their lease value in a fee to 

GSA based on the level of flexibility the agency had in canceling the agreement. GSA 

officials told GAO that this fee is 7 percent when the ability to cancel the occupancy 

agreement prior to lease expiration—with a 120-day notice—is included in the occupancy 

agreement and 5 percent when it is not. Space is deemed to be non-cancelable when 

there is a low probability that the Public Buildings Service would be able to find a backfill 

tenant due to specific qualities of the space. GSA guidance states that the agency reviews 

each space assignment and uses certain specified criteria to designate space as 

cancelable or non-cancelable.
Page 159 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

rate, which will ultimately cost $4.0 million after including both the $1.7 

million to be paid in interest charges and GSA’s 5 percent fee on those 

charges. The agency could have saved 45 percent, more than $1.8 

million, over the term of its GSA lease if these costs had been paid at the 

outset. Additional examples from GAO’s analysis are illustrated in the 

figure below.

Total Tenant Improvement Costs If Not Paid at the Outset of the Lease for Three 

Selected General Services Administration (GSA) Leases Executed between 2000 

and 2014

Although GSA officials stated that agencies typically lack the resources to 

fund improvements at the outset of a lease, opportunities may exist to 

reduce overall federal leasing costs by identifying funds to reduce the 

amount of interest paid to private lessors. The Federal Management 

Regulation states that the basic real estate acquisition policy is to acquire 

real estate in an efficient and cost-effective manner.6 GAO reported in 

January 2008 that lack of capital to finance real property investments has 

been a long-standing challenge for GSA and other federal agencies.7

 6

41 C.F.R. § 102-73.10.

7

GAO, Federal Real Property: Strategy Needed to Address Agencies’ Long-standing 

Reliance on Costly Leasing, GAO-08-197 (Washington, D.C.: Jan. 24, 2008).
Page 160 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

However, identifying sources of capital to fund tenant improvement costs 

at the outset of leases would reduce federal agencies’ costs. 

One possible option to reduce the costs paid by tenant agencies could be 

to provide budget authority for GSA to finance the capital needed for 

tenant improvements to be paid at the outset of a new lease and have the 

tenant pay it back over the term, without the private interest charges that 

tenant agencies currently pay. GSA could potentially use available 

balances from the Federal Buildings Fund (FBF) to fund tenant 

improvement costs, with sufficient controls in place, at the outset of a 

lease. The FBF is administered by GSA and was established in 1972 as 

the primary source of funds for operating and capital costs associated 

with federal space. GSA collects rent from tenant agencies, deposits it 

into the FBF, and uses that money—as authorized by Congress—to fund 

real property acquisition, operation, maintenance, and disposal. The FBF 

has contained unobligated balances for several years and, as of February 

2015, the fund had an unobligated balance of $3.6 billion.8 However, GSA 

does not currently have the budget authority to use the unobligated 

balances in the FBF to fund tenant improvements. GSA officials said that 

the concept of funding agencies’ tenant improvements using unobligated 

FBF balances has potential, but they also said that GSA has not formally 

considered this approach. They said that applying unobligated balances 

in this way has the potential to save substantial amounts of money on 

interest charges that are currently passed on to federal tenants, but that 

the potential risks and opportunities would need to be fully studied.

GAO recommended in January 2016 that the Administrator of the General 

Services Administration take the following action:

• Explore, with relevant stakeholders, the possibility of loaning 

unobligated Federal Buildings Fund balances to agencies to cover 

tenant improvement costs that would otherwise have to be financed 

for new leases. If GSA finds that, with sufficient controls in place, 

tenant improvements can be safely funded this way, it should 

participate in the development of a legislative proposal to request that 

Congress make the necessary budget authority available.

If GSA determines that it could safely loan unobligated FBF balances to 

cover tenant improvement costs for new leases that would otherwise 

have to be financed at private-sector rates by the owner, it could reduce 

costs. GAO’s review of nine GSA leases involving tenant improvement 

 8

As GAO reported in 2012, this balance has primarily resulted from the growing difference 

between the resources deposited into the FBF and use of these funds as determined 

through the budgeting and appropriations process. Specifically, the total available balance 

is a function of the resources deposited into the fund, the amount of obligational authority 

requested by GSA as part of the President’s Budget Request, and the actual obligational 

authority provided by Congress. See GAO, Federal Real Property: GSA Could Decrease 

Leasing Costs by Encouraging Competition and Reducing Unneeded Fees, GAO-12-646

(Washington, D.C.: Jan. 13, 2016).

Actions Needed and 

Potential Financial or 

Other Benefits
Page 161 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

costs found that these leases will incur $15 million in interest fees to be 

paid to private owners—nearly 40 percent of their tenant improvement 

costs. The magnitude of potential government-wide savings depends on 

the future amount of tenant improvements. For this reason, GAO has not 

yet quantified the potential financial benefits associated with the 

recommended action.

GAO provided a draft of its January 2016 report to GSA. In response, 

GSA agreed with GAO’s recommendation to seek to reduce tenant 

agencies’ interest costs, stating that it would evaluate its existing 

authorities to determine whether it is able to loan unobligated FBF 

balances to agencies to cover tenant improvement costs for new leases, 

which would otherwise have to be financed. GAO continues to track 

GSA’s actions related to this recommendation.

GAO provided a draft of this report section to GSA for review and 

comment. GSA did not provide comments on this report section.

The information contained in this analysis is based on findings from the 

report listed in the related GAO products section. GAO contracted with a 

real estate consulting firm chosen through a competitive process to 

compare a sample of GSA leases executed between 2008 and 2014 with 

private-sector leases of similar location, size, and quality in the same 

markets during the same period to assess the extent to which GSA 

achieves market leasing rates. GAO also assessed how GSA’s cost 

estimates compare with the actual costs of leasing paid by federal tenants 

by analyzing documentation and estimating the actual costs for a nongeneralizable selection of leases from each of GSA’s 11 regions. GAO 

also interviewed key GSA staff for all selected leases, interviewed officials 

from GSA headquarters about its leasing process, and interviewed 

officials from all 11 GSA regional offices, as well as two tenant agencies 

represented in the sample.

Federal Real Property: GSA Could Decrease Leasing Costs by 

Encouraging Competition and Reducing Unneeded Fees. GAO-16-188.

Washington, D.C.: January 13, 2016. 

High-Risk Series: An Update. GAO-15-290. Washington, D.C.: February

11, 2015.

Federal Buildings Fund: Improved Transparency and Long-term Plan 

Needed to Clarify Capital Funding Priorities. GAO-12-646. Washington, 

D.C.: July 12, 2012.

Federal Real Property: Strategy Needed to Address Agencies’ Longstanding Reliance on Costly Leasing. GAO-08-197. Washington, D.C.: 

January 24, 2008.

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work

Related GAO 

Products
Page 162 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

For additional information about this area, contact Dave Wise at (202) Contact Information 512-2834 or wised@gao.gov.
Page 163 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

22. Identity Theft Refund Fraud

The Internal Revenue Service and Congress could potentially save billions of dollars in fraudulent refunds by 

improving the agency’s efforts to prevent refund fraud associated with identity theft.

Tax refund fraud associated with identity theft (IDT) is a complex and 

rapidly changing threat facing the nation’s tax system. IDT refund fraud 

occurs when a refund-seeking identity thief obtains an individual’s 

identifying information and uses it to file a fraudulent tax return. IDT 

refund fraud burdens honest taxpayers who have had fraudulent tax 

returns filed in their name because they must deal with delayed refunds 

as they authenticate their identities with the Internal Revenue Service 

(IRS). Additionally, IDT refund fraud is an attractive target for criminals 

with a potentially high payoff. While its preliminary estimates have 

inherent uncertainty, IRS estimated that it prevented or recovered $22.5 

billion in fraudulent IDT refunds in filing season 2014 (see figure).1

However, IRS also estimated, where data were available, that it paid $3.1 

billion in fraudulent IDT refunds. Because of the difficulties in knowing the 

amount of undetected fraud, the actual amount could differ from these 

estimates. GAO has designated IRS’s enforcement of tax laws—which 

includes the agency’s efforts to combat IDT—as a high-risk area.2

IRS Estimates of Attempted Identity Theft Refund Fraud, 2014

 1

IRS’s 2014 estimates cannot be compared to those of previous years because of 

substantial methodology changes to better reflect new IDT refund fraud schemes and to 

improve the accuracy of its estimates, according to IRS officials. GAO is reviewing IRS’s 

IDT refund fraud estimates as part of ongoing work.

2

GAO, High-Risk Series: An Update, GAO-15-290 (Washington, D.C.: Feb. 11, 2015).

Why This Area Is 

Important
Page 164 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

While IRS has taken steps to address this problem, IDT refund fraud 

remains a persistent and evolving threat. Without additional action by IRS 

and Congress, the risk of issuing fraudulent IDT refunds could grow. 

Recovering a fraudulent refund after it is issued can be challenging—if 

not impossible—because identity thieves often spend or transfer the 

funds immediately, making them very difficult to collect. 

While there are no simple solutions to combating IDT refund fraud, GAO 

identified various options in its August 2014 and January 2015 reports 

that could realize cost savings, some of which would require legislative 

action. Because some of these options represent a significant change to 

the tax system that could likely burden taxpayers and impose significant 

costs to IRS for systems changes, it is important for IRS to assess the 

relative costs and benefits of the options. Such an assessment can help 

ensure an informed discussion among IRS and relevant stakeholders—

including Congress—on the best option (or set of options) for preventing 

IDT refund fraud. IRS has taken steps to assess various options for 

combating IDT refund fraud, such as conducting a study of the costs and 

benefits of accelerating the deadlines of Form W-2 (Wage and Tax 

Statement). Building on this progress, IRS can thoroughly assess and 

quantify the costs, benefits, and risks of its authentication options for 

combating IDT refund fraud. The administration requested an additional 

$90 million and 491 full-time equivalents for fiscal year 2017 to prevent 

IDT refund fraud and reduce improper payments. IRS estimates that this 

$90 million would help IRS protect an additional $612 million in revenue in 

fiscal year 2017, as well as protect future revenue in future years. 

Accelerate W-2 deadlines. In August 2014, GAO reported that the wage 

information that employers report on Form W-2 is not available to IRS 

until after it issues most refunds. If IRS had access to W-2 data earlier, it 

could match such information to taxpayers’ returns and identify 

discrepancies before issuing billions of dollars of fraudulent IDT refunds. 

Such matching could also provide potential benefits for other IRS 

enforcement programs, such as preventing improper payments via the 

Earned Income Tax Credit. 

The Consolidated Appropriations Act, 2016, amended the tax code to 

accelerate W-2 filing deadlines to January 31.3 According to IRS, a 

program that would match W-2 data to tax returns before refunds are 

issued would save revenue by protecting a substantial part of the billions 

currently paid to fraudsters. 

In August 2014, we reported that IRS had not fully assessed the costs 

and benefits of having available W-2 information for pre-refund matching, 

which could involve challenges such as a potential increase in W-2s that 

 3

Pub. L. No. 114-113, div. Q, § 201, 129 Stat. 2242 (Dec. 18, 2015). This change goes 

into effect for W-2s reporting payments made in 2016 and filed in 2017. 

What GAO Found
Page 165 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

need to be corrected; required upgrades to IRS’s information technology 

systems; costs to employers and payroll providers; and logistical 

challenges for the Social Security Administration (SSA), which processes 

W-2 data before transmitting them to IRS.4 Further, GAO found that prerefund W-2 matching may require other policy changes, such as delaying 

refunds or delaying the start of the filing season. In response to GAO’s 

recommendation, in September 2015, IRS provided GAO a report 

discussing (1) adjustments to IRS systems and work processes needed 

to use accelerated W-2 information, (2) potential impacts on internal and 

external stakeholders, and (3) other changes needed to match Form W-2 

data to tax returns prior to issuing refunds, such as delaying refunds until 

W-2 data are available. This report will help IRS determine how best to 

implement pre-refund W-2 matching, given the new January 31 deadline 

for filing W-2s. 

Increase electronic filing of W-2s. In August 2014, GAO reported that 

increased electronic filing would allow IRS to obtain timely, accurate data 

from a significant number of additional employers. It also could further 

enhance the benefits IRS could obtain from the accelerated W-2 deadline 

and pre-refund W-2 matching. Treasury requested the authority to reduce 

the current, 250-return annual threshold for employers required to file 

information returns electronically.5 SSA estimated that to meaningfully 

increase electronic W-2 filing, the threshold would have to be lowered to 

include those filing from 5 to 10 W-2s. In addition, SSA estimated an 

administrative cost savings of about 50 cents per electronically filed W-2. 

Based on these cost savings and the ancillary benefits they provide in 

supporting IRS’s efforts to conduct more pre-refund matching, a change 

in the electronic filing threshold is warranted. Without this change, IRS 

efforts to prevent fraudulent refunds could be hindered because some 

employers’ paper W-2s could be unavailable for matching until much later 

in the year due to the additional time needed to process paper forms. 

Increasing electronic filing of W-2s would support IRS’s strategic 

objectives to encourage compliance while minimizing costs and taxpayer 

burden. 

Improve external leads programs. IRS partners with financial 

institutions and other external parties to obtain valuable information about 

emerging IDT refund trends and fraudulent returns that have passed 

through IRS detection systems. In August 2014, GAO reported that 

weaknesses in IRS’s external leads programs limit post-refund fraud 

 4

In February 2016, SSA officials commented that they believe the earlier January 31 filing 

date will minimally affect W-2 processing, although they are still reviewing this change. 

Officials further noted that prior to the passage of the Consolidated Appropriations Act, 

2016, SSA had built the capacity to receive and process W-2 information with filing dates 

prior to February 28 as part of its modernization efforts. SSA officials plan to meet with 

IRS officials to discuss changes to W-2 processes. 

5

26 U.S.C. § 6011(e)(2)(A). According to SSA officials, the agency would be able to easily 

process W-2s regardless of the threshold requirement for electronic filing of W-2s.
Page 166 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

detection. Specifically, IRS provides limited feedback to external parties 

on IDT external leads they submit and offers external parties limited 

general information on IDT refund fraud trends. Without accurate, timely, 

and actionable feedback, external parties do not know if the leads they 

provide to IRS are useful and have difficulty improving their own detection 

tools. While Section 6103 of the Internal Revenue Code limits the types of 

information IRS can share with external parties, IRS is able to share 

aggregated information. Communicating with third parties is consistent 

with federal internal control standards and IRS’s strategic plan objective 

to implement a robust enterprise risk management program by 

establishing routine reporting procedures to inform external stakeholders 

about operational risks. Of the requested $90 million increase for fiscal 

year 2017 described above, the administration requested about $1 million 

to improve the external leads program.

Enhance taxpayer authentication. In January 2015, GAO reported that 

IRS’s current authentication tools have limitations. For example, 

individuals can obtain an e-file personal identification number (PIN) by 

providing their name, Social Security number, date of birth, address, and 

filing status. Identity thieves can easily find this information, allowing them 

to bypass some, if not all, of IRS’s current automatic checks for IRS’s efile PIN application, according to GAO analysis and interviews with tax 

software and return preparer associations and companies. After filing an

IDT return using an e-file PIN, the fraudulent return would proceed 

through IRS’s normal return processing and would be subject to IRS’s 

IDT and fraud defenses, such as IDT filters.

IRS recently created a group aimed at centralizing several prior ad-hoc 

efforts to authenticate taxpayers across its systems. Planning 

documentation from the authentication group contains goals and shortand long-term priorities (including implementation plans).6 However, a 

commitment to cost, benefit, and risk analysis is not documented in the 

group’s short- and long-term priorities. The draft planning documentation 

makes no mention of where such analyses would be included in IRS’s 

priorities. Office of Management and Budget (OMB) guidance states that 

agencies should use cost-benefit analyses that consider alternatives to 

promote efficient resource allocation. As detailed in OMB and National 

Institute of Standards and Technology (NIST) guidance, agencies should 

also ensure that authentication processes provide the appropriate level of 

assurance by assessing risks. Without analysis of costs, benefits, and 

risks, IRS and Congress may not have quantitative information that could 

inform decisions about whether and how much to invest in the various 

authentication options. 

 6

The authentication group later became the Identity Assurance Office. 
Page 167 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

In August 2014, GAO suggested that Congress should: 

• consider providing the Secretary of the Treasury with the regulatory 

authority to lower the threshold for electronic filing of W-2s from 250 

returns annually to between 5 to 10 returns, as appropriate.

In August 2014, GAO recommended that IRS take the following two 

actions to provide timely, accurate, and actionable feedback to all 

relevant lead-generating external parties:

• provide aggregated information on (1) the success of external party 

leads in identifying suspicious returns, and (2) emerging trends; and

• develop a set of metrics to track external leads by the submitting third 

party.

To ensure relevant information is available to decision makers, in January 

2015, GAO recommended that IRS 

• estimate and document the costs, benefits, and risks of possible 

options for taxpayer authentication, in accordance with OMB and 

NIST guidance.

IRS and Congress could potentially prevent a substantial portion of the 

estimated $3.1 billion in IDT refund fraud by taking these actions. 

However, estimating specific savings is challenging because the 

deceptive nature of fraud makes it difficult to measure outcomes of fraud 

prevention activities in a reliable way. 

With regard to GAO’s August 2014 recommendations on external leads, 

IRS reported in November 2014 that it would implement GAO’s 

recommendations. In November 2015, IRS reported that it had 

developed a database to track leads submitted by financial institutions 

and the results of those leads. IRS also stated that it had held two 

sessions with financial institutions to provide feedback on external leads 

provided to IRS. In December 2015, IRS officials stated that the agency 

recently sent a customer satisfaction survey asking financial institutions 

for feedback on the external leads process and is considering other ways 

to provide feedback to financial institutions. GAO is following up with IRS 

to understand future planned activities for IRS to provide feedback on 

leads to other financial institutions. Upon review of relevant IRS 

documentation and follow-up conversations with IRS officials, GAO will 

determine the extent to which IRS has addressed this recommendation. 

In commenting on the January 2015 report, IRS agreed with GAO’s 

recommendation. According to IRS, the agency was creating an 

authentication group aimed at centralizing efforts to authenticate 

taxpayers across IRS channels (e.g., online, telephone, walk-in). This 

group later became the Identity Assurance Office. In November 2015, IRS 

officials told us that the agency has developed guidance for the Identity 

Assurance Office to assess costs, benefits, and risk, and that its analysis 

will inform decision making on authentication-related issues. IRS also 

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation
Page 168 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

noted that the methods of analysis for the authentication tools will vary 

depending on the different costs and other factors for authenticating 

taxpayers in different channels, such as online, phone, or in-person. 

While IRS is making progress, it has yet to analyze the costs, benefits, 

and risks of its range of authentication options and has not used analysis 

to select which authentication options to use for specific types of taxpayer 

interactions.

GAO provided a draft of this report section to IRS and SSA for review and 

comment. In response, IRS and SSA provided technical comments and in 

response GAO made changes to this report when appropriate.

The information contained in this analysis is based on findings from the 

products in the related GAO products section. For the related products 

listed, GAO analyzed agency documents and interviewed officials from 

IRS, SSA, and other parties. GAO also analyzed budget data from IRS, 

reviewed related budget documents and IRS’s efforts to implement past 

recommendations, and interviewed IRS budget officials. 

Table 12 in appendix V lists the activities GAO identified that may help 

IRS realize cost savings related to IDT. 

Identity Theft and Tax Fraud: Enhanced Authentication Could Combat 

Refund Fraud, but IRS Lacks and Estimate of Costs, Benefits and Risks. 

GAO-15-119. Washington, D.C.: January 20, 2015.

Identity Theft: Additional Actions Could Help IRS Combat the Large, 

Evolving Threat of Refund Fraud. GAO-14-633. Washington, D.C.: 

August 20, 2014. 

For additional information about this area, contact James R. McTigue, Jr. 

at (202) 512-9110, or mctiguej@gao.gov.

How GAO Conducted 

Its Work

Related GAO 

Products

Contact Information
Page 169 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

23. National Park Service Fees

The National Park Service could potentially increase revenues from the recreation fees it collects by millions of 

dollars annually if Congress were to amend the authorizing legislation for this program and if the agency 

required park units to periodically review these fees. 

The National Park Service (Park Service) has reported that its funding 

does not cover the full cost of its mission to preserve the 409 park units it 

manages. The result has been the growth of a maintenance backlog for 

the buildings, trails, and artifacts for which the agency is responsible. As 

of September 30, 2014, the Park Service estimated this maintenance 

backlog had grown to about $11.5 billion.1

 Funding for the Park Service 

is generally composed of annual appropriations along with revenues 

generated from fees and donations that the Park Service is authorized to 

collect and use. In fiscal year 2014, the Park Service had about $3.1 

billion in total funding, of which 84 percent ($2.6 billion) came from annual 

appropriations and 15 percent ($473 million) from fees, donations, and 

other funding sources.2

 From fiscal year 2005 through fiscal year 2014, 

annual appropriations declined by 8 percent after adjusting for inflation, 

while fees, donations, and other funding sources increased 39 percent 

after adjusting for inflation.

Among these fees, donations, and other funding sources, the largest 

portion comes from recreation fees that the Park Service is authorized to 

collect and use by the Federal Lands Recreation Enhancement Act 

(FLREA).3

 Recreation fees are generally comprised of entrance fees and 

amenity fees for certain equipment and services, such as campgrounds. 

In fiscal year 2014, the Park Service collected about $186 million in 

recreation fees, of which about 76 percent came from entrance fees. 

However, certain parks are prohibited by law from charging entrance 

fees. According to Park Service data, 58 park units are prohibited by law 

from charging entrance fees. For example, the Alaska National Interest 

Lands Conservation Act prohibits the Park Service from charging 

entrance fees at all park units in Alaska.4

 In addition, at some park units, 

collecting recreation fees is precluded by the configuration of the parks or 

is not economically advantageous. For example, at parks with few 

visitors, the costs of administering the fee collection program would be a 

significant portion of the total fees collected, and these parks may choose

not to charge an entrance fee. 

 1

National Park Service, Fiscal Year 2014 Deferred Maintenance Reports (Mar. 23, 2015).

2

Percentages do not add up to 100 percent because of rounding.

3

Pub. L. No. 108-447, div. J. tit. VIII, 118 Stat. 3377 (2004) (codified as amended at 16 

U.S.C. §§ 6801-6814 (2015)).

4

16 U.S.C. § 410hh-2 (2015). FLREA excepts Denali National Park and Preserve from this 

prohibition. 16 U.S.C. § 6802(d)(3)(G) (2015).

Why This Area Is 

Important
Page 170 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

In August 2014, the Director of the Park Service issued a memorandum 

that ended a moratorium on entrance fee increases that had been in 

place since 2008 and updated the agency’s entrance fee rate schedule 

for the first time since 2006. According to this memorandum, the goal 

was for parks that collected entrance fees to align with the schedule by 

2017 if these changes were supported by the public. In response to the 

2014 memo, 111 park units increased recreation fees, as of September 

2015. However, in its December 2015 report, GAO found that several 

park units that were collecting some type of entrance fee in 2015 did not 

increase entrance fees and may not align with the fee schedule by 2017. 

In addition, the Park Service does not require park units to provide 

information supporting their decisions on not increasing entrance fee 

rates or increasing their fees by less than the fee schedule. According to 

a senior Park Service official, park units are not required to provide this 

information because it was not compulsory that park units increase their 

fees. By not requiring that parks provide information on decisions that 

deviate from the fee schedule, the Park Service may not have relevant 

information that would help to manage changes to recreation fees more 

effectively and ensure that park units are taking steps to determine 

whether entrance fees are set at a reasonable level. Such information is 

generally required by Federal Internal Control Standards, which state that 

for an agency to run its operations, it must have reliable and timely 

communication and that information is needed throughout the agency to 

achieve its objectives.5

Unlike amenity fees, which the Park Service expects park units to review 

annually, Park Service officials stated they had no plans to periodically 

review entrance fees to determine if they should be increased. GAO’s 

2008 guide on federal user fees states that if federal user fees are not 

reviewed and adjusted regularly, federal agencies run the risk of 

undercharging or overcharging users.6

 Moreover, Park Service guidance 

directs the agency to ensure its fees are set at a reasonable level, but this 

guidance does not direct that these fees be periodically reviewed.7

 In a 

2015 report, the Department of the Interior Inspector General 

recommended that the Park Service establish intervals for periodic 

reviews of its entrance fees to ensure that the fee schedule remains up to 

date.8

 Park Service officials stated they were hesitant to commit to such 

 5

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

 

6

GAO, Federal User Fees: A Design Guide, GAO-08-386SP (Washington, D.C.: May 29, 

2008).

7

Park Service guidance states that fees should not be collected in instances where the 

costs of collection exceed revenue from the fees. National Park Service, Management 

Policies (2006).

8

Office of Inspector General, U.S. Department of the Interior, Review of National Park 

Service’s Recreation Fee Program, C-IN-NPS-0012-2013 (February 2015). 

What GAO Found
Page 171 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

reviews until FLREA is reauthorized because they were unsure if they 

would continue to have the authority to continue charging entrance fees.9

 

However, the Park Service has not required periodic reviews of entrance 

fees for the 11 years that FLREA has been in place. By not regularly 

reviewing its entrance fee schedule, the Park Service is missing an 

opportunity to better ensure that these fees are reasonable. 

In addition, the Park Service’s ability to further increase revenues from 

recreation fees is limited by certain factors, including legislation. For 

example, FLREA directed the Secretary of the Interior to establish an 

interagency pass that covers entrance fees and certain amenity fees for 

all federal recreational lands. The price of the pass is $80 annually, as of 

November 2015, and covers national park units as well as recreational 

lands managed by the U.S. Forest Service, Bureau of Reclamation, 

Bureau of Land Management, and the U.S. Fish and Wildlife Service. 

However, FLREA limits these agencies’ ability to increase revenue from 

recreation fees.10 For example, FLREA requires the Secretary of the 

Interior to offer a lifetime interagency pass for a one-time $10 price to 

senior citizens, defined as being over 62 years of age. While under 

FLREA the price of the annual interagency pass can be changed by the 

agencies that administer it, the law does not provide this flexibility for the 

$10 lifetime senior pass. Because of the limitations in FLREA, the Park 

Service and the other agencies that administer the recreation fee program 

do not have the flexibility to periodically reassess and change the price of 

the lifetime senior pass. Providing this flexibility to these agencies would 

allow them to consider adjusting fees periodically, which is consistent with 

GAO’s guide on federal user fees.11 

To increase the flexibility that the Park Service has to change entrance 

fees, GAO suggested in December 2015 that Congress take the following 

action: 

• Consider amending FLREA to give authority to the Park Service and 

the other four agencies that implement the recreation fee program—

Bureau of Reclamation, Bureau of Land Management, the U.S. Fish 

and Wildlife Service, and the U.S. Forest Service—to adjust the price 

of a lifetime senior pass.

 9

FLREA is currently set to expire September 30, 2016. 16 U.S.C. § 6809 (2015). 

10Of these agencies, the Park Service collects the majority of recreation fees. In fiscal 

year 2011, the Park Service collected about two-thirds of the total recreation fees 

collected ($172.4 million of $260.6 million). See Department of the Interior and 

Department of Agriculture, Implementation of the Federal Lands Recreation Act: Triennial 

Report to Congress (May 2012). 

11GAO-08-386SP.

Actions Needed and 

Potential Financial or 

Other Benefits
Page 172 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

The price of the senior pass has been $10 since 1993, but a bill 

introduced in September 2015 would increase this price to a one-time 

amount matching the price of the annual interagency pass, which is $80, 

as of November 2015.12 If this change occurred, it could generate about 

another $35 million in revenue annually, assuming that the same number 

of senior passes was sold as in fiscal year 2014, which was about 

500,000.13 

In addition, to help improve the management of recreation fees, GAO also 

recommended in December 2015 that the Secretary of the Interior direct 

the Director of the Park Service to take the following two actions: 

• Revise the Park Service’s guidance on recreation fees so that the 

agency periodically reviews its entrance fees to determine whether 

the fees are reasonable.

• Direct that park units provide information to headquarters on why they 

are choosing to not increase entrance fees or increase them by an 

amount less than the fee schedule.

If the Park Service were to take these two actions, it is possible that the 

agency would realize additional revenues from entrance fees to the extent 

that having park units periodically review entrance fees and provide 

additional information on entrance fee decisions led park units to 

conclude that they could raise their entrance fees. Because the potential 

increase in revenues depends on a host of factors—including how much 

parks choose to increase fees and the impact these increased fees may 

have on visitation—GAO was unable to develop an estimate. 

In commenting on the December 2015 report on which this analysis is 

based, Interior agreed with each of GAO’s recommendations, and Interior 

also noted that the Park Service is planning to address these 

recommendations. Specifically, in 2016, the Park Service is planning to 

revise its guidance on recreation fees to require periodic evaluation of the 

entrance fee pricing structure. In addition, beginning in 2016, Interior 

indicated the Park Service will require park units to provide information on 

their decisions to not increase entrance fees. 

GAO provided a draft of this report section to Interior for review and 

comment. Interior reviewed this report section and did not have any 

comments on it. 

 12National Park Service Centennial Act, H.R. 3556, § 602 114th Cong. (2015).

13The amount of additional revenue could be lower if the amount of the price increase 

deters seniors from purchasing the pass. 

Agency Comments 

and GAO’s Evaluation
Page 173 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

The information contained in this analysis is based on findings from the 

product listed in the related GAO products section. GAO analyzed 

budget data from fiscal years 2005 through 2014 on the Park Service’s 

overall funding and fee revenues. GAO also reviewed laws and Park 

Service policies and compared this information with GAO’s design guide 

for federal user fees14 and Standards for Internal Control in the Federal 

Government.

15 In addition, GAO interviewed Park Service officials at the 

headquarters, regional, and park unit levels. 

National Park Service: Revenues from Fees and Donations Increased, 

but Some Enhancements Are Needed to Continue This Trend. 

GAO-16-166. Washington, D.C.: December 15, 2015.

For additional information about this area, contact Anne-Marie Fennell at 

(202) 512-3841 or fennella@gao.gov.

 14GAO-08-386SP. 

15GAO/AIMD-00-21.3.1.

How GAO Conducted 

Its Work

Related GAO Product

Contact Information
Page 174 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

24. Unobligated Balances

To help ensure effective use of federal funds, the Departments of Energy and State should develop and 

finalize strategies for reducing tens and hundreds of millions of dollars of excess unobligated balances, 

respectively, in two budget accounts.

In fiscal year 2014, unobligated balances—the balance of available 

budget authority that has not yet been obligated as of the end of the fiscal 

year—made up about $870 billion of the $2.3 trillion in unexpended 

balances.1 Unobligated balances can present agencies with an 

opportunity to better respond to unexpected events, but high levels of 

unobligated balances may highlight opportunities for funds to be used

more efficiently elsewhere, such as through reprogramming funds to other 

activities or reducing future budget authority requests, as applicable.2

In September 2013, GAO reported that agency officials should answer 

key questions during their reviews of unexpended balances to provide 

insight into why a balance exists, what size balance is appropriate, and 

what opportunities for savings may exist. Furthermore, understanding an 

agency’s processes for managing these balances provides information to 

assist decision makers in assessing how effectively agencies are in 

anticipating program needs and helping ensure the most efficient use of 

resources. 

In October 2015, GAO reported that actively managing unobligated 

balances may include estimating projected annual unobligated balances 

and identifying the amount of unobligated balances that should be 

retained the following year. If an agency does not have a robust strategy 

in place to manage unobligated balances or is unable to adequately 

explain or support the reported unobligated balances, then a more indepth review is warranted. If unobligated balances fall too low, agencies 

may not be able to efficiently manage operations. In contrast, if balances 

rise to unnecessarily high levels, there may be potential opportunities for 

those funds to be used more efficiently elsewhere. 

 1

Unexpended balances are the sum of obligated and unobligated balances. Obligated 

balances are the amount of obligations already incurred for which payment has not yet 

been made, while an unobligated balance is the portion of available budget authority that 

has not yet been obligated. An obligation is a definite commitment that creates a legal 

liability of the government for the payment of goods and services or a legal duty that could 

mature into a legal liability by virtue of actions that are beyond the control of the United 

States. For example, an agency incurs an obligation when it places an order, signs a 

contract, awards a grant, or purchases a service. See GAO, A Glossary of Terms Used in 

the Federal Budget Process, GAO-05-734SP (Washington, D.C.: September 2005).

2

Reprogramming is the shifting of funds from one program activity to another within an 

appropriation account for purposes other than those contemplated at the time of 

appropriation. See GAO-05-734SP.

Why This Area Is 

Important
Page 175 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

In October 2015, GAO reported that four agencies—the Departments of 

Commerce, Energy, and State and the National Aeronautics and Space 

Administration—generally managed and tracked unobligated balances to 

ensure the effective use of program resources in the eight reviewed 

budget accounts.3 However, GAO found that for two of the reviewed 

accounts at the Department of Energy (Energy) and the Department of 

State (State), the agencies exceeded target levels of unobligated 

balances for fiscal year 2014. These target levels were set by agency 

officials, who explained that the target balances were necessary to 

properly execute activities and manage financial risk for certain programs 

within the accounts.

Energy’s Western Area Power Administration’s (WAPA) 

Construction, Rehabilitation, Operation and Maintenance (CROM) 

account. The unobligated balances in the CROM account exceeded the 

level officials said was necessary to maintain certain activities and 

manage risk for those activities. Specifically, for the annual expense fund

within the account, officials set a target to retain up to 25 percent of the 

yearly budget requirement as contingency funds against unexpected 

events. The unobligated balance in the annual expense fund in fiscal year 

2014 accounted for $92 million, or about 44 percent of the fund’s budget 

requirement. This exceeded the 25 percent target, which officials 

estimated to be about $52 million, by about $40 million. According to 

WAPA officials, the annual expense fund’s unobligated balance for fiscal 

year 2014 was higher than the predetermined target partially because 

they forecasted a 3 percent cost of living increase for personnel, which 

did not occur.

 3

GAO reviewed data for each of the 24 Chief Financial Officers Act agencies and selected 

these agencies based on their use of balances to address sequestration and large or 

significant changes in the balances from fiscal years 2012 to 2014. The Department of 

Defense was excluded from selection because of ongoing GAO work.

What GAO Found
Page 176 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

WAPA officials explained that WAPA’s mission—to market hydroelectric 

power to multiple regions across the western United States—can be 

affected by a number of environmental factors, such as drought, animal 

breeding seasons, and flood prevention, all of which may affect the 

function of power generating dams and introduce financial risk. WAPA 

officials reported addressing these environmental factors and potential 

financial risks by carrying over unobligated balances from one fiscal year 

to the next. WAPA officials told GAO that while a carryover of up to 25 

percent in unobligated balances is the current target for the annual 

expense fund, they are continuing to refine and evaluate the necessary 

level of unobligated balances. These officials said that they do not have a 

model or formula for estimating anticipated environmental factors and 

how those factors may have a fiscal impact on the agency.

WAPA officials reported that they developed a strategy in fiscal year 2013 

for managing unobligated balances in the annual expense fund. 

According to officials, the draft strategy includes three alternatives for 

reducing unobligated balances in the annual expense fund, including one 

to decrease future budget requests and to instead rely on existing 

unobligated balances to cover expenses. Officials said that this 

alternative was approved by WAPA senior management. However, 

officials acknowledged that this strategy would not be fully implemented 

until officials assess the outcomes of the strategy. WAPA officials also 

reported that they are considering other strategies for reducing 

unobligated balances to determined targets. According to WAPA, the 

strategy for managing its unobligated balances will be completed and 

implemented by the end of calendar year 2016. 

State’s Consular and Border Security Programs (CBSP) within the 

Diplomatic and Consular Programs (D&CP) account. In fiscal year 

2014, unobligated balances for the D&CP account exceeded State’s

target to carry over approximately 25 percent of projected program 

expenditures for CBSP for the next year to manage complex global visa 
Page 177 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

and passport operations. CBSP is fully fee funded, which means that all 

appropriations for the program are offsetting collections from consular 

fees and surcharges. These fees and surcharges include the Passport 

Security Surcharge, the Diversity Visa Lottery fee, and the Machine 

Readable Visa fee, among others. Congress has permanently 

appropriated these collections to State as no-year authority for CBSP’s 

use.4 State set the carryover target of 25 percent based on activityspecific analysis using historical data and projections. 

The unobligated balances for CBSP in fiscal year 2014 accounted for 

approximately $1.3 billion, or 38 percent of projected program 

expenditures for fiscal year 2015. This exceeded the 25 percent target of 

approximately $850 million by approximately $440 million. Similarly, in 

fiscal years 2012 and 2013, unobligated balances for CBSP accounted 

for approximately 40 percent of program expenditures for the next fiscal 

year. State officials reported that unobligated balances were higher than 

the predetermined target, in part, because some fees collected under 

CBSP may only be used for limited purposes. In particular, fees collected 

for fraud prevention and detection on certain types of visas can only be 

spent on specific fraud activities, which State officials said limits the 

opportunities they have to expend funds and decrease the balances. 

State officials reported that annual revenue from this fee is usually higher 

than the cost of these activities, resulting in an annual increase in 

unobligated balances. However, the unobligated balance from this fee 

accounts for only about 22 percent of the total excess unobligated 

balances (approximately $97 million of the total excess unobligated 

balance of $440 million in fiscal year 2014).

