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Under a VAT, businesses pay tax on the value they add to the goods and services they purchase from other businesses. VAT liability is typically calculated in industrialized countries using what is known as the credit- invoice method. Under this method, businesses apply the VAT rate to their sales but claim a credit for VAT paid on purchases of inputs from other businesses (shown on purchase invoices). The difference between the VAT collected on sales and the credit for VAT paid on input purchases is remitted to the government. Figure 1 illustrates a VAT with a 10 percent rate. A lumber company cuts and mills trees and has sales of $50 to a furniture maker. Assuming no input purchases from other businesses, to keep the illustration simple, the company adds the tax to the price of the goods sold and remits $5 in tax to the government. The purchase invoice received by the furniture maker would list $50 in purchases plus $5 in VAT paid. If the furniture maker has sales of $120 to a retail store, $12 of VAT would be added to the sales price but the furniture maker could subtract a credit for the $5 VAT paid on purchases and remit $7 to the government. The retailer would receive an invoice showing purchases of $120 and $12 of VAT. Similarly, if the retailer then has sales of $150, $15 of VAT would be added but the retailer could subtract a credit for the $12 paid on purchases and remit $3 to the government. In total, the government would receive VAT equal to 10 percent of the final sales price to consumers. Thus, a 10 percent VAT is equivalent to a 10 percent retail sales tax in terms of revenue. Under both taxes, the final consumer ultimately bears the economic burden of the tax ($15), except in a VAT, the tax is collected in stages, not just in the final sale. Our study countries’ experiences with noncompliance suggest that even a conceptually simple VAT—one that applies a single tax rate to all goods and services—would have compliance risks and would generate significant administrative costs and compliance burden. Further, like other types of taxes, adding complexity through preferences increases these risks, costs, and burden. While our study countries had VATs of varied designs and complexity at the time of our original review in 2008, they all devoted significant enforcement resources to addressing compliance issues that would be found in even a simple VAT. As shown in table 1, compliance risks for a VAT can stem from either underpayment of taxes owed on sales, or overstating taxes paid on purchases. These risks include refund fraud and missing-trader fraud. VATs are vulnerable to refund fraud because businesses with taxable sales less than taxable purchases are entitled to refunds. All of our study countries were concerned about illegitimate businesses or fraudsters submitting fraudulent refund claims that result in the theft of funds from the government. In the case of a missing trader, a business is set up for the sole purpose of collecting VAT on sales and then disappearing with the proceeds. Because of compliance risks, even simple VATs require enforcement activities, such as audits and record keeping by businesses, that create administrative costs for the government and compliance burden for businesses. Of course, compliance risks and the associated administrative costs and compliance burdens are not peculiar to VATs. While the specifics may vary, other types of taxes also carry compliance risks. A VAT, like any tax system, will require government resources to administer. The drivers of administrative costs in many tax systems include the number of taxpayers (businesses, individuals, or both) subject to the tax, how often they file returns, and the percentage of taxpayers audited. In the case of a VAT, administration requires the government to process tax returns and provide certain services to businesses. Even a simple VAT warrants education and assistance services, in part to address compliance risks. Tax administrators also need to spend significant resources on audit and enforcement activities. Some available data from our study countries indicate a VAT may be less expensive and easier to administer than an income tax. In 2006, the tax administration agency in the United Kingdom measured administrative costs for the VAT to be approximately half a percent of revenue collected compared to over one and a quarter percent for the income tax. Officials at the New Zealand Inland Revenue Department also told us that administering their VAT was easier than administering some of their other taxes. For example, only 3 percent of VAT returns submitted to New Zealand’s revenue agency are found to have errors, compared to approximately 25 percent for income tax returns. As with other taxes, compliance burden with a VAT is mostly driven by record-keeping requirements, filing-frequency requirements, and time and resources to deal with audits. The “fixed cost” nature of many compliance costs associated with a VAT means that smaller businesses often face a proportionally higher burden than larger businesses in complying with the VAT. The three most comparable studies we identified estimated that the compliance burden as a percentage of annual sales in Canada, New Zealand, and the United Kingdom ranged from approximately 2 percent for businesses with less than $50,000 in sales to as low as 0.04 percent for businesses with over $1,000,000 in sales. Private accounting and tax experts we spoke with also agreed that as the size of the business grows, the VAT compliance burden decreases per dollar of sales. All of the countries we studied have added complexity to their VAT designs, mainly through the use of tax preferences. Tax preferences— also called tax expenditures—result in foregone tax revenue due to preferential provisions that generally shrink the tax base. Tax preferences can also exist in other tax systems, such as income taxes or retail sales taxes. In our study countries, some economic sectors, such as certain consumer essentials like food and health care and public-sector organizations are often provided VAT preferences because of social or political considerations. Other sectors, such as financial services, insurance, and real estate, are provided exemptions or exclusions because they are inherently hard to tax under a VAT system. Countries’ use of VAT preferences—such as exemptions and reduced rates—generally results in reduced revenue and greater compliance risks, administrative costs, and compliance burden. However, some preferences, such as thresholds for businesses, may not increase administrative costs and compliance burden because they reduce the number of entities subject to VAT requirements. Additionally, in most study countries, certain financial-services and real-estate transactions are exempt for administrative purposes, which could result in reduced compliance burden. VAT preferences used in our study countries included exemptions, exclusions, and thresholds. An exempt good or service is not taxed when sold, and businesses that sell exempt goods or services cannot claim input tax credits for inputs used in producing the exempt output. While no VAT is collected with the final sale, the government still collects tax revenue throughout the stages of production. Tax is paid and collected on inputs. In contrast, excluding a good or service, more commonly referred to as zero rating, removes it entirely from the tax base resulting in an effective tax rate of zero. For goods and services that are zero-rated, VAT that was paid in the production of the good or service can be fully recovered through input tax credits. As a consequence, no net VAT revenue is actually collected by the government from the sale of zero- rated goods and services. A threshold is a type of exemption that excludes businesses below a certain size from collecting and remitting VAT and from being able to claim input tax credits. Businesses with sales below the threshold are not required to charge VAT on their sales and cannot claim input tax credits for VAT paid on purchases. Businesses with annual sales above the threshold level are required to register with the tax agency, and collect and remit the VAT. One issue the United States would face if it adopted a national VAT is its interaction with retail sale taxes levied by states and localities. Although there are several countries with a federal system of government, Canada is the only country that we identified that has a national VAT administered alongside a variety of subnational consumption taxes. Canada administers its federal VAT and provincial consumption tax systems differently in different provinces. The four types of national/subnational consumption tax structures in Canada are:  a separate federal and provincial VAT, both of which are administered  a joint federal and provincial VAT administered by the federal government;  a separate federal VAT and provincial retail sales tax administered  a federal VAT only. Canada’s experience administering a national VAT along with a variety of provincial VATs and sales taxes demonstrates that multiple arrangements in a federal system are feasible, but results in increased administrative costs and compliance challenges for both government and business. Businesses in provinces where the provincial and federal VATs tax the same goods and services and are administered by the federal government have a relatively lower compliance burden since they only have to comply with one set of requirements. In contrast, businesses, particularly retailers, in provinces with a sales tax face greater compliance burdens than those in other provinces because they are subject to dual reporting, filing, and remittance requirements. Australia, Canada, and New Zealand, the study countries that most recently implemented a VAT, all built on preexisting administrative structures. All had national consumption taxes that were paid by businesses prior to transitioning to a VAT. Despite the preexisting structure, implementation of the new tax in these countries involved multiple agencies, the development of new policies and processes, and the hiring of additional staff. Interagency committees were also established in all three countries to facilitate and coordinate implementation efforts. These three study countries took 15 to 24 months to implement the VAT and devoted a great deal of time and effort to education activities. Before entities subject to VAT requirements can be expected to comply, they must know what those requirements are and what they mean to specific economic and industry sectors. According to International Monetary Fund guidance on VAT implementation, development and testing of tax forms early in the implementation process is important because they are a key part of the education effort. For Australia, Canada, and New Zealand, this also included extensive outreach efforts through a variety of direct and indirect assistance. For example, Australian officials said a key part of their education and outreach strategy was to target key players in various industry sectors, such as local chambers of commerce. Both Canada and Australia also provided direct monetary assistance to qualifying small businesses to defray the costs of acquiring the necessary supplies needed to meet new bookkeeping and reporting requirements. Despite significant efforts to encourage businesses to submit materials early for VAT registration, both Australia and Canada still had difficulty getting businesses to register prior to the VAT implementation date. In both countries, this resulted in significant spikes in registration and education-related workload just prior to implementation. In Canada, for example, only 500,000 or 31 percent of the 1.6 million total registrants had voluntarily registered 3 months prior to VAT implementation. The experiences of our five study countries show that all VAT designs have compliance risks that generate considerable administrative costs and compliance burden and that, similar to the U.S. tax system, adding complexity to the tax’s design increases these risks, costs, and burden. While our study countries had VATs of varied designs and complexity, they all devoted significant enforcement resources to addressing compliance that would be found in even a simple VAT. Enforcement activities, such as audits, and record keeping by businesses create administrative costs for the government and compliance burden for businesses. Of course, compliance risks and the associated administrative costs and compliance burden are not peculiar to VATs. While the specifics may vary, other types of taxes also carry compliance risks. One overriding lesson about VAT design is that, like our income tax system, adding tax preferences to the system may satisfy economic, distributional, or other policy goals but at a cost. Tax preferences—in the form of exemptions, zero rates, or reduced rates—often reduce revenue, add complexity, and increase compliance risks. To mitigate the increased risk, countries have imposed additional record-keeping and reporting requirements on businesses, delayed refunds, and done more auditing of businesses. The end result is an increase in compliance burden for businesses and administrative costs for the government. The choice of tax type is typically heavily influenced by criteria other than administrability. Revenue needs, effect on economic performance, and distributional consequences are prominent considerations and have been at the forefront of the debate in the United States about tax reform. Administrability and the details of how a new tax would be implemented often get less attention. However, administrability and design details do matter. The benefits of a new or reformed tax system, in terms of revenue, economic performance, or equity, would be at least partially offset by poor design that unnecessarily increased compliance risks, administrative costs, and compliance burden. Chairman Camp, Ranking Member Levin, and Members of the Committee, this completes my prepared statement. I would be happy to respond to any questions you may have at this time. For further information on this testimony, please contact James R. White at (202) 512-9110 or whitej@gao.gov. In addition, contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. In addition to the individual named above, Jay McTigue, Assistant Director; Brian James; and Danielle Novak made key contributions to this testimony. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Dissatisfaction with the federal tax system has led to a debate about U.S. tax reform, including proposals for a national consumption tax. One type of proposed consumption tax is a value-added tax (VAT), widely used around the world. A VAT is levied on the difference between a business's sales and its purchases of goods and services. Typically, a business calculates the tax due on its sales, subtracts a credit for taxes paid on its purchases, and remits the difference to the government. While the economic and distributional effects of a U.S. VAT type tax have been studied, GAO issued a report in 2008 that looked at lessons learned from VAT administration in Australia, Canada, France, New Zealand, and the United Kingdom. These countries provided a range of VAT designs from relatively simple to more complex. This statement, which is based on the 2008 report, focuses on (1) the effect VAT design choices, such as exemptions and enforcement mechanisms, have on compliance, administrative costs, and compliance burden; (2) Canada's experience with administering a VAT in conjunction with several different subnational consumption tax arrangements; and (3) the experience that some countries had transitioning to a VAT. VATs have grown in popularity over the past five decades with recent estimates showing more than 130 countries worldwide using a VAT. Nonetheless, like other tax systems, even a simple VAT--one that exempts no goods or services--has compliance risks and, largely as a consequence, generates administrative costs and compliance burden. For example, all of the study countries reported devoting significant enforcement resources to compliance issues. Like an income tax, VATs can be vulnerable to compliance schemes that either result in undercollection of taxes due or overclaiming of credits for taxes paid. Also, as with other taxes, adding tax preferences--such as exempting certain goods or services from tax--generally decreases revenue, increases complexity, and increases compliance risks. Increased complexity also increases the record-keeping burden on businesses and government resources needed for enforcement. Canada's experience administering a national VAT along with a variety of provincial VATs and sales taxes demonstrates that multiple arrangements in a federal system are feasible, but increase administrative costs and compliance challenges for both governments and businesses. Businesses, particularly retailers, in provinces with a sales tax face greater compliance burdens than those in other provinces because they are subject to dual reporting, filing, and remittance requirements. When implementing their VAT, Australia, Canada, and New Zealand all devoted considerable resources to educate and assist businesses subject to the new tax. Both Australia and Canada provided direct monetary assistance to qualifying small businesses to help meet new bookkeeping and reporting requirements. Both had trouble getting businesses to register for the VAT by the implementation date.

Coordinating and evaluating research are important elements in ensuring federal dollars are used efficiently and effectively. RITA is responsible for coordinating and reviewing the DOT operating administrations’ RD&T activities so that (1) no unnecessary duplication takes place and (2) the activities have been evaluated in accordance with best practices. The Committee on Science, Engineering, and Public Policy—a joint committee of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine—has emphasized the importance of careful coordination and focused evaluation of federal research and developed principles to help agencies evaluate their research programs. The committee recommended establishing a formal process to coordinate research across agencies. While this recommendation is focused on cross-agency research, the goals—enhancing collaboration, ensuring that questions are explored, and reducing inefficiencies—are important and applicable within agencies as well. Coordination of research ensures that information is shared so that, if necessary, research can be adjusted to ensure a field is appropriately covered and understood. In addition, the committee noted that evaluating research against established performance measures in agency strategic plans, developing measures that are appropriate for the type of research being developed, and using expert reviews aid in assessing the quality of the research. Relatedly, the Government Performance and Results Act of 1993 (GPRA) requires federal agencies to set performance goals and measure performance against those goals to ensure the effectiveness of federal investments. GPRA’s emphasis on results implies that federal programs contributing to the same or similar outcomes should be closely coordinated to ensure that goals are consistent and complementary, and that program efforts are mutually reinforcing. Making appropriate and cost-effective investment choices is an essential aspect of responsible fiscal stewardship. Such choices are even more important in today’s climate of expected trillion-dollar deficits. Careful decisions will need to be made to ensure that RD&T activities achieve their intended (or other) purposes and do so efficiently and economically. In 2006, we made seven recommendations to enhance RITA’s ability to manage and ensure the effectiveness of RD&T activities, including developing strategies for coordinating and reviewing RD&T activities and developing performance goals and measures. (See table 1.) RITA has implemented five of our recommendations and is making progress on implementing the remaining two. Preventing duplication of effort. In response to our recommendation, RITA developed a strategy to ensure that no unnecessary duplication of research programs occurs within the department, incorporated the results into various high-level DOT planning documents, and reported the results in its strategic plan. RITA’s strategy consists of ongoing internal reviews of all of DOT’s research programs. These reviews are conducted by (1) convening meetings in which officials from each of the operating administrations share information about areas of ongoing and planned research, seeking opportunities for joint effort, and (2) conducting annual reviews of each operating administration’s research plans, looking for research duplication, among other things. In addition, RITA has formed eight working groups, in concert with DOT’s operating administrations, to foster collaboration on cross-modal issues. According to a RITA official, results of these reviews have identified several areas for cross-modal collaboration, including climate change, freight capacity, security, alternative energy technologies, and advanced materials and sensors. According to RITA officials, as a result of these actions, RITA is better able to meet legislative and DOT requirements for coordinating its research, leverage resources for cross-modal research initiatives, and prevent unnecessary research duplication. Following best practices. RITA also developed a strategy to ensure that the results of all DOT’s research activities are evaluated according to established best practices. The strategy includes three primary mechanisms: (1) ensuring systematic application of the Office of Management and Budget’s Research and Development Investment Criteria (relevance, quality, and performance) and the Program Assessment Rating Tool by the operating administrations; (2) annual internal program reviews with self-reporting by the operating administrations; and (3) documenting the operating administrations’ external stakeholder coordination and review. According to RITA, reviews conducted in fiscal years 2007 and 2008 focused on how well the operating administrations are implementing best practices, including external stakeholder involvement, merit review of competitive proposals, independent expert review, research performance measures, and external research coordination. RITA reports the results of its reviews to the department’s RD&T Planning Council, which consists of administrators from each of the operating administrations, including RITA, and officials from DOT’s Office of the Secretary. According to RITA officials, as a result of these efforts, RITA is better able to determine the quality and effectiveness of its research activities and investments and determine whether they are achieving their intended (or other) goals. Establishing RD&T project databases. RITA created two database systems to inventory and track all of DOT’s research activities and provide tools for querying and searching individual projects to identify potential duplication and areas where operating administrations could collaborate. The first database, the RITA Research Notification System, captures research investments at the transaction level, allowing users to search by activity, contracts and grants, and contractor names, enabling identification of funded programs for coordination, collaboration and review. The second database is part of the annual Research Planning and Investment Coordination (RPIC) process, which captures research at the budget request level, allowing for departmentwide transparency and coordination of proposed programs and projects. According to a RITA official, eventual combination of the two databases will offer a mechanism for measuring and tracking investments from request through funding and execution. Communicating evaluation efforts. To communicate its efforts in evaluating DOT’s research to Congress, senior DOT officials, and the transportation community, RITA and its predecessor organization published a summary of all research program evaluations for 2004 through 2006 and included that summary in a high-level DOT planning document and in a report to Congress. First, RITA’s predecessor published what was essentially a summary of all research program evaluations conducted in fiscal year 2004—in the form of a summary of the results of its review of the operating administrations’ application of the Office of Management and Budget’s Research and Development Investment Criteria—in its 2005 annual RD&T plan. Secondly, RITA developed a summary of the results of its fiscal year 2005 and 2006 research program reviews, and a schedule of RITA’s planned fiscal year 2007 reviews, and included it in DOT’s “Research, Development and Technology Annual Funding Fiscal Years 2006-2008, A Report to Congress.” This report also includes summaries of research program evaluations conducted by modal research advisory committees, the Transportation Research Board, and key modal stakeholders in fiscal years 2006 and 2007. According to RITA officials, as a result of this reporting, RITA has provided better continuity and context to Congress and the transportation community about the results of its research evaluations. Documenting processes. RITA has also acted to document its process for systematically evaluating the results of its own multimodal research programs, such as the Hydrogen Safety Program and various grant programs. RITA evaluates the results of its RD&T activities by ensuring they align with DOT goals, meet the research and development investment criteria, and are subject to an annual peer review process. RITA has documented this process in its strategic plan. Establishing performance goals. In 2006, we found that RITA lacked performance goals and an implementing strategy and evaluation plan to delineate how the activities and results of its coordination, facilitation, and review practices will further DOT’s mission and ensure the effectiveness of the department’s RD&T investment. RITA has partially implemented our recommendation that it develop these elements. Setting meaningful goals for performance, and using performance information to measure performance against those goals, is consistent with requirements in GPRA. Developing an evaluation plan and analyzing performance information against set goals for its own coordination, facilitation, and review practices could assist RITA in identifying any problem areas and taking corrective actions. Linking performance goals with the planning and budget process, such as DOT’s annual budget process, can also help RITA determine where to target its resources to improve performance. Guidance provided by the Committee on Science, Engineering, and Public Policy notes that evaluating the performance of research in the context of the strategic planning process ensures the research is relevant to the agency’s mission. Without such goals and an evaluation plan, it is difficult for RITA to determine its success in overseeing the effectiveness of DOT’s RD&T activities. According to RITA officials, while an overall implementing strategy and evaluation plan has not yet been established, RITA has created performance goals. A RITA official told us that the RPIC process—a relatively new process that integrates the budget and strategic planning processes—will help in creating an implementing strategy. The RPIC process is meant to provide information to the Planning Council and Planning Team, which is responsible for defining the department’s overall RD&T strategic objectives. The RPIC process assesses the department’s RD&T activities in terms of the following performance goals: (1) balanced portfolio (e.g., mix of basic, applied, developmental, and high risk RD&T), (2) alignment of RD&T programs with DOT goals and each operating administration’s mission, and (3) return on investment. The RPIC process has been in place only for fiscal year 2009, and as a result, the Planning Council does not yet have the information needed to make decisions about a strategy. In addition, RITA does not yet have an evaluation plan to monitor and evaluate whether it is achieving its goals. A RITA official told us that the RPIC process needs to be in place for 2 or 3 fiscal years before it can provide enough information for RITA to establish a strategy or evaluation plan. Developing performance measures. In 2006, we also found that RITA did not work with the operating administrations to develop common performance measures for DOT’s RD&T activities. According to RITA officials, RITA has partially implemented our recommendation that it do so. Without common performance measures for the RD&T activities of the operating administrations, RITA and the operating administrations lack the means to monitor and evaluate the collective results of those activities and determine that they are achieving their intended (or other) results and furthering DOT-wide priorities. In response to our recommendation, RITA officials told us that they are working with the operating administrations through the RD&T Planning Team—made up of senior officials in RITA and each of the operating administrations. During Planning Team meetings, representatives from each of the operating administrations share information about how RD&T projects are measured and prioritized. For example, according to a RITA official, the Federal Railroad Administration measures how frequently its RD&T projects are used in real-world applications. Once representatives from each operating administration have had the chance to share information, RITA officials will then look for commonalities and determine whether any of the measures could be adopted for the department’s RD&T activities. In closing, since it became operational in 2005, RITA has taken a number of positive steps to meet its vision of becoming a DOT-wide resource for managing and ensuring the effectiveness of RD&T activities. While we have not assessed the effectiveness of these efforts since our 2006 report, we believe that RITA has made progress. We will continue to monitor RITA’s performance in implementing our recommendations. As reauthorization approaches, we look forward to assisting Congress as it considers RITA’s management of DOT’s research program, to better ensure that taxpayers receive the maximum value for DOT’s RD&T investment. Mr. Chairman, this concludes my prepared statement. I would be pleased to respond to any questions that you or other members of the subcommittee might have. For further information regarding this statement, please contact David Wise at (202) 512-2834 or wised@gao.gov. Individuals who made key contributions to this statement are Michelle Everett, Colin Fallon, Erin Henderson, and James Ratzenberger. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Research, development, and technology (RD&T) activities are vital to meeting the Department of Transportation's (DOT) priorities, such as increasing safety, enhancing mobility, and supporting the nation's economic growth. In fiscal year 2008, the department's RD&T budget totaled over $1.1 billion, primarily for highway and aviation projects. Over the years, concerns have been raised about DOT's capabilities to improve RD&T coordination and evaluation efforts across the agency. In 2004, Congress created DOT's Research and Innovative Technology Administration (RITA) to coordinate and review the department's RD&T programs and activities for the purposes of reducing research duplication, enhancing opportunities for joint efforts, and ensuring RD&T activities are meeting goals. In 2006 GAO reported that RITA had made progress toward these ends, but needed to do more. GAO's testimony focuses on (1) the importance of coordinating and evaluating RD&T activities and (2) RITA's progress in implementing GAO's 2006 recommendations. GAO's statement is based on its 2006 report, a review of best practices for coordination and evaluation, and follow-up discussions with RITA officials on actions to implement GAO's recommendations. GAO did not assess whether RITA's actions have improved the effectiveness of the department's RD&T investment. Coordinating and evaluating research are important elements in ensuring that federal dollars are used efficiently and effectively. Coordinating research enhances collaboration, ensures that questions are explored, and reduces inefficiencies, such as from duplication of research. Evaluating research activities entails comparing research with established performance measures in agency strategic plans and using expert reviews to assess the quality of the research. With DOT's large RD&T budget--over $1.1 billion--coordination and evaluation are critical to making cost-effective investment choices in today's climate of expected trillion-dollar deficits. RITA has fully implemented five recommendations that GAO made in 2006 aimed at enhancing RITA's ability to manage and determine the effectiveness of RD&T activities, and partially implemented the remaining two. (See table below.) Regarding implemented recommendations, most notably, RITA has implemented a strategy to coordinate RD&T activities and look for areas where joint efforts would be appropriate. Results of its coordination efforts have identified a number of areas for cross-modal collaboration, including the areas of climate change and freight capacity. RITA has also developed a strategy to ensure that the results of DOT's research activities are evaluated against best practices, using governmentwide guidance and external stakeholder reviews. Regarding partially implemented recommendations, RITA has not yet developed an overall strategy, evaluation plan, or performance measures that delineate how its activities ensure the effectiveness of the department's RD&T investment. However, it has developed a process for doing so. In this regard, RITA plans to use an existing departmentwide strategic planning and budget process and collaborative meetings to develop an overall strategy and performance measures. RITA officials expect that it will fully implement activities related to this recommendation by 2012. GAO will continue to monitor RITA's activities.

NPRC maintains the personnel and medical records of nearly all former members of the U.S. military service departments who served during the twentieth century and responds to requests for these records. The records maintained by NARA are the property of the Department of Defense (DoD), which reimburses NARA for storing and servicing the records. NARA maintains DoD’s records at the Military Personnel Records facility in St. Louis, Missouri, which opened in 1955 for this purpose. Although the building experienced a major fire in 1973 that destroyed some records, it currently contains about 55 million military personnel records and an additional 39 million auxiliary records such as military pay vouchers. The records—paper copy—are kept in cardboard boxes stacked on 10 foot high shelves. They are filed in sections according to branch of service, time period of service, or date of transfer to NPRC. Within the sections, records are filed alphabetically, by service number or by registry number (a sequential numbering system). Each box is marked with the name or number of the first record in the box to identify its contents. Figure 1 shows the central corridor of a typical storage area, and figure 2 shows a typical row of records in the storage area. Prior to 1999, NPRC operated in the same fashion as it had since the 1950s, when its building first opened. Request processing was manual and labor intensive. Only recently has the NPRC begun to make computers and other technology available to its staff that processes requests. Even telephones were not installed on employees’ desks until February 2000. The pre- reengineering philosophy was that having telephones on the desks of all technicians might reduce productivity. As a result of not having telephones on their desks, technicians generally did not contact requesters to obtain additional information to assist them in locating the requested military service record or to clarify an unclear request. In the past, requests that were unclear and could not be clarified were returned to the requester. For requests that were clear, staff located the appropriate cardboard box, pulled the record, processed the request, and later returned the record. For each request, staff created a reply using forms with preprinted responses that could be checked off. The forms were handwritten and sent out with the relevant record copies. NPRC was organized by branches of service—the Army, Navy and Air Force—and each branch processed its own records. Technicians were assigned work based on the level of difficulty of the tasks required to fulfill the requests. These tasks could range from simply photocopying a form to formulating complex correspondence. More complex cases were assigned to higher pay grade employees. However, the division of workload among branches and pay grades made it difficult to respond to fluctuations in workload and affected timeliness and customer service, according to NPRC officials. In 1997, NPRC began an ongoing business process reengineering project to improve timeliness among other things. In February 1999, a pilot team began using the new work processes. When the reengineering project is fully implemented, NPRC will be organized into five units or cores. As of March 2001, four of the cores had been implemented. Each core will process requests pertaining to records of veterans in all military services. Within the cores, each technician is expected to be able to process requests of varying levels of difficulty. In addition, NPRC is introducing computer technology into its processing. NPRC has implemented an interim computer system with the capability to track requests electronically, identify duplicate requests, and access prior responses concerning a record. Ultimately, NPRC expects to implement a more capable computer system that, among other things, will enable it to receive requests electronically and directly access other agencies’ data bases in order to fulfill requests. NPRC officials expect these two features to significantly improve timeliness. The challenge that NPRC faces in shortening the amount of time it takes to respond to requests for records is in part a function of its human capital challenges. Our designation in January 2001 of strategic human capital management as a governmentwide high-risk area underscored the connection between human capital challenges and programmatic challenges and risks. To help agencies manage these challenges, in September 2000 we published a human capital self-assessment checklist.The checklist emphasized the need to pursue a workforce planning strategy, through which an organization should identify its current and future human capital needs, including the size and deployment of its workforce across the organization, and the knowledge, skills, and abilities needed for the agency to pursue its mission, goals, and business strategies. Moreover, an agency’s workforce planning strategy should be linked to strategic and program planning efforts. In fiscal year 2000, on average, NPRC took 54 days to respond to written requests for records. Although NPRC completed about 6 percent of record requests within 10 days in fiscal year 2000, its goal is to eventually complete 95 percent of requests within 10 days by fiscal year 2005. This goal is identified in NARA’s strategic plan under the Government Performance and Results Act. NPRC officials attribute delays in completing requests primarily to the large backlog of requests waiting to be processed. As of the end of the second quarter of fiscal year 2001, NPRC had a backlog of about 214,000 requests. This would represent about a 3-month wait from the time NPRC receives the request to the time that a technician begins to process the request. NPRC officials identify two events as the cause of the backlog. The first is the loss of 43 employees out of a staff of 273 who accepted buyouts—cash incentives to retire or resign—in fiscal year 1995. According to NARA, the buyout was part of a governmentwide effort to streamline the federal workforce. The second is the ongoing implementation of NPRC’s reengineering project. NPRC officials told us that reengineering slowed down productivity because employees were participating in training, moving to redesigned work spaces, and adjusting to the restructuring of the work process. Data from NPRC showing changes in the backlog appear consistent with NPRC’s explanation of the causes of the backlog. Specifically, the backlog initially increased dramatically in fiscal year 1995, the year of the buyout; dropped to about 61,000 in 1997 as the number of staff rose to pre-buyout levels; and increased dramatically again during fiscal years 1999 and 2000 when NPRC began implementing the reengineering project. Our analysis of workload and staffing data provided by the NPRC shows that productivity declined by about 25 percent from the end of fiscal year 1997 to the end of fiscal year 2000. Figure 3 shows the request backlogs from 1993 through 2000. NPRC’s current efforts are not likely to improve response time soon, and it is unclear whether NPRC will meet its fiscal year 2005 timeliness goal. NPRC’s use of overtime has not stopped the growth in the backlog of requests while reengineering is being implemented. NPRC expects the backlog to continue to increase as its employees adjust to the new process. Moreover, in the long term it is not clear that the reengineering project will result in NPRC meeting its timeliness goals. NPRC does not have a plan that shows how it will achieve its fiscal year 2005 timeliness goal, in part because NPRC does not yet have data to show what level of production it will achieve by operating in the reengineered environment. In addition, NPRC has not yet implemented its proposed computer system, which it expects to have a significant impact on timeliness. NPRC is using overtime in an attempt to contain the growth of the backlog while it implements its reengineering. However, the number of cases completed through overtime work has not reduced the backlog. Even while using overtime, NPRC was unable to complete its incoming workload in the first 6 months of fiscal year 2001. As a result, the backlog of cases grew by about 69,000 cases to 214,000 cases in the first half of fiscal year 2001. NPRC projects that it can complete about 26,000 to 28,000 additional cases per year by using overtime given its current overtime budget. Even if NPRC could keep up with its normal workload during regular hours and overtime efforts were applied only to reducing the backlog, we estimate it would take over 7 years to eliminate the backlog. NPRC officials expect the backlog of requests to increase as it implements its reengineering. According to NPRC officials, employees are still adjusting to their expanded roles and the new process. These adjustments include learning to work in teams, handling requests of varying difficulty levels and for different service branches, and using computers to receive, track, and draft responses to requests. The productivity of staff working under the old system is greater than that of staff working under the reengineered system. According to NARA, NPRC’s units working in the new environment completed about 15 cases per staff day. In fiscal year 2000 units still operating under the old process completed about 31 cases per staff day. However, according to NPRC officials, future productivity numbers may not be comparable to those achieved under the old process. This is because NPRC anticipates handling cases completely and correctly the first time they are received, which could take longer. NPRC officials estimate that the backlog could exceed 240,000 cases at the end of this year. This is almost 100,000 cases more than at the end of fiscal year 2000. Currently, it is not clear whether reengineering will result in NPRC meeting its goal of answering 95 percent of requests within 10 working days by fiscal year 2005. NPRC does not have a plan that shows how it will achieve its fiscal year 2005 timeliness goal. NPRC has not identified specific timeframes, staff, or production levels needed to meet its long- term goal and how its use of overtime and its reengineering efforts will enable it to meet the goal. According to NPRC officials, they do not have such a plan because they do not have enough information to develop such a plan. For example, the officials said that they do not have data on the overall NPRC productivity improvements anticipated in the reengineered environment. NPRC is currently developing this type of data. While NPRC has begun implementing its reengineering, full implementation of its proposed computer technologies has not occurred. NPRC is depending on electronic receipt of requests and the ability to access other agency data bases to significantly improve timeliness. NPRC officials believe that these technologies will significantly free up time for staff to work on more cases. They believe that in some situations requests will be filled electronically without human intervention. NPRC officials do not anticipate beginning to implement receipt of electronic requests until April 2002, and accessing other agency data bases could begin as late as fiscal year 2004. NPRC is attempting to improve its timeliness in responding to requests for veterans’ records. NPRC is using overtime to control the backlog while it implements the business reengineering in an effort to revamp its outmoded manual process. However, NPRC’s use of overtime has not been able to control its backlog, which is expected to increase significantly. NPRC’s ability to realize any potential benefits from reengineering is hampered by the existence of the backlog. Computer technology, which is expected to significantly improve timeliness, has not been fully implemented. NPRC does not have a plan that shows what it needs to meet its long-term timeliness goal and how its actions will enable it to do so. Without such a plan, NPRC cannot provide assurances that it will meet its timeliness goal and that its actions will be sufficient to improve timeliness. We recommend that NARA require NPRC to develop a plan that shows what is needed to meet its fiscal year 2005 timeliness goal, including human capital issues such as staffing and production levels and timeframes, and how its use of overtime and reengineering will enable it to meet its goal. We received written comments on a draft of this report from NARA (see app. I). In its comments, NARA stated that it supported our recommendation to develop a plan that shows what is needed to meet its fiscal year 2005 timeliness goal. NARA noted that it expects to complete a plan that will link reengineering milestones to cycle time improvements by mid-July of this year. NARA also indicated that the draft report did not take into account its customer service and human capital management initiatives. However, the draft report discussed changes in both the work environment and quality of customer service as they potentially relate to timeliness – the central focus of our review. NARA also commented that timeliness was just one facet of its effort and that its “balanced scorecard” approach established other goals. We agree that measuring timeliness without measuring other factors, such as quality of the work, would be inappropriate. Finally, NARA commented that the draft report tried to compare productivity statistics from before reengineering to the pilot phase of the reengineering project. We disagree. In fact, we explicitly acknowledged that future productivity numbers may not be comparable to those achieved under the old process because of the NPRC’s plan to handle cases completely and correctly the first time they are received. This approach may take longer than the previous system, but, to the extent that it reduces duplicate requests and other rework, it would ultimately improve timeliness. NARA also provided technical comments, which we incorporated where appropriate. NARA stated that the NPRC backlog is not a factor in the timeliness of the Veterans Benefits Administration’s (VBA’s) servicing of disability compensation claims. However, our previous work on VBA’s process shows that NPRC is an external source from which VBA often needs documentation. To expedite obtaining this information, VBA established its own unit at the NPRC in 1999. As agreed with your offices, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after its issue date. At that time, we will send copies of this report to the Honorable John Carlin, Archivist of the United States; appropriate congressional committees; and other interested parties. We will also make copies available to others on request. If you have any questions about this report, please call me on (202) 512- 7101 or Irene Chu, Assistant Director, on (202) 512-7102. Other key contributors were Martin Scire, Bob Sampson, and Patrick di Battista.

The National Personnel Records Center (NPRC) is responsible for maintaining the official military personnel records of discharged members of the military services. Veterans frequently need their records for a variety of reasons, such as obtaining disability compensation, health benefits, GI bill education benefits, home loan guarantees, and burial in national cemeteries. However, access to these benefits has been hampered due to delays in obtaining documentation of their military service from NPRC. This report evaluates NPRC's timeliness in responding to veterans' requests for records. GAO reviewed (1) how long it took NPRC to answer veterans' requests for records and (2) whether the actions NPRC was taking would improve response time. GAO found that, in fiscal year 2000, NPRC took an average of 54 days to respond to written requests for records, answering about six percent of written requests within 10 working days. Actions NPRC was taking to respond more quickly were unlikely to significantly improve timeliness soon, and the prospects for meeting its fiscal year 2005 goal of answering 95 percent of requests within 10 working days were unclear.

Recognizing the human capital challenges facing federal agencies, Congress, the administration, and others are focusing increased attention on strategic human capital management. Congress has underscored the consequences of human capital weaknesses in federal agencies and pinpointed solutions through the oversight process and a wide range of hearings held over the last few years. The President, in August 2001, placed human capital at the top of his management agenda. The Office of Management and Budget is assessing agencies’ progress in addressing their individual human capital challenges. In January 2001, we designated strategic human capital management as a governmentwide high-risk area and stated that one of the pervasive human capital challenges facing the federal government was a lack of strategic human capital planning and organizational alignment. In March 2002, we issued our model of strategic human capital management, stating that federal agencies needed to adopt a consistent strategic approach to marshaling, managing, and maintaining the human capital needed to maximize government performance and ensure accountability. Several DOD studies have identified the need for a more strategic approach to human capital planning. The 8th Quadrennial Review of Military Compensation, completed in 1997, strongly advocated that DOD adopt a strategic human capital planning approach. The review found that DOD lacked an institutionwide process for systematically examining human capital needs or translating needs into a coherent strategy. Subsequent DOD and service studies, including those by the Defense Science Board Task Force on Human Resources Strategy (2000), the Naval Personnel Task Force (2000-2001), and the DOD Study on Morale and Quality of Life (2001), endorsed the concept of human capital strategic planning. For example, the Defense Science Board Task Force found there was “no overarching framework within which the future DOD workforce is being planned aside from planning conducted within the military services and ad hoc fora in the Office of the Secretary of Defense. An overarching strategic vision is needed that identifies the kind of capabilities that DOD will need in the future, the best way to provide those capabilities, and the changes in human resources planning and programs that will be required.” In view of these studies, the Office of the Secretary of Defense published the Military Personnel Human Resource Strategic Plan (referred to in this report as the military personnel strategic plan) in April 2002 to establish military personnel priorities for the next several years. DOD, in the military personnel strategic plan, states that the plan is intended to be a dynamic document that will be assessed and refined. In April 2002, DOD also published A New Social Compact: A Reciprocal Partnership Between the Department of Defense, Service Members and Families (or Social Compact) to review measures for improving the quality of life for military personnel and their families. These two plans were developed separately within the Office of the Under Secretary of Defense for Personnel and Readiness, and they differ in their methodological approach and structure. Nevertheless, DOD officials said the plans should be considered in conjunction as part of DOD’s overall strategic human capital strategy. DOD, in its military personnel strategic plan and Social Compact, recognizes that benefits are an important component to human capital management and deserve attention. In this regard, the two plans constitute a positive step forward in DOD’s strategic management of the military workforce. The Social Compact indicates that benefits are important to alleviating some of the hardships of military life and emphasizes that providing consistent, high-quality benefits that meet the needs of service members and their families can yield a committed and long-term workforce. The Social Compact also outlines DOD’s vision and goals for a number of benefit areas, including child and youth services, parent support, commissaries and exchanges, financial literacy, health, housing, spouse employment, fitness and recreation, and tuition assistance. The military personnel strategic plan indicates that DOD considers benefits important elements in its efforts to develop, sustain, and retain the force and to transition members from active duty. The plan lists a number of planned studies (see table 1) that ultimately could lead to changes in pay and benefits. While progress has been made, DOD’s human capital plans do not yet satisfy the two factors we identified in our model as critical to the success of strategic human capital planning (one of the four cornerstones of sound strategic human capital management). First, the plans do not specifically address how DOD will integrate and align benefits and other human capital approaches to meet its overall organizational goals. According to our model, effective organizations integrate human capital approaches as key strategic elements for accomplishing their mission and programmatic goals and results. These organizations consider further human capital initiatives or refinements in light of both changing organizational needs and the demonstrated successes or shortcomings of their human capital efforts. DOD’s military personnel strategic plan identifies more than 30 discrete initiatives. It is unclear from the plan how these initiatives are integrated and aligned with each other, except that they are grouped under five broadly stated human capital goals such as recruit the right number and quality of people. It is also unclear how the initiatives, many of which are studies, will work in conjunction with one another to meet DOD’s goals. For example, one of the initiatives is to study alternatives to the military retirement system. The plan does not explain how retirement reform may be integrated and aligned with other initiatives such as DOD’s study of variable career lengths for officers. In addition, the retirement study is listed under the human capital goal of transitioning members from active status but does not explain why a new approach to retirement may be needed to meet this goal. It is also unclear why the initiative was not listed under the human capital goal of developing, sustaining, and retaining the force, even though an organization’s retirement system is considered an important retention tool. Further, the military personnel strategic plan and the Social Compact, which were developed separately, address different sets of human capital issues, and there are no explicit linkages between the two plans. For example, while the Social Compact addresses such benefit areas as housing, health care, and family support, the military personnel strategic plan is silent on these topics. Thus, DOD lacks an overarching framework integrating its human capital plans for military personnel. DOD officials said they are working to improve the integration of the human capital plans by developing an “umbrella” plan. Secondly, the plans do not satisfy the critical success factor of using data in human capital decisions. We state in our model that a fact-based, performance-oriented approach to human capital management is crucial for maximizing the value of human capital as well as managing related risks. High-performing organizations use relevant and reliable data to determine key performance objectives and goals that enable them to evaluate the success of their human capital approaches. These organizations also identify current and future human capital needs, including the appropriate number of employees, the key competencies and skills mix for mission accomplishment, and the appropriate deployment of staff across the organization and then create strategies for identifying and filling gaps. The military personnel strategic plan provides measures of effectiveness for each initiative; however, these measures are not adequate to assess the success of DOD’s human capital approaches because they (1) do not describe the significance of outcomes in terms of programmatic goals and results, (2) are not always specific or stated as measurements, and (3) are activity-based rather than outcome-oriented. For example, one initiative calls for a study of sabbatical programs. However, the measure of effectiveness for this initiative is to implement guidance for a sabbatical- type program. The relationship between sabbatical programs and the human capital goal of improving retention is not described. In addition, DOD’s plans do not discuss, at a strategic level, military workforce needs or gaps. Furthermore, they do not address how the military workforce may change in its total end strength, distribution among the services, grade level, geographic deployment, or force mix. For example, DOD has faced challenges in providing benefits to service members that respond to their changing needs. A major demographic change has been the growing proportion of service members who are women. In 2000, women comprised about 15 percent of the active duty force, compared with 4 percent in 1974. Up to 10 percent of women in the military become pregnant each year. If these trends continue, DOD may need to take into account the benefits that this population values to better retain these trained, experienced service members. For example, we have recommended that DOD assess the feasibility, costs, and benefits of offering extended time off to parents of newborn or adopted children. Moreover, DOD lacks a process for enabling senior DOD officials to oversee the progress and implementation of its human capital plans from a strategic vantage point. Our model of strategic human capital management identifies the sustained and active commitment of senior leaders as a critical success factor for effective strategic human capital management. Top leaders need to stimulate and support efforts to integrate human capital approaches with organizational goals and direct that approaches be evaluated by the standard of how well they support the agency’s efforts to achieve program results. A senior DOD official told us that implementing the plan will be a long-term endeavor. One of the human capital goals in the military personnel strategic plan is to sustain the strategic management process and maintain its viability. According to the plan, DOD needs to establish a process and forum to regularly review the progress of its human capital strategy in order that its strategy will remain viable and relevant. The plan calls for the establishment of a Defense Human Resources Board by March 2003. However, DOD officials have not decided on the roles and responsibilities of the board, the composition of the board, or how the board would work with existing processes. DOD, in developing its human capital plans addressing military personnel and quality of life, has made progress in adopting a more strategic approach to human capital management. Since the military personnel strategic plan is intended to be a dynamic document that periodically will be assessed and refined, DOD will have opportunities to incorporate additional elements of human capital strategic planning in future iterations of the plan. A positive step toward such improvements would be the establishment of an oversight process enabling senior DOD officials to oversee the progress and implementation of the human capital plans. Such a process could assist in the integration and alignment of benefits and other human capital approaches to meet organizational goals and in promoting a fact-based, performance-oriented approach to human capital management. To improve DOD’s strategic human capital management, we recommend that you direct the Under Secretary of Defense for Personnel and Readiness to establish an oversight process by which senior DOD officials may integrate and align benefits and other human capital approaches and promote a fact-based, performance-oriented approach to human capital management. As one option, you may wish to consider incorporating this oversight responsibility into the mission of the planned Defense Human Resources Board. In written comments on a draft of this report, DOD concurred with our recommendation. DOD stated that it will establish a senior leader oversight process to ensure integration and alignment of benefits and other human capital approaches and to continue a fact-based, performance-oriented approach. DOD’s comments are reprinted in appendix I. To critique DOD’s human capital plans for military personnel, we drew primarily from our model of strategic human capital management. The model highlights some of the steps agencies can take to make progress in managing human capital strategically. The model identifies eight critical success factors, which are organized in pairs to correspond with four cornerstones of effective strategic human capital management. We focused on the two critical success factors that correspond to strategic human capital planning, namely (1) the integration and alignment of human capital approaches to meet organizational goals and (2) the use of data to make human capital decisions. We reviewed DOD’s human capital plans to determine the extent they satisfied these two critical success factors with respect to active duty military benefits. In analyzing DOD’s plans, we reviewed our prior work on military personnel issues and DOD studies of human capital management. We discussed the human capital plans with officials in the Office of the Under Secretary of Defense for Personnel and Readiness. We conducted our review from June to September 2002 in accordance with generally accepted government auditing standards. This report contains recommendations to you. Under 31 U.S.C. 720, the head of a federal agency is required to submit a written statement of the actions taken on our recommendations to the Senate Committee on Governmental Affairs and the House Committee on Government Reform not later than 60 days after the date of the report. A written statement also must be sent to the House and Senate Committees on Appropriations with the agency’s first request for appropriations made more than 60 days after the date of the report. We are sending copies to appropriate congressional committees and the Director, Office of Management and Budget. We will make copies available to other interested parties on request. In addition, the report will be available at no charge at the GAO Web site at http://www.gao.gov. If you or your staff has any questions regarding this report, please call me at (202) 512-5140. Brenda S. Farrell, Thomas W. Gosling, and Stefano Petrucci made significant contributions to this report.

The Department of Defense (DOD) has, in the past, lacked a strategic approach to human capital management. In April 2002, DOD issued two human capital strategic plans for military personnel. One plan addresses military personnel management and policies; the second addresses quality of life issues affecting service members and their families. As a follow-on to its recent work on benefits for military personnel, GAO reviewed the extent that these two plans, in addressing military benefits, promote (1) the integration and alignment of human capital approaches to meet organizational goals and (2) the use of reliable data to make human capital decisions--two critical success factors for human capital planning. GAO also reviewed DOD's plans for overseeing the progress and implementation of its human capital plans. DOD's human capital plans addressing military personnel and quality of life represent a positive step forward in fostering a more strategic approach to human capital management. The two plans lay some of the groundwork needed to incorporate benefits into the strategic management of human capital. The plans, for example, recognize that benefits are important elements to meeting recruiting and retention goals and to alleviating some of the hardships of military life. However, the two plans do not satisfy the two critical success factors GAO has identified for human capital planning. The plans do not specifically address how DOD will integrate and align benefits with other human capital approaches to meet organizational goals. DOD's plans identify a number of initiatives, but the plans do not describe how individual initiatives, many of which are studies, will work in conjunction with one another to meet DOD's goals and objectives. For example, one of DOD's initiatives is to study alternatives to the military retirement system, and another initiative is to study variable career lengths for officers. However, the human capital plans do not explain how these two initiatives may be integrated and aligned with each other to achieve desired outcomes. The military personnel strategic plan also does not identify outcome-oriented performance measures or discuss, at a strategic level, military workforce needs or gaps in meeting these needs--the kinds of data used by high-performing organizations to manage their human capital. DOD lacks a process for overseeing the progress and implementation of its human capital plans from a strategic vantage point. Without such a process, DOD may have difficulty integrating and aligning benefits and other human capital approaches to meet organizational goals and promoting a data-driven, performance-oriented approach to human capital management. Moreover, an oversight process could help DOD officials maintain the momentum of their strategic human capital planning efforts. DOD is considering establishing a Defense Human Resources Board to maintain the viability of its strategic human capital planning, but DOD officials have not determined the roles and responsibilities of the board.

Because of their experience with the technical aspects of cleanups, EPA regional work assignment managers prepare detailed cost estimates for all new work on Superfund projects before the agency contracts for that work. These estimates should specify the scope of the work assignment (such as conducting a cleanup feasibility study), the required hours, and the expected cost of each major activity for that assignment. Regional contract officers then use these estimates to negotiate with contractors the best price that EPA can award for each work assignment, documenting any significant differences between the estimate and the awarded price. The agency also uses this process to negotiate any changes in the scope of a work assignment as the cleanup proceeds that may lead to discrepancies between the original awarded price and the final price of the contracted work. The work assignment manager uses the estimate and any revisions to develop the work plan and to manage the contractor’s work. When we last examined EPA’s cost estimates in April 1999, we reported that 11 (or about 31 percent) of the 35 estimates we reviewed fell substantially below the awarded price—an indication that the estimates may be of poor quality, according to the agency’s Financial Manager’s Financial Integrity Act Report. In addition, in 29 percent of the cases, the awarded price matched the contractor’s estimate—an indication that EPA may not be using the estimates to negotiate the best price for the government. In response to our report, the agency said it was awaiting the results of the Corps’ review and would then take further action to correct any cost-estimating problems. EPA is in the process of implementing two initiatives designed to address the weaknesses with its cost-estimating processes identified by the Corps and us. The initiatives are a new training course and new guidance, including a Web-based tool that provides work assignment managers with data on the actual, current costs of contracted work to help them develop more complete and accurate estimates. EPA has yet to determine how it will make the training available to all managers when needed or how it will ensure that the actual cost data in the tool remain up-to-date. In our April 1999 report, we noted that work assignment managers, who prepare the estimates, cited two barriers that kept them from developing better estimates. First, 15 of the 34 work assignment managers we interviewed (about 44 percent) cited their inexperience with estimate preparation. Although work assignment managers are chiefly responsible for managing the technical aspects of cleanup work, they had relatively little cost-estimating experience, because they tended to prepare only one or two estimates each year. They told us that more and better training were needed to compensate for this lack of experience. Second, all of the work assignment managers cited the need to access data on the actual costs of previously contracted work. They believed that better data on actual costs could serve as a baseline when determining what new contracted work should cost. Similarly, the Corps recommended in its December 1999 report that EPA (1) improve the training it provides work assignment managers, and (2) develop tools that contain better information on actual costs of assignments to help the work assignment managers generate better estimates. It also recommended that EPA (1) consolidate its various cost- estimating guidance documents, (2) encourage work assignment managers to make more of a commitment to using their estimates to control contract costs, and (3) better document the assumptions work assignment managers used to develop each estimate and any significant differences in the estimate, the awarded price, and actual costs incurred. Actual costs may differ if changes in the scope of the work occur as the work proceeds. To address the Corps’ and our concerns, EPA designed a new training course for regional work assignment managers and is currently in the process of consolidating and revising its guidance on preparing estimates. The agency offered its new half-day course targeted at preparing estimates as an optional seminar during the last two annual conferences for work assignment managers. According to EPA officials, about 50 (or 10 percent) of the agency’s 500 work assignment managers attended one of these two sessions. The course offered instruction on which cost components to include in an estimate and addressed pricing the components and the resources available to help staff with this pricing activity. These resources included an introduction to a database on historical costs for contracted work compiled by the New York regional office and tables detailing the typical amount of labor hours needed to complete various contracted cleanup activities. In addition, the course showed managers how to adequately document the assumptions and data used to generate EPA’s estimate. The work assignment managers who attended the course found it very helpful and suggested improvements—such as additional instruction on documenting estimates—that could make it even more useful, according to the course evaluations they completed. Superfund managers in charge of contracting practices have not yet decided how to provide the training to all work assignment managers who need it when they need it. In response to our questions, the managers said that they planned to continue offering the course at the annual conference. However, it is unlikely that a sufficient number of work assignment managers will obtain the training they need in a timely and useful manner, since the agency has only reached about 10 percent of the work assignment managers in the past 2 years by relying on this method. To provide more opportunities for work assignment managers to attend, Superfund managers also said they are considering offering more than one session during each conference and training key staff in each region, who could, in turn, train the work assignment managers in that region. However, Superfund managers do not have such a plan in place at this point. According to the Atlanta region’s cost estimator, who was instrumental in developing the training course, it would be more effective for EPA to offer future training in the regions rather than through the annual conferences because more useful and detailed cost information can be presented in that forum. State project managers also attend the annual conferences, and unlike EPA project managers, some of them are required to disclose to contractors all of the information they used to develop their estimates. EPA does not disclose how it prices estimates because that could diminish the independence of the estimates and result in higher costs to the government. By presenting the training in the regions exclusively to EPA project managers, EPA can include the cost information without fearing that it will be disclosed to contractors. As its second initiative, the Superfund managers formed a workgroup— composed of headquarters and regional contracting staff—to revise the agency’s guidance to regional staff on how to prepare independent cost estimates. According to the managers, the new guidance will consolidate eight separate guidance documents currently in use and will emphasize how good estimates are critical to controlling contract costs. The guidance will also take users through the steps of developing a thorough estimate, providing them with checklists detailing the scope of a work assignment, giving users instructions for adequately documenting the steps, and identifying reliable sources of cost data. EPA has contracted with the Corps to use its expertise and databases to develop the data on the actual costs of similarly contracted work and other information, such as data on the labor hours needed for cleanup activities, to be included in the guidance. EPA also plans to ask cleanup estimators from other agencies, such as the U.S. Navy, to review these data before they are made available to work assignment managers. The Superfund managers intend to publish the guidance in paper form and make it available as an interactive tool via EPA’s Web site by the end of 2001. Data on the actual costs and the other information, such as the labor hours needed, will only be useful if they are updated regularly and kept current. To date, the Superfund managers have told us that their primary focus is to develop and implement the revised guidance to ensure that the initial version contains accurate data. They have not yet determined how they will routinely keep the data current, including the data originally obtained from the Corps, although they have discussed obtaining the Corps’ assistance on these issues. EPA plans to include a mechanism in the Web- based tool that allows work assignment managers to provide feedback on the tool, which they hope will help them keep the data current. However, because this feedback is voluntary, it does not provide a comprehensive method for updating the actual cost data. EPA plans to continue its current method of evaluating the quality and usefulness of estimates by relying primarily on its on-site reviews of estimates in each region once every 3 years. Superfund managers believe the reviews have been effective; furthermore, they do not believe they have the resources needed to visit the regions more frequently. EPA could supplement its regional reviews fairly easily by routinely analyzing information on estimate quality that is now becoming available—such as regional data comparing estimates to awarded prices—to look for systemic problems that need addressing. According to contracting officials from EPA and the Corps, additional monitoring would help EPA better ascertain the initiatives’ effectiveness in the regions. Currently, Superfund managers and officials from EPA’s Office of Acquisition Management—the office responsible for the agency’s overall contracting practices—review all Superfund contracting activities in the regions by visiting each of the 10 regions approximately once every 3 years to conduct reviews. Superfund managers assured us that, in response to the concerns we raised in our 1999 report regarding estimate quality, the reviews conducted in the past 2 years have included an examination of the quality of a region’s estimates. The three most recent reviews, beginning with the review of the Seattle region in June 1999, contain assessments of estimates and recommendations for improvement. In addition, Superfund managers told us that they use the periodic meetings and monthly teleconferences of the Senior Regional Management Acquisition Council as a forum to exchange information on issues or problems affecting estimates. The Council includes representatives from EPA’s Office of Acquisition Management and the Superfund program in headquarters, and regional work assignment managers. Furthermore, the managers told us that the discussion of estimates is a regular topic on the agenda for the Council’s semiannual conferences. Superfund managers plan to continue to rely on the regional reviews, supplemented by the Council’s and other discussions, to determine whether the quality and usefulness of contract estimates have improved as a result of the new guidance and training. They pointed out that recent regional reviews have found that estimate quality has generally improved in the regions. The managers believe that examining estimates in three to four regions each year, supplemented by the periodic Council discussions, provides them with a good indication of any problems that may be occurring with estimates nationwide. Furthermore, they cited a lack of resources as a barrier limiting more frequent regional reviews. According to the director of the division in the Office of Acquisition Management that oversees Superfund contracting activities, if the resources for more frequent monitoring were available, EPA could better determine how effective the initiatives are in the regions. Similarly, according to the Corps’ manager who oversaw the review of EPA’s estimating practices, EPA should review regional implementation of the new guidance within 6 months to 1 year of its taking effect to ensure that regional estimates are improving. Monitoring would be particularly important in the early implementation phases. However, these officials recognize that resource constraints are likely to rule out more frequent regional reviews. Superfund managers have at least two possible ways to augment the regional reviews and better monitor the agency’s initiatives. First, in their recent regional reviews, managers have recommended that the regions begin tracking data that compare the estimates, the awarded prices, and the final prices paid for the work as a way to gauge estimate quality in that region. The Atlanta region has already begun tracking its comparison data, according to the cost estimator in that region, who found the analysis very helpful for making improvements. Superfund managers have not yet required the remaining regions to collect the data or to forward it to headquarters, where the managers could analyze the information across regions. According to a Corps contracting official, the Corps performs such an analysis to determine whether its estimates are adequate nationwide. He believed that a similar analysis could help Superfund managers quickly identify and correct any systemic problems or incorporate any successful best practices. Second, Superfund managers plan to include a comment section in the new guidance, once it has been posted to the Superfund Web site, where regional work assignment managers can voluntarily provide feedback on the guidance as they begin to use it. The managers have not planned how they will analyze and use this information but said they would develop a plan before launching the new guidance by the end of 2001. EPA’s and GAO’s reviews have shown that the agency has made significant progress over the past decade in addressing the weakness of its cost- estimating processes. EPA regional work assignment managers are currently developing independent estimates, which contracting officers are using to negotiate the prices for cleanup work. The agency’s current initiatives should help the agency successfully address the Corps’ and our remaining concerns by providing the managers with the training and tools they need to develop better estimates. By incorporating some relatively simple additional steps to more fully implement and better scrutinize the effectiveness of the initiatives, the agency can better ensure that its efforts improve cost estimates agencywide. In order to more fully implement and better evaluate the improvements currently being made to EPA’s cost-estimating processes, we recommend that the Administrator, EPA, direct the Assistant Administrator, Office of Solid Waste and Emergency Response, to complete plans on how to most effectively deliver improved, timely, and effective training to work work with the Corps to keep the data on actual costs of contracted work in its Web-based tool updated and current, and consolidate and routinely analyze regional data (which compare estimates, awarded prices, and final prices paid to contractors) and the feedback from work assignment managers on the Web-based tool to determine whether systemic estimating problems exist that EPA needs to address or whether best-estimating practices are available that it could adopt. We provided a draft of this report to EPA for review and comment. We subsequently met with designated Superfund managers, who agreed with our recommendations and promised to take actions to begin their implementation. Specifically, with respect to our first recommendation, they agreed that regional training seminars could be tailored and timed to meet the specific needs of the work assignment managers in the region. Therefore, they are likely to develop region-specific training as the primary training vehicle. In that regard, the Atlanta region’s cost estimator is conducting a training session in February 2001 for the work assignment managers in that region. Project officers from other regions are also attending the training in Atlanta, and the Superfund managers said they may consider whether it would be best for those project officers to customize the training, and in turn, train the work assignment managers in their own regions. Responding to our second recommendation, Superfund managers agreed that the Corps can most efficiently and effectively update cost data in the Web-based tool. However, EPA has yet to work out the details of the Corps’ future involvement in that effort. Finally, Superfund managers agreed that uniform regional data would help them judge the quality of estimates agencywide, identify any potential problems, and address them in a timely manner. Therefore, they agreed to formalize the requirements for reporting regional data to track cost estimates, awarded prices, and the actual prices of contracted cleanup work. We are sending copies of this report to appropriate congressional committees and interested Members of Congress. We are also sending copies to the Honorable Mitchell E. Daniels, Jr., Director, Office of Management and Budget. In addition, we will make copies available to others on request. If you or your staff have any questions about this report, please contact me at (202) 512-3841. Key contributors to this report were Eileen Larence, Karla Springer, Elizabeth Erdmann, Jonathan S. McMurray, and Roger Bothun.

The Environmental Protection Agency (EPA), which manages the cleanup of the nation's most hazardous abandoned sites through the Superfund program, relies heavily on contractors to conduct its cleanup activities. Currently, EPA spends about 50 percent of its approximately $1.5 billion annual Superfund budget on contractors. With so much at stake, it is critical that the government get the best contract price for this cleanup work. EPA's and GAO's reviews have shown that the agency has made significant progress during the past decade in addressing the weakness of its cost-estimating processes. EPA regional work assignment managers are currently developing independent estimates, which contracting officers are using to negotiate the prices for cleanup work. The agency's current initiatives should help the agency successfully address the Army Corps of Engineers' and GAO's remaining concerns by providing the managers with the training and tools they need to develop better estimates. By incorporating some relatively simple additional steps to more fully implement and better scrutinize the effectiveness of the initiatives, the agency can better ensure that its efforts improve cost estimates agencywide.

Mr. Chairman and Members of the Subcommittee: I am pleased to be here today to discuss the Office of National Drug Control Policy (ONDCP). My testimony focuses on (1) our recent work on federal drug control efforts; (2) ONDCP’s efforts to implement performance measures; (3) ONDCP’s anticipated actions to lead the development of a centralized lessons-learned data system for drug control activities; and (4) whether ONDCP, which is scheduled to expire in September of this year, should be reauthorized. In 1988, Congress created ONDCP to better plan the federal drug control effort and assist it in overseeing that effort. ONDCP was initially authorized for 5 years—until November 1993. With the enactment of the Violent Crime Control and Law Enforcement Act of 1994 (P.L. 103-322 (1994)), ONDCP was reauthorized until September 30, 1997. ONDCP is responsible for overseeing and coordinating the drug control efforts of over 50 federal agencies and programs. ONDCP is also charged with coordinating and reviewing the drug control activities of hundreds of state and local governments as well as private organizations to ensure that the drug control effort is well coordinated and effective at all levels. Under the 1988 act, ONDCP is to (1) develop a national drug control strategy with short- and long-term objectives and annually revise and issue a new strategy to take into account what has been learned and accomplished during the previous year, (2) develop an annual consolidated budget providing funding estimates for implementing the strategy, and (3) oversee and coordinate implementation of the strategy by federal agencies. Since its inception, ONDCP has published nine annual national drug control strategies. “1. Educate and enable America’s youth to reject illegal drugs as well as the use of alcohol and tobacco. “2. Increase the safety of America’s citizens by substantially reducing drug-related crime and violence. “3. Reduce health and social costs to the public of illegal drug use. “4. Shield America’s air, land, and sea frontiers from the drug threat. “5. Break foreign and domestic sources of supply.” The administration’s drug control budget request for fiscal year 1998 is approximately $16 billion, an increase of $818 million over the 1997 budget. Approximately $5.5 billion is targeted for demand reduction, an increase of 10 percent over the 1997 budget and $10.5 billion for supply reduction, an increase of 3.2 percent over the 1997 budget. At the request of the Chairman, Subcommittee on Transportation and Related Agencies and the Chairman, Subcommittee on Labor, Health and Human Services, and Education, House Committee on Appropriations, on the demand reduction side we recently identified findings of current research on promising approaches in drug abuse prevention targeted at school-age youth and described promising drug treatment strategies for cocaine addiction. On the supply reduction side, we summarized our recent work assessing the effectiveness of international efforts, including interdiction, to reduce illegal drug availability. demonstrated that both approaches have shown some success in reducing student drug use as well as strengthened individuals’ ability to resist drugs in both short- and longer-term programs. Three approaches have been found to be potentially promising in the treatment of cocaine use. These approaches include (1) avoidance or better management of drug-triggering situations (relapse prevention therapy); (2) exposure to community support programs, drug sanctions, and necessary employment counseling (community reinforcement/contingency management); and (3) use of a coordinated behavioral, emotional, and cognitive treatment approach (neurobehavioral therapy). Research shows that many drug dependent clients using these approaches have maintained extended periods of cocaine abstinence and greater retention in treatment programs. While these prevention and treatment approaches have shown promising outcomes in some programs, further evaluative research would have to be conducted to determine their effectiveness and their applicability among different populations in varied settings. Such research should help policymakers better focus efforts and resources in an overall drug control strategy. Regarding international drug control efforts, our work has shown that, despite some successes, efforts have not materially reduced the availability of drugs in the United States for several reasons. First, international drug trafficking organizations have become sophisticated, multibillion dollar industries that quickly adapt to new U.S. drug control efforts. Second, the United States faces other significant and long-standing obstacles, such as inconsistent funding, competing foreign policy objectives, organizational and operational limitations, and a lack of ways to tell whether or how well counternarcotics efforts are contributing to the goals and objectives of the national drug control strategy, and the resulting inability to prioritize the use of limited resources. Third, in drug-producing and transit countries, counternarcotics efforts are constrained by competing economic and political policies, inadequate laws, limited resources and institutional capabilities, and internal problems such as terrorism and civil unrest. the Government Performance and Results Act (GPRA), we recently made several recommendations to the Director of ONDCP to better comply with the 1988 Anti Drug Abuse Act’s requirements. We recommended that ONDCP complete the development of a long-term plan with meaningful performance measures and multiyear funding needs that are linked to the goals and objectives of the international drug control strategy. In particular, such a plan would permit ONDCP to better carry out its responsibility to at least annually review the progress made and adjust its plan, as appropriate. Further, we recommended that ONDCP enhance support for the increased use of intelligence and technology to (1) improve U.S. and other nations’ efforts to reduce supplies of and interdict illegal drugs and (2) take the lead in developing a centralized lessons-learned data system to aid agency planners and operators in developing more effective counterdrug efforts. We have acknowledged for many years that performance measurement in the area of drug control has been difficult. In 1988 and again in 1990, we reported that (1) it was difficult to isolate the full impact and effectiveness of a single program, such as drug interdiction, on reducing drug use without considering the impact of prevention and treatment efforts; (2) the clandestine nature of drug production, trafficking, and use had limited the quality and quantity of data that could be collected to measure program success; and (3) the data that were collected—for example, the data used to prepare estimates of drug availability and consumption—were generally not designed to measure program effectiveness. In a 1993 report, we concluded that although difficulties, such as the interrelated nature of programs, may have precluded the development of “perfect” or “precise” performance measures, these difficulties should not have stopped antidrug policymakers from developing the best alternative measures—measures that could provide general indicators of what was being accomplished over the long term. We also reported in 1993 that ONDCP’s national strategies did not contain adequate measures for assessing the contributions of component programs for reducing the nation’s drug problems. In addition, we found little information on which to assess the contributions made by individual drug control agencies. As a result, we recommended that, as part of its reauthorization of ONDCP, Congress direct the agency to develop additional performance measures. In reauthorizing ONDCP in 1994, Congress specified that ONDCP’s performance measurement system should assess changes in drug use, drug availability, the consequences of drug use, drug treatment capacity, and the adequacy of drug treatment systems. Similarly, in our most recent report, we found it still difficult to assess the performance of individual drug control agencies. For example, increased Customs Service inspections and use of technology to detect drugs being smuggled through ports of entry may cause smugglers to seek other routes; this would put more pressure on drug interdiction activities of other agencies, such as the Coast Guard. We concluded that it was important to consider both ONDCP and operational agency data together because results achieved by one agency in reducing the use of drugs may be offset by less favorable results by another agency. According to ONDCP officials, around January 1994, they, in collaboration with the Department of Defense, entered into a contract with a private contractor to develop “measures of effectiveness” in the international arena. According to ONDCP officials, overall the results of the contractor’s efforts did not prove useful in developing performance measures for ONDCP. The efforts of the contractor were eventually abandoned, and in the summer of 1996 ONDCP began a new effort to develop performance measures for all drug control operations. The new effort relies on working groups, which consist of representatives from federal drug control agencies and state, local, and private organizations, to develop national drug control performance measures. According to ONDCP officials, early in 1997, the ONDCP working groups began developing performance targets (measurable milestones to track progress) and performance measures (the data used to track each target) for each of the objectives. As of April 1997, the plans for one of its five goals—“shield America’s air, land, and sea frontiers from the drug threat”—were ready for the Director’s approval, and they will be distributed to the affected agencies for agreement. ONDCP officials told us they are not yet that far along on the other four goals. As previously mentioned, we recently recommended in our report on international antidrug activities that ONDCP strengthen its planning and implementation of antidrug activities through the development of an after-action reporting system similar to the Department of Defense’s (DOD) system. Under DOD’s system, operations reports describe an operation’s strengths and weaknesses and contain recommendations for consideration in future operations. A governmentwide after-action system for reporting international antidrug activities should allow agencies to learn from the problems and impediments encountered internally and by other federal agencies in implementing past operations. With such information, the agencies would be in a better position to develop plans that avoid past problems or contingencies in known problem areas. This governmentwide after-action system should go a long way toward meeting ONDCP’s basic responsibility of taking into account what has been learned and accomplished during the previous year and adjusting its plan accordingly. As of April 15, 1997, ONDCP officials said they had not yet implemented this recommendation. According to these officials, ONDCP is currently preparing a formal response to the Subcommittee on National Security, International Affairs, and Criminal Justice, Committee on Government Reform and Oversight, explaining how it plans to implement this recommendation. Over the years, we have concluded there is a continuing need for a central planning agency, such as ONDCP, to coordinate the nation’s drug control efforts. Before ONDCP existed, we recommended in 1983 that the President make a clear delegation of responsibility to one individual to oversee federal drug enforcement programs to strengthen central oversight of the federal drug enforcement program. Again in 1988, we reported problems caused by the fragmentation of federal antidrug efforts among cabinet departments and agencies, and the resulting lack of coordination of federal drug abuse control policies and programs. In 1993, we concluded that given the severity of the drug problem and the large number of federal, state, and local agencies working on the problem, there was a continuing need for a central planning agency, such as ONDCP, to provide leadership and coordination for the nation’s drug control efforts. We recommended that Congress reauthorize ONDCP for an additional finite period of time. Coordinating the 5 goals of the national drug control strategy among more than 50 federal agencies is a complex process. Our analysis of federal agencies that contribute to the implementation of each of the 5 strategy goals showed an average of 21 agencies were committing resources to address specific strategy goals. For example, Goal 1 involves 18 agencies, Goals 2 and 3 involve 24, Goal 4 involves 13, and Goal 5 involves 28. Further, we found that more than 30 agencies are committing resources to implement two or more of the five strategy goals. Given the complexity of the issues and the fragmentation of the approach to the national drug control strategy among more than 50 agencies, we continue to believe there is a need for a central planning agency, such as ONDCP, to coordinate the nation’s drug control efforts. In addition, we have found no compelling evidence to lead us to advise against ONDCP’s reauthorization for a finite period of time. Mr. Chairman, this completes my statement. I would be pleased to answer any questions you or the other Subcommittee members might have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. 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GAO discussed the Office of National Drug Control Policy (ONDCP), focusing on: (1) its recent work on federal drug control efforts; (2) ONDCP's efforts to implement performance measures; (3) ONDCP's anticipated actions to lead the development of a centralized lessons-learned data system for drug control activities; and (4) whether ONDCP, which is scheduled to expire in September 1997, should be reauthorized. GAO noted that: (1) its recent work shows that there are some promising initial research results in the area of demand reduction but that international supply reduction efforts have not reduced the availability of drugs; (2) GAO's work also shows that the nation still lacks meaningful performance measures to help guide decisionmaking; (3) GAO has acknowledged that performance measurement in the area of drug control is particularly difficult for a variety of reasons; (4) notwithstanding, GAO has concluded over the years that better performance measures than the ones in place were needed; (5) in 1993, GAO recommended that Congress, as part of its reauthorization of ONDCP, direct the agency to develop additional performance measures; (6) in reauthorizing ONDCP in 1994, Congress specified that ONDCP's performance measurement system should assess changes in drug use, drug availability, the consequences of drug use, drug treatment capacity, and the adequacy of drug treatment systems; (7) ONDCP's initial effort, with a private contractor, did not prove fruitful, and, in the summer of 1996, it began a new effort involving working groups composed of representatives from federal drug control agencies and state, local, and private organizations; (8) the working groups have been tasked with establishing performance measures for the goals set forth in the 1997 national strategy articulated by ONDCP; (9) as of April 15, 1997, no new measures had been approved by the ONDCP Director; (10) given the complexity of the issues and the fragmentation of the approach to the national drug strategy among more than 50 federal agencies, GAO continues to believe that there is a need for a central planning agency, such as ONDCP, to coordinate the nation's efforts; and (11) while it is difficult to gauge ONDCP's effectiveness given the absence of good performance measures, GAO has found no compelling evidence that would lead it to advise against ONDCP's reauthorization for a finite period of time.

DOD has taken steps to implement our August 2008 recommendations to improve its sexual assault prevention and response program; however, its efforts reflect various levels of progress, and opportunities exist for further program improvements. To its credit, DOD has implemented four of the nine recommendations in our August 2008 report. First, the Office of the Secretary of Defense (OSD) established a working group to address our recommendation to evaluate the adequacy of DOD policies for implementing its sexual assault prevention and response program in joint and deployed environments. Based on the working group’s findings, OSD suggested revisions to joint policy, which a Joint Staff official told us they are using to modify related publications. Second, the military service secretaries have each taken a variety of steps to address our recommendation to emphasize responsibility for program support at all levels of command. The most notable examples of this support include the U.S. Navy’s recent establishment of a sexual assault prevention and response office that will report directly to the Secretary of the Navy, and the Army’s incorporation of a sexual assault program awareness assessment into promotional boards for its noncommissioned officers. Third, OSD chartered the Health Affairs Sexual Assault Task Force to address our recommendation to evaluate and address factors that may prevent or discourage servicemembers from seeking health services. Specifically, the task force evaluated and subsequently issued a number of recommendations that are intended to improve access to health care following a sexual assault, including chartering a Sexual Assault Health Care Integrated Policy Team to review department-level policies regarding clinical practice guidelines, standards of care, personnel and staffing, training requirements and responsibilities, continuity of care, and in- theater equipment and supplies. Fourth, in August 2008, the Defense Task Force on Sexual Assault in the Military Services began its examination of matters related to sexual assault, as we recommended, and on December 1, 2009 the task force released a report with its findings and recommendations. However, DOD’s actions toward implementing the other five recommendations from 2008 reflect less progress. For example, although OSD has drafted an oversight framework, that framework does not contain all the elements necessary for effective strategic planning and program implementation, such as criteria for measuring progress to facilitate program evaluation and to identify areas needing improvement. However, according to OSD officials, they plan to develop these within the next 2 years. Further, the draft oversight framework does not include information on how OSD plans to use or report the results of its performance assessments, does not identify how program resources correlate to its achievement of program objectives, and does not correlate with the program’s two strategic plans. Therefore, to improve oversight of the department’s sexual assault prevention and response programs, in our February 2010 report we recommend that OSD strengthen its oversight framework by identifying how the results of performance assessments will be used to guide the development of future program initiatives, identifying how program resources correlate to its achievement of strategic program objectives, and correlating the oversight framework with the program’s two strategic plans. In written comments on our draft report, DOD concurred and noted that it has already taken steps toward implementing these recommendations. For example, DOD stated that it currently has efforts underway to establish criteria for measuring its progress and expects to have a plan in early 2010 for tracking the department’s progress toward performance objectives. DOD also noted that it plans to align its budget categories with specific performance objectives, starting with the 2012 budget cycle. Further, DOD noted that the process it plans to use to track its progress toward performance objectives will also allow the department to synchronize the objectives, timelines, and strategies of its two strategic plans. We commend DOD for taking immediate steps in response to our recommendations, and encourage the department to continue taking positive actions toward fully implementing them. Further, while OSD has introduced some changes in DOD’s annual report to Congress, it has not completed the process of developing a standardized set of sexual assault data elements and definitions. OSD officials noted that the standardization of data definitions is something they expect to accomplish in the near term, while standardizing data elements will take longer as it is a task that will be completed in conjunction with their development of a centralized sexual assault database. However, we note that in the meantime, information in DOD’s annual report still cannot be compared across the military services, and it may not be effectively characterizing incidents of sexual assault in the military services. Thus, to enhance visibility over the incidence of sexual assaults involving DOD servicemembers, and to improve the department’s sexual assault prevention and response programs and the pending implementation of the Defense Sexual Assault Incident Database, in our February 2010 report we recommend that DOD standardize the type, amount, and format of the data in the military services’ report submissions. In written comments on our draft report, DOD stated that it is working to achieve complete data uniformity among the military services, but that this will ultimately be accomplished once the Defense Sexual Assault Incident Database—which we will discuss next—has been established. While we recognize the complexity of this task, we continue to assert that the full establishment and implementation of standardized data elements and definitions will facilitate a more comprehensive understanding of DOD’s sexual assault prevention and response programs. We also found that OSD cannot assess training programs as we recommended, because OSD’s strategic plans and draft oversight framework do not contain measures against which to benchmark performance, and DOD has not implemented our recommendation to evaluate processes for staffing key installation-level positions because, according to OSD officials, they were advised that the Defense Task Force on Sexual Assault in the Military Services would be making related recommendations. Finally, OSD officials stated that they will not address our recommendation to collect installation-level data—despite its availability and the military services’ willingness to provide them—until they have implemented the Defense Sexual Assault Incident Database to maintain these data. We did not make any new recommendations to DOD in our February 2010 report regarding these findings however, we continue to assert that until these recommendations are fully implemented, OSD cannot be sure that the programs are improving the department’s prevention of and response to sexual assault incidents. DOD has taken preliminary steps to establish the centralized, case-level Defense Sexual Assault Incident Database that Congress directed it to implement in the National Defense Authorization Act for Fiscal Year 2009, but it did not meet the statutorily mandated January 2010 deadline for implementing the database. Instead, only general milestones for acquiring the database have been set, and DOD cannot currently commit to when the system will be implemented because it does not have a reliable acquisition and implementation schedule. Further, a range of key information technology management practices that are essential to successfully acquiring and implementing a system remain to be accomplished. Our research and evaluations of information technology programs across the federal government have shown that adherence to such practices—including assessing a program’s overlap with related programs and using reliable estimates of life cycle costs and benefits to justify investment in the system—is essential to delivering promised system capabilities and benefits on time and within budget. However, more remains to be accomplished before these disciplines will be effectively implemented. For example, while DOD developed a business case for the database in June 2009 that includes a cost estimate of $12.6 million, the cost estimate does not include all costs over the system’s life cycle, has not been adjusted to account for program risks, and does not include a comparison of alternatives on the basis of net present value. To increase the chances of the database being successfully acquired and implemented, in our February 2010 report we recommend that DOD adhere to key system acquisition management processes and controls, including, but not limited to developing a reliable integrated master schedule, assessing the program’s overlap with related programs, and justifying the investment based on reliable estimates of life cycle costs and benefits. In written comments on our draft report, DOD agreed with these recommendations but noted that doing so depends in part on hiring a system development contractor. In this regard, DOD expects to release the Request for Proposals for a system developer soon, and award a contract sometime between April and June 2010. While the Coast Guard has partially implemented one of our recommendations to further develop its sexual assault prevention and response program, it has not implemented the other. In August 2008, we reported that the Coast Guard’s sexual assault prevention and response program was hindered by several issues, and we made two recommendations to strengthen its program’s implementation. In response to these recommendations, the Coast Guard has established a headquarters-level program manager position to oversee its sexual assault prevention and response program, and it has initiated an assessment of the current workload requirements and resource allocations for its Sexual Assault Response Coordinators. In written comments on our draft report, the Coast Guard stated that it had recently completed its assessment of the workload requirements and resource allocations for its Sexual Assault Response Coordinators, and upon release of the final report the Coast Guard plans to review and analyze the recommendations and as appropriate, incorporate additional resource requirements into its annual budget process. Further, the Coast Guard lacks a systematic process to collect, document, and maintain its sexual assault data and related program information, and it lacks quality control procedures to ensure that program data being collected are reliable. For example, Coast Guard officials noted that in fiscal year 2008, the Coast Guard Investigative Service documented 78 reports of alleged sexual assault, while Coast Guard Headquarters, using its hard copy log of reports from its coordinators, had documented only 30. Therefore, in our February 2010 report we recommend that the Coast Guard improve the oversight and accountability of its sexual assault prevention and response program by establishing a systematic process for collecting, documenting, and maintaining sexual assault incidence data, and by establishing quality control processes to ensure that program information collected is reliable. In written comments on our draft report, the Coast Guard noted that it is currently developing a prototype of an electronic database to track sexual assault reports and that it expects to complete the database in 2010. Additionally, while the Coast Guard’s instruction requires that all Coast Guard Sexual Assault Response Coordinators be trained to perform relevant duties, officials stated that they have not developed a curriculum or implemented training for the Coast Guard’s 16 Sexual Assault Response Coordinators, as they had elected alternatively to develop a training curriculum for other program personnel. Thus, to ensure that the Coast Guard can provide proper advice to its personnel, in our February 2010 report we recommend that it establish and administer a curriculum for all key program personnel. In written comments on our draft report, the Coast Guard noted that it has scheduled training in May 2010 for all of its personnel performing Sexual Assault Response Coordinator duties. We commend the Coast Guard for the steps it has taken and its plans for further developing its sexual assault prevention and response program, and we encourage the service to continue taking positive actions toward fully implementing our recommendations. In summary, we want to reiterate our recognition that both DOD and the Coast Guard have taken a number of positive steps toward addressing our recommendations from 2008 to further strengthen their respective sexual assault prevention and response programs. Additionally, each service has proactively developed and implemented a variety of initiatives—beyond what we recommended—to increase program awareness and to improve prevention of and response to occurrences of sexual assault. While such progress is noteworthy, DOD’s and the Coast Guard’s efforts have not fully established sound management frameworks that include a long-term perspective and clear lines of accountability—all of which are needed to withstand the administrative, fiscal, and political pressures that confront federal programs on a daily basis. Further, successful program implementation will require the personal involvement of top DOD and Coast Guard leadership in order to maintain the long-term focus on and accountability for program objectives. Without such support, DOD’s and the Coast Guard’s programs will not be able to maximize the benefits of their respective prevention and response initiatives, and they may not be able to effect the change in military culture that is needed to ensure that their programs are institutionalized. Chairman Tierney and Members of the Subcommittee, this concludes our prepared statement. We would be pleased to answer any questions you may have at this time. If you or your staff have any questions on matters discussed in this statement, please contact Brenda Farrell at (202) 512-3604 or farrellb@gao.gov or Randolph Hite at (202) 512-3439 or hiter@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Key contributors to this statement include Marilyn K. Wasleski, Assistant Director; Neelaxi Lakhmani, Assistant Director; Divya Bali; Stacy Bennett; K. Nicole Harms; Jim Houtz; Ron La Due Lake; Kim Mayo; Adam Vodraska; and Cheryl A. Weissman. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

This report discusses our efforts to evaluate the Department of Defense's (DOD) and the U.S. Coast Guard's oversight and implementation of their respective sexual assault prevention and response programs. Our findings build upon our previous work related to sexual assault in the military services. DOD and the Coast Guard have taken a number of positive steps to increase program awareness and to improve their prevention and response to occurrences of sexual assault, but additional actions are needed to strengthen their respective programs. As we have previously reported, sexual assault is a crime with a far-reaching negative impact on the military services in that it undermines core values, degrades mission readiness and esprit de corps, subverts strategic goodwill, and raises financial costs. Since we reported on these implications in 2008, incidents of sexual assault have continued to occur; in fiscal year 2008, DOD reported nearly 3,000 alleged sexual assault cases, and the Coast Guard reported about 80. However, it remains impossible to accurately analyze trends or draw conclusions from these data because DOD and the Coast Guard have not yet standardized their respective reporting requirements. DOD has taken steps to implement our August 2008 recommendations to improve its sexual assault prevention and response program; however, its efforts reflect various levels of progress, and opportunities exist for further program improvements. To its credit, DOD has implemented four of the nine recommendations in our August 2008 report. Further, while the Office of the Secretary of Defense (OSD) has introduced some changes in DOD's annual report to Congress, it has not completed the process of developing a standardized set of sexual assault data elements and definitions. We also found that OSD cannot assess training programs as we recommended, because OSD's strategic plans and draft oversight framework do not contain measures against which to benchmark performance, and DOD has not implemented our recommendation to evaluate processes for staffing key installation-level positions because, according to OSD officials, they were advised that the Defense Task Force on Sexual Assault in the Military Services would be making related recommendations. Finally, OSD officials stated that they will not address our recommendation to collect installation-level data--despite its availability and the military services' willingness to provide them--until they have implemented the Defense Sexual Assault Incident Database to maintain these data. While the Coast Guard has partially implemented one of our recommendations to further develop its sexual assault prevention and response program, it has not implemented the other. In August 2008, we reported that the Coast Guard's sexual assault prevention and response program was hindered by several issues, and we made two recommendations to strengthen its program's implementation. Further, the Coast Guard lacks a systematic process to collect, document, and maintain its sexual assault data and related program information, and it lacks quality control procedures to ensure that program data being collected are reliable. Additionally, while the Coast Guard's instruction requires that all Coast Guard Sexual Assault Response Coordinators be trained to perform relevant duties, officials stated that they have not developed a curriculum or implemented training for the Coast Guard's 16 Sexual Assault Response Coordinators, as they had elected alternatively to develop a training curriculum for other program personnel. Thus, to ensure that the Coast Guard can provide proper advice to its personnel, in our February 2010 report we recommend that it establish and administer a curriculum for all key program personnel.

Since 1965, Head Start’s primary goal has been to improve the social competence of children in low-income families, that is, their everyday ability to deal with both their current environment and later responsibilities in school and life. This considers the relationships between cognitive and intellectual development, physical and mental health, nutritional needs, and other factors. Head Start delivers, or provides access to, a wide range of services—educational, medical, dental, nutrition, mental health, and social services. HHS administers the Head Start program through its Head Start Bureau within the Administration for Children and Families (ACF). coordinate with public health agencies to obtain health services, while others contract with local physicians. Although all grantees operate under one set of performance standards, they have a great deal of discretion in implementing those standards, resulting in programs that vary. In addition to providing services to children and families, Head Start sees one of its roles as a national laboratory for child development. Consequently, Head Start uses much of its discretionary research funding for demonstrations and studies of program innovations. The amount of funds allocated to research, demonstration, and evaluation has represented about 2 percent of the Head Start budget over the years. About $12 million (about 0.3 percent of the Head Start budget) was so allocated for fiscal year 1997. The main focus of the program’s research, according to Head Start Bureau officials, has been to improve the program by exploring ways to maximize and sustain Head Start benefits. In addition, Head Start funds studies designed to answer questions on the effectiveness of new or innovative service delivery strategies. Such studies typically involve special program efforts and demonstration projects conducted on a trial basis at a few Head Start sites that focus on practices or services not typically found in regular Head Start programs. The passage of the Results Act in 1993 has heightened the importance of the type and direction of this research. The Results Act is designed to hold federal agencies accountable for achieving program results. The act specifically requires that agencies clearly define their missions, establish long-term strategic goals as well as annual goals linked to them, measure their performance according to their performance goals, and report on their progress. Agencies are also expected to perform discrete program evaluations and to use information from these evaluations to improve their programs. impact as differences in outcomes caused by Head Start participation. Essentially, impact evaluations are the only way to answer the question, “Is this program making a difference?” Impact evaluation is a form of program evaluation that assesses the net impact of a program by comparing its outcomes with an estimate of what would have happened without the program. This form of program evaluation is used when external factors are known to influence the program’s outcomes; it isolates program contributions from other factors that may affect the achievement of program objectives. The most reliable way to determine program impact is to compare a group of Head Start participants with an equivalent group of nonparticipants. The preferred method for establishing that the groups are equivalent at the outset is to randomly assign participants to either a Head Start group or a comparison group, although other methods are valuable for estimating a program’s net impact. In 1997, we reported the results of our work on identifying what existing studies suggest about Head Start’s impact. To conclude that impact has been demonstrated, one would expect to see either (1) a sufficient number of reasonably well-designed individual studies whose findings could appropriately be combined to provide information on national impact or (2) at least one large-scale evaluation using a nationally representative sample. After locating and screening 600 studies and consulting with many early childhood researchers and officials at the Head Start Bureau, we identified only 22 studies that met the criteria for inclusion in our analysis. other early childhood programs for low-income families has been growing. Thus, the Congress needs to know with some certainty whether the federal investment in Head Start is making a difference. In commenting on our earlier report, HHS said that the existing research on Head Start’s impact was substantial and that the Department’s strategy to expand this research was appropriate for determining both the program’s impact and its quality. HHS also indicated plans to evaluate the feasibility of conducting impact studies such as we recommended. HHS supported its claim that the existing research was substantial by noting the findings from a 1985 research synthesis of studies conducted in the 1960s and 1970s and two more recent studies. We disagreed, however, that findings drawn from studies more than 20 years old adequately support claims about the current program’s impact. As noted, the current Head Start program operates in an environment that has changed in the last 20 years, when other, non-Head Start comprehensive early childhood services were not as available. Similarly, the findings from the two more recent studies did not support conclusions about program impact that can be generalized to the national program. Even though these two studies were larger than others we had found, both had significant methodological limitations. HHS’ current initiatives reflect its opinion that a randomized control group is not necessary to measure Head Start’s impact. The current initiatives HHS describes as assessing impact include (1) the development of new performance measures, (2) a longitudinal study called FACES, and (3) a collaborative effort with NCES. assess the net impact of the Head Start program. It will allow Head Start to define and assess program outcomes, such as improved language skills, that it could then use to compare Head Start participants’ outcome results with those of a control group to determine impact. Another HHS initiative, FACES, is a study of a representative sample of Head Start children and their families intended to show whether Head Start is reaching its goal of improving children’s social competence. According to HHS, for the spring 1997 pilot, data were collected from a sample of 2,400 families with children enrolled in 160 randomly selected centers in 40 Head Start programs nationwide. The full study will collect data from 3,200 families at program entry, exit, and at the end of kindergarten. HHS will conduct a more comprehensive validation substudy of 120 families. Researchers will use well-established and widely used scales, assessments, and observational protocols and specially tailored questionnaires to collect data on children’s vocabulary, emergent literacy and mathematical skill, perceptual-motor development, and social and communicative competence before and after Head Start participation. Head Start officials describe FACES as a way to draw conclusions about Head Start’s impact in part because it will use nationally normed instruments. In addition, some of the FACES data elements will be the same as those in a Department of Education national household education survey. This will allow for comparing certain FACES results with a nationally representative sample of low-income children. It is not clear from our work so far how HHS will use the nationally normed data. According to HHS officials, the study will not compare Head Start children and their families with a randomly assigned control group of other children and families or with any other group. collect data from parents and children, including descriptions of children’s preschool experience and standardized tests in areas such as achievement and psychomotor development. This database will be available as a public-use tape for Head Start as well as other researchers. Head Start could use this database to compare groups of children in non-Head Start preschool programs with those in Head Start programs to assess program impact. Head Start’s initiatives are headed in the right direction because of their increased focus on outcomes and research that could be expanded to compare outcomes for children in Head Start with those for similar children and families not served by the program. It is not clear how or whether Head Start will make these comparisons, however, using nationally normed tests or comparison group data from NCES. In addition, either of those research designs provides a much weaker basis for drawing conclusions about impact than a study with randomized assignment. For example, if Head Start uses NCES data for comparisons, the results could provide some indication of program impact. Some question will always remain, however, about the degree to which preexisting differences in the groups may have affected study results. True experimental designs, also called randomized trials, eliminate such questions. Randomized trials are comparison group studies that randomly assign study participants to either a treatment or control group. In the case of Head Start, these studies would require recruiting more eligible children than the program can serve. From these recruits, some would be randomly assigned to Head Start; the rest, the unserved children, would constitute the control group. HHS officials cited ethical considerations of assigning children to an unserved control group as one of the difficulties in conducting randomized trials. suggested that Head Start conduct randomized trials to study regular Head Start programs because this type of study provides the most conclusive information on program impact. In fact, the evaluation of the Early Head Start program, now under way, has randomly assigned potential participants to Early Head Start or a control group that has not received Early Head Start services. Control groups of randomly assigned participants are important to determining impact because they prevent mistakenly attributing outcomes to program effects when these outcomes are really caused by other factors. For instance, a recent evaluation of the Comprehensive Child Development Program, a demonstration project involving comprehensive early childhood services like those of Head Start, found positive changes in the families participating. The study had a control group, however, and researchers discovered that the control group families also had similar positive changes. They concluded therefore that the positive changes could not be attributed to the program. Although impact research can be costly and time consuming, the federal government has made a considerable financial investment in the Head Start program; therefore, Head Start warrants a close examination to determine what the public is getting for its investment. Head Start has devoted substantial resources to research and evaluation activities, including some long-term studies and studies involving comparison groups. Although these have been worthwhile efforts, they have not sufficiently focused on evaluating results. HHS is taking steps that may help lay the groundwork for efforts to evaluate the net impact of Head Start program services. Identifying performance measures is an important first step in building a research and impact evaluation base for Head Start. In addition, this effort could yield a set of common measures upon which a body of research, including impact research, could be built. Similarly, the information gained in FACES should be extremely useful, especially to the extent that it is nationally representative. HHS efforts, however, do not include plans for a research study or set of studies that will definitively compare the outcomes achieved by Head Start children and their families with those achieved by similar non-Head Start children and families. Although definitive results could take years to obtain, questions about Head Start’s impact will remain unanswered unless these plans are expanded. Messrs. Chairmen, this concludes my statement. I would be happy to answer any questions you or members of the Subcommittees may have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. 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GAO discussed Head Start's impact on children and their families, and the adequacy of the Department of Health and Human Services' (HHS) current research plans to provide additional information on Head Start's impact. GAO noted that: (1) the Head Start program has provided comprehensive services to millions of low-income children and their families; (2) little is known, however, about whether the program has achieved its goals; (3) although an extensive body of literature exists on Head Start, only a small part of that involves program impact research; (4) because of these research studies' individual and collective limitations, this body of research is insufficient for use in drawing conclusions about the impact of the national program; (5) HHS has the following initiatives it describes as impact assessments: (a) development of performance measures focusing on program outcomes, rather than just processes; (b) a national longitudinal study of a representative sample of Head Start children and their families; and (c) a collaborative effort with the National Center for Educational Statistics; (6) these efforts are headed in the right direction for Head Start to evaluate the impact of its program; and (7) it is unclear, however, whether these efforts will meaningfully compare the outcomes achieved by Head Start children and their families with those achieved by non-Head Start children and families, leaving unanswered questions about Head Start's impact.

As discussed in our May 2010 report, TSA deployed SPOT nationwide before first determining whether there was a scientifically valid basis for using behavior and appearance indicators as a means for reliably identifying passengers who may pose a risk to the U.S. aviation system. A validation study by DHS’s Science and Technology Directorate is under way now, but questions exist regarding whether the study’s methodology is sufficiently comprehensive to validate the SPOT program. Specifically, DHS’s plan to assess SPOT is not designed to fully validate whether behavior detection can be used to reliably identify individuals in an airport environment who pose a security risk. The results of an independent assessment are needed to determine whether current validation efforts are sufficiently comprehensive to validate the program, and to support future requests for increased funding. According to TSA, SPOT was deployed before a scientific validation of the program was completed, but TSA stated that this deployment was made in response to the need to address potential threats to the aviation system, such as suicide bombers. TSA also stated that the program was based upon scientific research available at the time regarding human behaviors. Moreover, TSA stated that no other large-scale U.S. or international screening program incorporating behavior- and appearance-based indicators has ever been rigorously scientifically validated. However, a 2008 report issued by the National Research Council of the National Academy of Sciences stated that the scientific evidence for behavioral monitoring is preliminary in nature. The report also noted that an information-based program, such as a behavior detection program, should first determine if a scientific foundation exists and use scientifically valid criteria to evaluate its effectiveness before deployment. The report added that such programs should have a sound experimental basis and that the documentation on the program’s effectiveness should be reviewed by an independent entity capable of evaluating the supporting scientific evidence. As we reported in May 2010, an independent panel of experts could help DHS develop a comprehensive methodology to determine if the SPOT program is based on valid scientific principles that can be effectively applied in an airport environment for counterterrorism purposes. Thus, we recommended that the Secretary of Homeland Security convene an independent panel of experts to review the methodology of the validation study on the SPOT program being conducted to determine whether the study’s methodology is sufficiently comprehensive to validate the SPOT program. We also recommended that this assessment include appropriate input from other federal agencies with expertise in behavior detection and relevant subject matter experts. DHS concurred and stated that its current validation study includes an independent review of the study th at will include input from a broad range of federal and operational agencies and relevant experts, including those from academia. According to DH S’s Science and Technology Directorate, this independent review is expected to be completed in early April 2011. As discussed in our May 2010 report, DHS has contracted with the American Institutes for Research to conduct its validation study. DHS stated that the ongoing independent review will include, among other things, recommendations on additional studies that should be undertaken to more fully validate the science underlying the SPOT screening process. As we noted in our report, research on other issues, such as determining the number of individuals needed to observe a given number of passengers moving at a given rate per day in an airport environment or the duration that such observation can be conducted by BDOs before observation fatigue affects effectiveness, could provide additional information on the extent to which SPOT can be effectively implemented in airports. Additional research could also help determine the need for periodic refresher training for the BDOs since research has not yet determined whether behavior detection is easily forgotten or can be potentially degraded with time or lack of use. Because such questions exist, the results of an independent panel of experts to assess the methodology of the study could provide DHS with additional assurance regarding whether the study’s methodology is sufficiently comprehensive to validate the SPOT program. Moreover, DHS stated that its current effort to validate the science underlying SPOT includes 3 years of operational SPOT referral data and preliminary results indicate that it is supportive of SPOT. However, in May 2010, we reported weaknesses in TSA’s process for maintaining operational data from the SPOT program database. Because of these data- related issues, we reported that meaningful analyses could not be conducted to determine if there is an association between certain behaviors and the likelihood that a person displaying certain behaviors would be referred to a law enforcement officer or whether any behavior or combination of behaviors could be used to distinguish deceptive from nondeceptive individuals. As we reported in March 2011, Congress may wish to consider limiting program funding pending receipt of an independent assessment of TSA’s SPOT program. We identified potential budget savings of about $20 million per year if funding were frozen at current levels until validation efforts are complete. Specifically, in the near term, we reported that Congress could consider freezing appropriation levels for the SPOT program at the 2010 level until the validation effort is completed. Assuming that TSA is planning to expand the program at a similar rate each year, this action could result in possible savings of about $20 million per year, or $100 million over 5 years, since TSA is seeking about a $20 million increase for SPOT in fiscal year 2011. We also reported that upon completion of the validation effort, Congress may also wish to consider the study’s results—including those on the program’s effectiveness in using behavior-based screening techniques to detect terrorists in the aviation environment—in making future funding decisions regarding the program. In May 2010, we reported that TSA is not fully utilizing the resources it has available to systematically collect the information obtained by BDOs on passengers whose behaviors and appearances resulted in either a referral to a BDO or to a LEO, and who thus may pose a risk to the aviation system. As we previously reported, TSA does not provide official guidance on how or when BDOs or other TSA personnel should enter data into the Transportation Information Sharing System or which data should be entered. Official guidance on what data should be entered into the system on passengers could better position TSA personnel to be able to consistently collect information to facilitate synthesis and analysis in “connecting the dots” with regard to persons who may pose a threat to the aviation system. Moreover, as of May 2010, TSA had not developed a schedule or milestones by which database access would be deployed to SPOT airports, or a date by which access at all SPOT airports would be completed. Setting milestones for expanding Transportation Information Sharing System access to all SPOT airports, and setting a date by which the expansion will be completed, could better position TSA to identify threats to the aviation system that may otherwise go undetected and help TSA track its progress in expanding Transportation Information Sharing System access as management intended. Thus, we previously recommended that TSA provide guidance in the SPOT standard operating procedures or other directives to BDOs, and to other TSA personnel as appropriate, on how and when to input data into the Transportation Information Sharing System database. In March 2011, TSA stated that it has taken steps to implement our recommendation by revising SPOT standard operating procedures to provide guidance directing the input of BDO data into the Transportation Information Sharing System. TSA plans to implement these revised procedures in April 2011. In addition, all SPOT airports have access to the Transportation Information Sharing System as of March 2011 according to TSA. In addition, as we previously reported, studying airport video recordings of the behaviors exhibited by persons transiting airport checkpoints who were later charged with or pleaded guilty to terrorism-related offenses could provide important insights about behaviors that may be common among terrorists or could demonstrate that terrorists do not generally display any identifying behaviors. In addition, such images could help determine if BDOs are looking for the right behaviors or seeing the behaviors they have been trained to observe. Using CBP and Department of Justice information, we examined the travel of key individuals allegedly involved in six terrorist plots that have been uncovered by law enforcement agencies. We determined that at least 16 of the individuals allegedly involved in these plots moved through 8 different airports where the SPOT program had been implemented. Six of the 8 airports were among the 10 highest-risk airports, as rated by TSA in its Current Airport Threat Assessment. In total, these individuals moved through SPOT airports on at least 23 different occasions. For example, according to Department of Justice documents, in December 2007 an individual who later pleaded guilty to providing material support to Somali terrorists boarded a plane at the Minneapolis-Saint Paul International Airport en route to Somalia. Similarly, in August 2008, an individual who later pleaded guilty to providing material support to al Qaeda boarded a plane at Newark Liberty International Airport en route to Pakistan to receive terrorist training to support his efforts to attack the New York subway system. Our survey of federal security directors at 161 SPOT airports indicated that most checkpoints at SPOT airports have surveillance cameras installed. Thus, we reported that TSA may be able to utilize the information collected from the video infrastructure at the nation’s airports to study the behavior of persons who were later charged with or pleaded guilty to terrorism-related offenses to help improve and refine the existing SPOT program. As a result, in our May 2010 report, we recommended that if the current validation effort determines that the SPOT program has a scientifically validated basis for using behavior detection for counterterrorism purposes in the airport environment, then TSA should study the feasibility of using airport checkpoint surveillance video recordings to enhance its understanding of terrorist behaviors. DHS agreed with our recommendation and noted that TSA agrees this could be a useful tool and is working with DHS’s Science and Technology Directorate to utilize video case studies of terrorists, if possible. TSA officials agreed that examining video recordings of individuals who were later charged with or pleaded guilty to terrorism-related offenses, as they used the aviation system to travel to overseas locations allegedly to receive terrorist training or to execute attacks, could help inform the SPOT program’s identification of behavioral indicators. In March 2011, TSA stated that it is exploring ways to better utilize video recordings to identify these behavioral indicators. Chairman Broun, Ranking Member Edwards, and Members of the Subcommittee, this concludes my statement. I look forward to answering any questions that you may have at this time. For questions about this statement, please contact Stephen M. Lord at (202) 512-4379 or lords@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals making key contributions to this testimony are David M. Bruno, Assistant Director; Ryan Consaul; Katherine Davis; Emily Gunn; and Tracey King. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

The attempted passenger aircraft bombing of Northwest flight 253 on December 25, 2009, provided a vivid reminder that the civil aviation system remains an attractive terrorist target. To enhance aviation security, in October 2003 the Department of Homeland Security's (DHS) Transportation Security Administration (TSA) began testing of its Screening of Passengers by Observation Techniques (SPOT) program to identify persons who may pose a risk to aviation security. The SPOT program utilizes behavior observation and analysis techniques to identify potentially high-risk passengers. This testimony provides information on (1) the extent to which TSA has validated the scientific basis for SPOT and (2) other operational challenges. This statement is based on a prior report GAO issued in May 2010 on SPOT, including selected updates made in March 2011. For the updates, GAO reviewed documentation on TSA's progress in implementing the report's recommendations. As GAO reported in May 2010, TSA deployed its behavior detection program nationwide before first determining whether there was a scientifically valid basis for the program. According to TSA, the program was deployed before a scientific validation of the program was completed in response to the need to address potential security threats. However, a scientific consensus does not exist on whether behavior detection principles can be reliably used for counterterrorism purposes, according to a 2008 report of the National Research Council of the National Academy of Sciences. DHS is conducting a study on the scientific basis of SPOT. Thus, in May 2010, GAO recommended that DHS convene an independent panel of experts to review the methodology of its study. DHS concurred and stated that it is convening an independent panel to review its current efforts to help validate the scientific basis for the program, which is expected to complete its work by early April 2011. Nonetheless, DHS's study to assess SPOT is not designed to fully validate whether behavior detection can be used to reliably identify individuals in an airport environment who pose a security risk. For example, factors such as the length of time behavior detection officers (BDO) can observe passengers without becoming fatigued are not part of the plan and could provide additional information on the extent to which SPOT can be effectively implemented. The results of a panel to review DHS's methodology could help ensure a rigorous, scientific validation of SPOT. As GAO previously reported, TSA experienced SPOT operational challenges, including not systematically collecting and analyzing information obtained by BDOs on passengers who may pose a threat to the aviation system. Better utilizing existing resources would enhance TSA's ability to quickly verify passenger identity and could help TSA to more reliably "connect the dots" with regard to persons who pose a threat. Thus, GAO recommended that TSA clarify BDO guidance for inputting information into the database used to track suspicious activities, and develop a schedule to expand access to this database across all SPOT airports. TSA agreed and in March 2011 stated that it has revised the SPOT standard operating procedures on how BDOs are to input data into the database used to report suspicious activities. TSA plans to implement these revised procedures in April 2011. TSA also reported that all SPOT airports have access to this database as of March 2011. In addition, GAO reported that individuals allegedly involved in six terrorist plots transited SPOT airports. GAO recommended in May 2010 that TSA study the feasibility of using airport video recordings of the behaviors exhibited by persons transiting airport checkpoints who were later charged with or pleaded guilty to terrorism-related offenses. GAO reported that such recordings could provide insights about behaviors that may be common among terrorists or could demonstrate that terrorists do not generally display any identifying behaviors. TSA agreed that studying airport videos could be a useful tool in understanding terrorist behaviors in the airport environment and in March 2011 reported that it is exploring ways to better utilize such recordings. GAO has made recommendations in prior work to strengthen TSA's SPOT program. TSA generally concurred with the recommendations and has actions under way to address them. GAO provided the updated information to TSA. TSA had no comment.

SSA historically has compiled death information about SSN-holders in order to ensure it does not pay Social Security benefits to deceased individuals and to establish benefits for survivors. When SSA receives a report of death—which could include name, date of birth, date of death, and SSN—it matches that information against corresponding information in its database of all SSN-holders, known as the Numerical Index File (Numident). SSA then marks the appropriate Numident record with a death indicator. This death information was not publicly available until 1980 when, in response to Freedom of Information Act requests, SSA began to extract Numident records that had a death indicator into a separate file it called the DMF. According to SSA officials, SSA received about 7 million death reports in 2012 from a variety of sources. These sources include family members, funeral directors, post offices, financial institutions, other federal agencies, and state vital records agencies (states). To get death reports from the states, SSA has established formal agreements that set forth a payment structure for the states’ death reports and limit SSA’s ability to share this information. However, the Social Security Act requires SSA to share death information, including data reported by the states, with federal agencies to ensure proper payment of benefits to individuals. The act also prohibits SSA from sharing state-reported death information for any other purposes. As a result, SSA maintains two versions of the DMF. The “full DMF,” which contains all death records, is available to federal benefit-paying agencies. The “partial DMF,” which excludes state- reported death information, is available publicly to any interested party. Following the Social Security Act, SSA removes the state-reported records from the full DMF and provides the partial DMF to the Department of Commerce’s National Technical Information Service (NTIS), which reimburses SSA for the cost of providing the file and sells it through a subscription service. Our work to date has identified ways in which SSA’s procedures for compiling and verifying death reports may affect the accuracy of death reports in the DMF. To guide how to handle death reports, SSA has determined accuracy levels for each of the sources based on its past experience. Of all the sources of death reports that SSA receives, SSA considers those submitted by states through Electronic Death Registration Systems (EDRS) to be the most accurate. As part of these systems, states generally verify the names and SSNs from death reports with SSA’s databases before submitting them. As of March 2013, 35 states submit their death reports using EDRS. SSA considers reports from funeral directors and family members of decedents the next most accurate. Finally, SSA considers reports from the remaining sources to be less accurate. According to SSA officials, SSA does not collect data on the number of death reports submitted by each source. However, officials told us that if SSA receives multiple death reports for the same individual, the Numident record is updated to reflect only the source SSA considers to be the most accurate. For example, if SSA first receives a death report from a family member and subsequently receives an electronic report from a state about the same individual, the original report is overridden and SSA records only the state as the source of the death report. Whether SSA verifies death reports depends upon (1) whether the decedent is receiving Social Security benefits, and (2) the source of the report. Verification includes confirming the date of death and decedent’s SSN to ensure that the person identified in the death report is the person who has died. According to SSA officials, the agency only verifies death reports for individuals currently receiving Social Security program benefits because it is essential to its mission to stop payments to deceased beneficiaries. Even then, SSA verifies only those reports from sources it considers to be less accurate, such as financial institutions and other federal agencies. Therefore, death reports for non-beneficiaries are not verified (see table 1). SSA officials said they do not maintain data on the number of death reports they verify annually or how long such verifications take. The following scenarios illustrate SSA’s approach to verification: SSA receives a death report from a funeral director and determines the decedent is currently receiving Social Security benefits. Because the report was received from a source considered highly accurate, SSA takes no further steps to verify the death. The death is recorded in the decedent’s Numident record and subsequently the DMF. SSA receives a death report from a post office based on a returned Social Security benefit check noting the addressee is deceased. Because the decedent is a current SSA beneficiary and the report came from a source considered less accurate, it is turned over to an SSA field office to verify. Field office staff attempt to contact either the family of the decedent or some other source that is likely to have first- hand knowledge of the death to confirm the decedent’s identity and date of death. Once this is completed, the death is recorded in the decedent’s Numident record and the DMF. Veterans Affairs submits a death report to SSA. SSA determines the decedent is not receiving Social Security benefits. SSA does not verify the death before recording it in the Numident record and subsequently the DMF. Because there are a number of death reports that SSA does not verify, the agency risks having erroneous death information in the DMF, such as including living individuals in the file or not including deceased individuals. Specifically, for death reports that are not verified, SSA would not know with certainty if the individuals reported as dead are, in fact, the ones who are dead. SSA acknowledges these limitations and does not guarantee the accuracy of the file. Other SSA practices may prevent deaths from being included in the DMF or lead to other errors. For example, if SSA cannot match a death report to a corresponding Numident record because of differences in name, date of birth, or gender, it generally will not take actions to resolve the non- match. As a result, these deaths would not be included in the DMF. In addition, analysis we performed on existing DMF records identified potentially erroneous information. Specifically, we identified: 130 records where the date of death was recorded to occur before the 1,295 records where the recorded age at death was between 111 and 1,791 records where the recorded death preceded 1936, the year SSNs were first issued, although the decedents had SSNs assigned to them. SSA officials said some of these anomalies were likely associated with records added prior to the mid-1970s that were manually processed. For example, SSA staff could have keyed in a date of birth that occurred after a date of death. In addition, they told us SSA is taking steps toward identifying or preventing these types of potential errors. These include implementing an edit check to catch records showing a date of birth after date of death, and undertaking a review of cases in which persons appear to be unreasonably old and still receiving benefits to determine if they are dead or if their birth date was entered incorrectly. Finally, there are other situations in which deaths would not be included in the DMF. For example, decedents who were never assigned an SSN cannot be matched to the Numident. In addition, some deaths may not be reported to SSA, because, for example, identity cannot be established or a body is never found. However, it was beyond the scope of our review to determine the extent to which such gaps occurred. A number of federal agencies access the DMF, but the conditions of access vary widely due to legal and administrative factors. Federal agencies’ access to the full DMF depends on various legal requirements, including (1) whether they pay federal benefits and (2) whether their proposed use of the DMF is consistent with uses outlined in the Social Security Act. Currently, SSA shares the full DMF with six federal benefit- paying agencies which have requested access and which it has determined meet the relevant legal requirements: Centers for Medicare & Medicaid Services Department of Defense (Defense Manpower Data Center) Department of Veterans Affairs Internal Revenue Service Office of Personnel Management Railroad Retirement Board To address administrative conditions of access, these agencies have established information exchange agreements to receive the full DMF. As a part of these agreements, SSA and the agencies agree on what the agency will pay for receiving the data, among other things. SSA has statutory authority to require reimbursement to cover the reasonable cost of sharing the data, and the amount varies by agency. According to SSA officials, although the cost is generally related to the volume of data SSA provides, other factors may affect what agencies pay. For example, the Department of Veterans Affairs does not reimburse SSA for the DMF because it is statutorily exempted from doing so. The Office of Personnel Management similarly does not reimburse SSA because it provides other data to SSA, and the agencies have agreed that the expenses involved in the exchanges are reciprocal. In contrast, the Defense Manpower Data Center pays over $40,000 annually for monthly updates, while CMS officials told us it pays about $10,000 per year for weekly updates. A number of other federal agencies purchase only the partial DMF that is publicly available from NTIS. Several of these pay federal benefits, including the Department of Labor’s Energy Employees Occupational Illness Compensation Program, which provides compensation and health benefits to eligible Department of Energy workers and certain survivors. In addition, the Department of Agriculture’s Farm Service Agency administers several programs that pay benefits to farmers. Other agencies include, for example, the Department of Homeland Security, the Department of Justice, and the Department of the Treasury office that administers the Do Not Pay Initiative. According to SSA officials, the partial DMF has about 10 percent fewer records than the full DMF due to the removal of state-reported deaths. As more states submit records via EDRS, SSA officials expect this difference to grow over time. As a result, any benefit-paying agency relying on the partial DMF to help identify deceased program participants may be missing death records for some of its beneficiaries because it has access to only about 87 million of the 98 million records in the full DMF. Although SSA officials make the determination about which agencies are eligible to receive the full DMF, they told us agencies must first formally request it. In response to agencies’ requests, SSA makes determinations about agencies’ statutory eligibility on a case-by-case basis. However, SSA officials said they were not aware of written standards or guidelines to follow in determining which federal agencies meet statutory requirements. SSA officials said that Offices of Inspectors General at benefit-paying agencies would likely be eligible to receive the full DMF for the purpose of ensuring proper payments of benefits. In contrast, SSA officials said that the agency has determined that the Department of the Treasury would not be eligible to receive the full DMF for the purposes of administering the Do Not Pay Initiative. Even though this initiative is designed to help agencies prevent improper payments, SSA officials explained that under the Do Not Pay Initiative, Treasury would share state death information with agencies that do not pay benefits, which would put SSA in violation of the Social Security Act and its agreements with the states. In summary, SSA’s death information can serve as a helpful tool in preventing improper payments, but can only do so if it is accurate and accessible to federal agencies that need it. As we continue our work, we will explore these and other issues in more detail and look forward to providing a final product later in 2013. Chairman Carper, Ranking Member Coburn, and Members of the Committee, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time. For further information about this testimony, please contact me at (202) 512-7215 or bertonid@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this testimony. Other key contributors to the testimony include Keira Dembowski, Holly Dye, Joel Marus, Sara Pelton and Lori Rectanus. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

As the steward of taxpayer dollars, the federal government is accountable for safeguarding against improper payments--those that should not have been made or that were made in an incorrect amount. One tool federal agencies can use to do this is the DMF, which is a file containing records of deceased individuals who are SSNholders. Through data matching, federal benefit-paying agencies can use the DMF to alert them of deceased benefit recipients. However, the SSA Office of Inspector General and others have identified inaccuracies in the DMF, including deceased individuals who were not listed in the file. Such inaccuracies could adversely affect its usefulness to federal agencies. This testimony addresses preliminary observations on (1) SSA's process for handling death reports for inclusion in the DMF, and (2) federal agency access to the DMF. In addressing these objectives, we interviewed SSA officials regarding how the agency obtains death reports and maintains the DMF; reviewed applicable federal laws, SSA procedures, and reports; interviewed representatives of organizations that report deaths to SSA; and interviewed officials at other federal agencies that use the DMF. The Social Security Administration's (SSA) procedures for handling and verifying death reports may allow for erroneous death information in the Death Master File (DMF) because SSA does not verify certain death reports or record others. SSA officials said, in keeping with its mission, the agency is primarily focused on ensuring that it does not make benefit payments to deceased Social Security program beneficiaries. As a result, it only verifies death reports received for individuals who are current program beneficiaries, and even then, only for those reports received from sources it considers to be less accurate. For example, SSA officials consider death reports from states that have pre-verified decedents' name and SSN to be highly accurate, so SSA does not verify that the subjects of these reports are actually deceased. It would, however, verify a report received from a source such as a post office. SSA verifies no death reports for individuals who are not beneficiaries, regardless of source. Because there are a number of death reports that SSA does not verify, the agency risks including incorrect death information in the DMF, such as including living individuals in the file or not including deceased individuals. Specifically, for death reports that are not verified, SSA would not know with certainty if the individuals are correctly reported as dead. SSA also does not record some deaths because incorrect or incomplete information included in death reports generally prevents SSA from matching decedents to SSA records. For example, if SSA is unable to match a death report to data in its records such as name and Social Security Number (SSN), it generally does not follow up to correct the non-match and does not record the death. A number of federal agencies access the DMF for the purpose of matching it against data in their files, but the conditions of access depend on a variety of legal and other factors. Currently SSA shares a full version of the DMF with six federal agencies that it has determined meet legal requirements for accessing the file, which include being an agency that pays federal benefits. By law, SSA can require reimbursement for the cost of sharing the data, however various factors affect what the agencies actually pay. The Department of Veterans Affairs and the Office of Personnel Management pay nothing to receive the file, whereas the Department of Defense annually pays more than $40,000. A number of other federal agencies--including several that administer programs that pay benefits-- purchase a partial version of the DMF that is publicly available through the Department of Commerce's National Technical Information Service (NTIS). NTIS reimburses SSA for receipt of the file. The partial DMF does not include statereported data and, according to SSA officials, has about 10 percent fewer records than the full DMF (roughly 87 million, compared to 98 million). Thus, agencies accessing this version of the file, such as the Department of Labor's Energy Employees Occupational Illness Compensation Program, may be missing deceased program participants. If agencies want access to the full DMF, they must formally request it. SSA makes determinations about their eligibility on a case-by-case basis. SSA officials said they were not aware of written standards or guidelines to follow in making these determinations. The work is ongoing and GAO has no recommendations at this time. GAO plans to issue its final report later in 2013.

According to the American Academy of Pediatrics, only about a quarter of all approved drugs marketed in the United States have had clinical trials performed involving pediatric patients. FDA’s January 2001 report to Congress on the pediatric exclusivity provision noted that evidence from several studies conducted since 1973 showed that between 71 and 81 percent of drugs were inadequately labeled for use in pediatric patients. According to the legislative history of FDAMA, several factors appear to have contributed to the lack of pediatric studies. Drug companies indicated that they had little incentive to perform pediatric studies on drugs they intended to market primarily to adults and that these drugs would provide little additional revenue from use in children. Companies also said they were concerned about liability and malpractice issues and the difficulty of attracting enough pediatric patients for studies because of the small number of children with a particular disease. Previous FDA efforts to address the problem of inadequate pediatric testing and drug labeling information had been unsuccessful. For example, in 1994 FDA tried to encourage sponsors to provide more pediatric information and conduct new studies. However, it did not require sponsors to conduct new pediatric studies, and pediatric use information did not substantially increase. In 1997, the Congress recognized the importance of learning more about how drugs work in children by including in FDAMA a financial incentive for pharmaceutical manufacturers and drug sponsors to conduct pediatric studies and submit the results to FDA. The pediatric exclusivity provision offered 6 months of additional marketing exclusivity for drugs tested by manufacturers and other sponsors for use in children. This provision also required FDA to develop, prioritize, and publish an annual list of approved drugs for which new pediatric information may produce health benefits in the pediatric population. FDA’s initial priority list, issued in May 1998, was developed based on recommendations from experts in pediatric research from the American Academy of Pediatrics, PhRMA, GPhA, the National Institutes of Health, the Pediatric Pharmacology Research Units Network,the U.S. Pharmacopoeia, and several others. To be included on FDA’s priority list, a drug had to meet one of the following criteria: The drug would be a significant improvement compared to marketed products labeled for use in the treatment, diagnosis, or prevention of a disease in the relevant pediatric population. The drug is widely used in the pediatric population, with at least 50,000 projected uses per year. The drug is in a class or for an indication for which additional therapeutic or diagnostic options are needed for pediatric patients. The process for obtaining the pediatric exclusivity extension usually begins when a sponsor submits a proposal to conduct pediatric studies to FDA. If FDA officials believe the studies will provide useful information, the agency issues a formal written request for sponsors to conduct the studies. FDA also issues written requests without sponsor proposals. The written request addresses, among other things, the type of studies to be performed, study design, appropriate study age groups, and clinical endpoints. The sponsor then decides whether to conduct studies requested by FDA. Once the sponsor submits the results of the studies to FDA, the agency generally has 90 days to determine whether the completed studies reported meet the terms of the written request and were conducted properly. If FDA officials determine that the sponsor’s efforts were sufficient, the 6-month marketing exclusivity extension is granted. There has been a substantial increase in pediatric drug research compared to the very limited amount of such research before enactment of FDAMA. As of April 1, 2001, FDA had issued 188 written requests covering 155 drugs already on the market and 33 new drugs not yet approved. About 73 percent of the written requests were for drugs that treat anti-inflammatory, cardiovascular, anti-viral, oncology, neurology, or endocrine diseases or conditions. A written request can ask for more than one study of a drug, and the 188 requests include 414 studies involving potentially more than 23,200 children as research subjects. Of the 414 studies requested, 33 percent were to examine drug safety and efficacy in pediatric patients, about 30 percent were to examine both a drug’s safety and its pharmacokinetics, or how it is absorbed, distributed, and eliminated from the body. Another 20 percent of the studies were to examine only a drug’s safety in pediatric patients, and about 9 percent were to study both pharmacokinetics and pharmacodynamics, or how different individuals, such as children at various stages of development, respond to a drug. Precise data on study costs is not publicly available. The estimates we were provided vary considerably. Officials at NICHD, which has conducted many pediatric drug studies, said costs vary depending on the number of children participating and type of drug being studied. They estimated that a safety and efficacy study may cost between $1 million and $7.5 million, while the cost of a pharmacokinetic study can range from $250,000 to $750,000 per age group. Limited data provided by PhRMA suggested higher study costs, ranging from under $5 million to more than $35 million. Another study indicated that, based on a survey of drug companies, the cost of pediatric studies averaged $3.87 million per written request. As of April 1, 2001, 28 drugs had been granted marketing extensions based on research conducted in accordance with FDA’s written requests. The drugs granted extensions treat a variety of diseases or conditions that afflict children. Table 1 provides some overall population information on the prevalence of diseases in pediatric patients that may be treated by some of the drugs granted market extensions. There has been some concern that exclusivity may be sought and granted primarily for drugs that generate substantial revenue. Our analysis found that sales revenue varied widely for the 155 approved drugs for which FDA has issued written requests. As shown in figure 1, while 7.7 percent of the drugs covered by written requests had sales exceeding $1 billion in 1999, 53.5 percent had sales under $120 million in 1999. Another 14.8 percent of the drugs had sales that were more than $120 million but less than $200 million. Research conducted under the pediatric exclusivity provision is providing new and useful information about whether and how drugs work in children. As of April 1, 2001, labels for 18 of the 28 drugs granted marketing extensions had been changed to incorporate findings from research conducted to obtain the extensions. Some of these label changes include new statements that the drug can be used for younger children or for a new use. Other label changes provide additional and more specific guidance regarding the effective dose or additional warnings about adverse events in children or information on related medications. In addition to making label changes, sponsors for three drugs developed new formulations that are easier to administer to children. A few examples will help illustrate the new information derived from these studies. Ibuprofen: this commonly used drug to reduce fever had no dosing information for children under 2 years of age. Studies in thousands of infants established a safe and effective dose in infants and children from 6 months to 2 years. Ranitidine: studies in neonates provided accurate dosing information for safer and more effective use of this drug in the management of reflux of stomach contents—a life-threatening event in seriously ill neonates—and the label now says the drug can be prescribed to newborns and 1-month- olds. Fluvoxamine: studies with this drug, used to treat children with obsessive compulsive disorder, indicated that the dose in adolescents may need to be as high as in adults but may need to be lower for girls ages 8 to 11 years. Etodolac: study results allowed for indication on the label that the drug can be used to treat juvenile rheumatoid arthritis in children 6 to 16 years old. Midazolam: studies with this drug, used as a sedative, led to a new oral formulation for use in infants and children. In addition, the study results showed that this drug has a high risk for an adverse event in children with congenital heart disease and pulmonary hypertension. Experts agree that, since FDAMA, there also has been significant growth in the infrastructure necessary to conduct pediatric studies. For example, NICHD has expanded the number of PPRUs from 7 to 13. These units, located in children’s hospitals and academic research centers specializing in pediatric research, have conducted an increasing number of pediatric drug studies. Prior to FDAMA, the PPRU Network had conducted 17 studies in collaboration with drug sponsors. By 2000, the PPRUs were conducting 73 pediatric drug studies in collaboration with drug sponsors. The pharmaceutical industry also has increased its capacity to conduct pediatric studies since enactment of FDAMA. According to a recent survey, contract research organizations, which conduct pediatric trials for drug sponsors, are working on over 100 pediatric studies involving 7,000 patients. In addition, two of the largest contract research groups have established pediatric-specific research ventures, which collectively can call on the services of 500 doctors with pediatric training and nearly 2000 investigators. While the new information generated by the increasing number of pediatric studies has resulted in a variety of benefits, the cost of granting additional market exclusivity can be very large. The cost to the public of providing the brand named drugs with an additional 6 months of market exclusivity presents a delay in consumer access to lower-cost generic drugs. Delaying access to lower cost generic drugs increases health care spending overall and may be particularly burdensome for those without prescription drug coverage that must pay for the drugs out-of-pocket. FDA estimates that the delay in availability of generic drugs could increase national drug spending by about one half of one percent, or on average about $695 million per year over a 20-year period. The Agency did not attempt to develop a quantitative estimate of cost savings from improved health outcomes at this time. While the pediatric exclusivity provision is working better than previous efforts to stimulate pediatric drug research, two important challenges remain. First, the law does not ensure that research results are incorporated into labels in a timely manner for drugs that are already on the market once marketing extensions have been granted. Second, the law provides no incentive to conduct pediatric research on drugs for which patents and marketing exclusivity have expired. The statute requires that FDA decide whether to grant the 6-month marketing exclusivity within 90 days of receiving research results. The decision must be based solely on whether the research meets the terms of the written request. The sponsor is required to submit proposed label changes with the study results, but the decision to grant the extension is not contingent on reaching agreement with FDA on label changes. Because it usually takes much longer than 90 days — often a year— to evaluate study results and negotiate label changes with manufacturers, drugs may be granted an additional 6 months of marketing exclusivity before appropriate label changes have been determined. We found that it took on average more than 9 months for FDA and sponsors to agree on label changes for the 18 drugs granted exclusivity that have had label changes. This is slightly faster than FDA’s goal of reviewing other, similar changes to approved drug labels within 10 to 12 months. FDA officials told us that five drugs have gone for more than a year without label changes after the sponsor was granted exclusivity extension. In some cases, FDA officials said they have had substantial difficulty in getting drug manufacturers to incorporate unfavorable pediatric research results into drug labels. We found a difference of opinion on whether a marketing extension should be contingent on label changes. Some officials we interviewed suggested that drug manufacturers should be required to incorporate results into label changes within 1 year. Others have suggested that the 6- month marketing extension be contingent on agreement on label changes based on the pediatric study results. PhRMA officials told us that the current requirement provides their members with a degree of certainty that they will receive an additional 6-months exclusivity when they successfully complete the pediatric studies requested by FDA. They have suggested some policy changes to ensure that label changes are agreed to more quickly after pediatric studies are completed.

Children fall ill with many of the same diseases as adults and are often treated with the same drugs. However, only about 25 percent of drugs used today have been labeled for pediatric patients. The lack of pediatric testing and labeling can place children at risk of under- or overdosing, and the lack of age-appropriate formulations, such as liquids or chewable tablets, can result in improper administration of drugs. The pediatric exclusivity provision of the Food and Drug Administration Modernization Act of 1997 has successfully encouraged drug sponsors to generate needed information on how drugs work in children. A wide range of drugs are being studied in many therapeutic areas. The infrastructure for conducting pediatric trials has also been greatly strengthened, which should help to support continued progress. Although several drug labels have been changed to incorporate findings from research done under the pediatric exclusivity provision, label changes typically occur long after the Food and Drug Administration has granted the extension of market exclusivity. In addition, there continues to be little incentive to conduct pediatric research on off-patent drugs.

ITAA, a trade association, issued a report titled Help Wanted: The IT Workforce Gap at the Dawn of a New Century in February 1997 that focused on issues relating to the IT labor market. Responding to this report, the National Economic Council and the Departments of Commerce, Education, and Labor began to discuss the workforce requirements of the IT sector; subsequently, federal officials agreed to cosponsor a convocation on the IT worker issue. The convocation, cosponsored by the Departments of Commerce and Education, the University of California at Berkeley, and ITAA, was designed to bring together leaders from industry, academia, and government to develop new educational strategies and forge partnerships that would increase the quantity and quality of the American IT workforce. Federal officials noted that the convocation would support the administration’s goals for lifelong learning. New Deficit: The Shortage of Information Technology Workers, examining the potential for shortages of IT workers. In its report, Commerce presented BLS projections that between 1994 and 2005 the United States would require slightly over 1 million additional IT workers. BLS projections, based on surveys conducted for the Occupational Employment Statistics program and on the Current Population Survey, estimate future occupational needs resulting from expected national growth and separations from employment over time. Although there is no single, universally accepted definition of the occupations that should be designated as IT occupations, Commerce based its analysis of demand on job growth projections for the three IT occupations used by BLS—computer programmers, systems analysts, and computer scientists and engineers. BLS descriptions of these occupations are as follows: (1) computer programmers write and maintain the detailed instructions, called “programs” or “software,” that list in logical order the steps that computers must execute to perform their functions; (2) systems analysts use their knowledge and skills in a problem-solving capacity, implementing the means for computer technology to meet the individual needs of an organization; (3) computer scientists generally design computers and conduct research to improve their design or use, and develop and adapt principles for applying computers to new uses; and (4) computer engineers work with the hardware and software aspects of systems design and development. BLS projections for new IT workers over the 11 years from 1994 to 2005 include IT workers to fill newly created jobs (820,000) in the three occupational categories and to replace workers (227,000) who are leaving these fields as a result of retirement, change of profession, or other reasons. The report noted that, according to BLS, of the three IT occupations, the greatest job growth is predicted for systems analysts (92 percent). (See table 1.) The number of computer engineers and scientists is expected to grow by 90 percent, while the number of computer programmer positions is expected to grow at a much slower rate (12 percent). The projected job growth for all occupations between 1994 and 2005 is 14 percent. Since the report was issued, Commerce has issued an update with revised BLS projections showing even stronger growth. Between 1996 and 2006, there will be over 1.3 million projected job openings as a result of growth and net replacements; about 1.1 million of these job openings will be due to growth alone. Information Technology: Assessment of the Commerce Department’s Report on Worker Demand and Supply 2005 (projected) Commerce identifies the supply of potential IT workers as the number of students graduating with bachelor’s degrees in computer and information sciences. The report presents data from the Department of Education showing that 24,553 students earned bachelor’s degrees in computer and information sciences in 1994, a decline of more than 40 percent from 1986. While the Commerce report highlights the supply of IT workers as those with bachelor’s degrees in computer and information sciences, Commerce does note that IT workers may also acquire needed skills through other training paths—master’s degrees, associate degrees, or special certification programs. Commerce’s report also includes information from BLS that indicates, in the case of computer professionals, there is no universally accepted way to prepare for such a career but that employers almost always seek college graduates. number for IT workers when Commerce compared the IT worker demand with the available supply. Commerce also noted that, although employers almost always seek college graduates for computer professional positions, there is no universally accepted way to prepare for a career as a computer professional. According to the BLS Occupational Outlook Handbook, which defines qualifications for jobs and careers in terms of education and experience of IT workers with a bachelor’s degree, some workers have a degree in computer science, mathematics, or information systems, while others have taken special courses in computer programming to supplement their study in other fields such as accounting or other business areas. According to the National Science Foundation, only about 25 percent of those employed in computer and information science jobs in 1993 actually had degrees in computer and information science. Other workers in these fields had degrees in such areas as business, social sciences, mathematics, engineering, psychology, economics, and education. The Commerce report did not take this information into account in any way in estimating the future supply of IT workers. The report also stated that IT workers acquire needed skills through various training paths, but it provided no analysis of the extent to which companies are training and retraining workers. potential supply of IT workers, it used only the number of students earning bachelor’s degrees in computer and information sciences when it compared the potential supply of workers with the magnitude of IT worker demand. Commerce stated that upward movement in salaries is evidence of a short supply of IT workers and cited several surveys and newspaper articles illustrating salary increases. For example, the report cited a survey conducted by the Deloitte & Touche Consulting Group showing that salaries for computer network professionals rose an average of 7.4 percent from 1996 to 1997. The report also cited an annual survey by Computerworld, a weekly newspaper covering the computer industry and targeting IT workers and managers, showing that in 11 of 26 positions tracked, average salaries increased by more than 10 percent from 1996 to 1997. Increases in starting salaries were also reported in the Wall Street Journal and The Washington Post. These wage increases, however, may not be conclusive evidence of a long-term limited supply of IT workers but may be an indication of a current tightening of labor market conditions for IT workers. According to BLS data, increases have been less substantial when viewed over a longer period of time. For example, the percentage changes in weekly earnings for workers in computer occupations over the 1983 through 1997 period were comparable with or slightly lower, in the case of computer systems analysts and scientists, than the percentage changes for all professional specialty occupations. Thus, salary increases for these occupations have been consistent with the salary increases for other skilled occupational categories over time. What is uncertain is whether the recent trend toward higher rates of increase will continue. Regarding unfilled jobs, Commerce cited the ITAA report, which concluded that about 190,000 U.S. IT jobs were unfilled in 1996 because of a shortage of qualified workers and that these shortages were likely to worsen. According to the ITAA survey, 82 percent of the IT companies responding expected to increase their IT staffing in the coming year, while more than half of the non-IT companies planned IT staff increases. provides useful information on unfilled jobs among the firms responding to its survey, the findings cannot be generalized to the national level. ITAA surveyed a random sample of 2,000 large and midsize IT and non-IT companies about their IT labor needs and received a total of 271 responses—a response rate of about 14 percent. We consider a 14-percent response rate to be unacceptably low as a basis for any generalizations about the population being surveyed. In order to make sound generalizations, the effective response rate should usually be at least 75 percent for each variable measured—a goal used by many practitioners. Furthermore, ITAA’s estimate of the number of unfilled IT jobs is based on reported vacancies, and adequate information about those vacancies is not provided, such as how long positions have been vacant, whether wages offered are sufficient to attract qualified applicants, and whether companies consider jobs filled by contractors as vacancies. These weaknesses tend to undermine the reliability of ITAA’s survey findings. Commerce cited support for an emerging shortage in its observation that some companies are drawing upon talent pools outside the United States to meet their demands for IT workers. For example, the Commerce report stated that India has more than 200,000 programmers and, in conjunction with predominantly U.S. partners, has developed into one of the world’s largest exporters of software; in 1996 and 1997, outsourced software development accounted for 41 percent of India’s software exports. Commerce also cited a Business Week article, “Forget the Huddled Masses: Send Nerds,” to illustrate that companies are searching for IT workers in foreign labor markets such as Russia, Eastern Europe, East Asia, and South Africa. United States is exaggerated and that it is not necessary to recruit foreign workers to fill IT jobs. Additional systematic information about the magnitude of the phenomenon of companies meeting their demands for IT workers outside of the United States would be useful. The report identified the decline in the number of computer science graduates as a factor contributing to an inadequate supply of IT workers. The introduction to the report stated that evidence suggests that job growth in information technology fields now exceeds the production of talent. Commerce reported that between 1994 and 2005, an annual average of 95,000 new systems analysts, computer scientists and engineers, and computer programmers will be required to satisfy the increasing demand for IT workers and that only 24,553 students earned bachelor’s degrees in computer and information sciences in 1994. Because there is a disparity between these two numbers, Commerce concluded that it will be difficult to meet the demand for IT workers. Commerce did not adequately explain why the decline in conferred bachelor’s degrees in computer science would reflect a short supply of IT workers. As stated in the section on supply, IT workers come from a variety of educational backgrounds and have a variety of educational credentials such as master’s degrees, associate degrees, or special certifications. In addition, Commerce reported on the decline from 1986, although that year represents a peak in the number of computer science degrees conferred, which had risen steadily from the 1970s but has remained relatively stable in the 1990s. Commerce’s conclusions about the IT workforce are inconsistently reported in separate segments of its report. First, the title of the report states that America’s new deficit is a shortage of information technology workers. The introduction also states that there is substantial evidence that the United States is having trouble keeping up with the demand for new information technology workers. However, the report notes that current statistical frameworks and mechanisms for measuring labor supply do not allow for precise identification of IT worker shortages and, in its summary chapter, Commerce concludes that more information is needed to fully characterize the IT labor market. We agree with Commerce’s conclusion that more information and data are needed about the current and future IT labor market. Mr. Chairman, this concludes my prepared statement. I will be happy to answer any questions that you or Members of the Subcommittee may have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. 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GAO discussed the Department of Commerce's report on the demand and supply of information technology (IT) workers. GAO noted that: (1) Commerce's report has serious analytical and methodological weaknesses that undermine the credibility of its conclusion that a shortage of IT workers exists; (2) however, the lack of support presented in this one report should not necessarily lead to a conclusion that there is no shortage; (3) instead, as the Commerce report states, additional information and data are needed to more accurately characterize the IT labor market now and in the future; (4) the report appears to appropriately establish that the demand for IT workers is expected to grow, but it does not adequately describe the likely supply of IT workers; (5) although Commerce reported that only 24,553 U.S. students earned bachelor's degrees in computer and information sciences in 1994, Commerce also stated the Bureau of Labor Statistics projects increasing job growth--an annual average of 95,000 new computer programmers, systems analysts and computer scientists and engineers will be required to satisfy the increasing demand for IT workers between 1994 and 2005; (6) pointing to the disparity between these two numbers and referring to evidence from other sources, Commerce concludes in the report's title and introduction that there is a shortage of IT workers; (7) Commerce did not, however, consider other likely sources of workers, such as college graduates with degrees in other areas; and (8) as a result, rather than supporting its conclusion that a shortage of IT workers exists, the data and analysis support the report's observation that more needs to be known about the supply and demand for IT workers.

The total number of incidents involving incomplete inactivation that occurred from 2003 through 2015 is unknown for three reasons: (1) the inability to easily identify incidents involving incomplete inactivation in incident databases; (2) the absence of reporting requirements for pathogens that are not select agents; and (3) the absence of a clear, consistent definition of inactivation. First, we found that the Select Agent Program and NIH do not have the ability to easily identify incidents involving incomplete inactivation because their incident reporting forms are not structured to specifically identify this type of incident. As a result, neither the Select Agent Program nor NIH (for the oversight of recombinant pathogens) was able to provide us with an accurate number of all incidents involving incomplete inactivation that occurred from 2003 through 2015. We identified additional incidents that the Select Agent Program and NIH did not initially identify. Second, we found that federal incident reporting, in general, is required only for (1) incidents that involve select agents, which are reportable to the Select Agent Program, and (2) incidents that involve recombinant pathogens, which are reportable to NIH. Thus, incidents involving incomplete inactivation of pathogens that are neither select agents nor recombinant pathogens, such as West Nile virus or the bacteria that causes tuberculosis, are generally not required to be reported to any federal agency. Third, we found that there is currently no clear and consistent definition of inactivation in guidance or regulations issued by the Select Agent Program and NIH. As a result, researchers may not consistently define inactivation, which potentially affects how and when they report incidents involving incomplete inactivation. Moreover, experts at our meeting noted that this can make it difficult to understand when an incident occurs. These experts stated that there is a need for a clear, consistent definition of inactivation across key federal guidance documents, and our past work has also shown that the use of standardized definitions is key to ensuring that information is reported consistently. Without the ability to easily identify incidents involving incomplete inactivation on reporting forms, the Select Agent Program and NIH are unable to easily search their respective databases to determine the frequency and causes of incidents related to the pathogens they regulate. In addition, without a clear and consistent definition of inactivation across key federal guidance, researchers may not know when to include incomplete inactivation in an incident report, potentially affecting the number of incidents reported. We concluded that, collectively, these issues prevent the Select Agent Program and NIH from knowing the extent to which incomplete inactivation occurs and whether incidents are properly identified, analyzed, and addressed. Not knowing the magnitude of the problem may inhibit agencies’ ability to achieve program missions of investigating any incidents in which noncompliance may have occurred. In our report, we recommended that the agencies develop clear definitions of inactivation for use within their respective guidance documents. We also recommended that they revise reporting forms to help identify when incidents involving incomplete inactivation occur and analyze the information reported to help identify the causes of incomplete inactivation to mitigate the risk of future incidents. HHS and USDA agreed with our recommendations and noted steps they were taking to address them. For example, CDC and APHIS are proposing revisions to the select agent regulations to include a definition of inactivation and are planning to update their reporting forms. Several challenges affect the implementation of inactivation in high- containment laboratories, including (1) limited scientific information for developing and implementing inactivation protocols, (2) limited federal guidance for developing inactivation protocols, (3) inconsistent implementation of safeguards to help ensure inactivation is properly conducted, and (4) varied documentation requirements for shipping inactivated material. Experts in our meeting stated that such challenges may affect laboratories’ ability to mitigate the risk of incomplete inactivation. First, we found that insufficient scientific information exists for developing and implementing inactivation protocols. This could result in incomplete inactivation, according to peer-reviewed literature and our group of experts. Examples of insufficient scientific information include a lack of understanding about (1) mechanisms of inactivation, (2) the ability of some pathogens to repair themselves after inactivation, and (3) viability testing (a procedure to determine the extent to which viable pathogens remain in a sample after an inactivation process). Second, we found that federal guidance for developing and validating inactivation protocols is limited. Major sources for technical guidance that researchers commonly use—such as NIH guidelines and Select Agent Program guidance—provide little detailed information on development and validation of inactivation protocols. In lieu of guidance, we found that researchers in laboratories we visited often developed inactivation protocols at a laboratory level and that protocols sometimes varied within the same department, agency, or laboratory, which may increase the risk of incomplete inactivation. We concluded that without more comprehensive and consistent federal guidance on the development and validation of inactivation protocols, protocols will vary in their scientific soundness and effectiveness, increasing the risk that inactivation may not be achieved. Third, we found that the high-containment laboratories that we visited did not consistently apply safeguards when conducting inactivation, and there is limited federal guidance on doing so. Examples of safeguards that were inconsistently applied at these laboratories included conducting viability testing following inactivation procedures, implementing verification mechanisms to ensure inactivation protocols are followed, and sharing lessons learned. Fourth, according to experts from our meeting, documenting the shipment of inactivated pathogens provides an important safeguard if the pathogen is determined to be still viable and needs to be destroyed to prevent potential exposures or release. However, we found through our review of agency documents and interviews with agency officials that laboratories vary in their documentation requirements for shipping inactivated pathogens. Without guidance for documenting the shipment of inactivated pathogens, laboratories are at risk of being unable to locate shipped pathogens in a timely manner, which is important if material thought to be inactivated is determined to still be viable. In our report, we recommended that the agencies take several steps to address these findings. First, we recommended that the Secretaries of Health and Human Services and Agriculture coordinate research efforts and take actions to help close gaps in the science of inactivation and viability testing. Second, we recommended that the agencies create comprehensive and consistent guidance for the development, validation, and implementation of inactivation protocols, including the application of safeguards. Third, we recommended that guidance on documenting the shipment of inactivated material be developed. HHS and USDA agreed with these recommendations and described steps they are taking to address them. For example, HHS and USDA stated that they are developing a federally supported program to improve laboratory biological safety that will include examination of gaps related to inactivation. In addition, for the Select Agent Program the agencies said they plan to develop guidance to assist with the development and implementation of inactivation protocols and viability testing. The two agencies that comprise the Select Agent Program—CDC and APHIS—did not consistently refer incidents involving incomplete inactivation for further investigation and enforcement to the HHS Office of Inspector General or APHIS’s Investigative and Enforcement Services. For example, the CDC component of the program referred a number of incidents involving incomplete inactivation that it investigated at high- containment laboratories between 2004 and 2015 to the Office of Inspector General. In contrast, the APHIS component of the program investigated two 2014 incidents at CDC laboratories involving incomplete inactivation that it did not refer to its Investigative and Enforcement Services. We found that it was unclear why some incidents were referred and enforced and not others. According to an interagency memorandum of understanding regarding the Select Agent Program, CDC and APHIS should maintain consistency in the application and enforcement of the select agent and toxin regulations. We found, however, that CDC and APHIS did not use the same set of criteria for referring violations for investigation by the HHS Office of Inspector General or APHIS’s Investigative and Enforcement Services. Moreover, they did not clearly document the bases for referring or not referring violations. In addition, it was unclear why the Select Agent Program took certain administrative actions, such as revoking or suspending an entity’s registration to possess select agents or requiring a corrective action plan, in response to some violations and not others. The Select Agent Program recently took some steps to increase consistency in the application and enforcement of the select agent regulations. However, the extent to which these steps will improve the understanding and transparency of the program’s enforcement is not yet clear. Without consistent criteria and documentation of decisions for referring violations and enforcing regulations related to incidents involving incomplete inactivation, the Select Agent Program will not have reasonable assurance that its regulatory approach to overseeing high-containment laboratories is applied consistently. In our report, we recommended that CDC and APHIS develop and implement consistent criteria and documentation requirements for referring violations to investigative entities and enforcing regulations related to incidents involving incomplete inactivation. HHS and USDA agreed with this recommendation and described steps they recently took, or are planning to take, to increase consistency in the application and enforcement of the select agent regulations. For example, they said that for the Select Agent Program they have developed a draft document that provides guidance on when to refer violations and options for enforcement actions but they did not provide a time frame for finalizing and implementing the draft document. In conclusion, these inconsistencies, in conjunction with our past work, also raise larger questions about the potential limitations of the Select Agent Program as a whole to effectively and independently oversee high- containment laboratories, both within HHS and across other federal agencies. Select Agent Program officials and an expert from our group noted that the Select Agent Program is independent in its oversight of HHS labs since it organizationally exists in a separate part of the department from the HHS agencies that have high-containment laboratories. However, as we have noted in our prior work, existing federal oversight of high-containment laboratories is fragmented and largely self-policing, raising questions about whether the government framework and oversight are adequate. Chairman Murphy, Ranking Member DeGette, and Members of the Subcommittee, this concludes our prepared statement. We would be pleased to respond to any questions that you may have at this time. For further information on this testimony, please contact Timothy M. Persons, Chief Scientist, at (202) 512-6522 or personst@gao.gov or John Neumann, Director, Natural Resources and Environment, at (202) 512-3841 or neumannj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this testimony include Mary Denigan- Macauley (Assistant Director), Sushil Sharma (Assistant Director), Amy Bowser, Caitlin Dardenne, Ashley Grant, Lesley Rinner, and Paola Tena. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

This testimony summarizes the information contained in GAO's September 2016 report, entitled ( GAO-16-642 ). or John Neumann at (202) 512-3841 or neumannj@gao.gov . The total number of incidents involving incomplete inactivation--a process to destroy the hazardous effects of pathogens while retaining characteristics for future use--that occurred from 2003 through 2015 is unknown for several reasons. One key reason is that the Select Agent Program--operated by the Departments of Health and Human Services (HHS) and Agriculture (USDA) to oversee certain dangerous pathogens, known as select agents--does not require laboratories to identify such incidents on reporting forms. According to the program, 10 incidents occurred from 2003 through 2015. However, GAO identified an additional 11 incidents that the program did not initially identify. Because the program cannot easily identify incidents involving incomplete inactivation, it does not know the frequency or reason they occur, making it difficult to develop guidance to help mitigate future incidents. The 21 identified incidents involved a variety of pathogens and laboratories, as shown below. Several challenges affect the implementation of inactivation in high-containment laboratories, including gaps in scientific knowledge and limited guidance. For example, there is limited federal guidance for researchers on the development and validation of inactivation protocols. Validation helps ensure protocols are scientifically sound and produce consistent results. Due to limited guidance, laboratories varied in their interpretation of validated methods of inactivation, resulting in researchers applying differing levels of rigor. Without more comprehensive guidance, as called for by experts, protocols will vary in their scientific soundness, increasing the risk of incomplete inactivation. The Select Agent Program did not consistently refer incidents involving incomplete inactivation for further investigation and enforcement for violations of select agent regulations. For example, the program referred incidents involving incomplete inactivation at various laboratories, but did not refer two incidents in 2014 that occurred at HHS. A memorandum of understanding between HHS and USDA states that the program should handle incidents consistently. GAO found, however, that the program does not have a consistent, written set of criteria for handling incidents. Without such criteria, the program risks inconsistent enforcement of select agent regulations. This further highlights GAO's previous finding that existing federal oversight of high-containment laboratories is fragmented and self-policing.

To better help low-income families meet their child care needs, the Congress combined four programs with different target populations into one program—the Child Care and Development Block Grant (CCDBG)—with a single set of eligibility criteria and requirements. This program, now referred to as the Child Care and Development Fund (CCDF), provides federal funds to states for child care subsidies for families who are working or preparing for work and who have incomes of up to 85 percent of a state’s median income (SMI). Unlike the previous programs, which segmented working low-income families into different service categories on the basis of welfare status, the CCDF allows states greater flexibility to create integrated programs that serve all families in similar economic circumstances. Such programs are important to ensure that families who have never been on welfare are not penalized for their work efforts and that families can move easily from welfare to self-sufficiency. activities, creating a greater need for child care assistance. The act requires that a significant percentage of states’ CCDF funds are used to provide child care assistance to current or potential TANF recipients. In response to welfare reform, the seven states we reviewed are expanding funding for child care programs. As table 1 shows, the increase in combined federal and state CCDF funding in the seven states between state fiscal years 1996 and 1997 ranged from 2 percent in Maryland to 62 percent in Louisiana. On average, funding in these states increased from about $1.1 billion in fiscal year 1996 to about $1.4 billion in fiscal year 1997. According to child care officials, these additional funds have allowed six of the seven states to expand the number of children served under their child care subsidy programs by an average of about 17 percent between fiscal years 1996 and 1997. The CCDF allows states to operate their child care programs exclusively with federal funds, thereby reducing or eliminating the need for state funds to be used for child care. Nevertheless, the seven states we reviewed intend to spend at least enough state funds to qualify for the maximum amount of federal CCDF funds available for child care. State funding in three of the states will exceed the amount required to maximize their federal CCDF allocation. than were previously available under AFDC. As a result, some states are using TANF funds to fund child care subsidies. For example, while Wisconsin expanded its child care funding by 38 percent between state fiscal years 1996 and 1997, the increase came from federal, not state, funding sources. Even though the seven states we reviewed are expanding their programs, they are still unable to provide child care subsidies to all families meeting federal eligibility criteria who might benefit from such assistance. In fact, a recent Urban Institute study estimated that only about 48 percent of the potential child care needs of low-income families would be met if states maximized federal dollars available under welfare reform. Because they cannot serve all eligible families, states have devised strategies to target subsidies to subsets of the eligible population. subsidized child care programs too expensive for higher-income eligible families. Comparing the systems in Wisconsin and Oregon can help illustrate how states can use these different criteria to target child care subsidies toward specific populations. Wisconsin has established a relatively low income eligibility criterion (53 percent of SMI—$21,996 in fiscal year 1997), coupled with relatively low copayments (6 to 16 percent of gross income). Thus, although it has restricted the population of eligible families to those with very low incomes, it has designed the copayment structure to make subsidized child care affordable to all eligible families who apply. In contrast, Oregon has a relatively high income eligibility criterion (85 percent of SMI—$33,012) and a relatively high family copayment level (31 percent of monthly income up to $2,042). While families with higher incomes are eligible for child care subsidies in Oregon, the copayment structure discourages them from participating and, in effect, targets aid to lower income families. Welfare status is also an important consideration in establishing access to child care subsidies in many states. Five of the states we reviewed distinguish between welfare families (including those transitioning off of welfare) and nonwelfare families in determining who will be served. Connecticut and Louisiana consider child care as an entitlement to working families receiving TANF, and Texas guarantees child care subsidies to former TANF families who are transitioning to work. In California, child care programs are administered separately for welfare and nonwelfare clients, and in Maryland, TANF families and families transitioning off of TANF are given first priority in obtaining subsidies when all eligible families cannot be served. California, Connecticut, and Texas said they have insufficient resources to serve all nonwelfare families who meet individual state eligibility requirements. In California and Texas, this results in waiting lists for subsidies, while in Connecticut, the nonwelfare child care program was closed to new applicants at the time of our study. expected to increase over the next few years, some data suggest that the increase could be significant. Connecticut has estimated that an additional 5,000 TANF-related families will need child care assistance during its next 2 fiscal years, and Maryland estimates the number of families needing child care will more than double from 1997 to 1999. In Oregon, which began in 1992 to require more welfare parents to participate in welfare-to-work activities and has emphasized child care assistance as a way to help welfare and other low-income families support themselves through work, the number of children served by the state’s Employment-Related Day Care program increased by 137 percent from July 1992 to February 1997.In fact, almost 61 percent of projected child care expenditures in Oregon for 1997-99 are designated for that program. States’ ability to meet the anticipated increased demand for child care will depend on future levels of state child care funding as well as on changes in demand for child care subsidies resulting from welfare reform’s work participation requirements. The Personal Responsibility Act’s requirement that states place increasingly higher percentages of their caseloads in work activities, combined with the capping of federal child care funds through the CCDF, could strain the states’ capacity to sufficiently expand child care programs in future years. On the other hand, if states’ welfare caseloads continue to decline, then demand among welfare families could decline or increase at a slower rate. Consequently, TANF funds previously devoted to cash assistance could be redirected to the states’ child care subsidy programs. However, states may face pressures to spend these additional resources for other TANF-related services. Welfare and child care program officials in six of the seven states report that with the additional funds available under the CCDF, the supply of child care appears so far to have kept pace with increases in demand. One indication of this is that these states had granted few exemptions from work requirements because of unavailability of child care, and most did not expect to grant such exemptions on a large scale in the near future. enhance or expand their services. Other states have created incentives for employers to provide child care assistance. These approaches include loan and grant programs, corporate tax incentives, policies to require or encourage developers to set aside space for child care centers in business sites, and information referral and technical assistance to increase private sector involvement. Overall, according to their CCDF plans, 38 of the 51 states plan to make grants or loans available for establishing or expanding child care facilities. However, some kinds of child care are and will continue to be in short supply. In a previous report we estimated that, in the four sites we examined, the demand for infant care and after-school care would grow substantially over time in response to the new welfare reform legislation and would greatly exceed the supply of those types of care, if the supply did not increase. The gap between projected demand and supply was estimated to be even greater in low-income areas. On the basis of our analysis, given the current supply, the four sites would also have trouble meeting increased demand for nonstandard-hour care. Furthermore, child care centers and other formal arrangements are only part of the picture. It is expected that informal care—child care arrangements that are not subject to state licensing or regulatory requirements—will meet some of the increased demand for child care and, in some cases, may account for most of the child care used. For example, in Connecticut, state officials estimated that 80 percent of welfare families used informal child care arrangements. Similarly, Oregon officials estimated that nearly half of their welfare-to-work program clients had used informal care. We previously reported that families with annual incomes below $15,000, low-income mothers who are single and employed, and parents whose jobs require them to work nonstandard hours tend to rely heavily on informal care. At the same time that states are expanding their programs and attempting to increase supply, they appear to be maintaining child care standards and enforcement practices. In fact, some of the seven states we reviewed are making incremental changes that tend to strengthen existing standards. For example, Texas planned to phase in a requirement that will reduce the ratio of children to staff members. Similarly, a survey done by the American Public Welfare Association of all the states reported that quality standards have generally been maintained and, in many cases, enhanced.In addition, recognizing that enforcement is important to ensure that standards are maintained and children receive adequate care, none of the seven states plans to reduce the size of its staff responsible for inspecting or regulating child care providers. However, the long-term effects of welfare reform on states’ efforts to regulate child care providers and ensure that children receive quality child care are as yet unknown. As we previously reported, fiscal pressures could ultimately lead states to devote fewer state resources to monitoring and regulating child care providers in the future. As noted earlier, informal care arrangements are widely used by welfare and other low-income families. Much of this care is exempt from state standards or is minimally regulated. To address concerns about the safety and quality of informal child care, some states have imposed additional requirements on informal providers who receive subsidies. California and Oregon conduct background checks on the criminal histories of subsidized providers, including those who are otherwise exempt from regulatory or licensing requirements. Nonetheless, some child care advocates and researchers continue to be concerned that efforts to expand the supply of state-subsidized child care could focus on informal care, placing more children in unregulated settings. At this point, it is too early to assess the types of child care that states and parents will rely on as more parents participate in work or work-related activities. deciding who will be served through the programs. Since none of the states in our study has sufficient resources to serve all families who meet the federal eligibility criteria, these states are targeting subsidies to certain groups of eligible families, while attempting to balance the needs of welfare and nonwelfare families. In addition, although the seven states have many initiatives under way to expand their supply of child care providers, the outcomes of their efforts are not yet known. Moreover, it is too soon to know what kinds of child care states and parents will rely on as more parents are expected to support themselves through work. States’ efforts to increase the number of children receiving child care services while at the same time ensuring safe care for children will deserve attention as welfare reform evolves. Mr. Chairman, this concludes my formal remarks. I will be happy to answer any questions you or other Members of the Subcommittee may have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

GAO discussed how child care programs are changing at the state level through the revisions in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, focusing on: (1) how much federal and state funds states are spending on child care subsidy programs and how they are allocating these resources; (2) how states are trying to increase the supply of child care to meet the projected demand under welfare reform; and (3) the extent to which states are changing standards for child care providers in response to the anticipated increased demand under welfare reform. GAO noted that: (1) its findings provide an early indication that the seven states it reviewed are using additional federal dollars and their own funds to expand their child care programs to serve increasing numbers of welfare recipients required to work and at least some of the working poor; (2) in addition, states are making efforts to further increase the supply of child care by funding initiatives to support and encourage the entrance of new child care providers into the market; (3) at the same time, the states that are expanding their programs and attempting to increase supply appear to be maintaining child care standards and enforcement practices; and (4) however, it is too early to know how effective these efforts will be in meeting the child care needs of low-income families.

Our work has shown that concession activities on federal lands are a large industry that generates billions of dollars. In April 1996, we issued a report on governmentwide concessions activities. Unlike our past work, which examined concession activities within the six land management agencies, this report reviewed concession operations throughout the civilian agencies of the federal government and included concession activities at agencies such as NASA, the U.S. Postal Service, the Department of Justice, and the Department of Veterans Affairs—just to name a few. In the report, we found that in fiscal year 1994, there were 11,263 concession agreements managed by 42 different federal agencies. Concessioners operating under these agreements generated about $2.2 billion in revenues, and paid the government about $65 million in fees and about $23 million in other forms of compensation. The average total rate of return to the government from concessioners that had their concession agreement initiated or extended in fiscal year 1994 was about 3.6 percent of concession revenues. While 42 different federal agencies have concession agreements, 93 percent of these agreements and revenues are managed by the six land management agencies. However, in spite of having the largest programs, the rate of return from concessioners operating in the land management agencies is significantly less than the return generated from concessioners in other federal agencies. We found that for concession agreements that were either initiated or extended during fiscal year 1994, the average return to the government from concessions in land management agencies was about 3 percent while the return from concessions in the other federal agencies averaged about 9 percent. Within the six land management agencies, concession agreements in the National Park Service accounted for about 30 percent of the gross revenues and the return to the government. (See att. I for a list of rates of return from concessioners for agreements initiated or extended during fiscal year 1994 for each federal agency in our review.) Our analysis of rates of return throughout the federal government indicated that there are three key factors that affect the rate of return to the government. These are (1) whether the return from a concession agreement was established through a competitive bidding process, (2) whether the incumbent concessioner had a preferential right of renewal in the award of a follow-on concession agreement, and (3) whether the agency had the authority to retain a majority of the fees generated from the concession agreement. Our work indicated that when concession agreements are awarded through a competitive process, the rate of return to the federal government was higher. Specifically, for concession agreements that were initiated during fiscal year 1994, the return to the government from concession agreements that were competed averaged 5.1 percent of the concessioners’ gross revenues. When competition was not used in establishing concession agreements, the return to the government averaged about 2.0 percent. While the return to the government is higher for concessions that are competitively selected, very few concessions agreements have fees established through competition—especially among concessions in the land management agencies. For concession agreements which were entered into during fiscal year 1994, only 8.6 percent of over 2,100 agreements in land management agencies were established through competition. In contrast, for concession agreements in the nonland management agencies, about 96 percent of 101 concession agreements were established through competition during this time period. Another factor affecting the return to the government from concessioners is the existence of preferential rights of renewal. These rights primarily affect concessioners in the Park Service. Under the Concessions Policy Act of 1965, Park Service concessioners that have performed satisfactorily have a preferential right of renewal when their concession agreements expire. This preference has generally meant that when a concession agreement expires, an incumbent concessioner has the right to match or better the best competing offer to win the award of the next concession agreement. This preference tends to put a chilling effect on competition because qualified business are reluctant to expend time and money preparing bids in a process where the award is most likely going to the incumbent concessioners. With fewer bidders, there is less competitive pressure to increase the return to the government. Our analysis of Park Service concession agreements showed that in fiscal year 1994, new concession agreements that were awarded with a preferential right of renewal resulted in a return to the government of about 3.8 percent. In contrast, Park Service concession agreements that were competed in the same year without any preference resulted in an average return to the government of 6.4 percent. A third factor that affects the rate of return to the government from concessioners is the agencies’ authority to retain fees. Our analysis of federal concessions showed that when agencies are permitted to retain over 50 percent of the fees from concessions, the return to the government is over 3 times higher than agencies that are not authorized to retain this level of fees. In addition, five nonland management agencies that had authority to retain most of their fees managed 5 percent of the concession agreements throughout the government. These agreements generated about 3 percent of the total revenues from concessioners, but generated 18 percent of the total concession fees. In contrast, the six land management agencies, which have not had authority to retain concession fees, have over 90 percent of the total concession agreements and concession revenues, but generate only 73 percent of the total concession fees. Thus, our work showed that agencies authorized to retain fees obtained more fees in proportion to their concessioners’ revenue than agencies that were not authorized to retain fees. For over 20 years, we have issued reports and testimonies that highlighted the need for reform of federal concession laws and policies. Our most recent work, which I have just summarized, is further evidence of the need for reform. Based on this body of work, it is our view that any efforts at reforming concessions should consider (1) encouraging greater competition in the awarding of concession agreements, including eliminating preferential rights of renewal; and (2) promoting more consistency by including all of the land management agencies as part of concessions reform. In addition, Congress may also wish to consider providing opportunities for the land management agencies to retain at least a portion of their concession fees. Encouraging greater competition in awarding concession agreements, and eliminating preferential rights of renewal, should be a primary goal of reforming concessions. Using a competitive bid process to award concession agreements has several benefits. Our April 1996 report presents evidence that where there is competition in awarding concession agreements the rate of return to the government is significantly higher. Competition among qualified bidders would also likely result in improving the level or quality of services provided to the public. Finally, using competition to establish fees would eliminate much of the need for elaborate and at times cumbersome fee systems used by the land management agencies. A significant impediment to competition is preferential rights of renewal granted to Park Service concessioners by the Concessions Policy Act of 1965. Thus, in our view, any legislative effort to reform existing concessions law should consider including the elimination of preferential rights of renewal. Our work has shown the need for common concessions policies among the land management agencies so that similar concessions operations are managed consistently throughout federal recreation lands. As we reported in June 1991, no single law authorized concessions operations for all six land management agencies. Rather, at least 11 different laws govern concessions operations. Many of these laws are specific to an agency and allow the agency broad discretion in establishing policies on the terms and conditions of concessions agreements. One exception to this is the Concessions Policy Act of 1965 which prescribes Park Service policy for several key terms and conditions in concessions agreements. The results of differing laws and policies are that similar concessioners are managed quite differently among the land management agencies. For example, a marina operator in the Park Service may have a preferential right of renewal and pay a fee based the Park Service’s fee system that is based on industry profitability norms. In contrast, a marina operator in the Forest Service may not have any preferential right to renew his agreement, and pays a fee based on the Forest Service’s fee system that determines fees based on the concessioner’s level of investment in facilities and a percentage of their revenues in up to nine different business categories such as food service or grocery. Our April report on concessions indicated that when agencies are authorized to retain most of their concession fees, the return to the government from its concessioners is significantly higher. However, permitting agencies to retain a portion of the fees from concessioners has both costs and benefits. Our work has shown that retaining fees for use in agencies’ operations serves as a powerful incentive in managing concessioners. However, if the Congress decides to use increased fees to supplant rather than supplement existing appropriations, this incentive would be diminished. In addition, our past work in the Park Service and Forest Service has indicated that these agencies have backlogs of unmet maintenance and infrastructure needs, which combined exceed $5 billion. Furthermore, in recent years, both agencies have had to cutback on the level of visitor services provided to the public. One option to help address these issues, which we have raised in the past, might be to provide additional financial resources through fees—including entrance fees, user fees, and concession fees. While retaining fees will not resolve such problems as multibillion dollar backlogs, it will nonetheless provide some assistance to parks, forests, and other recreation areas across the nation. It is important to note that permitting the land management agencies to retain fees is a form of “backdoor” spending authority, and as such raises questions of oversight and accountability. In addition, earmarking revenues reduces governmentwide budget flexibility. Furthermore, permitting the land management agencies to retain fees could also raise scoring and compliance issues under the Budget Enforcement Act. These issues need to be weighed in considering whether to permit the land management agencies to retain fees. As you requested Mr. Chairman, I would now like to take a few moments to discuss our recently issued report on special account funds within the Park Service. Park units have been permitted to keep some of the funds that are generated from specific in-park activities without going through the annual appropriation process. One type of these special account funds deals with concessions. These concessions special account funds are generally established as part of the terms and conditions of a concessions agreement with the Park Service. As part of the agreement, the concession operator periodically escrows a portion of its gross revenues or a fixed sum of money into a bank account. The monies deposited into the account are in lieu or in addition to franchise fees and are used by the concessioner to repair, improve, or construct facilities related to the concession operation. Franchise fees from Park Service concessioners generally go to the Treasury. Expenditures from special accounts are made only with the approval of the Park Service. The use of concessioner special account funds has increased over the past few years. This is largely because while franchise fees are returned to the Treasury, the special account funds remain at the parks. In fact, at some of the largest parks like Yellowstone and Yosemite, the primary concessioner no longer pays any franchise fees. Instead, the return to the government is entirely from special account funds and other nonfee compensation. At other parks, like the Grand Canyon and Glacier National Park, the Park Service and the concessioners have made amendments to concession agreements to reduce or eliminate franchise fees and to establish or increase the special account funds. According to data from Park Service headquarters, in fiscal year 1994, 21 park units had a concession special account fund; headquarters officials estimated that the deposits totaled $13.9 million. During this review, we contacted a sample of 27 parks units to determine the level of deposits in special account funds. In fiscal year 1994, 14 of the 27 units we reviewed had concessioner special accounts. These 14 park units reported that a total of $19.4 million had been deposited into special accounts—a difference of $5.5 million more than reported by Park Service headquarters. We discussed this difference with Park Service officials. We found that the discrepancies were due to differing interpretations among Park Service concessions officials—both at headquarters and at the individual parks units—as to what should be counted as concessioners’ special accounts. However, Park Service officials acknowledged that the headquarter’s data were not complete because the Park Service did not have a system in place to routinely collect information on these accounts. The agency has been developing a system to track these accounts, and expects it to be implemented by August 1996. We plan to follow-up on this issue after the Park Service’s tracking system is implemented. Mr. Chairman, in recent years, an understanding has emerged that the federal government needs to be run in a more business like manner than in the past. It is clear that agencies such as the Park Service and the Forest Service can learn some lessons about competition and incentives from nonland management agencies. However, if the Congress proceeds with reforming concessions, it should consider changing existing concessions law to encourage greater competition and eliminating preferential rights of renewal, and promoting greater consistency by establishing common concessions policies among the land management agencies. In addition, it may wish to consider providing opportunities for the land management agencies to retain at least a portion of concession fees. This concludes my statement. I would be happy to answer any questions that you or other Members of the Subcommittee may have. Total (fees + special accounts) The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

GAO discussed its work on concessions issues, concession reform, and the National Park Service's (NPS) use of concessioner special accounts. GAO noted that: (1) in 1994, there were 11,000 concession agreements throughout the federal government; (2) the agreements generated over $2.2 billion in revenue for concessioners; (3) while concessioners in land management agencies paid the government an average of 3 percent of their gross revenues, concessioners in other agencies paid an average of 9 percent of their gross revenues; (4) key factors affecting the government's rate of return include whether the concession is established competitively, whether the agency can retain concessions fees, and whether incumbent concessioners had a preferential right of renewal; and (5) Congress may wish to consider encouraging competition, eliminating preferential rights of renewal for incumbents, promoting consistency among land management agencies, and providing greater opportunities for land management agencies to retain concession fees.

The Department of Defense defines overseas presence as the right mix of permanently stationed forces, rotationally deployed forces, temporarily deployed forces, and infrastructure required to conduct the full range of military operations. Historically, these forces have been concentrated in three regions—Asia-Pacific, Europe, and Southwest Asia. Forces in Europe include the major elements of two Army divisions; six Air Force wings, which include fighter/attack, refueling, and transport aircraft; one Navy aircraft carrier battle group; and one Marine Corps amphibious group. Prepositioned items include Army stockpiles of equipment for three heavy brigades, equipment and supplies for the lead unit of a Marine Corps expeditionary unit, and six Air Force air base support sets. The Mobility Requirements Study 2005, issued in January 2001, determined the number and mix of mobility systems needed to support the national defense strategy at the time, which required the military to fight and win two nearly simultaneous major wars. This mix includes both airplanes and ships owned by Defense as well as volunteer and chartered civilian airplanes and ships that participate in the Department’s mobility programs. The study investigated mobility requirements stateside as well as between theaters and within individual theaters of war. The analysis determined requirements for the three components of mobility (airlift, sealift, and ground transportation) and assumed that most forces and prepositioned equipment currently stationed overseas, including those in Europe, would remain at the levels planned, at the time of the study, for fiscal year 2005. The study also modeled the en-route airbases needed to support the movement of forces and equipment. The study did not model any scenarios without forward-deployed U.S. troops and equipment in Europe. The study did conclude, however, that the mobility force structure planned for fiscal year 2005 was sufficient to fight and win one major theater war and that a second nearly simultaneous war could be won by shifting air and sealift mobility assets from one theater to the other. During the time of our study, the Department of Defense was conducting the Quadrennial Defense Review, a congressionally mandated review of national defense strategy, which is to analyze, among other things, force structure and military infrastructure. The review’s report, issued on September 30, 2001, stated that the mix of new threats and missions requires the Department to reevaluate the Mobility Requirements Study 2005 in detail and adjust the results as necessary. According to a Department official, this reevaluation includes the en-route basing system, the use of civilian aircraft, and the mobility requirement for the new national defense strategy. A U.S. forward presence in Europe reduces mobility requirements, mobility costs, war-fighting risk, and time required for deployment to operations in Europe or Southwest Asia. A reduction in any of the four elements of forward presence in Europe would have an adverse effect on mobility requirements, costs, and risk, according to Defense officials. Central Command officials have told us that the U.S presence in Europe, particularly the en-route system of airbases and the Air Force assets, would be critical to the success of their operations in Southwest Asia.European Command officials also told us that the U.S. presence allows the Commander to manage the missions assigned to the Command more easily, such as the small-scale contingencies in Bosnia and Kosovo. Many officials generally agreed that some elements have a greater relative impact on mobility requirements than others. DOD officials suggested a relative ranking of U.S. military presence in Europe starting with the en- route system of airbases as having the greatest impact on mobility, followed by prepositioned equipment, Air Force aircraft and personnel, and finally Army combat forces. The Department of Defense maintains a system of en-route airbases in Europe and the Pacific to support long-range airlift operations. These bases provide the basic services, such as parking facilities, maintenance capabilities, equipment to load and unload cargo if needed, and refueling capabilities for airlift aircraft as they move on to their final destinations. Six airbases in Europe are part of this en-route system (see fig. 1). Officials from the commands agreed that the en-route system is critical to operations in Europe and Southwest Asia. The en-route airbase system in Europe gives transport aircraft the ability to fly from the U.S. to Europe and continue from Europe into Southwest Asia in the early phase of a conflict, a range of about 3,500 nautical miles, which is about the distance a C-17 can fly without refueling. Defense officials believe that the system has a significant impact on their ability to move troops and equipment into any location around the world. For example, the loss of Howard Air Force Base in Panama made it more difficult for the United States to move forces quickly and easily into Central and South America. According to Defense officials, if the en-route airbase system in Europe did not exist, it would have to be created before combat forces and equipment can arrive from the United States and move through on their way to an operation in Europe or Southwest Asia. This effort would require using airlift to open airbases along the way, instead of using the same airlift to carry troops and equipment. Without the system, the Department would require more air refueling capability, as well as more airlift. The Mobility Requirements Study 2005 concluded that en-route system capacity is significantly less than requirements but that planned improvements would largely eliminate the shortfall by 2005. Defense transportation officials attribute the shortfall to the shrinkage in U.S. overseas presence and increased reliance on the remaining bases. They believe that the shortfall would cause forces and equipment to arrive in the war theater later than planned, increasing the risk of operations not being executed as planned and the risk of higher casualties. We recently issued a report on the en-route system. This report discussed the system’s shortfall in capacity, the reasons for the shortfall and costs associated with improvements, and the lack of basic information and a coherent management structure to ensure that the operations of the system can be carried out efficiently and effectively. We are continuing to study the system’s planned modernization. According to U.S. Transportation Command officials, the en-route system will continue to be evaluated in the context of the new defense strategy. They stated that they anticipate airlift requirements will be at least as demanding, and possibly more demanding in the new strategy. The services have both land-based and sea-based equipment and munitions prepositioned in Europe. Land-based prepositioned items consist of equipment and supply sets for three Army brigades, one Army artillery battalion, and one Marine expeditionary unit, in addition to six Air Force air base support sets and other Air Force equipment. The Army’s three brigade sets, two in central Europe and one in Italy, include 348 Abrams tanks and 240 Bradley fighting vehicles. In Norway, the Army has equipment for an artillery battalion, which includes 18 self-propelled howitzers, and the Marine Corps stores equipment and 30-day supplies for a Marine expeditionary brigade. Air Force air base support sets— temporary shelters for early-arriving air base personnel—are stored at a site in Luxembourg, with the other equipment stored in sites around Europe. There are also ships afloat in the Mediterranean Sea, which carry equipment and munitions for the Marine Corps and the Air Force (see fig. 2). Prepositioned equipment in Europe greatly reduces the amount of time needed to deploy to a conflict in Europe than if the same forces and equipment have to be moved from the United States using air and sealift. For example, officials stated that the Army has established a brigade set of equipment in Bosnia for rotating troops to use when they deploy to that mission instead of bringing their own. Using this prepositioned equipment saves about $5.5 million in transportation costs if the unit is coming from the United States and about $2.5 million if the unit is based in Europe. Furthermore, an earlier mobility study pointed out that prepositioned equipment is a more attractive option because it might be less expensive than purchasing more airlift aircraft. The Mobility Requirements Study 2005 assumed both afloat and land- based prepositioned equipment would be in place and fully stocked in 2005 and did not model any scenarios without it. Land-based prepositioned equipment in Europe is not used to support the two major theater war strategy. However, some prepositioned equipment can be used as reserve during a major conflict or in small-scale contingencies. In fact, from the start of the mission in Bosnia in December 1995 to June 1998, the Army lent over 7,900 pieces of prepositioned equipment to units in Bosnia. The equipment included, among others, Abrams tanks, Bradley fighting vehicles, and armored personnel carriers. Officials did cite some drawbacks to having large quantities of equipment and weapons prepositioned in specific places. First, it is always difficult to plan conflicts in advance, and there is always the danger that the equipment may be in the wrong place or that two conflicts break out at the same time. Other risks are that prepositioned equipment can be a tempting target for enemies and that the Department might need more flexibility to quickly move to other geographical regions than prepositioning allows. The Air Force has almost 33,000 personnel in Europe assigned to six wings, which include three fighter wings, a refueling wing, an airlift wing, and a multi-mission wing (see fig. 3). These forces can accomplish all the traditional Air Force missions, both conventional and nuclear. The units include 167 fighter/attack aircraft, 36 transport aircraft, and 15 refueling aircraft. Air Force aircraft deployed in Europe allow forces to move more quickly to small-scale contingencies and reduce the burden on airlift and sealift. For example, F-15 pilots from Aviano Airbase in Italy conducted combat missions during the first day of the air campaign in Kosovo. Also, the 31st Fighter Wing based at Aviano is providing the aircraft to support the mission to monitor, control, and police air space over Bosnia. Central Command officials stated that combat and transport aircraft are important to have in Europe and are critical to ensuring the command’s ability to execute its operational plan for a major theater war in Southwest Asia. As stated above, the Mobility Requirements Study 2005 modeled the forward-deployed forces in Europe as they were planned for fiscal year 2005. The exception is the assumption that those forces currently enforcing the “no-fly” zones in Northern and Southern Iraq would no longer be assigned to those missions and therefore would no longer be forward deployed in Europe. This would mean that there would be fewer Air Force personnel and equipment stationed in Europe and a greater mobility requirement for U.S. Central Command to execute their operational plan if a conflict were to arise in Southwest Asia. There are about 69,400 soldiers based in Europe who are assigned to three infantry and three armored brigades, an aviation brigade, and numerous support units (see fig. 4). Some officials we spoke with stated that, of the four elements of forward presence, Army combat and support troops would be the easiest to move, if they were not forward deployed in Europe. In the event of a conflict in Europe or Southwest Asia, 95 percent of ground troops would move by commercial airlift. These troops would then fall in on prepositioned equipment or meet up with their unit equipment, which would move by sealift. According to the Mobility Requirements Study 2005, there is sufficient sealift, except for special purpose sealift, which is used to move watercraft that cannot self-deploy, to handle the requirements of a two major theater war strategy. This would leave the Defense-owned transport aircraft to carry other critical items. But having Army personnel and equipment stationed in Europe allows the Commander, U.S. European Command, to deploy troops faster and easier to a conflict in his theater. For example, forward-deployed troops from Europe were among the first units deployed in both the Bosnia and Kosovo operations because they had to travel a much shorter distance from home station to the theater than troops based in the continental United States. According to a former commander-in-chief of the European Command, the 1st Armored Division’s deployment to Bosnia from its bases in Germany reduced the number of days required for full deployment and cost significantly less than deployment would have by a similarly equipped unit based stateside using strategic airlift and sealift. Also, European-based units deploy to Bosnia and Kosovo primarily by rail and road transportation, and are therefore less costly to move than forces requiring air transportation. War fighting risk is another factor to be considered. If personnel, weapons, and equipment have to be moved to a conflict in Europe or Southwest Asia from the United States, they would take longer or require more airlift capacity than the same units coming from Europe, which would increase risk. For example, the Patriot missile battalion in Europe would need the airlift capacity of 59 C-17 cargo aircraft to move to the area of operations under the Central Command. But the same battalion, coming from the United States, would require twice the airlift capacity to arrive within the same timeframe, according to Defense officials. If that capacity were not available, it would take longer to arrive, which would increase the war fighting risk. Again, the Mobility Requirements Study 2005 modeled the Army forces in Europe as they were planned, at the time of the study, for fiscal year 2005. In written comments on a draft of this report, DOD generally concurred with the information in our report. DOD’s comments are reprinted in appendix I. DOD also provided technical comments, which we incorporated as appropriate. To determine the impact of U.S. forward presence in Europe on mobility, we reviewed the Mobility Requirements Study 2005 and other Defense mobility studies. We obtained briefings, reviewed documents, and interviewed officials at the Office of the Secretary of Defense, the Joint Chiefs of Staff, the military services, the Central Command, the European Command, the U.S. Transportation Command, the Special Operations Command, the Joint Forces Command, and the Air Mobility Command. We also obtained information and held discussions with officials at U.S. Army, Europe, and U.S. Air Forces, Europe, headquarters. We conducted our review from May 2001 through August 2001 in accordance with generally accepted government auditing standards. We are sending copies of this report to the appropriate congressional committees, the Honorable Donald H. Rumsfeld, Secretary of Defense, and The Honorable Mitchell E. Daniels, Jr., Director, Office of Management and Budget. Copies will also be made available to others upon request. Please contact me at (757) 552-8100 if you or your staffs have any questions concerning this report. Major contributors to this report are listed in appendix II. In addition to those named above, Lawrence E. Dixon, Patricia Lentini, Alan Goldberg, and Stefano Petrucci made key contributions to this report.

The United States maintains 100,000 military personnel in Europe to provide rapid response in the event of a military crisis and help shape the international environment. These forward-deployed forces and equipment also facilitate the movement of U.S. forces to an area of operations. DOD has not quantified the impact of a forward presence in Europe on mobility requirements. However, Defense officials believe that, without forward-deployed forces and equipment in Europe, mobility requirements and costs would be considerably higher and deployment times longer, increasing war-fighting risk. The U.S. en-route system of airbases is critical to operations in Europe and Southwest Asia. U.S. prepositioned weapons and equipment in Europe facilitate military operations in nearby areas. Air Force aircraft and personnel deployed in Europe allow forces to move more quickly to small-scale contingencies in the area and reduce the airlift and sealift burden on U.S.-based units. As with the Air Force, Army combat and support units stationed in Europe allow forces to move more quickly and at less cost to small-scale contingencies in the area.

Under traditional indemnity plans, the physician has no legal relationship to the patient’s health plan. The contractual relationships are between the patient and the physician—under which the patient is obligated to pay the physician a fee for service rendered—and between the patient and the plan—under which the plan is obligated to indemnify the patient for medical expenditures incurred according to the terms of the insurance contract. Although disputes between the patient and plan may arise over denial of payment, claims regarding the quality of services that result in medical injury are resolved in state common law tort systems under principles of medical malpractice law. Complaint and appeal procedures are regulated by a patchwork of federal and state laws. No federal standards, however, prescribe how complaint and appeal systems are to be structured and administered. For example, the Employee Retirement Income Security Act of 1974 (ERISA), a federal law governing most employer-sponsored health plans, requires that all health plans provide a mechanism to permit participants and beneficiaries to appeal a plan’s denial of a claim. Regulations promulgated pursuant to ERISA generally require that plans approve or deny appeals within 60 days. Some states may have statutes or regulations governing indemnity plan complaint and appeal procedures; however, under ERISA the states are prevented from regulating self-funded health plans, which enroll approximately 87 percent of indemnity plan members. The groups we contacted identified 9 of the 11 elements recommended for HMO complaint and appeal systems as applicable to indemnity plans. The two HMO-related elements not considered applicable to indemnity plans were a two-level appeal process and the member’s right to appear at one appeal hearing. The elements considered important to a sound complaint and appeal process for indemnity plans fell into three general categories—timeliness, integrity of the decision-making process, and effective communication—and included the following: explicit time periods, set out in plan policies, within which plans resolve complaints or appeals. Appeals, according to the criteria, were to be resolved within 30 days; expedited review of appeals in situations in which, were a plan to follow its usual time period for processing an appeal, the patient’s health might be jeopardized. Such situations might include, for example, admission to, or discharge from, an acute-care hospital. Criteria called for expedited review to be completed within 72 hours or 2 business days of the appeal; appeal decisions made by medical professionals with appropriate appeal decisions made by individuals not involved in the initial decision; information provided about how to register a complaint or appeal; oral complaints accepted by the plan; oral appeals accepted by the plan; appeal rights included in notice of denial of coverage or payment of written notice of appeal denials, including further appeal rights where applicable. This standard would not apply in cases where members have no further appeal rights—for example, in plans that offered only one level of review. Nearly all the recommended elements were present in the policies of at least half the plans in our study. As shown in table 1, five elements—explicit time periods for resolving member appeals, appeal decisions made by medical professionals with appropriate expertise, provision of information on how to register a complaint or appeal, plan acceptance of oral complaints, and inclusion of appeal rights in notice of denial of coverage or payment—were included in the policies of a large majority of the indemnity plans in our study. However, the remaining four elements—expedited review of appeals in urgent situations, appeal decisions made by individuals not involved in the initial decision, plan acceptance of oral appeals, and written notice of appeal denials including further appeal rights—were present in the policies of only two-thirds or fewer of the plans reporting. We asked plans to indicate whether the complaint and appeal policies they described applied to both insured and self-funded business. Four plans provided no information on this issue, while one stated that its indemnity plan had no self-funded members. Of the five remaining plans, three stated that the complaint and appeal policies they reported to us applied to all members, insured as well as self-funded, and two stated that most self-funded purchasers follow the plans’ policies. Three plans stated that self-funded purchasers may become involved in the appeal process, generally after the member has exhausted the plan’s standard appeal process. According to an official at one plan, because such purchasers are actually responsible for the cost of care, they have the discretion to overturn denials made by the plan. All 10 plans in our study had established time periods within which complaints and appeals were to be resolved. Two plans reported that their time period for resolving an appeal was 21 days; several allowed 30 days, and several others allowed 60 days. Six plans (of nine included in this analysis) reported that their policies contained expedited appeal processes for use in circumstances in which delay in care might jeopardize the patient’s health. One plan’s policies called for appeals involving admission to, or services from, an acute-care hospital in a life-threatening or other serious injury situation to be resolved within 3 hours, while other types were to be resolved within 2 business days. Another plan’s policies called for expedited appeals to be resolved within 72 hours. Two plans allowed up to 3 business days, while another allowed up to 7 days. The remaining three plans stated that they did not have such expedited review policies. The final plan is excluded from our analysis of this element; an official from this plan stated that the plan does not require preauthorization of any procedures and that an expedited review process is unnecessary because all decisions regarding coverage are made after the care is received. Nine plans reported that they included doctors or nurses on their appeal committees. We did not, however, analyze individual appeal cases and so were unable to determine whether doctors and nurses with appropriate expertise made appeal decisions in cases of denials resulting from medical necessity decisions. Five plans, out of 10 reporting, required that persons reviewing appeals not be the same individuals involved in the case earlier. All 10 plans in our study reported that they provide written information to members describing the complaint and appeal process. We reviewed the materials provided to members—including member handbooks, member contracts, newsletters, and other forms of communication—and judged them to be clear and understandable. Nine plans accepted oral complaints from members, while one plan required members to put complaints in writing. Only two plans, however, accepted oral appeals from members; the remaining eight required members to file appeals in writing. One plan that accepted oral appeals, however, noted in its policy that oral appeals must be filed in person. In our prior study of HMOs, some plan officials told us that they prefer members to submit appeals in writing in order to ensure that members’ concerns are accurately characterized. Seven plans, out of nine responding, described member appeal rights when informing members of a denial of payment or authorization. Regarding denials of members’ appeals, six plans (of nine providing data) reported that they included further appeal rights, where applicable, in written notices of denial. Further appeal rights might include additional levels of appeal within the plan or the right to appeal to a state organization or the member’s employer. Two of the remaining three plans provided written notice of appeal denials but did not include further appeal rights despite offering additional internal levels of appeal, while one plan responded to members only if the appeal was resolved in the member’s favor. Compared with the 38 HMOs in our previous report, a smaller proportion of the 10 indemnity plans’ policies and procedures included the recommended elements. However, the disparity in the number of HMOs and indemnity plans participating in our studies might account for some of the noted differences. At the individual carrier level, in most cases, the prevalence of recommended elements was nearly the same in the indemnity plan and HMO operated by the same carrier, but several carriers had less conformance in their indemnity plan. As shown in table 2, on the whole, a smaller percentage of indemnity plans than HMOs had the nine recommended elements applicable to both indemnity and HMO plans. Four elements were incorporated by a similar, and relatively high, proportion of plans of each type. Large differences were evident in two elements—expedited review and written notice of appeal denials, including further appeal rights—where a substantially lower proportion of indemnity plans included the elements than did HMOs. We found smaller differences in three elements: a slightly higher percentage of indemnity plans than HMOs specify that appeal decisions must be made by individuals not involved in the initial decision, and a slightly higher percentage of HMOs than indemnity plans accept oral appeals and explain appeal rights in denial notices. Regarding the remaining four elements, we noted only slight differences. We also examined the extent to which individual insurance carriers offering both indemnity and HMO plans included recommended elements in the complaint and appeal systems for each type of plan. Figure 1 compares the prevalence of recommended elements in indemnity plans with those in place in the HMO offered by the same carrier. For 7 of the 10 carriers in our study, the indemnity plan and HMO had nearly the same proportion of recommended elements. At the remaining 3 carriers, the HMO included the greater proportion of elements, with 1 carrier showing substantial differences across plans. In commenting on a draft of our report, NAIC officials stated that we had accurately characterized their criteria governing consumer complaint and appeal systems for indemnity health plans. As arranged with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after its issue date. We will then send copies to those who are interested and make copies available to others on request. Please call me on (202) 512-7119 if you or your staff have any questions. Major contributors to this report include Rosamond Katz and Steve Gaty. Bernice Steinhardt Director, Health Services Quality and Public Health Issues The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. 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Pursuant to a congressional request, GAO reviewed the key features that are important to indemnity plans' complaint and appeal systems, focusing on: (1) the elements that are considered important to a system for processing indemnity plan member complaints and appeals; (2) the extent to which indemnity plan complaint and appeal systems contain these elements; and (3) how indemnity plans compare with health maintenance organizations (HMO) in the extent to which their complaint and appeal systems incorporate recommended elements. GAO noted that: (1) guidelines issued by the regulatory and consumer advocacy groups in GAO's study identified nine elements as important to indemnity plan complaint and appeal systems, falling into three general categories: (a) timeliness; (b) integrity of the decisionmaking process; and (c) communication with members; (2) nearly all the recommended elements were present in the policies of at least half of the plans in GAO's study; (3) five elements--explicit time periods for resolving member appeals, appeal decisions made by medical professionals with appropriate expertise, provision of information on how to register a complaint or appeal, plan acceptance of oral complaints, and inclusion of appeal rights in notice of denial of coverage or payment--were included in the policies of a large majority of indemnity plans in GAO's study; (4) however, the remaining four elements--expedited review of appeals in urgent situations, appeal decisions made by individuals not involved in the initial decision, plan acceptance of oral appeals, and written notice of appeal denials including further appeal rights, were present in the policies of only two-thirds or fewer of the plans reporting; (5) taken together, a smaller proportion of indemnity plans in GAO's study incorporated recommended elements in their complaint and appeal systems than did HMOs in GAO's previous study; and (6) when compared with HMOs operated by the same carrier, indemnity plans generally incorporated about the same proportion of recommended elements as did HMOs.

Arguably, while each at-risk locality must be provided adequate resources to effectively fight this war, no single jurisdiction or response discipline can fight it alone. Effective homeland security efforts require continuous regional collaboration and coordination. Such an approach includes developing national guidelines and standards and monitoring and assessing preparedness against those standards to effectively manage risk. The National Strategy for Homeland Security, released in 2002 following the proposal for DHS, emphasized a shared national responsibility for security involving close cooperation among all levels of government and acknowledged the complexity of developing a coordinated approach within our federal system of government and among a broad range of organizations and institutions involved in homeland security. The national strategy highlighted the challenge of developing complementary systems that avoid unintended duplication and increase collaboration and coordination so that public and private resources are better aligned for homeland security. The national strategy established a framework for this approach by identifying critical mission areas with intergovernmental initiatives in each area. For example, the strategy identified such initiatives as modifying federal grant requirements and consolidating funding sources to state and local governments. The strategy further recognized the importance of assessing the capability of state and local governments, developing plans, and establishing standards and performance measures to achieve national preparedness goals. In addition, many aspects of DHS’ success depend on its maintaining and enhancing working relationships within the intergovernmental system as the department relies on state and local governments to accomplish its mission. The creation of DHS was an initial step toward reorganizing the federal government to respond to some of the intergovernmental challenges identified in the National Strategy for Homeland Security. The Homeland Security Act established ONCRC within DHS to oversee and coordinate federal programs for, and relationships with, federal, state, local, and regional authorities in the NCR. Specifically, ONCRC was mandated to coordinate the activities of DHS relating to NCR, including cooperating with the DHS’ Office for State and Local Government Coordination; coordinate with federal agencies in the NCR on terrorism preparedness to ensure adequate planning, information sharing, training, and execution of the federal role in domestic preparedness activities; coordinate with federal, state, and regional agencies and the private sector in NCR on terrorism preparedness to ensure adequate planning, information sharing, training, and execution of domestic preparedness activities among these agencies and entities; serve as a liaison between the federal government and state, local, and regional authorities, and private sector entities in NCR to facilitate access to federal grants and other programs. With regard to resource assessments and needs, the NCR’s responsibilities also include assessing and advocating for resources needed by state, local, and regional authorities in the NCR to implement efforts to secure the homeland and submitting an annual report to Congress that (1) identifies resources required to fully implement homeland security efforts, (2) assesses progress in implementing homeland security efforts in the NCR, and (3) includes recommendations to Congress regarding additional resources needed to fully implement homeland security efforts in the NCR. In fiscal years 2002 and 2003, 16 separate federal grant programs conveyed about $340 million to state and local emergency management, law enforcement, fire, public health, and other emergency response agencies in NCR. Two funding sources—the fiscal year 2002 Department of Defense Emergency Supplemental Appropriation (almost $230 million) and the fiscal year 2003 Urban Area Security Initiative ($60.5 million) accounted for about 85 percent of those funds. The Urban Area Security Initiative funds were designated for regional use, and a plan has been developed for using the funds to benefit the region as a whole. These funds have been targeted for equipment ($26.5 million), planning ($12.4 million), exercises ($4 million), and administrative costs ($1.8 million), among other things. The other grant programs were not specifically designated for regional purposes, and spending for these funds was determined by individual local jurisdictions. These funds were available for such purposes as purchasing additional equipment and supplies for first responders; planning, coordinating, and evaluating exercises; training first responders; funding the emergency preparedness planning efforts and administration; and providing technical assistance. NCR jurisdictions reported using or planning to use these funds to purchase a range of equipment—for example, vehicles and communications equipment—supplies, training, and technical assistance services. In our report, we discuss issues associated with managing federal first responder grants in NCR, assessing gaps in first responder capacities and preparedness in the region, and the role of the Office for National Capital Region Coordination in coordinating and assessing efforts to enhance first responder capacity across NCR. Effectively managing first responder federal grants funds requires the ability to measure progress and provide accountability for the use of public funds. A strategic approach to homeland security includes identifying threats and managing risks, aligning resources to address them, and assessing progress in preparing for those threats and risks. As with other major policy areas, demonstrating the results of homeland security efforts includes developing and implementing strategies, establishing baselines, developing and implementing performance goals and data quality standards, collecting reliable data, analyzing the data, assessing the results, and taking action based on the results. The purpose of these efforts with regard to first responder grant funds to be able to answer three basic, but difficult, questions: For what types of threats and emergencies should first responders be prepared? What is required—for example, coordination, equipment, training—to be prepared for these threats and emergencies? How do first responders know that they have met their preparedness goals? NCR is an example of the difficulties of answering the second and third questions in particular. The region faces significant challenges in managing homeland security dollars. ONCRC and NCR jurisdictions face three interrelated challenges that limit their ability to jointly manage federal funds in a way that demonstrates increased first responder capacities and preparedness while minimizing inefficiency and unnecessary duplication of expenditures. First, a lack of preparedness standards for both equipment and performance means that it is difficult to assess first responder capabilities, identify gaps in those capabilities, and measure progress in closing those gaps. As in other areas of the nation generally, NCR does not have a set of accepted benchmarks (best practices) and performance goals that could be used to identify desired goals and determine whether first responders have the ability to respond to threats and emergencies with well-planned, well-coordinated, and effective efforts that involve police, fire, emergency medical, public health, and other personnel from multiple jurisdictions. Second, a strategic plan for the use of homeland security funds—whether in NCR or elsewhere—should be based on established goals, priorities, and measures, and align spending plans with those priorities and goals. At the time of our review, ONCRC had developed a regional spending plan for the Urban Area Security Initiative grants, but this plan was not part of a broader coordinated plan for spending federal grant funds and developing first responder capacity and preparedness in NCR. The lack of benchmarks and performance goals may contribute to difficulties in developing a coordinated region-wide plan for determining how to spend federal funds and assessing the benefits of that spending. Third, there is no established process or means for regularly and reliably collecting data on (1) the amounts of first responder grants available to each jurisdiction and (2) the budget plans and criteria used for determining spending allocations and budget priorities. Reliable data are needed to establish accountability, analyze gaps, and assess progress toward meeting established performance goals. Without such data, it is difficult to verify the results of preparedness assessments and to establish a baseline that could be used to develop plans to address outstanding needs. It should be noted that the fragmented nature of the multiple federal grants available to first responders—some awarded to states, some to localities, some directly to local first responder agencies—may make it more difficult to collect and maintain region-wide data on grant funds received and the use of those funds in NCR. Without national standards, guidance on likely threats and scenerios for which to be prepared, coordinated plans, and reliable data, it is difficult for us or ONCRC to determine what gaps, if any, remain in the emergency response capacities and preparedness within NCR. Determining the existence of gaps in NCR’s emergency preparedness is difficult currently because there is little baseline data on the region’s preparedness, and DHS’s Office for National Capital Region Coordination does not have information on how NCR localities used federal grant dollars to enhance their capacities or preparedness. Even if those data were available, a lack of standards against which to evaluate the data would also have made it difficult to assess any gaps. The Office for Domestic Preparedness collected information on regional security risks and needs for NCR jurisdictions, and ONCRC based funding decisions for the Urban Area Security Initiative on the results. However, as already noted, it is not clear how the Urban Area Security Initiative spending plan links to the actual and planned uses for the other funding sources that comprised about $279.5 million of the $340 million in federal homeland security grants to the NCR during fiscal years 2002 and 2003. Each jurisdiction provided us with information on their perceived gaps and specific needs for improving emergency preparedness. However, there is no consistent method for identifying these gaps among jurisdictions within NCR. Several jurisdictions told us that they identify remaining gaps based on requests from emergency responder agencies. Other jurisdictions said they have established emergency management councils or task forces to review their preparedness needs and are developing a more strategic plan for funding those needs. Officials of most NCR jurisdictions commonly identified the need for more comprehensive and redundant communications systems and upgraded emergency operations centers. We recognize that NCR is a complex multijurisdictional area comprising the District of Columbia and surrounding county and city jurisdictions in Maryland and Virginia. The region is the home to the federal government, many national landmarks, and military installations. Coordination within this region presents the challenge of working with numerous jurisdictions that vary in size, political organization, and experience with managing large emergencies. According to emergency management officials we contacted, DHS’ Office for National Capital Region Coordination could play a potentially important role in assisting them to implement a coordinated, well-planned effort in using federal resources to improve the region’s preparedness. In our view, meeting ONCRC’s statutory mandate would fulfill such a key responsibility. We recognize that the Office for National Capital Region Coordination was created about 15 months ago, and that some start-up time has been required. To date, however, it appears that ONCRC’s efforts have not focused on assessing what has been accomplished with funds available within NCR to date and identifying what needs remain and for what purposes. ONCRC has concentrated its efforts on developing a coordinated assessment and plan for the use of Urban Area Security Initiative funds. Although we believe that those steps are important for rationalizing and prioritizing the expenditure of homeland security dollars designated for region-wide use, ONCRC’s efforts generally do not address expenditures from the majority of the homeland security grant dollars received in NCR. In addition, it is difficult for the ONCRC to meet its statutory responsibilities without an NCR emergency preparedness baseline, a region-wide plan for prioritizing expenditures and assessing their benefits, and reliable data on funds that are available and those have been spent. According to DHS, a governance structure was approved in February 2004 that will provide the essential region-wide coordination that is necessary. Our report contains several recommendations. To help ensure that emergency preparedness grants and associated funds are managed in a way that maximizes their effectiveness, we recommend that the Secretary of the Department of Homeland Security take the following three actions to fulfill DHS’s statutory responsibilities in NCR: Work with NCR jurisdictions to develop a coordinated strategic plan to establish goals and priorities for enhancing first responder capacities that can be used to guide the use of federal emergency preparedness funds. Monitor the plan’s implementation to ensure that funds are used in a way that promotes effective expenditures that are not unnecessarily duplicative. Identify and address gaps in emergency preparedness and evaluate the effectiveness of expenditures in meeting those needs by adapting standards and preparedness guidelines based on likely scenarios for NCR and conducting assessments based on them. In their comments on a draft of our report, DHS and the Senior Policy Group generally agreed with our recommendations, but also said that NCR jurisdictions had worked cooperatively together to identify opportunities for synergies and lay a foundation for meeting the challenges noted in the report. The Senior Policy Group noted the challenge and critical importance of integrating private sector initiatives as part of the broader effort. DHS and the Senior Policy Group also agreed that there is a need to continue to improve preparedness by developing more specific and improved preparedness standards, clearer performance goals, and an improved method for tracking regional initiatives. They believe the governance process now in place will accomplish essential regional coordination. Coordinated planning for the use of federal grant funds and monitoring the results achieved with those funds are fundamental for assessing and building the needed first responder capacity of the region to prepare for, mitigate, respond to, and recover from major emergency events in the region—whether the result of nature, accident, or terrorist act. The urgent nature of the security risk to the National Capital Region requires a coordinated, well-planned approach to the expenditure of federal first responder grants. To maximize the positive impact of such federal dollars, duplication needs to be minimized, available resources used to the maximum extent possible, and a strategic, region-wide plan based on an assessment of preparedness gaps developed to guide those expenditures. Assessments of the current status of emergency preparedness and of any existing preparedness gaps require the existence and application of various types of standards. DHS’s Office for National Capital Region Coordination has a significant, statutorily mandated role in meeting those requirements. It has made a good first step in developing a region-wide plan for the use of the Urban Area Initiative Grants. However, information and analysis of planned and actual expenditures by local NCR jurisdictions is also needed to develop a region-wide plan for the use of federal grants. Mr. Chairman, that concludes my statement. I would be pleased to answer any questions you or other members of the Committee may have. For questions regarding this testimony, please contact William O. Jenkins, Jr., on (202) 512-8777 or Patricia A. Dalton, Director, on (202) 512-6737. Other individuals making key contributions to this testimony included Amelia Shachoy, Ernie Hazera, John Bagnulo, and Wendy Johnson. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Since the tragic events of September 11, 2001, the National Capital Region (NCR), comprising jurisdictions including the District of Columbia and surrounding jurisdictions in Maryland and Virginia, has been recognized as a significant potential target for terrorism. GAO was asked to report on (1) what federal funds have been allocated to NCR jurisdictions for emergency preparedness; (2) what challenges exist within NCR to organizing and implementing efficient and effective regional preparedness programs; (3) what gaps, if any, remain in the emergency preparedness of NCR; and (4) what has been the role of the Department of Homeland Security (DHS) in NCR to date. In fiscal years 2002 and 2003, grant programs administered by the Departments of Homeland Security, Health and Human Services, and Justice awarded about $340 million to eight NCR jurisdictions to enhance emergency preparedness. Of this total, the Office for National Capital Region Coordination (ONCRC) targeted all of the $60.5 million Urban Area Security Initiative funds for projects designed to benefit NCR as a whole. However, there was no coordinated regionwide plan for spending the remaining funds (about $279.5 million). Local jurisdictions determined the spending priorities for these funds and reported using them for emergency communications and personal protective equipment and other purchases. NCR faces several challenges in organizing and implementing efficient and effective regional preparedness programs, including the lack of a coordinated strategic plan for enhancing NCR preparedness, performance standards, and a reliable, central source of data on funds available and the purposes for which they were spent. Without these basic elements, it is difficult to assess first responder capacities, identify first responder funding priorities for NCR, and evaluate the effectiveness of the use of federal funds in enhancing first responder capacities and preparedness in a way that maximizes their effectiveness in improving homeland security.

According to the State Department, no country in the world poses a more immediate narcotics threat to the United States than Mexico. Estimates indicate that up to 70 percent of the more than 300 tons of cocaine that entered the United States in 1994 came through Mexico. In March 1996, the State Department reported that Mexico supplied up to 80 percent of the foreign-grown marijuana consumed in the United States and from 20 to 30 percent of the heroin. Furthermore, during the past 3 years, Mexican trafficking organizations operating on both sides of the border have replaced U.S.-based outlaw motorcycle gangs as the predominant methamphetamine manufacturers and traffickers in the United States. The Drug Enforcement Administration (DEA) estimates that up to 80 percent of the methamphetamine available in the United States is either produced in Mexico and transported to the United States or manufactured in the United States by Mexican traffickers. Mexican drug-trafficking organizations have complete control over the production and distribution of methamphetamine. In recent years, drug-trafficking organizations in Mexico have become more powerful, expanding their methamphetamine operations and also their cocaine-related activities. DEA reports that Mexican drug traffickers have used their vast wealth to corrupt police and judicial officials as well as project their influence into the political sector. According to DEA’s Administrator, some Mexican organizations have the potential of becoming as powerful as their Colombian counterparts. Furthermore, proximity to the United States, endemic corruption, and little or no financial regulation have combined to make Mexico a money-laundering haven for the initial placement of drug profits into the world’s financial systems. Drug traffickers use a variety of air, land, and sea conveyances and routes to move cocaine from Colombia to Mexico and then overland through Mexico into the United States. Traditionally, traffickers have relied on twin-engine general aviation aircraft to deliver cocaine shipments that ranged from 800 to 1,000 kilograms. Beginning in 1994, however, some trafficking groups began using larger Boeing 727-type jet aircraft that can fly faster than U.S. and Mexican detection and monitoring aircraft and deliver up to 10 metric tons of cocaine per trip. To date, there have been eight known deliveries using this means of transport. Furthermore, as we recently reported, traffickers in the Caribbean have changed their primary means of delivery and are increasingly using commercial and noncommercial maritime vessels. According to U.S. Embassy officials, about two-thirds of the cocaine currently entering Mexico is transported by maritime means. Mexico has taken some counternarcotics actions. Mexico eradicated substantial amounts of marijuana and opium poppy crops in 1995 with the assistance of up to 11,000 soldiers working on drug eradication programs. According to the Department of State, Mexican personnel effectively eradicated 29,000 acres of marijuana and almost 21,000 acres of opium poppy in 1995. Furthermore, President Zedillo directed the Mexican Air Force to use its F-5 aircraft to assist in air interdiction efforts in 1995. On the other hand, the amount of cocaine seized and the number of drug-related arrests in Mexico have declined from 1993 to 1995 compared to those before U.S. assistance was terminated. For example, the average annual amount of cocaine seized in Mexico between 1990 and 1992 was more than 45 metric tons, including more than 50 tons in 1991. In contrast, from 1993 to 1995, average cocaine seizures declined to about 30 metric tons annually. The number of drug-related arrests declined by nearly two-thirds between 1992 and 1995. Mexico’s efforts to stop the flow of drugs have been limited by numerous problems. First, despite the efforts that President Zedillo has undertaken since late 1994, both State and DEA have reported that corruption in Mexico is still widespread and that pervasive corruption is seriously undermining counternarcotics efforts. Second, serious economic and political problems have limited Mexico’s counternarcotics effectiveness. In December 1994, Mexico experienced a major economic crisis—a devaluation of the peso that eventually resulted in a $20-billion U.S. financial assistance package. In addition, high rates of unemployment and inflation have continued to limit Mexico’s economic recovery. Also, Mexico has had to focus funds and resources on the Chiapas region to suppress an insurgency movement. Third, Mexico has lacked some basic legislative tools needed to combat drug-trafficking organizations, including the use of wiretaps, confidential informants, and a witness protection program. New legislation authorizing these activities recently passed the Mexican Congress and is expected to be enacted following ratification by the Mexican states. Also, until May 1996, the laundering of drug profits was not a criminal offense and Mexico’s laws lacked sufficient penalties to effectively control precursor chemicals that are used to manufacture methamphetamine. To counter the growing threat posed by these chemicals, the United States encouraged Mexico to adopt strict chemical control laws. Fourth, the counternarcotics capabilities of the Mexican government to interdict drug-trafficking activities are hampered by inadequately equipped and poorly maintained aircraft. In addition to equipment problems, some Mexican pilots, mechanics, and technicians are not adequately trained. For example, many F-5 pilots receive only a few hours of proficiency training each month, which is considered inadequate to maintain the skills needed for interdiction. Moreover, assigning the aircraft to interdiction efforts may not have an immediate impact because of deficiencies in the capabilities and maintenance of the F-5s. Between fiscal years 1975 and 1992, Mexico was the largest recipient of U.S. counternarcotics assistance, receiving about $237 million in assistance. In fiscal year 1992, the United States provided about $45 million in assistance that included excess helicopters, aviation maintenance support, military aviation training, and some equipment. In early 1993, the Mexican government assumed responsibility for the cost of all counternarcotics efforts in Mexico. Since then, U.S. aid has declined sharply and, in 1995, amounted to about $2.6 million, mostly for helicopter spare parts and a limited amount of training to Mexican personnel. According to the State Department, U.S. efforts in Mexico are guided by an interagency strategy developed in 1992 that focused on strengthening the political commitment and institutional capability of the Mexican government, targeting major trafficking organizations, and developing operational initiatives such as drug interdiction. A key component of the strategy, developing Mexican institutional capabilities to interdict drugs, was severely hampered when State Department funding was largely eliminated in January 1993. U.S. policy decisions have also affected drug control efforts in the transit zone and Mexico. In November 1993, the President issued Presidential Decision Directive 14, which changed the focus of the U.S. international drug control strategy from interdicting cocaine as it moved through the transit zone of the Caribbean and Mexico to stopping cocaine in the source countries of Bolivia, Colombia, and Peru. To accomplish this, drug interdiction resources were to be reduced in the transit zone, while, at the same time, increased in the source countries. As we reported in April 1996, the Department of Defense (DOD) and other agencies involved in drug interdiction activities in the transit zone began to see major reductions in their drug interdiction resources and capabilities in fiscal year 1993. The amount of U.S. funding for the transit zone declined from about $1 billion in fiscal year 1992 to about $569 million in fiscal year 1995—a decline of 43 percent. Reductions in the size of the counternarcotics program have resulted in corresponding decreases in the staff available to monitor how previously provided U.S. helicopters and other assistance are being used, a requirement of section 505 of the Foreign Assistance Act of 1961, as amended. The Mexican government, however, has objected to direct oversight of U.S.-provided assistance and, in some instances, has refused to accept assistance that was contingent upon signing such an agreement. In other instances, Mexico’s position resulted in lengthy negotiations between the two countries to develop agreements that satisfied the requirements of section 505 and were more sensitive to Mexican concerns about national sovereignty. Prior to the “Mexicanization” policy, the State Department employed several aviation advisers who were stationed at the aviation maintenance center in Guadalajara and the pilot training facility at Acapulco. One of the duties of these advisers was to monitor how U.S. assistance was being used. However, with the advent of the Mexicanization policy in 1993, the number of State Department and contract personnel was greatly reduced and the U.S.-funded aviation maintenance contract was not renewed. As a result, the State Department currently has no personnel in the field to review operational records on how the 30 U.S.-provided helicopters are being used. According to U.S. officials, the U.S. Embassy relies heavily on biweekly reports that the Mexican government submits. Unless they request specific operational records, U.S. personnel have little knowledge of whether helicopters are being properly used for counternarcotics activities. There are also limitations in U.S. interdiction efforts. The 1993 change in the U.S. drug interdiction strategy reduced the detection and monitoring assets in the transit zone. U.S. Embassy officials stated that this reduction created a void in the radar coverage, and some drug-trafficking aircraft are not being detected as they move through the eastern Pacific. DOD officials told us that radar voids have always existed throughout the transit zone and the eastern Pacific area. These voids are attributable to the vastness of the Pacific Ocean and the limited range of ground- and sea-based radars. As a result, DOD officials believe that existing assets must be used in a “smarter” manner, rather than flooding the area with expensive vessels and ground-based radars, which are not currently available. In Mexico, U.S. assistance and DEA activities have focused primarily on interdicting aircraft as they deliver their illicit drug cargoes. However, as previously mentioned, traffickers are increasingly relying on maritime vessels for shipping drugs. Commercial smuggling primarily involves moving drugs in containerized cargo ships. Noncommercial smuggling methods primarily involved “mother ships” that depart Colombia and rendezvous with either fishing vessels or smaller craft, as well as “go-fast” boats that depart Colombia and go directly to Mexico’s Yucatan Peninsula. Efforts to address the maritime movements of drugs into Mexico are minimal, when compared with the increasing prevalence of this trafficking mode. State Department officials believe that Mexican maritime interdiction efforts would benefit from training offered by the U.S. Customs Service and the U.S. Coast Guard in port inspections and vessel-boarding practices. Since our August 1995 testimony, a number of events have occurred that could affect future drug control efforts by the United States and Mexico. Specifically: The U.S. Embassy elevated counternarcotics from the fourth highest priority—its 1995 ranking—in its Mission Program Plan to its co-first priority, which is shared with the promotion of U.S. business and trade. In July 1995, the Embassy also developed a detailed embassy-wide counternarcotics plan for U.S. efforts in Mexico. The plan involves the activities of all agencies involved in counternarcotics activities at the Embassy, focusing on four established goals, programs that the Embassy believes will meet these goals, and specific milestones and measurable objectives. It also sets forth funding levels and milestones for measuring progress. The Embassy estimated that it will require $5 million in State Department funds to implement this plan during fiscal year 1996. However, only $1.2 million will be available, according to State Department personnel. After taking office in December 1994, President Zedillo declared drug trafficking “Mexico’s number one security threat.” As such, he advocated legislative changes to combat drugs and drug-related crimes. During the most recently completed session, the Mexican Congress enacted legislation that could improve some of Mexico’s counternarcotics capabilities such as making money laundering a criminal offense. However, legislation to provide Mexican law enforcement agencies with some essential tools needed to arrest and prosecute drug traffickers and money launderers requires ratification by the Mexican states. These tools include the use of electronic surveillance and other modern investigative techniques that, according to U.S. officials, are very helpful in attacking sophisticated criminal organizations. Furthermore, to date, the Mexican Congress has not addressed several other key issues, such as a requirement that all financial institutions report large cash transactions through currency transaction reports. In March 1996, Presidents Clinton and Zedillo established a high-level contact group to better address the threat narcotics poses to both countries. The Director of the Office of National Drug Control Policy co-chaired the first contact group meeting in late March, which met to review drug control policies, enhance cooperation, develop new strategies, and begin to develop a new plan for action. Binational working groups have been formed to plan and coordinate implementation of the contact group’s initiatives. According to officials from the Office of National Drug Control Policy, a joint antinarcotics strategy is expected to be completed in late 1996. In April 1996 the United States and Mexico signed an agreement that will facilitate the transfer of military equipment and, shortly thereafter, the United States announced its intention to transfer a number of helicopters and spare parts to the Mexican government. Twenty UH-1H helicopters are scheduled to be transferred in fiscal year 1996 and up to 53 in fiscal year 1997. State Department personnel stated that the details about how the pilots will be trained, as well as how the helicopters will be operated, used, and maintained, are being worked out. It is too early to tell whether these critical efforts will be implemented in such a way as to substantially enhance counternarcotics efforts in Mexico. This concludes my prepared remarks. I would be happy to respond to any questions. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

GAO discussed the results of its review of counternarcotics efforts in Mexico. GAO noted that: (1) U.S. and Mexican interdiction efforts have had little impact on the flow of illegal drugs from Mexico into the United States; (2) instead of concentrating on intercepting drugs as they move through the transit zone, the United States has focused its interdiction efforts on stopping cocaine production in South America; (3) Mexico's efforts to stop the flow of drugs have been limited by widespread political corruption, lack of legislative tools to combat drug trafficking organizations, and poorly maintained aircraft; (4) U.S. and Mexican counternarcotics programs have declined over the past few years; and (5) the United States and Mexico signed an agreement in April 1996 to facilitate the transfer of military equipment to enhance counternarcotics efforts in Mexico.

In an April 1995 report, the National Academy of Public Administration recommended that EPA establish specific environmental goals and strategies to attain them, and use comparative risk analyses to select priorities and develop strategies for specific programs. NAPA also said that EPA should consolidate its planning and budgeting functions, use the budget process to allocate resources to the agency’s priorities, and establish accountability by setting and tracking benchmarks and evaluating performance. The NAPA study’s recommendations are similar to the requirements for federal agencies established by the Government Performance and Results Act of 1993 (GPRA). Under GPRA, agencies must establish strategic plans, by September 30, 1997. GPRA also requires agencies to submit to the Office of Management and Budget, beginning for fiscal year 1999, annual performance plans, including annual performance goals and performance measures. The first annual performance plans are to be submitted in the fall of 1997. In response to NAPA’s recommendations, in July 1995, EPA created a task force to study ways to improve the agency’s management processes. In its report, the task force recommended an integrated system composed of strategic planning, budgeting, and accountability processes. In the planning process, EPA was to develop a strategic plan that would be based on the agency’s goals. During the budgeting process, each goal in the strategic plan would be considered, and an annual performance plan would be prepared showing the agency’s progress to date and plans for future expenditures. During the accountability process, EPA would determine progress under the annual plans and use the data on progress to make corrections in the strategic and annual performance plans. In March 1996, the EPA Administrator and Deputy Administrator endorsed the task force’s recommendations for developing an integrated planning, budgeting, and accountability system and directed that the recommendations be implemented. In making a commitment to substantially revise the agency’s management systems, EPA officials recognized that the effort would take several years to complete. The EPA Administrator and Deputy Administrator also announced plans to create a new office by January 1997 to consolidate the agency’s planning, budgeting, and accountability processes. In the interim, a work group composed of employees on temporary assignment was established to begin developing the new system. In January 1997, the EPA Administrator approved the structure and staffing plans for the new office, called the Office of Planning, Analysis, and Accountability. The interim work group that had been assigned to develop the new system was detailed to the new office to continue its work. The work group has 21 employees, fewer than half the number that EPA had planned for the group. The new office is authorized 49 employees. As of the end of March 1997, EPA had published job announcements to fill 26 of the new positions. EPA officials told us that these announced positions, which are open only to current EPA employees, will be filled in May 1997. The remaining positions, which are to be announced governmentwide, are not likely to be filled before July 1997. The officials told us that the office was not fully staffed when it was established because time was required to determine the most appropriate types of skills and work experiences needed and to implement a competitive process for selecting staff. Given the office’s limited staffing, the development of an integrated system is in the early stages. For example, EPA is reviewing the agency’s former accountability process to find out what did and did not work well, contacting other federal agencies to determine how they account for progress in meeting their goals, and examining reporting systems in the agency’s program offices to identify their potential use in the new system. EPA hopes to have the accountability component in place by September 1999. According to EPA officials, the development of the new budgeting component will begin after the agency completes its strategic plan in September 1997. They said that EPA’s fiscal year 1999 budget will be structured along the lines of the goals in the strategic plan. Thus far, the work group members have spent most of their time developing a strategic plan, which is required by September 30, 1997, under GPRA. An important part of the new strategic planning process is the selection of goals and objectives that can be used to guide the agency’s actions and to measure its performance. Although EPA is making progress toward developing its strategic plan, it has not completed two studies that are intended to identify the most appropriate goals for the agency and to provide the latest scientific information on environmental risk. EPA officials told us that the September 30, 1997, strategic plan will be updated, as appropriate, to reflect the final results of these studies, which are likely to be completed in late 1997 or early 1998. Although EPA continues to expand and improve the environmental data it compiles, it still needs to fill data gaps; improve the quality of its data; integrate information systems; and build the capability to compile, organize, and analyze the data in ways useful to EPA managers and stakeholders. In addition to the measures of outputs or program activities that it currently relies on to assess its performance, EPA is working to develop environmental measures that enable the agency to evaluate the impact of its programs on the environment and determine whether they are achieving the desired results. The need to assess EPA’s performance in terms of changes in environmental conditions substantially increases the demand for high-quality environmental data. Such data are also needed to identify emerging problems so that they can be addressed before significant damage is done to the environment. Despite EPA’s efforts to improve the quality of its data, these data are often unreliable, and the agency’s many disparate information systems are not integrated. These shortcomings have been raised in various external and internal reports on EPA, including the Vice President’s report on reinventing government. In its April 1995 report, NAPA also identified the lack of high-quality data on environmental conditions as a particularly important problem for EPA. NAPA specifically noted the limited amount of information based on the real-time monitoring of environmental conditions. Without monitoring data, EPA must rely on estimates and limited, site-specific data. NAPA also concluded that much remains to be done to improve the overall management of environmental information in the agency. It noted that EPA had over 500 information systems and that program offices, which are responsible for their own data, use different methods and definitions to gather data. Furthermore, EPA relies on data compiled by other federal agencies and the states. According to NAPA, these agencies and the states also use divergent methods of collecting data. More recently, a 1996 EPA report concluded that the agency needs to redesign its many disparate fiscal and environmental data systems so that it and others can measure its success in meeting environmental goals and determine the costs of doing so. The agency’s difficulty in demonstrating its performance or the impact of its actions is illustrated by the findings of a team of agency personnel, which was formed in 1995 to evaluate the agency’s needs for environmental information. The team identified various problems with the information needed to report on environmental goals, such as gaps in the data and inconsistencies in the methods of collecting and/or reporting data across states or federal agencies. Specific examples include the lack of (1) national reporting on risk reduction at waste sites, (2) reliable data on the nature and cause of pesticide poisonings, (3) effective reporting on progress in improving the nation’s water quality, and (4) complete data on air pollutants. EPA and the states are devoting considerable attention to developing environmental indicators or measures for use in assessing programs’ performance and better informing the public about environmental conditions and trends. Some efforts are just starting, while some of the agency’s program and regional offices and some states have begun to use these measures in reporting on their programs’ performance. Although EPA and state officials believe that environmental measures are more useful than measures of activities for assessing programs’ performance, they recognize that scientific and technical issues have to be addressed before indicators that really measure environmental conditions and trends can be widely used. Developing and using environmental indicators for an entire program presents significant challenges. The scientific and technical challenges include identifying (1) a range of health or environmental conditions that can be measured and (2) changes in these conditions that can be linked to a program’s activities. These tasks are especially difficult because natural causes, such as changes in weather patterns, and other factors outside a program’s control can affect environmental conditions. In some cases, data or indicators are not available for a specific aspect of the environment because of high costs or technical difficulties. Thus, it could be some time before EPA is able to develop and use a set of environmental indicators that accurately reflect the impact of its programs or their results. According to EPA officials, the agency’s and the states’ efforts to develop and use environmental measures have been valuable but disparate. Furthermore, at a conference convened by EPA in September 1996 to better coordinate these efforts, as well as in interviews conducted by EPA staff to prepare for the conference, regional and state representatives cited several concerns. They said, for example, that (1) clarification is needed on EPA’s and the states’ direction in developing goals and indicators, (2) the qualities of a good indicator are not well understood, and (3) determining whether the best indicators have been chosen will take many years. The representatives also believed that the data and resources needed to develop and use environmental indicators are inadequate. An additional challenge will be to reach agreement within EPA and among its stakeholders on the specific environmental indicators that will be used to measure performance. A consensus may be difficult to reach because of the potential for debate on what is important about individual programs and whether a relatively small number of measures can adequately reflect the effects of an agency’s or a program’s activities. EPA will need a set of measures common to all the states to report to the Congress and the public on the agency’s performance and the state of the nation’s environment. At the same time, the development of national measures, to the extent that such measures drive the implementation of environmental programs, will reduce the states’ flexibility to tailor the programs to meet local needs and conditions, a major concern of the states. Reporting on new measures will also increase the states’ costs unless other reporting requirements are eliminated or reduced. In May 1995, EPA signed an agreement with state leaders to implement a new system of federal oversight for state environmental programs. This new National Environmental Performance Partnership System fundamentally changes EPA’s working relationship with the states because it places greater emphasis on the use of environmental goals and indicators, calls for environmental performance agreements between EPA and individual states, and provides opportunities for reducing the agency’s oversight of state programs that exhibit high performance in certain areas. As of March 1997, about half of the states had signed performance partnership agreements to participate in the system. EPA’s Office of Regional Operations and State/Local Relations is developing a set of core performance measures, including some environmental indicators, that the agency’s regional offices are to use in negotiating annual work plans and agreements with the states. The core measures are to be focused and limited in number, representing measurable priorities for each of EPA’s national program managers. They are to serve as the minimum measures in performance agreements with the states, which may develop additional measures to represent their own environmental or programmatic issues. In addition, a particular core measure may not be required if a state can demonstrate that the measure does not apply or cannot be addressed. According to EPA, its national program managers will finalize their core measures in April 1997 and its regional staff will begin negotiations with the states to incorporate the measures into the agreements for fiscal year 1998. At this point, it is too soon to know how extensively EPA’s regional offices will be negotiating measures that reflect programs’ direct effects on human health and the environment. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

GAO discussed the Environmental Protection Agency's (EPA) efforts to improve its methods of establishing priorities, allocating resources, and measuring performance. GAO noted that: (1) in March 1996, the EPA Administrator announced plans to create a new Office of Planning, Analysis, and Accountability; (2) the office was established in January 1997; (3) in the interim, an EPA work group composed of employees on temporary assignment started to develop the new planning, budgeting, and accountability system; (4) however, the work group was not fully staffed, and the development of the new system is still in the early stages; (5) the new Office of Planning, Analysis, and Accountability will not be fully staffed before July 1997; (6) EPA faces long-term challenges to obtain the scientific and environmental data needed to fully support its new system; (7) although much environmental information has already been collected, many gaps exist and the data are often difficult to compile because divergent data collection methods have been used; (8) likewise, much effort is still required to identify, develop, and agree on a comprehensive set of environmental measures to link the agency's activities to changes in environmental conditions; and (9) without environmental measures, EPA has to rely solely on administrative measures, such as the number of permits issued or inspections made, to measure its performance or success.

The Congress has urged VA and DOD to work together to maximize the efficiency and effectiveness of federal health care resources they use for pharmacy and other services. In May 1982, the Congress passed the VA and DOD Health Resources Sharing and Emergency Operations Act (P.L. 97-174), which generally encouraged the two departments to enter into agreements to share health care services. Beginning in the mid-1990s, the Congress increasingly emphasized that the departments cooperate in the purchase and distribution of pharmaceuticals. A 1999 report by a congressional commission concluded that VA and DOD should combine their market power to get better pharmaceutical prices through joint contracts. More recently, the Veterans Millennium Health Care and Benefits Act (P.L. 106-117) required VA and DOD to submit a report on how joint pharmaceutical procurement can be enhanced and cost reductions realized. Finally, the Veterans Benefits and Health Care Improvement Act of 2000 (P.L. 106-419) included a provision encouraging VA and DOD to increase to the maximum extent consistent with their respective missions their level of cooperation in the procurement and management of prescription drugs. VA and DOD have been able to reduce spending on drugs by establishing formularies. VA and DOD can increase their savings by using one or more of the lower cost drugs from their formularies in drug classes that they have determined are therapeutically interchangeable—that is, essentially equivalent in terms of efficacy, safety, and outcomes. In these cases, VA and DOD place restrictions on providers’ choice of drug, by classifying a drug class as either closed or preferred. In the closed classes, VA providers must prescribe and pharmacies must dispense the selected drug, instead of therapeutic alternatives. Case-by-case exceptions for nonformulary prescriptions are allowed. VA has classified about 2 percent of the classes on VA’s national formulary as closed or preferred. VA obtains more favorable prices for some drugs in the closed classes by competitively awarding contracts that guarantee companies a high volume of use. In preferred classes, VA and DOD providers and pharmacies are encouraged to use the preferred drug but may prescribe or dispense other drugs in the same class without obtaining an exception. VA has been able to control costs by encouraging their providers to use drugs on their formulary without having adverse effects on health care quality, according to an Institute of Medicine (IOM) study. The IOM study noted that formularies are a key part of modern health care systems and that VA’s formulary was well managed and not overly restrictive. IOM recommended that VA continue to prudently establish closed and preferred classes of drugs on its formulary and to use more contracts to carefully limit drug choices in more classes, based on quality and cost considerations. VA and DOD have been successful in using a number of purchasing arrangements to obtain substantial discounts on prescription drugs (see table 1). For the bulk of their pharmaceutical purchases, VA and DOD obtain favorable prices through the Federal Supply Schedule (FSS). By statute, in order to be able to obtain reimbursement for drugs for Medicaid beneficiaries, manufacturers must offer their drugs on the FSS. The FSS schedule prices are intended to be no more than the prices manufacturers charge their most-favored nonfederal customers under comparable terms and conditions. In 1999, about 81 percent of VA and DOD’s combined $2.4 billion in drug expenditures was for drugs bought through the FSS for pharmaceuticals. VA and DOD also buy some brand name drugs for prices less than those listed under the FSS schedule. For example, by statute VA and DOD can buy brand name drugs at a price at least 24 percent lower than the nonfederal average manufacturer price (NFAMP), which may be lower than the FSS price for many drugs. In addition, VA and DOD have obtained some drugs at lower than FSS prices through national contracts with a single manufacturer based on a competitive-bid process. VA and DOD may solicit competitive bids for therapeutically equivalent drugs and may select one winner based on price alone for exclusive or preferred use on their formularies. These competitive processes for formulary drugs result in prices that average 33 percent lower than FSS prices. VA has used consolidated mail outpatient pharmacy (CMOP) centers to reduce dispensing costs. CMOPs reduce costs through economies of scale. Specifically, CMOP automated technologies have enabled each full- time CMOP employee to dispense between 50,000 and 100,000 prescriptions annually, compared to about 15,000 prescriptions dispensed by VA pharmacy employees. According to VA, such productivity rates are several times greater than traditional hospital and clinic systems. As a result of these automated technologies, VA estimated that its dispensing cost per prescription for CMOPs was approximately $2.00 in fiscal year 2000. VA and DOD are currently working on a pilot demonstration to test the feasibility of DOD using VA’s CMOPs to assume refill prescription workload from military pharmacies. In addition to reducing dispensing costs, additional benefits could result because VA’s CMOPs have reduced the pharmacy workload of VA hospital and clinic pharmacies. Between 1996 and 2000, the CMOPs have increased their prescription processing by 30 percent per year. Instead of patients receiving prescriptions from VA hospitals or clinics, the CMOPs process and mail out the prescriptions. Patients generally receive their medications by mail within 4 days of their orders going from the VA medical facility to a CMOP. As a result of this reduction in pharmacy volume at VA hospital and clinic pharmacies, VA can potentially operate with fewer pharmacists and other staff, free-up more of pharmacists’ time to counsel patients, and reduce waiting times for beneficiaries in VA hospital and clinic pharmacies. While VA and DOD have obtained prices that are better than the FSS through negotiating contracts, they have secured additional savings through joint procurement. In 2001, VA and DOD estimated substantial savings from current and planned joint procurements of pharmaceuticals—about $170 million per year. The departments can exert considerable leverage when they commit to buy increased volumes of particular generic or brand name drugs that are interchangeable in efficacy, safety, and outcomes. For example, from October 1998 through April 2000, VA and DOD awarded joint contracts for 18 products, which accounted for about $62 million in combined drug expenditures in fiscal year 2000. Although these drugs accounted for just 1.9 percent of the departments’ combined $3.2 billion drug spending in 2000, VA and DOD estimate these joint procurement discounts achieved sizeable cost avoidance—about $40 million in 2000. Most VA and DOD joint procurements have been for low-cost generic drugs. VA and DOD have experienced difficulties in joint contracting for brand name drugs because limiting beneficiary choice requires gaining clinical agreement on therapeutic equivalence of competing drugs. Due to the complexity of the care issues and the need to garner clinical acceptance and support, VA and DOD can take as long as a year between the date their respective class reviews establish therapeutic equivalence of competing brand name drugs and the date a contract is awarded. Generic drug contracts do not require drug class reviews—since competing products are already known to be chemically and therapeutically alike— and, therefore, take less effort and time—about 120 days. VA and DOD have demonstrated that in a few cases, with flexible arrangements, they can procure brand name drugs at maximum discounts while still allowing one or both departments to preserve drug choice. For example, DOD negotiated a blanket purchase agreement (BPA) to receive the same price as VA’s contract price for Zoladex—a 33-percent discount off of old prices for the leutinizing hormone–releasing hormone (LHRH) class of anticancer drugs. In return, DOD has agreed to the preferential use of Zoladex to treat a subset of DOD’s population—adult prostate cancer patients. However, the BPA does not limit providers’ choice in prescribing LHRH drugs for women and children. VA and DOD face continuing challenges to reduce future drug costs. One of the most important challenges is the joint procurement of brand name drugs. VA and DOD officials state that it is more difficult to restrict brand name drugs on their formularies than generic drugs. As discussed earlier, garnering clinical support and provider acceptance on certain brand name drugs is more difficult because of the scientific reviews needed to gain clinical agreement on therapeutic equivalence of competing drugs. As a result, most VA and DOD joint procurements have been for low-cost generic drugs. However, because brand name drugs make up a far higher share of expenditures than generic drugs, the financial benefit of more joint procurement of brand name drugs is much greater. For example, VA’s brand name drug purchases are 36 percent of volume but 91 percent of expenditures. The joint purchase of brand name drugs is further complicated due to the significant differences between the VA and DOD health care systems. These include differences in patient populations. VA serves mostly older men, while DOD also serves younger men as well as women and children. VA and DOD officials state that different populations result in dissimilar patterns of drug use and demand among their respective beneficiaries, resulting in fewer opportunities to combine drug requirements and solicit joint contracts. However, increasing numbers of military retirees and expanded DOD benefits are lessening differences between VA and DOD drug needs. In fiscal year 2000, close to 70 percent of military pharmacies’ drug costs was for retirees’ prescriptions. Another difference between the two systems that complicates joint procurement efforts is the scope of VA’s and DOD’s formularies. In 2001, VA’s national formulary listed about 1,100 drugs for inpatient and outpatient care representing 254 classes, while DOD’s basic core formulary listed 175 drugs for outpatient care in only 71 classes. VA’s national formulary was supplemented by 22 regional formularies of its health care networks. In addition, DOD’s hospitals, its national mail pharmacy, and its retail pharmacy networks maintain their own separate formularies. The different scope of the formularies complicates VA and DOD’s efforts to find overlap between the formularies. In an effort to address differences in DOD’s formularies, the Congress passed legislation in 1999 requiring DOD to establish a uniform drug formulary by October 2000, applicable to both military pharmacies and TRICARE retail and mail- order pharmacies. DOD issued a proposed rule to establish a uniform formulary in April 2002, but this rule has not been finalized. Finally, differences in prescribing patterns of providers further complicate joint procurement. DOD is concerned about its ability to control private- provider prescribing practices and persuade these providers to prescribe drugs contracted under joint procurements. Unlike VA beneficiary prescriptions, which are almost all written by VA providers and dispensed by VA pharmacies, DOD beneficiary prescriptions are written by both military and private providers and dispensed by both military and retail pharmacies. For example, about half of the 52 million prescriptions dispensed by military pharmacies in fiscal year 2000 were written by nonmilitary providers treating DOD beneficiaries. VA and DOD have faced continuing pressure on their health care budgets from rapidly rising pharmacy costs. As in the private sector, these costs have risen faster than overall health care spending for the two departments. VA and DOD have taken a number of actions separately and jointly to attempt to restrain pharmacy costs. These actions include the establishment of formularies, use of different contract arrangements to purchase drugs, use of mail-order pharmacies, and use of joint procurement. Nonetheless, VA and DOD face continuing challenges as pharmacy cost pressures continue unabated. One of these challenges is to increase joint purchasing of brand name drugs, which account for most pharmacy costs. To do this, the two departments need to address how differences in their respective patient populations, national formularies, and practice patterns among prescribers, some of whom are private physicians, can be managed to facilitate joint purchasing. Effectively doing so will be crucial for both VA and DOD to maintain control of their overall health care budgets. Mr. Chairman, this concludes my prepared remarks. I will be pleased to answer any questions you or other members of the Subcommittee may have. For further information please contact me at (202) 512-7101 or James Musselwhite at (202) 512-7259. Thomas Walke also contributed to this statement.

The Department of Veterans Affairs (VA) and the Department of Defense (DOD) pharmacy expenditures have risen significantly, reflecting national trends. The increase in pharmacy costs would have been even greater if not for the efforts taken by VA and DOD. GAO identified four important factors that have contributed to reduced pharmacy spending by VA and DOD. First, the two departments have used formularies to encourage the substitution of a lower-cost drug that is determined to be just as effective as a higher-cost drug. Second, VA and DOD have been able to effectively employ different arrangements to pay for or purchase prescription drugs at substantial discounts. Third, VA has significantly reduced the cost of dispensing prescription refills by using highly automated and less expensive consolidated mail outpatient pharmacy (CMOP) centers to handle a majority of the pharmacy workload instead of VA hospital and clinic pharmacies. Fourth, VA and DOD have reduced costs by leveraging their combined purchasing power by jointly buying prescription drugs. Nevertheless, one of the most important challenges is the joint procurement of brand name drugs. Although brand name drugs account for the bulk of prescription drug expenditures, most of VA/DOD joint contracts have been for generic drugs. Generic drugs are easier to contract for because these products are already known to be chemically and therapeutically alike. Contracting for brand name drugs is more difficult because of the scientific reviews needed to gain clinical agreement on therapeutic equivalence of competing drugs. Joint purchasing of brand name drugs is also more difficult due to the significant differences between the VA and DOD health care systems in patient populations; national formularies; and prescribing patterns of providers, some of whom are private physicians.

The initial response to a public health emergency—for instance an outbreak of an infectious disease—generally occurs at the local and state levels and could involve disease surveillance, laboratory testing, epidemiologic investigation, communication, and health care treatment. As a public health emergency develops, each plays a critical role in an effective response. Local and state health departments collect and monitor data, such as reports from clinicians, for disease trends and evidence of an outbreak. Laboratory personnel test clinical and environmental samples for possible exposures and identification of illnesses. Epidemiologists in the health departments use disease surveillance systems to detect clusters of suspicious symptoms or diseases in order to facilitate early detection of disease and treatment of victims. Public health officials provide needed information to the clinical community, other responders, and the public and implement control measures to prevent additional cases from occurring. Health care providers treat patients and limit the spread of infectious disease. All these response activities require a workforce that is sufficiently skilled and adequate in number. The federal government provides funding and resources to state and local entities to support preparedness and response efforts. For example, in fiscal year 2002 CDC’s Public Health Preparedness and Response for Bioterrorism cooperative agreement program provided approximately $918 million to states to improve bioterrorism preparedness and response as well as other public health emergency preparedness capacities. Similarly, HRSA’s Bioterrorism Hospital Preparedness cooperative agreement program provided approximately $125 million to states in fiscal year 2002 to enhance the capacity of hospitals and associated health care entities to respond to bioterrorist attacks. HHS renewed these cooperative agreements for the period of August 31, 2003 through August 30, 2004. For these renewed agreements, CDC’s program and HRSA’s program distributed about $870 million and about $498 million, respectively. Among the other resources that the federal government provides is the Strategic National Stockpile, which contains pharmaceuticals and medical supplies that can be delivered to the site of a public health emergency anywhere in the United States within 12 hours of the decision to deploy them. The federal government also supports preparedness efforts for an influenza pandemic. HHS’s National Vaccine Program Office is responsible for the development of federal plans for vaccine and immunization activities and coordinating these efforts among federal agencies. To foster state and local planning, HHS issued interim planning guidance for the states in 1997 that outlined general federal and state responsibilities during an influenza pandemic. HHS expects that if a pandemic occurs, both the vaccines that are used to prevent influenza and the antiviral drugs that are used to treat influenza will be in short supply. The guidance discussed certain key issues related to limited supplies of the influenza vaccine and antiviral drugs—for instance the amount of vaccine and antiviral drugs that will be purchased at the federal level; the division of responsibility between the public and private sectors for the purchase, distribution, and administration of these supplies during a pandemic; and priorities for vaccinating population groups, such as health workers and public health personnel involved in the pandemic response, and persons traditionally considered to be at increased risk of severe influenza illness and mortality. States reported that as of the summer of 2003 they have made improvements in their preparedness to respond to major public health threats, but no aspect of preparedness has been fully addressed by all of the states. Specifically, although states have strengthened their disease surveillance systems, laboratory capacity, communications, workforce, surge capacity, regional coordination across state borders, and readiness to utilize the Strategic National Stockpile, all of these important aspects of preparedness require additional work. Although some states have made improvements to their disease surveillance systems, the nation’s ability to detect and report a disease outbreak is not uniformly strong across all states. For example, about half of the states reported that their health departments are capable of receiving and evaluating urgent disease reports on a 24-hour-per-day, 7-day-per-week basis; however, few states reported having the ability to rapidly detect an outbreak of an influenza-like illness in the state. Similarly, few states reported efforts to strengthen links between their public health and animal surveillance systems and the veterinary community in order to monitor diseases in animals that may be spread to humans, such as the West Nile virus. States have increased their capacity to test and identify specimens and improve laboratory security, although laboratory capacity is not uniformly robust in all states. All states participate in CDC’s Laboratory Response Network, a network of local, state, federal, and international laboratories that are equipped to respond to biological and chemical terrorism, emerging infectious diseases and other public health threats. However, only about half of the states reported that they have at least one public health laboratory within the state that has the appropriate instrumentation and appropriately trained staff to conduct certain tests for rapidly detecting and correctly identifying biological agents. About half of the states reported that they had a facility with a biosafety level sufficient to handle such agents as anthrax. About half the states also reported that laboratory security within the state is consistent with HHS guidelines, which include recommendations for protecting laboratory personnel and preventing the unauthorized removal of dangerous biologic agents from the laboratory. Although improving, communication, both among those involved in responding to a major public health threat—such as public health officials, health care providers, and emergency management agencies—and with the public, remains a challenge. CDC’s Health Alert Network has been expanded—most of the states reported that the local health departments that cover at least 90 percent of their populations are involved in this network. However, many states reported that they were still in the process of assessing their communication needs. Although about half the states have a plan for educating the public about the risks posed by bioterrorism and other public health threats, few states have mechanisms in place for communicating with the general public during an incident about such issues as when it is necessary to go to the hospital. States have increased the number of personnel essential to public health preparedness, but concerns about workforce shortages remain. Most of the states reported that the bioterrorism preparedness funding from CDC allowed each to appoint an executive director of its bioterrorism preparedness and response program, to designate a response coordinator, and to hire at least one epidemiologist for each metropolitan area with a population greater than 500,000. However, most states continue to have staffing concerns. As we have reported previously, some state and local health officials have had difficulty finding and hiring epidemiologists and laboratory personnel. The ability to hire and retain personnel in these areas is still a concern for state and local health officials, who identify workforce shortages as a long-term challenge to their preparedness efforts. Most states lack surge capacity—that is, the capacity to respond to the large influx of patients that could occur during a public health emergency. For example, few states reported that they had the capacity to evaluate, diagnose, and treat 500 or more patients involved in a single incident. Furthermore, no state reported having protocols in place for augmenting personnel in response to large influxes of patients, and few states reported having plans for sharing clinical personnel among hospitals. In addition, few states reported having the capacity to rapidly establish clinics to immunize or provide treatment to large numbers of patients. Few states have regional plans in place that would coordinate the response among states during a public health emergency, and state officials remain concerned about a lack of regional planning across state borders. Few states have completed regional response plans for incidents of bioterrorism and other public health threats and emergencies. Most of the states that do have such plans have not established training programs to support their plans or mechanisms to test their plans. Most state plans for using the Strategic National Stockpile in the event of a public health emergency have not been fully developed. All states have prepared preliminary plans for the receipt and management of stockpile materials, but only about a third of the states have plans that outline how they would distribute antibiotics, chemical/nerve agent antidotes, and other materials to areas within the state. Federal officials have not finalized plans for responding to an influenza pandemic, and state influenza pandemic response plans are in various stages of completion. As we have reported previously, federal officials have drafted but not finalized the federal influenza pandemic plan. In 2000, we recommended that HHS complete the national plan for responding to an influenza pandemic, but HHS reported recently that the plan was still under review within HHS. However, HHS is taking other steps to prepare for an influenza pandemic. For example, CDC has increased the supply of ventilators and added an antiviral drug to the Strategic National Stockpile. HHS is also coordinating with other federal partners, such as the Department of Agriculture, to improve the nation’s ability to respond to public health emergencies involving the veterinary and agricultural sectors. Despite the absence of a finalized, federal response plan for an influenza pandemic, states are developing their own response plans. According to HHS officials, as of February 2004, 15 states have final or draft plans, and 34 states are actively working on plans. In these plans, states have had to make assumptions about what the federal role during an influenza pandemic will be. It is still unclear whether the private sector, the public sector, or both will have responsibility for purchasing and distributing vaccines and antiviral drugs. Some states have assumed that vaccine supply will be under the control of the federal government, while others have assumed that it will not. States have also made different assumptions about who will pay for vaccines, antiviral medications, and related supplies. States have taken many actions to improve their ability to respond to a major public health threat, but no state has reported being fully prepared. Federal plans for the purchase, distribution, and administration of vaccines and drugs in response to an influenza pandemic still have not been finalized, complicating the efforts of states to develop their state plans and heightening concern about our nation’s ability to respond effectively to an influenza pandemic. States are more prepared now, but much remains to be accomplished. Mr. Chairman, this completes my prepared statement. I would be happy to respond to any questions you or other Members of the Committee may have at this time. For further information about this testimony, please contact Janet Heinrich at (202) 512-7119. Angela Choy, Maria Hewitt, Krister Friday, Nkeruka Okonmah, and Michele Orza also made key contributions to this statement. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

The anthrax incidents in the fall of 2001 and the severe acute respiratory syndrome (SARS) outbreak in 2002-2003 have raised concerns about the nation's ability to respond to a major public health threat, whether naturally occurring or the result of bioterrorism. The anthrax incidents strained the public health system, including laboratory and workforce capacities, at the state and local levels. The SARS outbreak highlighted the challenges of responding to new and emerging infectious disease. The current influenza season has heightened concerns about the nation's ability to handle a pandemic. GAO was asked to examine improvements in state and local preparedness for responding to major public health threats and federal and state efforts to prepare for an influenza pandemic. This testimony is based on GAO's recent report, HHS Bioterrorism Preparedness Programs: States Reported Progress but Fell Short of Program Goals for 2002, GAO-04- 360R (Feb. 10, 2004). This testimony also updates information contained in GAO's report on federal and state planning for an influenza pandemic, Influenza Pandemic: Plan Needed for Federal and State Response, GAO- 01-4 (Oct. 27, 2000). Although states have further developed many important aspects of public health preparedness, since April 2003, no state is fully prepared to respond to a major public health threat. States have improved their disease surveillance systems, laboratory capacity, communication capacity, and workforce needed to respond to public health threats, but gaps in each remain. Moreover, regional planning between states is lacking, and many states lack surge capacity--the capacity to evaluate, diagnose, and treat the large numbers of patients that would present during a public health emergency. Although states are developing plans for receiving and distributing medical supplies and material for mass vaccinations from the Strategic National Stockpile in the event of a public health emergency, most of these plans are not yet finalized. HHS has not published the federal influenza pandemic plan, and most of the state plans have not been finalized. In 2000, GAO recommended that HHS complete the national plan for responding to an influenza pandemic, but according to HHS, the plan is still under review. Absent a federal plan, key questions about the federal role in the purchase, distribution, and administration of vaccines and antiviral drugs during a pandemic remain unanswered. HHS reports that most states continue to develop their state plans despite the lack of a federal plan.

ATP’s mission is to stimulate economic growth in the United States through technology development. The program seeks to accomplish that mission by sharing the cost of R&D projects with private industry. The projects selected by ATP for funding are characterized by the program as having “a potential broad-based economic impact but a relatively high technical risk and a long time horizon.” ATP’s program guidance has stated that if the technical risk associated with a project is very low, federal funding should not be necessary. In addition, when submitting a research proposal, applicants must sign a form stating that “this proposal is not requesting funding for existing or planned research programs that would be conducted in the same time period in the absence of financial assistance under the ATP.” This wording suggests that ATP should not fund projects that other sources would have funded or, when ATP does fund such projects, that ATP funds should enable applicants to complete their projects in a shorter time. Manufacturing extension programs offer manufacturers assistance in modernizing or upgrading their operations, often with state and federal funding. NIST manages federal funding of this type of program through its Manufacturing Extension Partnership Program, or MEP. In our prior reports, we used MEP to collectively refer to all state, federal, and university manufacturing extension programs. The primary mission of manufacturing extension programs is to give “hands-on” technical assistance to small- and medium-sized manufacturers trying to improve their operations through the use of appropriate technologies. These programs engage in a variety of activities to assist small- and medium-sized manufacturers, often in partnership with other business assistance providers, such as Small Business Development Centers, community colleges, and federal laboratories. The programs offer a wide range of business services, including helping companies (1) solve individual manufacturing problems, (2) obtain training for their workers, (3) create marketing plans, and (4) upgrade their equipment and computers. The assistance focuses on small- and medium-sized manufacturers because research by the National Research Council and others has indicated that these companies lack the resources necessary to improve their manufacturing performance. In our work on ATP, our objective was to examine, as one way to assess the program’s impact, whether research projects would have been funded by the private sector if they had not received funds from ATP. We also examined ATP’s impact in terms of other goals of the program, such as aiding the formation of joint ventures. We focused on two groups of ATP applicants, which we called “winners” and “near winners.” Both groups submitted proposals that were rated highest during ATP’s review, but the near winners did not ultimately receive ATP funding. We surveyed all applicants that qualified as winners or near winners during ATP’s first 4 years (1990-93). We achieved a 100-percent response rate from the 123 respondents that we included in our analysis (89 winners and 34 near winners). We found that ATP had funded research projects that would have been funded by the private sector as well as those that would not. The winners were nearly evenly divided when asked if they would have pursued their projects even if they had not received ATP funding. Half of the near winners continued their projects without relying on ATP funding, while the other half discontinued their projects for various reasons. Almost all the near winners that continued their projects did so on a modified schedule, meeting the projects’ milestones later than they had scheduled in their proposals to ATP. Of the 123 applicants we surveyed, 77, or 63 percent, did not look for funding from other sources before requesting it from ATP. Those applicants that did look for funding looked for a long time and made many attempts to find funding, on average. Seven applicants turned down offers from private sources because they could not reach an acceptable funding arrangement. We also found that ATP had other effects. More than three-fourths of the joint-venture applicants indicated that they had come together solely to pursue an ATP project, thus satisfying ATP’s goal of serving as a catalyst for the formation of joint ventures. Furthermore, of the 45 applicants that tried to find funding elsewhere before turning to ATP, about half were told by prospective funders that their projects were either too risky or precompetitive—characteristics that fulfill the aims of ATP funding. We surveyed 766 U.S. manufacturers that had completed at least 40 hours of manufacturing extension program assistance, including NIST’s MEP, and received 551 responses. We obtained respondents’ views on the impact of these services on their business performance and on the factors affecting the impact of these services. We did not verify either the positive or negative impacts reported by manufacturers, nor did we evaluate the operations or management of specific federal or state programs. We also obtained the views of other manufacturers that had little or no experience with these programs to determine why they made little or no use of them. Most manufacturers responding to our questionnaire—about 73 percent—reported that they believed the programs’ assistance had positively affected their overall business performance. About 15 percent of the respondents reported that they believed the assistance had not affected their overall business performance. Approximately 8 percent said that it was too early to determine the effect, and another 4 percent said they had had no basis to estimate the effect. In addition, most respondents reported that the assistance had positively affected their use of technology in the workplace (about 63 percent), the quality of their product (about 61 percent), and the productivity of their workers (about 56 percent). Between about 44 percent and 63 percent of the respondents reported that the programs’ assistance had positively affected certain specific indicators of their business performance, such as customer satisfaction, profits, and the ability to meet production schedules. Of those respondents not reporting a positive impact on specific indicators of their business performance, most said the programs’ assistance had not had any impact. Two percent or fewer of the respondents reported a negative impact on each specific performance indicator. Among the factors that manufacturers said had affected the impact of MEP services was their own companies’ input. The companies that had committed their own financial resources to implement the programs’ recommendations reported greater benefits from the assistance relative to other survey respondents. Of those 322 respondents who had made a financial investment, 86 percent said that the programs’ assistance had positively affected their business performance. However, 54 percent of those who had not made a financial investment also reported an overall positive impact. Other factors, according to the respondents, that influenced the effectiveness of the programs’ services were the expertise and experience of the programs’ staff and the affordability of the assistance. In our related telephone survey of 200 additional manufacturers who were not extensive users of the programs’ services, about 82 percent reported that they had not used the services because they were unaware of these programs. About 10 percent said that although they knew about these programs, they had not used them because they believed the assistance would not be necessary. The companies we interviewed said that other sources of modernization assistance besides these programs were their customers, vendors and/or suppliers, industry associations, and consultants. The report we are releasing today on performance measurement shows that there is no single indicator or evaluation method that adequately captures the results of R&D. However, indicators do provide helpful information for making decisions about R&D. Whether the focus is on basic research, applied research, or development, the amount of money spent in that area is taken as an indication of how much research is being performed. The major advantages of using expenditure data as an indicator are that they are easily understandable, readily available, and have been, in general, consistently gathered over time. In addition, spending on different projects in different research areas can be measured according to the same unit, dollars, making comparisons between projects straightforward. The amount of funding, however, does not provide a good indication of research results. Companies told us that they are switching their spending to more short-term R&D projects rather than long-term projects. However, the impacts of that change are unclear. The reduced funding levels for long-term projects may not reflect the fact that the R&D efforts can be performed with greater efficiency. For example, one way in which the federal government and the private sector have tried to use R&D resources more efficiently and effectively is through consortia with universities or other companies. By combining their research activities, companies attempt to avoid expensive duplication and learn from each other. We also found that because of the difficulties in identifying the impacts of research, quantitative and qualitative indicators have been developed as proxies to assess R&D results. The strengths and limitations are evident in both types of indicators. Quantitative indicators focus mainly on return on investment, patenting rates, and bibliometrics—the study of publication-based data. While implying a degree of precision, these indicators were not originally intended to measure long-term R&D results. Qualitative assessment such as peer review provides detailed information, but it relies on the judgments of experts and may be expensive. Because of these difficulties, the companies we interviewed stressed marketplace results rather than R&D output indicators. While varying in the types of indicators they collect, they emphasized the difficulties in measuring R&D’s specific contribution to a company’s overall performance. For example, one company stated that because so many people have been involved in a product’s evolution, it is difficult to separate the contribution of the research unit from that of other units. All of the companies interviewed have increased their expectation that R&D contribute directly to their profitability. However, instead of increasing their efforts at measuring R&D results, they have shifted the responsibility for making R&D decisions to the business units. For example, if the business units believe that a particular R&D project would increase their profits, the firm would budget for that R&D. Many of the R&D output measures tracked by the private sector do not apply directly to the federal government. In particular, while facing the same increasing cost pressures as the private sector, the federal government cannot rely on the profit motive to guide its decisions. This discussion of performance measures for R&D is particularly relevant because of the current emphasis on the Government Performance and Results Act (GPRA). In response to questions about the value and effectiveness of federal programs, GPRA seeks to shift federal agencies’ focus away from such traditional concerns as staffing, activity levels, and tasks completed toward a focus on program outcomes. GPRA incorporates performance measurement as one of its most important features. Under this act, executive branch agencies are required to develop annual performance plans that use performance measurement to reinforce the connection between the long-term strategic goals outlined in their strategic plans and the day-to-day activities of their managers and staff. However, the very nature of the innovative process makes measuring the performance of science-related projects difficult. For example, a wide range of factors determines if and when a particular R&D project will result in commercial or other benefits. It can also take many years for a research project to achieve results. Experiences from recent GPRA pilot efforts reinforce the fact that output measures are highly specific to the management and mission of each federal agency and that no single indicator exists to measure the results of research. The Army Research Laboratory, which was designated as a pilot project for performance measurement under the act, has developed a multifaceted approach using quantitative indicators, peer review, and customer feedback to evaluate the results of R&D. Although this is not the only approach that can be taken, this response to the challenges in measuring the impacts of research shows that some progress is being made in response to GPRA. Madame Chair, this concludes my prepared remarks. I would be happy to respond to any questions you may have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. 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GAO discussed its work related to the National Institute of Standards and Technology's Advanced Technology Program (ATP), Manufacturing Extension Partnership (MEP) Program, and research and development (R&D) performance measures. GAO noted: (1) ATP has funded research projects that would have been funded by the private sector as well as those that would not; (2) the award recipients were nearly evenly divided when asked if they would have pursued their projects if they had not received such funding; (3) GAO also found that in most cases, the participants in its survey did not look for funding from other sources, private or public, before trying to obtain funding from ATP; (4) about half of the 45 applicants that tried to find funding elsewhere before turning to ATP were told by prospective funders that their projects were either too risky or "precompetitive", characteristics that fulfill the aims of ATP; (5) manufacturers viewed the manufacturing extension programs' services positively, as was demonstrated in GAO's national survey of manufacturers who had received substantive services from the programs in 1993; (6) most manufacturers responding to GAO's questionnaire, about 73 percent, reported that they believed that the type of assistance they had received from these programs had positively affected their overall business performance; (7) about 15 percent of the respondents reported that they believed the programs' assistance had not affected their overall business performance; (8) the amount of money spent on R&D, the primary indicator of research investment, is useful as an input measure of how much research is being performed; (9) however, the level of spending is not a reliable indicator of research results; (10) GAO found that there is no primary indicator of R&D results; (11) the companies that GAO spoke with collect data on various output indicators, such as return on investment and patents granted, but in general make limited use of them in their investment decisions; (12) instead, they emphasized that R&D contributes directly to the bottom line; (13) because companies are profit oriented, many of the indicators tracked by the private sector cannot be directly applied to the federal government; (14) determining the specific outcomes resulting from federal R&D is a challenge that will not be easily resolved; and (15) however, in response to recent legislation requiring agencies to report on program results, some progress is being made in measuring the impacts of research.