 4

No-year budget authority is available for obligation until expended, in contrast with 

multiyear budget authority, which is available for obligation for a fixed period of time in 

excess of 1 fiscal year, or one-year budget authority, which is available for obligation only 

in a specific fiscal year and expires at the end of that fiscal year. See GAO-05-734SP.
Page 178 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

State officials within the Bureau of Consular Affairs said that they began 

drafting a plan in 2013 for managing and monitoring funding for each 

program within CBSP. According to officials, this plan is to include a 

strategy for tracking and managing unobligated balances to reach the 

identified target of 25 percent. Officials said that they are waiting on 

leadership to approve the plan and they anticipate that it will be finalized 

by June 2016. While unobligated balances for CBSP were greater than 

the 25 percent target in recent years, State officials reported that they 

have taken steps to regulate and reduce unobligated balances. According 

to officials, these steps included decreasing fees or delaying fee 

increases when unobligated balances were adequate to cover costs. For 

example, officials reported that since fiscal year 2012, the cost of the 

Passport Security Surcharge service was higher than the $40 fee 

charged; however, State did not implement an increase of the fee to $60 

until 2015. Officials said that this delay of the fee increase allowed them 

to spend down existing unobligated balances from fiscal years 2012 

through 2014. According to data provided by State, unobligated balances 

for the Passport Security Surcharge decreased from 95 percent of the

next year’s program expenditures in fiscal year 2012 to 72 percent in 

fiscal year 2014. Officials also reported realigning spending, consistent 

with authorities, to better coincide with actual costs and improving internal 

coordination to better track and model revenues and obligations. 

However, unobligated balances for CBSP remained greater than the 

agency’s 25 percent target, indicating that further action is needed to 

reduce excess unobligated balances.

Without finalized and fully implemented strategies for reducing 

unobligated balances in excess of the agencies’ predetermined targets for 

the identified programs or activities in these two accounts, Energy and 

State are missing opportunities to actively manage unobligated balances

and help ensure effective use of resources. 

To better ensure effective use of federal funds and management of

unobligated balances, in October 2015 GAO recommended the following 

two actions: 

• The Secretary of Energy should direct WAPA’s Administrator and 

Chief Executive Officer to finalize and implement a strategy to reduce 

excess unobligated balances within the CROM account.

• The Secretary of State should direct the Assistant Secretary of State 

for Consular Affairs to finalize Consular Affair’s strategy for the 

management of its unobligated balances, and to continue efforts to 

reduce excess unobligated balances allocated to CBSP in the D&CP 

account.

Financial benefits could be as much as the $40 million and $440 million in 

excess unobligated balances GAO identified in the Energy and State 

accounts, respectively, at the end of fiscal year 2014. Energy and State 

could use various methods to reduce the excess unobligated balances, 

Actions Needed and 

Potential Financial or 

Other Benefits
Page 179 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

as appropriate, such as reprogramming or transferring funds to other

activities, to the extent allowed by appropriations law; reevaluating fees to 

ensure that fee revenues match program needs; or reducing budget 

authority requests where applicable in future years.

In commenting on GAO’s October 2015 report on which this analysis is 

based, Energy and State concurred with GAO’s recommendations. 

Energy said that it agrees with the need to avoid excess unobligated 

balances and reported that WAPA is finalizing a plan to better manage 

unobligated balances in the CROM account. While State concurred with 

the recommendation, officials noted that they disagreed with the use of 

“excess” to describe the unobligated balances in CBSP. State said that it 

plans to continue efforts to better align unobligated balances and finalize 

the plan for CBSP to maintain balances at optimal levels. GAO 

maintained that the unobligated balances for CBSP are “excess” because 

they are above the agency’s own target of 25 percent of projected

program expenditures for the next year.

GAO provided a draft of this report section to Energy and State for review 

and comment. Energy provided comments on February 17, 2016 stating it 

agrees with the need to manage its unobligated balances, but said it does 

not agree that the $40 million in unobligated balances identified in GAO’s 

October 2015 report should be considered in “excess” or characterized as 

a potential cost savings or revenue enhancement area. GAO maintains 

that the balances are “excess” because they are above the agency’s own 

target of 25 percent of the yearly budget requirement and opportunities 

exist for potential financial benefits if the excess balances were reduced. 

State provided comments on February 17, 2016 stating that the Bureau of 

Consular Affairs is on track to complete its plan to maintain its balances at 

optimal levels by June 2016.

The information contained in this analysis is based on findings from the 

products in the related GAO products section. To examine agencies’ 

management of carryover balances across the federal government, GAO 

analyzed agency budget reports and guidance, congressional budget 

justifications, and congressional notifications, among other things. GAO 

also interviewed agency officials at selected department (or agency), 

bureau, and account levels about account management policy and 

practice, especially with regard to unobligated balances. To describe 

unexpended balances government-wide, GAO analyzed data across all 

federal budget accounts from the Office of Management and Budget’s 

MAX database. 

Table 13 in appendix V lists the programs GAO identified that might have 

opportunities for cost savings. 

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 180 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

2013 Sequestration and Shutdown: Selected Agencies Generally 

Managed Unobligated Balances in Reviewed Accounts, but Balances 

Exceeded Target Levels in Two Accounts. GAO-16-26. Washington, 

D.C.: October 30, 2015.

Budget Issues: Key Questions to Consider When Evaluating Balances in 

Federal Accounts. GAO-13-798. Washington, D.C.: September 30, 2013.

For additional information about unobligated balances, contact Susan J. 

Irving at (202) 512-6806 or irvings@gao.gov.

Related GAO 

Products

Contact Information
Page 181 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Health

25. Distribution of Medicaid Supplemental 

Payments

The Centers for Medicare & Medicaid Services should provide written guidance to state Medicaid programs 

clarifying its policies that the distribution of Medicaid supplemental payments be linked to the provision of 

Medicaid-covered services, and that such payments not be made contingent on the availability of local funding 

for the nonfederal share—actions that could result in substantial cost savings.

Medicaid, a joint federal-state health care program that provides coverage 

for low-income and medically needy individuals, involves significant and 

growing expenditures for the federal government and states.1 In fiscal 

year 2015, Medicaid was estimated to cover, on average, approximately 

69 million beneficiaries at an estimated cost of $529 billion.2 In addition to 

regular payments for covered services, states often make supplemental 

payments, up to certain limits, for which the federal government also 

shares in the cost.3 GAO reported in November 2012 that 39 states made 

supplemental payments in 2007 that resulted in 505 hospitals having 

Medicaid payment surpluses—that is, total Medicaid payments in excess 

of the hospitals’ total costs of providing Medicaid services—totaling about 

$2.7 billion. GAO designated Medicaid as a high-risk program in 2003, in 

part due to the program’s size and growth and to concerns about the 

transparency and oversight of supplemental payments.

Medicaid supplemental payments are typically made under a Medicaid 

state plan. Each state’s plan is required to be reviewed and approved by 

the Centers for Medicare & Medicaid Services (CMS), the agency within 

the Department of Health and Human Services (HHS) responsible for 

overseeing state Medicaid programs at the federal level. Payments under 

a state plan, including supplemental payments, must be economical and 

efficient and within the Medicaid Upper Payment Limit (UPL), which caps 

federal matching of certain Medicaid payments at the level Medicare 

would pay for comparable services.4 The UPL is typically a limit applied to 

 1

Under a statutory formula, the federal government reimburses from 50 to 83 percent of a 

state’s Medicaid expenditures for services for most Medicaid beneficiaries. States with 

lower per capita incomes receive higher federal matching rates. 42 U.S.C. §§ 1396b(a), 

1396d(b).

2

Department of Health and Human Services, 2014 Actuarial Report on the Financial 

Outlook for Medicaid (Washington, D.C.: 2015).

3

States generally make three types of supplemental payments. States are required to 

make disproportionate share hospital payments to hospitals that serve a large number of 

Medicaid and uninsured low-income patients. The other two types of supplemental 

payments that states make, which are the subject of GAO’s February 2016 report, are 

those made under the Medicaid upper payment limit regulations and those made under 

approved Medicaid demonstration projects.

4

Medicare is the federal health program that covers seniors aged 65 and over, individuals 

with end-stage renal disease, and certain disabled persons.

Why This Area Is 

Important
Page 182 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

institutional providers, particularly hospitals and nursing facilities. The 

UPL is not a provider-specific limit, for example, a limit on payments 

made to any particular hospital, but is instead applied on an aggregate 

basis for certain provider ownership types (local government, state 

government, and private) and categories of service (e.g., hospital 

inpatient, hospital outpatient, and nursing facility). States can estimate the 

UPL for a category of service for all services provided, for example, by 

local government hospitals, and make payments up to the UPL. Under 

the flexibility of the Medicaid UPL, states can make supplemental 

payments under the UPL—known as UPL supplemental payments—to

only a portion of the providers providing a service type. Some states have 

targeted their UPL supplemental payments to a small number of providers 

within a particular category—for example, local government hospitals—

resulting, in some cases, in Medicaid surpluses. Medicaid payments that 

greatly exceed costs raise questions about the purpose of the payments, 

including how they relate to Medicaid services and if they are economical 

and efficient, as required by law.

In addition, in recent years states have increasingly made another type of

supplemental payment under section 1115 of the Social Security Act, 

which authorizes the Secretary of Health and Human Services to approve

funds for Medicaid demonstration projects—including for costs that would 

not otherwise be eligible for federal matching funds—if, in the Secretary’s 

judgment, such spending is likely to assist in promoting Medicaid 

objectives.5 Some states have received approval to make these 

payments—known as demonstration supplemental payments—and 

ended their UPL supplemental payments. HHS has authorized 

demonstration supplemental payments for purposes such as paying 

hospitals for uncompensated care costs and incentive payments for broad 

health care improvements.

States finance the nonfederal share of their Medicaid programs primarily 

with state general funds; however, they may, within certain limits, use 

other sources of funds, including funds from local government providers, 

such as county-owned hospitals, or from local governments on behalf of 

government providers. GAO reported in July 2014 that states have 

increasingly relied on local governments to fund the nonfederal share of 

state Medicaid payments, particularly for supplemental payments. Trends 

toward increasing reliance on Medicaid providers and local governments 

to finance the nonfederal share of Medicaid payments can shift costs to 

the federal government, changing the nature of the federal-state 

partnership.6 GAO has found, for example, that states have established 

 5

42 U.S.C. § 1315(a). Medicaid demonstrations are intended to allow states to test and 

evaluate new approaches for delivering Medicaid services to beneficiaries.

6

GAO reported that in state fiscal year 2012, across all states, 70 percent of the 

nonfederal share of UPL supplemental payments was financed by funds from local 

governments, including local government hospitals, which represented an increase of 13 

percentage points since state fiscal year 2008. 
Page 183 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

complex payment arrangements involving increased Medicaid payments 

to certain institutional providers, such as local government hospitals, and 

sought funds to finance the nonfederal share of those payment increases 

from the same providers receiving the payments, or the local government 

operating them. By increasing the providers’ Medicaid payments and 

requiring the providers receiving the payments, or the local governments 

operating them, to supply all or most of the nonfederal share, the states 

have effectively shifted more of the cost of payments made to those 

providers to the federal government. The net payment to those providers 

may largely be made up of federal funds. Such financing arrangements 

can be within federal rules; however, states may not lower the amount, 

duration, scope, or quality of Medicaid services provided due to a lack of 

funds from local sources.7

In February 2016, GAO found that, in three of four states it reviewed that 

made supplemental payments resulting in Medicaid payment surpluses, 

states distributed Medicaid supplemental payments to hospitals largely 

based on the availability of local government funds to finance the 

nonfederal share, rather than on the volume of services each hospital 

provided. While CMS has recently acted to curtail one state’s 

supplemental payments that were distributed based on availability of local 

financing, it has not clarified or broadly communicated guidance regarding 

appropriate payment distribution methods. The absence of CMS guidance 

on how to distribute Medicaid supplemental payments may be leading to 

inconsistent application among states and the distribution of supplemental 

payments that are counter to agency policies, resulting in payments to 

providers that are not commensurate with the level of Medicaid services 

provided, or overpayments to providers that contributed local financing. 

This lack of clarity may partly explain why states have often made 

supplemental payments that were based on the availability of local 

financing rather than on their services for Medicaid beneficiaries and why 

states have increasingly relied on local financing for supplemental 

payments, which has the effect of shifting state costs to the federal 

government.

GAO reported that, for three of four selected states—which were selected 

on the basis of having made the largest Medicaid payments in excess of 

costs in 2009—the bulk of the supplemental payments to hospitals were 

made contingent on these hospitals, or the relevant local governments,

providing funds to finance the nonfederal share of the payments the 

hospitals received, rather than on the Medicaid services they provided.

Based on its review of applicable state laws, regulations, or Medicaid 

documents that established the rules regarding which hospitals would 

receive payments and the amounts of the payments, GAO reported that 

in 2009 over $3.2 billion—or 92 percent of $3.5 billion the three states 

 7

42 U.S.C. § 1396a(a)(2); 42 C.F.R. § 433.53(c)(2) (2015).

What GAO Found
Page 184 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

made in supplemental payments in total that year—was based on 

contributions of local funds. For 2012, GAO reported that $4.9 billion—or 

97 percent of $5.0 billion the three states made in supplemental 

payments in total that year—was based on contributions of local funds.

GAO reported on several examples of hospitals that did not receive a 

supplemental payment, or received a smaller payment, because the 

hospital or local government did not provide the funds, or provided a 

smaller contribution to the nonfederal share than expected. In one state, 

for example, GAO found that 18 rural hospitals did not receive UPL 

payments under a program specifically for hospitals in rural counties 

because they did not provide local funds for the nonfederal share of the 

payments.

While states are permitted to use local funds to finance the nonfederal 

share of their Medicaid programs, GAO findings from its February 2016 

report show that distributing payments only to hospitals that are capable 

of financing the nonfederal share can result in payments not being made 

to otherwise eligible hospitals that lack the ability either to finance the 

expected nonfederal share of the payment or to obtain local government 

support for such financing. In addition, GAO reported that basing the 

distribution of supplemental payments on the availability of local funding 

can result in payments that are not aligned with hospitals’ workload of 

low-income patients, as measured by their uncompensated care costs 

associated with serving low-income or uninsured individuals. For 

example, the report highlighted a hospital for which local funding was 

provided that had $352 million in uncompensated care costs, yet received 

$384 million in demonstration supplemental payments for those costs, in 

addition to $77 million in Disproportionate Share Hospital payments.8

However, another hospital with about $121 million in uncompensated 

care costs—which was the fourth-highest amount of uncompensated care 

costs among the state’s hospitals that year—but that had no local funding 

provided on its behalf received no supplemental payments. GAO also 

reported in 2014 that reliance on local funds may incentivize states to 

make Medicaid payments in excess of hospitals’ Medicaid costs because 

those hospitals are able to provide or secure local financing for the 

nonfederal share of the payments, which can effectively reduce the 

state’s obligation for Medicaid payments and shift costs for Medicaid to 

the federal government.

Federal law requires states to ensure that a lack of local funds will not 

result in lowering the amount, duration, scope, or quality of Medicaid 

services,

9 and CMS officials told GAO that the agency interprets this 

 8

States are required by federal law to make Disproportionate Share Hospital payments to 

certain hospitals, which are payments designed to help offset these hospitals’ 

uncompensated care costs for serving large numbers of Medicaid and uninsured lowincome individuals. See 42 U.S.C. §§ 1396a(13)(A), 1396r-4.

9

42 U.S.C. § 1396a(a)(2); 42 C.F.R. § 433.53(c)(2).
Page 185 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

requirement as prohibiting arrangements where Medicaid payments are 

contingent on local financing. CMS officials also told GAO that the 

agency’s policy requires that supplemental payments be distributed 

based on the hospitals’ provision of services to Medicaid and uninsured 

individuals. However, GAO reported that CMS had not clearly or broadly 

communicated its policies about appropriate distribution methodologies to 

states. Federal standards for internal control stress that management 

should ensure there are adequate means of communicating information 

to external stakeholders that may have a significant impact on the 

agency’s achieving its goals.

10 GAO reported that CMS communicated 

key principles in writing to one state regarding how the state should 

distribute its demonstration supplemental payments for uncompensated 

care costs, including that (1) payments should support the provision of 

services to Medicaid beneficiaries and low-income uninsured individuals, 

and (2) payments should not be made based on the availability of local 

financing. In addition, CMS officials told GAO in October 2015 that the 

agency plans to issue a proposed rule to specify appropriate 

methodologies for state distribution of UPL supplemental payments under 

their state plans, and they plan to publish a proposed rule for comment in 

fall of 2016. However, CMS has not issued written guidance to articulate 

and broadly communicate its demonstration supplemental payment 

requirements to all states. Additionally, because the proposed rule was 

under development as of March 2016, details regarding the UPL 

supplemental payment distribution methodologies were not available.

To promote consistency in the distribution of supplemental payments 

among states and with CMS policy, GAO recommended in its February 

2016 report that the Administrator of CMS take the following two actions:

• Issue written guidance clarifying its policy that requires a link between 

the distribution of supplemental payments and the provision of 

Medicaid-covered services.

• Issue written guidance clarifying its policy that payments should not 

be made contingent on the availability of local funding.

Currently it is not possible to estimate the potential cost savings that may 

result from CMS taking these actions because the total amount of 

supplemental payments that are distributed based on the availability of 

local funding is unknown, as is the extent to which payment amounts 

would be reduced in response to CMS’s clarification of its policies. 

Previous GAO reports (for example, reports issued in July 2014 and April 

2015) have shown that states often make large Medicaid supplemental 

payments to a small number of providers, increasingly relying on local 

funding for the nonfederal share of supplemental payments, and 

 10GAO, Internal Control: Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).

Actions Needed and 

Potential Financial or 

Other Benefits
Page 186 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

effectively shifting costs for Medicaid payments to the federal government 

in doing so. A November 2012 GAO report found that states had made 

supplemental payments to hospitals that contributed to about $2.7 billion 

in Medicaid payment surpluses among hospitals receiving them, 

suggesting that states were often overpaying hospitals when making 

supplemental payments. GAO’s February 2016 report provides new 

information related to why a state might make large supplemental 

payments in excess of Medicaid costs by financing these payments using 

local or provider funds. Curtailing the practice of basing payments on the 

availability of local funding, and instead clarifying that they be distributed 

based on the level of Medicaid-covered services provided, may result in 

substantial savings through the reduction of these surpluses.

In commenting on the February 2016 report on which this analysis is 

based, HHS concurred with one recommendation and agreed with 

concerns raised by the other. Specifically, HHS concurred with GAO’s

recommendation to articulate in written guidance to all states the 

agency’s current policy that supplemental payments be distributed based 

on the provision of services to Medicaid and low-income uninsured 

individuals. HHS cited the rule it plans to propose in the spring of 2016 

that would set forth additional requirements to better ensure that 

supplemental payments are consistent with the statutory principles of 

economy, efficiency, and quality of care. HHS also cited its effort to apply 

new criteria to the approval of demonstrations that contain supplemental 

payments for uncompensated care, which it has communicated to Florida 

and other affected states. In responding to GAO’s second 

recommendation, HHS agreed that Medicaid payments that are 

contingent on the availability of local funding are a concern, and it 

referenced again its plans for a proposed rule, indicating that the rule is to 

highlight the issue. Although HHS did not explicitly concur with GAO’s 

recommendation, it did state it is considering additional options to 

address the issue. In light of its findings, GAO plans to continue to 

monitor HHS actions on these issues.

GAO provided a draft of this report section to HHS for review and 

comment. The department did not provide comments on this report 

section.

The information contained in this analysis is based on findings from the 

products listed in the related GAO products section. To determine the 

basis on which states distributed supplemental payments, GAO reviewed 

documents authorizing the payments, including state plan provisions, the 

terms and conditions of Medicaid demonstrations, state administrative 

code provisions, and other state documents. GAO obtained payment data 

from the four selected states to analyze the extent to which states’ 

supplemental payments were contingent on local funding and, along with 

available cost data, to compare hospitals’ payments to their 

uncompensated care costs. 

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 187 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Table 14 in appendix V lists the program GAO identified that might have 

opportunities for cost savings or revenue enhancement.

Medicaid: Federal Guidance Needed to Address Concerns about 

Distribution of Supplemental Payments. GAO-16-108. Washington, D.C.:

February 5, 2016.

Medicaid Demonstrations: Approval Criteria and Documentation Need to 

Show How Spending Furthers Medicaid Objectives. GAO-15-239.

Washington, D.C.: April 13, 2015.

Medicaid: CMS Oversight of Provider Payments Is Hampered by Limited 

Data and Unclear Policy. GAO-15-322. Washington, D.C.: April 10, 2015.

Medicaid Financing: States Increased Reliance on Funds from Health 

Care Providers and Local Governments Warrants Improved CMS Data 

Collection. GAO-14-627. Washington, D.C.: July 29, 2014.

Medicaid Demonstration Waivers: Approval Process Raises Cost 

Concerns and Lacks Transparency. GAO-13-348. Washington, D.C.: 

June 25, 2013.

Medicaid: More Transparency of and Accountability for Supplemental 

Payments Are Needed. GAO-13-48. Washington, D.C.: November 26, 

2012.

Medicaid: States Reported Billions More in Supplemental Payments in 

Recent Years. GAO-12-694. Washington, D.C.: July 20, 2012.

For additional information about this area, contact Katherine Iritani at 

(202) 512-7114 or iritanik@gao.gov.

Related GAO 

Products

Contact Information
Page 188 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

26. Eligibility of Medicare Providers and 

Suppliers

The Centers for Medicare & Medicaid Services could use better information to help prevent ineligible providers 

and suppliers from enrolling in the Medicare program and improperly obtaining Medicare funds, potentially 

reducing the billions of dollars in improper payments that the program has paid out in recent years.

In fiscal year 2015, Medicare paid $568.9 billion for health care and 

health care-related services. According to the Centers for Medicare & 

Medicaid Services (CMS)—the agency within the Department of Health 

and Human Services (HHS) that administers the Medicare program—an 

estimated $59.6 billion (10.5 percent) of that total was paid improperly.1

Due to the large dollar amount involved in improper payments, the Office 

of Management and Budget has placed Medicare on its list of high-error 

programs. Further, because of its size, complexity, and susceptibility to 

mismanagement and improper payments, GAO has designated Medicare 

as a high-risk program.

CMS requires prospective Medicare providers and suppliers to be listed in 

the Provider Enrollment, Chain and Ownership System (PECOS) to enroll 

in Medicare and to bill for services provided to Medicare beneficiaries.2

PECOS is a centralized database that contains enrollment information for 

providers and suppliers. According to CMS, about 1.9 million providers 

and suppliers were listed in PECOS as of December 2015. CMS is 

responsible for developing provider and supplier enrollment procedures to 

help safeguard the program from fraud, waste, and abuse. CMS requires 

providers and suppliers to resubmit and recertify the accuracy of their 

enrollment information every 5 years and durable medical equipment, 

prosthetics, orthotics, and supplies (DMEPOS) suppliers every 3 years in 

order to maintain billing privileges. 

 1

This amount represents the Medicare Fee-for-Service, Medicare Advantage (Part C), and 

Medicare prescription Drug Benefit (Part D) programs. An improper payment is defined as 

any payment that should not have been made or that was made in an incorrect amount 

(including overpayments and underpayments) under statutory, contractual, administrative, 

or other legally applicable requirements. It includes any payment to an ineligible recipient, 

any payment for an ineligible good or service, any duplicate payment, and any payment 

that does not account for credit for applicable discounts.

2

The term “provider” refers collectively to institutional providers such as hospitals and 

health-care facilities, as well as physicians and nonphysician practitioners who provide 

health-care services to Medicare beneficiaries. Providers also include organ-procurement 

organizations, skilled-nursing facilities, hospice, and end-stage renal disease centers. The 

term “supplier” refers to certain Part B entities such as ambulance-service providers, 

mammography centers, and portable X-ray facilities. Suppliers also include entities that 

supply Medicare beneficiaries with Medicare-durable medical equipment, prosthetics, 

orthotics, and supplies, such as walkers and wheelchairs.

Why This Area Is 

Important
Page 189 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

In June 2015, GAO reported weaknesses in two key screening 

procedures CMS implemented to prevent and detect ineligible or 

potentially fraudulent providers and suppliers from enrolling in PECOS: 

(1) verification of practice location and (2) verification of licensure status. 

Federal regulations stipulate the type of physical practice required for 

applicants enrolling into the Medicare program. Providers and suppliers 

must be “operational” to furnish Medicare-covered items or services.3

Federal regulations define “operational” as having a qualified physical 

practice location, being open to the public for the purpose of providing 

health care-related services, being prepared to submit valid Medicare 

claims, and being properly staffed, equipped, and stocked to furnish these 

items or services.4 Medicare providers are required to submit the address 

of the actual practice location from which they offer services.5

GAO examined practice location addresses of providers and suppliers 

listed in PECOS as of March 2013 and DMEPOS as of April 2013 and 

found that an estimated 23,400 (22 percent) of 105,234 addresses were 

potentially ineligible.6 Of the 23,400 potentially ineligible addresses, GAO 

estimated that, from 2005 to 2013, about 2,600 were associated with 

providers that had Medicare claims that were $500,000 or more per 

address.7

 3

42 C.F.R. § 424.510.

4

42 C.F.R. § 424.502.

5

Once enrolled in PECOS, providers and suppliers have the responsibility to self-report 

changes to their practice locations. CMS requires providers, suppliers, and DMEPOS 

suppliers to report a change in practice location within 30 days.

6

Potentially ineligible addresses include those that are associated with a certain type of 

Commercial Mail Receiving Agency (CMRA), or vacant or invalid addresses. PECOS 

provider and supplier data were current as of March 2013 and DMEPOS as of April 2013. 

As part of the initial analysis using the USPS software, GAO identified 105,234 of the 

980,974 addresses that were listed in PECOS that appeared in the USPS software as a 

CMRA, a vacant address, or an invalid address. GAO selected a generalizable stratified 

sample of 496 addresses from the population of the 105,234 that appeared in the USPS 

software as a CMRA, a vacant address, or an invalid address. For each selected address, 

GAO conducted further analysis to confirm whether the address was an ineligible practice 

location. On the basis of GAO’s additional analysis of the generalizable sample, GAO 

estimated that 23,400 of 105,234 addresses were potentially ineligible. This estimate 

represents about 22 percent of the 105,234 questionable addresses and is about 2.3 

percent of the entire population of 980,974 addresses. These estimates have a margin of 

error at the 95 percent confidence level of plus or minus 10 percentage points or fewer.

7

The claims amount was calculated based on all claims associated with the National 

Provider Identifier that was listed on the matched address. Because some providers are 

associated with more than one address, it is possible that some of the claim amounts 

reported may be associated with a different, valid practice location. Due to how GAO 

obtained compiled claims by the National Provider Identifier, GAO was unable to 

determine how much, if any, of the claim amount may be associated with a different, valid 

address.

What GAO Found
Page 190 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

GAO utilized a software package that provides more detailed information 

on the PECOS practice location addresses than that used by CMS. GAO 

checked PECOS practice location addresses using the United States 

Postal Service (USPS) Address Matching System Application Program 

Interface. This is a commercially available software package that 

standardizes addresses and provides specific flags, such as whether the 

location is a Commercial Mail Receiving Agency (CMRA) or whether it is 

vacant or invalid.8 This software is not currently being used by CMS. 

Instead, CMS uses Finalist computer software to standardize applicants’ 

practice location addresses.9 However, the Finalist software does not 

provide data on whether the address is a CMRA, vacant, or invalid—in 

other words, whether the location is potentially ineligible to qualify as a

legitimate practice location. CMS does not have these flags in Finalist 

because the agency added coding in PECOS that prevents post office 

box addresses from being entered, and incorrectly assumed that this step 

would prevent these types of ineligible practice locations from being 

accepted. CMS officials agreed, however, that adding flags to the Finalist

software to identify attributes that might make the practice location 

address ineligible, such as a CMRA, would be of value. 

In June 2015, GAO found that 46 out of the 496 generalizable sample 

addresses examined during the review were allowed to enroll in Medicare 

with a practice location that was inside a mailing store, such as a UPS 

store.10 These providers’ addresses did not appear in PECOS as a post 

office box, but instead were listed as a suite or other number, along with 

the street address of the store. Businesses can purchase a post office 

box that is listed to the public as a suite number in a business district from 

some commercial mailing businesses, allowing the businesses to mask 

the identity of the address as a post office box. For example, GAO 

identified a particular provider that used a mailbox-rental store as its 

practice location and where services are not actually rendered. As of 

January 2015, this provider was listed in PECOS under a suite number. 

 8

USPS standardizes an address by converting it to a standard format through correcting 

the address, including adding missing information such as directional or zip code 

information, to provide a complete address. Addresses that generally would not be 

considered a valid practice location include post office boxes, and those associated with a 

certain type of CMRA, such as a United Parcel Service (UPS) store. Based on USPS 

guidance, a CMRA is a third-party agency that receives and handles mail for a client. 

USPS would flag a location as vacant if it used to deliver mail there and has not delivered 

mail there in more than 90 days. An invalid address is an address that is not recognized 

by USPS, was incorrectly entered in PECOS, or was missing a street number. Not all 

addresses flagged by the USPS software are ineligible addresses. However, the software 

provides an initial indicator that an address warrants a closer review.

9

According to CMS, Finalist is integrated into PECOS to standardize addresses and does 

so by comparing the address listed on the application to USPS records. It then corrects 

any misspellings in street and city names, standardizing directional markers (NE, West, 

etc.) and suffixes (Ave, Lane, etc.), and correcting errors in the zip code.

10GAO selected a generalizable stratified random sample of 496 addresses from the 

population of 105,234 that appeared in the USPS Address Matching System Application 

Program Interface as a CMRA, a vacant address, or an invalid address.
Page 191 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

According to GAO analysis of CMS records, this provider was paid 

approximately $592,000 by Medicare from the date it enrolled in PECOS 

with this address to December 2013, the latest date for which CMS had 

claims data. GAO referred this provider to CMS for further review and 

action. 

The fact that providers can submit an address that is not an actual 

practice location is a potential indicator of fraud. Without having flags in 

Finalist to better indicate the validity of the providers’ or suppliers’ practice 

locations, CMS is missing an opportunity to identify an address that could 

potentially be an illegitimate practice location. Further, CMS is missing an 

opportunity to better ensure that payment is limited to legitimate 

providers.

Another screening weakness GAO identified was verification of physician 

licenses. Physicians applying to participate in the Medicare program must 

hold an active license in the state in which they plan to practice and also 

must self-report any final adverse actions, such as a suspension or 

revocation by a state licensing authority. In June 2015, GAO reported the 

following:

• Of approximately 1.3 million physicians listed as eligible to bill 

Medicare, 147 had received an adverse action from a state medical 

board for committing a crime against a person, a financial crime, or 

another type of felony.11 These physicians were not revoked from the 

Medicare program until months after the adverse action and, in some 

cases, were never removed.

• Of the 147 physicians identified, 47 have been paid a total of 

approximately $2.6 million in Medicare funds during the time that CMS 

could have potentially barred them.12

CMS requires its contractors to verify any self-reported final adverse 

action directly with the state medical board website. In March 2014, CMS 

began providing the License Continuous Monitoring (LCM) report to its 

Medicare contractors to improve their oversight of physician license 

reviews. However, the LCM report only includes the medical license 

number that the providers use to enroll into the Medicare program; it does 

not list any other medical licenses or adverse-action history that a 

provider may have in another state, which leaves open the possibility that 

a provider could enroll into Medicare despite having another license with 

an adverse-action history. 

 1142 C.F.R § 424.535 (a)(3)(i).

12The time period for potential debarment from the Medicare program was between March 

29, 2003, and March 29, 2013.
Page 192 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

GAO used data with more detailed licensure history for all medical 

licenses than that used by CMS. GAO obtained data from the Federation 

of State Medical Boards (FSMB).13 Unlike the database used by CMS, the 

FSMB database includes a provider’s entire history of license revocations 

and suspensions for all medical licenses, while the LCM report only 

includes the current license status of the licenses reported by providers in 

PECOS. By focusing on the license numbers used to enroll in PECOS 

and relying on applicants to self-report final adverse actions on the 

application, CMS and its contractors are missing an opportunity to 

develop a more complete picture of individual providers. CMS could 

prevent potentially ineligible physicians from enrolling into the Medicare 

program if it obtains all license numbers associated with the individual 

providers, including licenses outside of the state for which a provider 

seeks Medicare privileges. Further, CMS is missing an opportunity to 

better ensure that payment is limited to eligible physicians.

To help improve the Medicare provider and supplier enrollment-screening 

procedures, GAO recommended in June 2015 that the Acting 

Administrator of CMS take the following two actions:

• Modify the CMS software integrated into PECOS to include specific 

flags to help identify potentially questionable practice location 

addresses, such as CMRA, vacant, and invalid addresses. 

• Collect information on all licenses held by providers that enroll into 

PECOS by using data sources that contain this information, including 

licenses obtained from other states, and expand the LCM report to 

include all licenses; and at least annually review databases, such as 

that of the FSMB, to check for disciplinary actions. 

Estimating the total amount of improper payments is not possible without 

CMS conducting a detailed review of each potential ineligible provider. 

However, modifying CMS’s software and collecting all license information 

would allow CMS to better prevent ineligible providers from enrolling into 

the Medicare program and obtaining Medicare funds, thus potentially 

reducing the amount of improper payments. 

 13FSMB is a nonprofit organization that serves state medical boards in all U.S. states, 

Puerto Rico, Guam, and the Northern Mariana Islands; and 14 state boards of osteopathic 

medicine. According to CMS, it does not use the FSMB data because FSMB only updates 

the total number of licenses included in its master license file every 2 years. According to 

FSMB, it compiles this list of licensed physicians every 2 years and receives an update on 

these specific medical licenses on a weekly, monthly, or quarterly basis from 65 state and 

territorial medical boards in the United States. The vendor that CMS currently uses 

updates the total number of licenses included in its master list of licenses continuously. 

However, GAO found the LCM report provided by this vendor only provides the current 

license status and not the history of the license, while FSMB provides the license history 

as well as disciplinary actions.

Actions Needed and 

Potential Financial or 

Other Benefits
Page 193 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

In their comments to the June 2015 report on which this analysis is 

based, HHS agreed with the two recommendations and noted that it plans 

to take steps to address them. For example, HHS plans to configure the 

provider and supplier address-verification system in PECOS to flag 

CMRAs, vacancies, invalid addresses, and other potentially questionable 

practice locations. Because HHS has not yet initiated specific actions to 

implement GAO’s recommendations, it is too early for GAO to determine 

whether the actions the agency outlined in its official comments on a draft 

of this report would fully address the intent of the recommendations. 

However, if effectively implemented, the actions could prevent ineligible 

providers from enrolling into the Medicare program and obtaining

Medicare funds, thus potentially reducing the amount of improper 

payments. GAO plans to continue to monitor the agency’s efforts in this 

area. 

GAO provided a draft of this report section to HHS for review and 

comment. The department did not provide comments on the report 

section. 

The information contained in this analysis is based on findings from the 

product listed in the related GAO products section. To assess the extent 

to which two enrollment screening procedures—CMS’s verification of 

medical providers’ and suppliers’ practice locations and verification of 

physicians’ licensure status—are designed to prevent and detect the 

enrollment of ineligible or potentially fraudulent Medicare providers and 

suppliers into PECOS, GAO reviewed CMS procedural manuals and 

directives, interviewed CMS officials, and conducted interviews with five 

Medicare Administrative Contractors (MAC).14

To assess the extent to which CMS’s enrollment-screening procedure for 

verifying medical providers’ and suppliers’ practice locations was 

implemented to prevent and detect the enrollment of ineligible or 

potentially fraudulent Medicare providers and suppliers into PECOS, GAO 

matched the list of 980,974 providers and suppliers present in PECOS on 

March 29, 2013, and DMEPOS suppliers on April 6, 2013, to the USPS 

Address Matching System Application Program Interface. Of the 980,974 

addresses, 105,234 (about 11 percent) appeared in the USPS software 

as a CMRA, a vacant address, or an invalid address. For those

addresses, GAO selected a generalizable stratified random sample of 

496 addresses and confirmed the eligibility of each of the 496 sampled 

practice location addresses using Google Maps, Internet searches, or 

 14The five MACs were selected to include some with larger numbers of physicians 

serviced, some that met and some that did not meet the accuracy threshold in CMS’s 

provider enrollment performance evaluation, some that participated in the automated 

screening process, and some that did not (to capture additional possible checks that some 

MACs performed on providers’ enrollment information through this process), and some 

that served more than one jurisdiction to maximize the number of states included in the 

review.

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 194 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

physical site visits. To calculate and report on the amount of Medicare 

claims paid to these potentially ineligible providers and suppliers, GAO 

matched their provider and supplier National Provider Identifier number 

with claims paid from 2005 to 2013, the period for which CMS had claims 

data available.

To assess the extent to which CMS’s verification of physicians’ licensure 

status was implemented to prevent and detect the enrollment of ineligible 

or potentially fraudulent Medicare providers into PECOS, GAO matched 

the list of physicians (who are categorized as providers) present in 

PECOS to the FSMB licensure data from March 31, 2014. GAO 

calculated Medicare claims paid from 2005 to 2013 for those physicians 

that received a suspension or revocation of their medical license while 

enrolled in PECOS. This analysis included the time the physician was 

actively suspended or revoked and in some cases the time when the 

provider could have been barred from the Medicare program for not 

reporting an adverse action. 

Table 15 in appendix V lists the programs GAO identified that might have 

opportunities for cost savings.

Medicare Program: Additional Actions Needed to Improve Eligibility 

Verification of Providers and Suppliers. GAO-15-448. Washington, D.C.: 

June 25, 2015.

For additional information about this area, contact Seto J. Bagdoyan at 

(202) 512-6722 or bagdoyans@gao.gov.