Our March 2011 and February 2012 reports identified 6 areas across DHS where overlap or potential unnecessary duplication exists, and 17 specific actions that the department or Congress could take to address these areas. In our March 2011 report we suggested that DHS or Congress take 11 actions to address the areas of overlap or potential unnecessary duplication that we found. Of these 11 actions, 1 has been fully addressed, 4 have been partially addressed, and the remaining 6 have not been addressed. In many cases, the existence of overlap, potential unnecessary duplication, or fragmentation can be difficult to determine with precision due to a lack of data on programs and activities. Where information has not been available that would provide conclusive evidence of overlap, duplication, or fragmentation, we often refer to “potential unnecessary duplication.” In some cases, there is sufficient information available to show that if actions are taken to address individual issues, significant financial benefits may be realized. In other cases, precise estimates of the extent of potential unnecessary duplication, and the cost savings that can be achieved by eliminating any such unnecessary duplication, are difficult to specify in advance of congressional and executive-branch decision making. However, given the range of areas we identified at DHS and the magnitude of many of the programs, the cost savings associated with addressing these issues could be significant. Tables 1 and 2 summarize the areas of overlap and potential unnecessary duplication that we identified at DHS, the actions we identified for DHS and Congress to consider to address those areas, and the status of those actions. Our 2011 and 2012 annual reports also identified 9 areas describing other opportunities for DHS or Congress to consider taking action that could either reduce the cost of government operations or enhance revenue collection for the Treasury. We identified 23 specific actions that the department or Congress could take to address these areas. In our March 2011 report, we suggested that DHS or Congress take 11 actions to either reduce the cost of government operations or enhance revenue collection. Of these 11 actions, 1 has been fully addressed and 10 have been partially addressed. In some cases, there is sufficient information to estimate potential savings or other benefits if actions are taken to address individual issues. In other cases, estimates of cost savings or other benefits would depend upon what congressional and executive branch decisions were made, including how certain GAO recommendations are implemented. Additionally, information on program performance, the level of funding in agency budgets devoted to overlapping or fragmented programs, and the implementation costs that might be associated with program consolidations or terminations, are factors that could impact actions to be taken as well as potential savings. Tables 3 and 4 summarize the cost-savings and revenue enhancing areas that we reported on in March 2011 and February 2012. Our work at DHS has identified three key themes—leading and coordinating the homeland security enterprise, implementing and integrating management functions for results, and strategically managing risks and assessing homeland security efforts—that have impacted the department’s progress since it began operations. As these themes have contributed to challenges in the department’s management and operations, addressing them can result in increased efficiencies and effectiveness. For example, DHS can help reduce cost overruns and performance shortfalls by strengthening the management of its acquisitions, and reduce inefficiencies and costs for homeland security by improving its R&D management. These themes provide insights that can inform DHS’s efforts, moving forward, as it works to implement its missions within a dynamic and evolving homeland security environment. DHS made progress and has had successes in all of these areas, but our work found that these themes have been at the foundation of DHS’s implementation challenges, and need to be addressed from a department wide perspective to effectively and efficiently position DHS for the future and enable it to satisfy the expectations set forth by the Congress, the administration, and the country. Leading and coordinating the homeland security enterprise. While DHS is one of a number of entities with a role in securing the homeland, it has significant leadership and coordination responsibilities for managing efforts across the homeland security enterprise. To satisfy these responsibilities, it is critically important that DHS develop, maintain, and leverage effective partnerships with its stakeholders, while at the same time addressing DHS-specific responsibilities in satisfying its missions. Before DHS began operations, we reported that the quality and continuity of the new department’s leadership would be critical to building and sustaining the long-term effectiveness of DHS and achieving homeland security goals and objectives. We further reported that to secure the nation, DHS must form effective and sustained partnerships between components and also with a range of other entities, including federal agencies, state and local governments, the private and nonprofit sectors, and international partners. DHS has made important strides in providing leadership and coordinating efforts. For example, it has improved coordination and clarified roles with state and local governments for emergency management. DHS also strengthened its partnerships and collaboration with foreign governments to coordinate and standardize security practices for aviation security. However, DHS needs to take additional action to forge effective partnerships and strengthen the sharing and utilization of information, which has affected its ability to effectively satisfy its missions. For example, in July 2010, we reported that the expectations of private-sector stakeholders have not been met by DHS and its federal partners in areas related to sharing information about cyber-based threats to critical infrastructure. In 2005, we designated information-sharing for homeland security as high risk because the federal government faced serious challenges in analyzing information and sharing it among partners in a timely, accurate, and useful way.failure to link information about the individual who attempted to conduct the December 25, 2009, airline bombing, prevented the individual from being included on the federal government’s consolidated terrorist watchlist, a tool used by DHS to screen for persons who pose risks to the country. The federal government and DHS have made progress, but more work remains for DHS to streamline its information sharing mechanisms and better meet partners’ needs. Moving forward, it will be important that DHS continue to enhance its focus and efforts to strengthen and leverage the broader homeland security enterprise, and build off the important progress that it has made thus far. In addressing ever-changing and complex threats, and with the vast array of partners with whom DHS must coordinate, continued leadership and stewardship will be critical in achieving this end. GAO, High-Risk Series: An Update, GAO-11-278, (Washington, D.C.: Feb. 2011). acquisition and information technology management policies and controls, to provide enhanced guidance on investment decision making. DHS also reduced its financial management material weaknesses and developed strategies to strengthen human capital management. For example, in fiscal year 2011, DHS moved from a Disclaimer of Opinion to a Qualified Audit Opinion on its Balance Sheet and Statement of Custodial Activity for the first time since 2003. However, DHS has not been able to obtain an unqualified audit opinion on its consolidated financial statements (i.e., prepare a set of financial statements that are considered fairly presented) though its current goal is to receive an unqualified, or clean opinion, on the departmentwide consolidated financial statement for fiscal year 2013. DHS needs to continue to demonstrate sustainable progress in addressing its challenges, as these issues have contributed to schedule delays, cost increases, and performance problems in major programs aimed at delivering important mission capabilities. For example, we reported on numerous cost, schedule, and performance risks, and concluded that DHS had not economically justified its investment in the Secure Border Initiative Network, DHS’s border security technology program. More specifically, DHS did not adequately define requirements, perform testing, or oversee contractors, delaying security enhancements on the southwest border. After initiating a departmentwide assessment of the program, the Secretary of Homeland Security froze program funding and, at the completion of the assessment in January 2011, the Secretary decided to end the Secure Border Initiative Network as originally conceived after investing nearly $1 billion in the program. DHS also has not yet fully implemented its roles and responsibilities for developing and implementing key homeland security programs and initiatives. For example, FEMA has not yet developed a set of target capabilities for disaster preparedness or established metrics for assessing those capabilities to provide a framework for evaluating preparedness, as required by the Post-Katrina Emergency Management Reform Act of 2006. Moreover, DHS does not yet have enough personnel with required skills to carry out activities in various areas, such as acquisition management; and is in the process of modernizing its financial management system, impacting its ability to have ready access to reliable information for informed decision making. Moving forward, addressing these management challenges will be critical for DHS’s success, as will be the integration of these functions across the department to achieve efficiencies and effectiveness. GAO, Aviation Security: DHS and TSA Have Researched, Developed, and Begun Deploying Passenger Checkpoint Screening Technologies, but Continue to Face Challenges, GAO-10-128 (Washington, D.C.: Oct. 7, 2009). using nuclear and radiological materials through coordinated activities. However, the strategic plan for the architecture did not include some key components, such as funding needed to achieve the strategic plan’s objectives, or monitoring mechanisms for determining programmatic progress and identifying needed improvements. Further, DHS has made important progress in analyzing risk across sectors, but it has more work to do in using this information to inform planning and resource-allocation decisions. Risk management has been widely supported by Congress and DHS as a management approach for homeland security, enhancing the department’s ability to make informed decisions and prioritize resource investments. Since DHS does not have unlimited resources and cannot protect the nation from every conceivable threat, it must make risk-informed decisions regarding its homeland security approaches and strategies. Moreover, we have reported on the need for enhanced performance assessment, that is, evaluating existing programs and operations to determine whether they are operating as intended or are in need of change, across DHS’s missions.programs is critical for helping the department, Congress, and other stakeholders more systematically assess strengths and weaknesses and inform decision making. In recent years, DHS has placed an increased emphasis on strengthening its mechanisms for assessing the performance and effectiveness of its homeland security programs. For example, DHS established new performance measures, and modified existing ones, to better assess many of its programs and efforts. However, our work has found that DHS continues to miss opportunities to optimize performance across its missions due to a lack of reliable performance information or assessment of existing information; evaluation among possible alternatives; and, as appropriate, adjustment of programs or operations that are not meeting mission needs. For example, we reported that CBP had invested $2.4 billion in tactical infrastructure (fencing, roads, and lighting) along the southwest border, but could not measure the impact of this investment in tactical Information on the performance of infrastructure on border security. As the department further matures and seeks to optimize its operations, DHS will need to look beyond immediate requirements; assess programs’ sustainability across the long term, particularly in light of constrained budgets; and evaluate trade-offs within and among programs across the homeland security enterprise. Doing so should better equip DHS to adapt and respond to new threats in a sustainable manner as it works to address existing ones. Given DHS’s significant leadership responsibilities in securing the homeland, it is critical that the department’s programs and activities are operating as efficiently and effectively as possible, are sustainable, and that they continue to mature, evolve, and adapt to address pressing security needs. Since it began operations in 2003, DHS has implemented key homeland security operations and achieved important goals and milestones in many areas. These accomplishments are especially noteworthy given that the department has had to work to transform itself into a fully functioning cabinet department while implementing its missions—a difficult undertaking for any organization and one that can take years to achieve even under less-daunting circumstances. However, our work has shown that DHS can take actions to reduce overlap and potential unnecessary duplication to improve the efficiency of its operations and achieve cost-savings in several areas. Further, while DHS has made progress, additional actions are needed to strengthen partnerships with stakeholders, improve its management processes and share information, and enhance its risk management and performance- measurement efforts to enhance effectiveness and achieve efficiencies throughout the department. Chairman McCaul, Ranking Member Keating, and Members of the Subcommittee, this concludes my prepared testimony. I would be pleased to respond to any questions that members of the Subcommittee may have. For further information regarding this testimony, please contact Cathleen A. Berrick at (202) 512-3404 or berrickc@gao.gov. In addition, contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals who made key contributions to this testimony are Chris Currie, Emily Gunn, and Taylor Matheson. Key contributors for the previous work that this testimony is based on are listed within each individual product. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

The terrorist attacks of September 11, 2001, led to profound changes in government agendas, policies, and structures to confront homeland security threats facing the nation. Most notably, DHS began operations in 2003 with missions that included preventing terrorist attacks in the United States, reducing the nation’s vulnerability to terrorism, and minimizing damages from attacks. DHS is now the third-largest federal department, with more than 200,000 employees, and has an annual budget of almost $60 billion. Since 2003, GAO has issued over 1,200 products on DHS’s operations in such areas as transportation security and emergency management, among others. Moreover, GAO has reported that overlap and fragmentation among government programs, including DHS, can cause potential unnecessary duplication, and reducing it could save billions of tax dollars annually and help agencies provide more efficient and effective services. As requested, this testimony addresses (1) opportunities for DHS to reduce potential unnecessary duplication in its programs, save tax dollars, and enhance revenue, and (2) crosscutting and management issues that have affected DHS’s implementation efforts. This testimony is based on GAO reports issued from March 2011 through February 2012. In March 2011 and February 2012, GAO reported on 6 areas where the Department of Homeland Security (DHS) or Congress could take action to reduce overlap and potential unnecessary duplication, and 9 areas to achieve cost-savings. Of the 22 actions GAO suggested be taken in March 2011 to address such issues, 2 were fully implemented, 14 were partially implemented, and 6 have not been addressed. GAO’s February 2012 report identified 18 additional actions to address overlap, potential duplication, and costs savings. In September 2011, GAO reported on three key themes that should be addressed to enhance the effectiveness and efficiency of DHS’s operations. Leading and coordinating the homeland security enterprise. DHS has made important strides in providing leadership and coordinating efforts among its stakeholders. However, DHS needs to take additional action to forge effective partnerships and strengthen the sharing and utilization of information, which has affected its ability to effectively satisfy its missions, such as sharing information with private sector stakeholders on cyber-based threats to critical infrastructure. Implementing and integrating management functions for results. DHS has enhanced its management functions, and has plans to further strengthen the management of the department. However, DHS has not always effectively executed or integrated these functions, which has contributed to schedule delays, cost increases, and performance issues in a number of programs aimed at delivering important mission capabilities, such as border security technologies. Strategically managing risks and assessing homeland security efforts. While progress has been made, limited strategic and program planning and limited assessment to inform approaches and investment decisions have contributed to DHS programs not meeting strategic needs in an efficient manner, such as the lack of risk based plans for deploying aviation security technologies. While this testimony contains no new recommendations, GAO previously made about 1,600 recommendations to DHS. The department has addressed about half of them, has efforts to address others, and has taken action to strengthen its operations.

Cloud computing is a new form of delivering IT services that takes advantage of several broad evolutionary trends in information technology, including the use of virtualization. According to NIST, cloud computing is a means “for enabling convenient, on-demand network access to a shared pool of configurable computing resources that can be rapidly provisioned and released with minimal management effort or service provider interaction.” NIST also states that an application should possess five essential characteristics to be considered cloud computing; on-demand self service, broad network access, resource pooling, rapid elasticity, and measured service. Cloud computing offers three service models: infrastructure as a service, where a vendor offers various infrastructure components; platform as a service, where a vendor offers a ready-to-use platform on which customers can build applications; and software as a service, which provides a self- contained operating environment used to deliver a complete application such as Web-based e-mail. In addition, four deployment models for providing cloud services have been developed: private, community, public, and hybrid cloud. In a private cloud, the service is set up specifically for one organization, although there may be multiple customers within that organization and the cloud may exist on or off the premises. In a community cloud, the service is set up for related organizations that have similar requirements. A public cloud is available to any paying customer and is owned and operated by the service provider. A hybrid cloud is a composite of the deployment models. The adoption of cloud computing has the potential to provide benefits related to information security. The use of virtualization and automation in cloud computing can expedite the implementation of secure configurations for virtual machine images. Other advantages relate to cloud computing’s broad network access and use of Internet-based technologies. For example, several agencies stated that cloud computing provides a reduced need to carry data in removable media because of the ability to access the data through the Internet, regardless of location. Additional advantages relate to the potential economies of scale and distributed nature of cloud computing. In response to our survey, 22 of the 24 major agencies identified low-cost disaster recovery and data storage as a potential benefit. The self-service aspect of cloud computing may also provide benefits. For example, 20 of 24 major agencies identified the ability to apply security controls on demand as a potential benefit. In addition to benefits, the use of cloud computing can create numerous information security risks for federal agencies. In response to our survey, 22 of 24 major agencies reported that they are either concerned or very concerned about the potential information security risks associated with cloud computing. Several of these risks relate to being dependent on a vendor’s security assurances and practices. Specifically, several agencies stated concerns about: the possibility that ineffective or non-compliant service provider security controls could lead to vulnerabilities affecting the confidentiality, integrity, and availability of agency information; the potential loss of governance and physical control over agency data and information when an agency cedes control to the provider for the performance of certain security controls and practices; the insecure or ineffective deletion of agency data by cloud providers once services have been provided and are complete; and potentially inadequate background security investigations for service provider employees that could lead to an increased risk of wrongful activities by malicious insiders. Multitenancy, or the sharing of computing resources by different organizations, can also increase risk. Twenty-three of 24 major agencies identified multitenancy as a potential information security risk because one customer could intentionally or unintentionally gain access to another customer’s data, causing a release of sensitive information. Another concern is the increased volume of data transmitted across agency and public networks. This could lead to an increased risk of the data being intercepted in transit and then disclosed. Although there are numerous potential information security risks related to cloud computing, these risks may vary based on the particular deployment model. For example, NIST states that private clouds may have a lower threat exposure than community clouds, which may have a lower threat exposure than public clouds. Several industry representatives stated that an agency would need to examine the specific security controls of the vendor the agency was evaluating when considering the use of cloud computing. Federal agencies have begun to address information security for cloud computing; however, they have not developed the corresponding guidance. About half of the 24 major agencies we asked reported using some form of public or private cloud computing for obtaining infrastructure, platform, or software services. These agencies identified measures they are taking or plan to take when using cloud computing. These actions, however, have not always been accompanied by development of related policies or procedures to secure their information and systems. Most agencies have concerns about ensuring vendor compliance and implementation of government information security requirements. In addition, agencies expressed concerns about limitations on their ability to conduct independent audits and assessments of security controls of cloud computing service providers. Several industry representatives agreed that compliance and oversight issues are a concern and raised the idea of having a single government entity or other independent entity conduct security oversight and audits of cloud computing service providers on behalf of federal agencies. Agencies also stated that having a cloud service provider that had been precertified as being in compliance with government information security requirements through some type of governmentwide approval process would make it easier for them to consider adopting cloud computing. Other agency concerns related to the division of information security responsibilities between customer and vendor. Until these concerns are addressed, the adoption of cloud computing may be limited. While several governmentwide cloud computing security activities are under way by organizations such as the Office of Management and Budget (OMB) and the General Services Administration (GSA), significant work remains to be completed. For example, OMB stated that it began a federal cloud computing initiative in February 2009; however, it does not yet have an overarching strategy or an implementation plan. According to OMB officials, the initiative includes an online cloud computing storefront managed by GSA and will likely contain several pilot cloud computing projects, each with a lead agency. However, as of March 2010, a date had not been set for the release of the strategy or for any of the pilots. In addition, OMB has not yet defined how information security issues, such as a shared assessment and authorization process, will be addressed in this strategy. Federal agencies have stated that additional guidance on cloud computing security would be helpful. Addressing information security issues as part of this strategy would provide additional direction to agencies looking to use cloud computing services. Accordingly, we recommended that OMB establish milestones for completing a strategy for implementing the cloud computing initiative and ensure the strategy addresses the information security challenges associated with cloud computing, such as needed agency-specific guidance, controls assessment of cloud computing service providers, division of information security responsibilities between customer and provider, a shared assessment and authorization process, and the possibility for precertification of cloud computing service providers. OMB agreed with our recommendation and noted that it planned to issue a strategy over the next 6 months that covers activities for the next 5 to 10 years based on near term lessons learned. OMB also identified several federal activities planned in the short term to address security issues in cloud computing. GSA has established the Cloud Computing Program Management Office that manages several cloud computing activities within GSA and provides administrative support for cloud computing efforts by the Federal Chief Information Officers (CIO) Council. Specifically, the program office manages a storefront, www.apps.gov, established by GSA to provide a central location where federal customers can purchase software as a service cloud computing applications. GSA has also initiated a procurement to expand the storefront by adding infrastructure as a service cloud computing offerings such as storage, virtual machines, and Web hosting. Establishing both an assessment and authorization process for customers of these services and a clear division of security responsibilities will help ensure that these services, when purchased and effectively implemented, protect sensitive federal information. GSA officials stated that they need to work with vendors after a new procurement has been completed to develop a shared assessment and authorization process, but have not yet developed specific plans to do so. Accordingly, we recommended that GSA ensure that full consideration is given to the information security challenges of cloud computing, including a need for a shared assessment and authorization process as part of their procurement for infrastructure as a service cloud computing technologies. GSA agreed and identified plans for ensuring issues such as a shared assessment and authorization process would be addressed. The Federal CIO Council established the Cloud Computing Executive Steering Committee to promote the use of cloud computing in the federal government. Under this committee, the security subgroup has developed the Federal Risk and Authorization Management Program, which is a governmentwide program to provide joint authorizations and continuous security monitoring services for all federal agencies, with an initial focus on cloud computing. The subgroup is currently working with its members to define interagency security requirements for cloud systems and services and related information security controls. However, a deadline for completing development and implementation of a shared assessment and authorization process has not been established. We recommended that OMB direct the CIO Council Cloud Computing Executive Steering Committee to develop a plan, including milestones, for completing a governmentwide security assessment and authorization process for cloud services. OMB agreed and identified current activities of the CIO Council which are intended to address the recommendation. NIST is responsible for establishing information security guidance for federal agencies to support FISMA; however, it has not yet established guidance specific to cloud computing or to information security issues specific to cloud computing, such as portability and interoperability, and virtualization. The NIST official leading the institute’s cloud computing activities stated that existing NIST guidance in SP 800-53 and other publications applies to cloud computing and can be tailored to the information security issues specific to cloud computing. However, both federal and private sector officials have made clear that existing guidance is not sufficient. Accordingly, we recommended that NIST issue cloud computing guidance to federal agencies to more fully address key cloud computing domain areas that are lacking in SP 800-53 areas such as virtualization, and portability and interoperability, and include a process for defining roles and responsibilities of cloud computing service providers and customers. NIST officials agreed and stated that the institute is planning to issue guidance on cloud computing and virtualization this year. In summary, the adoption of cloud computing has the potential to provide benefits to federal agencies; however, it can also create numerous information security risks. Federal agencies have taken steps to address cloud computing security, but many have not developed corresponding guidance. OMB has initiated a federal cloud computing initiative, but has not yet developed a strategy that addresses the information security issues related to cloud computing, and guidance from NIST to ensure information security is insufficient. While the Federal CIO Council is developing a shared assessment and authorization process, which could help foster adoption of cloud computing, this process remains incomplete, and GSA has yet to develop plans for a shared assessment and authorization process for its procurement of cloud computing infrastructure as a service offerings. Until federal guidance and processes that specifically address information security for cloud computing are developed, agencies may be hesitant to implement cloud computing, and those programs that have been implemented may not have effective information security controls in place. Chairman Towns, Chairwoman Watson, and Members of the Committee and Subcommittee, this concludes my prepared statement. I would be pleased to respond to any questions. For questions about this statement, please contact Gregory C. Wilshusen at (202) 512-6244 or wilshuseng@gao.gov. Individuals making key contributions to this testimony included Season Dietrich, Vijay D’Souza, Nancy Glover, and Shaunyce Wallace. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Cloud computing, an emerging form of computing where users have access to scalable, on-demand capabilities that are provided through Internet-based technologies, reportedly has the potential to provide information technology services more quickly and at a lower cost, but also to introduce information security risks. Accordingly, GAO was asked to testify on the benefits and risks of moving federal information technology into the cloud. This testimony summarizes the contents of a separate report that is being released today which describes (1) the models of cloud computing, (2) the information security implications of using cloud computing services in the federal government, and (3) federal guidance and efforts to address information security when using cloud computing. In preparing that report, GAO collected and analyzed information from industry groups, private-sector organizations, and 24 major federal agencies. Cloud computing has several service and deployment models. The service models include the provision of infrastructure, computing platforms, and software as a service. The deployment models relate to how the cloud service is provided. They include a private cloud, operated solely for an organization; a community cloud, shared by several organizations; a public cloud, available to any paying customer; and a hybrid cloud, a composite of deployment models. Cloud computing can both increase and decrease the security of information systems in federal agencies. Potential information security benefits include those related to the use of virtualization and automation, broad network access, potential economies of scale, and use of self-service technologies. In addition to benefits, the use of cloud computing can create numerous information security risks for federal agencies. Specifically, 22 of 24 major federal agencies reported that they are either concerned or very concerned about the potential information security risks associated with cloud computing. Risks include dependence on the security practices and assurances of a vendor, and the sharing of computing resources. However, these risks may vary based on the cloud deployment model. Private clouds may have a lower threat exposure than public clouds, but evaluating this risk requires an examination of the specific security controls in place for the cloud's implementation. Federal agencies have begun efforts to address information security issues for cloud computing, but key guidance is lacking and efforts remain incomplete. Although individual agencies have identified security measures needed when using cloud computing, they have not always developed corresponding guidance. Agencies have also identified challenges in assessing vendor compliance with government information security requirements and clarifying the division of information security responsibilities between the customer and vendor. Furthermore, while several governmentwide cloud computing security initiatives are under way by organizations such as the Office of Management and Budget and the General Services Administration, significant work needs to be completed. For example, the Office of Management and Budget has not yet finished a cloud computing strategy, or defined how information security issues will be addressed in this strategy. The General Services Administration has begun a procurement for expanding cloud computing services, but has not yet developed specific plans for establishing a shared information security assessment and authorization process. In addition, while the National Institute of Standards and Technology has begun efforts to address cloud computing information security, it has not yet issued cloud-specific security guidance. Until specific guidance and processes are developed to guide the agencies in planning for and establishing information security for cloud computing, they may not have effective information security controls in place for cloud computing programs. In the report being released today, GAO recommended that the Office of Management and Budget, the General Services Administration, and the Department of Commerce take steps to address cloud computing security, including completion of a strategy, consideration of security in a planned procurement of cloud computing services, and issuance of guidance related to cloud computing security. These agencies generally agreed with GAO's recommendations.

Congress, and this Subcommittee in particular, has demonstrated a sustained interest in working with the District government to ensure that a sound performance management system is in place. After holding hearings on the District’s performance in serving its residents, Congress enacted the “Federal Payment Reauthorization Act of 1994,” which required the District to implement an annual performance assessment process. Specifically, the law requires the District to develop and submit to Congress a performance plan for each fiscal year, including a statement of measurable, objective performance goals for all of the government’s significant activities. After each fiscal year, the District is to develop and submit a performance report that includes (1) the level of performance achieved in relation to each of the goals in the performance plan, (2) the title of the management employee most directly responsible for the achievement of each goal and the title of the employee’s immediate supervisor or superior, and (3) the status of any applicable court orders and the steps taken to comply with such orders. This law’s general approach of establishing performance goals and reporting on performance is similar to the requirements for executive branch federal agencies under the Government Performance and Results Act of 1993 (GPRA). Our extensive work on federal agencies’ implementation of GPRA has shown that it takes time and continuous effort to transform the culture of an organization and adopt a more results- oriented and customer-focused approach to performance management. Last year, on two occasions, we highlighted the challenges faced and progress made by the District to implement a sound performance management system. In April 2000, we reported that the District’s first performance report, covering fiscal year 1999, lacked some of the required information. Specifically, the report did not contain (1) performance data for most of its goals, (2) the titles of managers and their supervisors responsible for each of the goals, and (3) information on any of the court orders applicable to the District government during fiscal year 1999. In October 2000, we testified before the Subcommittee on Oversight of Government Management, Restructuring, and the District of Columbia, Senate Committee on Governmental Affairs, that the District had made progress in defining clear goals and desired outcomes through its strategic planning efforts. However, we said there were still opportunities to more fully integrate various aspects of its planning process and to ensure that performance information was sufficiently credible for decision-making and accountability. Since then, the District has taken a number of actions to implement a performance management process, and Congress has continued to provide oversight directed at strengthening the District’s ability to efficiently and effectively deliver results to its taxpayers. The District’s fiscal year 2000 performance report, issued on March 22 of this year, included several initiatives to address issues raised in congressional hearings on the District’s management and performance. Within the next few weeks, we will issue our detailed assessment of the fiscal year 2000 performance report. However, we are far enough along in our assessment that I can provide an overview of our key findings. Performance management remains very much a work in progress for the District, and the performance report reflects that fact. The District’s goals and measures were in a state of flux during fiscal year 2000, changing as the District introduced new plans, goals, and measures into its performance management process. These changes were part of its ongoing efforts to further develop and improve the performance management process. Nevertheless, these significant and continuing revisions to the District’s performance goals limit the usefulness of the performance report for oversight, transparency, accountability, and decision-making. For example, the goals in the annual plan submitted to Congress were revised extensively to become a final set three-quarters of the way through the assessment period. About 54 percent of the goals established in the annual plan were not addressed in the final goals for the fiscal year. For example, the Department of Motor Vehicles’ goal to seek out regular feedback on the level and quality of service was not used as a final fiscal year 2000 goal. Although the District developed several final goals related to improving customer service such as wait times for vehicle registration, it did not continue the goal to obtain feedback directly from its customers. No explanation was provided in the report to explain why the goal was dropped or whether it had been achieved. Many of the remaining 46 percent of the original goals were significantly revised by the time the District issued its report, making it difficult to determine the degree to which the original goal was achieved. A District official responsible for coordinating the performance report said that information about revisions to goals was only available from the District’s individual agencies and was not centrally collected. Although changing goals to reflect changing circumstances and better understandings of how to improve performance is appropriate, the District’s report does not identify why specific goals were altered during the year or describe the decisionmaking and accountability implications of the change. In our reviews of federal agencies’ performance management efforts under GPRA, we have noted that such information is important to Congress and other decisionmakers so that they can have confidence in the usefulness of the performance report. In the absence of such information, the extensive revisions to the goals and the fact that they were revised during the fiscal year raise concerns about the validity and completeness of the reported performance data. In addition, the District’s performance management process did not cover all significant District activities. Therefore, the performance report does not provide a comprehensive snapshot of the District government’s activities. For example, the report does not cover the performance of the District’s public schools, which accounts for more than 15 percent of the District’s budget. More important, the schools are responsible for a core local government function—providing primary education. On the other hand, the fiscal year 2000 performance report addressed other key legislatively mandated reporting requirements that were not met in the fiscal year 1999 report. Specifically, the District provided the titles of the officials responsible for the goals it finally used in fiscal year 2000. In another improvement over its first year’s report, the District complied with the requirement that it provide information on the status and actions taken to address court orders affecting the District of Columbia government. District officials recognize that much work remains in its goal setting, performance measurement, and accountability efforts and, as I have noted, they have important initiatives underway. In that regard, we believe that two actions will be particularly important as the District continues to move forward. First, the District needs to accelerate efforts to settle upon a set of results-oriented goals that are more consistently reflected in its various planning, reporting, and accountability efforts. In addition and more specifically, the District can improve transparency and thereby assist Congress, District citizens, and city managers in using its performance reports by providing specific information for each goal and measure that changed including a description of how, when, and why the change occurred. Also, the District should identify the impact of the change on the performance assessment itself, including data collection and measurement for the reporting period. Overall, we have a very constructive relationship with the District on these issues and look forward to continuing to work with District officials as they seek to instill a model, results-oriented management system for the city government. The District is now in its fourth year of implementing its new financial management system. However, as we reported recently, essential elements of the system are not operational. For example, two components of its new core general ledger System of Accounting and Reporting, or “SOAR,” have not been fully implemented. Specifically, we found that the SOAR budget module was on hold and the fixed assets module was incomplete. Further, the implementation of personnel and payroll, procurement, and tax systems that feed into SOAR are incomplete and lack electronic interfaces with SOAR. Also, the personnel and payroll system, which the District estimates has cost about $13 million so far, may be abandoned. As of April 2001, the District had no timetable or comprehensive plan for fully implementing its financial management system. Because the financial management system is incomplete, much of the District’s financial management and budget information is produced through cumbersome, manual processes and the extraordinary efforts of a few key staff. For example, the District does not have a formal budget execution process to ensure that planned spending is carried out as envisioned. Instead, it relies on an error-prone manual process to periodically compare actual spending to planned budget limits. Therefore, the District cannot reliably and regularly report on whether it has spent its budget as intended for targeted city services, nor can it report on the cost of those services. The District is continuing to conduct business process reengineering for its budget process before making any decisions about implementing a budget system. The District recently received its fourth consecutive unqualified or “clean” opinion on its financial statements for fiscal year 2000. However, the District’s unqualified opinions on its financial statements are primarily the result of the tremendous amount of effort expended by a few key individuals who were able to accomplish this yearly task despite the serious weaknesses of the city’s financial management system. Such a situation cannot be sustained without significant costs to the District. One of the reasons that the District finds itself in this situation is that it has not employed the necessary disciplined system development processes to develop and implement its financial management system. In addition, the District has not conducted a comprehensive assessment of its human capital needs for financial management functions. Such an assessment would help to ensure that the District’s financial professionals are equipped to meet the challenges of successfully implementing its financial management system to support the District’s mission and goals.Reflecting the current overall status of implementation, officials from the District’s five pilot agencies have indicated that the experience of their agencies with SOAR, as it is currently implemented, does not meet the expectations originally set forth for the new system, and that old deficiencies have still not been remedied. In our earlier work, which addressed the District’s need for a new financial management system, we reported that experience studying the success and failure of hundreds of information systems has shown that hardware and software do little to improve financial management unless they are part of an overall assessment of the processes, personnel, and equipment that make up the entire system. In each of our reports leading up to the September 1997 system acquisition contract and since the acquisition, we have emphasized the need to implement a disciplined system development effort, including requirements management, project planning, project tracking and oversight, quality assurance, configuration management, and risk management. In implementing SOAR, the District proceeded with an ambitious implementation schedule that abbreviated and eliminated key steps in a disciplined process. As our latest report indicates, SOAR implementation had been plagued by delays and increasing costs. Almost 6 years after we began reviewing the system and started making recommendations, the District’s financial management system now serves as yet another cautionary example of the risks entities run when they choose to shortcut a structured, disciplined approach to the planning, acquisition, and management of a new financial management system. The District has completed action on very few of the recommendations we have made in reports dating back to 1995. In our recent report, we made seven recommendations that focus on the District’s need to apply a structured, disciplined approach to completing the implementation of SOAR and related financial management systems to ensure that the entire financial management system is properly, expeditiously, and fully implemented. The Chief Financial Officer (CFO) of the District, in responding to our report, agreed with our recommendations. The CFO also stated that the District is taking action on the recommendations made in our prior reports. The CFO also noted that the District had taken the initial step in conducting a human capital assessment for financial management. The District is also in the process of implementing a new, intensive training program for its users of SOAR. The CFO also stated that the District had an updated timetable and comprehensive plan for fully implementing the SOAR system; however, at the time we finalized our report, the District was not able to provide us with a copy of the plan. We will follow up on the status of our recommendations to the District as part of our regular, semi-annual process for updating the status of GAO recommendations. The District of Columbia Appropriations Act for fiscal year 2001 provided a $250,000 payment to the District Mayor for a contract “for the study and development of a plan to simplify the compensation systems, schedules, and work rules applicable to employees of the District government.” However, the act placed several conditions on the appropriation. First, the plan developed pursuant to the contract was required to include, at a minimum, (1) a review of the current compensation systems, schedules, and work rules applicable to DC government employees, (2) a review of the best practices of state and local governments and other appropriate organizations regarding compensation systems, schedules, and work rules, (3) a proposal for simplifying the systems, schedules, and rules applicable to DC government employees, and (4) the development of strategies for implementing the proposal, including the identification of any statutory, contractual, or other barriers to implementing the proposal and an estimated time frame for implementing the proposal. Second, the Appropriations Act required the contractor to submit the plan to the Mayor and to the committees on appropriations of the House of Representatives and the Senate. Third, the act required the Mayor to develop a proposed solicitation within 90 days after enactment and submit a copy of the proposed solicitation to the Comptroller General at least 90 days before its issuance. Fourth, the act provided that within 45 days after receipt of the proposed solicitation, the Comptroller General must review the solicitation to ensure that it adequately addresses all of the required elements and report on the results to the committees on appropriations of the House and the Senate. The conference report for the Appropriations Act indicated that the conferees expected the District government to supplement the $250,000 appropriated, if necessary, with local funds. Initially, officials from the District’s Office of Personnel told us that the District government did not plan to develop a new solicitation. Instead, they said the District planned to use the funds to help pay the costs associated with existing contracts related to human resources reform initiatives that had been started before the Appropriations Act was passed. They said the District began to rethink its civil service classification and compensation systems in 1999, and that the language in the Appropriations Act was based on an assumption that nothing was being done to improve the condition of the District’s human resource management system. They also said the $250,000 had been deposited in a general fund account controlled by the Mayor, but that no federal money had been spent under the existing contracts.

The District of Columbia has taken various steps to implement a performance management process, and Congress has continued to provide oversight to strengthen the District's ability to efficiently and effectively deliver results to its taxpayers. This testimony discusses GAO's (1) ongoing review of the District's fiscal year 2000 performance report; (2) report issued in April 2001 on the implementation of the District's new financial management system; and (3) report being issued in May 2001 on the District's decision not to use money that Congress provided to help simplify the District's compensation systems, schedules, and work rules. GAO found that although the fiscal year 2000 report more fully met statutory requirements than did the 1999 report, performance planning, measurement and reporting is still a work in progress in the District. The District continues to face significant challenges in its efforts to put in place a financial management framework that ensures timely and reliable data on the cost of the District's operations. Finally, the District no longer plans to use the $250,000 appropriated by Congress for reform of the District's classification and compensation systems because doing so would delay their reform effort. This testimony summarizes two GAO reports ( GAO-01-489 and GAO-01-690R).

Telecommuting in the public sector began about 10 years ago as a federal pilot project. Its goals were to save energy, improve air quality, reduce congestion and stress on our highways, and help employees better balance the competing demands of work and family obligations. Typically, formal telecommuting arrangements establish specific times, generally ranging from 1 to 5 days per week, in which employees work at their homes or other remote locations. However, employers may also allow telecommuting on an informal basis, where arrangements are more episodic, shorter term, and designed to meet special employer or employee needs. Although estimates vary depending on the definition of telecommuting that is used, recent data indicate that the number of employers and employees involved in telecommuting arrangements has grown over the past 10 years. In 1992, the U.S. Department of Transportation estimated that there were 2 million telecommuters (1.6 percent of the labor force) working from their homes 1 or 2 days per week. Last year, a private association that promotes the concept of telecommuting, estimated that 9.3 million employees telecommuted at least 1 day per week and 16.5 million telecommuted at least 1 day per month. These estimates show that out of 138 million wage and salary workers in the United States, about 7 to 12 percent telecommute periodically. For the federal workforce, a recent OPM survey of 97 federal agencies showed that 45,298 workers or 2.6 percent of their total workforce, telecommuted at least 52 days per year. In our examination of barriers to telecommuting in the private sector, we found that decisions on whether an organization ultimately adopted telecommuting programs or expanded them over time was heavily dependent on the resolution of three concerns: identifying the positions and employees suitable for telecommuting; protecting data; and controlling the costs associated with telecommuting. The concerns held by private sector management were similar to those of managers in federal agencies. Of those management concerns that pose a potential barrier to telecommuting, the first involved identifying those positions and employees best suited for telecommuting. Our analysis and interviews with employers, proponents of telecommuting, and other experts, showed that telecommuting is not a viable option for every position or employee. For example, site-specific positions involving manufacturing, warehousing, or face-to-face interaction with customers are usually not suitable for telecommuting. Conversely, positions involving information handling and professional knowledge-related tasks, such as administrative activities and report writing, can often be performed from a remote location. Beyond having jobs suitable for telecommuting, an organization must also have employees that are able to perform in a telecommuting environment. The current literature showed that telecommuting is best suited for high-performing and self-motivated employees with a proven record of working independently and with limited supervision. If an organization determines that it lacks the positions or employees that are suitable for telecommuting, it may choose not to establish or expand such arrangements. A second management concern pertained to an employer’s ability to protect proprietary and sensitive data and monitor employee access to such data without invading individual privacy rights. Our analysis of current literature and studies on this subject, as well as interviews with employers, showed that security concerns generally centered on potential vulnerabilities associated with providing employees with remote access to internal record systems. Access involving the Internet and employers’ ability to prevent unauthorized copying, manipulation, and modification of company information was of particular concern. We also identified uncertainties among employers regarding the extent to which electronic monitoring of employee activities is permissible or considered an infringement on individual privacy. Left unresolved, these data security issues could potentially cause employers to choose not to adopt telecommuting arrangements. The third management concern involved assessing the costs associated with starting a telecommuting program and its potential impact on productivity and profits. Telecommuting programs often involve some employer investment related to upgrading systems and software to permit remote access, providing employees with hardware and software to work from their homes, or incurring additional costs to rent space and equipment available at telecenters. These costs may adversely affect profits if productivity does not increase or at least remain the same. The potential barriers to private sector telecommuting discussed today are similar in many ways to those confronting telecommuting in the federal government, as noted in prior GAO work and OPM’s June 2001 report. In 1997, we reported on the implementation of telecommuting (then referred to as flexiplace) in federal agencies. Among the topics discussed in our report were barriers affecting the growth of telecommuting programs. The most frequently cited obstacle to increased use of telecommuting related to management concerns. Interviews with agency and union officials disclosed that managers and supervisors were hesitant to pursue telecommuting arrangements because of fears that employee productivity would diminish if they worked at home. Other related concerns cited in our report included management views that agencies did not have sufficient numbers of suitable employees and positions for telecommuting arrangements; concerns regarding the treatment of sensitive data, especially the additional cost of ensuring the security of data accessed from remote locations; and lack of resources necessary to provide additional computers, modems, and phone lines for the homes of telecommuters. OPM’s June 2001 report on federal agency efforts to establish telecommuting policies identified similar potential barriers. OPM reported that its survey of 97 federal agencies showed that management reluctance was the most frequently cited barrier to increased telecommuting among federal employees. Basic concerns centered on the ability to manage workers at remote sites and the associated loss of control over telecommuters. OPM also noted that security concerns about allowing remote access to sensitive and classified data remained high, as did questions about funding the purchase of additional computer hardware and software for equipment that would be deployed at telecommuters’ homes. While management concerns are often cited as a potential barrier to private and federal telecommuting programs, our work identified a number of laws and regulations that could also impact these arrangements. These laws and regulations include those covering taxes, workplace safety, recordkeeping, and liability for injuries. Because several of these laws and regulations predate the shift toward a more technological and information-based economy in which telecommuting has developed, their application to telecommuting is still evolving and unclear at this time. Of those laws and regulations that could impact an employer’s provisions of telecommuting arrangements, increased state tax liability for employers and employees involved in interstate telecommuting arrangements may have the greatest potential to undermine further growth. At issue for employers is whether having telecommuters work from their residence in a state where a company has no other physical presence can expose the company to additional tax liabilities and burdens. For the employees, the tax issue has taken on increasing importance, most notably in the Northeastern United States, where a number of states have tax rules that allow them to deem all wages of nonresident telecommuters working for companies located in their states as taxable whenever working at home is for the employee’s convenience rather than an employer necessity. At the same time, the state where the telecommuter resides and works via telecommuting may be taxing some of the same income because it was earned while they worked at home, which in effect “double taxes” that income. Our discussions and other information we received during our review, brought to our attention at least 13 tax cases related to telecommuting and taxing issues. One such case showing the long reach of a tax authority involves New York State’s taxing the wages of a telecommuting Tennessee resident who was employed by a company located in New York, but worked 75 percent of the time from home. A number of telecommuting experts and employers we interviewed believed that the uncertainties surrounding the application of individual state tax laws to telecommuting situations was a significant emerging issue that, if left unresolved, could ultimately impact the willingness of employers and individuals (including federal employees) to participate in telecommuting programs. Beyond the issue of state taxation, our work identified a number of other barriers to private-sector telecommuting programs that are also applicable to federal agencies. First, in regard to workplace safety, one concern was that employers would have to conduct potentially costly inspections of workers’ home offices. The federal Occupational Safety and Health Act requires private employers to provide a place of employment that is free from recognized, serious hazards. A February 2000 OSHA policy directive stated that it would not inspect home offices, hold employers liable for their safety, or require employers to inspect these workplaces. Some employers and telecommuting proponents, however, remained concerned that this internal policy could be reversed in the future, exposing employers to workplace safety violations and ultimately requiring them to complete costly home office inspections. A number of employers told us they were attempting to eliminate potential workplace safety issues by offering employees guidance on home office safety and design or providing them with ergonomic furniture. Other experts have suggested that a training program on safety be part of an employer’s program. Under the Occupational Safety and Health Act, federal agencies must also establish and maintain safety and health programs consistent with OSHA standards. To the extent that they attempt to meet OSHA safety standards for their telecommuters’ home offices, the potential financial and administrative costs of initiatives similar to those taken in the private sector may serve as a barrier to implementation. Second, federal wage and hour law and regulations may also pose a barrier to telecommuting programs in both the private and public sectors. The Fair Labor Standards Act (FLSA) requires, among other things, that employers maintain sufficient records to document all hours worked, including overtime. Concerns voiced by telecommuting experts in this area centered on the increased documentation burden this may pose, as well as the uncertainties regarding an employer’s ability to sufficiently monitor hours worked and control labor costs. However, our review and interviews with employers showed that most telecommuters fall under employee classifications (i.e., executive, administrative, or professional) that are exempt from FLSA requirements. In addition, to comply with the law and control labor costs for the few employees to whom the FLSA did apply, some employers developed ad hoc procedures to preauthorize and record hours and overtime worked. As a result, monitoring the hours of telecommuting workers was not viewed as a substantial barrier. However, to the extent that federal agencies have a workforce covered by the FLSA, concerns about the ability to sufficiently control and track telecommuter hours worked may serve as a barrier to implementation. A final issue I will discuss relates to the potential for increased employer liability for home workplace injuries and the rising worker compensation costs this could bring. Generally, work-related injuries are covered under state workers’ compensation programs. Numerous telecommuting experts are concerned that, because injuries at home are not usually witnessed, determining whether they are truly work-related is problematic. Our analysis and interviews showed that this is an area that could be vulnerable to increased fraud and abuse. The employers we interviewed and other experts have said that they were not yet experiencing significant problems with home workplace injuries or workers’ compensation claims. However, some experts noted that this could become a larger issue as more individuals telecommute. Telecommuting offers a new set of opportunities that could benefit employers, employees, and society as a whole. Whether these opportunities are realized, however, will depend on resolving fundamental questions about how telecommuting affects an employer’s ability to manage employees and other resources, specifically about its suitability as a work arrangement as well as questions about data security and overall costs. Knowing the extent to which these questions apply to federal agencies would provide important information for making decisions about telecommuting by federal workers. Realizing the full potential of telecommuting also requires looking beyond internal management concerns to the laws that govern an organization’s operating environment. Some of these laws were put in place before we could imagine a world in which employees lived in one state, but through technology, worked in another distant state, and as a result, they may unintentionally discourage telecommuting. Further examining how current laws and regulations could potentially impact telecommuters and their employers would provide the opportunity to mitigate their effects. In conclusion, pursuing the question of how to promote telecommuting is really a question of how to adapt current management practices, and laws and regulations to changing work arrangements that are, and will be, part of the information age in which we now live. This concludes my prepared statement. I will be happy to respond to any questions you or other Members of the Subcommittee may have.

Telecommuting refers to work that is done at an employee's home or at a job site other than a traditional business office. Perhaps the biggest challenge to establishing and expanding telecommuting programs in both the public and private sectors is management's concerns about the types of positions and employees suitable for telecommuting, protecting proprietary and sensitive data, and establishing cost-effective telecommuting programs. Some federal and state laws and regulations, including those governing taxes, workplace safety, workforce recordkeeping, and liability for home workplace injuries, are also potential obstacles to telecommuting. Overall, the application of state tax laws to telecommuting arrangements, as well as other laws and regulations enacted before the transition to a more technological and information based economy, is evolving and their ultimate impact remains unclear.

As part of our undercover investigation, we produced counterfeit documents before sending our two teams of investigators out to the field. We found two NRC documents and a few examples of the documents by searching the Internet. We subsequently used commercial, off-the-shelf computer software to produce two counterfeit NRC documents authorizing the individual to receive, acquire, possess, and transfer radioactive sources. To support our investigators’ purported reason for having radioactive sources in their possession when making their simultaneous border crossings, a GAO graphic artist designed a logo for our fictitious company and produced a bill of lading using computer software. Our two teams of investigators each transported an amount of radioactive sources sufficient to manufacture a dirty bomb when making their recent, simultaneous border crossings. In support of our earlier work, we had obtained an NRC document and had purchased radioactive sources as well as two containers to store and transport the material. For the purposes of this undercover investigation, we purchased a small amount of radioactive sources and one container for storing and transporting the material from a commercial source over the telephone. One of our investigators, posing as an employee of a fictitious company, stated that the purpose of his purchase was to use the radioactive sources to calibrate personal radiation detectors. Suppliers are not required to exercise any due diligence in determining whether the buyer has a legitimate use for the radioactive sources, nor are suppliers required to ask the buyer to produce an NRC document when making purchases in small quantities. The amount of radioactive sources our investigator sought to purchase did not require an NRC document. The company mailed the radioactive sources to an address in Washington, D.C. On December 14, 2005, our investigators placed two containers of radioactive sources into the trunk of their rental vehicle. Our investigators – acting in an undercover capacity – drove to an official port of entry between Canada and the United States. They also had in their possession a counterfeit bill of lading in the name of a fictitious company and a counterfeit NRC document. At the primary checkpoint, our investigators were signaled to drive through the radiation portal monitors and to meet the CBP inspector at the booth for their primary inspection. As our investigators drove past the radiation portal monitors and approached the primary checkpoint booth, they observed the CBP inspector look down and reach to his right side of his booth. Our investigators assumed that the radiation portal monitors had activated and signaled the presence of radioactive sources. The CBP inspector asked our investigators for identification and asked them where they lived. One of our investigators on the two-man undercover team handed the CBP inspector both of their passports and told him that he lived in Maryland while the second investigator told the CBP inspector that he lived in Virginia. The CBP inspector also asked our investigators to identify what they were transporting in their vehicle. One of our investigators told the CBP inspector that they were transporting specialized equipment back to the United States. A second CBP inspector, who had come over to assist the first inspector, asked what else our investigators were transporting. One of our investigators told the CBP inspectors that they were transporting radioactive sources for the specialized equipment. The CBP inspector in the primary checkpoint booth appeared to be writing down the information. Our investigators were then directed to park in a secondary inspection zone, while the CBP inspector conducted further inspections of the vehicle. During the secondary inspection, our investigators told the CBP inspector that they had an NRC document and a bill of lading for the radioactive sources. The CBP inspector asked if he could make copies of our investigators’ counterfeit bill of lading on letterhead stationery as well as their counterfeit NRC document. Although the CBP inspector took the documents to the copier, our investigators did not observe him retrieving any copies from the copier. Our investigators watched the CBP inspector use a handheld Radiation Isotope Identifier Device (RIID), which he said is used to identify the source of radioactive sources, to examine the investigators’ vehicle. He told our investigators that he had to perform additional inspections. After determining that the investigators were not transporting additional sources of radiation, the CBP inspector made copies of our investigators’ drivers’ licenses, returned their drivers’ licenses to them, and our investigators were then allowed to enter the United States. At no time did the CBP inspector question the validity of the counterfeit bill of lading or the counterfeit NRC document. On December 14, 2005, our investigators placed two containers of radioactive sources into the trunk of their vehicle. Our investigators drove to an official port of entry at the southern border. They also had in their possession a counterfeit bill of lading in the name of a fictitious company and a counterfeit NRC document. At the primary checkpoint, our two-person undercover team was signaled by means of a traffic light signal to drive through the radiation portal monitors and stopped at the primary checkpoint for their primary inspection. As our investigators drove past the portal monitors and approached the primary checkpoint, they observed that the CBP inspector remained in the primary checkpoint for several moments prior to approaching our investigators’ vehicle. Our investigators assumed that the radiation portal monitors had activated and signaled the presence of radioactive sources. The CBP inspector asked our investigators for identification and asked them if they were American citizens. Our investigators told the CBP inspector that they were both American citizens and handed him their state-issued drivers’ licenses. The CBP inspector also asked our investigators about the purpose of their trip to Mexico and asked whether they were bringing anything into the United States from Mexico. Our investigators told the CBP inspector that they were returning from a business trip in Mexico and were not bringing anything into the United States from Mexico. While our investigators remained inside their vehicle, the CBP inspector used what appeared to be a RIID to scan the outside of the vehicle. One of our investigators told him that they were transporting specialized equipment. The CBP inspector asked one of our investigators to open the trunk of the rental vehicle and to show him the specialized equipment. Our investigator told the CBP inspector that they were transporting radioactive sources in addition to the specialized equipment. The primary CBP inspector then directed our investigators to park in a secondary inspection zone for further inspection. During the secondary inspection, the CBP inspector said he needed to verify the type of material our investigators were transporting, and another CBP inspector approached with what appeared to be a RIID to scan the cardboard boxes where the radioactive sources was placed. The instrumentation confirmed the presence of radioactive sources. When asked again about the purpose of their visit to Mexico, one of our investigators told the CBP inspector that they had used the radioactive sources in a demonstration designed to secure additional business for their company. The CBP inspector asked for paperwork authorizing them to transport the equipment to Mexico. One of our investigators provided the counterfeit bill of lading on letterhead stationery, as well as their counterfeit NRC document. The CBP inspector took the paperwork provided by our investigators and walked into the CBP station. He returned several minutes later and returned the paperwork. At no time did the CBP inspector question the validity of the counterfeit bill of lading or the counterfeit NRC document. We conducted corrective action briefings with CBP and NRC officials shortly after completing our undercover operations. On December 21, 2005, we briefed CBP officials about the results of our border crossing tests. CBP officials agreed to work with the NRC and CBP’s Laboratories and Scientific Services to come up with a way to verify the authenticity of NRC materials documents. We conducted two corrective action briefings with NRC officials on January 12 and January 24, 2006, about the results of our border crossing tests. NRC officials disagreed with the amount of radioactive material we determined was needed to produce a dirty bomb, noting that NRC’s “concern threshold” is significantly higher. We continue to believe that our purchase of radioactive sources and our ability to counterfeit an NRC document are matters that NRC should address. We could have purchased all of the radioactive sources used in our two undercover border crossings by making multiple purchases from different suppliers, using similarly convincing cover stories, using false identities, and had all of the radioactive sources conveniently shipped to our nation’s capital. Further, we believe that the amount of radioactive sources that we were able to transport into the United States during our operation would be sufficient to produce two dirty bombs, which could be used as weapons of mass disruption. Finally, NRC officials told us that they are aware of the potential problems of counterfeiting documents and that they are working to resolve these issues. Mr. Chairman and Members of the Subcommittee, this concludes my statement. I would be pleased to answer any questions that you or other members of the Subcommittee may have at this time. For further information about this testimony, please contact Gregory D. Kutz at (202) 512-7455 or kutzg@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this testimony. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Given today's unprecedented terrorism threat environment and the resulting widespread congressional and public interest in the security of our nation's borders, GAO conducted an investigation testing whether radioactive sources could be smuggled across U.S. borders. Most travelers enter the United States through the nation's 154 land border ports of entry. Department of Homeland Security U.S. Customs and Border Protection (CBP) inspectors at ports of entry are responsible for the primary inspection of travelers to determine their admissibility into the United States and to enforce laws related to preventing the entry of contraband, such as drugs and weapons of mass destruction. GAO's testimony provides the results of undercover tests made by its investigators to determine whether monitors at U.S. ports of entry detect radioactive sources in vehicles attempting to enter the United States. GAO also provides observations regarding the procedures that CBP inspectors followed during its investigation. GAO has also issued a report on the results of this investigation (GAO-06-545R). For the purposes of this undercover investigation, GAO purchased a small amount of radioactive sources and one secure container used to safely store and transport the material from a commercial source over the telephone. One of GAO's investigators, posing as an employee of a fictitious company located in Washington, D.C., stated that the purpose of his purchase was to use the radioactive sources to calibrate personal radiation detection pagers. The purchase was not challenged because suppliers are not required to determine whether prospective buyers have legitimate uses for radioactive sources, nor are suppliers required to ask a buyer to produce an NRC document when purchasing in small quantities. The amount of radioactive sources GAO's investigator sought to purchase did not require an NRC document. Subsequently, the company mailed the radioactive sources to an address in Washington D.C. The radiation portal monitors properly signaled the presence of radioactive material when our two teams of investigators conducted simultaneous border crossings. Our investigators' vehicles were inspected in accordance with most of the CBP policy at both the northern and southern borders. However, GAO's investigators, using counterfeit documents, were able to enter the United States with enough radioactive sources in the trunks of their vehicles to make two dirty bombs. According to the Centers for Disease Control and Prevention, a dirty bomb is a mix of explosives, such as dynamite, with radioactive powder or pellets. When the dynamite or other explosives are set off, the blast carries radioactive material into the surrounding area. The direct costs of cleanup and the indirect losses in trade and business in the contaminated areas could be large. Hence, dirty bombs are generally considered to be weapons of mass disruption instead of weapons of mass destruction. GAO investigators were able to successfully represent themselves as employees of a fictitious company present a counterfeit bill of lading and a counterfeit NRC document during the secondary inspections at both locations. The CBP inspectors never questioned the authenticity of the investigators' counterfeit bill of lading or the counterfeit NRC document authorizing them to receive, acquire, possess, and transfer radioactive sources.

HHS’ ability to use the Special Reserve Fund for the procurement of countermeasures is predicated on a six-step process involving coordination with DHS and approval by the Director of the Office of Management and Budget (OMB). As provided in the BioShield Act, the process requires: 1. the DHS Secretary, in consultation with the HHS Secretary and the heads of other agencies as appropriate, to determine that a material threat exists and issue a “material threat determination;” 2. the HHS Secretary to determine countermeasures that are necessary to protect the public health; 3. the HHS Secretary to determine that a particular countermeasure is appropriate for procurement for the Strategic National Stockpile using the Special Reserve Fund and the quantities to be procured; 4. the DHS and HHS Secretaries to jointly recommend to the Director of OMB that the Special Reserve Fund should be used for the designated countermeasure acquisitions; 5. the director of OMB to approve the use of the Special Reserve Fund; 6. both Secretaries to notify designated congressional committees of the procurement. The BioShield Act also provides HHS the ability to use four new contracting authorities for the acquisition of countermeasures. In general, these authorities expanded upon existing provisions in the Federal Acquisition Regulation (FAR). The four authorities are: Simplified acquisition procedures which, in general, increased HHS contract threshold amounts from $100,000 to $25 million. However, the BioShield Act does not place a threshold limit on countermeasures that are procured using the Special Reserve Fund if the HHS Secretary determines there is a pressing need for the specific countermeasure. Procedures other than full and open competition can be used to award contracts when the requirement is only available from one responsible source or a limited number of responsible sources. In addition, in order to conduct procurements on a basis other than full and open competition using simplified acquisition procedures, the HHS Secretary must determine that the mission of the BioShield Program under the Act would be seriously impaired without such a limitation. Increased micropurchase threshold from $2,500 to $15,000. Personal services contracts may be used for experts or consultants who have scientific or other professional qualifications when the HHS Secretary determines such contracts are necessary to respond to pressing countermeasure research and development needs. In 2006, the Pandemic and All-Hazards Preparedness Act (PAHPA), among other things, established the Biomedical Advanced Research and Development Authority (BARDA), within HHS, to provide a coordinated, systematic approach to the development and purchases of countermeasures, including vaccines, drugs, therapies, and diagnostic tools. Later, in 2009, Congress transferred the following amounts from the Special Reserve Fund to HHS accounts: $275 million to be used for the advanced research and development of countermeasures and $137 million for influenza pandemic preparation. HHS has used its Special Reserve Fund (purchasing) authority and one of its contracting authorities to procure countermeasures for the Strategic National Stockpile. Since 2004, HHS awarded nine contracts using Special Reserve Fund monies to procure various countermeasures, such as anthrax and botulism antitoxins, vaccines for anthrax and smallpox, and post-exposure treatments for radiation poisoning in children and adults. Of the nine contracts awarded using monies from the Fund, HHS terminated one contract, in 2006, because the contractor was unable to meet a major contractual milestone. To date, the remaining eight contracts are valued at almost $2 billion. See table 1. In addition, HHS officials told us there are currently two requests for proposal solicitations for an anthrax vaccine and a smallpox therapeutic. Of the four contracting authorities provided under the BioShield Act, HHS has only used the simplified acquisition procedure authority. From 2004 through 2005, HHS’s National Institutes of Health (NIH) used this authority to award five other contracts, including ones for research to develop a botulism antitoxin and improved treatments for radiation poisoning. Awarded with NIH funding, these contracts have a total value of almost $30 million when options and other later modifications are included. See table 2. HHS officials told us that they have not used this authority since 2005. HHS officials also told us that no other BioShield contracting authorities have been used to date, although the officials noted that these authorities may be needed for use in the future. In response to BioShield requirements, HHS has established internal controls on its Special Reserve Fund (purchasing) and contracting authorities, but lacks adequate documentation of the risks of using the new contracting authorities. Language in the BioShield Act sets up a broad framework of controls over the procurement of countermeasures, including those with Special Reserve Funds, by requiring HHS to coordinate with DHS and obtain approval by OMB before the Fund may be used. In addition to the language in the Act, HHS officials told us that the internal controls for procuring countermeasures using the Fund are documented in a variety of internal policy and procedure documents and interagency agreements, which provide guidance on roles and responsibilities for how the controls are to be implemented. These documents include: an HHS policy document that establishes an enterprise governance board to oversee requirements and priority-setting regarding emergency medical countermeasures for the civilian population. The document also outlines the authorities, organizational structure, and guidelines for the board; an HHS budget execution document that delineates responsibilities and describes the processes for requesting contract actions, purchases, and interagency agreements; a BARDA standard operating procedure document that provides contracting and other BARDA officials with guidance on source selection procedures and outlines specific responsibilities in carrying out those procedures; a BARDA acquisition plan which details the pre- and post-award approval processes for procurements using the Fund; an interagency agreement between HHS and DHS dated September 25, 2006, that outlines the terms and conditions for when the Fund can be used; and an OMB Circular on transferring budget authority from one agency to another. HHS has also established internal controls for the contracting authorities that were specified in the BioShield Act. On October 18, 2005, HHS issued a memorandum that provided guidance on the use of the following contracting authorities: the increased simplified acquisition threshold and its use with the Special Reserve Fund, the increased micropurchase threshold, and the use of personal services contracts. HHS’s memo is structured around the five elements of internal control: the control environment, risk assessment, control activities, information and communications, and monitoring. Federal internal control standards state that management needs to comprehensively identify risks, analyze them for possible effect, and determine how risks should be managed. Federal internal control standards also state that controls need to be clearly documented, readily available for examination, and distributed in a form and time frame that permits people to perform their duties efficiently. Risk assessment statements we reviewed in the memo are generally not assessments of the risks involved in using particular authorities. Some of the risk statements identify some risks and one mentions possible negative consequences that could occur without proper controls in place, but the statements lack an analysis of those risks. For example, the risk assessment statement for using the increased micropurchase threshold states that “control procedures are necessary to prevent noncompliance with specific requirements of the Act, including exceeding statutory limitation on number of contracts and selections based on improper criteria.” And, the risk assessment statement on increased simplified acquisition procedures does not mention or assess risk. It simply states that “control procedures are necessary to prevent noncompliance with specific requirements of the Act.” In particular, the risk statement on simplified acquisition procedures in the memo does not discuss a key risk associated with using simplified acquisition procedures—namely, that an agency is prohibited from obtaining cost or pricing data for acquisitions at or below the simplified acquisition threshold. According to a senior BARDA procurement official, while using simplified acquisition procedures can expedite the procurement process, the agency will not have cost and pricing data, which may be needed to determine that the price of a contract—especially those valued in the tens of millions or hundreds of millions—is fair and reasonable. In a subsequent meeting, he stated that he is aware of these trade-offs based on his own experience and knowledge of the FAR. He also confirmed that an explanation assessing the trade-offs and risks involved when using the new contracting authorities is not contained in other HHS documents. Instead, this official acknowledged that HHS’s written guidance on the controls for the contracting authorities does not document known risks and trade-offs of using the authorities. As a result, implementation of these controls depends on the experience and knowledge of current personnel. Moreover, the consistent application of these controls is not likely to be sustained over time as employees leave their positions and new ones take their place. Not having adequately documented and appropriately communicated risk assessments, which institutionalize agency policies, may potentially result in future employees not knowing or understanding the risks or tradeoffs involved in using the various contracting authorities. Since the enactment of the BioShield Act in 2004, HHS has awarded almost $2 billion in contracts to either procure medical countermeasures or to facilitate their development. Although HHS has established internal controls for its new purchasing and contracting authorities, the risk assessment statements related to the agency’s internal controls for the contracting authorities are not sufficiently specific. In particular, the failure to mention and lack of analysis of specific risks in the risk statements associated with using the increased micropurchase threshold and increased simplified acquisition procedures is not consistent with requirements under federal internal control standards. With employee turnover, the lack of adequately documented risk assessment statements could create a situation in which employees do not know the risks or trade-offs involved in using the various authorities. The effectiveness of the internal controls now in place is dependent on the knowledge of individuals currently working at the agency. Without appropriately documented risk assessments that institutionalize agency policies, HHS will be unable to ensure that sound, informed, and consistent decisions will be made in the face of employee turnover. We recommend that the Secretary of Health and Human Services include comprehensive risk assessment statements in written guidance on the internal controls for the BioShield contracting authorities for which the agency was required to establish controls. HHS provided us with written comments on a draft of this report. The comments appear in appendix I. HHS agreed with our recommendation and said that it will revise its internal control guidance on risk assessments for using BioShield contracting authorities. We believe that this is a positive step toward helping ensure that sound, informed, and consistent risk assessments will be made in BioShield acquisitions. HHS also provided observations on the Special Reserve Fund and risk assessments, which appear in appendix I. We are sending copies of this report to the Secretary of Health and Human Services. The report is also available at no charge on the GAO Web site at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-4841 or NeedhamJK1@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix II. In addition to the contact named above, Carol Dawn Petersen, Assistant Director; Angela D. Thomas, Kelly Bradley, Robert S. Swierczek, Marie P. Ahearn, and Kenneth E. Patton made key contributions to this report.

The Project BioShield Act of 2004 (BioShield Act) increased the federal government's ability to procure needed countermeasures to address threats from chemical, biological, radiological, and nuclear agents. Under the BioShield Act, the Department of Health and Human Services (HHS) was provided with new contracting authorities (increased simplified acquisition and micropurchase thresholds, and expanded abilities to use procedures other than full and open competition and personal services contracts) and was authorized to use about $5.6 billion in a Special Reserve Fund to procure countermeasures. Based on the BioShield Act's mandate, GAO reviewed (1) how HHS has used its purchasing and contracting authorities, and (2) the extent to which HHS has internal controls in place to manage and help ensure the appropriate use of its new authorities. To do this work, GAO reviewed contract files and other HHS documents, including internal control guidance, which GAO compared with federal statutes and federal internal control standards. Since 2004, HHS has awarded nine contracts using its Special Reserve Fund (Fund) purchasing authority under the BioShield Act to procure countermeasures that address anthrax, botulism, smallpox, and radiation poisoning. HHS may procure countermeasures that are approved by the Food and Drug Administration and ones that are unapproved, but are within 8 years of approval. Of the nine contracts, one was terminated for convenience and the remaining eight are valued at almost $2 billion. HHS officials told GAO that additional contracts are likely to be awarded in the near future as the Fund provides funding through fiscal year 2013. In addition, HHS has used one of its new contracting authorities, simplified acquisition procedures, although it has not used this authority since 2005. HHS has established internal controls on its new purchasing and contracting authorities. In addition to the language in the BioShield Act, which sets up a broad framework of controls over the use of the Special Reserve Fund, the internal controls for this purchasing authority are documented in a variety of internal policy and procedure documents and interagency agreements, which provide guidance on roles and responsibilities for how the controls are to be implemented. In response to BioShield Act requirements, HHS also established internal controls for three of the contracting authorities: the increased simplified acquisition threshold and its use with Special Reserve Funds, the increased micropurchase threshold, and the use of personal services contracts. Federal internal control standards state that, among other things, management needs to comprehensively identify risks, analyze them for possible effect, and determine how risks should be managed. Although some of the risk statements in a memo HHS issued identify some risks and one mentions possible negative consequences that could occur without proper controls in place, the risk statements for using the increased micropurchase threshold and increased simplified acquisition procedures lack analysis of specific risks. In particular, the memo does not discuss a key risk associated with using simplified acquisition procedures--namely, that an agency is prohibited from obtaining cost or pricing data for acquisitions at or below the simplified acquisition threshold. Without this data, the agency may not be able to determine if the price of a contract is fair and reasonable. Moreover, not having adequately documented and appropriately communicated risk assessments potentially results in future employees not knowing or understanding the risks or trade-offs involved in using the authorities. With employee turnover, HHS' reliance on the knowledge of current personnel to appropriately implement key controls will not enable future employees to make sound, informed, and consistent decisions.

In July 2005, we reported that DHS had established a draft Target Capabilities List that provides guidance on the specific capabilities and levels of capability that FEMA would expect federal, state, local, and tribal first responders to develop and maintain. We reported that DHS defined these capabilities generically and expressed them in terms of desired operational outcomes and essential characteristics, rather than dictating specific, quantifiable responsibilities to the various jurisdictions. DHS planned to organize classes of jurisdictions that share similar characteristics—such as total population, population density, and critical infrastructure—into tiers to account for reasonable differences in capability levels among groups of jurisdictions and to appropriately apportion responsibility for development and maintenance of capabilities among levels of government and across these jurisdictional tiers. According to DHS’s Assessment and Reporting Implementation Plan, DHS intended to implement a capability assessment and reporting system based on target capabilities that would allow first responders to assess their preparedness to identify gaps, excesses, or deficiencies in their existing capabilities or capabilities they will be expected to access through mutual aid. In addition, this information could be used to measure the readiness of federal civil response assets and the use of federal assistance at the state and local level and to provide a means of assessing how federal assistance programs are supporting national preparedness. In implementing this plan, DHS intended to collect preparedness data on the capabilities of the federal government, states, local jurisdictions, and the private sector to provide information about the baseline status of national preparedness. DHS’s efforts to implement these plans were interrupted by the 2005 hurricane season. In August 2005, Hurricane Katrina—the worst natural disaster in our nation’s history—made final landfall in coastal Louisiana and Mississippi, and its destructive force extended to the western Alabama coast. Hurricane Katrina and the following Hurricanes Rita and Wilma— also among the most powerful hurricanes in the nation’s history— graphically illustrated the limitations at that time of the nation’s readiness and ability to respond effectively to a catastrophic disaster, that is, a disaster whose effects almost immediately overwhelm the response capacities of affected state and local first responders and require outside action and support from the federal government and other entities. In June 2006, DHS concluded that target capabilities and associated performance measures should serve as the common reference system for preparedness planning. In September 2006, we reported that numerous reports and our work suggest that the substantial resources and capabilities marshaled by federal, state, and local governments and nongovernmental organizations were insufficient to meet the immediate challenges posed by the unprecedented degree of damage and the resulting number of hurricane victims caused by Hurricanes Katrina and Rita. We also reported that developing the capabilities needed for catastrophic disasters should be part of an overall national preparedness effort that is designed to integrate and define what needs to be done, where, based on what standards, how it should be done, and how well it should be done. In October 2006, Congress passed the Post-Katrina Act that required FEMA, in developing guidelines to define target capabilities, ensure that such guidelines are specific, flexible, and measurable. In addition, the Post-Katrina Act calls for FEMA to ensure that each component of the national preparedness system, which includes the target capabilities, is developed, revised, and updated with clear and quantifiable performance metrics, measures, and outcomes. We recommended, among other things, that DHS apply an all- hazards, risk management approach in deciding whether and how to invest in specific capabilities for a catastrophic disaster; DHS concurred, and FEMA said it planned to use the Target Capabilities List to assess capabilities to address all hazards. In September 2007, FEMA issued the Target Capabilities List to provide a common perspective to conduct assessments to determine levels of readiness to perform critical tasks and to identify and address any gaps or deficiencies. According to FEMA, policymakers need regular reports on the status of capabilities for which they have responsibility to help them make better resource and investment decisions and to establish priorities. Further, FEMA officials said that emergency managers and planners require assessment information to help them address deficiencies; to identify alternative sources of capabilities (e.g., from mutual aid or contracts with the private sector); and to identify which capabilities should be tested through exercises. Also, FEMA said that agencies or organizations that are expected to supplement or provide capabilities during an incident need assessment information to set priorities, make investment decisions, and position capabilities or resources, if needed. In April 2009, we reported that establishing quantifiable metrics for target capabilities was a prerequisite to developing assessment data that can be compared across all levels of government. At the time of our review, FEMA was in the process of refining the target capabilities to make them more measurable and to provide state and local jurisdictions with additional guidance on the levels of capability they need. Specifically, FEMA planned to develop quantifiable metrics—or performance objectives—for each of the 37 target capabilities that are to outline specific capability targets that jurisdictions (such as cities) of varying size should strive to meet, being cognizant of the fact that there is not a “one size fits all” approach to preparedness. However, FEMA has not yet completed these quantifiable metrics for its 37 target capabilities, and it is unclear when it plans to do so. In October 2009, in responding to congressional questions regarding FEMA’s plan and timeline for reviewing and revising the 37 target capabilities, FEMA officials said they planned to conduct extensive coordination through stakeholder workshops in all 10 FEMA regions and with all federal agencies with lead and supporting responsibility for emergency support-function activities associated with each of the 37 target capabilities. The workshops were intended to define the risk factors, critical target outcomes, and resource elements for each capability. The response stated that FEMA planned to create a Task Force comprised of federal, state, local, and tribal stakeholders to examine all aspects of preparedness grants, including benchmarking efforts such as the Target Capabilities List. FEMA officials have described their goals for updating the list to include establishing measurable target outcomes, providing an objective means to justify investments and priorities, and promoting mutual aid and resource sharing. In November 2009, FEMA issued a Target Capabilities List Implementation Guide that described the function of the list as a planning tool and not a set of standards or requirements. We reported in July 2005 that DHS had identified potential challenges in gathering the information needed to assess capabilities, including determining how to aggregate data from federal, state, local, and tribal governments and others and integrating self-assessment and external assessment approaches. In reviewing FEMA’s efforts to assess capabilities, we further reported in April 2009 that FEMA faced methodological challenges with regard to (1) differences in data available, (2) variations in reporting structures across states, and (3) variations in the level of detail within data sources requiring subjective interpretation. We recommended that FEMA enhance its project management plan to include milestone dates, among other things, a recommendation to which DHS concurred. In October 2010, we reported that FEMA had enhanced its project management plan. Nonetheless, the challenges we reported in July 2005 and April 2009 faced by DHS and FEMA, respectively, in their efforts to measure preparedness and establish a system of metrics to assess national capabilities have proved to be difficult for them to overcome. We reported that in October 2010, in general, FEMA officials said that evaluation efforts they used to collect data on national preparedness capabilities were useful for their respective purposes, but that the data collected were limited by data reliability and measurement issues related to the lack of standardization in the collection of data. For example, FEMA’s Deputy Director for Preparedness testified in October 2009 that the “Cost-to-Capabilities” (C2C) initiative developed by FEMA’s Grant Programs Directorate (at that time already underway for 18 months) had a goal as a multiyear effort to manage homeland security grant programs and prioritize capability-based investments. We reported in October 2010, that as a result of FEMA’s difficulties in establishing metrics to measure enhancements in preparedness capabilities, officials discontinued the C2C program. Similarly, FEMA’s nationwide, multiyear Gap Analysis Program implementation, proposed in March 2009, was “to provide emergency management agencies at all levels of government with greater situational awareness of response resources and capabilities.” However, as we reported in October 2010, FEMA noted that states did not always have the resources or ability to provide accurate capability information into its Gap Analysis Program response models and simulation; thus, FEMA had discontinued the program. FEMA officials reported that one of its evaluation efforts, the State Preparedness Report, has enabled FEMA to gather data on the progress, capabilities, and accomplishments of a state’s, the District of Columbia’s, or a territory’s preparedness program, but that these reports included self- reported data that may be subject to interpretation by the reporting organizations in each state and not be readily comparable to other states’ data. The officials also stated that they have taken steps to address these limitations by, for example, creating a Web-based survey tool to provide a more standardized way of collecting state preparedness information that will help FEMA officials validate the information by comparing it across states. We reported in October 2010 that FEMA officials said they had an ongoing effort to develop measures for target capabilities—as planning guidance to assist in state and local assessments —rather than as requirements for measuring preparedness by assessing capabilities; FEMA officials had not yet determined how they plan to revise the list and said they are awaiting the completed revision of Homeland Security Presidential Directive 8, which is to address national preparedness. As a result, FEMA has not yet developed national preparedness capability requirements based on established metrics to provide a framework for national preparedness assessments. Until such a framework is in place, FEMA will not have a basis to operationalize and implement its conceptual approach for assessing federal, state, and local preparedness capabilities against capability requirements to identify capability gaps for prioritizing investments in national preparedness. Mr. Chairman, this completes my prepared statement. I would be pleased to respond to any questions that your or other Members of the Committee may have at this time. For further information about this statement, please contact William O. Jenkins Jr., Director, Homeland Security and Justice Issues, at (202) 512- 8777 or jenkinswo@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. In addition to the contact named above, the following individuals from GAO’s Homeland Security and Justice Team also made major contributions to this testimony: Chris Keisling, Assistant Director; John Vocino, Analyst-In-Charge; C. Patrick Washington, Analyst, and Lara Miklozek, Communications Analyst. This appendix presents additional information on the Federal Emergency Management Agency’s National Preparedness Guidelines as well as key steps and critical practices for measuring performance and results.

This testimony discusses the efforts of the Federal Emergency Management Agency (FEMA)--a component of the Department of Homeland Security (DHS)--to measure and assess national capabilities to respond to a major disaster. According to the Congressional Research Service, from fiscal years 2002 through 2010, Congress appropriated over $34 billion for homeland security preparedness grant programs to enhance the capabilities of state, territory, local, and tribal governments to prevent, protect against, respond to, and recover from terrorist attacks and other disasters. Congress enacted the Post-Katrina Emergency Management Reform Act of 2006 (Post-Katrina Act) to address shortcomings in the preparation for and response to Hurricane Katrina that, among other things, gave FEMA responsibility for leading the nation in developing a national preparedness system. The Post-Katrina Act requires that FEMA develop a national preparedness system and assess preparedness capabilities--capabilities needed to respond effectively to disasters--to determine the nation's preparedness capability levels and the resources needed to achieve desired levels of capability. Federal, state, and local resources provide capabilities for different levels of "incident effect" (i.e., the extent of damage caused by a natural or manmade disaster). FEMA's National Preparedness Directorate within its Protection and National Preparedness organization is responsible for developing and implementing a system for measuring and assessing national preparedness capabilities. The need to define measurable national preparedness capabilities is a well-established and recognized issue. For example, in December 2003, the Advisory Panel to Assess Domestic Response Capabilities noted that preparedness (for combating terrorism) requires measurable demonstrated capacity by communities, states, and private sector entities throughout the United States to respond to threats with well-planned, well-coordinated, and effective efforts. This is consistent with our April 2002 testimony on national preparedness, in which we identified the need for goals and performance indicators to guide the nation's preparedness efforts and help to objectively assess the results of federal investments. We reported that FEMA had not yet defined the outcomes of where the nation should be in terms of domestic preparedness. Thus, identifying measurable performance indicators could help FEMA (1) track progress toward established goals, (2) provide policy makers with the information they need to make rational resource allocations, and (3) provide program managers with the data needed to effect continual improvements, measure progress, and to enforce accountability. In September 2007, DHS issued the National Preparedness Guidelines that describe a national framework for capabilities-based preparedness as a systematic effort that includes sequential steps to first determine capability requirements and then assess current capability levels. According to the Guidelines, the results of this analysis provide a basis to identify, analyze, and choose options to address capability gaps and deficiencies, allocate funds, and assess and report the results. This proposed framework reflects critical practices we have identified for government performance and results. This statement is based on our prior work issued from July 2005 through October 2010 on DHS's and FEMA's efforts to develop and implement a national framework for assessing preparedness capabilities at the federal, state, and local levels, as well as DHS's and FEMA's efforts to develop and use metrics to define capability levels, identify capability gaps, and prioritize national preparedness investments to fill the most critical capability gaps. As requested, this testimony focuses on the extent to which DHS and FEMA have made progress in measuring national preparedness by assessing capabilities and addressing related challenges. In summary, DHS and FEMA have implemented a number of efforts with the goal of measuring preparedness by assessing capabilities and addressing related challenges, but success has been limited. DHS first developed plans to measure preparedness by assessing capabilities, but did not fully implement those plans. FEMA then issued the target capabilities list in September 2007 but has made limited progress in developing preparedness measures and addressing long-standing challenges in assessing capabilities, such as determining how to aggregate data from federal, state, local, and tribal governments. At the time of our review of FEMA's efforts in 2008 and in 2009, FEMA was in the process of refining the target capabilities to make them more measurable and to provide state and local jurisdictions with additional guidance on the levels of capability they need. We recommended in our April 2009 report that FEMA enhance its project management plan with, among other things, milestones to help it implement its capability assessment efforts; FEMA agreed with our recommendation. We reported in October 2010 that FEMA had enhanced its plan with milestones in response to our prior recommendation and that officials said they had an ongoing effort to develop measures for target capabilities--as planning guidance to assist in state and local assessments--rather than as requirements for measuring preparedness by assessing capabilities; FEMA officials had not yet determined how they plan to revise the list.

Radar-guided missile systems emit radio-frequency energy, that is, radar signals, which reflect or bounce off the surfaces of aircraft in flight. In essence, all radar-guided missile systems use these reflected signals to locate and target aircraft. The Army currently has two types of radar countermeasure systems fielded on its helicopters to defend them from radar-guided missiles. The first type seeks to decoy the missile away from the aircraft by providing alternative reflected radar signals for the missile to follow. This is accomplished by using a missile warning system that detects approaching missiles and signals countermeasure dispensers on the aircraft to launch chaff in an attempt to confuse the missile’s radar.The second type of countermeasure system uses a radar-warning receiver and radar jammer to defeat radar-guided missile systems. A radar-warning receiver detects radar-guided missile systems so the aircraft’s pilot can navigate out of the missile’s range. If the systems cannot be avoided, a radar jammer emits electronic radio-frequency transmissions to confuse and/or blind the radar-guided missile system. The Army’s Suite of Integrated Radio Frequency Countermeasures system will include an advanced-threat radar-warning receiver and an advanced- threat radar jammer. (See figure 1.) These components are expected to provide state-of-the-art-radar warning and jamming capabilities and to perform better than the Army’s currently fielded radar warning receivers and radar jammers. The advanced-threat radar-warning receiver will provide enhanced situational awareness by more precisely detecting, identifying, locating, and tracking multiple radio-frequency threat systems. Likewise, the advanced-threat radar jammer is expected to counter multiple and simultaneous modern radio-frequency threats. In addition, the system can be reprogrammed to defeat different threat systems, and its modular open architecture allows for reconfiguring its components so that applications on multiple aircraft types are possible. For acquiring electronic warfare systems such as the new radar countermeasures system, departmental guidance states that developmental testing provides decisionmakers with knowledge about whether the system is ready to begin low-rate initial production—the next step in the acquisition process after engineering and manufacturing development. Developmental testing begins in a controlled environment by testing individual components of a system in the laboratory. Based on the results of this testing, individual components are modified, improved and/or replaced until they meet component-level performance requirements. After the performance of each component is tested and validated, the developmental test process is repeated at the subsystem and finally system level. The developmental test process continues until the system’s ability to meet performance requirements when installed on a weapon system platform is tested and validated. According to the Department’s guidance for acquiring systems, low-rate initial production is designed to (1) establish an initial production base for the system and ensure adequate and efficient manufacturing capability, (2) produce the minimum quantity necessary to provide production configured or representative articles for initial operational testing and evaluation, and (3) permit an orderly increase in the production rate for the system sufficient to lead to full-rate production upon the successful completion of operational testing. Operational testing, which follows developmental testing, is designed to determine whether a production- configured system can meet performance requirements in an operationally realistic environment. The Army’s contractor for its new radar countermeasures system has substantial software and hardware changes under way to improve the system’s performance and address the obsolescence of parts, reduce cost, and improve producibility. The Army intends to determine that the modified software performs as required in time for the low-rate initial production decision now scheduled for some point from January through March 2002. However, the current schedule does not provide for completion and integration of the hardware changes into the system until June 2002 with testing completed by September 2002. Beginning in 1999, laboratory testing of developmental prototypes of the new radar countermeasures system indicated that significant software deficiencies had to be corrected before the system could meet performance requirements. Because of these software deficiencies, the prototype countermeasures system could not properly perform any of its major functions; that is, it could not properly detect, identify, track, or defeat threat radars. In response to these results, the Army’s Program Manager directed the system contractor to undertake the major software maturation effort that is now under way. For the software maturation effort, the Army directed the contractor to follow a disciplined maturation process. This involved breaking down the system’s software into a series of 10 blocks with each successive block introducing more complex functionality (e.g., detect and identify one radar; detect and identify multiple radars; detect, identify and jam one radar; and so forth). To ensure that the contractor adheres to this process, the Army does not approve the introduction of succeeding software blocks into the system until the functionality of the prior block has been demonstrated in the Army’s laboratory at Fort Monmouth, New Jersey. According to the Defense Contract Management Agency, which the Army has engaged to oversee the program, the ongoing software maturation effort, as of April 2001, has been rated as high risk. Laboratory tests indicate that the software continues to have difficulty in properly detecting, identifying, tracking, and defeating threat-radar systems in complex environments where many radars are operating simultaneously. Moreover, according to the Agency, flight-testing on an Apache helicopter has begun recently and a new set of software problems is being experienced because the operating environments of the aircraft and open- air test range are very different than the controlled conditions of the laboratory. For instance, interference resulting from the simultaneous operation of the system with the Apache’s fire control radar is resulting in system resets. Resets are totally unacceptable for countermeasure systems because they refer to instances when the software causes the system to reboot. While the system is rebooting, the aircraft and aircrew are completely unprotected. Overall, the software maturation effort is 4 months behind schedule, and the contractor has been submitting increasing numbers of unanticipated software change requests each month for the past 6 months as the software blocks are becoming more complex. Change requests have increased each month from September 2000, when they numbered 699, to March 2001, when they reached 923. The need to make unanticipated changes is expected in a software maturation process, according to the Defense Contract Management Agency; nonetheless, increasing numbers of changes result in additional cost to the program and the extension of test schedules. Of the 10 software blocks, blocks 1 through 8a have now been accepted, and the contractor was scheduled to deliver block 9 for testing in April 2001. (Block 8 did not pass acceptance testing at Fort Monmouth, so the contractor had to create block 8a, which was accepted by the Army in March 2001.) While software maturation continues under the original developmental contract, the contractor is addressing hardware improvements under a separate $13.2 million technology insertion program contract to redesign, develop, and test new system components. The contractor plans to complete and integrate hardware changes into the system by June 30, 2002. The Army then plans to determine whether the modified system performs as required by September 2002. According to the contractor, replacing key hardware components of the current prototype system is necessary to reduce costs, address the obsolescence of electronic parts, enhance producibility and improve system performance. The contractor is developing replacements for such components as the primary computer processor, the tracker used to locate radar sources, and the frequency synthesizer used to produce the electronic responses to hostile radar signals. The contractor is also replacing the analog wide-band receiver used to detect radar signals with an improved receiver based on digital technology. (See figure 2.) As of April 2001, the Defense Contract Management Agency was rating hardware issues and the system’s readiness for production as moderate risk. According to the Agency, the bases for this assessment include staffing shortages, parts delivery delays, and failures during electromagnetic interference, shock/vibration, and humidity testing, all of which are delaying the contractor’s schedule. Besides physical changes to the system, hardware changes will cause additional changes to be made to the system’s software. This is because the hardware functions of the system are software-controlled. In order to exercise this control, the software has to be written to “recognize” the behavior of the new components so the right software commands are issued and the hardware will do what it is supposed to do at the right time. Additionally, while making changes to hardware components and software, the contractor discovered carcinogenic beryllium oxide residue on the system during humidity testing. To address this problem, the contractor is now developing and testing aluminum component casings for beryllium casings that had already been developed. Substituting aluminum for beryllium is troublesome because (1) aluminum is weaker and heavier than beryllium and (2) the weight of the radar countermeasures system was already more than 20 pounds over the Army’s requirement even with use of the lighter beryllium casings. Department officials told us that the insertion of the hardware modifications is not substantial enough to constitute a significant design change and that little risk is associated with the integration of the new hardware with the software and the aircraft. However, based on test results to date and monthly status reports from the Defense Contract Management Agency, we did not find that integrating the new hardware with the software and the aircraft will be a low-risk undertaking. According to departmental guidance for acquiring systems, one of the purposes of low-rate initial production is to produce production representative articles for initial operational test and evaluation. In our view, a key to assuring that these articles will be production representative is to first conduct developmental testing of the modified software and hardware together as a system in the aircraft to ensure the design is stable before beginning low-rate initial production. We believe, therefore, that the Department would decrease its risks by deferring the low-rate initial production decision until the hardware modifications are completed and integrated and the system is found to perform as required. Only the testing of the actual replacement components can provide assurance that the system’s design is stable. The Army has identified software and hardware modifications needed for its new radar countermeasures system. The Army expects that future tests will enable it to determine whether the modified software performs as required before the planned low-rate initial production decision in early 2002. However, the testing of the modified hardware is not scheduled for completion until September 2002. By deferring the low-rate initial production decision, the Army would reduce the risk of incurring unanticipated costs to retrofit articles if the system does not perform as required. We recommend that the Secretary of Defense direct that the Army defer the low-rate initial production decision until software and hardware modifications are completed and the Army determines that the integrated system, as modified, performs as required. Although the Department of Defense concurred with our finding that the Army’s radar countermeasures program has faced technical challenges both in software and hardware, it did not concur with our recommendation. The Department stated that our draft report was incorrect in finding that hardware modifications were being made to correct performance deficiencies. It maintained that the contractor’s hardware modifications are necessary to address cost, parts obsolescence and producibility issues, and the changes are only more technologically advanced form, fit, and function replacements for existing components. We recognize that the purposes of the changes include addressing cost, parts obsolescence and producibility issues. Nevertheless, program documentation provided by the contractor and the Defense Contract Management Agency indicates that these changes are also necessary to meet system performance requirements for several components, including the wide-band receiver and the system processor. We also recognize that any replacement component for a system must be form, fit, and function compatible; otherwise it cannot be successfully installed or expected to work in the system. It cannot be automatically assumed, however, that developing these replacement components is low risk simply because they are planned to be form, fit, and function compatible. After receiving the Department’s comments, we acquired updated data from the Defense Contract Management Agency to provide the most current information on the risks associated with the ongoing software and hardware modification process. After reviewing the additional data, we continue to believe that the Department would decrease its risks by deferring the low-rate initial production decision until the hardware modifications are completed and integrated and the system is found to perform as required. Although the Department may well be confident in the ability of the contractor to successfully develop replacement components, it cannot conclude on the basis of the performance of existing hardware components that different, replacement components will be satisfactory. System development has been ongoing for seven years. In our view, it is prudent to take the extra several months to test the actual replacement components with the software and in the aircraft so that the Army can assure itself that the system design is stable before it proceeds to low-rate initial production. To determine whether the Army’s decisionmakers will have sufficient knowledge about the readiness of the Suite of Integrated Radio-Frequency Countermeasures system to enter the low-rate initial production decision as planned in the second quarter of fiscal year 2002, we analyzed the Army’s modernization, acquisition, and fielding plans for the system and the contractor’s performance reports and other program documentation produced by the Army and the Defense Contract Management Agency. To ensure that we understood the documentation we utilized, we interviewed officials of the Office of the Secretary of Defense, Washington, D.C.; the Department of the Army, at Arlington, Virginia; the Program Executive Office for Army Aviation, and Missile and Space Intelligence Center at Redstone Arsenal, Alabama; the Communications and Electronics Command at Fort Monmouth, New Jersey; and the Army Aviation Directorate of Combat Development at Fort Rucker, Alabama. We also interviewed representatives of the Suite of Integrated Radio- Frequency Countermeasures contractor, International Telephone and Telegraph, Avionics Division in Clifton, New Jersey. We conducted our work from September 2000 through April 2001 in accordance with generally accepted government auditing standards. This report contains a recommendation to you. The head of a federal agency is required under 31 U.S.C. 720 to submit a written statement of actions taken on our recommendations to the Senate Committee on Governmental Affairs and the House Committee on Government Reform not later that 60 days after the date of this letter and to the Senate and House Committees on Appropriations with the agency’s first request for appropriations made more than 60 days after the date of this letter. We are sending copies of this report to interested congressional committees; the Honorable Joseph W. Westphal, Acting Secretary of the Army; and the Honorable Mitch Daniels, Director, Office of Management and Budget. Copies will also be made available to others upon request. If you have any questions regarding this report, please contact me at (202) 512-4841 or Charles A. Ward at (202) 512-4343. Key contributors to this assignment were Dana Solomon and John Warren.

The Army is acquiring a new, state-of-the-art radar countermeasures system--called the Suite of Integrated Radio Frequency Countermeasures to help helicopters and other aircraft identify, track, and defeat radar-guided missiles in complex electronic environments where many radar systems could be operating simultaneously. The Army has identified software and hardware modification needed for its new radar countermeasures system. The Army expects that future tests will enable it to determine whether the modified software performs as required before the planned low-rate initial production decision in early 2002. However, the testing of the modified hardware is not scheduled for completion until September 2002. By deferring low-rate initial production decision, the Army would reduce the risk of incurring anticipated costs to retrofit articles if the system does not work as expected.

VA serves veterans of the U.S. armed forces, and provides health, pension, burial, and other benefits. In fiscal year 2015, VA spent about $20 billion on goods and services via contracts—more than a quarter of its discretionary budget. As shown in the organizational chart below, these contracts were awarded by VA’s eight heads of contracting activity (HCAs). The department’s three operational administrations—VHA, the Veterans Benefits Administration, and the National Cemetery Administration—operate largely independently from one another. In addition to the operating administrations, several VA procurement organizations have department-wide roles: The Office of Acquisition, Logistics, and Construction (OALC) is a VA headquarters organization responsible for directing the acquisition, logistics, construction, and leasing functions within VA. The Office of Acquisition Operations (OAO), which falls under OALC’s purview, conducts procurement activities for customers across the department and has two primary operating divisions—the Technology Acquisition Center (TAC), which focuses on IT purchasing, and the Strategic Acquisition Center (SAC), which is responsible for procurement of certain types of goods and services for the operating administrations, such as VHA. The Office of Acquisition and Logistics (OAL) is responsible for oversight of contracting across VA, including setting policy and issuing warrants to contracting officers. o The National Acquisition Center (NAC) is an OAL contracting organization which serves VHA by providing contracting for certain health care-related goods and services. VHA provides medical care to veterans and is by far the largest administration in VA, with a budget of $61.1 billion for fiscal year 2016, representing the majority of VA’s $75 billion discretionary budget. Its 167 medical centers are currently organized into 19 Veterans Integrated Service Networks (VISN), regional networks that manage some aspects of operations. VHA has 19 Network Contracting Offices, each of which serves one of the 19 VISNs. VA has some organizational and programmatic changes in progress that affect procurement. In July 2015, the Secretary of Veterans Affairs announced an organizational transformation for the department called MyVA. In a related effort, responsibility for the medical-surgical prime vendor (MSPV) program—a logistics provider that facilitates ordering and delivery of supplies to medical centers from many different contractors— was recently transferred from NAC to SAC. Given VA procurement’s highly decentralized structure, a given customer—such as a department in a medical center or a program office—may need to work with multiple contracting entities to meet its procurement needs. Figure 2 illustrates the complex working relationship between contracting offices and their customers across VA. This can contribute to confusion. Several of the contracting officials we spoke with stated that they were, at times, uncertain about which contracting office handled what requirements. VA issued a memorandum in 2013 to clarify areas of responsibility for the national contracting organizations, but confusion remains. VA’s Acting Chief Acquisition Officer stated that he is aware of overlap in the functions of some contracting organizations, especially the NAC and the SAC. At one VISN we visited, an official reported procuring one type of high-tech medical equipment through the SAC even though this area is specifically designated as NAC’s responsibility because she expected that the SAC could execute the purchase more quickly. Without clearly delineated organizational roles and customer relationships—beyond what was provided in the 2013 memorandum—the possibility of duplication in these roles and relationships is increased, and customers lack clear guidance on which organization to approach for certain types of procurements. In our September 2016 report, we recommended that OALC assess whether additional policy or guidance is needed to clarify the roles of VA’s national contracting organizations. The Acting Chief Acquisition Officer, OALC said that the department agreed with this recommendation. Key VA procurement policies are outdated and difficult for contracting officers to use. Standards for Internal Control in the Federal Government state that it is important for an organization’s management to update its policies over time to reflect changing statutes or conditions, and that those policies should be communicated to those who need to implement them. However, many of VA’s regulations and policies are outdated, most notably the VA Acquisition Regulation (VAAR), which has not been updated since 2008. The department has issued a patchwork of policy documents in the interim to fill this gap. VA asks contracting officers to refer to two different versions of the VAAR, one from 1997 and the other from 2008. This causes confusion among contracting officers. In addition, VA communicates interim procurement policies in a number of different forms, some of which can be duplicative. Figure 3 illustrates the numerous sources that contracting officers must turn to for guidance. The sheer volume and number of different forms of communications— many of which are outdated—are confusing and present challenges for contracting officials seeking appropriate guidance. While VA recently fully rescinded the 1997 VAAR after our inquiries, the 2008 version remains out of date. A new revision of the VAAR is also in development, but has faced delays. VA began the process in 2011 but does not plan to finalize the new VAAR until December 2018, including the required rulemaking process. The lengthy delay in updating this fundamental source of policy impedes contracting officers’ abilities to effectively carry out their duties. In our September 2016 report, we recommended that VA identify measures to expedite the revision of the VAAR, and take interim steps to clarify its policy framework; the Acting Chief Acquisition Officer, OALC stated that the department agreed with both of these recommendations. VA medical centers use contractors called medical-surgical prime vendors to obtain many of the supplies they use on a daily basis, such as bandages and surgical sutures. Officials known as ordering officers, who work at the medical centers, regularly place orders. In turn, the prime vendor delivers those orders via a local warehouse. The prices for these medical supplies are established by VA national contracts, which typically provide significant discounts over the Federal Supply Schedule prices— an estimated 30 percent on average, according to a senior NAC official. Use of these national contracts is also required by VA policy and regulation. Figure 4 provides an overview of the MSPV process. However, the current MSPV process is confusing and cumbersome. Most orders are placed through the Integrated Funds Distribution Control Point Activity, Accounting and Procurement (IFCAP) system, a decades-old IT system with a text-based interface, which does not include a tool to look up items that are available on the national contracts. For instance, ordering officers must know the exact item number—which is different for each vendor—to enter into IFCAP. The existing tools to look up available national contracts are also cumbersome. Along with discounted items on national contracts, the MSPV system also allows ordering officers to buy thousands of items directly from VA’s Federal Supply Schedule contracts, which lack the degree of discounted pricing of the national contracts. Because of the challenges posed by the system, ordering officers in some cases purchase items directly from the Federal Supply Schedules, and might miss opportunities to obtain discounts on the national contracts. Administration of the MSPV program is being transferred from NAC to SAC, and, along with this transfer, VHA and SAC are making changes to the MSPV program in an effort to address the issues discussed above and streamline the process. To support the next generation MSPV, SAC has already awarded new prime vendor contracts and is in the process of awarding the supporting national contracts for individual types of supplies. VHA and SAC also plan to implement a new online ordering interface, developed by a contractor for VHA, which will provide ordering officers a more intuitive interface for the outdated and difficult-to-use IFCAP system. Further, unlike the current system, this new interface will only permit ordering officers to purchase items from a specific catalog of items, not the wider range of Federal Supply Schedule items. VA estimates that this catalog will eventually contain 8,000 to 10,000 items to meet the needs of its medical centers. However, there have been some delays in VHA’s development of supply requirements and SAC’s award of new supply contracts, with only about 1,800 items on national contracts as of July 2016. VA does not anticipate that SAC will be able to award contracts for the full catalog by the time the new MSPV contracts become operational in December 2016. In the interim, SAC and VHA officials stated that they will allow ordering of Federal Supply Schedule items (approximately 4,500) that are not on national contracts, to ease the transition. Work remains to ensure that the transition to this new approach will be successful. Updating the MSPV process affects how essential supplies are ordered and delivered at 167 medical centers on a daily basis, and facility logistics staff, including ordering officers, must be able to implement the new approach. VHA has an outreach plan in place, but chief logistics officers at medical centers we visited expressed some concerns about the transition—for instance, one reported that his office’s analysis found 14 items deemed critical to the function of the medical center were not on a preliminary list of supplies available through the new MSPV, nor were acceptable substitutes. If medical centers instead purchase items through their local contracting offices because the new MSPV does not meet their needs, it will undermine the program’s potential to increase efficiency and cost savings. In our September 2016 report, we recommended that VA take steps to facilitate the transition to the new MSPV process, including ensuring that SAC collects data to monitor the use of national contracts in the new system, that SAC and VHA establish achievable time frames for eliminating Federal Supply Schedule items from the MSPV catalog once national contracts are in place, and that the new ordering interface clearly distinguish between items on national contracts and the 4,500 items on the Federal Supply Schedules. The Acting Chief Acquisition Officer, OALC said that the department agreed with this recommendation. VA’s substantial buying power presents many opportunities for procurement cost savings, but the department has not consistently taken advantage of them. A key aspect of strategic sourcing is consolidating similar requirements to manage them collectively, reaping cost savings and efficiency gains. VA has done this successfully in some areas, such as pharmaceuticals, and the planned changes to the MSPV program could result in greater use of discounted national contracts for medical supplies if they are successfully implemented. There are opportunities to better apply strategic sourcing principles at the regional level, as well. Within VHA, each of the 19 VISNs is responsible for a regional network of multiple medical centers and clinics. Individual medical centers within each VISN procure many goods and services separately, despite the fact that their requirements are similar. Consolidating these requirements—such as security services, elevator maintenance, and eyeglasses for patients—can realize both cost savings and greater efficiency in awarding and administering contracts. We found efforts underway to consolidate requirements at the regional level, but local autonomy and limited planning capacity pose obstacles. For instance, one VISN we visited recently began an initiative to consolidate requirements for purchases made by all of its medical centers, especially services. VISN managers explained that they began with the easiest requirements, such as landscaping services and parking administration. They issued a draft memorandum with plans to broaden this approach to most purchases, but medical center staff provided feedback that they preferred their own local contracts and did not want VISN-wide contracts to become the default approach. In our review of 37 selected contracts, we did find several instances of VISN and contracting officials consolidating requirements for greater efficiency and to obtain better pricing. This indicates that consolidating procurement is possible with leadership buy-in, and that there are opportunities to share lessons learned across VISNs. Within VHA, in VISNs where there is not a consistent push by local leadership to pursue consolidation, it is challenging for efforts driven by individual departments or contracting personnel to overcome cultural obstacles. To provide the necessary leadership commitment to take advantage of these opportunities, we recommended in our September 2016 report that VHA Procurement and Logistics conduct a review of VISN-level strategic sourcing efforts, identify best practices, and, if needed, issue guidance. The Acting Chief Acquisition Officer, OALC said that the department agreed with this recommendation. Chairman Coffman, Ranking Member Kuster, and Members of the Subcommittee, this concludes my prepared statement. I would be pleased to respond to any questions that you may have at this time. If you or your staff have any questions about this statement, please contact Michele Mackin at (202) 512-4841 or MackinM@gao.gov. In addition, contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals who made key contributions to the report on which this testimony is based are Lisa Gardner, Assistant Director; Emily Bond; George Bustamante; Margaret Hettinger; Julia Kennon; Katherine Lenane; Ethan Levy; Teague Lyons; Jean McSween; Sylvia Schatz; Erin Stockdale; and Roxanna Sun. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

This testimony summarizes the information contained in GAO's September 2016 report, entitled Veterans Affairs Contracting: Improvements in Policies and Processes Could Yield Cost Savings and Efficiency ( GAO-16-810 ). GAO found opportunities for the Department of Veterans Affairs (VA) to improve the efficiency and effectiveness of its multi-billion dollar annual procurement spending in several areas including data systems, procurement policies and oversight, acquisition workforce, and contract management. Shortcomings in VA's recording of procurement data limit its visibility into the full extent of its spending. A recent policy directing that medical-surgical supply orders be captured in VA's procurement system is a step in the right direction, but proper implementation is at risk because procedures are not in place to ensure all obligations are recorded. VA's procurement policy framework is outdated and fragmented. As a result, contracting officers are unclear where to turn for current guidance. VA has been revising its overarching procurement regulation since 2011 but completion is not expected until 2018. Meanwhile, contracting officers must consult two versions of this regulation, as well as other policy related documents. Clear policies are key to ensuring VA conducts procurements effectively on behalf of veterans. The figure below depicts the various sources of regulations, policy, and guidance. Sources of Veterans Affairs (VA) Procurement Policy as of June 2016 Managing workload is a challenge for VA's contracting officers and their representatives in customer offices. A 2014 directive created contract liaisons at medical centers in part to address this issue, but medical centers have not consistently implemented this initiative, and VA officials have not identified the reasons for uneven implementation. VA can improve its procurement processes and achieve cost savings by complying with applicable policy and regulation to obtain available discounts when procuring medical supplies; leveraging its buying power through strategic sourcing; ensuring key documents are included in the contract file, as GAO found that more than a third of the 37 contract files lacked key documents; and ensuring that compliance reviews identify all contract file shortcomings.

In our prior work, we identified concerns associated with BIA management of energy resources and categorized them into five broad areas: (1) oversight of BIA activities; (2) collaboration and communication; (3) BIA workforce planning; (4) technology; and (5) BIA’s data. In the past 2 years, we issued three reports on Indian energy resources and development in which we made 14 recommendations to BIA. BIA agreed with most of these recommendations, and has identified steps it will take to address some of the recommendations. In a June 2015 report, we found that BIA review and approval is required throughout the development process, including the approval of leases, right-of-way (ROW) agreements, and appraisals. However, BIA does not have a documented process or the data needed to track its review and response times—such as data on the date documents are received, the date the review process is considered complete by the agency, and the date documents are approved or denied. However, a few stakeholders we interviewed and some literature we reviewed suggested that BIA’s review and approval process can be lengthy and increase development costs and project development times, resulting in missed development opportunities, lost revenue, and jeopardized viability of projects. For example, in 2014, the Acting Chairman for the Southern Ute Indian Tribe reported that BIA’s review of some of its energy-related documents took as long as 8 years. Specifically, as of April 30, 2014, the tribe had been waiting for at least 5 years for BIA to review 81 pipeline ROW agreements—11 of these 81 ROW agreements had been under review for 8 years. According to the tribal official, had these ROW agreements been approved in a timely manner, the tribe would have received revenue through various sources, including tribal permitting fees, oil and gas severance taxes, and royalties. The tribal official noted that, during the period of delay, prices for natural gas rose to an historic high but had since declined. Therefore, the official reported that much of the estimated $95 million in lost revenue would never be recovered by the tribe. In another example from our June 2015 report, one lease for a proposed utility-scale wind project took BIA more than 3 years to review and approve and according to a tribal official, the lease was only reviewed and approved after multiple calls and letters from the tribe to BIA headquarters. According to a tribal official, the long review time contributed to uncertainty about the continued viability of the project because data used to support the economic feasibility and environmental impact of the project became too old to accurately reflect current conditions. We recommended in our June 2015 report that Interior direct BIA to develop a documented process to track its review and response times. Interior agreed with the recommendation and stated it would try to implement a tracking and monitoring mechanism by the end of fiscal year 2017 for oil and gas leases. However, Interior did not indicate whether it intends to track and monitor its review of other energy-related documents that must be approved before tribes can develop resources. Without comprehensively tracking and monitoring its review process, BIA cannot ensure that documents are moving forward in a timely manner, and lengthy review times may continue to contribute to lost revenue and missed development opportunities for Indian tribes. Further, in a June 2016 report, we found that BIA took steps to improve its process for reviewing revenue-sharing agreements but still had not established a systematic mechanism for monitoring or tracking. We recommended, among other things, that BIA develop a systematic mechanism for tracking these agreements through the review and approval process. Interior concurred with this recommendation and stated that BIA would develop such a mechanism and in the meantime would use a centralized tracking spreadsheet. In June 2015, we reported that the added complexity of the federal process, which can include multiple regulatory agencies, prevents many developers from pursuing Indian energy resources for development. In a November 2016 report, we reported that Interior has recognized the need for collaboration in the regulatory process and described the creation of the Indian Energy Service Center as a center point of collaboration for permitting that will break down barriers between federal agencies. We found that BIA had taken steps to form an Indian Energy Service Center that was intended to, among other things, help expedite the permitting process associated with Indian energy development. We reported that the Service Center had the potential to increase collaboration between BIA and BLM on some permitting requirements associated with oil and gas development. However, we found that BIA did not coordinate with other key regulatory agencies, including Interior’s Fish and Wildlife Service, the U.S. Army Corps of Engineers, and the Environmental Protection Agency. As a result, the Service Center was neither established as the central point for collaborating with all federal regulatory partners generally involved in energy development, nor did it serve as a single point of contact for permitting requirements. Without serving in these capacities, the Service Center was limited in its ability to improve efficiencies in the federal regulatory process. We also found that in forming the Service Center, BIA did not involve key stakeholders, such as the Department of Energy (DOE)—an agency with significant energy expertise—and BIA employees from agency offices. By not involving key stakeholders, BIA was missing an opportunity to incorporate their expertise into its efforts. We recommended that BIA include other regulatory agencies in the Service Center so that it can act as a single point of contact or a lead agency to coordinate and navigate the regulatory process. We also recommended that BIA establish formal agreements with key stakeholders, such as DOE, that identify the advisory or support role of the office, and establish a process for seeking and obtaining input from key stakeholders, such as BIA employees, on the Service Center’s activities. Interior agreed with our recommendations and described its plans to address them. In addition, in 2005, Congress provided an option for tribes to enter into an agreement with the Secretary of the Interior that allows the tribe, at their discretion, to enter into leases, business agreements, and ROW agreements for energy resource development on tribal lands without review and approval by the Secretary. However, in our June 2015 report, we found that uncertainties about Interior’s regulations for implementing this option have contributed to deter tribes from pursuing such agreements. We recommended that Interior provide clarifying guidance. In August 2015, Interior stated the department was considering further guidance. As of December 2016, however Interior had not provided additional guidance. In our June 2015 report, we found that BIA’s long-standing workforce challenges, such as inadequate staff resources and staff at some offices without the skills needed to effectively review energy-related documents, were factors hindering Indian energy development. Further, in November 2016, we found that some BIA offices had high vacancy rates for key energy development positions, and some offices reported not having staff with key skills to review energy-related documents. For example, BIA agency officials in an area where tribes are considering developing wind farms told us that they would not feel comfortable approving proposed wind leases because their staff do not have the expertise to review such proposals. Consequently, these officials told us that they would send a proposed wind lease to higher ranking officials in the regional office for review. Similarly, an official from the regional office stated that they do not have the required expertise and would forward such a proposal to senior officials in Interior’s Office of the Solicitor. The Director of BIA told us that BIA agency offices generally do not have the expertise to help tribes with solar and wind development because it is rare that such skills are needed. Through the Indian Energy Service Center, BIA plans to hire numerous new staff over the next 2 years, which could resolve some of the long- standing workforce challenges that have hindered Indian energy development in the past. However, BIA is hiring new staff without incorporating effective workforce planning principles. Specifically, BIA has not assessed key skills needed to fulfill its responsibilities related to energy development or identified skill gaps, and does not have a documented process to provide reasonable assurance its workforce composition at agency offices is consistent with its mission, goals, and tribal priorities. As a result, BIA cannot provide reasonable assurance it has the right people in place with the right skills to effectively meet its responsibilities or whether new staff will fill skill gaps. We recommended in our November 2016 report that BIA assess critical skills and competencies needed to fulfill its responsibilities related to energy development and identify potential gaps. We also recommended BIA establish a documented process for assessing BIA’s workforce composition at agency offices taking into account BIA’s mission, goals, and tribal priorities. Interior agreed with our recommendations and stated it was taking steps to implement them. In June 2015, we found that BIA did not have the necessary geographic information system (GIS) mapping data for identifying who owns and uses resources, such as existing leases. Interior guidance states that efficient management of oil and gas resources relies, in part, on GIS mapping technology because it allows managers to easily identify resources available for lease and where leases are in effect. According to a BIA official, without GIS data, the process of identifying transactions, such as leases and access agreements for Indian land and resources, can take significant time and staff resources to search paper records stored in multiple locations. We recommended BIA should take steps to improve its GIS capabilities to ensure it can verify ownership in a timely manner. Interior stated it will enhance mapping capabilities by developing a national dataset composed of all Indian land tracts and boundaries in the next 4 years. In June 2015, we found that BIA did not have the data it needs to verify who owns some Indian oil and gas resources or identify where leases are in effect. In some cases, BIA cannot verify ownership because federal cadastral surveys—the means by which land is defined, divided, traced, and recorded—cannot be found or are outdated. The ability to account for Indian resources would assist BIA in fulfilling its responsibilities, and determining ownership is a necessary step for BIA to approve leases and other energy-related documents. We recommended that BIA identify land survey needs. Interior agreed with the recommendation and stated it will develop a data collection tool to identify the extent of its survey needs in fiscal year 2016. As of December 2016, Interior had not provided information on the status of its efforts to develop a data collection tool. In conclusion, our reviews have identified a number of areas in which BIA could improve its management of Indian energy resources. Interior has stated that it intends to take some steps to implement our recommendations, and we will continue to monitor its efforts. We look forward to continuing to work with this committee in overseeing BIA, BIE, and IHS to ensure that they are operating in the most effective and efficient manner, consistent with the federal government’s trust responsibilities, and working toward improving service to tribes and their members. Chairman Farenthold, Ranking Member Plaskett, and Members of the Committee, this concludes my prepared statement. I would be pleased to answer any questions that you may have at this time. If you or your staff members have any questions about this testimony, please contact me at (202) 512-3841 or ruscof@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this testimony. Christine Kehr (Assistant Director), Richard Burkard, Jay Spaan, and Kiki Theodoropoulos made key contributions to this testimony. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Indian tribes and their members hold considerable energy resources and may decide to use these resources to provide economic benefits and improve the well-being of their communities. However, according to a 2014 Interior document, these resources are underdeveloped relative to surrounding non-Indian resources. Development of Indian energy resources is a complex process that may involve federal, tribal, and state agencies. Interior's BIA has primary authority for managing Indian energy development and generally holds final decision-making authority for leases, permits, and other approvals required for development. GAO's 2017 biennial update to its High Risk List identifies federal management of programs that serve tribes and their members as a new high risk area needing attention by Congress and the executive branch. This testimony highlights the key findings of three prior GAO reports ( GAO-15-502 , GAO-16-553 , and GAO-17-43 ). It focuses primarily on BIA's management of Indian energy resources and development. For the prior reports, GAO analyzed federal data; reviewed federal, academic, and other literature; and interviewed tribal, federal and industry stakeholders. In three prior reports on Indian energy development, GAO found that the Department of the Interior's (Interior) Bureau of Indian Affairs (BIA) has inefficiently managed Indian energy resources and the development process and thereby limited opportunities for tribes and their members to use those resources to create economic benefits and improve the well-being of their communities. GAO has also reported numerous challenges facing Interior's Bureau of Indian Education and BIA and the Department of Health and Human Services' Indian Health Services in administering education and health care services, which put the health and safety of American Indians served by these programs at risk. For the purposes of this testimony, GAO is focusing on the concerns related to Indian energy. GAO categorized concerns associated with BIA management of energy resources and the development process into several broad areas, including oversight of BIA activities, collaboration, and BIA workforce planning. Oversight of BIA activities . In a June 2015 report, GAO found that BIA review and approval is required throughout the development process. However, BIA does not have a documented process or the data needed to track its review and response times—such as data on the date documents are received, the date the review process is considered complete, and the date documents are approved or denied. GAO recommended that BIA develop a documented process to track its review and response times. Interior generally agreed and stated it would try to implement a tracking and monitoring mechanism by the end of fiscal year 2017 for oil and gas leases. Interior did not indicate whether it intends to track and monitor its review of other energy-related documents that must be approved before tribes can develop resources. Collaboration . In a November 2016 report, GAO found that BIA has taken steps to form an Indian Energy Service Center that is intended to, among other things, help expedite the permitting process associated with Indian energy development. However, BIA did not coordinate with key regulatory agencies, including Interior's Fish and Wildlife Service, the Environmental Protection Agency and the U.S. Army Corps of Engineers. GAO recommended that BIA include other regulatory agencies in the Service Center so that it can act as a single point of contact or lead agency to coordinate and navigate the regulatory process. Interior agreed with our related recommendation and described plans to address it. BIA workforce planning . In June 2015 and in November 2016, GAO reported concerns associated with BIA's long-standing workforce challenges, such as inadequate staff resources and staff at some offices without the skills needed to effectively review energy-related documents. GAO recommended that BIA assess critical skills and competencies needed to fulfill its responsibilities related to energy development, and that it establish a documented process for assessing BIA's workforce composition at agency offices. Interior agreed with our recommendations and stated it is taking steps to implement them. In the past 2 years, GAO issued three reports and made 14 recommendations to BIA to improve its management of Indian energy resources, such as to track its review process, improve collaboration, and conduct workforce planning. BIA agreed with most recommendations and identified some steps it intends to take to implement them.

At the time of our visits, we observed instances of noncompliance with ICE’s medical care standards at 3 of the 23 facilities we visited. However, these instances did not show a pervasive or persistent pattern of noncompliance across the facilities like we those identified with the telephone system. Detention facilities that we visited ranged from those with small clinics with contract staff to facilities with on-site medical staff, diagnostic equipment such as X-ray machines, and dental equipment. Medical service providers include general medical, dental, and mental health care providers that are licensed by state and local authorities. Some medical services are provided by the U.S. Public Health Service (PHS), while other medical service providers may work on a contractual basis. At the San Diego Correctional Facility in California, an adult detention facility, ICE reviewers that we accompanied cited PHS staff for failing to administer the mandatory 14-day physical exam to approximately 260 detainees. PHS staff said the problem at San Diego was due to inadequate training on the medical records system and technical errors in the records system. At the Casa de San Juan Family Shelter in California, we found that the facility staff did not administer medical screenings immediately upon admission, as required in ICE medical care standards. At the Cowlitz County Juvenile Detention Center in Washington state, we found that no medical screening was performed at admission and first aid kits were not available, as required. Officials at some facilities told us that meeting the specialized medical and mental health needs of detainees can be challenging. Some also cited difficulties they had experienced in obtaining ICE approval for outside nonroutine medical and mental health care as also presenting problems in caring for detainees. On the other hand, we observed instances where detainees were receiving specialized medical care at the facilities we visited. For example, at the Krome facility in Florida we observed one detainee sleeping with the assistance of special breathing equipment (C- PAP machine) to address what we were told was a sleep apnea condition. At the Hampton Roads Regional jail in Virginia we observed a detainee receiving treatment from a kidney dialysis machine. Again, assessing the quality of care and ICE’s decision—making process for approval of nonroutine medical procedures were outside the scope of our review. We reviewed the most recently available ICE annual inspection reports for 20 of the 23 detention facilities that we visited. With the exception of the San Diego facility in California, the reports covered a different time period than that of our review. The 20 inspection reports showed that ICE reviewers had identified a total of 59 instances of noncompliance, 4 of which involved medical care. According to ICE policy, all adult, juvenile, and family detention facilities are required to be inspected at 12-month intervals to determine that they are in compliance with detention standards and to take corrective actions if necessary. As of November 30, 2006, according to ICE data, ICE had reviewed approximately 90 percent of detention facilities within the prescribed 12-month interval. Subsequent to each annual inspection, a compliance rating report is to be prepared and sent to the Director of the Office of Detention and Removal or his representative within 14 days. The Director of the Office of Detention and Removal has 21 days to transmit the report to the field office directors and affected suboffices. Facilities receive one of five final ratings in their compliance report—superior, good, acceptable, deficient, or at risk. ICE officials reported that as of June 1, 2007, 16 facilities were rated “superior,” 60 facilities were rated “good,” 190 facilities were rated “acceptable,” 4 facilities were rated “deficient,” and no facilities were rated “at risk.” ICE officials stated that this information reflects completed reviews, and some reviews are currently in process and pending completion. Therefore, ICE could not provide information on the most current ratings for some facilities. Four inspection reports disclosed instances of noncompliance with medical care standards. The Wakulla County Sheriffs Office in Florida had sick call request forms that were available only in English whereas the population was largely Spanish speaking. The Cowlitz County Juvenile Detention Facility in Washington state did not maintain the alien juvenile medical records on-site. The San Diego Correctional facility staff, in addition to the deficiencies noted earlier in this statement, failed to obtain informed consent from the detainee when prescribing psychiatric medication. Finally, the Broward Transitional Center in Florida did not have medical staff on-site to screen detainees arriving after 5 p.m. and did not have a properly locked medical cabinet. We did not determine whether these deficiencies were subsequently addressed as required. Our review of available grievance data obtained from facilities and discussions with facility management showed that the types of grievances at the facilities we visited typically included the lack of timely response to requests for medical treatment, missing property, high commissary prices, poor quality or insufficient quantity of food, high telephone costs, problems with telephones, and questions concerning detention case management issues. ICE’s detainee grievance standard states that facilities shall establish and implement procedures for informal and formal resolution of detainee grievances. Four of the 23 facilities we visited did not comply with all aspects of ICE’s detainee grievance standards. Specifically, Casa de San Juan Family Shelter in San Diego did not provide a handbook to those aliens in its facility, the Cowlitz County Juvenile Detention Center in Washington state did not include grievance procedures in its handbook, Wakulla County Sheriff’s Office in Florida did not have a log, and the Elizabeth Detention Center in New Jersey did not record all grievances that we observed in their facility files. The primary mechanism for detainees to file external complaints is directly with the OIG, either in writing or by phone using the DHS OIG complaint hotline. Detainees may also file complaints with the DHS Office for Civil Rights and Civil Liberties (CRCL), which has statutory responsibility for investigating complaints alleging violations of civil rights and civil liberties. In addition, detainees may file complaints through the Joint Intake Center (JIC), which is operated continuously by both ICE and U.S. Customs and Border Protection (CBP) personnel, and is responsible for receiving, classifying, and routing all misconduct allegations involving ICE and CBP employees, including those pertaining to detainee treatment. ICE officials told us that if the JIC were to receive an allegation from a detainee, it would be referred to the OIG. OIG may investigate the complaint or refer it to CRCL or DHS components such as the ICE Office of Professional Responsibility (OPR) for review and possible action. In turn, CRCL or OPR may retain the complaint or refer it to other DHS offices, including ICE Office of Detention and Removal (DRO), for possible action. Further, detainees may also file complaints with nongovernmental organizations such as ABA and UNHCR. These external organizations said they generally forward detainee complaints to DHS components for review and possible action. The following discussion highlights the detainee complaints related to medical care issues where such information is available. We did not independently assess the merits of detainee complaints. Of the approximately 1,700 detainee complaints in the OIG database that were filed in fiscal years 2003 through 2006, OIG investigated 173 and referred the others to other DHS components. Our review of approximately 750 detainee complaints in the OIG database from fiscal years 2005 through 2006 showed that about 11 percent involved issues relating to medical treatment, such as a detainees alleging that they were denied access to specialized medical care. OPR stated that in fiscal years 2003 through 2006, they had received 409 allegations concerning the treatment of detainees. Seven of these allegations were found to be substantiated, 26 unfounded, and 65 unsubstantiated. Four of the seven substantiated cases involved employee misconduct, resulting in four terminations. According to OPR officials, three cases were still being adjudicated and the nature of the allegations was not provided. Additionally, 200 of the allegations were classified by OPR as either information only to facility management, requiring no further action, or were referred to facility management for action, requiring a response. CRCL also receives complaints referred from the OIG, nongovernmental organizations, and members of the public. Officials stated that from the period March 2003 to August 2006 they received 46 complaints related to the treatment of detainees, although the nature of the complaints was not identified. Of these 46 complaints, 14 were closed, 11 were referred to ICE OPR, 12 were retained for investigation, and 9 were pending decision about disposition. We could not determine the number of cases referred to DRO or their disposition. On the basis of a limited review of DRO’s complaints database and discussions with ICE officials knowledgeable about the database, we concluded that DRO’s complaint database was not sufficiently reliable for audit purposes. We recommended that ICE develop a formal tracking system to ensure that all detainee complaints referred to DRO are reviewed and the disposition, including any corrective action, is recorded for later examination. We reviewed 37 detention monitoring reports compiled by UNHCR from the period 1993 to 2006. These reports were based on UNHCR’s site visits and its discussions with ICE officials, facility staff, and detainee interviews, especially with asylum seekers. Eighteen of the 37 UNHCR reports cited concerns related to medical care, such as detainee allegations that jail staff were unresponsive to requests for medical assistance and UNHCR’s concern about the shortage of mental health staff. While American Bar Association officials informed us that they do not keep statistics regarding complaints, they compiled a list for us of common detainee complaints received through correspondence. This list indicated that of the 1,032 complaints it received from January 2003 to February 2007, 39 involved medical access issues such as a detainee alleging denial of necessary medication and regular visits with a psychiatrist, allegations of delays in processing sick call requests, and allegations of a facility not providing prescribed medications. Madam Chairman, this concludes my prepared remarks. I would be happy to answer any questions you or the members of the subcommittee have. For further information on this testimony, please contact Richard M. Stana at (202) 512-8777 or by e-mail at stanar@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. In addition to the contact named above, William Crocker III, Assistant Director; Minty Abraham; Frances Cook; Robert Lowthian; and Vickie Miller made key contributions to this statement. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

In fiscal year 2007, Department of Homeland Security's (DHS) U.S. Immigration and Customs Enforcement (ICE) detained over 311,000 aliens, with an average daily population of over 30,000 and an average length of stay of about 37 days in one of approximately 300 facilities. The care and treatment of aliens while in detention is a significant challenge to ICE, as concerns continue to be raised by members of Congress and advocacy groups about the treatment of the growing number of aliens while in ICE's custody. This testimony focuses on (1) the extent to which 23 facilities complied with medical care standards, (2) deficiencies found during ICE's annual compliance inspection reviews, and (3) the types of complaints filed by alien detainees about detention conditions. This testimony is based on GAO's July 2007 report evaluating, among other things, the extent to which 23 facilities complied with aspects of eight of ICE's 38 National Detention Standards. This report did not address quality of care issues. At the time of its visits, GAO observed instances of noncompliance with ICE's medical care standards at 3 of the 23 facilities visited. These instances related to staff not administering a mandatory 14-day physical exam to approximately 260 detainees, not administering medical screenings immediately upon admission, and first aid kits not being available as required. However, these instances did not show a pervasive or persistent pattern of noncompliance across all 23 facilities. Officials at some facilities told GAO that meeting the specialized medical and mental health needs of detainees had been challenging, citing difficulties they had experienced in obtaining ICE approval for outside nonroutine medical and mental health care. On the other hand, GAO observed instances where detainees were receiving specialized care at the facilities visited. At the time of its study, GAO reviewed the most recently available ICE annual inspection reports for 20 of the 23 detention facilities that it visited; these reports showed that ICE reviewers had identified a total of 59 instances of noncompliance with National Detention Standards, 4 of which involved medical care. One facility had sick call request forms that were available only in English whereas the population was largely Spanish speaking. Another did not maintain alien medical records on-site. One facility's staff failed to obtain informed consent from the detainee when prescribing psychiatric medication. Finally, another facility did not have medical staff on-site to screen detainees arriving after 5 p.m. and did not have a properly locked medical cabinet. GAO did not determine whether these instances of noncompliance were subsequently corrected as required. The types of grievances at the facilities GAO visited typically included the lack of timely response to requests for medical treatment, missing property, high commissary prices, poor food quality and insufficient food quantity, high telephone costs, problems with telephones, and questions concerning detention case management issues. ICE's detainee grievance standard states that facilities shall establish and implement procedures for informal and formal resolution of detainee grievances. Four of the 23 facilities GAO visited did not comply with all aspects of ICE's detainee grievance standards. For example, one facility did not properly log all grievances that GAO found in their facility files. Detainee complaints may also be filed with several governmental and nongovernmental organizations. The primary way for detainees to file complaints is to contact the DHS Office of Inspector General (OIG). About 11 percent of detainee complaints to the OIG between 2005 and 2006 involved medical treatment issues. However, we found that the OIG complaint hotline 1-800 number was blocked or otherwise restricted at 12 of the facilities we tested. OIG investigates the most serious complaints and refers the remainder to other DHS components. GAO could not determine the number of cases referred to ICE's Detention Removal Office and concluded that ICE's detainee complaint database was not sufficiently reliable.