Related GAO Product

Contact Information
Page 195 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

27. Medicaid Demonstration Approved 

Spending

The Secretary of Health and Human Services could potentially curtail spending growth of Medicaid 

demonstrations, which have resulted in the authorization of billions of dollars in federal spending, by 

establishing specific criteria for assessing whether demonstration spending furthers Medicaid objectives and 

taking other steps to improve the transparency and accountability of the approval process.

Medicaid is a joint federal-state program that is now one of the largest 

sources of health care coverage and financing for tens of millions of lowincome and medically needy individuals, with estimated spending over 

$500 billion in fiscal year 2015. Under the program, states claim federal 

matching funds for Medicaid expenditures from the Department of Health 

and Human Services (HHS), which oversees the program at the federal 

level. Within the Medicaid program, the Secretary of Health and Human 

Services has broad authority, provided under section 1115 of the Social 

Security Act, to waive certain federal Medicaid requirements and allow 

costs that would not otherwise be eligible for federal matching funds for 

experimental, pilot, or demonstration projects that in the Secretary’s 

judgment, are likely to assist in promoting Medicaid objectives.1 Section 

1115 demonstrations provide a way for states to test and evaluate new 

approaches to delivering services outside of Medicaid’s traditional rules,

and they have become a significant and rapidly growing share of 

Medicaid expenditures. In fiscal year 2011, Medicaid demonstrations 

accounted for about one-fifth of Medicaid expenditures, rising to about 

one-fourth in fiscal year 2013, and increasing to almost one-third of 

Medicaid expenditures in fiscal year 2014, an estimated $89 billion in 

federal funds. Medicaid is on GAO’s list of high-risk programs, in part 

because of concerns about inadequate fiscal oversight, including fiscal 

oversight of section 1115 Medicaid demonstrations.

Historically, many states have sought section 1115 demonstrations to 

provide health coverage to individuals who could not be covered under 

traditional Medicaid rules; however, in recent years, HHS has approved 

demonstration spending for many other purposes not otherwise allowed 

under Medicaid. For example, states have obtained approval under 

demonstrations to claim federal matching funds for supplemental 

payments made to providers to help cover their uncompensated care 

costs associated with providing care to individuals without insurance. A 

key aspect of section 1115 demonstrations is that under HHS policy they 

 1

42 U.S.C. § 1315(a). Although the Secretary of Health and Human Services has 

delegated the administration of the Medicaid program, including the approval of section 

1115 demonstrations, to the Centers for Medicare & Medicaid Services, this report section 

refers to HHS throughout because authority for section 1115 demonstrations ultimately 

resides with the Secretary.

Why This Area Is 

Important
Page 196 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

must be budget neutral; that is, they should not increase the cost of the 

Medicaid program to the federal government.2

In April 2015, GAO reported that although section 1115 of the Social 

Security Act provides HHS with broad authority in approving expenditure 

authorities for demonstrations that in the Secretary’s judgment are likely 

to promote Medicaid objectives, HHS has not issued specific criteria for 

assessing whether demonstration expenditures meet this broad statutory 

requirement. Federal standards for internal control stress that 

management should ensure that there are adequate means of 

communicating with, and obtaining information from, external 

stakeholders, such as states in the case of Medicaid demonstrations, that 

may have a significant impact on the agency achieving its goals.3 In 

GAO’s view, the criteria HHS uses for approving expenditure authorities 

would be subject to such a communication requirement. However, HHS 

officials told GAO that the agency has not issued specific criteria for 

assessing Medicaid demonstration expenditures. The officials said that 

for a demonstration to be approved, its goals and purposes must provide 

an important benefit to the Medicaid program, but they did not provide 

more explicit criteria for determining whether approved demonstration 

expenditures would provide an important benefit or promote Medicaid 

objectives. GAO reported that given the breadth of the Secretary’s 

authority under section 1115, explicit criteria are needed to illuminate how 

HHS determines that new demonstrations promote Medicaid objectives. 

Having such criteria would make the basis for HHS’s decisions to approve 

expenditure authorities in section 1115 demonstrations—which can result 

in billions of dollars of federal expenditures for costs not otherwise 

allowed under Medicaid—more transparent and could potentially achieve 

cost savings by avoiding spending on programs and purposes that do not 

promote Medicaid objectives.

GAO also reported in April 2015 that how demonstration spending would 

further Medicaid objectives was not always clear in HHS’s approval 

documents. This was evident, for example, in recently approved 

demonstrations allowing expenditures for state programs, which were 

 2

To comply with HHS’s budget neutrality policy, generally a state must establish that the 

cost of the demonstration’s planned changes will be offset by savings or other available 

Medicaid funds. For example, individuals not previously eligible for Medicaid could be 

covered under a state’s demonstration without additional costs if the state were saving 

Medicaid funds through efficiencies under the demonstration, such as by implementing 

managed care. GAO has concerns about HHS’s process for ensuring that demonstrations 

will be budget neutral. In June 2013 and August 2014, GAO determined that spending 

limits approved by HHS for demonstrations in five states were tens of billions of dollars 

higher than what they would have been had HHS used methods to calculate spending 

limits that were consistent with its own budget neutrality policy.

3

GAO, Standards for Internal Control in the Federal Government, GAO-14-704G

(Washington, D.C.: September 2014).

What GAO Found
Page 197 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

significant in terms of the amounts approved.4 In five states, HHS 

approved demonstrations that allowed the states to spend $9.5 billion in 

Medicaid funding (federal and state) to support more than 150 stateoperated programs.5 While many of the state programs approved offered 

health-related services, overall they were wide-ranging in nature and 

included, for example, programs supporting health care workforce 

development and programs subsidizing private health coverage 

purchased through exchanges. The programs were operated or funded 

by a wide range of state agencies, such as state departments of mental 

health, public health, corrections, youth services, developmental 

disabilities, and aging and state educational institutions.6

GAO found that HHS’s approval documents for these state programs did 

not consistently include information indicating the specific purposes of the 

approved expenditures; therefore, how the programs would likely promote 

Medicaid objectives was not clear. The state programs were generally 

listed by program name in the approval documents but often without any 

further detailed information. Several state programs approved for 

Medicaid funds appeared, based on information in the approvals, to be 

only tangentially related to improving health coverage for low-income 

individuals and lacked documentation explaining how their approval was 

likely to promote Medicaid objectives. For example, the purposes of some 

approved programs included funding health insurance for fishermen and 

their families at a reduced rate, constructing supportive housing for the 

homeless, and recruiting and retaining health care workers. For two of the 

five states with approvals to cover their state programs under their 

demonstrations, HHS’s approval documents included additional details 

beyond the program names—including program descriptions and target 

populations—in what HHS calls claiming protocols. Such information can 

help explain how programs may promote Medicaid objectives; however, 

in some instances, even when such information was included, HHS’s 

basis for approving expenditure authorities for some state programs was 

not apparent. Approvals for three states, which accounted for nearly half 

of the more than 150 state programs approved, did not include claiming 

protocols for most programs and otherwise lacked clear information on 

how the programs would promote Medicaid objectives, such as how they 

would benefit low-income populations. Identifying the linkages between 

 4

GAO raised similar concerns about approved demonstrations that allowed five states to 

make up to nearly $18.8 billion (federal and state) in supplemental payments to hospitals 

or their partners to make delivery system or infrastructure improvements. How this 

approved spending would likely promote Medicaid objectives was not consistently 

documented in HHS’s approvals.

5

The $9.5 billion approved was for programs in all five states during their current 

demonstration approval periods, which ranged from 2.5 to 5 years.

6

Prior to the demonstrations, these programs could have been funded with state or other 

funding sources, including other federal funding sources. Under the demonstrations, 

federal matching funds could replace some of the states’ expenditures for the programs, 

freeing up state funding for other purposes, including addressing state budget shortfalls.
Page 198 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

state programs and Medicaid objectives in approval documents could 

potentially help HHS avoid spending on programs that do not further 

Medicaid’s objectives. Without this information, HHS may be missing 

opportunities to achieve cost savings. 

GAO also found that HHS’s approvals did not consistently provide 

assurances that Medicaid demonstration funding would not unnecessarily

duplicate other federal funding received by states. In 2012, HHS 

established an application template that states could opt to use to apply 

for section 1115 demonstrations. The template included instructions for 

states to identify other federal funds used for the demonstration, in part to 

help HHS identify potential areas of duplicative effort. HHS’s approvals in 

five states reviewed, however, did not consistently document potential 

areas of duplicative efforts. In two of the five states reviewed, the 

approvals included claiming protocols that identified all other federal and 

nonfederal funding sources for each state program and included specific 

instructions on how states should “offset” other revenues received by the 

state programs related to eligible expenditures. The approval for a third 

state had a general program integrity provision requiring the state to have 

processes in place to ensure no duplication of federal funding. In contrast, 

the remaining two states did not identify other federal and nonfederal 

funding sources for approved state programs and lacked language 

expressly prohibiting the states’ use of federal funding for the same 

purposes. Furthermore, it was not always clear from HHS’s approval 

documents that it considered whether Medicaid demonstration funds 

would unnecessarily duplicate other federal funding sources. The 

resulting potential for duplicative federal funding may represent a missed 

opportunity to achieve cost savings.

To improve the transparency and accountability of HHS’s section 1115 

Medicaid demonstration approval process, and to ensure that federal 

Medicaid funds for the demonstrations do not duplicate other federal 

funds, GAO recommended in April 2015 that the Secretary of Health and 

Human Services take the following three actions:

• issue criteria for assessing whether section 1115 expenditure 

authorities are likely to promote Medicaid objectives;

• ensure the application of these criteria is documented in all HHS’s 

approvals of section 1115 demonstrations; and 

• take steps to ensure Medicaid demonstration approval documentation 

consistently provides assurances—such as through claiming 

protocols—that states will avoid duplicative spending by offsetting as 

appropriate all other federal revenues received when claiming federal 

Medicaid matching funds.

The actual cost savings associated with these actions is unknown 

because HHS has not issued specific criteria upon which GAO could 

assess whether existing expenditure authorities should have been 

Actions Needed and 

Potential Financial or 

Other Benefits
Page 199 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

approved. Also, the cost of future proposed expenditure authorities that 

might be avoided as a result of HHS issuing specific criteria is unknown. 

As a result, GAO cannot quantify potential financial benefits associated 

with the recommended actions. GAO estimates that savings could 

potentially be significant, given the billions of dollars of spending 

approved under Medicaid demonstrations, including for new costs not 

otherwise eligible for federal Medicaid funds. 

In commenting on the April 2015 report on which this analysis is based, 

HHS partially agreed with GAO’s recommendation that it issue criteria for 

assessing whether Medicaid demonstration expenditure authorities are 

likely to promote Medicaid objectives. HHS stated then and in subsequent 

correspondence submitted in July 2015 that the Centers for Medicare & 

Medicaid Services (CMS) reviews all demonstrations against four 

“general criteria” to determine whether the objectives of the Medicaid 

program will be or are being met.7 HHS has since posted these criteria on 

its Medicaid.gov website, indicating that these are the criteria used to 

determine whether Medicaid program objectives are met in 

demonstrations. While this is a positive step, GAO continues to maintain 

that more specific guidance is needed to improve transparency.

HHS agreed with GAO’s recommendations that it improve the 

documentation around the basis for new approved spending and 

consistently include in approval documentation assurances that the new 

demonstration spending for state programs will not duplicate other federal 

funding streams. HHS stated that since the release of the report, CMS 

has been identifying in approval documents which of its “general criteria” 

each approved expenditure authority promotes. While this may add some 

transparency, GAO still regards the general criteria as not sufficiently 

specific to inform stakeholders of HHS’s interpretation of its section 1115 

authority. HHS also stated that CMS has plans to require all future section 

1115 demonstration approvals to include claiming protocols for both new 

and previously authorized state programs and to verify that there is no 

duplication of federal funding. Since GAO’s report, HHS has taken action 

to improve transparency and oversight of demonstration approvals,

including requiring states to submit claiming protocols as a condition of 

HHS’s approving spending for state programs. A review of selected 

approvals found that not all protocols had been submitted as of January 

2016. GAO will continue monitoring the implementation of 

recommendations in this area.

 7

The four general criteria are whether the demonstration will (1) increase and strengthen 

overall coverage of low-income individuals in the state; (2) increase access to, stabilize, 

and strengthen providers and provider networks available to serve Medicaid and lowincome populations in the state; (3) improve health outcomes for Medicaid and other lowincome populations in the state; and (4) increase the efficiency and quality of care for 

Medicaid and other low-income populations through initiatives to transform service 

delivery networks. 

Agency Comments 

and GAO’s Evaluation
Page 200 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

GAO provided a draft of this report section to HHS for review and 

comment. The department did not provide comments on this report 

section.

The information contained in this analysis is based on findings from 

GAO’s April 2015 report noted in the related GAO products section. For 

this report, GAO examined new section 1115 demonstrations, as well as 

extensions or amendments to existing demonstrations, approved by HHS 

from June 2012 through mid-October 2013. GAO identified a total of 25 

states that received such approvals during that time. GAO examined the 

approval documents for each demonstration, including the special terms 

and conditions, which set forth HHS’s conditions and limitations for the 

demonstration; interviewed HHS officials; and obtained additional 

documents from HHS to identify the criteria used for approval and how 

the department documented that states’ demonstrations met such criteria. 

Table 16 in appendix V lists the program GAO identified that may have 

opportunities for cost savings.

Medicaid Demonstrations: More Transparency and Accountability for 

Approved Spending Are Needed. GAO-15-715T. Washington, D.C.: 

June 24, 2015.

Medicaid Demonstrations: Approval Criteria and Documentation Need to 

Show How Spending Furthers Medicaid Objectives. GAO-15-239. 

Washington, D.C.: April 13, 2015.

Medicaid Demonstrations: HHS’s Approval Process for Arkansas’s 

Medicaid Expansion Waiver Raises Cost Concerns. GAO-14-689R. 

Washington, D.C.: August 8, 2014.

Medicaid Demonstration Waivers: Approval Process Raises Cost 

Concerns and Lacks Transparency. GAO-13-384. Washington, D.C.: 

June 25, 2013.

For additional information about this area, contact Katherine Iritani at 

(202) 512-7114 or iritanik@gao.gov.

How GAO Conducted 

Its Work

Related GAO 

Products

Contact Information
Page 201 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

28. Medicaid Eligibility Determinations

The Centers for Medicare & Medicaid Services should assess the accuracy of federal Medicaid eligibility 

determinations to minimize the risk of improper payments.

States and the federal government share in the financing of Medicaid, a 

joint federal-state health care financing program for certain low-income 

and medically needy individuals. The federal government matches most 

state expenditures for Medicaid services on the basis of a statutory 

formula known as the Federal Medical Assistance Percentage (FMAP).

1

During fiscal year 2013, Medicaid covered about 72 million individuals at 

a cost of approximately $431.1 billion.

2 Of this $431.1 billion, the federal 

share was $247.7 billion (57 percent), and the state share was 

$183.4 billion (43 percent). The size and diversity of the Medicaid 

program make it particularly vulnerable to improper payments, including 

payments made for treatments or services that were not covered by 

program rules, that were not medically necessary, or that were billed for 

but never provided. Improper payments are a significant cost to Medicaid, 

totaling an estimated $29 billion in fiscal year 2015, according to the 

Department of Health and Human Services (HHS). Due to concerns 

about Medicaid’s improper payment rate and the sufficiency of federal 

and state oversight, GAO added Medicaid to its list of high-risk programs 

in 2003.3

Historically, Medicaid eligibility has been limited to certain categories of 

low-income individuals, but the Patient Protection and Affordable Care 

Act (PPACA), enacted on March 23, 2010, gave states the option to 

expand coverage to nearly all adults with incomes at or below 133 

percent of the federal poverty level, beginning January 1, 2014.4 States 

that choose to expand their programs receive an increased federal match 

 1

The FMAP is calculated using a statutory formula based on the state’s per capita income, 

with the federal government paying a larger portion of Medicaid expenditures in states 

with low per capita incomes relative to the national average and a smaller portion for

states with higher per capita incomes. 

2

The number of enrollees represents the total number of individuals ever enrolled in the 

program in 2013; there were about 58 million individuals enrolled in the program at any 

one point in time. Medicaid and CHIP Payment and Access Commission, MACStats: 

Medicaid and CHIP Program Statistics (March 2014). 

3

See GAO, Major Management Challenges and Program Risks: Department of Health and 

Human Services, GAO-03-101 (Washington, D.C.: January 2003).

4

Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and 

Education Reconciliation Act of 2010 (HCERA), Pub. L. No. 111-152, 124 Stat. 1029 

(2010). For purposes of this report section, references to PPACA include the amendments 

made by HCERA. PPACA also provides for a 5 percent disregard when calculating 

income for determining Medicaid eligibility, which effectively increases this income level to 

138 percent of the federal poverty level. See 42 U.S.C. § 1396a(a)(10)(A)(i)(VIII), 

(e)(14)(I).

Why This Area Is 

Important
Page 202 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

for expenditures incurred as a result of providing services to individuals 

whom the state had not previously covered. Some of these states may 

also receive an increased federal matching rate for their expenditures 

incurred as a result of providing care to individuals the state covered 

under a qualifying expansion of coverage prior to PPACA’s enactment. In 

addition to expanding eligibility standards, PPACA also required the 

establishment of a coordinated eligibility and enrollment process for 

Medicaid and the health insurance exchanges—whether federally 

facilitated or state-based exchanges—to streamline the eligibility 

determination process. If a state elected not to create and operate its own 

exchange, PPACA directed HHS to establish and operate a federally 

facilitated exchange in the state. As of November 2015, 34 states had 

federally facilitated exchanges, and among these, 8 had delegated 

authority to those exchanges to make Medicaid eligibility determinations. 

These eligibility, funding, and process changes could have significant 

effects on Medicaid enrollment and expenditures. Further, implementing 

these changes requires states to adapt their systems, policies, and 

procedures, resulting in a complex realignment of processes and 

necessitating careful review by the Centers for Medicare & Medicaid 

Services (CMS)—the agency within HHS that oversees Medicaid—to 

ensure that determinations of eligibility are accurate and to protect 

against improper payments.

In October 2015, GAO reported that CMS had a gap in its interim 

measures for assessing the accuracy of eligibility determinations. Under 

PPACA’s coordinated eligibility determination process, enrollees may 

apply for Medicaid coverage through multiple channels, including applying 

to the state’s Medicaid agency or through the state’s health insurance 

exchange, whether federally facilitated or state-based. CMS has 

implemented interim efforts to assess states’ Medicaid eligibility 

determinations by requiring states to conduct pilot eligibility reviews. 

However, CMS has excluded from these reviews federal Medicaid 

eligibility determinations in the states that have delegated authority to the 

federal government to make Medicaid eligibility determinations through 

the federally facilitated exchanges. According to CMS officials, the 

agency excluded federal determinations from the pilot eligibility reviews 

states must conduct because these states do not have the resources to 

fully review the federal determinations, among other reasons. 

CMS has established another mechanism—termed the eligibility support 

contractor pilot program—to assist in developing new methodologies for 

assessing eligibility determinations. According to CMS officials, this 

program was intended to inform revisions to the eligibility component of 

the Payment Error Rate Measurement (PERM) program, under which 

CMS measures and reports Medicaid improper payment rates to 

What GAO Found
Page 203 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Congress.

5 However, although the eligibility support contractor program 

assesses methodologies for reviewing eligibility determinations, the 

program generally does not assess federal determinations for accuracy. 

Consequently, GAO determined that a gap exists in efforts to ensure that 

only eligible individuals are enrolled into Medicaid.

Federal internal control standards require that federal agencies identify 

and assess risks associated with achieving agency objectives.6 One 

method for identifying the risk of inaccurate eligibility determinations could 

include consideration of findings from audits and other assessments. 

However, neither of the interim measures implemented by CMS—the pilot 

eligibility reviews or the eligibility support contractor program—will identify 

erroneous federal determinations, creating the potential risk for improper 

payments in the states that have delegated authority to the federal 

government to make eligibility determinations through the exchanges.

To improve the effectiveness of CMS’s oversight of eligibility 

determinations, GAO recommended that the Administrator of CMS take 

the following action:

• Conduct reviews of federal Medicaid eligibility determinations to 

ascertain the accuracy of these determinations and institute corrective 

action plans where necessary.

Because GAO found that CMS did not have a process in place to identify 

the number of erroneous federal eligibility determinations and their 

associated payments, the extent to which Medicaid was at risk for 

improper payments in 2014 could not be determined. As a result, GAO is 

unable to calculate the potential financial benefits associated with this 

action. However, taking this action should help CMS improve the 

effectiveness of its oversight of eligibility determinations, thus helping 

protect the Medicaid program from improper payments and resulting in 

potential cost savings to the federal government.

In commenting on the October 2015 report on which this analysis is 

based, HHS generally concurred with GAO’s recommendations and 

highlighted the actions the department has already taken to ensure the 

accuracy of Medicaid eligibility determinations made through the 

exchanges, citing the multilayer verification processes in place to assess 

applicant eligibility. HHS concurred with GAO’s recommendation to 

review the accuracy of federal Medicaid eligibility determinations and 

institute corrective action plans where necessary. HHS noted that federal 

eligibility determinations in two states are currently being reviewed by the 

 5

The eligibility component of the PERM has been suspended while CMS and the states 

implement the pilot eligibility reviews and is to be resumed in 2018. 

6

See GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-

21.3.1 (Washington, D.C.: November 1999).

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation
Page 204 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

eligibility support contractor and stated that federal determinations are to 

be included as part of the future PERM eligibility review. However, the 

eligibility component of the PERM will not be resumed until 2018, and in 

the interim, without a systematic assessment of federal eligibility 

determinations, GAO remains concerned that CMS lacks a mechanism to 

identify and correct federal eligibility determination errors and associated 

payments. 

GAO provided a draft of this report section to HHS for review and 

comment. The department did not provide comments on this report 

section.

The information contained in this analysis is based on findings from the 

products listed in the related GAO products section. To examine CMS 

efforts to ensure that states are accurately verifying eligibility and that 

expenditures for Medicaid enrollees in different eligibility groups are 

appropriately matched by federal funds, GAO examined (1) relevant laws 

and federal regulations and CMS policy documents describing the 

different eligibility groups, (2) guidance to states on eligibility and 

expenditure reviews, and (3) instructions for eligibility and expenditure 

reviews conducted by states and CMS. GAO also reviewed the results of 

CMS’s CMS-64 expenditure reviews, state eligibility reviews, and regional 

office reports for nine selected states.7 In evaluating this information, 

GAO considered GAO’s Standards for Internal Control in the Federal 

Government, which provides guidance to federal agencies on ensuring 

accountability.8 In addition, GAO interviewed CMS officials about CMS’s 

eligibility and expenditure reviews. 

Table 14 in appendix V lists the programs GAO identified that might have 

opportunities for cost savings or revenue enhancement. 

Medicaid: Additional Federal Controls Needed to Improve Accuracy of 

Eligibility Determinations and for Coordination with Exchanges. GAO-16-

157T. Washington, D.C.: October 23, 2015.

Medicaid: Additional Efforts Needed to Ensure that State Spending is 

Appropriately Matched with Federal Funds. GAO-16-53. Washington, 

D.C.: October 16, 2015.

 7

GAO selected states to review based on their expansion status; size of the program as 

indicated by recent enrollment and expenditure reports; whether the state established its 

own state-based exchange, as authorized by PPACA, or used an exchange established 

by HHS, known as a federally facilitated exchange; and geographic diversity. The states 

selected were California, Hawaii, Kentucky, Minnesota, New Mexico, New York, North 

Dakota, Ohio, and West Virginia.

8

GAO/AIMD-00-21.3.1.

How GAO Conducted 

Its Work

Related GAO 

Products
Page 205 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

For additional information about this area, contact Carolyn L. Yocom at Contact Information (202) 512-7114 or yocomc@gao.gov.
Page 206 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

29. Medicaid Payments to Institutional 

Providers

The Centers for Medicare & Medicaid Services should take steps to improve the oversight of state Medicaid 

payments to institutional providers and better ensure that the federal government does not provide funds for 

excessive state payments made to certain providers, which could result in savings of hundreds of millions of 

dollars.

Medicaid is a joint federal-state program that is one of the largest sources 

of health care coverage and financing for tens of millions of low-income 

and medically needy individuals, with federal and state spending 

estimated at over $500 billion in fiscal year 2015.1 A significant share of 

Medicaid program payments is made to institutional providers, such as 

hospitals. For example, Medicaid paid an estimated $194 billion to 

hospitals in 2015.2

 

States pay hospitals and other providers for covered services delivered to 

Medicaid beneficiaries, and the federal government shares in the cost of 

these payments. Under federal law, federal funding is available when 

payments (1) are made for covered Medicaid items and services; (2) are 

consistent with economy, efficiency, and quality of care; and (3) do not 

exceed the Medicaid upper payment limit (UPL), which is a reasonable 

estimate of what Medicare would pay for comparable services.3 States 

administer their individual Medicaid programs, within broad federal 

requirements, under individual state Medicaid plans, under which, among 

other things, the states set payment rates that different providers are to 

receive for various covered services and pay providers for claims 

submitted for services rendered. States often make separate monthly, 

quarterly, or annual supplemental lump-sum payments to institutional 

providers, not based on claims, for which states also receive federal 

matching funds. GAO has designated Medicaid a high-risk program, in 

part due to concerns about excessively large payments to certain 

providers and gaps in federal oversight. 

 1

Office of the Actuary, Centers for Medicare & Medicaid Services, United States

Department of Health and Human Services: 2014 Actuarial Report on the Financial 

Outlook for Medicaid (Washington, D.C.: 2014).

2

Office of the Actuary, Centers for Medicare & Medicaid Services, National Health 

Expenditures (NHE), Amounts by Type of Expenditure and Source of Funds: Calendar 

Years 1960-2024, accessed March 201,

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Report

s/NationalHealthExpendData/NationalHealthAccountsHistorical.html.

3

Medicare is the federal health program that covers seniors aged 65 and over, individuals 

with end-stage renal disease, and certain disabled persons.

Why This Area Is 

Important
Page 207 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

The Centers for Medicare & Medicaid Services (CMS), an agency within 

the Department of Health and Human Services (HHS), is responsible for 

overseeing state Medicaid programs at the federal level. CMS’s 

responsibilities include reviewing and approving state Medicaid plans to 

help ensure that state Medicaid payments are for Medicaid-covered 

services and beneficiaries and comply with Medicaid payment 

requirements, including, in particular, that payments to providers are 

consistent with economy and efficiency. 

In April 2015, GAO concluded that federal oversight of Medicaid 

payments is limited in part by insufficient federal information on payments 

and also by the lack of a policy and process for determining that 

payments are economical and efficient. As a result, excessive payments 

states make to individual providers may not be identified or examined by 

CMS. These findings were based on GAO’s review of CMS processes 

and policies for overseeing payments to individual providers and analysis 

of payments to individual inpatient hospitals in two states with large 

Medicaid programs. 

GAO reported that Medicaid payments for hospital inpatient services 

ranged widely in 2011—the latest time frame for which data were 

available at the time of GAO’s review—with payments in excess of costs 

for some hospitals. Federal law does not limit Medicaid payments to the 

costs of providing services;4 nevertheless, payments that greatly exceed 

costs raise questions about the appropriateness of these payments to 

individual institutional providers, as well as questions about CMS’s 

oversight of state Medicaid payments. GAO’s analysis of the 16 hospitals 

with the highest daily Medicaid payment in the two selected states 

showed that 10 of these hospitals had total Medicaid inpatient 

payments—regular plus supplemental—that exceeded those hospitals’ 

total costs of providing these services; the excess payments ranged from 

$273,000 to over $210 million in 2011.5 GAO also reported that some 

hospitals’ total Medicaid payments exceeded the hospitals’ total operating 

costs—that is, costs for all hospital services provided to all patients the 

hospital served. For example, in one state, two of these hospitals 

received payments that were $75 million and $69 million, respectively, in 

excess of the hospitals’ total operating costs for the year. These two 

 4

The UPL regulations establish a ceiling on the amount of federal matching funds a state 

can claim. The UPL, which is based on the amount that Medicare would pay for 

comparable services, is an aggregate limit that applies to groups of providers based on 

category of service and provider ownership. The UPL does not limit the amount of 

payment a particular provider can receive as long as the aggregate payment amount to 

the group does not exceed the UPL. See, e.g., 42 C.F.R. § 447.272.

5

GAO compared hospitals’ estimated Medicaid payments received to hospitals’ Medicaid 

costs and operating costs in 16 hospitals. GAO selected the three hospitals in each of the 

following ownership groups—state government, local government, and private—that had 

the highest daily payments, for a total of 9 in one state and 7 in the other state, which only 

had one state government hospital.

What GAO Found
Page 208 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

hospitals received a combined total of over $486 million in total Medicaid 

payments. According to CMS officials, CMS was unaware of the total 

amount of payments these two hospitals received and that the payments 

exceeded the hospitals’ costs. In the fall of 2014, CMS took action to 

reduce Medicaid payments to these two hospitals. Earlier GAO reports 

indicated that excessive provider payments may not be limited to a small 

number of selected states. For example, in November 2012, GAO 

reported that in 39 states, a total of 505 hospitals received total regular 

Medicaid and UPL supplemental payments that were in total about $2.7 

billion in excess of the hospitals’ Medicaid costs in 2007.

6

CMS’s oversight of Medicaid payments is limited, in part, by insufficient 

information on provider-specific payments and by the lack of a policy and 

process for determining whether these payments are economical and 

efficient. GAO’s analysis of payments at the provider level in the two 

selected states illustrates the need for provider-specific payment data. 

However, CMS does not collect information on payments to individual 

providers in its two Medicaid payment data systems, CMS-64 and the 

Medicaid Statistical Information System (MSIS). CMS-64 is an 

expenditure data system that only provides aggregate information. MSIS 

is CMS’s national eligibility and claims system and is the agency’s only 

source of provider-specific payment data reported by the states. 

However, states are not required to report UPL supplemental payments 

that are not paid on claims in MSIS. Thus, CMS cannot identify and 

assess payments at the provider level. 

GAO also reported in April 2015 that CMS does not have a policy that 

specifies criteria to use in determining when payments made to individual 

providers are economical and efficient, and it does not have a process to 

identify payments to individual providers that appear questionable. 

Instead, the agency ensures states aggregate payments for a group of 

providers are within the UPL and will follow up on payments that are 

identified as questionable by reviews conducted by oversight agencies, 

such as HHS’s Office of Inspector General. Without complete and 

accurate information on provider-specific payments, a policy specifying 

criteria to determine when payments to individual providers comply with 

statutory requirements that payments be economical and efficient, and a 

process for identifying and assessing payments at the provider level, 

CMS cannot ensure that payments to individual providers are economical 

and efficient. As a result, the federal government could be paying states 

hundreds of millions of dollars in federal matching funds for payments 

made to certain providers that are not consistent with federal 

requirements. 

 6

UPL supplemental payments are Medicaid payments that are above the regular Medicaid 

payments but within the UPL, defined as the estimated amount that Medicare would pay 

for comparable services.
Page 209 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

To improve CMS’s oversight of Medicaid and better ensure that the 

federal government does not provide federal funds for excessive state 

payments made to certain providers, GAO recommended in its April 2015 

report that the Administrator of CMS take the following three actions:

• Take steps to ensure that states report accurate provider-specific 

payment data for all payments. 

• Develop a policy establishing criteria to determine when providerspecific payments are economical and efficient.

• Once criteria are established, develop a process for identifying and 

reviewing payments to individual providers to determine if such 

payments meet the criteria.

Currently, it is not possible to estimate the potential cost savings that may 

result from ensuring that the federal government is not providing matching 

funds for Medicaid provider payments that exceed federal limits because 

CMS has neither the criteria nor a process to identify payment amounts 

that are excessive and should not be allowed. In addition, the agency 

does not have the data necessary to identify the amount of payments that 

would exceed the criteria once they are established. As a result, it is 

difficult to determine with specificity the potential cost savings. However, 

GAO reports suggest that curtailing excessive payments to individual 

providers could result in savings in the hundreds of millions of dollars. 

In commenting on a draft of the April 2015 report on which this analysis is 

based, HHS concurred with GAO’s recommendations and noted efforts to 

address them. HHS stated that it was evaluating ways to improve its 

oversight, including gathering information from states to better inform 

future policies. HHS noted that information being collected should better 

inform the agency’s efforts to establish criteria, policies, and procedures 

to evaluate whether payments at the provider level are economical and 

efficient. In March 2015, CMS officials stated that they are developing a 

proposed rule to improve the oversight of supplemental payments made 

to individual providers, and they plan to publish a proposed rule for 

comment in fall of 2016. 

GAO provided a draft of this report section to HHS. In commenting on this 

submission HHS provided technical comments, which were incorporated, 

as appropriate.

The information contained in this analysis is based on findings from the 

products in the related GAO products section. To determine the extent to 

which CMS oversees Medicaid payments to government providers, GAO 

interviewed CMS officials, including representatives from the CMS 

regional offices, and obtained and reviewed documentation of CMS 

review and approval of state Medicaid payments, relevant federal laws, 

regulations, and guidance. To analyze payment and cost information for 

selected hospitals in two states, GAO obtained and analyzed state fiscal 

year 2011 information from the states, CMS’s national claims data, and 

Medicaid cost reports that the hospitals submit to the states. 

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 210 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Table 14 in appendix V lists the program GAO identified that might have 

opportunities for cost savings or revenue enhancement. 

Medicaid: CMS Oversight of Provider Payments Is Hampered by Limited 

Data and Unclear Policy. GAO-15-322. Washington, D.C.: April 10, 2015.

Medicaid: Completed and Preliminary Work Indicate that Transparency 

around State Financing Methods and Payments to Providers Is Still 

Needed for Oversight. GAO-14-817T. Washington, D.C.: July 29, 2014.

Medicaid: More Transparency of and Accountability for Supplemental 

Payments Are Needed. GAO-13-48. Washington, D.C.: November 26, 

2012.

Medicaid: States Reported Billions More in Supplemental Payments in 

Recent Years. GAO-12-694. Washington, D.C.: July 20, 2012.

For additional information about this area, contact Katherine Iritani at 

(202) 512-7114 or iritanik@gao.gov.

Related GAO 

Products

Contact Information
Page 211 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

30. Medicare Payments by Place of Service

Medicare could save billions of dollars if Congress were to equalize the rates Medicare pays for certain health 

care services, which often vary depending on where the service is performed.

Medicare, which remains on GAO’s High Risk List, spent nearly $40 

billion on hospital outpatient department services in 2013. Medicare 

spending on such services has grown rapidly—faster than the growth in 

total Medicare Part B spending and the growth in the national economy 

from 2007 through 2013.1 Some of the growth in hospital outpatient 

department spending is attributable to the fact that services that were 

typically performed in physician offices have shifted to hospital outpatient 

departments. Some services can be performed in multiple settings, 

including physician offices and hospital outpatient departments, and 

Medicare’s total payment rates are often higher when services are 

performed in hospital outpatient departments compared to physician 

offices. For example, the total Medicare payment rate for one common 

service—a mid-level evaluation and management office visit for an 

established patient—was $51 higher when the service was performed in a 

hospital outpatient department instead of a physician office in 2013.2 One 

reason services may shift to hospital outpatient departments is an 

arrangement health care experts commonly refer to as vertical 

consolidation—when hospitals acquire physician practices or hire 

physicians directly as employees. After such consolidation occurs, the 

same services that were once reimbursed at a lower total payment rate 

can be classified as hospital outpatient department services and 

reimbursed by Medicare at a higher total payment rate.

In a December 2015 report, GAO’s analysis of American Hospital 

Association survey data showed that from 2007 through 2013, the 

number of vertically consolidated hospitals and physicians increased 

substantially. Out of the approximately 4,700 surveyed hospitals included 

in GAO’s study, 1,408 reported having a vertical consolidation 

arrangement with physicians in 2007. This number increased to 1,707 in 

2013, an increase of 21 percent. In addition, GAO found that the number 

of vertically consolidated physicians nearly doubled between 2007 and 

2013, going from approximately 96,000 in 2007 to 182,000 in 2013.

 1

Medicare Part B covers certain hospital outpatient department services, physician, and 

laboratory services, among other services.

2

Evaluation and management office visits are provided by physicians and nonphysicians 

to assess patients’ health and manage their care. In general, Medicare pays roughly 80 

percent of the payment rate for evaluation and management office visits under Medicare 

Part B, and the beneficiary is responsible for the remaining 20 percent.

Why This Area Is 

Important

What GAO Found
Page 212 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Number of Vertically Consolidated Hospitals and Physicians, 2007 through 2013

Note: GAO limited its analysis to hospitals that served Medicare beneficiaries on an inpatient basis 

based on an analysis of Medicare claims data.

GAO’s analysis of American Hospital Association survey data and 

Medicare claims data showed that the percentage of evaluation and 

management office visits—as well as the number of office visits per 

beneficiary—performed in hospital outpatient departments was generally 

higher in counties with higher levels of vertical consolidation from 2007 

through 2013. For example, after dividing counties into five equal groups 

based on their 2013 level of consolidation, GAO found that the median 

percentage of evaluation and management office visits performed in 

hospital outpatient departments in the group of counties with the lowest 

levels of vertical consolidation was 4.1 percent. In contrast, this rate was 

14.1 percent for the counties with the highest levels of consolidation. 
Page 213 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Median Percentage of Medicare Evaluation and Management Office Visits 

Performed in Hospital Outpatient Departments, by County Level of Vertical 

Consolidation, 2013

Note: Counties were sorted into quintiles based on their level of vertical consolidation in 2013. 

Specifically, the counties in the lowest quintile were considered to have low levels of vertical 

consolidation, and the next four quintiles were considered to have medium-low, medium, mediumhigh, and high levels of vertical consolidation, respectively. 