GSA estimated that federal agencies spent about $1.6 billion during fiscal year 2009 purchasing office supplies from more than 239,000 vendors. Federal agencies can use a variety of different approaches to purchase office supplies. For relatively small purchases, generally up to $3,000, authorized personnel can use their government purchase cards. For larger purchases, agencies may use other procedures under the Federal Acquisition Regulation, such as awarding a contract or establishing blanket purchase agreements. Alternatively, agencies can use the Federal Supply Schedule program (schedules program), a simplified process for procuring office supplies where GSA awards contracts to multiple vendors for a wide range of commercially available goods and services to take advantage of price discounts equal to those that vendors offer their “most favored customers.” The schedules program can leverage the government’s significant aggregate buying power. In addition, agencies can make office supply purchases under GSA’s new initiative, the OS II program. The OS II program is an outgrowth of an earlier attempt by GSA to offer agencies a simplified process for fulfilling their repetitive supply needs while obtaining prices that are lower than vendors’ schedule prices. By July 2010, GSA had awarded 15 blanket purchase agreementswhich went to small businesses. competitively to support the OS II initiative, 13 of For its study, GSA reviewed office supply purchases in 14 categories of mostly consumable office supplies, ranging from paper and writing instruments to calendars and filing supplies. The report did not include non-consumable items such as office furniture and computers because they are not part of the standard industry definition of office supplies. The GSA report estimated that during fiscal year 2009, the 10 agencies the highest spending on office supplies accounted for about $1.3 billion, or about 81 percent, of the total $1.6 billion spent governmentwide in the 14 categories of office supplies. Further, it stated that about 58 percent of office supply purchases were made outside of the GSA schedules program, mostly at retail stores. Additionally, GSA reported that agencies paid an average of 75 percent more (a price premium) than schedule prices and 86 percent more than OS II prices, for their retail purchases. Departments of the Army, Air Force, Navy, Homeland Security, Veterans Affairs, State, Health and Human Services, Justice, Commerce, and Agriculture. While the GSA report acknowledged some limitations with the data, we identified additional data and other limitations that lead us to question the magnitude of some of GSA’s reported price premiums. We were not able to fully quantify the impact of these limitations. Additionally, other agencies questioned the study’s specific findings related to price premiums, but their own studies of price premiums support GSA’s conclusion that better prices can be obtained through consolidated, leveraged purchasing. Since purchasing of office supplies is highly decentralized, GSA obtained data for its study from multiple disparate sources, such as the Federal Procurement Data System-Next Generation, the Department of Defense (DOD) electronic mall, and purchase card data from commercial banks. To determine the amount of funds spent on office supplies and to conduct related analyses, GSA had to sort through about 7 million purchase transactions involving over 12 million items. The agency took steps to clean the data prior to using them. For example, it removed duplicate purchases and items that did not meet its definition of office supplies. The GSA study noted that the estimated amount of funds and related calculations were to be considered sound and reliable estimates derived from rigorous data analysis techniques. We also identified additional data and other limitations in GSA’s study, including: GSA may not have been able to properly control for purchases of different quantities of the same item. Because there is no consistency in how part numbers are assigned, manufacturers may assign the same part number to both individual items and to packages of items in some cases. GSA tried to exclude transactions that had large variations in retail prices for apparently identical items to control for these occurrences. However, when we reviewed data for 10 items within the writing instruments category, we found that retail prices for 6 of the 10 items varied by more than 300 percent, such as Rollerball pens, which ranged from $9.96 to $44.96. Two different formulas were used for calculating price premium estimates. However, the study only described one of these specific formulas. The use of the unreported formula did not have a substantial impact on the retail price premium calculations for most categories of office supplies or the overall conclusions of the study, but the GSA report could have been more complete had it fully disclosed all the formulas used for all categories of office supplies. GSA did not identify or collect any data about price comparisons conducted by the purchase cardholders. GSA concluded that purchase cardholders compared costs at some level prior to making a purchase based on its interviews with senior-level acquisition officials. While these officials may have had a broad understanding of agency procurement policies and practices, they were not representative of the approximately 270,000 credit cardholders making purchasing decisions. GSA officials said that given the reporting time frame for the study, they did not have the resources or time needed to survey a representative sample of the 270,000 purchase cardholders. Additionally, officials from the Departments of Air Force, Army, Navy, and Homeland Security believed that the price premiums reported by GSA when buying outside the GSA schedule were overstated based upon their own studies. For example, the Air Force determined that the OS II blanket purchase agreements could save about 7 percent in a study of the 125 most commonly purchased items. However, these agencies agreed with GSA’s overall conclusion that better prices can be obtained through leveraged buys and that prices available through the new OS II blanket purchase agreements were better than the prices available from their existing agency blanket purchase agreements. According to initial available data, GSA’s OS II blanket purchase agreements have produced savings. The OS II initiative, more so than past efforts, is demonstrating that leveraged buying can produce greater savings and has provided improvements for managing ongoing and future strategic sourcing initiatives. GSA is using a combination of agency and vendor involvement to identify key requirements and cost drivers, increase the ease of use, and obtain the data necessary to manage the program. On the basis of the sales data provided by OS II vendors, GSA estimates the federal government saved $39.2 million between June 2010 and March 2012 by using the 15 blanket purchase agreements established for this program. These savings were estimated by comparing the lowest prices of a set—or market basket—of over 400 items available on GSA’s schedules program contracts before OS II with prices and discounts being paid for the same items on the OS II blanket purchase agreements. Importantly, and unlike GSA’s report, GSA’s conclusions about savings realized under OS II are based on data from vendors—which they are required to collect and provide in the normal course of business—and not on data collected after the fact from sources not designed to produce information needed to estimate savings. GSA’s comparison of the market basket of best schedule prices against the OS II blanket purchase agreement vendors’ prices found that prices offered by OS II vendors were an average of 8 percent lower. The average savings, however, is expected to fluctuate somewhat as the OS II initiative continues to be implemented and the mix of vendors, products, and agencies changes. For example, GSA found that savings, as a percentage, declined slightly as agencies with historically strong office supplies management programs increased their use of OS II. Conversely, they expect the savings percentage to increase as agencies without strong office supplies management programs increase their use. In addition to the savings from the blanket purchase agreements, GSA representatives told us that they are also seeing prices decrease on schedules program contracts as vendors that were not selected for the OS II program react to the additional price competition created by the OS II initiative. The agency decided to extend the OS II blanket purchase agreements for an additional year after negotiating additional price discounts of about 3.9 percent on average with 13 of the 15 vendors in the program. The blanket purchase agreements also include tiered discounts, which apply when specific sales volume thresholds are met. Sales realized by 5 of the vendors reached the first tier discount level as of April 2012, and the vendors have since adjusted their prices to provide the corresponding price discounts. GSA anticipates that additional vendors will reach sales volumes that exceed the first tier discount threshold in the first option year, which will trigger additional discounts. An additional benefit of OS II may be lower contract management costs, as agencies can rely on GSA to administer the program instead of their own staffs. While this may create some additional burden for GSA, officials believe the overall government costs to administer office supply purchases should decrease. GSA has incorporated a range of activities representative of a strategic procurement approach into the OS II initiative. These activities range from obtaining a better picture of spending on services, to taking an enterprisewide approach, to developing new ways of doing business. They also involve supply chain management activities. All of these activities involve some level of centralized oversight and management. GSA is capturing lessons learned from OS II and is attempting to incorporate these lessons into other strategic sourcing initiatives. GSA obtained commitments from agencies and helped set goals for discounts to let businesses know that the agencies were serious in their commitment to the blanket purchase agreements. This also helped GSA determine the number of blanket purchase agreements that would be awarded. As part of the overall strategy, a GSA commodity council identified five overarching goals, in addition to savings, for the OS II initiative. These goals and the methods used to address them are in table 1. Several new business practices have been incorporated in the OS II program to meet the goals. For example, to meet the capture data goal, GSA is collecting data on purchases and vendor performance that are assimilated and tracked through dashboards, which are high-level indicators of overall program performance. The dashboard information is used by the GSA team members responsible for oversight to ensure that the vendors are meeting terms and conditions of the blanket purchase agreements and that the program is meeting overall goals. The information is also shared with agencies using OS II. Our review of GSA’s OS II vendor files found that GSA has taken a more active role in oversight and is holding the vendors accountable for performance. For example, GSA has issued Letters of Concern to four vendors and has issued one Cure Notice to a vendor. These letters and notices are used to inform vendors that the agency has identified a problem with the vendor’s compliance. To support the OS II management responsibilities, GSA charges a 2 percent management fee, which is incorporated into the vendors’ prices. This fee, which is higher than the 0.75 percent fee normally charged on GSA schedules program sales, covers the additional program costs, such as the cost of the six officials responsible for administering the 15 blanket purchase agreements, as well as their contractor support. In addition, to increase savings and ease of use, OS II includes a point of sale discount, under which blanket purchase agreement prices are automatically charged whenever a government purchase card is used for an item covered by the blanket purchase agreement rather than having the buyers ask for a discount. Additionally, purchases are automatically tax exempt if the purchases are made using a government purchase card. State sales taxes were identified by GSA’s report as costing the federal agencies at least $7 million dollars in fiscal year 2009. GSA’s experience with OS II is being applied to other strategic sourcing initiatives. For example, GSA set up a commodity council for the Federal Strategic Sourcing Initiative Second Generation Domestic Delivery Services II program. The council helped identify program requirements and provide input on how the program operates. GSA’s office supplies report contained some data and other limitations, but it showed that federal agencies were not using a consistent approach in both where and how they bought office supplies and often paid a price premium as a result of these practices. The magnitude of the price premium may be debatable, but other agencies that have conducted studies came to the same basic conclusion about the savings potential from leveraged buying. The GSA study helped set the course for a more strategic approach to buying office supplies—an approach that provides data to oversee the performance of vendors, monitor prices, and estimate savings. Additional savings are expected as more government agencies participate in the OS II initiative and further leverage the government’s buying power. Chairman Mulvaney, Ranking Member Chu, and the Members of the Subcommittee on Contracting and Workforce, this completes my prepared statement. I am happy to answer any questions you have. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

The GSA estimated that federal agencies spent about $1.6 billion during fiscal year 2009 purchasing office supplies from more than 239,000 vendors. Concerned that federal agencies may not be getting the best prices available, Congress directed GSA to study office supply purchases by the 10 largest federal agencies. GSA delivered the results of its study in November 2010. The study also discussed GSA’s efforts to implement an initiative focused on leveraging the government’s buying power to realize savings when buying office supplies, known as OS II. Congress directed GAO to assess the GSA study, with particular attention to the potential for savings. This testimony is based on the findings and conclusions of GAO’s December 2011 report, G AO-12-178, and focuses on (1) the support for the findings and conclusions in GSA’s study, and (2) how GSA's new office supply contracts support the goal of leveraging the government’s buying power to achieve savings. In 2010, the General Services Administration’s (GSA) pricing study found that during fiscal year 2009, the 10 largest federal agencies accounted for about $1.3 billion, or about 81 percent, of the total $1.6 billion spent governmentwide in 14 categories of office supplies. About 58 percent of their office supply purchases were made outside of the GSA schedules program—a simplified process to take advantage of price discounts equal to those that vendors offer “most favored customers.” Most of these purchases were made at retail stores. GSA also reported that agencies paid an average of 75 percent more (a price premium) than schedule prices for their retail purchases and 86 percent more compared to Office Supplies II (OS II) prices. While the GSA acknowledged some limitations with the study data, we identified additional data and other limitations that lead us to question the magnitude of some of GSA’s reported price premiums and assertions. More specifically, we determined that the study may not have properly controlled for quantities, used two different formulas to calculate price premium estimates, and relied on interviews with senior level acquisition officials instead of purchasers to determine whether buyers compared prices before making purchases. We were not able to fully quantify the impact of these limitations. Additionally, other agencies questioned the study’s specific findings related to price premiums, but their own studies of price premiums support GSA’s conclusion that better prices can be obtained through consolidated, leveraged purchasing. Available data show that the OS II initiative has produced savings of $39.2 million from June 2010 through March 2012. According to GSA, the OS II initiative is demonstrating that leveraged buying can produce greater savings and has provided improvements for managing ongoing and future strategic sourcing initiatives. For example, GSA reports that OS II allowed it to negotiate discounts with vendors who were selected for the initiative. As governmentwide sales surpass certain targets, additional discounts are applied to purchase prices. Further, OS II has spurred competition among schedule vendors that were not selected for OS II, resulting in decreased schedule prices. The initiative is also expected to lower governmentwide supply costs through more centralized contract management. Another key aspect of the initiative is that participating vendors provide sales and other information to GSA to help monitor prices, savings, and vendor performance. Finally, GSA is capturing lessons learned from OS II and is attempting to incorporate these lessons into other strategic sourcing initiatives. GAO did not make any recommendations in its report, and is not making any in this testimony.

The Bureau’s mission is to provide comprehensive data about the nation’s people and economy. The 2010 census enumerates the number and location of people on Census Day, which is April 1, 2010. However, census operations begin long before Census Day and continue afterward. For example, address canvassing for the 2010 census will begin in April 2009, while the Secretary of Commerce must report tabulated census data to the President by December 31, 2010, and to state governors and legislatures by March 31, 2011. The decennial census is a major undertaking for the Bureau that includes the following major activities: Establishing where to count. This includes identifying and correcting addresses for all known living quarters in the United States (address canvassing) and validating addresses identified as potential group quarters, such as college residence halls and group homes (group quarters validation). Collecting and integrating respondent information. This includes delivering questionnaires to housing units by mail and other methods, processing the returned questionnaires, and following up with nonrespondents through personal interviews (nonresponse follow-up). It also includes enumerating residents of group quarters (group quarters enumeration) and occupied transitional living quarters (enumeration of transitory locations), such as recreational vehicle parks, campgrounds, and hotels. It also includes a final check of housing unit status (field verification) where Bureau workers verify potential duplicate housing units identified during response processing. Providing census results. This includes tabulating and summarizing census data and disseminating the results to the public. Automation and IT are to play a critical role in the success of the 2010 census by supporting data collection, analysis, and dissemination. Several systems will play a key role in the 2010 census. For example, enumeration “universes,” which serve as the basis for enumeration operations and response data collection, are organized by the Universe Control and Management (UC&M) system, and response data are received and edited to help eliminate duplicate responses using the Response Processing System (RPS). Both UC&M and RPS are legacy systems that are collectively called the Headquarters Processing System. Geographic information and support to aid the Bureau in establishing where to count U.S. citizens are provided by the Master Address File/Topologically Integrated Geographic Encoding and Referencing (MAF/TIGER) system. The Decennial Response Integration System (DRIS) is to provide a system for collecting and integrating census responses from all sources, including forms and telephone interviews. The Field Data Collection Automation (FDCA) program includes the development of handheld computers for the address canvassing operation and the systems, equipment, and infrastructure that field staff will use to collect data. Paper-Based Operations (PBO) was established in August 2008 primarily to handle certain operations that were originally part of FDCA. PBO includes IT systems and infrastructure needed to support the use of paper forms for operations such as group quarters enumeration activities, nonresponse follow-up activities, enumeration at transitory locations activities, and field verification activities. These activities were originally to be conducted using IT systems and infrastructure developed by the FDCA program. Finally, the Data Access and Dissemination System II (DADS II) is to replace legacy systems for tabulating and publicly disseminating data. As stated in our testing guide and the Institute of Electrical and Electronics Engineers (IEEE) standards, complete and thorough testing is essential for providing reasonable assurance that new or modified IT systems will perform as intended. To be effective, testing should be planned and conducted in a structured and disciplined fashion that includes processes to control each incremental level of testing, including testing of individual systems, the integration of those systems, and testing to address all interrelated systems and functionality in an operational environment. Further, this testing should be planned and scheduled in a structured and disciplined fashion. Comprehensive testing that is effectively planned and scheduled can provide the basis for identifying key tasks and requirements and better ensure that a system meets these specified requirements and functions as intended in an operational environment. In preparation for the 2010 census, the Bureau planned what it refers to as the Dress Rehearsal. The Dress Rehearsal includes systems and integration testing, as well as end-to-end testing of key operations in a census-like environment. During the Dress Rehearsal period, running from February 2006 through June 2009, the Bureau is developing and testing systems and operations, and it held a mock Census Day on May 1, 2008. The Dress Rehearsal activities, which are still under way, are a subset of the activities planned for the actual 2010 census and include testing of both IT and non-IT related functions, such as opening offices and hiring staff. The Dress Rehearsal identified significant technical problems during the address canvassing and group quarters validation operations. For example, during the Dress Rehearsal address canvassing operation, the Bureau encountered problems with the handheld computers, including slow and inconsistent data transmissions, the devices freezing up, and difficulties collecting mapping coordinates. As a result of the problems observed during the Dress Rehearsal, cost overruns and schedule slippage in the FDCA program, and other issues, the Bureau removed the planned testing of several key operations from the Dress Rehearsal and switched key operations, such as nonresponse follow-up, to paper-based processes instead of using the handheld computers as originally planned. Through the Dress Rehearsal and other testing activities, the Bureau has completed key system tests, but significant testing has yet to be done, and planning for this is not complete. Table 1 summarizes the status and plans for system testing. Effective integration testing ensures that external interfaces work correctly and that the integrated systems meet specified requirements. This testing should be planned and scheduled in a disciplined fashion according to defined priorities. For the 2010 census, each program office is responsible for and has made progress in defining system interfaces and conducting integration testing, which includes testing of these interfaces. However, significant activities remain to be completed. For example, for systems such as PBO, interfaces have not been fully defined, and other interfaces have been defined but have not been tested. In addition, the Bureau has not established a master list of interfaces between key systems, or plans and schedules for integration testing of these interfaces. A master list of system interfaces is an important tool for ensuring that all interfaces are tested appropriately and that the priorities for testing are set correctly. As of October 2008, the Bureau had begun efforts to update a master list it had developed in 2007, but it has not provided a date when this list will be completed. Without a completed master list, the Bureau cannot develop comprehensive plans and schedules for conducting systems integration testing that indicate how the testing of these interfaces will be prioritized. With the limited amount of time remaining before systems are needed for 2010 operations, the lack of comprehensive plans and schedules increases the risk that the Bureau may not be able to adequately test system interfaces, and that interfaced systems may not work together as intended. Although several critical operations underwent end-to-end testing in the Dress Rehearsal, others did not. As of December 2008, the Bureau had not established testing plans or schedules for end-to-end testing of the key operations that were removed from the Dress Rehearsal, nor has it determined when these plans will be completed. These operations include enumeration of transitory locations, group quarters enumeration, and field verification. The decreasing time available for completing end-to-end testing increases the risk that testing of key operations will not take place before the required deadline. Bureau officials have acknowledged this risk in briefings to the Office of Management and Budget. However, as of January 2009, the Bureau had not completed mitigation plans for this risk. According to the Bureau, the plans are still being reviewed by senior management. Without plans to mitigate the risks associated with limited end-to-end testing, the Bureau may not be able to respond effectively if systems do not perform as intended. As stated in our testing guide and IEEE standards, oversight of testing activities includes both planning and ongoing monitoring of testing activities. Ongoing monitoring entails collecting and assessing status and progress reports to determine, for example, whether specific test activities are on schedule. In addition, comprehensive guidance should describe each level of testing and the types of test products expected. In response to prior recommendations, the Bureau took initial steps to enhance its programwide oversight; however, these steps have not been sufficient. For example, in June 2008, the Bureau established an inventory of all testing activities specific to all key decennial operations. However, the inventory has not been updated since May 2008, and officials have no plans for further updates. In another effort to improve executive-level oversight, the Decennial Management Division began producing (as of July 2008) a weekly executive alert report and has established (as of October 2008) a dashboard and monthly reporting indicators. However, these products do not provide comprehensive status information on the progress of testing key systems and interfaces. Further, the assessment of testing progress has not been based on quantitative and specific metrics. The lack of quantitative and specific metrics to track progress limits the Bureau’s ability to accurately assess the status and progress of testing activities. In commenting on our draft report, the Bureau provided selected examples where they had begun to use more detailed metrics to track the progress of end-to-end testing activities. The Bureau also has weaknesses in its testing guidance. According to the Associate Director for the 2010 census, the Bureau did establish a policy strongly encouraging offices responsible for decennial systems to use best practices in software development and testing, as specified in level 2 of Carnegie Mellon’s Capability Maturity Model® Integration. However, beyond this general guidance, there is no mandatory or specific guidance on key testing activities such as criteria for each level or the type of test products expected. The lack of guidance has led to an ad hoc—and, at times—less than desirable approach to testing. In our report, we are making ten recommendations for improvements to the Bureau’s testing activities. Our recommendations include finalizing system requirements and completing development of test plans and schedules, establishing a master list of system interfaces, prioritizing and developing plans to test these interfaces, and establishing plans to test operations removed from the Dress Rehearsal. In addition, we are recommending that the Bureau improve its monitoring of testing progress and improve executive-level oversight of testing activities. In written comments on the report, the department had no significant disagreements with our recommendations. The department stated that its focus is on testing new software and systems, not legacy systems and operations used in previous censuses. However, the systems in place to conduct these operations have changed substantially and have not yet been fully tested in a census-like environment. Consistent with our recommendations, finalizing test plans and schedules and testing all systems as thoroughly as possible will help to ensure that decennial systems will work as intended. In summary, while the Bureau’s program offices have made progress in testing key decennial systems, much work remains to ensure that systems operate as intended for conducting an accurate and timely 2010 census. This work includes system, integration, and end-to-end testing activities. Given the rapidly approaching deadlines of the 2010 census, completing testing and establishing stronger executive-level oversight are critical to ensuring that systems perform as intended when they are needed. Mr. Chairman and members of the subcommittee, this concludes our statement. We would be pleased to respond to any questions that you or other members of the subcommittee may have at this time. If you have any questions about matters discussed in this testimony, please contact David A. Powner at (202) 512-9286 or pownerd@gao.gov or Robert Goldenkoff at (202) 512-2757 or goldenkoffr@gao.gov. Other key contributors to this testimony include Sher`rie Bacon, Barbara Collier, Neil Doherty, Vijay D’Souza, Elizabeth Fan, Nancy Glover, Signora May, Lee McCracken, Ty Mitchell, Lisa Pearson, Crystal Robinson, Melissa Schermerhorn, Cynthia Scott, Karl Seifert, Jonathan Ticehurst, Timothy Wexler, and Katherine Wulff. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

The Decennial Census is mandated by the U.S. Constitution and provides vital data that are used, among other things, to reapportion and redistrict congressional seats and allocate federal financial assistance. In March 2008, GAO designated the 2010 Decennial Census a high-risk area, citing a number of long-standing and emerging challenges, including weaknesses in the U.S. Census Bureau's (Bureau) management of its information technology (IT) systems and operations. In conducting the 2010 census, the Bureau is relying on both the acquisition of new IT systems and the enhancement of existing systems. Thoroughly testing these systems before their actual use is critical to the success of the census. GAO was asked to testify on its report, being released today, on the status and plans of testing of key 2010 decennial IT systems. Although the Bureau has made progress in testing key decennial systems, critical testing activities remain to be performed before systems will be ready to support the 2010 census. Bureau program offices have completed some testing of individual systems, but significant work still remains to be done, and many plans have not yet been developed (see table below). In its testing of system integration, the Bureau has not completed critical activities; it also lacks a master list of interfaces between systems and has not developed testing plans and schedules. Although the Bureau had originally planned what it refers to as a Dress Rehearsal, starting in 2006, to serve as a comprehensive end-to-end test of key operations and systems, significant problems were identified during testing. As a result, several key operations were removed from the Dress Rehearsal and did not undergo end-to-end testing. The Bureau has neither developed testing plans for these key operations, nor has it determined when such plans will be completed. Weaknesses in the Bureau's testing progress and plans can be attributed in part to a lack of sufficient executive-level oversight and guidance. Bureau management does provide oversight of system testing activities, but the oversight activities are not sufficient. For example, Bureau reports do not provide comprehensive status information on progress in testing key systems and interfaces, and assessments of the overall status of testing for key operations are not based on quantitative metrics. Further, although the Bureau has issued general testing guidance, it is neither mandatory nor specific enough to ensure consistency in conducting system testing. Without adequate oversight and more comprehensive guidance, the Bureau cannot ensure that it is thoroughly testing its systems and properly prioritizing testing activities before the 2010 Decennial Census, posing the risk that these systems may not perform as planned.

On January 14, 2004, the President articulated a new vision for space exploration for NASA. Part of the Vision includes the goal of retiring the space shuttle following completion of the International Space Station (ISS), planned for the end of the decade. In addition, NASA plans to begin developing a new manned exploration vehicle, or CEV, to replace the space shuttle and return humans to the moon as early as 2015, but no later than 2020, in preparation for more ambitious future missions. As this Subcommittee is aware, NASA’s Administrator has recently expressed his desire to accelerate the CEV development to eliminate the gap between the end of the Space Shuttle Program, currently scheduled for 2010, and the first manned operational flight of the CEV, currently scheduled for 2014. If the CEV development cannot be accelerated, NASA will not be able to launch astronauts into space for several years and will likely have to rely on Russia for transportation to and from the ISS. A 1996 “Balance Agreement” between NASA and the Russian space agency, obligated Russia to provide 11 Soyuz spacecraft for crew rotation of U.S. and Russia crews. After April 2006, this agreement will be fulfilled and Russia no longer must allocate any of the seats on its Soyuzes for U.S. astronauts. Russian officials have indicated that they will no longer provide crew return services to NASA at no cost at that time. However, NASA may face challenges to compensating Russia for seats on its Soyuzes after the agreement is fulfilled due to restrictions in the Iran Nonproliferation Act. The space shuttle, NASA’s largest individual program, is an essential element of NASA’s ability to implement the Vision because it is the only launch system presently capable of transporting the remaining components necessary to complete assembly of the ISS. NASA projects that it will need to conduct an estimated 28 flights over the next 5 to 6 years to complete assembly of and provide logistical support to the ISS. However, NASA is currently examining alternative ISS configurations to meet the goals of the Vision and satisfy NASA’s international partners, while requiring as few space shuttle flights as possible to complete assembly. Prior to retiring the space shuttle, NASA will need to first return the space shuttle safely to flight and execute whatever number of remaining missions are needed to complete assembly of and provide support for the ISS. At the same time, NASA will begin the process of closing out or transitioning its space shuttle assets that are no longer needed to support the program —such as its workforce, hardware, and facilities—to other NASA programs. The process of closing out or transitioning the program’s assets will extend well beyond the space shuttle’s final flight (see fig. 1). The planning window for the first flight is July 13 through July 31, 2005. Retiring the space shuttle and, in the larger context, implementing the Vision, will require that the Space Shuttle Program rely on its most important asset—its workforce. The space shuttle workforce consists of about 2,000 civil service and 15,600 contractor personnel, including a large number of engineers and scientists. While each of the NASA centers support the Space Shuttle Program to some degree, the vast majority of this workforce is located at three of NASA’s Space Operations Centers: Johnson Space Center, Kennedy Space Center, and Marshall Space Flight Center. Data provided by NASA shows that approximately one quarter of the workforce at its Space Operations centers is 51 years or older and about 33 percent will be eligible for retirement by fiscal year 2012. The space shuttle workforce and NASA’s human capital management have been the subject of many GAO and other reviews in the past that have highlighted various challenges to maintaining NASA’s science and engineering workforce. In addition, over the past few years, GAO and others in the federal government have underscored the importance of human capital management and strategic workforce planning. In response to an increased governmentwide focus on strategic human capital management, NASA has taken several steps to improve its human capital management. These include steps such as devising an agencywide strategic human capital plan, developing workforce analysis tools to assist in identifying critical skills needs, and requesting and receiving additional human capital flexibilities. NASA has made only limited progress toward developing a detailed long- term strategy for sustaining its workforce through the space shuttle’s retirement. While NASA recognizes the importance of having in place a strategy for sustaining a critically skilled workforce to support space shuttle operations, it has only taken preliminary steps to do so. For example, the program identified lessons-learned from the retirement of programs comparable to the space shuttle, such as the Air Force Titan IV Rocket Program. Among other things, the lessons learned reports highlight the practices used by other programs when making personnel decisions, such as the importance of developing transition strategies and early retention planning. Other efforts have been initiated or are planned; examples include the following: contracted with the National Academy of Public Administration to assist it in planning for the space shuttle’s retirement and transitioning to future programs and began devising an acquisition strategy for updating propulsion system prime contracts at MSFC to take into account the Vision’s goal of retiring the space shuttle following completion of the ISS. NASA’s prime contractor for space shuttle operations, USA, has also taken some preliminary steps, but its progress with these efforts depends on NASA making decisions that impact contractor requirements through the remainder of the program. For example, USA has begun to define its critical skills needs to continue supporting the Space Shuttle Program, devised a communication plan, contracted with a human capital consulting firm to conduct a comprehensive study of its workforce; and continued to monitor indicators of employee morale and workforce stability. Contractor officials said that further efforts to prepare for the space shuttle’s retirement and its impact on their workforce are on hold until NASA first makes decisions that impact the space shuttle’s remaining number of flights and thus the time frames for retiring the program and transitioning its assets. Making progress toward developing a detailed strategy for sustaining a critically skilled space shuttle workforce through the program’s retirement is important given the impact that workforce problems could have on NASA-wide goals. According to NASA officials, if the Space Shuttle Program faces difficulties in sustaining the necessary workforce, NASA- wide goals, such as implementing the Vision and proceeding with space exploration activities, could be impacted. For example, workforce problems could lead to a delay in flight certification for the space shuttle, which could result in a delay to the program’s overall flight schedule, thus compromising the goal of completing assembly of the ISS by 2010. In addition, officials said that space exploration activities could slip as much as 1 year for each year that the space shuttle’s operations are extended because NASA’s progress with these activities relies on funding and assets that are expected to be transferred from the Space Shuttle Program to other NASA programs. NASA officials told us they expect to face various challenges in sustaining the critically skilled space shuttle workforce. These challenges include the following: Retaining the current workforce. Because many in the current workforce will want to participate in or will be needed to support future phases of implementing the Vision, it may be difficult to retain them in the Space Shuttle Program. In addition, it may be difficult to provide certain employees with a transition path from the Space Shuttle Program to future programs following retirement. Impact on the prime contractor for space shuttle operations. Because USA was established specifically to perform ground and flight operations for the Space Shuttle Program, its future following the space shuttle’s retirement is uncertain. Contractor officials stated that a lack of long-term job security would cause difficulties in recruiting and retaining employees to continue supporting the space shuttle as it nears retirement. In addition, steps that the contractor may have to take to retain its workforce, such as paying retention bonuses, are likely to require funding above normal levels. Governmentwide budgetary constraints. Throughout the process of retiring the space shuttle, NASA, like other federal agencies, will have to contend with urgent challenges facing the federal budget that will put pressure on discretionary spending—such as investments in space programs—and require NASA to do more with fewer resources. While the Space Shuttle Program is still in the early stages of planning for the program’s retirement, its development of a detailed long-term strategy to sustain its future workforce is being hampered by several factors: Near-term focus on returning the space shuttle to flight. Since the Space Shuttle Columbia accident, the program has been focused on its near-term goal of returning the space shuttle safely to flight. While this focus is understandable given the importance of the space shuttle’s role in completing assembly of the ISS, it has led to the delay of efforts to determine future workforce needs. Uncertainties with respect to implementing the Vision. While the Vision has provided the Space Shuttle Program with the goal of retiring the program by 2010 upon completion of the ISS, the program lacks well-defined objectives or goals on which to base its workforce planning efforts. For example, NASA has not yet determined the final configuration of the ISS, the final number of flights for the space shuttle, how ISS operations will be supported after the space shuttle is retired, or the type of vehicle that will be used for space exploration. These determinations are important because they impact decisions about the transition of space shuttle assets. Lacking this information, NASA officials have said that their ability to progress with detailed long-term workforce planning is limited. Despite these uncertainties, the Space Shuttle Program could follow a strategic human capital management approach to plan for sustaining its critically skilled workforce. Studies by several organizations, including GAO, have shown that successful organizations in both the public and private sectors follow a strategic human capital management approach, even when faced with an uncertain future environment. In our March 2005 report, we made recommendations aimed at better positioning NASA to sustain a critically skilled space shuttle workforce through retirement. In particular, we recommended that the agency begin identifying the Space Shuttle Program’s future workforce needs based upon various future scenarios the program could face. Scenario planning can allow the agency to progress with workforce planning, even when faced with uncertainties such as those surrounding the final number of space shuttle flights, the final configuration of the ISS and the vehicle that will be developed for exploration. The program can use the information provided by scenario planning to develop strategies for meeting the needs of its potential future scenarios. NASA concurred with our recommendation, and NASA’s Assistant Associate Administrator for the Space Shuttle program is leading an effort to address the recommendation. Since we issued our report and made our recommendation, NASA has taken action and publicly recognized that human capital management and critical skills retention will be a major challenge for the agency as it moves toward retiring the space shuttle. This recognition was most apparent at NASA’s Integrated Space Operations Summit held in March 2005. As part of the Summit process, NASA instituted panel teams to examine the Space Shuttle Program’s mission execution and transition needs from various perspectives and make recommendations aimed at ensuring that the program will execute its remaining missions safely as it transitions to supporting emerging exploration mission needs. The reports that resulted from these examinations are closely linked by a common theme—the importance of human capital management and critical skills retention to ensure success. In their reports, the panel teams highlighted similar challenges to those that we highlighted in our report. The panels made various recommendations to the Space Flight Leadership Council on steps that the program should take now to address human capital concerns. These recommendations included developing and implementing a critical skills retention plan, developing a communication plan to ensure the workforce is informed, and developing a detailed budget that includes funding for human capital retention and reductions, as well as establishing an agencywide team to integrate human capital planning efforts. There is no question that NASA faces a challenging time ahead. Key decisions have to be made regarding final configuration and support of the ISS, the number of shuttle flights needed for those tasks, and the timing for development of future programs, such as the CEV—all in a constrained funding environment. In addition, any schedule slip in the completion of the construction of the ISS or in the CEV falling short of its accelerated initial availability (as soon as possible after space shuttle retirement) may extend the time the space shuttle is needed. But whatever decisions are made and courses of action taken, the need for sustaining a critically skilled workforce is paramount to the success of these programs. Despite a limited focus on human capital management in the past, NASA now acknowledges that it faces significant challenges in sustaining a critically skilled workforce and has taken steps to address these issues. We are encouraged by these actions and the fact that human capital management and critical skills retention was given such prominent attention throughout the recent Integrated Space Operations Summit process. The fact that our findings and conclusions were echoed by the panel teams established to support the Integrated Space Operations Summit is a persuasive reason for NASA leadership to begin addressing these human capital issues early and aggressively. Madam Chairman, this concludes my prepared statement. I would be pleased to respond to any questions that you or other Members of the Subcommittee may have. For further information regarding this testimony, please contact Allen Li at (202) 512-4841 or lia@gao.gov. Individuals making key contributions to this testimony included Alison Heafitz, Jim Morrison, Shelby S. Oakley, Karen Sloan, and T.J Thomson. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

The National Aeronautics and Space Administration's (NASA) space shuttle program is key to implementing the President's vision for space exploration, which calls for completing the assembly of the International Space Station (ISS) by the end of the decade. Currently, the space shuttle, which is to be retired after ISS assembly is completed, is the only launch system capable of transporting ISS components. To meet the goals of the President's vision and satisfy ISS's international partners, NASA is examining alternative launch vehicles and ISS configurations. Retiring the space shuttle and, in the larger context, implementing the President's vision, will require NASA to rely on its most important asset--its workforce. Because maintaining a skilled workforce through retirement will be challenging, GAO was asked to discuss the actions NASA has taken to sustain a skilled space shuttle workforce and the challenges it faces in doing so--findings reported on in March 2005 (see GAO, Space Shuttle: Actions Needed to Better Position NASA to Sustain Its Workforce through Retirement, GAO-05-230). While NASA recognizes the importance of sustaining a critically skilled workforce to support space shuttle operations, it has made limited progress toward developing a detailed long-term strategy to do so. At the time of our March 2005 review, the Space Shuttle Program had identified lessons learned from the retirement of comparable programs, and United Space Alliance--NASA's prime contractor for space shuttle operations--had begun to prepare for the impact of the space shuttle's retirement on its workforce. However, timely action to address workforce issues is critical given their potential impact on NASA-wide goals. Significant delays in implementing a strategy to sustain the space shuttle workforce would likely lead to larger problems, such as overstretched funding and failure to meet NASA program schedules. NASA and United Space Alliance acknowledge that sustaining their workforces will be difficult, particularly if a career path beyond the space shuttle's retirement is not apparent. Fiscal challenges facing the federal government also make it unclear whether funding for retention tools, such as bonuses, will be available. Our March 2005 report identified several factors that have hampered the Space Shuttle Program's workforce planning efforts. For example, the program's near-term focus on returning the space shuttle safely to flight has delayed other efforts that will help the program determine its workforce requirements, such as assessing hardware and facility needs. Program officials also noted that due to uncertainties in implementing the President's vision for space exploration, requirements on which to base workforce planning efforts have yet to be defined. Despite these factors, our work on strategic workforce planning has shown that even when faced with uncertainty, successful organizations take steps, such as scenario planning, to better position themselves to meet future workforce requirements. Since we issued our report and made our recommendation, NASA has publicly recognized, at its Integrated Space Operations Summit, that human capital management and critical skills retention will be a major challenge for the agency as it progresses toward retirement of the space shuttle.

Mr. Chairman and Members of the Subcommittee: We are pleased to be here today to discuss the report that we issued last October to Senator Kay Bailey Hutchison on matters relating to aircraft restoration at the Smithsonian Institution’s National Air and Space Museum (NASM). Senator Hutchison asked us to review whether NASM restored a sufficient number of aircraft to prevent deterioration of its collection. Our review included an assessment of the rate of aircraft restoration, an examination of the adequacy of facilities for preserving aircraft, and an identification of options to better care for the collection. In general, we found that NASM committed relatively few resources to restoration, compared to (1) other NASM museum activities and (2) the resources committed by the Air Force Museum in Dayton, Ohio. But we also found that even if NASM increased its restoration efforts, the museum would not have enough space with environmental controls to properly store or display the restored aircraft. Let me now summarize our findings with respect to NASM’s preservation of its aircraft collection. In October 1995, NASM said that of the 344 aircraft in its collection, 62 were on display at the museum on Washington’s Mall; 210 were stored at the Paul E. Garber facility, in Suitland, Maryland; 58 were on loan to other museums; 12 were stored at Dulles International Airport, Virginia; 1 was stored at Department of Defense facilities in Tucson, Arizona, and 1 at Andrews Air Force Base, Maryland. NASM also estimated that 245 of its 344 aircraft were exhibitable, 55 needed minor work to be exhibitable, and 44 needed major restoration work. Although the Smithsonian started collecting aircraft artifacts in 1876, much of its collection was acquired after World War II by Smithsonian employee Paul E. Garber, an aviation buff who joined the Institution in 1920. Mr. Garber obtained many of the Smithsonian’s aircraft from a collection assembled at the conclusion of World War II by General Hap Arnold, who believed that it was in the national interest to obtain one example of each type of World War II aircraft. Around 1950, the Smithsonian’s share of that collection was moved to a 21-acre tract of federally owned land in Suitland, Maryland, for the Institution’s then newly organized National Air Museum. The aircraft were mainly stored outside from the early 1950s until they were moved into temporary storage buildings, which were constructed primarily in the 1950s, 1960s, and 1970s. In 1966, Congress changed the name of the National Air Museum to the National Air and Space Museum and indicated that NASM should “memorialize the national development of aviation and space flight; collect, preserve, and display aeronautical and space flight equipment of historical interest and significance; serve as a repository for scientific equipment and data pertaining to the development of aviation and space flight; and provide educational material for the historical study of aviation and space flight.” NASM operates on both federal funds, which are used primarily to pay employee salaries, and private donations, which largely fund exhibits. In fiscal year 1994, NASM received about $15.4 million in federal appropriations, grants, and contracts. It also received $10.6 million in nongovernmental funds, such as private donations and theater and gift shop revenues. We found that NASM devoted relatively few resources to aircraft restoration. In fiscal year 1994, NASM devoted about $2.7 million, or 14 percent of its total expenditures, on collections management, which includes aircraft restoration. From 1990 to 1995, NASM completed seven aircraft restoration projects, while continuing four other restoration projects. We estimated that it would take about 100 years to restore the 99 aircraft in its collection needing restoration work at current staffing levels. We reported that even if NASM were to restore more aircraft, the museum did not have adequate storage facilities to protect them from deterioration. Although the indoor storage facilities at Suitland were an improvement over conditions when much of the aircraft collection was stored outdoors, the buildings did not have humidity controls or air-conditioning, some had leaky roofs, and only a few were heated. Because the storage facilities were not environmentally controlled, the wood, fabric, and even metals used in aircraft were susceptible to deterioration and corrosion when exposed to great fluctuations in temperature and humidity. NASM had consistently requested increased funding for collections management and for storage facilities repairs in recent years, but it had to compete with other Smithsonian museums for limited resources and was unable to obtain needed funding. From 1991 to 1994, NASM undertook a conservation assessment, examining the condition of the museum’s 13 storage buildings in Suitland and the condition of the artifacts contained in them. According to the assessment, the buildings containing artifacts suffered from wide temperature fluctuations, leaky roofs, structural problems, and dirt and dust accumulation. An assessment of aircraft engines and wing sections housed in one building revealed corrosion, dirty surfaces, and peeling paint. Another building was reported to be in poor condition, with its concrete slab showing several major cracks and crumbling along the edges as well as a rusting steel structure. The conservation assessment also commented on overall preservation practices, stating that the condition of many objects stored at Suitland illustrated what can happen when a collection is permitted to grow and develop without providing direction and funding for its preservation. We reported that the Smithsonian had spent $9.1 million over the previous decade to improve the Suitland facility, including roof repairs, asbestos removal, and storm-water structures. The Smithsonian estimated that 35 percent of these improvements were made for NASM’s share of the Suitland facility, which is also used by other Smithsonian museums. Also, a new artifacts storage facility that NASM shares with the Smithsonian’s National Museum of American History and a new chemical facility for NASM were recently constructed at Suitland at a cost of about $1.4 million. Despite these improvements, officials from the Smithsonian’s Office of Design and Construction, which is responsible for maintaining and repairing Smithsonian facilities, said last year that over the next 5 years, the Suitland facility needed at least $7.4 million in repairs and the Mall museum needed at least $33.8 million in repairs. However, the officials said that it was unlikely that NASM would receive the needed repair funds because NASM must compete with other Smithsonian museums for scarce repair funds. The officials said that the Smithsonian had a backlog of $250 million in deferred maintenance for all of its museums, could only afford to make about $25 million in repairs each year, and accrued another $32 million to $35 million in additional repair work each year. NASM officials cited plans to build an extension at Dulles Airport as the solution to the museum’s storage and restoration problems. NASM plans to finance the extension through private fundraising and funds pledged by Virginia. Federal funds will be used for planning and design of the facility. However, it was uncertain when or whether the extension will be built, given the museum’s need to raise at least $100 million in private funds for its construction. The Smithsonian plans to begin fundraising for the extension after construction of the project is authorized. Also, NASM had plans to acquire 80 aircraft over the next 30 years, which would have exacerbated its storage problems. During our review, several experts familiar with NASM’s aircraft collection questioned whether NASM should have collected certain aircraft, such as a large collection of World War II Japanese aircraft, a Boeing 727—a commercial aircraft still widely used—and two McDonnell F-4s. It was not clear whether such aircraft fulfilled Congress’ original intent to establish a national museum that showcases this country’s most important aviation achievements. We indicated that reducing the size of the collection and undertaking second-party aircraft restoration with temporary display loans were viable alternatives to lessen NASM’s burden of caring for a large aircraft collection. NASM reported that it had deaccessioned 11 aircraft from 1990 to 1995 and loaned 18 aircraft to other museums for restoration and storage from 1993 to 1994. However, NASM had not developed a strategy to deaccession aircraft and had not accelerated pursuing second-party restorations with temporary loans, despite repeated recommendations to do so by its advisory committee. We concluded that although NASM is popular with the public and has preserved many of our nation’s historic air and space artifacts, the management of the aircraft collection that is not generally seen by the public needed improvement. We also reported that since NASM was established, certain aspects of the museum’s mission as a national air and space museum have been vague. For example, NASM’s authorizing legislation does not specify whether the museum should duplicate collections at other federally funded air and space museums or whether a national museum should include foreign aircraft. We reported that NASM should determine if its current collection is too large in view of the resources and facilities available. We also concluded that the planned extension at Dulles could help alleviate NASM’s storage facility problems, but funding was uncertain and the extension may take several years to complete. We recommended that the Secretary of the Smithsonian, together with the NASM Director: consult with the appropriate Committees of Congress to better define the mission of a national air and space museum, and within that definition, establish criteria for historically and technologically significant aircraft. As part of this effort, the Secretary and NASM Director should specifically consider the extent to which the museum should (1) include foreign aircraft in its collection and (2) duplicate aircraft contained in the collections of other federally funded museums; determine the relative priority of the aircraft contained in the NASM determine the number and types of aircraft that should be retained, after establishing criteria for historically and technologically significant aircraft and considering expected levels of funding and storage capacity; and deaccession those aircraft in the NASM collection that either do not meet the historically and technologically significant criteria or cannot be adequately stored and maintained with available resources. In pursuing the latter, we recommended that consideration should also be given to second-party restorations and temporary loans of aircraft to other institutions. We further recommended that the NASM Director: develop a management plan for those aircraft that are to remain in the NASM collection, and further explore private funding alternatives and the feasibility of options to better care for aircraft, such as constructing a smaller, environmentally controlled facility to house those aircraft that will remain in the collection and are currently in inadequate storage facilities, as an initial phase of the Dulles extension. We recently asked NASM officials about the status of action taken regarding our recommendations. In response, the NASM Director wrote us in August 1996 that NASM has drafted a new mission statement, which is expected to be completed next month, that emphasizes the basic values outlined in the original legislation establishing the National Air Museum in 1946. Further, the Director indicated that as NASM prepares to move to the Dulles extension in about 5 years, it will assess each artifact to ensure that it rightfully belongs in the collection and plays a meaningful role in exhibits and for research, or whether it could be deaccessioned or traded; has not yet established collecting priorities that are linked directly to its mission statement and prioritized the aircraft in its collections based on their historical and technological significance; is preparing a list of artifacts that will be relocated to the Dulles extension for public display and plans to assess the condition of, and develop an action plan and treatment schedule for, each aircraft on the list. For those aircraft that cannot be displayed immediately, a preservation and storage strategy will be developed; and will launch a major capital campaign this fall for the Dulles extension after Congress has authorized construction of the facility. “The formation of partnerships with existing or emerging museums throughout the country could make the Institution more reflective of our nation. It would also address the problem of . . . . exhibiting the constantly growing collections. By dispersing these in a responsible manner, public access . . . . could be enhanced. Such partnerships also would help to ameliorate the lack of space and funds to build new museums on the Mall.” This resolution is a first step toward providing NASM with new guidance on loaning aircraft to other museums. According to the Smithsonian, the Board of Regents adopted this resolution with the understanding that the Secretary will ensure that new operational guidelines will be issued. Further, NASM will have to implement this policy for the aircraft collection. In general, it appears that the Smithsonian is taking steps in the right direction to improve the care of aircraft in the NASM collection. To be successful, the Smithsonian will have to carry through on its initiated actions to develop a more clearly defined mission, collection priorities, and plans for the care of aircraft. Further, it remains to be seen how successful the Smithsonian will be in raising private funds for the Dulles extension and how long this effort will take. Mr. Chairman, that concludes my prepared statement. We would be pleased to answer any questions. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. 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GAO discussed its 1995 report on the Smithsonian Institution's National Air and Space Museum's (NASM) aircraft restoration and preservation efforts, focusing on: (1) the adequacy of aircraft storage facilities; (2) recommendations for improving the care of museum aircraft; and (3) the Smithsonian's response those recommendations. GAO noted that: (1) NASM devoted relatively few resources to aircraft restoration in fiscal year 1994; (2) inadequate storage facilities contributed to the deterioration of previously restored aircraft; (3) NASM must compete with other Smithsonian museums for limited funding; (4) NASM ability to raise $100 million in private funds for the construction of a storage facility is in doubt; (5) NASM has drafted a new mission statement that will focus the museum on its original goal, but it has not established collecting priorities that are linked to that mission statement; and (6) NASM will launch a major capital campaign to raise funds for the Dulles extension facility.

The federal government realizes a financial gain when it issues notes or coins because both forms of currency usually cost less to produce than their face value. This gain, which is known as seigniorage, equals the difference between the face value of currency and its costs of production. Seigniorage reduces the government’s need to raise revenues through borrowing, and with less borrowing, the government pays less interest over time, resulting in a financial benefit. Replacing the $1 note with a $1 coin would provide a net benefit to the government of approximately $4.4 billion over 30 years, amounting to an average yearly discounted net benefit of about $146 million. This benefit would occur because, based on differences in how notes and coins are used in the economy, more coins than notes would have to be circulated to meet demand, and therefore more seigniorage would be created. This estimate assumes a 4-year transition period beginning in 2012, during which the production of $1 notes would stop immediately. On the basis of information provided by the Mint, we assumed that during the first year the Mint would convert existing equipment to increase its production capability for $1 coins. We also assumed that it would take 4 years for the Mint to produce enough coins to replace the currently outstanding $1 notes. Our assumptions cover a range of factors including a replacement ratio of 1.5 coins to 1 note to take into consideration the fact that coins circulate with less frequency than notes and therefore a larger number the expected rate of growth in the demand for are required in circulation,currency over 30 years, the costs of producing and processing both coins and notes, and the differential life spans of coins and notes. Our analyses are projected over 30 years to be consistent with previous GAO analyses and because that period roughly coincides with the life expectancy of the $1 coin. As shown in figure 1, the annual benefit would vary over the 30 years— the government would incur a net loss in 6 of the first 7 years and then realize a net benefit in the remaining years. The early net loss would be due in part to the up-front costs to the Mint of increasing its coin production during the transition, together with the limited interest expense the government would avoid in the first few years after replacement began. The large net benefit in 2016 would occur because we assume that the Mint’s production at maximum capacity during the 4-year transition period would lead to some overproduction and thus production would drop dramatically in 2016. Because of the far lower coin production costs, the net benefit to the government would temporarily spike in that year. We also found our net benefit estimate was due solely to increased seigniorage and not to reduced production costs. Like all estimates, this one is uncertain, particularly in the later years, and thus the benefit could be greater or smaller than estimated. Furthermore, inputs to our analysis, such as the costs to produce $1 notes and $1 coins, will change over time. Changes to the inputs and the assumptions used in the estimate could increase or decrease the estimated net benefit. This estimate differs from our 2011 estimate, which found that replacement would result in a net benefit of about $5.5 billion over 30 years, or an average of about $184 million per year, because it takes into account two key actions that occurred since our 2011 report. In April 2011, the Federal Reserve began using new equipment to process notes, which has increased the expected life of the $1 note to an average of 56 months, according to the Federal Reserve, compared with the 40 months we used in our 2011 analysis. The longer note life reduces the costs of the status quo scenario and thus reduces the expected net benefits of replacing the $1 note with a $1 coin. In December 2011, the Treasury Department announced that it would take steps to eliminate the overproduction of dollar coins by relying on the approximately 1.4 billion $1 coins stored with the Federal Reserve as of September 30, 2011, to meet the relatively small transactional demand for dollar coins. This new policy will reduce the cost of producing $1 coins that we estimated in the status quo scenario and thus reduces the expected net benefits of replacing the $1 note with a $1 coin. In addition, our updated analysis used a start date of 2012 rather than 2011 and used the Congressional Budget Office’s most recent estimates for future government borrowing costs, which are lower than the figures used in our 2011 analysis. The reduced borrowing costs reduced the net benefits of switching to a $1 coin. For example, officials from the Bureau of Printing and Engraving pointed out that replacing the $1 note with a $1 coin would also have environmental impacts relating to obtaining raw materials and carbon dioxide emissions, among others. benefits of reduced interest expense due to increased seigniorage would occur more heavily in later years. Under a scenario that does not consider interest savings due to seigniorage, a net loss of approximately $1.8 billion would accrue during the 10-year period for an average cost of $179 million per year. As shown in figure 3, net losses would be incurred in 9 of the 10 years. In particular, large costs would be incurred in each of the first 4 years because of the large number of coins that would need to be produced for the transition, as was the case in the scenario discussed above. As in the previous analysis, in year 5, there would be a temporary net benefit because coins would be overproduced during the previous 4 years and coin production would fall to zero in that year—and the cost is therefore less than the cost of producing $1 notes that would have been incurred had the transition not taken place. After year 5, net losses would continue to be incurred because, although the life of a $1 coin is longer than the life of a $1 note, coins cost more than notes to produce. All of the scenarios assume that additional currency would need to be produced not only to replace worn out or lost currency, but also to support a growing economy. Thus, in this scenario, we found that even with the longer life of the $1 coin, the cost of producing coins for the growing economy after the transition would exceed the cost of producing $1 notes in each of those years that would have been incurred without the replacement. While this scenario suggests that there would be no net benefits from switching to a $1 coin, we believe that not including the interest savings related to seigniorage omits a monetary benefit to the government. Under this scenario, we include the net benefits of interest savings related to seigniorage, but assume that a single $1 coin would be produced to replace each $1 note. In total, across the 10 years the total net loss of switching to $1 coins would be $582 million, or just over $58 million per year. As shown in figure 4, net losses would be incurred in 9 of 10 years of this scenario. The costs of producing coins for the transition are highest in the first 3 years, followed by benefits in the fourth year because of the overproduction of coins during the transition. In this scenario, net losses would continue through year 10. In this scenario, far fewer coins would be produced because of the low replacement ratio, and thus the costs associated with their production would be much less than in the previous scenarios. However, this scenario also involves no gains to the government because of seigniorage because only one coin would be produced to replace each note that will fall out of circulation. In fact, the replacement case in this scenario results in reduced seigniorage relative to the status quo because the cost of producing a note is less than the cost of producing a coin, so each $1 coin has less seigniorage associated with its issuance than the $1 note it is replacing. A caution concerning a 1-to-1 replacement of coins to notes is that under this scenario, there would likely not be enough coins to meet demand. A shortage of currency could have significant negative consequences for the economy, such as hampering cash transactions. As we noted in our 2011 report, other countries that have switched from notes to coins have found that, because people use notes and coins differently, the number of coins needed for a replacement is greater than the number of notes to be replaced. While the actual replacement ratio needed is not known ahead of any transition, our 2011 analysis of the transition to a $1 coin in Canada and the £1 coin in the United Kingdom led us to decide that a 1.5-to-1 ratio was a reasonable level. Estimating whether the government would derive benefits from replacing the $1 note with a $1 coin requires an analysis with many assumptions. As is clear from the findings in this report, not accounting for the benefits related to increased seigniorage can substantially affect the estimate. While we identified and updated a few factors used in these analyses that changed since our 2011 report, other factors could also change over time, such as the cost of inputs for notes and coins or changes in the use of cash by the public, among other things. As such, these analyses are highly affected by changing conditions as well as by conceptual views on certain key issues, such as seigniorage and replacement ratios. We provided a draft of this report to the Federal Reserve and the Department of the Treasury for review and comment. Their written comments are reprinted in appendixes I and II, respectively. The Federal Reserve noted that it believes our 30-year estimate may overstate the net financial benefit to the government because it (1) does not adequately address the costs to the private sector, state and local government, and the Federal Reserve and (2) does not consider potential increases in the cost of raw material for coins or possible future changes in discount rates. Similarly, the Treasury Department noted that our analysis should consider the cost to the private sector and the impact on the environment. We agree that the benefits and costs to the private sector and the impact on the environment are important considerations. However, we found no quantitative estimates of the costs to the private sector or environmental impacts that could be evaluated or modeled. We did not assess potential environmental impacts because these concerns were beyond the scope of our analysis and we did not identify quantitative estimates of such impacts. We included all relevant costs to the Federal Reserve that the agency provided to us and found no data on the cost to state and local governments. We used the best data available on coin production costs, which accounts for the cost of raw materials, and we used the most current discount rate. Furthermore, we recognize that our analyses are highly affected by changing conditions, such as changes in the cost of coins and notes, which may alter the total cost savings associated with replacing the $1 note with a $1 coin. In addition, the Federal Reserve noted an increased risk of counterfeiting associated with replacing the $1 note with a $1 coin. We reported in 2011 that counterfeiting of U.S. coins is currently minimal, according to the U.S. Secret Service. The Federal Reserve also noted that we did not provide a sensitivity analysis that varies key assumptions such as possible increases in the public’s use of electronic payments. In 2011, we reported the results of our sensitivity analyses, including one in which replacement leads to a decrease in the demand for currency as people switch to electronic payments. The Treasury also provided technical comments, which we addressed as appropriate. We are sending copies of this report to the appropriate congressional committees, the Secretary of the Treasury, and the Chairman of the Federal Reserve. The report will also be available at no charge on the GAO Web site at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-2834 or by e-mail at stjamesl@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff that made key contributions to this report include Teresa Spisak (Assistant Director), Amy Abramowitz, Lindsay Bach, Patrick Dudley, Bess Eisenstadt, and David Hooper.

In March 2011, GAO reported that replacing the $1 note with a $1 coin would provide a net benefit to the government of about $5.5 billion over 30 years, or an average of about $184 million per year. This benefit, which GAO estimated using an economic model based on a set of assumptions, was entirely attributable to “seigniorage,” a term defined as the difference between the cost of producing coins or notes and their face value. Seigniorage reduces government borrowing and interest costs, resulting in a financial benefit to the government. As GAO noted, the estimated net benefit could increase or decrease with changes in the assumptions. GAO was asked to provide additional details on its 2011 analysis. Accordingly, GAO (1) updated its analysis to account for recent changes in note processing, among other things, and based on this update determined (2) the specific benefit or loss to the government for each of the first 10 years of its 30-year analysis; (3) the net benefit or loss to the government over 10 years if the interest savings due to seigniorage are excluded from the analysis; and (4) the net benefit or loss to the government over 10 years if it is assumed that each note will be replaced by 1 coin, rather than 1.5 coins, as GAO assumed in its 30-year analysis. GAO used the economic model it developed for its 2011 report, updated certain factors, and varied the assumptions for seigniorage and the replacement ratio of coins to notes as requested. According to GAO’s updated analysis, replacing the $1 note with a $1 coin would provide a net benefit to the government of approximately $4.4 billion over 30 years, or an average of about $146 million per year. The overall net benefit was due solely to increased seigniorage and not to reduced production costs. This estimate differs from GAO’s 2011 estimate because it considers recent efficiency improvements in note processing that have extended the expected life of the $1 note and other updated information. GAO’s estimate covered 30 years to be consistent with previous GAO analyses and because that period roughly coincides with the life expectancy of the $1 coin. Using the same model and assumptions used for its 30-year analysis, GAO found that replacing the $1 note with a $1 coin would provide a net loss to the government of about $531 million in the first 10 years, or an average of about $53 million per year. The cost of producing a large number of coins necessary for the transition would result in a net loss in 6 of the first 7 years. In the eighth year, and for the remaining 2 years, this situation is reversed: the interest savings outweigh the production costs and the net benefits would be positive. Overall, the net loss over 10 years compared with the net benefit GAO estimated over 30 years would occur because of large costs in the first few years to produce the initial supply of $1 coins. If the interest savings due to increased seigniorage are excluded from the analysis, the government would incur a total net loss of about $1.8 billion over 10 years, or an average of $179 million per year. With no interest savings to offset the costs of coin production, net losses would be incurred in 9 of the 10 years. As in the preceding scenario, these production costs are greatest in the first 4 years, when a large number of coins need to be produced for the transition. Although this scenario suggests there are no net benefits of switching to a $1 coin, GAO believes that excluding the interest savings related to seigniorage omits a monetary benefit to the government. If it is assumed that each $1 note will be replaced by 1, rather than 1.5, $1 coins, the government would incur a total net loss of about $582 million over 10 years, or an average of about $58 million per year. The costs of producing coins for the transition dominate in the first 3 years, followed by benefits in the fourth year due to the overproduction of coins during the transition. In this scenario, net losses continue to accrue through year 10. Net losses in this scenario are smaller than in the preceding scenario because fewer coins are produced and coin production costs are lower, but the one-to-one replacement does not provide increased seigniorage. Moreover, this lower replacement ratio is not consistent with the experiences of other countries that have switched from notes to coins and is likely to produce too few coins to meet demand, which could be disruptive to the economy. In commenting on a draft of this report, the Federal Reserve and Treasury Department noted that GAO’s 30-year estimate does not consider the cost to the private sector or environmental impacts. GAO agrees that such costs and impacts are important considerations, but GAO identified no quantitative estimates that could be evaluated or modeled.

In the 21st century the nation faces a growing fiscal imbalance. A demographic shift will begin to affect the federal budget in 2008 as the first baby boomers become eligible for Social Security benefits. This shift will increase as spending for federal health and retirement programs swells. Long-term commitments for these and other federal programs will drive a massive imbalance between spending and revenues that cannot be eliminated without tough choices and significant policy changes. Over the past several years, GAO has called attention to this problem. Long-term budget simulations by GAO, the Congressional Budget Office (CBO), and others illustrate the growing fiscal imbalance. (See fig. 1.) Continued economic growth is critical to addressing this challenge and will help to ease the burden, but the projected fiscal gap is so great that it is unrealistic to expect that the United States will grow its way out of the problem. Early action to change existing programs and policies would yield the highest fiscal dividends and provide a longer period for prospective beneficiaries to make adjustments in their own planning. One of the potential policy changes that could address both the demographic shift and the need for robust economic growth is assisting older workers who want to stay in the workforce past retirement age. These demographic problems are not unique to the United States. Other countries are also confronting the economic and labor force consequences of aging populations. In fact, the challenges arising from these demographic shifts alone will be less pronounced in the United States than in several other high-income nations. In prior work that we conducted for this committee, we found that Sweden, Japan, and the United Kingdom had enacted retirement policy reforms that included incentives for older workers to extend their working lives. At the same time, these countries were also seeking policies that would reduce barriers to employment for older workers. In the 21st century, older Americans are expected to represent a growing share of the population, have a longer life expectancy than previous generations and spend more years in retirement. The baby boom generation is fast approaching retirement age; the oldest baby boomers will start to turn 65 in 2011, just 6 years from now. In addition, life expectancy is increasing. The average life expectancy at age 65 for men has increased from just over 13 years in 1970 to 16 years in 2005, and is projected to increase to 17 years by 2020. Women have experienced a similar rise--from 17 years in 1970 to over 19 years in 2005. Women’s life expectancy at age 65 is projected to be 20 years by 2020. (See fig. 2.) As a consequence of life expectancy increases, individuals are generally spending more years in retirement. The average male worker spent 18 years in retirement in 2003, up from less than 12 years in 1950. A lower fertility rate is the other principal factor underlying the growth in the elderly’s share of the population. In the 1960s, the fertility rate was an average of three children per woman. Since the 1970s, the fertility rate has hovered around two children per woman. This decline in the fertility rate is a major factor in the slowing growth of the labor force over the last decade, a trend that is expected to continue. By 2025 labor force growth is expected to be less than a fifth of what it is today, as shown in figure 3. As a result of these trends, the share of the population aged 65 and older is projected to increase from 12 percent in 2000 to almost 20 percent in 2030. These developments will lead to significant changes in the elderly dependency ratio--the estimated proportion of people aged 65 and over to those of working age. In 1950, there was one elderly person for every 7 workers. The ratio increased to 1 to 5 in 2000 and is projected to rise to 1 to 3 by 2050. (See fig. 4.) These demographic developments have real implications for the nation’s economy. If labor force growth continues to decline as projected, relatively fewer workers will be available to produce goods and services. Without a major increase in productivity or higher than projected immigration, low labor force growth will lead to slower growth in the economy and to slower growth of federal revenues. This in turn will accentuate the overall pressure on the federal budget. Another concern is the possible loss of many experienced workers as the baby boomers retire. This could create gaps in skilled worker and managerial occupations, leading to further adverse effects on productivity and economic growth. Though long-term trends in labor force growth present significant challenges, there is some reason for optimism. In recent years, the labor force participation rate of men over age 55 has increased, and it is projected to continue to increase in the future. After hitting a low point of approximately 65 percent in 1994, the rate for this group rose to more than 69 percent in 2002, and the Bureau of Labor Statistics (BLS) projects it will be almost 70 percent in 2012. For men 65 and older, the rate also increased, to about 19 percent, and is projected to rise to nearly 21 percent by 2012. Similarly, the labor force participation rate of women over 55 has continued to increase. For women 55 to 64, the rate rose to more than 56 percent by 2004 and is projected to grow to over 60 percent by 2012. (See fig. 5.) These recent increases in labor force participation by older workers are encouraging. If Americans increase the number of years they work it could ease pressure on government retirement programs by increasing revenues to the Social Security and Medicare trust funds. In addition, individuals can significantly improve their standard of living in retirement. By remaining in the labor force, workers continue to earn income and delay drawing down assets such as pensions and personal savings, resulting in a shorter period over which they have to budget their resources. Some researchers have found that delaying retirement can substantially increase annual income in retirement. For example, they found that postponing retirement from age 55 to age 65 could nearly double real annual income at age 75. Although some people can benefit by remaining in the labor force at later ages, others may be unable or unwilling to do so. For those who are able, there are many factors that influence their choices. These include the eligibility rules of both employer pension plans and Social Security, an individual’s health status, the need for health insurance, personal preference, and the employment status of a spouse. The availability of suitable employment, including part-time work or flexible work arrangements, may also affect the retirement and employment choices of older workers. Depending on the eligibility rules and schedule of benefits, it can sometimes be more advantageous for workers to retire than to continue employment. The eligibility age for full Social Security benefits is currently 65 years and 6 months and rising, with reduced benefits available at age 62. Data from 2002 show that a majority of people (56.1 percent) elect to start benefits at age 62. Another important retirement incentive is eligibility for employer-provided pension benefits. In the United States, less than half of the labor force has some type of employer-provided pension coverage. In some cases the rules governing these plans create incentives to retire, even for those who may prefer to continue working. Health status and occupation are other key factors that influence the decision to work at older ages. As people age, they tend to encounter more health problems that make it more difficult to continue working or to work full-time. Thus, jobs that are physically demanding, usually found in the blue-collar and service sectors of the economy, can be difficult for many people to perform at older ages. Moreover, health status and occupation are often interrelated since health can be affected by work environment. Although blue-collar and service sector workers may continue to face significant health problems, there is evidence that the health of older persons generally is improving. Research has shown that the majority of workers aged 62 to 67 do not appear to have health limitations that would prevent them from extending their careers, although some could face severe challenges in attempting to remain in the workforce. In general, however, today’s older population may have an increased capacity to work compared with that of previous generations. Rising health care costs have made the availability of health insurance and anticipated medical expenditures important factors in the decision to retire. As health care costs continue to rise, many employers have decided to discontinue their retiree health benefits. A recent study estimated that the percentage of after-tax income spent on health care will approximately double for older married couples and singles by 2030. People at the lower end of the income distribution will be the most adversely affected. The study projected that by 2030 those in the bottom 20 percent of the income distribution would spend more than 50 percent of their after-tax income on insurance premiums and health care expenses, an increase of 30 percentage points from 2000. Continued employment could provide older workers with more income to help finance health care and in some cases could provide them with employer-sponsored health insurance. However, those least able to work at older ages may also be those with higher health care expenses. Researchers have also found that some older workers choose to remain in the labor force for reasons of physical and mental well-being. In recent surveys by AARP, Watson Wyatt, and the Employee Benefit Research Institute (EBRI), older workers and retirees indicated that, in addition to financial considerations, enjoyment of work and a desire to stay active were important reasons to decide to work in retirement. For example, in the 2004 Retirement Confidence Survey done by EBRI, retirees most often said they worked for pay because they enjoyed working and wanted to stay involved (66 percent); yet a large majority also identify at least one financial reason for having worked (81 percent). In addition, the labor force status of a spouse affects the retirement decision of an older worker. A recent study found that older married couples tend to retire at the same time. Another study which analyzed the retirement behavior of married men and women separately found that men were more likely to retire if their wife was also retired, but women were not significantly affected by the labor force status of their husbands. The labor force decisions of older persons are also influenced by the availability of alternatives to full-time employment. In the United States, there has been interest among older workers who wish to work longer in seeking employment arrangements that allow them to work part-time in retirement. We define partial retirement as a reduction in hours from full-time to part-time work. A partial retiree may have transitioned directly from full- to part-time work at either a current or a new job, or may have returned to work after full retirement. Although surveys indicate that many older workers would like to partially retire, prior GAO work found that offering such options is not a widespread practice among private employers and does not involve large numbers of workers at individual firms. Labor force participation is not solely the workers’ decision—there must also be an effective demand for their labor. Employers’ perceptions or biases against older workers may form potential barriers to older workers’ retaining their current jobs, finding new jobs, or reentering the work force after retiring. For example, employers may feel that it is more difficult to recoup the costs of hiring and training older workers. All other things being equal, older workers can also raise an employer’s cost of providing health insurance. Older workers may also face an obstacle because of a negative perception among employers about their productivity. Although the Age Discrimination in Employment Act protects those age 40 and over from age-based discrimination in the workplace, complaints to the Equal Employment Opportunity Commission suggest that such discrimination does still occur. To the extent that people choose to work longer as they live longer, the increase in the amount of time spent in retirement could be diminished. By staying in the workforce, older workers could ease financial pressures on Social Security and Medicare, as well as mitigate the expected slowdown in labor force growth. The additional income from earnings also could provide older Americans with greater resources in retirement and improve their financial security. Many older Americans are both willing and able to continue working at older ages. As described above, increased labor force participation of older workers would benefit both the economy and individuals. Thus, it is important to (1) encourage more widespread availability of flexible employment arrangements, such as partial retirement, which would make it easier for older workers to continue working, and (2) remove incentives that may induce older workers, who would otherwise choose to continue working, to retire. For those older Americans who are able to work, policies, programs, and alternative employment arrangements that help to extend their working life can enhance future supplies of skilled workers, bolster economic growth, and help many people secure adequate retirement income. We at GAO look forward to continuing to work with this Committee and the Congress in addressing this and other important issues facing our nation. Mr. Chairman, Mr. Kohl, members of the Committee, that concludes my statement. I’d be happy to answer any questions you may have. For further information regarding this testimony, please contact Barbara D. Bovbjerg, Director,or Alicia Puente Cackley, Assistant Director, at (202) 512-7215. Other individuals making key contributions to this testimony included Mindy Bowman, Sharon Hermes, and Kristy Kennedy. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

In the 21st century our nation faces a growing fiscal imbalance. A demographic shift will begin to affect the federal budget in 2008 as the first baby boomers become eligible for Social Security benefits. This shift will increase as spending for federal health and retirement programs swells. Long-term commitments for these and other federal programs will drive a massive imbalance between spending and revenues that cannot be eliminated without tough choices and significant policy changes. Continued economic growth is critical and will help to ease the burden, but the projected fiscal gap is so great that it is unrealistic to expect that we will grow our way out of the problem. Early action to change existing programs and policies would yield the highest fiscal dividends and provide a longer period for prospective beneficiaries to make adjustments in their own planning. One of the potential policy changes is assisting older workers who want to stay in the workforce past retirement age. The Chairman and Ranking Member of the Senate Special Committee on Aging asked GAO to discuss demographic and labor force trends and the economic and fiscal need to increase labor force participation among older workers. This testimony will address those factors making it important to encourage those who want to work to continue doing so, as well as factors affecting older Americans' employment decisions. The aging of the baby boom generation (those born between 1946 and 1964), increased life expectancy, and falling fertility rates pose serious challenges for our nation. These trends will affect the size and productivity of the U.S. labor force and its output and will have real and important impacts on employers and the economy. With the impending retirement of the baby boom generation, employers face the loss of many experienced workers and possibly skill gaps in certain occupations. This could have adverse effects on productivity and economic growth. Furthermore, the expected increasing ratio of the elderly to those of working ages will place added pressure on Social Security and Medicare, both of which face long-term financial problems. Increasing the labor force by encouraging Americans to work longer may be one part of solutions to these problems. Although some people can benefit by remaining in the labor force at later ages, others may be unable or unwilling to do so. For those who are able, there are many factors that influence their choices. These include the eligibility rules of both employer pension plans and Social Security, an individual's health status, the need for health insurance, personal preference, and the employment status of a spouse. The availability of suitable employment, including part-time work or flexible work arrangements, may also affect the retirement and employment choices of older workers.

Used by all U.S. military service members and DOD civilians in the area of operations, the IBA consists of an outer tactical vest with ballistic inserts or plates that cover the front, back, and sides. As the ballistic threat has evolved, ballistic requirements have also changed. The vest currently provides protection from 9mm rounds, while the inserts provide protection against 7.62mm armor-piercing rounds. Additional protection can also be provided for the shoulder, throat, and groin areas. Figure 1 details the body armor components. Concerns regarding the level of protection and amount of IBA needed to protect U.S. forces have been raised in recent years, prompted by a number of reports, newspaper articles, and recalls of issued body armor by both the Army and the Marine Corps. In May 2005, the Marine Corps recalled fielded body armor because it concluded that the body armor failed to meet contract specifications, and in November 2005, the Army and Marine Corps recalled 14 lots of body armor that failed original ballistic testing. Additionally, in April 2005, we reported on shortages of critical force protection items, including individual body armor. Specifically, we found that the shortages in body armor were due to material shortages, production limitations, and in-theater distribution problems. In the report, we did not make specific recommendations regarding body armor, but we did make several recommendations to improve the effectiveness of DOD’s supply system in supporting deployed forces for contingencies. DOD agreed with the intent of the recommendations and cited actions it had or was taking to eliminate supply chain deficiencies. Army and Marine Corps body armor currently meets theater ballistic requirements and the required amount needed for personnel in theater, including the amounts needed for the surge of troops into Iraq. Used by all U.S. military service members and DOD civilians in the area of operations, the IBA consists of an outer tactical vest with ballistic inserts or plates that cover the front, back, and sides. The vest and inserts currently meet the theater ballistic requirements. The vest provides protection from 9mm rounds, while the inserts provide protection against 7.62mm armor- piercing rounds. Additional protection can also be provided for the shoulder, throat, and groin areas. The Army and Marine Corps body armor meets the required amounts needed for personnel in theater as well. Table 1 details Army and Marine Corps theater requirements and worldwide inventory quantities of the body armor as of February 2007. CENTCOM requires that all U.S. military forces and all DOD civilians in the area of operations receive the body armor system. Currently, service members receive all service-specific standard components of the body armor system prior to deploying. For example, the Army issues the shoulder protection equipment to all its forces; however, Marine Corps personnel receive this equipment item in theater on an as-needed basis. The Army and the Marine Corps provide the DOD civilians with components of the armor system. However, the time frame for receipt of these items varies as some receive the body armor prior to deploying and others upon arrival in theater. Army unit commanders only reported one body armor issue in their December 2006 to February 2007 classified readiness reports. This one issue did not raise a significant concern regarding the body armor. Moreover, Marine Corps commanders’ comments contained in the December 2006 and January 2007 readiness reports did not identify any body armor issues affecting their units’ readiness. In December 2006 and January 2007, the Army, in its critical equipment list did not identify body armor as a critical equipment item affecting its unit readiness. The Army and Marine Corps have controls in place during manufacturing and after fielding to assure that body armor meets requirements. Both services conduct quality and ballistic testing prior to fielding and lots are rejected if the standards are not met. They both also conduct formal testing on every lot of body armor (vests and protective inserts) prior to acceptance and issuance to troops. During production, which is done at several sites, the lots of body armor are sent to a National Institute of Justice-certified laboratory for ballistic testing and to the Defense Contract Management Agency for quality testing (size, weight, stitching) prior to issuance to troops. Figure 2 illustrates the lot acceptance process. Once approved, the body armor is issued to operating forces. Currently, both Army and Marine Corps personnel are issued body armor prior to deployment. The Army lot failure rate from January 2006 to January 2007 was 3.32 percent for the enhanced small arms inserts, and there were no failures for the outer tactical vests. From February 2006 to February 2007, the Marine Corps lot failure rate was 4.70 percent for the outer tactical vests. Although not required to do so, after the systems have been used in the field, the Army does limited ballistic testing of outer tactical vests and environmental testing of the outer tactical vests and the inserts. The Marine Corps visually inspects the vest and the plates for damage. According to Army officials, there has been no degradation of body armor based on ballistic and environmental testing results. Additionally, to determine future improvements, the Army and the Marine Corps body armor program offices monitor and assess the use of body armor in the field, including the review of medical reports from the Armed Forces Medical Examiner. For example, the Army and Marine Corps added side plates and throat protection based on body armor usage in the field. DOD has a standard methodology for ballistic testing of the hard body armor plates, but not for the soft body armor vest. Currently, DOD’s Director, Operational Test and Evaluation Office is developing a standard methodology for ballistic testing of the soft body armor to eliminate discrepancies in testing methodologies. The new standard is expected to be issued sometime in 2007. The Army and Marine Corps share information regarding ballistic requirements and testing, and the development of future body armor systems, although they are not required to do so. For example, in August 2006, the Marine Corps attended the Army’s test of next generation body armor types at Fort Benning, Georgia. Similarly, the Army sent representatives to attend the Marine Corps’s operational assessment of the new Modular Tactical Vest. DOD officials indicate that there is no requirement to share information. Title 10 of the U.S. Code allows each service to have separate programs, according to Army and Marine Corps officials. Nevertheless, the services are sharing information regarding ongoing research and development for the next generation of body armor. Regarding contractors or non-DOD civilians, DOD Instruction 3020.41 allows DOD to provide body armor to contractors where permitted by applicable DOD instructions and military department regulations and where specified under the terms of the contract. It is CENTCOM’s position that body armor will be provided to contractors if it is part of the terms and conditions of the contract. According to CENTCOM officials, non- DOD government civilians such as State Department civilians are expected to make their own arrangements to obtain this protection. However, the officials said that commanders, at their discretion, can provide body armor to any personnel within their area of operation. In conclusion, Mr. Chairman, the Army and Marine Corps have taken several actions to address concerns, including assuring that the body armor systems meet the current theater requirements and that the amounts needed in theater are available. However, ballistic theater threats can change, and the services will need to continue to monitor and evaluate the theater ballistic threats in order to develop and provide individual body armor that can counter these changing threats. The services also will need to monitor and evaluate new technologies that may counter emerging theater ballistic threats. Moreover, they will need to continue to assure that controls are in place during manufacturing and after fielding to assure that existing and future body armor systems meet theater ballistic requirements. Mr. Chairman, this concludes my statement. I would be pleased to respond to any questions you or other Members of the Committee may have. For more information regarding this testimony, please call me at (202) 512- 8365. Individuals making key contributions to the testimony include: Grace Coleman, Alfonso Garcia, Lonnie McAllister, Lorelei St. James, and Leo Sullivan. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

In recent years, a number of reports and newspaper articles have cited concerns regarding the level of protection and the available amounts of body armor to protect deployed service members. As part of GAO's efforts to monitor the Department of Defense's (DOD) and the services' action to protect ground forces, GAO reviewed the Army and Marine Corps's actions to address these concerns. On April 26, 2007, GAO issued a report regarding the Army and the Marine Corps's individual body armor systems. Today's testimony summarizes the report's findings regarding the extent to which the Army and Marine Corps (1) have met the theater requirements for body armor, (2) have the controls in place to assure that the manufacturing and fielding of body armor meet requirements, and (3) have shared information regarding their efforts on body armor ballistic requirements and testing. The report also included additional information concerning whether contractors or non-DOD civilians obtain body armor in the same way as U.S. forces and DOD civilians given the number of contractors and non-DOD civilians in Central Command's (CENTCOM) area of operation. GAO did not make recommendations in the report. DOD officials did not provide written comments on the report but technical comments were incorporated as appropriate. Army and Marine Corps body armor currently meets theater ballistic requirements and the required amount needed for personnel in theater, including the amounts needed for the surge of troops into Iraq. The Interceptor Body Armor (IBA) consists of an outer tactical vest with ballistic inserts or plates that cover the front, back, and sides. The vest and inserts currently meet the theater ballistic requirements. The vest provides protection from 9mm rounds, while the inserts provide protection against 7.62mm armor-piercing rounds. CENTCOM requires that all U.S. military forces and all DOD civilians in the area of operations receive the body armor system. Currently, service members receive all service-specific standard components of the body armor system prior to deploying. The Army and the Marine Corps provide the DOD civilians with components of the armor system. The Army and Marine Corps have controls in place during manufacturing and after fielding to assure that body armor meets requirements. Both services conduct quality and ballistic testing prior to fielding, and lots (a grouping of items varying in number) are rejected if the standards are not met. They also conduct formal testing on every lot of body armor (vests and protective inserts) prior to acceptance and issuance to troops. During production, which is done at several sites, the lots of body armor are sent to a National Institute of Justice-certified laboratory for ballistic testing and to the Defense Contract Management Agency for quality testing (size, weight, stitching) prior to issuance to troops. Although not required to do so, after the systems have been used in the field, the Army does limited ballistic and environmental testing to determine future improvements. The Army and Marine Corps share information regarding ballistic requirements and testing although they are not required to do so. Title 10 of the U.S. Code allows each service to have separate programs, according to Army and Marine Corps officials. Nevertheless, the services are sharing information regarding ongoing research and development for the next generation of body armor. DOD Instruction 3020.41 allows DOD to provide body armor to contractors and non-DOD civilians where permitted by applicable DOD instructions and military department regulations and where specified under the terms of the contract. It is CENTCOM's position that body armor will be provided to contractors if it is part of the terms and conditions of the contract. However, the officials indicated that commanders, at their discretion, can provide body armor to any personnel within their area of operation.

VA prioritizes all proposed capital projects using six major-decision criteria (see table 1), which focus on addressing needs that (1) can demand quick solutions, such as the need to replace an expiring lease that cannot be renewed, and (2) often change, such as demands for veterans’ access to care options. As such, according to VA officials, leasing is often VA’s preferred alternative for major medical facilities because project implementation times are often shorter than the time for constructing a federally-owned facility and leasing can provide flexibility to relocate in the future to meet changes in VA’s needs. VA cited a shorter project time frame and flexibility to relocate in all 51 of its prospectuses for major medical facilities’ leases submitted to Congress since fiscal year 2015. For example, in the fiscal year 2015 submission, VA cited a shorter implementation time frame and flexibility to relocate as justifications for a new lease in Johnson County, Kansas, to address growing demand and overcrowding at the Kansas City Veterans Medical Center and to reduce the drive time for a high concentration of veterans in the area to within VA’s 30-minute drive-time target. VA also generally identified leasing as the lowest cost alternative in its prospectuses, but in some cases preferred leasing for the two previously cited reasons when other options may have been less costly. For example, in fiscal year 2015, VA proposed a new lease in Lafayette, Louisiana, to replace a facility that the VA determined was too small and estimated leased space would have a total life-cycle cost of approximately $259 million, compared to $201 million for construction of a new federally-owned facility. According to VA, an owned facility would require a longer time frame to open than a leased facility and limit VA’s flexibility to adapt to potential changes in the veterans population, demand for services, new technologies, or health care delivery. Leasing may offer VA greater efficiencies and flexibilities when major medical-facility projects are compared to construction. Specifically, VA’s use of GSA delegated leasing authority to execute its major medical facility leases requires that VA’s lease terms not exceed 20 years. This period provides some of the flexibility that VA values in terms of relocating to facilities that align with VA’s changing needs. Construction of federally- owned facilities may not offer this flexibility given the challenges that we have previously identified with renovating and disposing of some federal properties, including VA’s, due to issues such as competing stakeholder interests that can make renovating or closing facilities difficult. Further, construction of a federally-owned facility requires a full upfront funding commitment that can be difficult to secure in the current budgetary environment. VA officials added that although VA’s major medical facility lease projects also generally require a lessor to construct a new facility to VA’s specifications, leasing tends to have a shorter project timeframe because it does not require VA to acquire the land on which the facility will be constructed, which can require additional time and resources. Although VA has justified leasing its major medical facilities to its department leadership and congressional decision makers based on the flexibility that leasing offers compared to other alternatives, VA has not provided these stakeholders with information on the extent to which it has benefited from that flexibility, nor does VA regularly assess information that would help it do so. In particular, while VA regularly cited future “flexibility,” such as ability to move when needs change, as a justification for the leases included in its annual capital plans, the benefits that VA has experienced from this flexibility with major medical facility leases are not presented to VA stakeholders responsible for selecting projects to present to Congress or to congressional decision makers. VA officials told us that VA’s data systems do not provide VA staff responsible for planning new leases with information on the use of flexibilities with existing major medical facilities’ leases, such as how far VA has moved from a previously occupied medical facility and why it has moved to new leased locations. We and OMB have previously identified the importance of assessing the results of capital decisions and incorporating lessons learned from those assessments into capital decisions. Without transparency on the actual benefits VA has experienced from leasing its major medical facilities, VA and congressional decision-makers may lack information to make informed decisions about the need for VA’s major medical facility leases. Further, greater transparency could help decision- makers and taxpayers understand the value of leasing in cases in which VA proposes leasing major medical facilities when other alternatives, such as construction of a federally-owned facility, may have a lower cost. In our issued report, we recommended that the Secretary of Veterans Affairs annually assess how VA has benefited from flexibilities afforded by leasing its major medical facilities and use information from these assessments in its annual capital plans in order to enhance transparency and allow for more informed decision making related to VA’s major medical facility leases. VA agreed with our recommendation, noting that assessing and explaining the benefits and flexibilities of leasing major medical facilities could improve transparency. VA agreed to add this information to future annual budget submissions. VA’s cost-estimating procedures for major medical facilities’ leases generally align with 9 of the 12 best practice steps for cost-estimating that we have previously identified, and recent changes may improve the quality of VA’s cost-estimating process for these leases. (See fig. 1.) For a cost-estimating process to support the creation of reliable cost estimates, it should substantially or fully meet each of the four characteristics in GAO’s Cost Guide—comprehensive, well-documented, accurate, and credible—based on the extent to which the procedures incorporate the underlying best practice steps for each characteristic. We found that VA’s cost-estimating procedures for major medical leases fully met the comprehensive characteristic, substantially met the well- documented characteristic, and partially met the accurate and credible characteristics. Our finding that VA’s cost-estimating process partially met the characteristics for producing reliable cost estimates is based on the following: Comprehensive: VA’s cost-estimating process fully met the comprehensive characteristic because its procedures include both the best practice steps of developing an estimating plan and determining the estimating structure. Well-documented: VA’s process substantially met the well- documented characteristic because its procedures incorporate a large number of related best-practice steps, such as defining the estimate’s purpose and presenting the estimate for approval. Accurate: VA’s process partially met the accurate characteristic because the procedures incorporate some elements of the two associated best practice steps. Specifically, VA’s process includes the best practice step of developing a point estimate and comparing it to an independent estimate, which is based on the market rental rate determined by a market survey that VA conducts and the cost of specific improvements required for VA’s intended medical purposes. VA applies several standard and variable adjustments to the market rental rate to determine the rental portion of the estimated first-year lease cost to include in the VA’s prospectuses to Congress. (See Table 2.) This best practice step normally includes comparing the estimate to an independent cost estimate, which VA does not obtain. Because of the standardized nature of the adjustments to the rent rate and pricing for improvements for major-medical facilities’ lease cost estimates, obtaining an independent cost estimate for these inputs would likely yield little new information; accordingly, we consider the rating for this best practice step to be substantially met. The procedures also include updating the estimate, another best practice step supporting this characteristic, but VA does not update it with actual costs as the best practice step requires. Estimates are updated during the development process to calculate whether actual costs are likely to rise more than 10 percent above the prospectus-estimated cost. For leases executed under GSA authority, the estimated maximum cost provided in a prospectus may be increased for construction or alterations but may not exceed 10 percent. After leases are executed VA does not update the estimate with actual costs. Updating the estimate with actual costs is a best practice step because it enables a “lessons learned” analysis, which can strengthen estimates going forward. Credible: VA’s process partially met the credible characteristic because VA’s procedures incorporate some elements of the three associated best practice steps. For example, the best practice step of conducting a sensitivity analysis on the lease’s cost estimate is not directly included in VA’s procedures, but some procedures do address uncertainty and risk. A sensitivity analysis reveals how to assess the potential variability in the estimate by calculating how the estimate is affected by a change in any single underlying assumption. These calculations identify the cost elements that represent the most risk to an estimate. Instead, VA officials said that VA applies an annual escalation rate to adjust for increases in market rental rate and inflationary increases in the cost for tenant improvements over time, two key assumptions supporting the estimate that could cause actual first-year lease costs to fluctuate from the prospectus estimated costs. We found that VA’s use of an escalation rate often did not fully account for variation in lease costs. Specifically, our review of cost data provided by VA for 18 of the 23 most recently completed major medical-facility leases activated by the end of fiscal year 2015 shows that actual costs for 15 of the 18 leases varied substantially from adjusted prospectus costs, including 7 leases that were more than 15 percent above VA’s adjusted estimates and 8 that were more than 15 percent below the VA’s adjusted estimates. For example, actual first-year lease costs increased about 26 percent over the adjusted estimate for VA’s San Francisco, California, medical facility’s lease and decreased about 44 percent for the VA’s Montgomery, Alabama, facility. VA recently issued a new standard design guide to increase the reliability of its prospectus estimates for major medical facilities and plans to conduct a “lessons learned” study that could further improve how VA estimates its costs. The standard design guide, issued in January 2016, covers the different types of outpatient clinic facilities and provides guidance on VA activities, such as site selection, and delineates minimum federal-facility requirements for security, sustainability, and seismic standards. VA officials told us that the new guide was developed to reduce the risk of facility changes and consequent cost changes for lease projects, and that moving forward all authorized major medical facility leases would use this guide. Reducing the potential for design changes— which we have previously found to be a main driver of increases in facility costs—after a prospectus is submitted may enable VA to better estimate facility costs. Second, VA officials told us that the department is planning a “lessons-learned” review that would involve updating data used for planning major medical facilities’ leases with actual cost data after the facility is accepted. This type of review can improve cost- estimating processes over time by exposing the precise reasons why actual costs differed from the estimate, such as faulty project ground rules and assumptions, and previously unrecognized risks. The new design guide and the lessons-learned study are in the early stages, and their success will depend on how quickly and successfully VA implements them. In conclusion, the recent changes in VA’s leasing program show promise for improving cost estimates for VA’s major medical facility leases. In particular, VA’s new guidance could introduce more discipline into the process and VA’s “lessons learned” study could identify factors that lead to cost variance from what is proposed to Congress. Further, VA’s commitment to assess and provide information to Congress on the benefits and flexibilities of leasing major medical facilities could provide much needed transparency to VA’s decisions to pursue leasing versus other alternatives. We will continue to monitor how VA proceeds with these changes. Chairman Barletta, Ranking Member Carson, and Members of the Subcommittee, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time. If you or your staff members have any questions concerning this testimony, please contact Rebecca Shea, (202) 512-2834; shear@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. GAO staff who made key contributions include Heather MacLeod, Assistant Director; Jennifer Echard, Delwen Jones, James Leonard, and Crystal Wesco. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

VA operates the largest health care network in the United States, with over 2,700 health care sites, including hospitals and outpatient facilities. However, many facilities are outdated, and VA estimates that its capital needs will require up to $63 billion over the next 10 years. In recent years, VA has increasingly leased its facilities, including major medical facilities. This testimony discusses (1) the factors that account for VA’s decisions to lease major medical facilities and (2) the extent to which VA’s cost-estimating process for leasing these facilities reflects best practices. This testimony is based on GAO’s June 2016 report (GAO-16-619). For that report, GAO analyzed agency documents, VA data on major medical facilities’ leases, compared VA’s cost-estimating procedures to best practices in GAO’s Cost Guide, and interviewed VA officials. VA’s cost-estimating procedures for leasing major medical facilities generally align with GAO’s 12 cost-estimating best practice steps and recent changes in VA’s approach may improve the quality of VA’s estimates. GAO’s review of cost data for these leases since 2006 found that actual costs often varied more than 15 percent above or below the estimates included in VA’s proposals for these leases, often due to project design changes. In 2016, VA introduced a design guide for leased medical facilities that delineates VA and federal requirements, such as security and sustainability standards, that may reduce the risk that a project, and its cost, change from what the VA proposed. VA also initiated a lessons-learned effort to evaluate the factors that contribute to differences between actual lease costs and those included in proposals. The success of these steps will depend on how quickly and effectively VA implements them. In its June 2016 report, GAO recommended that VA assess the benefits of leasing major medical facilities and use the information in VA’s annual capital plans. VA concurred with GAO’s recommendation.

The United States health care system is a large sector of the economy comprised of clinicians, health care delivery organizations, insurers, consumers, and government health agencies. According to the Medicare Payment Advisory Commission, the health care industry generally uses less IT than other industries, and the extent and types of IT deployed vary by setting and institution. The health care industry has recognized that IT can improve the quality of care, promote patient safety, reduce costs of both care and administrative functions, and expedite response to public health emergencies. Public health officials are increasingly concerned about our exposure and susceptibility to infectious disease and food-borne illness because of global travel, increased volume of food imports, and the evolution of antibiotic-resistant pathogens. Public health experts maintain that a strong infrastructure could provide the capacity to prepare for and respond to both acute and chronic threats to the nation’s health, whether they are bioterrorism attacks, emerging infections, disparities in health status, or increases in chronic disease and injury rates. IT can play an essential role in supporting federal, state, local, and tribal governments in public health activities and clinical care delivery. For public health emergencies in particular, the ability to quickly exchange data from provider to public health agency—or from provider to provider—is crucial in detecting and responding to naturally occurring or intentional disease outbreaks. It allows physicians to share individually identifiable information with public health agencies for use in performing public health activities. The Centers for Disease Control and Prevention (CDC) has previously acknowledged several IT limitations in the public health infrastructure. For example, basic capability for disease surveillance systems to detect and analyze disease outbreaks is lacking for several reasons. First, health care providers have traditionally used paper- or telephone-based systems to report disease outbreaks to approximately 3,000 public health agencies. This is a labor-intensive, burdensome process for local health care providers and public health officials, often resulting in incomplete and untimely data. Second, not all public health agencies have access to the Internet or to secure channels for electronically transmitting sensitive data. Several types of systems can play vital roles in identifying and responding to public health emergencies, including acts of bioterrorism. These types of systems—described in a technology assessment for the Department of Health and Human Services (HHS) that was completed by the University of California San Francisco-Stanford Evidence-based Practice Center—serve different but related functions and include the following: Detection—systems that consist of devices for the collection and identification of potential biological agents from environmental samples, making use of IT to record and send data to a network. Surveillance—systems that facilitate the performance of ongoing collection, analysis, and interpretation of disease-related data to plan, implement, and evaluate public health actions. Diagnostic and clinical management—systems with potential utility for enhancing the likelihood that clinicians will consider the possibility of bioterrorism-related illness. These systems are generally designed to assist clinicians in developing a differential diagnosis for a patient who has an unusual clinical presentation. Communications—systems that facilitate the secure and timely delivery of information to the relevant responders and decision makers so that appropriate action can be taken. In April of this year, the President issued an Executive Order, which recognizes the importance of IT to the improvement of the health care system to address problems with high costs, medical errors, and administrative inefficiencies. The order establishes the position of a National Health Information Technology Coordinator. This new position has been tasked with providing leadership for the development and nationwide implementation of interoperable health IT in both the public and private health care sectors. The President also announced a goal of having EMRs available for most Americans within the next 10 years. IT can provide significant benefits in providing clinical health care and in the administrative functions associated with health care delivery. Last October, we identified 20 examples of reported cost savings or other benefits at 14 health care organizations that had implemented IT solutions in their clinical care environments. The rapidly rising costs of health care, along with an increasing concern for the quality of care and the safety of patients, are driving health care organizations to use IT to automate clinical care operations and their associated administrative functions. IT is now being used for, among other things, EMRs, order management, Internet access for patient and provider communications, and automated billing and financial management. Health care delivery organizations identified instances that resulted in cost savings from the use of IT as a result of reductions in costs associated with medication errors, communication and documentation of clinical care and test results, staffing and paper storage, and processing of information. Specific examples included: A teaching hospital reported that it realized about $8.6 million in annual savings by replacing paper medical charts with EMRs for outpatients. It also reported saving over $2.8 million annually by replacing its manual process for handling medical records with electronic access to laboratory results and reports. A teaching hospital reported that it saved $5 million annually on drug substitutions, based on automated prompts that recommended alternatives resulting in increased quality and decreased cost. A community hospital prevented the administration of over 1,200 wrong drugs or dosages and almost 2,000 early or extra doses by using bar code technology and wireless scanners to verify both the identities of patients and their correct medications. The reported monetary value of the errors prevented was almost $850,000. An integrated health care delivery organization reduced the overall number of daily chart pulls, estimating that about $5.7 million in medical record staffing costs were avoided or saved annually. IT also contributed to other benefits, such as shorter hospital stays, faster communication of test results, improved management of chronic disease, and improved accuracy in capturing charges associated with diagnostic and procedure codes. For example, A teaching hospital reported a decrease in average length of stay from 7.3 to 5 days when it implemented an integrated EMR system that resulted in improvements in health care efficiency and practice changes. A teaching hospital reported improved patient scheduling using a rules-based electronic scheduling system that accommodated travel time to the appointment, fasting requirements, and providers’ availability. An integrated health care delivery organization reported improvements in diabetes control for members with the disease, decreases in upper gastrointestinal studies ordered, and increases in the number of Pap smears performed by using alerts and reminders, automated patient care guidelines, and data warehouse reports. A teaching hospital reported that 4 percent of radiology orders that had been entered into the order entry system were cancelled and 55 percent were changed when an embedded alert warned that an order was inappropriate for specified clinical reasons. Health care organizations also told us that EMRs could also improve the delivery of care because, among other reasons, more complete medical documentation was available to support the provider’s diagnosis. In addition, EMRs greatly facilitate the reporting of public health information associated with the early detection of and response to disease outbreaks. The lessons learned that were reported to us by health care organizations that have successfully implemented IT may prove useful for other organizations as they implement solutions—such as recognizing the importance of reengineering business processes, gaining users’ acceptance, providing adequate training, and making systems available and secure. For example, organizations reported that business process changes were key in effectively implementing the technology and that users, including physicians, should be involved in systems design and implementation. In May 2003, we reported that six federal agencies involved in bioterrorism preparedness and response had a large number of existing and planned information systems associated with supporting a public health emergency. Specifically, these agencies identified 72 information systems and supporting technologies. Of the 72 systems, 34 are surveillance systems, 18 are supporting technologies, 10 are communications systems, and 10 are detection systems. In spite of these many initiatives, the key ones that are intended to facilitate greater information sharing are still being developed and implemented. For example, CDC is currently implementing its Public Health Information Network, which consists of a number of disease surveillance and communications systems, including the Health Alert Network. This network is an early warning and response system intended to provide federal, state, and local agencies with better communications during public health emergencies. The Department of Defense is using its Electronic Surveillance System for the Early Notification of Community-based Epidemics (ESSENSE) to support early identification of infectious disease outbreaks in the military by comparing analyses of data collected daily with historical trends. We also found that agencies varied in the extent to which they interacted and coordinated with other agencies in planning and operating each of these initiatives. The October 2001 anthrax attacks and the subsequent emergence of new infectious diseases have highlighted the importance of data standards for real-time data exchange across the public health infrastructure. During the anthrax attack, participants accumulated dissimilar data and principally exchanged it manually. Since 1993, we have called for federal leadership to expedite the standards development process in order to accelerate the use of EMRs. Most recently, in May 2003, we again reported that the identification and implementation of health care data, communications, and security standards—which are necessary to support the compatibility and interoperability of agencies’ various IT systems—remains incomplete across the health care industry. We also identified other standards setting initiatives (e.g., CHI and HIPPA) and raised concerns about coordinating these initiatives. To address the challenges of coordinating the many IT initiatives and implementing a consistent set of standards, we recommended that the Secretary of Health and Human Services (HHS), in coordination with other key stakeholders, establish a national IT strategy for public health preparedness and response, including specific steps toward improving the nation’s ability to use IT in support of the public health infrastructure. Specifically, we recommended, among other things, that the Secretary set priorities for information systems, supporting technologies, and other IT initiatives; define activities for ensuring that the various standards-setting organizations coordinate their efforts and reach further consensus on the definition and use of standards; establish milestones for defining and implementing all standards; create a mechanism—consistent with HIPAA requirements—to monitor the implementation of standards throughout the health care industry. Since our May 2003 report, HHS has continued its efforts to identify applicable standards throughout the health care industry and across federal health care programs. For example, in May 2004, the CHI initiative—one of OMB’s e-government projects—announced fifteen additional standards that build on the initial five announced in March 2003. Federal agencies are expected to include the standards in their architectures and when they build, acquire, or modify systems. Current plans for the CHI initiative call for it to be incorporated into HHS’s Federal Health Architecture by September 2004. This architecture is still evolving, and many issues—such as coordination of the various standards setting efforts and implementation of the standards that have been identified—are still works in progress. Until these standards are more fully implemented, federal agencies and others associated with the public health infrastructure cannot ensure that their systems will be capable of exchanging data with other systems when needed and consequently cannot ensure effective preparation for and response to public health emergencies, including acts of bioterrorism. In addition, in April of this year, the President issued an Executive Order, which calls for the establishment of a National Health Information Technology Coordinator and the issuance of a broader strategic plan to guide the nationwide implementation of interoperable health care information systems. The coordinator is also specifically tasked with creating incentives for the use of health IT and accelerating the adoption of EMRs, among other things. The Coordinator plans to present the strategic plan next week. Such a plan, if properly crafted, should help to move the health care industry towards interoperable information systems. As health IT initiatives are pursued, it will be essential to have continued leadership, clear direction, measurable goals, and mechanisms to monitor progress. In summary, there are many opportunities and challenges associated with the implementation of IT for clinical care delivery and public health. The federal government, namely HHS, has taken a leadership role in establishing a strategy and identifying data and communications standards, which are critical for sharing data across the health care industry—both to improve the quality of patient care in the United States and to strengthen the public health infrastructure. However, much more work remains to more fully utilize IT for the delivery of care and to identify and respond to public health emergencies. HHS needs to provide continued leadership, sustained and focused attention, clear direction, and mechanisms to monitor progress in order to bring about measurable improvements and achieve the President’s goals. Mr. Chairman, this concludes my statement. I would be happy to answer any questions that you or members of the subcommittee may have at this time. If you should have any questions about this testimony, please contact me at (202) 512-9286 or M. Yvonne Sanchez, Assistant Director, at (202) 512-6274. We can also be reached by e-mail at pownerd@gao.gov and sanchezm@gao.gov, respectively. Other individuals who made key contributions to this testimony include Joanne Fiorino, M. Saad Khan, and Mary Beth McClanahan. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Health care is an information-intensive industry that remains highly fragmented and inefficient. Hence, the uses of information technology (IT)--in delivering clinical care, performing administrative functions, and supporting the public health infrastructure--have the potential to yield both cost savings and improvements in the care itself. In 2003, GAO reported on benefits to health care that could result from using IT--both cost savings and measurable improvements in the delivery and quality of care. GAO also reported on federal agencies' existing and planned information systems intended to support our nation's preparedness for and ability to respond to public health emergencies and the status of health care standards setting initiatives. Congress has asked GAO to summarize our work on reported benefits of the use of IT for health care delivery and on IT initiatives supporting public health preparedness and response. The use of IT can yield benefits in clinical care and associated administrative functions as well as in public health. Health care organizations reported that electronic medical records (EMR) improved the delivery of care because, among other reasons, more complete medical documentation was available to support the provider's diagnosis. In addition, EMRs could greatly facilitate the reporting of public health information associated with the early detection of and response to disease outbreaks. One hospital replaced outpatients' paper medical charts with EMRs, realizing about $8.6 million in annual savings. This hospital also established electronic access to laboratory results and reports, replacing its manual process for handling medical records and saving another $2.8 million a year. In addition, the lessons learned that were reported to us by health care organizations that have successfully implemented solutions could be used by other organizations to accelerate the adoption of health IT. These lessons recognize the importance of reengineering business processes, gaining users' acceptance of IT, providing adequate training, and making systems secure. Regarding public health, federal agencies identified 72 existing and planned information systems--34 surveillance systems, 18 supporting technologies, 10 communications systems, and 10 detection systems. For example, the Centers for Disease Control and Prevention is currently implementing its Public Health Information Network comprised of a number of disease surveillance and communications systems, including the Health Alert Network. This network is an early warning and response system that is intended to facilitate communication among federal, state, and local agencies during public health emergencies. GAO also reported that identification and implementation of health care data, communications, and security standards--which are necessary to support compatibility and interoperability of agencies' various IT systems--remained incomplete across the health care sector. To address the challenges of coordinating the many IT initiatives and implementing a consistent set of standards, GAO recommended last year that the Secretary of Health and Human Services develop a strategy for public health preparedness and response, to include setting priorities for IT initiatives and establishing mechanisms to monitor the implementation of standards throughout the health care industry. Since that time, progress has been made in identifying standards. The Office of Management and Budget's e-government initiative, the Consolidated Health Informatics initiative, has identified a number of standards to be applied to new federal development efforts and modifications of existing systems. This initiative is intended to promote the interoperability of information systems. However, implementing these standards across the federal government is still a work in progress. Until these standards are implemented, information-sharing challenges will remain. In April of this year, Executive Order 13335 established a National Health IT Coordinator and called for a strategic plan to guide the nationwide implementation of interoperable health IT. As this plan moves forward, it will be essential to have continued leadership, clear direction, measurable goals, and mechanisms to monitor progress.

percentage of organ donors who belonged to racial and ethnic minority groups increased from about 16 to 23 percent. The organ donation process usually begins at a hospital when a patient is identified as a potential organ donor. Only those patients pronounced brain dead are considered for organ donation. Most organ donors either die from nonaccidental injuries, such as a brain hemorrhage, or accidental injuries, such as a motor vehicle accident. Other causes of death that can result in organ donation include drowning, gunshot or stab wound, or asphyxiation. Once a potential organ donor has been identified, a staff member of either the hospital or the OPO typically contacts the deceased’s family, which then has the opportunity to donate the organs. If the family consents to donation, OPO staff coordinate the rest of the organ procurement activities, including recovering and preserving the organs and arranging for their transport to the hospital where the transplant will be performed. One donor may provide organs to several different patients. Each cadaveric donor provides an average of three organs. In 1996, OPOs procured kidneys from 93 percent of organ donors and livers from 82 percent of them; other organs were procured at lower rates. The national system of 63 OPOs currently in operation coordinates the retrieval, preservation, transportation, and placement of organs. For Medicare and Medicaid payment purposes, HCFA certifies that an OPO meets certain criteria and designates it as the only OPO for a particular geographic area. OPOs must meet service area and other requirements. As of January 1, 1996, each OPO had to meet at least one of the following service area requirements: 1. It must include an entire state or official U.S. territory. 2. It must either procure organs from an average of at least 24 donors per calendar year in the 2 years before the year of redesignation, or it must request and receive an exception to this requirement. 3. If it operates exclusively in a noncontiguous U.S. state, territory, or commonwealth, the OPO must procure organs at the rate of 50 percent of the national average of all OPOs for both kidneys procured and transplanted per million population. 4. If it is a new entity, the OPO must demonstrate that it can procure organs from at least 50 potential donors per calendar year. In addition, an OPO must be a nonprofit entity and meet other requirements for the composition of its board, its accounting, its staff, and its procedures. To ensure the fair distribution and safety of organs, OPOs must have a system to equitably allocate organs to transplant patients. In addition, OPOs must arrange for appropriate tissue typing of organs and ensure that donor screening and testing for infectious diseases, including the human immunodeficiency virus, are performed. OPOs use a variety of methods for increasing donation such as raising public awareness of organ donation and developing relationships with hospitals. The goal of public education is to promote the consent process, giving people the information they need to make decisions about organ and tissue donation and encouraging them to share their decisions with their families. Such public education campaigns include mass media advertising; presentations to schools, churches, civic organizations, and businesses; and informational displays in motor vehicle offices, city and town halls, public libraries, pharmacies, and physician and attorney offices. In addition, education efforts help hospital staff clarify organ and tissue recovery policies to ensure that potential donors are consistently recognized and referred. OPOs also conduct hospital development activities to build strong relationships with service area hospitals to promote organ donation. determined to be a new entity and not subject to meeting the performance standard. A population-based standard, however, does not accurately assess OPO performance because OPO service areas consist of varying populations. Although potential organ donors share certain characteristics, including causes of death, absence of certain diseases, and being in a certain age group, OPO service area populations can differ greatly in these characteristics. For example, motor vehicle accidents, the cause of death for about one-quarter of organ donors in 1994 and 1995, ranged from about 4.4 to about 17.9 per 100,000 population among the states and the District of Columbia. In addition, the rates of acquired immunodeficiency syndrome, a disease that eliminates someone for consideration as an organ donor, differ among the states and the District of Columbia—from 2.8 to 246.9 cases per 100,000 people in 1994. Furthermore, although most organ donors were between 18 and 64 years of age in 1994 and 1995, this age group constitutes from 56 to 66 percent of the population in different states. Thus, the number of potential organ donors can vary greatly for OPOs serving equally sized populations. We identified several performance measures as alternatives to the current population-based standard. The alternatives we examined included measuring organ procurement and transplantation compared with (1) the number of deaths, (2) the number of deaths adjusted for cause of death and age, (3) the number of potential donors based on medical records reviews, and (4) the number of potential donors based on modeling estimates in an OPO service area. In developing its current OPO performance standard, HCFA considered using the number of service area deaths as the basis for assessing performance. Although some organs, typically kidneys, are obtained from living donors, OPOs recover organs from cadaveric donors. Therefore, the number of deaths in an OPO’s service area more accurately reflects the number of an OPO’s potential donors. In 1994, the United States had about 2.3 million deaths out of a population of about 260 million. Although using total deaths fails to consider other factors about and characteristics of potential donors, it would eliminate considering a portion of the population that an OPO clearly could not consider for organ donation. HCFA also considered using an adjusted measure of deaths for the performance standard. Measuring OPO performance according to the number of service area deaths adjusted for cause of death and age more accurately reflects the number of potential donors than measuring performance according to the number of all service area deaths. The number of service area deaths adjusted for cause of death and age better estimates the number of potential donors because it accounts for the small subset of the deceased that may be suitable organ donation candidates. Adjusting for cause of death and limiting consideration to deaths of those under age 75, we found that in 1994 about 147,000, or 6 percent, of the 2.3 million U.S. deaths involved these causes of death or were of people in this age group. This estimate, however, is much larger than the estimates some have made of a national donor pool of from 5,000 to 29,000 people per year. We found that both the death and adjusted-death measures have drawbacks that limit their usefulness, however, including lack of timely data and inability to identify those deaths suitable for use in organ donation. We ranked the OPOs, using 1994-95 OPO procurement and transplant data, according to the current population-based measure and these two alternative measures—number of deaths and adjusted deaths. Although three OPOs would not qualify for recertification under any of these measures, according to our review, the number of and which OPOs would not qualify vary depending on the measure used. More OPOs would have been subject to termination under either of these alternative measures. HCFA did not consider two other methods for determining the number of potential donors—medical records reviews and modeling—that show promise for determining OPOs’ ability to acquire all usable organs. Reviewing hospital medical records is the most accurate method of estimating the number of potential donors in an OPO’s service area. A medical records review involves reviewing all deaths at a hospital with an in-depth examination of those meeting certain criteria. Reviewing the records of these patients reveals the patients’ suitability for organ donation based on several factors, including cause of death, evidence of brain death, and contraindications for donation such as age and disease. Such reviews can identify that subset of deaths in which patients could have become organ donors—the true number of potential donors for an OPO service area. Most OPOs do conduct medical records reviews but at varying levels of sophistication. For records reviews to be useful for assessing OPO performance, the reviews would have to be conducted consistently among OPOs and the results would need to be available for validation. Such reviews, however, are labor intensive and therefore expensive. Although most OPOs are conducting some form of medical records reviews and therefore already incurring the costs of these reviews, HCFA must consider its own and the OPOs’ additional expense involved in standardizing such reviews. Other considerations include the extent to which the reviews would add to the cost of organs and whether these costs would outweigh the benefit of more accurately measuring the number of potential donors. Another alternative, modeling, shows promise and would be less expensive than medical records reviews. At least one group is developing a modeling method using substitute measures to provide a valid measure for estimating the number of potential donors. The goal of this effort is to design an estimating procedure that will be relatively simple to execute, inexpensive, and valid. This approach uses information from hospitals in the OPO’s service area on variables, such as total number of deaths, total staffed beds, Medicare case mix, medical school affiliation, and trauma center certification, to predict the number of potential donors. Using existing data would make this alternative less costly than medical records reviews; however, the accuracy of such a model has yet to be established. If the number of potential donors for an OPO can be reasonably predicted using a set of variables, this could eliminate concerns about the cost of implementing medical records reviews. HCFA believes its current standard identifies OPOs that are poor performers. When publishing its final rule, however, the agency stated that it was interested in any empirical research that would merit consideration for further refining its standard. The approaches we identified in our report merit HCFA’s consideration. potential donors at a reasonable cost, it should choose one and begin assessing OPO performance accordingly. HCFA has concurred with our recommendation. It has indicated that when the ongoing research on medical records reviews and modeling are complete and it receives the studies, it will review the results to determine if it can support a better performance standard. HCFA’s continuous monitoring of the developments in approaches to identifying potential organ donors is important. Because the demand for organs surpasses the supply, OPOs are required by law to conduct and participate in systematic efforts to acquire all usable organs from potential donors. As we have reported, unless HCFA measures OPO performance according to the number of potential donors, the agency cannot determine OPOs’ effectiveness in acquiring organs. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

GAO discussed: (1) whether the current standard for assessing the local organ procurement organizations' (OPO) effectiveness appropriately measures the extent to which OPOs are maximizing their ability to identify, procure, and transplant organs and tissue; and (2) alternatives to the current standard that could be more effective. GAO noted that: (1) the Health Care Financing Administration's (HCFA) current performance standard does not accurately assess OPO's ability to meet the goal of acquiring usable organs because it is based on the total population, not the number of potential donors within the OPOs' service areas; (2) GAO identified two alternative performance measures that would better estimate the number of potential organ donors--measuring the rates of organ procurement and transplantation compared with either the number of deaths or the number of deaths adjusted for cause of death and age; (3) both these approaches have limitations, however, in data availability and accuracy; (4) two other methods for assessing OPO performance--medical records reviews and modeling--show promise because they could more accurately determine the number of potential donors; and (5) because OPOs must meet performance goals to continue to operate, approaches that more accurately differentiate between OPOs that achieve greater or lesser proportions of all possible donations in their service areas can help increase donations.

Before proceeding further, Mr. Chairman, I would like to briefly explain the operation of FBF, which is administered by GSA’s Public Buildings Service (PBS). In 1975 , FBF replaced appropriations to GSA as the primary means of financing the operating and capital costs associated with federal space owned or managed by GSA. PBS charges federal agencies rent, the receipts of which are deposited in FBF. Congress exercises control over FBF through the annual appropriations process that sets annual limits on how much of the fund can be expended for various activities. In addition, Congress may appropriate additional amounts for FBF. The specific activities the fund is used for include space acquisition and the operation, maintenance, repair of, and improvements to, government-owned and -leased buildings managed by GSA. FBF rent revenues have grown from about $2.5 billion in fiscal year 1987 to about $4.8 billion in fiscal year 1997. Each year, as part of the budget process, PBS calculates a revenue estimate that includes an estimate of rental revenue. Under the federal budget process, PBS’ initial rental income estimate for a given fiscal year is made 18 months in advance. For example, PBS’ initial rental income estimate for fiscal year 1997 was made in the spring of 1995, using rental revenue estimates for fiscal years 1995 and 1996 as a starting point. At that time, however, PBS did not yet have actual rental income data for all of fiscal year 1995, which had not yet ended, and it also did not have actual rental income data for fiscal year 1996, which had not yet begun. Accordingly, as a starting point, PBS updated and adjusted previous estimates it had made for fiscal years 1995 and 1996 based on the most recent information it had at the time, and it made assumptions about events it believed would affect rental revenues in fiscal year 1997. Updated information PBS compiled for fiscal years 1995 and 1996 included expected (1) annualized changes in space inventories for fiscal year 1995, (2) changes in the inflation rate, and (3) changes in building delegations under which agencies pay their own building operating costs and are refunded from FBF for the operating cost portion of their rent payments. PBS obtained this information from GSA’s regions and various other sources. PBS’ assumptions included such factors as using a uniform national average for the number of months new space would be occupied as well as the rental rate. As you can see, Mr. Chairman, forecasting rental revenues is a complex process carried out 18 months in advance that must be made with incomplete information for the 2 years preceding the year being estimated and is based on assumptions about future events. Given these circumstances, it would be reasonable to expect some differences between actual and estimated rental revenues. In this regard, PBS’ historical trends of estimated revenue versus actual revenue show actual rent revenue (1) exceeded estimated rental revenues for each year from fiscal year 1987 through fiscal year 1993—except for fiscal year 1992, when actual rental revenues were less than estimated rental revenues by 1.6 percent—and (2) differed from the estimate by less than 2 percent for each year during this period, except for fiscal year 1990, when actual revenue exceeded the estimate by 2.8 percent. However, for each of fiscal years 1994 through 1997, PBS’ data showed that annual actual rental revenues were less than estimated rental revenues, ranging from an overestimate of about $110.7 million, or 2.4 percent, in fiscal year 1995, to an overestimate of about $422.1 million, or 8.2 percent, in fiscal year 1996. (See app. II.) For fiscal years 1994 and 1995, PBS overestimated rental revenues by a combined total of $308.1 million, that according to the PBS’ Chief Financial Officer, was absorbed by reducing planned expenditures and using carryover balances without the need for congressional action. In addition, PBS reported a combined overestimate of $773.5 million for fiscal years 1996 and 1997, which PBS dealt with as I will explain in a moment. It is important to note that the fiscal year 1996 and 1997 overestimation from the historical analysis does not match the amount reported to Congress in January 1997 because the revenue estimates were made at different times. In January 1997, PBS expected the total overestimation for fiscal years 1996 and 1997 to be $847 million. Subsequently, in July of 1997, PBS increased the anticipated overestimation for fiscal year 1997 by $86.8 million and reported an anticipated overestimation for fiscal year 1998 of about $109.2 million. This brought the total anticipated overestimation for fiscal years 1996 through 1998 to about $1.04 billion. expenses in fiscal years 1997 and 1998 by deferring planned expenditures until later years to offset the remaining $359.5 million. However, after it had closed its fiscal year 1997 books, PBS reported the actual budget impact of its overestimation to be $634.4 million for fiscal years 1996 and 1997, and reduced its fiscal year 1998 overestimation to $28.3 million. As indicated, in January 1997, GSA informed Congress that it expected its total overestimate of rental revenue for fiscal years 1996 and 1997 to be $847 million. As shown in appendix I, PBS identified seven reasons for the overestimation and linked specific dollar amounts of the overestimate to each reason. For example, PBS attributed $209 million of the $847 million overestimate to rental reductions in fiscal year 1995 in 18 metropolitan areas that had not been factored into its original estimates. PBS provided documentation supporting the amount of the overestimation for six of the seven reasons. PBS could not provide data showing how the amount—$86 million—attributed to the remaining reason (i.e., that the original fiscal year 1995 rent revenue estimate was generally higher than actual fiscal year 1995 revenues) was developed. Although we examined the documentation PBS provided, we did not trace all the data compiled by PBS to explain its overestimation back to the original source documents. In July 1997, PBS reported increased overestimates of rental revenue for fiscal years 1997 and 1998 totalling $196 million, which, if accurate, would have brought the total overestimation for fiscal years 1996 through 1998 to over $1 billion. However, PBS did not identify the causes of the increased overestimation, and in January 1998, PBS identified the actual fiscal year 1997 budget impact of the overestimate for fiscal year 1997 to be only about $14.1 million and the estimated budget impact of the revised fiscal year 1998 overestimation to be about $28.3 million, for a combined total of $42.4 million. information provided by, GSA employees to reconstruct the reasons for deficiencies in the rental revenue estimates. To illustrate, one of the seven reasons for the overestimation identified by PBS was a change in assumptions about costs that was made in 1995 relative to the fiscal year 1997 rent revenue estimate. For example, one assumption changed was the estimated time that increased government-owned space would be occupied in a fiscal year. The time was changed from 6 months to 9 months, which resulted in an increase in the overestimation of rental revenue. However, PBS staff said that they could not recall who had authorized the change in the assumptions. Subsequently, PBS officials advised us that responsibility for the change in the assumptions was borne by the then PBS Commissioner. We could not locate any documentation explaining why the change was made. GSA’s Inspector General also noted that PBS lacked documentation for the assumptions made and methodology used to increase the revenue gap expected for fiscal year 1997. Use of national averages, rather than project-specific data, to forecast occupancy schedules and rental rates: For fiscal years 1996 and 1997, PBS reported that its use of national averages (which caused estimates of government-owned space increases to be too high) accounted for $142 million of the $847 million overestimation. For example, PBS assumed that it would receive rent for all space coming on line, for 9 months of the year, at the national average per square foot rental rate. In using national averages, PBS relied on less accurate data for estimating than if it had used project-specific data. In addition, in its calculations, the national average rental rate for government-owned space was changed from $40 to $44 per square foot without supporting documentation explaining the reason for the change. Additional problems with PBS’ rental revenue estimation process have also been identified. For example, in July 1997, Arthur Andersen reported that PBS lacked documentation for its budget methodology, including FBF, and had problems with its information and analysis systems as well as its pricing policies and practices. official, PBS will issue a directive on documenting the rental estimating process by April 1998. In our review of PBS’ fiscal year 1999 rental revenue estimate, we found that documentation had been prepared on the decisions, assumptions, and steps involved in the process. Office of Financial and Information Systems (FIS), with overall responsibility for the rental revenue forecasting process, was established: In July 1997, GSA issued an order establishing FIS with one of its responsibilities being to forecast rental revenue and monitor revenue status monthly to determine whether predictions of inventory changes, other technical assumptions, and income collected are occurring as anticipated. Within FIS, there is a Rent Team, with six people (two additional positions are authorized, but not yet filled) responsible for executing these duties. In the past, forecasting revenue was treated as a part-time task, and monitoring was done quarterly. In addition, in April 1997, PBS hired a Chief Financial Officer to oversee FIS. Also, each of GSA’s regions was directed to appoint a revenue manager to be responsible for this issue. According to a PBS official, as of February 20, 1998, 10 of the 11 regions have done so. Project-specific data is to be used in occupancy schedules and rental rates instead of national averages: In July 1996, PBS instructed each of its regions to submit monthly data on the changes expected in occupancy and rental rates for each property in its inventory. This would include known changes caused by government downsizing. However, PBS cautions that general estimates on downsizing that are not project-specific are too speculative to be used in making rental revenue forecasts. PBS intends to use project-specific data, whenever possible, to provide a more realistic fact-based estimate on which to base future rental revenues. New information system is being implemented to manage, track, and access data, with plans for a revenue forecasting module to be added to the system: By January 1998, PBS had installed its new information system, called the System for Tracking and Administering Real Property (STAR), in all its regions. PBS expects STAR to generate a more accurate inventory and greater integration of financial and operational data. According to PBS officials, they plan to develop a rental revenue forecast module for STAR. They expect this module to be completed by the spring of 1999 and to be used to develop the revenue projections for the fiscal year 2001 budget. we agree, since its rental revenue estimate is a forecast, it is unlikely to produce an estimate that is identical to actual rental revenue. While some variance is to be expected in any estimating process, variances that go beyond a certain level can be indicative of problems that need to be addressed. In this regard, we noted that PBS has not established an acceptable margin of error against which it can measure the success of its estimation process. Having such a benchmark, we believe, would put PBS in a better position to identify variances that need to be investigated so that it can explore and fix the causes of excessive variances, improve its estimation process, and determine its effectiveness over time. We recommend that the Commissioner, PBS, establish an acceptable margin of error for its rental revenue estimates, as well as a process for exploring and resolving causes of variances outside the margin adopted. Mr. Chairman, that concludes my prepared statement. I will be happy to answer any questions the Subcommittee may have. Less leased expansion space was delivered than was expected, and at later dates than expected. Fiscal year 1995 rental reductions in 18 metropolitan areas were not factored into the original estimates. Estimates of the effect of government-owned-space increases were too high. The fiscal year 1995 rental revenue estimate was generally higher than actual fiscal year 1995 revenues. Because of the timing of the budget, these high estimates were used as the basis for fiscal years 1996 and 1997 projections. Assumptions concerning the costs of leased and government space were changed to make them less conservative. A technical error was made in calculating the effect of indefinite authority in the rental of space. Rental revenue decreases from buildings, or portions of buildings, becoming unoccupied were not factored into the original estimate. In July 1997, GSA increased its estimate of the fiscal year 1997 overestimation but did not identify the causes. In July 1997, GSA identified an overestimation for fiscal year 1998 but did not identify the causes. Note 1: Rental income does not include reimbursables, outleasing, and miscellaneous income; therefore, these numbers are less than rental revenue in GSA’s financial statements. This historical analysis does not match revenue overestimation reported to Congress in January 1997 because the revenue estimates were made at different times. Note 2: N/A = Not available. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

Pursuant to a congressional request, GAO discussed the General Services Administration's (GSA) overestimation of its rental revenue projects for the Federal Buildings Fund (FBF) in fiscal years (FY) 1996, 1997, and 1998, and the actions it is taking to improve its future revenue projections. GAO noted that: (1) GSA had documentation supporting the dollar amounts it attributed to six of the seven reasons it reported for the overestimation of rental revenue; (2) in addition, GAO and others identified several weaknesses in GSA's rental revenue estimation process; (3) GSA was aware of these problems and has taken corrective actions which GAO believes, if effectively implemented, should help improve future rental revenue estimates; and (4) further, GSA recently reported the actual budget impact of its rental revenue overestimation to be $634.4 million for FY 1996 and FY 1997, and reduced its FY anticipated overestimation substantially.

Regardless of a veteran’s employment status or level of earnings, VA’s disability compensation program pays monthly cash benefits to eligible veterans who have service-connected disabilities resulting from injuries or diseases incurred or aggravated while on active military duty. A veteran starts the disability claims process by submitting a claim to one of the 57 regional offices administered by the Veterans Benefits Administration (VBA). In the average compensation claim, the veteran claims about five disabilities for which the regional office must develop the evidence required by law and federal regulations, such as military records and medical evidence. To obtain the required medical evidence, VBA’s regional offices often arrange medical examinations for claimants. For example, in fiscal year 2004, VBA’s 57 regional offices asked the 157 medical centers administered by the Veterans Health Administration (VHA) to examine about 500,000 claimants and provide examination reports containing the medical information needed to decide the claim. On the basis of the evidence developed by the regional office, an adjudicator determines whether each disability claimed by the veteran is connected to the veteran’s military service. Then, by applying medical criteria contained in VA’s Rating Schedule, the adjudicator evaluates the degree of disability caused by each service-connected disability in order to determine the veteran’s overall degree of service-connected disability. The degree of disability is expressed as a percentage, in increments of 10 percentage points—for example, 10 percent, 20 percent, 30 percent, and so on, up to 100 percent disability. The higher the percentage of disability, the higher the benefit payment received by the veteran. If a veteran disagrees with the regional office adjudicator’s decision on whether a disability is service-connected or on the appropriate percentage of disability, the veteran may file a Notice of Disagreement. The regional office then provides a further written explanation of the decision, and if the veteran still disagrees, the veteran may appeal to VA’s Board of Veterans’ Appeals. Before appealing to the board, a veteran may ask for a review by a regional office Decision Review Officer, who is authorized to grant the contested benefits based on the same case record that the original adjudicator relied on to make the initial decision. After appealing to the board, if a veteran disagrees with the board’s decision, the veteran may appeal to the U.S. Court of Appeals for Veterans Claims, which has the authority to render decisions establishing criteria that are binding on future decisions made by VA’s regional offices as well the board. For example, in DeLuca v. Brown, 8 Vet. App. 202 (1995), the court held that when federal regulations define joint and spine impairment severity in terms of limits on range of motion, VA claims adjudicators must consider whether range of motion is further limited by factors such as pain and fatigue during “flare-ups” or following repetitive use of the impaired joint or spine. Previous to this decision, VA had not explicitly considered whether such additional limitations existed because VA contended that its Rating Schedule incorporated such considerations. Because adjudicators often must use judgment when deciding disability compensation claims, variations in decision making are an inherent possibility. While some claims are relatively straightforward, many require judgment, particularly when the adjudicator must evaluate (1) the credibility of different sources of evidence; (2) how much weight to assign different sources of evidence; or (3) disabilities, such as mental disorders, for which the disability standards are not entirely objective and require the use of professional judgment. Without measuring the effect of judgment on decisions, VA cannot provide reasonable assurance that consistency is acceptable. At the same time, it would be unreasonable to expect that no decision-making variations would occur. Consider, for example, a disability claim that has two conflicting medical opinions, one provided by a medical specialist who reviewed the claim file but did not examine the veteran, and a second opinion provided by a medical generalist who reviewed the file and examined the veteran. One adjudicator could assign more weight to the specialist’s opinion, while another could assign more weight to the opinion of the generalist who examined the veteran. Depending on which medical opinion is given more weight, one adjudicator could grant the claim and the other could deny it. Yet a third adjudicator might conclude that the competing evidence provided an approximate balance between the evidence for and the evidence against the veteran’s claim, which would require that the adjudicator apply VA’s “benefit-of-the-doubt” rule and decide in favor of the veteran. An example involving mental disorders also demonstrates how adjudicators sometimes must make judgments about the degree of severity of a disability. The disability criteria in VA’s Rating Schedule provide a formula for rating the severity of a veteran’s occupational and social impairment due to a variety of mental disorders. This formula is a nonquantitative, behaviorally oriented framework for guiding adjudicators in choosing which of the degrees of severity shown in table 1 best describes the claimant’s occupational and social impairment. Similarly, VA does not have objective criteria for rating the degree to which certain spinal impairments limit a claimant’s motion. Instead, the adjudicator must assess the evidence and decide whether the limitation of motion is “slight, moderate, or severe.” To assess the severity of incomplete paralysis, the adjudicator must decide whether the veteran’s paralysis is “mild, moderate, or severe.” The decision on which severity classification to assign to a claimant’s condition could vary in the minds of different adjudicators, depending on how they weigh the evidence and how they interpret the meaning of the different severity classifications. Despite the inherent variation, however, it is reasonable to expect the extent of variation to be confined within a range that knowledgeable professionals could agree is reasonable, recognizing that disability criteria are more objective for some disabilities than for others. For example, if two adjudicators were to review the same claim file for a veteran who has suffered the anatomical loss of both hands, VA’s disability criteria state unequivocally that the veteran is to be given a 100 percent disability rating. Therefore, no variation would be expected. However, if two adjudicators were to review the same claim file for a veteran with a mental disability, knowledgeable professionals might agree that it would not be out of the bounds of reasonableness for these adjudicators to diverge by 30 percentage points but that wider divergences would be outside the bounds of reasonableness. The fact that two adjudicators might make differing, but reasonable, judgments on the meaning of the same evidence is recognized in the design of the system that VBA uses to assess the accuracy of disability decisions made by regional office adjudicators. VBA instructs the staff who review the accuracy of decisions to refrain from charging the original adjudicator with an error merely because they would have made a different decision than the one made by the original adjudicator. VBA instructs the reviewers not to substitute their own judgment in place of the original adjudicator’s judgment as long as the original adjudicator’s decision is adequately supported and reasonable. Because of the inherent possibility that different adjudicators could make differing decisions based on the same information pertaining to a specific impairment, we recommended in November 2004 that the Secretary of Veterans Affairs develop a plan containing a detailed description of how VA would (1) use data from a newly implemented administrative information system—known as Rating Board Automation 2000—to identify indications of decision-making inconsistencies among the regional offices for specific impairments and (2) conduct systematic studies of the impairments for which the data reveal possible inconsistencies among regional offices. VA concurred with our recommendation but has not yet developed such a plan. At this point, VA has now collected 1 full year of data using the new administrative data system, which should be sufficient to begin identifying variations and then assessing whether such variations are within the bounds of reasonableness. Because the existing medical records of disability claimants often do not provide VBA regional offices with sufficient evidence to decide claims properly, the regional offices often ask VHA medical centers to examine the claimants and provide exam reports containing the medical information needed to make a decision. Exams for joint and spine impairments are among the exams that regional offices most frequently request. To comply with the DeLuca decision’s requirements for joint and spine disability exam reports, VHA instructs its medical center clinicians to make not only an initial measurement of the range of motion in the impaired joint or spine but also to measure range of motion after having the claimant flex the impaired joint or spine several times. This is done to determine the extent to which repeated motion may result in pain or fatigue that further degrades the functioning of the impaired joint or spine. In addition, the clinician also is instructed to determine if the claimant experiences flare-ups from time to time, and if so, how often such flare- ups occur and the extent to which they limit the functioning of the impaired joint or spine. However, in a baseline study conducted in 2002, VA found that 61 percent of the exam reports on joint and spine impairments did not provide sufficient information on the effects of repetitive movement or flare-ups to comply with the DeLuca criteria. We reported earlier this month on the progress VA had made since 2002 in ensuring that its medical centers consistently prepare joint and spine exam reports containing the information required by DeLuca. We found that, as of May 2005, the percentage of joint and spine exam reports not meeting the DeLuca criteria had declined substantially from 61 percent to 22 percent. Much of this progress appeared attributable to a performance measure for exam report quality established by VHA in fiscal year 2004 after both VHA and VBA had taken a number of steps to build a foundation for improvement. This included creating the Compensation and Pension Examination Project Office, a national office established in 2001 to improve the disability exam process, and providing extensive training to VHA and VBA personnel. While VA made substantial progress in ensuring that its medical centers’ exam reports adequately address the DeLuca criteria, a 22 percent deficiency rate indicated that many joint and spine exam reports still did not comply with DeLuca. Moreover, in relation to the issue of consistency, the percentage of exam reports satisfying the DeLuca criteria varied widely across the 21 health care networks that manage VHA’s 157 medical centers—from a low of 57 percent compliance to a high of 92 percent. It should be noted that the degree of variation is likely even greater than indicated by these percentages because, within any given health care network, an individual medical center’s performance in meeting the DeLuca criteria may be lower or higher than the combined average performance for all the medical centers in that specific network. Therefore, in the network that had 57 percent of its joint and spine exams meeting DeLuca criteria, an individual medical center within that network may have had less than 57 percent meeting the DeLuca criteria. Conversely, in the network that had 92 percent of the exams meeting the DeLuca criteria, an individual medical center within that network may have had more than 92 percent satisfying DeLuca. Unless medical centers across the nation consistently provide the information required by DeLuca, veterans claiming joint and spine impairments may not receive consistent disability decisions. Further, VA has found deficiencies in a substantial portion of the requests that VBA’s regional offices send to VHA’s medical centers, asking them to perform disability exams. For example, VA found in early 2005 that nearly one-third of the regional office requests for spine exams contained errors such as not identifying the pertinent medical condition or not requesting the appropriate exam. However, VBA had not yet established a performance measure for the quality of the exam requests that regional offices submit to medical centers. To help ensure continued progress in satisfying the DeLuca criteria, we recommended that the Secretary of Veterans Affairs direct the Under Secretary for Health to develop a strategy for improving consistency among VHA’s health care networks in meeting the DeLuca criteria. For example, if performance in satisfying the DeLuca criteria continues to vary widely among the networks during fiscal year 2006, VHA may want to consider establishing a new performance measure specifically for joint and spine exams or requiring that medical centers use automated templates developed for joint and spine exams, provided an in-progress study of the costs and benefits of the automated exam templates supports their use. We also recommended that the Secretary direct the Under Secretary for Benefits to develop a performance measure for the quality of exam requests that regional offices send to medical centers. As a national program, VA’s disability compensation program must ensure that veterans receive fair and equitable decisions on their disability claims no matter where they live across the nation. Given the inherent risk of variation in disability decisions, it is incumbent on VA to ensure program integrity by having a credible system for identifying indications of inconsistency among its regional offices and then remedying any inconsistencies found to be unreasonable. Until assessments of consistency become a routine part of VA’s oversight of decisions made by its regional offices, veterans may not consistently get the benefits they deserve for disabilities connected to their military service, and taxpayers may not trust the effectiveness and fairness of the disability compensation program. Mr. Chairman, this concludes my remarks. I would be happy to answer any questions you or the members of the subcommittee may have. For further information, please contact Cynthia A. Bascetta at (202) 512- 7101. Also contributing to this statement were Irene Chu and Ira Spears. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

The House Subcommittee on Disability Assistance and Memorial Affairs asked GAO to discuss its work on the consistency of disability compensation claims decisions of the Department of Veterans Affairs (VA). GAO has reported wide state-to-state variations in average compensation payments per disabled veteran, raising questions about decisional consistency. In 2003, GAO designated VA's disability programs, along with other federal disability programs, as high risk, in part because of concerns about decisional consistency. Illustrating this issue, GAO reported that inadequate information from VA medical centers on joint and spine impairments contributed to inconsistent regional office disability decisions. GAO's November 2004 report explained that adjudicators in the Department of Veterans Affairs often must use judgment in making disability compensation claims decisions. As a result, it is crucial for VA to have a system for routinely identifying the effect of judgment on decisional variations among its 57 regional offices to determine if the variations are reasonable and, if not, how to correct them. In 2002, GAO reported that state-to-state variations of as much as 63 percent in average compensation payments per disabled veteran indicated potential inconsistency. The nature of the criteria that adjudicators must apply in evaluating the degree of impairment due to mental disorders provides an example of the extent of judgment required. GAO's October 2005 report on decisions for joint and spine disabilities showed one important way to improve consistency. Specifically, regional offices often rely on VA's 157 medical centers to examine claimants and provide medical information needed to decide the claims. However, VA has found inconsistency among its medical centers in the adequacy of their joint and spine disability exam reports that regional offices need to decide these claims. As of May 2005, the percentage of exam reports containing the required information varied across the medical centers from a low of 57 percent to a high of 92 percent. This could adversely affect the consistency of disability claims decisions involving joint and spine impairments. Although VA has made substantial progress, more remains to be done to improve the level of consistency in the disability exam reports.

With an overall goal of developing research that communities need to make sound decisions about how best to prevent and reduce girls’ delinquency, OJJDP established the Girls Study Group (Study Group) in 2004 under a $2.6 million multiyear cooperative agreement with a research institute. OJJDP’s objectives for the group, among others, included identifying effective or promising programs, program elements, and implementation principles (i.e., guidelines for developing programs). Objectives also included developing program models to help inform communities of what works in preventing or reducing girls’ delinquency, identifying gaps in girls’ delinquency research and developing recommendations for future research, and disseminating findings to the girls’ delinquency field about effective or promising programs. To meet OJJDP’s objectives, among other activities, the Study Group identified studies of delinquency programs that specifically targeted girls by reviewing over 1,000 documents in relevant research areas. These included criminological and feminist explanations for girls’ delinquency, patterns of delinquency, and the justice system’s response to girls’ delinquency. As a result, the group identified 61 programs that specifically targeted preventing or responding to girls’ delinquency. Then, the group assessed the methodological quality of the studies of the programs that had been evaluated using a set of criteria developed by DOJ’s Office of Justice Programs (OJP) called What Works to determine whether the studies provided credible evidence that the programs were effective at preventing or responding to girls’ delinquency. The results of the group’s assessment are discussed in the following sections. OJJDP’s effort to assess girls’ delinquency programs through the use of a study group and the group’s methods for assessing studies were consistent with generally accepted social science research practices and standards. In addition, OJJDP’s efforts to involve practitioners in Study Group activities and disseminate findings were also consistent with the internal control standard to communicate with external stakeholders, such as practitioners operating programs. According to OJJDP research and program officials, they formed the Study Group rather than funding individual studies of programs because study groups provide a cost-effective method of gaining an overview of the available research in an issue area. As part of its work, the group collected, reviewed, and analyzed the methodological quality of research on girls’ delinquency programs. The use of such a group, including its review, is an acceptable approach for systematically identifying and reviewing research conducted in a field of study. This review helped consolidate the research and provide information to OJJDP for determining evaluation priorities. Further, we reviewed the criteria the group used to assess the studies and found that they adhere to generally accepted social science standards for evaluation research. We also generally concurred with the group’s assessments of the programs based on these criteria. According to the group’s former principal investigator, the Study Group decided to use OJP’s What Works criteria to ensure that its assessment of program effectiveness would be based on highly rigorous evaluation standards, thus eliminating the potential that a program that may do harm would be endorsed by the group. However, 8 of the 18 experts we interviewed said that the criteria created an unrealistically high standard, which caused the group to overlook potentially promising programs. OJJDP officials stated that despite such concerns, they approved the group’s use of the criteria because of the methodological rigor of the framework and their goal for the group to identify effective programs. In accordance with the internal control standard to communicate with external stakeholders, OJJDP sought to ensure a range of stakeholder perspectives related to girls’ delinquency by requiring that Study Group members possess knowledge and experience with girls’ delinquency and demonstrate expertise in relevant social science disciplines. The initial Study Group, which was convened by the research institute and approved by OJJDP, included 12 academic researchers and 1 practitioner; someone with experience implementing girls’ delinquency programs. However, 11 of the 18 experts we interviewed stated that this composition was imbalanced in favor of academic researchers. In addition, 6 of the 11 said that the composition led the group to focus its efforts on researching theories of girls’ delinquency rather than gathering and disseminating actionable information for practitioners. According to OJJDP research and program officials, they acted to address this issue by adding a second practitioner as a member and involving two other practitioners in study group activities. OJJDP officials stated that they plan to more fully involve practitioners from the beginning when they organize study groups in the future and to include practitioners in the remaining activities of the Study Group, such as presenting successful girls’ delinquency program practices at a national conference. Also, in accordance with the internal control standard, OJJDP and the Study Group have disseminated findings to the research community, practitioners in the girls’ delinquency field, and the public through conference presentations, Web site postings, and published bulletins. The group plans to issue a final report on all of its activities by spring 2010. The Study Group found that few girls’ delinquency programs had been studied and that the available studies lacked conclusive evidence of effective programs; as a result, OJJDP plans to provide technical assistance to help programs be better prepared for evaluations of their effectiveness. However, OJJDP could better address its girls’ delinquency goals by more fully developing plans for supporting such evaluations. In its review, the Study Group found that the majority of the girls’ delinquency programs it identified—44 of the 61—had not been studied by researchers. For the 17 programs that had been studied, the Study Group reported that none of the studies provided conclusive evidence with which to determine whether the programs were effective at preventing or reducing girls’ delinquency. For example, according to the Study Group, the studies provided insufficient evidence of the effectiveness of 11 of the 17 programs because, for instance, the studies involved research designs that could not demonstrate whether any positive outcomes, such as reduced delinquency, were due to program participation rather than other factors. Based on the results of this review, the Study Group reported that among other things, there is a need for additional, methodologically rigorous evaluations of girls’ delinquency programs; training and technical assistance to help programs prepare for evaluations; and funding to support girls’ delinquency programs found to be promising. According to OJJDP officials, in response to the Study Group’s finding about the need to better prepare programs for evaluation, the office plans to work with the group and use the remaining funding from the effort— approximately $300,000—to provide a technical assistance workshop by the end of October 2009. The workshop is intended to help approximately 10 girls’ delinquency programs prepare for evaluation by providing information about how evaluations are designed and conducted and how to collect data that will be useful for program evaluators in assessing outcomes, among other things. In addition, OJJDP officials stated that as a result of the Study Group’s findings, along with feedback they received from members of the girls’ delinquency field, OJJDP plans to issue a solicitation in fiscal year 2010 for funding to support evaluations of girls’ delinquency programs. OJJDP has also reported that the Study Group’s findings are to provide a foundation for moving ahead on a comprehensive program related to girls’ delinquency. However, OJJDP has not developed a plan that is documented, is shared with key stakeholders, and includes specific funding requirements and commitments and time frames for meeting its girls’ delinquency goals. Standard practices for program and project management state that specific desired outcomes or results should be conceptualized, defined, and documented in the planning process as part of a road map, along with the appropriate projects needed to achieve those results, supporting resources, and milestones. In addition, government internal control standards call for policies and procedures that establish adequate communication with stakeholders as essential for achieving desired program goals. According to OJJDP officials, they have not developed a plan for meeting their girls’ delinquency goals because the office is in transition and is in the process of developing a plan for its juvenile justice programs, but the office is taking steps to address its girls’ delinquency goals, for example, through the technical assistance workshop. Developing a plan for girls’ delinquency would help OJJDP to demonstrate leadership to the girls’ delinquency field by clearly articulating the actions it intends to take to meet its goals and would also help the office to ensure that the goals are met. In our July report, we recommended that to help ensure that OJJDP meets its goals to identify effective or promising girls’ delinquency programs and supports the development of program models, the Administrator of OJJDP develop and document a plan that (1) articulates how the office intends to respond to the findings of the Study Group, (2) includes time frames and specific funding requirements and commitments, and (3) is shared with key stakeholders. OJP agreed with our recommendation and outlined efforts that OJJDP plans to undertake in response to these findings. For example, OJJDP stated that it anticipates publishing its proposed juvenile justice program plan, which is to include how it plans to address girls’ delinquency issues, in the Federal Register to solicit public feedback and comments, which will enable the office to publish a final plan in the Federal Register by the end of the year (December 31, 2009). Mr. Chairman, this concludes my statement. I would be pleased to respond to any questions that you or other Members of the Subcommittee may have. For questions about this statement, please contact Eileen R. Larence at (202) 512-8777 or larencee@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals making key contributions to this statement include Mary Catherine Hult, Assistant Director; Kevin Copping; and Katherine Davis. Additionally, key contributors to our July 2009 report include David Alexander, Elizabeth Blair, and Janet Temko. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

This testimony discusses issues related to girls' delinquency--a topic that has attracted the attention of federal, state, and local policymakers for more than a decade as girls have increasingly become involved in the juvenile justice system. For example, from 1995 through 2005, delinquency caseloads for girls in juvenile justice courts nationwide increased 15 percent while boys' caseloads decreased by 12 percent. More recently, in 2007, 29 percent of juvenile arrests--about 641,000 arrests--involved girls, who accounted for 17 percent of juvenile violent crime arrests and 35 percent of juvenile property crime arrests. Further, research on girls has highlighted that delinquent girls have higher rates of mental health problems than delinquent boys, receive fewer special services, and are more likely to abandon treatment programs. The Office of Juvenile Justice and Delinquency Prevention (OJJDP) is the Department of Justice (DOJ) office charged with providing national leadership, coordination, and resources to prevent and respond to juvenile delinquency and victimization. OJJDP supports states and communities in their efforts to develop and implement effective programs to, among other things, prevent delinquency and intervene after a juvenile has offended. For example, from fiscal years 2007 through 2009, Congress provided OJJDP almost $1.1 billion to use for grants to states, localities, and organizations for a variety of juvenile justice programs, including programs for girls. Also, in support of this mission, the office funds research and program evaluations related to a variety of juvenile justice issues. As programs have been developed at the state and local levels in recent years that specifically target preventing girls' delinquency or intervening after girls have become involved in the juvenile justice system, it is important that agencies providing grants and practitioners operating the programs have information about which of these programs are effective. In this way, agencies can help to ensure that limited federal, state, and local funds are well spent. In general, effectiveness is determined through program evaluations, which are systematic studies conducted to assess how well a program is working--that is, whether a program produced its intended effects. To help ensure that grant funds are being used effectively, you asked us to review OJJDP's efforts related to studying and promoting effective girls' delinquency programs. We issued a report on the results of that review on July 24, 2009. This testimony highlights findings from that report and addresses (1) efforts OJJDP has made to assess the effectiveness of girls' delinquency programs, (2) the extent to which these efforts are consistent with generally accepted social science standards and federal standards to communicate with stakeholders, and (3) the findings from OJJDP's efforts and how the office plans to address the findings. This statement is based on our July report and selected updates made in October 2009. With an overall goal of developing research that communities need to make sound decisions about how best to prevent and reduce girls' delinquency, OJJDP established the Girls Study Group (Study Group) in 2004 under a $2.6 million multiyear cooperative agreement with a research institute. OJJDP's objectives for the group, among others, included identifying effective or promising programs, program elements, and implementation principles (i.e., guidelines for developing programs). Objectives also included developing program models to help inform communities of what works in preventing or reducing girls' delinquency, identifying gaps in girls' delinquency research and developing recommendations for future research, and disseminating findings to the girls' delinquency field about effective or promising programs. OJJDP's effort to assess girls' delinquency programs through the use of a study group and the group's methods for assessing studies were consistent with generally accepted social science research practices and standards. In addition, OJJDP's efforts to involve practitioners in Study Group activities and disseminate findings were also consistent with the internal control standard to communicate with external stakeholders, such as practitioners operating programs. The Study Group found that few girls' delinquency programs had been studied and that the available studies lacked conclusive evidence of effective programs; as a result, OJJDP plans to provide technical assistance to help programs be better prepared for evaluations of their effectiveness. However, OJJDP could better address its girls' delinquency goals by more fully developing plans for supporting such evaluations.

Medicare is a huge program. As the nation’s largest health insurer, it serves some 38 million Americans by providing health insurance to those aged 65 and over and to many of the nation’s disabled. It disburses over $200 billion in health care benefits every year, and by 2000 is expected to be processing 1 billion claims annually. The Medicare program is divided into two components—part A and part B. Part A encompasses facility-based services, with claims paid to hospitals, skilled nursing facilities, hospices, and home health agencies. Part B comprises outpatient services, with claims paid to physicians, laboratories, medical equipment suppliers, and other outpatient providers and practitioners. Claims processing for the Medicare program is handled at some 45 sites throughout the country by about 70 private companies under contract with HCFA. Contractors handling part A services, called intermediaries, had been using three different computer systems to process claims; those handling part B, called carriers, used six different systems. In order to improve the efficiency and effectiveness of Medicare operations and better address fraud and abuse, HCFA planned to develop one unified computer system to replace the existing systems. In January 1994, HCFA awarded a contract to a software developer to design, develop, and implement the MTS automated claims-processing information system. In so doing, MTS was to aid HCFA in identifying fraud and abuse by utilizing an integrated database that would greatly improve HCFA’s ability to profile data by type of service on a national or regional basis. The single system would integrate data from Medicare part A and part B and managed care (a newer, third component), provide a comprehensive view of billing practices, and incorporate new technology to facilitate innovative investigative procedures. The MTS project encountered problems from the very beginning. It was plagued with schedule delays, cost overruns, and the lack of effective management and oversight. We repeatedly reported that HCFA was not applying effective investment management practices in its planning and management and, as a result, had no assurance that the project would be cost-effective, delivered within estimated time frames, or even improve the processing of Medicare claims. MTS costs had also escalated dramatically. As we testified in May, total estimated project costs jumped sevenfold in 5 years, from $151 million in 1992 to about $1 billion in 1997. I should point out that the $1 billion figure included costs for transitioning from the three part A and six part B systems to a single part A and a single part B system prior to implementing MTS, and for acquiring MTS operating sites. To justify the continuation of MTS, we recommended in May 1997 that HHS require HCFA to prepare a valid cost-benefit and alternatives analysis. Further, we recommended at that time that HHS withhold funding for proposed MTS operating sites until these sites were justified. We likewise identified critical areas in which HCFA was not using sound systems-development practices in managing its MTS software development contractor. HCFA had not developed the kinds of plans that are critical to systems success. This included missing or inadequate plans for three important components of systems development: requirements management, configuration management, and systems integration. Finally, HCFA had not adequately monitored its contractor’s activities using measures of software development quality. These problems decreased HCFA’s chances of controlling the development of systems requirements and software. Given the magnitude of problems surfaced with MTS, along with runaway costs, HCFA further assessed the project’s viability. Faced with the prospect of spending hundreds of millions of dollars to acquire MTS operating sites along with additional millions of dollars for the software development effort, HCFA decided to terminate both the request for proposals for the sites and the entire software-development contract as well. On August 15, 1997, HCFA terminated the MTS contract on which it had spent about 3 and a half years and about $80 million to date—about $50 million for software development and about another $30 million for internal HCFA costs. What has that money purchased? A huge learning experience about the difficulty of acquiring such a large system under a single contract and a better understanding of the requirements for developing a Medicare claims processing system, but no integrated claims processing software to aid HCFA in preventing fraud and abuse. Still to be delivered to HCFA, at additional cost under the original contract, is a set of application requirements for what was to have been the managed care module. The agency is considering awarding another contract for the development and implementation of managed care software using these requirements. In addition, it is now beginning to reconsider its approach for identifying requirements and developing software for two features that were planned as part of MTS: a beneficiary insurance file and a financial management component. While the MTS termination delays one means of possibly combatting fraud and abuse, HCFA has two other independent information technology initiatives in this area that are continuing. These separate initiatives are analyzing the potential for using existing commercial software and exploring the possibilities for developing antifraud software. In May 1995, we reported on the potential benefits of HCFA’s use of commercial software to help detect inappropriate medical coding, a common form of billing abuse. We concluded that HCFA had not kept pace with private industry’s use of such software, and that HCFA’s internal efforts to develop the capability to detect such code manipulation were limited and unlikely to fully stem the losses being suffered from these abuses. We recommended that HCFA require Medicare carriers to use a commercial system to detect code manipulation when processing Medicare claims for physicians’ services and supplies. Although senior HCFA officials voiced their support for our recommendation to use modern information technology to strengthen payment controls, they did not begin to test the feasibility of using commercial code manipulation-detection software to process Medicare claims until about a year after we reported on its potential. Furthermore, any positive results from this testing are not expected to be implemented nationally for at least several years. In the meantime, hundreds of millions of dollars continue to be lost annually, some of which could have possibly been saved with timely implementation of this software. In addition to our report on opportunities to use commercial software to detect billing abuse, we reported in 1995 that new antifraud systems were available and being used by private insurers, some of whom were also Medicare carriers. Concluding that this technology could possibly complement existing Medicare systems, we recommended that HHS direct HCFA to develop a plan for implementing antifraud technology. However, HHS expressed three reservations about implementing new technology for identifying fraudulent patterns of behavior in the Medicare program. First, it said, the technology might not be applicable in a health insurance setting; second, that it might require substantial modification; and third, that more testing would be needed to assess its usefulness in detecting fraud in Medicare claims data. Rather than trying to adopt the commercially available software, HCFA chose to enter into an agreement that allowed it to explore the possibility of developing such software. Specifically, HCFA signed a 2-year, $6-million interagency agreement with the Los Alamos National Laboratory to assess the potential for identifying patterns of fraud. This agreement was recently extended for 3 additional months, until December of this year. As part of this agreement, Los Alamos has developed prototype approaches to detecting some suspicious part B claims. These approaches are currently being tested. To bring its work to fruition, the laboratory has submitted a 4-year, $13-million follow-up proposal to HCFA to use these approaches to design a system that will detect those and other suspicious claims. According to HCFA officials, they have agreed to a 4-year follow-up commitment and have approved $2.7 million for the fiscal year 1998 work. Usable results from this effort appear to be years away because, once the system’s design is complete, HCFA would have to award another contract to a software developer to create software from the Los Alamos design. Further, according to laboratory officials, HCFA will have to acquire separate computers to implement any Los Alamos-based fraud detection system because its approaches, which were originally to become part of MTS, are not designed to be integrated with the standard part A and part B Medicare claims-processing systems to which HCFA is now transitioning. HCFA’s negative experience with its automation projects represents a pattern we see throughout the federal sector: it is weaknesses in management, not technology itself, that stymie effective systems development and implementation. Managing information technology is not easy. But the payoffs of success—and the significant cost of failure, in time and money—demand that agencies implement sound information technology practices. How can agency officials begin implementing such practices? A good place to start is with the Clinger-Cohen Act of 1996. Fueled by a decade of poor information technology planning and program management across government, the act sought to strengthen executive leadership in information management and institute sound investment decision-making to maximize the return on costly technology investments. It is important to note that just as technology is most effective when it supports defined business needs and objectives, Clinger-Cohen will be more powerful if it can be integrated with the objectives of broader governmentwide management reform legislation that HHS, HCFA’s parent department, is also required to implement. One such reform is the Paperwork Reduction Act of 1995, which emphasizes the need for an overall information resources management strategic planning framework, with information technology decisions linked directly to mission needs. Another reform is the Chief Financial Officers Act of 1990, which requires, among other things, that sound financial management practices and systems essential for tracking program costs and expenditures be in place. Still another reform is the 1993 Government Performance and Results Act, which focuses on defining mission goals and objectives, measuring and evaluating performance, and reporting results. Together, Clinger-Cohen and these other laws provide a powerful framework under which federal agencies have the best opportunity to improve the management and acquisition of information technology. We believe that if properly and fully implemented, the requirements of Clinger-Cohen and the Paperwork Reduction Act should help HHS and HCFA make real change and improve the way they acquire information technology and manage these investments. These acts emphasize establishing senior-level chief information officers (CIO), involving senior executives in information management decisions, and tightening controls over technology spending. HCFA has recognized the need to more effectively manage its information technology acquisitions and has taken several important steps. For example, late last year it established a CIO position and is now reportedly in the final stages of selecting an individual for the position. Such a position is essential to ensuring the success of the agency’s information technology initiatives. HCFA has also established an information technology investment review board involving senior executives. HCFA sees these actions as providing an integrated process for planning, budget development, performance-based management, and evaluation of information technology investments. We endorse these positive steps. However, much remains to be done to ensure that HCFA’s initiatives—or those of any agency—are cost-effective and serve its mission. HCFA has not yet implemented our recommendations in establishing investment processes that will allow it to maximize the value and manage the risks of its information technology acquisitions, and tightly control spending. In HCFA’s case, officials state that establishing investment management practices to support its recent changes will be an “iterative process” that will take time. To effectively manage as an investment any information technology it seeks to acquire, an agency—including HCFA—must be structured organizationally in a way that allows—even promotes—such an approach. This means providing a qualified top official with the authority and accountability to make critical management decisions on the basis of sound information. This structure should provide such information through systematic analyses that predict the kind of return on investment envisioned, in both a fiscal and technical sense. The agency then is obliged to use sound systems-development practices in managing its automation projects. Where such management has not been the norm, both HHS and the Office of Management and Budget should provide close oversight to ensure swift implementation of sound information technology management. Continuing congressional oversight would further assist in accomplishing this. This concludes my statement. I would be happy to respond to any questions you or other Members of the Subcommittee may have at this time. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

GAO discussed: (1) the Health Care Financing Administration's (HCFA) Medicare Transaction System (MTS) and the recommendations GAO made to correct serious weaknesses in its management identified as part of a GAO review; (2) two continuing HCFA initiatives to combat fraud and abuse; and (3) underlying information technology management issues. GAO noted that: (1) to improve the efficiency and effectiveness of Medicare operations and better address fraud and abuse, HCFA planned to develop one unified computer system to replace the existing system, but the project encountered problems from the beginning; (2) HCFA assessed the project's viability and decided to terminate both the request for proposals for the MTS sites and the entire software-development contract; (3) HCFA has two other independent information technology initiatives in the areas of fraud and abuse that are continuing--analyzing the potential for using existing commercial software and exploring the possibilities for developing antifraud software; (4) HCFA did not begin to test the feasibility of using commercial code-manipulation software to process Medicare claims until about 1 year after GAO reported on its potential; (5) any positive results from this testing are not expected to be implemented nationally for at least several years; (6) HCFA chose to enter an agreement with Los Alamos National Laboratory that allowed it to explore developing such software; (7) results from this program appear to be years away because once the system's design is complete, HCFA would have to award another contract to a software developer to create from the Los Alamos design; (8) HCFA would have to acquire new computers to implement any Los Alamos-based fraud detection system because its approaches, which were originally to become part of MTS, are not designed to be integrated with the Medicare claims processing systems to which HCFA is transitioning; (9) HCFA's negative experience with its automation projects represents a pattern of weaknesses GAO sees throughout the federal sector; weaknesses in management that stymie effective systems development and implementation; (10) the Clinger-Cohen Act of 1996, the Paperwork Reduction Act of 1995, the Chief Financial Officers Act of 1990, and the 1993 Government Performance and Results Act, provide a powerful framework under which federal agencies have the best opportunity to improve the management and acquisition of information technology; (11) HCFA has recognized the need to more effectively manage its information technology acquisitions, and has taken several important steps, but much remains to be done to ensure that HCFA's initiatives are cost-effective and serve its mission; and (12) HCFA has not yet implemented GAO's recommendations in establishing investment processes that will allow it to maximize the value, manage the risks of its information technology acquisitions, and tightly control spending.

The 7(a) loan program, SBA’s largest lending program, is intended to serve small business borrowers who cannot otherwise obtain financing under suitable terms and conditions from the private sector. Under the program, SBA guarantees to repay a participating lender a prespecified percentage of the 7(a) loan amount (generally between 75 and 80 percent) in the event of borrower default. To obtain a 7(a) loan guarantee, a lender must document that the prospective borrower was unable to obtain financing under reasonable terms and conditions through normal business channels. Borrowers participating in the program represent a broad range of small businesses, including restaurants, consumer services, professional services, and retail outlets. The dollar volume of 7(a) loans that can be guaranteed under SBA’s authority is predetermined each fiscal year by congressional appropriations that subsidize the program. During fiscal year 1997, 7(a) loan approvals totaled nearly $9.5 billion—the highest level of loan approvals in the program’s history and an increase of over 20 percent from the previous fiscal year. As of December 31, 1997, there was $21.5 billion in total 7(a) loans outstanding. Lending Companies (SBLC) that accounted for about 19 percent of 7(a) loans outstanding at the end of 1997. A secondary loan market is a resale market for loans originated in the primary market. It allows a lender to sell a loan it originates rather than holding the loan on its balance sheet. To hold a loan on its balance sheet, the lender would be required to obtain funding for the time period over which the loan was outstanding. For the types of loans I am discussing, when a lender sells a loan, it continues to service the loan by collecting borrower principal and interest payments and taking possible corrective actions if the borrower does not make required payments. A number of benefits are associated with secondary markets. They provide lenders a funding alternative to deposits, lines of credit, and other debt sources. Secondary loan markets generally link borrowers and lenders in local markets to national capital markets, which can provide liquidity for lenders and thereby reduce regional imbalances in loanable funds and possibly increase the overall availability of credit to the primary market and lower interest rates for borrowers. The share of loans in a primary market that are sold in a secondary market depends on the benefits generated by the secondary market. For example, secondary markets allow interest rate risk to be diversified among investors with access to funding sources that help them manage such risks. Interest rate risk is the possibility of financial loss due to changes in market interest rates. This risk is greatest for holders of assets such as fixed-rate loans. For example, a financial institution holding a 30-year fixed rate mortgage on its balance sheet that it funds with short-term liabilities can experience losses if interest rates rise. In this case, interest earnings from the mortgage do not increase while interest costs do. Interest rate risk is also present for variable rate loans with caps that limit how much interest rates paid by the borrower can increase. Adjustable-rate residential mortgages are an important example of such a variable-rate loan product. Depository institutions that rely on short-term deposits for funding have incentives to avoid holding fixed-rate assets on their balance sheets. In this case, secondary markets provide a funding source that is less likely to be disrupted in a changing interest rate environment. defaults. When secondary market investors are exposed to credit risk, secondary market sales can be impeded if investors lack information on lenders, borrowers, and loan characteristics to estimate their exposure to credit risks. Investors who purchase federally guaranteed loans and securities are not subject to credit risk because the federal guarantees ensure that investors will be paid on defaulted loans. However, lenders and investors are subject to credit risk on unguaranteed loans or portions of loans. Prepayment risk is the risk that borrowers will pay off their loans before maturity. For example, prepayments can lower returns to investors in fixed-rate loans if borrowers prepay the loans when interest rates decline. Likewise, for fixed- or variable-rate loans, prepayments can lower returns to investors who pay a premium for a pool of loans with relatively high interest rates. Federal guarantees do not mitigate this risk. Thus, secondary market sales can be impeded if investors lack information on lenders, borrowers, and loan characteristics to estimate their exposure to prepayment risks. Analysts are able, by using various statistical techniques, to estimate prepayment risks for large loan pools for which information is available on the pool’s loan characteristics and historic prepayment rates on statistical samples of similar loans. In contrast, such estimates are less reliable for securities backed by loan pools composed of a relatively small number of loans. The size of the pool is important because loans with cash flows that represent statistical outliers are less likely to cause the cash flow from a large pool to differ from those of other representative statistical samples of similar loans. Ginnie Mae is a government corporation that is part of the Department of Housing and Urban Development. Ginnie Mae participating lenders originate mortgages insured by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) for resale in the secondary market. These lenders issue mortgage-backed securities backed by cash flows from these mortgages. For a fee of 6 basis points, Ginnie Mae guarantees timely payment of principal and interest on these securities. Currently, over $500 billion in MBS backed by Ginnie Mae is outstanding. Most mortgages backing Ginnie Mae MBS are FHA insured mortgages. compete in the primary market for loan originations even though they do not have a deposit base to finance the mortgages on their balance sheets. Due to competitive forces in the primary market and as a result of increased access to additional sources of funds for lenders, this secondary market has contributed to lower interest rates paid by borrowers on federally insured mortgages. Over 90 percent of single-family FHA mortgages have been sold in the Ginnie Mae MBS secondary market. Over 70 percent of FHA insured mortgages are fixed-rate mortgages. These mortgages have greater interest rate risk than adjustable-rate mortgages. In addition, for adjustable-rate mortgages, FHA limits the degree to which interest rates paid by the borrower can increase to a maximum of 1 percentage point annually and 5 percentage points over the life of the mortgage loan. Therefore, Ginnie Mae guaranteed MBS backed by FHA-insured adjustable-rate mortgages also entail interest rate risk for investors. As I discussed earlier, the presence of interest rate risk in a primary market increases the attractiveness of the secondary market to loan originators. An investor in a Ginnie Mae MBS is to receive an offering statement that discloses the issuer of the MBS, which is normally the lender. Other information to be disclosed includes the value of loans in the pool and characteristics of the loans, such as whether they are 30-year fixed-rate or adjustable rate. The minimum pool size is eight loans, but most pools are much larger. For a fixed-rate MBS pool, interest rates paid by borrowers in the pool must be within one percentage point of each other. For MBS backed by adjustable-rate mortgage pools, the index used to adjust the interest rate paid by the borrower must be specified. Therefore, in estimating prepayment risk, the investor is helped by being able to analyze a relatively large and homogeneous loan pool issued by a particular lender. Investors in Ginnie Mae MBS include mutual funds, pension funds, insurance companies, and individuals. sheets. Particularly active among nondepository lenders are 12 SBLCs that accounted for about 19 percent of 7(a) loans outstanding at the end of 1997. In this market, SBA 7(a) lenders sell their loans to pool assemblers who form pools by combining the loans of a number of lenders and then sell certificates backed by these pools. Colson Services, SBA’s fiscal and transfer agent (FTA), monitors and handles the paperwork and data management system for all 7(a) guaranteed portions sold on the secondary market. Colson also serves as a central registry for all sales and resales of these portions. The firm receives payment from lenders for its secondary market services equal to 12 1/2 basis points of the value of certificates for guaranteed portions under Colson’s management. In 1997, SBA 7(a) secondary market sales of pooled guaranteed portions was approximately $2.6 billion. In contrast to Ginnie Mae guaranteed MBS that are backed by cash flows from whole loans, 7(a) loans are divided into separate guaranteed and unguaranteed portions for secondary market sales. SBA reported that in 1997 over 12,000 7(a) guaranteed portions were sold on the secondary market, about 40 percent of all 7(a) loans approved that year. In recent years, anywhere from a third to almost half of the guaranteed portions of loans originated have been sold on the secondary market. This is in contrast to Ginnie Mae guaranteed MBS, which represent over 90 percent of outstanding federally insured residential mortgage loans. The guaranteed 7(a) secondary market is smaller and less active, and provides lenders with fewer incentives to sell loans than the federally insured residential mortgage market. At the end of 1997, about $10 billion in guaranteed portions of 7(a) loans were outstanding, while Ginnie Mae guaranteed MBS had over $500 billion outstanding. The 7(a) market does not benefit from the incentive for lenders to sell on the secondary market to mitigate interest rate risk, because the 7(a) program consists mainly of variable-rate loans without interest rate caps. Almost 90 percent of 7(a) loans made in 1997 were variable- rate loans without interest rate caps. Because interest rates are adjusted at least quarterly to reflect market rates, these loans entail almost no interest rate risk. In addition, SBA 7(a) loans can consist of loans backed by a variety of items, such as real estate, production inventory, or equipment, and 7(a) loans finance a broad range of businesses. Residential mortgages are all backed by residential property. Because of the heterogeneous nature of 7(a) loans, analysts are less able to accurately estimate prepayment risks. Some participants in the secondary market for 7(a) guaranteed portions expressed concern that information useful to investors in analyzing prepayment risk is not available when pool certificates are resold, limiting investors’ ability to resell in this market. SBA is concerned that providing such information to investors could reduce benefits to some 7(a) borrowers by potentially allowing investors to identify individual borrowers and groups of borrowers. According to SBA, all investors in 7(a) guaranteed pool certificates are institutional investors, such as pension funds, insurance companies, and mutual funds. In summary, secondary market volume for both the guaranteed portions of 7(a) loans and federally insured residential mortgage loans is a market outcome that depends on the relative benefits provided by the respective secondary markets compared to other methods of finance. For the most part, SBA has few if any means to change factors that, through market forces, limit the relative size of the secondary market. For example, heterogeneity in loan characteristics, which results from the 7(a) program’s intention to serve a broad range of small businesses, limits the ability of investors to estimate prepayment risk. As we continue our work, we will consider SBA actions that indicate the potential to improve the efficiency of the SBA 7(a) secondary market in achieving the objectives established for it. Mr. Chairman, this concludes my prepared statement. I will be happy to respond to any questions you or other Members of the Subcommittee may have. The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

Pursuant to a congressional request, GAO discussed the Small Business Administration (SBA) 7(a) guaranteed loans secondary market, focusing on the: (1) benefits generally provided by secondary loan markets; (2) characteristics of the secondary market for federal government guaranteed mortgage loans; and (3) characteristics of the guaranteed 7(a) secondary market in relation to those of the Government National Mortgage Association (Ginnie Mae) mortgage-backed securities (MBS) secondary market. GAO noted that: (1) the 7(a) loan program, SBA's largest lending program, is intended to serve small business borrowers who cannot otherwise obtain financing under suitable terms and conditions from the private sector; (2) secondary loan markets link borrowers and lenders in local markets to national capital markets, thus reducing dependence on local funds availability; (3) the secondary market in residential mortgages is recognized for creating this link; (4) this secondary market has reduced regional imbalances in the availability of loanable funds; (5) other benefits, which include tapping additional sources of funds, have also helped to lower interest rates paid by borrowers; (6) in addition, this secondary market allows interest rate risk inherent in holding fixed-rate loans to become diversified among investors that might be better able to hedge against such risks than loan originators; (7) in contrast to Ginnie Mae guaranteed MBS that are backed by cash flows from whole loans, 7(a) loans are divided into separate guaranteed and unguaranteed portions for secondary market sales; (8) preliminary results indicate that the guaranteed 7(a) secondary market has also linked borrowers and lenders in local markets to national capital markets, and thus generated some of the benefits generally created by other secondary markets; (9) however, the guaranteed 7(a) secondary market has characteristics that limit its size in relation to the primary 7(a) market; (10) in particular, most 7(a) loans are variable-rate loans with almost no interest rate risk, which reduces incentives for some lenders to use the secondary market; (11) in addition, 7(a) secondary market investors, relative to MBS investors, have less information to accurately estimate their exposure to risks associated with borrowers paying off their loans before they are due (prepayment risks), which may limit whether or how much they are willing to participate; (12) secondary market volume for both the guaranteed portions of 7(a) loans and federally insured residential mortgage loans is a market outcome that depends on the relative benefits provided by the respective secondary markets compared to other methods of finance; and (13) for the most part, SBA has few if any means to change factors that, through market forces, limit the relative size of the secondary market.

The Randolph-Sheppard Act, originally signed into law by Franklin D. Roosevelt in 1936, requires that blind individuals receive priority for the operation of vending facilities on federal property. The 1974 amendments to the act changed the term "vending stand" to "vending facility" and defined the term as meaning "automatic vending machines, cafeterias, snack bars, cart services, shelters, counters, and such other appropriate auxiliary equipment as the Secretary [of Education] may by regulation prescribe as being necessary for the sale of the articles or services described in section 107a(a)(5) of this title and which may be operated by blind licensees...." The regulations promulgated by the Department of Education define "cafeteria" as "a food dispensing facility capable of providing a broad variety of prepared foods and beverages (including hot meals) primarily through the use of a line where the customer serves himself from displayed selections. A cafeteria may be fully automated or some limited waiter or waitress service may be available and provided within a cafeteria and table or booth seating facilities are always provided." The act does not apply to "income from vending machines within retail sales outlets under the control of exchange or ships' stores systems[,] ... income from vending machines operated by the Veterans Canteen Service[,] ... or income from vending machines not in direct competition with a blind vending facility at individual locations" on the federal property. Two major circuit court cases have dealt with the issue of whether the term "cafeteria" in the Randolph-Sheppard Act applies to military troop dining facilities. Both the Fourth Circuit and the Tenth Circuit concluded that military troop dining facilities are "cafeterias" under the Randolph-Sheppard Act. In NISH v. Cohen , the court held that the Randolph-Sheppard Act applied to military troop dining facilities at Fort Lee in Virginia. NISH, a nonprofit agency designated "to represent other nonprofits employing the severely disabled in the production of items and services for government agencies under the Javits-Wagner-O'Day Act" (JWOD Act), had unsuccessfully sought to negotiate a contract for military troop dining facilities that was granted to a blind licensee. NISH filed suit seeking a declaratory judgment concerning the proper interpretation of the Randolph-Sheppard Act. In its appeal to the Fourth Circuit, NISH argued that military troop dining facilities are not "cafeterias" under the Randolph-Sheppard Act "because, in contrast to typical cafeterias (where meals are purchased by the general public from private funds), meals at military mess halls are provided to soldiers from appropriated funds." Using a two-part Chevron analysis , the court analyzed statutory and administrative interpretations and ruled that Fort Lee's contracting officer did not act unreasonably in applying the term "cafeteria" to the military troop dining facilities at Fort Lee. NISH also argued that the JWOD Act applied to the awarding of the military troop dining facilities contract at Fort Lee because the Competition in Contracting Act (CICA) "preclud[ed] application of the Randolph-Sheppard Act." CICA "requires that the military use 'full and open competition' when contracting for 'property or services' except 'in the case of procurement procedures otherwise expressly authorized by statute.'" The court ruled that the procurement provisions found in the Randolph-Sheppard Act met CICA's sweeping definition of procurement, which meant both the Randolph-Sheppard Act and the JWOD Act could apply to the situation. The court further held that, of the two statutes, the Randolph-Sheppard Act was more specific and therefore controlling. In NISH v. Rumsfeld , the court held that the Randolph-Sheppard Act applied to military troop dining facilities at Kirtland Air Force Base in New Mexico. NISH had a one-year contract for food services at the base with options for four additional years. Following the first year, the Air Force did not renew the contract with NISH and instead awarded it to the New Mexico Commission for the Blind (NMCB), citing compliance with the provisions of the Randolph-Sheppard Act. NISH filed suit seeking a declaratory judgment concerning the proper interpretation of the Randolph-Sheppard Act. In its appeal to the Tenth Circuit, NISH argued that Congress did not intend to include military troop dining facilities in the Randolph-Sheppard Act's definition of "vending facilities." The court rejected this argument by ruling that the plain language of the statute is unambiguous with respect to the inclusion of "cafeterias." NISH further argued that the Randolph-Sheppard Act did not grant authority to the Department of Education (ED) to regulate military mess halls, but the court ruled that Congress did grant this authority to the ED. Using a two-part Chevron analysis, the court held that the Air Force reasonably relied on the ED's determinations about the meaning of the Randolph-Sheppard Act as well as its own determination in awarding the contract to NMCB. As in NISH v. Cohen , NISH also argued that the JWOD Act applied because of CICA. The court here reached the same conclusion, holding that the Randolph-Sheppard Act met CICA's procurement definition and controlled over the JWOD Act. Small business concerns eligible to participate in a program or contract under Section 8(a) of the Small Business Act and HUBZone entities have also filed claims objecting to the application of the Randolph-Sheppard Act to the military troop dining facility contract process. In these cases the Comptroller General and the Court of Federal Claims both held that the blind vendor contracts within the competitive range of contracts had priority over the other groups' contracts. The application of the Randolph-Sheppard Act to military troop dining facility contracts is limited by the requirement found in 48 C.F.R. 15.306 that the contract fall within the competitive range. In Southfork Systems, Inc. v. United States , the Court of Appeals for the Federal Circuit held that a contract proposal from a blind vendor could fall within the competitive range of contracts as determined by the contracting officer. In this case Southfork lost its contract with the Air Force for military troop dining facility services to the Texas Commission for the Blind (the Commission) and contested the inclusion of the Commission's contract proposal in the competitive range. The lower court rejected Southfork's claims. The appellate court agreed with the lower court and specifically stated that it failed to see "how ... the Air Force could have concluded that the Commission did not have a 'reasonable chance of being selected for award'" without rejecting "out of hand the proposition that economic opportunities for the blind could be enlarged by having a blind individual" managing the cafeteria. The court recognized that the "contracting officer had broad discretion to consider each factor [in the contract process] as a part of a totality of the circumstances" in making the competitive range determination. The determination of the competitive range has also been part of several federal district court rulings. The application of the Randolph-Sheppard Act to military troop dining facility contracts also may be limited by the types of services provided by the blind individual. In one case, Washington State Department of Services for the Blind v. United States , the Court of Federal Claims held that dining facility attendant services contracts were not covered by the Randolph-Sheppard Act. In this case, the Washington State Department of Services for the Blind (WSDSB) challenged the Army's determination that the Randolph-Sheppard Act did not apply to contracts for dining facility attendant services at Fort Lewis. WSDSB argued that the Randolph-Sheppard Act's requirement that blind persons be given priority for " operation of a vending facility" on federal property included dining facility attendant services contracts, but the court held that the Army's interpretation that "operation" did not include dining facility attendant services was not arbitrary or capricious. However, in Mississippi Department of Rehabilitation Services v. United States , the Court of Federal Claims held that a contract for day-to-day services, as opposed to dining facility attendant services, fell under the Randolph-Sheppard Act even though the Navy retained control over menu selection and food supply purchasing. In this case, the Mississippi Department of Rehabilitation Services challenged the Navy's determination that the Randolph-Sheppard Act did not apply to a contractor for services at the Naval Air Station in Meredian, Mississippi, who was required to "manage the cafeteria, prepare the food, serve the food, provide cleanup and cashier services, implement quality control and training programs, provide certain supplies and equipment and hire the personnel, both managerial and support." The court concluded that the contractor was considered the facility's "operator" because of its daily responsibilities. The Javits-Wagner-O'Day and Randolph-Sheppard Modernization Act of 2008 was introduced by Senator Enzi on June 11, 2008. This legislation would, among other things, address several issues raised by the judicial decisions previously discussed. The bill would establish the Committee for the Advancement of Individuals with Disabilities that would jointly administer both the Randolph-Sheppard program and the AbilityOne program (which implements the JWOD Act). The bill also would require state licensing agencies to grant licenses for the operation of a vending facility to individuals with disabilities other than blindness starting three years after the bill's enactment. Additionally, with respect to military troop dining facilities, the bill would grant equal priority in the contract process to a state licensing agency bidding for a contract under the Randolph-Sheppard Act, a small business concern eligible to participate in a program or contract under Section 8(a) of the Small Business Act, a HUBZone entity, an Alaska Native Corporation, and other socially disadvantaged groups as defined by the Department of Defense. For military troop dining facility contract proposals from the AbilityOne program, the bill would prohibit new proposals and require that proposals be removed from the procurement list five years after the bill becomes law. Finally, the bill would specify that the term "cafeteria" in the Randolph-Sheppard Act, when used in reference to a military troop dining facility, would refer only to "services pertaining to a full food service military dining facility." This definition would not include "mess attendant, dining facility attendant, dining support" or other activities that supported the operation of the cafeteria. The bill was referred to the Senate Committee on Health, Education, Labor, and Pensions on June 11, 2008. No similar legislation has been introduced in the House.

The Randolph-Sheppard Act requires that blind individuals receive priority for the operation of vending facilities on federal property. "Vending facilities" include automatic vending machines, cafeterias, and snack bars. This report will discuss several significant court decisions and recent legislation related to the Randolph-Sheppard Act. Two federal court of appeals decisions, NISH v. Cohen and NISH v. Rumsfeld, held that military troop dining facilities are "cafeterias" under the Randolph-Sheppard Act and that the act controlled over the Javits-Wagner-O'Day Act, which provides employment opportunities for the severely disabled. Other cases have analyzed the scope of the Randolph-Sheppard Act's application to military troop dining facilities. S. 3112, which was introduced on June 11, 2008, would amend the Javits-Wagner-O'Day and Randolph-Sheppard Acts and address several issues raised by these judicial decisions.

Concerns about the safety of Presidents have existed throughout the history of the Republic, beginning with George Washington in 1794, when he led troops against the Whiskey Rebellion in Pennsylvania. The intervening years have witnessed a variety of incidents of actual and potential harm to Presidents (as well as immediate family members and other high-ranking officials). These situations extend to illegal entries onto the White House grounds and the White House itself; violence and conflict near the President's residence or where he was visiting; unauthorized aircraft flying near the White House and, in one instance, a plane crashing into the building; schemes to use airplanes to attack the White House; other threats of attack, including bombings and armed assaults; feared kidnapping and hostage-taking; assassination plots; as well as immediate, direct assaults against Presidents. In addition to incumbents, Presidents-elect and candidates for the office have been subject to assaults or threats. This report identifies assassinations of and other direct assaults against Presidents, Presidents-elect, and candidates for the office of President. There have been 15 such attacks (against 14 individuals), with five resulting in death. The first incident occurred in 1835, involving President Andrew Jackson, when an attacker's pistol misfired. The most recent occurred in 2005, when a would-be assassin in Tbilisi, Republic of Georgia, tossed a grenade (which did not explode) at the platform where President George W. Bush and the Georgian President were speaking. The tally of victims reveals the following: Of the 43 individuals serving as President, 10 (or about 23%) have been subject to actual or attempted assassinations. Four of these 10 incumbents—Abraham Lincoln, James A. Garfield, William McKinley, and John F. Kennedy—were slain. Four of the seven most recent Presidents have been targets of assaults: Gerald R. Ford (twice in 1975), Ronald W. Reagan (in a near-fatal shooting in 1981), William J. Clinton (when the White House was fired upon in 1994), and George W. Bush (when an attacker tossed a grenade, which did not explode, towards him and the President of Georgia at a public gathering in Tbilisi in 2005). Two others who served as President were attacked, either as a President-elect (Franklin D. Roosevelt in 1933) or as a presidential candidate (Theodore Roosevelt in 1912, when he was seeking the presidency after being out of office for nearly four years). Two other presidential candidates—Robert F. Kennedy, who was killed in 1968, and George C. Wallace, who was seriously wounded in 1972—were also victims, during the primaries. In only one of these 15 incidents (the Lincoln assassination) was a broad conspiracy proven, although such contentions have arisen on other occasions. Only one other incident involved more than one participant (the 1950 assault on Blair House, the temporary residence of President Harry S Truman); but no evidence of other conspirators emerged from the subsequent investigation or prosecution. Of the 15 direct assaults, 11 relied upon pistols, two on automatic weapons, one on a rifle, and one on a grenade. All but two of the attacks (both against Gerald Ford) were committed by men. All but one of the 15 assaults occurred within the United States. The following table identifies the direct assaults on Presidents, Presidents-elect, and candidates for the office of President. It specifies the date when the assault occurred, the victim, his political party affiliation, the length of his administration at the time of the attack or whether he was then a candidate or President-elect, the location of the attack, its method and result, and the name of the assailant, along with the professed or alleged reason for the attack (if known).

Direct assaults against Presidents, Presidents-elect, and candidates have occurred on 15 separate occasions, with five resulting in death. Ten incumbents (about 23% of the 43 individuals to serve in the office), including four of the seven most recent Presidents, have been victims or targets. Four of the 10 (and one candidate) died as a result of the attacks. This report identifies these incidents and provides information about what happened, when, where, and, if known, why. The report will be updated and revised if developments require.

RS21582 -- North Korean Crisis: Possible Military Options July 29, 2003 The Korean peninsula lies at a nexus of military, economic, and political concerns with global implications. From North Korea'sperspective, it is surrounded by world powers: to the west and north are China and Russia, to the East is Japan, andto the South isSouth Korea and military forces of the United States. Since the Korean War began in 1950, the North Koreandictatorship haspresented continuous military and economic challenges to its neighbors. Recent challenges have included a specterof economiccollapse and a threat to develop a nuclear arsenal. North Korea, with a population of 22 million, maintains a large military force of over 1 million active soldiers and 4.7 millionreservists. Its force structure includes some 20 army corps with armor, mechanized infantry, and infantry units;notable enhancementsinclude 88,000 special purpose forces and a range of artillery, rocket, and missile forces (some reportedly capableof deliveringchemical and biological agents) (1) . Naval forcesinclude some 300 patrol and coastal combatants, 26 submarines, and 66inshore/coastal submarines for inserting special forces. Air forces deploy over 500 Russian fighter and attackaircraft and some 300utility helicopters. Detracting from the potency of this large force are the age and obsolescence of many combatsystems and lowtraining hours afforded to their crews. Many draftees may reflect weakness stemming from ten years of malnutrition. Directly facing the North Korean threat is South Korea with some 48 million people. It has 686,000 personnel on active military dutyand can muster 4.5 million reservists. The South Korean Army is organized into some 10 corps, with equipmentgenerally better thanthat found to the North -- for example, half of its tanks are comparable to the U.S. Abrams tank. Its fleet of over350 helicoptersincludes U.S. AH-1 Cobras, CH-47 Chinooks, and UH-60 Blackhawks. The Navy deploys 26 submarines, 39principal surfacecombatants, 84 patrol and coastal combatants, and a 2-division force of 28,000 Marines. The Air Force flies over530 combat aircraft, including the F-16C/D. The South Korean level of training is considered generally higher than that of North Korea. Integral to the defense of South Korea is the direct presence of some 37,000 U.S. military personnel. Major units are two brigades ofthe 2d Infantry Division, combat and support units of the Eighth Army (including Patriot missile batteries), and U.S.Air Force unitsdeploying 90 combat aircraft. Dedicated reinforcement and supporting forces are considerable, including a newStryker Brigade (2) and a corps headquarters in Fort Lewis, Washington and the 25th Infantry Division in Hawaii. Powerful Air Force, Marine Corps, andNavy forces (totaling 48,000 personnel) are nearby in Japan, including the Seventh Fleet. Availability of additionalArmy forces inthe near term, however, would be limited by ongoing commitments in Iraq, Afghanistan, the Balkans, and otherplaces. (3) A unique strength of the defense of South Korea resides in the command arrangements, both joint and combined. A U.S. officer,General Leon J. LaPorte, as Commander of the Combined Forces Command, would command all allied forces inSouth Korea duringwartime, as well as all U.S. forces. A South Korean general would be the ground component commander and haveoperationalcontrol of U.S. ground forces assigned to him by General LaPorte. Higher headquarters integrate both U.S. andSouth Koreanintelligence and operational planning, an area of frequent testing and exercise. Major military action on the Korean Peninsula could create a challenge exceeding that recently met by the United States and its alliesin Iraq. Some 80% of the peninsula, about the size of Utah, is covered by rugged hills and mountains. (4) The winters are bitterly cold,while the summers are hot and humid with periodic torrential rains and flooding. Much of the North Korean forceis protected by asystem of underground caves and tunnels. About two-thirds of the North Korean force is forward deployed alongthe DemilitarizedZone (DMZ), the northern boundary of South Korea. Complicating military defensive planning is the location ofSeoul, the capital ofSouth Korea. Seoul, a metropolis of some 10 million people, sits astride the major trafficable corridor betweenNorth and SouthKorea, as close as 25 miles to the DMZ. In a surprise attack, the North could inflict artillery and missile devastationupon Seoul --referred to by the North as a "sea of fire" (5) -- andpossibly reach the city with a coordinated ground and special operations attack. Should resort to force be deemed necessary, there are several military actions that the United States could contemplate to achievepolicy objectives on the Korean Peninsula. North Korea, unfortunately, has a history of unpredictable, and oftenviolent, reactions toeven slight provocations. Therefore, even the most modest U.S. military action risks escalation to higher levels ofconflict and mostanalysts agree that no military option should be chosen without full recognition of such danger. Also, acombination of options couldbe chosen or even anticipated to ensue. U.S. allies and other nations in Northeast Asia are aware of these dangersand the UnitedStates would likely undertake some form of consultation with them -- their active or passive cooperation could beneeded. Some suggest that, in light of potentially large casualties, proceeding without South Korean agreement "would be immoralas well asill-advised." (6) Status Quo. Current U.S. policy involves maintaining a stable military situationwhile diplomacy proceeds to solve the North Korean nuclear crisis. South Korea and the United States maintainstrong defenses alongthe DMZ. Periodic military exercises elicit complaints from North Korean officials, but, over time, they generallyseem accustomedto and respect the existing military situation. (7) Somehave suggested withdrawal or drawdown of U.S. forces, but other analystsbelieve this could, in a time of tensions, send unintended messages to North Korea or even to one or more of itspowerful neighbors. Ongoing studies and negotiations propose to relocate U.S. ground forces and headquarters, primarily by movingthe U.S. 2d InfantryDivision from the north to the south of Seoul. (8) Sucha move would give U.S. forces greater flexibility to maneuver and make themless vulnerable to a surprise attack -- essentially lessening the "tripwire" effect of having U.S. forces close to theDMZ. Whethersuch an action will make the military situation more or less stable could be argued either way, (9) but the overall effect should notunduly change the military status quo on the Korean Peninsula. Improve Defensive Posture. Recognizing that the current situation is unusuallytense, the United States and South Korea could adopt a policy of temporarily increasing military preparedness todeter a NorthKorean military strike, (10) improve allied odds todefeat such a strike, or reinforce diplomatic firmness. The least provocative actionmight be to add more robust intelligence and warning activities, both those based in South Korea and those usingspace assets andadjoining air and sea access. Other options include: upgrading and testing alternate command headquarters,including thoseunderground, as well as information and communications networks; adding more air and missile defense assets toprotect additionalkey government and military facilities in South Korea and Japan; and, strengthening unit reception plans andfacilities forreinforcements. In so far as the North Korean crisis is recognized as a priority military challenge to the UnitedStates, the measuresabove are, in some cases, underway, according to recent press reports. (11) Although possible, it is unlikely that North Korea wouldattack solely in response to such gradual, defensive measures. It might, however, feel greater pressure to either reacha diplomaticsolution or expend more resources on its own military establishment. Calling up South Korean reservists or moving additional U.S. combat forces into the Peninsula might also be considered. Unlessdone in response to overtly hostile North Korean actions or intentions, such actions would most likely be construedas a seriousprovocation or possibly a prelude to an allied attack. North Korean sensitivity is illustrated by statements of concerneven whentemporary U.S. buildups and exercises are held in Okinawa. (12) Military Enforcement of Sanctions. Should North Korea attempt to export weapons of mass destruction, longer range missiles, or the materials to create such things, interception on the highseas or in the air bymilitary forces might be considered. (13) U.S. andinternational policy objectives would be to enforce nonproliferation goals and,perhaps secondarily, to restrict hard currency gains from such transactions. Such a "blockade," "quarantine," or"containment," to beeffective, would require large, dedicated U.S. Navy and Air Force participation, and at least some Coast Guardassets. It wouldrequire the cooperation of other nations and international organizations, not least being a commitment from Chinaand Russia toactively seal their land, sea, and air borders from penetration by North Korean conveyances and those of theircustomers. Risks for such an operation are that innocent trade and other activities of many nations could be inconvenienced; North Korea mightcircumvent even sophisticated intelligence and interception operations; and, since a blockade is considered an actof war, North Koreamight respond with military action. (14) Preemptive Strike on Nuclear Facilities. The Administration's National SecurityStrategy reserves the option for the President to order a preemptive strike to forestall a weapons of mass destructionattack against theUnited States, its military forces, or its allies. (15) In this case, the possession of nuclear weapons and ballistic missiles could threaten,now or in the short term, U.S. forces and allied populations in South Korea and Japan. In the longer term, a fewobservers areconcerned that North Korea could threaten more distant targets, to include parts of the U.S. homeland. (16) There is also the possibilitythat North Korean nuclear materials and weapons could be exported to third parties -- terrorist groups or rogue states-- that mightwish to harm the United States. In any event, a policy option would be to destroy identified weapons and materialsand associatedproduction facilities in North Korea; it would be complicated by the North Korean's ability to hide or protect suchtargets, oftendeeply underground. The United States has the ability to deliver both conventional and nuclear weapons against some underground targets, and is studying "robust nuclear earth penetrators." (17) Some targetscould presumably also be neutralized with special forces operations. A risk with apreemptive strike option is that all identified targets, if they do exist, might not be accurately located and that somemay be deeply oreffectively protected against U.S. weapons. (18) Surviving capabilities might be used in retaliatory strikes, possibly creating calamitiesthat U.S. policy was trying to prevent. U.S. strikes would undoubtedly be considered acts of war, and North Koreacould attempt tolaunch selective or massive conventional attacks against South Korea in response. (19) It is, therefore, unlikely that South Korea wouldsupport a preemptive strike option under most circumstances. Preemptive War. Initiating general war with North Korea is an unlikely option forthe United States, as South Korea would be unwilling to sustain the resultant, huge costs on its population withoutextremeprovocation. In theory, however, two policy objectives might be met. First, should regime change in North Koreabecome a prioritypolicy objective, a military march to Pyongyang might be the only sure means available. Second, should a majorNorth Korean attacksouth appear imminent, the policy of preemptive attack might offer advantages: the initial allied targeting andassaults could reduceNorth Korean capabilities to destroy Seoul, WMD could be destroyed or captured, and allied commanders wouldbe able to executetheir plan with nonattritted forces -- a particular advantage if the United States followed a doctrine of rapid, joint,and coordinatedattacks throughout the depth of North Korea. In considering a war option, certain assumptions and risks would need to be assessed. First, international support for the war wouldbe desirable, given U.S. reliance on global communications and transport; China's reaction would be key -- at theminimum it wouldhave to be neutral. Next, it would be difficult to mask attack preparations by U.S. and South Korean forces. NorthKorea couldlaunch its own preemptive attack, possibly creating some of the adverse consequences U.S. policy was trying tocircumvent. Also,timing is a problem -- due to heavy commitments in Iraq and many other places, the U.S. Army is currently stretchedvery thin, andwould find it difficult to contribute the major ground forces needed. (20) To sustain such an operation, it is likely that many ArmyNational Guard and Army Reserve units not already on active duty would have to be mobilized, as well asconsiderable numbers ofindividual reservists to fill out units and replace casualties. It is likely that much of any post-war occupation ofNorth Korea requiredcould be accomplished by South Korea. Finally, American public acceptance of a more difficult and protracted war than it might expect based on recent, quick U.S. militaryvictories in Southwest Asia and the Balkans may be a requisite. In addition to geographic problems highlightedabove and a largerenemy force that has possibly learned through observation how the United States fights, the North Korean soldiermay not surrendereasily. The Korean War of 1950-1953 is a cautionary example: one U.S. veteran of that conflict said, "I'd ratherfight the Chinese anyday than the North Koreans, who were more tenacious, more fanatical, and more disciplined." (21) Others would point out that today'sNorth Korean soldier is physically weaker, may resent state oppression, is severely outclassed in weaponry andexperience withmodern warfare -- and the current limits of his tenacity are not known. Should a military option be deemednecessary, the Executivewould be expected to consult with appropriate congressional bodies.

North Korea has confronted the United States with its decision, failing other securityaccommodations, to pursue production of nuclear weapons. The Bush Administration has stated that, although thesituation isunacceptable, it will pursue its resolution through diplomatic means. Military means, however, could be consideredat some point andbecome a serious issue for Congress. This short report discusses the geography and military balance on the KoreanPeninsula,presents the range of military options that might be applied there to specific U.S. political objectives, and assessespossibleconsequences. Military options discussed are: status quo, improved defensive posture, enforce sanctions,preemptive strike againstnuclear facilities, and preemptive war. Also see CRS Issue Brief IB98045 on U.S.-Korean relations and CRS Issue Brief IB91141 onNorth Korea's nuclear weapons. This report will be updated if major changes occur.

Several statutes authorize the use of administrative subpoenas primarily or exclusively for use in a criminal investigation in cases involving health care fraud, child abuse, Secret Service protection, controlled substance cases, and Inspector General investigations. The Child Protection Act of 2012, P.L. 112-206 ( H.R. 6063 ) authorizes the Marshals Service to use administrative subpoenas to track unregistered sex offenders. Administrative agencies have long held the power to issue subpoenas and subpoenas duces tecum in aid of the agencies' adjudicative and investigative functions. There are over 300 instances where federal agencies have been granted administrative subpoena power in one form or another. The statute granting the power ordinarily describes the circumstances under which it may be exercised: the scope of the authority, enforcement procedures, and sometimes limitations on dissemination of the information subpoenaed. In some instances, the statute may grant the power to issue subpoena duces tecum, but explicitly or implicitly deny the agency authority to compel testimony. The statute may authorize use of the subpoena power in conjunction with an agency's investigations or its administrative hearings or both. Authority is usually conferred upon a tribunal or upon the head of the agency. Although some statutes preclude or limit delegation, agency heads are usually free to delegate such authority and to authorize its redelegation thereafter within the agency. Failure to comply with an administrative subpoena may pave the way for denial of a license or permit or some similar adverse administrative decision in the matter to which the issuance of the subpoena was originally related. In most instances, however, administrative agencies ultimately rely upon the courts to enforce their subpoenas. Generally, the statute that grants the subpoena power will spell out the procedure for its enforcement. Objections to the enforcement of administrative subpoenas must be derived from one of three sources: a constitutional provision; an understanding on the part of Congress; or the general standards governing judicial enforcement of administrative subpoenas. Constitutional challenges arise most often under the Fourth Amendment's condemnation of unreasonable searches and seizures, the Fifth Amendment's privilege against self-incrimination, or the claim that in a criminal context the administrative subpoena process is an intrusion into the power of the grand jury and its concomitant Fifth Amendment right to grand jury indictment. In an early examination of the questions, the Supreme Court held that the Fourth Amendment did not preclude enforcement of an administrative subpoena issued by the Wage and Hour Administration notwithstanding the want of probable cause. Neither the Fourth Amendment nor the unclaimed Fifth Amendment privilege against self-incrimination was thought to pose any substantial obstacle to subpoena enforcement. Soon thereafter a second case echoed the same message—the Fourth Amendment does not demand a great deal of administrative subpoenas addressed to corporate entities; a governmental investigation into corporate matters may be of such a sweeping nature and so unrelated to the matter properly under inquiry as to exceed the investigatory power. But it is sufficient if the inquiry is within the authority of the agency, the demand is not too indefinite, and the information sought is reasonably relevant. The gist of the protection is in the requirement that the disclosure sought shall not be unreasonable. A statute or judicial tolerance, however, may require what the Constitution does not. Nevertheless when asked if the Internal Revenue Service (IRS) must have probable cause before issuing a summons for the production of documents, the Court intoned the standard often repeated in response to an administrative subpoena challenge, the Commissioner need not meet any standard of probable cause to obtain enforcement of his summons. He must show [1] that the investigation will be conducted pursuant to a legitimate purpose, [2] that the inquiry may be relevant to the purpose, [3] that the information sought is not already within the Commissioner's possession, and [4] that the administrative steps required by the Code have been followed.... This does not mean that under no circumstances may the court inquire into the underlying reason for the examination. It is the court's process which is invoked to enforce the administrative summons and a court may not permit its process to be abused. The earliest of the three federal statutes (21 U.S.C. 876) used extensively for criminal investigative purposes appeared with little fanfare as part of the 1970 Controlled Substances Act, and empowers the Attorney General to issue subpoenas "in any investigation relating to his functions" under the act. In spite of its spacious language, the legislative history of section 876, emphasizes the value of the subpoena power for administrative purposes—its utility in assigning and reassigning substances to the act's various schedules and in regulating the activities of physicians, pharmacists, and the pharmaceutical industry—rather than as a criminal law enforcement tool. Nevertheless, the Attorney General has delegated the authority to issue subpoenas under section 876 to both administrative and criminal law enforcement personnel, and the courts have approved its use in inquiries conducted exclusively for purposes of criminal investigation. Section 876 authorizes both testimonial subpoenas and subpoenas duces tecum. It provides for judicial enforcement; failure to comply with the court's order to obey the subpoena is punishable as contempt of court. It also contains no explicit prohibition on disclosure. The language of the Inspector General Act of 1978 provision is just as general as its controlled substance counterpart: each Inspector General, in carrying out the provisions of this act, is authorized to require by subpoena the production of all information necessary in the performance of the functions assigned by this act. Its legislative history supplies somewhat clearer evidence of an investigative tool intended for use in both administrative and criminal investigations. The Justice Department reports that the Inspector General's administrative subpoena authority is mainly used in criminal investigations, and the courts have held that the act gives the Inspectors General both civil and criminal investigative authority and subpoena powers coextensive with that authority. The act contains no explicit prohibition on disclosure of the existence or specifics of a subpoena issued under this authority. Unlike its companions, there can be little doubt that 18 U.S.C. 3486 is intended for use primarily in connection with criminal investigations. It is an amalgam of three relatively recent statutory provisions—one, the original, dealing with health care fraud; one with child abuse offenses; and one with threats against the President and others who fall under Secret Service protection. Congress added the final piece to Section 3486 in the Child Protection Act of 21012. There, it vests Section 3486's administrative subpoena power in the Marshals Service for use in tracking unregistered sex offenders. Section 3486 is both more explicit and more explicitly protective than either of its controlled substance or IG statutory counterparts. In addition to a judicial enforcement provision, it specifically authorizes motions to quash and ex parte nondisclosure court orders. It affords those served a reasonable period of time to assemble subpoenaed material and respond and in the case of health care investigations the subpoena may call for delivery no more than 500 miles away. In child abuse and presidential investigation cases, however, it imposes no such geographical limitation and it may contemplate the use of "forthwith" subpoenas. It includes a "safe harbor" subsection that shields those who comply in good faith from civil liability; and in health care investigations limits further dissemination of the information secured. Although the authority of section 3486 has been used fairly extensively, reported case law has been relatively sparse and limited to health care investigation subpoenas. The first of these simply held that the subject of a record subpoenaed from a third party custodian has no standing to move that the administrative subpoena be quashed. The others addressed constitutional challenges, and with one relatively narrow exception agreed that subpoenas in question complied with the demands of the Fourth Amendment. They cite Oklahoma Press , Powell , and Morton Salt for the view that administrative subpoenas under Section 3486 need not satisfy a probable cause standard. The Fourth Amendment only demands that the subpoena be reasonable, a standard that requires that (1) it satisfies the terms of its authorizing statute, (2) the documents requested were relevant to the Department of Justice's investigation, (3) the information sought is not already in the Department of Justice's possession, and (4) enforcing the subpoena will not constitute an abuse of the court's process. Of the three statutes that most clearly anticipate use of administrative subpoenas during a criminal investigation, Section 3486 is the most detailed. Neither of the others has a nondisclosure feature nor a restriction on further dissemination; neither has an explicit safe harbor provision nor an express procedure for a motion to quash. All three, however, provide for judicial enforcement reinforced by the contempt power of the court. Only the controlled substance authority of 21 U.S.C. 876 clearly extends beyond the power to subpoena records and other documents to encompass testimonial subpoena authority as well. The Inspector General Act speaks only of subpoenas for records, documents, and the like, and has been held to not include testimonial subpoenas. Section 3486 strikes a position somewhere in between; the custodian of subpoenaed records or documents may be compelled to testify concerning them, but there is no indication that the section otherwise conveys the power to issue testimonial subpoenas.

Proponents refer to administrative subpoenas as a quick, efficient and relatively nonintrusive law enforcement tool. Opponents express concern that they pose a threat of unchecked invasions of privacy and evasions of the Fourth Amendment warrant and probable cause requirements. The courts have determined that, as long as they are not executed in a manner reminiscent of a warrant, administrative subpoenas issued in aid of a criminal investigation must be judicially enforced if they satisfy statutory requirements and are not unreasonable by Fourth Amendment standards. The Child Protection Act of 2012, P.L. 112-206 (H.R. 6063) authorized the United States Marshals Service to issue administrative subpoenas in aid of tracking unregistered sex offenders. This report is an abridged version—without footnotes, appendixes, quotation marks, and most citations to authority—of CRS Report RL33321, Administrative Subpoenas in Criminal Investigations: A Brief Legal Analysis, by [author name scrubbed].

When a new Congress convenes in January, one of its first orders of business is to receive the annual budget submission of the President. Following receipt of the President's budget, Congress begins the consideration of the budget resolution and other budgetary legislation for the upcoming fiscal year, which starts on October 1. The transition from one presidential administration to another raises special issues regarding the annual budget submission. Which President—the outgoing President or the incoming one—is required to submit the budget, and how will the transition affect the timing and form of the submission? The purpose of this report is to provide background information that addresses these questions. The Budget and Accounting Act of 1921, as amended, requires the President to submit a budget annually to Congress toward the beginning of each regular session (31 U.S.C. §1105a). This requirement first applied to President Warren Harding for FY1923. The deadline for submission of the budget, first set in 1921 as "on the first day of each regular session," has changed several times over the years: in 1950, to "during the first 15 days of each regular session"; in 1985, to "on or before the first Monday after January 3 of each year (or on or before February 5 in 1986)"; and in 1990, to "on or after the first Monday in January but not later than the first Monday in February of each year." The 20 th Amendment to the Constitution, ratified in 1933, requires each new Congress to convene on January 3 (unless the date is changed by the enactment of a law) and provides a January 20 beginning date for a President's four-year term of office. Therefore, under the legal framework for the beginning of a new Congress, the beginning of a new President's term, and the deadline for the submission of the budget, all outgoing Presidents prior to the 1990 change were obligated to submit a budget. The 1990 change in the deadline made it possible for an outgoing President to leave the annual budget submission to his successor, an option which the three outgoing Presidents since then (George H.W. Bush, Bill Clinton, and George W. Bush) took. Because President George H.W. Bush chose not to submit a budget for FY1994 (and was not obligated to do so), President Bill Clinton submitted the original budget for FY1994 rather than budget revisions. Similarly, the budget for FY2002 was submitted by the incoming President George W. Bush, rather than by outgoing President Bill Clinton. The Office of Management and Budget (OMB) provided considerable advance notice of the plan for FY2002. President George W. Bush indicated early on that he would not submit a budget for FY2010. In announcing the decision, then-OMB Director Jim Nussle stated: The FY2010 budget will be submitted by the next President. In order to lay the groundwork for the next Administration, we intend to prepare a budget database that includes a complete current services baseline and to gather information to develop current services program estimates for FY2010 from which the incoming Administration can develop its budget proposals. President Barack Obama submitted an overview of his budget, "A New Era of Responsibility: Renewing America's Promise" on February 26, 2009, two days after delivering an address on his economic and budget plan to a joint session of Congress. He submitted his Appendix , which contained detailed budget information on May 7, 2009, and additional supplemental volumes, including the Analytical Perspectives and the Terminations, Reductions, and Savings volume, on May 11, 2009. Incoming Presidents, except for Warren Harding, Bill Clinton, George W. Bush, and Barack Obama, assumed their position with a budget of their predecessor in place. Under the 1921 act, Presidents may submit budget revisions to Congress at any time. Six incoming Presidents chose to modify their predecessor's budget by submitting revisions shortly after taking office: Dwight Eisenhower, John Kennedy, Richard Nixon, Gerald Ford, Jimmy Carter, and Ronald Reagan. Six incoming Presidents chose not to submit revisions: Calvin Coolidge, Herbert Hoover, Franklin Roosevelt, Harry Truman, Lyndon Johnson, and George H. W. Bush. During the period beginning with the full implementation of the congressional budget process (in FY1977), six transitions of presidential administration have occurred. As Table 1 shows, the three outgoing Presidents required to submit a budget during this period (Gerald Ford, Jimmy Carter, and Ronald Reagan) did so on or before the statutory deadline. The three Presidents who were not required to submit an outgoing budget (George H.W. Bush, Bill Clinton, and George W. Bush) each chose to leave the budget submission to his successor. Once the original budget for a fiscal year has been submitted, a President or his successor may submit revisions at any time. Two incoming Presidents during this period (Jimmy Carter and Ronald Reagan) submitted budget revisions and one (George H.W. Bush) did not. The FY1978 revisions by President Jimmy Carter (a 101-page document) were submitted on February 22 and the FY1982 revisions by President Ronald Reagan (an initial 159-page document and a subsequent 435-page document) were submitted on March 10 and April 7, respectively. In past years, Congress authorized the submission of a budget for a fiscal year after the statutory deadline by enacting a deadline extension in law. For example, the deadlines for submission of the budgets for FY1981, FY1984, and FY1986 were extended from mid-January to late-January or early-February by P.L. 96 - 186 , P.L. 97 - 469 , and P.L. 99 - 1 , respectively. Beginning in the late 1980s, however, several original budgets have been submitted late without authorization. For FY1991, the budget was submitted a week after a deadline that already had been extended by law ( P.L. 101 - 228 ). For FY1989, the budget was submitted 45 days after the deadline without the consideration of any measure granting a deadline extension. The three most recent transition-year budgets (FY1994, FY2002, and FY2010) were submitted 66, 63, and 98 days beyond the deadline, respectively, without the consideration of a measure granting a deadline extension. Presidents Clinton and George W. Bush submitted the original budgets for FY1994 and FY2002 (on April 8, 1993, and April 9, 2001, respectively), and President Obama submitted the FY2010 budget on May 7, 2009. Although Presidents Reagan, Clinton, George W. Bush, and Barack Obama did not submit detailed budget proposals until April or May of their first year in office, each of them advised Congress regarding the general contours of their economic and budgetary policies in special messages submitted to Congress in February. Though President George H. W. Bush did not submit an official revision of President Reagan's FY1990 budget, he submitted a message to Congress that contained many of the same elements as budget revisions that had been submitted by previous incoming Presidents. In conjunction, each incoming President since Ronald Reagan has presented his special message on the budget to a joint session of Congress. Though the three Presidents who were not required to submit an outgoing budget (G.H.W. Bush, Clinton, and G.W. Bush) each chose to leave the budget submission to his successor, Presidents Clinton and George H.W. Bush helped facilitate the development of their successor's budget by providing a "transition budget" volume to Congress. On January 6, 1993, just prior to the inauguration of President Clinton, President George H. W. Bush submitted to Congress a 573-page, single-volume budgetary document, Budget Baselines, Historical Data, and Alternatives for the Future . Instead of constituting a budget in the usual sense, this document provided historical data, baseline budget projections under the status quo, and illustrations of budget projections using alternative economic assumptions and different broad policy outlines. Similarly, on January 16, 2001, President Clinton prepared a "transition budget" for incoming President George W. Bush, FY2002 Economic Outlook, Highlights From FY1994 To FY2001, FY2002 Baseline Projections . The volume was comparable in scope to the one issued for FY1994 by President George H. W. Bush just before he left office, providing revised budget projections and an economic and programmatic update.

At the time of a presidential transition, one question commonly asked is whether the outgoing or incoming President submits the budget for the upcoming fiscal year. Under past practices, outgoing Presidents in transition years submitted a budget to Congress just prior to leaving office, and incoming Presidents usually revised them. Six incoming Presidents—Dwight Eisenhower, John Kennedy, Richard Nixon, Gerald Ford, Jimmy Carter, and Ronald Reagan—revised their predecessor's budget shortly after taking office, while only two Presidents during this period, Lyndon Johnson and George H. W. Bush, chose not to do so. The deadline for submission of the President's budget, which has been changed several times over the years, was set in 1990 as "on or after the first Monday in January but not later than the first Monday in February of each year." The change made it possible for an outgoing President, whose term ends on January 20, to leave the annual budget submission to his successor. The three outgoing Presidents since the 1990 change—George H. W. Bush, Bill Clinton, and George W. Bush—exercised this option. Accordingly, the budget was submitted in 1993, 2001, and 2009 by the three incoming Presidents (Bill Clinton for FY1994, George W. Bush for FY2002, and Barack Obama for FY2010). Before President Barack Obama, the last three incoming Presidents that submitted a budget or revised their predecessor's budget (Ronald Reagan, Bill Clinton, and George W. Bush) did not submit detailed budget proposals during their transitions until early April; however, each of them advised Congress regarding the general contours of their economic and budgetary policies in a special message submitted to Congress in February concurrently with a presentation made to a joint session of Congress. President Barack Obama followed a comparable approach. He delivered an address on his economic and budget plan to a joint session of Congress on February 24, 2009, and submitted an overview document two days later. He submitted his detailed budget proposal on May 7, 2009, and submitted additional supplemental volumes four days later, on May 11, 2009. This report will be updated as developments warrant.

Following a boom and bust in residential real estate and a meltdown in financial markets, Congress enacted a program to purchase troubled assets from financial institutions in October 2008. The Troubled Asset Relief Program (TARP) was created by Division A of the Emergency Economic Stabilization Act (EESA). EESA authorized the Secretary of the Treasury to purchase up to $700 billion of real estate related assets, or any other asset that the Secretary, in consultation with the Chairman of the Federal Reserve, believes the purchase of which will contribute to financial stability. This broad definition of troubled asset gives the Secretary wide discretion in implementing TARP, although EESA also included two new oversight mechanisms—the Congressional Oversight Panel (COP) and the Special Inspector General for TARP (SIGTARP). Thus far, Treasury has exercised its broad discretion through the creation of several programs, including providing capital to banks, guaranteeing particular pools of assets for some large financial institutions, intervening on behalf of two large U.S. automobile manufacturers, providing financial support for a Federal Reserve lending facility for securities backed by consumer and small business loans, and compensating some mortgage servicers for modifying loan terms. By statute, Treasury is authorized to purchase assets under TARP until October 3, 2010. In its November 2009 monthly report to Congress, Treasury reported that $550 billion of TARP expenditures had been planned and $476 billion had been committed under signed contracts, signifying that Treasury has no plans at this time to use $150 billion of the funds authorized. The planned purchases of $550 billion do not take into account that some TARP funds have already been repaid. As a result of repayments, the amount outstanding under TARP has already begun to fall from its peak. Treasury's planned use of available TARP funds can change at any time, however. Some policymakers have proposed redirecting funds under the Troubled Asset Relief Program to finance new policy proposals. One proposal, The Helping Families Save Their Homes Act ( S. 896 ), which was signed into law as P.L. 111-22 , redirected $1.3 billion from TARP to offset the cost of modifications to the Hope for Homeowners Program. The Wall Street Reform and Consumer Protection Act of 2009 ( H.R. 4173 ), which passed the House on December 11, 2009, would redirect $20.8 billion from TARP to offset $10.4 billion of the bill's various provisions. The Jobs for Main Street Act, 2010 ( H.R. 2847 ), which passed the House on December 16, 2009, would redirect $150 billion of TARP funds to offset $75 billion of the bill's spending and tax provisions, which include infrastructure spending, public service jobs, an extension of expanded unemployment benefits, an extension of the higher Medicaid match for doctors payments, an extension of the health insurance subsidy for unemployed workers, and an increase in the eligibility for the child tax credit. (The difference between the amount redirected from TARP and the amount offset is discussed below.) When TARP was created, the Treasury did not collect and set aside $700 billion of revenue to finance the program—the Treasury Secretary was simply given legal authority to purchase $700 billion of assets. Therefore, Treasury holds no unused money under TARP that can be redirected toward new policy proposals. Like most spending programs, TARP expenditures are financed from general revenues. When the budget is in deficit, additional expenditures are financed by additional borrowing. If the Treasury Secretary wished to purchase more TARP assets, it would be necessary to first issue federal debt (thereby increasing the budget deficit) to do so. The size of the actual deficit today is based on the cost of TARP expenditures taken during this fiscal year (the method for measuring the cost is described below); the projected size of the future deficit in budget projections is based on some assumption about how much the Treasury Secretary plans to increase the size of TARP in the future and how much these future expenditures will cost. Title I of EESA authorizes the Secretary of the Treasury to purchase troubled assets at any time up to the point that there are $700 billion in such assets outstanding. Although Title I also requires that proceeds from disposition of any assets acquired through TARP must return to the general fund, the authorization of Treasury to hold up to $700 billion outstanding is generally interpreted to mean that TARP asset repurchases or repayments of principal place the TARP balance further under its authorized ceiling, increasing Treasury's capacity to make new TARP acquisitions. The effect of this interpretation is that repaid TARP funds could be "reused" by Treasury to purchase additional assets, although to this point the question is largely moot, since well under $700 billion in troubled assets have been purchased. For purposes of this report, proposals to redirect funds received from repayment of loan principal or repurchase of assets can be thought of as having the same effect on the budget and budget deficit as reducing TARP's authorized limit. Some of the funds that have been outlaid under TARP result in payments of proceeds beyond the repayment of the initial outlay, such as dividends on TARP preferred share purchases and interest on TARP loans. These monies would not be considered a repayment of TARP funds and would not allow for the purchase of additional assets under TARP.  Under Title I, the funds would simply go to the general fund to reduce the deficit. Because dividends and interest payments do not grant TARP new spending authority, these revenues cannot be redirected to fund other policy proposals without increasing the deficit. Put differently, these revenues were included in the original estimates of the net cost of TARP, so redirecting them to other uses would be considered double counting. Proposals to redirect TARP funds to finance other proposals rely, in essence, on a reduction in the amount that the Treasury Secretary is authorized to purchase under TARP. The ultimate effect on the budget deficit of doing so depends on whether the redirected authority is more likely to result in future spending under its new use or was more likely to have resulted in future spending if it had remained in TARP. Since TARP is not near its ceiling today, any proposal that reduces TARP authority by less than $150 billion would not force TARP asset holdings to be reduced from the currently planned size. Thus, reducing the authorized size of TARP by less than $150 billion does not increase the revenues flowing to the Treasury because it does not force Treasury to sell any of the assets TARP currently holds. In effect, a new policy proposal that increases spending or reduces revenues would be deficit financed if it included a reduction in TARP authority of less than $150 billion under Treasury's current plan (since it would not result in any increase in revenues via a reduction in TARP assets outstanding). A separate issue is whether redirecting TARP funds to finance new proposals would increase the expected budget deficit in the future compared to projections of current policy. This measure would be relevant for scoring the proposal and for measuring the proposal's macroeconomic effects relative to a baseline of current policy. The answer to this question depends on what assumption is made about the future size of the TARP program under current policy baselines, which need not be the same as Treasury's announced plans since those plans are not binding. (Likewise, the effect on future deficits depends on what assumption is made about how much spending will increase or tax revenue will decline in the future as a result of the new policy proposal. The projected increase in the deficit will not necessarily be as much as the amount authorized in the proposal.) Through March 2009, the Congressional Budget Office (CBO) baseline assumed that the amount outstanding under TARP would reach $700 billion. In August 2009, CBO modified its baseline and assumed that TARP would peak at $600 billion, or $50 billion higher than the Treasury's current plans. That implies that reducing TARP by up to $100 billion would have no impact on future projections of the baseline deficit (because the baseline already assumed that the redirected money would not be spent by TARP), so redirecting TARP by up to that amount to finance a new proposal would be fully matched by an increase in the deficit. From a macroeconomic perspective, a new proposal to be financed by a decrease in TARP authority of up to $100 billion would have the same effect on economic projections compared to the August baseline as a deficit-financed proposal. For official scoring purposes in 2009, the 2009 budget resolution ( S.Con.Res. 13 ) instructs CBO to use the March baseline, even though a more recent baseline is now available. (The same baseline is used so that scoring will be consistent throughout the session.) Therefore, a bill financed by redirecting any TARP funds would be officially scored as being offset by a decline in overall anticipated federal spending via a smaller TARP program since the March baseline assumed all $700 billion of TARP authority would be used in the future. The offset would not be one-for-one, however, assuming money is being shifted from an income-earning investment under TARP to a use that does not earn income. Section 123 of EESA specified that the cost of asset purchases under TARP be determined as provided under the Federal Credit Reform Act of 1990 with a discount rate adjusted for market risk. Under these instructions, CBO reported that the federal budget would not record the gross cash disbursement for the purchase of a troubled asset (or cash receipt for its eventual sale) but instead would incorporate an estimate of the government's net cost (on a present-value basis) for the purchase. Broadly speaking, the net cost is the purchase cost minus the estimated market value of the assets, which is the present value—calculated using an appropriate discount factor that reflects the riskiness of the underlying cash flows associated with the asset—of any estimated future earnings from holding the asset and the proceeds from its eventual sale. Present value calculations allow one to compare costs and benefits over time. The discount rate or discount factor measures how much more present costs or benefits are valued compared to future costs or benefits. A risk adjustment is used because the expected return on TARP assets is more volatile than the government's borrowing cost. The subsidy rate under TARP can be calculated by dividing the net cost in present value terms by the government's initial expenditures. CBO has estimated that certain TARP programs, such as the Capital Purchase Program, have lower subsidy rates, while other programs, such as the Auto Industry Financing Program, have higher subsidy rates. For future TARP spending, CBO assumes a subsidy rate of 50%. Therefore, a dollar reduction in TARP authority reduces the official budget deficit by only 50 cents in a budget score. For example, CBO scored the $20.8 billion reduction in TARP authority in H.R. 4173 as a $10.4 billion reduction in the deficit in 2010. Likewise, the amount outstanding in TARP has not increased the budget deficit on a one-to-one basis, but rather by the present value of the subsidy. In August 2009, CBO estimated that, for expenditures already made, TARP would increase the budget deficit by $133 billion in 2009, and for future expenditures, by $80 billion in 2010 and $28 billion between 2011 and 2013.

Following a boom and bust in real estate and a meltdown in financial markets, Congress enacted a program to purchase troubled assets from financial institutions in October 2008. The Troubled Asset Relief Program (TARP) was created by the Emergency Economic Stabilization Act (EESA, P.L. 110-343). Under TARP, the Secretary of the Treasury is authorized to purchase up to $700 billion of "troubled" assets, including any asset that the Secretary, in consultation with the Chairman of the Federal Reserve, believes the purchase of which will contribute to financial stability. The amount outstanding under TARP is currently far below this limit, and Treasury has announced plans for no more than $550 billion to be outstanding in the future. Some policymakers have proposed redirecting funds under the Troubled Asset Relief Program to finance new policy proposals. The Helping Families Save Their Homes Act (S. 896/P.L. 111-22), redirected $1.3 billion from TARP to finance modifications to the Hope for Homeowners Program. The Wall Street Reform and Consumer Protection Act (H.R. 4173), which passed the House, would redirect $20.8 billion of TARP funds to offset $10.4 billion of various provisions of the bill. The Jobs for Main Street Act (H.R. 2847), which passed the House, would redirect $150 billion of TARP funds to offset $75 billion of the bill's spending and tax provisions. When TARP was created, the Treasury did not collect and set aside $700 billion of revenue to finance the program—the Treasury Secretary was simply given legal authority to purchase $700 billion of assets. Therefore, Treasury holds no unused money under TARP that can be redirected toward new policy proposals. Like most spending programs, TARP expenditures are financed from general revenues. If the Treasury Secretary wished to purchase more TARP assets, it would be necessary to first issue federal debt (thereby increasing the budget deficit) to do so. Proposals to redirect TARP funds to finance other proposals rely, in essence, on a reduction in the amount that the Treasury Secretary is authorized to purchase under TARP. Since TARP is not near its ceiling today, any proposal that reduces TARP authority by less than $150 billion would not force TARP asset holdings to be reduced from the currently planned size. Thus, reducing the authorized size of TARP by less than $150 billion does not increase the revenues flowing to the Treasury because it does not force Treasury to sell any of the assets TARP currently holds. In effect, a new policy proposal that increases spending or reduces revenues would be deficit financed if it included a reduction in TARP authority of less than $150 billion under Treasury's current plan (since it would not result in any increase in revenues via a reduction in TARP assets outstanding). The scoring of proposals to redirect TARP funds, however, differs from the actual effect of these proposals. For official scoring purposes, the 2009 budget resolution instructs CBO to use the baseline from March 2009. This March baseline assumed all $700 billion of TARP authority would be used in the future, as opposed to the $550 billion currently planned by Treasury. Therefore, a bill financed by redirecting any TARP funds would officially be scored as being offset by a decline in overall anticipated federal spending via lower future TARP purchases, although under current Treasury plans, future TARP purchases would not actually be reduced. The offset would not be one-for-one, however. Under Section 123 of EESA, the cost of asset purchases are scored as the net present value of the subsidy in the loan, modified for risk, and are not scored on a cash flow basis. For future TARP spending, CBO assumes a subsidy rate of 50%. Therefore, a dollar reduction in TARP authority is scored as reducing the official budget deficit by only 50 cents.

Most federal and state programs of financial assistance to poor and low-income families either increase income or subsidize the purchase of goods and services to help them meet their basic, immediate consumption needs. The exceptions are education and training programs, that seek to build "human capital." More recently, Individual Development Accounts (IDAs) have been developed to help low-income families build financial capital. IDA programs are operated by community-based organizations (including faith-based organizations), as well as state and local governments in partnership with community-based organizations. From the participant's viewpoint, IDAs operate much like retirement 401(k) plans: the participant makes contributions, which are matched (at varying rates) by the program. Withdrawals from IDAs are restricted. Funds can be withdrawn to finance specific activities and purchases—generally, education, the purchase of a home, and to start a business. An individual's contributions may also be withdrawn for other purposes, but this leads to the loss of matching funds. In addition to providing matching funds for accounts, IDA programs also provide financial literacy education, case management, and supportive services to participants. This report describes IDA programs funded by two major federal grants: the Assets for Independence (AFI) Act of 1998 and the Temporary Assistance for Needy Families (TANF) program created in the 1996 welfare reform law. Other federal initiatives that provide for more targeted IDAs (e.g., for refugees and for families in assisted housing) are not discussed in this report. The Assets for Independence Act (AFI, P.L. 105-285 ) authorized up to $25 million per year for FY1999 to 2003 for competitively awarded IDA demonstration programs. Congress has continued the AFI program absent an authorization. The Department of Health and Human Service (HHS) administers the AFI program. Table 1 provides a funding history for IDAs under the AFI program. AFI is funded at $19 million for FY2014. AFI grantees must raise nonfederal funds to operate AFI IDAs. The AFI federal grant to an individual grantee cannot exceed the lesser of (1) the amount of nonfederal resources raised for the program, or (2) $1 million. The AFI Act authorizes competitive grants for IDA programs to nonprofit organizations; state, local, and tribal governments that apply with non-profits; credit unions; and organizations designated by the Secretary of the Treasury as community development financial institutions. Credit unions and community development financial institutions must demonstrate a collaborative relationship with local community-based organizations whose activities are designed to address poverty. Faith-based organizations may also operate IDA programs. Additionally, the AFI Act "grandfathers" in eligibility to operate an IDA program to state programs funded at $1 million or higher that were in operation on the date of enactment. "Grandfathered" state programs need not comply with AFI's rules. Under this provision, Pennsylvania and Indiana received AFI funds. Participation in AFI Act IDA programs is limited to persons who are eligible for TANF assistance; or live in a household with income below 200% of the poverty line or have and have a net worth of less than $10,000. The net worth test takes into account the market value of all assets except the household's primary residence and the value of one motor vehicle. IDAs may be established for the benefit of the participant, as well as his/her spouse and dependents. Since IDAs are targeted to low-income families who might qualify for government aid based on low income and assets, the AFI Act requires that IDA funds be ignored when determining eligibility for federal assistance programs. Participants are required to contribute to their IDA with cash or a check. Contributions from earnings are matched by a minimum $1 for each $1 in participant contributions. Matching amounts are funded from both federal and nonfederal sources, with a minimum 50% funded from nonfederal sources. Maximum matching amounts from federal funds are limited to $2,000 for any one individual and $4,000 for any one household. Participants may withdraw their contributions, match funds, and interest for specified purposes. These specified purposes are as follows: Post-secondary educational expenses. Payments are made directly from the IDA to an educational institution for tuition, fees, books, supplies, and equipment. The purchase of a home. Payments are made directly from the IDA to cover the acquisition costs (including the closing costs) of the home. The acquisition costs cannot exceed 120% of the average purchase price of similar residences in the area. Starting a business. The IDA may be used to finance expenditures under a business plan to acquire plant, equipment, working capital and finance inventory expenses. The business plan must be approved by a financial institution, micro enterprise development organization, or a nonprofit loan fund. The AFI Act allows participants to withdraw their contributions from the IDA to pay medical expenses for the participant and his/her spouse or dependents; payments to prevent the eviction of the participant from her home; and necessary living expenses following loss of employment. Match funds and interest earnings cannot be withdrawn for these emergency expenses. Under the AFI Act, IDA programs must use funds to provide financial literacy education (economic literacy, budgeting, credit, and credit counseling) to IDA participants. Of the federal and nonfederal funds used in the IDA program, up to 15% may be used for such financial literacy, administration, and assisting with an evaluation of the program. As a demonstration program, the AFI Act IDA program has an evaluation component. Organizations operating IDAs are required to submit annual progress reports to the Secretary of Health and Human Services (HHS) and HHS is required to submit periodic reports to Congress. Additionally, the AFI law required an evaluation, which was conducted by the Abt Research organization. Temporary Assistance for Needy Families (TANF) is a federal block grant that gives states broad flexibility in the use of its funds in aiding needy families with children. Generally, TANF funds (and required state monies spent under its "maintenance of effort" requirement) can be used to further any of its statutory goals. In addition, TANF provides specific authority and rules for states to operate IDA programs. States may use TANF and state maintenance of effort funds for IDAs either as an activity that furthers the statute's broad goals, in which case it must conform only to general TANF rules, or under TANF's specific authority to use funds for IDAs, in which case it must follow TANF's specific IDA rules. The TANF law provides explicit authority for states to use federal block grant funds for IDA programs and rules for their operation. Under this provision, IDA programs may be established for individuals eligible for TANF assistance who may make contributions from earned income to the account. Many of the rules for the TANF IDA are similar to the rules under the AFI Act: contributions are to be matched through a nonprofit organization or a state and local government (though there are no limits to matching rates or amounts); withdrawals may be made for educational expenses, purchase of a first home, or starting a business; and the IDA is not to be considered when determining the financial eligibility status of a recipient applying for or receiving federal aid. Eligibility to participate in TANF IDA programs is limited to those "eligible" for TANF assistance. There are no provisions for "emergency" withdrawals from TANF IDAs. As mentioned above, IDAs may also be established under TANF's authority to permit federal and state funds to be used to accomplish any TANF purpose. Except for general requirements regarding the use of TANF funds, states are free to design IDA programs without regard to federal limits and rules. For example, such IDAs may be established for purposes other than educational expenses, home purchase, or starting a business—such as purchasing a car. Boshara, Ray. Individual Development Accounts: Policies to Build Savings and Assets for the Poor. Brookings Institution Policy Brief, Welfare Reform and Beyond #32. March 2005. Sheridan, Michael. Assets and the Poor. M.E. Sharpe Inc., Armonk, New York. 1991.

Individual Development Accounts (IDAs) are savings accounts to help low-income families and persons save for specified purposes, usually education, purchase of a home, or to start a business. IDA programs match an individual's contributions, much like retirement 401(k) accounts. The Assets For Independence (AFI) Act, enacted by Congress in 1998, specifically authorizes IDA demonstration programs. Authorization for the AFI program expired at the end of FY2003, though Congress continued to appropriate money for the program. AFI is funded at $19.026 million for FY2014.

Under the Social Security Act, disabled individuals qualify for benefits only if they are determined to be unable to engage in "substantial gainful activity" (SGA). Under Section 223(d) of the Social Security Act, the Commissioner of Social Security is given the authority to promulgate regulations prescribing the criteria for determining when earnings demonstrate an individual's ability to engage in SGA. Since July 1999, the SGA amount has been adjusted annually to reflect the growth in average wages. In 2014, this amount is $1,070 a month. However, the same section of the law specifies that a different definition of SGA applies to individuals disabled by blindness. These individuals are considered to be engaging in SGA if their earnings exceed 1,800 a month (this amount is also adjusted annually to reflect growth in average wages). This different treatment for the blind began with enactment of P.L. 95 - 216 in 1977. During consideration of H.R. 9346 , the Social Security Financing Amendments of 1977, the Senate adopted by a voice vote an amendment by Senator Birch Bayh that provided disability benefits for blind individuals regardless of their ability to work or the amount of money they actually earned. The amendment was identical to S. 753 , a bill introduced by Senator Hubert Humphrey earlier in the year. Speaking in support of this amendment on the Senate floor, Senator Bayh stated, Social security disability insurance was designed to partially replace income loss due to a disability. Congress has previously recognized blindness as a distinct and unique condition. Certain economic consequences predictably follow the disability of blindness. It is comparable with the social security insurance concept to protect the blind from these adverse effects. If persons with a high earning capacity can return to work at all after becoming blind, they do so, almost without exception, at a much lower salary, and continue to suffer an adverse impact on their earning power. Moreover, working in a society adapted to vision entails extra costs for supportive services and special devices. The House-passed version of H.R. 9346 contained no similar provision. In conference, it was agreed that the House would recede with an amendment that struck the provisions of the Senate amendment but provided that the amount of earnings under the test of SGA that would terminate a blind individual's benefits would be increased to the monthly exempt amount for persons at or above the full retirement age (FRA) under the Social Security earnings test. The conferees stated that they were aware that this established a different test of SGA for blind persons than is applied administratively for persons with other disabilities. They went on to say that they did not intend that the new SGA level established for the blind should be applied to other types of disabilities. When the provision became effective in 1978, the SGA for non-blind recipients was $260 a month; for the blind, it was $334 a month, a difference of about 28% (see Figure A-1 in the Appendix). In subsequent years, the different SGA amounts occasionally became subject to debate. In 1988, the Social Security Advisory Council found that the preferential treatment for the blind was inappropriate and recommended that for new applicants the SGA level be lowered to that for all other disabled recipients. The council also recommended that the SGA level for blind persons already on the rolls be frozen at the then-current level ($700 a month). In 1992, the United States District Court for the District of Wyoming found that the higher SGA amount for the blind was unconstitutional because it violated the guarantee of equal protection under the law. The United States Court of Appeals for the 10 th Circuit overturned the district court's ruling, saying that there was a rational basis for Congress to place preferences for blind persons in the law. The Supreme Court refused to review the appeals court's decision. In 1996, when Congress enacted the Contract with America Advancement Act of 1996 ( P.L. 104 - 121 ) to substantially increase the earnings test limit for those who have attained retirement age over a period of five years, reaching $30,000 in 2002, it removed the linkage between the SGA level of the blind and the exempt amount for individuals who have attained the FRA. Instead their SGA level continued as before (i.e., adjusted annually to reflect growth in average wages). During deliberation of the bill, advocates of the blind sought to have the link maintained. During the mark-up of the bill in the Ways and Means Subcommittee on Social Security, an amendment was offered to do so. However, the amendment was rejected. On April 7, 2000, President William Clinton signed into law H.R. 5 , the Senior Citizens' Freedom to Work Act ( P.L. 106-182 ), which eliminated the Social Security earnings test for recipients who have reached the FRA (effective in 2000). P.L. 106 - 182 permanently continued the severance between the earnings test and the SGA level of the blind enacted in P.L. 104 - 121 . In 1996, the General Accounting Office (GAO, now known as the Government Accountability Office) was asked to examine whether the legislative rationale for an earnings limit for the blind that was higher than for individuals who have other disabilities was warranted. It concluded that the legislative rationale was based on the assumption that adverse employment experiences, including high job-related costs and unemployment, were greater for the blind than for persons who have other disabilities. However, GAO found that such experiences do not appear to be unique to the blind compared to other disabled recipients. GAO repeated this conclusion in a hearing on the topic held by the Social Security Subcommittee of the House Committee on Ways and Means on March 23, 2000. Proponents of liberalizing the SGA limit for the blind maintain that the reasons given in 1977 to provide a different limit for the blind are just as valid today. Blindness is still a distinct and special condition, and they believe that the blind still merit being singled out for compensatory help. They point out that Congress has recognized the special nature of blindness by writing into law different disability criteria for the blind in regard to (1) insured status, (2) continued eligibility for benefits beyond the age of 54 regardless of the level of work activity, and (3) the use of functional capacity as part of the test of meeting the definition of disability. Proponents say that what Congress established then was that the "retirement test" (as the earnings test is sometimes called) for older workers should be applied to the blind, and therefore that they should be treated just like retired older workers whenever Congress makes changes to the retirement test. They say that if any change is made to lessen or eliminate the difference in SGA amounts, it should be to raise the SGA limits of the non-blind. Opponents of liberalizing the SGA limit for the blind maintain that the blind already receive enough preferential treatment and that to expand it further would be inequitable. Many of them think that even current law is too generous, because they see no logical reason that a particular group of disabled individuals should receive advantages over another. In their view, many other impairments could just as easily be viewed as needing special compensatory relief (e.g., quadriplegia and cancer). They dispute that the blind suffer higher rates of unemployment or work-related expenses. Opponents point out that the very definition of disability is that a person is unable to perform substantial work, and that the purpose of the SGA limit is to determine if, regardless of a person's medical condition, he or she demonstrates by work that he or she is not in fact disabled. From their perspective, if the SGA for the blind were further liberalized, especially to the point where it would approach or exceed the average wage of all workers, the concept of disability would become meaningless and weaken the basic concept of the disability program as a whole.

In the Social Security disability program, the level of earnings that constitute "substantial gainful activity" (SGA), and therefore disqualifies a person from receiving benefits, is set by regulation at $1,070 a month for 2014. However, the law provides a different SGA level for the blind at $1,800 a month for 2014, which is adjusted annually to reflect growth in average wages. This report discusses the reasons for these differing amounts and proposals to change them. The appendix section of the report charts the difference between the two amounts from 1975 to 2014.

The Census Bureau's release of the first figures from the 2010 Census on December 21, 2010, shifted 12 seats among 18 states for the 113 th Congress (beginning in January 2013). Illinois, Iowa, Louisiana, Massachusetts, Michigan, Missouri, New Jersey, and Pennsylvania each lost one seat; New York and Ohio each lost two seats. Arizona, Georgia, Nevada, South Carolina, Utah, and Washington each gained one seat; Florida gained two seats, and Texas gained four seats. The reapportionment of House seats in 2010 was based on an apportionment population that is different from the actual resident population of each state. For apportionment purposes since 1970 (with the exception of 1980), the Census Bureau has added to each state's resident population the foreign-based, overseas military and federal employees and their dependents, who are from the state but not residing therein at the time of the census. In 2010, these additional persons increased the census count for the 50 states by 1,042,523, a little less than twice the number in 2000. If the foreign-based military and federal employees had not been included in the counts, there would have been no change in the 2010 apportionment of seats, although the order of seat assignment would have changed. The reapportionment process for the House relies on rounding principles, but the actual procedure involves computing a "priority list" of seat assignments for the states. The Constitution allocates the first 50 seats because each state must have at least one Representative. A priority list assigns the remaining 385 seats for a total of 435. Table 2 displays the end of the "priority list" that would be used to allocate Representatives based on the 2012 Census estimates of the state populations as of July 1. The law only provides for 435 seats in the House, but the table illustrates not only the last seats assigned by the apportionment formula (ending at 435), but the states that would just miss getting additional representation. The apportionment counts transmitted by the Census Bureau to the President (who then sends them to Congress) are considered final. Thus, most states that lost seats in the 113 th Congress had only one possible option for retaining them: urge Congress to increase the size of the House. Any other option such as changing the formula used in the computations, or changing the components of the apportionment population (such as omitting the foreign-based military and federal civilian employees) might only affect a small number of states if the House stays at 435 seats. As noted above, the 435-seat limit was imposed in 1929 by 46 Stat. 21, 26-27. Altering the size of the House would require a new law setting a different limit. Article I, Section 2 of the Constitution establishes a minimum House size (one Representative for each state), and a maximum House size (one Representative for every 30,000, or 10,306 based on the 2010 Census). In 2013, a House size of 468 would be necessary to prevent states from losing seats they held from the 108 th to the 112 th Congresses, but, by retaining seats through an increase in the House size, other states would also have their delegations become larger. At a House size of 468, California's delegation size, for example, would be 56 instead of 53 seats. The apportionment figures released on December 21, 2010, are made up of three components: total resident population figures for the 50 states and the District of Columbia, the foreign-based military and overseas federal employees allocated to each state and DC, and the sum of these numbers (excluding DC), which becomes the apportionment population. These numbers (minus DC) are all that is needed to reapportion the House, but most states need figures for very small geographic areas in order to draw new legislative and congressional districts. The Census Bureau must provide small-area population totals to the legislatures and governors of each state by one year after the census (e.g., April 1, 2011). The Census Bureau data delivered by April 1, 2011 (some states started receiving the information in February 2011), are often referred to as the P.L. 94-171 program data (89 Stat. 1023). This program provides, to each state, information from the 2010 Census. As such, the information is very limited—including age, race, and Hispanic origin. No other demographic information that might be useful to the persons constructing political jurisdictions, such as income or employment status, is available in the P.L. 94-171 data. Such data, however, are available from the results of the American Community Survey for geographic areas with populations as small as 20,000 persons. Census data are usually reported by political jurisdictions (states, cities, counties, and towns), and within political jurisdictions by special Census geography (such as Census designated places, tracts, block numbering areas, and blocks). The P.L. 94-171 program allows states, which chose to participate in it (49 in 2010), to request Census data by certain nontraditional Census geography such as voting districts (precincts) and state legislative districts. These special political jurisdiction counts enable the persons drawing the district lines to assess past voting behavior when redrawing congressional and state legislative districts. In most states, redrawing congressional districts is the responsibility of the state legislature with the concurrence of the governor. In seven states, Arizona, California, Hawaii, Idaho, Montana, New Jersey, and Washington, a non-partisan or bi-partisan commission is responsible for drawing and approving the plans. Some states have explicit deadlines in law to complete their congressional districting. Most do not, so the effective deadline for the legislatures or commissions to complete their work would have been whatever deadlines were established in the states for filing for primaries for the 2012 elections. Although many states have standards mandating equal populations, compactness, contiguousness, and other goals to not split counties, towns, and cities, federal law controls the redistricting process. Other than a requirement that multi-member states cannot elect Representatives at-large (2 U.S.C. 2c) however, no federal statutory law establishes explicit standards for redistricting. The principal laws that apply are the Supreme Court decisions mandating one person, one vote and the Voting Rights Act. The fundamental federal rule governing redistricting congressional districts, one person, one vote , was promulgated by the Supreme Court in Wesberry v. Sanders (376 U.S. 7, 1964). The Court has refined that ruling in a series of cases culminating in Karcher v. Daggett (462 U.S. 725, 1983) that one person, one vote means that any population deviation among districts in a state must be justified, but the deviations from absolute equality may be permitted if the states strive to make districts more compact, respect municipal boundaries, preserve the cores of prior districts, or avoid contests between incumbents. Section 2 of the Voting Rights Act (VRA) applies nationwide. It prohibits states or localities from imposing a "voting qualification or prerequisite to voting or standard, practice or procedure ... in a manner which results in the denial or abridgement of the right to vote on account of race or color." The Supreme Court interpreted the VRA's application to redistricting in a series of cases responding, in part, to the extraordinarily complicated districts created by many states in the 1990s to maximize minority representation (beginning with Shaw v. Reno , 509 U.S. 630, 1993). The Court ended the decade by establishing new principles concerning such practices: (1) race may be considered in districting to remedy past discrimination; (2) but, states must have a compelling state interest to ignore traditional redistricting principles and "gerrymander" to establish majority-minority districts; (3) courts will apply "strict scrutiny" to such assertions that racial "gerrymanders" are necessary to determine whether such plans are narrowly tailored to achieve the compelling state interest.

On December 21, 2010, the Commerce Department released 2010 Census population figures and the resulting reapportionment of seats in the House of Representatives. The apportionment population of the 50 states in 2010 was 309,183,463, a figure 9.9% greater than in 2000. Just as in the 108th Congress, 12 seats shifted among 18 states in the 113th Congress as a result of the reapportionment. The next census data release was February 2011, when the Census Bureau provided states the small-area data necessary to re-draw congressional and state legislative districts in time for the 2012 elections. This report examines the distribution of seats based on the most recent estimates of the population of the states (as of July 1, 2012). It explores the question of, what, if any, would be the impact on the distribution of seats in the U.S. House of Representatives if the apportionment were conducted today, using the most recent official U.S. Census population figures available. The report will be updated as is deemed necessary.