The association GAO found between higher levels of vertical 

consolidation and higher utilization of evaluation and management office 

visits in hospital outpatient departments remained after using regression 

analyses to control for other factors that could affect the setting in which 

evaluation and management office visits were performed. Specifically, 

GAO’s regression analyses found that the level of vertical consolidation in 

a county was significantly and positively associated with a higher number 

and percentage of evaluation and management office visits performed in 

hospital outpatient departments—that is, as vertical consolidation 

increased in a given county, the number and percentage of evaluation 

and management office visits performed in hospital outpatient 

departments in that county also tended to be higher.

GAO concluded that rapid growth of vertical consolidation, and with it the 

higher utilization of evaluation and management office visits in hospital 

outpatient departments from 2007 through 2013, resulted in Medicare 

paying more for these services than necessary. Such excess payments 

are inconsistent with Medicare’s role as an efficient purchaser of health 

care services. According to the Centers for Medicare & Medicaid 

Services, the agency does not have the statutory authority to equalize 

total payment rates between hospital outpatient departments and 

physician offices without legislation. Further, the agency lacks the 

authority to return the associated savings from any rate changes to the 

Medicare program. Therefore, absent legislative intervention, the 
Page 214 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Medicare program will likely continue to pay more than necessary for 

certain services. 

The Bipartisan Budget Act of 2015, enacted in November 2015, 

effectively limits certain providers from billing at the higher hospital 

outpatient department rates. Specifically, the legislation excludes services 

furnished by off-campus hospital outpatient departments from 

reimbursement under Medicare’s hospital outpatient prospective payment 

system, effective January 1, 2017.3 According to the Congressional 

Budget Office, this action could save the Medicare program $9.3 billion 

over 10 years. However, the Act does not apply to services furnished by 

providers billing as hospital outpatient departments prior to enactment of 

the legislation—which includes providers billing as hospital outpatient 

departments during GAO’s study period—as well as hospital outpatient 

departments located on hospital campuses. This means that, even in 

2017 and beyond, many providers will not be affected by the Act, and 

Medicare will continue to pay more than necessary for certain services. 

To prevent the shift of services from physician offices to hospital 

outpatient departments from increasing costs for the Medicare program 

and its beneficiaries, GAO recommended in December 2015 that 

Congress consider the following action:

• Direct the Secretary of Health and Human Services (HHS) to equalize 

payment rates between settings for evaluation and management 

office visits—and other services that the Secretary deems 

appropriate—and return the associated savings to the Medicare 

program.

Several organizations, such as the Bipartisan Policy Center and Medicare 

Payment Advisory Commission, have estimated that equalizing payment 

rates between physician offices and hospital outpatient departments for 

evaluation and management office visits would save billions of dollars, 

with some estimates predicting savings of nearly $1 billion to $2 billion a 

year. 

Other than technical comments, which were incorporated as appropriate, 

HHS did not comment on GAO’s December 2015 report on which this 

analysis is based. However, the American Hospital Association noted 

several reasons why, in their opinion, a service performed in a hospital 

outpatient departments should receive a higher Medicare reimbursement

compared to when the same service is performed in other settings. GAO 

recognizes that it might be inappropriate to equalize the total Medicare 

payment rate in all circumstances. However, Medicare aims to be a 

 3

See Bipartisan Budget Act of 2015, Pub. L. No. 114-74, § 603, 129 Stat. 584, 597-598 

(2015).

Actions Needed and 

Potential Financial or 

Other Benefits

Agency and ThirdParty Comments and 

GAO’s Evaluation
Page 215 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

prudent purchaser of health care services, and that goal is not achieved if 

Medicare’s total payment rate is substantially higher simply because 

hospitals have acquired physician practices.

GAO provided a draft of this report section to HHS for review and 

comment. The department did not provide comments on this report 

section. 

The information contained in this analysis is based on findings from the 

product in the related GAO products section. To examine trends in 

vertical consolidation between hospitals and physicians from 2007 

through 2013, GAO analyzed American Hospital Association survey data, 

in which hospitals report the types of financial arrangements they have 

with physicians and the number of physicians in those relationships. This 

analysis was limited to hospitals that served Medicare beneficiaries 

during this period, which were identified using Medicare claims data. To 

examine the extent to which higher levels of vertical consolidation were 

associated with more evaluation and management office visits being 

performed in hospital outpatient departments instead of physician offices, 

GAO first determined the (1) the level of vertical consolidation in counties 

using American Hospital Association survey data and Medicare claims 

data and (2) the setting in which evaluation and management office visits 

were performed based on Medicare claims data. GAO then analyzed how 

the utilization of evaluation and management office visits differed among 

counties with varying levels of consolidation. To ensure that the 

relationship observed in this analysis was not due to other factors, GAO 

developed regression models that controlled for county and hospital 

characteristics. 

Table 17 in appendix V lists the program GAO identified that might have 

opportunities for costs savings.

Medicare: Increasing Hospital-Physician Consolidation Highlights Need 

for Payment Reform. GAO-16-189. December 18, 2015.

For additional information about this area, contact James Cosgrove at 

(202) 512-7114 or cosgrovej@gao.gov.

How GAO Conducted 

Its Work

Related GAO Product

Contact Information
Page 216 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Income security

31. Disability Insurance and Federal 

Workers’ Compensation

The Social Security Administration should take steps to minimize overpayments from the Social Security 

Disability Insurance program to individuals who also received federal workers’ compensation, which could help 

to achieve potential cost savings associated with millions of dollars of overpayments from the Social Security 

Disability Insurance program.

Both the Social Security Disability Insurance (DI) program and 

Department of Labor’s (DOL) Federal Employees’ Compensation Act 

(FECA) program provide an important safety net for workers by providing 

wage-loss compensation for workers with disabilities. The DI program, 

which is administered by the Social Security Administration (SSA), is the 

nation’s largest cash assistance program for workers with disabilities. In 

fiscal year 2014, the DI program paid more than $142 billion in benefits to 

approximately 11 million beneficiaries.1 The FECA program, which is 

administered by DOL’s Office of Workers’ Compensation Programs, 

provides wage-loss, medical, and rehabilitation compensation to federal 

employees who suffer work-related injuries and illnesses. In fiscal year 

2012, the FECA program provided nearly 243,000 federal workers and 

survivors over $3 billion in benefits for work-related injuries, illnesses, or 

deaths.2

SSA must offset DI benefits if the sum of an individual’s monthly DI and 

FECA benefit payments exceeds a certain statutory limit.3 If SSA does 

not obtain timely and accurate information about an individual’s FECA 

benefits, overpayments can accrue. SSA officials reported that the 

agency made an estimated $371.5 million in DI overpayments stemming 

from concurrent FECA benefits from fiscal year 2009 through fiscal year 

2013, but GAO was unable to determine how much of these funds SSA 

has recovered. The estimated $371.5 million in FECA-related 

overpayments accounts for about 6 percent of the total DI overpayments 

of more than $6.1 billion that the agency recognized during that period. 

 1

Social Security Administration, Agency Financial Report, Fiscal Year 2014 (Nov. 10, 

2014). 

2

Department of Labor, Office of Workers’ Compensation Programs, Annual Report to the 

Congress, Fiscal Year 2012 (Washington, D.C.: February 2014). This fiscal year 2012 

report was the most recent available at the time of GAO’s July 2015 report. 

3

42 U.S.C. § 424a(a); 5 U.S.C. § 8116(d)(1) . The applicable limit referred to here is the 

higher of either (1) 80 percent of the individual’s average current earnings or (2) total 

family benefits. SSA calculates the average current earnings based, in part, on previous 

wages earned. For more information on average current earnings, see SSA Program 

Operations Manual System (POMS), section DI 52150.010. SSA’s calculation of total 

family benefits includes the total of all monthly benefits for the primary beneficiary and any 

auxiliaries, such as spouses and children. For more information on total family benefits, 

see SSA POMS, section DI 52150.005. 

Why This Area Is 

Important
Page 217 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Overpayments adversely affect program integrity and may also create 

economic hardship for individuals who have to repay overpayment debts 

once they have been detected. Further, overpayments in the DI program 

weaken the financial status of the DI trust fund. Based on provisions in 

the Bipartisan Budget Act of 2015, SSA projects that the DI trust fund 

reserves will be exhausted in 2022.

In a July 2015 report, GAO analyzed DI and FECA beneficiary data and 

found that SSA detected concurrent FECA payments received by some, 

but not all individuals who received these concurrent payments during at 

least 1 calendar month of the period from July 1, 2011 through June 30, 

2014, which was the time frame for GAO’s analysis.4 Federal law requires 

SSA to reduce DI benefits for some individuals receiving workers’ 

compensation payments, including FECA payments, and SSA risks 

overpaying benefits if it does not do so. GAO found the following:

• SSA successfully detected FECA payments for approximately 4,090 

individuals, or about 52 percent of the approximately 7,860 individuals 

who received concurrent FECA and DI payments during that period. 

• SSA did not detect concurrent FECA payments for approximately 

1,040 individuals, or about 13 percent of the population of individuals 

who received concurrent FECA and DI payments during that period.5

These 1,040 individuals received a total of $48 million in DI benefits 

during this period, but the electronic data GAO received did not 

contain the detailed information necessary for GAO to determine the 

exact amount of DI overpayments that SSA may have made if the 

 4

The period of July 1, 2011, through June 30, 2014, represents DOL’s chargeback years 

2012 through 2014. The term “chargeback” refers to the process by which DOL bills 

employing agencies for their compensation costs incurred during the preceding year. A 

single chargeback year is from July 1 through June 30. GAO’s analysis may understate 

the population of individuals receiving concurrent DI and FECA benefits for several 

reasons that are described in the July 2015 report on which this text is based. GAO 

identified whether SSA detected concurrent benefits using a specific variable in SSA’s 

data, in accordance with instruction from SSA officials. 

5

GAO’s analysis of the DI data GAO received also indicates that, at the time of GAO’s 

July 2015 review, SSA had not offset the DI benefits for these approximately 1,040 

individuals who received concurrent FECA payments that the agency did not detect. SSA 

officials confirmed that GAO’s analysis indicates that the agency had not offset DI benefits 

for the approximately 1,040 individuals that the agency did not know were receiving FECA 

benefits at the time of GAO’s July 2015 review. 

What GAO Found
Page 218 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

agency did not offset these overlapping benefits in accordance with 

federal law.6

• Due to limitations in the SSA data GAO received, GAO was unable to 

determine whether SSA detected concurrent FECA benefits for about 

2,730 individuals (about 35 percent) who received concurrent FECA 

and DI payments during that period. 

GAO’s nongeneralizable case studies showed that SSA’s internal controls 

did not detect and prevent potential DI overpayments to any of the 20 

beneficiaries GAO selected for additional review.7 SSA’s internal controls 

for helping to prevent DI overpayments due to the concurrent receipt of 

FECA benefits rely on beneficiaries to self-report any workers’ 

compensation benefits, including FECA benefits. SSA officials agreed 

that relying on beneficiaries to self-report benefits presents a challenge in 

identifying overpayments related to the concurrent receipt of FECA 

benefits. Further, GAO has previously concluded that agencies’ reliance 

on self-reported data poses an internal-control weakness that affects 

program integrity.8 For 7 of the 20 individuals GAO reviewed, SSA did not 

detect and prevent potential overpayments for more than a decade, 

resulting in potential overpayments totaling more than $100,000 for each 

of these 7 individuals. GAO’s analysis of the nongeneralizable case 

 6

SSA’s rules for calculating the DI offset for FECA benefits stipulate that certain benefit 

increases, such as cost of living adjustments (COLA), are to be protected from offset. To 

do this, SSA must identify the first possible month that an individual received both FECA 

and DI—that is, the first possible month of offset, regardless of whether the offset is 

actually imposed—and exclude from offset any COLAs to the DI benefit that occur in 

subsequent months (DI 52150.055). Because the DI and FECA payment data GAO used 

to perform this work are limited to July 1, 2011, through June 30, 2014, GAO was unable 

to identify any DI or any FECA payments prior to July 1, 2011. Further, the FECA payment 

data do not contain a variable that indicates the first date that FECA benefits are payable, 

meaning that GAO could not use the data to identify whether the first possible month of 

offset occurred before the time frame of GAO’s data extracts. Thus, GAO could not use 

the electronic data GAO received to identify the first possible month of offset for all 

individuals in GAO’s population, and consequently GAO could not calculate the exact 

amount of potential DI benefit overpayments that occurred during this period in 

accordance with SSA policy. 

7

As part of the work described here, GAO reviewed case files for a nongeneralizable 

sample of 20 individuals, selected based on their risk of DI overpayments. Specifically, we 

randomly selected 10 individuals who received 15 or more concurrent FECA payments 

during a single calendar year that were not detected by SSA. Individuals who received 15 

or more undetected concurrent FECA and DI payments in a single calendar year 

represent approximately the top 5 percent of individuals who received undetected 

concurrent payments for a single calendar year. We believe the number of undetected 

concurrent payments these individuals received in a single year suggests that they may 

be at a higher risk of receiving overpayments. We also randomly selected 10 individuals 

who received 14 or fewer undetected concurrent FECA payments during a single calendar 

year. We then consulted with SSA staff to determine whether SSA overpaid these 

beneficiaries due to the concurrent receipt of FECA benefits. Because we selected a small 

number of individuals for further review, these examples cannot be generalized to the 

population of individuals receiving concurrent DI and FECA payments. 

8

GAO, Federal Employees’ Compensation Act: Preliminary Observations of FraudPrevention Controls, GAO-12-402 (Washington, D.C.: Jan. 25, 2012). 
Page 219 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

studies also found that SSA made potential overpayments to 8 individuals 

who reported their workers’ compensation payments to SSA because 

agency staff did not obtain sufficient proof of the workers’ compensation 

payments, as required by SSA policy, to offset their DI benefits and 

prevent these potential overpayments.9 GAO referred these 20 cases to 

SSA for further review. However, GAO describes these as potential 

overpayments because SSA had not yet established overpayments for 

these individuals at the time of GAO’s July 2015 report. 

SSA has not compared the costs and benefits of routinely matching SSA 

and FECA data, but it might benefit from doing so. SSA officials told GAO 

that they have spent more than a decade exploring the best way to match 

DOL’s FECA data with SSA data to prevent DI overpayments, but SSA is 

not currently performing a routine match of these data. SSA previously 

stated that it would not be cost-effective to perform a routine match of 

FECA data with SSA data to help prevent DI overpayments, but SSA did 

not consider specific cost and benefit information in making this 

determination. Standards for Internal Control in the Federal Government 

state that management should design and implement internal controls 

based on the related cost and benefits.10 Additionally, the Office of 

Management and Budget (OMB) has issued guidance stating that a 

program may be justified if its benefits outweigh its costs. In this context, 

making such a determination would involve comparing the costs and 

benefits of alternatives to SSA’s current approach for reducing these 

overpayments, which relies on beneficiaries to self-report any FECA 

benefits they receive. These alternatives may include, among others, 

obtaining available FECA data to prevent overpayments. Comparing 

alternatives for reducing these overpayments would help SSA to 

determine which option presents the best opportunity to detect and 

prevent DI overpayments related to FECA benefits.

To improve SSA’s ability to detect, prevent, and recover potential DI 

benefit overpayments due to the concurrent receipt of FECA benefits, 

GAO recommended in July 2015 that the Commissioner of Social 

Security take the following four actions:

• Review the potential DI overpayments resulting from FECA benefits 

identified in GAO’s case studies, as well as any indicators of 

fraudulent activity related to FECA benefits that were not self-reported 

by DI beneficiaries, and establish debt-collection efforts and fraudrelated penalties, as appropriate.

 9

SSA POMS, section DI 52140.010, requires agency staff to document all allegations of 

workers’ compensation and public disability benefits and obtain all relevant payment rates, 

dates, lump-sum settlements, and any subsequent changes to these workers’ 

compensation or public disability payments. 

10GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

Actions Needed and 

Potential Financial or 

Other Benefits
Page 220 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

• Review the instances described in GAO’s report in which SSA staff 

did not obtain proof of FECA benefits that were reported by DI 

beneficiaries and (1) determine the reasons for these occurrences 

and whether this is a pervasive problem; and (2) if necessary, design 

appropriate controls or make other efforts, such as staff training, to 

help ensure SSA staff obtain proof of workers’ compensation 

payments, as required by SSA policy. 

• In accordance with OMB guidance, compare the costs and benefits of 

alternatives to SSA’s current approach for reducing the potential for 

overpayments that result from the concurrent receipt of FECA 

benefits, which relies on beneficiaries to self-report any FECA benefits 

they receive. These alternatives could include, among others, 

routinely matching DOL’s FECA program data with DI program data to 

detect potential DI overpayments. 

• Strengthen internal controls designed to prevent DI overpayments due 

to the concurrent receipt of FECA benefits by implementing the 

alternative that provides the greatest net benefits. 

Due to limitations in the data GAO received, GAO was not able to 

determine the exact amount of DI overpayments that SSA may have 

made if the agency did not offset DI benefits in accordance with federal 

law for the population of individuals GAO identified as receiving potential 

overpayments. As such, GAO cannot quantify the exact amount of 

savings that SSA could realize by properly offsetting DI benefits for those 

individuals. 

In commenting on the July 2015 report on which this analysis is based, 

SSA stated that although the agency believes improper payments caused 

by DI beneficiaries receiving FECA benefits represent a small portion of 

all DI overpayments, it agreed with all four recommendations GAO made. 

SSA said it would review the cases that GAO identified where SSA did 

not detect the receipt of FECA benefits. SSA also proposed reviewing a 

sample of individuals that GAO’s report identifies as being at risk of 

overpayments due to the concurrent receipt of FECA benefits, including 

some individuals receiving FECA payments that SSA had not detected at 

the time of GAO’s July 2015 report. Additionally, SSA said it will analyze 

alternatives to its current FECA benefit processes by December 31, 2015. 

SSA also stated that the agency is working with DOL on a new data 

exchange to access data on FECA payments. SSA said that once it 

conducts the analysis and case reviews, as described above, it will 

identify and decide on additional steps needed to strengthen internal 

controls on the concurrent receipt of DI and FECA benefits. Because SSA 

has not yet initiated specific actions to implement GAO’s 

recommendations, it is too early for GAO to determine whether the 

actions the agency outlined in its official comments on a draft of GAO’s 

July 2015 report would fully address the intent of the recommendations. 

However, if effectively implemented, the actions could prevent 

overlapping payments in the two programs and reduce the amount of 

Agency Comments 

and GAO’s Evaluation
Page 221 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

improper payments made to recipients. GAO plans to continue to monitor 

the agency’s efforts in this area. In an e-mail GAO received on June 16, 

2015, DOL’s Fiscal Branch Chief, Division of Federal Employees’ 

Compensation, did not provide comments on the findings but noted that 

SSA had contacted DOL to set up a meeting to discuss exchanging data, 

including FECA data.

GAO provided a draft of this report section to SSA and DOL for their 

review and comment. In response, SSA stated that the agency is 

continuing to have discussions with DOL to reach a data matching 

agreement that would allow SSA to obtain FECA data for DI beneficiaries 

who receive concurrent FECA payments. SSA also stated that the agency 

is reviewing its internal controls related to concurrent FECA payments. 

Finally, the agency stated that it expects to complete its reviews of the 

cases GAO referred to the agency and establish debt-collection efforts 

and any fraud related penalties as appropriate by June 30, 2016. 

Because SSA has not completed its work in this area, it is too early to 

determine whether these actions will address the problems GAO 

identified. GAO will continue to monitor SSA’s work in this area. DOL had 

no comments on this section of the report.

The information contained in this analysis is based on findings from the 

July 2015 report listed in the related GAO products section. For that work, 

GAO compared DI beneficiary data to FECA beneficiary data to identify 

individuals who received concurrent DI and FECA benefits in at least 1 

month from July 1, 2011, through June 30, 2014—the most current data 

available at the time GAO began its work. GAO reviewed agency 

documentation and interviewed officials to identify relevant internal 

controls. GAO also reviewed case files for a nongeneralizable sample of 

20 individuals, selected based on their risk of DI overpayments. GAO also 

reviewed information on DI overpayments and recovery efforts. 

Table 18 in appendix V lists the programs GAO identified that might have 

opportunities for cost savings or revenue enhancement. 

GAO, Disability Insurance: Actions Needed to Help Prevent Potential 

Overpayments to Individuals Receiving Concurrent Federal Workers’ 

Compensation. GAO-15-531.Washington, D.C.: July 8, 2015.

GAO, Federal Employees’ Compensation Act: Preliminary Observations 

of Fraud-Prevention Controls. GAO-12-402.Washington, D.C.: January

25, 2012. 

GAO, Workers’ Compensation: Action Needed to Reduce Payment Errors 

in SSA Disability and Other Programs. GAO-01-367.Washington, D.C.: 

May 4, 2001.

For additional information about this area, contact Seto J. Bagdoyan at 

(202) 512-6722 or bagdoyans@gao.gov.

How GAO Conducted 

Its Work

Related GAO 

Products

Contact Information
Page 222 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

32. Disability Insurance Overpayments

To help prevent the loss of billions of dollars, the Social Security Administration should take steps to prevent 

overpayments to beneficiaries of the Disability Insurance program and improper waivers of beneficiaries’ 

overpayment debt.

The Social Security Administration’s (SSA) Disability Insurance (DI) 

program is one of the nation’s largest cash assistance programs for 

workers with disabilities. In fiscal year 2014, about 11 million individuals 

with disabilities and their dependents received approximately $143 billion 

in DI benefits. During the same year, SSA reported detecting $1.3 billion 

in new DI benefit overpayments, which occur when SSA pays benefits in 

excess of what is due or continues to pay those who are no longer 

eligible.1

 Overpayments often result when a beneficiary returns to work 

and starts earning income above a certain level, but the earnings activity 

is not properly reported to or processed by SSA. Overpayments can pose 

a financial hardship for beneficiaries responsible for repaying the debt. 

They may also result in the loss of taxpayer dollars when beneficiaries do 

not repay their overpayments or when SSA grants a waiver of the 

overpayment. Further, overpayments can contribute to the weakened 

financial status of the DI trust fund.2

In October 2015, GAO found that over the last 10 years, more than half of 

DI overpayment debt resulted from SSA paying benefits to individuals 

whose earnings exceeded program limits (referred to hereafter as “workrelated” overpayments). According to data provided by SSA, the agency 

overpaid DI beneficiaries a total of about $20 billion during fiscal years 

2005 through 2014, of which $11.5 billion was work related.3 These data 

also showed that, on average, 28 percent of all overpaid beneficiaries 

received excess benefits because their work activity exceeded program 

 1

SSA provided GAO summary data on new DI beneficiary debt detected each fiscal year 

for fiscal years 2005 through 2014. SSA cites the source of these data as the agency’s 

fourth quarter report for the Treasury Report on Receivables (TROR) for each fiscal year. 

2

According to SSA, the DI trust fund reserves will be exhausted in 2022.

3

SSA provided data on all DI overpayments that were work related for each year in the 10-

year period. SSA cites the source of these data as the agency’s Recovery of 

Overpayments, Accounting and Reporting (ROAR) system, which reflects the current 

amount of beneficiary overpayments and the date established. This differs from the TROR 

that SSA used to provide data on new DI beneficiary debt, which indicated a total of $14 

billion in new SSA legally defined overpayments to beneficiaries. Specifically, SSA officials 

explained that TROR does not include what SSA characterizes as nonlegally-defined 

overpayments, such as benefits issued for the month of death.

Why This Area Is 

Important

What GAO Found
Page 223 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

limits.4 The average work-related overpayment per beneficiary was 

almost $12,000 during this period, compared to about $3,300 for other 

types of overpayments.

SSA’s process for handling work reports by beneficiaries has internal 

control and other weaknesses that increase the risk of overpayments, 

even when DI beneficiaries follow program rules and report work and

earnings. These weaknesses include the following: 5

• Processing weaknesses. GAO found that, due to unclear guidance 

and other process vulnerabilities, SSA staff may bypass established 

procedures and not (1) initiate tracking of work activity in eWork, 

which would help prevent overpayments and (2) issue a receipt to the 

beneficiary—as required by law—that proves the beneficiary’s work 

was reported. 6 For example, GAO found that SSA’s 800-number 

teleservice staff may send work reports to the field office for manual 

entry and processing, rather than directly entering the information into 

eWork. Work reports handled this way can be more easily missed or 

overlooked and are at risk of being deleted or marked as completed 

without action being taken. In addition, insufficient automation coupled 

with weak procedures for monitoring alerts may result in work 

information submitted by concurrent beneficiaries—i.e., those 

receiving both Supplemental Security Income (SSI) and DI benefits—

being tracked for one but not both programs.7 Data are not available 

to determine the full extent to which such vulnerabilities result in 

overpayments.

• Limited oversight. While SSA tracks timeliness of staff action on 

work reports, it lacks procedures for how staff should screen such 

reports and oversight procedures to help ensure that the actions taken 

were appropriate. 

 4

Tracking beneficiaries over a 10-year period, a recent SSA Office of the Inspector 

General (OIG) study found that within a national sample of 985 DI beneficiaries it 

reviewed, 26 percent (259) of DI beneficiaries were assessed overpayments and of these, 

about 12 percent (32) was due to work activity or changes in income. For this longitudinal 

study, see Social Security Administration, Office of the Inspector General, Overpayments

in the Social Security Administration’s Disability Programs—A 10-Year Study A-01-14-

24114 (June 4, 2015) at 

http://oig.ssa.gov/sites/default/files/audit/full/pdf/A-01-14-24114.pdf.

5

GAO reviewed relevant federal laws, regulations, and guidance. In addition, GAO 

identified agency policies and procedures for processing work reports and making 

overpayment waiver decisions, and assessed these against the Standards for Internal 

Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 

1999).

6

In 2004, SSA implemented the eWork system, which is the primary system for capturing 

beneficiary work-related information and processing work continuing disability review 

cases in headquarters and field locations.

7

SSA’s SSI program is a means-tested disability benefits program.
Page 224 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

• No automated reporting options. The DI program lacks automated 

tools to report work, such as an automated telephone system and a 

smartphone application.8 Although SSA officials said there is an 

internal proposal to automate DI work reports, they did not provide 

details on how or when this would occur. Without automation, SSA 

must rely on its current approach of manually entering into its systems 

work reports provided by beneficiaries in person or by phone, mail, or 

fax, which is vulnerable to error. Automated reporting options similar 

to those currently used in the SSI program could help minimize the 

potential effect of vulnerabilities. 

• Inadequate beneficiary guidance. GAO found that beneficiaries 

may receive inadequate and inconsistent guidance on when to report 

their work due to (1) unclear work reporting requirements and 

complex rules that SSA staff may not fully understand and (2) 

infrequent reminders and limited information sent to beneficiaries 

about potential liability for overpayments.9 SSA provides some 

additional written materials to beneficiaries to inform them about their 

benefits, but this information is only distributed upon request and does 

not clarify requirements for reporting work.

GAO also found that over the last 10 years, $2.4 billion in overpayment 

debt was permanently waived by SSA, and more than half (60 percent) of 

those waivers were for work-related overpayments.10 The average

number of waivers based on work activity annually was about 16,200, or 

36 percent of the total. Moreover, a higher percentage of work-related 

overpayments was waived compared to the percentage of nonworkrelated overpayments (17 percent versus 12 percent). The average 

annual work-related waiver amount was about $8,800 during the 10-year 

period compared to about $3,400 for nonwork-related waivers.

SSA’s processes for handling requests to waive overpayments lack 

sufficient controls to help ensure appropriate decisions are made, 

especially those involving low dollar amounts. Two recent reviews—

conducted by SSA and SSA’s Office of Inspector General (OIG)—found 

high error rates in documenting DI and other waivers. For example, 

 8

By contrast, SSA’s SSI program has both of these automated reporting options.

9

SSA informs DI beneficiaries of reporting requirements when their benefit application is 

initially approved, and it reminds them of reporting responsibilities in annual cost-of-living 

adjustment letters. In contrast, for the SSI program, SSA implemented a web-based 

service in 2014 that uses e-mails and text messages to remind recipients to report wages. 

Although DI beneficiaries are not prevented from using this service, SSA does not 

systematically inform DI beneficiaries of this service.

10A beneficiary may request a waiver of an overpayment that is not in dispute, and SSA 

may grant that waiver request if two conditions are met: (1) the agency finds the 

beneficiary was not at fault, and (2) recovery or adjustment would either defeat the 

purpose of the program or be against equity and good conscience, as determined by SSA. 

20 C.F.R. § 404.506. However, for overpayment amounts under $1,000, administrative 

waivers may be granted on the sole basis that the beneficiary was not at fault. 
Page 225 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

although SSA’s Debt Management System11 is supposed to prevent staff 

from administratively waiving overpayments over $1,000, a 2015 SSA 

quality review report noted that the system currently inappropriately 

allows SSA staff to do so.12 A 2015 SSA OIG study found significant 

variation in DI and other waiver documentation and approval rates among 

field offices. The study also noted that some field offices with high waiver 

approval rates also had a high incidence of waivers under $1,000, which 

require less documentation. In response to the reviews, SSA has already 

taken some steps to improve waiver policy and training. Nevertheless, 

SSA’s quality reviews conducted at the discretion of local offices do not 

target the appropriateness of DI waiver decisions—especially those under 

$2,000, which do not require supervisory review and comprise almost a 

third of all waiver decisions—for the purpose of performance monitoring 

and improvement. Further, for waivers under $1,000, SSA’s practice is to 

document the waiver decision as a remark in the beneficiary’s Debt 

Management System record, then delete such remarks after 6 months. 

Without additional oversight, such as targeted reviews of DI waivers, staff 

may systematically waive overpayments incorrectly, particularly for 

waivers involving low dollar amounts.

To improve SSA’s handling of overpayments, work reports, and waivers, 

in October 2015 GAO recommended that SSA’s Commissioner take the 

following six actions:

• To minimize the potential effect of vulnerabilities in the work reporting 

process, SSA should take steps to help ensure that work information 

is entered directly into eWork, the system of record for work 

information, and issue required receipts. Such steps could include: 

improving and issuing guidance and training to field and 800-number 

staff to help ensure they log information into eWork and issue required 

receipts, and establishing policies to monitor alerts to help ensure that 

work information for concurrent beneficiaries is reflected in SSI and DI 

systems, and take steps to monitor and make enhancements to 

systems or guidance, as needed.

• To further ensure the effective screening of work reports, SSA should 

monitor its process for handling work reports to determine whether 

staff are taking action on work reports in accordance with proper 

procedures, and provide feedback to staff as needed.

 11The Debt Management System is SSA’s financial management system. It consolidates

the agency’s program debt activities, including overpayments and actions against the 

debts, amounts collected and written off (e.g., waivers), and methods of collection and 

debtor requests for due process. 

12Social Security Administration, Continuous Quality Area Director Review: Data Analysis 

Report Findings and Recommendations (Baltimore, MD: January 2015). In this report, 

2,849 Title II initial waiver decisions and 1,152 personal conference waiver decisions were 

reviewed.

Actions Needed and 

Potential Financial or 

Other Benefits
Page 226 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

• To enhance the ease and integrity of the work reporting process, SSA 

should study the costs and benefits of automated reporting options, 

including options similar to those currently available for SSI recipients 

but that do not go as far as automating the continuing disability review 

process.

• To enhance beneficiary understanding of work reporting 

requirements, SSA should: clarify work reporting requirements 

provided to beneficiaries, and explore options for increasing the 

frequency of reporting reminders to DI beneficiaries, similar to those 

currently available to SSI recipients. 

• To improve compliance with waiver policies, SSA should develop a 

timetable for implementing updates to its Debt Management System 

to: align system controls with SSA policy so that waivers over $1,000 

cannot be administratively waived, and ensure that evidence 

supporting waiver decisions is sufficiently maintained to allow for 

subsequent monitoring and oversight. 

• To improve compliance with waiver policies, SSA should take steps to 

regularly assess the accuracy of DI waiver decisions, particularly for 

administrative waivers and for some waivers under $2,000. This could 

include periodically reviewing approved and denied DI waivers 

through its continuous quality initiative.

Due to limitations in the data and information GAO received, GAO was 

not able to determine the exact amount of DI overpayments that SSA may 

have made when the agency did not take prompt action to adjust DI 

benefits for individuals who work, or the amount of DI overpayments that 

may have been waived in error. As such, GAO cannot quantify the 

amount of savings that SSA could realize by promptly adjusting DI 

benefits for individuals who work, improving beneficiary work reporting, or 

ensuring that overpayments are not improperly waived.

In its comments on GAO’s October 2015 report on which this analysis is 

based, SSA agreed with all of GAO’s recommendations except the 

recommendation that SSA assess the quality and accuracy of work 

reports and provide feedback to staff as needed. In its response, SSA 

stated that work information provided by beneficiaries is not verified when 

provided in a work report, but instead during the process of conducting a 

work continuing disability review (CDR). In the report, GAO 

acknowledged the role of the work CDR process, but also noted that if a 

work report were improperly closed when a work CDR should have been 

conducted, an overpayment could result. GAO also noted that SSA staff 

do not receive feedback on their handling of work reports and that SSA 

lacks procedures for reviewing work reports that are closed without a 

work CDR. GAO clarified the recommendation to reflect these issues. 

Agency Comments 

and GAO’s Evaluation
Page 227 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

The Bipartisan Budget Act of 2015 included two provisions related to 

GAO’s October 2015 recommendations.13 Specifically, sections 824 and 

826 of the Act address the recommendation on automated reporting 

options. Under section 824 of the Act, SSA is allowed to obtain wage data 

for DI recipients, among others, from payroll providers. Individuals who 

provide authorization to SSA to obtain these data are exempt from any 

penalty for omissions or errors with respect to their payroll data as 

reported by their payroll provider. In addition, under section 826 of the 

Act, SSA must establish and implement a system by September 30, 

2017, to allow DI beneficiaries to report wages by telephone and Internet, 

similar to options available under SSI. 

GAO provided a draft of this report section to SSA for review and 

comment. In its response, SSA stated it is taking a number of steps to 

reduce overpayments, including expanding its use of quarterly earnings 

data from the Office of Child Support Enforcement to improve its disability 

enforcement operation. According to SSA, these data will reduce 

overpayments by allowing it to identify and make work continuing 

disability review determinations sooner. The agency also stated that the 

Bipartisan Budget Act of 2015 will aid its efforts to reduce improper 

payments. Specifically, SSA stated that the Act provides another source 

of more timely earnings data by allowing the agency to contract with thirdparty payroll providers, and allows SSA to use evidence of earnings when 

paid to determine when work was performed. 

SSA, also stated that it is taking steps to address GAO’s finding that staff 

may bypass established procedures and not (1) initiate tracking of work 

activity in eWork, which would help prevent overpayments, and (2) issue 

a receipt to the beneficiary—as required by law—that proves the 

beneficiary’s work was reported. Specifically, SSA issued an Operational 

Bulletin with a reminder on the processing of Title II Disability Work 

Reports via eWork on December 14, 2015. SSA also reported that it is 

evaluating the possibility of conducting refresher training to provide 

guidance to agents on handling DI work reports via eWork. Finally, SSA 

stated that it will work to incorporate clear reporting language that 

explains work reporting requirements into the online and telephone wage 

applications that it is required to develop under Section 826 of the 

Bipartisan Budget Act.

The information contained in this analysis is based on findings from the 

products listed in the related GAO products section. GAO analyzed 10 

years of SSA data on overpayments and waivers; reviewed relevant laws, 

regulations, guidance, and studies; interviewed staff at SSA headquarters 

and several field offices and teleservice centers in three SSA regions, 

 13Pub. L. No. 114-74, 129 Stat 584, (Nov. 2, 2015).

How GAO Conducted 

Its Work
Page 228 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

selected to represent a range of relevant DI workloads; and reviewed 10 

nongeneralizable DI cases involving waived overpayments.

Table 19 in appendix V lists the program that GAO identified that might 

have opportunities for cost savings.

Disability Insurance: SSA Could Do More to Prevent Overpayments or 

Incorrect Waivers to Beneficiaries. GAO-16-34. Washington, D.C.: 

October 29, 2015.

Disability Insurance: Preliminary Observations on Overpayments and 

Beneficiary Work Reporting. GAO-15-673T. Washington, D.C.: June 16, 

2015.

For additional information about this area, contact Daniel Bertoni at (202) 

512-7215 or bertonid@gao.gov.

Related GAO 

Products

Contact Information
Page 229 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

33. Disability Reviews

The Social Security Administration may increase federal savings realized as a result of disability reviews by 

further considering factors that affect individuals’ expected lifetime benefits when prioritizing its reviews of 

Disability Insurance and Supplemental Security Income cases.

The Social Security Administration (SSA) administers two disability 

programs that provide monthly cash benefits to eligible individuals: 

Disability Insurance (DI) and Supplemental Security Income (SSI). DI 

provides benefits to individuals (and their dependents) who have paid into 

the Disability Insurance Trust Fund.1 SSI provides assistance to lowincome individuals. To be eligible for DI or SSI benefits based on a 

disability, an individual must have a severe long-term disability. In 

December 2015, SSA made payments to 8.1 million individuals receiving 

only DI benefits, 4.6 million individuals receiving only SSI benefits, and 

1.5 million individuals receiving both DI and SSI benefits.

To help ensure that only eligible individuals continue to receive benefits, 

SSA is generally required to conduct periodic continuing disability reviews 

(CDR).2 These reviews assess individuals’ continued eligibility for benefits 

based on several criteria, including whether they demonstrate medical 

improvement. For cases with a low likelihood of medical improvement, 

SSA sends individuals a low-cost questionnaire, called a mailer. Other 

cases receive more in-depth full medical reviews. When an individual’s 

benefits are ceased as the result of a CDR, the forgone benefits 

represent savings to the federal government. In fiscal year 2013, the most 

recent year for which data are available, SSA conducted more than 1.5 

million CDRs, including over 400,000 full medical reviews, which saved 

the federal government an estimated $7.1 billion in forgone lifetime 

program benefits. When CDRs are not conducted as scheduled, some 

recipients may receive benefits for which they are no longer eligible, 

potentially costing taxpayers billions of dollars. As GAO reported in 

February 2016, SSA has had difficulty completing timely reviews since 

2003 and, as a result, amassed a backlog of more than 900,000 pending 

CDRs by the end of fiscal year 2014. SSA officials cited resource 

limitations and competing priorities as driving factors for the CDR 

backlog.

In a June 2012 report—which was featured in GAO’s 2015 annual report 

on fragmentation, overlap, and duplication—GAO identified conducting 

additional reviews of children receiving SSI benefits as a potential source 

 1

The Disability Insurance Trust Fund is generally funded by revenues from payroll taxes, 

interest on the trust fund, and income tax on benefits. 

2

For DI, the legal requirements to conduct CDRs can be found at 42 U.S.C. § 421(i). For 

SSI, the legal authority and requirements to conduct CDRs can be found at 42 U.S.C. § 

1382c(a)(3)(H).

Why This Area Is 

Important
Page 230 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

of cost savings, estimating that SSA could save the federal government 

$3.1 billion over 5 years by becoming and remaining current on reviews of 

SSI children with mental impairments who are likely to improve.3 By 

contrast, this report section, which is based on a report GAO issued in 

February 2016, more broadly considers reviews of individuals receiving 

benefits in either of SSA’s disability programs and focuses on how cases 

are prioritized for review. 

In February 2016, GAO found that because SSA does not complete all 

CDRs as scheduled, it uses a range of inputs to prioritize the order in 

which it conducts CDRs. SSA selects cases to receive a CDR first using a 

set of priorities based on legal requirements and agency policies and then 

statistical models that score each case for the likelihood of medical 

improvement. Certain types of beneficiaries are designated as high 

priority using a range of considerations. For example, reviews of SSI 

children at age 18 and reviews of SSI children up to 1 year old who are 

receiving benefits due in part to low birth weight are legally required, and 

therefore these reviews are prioritized above all other groups of CDRs. 

Cases not included in a high-priority group are prioritized first by benefit 

program (DI, SSI Other Children, and SSI Adults) and then within benefit 

program by statistical scores developed by SSA to identify cases with the 

highest likelihood of medical improvement.4 CDRs for the lower-priority 

groups are initiated as resources permit. Any cases that do not receive a 

mailer or full medical review are backlogged for future review. 

GAO reported that although SSA considers cost savings to some degree 

when prioritizing CDR cases, it does not do so in a manner that 

maximizes potential savings. GAO found that the order in which SSA 

prioritizes beneficiary groups for CDRs does not fully align with the 

average savings per full medical review for those groups. Specifically, 

although the SSI Other Children group has higher average savings in 

forgone disability benefits than DI beneficiaries, SSI Other Children are 

prioritized after DI beneficiaries for CDRs. According to SSA, DI cases 

have been given priority over SSI Other Children partly to protect the 

Disability Insurance Trust Fund, which is the source of benefit payments 

to most DI recipients. However, recent action to address the solvency of 

the Disability Insurance Trust Fund somewhat mitigates this rationale.5 In 

 3

See GAO, 2015 Annual Report: Additional Opportunities to Reduce Fragmentation, 

Overlap, and Duplication and Achieve Other Financial Benefits, GAO-15-404SP

(Washington, D.C.: Apr. 14, 2015), as well as the June 2012 report in the related products 

section.

4

SSI Other Children refers to children receiving SSI benefits who are not currently eligible 

for reviews at age 18 or for low birth weight. SSI Adults refers to adults receiving SSI 

benefits because of disability. 

5

According to the Congressional Budget Office, the Bipartisan Budget Act of 2015 is 

expected to delay the exhaustion of the Disability Insurance Trust Fund until fiscal year 

2021. Previously, the fund was projected to be able to pay DI benefits in full on a timely 

basis until the fourth quarter of 2016. 

What GAO Found
Page 231 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

addition, GAO found that SSA does not fully capture differences in 

average savings among beneficiary subgroups in its prioritization 

process. For example, the average lifetime savings per full medical 

review among four DI subgroups (i.e., workers receiving only DI, survivors 

receiving only DI, workers receiving DI and SSI, and survivors receiving 

DI and SSI) differed by as much as approximately $3,000 in fiscal years 

2012 and 2013, but SSA does not distinguish between these subgroups 

when selecting cases for review.6

Furthermore, GAO reported that SSA does not take into account 

differences in savings across individual cases when selecting cases for 

review. The amount of potential savings associated with an individual 

case depends on various factors that affect how much SSA would have 

paid if the individual continued to receive disability benefits over time, 

including the individual’s age, life expectancy, and monthly benefit 

payment. For example, two individuals who are different ages but are 

otherwise similar (e.g., live in the same state, have the same benefit 

amount, and have the same likelihood of medical improvement as 

determined by SSA’s statistical models) would generate different 

expected savings from a CDR because the younger individual would 

likely receive benefits for a longer period of time. Similarly, two individuals 

who have different benefit amounts but are otherwise similar would 

generate different expected savings from a CDR because the individual 

with higher monthly benefits would likely receive greater total benefits 

over time. Prioritizing the CDR for the younger individual or the individual 

with a higher benefit amount could result in greater savings for SSA. 

However, SSA lacks a mechanism for factoring expected savings from 

benefit cessation into its CDR prioritization process on a case-specific 

basis, despite the fact that federal internal control standards instruct 

federal agencies to ensure effective stewardship of public resources.7

To promote more efficient use of SSA’s resources, GAO recommended in 

February 2016 that the Acting Commissioner of Social Security direct the 

Deputy Commissioner of Operations to take the following action:

• Further consider cost savings as part of SSA’s prioritization of full 

medical reviews. Options could include considering the feasibility of 

prioritizing different types of beneficiaries on the basis of their 

estimated average savings and, as appropriate, integrating casespecific indicators of potential cost savings, such as beneficiary age 

and benefit amount, into its modeling or prioritization process for 

lower-priority cases.

 6

In DI, workers are those beneficiaries who paid into the Disability Insurance Trust Fund 

through payroll taxes. Survivors are workers’ dependents and surviving family members 

who are eligible to receive DI benefits. 

7

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

Action Needed and 

Potential Financial or 

Other Benefits
Page 232 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

If SSA further incorporates cost savings into its process for selecting 

which CDRs to conduct, the agency could realize greater savings for the 

federal government by targeting cases with the highest potential savings 

among those with the highest likelihood of benefit cessation. GAO was 

unable to quantify the potential financial benefits of incorporating casespecific indicators of potential cost savings because it lacked information 

to inform the range of actuarial assumptions necessary to make such a 

calculation. 

In commenting on the February 2016 report on which this analysis is 

based, SSA partially agreed with GAO’s recommendation to further 

consider cost savings when prioritizing full medical reviews. SSA stated 

that although it could do more to increase the return on its CDRs, the 

agency’s statistical models and prioritization already do much of what was 

recommended. GAO noted that the models predict medical improvement 

and are not designed to take expected cost savings into account. 

Therefore, GAO maintains that to maximize expected cost savings, SSA 

could refine its prioritization process by factoring in actuarial 

considerations apart from its existing statistical models.

GAO provided a draft of this report section to SSA for its review. SSA did 

not provide comments on this issue.

The information contained in this analysis is based on findings from the 

reports in the related GAO products section. GAO reviewed legal 

requirements for conducting certain types of CDRs and analyzed data on 

the number and type of CDRs conducted for fiscal years 2003 through 

2013 (the most recent year for which complete data were available). GAO 

reviewed documentation about how SSA prioritizes which CDRs to 

conduct each year and about the statistical models that SSA uses to help 

prioritize CDRs, and interviewed SSA officials about these practices.

Table 20 in appendix V lists the programs GAO identified that might have 

opportunities for cost savings or revenue enhancement. 

Social Security Disability: SSA Could Increase Savings by Refining Its 

Selection of Cases for Disability Review. GAO-16-250. Washington, D.C.:

February 11, 2016.

Supplemental Security Income: Better Management Oversight Needed for 

Children’s Benefits. GAO-12-497. Washington, D.C.: June 26, 2012.

For additional information about this area, contact Daniel Bertoni at (202) 

512-7215 or bertonid@gao.gov.

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work

Related GAO 

Products

Contact Information
Page 233 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

34. VA’s Individual Unemployability Benefit

To potentially achieve cost savings, the Department of Veterans Affairs should develop a plan to study whether 

age should be considered when deciding if veterans are unemployable due to service-connected disabilities. 

By comparison, other benefit programs, such as Social Security Disability Insurance, consider retirement age a 

cause for ineligibility and convert benefits for those reaching their retirement age to a Social Security retirement 

benefit. If the department were to determine that Total Disability Individual Unemployability benefits should be 

provided only to veterans younger than their full Social Security retirement age, it could achieve an estimated 

$15 billion in savings from 2015 through 2023, according to the Congressional Budget Office.

The Department of Veterans Affairs (VA) provides monthly disability 

compensation, based on a disability rating ranging from 0 to 100 percent, 

to veterans with disabling conditions caused or aggravated by their 

military service. In recognition of its position that there are cases where 

this benefit does not adequately compensate individual veterans in their 

particular circumstances, VA provides supplemental compensation for 

veterans with a demonstrated need. Specifically, Total Disability Individual 

Unemployability (TDIU) benefits are generally provided to disabled 

veterans, irrespective of age, who are unable to maintain “substantially 

gainful employment”—that is, employment with earnings above the 

federal poverty guidelines—due to service-connected disabilities.1 The 

TDIU supplement increases an eligible veteran’s disability rating to 100 

percent. 

In fiscal year 2013, over 330,000 of the approximately 3.7 million veterans 

VA compensated for disabilities incurred during active military service 

received TDIU benefits. From fiscal years 2009 through 2013, the number 

of TDIU beneficiaries increased by 22 percent and payments to those 

receiving TDIU benefits (i.e., the base disability payment plus the TDIU 

supplement) increased by 30 percent. TDIU payments reached $11 billion 

in fiscal year 2013. The population of veterans who receive these 

supplemental benefits has been growing, which has led to questions 

about TDIU benefits, including whether this supplement to the regular 

disability compensation benefit should be provided to veterans past 

retirement age. Because of the challenges agencies face in keeping their 

criteria for evaluating disability and determining compensation consistent 

with advances in medicine, technology, and changes in the labor market 

and society, GAO has designated federal disability programs a 

government-wide high-risk area.2

 1

Veterans who are eligible for TDIU do not actually receive separate TDIU payments. 

Instead, TDIU serves as a method by which veterans can have their disability rating raised 

to 100 percent and receive larger disability payments. 

2

See GAO, High-Risk Series: An Update, GAO-15-290 (Washington, D.C.: Feb. 11, 2015). 

Why This Area Is 

Important
Page 234 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

In a June 2015 report, GAO found that in fiscal year 2013, older 

beneficiaries (aged 65 and older) represented the majority (54 percent) of 

the TDIU population—a 73 percent increase from fiscal year 2009. 

Further, nearly 57,000 were 75 years of age and older, while 10,567 were 

90 years of age and older. The increase in the share of beneficiaries over 

age 65 was mostly attributed to new beneficiaries who received the 

benefit for the first time, as shown in the figure below. From fiscal years 

2009 through 2013, the number of older beneficiaries receiving the 

benefit for the first time more than doubled to 13,259. Of these new older 

beneficiaries, 2,801 were aged 75 and over, while 408 were 90 and over.

Sources of the Increase in the Older Total Disability Individual Unemployability 

(TDIU) Beneficiary Population, Fiscal Years 2009-2013 

Veterans of all ages are eligible for TDIU benefits so long as they meet 

the eligibility criteria and have a single service-connected disability rated 

at least 60 percent or multiple disabilities with a combined rating of at 

least 70 percent (with at least one disability rated at 40 percent or higher). 

In addition, the veteran must be unable to obtain or maintain 

“substantially gainful employment,” which VA refers to as unemployability, 

as a result of these service-connected disabilities. Unlike other benefit 

programs, such as Social Security Disability Insurance (SSDI), VA does 

not consider reaching retirement age to be a cause for ineligibility and has 

established that age is not to be a factor in evaluating entitlement to 

TDIU. In SSDI, once program beneficiaries reach their full retirement 

age,3 the amount of their benefit payment remains the same although 

their benefit converts to a Social Security retirement benefit. 

A number of options have been proposed by disability compensation 

committees and research organizations to revise the TDIU eligibility 

requirements and benefit structure, including setting age limits for those 

eligible for the benefit. The Congressional Budget Office (CBO), as part of 

 3

Full retirement age, which ranges from ages 65 to 67 depending on an individual’s year 

of birth, is the age at which Social Security pays unreduced retirement benefits.

What GAO Found
Page 235 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

a broader examination to reduce the federal deficit in 2013, proposed that 

VA no longer make TDIU payments to veterans who are past their full 

Social Security retirement age, and that such veterans’ disability 

payments revert to the amount associated with the veteran’s rated 

disability level. CBO also noted most TDIU beneficiaries began collecting 

TDIU benefits later in life and had therefore likely worked enough to earn 

Social Security benefits which they would receive during retirement in 

addition to their VA disability-level payment. CBO concluded that because 

most veterans who are older than retirement age would not be in the 

labor force because of their age, a lack of earnings for those veterans 

would probably not be attributable to service-connected disabilities. CBO 

estimated that providing TDIU benefits only to those veterans younger 

than their full Social Security retirement age would reduce costs by $15 

billion from 2015 through 2023.4 In addition, in its 2012 report, the 

Advisory Committee on Disability Compensation made recommendations 

to VA on potential revisions to the TDIU benefit.5 The committee 

recommended that the agency study whether age should be considered 

when deciding if a veteran is unemployable. In its comments to the 

committee, VA concurred with the recommendation to study whether age 

should be considered. However, at the time of GAO’s June 2015 report, 

VA did not have a plan for conducting such a study. As a result, VA may 

be missing an opportunity to achieve significant cost savings.

In light of VA’s agreement with the recommendations of the Advisory 

Committee on Disability Compensation, GAO recommended in June 2015 

that the Secretary of Veterans Affairs direct the Under Secretary for 

Benefits to take the following action: 

• Develop a plan to study whether age should be considered when 

deciding if veterans are unemployable. 

A change to the TDIU benefit eligibility standards could result in cost 

savings. Specifically, if VA determined that Individual Unemployability 

benefits should be restricted to veterans younger than their full Social 

Security retirement age, the agency could save an estimated $15 billion 

from 2015 through 2023, according to the Congressional Budget Office.

 4

Congressional Budget Office, Options for Reducing the Deficit: 2014 to 2023

(Washington, D.C.: November 2013), 48. 

5

The Advisory Committee is composed of experts with experience in the provision of VA 

disability compensation or who are leading medical or scientific experts in relevant fields.

The committee is required to issue reports no less than every 2 years and include 

recommendations deemed to be appropriate. In addition, the committee, when consulted 

by the Secretary of Veterans Affairs, is required to provide, among other things, an 

ongoing assessment of the effectiveness of the schedule for rating disabilities and advice 

on the most appropriate means of responding to the needs of veterans with respect to 

disability compensation.

Actions Needed and 

Potential Financial or 

Other Benefits
Page 236 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

GAO provided a draft of its June 2015 report to VA. VA concurred with 

GAO’s recommendations and stated that the agency had initiated a 

review of TDIU policies and procedures in April 2015, including 

consideration of age in claim decisions. VA’s Veterans Benefits 

Administration expected to complete an action plan to initiate any studies, 

legislative proposals, or proposed regulations deemed necessary by July 

2015. In August 2015, VA reported that its disability compensation policy 

staff was in the process of completing a review of TDIU policies and 

procedures. As of December 24, 2015, VA reported it had tentatively 

defined the scope of an internal study on TDIU, which is pending 

department-level review and approval. If this internal study on TDIU is 

approved, VA anticipates that the study will begin in fiscal year 2016 with 

a target completion date of September 30, 2017. GAO continues to track 

VA’s actions related to the recommendation.

GAO provided a draft of this report section to VA for review and comment. 

VA responded and indicated that the proposed internal study on TDIU, 

which is to include the consideration of age and vocational assessments, 

was approved in late December 2015. A workgroup is focusing on 

obtaining data sets related to TDIU. VA maintained the target completion 

date of September 30, 2017.

The information contained in this analysis is based on findings from the 

products listed in the related GAO products section. GAO obtained and 

analyzed data from VA on new and continuing beneficiaries covering 

fiscal years 2009 through 2013 (the most recently available data); 

examined relevant federal laws, regulations, and procedures for new and 

continuing claim determination decisions; conducted interviews with VA 

and Veterans Benefits Administration officials in their central office and 

regional offices, as well as disability experts familiar with TDIU benefits 

and representatives of veterans service organizations; and reviewed 

options presented for revising the TDIU eligibility and benefit structure. 

GAO also conducted a total of 11 in-person discussion groups with rating 

specialists across five of the regional offices; each discussion group 

consisted of two to three rating specialists, for a total of 29 rating 

specialists. 

Table 21 in appendix V lists the program GAO identified that might have 

opportunities for cost savings or revenue enhancement. 

Veterans’ Disability Benefits: VA Can Better Ensure Unemployability 

Decisions Are Well Supported. GAO-15-464. Washington, D.C.: June 2, 

2015. 

Veterans’ Disability Benefits: Improvements Needed to Better Ensure VA 

Unemployability Decisions are Well Supported. GAO-15-735T.

Washington, D.C.: July 15, 2015.

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work

Related GAO 

Products
Page 237 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

For additional information about this area, contact Daniel Bertoni at (202) Contact Information 512-7215 or bertonid@gao.gov.
Page 238 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Information technology

35. Federal Mobile Telecommunications

In order to achieve substantial government-wide savings, federal agencies should establish better controls on 

mobile device spending, and the Office of Management and Budget should monitor progress in achieving 

these savings.

In 2012, the Office of Management and Budget (OMB) reported that the 

federal government spent approximately $1.2 billion annually on about 

1.5 million mobile devices and associated services.

1 Federal agencies 

use mobile devices to provide their employees and contractors flexibility 

to perform their work anywhere at any time. Given that the use of mobile 

technology in the federal government was expected to increase, OMB 

identified the potential for achieving efficiencies and reducing spending in 

this area. Specifically, OMB identified potential savings of about $388 

million in fiscal years 2013 through 2015 by consolidating or eliminating 

mobile device contracts. 

An executive order and OMB strategy provided direction and guidance on 

controlling mobile device spending. Specifically, in November 2011, the 

President issued an executive order on promoting efficient spending, 

which required agencies to, among other things, assess current federal 

employee IT device inventories and usage, including mobile devices, and 

establish controls to ensure they are not paying for unused or underused 

devices or services.2 In May 2012, OMB issued a strategy, known as the 

Digital Government Strategy, a key objective of which is to move 

agencies away from purchasing mobile technology in a fragmented 

manner at the component level to purchasing the technology at an 

agency-wide level (i.e., centralized) and eventually government-wide 

level.3 To help achieve this objective, OMB required agencies to develop, 

by November 2012, an enterprise-wide inventory of their wireless service 

contracts and to maintain it. Federal internal control standards4 and 

 1

OMB has not reported an updated estimate of the federal government’s spending on 

mobile devices and services.

2

Exec. Order No. 13589, Promoting Efficient Spending, 76 Fed. Reg. 70863 (Nov. 15, 

2011).

3

OMB, Digital Government: Building a 21st Century Platform to Better Serve the American 

People (Washington, D.C.: May 2012), commonly referred to as the Digital Government 

Strategy.

4

OMB, Circular A-123, Management’s Responsibility for Internal Control (Dec. 21, 2004); 

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999); and GAO, Internal Control Management and 

Evaluation Tool, GAO-01-1008G (Washington, D.C.: August 2001). See also GAO, 

Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, 

D.C.: September 2014), which is effective beginning fiscal year 2016.

Why This Area Is 

Important
Page 239 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

GAO’s June 2006 work on telecommunications inventories provide 

agencies guidance on implementing these requirements.5

In May 2015, GAO reported on weaknesses in 15 selected agencies’ 

controls on mobile device spending.6 GAO found that most of the 

agencies reviewed did not have an inventory of mobile devices and 

associated services that could be used to assess device usage. Only 5 of 

the 15 agencies had complete device and service inventories at either the 

enterprise level or at the components GAO reviewed. The remaining 

agencies either did not have inventories, or those inventories did not 

account for all devices and services. Similarly, only 1 of the 15 agencies 

had documented procedures for monitoring spending by reviewing 

devices and associated service plans for overuse, underuse, or zero use, 

which are key indicators of potential inefficient use. Eleven agencies had 

procedures that either addressed some of the potential aspects of 

inefficient use or were incompletely documented. Three agencies did not 

have documented procedures. The table below shows the number of 

agencies that followed guidance related to (1) establishing a mobile 

device and service inventory, and (2) procedures for monitoring mobile 

technology spending.

Number of 15 Selected Agencies That Followed Guidance on Managing Mobile 

Devices and Services

Fully 

satisfied

Met some

but not all

Did not 

satisfy

Inventory (devices and services) 5 7 3

Procedures 1 11 3

Source: GAO analysis of agency data as reported in GAO-15-431. | GAO-16-375SP

GAO also reported that of the 15 agencies reviewed, 6 agencies collected 

mobile device contract information and reported it to OMB in the quarters 

between May and November 2014, in accordance with OMB’s 2012 

strategy and guidance. The remaining 9 agencies’ reports were missing 

key data or were not adequately maintained.

 5

In June 2006, GAO identified establishing a telecommunications inventory as a key 

telecommunications transition planning practice and noted the importance of establishing 

and maintaining an inventory for purposes in addition to transition planning. GAO 

identified the transition planning practices through research of literature and interviews 

with those with experience in telecommunications transitions, including industry experts, 

telecommunications vendors, and other private sector companies.

6

The agencies were selected based on reported telecommunications spending and 

include the Departments of Agriculture, Commerce, Defense, Health and Human 

Services, Homeland Security, the Interior, Justice, State, Transportation, the Treasury, 

and Veterans Affairs; the Environmental Protection Agency; the General Services 

Administration; the National Aeronautics and Space Administration; and the Social 

Security Administration.

What GAO Found
Page 240 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Agencies cited several reasons for these weaknesses, including a lack of 

understanding of the relevant guidance, the use of unwritten procedures, 

and a continued belief in the effectiveness of decentralized management. 

Without an inventory that includes each device and associated service 

limits and rates, as well as documented procedures to assess device 

usage relative to service rate plans, agencies have a limited ability to 

monitor device usage and determine if a device should be canceled or 

moved to a more cost-effective service plan. Further, without a reliable 

inventory of mobile service contracts, agencies are less likely to identify 

opportunities for consolidation, and thus are less likely to achieve cost 

savings.

Highlighting the potential to reduce costs, GAO also found a variance in 

the rates that agencies paid for the same services. Specifically, there was 

a variance of about $53 between the lowest and highest rates the 

selected agencies paid for unlimited voice, data, and text. Given the 

variance, cost savings could be realized by taking steps such as 

consolidating contracts and leveraging economies of scale to reduce 

costs. 

Finally, although OMB identified a goal for financial savings related to 

mobile devices and services, it has not measured progress toward that 

goal, as called for by leading practices in performance management.7

Instead, an OMB analyst said that OMB provides agencies information, 

quarterly, on rates paid by other agencies because it believes such 

information is more effective at convincing agencies to achieve savings. 

As of November 2015, OMB reported that 11 agencies had action items 

related to mobile contracts. OMB further reported that it has seen prices 

fall across the government, and that some agencies have made 

significant progress. However, without measuring progress toward its 

goal, OMB has little assurance that its approach is effective. 

In May 2015, GAO made recommendations to each of the agencies 

reviewed to help ensure their ability to effectively manage spending on 

mobile devices and services. Specifically, GAO recommended the 

following:

 7

GAO, Data Center Consolidation: Reporting Can Be Improved to Reflect Substantial 

Planned Savings, GAO-14-713 (Washington, D.C.: Sept. 25, 2014); Aviation Weather: 

Agencies Need to Improve Performance Measurement and Fully Address Key 

Challenges, GAO-10-843 (Washington, D.C., Sept. 9, 2010); NextGen Air Transportation 

System: FAA’s Metrics Can Be Used to Report on Status of Individual Programs, but Not 

of Overall NextGen Implementation or Outcomes, GAO-10-629 (Washington, D.C.: July 

27, 2010); OMB, Guide to the Program Assessment Rating Tool (Washington, D.C.: 

January 2008); and General Services Administration, Performance-Based Management: 

Eight Steps To Develop and Use Information Technology Performance Measures 

Effectively (Washington, D.C.: 1996).

Actions Needed and 

Potential Financial or 

Other Benefits
Page 241 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

• Ten of the 15 agencies should ensure that an inventory of mobile 

devices and services is established agency-wide (i.e., all components’ 

devices and associated services are accounted for).8

• Nine of the 15 agencies should ensure that a reliable and current 

agency-wide inventory of mobile service contracts is developed and 

maintained.9

• Fourteen of the 15 agencies should ensure that procedures to monitor 

and control spending on mobile devices and services are established 

agency-wide. Specifically, they should ensure that procedures include 

assessing devices for zero, under, and over usage; personnel with 

authority and responsibility for performing the procedures are 

identified; and the specific steps to be taken to perform the process 

are documented.10

In addition, to better enable OMB to oversee agency efforts to consolidate 

mobile telecommunications contracts, GAO recommended the following:

• OMB should measure and report progress in achieving its goal of 

mobile device and service cost savings through consolidation. 

The actual cost savings associated with these actions is unknown, as the 

2012 estimate from OMB of about $388 million in potential savings during 

fiscal years 2013 through 2015 has not been updated or reassessed. As 

a result, GAO cannot quantify potential financial benefits associated with 

the recommended actions. GAO believes savings could potentially be 

significant, given OMB’s original estimate.

Taking these actions—34 across the selected agencies and OMB—

should better position agencies to meet OMB’s goal of reducing costs by 

moving toward a less fragmented approach to acquiring the technology. 

Further, by measuring and reporting progress agencies are making in 

meeting this goal, OMB could enhance its ability to oversee these efforts 

and improve agencies’ management of their spending on mobile devices 

and services.

In commenting on GAO’s May 2015 report, 13 of the 15 selected 

agencies generally agreed with GAO’s recommendations, 1 agency (the 

Department of Defense) partially agreed, and 1 (the Department of the 

Treasury) stated that it did not have any comments. In addition, OMB 

 8

GAO did not make recommendations to the Departments of Health and Human Services, 

Justice, Transportation, and Veterans Affairs; and the General Services Administration.

9

GAO did not make recommendations to the Departments of Agriculture, Transportation, 

the Treasury, and Veterans Affairs; the General Services Administration; and the Social 

Security Administration.

10GAO did not make a recommendation to the Department of Defense.

Agency Comments 

and GAO’s Evaluation
Page 242 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

generally agreed with GAO’s recommendation. The Department of

Defense stated that it agreed with the merits of establishing an inventory 

of mobile devices and services but that maintaining it comes at 

considerable expense and effort. GAO disagreed and noted that the 

inventory need not be generated centrally at the headquarters level; the 

department can compile a comprehensive inventory using components’ 

complete inventories. Accordingly, GAO maintained that a comprehensive 

inventory is critical to managing mobile device costs.

Since GAO issued its report, one agency, the General Services 

Administration, has addressed the recommendation made to it by 

including in its procedures steps to assess devices for under and over 

usage. By including these steps in its procedures, the General Services 

Administration is better able to ensure that it is sufficiently controlling 

spending on mobile services. 

Recently, GAO provided a draft of this report section to OMB and the 15 

selected agencies for review and comment. In response, OMB stated that 

it generally concurred, nine of the agencies stated that they have no 

comment, and four described steps they are taking and plan to take to 

address GAO’s recommendations. In addition, OMB and the Departments 

of Homeland Security and the Treasury provided technical comments, 

which were incorporated, as appropriate. One agency (the Environmental 

Protection Agency) did not provide comments.

The information contained in this analysis is based on findings from the 

May 2015 report listed in the related GAO products section. GAO 

selected 15 major agencies based on reported telecommunications 

spending. It compared each agency’s mobile device and service inventory 

to an executive order on promoting efficient spending and sound 

telecommunications transition practices identified in a June 2006 GAO 

report. GAO also evaluated the extent to which agencies developed and 

maintained mobile service contract inventories, relative to OMB 

requirements. In addition, GAO assessed the agencies’ procedures for 

monitoring and controlling mobile device and services spending relative to 

the executive order and OMB internal control standards. GAO also 

compared OMB’s oversight of agencies’ progress toward meeting the 

Digital Government Strategy’s goal of purchasing mobile technology at 

the agency level (and ultimately government-wide) with leading 

management practices. To determine the rates agencies were paying for 

mobile services, GAO analyzed the agencies’ most recent quarterly 

mobile service contract reports to OMB, as of November 2014. To assess 

the reliability of the cost data in the reports, GAO identified obvious 

issues, such as missing or questionable values, and reviewed each 

agency’s responses to questions about efforts to ensure the reports are 

accurate and complete. GAO determined the cost data were sufficiently 

reliable for the purposes of its report. GAO also interviewed agency and 

OMB officials.

How GAO Conducted 

Its Work
Page 243 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Telecommunications: Agencies Need Better Controls to Achieve 

Significant Savings on Mobile Devices and Services. GAO-15-431. 

Washington, D.C.: May 21, 2015.

Telecommunications: Full Adoption of Sound Transition Planning 

Practices by GSA and Selected Agencies Could Improve Planning 

Efforts. GAO-06-476. Washington, D.C.: June 6, 2006.

For additional information about this area, contact Carol R. Cha at (202) 

512-4456 or chac@gao.gov.

Related GAO 

Products

Contact Information
Page 244 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

International affairs

36. Cargo Preference for Food Aid

A clearer definition of “geographic area” in legislation on cargo preference for food aid could allow the U.S. 

Department of Agriculture to achieve financial savings by more fully utilizing the flexibility Congress granted 

when it lowered the statutory cargo preference requirement.

The United States shipped more than 1 million metric tons of food aid in 

fiscal year 2013, intended to benefit 46.2 million people in 56 countries, at 

a cost of around $1.7 billion, which included commodity and freight cost.1

Under U.S. cargo preference laws, a minimum share of U.S. government 

cargo, including food aid, must be shipped on U.S.-flag vessels. Statutory 

objectives for cargo preference, which in addition to food aid are also 

applied to other government cargo, include the development and 

maintenance of a merchant marine—both vessels and mariners—capable 

of providing sealift in time of war or national emergency. Sealift is the 

process of transporting Department of Defense (DOD) and other federal 

agency equipment and supplies required during peacetime and war. The 

percentage requirement of cargo preference for food aid (CPFA) has 

fluctuated since Congress established the requirement in 1954, from the 

original 50 percent to 75 percent in 1985, and back to 50 percent in 2012. 

The U.S. Agency for International Development (USAID) and the U.S. 

Department of Agriculture (USDA) administer food aid programs; the cost 

of transporting food aid is covered by the funding for these programs. In 

fiscal year 2014, USAID provided an estimated 1.18 million metric tons of 

food aid at a total cost of more than $1.5 billion, of which about $150 

million was the ocean freight shipping costs. In fiscal year 2014, USDA 

provided nearly 195,900 metric tons of food aid at a total cost of more 

than $127.5 million, which included about $37.9 million ocean freight 

shipping costs, for its Food for Progress program; and 78,860 metric tons 

of food aid, at a total cost of more than $164.8 million, which included 

about $22.5 million ocean freight shipping costs, for its McGovern-Dole 

International Food for Education and Child Nutrition program. The 

Department of Transportation’s (DOT) Maritime Administration (MARAD) 

is responsible for monitoring USAID’s and USDA’s adherence to CPFA.

Cargo preference laws require that a percentage of U.S. government 

cargo, including international food aid, be transported on U.S.-flag 

vessels, which usually charge higher shipping rates than foreign-flag 

vessels, according to geographic area of destination and vessel type. 

However, the term “geographic area” is not defined by statute, and

USAID and USDA use different interpretations of how to implement CPFA

 1

As of October 2015, fiscal year 2013 data were the most recent data reported to 

Congress on the U.S. government’s international food assistance as a whole, but GAO 

obtained and reported on fiscal year 2014 data for specific food aid programs.

Why This Area Is 

Important

What GAO Found
Page 245 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

requirements. Pursuant to a court order following a lawsuit filed against 

USDA, USDA must measure compliance with cargo preference laws for 

Food for Progress and certain other programs on a country-by-country 

basis to the extent practicable unless MARAD revises cargo preference 

regulations or policy to allow a different method for defining geographic 

area, or unless USDA determines that a change in method is necessary 

following good faith negotiations on the matter with MARAD.2 The 

country-by-country basis is a more narrow interpretation of the 

geographic area requirement than what USAID applies. USAID— which 

was not part of the lawsuit, so is not bound by the court order— currently 

interprets the CPFA requirement in a manner that gives it substantially 

more flexibility. For example, USAID defines geographic area on a global 

basis for its packaged food aid. For bulk food aid, USAID uses a modified 

country basis where it can broaden the interpretation of geographic area 

to the regional level when it determines that there is limited availability of 

U.S.-flag vessels for a particular route.

In an August 2015 report, GAO found that USDA pays higher shipping 

rates than USAID partly because of the different application of the CPFA

requirements between the two agencies. Following the 2012 reduction in 

the minimum percentage of food aid to be carried on U.S.-flag vessels, 

USAID was able to substantially increase the proportion of food aid 

awarded to foreign-flag vessels, which on average have lower rates, 

helping to reduce its average shipping rate. In contrast, USDA was able 

to increase the proportion of food aid awarded to foreign-flag vessels by 

only a relatively small amount such that it utilized foreign-flag vessels far 

below the 50 percent allowed by the 2012 law, and its average shipping 

rate did not decrease. GAO’s analysis of USAID’s and USDA’s food aid 

shipments from fiscal years 2009 through 2014 found that USAID shipped 

an average of 82 percent of food aid on U.S.-flag vessels before the 

change and 54 percent after the change. In contrast, USDA shipped an 

average of 89 percent of food aid on U.S.-flag vessels before the change 

and 76 percent after the change.

GAO found that a clearer definition of geographic area could provide 

USDA more flexibility in how it interprets the CPFA requirement, which 

could potentially allow it to achieve greater cost savings on shipping of 

food aid. The 1954 Act specified that at least 50 percent of the gross 

tonnage of U.S. food aid commodities be shipped on U.S.-flag vessels “in 

a manner that will ensure a fair and reasonable participation of 

commercial vessels of the United States in those cargoes by geographic 

areas.”3 However, neither this Act and subsequent laws modifying the 

CPFA minimum percentage requirement nor the cargo preference 

regulations promulgated by MARAD define geographic area. GAO 

recommended in April 2007 and again in May 2009 that USAID and 

 2

The parties to the lawsuit agreed to the court order to settle the litigation.

3

Act of Aug. 26, 1954, ch.936, 68 Stat. 832.
Page 246 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

USDA work with DOT and relevant parties to expedite updating a 

memorandum of understanding (MOU) between U.S. food assistance 

agencies and DOT to minimize the cost impact of cargo preference 

regulations on food aid transportation expenditures and to resolve 

uncertainties associated with the application of CPFA requirements.4

Pursuant to the terms of the court order requiring USDA to comply with 

CPFA on a country-by-country basis, an MOU embodying an agreement 

between USDA and MARAD on a consistent definition of “geographic 

area” would allow USDA to administer CPFA using a method other than 

country-by-country. However, the agencies did not fully implement 

GAO’s recommendation; their signed MOU in 2009 did not resolve some 

uncertainties among agencies, including the definition of geographic area. 

A clearer definition of geographic area could potentially allow USDA to 

reduce costs by more fully utilizing the flexibility Congress granted when it 

lowered the statutory cargo preference requirement.

Prior to August 2015, GAO twice recommended that agencies agree on 

consistent interpretation of cargo preference for food aid requirements 

through an MOU, but agencies have not addressed the definition of 

“geographic area.” As a result, GAO suggested in August 2015 that 

Congress take the following action: 

• While recognizing that cargo preference serves policy goals 

established by Congress with respect to the U.S. merchant marine, 

including maintenance of a fleet capable of serving as a naval and 

military auxiliary in time of war or national emergency, Congress 

should consider clarifying cargo preference legislation regarding the 

definition of “geographic area” to ensure that agencies can fully utilize 

the flexibility Congress granted to them when it lowered the cargo 

preference for food aid requirement.

If Congress takes the action GAO describes to clarify language in cargo 

preference legislation, cost savings could result from potentially lowering 

the overall shipping rates USDA pays to ship food aid for its two food aid 

programs by transporting a higher proportion of commodities on foreignflag carriers, which on average charge lower rates than U.S.-flag carriers. 

Calculating definitive cost savings in this area is challenging because 

food aid shipping data needed to calculate cost savings are not readily 

available. Nonetheless, assuming that a congressional action to clarify 

the definition of “geographic area” would reduce USDA’s costs to 

 4

GAO, Foreign Assistance: Various Challenges Impede the Efficiency and Effectiveness 

of U.S. Food Aid, GAO-07-560 (Washington, D.C.: Apr. 13, 2007), and International Food 

Assistance: Local and Regional Procurement Can Enhance the Efficiency of U.S. Food 

Aid, but Challenges May Constrain Its Implementation, GAO-09-570 (Washington, D.C.: 

May 29, 2009). 