In the wake of accounting scandals involving the Federal Home Loan Mortgage Corporation (Freddie Mac) and its sister organization the Federal National Mortgage Association (Fannie Mae) and, more recently, with various housing problems beginning with the subprime mortgage crisis, Congress has launched efforts concerning the oversight of Freddie Mac and Fannie Mae. Legislative efforts to increase the oversight of these two entities are still pending. The Department of the Treasury may assert that it has the power to regulate Fannie and Freddie's debt issuances more strongly than it has in the past. According to these reports, the Treasury Department would trace this authority to language in Fannie's and Freddie's charters. The Fannie Mae charter provides Fannie Mae the authority to issue obligations "upon the approval of the Secretary of the Treasury, and have outstanding at any one time obligations having such maturities and bearing such rate or rates of interest as may be determined by [Fannie Mae] with the approval of the Secretary of the Treasury." The Treasury Secretary has the same authority over Freddie Mac's securities issuances. The Treasury Secretary has traditionally, although not exclusively, exercised the approval authority with regard to Fannie's and Freddie's debt issuances—not to prevent them from issuing such debt but, rather, to time such issuances so that they do not conflict with the Department of the Treasury's own debt issuances. In other words, the Department of the Treasury has traditionally acted as a "traffic cop" with regard to Fannie and Freddie debt issuances as part of an overall effort to coordinate the federal government's debt issuances. As mentioned above, however, reports have circulated that the Treasury Department may seek to exercise its approval authority to regulate the amount of debt that Fannie and Freddie can issue. The Supreme Court held in Chevron, Inc. v. Natural Resources Defense Council that courts should defer to a reasonable agency interpretation of an ambiguous statute that the agency is charged with administering. Later cases have clarified the scope of Chevron . For example, the Chevron deference is available only to interpretations of an agency to which Congress has delegated the authority to make "rules carrying the force of law." Generally, then, Chevron deference is warranted for agency interpretations after formal adjudication or notice-and-comment rulemaking. Actions pursuant to less formal interpretations are "entitled to respect" under an earlier case, Skidmore v. Swift Co. Because it is not clear how, or even if, the Treasury Department will issue an interpretation, this report analyzes the strength of the Treasury Department's reported proposed interpretation under both Chevron and Skidmore. Chevron analysis requires a two-step inquiry. First, the court must ask if the statute is ambiguous. If not, then the court simply rules according to the clear meaning of the statute. However, if the statute is ambiguous, the court must determine whether the agency's interpretation is reasonable. If the interpretation is reasonable, the court must then defer to that interpretation. Here, it would seem that the analysis would end after the first prong. The statute is not ambiguous; it vests approval authority in the Secretary of the Treasury. The language in both statutes clearly gives the Treasury Secretary approval authority over Fannie's and Freddie's debt issuances. There appears to be nothing in the statutory language to suggest that this approval authority is limited to the "traffic cop" role through which the Secretary has traditionally exercised this power. The statutory language in both Fannie Mae's and Freddie Mac's charters conditions the issuance of debt obligations upon the approval of the Secretary of the Treasury. The power to approve seems clearly to imply the concomitant power to disapprove . Indeed, the power to approve would be no power at all if an agency did not have the ability to withhold that approval. There is one notable Supreme Court case where the Court, faced with clear statutory language, used superceding congressional and agency action to find ambiguity under the first Chevron prong. In FDA v. Brown & Williamson Tobacco Corp. , the FDA had interpreted its statutory mandate to regulate "drugs" and "devices" to give the agency the power to regulate tobacco. The Supreme Court, however, looked at the FDA's long history of disclaiming authority over tobacco and the fact that Congress had legislatively addressed tobacco regulation separately six times to find a congressional intent contrary to the agency's proposed interpretation. There appears to be no such history here which would force a reviewing court to look beyond the language of the statute. Congress has passed no legislation evincing a different congressional intent from what the language indicates. Further, Congress has not created a separate regulatory scheme for the regulation of Fannie's and Freddie's debt issuances. Moreover, unlike the FDA in Brown & Williamson , the Treasury Department has never disclaimed or receded from its authority to regulate in this area. Although the department has not generally exercised this authority to stop Fannie and Freddie from issuing debt, the statutory authority to do so remains. Given that the Treasury Department has this authority, there appears to be nothing to prevent the department from exercising it in a different way. As the Supreme Court has held, agencies must be allowed to "adapt their rules and policies to the demands of changing circumstances." Although it seems doubtful that a court using the Chevron analysis would even get to the second prong of that analysis, the Treasury Department's reported proposed exercise of authority would very likely be legal under Chevron ' s second prong. Under this highly deferential prong, a court must accept an agency's interpretation so long as that interpretation is reasonable, whether or not the court agrees with it. For the same reasons discussed above, it appears difficult to imagine bases upon which a court would find the Treasury Department's reported proposed interpretation here to be unreasonable. If Congress had wanted to limit the Treasury Department's approval authority, Congress could have done so. Because Congress chose instead to use broad language in describing Treasury's authority, it follows that a broad interpretation of that authority would likely be judged to be reasonable. Although Chevron requires a court to defer to an agency interpretation of an ambiguous statute, so long as the interpretation is reasonable, an agency interpretation under Skidmore is merely guidance. The weight of the agency's interpretation depends upon a variety of contextual factors, including the thoroughness evident in the agency's consideration of the interpretation, the validity of its reasoning, its consistency with earlier and later pronouncements, "and all those factors which give it power to persuade, if lacking power to control." In essence, under the Skidmore analysis, the court will determine the statute's meaning, merely taking into account the agency's interpretation as one tool among the many statutory interpretation tools used by courts—unless the agency can convince the court that the agency has some special body of knowledge warranting greater deference. One of the most basic premises of statutory construction is that the statutory language itself should be the initial touchstone for analysis. The Supreme Court has consistently stated that "the meaning of the statute must, in the first instance, be sought in the language in which the act is framed, and if that is plain ... the sole function of the courts is to enforce it according to its terms." As mentioned above, the statutory language at issue here unambiguously grants approval power to the Secretary of the Treasury without any qualifying language limiting the exercise of this power in any way. Further, as the Supreme Court has stated, "legislative history is irrelevant to the interpretation of an unambiguous statute." Although the general rule is that extrinsic aids such as legislative history are only to be used when a statute is unclear and ambiguous, there appears to be no rule that forbids a court from examining legislative history of clear language. Courts have on occasion allowed the admission of legislative history to interpret unambiguous statutes if that history clearly expresses a legislative intent contrary to the language. It is important, then, to examine the legislative history and see if it points strongly against the interpretation that the language appears to command. Fannie Mae has been authorized to issue obligations since 1934. However, it was not until 1954, when Congress re-chartered Fannie Mae as a mixed government and private sector entity, that Congress inserted into Fannie Mae's charter the aforementioned language conditioning the issuance of debt obligations on the Secretary of the Treasury's approval. Although the legislative history is silent as to why the Secretary of the Treasury was given this authority or how Congress expected him to use it, the clear language suggests that the power is a broad one. The statutory language indicates a broad authority vested in the Secretary of the Treasury to regulate Fannie Mae's debt issuances. However, the Secretary has generally used this power not to disapprove of proposed issuances but, rather, to coordinate these issuances so as not to conflict with the Treasury Department's debt issuances. One House committee had this in mind in 1989 when Congress gave Freddie Mac powers similar to those held by Fannie Mae to issue debt. Although the House report that accompanied that legislation stated that one of the overarching purposes of the statute was to give Freddie Mac powers and authority parallel to those enjoyed by Fannie Mae, Part III of the House Report, submitted by the Committee on Banking, Housing, and Urban Affairs, also offered a very different picture of how the committee expected the Secretary of the Treasury to exercise the approval authority: The title also grants the Secretary of the Treasury certain approval authorities over [Freddie Mac's] issuance of unsecured debt obligations and mortgage-related securities. Treasury already possesses such powers over [Fannie Mae] ... The Committee intends that the Treasury shall use these powers solely to ensure that [Freddie Mac's] financing activities are conducted in a way that promotes [Freddie Mac's] statutory purpose. In fulfilling this responsibility, and as is the case with [Fannie Mae], the Committee expects that Treasury will function largely as a " traffic cop " to assure that securities issued or guaranteed by [Freddie Mac] are marketed in an orderly way in appropriate coordination with the financing activities of the Treasury and other government-sponsored enterprises (GSEs) [Emphasis added]. At first glance, it appears possible that Congress had a different intent in mind when it granted this approval authority to the Secretary of the Treasury. Put simply, although the statutory language concerning the Treasury Secretary's authority here is clear, one could argue that Congress's understanding of that authority may have changed between the time that it was granted over Fannie Mae and when it was granted to Freddie Mac, because of the way that the Department of the Treasury had traditionally chosen to exercise this authority. For a variety of reasons, however, the above-quoted report language from 1989 would not likely be enough to convince a court that the Secretary of the Treasury's power is limited here. First and foremost, the language represents the opinion of one committee, not the entire Congress. The Supreme Court has made it clear that a committee's direction cannot be equated with a statute passed by Congress. Under the Constitution, federal statutes must pass both Houses of Congress and be signed by the President to have legal effect. As the Supreme Court has stated, "unenacted approvals, beliefs, and desires are not laws." This is not to suggest that committee reports are not important interpretive tools. On the contrary, these reports are among courts' favorite sources of interpretation. Such sources, however, cannot be divorced from the statutory language. "Courts have no authority to enforce [a] principle gleaned solely from legislative history that has no statutory reference point." In this case, Congress could have chosen to enact language explicitly limiting the Treasury Secretary's authority to the "traffic cop" function described above. Congress chose not to do so, however. Even if the report language were to be given greater weight, however, the language itself does not evince an intent completely to constrain the Treasury Secretary's authority. The language describes an expectation that, concerning securities and debt issuances, the department would function " largely as a 'traffic cop.'" This use of the word " largely, " as opposed to " only ," suggests that there are other, unenumerated ways in which Treasury could exercise that authority. Consequently, the legislative history does not provide a clear Congressional intent that courts should depart from the clear statutory language. In addition to the clear language, as mentioned above, a reviewing court using the Skidmore analysis would give weight to the Treasury Department's opinion that the Treasury Secretary possesses the power to regulate debt issuances by Fannie and Freddie. The likely final result under the Skidmore analysis, then, appears to be the same as that under Chevron deference.

The Department of the Treasury is developing a more formalized approach for approving Fannie Mae's and Freddie Mac's debt issuances. Although the Department of the Treasury has traditionally used its approval authority merely to coordinate the timing of debt issuances, the department may seek to regulate the amount of debt that Fannie Mae and Freddie Mac may issue. This report analyzes the Department of the Treasury's legal authority over Fannie Mae and Freddie Mac and concludes that a court would likely hold that the department possesses the power to regulate the amount of debt issued by these two organizations.

Title II of the Social Security Act provides that certain individuals may be entitled to Social Security Disability Insurance (SSDI) benefits under the federal Old Age, Survivors, and Disability Insurance (OASDI) program if they meet the following statutory requirements: The individual's medical condition meets the definition of disability as specified in Section 216 of the act; The individual has filed a claim for disability benefits; The individual is insured, generally requiring either a work history or the work history of a parent or spouse, as specified in Section 214 of the act; The individual has not reached normal retirement age as provided in Section 216 of the act; and The individual has completed a five-month waiting period. The waiting period for SSDI benefits consists of five consecutive calendar months beginning with the first full calendar month in which a covered individual satisfied the test of disability. If an individual's disabling condition began before he or she met the insurance requirements, the waiting period would begin with the first full calendar month after insured status was gained. During this waiting period, SSDI benefits cannot be paid. It is important to note that this waiting period begins at the onset of the disabling condition and is not affected by the date a worker applies for SSDI benefits. Workers are encouraged by the Social Security Administration (SSA) to apply for benefits at the onset of their disability. The first month counted as part of the waiting period can be no more than 17 months before the month of application and thus, retroactive benefits are limited to 12 months from the date of application. SSA provides retroactive SSDI benefits when the onset of disability occurred before an application for benefits was filed. In such cases, a beneficiary is entitled to benefits retroactive to five months after the date of disability onset provided that this date is within one year of the date of application. Section 223 of the act provides one exception to the five-month waiting period. A person who, in the five years immediately preceding the onset of a current disability, had either received SSDI benefits or had a disabling condition that met the requirements set forth in Section 216 of the act (42 U.S.C. §416), is entitled to immediate benefits paid from the onset of disability. A waiting period from the onset of disability to eligibility for benefits has been part of the SSDI program from its inception. In 1954, Congress made the first provisions for loss of work due to disability and included language that exempted a period of disability from being counted when determining retirement benefits. Two years later, Congress authorized the payment of SSDI benefits to persons over the age of 50 after a six-month waiting period. The age requirement was removed in 1960. In recent years, Congress has introduced a variety of legislative initiatives to reduce or eliminate the five-month waiting period. In 1955, the House Ways and Means Committee recommended passage of the proposed Social Security Amendments and discussed the rationale for a six-month waiting period between the onset of disability and eligibility for federal benefits. A committee report cited the unique nature of the federal definition of disability and called its requirement that a disabling condition be expected to result in either death or long duration "more exacting" than the disability definitions commonly used by commercial insurance carriers at the time, many of which had their own six-month waiting periods. In addition, the Ways and Means Committee expressed that the six-month waiting period was "long enough to permit most temporary conditions to be corrected or to show definite signs of probable recovery" and would be of sufficient length to make it "unprofitable for a person who can work not to do so." Two significant changes to the original six-month waiting period have been passed as part of the creation of the SSDI program. The first change eliminated the waiting period for disabled workers who were previous SSDI recipients or who had a previous disabling condition in the five years prior to the onset of their current disability. To be exempted from the waiting period, the previous disabling condition must have met the statutory definition of disability as provided in Title II of the act. In their reports to the House and Senate on the 1960 Amendments, the Ways and Means and Finance Committees affirmed that the six-month waiting period for those with previous disabilities as a possible barrier to return to work efforts, stating that Most disability insurance beneficiaries who return to work do so despite severe impairments. Where a disabled person becomes employed without any improvement of his condition, a more or less slight change in his situation can result in the loss of his job and make him once again eligible for disability insurance benefits. Other disabled persons, whose medical conditions may improve sufficiently to require termination of benefits, may subsequently grow worse again and become reentitled to benefits. A new six-month qualifying period during which they receive neither earnings nor benefits imposes a hardship on them and their families, and may be a real bar to any further work attempts. The second change to the SSDI waiting period reduced the waiting period from six to five months. The intent of this change was to reduce the financial burden on applicants, and the Ways and Means Committee reported that "reducing the waiting period from six months to five months would diminish the financial hardships faced by those workers who have little or no savings or other resources to fall back on during the early months of long-term disability." The Senate Finance Committee went further than the House and recommended reducing the waiting period to four months. Title XVI of the act authorizes Supplemental Security Income (SSI) benefits for individuals who meet the statutory test of disability or are over the age of 65 and who fall below specific income and asset thresholds. SSI beneficiaries need not have any prior work history or meet the insurance requirements of SSDI, and there is no waiting period between the onset of a disability and eligibility for SSI benefits. In December 2012, of the 8.4 million disabled-worker beneficiaries aged 18-64 receiving SSDI benefits, 1.1 million or 13.1% also received federally administered SSI benefits. Thus, SSI can be used by some disabled workers to lessen the economic hardship faced by the lack of earnings and benefits during the SSDI waiting period. SSI benefits are not available to residents of Puerto Rico, Guam, or the U.S. Virgin Islands. The maximum federal SSI payment, referred to as the federal benefit rate, is $721 per month for an individual living independently and $1,082 for a couple living independently in 2014. Forty-four states and the District of Columbia add a supplement to this benefit for their residents. The amount of the federal benefit, plus any state supplement, may be reduced or offset by some earned and unearned income. Since most SSI recipients have other income, the average monthly SSI payment is less than the federal benefit rate. In December 2013, the average federally administered SSI payment was $546.38 for adults aged 18 to 64. Thirty-nine states, the District of Columbia, and the Commonwealth of the Northern Mariana Islands grant Medicaid eligibility to all SSI recipients or have Medicaid eligibility rules that are the same as those of the SSI program. California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island currently administer Temporary Disability Insurance (TDI) programs that provide either state or private benefits to workers with disabilities who are not receiving SSDI benefits. The six TDI programs provide temporary benefits, with maximum durations of between 26 and 52 weeks, for those with an earnings history who are unable to work because of a disability and who are not receiving workers' compensation or SSDI benefits. In addition to state TDI, employees of the railroad industry in all states are eligible for TDI benefits administered by the federal Railroad Retirement Board in accordance with provisions of the Railroad Unemployment Insurance Act. Workers' compensation systems in each state provide wage replacement and medical benefits to workers unable to work because of an employment-related illness or injury and may be able to pay benefits during the SSDI waiting period. The federal government administers workers' compensation for its employees under the Federal Employees' Compensation Act. The federal government also administers workers' compensation systems for some private sector employees in the maritime, mining, and railroad industries through the Longshore and Harbor Workers Compensation Program, the Black Lung Benefits Program, and the Energy Employees' Occupational Illness Compensation Program. In each state, workers covered by state unemployment insurance (UI) systems may be eligible to receive partial wage replacement in the event of a job separation. The states, however, require that those receiving unemployment compensation be able and willing to work, a condition that may exclude many waiting for SSDI eligibility (especially an individual who would earn in excess of the substantial gainful activity), since it is assumed that the individual is unable to work. Unemployment benefits are administered by the states within federal guidelines under Title III of the act, and unemployment compensation provisions for individuals who are ill or disabled vary by state. The Government Accountability Office (GAO) found that 117,000 individuals (less than 1.0% of all SSDI beneficiaries) received concurrent SSDI and UI cash benefits in fiscal year (FY) 2010. SSA's Office of the Chief Actuary estimated that 0.4% of disabled-worker beneficiaries would be in receipt of both SSDI and UI benefits in 2014. Private disability insurance programs offered by employers can be used to provide wage replacement benefits during the five-month waiting period for SSDI benefits. In March 2013, 39% of private-sector workers participated in some form of short-term disability insurance plan while 32% of private-sector workers were covered by long-term disability insurance. It has been estimated that up to 20% of SSDI beneficiaries have received payments from private disability insurance policies before being eligible for federal benefits. The five-month waiting period between the onset of disability and eligibility for SSDI may have a negative impact on the income of those seeking to enter the program. During this waiting period, persons with disabilities are either not working or earning less than the substantial gainful activity (SGA) threshold. In addition, claimants are either not receiving monthly benefits to replace lost wages or are receiving only SSI benefits, which are usually lower than SSDI benefits. A July 2012 analysis by the Congressional Budget Office (CBO) estimated that the elimination of the five-month waiting period would increase outlays to SSDI by approximately $8.0 billion dollars in 2022 (about 4% of program outlays). One impact that may not be as clear, however, is the role that the waiting period plays in discouraging possible beneficiaries from applying for benefits. This waiting period, and its accompanying loss of income, lessen the overall generosity of the SSDI benefit.

Social Security Disability Insurance (SSDI) is authorized by Title II of the Social Security Act and provides income replacement for eligible individuals who are unable to work due to a long-term injury or illness that is expected to last at least one year or result in death. Current eligibility requirements include (1) verification of an applicant's disability, (2) filing a claim, (3) a "recent work" and "duration of work" test, (4) verification that an individual has not reached normal retirement age, and (5) a five-month waiting period from disability-onset. In implementing the five-month waiting period for SSDI benefits, Congress sought to set a time frame that would be long enough for a short-term injury or illness to be corrected, but would also deter individuals who can work from applying for benefits. The first month counted as part of the waiting period can be no more than 17 months before the month of application, and benefits can be applied retroactively for up to 12 months. The Social Security Administration (SSA) encourages eligible individuals to apply for benefits as soon as possible after the onset of a disabling condition. The waiting period does not apply to individuals who have been previous recipients of SSDI in the five years prior to any current disability. Several other programs, such as Supplemental Security Income (SSI), temporary disability insurance, workers' compensation, unemployment compensation, and private disability insurance, can provide funds for eligible SSDI applicants facing financial hardship during the five-month wait period.

Since the mid-1950s, Congress has added numerous provisions to the Public Health Service Act (PHSA) that authorize education and training programs for various health, medical, and nursing professionals. The programs, consolidated in Title VII and Title VIII of the PHSA, provide grants, scholarships, and loans to individuals and institutions in order to increase the supply of professionals in health care, medicine, and nursing. Title VII programs support individuals who study to become primary care physicians, dentists, public health, and allied health professionals. Also, institutions that train these individuals are eligible for grants to support the development of education and training opportunities through endeavors such as multidisciplinary collaborative efforts and community partnerships. Title VIII programs support individuals in the study of nursing and enhance the ability of institutions to sustain nursing workforce programs. Major health reform legislation enacted in 2010 includes amendments to Title VII and Title VIII that add, delete or modify program authorities. The Health Resources and Services Administration (HRSA) in the Department of Health and Human Services (HHS) administers Title VII and Title VIII programs. Discretionary funding for these programs is provided in the annual appropriations act for the Departments of Labor, HHS, and Education (Labor-HHS-ED). The FY2010 enacted appropriations for Title VII and Title VIII programs are $254.1 million and $243.9 million, respectively, for a total of $498.0 million. In addition, a portion of the supplemental funds provided through the American Recovery and Reinvestment Act of 2009 (ARRA) is available for FY2010. Major provisions enacted in the Patient Protection and Affordable Care Act (PPACA) amended Title VII and Title VIII of the PHSA to revise existing authorities or create new ones. Implementation of the discretionary programs authorized in PPACA will depend on future appropriations actions. After reviewing the status of authorizations for Title VII and Title VIII programs, this report summarizes the appropriations history for the period from FY2001 through FY2010, together with the FY2011 President's budget request. Table 1 provides an appropriations history for Title VII; Table 2 , an appropriations history for Title VIII; and Table 3 , a consolidation of program totals for Title VII and Title VIII. Appendix A provides details about plans within HRSA to distribute ARRA funds in FY2009 and FY2010 for Title VII and Title VIII programs. Appendix B summarizes the sections of PPACA that amend various sections in Title VII and Title VIII of the PHSA. Before PPACA was enacted in March 2010, statutory authorities for Title VII and Title VIII programs had been amended numerous times since their initial passage. For Title VII, the Health Education Partnerships Act of 1998 ( P.L. 105-392 ) had been the most recent reauthorizing legislation, authorizing appropriations for many programs through FY2002. The same law also extended appropriations authority for most Title VIII programs through FY2002. Subsequently, authorizations for some, but not all, Title VIII programs had been extended through FY2007 in the Nurse Reinvestment Act of 2002 ( P.L. 107-205 ). In the 111 th Congress, multiple provisions of PPACA added, eliminated, or revised program authorities in each of Title VII and Title VIII, including new or extended authorization of appropriations for selected programs (see Appendix B ). On February 1, 2010, President Barack Obama presented the FY2011 budget, requesting a total of $503.9 million for Title VII and Title VIII programs. The amount is an increase of $5.9 million (1.2%) above the $498.0 million enacted in the FY2010 appropriations for these programs. The FY2010 enacted appropriations for Title VII and Title VIII programs are $254.1 million and $243.9 million, respectively. PPACA provided no supplemental FY2010 appropriations for Title VII and Title VIII programs. For FY2009, Congress appropriated funds for Title VII and Title VIII programs in two separate enactments. Regular appropriations of $392.7 million were provided in the FY2009 Omnibus Appropriations Act. A supplemental appropriation of $200 million for health, medical, and nursing workforce programs was added by ARRA. Of that $200 million, the Secretary has allocated $148.5 million to Title VII and Title VIII programs, and $50 million for equipment to enhance the training of health professionals. Unlike regular appropriations, most ARRA funds are available for obligation over two fiscal years, through September 30, 2010. As shown in Appendix A , HRSA obligated about one-third ($68.2 million) of the $200 million in FY2009, leaving about two-thirds ($131.8 million) for obligation in FY2010. President Obama's FY2011 budget request would provide a total of $260.0 million for Title VII programs, representing an increase of $5.9 million (2.3%) above the FY2010 appropriation of $254.1 million. All currently funded programs would receive level funding, except for the Workforce Information and Analysis program, which would be increased from $2.8 million to $8.8 million. Table 1 presents Title VII appropriations for health and medical professions training programs for the period from FY2001 through FY2010, together with President Obama's FY2011 budget request. During the period from FY2001 through FY2010, total annual appropriations for Title VII programs fluctuated significantly, from a high of $308.4 million in FY2003 to a low of $145.1 million in FY2006. Throughout much of this period, the George W. Bush Administration sought to eliminate funds for most Title VII programs, but Congress generally restored funding. Funding for several progams was eliminated starting in FY2006, including Health Education and Training Centers, Workforce Information and Analysis, and Health Administration Traineeships and Special Projects. However, Workforce Information and Analysis received renewed funding in FY2010. President Obama's FY2011 budget request would provide $243.9 million for Title VIII programs, which is equal to the FY2010 enacted appropriation. The request would maintain current levels of funding for each of six authorized programs. Table 2 presents Title VIII appropriations for nursing programs from FY2001 through FY2010, together with President Obama's FY2011 budget request. During the period from FY2001 through FY2009, appropriations for Title VIII programs increased by 104%, from $83.8 million to $171.0 million. In the FY2010 appropriation, Congress boosted Title VIII funding by an additional 43% over the FY2009 regular appropriation. The Public Service Announcements program (PHSA Sections 851 and 852) is the only program authorized in P.L. 107-205 that has received no funding. Table 3 compiles total appropriations for Title VII and Title VIII programs for FY2001 through FY2010, and shows President Obama's FY2011 budget request. Appendix A details HRSA's planned obligations of $200 million in ARRA funding over FY2009 and FY2010. Appendix B summarizes the sections of the health care reform legislation that added, deleted or modified selected authorities in Title VII and Title VIII. Appendix A. Allocation of Stimulus Funds Appropriated for HRSA Health Professions Programs in the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) Appendix B. Sections of Patient Protection and Affordable Care Act (PPACA) that Amend Authorities in Title VII and Title VIII of the Public Health Service Act (PHSA)

The Public Health Service Act (PHSA) establishes authority for the Secretary of Health and Human Services (HHS) to develop and implement workforce programs authorized in Title VII (health and medicine) and Title VIII (nursing). These programs, administered by the Health Resources and Services Administration (HRSA), provide grants, scholarships, and loans to support institutions and individuals in developing and sustaining the health workforce. Before passage of health care reform legislation in March 2010, appropriations authority for all Title VII and Title VIII programs had expired. Congress had nonetheless continued to appropriate funds for the programs. During the period from FY2001 through FY2010, total annual appropriations for Title VII programs fluctuated from a high of $308.4 million in FY2003 to a low of $145.1 million in FY2006. For Title VIII programs, during the period from FY2001 through FY2009, the annual appropriation increased from $83.8 million to $171.0 million. In the FY2010 appropriation, Congress boosted Title VIII funding by an additional 43% over the previous year. For FY2009, Congress appropriated funds for Title VII and Title VIII programs through two separate enactments. The Omnibus Appropriations Act, 2009 (P.L. 111-8) provided $392.7 million in regular appropriations. The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) added a supplemental appropriation of $200 million to be obligated over two years. Of this total, $148.5 million has been applied to Title VII and Title VIII programs; remaining funds are expected to be obligated for related activities (see Appendix A). For FY2010, Congress appropriated $498.0 million for Title VII and Title VIII programs, an increase of 26.8% over the regular FY2009 appropriations. President Barack Obama's FY2011 budget contains a request of $503.9 million for Title VII and Title VIII programs, a 1.2% increase above the regular FY2010 appropriations. The FY2011 request would provide level funding for almost all Title VII and Title VIII programs. This report provides a history of appropriations for programs in Title VII and Title VIII of the PHSA. It includes a summary of new authorizations for these two titles, as enacted in major health reform legislation, the Patient Protection and Affordable Care Act, P.L. 111-148 (see Appendix B).

Concerns about hate crimes have become increasingly prominent among policymakers at all levels of government in recent years. A hate crime is defined as "[a] criminal offense against a person or property motivated in whole or in part by the offender's bias against a race, religion, disability, ethnic/national origin, or sexual orientation." Congress has recognized the special concerns and effects of hate crimes by enacting several laws such as the Civil Rights Act of 1968, the Hate Crimes Statistics Act of 1990, and the Hate Crimes Sentencing Enhancement Act of 1994. Current federal law permits prosecution of hate crimes committed on the basis of a person's race, color, religion, or national origin when engaging in a federally protected activity. On October 28, 2009, the President signed the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act into law. The law expands the scope of hate crime victims to include gender, sexual orientation, gender identity and disability. In addition, the law broadens the circumstances under which the federal government would assert jurisdiction to prosecute such crimes. In light of the United States Supreme Court decision in United States v. Morrison , there are questions as to what underlying authority Congress may utilize to expand the scope of hate crimes to cover violence based on gender, sexual orientation, gender-identity and/or disability. The commerce clause, section 5 of the 14 th Amendment, and section 2 of the 13 th and 15 th Amendments are the grants of power most often mentioned when discussing Congress's authority to proscribe hate crimes and to enact other forms of civil rights legislation. Article I, Section 8, Clause 4 of the United States Constitution authorizes Congress to "regulate Commerce with foreign Nations, and among the several States." There are three categories of activities subject to congressional regulation under the commerce clause. Congress may regulate the use of the channels of interstate commerce, or persons or things in interstate commerce, although the threat may come only from intrastate activities. Finally, Congress may regulate those activities having a substantial relation to interstate commerce (i.e., those activities that substantially affect interstate commerce). The Court narrowed the "affects interstate commerce" category with its decision in Morrison by rejecting the argument that Congress may regulate "non-economic, violent criminal conduct based solely on that conduct's aggregate effect on interstate commerce." In this case, the Court considered a suit brought by a former student of The Virginia Polytechnic Institute who alleged that two university football players raped her. The defendants and the university argued that the Violence Against Women Act, which allowed victims of gender-motivated violence to bring federal civil suits for damages, exceeded Congress's authority under the commerce clause. The Court agreed with the defendants despite the congressional findings that gender-motivated violence deterred interstate travel, diminished national productivity, and increased medical costs. The Court concluded that upholding the Violence Against Women Act would open the door to federalization of virtually all serious crime as well as family law and other areas of traditional state regulation. The Court said that Congress must distinguish between "what is truly national and what is truly local," and that its power under the commerce clause reaches only the former. As such, it would appear that any attempts to broaden the scope of hate crime legislation tied to findings and the general nature and consequences of hate crimes under the commerce clause are constitutionally suspect. However, it would appear that hate crimes that involve interstate travel continue to be within the commerce clause's reach. While the expansion of hate crime legislation may be suspect under the commerce clause, it may be within the scope of other legislative powers such as the legislative clauses of the 13 th , 14 th , and 15 th Amendments. The legislative clauses of the aforementioned amendments give Congress the power to enforce the Amendments by appropriate legislation. Morrison addresses the breadth of Congress's legislative power under section 5 of the 14 th Amendment. Under section 5 the Congress is vested with "power to enforce, by appropriate legislation, the [Amendment's] provisions." However, in Morrison, the Court pointed out that state action, not private, is covered. As such, Section 5 does not authorize legislation "directed exclusively against the action of private persons, without reference to the laws of the state, or their administration by her officers." Therefore, hate-driven denials by state officers or those acting under the color of law of equal protection or due process, or the right to vote fall within the scope of the legislative sections of the 14 th and 15 th Amendments. Conversely, it would appear that hate crimes committed by private individuals not acting under the color of law are beyond the scope of amendments. However, Section 2 of the 13 th Amendment may be a more viable option of broadening hate crime legislation. Unlike the 14 th Amendment, the 13 th Amendment proscribes slavery and involuntary servitude without reference to federal, state or private action. The Court has observed that "the varieties of private conduct that" Congress "may make criminally punishable ... extend far beyond the actual imposition of slavery or involuntary servitude ... Congress has the power under the 13 th Amendment rationally to determine what are the badges and incidents of slavery, and the authority to translate that determination into effective legislation." Section 2 of the 13 th Amendment envisions legislation for the benefit of those who bore the burdens of slavery and their descendants (race and/or color). But, it is unclear as to whether it is an appropriate authority for Congress to expand the range of victims of hate crimes (e.g., religion, national origin, etc.). Two questions come to mind: First, does violence based on bigotry constitute a "badge and/or incident of slavery?" Second, if so, must the remedial legislation be limited to the descendants of those for whose principal benefit the amendments were adopted? In a series of cases, the Court has observed that section 2 "clothes Congress with power to pass all laws necessary and proper for abolishing all badges and incidents of slavery in the United States." One could argue that due to the Court's decision in Morrison demonstrating a reluctance to expand Congress's use of the commerce clause to address gender-motivated violence, it is unclear as to whether the Court would consider the same violence as a "badge or incident of slavery" under the 13 th Amendment. However, the Court has not yet addressed the issue of how broad this congressional authority is. In construing the civil rights statutes enacted contemporaneously with the 13 th , 14 th , and 15 th Amendments, the Court held that Arabs and Jews would have been considered distinct "races" at the time the statutes were passed and the Amendments, drafted, debated and ratified. As this case addressed the issue of race, the question of whether religion can be used as a race indicator remains unanswered. In other words, would a Roman-Catholic, Methodist, or Episcopalian be considered a distinct "race" in the 19 th century? As such, it is unclear as to whether this would be considered sufficient to embrace all religious discrimination. There are other constitutional limits upon the manner in which Congress and/or states may enact hate crime legislation. The Court has considered constitutional challenges regarding state hate crime statutes under both the 1 st and 6 th Amendments. The 1 st Amendment declares that "Congress shall make no law ... abridging the freedom of speech." The 14 th Amendment's due process clause imposes the same restriction upon the states, many of whose constitutions have a comparable limitation on state legislative action. Under the 1 st Amendment, the Court has decided several cases which provide the framework in which states must act to protect the constitutionality of hate crime legislation. Generally, the constitutional distinction boils down to the difference between conduct and speech. If the statute's aim is to punish conduct, then it will generally be upheld; however, if the intent behind the statute is to punish speech, thought, or expression, then courts are more apt to strike down the statute. For example in R.A.V. v. City of St. Paul , the Court struck down a local ordinance as being overbroad and because the regulation was "content-based," proscribing only activities which conveyed messages concerning particular topics. However, in Wisconsin v. Mitchell , the Court found that a Wisconsin statute providing sentence enhancement for bias-motivated crimes did not violate a defendant's 1 st Amendment right as the statute was directed towards the defendant's conduct and not expression. Most recently, in Virginia v. Black , the Court found that the 1 st Amendment permits a state to outlaw cross burnings done with the intent to intimidate because "burning a cross is a particularly virulent form of intimidation." However, in a separate ruling, the Court found that the Virginia statute banning all cross burnings is facially invalid as it impermissibly shifts the burden of proof to the defendant to demonstrate that he or she did not intend the cross burning as intimidation. The 6 th Amendment also provides constitutional limits on hate crime statutes. The 6 th Amendment provides defendants a right to a jury trial. In Apprendi v. New Jersey , the Court struck down New Jersey's hate crime law, which allowed a judge to increase a sentence to double the statutory maximum if he or she found, by a preponderance of the evidence, that the defendant acted with a purpose to intimidate an individual or group of individuals because of race. In reversing the lower court's decision, the Court declared that the jury trial and notification clauses of the 6 th Amendment and the due process clauses of the 5 th and 14 th Amendments embody a principle that insists that, except in the case of recidivists, a judge could not on his own findings sentence a criminal defendant to a term of imprisonment greater than the statutory maximum assigned for which he had been convicted by the jury. In other words, "other than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt."

Federal and state legislators recognize the special concerns and effects of hate crimes. Although there is some federal legislation in place, many states have enacted some form of ethnic intimidation law or bias-motivated sentence-enhancement factors in attempts to curtail hate crimes. Several United States Supreme Court cases provide the framework in which states must legislate to ensure the constitutionality of hate crime legislation. After these landmark cases, the real questions for states involve identifying permissible ways to curtail hate crimes without infringing on any constitutionally protected rights. On the federal level, in light of U.S. Supreme Court cases, the question remains as to what extent Congress can broaden the classes of individuals subject to hate crime legislation. This report discusses constitutional considerations facing both individual states and Congress in enacting hate crime legislation. It will be updated as events warrant.

The Americans with Disabilities Act (ADA) is a broad civil rights statute prohibiting discrimination against individuals with disabilities. As stated in the act, its purpose is "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." Title III of the ADA prohibits discrimination by public accommodations, which are defined to include movie theaters, but the statute does not include specific language on closed captioning or video description. The Department of Justice (DOJ) has promulgated regulations under Title III, but has not specifically addressed issues regarding closed captioning or video description. However, DOJ has issued an advance notice of proposed rulemaking (ANPR) to establish requirements for closed captioning and video description for movie theaters. In addition, the Ninth Circuit, in the first court of appeals case to address the issue, held that the ADA requires the provision of closed captioning and descriptive narration in movie theaters unless to do so would be a fundamental alteration or an undue burden. Title III of the ADA prohibits discrimination in "the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of a place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation." Public accommodations are defined as including "a motion picture house, theater, concert hall, stadium, or other place of exhibition entertainment." Places of public accommodation are prohibited from providing individuals with disabilities a service that is not equal to that afforded individuals without disabilities. In addition, public accommodations are required to take action to ensure that an individual with a disability is not excluded, denied services, or otherwise treated differently because of the absence of auxiliary aids and services "unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the good, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden." Auxiliary aids and services are defined as including "qualified interpreters or other effective methods of making aurally delivered materials available to individuals with hearing impairments; [and] qualified readers, taped tests, or other effective methods of making visually delivered materials available to individuals with visual impairments." Although the ADA does not define "undue burden," the DOJ regulations define undue burden as meaning "significant difficulty or expense" and provide various factors to be considered in making this determination. When the ADA was enacted in 1990, the technology for closed captioning was limited. The legislative history of the ADA did not specifically discuss closed captions, but did discuss open captioning. Open captioning was not seen as required by the ADA, but open captioned versions of films were encouraged and theaters were encouraged to have some preannounced screenings of open captioned films. The House Education and Labor Committee report also emphasized that advances in technology may change what the ADA requires: The Committee wishes to make it clear that technological advances can be expected to further enhance options for making meaningful and effective opportunities available to individuals with disabilities. Such advances may require public accommodations to provide auxiliary aids and services in the future which today would not be required because they would be held to impose undue burdens on such entities. On July 26, 2010, the 20 th anniversary of the enactment of the ADA, DOJ issued an advance notice of proposed rulemaking (ANPR) regarding movie captioning and video description. DOJ examined the ADA's statutory language and found that "given the present state of technology, we believe that requirements of captioning and video description fit comfortably within the statutory text." Although DOJ had raised some questions regarding closed captioning and video description in its 2008 notice of proposed rulemaking, no regulations on the subject were proposed, and none were included in the final rule. In the ANPR, DOJ sought further public comment on several new issues and technical questions as well as the implications of the conversion to digital cinema for potential regulations. The issues DOJ sought public comment on included the following: the implications of a sliding compliance schedule; the appropriate basis for calculating the number of movies that will be captioned and video described; whether movie theater owners and operators should be given the option to use open captioning; the number of movie theater owners or operators who have converted to digital cinema; whether there are specific protocols or standards for captioning and video description for digital cinema; whether DOJ should require a system of notifying individuals with disabilities in advance as to which movies provide captioning and video description; whether DOJ should consider a training requirement for movie theater personnel; and whether a proposed rule should be considered an economically significant regulatory act and, if so, are there alternative regulatory approaches to minimize such impact. The Ninth Circuit in Arizona v. Harkins Amusement Enterprise s became the first court of appeals to address the ADA's requirements concerning closed captioning and video descriptions. The court held that closed captioning and video descriptions may be required by the ADA, but are subject to the ADA's fundamental alteration and undue burden exceptions. Harkins involved a suit by two patrons of a theater, one with a hearing impairment and one with impaired vision. They alleged that the theater owners discriminated against them by not providing open or closed captioning and descriptive narration. The court examined the statutory language of the ADA, emphasizing the requirement for auxiliary aids and services and finding that "movie captioning and audio descriptions clearly are auxiliary aids and services." Rejecting the defendant's argument that captioning and descriptive narration fall outside the scope of the ADA , the Ninth Circuit noted that the ADA makes it discriminatory to fail to take steps to ensure that an individual with a disability is not excluded "because of the absence of auxiliary aids and services." The defendant also argued that DOJ's regulatory commentary specifically did not require open captioning, and the court agreed that the defendant should be able to rely on the plain meaning of DOJ's commentary until it was revised. However, the commentary did not address closed captioning, and the court returned to the statutory language regarding auxiliary aids for its analysis, finding that closed captioning and descriptive narration "fall comfortably within the scope of this definition." In addition, the court noted that several defenses were available to the defendant, including the arguments that closed captioning and descriptive narration would fundamentally alter the nature of its services or constitute an undue burden. Although the Ninth Circuit's decision is only binding in that circuit, its decision provided an added impetus to DOJ's consideration of regulations in the area.

The Americans with Disabilities Act (ADA) is a broad civil rights statute prohibiting discrimination against individuals with disabilities. Title III of the ADA prohibits discrimination by public accommodations, which are defined to include movie theaters, but the statute does not include specific language on closed captioning or video description. Although the Department of Justice (DOJ) has promulgated regulations under Title III, it has not specifically addressed issues regarding closed captioning or video description. However, DOJ has issued an advance notice of proposed rulemaking (ANPR) to establish requirements for closed captioning and video description for movie theaters. The ANPR asks for input in several areas including the implications of a sliding compliance schedule, and the appropriate basis for calculating the number of movies that will be captioned and video described. In addition, the Ninth Circuit, in the first federal court of appeals case to address the issue, held that the ADA requires the provision of closed captioning and descriptive narration in movie theaters unless to do so would be a fundamental alteration or an undue burden.

Canada and the United States have open borders for waste shipments, and waste has flowed across the border in both directions for years. The federal government does not report data regarding such shipments, but information is available from Environment Canada, the Ontario Ministry of the Environment, and from some U.S. states. According to these sources, the United States appears to be a net exporter to Canada of hazardous waste; but, because of plentiful landfill capacity, low-cost disposal options, and existing contractual arrangements, the United States is a much larger net importer from Canada of non -hazardous solid waste. The latter category can include municipal solid waste (MSW), construction and demolition (C&D) waste, medical waste, and non-hazardous industrial waste. Under a 1986 agreement between the United States and Canada, shipments of hazardous waste require notification to the importing country and that country's consent before waste may be shipped. The notification must include the exporter's identity; a description of the waste; the frequency or rate at which the waste will be imported; the total quantity of the waste; the point of entry; the identity of the transporter, means of transport, and type of containers; the identity of the consignee; a description of the manner in which the waste will be treated, stored, or disposed; and the approximate date of the first shipment. The receiving country is given 30 days from the date it receives notice to indicate its consent (conditional or not) or its objection to the shipment. If no response is received within the 30-day period, the importing country is considered to have no objection. Consent is not irrevocable: whether express, tacit, or conditional, the importing country's consent may be withdrawn or modified for good cause. The bilateral hazardous waste agreement was amended in 1992 to establish similar requirements for municipal solid waste, but, for lack of legislative authority, the amendment was never implemented. It is these unregulated shipments of non-hazardous waste, principally municipal solid waste, that have proven controversial. Lacking notification or consent requirements for MSW, many state governments do require the operators of solid waste management facilities to report the origin of waste they have received for disposal after the fact, on a quarterly or an annual basis. According to these data, entities in the Canadian province of Ontario have shipped major quantities of waste (principally MSW and C&D waste) to the United States in recent years. State waste reporting requirements are not uniform: the reporting periods vary, as do the methods used by states to collect the data; some states don't collect data at all, although one can often find a knowledgeable official willing to provide an estimate. Using these sources, CRS has from time to time compiled the existing state data, in an attempt to provide comprehensive and comparable estimates. Our latest survey, published in June 2007, indicated that Michigan received 3,781,171 tons of municipal solid waste from Ontario in FY2005 (October 2004-September 2005). New York, the second largest recipient, received 195,228 tons from Ontario in calendar year 2005. The only other recipient we identified was the state of Washington, which received 101,834 tons from the Canadian province of British Columbia in 2005. The proportions are consistent with amounts reported in earlier years. Thus, it appears that more than 90% of the solid waste that Canada ships to the United States has gone to Michigan. The remainder has generally gone to the states of New York and Washington. While somewhat controversial throughout the 1990s, Canadian waste imports have received much greater attention since late 2002, when the city of Toronto—Canada's largest city—announced that it would close its last landfill and begin shipping all of its waste to Michigan. Canada's shipments of waste to Michigan increased 83% between then and fiscal year 2006. In FY2006, Michigan reported that it received 12,084,907 cubic yards (an estimated 4.03 million tons) of non-hazardous waste from Canada. Canada accounted for 19.5% of all the waste disposed in Michigan landfills in that year. Canadian waste imports decreased 9% in FY2007, to 10,982,984 cubic yards (about 3.66 million tons), but still accounted for 18.9% of the waste disposed in Michigan landfills. Since the late 1980s, Michigan has attempted to restrict imports of waste. In 1992, however, in Fort Gratiot Sanitary Landfill v. Michigan DNR , waste import restrictions authorized by the state were held unconstitutional by the U.S. Supreme Court. Under Article I, Section 8 of the U.S. Constitution, Congress is given power to regulate interstate and foreign commerce; in a long series of cases beginning in the 1800s the Court has held that this grant of authority to Congress implies a prohibition of state actions to discriminate against interstate and foreign commerce, absent the consent of Congress. Providing congressional consent is the goal of numerous bills that have been introduced in Congress. In the 109 th Congress, the most prominent of these bills was H.R. 2491 (Gillmor), which was reported by the House Energy and Commerce Committee on September 27, 2005, and passed the House by voice vote, September 6, 2006. Similar legislation ( H.R. 518 ) was introduced by Representative Dingell in the 110 th Congress, was reported by the Energy and Commerce Committee ( H.Rept. 110-81 ) March 29, 2007, and passed the House by voice vote, April 24, 2007. As of January 2008, there has been no action on the bill in the Senate. H.R. 518 would implement the bilateral U.S.-Canada waste trade agreement, as amended in 1992 to deal with municipal solid waste shipments between the two countries. It would require the EPA Administrator to perform the functions of the Designated Authority under the agreement and require him to implement and enforce the agreement's notice and consent requirements. In considering whether to consent to waste importation, the EPA Administrator would be required, in the words of the bill, to "give substantial weight to the views of the State or States into which the municipal solid waste is to be imported, and consider the views of the local government with jurisdiction over the location where the waste is to be disposed." The Administrator would also be required to consider the impact of the importation on continued public support for and adherence to state and local recycling programs, landfill capacity, and air emissions and road deterioration from increased vehicular traffic, and to consider the impact of the importation on homeland security, public health, and the environment. The bill would also authorize states to restrict imports of foreign MSW, provided they do so prior to the bilateral agreement's implementation. Under the latter provision, states would have a window of up to 24 months after the bill's enactment to impose restrictions of their choosing on the receipt of foreign MSW, and those regulations could remain in effect as long as the state desires. Michigan has already enacted legislation that would go into effect if this provision of H.R. 518 were enacted. On March 9, 2006, the Governor signed H.B. 5176, which prohibits the delivery and acceptance for disposal in Michigan of MSW generated outside of the United States, once Congress authorizes such prohibitions. In the 109 th Congress, H.R. 5441 , the Department of Homeland Security (DHS) FY2007 Appropriations bill, as amended by the Senate July 13, 2006, also contained provisions that would have discouraged Canadian waste imports. An amendment submitted by Senator Stabenow (for herself, Senator Levin, and Senator Baucus) provided for inspections of international shipments of MSW, and required the Secretary of Homeland Security to levy a fee to cover the approximate cost of such inspections. In a floor statement, Senator Stabenow explained the effect of the amendment as follows: Based on information provided by the inspector general [of the Department of Homeland Security], we know that it will take four Customs agents about 4 hours for each trash truck inspection. Based on personnel and administrative costs, we estimate that the fee for each trash truck will be approximately $420. A separate amendment, introduced by Senator Levin (with the co-sponsorship of Senators Stabenow and Voinovich) and also approved in the Senate by unanimous consent, would have required that the Secretary of Homeland Security deny entry into the United States to trucks carrying MSW unless he certifies to Congress that the methodologies and technologies used by the Bureau of Customs and Border Protection to detect the presence of chemical, nuclear, biological, and radiological weapons in municipal solid waste are as effective as those used to screen for such materials in other items of commerce entering the United States in commercial motor vehicles. Following passage of the Stabenow and Levin amendments, on August 30, 2006, the Ontario Ministry of the Environment reached an agreement with the two Senators, under which Ontario will eliminate shipments of municipally managed waste to Michigan by the end of 2010. In return, the Senators agreed not to pursue passage of the inspection fee and certification provisions in the Homeland Security Appropriations bill or to "pursue similar current or future measures." The inspection fee and certification provisions were deleted in conference, and the bill was signed by the President October 4, 2006. On September 19, 2006, Toronto's City Council approved a letter of intent to purchase a landfill near London, Ontario, where it is expected to ship its waste as it phases out shipments to Michigan. In FY2007, shipments of solid waste from Ontario to Michigan declined for the first time since FY1999. The steps taken by Congress in beginning to move legislation, as well as the separate legislation enacted by the state of Michigan, clearly played a role in bringing about the exchange of letters with Ontario. But large issues remain. Issues remaining to be addressed include some posed by the exchange of letters and others posed by H.R. 518 . The agreement reached by the two Michigan Senators in their exchange of letters with Ontario's Minister of the Environment would address a portion of the waste shipped from Ontario to Michigan, but it would not eliminate the majority of it. The letters refer to "municipally managed waste," and specifically use a 2005 baseline amount of 1.34 million tonnes of municipal waste shipped. Accompanying materials from the Ministry of the Environment, however, note that in 2005, "4 million tonnes of waste were exported to the U.S., with 90% of this waste being sent to Michigan landfills." Thus, Ontario's commitment appears to cover only one-third of the waste shipped from the province to the United States, or 37% of the waste it shipped to Michigan. The reason for excluding the majority of the waste is that it is not "municipally managed"—it is waste collected by private haulers and shipped to Michigan landfills under private contracts. These wastes are shipped to Michigan either because it provides lower cost disposal options or because the landfills in Michigan are controlled by the same company that collects the waste in Canada. The provincial government and the local governments within the province have no authority to prevent these private waste shipments from leaving Ontario. Thus, the province has committed to eliminate what it can, i.e., that portion of the waste that is municipally managed. Second, the exchange of letters addresses the shipment of these wastes to Michigan, but not to other U.S. states. Given the subsequent action by the Toronto City Council, it would appear that when the waste is diverted from Michigan, it will be shipped to a site in Ontario; but nothing in the letters would prevent the waste being shipped to other U.S. landfills instead of those in Michigan. Third, the exchange of letters represents voluntary, good faith commitments by the parties. It is not a treaty or an international agreement and does not provide the enforcement provisions or penalties that legislation might offer. To summarize, those who continue to be concerned about Canadian waste shipments are likely to note that the exchange of letters does not address two-thirds of the waste being shipped, does not protect states other than Michigan, and contains no enforcement provisions. Addressing these issues would require congressional action. H.R. 518 , by contrast, would apply to private contracts, would apply to all 50 states, and would provide for enforcement. The bill would clarify that actions taken under its authority shall not be considered to impose an undue burden on interstate or foreign commerce, and thus would be immune to challenge under the Commerce Clause of the Constitution. But the effect of the bill might still be uncertain. In Section 4011(a)(3), it states, "Nothing in this section affects, replaces, or amends prior law relating to the need for consistency with international trade obligations." The bill, thus, appears to recognize that U.S. trade agreements would have a role to play in defining the scope of the states' authority to act pursuant to the legislation. It is not clear how these obligations and the bill's grant of authority to the states to restrict waste imports would ultimately be reconciled. Opponents of the bill, including the National Solid Wastes Management Association (which represents the U.S. waste management industry), have already made clear their intention to challenge its provisions in court if it is enacted; this issue would presumably be among the provisions litigated.

Private waste haulers and Canadian cities—including the city of Toronto—ship large quantities of waste to the United States. About four million tons (as many as 400 truckloads a day) have been shipped annually since 2004, according to receiving states. Nearly three-quarters of this waste has gone to two large landfills near Detroit. The influx of waste has been highly controversial, in part because the ability of state and local governments to restrict it is limited. Under court rulings concerning the U.S. Constitution's Commerce Clause, only Congress can authorize restrictions that discriminate against foreign waste. Thus, for several years, the state of Michigan and the Michigan congressional delegation have pressed Congress for action. Legislation to provide limited authority to restrict waste imports, H.R. 518, was introduced early in the 110th Congress by Representative Dingell, with the co-sponsorship of the entire Michigan delegation. The bill was reported by the Energy and Commerce Committee March 29, and passed the House, by voice vote, April 24, 2007. Congress began to focus on this issue in the summer of 2006. In July of that year, in the Department of Homeland Security appropriations bill (H.R. 5441), the Senate approved the establishment of an inspection program for waste imports that might have added more than $400 in fees to the cost of importing a truckload of waste. In early September, the House passed legislation similar to H.R. 518 (H.R. 2491 in the 109th Congress), which would have given states limited authority to restrict waste imports. In between these actions, an agreement was reached between Michigan's two Senators and the Ontario Ministry of the Environment, under which Ontario will eliminate shipments of municipally managed waste to Michigan by the end of 2010. The steps taken by Congress in beginning to move legislation, as well as separate legislation enacted by the state of Michigan, clearly played a role in bringing about the voluntary agreement between Michigan's two Senators and Ontario. But large issues remain. The agreement is not a treaty or an international agreement, so it does not formally bind the United States or Canada or the parties shipping and receiving the waste. Assuming that its provisions are adhered to by Ontario's waste managers, it still would not address two-thirds of the waste being shipped to Michigan (i.e., the waste being managed by private waste management firms), and it would not affect waste shipments to states other than Michigan. This report provides background information on the history of Canadian waste imports, reviews congressional developments, and discusses issues raised by the voluntary agreement and legislation.

D etermining whether aliens who enter or remain in the United States in violation of federal immigration law (called unlawfully present aliens for purposes of this report) are permitted to claim refundable tax credits under federal law requires answering two questions. The first is whether these individuals may claim the credits under the Internal Revenue Code (IRC). The second is whether any refundable tax credits are "Federal public benefits" under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), in which case it could be argued that any such credit should be disallowed to unlawfully present aliens regardless of whether the IRC contains such a restriction. This report first provides a list of refundable tax credits and then examines these two questions. Tax credits reduce a taxpayer's tax liability dollar-for-dollar, up to the value of the credit. Refundable credits, unlike nonrefundable credits, can be larger than a taxpayer's income tax liability, with the taxpayer receiving the difference as a cash payment from the IRS in the form of a tax refund. Table 1 lists the current and recently expired refundable tax credits. A list of CRS reports that provide information on these credits can be found in the Appendix to this report. The first question in determining whether unlawfully present aliens may claim refundable tax credits is whether this is permitted under the Internal Revenue Code (IRC). There is no general rule in the IRC that prohibits unlawfully present aliens from claiming refundable tax credits. Rather, the restrictions that exist are established on a credit-by-credit basis. As discussed below, there are three types of restrictions: (1) prohibitions on nonresident aliens (defined below) from claiming a credit; (2) requirements that taxpayers provide Social Security numbers (SSNs) in order to claim a credit; and (3) a restriction that only aliens who are "lawfully present" may claim a credit. Some credits are denied to nonresident aliens, and thus any unlawfully present alien who is a nonresident alien would be ineligible to claim them. For purposes of federal income tax law, individuals who are not U.S. citizens are classified as being either a resident or nonresident alien. In general, an individual is a resident alien if he or she is a lawful permanent resident (LPR) at any time during the year or is present in the United States for a significant period of time during the current and previous two years ("substantial presence test"). In general, other noncitizens are nonresident aliens. Unlawfully present aliens are categorized as either a resident or nonresident alien under these same rules. As shown in Table 2 , only two existing credits—the EITC and American Opportunity tax credit—contain provisions denying the credit to nonresident aliens. Two recently expired credits—the Making Work Pay credit and the 2008 stimulus credit—were denied to nonresident aliens, and the now-expired First-Time Homebuyer credit was not available for purchases by nonresident aliens. Some credits are denied to taxpayers without Social Security numbers (SSNs). As shown in Table 2 , only the EITC currently contains an SSN requirement. In order to claim the EITC, taxpayers must provide SSNs for themselves, a spouse if filing a joint return, and any qualifying children. The SSNs must be valid for work purposes (i.e., the SSN holder is authorized to work in the United States). Some aliens have SSNs that are issued for non-work purposes, but individuals with these types of SSNs may not claim the EITC. The now-expired Making Work Pay and 2008 stimulus credits contained SSN requirements, although they did not specify that the SSN be valid for work purposes. Also, for the 2008 stimulus credit, the SSN requirement did not apply to a joint return if at least one spouse was a member of the Armed Forces during the taxable year. One issue that arises with SSN requirements for tax credits is that some resident aliens who are currently not lawfully present may have once lawfully received an SSN and could attempt to use the SSN to claim a credit. While the statutory language is silent on this matter, it appears Congress intended to limit the EITC and 2008 stimulus credit to taxpayers currently authorized to work in the United States. For the other refundable credits, such as the additional child tax credit, taxpayers may claim the credit using an SSN or an individual taxable identification number (ITIN). ITINs are issued by the IRS to taxpayers who are not eligible for SSNs. ITINs are unique identifying numbers that these individuals use to file tax returns and otherwise comply with their federal tax law responsibilities. Being assigned an ITIN does not affect an individual's immigration status, and unlawfully present aliens may receive ITINs. A legal requirement that a taxpayer provide an SSN in order to claim a credit is not duplicative of a restriction that denies nonresident aliens from claiming the credit. Having an SSN or ITIN does not denote whether an individual is a resident or nonresident alien. Some resident aliens are ineligible for SSNs and therefore have ITINs, while some nonresident aliens have SSNs. Under the Patient Protection and Affordable Care Act ( P.L. 111-148 , ACA), individuals who buy health insurance through an exchange are eligible for a refundable premium assistance tax credit. Aliens who are not "lawfully present," as that term is defined in regulations implementing ACA, are ineligible for the credit. This is because the credit is only available for months during which a person purchases health insurance through the ACA exchanges, and aliens who are not "lawfully present" are prohibited from buying insurance through an exchange. However, an individual who is not "lawfully present" may claim the credit for an eligible family member (for example, a parent who is not "lawfully present" may file a tax return claiming the credit if he or she has children who meet the credit's qualifications). The second question is whether any refundable tax credits are subject to Section 401 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), which generally bars unlawfully present aliens from receiving any "Federal public benefit." If any refundable tax credit is such a benefit, it could be argued that aliens subject to Section 401's restrictions may not claim the credit, regardless of whether the IRC contains such a prohibition. "Federal public benefit" is defined in Section 401(c)(1) as, (A) any grant, contract, loan, professional license, or commercial license provided by an agency of the United States or by appropriated funds of the United States; and (B) any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States. It appears the IRS permits unlawfully present aliens to claim any refundable tax credit that is not restricted under the IRC. In other words, while the IRS has not released a public statement or guidance on this issue, it appears the agency does not consider any refundable tax credits to be subject to Section 401. No court has examined the issue of whether refundable tax credits are federal public benefits under PRWORA. So long as the IRS permits unlawfully present aliens to claim any credit without an IRC restriction, there is a question as to whether that position could be challenged in court. This is because it appears doubtful that anyone would be personally injured—a necessary prerequisite to have standing to sue —by the IRS's decision to allow the credit. Thus, if the IRS does not interpret Section 401 to include refundable tax credits, this could be a de facto permissible interpretation by the agency, unless Congress were to address the matter legislatively. If the issue were to come before a court, there appears to be support for the IRS's apparent determination that refundable credits are not federal public benefits. For example, Section 401 does not expressly include refundable tax credits, and it could therefore be argued that Congress did not include them in the list of federal public benefits because it understood them to be excluded. One could also argue that refundable tax credits are not federal public benefits because tax benefits are not traditionally thought of as the types of "grants" or qualifying "benefits" referred to in Section 401, and there is no clear evidence in the legislative history that Congress intended such credits to be treated as such. Additional support could be found in PRWORA Section 432(a), which directs the Attorney General to consult with the Secretary of Health and Human Services when promulgating regulations for verifying the immigration status of applicants for federal benefits, but does not require consultation with the Treasury Department, thus arguably suggesting tax benefits were understood not to be affected. Support might also be found in other congressional action: Congress included in PRWORA an SSN requirement for the EITC and subsequently enacted legislation to impose an SSN requirement for the 2008 stimulus and Making Work Pay credits and to deny the premium assistance credit to unlawfully present aliens. These actions would arguably be unnecessary had Congress believed that PRWORA Section 401 applied to refundable tax credits. On the other hand, it might be argued that at least some refundable tax credits could be a "grant" under Section 401(c)(1)(A) or a "benefit" under Section 401(c)(1)(B). Since the key terms are not defined statutorily nor do they appear to be terms of art (i.e., have a generally accepted meaning in law), a court might look to their customary and ordinary meanings. In general, "grant" is defined as "a sum of money given by an organization, especially a government, for a particular purpose"; "benefit" is "a payment made by the state or an insurance scheme to someone entitled to receive it"; and "assistance" is "the provision of money, resources, or information to help someone." Furthermore, in other contexts, courts have interpreted "other similar benefits" in PRWORA to mean services that "assist people with economic hardship" or could potentially "create [an] incentive for illegal immigration." These definitions might support the argument that some refundable tax credits could be federal public benefits due to their refundable nature and purpose. Such a determination would likely depend on the specific characteristics of each credit. For example, in other contexts, courts have held the EITC to be public assistance for purposes of state law because of its refundable, grant-like nature and purpose of assisting low-income families. However, some courts have held that the child tax credit is not such a benefit since, unlike the EITC, it is not limited to assisting low-income families. As these cases illustrate, a court might not reach the same conclusion for each credit, concluding that some would meet the criteria while others would not, depending on the specific characteristics of each credit. There appears to be justification for concluding that refundable tax credits are not federal public benefits under PRWORA Section 401, but there is also arguably support for determining that some might be, depending on their characteristics and purpose. Until the IRS, a court, or Congress addresses whether any refundable credits are federal public benefits, the only clear restrictions on the ability of aliens to claim them are those found in the IRC (see Table 2 ). The following CRS reports provide information on specific refundable tax credits: Earned Income Tax Credit: CRS Report R43805, The Earned Income Tax Credit (EITC): An Overview , by [author name scrubbed] and [author name scrubbed]. Additional Child Tax Credit: CRS Report R41873, The Child Tax Credit: Current Law and Legislative History , by [author name scrubbed]. American Opportunity Tax Credit: CRS Report R41967, Higher Education Tax Benefits: Brief Overview and Budgetary Effects , by [author name scrubbed]. Health Coverage Tax Credit: CRS Report RL32620, Health Coverage Tax Credit , by [author name scrubbed]. Making Work Pay Credit: CRS Report R40969, Withholding of Income Taxes and the Making Work Pay Tax Credit , by [author name scrubbed]. Adoption Tax Credit: CRS Report RL33633, Tax Benefits for Families: Adoption , by [author name scrubbed] First-Time Homebuyer Tax Credit: CRS Report RL34664, The First-Time Homebuyer Tax Credit , by [author name scrubbed].

The question is frequently asked whether aliens who enter or remain in the United States in violation of federal immigration law (called unlawfully present aliens for purposes of this report) are permitted to claim refundable tax credits. There is no general provision in the Internal Revenue Code (IRC) prohibiting unlawfully present aliens from claiming refundable tax credits. Rather, the restrictions that exist are established on a credit-by-credit basis. For example, one credit—the earned income tax credit (EITC)—requires that taxpayers provide work-authorized Social Security numbers (SSNs) for themselves, a spouse if filing a joint return, and any qualifying children. Because of this requirement, aliens who are not authorized to work in the United States are ineligible for the credit. This treatment can be contrasted with another credit, the additional child tax credit, which does not have an SSN requirement and can be claimed by taxpayers regardless of their immigration or work authorization status. A related issue is whether any refundable tax credits are "Federal public benefits" under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). Section 401 of that act disallows such benefits to unlawfully present aliens. If any refundable tax credits were federal public benefits, it could be argued the credits should be disallowed to these aliens, even if the IRC does not contain such a restriction. It appears the IRS does not interpret PRWORA to apply to refundable tax credits. No court has examined this issue, and Congress has not taken any action to address it legislatively. Thus, at this time, the only clear restrictions on the ability of unlawfully present aliens to claim refundable tax credits are those found in the IRC.

Sharp increases in U.S. oil exports in recent years has led to perceptions that these exports are not in the national interest, and have drawn Congressional attention. Oil exports from the United States, which averaged 1.4 million barrels daily (mbd) in 2007, and have increased to a daily average of 1.9 mbd during the period of January-September 2008. This represents roughly 10% of total daily consumption of oil products in the United States. A significant volume of these exports are of heavier oil products that U.S. markets cannot absorb. These include petroleum coke used in the making of steel, and residual fuel that is often used as ship fuel. Exports of these products averaged, respectively, 40,000 b/d and 362,000 b/d annually during the first nine months of 2008. There would be no advantage to keeping these products in the United States as it would be costly or impractical to further refine them into products that could be used in the automotive or residential heating sectors. Some have argued that restricting U.S. oil exports would lower product prices. However, because oil is a commodity in a global market, a prohibition on U.S. exports would not lower crude oil prices. Allowing for oil quality differentials, regional anomalies and the policies of the governments of producing and consuming nations, the price for crude oil and refined products is primarily set by world demand, and not by a nation's dependence on imported oil. Prohibiting U.S. oil exports would compel those purchasing these products to seek elsewhere the supply no longer available from the United States. This would bring about a re-balancing in the flow of oil worldwide, but would have no bearing on world demand and would not materially affect price. However, if the re-balancing in oil trade brings about higher transportation costs and other inefficiencies in world trade, it is possible that some additional pressure could be placed on prices. Additional processing, if feasible, of heavier petroleum products for which there is insufficient domestic demand, would also increase costs. A widespread but erroneous impression persists that the United States is continuing to export crude oil from the Alaska North Slope (ANS). Exports of crude oil from Alaska ended in 2000. The only crude exported from the United States is an insignificant amount which does not originate from Alaska; it averaged 25,000 barrels per day (b/d) during the period of January-September 2008. This report summarizes the history and current trends of U.S. oil exports, and examines proposals to restrict U.S. oil exports as a policy option to lower gasoline and diesel prices. (For information on the ANWR debate, see CRS Report RL33872, Arctic National Wildlife Refuge (ANWR): New Directions in the 110th Congress , by [author name scrubbed], [author name scrubbed], and [author name scrubbed].) When the Arab oil embargo began in late 1973, oil development on Alaska's North Slope had not yet commenced. Oil at Prudhoe Bay was discovered in 1968, but no agreement had been reached on a pipeline destination. Two plans were under consideration. One favored by many policy makers envisioned the oil transiting Canada to a Chicago-area destination. Proponents of this plan pointed out that the Midwest had no indigenous source of crude; those opposing it cited the high cost of such a lengthy and expensive pipeline construction project. The other plan, which ultimately became the route of choice for the Trans-Alaska Pipeline System (TAPS), was to transport crude oil to the southern Alaska seaport of Valdez, where it would be shipped to refiners by tanker. Proponents cited large cost savings and the timeliness of the smaller construction project. Opponents of this plan contended that TAPS sponsors' true intent was to export North Slope crude, a contention denied by TAPS supporters. Midwest destination proponents asserted that exports would run counter to the principle that U.S. oil should be used domestically and remain available for consumption in the United States as a matter of energy security. A pipeline from Prudhoe Bay required transiting a route where much of the right-of-way was on federal lands. The 1973-74 Arab oil embargo brought a new sense of urgency to the debate, and legislation was required to end the stalemate over the route. The compromise, the Trans-Alaska Pipeline Act ( P.L. 93 - 153 ), authorized right-of-way for the shorter pipeline to Valdez. However, the law included a proviso that crude oil transiting the right-of-way granted by Congress would not be exported. TAPS was completed in 1977, and initial oil shipments began to flow by year-end. With continued oilfield development on the North Slope, production climbed steadily for 10 years, peaking at 2.0 million barrels per day (mbd) in 1988. In subsequent years, Alaska North Slope (ANS) output declined, falling to 1.5 mbd in 1995 and continuing downward to current flows of roughly 700,000 bd. During the mid-1990s, California produced about 800,000 bd of crude oil. The combination of California's indigenous production, ANS crude, and foreign oil imports resulted in a regional oil surplus, in part because the West Coast market is isolated from the rest of the country. The local glut depressed prices for both California and ANS producers. Since more crude was available on the West Coast than was needed there at that time, about 300,000 bd of crude were shipped via the Panama Canal to the U.S. Gulf Coast and U.S. Virgin Islands. The West Coast oil glut elicited persistent expressions of concern from oil producers who argued that the ban on the export of Alaskan oil production was distorting the market and causing a decline in the price of West Coast production. However, this was a much different oil market than witnessed in 2008.The price for U.S. production on the mainland had fallen to $15.30 per barrel by 1993; California production was roughly $2-$3 per barrel cheaper. California oil producers argued that an increase of $1-$2 per barrel would be sufficient incentive to increase production and create jobs. A June 1994 DOE study, Exporting Alaskan North Slope Crude Oil—Benefits and Costs , found that exporting Alaska crude would increase producer receipts for both California and Alaska oil. The increased producer receipts would be the result of transportation savings realized by avoiding a trip through the Panama Canal. Additionally, DOE estimated that lifting the ban would create 16,000 jobs in the near-term, and predicted that larger producer revenues at the wellhead would result in 100,000 bd more output from Alaska and California than would be the case with continued export restriction. Interest in revisiting the statute prohibiting Alaskan oil exports grew in 1995, when low world oil prices, a relatively benign level of net oil imports (8.0 mbd, in contrast to a current level exceeding 12 mbd), and a supportive Department of Energy (DOE) coincided with renewed legislative efforts in both Houses of Congress. Bills introduced in the 104 th Congress to repeal the ban ( H.R. 70 and S. 395 ) passed by large margins, 324-77 and 74-25 respectively. The Clinton Administration supported ANS crude exports and the President signed P.L. 104 - 58 in November 1995. The first commercial tanker carrying ANS oil to a foreign country departed Valdez on May 31, 1996, approximately six months after the legislation lifting the ban was enacted. In a 1999 report, the General Accounting Office estimated that lifting the ban on Alaskan oil exports had increased California crude oil prices by $.98-$1.30 barrel higher than they would have been had the ban remained in place. Exports of ANS oil totaled 36,000 bd in 1996; they grew to 66,500 bd in 1997, dipped slightly to 52,900 in 1998, and rose to a high of 74,000 bd in 1999. According to unpublished DOE figures, during 1999, Korea (50%), Japan (36%), and China (12%) imported nearly all ANS exports. The list of customers for this oil remained the same throughout the period. Before ANS exports stopped in May 2000, the result of ownership changes and falling output, about 7% of North Slope output was shipped abroad. Viewed relative to total domestic consumption of 19.3 mbd in 2000, these exports comprised less than one-half of one percent. While the export ban was under debate during 1995, the United States was already exporting nearly 900,000 bd—28% in the form of petroleum coke, which is used in making steel. During the period of January through June 2008, exports have averaged 1.7 mbd, of which petroleum coke exports have averaged roughly 22%. Finished motor gasoline represents roughly 9.5% of exports, distillates (the portion of the barrel from which diesel fuel and home heating oil are refined) comprise a little less than 25%. Residual fuel oil averaged less than 22%. During this period, approximately 35% of total U.S. oil exports went to Canada and Mexico in cross-border trades. Oil is a commodity in a global market. Restricting U.S. oil exports would not lead to lower prices for products such as gasoline and diesel fuel. Except in nations where the price of petroleum products is controlled, consumers worldwide pay the prevailing market price, taking into account the quality of the crude, the refining process, taxes, and distribution to points-of-sale. In an unregulated market, economic theory holds that commodities find the most efficient and economic pattern of distribution at market prices. As has been noted, most U.S. oil exports are of products the U.S. market cannot use or absorb. Additionally, prohibiting U.S. oil exports would compel customers for those exports to seek the supply no longer provided by the U.S. elsewhere. This would have no bearing on world demand for crude oil. Price is primarily determined by demand, and by expectations that world supply will be able to satisfy it in the future. Consequently, restrictions on U.S. oil exports are highly unlikely to place downward pressure on world crude prices. However, upward pressure might be placed on oil prices. The current worldwide import and export patterns would need to find a new equilibrium, and it could prove to be less economically efficient than currently. For example, the transportation costs of bringing products from elsewhere might be greater than from the United States. While a reduction in U.S. dependence on petroleum imports could reduce anxiety about the adequacy of supply during an incident that reduced world oil production for a time, a disruption in production from any supplier will affect the price for oil paid by all, no matter how dependent or independent they may be on imported oil.

Concern about exports of United States crude oil, gasoline, diesel fuel and home heating oil periodically draws Congressional attention to the level of these exports, recently observed to increase from 1.4 million barrels daily in 2007, to nearly 1.9 mbd during January-September 2008. Some policymakers have suggested that prohibiting oil exports would lower prices. Legislation introduced in the 110th Congress (H.R. 6515, S. 2598) included provisions prohibiting some or all oil exports, or would have reimposed the ban on Alaskan oil exports; but no bills received major attention. Virtually all U.S. oil exports are of refined products, and no crude is exported from the West Coast. A trickle of crude oil, in a range of 25,000 barrels per day during the first nine months of 2008, is sent to Canada from the upper Midwest. However, as Canada is the largest supplier of crude oil to the United States, providing nearly 1.9 mbd in 2008 (also through September), the U.S. crude sent to Canada is of limited significance. The United States does export some gasoline to Canada and Mexico, and middle distillates to Latin America, but some of this product would not meet U.S. environmental standards. An additional roughly 40% of U.S. oil exports are of "heavier" products, such as residual fuel oil and petroleum coke, for which there is insufficient market in the United States. Because the market for oil is global, a prohibition on U.S. oil exports would have negligible effect on price. Such a restriction would only cause a rebalancing in the movement of petroleum because countries that had purchased U.S. oil products would need to find them from other suppliers. Restrictions on exports might, in fact, create inefficiencies in the movement of world oil supplies that could foster less optimal distribution of oil and possibly lead to higher prices in some markets.

Industry observers have raised concerns about perceived gaps in food import safety over the past few years. One particular area of concern focuses on imported goods that are released into the United States market after the Food and Drug Administration (FDA) detains them under an import alert. Generally, these goods may be released into the market after an importer "provides evidence that the entry is in compliance with federal laws and regulations." The proof can be provided by private laboratories that have tested samples of the detained imported goods, and importers can present results indicating that the goods are FDA-compliant. Currently, the FDA does not have express statutory authority to regulate the private laboratories that sample or test these imported goods, although the FDA regulates the importer and imported products. This report focuses on proposals for FDA regulation of the private laboratories that analyze imported, FDA-regulated goods. It provides background on the relationship between the FDA and the private laboratories, as well as information about agency and Bush Administration proposals and legislative responses in the 110 th Congress (particularly the Dingell Draft, S. 2418 , H.R. 5904 , and H.R. 5827 ) to the current lack of regulation. Administrative responsibility for regulation of certain types of imported food is delegated to the FDA under Chapter VIII of the Federal Food, Drug and Cosmetic Act (FFDCA). Generally, the FFDCA provides that an article must be refused admission into the United States, with some exceptions, on the following bases: [i]f it appears from the examination of [samples of food, drugs, devices, and cosmetics which are being imported or offered for import into the United States] or otherwise that (1) such article has been manufactured, processed, or packed under insanitary conditions ..., or (2) such article is forbidden or restricted in sale in the country in which it was produced or from which it was exported, or (3) such article is adulterated, misbranded, or in violation of section 505. Under the FFDCA, the FDA can automatically detain a product without physically examining it. Automatic detention occurs as a result of the issuance of import alerts, which "identify problem commodities and/or shippers and/or importers and provide guidance for import coverage," such as if "those products or shippers ... have met the criteria for automatic detention." Importers whose products have been detained because of import alerts can petition for the release of their products by presenting testimony from private, or third-party, laboratories that shows that their products are compliant. In order to do this, they submit either their products or samples of their products for testing to the private laboratories. For the products to be released, the private laboratories must then present test results that indicate that the products do not violate the FDA's entry standards. The test results can be returned to the importer, who will give it to the FDA, or the lab can turn in the results directly to the FDA. The FDA may then use this data "to determine whether the imported food complies with the [FFDCA] and can be released into the United States." The FDA has recognized these private laboratories as an integral part of food import safety. According to the FDA, the third-party labs help ensure that the food reaching the market complies with agency standards and allow agency laboratory resources to be devoted to other regulatory matters. However, there has been criticism regarding the autonomy given to the importers and private laboratories. Such criticism varies from the manner in which the samples are collected for testing to the reporting of test results by the importers to the FDA. For example, at a 1998 hearing before a Senate Governmental Affairs subcommittee, a former customs broker testified regarding the abuses of the private laboratory system in relation to the product samples given to the private laboratory. He recounted how some importers selected samples for testing that were from shipments that had not been detained or they submitted multiple samples for testing until a sample was found to be compliant. As the FDA has noted, "[b]oth of these activities permit importers to market adulterated or misbranded foods in the United States, representing a health hazard." Another example occurred early in 2008, when the chairman of a private laboratory that samples and tests FDA-regulated goods testified at a House Energy and Commerce subcommittee hearing. His testimony concerned encounters with importers who deleted information from test results that evidenced FDA violations and then submitted the altered results to the FDA, as well as suggestions for improving the FDA's regulation of imported foods via the use of laboratories and existing FDA programs. Additionally, he stated that the FDA should be able to visit and audit laboratories at their physical location at any time. Currently, the FDA may conduct voluntary, on-site assessments of such laboratories. Recent agency, administration, and legislative proposals address various ways to curb the potential for such abuses by monitoring private laboratories. The FDA Office of Regulatory Affairs publishes a Laboratory Manual with a section on Private Laboratory Guidance. The Guidance "seeks to establish a uniform, systematic, and effective approach to ensuring that private labs performing analyses on FDA-regulated imported commodities submit scientifically sound data." To that end, the Guidance provides recommendations on sampling techniques, information regarding the training and experience of private lab analysts, considerations for reviewing the analytical packages, and suggested criteria for collecting audit samples. In general, a guidance document is a type of policy statement, "issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power." General statements of policy do not "impose any rights and obligations," nor do they "establish a 'binding norm'" because they are "not finally determinative of the issues or rights to which [they are] addressed." In April 2004, the FDA proposed a rule to regulate imported food product sampling services and private laboratories. It was withdrawn without comment on August 5, 2005. Some of the recommendations from the FDA's Laboratory Guidance were put forth in the proposed rule. The proposed rule would have required "samples to be properly identified, collected and maintained." The proposed sampling requirements outlined specific provisions for identification, collection, and documentation from the time the sample was collected to the time the sample was delivered to a private laboratory. Particularly, the proposed rule placed an emphasis on an "independent" execution of the sampling, to ensure that the sampling and the tests are conducted without the importer's influence. It went further to require "laboratories to use validated or recognized analytical methods, and to submit analytical results directly to FDA." It purposefully omitted a laboratory accreditation requirement. In November 2007, the FDA prepared a report entitled the Food Protection Plan . The FDA's plan is integrated with a separate plan, prepared for President Bush by the Interagency Working Group on Import Safety, called an Action Plan for Import Safety . Both reports highlight how the Bush Administration would like to improve food import safety. The Food Protection Plan recommends legislation that would give the FDA the authority to accredit private laboratories. The Action Plan for Import Safety notes that the FDA plans to issue guidance "that would set standards for the sampling and testing of imported products, including the use of accredited private laboratories submitting data to FDA to assist in evaluating whether an appearance of a violation may be resolved." Several bills introduced in the 110 th Congress addressed the issue of private laboratory regulation. One common theme among these legislative proposals is the accreditation or certification of private laboratories. Representative Dingell of the House Committee on Energy and Commerce began circulating a bill in draft form in April 2008. The draft sought to alter the FFDCA in a variety of ways, including by requiring new sampling and testing protocols for food shipments. The Dingell draft would have added a new section to the FFDCA dedicated to the testing of food shipments. The new section would have addressed three areas of food shipment testing: (1) testing in facilities that manufacture, process, pack, or hold food that would not have been certified under the provisions that the bill would have established (in which case accredited laboratories would conduct sampling and testing of each shipment and simultaneously submit the sampling results electronically to the Health and Human Services (HHS) Secretary and the facility owner); (2) testing in like facilities that would have been certified under the bill's provisions (accredited laboratories would conduct sampling and testing of shipments "on a periodic basis specified by the Secretary" and submit the sampling results electronically to the HHS Secretary and the facility owner); and (3) accreditation of laboratories by the HHS Secretary "for the purpose of conducting sampling and testing." The section would have required the Secretary to establish a standard for accreditation and mandated that all certified and non-certified facilities submit all their samples to accredited labs only. The accredited labs would then return the results simultaneously to the FDA and to the importer. The EAT SAFE Act was introduced by Senator Casey in December 2007. The bill would have required private laboratories that conduct tests on FDA-regulated imports to be certified by the agency under a fee-funded certification and audit process developed by the FDA. Laboratories would have had to submit to the agency the results of all tests conducted. The Safe FEAST Act was introduced in April 2008 by Representative Costa. In particular, it would have allowed the HHS Secretary to recognize "qualified" laboratories to test imported foods, once the laboratories have established, to the recognizing agency's satisfaction, that they maintain internal quality systems and meet other criteria. The Secretary would also have been required to establish a registry of such laboratories. Alternative laboratories would have been allowed to test samples as well, but additional requirements, such as the submission of evidence to the Secretary to establish the laboratory's qualifications and the submission to the FDA of all testing results and data, would have been imposed on such laboratories. This bill was introduced by Representative Roskam in April 2008. Among other things, the bill would have required the addition of a section to the FFDCA that would have required the HHS Secretary to certify all private laboratories and sampling services that test imported FDA-regulated goods. Laboratories would have had to allow audits and submit all test results directly to the FDA. In addition, importers, laboratories, and sampling services would have faced civil penalties for knowingly falsifying test results.

Industry observers have raised concerns about perceived gaps in food import safety over the past few years. One particular area of concern focuses on imported goods that are released into the United States market after the Food and Drug Administration (FDA) detains them under an import alert. Generally, these goods may be released into the market after an importer "provides evidence that the entry is in compliance with federal laws and regulations." Currently, the FDA does not have express statutory authority to regulate the private labs that test these imported goods for compliance, although the FDA has authority over the importer and imported products. This report focuses on obstacles to and legislative proposals for FDA regulation of the private laboratories that analyze imported FDA-regulated goods. It provides background to that relationship, as well as information about agency and Bush Administration proposals and legislative responses from the 110th Congress (particularly the Dingell Draft, S. 2418, H.R. 5904, and H.R. 5827) to the lack of regulation.

Foreign assistance law requires Congress to authorize funding for programs before appropriated funds are spent. Through 1985, Congress regularly enacted new authorization legislation or amended the Foreign Assistance Act of 1961, the foundation of U.S. foreign aid policy, to update authorization time frames, and to incorporate newer programs and authorities. After 1986, however, Congress turned more frequently to enacting freestanding authorities that did not amend the 1961 Act, and waived the requirement to authorize funds before making them available in appropriations. The annual foreign operations appropriations bill funds foreign aid programs as they are defined and authorized in the Foreign Assistance Act of 1961, the Arms Export Control Act, and other related Acts. These annual measures, like all appropriations bills that fund executive branch programs and operations, include General Provisions to guide how funds may be spent. Over time, as enactment of foreign aid reauthorizations waned, the General Provisions of foreign operations appropriations measures increasingly have become a legislative option for Congress to assert its views on the role and use of U.S. foreign aid policy, put limits or conditions on assistance, or even authorize new programs. As a result, some contend, General Provisions have become more important. The greater likelihood—relative to authorization proposals, at least—that appropriations measures will be considered in committee, on the floor, in both chambers, and in conference also impacts the attractiveness of serving on an appropriations or authorization committee, and affects the relationship between authorizers and appropriators. This report identifies the legislative origins of General Provisions that pertain to foreign aid in current foreign operations appropriations: Department of State, Foreign Operations, and Related Programs Appropriations Act, 2010 (division F of the Consolidated Appropriations Act, 2010; P.L. 111-117 ; 123 Stat. 3034 at 3312), as continued for Fiscal Year 2011 by the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ; 125 Stat. 38; of which sec. 1101(a)(6) continues appropriations enacted in P.L. 111-117 , and division B, title XI, which provides further instruction for FY2011 foreign operations expenditures). The left column shows the General Provision section and heading, taken from P.L. 111-117 . The right column, in most instances, has two paragraphs per section. The first paragraph identifies in which section the intent or language of the General Provision first appeared, and is taken from annotations the Congressional Research Service prepares for the House Committee on Foreign Affairs and Senate Committee on Foreign Relations for their joint committee print, Legislation on Foreign Relations . The second paragraph establishes the more detailed legislative history of each provision—where and how it first appears that first year (reported out of committee, floor sponsor, or conference committee). Where available, report numbers are included. In some years, detailed information about sponsorship is not available: there is nearly no legislative history trail for new General Provisions introduced in FY2009, for example. Very few of the General Provisions are codified as notes in the U.S. Code. Very few of the General Provisions correspond with sections in the Foreign Assistance Act of 1961. When either condition occurs, it is noted in the right column. Most of the sections have changed over the years. The legislative histories in the right column document the introduction of the concept or intent of the General Provision, not the subsequent changes to that initial idea. Thus, an idea may be introduced and the right column identifies the committee or Member who brought the idea forward, but legislative maps of subsequent alterations, additions, changes in applicability, are not tracked. On occasion, an idea initially stated in a General Provision migrates and is incorporated into the funding titles: requirements of the Chief Executive Officer of the Millennium Challenge Corporation, for example, were first stated in General Provisions but in FY2010 appropriations those requirements were folded into the title III paragraph pertaining to that entity. The goal is solely to identify the emergence of the idea. Frequently, once enacted, a General Provision is continued annually in subsequent foreign operations appropriations measures. If some portion of a section is not carried forward annually, it is noted in the right column. The short titles or popular names of annual foreign operations appropriations have changed over time. In keeping with current jargon, the table refers to each annual measure as a "Foreign Operations Appropriations" with the fiscal year to which it applies. An appendix follows the table, which provides true short titles and popular names along with Public Law numbers. Mutual Security Appropriations Act, 1958 (P.L. 85-853; 72 Stat. 1100) Foreign Assistance and Related Agencies Appropriations Act, 1967 (P.L. 89-691; 80 Stat. 1018) Foreign Assistance and Related Programs Appropriation Act, 1974 (P.L. 93-240; 87 Stat. 1048) Foreign Assistance and Related Programs Appropriations Act, 1976 (P.L. 94-11; 89 Stat. 17) Foreign Assistance and Related Programs Appropriations Act, 1976 [transitional quarter] (P.L. 94-330; 90 Stat. 771) Foreign Assistance and Related Programs Appropriations Act, 1977 (P.L. 94-441; 90 Stat. 1465) Foreign Assistance and Related Programs Appropriations Act, 1978 (P.L. 95-148; 91 Stat. 1230) Foreign Assistance and Related Programs Appropriations Act, 1979 (P.L. 95-481; 92 Stat. 1591) Continuing Appropriations, 1980 (P.L. 96-86; 93 Stat. 656) Continuing Appropriations, 1981 (P.L. 96-536; 94 Stat. 3166) Foreign Assistance and Related Programs Appropriations Act of 1982 (P.L. 97-121; 95 Stat. 1647) Urgent Supplemental Appropriations Act of 1982 (P.L. 97-216; 96 Stat. 180) Further Continuing Appropriations Act, 1983 (P.L. 97-377; 96 Stat. 1830) Continuing Resolution, 1984 (P.L. 98-151; 97 Stat. 964) Foreign Assistance and Related Programs Appropriations Act, 1985 (in Continuing Appropriations Act, 1985) (P.L. 98-473; 98 Stat. 1837 at 1884) Foreign Assistance and Related Programs Appropriations Act, 1986 (in Continuing Appropriations Act, 1986) (P.L. 99-190; 99 Stat. 1185 at 1291) Foreign Assistance and Related Programs Appropriations Act, 1987 (in Continuing Appropriations, 1987) (P.L. 99-591; 100 Stat. 3341 at 3341-214) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1988 (sec. 101(e)) in Continuing Appropriations, 1988) (P.L. 100-202; 101 Stat. 1329 at 1329-131) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1989 (P.L. 100-461; 102 Stat. 2268) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1990 (P.L. 101-167; 103 Stat. 1195 ) Foreign Operations, Export Financing, and Related Programs Appropriations Act 1991 (P.L. 101-513; 104 Stat. 1979) Continuing Appropriations, 1992 (P.L. 102-145; 105 Stat. 968) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1993 (P.L. 102-391; 106 Stat. 1633) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1994 (P.L. 103-87; 107 Stat. 931) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1995 (P.L. 103-306; 108 Stat. 1608) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1996 (P.L. 104-107; 110 Stat. 704) Foreign Operations, Export Financing, and Related Programs Supplemental Appropriations Act, 1997 (title I, sec. 101(c)) in Omnibus Consolidated Appropriations Act, 1997) (P.L. 104-208; 110 Stat. 3009 at 3009-121) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1998 (P.L. 105-118; 111 Stat. 2386) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1999 (in Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999) (P.L. 105-277; 112 Stat. 2681 at 2681-150) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2000 (H.R. 3422, enacted by reference in Consolidated Appropriations Act, 2000) (P.L. 106-113; 113 Stat. 1501) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2001 (P.L. 106-429) Kenneth M. Ludden Foreign Operations, Export Financing and Related Programs Appropriations Act, 2002 (P.L. 107-115; 115 Stat. 2118) Foreign Operations, Export Financing and Related Programs Appropriations Act, 2003 (division E in Consolidated Appropriations Act, 2003) (P.L. 108-7; 117 Stat. 11 at 159) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2004 (division D in Consolidated Appropriations Act, 2004) (P.L. 108-199; 118 Stat. 3 at 143) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2005 (division D in Consolidated Appropriations Act, 2005) (P.L. 108-447; 118 Stat. 2809 at 2968) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2006 (P.L. 109-102; 119 Stat. 2172) 2007: none (2006 continues) Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2008 (division J in Consolidated Appropriations Act, 2008) (P.L. 110-161; 121 Stat. 1844 at 2277) Department of State, Foreign Operations, and Related Programs Appropriations Act, 2009 (division J in Omnibus Appropriations Act, 2009) (P.L. 111-8; 123 Stat. 524 at 831) Department of State, Foreign Operations, and Related Programs Appropriations Act, 2010 (division F in Consolidated Appropriations Act, 2010) (P.L. 111-117; 123 Stat. 3034 at 3312)

This report identifies the legislative origins of General Provisions that pertain to foreign aid in the current Department of State, Foreign Operations, and Related Programs Appropriations Act, 2010 (division F of the Consolidated Appropriations Act, 2010; P.L. 111-117; 123 Stat. 3034 at 3312), as continued for Fiscal Year 2011 by the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (P.L. 112-10; 125 Stat. 38; of which sec. 1101(a)(6) continues appropriations enacted in P.L. 111-117, and division B, title XI, which provides further instruction for FY2011 foreign operations expenditures). Foreign assistance law requires Congress to authorize funding for programs before appropriated funds are spent. Through 1985, Congress regularly enacted new authorization legislation or amended the Foreign Assistance Act of 1961, the foundation of U.S. foreign aid policy, to update authorization time frames, and to incorporate newer programs and authorities. After 1986, however, Congress turned more frequently to enacting freestanding authorities that did not amend the 1961 Act, or included language in annual appropriations measures to waive the requirement to keep authorizations current. Over time, as enactment of foreign aid reauthorizations waned, the General Provisions of foreign operations appropriations measures increasingly became an important legislative place for Congress to assert its views on the role and use of U.S. foreign aid policy, put limits or conditions on assistance, or even authorize new programs.

As a whole, Latin American countries have made significant progress in improving their education systems, particularly in the last two decades. Governments have increased spending on education, expanded cooperation with the United States, the World Bank, and other donors, and pledged to achieve certain educational milestones established through the Organization of American States' Summit of the Americas process. Latin America is close to attaining the Millennium Development Goal (MDG) of having universal primary enrollment by 2015, with 97% of students enrolled in primary school. The region is also making major progress towards ensuring that once enrolled, students complete their primary education. Improvements in basic education have led to an average youth literacy rate of 96%, exceeding the world average rate of 87%. The region has also achieved gender parity in literacy performance and primary school enrollment rates. Unlike most other regions, Latin American countries now have more girls than boys enrolled in secondary schools and universities. In recent years, Latin American governments have implemented a variety of programs to increase the supply of and demand for education in their countries, many of which have specifically targeted disadvantaged students and school districts. In general, the success of those programs has hinged upon the accuracy of their targeting mechanisms in reaching the poorest, most disadvantaged students. One recent review of education interventions in Latin America suggests that providing free textbooks and creating classroom libraries are the most cost-effective ways to improve equity in education. Other interventions that are thought to be effective when implemented in poor districts are in-service teacher training programs and tutoring programs for students. Free food distribution programs, while showing positive effects on some learning outcomes, are not regarded as particularly cost-effective education interventions. On the demand side, many countries in Latin America have successfully boosted enrollments by providing compensatory cash transfers to families in exchange for keeping their children in school. Despite these recent improvements, Latin America's education indicators still lag behind the developed world and many developing countries of comparable income levels in East Asia. Students from Latin America tend to underperform on international assessment tests, even when comparisons are limited to countries with similar income levels. Test scores on national exams for students across all education levels remain low, with students from rural, poor, Afro-descendant, and indigenous households having less access to quality education than the general population. In Brazil, nonwhite students score significantly lower than white students from similar socioeconomic backgrounds on national tests. Across the region, indigenous people complete fewer years of schooling than non-indigenous people and have lower economic returns for each year of schooling completed. These gaps in access to quality education are most pervasive in countries with high levels of income inequality. In addition to equity issues, grade repetition and dropout rates are still high, particularly at the secondary level, with boys tending to have higher dropout rates than girls. This problem is particularly pervasive in the poorer countries of Central America, where dropout rates stood at roughly 52% in Guatemala, 53% in Honduras, and 41% in Nicaragua in 2005. Haiti, the poorest country in the Western Hemisphere, with a primary enrollment rate of some 67% and a primary completion rate of less than 30%, lags far behind other countries in the region on all education indicators. Few governments in Latin America invest the percent of their budgets on education that is recommended by international education experts. Moreover, most governments have devoted a much larger percentage of their education budgets to funding primary schools and subsidizing public universities rather than secondary schools. A recent World Bank study maintains that in order to reach a secondary target enrollment rate of 85%, Latin America would need to double their current resource allocation level for secondary education, which could be difficult given current resource constraints in many countries. The United States has long been a major supporter of education programs in Latin America. Education assistance programs are generally administered by USAID, whereas most educational exchange and scholarship programs are run by the State Department's Bureau of Education and Cultural Affairs (ECA). USAID's Bureau of Latin America and the Caribbean (LAC) implements regional and bilateral education assistance programs in Latin America. Those programs focus on: increasing resources for basic education, providing teacher training, improving the quality of curricula and teaching materials, strengthening parental and community engagement in schools, and increasing access to educational opportunities for disadvantaged youth. In FY2006, the U.S. government provided some $73.4 million in total education assistance to Latin America. Total education assistance fell to roughly $54.4 million in FY2007. The FY2008 request for education in Latin America was reduced again to $39.4 million. There are three major regional education assistance programs supported by USAID in Latin America. In 2001, President Bush established the Centers of Excellence for Teacher Training (CETT) initiative in order to strengthen the quality of literacy instruction offered in Latin America. Since 2002, CETT has provided training and follow-up support to more than 15,000 teachers of Grades 1-3 from fifteen countries in the region. CETT programs are offered at regional training centers located in Peru, Jamaica, and Honduras. CETT plans to have trained a total of 20,000 teachers by 2009, with the aim of improving the basic literacy instruction offered to some 650,000 children. The Partnership for Educational Revitalization in the Americas (PREAL) is a private group that seeks to monitor equity and quality in national and regional education programs in Latin America. It publishes "report cards" on educational performance in each country in the region, compiles and disseminates best practices, and convenes conferences and seminars on education in the Americas. The Cooperative Association of States for Scholarships (CASS) , founded in 1985, provides two-year scholarships for disadvantaged students and rural professionals from Central America, Haiti, and Mexico to community colleges in the United States. The students receive technical and leadership training on how to promote economic and social development in their countries of origin. More than 5,000 individuals have graduated from the CASS program. The CASS program is similar to a past scholarship program, the Caribbean and Latin American Scholarship Program (CLASP), which provided academic and/or technical training in the United States to more than 23,000 individuals from Latin America and the Caribbean between 1985 and 1996. In Latin America, USAID currently provides bilateral education assistance to the Dominican Republic, El Salvador, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, and Peru. Other countries that receive assistance through USAID's regional education programs include Belize, Bolivia, Ecuador, Grenada, Guyana, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago. Many of these country programs are implemented by USAID's partner organizations through the "Equip123" contracting mechanism. Equip 1 programs focus on building education quality in the classroom, school and community. Equip 2 programs aim to improve educational systems and management. Equip 3 programs seek to serve out-of-school youth. The largest bilateral education programs are in Haiti and Honduras. In FY2006, Haiti received $10.4 million to support basic education programs and $2.5 million to support higher education programs. According to USAID, ongoing U.S.-supported education programs have lowered dropout rates and raised the performance of more than 75,000 Haitian youth. In Honduras, USAID has helped the government to develop new curriculum standards and a monthly evaluation system to ensure that students are learning math and reading skills. The chart below displays funding amounts for USAID country education assistance programs for FY2006, FY2007, as well as the FY2008 funding request for each country. The State Department supports and administers most U.S. education and cultural exchange programs, as well as some scholarship programs that benefit Latin American students. In March 2007, President Bush announced the creation of a Partnership for Latin American Youth program, a $75 million initiative over three fiscal years to provide English training for students, home-country and U.S.-based study opportunities, and skills development for high school aged students in Latin America. In 2006, the Study of the United States Institute for Student Leaders brought 35 Latin American undergraduate students to the United States for an intensive course of study on U.S. society, culture, history, and values. In addition, the Fusion Arts Exchange enabled twelve talented undergraduates from the region to participate in intensive academic exchanges with institutions focused on their respective fields of expertise. The best known graduate fellowship program funded by the State Department is the Fulbright Foreign Student Program . The Fulbright Program provides fellowships to foreign graduate students for study and research abroad. In 2007, 389 Latin American students were given Fulbright scholarships to study at U.S. universities. On a recent visit to the region, U.S. Secretary of Education Margaret Spellings said that the United States has begun to regain ground lost to Australia, Canada, and the United Kingdom as the primary destination for Latin American students seeking to studying abroad, despite the additional visa requirements that have been put in place since September 11, 2001. While applications for student visas to the United States have declined in recent years, the number of exchange visas granted to students and professionals from Latin America and other regions has been increasing. The Bureau of Educational and Cultural Affairs (ECA) supports a number of International Visitor Leadership Programs that have enabled young professionals to travel to the United States for training and enrichment programs. In recent years, special efforts have been made to provide opportunities to candidates from diverse ethnic backgrounds, including Afro-Latinos and indigenous groups. ECA also provides visitor programs for foreign educators who teach English as a foreign language and/or American studies through institutes and teaching assistant programs. The Hubert H. Humphrey Fellowship Program brings mid-career professionals from developing countries to the United States for a year of non-degree, graduate-level course work in their field of professional expertise. In 2007, 19 Latin Americans received Humphrey fellowships. The State Department also gives grants to non-governmental organizations (NGOs) for citizen exchange programs. The 2006 grants included an exchange program between immigrant youth in San Diego, California and internally displaced young people in Bogota, Colombia, and a film, mural, and theater exchange project between the Harlem neighborhood of New York City and El Alto and Potosi, Bolivia. In the 110 th Congress, H.R. 176 (Lee), the Shirley A. Chisholm United States-Caribbean Educational Exchange Act of 2007, was passed (371-55) by the House on July 31. It would authorize assistance to the countries of the Caribbean Community (CARICOM) to fund educational development and exchange programs. It would provide two-year scholarships in the United States for secondary students, four years of study for undergraduate students, 30 months of study for graduate students, and up to one year of study for post-graduate students and scholars from CARICOM countries. In return, the students would be required to either return to work in a CARICOM country or to work in a capacity that directly benefits a CARICOM country for a period of time equal to the length of their scholarship, not to exceed two years. H.R. 2092 (Lowey)/ S. 1259 (Clinton), the Education for All Act of 2007 (introduced on May 1, 2007 in both the House and the Senate) would amend the Foreign Assistance Act of 1961 to provide assistance for developing countries to improve their basic education systems. The bill would also establish the achievement of universal basic education in all developing countries as an objective of U.S. foreign assistance.

The United States has long supported education programs in Latin America, and has a vested interest in promoting educational progress in the region. In the last 20 years, most Latin American countries have taken significant steps to improve their education systems, but major challenges remain. Those challenges include unequal access to education, high dropout and repetition rates, poor teacher quality, and uneven assessments and accountability systems. Regional and bilateral education assistance programs administered by the U.S. Agency for International Development (USAID) have sought to help countries address many of those challenges. At the same time, the State Department's Bureau of Education and Cultural Affairs (ECA) has supported educational exchange and scholarship programs for Latin American students and teachers. This report provides an overview of the current level of educational attainment in Latin America, U.S. education programs in the region, and related legislative proposals. It will not be updated.

Kishore Mahbubani, formerly a senior official in Singapore's Ministry of Foreign Affairs andTrade, stated that history will view the EAS as the real beginning of the Pacific century. (3) The EAS is viewed asimportant not only because of its implications for regional trade but more importantly for itspotential importance as an indicator of China's rising geopolitical importance. It is also of importancebecause the positions of regional states relative to China and the United States were brought intoperspective as the diplomacy surrounding the summit unfolded. The EAS is viewed as potentiallyof strategic importance because many believe that it could form the basis of a future East AsianCommunity, which might make collective agreements on trade or even security affairs without U.S.input. As such, regional states have sought to be included in the summit so that they will not beexcluded from any future East Asian Community. The United States has not played a role in the EAS process nor was it invited to attend. Whatis of concern to some analysts is that this appears to be a potential challenge to Americaninvolvement in the region. Some fear that by shifting emphasis from APEC, an organization in whichthe United States has played a leading role and which encompasses the broader Pacific Rim, to anannual East Asia Summit, in which the United States is not a participant, America's overall positioncould become relatively less influential and the United States could potentially be excluded frompreferential trade agreements. Though President Bush attended the APEC gathering in Busan, SouthKorea in November 2005, that gathering is being viewed by some as "trumped" by the December2005 EAS meeting. (4) APEC, however, is primarily a trade and economic organization. A major strategic consideration isthat APEC includes Taiwan whereas the EAS does not. (5) Some view the inclusion of India, Australia, and New Zealand as a partial balancer to thegeopolitical weight of China within the grouping. (6) This is thought to be the perspective of countries such asSingapore, Japan, Vietnam, and Indonesia, though other states are thought to be relativelycomfortable with China's role and an ASEAN Plus Three format. (7) Some observers believe thatdespite its acceptance of the current membership of the EAS, China actually favors a future EastAsian Community based on the more restricted membership of the ASEAN Plus Three states. Thiswould exclude Australia and New Zealand, which are more closely aligned with the United States,as well as India. India is China's traditional rival in Asia and is in the process of developing closerties with the United States. This issue came to light as China reportedly favored a draft jointdeclaration for the summit which portrayed ASEAN Plus Three states as having a dialogue withIndia, Australia and New Zealand at the summit. Japan reportedly opposed such a definition of thegrouping. India reportedly opposed any joint declaration that did not imply that the EAS would formthe basis of a future East Asian Community. (8) To some, the EAS is an extension of the East Asian Economic Caucus (EAEC) concept putforward by former Prime Minister Mahathir Mohammed of Malaysia. The EAEC was a revisedversion of Mahathir's 1990 East Asian Economic Group (EAEG) concept. (9) The EAEC was to excludenon-Asian states, such as the United States, Australia, New Zealand, and Canada. The United Stateswas opposed to such an exclusive East Asian grouping, and Japan reportedly worked to thwart itwhile Australia promoted the APEC grouping which includes all states concerned. (10) The evolution of the EastAsian Community concept, of which the EAS is the latest manifestation, evolved further whenASEAN joined with China, Japan, and Korea in 1997/1998 to form the ASEAN Plus Threegrouping. (11) Singaporean Foreign Minister George Yeo stated after a meeting with Secretary of State Ricein February 2005 that the United States "has some concerns that the East Asia Summit will be inwardlooking and exclusive." (12) The United States has been criticized by regional states for notpaying enough attention to Southeast Asia. This was highlighted by Secretary of State CondoleezzaRice's decision to break with tradition and not to attend the July 24-29, 2005 ASEAN Ministerialmeeting in Vientiane, Laos. Secretary of State Rice also canceled a planned visit to Indonesia inJanuary 2006 reportedly due to developments in the Middle East. (13) Some interpreted this moveas "a sign that the United States was ceding the region to China." (14) The Administration hasindicated that the EAS agenda is not clear and that it continues to support APEC as "by far the mostrobust, multilateral grouping in Asia." (15) Despite the perceived lack of attention by the U.S., the UnitedStates and ASEAN announced a Joint Vision Statement on the ASEAN-U.S. Enhanced Partnershipjust prior to President Bush's meeting with ASEAN leaders on the sidelines of the November 2005APEC meeting in South Korea. (16) A Singaporean Foreign Affairs spokesman greeted the JointVision Statement by stating that "The enhanced partnership ... will substantially broaden the UnitedStates' engagement with ASEAN ... and will better position both sides to meet the challengesahead." (17) China's approach to multilateral institutions which involve ASEAN has undergone atransformation as have Southeast Asian states' perceptions of China. China has evolved fromviewing multilateral institutions in Southeast Asia as potentially constraining to viewing them asuseful for promoting China's foreign policy objectives. (18) Southeast Asian states' views of China have evolved as Chinahas abandoned its support of communist insurgencies in the region, been less assertive in the SouthChina Sea, and has embarked on diplomatic and trade initiatives. Since taking office in March of2003, President Hu Jintao has traveled extensively in the region. (19) Some view the currentdrive for the creation of an East Asian Community as having roots in the perceived failure of theUnited States to effectively respond to the 1997/98 Asian financial crisis. (20) At that time, China gainedmuch favor by not devaluing its currency and by providing a reported $US 4 billion in aid to affectedcountries at a time when the United States' response was not viewed positively by regional states.China is also developing defense cooperation with Indonesia, Malaysia, and the Philippines. Chinaviews the region as key for its energy security both as a region through which its energy flows (some80% of China's oil imports flow through the straits of Malacca) as well as a region from which Chinacan derive energy resources. (21) China-ASEAN trade exceeded $100 billion in 2004, a 30% increase over 2003 levels. (22) The rapid growth in tradebetween China and regional states provides the economic ballast for a broader relationship that mayincreasingly encompass political and security linkages as well. China and ASEAN have signed aFree Trade Agreement and are negotiating to reduce tariffs to between zero and 5% on certain goodsby 2010 and by 2015 for poorer members of ASEAN. (23) The combined gross domestic product (GDP) of Asian countriesis approximately 22% of the world total while the United States and Europe account forapproximately 28% and 30% respectively. (24) Asia has experienced much higher rates of growth than theUnited States and Europe in recent years, and this trend is widely expected to continue. There are a range of perspectives within ASEAN on the EAS and China's evolving role ina potential East Asian Community. While all invitees to the EAS see value in developing diplomaticand trade relations with China, some are more concerned than others that China's potentiallypreponderant influence should be balanced. Singapore has taken a leading role in articulating thebenefits of an open regional framework for Southeast Asia. Prime Minister Lee Hsien Loong hasstated "ASEAN does not want to be exclusively dependent on China and does not want to be forcedto choose sides between China and the United States or China and Japan." He also reportedly stated"if the world is split up into closed blocs or exclusive spheres of influence, rivalry, antagonism andconflict are inevitable." (25) Singapore has supported India's inclusion in both the East AsiaSummit and India's bid for a permanent seat on the United Nations Security Council. (26) Singapore also seekscontinued U.S. engagement in the region. Burma and Laos are viewed as already significantly underChina's sphere of influence in Southeast Asia. (27) It is not only Southeast Asian states that are feeling the pull of China's diplomatic initiatives;"loyal allies of the United States, such as Japan, South Korea, and Australia, already feel themagnetic force of a new geopolitical pole." (28) Australia reversed its previous policy on the ASEAN Treaty ofAmity and Cooperation and signed the treaty which enabled it to attend the East Asia Summit. It isunclear to what extent current tensions between Japan and China will hinder the future developmentof the EAS. China has reportedly postponed discussions involving Japan which were to take placeon the sidelines of the EAS. (29) This conflict, and Japan's perceived declining regional influence,may have contributed to enthusiasm among others to include India, Australia, and New Zealand inthe group. Some view recent developments in America's bilateral relationship with India as in partinspired by a desire to build ties with another regional state which may not be comfortable with arapidly expanded Chinese position. (30) China was recently able to gain observer status to the SouthAsian Association of Regional Cooperation, the main multilateral grouping in South Asia. (31) The Kuala Lumpur Declaration on the East Asia Summit, of December 14, 2005, madeseveral key declarations which are listed below. "... we have established the East Asia Summit as a forum for dialogue on broadstrategic, political and economic issues of common interest and concern with the aim of promotingpeace, stability and prosperity in East Asia." "... the efforts of the East Asia Summit to promote community building in thisregion will be consistent with and reinforce the realization of the ASEAN Community, and will forman integral part of the evolving regional architecture." "... the East Asia Summit will be an open inclusive, transparent and outwardlooking forum ... with ASEAN as the driving force ..." The EAS will focus on "fostering strategic dialogue and promoting cooperationin political and security issues ... promoting development, financial stability, energy security,economic integration and growth eradicating poverty and narrowing the development gap in EastAsia ..." (32) The summit has highlighted a number of evolving geopolitical dynamics in the region. It hasbeen observed that key outcomes of the summit are that ASEAN "successfully projected its politicalcentrality in a wider region fast becoming a function of the economic weight of China and India,"and those within ASEAN Plus Three who advocated a more inclusive membership were able to bringIndia, Australia, and New Zealand into the group. (33) It has been reported that Japan, Singapore, and Indonesia workedto broaden membership to include India, Australia, and New Zealand. (34) Such additions are thoughtto partially offset the influence of China within the group. It was also observed that while the UnitedStates did not participate, "its influence remains directly and via regional allies." While media reportsdid focus on the EAS as a new Asian bloc they also pointed to conflicts within the region,particularly the Sino-Japanese conflict, that may limit future regional cooperation. (35) Some analysts haveobserved that rather than bringing Asia together under Chinese leadership the EAS may have moreclearly defined Asian rivalry and regional geostrategic divisions. (36) Russia, which had observerstatus at the EAS, also is reportedly seeking to become a full member at the next EAS meeting. (37) The group plans to holdits second summit in the Philippines in 2006. (38) Some have asked why the United States should be concerned with an EAS that has yet todemonstrate that it will be a threat to American influence in Asia. Others argue that it will lead toa reduction in influence that would limit America's ability to promote its values or look after itsinterests whether they be economic or strategic. To some, America's preoccupation with Iraq hasbeen a distraction that has led it to underestimate the importance of evolving geopolitical dynamicsin Asia including the EAS. (39) The focus on the EAS comes at a time when APEC is generally perceived to have lostmomentum. There is an increasing perception that APEC, which has 21 members and wasestablished in 1989, is disintegrating into regional and bilateral blocs and that it does not have theleadership necessary to meet future challenges. Some feel that a return to APEC core issues of tradeliberalization and the reduction of trade barriers is the best way for APEC to regain itsmomentum. (40) Australia, which played a key role in the development of APEC, will be the 2007 Chair of APEC.A question is whether the United States should take additional measures to strengthen APEC. Somesuggest this would also keep Taiwan from becoming increasingly isolated. To some, the key question concerning the EAS is whether China's leadership "will be benignor will it be aimed -- or be perceived by the U.S. as being aimed -- at limiting or replacingWashington's (and Tokyo's) influence in the region." (41) China's actions through the Shanghai Cooperation Organization(SCO), which includes China, Russia, Kazakhstan, Tajikistan, and Uzbekistan, and Kyrgyzstan, areviewed by some as challenging America's regional presence. (42) The SCO asked in July2005 for a timetable for the withdrawal of U.S. coalition forces in Central Asia. (43) China's potentialopposition to America presence in a region that it may increasingly see as within its sphere ofinfluence may portend future negative postures relative to American forces elsewhere in Asia. Developing a constructive relationship with China is generally viewed as the most significantforeign policy challenge for the United States in Asia, and possibly the world, in the years ahead.How the United States reacts to China's bid to position itself more centrally in Asia, as demonstratedby the EAS, is an important component of this challenge. A policy approach that seeks to continueto foster the peaceful rise of China appeals to many. (44) Some feel that it is important that American policy on the EastAsia Summit, or a potential future East Asian Community, not be interpreted by China as an effortto contain China but rather as a policy initiative to demonstrate that America seeks to remain anactive and constructive actor in Asian multilateral affairs and that it supports the constructiveintegration of China into regional and world affairs.

The first East Asia Summit (EAS) met on December 14, 2005, in Kuala Lumpur, Malaysia.It brought together the ten Association of Southeast Asian Nations (ASEAN), [Brunei, Burma,Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam] as well as the"plus three" states [China, South Korea, and Japan] and Australia, New Zealand, and India, todiscuss issues of common concern. Japanese officials have described the EAS as an "historic summitmeeting to be held with a view to establishing a future East Asia Community." (1) Such a group could potentiallyreplace Asia Pacific Economic Cooperation (APEC) as the main multilateral forum in Asia on tradeand investment liberalization and economic integration. Russia was invited to attend the EAS as aspecial guest. (2) Some inthe United States are concerned that the East Asia Summit marks a rise in Asian regionalism inwhich the United States is not playing a leading role. There is also concern that China may use theEast Asia Summit to consolidate a leading role in Asia. A key outcome of the first East Asia Summitis that ASEAN appears to have retained a central role in the process. This report will be updated ascircumstances warrant.

Under Article III of the U.S. Constitution, the jurisdiction of federal courts is limited to actual, ongoing cases and controversies. From this constitutional requirement comes several "justiciability" doctrines that may be invoked in federal court actions that could prevent plaintiffs from maintaining a legal claim against defendants. The four justiciability doctrines are standing, ripeness, political question, and mootness. These doctrines will render a controversy "nonjusticiable" if a court decides that any one of them applies. Standing addresses whether the plaintiff is the proper party to assert a claim in federal court. Ripeness considers whether a party has brought an action too early for adjudication. The political question doctrine makes nonjusticiable controversies that involve an issue constitutionally committed to the political branches of government. There are two types of mootness: Article III mootness and prudential mootness. As the name implies, the former is derived from the constitutional requirement that judicial power be exercised only in "cases" or "controversies." The latter concerns a federal court's discretion to withhold use of judicial power in suits that—while not actually moot—should be treated as moot for "prudential" reasons. Usually, a case or controversy must exist throughout all stages of federal judicial proceedings, and not just when the lawsuit is filed or when review is granted by an appellate court. The dispute must concern "live" issues, and generally, the plaintiffs must have a personal interest in the outcome of the case. The Supreme Court has described mootness as follows: The "personal stake" aspect of mootness doctrine ... serves primarily the purpose of assuring that federal courts are presented with disputes they are capable of resolving. One commentator has defined mootness as "the doctrine of standing set in a time frame: The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness)." When a legal claim becomes moot while awaiting appellate review, the established practice is for the federal appeals court to reverse or vacate the judgment below and to remand the case to the district court with an instruction to dismiss the action. That consequence is because a moot case does not qualify as a "case or controversy" under Article III; due to the lack of jurisdiction, federal courts have no power to consider the merits of a constitutionally moot case. Cases may be rendered moot because of a change in the status of the parties or in the law, or because of an act of one of the parties that dissolves the controversy. The following paragraphs provide examples of these scenarios. When a white law school applicant challenged the constitutionality of a public law school's affirmative action admissions policy, he was admitted to the school pursuant to a trial court ruling that found in his favor. During his second year of law school, the state's supreme court reversed the lower court's decision. By the time the Supreme Court granted certiorari to hear the case, the student was in his final school term. The Court dismissed the case as moot because "the petitioner will complete his law school studies at the end of the term for which he has now registered regardless of any decision this Court might reach on the merits of this litigation...." A lawsuit was filed claiming that the suspension and termination of disability benefit payments under the Social Security Act violated the procedural due process rights of the recipients. Before oral argument before the Supreme Court, the Secretary of Health, Education, and Welfare adopted new regulations governing the procedures to be followed by the Social Security Administration in determining whether to suspend or terminate disability benefits. In light of this development, the Court held "that the appropriate course is to withhold judicial action pending reprocessing, under the new regulations, of the determinations here in dispute. If that process results in a determination of entitlement to disability benefits, there will be no need to consider the constitutional claim that claimants are entitled to an opportunity to make an oral presentation." A prison inmate was transferred by corrections authorities, without notice or an opportunity for a hearing, from a medium security prison to a maximum security prison. The inmate filed a lawsuit alleging a violation of his due process rights under the Fourteenth Amendment of the U.S. Constitution; however, while his appeal was pending, he was transferred twice, first back to the medium security facility and thereafter to a minimum security institution. The Supreme Court held that the suit no longer presented a case or controversy, and thus dismissed the case as moot. Equitable, or prudential mootness, has been referred to as the "cousin of the mootness doctrine" and described as relating to the court's discretion in matters of remedy and judicial administration. Unlike Article III mootness, [it] address[es] not the power to grant relief but the court's discretion in the exercise of that power. In some circumstances, a controversy, not actually moot, is so attenuated that considerations of prudence and comity for coordinate branches of government counsel the court to stay its hand, and to withhold relief it has the power to grant. Thus, while a case may not be moot for failure to meet Article III's requirements, a court may nevertheless "treat [the case] as moot for prudential reasons" and decline to exercise judicial power in the case. The doctrine of prudential mootness is often applied in cases where the federal court declines to grant the plaintiff's request for declaratory judgment or injunctive relief because the defendant "has already changed or is in the process of changing its policies or where it appears that any repeat of the actions in question is otherwise highly unlikely." The Supreme Court has explained that the burden on the party asking the court to dismiss a case on prudential mootness grounds is a "heavy one," as the movant (usually the defendant) must "demonstrate that there is no reasonable expectation that the wrong will be repeated." The Supreme Court has recognized several exceptions to the mootness doctrine that, if found to apply to a case, would permit federal court adjudication of the dispute. In Sibron v. New York , an individual convicted of unlawful possession of heroin had completed service of his prison sentence prior to Supreme Court review of the case. The Court explained that the case was not moot: Although the term has been served, the results of the conviction may persist. Subsequent convictions may carry heavier penalties, civil rights may be affected. As the power to remedy an invalid sentence exists, we think, respondent is entitled to an opportunity to attempt to show that this conviction was invalid. This exception to the mootness doctrine thus applies in the criminal context, when there is a "possibility that any collateral legal consequences will be imposed on the basis of the challenged conviction." Even a "remote" possibility of such consequences is enough to save a criminal case from becoming moot. Some disputes or injuries may arise in the short-term and have the potential for recurrence, but always fail to last long enough to permit federal judicial review. In such a situation, federal courts have justified an exception to the mootness doctrine. A classic example is the landmark abortion case, Roe v. Wade. The Supreme Court explained why the exception should be invoked in this instance: [W]hen, as here, pregnancy is a significant fact in the litigation, the normal 266-day human gestation period is so short that the pregnancy will come to term before the usual appellate process is complete. If that termination makes a case moot, pregnancy litigation seldom will survive much beyond the trial stage, and appellate review will be effectively denied. Our law should not be that rigid. Pregnancy often comes more than once to the same woman, and in the general population, if man is to survive, it will always be with us. However, the Court has held that this exception applies only in "exceptional situations," where the plaintiff "can make a reasonable showing that he will again be subjected to the alleged illegality." If a defendant voluntarily terminates the allegedly unlawful conduct after the lawsuit has been filed but retains the power to resume the practice at any time, a federal court may deem the case nonmoot. The "heavy burden" of persuading the court that a case has been mooted by the defendant's voluntary actions lies with the party asserting mootness, and the standard for such a determination is a "stringent" one: "if subsequent events ma[ke] it absolutely clear that the allegedly wrongful behavior [can] not reasonably be expected to recur." This exception is supported by the Supreme Court because, in addition to ensuring that the defendant is not "free to return to his old ways," there is "a public interest in having the legality of the practices settled." For example, an environmental group had filed a citizen suit under the Clean Water Act against Laidlaw, a company that operated a wastewater treatment plant, alleging that the plant had discharged far more toxic pollutants into a river than it was allowed under terms of a government-issued permit. However, after the lawsuit began, Laidlaw began to comply with the discharge limit. The Supreme Court held that this case was not moot because it was a "disputed factual matter" whether the company's substantial compliance with its permit requirements, or its closure of the facility in question (which had occurred after the court of appeals had issued its decision), would make "it absolutely clear that Laidlaw's permit violations could not reasonably be expected to recur." When the claim of the named plaintiff in a certified class action becomes moot, the class action will not be dismissed so long as a member of the class continues to have a sufficiently adversarial relationship to constitute a live controversy. For example, a plaintiff brought a class action to challenge a one-year residency requirement in a state divorce statute, on the ground that it violated the U.S. Constitution. By the time her case reached the Supreme Court, she had long since satisfied the state's durational residency requirement, a development that, had she filed the suit only on her own behalf, would have made the case moot because she no longer retained a personal stake in the outcome. However, the Court noted the significant fact that she had brought the lawsuit as a class action in a representative capacity, which affected the mootness determination: "When the District Court certified the propriety of the class action, the class of unnamed persons described in the certification acquired a legal status separate from the interest asserted by [the named representative]," and therefore the Article III "cases or controversies" requirement was satisfied.

A case pending before a federal court may at some point in the litigation process lose an element of justiciability and become "moot." Mootness may occur when a controversy initially existing at the time the lawsuit was filed is no longer "live" due to a change in the law or in the status of the parties involved, or due to an act of one of the parties that dissolves the dispute. When a federal court deems a case to be moot, the court no longer has the power to entertain the legal claims and must dismiss the complaint. However, the U.S. Supreme Court over time has developed several exceptions to the mootness doctrine. This report provides a general overview of the doctrine of "mootness," as the principle is understood and used by federal courts to decide whether to dismiss certain actions for lack of jurisdiction.

RS21435 -- High School Completion and Postsecondary Enrollment Among First Generation and Low-IncomeStudents Updated February 9, 2005 The proportion of high school graduates whose parents do not have a college degree has declined over the last threedecades, according to data collected by the U.S. Department of Education and the U.S. Census Bureau. (3) Over four out offive graduates in the class of 1972 would have been first generation college students were they to have gone tocollegecompared to two out of three graduates in the class of 2000. (4) This decline of would be first generation college studentsroughly coincides with the growth in educational attainment that occurred during the same period. In 1970, 11%of theU.S. population were college graduates and by 2000 this had increased to 24%. (5) The proportion of high school graduates from families with income below 150% of the official poverty level has remainedrelatively stable at around 21% over the last 30 years, according to these data. Twenty percent of the class of 1972lived inlow-income families compared to 22% of the class of 2000. This parallels the rate of poverty for the U.S.population as awhole which has fluctuated between 16% and 20% over the same period. (6) Similar trends can be seen in the data on college students, although the Department has only begun to collect such datasince 1987. (7) These data indicate modest declinesin the proportion of low-income and first generation college students. The proportion of students from low-income families dropped from 16% to 12% between 1987 and 2000. Theproportionwho, upon graduation, would be the first in their family to get a college degree declined from 65% in 1987 to 62%in 2000. A second indication from these data is that the representation of first generation and low-income students among thoseenrolled in college has been consistently lower than among those graduating from high school. Thus, it appears thathighschool graduates from low-income families and those that lack a parent with a college degree are less likely thanothergraduates to move on to college. As stated above, the overall rate of college enrollment for the high school class of 2000 was 53%. That is, just over half ofthose who graduated in the spring of 2000 were enrolled in college in the fall of that year and just under half werenot. Theanalysis that follows reveals that the rate of enrollment is strongly related to parental educational attainment andfamilyincome. Table 1 shows fall 2000 college enrollment for the high school class of 2000 by parent's education. The rates ofenrollment for fall 2000 were 46% for those whose parents did not attain a Bachelor's degree and 75% for thosewhoseparents hold a Bachelor's degree. High school graduates whose parents lack a college degree were more than twiceaslikely not to be enrolled in college the fall after graduation as those whose parents have a college degree(54% compared to25%). Table 1. College Enrollment in the Fall of 2000 Among Spring 2000 High School Graduates by Parental Educational Attainment Source: Current Population Survey. Note: Columns may not sum to 100% due to rounding. Table 2 displays fall 2000 college enrollment for the high school class of 2000 by family income. The rates of enrollmentfor the fall of 2000 were 35% for those from families below 150% of the poverty line and 58% for those above150% ofpoverty. High school graduates from families below 150% of poverty were over 50% more likely not tobe enrolled incollege the fall after graduation as those from families above 150% of poverty (65% compared to 42%). Table 2. College Enrollment in the Fall of 2000 Among Spring 2000 High School Graduates by Family Income Source: Current Population Survey. Note: Columns may not sum to 100% due to rounding. The figures in Tables 1 and 2 also support the large body of research which has established a strong link between thesocio-economic status of parents (including income, occupation, and educational attainment) and that of theirchildren. Since the late 1960s, researchers have documented the various ways that "class background is very important indetermining who goes to college." (8) Among theindicators of class background used in this research were direct measureslike family income and parent's education and more indirect measures like educational aspirations and collegepreparedness -- all have been found to be positively associated with college attendance and completion. The final section of this report takes a brief look at the combined effects of first generation status and family income onrates of college enrollment. Table 3 shows rates of college enrollment in the fall of 2000 amongthose who graduated highschool in the spring of 2000 by parental educational attainment and family income. Table 3 indicates that the rate of college enrollment among students from low-income families is not altered by parentaleducation -- 69% of those whose parents did not attain a Bachelor's degree were not enrolled, compared to 66% ofthosewhose parents have a Bachelor's degree (this difference is not statistically significant). Conversely, Table3 reveals thatparental educational attainment is strongly associated with college attendance among students above150% of poverty. Atthis income level, 51% of the graduates whose parents lack a Bachelor's degree went on to college compared to 75%of thegraduates whose parents have a Bachelor's degree. (9) Table 3. College Enrollment in the Fall of 2000 Among Spring 2000 High School Graduates by Parent's Educational Attainment and Family Income Status Source: Current Population Survey. Note: Columns may not sum to 100% due to rounding. The findings presented here indicate that rates of college enrollment vary greatly by family income and parental educational attainment. Rates of college enrollment among low-income and first generation students were muchlowerthan the overall rate for 2000 high school graduates. In the final analysis of the combined effects of these factors,firstgeneration status was found to have little association with the rate of enrollment of low-income students, but wasstronglyassociated with the rate of enrollment of students from families with greater income. These results have particularly important implications for the TRIO programs since the legislation stipulates that not lessthan two-thirds of program participants be both low-income and first generation students. The results which show that firstgeneration status does not impact upon the enrollment rate of low-income students might lead some to argue forremoval ofthe first generation portion of this requirement. However, since the findings do reveal lower college going ratesamongfirst generation students from higher income families, some might argue that the statute should be amended to read"or"rather than "and." Another possibility would be an amendment to the definition of low-income to include studentsatgreater income levels whose enrollment likelihood is impacted by first generation status.

The Higher Education Act (HEA) supports several programs that provideservices and incentives to disadvantaged students to help increase their educational attainment. Foremost amongtheseprograms are the federal TRIO programs and the Gaining Early Awareness and Readiness for UndergraduateProgram(Gear Up). These programs are primarily intended for individuals who are from low-income families and wouldbe thefirst in their family to attain a college degree. This report reviews available data on these populations and attemptstomeasure the extent to which high school graduates from these groups go on to college. This report is intended asasupplement to CRS Report RL31622, TRIO and Gear Up Programs: Status and Issues, and will notbe updated.

The Americans with Disabilities Act (ADA) has often been described as the most sweeping nondiscrimination legislation since the Civil Rights Act of 1964. It provides broad nondiscrimination protection in employment, public services, public accommodations, and services operated by private entities, transportation, and telecommunications for individuals with disabilities. As stated in the act, its purpose is "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." The ADA and its regulations require reasonable accommodation or modifications in policies, practices, or procedures when such modifications are necessary to render the goods, services, facilities, privileges, advantages, or accommodations accessible to individuals with disabilities. This concept is found in title I, regarding employment, title II, regarding public entities, and title III, regarding public accommodations. The reasonable accommodation or modification requirement has been interpreted to allow the use of service animals, even in places where animals are generally not permitted. Recently, the Department of Justice (DOJ) promulgated regulations containing specific details about service animals, including when they may be denied access, and defining service animals as trained dogs. This report focuses on these regulatory requirements. Currently, the DOJ regulations for titles II and III of the ADA define service animal as "any dog that is individually trained to do work or perform tasks for the benefit of an individual with a disability, including a physical, sensory, psychiatric, intellectual, or other mental disability." Previously, the DOJ regulations had defined service animal as a dog or other animal individually trained to do work or perform tasks for the benefit of an individual with a disability; however, the variety of animal species promoted as service animals led to DOJ's limitation of the definition. The regulations specifically exclude other species of animals whether or not they are wild or domestic or trained or untrained. DOJ notes that, at the time of the promulgation of the original regulations, "few anticipated the variety of animals that would be promoted as service animals in the years to come, which ranged from pigs, and miniature horses to snakes, iguanas, and parrots." Arguments were made by commentators on the proposed regulations for the inclusion of monkeys, particularly capuchin monkeys, who were trained to provide in-home services to individuals with paraplegia and quadriplegia. However, DOJ rejected these arguments noting the potential for disease transmission and unpredictable aggressive behavior. The DOJ regulations specifically define a service animal as "any dog that is individually trained to do work or perform tasks for the benefit of an individual with a disability." The regulations elaborate on the meaning of this requirement mandating that the "work or tasks performed by a service animal must be directly related to the handler's disability." Examples of work or tasks are provided and include the following: Assisting individuals who are blind or have low vision with navigation Alerting individuals who are deaf or hard of hearing to the presence of people or sounds Providing non-violent protection or rescue work Pulling a wheelchair Assisting an individual during a seizure Alerting individuals to the presence of allergens Retrieving items such as medicine or the telephone Providing physical support and assistance with balance to individuals with mobility disabilities Helping individuals with psychiatric and neurological disabilities by preventing or interrupting impulsive or destructive behaviors However, the fact that the presence of an animal may deter crime or provide emotional support does not constitute work or a task. DOJ emphasizes the importance of the concept of doing work or performing tasks and states that "unless the animal is individually trained to do something that qualifies as work or a task, the animal is a pet or support animal and does not qualify for coverage as a service animal." The process for determining if an animal is doing work or performing a task is described as two-part: first, the animal must recognize the problem, and second, the animal must respond. An example would be recognition by a service animal that a person is about to have a psychiatric episode, and a response to this recognition by nudging, barking, or removing the individual to a safe location. Whether or not to include "comfort animals" in the definition of service animals was controversial. DOJ recognizes that the Fair Housing Act (FHA) and the Air Carriers Access Act (ACAA) may create legal obligations for an entity to allow a comfort animal and that this difference from the ADA requirements could lead to confusion. However, DOJ notes that its distinction between a service animal and a comfort animal is based on differences in the covered entities; ADA titles II and III govern a broader range of public settings than either the FHA or the ACAA. Despite the regulatory limitation in the definition to dogs, miniature horses may be allowed in certain circumstances. Although they are not included in the definition of service animal, the regulations specifically provide that a public entity (title II) or public accommodation (title III) "shall make reasonable modifications in policies, practices, or procedures to permit the use of a miniature horse by an individual with a disability if the miniature horse has been individually trained to do work or perform tasks for the benefit of the individual with a disability." DOJ notes that this provision for miniature horses was made since miniature horses are a viable alternative to dogs for individuals with allergies or who have religious beliefs that preclude the use of dogs. In addition, the longer life span of miniature horses reduces the replacement cost of an animal. In order to determine whether the modifications required for a miniature horse are "reasonable," the regulations provide that public entities or public accommodations shall consider four factors: The type, size, and weight of the miniature horse and whether the facility can accommodate these features Whether the handler has sufficient control over the miniature horse Whether the miniature horse is house broken Whether the miniature horse's presence compromises legitimate safety requirements The specific times when a service animal may be properly excluded, discussed infra, are applicable to miniature horses. In addition, ponies and full sized horses are not covered and miniature horses may be excluded if their presence results in "a fundamental alteration to the nature of the programs, activities, or services provided." Generally, a public entity (title II) or a place of public accommodation (title III) must modify its policies, practices, and procedures to allow an individual with a disability to use a service animal. More specifically, individuals with disabilities must be permitted to be accompanied by their service animal in areas where other members of the public, or participants in programs or activities are allowed. A public entity or place of public accommodation may not ask or require a surcharge for a service animal, even if people with pets must pay an additional fee. However, there are certain limitations on these requirements, and, as noted previously, these limitations also apply to miniature horses. The animal must be under its handler's control and the public entity or place of public accommodation is not responsible for the care or supervision of the animal. The regulations specifically allow a public entity or a place of public accommodation to ask an individual with a disability to remove a service animal from the premises when the animal is out of control and its handler does not take effective action to control it, or the animal is not housebroken. In its discussion of these exceptions, DOJ observes that an animal may misbehave when provoked or injured. If there is reason to suspect this has occurred, a public entity or a place of public accommodation should determine the facts and, if provocation or injury has occurred, take steps to prevent any similar actions. When the service animal is properly excluded, the public entity or a place of public accommodation must give the individual with a disability the opportunity to participate in the service, program, or activity without the animal. A public entity or place of public accommodation may not ask about the nature or extent of an individual's disability but may ask two questions to determine if the animal is a service animal, when it is not readily apparent. These two questions are if the animal is required because of a disability, and what work or task the animal is trained to do. Although the DOJ title II and III regulations provide significant guidance regarding service animals, there are still some issues remaining. For example, the exact interaction between the ADA's requirements and those of other statutes, such as the Fair Housing Act, is somewhat uncertain. When a facility has a mixed use—such as a hotel which allows both residential and short-term stays but does not allocate space for these different uses in separate, discrete units—both the ADA and the Fair Housing Act may apply to the facility. Exactly how the differing service animal requirements would apply in this situation is unclear and will most likely await judicial determinations. Similarly, DOJ regulations do not address the issues involved when an individual with allergies to dogs and an individual with a disability using a service animal both attempt to use a place of public accommodation. This situation, which may occur more often given the more expansive definition of disability provided in ADA Amendments Act, was at issue in Lockett v. Catalina Channel Express, Inc . In Lockett , Catalina Channel Express (CCE), which operates a ferry between Long Beach and Catalina Island, instituted a policy of excluding animals from part of the ferry because of a request by a frequent passenger for an area free of animal dander. When an individual with a visual impairment and a guide dog attempted to buy a ticket for this part of the ferry, the CCE refused, although it changed its policy two weeks later. The court of appeals found that the CCE had made a "one-time reasonable judgment … while it investigated the competing interests" and emphasized the narrowness of its holding. Thus, there is considerable ambiguity concerning how potentially conflicting claims for accommodations relating to service animals should be addressed.

The Americans with Disabilities Act (ADA) has as its purpose providing "a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." In order to effectuate this purpose, the ADA and its regulations require reasonable accommodation or modifications in policies, practices, or procedures when such modifications are necessary to render the goods, services, facilities, privileges, advantages, or accommodations accessible to individuals with disabilities. The reasonable accommodation or modification requirement has been interpreted to allow the use of service animals, even in places where animals are generally not permitted. The Department of Justice (DOJ) has promulgated regulations containing specific details about service animals, and this report focuses on these regulatory requirements. Generally, a public entity (ADA title II) or a place of public accommodation (ADA title III) must modify its policies, practices, and procedures to allow an individual with a disability to use a service animal. The regulations also define service animals. A service animal is "any dog that is individually trained to do work or perform tasks for the benefit of an individual with a disability, including a physical, sensory, psychiatric, intellectual, or other mental disability." (emphasis added). However, despite the regulatory limitation of the definition to dogs, miniature horses may be allowed in certain circumstances. A service animal does not need to be allowed when the animal is out of control or the animal is not housebroken. In addition, a public entity or place of public accommodation may not ask about the nature or extent of an individual's disability but may ask two questions to determine if the animal is a service animal when it is not readily apparent. These questions are, if the animal is required because of a disability, and what work or task the animal is trained to do. Several issues remain unresolved by the DOJ regulations. For example, the relationship between the ADA and Fair Housing Act in some situations is unclear. In addition, there is considerable ambiguity concerning how potentially conflicting claims for accommodations relating to service animals should be addressed.

Federal agencies rely on both their general contracting authorities and the special authorities of the Small Business Act when contracting with small businesses. The general contracting authorities—the Armed Services Procurement Act (ASPA) of 1947 and the Federal Property and Administrative Services Act (FPASA) of 1949—grant defense and civilian agencies, respectively, broad authority to contract with any responsible firm, including small businesses. However, ASPA and FPASA do not authorize agencies to set aside contracts for small businesses, or conduct procurements in which only small businesses, or specific types of small businesses, may compete. Only the Small Business Act does this, authorizing agencies to set aside part or all of certain procurements for 1. small businesses; 2. women-owned small businesses; 3. service-disabled veteran-owned small businesses (SDVOSBs); 4. small businesses located in Historically Underutilized Business Zones (HUBZones) (HUBZone small businesses); and 5. small businesses owned and controlled by socially and economically disadvantaged individuals participating in the Small Business Administration's (SBA's) Minority Small Business and Capital Ownership Development Program (commonly known as the 8(a) Program) (8(a) firms). Although ASPA and FPASA do not authorize set-asides for small businesses, agencies may still "favor" small businesses in certain procurements conducted under their authority by using small-business status as an evaluation factor in negotiated procurements. A negotiated procurement is one in which the government awards the contract to the contractor whose offer represents the "best value" for the government in light of various factors established by the government and incorporated into the solicitation for the contract. Cost or price must be among these factors, but it need not be the primary factor or carry any specific weight in the overall award. Other factors may include contractors' past performance, compliance with the solicitation requirements, technical excellence, management capability, personnel qualifications, prior experience, and small-business status. Commentators sometimes call contracts that are awarded using firms' size as an evaluation factor "preference contracts" because they allow agencies to prefer various types of small businesses without setting aside a procurement for them. Not all contracts awarded to small businesses under ASPA and FPASA are preference contracts, however. Some contracts are awarded to small businesses using sealed bidding, with awards made solely on the basis of price and without consideration of firms' size. In other cases, agencies use negotiated procurements without evaluation factors focusing on firms' size. Contracts awarded under any authority—ASPA, FPASA, or the Small Business Act—count toward the government-wide and agency-specific goals for contracting with small businesses. The Business Opportunity Development Reform Act (BODRA) of 1988 requires the President to set government-wide goals for the percentage of federal contract and/or subcontract dollars awarded to various categories of small businesses. These goals must be equal to or exceed certain percentages specified in statute, as illustrated in Table 1 . A 1978 amendment to the Small Business Act similarly requires that agency heads, in consultation with the SBA, set agency-specific goals for the percentage of contract dollars awarded to the same categories of small businesses. These goals are to "realistically reflect the potential" of small businesses to perform federal prime contracts and subcontracts and thus vary among agencies. Commentators frequently note the government's failure to meet either government-wide or agency-specific goals, and some Members of Congress have suggested that the current government-wide goals are too low. Limitations on subcontracting have applied to contracts set aside for small businesses under the authority of the Small Business Act since 1986. These limitations result from statutory and regulatory provisions prohibiting agencies from awarding prime contracts to small businesses unless the small business performs a certain percentage of the contract work itself, instead of subcontracting it. The percentage that must be performed by the small business varies depending on the nature of the contract, as Table 2 illustrates. Prior to GAO's decision, no judicial or administrative tribunal appears to have addressed whether these limitations apply to preference contracts as well as set-asides. Certain contracts set-aside for "local firms," of any size, in disaster or emergency areas under the authority of the Stafford Act are also subject to limitations on subcontracting. These limitations require that similar percentages of work be performed by the "local firm," as opposed to subcontracted, on the types of contracts listed in Table 2 . However, these limitations are arguably unaffected by the GAO decision discussed here because they are not related to firm size. In its November 16, 2009, decision, GAO denied Washington-Harris Group's protest alleging that the Army National Guard Bureau improperly awarded a contract for case management and administrative services to Skyline Ultd Inc. The procurement had not been set aside for SDVOSBs. However, the solicitation had included an evaluation factor focusing on firms' SDVOSB status, as well as a statement that the source selection authority would "favorably view an offeror's Small Business status." Under the solicitation, firms' SDVOSB status and understanding of the requirements carried equal weight, and each was more important than any other evaluation factor. Price was the least important factor. For purposes of the solicitation, offers were considered to come from SDVOSBs if either (1) the prime contractor was an SDVOSB or (2) the offeror was a joint venture involving an SDVOSB firm that would perform more than 50% of the work. There was no dispute that Skyline proposed to perform less than 50% of the contract requirements. Washington-Harris Group argued that the solicitation and the Federal Acquisition Regulation (FAR) required SDVOSB contractors to perform at least 50% of the contract requirements in order to be evaluated favorably as an SDVOSB. Washington-Harris Group's reference to the FAR appears to have been to Part 19.14, which requires, among other things, that a clause containing the limitations on subcontracting discussed in Table 2 (Clause 52.219-27) be incorporated in all solicitations. GAO rejected Washington-Harris Group's arguments regarding the solicitation because the solicitation distinguished between SDVOSB prime contractors and SDVOSB joint venturers and required only the latter to perform more than 50% of the work. It also rejected the argument that the FAR clause containing the limitations on subcontracting applied to this procurement. GAO reached this conclusion because the FAR states that Clause 52.219-27 is required only when "[o]ffers are solicited only from service-disabled veteran-owned small business concerns [and] [o]ffers received from concerns that are not service-disabled veteran-owned small business concerns shall not be considered." Given this language, GAO concluded that the clause did not apply to this procurement because the procurement was not set aside for SDVOSBs. Because Clause 52.219-27 did not apply to the procurement, it found that the agency did not improperly evaluate Skyline favorably as an SDVOSB when awarding the contract even though Skyline proposed to subcontract over 50% of the work on the contract. GAO did not directly address the differences between the general contracting authorities and the Small Business Act in its decision. It also did not address contracting with small businesses that are not SDVOSBs. However, because contracts awarded under the general contracting authorities cannot be set aside for SDVOSBs while those awarded under the authority of the Small Business Act can be, and because the same limitations on subcontracting apply to other types of small businesses as apply to SDVOSBs, GAO's decision can arguably be construed to mean that limitations on subcontracting do not apply to any non-disaster and non-emergency "preference contract" awarded to any type of small business under the general contracting authorities. Some commentators have suggested that GAO's decision could result in agencies using more preference contracts and fewer set-asides . Such a shift from set-asides to preference contracts would not necessarily result in the government paying higher prices. While greater subcontracting generally tends to increase costs because each tier of subcontractors imposes additional overhead costs, recent legislation may help ensure that the government is aware of and does not compensate certain costs. For example, Section 866 of the Duncan Hunter National Defense Authorization Act for FY2009 imposed "limitations on tiering of subcontractors" by requiring that the FAR be amended to "minimize the excessive use … of subcontractors, or of tiers of subcontractors, that add no or negligible value" by non-defense agencies. The amendments to the FAR required by Section 866 took effect on October 14, 2009, and require contractors to "provide information on indirect costs and profit/fee and value added with regard to the subcontract work" when over 70% of the total cost of the work to be performed under the contract will be subcontracted. The amendments also bar contractors from receiving indirect costs or profits/fees on work performed by subcontractors when the contractor "add[ed] no, or negligible value." Similar requirements already applied to defense agencies under Section 852 of the John Warner National Defense Authorization Act for FY2007, and in a memorandum dated December 23, 2009, the Director of Defense Procurement and Acquisition Policy announced that the Department of Defense would delete its agency-specific regulations implementing Section 852 and comply with the government-wide regulations implementing Section 866. Ignoring costs, any shift that might occur could potentially have both benefits and drawbacks. On the one hand, increased use of preference contracts could result in increased contracting with small businesses because agencies could award contracts to firms that would have lacked the capacity to perform the required percentage of the work on a set-aside contract. Increased contracting, in turn, could result in the government, as a whole, and individual agencies performing better on their goals for contracting with small businesses. On the other hand, increased use of preference contracts could limit small businesses' development because they would no longer be effectively required by the limitations on subcontracting to develop the in-house resources to perform certain set-aside contracts. This may be a particular concern with 8(a) firms because the 8(a) Program is, in part, intended to help small businesses owned and controlled by socially and economically disadvantaged individuals develop. Agencies could also potentially use preference contracts to steer work to preferred subcontractors, who are not competitively selected.

This report discusses Washington-Harris Group, a protest filed with the Government Accountability Office (GAO) alleging, among other things, that an agency improperly awarded a "preference contract" to a service-disabled veteran-owned small business that proposed to subcontract a greater percentage of work on the contract than allowed under the Small Business Administration's limitations on subcontracting. GAO denied the protest, in part, because it found that limitations on subcontracting apply only to contracts "set aside" for small business, not to preference contracts. A preference contract is one awarded in an unrestricted competition in which firms' small-business status is an evaluation factor, while a set-aside is a procurement in which only small businesses may compete. Limitations on subcontracting are statutory and regulatory provisions that require small businesses to perform certain percentages of the work on federal prime contracts themselves, rather than subcontract it to other firms. GAO's decision appears to be a case of first impression and can arguably be construed to mean that existing limitations on subcontracting are inapplicable to non-disaster and non-emergency contracts awarded to any type of small business under the general contracting authorities. Commentators have suggested that the decision may result in increased use of preference contracts by federal agencies. The federal government awarded $96.8 billion in prime contracts and subcontracts to small businesses in FY2009 through set-asides and other contracting vehicles.

Individuals were first able to establish health savings accounts (HSAs) in 2004. These accounts allow people to pay for out-of-pocket medical expenses on a tax-advantaged basis. Individuals must have a qualifying high-deductible health plan (HDHP) to establish an HSA. After establishing an HSA, individuals (or employers) can contribute money to the account up to an annual maximum. Although commonly discussed in combination, HSAs should not be confused with Health Reimbursement Accounts (HRAs). Even though HRAs are also used to pay for unreimbursed medical expenses on a tax-advantaged basis, only employers may establish and contribute to an HRA. In addition, employees usually forfeit any remaining HRA funds at the termination of employment. Data covering enrollment and/or cost sharing during the first few years of HDHPs and their associated HSAs are now available from at least five separate sources. Only one source provides data on HSAs. Two sources provide data on HDHPs whose owners are eligible to open an HSA. The remaining two sources provide data that include individuals with HRAs. Before analysts can evaluate the effects of HSAs, they must decide which data source(s) to use. This primer provides basic guidance in that direction. The primer also provides the most recent data available from each source on enrollment, premiums, and deductible. Table 1 identifies the five data sources. The various data sources include two separate surveys of firms, a survey of individuals, data on all policies reported to an association, and a sample of IRS tax returns. The data sources are listed in alphabetical order. Which data source to use depends primarily on the question being asked. If the policy question truly requires information on HSAs—that is, the actual accounts rather than the associated HDHPs—then only the IRS data are suitable. The IRS data, which are broken down by tax reporting units, provide the total number of tax deductions taken and the aggregate value of the deductions. Two disadvantages of the IRS data are a total lack of information on the associated HDHPs and that the data are released well after the other data sources. Two sources combine data on HSA-eligible HDHPs and HRAs. These data can be used if separate analyses of HSAs or HRAs are not necessary. The Employee Benefit Research Institute (EBRI) provides enrollment estimates for privately insured individuals aged 21 to 64 with either an HRA or an HSA-eligible HDHP, while Mercer, a human resources consulting firm, provides enrollment estimates for account holders who are adults working in firms with at least 10 employees with either an HRA or an HSA-eligible HDHP. The EBRI data are based on a survey of individuals and contain information on the workers' ages, incomes, health status, and opinions of their health plan options. The Mercer survey is of firms and contains information on firm size. Choosing between these two data sources comes down to a choice between an individual-level analysis (EBRI) or a firm-level analysis (Mercer). Finally, two additional data sources provide information on HSA-qualified HDHPs. The data from America's Health Insurance Plans (AHIP) are obtained from insurance plans and measure all covered lives in the plans. Both individual and group plans are analyzed. The data form virtually a census of such policies among AHIP member companies. Thus, the AHIP data are based on a large number of enrollees in high-deductible health plans. Along with the average premiums and deductibles, information on enrollees' age and state of residence is also available. The Kaiser Family Foundation/Health Research and Education Trust (KFF/HRET) survey is of firms with at least three employees. Table 2 presents the most recent available data on enrollment. Four of the sources contain data on enrollment. The enrollment estimates differ greatly. These differences occur because each source measures a unique concept. AHIP reports that 10,009,000 individuals (including children) were covered by an HSA-eligible HDHP, and EBRI reports that 11,200,000 individuals between 21 and 64 were enrolled in either an HSA-eligible HDHP or an HRA in 2009. Mercer reports that 9% of all covered employees (in firms with at least 10 employees) have either an HSA-eligible HDHP or HRA, also in 2009. The IRS data do not measure enrollment but state that 810,729 tax returns claimed an HSA deduction in 2008. Although the various enrollment measures are not directly comparable to each other because they represent different concepts, the number of individuals who claim deductions for HSA contributions in 2008 is the smallest number. This is as expected for two reasons: (1) the number of HSAs has been growing over the 2008 to 2010 period, and (2) not all individuals contribute money to the HSA—and of those who do, not all claim an HSA deduction. AHIP provides the most complete information on premiums and deductibles; the average values are available for the small group and large group markets, and for three age groups in the individual market. No other data source provides breakdowns for more than one of these markets. In all cases, values for individual (and not family) insurance plans are reported in Table 2 . In general, individuals in small group markets are more costly to insure because the risk of major illness is spread across fewer individuals and because there are fewer economies of scale. Small group market deductibles should therefore be higher than large group market deductibles, assuming benefits and other policy characteristics are comparable across group size. The AHIP data display the expected pattern for HSA-eligible HDHPs, although the difference is not particularly large. The average deductible for small group policies is $2,329, and the average deducible for a large group policy is $2,203. HSAs have been available since 2004, and at least five data sources can be used to uncover some basic facts about the recent experience. Nevertheless, the data sources differ in the insurance markets analyzed; whether the information covers HSAs, HSA-eligible HDHPs, or HSA-eligible HDHPs and HRAs; and whether the information is provided by employers, insurance companies, or individuals. Great caution should be exercised in any attempt to combine data from these different sources. A more fruitful strategy would be to decide on a specific question and use only the source which best answers that question.

Individuals began establishing health savings accounts (HSAs) in 2004. These savings accounts are generally used to pay for unreimbursed medical expenses on a tax-advantaged basis. Any unspent money accrues to the individual. To open an HSA, the individual must enroll in a qualifying high-deductible health plan (HDHP). HSAs are tax-advantaged and provide some incentives for people to monitor, and perhaps reduce, their expenditures on health care. Data covering enrollment and/or cost sharing during the first few years of HDHPs and their associated HSAs are now available from at least five separate sources. This primer provides information on the data sources, together with the most recent data available from each source on enrollment, premiums and deductibles. Only one source, the Internal Revenue Service, provides data on HSAs. These data count the number of tax filing units that took a deduction for the HSA on their tax returns. Two sources provide data on HDHPs whose owners are eligible to open an HSA. One of these data sources, from the American Health Insurance Plans, is a census of virtually all lives covered by a HSA-eligible HDHP. The remaining two sources provide data that includes individuals with another type of health-related savings account (the Health Reimbursement Account). In addition to differing by the type of insurance plan covered, the data sources differ in the insurance markets analyzed, and whether the information is provided by employers, insurance companies, or individuals. Great caution should be exercised in any attempt to combine data from these different sources. A more fruitful strategy would be to decide on a specific question and use only the source which best answers that question.

RS21360 -- Department of Homeland Security: Options for House and Senate Committee Organization Updated August 13, 2004 Since the terrorist attacks of 2001 and the creation of the new Department of Homeland Security, there has been widespread interest in reorganizing the Houseand Senate committee systems to handle homeland security issues more effectively. Some changes to the committeesystems have already been made, but thereare calls for still more comprehensive action. Recommendations of the 9/11 Commission. Among the many issues discussed in the report of thecommission were a group of recommendations intended to "strengthen congressional oversight of intelligence andhomeland security." Concerning homelandsecurity, the commission recommended establishment of a standing committee in each chamber to assumeresponsibility over the topic. Congress should create a single, principal point of oversight and review for homeland security. Congressionalleaders are best able to judge what committee should have jurisdiction over this department and its duties. But webelieve that Congress does have theobligation to choose one in the House and one in the Senate, and that this committee should be a permanent standingcommittee with a nonpartisanstaff. (1) Two House Homeland Security Committees. The House created a temporary Select Committee onHomeland Security that was directed to coordinate recommendations on the bill made by a half dozen differentHouse standing committees. The HomelandSecurity Committee compiled a comprehensive proposal, led House floor debate on the bill, and served as thecentral negotiating team in resolving differencesbetween the House and Senate versions of the bill. When P.L. 107-296 was signed into law, the Select Committeeon Homeland Security was abolished, butnot before the new law included language in Section 1503 stating, "It is the sense of Congress that each House ofCongress should review its committeestructure in light of the reorganization of responsibilities within the executive branch by the establishment of theDepartment." The House deferred immediate action, creating in January 2003, a new Select Committee on Homeland Security. This new committee was to serve during the108th Congress as the House focus for legislative and oversight coordination for homeland securityissues, while other House committees retained their morelimited legislative and oversight authority over homeland security. Most significantly, the Select Committee wasdirected to report by September 30, 2004, itsrecommendations for changes in the House committee system. By comparison, the Senate, in the 108thCongress, has continued to consider homeland securityissues within its existing committee structure. Appropriations Subcommittee for Homeland Security. The structure of the House and SenateAppropriations Committees have been changed to account for the creation of the new department. In early February2003, the House AppropriationsCommittee approved an internal reorganization plan which abolished the former Subcommittee on Treasury andPostal Service Appropriations and transferredits responsibilities to a renamed Subcommittee on Transportation, Treasury, and Independent AgenciesAppropriations. With this consolidation, a newthirteenth Subcommittee on Homeland Security was established and it was assigned jurisdiction over appropriationsfor the new department and for bureaus inother departments transferred to it. The Senate Appropriations Committee shortly thereafter followed suit, to ensurethat the subcommittee structures of the twocommittees were parallel. Calls for Further Change. Many Members have already endorsed further changes to the committee system. A number of proposals have been offered in the House and Senate to establish a new temporary select, permanentselect, or standing committee on homelandsecurity, to alter the appropriations process, or to make other changes in congressional structures dealing withhomeland security issues. A senior House leaderobserved in 2002 that creation of the new department "probably will require at least a reorganization of the currentcommittees." A Senator active in crafting thefinal version of the Homeland Security Department bill stated "It is hard to see how Congress could do a decent jobof authorizing and overseeing what the newdepartment does without a new Committee of Homeland Security." On the other hand, a number of Members havepublicly opposed any alteration of House orSenate committee structures, while others have endorsed or opposed such action at different times. (2) From the perspective of the executive branch, areductionin committee jurisdiction fragmentation limits the number of panels to which officials of the new agency will beanswerable. Although the House and Senate have undertaken some initial steps to revise their committee structures, the report of the 9/11 Commission may add additionalpressure for congressional action. This report examines various options for the House and Senate individually orjointly to consider in reorganizing itsstructures dealing with homeland security and discusses possible advantages and disadvantages of each. Timetable for Reform. Not only is there discussion about what changes should be made in congressionalstructures, but there is also discussion about when such changes should be made. With the 9/11 Commission'srecent recommendations and the September 30,2004, deadline for committee system reform proposals from the House Homeland Security Committee, some sayreforms are so vital that they should beadopted before Congress adjourns for the election. These advocates can point to the 1974 House committee reformswhich were passed just before the electionsthat year. Other say it would be best to defer such action until the beginning of the new Congress in January. After the election, the voters will have supplied freshmandates and the House and Senate will have time in January before the inauguration to consider morecomprehensive reform options thoroughly. The Houseadopts its rules for the new Congress on the first session day, and these reforms could include substantial changesto its committee structure. The Senate's rulesare deemed to be in place automatically at the beginning of a new Congress. However, some believe there will beattempts on the first day of the new Congressto change the Senate's Cloture Rule and other rules relating to the consideration of executive nominations. Theseefforts could open the door to considerationof committee system changes as well. Retain Current Structure. Congress could decide that the current system is sufficient to monitor the work ofthe new department. No changes would be made in either jurisdiction or referral procedures. Some may argue thatit is too soon to know how much legislativeworkload the new department will cause House and Senate committees. In the immediate aftermath of the 2001terrorist attacks, all congressional committeessought involvement in terrorism matters. More recently, the involvement of committees with only minor claimsto jurisdiction seems to have tapered off. Historically, there has been no necessary connection between an executive reorganization and congressional committee reorganization. Several House andSenate committees were combined to create the new Armed Services Committees in 1947, at about the same timethat the Department of Defense was created. The Armed Services Committees promptly created subcommittees that closely matched the former standingcommittees that had been merged in the committeereorganization. On the other hand, the Department of Energy was created after the Senate had consolidated energyjurisdiction in its committees, but before theHouse completed a realignment of its energy jurisdictions in 1980. The creation of the Department of Health,Education, and Welfare (now Health and HumanServices) was not accompanied by any change in House or Senate committee jurisdictions. Reorganize Entire System. Either chamber or both chambers, acting separately or jointly, could undertake anextensive reorganization of the committee system. A substantial House committee reorganization took place in1995, but it has been a quarter century since theSenate comprehensively reorganized its committees. The Joint Committee on the Organization of Congress in the103rd Congress considered numerous optionsfor such reorganization, but did not directly address the issue of terrorism or anti-terrorism jurisdiction. (4) A comprehensive reorganization could allow bothchambers to address other jurisdiction issues which have emerged in recent years. (5) Nevertheless, a comprehensive reorganization is normally controversialand rarely contemplated under very short deadlines. Realign Committee Jurisdiction. Within the existing system, either or both chambers could choose to realigntheir committee jurisdictions within the existing structure. That would entail changing chamber rules. Pastexperience indicates that Members generally havebeen loathe to overhaul the committee system, especially during a Congress. Rules changes are traditionally adoptedat the beginning of a new Congress. In theSenate, because there is no need to readopt Senate rules at the beginning of a new Congress, a committeereorganization would have to be consideredseparately. In either chamber, it would be possible to add jurisdictional aspects of certain homeland security topics to the jurisdiction of specific committees, withoutaltering the existing subject jurisdictions of committees over other topics. For example, jurisdiction over "nationalenergy policy generally" was assigned to theHouse Energy and Commerce Committee in 1980 without significant alteration to other committees' jurisdictions. Change Referral System. Both chambers typically refer measures to a single committee, by determiningprimary jurisdiction in the House and predominant jurisdiction in the Senate. In the House, most multiple referralsare sequential, although joint referrals werepermitted until 1995. Changing the referral system could enable all interested committees to maintain legislativeand oversight jurisdiction. For example, theSpeaker of the House (who has the discretionary authority to impose time limits on referrals) could be required toimpose one on all committees involved in amultiple referral of a homeland security-related bill. In addition, for legislation on homeland security, the Housecould allow joint referrals. (In the 108thCongress, House rules allow referral without designation of a primary committee "under exceptionalcircumstances.") In the Senate, which generally requires unanimous consent for multiple referrals, party leaders could invoke their little-used authority to recommend referrals toseveral committees by debate-limited motion. However, major changes in House or Senate bill referral rules couldcomplicate action on homeland securitymatters and could be nearly as controversial as a jurisdictional realignment. Create New Standing Committee over Homeland Security. A new standing committee could be created ineither or both chambers. Such a panel could have legislative responsibility over all aspects of the Department ofHomeland Security. Questions regardingwhether the new committee would absorb jurisdiction from existing panels or overlap with them would need to bedecided. Would special oversight authority(broader in scope than the committee's legislative jurisdiction) be granted to it? Create Select Committee over Homeland Security. The House has created two temporary select committeesto deal with homeland security in the wake of the 2001 attacks. A select committee with the same or a revisedjurisdiction could be established in the 109thCongress, with or without the creation of a companion select committee in the Senate. If such a new panel werecreated, would it have legislative authority (forexample, in the same manner as do the current intelligence select committees)? If it were limited to conductingoversight, how and through what process wouldits findings be converted into legislative recommendations? In view of the recommendations of the 9/11Commission about the House and Senate PermanentSelect Committees on Intelligence, will the views of the House and Senate about creating such select committeeson other subjects change? Create a Joint Committee on Homeland Security. The House and Senate could create a joint committee tooversee the work of the new department. However, only one joint committee in the last half-century has beengranted legislative jurisdiction. If such a jointpanel were created, the question of sequential referrals to existing standing committees could still be raised. TheHouse and Senate acted separately in the 107thCongress to permit the two intelligence committees to hold an inquiry into intelligence failures prior to the terroristattacks. Nothing in House or Senate ruleswould preclude existing House or Senate committees from holding joint hearings in the interests of greaterefficiency. Some view joint committees as a meansto permit more efficient congressional review of policy areas, while others believe that separate committees help preserve chamber autonomy and encourageindependent committee initiatives. Create Leadership Committee. A small committee comprised of members named by chamber party leaderscould act to coordinate homeland security legislative and oversight work among other committees in the chamber. The 107th Congress House HomelandSecurity Select Committee was just such a leadership panel, and a similarly constituted panel could be reestablishedon a more permanent basis. (6) Use less Formal Means to Coordinate Policy. In both the House and Senate, many committees claimingresponsibility for specific policy areas have entered into "memoranda of understanding," or agreements among theconcerned committees, reflecting eachpanel's appropriate jurisdiction over a disputed policy area. These memoranda serve as guidance to theparliamentarians' offices in making bill referrals andmay obviate the immediate need for a formal revision in committee jurisdictions. The Senate also makes use of "temporary standing orders," unanimous consent agreements typically in force for the current Congress only, that modify thestanding rules of the Senate. One or more temporary standing orders could be used to allocate jurisdiction amongSenate committees over homeland securityissues, subject to renewal or modification at the beginning of each succeeding Congress. If successful, the temporaryorders could be converted into morepermanent changes in Senate procedure; if not, other realignments could be attempted. Further Realign Appropriations Committees' Subcommittees. The House and Senate AppropriationsCommittees adapted their structures in 2003 to create a new Subcommittee on Homeland Security. (7) Additional recommendations by the 9/11 Commissioninclude a proposal to set out intelligence appropriations in a separate appropriations bill, or to combine authorizationand appropriations for intelligenceactivities in only one panel in each chamber. Additional changes may be required in the AppropriationsCommittees' structures and the procedures throughwhich they draft both regular and supplemental appropriations bills.

The 9/11 Commission Report recommended that the House and Senateeach have a "permanent standingcommittee" as the principal committee for conducting oversight and review for homeland security. Earlier, pursuantto PL 107-296, the Homeland SecurityAct, a new Department of Homeland Security was established. Congress began discussions regarding theappropriate congressional structure to conductoversight and fund the new department. Section 1503 of the legislation states the sense of Congress that eachchamber should review its committee structure inlight of the reorganization of the executive branch, and the House, in the 108th Congress, establisheda Select Committee on Homeland Security with a mandateto report recommendations for changes in the House committee system by September 30, 2004. Each chamber might decide to retain its current structure, make minor alterations to its current jurisdictionalalignment, make extensive jurisdictional changes,create a standing committee, re-establish the existing House select committee, or establish one or more new selectcommittees with revised authorities. Furtherchanges might also be made in the structure of the Appropriations Committees. This report addresses some of theseoptions and will be updated as eventswarrant.

Trade Adjustment Assistance Community College and Career Training (TAACCCT) grants are competitive grants to institutions of higher education (IHEs) to support career training programs that can be completed in two years or less. Statute specifies that TAACCCT-funded programs should target workers who have been adversely affected by international trade and are eligible for the Trade Adjustment Assistance for Workers (TAAW) program. TAAW offers subsidized training and other supports for displaced workers who have lost their jobs due to foreign trade. While the TAACCCT program targets TAAW-eligible workers, other adults may also be served by programs with TAACCCT funding. The program is administered by the Department of Labor (DOL). TAACCCT was created as part of the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ) and is codified as part of the Trade Act of 1974, as amended. The Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ) provided four years of annual mandatory funding through FY2014. Additional details are in the " Legislative and Funding Histories " section at the end of this report. The statutory provisions of TAACCCT are somewhat general. DOL has not established regulations related to the program, so the department's solicitation for grant applications (SGA) clarifies many details. To present the most up-to-date information possible, this report will focus on program elements and applicant requirements as they are conveyed in the most recent SGA, issued in April 2014. Statute authorizes grants for "developing, offering, or improving educational or career training programs" for TAAW-eligible workers. The most recent SGA operationalizes these aims by establishing three program objectives: (1) increasing the attainment of employment-related credentials, (2) developing, implementing, and replicating innovative training curricula, and (3) improving employment outcomes. The most recent SGA also notes that while the statutory purpose of the program is to meet the training needs of TAAW-eligible workers, it expects that grantees will develop and deliver programs that are appropriate for a broad range of adult workers. The SGA also specifies that TAACCCT grants emphasize capacity-building and the transferability and scalability of the projects they fund. All intellectual property created under the grants is openly licensed for free use, adaptation, and improvement by other education and training providers. Statute specifies that eligible institutions are IHEs that offer programs that can be completed in no more than two years. The most recent SGA further specifies that qualified IHEs include public, private not-for-profit, and private for-profit institutions. Grantee institutions must partner with other local stakeholders. These partnerships are described in the " Core Elements of TAACCCT Projects " section later in this report. IHEs may apply for TAACCCT funding as an individual institution or as a member of a multi-institution consortium. Consortia may be from a single state or may be from multiple states if the consortium members share a common labor market. Each consortium application must specify a lead institution that will have fiscal and administrative responsibility over the grant. Institutions in the 50 states, the District of Columbia, Puerto Rico, and other U.S. territories are eligible to apply for TAACCCT grants. Since the TAAW program is limited to workers in the 50 states, the District of Columbia, and Puerto Rico, the SGA notes that U.S. territories other than Puerto Rico may be at a disadvantage in the application process because they do not have TAAW-eligible workers and therefore will not be able to meet all of the SGA's criteria. The SGA states the intention of awarding approximately $150 million of the $450 million available for grants in FY2014 to single-institution applicants. The remaining funds (approximately $300 million) are intended for larger awards to consortium applicants. As required by statute, at least 0.5% of total funds for grants (approximately $2.25 million) must be allocated to institutions in each state. This minimum can be met through a single-institution award or as an institution's share of funding as part of a consortium. Allowable uses of TAACCCT funds are the development, improvement, and expansion of education and career training programs. This may include both personnel and non-personnel costs. Grant funds may be used to hire and train staff that will develop or deliver new curricula or other program components. Allowable non-personnel costs include purchasing classroom supplies or technological investments that directly support grant activities. Capital expenditures may be allowable with approval from DOL. Non-allowable activities include any kind of payment to training participants, including using grant funds for participants' tuition, fees, or other personal expenditures. In all cases, TAACCCT funds must supplement and not supplant any other sources that are funding existing activities. The most recent SGA specified that grants are for a 48-month period of performance. Grantees must develop and offer programs within the first 36 months and spend the final 12 months gathering information and reporting outcome data. Statute establishes basic requirements for grant proposals and general criteria for choosing grantees. The law also specifies that DOL will promulgate guidelines for the submission of grant proposals. These guidelines have been issued through SGAs and both clarify and expand upon the requirements established in statute. Statute specifies that grant proposals must describe the proposed project and how it will develop, offer, or improve a training program; how the project will meet the needs of TAAW-certified workers in the community; any previous experience the applicant has in providing training to TAAW-eligible workers (a lack of experience does not disqualify an applicant); outreach the applicant has conducted in the community to identify unmet training needs that will likely result in employment outcomes; and outreach to local employers who demonstrate a commitment to hiring individuals who partake in the proposed training. Statute further specifies that, when awarding grants, DOL will consider the merits of the proposal to develop, offer, or improve training programs to be made available to TAAW-eligible workers; the employment opportunities available to workers who complete a program that is developed, offered, or improved by TAACCCT funding; and the prior and anticipated demand for training programs by TAAW-eligible workers served by the applying institution as well as the capacity of existing programs to meet anticipated demand. The most recent SGA specifies an expanded set of requirements, establishing six core elements of TAACCCT projects. The project's approach, which accounts for 55% of the criteria on which applications are evaluated, must demonstrate the following core elements. 1. Evidence-based design. Proposed programs must demonstrably improve educational and employment outcomes. Applicants replicating or adapting existing strategies should provide evidence of effectiveness. Applicants proposing new strategies should cite "preliminary research findings, related research findings, and/or reasonable hypotheses to support the design of the program[.]" 2. Career Pathways . Applicants must develop a curriculum that offers a clear sequence of coursework and/or credentials focused on one or more industry sectors. Applicants must also offer accelerated and contextualized remediation, competency-based assessments, stacked and latticed credentials, and transferability of credits to other two-year and four-year institutions within the state or consortium. 3. Advanced online and technology-enabled learning . TAACCCT proposals must consist of courses that are conducted online, in hybrid (combining traditional and online coursework), or otherwise incorporate technology. The SGA suggests that applicants may use technology or online courses to "enable rolling and open enrollment processes, modularize content delivery, simulate assessments and training, and accelerate course delivery strategies." The SGA also expressed interest in technology that will customize content to the student's prior knowledge or expand upon technology developed in prior TAACCCT projects. 4. Strategic alignment with the workforce system and other stakeholders . Applicants must partner with at least one local Workforce Investment Board and the state agency that administered the TAA for workers program. Applicants must illustrate local needs and avoid duplication by demonstrating alignment with the governor's Economic Development plan and the state's Workforce Investment Act-Wagner Peyser (WIA-WP) integrated workforce plan. Applicants are also encouraged to coordinate their proposal with any private sector or philanthropic entities that may align with the proposed project. 5. Sector strategies and employer engagement . Applicant institutions must partner with at least two employers and a regional industry representative for each industry that the proposed program targets. These partners are expected to support curriculum development and provide work-based training opportunities, as appropriate. 6. Alignment with previously-funded TAACCCT projects . Applicants are expected to research projects that received funding under prior rounds of TAACCCT and design their applications to decrease duplication and strengthen the geographic reach of projects. Since all resources developed in previous TAACCCT grants are openly licensed, applicants may also align with prior grantees by incorporating existing resources into a new curriculum. Statute requires DOL to report annually to the Senate Committee on Finance and the House Committee on Ways and Means on each TAACCCT grant awarded and the impact of each award on TAAW-eligible workers. The SGA establishes reporting requirements for grantees. Grantees must provide quarterly financial reports, quarterly progress reports, and annual performance reports. The last annual performance report will serve as the grant's final performance report and should include annual and cumulative information on the grant's activities. Single institution grantees will submit data directly to DOL. Consortium member institutions will submit reports to the consortium's lead institution, which will compile data and submit a single report to DOL. The SGA specifies that each TAACCCT application must also include a budget, design, and implementation plan for a third-party evaluation of the proposed project. All evaluation designs must include (1) impact or outcome analysis of participants in grant-funded activities, and (2) implementation analysis. Grantees must also participate in a national evaluation that will be conducted by a contractor on behalf of DOL. TAACCCT was created by the Trade Globalization Adjustment Assistance Act of 2009 (TGAAA), part of the ARRA. TAACCCT was in a subsection of TGAAA that created several programs targeting communities that were adversely affected by international trade. The Trade Adjustment Assistance Extension Act of 2011 (TAAEA; Title II of P.L. 112-40 ) repealed all components of the subsection except TAACCCT. The original statute outlined the provisions of the TAACCCT and authorized $40 million in each of FY2009 and FY2010 as well as $10 million for the first quarter of FY2011. It also specified that no institution could receive more than one grant or a grant in excess of $1 million. No funds were appropriated for TAACCCT until March 30, 2010, when President Obama signed the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ). This act provided $500 million in mandatory funding for TAACCCT in each of the four years from FY2011 through FY2014 (see Table 1 ). This act also specified that institutions in each state receive at least 0.5% of each year's TAACCCT funding and explicitly supersedes the $1 million per-state limit established by prior law. Funding levels in FY2013 and FY2014 were reduced under sequestration. The first SGA for TAACCCT funding was issued by DOL in January 2011 and closed in April 2011. DOL announced the grantees under this SGA on September 27, 2011. Among the grantees were 17 single institution applicants, 18 single-state consortia, and 5 multi-state consortia. Each state received at least $2.5 million in funding either directly or as their share of a grant to a multi-state consortium. The second SGA was issued in February 2012 and closed May 24, 2012. DOL announced the grantees on September 19, 2012. Among the grantees were 27 community college and university consortia and 27 individual institutions. In its announcement, DOL stated that the 25 states without a winning submission for an individual institution would each be contacted to develop a qualifying project that would be awarded $2.5 million. The third SGA was issued in April 2013. DOL announced the grantees September 18, 2013. The grants included 23 awards to individual institutions and 20 awards to consortia. In its announcement, DOL stated that 14 states and territories were not awarded funds during the competitive process and would be contacted by DOL to develop a qualifying project that would be awarded a grant of approximately $2.5 million. The fourth SGA was issued in April 2014. This SGA represents the final round of TAACCCT grants under the funding provided under HCERA. The SGA's closing date was July 7, 2014.

Trade Adjustment Assistance Community College and Career Training (TAACCCT) grants are competitive grants to institutions of higher education to support the development, offering, and improvement of career training programs that can be completed in two years or less. The program targets workers who have been adversely affected by international trade, though non-trade-affected workers may also participate in TAACCCT-funded programs. TAACCCT is administered by the Department of Labor (DOL). It was created by the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) and is authorized under the Trade Act of 1974, as amended. The Health Care and Education Reconciliation Act of 2010 (HCERA, P.L. 111-152) provided $500 million per fiscal year in mandatory appropriations for TAACCCT for FY2011 through FY2014. In FY2013 and FY2014, the funding for the program was reduced to $474.5 million and $464 million, respectively, due to sequestration. Funds equal to at least 0.5% of the total annual funding for grants must be awarded to institutions in each state. TAACCCT grantees may use funds to design, develop, and offer career training programs. Allowable uses of funds include personnel as well as materials and other expenses related to content development and delivery. Under the most recent solicitation for grant applications (SGA), TAACCCT grants provide a 48-month period of performance. This period includes 36 months for the design, development, and delivery of a training program and 12 months for data gathering and evaluation. Statute requires that grant applications include a description of the proposed project and how it will serve trade-affected workers. Statute further specifies that grants will be judged on the merit of the proposed project and the local employment prospects for individuals who would complete the proposed program. SGAs have specified an expanded set of criteria for program grants to operationalize the aims of the TAACCCT program. The first SGA was issued in January 2011 and grantees were announced in September 2011. The second SGA was issued in February 2012 and grantees were announced in September 2012. The third SGA was issued in April 2013 and grantees were announced in September 2013. The fourth SGA, representing the final round of grants under the HCERA funding, was issued in April 2014.

Most measures considered by the Senate are taken from its Calendar of Business, which lists measures available for floor consideration under the heading "General Orders." Usually, measures are placed on the calendar under General Orders when they are reported by the committee to which they have been referred. A bill or joint resolution may also be placed directly on the Calendar of General Orders upon introduction (or receipt from the House) under provisions contained in Senate Rule XIV. Normally, introduced measures are immediately read twice and referred to a committee. If objection is heard to a second reading on the same day, the measure is held over until the next day. After a second reading, if objection is heard to further proceedings, the measure is not referred but is placed directly on the Calendar of General Orders. Conference reports do not come up for consideration from the calendar. Instead they may be called up at any time when the conference papers are filed at the "desk" in the Senate. Over the Senate's history, the majority leader has acquired responsibility for arranging the schedule of the Senate's business. Although the presiding officer of the Senate is required to recognize any Senator seeking recognition, the long-standing practice of the Senate is to allow the majority leader (or minority leader) to have priority for recognition if seeking recognition at the same time as another Senator. Likewise, the majority leader (or a designee, such as the bill manager) is, by custom, the one who offers motions or makes unanimous consent requests concerning the floor agenda and scheduling, including the consideration of legislation or the time for the Senate to meet, recess, or adjourn. In general, the standing rules of the Senate place a strong emphasis on the prerogatives of individual Senators, even at the expense of the majority. As a result, the Senate and its agenda are greatly influenced by the preferences of individual Senators. Senators may exercise their prerogatives at any time, but comity and compromise often lead Senators to relinquish the opportunity to exercise their prerogatives fully. In exchange they enable the Senate to conduct its business more efficiently and may receive corresponding concessions in relation to measures they favor. A large majority of measures reach the floor of the Senate when the Senate accepts a unanimous consent request to proceed to consider them made by the majority leader (or his designee). Normally, before the majority leader requests unanimous consent, he will consult with interested Senators to ensure that no objection will be made. Although the measures taken up are generally those that have been placed on the calendar, the Senate may, by unanimous consent, agree to take up any measure, whether it is already on the calendar, has been previously reported, or has even been introduced. Unanimous consent agreements may provide for the Senate to immediately proceed to consider a measure or may be made in advance of actual consideration. The agreement may provide that the measure in question come up at a specific time in the future or that the majority leader (usually in consultation with the minority leader) bring it up unilaterally at any time thereafter. Unanimous consent agreements to bring a measure to the floor, perhaps by discharging a Senate committee from its further consideration, as well as to pass it without debate, are common. Such agreements often permit Senators to have their statements placed in the Congressional Record as if they were delivered. The process of consultation and negotiation used to craft such unanimous consent agreements is sometimes referred to as the "clearance" process. The request for unanimous consent to take up a measure is often made in a freestanding form, but sometimes it is part of a more extensive unanimous consent request that also sets terms for the measure's consideration. The majority leader often seeks to negotiate such terms in advance, placing limits on the ability of Senators to debate a measure or offer amendments, because the rules of the Senate place no general limits on such prerogatives. These negotiations are designed to produce unanimous consent agreements (sometimes called "time agreements," since one of their primary objectives is to limit the time available for debate) that govern consideration of a measure in place of the regular standing rules of the Senate. Alternately, the majority leader may instead offer a motion that the Senate proceed to consideration of a measure, particularly if he has been unable to negotiate a unanimous consent agreement to do so. Although this motion requires only a simple majority for approval, in most parliamentary situations it is debatable. As a result, the motion to proceed is itself susceptible to extended debate. As a result, even before a measure can itself reach the Senate floor, there may be a filibuster on the question of whether the Senate should consider it at all. The majority leader may attempt to invoke cloture on the motion to proceed but may still be faced with a filibuster against the underlying measure. Since 1959, the rules of the Senate have allowed cloture to be invoked on the motion to proceed regardless of the type of underlying measure. On January 24, 2013, the Senate amended Senate Rule XXII to establish an additional, optional process of invoking cloture on a motion to proceed that differs in some respects from the normal cloture process. Under this process, if a cloture motion filed on a motion to proceed to consider a measure or matter is signed by both floor leaders, seven additional Senators not affiliated with the majority party, and seven additional Senators not affiliated with the minority party, it will be eligible for a vote on the next session day (as opposed to the second day of session, as would otherwise be the case). If cloture is invoked, the vote will immediately be put on the motion to proceed without the usual 30 hours of post-cloture consideration. Under certain circumstances the motion to proceed is not debatable. In particular, the motion is non-debatable when offered: on a conference report or amendments between the houses, on a measure considered pursuant to a rule-making statute, or during the morning hour. Although a non-debatable motion to proceed could be made during the morning hour on a wide variety of m easures, it is not a frequent occurrence in modern chamber practice. When the Senate adjourns it will routinely stipulate by unanimous consent that at the start of the next legislative day the morning hour be deemed to have expired and, thus, no motion to proceed be in order. Additionally, a motion made during legislative session to proceed to consider executive calendar business (described below) is also not debatable. The practice of Senate majority leaders seeking advance clearance for unanimous consent to call up measures often serves to give them notice of potential objections to consideration from other Senators. A complex network of formal and informal avenues of information flows between the majority leader's office and those of all other Senators. This network is used to notify Senators of scheduling proposals from the majority leader's office and in return to provide the majority leader's office with specific requests or objections of other Senators. Similar information flows through the minority leader's office. Notifications of prospective objections to requests to take up a measure are referred to as "holds." Senate rules provide a Senator placing a hold with at least two possible ways of enforcing it. First, if a unanimous consent request to consider a measure is made despite the hold, the Senator may object to the request. Because one objection suffices to defeat a unanimous consent request, the majority leader will frequently refrain from propounding the request on the floor when one or more Senators have made it known that they would object. Second, if a request for unanimous consent meets objection, the majority leader may instead attempt to bring the measure up by offering a motion to proceed. Inasmuch as the motion to proceed is usually debatable, a Senator who wishes not to see the measure reach the floor may attempt to block its consideration by engaging in or threatening to engage in extended debate of this motion, a form of filibuster. Holds are given serious consideration by the majority leader when negotiating the Senate's floor agenda. A hold is the prerogative of any Senator and may be placed for any reason. In some cases, a hold may simply reflect a request by a Senator that he or she be given advance notice before a measure will be brought to the floor. In others, a hold may be part of a complex negotiation over unanimous consent agreements covering consideration of one or more measures or even part of a deliberate plan to block consideration. In recent years, there have been efforts to regulate the use of holds in the Senate. Section 512 of P.L. 110-81 , the Honest Leadership and Open Government Act, directs the majority and minority leaders of the Senate to recognize an anonymous hold only when public notice procedures outlined in that section are followed by Senators. At the beginning of the 112 th Congress (2011-2012), the Senate adopted a standing order that was designed to supplement this law. Senate rules provide that executive business (i.e., treaties and nominations) be considered in executive session rather than in legislative session like other business of the Senate. Under Rule XXV, all treaties are referred to the Foreign Relations Committee and, when they are reported, are placed on the Executive Calendar. Treaties must lie over for one calendar day before any subsequent Senate consideration. Similarly, under Rule XXXI, nominations must be referred to the appropriate committee and cannot be voted on the same day they are received from the President or on the same day they are reported, except by unanimous consent. The majority leader will typically seek to obtain unanimous consent to go into executive session to consider specific executive business. However, a majority leader may alternatively make a motion to go into executive session that may specify a particular treaty or nomination to be considered. The motion to go into executive session is neither debatable nor amendable and is highly privileged. It takes precedence over all motions except to adjourn or recess and is not subject to a motion to table. If the motion provides that the Senate go into executive session to consider a specific piece of executive business, the effect is to raise executive business for consideration by non-debatable motion. Although infrequent in current practice, the Senate may also agree to a request or motion to go into executive session without an item of executive business being specified. In that case, once the Senate is in executive session, it may proceed to specific executive business by unanimous consent or by motion, but the motion would be debatable. On November 21, 2013, and April 6, 2017, the Senate voted to establish new precedents related to the number of votes necessary to bring debate to a close on presidential nominations. Under these precedents, invoking cloture on presidential nominations requires a vote of a majority of Senators present and voting (51 votes if all 100 Senators vote). Prior to the establishment of these two precedents, the cloture threshold for nominations was three-fifths of the Senators duly chosen and sworn, or 60 votes if there are no vacancies in the Senate's membership. Multiple nominations are frequently considered together ("en bloc") but only by unanimous consent. Upon objection by any Senator a nomination must be considered separately.

Two basic methods are used by the Senate to bring legislation to the floor for consideration: (1) The Senate, at the majority leader's request, grants unanimous consent to take up a matter, or (2) it agrees to his motion to proceed to consider it. Because the motion to proceed is subject to debate in most circumstances, it is less frequently used. Both methods are derived from the basic premise that the Senate as a body may decide what matters it considers. The Senate may also use the same two methods to bring up executive business (nominations and treaties). This report will be updated to reflect changes in Senate practice.

Concerns over the price of oil and supply of petroleum have revived interest in alternative energy supplies, including the development of oil shale to help address energy needs in the United States. The process used to develop oil shale resources requires a plentiful water supply. According to news reports, oil companies currently hold senior water rights in the states where oil shale reserves are located. As explained below, appropriation of water in these states is based on a priority system, under which water rights holders have seniority over other water rights holders who acquired rights later. These senior rights reportedly have not been exercised for decades, allowing junior water rights holders to use the water. Because of the nature of the water rights systems in the relevant states, junior water rights holders might face significant limitations on their future use of water from the Colorado River Basin if the oil companies exercise their rights. This report will provide a brief overview of water rights in Colorado, Utah, and Wyoming; changes that may be made to currently held water rights; and the possibility for abandonment of unused water rights. The law of water rights is traditionally an area regulated by the states, rather than the federal government. Individual states may choose the system under which water rights are allocated to water users. Western states, including Colorado, Utah, and Wyoming, generally follow the prior appropriation doctrine of water rights, often referred to as "first in time, first in right." These states typically are drier and experience regular water shortages. The prior appropriation system allows water users to acquire well-defined rights to certain quantities of water by designating senior and junior rights to avoid uncertainty during times of water scarcity. Under the prior appropriation doctrine, a person who diverts water from a watercourse and makes reasonable and beneficial use of the water acquires a right to use of the water. The user's location relative to the watercourse (whether upstream, downstream, adjacent, or remote) does not affect the ability to obtain a water right. Typically, under a prior appropriation system of water rights, users apply for a permit from a state administrative agency which manages the acquisition and transfers of such rights. The prior appropriation system limits users to the quantified amount of water the user secured under the permit process with a priority based on the date the water right was conferred by the state. The user's right that was appropriated first (the senior water right) is considered superior to later appropriators' rights to the water (the junior water right). Appropriators fill their needs according to the order in which they secured the right to the water and not based on the available quantity. Therefore, in times of shortage, junior rights holders could be without the water they need. The issues regarding water rights in the Colorado River Basin arise from the fact that a limited supply of water is sought after by many different users. Junior rights holders who use waters from the Basin to meet agricultural and municipal interests potentially are limited by what oil companies, as senior rights holders, use. These junior rights holders have been able to use water to fill their needs for decades, while senior rights holders have not used the water. The dispute over a possible water shortage when both groups wish to use water likely will raise questions about the nature and administration of water rights, whether existing water rights may be amended to account for the changed circumstances, and the options available for users who seek to claim unused water rights from other users. Water rights typically are established through an administrative permit system of the state in which the water is being appropriated. Water rights seekers must file an application with the proper state administrative organization, which dates the seniority of the water right. State law provides that the water is the property of the state, but a water right is considered an individual's property right in the priority of the use of the state's water. The specific nature of water rights may vary depending on the state. For example, in Colorado, water rights can be either absolute or conditional. Absolute rights are assigned to users who have diverted water and put the water to beneficial use, whereas conditional water rights allow the user to maintain the priority of the right he intends to acquire until the diversion is complete. In other words, a user with an absolute right has fulfilled all the requirements necessary to acquire a right to the water. A user with a conditional right has asserted an intention to acquire a right but has not yet fulfilled all of the requirements necessary to do so, and that right is conditioned on the completion of all requirements. Utah law provides that water rights become real property only when the application has been perfected under the required legal process, meaning that title of the right is properly filed with the state. Wyoming issues permits to applicants for water rights, which allow the user time to construct and complete a project to put water to a beneficial use. The water right is not considered permanent until the process is complete and may be disputed or removed until that time. In the context of oil shale in the Colorado River Basin, oil companies hold both absolute and conditional rights for water in Colorado. The nature of the rights held could influence the future use of the water and may provide a basis for junior rights holders to challenge the continuing validity of the senior rights holders' rights. Both junior and senior rights holders may seek to alter certain water rights if circumstances of water use change. For example, in Colorado, senior rights holders may seek to convert their conditional rights to absolute rights, as discussed. Other state laws provide for water rights to be altered as circumstances change. Junior or senior rights holders may seek to change the geographic or purpose parameters set at the time they acquired their rights. Water rights generally are allocated based on a specific point of diversion, location of use, and purpose of use. In order to change the point from which water is diverted from its source or to change the place or purpose of use, a water right holder must apply to the appropriate state office for approval. The state office considering the change may consider factors such as whether the change would exceed historical levels and whether other users' vested water rights would be impaired by the change. Junior rights holders may seek to secure water by acquiring the rights of senior rights holders under the water rights transfer process in each state. In Colorado, a water right may be bought, sold, or leased to other entities if the transfer is filed with the appropriate state office and the transfer would not injure the vested rights of another user. Similarly, Utah water law provides that a water right may be bought or sold if the transfer is approved by the state. Under Wyoming law, a water right attaches to the lands or the place of use in the permit rather than to an individual. Water rights may be transferred only if included in the sale of land, or by petition for a change in place of use to the appropriate state office. Senior rights holders may lose their rights if those rights are not used. Conditional rights in Colorado require rights holders to demonstrate continuous efforts in developing the water right on a regular basis. Other water rights also may be lost under certain circumstances according to state law. If senior rights holders lose their rights, the water supply available for junior rights holders to fill their needs would increase. In Colorado, a water right may be considered abandoned if it is not used for a 10-year period and there is an intent to abandon. In Utah, water rights may be abandoned or forfeited. For a water right to be abandoned, there must be intent to abandon by the user and there is no time requirement. For a water right to be forfeited, the water right must not be used for a five-year period. In Wyoming, abandonment may take three forms. First, the user may voluntarily abandon the water right. Second, one user may allege that another user's right has been abandoned because the other user has not used the right for a five-year period and that reactivation of that right would injure the user's right. Third, the state may allege an abandonment if the water is not put to beneficial use for a five-year period and reallocation would serve the public interest. Water rights that are lost under these processes revert to the state and may be appropriated in the future. State water laws govern the allocation of water within the state, but water resources rarely are confined to state boundaries. Rather, like the Colorado River Basin, water basins spread across several states. As a result, states often compete for resources from shared basins, and the competition often leads to water disputes between states in regions with shared water resources. Interstate water disputes may be resolved in various manners. Two of the most common methods are equitable apportionment in the U.S. Supreme Court and interstate compact negotiated by the parties and approved by Congress. The Colorado River Basin is no exception to the likelihood of disputes and is subject to a number of judicial decisions and interstate compacts, commonly referred to as the "Law of the River." The Law of the River governs the waters of the Colorado River Basin in addition to regulation by the individual states in which water rights are allocated. The Law of the River is a collection of laws and agreements that govern the distribution of the water throughout the Basin as a whole. Because the Colorado River Basin includes seven states, which have varying needs and all draw upon the same resources, a series of court decisions, statutes, interstate compacts, and international treaties address the use and management of Colorado River water. The laws and agreements that form the Law of the River attempt to allocate the waters of the Colorado River Basin among the states, providing broad parameters for the distribution of the Basin's waters. Thus, the Law of the River would not govern individual water rights directly, but it would place limits on the water available for allocation by each state. Development of oil shale resources has been a controversial political issue. Some have expressed an interest in pursuing more aggressive oil shale development programs. Others have suggested that such programs would be harmful to environmental protection policies. In 2008, the Department of Interior announced proposed regulations that would promote oil shale development and issued final regulations that took effect in January 2009. The 111 th Congress may consider directing future activity in oil shale development, whether in accordance with the regulations or enacting legislation providing other direction for future agency actions.

Concerns over fluctuating oil prices and declining petroleum production worldwide have revived interest in oil shale as a potential resource. The Energy Policy Act of 2005 (EPAct; P.L. 109-58) identified oil shale as a strategically important domestic resource and directed the Department of the Interior to promote commercial development. Oil shale development would require significant amounts of water, however, and water supply in the Colorado River Basin, where several oil shale reserves are located, is limited. According to news reports, oil companies holding water rights in the region have not exercised those rights in decades, which has allowed other water rights holders to use the water for agricultural and municipal needs. Because of the nature of the water rights systems in the relevant states, these users might face significant limitations in their future use of water from the Colorado River Basin if the oil companies exercise their rights. This report will provide a brief overview of water rights in Colorado, Utah, and Wyoming, including changes that may be made to currently held water rights and the possibility for abandonment of unused water rights.

The first Secretary of the Senate, Samuel Allyne Otis, was elected on April 8, 1789, two days after the Senate first achieved a quorum. The Secretary of the Senate was initially responsible for keeping the minutes and records of the Senate, transmitting messages to the House of Representatives, and purchasing supplies. Today, the Secretary of the Senate's jurisdiction has been expanded beyond the original duties. These additional responsibilities include supervision of the clerks, curators, official recorders of debates, and the parliamentarian; the disbursement of payroll; the education of the Senate pages; and the maintenance of public records. The Secretary also serves as the chief financial officer of the Senate and is the custodian of the Senate seal. In the event that the Secretary dies, resigns, or is disabled, the Assistant Secretary of the Senate acts as Secretary until a new Secretary is elected or the disability has ended. Acting jointly, only the majority and minority leaders and the President pro tempore can certify that the Secretary is unable to perform her duties. The duties and responsibilities of the Secretary of the Senate have developed over time through several sources. These sources include statutes, Senate rules and orders, and custom and precedent. Statutes, rules and orders, and other materials may be found in the United States Code , which is the codification, by subject matter, of the general and permanent laws of the United States; the United States Statutes at Large , which is the collection of all laws and resolutions enacted during each session of Congress; the Senate Manual , which contains the texts of the (1) Standing Rules of the Senate, (2) standing orders of the senate, (3) rules for the Regulation of the Senate Wing of the United States Capitol, and (4) excerpts from laws applicable to the Senate; and through custom and precedent. Many of the duties of the Secretary of the Senate are defined by the Senate Committee on Appropriations and the Senate Committee on Rules and Administration. As a consequence of its jurisdiction over Senate administrative matters, the Senate Committee on Rules and Administration oversees operations of the Secretary of the Senate. The Secretary of the Senate's duties and responsibilities can be divided into three broad categories: financial, administrative, and legislative. The Secretary is the chief financial officer of the Senate. As such, the Secretary is responsible for funds appropriated to the Senate and for managing and supervising the disbursing office, which among its financial duties handles the Senate payroll and related personnel matters. The Secretary also conducts audits of Senate financial activities. Details on expenditures of funds appropriated to the Senate are published semi-annually by the Secretary in the Senate document, Report of the Secretary of the Senate. The Secretary of the Senate is responsible for a number of services within the Senate. These responsibilities include the Senate Stationery Room; the Senate Library; the Conservation and Preservation Office; the Office of Public Records; the Senate Historical Office; the Office of Senate Curator; the Office of Senate Security; the Office of Interparliamentary Services; the Office of Printing and Document Services; the Disbursing Office; the Senate Page Program; and the Senate Gift Shop (including Gift Shop Revolving Fund). Other duties of the Secretary of the Senate include maintenance of the Senate public website; supervision of Senate staff displaced by the death or resignation of a Senator; and supervision of the Senate legal counsel. The Secretary of the Senate manages functions that support the legislative process in the Senate, such as signing legislation after Senate passage. The Secretary also supervises the following staff (listed with their roll in the Senate legislative process): Bill Clerk (records the Senate's official activities and status of legislation); Enrolling Clerk (prepares Senate-passed legislation before it is sent to the President); Executive Clerk (records Senate actions during executive sessions, produces the Executive Calendar, and processes nominations and treaty resolutions received from the President); Journal Clerk (records the Senate's daily legislative proceedings and prepares a history of legislation for the Senate Journal ); Legislative Clerk (reads aloud bills and amendments, the Senate Journal , messages to the Senate; calls the roll and prepares the daily Calendar of Business); Official Reporters of Debates (prepare verbatim reports of Senate floor proceedings for the Congressional Record ); and Parliamentarian (advises Senators and staff on Senate precedents and rules, precedents, and statutes related to Senate proceedings). In addition, the Secretary of the Senate manages the following offices: Daily Digest (preparing the resume of each day's activities of the Senate for the Congressional Record , including committee hearings and meetings, and floor actions); Captioning Services Office (provides captions of Senate proceedings for the hearing-impaired); Continuity of Operations Program (supports the Senate's ability to conduct business and access data at an offsite location, in conjunction with the Senate Sergeant at Arms). Since 1789, 32 men and women have been elected Secretary of the Senate. Table A-1 lists those individuals, the Congress, when their terms began, and when their terms concluded.

The Secretary of the Senate is an officer of the Senate elected at the beginning of each Congress by the membership of the Senate. The Secretary has financial, administrative, and legislative responsibilities derived from law, Senate rules, and other sources. In addition, the Senate Committee on Rules and Administration maintains oversight authority over the Secretary of the Senate and issues policies and regulations governing the Secretary's duties and responsibilities. The Secretary of the Senate was established during the First Congress (1789-1791), when Samuel Allyne Otis was elected on April 8, 1789.

Decentralization is the most distinctive characteristic of the congressional committee system. Because of the high volume and complexity of its work, Congress divides its legislative, oversight, and internal administrative tasks among committees and subcommittees. Within assigned subject areas, committees and subcommittees gather information; compare and evaluate legislative alternatives; identify policy problems and propose solutions to them; select, determine the text of, and report out measures for the full chambers to consider; monitor executive branch performance of duties (oversight); and look into allegations of wrongdoing (investigation). Although Congress has used committees since its first meetings in 1789, the 1946 Legislative Reorganization Act (60 Stat . 812) set the foundation of today's committee system. The House and Senate each have their own committees and related rules of procedure, which are similar but not identical. Within the guidelines of chamber rules, each committee adopts its own rules addressing organizational, structural, and procedural issues; thus, even within a chamber, there is considerable variation among panels. Within their respective areas of responsibility, committees generally operate rather independently of each other and of their parent chambers. The difficult tasks of aggregating committees' activities, and of integrating policy in areas where jurisdiction is shared, fall largely to the chambers' party leaderships. There are three types of committees—standing, select, and joint. Standing committees are permanent panels identified in chamber rules. The rules also list the jurisdiction of each committee. Because they have legislative jurisdiction, standing committees consider bills and issues and recommend measures for consideration by the respective chambers. They also have oversight responsibility to monitor agencies, programs, and activities within their jurisdictions, and in some cases in areas that cut across committee jurisdictions. Most standing committees recommend authorized levels of funds for government operations and for new and existing programs within their jurisdiction. Standing committees also have jurisdiction over appropriations (in the case of the Appropriations Committees), taxation (in the case of the House Ways and Means and Senate Finance Committees), various other revenues, and direct spending such as Social Security, veterans' pensions, and some farm support programs. Select committees usually are established by a separate resolution of the parent chamber, sometimes to conduct investigations and studies, sometimes to consider measures. A select committee is established because the existing standing committee system does not address an issue comprehensively, or because a particular event sparks interest in an investigation. A select committee may be permanent or temporary. Special committees tend to be similar in constitution and function and that distinction from select committees is generally thought to be only semantic. Joint committees are made up of Members of both chambers. Today, they usually are permanent panels that conduct studies or perform housekeeping tasks rather than consider measures. A conference committee is a temporary joint committee formed to resolve differences in Senate- and House-passed versions of a particular measure. Most committees form subcommittees with legislative jurisdiction to consider and report bills on particular issues within the purview of the full committee. Committees may assign their subcommittees such specific tasks as the initial hearings held on measures and oversight of laws and programs in their areas. Subcommittees are responsible to and work within guidelines established by their parent committees. Consequently, subcommittees' number, independence, and autonomy vary among committees. Party leaders generally determine the size of committees and the ratio of majority to minority members on each of them. Each party is primarily responsible for choosing its committee leaders and assigning its Members to committees, and, once assigned to a particular committee, a Member often makes a career there. Each committee distributes its members among its subcommittees, on which only members of the committee may serve. There are limits on the number and type of committees and subcommittees on which each Member may serve. Members, especially in the House, tend to specialize in the issues of their assigned committees. A committee's authority is centered in its chair. In practice, a chair's prerogatives usually include determining the committee's agenda, deciding when to take or delay action, presiding during meetings, and controlling most funds allocated by the chamber to the committee. Several rules allow others a share in controlling a committee's business, such as one allowing a majority of members of a committee to call a meeting. The ranking minority member, usually the minority party member of longest committee service, often participates in the chair's regulation of the committee, in addition to leading on matters affecting a committee's minority members. Also, each subcommittee has a chair and a ranking minority member who oversee the affairs of their panel. To distribute committee power, chamber and party caucus rules limit the number of full and subcommittee chair or ranking minority positions a single Member may hold. Only the Republicans have committee leadership term limits. No House Republican may serve as chair (or ranking minority member) of a committee or subcommittee for more than three consecutive terms, effective with the 104 th Congress, and no Senate Republican may serve more than six years as chair and six years as ranking member of any standing committee, effective with the 105 th Congress. Waivers can be granted. Approximately 2,000 aides provide professional, administrative, and clerical support to committees. Their main job is to assist with writing, analyzing, amending, and recommending measures to the full chamber, as well as overseeing the executive branch's implementation of laws and the operation of programs. Pursuant to funding resolutions and other mechanisms, committees receive varying levels of operating funds for their expenses, including the hiring of staff. From these funds, each hires its own staff, and committees employ varying numbers of aides ranging from a few to dozens. (Committees may also fire staff.) Most staff and resources are controlled by the chair of a committee, although in general a portion must be shared with minority-party members. Further, some committees assign staff directly to their subcommittees, and give subcommittee leaders considerable authority in hiring and supervising subcommittee staff. Each committee sets staff pay levels within limits contained in chamber salary policies. Committees conduct oversight to assure that the policy intentions of legislators are carried out by those administering programs, and to assess the adequacy of programs for changing conditions. Some committees, especially in the House, establish separate oversight subcommittees to oversee the implementation of all programs within their jurisdiction. Also, each chamber has assigned to specific committees oversight responsibility for certain issues and programs that cut across committee jurisdictions, and each has a committee responsible for overseeing comprehensively the efficiency and economy of government activities. Each committee has nearly exclusive right to consider measures within its jurisdiction. In general, committees are not required to act on any measure, and a measure cannot come to the floor for consideration unless through the action or at least concurrence of a committee. A procedure to discharge a committee from consideration is rarely successful. Any introduced measure generally gets referred immediately to a committee. Especially in the House, some measures are referred to two or more panels, usually because policy subjects are split among committees. When more than one House committee receives a referral, a primary committee is usually designated. Other panels receive a sequential referral. In the Senate, referral is determined by the predominant subject matter in the legislation. Singly referred measures have been more likely than multiply referred ones to pass their chamber and to be enacted into law, in part because of the difficulty in coordinating the work of multiple panels. Committees receive varying numbers of measures. Committees dispose of these measures as they please, selecting only a small percentage for action, for a number of reasons. For instance, a committee usually receives many proposals in each major policy area within its jurisdiction, but ultimately chooses one measure as its vehicle in each such area. While those measures not chosen usually receive no further congressional action, the idea, specific provisions, or entire text of some of these measures may be incorporated through the amendment process into others that the committees and chambers consider and that become law. Determining the fate of measures and, in effect, helping to set a chamber's agenda make committees very powerful. Committees often send their measures to subcommittees for initial consideration, but only a full committee can report a measure to the floor for consideration. When a committee or a subcommittee considers a measure, it usually takes the four actions described below. This sequence assumes the committee favors a measure; but, at any time, action on a measure may be discontinued. As a matter of practice and cooperation between the legislative and executive branches, a committee asks relevant executive agencies for written comments on measures it is studying. Committees frequently hold hearings to receive testimony from individuals not on the committee. Hearings may be for legislative, oversight, or investigative purposes. Legislative hearings are those addressing measures or policy issues before the committee, and they may address many measures on a given subject. Oversight hearings focus on the implementation and administration of programs created by law. Many committees perform oversight when preparing to reauthorize funds for a program, which may occur annually. Investigative hearings often address allegations of wrongdoing by public officials or private citizens, or seek the facts behind a major disaster or crisis. Oversight and investigative hearings may lead to the introduction of legislative proposals. At hearings, committees gather information and views, identify problems, gauge support for and opposition to measures and proposals, and build a record of action on committee proposals. Some common elements of hearings include the following: Most, but not all, hearings are held in Washington, DC. Hearings held outside of Washington, DC, are called field hearings. Committees invite experts (witnesses), including Members not on the committee, federal officials, representatives of interest groups, and private citizens to testify at hearings. Most witnesses testify willingly upon invitation by the chair or ranking minority member, and some request to testify. However, committees may summon individuals, as well as written materials, under a legal process (subpoena). Before testifying, witnesses generally are required to submit written statements, which they then summarize orally. Subsequently, committee members question witnesses. Committees generally must give at least one week public notice of the date, place, and subject of a hearing. The public usually may attend hearings and other committee meetings, and open hearings and meetings might be broadcast. Following legislative hearings, a committee decides whether to attempt to report a measure, in which case it chooses a specific measure to mark up and then modifies it through amendment to clean up problems, and sometimes, to attract broader committee support. A business meeting for this purpose is called a markup. Both chambers require a minimum quorum of one-third of a committee's members to hold a markup session, and some committees establish a higher quorum. The procedures of each chamber for amending measures on the floor apply generally to its committees. In practice, the amending process may be formal for controversial measures and informal for ones less contentious. In leading a markup, a chair in practice generally chooses the legislative vehicle, and presents it for consideration and amendment. This vehicle may be an introduced bill, or another version prepared by committee staff at the direction of the chair. Senate committees may permit absent members to vote by proxy, by submitting their vote in writing in advance of the actual vote; proxy voting is banned in the House. A majority of committee members voting, with a majority quorum present, is needed to approve a measure and report it to the parent chamber. A committee rarely reports a measure without changes. Committees sometimes report measures with a series of changes in various sections, or with one large amendment as an entirely new text (called an amendment in the nature of a substitute). A committee may also set aside its amended measure and report a new one reflecting the amended text. In the House the new bill is called a clean bill ; in the Senate, an original bill . Any committee amendments, and the entire measure, require a chamber's approval to be passed. A reported measure usually is accompanied by a written document, called a report, describing the measure's purposes and provisions and telling Members of a chamber why this version has been reported and why it should be passed. The report reflects the views of a majority of the committee, but also may contain minority, supplemental, or additional views of committee members. It usually includes estimates of the legislation's cost should it become law, various statements of its impact and application, a section-by-section analysis, and a comparison with existing law. Officials of the executive and judicial branches of government use these reports as an aid to understanding the legislative history of a law and Congress's intent in enacting it. Measures may reach the floor for consideration in ways other than by being formally reported. A measure may be called up and simultaneously extracted from a committee by unanimous consent, or, in the House, by suspension of the rules. These procedures, however, are seldom used without the consent of the committee of jurisdiction. By contrast, a measure may be extracted from a committee without its approval. For example, the House may agree to a motion to discharge a committee of consideration of a measure, and in general a Senator may offer the text of a measure before a committee as an amendment to a bill under consideration on the floor. The measure and its report are placed on a calendar of chamber business and scheduled for floor action by the majority-party leadership. In the House, the Committee on Rules works with the leadership to establish the terms and conditions for debating the more controversial or complex measures. These terms may include restrictions on offering and debating amendments. Other measures are considered under a few different procedures, where little or no debate and amendment is the norm. In the Senate, noncontroversial measures ordinarily are called up by unanimous consent, and disposed of with little or no debate and no amendment. More controversial or complex measures may be considered under the provisions of a time agreement (or other unanimous consent agreement), which may restrict Senators' freedom of debate and amendment in part by establishing time limits on actions related to the measure. Alternatively, such a measure may require a motion to proceed to its consideration, which generally is debatable and must be agreed to by majority vote. The influence of committees over measures extends to their consideration on the floor. The chair and ranking member of the committee or subcommittee that considered the measure (or their designees) normally manage floor debate for their respective parties. Managers guide measures through final disposition by the chamber, which includes planning parliamentary strategy, controlling time for debate, responding to questions from colleagues, warding off unwanted amendments, and building coalitions in favor of their positions. Especially in the House, committee members also have priority in recognition to offer floor amendments. Committees' responsibilities extend beyond a measure's initial passage by the chambers to its enactment into law. If the chambers agree to different versions of a measure, the leaders of the reporting committees may facilitate its transmittal between the chambers to obtain agreement on one version. If, however, the chambers decide to reconcile their differences at a conference committee, members of the reporting committees will comprise most of the negotiators. In practice, the chambers rely on the chair and ranking member of the reporting committee to choose which of their party colleagues on a committees will serve as conferees. Finally, the chair and ranking member often head their chamber's delegations in conference.

Because of the high volume and complexity of its work, Congress divides its tasks among committees and subcommittees. Both the House and Senate have their own committee systems, which are similar but not identical. Within chamber guidelines, however, each committee adopts its own rules; thus, there is considerable variation among panels. This report provides a brief overview of the organization and operations of House and Senate committees.

Estimates of military spending by foreign nations are available from a number of sources. ThisCRS report lists and compares military expenditures of the United States and foreign countries usingtwo of the most commonly cited and readily available publications: The Military Balance, publishedin October of each year by the London-based International Institute for Strategic Studies (IISS)andWorld Military Expenditures and Arms Transfers (WMEAT), published about annually by the U.S.Department of State, Bureau of Arms Control. (1) Although the IISS and U.S. State Department aim to provide figures that are as consistent and accurate as possible, cross-national comparisons of defense spending are inherently imperfect. Available sets of figures are useful for comparative purposes, but often do not correspond with oneanother for a variety of reasons. This report provides two sets of figures from widely recognizedsources in order to offer Congress a sample of the data published on this topic. In The Military Balance , military expenditures are defined as the cash outlays of a central orfederal government to meet the costs of national armed forces. The term "armed forces" includesstrategic, land, naval, air, command, administration, and support forces. It also includes paramilitaryforces such as the gendarmerie , as well as customs service and border guards if these are trained inmilitary tactics, equipped as a military force and operate under military authority in the event of awar. (2) The IISS produces the most current estimates of foreign military expenditures. The 2003-2004 edition of The Military Balance contains military expenditure figures from 2002, while the mostrecent edition of the U.S. State Department's WMEAT contains military expenditure figures from1999. The IISS obtains its figures using data from national governments, the North Atlantic TreatyOrganization (NATO), the United Nations, the Organization for Security and Cooperation in Europe(OSCE), and the International Monetary Fund (IMF). However, consistent and accurate data formany countries are not available even from these sources, as many countries neither publish theirmilitary expenditures nor report them accurately to these organizations. In these cases, the IISSestimates military expenditures "based on information from several sources." (3) Such cases aremarked with an "E" on Table 1 and Table 2 in this report. For most countries, the IISS converts budget data into dollars using current exchange rates in US Dollars. For countries where basic economic data are hard to obtain, such as former commandeconomies like China, Russia, or countries in conflict, the IISS uses purchasing power parity (PPP)estimates for its conversions. PPPs measure the relative purchasing power of different currenciesover equivalent goods and services. This method accounts for the substantial differences inestimated prices for defense goods. The U.S. State Department Bureau of Arms Control's World Military Expenditures and ArmsTransfers (WMEAT) report, most recently published on February 6, 2003, provides figures for theten-year period from 1989 to 1999. (4) WMEAT usesthe World Bank's average 1999 market exchangerates in order to calculate military expenditures for most countries. (5) In cases where no appropriateexchange rate is available, WMEAT uses PPP estimates. For NATO members, WMEAT measures military expenditures according to a common definition that includes military retired pay and military-type expenditures of defense ministries. Inthis definition, a) civilian-related expenditures of defense ministries are excluded and military-relatedexpenditures of other ministries are included; b) grant military assistance is included in theexpenditures of the donor country; c) purchases of military equipment for credit are included at thetime the debt is incurred, not at the time of payment. For most other countries, figures represent the expenditures of the ministry of defense. When these are known to include the costs of internal security, an attempt is made to remove suchexpenditures. A wide variety of data sources is used for these countries, including the publicationsand data resources of other U.S. Government agencies, standardized reporting to the United Nationsby country, and other international sources. (6) For Russia, China, and many current or former communist countries, WMEAT estimates military expenditures in different ways. Figures for China are based on U.S. Government estimatesof the yuan costs of Chinese forces, weapons, programs, and activities. WMEAT warns that figuresfor Chinese military spending should be treated as having a wide margin of error. (7) Estimates for most states comprising the former Soviet Union and Warsaw Pact are made by establishing the ratio of military expenditures to Gross National Product (GNP) in nationalcurrencies and then multiplying this ratio by the World Bank's estimate of GNP in dollars asconverted to international dollars by estimated PPPs and reported in the World Bank Atlas 1997 . (8) Using the IISS and WMEAT data, this report presents the following tables and figures: Table 1: U.S. and Foreign Defense Spending (by Rank): Data from the IISS and U.S. Department of State (countries ranked according to WMEATfigures) Table 2: U.S. and Foreign Defense Spending (by Country): Data from the IISS and U.S. Department of State Figure 1: U.S. Defense Expenditures as a Percentage of the Top 10 Defense-Spending Countries, 2002 (IISS figures) Figure 2: U.S. Defense Expenditures as a Percentage of the Top 10 Defense-Spending Countries, 1999 (WMEAT figures) Figure 3: U.S. Defense Expenditures as a Percentage of the Top 25 Defense-Spending Countries, 2002 (IISS figures) Figure 4: U.S. Defense Expenditures as a Percentage of the Top 25 Defense-Spending Countries, 1999 (WMEAT figures) Figure 5: Defense Expenditures as a Percentage of GDP: Top 25 Countries, 1999 (WMEAT figures) Figure 6: Defense Expenditures as a Percentage of GDP: Top 25 Countries, 2002 (IISS figures) Table 3: NATO Defense Expenditures: Data from the IISS and U.S. Department of State (countries ranked according to IISS figures) Figure 7: U.S. Defense Expenditures as a Percentage of NATO Defense Expenditures, 1999 (WMEAT figures) Figure 8: U.S. Defense Expenditures as a Percentage of NATO Defense Expenditures, 2002 (IISS figures) Figure 9: NATO Defense Expenditures as a Percentage of GDP, 1999 (WMEAT figures) Figure 10: NATO Defense Expenditures as a Percentage of GDP, 2002 (IISS figures) Table 1. U.S. and Foreign Defense Spending (by Rank): Data from the IISS and U.S. Department of State (current year U.S. dollars inmillions) * These figures are based on purchasing power parity (PPP) estimates. PPPs measure the relative purchasing power of different currencies over equivalent goods and services. This method betteraccounts for the substantial differences in relative prices for defense goods. E These figures were estimated by IISS and not based on reported data from the individual country. Table 2. U.S. and Foreign Defense Spending (by Country): Datafrom the IISS and U.S. Department of State (current year U.S. dollars inmillions) * These figures are based on purchasing power parity (PPP) estimates. PPPs measure the relative purchasing power of different currencies over equivalent goods and services. This method betteraccounts for the substantial differences in relative prices for defense goods. E These figures were estimated by IISS and not based on reported data from the individual country. *Countries #2 - #10: China, Russia, France, United Kingdom, Germany, Italy, India, Japan, SaudiArabia * Countries #2 - #10: China, Russia, France, United Kingdom, Germany, Italy, Japan, SaudiArabia,China-Taiwan *Countries #2 - #25: China, Russia, France, Japan, United Kingdom, Germany, Italy, Saudi Arabia,India, South Korea, Brazil, Israel, Turkey, Spain, Canada, Australia, China - Taiwan, Netherlands,Indonesia, Greece, Mexico, Iran, Ukraine, N. Korea *Countries #2 - #25: China, Japan, France, United Kingdom, Russia, Germany, Italy, Saudi Arabia, China-Taiwan, South Korea, India, Turkey, Brazil, Israel, Canada, Spain, Australia, Netherlands,Poland, Iran, Greece, Sweden, Dem. Rep. of Congo, Ukraine Note: The United States, with defense spending at 3.0% of GDP in 1999 according toWMEAT,would rank #50 on this chart. Note: The United States, with defense spending at 3.3% of GDP in 2002 according to theIISS,would rank #47 on this chart. Table 3. NATO Defense Expenditures: Data from the IISS and U.S. Dept. of State (current year U.S. dollars in millions) *Non-U.S. NATO: United Kingdom, France, Germany, Italy, Turkey, Greece, Czech Republic,Norway, Portugal, Poland, Italy, Netherlands, Hungary, Denmark, Germany, Belgium, Canada,Spain, Luxembourg, Iceland *Non-U.S. NATO: United Kingdom, France, Germany, Italy, Turkey, Greece, Czech Republic,Norway, Portugal, Poland, Italy, Netherlands, Hungary, Denmark, Germany, Belgium, Canada,Spain, Luxembourg, Iceland

This report lists and compares military expenditures of the United States and foreign nations using two sources: the London-based International Institute for Strategic Studies' (IISS) The MilitaryBalance, and the U.S. State Department's World Military Expenditures and Arms Transfers (WMEAT). Although the IISS and the U.S. State Department aim to provide figures that are as consistent and accurate as possible, cross-national comparisons of defense spending are inherently imperfect. Available sets of figures are useful, but often do not correspond with one another for a variety ofreasons. This report provides two sets of figures from widely recognized sources in order to offerCongress a sample of the data published on this topic. This report will be updated as necessary.

The Elementary and Secondary Education Act (ESEA) was last comprehensively amended by the No Child Left Behind Act of 2001 (NCLB; P.L. 107-110 ). Appropriations for most programs authorized by the ESEA were authorized through FY2007. As Congress has not reauthorized the ESEA, appropriations for ESEA programs are currently not explicitly authorized. However, because the programs continue to receive annual appropriations, appropriations are considered implicitly authorized. During the 114 th Congress, the House Education and the Workforce Committee reported the Student Success Act ( H.R. 5 ), which would provide for a comprehensive reauthorization of the ESEA. The bill was subsequently passed on the House floor on July 8, 2015, based on a strictly partisan vote of 218-213. The Senate Health, Education, Labor, and Pensions (HELP) Committee reported the Every Child Achieves Act of 2015 (ECAA; S. 1177 ), which would also provide for a comprehensive reauthorization of the ESEA. S. 1177 was subsequently passed on the Senate floor on July 16, 2015, based on a bipartisan vote of 81-17. Both chambers agreed to a conference to resolve their differences. On November 19, 2015, the conference committee agreed to file the conference report of the Every Student Succeeds Act (ESSA) by a vote of 39-1. On December 2, 2015, the House agreed to the conference report based on a bipartisan vote of 359-64. This report highlights key provisions included in the ESSA and provides some context regarding the treatment of similar provisions in current law, where applicable. Table 1 highlights key provisions in the bill. An emphasis has been placed on issues that have received the most attention during the reauthorization process, including Title I-A accountability and formula issues and Title II-A formula issues. Table 2 depicts the proposed structure of the ESEA under the ESSA and includes all authorizations of appropriations for FY2017 through FY2020. The table also indicates whether a comparable program was included in current law. Table 3 provides examples of programs authorized under current law that would not be retained by the ESSA. The report does not aim to provide a comprehensive summary of ESSA or of technical changes that would be made by the bill. As Congress had not enacted legislation to reauthorize the ESEA, on September 23, 2011, President Obama and the Secretary of Education (hereinafter referred to as the Secretary) announced the availability of an ESEA flexibility package for states and described the principles that states must meet to obtain the included waivers. The waivers exempt states from various academic accountability requirements, teacher qualification-related requirements, and funding flexibility requirements that were enacted through NCLB. State educational agencies (SEAs) may also apply for optional waivers related to the 21 st Century Community Learning Centers program and the use of funds, determinations of adequate yearly progress (AYP), and the allocation of Title I-A funds to schools. However, in order to receive the waivers SEAs must agree to meet four principles established by the U.S. Department of Education (ED) for "improving student academic achievement and increasing the quality of instruction." The four principles, as stated by ED, are (1) college- and career-ready expectations for all students; (2) state-developed differentiated recognition, accountability, and support; (3) supporting effective instruction and leadership; and (4) reducing duplication and unnecessary burden. Taken collectively, the waivers and principles included in the ESEA flexibility package amount to a fundamental redesign by the Administration of many of the accountability and teacher-related requirements included in current law. As of December 2015, 42 states, the District of Columbia, and Puerto Rico had approved ESEA flexibility applications, and ED was reviewing applications from other states. The ESSA would terminate all waivers associated with the ESEA flexibility package on August 1, 2016. The remainder of this report focuses only on current law and does not compare the provisions in the ESSA with the provisions included in the ESEA flexibility package. Table 1 highlights similarities and differences between the ESSA and current law. As previously discussed, areas of the ESSA that have received the most congressional interest are given a more in-depth review in the table. The major areas considered include the following: overall structural and funding issues; Title I-A accountability; Title I-A formulas; teachers, principals, and school leaders; flexibility and choice; and general provisions. No attempts, however, were made to provide a comprehensive analysis of the ESSA. Table 2 depicts the structure of the ESSA by title. For each program with an authorization of appropriations, the amount authorized is provided for FY2017 through FY2020. The table also indicates whether the program is a new program or one that is similar to a program included in current law. An indication that a program is also included in current law does not mean that the program is being retained without changes. For example, while the ESSA would retain Title II-A, a state grant program focused on teachers, it would modify the formula used to award grants and the uses of funds. Table 3 provides examples of programs authorized under current law that would not be authorized under the ESSA. Activities supported by some of the programs that would no longer be authorized, however, may be required or allowable uses of funds under programs that would be authorized under the ESSA. For example, under the Student Support and Academic Enrichment Grants program (block grant program), LEAs could use funds to support counseling programs, create safe school environments, provide physical education, and support the use of technology; and states and LEAs could use funds to reimburse low-income students for the costs of accelerated learning examination fees, such as Advanced Placement (AP) exams. This is not intended to be a comprehensive list of all programs authorized under current law that would no longer be authorized. Rather, this list is based primarily on programs that have been included as line-items on appropriations tables in recent years and would not continue to be authorized by the ESSA.

The Elementary and Secondary Education Act (ESEA) was last comprehensively amended by the No Child Left Behind Act of 2001 (NCLB; P.L. 107-110). Appropriations for most programs authorized by the ESEA were authorized through FY2007. As Congress has not reauthorized the ESEA, appropriations for ESEA programs are currently not explicitly authorized. However, because the programs continue to receive annual appropriations, appropriations are considered implicitly authorized. Congress has actively considered reauthorization of the ESEA during the 114th Congress, passing comprehensive ESEA reauthorization bills in both the House (Student Success Act; H.R. 5) and the Senate (Every Child Achieves Act of 2015; S. 1177). Both chambers agreed to a conference to resolve their differences. On November 19, 2015, the conference committee agreed to file the conference report of the Every Student Succeeds Act (ESSA) by a vote of 39-1. On December 2, 2015, the House agreed to the conference report based on a bipartisan vote of 359-64. Table 1 in this report highlights key provisions included in the ESSA and provides some context regarding the treatment of similar provisions in current law, where applicable. The major areas considered in this examination include the following: overall structural and funding issues; Title I-A accountability; Title I-A formulas; teachers, principals, and school leaders; flexibility and choice; and general provisions. Table 2 depicts the proposed structure of the ESEA under the ESSA and includes all authorizations of appropriations for FY2017 through FY2020. Table 3 provides examples of programs authorized under current law that would not be retained by the ESSA. The report does not aim to provide a comprehensive summary of ESSA or of technical changes that would be made by the bill.

Employers have frequently sought to trim the high cost of providing group health coverage for their workers by reducing retiree benefits or narrowing the group of retirees eligible for coverage. Under one commonly used formula, employers often provide one level of benefits to retirees under age 65 to cover them until they are eligible for Medicare and then reduce or eliminate the benefit when the retiree becomes Medicare eligible. In Erie County Retirees Ass ' n v. County of Erie , however, a federal appeals court ruled that the Age Discrimination in Employment Act (ADEA) applies to retirees and held that the practice of providing different benefits to older and younger retirees based on their eligibility for Medicare constitutes age discrimination in violation of the ADEA because Medicare eligibility is an "explicitly" age-related factor. In 2000, the Equal Employment Opportunity Commission (EEOC) adopted the court's reasoning as the agency's national enforcement policy, but the Commission later rescinded its position to further review the issue. Following two years of study, the EEOC proposed a rule in 2004 that would allow employer-sponsored retiree health plans to reduce or eliminate benefits for Medicare-eligible retirees without violating the ADEA. According to the EEOC: Since the ADEA requires only equal treatment, employers threatened to comply with the ADEA not by raising benefits for older retirees, but by reducing benefits to younger retirees or by eliminating all benefits for all retirees. Indeed, the Erie County case was settled by requiring younger retirees to pay higher premiums and move into an HMO plan. In light of evidence that employers would 'equalize' benefits by reducing them ... the EEOC sought, in essence, to undo the court's decision in Erie County by issuing a rule specifying that the practice of coordinating a retiree's health benefits would not violate the ADEA. The ADEA prohibits discrimination against workers over 40 years of age in compensation or with respect to employment "terms, conditions, or privileges." The act's legislative history contained a Statement of Managers, which suggested that the practice of coordinating retiree health plans with Medicare was not prohibited. In Erie County , however, the Third Circuit disregarded that evidence of congressional intent when it ruled that providing inferior benefits to Medicare-eligible retirees than to younger retired workers may be illegal age discrimination. It remanded the case for a trial court determination of whether the plan was saved by the equal-benefit or equal-cost provisions of the ADEA, which provide a "safe harbor" for employers who provide equal benefits to older and younger workers or who incur equal costs on behalf of each. In the Erie County case, a group of retirees who were over the age of 65 sued the county claiming that their retiree health program was inferior to the program offered to younger retirees. Designed to supplement Medicare benefits, older retirees were offered an HMO plan that coordinated all health care services through a primary care physician. The county provided former employees who were not Medicare-eligible with a "hybrid point of service program" that combined the features of an HMO with a traditional indemnity plan. The district court granted partial summary judgment for the county, holding that the ADEA was not intended to apply to retirees such as plaintiffs, who based their age discrimination claim on disparities in health coverage arising from Medicare eligibility. In its reversal, the Third Circuit found that age discrimination had occurred since the medical benefits for older retirees were based solely on their eligibility for Medicare, and "Medicare eligibility follow[s] ineluctably upon attaining age 65." In reviewing the ADEA, the Third Circuit concluded that an age-based disparity in retiree health benefits is only lawful if the program falls within a "safe harbor" established by the "equal benefit/equal cost" standard. Both the legislative history of the ADEA and the "plain language" of the safe harbor provision indicated Congress's intent that the section apply when an employer reduces health benefits on the basis of Medicare eligibility. In other words, the County of Erie could only prevail if it established that the benefits offered to Medicare-eligible retirees were equal to those provided to younger retirees or that its costs for providing benefits to the two groups were equal. The Third Circuit remanded the case back to the trial court, which ultimately found that the county's plan was unlawful because: (1) older retirees were required to pay a greater percentage of their overall premium than were younger retirees; and (2) younger retirees were given the option between HMO coverage or indemnity coverage, while older retirees could only elect HMO coverage. For these reasons, the trial court concluded that older retirees were provided inferior benefits in violation of ADEA. The EEOC had initially supported the position adopted by the Third Circuit in Erie County , which the agency then incorporated in its "Compliance Manual" as part of its national enforcement policy on the ADEA. In 2001, however, after consulting various labor and employer groups, the EEOC rescinded its policy regarding employer-sponsored retiree health plans, announcing that it would study the issue further. The EEOC study demonstrated a considerable decline in the number of employers providing retiree health benefits in the decade preceding, due to higher health care coverage costs, the number of employees nearing retirement age, and changes in accounting rules for retiree health benefits. In addition, it found that "concern about the potential application of the ADEA to employer-sponsored retiree health benefits is adversely affecting the continued provision of this important retirement benefit." In other words, when faced with the prospect of equalizing benefits, many employers were choosing not to increase benefits for Medicare-eligible retirees, but instead to reduce benefits for younger retirees or to eliminate retiree benefits altogether. Indeed, the Erie County case resulted in a settlement in which benefits were reduced for younger retirees. Ultimately, the EEOC concluded that a reversal of policy was required in the "public interest" to protect retiree health coverage as a valuable benefit to older individuals, and, therefore, the agency proposed to amend the EEOC's ADEA regulations. As proposed, the EEOC rule would exempt from ADEA requirements the alteration, reduction, or elimination of employer-sponsored retiree health benefits when retirees become eligible for Medicare or other comparable state retiree health benefits. The EEOC cited § 9 of the ADEA, which permits the EEOC to "establish such reasonable exemptions to and from any or all provision of [the act] as it may find necessary and proper in the public interest," as its authority for issuing the regulation. Noting that employers are not legally obligated to provide any retiree health benefits and arguing that the safe harbor provisions of the ADEA have become unworkable given the broad diversity of employer health plan options currently available, the EEOC indicated that the exemption provides a "necessary and proper" incentive to employers not to eliminate all retiree health benefits, nor to reduce the benefits of younger retirees to equal those provided to their Medicare-eligible counterparts. Implementation of the proposed rule, however, was delayed in 2005 by a federal district court in Philadelphia that initially found the rule in conflict with the Third Circuit decision in the Erie County case. In AARP v. EEOC , the court first ordered a permanent injunction against enforcing the rule, finding that it "is contrary to congressional intent and the plain language of the Age Discrimination in Employment Act." The EEOC, according to the court, has the power to issue rules, regulations and exemptions within ... explicit or implicit gaps that Congress left in the ADEA. In the case of the challenged exemption, however, the Third Circuit held that Congress did not allow for ambiguity with regard to the applicability of the ADEA to retiree health benefits. In other words, the court found that the EEOC was interpreting too broadly its powers to create exemptions to the ADEA. The EEOC filed an appeal with the Third Circuit. Meanwhile, the U.S. Supreme Court decided National Cable and Telecommunications Association v. Brand X Internet Services in 2005. The Justices there ruled that a federal court under the " Chevron doctrine" is required to defer to an agency's interpretation of law—even if its differs from the court's own views—if the particular statute is within the agency's administrative authority, if it is ambiguous on the point in contention, and if the agency's interpretation is "reasonable." In other words, the agency's interpretation of a statute is entitled to deference except where a court finds that the law in question is clear and unambiguous, leaving no gaps for the agency decision to fill. In view of Brand X , the EEOC moved the district court to reconsider whether prior judicial precedent foreclosed issuance of the proposed rule on retiree health benefits. Ultimately, the district court reversed its earlier decision, holding that the EEOC does, indeed, have the authority to issue the challenged regulation. ... Brand X makes it clear that where a court's holding states merely the 'best' interpretation of a statute, not the 'only permissible' interpretation, the court decision does not foreclose a later, differing agency interpretation.... Because the Third Circuit's opinion in Erie County did not hold that it was the only permissible interpretation of the ADEA, it cannot foreclose a contrary interpretation by the EEOC. Despite the decision to vacate its earlier judgment, the court left in place the injunction preventing implementation of the proposed EEOC rule pending the outcome of appeals that the parties filed with the Third Circuit. In 2007, the Third Circuit issued its ruling in AARP v. EEOC . Although the appellate court affirmed the district court's decision upholding the EEOC's retiree health benefit rule, the Third Circuit reached its decision on different legal grounds. Specifically, the court held that the proposed rule does fall within the EEOC's exemption authority under § 9. According to the court, because "the power to grant exemptions provides an agency with authority to permit certain actions at variance with the express provisions of the statute in question ... Congress made plain its intent to allow limited practices not otherwise permitted under the statute, so long as they are 'reasonable' and 'necessary and proper in the public interest.'" Finding that the retiree health benefit rule was a reasonable, necessary, and proper exercise of the EEOC's exemption authority under the ADEA, the court upheld the rule and lifted the injunction, allowing the final regulations to become effective on December 26, 2007, when the EEOC published them in the Federal Register . Although the American Association of Retired Persons (AARP) filed a petition with the Supreme Court requesting review of the Third Circuit's decision, the Court recently declined to review the case. The EEOC's final rule contains a narrowly drawn exemption from the ADEA to permit the practice of coordinating employer-provided retiree health coverage with eligibility for Medicare. Specifically, employers may, without violating the ADEA, alter, reduce, or eliminate health benefits for retirees when the participant becomes eligible for Medicare or comparable state health benefits. The EEOC emphasizes that the rule is not intended to encourage employers to eliminate any retiree health benefits they may currently provide. The final regulations also include an appendix with questions and answers that provide the following specific guidance: The exemption does not mean that the ADEA does not apply to retirees, or that all forms of retiree health coverage are exempted. Only the specific practice of coordinating retiree health benefits with Medicare or a comparable state health plan is exempted from ADEA. Employers may offer to retirees "Medicare carve out plans" under which Medicare is primary and the employer plan secondary for retirees, but they may not offer such plans to active employees. The exemption also applies to dependent and/or spousal health benefits included as part of retirees' benefits, although these may be altered, reduced, or eliminated even when the retirees' are not. No other aspects of ADEA coverage or employment benefits other than retiree health benefits are affected by the exemption. The exemption applies to existing, as well as newly created, employee health benefit plans. The exemption does not apply to active employees over the age of Medicare (or state health plan) eligibility. As noted above, the Supreme Court recently denied a request to review the Third Circuit's decision upholding the EEOC regulation. As a result, the EEOC's new retiree health benefit rule has survived legal challenge and remains in effect.

Under the Age Discrimination in Employment Act (ADEA), the Equal Employment Opportunity Commission (EEOC) has the authority to issue reasonable exemptions the Commission finds to be in the public interest. In 2004, the EEOC approved a narrowly drawn exemption to permit the practice of coordinating employer-provided retiree health coverage with eligibility for Medicare. However, the proposed regulation was challenged in court, and a permanent injunction blocking its implementation remained in effect for several years while the courts considered the issue. Recently, a federal appeals court upheld the EEOC's promulgation of the proposed rule and lifted the injunction, allowing the EEOC to publish the final rule, which became effective in December 2007. The final rule states that it is not a violation of the ADEA to alter, reduce, or eliminate health benefits for retirees when the participant becomes eligible for Medicare or comparable state health benefits. According to the EEOC, if employers were required to provide equal health benefits to both younger and older retirees, employers would be more likely to reduce benefits for younger retirees or eliminate benefits for all retirees than to increase benefits for older, Medicare-eligible retirees. Thus, the ADEA exemption is designed to eliminate any incentive for employers to cut retiree health benefits.

Earlier federal law, the Jacob Wetterling Act, encouraged the states to establish and maintain a registration system. Each of them has done so. The Walsh Act preserves the basis structure of the earlier law, expands upon it, and makes more specific matters that were previously left to individual choice. For purposes of compliance by the states and other jurisdictions the prior law remains in effect until the later of three years after enactment or one year after the necessary software for the new uniform, online system has become available. For registrants, however, the new requirements became effective upon enactment. The class of offenders required to register has been expanded under the act. The group includes anyone found in the United States and previously convicted of a federal, state, local, tribal, military, or foreign qualifying offense, although strictly speaking violations of the laws of the District of Columbia or U.S. territories are not specifically mentioned as qualifying offenses. Offenders must register in each state or territory in which they live, work, or attend school. There are five classes of qualifying offenses: crimes identified as one of the specific offenses against a minor; crimes in which some sexual act or sexual conduct is an element; designated federal sex offenses; specified military offenses; and attempts or conspiracy to commit any offense in the other four classes of qualifying offenses. The inventory of qualifying offenses is subject to exception. Conviction for an otherwise qualifying foreign offense does not necessitate registration if it was not secured in a manner which satisfies minimal due process requirements under guidelines or regulations promulgated by the Attorney General. Nor does conviction of a consensual sex offense require registration if the victim is an adult not in the custody of the offender, or if the victim is 13 years of age or older and the offender no more than four years older. Finally, juvenile delinquency adjudications do not constitute qualifying convictions unless the offender is 14 years of age or older at the time of the misconduct and the misconduct adjudicated is comparable to, or more severe than, aggravated sexual assault or attempt or conspiracy to commit such an offense. There are no specific limitations on registration based on convictions that have been overturned, sealed or expunged under state or foreign law or on convictions for which the offender has been pardoned. There are no specific limitations on requirements that flow from past convictions regardless of their vintage. Instead, the Attorney General is authorized to promulgate rules of applicability. Those required to register must provide their name, social security number, the name and address of their employers, the name and address of places where they attend school, and the license plate numbers and descriptions of vehicles they own or operate. The jurisdiction of registration must also include a physical description and current photograph of the registrant and a copy of his driver's license or government issued identification card; a set of fingerprints, palm prints, and a DNA sample; the text of the law under which he was convicted; a criminal record that includes the dates of any arrests and convictions, any outstanding warrants, as well as parole, probation, supervisory release, and registration status; and any other information required by the Attorney General. The regularity with which registrants must appear for new photographs and to verify their registration information depends upon their status. It is at least every three months for Tier III offenders. Tier II offenders must reappear no less frequently than every six months. Tier I offenders must reappear for new photographs and verification at least once a year. Tier I offenders must maintain their registration for 15 years, which can be reduced to 10 years. Tier II offenders must maintain their registration for 25 years. Tier III offenders must maintain their registration for life, which can be reduced to 25 years. Jurisdictions that fail to comply after the act becomes fully effective run the risk of having their Byrne program funds reduced by 10%. The act makes failure to register a federal crime for offenders convicted of a federal qualifying offense, or who travel in interstate commerce, or who travel in Indian country, or who live in Indian country. Violations are punishable by imprisonment for not more than 10 years and by an addition penalty to be served consecutively of not less than five nor more than 30 years if the offender commits a crime of violence. Moreover, violation exposes an offenders to term of supervised release for any term of years not less than five years or for life. If the offender is a foreign national ("an alien"), he becomes deportable upon conviction. The Adam Walsh Child Protection and Safety Act is focused, as its name implies, upon child protection and safety. Its efforts involve the creation of new federal crimes, the enhancement of the penalties for preexisting federal crimes, and the amendment of federal criminal procedure, among other things. Many of these efforts are child-specific; some are more general. The new federal crimes include the following. Murder in the course of a wider range of federal sex offenses. Internet date rape drug trafficking. Kidnaping that involves the use of interstate facilities. Child abuse in Indian country. Production of obscene material. Obscenity or pornography in Internet source codes. Child exploitation enterprises. The amendments to federal criminal procedure are a bit more numerous and somewhat more likely to implicate crimes in addition to those committed against children. Among their number are: Random searches of sex offender registrants as a condition of probation or supervised release. Expanded DNA collection from those facing federal charges or convicted of any federal offense. Elimination of the statute of limitations for various sexual crimes or crimes committed against a child. Participation of state crime victims in federal habeas proceedings. Study of the elimination of marital privileges in abuse cases. Preventive detention in cases involving a minor victim or a firearm. Compensation for guardians ad litem. Government control of evidence in pornography cases. Forfeiture procedures in obscenity, exploitation and pornography cases. Murder during course of various sex offenses as a felony murder predicate. Civil commitment procedure for federal sex offenders. The act's penalty enhancements are the most extensive of its amendments to federal criminal law and procedure. It establishes new sentencing ranges for the federal crimes of murder, kidnaping, maiming, or aggravated assault when the victim is a child. In the case of murder, the penalty is imprisonment for any term of years not less than 30 years, imprisonment for life, or death; in the case of kidnaping or maiming, imprisonment for life or any term of years not less than 25 years; and in the case of aggravated assault, imprisonment for life or any term of years not less than 10 years. While the new minimums terms of imprisonment must yield to any otherwise applicable higher mandatory minimum, the new maximum penalties trump any otherwise applicable maximum. The provision has the effect of making capital offenses out of several federal murder statutes that heretofore were punishable only by a term of imprisonment when the victim is a child and when the misconduct involves the intentional killing of the victim or a reckless, fatal act of violence. The act increases penalties for several other child offenses including: The act establishes, reinforces, and revives several grant programs devoted to child and community safety, including the following. Big Brothers Big Sisters of America (authorizing appropriations totaling $58.5 million through FY2011). National Police Athletic League (authorizing appropriations totaling $64 million through FY2010). State, local and tribal governments in order to outfit sex offenders with electronic monitoring devices (authorizing appropriations totaling $15 million through FY2009). Public and private entities that assist in treatment of juvenile sex offenders or that assist the states in their enforcement of sex offender registration requirements (authorizing appropriations totaling $30 million through FY2009). Facilitating the prosecution of cases cleared as a consequence of the DNA backlog elimination (authorizing necessary appropriations through FY2011). Law enforcement agencies to combat sexual abuse of children (authorizing necessary appropriations through FY2009). A private nonprofit entity for a program of crime prevention media campaign (authorizing appropriations totaling $34 million through FY2010). State, local and tribal government programs for the voluntary fingerprinting of children (authorizing appropriations totaling $20 million through FY2011). The Rape, Abuse & Incest National Network (RAINN) to operate a sexual assault hotline, conduct media campaigns, and provide technical assistance for law enforcement (authorizing appropriations totaling $12 million through FY2010). To enable state, local and tribal entities to verify the addresses of registered sex offenders (authorizing necessary appropriations through FY2009). The act includes a wide assortment of other provisions designed to prevent, prosecute or punish the victimization of children. Among them are sections that broaden access to federal criminal records information systems, create a national child abuse registry, expand recordkeeping requirements for those in the business of producing sexually explicit material, immunize officials from civil liability for activities involving sexual offender registration, and authorize and direct the Department of Justice to establish and maintain a number of child protective activities.

The Adam Walsh Child Protection and Safety Act, P.L. 109-248 ( H.R. 4472 ), serves four purposes. It reformulates the federal standards for sex offender registration in state, territorial and tribal sexual offender registries, and does so in a manner designed to make the system more uniform, more inclusive, more informative and more readily available to the public online. It amends federal criminal law and procedure, featuring a federal procedure for the civil commitment of sex offenders, random search authority over sex offenders on probation or supervised release, a number of new federal crimes, and sentencing enhancements for existing federal offenses. It creates, amends, or revives several grant programs designed to reinforce private, state, local, tribal and territorial prevention; law enforcement; and treatment efforts in the case of crimes committed against children. It calls for a variety of administrative or regulatory initiatives in the interest of child safety, such as the creation of the National Child Abuse Registry. This is an abridged version of CRS Report RL33967, Adam Walsh Child Protection and Safety Act: A Legal Analysis , by [author name scrubbed], without the footnotes and citations to authority found in the longer report.

This report provides an analytic overview of the professional experiences and qualifications of those individuals who are currently serving as active U.S. circuit court judges. Ongoing congressional interest in the professional experiences of judicial nominees reflects, in part, the evaluative role of Congress in examining the qualifications of those who are nominated by the President to life-tenure positions. Senators, when giving floor speeches supporting circuit court nominations, routinely highlight certain professional experiences or qualifications often considered important to serving as a federal judge. Examples of such statements include the following: A Senator noting that a nominee to the Fourth Circuit Court of Appeals had 22 years of prior judicial experience "at the State courts and the Federal courts." The Senator stated that the nominee "has not only served as a distinguished judge, but also he came to the courts as an experienced prosecutor. He was with the Civil Rights Division at the Department of Justice and with the U.S. Attorney's Office in Maryland." A Senator noting that a nominee to the First Circuit had joined a prestigious law firm in the Senator's home state, "where over the subsequent 32 years [he] specialized in complex civil litigation at both the trial and appellate levels." The Senator also stated that the nominee had served as chairman of the state's Professional Ethics Commission and as president of the state's bar association, and that "his 30-plus years of real-world litigation experience would bring a valuable perspective to the court." A Senator emphasizing that a nominee to the Seventh Circuit Court of Appeals would "bring almost 12 years of judicial experience" to the bench as a result of her service on the Wisconsin Supreme Court and as a trial judge on the Milwaukee County Circuit Court. The Senator also noted that prior to the nominee's service as a state judge, the nominee had "practiced commercial litigation for 7 years at one of Wisconsin's most prestigious law firms." The professional experiences of judicial nominees are also of interest to interest groups, particularly professional organizations such as the American Bar Association (ABA). Judicial nominees are evaluated by the ABA's Standing Committee on the Federal Judiciary. The committee's evaluation criteria focus "strictly on professional qualifications: integrity, professional competence and judicial temperament." The committee "believes that a prospective nominee to the federal bench ordinarily should have at least twelve years' experience in the practice of law" and that "substantial courtroom and trial experience as a lawyer or trial judge is important." The committee also notes, however, that "distinguished accomplishments in the field of law or experience that is similar to in-court trial work ... may compensate for a prospective nominee's lack of substantial courtroom experience." For prospective circuit court nominees, the committee states that "because an appellate judge deals primarily with the review of briefs and the records of lower courts, the committee places somewhat less emphasis on the importance of trial experience as a qualification for the appellate courts." Additionally, the professional or career experiences of judges prior to the start of their judicial service has also been of interest to scholars examining whether particular professional experiences might influence or explain variation in aspects of judicial decision making (e.g., whether a judge votes in a consistent ideological direction, the sources relied upon by a judge in reaching his or her decisions, whether a judge decides to publish his or her opinions, etc.). For example, one study found that prior judicial experience for U.S. circuit court judges did not influence variation in judicial decision making in terms of the extent a judge voted in a consistent ideological fashion (such prior experience might have been hypothesized to be a source of consistency in judicial voting). Another study found that district court judges whose primary work before becoming a judge involved non-private practice work experience (e.g., working as a government attorney or law professor) were less likely to rely on regulations and other Internal Revenue Service pronouncements in interpreting the federal tax code than judges whose work prior to becoming a judge was predominately as an attorney in private practice. Other scholars suggest that the lack of career diversity among federal judges might be problematic, in terms of the lack of diversity diminishing the institutional performance of the courts. Specifically, they argue that, given appropriate procedural conditions, "the greater diversity of participation by people of different [professional] backgrounds and experiences, the greater the range of ideas and information contributed to the institutional process." Consequently, in the context of judicial decision making, "judges with varied career experiences bring distinct perspectives to the bench—perspectives that ultimately lead them to make distinct judicial choices—[and] merging jurists with diverse career paths on a particular court ought ... [to] lead to more effective decision making" by that court. In light of ongoing interest in the professional qualifications of those nominated to circuit court judgeships, this report seeks to inform Congress by providing statistics related to the professional qualifications or experiences of those currently serving on the bench as U.S. circuit court judges. Specifically, this report provides statistics and analysis related to (1) the percentage of active circuit court judges with judicial experience, as well as the type of judicial experience; (2) the percentage of active circuit court judges with private practice experience, as well as the length of time of such experience; and (3) the percentage of active circuit court judges by professional experience immediately prior to their appointment to a circuit court judgeship. Note that the statistics provided in this report are based upon the professional experiences of individuals serving, as of February 1, 2014, as active U.S. circuit court judges. Consequently, the statistics do not include circuit court judges who, prior to February 1, 2014, had assumed senior status, retired, or resigned. The total number of circuit court judges included in the analysis is 163. Consequently, this is the denominator used to calculate most of the statistics included in the report. The analysis is based on information provided by the Biographical Directory of Federal Judges . This report will be updated annually by CRS at the beginning of each calendar year. Figure 1 provides statistics related to the two most common types of professional experiences of U.S. circuit court judges who are currently serving on the bench—prior judicial experience and experience working as an attorney in private practice. The percentages reported for the two types of experiences are not mutually exclusive, meaning that there is some overlap between the two categories. For example, 47.9% of all active circuit court judges have both prior judicial experience as well as experience as an attorney in private practice (while 9.0% have neither prior judicial nor private practice experience). Altogether, 54.6% of U.S. circuit court judges who are currently serving had prior experience as another type of judge before their appointment to a circuit court (and 45.4% had no such experience). Of the judges with prior judicial experience, 22.7% served solely as another type of federal judge (e.g., a U.S. district court judge), while 20.9% served solely as a state judge and another 11.0% had both prior federal and state judicial experience. Of the 74 circuit judges with no prior judicial experience, 81.8% had worked as attorneys in private practice, including 39.2% who worked in private practice for 15 or more years (and another 14.9% who worked in private practice for 10 to 14 years). Although over half of active circuit court judges have prior judicial experience (54.6%), a greater percentage have at least some prior experience as attorneys in private practice (84.7%). Similarly, while 45.6% of active circuit judges do not have prior judicial experience, a much smaller percentage, 15.3%, have no prior experience in private practice. Figure 1 also shows that of active circuit court judges with private practice experience, a plurality (26.4%) had 15 or more years of experience as attorneys in private practice. Another 21.5% had less than 5 years of experience, while 17.2% had 5 to 9 years of experience and 19.6% had 10 to 14 years of experience. Altogether, 46.0% of active circuit court judges had 10 or more years of experience as attorneys in private practice (while 54.0% had less than 10 years of experience or no private practice experience). Figure 2 reports the percentage of active U.S. circuit court judges who had a particular type of position or occupation immediately prior to their appointment as a circuit court judge. So, for example, a plurality of active circuit court judges, 27.0%, were U.S. district court judges immediately prior to being appointed as circuit court judges. Altogether, half (50.3%) of all active circuit court judges were serving as another type of judge (either a U.S. district court judge, another type of federal judge, or a state judge). The percentage of circuit court judges serving as another type of judge immediately prior to appointment might be lower than what has been the case, historically, for circuit court judges (at least during the first half of the 20 th century). For example, of circuit court judges appointed during the seven presidencies from Theodore Roosevelt to Franklin Roosevelt, 63.7% were serving as another type of judge at the time of appointment or promotion to the U.S. courts of appeals. Additionally, 55.6% and 57.5% of Eisenhower and Johnson circuit court appointees, respectively, were serving as judges prior to their appointment to a circuit court. In general, service as a U.S. district court judge was the most common type of judicial experience of those serving as judges immediately prior to their appointment as a circuit court judge. As noted by one scholar, the "federal district court bench is a training camp for the federal courts of appeals bench. A president faced with a vacancy on a court of appeals looks, though not exclusively, to sitting district court judges." Of circuit court judges currently serving on the bench, approximately one-quarter (25.8%) were working as attorneys in private practice prior to being appointed as a circuit court judge, with 22.1% having worked in private practice for 10 years or more. Additionally, of those working in private practice for 10 years or more, 80.6% had been working as an attorney in private practice for at least 15 years. As the percentages reported in Figure 2 indicate, a relatively large majority of active circuit court judges (72.4%) were, prior to being appointed as circuit judges, serving as either another type of judge or engaged in private practice for 10 or more years (and often for 15 or more years). Other types of positions held by active U.S. circuit court judges prior to being appointed include working as an attorney at the Department of Justice (DOJ) or a U.S. Attorneys' Office (7.4%) or working as a law professor (6.7%). Another 9.8% of active circuit court judges held other types of positions immediately prior to being appointed. Of appointees of Democratic Presidents who are currently on the bench, the most common type of position immediately prior to appointment as a circuit court judge was service as another type of judge (54.8% of all active appointees), with a plurality (31.0%) having prior service as a U.S. district court judge. Other types of positions or occupations held by active circuit court appointees of Democratic Presidents immediately prior to appointment were attorneys in private practice (26.2%), attorneys at the Department of Justice or a U.S. Attorney's Office (8.3%), and law professors (6.0%). Of appointees of Republican Presidents currently on the bench, the most common type of position immediately prior to appointment as a circuit court judge was service as another type of judge (45.6%), with a plurality (22.8%) having served as a U.S. district court judge. Other types of positions or occupations held by active circuit court appointees of Republican Presidents immediately prior to appointment were attorneys in private practice (25.3%), attorneys at the Department of Justice or a U.S. Attorney's Office (6.3%), and law professors (7.6%). Another 15.2% of Republican appointees had another type of position or occupation immediately prior to their appointment. This report provides a statistical overview of the professional qualifications and experiences of active U.S. circuit court judges. Ongoing congressional interest in the professional background of those nominated to the federal bench reflects, in part, the role of Congress in evaluating the qualifications of those who are nominated by the President to life-tenure positions. As discussed above, a majority of current circuit court judges have prior judicial experience. A greater majority of active circuit judges also have experience working as attorneys in private practice, often for relatively lengthy periods of time. There are, however, judges without either type of experience who have other types of professional experiences such as working as an attorney for the federal government or as a law professor.

This report provides an analysis of the professional qualifications and experiences of U.S. circuit court judges who are currently serving on the federal bench. Interest in the professional qualifications of those nominated to the federal judiciary has been demonstrated by Congress and others. Congressional interest in the professional experiences of those nominated by a President to the federal courts reflects, in part, the evaluative role of Congress in examining the qualifications of those who are nominated to life-tenure positions. Other organizations, such as the American Bar Association (ABA), also have an ongoing interest in the professional qualifications of those appointed to the federal judiciary. Additionally, scholars have demonstrated an interest in this topic by examining whether a relationship exists between the professional or career experiences of judges and judicial decision making. The analysis in this report focuses on the professional experiences of 163 active U.S. circuit court judges who were serving as of February 1, 2014. Active judges are those who have not taken senior status, retired, or resigned. Consequently, the statistics provided do not necessarily reflect all circuit court judges who are sitting on the bench (which include judges who have assumed senior status). Some of this report's findings include the following: A majority, 54.6%, of active circuit court judges had prior judicial experience at some point before being appointed as circuit court judges (and 45.4% had no such experience). Of the judges with prior judicial experience, 22.7% served solely as another type of federal judge (e.g., a U.S. district court judge), while 20.9% served solely as a state judge and another 11.0% had both prior federal and state judicial experience. A majority, 84.7%, of active circuit court judges had at least some prior experience as an attorney in private practice at some point prior to their appointment as a circuit judge. Of active circuit court judges with private practice experience, a plurality (26.4%) had 15 or more years of experience as an attorney in private practice. While 45.4% of active circuit judges do not have prior judicial experience, a much smaller percentage, 15.3%, have no prior experience in private practice. Circuit court judges without either prior judicial experience or experience as an attorney in private practice had other professional experiences such as working as an attorney for the federal government or as a law professor. Immediately prior to their appointment to the appellate bench, most circuit court judges were either serving as another type of judge or had been engaged in private practice for at least 10 years. Approximately half, 50.3%, of all active circuit judges were serving as another type of judge immediately prior to their appointment (i.e., serving as a district court judge, another type of federal judge such as a bankruptcy judge, or a state judge). Approximately one quarter, 25.8%, of active circuit court judges were working as attorneys in private practice immediately prior to being appointed as a circuit judge (with 22.1% having worked in private practice for 10 years or more).

Alien legalization or "amnesty," as well as special provisions to allow certain aliens to adjust to legal permanent resident (LPR) status, are among the most controversial issues of U.S. immigration policy. Among the thorny questions raised by such proposals are: would unauthorized aliens (i.e., illegal aliens) currently in the United States be eligible for the visa? and would the proposal include a mechanism for guest workers to obtain LPR status? This report summarizes the main options for foreign nationals currently in the United States—legally or illegally—to become LPRs. As discussed more fully below, most of these options would hinge on Congress enacting special legislation. In the 109 th Congress, both chambers passed major overhauls of immigration law but did not reach agreement on a comprehensive reform package. The Senate-passed bill ( S. 2611 ) would have enabled certain groups of unauthorized aliens in the United States to obtain legal permanent residence and certain guest workers to adjust to LPR status. In the 110 th Congress, a bipartisan compromise was negotiated with Bush Administration officials and introduced in the Senate on May 21, 2007. That bill would have enabled unauthorized aliens in the United States to become LPRs if they had met certain conditions, paid penalty fees, and fulfilled other requirements. During his time in the Senate, President Barack Obama supported comprehensive immigration reform legislation that included increased enforcement as well as a pathway to legal residence for certain unauthorized residents. Similar views have been expressed Secretary of Homeland Security Janet Napolitano. Immigrant admissions, as well as adjustments to LPR status, are subject to a complex set of numerical limits and preference categories that give priority for admission on the basis of family relationships, needed skills, humanitarian concerns, and geographic diversity. When Congress first codified the assortment of immigration laws into the Immigration and Nationality Act (INA) in 1952, the assumption was that most aliens who would receive LPR status would be coming to the United States from abroad. Indeed, 30 years ago, more than 80% of the 386,194 aliens who became LPRs of the United States had arrived from abroad. In FY2008, 58% of all LPRs were adjusting status within the United States. That the number of LPRs arriving from abroad has generally remained around 400,000 for the past 30 years while the total number of LPRs now hovers around one million annually, highlights the contribution that aliens adjusting to LPR status after being in the United States is making to the growth of permanent legal immigration. In addition to LPRs, each year millions of foreign nationals come temporarily on nonimmigrant visas (e.g., tourists, foreign students and intra-company business transfers). It is estimated that annually hundreds of thousands of foreign nationals either overstay their nonimmigrant visas or enter the country illegally and thus may become unauthorized aliens. As of March 2008, there were an estimated 11.9 million aliens living here without legal authorization to do so. Almost 40%, an estimated 4.4 million, arrived in the 2000-2005 period. There are several main options for aliens in the United States to become LPRs without leaving the country, and as Figure 1 illustrates, most involving unauthorized aliens would require Congress to enact a law. To adjust status under current law, aliens must be in the United States legally on a temporary visa and eligible for a LPR visa; aliens fleeing persecution may be granted asylum; or—in very limited circumstances—unauthorized aliens may become LPRs through cancellation of removal by an immigration judge. Even aliens in the United States legally on a temporary visa can only adjust to LPR status if they qualify under the statutory set of numerical limits and preference categories that give priority for admission on the basis of family relationships, needed skills, and geographic diversity. INA §245 permits an alien who is legally but temporarily in the United States to adjust to LPR status if the alien becomes eligible on the basis of a family relationship or job skills, without having to go abroad to obtain an immigrant visa. INA §245 was limited to aliens who were here legally until 1994, when Congress enacted a three-year trial provision (commonly referred to as §245(i)) that allowed aliens here illegally to adjust status once they became eligible for an LPR visa, provided they paid a large penalty fee. In 2000, Congress temporarily reinstated §245(i) through April 30, 2001 ( P.L. 106-554 ). Over the years, Congress has enacted statutes that enable certain aliens in the United States on a recognized—but non-permanent—basis to adjust their status to legal permanent residence when they are not otherwise eligible for an immigrant visa. Since the codification of the INA in 1952, there have been at least 16 Acts of Congress that have enabled certain aliens in the United States in some type of temporary legal status to adjust to LPR status. Most of these adjustment of status laws focused on humanitarian cases, e.g., aliens paroled into the United States by the Attorney General or aliens from specific countries who were given blanket relief from removal such as temporary protected status (TPS), deferred enforced departure (DED), or extended voluntary departure (EVD). The other major group of aliens adjusting status through special provisions involved nonimmigrants and typically were employment-based. Beneficiaries of these special provisions included nonimmigrant alien physicians who had graduated from a medical school or qualified to practice medicine in a foreign state and were fully and permanently licensed and practicing medicine in a U.S. state on January 9, 1978; nonimmigrant retired employees of international organizations and/or their immediate families who have lived in the United States for specified periods of time, totaling at least 15 years for eligible adults and 7 years for children; and nonimmigrant nurses here as of September 1, 1989, who had been employed in the United States as registered nurses for at least three years before application for adjustment and whose continued employment met specified certification standards. The issue of whether aliens residing in the United States without legal authorization may be permitted to become LPRs has been debated periodically, and at various times Congress has enacted legalization programs. In 1929, for example, Congress enacted a law that some consider a precursor to legalization because it permitted certain aliens arriving prior to 1921 "in whose case there is no record of admission for permanent residence" to register with INS's predecessor agency so that they could become LPRs. In 1952, Congress included a registry provision (aimed at aliens who had been admitted but whose files were lost) when it codified the INA, and this provision ultimately evolved into an avenue for unauthorized aliens to legalize their status. When Congress passed the Immigration Reform and Control Act (IRCA) of 1986, it included provisions that enabled several million aliens illegally residing in the United States to become LPRs. Generally, legislation such as IRCA is referred to as an "amnesty" or a legalization program because it provides LPR status to aliens who are otherwise residing illegally in the United States. Although legalization is considered distinct from adjustment of status, most legalization provisions are codified under the adjustment or change of status chapter of INA. There were two temporary legalization programs created by IRCA. The "pre-1982" program provided legal status for otherwise eligible aliens who had resided continuously in the United States in an unlawful status since before January 1, 1982. They were required to apply during a 12-month period beginning May 5, 1987. The "special agricultural worker" (SAW) program provided legal status for otherwise eligible aliens who had worked at least 90 days in seasonal agriculture in the United States during the year ending May 1, 1986. They were required to apply during an 18-month period beginning June 1, 1987, and ending November 30, 1988. Approximately 2.7 million aliens qualified for legal status under the pre-1982 and SAW programs. Of this total, 1.6 million or 59% qualified under the pre-1982 program, and 1.1 million or 41% qualified under the SAW program. The Attorney General has the discretionary authority under the INA to grant relief from deportation and adjustment of status to otherwise illegal aliens who meet certain criteria. Generally, aliens seeking this type of relief are those who have established "deep roots" in the United States and who can demonstrate good moral character as well as hardship to their family here if they are returned to their native country. Decisions to grant relief are made on a case-by-case basis. This avenue, formerly known as suspension of deportation, is now called cancellation of removal as a result of the Illegal Immigrant Reform and Immigrant Responsibility Act (IIRIRA) of 1996 ( P.L. 104-208 , Division C). In addition to changing the terminology, IIRIRA established tighter standards for obtaining this relief. The hardship threshold previously was "extreme" hardship to the alien, the alien's citizen or permanent resident alien spouse, children, or parent. Now the language states "exceptional and extremely unusual hardship." The length of time the alien had to be physically residing in the United States was increased from 7 to 10 years. Moreover, the time span used to calculate the 10-year physical presence requirement now terminates when the alien receives a notice to appear (the document that initiates removal proceedings) or when the alien commits a serious crime. IIRIRA also established for the first-time limits on the number of people who could receive cancellation of removal—4,000 each fiscal year.