Actions Needed and 

Potential Financial or 

Other Benefits
Page 247 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

something more comparable to USAID’s, GAO estimates that this action 

could potentially result in millions of dollars of savings.5

 

GAO provided a draft of the report on which this analysis is based to 

DOT, USDA, and USAID, among other agencies, for review and comment 

but did not receive agency comments on its matter for congressional 

consideration.

GAO provided a draft of this report section to DOT, USDA, and USAID for 

review and comment. DOT, USDA, and USAID provided technical 

comments, which were incorporated as appropriate. In response to this 

report section, a USDA official noted that in 2015, MARAD has submitted 

a draft notice of proposed rulemaking to the Office of Management and 

Budget (OMB) that would amend the current cargo preference 

regulations. A DOT official also confirmed, in an email received by GAO 

in February 2016, that MARAD was working through the interagency 

process to issue this notice of proposed rulemaking proposal that would 

update its cargo preference regulations and provide definitions and clarity 

to implement cargo preference requirements consistent with the cargo 

preference statute. According to the USDA official, USDA and USAID 

met with MARAD and OMB on several occasions and provided comments 

on the proposed language that addressed, among other issues, the 

expansion of the geographic regions for the USDA food assistance 

programs. USDA officials further informed us that OMB and MARAD were 

scheduled to meet in early March 2016 to discuss USDA’s and USAID’s 

comments. As of March 8, 2016, the agencies had not reached 

consensus on changes to cargo preference regulations, no notice of 

proposed rulemaking has been published in the Federal Register, and 

agency officials had not confirmed whether or how any proposed rule 

would address the definition of “geographic area.”

The information contained in this analysis is based on findings from the 

products listed in the related GAO products section. GAO interviewed 

USAID and USDA officials and analyzed cargo preference legislation, as 

well as USAID’s and USDA’s guidance and data on CPFA. To determine 

CPFA requirements’ impact on food aid shipping cost, GAO analyzed 

food aid procurement data for both USAID and USDA from April 2011 

through fiscal year 2014, including some bulk food commodities and all 

packaged food commodities and shipment data for fiscal years 2011 

through 2014. During this time period, CPFA requirement levels changed 

from 75 to 50 percent. Furthermore, GAO obtained data on bids received 

 5

GAO estimated for its August 2015 report that the CPFA requirements increased 

USAID’s costs by 16 percent and USDA’s costs by 36 percent over the period from April 

2011 through fiscal year 2014. GAO further estimated that if USDA’s costs had only 

increased by 16 percent over that period, USDA would have avoided millions of dollars of 

spending on ocean shipping in fiscal year 2014. 

Agency Comments 

and GAO’s Evaluation

How GAO Conducted 

Its Work
Page 248 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

to ship all USDA food aid and USAID’s packaged food commodities and 

used regression analysis to identify the impact of the changes in cargo 

preference for food aid requirement on the cost of shipping U.S. food aid.

International Food Assistance: Cargo Preference Increases Food Aid 

Shipping Costs, and Benefits Are Unclear. GAO-15-666. Washington, 

D.C.: August 26, 2015. 

International Food Assistance: Local and Regional Procurement Can 

Enhance the Efficiency of U.S. Food Aid, but Challenges May Constrain 

Its Implementation. GAO-09-570. Washington, D.C.: May 29, 2009.

Foreign Assistance: Various Challenges Impede the Efficiency and 

Effectiveness of U.S. Food Aid. GAO-07-560. Washington D.C.: April 13, 

2007.

For additional information about this area, contact Thomas Melito at (202) 

512-9601, or melitot@gao.gov.

Related GAO 

Products

Contact Information
Page 249 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Training, employment, and education

37. Post-9/11 GI Bill Overpayments

The Department of Veterans Affairs could achieve substantial savings by developing guidance and controls to 

reduce the volume of annual Post-9/11 GI Bill overpayments—which amounted to over $400 million in fiscal 

year 2014—and to improve the collection of overpayment debts, of which $262 million was still outstanding as 

of November 2014.

The Post-9/11 GI Bill provides education benefits to eligible veterans and 

their beneficiaries. The Department of Veterans Affairs (VA) administers 

the program and pays schools for tuition and fees on behalf of veterans 

and sends additional payments for housing and books directly to 

veterans. Overpayments most often occur when VA pays benefits based 

on a student’s enrollment at the beginning of the school term and the 

student later drops one or more classes (or withdraws from school 

altogether). Students therefore receive benefits for classes they did not 

complete, and the “overpayment” must be paid back to VA. VA identified 

$416 million in Post-9/11 GI Bill overpayments in fiscal year 2014, or 4 

percent of the $10.8 billion in education benefits paid during that period. 

Overpayments affected one out of four beneficiaries in fiscal year 2014—

more than 225,000 veterans—and about 6,000 schools. Given the size 

and projected future growth of the Post-9/11 GI Bill program, these 

overpayments can result in a substantial loss of taxpayer dollars if they 

are not recovered. In addition, overpayment debts can create financial 

hardships for veterans and administrative burdens for schools.

VA generally holds veterans liable for repaying any overpayments 

resulting from enrollment changes during the school term, in accordance 

with statutory requirements.

1

 Schools are only responsible for repaying 

tuition payments to VA in certain circumstances, such as when the 

veteran completely withdraws from the school on or before the first day of 

the term. Most overpayment debts are collected relatively quickly, but VA 

had $262 million in outstanding debts, as of November 2014. Veterans 

are responsible for the vast majority of these outstanding debts, in part 

because VA has less success collecting debts from veterans than from 

schools.

In October 2015, GAO reported on the effectiveness of VA’s efforts to 

reduce and collect Post-9/11 GI Bill overpayments. GAO found that VA 

lacked adequate guidance and controls that could reduce overpayments 

from enrollment changes, which accounted for around $247 million of 

 1

38 U.S.C. § 3685(a).

Why This Area Is 

Important

What GAO Found
Page 250 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

high-dollar overpayments (i.e., overpayments greater than $1,667) in 

fiscal year 2014, according to GAO estimates.2

First, many veterans may not realize they can incur overpayments as a 

result of enrollment changes because VA provides limited guidance to 

veterans on its policies. For example, VA does not explain in its guidance 

to veterans how to avoid creating debts once enrolled in school or 

disclose its formula for calculating overpayments. As a result, veterans 

can be unaware of the consequences of enrollment changes until after 

they have already incurred their first overpayment debt, according to 

school officials. According to federal internal control standards, agencies 

should use adequate means of communicating with external stakeholders 

who may have a significant impact on the agency achieving its goals.3

However, VA’s lack of sufficient guidance may cause some veterans to 

incur debts that could have been avoided.

In addition, unlike in most other GI bill programs, VA has generally not 

required veterans using the Post-9/11 GI Bill to regularly verify their 

enrollment throughout the school term, which can also impact their 

housing payments. Therefore, some veterans continue to receive 

thousands of dollars in housing overpayments between the time they drop 

courses and when the enrollment change is reported to VA by school 

officials. VA officials said they would like to require veterans using the 

Post-9/11 GI Bill to verify their monthly enrollment but would need to 

develop a new verification process. Such an effort could provide 

substantial long-term savings for VA in comparison with the current 

system by reducing housing overpayments, and it could help VA comply 

with federal requirements to establish practices that help ensure funds 

are safeguarded against waste or loss.4 For example, $125 million of the 

$416 million in overpayments VA made in fiscal year 2014 were for 

housing overpayments, some of which would have been avoided if 

veterans using the Post-9/11 GI Bill were required to verify their monthly 

enrollment.

School officials also create overpayments when they make errors, such 

as reporting enrollment information incorrectly, which VA officials said is 

sometimes attributable to a lack of training. For example, some school 

officials routinely made systematic errors reporting enrollment 

 2

GAO calculated these dollar estimates using VA’s required quarterly reports on highdollar overpayments. Exec. Order No. 13,520, § 3(f), 74 Fed. Reg. 62,201, 62,203 (Nov. 

20, 2009). For the fiscal year 2013 and 2014 reports, VA reviewed a sample of 

overpayments each quarter that were over $1,667. GAO’s dollar estimates are based on a 

sample with 95 percent confidence intervals of $226 million to $267 million for student

enrollment changes and $259 million to $301 million for the total high-dollar 

overpayments.

3

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: Nov. 1, 1999).

4

31 U.S.C. § 3512(c) and GAO/AIMD-00-21.3.1.
Page 251 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

information. In total, school reporting errors accounted for around $28 

million in Post-9/11 GI Bill high-dollar overpayments in fiscal year 2014, 

according to GAO estimates.5 VA officials said the agency offers a variety 

of training opportunities, including an online course, but the number of 

school officials that have completed the training course remains low. 

Although VA officials said they would like to be able to require school 

officials to complete a minimum level of training on how to implement the 

program, they indicated that the agency lacks authority to do so. Since 

school officials have essential duties in processing Post-9/11 GI Bill 

payments, they need to possess and maintain a level of competence to 

do their job, which includes receiving training, consistent with federal 

internal control standards.6

As for collection of overpayments, GAO found that two aspects of VA’s 

formula for prorating tuition overpayments reduce total collection. First, 

VA’s formula for prorating overpayments gives veterans credit for extra 

days of attendance after they drop a class. When a Post-9/11 GI Bill 

beneficiary drops a class during the term, VA prorates the resulting 

overpayment as though the veteran attended class through the end of the 

month rather than using the actual date of the withdrawal. This in effect 

credits students for up to 30 extra days of classes they did not attend, 

which can reduce the overpayment amount subject to collection by 

hundreds of dollars per veteran, as shown in the figure below. VA officials 

said this policy was designed for monthly housing benefits, and then also 

applied to tuition benefits, which are paid separately under the Post-9/11 

GI Bill. However, since VA’s overpayment calculation is crediting veterans 

for school days they did not attend, it inappropriately increases the cost of 

the program, particularly since the law stipulates that education benefits 

shall only be paid for the period of time during which the veteran is 

enrolled.7

Effect of Prorating Overpayments Based on the End of the Month 

 5

GAO’s dollar estimates are based on a sample with 95 percent confidence intervals of 

$19 million to $36 million for school errors. 

6

GAO/AIMD-00-21.3.1.

7

38 U.S.C. § 3680(a).
Page 252 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

Second, VA’s formula for prorating overpayment amounts does not 

account for schools’ own internal refund policies, and can sometimes 

result in veterans receiving surplus funds that VA is not collecting. Some 

schools have fairly generous tuition refund policies when students drop a 

class or withdraw from school early in the term. In these cases, a school 

may send the veteran a tuition refund that is larger than the overpayment 

amount the veteran owes to VA, leaving the veteran with a potential 

financial gain, as shown in the figure below. For example, officials at one 

school estimated that the difference between their refund policy and VA’s 

overpayment calculations had resulted in VA making over $136,000 in 

excess tuition payments for 53 veterans between 2009 and 2014, 

averaging over $2,500 per veteran. These officials said they had 

attempted to return these excess funds to VA, but VA would not accept 

them. VA officials said they cannot accept funds in excess of the 

overpayment debt that is billed to veterans. The Post-9/11 GI Bill’s 

authorizing statute specifies that benefits are only payable for the actual 

tuition and fees charged by a school.8 However, in these cases VA’s 

tuition and fees payments exceed the amounts charged by the schools 

once the refund policies are accounted for—that is, VA is making 

payments for tuition amounts that were not charged by the school. As a 

result, VA is overpaying for tuition and these excess funds are being 

retained by schools or returned to veterans rather than collected by VA.

Overpayment Example when Veteran Withdraws during School’s 100 Percent 

Refund Period

 8

38 U.S.C. § 3313(c)(1)(A).
Page 253 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

To address Post-9/11 GI Bill overpayments resulting from school errors, 

in October 2015, GAO suggested that Congress take the following action:

• Consider granting VA explicit authority to require a minimum level of 

training for appropriate school officials.

To reduce the occurrence of Post-9/11 GI Bill overpayments and increase 

debt collections, GAO also recommended in October 2015 that the 

Secretary of Veterans Affairs take the following four actions:

• Provide guidance to educate student veterans about their benefits and 

the consequences of changing their enrollment. 

• Identify and implement a cost-effective way to allow Post-9/11 GI Bill 

beneficiaries to verify their enrollment status each month, and require 

monthly reporting. 

• Revise the policy for calculating overpayments by prorating tuition 

overpayments when veterans reduce their enrollment during the term 

based on the actual date of the enrollment change rather than paying 

additional benefits through the end of the month during which the 

reduction occurred.

• Ensure VA is recovering the full amount of tuition and fee payments if 

a school does not charge a veteran for any tuition or fees after 

dropping a class or withdrawing from school.

Although GAO cannot estimate the potential savings that would result 

from these actions, the potential exists for substantial savings from 

addressing overpayments that amounted to over $400 million in fiscal 

year 2014 alone. If VA does not take action, the amount of annual 

overpayments will likely continue to increase as more veterans use their 

GI Bill benefits, accumulating more uncollected debts each year. It is not 

reasonable to expect VA to eliminate overpayments entirely, since some 

overpayments are an inevitable byproduct of veteran enrollment changes. 

However, VA could achieve substantial savings that would increase over 

time by reducing the number and dollar amount of Post-9/11 GI Bill 

overpayments and increasing collections of debts.

In commenting on the October 2015 report on which this analysis is 

based, VA agreed with each of GAO’s recommendations and identified 

steps it plans to take to implement them. To address overpayments 

resulting from enrollment changes, VA plans to provide information on the 

consequences of enrollment changes in benefit letters and veteran 

guidance and to develop a system for verifying veterans’ monthly 

enrollment. To address collection issues, VA plans to adjust its 

regulations and procedures for prorating overpayments and accounting 

for school refund policies.

Actions Needed and 

Potential Financial or 

Other Benefits

Agency Comments 

and GAO’s Evaluation
Page 254 GAO-16-375SP Cost Savings and Revenue Enhancement Opportunities

GAO provided a draft of this report section to VA for review and comment. 

VA reviewed the draft and did not have any comments.

The information contained in this analysis is based on findings from the 

product in the related GAO products section. In developing those findings, 

GAO reviewed available Post-9/11 GI Bill financial data from fiscal years 

2013 and 2014. GAO also examined the causes of overpayments from a 

generalizable sample of high-dollar overpayments (greater than $1,667) 

from fiscal years 2013 and 2014 as well as an in-depth review of a 

nongeneralizable sample of 20 overpayment cases. In addition, GAO 

reviewed relevant federal laws, regulations, and policy guidance for 

processing and collecting VA debts, interviewed senior VA officials, and 

visited one of VA’s four Regional Processing Offices as well as VA’s debt 

collection office to interview management and frontline staff. Furthermore, 

GAO interviewed representatives from several veterans service 

organizations, higher education associations, and administrators at nine 

schools about the effects of overpayments on veterans and schools. The 

nine schools were selected to include a mix of program lengths (2-year

and 4-year schools), sectors (public, nonprofit, and for-profit), and student 

veteran populations. 

Table 22 in appendix V lists the program GAO identified that might have 

opportunities for cost savings or revenue enhancement. 

Post-9/11 GI Bill: Additional Actions Needed to Help Reduce 

Overpayments and Increase Collections. GAO-16-42. Washington, D.C.: 

October 21, 2015.

For additional information about this area, contact Melissa Emrey-Arras at 

(617) 788-0534 or emreyarrasm@gao.gov.

How GAO Conducted 

Its Work

Related GAO Product

Contact Information
Page 255 GAO-16-375SP List of Congressional Addressees 

Appendix I: List of Congressional 

Addressees

The Honorable Thad Cochran

Chairman

The Honorable Barbara A. Mikulski

Vice Chairwoman

Committee on Appropriations

United States Senate

The Honorable Mike Enzi

Chairman

The Honorable Bernie Sanders

Ranking Member

Committee on the Budget

United States Senate

The Honorable Ron Johnson

Chairman

The Honorable Thomas R. Carper

Ranking Member

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Harold Rogers

Chairman

The Honorable Nita M. Lowey

Ranking Member

Committee on Appropriations

House of Representatives

The Honorable Tom Price

Chairman

The Honorable Chris Van Hollen

Ranking Member

Committee on the Budget

House of Representatives

The Honorable Jason Chaffetz

Chairman

The Honorable Elijah E. Cummings

Ranking Member

Committee on Oversight and Government Reform

House of Representatives

The Honorable Claire McCaskill

United States Senate
Page 256 GAO-16-375SP List of Congressional Addressees 

The Honorable Mark R. Warner

United States Senate
Page 257 GAO-16-375SP Objectives, Scope, and Methodology 

Appendix II: Objectives, Scope, and 

Methodology

Section 21 of Public Law 111-139, enacted in February 2010, requires 

GAO to conduct routine investigations to identify federal programs, 

agencies, offices, and initiatives with duplicative goals and activities within 

departments and government-wide. This provision also requires GAO to 

report annually to Congress on its findings, including the cost of such 

duplication, with recommendations for consolidation and elimination to 

reduce duplication and specific rescissions (legislation canceling 

previously enacted budget authority) that Congress may wish to consider. 

As agreed with the key congressional committees, our objectives in this 

report are to (1) identify what potentially significant areas of 

fragmentation, overlap, and duplication as well as opportunities for cost 

savings and enhanced revenues exist across the federal government; 

and (2) identify what options, if any, exist to address fragmentation, 

overlap, and duplication in these areas and take advantage of 

opportunities for cost savings and enhanced revenues.

For the purposes of our analysis, we used the term “fragmentation” to 

refer to those circumstances in which more than one federal agency (or 

more than one organization within an agency) is involved in the same 

broad area of national need and there may be opportunities to improve 

how the government delivers these services. We used the term “overlap”

when multiple agencies or programs have similar goals, engage in similar 

activities or strategies to achieve them, or target similar beneficiaries. We 

considered “duplication” to occur when two or more agencies or programs 

are engaged in the same activities or provide the same services to the 

same beneficiaries.1 This report presents 12 areas of fragmentation, 

overlap, or duplication where greater efficiencies or effectiveness in 

providing government services may be achievable. We also highlighted 

25 other opportunities for potential cost saving or revenue enhancements.

Over the course of our 2011 through 2013 annual reports we conducted a 

systematic and practical examination across the federal government to 

provide reasonable coverage for areas of potential fragmentation, 

overlap, and duplication government-wide.2 Since then, we have 

considered a variety of factors to determine whether such potential 

instances or opportunities identified in our routine audit work warrant

 1

We recognize that there could be instances where some degree of program 

fragmentation, overlap, or duplication, may be warranted due to the nature or magnitude 

of the federal effort.

2

See GAO-13-279SP.

GAO’s Approach
Page 258 GAO-16-375SP Objectives, Scope, and Methodology 

inclusion in this annual report. Such factors included, but were not limited 

to, the extent of potential cost savings, opportunities for enhanced 

program efficiency or effectiveness, the degree to which multiple 

programs may be fragmented, overlapping, or duplicative, whether issues 

had been identified by GAO or external sources, and the level of 

coordination among agency programs.3

Each issue area contained in Sections II and III of this report lists any 

respective GAO reports and publications upon which it is based. Those 

prior GAO reports contain more detailed information on our supporting 

work and methodologies. For issues that update prior GAO work, we 

provide additional information on the methodologies used in that update 

in the section entitled “How GAO Conducted Its Work” of each issue area.

To identify what actions, if any, exist to address fragmentation, overlap, 

and duplication and take advantage of opportunities for cost savings and 

enhanced revenues, we reviewed and updated prior GAO work and 

recommendations to identify what additional actions agencies may need 

to take and Congress may wish to consider. For example, we used a 

variety of prior GAO work identifying leading practices that could help 

agencies address challenges associated with interagency coordination 

and collaboration and evaluating performance and results achieving 

efficiencies.4

To identify the potential financial and other benefits that might result from 

actions addressing fragmentation, overlap, or duplication, we collected 

and analyzed data on costs and potential savings to the extent it was 

available. Estimating the benefits that could result from eliminating 

unnecessary fragmentation, overlap, or duplication was not possible in 

some cases because information about the extent of duplication among 

certain programs was not available. Further, the financial benefits that 

can be achieved from eliminating fragmentation, overlap or duplication 

were not always quantifiable in advance of congressional and executive 

branch decision making, and needed information was not readily 

available on, among other things, program performance, the level of 

funding devoted to overlapping programs, or the implementation costs 

 3

Because this report is based on previously issued GAO products, in many cases we cite 

November 1999 internal control standards as criteria (GAO, Standards for Internal Control 

in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999). 

When cited, these criteria were effective at the time of our review. However, new internal 

control standards for the federal government became effective beginning October 1, 2015 

(GAO, Standards for Internal Control in the Federal Government, GAO-14-704G

Washington, D.C. September 2014). Any corrective action that agencies plan to take 

should be in accordance with the new standards. 

4

GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain 

Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005)

and Managing for Results: A Guide for Using the GPRA Modernization Act to Help Inform 

Congressional Decision Making, GAO-12-621SP (Washington, D.C.: June 15, 2012).

Identifying Actions
Page 259 GAO-16-375SP Objectives, Scope, and Methodology 

and time frames that might be associated with program consolidations or 

terminations.

When possible, we also included tables in appendix V that provide a 

detailed listing of federally-funded program names and associated 

budgetary information. There is no standard definition for what constitutes 

a program; they may include grants, tax expenditures, centers, loans, 

funds, and other types of assistance. A wide variety of budgetary 

information may be used to convey the federal commitment to these 

programs, and we provided the most relevant and up to date information 

available. For example, when available, we collected obligations 

information for fiscal year 2015 for reporting across issue areas. In some 

instances, obligations data were not available, but we were able to report 

other budgetary information, such as appropriations. In other issue areas, 

we did not report any budgetary information, because such information 

was either not available or sufficiently reliable. For example, some 

agencies could not isolate budgetary information for some programs, 

because the data were aggregated at higher levels.

We assessed the reliability of any computer-processed data that 

materially affected our findings, including cost savings and revenue 

enhancement estimates. The steps that we take to assess the reliability of 

data vary but are chosen to accomplish the auditing requirement that the 

data be sufficiently reliable given the purposes for which it is used for in 

our products. GAO analysts review published documentation about the 

data system and Inspector General or other reviews of the data. We may 

interview agency or outside officials to better understand system controls 

and to assure ourselves that we understand how the data are produced 

and any limitations associated with the data. We may also electronically 

test the data to see if values in the data conform to agency testimony and 

documentation regarding valid values, or compare data to source 

documents. In addition to these steps we often compare data with other 

sources as a way to corroborate our findings. Per GAO policy, when data 

do not materially affect findings and are presented for background 

purposes only, we may not have assessed the reliability depending upon 

the context in which the data are presented.

To examine the extent to which the Congress and executive branch

agencies have made progress in implementing the 544 actions in the 213 

areas we have reported on in previous annual reports on fragmentation,

overlap, and duplication, we reviewed relevant legislation and agency 

documents such as budgets, policies, strategic and implementation plans, 

guidance, and other information.5 We also analyzed, to the extent 

 5

To provide a more accurate picture of the progress made in the identified areas, we are 

reporting the status of each action under each area (see appendix IV). New actions are 

assessed as pending. To identify relevant legislation, we requested that agencies inform 

us of legislation impacting the actions and we searched key legislation related to the 

actions.

Assessing Status of 

Actions
Page 260 GAO-16-375SP Objectives, Scope, and Methodology 

possible, whether or not financial or other benefits have been attained, 

and included this information as appropriate. (See discussion below on 

the methodology we used to estimate financial benefits). In addition, we 

discussed the implementation status of the actions with officials at the 

relevant agencies.

Using the legislation and documentation collected from agencies, GAO 

analysts and specialists working on defense, domestic, and international 

areas assessed progress for each of the 544 actions within their areas of 

expertise. A core group of GAO staff examined all assessments to ensure 

consistent and systematic application of the criteria, and made 

adjustments, as appropriate.

We used the following criteria in assessing the status of actions.6

• In assessing legislative branch actions, we applied the following 

criteria: “addressed” means relevant legislation is enacted and 

addresses all aspects of the action needed; “partially addressed”

means a relevant bill has passed a committee, the House of 

Representatives, or the Senate, or relevant legislation has been 

enacted but only addressed part of the action needed; and “not 

addressed” means a bill may have been introduced but did not pass 

out of a committee, or no relevant legislation has been introduced.

• In assessing executive branch actions we applied the following 

criteria: “addressed” means implementation of the action needed has 

been completed; “partially addressed” means the action needed is in 

development, started but not yet completed; and “not addressed”

means the administration, the agencies, or both have made minimal 

or no progress toward implementing the action needed.

We provided drafts of these assessments to the agencies involved for 

their technical comments and incorporated these comments, as 

appropriate. In providing the drafts to the agencies for review, we 

communicated that we would use an as of date of March 2, 2016, for all 

assessments. In addition to summarizing any comments received on our 

assessments, we incorporated a summary of comments on the prior GAO 

work upon which each issue area is based. Consistent with GAO policy, 

we are not reprinting copies of agencies’ comment letters with this report, 

as the work included is based predominantly on previously issued GAO 

 6

This year, 4 actions were categorized as “consolidated or other” for a total of 24 actions 

in this category from 2011-2015. Actions categorized as “consolidated or other” are no 

longer assessed. In most cases, the actions were replaced or subsumed by new actions 

based on additional audit work or other relevant information. For example, actions 

categorized as “consolidated or other” may have been consolidated into other actions that 

we track based on subsequent audit work or significant changes in agency circumstances, 

or they may have been redirected from a congressional to an executive branch action, or 

vice versa. In addition, we added 6 new actions to areas on which we reported in 2011-

2015; these newly added actions are listed in appendix III. The status of these new 

actions has not yet been assessed.
Page 261 GAO-16-375SP Objectives, Scope, and Methodology 

reports. Copies of agency comment letters associated with previous 

reports can be found in those reports, if applicable.

In order to calculate the total financial benefits resulting from actions 

already taken and potential financial benefits from actions that are not 

fully addressed, GAO analysts compiled available estimates for all of the 

actions from GAO’s Action Tracker, from 2011 through 2015, and from 

reports identified for inclusion in the 2016 annual report, and linked

supporting documentation to those estimates. Each estimate was 

reviewed by a GAO technical specialist to ensure that estimates were 

based on reasonably sound methodologies. The savings estimates came 

from a variety of sources, including GAO analysis, Congressional Budget 

Office estimates, individual agencies, the Joint Committee on Taxation, 

and others. Due to differences in time frames, underlying assumptions, 

quality of data, and methodologies among these individual estimates, any 

attempt to generate a total will be associated with uncertainty that limits 

the precision of this calculation. As a result, our totals represent a rough

estimate of financial benefits, rather than an exact total.

For actions that have already been taken, individual estimates of realized 

cost savings covered a range of time periods stretching from 2010 

through 2025. In order to calculate the total amount of realized financial 

benefits that have already accrued, and those that are expected to 

accrue, we separated those that accrued from 2010 through 2015, and 

those expected to accrue between 2016 and 2025. For individual 

estimates that span both periods, we assumed that financial benefits

were distributed evenly over the period of the estimate.7 For each 

category, we summed the individual estimates in order to generate a 

total. To account for uncertainty and imprecision resulting from the 

differences in individual estimates, we present these realized savings to 

the nearest billion dollars, rounded down.

Estimates of potential financial benefits that could accrue from actions not 

yet taken have a higher level of uncertainty, because these estimates are 

dependent on whether, how, and when agencies and Congress take our 

recommended actions. As a result, many estimates of potential savings 

are notionally stated using terms like million, tens of millions, or billions, to 

demonstrate a magnitude without providing a more precise estimate. 

Further, many of these estimates are not tied to specific time frames, for 

the same reason. In order to calculate a total for potential savings, with a 

conservative approach, we used the minimum number associated with 

 7

For example, if an individual estimate was for $10 billion dollars to accrue from 2014-

2023, we assumed that $1 billion would be earned each year. As a result, $2 billion would 

be counted as “already accrued” through 2015, while the other $8 billion would be counted

as “expected to accrue” from 2016 and later.

Methodology for 

Generating Cost 

Savings Estimates
Page 262 GAO-16-375SP Objectives, Scope, and Methodology 

each term.8 To account for the increased uncertainty of potential 

estimates and the imprecision resulting from differences among individual 

estimates, we calculated potential financial benefits to the nearest $10

billion, rounded down, and presented our results using a notional term.

This report is based upon work GAO previously conducted in accordance 

with generally accepted government auditing standards, or GAO’s quality 

assurance framework. Generally accepted government auditing 

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.

 8

For example, if GAO had stated that an agency could potentially save “hundreds of 

millions,” we would use $100 million as part of our calculation of the total.
Page 263 GAO-16-375SP New Actions

Appendix III: New Actions Added to Existing 

Areas in 2016

As part of our April 2016 update of GAO’s Action Tracker, we are adding 

six new actions based on GAO reports that fall within the scope of two 

existing areas identified in prior annual reports. These actions are 

summarized in table 1.

Table 1: New Actions Added to Existing Areas in 2016

Mission

Annual 

Report Area

Associated

GAO Product Actions Identified 

General 

Government

2013 Area 23: Agencies’ 

Use of Strategic 

Sourcing

GAO-15-549 Action 1: The Secretary of the Army should direct appropriate 

officials to conduct a comprehensive analysis of information 

technology services spending to reduce duplicative contracts; 

implement policies encouraging the use of strategically 

sourced contracts and metrics to measure use of these 

contracts at the military department level; develop guidance, 

goals, and metrics for the resulting savings; and review the 

benefits and disadvantages of standardized labor categories 

for services contracts. 

Action 2: The Secretary of the Navy should direct appropriate 

officials to conduct a comprehensive analysis of information 

technology services spending to reduce duplicative contracts 

and to implement utilization metrics and monitor agency 

efforts to comply with the Navy’s existing use policies for IT 

services. 

Action 3: The Secretary of the Air Force should direct 

appropriate officials to conduct a comprehensive analysis of 

information technology services spending to reduce 

duplicative contracts; implement metrics to measure use of 

strategically sourced contracts at the military department 

level; develop guidance, goals, and metrics for the resulting 

savings; and review the benefits and disadvantages of 

standardized labor categories for services contracts. 

Action 4: The Administrator of the National Aeronautics and 

Space Administration (NASA) should direct the appropriate 

officials to use existing analyses of spending to reduce 

duplicative contracts; implement use policies and metrics to 

measure use of strategically sourced contracts; and develop 

guidance, goals, and metrics for the resulting savings.

Action 5: The Secretary of Homeland Security should direct 

the appropriate officials to establish utilization and savings 

goals for the portfolio of strategic sourcing contracts related to 

information technology services.

Homeland 

Security/Law 

Enforcement

2012 Area 17: Homeland 

Security Grants

GAO-16-38 Action 1: The Federal Emergency Management Agency 

(FEMA) should develop a plan with time frames, goals, 

metrics, and milestones to address longstanding coordination 

issues associated with its existing hybrid grants management 

model, which divides responsibilities for the management of 

preparedness grants between regional and headquarters 

staff.

Source: GAO. | GAO-16-375SP
Page 264 GAO-16-375SP Selected Tables

Appendix IV: Areas Identified in 2011-2016 

Annual Reports, by Mission

This appendix presents the areas we identified in our 2011-2016 annual 

reports. It also includes our assessment of the progress made in each of 

the 544 actions that we identified in our 2011-2015 annual reports in 

which Congress and the executive branch could take actions to reduce,

eliminate, or better manage potential fragmentation, overlap, and 

duplication or achieve other potential financial benefits.1

 We have not yet 

made any assessments of progress for 2016 actions. 

Table 1 presents our assessment of the progress made in implementing 

the actions needed in the areas related to fragmentation, overlap, or 

duplication. Table 2 presents our assessment of the progress made in 

implementing the actions needed in the areas related to cost savings or 

revenue enhancement.2

 1

GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax 

Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: Mar. 1, 2011); 2012 

Annual Report: Opportunities to Reduce Duplication, Overlap, and Fragmentation, 

Achieve Savings, and Enhance Revenue, GAO-12-342SP (Washington, D.C.: Feb. 28, 

2012); 2013 Annual Report: Actions Needed to Reduce Fragmentation, Overlap, and 

Duplication and Achieve Other Financial Benefits. GAO-13-279SP (Washington, D.C.: 

Apr. 9, 2013); 2014 Annual Report: Additional Opportunities to Reduce Fragmentation, 

Overlap, and Duplication and Achieve Other Financial Benefits. GAO-14-343SP

(Washington, D.C.: Apr. 8, 2014); and 2015 Annual Report: Additional Opportunities to 

Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits.

GAO-15-404SP (Washington, D.C.: Apr. 14, 2015). 

2

The information in these tables is consistent with what is reported on GAO’s Action 

Tracker. Tables 1 and 2 provide a snapshot of the overall action status for each area;

however, the ordering of the action status assessments may not correlate with the action 

numbering on GAO’s Action Tracker. For more information on the status of individual 

actions, please see GAO’s Action Tracker.
Page 265 GAO-16-375SP Selected Tables

Table 1: GAO Identified Areas and Assessment of Actions of Fragmentation, Overlap, and Duplication in 2011 – 2016 Annual 

Reports

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

Agriculture 2011 Area 1: Food Safety Fragmented food safety system has caused inconsistent oversight, 

ineffective coordination, and inefficient use of resources. 

Actions: 

2012 Area 1: Protection of Food 

and Agriculture

Centrally coordinated oversight is needed to ensure more than nine federal 

agencies effectively and efficiently implement the nation’s fragmented policy 

to defend the food and agriculture systems against potential terrorist attacks 

and major disasters.

Actions: 

2013 Area 1: Catfish Inspection Repealing provisions of the 2008 Farm Bill that assigned U.S. Department of 

Agriculture’s (USDA) Food Safety and Inspection Service responsibility for 

examining and inspecting catfish and for creating a catfish inspection 

program would avoid duplication of federal programs and save taxpayers 

millions of dollars annually without affecting the safety of catfish intended for 

human consumption.

Actions: 

2015 Area 1: EPA’s and FDA’s 

Laboratory Inspections

To avoid potential duplication of certain types of laboratory inspections and 

better leverage limited resources, the Environmental Protection Agency 

(EPA) and the Food and Drug Administration should develop a formal 

process to collaborate and share information on planned inspections.

Actions: 

Defense 2011 Area 2: DOD’s Military 

Medical Command

Realigning the Department of Defense’s (DOD) military medical command 

structures and consolidating common functions could increase efficiency 

and result in projected savings ranging from $281 million to $460 million 

annually.

Actions: 

2011 Area 3: Warfighter Urgent 

Needs

Opportunities exist for consolidation and increased efficiencies to maximize 

response to warfighter urgent needs.

Actions: 

2011 Area 4: DOD’s 

Coordination of CounterImprovised Explosive

Device Efforts

Opportunities exist to avoid unnecessary redundancies and improve the 

coordination of counter-improvised explosive device efforts.

Actions: 

2011 Area 5: Intelligence, 

Surveillance, and 

Reconnaissance

Opportunities exist to avoid unnecessary redundancies and maximize the 

efficient use of intelligence, surveillance, and reconnaissance capabilities. 

Actions: 

2011 Area 6: Tactical Wheeled 

Vehicles

A department-wide acquisition strategy could reduce DOD’s risk of costly 

duplication in purchasing Tactical Wheeled Vehicles. Reducing the number 

of joint light tactical vehicles DOD procures could result in billions of dollars 

in cost savings.

Actions: 

2011 Area 7: Prepositioning 

Programs

Improved joint oversight of DOD’s prepositioning programs for equipment 

and supplies may reduce unnecessary duplication. 

Actions: 

2011 Area 8: DOD’s Business 

Systems

DOD’s business systems modernization: opportunities exist for optimizing 

business operations and systems.

Actions: 

2012 Area 2: Electronic Warfare Identifying opportunities to consolidate DOD airborne electronic attack 

programs could reduce overlap in the department’s multiple efforts to 

develop new capabilities and improve the department’s return on its 

multibillion-dollar acquisition investments. 

Actions: 
Page 266 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2012 Area 3: Unmanned Aircraft 

Systems

Ineffective acquisition practices and collaboration efforts in the DOD 

unmanned aircraft systems portfolio creates overlap and the potential for 

duplication among a number of current programs and systems. 

Actions: 

2012 Area 4: DOD’s Timeline for 

Counter-Improvised 

Explosive Device Database 

Implementation

DOD continues to risk duplication in its multibillion-dollar counter-improvised 

explosive device efforts because it does not have a comprehensive 

database of its projects and initiatives

Actions: 

2012 Area 5: Defense Language 

and Culture Training

DOD needs a more integrated approach to reduce fragmentation in training 

approaches and overlap in the content of training products acquired by the 

military services and other organizations

Actions: 

2012 Area 6: Stabilization, 

Reconstruction, and 

Humanitarian Assistance 

Efforts

Improving DOD’s evaluations of stabilization, reconstruction, and 

humanitarian assistance efforts, and addressing coordination challenges 

with the Department of State (State) and the U.S. Agency for International 

Development (USAID), could reduce overlapping efforts and result in the 

more efficient use of taxpayer dollars. 

Actions: 

2013 Area 2: Combat Uniforms DOD’s fragmented approach to developing and acquiring uniforms could be 

more efficient, better protect servicemembers, and result in up to $82 million 

in development and acquisition cost savings through increased collaboration 

among the military services. 

Actions: 

2013 Area 3: Defense Foreign 

Language Support 

Contracts

DOD should explore opportunities to gain additional efficiencies in contracts 

for foreign language support, which is estimated to cost more than $1 billion 

annually, by addressing fragmentation in the department’s acquisition

approach. 

Actions: 

2014 Area 1: Army Workforce 

Planning

To address potential overlap between two Army information systems that 

support workforce planning for weapon system maintenance, manufacturing, 

and other industrial operations, the Army should increase leadership 

attention to the issue and establish a fully developed and documented 

approach for completing a timely assessment of unnecessary overlap, which 

could lead to millions of dollars in annual savings. 

Actions: 

2014 Area 2: Contracting for 

Defense Health Care 

Professionals

DOD should develop a consolidated agency-wide strategy to contract for 

health care professionals to reduce fragmentation and achieve greater 

efficiencies.

Actions: 

2014 Area 3: Defense Satellite 

Control Operations

Increased use of shared satellite control networks and leading practices 

within DOD could reduce fragmentation and potential duplication associated 

with dedicated systems, resulting in millions of dollars in savings annually. 

Actions: 

2014 Area 4: Defense Studies 

and Analysis Research

To address fragmentation in the processes used across the department to 

request studies and analysis research and limit the potential for overlap and 

duplication in research activities, DOD should establish a mechanism that 

requires the military services and other departmental offices to formally 

coordinate their annual research requests. 

Actions: 

2014 Area 5: POW MIA Mission DOD should minimize overlapping and duplicative efforts by examining 

options to reduce fragmentation and clarify guidance on roles and 

responsibilities among the eight organizations that account for missing 

persons and improve the effectiveness of the mission.

Actions: 
Page 267 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2015 Area 2: Ground Radar and 

Guided Munitions 

Programs

DOD should take steps to minimize the risk of future duplication within its 

ground radar and guided munitions weapons systems.

Actions: 

2015 Area 3: Weapon System 

Milestone Decision Process

To improve efficiency, the Secretary of Defense should streamline DOD’s

milestone decision process used for major weapon system acquisition 

programs by eliminating reviews that can be duplicative and are not highly 

valued by acquisition officials.

Actions: 

2016 Area 1: DOD Commercial 

Satellite Communication 

Procurement

Enforcing existing acquisition policy and identifying opportunities to 

centralize DOD’s procurement of commercial satellite communications 

services could create opportunities to potentially save tens of millions of 

dollars annually.

Actions: Pending

2016 Area 2: DOD’s Storage of 

Occupational and 

Environmental Health 

Surveillance Data

Inconsistencies among the policies of DOD and the military services have 

contributed to fragmented and duplicative efforts to store occupational and 

environmental health surveillance data needed to track and assess servicerelated health conditions of returning servicemembers and veterans.

Actions: Pending

2016 Area 3: Weapon System 

Portfolio Management

By using portfolio management more effectively, DOD could help ensure 

that the more than $100 billion it spends annually on weapon system 

acquisitions contributes to its strategic goals and could reduce the potential 

for overlapping and unnecessarily duplicative investments.

Actions: Pending

Economic

development

2011 Area 9: Economic 

Development Programs

The efficiency and effectiveness of fragmented economic development 

programs are unclear.

Actions: 

2011 Area 10: Surface 

Transportation

The federal approach to surface transportation is fragmented, lacks clear 

goals, and is not accountable for results.

Actions: 

2011 Area 11: Water Needs in 

U.S.-Mexico Border Region

Fragmented federal efforts to meet water needs in the U.S.-Mexico border 

region have resulted in an administrative burden, redundant activities, and 

an overall inefficient use of resources. 

Actions: 

2012 Area 7: Support for 

Entrepreneurs

Overlap and fragmentation among the economic development programs that 

support entrepreneurial efforts require the Office of Management and 

Budget (OMB) and other agencies to better evaluate the programs and 

explore opportunities for program restructuring, which may include 

consolidation, within and across agencies.

Actions: 

2012 Area 8: Surface Freight 

Transportation

Fragmented federal programs and funding structures are not maximizing the 

efficient movement of freight.

Actions:

2016 Area 4: Manufacturing Loan 

Guarantees

The Economic Development Administration could better ensure that the 

activities carried out under the Innovative Technologies in Manufacturing 

program do not duplicate the efforts of other federal loan guarantee 

programs by working with other agencies to identify and target capital 

access gaps not filled by other programs.

Actions: Pending

Energy 2011 Area 12: Federal Fleet 

Energy Goals

Resolving conflicting requirements could more effectively achieve federal 

fleet energy goals.

Actions: 
Page 268 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2011 Area 13: Domestic Ethanol 

Production

Addressing duplicative federal efforts directed at increasing domestic 

ethanol production could reduce revenue losses by more than $5.7 billion 

annually.

Actions: 

2012 Area 9: Department of 

Energy Contractor Support 

Costs

The Department of Energy (DOE) should assess whether further 

opportunities could be taken to streamline support functions, estimated to 

cost over $5 billion, at its contractor-managed laboratory and nuclear 

production and testing sites, in light of contractors’ historically fragmented 

approach to providing these functions. 

Actions: 

2012 Area 10: Nuclear 

Nonproliferation

Comprehensive review needed to address strategic planning limitations and 

potential fragmentation and overlap concerns among programs combating 

nuclear smuggling overseas.

Actions: 

2013 Area 4: Renewable Energy 

Initiatives

Federal support for wind and solar energy, biofuels, and other renewable 

energy sources, which has been estimated at several billion dollars per year, 

is fragmented because 23 agencies implemented hundreds of renewable 

energy initiatives in fiscal year 2010—the latest year for which GAO 

developed these original data. Further, the DOE and USDA could take 

additional actions—to the extent possible within their statutory authority—to 

help ensure effective use of financial support from several wind initiatives, 

which GAO found provided duplicative support that may not have been 

needed in all cases for projects to be built.

Actions: 

General

government

2011 Area 14: Enterprise 

Architectures

Enterprise architectures: key mechanisms for identifying potential overlap 

and duplication.

Actions: 

2011 Area 15: Federal Data 

Centers

Consolidating federal data centers provides opportunity to improve 

government efficiency.

Actions: 

2011 Area 16: Interagency 

Contracting

Collecting improved data on interagency contracting to minimize duplication 

could help the government leverage its vast buying power.

Actions: 

2011 Area 17: Tax Expenditures Periodic reviews could help identify ineffective tax expenditures and 

redundancies in related tax and spending programs, potentially reducing 

revenue losses by billions of dollars. 

Actions: 

2012 Area 11: Personnel 

Background Investigations

OMB should take action to prevent agencies from making potentially 

duplicative investments in electronic case management and adjudication 

systems.

Actions: 

2012 Area 12: Cybersecurity 

Human Capital

Government-wide initiatives to enhance cybersecurity workforce in the 

federal government need better structure, planning, guidance, and 

coordination to reduce duplication.

Actions: 

2012 Area 13: Spectrum 

Management

Enhanced coordination of federal agencies’ efforts to manage radio 

frequency spectrum and an examination of incentive mechanisms to foster 

more efficient spectrum use may aid regulators’ attempts to jointly respond 

to competing demands for spectrum while identifying valuable spectrum that 

could be auctioned for commercial use, thereby generating revenues for the 

U.S. Department of the Treasury (Treasury).

Actions: 
Page 269 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2015 Area 4: Consumer Product 

Safety Oversight

More formal and comprehensive coordination among federal agencies is 

needed to help increase efficiency and effectiveness related to consumer 

product safety oversight and address challenges related to fragmentation 

and overlap.

Actions: 

2015 Area 5: Nonemergency 

Medical Transportation

To mitigate the effects of overlap, the Department of Transportation (DOT) 

should take steps to enhance federal, state and local coordination among 42 

programs that provide nonemergency medical transportation to individuals 

who cannot provide their own transportation due to age, disability, or income 

constraints.

Actions: 

2016 Area 5: Financial 

Regulatory Structure

To reduce or better manage fragmentation and overlap, Congress should 

consider changes to the financial regulatory structure, and the Board of 

Governors of the Federal Reserve System and the Office of Financial 

Research should take steps to improve collaboration in monitoring systemic 

risk.

Actions: Pending

2016 Area 6: IRS’s Public 

Referral Programs

The Internal Revenue Service could potentially collect billions of dollars in 

tax underpayments through its nine public referral programs and save 

resources by better managing fragmentation and overlap, improving 

communication, and streamlining processes.

Actions: Pending

Health 2011 Area 18: DOD and VA 

Electronic Health Records 

Systems

Opportunities exist for DOD and the U.S. Department of Veterans Affairs 

(VA) to jointly modernize their electronic health records systems.

Actions: 

2011 Area 19: VA-DOD Drug 

Joint Contracting

VA and DOD need to control drug costs and increase joint contracting 

wherever it is cost-effective.

Actions:

2011 Area 20: Public Health 

Information Systems

The U.S. Department of Health and Human Services (HHS) needs an 

overall strategy to better integrate nationwide public health information 

systems.

Actions: 

2012 Area 14: Health Research 

Funding

The National Institutes of Health (NIH), DOD, and VA can improve sharing 

of information to help avoid the potential for unnecessary duplication.

Actions: 

2012 Area 15: Military and 

Veterans Health Care

DOD and VA need to improve integration across care coordination and case 

management programs to reduce duplication and better assist 

servicemembers, veterans, and their families.

Actions: 

2013 Area 5: Joint Veterans and 

Defense Health Care 

Services

VA and DOD should enhance their collaboration to reduce costs, overlap, 

and potential duplication in the delivery of health care services.

Actions: 

2013 Area 6: Medicaid Program 

Integrity

The Centers for Medicare & Medicaid Services (CMS) needs to take steps 

to eliminate duplication and increase efficiency in two Medicaid Integrity 

Program activities—provider audits and the collection of state program 

integrity data.

Actions: 

2014 Area 6: Federal Autism 

Research

Because much of the $1.2 billion that federal agencies spent on autism 

research from fiscal years 2008 through 2012 had the potential to be 

duplicative, the Interagency Autism Coordinating Committee and federal 

agencies should improve coordination and monitoring of autism research to 

help avoid unnecessary duplication.

Actions: 
Page 270 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2014 Area 7: Minority AIDS 

Initiative

Consolidating the fragmented funding of HHS’s Minority AIDS Initiative into 

core HIV/AIDS funding would likely reduce grantees’ administrative burden 

and help the agency more efficiently and effectively provide services to 

minority populations who are disproportionally affected by HIV/AIDS, with 

the approximately $3 billion used for this purpose. In addition to 

fragmentation, we found that the services provided by Minority AIDS 

Initiative grantees overlapped with those provided by core HIV/AIDS 

grantees and were provided to similar populations; this overlap increases 

the administrative costs associated with participating in the programs.

Actions: 

2015 Area 6: DOD US Family 

Health Plan

To potentially save millions of dollars and eliminate duplication within DOD’s

health care system, Congress should terminate the statutorily required US 

Family Health Plan because it offers military beneficiaries the same health 

care benefit offered by other DOD health care contractors.

Actions: 

2015 Area 7: Medicare 

Postpayment Claims 

Reviews

To prevent inappropriate duplicative postpayment claims reviews by 

contractors, CMS should monitor the Recovery Audit Data Warehouse—the 

database developed in part to prevent duplicative reviews—and develop 

more complete guidance on contractors’ responsibilities.

Actions: 

2015 Area 8: Programs for 

Serious Mental Illness 

To help ensure that the eight federal agencies administering over 100 

programs supporting individuals with serious mental illness are able to 

develop an overarching perspective in order to understand the breadth of 

programs and resources used—including any potential gaps or overlap—

greater coordination of federal efforts is needed from HHS, and within it, the 

Substance Abuse and Mental Health Services Administration, which is 

required to promote coordination of programs relating to mental illness 

throughout the federal government.

Actions: 

2016 Area 7: Medicaid and 

Exchange Coordination

CMS should take actions to minimize the risk of duplicative federal spending 

on health insurance coverage for individuals transitioning between Medicaid 

and exchange coverage.

Actions: Pending

Homeland

security/law

enforcement

2011 Area 21: Biological Threats Strategic oversight mechanisms could help integrate fragmented 

interagency efforts to defend against biological threats.

Actions: 

2011 Area 22: Securing the 

Northern Border 

Area 22: Department of Homeland Security (DHS) oversight could help 

eliminate potential duplicating efforts of interagency forums in securing the 

northern border.

Actions: 

2011 Area 23: Explosives

Investigations

The Department of Justice (DOJ) plans actions to reduce overlap in 

explosives investigations, but monitoring is needed to ensure successful 

implementation.

Actions: 

2011 Area 24: TSA’s Security 

Assessments

The Transportation Security Administration’s (TSA) security assessments on 

commercial trucking companies overlap with those of another agency, but 

efforts are under way to address the overlap.

Actions: 

2011 Area 25: Sharing SecurityRelated Information with 

Public Transit Agencies

DHS could streamline mechanisms for sharing security-related information 

with public transit agencies to help address overlapping information.

Actions: 

2011 Area 26: FEMA Grants Area 26: The Federal Emergency Management Agency (FEMA) needs to 

improve its oversight of grants and establish a framework for assessing 

capabilities to identify gaps and prioritize investments.

Actions: 
Page 271 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2012 Area 16: Department of 

Justice Grants

DOJ could improve how it targets more than $3 billion to reduce the risk of 

potential unnecessary duplication across the more than 11,000 grant awards 

it makes annually.

Actions: 

2012 Area 17: Homeland 

Security Grants

DHS needs better project information and coordination among four 

overlapping grant programs.a

Actions: 

2012 Area 18: Federal Facility 

Risk Assessments

Agencies are making duplicate payments for facility risk assessments by 

completing their own assessments, while also paying DHS for assessments 

that the department is not performing.

Actions: 

2013 Area 7: Department of 

Homeland Security 

Research and 

Development

Better policies and guidance for defining, overseeing, and coordinating 

research and development investments and activities would help DHS 

address fragmentation, overlap, and potential unnecessary duplication.

Actions: 

2013 Area 8: Field-Based 

Information Sharing

To help reduce inefficiencies resulting from overlap in analytical and 

investigative support activities, DOJ and DHS and the Office of National 

Drug Control Policy could improve coordination among five types of fieldbased information sharing entities that may collect, process, analyze, or 

disseminate information in support of law enforcement and counterterrorismrelated efforts—Joint Terrorism Task Forces, Field Intelligence Groups, 

Regional Information Sharing Systems centers, state and major urban area 

fusion centers, and High Intensity Drug Trafficking Areas Investigative 

Support Centers.

Actions: 

2013 Area 9: Justice and 

Treasury Asset Forfeiture

Conducting a study to evaluate the feasibility of consolidating DOJ’s and 

Treasury’s multimillion dollar asset forfeiture activities could help the 

departments identify the extent to which consolidation of potentially 

duplicative activities would help increase the efficiency and effectiveness of 

the programs and achieve cost savings.

Actions: 

2015 Area 9: Vulnerability 

Assessments of Critical 

Infrastructure

DHS could mitigate potential duplication or gaps by consistently capturing 

and maintaining data from overlapping vulnerability assessments of critical 

infrastructure and improving data sharing and coordination among the 

offices and components involved with these assessments.

Actions: 

2016 Area 8: Department of 

Homeland Security’s 

Human Resources 

Systems

To address issues related to fragmented systems and duplicative 

processes, DHS should take steps to (1) ensure that its Human Resources 

Information Technology investment receives necessary oversight and 

attention from its steering committee and (2) evaluate and update the 

investment’s strategic planning document.

Actions: Pending

2016 Area 9: Security of Federal 

Facilities

The Federal Protective Service and General Services Administration need to 

improve collaboration in key areas to better manage fragmentation and 

enhance the agencies’ ability to protect federal facilities.

Actions: Pending

Income

security

2014 Area 8: Disability and 

Unemployment Benefits

Congress should consider passing legislation to prevent individuals from 

collecting both full Disability Insurance benefits and Unemployment 

Insurance benefits that cover the same period, which could save $1.9 billion 

over 10 years in the Social Security Disability Insurance program according 

to the Congressional Budget Office.

Actions: 
Page 272 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2014 Area 9: Federal Employees’

Compensation and 

Unemployment Benefits

Changes to enhance the sharing of compensation and wage information 

between state and federal agencies could improve the Department of 

Labor’s ability to identify potentially improper payments, including 

inappropriately overlapping payments from the Federal Employees’

Compensation Act program and the Unemployment Insurance program 

administered by the states.

Actions: b

Information

technology

2012 Area 19: Information 

Technology Investment 

Management

OMB, DOD, and DOE need to address potentially duplicative information 

technology investments to avoid investing in unnecessary systems.

Actions: 

2013 Area 10: Dissemination of 

Technical Research 

Reports

Congress should consider whether the fee-based model under which the 

National Technical Information Service currently operates for disseminating 

technical information is still viable or appropriate, given that many of the 

reports overlap with similar information available from the issuing 

organizations or other sources for free.

Actions: 

2013 Area 11: Geospatial 

Investments

Better coordination among federal agencies that collect, maintain, and use 

geospatial information could help reduce duplication of geospatial 

investments and provide the opportunity for potential savings of millions of 

dollars.

Actions:

2014 Area 10: Interoperable 

Radio Communications 

Systems

Better collaboration among agencies that rely on radio communications 

solutions for mission-critical operations would help to address fragmentation 

in their approach to improving the interoperability of radio communications 

systems and has the potential to achieve savings.

Actions: 

2015 Area 10: DHS Processing 

of FOIA Requests

To address duplication in the processing of Freedom of Information Act 

requests, DHS should determine the viability of re-establishing an 

agreement between two of its component agencies that process immigration 

files.

Actions: 

2016 Area 10: Tribal Internet 

Access

Greater coordination among the Federal Communications Commission’s 

Universal Service Fund subsidy programs and USDA’s Rural Utilities 

Service grant programs could result in more efficient and effective support of 

Internet access for tribal communities.

Actions: Pending

International 

affairs

2011 Area 27: Development 

Efforts in Afghanistan

Lack of information sharing could create the potential for duplication of 

efforts between U.S. agencies involved in development efforts in 

Afghanistan.

Actions: 

2011 Area 28: Arms Control and 

Nonproliferation Bureaus

Despite restructuring, overlapping roles and functions still exist at State’s

Arms Control and Nonproliferation Bureaus.

Actions: 

2012 Area 20: Overseas 

Administrative Services

U.S. government agencies could lower the administrative cost of their 

operations overseas by increasing participation in the International 

Cooperative Administrative Support Services system and by reducing 

reliance on American officials overseas to provide these services.

Actions: 

2012 Area 21: Training to Identify 

Fraudulent Travel 

Documents

Establishing a formal coordination mechanism could help reduce duplicative 

activities among seven different entities that are involved in training foreign 

officials to identify fraudulent travel documents.

Actions: 
Page 273 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2013 Area 12: Export Promotion Enhanced collaboration between the Small Business Administration (SBA) 

and two other agencies could help to limit overlapping export-related 

services for small businesses.

Actions: 

2013 Area 13: International 

Broadcasting

The Broadcasting Board of Governors—with a budget of $752 million in 

fiscal year 2012—has recognized the need to reduce overlap and reallocate 

limited resources to broadcasts that will have the greatest impact, but the 

agency could do more to achieve this goal, such as systematically 

considering overlap of language services in its annual language services 

review.

Actions: 

2014 Area 11: International 

Religious Freedom

To promote international religious freedom more effectively, State and the 

U.S. Commission on International Religious Freedom should define how 

they are to interact in their efforts; the lack of defined roles has at times 

created tensions with foreign government officials.

Actions: 

2015 Area 11: Federal and 

States’ Export Promotion

Because federal and state export promotion efforts overlap, the Department 

of Commerce should take steps to enhance collaboration among them to 

promote economic development while ensuring the most efficient use of 

limited federal resources.

Actions: 

2016 Area 11: U.S. Embassy 

Kabul Construction

A strategic facilities plan for construction projects in Kabul, Afghanistan,

could enhance the planning and coordination among State bureaus and 

reduce the likelihood of fragmented construction efforts and duplicative 

facilities. 

Actions: Pending

2016 Area 12: U.S.-Funded 

Development Innovation 

Programs

USAID should establish a joint approach to collaboration among its 

Development Innovation Ventures program and other similar U.S.-funded 

programs in India to better manage overlap.

Actions: Pending

Science and 

the 

environment

2012 Area 22: Coordination of 

Space System 

Organizations

Fragmented leadership has led to program challenges and potential 

duplication in developing multibillion-dollar space systems.

Actions: 

2012 Area 23: Space Launch 

Contract Costs

Increased collaboration between DOD and the National Aeronautics and 

Space Administration could reduce launch contracting duplication.

Actions: 

2012 Area 24: Diesel Emissions Fourteen grant and loan programs at DOE, DOT, and EPA, and three tax 

expenditures fund activities that have the effect of reducing mobile source 

diesel emissions; enhanced collaboration and performance measurement 

could improve these fragmented and overlapping programs.

Actions:

2012 Area 25: Environmental 

Laboratories

EPA needs to revise its overall approach to managing its 37 laboratories to 

address potential overlap and fragmentation and more fully leverage its 

limited resources.

Actions: 

2012 Area 26: Green Building To evaluate the potential for overlap or fragmentation among federal green 

building initiatives, the Department of Housing and Urban Development 

(HUD), DOE, and EPA should lead other federal agencies in collaborating 

on assessing their investments in more than 90 initiatives to foster green 

building in the nonfederal sector.

Actions: 
Page 274 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2013 Area 14: Rural Water 

Infrastructure

Additional coordination by the EPA and the USDA could help three water 

and wastewater infrastructure programs with combined funding of about 

$4.3 billion avoid potentially duplicative application requirements, as well as 

associated costs and time developing engineering reports and 

environmental analyses.

Actions: 

2015 Area 12: Oceanic and 

Atmospheric Observing 

Systems Portfolio

The National Oceanic and Atmospheric Administration should analyze its 

portfolio of observing systems to determine the extent to which unnecessary 

duplication may exist.

Actions: 

Social 

services

2011 Area 29: Domestic Food 

Assistance

Actions needed to reduce administrative overlap among domestic food 

assistance programs.

Actions: 

2011 Area 30: Homelessness 

Programs

Better coordination of federal homelessness programs may minimize 

fragmentation and overlap.

Actions: 

2011 Area 31: TransportationDisadvantaged PersonsFurther steps needed to improve cost-effectiveness and enhance services 

for transportation-disadvantaged persons.

Actions: 

2012 Area 27: Social Security 

Benefit Coordination

Benefit offsets for related programs help reduce the potential for overlapping 

payments but pose administrative challenges.

Actions: 

2012 Area 28: Housing 

Assistance

Examining the benefits and costs of housing programs and tax expenditures 

that address the same or similar populations or areas, and potentially 

consolidating them, could help mitigate overlap and fragmentation and 

decrease costs.

Actions: 

2013 Area 15: Drug Abuse 

Prevention and Treatment 

Programs

More fully assessing the extent of overlap and potential duplication across 

the fragmented 76 federal drug abuse prevention and treatment programs 

and identifying opportunities for increased coordination, including those 

programs where no coordination has occurred, would better position the 

Office of National Drug Control Policy to better leverage resources and 

increase efficiencies.

Actions: 

Training, 

employment, 

and education

2011 Area 32: Employment and 

Training Programs

Multiple employment and training programs: providing information on 

colocating services and consolidating administrative structures could 

promote efficiencies.

Actions: 

2011 Area 33: Teacher Quality Teacher quality: proliferation of programs complicates federal efforts to 

invest dollars effectively.

Actions: 

2011 Area 34: Financial Literacy Fragmentation of financial literacy efforts makes coordination essential.

Actions: 

2012 Area 29: Early Learning 

and Child Care

The Departments of Education and HHS should extend their coordination 

efforts to other federal agencies with early learning and child care programs 

to mitigate the effects of program fragmentation, simplify children’s access 

to these services, collect the data necessary to coordinate operation of 

these programs, and identify and minimize any unwarranted overlap and 

potential duplication.

Actions: 
Page 275 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2012 Area 30: Employment for 

People with Disabilities

Better coordination among 45 programs in nine federal agencies that 

support employment for people with disabilities could help mitigate program 

fragmentation and overlap, and reduce the potential for duplication or other 

inefficiencies.

Actions: 

2012 Area 31: Science, 

Technology, Engineering, 

and Mathematics Education

Strategic planning is needed to better manage overlapping programs across 

multiple agencies.

Actions: 

2012 Area 32: Financial Literacy Overlap among financial literacy activities makes coordination and 

clarification of roles and responsibilities essential, and suggests potential 

benefits of consolidation.

Actions:

2013 Area 16: Higher Education 

Assistance

Federal agencies providing assistance for higher education should better 

coordinate to improve program administration and help reduce 

fragmentation.

Actions:

2013 Area 17: Veterans’

Employment and Training

The Departments of Labor, Veterans Affairs, and Defense need to better 

coordinate the employment services each provides to veterans, and Labor 

needs to better target the Disabled Veterans’ Outreach Program so that it 

does not overlap with other programs.

Actions: 

Source: GAO. | GAO-16-375SP

a

See appendix III for new actions added to this area.

b

In our 2015 annual report, we inadvertently counted this action as partially addressed but it was not 

addressed. 

Table 2: GAO Identified Areas and Assessment of Cost-Savings and Revenue-Enhancement Opportunities in 2011 – 2016

Annual Reports

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

Agriculture 2011 Area 35: Farm Program 

Payments

Reducing some farm program direct payments could result in savings from 

$800 million over 10 years to up to $5 billion annually.

Actions: 

2013 Area 18: Agricultural 

Quarantine Inspection Fees

The U.S. Department of Agriculture’s (USDA) Animal and Plant Health 

Inspection Service could have achieved as much as $325 million in savings 

(based on fiscal year 2011 data, as reported in GAO’s March 2013 report) 

by more fully aligning fees with program costs; although the savings would 

be recurring, the amount would depend on the cost-collections gap in a 

given fiscal year and would result in a reduced reliance on U.S. Customs 

and Border Protection’s annual Salaries and Expenses appropriations used 

for agricultural inspection services.

Actions: 

2013 Area 19: Crop Insurance To achieve up to nearly $2 billion per year in cost savings in the Federal 

Crop Insurance program, Congress could consider limiting the subsidy for 

premiums that an individual farmer can receive each year, reducing the 

subsidy, or some combination of limiting and reducing these subsidies.

Actions: 

Defense 2011 Area 36: Overseas Military 

Presence

The Department of Defense (DOD) should assess costs and benefits of 

overseas military presence options before committing to costly personnel 

realignments and construction plans, thereby possibly saving billions of 

dollars.

Actions:
Page 276 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2011 Area 37: Military Personnel 

Costs

Total compensation approach is needed to manage significant growth in 

military personnel costs.

Actions: 

2011 Area 38: Weapon Systems 

Acquisition Programs

Employing best management practices could help DOD save money on its 

weapon systems acquisition programs.

Actions: 

2011 Area 39: DOD’s Spare 

Parts

More efficient management could limit future costs of DOD’s spare parts 

inventory.

Actions: 

2011 Area 40: Sustaining 

Weapon Systems

More comprehensive and complete cost data can help DOD improve the 

cost-effectiveness of sustaining weapons systems.

Actions: 

2011 Area 41: Corrosion 

Prevention

Improved corrosion prevention and control practices could help DOD avoid 

billions in unnecessary costs over time.

Actions: 

2012 Area 33: Air Force Food 

Service

The Air Force has opportunities to achieve millions of dollars in cost savings 

annually by reviewing and renegotiating food service contracts, where 

appropriate, to better align with the needs of installations.

Actions: 

2012 Area 34: Defense 

Headquarters

DOD should review and identify further opportunities for consolidating or 

reducing the size of headquarters organizations.

Actions:

2012 Area 35: Defense Real 

Property

Ensuring the receipt of fair market value for leasing underused real property 

and monitoring administrative costs could help the military services’

enhanced use lease programs realize intended financial benefits.

Actions: 

2012 Area 36: Military Health 

Care Costs

To help achieve significant projected cost savings and other performance 

goals, DOD needs to complete, implement, and monitor detailed plans for 

each of its approved health care initiatives.

Actions: 

2012 Area 37: Overseas Defense 

Posture

DOD could reduce costs of its Pacific region presence by developing 

comprehensive cost information and re-examining alternatives to planned 

initiatives.

Actions: 

2012 Area 38: Navy’s Information 

Technology Enterprise 

Network:

Better informed decisions are needed to ensure a more cost-effective 

acquisition approach for the U.S. Navy’s Next Generation Enterprise 

Network.

Actions: 

2013 Area 20: Joint Basing DOD needs an implementation plan to guide joint bases to achieve millions 

of dollars in cost savings and efficiencies anticipated from combining 

support services at 26 installations located close to one another.

Actions: 

2014 Area 12: Combatant 

Command Headquarters 

Costs

DOD could potentially achieve tens of millions or more in cost savings 

annually if it (1) more systematically evaluates the sizing and resourcing of 

its combatant commands and (2) conducts a more comprehensive analysis 

of options for the location of U.S. Africa Command’s headquarters.

Actions: 

2015 Area 13: Defense Facilities 

Consolidation and Disposal

To help identify opportunities for saving costs by consolidating or disposing 

of unutilized or underutilized facilities, DOD should ensure that data on the 

utilization of DOD facilities—which were collectively valued at around $880 

billion in fiscal year 2014—are complete and accurate.

Actions: 
Page 277 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2015 Area 14: DOD 

Headquarters Reductions 

and Workforce 

Requirements

DOD could potentially achieve hundreds of millions of dollars in cost savings 

and help to ensure that headquarters organizations are properly sized to 

meet their assigned missions by reevaluating its ongoing headquartersreductions efforts and conducting periodic reassessments of workforce

requirements.

Actions: 

2016 Area 13: Defense Excess 

Property Disposal 

Federal civilian agencies could potentially achieve millions of dollars in cost 

savings if they were able to obtain more of DOD’s available excess personal 

property through the disposal process rather than purchasing similar 

property through a private sector supplier.

Actions: Pending

2016 Area 14: DOD’s Eligibility 

Determinations for Living 

Quarters Allowance

DOD could potentially achieve cost savings by monitoring its components’

reviews of eligibility determinations for the over $500 million spent annually 

on living quarters allowance for civilian employees to better ensure that 

DOD components are not improperly providing this allowance.

Actions: Pending

2016 Area 15: DOD Excess 

Ammunition

DOD could potentially reduce its storage, demilitarization, and disposal 

costs by hundreds of thousands of dollars by transferring excess serviceable 

conventional ammunition, including small arms ammunition, to federal, state, 

and local government agencies.

Actions: Pending

2016 Area 16: DOD Leases and 

Use of Underutilized Space 

at Military Installations

DOD could potentially achieve millions of dollars in savings by identifying 

and implementing actions to increase use of underutilized facilities at its 

military installations, such as identifying opportunities to relocate some of its

organizations currently in leased space to installations, communicating the 

availability of underutilized space to potential tenants, and seeking use by 

other federal agencies.

Actions: Pending

Economic

development

2011 Area 42: Essential Air 

Service

Revising the essential air service program could improve efficiency and save 

over $20 million annually.

Actions: 

2011 Area 43: Universal Service 

Fund

Improved design and management of the universal service fund as it 

expands to support broadband could help avoid cost increases for 

consumers.

Actions: 

2011 Area 44: Corps of 

Engineers Unobligated 

Balances

The U.S. Army Corps of Engineers should provide Congress with projectlevel information on unobligated balances.

Actions: 

2012 Area 39: Auto Recovery 

Office

Unless the Secretary of Labor can demonstrate how the Auto Recovery 

Office has uniquely assisted auto communities, Congress may wish to 

consider prohibiting the Department of Labor from spending any of its 

appropriations on the Auto Recovery Office and instead require that the 

department direct the funds to other federal programs that provide funding 

directly to affected communities.

Actions: 

2016 Area 17: Treasury’s 

Foreclosure Prevention 

Efforts

The Department of the Treasury could potentially achieve billions in financial 

benefits by reviewing the potential for unexpended balances for the Making 

Home Affordable Program and deobligating excess funds, which Congress 

could rescind and direct to other priorities.

Actions: Pending

Energy 2011 Area 45: Oil and Gas 

Resources

Improved management of federal oil and gas resources could result in 

approximately $1.7 billion of additional revenues over 10 years, according to 

the Department of the Interior.

Actions: 
Page 278 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2012 Area 40: Excess Uranium 

Inventories

Marketing the Department of Energy’s (DOE) excess uranium could provide 

substantial revenue for the government.

Actions: 

2013 Area 21: Department of 

Energy’s Isotope Program

Assessing the value of isotopes to customers, and other factors such as 

prices of alternatives, may show that DOE could increase prices for isotopes 

that it sells to commercial customers to create cost savings by generating 

additional revenue.

Actions: 

2014 Area 13: Advanced 

Technology Vehicles 

Manufacturing Loan 

Program

Unless DOE can demonstrate demand for new Advanced Technology 

Vehicles Manufacturing loans and viable applicants, Congress may wish to 

consider rescinding all or part of the remaining $4.2 billion in credit subsidy 

appropriations.

Actions: 

2015 Area 15: Strategic 

Petroleum Reserve

DOE could potentially realize savings by reexamining the appropriate size of 

the Strategic Petroleum Reserve—which was valued at about $22 billion as 

of January 2016—and depending on the outcome of the analysis, selling 

crude oil from the reserve and using the proceeds to fund other national 

priorities.

Actions: 

2015 Area 16: U.S. Enrichment 

Corporation Fund

Congress may wish to consider permanent rescission of the entire $1.6 

billion balance of the U.S. Enrichment Corporation Fund—a revolving fund in 

the U.S. Treasury—because its purposes have been fulfilled.

Actions: 

General

government

2011 Area 46: Government-wide 

Improper Payments

Efforts to address government-wide improper payments could result in 

significant costs savings.

Actions: 

2011 Area 47: Competition for 

Federal Contracts

Promoting competition for the over $500 billion in federal contracts could 

potentially save billions of dollars over time.

Actions:

2011 Area 48: Strategic Sourcing Applying strategic sourcing best practices throughout the federal 

procurement system could save billions of dollars annually.

Actions: 

2011 Area 49: Award Fee 

Contracts

Adherence to new guidance on award fee contracts could improve agencies’

use of award fees to produce savings.

Actions: 

2011 Area 50: Federal Real 

Property

Agencies aimed to save at least $3 billion by the end of fiscal year 2012 

through the continued disposal of unneeded federal real property.

Actions: 

2011 Area 51: Federal Facility 

Ownership and Leasing

Improved cost analysis used for making federal facility ownership and 

leasing decisions could save millions of dollars.

Actions: 

2011 Area 52: IT Dashboard The Office of Management and Budget’s IT Dashboard reportedly has 

already resulted in savings and can further help identify opportunities to 

invest more efficiently in information technology.

Actions: 

2011 Area 53: Electronic Filing of 

Tax Returns

Increasing electronic filing of individual income tax returns could reduce 

IRS’s processing costs and increase revenues by hundreds of millions of 

dollars.

Actions: 

2011 Area 54: Return on 

Investment

Using return on investment information to better target Internal Revenue 

Service (IRS) enforcement could reduce the tax gap; for example, a 1 

percent reduction would increase tax revenues by $3.8 billion.

Actions: 
Page 279 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2011 Area 55: Tax Debt 

Collection

Better management of tax debt collection may resolve cases faster with 

lower IRS costs and increase debt collected.

Actions: 

2011 Area 56: Simple Tax Return 

Errors

Broadening IRS’s authority to correct simple tax return errors could facilitate 

correct tax payments and help IRS avoid costly, burdensome audits.

Actions: 

2011 Area 57: Mortgage Interest 

Information

Enhancing mortgage interest information reporting could improve tax 

compliance.

Actions: 

2011 Area 58: Forgiven 

Mortgage Debt

More information on the types and uses of canceled debt could help IRS 

limit revenue losses of forgiven mortgage debt.

Actions: 

2011 Area 59: Real Estate Tax 

Deductions

Better information and outreach could help increase revenues by tens or 

hundreds of millions of dollars annually by addressing overstated real estate 

tax deductions.

Actions: 

2011 Area 60: Form 1098-T Revisions to content and use of Form 1098-T could help IRS enforce higher 

education requirements and increase revenues.

Actions: 

2011 Area 61: Sole Proprietors Many options could improve the tax compliance of sole proprietors and 

begin to reduce their $68 billion portion of the tax gap.

Actions: 

2011 Area 62: Businesses Not 

Filing Tax Returns

IRS could find additional businesses not filing tax returns by using third-party 

data, which show such businesses have billions of dollars in sales.

Actions: 

2011 Area 63: S Corporations Congress and IRS can help S corporations and their shareholders be more 

tax compliant, potentially increasing tax revenues by hundreds of millions of 

dollars each year.

Actions: 

2011 Area 64: Networks of 

Businesses

IRS needs an agency-wide approach for addressing tax evasion among the 

at least 1 million networks of businesses and related entities.

Actions: 

2011 Area 65: Research Tax 

Credit

Opportunities exist to improve the targeting of the $6 billion research tax 

credit and reduce forgone revenue.

Actions: 

2011 Area 66: New Markets Tax 

Credit

Converting the new markets tax credit to a grant program may increase 

program efficiency and significantly reduce the $4 billion 5-year revenue 

cost of the program.

Actions: 

2011 Area 67: Governmental 

Bonds

Limiting the tax-exempt status of certain governmental bonds could yield 

revenue.

Actions: 

2011 Area 68: Civil Tax Penalties Adjusting civil tax penalties for inflation potentially could increase revenues 

by tens of millions of dollars per year, not counting any revenues that may 

result from maintaining the penalties’ deterrent effect.

Actions: 

2011 Area 69: Nonresident 

Aliens

IRS may be able to systematically identify nonresident aliens reporting 

unallowed tax deductions or credits.

Actions: 
Page 280 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2011 Area 70: Undisbursed 

Balances in Expired Grant 

Accounts

Tracking undisbursed balances in expired grant accounts could facilitate the 

reallocation of scarce resources or the return of funding to the Treasury.