Immigration patterns have changed substantially since 1952, when policy makers codifying the Immigration and Nationality Act (INA) assumed that most aliens becoming legal permanent residents (LPRs) of the United States would be arriving from abroad. In 1975, more than 80% of all LPRs arrived from abroad. By 2005, however, only 34% of all aliens who became LPRs had arrived from abroad; most LPRs adjust status within the United States. This report summarizes the main avenues for foreign nationals currently in the United States—legally or illegally—to become LPRs. Alien legalization or "amnesty," as well as adjustment of status and cancellation of removal options, are briefly discussed. Designed as a primer on the issues, the report provides references to other CRS products that track pertinent legislation and analyze these issues more fully. This report will be updated as needed.

The Water Resources Development Act of 2000 (Title VI, P.L. 106-541 ) authorized involvement of federal agencies in projects to restore the Everglades; these projects are coordinated under a planning framework—the Comprehensive Everglades Restoration Plan (CERP or the plan). The Everglades is the defining component of the South Florida ecosystem (see Figure 1 ), which incorporates 16 national wildlife refuges and four national park units. South Florida is also home to more than six million people and a large agricultural economy. There is wide agreement that major changes in water quantity, quality, timing, and distribution since the 1950s have significantly altered the region's ecology. During the dry season, the current water regime in South Florida is unable to sufficiently supply freshwater to meet both natural system needs and urban and agricultural demand. Water shortages, like those affecting Florida in 2007 because of lower than normal rainfall, are expected to become more frequent as demand by urban and agricultural consumers increases. The Everglades is a network of subtropical wetland landscapes that once stretched 220 miles from Orlando to Florida Bay. Several hundred lakes fed slow-moving creeks, called sloughs, that joined the Kissimmee River. Depending on rainfall, water flowed south down the river or topped the river's banks and flowed through 40,000 acres of marsh to Lake Okeechobee. During the summer rainy season, the lake would overflow its southern shore, spilling water into the Everglades. Due to flat topography, this water moved slowly south to Florida Bay through a shallow 40-mile wide, 100-mile long sawgrass marsh. These wetlands acted as natural filters and retention areas that recharged underlying aquifers. The Everglades' combination of abundant moisture, rich soils, and subtropical temperatures supported a vast array of species. However, by the mid-1800s, many in South Florida viewed the Everglades as an unproductive swamp. Flood control and reclamation efforts that manipulated the Everglades hydrology allowed development of the East Coast of Florida and permitted agriculture on reclaimed marshland. Principal among the human interventions affecting the Everglades is the Central and Southern Florida (C&SF) project of the Army Corps of Engineers (Corps), which was first authorized by Congress in 1948 for flood damage reduction and to satisfy other water management needs of South Florida. Water flows in South Florida are now directed by 1,000 miles of canals, 720 miles of levees, and almost 200 water control structures. Management and development activities have markedly changed the Everglades' water regime. Because of the C&SF project, water that once flowed from Lake Okeechobee across the Everglades in a slow-moving sheet is directed into canals and rivers discharging directly to the ocean. Experts now believe that the Everglades ecosystem has changed because it now receives less water during the dry season and more during the rainy season. The altered water regime combined with urban and agricultural development have reduced the Everglades to half its original size. Habitat loss has threatened or endangered numerous plant and animal species. The Everglades is also harmed by degraded water quality. Pollutants from urban areas and agricultural runoff, including excess nutrients (such as phosphorous and nitrogen), metals, and pesticides, have harmed plant and animal populations. Nutrients entering the Everglades have caused a decline in native vegetation and an overabundance of invasive exotic species. Changes in the quantity, quality, and timing of freshwater flows have also disrupted the equilibrium of coastal estuaries and reef systems. The federal government and the State of Florida have undertaken many restoration activities, such as acquiring lands and preparing a multi-species recovery plan, to address the health of the Everglades. The South Florida Ecosystem Restoration Task Force (Task Force), which was formalized by WRDA 1996 ( P.L. 104-303 ), coordinates the numerous restoration activities. The Task Force facilitates restoration using the following goals: (1) "get the water right," (2) restore, preserve, and protect natural habitats and species, and (3) foster compatibility of built and natural systems. Achieving these goals for South Florida is estimated at nearly $20 billion, of which $10.9 billion would be spent under CERP. The plan is the principal mechanism for "getting the water right" (i.e., restoring natural hydrologic functions and water quality, and providing water supplies). CERP focuses on water quantity, quality, timing, and distribution. The plan is designed to capture and store freshwater, which is currently discharged to the ocean, for use during the dry season. An estimated 80% of the captured water would be directed to the natural system, and the remaining 20% would be for agricultural and urban consumption. CERP calls for removing 240 miles of levees and canals, and building a network of reservoirs, underground storage wells, and pumping stations that would capture water and redistribute it to replicate natural flow. Title VI of WRDA 2000 approved CERP as contained in the Final Integrated Feasibility Report and Programmatic Environmental Impact Statement , as modified by the act. It also authorized $700 million in federal funds for an initial set of CERP projects. As other CERP projects are prepared, the Administration proposes them for authorization and inclusion in the next WRDA. WRDA 2007 ( P.L. 110-114 ) authorized a second set of activities, including the Indian River Lagoon (IRL) and Picayune Strand restoration projects; CERP activities in the legislation represented roughly $2.0 billion in authorizations (not counting $240 million in related deauthorizations also included in the legislation). Title VI of WRDA 2000 established that construction as well as operation and maintenance (O&M) costs of CERP projects would be equally shared by Floridian stakeholders and the federal government. CERP authorization was achieved after years of delicate negotiations among federal, state, local, and tribal stakeholders. Federal agencies responsible for components of CERP receive appropriations for these activities through their annual appropriations bills. Information on the status of appropriations for CERP activities performed by the Corps is available in CRS Report RL34009, Energy and Water Development: FY2008 Appropriations , by [author name scrubbed] et al. Appropriations status for CERP activities performed by Department of the Interior agencies is available in CRS Report RL34011, Interior, Environment, and Related Agencies: FY2008 Appropriations , by [author name scrubbed] et al. While support for CERP remains broad, reservations remain over its implementation. Recent concerns have included how projects are being prioritized, the pace of federal efforts and investments, and the pace of mitigation efforts for excess phosphorous. Other issues include effectiveness of restoration efforts and uncertainties in technologies. Since enactment of WRDA 2000 and though FY2007, $0.37 billion in federal funds and $1.63 billion in state funds have been put toward CERP projects. Much of the state's funds have gone toward projects that are part of the state's Acceler8 effort to accelerate the design, construction, and funding for eight priority CERP projects. Some stakeholders are concerned that the Acceler8 prioritization may increase effort on meeting water supply needs of agricultural and urban users, and decrease attention to investments for ecosystem restoration. This concern is raised by those wanting to maintain a focus on restoration and by those concerned with the Corps' mission being expanded into water supply projects for municipal and agricultural users. Proponents of Accerler8 argue that the priority projects have both water supply and restoration benefits and were agreed to as part of the CERP program; these proponents also perceive the pace of federal funding as being too slow. Federal water resources policies justify federal participation in ecosystem restoration projects, like CERP projects, based on the projects' environmental benefits for the nation. A concern of some stakeholders is that some specific Everglades restoration projects proposed for authorization or under development have primarily local benefits, rather than national benefits. Another concern has been that the CERP costs have increased, with increasing costs associated with land acquisition being one factor. Acceler8 proponents argue that these increasing costs are a reason to move more quickly. The increasing costs are of particular concern to stakeholders who worry that the commitment of federal funds to CERP might limit the funds available for other ecosystem restoration projects across the nation. The sponsors and beneficiaries of traditional Corps projects that provide navigation and flood control are concerned that not only Everglades restoration but also other large-scale restoration activities, such as wetlands restoration in coastal Louisiana, may divert funds away from their projects. No CERP projects have been completed since enactment, and all 15 CERP components scheduled for completion by 2007 have been delayed. There exists serious concern that delays may jeopardize the plan's feasibility. For example, delays in the Modified Waters Deliveries Project (Mod Waters), a pre-CERP project to restore flows to Everglades National Park, may result in insufficient water flows for the implementation of CERP components on the eastern side of the Everglades National Park. This interdependency of CERP and non-CERP projects for achieving ecosystem restoration goals was codified in WRDA 2000, which restricted appropriations for specific components of CERP until Mod Waters is complete. Another area of controversy that is related to potential delays in restoration stems from a May 2003 Florida state law (Chapter 2003-12) that authorizes a plan to mitigate phosphorus pollution reaching the Everglades. Some critics of the law argue that the plan extends previously established phosphorus mitigation deadlines and may compromise restoration efforts. The law's proponents argue that the plan represents a realistic strategy for curbing phosphorus. In the Interior and Related Agencies Appropriations Act, FY2006 ( P.L. 109-54 ), there were several provisions that conditioned funds for restoration on the achievement of water quality standards in federal properties. These provisions were also included in the FY2004 and FY2005 Interior appropriations. If water quality standards are not achieved, appropriations for restoration may be reduced according to provisions in these acts. The enacted language indicates congressional interest in overseeing the achievement of water quality standards for waters entering federal lands in Florida. Some environmental groups question the extent to which CERP contributes to Everglades restoration and whether so complicated and costly a plan is necessary. There also is concern that the plan does not include enough measures to improve water quality in the Everglades. Some groups and federal agencies have noted that CERP does not explicitly give natural systems precedence in water allocation, and that it is focused first on water supply rather than on ecological restoration. To address this point, the Corps revised the project implementation sequencing to include restoration activities in earlier phases. These changes have not satisfied some groups and scientists who continue to oppose CERP. Some environmental groups, which support CERP and Florida's financial participation in the effort, worry about the source of Florida's contribution. They argue against using funds designated for the purchase of land needed for restoration to finance other types of CERP projects. These groups contend that land acquisition is essential for successful Everglades restoration. A report by the National Research Council also suggests that acquiring needed land early in the restoration process is important for lowering the potential for irreversible damage due to development within the Greater Everglades. Others have raised questions regarding the management of Lake Okeechobee and other aspects of flood management for central Florida on the Caloosahatchee River's ecosystem and how these water management issues are being integrated into Everglades restoration efforts and planning. Others also have questioned the extent to which the impacts of sea level rise and climate change have been integrated into CERP, and their potential effects on the future of the Everglades ecosystem. Ecosystem restoration is a relatively young applied science, and, in many cases, the technologies and scientific data to support it are still being developed. To manage the resulting uncertainty, CERP is being implemented using adaptive management —a flexible learning-based approach that integrates new information into the restoration effort as it proceeds. Consequently, CERP is not as detailed as a typical Corps feasibility proposal. Another mechanism for coping with uncertainty of ecosystem restoration outcomes is the use of pilot projects. WRDA 2000 authorized four pilot projects, including projects to test aquifer storage and recovery (ASR), a water management strategy that has never been used on such a large scale as proposed under CERP. ASR uses aquifers as underground reservoirs to store surface water that will be withdrawn later during dry periods. These pilot projects have not been completed, and as a result, there are uncertainties in their effectiveness of early water storage projects.

The Everglades, a unique network of subtropical wetlands in Florida, is half its original size. Many factors contributed to its decline, including flood control projects and agricultural and urban development. Federal, state, tribal, and local agencies collaborated to develop a Comprehensive Everglades Restoration Plan (CERP, or the plan). CERP aims to increase storage of wet season waters to augment the supplies during the dry season for both the natural system and urban and agricultural users. The plan consists of more than 60 projects estimated to take more than 30 years and $10.9 billion to complete. The Water Resources Development Act (WRDA) of 2000 (P.L. 106-541) approved the CERP framework and authorized a first set of projects at $1.4 billion. WRDA 2000 established how CERP costs would be split; the federal government would pay half of construction and operation, and an array of state, tribal, and local agencies the other half. WRDA 2007 (P.L. 110-114) authorized a second set of CERP activities ($2.0 billion). CERP implementation issues include project priorities and funding; timeliness and effectiveness of restoration efforts (e.g., the impacts of delays in the Modified Water Deliveries project); mitigation of excess phosphorous; and technological uncertainties. This report summarizes CERP and its implementation.

In the first few months of 2005, two leading data brokers, LexisNexis and ChoicePoint, announced that unauthorized individuals had breached their security measures and obtained personal information (e.g., Social Security numbers, addresses) about hundreds of thousands of individuals. These companies and others like them—so-called "data brokers"—operate largely free from federal and state regulation. The recent scandals have led to calls for tighter regulation of the data brokerage industry, creating the need for more complete information on the types of businesses that make up this industry, and the types of services they provide. This report provides an overview of the industry and specific case studies of ChoicePoint and LexisNexis. Personal information for background checks is of course essential for employers and criminal investigators. Businesses that have been able to use the Internet to quickly provide such information have grown tremendously over the past several years, as the events of September 11, 2001, and the subsequent war on terror have put a premium on accurate identification of individuals in both the public and private sectors. "Data brokers"—companies like ChoicePoint, LexisNexis, Axciom, Experian, US Search, and Information Search—have prospered by fulfilling this need. Law enforcement, in particular, has found data brokers useful, as these private companies maintain and organize personal information on individuals in a manner that may not be legally available to government actors. The Privacy Act, for example, requires federal agencies to limit the amount of information on American citizens that these agencies maintain and disseminate. The Act establishes the principle that the government should "collect information to the greatest extent practicable directly from the subject individual when the information may result in adverse determinations about an individual's rights, benefits, and privileges under Federal programs." Most data brokers sell data that they collect from public records (e.g., driver's license records, vehicle registration records, criminal records, voter registration records, property records, occupational licensing records) or from warranty cards, credit applications, etc. In addition, data brokers purchase so-called "credit headers" from credit reporting agencies. Information on a credit header generally includes a person's name, Social Security number, address, phone numbers, and birth date. While the release of certain information, such as data associated with a credit report, is subject to federal law, data brokers are largely free from state and federal regulation. Generally, companies or government agencies purchase from data brokers information about an individual—including his or her Social Security number. The vast majority of these transactions are conducted via the Internet, rather than person-to-person. Of course, the anonymity of most data brokerage transactions has opened the door for criminals to pose as legitimate businesses and obtain vital information about an individual—usually a Social Security number—and steal his or her identity. It has been reported in the past, for example, that identity thieves—using stolen credit card numbers—have obtained information about victims and transferred funds from the victims' accounts, written phony checks against those accounts, etc. As the following case studies show, the danger of identity theft remains, despite the implementation of tighter safeguards by data brokers. While the growth of companies that gather and sell information has tracked the rise of personal computers since the early 1980's, two events led to the exponential growth of data brokerage firms since 2000: (1) The explosion of the Internet throughout the 1990's; and (2) the development by Florida-based programmer John Asher of parallel programming software allowing a researcher to use bits of information about an individual (e.g., name, Social Security number) to search several databases simultaneously and find more information about that person within seconds. Asher built two companies on this technology, and later sold the companies to ChoicePoint and LexisNexis, who have used the technology to become two of the most successful data brokers in the world. One of the largest and most profitable data brokers in the United States is Georgia-based ChoicePoint. ChoicePoint sells data to a wide variety of entities, from insurers to law enforcement. Originally formed as a spin-off of credit reporting agency Equifax in 1997, ChoicePoint has grown to dominate the data brokerage market by purchasing a number of smaller, more specialized data brokers and operating several subsidiaries in various states. ChoicePoint's total annual revenue has grown in this time period from $585 million in 2000 to over $1 billion in 2006. The products ChoicePoint offers reflect the sophistication in the data brokerage industry that demand and competition have created. ChoicePoint not only groups personal information together according to what type of background check is being conducted (e.g., pre-employment screenings) but also "Soundex" searches that allow customers to search for personal information based on how names sound, rather than how they are spelled. In addition, ChoicePoint allows law enforcement to link suspects to former addresses, neighbors, etc. As mentioned above, the data brokerage industry has grown increasingly close to law enforcement and counterterrorism agencies in the last few years, and ChoicePoint's relationship with law enforcement and counterterrorism agencies is indicative of this fact. ChoicePoint has multi-million dollar contracts with the Departments of Homeland Security and Justice, and the company maintains federal agency-specific websites to facilitate searches by officers from those agencies. Up until recently, ChoicePoint guarded access to its information by requiring customers to provide business records on file with government agencies, copies of drivers' licenses, and other information identifying customers as legitimate businesses. Unfortunately, at least one criminal ring began creating sham businesses and identities in order to get around these requirements, and a Los Angeles-based sting operation in 2004 uncovered evidence leading authorities to conclude that the ring had accessed ChoicePoint's information on roughly 145,000 people. As the scandal unfolded, ChoicePoint drew heated criticism for refusing to notify many of those whose personal information had been accessed. At first, ChoicePoint only notified victims residing in California, as that is the only state with a law requiring such notification when personal information is compromised. Only after a public outcry did ChoicePoint agree to notify victims outside of California. The Federal Trade Commission (FTC) brought a compliant for civil penalties, permanent injunction, and other equitable relief alleging that ChoicePoint did not have reasonable procedures to screen prospective subscribers, and turned over consumers' sensitive personal information to subscribers whose applications raised "red flags." The FTC also alleged that ChoicePoint approved as customers individuals who lied about their credentials and used commercial mail drops as business addresses. In addition, according to the FTC, ChoicePoint applicants reportedly used fax machines at public commercial locations to send multiple applications for separate companies. The FTC charged that ChoicePoint violated the Fair Credit Reporting Act (FCRA) by furnishing consumer reports to subscribers who did not have a permissible purpose to obtain them, and by failing to maintain reasonable procedures to verify both their identities and how they intended to use the information. The agency also charged that ChoicePoint violated the Federal Trade Commission Act by making false and misleading statements about its privacy policies. In 2006, ChoicePoint agreed to pay $10 million in civil penalties and $5 million in consumer redress to settle Federal Trade Commission charges that its security and record-handling procedures violated consumers' privacy rights and federal laws. The settlement requires ChoicePoint to implement new procedures to ensure that it provides consumer reports only to legitimate businesses for lawful purposes, to establish and maintain a comprehensive information security program, and to obtain audits by an independent third-party security professional until 2026. LexisNexis has been one of the leading information research engines for over two decades. In August, 2004, LexisNexis' parent company, London-based Reed Elsevier, purchased data broker Seisint (an Asher creation) for $775 million and made it a unit of LexisNexis. Among other things, Seisint provides data for Matrix, a crime and terrorism database that, until recently, was funded by the federal government. Very soon after the ChoicePoint scandal, LexisNexis reported that unauthorized individuals had accessed the personal information of about 32,000 customers of the company's data brokerage unit by entering in the passwords of legitimate customers. A few weeks later, that estimate had risen to over 300,000. These individuals somehow acquired passwords of paying customers of Seisint's "Acurint" service, which generally charges $4.50 for packaged information about an individual. Using the legitimate passwords, the hackers were able to access personal information ranging from social security numbers to home addresses to drivers' licenses numbers. As the market for personal information has grown—particularly in light of the war on terror—so too has grown the data brokerage industry. The ChoicePoint and LexisNexis scandals, however, have spurred debate over the security of personal information collected and sold by data brokers.

Disclosures of breaches of the customer databases of LexisNexis and ChoicePoint have raised interest in the business and regulation of data brokers, companies that collect personal information from public and private records and sell this information to public and private sector entities. The growth of this industry has generally tracked the increase in government and private sector use of personal information. The vast amount of personal information that data brokers collect and the improper access to such data, however, have spurred concern as to the dangers of identity theft. Identity theft is reportedly the fastest growing crime in America. This report provides an overview of the data brokerage industry and more specific background on LexisNexis and ChoicePoint.

The attacks of September 11, 2001, heightened interest in port and maritime security. Much of this interest has focused on cargo container ships because of concern that terrorists could use containers to transport weapons into the United States, yet only a small fraction of the millions of cargo containers entering the country each year is inspected. Some fear that a container-borne atomic bomb detonated in a U.S. port could wreak economic as well as physical havoc. Robert Bonner, former head of Customs and Border Protection (CBP) in the Department of Homeland Security (DHS), has argued that such an attack would lead to a halt to container traffic worldwide for some time, bringing the world economy to its knees. Stephen Flynn, a retired Coast Guard commander and an expert on maritime security at the Council on Foreign Relations, holds a similar view. While container ships accounted for 30.4% of vessel calls to U.S. ports in 2005, other ships carried crude oil (12.9%), dry bulk cargo (18.7%), and vehicles (6.0%), among other things. These ships merit attention as well because terrorists will look for the weak link. The 9/11 Commission stressed the importance of a balanced approach to maritime security. To this end, this report focuses on the threat of a terrorist nuclear attack using oil tanker ships. This threat is of particular interest because the Middle East is the chief source of anti-U.S. terrorism. Crude oil and other petroleum products account for almost all export earnings of many Middle Eastern nations. In turn, 28.8% of net U.S. crude oil imports in September 2006 came from the Middle East. Crude oil from the Middle East went to 30 U.S. ports in 2003. Those handling the most oil were Blaine, WA; El Segundo, Long Beach, Los Angeles, and Richmond, CA; Corpus Christi, Freeport, Galveston, Houston, Port Arthur, and Texas City, TX; Baton Rouge, Gramercy, Lake Charles, Morgan City, and New Orleans, LA; Pascagoula, MS; Mobile, AL; Wilmington, DE; and Paulsboro, NJ. Crude oil from the Middle East is typically shipped to the United States in supertankers—Very Large Crude Carriers (VLCCs) and Ultra Large Crude Carriers (ULCCs). Their size is measured in deadweight tons (DWT), the weight of the stores, fuel, and cargo they can carry. One DWT is 2,240 lb. While definitions vary slightly, VLCCs can carry about 200,000 to 300,000 DWT and ULCCs can carry more than 300,000 DWT. Crude oil accounts for almost all of the deadweight tonnage of such ships. A representative ULCC was 60 meters wide and 350 meters long, and had a draft (depth below the waterline) of 22 meters. They are the largest ships ever built. The interior of a tanker is divided into multiple storage tanks. Both the Coast Guard and the Navy stated that they do not have responsibility for, or authority over, security of foreign-flagged vessels at foreign ports. Nor do other American forces. Security of foreign ports rests with foreign governments. The simplest type of atomic bomb, and by far the easiest to fabricate, is a gun-assembly bomb, in which one mass of uranium highly enriched in the fissile isotope 235 (highly enriched uranium, or HEU) is shot down a tube into another mass of HEU, forming a critical mass and causing a nuclear explosion. The Hiroshima bomb was of this type; its designers had such confidence in the design that it was not tested before use. This bomb had an explosive yield of 15 kilotons (equivalent to 15,000 tons of TNT). Excluding the bomb's outer casing, fins, and fuses, this device was 6 feet long and about 6 inches in diameter, and weighed about 1,000 pounds. Some items loaded onto large cargo ships are of similar or greater size and weight. It might be possible to make a lighter gun-assembly bomb. To stage a nuclear attack using a tanker, terrorists would need to acquire a nuclear device and smuggle it (or key components) onto a ship. Their ability to accomplish this latter task would likely depend on their ability to circumvent local security; on the reliability of security personnel in oil-exporting countries such as Saudi Arabia, Kuwait, and Algeria; and on the reliability of the ship's officers and crew. Terrorists might seek to place a nuclear device inside one of a tanker's oil tanks, which would require sealing and cushioning the bomb and possibly attaching it to the tank wall; or in a dry space on the ship; or in a blister attached to the ship underwater. Remotely detonating a bomb inside an oil tank or underwater might be difficult: it might not be possible to attach wires leading out to dry spaces, or to send an electromagnetic signal (e.g., a cell phone call) through water or oil to the bomb. Detonating the bomb with a timer would run the risk of the ship not being at the target at the specified time. Overcoming these challenges might be within the ability of a terrorist group resourceful enough to acquire an atomic bomb. Terrorists might also smuggle a bomb onto a ship at sea, as discussed later. Terrorists could be expected to select as their target a port that handled a large volume of oil and other goods and that had a densely-populated area that tankers passed on their way through a harbor to an unloading terminal. Various cities worldwide meet these criteria. If terrorists sought major economic damage while minimizing loss of life, they might target the Louisiana Offshore Oil Port, or LOOP, the only U.S. deepwater oil port that can handle fully loaded supertankers. LOOP, 18 miles off the Louisiana coast, handles about 10% of U.S. crude oil imports. The Panama Canal might be another potential economic target. Some means of detecting atomic bombs in a tanker would fail, especially for a bomb inside an oil tank. Gamma rays, essentially high-energy x-rays, are used to create x-ray-type pictures of the contents of cargo containers, but a tanker's huge mass of oil and steel would prevent gamma rays from traveling the width of a tanker. Neutrons may be used to detect fissile material; neutrons of the appropriate energy level cause such material to fission, producing neutrons and gamma rays that can be detected. The hydrogen atoms of crude oil, however, would block neutrons from penetrating. Other candidate techniques include chemical sampling of oil for traces of extraneous material, and preparing an acoustic profile of a ship when known to be "clean" to compare with a profile taken as the ship nears port. The vast amount of oil in a supertanker works against the former technique; the complex configuration of tanks on a tanker works against the latter. A more remote possibility, muon detection, might work if daunting technical challenges could be overcome. The difficulty of detecting a bomb aboard a tanker underscores the importance of keeping bombs off tankers. Securing tankers at loading terminals would likely involve a security perimeter (including underwater), and measures to ensure personnel reliability. Items brought on a ship would have to be screened. A National Nuclear Security Administration program, "Second Line of Defense," screens people and baggage for fissile material; similar technology might help secure tankers. Securing tankers in port might not be sufficient if terrorists could smuggle a bomb onto a ship at sea. It may be possible to improve security by using surveillance aircraft or satellites. Security may be a greater issue as tankers slow to navigate straits or approach port. Several issues arise: (1) Would shippers let crew spend time to upgrade security beyond current levels? VLCCs have small crews, perhaps 25 to 40 people, who may have no time for added tasks. (2) If intelligence data indicated a plot to board a tanker at sea to place a bomb, could a warning be passed without compromising U.S. intelligence capabilities? (3) This scenario would require the connivance of the entire crew, or silencing those who opposed the plot. Screening for personnel reliability may be the only defense against this prospect. Possible oversight questions include the following: How does the Administration view the potential for terrorists to use a tanker for a nuclear attack? To what extent has the Administration considered this threat in planning for port and maritime security? If considered a serious threat, what measures is the Administration implementing to respond to it? When will they be in place? How much funding is programmed for them over the next few years? Which areas of detection technology may merit development? Which executive branch office has overall responsibility for examining or addressing this potential threat? What other executive offices have responsibilities in this area? Is there adequate coordination among them? Congress might consider options such as the following to further explore the threat discussed in this report. Clarify federal responsibility for tanker security by requiring a lead federal agency for tanker security and making more explicit the responsibilities of various federal agencies involved in tanker security. Create a Tanker Security Initiative (TSI) analogous to the Container Security Initiative for improving containerized cargo security. TSI might set security standards for tankers that transport oil to U.S. ports, and for the ports where they load. Tankers not meeting the standards, or that come from ports not meeting the standards, could be denied entry to U.S. ports. Establishing such a regime would undoubtedly require negotiations with other countries. (See " Legislative Activities ," below.) Ensure that tankers are a focus of maritime domain awareness, which refers to surveillance and communication systems that would permit U.S. officials to have a comprehensive understanding at any given moment of the location and identity of ships at sea. Assure sufficient U.S. intelligence assets are focused on the threat and possible indications of preparations for such an attack. Terrorists seeking to acquire or build a bomb and smuggle it onto a tanker would need to go through certain steps. Similarly, a terrorist bomb placed inside a tank of crude oil might have certain signatures, such as a way to detonate the bomb. The Intelligence Community could analyze such steps and signatures, and be alert to signs of the most critical ones. Determine whether funding is adequate for technologies that hold some prospect of detecting an atomic bomb aboard a tanker. Keep oil tankers away from U.S. ports by promoting the construction of more offshore ports like LOOP. Improve international cooperation. Existing international agreements and organizations that might focus on tanker security include agreements for countering narcotics, crime, and piracy; the International Maritime Organization, shipping associations, and Interpol; and the International Ship and Port Facility Security Code. These efforts could supplement the Proliferation Security Initiative (PSI), a multilateral effort for interdicting ships at sea that are suspected of carrying weapons of mass destruction. Ships available for PSI missions might respond to indications of tanker security problems at sea. The United States could pursue increased bilateral cooperation with oil-exporting states and countries under whose flags tankers are registered. Potential measures include improved perimeter security at oil-loading terminals and more rigorous background screening and training of port workers and tanker crew members. Should Congress conclude that proactive steps should be taken in this area, the issues of who should pay and how funds should be collected would arise. Costs could be covered by general revenues. Alternatives would be to charge a fee on ships landing oil in the United States or to impose a tax on crude oil or petroleum products consumed in the United States. Congress may also wish to consider whether the issues discussed here might apply to other types of ships, such as those for carrying cars or dry bulk goods. On January 24, 2005, S. 12 , Targeting Terrorists More Effectively Act of 2005, was introduced and was referred to the Senate Committee on Foreign Relations. Section 325 provides for a Tanker Security Initiative under which "[t]he Secretary of Homeland Security shall establish a Tanker Security Initiative to promulgate and enforce standards and carry out activities to ensure that tanker vessels that transport oil, natural gas, or other materials are not used by terrorists or as carriers of weapons of mass destruction." As part of this initiative, the Secretary may develop standards to prevent terrorists from placing weapons of mass destruction on tankers, develop detection equipment and inspection procedures, conduct R&D on sensors to detect a nuclear device on a tanker, and aid foreign countries in carrying out provisions of this initiative. The legislation would also require the Secretary to submit a report to Congress on terrorism risks posed by tankers, means of combating this risk, and a proposed budget to carry out this initiative. This legislation was not reported from committee. Should the 110 th Congress undertake further consideration of the potential tanker/nuclear threat, issues that may garner attention include: (1) How might port security grant programs enhance tanker security? (2) Could imaging or radiation-detection systems available now, or deployable in the near future, significantly augment tanker security against this threat? (3) If so, is it worth the money to deploy them now, or would it be preferable to wait until more advanced systems were available? (4) If not, does the current R&D investment strategy consider tanker security, and what detection programs might be developed to do so? These questions might be raised as Congress oversees implementation of the SAFE Port Act, P.L. 109-347 .

While much attention has been focused on threats to maritime security posed by cargo container ships, terrorists could also attempt to use oil tankers to stage an attack. If they were able to place an atomic bomb in a tanker and detonate it in a U.S. port, they would cause massive destruction and might halt crude oil shipments worldwide for some time. Detecting a bomb in a tanker would be difficult. Congress may consider various options to address this threat. S. 12 , Targeting Terrorists More Effectively Act of 2005, included a Tanker Security Initiative (sec. 325). This report will be updated as needed.

On June 23, 2005, the Supreme Court handed down Kelo v. City of New London , one of its three property rights decisions during the 2004-2005 term. In Kelo , the Court addressed the City's condemnation of private property to implement its area redevelopment plan aimed at invigorating a depressed economy. By 5-4, the Court held that the condemnations satisfied the Fifth Amendment requirement that condemnations be for a "public use," notwithstanding that the property, as part of the plan, might be turned over to private developers—a private-to-private transfer. Under the Fifth Amendment, the United States may invoke its power of eminent domain to take private property—known as "condemnation"—only for a "public use." This public use prerequisite is made applicable to the states and their political subdivisions, as in Kelo , through the Fourteenth Amendment due process clause. In addition, states and their subdivisions must comply with state constitutions, which use phrases similar to "public use." The issue in Kelo was not whether the landowners were compensated; condemnation, under the federal or state constitutions, must always be accompanied by just compensation of the property owner. Rather, the issue was whether the condemnation was not for a public use and thus may not proceed at all , even given that just compensation is paid. Kelo prompted immediate debate whether Congress should respond by protecting property owners from the use of eminent domain for economic development. The overall issue is this: When does a private-to-private transfer of property through eminent domain, as in Kelo , satisfy the constitutional requirement that eminent domain only be used for a public use—notwithstanding that the transferee is a private entity. For our nation's first century, "public use" generally was construed to mean that after the condemnation, the property had to be either owned by the government (for roads, military bases, post offices, etc.) or, when private to private, by a private party providing public access to the property (as with entities, such as railroads and utilities, having common carrier duties). Beginning in the late 1890s, however, the Supreme Court rejected this public-access requirement for private-to-private condemnations, asserting that "public use" means only "for a public purpose." Even without public access, the Court said, private-to-private transfers by eminent domain, could, under proper circumstances, be constitutional. In 1954, the owner of a department store in a blighted area of the District of Columbia argued to the Supreme Court that the condemnation of his store for conveyance to a private developer, as part of an areawide blight-elimination plan, failed the public use condition. He pointed out that his particular building was not dilapidated, whatever the condition of other structures in the area might be. The Supreme Court in Berman v. Parker unanimously rejected the no-public-use argument. The Court declined to assess each individual condemnation, but rather viewed the blight-elimination plan as a whole. So viewed, the plan furthered a legitimate public interest. Indeed, the public use requirement was said to be satisfied anytime government acted within its police powers. Not surprisingly, the Berman decision is heavily relied upon by municipalities across the country engaged in blight removal. The 1980s saw further extensions of "public use" in the realm of private-to-private condemnations. In 1981, Detroit sought to condemn an entire neighborhood to provide a site for a General Motors assembly plant. Unlike in Berman , the neighborhood was not blighted ; the City simply wanted to improve its dire economic straits by bringing in the plant to increase its tax base. The Michigan Supreme Court in Poletown Neighborhood Council v. Detroit interpreted "public use" in its state constitution to allow the condemnation. A few years after Poletown , the U.S. Supreme Court in Hawaii v. Midkiff dealt with Hawaii's use of condemnation to relieve the highly concentrated land ownership there. The state's program allowed a land lessee to apply to the state to condemn the land from the owner, for sale to the lessee. Again unanimously, the Supreme Court perceived a public use, this time in the elimination of the claimed adverse impacts of concentrated land ownership on the state's economy. As in Berman , the Court declared that the public use requirement is "coterminous with the scope of the sovereign's police powers." The effect of Berman , Poletown , and Hawaii , and kindred decisions, was to lead some observers to declare that "public use" had been so broadly construed by the courts as to have been effectively removed from the Constitution. To exploit the new latitude in "public use," and with Poletown specifically in mind, local condemnations assertedly for economic development began to increase in the 1980s—some of them pushing the envelope of what could be considered economic development with a primarily public purpose. Predictably, litigation challenges to such condemnations increased in tandem, property owners charging that even under the courts' expansive view of "public use," the particular project could not pass muster. In one of the early property-owner successes, a New Jersey court in 1998 rejected as not for a public use a proposed condemnation of land next to an Atlantic City casino, for the casino's discretionary use. A few other cases also rejected "public use" rationales for economic-development condemnations, either because the project's benefits were primarily private, or because economic development categorically was not regarded as a public use. Most dramatically, in 2004, the Michigan Supreme Court unanimously reversed Poletown . All this set the stage for Kelo . In the late 1990s, Connecticut and the city of New London began developing plans to revitalize the city's depressed economy. They fixed on a 90-acre area on the city's waterfront, adjacent to where Pfizer Inc. was building a $300 million research facility. The intention was to capitalize on the arrival of the Pfizer facility. In addition to creating jobs, generating tax revenue, and building momentum for revitalizing the downtown, the plan was also intended to make the city more attractive and create recreation opportunities. The redevelopment would include office and retail space, condos, marinas, and a park. However, nine property owners in the redevelopment area refused to sell, so condemnation proceedings were initiated. In response, the property owners claimed that the condemnations of their properties were not for a public use. In his opinion for the 5-justice majority, Justice Stevens held that the condemnations, implementing a carefully considered areawide revitalization plan in an economically depressed area, were for a public use, even though the condemned properties would be redeveloped by private entities. The majority opinion noted preliminarily that there was no suggestion of bad faith here—no charge that the redevelopment was really a sweetheart deal with the private entities that would benefit. The case therefore turned on whether the proposed development was a "public use" even though private-to-private transfers with limited public access were involved. Without exception, said the majority, the Court's cases defining "public use" as "public purpose" reflect a policy of judicial deference to legislative judgments—affording legislatures broad latitude in determining what evolving public needs justify. While New London was not confronted with blight, as in Berman , "their determination that the area was sufficiently distressed to justify a program of economic rejuvenation is entitled to our deference." But just as in Berman , the plan was comprehensive and thoroughly deliberated, so the Court again refused to consider the condemnations of individual parcels; because the overall plan served a public purpose, it said, condemnations in furtherance of the plan must also. The property owners argued for a flat rule that economic development is not a public use. Rejecting this, the Court said that promoting economic development is a long-accepted function of government, and that there is no principled way of distinguishing economic development from other public purposes that the Court has recognized as public uses—as in Berman and Hawaii . Nor is the incidental private benefit troublesome, as government pursuit of a public purpose often benefits private parties. And, a categorical rule against development condemnations is not needed to prevent abuses of eminent domain for private gain; such hypothetical cases, said the Court, can be confronted as they arise. Also rejected was the property owners' argument that for cases of this kind, courts should require a "reasonable certainty" that the expected public benefits of the project will accrue. Such a requirement, the Court noted, asks courts to make judgments for which they are ill-suited, and would significantly impede carrying out redevelopment plans. Finally, the majority opinion stressed that it was construing only the Takings Clause of the Federal Constitution. State courts, it pointed out, remain free to interpret state constitutions more strictly, and state legislatures remain free to prohibit undesired condemnations. Other opinions in Kelo warrant mention, as they have echoed in the ensuing congressional debate. Justice Kennedy, one of the majority-opinion justices, filed a concurrence emphasizing that while deference to the legislative determination—"rational basis review"—is appropriate, courts must not abdicate their review function entirely. A court should void a taking, he said, that by a "clear showing" is intended to favor a particular private party, with only incidental or pretextual public benefits. In dissent, Justice O'Connor, joined by the Court's three core conservatives, argued vigorously that "[u]nder the banner of economic development," the majority opinion makes " all private property ... vulnerable to being taken and transferred to another private owner, so long as it might be upgraded." Justice O'Connor allowed as how private-to-private condemnations without public access could on some occasions satisfy "public use"—as in Berman and Hawaii. But in those cases, she asserted, "the targeted property inflicted affirmative harm on society." In contrast, in Kelo the well-maintained homes to be condemned were not the source of any social harm, so their elimination to allow a new use produces only secondary benefit to the public, something that almost any lawful use of real property does. She also questioned whether Justice Kennedy's test for acceptable development condemnations was workable, given that staff can always come up with an asserted economic development purpose. Property rights advocates assert that Kelo marks a change in existing takings jurisprudence, but the reality is arguably more subtle. Very possibly, some of their adverse reaction is attributable to the opportunity lost in Kelo to do away with economic-development condemnations in one fell swoop. After Kelo , property rights advocates will have to pursue their goal in multiple state courts and legislatures. The doctrinal crux of the matter appears to lie in the majority and dissenters' divergent readings of the Court's prior public-use decisions. Justice Stevens for the majority finds no principled difference between economic-development condemnations and condemnations the Court has already approved, as in Berman and Hawaii , while Justice O'Connor for the dissenters does. Justice Stevens' view arguably takes insufficient account of the distinction between projects where economic development is only an instrumental or secondary aspect of the project and those where economic development is the primary thrust. On the other hand, the distinction drawn by Justice O'Connor between projects whose primary thrust is elimination of affirmative harms and other projects, while intuitively appealing, requires a dichotomy between elimination of harm and creation of benefit that the Court has previously critiqued as unworkable. Moreover, Justice O'Connor had to backpedal on the statement in Hawaii , which she authored, that "the public use requirement is coterminous with the scope of the sovereign's police powers." Some exercises of that police power, she now would hold, are not public uses. Of course, what Kelo really means will not be known until the lower courts have had a few years to interpret and apply it. It will be interesting to see whether Justice Kennedy's "meaningful rational basis" review has any content, or whether the dissenters' more skeptical view, that a plausible economic development purpose can always be conjured up by competent staff, will ultimately prove correct. In the meantime, frequent efforts can be expected by property owners and like-minded public interest law firms to expand the number of states whose courts find fault under state constitutions with development condemnations. The interest group alignment on how to respond to Kelo does not break down along stereotypical liberal-conservative lines. A conservative, one supposes, would side with the property owners, but having a states-rights orientation might resist federal constraints on what local governments can do. On the other hand, liberals might be comfortable with municipal efforts to guide the market toward economic development, but resist on the ground that such efforts disproportionately displace minority and low-income communities. Some options that Congress might consider for responding to Kelo are— Kelo made plain that it was interpreting solely the Takings Clause in the U.S. Constitution. As in other constitutional areas, state courts remain free to interpret state constitutions more stringently, and indeed some state high courts have read their constitutions to bar condemnation for economic development. Moreover, whatever the state constitution says, state legislatures are free to statutorily prohibit development condemnations, and indeed, once again, at least a few have. In light of the foregoing, Congress might conclude that it was appropriate to let the matter simmer for a few years in the states, and then act only if unsatisfied with their response. Proposals have already surfaced in Congress to prohibit the use of federal money for state and local projects with an economic development purpose—usually through conditions on federal grants. There are several ways this could be done. The prohibitory condition could be attached solely to the monies for the particular economic development project involving the condemnation. More broadly, the condition could be applied to a larger pot of money (e.g., Community Development Block Grants) still having some relation to economic development condemnations. Most expansively, the condition could be attached to the largest federal funding program one can find (or all federal funding), though this course of action may run afoul of the constitutional requirement that conditions on federal funding must relate to the underlying purpose of the funding. The suggestion has been raised that Congress could direct how states exercise their eminent domain authority for economic development projects, regardless of whether federal funds are involved. Such legislation, however, arguably might exceed congressional power under the Commerce Clause and the Fourteenth Amendment, and may even raise Tenth Amendment issues. This statute requires compensation of persons who move from real property, voluntarily or by condemnation, due to a federal project or a state or local one receiving federal money. Its raison d'etre is that the constitutional promise of just compensation covers only the property taken, leaving the condemnee to bear the often substantial additional losses associated with having to move. Some of those losses are compensated under the URA. The statute, however, has long been criticized as inadequate both as to the losses covered and the amounts of compensation available. Moreover, it creates no cause of action allowing condemnees to enforce its terms. Expanding the Act would at least assure that persons displaced by economic-development condemnations receive fuller compensation. This is perhaps the most direct, but logistically difficult, option.

In Kelo v. City of New London , decided June 23, 2005, the Supreme Court held 5-4 that the city's condemnation of private property, to implement its area redevelopment plan aimed at invigorating a depressed economy, was a "public use" satisfying the U.S. Constitution—even though the property might be turned over to private developers. The majority opinion was grounded on a century of Supreme Court decisions holding that "public use" must be read broadly to mean "for a public purpose." The dissenters, however, argued that even a broad reading of "public use" does not extend to private-to-private transfers solely to improve the tax base and create jobs. Congress is now considering several options for responding to the Kelo decision.

T he Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) was signed into law on March 23, 2010. On March 30, 2010, the Health Care and Education Reconciliation Act (HCERA; P.L. 111-152 ) was signed into law, which included new provisions and amended several ACA provisions. Collectively, the laws comprise numerous provisions, most of which relate to how health care in the United States is financed, organized, and delivered. Since enactment of the ACA and HCERA, lawmakers have repeatedly debated the laws' implementation and considered bills to repeal, defund, or otherwise amend them. This report summarizes legislative actions taken during the 111 th -115 th Congresses to modify the health care-related provisions of the ACA and HCERA. (From this point forward, all references to the ACA in this report refer collectively to the law and to the changes made by HCERA, unless otherwise noted.) The first part of the report provides a brief overview of the ACA's core provisions and its impact on federal spending and health insurance coverage as context for the other material presented in the report. The second part of the report includes Table 2 , which summarizes laws enacted during the 111 th -115 th Congresses that modified ACA provisions. The third part of the report lists bills passed in the House or the Senate during the 111 th -115 th Congresses that would have modified ACA provisions, had they been enacted. Identifying legislation that modifies the ACA has become increasingly difficult over the years. This is because of the vast number of ACA provisions, their complexity, and the fact that these provisions are codified in many different parts of the U.S. Code . As a result, the legislation presented in this report's tables may not include all enacted legislation that modifies the ACA or all House- or Senate-passed legislation that would have modified the ACA, had it been enacted. Due to the increasing complexity of tracking such legislation and concerns about the ability to do so authoritatively, the Congressional Research Service (CRS) does not intend to update this report. The ACA has 10 titles ( Table 1 ), and each title has many provisions. The provisions in Titles I-VIII largely relate to how health care in the United States is financed, organized, and delivered. Title IX contains revenue provisions. Title X reauthorizes the Indian Health Care Improvement Act, establishes some new programs and requirements, and amends provisions included in the other nine titles of the ACA. A primary goal of the ACA was to increase access to affordable health care for the medically uninsured and underinsured. To that end, the law includes a complex set of interconnected provisions that address the private health insurance market and the Medicaid program. For instance, the law established financial subsidies for eligible individuals purchasing private insurance through health insurance exchanges and expanded eligibility for Medicaid. The costs to the federal government of expanding access to private insurance and Medicaid coverage were projected to be offset by increased taxes and revenues and by reduced spending on Medicare and other federal health programs. The ACA established several new taxes on firms in the health care sector and expanded existing taxes on individuals. The law includes many different provisions affecting the Medicare program, such as provisions concerning payment and program modifications to Medicare's fee-for-service program, the Medicare Advantage program, and the outpatient prescription drug program. In addition, the ACA contains hundreds of other provisions that address health care access, costs, and quality. The ACA includes provisions intended to increase the primary care and public health workforce, promote preventive services, and strengthen quality measurement, among other things. Other ACA provisions include programs to prevent elder abuse, neglect, and exploitation; a new regulatory pathway for licensing biological drugs shown to be biosimilar or interchangeable with a licensed biologic; and new nutrition labeling requirements for chain restaurant menus and vending machines. The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) issued the first cost estimate of the ACA on March 20, 2010. They issued an updated estimate in February 2011. According to the February 2011 estimate, the ACA would reduce federal deficits by $210 billion over the 10-year period FY2012-FY2021, and the number of non-elderly uninsured individuals would be reduced by about 34 million in CY2021. CBO and JCT have not issued an updated cost estimate of the ACA in its entirety since February 2011; however, they have issued many other ACA-related cost estimates and analyses. The estimates have changed over time due to changes in the economy, the effects of enacted legislation, technical changes in the agencies' analyses (e.g., new survey and agency data on enrollment in health care programs), and the effects of administrative and judicial decisions (e.g., the 2012 U.S. Supreme Court decision effectively making state participation in the ACA Medicaid expansion voluntary). Table 2 summarizes legislation amending the ACA that has been enacted since March 30, 2010. Each table entry identifies the Congress in which the law was enacted, provides the public law number and date of enactment, and offers a brief description of the change(s) made to the ACA. The laws are listed in reverse chronological order, beginning with the most recently enacted legislation and extending back to the first measure signed into law following enactment of the ACA and the accompanying package of amendments in the HCERA. During the 111 th Congress, a number of clarifications and technical adjustments to the ACA were enacted. In the 112 th -115 th Congresses, several more substantive ACA amendments were signed into law. For example, Title VIII of the ACA—the Community Living Assistance Services and Supports (CLASS) Act—which would have established a voluntary, long-term care insurance program to pay for community-based services and supports for individuals with functional limitations was repealed. Lawmakers also repealed a tax-filing provision (IRS Form 1099) that had been included in the ACA. In multiple separate legislative actions, lawmakers both appropriated funding for programs established under the ACA (e.g., the Community Health Center Fund) and rescinded funding for other programs established under the ACA (e.g., the Prevention and Public Health Fund). In compiling Table 2 , CRS made decisions about which laws—or which specific provisions in a particular law—to include. CRS elected to include only those provisions that made changes (including funding extensions or rescissions) to new programs and activities first authorized and funded by the ACA. CRS generally excluded provisions addressing established programs and activities that predate the ACA but were extended or amended in a non-substantive way by the law. For example, the ACA extended multiple existing Medicare and Medicaid program payments and activities that since have been further extended and/or modified by provisions in more recently enacted laws. The ACA also extended funding for a number of existing grant programs whose funding has been further extended by provisions in newer laws. None of these types of provisions are included in Table 2 . In addition to considering ACA repeal or amendment in authorizing legislation, lawmakers have used the annual appropriations process to eliminate or provide funding for ACA provisions and to modify provisions of the law. Table 2 includes provisions in appropriations legislation that have the effect of making new law or changing existing law. As an example, the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), included a temporary moratorium on the ACA's medical device tax and the annual fee on health insurance providers, as well as a two-year delay of the ACA's excise tax on high-cost employer-sponsored health plans (often referred to as the Cadillac tax ). However, Table 2 does not include provisions in appropriations legislation that address administrative spending for covering the costs of ACA implementation (e.g., denial of agency requests for new funding to help support ACA implementation); limit or restrict the use of funds provided under a bill for a specific purpose (e.g., language prohibiting an agency from using any of the funds appropriated to the agency for ACA implementation activities); or establish reporting or other administrative requirements regarding implementation of the ACA (e.g., language instructing an agency to provide an accounting of administrative funding on ACA implementation). As noted, identifying legislation that modifies the ACA has become increasingly difficult over the years. As a result, Table 2 may not provide a comprehensive list of enacted legislation that has modified the ACA. The tables in this section list legislation that passed the House ( Table 3 ) or the Senate ( Table 4 ) in the 111 th -115 th Congresses that would have modified health care-related provisions of the ACA. None of the bills listed in Tables 3 or 4 became law (although provisions included in the bills may have been added to other legislation that became law). Generally, Tables 3 and 4 list only legislation that, if enacted, would have had a direct impact on the ACA and its implementation; measures that would not have had such an effect are not included. Thus, budget resolutions, which are binding only on certain procedural matters before Congress, are not included. The House-passed legislation included stand-alone bills as well as provisions in broader, often unrelated measures. Four of the House-passed bills listed in Table 3 would have repealed the ACA in its entirety: H.R. 596 in the 114 th Congress; H.R. 45 in the 113 th Congress; H.R. 6079 in the 112 th Congress; and H.R. 2 in the 112 th Congress. The other House-passed bills listed in Table 3 would have (1) repealed, restricted, or otherwise limited, specific provisions in the ACA; (2) eliminated appropriations provided by the ACA and rescinded all unobligated funds; (3) replaced the mandatory appropriations for one or more ACA programs with authorizations of (discretionary) appropriations and rescinded all unobligated funds; or (4) blocked or otherwise delayed implementation of specific ACA provisions. The Senate passed considerably fewer bills that would have modified the health care-related provisions of the ACA than did the House in the 111 th -115 th Congresses ( Table 4 ). None of the Senate-passed bills listed in Table 4 would have repealed the ACA in its entirety. Two of the three bills listed in Table 4 would have repealed or amended specific provisions in the ACA, and the third bill would have extended a program that was modified under the ACA. As noted elsewhere in this report, identifying bills that would modify the ACA has become increasingly difficult. As a result, Tables 3 and 4 may not provide comprehensive lists of House-passed and Senate-passed bills that would modify the ACA.

The Patient Protection and Affordable Care Act (ACA; P.L. 111-148) was signed into law on March 23, 2010. The law comprises numerous provisions in 10 titles. The provisions in Titles I-VIII largely relate to how health care in the United States is financed, organized, and delivered. Title IX contains revenue provisions. Title X reauthorizes the Indian Health Care Improvement Act, establishes some new programs and requirements, and amends provisions included in the other nine titles of the ACA. On March 30, 2010, the Health Care and Education Reconciliation Act (HCERA; P.L. 111-152) was signed into law, which included new provisions and amended several ACA provisions. Since enactment of the ACA and HCERA, lawmakers have repeatedly debated the laws' implementation and considered bills to repeal, defund, or otherwise amend them. This report summarizes legislative actions taken during the 111th-115th Congresses to modify the health care-related provisions of the ACA and HCERA. The first part of the report provides a brief overview of the laws' core provisions and their impact on federal spending and health insurance coverage as context for the other material presented in the report. The second part of the report includes Table 2, which summarizes laws enacted during the 111th-115th Congresses that modified ACA or HCERA provisions. The third part of the report lists bills passed in the House or the Senate during the 111th-115th Congresses that would have modified ACA or HCERA provisions, had they been enacted. Identifying legislation that modifies the ACA and HCERA has become increasingly difficult over the years. This is because of the vast number of ACA and HCERA provisions, their complexity, and the fact that these provisions are codified in many different parts of the U.S. Code. As a result, the legislation presented in this report's tables may not include all enacted legislation that modifies the ACA or HCERA, or all House- or Senate-passed legislation that would have modified the ACA or HCERA, had it been enacted. Due to the increasing complexity of tracking such legislation and concerns about the ability to do so authoritatively, the Congressional Research Service (CRS) does not intend to update this report.

NASA launched the Hubble Space Telescope in 1990 aboard the space shuttle Discovery . Unlike other NASA space telescopes, Hubble was designed to be serviced regularly by astronauts. That design proved fortuitous when it was discovered that Hubble had a defective mirror that produced blurry images. Astronauts on the first servicing mission in 1993 were able to install corrective optics, allowing years of scientific accomplishments and generating widespread scientific and public support. Additional servicing missions were conducted in 1997, 1999, and 2002 to replace aging hardware and install advanced scientific instruments. Two more shuttle missions to Hubble were scheduled: a final servicing mission in 2004 (known as SM-4) and a retrieval mission to bring the telescope back to Earth in 2010. Following the space shuttle Columbia accident in February 2003, however, then-NASA Administrator Sean O'Keefe decided not to proceed with either flight. Current NASA Administrator Michael Griffin revisited that decision once the shuttle returned to regular flight. A servicing mission is now scheduled for October 8, 2008. No retrieval mission is currently planned. Roughly the size of a school bus, Hubble was designed to make astronomical observations of the universe in the visible, ultraviolet, and near-infrared wavelength bands. Although ground-based telescopes can also make visible and infrared observations, Hubble's location above Earth's atmosphere enhances image clarity, enabling astronomers to look at fainter, more distant objects and further back in time. Hubble is operated for NASA by the Space Telescope Science Institute (STStcI) near Baltimore, MD. Websites maintained by STScI ( http://hubblesite.org/ ) and NASA ( http://hubble.nasa.gov ) provide information about the telescope and its discoveries. Hubble was designed to operate for 15 years, a milestone that was reached on April 25, 2005. NASA had planned to extend the operational period until 2010, at which time the space shuttle would bring Hubble back to Earth to prevent an uncontrolled reentry that could pose a debris risk to populated areas. Funding constraints, however, led some NASA officials to conclude that Hubble's operations should be brought to end earlier than 2010. The "funding wedge" created by ending the servicing missions would be used to build the new James Webb Space Telescope (JWST), which is being designed for infrared observations. The JWST mission was "replanned" in 2006 and is now scheduled for launch in 2013 rather than 2011. The debate over how long to continue to operate Hubble, including the linkage with funding for the JWST, was under way at the time of the Columbia accident. During servicing visits to Hubble, shuttle crews repair or replace aging equipment and install updated scientific instruments. Hubble has six gyroscopes for pointing the telescope, but two are now nonfunctional and one has degraded performance. Until August 2005, three were required to achieve the accuracy needed for scientific observations. New techniques now allow operation on just two gyroscopes, so that one is kept in reserve. Solar arrays generate electricity for the telescope; the energy is stored in batteries. Hubble has no propulsion system, relying instead on the space shuttle to boost its orbit so that it does not reenter Earth's atmosphere. The tasks for the SM-4 mission included replacing all the gyroscopes and batteries and a fine guidance sensor, emplacing new thermal protection blankets, boosting Hubble's orbit, and installing two new scientific instruments (the Cosmic Origins Spectrograph for ultraviolet observations of chemical composition, and the Wide Field Camera 3 for observations from ultraviolet through near-infrared). All these tasks are also included in the planned 2008 servicing mission. One of Hubble's current instruments, the Advanced Camera for Surveys, malfunctioned in January 2007 and lost most of its capabilities. It was installed in March 2002 and was designed for five years of operation. Astronauts on the 2008 servicing mission will attempt to repair this instrument, even though NASA's plans did not originally call for that because of the difficulty and because the Wide Field Camera 3 will be more capable (although it will have a somewhat smaller field of view). The mission will also attempt to repair another malfunctioning instrument, the Space Telescope Imaging Spectrograph. On February 1, 2003, the space shuttle Columbia disintegrated as it returned to Earth following a 16-day scientific mission. All seven astronauts aboard perished. The shuttle system was immediately grounded. NASA established the Columbia Accident Investigation Board (CAIB) to determine the causes of the accident and recommend corrective actions. (For more on the Columbia accident, see CRS Report RS21408, NASA ' s Space Shuttle Program: The Columbia Tragedy, the Discovery Mission, and the Future of the Shuttle .) It was quickly apparent that SM-4 would be delayed. As the CAIB deliberated, NASA decided that the 2010 Hubble retrieval mission was too risky compared to the benefits. On January 16, 2004, Mr. O'Keefe informed workers at STScI and NASA's Goddard Space Flight Center (which built Hubble and oversees STScI) that he was canceling SM-4. According to the director of STScI, Dr. Steven Beckwith, Mr. O'Keefe cited several factors: the shuttle would not have the ISS as a safe haven; the changes required to meet the CAIB's recommendations regarding non-ISS related shuttle missions would not have application beyond the servicing mission, making their expense questionable; completing ISS construction by 2010 will require all the shuttle flights in that time period; Hubble's life would be extended for only a few years; and astronomers have other ground- and space-based telescopes they could use. Two days before Mr. O'Keefe announced his decision, President Bush directed NASA to embark on a new exploration initiative, requiring a shift in program and funding priorities. (See CRS Report RS21720, Space Exploration: Issues Concerning the " Vision for Space Exploration " . ) Funding for the new initiative would come primarily from canceling, deferring, or delaying other NASA programs. Although Mr. O'Keefe stated that the Hubble decision was based primarily on shuttle safety concerns, the timing of his announcement led many commentators to conclude that it was linked to the priority shifts required by the President's initiative. While some media accounts praised the NASA Administrator for making a difficult decision, others called Hubble "the first victim" of the President's initiative and chided NASA for putting the new exploration goals ahead of the astronomical research performed with Hubble. Initial opposition to the cancellation of SM-4 focused on attempts to reverse Mr. O'Keefe's decision and proceed with a shuttle mission. The debate centered on comparing the risk of a mission to Hubble with the risk of a mission to the ISS. Shortly after the cancellation decision, NASA's then-Chief Scientist, Dr. John Grunsfeld, an astronaut who was a member of the 1999 and 2002 Hubble servicing crews, commented that if a shuttle mission to Hubble were mounted, it would be necessary to have a second shuttle ready to launch in case the first one encountered difficulties. NASA has had a backup shuttle available for each of the shuttle launches since the Columbia accident, but may not for all future missions if safety modifications continue to work well. Attention soon shifted to robotic servicing options, which dominated the public discussion of Hubble's future throughout most of 2004. At a Senate Appropriations VA-HUD-IA Subcommittee hearing on March 11, 2004, Mr. O'Keefe agreed with a request from Senator Mikulski to ask the National Research Council (NRC) to study options for extending Hubble's life, including both shuttle and robotic missions. In November 2004, Congress passed the FY2005 Consolidated Appropriations Act ( P.L. 108-447 ), which provided $291 million for a Hubble servicing mission. The conference report ( H.Rept. 108-792 ) stated that "a successful servicing mission to Hubble should be one of NASA's highest priorities." The report language did not specify whether the servicing mission should involve the space shuttle or a robotic mission. The final NRC report on servicing options, released on December 8, 2004, found it "unlikely that NASA will be able to extend the science life of [Hubble] through robotic servicing" and that the risk of a shuttle mission to Hubble is similar to the risk of a single shuttle mission to the ISS. The report recommended a shuttle servicing mission, and a robotic mission only for deorbiting the telescope at the end of its useful lifetime. The robotic servicing option was off the table. Dr. Michael Griffin was sworn in as NASA Administrator, replacing Mr. O'Keefe, on April 14, 2005. At his Senate confirmation hearing on April 12, 2005, Dr. Griffin stated that he would revisit the question of whether to use the shuttle to service Hubble after the second successful post- Columbia shuttle flight, at which time NASA would be able to assess the risk factors associated with "essentially a new vehicle". The NASA Authorization Act of 2005 ( P.L. 109-155 ), enacted in December 2005, called for a shuttle servicing mission after the shuttle returned to flight successfully "unless such a mission would compromise astronaut safety." The second post- Columbia flight took place successfully in July 2006. In October 2006, NASA announced that a Hubble servicing mission will indeed take place. The launch is now scheduled for October 8, 2008, on space shuttle Atlantis . In October 2006, Administrator Griffin stated that the "cradle to grave" cost of the servicing mission will be $900 million: $500 million to keep the Hubble team together from 2004 through 2008; $200 million for the gyroscopes, batteries, and instruments that will be installed; $100 million for external tanks and solid-rocket boosters for the additional shuttle flight; and $100 million for shuttle launch processing. NASA expects that if the 2008 servicing mission is successful, Hubble will continue to operate until 2013, rather than being deorbited in 2010 as previously planned. According to one NASA official, "Hubble's most impressive accomplishments ... lie in its future." The cost of the additional years of operation, however, may affect funding and scheduling for other astronomy missions. For example, to offset the funding that Congress provided for Hubble in FY2005, NASA's May 2005 operating plan postponed two other astronomy missions and reduced funding for Mars exploration. Before the Columbia accident, the end of Hubble expenditures was expected to be a source of funding for the James Webb Space Telescope. According to NASA's FY2009 congressional budget justification, Hubble costs are expected to be $115 million in FY2011, $95 million in FY2012, and $94 million in FY2013, not including certain indirect costs. Plans for deorbiting Hubble remain uncertain. Before the Columbia accident, the space shuttle was to return Hubble to Earth at the end of its lifetime, but there is no longer any expectation of retrieval by the shuttle, whether or not the servicing mission in 2008 is successful. Hubble has no propulsion system of its own, however, so if it is not retrieved, a propulsion module would need to be attached to it to permit a controlled deorbit (that is, to ensure that any debris falls in an unpopulated area such as the Pacific Ocean). Analysis by NASA in 2005 indicated that Hubble is unlikely to make an uncontrolled reentry until at least 2020, rather than 2012 as previously believed, and the agency now considers the deorbiting issue to be "beyond the budget horizon." Boosting Hubble's orbit during the 2008 servicing mission will delay the date of reentry even further, but at some point, deorbiting will be necessary if an uncontrolled reentry is to be avoided.

The National Aeronautics and Space Administration (NASA) estimates that without a servicing mission to replace key components, the Hubble Space Telescope will cease scientific operations in 2008. In January 2004, then-NASA Administrator Sean O'Keefe announced that the space shuttle would no longer be used to service Hubble. He indicated that this decision was based primarily on safety concerns in the wake of the space shuttle Columbia accident in 2003. Many critics, however, saw it as the result of the new Vision for Space Exploration, announced by President Bush in January 2004, which focuses NASA's priorities on human and robotic exploration of the solar system. Hubble supporters sought to reverse the decision and proceed with a shuttle servicing mission. Michael Griffin, who became NASA Administrator in April 2005, stated that he would reassess whether to use the shuttle to service Hubble after there were two successful post-Columbia shuttle flights. The second post-Columbia flight took place successfully in July 2006. In October 2006, NASA approved a shuttle mission to service Hubble. That mission is now scheduled for October 8, 2008.

As of December 23, 2011, Congress completed action on and the President signed into law all 12 of the regular appropriations bills for FY2012, which began on October 1, 2011. Regular appropriations bills were consolidated into two laws, P.L. 112-55 and P.L. 112-74 . In addition, Congress enacted supplemental FY2012 funding for disaster relief activities in P.L. 112-77 . This report, consisting primarily of a table showing proposed and enacted discretionary appropriations by bill title, is intended to allow for broad comparison between the House and Senate FY2012 proposals, the Administration's FY2012 request, and the FY2011 and FY2012 enacted appropriations. FY2012. For detailed information and CRS analysis specific to each individual appropriations bill, use the report links on the CRS Appropriations Status Table, at http://www.crs.gov/Pages/AppropriationsStatusTable.aspx?source=QuickLinks . Table 1 displays discretionary appropriations as provided in proposed and enacted FY2012 appropriations legislation, by bill title, together with the appropriations enacted for FY2011. In most cases, totals are provided for both new discretionary budget authority as well as budget authority net of rescissions of prior year funding. Footnotes attached to each section heading note the legislation the data in that section is drawn from. As noted above, the figures do not necessarily reflect all budget scoring adjustments and adjustments allowable under the Budget Control Act of 2011. Readers should be aware that the numbers in this table reflect, to a great extent, the appropriations conventions and assumptions of each individual subcommittee and that these conventions and assumptions are not always comparable across subcommittees. Security spending is listed only for proposals in which it was specifically designated, excluding most House proposals, which were drafted and saw committee action prior to enactment of the Budget Control Act of 2011 on August 2, 2011.

This report presents an overview of proposed and enacted FY2012 appropriations legislation. The report consists primarily of a table showing discretionary appropriations, by bill title, for each of the proposed and enacted appropriations bills, together with the comparable figures enacted for FY2011. The product is intended to allow for broad comparison between the House and Senate FY2012 proposals, the Administration's FY2012 request, and the FY2011 and FY2012 enacted appropriations. The figures do not necessarily reflect budget scorekeeping adjustments allowable under the Budget Control Act. With action now completed on FY2012 appropriations, there will be no further updates to this report.

Conscience clause laws allow medical providers to refuse to provide services to which they have religious or moral objections. These laws are generally designed to reconcile "the conflict between religious health care providers who provide care in accordance with their religious beliefs and the patients who want access to medical care that these religious providers find objectionable." Although conscience clause laws have grown to encompass protections for entities that object to a wide array of medical services and procedures, such as providing contraceptives or terminating life-support, the original focus of conscience clause laws was on permitting health care providers to refuse to participate in abortion or sterilization procedures on religious or moral grounds. In 1973, Congress passed the first conscience clause law, commonly referred to as the Church Amendment, in response to the U.S. Supreme Court's decision in Roe v. Wade and a U.S. district court decision that enjoined a Catholic hospital from prohibiting a physician from performing a sterilization procedure at the facility. During consideration of the Church Amendment, Senator Frank Church explained the need for the conscience clause, stating, "It clears up any ambiguity in the present law by making it explicitly clear that it is not the intention of Congress to mandate religious hospitals to perform operations that are contrary to deeply held religious beliefs." The Church Amendment provides that individuals or entities that receive grants, contracts, loans, or loan guarantees under the Public Health Service Act (PHSA), the Community Mental Health Centers Act, or the Developmental Disabilities Services and Facilities Construction Act may not be required to perform abortions or sterilization procedures or make facilities or personnel available for the performance of such procedures if such performance "would be contrary to [the individual or entity's] religious beliefs or moral convictions." The Church Amendment also prohibits entities that receive federal funds under the specified statutes or under a biomedical or behavioral research program administered by the Department of Health and Human Services (HHS) from engaging in employment discrimination against doctors or other medical personnel who either perform abortions or sterilization procedures or who refuse to perform such services on moral or religious grounds. By 1978, five years after the Court's decision in Roe , virtually all of the states had enacted conscience clause legislation in one form or another. From 1978 to 1996, there was a lull in conscience clause activity, with one exception. When Congress enacted the Civil Rights Restoration Act in 1988, it adopted the Danforth Amendment, which mandates neutrality with respect to abortion. Specifically, the amendment clarifies that Title IX of the Education Amendments of 1972, which prohibits sex discrimination in federally funded education programs, may not be construed to prohibit or require any individual or entity to provide or pay for abortion-related services, nor may it be construed to permit the imposition of a penalty on any person who has sought or received abortion-related services. Nearly a decade after the Danforth Amendment, Congress passed additional conscience provisions in the Omnibus Consolidated Rescissions and Appropriations Act of 1996. Under the act, which added Section 245 to the PHSA, the federal government and state and local governments are prohibited from discriminating against health care entities that refuse to undergo abortion training, provide such training, perform abortions, or provide referrals for the relevant training or for abortions. Section 245 protects doctors, medical students, and health training programs from being denied federal financial assistance or a license or certification that they would otherwise receive but for their refusal to provide abortion services or training. One year after passing the 1996 omnibus legislation, Congress again revisited the abortion conscience clause issue when it approved the Balanced Budget Act of 1997. Concerned that managed care plans might seek to prevent doctors from informing patients about medical services not covered by their health plans, Congress amended the federal Medicare and Medicaid programs to prohibit managed care plans from restricting the ability of health care professionals to discuss the full range of treatment options with their patients. The legislation, however, simultaneously exempted managed care providers under these programs from the requirement to provide, reimburse for, or provide coverage of a counseling or referral service if the managed care plan objects to the service on moral or religious grounds. Thus, a Medicare and Medicaid managed care plan cannot prevent providers from providing abortion counseling or referral services, but it can refuse to pay providers for providing such information, although the plan must notify new and existing enrollees of such a policy if it does indeed have one. The effect of the 1997 legislation was to extend the coverage of conscience clause laws beyond the individuals who provide medical care to the companies that pay for such care under the Medicare and Medicaid programs. The law allows Medicare and Medicaid-funded health plans to refuse to provide counseling and referral for abortion-related services. Earlier conscience clause laws permitted providers to opt out only of the actual provision of such services. The 1997 legislation would appear to have a broader impact than the 1973 Church Amendment, both in terms of its effect on the entities that may refuse to provide abortion services and on the individuals who wish to access such services. In a similar vein, recent abortion bills introduced in Congress have proposed changes that would expand the scope of current conscience clause laws. This legislation is discussed in the next section. The Abortion Non-Discrimination Act (ANDA) has been introduced in every Congress since the 107 th Congress. In general, ANDA would amend the nondiscrimination provision in the PHSA to expand the definition of the term "health care entity" to include hospitals, provider-sponsored organizations, health maintenance organizations (HMOs), health insurance plans, or any other kind of health care facility, organization, or plan. Supporters of ANDA maintain that expanding the definition of "health care entity" is necessary because some state legislatures and courts have weakened existing conscience clause protections, which proponents view as critical to shielding religious hospitals and other medical providers that oppose abortion. Opponents contend, however, that ANDA would impose serious restrictions on a woman's access to abortion. Critics also argue that ANDA would allow providers to drop abortion coverage not only for moral or religious reasons, but also for financial reasons, such as the desire to save money by reducing coverage. Although ANDA has not been considered by recent Congresses, conscience clause provisions with similar language were inserted in the FY2005, FY2006, and FY2008 appropriations measures for the Departments of Labor, HHS, and Education. These provisions are commonly referred to as the Weldon Amendment because they were added to the FY2005 appropriations measure following the adoption of an amendment offered by Representative Dave Weldon. The language used in the appropriations measures has remained the same since 2004. The provisions state: None of the funds made available in this act may be made available to a Federal agency or program, or to a State or local government, if such agency, program, or government subjects any institutional or individual health care entity to discrimination on the basis that the health care entity does not provide, pay for, provide coverage of, or refer for abortions. The Weldon Amendment defines the term "health care entity" to include "an individual physician or other health care professional, a hospital, a provider-sponsored organization, a health maintenance organization, a health insurance plan, or any other kind of health care facility, organization, or plan." The Weldon Amendment prevents the federal government and state and local governments from enacting policies that require health care entities to provide or pay for certain abortion-related services. In addition, the Weldon Amendment increases both the number and type of health care providers and professionals who could refuse to provide abortion training or services without reprisals. For example, prior law protected only individual doctors or medical training programs that did not provide abortions or abortion training, and appeared to apply primarily in the medical education setting or to doctors in their individual practices. In contrast, the appropriations provisions allow large health insurance companies and HMOs to refuse to provide coverage or pay for abortions. Because an HMO's refusal to provide abortion-related services would affect a much larger number of patients than an individual doctor's refusal to provide such services, the Weldon Amendment has the potential of denying abortion-related services to a significantly expanded number of individuals. Although the Weldon Amendment language is similar to the proposed ANDA, it differs in two important respects. First, ANDA would deny all federal funds to entities that engage in abortion-related discrimination. The Weldon Amendment, however, denies only those funds available under the annual Labor, HHS, and Education appropriations measure. Second, the passage of ANDA would result in permanent legislation, while the Weldon Amendment language remains in effect for only the relevant fiscal years. Thus, although the Weldon Amendment expands prior law, it provides for smaller penalties and is temporary in nature. On December 19, 2008, HHS issued a new rule to implement the Church Amendment, Section 245 of the PHSA, and the Weldon Amendment. The new rule provides definitions for some of the terms used in the conscience protection laws, establishes a written certification of compliance requirement for recipients of federal health care funds, and identifies HHS's Office of Civil Rights as the entity responsible for complaint handling and investigation. At the time the rule was issued, HHS maintained that it was necessary to educate the public and health care providers on the protections afforded by federal law. The agency noted that the new rule would "[foster] a more inclusive, tolerant environment in the health care industry than may currently exist." Opponents of the new rule, however, argued that the rule could jeopardize the health of individuals by making it more difficult to obtain health care services and information. They noted, for example, that the new rule could limit the availability of oral contraceptives. On March 10, 2009, HHS published a proposed rule in the Federal Register to rescind the December 19, 2008, final rule. HHS explained that the comments received during consideration of the rule "raised a number of questions that warrant further consideration." The agency stated further, It is important that the Department have the opportunity to review this regulation to ensure its consistency with current Administration policy. Accordingly, we believe it would benefit the Department to review this rule, accept further comments, and reevaluate the necessity for regulations implementing the statutory requirements. Thus, the Department is proposing to rescind the December 19, 2008 final rule, and we are soliciting public comment to aid our consideration of the many complex questions surrounding the issue and the need for regulation in this area. The comment period for the proposed rule ended on April 9, 2009. Since that date, HHS has not indicated whether the rule will be rescinded. Legislation that attempts to reduce the number of uninsured individuals and restructure the private health insurance market has been passed by both the House of Representatives and the Senate. H.R. 3962 , the Affordable Health Care for America Act, and H.R. 3590 , the Patient Protection and Affordable Care Act, include provisions that address the coverage of abortion by health benefits plans that would be available through a health insurance exchange. In addition to addressing the coverage of abortions by plans in an exchange, the abortion provisions in both measures also provide conscience protection for specified entities. H.R. 3962 , the House-passed bill, would prohibit a federal agency or program, or state or local government that receives federal financial assistance under the measure from subjecting any individual or institutional health care entity to discrimination on the basis that the health care entity does not provide, pay for, provide coverage of, or refer for abortions. H.R. 3962 would also prohibit a federal agency or program, or state or local government that receives federal financial assistance under the bill from requiring any health plan created or regulated by the measure to subject any individual or institutional health care entity to discrimination on the basis that the health care entity does not provide, pay for, provide coverage of, or refer for abortions. In contrast, H.R. 3590 , the Senate-passed bill, would prohibit exchange plans from discriminating against any individual health care provider or health care facility because of its unwillingness to provide, pay for, provide coverage of, or refer for abortions. Neither measure would affect federal conscience protection and abortion-related antidiscrimination laws or Title VII of the Civil Rights Act of 1964.

Conscience clause laws allow medical providers to refuse to provide services to which they have religious or moral objections. In some cases, these laws are designed to excuse such providers from performing abortions. While substantive conscience clause legislation, such as the Abortion Non-Discrimination Act, has not been approved, appropriations bills that include conscience clause provisions have been passed. This report describes the history of conscience clauses as they relate to abortion law and provides a legal analysis of the effects of such laws. The report also discusses the issuance of a new rule to implement some of the existing conscience clause laws, and recent efforts to rescind that rule. Finally, the report reviews the conscience protection provisions of the House- and Senate-passed health reform measures, H.R. 3962 and H.R. 3590.

C ongressional office spending has been a regular topic of interest to Members of Congress, constituents, academics, interest groups, and media organizations. Members must choose how to allocate official funds and organize their offices and staff in a way to best represent their constituents. Media reports and interest groups have addressed Member activities and congressional spending on internal operations. A few scholars have also examined how Members typically spend their office allowances, analyzing spending within broader theories of representation. Individual office spending and actions, however, may be as varied as the states Senators represent. Senators operate their offices with funding from the Senators' Official Personnel and Office Expense Account (SOPOEA). The account may support, for example, salaries for staff in both Washington, DC, and home state offices; official mail; travel between a Senator's home state and Washington, DC; equipment; and other goods and services. The allowance is provided on a fiscal year basis (October 1-September 30). Senators have a high degree of flexibility to operate their offices in a way that supports their congressional duties and responsibilities, although they must operate within a number of restrictions and regulations. The SOPOEA may only be used for official expenses and may not be used to defray any personal, political, or campaign-related expenses. Additional guidelines and regulations may be provided by Senate rules, the Senate Committee on Rules and Administration, the Senate Ethics Committee, and statute. Senate expenses, including those supported by the SOPOEA, are reported biennially in the Report of the Secretary of the Senate and available online. This report provides a history of the SOPOEA and overview of recent developments, including recent funding. It also analyzes actual SOPOEA spending patterns in selected years (fiscal years 2007, 2008, 2011, and 2012) for all Senators who served for a defined period. Spending and practices across offices and across time may vary, and an examination of additional Congresses would be required for a more complete picture of congressional office spending patterns. In addition to resources provided through the SOPOEA, various Senate support offices, including the Secretary of the Senate and Sergeant at Arms, also provide services and resources to support Senators but are not considered in this report. For additional information, see CRS Report R43532, Offices and Officials in the Senate: Roles and Duties , by [author name scrubbed]. For a similar analysis of Member budgets in the House of Representatives, see CRS Report R40962, Members' Representational Allowance: History and Usage , by [author name scrubbed]. Senators have long been provided with resources to support their official duties. For example, Senators have been reimbursed for trips to their states, as well as funds for staffing assistance and maintaining home state offices. The level and means of providing this assistance has changed over time. For many years, funding for different types of expenses was provided in separate appropriations accounts. The current consolidated SOPOEA system was established in 1987 and effective January 1, 1988. It followed efforts during the previous decade to move to a system of increased flexibility for Senators in directing their individual office operations. The report from the Senate Committee on Rules and Administration accompanying the bill establishing the SOPOEA ( S. 1574 ) stated that the move "would allow Members to set their own priorities and react accordingly." Periodically, legislation has been introduced to amend the SOPOEA. The legislation has sought to regulate, prohibit, authorize, reduce, or encourage the use of funds for a particular purpose or to alter the SOPOEA in response to other action; increase transparency; or govern the use of unexpended balances. With few exceptions, however, no further action has been taken on these bills, and revisions to the SOPOEA generally have been made through the appropriations acts or internal procedures. The annual reports issued by the Senate Appropriations Committee accompanying the legislative branch appropriations bill generally provide preliminary SOPOEA allocation information for the upcoming fiscal year in a table arranged by state. The reports also generally indicate the total amount of agency contributions anticipated by the request; any amounts provided to cover "additional expenses that may be incurred in the event of the death or resignation of a Senator"; and the number of individuals employed by this account. The legislative branch appropriations acts have also periodically adjusted limits on "the aggregate of gross compensation paid employees in the office of a Senator," which is based on population of the state. The SOPOEA allocation for each Senator is calculated based on three components: administrative and clerical assistance allowance . This allowance has been based on state population since 1940, with the current system dating to 1967. Today, 25 population categories exist, ranging from populations below 5 million to over 28 million. The preliminary figures in the FY2016 Senate report ( S.Rept. 114-64 ) show this allowance varies from $2,409,294 for a Senator representing a state with a population under 5 million to $3,829,063 for a Senator representing a state with a population of 28 million or more. legislative assistance allowance . This allowance was first authorized in 1975 and revised in 1977. It was designed to provide Senators with support for their committee assignments, and it was established after lengthy hearings and debates regarding the level and division of Senate staffing resources devoted to committee work. The allowance is calculated based on salaries for three employees at a set rate, and it is the same for all Senators. According to the FY2016 Senate report ( S.Rept. 114-64 ), the legislative assistance component of the SOPOEA is $477,874. official office expense allowance , which varies by state depending on the distance between Washington, DC, and the home state, the population of the state, and the official (franked) mail allocation. According to S.Rept. 114-64 , the FY2016 office expense allowance component ranges from $121,120 to $453,274. The three components result in a single SOPOEA authorization for each Senator that can be used to pay for any type of official expense. Each Senator can choose how much to allocate to various types of expenses (e.g., travel or personnel or supplies), although additional limits pertain to spending on franked mail. Each Senator may also determine the number, job title, location, and duties of staff within his or her office. The SOPOEA allocation formula results in varying levels depending on the state from which a Senator is elected. Both Senators from a state receive the same allocation. Figure 1 demonstrates the variation in authorization levels that has resulted from the SOPOEA allocation formula from FY1996 through FY2016. For FY2016, SOPOEA levels range from $3,008,288 to $4,760,211. The difference between the median level ($3,064,818) and the average ($3,263,940) for FY2016 demonstrates the cluster of similar allocation levels for many states, with a larger differential for some of the larger states. Overall funding for the SOPOEA, described below, has decreased or remained flat in recent years, and the FY2016 maximum, minimum, average, and median allocation levels all remain below the corresponding FY2010 allocation levels. The SOPOEA for all Senators is funded in one line-item within the "Contingent Expenses of the Senate" account in the annual legislative branch appropriations bills. As seen in Figure 2 , this appropriations account has decreased in recent years, from a high of $422.0 million in FY2010 to $390.0 million in FY2014, a decrease of 7.6%, not adjusted for inflation. Appropriations acts for FY2015 ( P.L. 113-235 ) and FY2016 ( P.L. 114-113 ) continued the FY2014 level. This level represents the lowest funding since the $373.5 million provided in FY2008. Adjusted for inflation, the FY2016 level is approximately equivalent to the FY2004 funding level. The Senate has taken actions to reduce this account both directly—for example, the FY2011 Continuing Appropriations Act stated that "each Senator's official personnel and office expense allowance (including the allowance for administrative and clerical assistance, the salaries allowance for legislative assistance to Senators, as authorized by the Legislative Branch Appropriation Act, 1978 ( P.L. 95-94 ), and the office expense allowance for each Senator's office for each State) in effect immediately before the date of enactment of this section shall be reduced by 5 percent" —and more indirectly through broader appropriations actions that may have influenced the funding level for this account (i.e., continuing resolutions, across-the-board rescissions, and the FY2013 sequestration). The SOPOEA appropriations account includes agency contributions for benefits provided to employees paid by this account. As stated above, it does not include certain services provided to Senators from other accounts. This may include, for example, services or allowances provided by the Sergeant at Arms and Doorkeeper of the Senate, the Secretary of the Senate, or the Architect of the Capitol. In addition, the SOPOEA does not include salaries for Senators, which are provided separately through a permanent appropriation. For many years, the Senate Appropriations Committee reports on the annual legislative branch appropriations bill have contained language stating that the prudence of Senators in SOPOEA spending has been factored into the recommended level for this account. For example, the FY2016 report states, The amount recommended by the Committee for the SOPOEA is less than would be required to cover all obligations that could be incurred under the authorized allowances for all Senators. The Committee is able to recommend an appropriation of a lesser amount than potentially necessary because Senators typically do not obligate funds up to the absolute ceiling of their respective allowances. The FY2016 Consolidated Appropriations Act contains a new administrative provision "requiring amounts remaining in Senators' official personnel and office expense account to be used for deficit reduction or to reduce the federal debt." A similar administrative provision was previously included in the Senate Appropriations Committee's reported version of the bill ( H.R. 2250 ). The analysis below demonstrates the use of the SOPOEA in four selected years (fiscal years 2007, 2008, 2011, and 2012). The information is derived from the Report of the Secretary of the Senate. Since late-arriving bills may be paid for up to two years following the end of the SOPOEA year, information for FY2012, for example, was collected from volumes covering FY2012, FY2013, and FY2014. To account for late-arriving bills, fiscal years were only included if data for the subsequent two years are complete. Due to data collection limitations, only selected years were examined, although this precludes an examination of the funding limitations in recent years. The data exclude Senators who were not in Congress for the entirety of the initial fiscal year. SOPOEA spending is recorded in the Report of the Secretary of the Senate according to the following categories: net payroll expenses travel and transportation of persons rent, communications, and utilities printing and reproduction other contractual services supplies and materials acquisition of assets transportation of things This classification system is similar, but not identical, to that established by the Office of Management and Budget (OMB). The tables and figure below examine spending in the aggregate by all Senators and then as a distribution using office-level data. Office-level data were examined since, as stated above, Senators are provided flexibility to operate their offices in the manner that best represents the states from which they are elected and aggregate Senate data may not be typical or representative of any individual Senator's office. The data show a relative consistency in the overall allocation of SOPOEA resources by category of spending both across Senators and over time. As seen in Figure 3 , the largest category of spending in all four years, accounting for 90% of total SOPOEA spending by Senators, is for personnel compensation (i.e., net payroll expense). Table 1 provides a distributional analysis at the office level. Expenditures for all of the categories utilized by the Senate were collected, although this table only examines the largest ones. As with the Senate-wide data depicted in Figure 3 , the office-level data indicate that personnel compensation is by far the largest category of expense for Senators' offices. Spending on personnel as a percentage of total office spending varied (from as low as 70% of all expenditures to more than 96%), but personnel costs comprised 90% of the average office's spending each year. Data on other categories of spending also demonstrate that, while some variation exists across offices and years, similar patterns have developed. Table 2 shows spending as a proportion of the total individual authorization. For example, approximately 10% of Senators spent between 80% and 85% of their allowance in FY2011. As discussed above, the data collection methodology precludes an examination of the most recent fiscal years, when the appropriations account has been flat or decreased.

The Senators' Official Personnel and Office Expense Account (SOPOEA) is available to assist Senators in their official duties. The allowance is provided on a fiscal year basis (i.e., October 1-September 30). Funding is provided in the annual legislative branch appropriations bills. Senators have a high degree of flexibility to use the SOPOEA to operate their offices in a way that supports their congressional duties and responsibilities, and individual office spending may be as varied as the states from which the Senators are elected. This appropriations account has decreased in recent years, from a high of $422.0 million in FY2010 to $390.0 million in FY2014, a decrease of 7.6%. The appropriation remained at the FY2014 level in the FY2015 and FY2016 appropriations acts. The SOPOEA for each Senator is calculated based on three variables—the administrative and clerical assistance allowance, the legislative assistance allowance, and the official office expense allowance. The formula results in a single, consolidated allowance for each Senator that can be used to pay for any type of approved official expense, subject to any regulations or limitations established by statute, Senate rules, the Senate Committee on Rules and Administration, and the Senate Ethics Committee. A preliminary list of SOPOEA levels shows a range in FY2016 of $3,008,288 to $4,760,211, depending on the state. The average allowance is $3,263,940. Pursuant to 2 U.S.C. §4108, Senate expenses are reported online biennially on a fiscal year basis in the Report of the Secretary of the Senate. This report provides a history of the SOPOEA and overview of recent developments, including funding levels. It also analyzes actual SOPOEA spending patterns in selected years (fiscal years 2007, 2008, 2011, and 2012). For a similar analysis of Member office budgets in the House of Representatives, see CRS Report R40962, Members' Representational Allowance: History and Usage, by [author name scrubbed].

Under the rules and precedents of the Senate, debate on the Senate floor is largely unrestricted. In most cases, once recognized, a Senator may speak without time limit and on almost any subject of his or her choosing. Paragraph 1(b) of Senate Rule XIX, however—commonly known as the Pastore rule, after its author, former Rhode Island Senator John Pastore—requires Senate floor debate to be germane during specific periods of a Senate work day. The rule states (b) At the conclusion of the morning hour at the beginning of a new legislative day or after the unfinished business or any pending business has first been laid before the Senate on any calendar day, and until after the duration of three hours of actual session after such business is laid down except as determined to the contrary by unanimous consent or on motion without debate, all debate shall be germane and confined to the specific question then pending before the Senate. In practice, the Pastore rule rarely affects what Senators speak about on the floor. The presiding officer typically will not on his or her own initiative instruct a speaking Senator to keep remarks germane. Instead, another Senator would have to raise a point of order against the speech. For reasons discussed below, these points of order are infrequent in modern practice. The rule, nevertheless, remains in force, and this report discusses related precedents and past instances of enforcement on the floor. Pursuant to the Pastore rule, all floor debate must be germane and confined to the specific question then pending before the Senate for the first three hours after (1) the conclusion of the Morning Hour occurring at the beginning of a new legislative day (in the rare event the Senate should hold a Morning Hour) or (2) after the unfinished business or any pending business has been laid before the Senate on any calendar day. The practical effect of the rule is to require Senators to remain on topic in debate for the first three hours after the Senate begins considering its daily business. Three hours of actual Senate session must occur to fulfill the requirements of the Pastore rule. Recess periods taken prior to three hours of session elapsing are not counted toward the three-hour total. Once three hours of actual session have passed, Senators are no longer bound by the germaneness requirement. The Pastore rule's germaneness requirement can be waived by unanimous consent (UC) or by nondebatable motion. Any Senator may request unanimous consent to speak out of order on a nongermane subject while the Pastore rule is in effect. A Senator might also request UC to waive the rule on behalf of another Senator or request a blanket waiver to allow all Senators to speak on nongermane topics. The Senate also frequently by UC establishes periods for "morning business," when Senators can speak on topics of their choice for a period of time set by the UC agreement (typically 10 minutes). UC agreements can also structure the extent to which the Pastore rule will apply at any given time. For example, in one instance, by UC, the period during which the rule's germaneness of debate requirement applied was expanded from three hours to five hours. A Senator may be called to order during the three-hour window described in the Pastore rule if his or her remarks are not germane to the specific question then pending before the Senate. Chamber precedents permit the presiding officer to call a Senator to order under the rule on his or her own initiative. The precedents point out, however, that the rule is "not necessarily self-enforcing," and as such, the rule is customarily enforced only by a call to order from the floor. In current practice, the germaneness requirements of the Pastore rule are rarely formally invoked on the Senate floor. If a Senator calls another Senator to order under the rule, enforcement first results in a reminder from the presiding officer that debate must be germane to the question then pending before the Senate. A Senator does not need to be recognized by the chair in order to call another Senator to order under the rule. The raising of this point of order does not remove speaking privileges from the offending Senator, although the Senator must suspend his or her remarks until the chair rules on the question. Depending on the ruling of the presiding officer on such a point of order, a Senator may either continue speaking (if his or her debate is ruled germane), pivot to a germane topic (if ruled not germane), or yield the floor (if ruled not germane). Before paragraph 1(b) of Rule XIX was adopted in 1964, there was no rule or precedent requiring the germaneness of debate during regular Senate proceedings. What would become the present-day Pastore rule first appeared with the introduction of S.Res. 89 on February 19, 1963, by Senator Pastore for himself and 30 bipartisan cosponsors. The resolution, as submitted, included two key differences from what would ultimately be adopted: It called for four hours of germane debate (as opposed to three) and placed a germaneness requirement not just on debate but also on motions (except "amendments offered to the bill or resolution under consideration when reasonably related thereto"). During hearings held on S. Res. 89 by the Senate Rules Committee's Subcommittee on Standing Rules of the Senate, Senator Pastore expressed his view that the Senate was unable to sufficiently focus on debating important legislation I am very much disturbed by such a situation as where a member is charged with the responsibility of managing a bill on the floor. He must be there prepared to assume his responsibilities and present the matter to the Senate. But time and time again what has been our experience?... You sit there as the manager of the bill, and someone comes down on the floor with an extraneous speech, which he has a perfect right to deliver, because he must meet a press deadline. All I am saying here is that a period of 4 hours from the time we conclude the morning hour, for those 4 hours we devote ourselves to the business at hand. Senator Pastore argued that his proposed rule would increase attendance and allow the Senate to proceed in a more orderly fashion First of all, [the proposed rule] would accomplish this: The Members of the Senate, knowing that the business at hand will be discussed, will be more readily available on a quorum call. It will not have to take 20 minutes or a half hour, and then probably get into live quorums. Members would know that for 4 hours, if they arrange their program, they would sit on the floor, that they could discuss the business at hand and conclude it, without interruption. I think it would help immensely. The Senate Committee on Rules and Administration adopted three amendments to S.Res. 89 before reporting the resolution, as amended, favorably to the Senate on September 19, 1963. The first amendment inserted language clarifying that the germaneness period in the rule would occur just once each calendar day. By its second amendment, the committee struck language from the resolution that allowed only the introduction of amendments "reasonably related" to the pending business. This second amendment was adopted for the express purpose of continuing "the present practice of permitting legislative riders." The third and final amendment reported by the committee changed the germaneness period from four hours to three hours, as found in the current rule. Regarding this final change, the committee report accompanying S.Res. 89 noted In the opinion of the committee, it is important that there be flexibility of debate in the Senate, but the committee believes it equally important that there be some reasonable limitation on that flexibility. The adjustment in Senate procedure involved in Senate Resolution 89 would probably result in a larger participation in meaningful and coordinated debate on vital and major bills on the floor of the Senate. At the same time adoption of the measure reserves ample opportunity for the discussion of general topics. S.Res.89 was considered on the Senate floor over parts of eight days in January 1964. As noted above, at the time, no Senate rule or precedent existed that required a germaneness of debate during regular Senate session. As such, the resolution was viewed by some as proposing a significant change in chamber procedures. Minority Leader Everett Dirksen of Illinois, among others, took to the floor to express strong opposition to the idea of placing any limits on the rights of Senators in debate Let us make no mistake about it. If I read my history correctly, past and present, whenever the freedom of a parliamentary body is impaired, we go down the road to tyranny. What was the first thing that Hitler did to Germany? He demeaned the Bundestag. He made them, its members, appear to be like a group of urchins who had no sense. What was the first thing Mussolini did to Italy? The Chamber of Deputies was made to appear as if it had no sense, no value, no usefulness. Show me any place in the world where a parliamentary body and its freedoms are impaired and I will show an instance of freedom in retreat. On January 10, 1964, the Senate adopted a floor amendment to S.Res. 89 proposed by Senator Pastore himself to strike the resolution's germaneness requirement for motions and apply the requirement to debate only, as in the present rule. All other floor amendments to the resolution were rejected. Ultimately, S.Res. 89 was agreed to, as amended, in the Senate by a 57-25 vote on January 23, 1964. The resolution, as passed, inserted the new germaneness requirement into Senate Rule VIII, relating to the Order of Business. The language would later be recodified without change as paragraph 1(b) of Rule XIX with the adoption of S.Res. 274 on November 14, 1979, in the 96 th Congress (1979-1980). As noted above, the Pastore rule has seen sporadic enforcement since its adoption. In the decade or so after the rule's adoption, Senator Robert Byrd of West Virginia, who served as majority whip and later as both majority and minority leader, was a frequent observer of the rule, often seeking clarification on whether the Senate was operating within the three hours of required germaneness or seeking unanimous consent to waive the rule to allow him or others to speak without restriction. On occasion, Senators have taken to the floor to proclaim an expectation of adherence to the Pastore rule for the duration of the consideration of a particular bill. Despite, or perhaps because of, the sporadic observance of the Pastore rule, a report issued in 1983 by the Study Group on Senate Practices and Procedures—an entity established to examine Senate procedures and recommend improvements to them—recommended that the Senate "require debate to be relevant at all times during the discussion of legislation and executive business." On May 9, 1983, the Senate Committee on Rules and Administration held a hearing on the study group report. The Senate took no further action on the proposal. CRS identified several instances between 1964 and 2017 where a point of order or parliamentary inquiry was raised under the Pastore rule in relation to germaneness of debate or when other actions were taken that appeared to be efforts to enforce the rule, such as objections to unanimous consent requests to waive the germaneness requirement. The earliest instance identified occurred in 1968, four years after adoption of the rule; the most recent identified occurred in 2003. These instances are identified in Table 1 and were identified through full-text electronic searches of the Congressional Record in LIS.gov and the HeinOnline database as well as through a review of relevant chapters in Floyd M. Riddick and Alan S. Frumin, Riddick's Senate Procedure: Precedents and Practices, 101 st Cong., 1 st sess., S.Doc. 101-28 (Washington, DC: GPO, 1992). Not included in the table are simple references to the Pastore rule in debate (e.g., parliamentary inquiries as to whether the Senate was operating under the rule), instances when the requirement for germane debate would expire for the day, or Senators noting that they or others were in violation of the rule without an accompanying point of order made against the Senator holding the floor.

Paragraph 1(b) of Senate Rule XIX—commonly known as the Pastore rule, after its author, former Rhode Island Senator John Pastore—requires Senate floor debate to be germane during specific periods of a Senate work day. The rule has been enforced sporadically since its adoption in 1964. In current practice, the germaneness requirements of the Pastore rule are rarely formally invoked on the Senate floor. Pursuant to the rule, all floor debate must be germane and confined to the specific question then pending before the Senate for the first three hours after (1) the conclusion of the Morning Hour occurring at the beginning of a new legislative day (in the rare event the Senate should hold a Morning Hour) or (2) after the unfinished business or any pending business has been laid before the Senate on any calendar day. The Pastore rule's germaneness requirement can be waived by unanimous consent or by nondebatable motion. A Senator may be called to order during the three-hour window described in the Pastore rule by the presiding officer or by another Senator if his or her remarks are not germane to the specific question then before the Senate. If a Senator calls another Senator to order under the rule, enforcement first results in a reminder from the presiding officer that debate must be germane to the question then pending before the Senate. The raising of a point of order does not remove speaking privileges from the offending Senator. Depending on the ruling of the presiding officer on such a point of order, a Senator may either continue speaking (if ruled germane), pivot to a germane topic (if ruled not germane), or yield the floor (if ruled not germane).

The Environmental Protection Agency (EPA) Spill Prevention, Control, and Countermeasure (SPCC) regulations include requirements for facilities subject to the regulations to prevent, prepare, and respond to oil discharges that may reach U.S. navigable waters or adjoining shorelines. Requirements include secondary containment (e.g., dikes or berms) for certain storage units and the need for a licensed Professional Engineer to certify a facility's SPCC plan. In recent years, the SPCC program has received considerable interest from Congress. Most of this interest has involved the SPCC program's applicability to farms. Because farms may store oil onsite for agricultural equipment use, they may be subject to the SPCC regulations. Recent legislation would alter the scope and applicability of SPCC regulations to exclude farms that store and use oil below specific volumes or thresholds. The first section of this report provides background information on EPA's SPCC regulations. The second section identifies legislation in the 113 th Congress that has addressed and would address provisions in the SPCC regulations. The Federal Water Pollution Control Act Amendments of 1970 included a provision directing the President to promulgate oil spill prevention and response regulations. Two years later, Congress amended that provision with the enactment of the Federal Water Pollution Control Act Amendments of 1972 —commonly referred to as the Clean Water Act (CWA). The relevant provision from the 1972 Clean Water Act (CWA) remains the same today and reads as follows: Consistent with the National Contingency Plan … the President shall issue regulations consistent with maritime safety and with marine and navigation laws … establishing procedures, methods, and equipment and other requirements for equipment to prevent discharges of oil and hazardous substances from vessels and from onshore facilities and offshore facilities, and to contain such discharges. In 1970, President Nixon reorganized the executive branch delegations of various presidential authorities. Presidential authority for regulations addressing oil discharges from nontransportation-related onshore and offshore facilities was delegated to the Environmental Protection Agency (EPA). Subsequent executive orders and interagency agreements altered the implementation authority framework. As of a 1994 interagency agreement, EPA has jurisdiction over nontransportation-related onshore and offshore facilities, which includes facilities located "landward of the coast line." Pursuant to the 1994 agreement, the Department of Transportation has jurisdiction over vessels, transportation-related onshore facilities, deepwater ports, and transportation-related facilities located landward of coast line, and the Department of the Interior has jurisdiction over offshore facilities, including associated pipelines, located seaward of the coast line. A detailed discussion of these jurisdictions is beyond the scope of this report. In addition, Section 311(o) of the CWA states, "Nothing in this section [CWA Section 311] shall be construed as preempting any State or political subdivision thereof from imposing any requirement or liability with respect to the discharge of oil or hazardous substance into any waters within such State, or with respect to removal activities related to such discharge." Many states have their own oil spill programs. A discussion of these state programs is beyond the scope of this report. EPA issued the first SPCC regulations in 1973, and they became effective January 10, 1974. Following the enactment of the Oil Pollution Act of 1990, EPA proposed changes and clarifications to the SPCC regulations that were made final in July 2002 and effective in August 2002. Subsequently, EPA extended the 2002 rule's compliance date (on multiple occasions) and made further amendments to the 2002 rule. For most types of facilities subject to SPCC requirements, the deadline for complying with the changes made in 2002 was November 10, 2011. However, an EPA rulemaking extended this compliance date for farms to May 10, 2013. On March 26, 2013, Congress enacted P.L. 113-6 , which prohibited EPA from using appropriations to enforce SPCC provisions at farms for 180 days after enactment (i.e., through September 22, 2013). Notwithstanding these recent deadlines, the July 2002 final rule and subsequent revisions did not alter the requirement for owners or operators of facilities, including farms, to maintain and to continue implementing their SPCC plans in accordance with the SPCC regulations that have been in effect since 1974. The EPA SPCC plan requirements apply to nontransportation-related facilities that produce, store, use, or consume oil or oil products; and that could reasonably be expected to discharge oil into or upon navigable waters of the United States or adjoining shorelines. Facilities, including farms, are subject to the rule if they meet at least one of the following capacity thresholds: 1. an aboveground aggregate oil storage capacity greater than 1,320 gallons, or 2. a completely buried oil storage capacity greater than 42,000 gallons. In 2009, EPA estimated that approximately 640,000 facilities are subject to the SPCC requirements. Figure 1 illustrates the breakdown of these facilities by industry categories. Facilities involved in oil and gas production represent the largest percentage (29%) of facilities subject to the SPCC regulations, with farms coming in a close second (27%). EPA estimated that the SPCC requirements apply to approximately 152,000 farms, which represents approximately 8% of all farms nationwide. Most regulated facilities must prepare and implement, but are not required to submit, SPCC plans. (However, a subset of high-risk facilities must submit Facility Response Plans to EPA.) Among other obligations, SPCC regulations require secondary containment (e.g., dikes or berms) for certain oil-storage units. In addition, SPCC plans must be certified by a licensed Professional Engineer unless a facility owner/operator meets the conditions that allow for self-certification. In general, facilities with a clean spill history that store 10,000 gallons or less, in aggregate, can choose to self-certify their SPCC plans. EPA estimated that approximately 145,000 farms—about 95% of all farms subject to SPCC requirements—have an oil storage capacity less than or equal to 10,000 gallons, and would thus be able to self-certify their plans. According to a 2012 EPA Inspector General report, EPA regional offices inspected approximately 3,700 facilities for compliance with SPCC requirements; approximately 55% of the facilities were deemed to be out of compliance for various reasons. Unlike EPA regulations promulgated under some other statutes, SPCC regulations have not been delegated to states for implementation or enforcement. Section 311 of the CWA does not provide authority to delegate SPCC authority to the states. Therefore, enforcement of the program is performed by the EPA regional offices. As noted earlier, many states have their own regulatory programs that address oil storage units. SPCC regulations have garnered considerable attention in the 113 th Congress. Some Members have offered multiple proposals that would alter the scope and applicability of the regulations. Table 1 identifies legislation that has been enacted, passed either the Senate or the House, or been reported out of committee. All of these bills involve the treatment of farms in the SPCC regulations. In general, the bills would alter the aggregate oil storage threshold that triggers compliance with SPCC regulations. Such an approach has some precedent in federal environmental law and policy. For example, Congress modified the scope of the liability scheme of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA; P.L. 96-510 ) on several occasions to exclude particular parties. These parties may have contributed only very small quantities of waste (or less toxic wastes) to a contaminated site, or conducted activities, such as recycling, that Congress did not wish to discourage. Legislation identified in Table 1 similarly would exclude farms from SPCC requirements based on oil storage capacity. The argument in support of such legislation often concerns the financial impact of the SPCC regulations. For example, a 2012 House report stated that the "mandated infrastructure improvements—along with the necessary inspection and certification by a specially licensed Professional Engineer will cost many farmers tens of thousands of dollars." However, others have argued that EPA has considered the costs and benefits of its SPCC regulations during multiple rulemaking processes.

In 1970, Congress enacted legislation directing the President to promulgate oil spill prevention and response regulations. This presidential authority was delegated to the Environmental Protection Agency (EPA) by President Nixon in 1970. In 1973, EPA issued Spill Prevention, Control, and Countermeasure (SPCC) regulations that require applicable facilities to prevent, prepare, and respond to oil discharges that may reach navigable waters of the United States or adjoining shorelines. Among other obligations, SPCC regulations require secondary containment (e.g., dikes or berms) for certain oil-storage units. In addition, SPCC plans must generally be certified by a licensed Professional Engineer. In recent years, the SPCC regulations have received considerable interest from Congress. Most of this interest has involved the applicability of SPCC regulations to farms, which account for approximately 25% of SPCC regulated entities, second only to oil and gas production facilities. Farms may be subject to the SPCC regulations, because they store oil onsite for agricultural equipment use. In 2002, EPA issued a final rule that made changes and clarifications to its SPCC regulations. The compliance date for this rule was extended on multiple occasions. For most types of facilities subject to SPCC requirements, the compliance deadline was November 10, 2011. However, EPA extended this compliance date for farms to May 10, 2013. Related to this deadline, Congress enacted P.L. 113-6 on March 26, 2013, which included a provision prohibiting EPA from using appropriations to enforce SPCC provisions at farms for 180 days after enactment (i.e., through September 22, 2013). In addition, some Members in the 113th Congress have offered multiple proposals that include provisions that would alter the scope and applicability of the SPCC regulations. All of these provisions would revise the applicability to farms under the SPCC regulations. In general, the bills' provisions would alter the aggregate oil storage threshold that triggers compliance with SPCC regulations. Such provisions are included in the House version of the farm bill (H.R. 2642) and the Senate version of the Water Resources Development Act of 2013 (S. 601). The argument in support of recent SPCC legislation often concerns the financial impact of the SPCC regulations to farms. For example, a 2012 House report stated that the "mandated infrastructure improvements—along with the necessary inspection and certification by a specially licensed Professional Engineer will cost many farmers tens of thousands of dollars." However, others have argued that EPA has considered the costs and benefits of its SPCC regulations during multiple rulemaking processes.

Federal income tax laws provide certain allowances for the blind, the most important of which is the additional standard deduction amount allowed to legally blind taxpayers. Other special tax allowances are included in other provisions of the law, such as the exception from the 2% floor for deducting employee business expenses for impairment-related work expenses of handicapped employees. Only the additional standard deduction amount for the blind, however, is discussed in this short report. Under present law in 2008, individuals in general are entitled, for income tax purposes, to deduct from their income in lieu of itemizing deductions a standard deduction amount of $5,450 if single; $8,000 as head of household; or $10,900 if married and filing jointly. In addition, each married taxpayer is allowed an additional standard deduction amount of $1,050 if he/she is at least 65 years of age or blind; if both blind and 65 years of age or older they are each allowed an additional standard deduction amount of $2,100. (Thus, the total added deduction for a married couple, both of whom are blind and over 65, would be $4,200). If single or filing as head of household the additional standard deduction amount is $1,350 for age or blindness, and $2,700 for both. However, the additional standard deduction amount is not allowable for a dependent who is 65 years old or blind. The forgoing amounts are subject to adjustments for inflation. An additional standard deduction for other forms of handicap is currently not allowed by federal tax laws. The advocates of the special tax provisions for blind taxpayers justify it on the basis of need. They argue that blind persons incur certain expenses that sighted persons normally would not incur. For example, they say the blind often incur taxi fares to go shopping or to their place of employment whereas sighted persons may walk or take a less expensive form of transportation. Further, advocates say, those who are blind cannot mow their lawn, make many necessary home repairs, or perform all their own house cleaning. Consequently, blind persons pay for these services that would ordinarily be performed by those with sight. An employed blind person will frequently live near their place of employment, which may result in a higher rent than if he/she could live elsewhere. Thus, it was the incurring of additional expenses on account of blindness that was recognized when a special tax concession was first allowed blind taxpayers. Initially, in introducing the provision as a deduction in the Revenue Act of 1943, the House Ways and Means Committee stated "the committee has provided for a special deduction of $500 from the gross income of every blind person in order to cover the expenses resulting directly from blindness, such as the cost of readers and guides. This would relieve many blind persons of any tax whatsoever, and would reduce the tax of other blind persons." In a later tax bill (which became the Revenue Act of 1948) the deduction was changed to an additional personal exemption amount of $600 on the basis of these same considerations. In discussing the change, the House Ways and Means Committee noted that blind persons were benefitted by more than the $100 increase in amount. By substituting the exemption for the deduction, blind persons did not forfeit the ability to use the standard deduction. Additionally, as a personal exemption, it was easier to reflect the tax benefit in the income tax withholding tables so that tax relief was provided throughout the year rather than having to wait for a refund after tax filing. The tax provision for the blind in the Revenue Act of 1948 was incorporated in the Internal Revenue Code of 1954 , substantially unchanged. As the personal exemption increased over the years, so too did the amount of the additional exemption provided the blind. The exemption amount increased from $625 in 1970 to $1,080 in 1986. A comprehensive revision of the income tax code was made with enactment of the Tax Reform Act of 1986—designed to lead to a fairer, more efficient and simpler tax system. The act broadened the tax base so that tax rates could be lowered by removing the preferential treatment of certain classes of income and expenditures (e.g., capital gains, two-earner wage deduction, personal interest deductions, etc.). Further, the act provided for the repeal of the dividend exclusion, the political contributions credit and the provision of income averaging for all taxpayers. Both the personal exemption amount and the standard deduction amounts were raised, thus reducing the number of taxpayers who would find it advantageous to itemize their deductions. Further, the act repealed the additional personal exemption amount for the blind (and elderly) and in its place instituted an extra standard deduction amount for both blind and/or elderly taxpayers. This additional standard deduction amount is combined with the increased standard deduction provided by the 1986 act. Both the standard deduction and additional standard deduction amount for blind and/or elderly taxpayers were indexed for inflation in future years. In general, higher income taxpayers are more likely to itemize while lower and moderate income taxpayers more frequently use the standard deduction. The personal exemption is typically of greater value to higher income than lower income taxpayers. Thus, Congress in the 1986 tax act effectively targeted the tax benefits to lower and moderate income elderly and blind taxpayers by substituting an additional standard deduction amount for the additional personal exemption permitted under prior law. Advocates of the blind justify special tax treatment on the basis of need. It is argued that the blind face increased living costs. These costs arise from the need to hire readers and guides, etc. The blind are also frequently faced with additional expenses associated with earning income. These expenses are typically in the form of cab fares, specialized work equipment, etc. To the extent that the blind make these expenditures, it affects their ability to pay income taxes. Thus, the extra standard deduction amount can be seen as an attempt to compensate the blind for these added living and business expenses. However, as discussed below, it may also be said that the additional standard deduction accorded the blind does not meet horizontal equity principles in that all taxpayers with equal net incomes are not treated equally. Many blind individuals have low incomes. Low-income taxpayers most frequently use the standard deduction while higher income taxpayers are more likely than low-income individuals to itemize deductible items. Thus, as an additional standard deduction amount, this tax benefit for the blind is more likely to go to lower or moderate income blind taxpayers than higher income blind taxpayers who are more likely to itemize deductions. However, if this tax provision is truly based on need, then one objection opponents offer is that the provision does not offer equivalent treatment to other taxpayers with different handicapping conditions who may be in as much need of tax relief. For, just as the blind often incur special expenses due to their blindness, many other handicapped persons (e.g. amputees, learning disabled, hearing impaired, etc.) also incur special expenses due to their individual impairments. Some of the special expenditures made by the blind are frequently the same types of expenditures made by those with other handicapping conditions (i.e., travel costs to work or home, upkeep and repair services). Further, like the blind, the handicapped as a class usually have low incomes. It has been suggested that equity may not be the best tool to measure the merits of the additional standard deduction for blind taxpayers. Rather than equity, the question has been raised as to its effectiveness (that is, does the added standard deduction amount aid those needing tax relief?). The provision fails the effectiveness test since some low-income blind individuals, who already would be exempt from tax without the benefit of the additional standard deduction amount, receive no benefit. While these individuals are the most in need of financial assistance, they receive no benefit from the tax concession. Additionally, the provision does not benefit those blind taxpayers who itemize deductions (for example, those with large medical expenditures). Moreover, the value of the additional standard deduction amount is of greater benefit to higher rather than lower income taxpayers (in those cases where the taxpayer does not itemize). As mentioned in the brief summary of the law, a taxpayer that supports a blind dependent may not claim the additional standard deduction amount. Some believe that a taxpayer who incurs additional expenses on behalf of a blind dependent has as much justification to claim the additional standard deduction amount as that dependent. Questions arise as to why the provision for the blind has not spread to those taxpayers with other serious handicapping conditions. The legislative history indicates that administrative reasons initially precluded the addition of other handicapping provisions. Critics have argued that if it is appropriate and desirable to provide a subsidy to the lower-income blind, then similar subsidies should also be provided to other lower-income groups facing equivalent handicaps. Some have supported a shift from tax provisions to a grant program, since under a grant program, the revenue costs are known and benefits precisely targeted with conclusive rules and regulations. (However, a grant results in taxable income to the recipient unless specifically excluded by statute.) The current provision leads to pressures for tax concessions from other similar groups. However, the passage of an act, which allows many other handicaps the same tax advantage as the blind, would result in a substantial loss of revenue to the federal government. In general, enforcement procedures under the congressional budget process may raise significant hurdles to the consideration of legislation that would cause an additional revenue loss that is not accommodated by the annual budget resolution. Even so, legislation proposing such a revenue loss may be considered without triggering procedural sanctions if it is supported by majorities in the House and Senate sufficient to waive the enforcement procedures. Additional enforcement procedures based in statute (i.e., the "pay-as-you-go" requirement and limits on discretionary spending) effectively expired at the end of FY2002, and Congress and the President have not agreed on whether to renew them. Although it is true that more attention is focused on tax expenditures than in the past, they are still seen by many as "hidden" expenditures. A disadvantage of tax expenditures is that since they are not acted upon in the normal budgetary process, they are able to grow in revenue size and are not subject to periodic review. The Joint Committee on Taxation estimated that the revenue cost over the five fiscal years of 2007-2011 will be $8.9 billion for those who use the additional standard deductions available to the elderly and blind.

In the Revenue Act of 1943, a special $500 income tax deduction was first permitted the blind for expenses directly associated with readers and guides. This deduction for expenses evolved to a $600 personal exemption in the Revenue Act of 1948 so that the blind did not forfeit use of the standard deduction and so that the tax benefit could be reflected directly in the withholding tables. Congress attempted to target the tax benefit to low- and moderate-income blind individuals by replacing the tax exemption with an additional standard deduction amount with passage of the Tax Reform Act of 1986. The extra standard deduction amount provides tax relief that recognizes the increased costs of living and associated costs of employment for blind taxpayers. Since many blind taxpayers have low incomes, they are able to use the additional standard deduction amount provided under current tax law. However, this extra amount arguably does not meet the tax tests of horizontal equity and effectiveness. The provision has not been extended to other taxpayers with handicapping conditions because of administrative difficulties and the loss of additional federal tax revenues. This report will be updated in future years to reflect changes in law or in the additional standard deduction amount that is adjusted for inflation.

A valid conference report must carry the signatures of a majority of the conferees appointed by each chamber. House precedents state that "to be valid in the House, a conference report must be signed by a majority of the managers of the House and by a majority of the managers of the Senate." Similarly, Senate precedents provide that "[a] conference report to be valid must be signed by a majority of the conferees of each House...." In most cases, no problems arise in determining whether this requirement has been met. Under certain circumstances, however, questions may arise about whether a conference report carries sufficient signatures. These questions may arise especially in the House, and when one or both chambers appoint some of their conferees only for limited purposes. Usually, each house authorizes at least some of its conferees to negotiate on all the matters in disagreement between the two houses. Conferees with this blanket authority may be called "general conferees." Either house or both, however, also may authorize some of its conferees to negotiate only on certain of the matters committed to conference. For example, one chamber might appoint certain of its conferees only to consider title II of the Senate substitute and the corresponding provisions of the House bill. Conferees with this form of authority may be called "limited purpose conferees." Many limited purpose conferees are named as "additional" conferees, to negotiate along with the general conferees on the specified matters. Some, however, may be named as the "sole" conferees on the matters specified (in which case the authority of all other conferees also must be limited, so that they are not to negotiate on these matters). When limited purpose conferees are present, the matters before the conference may be thought of as divided into several portions, on each of which a different group of conferees is authorized to negotiate. The memberships of these different panels of conferees, of course, may overlap. When limited conferees are present, the House and Senate determine whether a conference report carries a sufficient number of signatures in different ways. The Senate does not often appoint conferees for limited purposes. One reason may lie in how the Senate counts to determine the sufficiency of signatures on conference reports. In the Senate, a valid conference report must carry the signatures of a majority of the Members from each chamber who were appointed as conferees, without regard to whether or not any of those Members were appointed as conferees only for limited purposes. The House Parliamentarian's handbook of current precedent, House Practice , states that "[U]nder Senate practice, signatures are counted strictly per capita." The House is more likely than the Senate to appoint conferees for limited purposes, and the House has a different standard for determining whether there is a sufficient number of signatures on a conference report. In the House, a valid conference report must carry the signatures of a majority of the Members from each chamber who were appointed to consider each provision or amendment in conference. "In the House," according to House Practice, "each provision must be signed by a majority of the Members appointed for that provision only (including general and additional conferees)." Each chamber uses its standard not only to determine whether a majority of its own Members have signed a conference report, but also to determine whether the report carries the requisite number of signatures from Members of the other chamber . For example, consider a typical case, in which the House appoints limited purpose conferees and the Senate does not. In the House, whether a sufficient number of Representatives have signed the conference report depends on a separate determination for each portion of the bill and amendment (or amendments) committed to conference. For each portion of the matters in disagreement, it will be necessary to count how many Representatives were appointed to consider that portion, and then to determine whether a majority of that number signed the report. If a majority of those appointed to consider any one portion of the matters in disagreement fail to sign the report, the report is not valid even if it carries the signatures of all the other House conferees. In the Senate, however, it is sufficient to count the number of Representatives who were appointed as conferees for any purpose—that is, the total number of both general and limited purpose conferees—and ascertain whether a majority of that number signed the conference report. To illustrate the application of the House and Senate standards, consider the rosters of Representatives and Senators appointed as conferees on H.R. 1000 of the 106 th Congress, the Wendell H. Ford Aviation Investment and Reform Act for the 21 st Century. In this example, both the House and the Senate appointed both general and limited purpose conferees. The Senate appointed 14 Senators from two committees. Nine Senators from the Committee on Commerce, Science, and Transportation were appointed for the consideration of the entire bill. The Senate also appointed five Senators from the Committee on the Budget to consider only title IX of the bill. The House appointed 29 Representatives, 20 of them for all purposes and nine for only limited purposes. In addition to the 20 managers appointed to consider the entire bill, the Speaker appointed three conferees from the Committee on the Budget for the consideration of titles IX and X of the House bill, three conferees from the Committee on Ways and Means for the consideration of title XI of the House bill, and three conferees from the Committee on Science for the consideration of title XIII of the Senate amendment and modifications committed to conference. In the Senate, the conference report would not be valid unless a majority of all the conferees from each chamber signed it. In other words, if any eight Senators and any 15 Representatives signed the report, then the report would have a sufficient number of signatures for the Senate to consider it. The House, however, would determine whether a sufficient number of Representatives signed the conference report according to its own standard. In our example, the signatures of a majority of the nine Senators appointed to consider the whole bill would be required for all titles except title IX. In other words, five Senators would need to sign the report for those titles. For the report to be valid in the House with respect to title IX, however, a majority of the full 14 Senators appointed would need to sign for the report, or eight Senators. Similarly, for the report to be valid in the House, 11 Representatives, or a majority of the 20 general conferees appointed, would need to sign the report for all the titles except IX, X, XI and XIII. For titles IX and X, signatures would have to be gathered from any 12 of the 23 Representatives appointed for the consideration of those titles. In other words, a majority of the 23 conferees (20 general conferees plus the three limited purpose conferees from the Committee on the Budget) appointed to consider titles IX and X would need to sign the report. In the same way, a majority of the 23 House conferees appointed to consider title XI, and a majority of the 23 House conferees appointed to consider title XIII, would also need to sign the report. Table 1 graphically displays the information in the above paragraphs. The difference between House and Senate standards for the sufficiency of signatures became an issue in the 106 th Congress when S. 900 , the Financial Services Modernization Act of 1999, went to conference. The Senate appointed 20 conferees, 11 Republicans and nine Democrats, all with no restrictions on their authority. The House initially appointed 42 conferees, drawn from four different House committees, each of which had jurisdiction over some provision or provisions of the Senate bill or the House amendment in the nature of a substitute. Of these 42, 23 were appointed as general conferees to consider the entire Senate bill and the entire House substitute. All the other House conferees were appointed for limited purposes, some much more limited than others. The most complex appointments were for members of the House Committee on Banking and Financial Services. Eight Republicans and two Democrats from that committee were appointed to the conference committee for all purposes. Eleven other Democrats from the committee were appointed in five overlapping groups, each consisting of four limited purpose conferees authorized to consider one or more titles of the House and Senate versions of the bill. As a result, each group of conferees from the Committee on Banking and Financial Services consisted of eight Republicans and six Democrats. Republicans constituted a majority of each panel of House conferees. The way in which the separate panels of limited purpose Democratic conferees from the Committee on Banking and Financial Services were made up, however, meant that the total number of House Members appointed as conferees included 20 Republicans and 22 Democrats. Some Senate conferees objected that this configuration opened up the possibility of a conference report that could be held valid for consideration in the Senate, under the Senate standard, even though no House Republicans had signed it. Subsequently, the Speaker appointed four additional Republican members as limited purpose conferees, and correspondingly restricted the role of four Republicans initially appointed as general conferees. The four new conferees were authorized to negotiate only on certain narrowly specified provisions of the bill. The authority of the four initial appointees was restricted to the remaining portions of the bill, so that they became limited purpose conferees as well. This change reduced the total number of House general conferees from 23 to 19. More significantly, however, the four new appointments brought the total number of House conferees to 46, made up of 24 Republicans and 22 Democrats. For related information from CRS on conference procedures in Congress, see the following products available on the CRS website, under "Congressional Operations," at http://crs.gov/analysis/Pages/CongressionalOperations.aspx?source=QuickLinks . CRS Report RS20454, Going to Conference in the Senate , by [author name scrubbed]. CRS Report 98-380, Senate Conferees: Their Selection and Authority , by [author name scrubbed]. CRS Report RS22733, Senate Rules Restricting the Content of Conference Reports , by [author name scrubbed]. CRS Report RS20227, House Conferees: Selection , by [author name scrubbed]. CRS Report RS20219, House Conferees: Restrictions on Their Authority , by [author name scrubbed]. CRS Report 96-708, Conference Committee and Related Procedures: An Introduction , by [author name scrubbed]. CRS Report 98-696, Resolving Legislative Differences in Congress: Conference Committees and Amendments Between the Houses , by [author name scrubbed].

The House and Senate both require that a conference report be signed by a majority of House conferees and a majority of Senate conferees. When some conferees are appointed only for limited purposes, the two chambers have different ways of counting to determine whether the conferees' report carries sufficient signatures. The Senate asks whether the report is signed by a majority of all the conferees from each house, without regard to whether those conferees were appointed for all or for limited purposes. The House asks whether the report is signed by a majority of all the conferees from each house who were appointed to consider each of the matters that were submitted to the conference committee. This report will be updated if procedural changes warrant.