Actions: 

2012 Area 41: General Services 

Administration Schedules 

Contracts Fee Rates

Re-evaluating fee rates on the General Services Administration’s Multiple 

Award Schedules contracts could result in significant cost savings 

government-wide.

Actions: 

2012 Area 42: U.S. Currency Legislation replacing the $1 note with a $1 coin would provide a significant 

financial benefit to the government over time.

Actions: 

2012 Area 43: Federal User Fees Regularly reviewing federal user fees and charges can help the Congress 

and federal agencies identify opportunities to address inconsistent federal 

funding approaches and enhance user financing, thereby reducing reliance 

on general fund appropriations.

Actions: 

2012 Area 44: Internal Revenue 

Service Enforcement 

Efforts

Enhancing IRS’s enforcement and service capabilities can help reduce the 

gap between taxes owed and paid by collecting billions in tax revenue and 

facilitating voluntary compliance.

Actions: 

2013 Area 22: Additional 

Opportunities to Improve 

Internal Revenue Service 

Enforcement of Tax Laws

IRS can realize cost savings and increase revenue collections by billions of 

dollars by, among other things, using more rigorous analyses to better 

allocate enforcement and other resources.

Actions: 

2013 Area 23: Agencies’ Use of 

Strategic Sourcing

Selected agencies could better leverage their buying power and achieve 

additional savings by directing more procurement spending to existing 

strategically sourced contracts and further expanding strategic sourcing 

practices to their highest spending procurement categories—savings of 1

percent from selected agencies’ procurement spending alone would equate 

to over $4 billion.a

Actions: 

2013 Area 24: Opportunities to 

Help Reduce Government 

Satellite Program Costs

Government agencies could achieve considerable cost savings on some 

missions by leveraging commercial spacecraft through innovative 

mechanisms such as hosted payload arrangements and sharing launch 

vehicle costs. Selected agencies have reported saving hundreds of millions 

of dollars to date from using these innovative mechanisms.

Actions: 

2014 Area 14: Coin Inventory 

Management

The Federal Reserve should develop a process to assess factors influencing 

coin management costs and identify practices that could potentially lead to 

millions of dollars in revenue enhancement.

Actions: 

2014 Area 15: Collection of 

Unpaid Federal Taxes

The federal government can increase tax revenue collections by hundreds 

of millions of dollars over a 5-year time period by identifying and taking 

actions to limit issuance of passports to applicants, levy payments to 

Medicaid providers, or identify security-clearance applicants with unpaid 

federal taxes.

Actions: 

2014 Area 16: Federal Real 

Property Ownership and 

Leasing

The General Services Administration (GSA) could potentially achieve 

millions of dollars in savings by using capital-planning best practices to 

create a long-term strategy for targeted ownership investments to replace 

some high-value leases.

Actions:
Page 281 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2014 Area 17: Online Taxpayer 

Services

IRS could potentially realize hundreds of millions of dollars in cost savings 

and increased revenues by enhancing its online services, which would 

improve service to taxpayers and encourage greater tax law compliance.

Actions:

2014 Area 18: Real EstateOwned PropertiesBy improving its practices for disposing of the real estate-owned properties it 

acquires through foreclosures of mortgages that it insured, the Department 

of Housing and Urban Development’s (HUD) Federal Housing 

Administration could further reduce losses by increasing sales proceeds and 

reducing maintenance and other expenses associated with holding these 

properties. The agency has already realized cost savings by using 

alternative means for resolving troubled mortgages.

Actions: 

2014 Area 19: Reverse Auctions 

in Government Contracting 

Including Commercial Items

Due to increasing government use of reverse auctions—with over $1 billion 

awarded in contracts in fiscal year 2012—additional guidance may help 

maximize opportunities to increase competition and improve the accuracy of 

estimated cost savings.

Actions: 

2014 Area 20: Tax Policies and 

Enforcement

IRS can realize cost savings and increase revenue by, among other things, 

identifying continued offshore tax evasion and evaluating whether the 

agency’s streamlined corporate audit process is meeting its goals.

Actions: 

2015 Area 17: Tax Policies and 

Enforcement

By more effectively using data to manage various enforcement programs, 

IRS could bolster tax compliance and potentially collect hundreds of millions 

of dollars in additional revenue.

Actions: 

2016 Area 18: Bridge Contracts When bridge contracts—which include extensions to existing contracts and 

short-term noncompetitive contracts to avoid a gap in service—are used 

frequently or for prolonged periods of time, the government is at risk of 

paying more than it should for goods and services.

Actions: Pending

2016 Area 19: Federal Supply 

Schedules

Agencies are paying insufficient attention to prices when using the Federal 

Supply Schedules program and may be missing opportunities for cost 

savings.

Actions: Pending

2016 Area 20: Federally Leased 

Vehicles

GSA and selected agencies could potentially reduce costs by improving the 

processes for justifying the use of vehicles in the federal fleet and taking 

actions for any vehicles that may be underutilized.

Actions: Pending

2016 Area 21: Financing of 

Improvements of Federally 

Leased Space

In order to achieve millions in potential cost savings, GSA should explore 

the benefits and risks of loaning unobligated Federal Buildings Fund 

balances to tenant agencies to cover the costs of improving newly leased 

space, which would otherwise be financed by private lessors at privatesector interest rates.

Actions: Pending

2016 Area 22: Identity Theft 

Refund Fraud

IRS and Congress could potentially save billions of dollars in fraudulent 

refunds by improving the agency’s efforts to prevent refund fraud associated 

with identity theft.

Actions: Pending.

2016 Area 23: National Park 

Service Fees

The National Park Service could potentially increase revenues from the 

recreation fees it collects by millions of dollars annually if Congress were to 

amend the authorizing legislation for this program and if the agency required 

park units to periodically review these fees.

Actions: Pending
Page 282 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2016 Area 24: Unobligated 

Balances

To help ensure effective use of federal funds, the Departments of Energy 

and State should develop and finalize strategies for reducing tens and 

hundreds of millions of dollars of excess unobligated balances, respectively, 

in two budget accounts.

Actions: Pending

Health 2011 Area 71: Medicaid Improper 

Payments

Preventing billions in Medicaid improper payments requires sustained 

attention and action by CMS.

Actions: 

2011 Area 72: Medicaid 

Supplemental Payments

Federal oversight over Medicaid supplemental payments needs 

improvement, which could lead to substantial cost savings.

Actions: 

2011 Area 73: Medicare 

Improper Payments

Better targeting of Medicare’s claims review could reduce improper 

payments.

Actions:

2011 Area 74: Medicare’s Health 

Care Payments

Potential savings in Medicare’s payment for health care.

Actions: 

2012 Area 45: Medicare 

Advantage Payment

The Centers for Medicare & Medicaid Services (CMS) could achieve billions 

of dollars in additional savings by better adjusting for differences between 

Medicare Advantage plans and traditional Medicare providers in the 

reporting of beneficiary diagnoses.

Actions: 

2012 Area 46: Medicare and 

Medicaid Fraud Detection 

Systems

CMS needs to ensure widespread use of technology to help detect and 

recover billions of dollars of improper payments of claims and better position 

itself to determine and measure financial and other benefits of its systems.

Actions:

2013 Area 25: Medicare 

Prepayment Controls

More widespread use of prepayment edits could reduce improper payments 

and achieve other cost savings for the Medicare program, as well as provide 

more consistent coverage nationwide.

Actions: 

2013 Area 26: Medicaid 

Supplemental Payments

To improve the transparency of and accountability for certain high-risk 

Medicaid payments that annually total tens of billions of dollars, Congress 

should consider requiring CMS to take steps that would facilitate the 

agency’s ability to oversee these payments, including identifying payments 

that are not used for Medicaid purposes or are otherwise inconsistent with 

Medicaid payment principles, which could lead to cost savings. GAO’s 

analysis of providers for which data are available suggests that savings 

could be in the hundreds of millions, or billions, of dollars.

Actions: 

2013 Area 27: Medicare 

Advantage Quality Bonus 

Payment Demonstration:

Rather than implementing the Medicare Advantage quality bonus payment 

program specifically established by law, CMS is testing an alternative bonus 

payment structure under a broad demonstration authority through a 3-year 

demonstration that has design flaws, raises legal concerns, and is estimated 

to cost over $8 billion; about $2 billion could be saved if it were canceled for 

its last year, 2014.

Actions: 

2014 Area 21: Medicaid 

Demonstration Waivers

Federal spending on Medicaid demonstrations could be reduced by billions 

of dollars if the Department of Health and Human Services (HHS) were 

required to improve the process for reviewing, approving, and making 

transparent the basis for spending limits approved for Medicaid 

demonstrations. GAO’s work has shown that HHS approved several 

demonstrations without ensuring that they would be budget neutral to the 

federal government.

Actions: 
Page 283 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2015 Area 18: DOD TRICARE 

Improper Payments

To achieve potential cost savings associated with billions of dollars of 

improper payments, DOD should implement a more comprehensive 

improper payment measurement methodology and develop more robust 

corrective action plans for the military health care program known as 

TRICARE.

Actions: 

2015 Area 19: Medicare 

Payments to Certain 

Cancer Hospitals

To achieve almost $500 million per year in program savings, Congress 

should consider modifying how Medicare pays certain cancer hospitals.

Actions: 

2015 Area 20: State Medicaid 

Sources of Funds

To potentially save hundreds of millions of dollars, CMS should ensure that 

states report accurate and complete data on state Medicaid sources of 

funds so that it may better oversee states’ financing arrangements that can 

increase costs for the federal government.

Actions: 

2016 Area 25: Distribution of 

Medicaid Supplemental 

Payments

CMS should provide written guidance to state Medicaid programs clarifying 

its policies that the distribution of Medicaid supplemental payments be linked 

to the provision of Medicaid-covered services, and that such payments not 

be made contingent on the availability of local funding for the nonfederal 

share—actions that could result in substantial cost savings.

Actions: Pending

2016 Area 26: Eligibility of 

Medicare Providers and 

Suppliers

CMS could use better information to help prevent ineligible providers and 

suppliers from enrolling in the Medicare program and improperly obtaining 

Medicare funds, potentially reducing the billions of dollars in improper 

payments that the program has paid out in recent years.

Actions: Pending

2016 Area 27: Medicaid 

Demonstration Approved 

Spending

The Secretary of Health and Human Services could potentially curtail 

spending growth of Medicaid demonstrations, which have resulted in the 

authorization of billions of dollars in federal spending, by establishing 

specific criteria for assessing whether demonstration spending furthers 

Medicaid objectives and taking other steps to improve the transparency and 

accountability of the approval process.

Actions: Pending

2016 Area 28: Medicaid Eligibility 

Determinations 

CMS should assess the accuracy of federal Medicaid eligibility 

determinations to minimize the risk of improper payments.

Actions: Pending

2016 Area 29: Medicaid 

Payments to Institutional 

Providers

CMS should take steps to improve the oversight of state Medicaid payments 

to institutional providers and better ensure that the federal government does 

not provide funds for excessive state payments made to certain providers, 

which could result in savings of hundreds of millions of dollars.

Actions: Pending

2016 Area 30: Medicare 

Payments by Place of 

Service

Medicare could save billions of dollars if Congress were to equalize the 

rates Medicare pays for certain health care services, which often vary 

depending on where the service is performed.

Actions: Pending

Homeland

security/law

enforcement

2011 Area 75/76: DHS’

Management of 

Acquisitions

DHS’ management of acquisitions could be strengthened to reduce 

inefficiencies, cost overruns, and schedule and performance shortfalls.

Actions: 

2011 Area 77: TSA’s BehaviorBased ScreeningValidation of the Transportation Security Administration’s (TSA) behaviorbased screening program is needed to justify future funding.

Actions: 

2011 Area 78: Baggage 

Screening Systems

More efficient baggage screening systems could result in about $470 million 

in reduced TSA personnel costs over the next 5 years.

Actions: 
Page 284 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2011 Area 79: Customs Fee 

Collections

Clarifying availability of certain customs fee collections could produce a onetime savings of $640 million.

Actions: 

2012 Area 47: Border Security Delaying proposed investments for future acquisitions of border surveillance 

technology until the Department of Homeland Security better defines and 

measures benefits and estimates life-cycle costs could help ensure the most 

effective use of future program funding.

Actions: 

2012 Area 48: Passenger 

Aviation Security Fees

Options for adjusting the passenger aviation security fee could further offset 

billions of dollars in civil aviation security costs.

Actions: 

2012 Area 49: Immigration 

Inspection Fee

The air passenger immigration inspection user fee should be reviewed and 

adjusted to fully recover the cost of the air passenger immigration inspection 

activities conducted by the Department of Homeland Security’s U.S. 

Immigration and Customs Enforcement and U.S. Customs and Border 

Protection rather than using general fund appropriations.

Actions: 

2013 Area 28: Checked Baggage 

Screening

By reviewing the appropriateness of the federal cost share TSA applies to 

agreements financing airport facility modification projects related to the 

installation of checked baggage screening systems, TSA could, if a reduced 

cost share was deemed appropriate, achieve cost efficiencies and be 

positioned to install a greater number of optimal baggage screening systems 

than it currently anticipates.

Actions: 

Income

security

2011 Area 80: Social Security 

Offsets

Social Security needs data on pensions from noncovered earnings to better 

enforce offsets and ensure benefit fairness, resulting in estimated $2.4-$7.9 

billion savings over 10 years if enforced both retrospectively and 

prospectively. If Social Security only enforced the offsets prospectively, the 

overall savings would be less as it would not reduce benefits already 

received.

Actions: 

2014 Area 22: Disability 

Insurance

The Social Security Administration (SSA) could prevent significant potential 

cash benefit overpayments in the Disability Insurance program by obtaining 

more-timely earnings data to identify beneficiaries’ work activity that is 

beyond program limits and suspend benefits appropriately.

Actions: 

2014 Area 23: Veterans’ and 

Survivors’ Benefits

The Department of Veterans Affairs’ (VA) direct spending could be 

reduced—by an average of about $4 million annually, according to the 

Congressional Budget Office—if new statutory provisions were enacted, 

namely, a look-back review and penalty period for claimants who transfer 

assets for less than fair market value prior to applying for pension benefits 

that are available to low-income wartime veterans who are at least 65 years 

old or have disabilities unrelated to their military service. This action would 

help to ensure that only those in financial need receive benefits and make 

the program more consistent with other federal programs for low-income 

individuals.

Actions: 

2015 Area 21: Children’s 

Disability Reviews

To prevent an estimated $3.1 billion dollars in potential overpayments over 5 

years, SSA needs to conduct timely disability reviews to better ensure that 

only eligible children receive cash benefits from the Supplemental Security 

Income program.

Actions: 
Page 285 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

2015 Area 22: Supplemental 

Nutrition Assistance 

Program Fraud and Abuse

States should be able to more effectively fight fraud among beneficiaries of 

the Supplemental Nutrition Assistance Program—which provided more than 

$76 billion in benefits in fiscal year 2013—by using data to better focus 

investigative efforts on high-risk households.

Actions: 

2016 Area 31: Disability 

Insurance and Federal 

Workers’ Compensation

SSA should take steps to minimize overpayments from the Social Security 

Disability Insurance program to individuals who also received federal 

workers’ compensation, which could help to achieve potential cost savings 

associated with millions of dollars of overpayments from the Social Security 

Disability Insurance program.

Actions: Pending

2016 Area 32: Disability 

Insurance Overpayments

To help prevent the loss of billions of dollars, SSA should take steps to 

prevent overpayments to beneficiaries of the Disability Insurance program 

and improper waivers of beneficiaries’ overpayment debt.

Actions: Pending

2016 Area 33: Disability Reviews SSA may increase federal savings realized as a result of disability reviews

by further considering factors that affect individuals’ expected lifetime 

benefits when prioritizing its reviews of Disability Insurance and 

Supplemental Security Income cases.

Actions: Pending

2016 Area 34: VA’s Individual 

Unemployability Benefit

To potentially achieve cost savings, VA should develop a plan to study 

whether age should be considered when deciding if veterans are 

unemployable due to service-connected disabilities. By comparison, other 

benefit programs, such as Social Security Disability Insurance, consider 

retirement age a cause for ineligibility and convert benefits for those 

reaching their retirement age to a Social Security retirement benefit. If the 

department were to determine that Total Disability Individual 

Unemployability benefits should be provided only to veterans younger than 

their full Social Security retirement age, it could achieve an estimated $15 

billion in savings from 2015 through 2023, according to the Congressional 

Budget Office.

Actions: Pending

Information

technology

2013 Area 29: Cloud Computing Better planning of cloud-based computing solutions provides an opportunity 

for potential savings of millions of dollars.

Actions: 

2013 Area 30: Information 

Technology Operations and 

Maintenance

Strengthening oversight of key federal agencies’ major information 

technology investments in operations and maintenance provides opportunity 

for savings on billions in information technology investments.

Actions: 

2014 Area 24: Information

Technology Investment 

Portfolio Management

The Office of Management and Budget and multiple agencies could help the 

federal government realize billions of dollars in savings by taking steps to 

better implement PortfolioStat, a process to help agencies manage their 

information technology investments.

Actions: 

2015 Area 23: Federal Software 

Licenses

In order to achieve hundreds of millions in government-wide savings, federal 

agencies should apply better management of software licenses and the

Office of Management and Budget should issue a directive to assist 

agencies in doing so.

Actions: 

2016 Area 35: Federal Mobile 

Telecommunications

In order to achieve substantial government-wide savings, federal agencies 

should establish better controls on mobile device spending, and the Office of 

Management and Budget should monitor progress in achieving these 

savings.

Actions: Pending
Page 286 GAO-16-375SP Selected Tables

Mission

Annual 

Report Area

Area summary and assessment of actions

Addressed Partially addressed Not addressed Consolidated or other 

International 

affairs

2011 Area 81: Antidumping and 

Countervailing Duties

Congress could pursue several options to improve collection of antidumping 

and countervailing duties.

Actions: 

2012 Area 50: Iraq Security 

Funding

When considering new funding requests to train and equip Iraqi security 

forces, Congress should consider the government of Iraq’s financial 

resources, which afford it the ability to contribute more toward the cost of 

Iraq’s security.

Actions: 

2013 Area 31: Tobacco Taxes Federal revenue losses were as much as $615 million to $1.1 billion 

between April 2009 and 2011 because manufacturers and consumers 

substituted higher-taxed smoking tobacco products with similar lower-taxed 

products. To address future revenue losses, Congress should consider 

modifying tobacco tax rates to eliminate significant tax differentials between 

similar products.

Actions: 

2016 Area 36: Cargo Preference 

for Food Aid

A clearer definition of “geographic area” in legislation on cargo preference 

for food aid could allow the U.S. Department of Agriculture to achieve 

financial savings by more fully utilizing the flexibility Congress granted when 

it lowered the statutory cargo preference requirement.

Actions: Pending

Social 

services

2012 Area 51: Domestic Disaster 

Assistance

The Federal Emergency Management Agency could reduce the costs to the 

federal government related to major disasters declared by the President by 

updating the principal indicator on which disaster funding decisions are 

based and better measuring a state’s capacity to respond without federal 

assistance.

Actions: 

2014 Area 25: Better Data to 

Mitigate Foreclosures

HUD’s Federal Housing Administration, VA, and USDA could improve 

outcomes and better manage the costs associated with foreclosure 

mitigation efforts with additional data collection and analysis, potentially 

saving taxpayers millions of dollars on an annual and recurring basis.

Actions: 

2014 Area 26: Housing Choice 

Vouchers Rent Reform

By improving data collection and analysis efforts under the Moving to Work 

demonstration program, HUD would provide Congress with information to 

determine which rent reform option should be implemented program-wide 

and thereby potentially reduce program funding by millions of dollars or 

extend housing assistance to additional low-income households or some 

combination of these outcomes.

Actions: 

2015 Area 24: Disaster Relief 

Fund Administrative Costs

Cost savings of millions of dollars could be realized if Federal Emergency 

Management Agency officials enhance their oversight of the agency’s 

administrative costs obligated from the Disaster Relief Fund for major 

disasters.

Actions: 

Training, 

employment, 

and 

education

2016 Area 37: Post 9/11 GI Bill 

Overpayments

VA could achieve substantial savings by developing guidance and controls 

to reduce the volume of annual Post-9/11 GI Bill overpayments—which 

amounted to over $400 million in fiscal year 2014—and to improve the

collection of overpayment debts, of which $262 million was still outstanding 

as of November 2014.

Actions: Pending

Source: GAO. | GAO-16-375SP

a

See appendix III for new actions added to this area.
Page 287 GAO-16-375SP Lists of Programs Identified

Appendix V: Lists of Programs Identified 

This appendix includes lists of federal programs or other activities related 

to issue areas in this report, and their obligations data, where such 

information was available. In some cases, we estimated the information,

or we did not report it because it was either not available or sufficiently 

reliable. For some issue areas, agencies were not able to readily provide 

programmatic information needed to determine whether and to what 

extent programs are actually duplicative. Additionally, in some instances 

of fragmentation, overlap, or duplication, it may be appropriate for multiple 

agencies or entities to be involved in the same programmatic or policy 

area due to the nature or magnitude of the federal effort.
Page 288 GAO-16-375SP Lists of Programs Identified

Table 1: Department of Defense Commercial Satellite Communication Procurements

Agency Program name Program description

Fiscal year 2012 

expenditures

Department of 

Defense

Commercial Satellite 

Communications Procurement

Provides commercial satellite communication 

services to support a variety of mission critical 

needs.

$1,160,000,000

Source: GAO analysis of Department of Defense data. | GAO-16-375SP

Table 2: Defense Acquisition Programs: Program and Related Budgetary Information

Agency Program name Program description

Total estimated acquisition costs

(as of December 2014)

Department of Defense Defense Acquisitions Major Weapon Systems $1.4 trillion

Source: GAO analysis of Department of Defense data. | GAO-16-375SP

Table 3: Examples of Loan Guarantee Programs Comparable to the Prospective Innovative Technologies in Manufacturing 

Program: List of Federal Programs

Agency Program name Program description

Fiscal year 2016 

estimated credit

subsidy budget authoritya

Department of 

Commerce

Innovative Technologies in 

Manufacturing

Provide loan guarantees to small- and mediumsized manufacturers for the use or production of 

innovative technologies.

$5,000,000

Small Business 

Administration

7(a) Provide loan guarantees to small businesses, 

including manufacturers, for a variety of purposes.

$0b

Department of 

Agriculture

Business and Industry Provide loan guarantees to improve, develop, or 

finance business, industry, and employment and 

improve the economic and environmental climate 

in rural communities.

$43,000,000

Department of 

Agriculture

Biorefinery, Renewable 

Chemical, and Biobased 

Product Manufacturing 

Assistance

Provide loan guarantees to assist the 

development of advanced biofuels, renewable 

chemicals, and biobased products manufacturing 

facilities.

$50,000,000

Department of 

Energy

Innovative Energy 

Technologies

Provide loan guarantees for projects that employ 

new or significantly improved technologies in 

energy projects that avoid, reduce, or sequester 

air pollutants or greenhouse gases.

$28,000,000

Source: GAO analysis of Innovative Technologies in Manufacturing program review document submitted by Economic Development Administration to the Office of Management and Budget, and GAO 

analysis of program regulations and budget documents associated with each of the programs listed.  | GAO-16-375SP

a

Data on fiscal year 2016 estimated credit subsidy budget authority are rounded to the nearest 

million.

b

According to the Small Business Administration’s fiscal year 2016 congressional budget justification, 

the Small Business Administration did not request a credit subsidy appropriation for the 7(a) loan 

program for fiscal year 2016 because it planned to rely on fees to cover the cost of supporting its 

lending authority.
Page 289 GAO-16-375SP Lists of Programs Identified

Table 4: Internal Revenue Service Referral Programs and Related Budgetary Information 

Agency Program name Program description

Fiscal year 2015 

obligations

Internal Revenue 

Service (IRS)

Whistleblower Office Accepts and routes within IRS information and 

allegations of noncompliance and, for certain 

whistleblowers, pays awards for information 

provided.

$5,850,677

IRS Information Referral Process Accepts and routes within IRS reports of 

noncompliance by individual and business 

taxpayers.

Not availablea

IRS Identity Theft Accepts reports of actual or potential incidents of 

identity theft and refund fraud.

$469,983,766b

IRS Return Preparer Office Accepts reports that a tax return preparer filed or 

altered a tax return without taxpayer consent.

$758,528c

IRS Small Business/Self-Employed 

Abusive Transactions

Accepts allegations of suspected abusive tax 

avoidance schemes or tax return preparers who 

promote such schemes.

Not availabled

IRS Large Business and International 

Office of Tax Shelter Analysis

Accepts allegations of abusive tax shelters involving 

large numbers of taxpayers and posing greater 

compliance risk.

$61,085e

IRS Tax Exempt and Government 

Entities, Exempt Organizations

Accepts reports of alleged violations by a taxexempt organization.$287,129f

IRS Tax Exempt and Government 

Entities, Employee Plans

Accepts reports of abusive tax transactions by a 

retirement plan.

Not availableg

IRS Electronic Filing Program Accepts reports by electronic filing providers of 

fraudulent and abusive tax returns.

Not availablea

Source: GAO analysis of IRS data. | GAO-16-375SP

Notes: Total spending on intake and routing of public submissions to these nine IRS referral 

programs is unclear because IRS does not track comparable costs.

a

IRS currently does not have tracking in place for these costs and did not provide an estimate.

b

This amount includes costs for refund fraud and identity theft.

c

IRS currently does not have tracking in place for these costs and provided an estimate.

d

IRS was unable to isolate specific costs for acceptance of abusive transactions forms because 

referrals are also received through IRS staff and informal email submissions.

e

This amount only includes the cost of monitoring the tax shelter hot line and email to receive 

referrals.

f

IRS tracked costs for this referral program only for fiscal year 2014 and estimated the amount for 

fiscal year 2015.

g

This referral program did not receive any abusive transaction referrals directly from the public in 

2015 and IRS did not provide an estimate.
Page 290 GAO-16-375SP Lists of Programs Identified

Table 5: Medicaid and Exchange Coordination: Programs and Related Budgetary Information

Agency Program name Program description

Fiscal year 2015

estimated cost

Centers for Medicare 

& Medicaid Services

Medicaid A joint federal-state program that finances health care for 

low-income individuals, including children, families, and 

aged or disabled individuals.

$529,000,000,000

Internal Revenue 

Service

Premium Tax Credit A subsidy available to help pay the cost of premiums for 

certain individuals enrolling in health insurance coverage 

through exchanges—that is, marketplaces where eligible 

individuals may compare and select among private health 

plans—and who are not eligible for other types of health 

insurance coverage and have household incomes between

100 and 400 percent of the federal poverty level.

23,560,000,000

Source: GAO analysis of Centers for Medicare & Medicaid Services and Internal Revenue Service data. | GAO-16-375SP

Table 6: Tribal Internet Access: Programs and Related Budgetary Information

Agency Program name Program description

Fiscal year 2014 

obligations

Federal Communications 

Commission’s Universal 

Service Fund

The Connect America Fund Provides subsidies to Internet providers to 

supplement their operating costs for 

providing high-speed Internet in unserved or 

high-cost areas.

$3.7 billion, a portion of 

which went to tribal lands

Federal Communications 

Commission’s Universal 

Service Fund

The Schools and Library 

Support Program

Provides discounts to eligible schools and 

libraries on telecommunications services, 

Internet access, and internal connections.

$2 billion, a portion of 

which went to tribal lands

Federal Communications 

Commission’s Universal 

Service Fund

The Healthcare Connect 

Fund

Provides assistance to ensure eligible rural 

health care providers have access to highspeed Internet services and supports the 

formation of regional health care provider 

networks.

About $50 million, a 

portion of which went to 

tribal lands

U.S. Department of 

Agriculture’s Rural Utilities 

Service

The Distance Learning and 

Telemedicine Program

Provides grants to rural communities to 

acquire technologies that use the Internet to 

link educational and medical professionals 

with people living in rural areas.

$20 million, a portion of 

which went to tribal lands

U.S. Department of 

Agriculture’s Rural Utilities 

Service

The Community Connect 

Program

Provides grants to rural communities to 

provide high-speed Internet service to 

unserved areas.

$13.7 million, a portion of 

which went to tribal lands

Source: GAO analysis of Federal Communications Commission and U.S. Department of Agriculture data. | GAO-16-375SP
Page 291 GAO-16-375SP Lists of Programs Identified

Table 7: U.S.-Funded Development Innovation Programs in India

Agency Program name Program description

U.S. Agency for 

International 

Development 

(USAID)

Development Innovation 

Ventures 

Innovation fund supporting private or public sector solutions to 

development challenges to benefit poor urban and rural populations in 

developing countries.

USAID mission in 

India

Millennium Alliance Innovation fund supporting private or public sector solutions to 

development challenges, focusing on small inventors and intending to 

benefit urban and rural populations in India. 

USAID mission in 

India

India Partnerships Program Public-private sector partnerships focused on overcoming development 

challenges to benefit urban and rural populations in India. 

Department of State U.S.-India Science and 

Technology Endowment Fund

Competitive grant program supporting joint research and development 

initiatives with a social impact for populations in India. 

Source: GAO analysis of USAID and Department of State data. | GAO-16-375SP

Table 8: Department of Defense Excess Property Disposal: List of Federal Programs

Agency Program name Program description

Fiscal year

2015 budget

Department of 

Defense

Law Enforcement Support Office 

(management of 1033 Program)

Provides excess DOD personal property to federal, 

state, local, and tribal law enforcement agencies.

$2,403,000

Source: GAO analysis of Department of Defense documentation. | GAO-16-375SP

Table 9: Living Quarters Allowance: Programs and Related Budgetary Information

Agency Program name Program description

Fiscal year 2014 

obligations

Department of 

Defense

Living Quarters Allowance A recruiting incentive for eligible civilian 

employee who are assigned overseas.

Appx. $504,000,000

Source: GAO analysis of Department of Defense data. | GAO-16-375SP

Table 10: DOD Excess Ammunition: List of Federal Programs

Agency Program name Program description

Fiscal year 2015 

obligations

Department of 

Defense

Conventional Munitions 

Demilitarization Program

Provides for the demilitarization and disposal of 

conventional ammunition for all military services 

that is unserviceable, obsolete, unsafe, or excess 

to requirements.

$118,000,000 

Source: GAO analysis of Department of Defense data. | GAO-16-375SP
Page 292 GAO-16-375SP Lists of Programs Identified

Table 11: Treasury Foreclosure Prevention Efforts: Program and Related Budgetary Information

Agency Program name Program description

Fiscal year 2017 

obligations

U.S. Department of 

the Treasury

Troubled Asset Relief Program -

Making Home Affordable

Provides financial support to borrowers and 

mortgage servicers to prevent avoidable 

foreclosures.

$27,800,000,000

Source: GAO analysis of Treasury data. | GAO-16-375SP

Table 12: Internal Revenue Service’s Refund Fraud Activities, Including the Identity Theft Prevention Program: Related 

Budgetary Information

Agency Program name Program description

Fiscal year 2015 

obligations

Internal Revenue 

Service

Refund Fraud Prevents refund fraud, including identity theft refund 

fraud, and provides assistance to identity theft victims. 

$469,983,766

Source: GAO analysis of Internal Revenue Service data. | GAO-16-375SP

Note: Internal Revenue Service officials told us they do not track obligations for identity theft activities 

separately from other types of refund fraud.

Table 13: Reviewed Accounts at the Departments of Energy and State with Excess Unobligated Balances: Programs and 

Related Budgetary Information

Agency Program name Program description

Unexpired,

unobligated balance,

end of fiscal year 2015

Department of Energy Western Area Power 

Administration’s Construction, 

Rehabilitation, Operation and 

Maintenance account

Markets electric power in 15 central and 

western states from federally owned 

power plants, serving a diverse group of 

nearly 700 wholesale customers, 

including municipalities, cooperatives, 

public utility and irrigation districts, 

federal and state agencies, and Native 

American tribes.

$638,000,000

Department of State Diplomatic and Consular 

Programs account

Funds a broad range of activities, 

including operational support for U.S. 

embassies, consulates, and other 

diplomatic posts worldwide. Funds are 

allocated to four main categories: human 

resources, overseas programs, 

diplomatic policy and support, and 

security programs.

$2,234,000,000

Source: GAO analysis of data from the President’s Budget Appendix. | GAO-16-375SP

Note: Unexpired, unobligated balances are for the entire account indicated.
Page 293 GAO-16-375SP Lists of Programs Identified

Table 14: Medicaid Financing: Program and Related Budgetary Information

Agency Program name Program description

Fiscal year 2015

estimated cost

Centers for Medicare & 

Medicaid Services

Medicaid A joint federal-state program that finances health care 

for low-income individuals, including children, and 

aged or disabled individuals.

$529,000,000,000a

Source: Centers for Medicare & Medicaid Services; Department of Health and Human Services, 2014 Actuarial Report on the Financial Outlook for Medicaid (Washington, D.C.: 2014). a

The $529,000,000,000 includes about $26,000,000,000 in administrative costs, $320,000,000,000 in 

federal share of Medicaid payments, and $209,000,000,000 in state share of Medicaid expenditures.

Table 15: Medicare Providers and Suppliers Eligibility Verification: Programs and Related Budgetary Information 

Agency Program name Program description

Fiscal year 2015 

outlays

Centers for Medicare & 

Medicaid Services

Medicare Medicare is the federal health insurance program for 

individuals aged 65 or over, certain individuals with 

disabilities, and individuals with end-stage renal 

disease.

$568,900,000,000a

Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-16-375SP

a

The $568,900,000,000 represents $358,300,000,000 for Medicare Fee-for-Service, 

$148,600,000,000 for Medicare Advantage (Part C), and $62,00,000,000 for Medicare Prescription 

Drug Benefit (Part D).

Table 16: Medicaid Demonstrations: Program and Related Budgetary Information

Agency Program name Program description

Fiscal year 2014

federal expenditures

Health and Human 

Services (HHS)

Medicaid section 1115 

demonstrations 

State demonstrations approved by HHS to test 

new approaches for delivering Medicaid services 

that are likely to assist in promoting Medicaid 

objectives.

$89,000,000,000a

Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-16-375SP

a

Data reflect federal expenditures only, as reported in Medicaid Budget and Expenditure System.

Table 17: Medicare: Program and Related Budgetary Information

Agency Program name Program description

Calendar year 2014

program cost

Centers for Medicare 

& Medicaid Services

Medicare’s hospital 

outpatient prospective 

payment system 

Payment system utilized by Medicare to pay for 

services provided to beneficiaries in hospital 

outpatient departments.

$41,088,000,000

Centers for Medicare 

& Medicaid Services

Medicare’s physician fee 

schedule

Payment system utilized by Medicare to pay 

physicians and certain other health professionals.

$70,205,000,000

Source: The Boards of Trustees of the Medicare Trust Funds. | GAO-16-375SP
Page 294 GAO-16-375SP Lists of Programs Identified

Table 18: Disability Insurance and Federal Workers’ Compensation: Programs and Related Budgetary Information 

Agency Program name Program description

Fiscal year 2015

benefit disbursements

Social Security 

Administration

Disability Insurance Disability Insurance provides benefits to

eligible workers who have qualifying disabilities

and their eligible family members.

$144,102,000,000 

Department of Labor Federal Employees’

Compensation Act (FECA) 

program

The FECA program provides monetary and 

medical benefits to federal workers who 

sustain work-related injury or disease.

$3,152,650,0000a

Source: GAO analysis of Social Security Administration and Department of Labor data. | GAO-16-375SP

a

Total FECA disbursements include benefits paid for compensation and medical benefits.

Table 19: Disability Insurance: Programs and Related Budgetary Information

Agency Program name Program description

Fiscal year 2015

benefits issued

Social Security 

Administration

Disability Insurance Disability Insurance provides benefits to eligible 

workers who have qualifying disabilities and their 

eligible family members.

$144,102,000,000 

Source: GAO analysis of SSA data. | GAO-16-375SP

Table 20: Continuing Disability Reviews: List of Federal Programs and Related Budgetary Information

Agency Program name Program description

Fiscal year 2015

benefit payments

Social Security 

Administration

Disability Insurance Disability Insurance provides benefits to eligible 

workers who have qualifying disabilities, and 

their eligible family members.

$144,102,000,000

Social Security 

Administration

Supplemental Security 

Income

Supplemental Security Income provides 

benefits to low-income individuals who are 

disabled, blind, or aged.

a

$51,520,000,000

Source: GAO analysis of Social Security Administration data. | GAO-16-375SP

a

Social Security Administration does not conduct continuing disability reviews on all individuals 

receiving Supplemental Security Income, such as those, for example, whose eligibility is based on 

age.

Table 21: Department of Veterans Affairs’ Individual Unemployability Benefit: Program and Related Budgetary Information

Agency Program name Program description

Fiscal year 2015 

obligations

Department of Veterans 

Affairs

Disability Compensation 

Program 

Provides monetary benefits, including Total 

Disability Individual Unemployability benefits, to 

veterans with disabilities that are the result of a 

disease or injury incurred or aggravated during 

active military service. 

$73,192,481,000

Source: GAO analysis of Department of Veterans Affairs data. | GAO-16-375SP
Page 295 GAO-16-375SP Lists of Programs Identified

Table 22: Post-9/11 GI Bill Education Benefits: Programs and Related Budgetary Information

Agency Program name Program description

Fiscal year 2014 

obligations

Department of 

Veterans Affairs

Post-9/11 GI Bill Provides education benefits, including tuition and monthly 

housing payments, to eligible veterans who served on 

active duty for at least 90 days on or after September 11, 

2001.

$10,754,649,000 

Source: GAO analysis of Veteran Affairs data. | GAO-16-375SP

(100127)
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